Case Questions CAFC’s Obviousness Jurisprudence

Patent, Patent Cases 2005,

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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.

(more…)

Statements by Patent Examiner to FBI Deemed Frivolous and Not Protected Whistleblowing Activity

Patent, Patent Cases 2005

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 Cir. 2005) (05–3023) (NONPRECEDENTIAL).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.

File Attachment: Jack v. Commerce (21 KB)

CAFC: District Court Improperly Dismissed Infringement Suit for Failure to Serve Defendant

Patent, Patent Cases 2005

PatentlyOImage020Bowling v. Hasbro (Fed. Cir. 2005) (04–1364).

Michael Bowling’s infringement case against Hasbro was dismissed with prejudice by th Arizona district court after Bowling failed to properly serve Hasbro, basing its decision on FRCP 4(m) and 41(b).  The district court then denied Bowling’s motion for reconsideration.

On appeal, the CAFC applied 9th Circuit law and reversed.

The CAFC first determined that FRCP 4(m) does not permit dismissal with prejudice:

Thus, Bowling is correct that the district court’s dismissal with prejudice could not be based on Rule 4(m).

Regarding FRCP 41(b), the CAFC found that the 9th Circuit “places strong emphasis on warning and consideration of less drastic alternatives.”  Because the district court had only warned as to a Rule 4(m) dismissal, the appellate court determined that the warnings were insufficient to warrant a dismissal with prejudice.

As an aside, do not attempt to obtain attorney’s fees by citing a non-existent rule:

Hasbro argues that it is entitled to attorney’s fees and expenses incurred in this appeal under Federal Circuit Rule 47.7(1), even though it chose not to submit any substantive argument in support of the district court’s dismissal. Because no such rule exists, we assume that Hasbro is asserting an entitlement to attorney’s fees under Federal Circuit Rule 47.7(a)(1). In view of our disposition of this case, we see no reason to award Hasbro its attorney’s fees and expenses for this appeal. (Emphasis added).

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CAFC: District Court Failed to Construe Terms in Sufficient Detail for Appellate Review

Patent, Patent Cases 2005

Java Accelerator

Nazomi Communications v. ARM Holdings (Fed. Cir. 2005)

In a dispute over a patented “Java hardware accelerator” for translating Java bytecode into native instructions for a CPU, the district court construed the claim term “instruction” and found that ARM’s accused device did not infringe.

On appeal, the Federal Circuit found that the lower court had not been detailed enough in its claim construction ruling:

This court’s review of a district court’s claim construction, albeit without deference, nonetheless is not an independent analysis in the first instance. Moreover, in order to perform such a review, this court must be furnished "sufficient findings and reasoning to permit meaningful appellate scrutiny." Gechter v. Davidson, 116 F.3d 1454, 1458 (Fed. Cir. 1997). This requirement for sufficient reasoning applies with equal force to issues of law, such as claim construction, and issues of fact, such as infringement. Id.

This opinion was written by Judge Rader and the panel members include Chief Judge Michel and Judge Proust.  Harold Wegner has noted, and I tend to agree, that this opinion appears to be written as a foreshadow of where Rader would take the Phillips decision — a decision that not expected until late this summer.

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SmithKline Beecham v. Apotex part VI

Patent, Patent Cases 2005,

PatentlyOImage017In the CAFC’s April 8 decision of SmithKline Beecham v. Apotex, the en banc panel vacated the original appellate court’s opinion relating to the experimental use exception to the public use bar of 102(b). The lower court had, somewhat controversially, found that experimental use may only be used to negate a 102(b) public use if the purpose of the experimental use was to assist in designing or testing of a claimed feature. Thus, because the “clinical trials tested only the safety and efficacy of PHC hemihydrate as an anti-depressant,” the original appellate panel found that those trials were not an experimental use of the chemical compound as claimed in claim 1.

