Challenging Patent Validity: Microsoft Asks Supreme Court to Reduce “Clear and Convincing” Standard

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Microsoft Corp. v. z4 Tech. (on petition for certiorari 2008)

After a jury verdict that z4’s patent was infringed and not invalid, the Eastern District of Texas district court ordered Microsoft to pay over $100M in damages to the patentee (a small Michigan company)  The award was affirmed by the Court of Appeals for the Federal Circuit (CAFC).

Now, Microsoft has asked the Supreme Court to hear its case. The appeal focuses on the CAFC’s hard-line stance of requiring “clear and convincing evidence” to invalidate a patent even when a defendant presents evidence of invalidity that was not considered by the PTO.  The question presented is:

When a defense of invalidity under Section 282 rests on documentary evidence that was not considered by the United States Patent and Trademark Office, whether the factual predicates of the defense must be proved by “clear and convincing evidence” or some lower burden of proof.

According to Microsoft’s brief (filed by Ted Olson), prior to the founding of the CAFC, “all twelve regional circuits” required a lower evidentiary burden when the invalidity argument “rests on evidence that the PTO never had an opportunity to consider.”  The petition also uses KSR as a hook — in that case, the Supreme Court stated in dicta that the “rationale underlying the presumption [of validity is] that the PTO, in its expertise, has approved the claim.” In KSR, the court found the rationale “seem[ed] much diminished” because the references were unavailable to the PTO during prosecution. 

In KSR, the Supreme Court truly did beg the question of whether the standard for proving invalidity should be lessened in certain cases. In its decision here, the the CAFC held the line, by quoting an old Uniroyal case: “The burden of proof is not reduced when prior art is presented to the court which was not considered by the PTO.”*

A weak point of Microsoft’s petition is that its claim for invalidity falls under 102(g). Microsoft is arguing that its own non-published prior invention should invalidate the z4 patent. (Specifically, Microsoft’s asserted prior art was included in a Brazilian version of Publisher). 102(g) cases provide additional rationales for a high evidentiary standard: 102(g) prior art is generally less trustworthy because the asserted prior art was not public but rather emerges from the accused infringer’s files at the opportune time. In addition, lowering the standard for 102(g) prior art encourages potential defendants to keep their developments in secret rather than publicly disclose them or present them to the PTO.  The same issues arise from non-documentary prior art, such as evidence of prior use.  In its question presented Microsoft attempts an end run around the issue by focusing on “documentary evidence.”

Related Notes:

Supreme Court News: Eleventh Amendment Immunity Question

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Today is a Supreme Court theme day. The lawyers running SCOTUS blog have projected Biomedical Patent Management Corp. v. < ?xml:namespace prefix ="" st1 />California Dept. of Health Services as one of the more likely candidates to be granted certiorari after the Supreme Court’s April 18 conference. Hal Wegner also has the case on his updated top-ten patent cases to watch.

Information:

  • Case Name: Biomedical Patent Management Corp. v. California Dept. of Health Services
  • Docket No: 07-956
  • Questions Presented:
  • Whether a state’s waiver of Eleventh Amendment immunity in one action extends to a subsequent action involving the same parties and the same underlying transaction or occurrence; 
  • Whether a state waives its Eleventh Amendment immunity in patent actions by regularly and voluntarily invoking federal jurisdiction to enforce its own patent rights. < ?xml:namespace prefix ="" o />
  • Patently-O Discussion of Case
  • Opinion below (Federal Circuit)
  • Petition for certiorari
  • Brief in opposition
  • Petitioner’s reply
  • Amicus brief of the Chamber of Commerce (in support of the petition)

    •  

    Tafas v. Dudas: Appeal and Legislation

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    Tafas v. Dudas (Fed. Cir. 2008).

    1. CAFC Appeal: PTO General Counsel James Toupin has reportedly indicated that the PTO will appeal the ruling to the Court of Appeals for the Federal Circuit (CAFC). On average, CAFC appeals take over one year. The average is raised for “important” cases where or caess where precedential opinions are issued.  However, there is a large variance between timing of the various judges. When on the panel, a couple of CAFC judges tend to greatly increase the expected time to judgment.
    2. Patent Reform: The pending Patent Reform Act includes language that would provide substantive rulemaking authority to the PTO. That provision would directly overrule yesterday’s decision. [UPDATE: To clarify, the version passed by the House (H.1908) includes additional regulatory authority. That portion is not in the current Senate bill.]

