The PTO has given the law firm of [REDACTED] an estimate that one of its recently filed application will be examined within fourteen (14) years of the filing date. (Unverified) image attached. As would be expected, this application falls within the business method technology center.
Other Upcoming Events: I will be at the ABA’s Intellectual Property Law Summer Conference in Boston from June 21-24. Please introduce yourself [I look like this] or contact me to set up a time to meet. The ABA has scheduled a "meet the bloggers" event at 6:00 on Wednesday evening. I’ll be there along with John Welch, Matt Buchanan, and others.
Motionless Keyboard Co. v. Microsoft Corp., (Fed. Cir. 2006) (non-precedential ruling)
By Tom Loos,
The CAFC upheld a ruling by the Oregon DC denying an individual inventor to intervene in behalf of a corporation.
Motionless Keyboard Co.(“MKC”) sued Microsoft for patent infringement. Microsoft prevailed at summary judgment. Thomas L. Gambaro, inventor of the patents and MKC’s majority share holder, then attempted to intervene under Fed. R. Civ. P. Rule 24. Gambaro argued he needed to appear as “Pro Se to continue to represent the Plaintiff” since “counsel has withdrawn.”
The CAFC cited 28 U.S.C. § 1654 and Rowland v. Calif. Men’s Colony, 506 U.S. 194 (1993) to state that “a corporation may appear in federal court only if represented by licensed counsel.” Applying 9th Circuit law, the CAFC held “to allow Gambaro…to intervene rather than hire replacement counsel ‘would eviscerate section 1654’” (quote from United States v. High Country Broad. Co., 3. F.3d 1244, 1245 (9th Cir. 1993)).
After losing summary judgment, MKC transferred its patent rights to Gambaro. The CAFC held that “Gambaro may have an interest allowing him to bring an infringement action in his own name [based on the patents], but he may not participate in the case filed by MKC as the plaintiff.”
Xerox v. 3Com (Fed. Cir. 2006).
Back in 1997, Xerox sued 3Com for patent infringement — asserting that the PalmPilot’s Graffiti handwriting recognition software infringed a Xerox patent. Xerox’s initial summary judgment win was reversed on appeal (Xerox I), and on remand 3Com subsequently won on summary judgment. The CAFC has now reversed/vacated once again.
Anticipation and Obviousness: In a showing of their technical forte, the appellate panel reviewed two prior art references in detail to determine the extent that those references anticipate the patent claims. Their conclusion — that a genuine issue of material fact remains as to whether the references disclose the limitations of the asserted claims.
Indefiniteness: The last portion of the decision focuses on indefiniteness. The lower court concluded that the claim term “sloppiness space” was ambiguous — leaving the related claims invalid as indefinite. However, in the specification, the patent provides a couple of examples of use of “sloppiness space.” As it has done before, the CAFC strained to find those claims not-ambiguous:
While those descriptions [in the specification] are not rigorously precise, they provide adequate guidance as to the types of symbols that are “well separated from each other in sloppiness space” . . . Thus, in light of the criteria provided in the specification, we hold that claims 9 and 11 are “subject to construction” and are not “insolubly ambiguous.”
The case is remanded to the district court in upstate NY for reconsideration.
“Blawgs” — for the uninitiated — are legal blogs, and if you haven’t incorporated them into your daily reading, you are missing out. The most compelling, cutting-edge, honest legal writing being produced in this country today is happening on the Internet, and the crop improves daily. From the fistful of judges (including Richard Posner) who maintain regular blogs, to the vast and growing number of law professors and law students who find the time to post daily, it’s clear that the real bones and guts and sinew of the national conversation is happening online, and not in print.
From American Lawyer (Dahlia Lithwick) tip to Kevin and Matt.
