Patently-O Bits and Bytes No. 32: Patent Law Jobs

Bits and Bytes, Patent

Purchasing Canadian Drugs & Patent Infringement

Patent

PatentLawPic289In the recent Litecubes case, the Court of Appeals for the Federal Circuit (CAFC) held that a product may be considered “sold” in the US even though title is transferred abroad.  [Background] A broad restatement of the court’s focus is that the sale is “within the United States” whenever the selling act would be sufficient to create personal jurisdiction over the accused infringer.  That conclusion is bolstered by the CAFC’s continued reliance of personal jurisdiction cases in its analysis.

One astute Patently-O comment by patent attorney Paul Morgan queried whether Litecubes could open the door to patent infringement litigation against Canadian pharmacies who sell to US customers who cross the border to purchase cheaper drugs.  There are some strong parallels between Litecubes and the pharmacy example that should give some reason to believe that such a lawsuit has some merit — especially if Canadian drug sellers knew they were selling to US nationals for transport back to the US. However, direct infringement would be a stretch from the facts of Litecubes:

“Since the American customers were in the United States when they contracted for the accused cubes, and the products were delivered directly to the United States, under North American Philips and MEMC there is substantial evidence to support the jury’s conclusion that GlowProducts sold the accused cubes within the United States.”

Litecubes focused on the issue of direct infringement.  Canadian sellers might alternatively be liable as indirect infringers under theories of inducement and/or contributory infringement.

Some have suggested that the a patentee should not be allowed to block importation of drugs that the patentee sold abroad.  I.e., if Pfizer sells Lipitor in Canada at a low price, the patentee should not be allowed to control the downstream free market — even if the result is US imports that undercut the company’s US price.  In patent lingo, this follows the theory of patent exhaustion.  However, US Courts have made clear that a patentees foreign sales do not exhaust its US patent rights.*

This type of case may never come to pass. However, that result may be more due to politics and difficulties in detection and enforcement rather than a lack of a strong legal case.

Notes:

  • Patent Exhaustion is currently being considered by the Supreme Court in a case titled Quanta v. LGE.
  • * Jazz Photo v. ITC, 264 F.3d 1094 (Fed. Cir. 2001), cert. denied, 536 U.S. 950 (2002)(“United States patent rights are not exhausted by products of foreign provenance. To invoke the protection of the first sale doctrine, the authorized first sale must have occurred under the United States patent.”).

Forging A Patent Document

Patent

PatentLawPic28718 U.S.C. § 497 creates a the felony crime of forging a patent document. According to the statute:

“Whoever falsely makes, forges, counterfeits, or alters any letters patent granted or purporting to have been granted by the President of the United States; or Whoever passes, utters, or publishes, or attempts to pass, utter, or publish as genuine, any such letters patent, knowing the same to be forged, counterfeited or falsely altered–

The punishment is “not more than ten years” of federal prison.  I was unable to find any reported decisions that apply or even interpret Section 497.  Unlike the marking statute, there is no provision that would allow a private action against under this statute. 

A general fraud claim would create standing for a civil action. However, the plaintiff would need to show particular harm — unlike a Section 292 plaintiff.

Patently-O Bits and Bytes No. 31

Bits and Bytes, Patent, ,
  • PatentLawPic286In re Volkswagen(5th Cir. en banc). A self-titled “ad hoc committee of intellectual property trial lawyers in the Eastern District of Texas” have filed a brief in the pending VW case arguing on the substance that the E.D.Tex. courts do not excessively retain cases in a way that is any different from other jurisdictions.  The AIPLA amicus brief in the same case argues that too many cases are being heard in Texas. [Trial Lawyer Brief] [More Info].
  • The non-profit IP Hall of Fame is asking for nominations for inductees in the 2008 IP Hall of Fame.  The award is designed to honor individuals who have made significant contributions to today’s Intellectual Property System. www.iphalloffame.com. The award will be limited to five inductees this year. A couple of notes: (1) The Hall of Fame is non-profit, but sponsored by the for-profit IAM-Magazine. (2) I am a member of the Hall of Fame Academy and will vote on the inductees. (Being on the academy is different from being an inductee).
  • John Doll (Commissioner for Patents) will be taking questions on May 13 (11:00 am CST) as part of a webinar sponsored by Kirkpatrick & Lockhart. It appears that you must pre-register for this FREE event. LINK.
  • While much of the proposed patent reform legislation has been directed toward easing pain felt by major corporations being sued for patent infringement, one proposed measure would move inequitable conduct issues to the PTO for a decision. NY Times discussed this last week as a battle between Innovator and Generic Pharma – with the lobbyists winning. [LINK]
  • USPTO Publishes Common Application Format for EPO and JPO  [Via IP/Updates]
  • Pfizer’s Lipitor ‘893 Patent Survives Reexamination [Via Patent Docs]