    Tafas v. Dudas: PTO’s Proposed Limitations on Continuations and Claims are Invalid

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    In a twenty-six page opinion, District Court Judge Cacheris has granted GSK’s and Tafas’s Motions for Summary Judgment — finding the PTO’s proposed limitations to the number of continuation applications and claims per patent to be improper extensions of PTO authority:

    “Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as ‘otherwise not in accordance with law’ and ‘in excess of statutory jurisdiction [and] authority.’ 5 U.S.C. § 706(2).”

    The documents:

    ==== Discussion ====

    PTO Has No Substantive Rulemaking Authority:  35 U.S.C. § 2 provides various specific powers to the PTO. However, Section 2 does not provide the PTO with any “general substantive rulemaking power.” According to the Court, “Section 2(b)(2)’s authority is limited to rules governing the ‘conduct of proceedings’ before the Office, the USPTO does not have the authority to issue substantive rules, and it does not have the authority to make substantive declarations interpreting the Patent Act.”

    Substantive Rulemaking is Broadly Defined: The district court defines a “substantive rule” as any rule that “affect[s] individual rights and obligations” (Quoting Chrysler Corp. v. Brown, 441 U.S. 281 (1979))

    PTO’s Proposed Rules are Substantive: Applying the broad definition of substantive, the court then easily found that the proposed rules are “substantive rules that change existing law and alter the rights of applicants such as GSK and Tafas under the Patent Act.”

    “The 2+1 Rule and the 5/25 Rule, which limit continuing applications, RCEs, and claims, and the ESD requirement, which shifts the examination burden onto applicants, constitute a drastic departure from the terms of the Patent Act as they are presently understood. By so departing, the Final Rules effect changes in GSK’s and Tafas’s existing rights and obligations.”

    Limits on Continuations are Substantive: In particular, the court found that the continuation rule is runs contrary to the law because it imposes a “hard limit” that “deprives applicants of their valuable rights under 35 U.S.C. § 120 to an unlimited number of continuation and continuation-in-part applications as a matter of right.” Likewise, the limitations on RCE filings is a “clear departure from the plan language” of 35 U.S.C. § 132 (the PTO “shall … “at the request of the applicant …”).

    Limits on Claims are Substantive: For over eighty years, the courts (CCPA) have blocked the PTO from placing any “mechanical limits” on the number of claims. Although the PTO may object to duplicate claims, the court found that the law prevents any strict limit on the number of claims.  The Court saw the ESD requirement substantive because it shifts the burden of examination from the PTO to the Applicant:

    [T]he ESD requirement changes existing law and alters the rights of applicants under the current statutory scheme by shifting the examination burden away from the USPTO and onto applicants. . . . [T]he Federal Circuit has stated that applicants have “no duty to conduct a prior art search” and “no duty to disclose art of which an applicant could have been aware. . . .

    It is only after the USPTO makes a demonstration of unpatentability that the burden shifts to the applicant to rebut that showing. . . .  Thus, by requiring applicants like GSK and Tafas to perform prior art searches and by shifting the examination burden away from the USPTO, the ESD requirement manifestly changes existing law and alters applicants’ rights under Sections 102, 103, and 131.”

    Holding: “Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as “otherwise not in accordance with law” and “in excess of statutory jurisdiction [and] authority.” 5 U.S.C. § 706(2).

    From the order:  “Defendants Jon W. Dudas and the United States Patent and Trademark Office and their agents, servants, and employees are permanently enjoined from implementing the Final Rules”

    Notes:

    • The court made no attempt to carve-out portions of the rules that may be legal.
    • Although numerous other issues were raised by the parties and amici, the Court decided only on the substantive ground.
    • Weak points in the decision: TBD.

    Unpredictable Arts Overcome KSR; Bonus: AND = OR

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    PatentLawPic256Ortho-McNeil Pharmaceutical v. Mylan Labs (Fed. Cir. 2008)

    Ortho-McNeil’s anti-convulsant Topamax is expensive and brings in over $1,000,000,000.00 each year. Hoping to produce a generic version, Mylan Labs filed an Abbreviated New Drug Application (ANDA) with the FDA along with arguments that the Topamax patent is invalid and not infringed.

    AND vs OR: Mylan’s primary argument relies on a specific construction of the word “AND.”  According to Mylan, AND should be construed logically as a conjunction. (i.e., AND = AND). Ortho, on the other hand, argues that its AND is not so restrictive. (I.e., AND = OR). 