Apotex v. FDA, No. 06-5105 (D.C. Cir. June 6, 2006)By Aaron Barkoff of the Orange Book Blog,
Apotex had challenged the FDA rule on the basis that it was inconsistent with the D.C. Circuit’s holdings in two prior cases. In those cases, the court found that FDA’s rationale for the rule–that the FDA has insufficient resources to inquire into the legal effects of settlements, such as estoppel, that lead to dismissals–was not adequately justified.
Now, however, the D.C. Circuit has upheld FDA’s rule–largely because the FDA offered a better justification this time around. According to the court, “FDA is indisputably correct that equitable estoppel in the patent law context rarely presents pure issues of law amenable to easy resolution. . . . We have little doubt that applying this standard would force FDA, an agency lacking patent law expertise, to resolve borderline questions about the estoppel effects of patent-holder declarations.” The court continued:
As FDA sees it, the uncertainty inherent in an estoppel-based inquiry would lead to two inter-related problems, neither of which relates to the drain-on-resources rationale set forth [previously]. First, FDA believes that the uncertainty would “undermine marketplace certainty and interfere with business planning and investment.” And second, FDA worries that forcing it to parse court decisions will invite fruitless litigation from generic drug manufacturers seeking to trigger, or to avoid triggering, exclusivity periods.
The D.C. Circuit concluded: “In our view, these perfectly reasonable propositions adequately support FDA’s position that an estoppel-based approach to the court decision trigger is ill-advised.”
Dennis Crouch’s Comment: I asked Aaron to write this short review of the Apotex case for Patently-O. He has the primary documents and much more detail at his site, the Orange Book Blog.
Pactiv Corp. v. Dow Chemical Co. (Fed. Cir. 2006)
By Tom Loos,
The Federal Circuit has upheld the NDNY’s ruling that a settlement leading to dismissal of a complaint with prejudice precludes Pactiv from re-challenging Dow’s patents.
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In 1995, Dow sued Pactiv for infringement of two patents related to manufacturing polyethylene foam. This suit settled in 1998 and Dow’s complaint was consequently dismissed with prejudice. In 2002, Pactiv stopped paying royalties as required by the agreement. In late 2003, Pactiv followed up by filing a declaratory judgment action asserting the patents were invalid, unenforceable, and their own non-infringement. Dow moved for dismissal under Rule 12(b)(6), claiming res judicata. The district court agreed with Dow that Pactiv’s action was barred by the prior final judgment since the settlement did not explicitly reserve Pactiv’s right to future litigation.
The CAFC found that claim preclusion is not specific to patent cases and thus applied the local circuit law to the case. Both the 2nd Circuit and the CAFC agree a dismissal with prejudice is a judgment on the merits for purposes of claim preclusion. Where there is a settlement, the CAFC found an express reservation to litigate is required for a settling party to relitigate a claim otherwise barred by res judicata.
Pactiv also claimed they were not given a full and fair opportunity to litigate. Pactiv argued that Dow’s expert’s data “had been fabricated” and that Pactiv would not have settled if it had known the data were false. The CAFC agreed that failure to receive a full and fair opportunity to litigate would be a valid defense to issue preclusion. However, the CAFC held that “res judicata was precluded only where there was a denial of due process.” Since the 1998 dismissal with prejudice met due process, the judgment was upheld.
What could Pactiv have done once they learned the circumstances of the expert’s report? The CAFC suggested they seek relief under Rule 60(b). Rule 60(b) provides one year to reopen final judgments due to mistake, new evidence, fraud, etc.
Practice tip for those representing patentees: Condition settlements on receiving a stipulated dismissal of suit with prejudice.
Notes:
On June 14, 2006, you might want to take an hour break (1–2pm EDT) to take part in an audio webcast discussing: Permanent Injunctions in Patent Infringement Cases After eBay Inc. v. MercExchange L.L.C. The PLI CLE will be moderated by Professor John Duffy and will feature the two attorneys who argued the case: Carter Phillips and Seth Waxman. Professor Duffy is one of the few patent attorneys who was also a Supreme Court clerk (Scalia). Topics for discussion include:
Register here. $299.
