Monsanto v. McFarling: CAFC Affirms “Reasonable Royalty” of 140% of Purchase Price

Damages, Patent, Patent Cases 2007,

Monsanto v. McFarling (Fed. Cir. 2007).

Soybean.USDAMonsanto is one of the few patentees that sues individuals for patent infringement.  In Monsanto’s case, the infringers are farmers who allegedly save & replant Monsanto’s patented genetically modified seeds violation of their “Technology Agreement”. When McFarling was found liable, the Missouri jury assessed damages of $40 per seed-bag and the court issued an injunction.

Monsanto customarily requires a royalty payment of $6.50 per seed-bag in addition to $22 per bag for the soybean seeds themselves.  On appeal the CAFC focused on the proper royalty measure.  McFarling argued that $6.50 was the “established” royalty while Monsanto argued that the actual royalty rate is much greater.

The Court agreed with Monsanto that the nominal designation of $6.50 as a royalty was not the entire sum of the damages:

Picking $6.50 as the upper limit for the reasonable royalty would create a windfall for infringers like McFarling. Such infringers would have a huge advantage over other farmers who took the standard Monsanto license and were required to comply with the provisions of the license, including the purchase-of-seed and non-replanting provisions. The evidence at trial showed that Monsanto would not agree to an unconditional license in exchange for a payment of $6.50, and the explanation—that Monsanto would lose all the benefits it gets from having the cooperation of seed companies in promoting Monsanto’s product and controlling its distribution—is a reasonable commercial strategy.

In fact, the CAFC found that the royalty rate can easily be calculated as something above the total $28 dollars per bag paid.

[I]t would be improper to hold that Monsanto’s reasonable royalty damages are limited to $25.50 to $28.50 per bag.

The damage amount, instead of being based on the amount usually paid by farmers, legitimately includes (a) the harm being felt by Monsanto because of the infrinement as well as (b) the additional benefits garnered by McFarling. In particular, these include: reputational harm due to rogue planters, potential lapses in monsanto’s database of planting techniques; bargaining power; as well as McFarling’s increased yeald of $31 – $61 per acre.

Based on those advantages alone, it was reasonable for the jury to suppose that, in a hypothetical negotiation, a purchaser would pay a royalty of $40 per bag for the Roundup Ready seed.

Under CAFC law, a jury’s damage award will be affirmed unless “grossly excessive or monsrous, clearly not supported by the evidence o rbased only on speculation or guesswork.” Here the court found sufficient reasons for the verdict and affirmed.

Established Royalty: Typically, an “established royalty” is the best measure of reasonable royalty damages when “the patentee has consistently licensed others to engage in conduct comparable to the defendant’s.” The rule of established royalty rate does not apply here, however, because Monsanto apparently never allows for replanting — Thus, there are no “comparable” replanting licenses.

Blacklist: The court also noted that Monsanto may blacklist Mr. McFarling from buying its seeds. 

Notes:

  • Mark Lemley of Stanford argued on behalf of the Farmer, McFarling.
  • Several other issues are included in the decision.
  • Read the case.

 

Forgent v. EchoStar: Jury Instruction on Obviousness

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Earlier this week, a Texas jury determined that Forgent’s patent claims against EchoStar were all invalid as anticipated, obvious, and lacking proper written description. Although the one-sided decision probably did not receive a boost from the recent decision of KSR v. Teleflex, it is interesting to note that the jury instructions on obviousness-by-combination closely follow DyStar and other new CAFC obviousness cases.

Jury Instructions:

One way to decide whether one of ordinary skill in the art would combine what is described in various items of prior art, is whether there is some teaching, suggestion, or motivation in the prior art for a skilled person to make the combination covered by the patent claims. Motivation can be implicit. In other words, motivation need not be explicit.

