Disclose Disclose Disclose: APJ Richard Lebovitz argues (on his own) that scientific researchers should be required to disclose potential patent rights prior to publication of related research as part of the conflict-of-interest review. [6 Nw. J. of Tech. & Intell. Prop. 36]. In his study of Science and Nature articles, Lebovitz found that “almost one-third” of the research articles were associated with one or more patent filings. - Compulsory Licenses: Thailand plans to continue its plan of paying low compulsory license rates for patents covering important cancer drugs. In response, Novartis has proposed to offer Gleevec for free, but only to Thai patients that qualify as poor. [Noonan]
- More Like Property: A major point of the Bessen & Meurer book is that the patent system can be improved by making patents work more like property. Should we work toward a system where patent rights are more predictably valid; where patent scope is more easily discernable; and where fragmented ownership of overlapping patent rights does not block further development?
- Patent Reform: IPO reports that the “massive” Patent Reform Act of 2007 will likely receive senate floor attention in April or May. According to the organization: “Patrick Leahy (D-Vermont) appears intent on moving the bill ahead even though it is unclear whether enough Senators will support it to break holds placed on it by some Senators. Claims made every day by lobbyists that Leahy has or does not have the 60 votes required to cut off debate and pass an amended bill are speculation, because the amendments are not known. Pronouncements that the bill is dead this year are premature.”
Disclose Disclose Disclose: APJ Richard Lebovitz argues (on his own) that scientific researchers should be required to disclose potential patent rights prior to publication of related research as part of the conflict-of-interest review. [Do Patents Stimulate R&D Investment and Promote Growth?
James Bessen and Michael J. Meurer have authored a new book presenting a careful empirical analysis of whether patent rights encourage innovation. Their conclusion: for the most part, today’s patent system does not achieve its stated goal. I asked them to provide Patently-O readers with a cut from their analysis. The following post is the first in a series of four by the authors. The book is titled: Patent Failure and published by Princeton [Web Link]. The analysis done in this book put Bessen and Meurer at the forefront of leaders in economic analysis of patent laws. I suspect that their results will become the talking points of the next round of patent reform discussions. A live symposium will be held at UGA Law School on March 29 focusing on the book and its results. [LINK]
==========
by James Bessen and Michael J. Meurer
As background material, this post reviews the sizable body of empirical research analyzing the impact of patents on R&D investment and economic growth. Three future posts will present new empirical research featured in our book Patent Failure. The theme across all four posts is that patents often fail to perform effectively as property rights. [DDC: To work well as property, the right should be predictably valid; have discernible boundaries; and not have an overly fragmented ownership scheme.]
Economists cherish property rights that provide strong incentives for investment and trade, and that thereby contribute to economic growth. Potentially, patent rights could accomplish these three goals, and surely they sometimes do. Apparently though, it is hard to set up and maintain a patent system that works as property.
The rise of new market economies and strengthening of property rights around the globe in the last two decades provides economists with “natural experiments” that help us evaluate whether and how much property rights contribute to investment and growth. The empirical results are impressive. Countries that expanded the role of markets and strengthened property rights have prospered from these choices. Economic historians find the same results hold going back to the Industrial Revolution.
Comparable studies of patent systems are discouraging. The evidence certainly is consistent with the notion that patents encourage American pharmaceutical R&D. But otherwise, it is hard to find evidence suggesting patents are a major factor spurring R&D investment, that patents contribute to economic growth, or even that the patent system is a source of great wealth to important inventors and innovators (outside of a few industries like pharmaceuticals).
Troll Tracker, Defamation, and Splitting the Bar
Rick Frenkel – who until recently was known only as the Patent Troll Tracker – has now been sued for defamation by two Eastern District of Texas lawyers: Johnny Ward, Jr. and Eric Albritton. Frenkel recently revealed himself as an IP Director at Cisco Systems. Cisco is also a named defendant in the lawsuit. Ward has represented many plaintiffs in E.D. Texas patent cases and is the son of Federal Judge John Ward of the Eastern District of Texas.
The whole case seemingly stems from a Patently-O posting on October 16, 2007. That post, titled “Patent Office Has Stopped Examining Patents with 25+ Claims,” included a short blurb about a seeming “preemptive strike” by the patent holder ESN:
From Patently-O: In another preemptive strike, on October 15th, ESN sued Cisco for infringing Patent No. 7,283,519. Unfortunately, the patent did not issue until the 16th of October. [Link]
Of course, a patentee has no standing to sue until after the patent issues, even if you know that the patent will issue the next day. The Patently-O post included a link to ESN’s complaint that had an October 15 electronic time-stamp and a civil cover sheet dated October 15. Ward and Albritton were involved in this case, apparently serving as local counsel for the McAndrews firm.
By October 18, the PACER filing information still reflected that the case had been originally filed on the 15th, but the PACER complaint filing date now indicated October 16. (See thumbnail screenshots.) This date became potentially important because, in the meantime, Cisco had filed a declaratory judgment action against ESN in Connecticut. (First-to-file with standing usually wins venue.)
On October 18, the Troll Tracker posted what are seemingly his most pointed comments about the case:
“I got a couple of anonymous emails this morning, pointing out that the docket in ESN v. Cisco . . . had been altered. One email suggested that ESN’s local counsel called the EDTX court clerk and convinced him/her to change the docket to reflect an October 16 filing date, rather than the October 15 filing date. I checked, and sure enough, that’s exactly what happened – the docket was altered to reflect an October 16 filing date and the complaint was altered to change the filing date stamp from October 15 to October 16. Only the EDTX Court Clerk could have made such changes. . . . This is yet another example of the abusive nature of litigating patent cases in the Banana Republic of East Texas.”
In a different post, PTT mentioned that Ward and Albritton represented ESN and that they might not “play well” in a Connecticut court.