CAFC Rejects Patent on Invention to Overcome the Second Law of Thermodynamics

Patent,

In re Speas (Fed. Cir. 2008)

In a short non-precedential opinion, the CAFC affirmed the PTO’s rejection of Speas patent application as both non-enabled and lacking utility. The application claims:

“all devices and systems which operate in such a manner as to violate the second law of thermodynamics as it is currently understood.”

The CAFC briefly described operation of an embodiment:

‘According to the specification, the invention raises a ferrofluid out of a reservoir by a magnetic column into a mass. The ferrofluid then escapes a “gradually decreasing magnetic field which holds it up against gravitational force” and is drawn away via tubular element by a capillary force aided by Brownian motion. At the end of the tubular element, drops of this ferrofluid accumulate and drop back into the reservoir below, spinning a wheel along their downward paths. Thus, the movement of the ferrofluid imparts mechanical energy upon the wheel. Speas claims that because this ferrofluid is moved and adds energy to the paddle wheel “without input into the system other than ambient thermal energy,” it is proof that the second law of thermodynamics is not inviolate – an object of the invention.’

Notes:

  • Although this type of case is fun to read, it also provides an interesting lesson — that the patent office has tools to reject inadequate patent applications on their merits without resorting to broad exclusions of particular subject matter. 
  • Speas is the inventor of several issued patents covering more practical applications such as an internal combustion engine and an adjustable bicycle drive mechanism. His home of record is in the town of Haiku on the island of Maui.

False Marking

Patent

PatentLawPic284A US patentee can only recover damages for patent infringement activity that occur after the infringer is “notified of the infringement.”  35 U.S.C. 287(a). The major exception to this limit on damages is through marking of goods. Goods that are properly marked as protected by a particular patent serve as a constructive notice to the world that the item is patented. Id.

Although marking serve as a benefit, the patentee must also be wary of statutory false marking. Under 35 U.S.C. 292, false marking includes marking unpatented product as “patented” or marking a product as “patent pending” when no patent is pending. These false marking activities are only actionable if done “for the purpose of deceiving the public.”

Section 292 is a criminal provision with only a monetary penalty – usually payable to the government.  The statute also spells out a qui tam right for “any person” to sue for false marking. One-half of any damages would then be awarded to the civil plaintiff, and the US Government collects the other half. Damages are limited to “not more than $500 for every such offense.” Some courts* appear to interpret “every such offense” broadly. Thus, for example, 100,000 mislabeled cups, would be seen as 100,000 offenses. The text from Section 292 has remained remarkably fixed since the Patent Act of 1870 the primary differences being that the old statute included a minimum penalty of $100 per offense and used the word “moiety” instead of “one-half.”

Recently, a Washington DC patent attorney, Matthew Pequignot, filed at least two Section 292 lawsuits in the Eastern District of Virginia alleging false marking. These include Pequignot v. Solo Cup and Pequignot v. Gillette and P&G.

In the first case, Pequignot alleged that Solo Cup marks its paper products with patents that had expired more than ten years ago. In a motion to dismiss, Solo Cup argued that marking with an expired patent cannot be considered false marking. Furthermore, the defendant argued, it should not be held liable because the markings were written in the tentative voice: indicating that the products “may be covered” by various patents.