    As you might guess, according to the courts, AND does indeed mean OR.

    The problem with Mylan’s argument is that it turns the claims into nonsense. In particular, a conjunctive AND would require the claimed R groups (above) to be both independent spurs and, at the same time, joined as ring groups.

    In the 2004 Chef America case, the CAFC allowed such a non-sensical construction — holding that the claim should be interpreted “as written, not as the patentees wish they had written it.” Here, however, Judge Rader distinguished Chef America — noting that here, the claim intrinsic evidence points toward the “alternative” interpretation:

    “In Chef America, the only possible interpretation of the claim led to a nonsensical result. This situation is distinguishable because claim 1 can and should be interpreted as the patentees intended, with the meaning of and connoting alternatives.”

    Because AND means OR, the claim properly covers the active ingredient topiramate.

    KSR and Unpredictable Arts: In what may become an oft-cited decision, Judge Rader outlines how the supreme court’s KSR decision should have little impact on the “unpredictable arts” such as the development of pharmaceuticals.

    Apparently, the anti-convulsive properties of topiramate were discovered by a researcher (Maryanoff) looking searching for FBPase inhibitor for diabetes. Oddly, both Mylan and the Court focused on whether the actual decisions of the researcher were logical, blocked by obstacles, or helped by serendipity.

    “In retrospect, Dr. Maryanoff’s pathway to the invention, of course, seems to follow the logical steps to produce these properties, but at the time of invention, the inventor’s insights, willingness to confront and overcome obstacles, and yes, even serendipity, cannot be discounted.”

    Of course, under 35 U.S.C. 103 patentability is not to “be negatived by the manner in which the invention was made.”

    A Flexible TSM Test: Focusing on KSR, the court promotes its new flexible TSM test:

    “The TSM test, flexibly applied, merely assures that the obviousness test proceeds on the basis of evidence – teachings, suggestions (a tellingly broad term), or motivations (an equally broad term) – that arise before the time of invention as the statute requires. As KSR requires, those teachings, suggestions, or motivations need not always be written references but may be found within the knowledge and creativity of ordinarily skilled artisans.”

    On the facts, the CAFC found agreed that the invention is clearly nonobvious.

    “In this case, the record amply supports the district court’s finding of nonobviousness. . . . As noted above, the challenges of this inventive process would have prevented one of ordinary skill in this art from traversing the multiple obstacles to easily produce the invention in light of the evidence available at the time of invention. Of particular importance beyond the prima facie analysis, this court also detects evidence of objective criteria showing nonobviousness. Specifically, the record shows powerful unexpected results (anticonvulsive activity) for topiramate. The record also shows skepticism of experts and copying – other respected sources of objective evidence of nonobviousness – as well as commercial success. As this court has repeatedly explained, this evidence is not just a cumulative or confirmatory part of the obviousness calculus but constitutes independent evidence of nonobviousness.”

    Notes:

    • Judge Rader wrote this opinion and was also a member of the 2004 Chef America panel

    CAFC Overturns Jury Verdict of Non-Obviousness Because Combination Yields Predictable Results

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    Woodstream-aAgrizap v. Woodstream Corp (Fed. Cir. 2008)

    Agrizap holds a patent covering a method of electrocuting rats and gophers. The product is sold under the trade name “Rat Zapper.”  Woodstream (maker of the Victor rat trap) first licensed the product then began manufacturing its own version.
     
    The jury found the patent nonobvious and held Woodstream liable for both infringement (and for fraud based on its actions during the license.) In a post-verdict decision, the district court granted JMOL of non-infringement.

    On appeal, the CAFC (Judge Moore) zeroed-in on the question of obviousness:

    “[A]s the ultimate conclusion of obviousness is a question of law, it remains our duty as the appellate court to ensure that the law has been correctly applied to the facts. . . . In other words, we review de novo the conclusion on obviousness . . . [keeping in mind] that ‘[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.’” (Quoting KSR v. Teleflex, 127 S. Ct. 1727, 1739 (2007)).

    Here, the CAFC found, as a matter of law, that Agrizap’s own commercial product (the “Gopher Zapper”) rendered the claimed invention obvious. The only difference between the two was the type of trigger mechanism, and the Rat Zapper’s claimed electrical switch was already well known in the cattle-prod art.