Moot Point?: Since then, ESN v. Cisco has been dismissed by agreement of the parties, and the original filing dates have become meaningless and moot. However, Ward and Albritton remembered Frenkel’s comments. Within three days of Frenkel’s “outing” a defamation lawsuit had been filed in Texas state court. At this point, none of the parties are discussing either case in public except that Cisco “continue[s] to have high regard for the judiciary of the Eastern District of Texas and confidence in the integrity of its judges.”
Seeing an opportunity, the Howrey firm has now declared that it “absolutely won’t represent trolls.” Is the patent bar in the midst of a split? [Joe Mullin has the Howrey Advert]
Documents:
Notes:
- Although I have not always agreed with Frenkel’s opinions, he has been a great addition to the public debate over patents and patent reforms. His analysis has always been fresh. On several occasions, I double-checked the factual basis of his reports, and each time found them spot-on. I do hope that he’ll be back with more caustic analysis. I’ve been sitting on this story for a while now. Although not a named party, my name appears in the filings. Craig Anderson (DailyJournal) apparently broke the story in a hardcopy version.
- This case may serve as a caution to Patently-O “anonymous” commentors. A defamed individual may have ways to figure out your identity.
- ESN has explained that it actually filed the complaint at 12:01 am on October 16.
- A couple of days after posting the comment above, PTT deleted the above quoted material and replaced it with the following: “You can’t change history, and it’s outrageous that the Eastern District of Texas may have, wittingly or unwittingly, helped a non-practicing entity to try to manufacture subject matter jurisdiction. Even if this was a “mistake,” which I can’t see how it could be, given that someone emailed me a printout of the docket from Monday showing the case, the proper course of action should be a motion to correct the docket. (n.b.: don’t be surprised if the docket changes back once the higher-ups in the Court get wind of this, making this post completely irrelevant). EDIT: You can’t change history, but you can change a blog entry based on information emailed to you from a helpful reader.” [Mullin]
- Reporter, Joe Mullin has more background — According to his report, Ward filed the complaint in November and had been in the process of unmasking the troll.
- Joe Mullin Reports on the Case
- Legal Blog Watch
- Legal Pad reports on the Case
- Forbes has a quite flippant view
- Zura Reports
- Mark Randazza
- Robert Ambrogi
Patently-O Bits and Bytes No. 20
SurveyMonkey: I am conducting an anonymous FOUR MINUTE readership survey. Please help me to figure out who reads Patently-O and how you read Patently-O. In a future survey, I’ll get your help improving the site. [Please Take the Survey] - 3/11/08 11:00 am: Over 1000 folks have submitted to the survey. Major comments (1) need a better way to forward interesting posts; (2) Need threaded and rated comments. 65% of readers have more than five years of IP law experience.
- Bye Bye Markush: The USPTO has published its “Initial Regulatory Flexibility Analysis” of the proposed changes to Markush Claims. [IRFA][Proposed Rules]. According to the PTO, about 22% of all patent applications contain affected claims, with the highest percentages in Biotech and Chemical cases. The proposed rules would limit Markush alternatives only to those that are not overlapping and that do not make the claim difficult to construe. There is still some time to comment on the changes.
SurveyMonkey: I am conducting an anonymous FOUR MINUTE readership surveyPharma Prosecution: CIP Breaks Priority for Restricted Claims
Pfizer v. Teva (Fed. Cir. 2008)
A family of three Pfizer patents covers aspects of the bestselling drug Celebrex. Seeing some possible holes* in the patents, Teva field an Abbreviated New Drug Application (ANDA) with the FDA with a Paragraph IV certification challenging the patents as invalid and unenforceable.
Continuation-in-Part After Restriction: 35 USC 121 blocks the use of a parent application “as a reference … against a divisional application” if the divisional was the result of a restriction requirement.
One of the Pfizer patents (the ‘068) is a continuation-in-part (CIP) filed after a restriction requirement. On appeal, the CAFC confirmed that Section 121 does not apply to CIPs: “a divisional application contains an identical disclosure to its parent application, but a CIP introduces new matter. . . . [T]he protection afforded by section 121 . . . is limited to divisional applications.”
Thus, the parent application of a CIP will potentially be used for an obviousness-type double patenting rejection. Here, the CAFC held that the CIP claims were indeed obvious when compared to the parent application.
Pfizer’s Strategy: From Dan Feigelson’s comment below:
Pfizer could have cured the problem with the ‘068 patent – even during the trial or the appeal – by filing a terminal disclaimer in that patent. I’m guessing they chose not to b/c they had nothing to lose and everything to gain by having the court adjudicate the question of 35 USC 121 to CIPs.
Best Mode: A patent is invalid when the applicant fails to satisfy the best mode requirement of Section 112. The requirement can be broken down into two elements:
- Whether the applicant subjectively “possessed” a best mode for practicing the invention at the time the application was filed; and, if so,
- Whether the disclosure would objectively enable a PHOSITA to practise the best mode.
Like other invalidity issues, best mode is determined on a claim-by-claim basis. There was no real question here that the COX-specific claims did satisfy the best mode requirement. The appellate panel refused to speculate further on the moot issue of how the best mode requirement is met for claims covering a larger class of compounds.
Note:
- * The post was updated to ensure that Patently-O remains non-controversial (See comments below).
Using Preliminary Injunction Decisions to Seek Immediate Appeal
University of California v. Dakocytomation California (Dako) (Fed. Cir. 2008)
Plaintiffs UC and Abbott are the owner and licensee of a set of patents covering methods of identifying chromosomal abnormalities. On appeal, the parties question whether the lower court improperly denied preliminary relief joined with an interlocutory appeal of summary judgment of non-infringement of some claims.
As in the recent Chamberlain Group decision, the appeal of preliminary relief offered a method for the parties to obtain an interlocutory judgment on claim construction.