Rather than offering any opinion, the CAFC en banc decision simply vacated the court’s decision.  At the same time that the en banc order was released, the three-member appellate panel released their rewritten opinion that avoided the experimental use issue entirely by finding an alternative grounds for finding the patent invalid.  Specifically, the court (J. Rader) found that the patent was “inherently anticipated.”

What makes the case even more odd is that, Judge Newman’s dissent from the order declining to hear the case en banc was essentially a written as a dissent from the new Rader decision.  Judge Newman criticized the new opinion’s expansion of the doctrine of inherent anticipation, arguing that the “breadth of the panel’s theory of inherent anticipation contravenes long-established precedent.”  According to the dissent, if a compound’s existence “is not reasonably known to persons of skill in the field, its later discovery cannot be retrospectively ‘inherently anticipated.’”

 According to the new decision, however, inherent anticipation does not require a person of ordinary skill in the art to recognize the inherent disclosure in the prior art at the time the prior art is created.  Thus, it appears that a defendant, in order to invalidate a patent, must simply show that, more likely than not, a natural result flowing from an operation taught in the prior art would result in the claimed product.

In this case, the recreated panel found that the prior art was sufficient because it disclosed the manufacture of PHC anhydrate that naturally results in the production of the claimed compound (PHC hemihydrate).  However, the court stated that a mere possibility of inherency is not sufficient for anticipation. (Citing Schering Corp.).

In concurrence, Judge Gajarsa found that the manufacture of PHC hemihydrate could be “a natural physical process” occurring “under normal climactic conditions and with no human intervention,” and thus found that it was an unpatentable process of nature.

In short, patent claims drawn broadly enough to encompass products that spread, appear, and “reproduce” through natural processes cover subject matter unpatentable under Section 101–and are therefore invalid.

Gajarsa’s concurrence is a foreshadow to the next few years where patentable subject matter will become a controversial area once again.

Links:

Federal Circuit Makes En Banc Decision in Paxil Case: Patent Inherently Anticipated

Patent, Patent Cases 2005, ,

SmithKline Beecham Corp. v. Apotex Corp. (Fed. Cir. 2005) (en banc order)

Paxil(R) is a blockbuster drug sold by SmithKline Beecham (SKB).  SKB’s patent covering the drug was initially invalidated in an opinion by 7th Circuit Judge Richard A. Posner who sat by designation as a district court judge.  On appeal, a Federal Circuit panel (J. Rader) rejected almost all of Judge Posner’s reasoning, but affirmed the invalidation decision on other grounds. 

Now, the CAFC issued an en banc decision to vacate the panel’s original decision with regard to the issue of experimental use, and the panel (J. Rader) has issued its new decision.

This case involves involved PHC anhydrates (without water) and PHC hemihydrates (some water). In the 70’s PHC anhydrates were invented in the UK. In 1984, SKB invented PHC hemihydrates and eventually patented a PHC hemihydrate compound. (U.S. Patent No. 4,721,723).  In 1998, Apotex filed an ANDA to market a prior art PHC anhydrate.  The question of experimental use arises because SKB performed clinical trials that occurred more than one year prior to filing of the patent application.  Normally, a public use of a patented invention more than a year before filing invalidates the patent under 35 U.S.C. §102(b).  However SKB has argued that the clinical trials were a form of experimental use. 

In its new decision, the CAFC majority simply avoided the issue of experimental public use in totality.  Rather, they found alternative grounds to invalidate the patent, holding that the asserted claims “invalid for inherent anticipation by the ’196 patent under § 102(a).”

Judge Posner had rejected this argument because Apotex “did not prove by clear and convincing evidence that it was impossible to make pure PHC anhydrate in the United States before the critical date.”  The appellate panel, however, found that Judge Posner erred by requiring Apotex to meet this standard of proof, “which is too exacting.”

Apotex did not need to prove that it was impossible to make PHC anhydrate in the United States that contained no PHC hemihydrate, but merely that “the disclosure [of the prior art] is sufficient to show that the natural result flowing from the operation as taught [in the prior art] would result in” the claimed product.