Holding: Judge Brinkema denied Solo Cup’s motion to dismiss, holding: (1) that, as a matter of law, listing of expired patents may constitute false marking; and (2) the use of permissive language (“may be covered”) in the marking does not create a safe harbor against liability for patent marking. In his Treatise, Don Chisum addresses this point — finding “little authority on whether continued use of a patent number of an article after expiration of the patent constitutes culpable mismarking.”

The complaint against Gillette and P&G similarly lists over thirty products being marked by those companies with expired patents or patents that do not cover the marked product.

Documents:

Trade Secret Information can be Purely Mental

Patent

Ohio-sealAl Minor & Assoc v. Martin, 2008 Ohio 292 (2008)

One aspect of the upcoming Bilski considers whether “mental methods” can be patentable. There are various types of mental methods — running from the most innocuous situation where a portion of a process could be performed in the human mind to the most questionable situation where an entire process must be performed in the human mind.

Opining on Patent’s legal cousin – trade secret law – the Ohio Supreme Court has held customer lists compiled by former employees strictly from memory can be the basis for a trade secret violation.

“[W]e have concluded that the client information at issue in this case did not lose its status as a trade secret, or the protection of the UTSA, because it had been memorized by a former employee.”

As part of his employment contract with AMA, Martin was not required to sign a noncompete agreement or even an employment contract. When he left AMA, Martin was careful not to take any documents belonging to AMA. However, Martin did remember the names of 15 AMA clients and solicited their business.

In its decision, the Ohio court could not find any legal or policy reason to “distinguish between information that has been reduced to some tangible form and information that has been memorized.” (Noting that the statute makes “no mention of writings or other physical forms that such information might take.”

One real problem is that “employee will of course have memories casually retained from the ordinary course of employment.”  In response to this problem, the court gave the unsatisfactory statement that former employees can use their non trade secret memories. “The [UTSA] does not apply to the use of memorized information that is not a trade secret.”

This decision follows the “modern trend” amongst most states to eliminate any “written-memorized distinction.” See Pooley, Trade Secrets (7th Ed.2001).

Bilski Hearing to Include Amici Arguments

Patent, , ,

En banc oral arguments for Ex parte Bilski will be held at 2:00 pm May 8 at the CAFC Courthouse in DC. [Calendar] Room 201 is expected to be filled to capacity for this important case.

In addition to the parties, the CAFC has requested oral arguments from two amici: Regulatory Datacorp (RDC) and the “Financial Services Industry” group of seven that includes Bank of America, Morgan Stanley, and Wachovia.

Professor John Duffy will argue for RDC. Over the past several years, Duffy has firmly established himself as the country’s leading conservative patent thought leader.  RDC’s amicus brief makes the point that applied economics falls well within any reasonable definition of “useful arts.”  According to Duffy, statutory subject matter should only limit claims that are directed to abstract ideas, physical phenomena, or principles of nature.

On the other hand, BOA argues that State Street and its progeny are unduly broad both as written and as interpreted. BOA rejects any “technological arts” requirement that would allow a token inclusion of a ‘machine’ to render a claim patentable subject matter. Bill Lee, Managing Director of WilmerHale will make this argument.

Notes:

Territorial Limits of Infringement via Sale

Patent

PatentLawPic282Litecubes v. Northern Light Productions (GlowProducts) (Fed. Cir. 2008).

Short Summary: (1) Subject Matter Jurisdiction is satisfied by a well pled complaint, even if the accused infringer is foreign and the infringing activity is potentially outside the US; (2) In an infringement analysis, a product may be considered “sold” in the US even though title is transferred abroad – so long as the seller deals directly with US customers and then ships the product to the US.

Litecubes are artificially illuminated pseudo-ice cubes. The company asserted both patent and copyright protection against GlowProducts of Canada.  Although GlowProducts has no US facilities or assets, the company does sell and ship directly to US customers.

Subject Matter Jurisdiction: On appeal, the CAFC raised the issue of subject matter jurisdiction. Specifically the court inquired whether the limits on subject matter jurisdiction require a patent plaintiff to establish some threshold level of infringement within the US. Or, are the elements of infringement merely factual elements to be proven at trial.