District Court Obviousness Trouble: On two separate occasions, the district court denied preliminary relief to the patent holder based on the likely invalidity of the asserted patents. First, the district court held that the patent was likely invalid based because the parent application was invalidating prior art. The court withdrew that analysis after realizing that the asserted patent claimed priority to the filing date of the parent. Next, the district court found the patent likely invalid for obviousness-type double patenting. That reasoning was also withdrawn by the district court after realizing that the patentee’s terminal disclaimer cured the double patenting defect.
Nonetheless, the lower court’s decision in favor of the defendant stuck because the CAFC found that the prosecution history warranted a construction of the claims that was narrow enough to allow Dako to avoid infringement.
Doctrine of Equivalents: In a decision to be contemplated further, the CAFC also decided that a narrowing amendment made during prosecution does not preclude application of the doctrine of equivalents because “the narrowing amendment was only tangential to the accused [] equivalent.”
Judge Prost dissented from the DOE holding and argued that the amendment was absolutely related to the accused equivalent.
Patently-O Bits and Bytes
- March 6, 2008, I will be the keynote speaker at the Missouri Inventor of the Year award program sponsored by the Bar Association of Metro St. Louis (BAMSL). I look forward to seeing my fellow Missourians there. 6:00 PM in Forest Park [LINK]
- April 11–13, 2008, I will be part of the annual Oregon/Washington Patent Conference — This year at the Salishan Resort on the Oregon coast. The speaker list is stacked, including John Duffy on Obviousness, Ken Port on Trademark Extortion, Paul Janicke with a ‘top ten’ list, Lisa Dolak on Inequitable Conduct, and others. I’ll be speaking about forward looking damages and injunctive relief.
Board of Patent Appeals and Interferences (BPAI)
Eight Reasons: I am undergoing a project to better understand the role of the Board of Patent Appeals and Interferences (BPAI). There are several reasons why BPAI is now receiving more limelight than ever. Here are eight such reasons: (1) every proposed patent reform bill includes an expanded role for a patent administrative court, such as the BPAI; (2) as various technology centers make patents more difficult to obtain, more cases are appealed to the administrative court; (3) under the proposed rule changes to limit continuation applications, more cases will likely be appealed; (4) as the value of patent rights continue to grow, important cases will continue to be challenged; (5) the publication of patent applications means that BPAI decisions can now also be immediately published; (6) the current large batch of examiners without much experience requires a serious check on potential abuses of naiveté; (7) under Judge Fleming, the BPAI has begun to open up to more public input and scrutiny; and (8) BPAI decisions are now available via Google search and Westlaw search.
BPAI is a Busy Court: It is important to recognize that the BPAI is deciding 3,500 cases every year. Thousands more are ‘settled’ prior to a BPAI decision either because the patent examiner withdrew a rejection (and likely re-opened prosecution) or the patent applicant filed a continuing application or abandoned the case. The BPAI usually sits in three-member panels, although there are occasionally ‘stacked’ panels for important cases such as Lundgren or Bilski. In my one-year sample, over seventy different Administrative Patent Judges (APJs) authored opinions.
As part of my initial study, this week, I created a database of information on recent BPAI decisions and coded them by issues discussed. My database is derived from decisions available on Westlaw. Consequently, it is missing some decisions. In particular, Westlaw decisions do not include appeals associated with unpublished patent applications.
The table below looks at board decisions for each technology center. The relative numbers are interesting — showing a low affirmance rate for rejection of business method cases (TC 3600) and a high affirmance rate for chemistry cases (TC 1700). The BPAI offers its own calculation of these numbers based on all of its decisions that are roughly parallel. [LINK] 
(Note, the table does not add-up to 100% because I excluded decisions to remand and deny rehearing).
Independence of the BPAI: One serious question about the competence of an internal patent appeal board is whether that body can act independently from the examining corps. Most of the BPAI judges are former examiners and they all work for the PTO Director. Although not conclusive, the above numbers give me some cause for hope that the BPAI does act independently. Over the past several years, many of the art units of TC 3600 has been notoriously difficult on applicants (especially e-commerce and business method groups). The BPAI’s low affirmance of rejections from that technology center may indicate that the Board has taken an independent stand against overzealous rejection practice. There are many other explanations, including some selection bias or difference in quality of attorneys. In addition, there is a skew of judges — i.e., Judges with a technical background related to a particular technology center are more likely to judge cases from that technology center. The BPAI rightfully does this to ensure that every case has at least one administrative patent judge (APJ) who is prepared to understand the technology at issue.
Issues on Appeal: Far and away the most decided issue is that of nonobviousness. Almost 80% of decisions involved a discussion of nonobviousness and 30 U.S.C. 103(a). Unfortunately for patent applicants, nonobviousness decisions were also the most difficult for applicants to win. In my study, decisions involving Section 103(a) were affirmed 63% of the time; decisions involving anticipation under Section 102 were affirmed 55% of the time; and decisions involving Section 112 were affirmed 52% of the time. As more issues are added to an appeal, the chance of affirmance goes down, and the chance of a split (reverse-in-part) decision goes up.
As might be expected, split decisions tend to be longer than others: 4500 words for split decision vs. 3500 words other decisions. If a short decision arrives at your desk, you may assume it is a remand.
Notes:
- BPAI Website
- Patently-O: BPAI Informative Opinions
- Patently-O: How long does a BPAI appeal take?
- Patently-O: BPAI Appeal Statistics
- Patently-O: Pre-Appeal-Brief Conference
Declaratory Judgment Jurisdiction: Later Filed Lawsuit by Patentee Serves as Admission that an Actual Controversy Exists
Micron v. Mosaid (Fed. Cir. 2008)
Of the four major DRAM manufacturers. MOSAID first sued Samsung. On the day that MOSAID settled with Samsung, the patent holder sued Hynix, then sued Infineon and settled. After a series of communications, Micron began to understand MOSAID’s unstated assertion of patent infringement.