It is common sense that familiar items may have obvious uses beyond their primary purposes, and a person of ordinary skill often will be able to fit the teachings of multiple patents together like pieces of a puzzle. Multiple references in the prior art can be combined to show that a claim is obvious. Any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed. To determine whether there was an apparent reason to combine the known elements in the way a patent claims, you can look to interrelated teachings of multiple patents, to the effects of demands known to the design community or present in the marketplace, and to the background knowledge possessed by a person of ordinary skill in the art. Neither the particular motivation nor the alleged purpose of the patentee controls. One of ordinary skill in the art is not confined only to prior art that attempts to solve the same problem as the patent claim.

 Notes:

DOE Requires Expert Evidence / NDA Still Good After Expiry

Patent,

Motionless Keyboard v. Microsoft (Fed. Cir. 2007).

Patent.Law002Tom Gambaro is two patents related to ergonomic game-controllers.  Like many solo-inventors, Gambaro invented on his own [thin] dime — in particular, he held day jobs as a “graphic artist and dishwasher” and lived “in a friend’s attic.”  After a long process of obtaining seed-money from investors, Gambaro filed for patent protection and assigned the patent to Motionless.  Motionless then sued Microsoft and others for infringement. On summary judgment, however, the district court found the patents invalid for prior public use and not infringed.

Infringement: The Motionless patent claim language requires a “concavity” in the grip housing. Because none of the accused devices included this express limitation, summary judgment of non-infringement was affirmed. Infringement under the Doctrine of Equivalents failed because Motionless did not present “particularized testimony” showing that differences between the claim element and accused device were insubstantial. (I.e., a technical expert is necessary to win on DOE).

Public Use: The CAFC found the Motionless patent not invalid, reversing the lower court’s decision on that issue. Prior to the patent’s critical date, Gambaro disclosed his inventions several persons under a NDA that also expired prior to the critical date.  These disclosures, according to the CAFC were not “public” as required by Section 102(b) because they originally occurred under a NDA. One additional disclosure to a tester was not under a signed NDA.  That disclosure, however, was not considered a public use because the invention was not “connected to be used in the normal course of business to enter data into a system.”  In addition, the tester later signed a NDA.

Terminal Disclaimer: The district court had also found one patent invalid based on a terminal disclaimer filed by Gambaro — holding that the disclaimer was an admission of obviousness. The CAFC quickly reversed that portion of the decision.

A terminal disclaimer simply is not an admission that a later-filed invention is obvious. Thus, the trial court erred on this point and the ‘322 patent is not invalid due to obviousness.

Reversed-in-part

Notes:

  • Like Gambaro, for the next month, I’ll be living in a friend’s attic while teaching Patent Law at Franklin Pierce Law Center in Concord, NH. The friend is patent attorney Steve Finch of Finch & Nguyen.
  • In an earlier decision, the CAFC held that Gambaro could not argue on behalf of Motionless “pro se.”

 

No Trademark Protection for ASPIRINA — Too Close to Generic Aspirin

Patent

In re Bayer (Fed. Cir. 2007)

The Trademark Office Appeal Board (TTAB) found the mark ASPIRINA merely descriptive of analgesics. On appeal to the CAFC, Judge Moore filed a majority opinion agreeing that the TTAB had reached the critical ‘substantial evidence’ threshold and thus affirmed.

The Board concluded that consumers will view ASPIRINA as merely a variation or misspelling of the generic term aspirin and determined that the terms are close in sound, appearance, and meaning. The Board also found that ASPIRINA immediately conveys the impression that Bayer’s analgesics are aspirin-based products. . . .

Under the deferential substantial evidence standard of review, the Board’s decision must be affirmed. Where two different conclusions may be warranted based on the evidence of record, the Board’s decision to favor one conclusion over the other is the type of decision that must be sustained by this court as supported by substantial evidence.

In particular, the CAFC noted that ASPIRINA looks and sounds like aspirin – the same basic product. In addition, a number of online dictionaries show that ASPIRINA is a common spanish-language translation for aspirin.

Judge Newman filed a dissent, arguing that a mark’s closeness to a generic word is not determinative of its trademark status. Rather, according to Newman, the Court should examine whether ASPIRINA serves to associate the goods with their source.