Well pled complaint rule: Under the well pled complaint rule, subject matter jurisdiction is satisfied by a complaint that establishes “either that federal patent law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal patent law.”  Here, because Lightcubes complaint pled each element of the infringement statute (35 USC 271(a)), the federal court properly has jurisdiction. 

Furthermore, subject matter jurisdiction is not defeated by a failure to prove the allegations unless the allegations are “wholly insubstantial and frivolous.”

There are some prior that look at territoriality requirements as jurisdictional. However, the CAFC found that the territorial limitations of Section 271 are elements of infringement rather than requirements for subject matter jurisdiction.

“Thus, in these respects, a limitation on the extraterritorial scope of a statute is no different than any other element of a claim which must be established before relief can be granted under a particular statute.”

Thus, the district court should have rejected GlowProduct’s subject matter jurisdiction claims without even considering whether any products were actually imported into the U.S.  Rather, Litecubes satisfied the SMJ requirement by alleging US infringement in the complaint:

“by alleging a violation of § 271, has properly invoked federal question jurisdiction under § 1331 and § 1338. This jurisdiction does not depend on whether Litecubes is able to succeed on the merits in proving all of the elements of patent infringement that it alleged in the complaint.”

Applying a parallel analysis, the CAFC likewise held that the issue of territoriality of copyright infringement is “properly treated as an element of the claim which must be proven before relief can be granted, not a question of subject matter jurisdiction.”  Of course, foreign companies charged with infringement can still escape the court’s reach if there is a lack of personal jurisdiction. “In many such cases, the court may not have personal jurisdiction over the defendant.”

Sale in the US: GlowProducts argued that it had not made any US sales. In particular, the Canadian defendant argued that the sales were made in Canada and then shipped f.o.b.. On appeal, the CAFC found that that the location of a “sale” under Section 271 should not be limited by any formalistic rules.  Citing its 1994 North American Philips case, the appellate panel held that foreign company’s “sale” may properly be considered within the US if the seller deals directly with US customers and then ships to the US — regardless of whether title to the goods was legally transferred in another country.  

Interestingly, the court extensively relied on personal jurisdiction precedents interpreting constitutional law to broadly define the location of a sale. Yet, the court also argued foreign defendants should rely upon personal jurisdiction arguments to protect against constitutional due process violations — noting that those foreign companies “have substantial protection if the activity complained of took place wholly outside of the United States.  In many such cases, the court may not have personal jurisdiction over the defendant.” 

CAFC Judge Linn Expresses Disappointment over Failures by the BPAI and Patent Bar

Patent, ,

In re Reuning (Fed. Cir. 2008)

The Reuning application claims to have invented a new method of targeting advertisements. In appealing a BPAI obviousness rejection, the inventors argued to the appellate panel that the claims should be allowable because they contain the limitations of “searching the internet”, “identifying web pages”, and identifying “web pages containing profile data.” During the appellate briefing, the applicant had admitted that each of those elements were already “known in the art” at the time of the invention. The CAFC applied the applicant’s admission to estop any argument that elements were not in the cited references:

“Having acknowledged that certain claimed elements are taught by the prior art, Reuning cannot now defeat an obviousness rejection by asserting that the cited references fail to teach or suggest these elements.”

This conclusion misses the somewhat subtle difference between elements being found in the art generally and those found in the cited references.

In a Concurring Opinion, Judge Linn wrote to “express . . . disappointment over the delays experienced in this case and . . . concern that the circumstances that led up to this appeal may be more symptomatic of certain failures of the patent system than merely reflective of the peculiar facts of this case.”

Here, Reuning filed the patent application in 2001, received a final rejection in 2003, and received the two-page BPAI decision in 2006. During the CAFC appeal, the PTO Director requested a remand so that the BPAI could reconsider all of the facts of the case:

After twice denying Reuning a substantive review of claims 3-66—and taking over three years in the process—the Board, via the Director, now requests that we remand so that the Board can do what it should have done in the first place; namely, substantively review the examiner’s rejection of claims 3-66. By taking nearly three years to decline to adjudicate the merits of claims 3-66 on a procedural technicality, and by forcing Reuning to appeal before recognizing the superficial nature of its actions, the Board squandered judicial resources and needlessly frustrated Reuning’s interests. This is not a reflection of the Board’s finest work. . . .