Not wanting to be sued next, Micron (the fourth major DRAM manufacturer) filed a declaratory judgment action, asking the N.D. Cal. federal court to find the patent not-infringed. A day later, MOSAID sued in E.D. Tex.
On appeal, the CAFC found that the lower court had improperly dismissed Micron’s DJ action — noting again that a DJ Plaintiff is not required to show any apprehension of suit in order to request declaratory action. Rather, the Supreme Court’s MedImmune test only requires that the controversy be definite, concrete, real, substantial, and have some specific relief that is possible.
Here, it is clear that there is an actual controversy between the parties based on communications between the parties and MOSAID’s actions against all manufacturers who could potentially be accused of infringement. MOSAID’s annual report promising “aggressive” enforcement of its patents also helps Micron’s cause.
What is most interesting here, is the fact that MOSAID’s lawsuit, filed the next day in Texas, also serves as evidence of a controversy. By filing suit, MOSAID admits that there is an actual controversy between the parties.
Indeed, that suit, filed only one day later, was actually pending in Texas at the time that the California district court made its ruling. Thus, the parties in this dispute are really just contesting the location and right to choose the forum for their inevitable suit.
In a foray into policy grounds, Judge Rader’s opinion notes that the “more lenient” MedImmune standards for declaratory judgment jurisdiction will likely lead to “forum-seeking race[s].” Judge Rader suggests that district courts (and litigants) may need to change their focus from jurisdiction (which will now almost always exist) to the convenience factors of 28 USC 1404(a).
Moving to the CAFC role as a district court, the panel then found that the more convenient forum is the Northern District of California. In particular, the court relied on the fact that (1) the California case was first filed and (2) MOSAID’s US home office is in California. The fact that the Eastern District of Texas had previously seen and decided cases involving the identical patents in suit was discounted because the record did not show any ‘ongoing litigation’ in that locale. Because of no ongoing litigation, the CAFC found that the prior litigation “does not suggest a better forum in Texas.”
Applying these factors, the panel unanimously agreed that “it would be an abuse of discretion to transfer the action.”
Reversed and Remanded
Notes
-
In what looks like a subtle jab at the Eastern District of Texas, the appellate court discussed the district as the “well-known patent forum.”
-
Judge Rader took a hard stance against using related litigation in another district as a factor in making a transfer decision. The implication from the opinion is that related litigation should only be considered as a factor if it “ongoing litigation requiring consolidation.”
Claim Construction Reversal Rates III – Additional Measures of Experience and Some Possible Explanations
How do district court judges with varying levels of experience perform on claim construction? Are judges more likely to have their decisions affirmed when they have previous claim construction experience? Previously here and here I provided some background on the large database I compiled and some of the results. A draft of the paper, Practice Makes Perfect? An Empirical Study of Claim Construction Reversal Rates in Patent Cases, can be downloaded here.
Today’s post provides an analysis of the data based upon two measures of district court judge experience: (1) the size of the district court judge’s total patent docket over an eleven year period; and (2) the performance after a first reversal by the Federal Circuit. As for the first measure, I determined the reversal rate (as measured by cases in which an incorrect claim construction required the case to be reversed or vacated) based upon the number of patent lawsuits a district court judge was assigned. Figure X below illustrates the results.
Figure X shows that the claim construction reversal rate varies little with the total number of patent lawsuits handled. The reversal rate was between 26.7% and 34.1%.
I turn now to the second measure of experience. It may be that a district court judge pays little attention to a Federal Circuit opinion if the case was affirmed. In contrast, when the result of a case is affected, the district court judge takes note. A remanded case is often returned to the same district court judge for further proceedings. As these further proceedings are time-consuming, the district court judge likely will remember the opinion remanding a patent lawsuit to his or her docket. Figure N below illustrates the reversal rate on all subsequent claim construction appeals after a particular district court judge has been reversed or vacated at least once due to an erroneous claim construction.
Figure N shows that the first reversal does not have a significant effect on the future performance of the district court judges, with the rate the varying from 25.0% and 44.4% for reversals, and from 31.4% and 44.4% for errors. The percentages in this breakdown vary to a greater degree than the percentages based upon number of prior appeals (reported
yesterday). However, the trend is not linear and the differences among the judges illustrated in Figure N are not statistically significant.
< ?xml:namespace prefix ="" o />
The data illustrated above and described yesterday do not suggest that district court judges learn from having their claim construction rulings appealed. As I explain in more detail in the paper, there are many possible explanations for the surprising results. Three likely explanations are (i) that claim construction is inherently indeterminate; (ii) that district court judges are incapable of or not interested in learning how to perform claim construction; and (iii) that the Federal Circuit decisions do a poor job of teaching district court judges how to construe claims. (Another possible explanation is that limitations in the data, as described in detail in the paper, affect the results.) If the indeterminacy explanation is correct, then it will be difficult to lower the claim construction reversal rate, especially as long as those decisions are reviewed de novo. If the district court judge explanation is correct, then a primary rationale for adopting the Issa patent pilot program is likely faulty. In other words, if district court judges cannot learn how to perform claim construction, creating quasi-specialized patent judges is unlikely to reduce the reversal rate. If the Federal Circuit explanation is correct, then the Federal Circuit must redouble its efforts to create a uniform body of claim construction case law.
For those who are interested, the paper also analyzes the data based upon various other characteristics of the district court judges including age and years of judicial experience.
I’d like to thank Dennis for permitting me to share my results with the readers of Patently-O. I’d like to also thank the readers of Patently-O for their comments.
Patently-O Bits and Bytes No. 18
- Harvard’s Journal of Law & Technology is generally considered on of the top two academic journals focusing on Law & Technology (along with Berkeley’s TLJ). JOLT recently increased its online footprint with the JOLT DIGEST where they regularly cover important new cases.
