- 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. [CAFC: As a Matter of Law, Preliminary Injunction Defeated by “Casting Doubt” on Patent’s Validity
Erico Int’l v. Vutec & Doc’s Marketing, 2007-1168 (Fed. Cir. 2008)
Claim 17 of Erico’s patent covers a method of supporting communication cables with saddle-hooks so that the sag distance (B) is less than 30 cm. During an earlier reexamination, the PTO cancelled several claims, but the validity of claim 17 was reaffirmed. Doc’s copied Erico’s saddle-hook design (called j-hooks) and follows the patented method in its daily business. Litigation ensued.
During litigation, the district court granted a preliminary injunction against Doc’s — finding that Erico had sufficiently satisfied the traditional four factor test of equitable preliminary relief: (1) patentee’s likely success on the merits; (2) irreparable harm associated with continued infringement; (3) a balance of hardships favoring the patentee; and (4) the public interest favoring preliminary relief.
Preliminary Injunction: For preliminary relief, the first factor is critical. Without showing probable success, a plaintiff has no chance of succeeding on the motion. More to the point, this usually requires proof of infringement of a valid enforceable claim. Here, the lower court considered issues of novelty, obviousness, and inequitable conduct in determining that the asserted claim was likely valid and enforceable.
Substantial Question of Validity: On appeal, the CAFC vacated the PI, finding that the defendant had raised sufficiently “substantial question of invalidity to show that the claims at issue are vulnerable.” According to the divided appellate panel (Judges Rader & Dyk), the threshold substantial question is met when the evidence “cast[s] doubt on the validity” of the asserted claims.
Here, the panel was able to find doubt because of a combination of prior art and their “reasonableness” of combination.
“It is reasonable to see that downwardly flared flanges coupled with the EIA spacing requirements could implicitly motivate a person of ordinary skill to use J-Hooks with the EIA spacing to achieve cable sag of no more than about 30 centimeters. See KSR”
Looking next at secondary considerations of validity, the majority panel found that such considerations cannot overcome the reasonable inference found above.
“Thus, Doc’s invalidity challenge based on obviousness cast enough doubt on the validity of Claim 17 to negate likelihood of success on the merits as to infringement of a valid patent. At this point, of course, Doc’s has only cast doubt on the validity of the ‘994 patent.”
Abuse of Discretion: A preliminary injunction is overturned only for clear error or mistake of law. Consequently, the majority’s holding is not simply a difference of opinion — rather it is a finding that the lower court committed an abuse of discretion by weighing the validity issues in the patentee’s favor.
Preliminary injunctions were difficult to obtain even before the Supreme Court’s decision in EBay and KSR. This decision simply moves the ratchet another half turn.
In Dissent, Judge Newman makes three primary arguments: (1) that preliminary injunctions should be easier to obtain because they preserve the status quo; (2) that the first factor of equitable relief should not determine the outcome (all four factors must be considered); and (3) that, even if the first factor is most important, a defendant simply ‘casting doubt’ on a patent’s validity is not sufficient. Rather, the inquiry should focus on which party is more likely to actually succeed on the merits.
Notes:
- Board Decision: Ex parte Raimond Scott Laughlin, Appeal No. 2002-0244 (heard on May 14, 2002).
- Asserted claim of U.S. Patent No 5,740,994: “17. A method of supporting a run of a bundle of low voltage communication cable, comprising the steps of providing spaced supports, each comprised of a curved saddle having smooth down-turned obtuse angle lateral edges, suspending the run from saddle to saddle, and spacing the saddles along the run so that the run sags between saddles no more than about 30 cm below the saddles.”
Patently-O Bits and Bytes No. 13
- The Budgetary Cost of Patent Reform: The CBO has released its cost estimates for the Patent Reform Act of 2007. A net loss of $1.4 Billion. Almost all of the additional cost is easily classified as “pork.” The vast majority of the additional money would be to pay for takings claims created by the neutering of DataTreasury’s Check21 patents.
- Angiomax: The other major pork goes to “The Medicines Co.” to extend the life of its patents covering Angiomax. The company was one day late in filing for its term extension based on FDA delay. (The extension would be almost five years). The Bill would give PTO Director Dudas the power to excuse the filing delay and thus allow the extension. “[W]e expect that [the] PTO would grant nearly five years of additional patent protection to that product. See also Baristas “Dog Ate My Homework Act.”
- Metabolite: Those wanting a head-start on on Bilski briefing should consider the filings from Metabolite v. LabCorp. [Link] [Link] [Link]
- Patent Reform: Chief Judge Paul Michel on Patent Reform (Transcript of Speech to Meeting of Chief IP Counsel for Major Corporations).
- Additional Design Patent Brief: Ed Manzo noted that I missed one of the Egyptian Goddess briefs. Elite Group argues that broadly interpreted design patents would lead to costly design-around without any associated consumer benefit. [Link]
Bilski: Full CAFC to Reexamine the Scope of Subject Matter Patentability
In re Bilski (Fed. Cir. 2008 – en Banc)
Taking sua sponte action, the Federal Circuit has ordered an en banc rehearing of the In re Bilski case – asking the following five questions:
- Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. § 101?
- What standard should govern in determining whether a process is patent-eligible subject matter under section 101?
- Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?
- Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101?
- Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?
The Patent Application and Patent Applicants: Bilski involves claims to a method of managing the risk of bad weather through commodities trading. The claims are not tied to any particular form of technology — thus, they do not require a computer or particular storage media. In some quarters, this process lacking a technological tie-in is termed a “mental method.”