This wasteful course of proceedings does not promote the fair and efficient administration of justice and is inconsistent with the PTO’s mission “to ensure that the intellectual property system contributes to a strong global economy, encourages investment in innovation, and fosters entrepreneurial spirit.” . . . I have the utmost respect for the members of the Board, the leadership of the PTO, and the members of the patent bar, and while I would like to believe that this case represents an aberration from the standards of practice I have long admired and have come to expect, I am concerned that it does not.

 

Patently-O Bits and Bytes No. 30

Patent
  • PatentLawPic280Standard Setting & Patents: The Court of Appeals for the District of Columbia has overturned an FTC monopolization ruling against Rambus.  The FTC had found that Rambus deceptively failed to disclose its patentable DRAM technology to the JEDEC standard-setting body. On appeal, the DC court found no evidence of competitive harm and a lack of evidence that Rambus violated disclosure policies of the standard-setting body. File Attachment: rambusdecision.pdf.
  • Markush Update: The PTO has proposed new Markush rules (limiting the use of Markush groups in claims). Recently, the office published a “supplementary notice” regarding the reasons for and impact of the rules. [LINK] The office has also posted comments received from the public. [LINK] The comments include a paper from Hal Wegner arguing that generic claim groupings have been the law since Ex parte Eagle was decided in 1870. [LINK]
  • Mediation: Court of Appeals for the Federal Circuit has an ongoing mediation program. In Q1 of 2008, the program completed 20 patent appeal mediations resulting in 9 settlements. (26 other mediations are still ongoing). [LINK]
  • Blog Meister: Publisher & Author, Dr. Jeremy Phillips published an interesting article in the recent WIPO Magazine all about IP Blogging. Phillips heads the UK Patent Blog IP KAT. [Read the Article]
  • PatentLawPic281Community Design: IP Kat has a recent article on a patent dispute involving spiky balls.
  • Prevacid Patent: A Delaware District Court has upheld Takeda’s patents covering Prevacid. [Barkoff]

Finisar v. DirecTV: Software Means-Plus-Function Claim must be Supported by Particular Structure

Means Plus Function, Patent

Finisar v. DirecTV (Fed. Cir. 2008) [This is Part II of the case discussion. Read Part I]

In a cross-appeal, Finisar asked the CAFC to overturn the lower court’s findings that its means-plus-function claims were invalid for failing to disclose any particular structure to perform the claimed function.  A patent applicant is allowed to claim that her invention covers the “means” for accomplish certain results so long as the application also discloses the “structure” for accomplishing the result.  That structural disclosure must be found somewhere in the specification. Means plus function claims are generally easier to write and are thought by many to be quite broad. Over the past decade, however, courts have increasingly been wary of particularly overbroad claims.

In this case, the claimed means and functions were software related. A number of CAFC cases have required that software means-plus-function claims provide more structural disclosure than just a general purpose computer. Rather, the disclosure must be “the special purpose computer programmed to perform the disclosed algorithm.” WMS Gaming; See also Aristocrat. The CAFC sees its structure requirement as quite minimal and easy to satisfy. Here, however, the complete lack of structure leaves the claims so vague that “one of skill simply cannot perceive the bounds of the invention.”

Notes:

  • One of the Finisar MPF clauses reads as follows:
    • “database editing means, coupled to said one or more computer memory devices, for generating a hierarchically arranged set of indices for referencing data in said information database, including distinct indices for referencing distinct portions thereof, and for embedding said indices in said information database . . .”

Finisar v. DirecTV: Parallel Claim Construction and Construing the Prior Art

Patent, ,

Finisar v. DirecTV (Fed. Cir. 2008)

After a jury found that DirecTV willfully infringed Finisar’s information broadcast patent, the Eastern District of Texas court (Judge Clark) awarded over $100 million to the patentee for past damages. Instead of an injunction to stop the infringement, Judge Clark also ordered a compulsory license rate for any future infringement.