- Software Patents: Although in Bilski, the CAFC is not likely to consider software patents per se, there is a strong and growing movement to eliminate all software patents. The descriptively named “End Software Patents” group is led by Ben Klemens (Author of Math You Can’t Use) and is continuing to move forward. Interestingly, Microsoft Explorer crashed when I visited their site. [See LegalPad’s article]
- Software Patents: On the more academic side, two serious patent dataheads (Iain Cockburn and Megan MacGarvie) have analyzed economic results of software patents in various industries. Their results: (1) When patents are held by those currently market, it is more difficult for a startup to get financing; and (2) When a startup holds patents, it has a greater chance of obtaining financing. [LINK] DDC Comment: This is, of course, exactly how we would expect the market to react.
- Auctioning the Right to File a Patent Application: Ayres and Parchomovsky have an interesting, if misguided, paper on patent rights. They see a problem with too many patents and suggest a “cap.” The right to file patent applications could be auctioned and then traded or sold in a secondary market. [LINK]
- Kempton Lam has an interesting discussion on patents and other matters with Mike Dillon GC of Sun. [LINK]
Harvard’s Journal of Law & Technology is generally considered on of the top two academic journals focusing on Law & Technology (along with Claim Construction Reversal Rates II – District Court Judge Experience
How do district court judges with varying levels of experience perform on claim construction? Are judges more likely to have their decisions affirmed when they have previous claim construction experience? Yesterday I provided some background on the large database I compiled and some overall results. [LINK] Today’s post provides an analysis of the data based upon the number of previous appeals of claim construction. A draft of the paper, Practice Makes Perfect? An Empirical Study of Claim Construction Reversal Rates in Patent Cases, can be downloaded here.
If district court judges improve after appellate review of claim construction, one would expect that the reversal rate would decrease as the number of appeals increases. More specifically, a district court judge with more prior Federal Circuit feedback should have a lower reversal rate than a district court judge with less experience. Assuming that the judge decided the second case after learning of the decision of the Federal Circuit in the prior case, the second time a particular judge is before the Federal Circuit, he or she should be more likely to have his or her claim construction affirmed. Figure A below illustrates the reversal rates of district court judges broken down by the number of prior claim construction appeals.
The left-most set of bars represents the results from every judge’s first appeal, with the blue bar indicating the percentage of cases that had to be reversed or vacated due to an incorrect claim construction, and the red bar indicating the percentage of cases with any erroneous claim construction. Moving to the right, the pairs of bars represent the results from each judge’s subsequent appeals.
These results suggest that district court judges do not improve as the Federal Circuit reviews their cases. Contrary to conventional wisdom, the reversal rate does not appear to decrease when a district court judge has multiple decisions reviewed by the Federal Circuit on claim construction. In fact, the highest reversal rate is for judges with four prior claim construction appeals. Other than judges who have been appealed exactly four times, the range is very narrow, between 26.8% and 30.5% for reversals and 31.0% and 40.4% for errors. Thus, there does not appear to be significant expertise gained by district court judges via direct Federal Circuit review that causes the claim construction reversal rate to decrease. (As discussed in more detail in the paper, the study is subject to several limitations inherent in studying appellate cases, including for example, a potential selection bias and a potential distortion if the cases are not distributed evenly across the district court judges. Ideally, for research purposes, cases would be randomly assigned to a judicial district (i.e., no forum shopping), and a random subset of those cases would be appealed.)
Up next: Reversal rates based performance by district court judges after a first reversal by the Federal Circuit.
I welcome comments from the readers of Patently-O.
Claim Construction Reversal Rates I – Overall Reversal Rates
How do district court judges with varying levels of experience perform on claim construction? To study that question, I compiled a large database that includes every single post Markman Federal Circuit decision involving claim construction. Others have studied this issue from the perspective of the Federal Circuit — i.e., what is the overall reversal rate. However, until now, no one has analyzed how district court judges perform based upon experience. My findings do not reveal any correlation between various measures of experiences and the likelihood of being affirmed. There will be several posts on the study and results. Today, I will provide some background on the dataset and a bit on the reversal rate. A draft of the paper, Practice Makes Perfect? An Empirical Study of Claim Construction Reversal Rates in Patent Cases, can be downloaded here.
The Dataset. First, a few brief words about the dataset. The dataset includes all decisions in which the parties disputed an issue of the district court’s claim construction. It includes all decisions in an eleven year period, from April 23, 1996 (the date of the Supreme Court decision in Markman) until June 30, 2007. Those decisions – 952 of them – are all of the published and unpublished opinions, as well as all of the summary affirmances under Federal Circuit Rule 36.
Overall Reversal Rates. For the entire eleven year period, 38.2% of cases had at least one term wrongly construed. Moreover, 30.0% of the cases had to be reversed or vacated because of an erroneous claim construction. These results are largely consistent with those of an earlier study (by then-professor and now-Federal Circuit judge Kimberly Moore).
Reversal Rates by Judicial District. In later posts, I will present the reversal rates based upon the experience of the district court judges. Today’s post presents the reversal rates aggregated by judicial district. Table II below identifies the number of Federal Circuit appeals from the most active judicial districts in terms of claim construction appellate decisions from April 1996 until June 2007. It also provides the percentage of cases that were vacated or reversed due to an erroneous claim construction. In the last column, I have provided the total number of patent lawsuits filed in those judicial districts, and in parenthesis, the rank of the judicial district if measured by the total number of patent lawsuits filed.