Bernie Bilski apparently was the CEO and owner of a small company called WeatherWise. At least some WeatherWise patents were purchased in 2007 by the “Pittsburgh Technology Licensing Corp” According to court documents, PTL is a wholly owned subsidiary of WeatherWise holdings. (See WeatherWise v. WeatherBill).
Although we don’t have the text of the application yet, this case looks problematic because of serious obviousness problems and lack of specificity in the claims. Thus, the court will have no sympathy for Bilski — making this the perfect test case for someone wanting to strink Section 101 coverage and eliminate business method patents. Representative Claim 1 reads as follows:
1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:< ?xml:namespace prefix ="" o />
(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
(b) identifying market participants for said commodity having a counter-risk position to said consumers; and
(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.
Procedure: This cases arises out of a rejection from the Patent Board of Appeals (BPAI). In its opinion, the Board asked for assistance from the CAFC in addressing Subject Matter Patentability of non-technological method claims: “The Federal Circuit cannot address rejections that it does not see. . . . It would be helpful if the Federal Circuit would address this question directly.” BPAI Decision. Bilski then apealed directly from the BPAI to the CAFC and oral arguments were held in October 2007. Rather than issuing an opinion, the court convened and voted to rehear the case en banc.
Timing and Amicus: The parties (Bilski & PTO) have already fully briefed the case. Thus, the CAFC is only allowing one supplimental brief each to be filed simultaneously on March 6, 2008. Amicus briefs discussing the five questions are requested by the court and may be filed without specific permission. Amicus briefs will be due 30 days later and must otherwise comply with FRAP and FCR 29. (Thanks Joe: Amicus should be due April 5th, but because that falls on a Saturday, they will be due April 7). The hearing is scheduled for May 8 at 2:00 pm.
Meaningful Patent Reform
By Senators Patrick Leahy and Orrin Hatch, Full editorial in the Washington Times 2/15/08
“. . . For several years, modernizing the patent system has been at the front and center of our mutual legislative agenda. Meaningful patent reform is crucial to America’s ability to maintain its competitive edge in the world, and now — after years of careful spadework — Congress has the chance to move forward.
The Patent Reform Act of 2007 (S.1145) is the product of years of deliberation and study within Congress and by many esteemed agencies and institutions, including dozens of hearings with the testimony of scores of witnesses, extensive and substantive mark-up sessions, and hundreds of meetings and discussions with countless stakeholders representing a sweeping array of interests in the patent system.
. . . the current law was last thoroughly updated more than 50 years ago, and much has changed since then. Think about this: The last time the patent system was significantly changed, the structure of DNA had not been discovered; gasoline was around 27 cents a gallon; and we had not yet sent a man to the moon. Our economy is no longer defined by assembly lines and brick-and-mortar production; we are living in the Information Age, and the products and processes that are being patented are changing as quickly as the times themselves. Unfortunately, Congress has neglected to modernize our patent system to keep pace with the boom in American innovation. Recent Supreme Court decisions have nudged things in the right direction, reflecting the growing sense that questionable patents are too easy to get and too hard to challenge. But the Court is constrained in its decisions by the laws on the books. It is time to dust off and refresh our patent laws.
If we are to maintain our position at the forefront of the global economy and continue to lead the world in innovation and production, we need an efficient and streamlined patent system that issues high-quality patents while limiting wheel spinning and counterproductive litigation. Our bipartisan reform bill is a solid step toward achieving these goals.
In 2003, the Federal Trade Commission reported that patents of questionable validity were inhibiting innovation and competition, harming consumers and businesses and our overall economy. The FTC further found that relying on court battles to challenge questionable patents was unduly costly and cumbersome. To address this problem, our bill would set up an administrative, post-grant review procedure. This would not only cut down on legal costs for the patent holder and the patent challenger, but it would also leave the issue to those best equipped to review patents — the experts at the U.S. Patent and Trademark Office.
We must also restore fairness to the rules that govern how courts determine damages when a patent is infringed. The threat of excessive damages is ruthlessly curtailing progress, and the loss of jobs and innovation is directly linked to litigation costs. . . .The goal of our reforms is to ensure that patent holders will be able to obtain appropriate compensation in case of infringement.
Under today’s rules … [p]laintiffs can “forum shop,” filing their lawsuits in jurisdictions that have virtually no relevance to the underlying case, but everything to do with where the plaintiff stands the best chance of winning the case. Our bill would prevent this gaming of the system….
Another provision to clarify and limit use of the so-called inequitable conduct defense would also bring balance to the patent system. …
…
As legislators, we know we are headed in the right direction when everyone is complaining that the entire bill is not going their way. We see this as a necessary, albeit somewhat difficult, part of the legislative process. But we welcome it. But at the end of day, we are confident that we will resolve the remaining issues in ways that should make everyone comfortable and will ensure final passage.
The Senate has a tremendous and historic opportunity — and a constitutional responsibility — to further strengthen our nation’s competitiveness through meaningful patent reform. Now is the time.