  • Of note — the majority gave no weight to the fact that ASPIRINA has been registered in 34 other countries. Judge Newman would have given weight to that international business information.

Patent Reform 2007: Apportionment of Damages

Patent, Patent Legislation, ,

Patent are business tools that can help ensure some monetary reward for innovative effort.  Although few patent are litigated through final decision, the threat of litigation casts an ever-present shadow on licensing negotiations and inter-corporate dealings.  Of course, any underlying threat is closely related to the size of potential damages and strength of a potential injunction.  In the past two-years, damages in particular have become more important as the Supreme Court’s decision in EBay v. MercExchange lessens the likelihood of injunctive relief.

There has been little scholarly discussion of how ongoing money damages should be assessed when an injunction is denied.  I take the position that a denial of an injunction should not necessarily result in a compulsory license and that there are many times when continued infringement would be considered willful.

The Patent Reform Acts of 2007 (both House and Senate) propose changes to damage calculations that would require specific economic analysis to ensure that any reasonable royalty damage award captures "only [the] economic value properly attributable to the patent’s specific contribution over the prior art."  These calculations would apparently apply to calculations of both past and future damages. CAFC Chief Judge Michel recently testified before Congress — discussing some practical implementation of the damage modifications:

[T]he provision on apportioning damages would require courts to adjudicate the economic value of the entire prior art, the asserted patent claims, and also all other features of the accused product or process whether or not patented. This is a massive undertaking for which courts are ill-equipped. For one thing, generalist judges tack experience and expertise in making such extensive, complex economic valuations, as do lay jurors. For another, courts would be inundated with massive amounts of data, requiring extra weeks of trial in nearly every case. Resolving the meaning of this novel language could take years, as could the mandating of proper methods. The provision also invites an unseemly battle of "hired-gun" experts opining on the basis of indigestible quantities of economic data. Such an exercise might be successfully executed by an economic institution with massive resources and unlimited time, but hardly seems within the capability of already overburdened district courts. Appellate issue would also proliferate increasing complexity and delays on appeal, not to mention the risk of unsound decisions.

I am unaware of any convincing demonstration of the need for either provision, but even if the Committee ultimately concludes that they would represent an improvement over current patent policies embedded in Title 35 of the United States Code, their practicality seems to me very dubious. That is, the costs in delay and added attorneys fees for the parties and overburden for the courts would seem to outweigh any potential gains. Finally, even if the policy gains were viewed as significant, the courts as presently constituted simply cannot implement the provisions in a careful and timely manner, in my judgment.

(more…)

What a Mess: Inequitable Conduct Based on Failure to Submit

Patent,

McKesson Information Solutions v. Bridge Medical (Fed. Cir. 2007)

[UPDATED] McKesson lost at the district court — the judge found that its patent was unenforceable due to inequitable conduct during prosecution.  The bad-deeds involved McKesson’s patent attorney who failed to submit three material pieces of information. On appeal, the CAFC affirmed.

The key facts in this case involved two similar applications pending before the PTO.  The three documents from the first case that were not cited in the second included: a prior-art patent; offices-actions; and the grant of the first case. The court found no clear error in the finding of materiality of these omissions or intent to deceive.

Judge Newman dissented:

It is not clear and convincing evidence of deceptive intent that the applicant did not inform the examiner of the examiner’s grant of a related case of common parentage a few months earlier, a case that was examined by the same examiner and whose existence has previously been explicitly pointed out by the same applicant. Nor is it clear and convincing evidence of deceptive intent that the applicant did not cite a reference that the applicant had cited in the same related case, and that had been explicitly discussed with the same examiner in the related case.

…

In Kingsdown, we observed that, "To be guilty of inequitable conduct, one must have intended to act inequitably." 863 F.2d at 872. That standard was not met here. This court returns to the "plague" of encouraging unwarranted charges of inequitable conduct, spawning the opportunistic litigation that here succeeded despite consistently contrary precedent.