|
Table II: Most Active Judicial Districts on Appellate Claim Construction Experience: 1996-2007 |
||||
|
Rank |
Judicial District |
# of Federal Circuit Claim Construction Appeals (1996-2007) |
% of Claim Construction Appeals Reversed or Vacated because of Claim Construction Error |
# of Patent Lawsuits Filed (1995-2005) |
|
1 |
N.D. Cal. |
84 |
28.6% |
2613 (1) |
|
2 |
C.D. Cal. |
69 |
43.5% |
2260 (2) |
|
3 |
N.D. Ill. |
65 |
26.2% |
1509 (3) |
|
4 |
D. Del. |
54 |
22.2% |
1112 (5) |
|
5 |
S.D.N.Y. |
45 |
28.9% |
1184 (4) |
|
6 |
D. Mass. |
42 |
26.2% |
782 (7) |
|
7 |
D. Minn. |
33 |
36.4% |
743 (8) |
|
8 |
E.D. Mich. |
29 |
31.0% |
669 (9) |
|
9 |
D.N.J. |
28 |
32.1% |
952 (6) |
|
10 |
E.D. Va. |
27 |
22.2% |
555 (14) |
|
11 |
N.D. Tex. |
21 |
42.9% |
591 (11) |
|
11 |
S.D. Tex. |
21 |
23.8% |
466 (19) |
|
13 |
W.D. Wisc. |
19 |
21.1% |
232 (36) |
|
14 |
W.D. Wash. |
18 |
38.9% |
475 (17) |
|
14 |
D. Col. |
18 |
27.8% |
407 (23) |
As is evident from the Table above, several of the busiest districts have reversal rates above the average rate of thirty percent. For example, the second busiest district in the country, as measured by either number of appeals or number of patent lawsuits handled, the Central District of California, has the highest reversal rate of claim construction. (Some may wonder why the Eastern District of Texas is not included in Table II. The trend of filing cases in the Eastern District of Texas began fairly recently, and as a result, many of the cases from the Eastern District of Texas have not had time to proceed through appeal. Consequently, the Eastern District of Texas is not one of the top fifteen districts in terms of appellate claim construction experience during the period 1996-2007.)
Up next: Reversal rates based on the number of claim construction cases previously appealed (i.e., the first case appealed from a particular district court judge, the second case appealed from a district court judge, etc.)
Comments are welcome!
Reviving Unintentionally Abandoned Patent Applications
Aristocrat Technologies v. IGT (pending before the CAFC).
The pending Aristocrat case is interesting for several reasons: (1) it involves the greatest fear of many practicing patent prosecutors — missing a deadline; (2) it will decide the scope of PTO authority in advance of Tafas v. Dudas; and (3) pending legislation would expand PTO authority to cover some of the issues here.
Background: The Patent Act discusses revival for unintentional abandonment due to failure to submit proper application fees (35 USC 111) and failure to rescind a nonpublication request (35 USC 122). In other cases, however, the Patent Act only explicitly allows revival of unavoidably abandoned cases — a much higher standard. These include Abandonment due to failure to respond to a PTO notice (35 USC 133); failure to pay the issue fee (35 USC 151); and failure to comply with national stage filing requirements (35 USC 371). The fee schedule (35 USC 41) further provides for a specific fee for revival of unintentionally abandoned applications as an explicit alternative to revival of unavoidably abandoned applications.
Aristocrat’s patent application was originally filed in Australia, but the US national stage filing was one day late. Per its usual operation, the PTO allowed Aristocrat to revive the application based on the unintentional standard. The district court (J. Jenkins N.D. Cal.) found that the PTO lacked authority to revive the application.
Revival is Common: The USPTO estimates that it has revived approximately 73,000 patent applications since 1982. If the lower court’s decision is upheld, most of the related patents would be put in jeopardy. In addition, many of the revived applications have spawned multiple family members – potentially leading to further invalidation.
In a brief supporting the appeal, the Patent argues that Section 41(a)(7) of the Patent Act authorizes the Office to revive unintentionally abandoned patent applications – regardless of the form of abandonment. As a backup, the Office demands Chevron deference:
“To the extent that any ambiguities or gaps exist between § 41(a)(7) and the other provisions of Title 35, the USPTO’s reasonable and contemporaneous interpretations of its governing statute is entitled to Chevron deference. ”
Beyond Chevron, the Patent Office argues that it is entitled to “great deference” because it has been applying its interpretation for so many years. See US v. Clark, 454 U.S. 555 (1982). In amicus, the Neurotechnology Industry Organization also argues that 35 U.S.C. § 2(b)(2)(A) requires that the PTO be given great deference.
Notes:
-
Briefs & Documents:
- PTO Amicus Brief
- NIO Amicus Brief
- Aristocrat Merits Brief [Patently-O Discussion of Aristocrat Appeal Brief]
- IGT Merits Brief
- District Court Decision [Patently-O Discussion of Original District Court Decision]
Statutory provisions for revival due to unintentional abandonment:
- 35 USC 111: Failure to submit fee and oath of a patent application;
- 35 USC 41: Fee schedule for revival of unintentionally abandoned applications. This section provides a specific fee for revival of unintentionally abandoned applications as an explicit alternative to revival of unavoidably abandoned applications; and
- 35 USC 122: Abandonment due to failure to rescind nonpublication request.
Statutory provisions that only refer to revival due to unavoidable abandonment:
- 35 USC 133: Abandonment due to failure to respond to PTO notice (Normally a 6–month deadline, but may be less);
- 35 USC 151: Revival for failure to pay issue fee; and
- 35 USC 371: Failure to comply with national stage filing requirements.
PTO Rules:
- 37 C.F.R. 1.137(b) provide for revival of applications based on an applicant’s unintentional delay in replying. Under the rule, abandoned applications, reexamination prosecution terminated under §§ 1.550(d) or 1.957(b) or limited under § 1.957(c), or lapsed patents may all be revived under this standard. The PTO rules are, however, subordinate to statutes.
Caselaw:
- Lumenyte v. Cable Lite (Fed. Cir. 1996): Patentee revived case as unintentionally abandoned. The CAFC affirmed the ruling without questioning whether such revival is ever permissible.
