Court Upholds Dual Patent/Copyright Protection for Software

Patent, Patent Cases 2006

Aharonian v. Gonzales (N.D.Cal. 2006).

Although he operates primarily through an e-mail list rather than through a website, Greg Aharonian is the honorary trailblazer for today’s intellectual property law blogs (including Patently-O).  He is also an activist.

In a lawsuit filed against the U.S. Government, Aharonian requested a declaratory judgment that copyright law cannot be applied to sourcecode.

Specifically, Aharonian hopes to build a powerful database of sourcecode to be used as a prior art repository — but does not want to be held liable for copyright infringement.  In a challenge to the statute, Aharonian argued that computer code is entirely made up of “algorithms” and “data structures,” both of which are uncopyrightable “ideas” or “processes” and additionally that the vague language of the Copyright Act is insufficient to support sourcecode copyrights. (And raised other arguments).

Standing: With any DJ action, there is often a question of standing. Here Aharonian was able to show that he was suffering a specific economic harm under the law (inability to build his database) and that economic harm, according to the court, was sufficient to establish standing.

This is not to say that all allegations of economic harm related to copyright law will be sufficient to meet the constitutional requirements for standing. For example, the mere assertion of a desire to copy, with no showing of an actual past or future business practice or actual economic benefit from copying, would not suffice. Here, however, plaintiff has an existing business which involves searching for potentially copyrighted prior art, and he has made a credible argument that incorporating (i.e. copying) such material into an automated search tool would result in additional profits.

Software as Math: The Aharonian machine will apparently transform computer code into a standardized logic framework and store that framework.  The court used that pont to avoid addressing the question head-on:

It would be unwise indeed for this court to make sweeping general pronouncements about the nature of software or the relationship between patent and copyright law, particularly where making such a pronouncement would have no clear effect on plaintiff’s ability to create his proposed database.

The court did take pains to distinguish patent and copyright cases — thus predicting their conclusion that both forms of protection are available for software:

A declaration that software consists entirely of “ideas”—data structures and algorithms—has no bearing on the applicability of copyright law to software source code, which, like all copyrightable material, is a particular written expression of ideas. . . . In sum, if plaintiff copies source code that is protected by copyright law, he infringes the copyright regardless of whether the ideas underlying the source code are patentable. Conversely, if plaintiff independently creates software that is functionally identical to other software, he does not infringe any copyright on the other software’s source code, even if his independently created source code is nearly identical to the copyrighted source code.

Vague Statute: On the issues of vagueness, the court essentially found that prior controlling precedent had interpreted the scope of the statute — leaving no room for the district court to hold otherwise.

Dismissed. The case is now on appeal.

Links:

  • Link: Website dedicated to the lawsuit.

Blogging Law and Blogging for Lawyers

Patent

I would like to invite you to the upcoming conference on Blog Law and Blogging for Lawyers to be held April 20–21 in San Francisco. LINK.

I am very excited to be the co-chair of the conference, which is the first comprehensive CLE to look at blogging both as a marketing tool for attorneys and as a legal area.  My co-chair Cathy Kirkman of Wilson Sonsini is a great attorney and full of ideas in this area.

Sample Topics:

  • Legal gray areas arising from the proliferation of Web logs
  • The future of blogging — a passing fad or here to stay?
  • The extent to which bloggers qualify for the First Amendment protections afforded to journalists
  • Content ownership and syndication issues
  • Employment issues arising from blogging within corporations
  • The latest in blogging technology, including audio and video feeds
  • How to set up a blog for your law firm or make your current blog more effective
  • How blogs differ from regular Web sites in generating traffic — and business — for your firm
  • Ethics questions surrounding the blog as a law firm marketing tool
  • PLUS an on-the-ground report from several law firm bloggers

We have been lucky with the help of Law Seminars International (LSI) to put together an amazing faculty and the peer group of bloggers and attending attorneys will make this a very special event. 

Feel free to contact me with any questions.
Dennis Crouch

Conference Links:

Other Links:

  • Link: Kevin O’Keefe discusses the conference
  • Link: Kevin Heller focuses on the conference is a clear sign that the “Big Law” players have arrived in the world of legal blogging.
  • Link: Denise Howell blinks.

CAFC Explains Materiality Standard for Inequitable Conduct

Patent, Patent Cases 2006,

AIPLATalk056

Digital Control (DCI) v. Charles Machine Works (aka DitchWitch) (Fed. Cir. 2006).

By Mark Chael,

DCI appealed the lower courts’ decision that its patents were unenforceable for inequitable conduct. DCI’s three asserted patents involve Horizontal Directional Drilling, which enables the creation of horizontal holes in the ground through with utility lines can be placed by allowing a worker to locate and/or orient the boring tool as it moves through the ground.

The district court previously awarded partial summary judgment to DitchWitch finding that there was no genuine issue of material fact that misstatements and omissions made by the inventor during prosecution of the patents were material. After a bench trial, the lower court held that the misstatements and omissions were made with intent to deceive and the level of materiality and inference of intent were both high. Thus, the lower court held that the patents were unenforceable.