Parallel Claim Construction: On appeal, the CAFC first reversed the construction of the claim term information database – leading to an order for a new trial on both infringement and validity.  The same patent term had also been later construed by a N.D. Cal. district court in Comcast v. Finisar, and “in the interest of uniformity and correctness” the appellate panel consulted the analysis of both courts.  Here, the CAFC essentially used the Comcast decision as an amicus brief arguing for a particular result. In its decision, the appellate panel praised the Comcast court for its rejection of the DirecTV claim construction.

It is appropriate to consider here what a district court should take away from the CAFC’s process – especially with respect to the court’s stated goal of uniformity. This decision leaves execution of that goal squarely in the hands of the appellate court. In this case, the California district court is encouraged to avoid uniformity and instead focus on contrasting its decisions from those of other district courts interpreting the same terms.  When several courts are deciding the scope of identical property rights in parallel infringement actions, there is some value in having a uniform interpretation or outcome. The practical implication of this case, however, is that a district court looking at a patent that was previously construed should not consider the value of uniformity in its decision.

Construction of Prior Art: A concept ripe for further analysis is the construction of prior art — a job that is currently left to the jury. Here, the court found that the database structure textbook reference should be interpreted based on “an understanding of English grammar and usage.” Ultimately, the court decided the anticipation issue based on the comma placement in a paragraph of the prior art book. Interestingly, although the court initially terms its interpretation a “stretch” in the end its interpretation of the facts means that no reasonable jury could hold otherwise.  (Based on its grammatical holding, one claim was held invalid and the others must be revisited by a jury).

Willful Infringement: The CAFC also reversed the willfulness decision — finding that there is no requirement for an opinion of counsel, and that an opinion of counsel can appropriately ignore validity if it sufficiently addresses noninfringement.

 Notes

  • Read Part II of this decision later today.

Patently-O Bits and Bytes

Patent
  • The Supreme Court reviewed the certiorari petition of Biomedical Patent Management (BPM v. California Dept. of Health) and asked the Solicitor General to offer the US Government’s views on the issue of when a state waives its Eleventh Amendment Immunity. [SCOTUS Blog] In this case, BPM sued California for patent infringement.

Implied License: Purchases from Licensed Manufacturer Come with Implied License to Practice the Invention (Regardless of Non-Infringing Uses)

Patent,

Zenith Electronics v. PDI Communications (Fed. Cir. 2008) [Part II] [Read Part I discussing anticipation]

Zenith’s patented remote TV control system is designed for hospital use. The invention includes both a remote “pillow speakers” and a TV receiver. Zenith accused PDI of infringing even though PDI had purchased Zenith-authorized remote pillow speakers from licensed manufacturers. PDI had, however, purchased off-brand TVs and receivers – Zenith wanted its own TVs to be used.

On summary judgment, the district court found that PDI could not infringe Zenith’s patent because the defendant was practicing the invention under an implied license from the patentee. On appeal, the CAFC affirmed.

Implied License: Under the first sale doctrine, a license to practice an invention will be implied when the patentee (or its licensee) sells a device that has “no non-infringing uses” under circumstances that “plainly indicate that the grant of a license should be inferred.” The no non-infringing use requirement is lifted when the patentee expressly licenses a manufacturer to sell its products for infringing uses. (Jacobs v. Nintendo).

Here, PDI purchased the pillow speakers from manufacturers expressly authorized to sell products for uses that would infringe the Zenith patent. Thus, potential non-infringing uses are “irrelevant” to the question of implied license. Interestingly, the Zenith licenses include aspirations that Zenith TV-equipment will be used. Those aspirations however are “simply the seller’s hope or wish, rather than an enforceable restriction.”

“We agree with the district court that customers who purchase pillow speakers from [the licensed manufacturers] Curbell, MedTek, and Crest obtain an implied license to use those pillow speakers in combination with any compatible television—not just Zenith televisions. That implied license is derived from the express licenses in place between Zenith and the manufacturers.”

