The Senate Intellectual Property subcommittee held hearings on Monday, April 25, 2005 to discuss patent reform. Some highlights:
Jon Dudas, Director of the Patent Office believes in the goal of “educating the world on the importance of patents.” I believe that a major part of this should be to restore the mystique of the American inventor/entrepreneur.
On behalf of the AIPLA, Michael Kirk shot down BSA proposals to limit the availability of injunctive relief and the size of damage awards. Kirk also mentioned that Congress should consider repealing 35 U.S.C. 271(f).
David Simon from Intel promoted changes to the notion of when an injunction should be granted. In his viewpoint, there should be “a return equitable principles to determine whether an injunction should be granted.”
Hoffer v. Microsoft Corp. (Fed. Cir. 2005) (per curiam).
By Eric Moran
In Hoffer, the patentee (appearing pro se) appealed a summary judgment holding that defendants Microsoft, IBM, and Ariba did not infringe claim 21 of U.S. Patent No. 5,799,151 (the ‘151 patent) and that claim 22 of the ‘151 patent was invalid for indefiniteness.The Federal Circuit reversed the judgment on invalidity and affirmed the judgment of noninfringement.In affirming the judgment of noninfringement, the Federal Circuit affirmed the construction of a “whereby” clause, which “generally states the result of a patented process” and generally does not limit claims.Here, however, as discussed below, the Federal Circuit held that when a “whereby” clause “states a condition that is material to patentability, it cannot be ignored in order to change the substance of the invention.”
The ‘151 patent involves methods and systems that allow remote users of computer terminals to obtain economic data from an index, and interactively post and receive messages concerning economic topics.Claim 21 of the ‘151 patent in Hoffer included the phrase:
whereby a trade network supports users at said plurality of [remote user terminals] who are each guided by said [integrated application program interface] to select an economic activity, to identify that index topic that corresponds to said activity, to enter that topic board dedicated to said topic, and who are collectively able to concurrently engage in interactive data messaging on said topic boards.< ?xml:namespace prefix ="" o />
The accused method allows real-time posting of messages, but not interactive data messaging in which users can communicate with each other.
The patentee argued that under Minton v. Nat’l Ass’n of Securities Dealers, Inc., 336 F.3d 1373, 1381 (Fed. Cir. 2003), a “whereby” clause cannot limit method claims when the “whereby” clause simply states the intended result of a method step.In particular, the patentee contended that the “whereby” clause in claim 21 did not state the mechanics of the claimed method, but only stated an overall objective, and, moreover, his invention does not require interactive messaging.
The Federal Circuit disagreed, finding that, based at least on the “Summary of the Invention” section of the patent and statements in the prosecution history, interactive messaging “is more than the intended result of a process step; it is part of the process itself. . . . [It is] an integral part of the invention.”Thus, the Federal Circuit held that the “whereby” clause stated a condition that was material to patentability, and claim 21 was limited to interactive messaging and did not extend to real-time posting of messages.
Judge Newman, in a panel that also included Judges Bryson and Dyk, authored a concurrence in which she disagreed with the panel’s failure to decide each of the appealed claim construction issues.
Eric Moran (moran@mbhb.com) is an attorney at the intellectual property law firm of McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. His practice runs the gamut of intellectual property issues and includes patent, trademark, and domain name disputes.
Merck & Co. v. Teva Pharmaceuticals (Fed. Cir. 2005) (on petition for rehearing).
Merck & Co. owns the patent on the best-selling drug Fosamax. Teva, a generic manufacturer lost an infringement case at the district court after the court found the patent valid and infringed. In January 2005, the Court of Appeals for the Federal Circuit reversed the district court — vacating the lower court’s finding of validity and infringement.
Merck, with the amicus support of PhRMA, subsequently filed a petition for rehearing en banc. The CAFC has denied that the request, thus maintaining the panel decision.
DISSENT: In a two-page dissent, Judge Lourie, supported by Chief Judge Michel and Judge Newman, argued that the panel decision erroneously concluded that commercial success was not probative to obviousness in this case and by linking commercial success with the failure of others.
Commercial success is a fact question, and, once it is established, as found here by the trial court, the only other question is whether the success is attributable to the claimed invention (“nexus”), rather than to other factors such as market power, advertising, demand for all products of a given type, a rising economy that “lifts all boats,” etc. It is not negatived by any inability of others to test various formulations because of the existence of another patent. Success is success. The panel’s rule is especially unsound in the context of an improvement patent, as here, because it holds in effect that commercial success for an improvement is irrelevant when a prior patent dominates the basic invention.
Commercial success is also independent of any “failure of others,” as that is another, separate secondary consideration.
Respectfully, the full court should have reheard the appeal to eliminate the confusion in the law that the panel opinion creates.
Interestingly, Judge Rader dissented in the three-judge panel opinion, but now agrees with the majority that the case should not be reheard.
The case will be remanded to the district court on April 28, 2005.
A REUTERS article indicates that Merck & Co. plans to petition the Supreme Court to hear an appeal from the CAFC decision.
Alacritech v. Microsoft (N.D. Cal. 2005) (04–C-03284)
In an April 12 decision, Judge Jeffrey White of the Northern District of California granted Plaintiff Alacritech’s motion for a preliminary injunction against Microsoft — thus preventing Microsoft from releasing its TCP Chimney or Longhorn software. Alacritech’s patent covers a software method of establishing a TCP connection with reduced processor load and accelerating digital communication.
In the thirteen page decision, Judge White determined that the patent was likely to be found valid and infringed and that the balance of hardships weighed in favor of the plaintiff, Alacritech. Factors considered include:
A finding of likelihood of success on the merits leads to a presumption of irreparable harm in patent cases;
Because Alacritech is a small start-up, it would not be able to withstand infringing competition from Microsoft; and
Microsoft has not yet released the TCP Chimney software
Back in 1986, Mr. Alton Hornback applied for a patent on a error slope sensor for a missile. The invention was found to be patentable but was withheld from issuance because of a secrecy order under 35 USC 181. The secrecy order was renewed annually until 1999, and the patent finally issued in June of 2000.
Hornback requested compensation for the delay in issuance, arguing that it was a taking. Because Hornback had argued the takings issue in a previous case, the CAFC found that his claim was now barred by res judicata.
Hornback argued that the present case raised new issues because the military had de-classified then reclassified the technology in the interim. The CAFC rejected that argument, however, finding that the classification action internal to the military did not alter his rights — “because only the Commissioner of Patents may rescind a secrecy order.”
In addition, the Appellate Panel agreed that the Court of Federal Claims “does not have subject matter jurisdiction of an adverse ruling of the PTO director.”
28 U.S.C. §1361 vests “original jurisdiction” for the issuance of mandamus orders in the district courts, authorizing the district court to hear any action “to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.”
Dismissal affirmed.
Aside: In 1996, Hornback made another precedent when the CFC held that a pro se patent applicant without legal training is not held to the same standard as trained counsel.
On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity). A transcript of the oral arguments is attached.
Based on the briefs and the oral arguments, I expect that the CAFC decision narrowly interpreting 35 USC 271(e)(1) will be reversed. Respondent Integra’s strongest argument is a technicality — that the question on appeal is not based on any case or controversy remaining between the parties.
In many eyes, the question is not whether Merck’s actions are protected by the statutory safe harbor. Rather, the point of speculation is: How far will the Supreme Court extend the safe harbor?
On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity). However, the oral arguments do not appear to have raised any new issues that will impact the case.
The High Court was critical of the Federal Circuit prose:
“not a crystal clear opinion by any means” (J. Ginsburg).
“pretty foggy” (J. Breyer).
These remarks did not extend to the substance of the opinion. Book-makers expect that the CAFC’s decision will be at least partially reversed — the real question is the eventual breadth of the statute.
In January 2005, Tom Mauro of the Legal Times reported that Justices Sandra Day O’Connor and Stephen Breyer did not participate in the decision to grant cert. Interestingly, both Justices took part in the oral arguments.
Space Systems/Loral v. Lockheed Martin (Fed. Cir. 2005)
By John Smith
Loral, the owner of U.S. patent 4,537,375 (the ‘375 patent), sued Lockheed for infringement of claim 1. The District Court ruled in favor of Lockheed, finding the claim invalid for violating the written description requirement of 35 U.S.C. § 112.
The ‘375 patent is directed to an improved method for maintaining the orientation and attitude of a satellite in space by a process known as station-keeping. After an initial thrust, the satellite re-checks its position, and often fires its thrusters again to better correct its position. Station-keeping thus uses the limited fuel supply on board a satellite and contributes to shortening the life of satellites. The ‘375 patent discloses a method directed to improving the efficiency of the corrective procedure.
Claim 1 of the ‘375 patent entails a multi-step procedure of thruster-firing, data storage, checking of position and correction of position, and minimization of error in correction of position. Essentially, the satellite fires its thrusters to correct its position, then checks its position and compares its current error in position to its previous error in position before firing its thrusters again. Lockheed argued that the patent was invalid, because the second step of claim 1 was not adequately described in the specification.
Defendant Lockheed’s expert, when asked at deposition where one would find the second step description, answered (over counsel objections) that the second step was depicted in Item 96 of Figure 2B. The court found this, along with the testimony of plaintiffs’ expert, established that the specification sufficiently described the claim.
Lockheed also argued that the second step of claim 1 was not inherent in the written description because the specification did not state that the second step was necessarily used in the satellite position correction procedure. On appeal, the Federal Circuit noted that the second step of the claim at issue in the procedure comes only (if at all) after thrusters are fired and actual position error and historical position error are compared. According to the Federal Circuit, this “does not diminish the descriptive content of the specification.”
The Federal Circuit reversed the finding of invalidity, and remanded back to the U.S. District Court for the Northern District of California for further proceedings.
John Smith is an attorney at MBHB LLP in Chicago. He earned both his JD and PhD (inorganic chemistry) from Vanderbilt University. He has co-authored numerous articles and served as a faculty member in the Chemistry Department of Lipscomb University in Nashville, Tennessee.
In his Case Alert, David Long of the Howrey firm correctly noted that this case should be “kept in mind by litigators taking or defending technical expert depositions on written description issues.”
Pamela Jones at GrokLaw, the fabulous pro-Linux blog, has created a patent resource page with links to all the patent resources that you would like to find:
House Subcommittee on the Courts, the Internet and Intellectual Property, chaired by Congressman Lamar Smith (R Tex) has released a patent legislation discussion draft that includes a number of proposed patent reform measures. The House Subcommittee is scheduled to hold an oversight hearing on the discussion draft on Wednesday, April 20, 2005 at 4:30 PM. [Link]. The witness list includes J. Jeffrey Hawley of Eastman Kodak testifying on behalf of the Intellectual Property Owners Association (IPO); Richard J. Lutton of Apple, testifying on behalf of the Business Software Alliance; Jeffrey Kusham, testifying on behalf of Genentech; and William LaFuze of the ABA. In a parallel action, the Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April 21. [Link]. [NOTE — Strong indications are that the Senate will postpone the hearing to April 25].
The current patent statute (35 USC §283) allows courts to grant injunctions to prevent violation of patent rights, but provides little guidance, specifying only that injunctions be "in accordance with the principles of equity." The terms of the injunctions need only be "as the court deems reasonable."
The proposed statute would keep the current language intact, but would add another section spelling out the grounds for granting such injunctions. Under the new language, "a court shall not grant an injunction unless it finds that the patentee is likely to suffer irreparable harm that cannot be remedied by the payment of money damages." In making this finding, the court is not to presume the existence of irreparable harm, but is instead required to "consider and weigh evidence" relating to equitable factors. One of these factors is "the extent to which the patentee makes use of the invention."
One result of the proposed new language is that, in a preliminary injunction determination, a reasonable likelihood of success on the merits would no longer lead to a presumption of irreparable harm. The concept of "irreparable harm" has been extensively adjudicated; that body of case law would seem to remain largely relevant in making the determination called for by the proposed statute.
In the recent case of Eolas v. Microsoft, the Court of Appeals for the Federal Circuit expanded the scope of Section 271(f) – a section that creates a cause of action for infringement due to foreign sales when a component of a patented invention is supplied from the U.S., knowing that the component will be combined in an infringing manner outside the U.S. The court ruled that the statute (i) had no tangibility requirement and (ii) was not limited to apparatus claims.
The proposed legislation would make it clear that a component "is a tangible item that is itself combined physically with other components to create the combination that is alleged to infringe."
This change would essentially overrule Eolas v. Microsoft.
Under the current statute, an employer has quite a bit of trouble filing a patent application when the inventor refuses to sign a declaration or is otherwise unavailable.
In order to file the application without the inventor’s help, the statute (35 U.S.C § 118) requires a proof that such action is “necessary to preserve the rights of the parties or to prevent irreparable damage.”
The proposed changes make it easier for the company to file the application without the inventor’s assistance. Specifically, the proposal allows an assignee (or a person owed an obligation to assign) to apply for a patent after showing that the action is “appropriate.”
The legislation proposes to completely rewrite 35 U.S.C. Section 102 to change (expand) the definition of qualifying prior art. A major change is to substantially eliminate the one-year grace period except in the case where public access of the invention was disclosed (directly or indirectly) by the inventor.
Under the new Section 102, a patent would not be available if:
The claimed invention was (1)(A) patented, described in a printed publication, or otherwise known more than one year before the effective filing date of the claimed invention, (1)(B) patented, described in a printed publication, or otherwise known before the effective filing date of the claimed invention, other than through disclosures made by the inventor or by others who obtained the subject matter disclosed directly or indirectly from the inventor; or (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published under section 122(b), in a case in which the application or the patent names another inventor and the application was effectively filed before the effective filing date of the claimed invention.
According to the proposed statute, an invention becomes “known” when it is “reasonably and effectively accessible” and can be “accessed and comprehended without resort to undue efforts.” The proposal would eliminate 102(c)-(g). The need for these sections seemingly eliminated by the switch to a First-to-File system (supra).
The attached legislative proposal was prepared by the House Subcommittee on Intellectual Property chaired by Congressman Lamar Smith (R Tex). Although the proposal is merely a discussion draft at this point, it is expected that a parallel Bill will be introduced within the next few days. The Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April [25th]. It is quite possible that this proposal will serve as an agenda for the Senate hearings.
The proposed legislation includes changes to:
Creating a post-grant opposition procedures;
Willfulness: Increased damages may not be awarded based merely on the knowledge of a patent or its contents;
Over the past year, the AIPLA, IPO, Microsoft, and others have all been beating the patent reform drum — each with a separate agenda. This proposal appears to be an amalgamation of all the proposals — with enough controversial points to get most everyone up in arms.
Over the next few weeks, Marcus Thymian, Jennifer Swartz, and I will discuss the various sections of the proposal in a series of posts.
KSR International v. Teleflex (On Petition for Certiorari)
In January 2005, the CAFC decided Teleflex v. KSR — holding that when combining two or more references in an obviousness finding, there must be a suggestion or motivation to combine the teachings. This “teaching-suggestion-motivation test” has been a stalwart of Federal Circuit obviousness jurisprudence for twenty years. During that time, the Supreme Court has not heard a single obviousness case.
Now, KSR has petitioned the Supreme Court for a writ of certiorari. In its petition, the company makes a couple of interesting points that may push the High Court to accept the case:
In Anderson’s-Black Rock (1969) and Sakraida (1976), the Supreme Court held that “a combination which only unites old elements with no change in their respective functions” is precluded from patentability under 103(a). Under the Sakraida standard, which remains law, the Teleflex patent is arguably obvious.
With the emergence of Holmes Group, circuit splits will become more of a possibility in patent law. On this issue, the Federal Circuit has acknowledged the existence of a circuit split between itself and the Fifth Circuit. KSR points out that the split extends to other circuits as well. The other circuits have followed the Sakraisa standard while the CAFC sticks to its requirement of an explicit motivation to combine.
A consortium of five major corporations, including Microsoft, Cisco, and Hallmark have filed as amicus supporting the petition. Their brief argues that the current structured test for obviousness is too easy a hurdle for patentees and that the formalities of the test undermines courts ability to truly determine whether an invention is obvious to one skilled in the art.
In addition, Teleflex has filed its opposition to the petition — arguing that (1) obviousness is well settled law and need not be revisited; (2) the CAFC’s test is consistent with Graham; and perhaps most importantly (3) this case does not hinge on the obviousness issue.
In a much anticipated decision, Judge Richard Young of the Southern District of Indiana has ruled that Eli Lilly’s patent covering the drug Zyprexa is valid, enforceable and infringed. The patent is not scheduled to expire until 2011.
The well-written 224 page opinion reads like a biography of Patent No. 5,229,382, the Zyprexa patent. In particular, the court details the prosecution history of the patent and provides a full analysis of the prior art references that the generic manufacturers cited against the patent. In the end, court determined that the generics could not prove invalidity or unenforceability:
Defendants have failed to prove by clear and convincing evidence that claims 1, 2, 3, 7, 8, and 15 of the ’382 patent are invalid as anticipated under 35 U.S.C. § 102, as obvious under 35 U.S.C. § 103, under the double patenting doctrine, or as barred by prior public use under 35 U.S.C. § 102. Defendants have further failed to prove by clear and convincing evidence that the ’382 patent is unenforceable for inequitable conduct.
The defendant generic manufacturers had stipulated that if the ’382 patent is valid and enforceable, then their actions constitute infringement. Thus, the court found that their ANDA submissions constituted an act of infringement.
For years, the TechnoLawyer community has provided insightful e-newsletters with interesting and helpful content. Each week, I receive the TechnoLawyer intellectual property newsletter, known as “IP Memes,” that is written by intellectual property attorney Stephen Nipper. IP Memes is continually filled with important discussions that were often missed by mainstream news organizations.
Jack v. Department of Commerce (Fed. Cir. 2005) (05–3023) (NONPRECEDENTIAL).
Todd Jack is an Examiner at the US Patent Office (PTO). In 2000 Mr. Jack alleged to the FBI that he had been approached by employees of the PTO who “proposed that he join them in a scheme to sell patents and perform patent searches for persons outside the PTO for cash payments.” Mr. Jack made several other allegations regarding identity theft and bribe-taking by PTO employees and he brought his case to several agencies, including a congressional office, the Secret Service, Department of Commerce security officers, and the Office of Inspector General.
Later, in 2002, Mr. Jack’s supervisor gave him a written and oral warning that his performance was “unacceptable.” Another supervisor proposed that Mr. Jack be removed for “(1) Harassing and threatening behavior exhibited toward your supervisor and co-workers; (2) Making false statements concerning another employee; (3) Creating a hostile work environment; and (4) Inappropriate behavior in the workplace.”
In January 2003, the PTO sustained all the charges against Mr. Jack, but reduced the proposed removal to a 120–day suspension.
Mr. Jack filed an appeal at the PTO Board. The administrative judge assigned to the appeal held that the Board lacked jurisdiction and that Mr. Jack had failed to make a non-frivolous allegation that would be protected whistle-blowing activity.
On appeal again, the Court of Appeals for the Federal Circuit (CAFC) did not touch the issue of “whistle-blowing activity.” Rather, the appellate panel found that Mr. Jack’s claims regarding improper procedure at the Board were without merit, and thus, upheld the Board’s decision denying his appeal.
In her most recent patent opinion, Northern District of Illinois Judge Joan Lefkow took both parties to task for their failure to comply with “the straightforward Local Rules of the U.S. District Court for the Northern District of Illinois.”
Before determining whether a genuine issue of material fact exists with regard to either Tel-Lock’s claims or Jasco’s counterclaims, the court must wade through the parties’ Local Rule 56.1 filings. [Motion for Summary Judgment]. It is apparent to the court that both parties, Tel-Lock in particular, require instruction.
Judge Lefkow proceeded to detail the improper legal conclusions submitted, the failure to cite to supporting evidence, and the submission of affidavits filled with conclusory allegations.
In the end, the court granted partial summary judgment to the defendant, Jasco on the issue of price erosion, but denied its invalidity motion. In addition, the Court granted Tel-Lock’s motion to dismiss Jasco’s trademark counterclaim.
Hoffer v. Microsoft Corp. (Fed. Cir. 2005) (per curiam). 
Alacritech v. Microsoft (N.D. Cal. 2005) (04–C-03284)
Hornback v. U.S. (Fed. Cir. 2005). 
Space Systems/Loral v. Lockheed Martin (Fed. Cir. 2005) 
Eli Lilly v. Zenith Goldline (N.D. Ill. 2005). 
In her most recent patent opinion, Northern District of Illinois Judge Joan Lefkow took both parties to task for their failure to comply with “the straightforward Local Rules of the U.S. District Court for the Northern District of Illinois.”