Research Corporation Technologies v. Microsoft (D. Az. 2006).
After a bench trial, Arizona District Court Judge Manual Real of found that RCT’s patents were unenforceable based on inequitable conduct that occurred during prosecution of the patents in suit. And, because it was an “exceptional case,” the judge granted Microsoft’s request for $8 million in attorney fees.
Back in 2001, RCT sued Microsoft for its patents directed to a “blue noise mask” used in halftoning digital images. The new procedure was touted in the patent application as being “visually pleasing” and lacking “low frequency graininess at every level of gray.” At the same time the inventors published a paper that reported resulted of “visually annoying clumps” with graininess. In the paper, the inventors reportedly rejected the claimed algorithm in favor of another technique that was inconsistent with the patent. That paper was never submitted to the PTO.
The court found this seemingly contradictory information material because a “reasonable Patent Examiner clearly would have considered [the contradictory information] important to at least the written description and enablement requirement for patentability.” For intent, the judge found that:
It is not credible that they did not know that a reasonable Examiner would consider it important to know that patent applicants’ reported efforts to practice the applications’ disclosed No K technique had led to “visually annoying clumps,” not the “visually pleasing” images promised by the patent applications and their patent claims.”
In addition, the inventors were awful on the stand — one was “not credible” and the other “evasive.” Thus, further supporting the finding of intent to mislead the PTO.
According to a release by Microsoft’s attorney John Vandenberg*, the patents previously had been asserted against Hewlett-Packard Company, Seiko Epson Corporation, and Lexmark International, each of whom had settled out of court and taken a license. In awarding Microsoft attorney fees, the Court found it to be an “exceptional case” and that RCT knew or should have known of the inequitable conduct before the Patent Office.
Liquid Dynamics v. Vaughan (Fed. Cir. 2006)
In a detailed decision involving technology for pumping sewage, the CAFC affirmed a finding of infringement and willfulness.
An interesting aspect of the case involved the evidence of willful infringement.
The case also gave a further analysis of Daubert principles in patent cases.
Falker-Gunter Falkner v. Inglis (Fed. Cir. 2006, 05–1324)
by Donald Zuhn, PhD
In an appeal from a decision of the PTO Board, the Federal Circuit affirmed judgment for Appellees (Inglis et al.) in an interference involving vaccines comprising modified viral vectors. In particular, the subject matter of the interference concerned vaccines comprising a poxvirus vector having a deleted or inactivated essential gene, wherein the modified poxvirus is capable of producing infectious viral particles when grown in a host cell modified to produce the absent essential viral gene product. In contrast with the vaccines of the invention, traditional vaccines had been prepared by deleting or inactivating inessential genes in the viral vector, since the deletion or inactivation of essential genes made it difficult to produce vaccines in commercial quantities.
On appeal, Appellants (Falkner et al.) reiterated several arguments made before the Board, each concerning the common issue of whether Appellees had adequately described and enabled a poxvirus-based vaccine. Specifically, Appellants argued that because Appellees did not identify any essential poxvirus genes or the inactivation of any such genes, Appellees had not sufficiently described and enabled vaccines comprising a poxvirus vector having a deleted or inactivated essential gene.
With respect to the Board’s determination that Appellees had sufficiently described vaccines comprising poxvirus vectors having modified essential genes, the Court noted that there was undisputed testimony before the Board that at the time of filing of Appellees’ earliest application, the DNA sequence of the poxvirus genome and the locations of essential poxvirus genes had been disclosed in the scientific literature. Adhering to the well-established rule that "[a] patent need not teach . . . what is well known in the art," the Court held that "there is no per se rule that an adequate written description of an invention that involves a biological macromolecule must contain a recitation of known structure." In affirming the Board’s determination that Appellees adequately described the invention, the Court concluded that because "accessible literature sources clearly provided, as of the relevant date, [poxvirus] genes and their nucleotide sequences (here "essential genes"), satisfaction of the written description requirement does not require either the recitation or incorporation by reference (where permitted) of such genes and sequences."