This is a major opinion for prosecutors. A further post will follow in June.

Patently-O TidBits on Patent Reform

Patent, , ,
  • John Sullivan, GC of the Commerce Department, has written a letter to support [UPDATED] Patent Reform [but not H.R. 1908].  The Commerce Department suggests reforms that would require applicants to submit higher-quality patent applications.  In reality, this can be translated as adding the submission requirements of accelerated examination to every case.  That approach is likely quite costly for applicants. However, it is undeniable that patent quality is a two-way street.  Low quality patent applications regularly lead to low quality patents.  A head-in-the-sand approach will not work here. The patent community should come-together with a set of best-practices for patent application drafting that can be implemented as rules. These practices should include definitions for claim terms; a more helpful discussion of prior art; a date of invention.  Done correctly, a few simple changes in the patent document could eliminate many of the current validity and claim construction issues that are so alive today. To be practicable for prosecuting attorneys, these reforms should be coupled with reform of the ‘rules’ of inequitable conduct, which are currently in a state of disarray. [Commerce Dept Letter].
  • The Commerce Dep’t letter opposed a number of particulars of currently proposed legislation, including first-to-file.
  • The House IP subcommittee has approved the language of H.R. 1908. It now goes to the full judiciary committee for a vote.
  • PTO Solicitor John Whealan has been seconded to the US Senate to iron-out the patent reform details. Stephen Walsh, a career PTO official, will reportedly Whealan’s shoes as Solicitor. Congratulations to both men!
  • A large number of biotech companies have also provided their statement regarding reform. The group opposes "apportionment of monetary damages for patent infringement, expansive PTO rule making authority, an open-ended post grant opposition system, and a narrow grace period." [Coalition letter]

Other TidBits:

  • Patently-O has taken-on its first advertising contract — Patent Supply Co. (See the left toolbar). 
  • Etherton Law Group in Phoenix needs you (so long as you are a quick-witted patent attorney with a couple-years experience). [LINK]
  • At BIO2007, biotech business executives were asked to rate on a scale of 1-10, the most helpful actions that that the federal gov’t could take.
    • Price controls: 71% rated 8-10;
    • International harmonization of patent laws: 59% rated 8-10;
    • Increase funding for biomedical research: 59% rated 8-10;
    • Increase funding for biofeuls: 41% rated 8-10. (Survey by Peter D. Hart Research Associates).

In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal

Patent,

In re Seagate questions the scope of privilege and work-product waiver associated with an opinion-of-counsel defense to willfulness. In a new article, Joseph Casino and Michael Kasdan attempt to re-focus the debate by arguing for a "temporal limitation on the scope of waiver which is not hinged on retaining separate [opinion and litigation] counsel."  In addition, the article delves further into the CAFC’s Quantum dicta, which encourages bifurcation of trials for liability and willfulness issues.

In In re Seagate Technology, L.L.C., the en banc Federal Circuit has the opportunity (and, it seems, the desire) to squarely address the troubling issues that have arisen in connection with the doctrine of willfulness. The manner in which the Court resolves these issues could have far-reaching impact on accused infringers’ practice of obtaining opinions of counsel and on their practical ability to rely on these opinions to defend against a charge of willful infringement without exposing their ongoing communications with and the work-product of their trial counsel.

The Federal Circuit should adopt a waiver doctrine that encourages the procurement and reliance upon opinions of counsel when one becomes aware of a pre-suit infringement assertion. In such cases, the solution of adopting a temporal cut-off to the waiver of attorney work-product and communications that occur after the litigation has been initiated strikes the proper balance for both patentees and accused infringers. However, it would be a mistake to seek a similar result by creating a bright-line rule that depends on the use of separate trial and opinion counsel to insulate post-litigation communications with counsel from discovery. Further, mandating bifurcation of willfulness issues until after a determination of liability would ease waiver concerns no matter what waiver framework is adopted by the Federal Circuit.