Patently-O Bits and Bytes No. 12
- Anti-DataTreasury Provision: Although DataTreasury is not named in the Patent Reform Act of 2007, it is clear that Section 14 of the Senate Bill is primarily directed at that single patent holder. The bill would excuse “financial institutions” from charges that their check imaging methods constitute patent infringement. DataTreasury has sued a number of banks, including City National, Wells Fargo, BOA, US Bank, Wachovia, Suntrust, BB&T, Bancorp South, Compass, Frost National, First Tennessee, HSBC, Harris, National City, Zions First National Bank, Bank of NY, Bank of TOkyo, Comerica, Deutsche Bank, First Citizens, Keycorp, LaSalle, M&T, PNC, and others. The cases are at least partially stayed pending reexamination of a DataTreasury patent. The core issue here is that DataTreasury claims that its patent is necessarily infringed when a bank follows the Federal “Check 21” procedure for electronically processing checks. See patents 5,910,988 and 6,032,137. [Washington Post Fills in Details].
- Takings: The DataTreasury bill raises takings concerns, and it appears that the Government agrees. According to reports, the Congressional Budget Office has calculated that the “taking” of DataTreasury’s right to sue is worth about one billion dollars.
- What happens when patent attorneys blog: I left my firm to teach; Michael Smith left his firm and joined another [now partner at Siebman Reynolds]; so did Peter Zura [Now partner at KattenMuchin]; so did Matt Buchanan [now of counsel at Dunlap Codding]; David Donoghue joined DLA Piper; Bill Heinze joined GE; John Welch joined Lowrie Lando; and the Troll Tracker is still in hiding. (Note — Nipper, Sorocco, Albainy-Jenei, and others are still rock-solid in their firms).
- Valentines Day: Americans spend an average of $100+ for Valentines day — this year you might consider giving it away.
- Delay in the Senate: IPO reports a strong likelihood that no action will take place in the Senate until April 2008. In the meantime, the Reform Act is in secret revision in Senator Leahy’s office.
Anti-DataTreasury Provision: Although DataTreasury is not named in the
IR v. IXYS: Appellate Jurisdiction and Narrowing/Broadening Amendments
International Rectifier (IR) v. IXYS (Fed. Cir. 2008)
IR’s patents cover particular layouts for MOSFET semiconductor chips. After an earlier appeal IXYS was found to infringe under the Doctrine of Equivalents. (Only one of the three patents were held infringed)
Jurisdiction on Appeal: IXYS did not file a notice of appeal within thirty days as required by FRAP 4(a). However, the defendant did file a motion with the district court to stay the permanent injunction pending appeal. Because the motion gave notice of the appeal to both IR and the district court, the CAFC ruled that it satisfied the requirements of Rule 4(a). (The stay was subsequently denied by both the district court and the CAFC motions panel).
Narrowed Amendment: On appeal IXYS argued that a narrowing amendment made by IR during prosecution of the patent forecloses any reliance on the doctrine of equivalents. The claim had been substantially rewritten and was undeniably broader in certain areas. However, the amendments also added an “adjoining” limitation to overcome a Section 112 rejection. Holding: A claim that is both narrowed and broadened is still narrowed — Thus Festo estoppel can apply.
Tangential Narrowing Amendment: A narrowing amendment does not limit DOE coverage if the amendment was made for a reason that is only tangentially related to the claimed equivalent. Here, the amendment was not tangential because the “adjoining” region limitation was clearly related to the asserted charges against products with only non-adjoining regions. The court rejected (as irrelevant) IR’s argument that the amendment was not necessary for patentability: IR’s decision to claim that structure using the limiting term “adjoining, whether or not required to overcome the rejection, cannot be described as only tangentially related to the equivalency of a structure with non-adjoining regions. [This paragraph updated 2/15/08]
Finding of infringement reversed and remanded.
Issues With Employee Assignment Agreements
DDB Tech v. MLB Advanced Media (Fed. Cir. 2008)
Mr. Barstow (head of DDB) was still an employee of Schlumberger when he invented his system for simulating a baseball game. As part of his employment agreement, Barstow assigned all rights to inventions relating to or resulting from Schlumberger business. At the time, Schlumberger’s GC for software agreed that Barstow’s baseball software was his own personal work and not Schlumberger related. After DDB filed suit, MLB bought “any interest that Schlumberger had in the patents” along with a retroactive license.
The district court (Judge Yeakel) dismissed the case for lack of subject matter jurisdiction — finding that the baseball software invention fell within the employment agreement and that MLB is now the patent owner. DDB appeals.
Employee Assignment: Under the Texas law, the employment agreement creates an instant assignment as soon as a qualifying invention is created. Thus, if the patents “qualify” as within the employment agreement, then they were owned by employer regardless of any seeming waiver, estoppel, or statute of limitations. Those defenses could prevent enforcement of an agreement to assign, but do not negate an already consummated assignment.
The CAFC ordered the lower court to reopen discovery so that the parties could collect evidence on whether the baseball software invention fell within the scope of the employment agreement.
Notes:
- Employees beware: Your employer likely owns your future inventions! Best practice for garage inventors is to obtain a written exception to the policy prior to inventing. Otherwise, you should obtain an assignment from the company. Of course, this depends upon state law and whether the agreement includes the magic language: “[The employee] does hereby grant and assign.” If Barstow had been employed at the University of Missouri, he might have won because the employment agreement only requires the employee “upon request [to] assign … all domestic and foreign rights.” For prolific home inventors, this difference may be enough to warrant a job change.
- Loyalty?: Not to pick on Schlumberger, but isn’t it odd that they chose to do business with MLB over their own former employee…
- Patently-O Discussion of district court case.