The CAFC, however, held there were genuine issue of material fact regarding the materiality of the inventor’s failure to disclose prior art. The CAFC thus vacated the district court’s ruling that the patents were unenforceable and remanded for further proceedings regarding the materiality of the failure to disclose prior art.

Before reviewing the lower court’s determination that DitchWitch was entitled to summary judgment on the issue of materiality, the CAFC addressed the proper standard for determining whether a misstatement by omission is material. What follows in the text of the opinion is a comprehensive, yet succinct, summary of the development and current standing of the law of inequitable conduct and material misrepresentation, in view of the Patent Office’s amendment of Rule 56 (duty of candor and good faith / duty of disclosure). This panel followed the “reasonable examiner” materiality standard of old Rule 56, which “new Rule 56 was not intended to replace or supplant.”

Dr. Mark Chael’s prior research in biochemistry, molecular biology, and cellular biology make him well equipped to understand the intricacies involved in biotech and pharmaceutical patents. He is an associate at the intellectual property law firm McDonnell Boehnen Hulbert & Berghoff in Chicago.

Links:

Read the opinion.

Patently-O TidBits

Patent

1) Continuation Practice: Matt Buchanan at Promote-The-Progress has posted slides from the PTO’s town-hall meeting.

2) APLF: Patent Judges Panel in Des Moines: The Association of Patent Law Firms (APLF) is pleased to present a discussion of patent litigation featuring a distinguished panel of judges.  Titled “Impressions and Observations of Patent Trial and Markman Hearings,” the event will be held March 9 from 12-1:30 p.m. at Drake University Law School in Des Moines.  For reservations and information on payment options, please visit http://media.aplf.org/conferences/drakeroundtable.php.

3) Chicago Bar Assn: On March 1st, 2006, I will be at a CBA Young Lawyers luncheon talking about blogging and blog-law with fellow weblog author Evan Brown.

4) Patent Law Symposium: Northwestern’s Journal of Technology will hold its first symposium: “Patent Litigation in the 21st Century” on February 24, 2006 at its downtown campus. Featured Speakers include Professor Matthew Sag, Peter Zura, Ken Withers, and Hal Wegner. Link.

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(via www.thehughpage.com).

Neither Poetry nor Bankruptcy Avoids Patent Infringement Damages

Patent, Patent Cases 2006

AIPLATalk055Hazelquist v. Guchi Moochie and Mr. Yamaguchi. (Fed. Cir. 2006).

It is now my dream to cite this case in open court:

DDC: “Your Honor, I would refer you to Guchi Moochi and Mr. Yamaguchi for controlling precedent.”
Court: “Quite compelling argument you have Counselor.”
Opposing Counsel: “Foiled again!”

To cite Guchi Moochi, you need a bankruptcy situation, and to be asking the court to collect post-bankruptcy damages:

DDC: “Under Guchi Moochi and Mr. Yamaguchi, although a discharge in bankruptcy operates as an injunction against a plaintiff asserting a claim for a cause of action that arose before the date of bankruptcy discharge, it does not act as an injunction against a plaintiff asserting a claim for a cause of action that arose after the date of bankruptcy discharge.”

Etc.:

  • Read the case: Link
  • cite as Dennis Crouch, Neither Poetry nor Bankruptcy Avoids Patent Infringement Damages, Patently-O, February 9, 2006, at https://patentlyo.com.

Non-Resident Alien Patent Attorneys and Agents are Entitled to Limited Recognition but not Full Registration

Patent

Catherine Lacavera v. Jon W. Dudas (Fed. Cir. 2006).

By Baltazar Gomez, Ph.D.

The Court of Appeals for the Federal Circuit affirmed the judgment of the District Court for the District of Columbia that the USPTO’s decision to grant Catherine Lacavera only limited recognition was consistent with the PTO’s regulations, did not exceed the statutory authority, and did not deny Lacavera equal protection.

 

Lacavera, a Canadian citizen and nonimmigrant alien, was authorized to work in the United States as an attorney to prepare and prosecute patent applications. Upon passing the patent examination, Lacavera was granted limited recognition because of the legal restrictions imposed by her immigration visa. After failing to convince the PTO to grant her full registration, Lacavera filed suit in the district court under the Administrative Procedure Act (5 U.S.C. §§702-706). The trial court denied Lacavera’s motion for summary judgment and granted summary judgment in favor of the PTO.

 

The PTO has statutory authority to regulate attorney practice under 35 U.S.C. § 2(b)(2)(D). From this general authority, the PTO formulated rules to govern the recognition of attorneys under 37 C.F.R. §§10.6, 10.7 and 10.9. (now 37 C.F.R. §§11.6, 11.7 and 11.9).  Regarding an alien, the rules state that an alien “may be registered” provided that registration is not inconsistent with the terms upon which the alien was admitted to, and resides in, the United States.  For nonimmigrant aliens, the PTO has interpreted the rules to dictate that nonimmigrant aliens are not registered upon passing the patent examination, but rather are entitled to “limited recognition” status that allows an alien to practice before the PTO, but confines their activities to those authorized by the United States Bureau of Citizenship and Immigration Services.