Notes

  • This situation is similar to that of Quanta, now pending at the Supreme Court. However, in that case, the license made explicit restrictions.
  • This decision also is an interesting parallel to the recent DataTreasury decision. In that case, the CAFC decided that the restrictive burden (a requirement to arbitrate disputes) was not actionable to a subsequent purchaser. Here, the CAFC decided that the beneficial license to practice does automatically extend to the purchaser of a patented good. This is like the law of real covenants where the benefit of a covenant flows to the subsequent purchaser much more easily than the burden. (There is a difference here between purchasing a patent in DataTreasury and purchasing a patented good in Zenith.)

Patently-O Bits and Bytes No. 28

Patent
  • Stupid_Recognition_SoftwareHuman Tricks: A reader attempting to use PAIR’s bitterly awful reCAPTCHA software had a little trouble getting through. Can anyone figure out this example? 
  • A new site: www.inventorresource.co.uk.
  • APRIL 18 in CHICAGO: Northwestern’s Journal of Law & Technology is hosting a one-day symposium on the Future of Intellectual Property. FREE.
  • Law Jobs: According to a WSJ article, the lateral law firm market is slow. Bucking the trend: Patent Jobs. “There are anomalies, including demand for hard-core IP – the patent jobs for the engineering types.” [WSJ Blog] [Patently-O Law Jobs]

That which infringes if later, anticipates if earlier – But Elements of Anticipation Must Still be Proven

Patent

PatentLawPic278Zenith Electronics v. PDI Communications (Fed. Cir. 2008)

Zenith’s patents related to TV remote control devices for use in hospital beds.  In patent infringement litigation, the accused infringer (PDI) won on summary judgment of invalidity by anticipation. For its defense, PDI had argued that its accused system was identical to the prior art. 

On appeal, the CAFC found the practicing prior art defense lacking — holding instead that “anticipation cannot be proved by merely establishing that one ‘practices the prior art.’”  This decision flows from the 2002 Tate Access holding that, accused infringers are not free to flout the requirement of proving invalidity by clear and convincing evidence by asserting a ‘practicing prior art’ defense to literal infringement under the less stringent preponderance of the evidence standard.”

At first glance, this decision might appear in direct conflict with numerous Supreme Court and Federal Circuit opinions stemming from the 1884 Ohio Circuit Court statement: “That which infringes if later, anticipates if earlier.” Peters v. Active Mfg., 21 F. 319 (W.D.Ohio 1884) (affirmed and quoted in 129 U.S. 530 (1889)).  That initial notion, however, can be pushed aside by understanding that the CAFC’s problem with the pithy maxim is that it serves as a poor rule of evidence.  The court has established a specific element by element procedure for determining anticipation by a clear and convincing standard.  When those standards are applied the maxim will be upheld.

On remand, PDI must prove the elements of anticipation. I.e., the defendant must show “that each element of the claim at issue, properly construed, is found in a single prior art reference.” 

Arbitration Agreement Does Not Encumber Patent

Patent

DataTreasury v. Wells Fargo (and 50+ other banks) (Fed. Cir. 2008)

In 2006, DataTreasury obtained its electronic check clearing patents from WMR e-Pin — a company that had previously licensed its patents to Wells Fargo. The license agreement included a provision requiring arbitration of disputes.

Soon after DataTreasury obtained the patents, it sued Wells Fargo and more than fifty other major banking institutions for patent infringement. On interlocutory appeal here, is the district court’s refusal to stay litigation pending arbitration. DataTreasury argues that it is not bound by the arbitration agreement.

On appeal, the CAFC confirmed that the subsequent purchaser, DataTreasury, is not bound by the arbitration clause. Applying Fifth Circuit interpretation of the FAA and Minnesota law, the appellate panel found that the arbitration policy does not operate as a servitude upon the property. Rather, the arbitration agreement it is a personal contract binding only the original parties. “[R]equiring a non-signatory to arbitrate solely on the basis of an arbitration clause in a license agreement between signatory parties would be inconsistent with basic principles of contract law and the Federal Arbitration Act.”