- This case was handled by my former firm, MBHB LLP. However, I was in Boston by the time that they took over the litigation.
- Recordation of Assignment: A reader suggested that the patent recordation statute (35 U.S.C. 261) be considered. If you remember 1L property, the patent recordation statute is a notice statute with a three-month grace period. Thus, a subsequent assignee of a patent will hold title over a prior assignee if two conditions are met: (1) the prior assignee did not record in time (which would give constructive notice); and (2) the subsequent assignee was “without notice” of the prior assignment. The timing is no question here — Schlumberger did not record until after DDB had already sued. The only issue then is whether DDB had notice of the prior assignment.
- Notice of Prior Assignment: Under Federal Circuit law, a subsequent assignee can have notice of a prior assignment based on actual notice, constructive notice, or even inquiry notice under the principles of equity. Unfortunately, the leading CAFC case on this issue is non-precedential, Katz v. Lear Siegler, 1993 US App Lexis 17507 (Fed. Cir. 1993), and at least two law firms have been publicly chastised for citing the case to the CAFC.
MPEP Section 2141 on Obviousness
Any examples of how this section is being applied?:
Prior art is not limited just to the references being applied, but includes the understanding of one of ordinary skill in the art. The prior art reference (or references when combined) need not teach or suggest all the claim limitations, however, Office personnel must explain why the difference(s) between the prior art and the claimed invention would have been obvious to one of ordinary skill in the art. The “mere existence of differences between the prior art and an invention does not establish the invention’s nonobviousness.” Dann v. Johnston, 425 U.S. 219 (1976).
The gap between the prior art and the claimed invention may not be “so great as to render the [claim] nonobvious to one reasonably skilled in the art.” Id. In determining obviousness, neither the particular motivation to make the claimed invention nor the problem the inventor is solving controls. The proper analysis is whether the claimed invention would have been obvious to one of ordinary skill in the art after consideration of all the facts. Factors other than the disclosures of the cited prior art may provide a basis for concluding that it would have been obvious to one of ordinary skill in the art to bridge the gap.
Patently-O Bits and Bytes No. 11
- Pharma/Biotech Patent Claim Drafting and Prosecution: West Coast patent attorneys Joyce Morrison and Robin Silva are chairing the ACI pharma/biotech patent drafting and prosecution conference Feb 25–26 in New York City. Donald Zuhn of PatentDocs will be signing autographs and PTO officials (including TC 1600 Director Kisliuk) will explain the new PTO examination mindframe. Patently-O readers use Keycode SP1 to save $200 on the registration fee: www.americanconference.com/claimdrafting.
- Duke IP & Cyberlaw folks are hosting their annual “Hot Topics” workshop on Feb 29 in Durham. I had a wonderful time at last year’s event, but won’t be able to make it this year. The program includes a big discussion of Tafas v. Dudas. [LINK]
- E.D.Texas Jury: $431 Million to Doctor Bruce Saffran from Boston Scientific. [Link][Patent]
- Best name for a patent enforcement company: the “National Institute for Strategic Technology Acquisition and Commercialization” has just sued Ford. NISTAC is a non-profit run by K-State. Interestingly, according to Stu Soffer the patents were originally owned by Ford and then donated to the predecessor of NISTAC in 1997. (Ford claimed a charitable deduction of $27 million). The patents were listed as for sale in the April 2006 Ocean Tomo auction, but were were withdrawn prior to live bidding.
- Congratulations to Jennifer Kurcz; David Ciesielski; and Paula Fritsch who recently became partners at MBHB LLP. We started as first-year associates on the same day way back when.
- Patent Law Jobs posted in the last two weeks:
Best name for a patent enforcement company: the “National Institute for Strategic Technology Acquisition and Commercialization” has just sued Ford. NISTAC is a non-profit run by K-State. Interestingly, according to Corporate Director Liability for Inducement: Must have Specific Intent to Aid and Abet the Infringement
Weschler v. Macke (Fed. Cir. 2007)
Anthony O’Rourke was the owner and only employee of Macke Int’l. Weschler successfully sued Macke and its owner O’Rourke for patent infringement. O’Rourke appeals his personal liability.
Rule on personal liability for inducing a corporate infringement:
“Unless the corporate structure is a sham, … personal liability for inducement must be supported by personal culpability. Hoover Group, 84 F.3d 1408 (Fed. Cir. 1996). This requires the officer to have possessed a specific intent to “aid and abet” the infringement. Water Techs, 850 F.2d 660(Fed. Cir. 1988).”
A director’s action may lead to a finding of willful infringement against the company without creating personal liability. “For example, a corporate officer could negligently believe that a patent was invalid and/or not infringed. This might support a finding of willful infringement by the corporation, see Biotec Biologische, 249 F.3d 1341 (Fed. Cir. 2001), but not a finding of personal liability for the officer. Accordingly, the district court’s statement that finding Macke liable for willful infringement while exonerating O’Rourke would be “inconsistent and unreasonable” because Macke could not act independently of O’Rourke is clearly incorrect.”
Finally, the court refused to pierce the corporate veil because Weschler failed to prove that Macke’s setup was “just a sham.” (holding that the lack of patent infringement insurance does not imply a sham corporation).
Notes:
- Post-History: Macke only had $10,000 to pay the $600,000 damages. Weschler filed an involuntary bankruptcy proceeding. In a tough twist, the bankruptcy court then forced Weschler to pay Macke’s attorney fees after failing to settle. [LINK]
- Late Homework: This is an important precedential case from 2007 that I missed in the shuffle. (As an excuse, It issued on the same day that we started our trek from Boston to Missouri).