Read the article: [HTML] [PDF]. Preferred Citation: Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1, https://patentlyo.com/lawjournal/2007/05/in_re_seagate_t.html.

Poking a Small Hole in Your Settlement Agreement: Successors

Patent

General Mills v. Kraft Foods (Fed. Cir. 2007).

Fruit by the Foot is similar the more popular Fuit Roll Up. The product is essentially three-feet of mashed fruit mixed with corn-syrup. General Mills patented this new food (U.S. Patent No. 5,723,163) and then sued Farley Candy Company for infringement.  The Farley case settled with an agreed lump-sum payment for General Mills and a covenant not to sue Farley or its successors on the patent. The settlement includes a provision that successors only have rights under the agreement if the entire business is transferred.

After the settlement, Kraft purchased Farley’s entire business, properly becoming a successor under the agreement.  Kraft then sold-off most of Farley’s business to a third party, but attempted to hold-on to its right of continued infringement.  General Mills then sued for infringement.

On appeal of a R.12(b)(6) dismissal, the CAFC gave a literal interpretation to the settlement agreement: First finding that Kraft had properly become a successor based on its purchase of the entire Farely business. Then, because the agreement did not specifically address the issue of divestiture of assets, the court held that Kraft maintained its right to infringe despite selling the Farley assets.

Dismissal affirmed

Notes:

  • The case also includes a Civil Procedure gem for those of you thinking about responding to an amended complaint:

Here, the court held that a response to an amended complaint is still due within 10-days regardless filing of a R.12(b)(6) motion to dismiss. R.12(a)(1) and (a)(2) provide the rules regarding timing of responive pleadings; R.12(a)(4) allows a delay in filing a responsive pleading under certain conditions; and R.15 provides a 10-day window for responding to amended complaints in particular. The opinion focused on the the phrase “these periods of time” to limit the delay provision of 12(a)(4) so that it only applies the timing provisions of Rule 12 (and not Rule 15).

“Rule 12(a)(4) then provides that “[u]nless a different time is fixed by court order, the service of a motion permitted under this rule [including a Rule 12(b)(6) motion to dismiss] alters these periods of time” so as to extend the deadline until a motion is ruled upon. Fed. R. Civ. P. 12(a)(4) (emphasis added). However, the time for answering an amended complaint is not one of “these periods of time.” Rather, the deadline for responding to an amended complaint is established separately under Rule 15: “A party shall plead in response to an amended pleading within the time remaining for response to the original pleading or within 10 days after service of the amended pleading, whichever period may be the longer, unless the court otherwise orders.” Fed. R. Civ. P. 15(a).”

This decision confused me because the phrase “these periods of time” is not found in my version of Rule 12(a)(4).  Rather, my version discusses “the periods of time . . . [for] responsive pleading,” which might then include a response to an amended complaint under Rule 15.  As you can see below, my version is different than the CAFC’s!   In the future, differences will be corrected by the Supreme Court’s upcoming amendment: Effective December 1, 2007, Rule 12 will be amended to “these periods.”

Various sources have different versions of the rule:

  • Cornell Online Version: “the periods of time.”
  • USCS Fed Rules Civ Proc R 12 (Lexis): “the periods of time.”
  • Federal Rules (Thompson West 2005 Rev. Ed.): “these periods of time.”
  • Federal Rules (Westlaw 2007): “these periods of time.”
  • All cases found in Lexis & Westlaw cite to the rule as “these periods of time.”

Interference: Junior Party’s "Appreciation" Requirement Limited to Subject Matter of Invention

Patent

Henkel v. Procter & Gamble (Fed. Cir. 2007).

Henkel and P&G both make dishwashing detergent tablets, and both parties applied for patents on tablets with two-regions that dissolve at different rates. P&G filed its application one-month before Henkel, and thus became the senior party in the interference proceeding.

The BPAI awarded priority to P&G after finding that Henkel had not proven an earlier conception and reduction to practice. The BPAI opinion turned on the finding that Henkel had not proven an appreciation of its invention that was contemporaneous with conception and reduction to practice.

On appeal, the CAFC reversed, finding that the “appreciation” requirement is not so strict. 

As a matter of law, we do not require that a junior party in an interference demonstrate that it recognized the exact language of the ultimate count—only the subject matter of the invention.

In discussing the appreciation requirement, the court noted that the requirement is to prevent a late filer from obtaining priority after “unwittingly and accidentally created something new.” That was not the case here.

Vacated and remanded.

BPAI May Not Substitute its Engineering Expertise for Hard Evidence (In an Interference)

Patent, , ,

Brand v. Miller (Fed. Cir. 2007).

Both Capital Machine and Miller Veneers claim rights in a new method of cutting veneer from logs using a “tapered filch.”  Brand, the inventor on Capital’s application now works for Miller, and the two companies had a close-relationship at the time of the applications. Capital filed its patent first, but Miller argued that Capital’s invention had been entirely derived from a documents and information provided by Miller.

Derivation: In an interference, impermissible derivation requires a showing of prior conception by the junior party and communication of concepts to the senior party that would enable construction and operation of the invention.  These elements are questions of fact.

In an interference, the BPAI awarded priority to Miller, finding that Miller’s communications to Capital were sufficiently enabling. In its appeal to the CAFC, Capital argued that the BPAI had improperly relied upon its own experience instead of evidence in holding that the Miller communication was enabling.

Substantial Evidence of Factual Findings: Appeals from the BPAI interference decision are governed by Section 706 of the Administrative Procedures Act (APA). The CAFC’s interpretation of that section requires that “findings of fact by the Board must in all cases be supported by substantial evidence in the [four corners of the closed] record.” Thus, it is impermissible for the BPAI to base factual findings on its own experience as opposed to evidence on record.

 Here, the court found that the board had-indeed “substituted its own expertise for record evidence” of how the information communicated by Miller would be arranged to perform the claimed method. “Under such circumstances the Board’s decision was not supported by substantial evidence in the record.”

Microsoft: FOSS Infringes Our Patents

Patent

Microsoft’s Brad Smith (General Counsel) and Horacio Gutierrez (Licensing) were recently interviewed in Fortune. According to the pair, open source software (FOSS) infringes at least 235 Microsoft patents. These include 42 patents infringed by the Linux kernel; 65 patents infringed by Linux GUI; 45 patents infringed by the FOSS Open Office suite; and 15 infringed by FOSS email programs.

Microsoft refuses to state which particular patents are infringed in an attempt to avoid retaliation from FOSS advocates. However, the statements certainly put Linux and its users under a dark cloud — potentially sufficient for a declaratory judgment action under MedImmune v. Genentech (2006).

Microsoft’s patent filing have ramped-up significantly over the past five-years, and the company will likely top the list of new-patent-owners in the coming years.

The Nuts and Bolts of Federal Circuit Practice

Patent

The Federal Circuit Bar Association is hosting what appears to be an informative webcast on Monday, May 14 from 2-3pm EST on “The Nuts and Bolts of Federal Circuit Practice and Recent Rule Changes.” The panel consists of three CAFC clerks, including the Chief Clerk Jan Horbaly. (These are permanent clerks who handle administration and operation of the CAFC, not the recent law-grad LexisNexis clerks). Noted attorney Larry Kass of Milbank is moderating.

According to Larry: This webcast will provide a practical “How To” discussion of the rules and issues that practitioners and companies must face when appealing to the Federal Circuit.  Join the webcast for a behind-the-scenes tour of the Court’s operations from the time the appeal is docketed to the day the mandate issues. 

$75 to register here. [Updated Link — Password is fcba2007]

Continuations Rules: Not too bad?

Patent

Rumors via Hal Wegner:

The continuation rules continue to be the corridor talk of the Boston AIPLA meeting which continues through tomorrow. One respected source has stated to have received information from inside the PTO that the continuation rules package is extremely thick (undoubtedly to respond to the numerous issues raised in testimony) and that the following are essential elements of the rulemaking package:

The “2+1” Limit on Continuations/RCE’s: “2+1”: First, a patent applicant is limited to one (1) RCE and (2) continuing applications. The rules will be applied retroactively for cases that have not yet received a first action on the merits.

“3+1 Transition Rule”: For cases which do have a first action by the time of the new rules, a “bonus” continuation will be allowed, i.e., a total of one (1) RCE and three (3) continuations.

The “25/5” Claim Limits: Twenty-five (25) total claims, including up to five (5) independent claims.

CAFC Applies KSR: Affirms Obviousness

Patent, ,

Leapfrog v. Fisher-Price (Fed. Cir. 2007).

In their first true application of the Supreme Court’s obviousness pronouncement in KSR v. Teleflex, the Court of Appeals for the Federal Circuit (CAFC) affirmed a finding of obviousness.

Leapfrog and Fisher-Price compete in the toy market. In this case, leapfrog sued Fisher-Price — alleging that Fisher-Price’s PowerTouch Learning System infringes claim 35 of Leapfrog’s patent.

The trial court found the patent not-infringed and invalid as obvious.  On appeal, the CAFC affirmed, noting that the obviousness analysis requires a common sense approach rather than any rigid formula.

An obviousness determination is not the result of a rigid formula disassociated from the consideration of the facts of a case. Indeed, the common sense of those skilled in the art demonstrates why some combinations would have been obvious where others would not. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. __ (2007) (“The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.”).

The results may have serious implications for Internet-related patents that have a close non-Internet corollary. The two pieces of prior art were Bevin (electro-mechanical, but not electronic, toy for phonetic learning) and SSR (electronic book-type toy). Together, the two references teach almost all the elements of the asserted claim, and the courts found their combination to be appropriate.

We agree with the district court that one of ordinary skill in the art of children’s learning toys would have found it obvious to combine the Bevan device with the SSR to update it using modern electronic components in order to gain the commonly understood benefits of such adaptation, such as decreased size, increased reliability, simplified operation, and reduced cost. While the SSR only permits generation of a sound corresponding to the first letter of a word, it does so using electronic means. The combination is thus the adaptation of an old idea or invention (Bevan) using newer technology that is commonly available and understood in the art (the SSR). We therefore also find no clear error in the finding of the district court that one of ordinary skill in the art could have utilized the electronics of the SSR device, with the method of operation taught by Bevan, to allow a child to press each individual letter in a word and hear the individual phonemes associated with each letter to sound out the words.

The one remaining limitation — a “reader” — was “well-known in the art at the time of the invention” and its combination. That known element could be combined because it provides “an added benefit and simplified use of the toy for the child in order to increase its marketability.”

Finally, the court gave the patentee a chance to avoid the combination.

Leapfrog presents no evidence that the inclusion of a reader in this type of device was uniquely challenging or difficult for one of ordinary skill in the art. Nor does Leapfrog present any evidence that the inclusion of a device commonly used in the field of electronics (a reader), and even in the narrower art of electronic children’s toys, represented an unobvious step over the prior art.

Secondary factors not enough to save the day:

The district court explicitly stated in its opinion that Leapfrog had provided substantial evidence of commercial success, praise, and long-felt need, but that, given the strength of the prima facie obviousness showing, the evidence on secondary considerations was inadequate to overcome a final conclusion that claim 25 would have been obvious.

Obviousness affirmed.

Notes:

  • Judgment of non-infringement was also affirmed.
  • Read the case 

Commerce Secretary Gutierrez Appoints Margaret Peterlin as PTO Deputy Director

Patent, ,

Margaret J.A. Peterlin has been appointed as the deputy director of the USPTO — second-in-command behind director Jon Dudas. Like the Director, Ms. Peterlin is a University of Chicago Law School graduate and spent most of her legal career in the halls of Congress. The job of deputy director opened-up after Steve Pinkos left to return to Texas.  Jon Dudas was the Deputy Director from 2002 to 2004 when his promotion came-through.