NOTE: This post was written by Donald Zuhn, PhD. Don is a true expert in cutting edge biotech patent law and practices both prosecution and litigation at MBHB LLP in Chicago. (zuhn@mbhb.com).
Lawman Armor v. Winner Int’l (Fed. Cir. 2006, en banc).
In February 2006, the Federal Circuit decided Lawman Armor in a way that utterly devalued design patents. The decision appeared to read a design patent would never be enforceable if the patent was simply a novel combination of known elements. Essentially, the decision held that, for the point of novelty test, multiple prior art references could be combined without any prior suggestion or motivation for doing so. As noted in the AIPLA’s amicus brief requesting rehearing, if this result were true, there would be very few enforceable design patents because most (if not all) designs are combinations of old forms.
On motion for rehearing and rehearing en banc, the original CAFC panel issued a new opinion intended to “clarify” the original:
In our [original] decision, we did not intend to cast any doubt upon our prior decisions indicating that in appropriate circumstances a combination of design elements itself may constitute a ‘point of novelty.’ Such a combination is a different concept than the overall appearance of a design which, as indicated, our cases have recognized cannot be a point of novelty.
Thus, the result:
As one of the attorneys of record pointed out to me in a post-decision conversation, this distinction does not make sense for this case because the Appellant never argued that the point of novelty was simply the “overall appearance.” Rather, the Applicant set forth eight constituent elements and also argued that the combination of those elements was a ninth point of novelty.
Judge Newman, joined by Judges Rader and Gajarsa would have heard the case in an en banc panel. In a dissenting opinion, those judges argue that the overall appearance of a design should be sufficient to constitute patentable novelty:
The patentability of a design is determined on statutory criteria, as for all patents. The protocol called "point of novelty" has often aided the analysis of the application of these criteria to designs, but it is not a different concept from patentability based on the invention — the design — as a whole, and has not replaced the statutory provisions. Contrary to the panel’s view, the overall appearance of a design can indeed be novel, and can indeed constitute the patentable novelty.
Documents:
Links:
Advanced Cardio and Guidant v. Medtronic (Fed. Cir. 2006, Nonprecedential).
On summary judgment, the lower court held that Medtronic’s vascular stent patents were not infringed. On appeal, the CAFC made an interesting point about claim construction — holding that a disclaimer in the file history of a patent applied equally to construction of similar terms in all the family member cases. The patentee had consciously chosen to use different claim language in later continuation applications — perhaps to avoid the prior disclaimer. The CAFC paid this no matter.
Medtronic correctly states that its claims do not all use the [disputed] term “end” to describe the connection. . . Instead, certain claims use “turn” or “curved member.” . . . However, because the specification . . . uses “peaks” and “turns” synonymously, and “turn” and “curved member” are used in the []patent claims synonymously with “end,” we find that those claims embody the same “peak” or “end” limitation as the [parent], i.e., the disclaimer from the [parent] patent applies against the [child] patent. Our conclusion is further buttressed by the established rule of claim interpretation that dictates that like terms should be construed consistently across related claims.
According to the Court, Medtronic admitted that the varying claim language should be identically interpreted when it made the statement that the child claims were allowable “for at least the same reasons as the parent application.”
Patent law professor Douglas Lichtman (and my good friend) has an interesting new short article (8 pages of text) about problems of “patent thickets.”
Theorists have discussed patent thickets as an example of problematic over-ownership — A.K.A. the tragic “anti-commons.” When a particular area of technology is blanketed by multiple patents owned by multiple parties, everyone blocks everyone else, and nothing gets done.
After all, the conventional literature on the tragedy of the anti-commons asserts that resources will be inefficiently under-used in the face of too many overlapping patent rights.
Lichtman turns this theory on its head and asserts that in actuality, a very thick thicket might result in less litigation. His idea is in a case of multiple overlapping patents, each patent represents only a small piece of the pie. And few patentees would be willing to go through litigation simply to recover such a small slice.
