Patent reform is largely being driven by corporate entities who argue that patent protections are currently too strong. The following video offers a skeptical version of this lobbying activity:
The real question: Can Apple & Microsoft combine forces to create a better video about the harms caused by today’s patent laws — and will they allow it to be posted on youtube?
Forest Labs v. IVAX (TEVA) and CIPLA (Fed. Cir. 2007). (Read Part I of this case analysis)
(J.Lourie) IVAX’s infringement began when it filed an abbreviated new drug application (ANDA) with the FDA for approval to manufacture a generic version of Forest Lab’s blockbuster antidepressant Lexapro. Under 35 USC 271(e)(2), the mere submission of the ANDA is considered an “act of infringement.”
At the conclusion of the case, the district court issued an injunction ordering IVAX to refrain from making or using “any products” that infringe Forest’s patent. CIPLA, IVAX’s planned distributor, was also included in the injunction.
IVAX and CIPLA both appealed the injunctions.
Overbroad Injunction: An injunction may only extend to adjudicated products (or methods) and those “not more than colorably different.” In this case, the CAFC found that the injunction language was overbroad because it applied to “any products” that infringe the patent. The court consequently modified the injunction to specifically focus on the products at issue. (Note: Under 271(e)(4), the court may issue injunctive relief to prevent the future manufacture and sale of the infringing product).
Injunction against CIPLA for Potential Contributory Infringement: IVAX is a direct infringer based on its ANDA submission. CIPLA, on the other hand, made no such submission and is not a direct infringer. Likewise, CIPLA is not a contributory infringer based on the ANDA submission. As the majority noted – “Ivax is not currently liable for infringement, as long as it is only pursuing FDA approval.”
Despite any current infringement, the Appellate Panel found that it is proper to issue an injunction to prevent potential future contributory infringement.
“[If the drug were sold] CIPLA would be contributing to the infringement by IVAX, so the injunction should cover both partners.”
Judge Shall dissented – arguing that CIPLA should not suffer under an injunction.
Forest Labs v. IVAX (TEVA) and CIPLA (Fed. Cir. 2007).
The Court of Appeals for the Federal Circuit today upheld Forest Labs patent on its billion dollar SSRI Lexapro (escitalopram oxalate) — rejecting IVAX’s arguments that the patent is anticipated and obvious. Based on two FDA extensions, the patent is set to expire on March 14, 2012.
This case is an important stepping stone in our new understanding of obviousness. Interestingly, in its multi-page discussion of obviousness, the appellate panel did not mention the Supreme Court’s recent landmark decision of KSR v. Teleflex.
History: Forest holds an expired patent on a racemic form of citalopram. After considerable effort, Forest’s scientists doubled the strength of the drug by isolating the (+) stereoisomer (which turned out to be the only active isomer) and patented that isomer in a “substantially pure” form. A prior art pharmacologic paper had suggested that the (-) stereoisomer would be the potent isomer, but that reference did not describe the preparation of the enantiomer.
House Report:Please see the House Report on HR1908 explaining the House’s view of why this particular patent reform bill is necessary. The report includes a marked-up version of the current version of the bill. A vote is being threatened for this week or next.
Law Firms Loving Reform: Advertising with Google Adwords and other online media is relatively cheap — especially when compared with typical IP firm advertising costs that can easly run $10,000 for a single full sheet ad in an ill-read monthly. Typically, online ads serve as a way for smaller companies receive publicity. Interestingly, several major lawfirms — notably Fish & Richardson along with Thelen Reid — have set up camp on Google for any searches relating to Patent Reform.
Mitutoyo Corp v. Central Purchasing (Fed. Cir. 2007)
Mitutoyo and Central have been wrangling for more than a decade over Mitutoyo’s patent covering electronic calipers. The history includes Central’s 1994 agreement to exit the market; a 1995 DJ finding that the patent is not invalid or unenforceable; and a 2006 summary judgment against Central.
Both parties appealed on damages issues:
Reasonable Royalty: On appeal the CAFC found the lower court’s 29.2% reasonable royalty rate acceptable. Although a seemingly high number, Central’s profit margin is around 70%. Most interestingly, the appellate panel held that the parties “contentious history” supports a high royalty rate. This serves as a reminder that a the reasonableness of the royalty still takes-into-account the positions of the parties.
Lost Profits: Although Mitutoyo also sells calipers, Central was able to avoid lost profit damages by showing that the products had little customer or price overlap. (Central’s proof included economic evidence that the market for its $21 product was highly elastic – indicating few of its customers would have instead purchased Mitutoyo’s $100 product.)
Willful Infringement: Mitutoyo’s willful infringement claim was dismissed on the pleadings under FRCP 12(b)(6) for failure to state a claim and failure to prosecute. On appeal the CAFC reversed – finding that Mitutoyo’s allegation of willful infringement coupled with Central’s long history with the patent were “plainly more than sufficient to meet the requirement of Rule 8(a)(2) for pleading a willful infringement claim and avoid dismissal.” Similarly, the appellate court held that failure to file a summary judgment motion on willfulness does not indicate “an intent to abandon [the] willfulness claim.”