The case is remanded to Judge Folsom (E.D.Tex.) to resolve the dispute.

Challenge to BPAI Appointments Moves to Supreme Court

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Translogic Tech. v. Dudas (on petition for certiorari 2008)

In 2007, Professor John Duffy wrote a Patently-O Patent Law Journal article challenging the constitutionality of the current system for appointing administrative patent judges. The Patent Act requires the Director of the PTO to appoint BPAI judges. 35 U.S.C. §6. However, under Article II of the constitution, appointment of “inferior officers” such as these may only be delegated as far as a “Head of Department.”  In this case, the head of department would be the Secretary of Commerce – not the PTO Director.

Now, Translogic has repackaged Professor Duffy’s article in its petition for certiorari to the Supreme Court — arguing that the BPAI’s rejection of the Translogic patent during reexamination should be vacated because one of the APJs was unconstitutionally appointed. (Based on the BPAI decision, the CAFC Set aside an $80 million jury verdict against Hitachi).

The question presented:

Under the Appointments Clause of the Constitution, art. II, § 2, cl. 2, Congress may vest the appointment of inferior officers in the President, in the Courts of Law, or in the Heads of Departments. In this case, one of the three members of a panel of the Board of Patent Appeals and Interferences (“Board”) of the United States Patent and Trademark Office (“PTO”) that ruled on the claims of Petitioner’s patent was appointed by the Director of the PTO, who is not the Head of a Department.

The Questions Presented are:

  1. Whether one of the members of the panel of the Board was appointed in violation of the Appointments Clause; and
  2. If so, whether there must be a vacatur of the Board’s decision.

Translogic’s brief is clean and could be an easy grant. It raises questions that the Supreme Court is designed to answer: how the Constitution limits federal law. The only knock is that this issue was not raised at the BPAI or the CAFC (until a rehearing request) – primarily because Professor Duffy’s article was not yet published. 

Notes and Documents:

Interview Before The Examination (“First Action Interview Pilot Program”)

BPAI, Patent

USPTOBy my count, well over eighty percent of patent applications are initially rejected by the PTO. Yet, most applications eventually result in an issued patent.  Many of the rejected patents are amended slightly. It is unclear, however, if those amendments are really made to overcome prior art or rather offered as negotiation chips to the examiner in order to obtain the patent as quickly and cheaply as possible.  The truth is that a non-trivial number of initial rejections might be termed “off course” because they miss the true nature of the invention. These off course rejections end up extending prosecution, increasing the PTO backlog, and causing endless patent attorney frustration.

In the hope of avoiding the problem of potentially off-course rejections, the PTO has created a new pilot program to allow an applicant to discuss the claims with the examiner before an initial rejection is issued (but after the examiner’s prior art search). Of course, under the current rules, pre-examination interviews are already allowed under MPEP 713.02 at the discretion of the Examiner.  This pilot program adds to the rules by forcing the Examiner to prepare a pre-examination search (upon request) and also meet for an interview.  The idea here is to ensure that everyone is on the same page regarding the invention and hopefully quickly issue patents for state of the art inventions.

The pilot program is limited to data processing inventions (Class 707 & 709) that have been pending for a couple of years. Likewise, a qualified application may only have three independent and twenty dependent claims. If successful, it may spread to art units with high-pendency.

Thoughts on Interviews: Over the last few years, in-person interviews at the PTO have lost much of their charm. In the past, a savvy attorney coupled with a tech-whiz inventor could convincingly elaborate the invention — without having the actual interview on record. After a tidy noncommittal “interview summary,” the case would issue.  As the record has become more important, Patent Office practice has also shifted toward examiners taking a harder post-interview look and often “renegotiating” the result. Still, interviews are useful for a patent applicant – just not as useful as they used to be.

My hope for this pre-examination interview is that it can create a communication link to help the PTO better understand the invention before crystallizing a particular position.  The PTO’s approach with the pilot is quite thoughtful because it requires the Examiner to prepare (by conducting a prior art search). This helps ensure that both sides will be ready to go when the interview begins.

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