 

In her appeal, Lacavera contended that the PTO’s decision to deny her full registration was an abuse of discretion because it was improper to find that full registration was inconsistent with the legal restrictions of her visa. The CAFC disagreed, reasoning that the PTO’s decision to grant limited recognition is a reasonable interpretation of the rules in view of Lacavera’s visa restrictions that would be inconsistent with full registration. Lacavera also argued that the PTO exceeded the authority granted by statute by taking into account visa restrictions when determining whether or not to grant full registration. The CAFC noted that the PTO has broad statutory authority to govern the recognition and conduct of attorneys.  The CAFC further noted that although the statute is silent as to whether the PTO may consider visa restrictions, the statute states that the PTO may require applicants to show that they have the necessary qualifications. Thus, the CAFC concluded that it was reasonable for the PTO to enact rules that limit an alien’s ability to practice to those activities in which the alien may lawfully engage as being necessary qualification. As to whether Lacavera was denied equal protection, the CAFC concluded that she suffered no individual equal protection violation because Lacavera offered no evidence that she was treated unequally as compared to other aliens with visa restrictions.

 

Note: Dr. Baltazar Gomez is a scientific advisor at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago.  Dr. Gomez obtained his PhD in biochemistry from the University of Texas and researched retrovirology as a PostDoc at Cornell University.

Non-Inventors Sloppy Lab Notebook Cannot Corroborate Reduction to Practice

Patent, Patent Cases 2006

Medichem v. Rolabo (Fed. Cir. 2006).

The parties here are sparing over rights to a novel process for making loratadine, the active ingredient of Claratin®. Rolabo filed its patent application first, but Medichem reduced to practice prior to that filing. 

Interference-in-fact: In order to proceed with an interference, the case must satisfy a two-way test — i.e., each disclosure, when considered as prior art, must at least render the other’s claims obvious.  Here some prior art taught away from adding a particular compound, while others suggested the addition.  The CAFC determined that in such a case, obviousness could be found because “the prior art, viewed as a whole, [teaches] that the addition of a tertiary amine sometimes works to improve the yield.” 

Priority: The later-filed case has the burden of establishing priority by a preponderance of the evidence. Here, the late-filer, Medichem, asserted an actual reduction to practice that occurred prior to Rolabo’s patent filing.  Proof of reduction to practice requires (1) an actual embodiment meeting all the claimed limitations; (2) showing that the invention would work; and (3) corroboration evidence to show (1) and (2).

On appeal, the CAFC found that Medichem failed to provide the necessary corroboration evidence under part (3) above — reversing the lower court’s decision. In its decision, the appellate panel found, as a matter of law, that a non-inventor’s lab notebook was insufficient corroboration evidence where the non-inventor did not testify at trial or otherwise attest to the notebook’s authenticity and where the notebook had not been signed and dated in accordance with good lab practices.

Given the facts of this case, [the noninventor’s] notebook should therefore not be accorded much corroborative value. In view of the minimal corroborative value of the inventors’ notebooks and the limited value of the NMR spectrum, we conclude that the evidence, evaluated as a whole under the rule of reason, is insufficient as a matter of law to corroborate Medichem’s reduction to practice.

Notes:

  • Interestingly, a parallel interference was also conducted by the BPAI — resolving the issue in favor of Rolabo. Stampa v. Jackson, 65 U.S.P.Q.2d 1942 (B.P.A.I. 2002).

 

 

 

CAFC: Diligence Easier to Prove than Conception

Patent, Patent Cases 2006

Brown v. Barbacid (Fed. Cir. 2006).

Both Brown and Barbacid claim to have invented a method for inhibiting cell growth control factors (farnesyl transferase). The effective filing dates at the PTO were April 18, 1990 and May 8, 1990 respectively.

In an interference proceeding, the PTO’s BPAI found that Brown had the earlier conception date, but that the early date was moot because Brown had “failed to provide corroborated evidence of diligence” in reducing the invention to practice.

Under 35 USC 102(g), the party that is the first to conceive of an invention is entitled to a patent over a later inventor — so long as the early inventor “exercised reasonable diligence from a time before the other party’s conception date to his own reduction to practice date.”

The CAFC found the time-line in this case as follows:

November 15, 1989 — Brown conception
March 6, 1990 — Barbacid conception and reduction to practice
April 18, 1990 — Brown constructive reduction to practice
May 8, 1990 — Barbacid constructive reduction to practice

Thus, in order to ensure priority over Barbacid, Brown must show continual diligence from before March 6 to April 18.  Furthermore, evidence is required to corroborate claims of diligence. However, such evidence can come from a variety of sources and is generally less rigorous to prove than conception.

The basic inquiry is whether, on all of the evidence, there was reasonably continuing activity to reduce the invention to practice. There is no rule requiring a specific kind of activity in determining whether the applicant was reasonably diligent in proceeding toward an actual or constructive reduction to practice.