- See Sheppard Mullin Blog
Court Refuses to Pierce Plutus/Orion/Taurus/Spangenberg Corporate Veil Without Better Evidence
Taurus IP v. Ford, Mazda, and Volvo (W.D.Wisc. 2008)
Erich Spangenberg owns Plutus IP. Plutus, in turn, owns a host of patent assertion companies, including Orion [Texas] IP, Constellation IP, Caelum IP, and the plaintiff, Taurus IP. (Polaris IP is in the mix as well.) A September 2007 article tells the story of the asserted patents, [Link][PTT], and how they were acquired from Firepond in 2004 for $1,000 by Spangenberg (a former director of Firepond).
Prior Settlement: After separate patent litigation in 2006, Orion IP settled with the defendants. (Taurus was not a party at that point). The settlement included a mandatory alternate dispute resolution process. Although Taurus is owned by the same company as Orion, Taurus is a separate corporate entity. Consequently, without some proof of “alter ego,” Taurus will not be bound by a settlement agreement signed by Orion.
At this stage, defendants have failed to show that plaintiff and Orion are “alter egos” of Spangenberg [under Wisconsin law]. All that plaintiff has established is that Spangenberg was a sole managing member of both and was involved in the transfer of the patent from one entity to another in a suspicious time period. This is a far cry from the requirement that the entity have “no separate mind, will or existence” and be used to commit fraud against defendants.
Interestingly, the same Wisconsin court has already pierced the veil on Orion IP and Taurus IP — finding them merely alter egos. See Taurus IP v. DaimlerChrysler, 519 F. Supp. 2d 905 (W.D. Wis. 2007). The court refused to carry-over that holding made in a different case and “different context.” In particular, the court implied that the veil was pierced in that case because of the manner that Spangenberg and the his multiple parties dealt with the DaimlerChrysler defendants.
More Definite Statement: The court did require that Taurus provide a “more definite statement” that identifies the particular claims and products that it believes are infringing or to provide “a criteria by which defendants can identify the infringing products.” The Taurus IP patent appears to be directed at a way of selecting the features of an automobile through an interactive online system. (U.S. Patent No. 6,141,658).
Notes:
Signal Claims Are Not Patentable: Nuijten Stands — Rehearing Denied
In re Nuijten (en banc denied 2008)
The CAFC has decided not to hold an en banc hearing of the important Nuijten appeal. In the original case, the CAFC (Judges Moore and Gajarsa) found that a transitory propagating signal is not proper patentable subject matter because it does not fit within any of the four statutory categories. That is, the signal is neither a process, machine, manufacture, nor composition of matter.
Three judges, including Judge Linn of the original panel, dissented from the en banc denial and offer a concise summary of their reasoning (some citations removed):
I respectfully dissent from the court’s decision not to rehear this case en banc. As I explained in my dissent from the panel opinion in this case, our decision conflicts with our own precedents as well as those of the Supreme Court. … It conflicts with our own precedent because our predecessor court’s decision in In re Breslow, 616 F.2d 516 (C.C.P.A. 1980), forecloses the majority’s conclusion that something “transient” or “fleeting” cannot constitute a “manufacture” under § 101. And it conflicts with Supreme Court precedent because it ignores the Supreme Court’s analysis of how, in general terms, § 101 is to be construed. As the Court discussed in Diamond v. Chakrabarty, patentable subject matter includes “anything under the sun that is made by man” except for certain enumerated exceptions: “The laws of nature, physical phenomena, and abstract ideas have been held not patentable.” The majority’s narrow construction of “manufacture” ignores this framework.
In addition, this case raises important questions about the relationship between § 101 and § 103. In this case, we affirm the PTO’s rejection of claims to a signal simpliciter, but the PTO has allowed a claim to a storage medium containing the very same signal, on the grounds that the storage medium is a manufacture that can be rejected, if at all, only under some provision other than § 101. In particular, the PTO considers the patentability of such claims under the “printed matter” doctrine of § 103. See In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994). These distinctions make no practical sense and are poorly supported by precedent, which, to the contrary, requires a more holistic approach to the question of whether a claim is directed only to an unpatentable abstraction or whether it is directed to a patentable application of such an abstraction to an otherwise statutory invention. Cf. Parker v. Flook, 437 U.S. 584, 591 (1978) (“The process itself, not merely the mathematical algorithm, must be new and useful.”); cf. also In re Abele, 684 F.2d 902, 909 (C.C.P.A. 1982) (“As was the case in [Diamond v. ]Diehr[, 450 U.S. 174 (1981),] . . . the algorithm is but a part of the overall claimed process.”). The distinctions that are drawn between signals and storage media containing those signals would appear to apply equally to the distinctions between software and hardware and are artificial at best.
Notes:
-
The Comiskey case is (apparently) still pending decision on rehearing. Comiskey arguablly stretches the 101/103 relationship even further than Nuijten. However, it may have an even smaller shot of rehearing en banc because of the lack of a dissent as well as a lack of amicus support for the en banc request.