- Morganroth v. Quigg (Fed. Cir. 1989): Affirming that the Director does not have authority to revive an unintentionally abandoned patent application “that resulted from the applicant’s failure to appeal from a final district court judgment that upheld the Commissioner’s prior refusal to issue a patent.”
- New York Univ. v. Autodesk, Inc., 2007 U.S. Dist. LEXIS 50832 (SDNY 2007): The court found that the delay in reviving was not even unintentional. The court explicitly did not reach the question of whether revival for unintentional abandonment due to failure to respond to an office action is even permitted. (Remember, 35 USC 133 only allows for revival of unavoidably abandoned applications.)
- Field Hybrids v. Toyota (D.Minn 2005).
De-Stabilizing Preliminary Injunctions through De Novo Review of Claim Construction
Chamberlain Group v. Lear Corp. (Fed. Cir. 2008)
Chamberlain’s patent is directed to improved security for remote garage door controls. After an initial claim construction, the N.D. Ill. court granted summary judgment for Chamberlain and issued a preliminary injunction.
A major point of contention was the claimed “binary code” limitation. In a portion of its system, Lear used a three-symbol (trinary) code. Of course the underlying processor is binary and thus encodes the trinary code as binary numbers. In its preliminary injunction decision, the lower court held that Lear likely infringed because of the trinary coded binary numbers.
De Novo Review: On appeal, the CAFC reversed, but only after noting that the “district court commendably strove to follow this court’s rules for claim construction.” In particular, the CAFC found in its de novo review that the specification requires a finding that a trinary code is not a binary code even though it is stored in binary format.
De Novo Preliminary Injunction: A preliminary injunction requires a showing that the patentee has a strong likelihood of success on the merits of the case. Because a showing of success on the merits depends upon the claim construction, the appellate panel held that reversal on claim construction will almost always lead to vacatur of a preliminary injunction. I.e., “A correct claim construction is almost always a prerequisite for imposition of a preliminary injunction.”
Preliminary Injunction Vacated.
Notes:
- This decision is important because it shows how de novo review of claim construction can de-stable holdings that are otherwise reviewed only for clear error.
- Background on the Litigation
Patently-O Bits and Bytes No. 17
- Increasing Complexity: The House Judiciary Subcommittee on IP is holding its PTO oversight hearing on Feb 27 at 1:30 pm. These graphs, originally from Patently-O, will be used by POPA when demanding enhanced examiner pay.
- Judicial Conference: The CAFC’s Judicial Conference is scheduled for May 15, 2008 in DC at the Grand Hyatt. INFO.
- Seagate: The Supreme Court has declined to grant certiorari in the Seagate decision. That decision has eliminated much of the need for a formal opinion of counsel prepared for litigation. Expect a study next summer showing treble damages in severe decline.
- Supreme Court Quanta: Quanta is awaiting decision. This decision may follow antitrust regulation and inject more economic analysis into decisions of whether particular license agreements are acceptable.
- Supreme Court Biomedical v. California: The U.S. Chamber of Commerce has filed an amicus brief supporting Biomedical Devices in its attempt to strip California of its immunity from patent infringement litigation. For an unknown reason, the IP Bar associations have refused to provide any input on this case.
- EPC 2000: The European Patent Convention has received its first major revision in 30 years. Nicholas Fox provides an excellent summary in book form for £25. Hat tip to Bill Heinze.
Patent Troll Tracker, Trade Secrets, and other Bits, No. 16
- Troll Tracker Revealed: After learning that Ray Niro paid $10,000+ for information leading to his actual identity, the Patent Troll Tracker has revealed his identity — Cisco IP Director Rick Frenkel [LINK]
- Trade Secret: Although perhaps a novel theory, I would argue that an anonymous blogger’s identity is a protectable trade secret. Improper means used to reveal the trade secret can create liability.
-
Quote of the day (from 1895):
“It should also be borne in mind that no property is so uncertain as “patent rights”; no property more speculative in character or held by a more precarious tenure. An applicant who goes into the patent office with claims expanded to correspond with his unbounded faith in the invention, may emerge therefrom with a shriveled parchment which protects only that which any ingenious infringer can evade. Even this may be taken from him by the courts. Indeed, it is only after a patentee has passed successfully the ordeal of judicial interpretation that he can speak with any real certainty as to the scope and character of his invention. Especially is this true of patents on spring-tooth harrows.” [1]
Troll Tracker Revealed: After learning that Ray Niro paid $10,000+ for information leading to his actual identity, the Patent Troll Tracker has revealed his identity — Cisco IP Director Rick Frenkel [
[1] E. Bement & Sons v. La Dow (C.C.) 66 Fed. 185 (Circuit Ct. N.Y. 1895)
Warning: Do Not Rely on the Experimental Use Exception to 102(b)
Atlanta Attachment v. Leggett & Platt (Fed. Cir. 2008)
The CAFC once again reaffirmed patent law’s parallel to Chicago democracy: File early and often.
The patentee, Atlanta Attachment, won a summary judgment on issues of infringement and validity. Missouri based defendant Leggett & Platt appealed — arguing that the patented sewing machine had been “on sale” for more than one year before Atlanta Attachment filed its patent application.
The on sale bar of 102(b) invalidates an issued patent that was on sale prior to the one-year critical date. In Pfaff, the Supreme Court defined “on sale” as requiring an embodiment of the claimed invention being subject to a commercial offer for sale and being ready for patenting at the time of the sale. The on sale bar can be negated in certain cases where experimentation was still occurring.
Facts: Atlanta Attachment was working with Sealy to develop a special ruffle producing sewing machine. Over the course of a few years, several prototypes were sent to Sealy for experimentation. Each one was returned to the plaintiff for improvements. The third prototype included all of the claimed elements. Atlanta Attachment invoiced Sealy and was paid for the prototype. Instead of delivering the prototype, however, Sealy merely tested the prototype at the patentee’s facility and was later refunded its purchase price. At that time. Sealy made further suggestions regarding changes. In addition, Atlanta Attachment had offered to sell 50 production units prior to the critical date.