Here, the BPAI refused to find diligence, and specifically found that the researcher’s laboratory notebook to be too cryptic to provide useful evidence. The appellate panel disagreed, finding that the evidence should be considered as viewed by persons skilled in the art. Specifically, there is no need to “reproduce on each page a statement of the larger research purpose” of the experiment because “this purpose may reasonably be shown in the various declarations.”

AIPLATalk053

Links:

Beware of Overshooting the Mark Set by Phillips v. AWH

Patent, Patent Cases 2006

AIPLATalk052Varco v. Pason Systems (Fed. Cir. 2006).

In a case involving oil and gas drilling equipment, the district court refused to grant the patentee a preliminary injunction.  Varco appealed claim construction.

Specifically, because the specification states that selected regulators 200-203 must be manually calibrated before use, the district court concluded the “selecting” step recited in the asserted claim requires manual calibration.

On appeal, the CAFC determined that the court’s construction was too narrow — and that it had impermissibly imported limitations into the claims.  In its decision, the appellate panel pointed to the preamble of the claim that indicated that it was a method for “automatically” regulating the drilling equipment.  Based on this and other tidbits pulled from the prosecution history, the court found that manual calibration was not required.

Vacated.

Note: This case brings home a point I made in my talk at the AIPLA winter meeting last week.  Specifically, courts should be wary of overshooting the instructions of Phillips. Notably, even though claims are interpreted in light of the specification, special care should be taken to avoid importing limitations from the claims.

Misleading prophetic examples only marginally relevant to materiality in inequitable conduct review

Patent, Patent Cases 2006

Purdue Pharma L.P. v. Endo Pharms. Inc. (Fed. Cir. 2006).

In a dramatic reversal of fortune, the Federal Circuit has reversed itself and the district court findings that Purdue’s Oxycontin patents-in-suit were unenforceable due to inequitable conduct that occurred during prosecution of the patents.

The district court found that Purdue repeatedly referred to its “surprising discovery” during prosecution, but did not inform the PTO that the “discovery” was based on “insight” without “scientific proof.”  In its initial decision, the Federal Circuit determined that the district court did not error in finding the two elements of inequitable conduct: materiality and intent.

On rehearing, the same three-member panel of Judges Gajarsa, Plager, and Linn came to a new conclusion — vacating the holding of inequitable conduct. 

The panel began by reviewing the law of inequitable conduct:

Applicants for patents have a duty to prosecute patents in the PTO with candor and good faith, including a duty to disclose information known to the applicants to be material to patentability. A breach of this duty may constitute inequitable conduct, which can arise from an affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive or mislead the PTO.  A party asserting that a patent is unenforceable due to inequitable conduct must prove materiality and intent by clear and convincing evidence. Once threshold findings of materiality and intent are established, the trial court must weigh them to determine whether the equities warrant a conclusion that inequitable conduct occurred.

The court applies a “careful balance:”

[W]hen the misrepresentation or withheld information is highly material, a lesser quantum of proof is needed to establish the requisite intent. In contrast, the less material the information, the greater the proof must be.

Regarding materiality, the CAFC agreed with the district court that “Purdue’s actions met a threshold level of materiality.” However, the panel found that the “level of materiality [was] not especially high” — thus requiring solid proof to establish intent. The trial court, however failed to “properly consider the [low] level of materiality.” 

Based on the lack of evidence intent presented in the trial court’s opinion, the CAFC vacated with instructions to reconsider the evidence of intent based on a low level of materiality.

Links:

 

Hamlet, on filing a response with the USPTO

Inventors, Patent

Angela Horne is a patent agent at Quine IP Law Group.  As can be seen from her prose below, she is also a talented Shakespearean.  In this Scene, young Hamlet is debating his next course of action:

To file, or not to file (today): that is the question
Whether ’tis easier on the budget to file
The current draft without further extension;
Or instead, to take more time to review,
And by reviewing, further revise the arguments…
To file, to wait for the Examiner to review
At last; and by calling before two months is up, forestall
The heart-ache and the thousand muttered curses
That a Final Office Action is heir to. ‘Tis a consummation
Devoutly to be wish’d.
To file the response, to follow up with a call;
To call, perchance to get the case allowed: aye, there’s the rub;
For in that Notice of Allowance, what claims to next pursue
When we have the current claim set allowed, 
Must give us pause…

Ms. Horne’s prose also reminds me of the Roach Trap patent application that was filed in the mid 1800’s by D. Breed of Washington DC.

To all those whom it may concern:
By this description, you may learn
That I, D. Breed, a District man,
Have made invention of a plan,
Both new and useful, of a trap
For catching roaches while you nap.

In setting forth my new invention,
Of first importance I would mention
My trap’s a novel earthen cup
Outside of which the roach creeps up
And, jumping in to eat molasses,
The well glazed mouth he ne’er repasses.

In drawings, figures one and two
Show simple forms, yet something new;
The first has rough outside or way;
The next, an inclined path at A.
The central stem (in dots you see),
Is crowned with bowl like half a pea,

To hold molasses, say a drop,
And smoothly glazed from base to top.
But this is no essential thing:
Without it, the roaches spring.
If in the bottom of the cup
You place the sweet whereon they sup.

The figure three shows a form unique
Of which in highest praise I speak;
‘Tis glaze on in and outer sides,
Except between the handle strides
Where creep the roachies up a track
Without fear of sliding back.

In figure four, at B, a spout
Is made, to wash dead roaches out;
This form is glazed entire within,
also the mouth up to the brim
but on the outer side, all round,
No trace of glazing can be found.

In five and six, a septum, C,
Cuts full two thirds the cup from three,
The smaller part has open door
At letter D, close to the floor,
And inclined way to top of cup
Where Mr. Roach with cane walked up;

Nor needs his wife or child his hand
To reach the highest brink and stand,
A little trip is balance hung
May o’er the mouth of cup be swung;
But that, an almost useless thing,
To save expense, away I fling.

Of varied traps, with spiral walk
And sundry forms, I yet might talk —
Of clay or other mortar made
To suit the fancy or the trade:
Forms now conceived, yet not revealed,
That sleeping lie to fancy’s field.

From this description,you may make
Whatever form you choose to take,
From figure one to six, made part
Of this to aid the potter’s art,
I recommend said figure three
Of porcelain, like cup for tea.

Claim

As manufacture new, I claim
Said pottery trap, or porcelain.

 

EBay v. MercExchange: Stay of Injunction Pending Appeal

Articles and Publications, Patent

A friend of mine who is also a senior patent counsel at a major technology corporation passed along his thoughts on the eBay appeal in an anonymous article entitled eBay v. MercExchange: Are YOUR Interests Represented?. 

The article, published here on Patently-O, raises a particular issue—that of stays pending appeal.  The article argues, inter alia, that the relatively short CAFC docket (~1 year) coupled with the high reversal rate indicate that injunctions should generally be stayed pending appeal.

This approach takes the high middle ground — allowing for injunctions on a regular basis, but not forcing settlement based on district court holdings that would potentially be vacated on appeal.

Notes:

  • Cite the article as: Note, eBay v. MercExchange: Are YOUR Interests Represented?, Patently-O, January 31, 2006 at https://patentlyo.com.
  • The article can be linked directly at: https://patentlyo.com/patent/eBay_20Article.pdf
  • Comments on the article should be directed to me.

Review: EBay v. MercExchange Amici Briefs

Patent, Patent Cases 2006, ,

eBay v. MercExchange (Supreme Court 2006).

This year, the Supreme Court will determine whether a patentee should have a right to an injunction once infringement is found.  This issue is fundamentally important to the practice, and a number of amici have filed briefs. (briefs in support of MercExchange will be filed later this spring). 

The following is a review of the briefs received thus far.  Copies of the briefs are available for download at the bottom of this post.[*]

Yahoo!’s Brief

Yahoo!, with the support of professor Robert Merges takes issue with patent trolls, and their propensity to ambush and cause harm.  According to the brief, patent trolls are “entities whose primary purpose is to prey on innovators who actually produce societally valuable products.”

Yahoo!’s solution is that the “availability of injunctions should turn largely on whether the patentee engages in research and development and should discourage entities whose sole business is patent litigation.”

Electronic Frontier Foundation Brief

EFF thinks about free speech and argues that “automatic injunctions” pushes against our first amendment protections. EFF cites the importance of blogging and the potential of patent owners to claim control over internet publishing mechanisms.

AIPLA & FCBA Joint Brief

AIPLA is nominally in support of neither party, but is in fact in support of MercExchange.  AIPLA argues that the CAFC’s “general rule” of issuing injunctions after a finding of liability is correct because the harm caused by continued infringement is “inherently irreparable.” The brief also argues that, in this case, the CAFC is not guilty of expanding the power of patents.  Rather, the general rule of issuing injunctions has long been a part of patent practice and is consistent with the analysis in other areas of law such as trademarks.

Fifty-Two Law Professors Brief

Professor Lemley along with fifty-one other professors filed their brief in support of eBay. Notably, the professors attempt to make a distinction between a district court’s refusal to grant an injunction and a compulsory licensing scheme.

Interestingly, professors are clear that courts should be given discretion to deny injunctive relief, but that such discretion should not be used regularly or even often.  This implies that the professors are at least in favor of a presumption that an injunction will issue.

Brief of Professors Pollack & Reynolds

Another set of law professors and legal scholars (Including Instapundit) argue that the Constitution supports a “presumption that injunctions are unwarranted for patent holders who are neither practicing their infringed inventions nor making good-faith efforts to prepare to practice their inventions.”

Teva’s Brief

Teva, primarily a generic drug manufacturer, filed its brief arguing that (1) district court’s should have discretion and (2) the public interest should be represented in any injunction decision.

Computer & Communications Industry Association (CCIA) Brief

CCIA argues that the CAFC continues to make patents stronger while the PTO continues to weaken patent quality. This combination, according to the advocacy group, encourages litigation and impedes innovation.

Bar Assn. of the District of Columbia’s Brief

The district court questioned the “unsettled political nature” of business method patents. In its brief, the BADC questions whether politics or draft legislation can be considered when determining an injunction.