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CAFC: Claims should be interpreted according to the specification and the pertinent art

Patent, Patent Cases 2005

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Nellcor Puritan Bennett, Inc. v. Masimo Corp. (Fed. Cir. 2005)

by Baltazar Gomez

Appellant Nellcor owns U.S. Patent No. 4,934,372 (“the ‘372 patent”), which covers a pulse oximeter and method for using signals from red and infrared light, and processing the signals to measure blood oxygen saturation noninvasively. Appellee Masimo also makes pulse oximeters of the same type as Nellcor.

Nellcor filed suit in the U. S. District Court for the Central District of California alleging that Masimo products infringed the ‘372 patent. The district court granted summary judgment of noninfringement. On appeal, CAFC vacated and remanded for further proceeding because the district court erred in interpreting the claims.

Claim 1 of the ‘372 patent covers a method for detecting, digitizing, and processing the signals, separating much of the aperiodic noise from the signal, and calculating the oxygen saturation from the processed signal. Claim 1 describes the processing and separating step as follows:

processing the time-measure collectively to determine a composite waveform having a relative maximum and minimum amplitude corresponding to a composite periodic waveform of the periodic information in the time-measure so that the aperiodic information present in the time-measure is attenuated and filtered from the composite; (emphasis added)

The district court construed the phrase “attenuated and filtered” to mean “reduced and removed,” and concluded that Masimo did not infringe the ‘372 patent.

On appeal, Nellcor argued that the district court erred by construing “filtered” to mean removal rather than simply reduction. In determining the meaning of the phrase “attenuated and filtered,” CAFC examined the meaning the patentee used in the specification of the ‘372 patent. The ‘372 patent describes the relative reduction of the impact of the aperiodic noise by the small relative weight assigned to it that results in it being “quickly and effectively attenuated, and thus filtered out.” The ‘372 patent further describes that the claimed phrase “attenuated and filtered from the composite” is used to refer to “effective removal” of data, rather than the absolute removal of unwanted data. Further, CAFC also looked at the meaning of “filter” in the IEEE standard dictionary which defines “filter” as separation of data, signals, or material in accordance with specified criteria and elimination of certain portions of a signal. The CAFC agreed that the definition from the IEEE dictionary was consistent with the meaning given in the specification of the ‘372 patent. Thus, the CAFC concluded that the district court misinterpreted the claims of the ‘372 patent because the phrase “attenuated and filtered from the composite” means “reduced in comparison to the desired information.”

Vacated and remanded to evaluate whether Masimo infringes based on the new claim construction

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.

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Teva’s Request for Rehearing of Declaratory Judgment Action is Denied

Patent, Patent Cases 2005,

Img285Teva Pharmaceuticals v. Pfizer (Fed. Cir. 2005) (On petition for rehearing).

In January 2005, the Court of Appeals for the Federal Circuit (CAFC) issued a controversial decision in the case of Teva Pharm. v. Pfizer.  Teva, a manufacturer of generic drugs had filed an Abbreviated New Drug Application (ANDA), seeking approval from the FDA to market a generic version of sertraline hydrochloride — a drug sold by Pfizer under the Zoloft® brand.  Under the provisions of the Hatch-Waxman Act, Pfizer had 45-days to sue Teva for patent infringement based on Teva’s ANDA filings.  However, Pfizer did not sue.  Teva then brought a declaratory judgment action against Pfizer, seeking a determination that its generic drug did not infringe Pfizer’s patent. 

The question on appeal was whether the Teva’s apprehension of suit was sufficient to create jurisdiction for its declaratory judgment action.  On appeal, the CAFC determined that Pfizer’s Orange Book listing along with Teva’s ANDA were insufficient to create an actual controversy

The listing of a patent in the Orange Book by an NDA filer is the result of a statutory requirement. Without more, Pfizer’s compliance with the Hatch-Waxman listing requirement should not be construed as a blanket threat to potential infringers as far as Pfizer’s patent enforcement intentions are concerned. . . . More is required for an actual controversy than the existence of an adversely held patent. . . . We are not prepared to hold that listing a patent in the Orange Book evinces an intent to sue any ANDA filer who submits a paragraph IV certification with respect to the patent.