    Secondary Considerations: When faced with a mere combination of familiar elements, even strong secondary evidence of nonobvious will not save the application. Here, Judge Moore took as true “the commercial success of the Rat Zapper, copying by Woodstream, and a long felt need in the market for electronic rat traps.” However, that evidence is “insufficient to overcome the overwhelming strength of Woodstream’s prima facie case of obviousness.”

    Notes:

    • Judges Bryson, Moore, and Wolle (S.D.Iowa).
    • This case should be contrasted with Ortho-Mcneil v. Mylan , also decided this week. (Judges Michel, Rader, and Linn).
    • Perhaps a strategic misstep by Agrizap?: During prosecution, the PTO made the identical argument as that made by Judge Moore. The only difference was that the PTO examiner rejected the Rat Zapper patent application based on the “Gopher Zapper” patent instead of the commercial product.  Instead of arguing around the asserted reference, Agrizap amended inventorship and filed a terminal disclaimer.  This left the Examiner’s rejection glaringly un rebutted when it turned out that the commercial embodiment (102(b) prior art) could not be swept away so easily. [See Patently-O discussion of whether to file a 131 declaration or argue over a reference.]

    Computer Implemented Means-Plus-Function Element Must be Supported by Specific Algorithm in Specification

    Indefinite, Means Plus Function, Patent

    ScreenShot014Aristocrat Technologies Australia (ATA) v. International Gaming Technology (IGT) (2007-1419) (Fed. Cir. 2008)

    ATA and IGT have two parallel cases pending before the CAFC. This appeal focuses on whether ATA’s asserted claims are invalid as indefinite. (U.S. Pat. No. 6,093,102). The other pending case questions whether the PTO properly revived ATA’s unintentionally abandoned national stage application. (U.S. Pat. Nos. 7,056,215 and 7,108,603) [See Patently-O discussion of revival case].

    This case focuses on a patent covering an electronic slot machine patent that allows players to pre-select which combination of symbol locations will be used to determine a winner.

    Claims Indefinite: The district court held the claims invalid as indefinite under 35 U.S.C. § 112 ¶ 2. Its opinion focused on the claimed means-plus-function element “game control means” — finding the term indefinite because the specification did not provide “structure” to perform the claimed functions.  The specification did include the statement that the control means could be a microprocessor-based gaming machine with “appropriate programming.” However, the lower court focused on the absence of any “specific algorithm” or “step-by-step process for performing the claimed functions.”

    On appeal, the CAFC affirmed, holding that computer implemented means-plus-function claims must include “more than simply a general purpose computer or microprocessor.”  The purpose of the requirement, according to Judge Bryson’s opinion, is to avoid overbroad “pure functional” claims.  Because of the ubiquity of general purpose computers, a bare microprocessor cannot be considered a sufficiently specific structural disclosure:

    For a patentee to claim a means for performing a particular function and then to disclose only a general purpose computer as the structure designed to perform that function amounts to pure functional claiming.

    Within PHOSITA’s Ability: The algorithm missing from ATA’s disclosure is almost certainly within the ability of an ordinary game programmer.  In fact, I believe that it would only take me (a law professor) only a few hours to create a rough algorithm showing how the ATA software program could operate.  Judge Bryson shot-down that argument: Structure for a means-plus-function element must be provided in the specification regardless of whether the structure is already well known in the art.

    What is Required: “Source code” is not required to be disclosed, nor is a “highly detailed description of the algorithm.”  However, a computer oriented application using means-plus-function claims must “at least disclose the algorithm that transforms the general purpose microprocessor to a “special purpose computer programmed to perform the disclosed algorithm.” (Quoting WMS Gaming)

    Notes:

    Patent Challenge of the Week: When does a patent expire?

    Patent

    Last week, I wrote about whether an infringement lawsuit can properly be filed at 12:01 am on the date that the patent is scheduled to issue. A plaintiff only has standing to sue once a patent is issued, and it is not clear to me that patent has actually issued by that point (even if the patentee holds exclusive rights for the entire day once the patent has issued).*

    Expiration Date: At the other end of the spectrum is the patent expiration date. The language for the new twenty year term reads as follows:

    35 U.S.C. 154(a)(2) TERM.-Subject to the payment of fees under this title, such grant shall be for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States …

    The optional seventeen year term language is parallel to the twenty year term, although slightly different: “The term … shall be the greater of the 20-year term as provided in subsection (a), or 17 years from grant.” 35 U.S.C. 154(c)(1).