In its August 2007 Seagate en banc opinion, the CAFC raised the culpability standard for willful infringement. This case takes a step back to remind courts that the enhanced damages theory does not (yet) require a showing of fraud.
Standing of a licensee to sue: Mitutoyo’s primary US licensee was also a party to the litigation. However, a licensee only has co-plaintiff standing if it holds “at least some of the proprietary rights” of the patent. Here, the licensee has no standing because Mitutoyo also allows one other company to import and distribute its products in the US.
NALP has released this interesting salary distribution for new law school grads. (via Bill Henderson). Newly minted patent attorneys make more on average, but I do not have hard numbers at this point.
House Vote potentially scheduled for Sept 7? – Passage Likely in the House.
In the past twenty years, the US Patent & Trademark Office has issued just over 268,000 design patents. During that time, almost exactly one percent (1%) of those issued design patents have been litigated to some degree. (i.e., at least a complaint was filed asserting infringement of the patent). The most commonly litigated are design patents covering ornamental features of shoes (7% of litigated patents) and lamps (5% of litigated patents). Other commonly litigated products include furniture (chairs & tables), eyeglasses, and golf equipment.
35 USC 171 outlines the scope of design patents as “any new, original, and ornamental design for an article of manufacture.” The MPEP narrows this definition to only include “visual characteristics” of a design – although a court could force the PTO to include other sensory characteristics. I suspect a product with ornamental textures – even if not visually distinct — could be protected (especially if the product was designed for blind individuals). A further (and improbable) stretch would be to define design to include associated music, scent, and taste.
Many product developers point to a large gap in the US protection for newly created articles and devices. In particular, product designs receive little coverage from any of the major IP regimes of patent, copyright, & trademark. Today, the fashion industry is the squeaky wheel and may be the most likely to receive sui generis coverage from Congress. If the Senate Bill becomes law, we may finally have true fashion police.
Over the holiday, I met with my great-uncle who is a farmer in Southeast Kansas. Marvin and his wife had just returned from the Farm Progress Show in Decatur, IL. They were happy to announce that their Chainsaw Caddie had been awarded first-place in the show’s annual Inventor’s Challenge.
The patented chainsaw holder design makes it easy to maneuver a saw near the ground without having to bend or stoop.
Congratulations Marvin & Sarah!
Links:
The IPO disagrees with my conclusions that substantive patent reform will not pass this year:
TO: ALL IPO MEMBERS
FROM: Herb Wamsley, IPO Executive Director
RE: Plans of House Leadership to Pass the Patent Reform Bill Next WeekIPO has confirmed today that the House Democratic leadership has scheduled a vote of the full House of Representatives on patent reform bill H.R. 1908 for next week.
The House Rules Committee, which is controlled by the leadership, has scheduled a meeting for 3:00 p.m. on Thursday, September 8, to set the rules for debate on the House floor, which means the bill will not come to a vote until after that time.
IPO understands that House IP subcommittee chairman Howard Berman (D-CA) plans to offer an amendment to the bill, but information on the content is not available.
We urge all IPO members to become engaged in the legislative debate.
When choosing a meeting or workshop to attend, I often prefer the smaller venues where you can really ask questions and easily meet your fellow attendees. Here are two that I have attended as a speaker and would recommend:
I will be speaking at the Ocean Tomo Fall 2007 Live Auction in Chicago on October 24th & 25th. My topic: The Three Branches of Patent Reform. Look me up if you are around.
Other events:
Dr. Chris Dent, an Australian Researcher, has written an interesting new paper on the history and value of original English patents. Although invention was not the basis of the patent grant, Dent argues that they may still have been based on sound public policy goals. I asked to provide a synopsis of the paper for Patently-O readers. The full paper is available here.
The manner in which the early modern English monarchs – Elizabeth I and James I – granted patents of monopoly is not seen in a good light in current legal discourse. There are many tales of the nepotism that was, allegedly, rife and the public outrage at the abuses of the Crown – circumstances that only ended with the “triumph” of the Statute of Monopolies in 1624. This simplistic understanding does not do justice to the good intentions of Elizabeth and James; and, to an extent, may be inaccurate. There is, for example, little evidence of public displays of disaffection at the grants beyond statements made by Parliamentarians, in Parliament, who may have been beholden to interests outside those of the average subject. The thoughts and attitudes of the average early modern person, however, may not be considered worthy of inclusion in a history of English patents.
The intentions, and actions, of the elites of the time are a matter of record. An investigation of the available material – whether as part of the legal, political or economic history of the time – demonstrates that there were good public interest motives behind many of the patents granted by Elizabeth and James. An exploration of the secondary literature on English politics, coupled with a reading of the mercantilist texts (the mercantilists were the closest the society had to economic theorists) and the analysis of court judgments shows that three key policy objectives informed the monopolies awarded by the two monarchs.