IBM’s Brief

 IBM argues that Section 283’s permissive language (“may”) requires that courts examine equitable principles before issuing an injunction.  Furthermore, the patent leader argues that the Supreme Court’s Continental Bag precedent also requires examination of the equitable principles.

Franklin Pierce Law Professors Brief

The law professors, led by Thomas Field, argue that the right to injunction should be strong and not variable according to patentee’s use of the patent. “The trial court accepted arguments analogous, given the apparent economic disparity between the parties, to ones Goliath might have made in asking that David be disarmed.”

Brief of Intel, Microsoft, Oracle, and Micron

The four technology giants have joined together in an “Innovator’s Alliance” and filed a brief in support of eBay’s position. The brief reviews some historical aspects of patent law and argue that the Founding Fathers would not have approved of automatic injunctions for patent infringement.

Brief of the Securities Industry

Several securities industry groups joined together to file a brief in support of eBay. The brief discusses their worries that a patent infringement lawsuit could hamper the reliability of financial markets

Brief of Research-In-Motion

RIM argues that the patent enforcement system must promote the useful arts

Nokia’s Brief

Nokia follows a similar vein as the EFF, but argues that interoperability of networks and systems is extremely important, and patents on de facto standards should not be granted injunctions.

Brief of the Bar of the City of New York

The NY Lawyers argue that injunctions should not be the general rule. Rather, courts should consider a broad range of factors that may sway the decision of whether to grant an injunction. These include irreparable harm; whether infringing activity was lawfully initiated (e.g., prior to issuance of the patent); whether patentee delayed in asserting a claim; whether there is a disputed question of law (e.g., claim construction); harm of an injunction to the infringer compared to benefit of the injunction for to patentee; extent of harm to third-parties.

Files (thus far):

  • Party Briefs on the Merits

  • Amici Briefs on the Merits

  • Briefs for/against Certiorari:

    • Other

     * cite as Dennis Crouch, Review: EBay v. MercExchange Amici Briefs, Patently-O, January 30, 2006, at https://patentlyo.com.

     

    Patent Examiners Should Interpret Claims In Light of Specification

    Patent, Patent Cases 2006, , ,

    In re Johnston (Fed. Cir. 2006)

    Although the CAFC affirmed the B.P.A.I’s use of a dictionary in defining the patent applicant’s claim terms, the court did so only because the patent specification did not otherwise provide any limits the terms.  The court thus indicated that the PTO should apply the principles of Phillips v. AWH during prosecution — rather than the PTO’s current practice of giving claims their “broadest reasonable interpretation.”

    In addition, the court provided an excellent review of its string of precedents concerning the standard for combining references in an obviousness rejection:

    Karsten Mfg. Corp. v. Cleveland Golf Co., 242 F.3d 1376, 1385 (Fed. Cir. 2001) (“In holding an invention obvious in view of a combination of references, there must be some suggestion, motivation, or teaching in the prior art that would have led a person of ordinary skill in the art to select the references and combine them in the way that would produce the claimed invention.”);

    In re Dance, 160 F.3d 1339, 1343 (Fed. Cir. 1998) (“When the references are in the same field as that of the applicant’s invention, knowledge thereof is presumed. However, the test of whether it would have been obvious to select specific teachings and combine them as did the applicant must still be met by identification of some suggestion, teaching, or motivation in the prior art, arising from what the prior art would have taught a person of ordinary skill in the field of the invention.”);

    In re Fine, 837 F.2d 1071, 1075 (Fed. Cir. 1988) (there must be “some objective teaching in the prior art or that knowledge generally available to one of ordinary skill in the art would lead that individual to combine the relevant teachings of the references”);

    Interconnect Planning Corp. v. Feil, 774 F.2d 1132, 1143 (Fed. Cri. 1985) (“When prior art references require selective combination by the court to render obvious a subsequent invention, there must be some reason for the combination other than the hindsight gleaned from the invention itself.”).

    Be aware that this particular issue is being considered by the Supreme Court in KSR v. Teleflex.  This decision solidifies the CAFC’s position and increases the odds that KSR will be taken-up on certiorari.  As noted by Professor Wegner, the Johnston panel “says nothing about the Anderson’s-Black Rock or Sakraida Supreme Court standard of patentability” that is the subject of the KSR case.

     * Cite as Dennis Crouch, Patent Examiners Should Interpret Claims In Light of Specification, Patently-O, January 30, 2006 at https://patentlyo.com.

    Patently-O Tidbits

    Patent

    In The News: Patently-O has been in The Wall Street Journal three times in the past two weeks:

    • Will Stent Makers Fight Dentist’s Patent Tooth and Nail?; The Wall Street Journal; Jan 26, 2006; A.1.
    • In Patent Disputes, A Scramble to Prove Ideas Are Old Hat, Anne Marie Squeo and Elena Cherney; The Wall Street Journal; Jan 25, 2006; A.1.
    • BlackBerry Gambles Patent Office Will Be On Its Side in Court, Anne Marie Squeo and Elena Cherney; The Wall Street Journal; Jan 17, 2006; B.1.
    • We also picked up some coverage from the WSJ’s new law blog by journalist/lawyer Peter Lattman. [Link].

    NTP v. RIM:

    • Interesting background story from the Globe and Mail. [Link] [via PHOSITA].

    Patent Law Jury Instructions

    • AIPLA has drafted an updated set of model jury instructions. [Link] [via I/P Updates]

     

    eBay Questions “Nearly-Automatic” Availability of Patent Injunctions

    Patent, Patent Cases 2006

    MercExchangePatent_small1eBay v. MercExchange (Supreme Court 2006).

    Like any patentee, Tom Woolston wants the exclusive rights to his invention as spelled out in the Patent Act.

    Every patent shall contain . . . a grant . . . of the right to exclude others from making, using, offering for sale, or selling the invention . . . (35 U.S.C. 154).

    A jury found that his patent was valid and infringed, but the court refused to enter an injunction to stop the infringement.  Woolston’s patent relates to computerized auction technology, and the defendant here is auction giant eBay.

    On appeal, a panel of three judges at the Court of Appeals for the Federal Circuit reversed the lower court, finding that absent exceptional circumstances, a district court should issue a permanent injunction after a finding of infringement.

    Many of the biggest names in technology as well as academia have taken issue with the CAFC’s holding and argue that the court’s “nearly automatic” injunction provisions violate both traditional notions of equitable relief as well as Section 283 of the patent act.

    In what could easily be the most important patent case in the past five years, the Supreme Court will hear eBay’s arguments on March 29, 2006. Injunctions form the bedrock of traditional patent law, and changes in this area will send waves through virtually every technology-centered business.

    In its brief on the merits, eBay argues that, like any equitable relief, courts should apply the traditional four-factor test that includes consideration of (i) irreparable harm from not issuing an injunction; (ii) whether an adequate remedy exists in law (damages); (iii) whether the injunction would be in the public interest; and (iv) whether a balance of hardships would tip in the plaintiff’s favor.

    EBay also takes the stance that the field of technology covered by the patent should effect the likelihood of an injunction.  Here, because MercExchange’s patent is related to a business method — a less favored technology.  In addition, eBay presents other questions of patent quality and cites the largely questioned assertion that 97% of patents are approved.

    Section 283 of the Patent Act supports eBay’s position by providing that a court “may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.”  This statute, according to eBay requires the courts to judge the equities before issuing such an injunction.

    File Attachment: EBay Brief On The Merits.pdf (178 KB)

    Indefinite Claims: Lack of Antecedent Basis Alone Does Not Render Claims Indefinite

    Patent, Patent Cases 2006

    MercuryFreebatteryEnergizer Holdings v. ITC (Fed. Cir. 2006).

    Energizer brought suit through the ITC under 19 USC 1337 to stop importation of what what it considered infringing devices. Energizer’s patent relates to batteries that are virtually mercury free.  The ITC held that Energizer’s patent was invalid under 35 USC 112 because a claim term, “said zinc anode,” lacked antecedent basis.

    On appeal, the CAFC found clear error and reversed.  In its decision, the CAFC refused to follow any strict “rules” of claim drafting.  Rather, the court found that a claim will not be indefinite unless the scope is not “reasonably ascertainable by those skilled in the art.”

    Reliable Documention Required To Show Costs

    Patent, Patent Cases 2006

    Summit Technology v. Nidek (Fed. Cir. 2006).

    Nidek won at trial, was awarded costs, and initially requested almost $500k under 28 U.S.C. § 1920.  After an initial appeal of the exact costs, the district court awarded Nidek $388k. On appeal, the CAFC further reduced the award to $173k after finding that Nidek had failed to provide reliable documentation of its costs.

    Cost awards are bound by the constraints of section 1920, and, when challenged, a prevailing party must offer some reliable documentation or other proof that its bill of costs represents the allowable costs that it actually and necessarily incurred during the litigation.

    Although the CAFC agreed that Nidek’s costs might be reasonable based on the complexity of the lawsuit, reasonable estimates could not substitute for the required proof.

    CAFC affirms willfulness and damage award despite multiple opinions of counsel.

    Patent, Patent Cases 2006

    TrocarApplied Medical Resources Corp. v. United States Surgical Corp. (Fed. Cir. 2006).

    By Gautham Bodepudi

    Facts and History:

    U.S. Surgical appealed the decision of the district court for the Central District of California, granting judgment of the willful infringement of U.S. Patent 5,385,553 to Applied Medical, and awarding damages, enhanced damages, attorney fees, and prejudgment interest totaling $64.5 million.

    Applied Medical’s ‘553 patent relates to surgical devices called trocars. Trocars are used as access ports into the abdomen during laparoscopic surgery.

    Applied first sued U.S. Surgical for their use of the Versaport trocar in the United States District Court for the Eastern District of Virginia (‘Applied I’), and the jury found that U.S. Surgical willfully infringed claims 4 and 18 of the ‘553 patent. The district court permanently enjoined U.S. Surgical, and awarded damages in the form of a 7% reasonable royalty rate.

    During the Applied I litigation, U.S. Surgical began redesigning its Versaport trocar, completed its redesign shortly after the Applied I verdict, and began selling the redesigned Versaport (‘Versaport II’) shortly thereafter.

    Two years later, Applied Medical filed a second infringement suit (Applied II) against U.S. surgical for their use of Versaport II, and the district court held that Versaport II infringed claim 3 of the ‘553 patent, and entered a permanent injunction against them.

    In a separate trial for damages, U.S. Surgical tried to establish that the reasonable royalty for infringing sales of Versaport II was 7%, as established in Applied I and is binding under the principles of collateral estoppel. In addition, U.S. Surgical moved for judgment as a matter of law to establish that their infringement was not willful due to U.S. Surgical’s due care and good faith in designing around the ‘553 patent. Lastly, U.S. Surgical sought preclude evidence relating to the jury’s finding of willfulness in Applied I. However, the judge denied all three motions, and U.S. Surgical appealed.

    Issues and Rulings:

    I. Is the reasonable royalty rate established in Applied I binding in Applied II under the principles collateral estoppel?

    The Court held that collateral estoppel should not be given effect in Applied II because the necessary reasonable royalty determination in Applied II is not identical to that decided in Applied I.

    In laying the groundwork, the Court noted that reasonable royalty calculations are employed when actual damages cannot be adequately proved, and that when using such a calculation, the court may determine a reasonable royalty based on hypothetical negotiations between a willing licensor and willing licensee.

    However, a reasonable royalty determination for purposes of making an evaluation for damages must relate to the time infringement occurred. The Court stated that the reasonable royalty damage calculation in Applied II is not identical to the issue of reasonable royalty damages in Applied I because the infringements requiring compensation began at separate and distinct times. The infringement in Applied II was caused by sales of Versaport II, which began in 1997, whereas the infringement in Applied I was caused by sales of Versaport I, which began in 1994. There were thus two separate infringements, and each commenced on a different date.

    Thus, the Court reasoned, the reasonable royalties of the two different infringements, beginning at two different times, may be different from one another, and therefore the district court was correct in not applying collateral estoppel to the issue of reasonable royalty determination.

    II. Was their substantial evidence to support the jury’s verdict that U.S. Surgical’s infringement was willful, despite U.S. Surgical’s good faith and due care to design around the ‘533 patent?

    Despite U.S. Surgical arguments that it engaged in an intense and deliberate program to design around the ‘553 patent, regularly consulted with its in-house counsel during the redesign process, requested the advice of outside law firms, and avoided making a single sale until after U.S. Surgical received a written second opinion from a patent attorney from another firm, the Court still held that substantial evidence supports the jury’s verdict of willful infringement.

    Notably, the Court held that a jury could reasonably infer that U.S. Surgical desperately needed a universal seal trocar to remain competitive in the surgical business, that U.S. Surgical’s management did not properly oversee or adequately participate in the development of Versaport II, and that U.S. Surgical’s management placed intense time pressure on their engineers to create a new product. Specifically, the Court noted that of the three opinions of counsel relied upon by U.S. Surgical, one did not even address the issue of infringement, and another letter arrived after U.S. Surgical began selling Versaport II. In addition, U.S. Surgical’s General Counsel admitted that U.S. Surgical wanted “no gap” in the supply of Versaport trocars once the Applied I injunction took effect. Based on this evidence, the Court concluded that a jury could have reasonably determined that U.S. Surgical paid little if any attention to the opinion letters, and that they would have proceeded to manufacture Versaport II despite outside legal opinions to the contrary.

    Therefore, the district court did not err in denying U.S. Surgical’s motion for judgment as a matter of law as to whether U.S Surgical’s infringement was willful.

    III. Did the district court abuse its discretion in allowing Applied to introduce evidence regarding the Applied I litigation, including the jury’s finding that U.S. Surgical’s infringement was willful?

    The Court held that district did not abuse its discretion because the Applied I litigation was relevant to U.S. Surgical’s state of mind with respect to willfulness. Specifically, the Court reasoned that the Applied I litigation was relevant to the reasonable royalty analysis because the hypothetical negotiation in 1997 took place on the heels of the Applied I jury verdict. In addition, the jury’s determination of willfulness in Applied I is relevant because U.S. Surgical’s in-house counsel testified that U.S. Surgical initiated the design of Versaport II because Applied had commenced the Applied I litigation. Furthermore, the Court noted that U.S. Surgical admitted that the Applied I verdict caused U.S. Surgical to redouble its efforts to avoid willful infringement.

    Thus, because the Applied I litigation was relevant to U.S. Surgical’s state of mind, and because U.S. Surgical could not show that the probative value of this evidence was outweighed by the danger of unfair prejudice, the Court held that the district court did not abuse its discretion in allowing the evidence to be introduced.

    Gautham Bodepudi received a B.S. in electrical engineering from the University of Illinois and a J.D. from the University of Chicago School of Law. He is an associate in MBHB’s Chicago office. Contact Gau.