Holding:
- On Sale: Although never actually delivered, prototype was sold an invoice was sent and paid. Additionally, the offer to sell the 50 production units constitutes an offer to sell. Here, the invention was considered on sale because the asserted claim was broadly written – even though the prototype was not the eventual preferred embodiment.
- Experimental Use: First, the CAFC held that the experimental use exception does not apply after a commercial offer for sale has taken place. Additionally, Atlanta Attachment cannot claim the experimental use exception for Sealy’s tests since “experimentation conducted to determine whether the invention would suit a particular customer’s purposes does not fall within the experimental use exception” and because Atlanta Attachment did not control the testing. This is a subtle point – the patentee apparently retained control over the device by keeping it in its facility, but did not control the testing of the device.
- Ready for Patenting: A prototype that is reduced to practice and works for its intended purpose is ready for patenting. The “intended purpose” here is shaped by the patent claim. And, later refinement of a device does not mean that it wasn’t ready for patenting.
Thus the claim is invalid under the on sale bar of 35 U.S.C. §102(b). Additionally, the CAFC asked the court to reexamine whether the patentee’s failure to submit information about the prototypes would be sufficient to lead to a finding of unenforceability due to inequitable conduct.
Concurrence: Judges Prost and Dyk joined the majority opinion, but also penned a separate concurring opinion begging for en banc review of the “confusing” jurisprudence on the experimental use exception to 102(b). “Without considering these issues in a comprehensive manner in future cases, we will never escape from the confused status of our current caselaw.” They specifically believe that this and other CAFC decisions are wrongly decided because of the absolute disregard of any experimental use after an invention is reduced to practice.
Patently-O Bits and Bytes No. 15: Law Professor Edition
-
Rankings:
- Professor Jay Brown recently ranked the most cited law professor blogs. (i.e., law review citation count). Patently-O ranks No. 6 with 73 citations since 2005. [LINK]
- Professor Paul Caron ranked the most frequently visited law professor blogs and ranked Patently-O as No. 5 or 6 in the world. [LINK]
- The site Volokh Conspiracy (a group of 20 law professors) is the only site ahead of Patently-O on both lists.
- Other IP related sites making the lists: LessigBlog (Lessig is now running for Congress…) and Goldman’s great blog.
- I ran a search this morning to compare Patently-O cites with Harvard’s excellent “Journal of Law and Technology.” Over the two-year period, Harvard’s JOLT certainly has been cited more times than Patently-O. However, to make things fair, I limited the search to articles published by Harvard JOLT to 2005 – 2007. Comparing new articles to new articles, the Crimson team barely passed Patently-O: 78 – 73… (Stretching back to Mid-2004, Harvard jumps on-top with 130 cites)
- IP & Start-ups: Berkeley’s Center for Law and Technology (BCLT) is hosting what will likely be the best conference of the year focusing on Intellectual Property’s interplay with Entrepreneurship: http://www.law.Berkeley.edu/institutes/bclt/entrepreneurship/about.html. They have an amazing lineup of top law and economic professors; lawyers; and business leaders. Registration is pretty cheap, even for the food-chain leaders Law Firm folks ($350). Academics $100; Entrepreneurs $75; Students $25. March 7–8 at the newly christened UC Berkeley Law School. (Formerly known as Boalt Hall).
- Houston IP Law: One of Berkeley’s top professors — Rob Merges — will speak at the annual Baker Botts Lecture at UH Law Center April 1 at 5:30 pm.
- F. Scott Keiff: One of the few law professors who remains staunchly in favor of strong patents (and staunchly conservative) has been appointed to the PPAC to advise the PTO director on patent policy. [LINK]
- Missouri Inventor of the Year: I’ll be giving the keynote at address at the Missouri Inventor of the Year award March 6 in Forest Park. [LINK]
I was hoping to see several Patent Law folks today in at Drake. Sorry that I could not make it.
Patently-O Bits and Bytes No. 14
- Design Patent Law: The House Subcommittee on IP held hearings on amendments to the design patent laws. The two primary specific issues on the table are (1) whether to eliminate design patents covering replacement automobile parts and (2) whether to extend IP protection to fashion designs. [LINK]. The IP group will hold PTO oversight hearings again next week.
- Replacement Parts: IPO recently voted to oppose any legislative exemption for particular products or technologies from the IP laws: “In particular, IPO opposes legislation that would exempt replacement automobile parts from infringing U.S. design patents.”
- LexisNexis Patent Center: lexisnexis is now in the blog world with their “Patent Center.”
- Missing Dates: The PTO revived Aristocrat’s national stage application even though filed a day late. During litigation, however, the district court found the revival an improper extension of the law. [Link] The patentee appealed to the CAFC with the question of “Whether a patent application abandoned for failure to comply with deadlines set forth in 35 U.S.C. §§ 371(d) and 133 may be revived based on mere ‘unintentional’ delay where those provisions provide for revival only for “unavoidable” delay.” Now, IGT responds.
- New Administrative Judge: According to Hal Wegner, the PTO has appointed Professor Lorelei Ritchie de Larena to the position of administrative judge on the TTAB BPAI. Judge Ritchie has been working in tech-transfer for several years while teaching at the same time. As the rate of appeals continues to rise, the PTO will need to continue to hire high quality judges. At the same time, these judges will begin to feel an even stronger pull to jump ship to law firms looking for inside experience and connections. [Related note: can someone send me a list of BPAI Judges? dcrouch@patentlyo.com]
Missing Dates: The PTO revived Aristocrat’s national stage application even though filed a day late. During litigation, however, the district court found the revival an improper extension of the law. [