More patents means less money per patent holder. Less money, in turn, means less of an incentive for a firm to strategically delay in the hopes of being a patent holdout, and less of an incentive for an accidental patent holdout to actually bring suit.
A couple of weeks ago, I would have rejected Lichtman’s argument out of hand. Under the old rule, every patent holder had a right to force large settlements based on its hold-up threat through injunction. Now, post eBay, his ideas begin to make more sense. . .
As predicted, the White House has sent Professor Kimberly Moore’s name to the Senate as a nominee to be a United States Circuit Judge for the Federal Circuit — filling the spot of Judge Raymond C. Clevenger, III, who has retired.
This should make the CAFC Judicial Conference that starts on May 19 a bit more exciting.
Professor Moore has long been considered one of the handful of leading patent law professors, and is especially noted for her empirical research methods. In addition, Moore is co-author of a book on patent litigation along with CAFC Chief Judge Michel and she is the Editor-in-Chief of the Federal Circuit Bar Journal.
Although not a registered patent attorney, Moore holds a BS and MS from MIT in electrical engineering. Her masters thesis focused on chaos theory applied to electrical systems. She received her JD from Georgetown. Moore has been teaching law — and more specifically patent law — since completing her clerkship with Judge Archer at the CAFC. She also has trial experience from her associate days at Kirkland & Ellis.
My two-cents — Professor Moore is an excellent nominee. She is extremely intelligent, and has a complete understanding of the legal issues faced by the CAFC. You will find that her decisions will be fair and quick, and, I believe that her vast knowledge of the CAFC and its history will help her to craft opinions that reconcile some of the internal cracks that have surfaced the past few years. I hope that the Patent Bar and will stand with me in putting its weight fully behind this nomination.
Congratulations to Professor Moore!
Blog Notes:
Vote for Patently-O:
Applied Medical v. U.S. Surgical (Fed. Cir. 2006, 05–1314).
In a dispute over Applied Medical’s patented trocar, the district court granted summary judgment of non-infringement to U.S. Surgical. Specifically, the district court found that the recited means plus function language was not infringed.
A means plus function claim limitation is literally infringed when the relevant structure in the accused device perform the identical function recited in the claim and be identical or equivalent to the corresponding structure in the specification.
Once the relevant structure in the accused device has been identified, a party may prove it is equivalent to the disclosed structure by showing that the two perform the identical function in substantially the same way, with substantially the same result.
This test for infringement is known as the function-way-result test. And, it was in applying the “way” portion of the test that the lower court erred.
Specifically, the district court looked at the “way” the accused structure operated in general and found that it was different from the “way” described in the specification. The CAFC found this general approach to be wrong because it essentially imported additional limitations into the claims.
In this step, the inquiry should be restricted to the way in which the structure performs the properly-defined function and should not be influenced by the manner in which the structure performs other, extraneous functions. . . . [T]he district court improperly imported unclaimed functions when analyzing the way in which the disclosed embodiment performed the claimed function.
Summary judgment vacated.
In a landmark unanimous decision, the U.S. Supreme Court has reportedly vacated the appellate court’s decision against eBay — putting an end to the “general rule” that a permanent injunction should follow a finding of infringement of a valid patent. Rather, the opinion by Justice Clarence Thomas rules that the decision of “whether an injunction should issue” is within the trial court’s discretion. Concurring opinions by Chief Justice John Roberts and Justice Anthony Kennedy.
Background: At the district court, eBay was found to infringe MercExchange’s valid patent. However, the district court refused to issue an injunction to stop the ongoing infringement because MercExchange’s patent was a disfavored type (business method), because MercExchange was willing to provide a license, and because of the contentious nature of the litigation, any injunction would be difficult to enforce. On appeal, the Federal Circuit (CAFC) reversed, finding that the lower court “did not provide any persuasive reason that this case is sufficiently exceptional to justify the denial of a permanent injunction.” Most controversially, the CAFC concluded with its “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”
eBay v. MercExchange ___ U.S. ___, No. 05–131 (2006).