    The Question: Is the standard patent term (a) twenty years from filing, or is it (b) twenty years from filing plus one day?  I.e., if a patent is set to expire on April 2, 2008, can a generic manufacturer begin to make and sell the product on the morning of the 2nd without infringing? I would initially argue that the term should be (a) twenty years from filing — perhaps primarily because 154(c)(1) refers to the “20–year term.” However, I have heard of generic manufacturers who wait the extra day to be safe. (In certain drug cases, this extra day may be worth several hundred thousand dollars). What is the answer?

    Notes:

    • As a comment noted, Fed. R. Civ. P. 6(a) spells out the rules that courts should “apply in computing any time period specified in these rules or in any local rule, court order, or statute.” Rule 6(a)(1) states that “the day of the act, event, or default that begins the period” should be excluded.  In addition, under Rule 6, a time period is extended if it would otherwise end on a Saturday, Sunday, legal holiday.”
    • 37 C.F.R. 1.7 may also be relevant. 
    • * One bit of hard evidence answering last week’s question comes from dicta in a 1952 Helene Curtis patent case. In that case, the SDNY district court noted that the lawsuit had been filed “fifty-nine minutes after the patent had issued at noon of December 4, 1951” — and thus, was proper. See 105 F. Supp. 886. [Link]

    Patently-O Bits and Bytes No. 26

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    • BusinessWeek: Michael Orey has written another interesting Troll Tracker article: Busting a Rogue Blogger.
    • A recent comment raised an interesting question: Why do the pharmaceutical companies rarely (if ever) file their patent infringement suits in the Eastern District of Texas?
    • In a tight economy, is there a tendency file more patents (to secure some assets as insurance against business failure) or fewer patents (to tighten the outflow of cash)?

    Ex Parte Bilski: Once Again Rethinking the Scope of Patentable Subject Matter

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    We can expect over one dozen friendly briefs in the pending en banc case captioned Ex Parte Bilski by the amicus deadline of April 7. The Bilski case involves questions of whether an invention can fit within the requirements of 35 U.S.C. 101 if the invention does not specifically require the use of “technology.” 

    35 U.S.C. 101: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

    I was part of the team that drafted and submitted IPO’s 2006 brief to the Supreme Court in the Metabolite case. There, we argued on policy grounds that the court should not set arbitrary limits on the types of innovations that should be patentable. Instead, we asked the court to “support the expectation that innovations in yet unknown areas of technology will be eligible for patent protection.”  There will be at least one Bilski brief arguing along the same lines. It will, of course, be interesting to see whether the IPO and AIPLA have altered their positions in the past two years.

    If the court chooses to narrow subject matter, the 2007 Comiskey decision will quickly become an elephant in the room. In that opinion, the Federal Circuit implicitly held that a patent applicant cannot rely on nonpatentable subject matter portions of an invention to prove nonobviousness.  Comiskey’s arguably unique inventive contribution was a method of arbitration. By itself, that method was considered an unpatentable mental process. And, Comiskey’s attempt to tie the process to a microprocessor were also unsuccessful:

    “The routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness. Moreover, there is no pertinent evidence of secondary considerations because the only evidence offered is of long-felt need for the unpatentable mental process itself, not long-felt need for the combination of the mental process and a modern communication device or computer.”

    The implicit holdings here: (1) during nonobviousness analysis, any portion of an invention that constitutes nonstatutory subject matter will be considered de facto obvious; and (2) evidence of secondary considerations do not apply to portions of an invention that are not considered “patentable subject matter.”

    Depending upon how it is interpreted, the Comiskey decision may greatly influence the impact of a rule narrowing patentable subject matter. For that reason, I hope that at least one brief will focus its effort on this important issue.

     

    Patently-O Bits and Bytes No. 25

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    E.D. Texas Venue Case Goes En Banc; AIPLA Amicus Brief

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    The AIPLA believes that the Eastern District of Texas is hearing too many patent cases. Legally, the organization has decided that E.D. Texas judges are “misapplying federal transfer rules by giving too much weight to plaintiffs’ choice of venue.”

    In re Volkswagen is up for an en banc hearing in the 5th circuit court of appeals. The VW case is a product liability case stemming from a VW Golf crash that killed a 7–year old girl. The accident occurred in Dallas (location of the N.D. Tex.), but the case was filed 150 miles away in Marshall. 