As such, the CAFC affirmed the District Court’s dismissal of Teva’s action.  Now, Teva has requested an en-banc rehearing and amicus curiae briefs were field by the FTC, the Generic Pharmaceutical Association, Ivax Pharmaceuticals and Senators Edward Kennedy, John McCain, and Charles Schumer.  However, that request has been denied.

In a precedential order, the CAFC denied Teva’s petition for a rehearing — noting that “a poll was requested, taken, and failed.”

However Judges Dyk and Gajarsa both filed dissenting opinions explaining their reasons for hearing the case.

Gajarsa Dissent: Judge Gajarsa, who was a member of the original Teva panel, argues that the ANDA situation is quite different from other patent infringement situations and requires a separate form of analysis.

The contextual differences between the second ANDA filer and the typical patent infringement case make the reasonable apprehension test inappropriate for this action. By guiding the patentee’s conduct in the typical case, the reasonable apprehension analysis allows the patentee to avoid litigation. Identifying a justiciable controversy in terms of a threat of infringement litigation, the doctrine establishes the circumstances in which the uncertainty of legal rights materially harm a potential infringer in the marketplace. The injury facing Teva in this case is different in kind, but no less actionable.

Gajarsa goes on to say that the panel decision’s Constitutional analysis (Article III limitations) “forestalls legislative correction” of the decision.

Dyk Dissent: Judge Dyke provides a full Article III analysis and concludes that the Teva panel was wrong in determining that a reasonable apprehension or imminent suit was required for declaratory judgment jurisdiction.

There are relatively few Supreme Court cases dealing with Article III and declaratory judgments, but the few cases that do exist provide no support for a reasonable apprehension of imminent suit requirement.

Teva and its cohort of supporters are expected to appeal petition for certiorari.

The Senators’ Brief: Senators Edward Kennedy, John McCain and Charles Schumer filed an amicus brief supporting the petition for rehearing. The brief made the point that there was a Congressional intent surrounding the passage of the Hatch-Waxman Act to expand subject matter jurisdiction over declaratory judgment actions by generic drug companies “to the constitutional limit” and that the panel opinion in Teva v. Pfizer frustrates the purposes of the amendments. (Thanks to Theodore Whitehouse at Willkie Farr for providing a copy of the Senators’ brief)

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Panel Prevents Piling-on of the Period of Patent Protection by Patenting Precursor Product

Patent, Patent Cases 2005

PatentlyOImage007In re Fujimura (Fed. Cir. 2005) (NONPRECEDENTIAL).

Fujimura’s earlier patent that covers a sintered permanent magnet had expired, but the applicant hoped to obtain a patent on a permanent magnet alloy, a precursor to the sintered permanent magnet.  During prosecution, the examiner rejected the claims of the application on the basis of obviousness-type double patenting.  This rejection was affirmed by the BPAI (Board). 

On appeal, the Court of Appeals for the Federal Circuit affirmed, finding that the applicant was impermissibly attempting to extend patent protection.

Reduced to its essentials, this is a case in which the patentees have attempted to extend the period of patent protection for their invention by claiming a composition that is a direct precursor of the product for which their patent protection has expired. In that setting, the examiner and the Board properly found that the appellants’ new claims are obvious in light of the expired ones, and we therefore affirm.

Affirmed.

CAFC: No Disclaimer of Claim Scope When Patentee Makes Contradictory Statements.

Patent, Patent Cases 2005

PatentlyOImage005Outlast Technologies v. Frisby Technologies (Fed. Cir. 2005)(Nonprecedential).

Most of you arrived at this post looking for information on patents on Frisbee discs and disc golf.  Unfortunately this is not a Frisbee case.  

However, it does involve temperature-resistant, phase changing materials that resist temperature change by changing between their solid and liquid state. (Remember latent heat from physics 101).

After claim construction, the district court awarded summary judgment of noninfringement to the defendant Frisby.  Specifically, the court found that the patentee had, during prosecution, clearly disclaimed certain ‘impregnated materials’ from the claim scope.  On Rule 54(b) certified appeal, Outlast argued for an alternative claim construction.

The Appellate Panel found that the district court had erred by finding disclaimer.  The rule, of course, is that a disclaimer must be unequivocal and unambiguous.  In this case, the patentee made one statement that is easily read as a disclaimer, but also made another statement that tends to contradict a disclaimer. 

The Panel found that such contradictory statements are ambiguous of the patentee’s desire to disclaim the subject matter, and thus cannot serve as such a disclaimer.

These seemingly contradictory statements do not unequivocally or unambiguously disclaim articles in which the microcapsules are impregnated within the interstices of the substrate. On the contrary, such contradictory statements are indicative of ambiguity.

The court remanded for a determination of infringement under its newly constructed claim construction using an ordinary meaning approach.

Metabolite Labs versus LabCorp — Request for Certiorari.

Patent, Patent Cases 2005,

The Metabolite Labs case is procedurally interesting because the Supreme Court appears to be focused in a question that is quite different from the one raised by Metabolite in its petition for certiorari.  From a practical standpoint, this case has the potential to once again shatter our current notion of patentable subject matter.

In February, the Court invited the Solicitor General to file a brief expressing the views of the United States on the question of whether a medical diagnosis method patent is invalid as non-patentable subject matter under Diamond v. Diehr, 450 U.S. 175, 185 (1981) (holding that one cannot patent laws of nature, natural phenomena, and abstract ideas).  The patent at issue claims a method of detecting a vitamin deficiency in a human body by using a device to determine whether there is an elevated amino acid level.

The court expressed its interest in the patentability question at a point that was too late for amicus to file briefs on the issue, however, some parties have been lobbying the office of the Solicitor General to submit a brief in their favor. The Public Patent Foundation, for instance, has issued a statement outlining its lobbying efforts asking the government to support the proposition that the method is unpatentable and invalid. Of course, to my knowledge, PubPat has never been publicly in favor of the validity of any patent. 

In the opinion below, the CAFC (Rader, J.) affirmed jury verdict of indirect infringement and breach of contract, and affirmed the district court’s award of over $8 million in damages to Metabolite (including damages for willfulness).  The dissent (Schall, J.) argued that claim interpretation had been mishandled. Metabolite Laboratories, Inc. v. Laboratory Corp. of America Holdings, dba as LabCorp., 370 F.3d 1354 (Fed. Cir. 2004) (read my summary).  The question that the High Court is now considering does not appear to have even been addressed by the CAFC decision.  The Court’s docket shows that the case has already been distributed for conference five times since January 1, 2005.  

The SG is expected to file a brief in the case.  However, even with SG support, the court is still unlikely to take this one up.

For general information, Professor Eileen Kane’s article on the patentability of Genes and DNA provides an excellent analysis of issues surrounding patentable subject matter. Kane argues that the genetic code should be characterized as a law of nature. Available at SSRN, 71 Tennessee Law Review 707.

 

CAFC: Indefiniteness Issues Overcome by Defining Terms According to Goal of the Invention

Patent, Patent Cases 2005

Artificial Hip

Howmedica Osteonics v. Tranquil Prospects (Fed. Cir. 2005).

by Dennis Crouch

In a dispute over a patented artificial hip prosthetic, a Federal Court in Indiana determined that Tranquil’s patent claims were invalid as indefinite under 35 U.S.C. Section 112, paragraph 2.  Specifically, the court found that the term “transverse sectional dimension” was indefinite to one skilled in the art. 

The second paragraph of Section 112 provides that the “specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.”  This section has been read to create a invalidity defense based on a lack of definiteness of the patent claims.  Generally, a claim is indefinite if its legal scope is not clear enough that a person of ordinary skill in the art could determine whether a particular [product or method] infringes or not.  Geneve Pharms, 349 F.3d 1373.

On appeal, the Court of Appeals for the Federal Circuit relied upon the purposes of the invention to determine that the one of ordinary skill would readily ascertain that the “transverse sectional dimension” is definite and calls for a two-dimensional measurement.

Transverse Hip Section

One of ordinary skill in this art would recognize that a one-dimensional linear measurement of the “transverse sectional dimensions” would defeat the purpose of the invention to provide a snug fit of the prosthesis in the medullary canal. A two-dimensional measurement, on the other hand, provides the snug fit that is the centerpiece of this invention.

The court went on to vacate the district court’s summary judgments on both indefiniteness and noninfringement. The case was remanded for further proceedings. 

Download Decision: Howmedica Osteonics Corp. v. Tranquil Prospects, Ltd. (04-1302).pdf

Federal Circuit Confirms that the Patent & Trademark Office is Not Bound to the Paris Convention

Patent, Patent Cases 2005

PatentlyO067

In re Dr. Matthias Rath (Fed. Cir. 2005).

In this trademark case, Dr. Rath appealed from a decision by the U.S. Patent & Trademark Office’s Trademark Trial and Appeal Board (TTAB) that refused to register the marks “DR. RATH” and “RATH.”

Dr. Rath is German and holds a German trademark registration for the marks.  However, the U.S. Examiner refused to register the marks after finding them to be “primarily merely surnames.”  Mere surnames are not registrable under the Lanham Act (Section 1052(e)(4)).

On appeal, Dr. Rath argued that the “primarily merely a surname” rule conflicts with the United States’ obligations under the Paris Convention.  The Federal Circuit dismissed his argument because, although the U.S. is a signatory to the Paris Convention, the Paris Convention is not ‘self executing’ and thus has no direct effect on U.S. law.

Further, the court held that the requirements under Section 44(e) of the Lanham Act cannot be read to require the U.S. to register marks with foreign priority if those marks fail to meet U.S. eligibility requirements.

In concurrence, Judge Bryson argued that there is no reason to decide whether the Lanham Act trumps the Paris Convention because in this case the two are in accord.

Link:

 

 

CAFC: Licensee must hold all substantial rights under a patent to bring an infringement suit.

Patent, Patent Cases 2005,

Aspex Eyewear v. E’lite Optik (Fed Cir. 2005) (04-1292)(NON PRECEDENTIAL).   PatentlyOImage001

by Joseph Herndon

In general, a licensee is not entitled to bring suit in its own name as a patentee, unless the licensee holds all substantial rights under the patent.

Aspex appealed the decision of the District Court stating that Aspex lacked standing to sue as an exclusive licensee for infringement of two patents (one naming Richard Chao as the sole inventor and the second being a CIP of the first with brothers David and Richard Chao as the named inventors). 

Aspex entered into a written license agreement with Chic that granted Aspex an exclusive license in the U.S. to any rights Chic had acquired from third parties relating to patents involving magnetic eyewear. Later, Richard Chao granted Chic an exclusive license for two patents.

In September 2000, Aspex sued E’Lite for infringement of the two patents. Chic was not named as a party to the suit. The district court concluded that Aspex lacked standing to sue because Chic did not convey any future-acquired patent rights to Aspex, and thus Aspex was not an exclusive licensee of the asserted patents.

On appeal, the Federal Circuit held that the plain language of the Chic-Aspex Agreement makes it clear that the agreement relates only to patents then-owned by Chic, not future-acquired ones. The court contended that if the parties had intended to include future-acquired patents, it more likely would have stated “is and/or will become the owner,” within the agreement. The court also looked to use of the past tense “LICENSED” in term “LICENSED PATENTS” to suggest which patents were at issue.

The court further iterated that even though the license covered patents “relating to magnetic eyewear for eyeglasses,” a provision which certainly covers the two patents at issue, the specific grant provisions control the scope of the license agreement—not the general subject matter of the license. Thus, the court held Chic did not grant an exclusive license to either of the patents to Aspex, and as such, Aspex lacks standing to sue.

Joseph Herndon is a law clerk and at MBHB and is a registered patent agent. Joe has a stellar background in electrical engineering and will graduate from law school this year. herndon@mbhb.com.

Monsanto Asks The Federal Circuit To Examine The Utility Requirement for Patenting Biotech Inventions

Patent, Patent Cases 2005

Patentlyo064_1In re Fisher (Fed. Cir. 2005)(04–1465) (Oral Arguments Scheduled for May 3, 2005).

Fisher could have an even greater impact to the field biotechnology than the upcoming Supreme Court case of Merck KGaA v. Integra.  After being denied a patent by the USPTO’s Board of Patent Appeals & Interferences (BPAI), Monsanto has appealed to the Court of Appeals for the Federal Circuit (CAFC). 

Monsanto’s argument is that the USPTO, without any statutory authority, is applying a heightened standard of utility to biotechnology inventions — specifically their argument is directed to the standard of usefulness under 35 U.S.C. Section 101 applied to nucleotide sequences known as expressed sequence tags (EST’s).  [EST definition]. On appeal, Monsanto has asked the CAFC to consider whether the BPAI’s ruling that EST’s corresponding to genes of unknown function are incapable of satisfying the utility requirement, even though the EST’s are quite useful as research tools. 

Monsanto’s appeal is a blunt attack against USPTO patent prosecution procedures and will impact a large number of biotech applications, past, present and future.  Hal Wegner has noted Monsanto may even be hoping to lose the appeal and thereby firmly establish a standard of utility that would keep others from obtaining patents in the area.

The briefs have all been filed, and oral arguments are scheduled for May 3, 2005. 

I have uploaded the briefs filed in the case.

The BPAI Decision is Available here: File Attachment: Ex Parte Fisher.pdf (209 KB)

Thanks to Paula Davis at Eli Lilly and Stephan Walsh at the USPTO for providing the PDF versions.

University of Texas files patent infringement suit against cell phone manufacturers

Patent, Patent Cases 2005

PatentlyO061

Regents of UT v. BenQ (N.D. Tex.) (05–CV-181).

The University of Texas has filed suit against fourteen electronics manufacturers for infringement of a patented method that allows text messaging through a standard telephone keypad.  The patent was issued to Professor George Kondraske in 1987 and covers a form of “predictive text.”  (U.S. Patent No. 4,674,112).  According to Katherine Mangan in the Chronicle of Higher Education, Kondraske teaches electrical and biomedical engineering at the system’s Arlington campus.

The lawsuit was filed this month in U.S. District Court in Austin, and charges Kyocera, the Sanyo North America, Sony Ericsson Mobile Communications, NEC USA, and others of infringement.  Judge Sam Sparks has been assigned the case.

According to the U.S. Patent Office, the University of Texas system received 101 patents in 2004 — ranking fourth behind the University of California, CIT, and MIT.

Links:

Microsoft requests rehearing in Eolas Appeal.

Patent, Patent Cases 2005

PatentlyO041

“Exporting this brief could violate 35 U.S.C. Section 271(f) under the Panel’s mistaken construction of that statute.”

So begins the Amicus brief submitted by Bentley Systems, et al., in support of Microsoft’s petition for rehearing in Eolas v. Microsoft (Golden Master I).  Bentley goes on to argued that the Court should maintain a principled and clear distinction between (a) supplying physical components of a physical patented invention, versus (b) supplying engineering design information that can be used to manufacture components of a patented invention. 

In Eolas v. Microsoft, a three member appellate panel at the Federal Circuit appears to have expanded the scope of Section 271(f) – a statute 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.  Microsoft had shipped a “Golden Master” of computer code for Internet Explorer (IE) to its foreign suppliers who then copied the disk and sold the copies on foreign soil.  This activity was seen as infringing, even though the patented invention was not practiced until at least the 3rd step above.

Of course, Microsoft agrees that the CAFC’s decision was mistaken.  In its petition for a rehearing Microsoft argues that the that the panel decision is contrary to Pellegrini v. Analog Devices — a case that were virtually ignored by the CAFC opinion.  In their brief, AOL & Intel agree that the panel’s application of 271(f) cannot be reconciled with Pellegrini and prior U.S. patent law. [AOL & Intel Amicus Brief].

As I have mentioned before, this case may have wide reaching effects.  In its amicus brief, Shell Oil notes that the panel’s opinion overreached when it declared that “every form of invention eligible for patenting falls within the protection of section 271(f).” Specifically, Shell, one of the most multinational of corporations, is concerned that they will be found to be violating patented processes that were somehow exported from the U.S. [Shell Oil Amicus Brief].

In disagreeing with the CAFC decision, the Business Software Alliance (BSA) makes both a legal argument and a policy argument.  On the legal side, BSA describes the Golden Master disks as templates that are not incorporated into patented inventions.  Their argument, that is not controverted by the CAFC decision, is that 271(f) was not enacted to “ensnare companies that transmit know-how.” On the policy side, the BSA notes that the decision hurts U.S. software developers and adds another incentive to outsource such work to developers in another country. [BSA Amicus Brief].

It is difficult to even make an educated guess as to how long it may take for the Federal Circuit to decide the petition.  In one case, a petition for rehearing has now been pending for almost a full year.

Thanks to Joseph Milowic, Janine Carlan, Joe Miller and John Vandenberg for helping me locate the briefs.

Ford settles patent lawsuit

Patent, Patent Cases 2005

Ford MyColor Patent

The Chicago Tribune (Jim Mateja) is reporting that Ford has settled a patent infringement action initiated by individual inventor, Frank Weyer. In the suit, Weyer accused Ford of infringing his patent that covers a "user selectable multi-color automobile instrument panel illumination."  (Patent No. 5,975,728).

Ford’s new 2005 Mustang had planned to include a MyColor feature that reportedly infringes. According to the Tribune, “Ford had been barred from offering its My Color option or delivering cars with it because of the suit, but now can start sales and shipments.”

In addition to being an inventor, Weyer is a patent attorney with an office in Beverly Hills, California.  In an earlier lawsuit, Weyer sued Network Solutions and Register.com for violating their patent on the selection of an e-mail address based on a domain name. www.whois.sc/news/2004-01/registrars-sued.html.  He also spent time coordinating the rural technology unit of the Peace Corps.

Patent Attorneys Testify to Consistency of Federal Circuit Court of Appeals

Patent, Patent Cases 2005

Patent attorneys often complain about the fractured relationship in the judicial system (i) within the Federal Circuit Court of Appeals and (ii) between the Federal Circuit and the trial courts.  The high rate of reversal on issues such as claim construction is often cited as an example of the disconnect.

Keeping these complaints in mind, yesterday’s testimony in the House of Representatives Intellectual Property Subcommittee was remarkable because of the clear affirmation from all four witnesses that the Federal Circuit should be the court that hears patent appeals. 

The witness list included a representative from the Federal Circuit Bar Association, a law school professor, an in-house counsel, and a practicing patent attorney.  These witnesses all supported legislative changes to overrule Holmes Group v. Vornado (holding that the Federal Circuit does not have jurisdiction over cases where patent issues are raised only in a counterclaim).

In support of their call for a change, the witnesses cited both (i) the legal consistency of the Federal Circuit and (ii) the technical knowledge of the Federal Circuit.  Congressman Lamar Smith (R Tex) chairs the subcommittee.

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