- Patently-O Discussion of Nuijten and Comiskey
- CAFC Nuijten Decision
PharmaStem Appeals Stem Cell Patent: Asks for Greater Deference to Patent Examiners
PharmaStem Therapeutics Inc. v. ViaCell Inc. (on petition for certiorari, January 2008)
In 2007, the CAFC found two of PharmaStem’s stem cell cryopreservation patents to be invalid as obvious. [Patently-O][Decision] Now, PharmaStem has petitioned the Supreme Court for a writ of Certiorari and and opportunity to challenge the legal basis of the ruling.
The CAFC found the patents invalid based on prior art that had already been examined by the PTO. In addition to the standard examination, the patents had also been reexamined twice and the PTO confirmed the validity of the claims.
Now, PharmaStem asks for some greater level of deference to “PTO determinations that patent claims are valid over particular prior art.” Is there ever any issue preclusion?; and Does the presumption of validity strengthen after successful reexamination?
Notes:
- PharmaStem failed to discuss the CAFC’s finding that the Examiner’s reasons for allowance contained an important factual misstatement.
- The Brief makes issue of the fact that Judge Newman (who dissented from the appellate decision) has a PhD and worked as a research scientist while Judges Bryson and Prost are not scientists. “If this breakthrough in using cord blood was not ‘inventive,’ it is difficult to imagine many biotechnological or pharmaceutical achievements that would be patentable. Most discoveries made by biotechnology and pharmaceutical companies are rooted in diligent application of the scientific method. As a former scientist, Judge Newman appreciated this in a way that her colleagues could not.” Perhaps Judge Newman’s dissents should be given greater deference as well.
- Photo: Judges Bryson, Newman, and Prost intermingled with Nayar and Bunch in 2004.
- Reexamination Request
The Brief makes issue of the fact that Judge Newman (who dissented from the appellate decision) has a PhD and worked as a research scientist while Judges Bryson and Prost are not scientists. “If this breakthrough in using cord blood was not ‘inventive,’ it is difficult to imagine many biotechnological or pharmaceutical achievements that would be patentable. Most discoveries made by biotechnology and pharmaceutical companies are rooted in diligent application of the scientific method. As a former scientist, Judge Newman appreciated this in a way that her colleagues could not.” Perhaps Judge Newman’s dissents should be given greater deference as well.
Egyptian Goddess v. Swisa (en banc 2008)
Egyptian Goddess v. Swisa (en banc 2008)
More than a handful of studies and articles have discussed how the rise in patent law power parallels the founding and evolution of the Court of Appeals for the Federal Circuit (CAFC). Those articles gloss over the CAFC’s negative impact on design patent law. Today, design patent law is in the weakest and most confused state since before the Supreme Court’s landmark 1871 decision of Gorham v. White. (Although, the law is admittedly more uniform now than it was pre-CAFC).
Through its en banc rehearing of Egyptian Goddess, the CAFC now has the opportunity to change course and breathe new life into this languishing area of intellectual property.
In Gorham, the Supreme Court created the test governing design patent infringement. The so-called ordinary observer test considers whether an ordinary purchaser of the claimed product, “giving such attention as a purchaser usually gives” would consider that “two designs are substantially the same.” Later, cases recognized a problem with this simple formulation — finding that the ordinary observer test could potentially capture prior-art designs as infringing. In response, the CAFC added an additional “points of novelty” test that requires a showing that accused devices appropriate the specific novel features of a patented design.
To many, this points-of-novelty requirement and the apparent rule requiring transform the design-patent picture claims into paragraph form as unduly limiting the potential scope of a design patent. The requirements are also seen by some as unnecessary because of the parallel validity requirements of novelty and nonobviousness. Two additional points-of-novelty test issues that raise ire are whether the design as a whole can be a point of novelty and whether the points of novelty can include “trivial” points.
The en banc appeal will focus on three separate questions:
- Should “point of novelty” be a test for infringement of a design patent?
- If so, (a) should the court adopt the non-trivial advance test adopted by the panel majority in this case; (b) should the point of novelty test be part of the patentee’s burden on infringement or should it be an available defense; (c) should a design patentee, in defining a point of novelty, be permitted to divide closely related or, ornamentally integrated features of the patented design to match features contained in an accused design; (d) should it be permissible to find more than one “point of novelty” in a patented design; and (e) should the overall appearance of a design be permitted to be a point of novelty? See Lawman Armor Corp. v. Winner Int’l (Fed. Cir. 2006).
- Should claim construction apply to design patents, and, if so, what role should that construction play in the infringement analysis? See Elmer v. ICC (Fed. Cir. 1995).
Now, the plaintiff, Egyptian Goddess along with its amici have filed opening briefs in the case. (Attached below). Swisa’s opposition will arrive in a few weeks.
- File Attachment: EG.EGBrief.pdf (750 KB)
- File Attachment: EG.AIPLA.pdf (226 KB)
- File Attachment: EG.FICPI.pdf (347 KB)
- File Attachment: EG.IPO.pdf (962 KB)
- File Attachment: EG.ISDA.pdf (607 KB)
- File Attachment: EG.FCBA.pdf (468 KB)
- File Attachment: EG.Apple.pdf (425 KB)
- File Attachment: EG.Daisy.pdf (4103 KB)
- File Attachment: EG.HIPLA.doc (181 KB)
- File Attachment: EG.IPLAC.pdf (79 KB)
- File Attachment: EG.Nike.pdf (339 KB)
- File Attachment: EG.ProfFryer.rtf (125 KB)
Points of Novelty: Several of the briefs dismiss the points-of-novelty test as unnecessary in light of the validity requirements of novelty and nonobviousness. That suggestion is ultimately unworkable because of a disconnect between a strict ordinary observer test of infringement and the obviousness test of invalidity. This disconnect would potentially allow a finding that a prior art design infringes a valid design patent. (Obviousness is in the eye of PHOSITA at the time of the invention while ordinary observer infringement is in the eye of an ordinary purchaser at the time of purchase). The points-of-novelty approach is, however, seriously flawed — it is an odd process akin to separating a painting into various individual components and then making a list of those components that have never been used before. In most cases, the final list has little relation to the patented design. (This process is further facilitated by an overzealous Markman process).