    VW argues that the District Court (Judge Ward) abused its discretion in denying the defendant’s §1404 venue transfer motion — arguing that it would be “unduly burdensome” for the multinational to litigate in the Eastern District of Texas rather than the Northern District of Texas.

    28 U.S.C. §1391, the venue statute, broadly allows cases to proceed in any venue where a defendant corporation “is subject to personal jurisdiction at the time the action is commenced.”  Even when venue is proper, a court may still transfer the case to a more convenient location. 28 U.S.C. §1404 provides that a district court may transfer a civil action when it is both more convenient for the parties and witnesses and is “in the interest of justice.” 

    In an amicus brief filed in the case, the AIPLA argues that there are many cases sitting in the Eastern District of Texas that should more properly be heard elsewhere, and that the district court has been too slow to transfer venue.

    “The routine filing of patent infringement complaints in the Eastern District of Texas that have essentially no connection to that district has been encouraged by the seeming reluctance of courts in that district to transfer cases under § 1404(a).”

    As a backstop to its arguments, the AIPLA also raised the threat of legislation:

    “It is also worth noting that legislation on patent reform currently before Congress seeks to narrow drastically venue in patent cases, driven to a great extent by a desire to address the kind of forum shopping that occurs in the Eastern District of Texas.4 Providing the district courts clear guidance on applying the transfer provision will go a long way toward solving the forum shopping problem that is the impetus behind the pending venue legislation.”

    The AIPLA Argument:

    1. The location of filing should only be a presumptive starting point in the venue analysis. If a defendant shows “good cause” reason to transfer, then the presumption should evaporate.
    2. “Proximity of evidence” should be a major factor.
    3. This decision is made at a very early stage in the litigation, thus the court should not require a high level of precise evidence to prove convenience.
    4. The “public interest” is usually a sham argument. (That the people of E.D. Tex. have an interest in having their courts adjudicate patent cases if the goods are sold there).

    Read the AIPLA Brief

    Intramurals: The European Patent Divide

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    European IP Attorney Severin de Wit writes one of the best patent focused blogs on the European continent: IPEG. With his permission, I am reposting his article on European Patent No. 0455 750 B1 owned by the US company Document Security Systems, Inc. (DSS).

    PatentLawPic253You are a European institution, the European Central Bank (ECB), and you seek the invalidation of what has been granted as a valid right by another European institution, the European Patent Office (EPO). The last weeks we got a taste of how The Great Patent Divide, the most un-European experience in patent law, has turned into Europe’s Patent Demise.

    Threatened by a patent infringement claim of a US company, Document Security Systems, Inc. (DSS) the ECB seeks invalidation in several European countries. The UK patents court (in first instance) invalidates the patent, EP 0455 750 B1 for a ‘Method of making a nonreplicable document’ on March 26, 2007. A day later the German Federal Patent Court (“BundesPatentGericht”) disagrees with the UK court and finds the patent valid. By judgment of March 12, 2008 the District Court in The Hague, Netherlands, upheld the patent as valid and follows Germany. Just a few weeks earlier, on 9th January 2008, the French court (“Tribunal de Grande Instance de Paris”) agreed with the UK court in first instance and distances itself from the German court and found the patent invalid.

    On March 19, 2008, the UK Appeal Court affirmed the invalidity findings of its first instance colleagues. Patent dead, in the UK and France (so far, appeal in France still pending).

    You still with me?

    What a disgrace. What a sorry state European patent law is in. We know that Europe is lacking a European view on validity (and infringement for that matter), but how can this be explained? The view, generally held, is that UK courts are (very) critical on what comes out of the European Patent Office. [According to the UK,] Patent 0455750 should not have been granted. France, not yet known as “patent-unfriendly” has chosen the side of the UK in this case. Is this a scary sign of what is there to come? Maybe (just) an incident and no forbode of what is next (France as the next patent basher)? One begins to wonder, are the Germans more fond of what comes out of their (“own”) EPO, located in Munich? Is Holland more inclined to accept what comes out of Munich as well? Or is this all “coincidence”? We think not. We have seen this divide before (on stents: Angiotech’s patent for Taxus stent revoked by UK Court of Appeal, (partially) upheld by the Dutch District Court, but then it was only for Germany & Holland versus the UK. Is France now joining the chorus of “we-know-it-all-better-than-the-EPO” ?