Unanimous Opinion: The decision relies on the traditional “four-factor test” for determining whether to issue a permanent injunction:
A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. . . . These familiar principles apply with equal force to disputes arising under the Patent Act.
The Court indicated that these factors must be applied on a case by case basis – noting that “traditional equitable principles do not permit such broad classifications.”
The Supreme Court flatly rejected the argument that patentee’s who only license should not qualify for injunctive relief — finding that “[s]uch patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so. To the extent that the District Court adopted such a categorical rule, then, its analysis cannot be squared with the principles of equity adopted by Congress.”
In its final word, the court emphasized that the “decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity.”
Roberts, CJ, Scalia, J, and Ginsberg, J, Concurring: Chief Justice Roberts provides a short concurring opinion that appears to caution district court judges in their “discretion.”
[T]here is a difference between exercising equitable discretion pursuant to the established four-factor test and writing on an entirely clean slate. .Discretion is not whim, and limiting discretion according to legal standards helps promote the basic principle of justice that like cases should be decided alike.
The opinion notes that from “at least the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases.” According to the Chief Justice, this long tradition of injunctive relief should be awarded great weight.
Kennedy, J, Stevens, J, Souter, J, and Breyer, J, Concurring: These four Justices feel that times have changes, and that the tradition of injunctive relief might no longer be so compelling. The Kennedy opinion is focused primarily on non-manufacturing patent holding companies and business method type patents:
In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. . . . For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest. In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.
The equitable discretion over injunctions, granted by the Patent Act, is well suited to allow courts to adapt to the rapid technological and legal developments in the patent system. For these reasons it should be recognized that district courts must determine whether past practice fits the circumstances of the cases before them. With these observations, I join the opinion of the Court.
In the end: The court found problems with both the CAFC decision and the district court decision. For those concerned about the actual parties (MercExchange and eBay), we’ll have to wait to see a new decision from the lower courts.
Crouch’s off the cuff analysis: I had predicted that the Court would apply equitable principles, but would announce that that injunctions should continue to issue in most cases. [Prediction]. As it turns out, that decision is found in the Roberts Concurrence, but not in the majority. (Thus, I lost my $1 bet). I also had not predicted that four Justices (Kennedy, Stevens, Souter, and Breyer) would come out so strongly against injunctions. This decision may indicate a real shift in Patent Law and the strength of an individual patent. My general advice to litigators: The injunction is now a big issue — make sure that you focus on evidence of irreparable harm from the beginning — including your cease & desist letter or initial complaint. My colleague Tom Fairhall correctly points out that this decision adds yet another layer of uncertainty to patent litigation.
Based on this decision, it is now clear that the value of a patent does depend upon the identity of the owner. For instance, an industry competitor will be able to show irreparable injury much more easily than would a university or individual inventor who has no plans to manufacture a product. Because the industry competitor has a higher likelihood of obtaining an injunction, it should be willing to pay more for the patent. Interestingly, this valuation gap may spur more licenses and patent transfers.
Notes:
Here’s a total fluff article . . . [Link]. I don’t really like the article (too much information), but it is what it is.
The USPTO has a new search engine for finding decisions of the Board of Patent Appeals and Interferences. (Link). As far as I know, none of the 308 decisions filed in 2006 are precedential. Rather, it seems the last precedential decision was Ex parte Lundgren from 2005. (Decision).
Traditionally, the vast majority of BPAI decisions involved underlying applications that remained secret. With the advent of publication of applications, the BPAI has become a more public body and continues to move toward the goal of providing sound decisions that both adjudicate the particular issues in question and provide further guidance to other applicants and examiners.
For someone thinking of starting a new blog, I would suggest a BPAI blog in the mold of John Welch’s excellent TTABlog.