The better approach is suggested in the AIPLA and Apple briefs. The ordinary observer test should necessarily include some consideration of the prior art, but that consideration should be at the level of the ordinary observer in a three-way visual comparison test. Thus, in the Braun case (below), the accused design would be found to infringe if the ordinary observer finds it substantially the same as the patented design and more similar to the patented design than to the prior art.
Academics are Out: It is notable that for this important case, only one academic (Professor Fryer of Baltimore) filed an amicus brief. Perry Saidman’s brief for Apple was the only brief citing a law review article, and it cited one by Perry Saidman. Saidman also cited a Patently-O comment made by Chris Carini (author of the AIPLA brief).
Tafas v. Dudas: Summary Judgment Hearing February 8, 2008
Judge Cacheris entertained arguments relating to the three pending summary judgment motions in the consolidated cases of Tafas and GSK vs. Dudas, taking the matters under advisement and indicating that the Court would present a final decision as soon as his docket permitted. A brief summary of the almost 2 hours of argument follows.
Substantive vs. Procedural: The Court actively directed the parties with questions throughout the argument, beginning with questions directed to why the proposed rule changes were “substantive” and following up with a question regarding the proposed remedy if the Court were to determine that the proposed rules were substantive.
GSK responded by indicating that the proposed rules were substantive because they (i) affect individual applicants’ rights and/or obligations (i.e., limit the number of continuations and claims); (ii) reflect a change in existing law and/or policy and (iii) interpret the patent statute.
In response, the USPTO argued that the debate between identifying the rules as either “substantive” or “procedural” was the plaintiffs’ attempt to distract the Court from the real issue, which, according to the USPTO, is whether Congress delegated the proper authority to the USPTO to enact the proposed rules.
The PTO’s authority arises from 35 U.S.C. § 2(b)(2). The arguments primarily focusing on subsections (A) and (B), which state, in relevant part, that the USPTO:
- (2) may establish regulations, not inconsistent with law, which-
- (A) shall govern the conduct of proceedings in the Office;
- (B) shall be made in accordance with section 553 of title 5;
Plaintiffs read the above statute as requiring the USPTO to comply with both (A) and (B), which would mean that the USPTO may only enact rules that (i) are not inconsistent with law; (ii) govern the procedures to handle the applications at the USPTO; and (iii) that are enacted only after the USPTO engages in the notice and comment rulemaking procedures of the Administrative Procedures Act (“APA”). Thus, plaintiffs indicated that the USPTO would not properly be permitted to enact even procedural rules without engaging in the notice/comment procedures of the APA.
The USPTO advanced the position that a fair reading of 35 U.S.C. § 2 clearly supports its position that Congress delegated the authority to the USPTO to enact the proposed rules.
Further, the USPTO argued that the proposed rules are not “substantive” because they are not directed to the substantive eligibility requirements (such as novelty or written description) for an applicant to obtain a patent. According to the PTO, the proposed rules merely affect the “timing,” as they encourage applicants to claim their invention early.
To support this position, the USPTO analogized to powers granted to other agencies to impose timing restrictions, pointing out that agencies’ ability to completely cut-off third parties benefits applications have been upheld. In response, Plaintiffs pointed out that the USPTO, as an agency, is different from other agencies because the USPTO was not awarding “benefits” as other agencies such as, for example, the FCC when it grants the right to certain bandwidths. Here, the patents applicants have the “benefit” and are electing to confer that benefit to the public in return for the limited right to exclude others for the term of the patent.
Remedy – Void Rules: With respect to the proposed remedy, GSK and Tafas argued that, should the Court find that the rules proposed are “substantive” in nature, as opposed to only affecting the procedural aspects of examining patent applications, then the rules should be struck as void and not remanded to the patent office. The USPTO indicated that, should the rules be found to be “substantive,” then they should be accorded less deference.
Plaintiffs argued that the proposed rules retroactively impact applications already on file, abrogating the quid pro quo the applicants believed it had when it filed the application (i.e., disclosing its trade secrets to the public in return for the limited monopoly). When an applicant filed its application, it was permitted to file an unlimited number of continuations, RCE’s and claims (subject to extreme cases wherein the Federal Circuit has permitted the USPTO to refuse further applications).
Property Interest in Patent Application: The USPTO argued that the “quid pro quo” is a fallacy because an application is not a property right (only patents are property rights) and, moreover, there are no property rights in “procedures.” Further, the USPTO argued that the applicant is the party who elects to disclose the trade secret – the USPTO is willing to maintain the confidentiality of all applications filed. Further, the USPTO appeared to concede that substantive rules cannot be applied retroactively, but compared the proposed rules to newly enacted Federal Rules of Civil Procedure, indicating that newly enacted Federal Rules were routinely applied to pending cases, as these proposed rules should be applied to pending applications. The USPTO indicated that, should the Court find the rules have an improper retroactive impact, the Court should simply change the effective date of the Rules.
Mr. Walsh of the USPTO presented arguments relating to Sections 120 and 132. Echoing the concerns already articulated by his co-counsel, Mr. Walsh further indicated that the USPTO had experienced a significant increase in applications, particularly continuation applications. The proposed rules were a reasonable restriction on the growing numbers of applications and provide ample opportunity (at least 8) for the applicant to present its position to the Examiner, after which, they should appeal to the Board. Further, if the applicant believes that it requires additional applications, the applicant can petition for permission to file an additional application, he must only indicate why they need additional bites at the apple.
He further indicated that delay in presenting claims has never been favored and that Section 120 does not compel the USPTO to accept an unlimited number of continuation applications. With respect to Section 132, the USPTO’s proposed new rule 114 limits application families to a single RCE. The USPTO argued this limit is justified (and more stringent requirements could be imposed) because the wording of § 132 is that the applicant can “request” the continued application, indicating discretion on the USPTO’s part regarding whether or not to grant the request. The USPTO further argued that, should the petition to file additional RCE’s be denied, the applicant has the remedy of judicial review.
In response, plaintiffs pointed out that an increase in patent application filings or other administrative burdens cannot grant the USPTO the authority to enact rules.
Notes:
- Arguing Attorneys included John Desmerais of K&E for GSK; Lauren Wetzler and Steve Walsh for the Administration; Jim Nealon of Kelley Drye for Tafas.
- Insider prediction (not DDC): Court may rule that rules are substantive and that PTO lacks substantive rulemaking authority. This allows the court to give a clean ruling without worrying potentially more difficult secondary issues.
Patent Litigation Statistics for January 2008
The Patent Troll Tracker has released a new compilation of patent litigation statistics for January 2008. [LINK] PTT continues to find that most patent law suits (74%) are filed by companies who manufacture or sell an associated product. However, because non-practising entities tend to sue multiple defendants only slightly more than half (58%) of defendants are sued by a practising entity. As usual, the non-practising entities overwhelmingly filed suit in the Eastern District of Texas. Patent veteran Sorensen Research (interest holder of Jens Sorensen) was the most prolific filer in January — filing 9 patent cases against 13 total defendants. (3 more have been filed in February as well).
Read PTT’s Article.
Tafas v. Dudas: Under Advisement
Patent attorney Jill Browning attended today’s Tafas v. Dudas hearing on behalf of Patently-O. Her report will be out later today. Bottom line: Judge Cacheris heard the arguments and has taken them under advisement. He did not make any substantive ruling from the bench.
Tafas v. Dudas: Challenging PTO Rules Potential Feburary 8th Decision
The challenge against the USPTO’s implementation of its new continuation and claim rules continues into its seventh month. On Friday, February 8, Judge Cacheris is hosting oral arguments on the competing motions for summary judgment. Previously in this case, Judge Cacheris indicated his holding from the bench — this case may be no different.
As I have mentioned before, at best, this case is a likely partial-winner for Tafas. The patentee’s two best arguments are (1) the illegality of strictly limiting the number of continuations and (2) retroactivity problems. Two additional arguments are also potential winners: (3) that the ESD requirements are vague (not just costly) and (4) that the PTO followed improper procedures in implementing the rules.
Even if the rule challengers win, the PTO would still be able to implement portions of the new rule that limit the number of claims in newly filed applications. However, the court could potentially require that notice-and-comment process be entirely redone — thus changing the timing.
- Docket & Briefs on Justia
- Polestar Amicus is particularly interesting [as discussed by PatentHawk]
- PLI’s Quinn will be blogging from the event.
- Regarding Paragraph two above, I also predicted the Patriot’s to win. . .
- One argument against the possibility of ‘splitting’ the rules is that no party has asked for that rule — both sides are going all or nothing.
- It is also interesting to consider why none of the plaintiffs or amici have been able to pursuade the Senate to include limits on PTO power in the proposed Patent Reform Act of 2007.
Patently-O Bits and Bytes No. 10
- Financial Services Event: The Securities Industry and Finance Markets Association (SIFMA) is hosting a half-day patent law symposium for the financial industry on March 11 in New York City. Speakers includes Chief IP counsel for several major financial institutions and Ocean Tomo. See www.sifma.org/patentlaw2008. The cost is regularly $595, but we’ve secured a $200 discount for Patently-O readers who use this registration document.
- Standard Setting Event (STARTING NOW): The FTC’s recent decision in N-Data raises a number of dramatically important issues for how patent holders should operate during a standard setting process. The MoFo law firm is hosting a lunchtime event on Feb 6 (Noon PST) to discuss the FTC’s change in course. Via WEB or live (4290 El Camino, Palo Alto). Free.
- IDS Rules Status: We expected to see the new IDS in January and receive an implementation schedule. We have no word on when or whether those will be forthcoming.
- Patent Blogs: Brett Trout is an Iowa patent attorney with a fun blog: blawgit.com. In a recent post, he provided a nice up-to-date list of patent blogs. LINK. Brett is becoming well known for his book titled “Cyber Law
.” The book is great (Brett sent me a free copy), but the fame comes from another attorney’s attempt to enforce a trademark to the “CyberLaw” phrase. (See also Stephen)
Patent Blogs: Brett Trout is an Iowa patent attorney with a fun blog: 
.” The book is great (Brett sent me a free copy), but the fame comes from another attorney’s 