From the USPTO Press Release:

“Margaret is a tremendous asset to the USPTO. With an impressive track record of success across several disciplines, she has established herself as a proven leader, strategic legal thinker, and knowledgeable legislative tactician,” said Jon Dudas, Under Secretary of Commerce for Intellectual Property and Director of the USPTO.  “Margaret will apply these skills to USPTO’s challenges, which she well understands from her time representing the leadership of the U.S. House of Representatives.  Margaret’s leadership will be instrumental in the USPTO’s efforts to work with applicants to enhance the quality of their applications, process patents and trademarks in a timely manner, and operate in a way that motivates our employees and inspires our international partners.”

The role of deputy director is appointed by the “Secretary of Commerce, upon nomination by the Director . . . [and] shall be a citizen of the United States who has a professional background and experience in patent or trademark law.” 35 U.S.C. 3.

Ms. Peterlin’s full title will be: Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the Commerce Department’s United States Patent and Trademark Office.

 

 

Links:

Thank you MBHB, Hello Missouri!

Patent

I have been a part of McDonnell Boehnen Hulbert & Berghoff (MBHB) for the past six years. First as a law clerk, then an associate, and finally in an of counsel role while teaching at Boston University Law School.  Like many of my UChicago classmates, I could have taken a job at almost any major firm in the country. I chose MBHB because I enjoyed and respected the people and fit-well with the firm’s entrepreneurial spirit.  And although I hate to admit it, the firm’s over-generous payscale was also a draw. I want to thank all of my friends at MBHB for your mentorship, faith in me, and for the freedom-to-operate these past six years.  Your support has been a daily affirmation that my decision was correct.

A year ago, I had no intention of staying in academia — we were simply enjoying a sojourn in Boston.  But I have loved this year of teaching and writing at BU Law School and the opportunity to think a little-bit deeper about the law.  I recently accepted a position as an associate professor at the University of Missouri Law School in Columbia Missouri.  We chose Mizzou for a few reasons: I really like the faculty — there are at least four other engineer-law-professors, several others who are also interested in IP law, and even a few bloggers. (Lambert, McGuinness, and newly Sokol).  MU’s location is also excellent because many of our family members live nearby. Columbia regularly ranks as one of the best places to live and raise a family — this is largely driven by the low cost of living and the plentiful spots for hiking & fishing.

My plan is to focus primarily on teaching and writing for the first few years, although I hope to keep my hands a bit dirty as well. Thanks MBHB, and Hello Missouri!

Links:

CAFC Affirms Disqualification of Defendant’s Attorneys

Patent, Patent Cases 2007,

In re Hyundai Motor Am., 185 Fed. Appx. 940 (Fed. Cir. 2006)

Orion IP has accused dozens of companies of infringement of its business method patents ("computer-assisted sales").  At one point, Orion worked with the Orrick firm on some matters and Orrick made a pitch to handle Orion’s litigation and patent strategy work. Orion demurred.  Once litigation began, Orrick got back in the game by agreeing to represent several of the accused infringers directly adverse to Orion.

The Texas district court noted a conflict-of-interest and disqualified Orrick.  On writ of mandamus, the CAFC affirmed — finding no error.

The parties apparently presented diverging evidence as to the subject-matter of early meetings between Orrick and Orion and the type of documents exchanged.  The CAFC noted that these were purely factual questions that the lower court "resolved in Orion’s favor" without any clear error.

In order to prevail, Hyundai must clearly and indisputably show clear error in the district court’s findings of fact and application of the facts to the law. Hyundai has not carried its burden. This is essentially a factual dispute, which the district court resolved in Orion’s favor. The district court held a hearing, considered the competing declarations, and reviewed the pertinent documents. We do not find a basis for overturning those findings.

Disqualification affirmed.

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