    Recent Patent Law Job Postings on Patently-O

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    Disavowal of Claim Scope: CDS v. Dell

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    PatentLawPic251Computer Docking Station v. Dell (Fed. Cir. 2008)

    More than any other patent litigation issue, a winning claim construction argument needs to do more than simply convince the district court judge.  Rather, the best argument will both convince the district court judge and will also teach that judge how to write a claim construction opinion that holds up on appeal.

    Limiting Preamble: CDS’s patent was filed in 1991 and includes the claim preamble: “portable computer.” In interpreting that preamble term, the CAFC found that it must be limiting because statements in the specification and prosecution history emphasize portability, but the portability limitation is not found in the claims.

    “The written description and applicants’ statements during prosecution emphasize this feature of the invention, yet this limitation does not appear in the body of the claims. As a result, this court finds that the terms “portable computer” and “portable computer microprocessing system” limit the scope of the asserted claims.”

    Disavowal of Claim Scope: The CAFC also found that CDS had, through its statements in the specification and during prosecution, disavowed coverage of a laptop computer device that included an attached keyboard and screen.  In claim scope disavowal, the court always looks for a linguistic hook in the claims. Here, it relied again on the “portable computer” preamble term — finding that the patentee had disavowed coverage of portable computers that included those features.

    Attachable features: In several figures, the patentee showed how a keyboard and screen could be coupled with its device. However, the CAFC noted that those attachments were only temporary and did not become part of the portable computer. “Thus, a cable connects the physically separate keyboard to the main housing. The keyboard is neither built-in nor attached.”

    Exceptional Case: The patentee is not liable for attorney fees because this is not an ‘exceptional case’ under 35 USC 285. In particular, the court noted that it was not “self-evident” at the beginning of the claim construction analysis that laptop coverage had been disavowed. (Of course, this finding cuts directly against the finding that the public was on notice of a clear disavowal of claim scope)

    LinkedIn describes PTO Employees

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    PatentLawPic252The social networking site LinkedIn has created a profile of USPTO employees (Based on LinkedIn members). In their data, the most common career path is from ASRC (a major Gov’t Contractor) to the USPTO; then to Bingham McCutchen. Folks leave Bingham for Perkins Coie and Goodwin Procter. From there, they branch out to Ropes & Gray, Foley Hoag, Microsoft, Amazon, Expedia, Wilson Sonsini, and Google.

    With all this job-hopping, LinkedIn helps me keep track of patent law folks I have met along the way (even after we change jobs and move across the world).

    Patent Troll Tracker & Cisco’s New Blog Policy

    Patent,

    WorldisflatMost major companies are still trying to get their heads wrapped around the flat world concepts that Thomas Friedman presented in his 2005 bestseller. The reputational power of the internet is now driving many corporate balance sheets.  The business issue: ensuring that the reputation is going right way.  Certainly, this management may be a bit like herding cats: In less than five minutes, anyone with an internet connection and skills with a mouse can become an anonymous online publisher to the world without spending a dime.  The impact of cheap worldwide distribution is multiplied by a seeming societal shift away from a desire for privacy, away from strong employee loyalty, and away from a respect for intellectual property in favor of free speech and free software.

    Cisco Systems found itself in the midst of a potential reputation firestorm when the popular anonymous blogger known as the Patent Troll Tracker (PTT) revealed himself as a Cisco IP Director Rick Frenkel.  The PTT blog focused on patent enforcement companies — so called patent trolls — that have sued major technology companies such as Cisco, Microsoft, Sprint, and others.  Frenkel and Cisco have been accused of defaming two Texas plaintiffs attorneys and have also been accused of a stealth anti-patent lobbying campaign. (Cisco is a major part of the “Coalition for Patent Fairness” — an organization lobbying for weaker patent rights).

    One way that Cisco can emerge as a publicity winner is to promote and encourage employee publication and free speech.  Cisco appears to be taking this road. I discussed the Frenkel case with a Cisco spokesperson today who indicated that Cisco is defending against the lawsuit; that Cisco is “committed to supporting [its] employees and their right to online expression”; and that Frenkel will certainly be allowed to continue blogging while a Cisco employee.

    The internet’s ease of anonymity is in tension with the prevailing blog notion of transparency.  The problem with anonymous corporate blogs is the potential for customer backlash when they discover the true content provider.  The other major problem with anonymous publication is the tendency of anonymous authors to become reckless authors. (See, e.g., anonymous Patently-O comments). Cisco’s new employee publishing policy takes these issues into consideration. The policy: No anonymous blogging or comments on issues associated with your Cisco job.

    “If you comment on any aspect of the company’s business or any policy issue the company is involved in where you have responsibility for Cisco’s engagement, you must clearly identify yourself as a Cisco employee in your postings or blog site(s) and include a disclaimer that the views are your own and not those of Cisco. In addition, Cisco employees should not circulate postings that they know are written by other employees without informing the recipient that the source was within Cisco.”

    I disagree with many of Cisco’s patent reform suggestions, but I admire the way the company is handling this issue.

    Notes:

    CAFC Again Vacates Preliminary Injunction: No Likelihood of Success

    Patent,

    PatentLawPic250A G Design v. Trainman Lantern (Fed. Cir. 2008) (nonprecedential)

    AG sued Trainman for infringement of its hand-held RR Lantern patent. (US Pat. No. 7,118,245).  The W.D. Washington district court issued a preliminary injunction after hearing an expert report that Trainman’s product was essentially identical to the patented device (except for one claim element).

    On appeal the CAFC vacated the preliminary injunction — finding that the lower court had committed legal error in finding that the patentee had “a likelihood of success on the merits.”

    Legal Standard for Preliminary Relief: The CAFC nominally applies a four factor standard for determining whether preliminary relief is warranted. However, two factors are requisite and typically determinative: (a) Likelihood of success on the merits and (b) irreparable harm associated without preliminary relief.

    Likelihood of Success: A likelihood of success on the merits requires some proof that the defendant “infringes at least one valid and enforceable claim” of the asserted patent. The likelihood of success may be rebutted by an accused infringer who raises a “substantial question” regarding the patent’s validity, enforceability, or whether the accused device infringes the asserted claims.  In a recent case, the a different panel (Judges Rader & Dyk) found the substantial question threshold met by evidence that “cast[s] doubt on the [claim’s] validity.” Erico Int’l v. Vutec & Doc’s Marketing (Fed. Cir. 2008).

    Lacking a Claim Element: Because the accused device here lacked a claim element (a ‘plurality of ports’ in the reflector), it could not literally infringe. Likewise, the CAFC found that the ‘plurality of ports’ limitation had been added during prosecution to narrow the claims — presumptively foreclosing infringement by equivalents. (Unless AG can show that the “rationale for the amendment is tangential to the equivalent in question.”).

    Validity Questions: The CAFC also found error in the district court opinion because the court did not specifically analyze whether a disclosed prototype included “all of the limitations of any of the asserted claims.”  Instead, for the purposes of the PI, the district court had only noted that the prototype was “different” from the patent claims.

    Expired Non-Compete: The parties here have a history including a non-compete agreement that expired during the appeal.  Because it is now expired, the CAFC found that the non-compete could not serve as a basis for preliminary relief.

    Notes:

     

    Courts Resist Using the Term Patent Troll

    Patent,

    Despite being used en gross by accused defendants, courts have largely resisted using the term “patent troll” in their decisions. A Westlaw search revealed only seven examples of the pejorative term in court decisions:

    • IP Innovation v. Ecollege.com (Fed. Cir. 2005) (The CAFC noted that the term had been used in the defendant’s argument, but refused to engage in a discussion of its implication).
    • Colida v. Sanyo (Fed. Cir. 2004) (In dissent, Judge Newman argued that attorney fees should not be granted against an accused “patent troll”)
    • Hynix Semiconductor v. Rambus (N.D. Cal. 2008) (Judge Whyte granting Rambus motion in limine to prohibit use of the term “patent troll” during the trial)
    • Taurus IP v. DaimlerChrysler (W.D. Wisc. 2007) (Citing Magliocca’s article; piercing the corporate veil of the accused “nonpracticing entities”)
    • InternetAd Systems v. Opodo ( N.D. Tex. 2007)  (Defining a patent troll as a “small company that did not manufacture products or supply services based on patents in question but enforced patent rights against accused infringers in attempt to collect licensing fees”).
    • Overstock.com v. Furnace Brook (D.Utah 2005) (The court indicated a preference for finding that “patent trolls should be subject to more general jurisdiction, perhaps as a way of deterring coercive baseless litigation.” However, the court could not find a legal hook for such a holding.).
    • Black & Decker Mfg. v. Baltimore Truck Tire Service (D.Md. 1928) (Patent was issued to Mr. Fred Troll)

    In the eBay decision, the Supreme Court ruled that the status of the patent owner may not operate as a categorical exclusion from the prospect of injunctive relief.