These goals – increased employment levels, an improved balance of trade with other countries and the better regulation of industries – not only appear to be modern, but also may be understood to have been fundamental to the modernisation of English society and its economy. Examples of these goals in practice include the granting of monopolies for water pumping inventions to more effectively mine for minerals (increasing both goods production and employment); grants for the establishment of local industries, based on imported technical knowledge, to reduce the reliance on foreign goods; and the regulation of manufacturers to improve the quality of goods available for sale. Economic historians note that the English economy underwent significant change in the 16th and 17th centuries; this change may have been, in part, a result of the policy actions of the Executive of the time. Actions that included the grant to individuals and companies of the now-maligned grants of monopolies.
Egyptian Goddess v. Swisa (Fed. Cir. 2007)
Judge Moore in the Majority: Egyptian Goddess owns a design patent covering an ornamental fingernail buffer design. (U.S. Design Patent No. 467,389). As is standard for design patents, the patent claims “the ornamental design … as shown and described.”
Design patent infringement requires proof of two separate infringement tests:
Satisfaction of the ordinary observer test requires proof that an “ordinary observer” would think the accused design as a whole is substantially the same as the patented design — thus creating some customer confusion.
Satisfaction of the points of novelty test requires proof that the accused device incorporates the “points of novelty” that distinguish the patented design from the prior art.
The real hurdle for most patent owners is the points of novelty test. Here, Egyptian Goddess listed four points of novelty — (1) an open hollow body; (2) square cross-section; (3) raised rectangular pads; and (4) exposed corners. Each of these elements are found in the prior art and thus do not server as individual points of novelty.
The combination of elements may also serve as a point of novelty. However, according to this court, a combination of known elements may only serve as a point of novelty if the combination is a “non-trivial advance over the prior art.” This is a further clarification of the recent Lawman Armor decision.
Here, the court agreed that the combination of the various elements was trivial – and thus that the combination could not serve as a point of novelty. Consequently, the patent is not infringed.
Interestingly, there is one point of novelty that might not be found in the prior art — a fourth side without raised rectangular pads. However, that point of novelty could not be used in the infringement analysis because all four sides of the accused Swisa product included raised pads. (This example is useful for thinking about the difference between the point of novelty test of infringement and the tests for invalidity based on anticipation and obvousness.)
Judge Dyk dissents: Judge Dyk argues that the concept of a ‘non-trivial advance’ is antithetic to the notion of ‘points of novelty’ — essentially creating a new obviousness test.
In preparing for my e-commerce class on cybersquatting, I tried Veralab’s typo-squatting search engine on patentlyo.com. It turns out that someone has registered the typosquatting site http://patnetlyo.com/.
According to Network Solutions, the offending registrant:
Navigation Catalyst Systems, Inc
2101 Rosecrans Ave. #2000
El Segundo, CA 90245
Email: domainadmin@navigationcatalyst.com
Phone: 3106471592
Fax: 3106476001
I’d be interested in what action you would suggest to meet the following objectives: Cancel the registration; potentially walk away with money; but avoid any potential major loss of money. (I have handled UDRP Arbitration cases in the past, but am deterred by their lack of money damages)
Bodog is an offshore internet gambling operation. The US Government considers internet gambling illegal. And, for some time, Bodog’s famous leader, Calvin Ayre, has reportedly avoided stepping back on US soil.
In 2006, Bodog was sued for patent infringement by 1st Technology. Bodog failed to respond to the complaint, and now the Nevada district court has issued a default judgment of $46 million+. 1st Technology has also requested an injunction to stop all Bodog advertisements of infringing products.
Bodog’s domain name is apparently being pulled-into the mix to satisfy the judgment. [LINK] Meanwhile bodog is operating at www.newbodog.com.
Notes
In re Sullivan (Fed. Cir. 2007)
The Board of Patent Appeals (BPAI) found Sullivan’s rattlesnake antivenom immunoglobulins obvious in light of Sullivan’s own publications and another reference, “Coulter.” On appeal, the CAFC reversed – finding that the BPAI had improperly refused to consider Sullivan’s rebuttal evidence.
Once the PTO presents a prima facie case of obviousness, the patent applicant has a burden of presenting rebuttal evidence supporting the opposite conclusion. This rebuttal evidence may, for example, be evidence of unexpected results, teaching away from the invention, or secondary indicia of nonobviousness. The BPAI must consider rebuttal evidence that is presented.
Here, the BPAI had failed to consider three declarations that potentially provided evidence of unexpected results of the claimed compound.
Vacated and remanded.
Ormco v. Align Technology (CAFC 2007, 06–1240)
Here, prosecution disclaimer narrowed Ormco’s patent claim scope, but only for some of the claims.
Ormco’s invention relates to computer-aided design of orthodontics. During prosecution Ormco distinguished its invention based on its automated calculation of final tooth position even though the claims do not explicitly require fully automated calculations. Although finding the disclaimer clear, the CAFC required some relation between the disclaimer and any affected claim before narrowing claim scope. As a consequence, the scope disclaimer only applies to claims directed at finish tooth positions and not to other claims — such as those directed to preliminary organization of tooth data.
Dissent: Dissenting from the majority opinion, Judge Kathleen O’Malley (N.D.Ohio, sitting by designation) criticized both the majority and the lower court for their procedural sloppiness. Judge O’Malley would have remanded to wait for a more developed opinion from the district court.
Notes:
