Appeals Court orders Eolas v. Microsoft Patent Case to be Reassigned

Eolas Eolas v. Microsoft (Fed. Cir. 2006).

Eolas has been after Microsoft since 1999 hoping to collect on its five hundred million dollar patent infringement verdict.  After last year’s remand from the CAFC, Microsoft asked the Northern District of Illinois to reassign its case to another judge — a motion that was denied. Microsoft appealed.

In its motion for reassignment, Microsoft did not assert bias or misconduct, but rather argued that under N.D.Ill. rules, cases on remand should be "automatic." (Local Rule 40.5). In denying the motion, the district court explained that the particular rule had become "mostly dormant."

In its decision to reassign the case, the CAFC also relied upon the Seventh Circuit rule that cases must be reassigned on remand. 

Although the 2005 CAFC decision in this case was largely in favor of the patentee Eolas, Microsoft will now have a new opportunity to present its defenses to an entirely new judge.

Eolas case is now even stronger — with the recent issuance of a reexamination certificate of the Eolas ‘906 patent by the PTO. The reexamination provides a further presumption that the patent is valid over a number of additional pieces of prior art, including that submitted by W3C Director Tim Berners-Lee.


The 271(f) export issue is likely to be taken-up by the Supreme Court in the parallel AT&T v. Microsoft case.

PVPA Not Infringed When Seller Lacked Knowledge

Rewritten Aug 1:Softred

Syngenta Seeds v. Delta Cotton (Fed. Cir. 2006).

In a case involving a variety of soft winter wheat, the CAFC has effectively reversed a jury’s finding of infringement and damages under Section 2567 of the Plant Variety Protection Act (PVPA) because the accused seed seller did not have proven knowledge that the seeds were protected. 

Here, Delta was reselling seeds that had been provided by local farmers.  Delta’s apparent "don’t ask don’t tell" policy with regard to the variety of seed enabled it to escape liability under the PVPA. 

Lanham Act: Syngenta also accused Delta of "reverse passing off" because Delta was selling the Syngenta variety of seed under the Delta Cotton name.  Reverse passing off is generally thought of as "misrepresenting someone else’s goods or services as [your] own." Dastar.

The CAFC agreed with Syngenta that reverse passing off has no scienter requirement and thus proof of Delta’s knowledge would not be required.  However, Syngenta did not show proof that the misidentification of goods caused any harms to Syngenta’s business or mark.



Settlement Creates Unchallengable Claim Construction

LouisvilleBeddingPatentLouisville Bedding Co v. Pillowtex (Fed. Cir. 2006).

Louisville Bedding owns a patent on a mattress pad cover that uses a special skirt material.  In its original suit against Pillowtex, Louisville got a negative claim construction and infringement opinion from the district court and the parties quickly settled. Shortly after settling, Pillowtex dissolved into bankruptcy.

After the earlier decision was used to collaterally estop Louisville in a later suit against another party, the patent holder filed a Rule 60(b)(6) motion to reopen (or vacate) the original decision. — The motion was denied, first by the district court and then affirmed on appeal.

The CAFC did not discuss whether the application of collateral estoppel of claim construction was correct.  The appellate panel did, however, uphold the longstanding tradition of finality of judgment.

As the Supreme Court has recognized, "[p]ublic policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties." Baldwin v. Traveling Men’s Ass’n, 283 U.S. 522, 525 (1931). This policy concern is even stronger when a case is ended by the deliberate choice of the parties.

Louisville Bedding argued that the changed circumstances of the Pillowtex bankruptcy opened the door to revisit the case. The CAFC disagreed.

Typically, a district court may grant relief under Rule 60(b)(6) only for "exceptional or extraordinary circumstances.” Louisville has not made such a showing. Because businesses fail every day, the failure of Pillowtex in this case, even though it appeared to be highly commercially successful in 1998, is not an "exceptional or extraordinary circumstance." To say the least, Louisville took a calculated risk that did not turn out the way that it expected. Nor can we say that the equities in this case particularly favor Louisville and its fateful business decision. In the Pillowtex case, Louisville was faced with a summary judgment of noninfringement and an unfavorable claim construction with respect to the ’322 patent. Its position looked bleak at that time. There was no certainty that Louisville could have had that result changed in the district court or on appeal if it did not enter into the settlement agreement. Thus, it was greatly to Louisville’s benefit to settle the case under the terms that it did.

Denial of R.60 motion affirmed.

Interference: Late Claim Loses the Game

Images_1California v. Iowa (Fed. Cir. 2006).

The first annual bio-bowl was recently played-out before a small crowd and three officials in the heart of Washington, D.C.

Cal and Iowa battled through an interference proceeding over rights to a molecule designed to desensitize a person to an allergen.

Iowa, the junior party, received its patent first.  Within months, Cal amended its pending claims and requested an interference.  Unfortunately for Cal, the PTO had some problems with its new claims and Cal spent many more months fighting over their patentability.  Eventually, Cal canceled its claims and added a new one that properly set-up the interference.

For an interference, new claims must be added within one year of the other patent’s issue date. 35 USC 135(b)(1).  Even though its newest claim was filed more than one year after Iowa’s patent issued, Cal argued that its earlier amendments and requests for interference should satisfy the rule.  Both the BPAI and CAFC disagreed:

Because California’s proposed interpretation of section 135(b)(1) contravenes this court’s precedent, the plain meaning of the statute, and the policy underlying that section, this court rejects those contentions.

Cal could have relied on the earlier claims if they had not differed in any materially limitation from the new claim — unfortunately for the brown-furballs, the claim was materially different.

The conclusion: tough luck for you if you write bad claims in anticipation of an interference.

Iowa Wins.

Foreign Soverign Immunity Waived By Patent License Negotiations

CsiroIntel and Microsoft v. Commonwealth Scientific (CSIRO) (Fed. Cir. 2006).

Under the Foreign Soverign Immunity Act (FSIA), a foreign state is presumptively immune from the jurisdiction of United States courts. A federal court therefore has no subject-matter jurisdiction over a claim against a foreign state unless the case falls within a specified exception. 28 U.S.C. §§ 1602-1611. 

Intel and Microsoft sued the Australian Commonwealth Scientific and Industrial Research Organisation ("CSIRO") for declaratory judgment of non-infringement. CSIRO is Australia’s national science agency and claimed immunity under the FSIA. The district court found jurisdiction, and the appeal was heard on interlocutory review.

Level of Review: Without determining whether to apply CAFC or 9th Circuit law, the appellate panel first determined that the existence of immunity are questions of law that are reviewed de novo.

Commercial Activity: In a question of first impression, CSIRO argued that its extensive patent licensing negotiations should not qualify as a commercial activity exception to the FSIA when those do not result in fully-executed and binding contracts. The CAFC flatly rejected that argument — finding that commercial activity is broadly defined under the FSIA — noting in the Congressional record that "[t]he courts would have a great deal of latitude in determining what is a ‘commercial activity’ for purposes of this bill."

It is possible to extrapolate this case to argue that merely obtaining a U.S. patent is also commercial activity.

CSIRO’s acts of (1) obtaining a United States patent and then (2) enforcing its patent so it could reap the profits thereof—whether by threatening litigation or by proffering licenses to putative infringers—certainly fall within the latter category [of commercial activities]. Indeed, we have expressly recognized, in another context, that "a patentee’s attempt to conduct license negotiations is a commercial activity."

Affirmed and dismissed.

Read the case: Link

Delay alone cannot constitute intentional concealment

Flex-Rest v. Steelcase (Fed. Cir. 2006).

Flex-Rest holds at least two patents on negative-tilt computer keyboards and sued for infringement.  Steelcase, the defendant, had an earlier conception date, but Flex-Rest argued that 102(g) should not apply because Steelcase had concealed the invention (either intentionally or unreasonably).

Here, there was a seven month delay from Steelcase’s reduction to practice and public release of its product (timed with the filing of its own patent application).

Intentional Concealment: As it turns out, a seven month delay alone does not constitute intentional suppression or concealment:

"Intentional suppression, however, requires more than the passage of time. It requires evidence that the inventor intentionally delayed filing in order to prolong the period during which the invention is maintained in secret." quoting Fujikawa.

The record demonstrates that after reduction to practice, Steelcase moved almost immediately towards both filing a patent application and commercially disclosing the KBS device at a trade show, actions which indicate an intent to make a public disclosure.

The CAFC found that keeping the device secret while preparing a patent application and/or preparing for a trade show release "is not, by itself, indicative of intentional suppression or concealment."

Unreasonable Delay: The failure to bring forth an invention, either publicly or in a patent application within a reasonable amount of time will support an inference of suppression or concealment.  "There is no particular length of delay that is per se unreasonable." Here, the CAFC agreed that the seven month delay was not unreasonable:

After reduction to practice, Steelcase resolved design issues and spent $775,000 on tooling for the parts to the KBS device. The lead times for creating the tooling varied from four weeks to approximately six months. Therefore, it does not appear that Steelcase could have brought the KBS device to market much sooner than the trade show unveiling in June 1991.

At the same time, Steelcase’s patent counsel began drafting a patent application for the KBS device, submitting a first draft to Steelcase in March 1991. The draft was reviewed by the four named inventors and filed in May 1991. No evidence indicated that this amount of time was unreasonably long.

In the process, the Court also shot-down the urban myth of a court sanctioned three-month patent prep deadline derived from the old Shindelar case.

Flex-Rest’s argument that Shindelar identifies a reasonable amount of time for drafting when the court stated that “a period of approximately three months could possibly be excused” takes that quote out of context. . . . What constitutes a reasonable time for drafting a patent application will vary with the technology and the particular set of facts involved in each case.

Method Claims Not Exhausted By Sale of Patented Device

LG Electronics (LGE) v. BizCom (Fed. Cir. 2006, 05-1261).

LGE sued a bunch of Intel customers for infringing use of a chipset.  Intel itself was not a defendant because it is licensed to sell the products under an agreement with LGE.  Under the agreement, however, Intel’s customers were not permitted to combine the products with non-Intel products.

LGE lost on summary judgment — the district court found that LGE’s rights were "exhausted" as to all but one asserted patent and that LGE was contractually barred from suing over the remaining patent. The appeal addressed, inter alia, implied licenses and exhaustion.

Implied License: A defendant can avoid liability for patent infringement by showing that it had an implied license to practice the patented invention.  To prevail, the defendant must prove that its products (1) have no noninfringing uses and that (2) the circumstances plainly suggest that an implied license should be inferred. Here, Intel expressly informed the parties that they were not licensed to combine the Intel products with other products — thus those combinations could not be considered licensed in any way.

Exhaustion: The patent exhaustion doctrine is triggered by an unconditional sale of a patented item — this is commonly termed the "first sale doctrine."

The theory behind this rule is that in such a transaction, the patentee has bargained for, and received, an amount equal to the full value of the goods.

The exhaustion doctrine does not, however, apply to express conditions made upon that original sale.

"In such a transaction, it is more reasonable to infer that the parties negotiated a price that reflects only the value of the ‘use’ rights conferred by the patentee."

Exhaustion – System Claims: Regarding LGE’s system claims, the appellate panel found that there was no exhaustion because there were express conditions on the use of Intel’s licensed products — specifically that they could not be combined with non-Intel parts.

Although Intel was free to sell its microprocessors and chipsets, those sales were conditional, and Intel’s customers were expressly prohibited from infringing LGE’s combination patents.

Exhaustion – Method Claims: Here, the CAFC made their statement short and to-the-point: "the sale of a device does not exhaust a patentee’s rights in its method claims."

The Marking Statute of § 287(a) Requires Internet Vendors of Downloadable Patented Software To Mark Their Websites

IMX, Inc. v. LendingTree, LLC, 2005 U.S. Dist. LEXIS 33179 (D. Del. Dec. 14, 2005); motion for reconsideration denied, 2006 U.S. Dist. LEXIS 551 (D. Del. Jan. 10, 2006).

by Eric Lane,

IMX v. LendingTree appears to be the first court decision to hold that compliance with the constructive notice provision of 35 U.S.C. § 287(a) requires a patentee to mark an internet website that facilitates downloads of patented software.

IMX asserted its patent covering a method and system for trading loans against LendingTree. Users download IMX’s web-based software from IMX’s website. LendingTree moved for partial summary judgment to limit damages to those occurring on or after the filing date of the lawsuit because IMX failed to provide constructive notice of the patent. The issue was whether IMX had to mark its website to provide constructive notice.

Although the components of the invention (database and transaction server) can not by viewed by the end user and the website does not embody any claim of the patent, the court found that IMX had a duty to mark its website because the public accesses the commercial embodiment of the patented invention through the IMX website:

Although IMX does not make or sell the computer components through which its patented system is processed, and although the IMX website itself is not the patented invention, nevertheless, consistent with the purpose of § 287(a) as interpreted by the Federal Circuit, the website is intrinsic to the patented system and constitutes a “tangible item to mark by which notice of the asserted method claims can be given” . . . The point of public access to the patented invention of the ‘947 patent since March 2000 has been through IMX’s website; therefore, marking the patent on the website is required.

The IMX case is still pending, but if the marking decision is appealed, would it hold up under Federal Circuit scrutiny? The IMX court found that IMX’s website was a “tangible item” under the Federal Circuit’s American Medical Systems decision, but in American Medical Systems, the “tangible item” at issue was an article produced by the method of the patent-in-suit:

In this case, both apparatus and method claims of the ‘765 patent were asserted and there was a physical device produced by the claimed method that was capable of being marked. Therefore, we conclude that AMS was required to mark its product pursuant to section 287(a) in order to recover damages under its method claims prior to actual or constructive notice being given to MEC.

Yet the IMX court explicitly acknowledged that the IMX website is not the patented invention, so the decision is not consistent with AMS.

On the other hand, the IMX decision could be read as finding the website through which the patented product is accessed to be the legal equivalent of product packaging, which would require marking under § 287(a), or that the website is akin to a product insert. There is some case law that supports the proposition that marking patent notice on materials that are included with each individual patented article, though not on the packaging itself, would satisfy the marking requirement under § 287(a). See Calmar, Inc. v. Emson Research, Inc., 850 F. Supp. 861 (C.D. Cal. 1994) (§ 287(a) requires either marking the patented article itself “or, at least, including something with the packages in which the patented articles are shipped which would indicate the article’s patent number”); Stryker Corp. v. Intermedics Orthopedics, Inc., 891 F. Supp. 751 (E.D.N.Y. 1995) (patentee did not comply with section 287(a) because it failed to mark the product packaging “[n]or was there any evidence offered at the trial by the plaintiff that . . . other literature containing the patent marking was placed in the packaging of the [patented surgical implant] that was distributed to vendors and end-users”).

Note: This post is the first in a series of posts by a team of attorneys at Morgan & Finnegan’s New York office.  The team is led by former Markey clerk, Mark Abate.

Small Entity Status — be careful of non-exclusive licenses.

Is a company’s “small entity” status with the PTO put in jeopardy by granting a non-exclusive license to a major corporation — assuming that the non-exclusive license does not convey any right to exclude others from making or using the invention?

According to 37 CFR 1.27, a small entity includes:

an inventor . . . who has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention. . . .

MPEP 509.02 defines “rights in the invention” in this section of the rules as “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States.”  This therefore appears to indicate that a non-exclusive license to a large entity that does not convey any right to exclude others would not fall within rule. However, if you read further in the MPEP, you notice a discrepancy involving non-exclusive licenses:

A grant of a non-exclusive license to a “non-small” entity will disqualify applicant from claiming small entity status. See Ulead Systems, Inc. v. Lex Computer & Management Corp., 351 F.3d 1139, 1142 (Fed. Cir. 2003).

In yesterday’s decision in Nilssen v. Osram Sylvania (N.D. Ill. 2006), the district court found Nilssen’s patents unenforceable because, inter alia, Nilssen had failed to pay a large entity fee even though the patents-in-suit were nonexclusively licensed to Philips Electronics.

In addition, the patents were unenforceable due to: (a) a patentability declaration submitted by an undisclosed business partner; (b) Nilssen’s admission that he “opposes government fees, taxes, and the present legal system;” (c) Nilssen’s improper priority claims; (d) failure to disclose ongoing litigation to the PTO; (e) failure to disclose material prior art; and (f) unclean hands due a failure of decorum and courtesy in interactions with the PTO.

Regarding Nilssen’s unclean hands, the Court cited a petition to the Commissioner that reads as follows:

a) [The Examiner] cannot be characterized as being skilled in the arts to which subject applications pertain . . .
b) [The Examiner] is severely deficient in his understanding and use of reason and logic . . .
c) [The Examiner] has an inadequate command of the English language . . .
d) [The Examiner] has repeatedly shown himself to be overtly non-cooperative and non-caring.

Paxil Patent Case: New Mandate

PatentlyOImage017SmithKline Beecham v. Apotex (Fed. Cir. 2006, 04–1522o).

In February 2006, the CAFC affirmed a lower court’s invalidation of Apotex’s Paxil patent — finding that its product-by-process claims were invalid because they attempted to recapture the end-product from the public domain. According to that decision, “once a product is fully disclosed in the art, future claims to that same product are precluded, even if that product is claimed as made by a new process.”

On petition, the CAFC has now refused to rehear the case.  However, the court indicated that a new “mandate of the court will issue on June 29, 2006.”

Judge Newman dissented from the rehearing decision.  She argued that this case should be used to clarify the difference between products that could only be described by the way they are made (Scripps) and products whose production require use of a certain process (Atlantic Thermoplatics). 

This decision holds that a product-by-process claim that, for instance, claims “product X made by performing steps A, B, and C,” will be invalid if product X is known in the art — regardless of whether the known X was made through those steps.  This makes the claimed steps (A, B, and C) meaningless or, in Judge Newman’s words, “expands on the existing confusion by suggesting that the specific language of the claims is not relevant to anticipation.”

Paxil Cases: There are at least two Paxil patent cases that are ongoing. In 2005, the CAFC ruled that the patent covering the drug compound was inherently anticipated. The Supreme Court recently declined to hear that case on appeal.

Jury Trial Not Required For Inequitable Conduct Issues

ComputerAGFA v. CREO Products (Fed. Cir. 2006).

In patent litigation involving patented computer-to-plate printing technology, the Massachusetts district court held a bench trial on the issues of inequitable conduct and enforceability before a jury trial on infringement and invalidity. In that bench trial, the patent was found unenforceable.

AGFA appealed — asserting that inequitable conduct and enforceability should have been tried by a jury. The CAFC disagreed — holding that the Seventh Amendment right to a jury trial does not extend to questions of inequitable conduct and enforceability.

Dissent by Newman:

The panel majority holds that the factual questions of both intent to deceive and materiality of deceptively withheld information are not subject to the jury right. This is a departure from the established jury right, for materiality and intent are quintessential questions of fact, and have been tried to a jury throughout the nation’s history. There is no basis for removing these factual questions from the jury when the jury is trier of fact. I respectfully dissent from the court’s holding that there is no right to a jury, and that the jury demand can be rejected at the trial court’s discretion.

More to come later . . .

In its first post-eBay injunction decision, CAFC vacated Abbott’s preliminary injunction

Macrolides (Clarithromycin)Abbott Labs v. Andrx Pharma (Fed. Cir. 2006, 05–1433).

Abbot was awarded a preliminary injunction (PI) against Teva to stop alleged infringement of its patents relating to extended release clarithromycin. The CAFC reviewed that holding for abuse of discretion or clear error. 

Looking at the prior art, the lower court found no motivation to combine several prior art references that discussed azithromycin rather than clarithromycin.  On appeal, the CAFC found the motivation in the form of an implicit admission made by Abbott in one of its prior patents.  In that prior patent, the specification discussed only clarithromycin, but the claims were directed at both azithromycin and clarithromycin. 

Because the [earlier Abbott] patent explicitly discloses only clarithromycin controlled release compositions, yet claims azithromycin compositions, we conclude that Abbott has represented to the U.S. Patent and Trademark Office ("PTO") that the differences between clarithromycin and azithromycin were such that azithromycin could be substituted into a controlled release clarithromycin composition by a person of ordinary skill in the art without undue experimentation.

Based on the earlier Abbott patent, the CAFC found a substantial argument that a jury could find a motivation to combine the references with a reasonable expectation of success.

Regarding potential irreparable harm, the CAFC held that direct competition “alone does not establish that Abbott’s harm will be irreparable.” 

And, on the question of public interest, the appellate panel “agree[d] with the district court that the public is best served by enforcing patents that are likely valid and infringed.”  But, because of the chance that Abbott’s patents are invalid, the panel concluded “that the public interest is best served by denying the preliminary injunction.”

In dissent, Judge Newman argued that the majority opinion constituted de novo rule and did not give significant deference to the lower court — as is required by law.

My colleagues do not discuss the trial judge’s careful explanations, but, upon finding that Teva has raised a "substantial question" about patent validity, they hold that Teva should be permitted to practice the Abbott invention before patent validity is decided. With all respect to my colleagues’ concerns, they misapply not only the criteria of the preliminary injunction but also the standard of appellate review.

Newman argues that the criteria used by the majority for determining likelihood of success on the merits were not correct:

Thus my colleagues conclude that claim 4 of the ‘718 patent is "vulnerable to allegations of invalidity," and find "a substantial argument" as to other claims. These are not the criteria of likelihood of success.

eBay Casualty: E.D. Texas Court Denies Injunctive Relief to Halt Microsoft’s Infringing Activities

Z4I’m writing a paper on this very topic, but history is happening faster than I can type . . .

z4 Technologies, Inc. v. Microsoft (E.D.Texas 2006)

z4 Tech appears to be the first post-eBay decision denying a permanent injunction after a patent has been valid and infringed. Here, the jury found that the patents were willfully infringed by Microsoft and that there was insufficient evidence to find the patents invalid. z4 then asked the Court to enjoin Microsoft from making, using, or selling its infringing product (Windows XP).

The Court followed the “traditional four-factor test used by courts of equity.” to determine whether to issue an injunction:

I. Irreparable Injury to Patentee: The patentee argued that infringement of a patent created a rebuttable presumption of irreparable harm to the patentee.  The district court dismissed this “creative” argument as lacking precedential foundation:

z4’s arguments for the application of a presumption of irreparable harm are creative, but z4 cannot cite to any Supreme Court or Federal Circuit case that requires the application of a rebuttable presumption of irreparable harm with regard to a permanent injunction.

In fact, the court cited the Supreme Court case of Amoco Production for the proposition that a presumption of irreparable harm in the context of an injunction is “contrary to traditional equitable principles.” 

Because z4 does not create any products, the Court found that z4 the first factor weighed in favor of the willful infringer, Microsoft.

In the absence of a permanent injunction against Microsoft, z4 will not suffer lost profits, the loss of brand name recognition or the loss of market share because of Microsoft’s continued sale of the infringing products. These are the type of injuries that are often incalculable and irreparable. The only entity z4 is possibly prevented from marketing, selling or licensing its technology to absent an injunction is Microsoft. As . . . z4 can be compensated for any harm it suffers in the way of future infringement at the hands of Microsoft by calculating a reasonable royalty for Microsoft’s continued use of the product activation technology. Accordingly, z4 has not demonstrated that it will suffer irreparable harm absent a permanent injunction.

II. Remedies Available at Law (Is Money Sufficient?): Here, the court cited Kennedy’s concurring opinion from eBay:

Justice Kennedy specifically mentioned the situation where a “patented invention is but a small component of the product the companies seek to produce” and states that in such a situation, “legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.” . . .

Here, product activation is a very small component of the Microsoft Windows and Office software products that the jury found to infringe z4’s patents. The infringing product activation component of the software is in no way related to the core functionality for which the software is purchased by consumers. Accordingly, Justice Kennedy’s comments support the conclusion that monetary damages would be sufficient to compensate z4 for any future infringement by Microsoft.

In addition, Microsoft has promised that its new version of Windows (2007) will phase out all the infringing components.  Thus, any ongoing royalty would only last for a couple of years.  “For the reasons stated above, z4 has not demonstrated that monetary damages are insufficient to compensate it for any future infringement by Microsoft.”

III. Balance of Hardships: Microsoft argued that it would be really hard to redesign even a small component of Microsoft office.  From what I have heard about the complicated code noodle, that assertion must be true. Thus, the court found that the balance of the hardships weigh in favor of Microsoft.

IV. Public Interest: Microsoft office is really popular, and “it is likely that any minor disruption to the distribution of the products in question could occur and would have an effect on the public due to the public’s undisputed and enormous reliance on these products. . . . Although these negative effects are somewhat speculative, such potential negative effects on the public weigh, even if only slightly, against granting an injunction.

Commentary: As I predicted earlier, one way to avoid an injunction is to be a very successful infringer.  I would have suspected that Microsoft’s willfulness would have weighed in z4’s favor, but the court did not even mention willfulness in its analysis of the equitable relief factors. 

In a forthcoming paper code-named Injunction Denied, I address the issue of injunctive and monetary relief in patent cases.  In particular, I focus on the situation where equities favor the defendant, and ask the question what monetary remedy a court should then impose? My answer may surprise you. . .


NTP Continues to Trouble Patent Office

PatentlyOImage009Rumors continue to fly regarding reexamination of NTP’s patents and alleged misdeeds at the PTO.  Calling it “BlackBerryGate,” professor Hal Wegner notes that the allegations reach both PTO administration and into the Department of Commerce.

Although third-party communications in an ex parte reexamination is strictly forbidden, NTP has accused PTO officials of holding covert meetings with RIM officials, including RIM’s CEO and Canadian counsel.  According to the PTO, those meetings had nothing to do with the five ongoing NTP reexaminations.  However, it is clear that RIM was hoping to exert political pressure on the PTO, that the NTP reexamination were undertaken with record speed, and that rejections of NTPs patents were issued just before a critical hearing in the litigation between those two companies.

Of course, NTP has an incentive to fight the messenger — it only has weak direct arguments against the asserted prior arts.  NTP’s position is also weakened by its odd argument that the cited prior art is not good evidence based on a forensic analysis that asserts document tampering.

Crouch’s Comments — NTP’s filings do not present any hard evidence of PTO wrongdoing.  However, we all hope that the Office will come through with clear evidence that there were no improper contacts or pressure.



CAFC Denies Pro Se Intervenor Rights

Motionless Keyboard Co. v. Microsoft Corp., (Fed. Cir. 2006) (non-precedential ruling)

By Tom Loos,

The CAFC upheld a ruling by the Oregon DC denying an individual inventor to intervene in behalf of a corporation. 

Motionless Keyboard Co.(“MKC”) sued Microsoft for patent infringement.  Microsoft prevailed at summary judgment.  Thomas L. Gambaro, inventor of the patents and MKC’s majority share holder, then attempted to intervene under Fed. R. Civ. P. Rule 24. Gambaro argued he needed to appear as “Pro Se to continue to represent the Plaintiff” since “counsel has withdrawn.” 

The CAFC cited 28 U.S.C. § 1654 and Rowland v. Calif. Men’s Colony, 506 U.S. 194 (1993) to state that “a corporation may appear in federal court only if represented by licensed counsel.”  Applying 9th Circuit law, the CAFC held “to allow Gambaro…to intervene rather than hire replacement counsel ‘would eviscerate section 1654’” (quote from United States v. High Country Broad. Co., 3. F.3d 1244, 1245 (9th Cir. 1993)).

After losing summary judgment, MKC transferred its patent rights to Gambaro.  The CAFC held that “Gambaro may have an interest allowing him to bring an infringement action in his own name [based on the patents], but he may not participate in the case filed by MKC as the plaintiff.”


Court Order Dismissing Patent Suit Does Not Trigger 180-Day Exclusivity Period Under Hatch-Waxman

GenericChallengeApotex v. FDA, No. 06-5105 (D.C. Cir. June 6, 2006)
By Aaron Barkoff of the Orange Book Blog,
The Court of Appeals for the D.C. Circuit today upheld an FDA rule stating that a district court order dismissing a patent suit for lack of subject matter jurisdiction is not a “court decision” under the Hatch-Waxman Act, and is therefore insufficient to trigger the first ANDA filer’s 180-day exclusivity period.

Apotex had challenged the FDA rule on the basis that it was inconsistent with the D.C. Circuit’s holdings in two prior cases.  In those cases, the court found that FDA’s rationale for the rule–that the FDA has insufficient resources to inquire into the legal effects of settlements, such as estoppel, that lead to dismissals–was not adequately justified.

Now, however, the D.C. Circuit has upheld FDA’s rule–largely because the FDA offered a better justification this time around.  According to the court, FDA is indisputably correct that equitable estoppel in the patent law context rarely presents pure issues of law amenable to easy resolution.  . . .  We have little doubt that applying this standard would force FDA, an agency lacking patent law expertise, to resolve borderline questions about the estoppel effects of patent-holder declarations.”  The court continued:

As FDA sees it, the uncertainty inherent in an estoppel-based inquiry would lead to two inter-related problems, neither of which relates to the drain-on-resources rationale set forth [previously].  First, FDA believes that the uncertainty would “undermine marketplace certainty and interfere with business planning and investment.”  And second, FDA worries that forcing it to parse court decisions will invite fruitless litigation from generic drug manufacturers seeking to trigger, or to avoid triggering, exclusivity periods.

The D.C. Circuit concluded:  “In our view, these perfectly reasonable propositions adequately support FDA’s position that an estoppel-based approach to the court decision trigger is ill-advised.”

Dennis Crouch’s Comment: I asked Aaron to write this short review of the Apotex case for Patently-O.  He has the primary documents and much more detail at his site, the Orange Book Blog.

Inventor’s Post-filing Publication Disparaging Invention Leaves Patent Unenforceable

AIPLATalk217Research Corporation Technologies v. Microsoft (D. Az. 2006).

After a bench trial, Arizona District Court Judge Manual Real of found that RCT’s patents were unenforceable based on inequitable conduct that occurred during prosecution of the patents in suit. And, because it was an “exceptional case,” the judge granted Microsoft’s request for $8 million in attorney fees.

Back in 2001, RCT sued Microsoft for its patents directed to a “blue noise mask” used in halftoning digital images.  The new procedure was touted in the patent application as being “visually pleasing” and lacking “low frequency graininess at every level of gray.”  At the same time the inventors published a paper that reported resulted of “visually annoying clumps” with graininess.  In the paper, the inventors reportedly rejected the claimed algorithm in favor of another technique that was inconsistent with the patent.  That paper was never submitted to the PTO. 

The court found this seemingly contradictory information material because a “reasonable Patent Examiner clearly would have considered [the contradictory information] important to at least the written description and enablement requirement for patentability.”  For intent, the judge found that:

It is not credible that they did not know that a reasonable Examiner would consider it important to know that patent applicants’ reported efforts to practice the applications’ disclosed No K technique had led to “visually annoying clumps,” not the “visually pleasing” images promised by the patent applications and their patent claims.” 

In addition, the inventors were awful on the stand — one was “not credible” and the other “evasive.” Thus, further supporting the finding of intent to mislead the PTO.

AIPLATalk218According to a release by Microsoft’s attorney John Vandenberg*, the patents previously had been asserted against Hewlett-Packard Company, Seiko Epson Corporation, and Lexmark International, each of whom had settled out of court and taken a license. In awarding Microsoft attorney fees, the Court found it to be an “exceptional case” and that RCT knew or should have known of the inequitable conduct before the Patent Office. 

A couple of readers wrote-in to identify Judge Manny Real as a legendary old-school federal judge, and former chief judge in the central district of California. It appears that Judge Real is sitting by designation for this patent case. 

NonInfringement Opinion Discounted By Lack of Disclosure Evidence

Liquid Dynamics v. Vaughan (Fed. Cir. 2006)

In a detailed decision involving technology for pumping sewage, the CAFC affirmed a finding of infringement and willfulness.

An interesting aspect of the case involved the evidence of willful infringement. 

  • The CAFC agreed that Vaughan’s use of a former LD employee was persuasive evidence in proving copying.
  • Vaughan’s noninfringement opinion was properly discounted because the attorney was not given all the important evidence.

The case also gave a further analysis of Daubert principles in patent cases.

Biotech: Written Description Does Not Require Recitation Of A Known Structure

AIPLATalk216Falker-Gunter Falkner v. Inglis (Fed. Cir. 2006, 05–1324)

by Donald Zuhn, PhD

In an appeal from a decision of the PTO Board, the Federal Circuit affirmed judgment for Appellees (Inglis et al.) in an interference involving vaccines comprising modified viral vectors. In particular, the subject matter of the interference concerned vaccines comprising a poxvirus vector having a deleted or inactivated essential gene, wherein the modified poxvirus is capable of producing infectious viral particles when grown in a host cell modified to produce the absent essential viral gene product. In contrast with the vaccines of the invention, traditional vaccines had been prepared by deleting or inactivating inessential genes in the viral vector, since the deletion or inactivation of essential genes made it difficult to produce vaccines in commercial quantities.

On appeal, Appellants (Falkner et al.) reiterated several arguments made before the Board, each concerning the common issue of whether Appellees had adequately described and enabled a poxvirus-based vaccine. Specifically, Appellants argued that because Appellees did not identify any essential poxvirus genes or the inactivation of any such genes, Appellees had not sufficiently described and enabled vaccines comprising a poxvirus vector having a deleted or inactivated essential gene.

With respect to the Board’s determination that Appellees had sufficiently described vaccines comprising poxvirus vectors having modified essential genes, the Court noted that there was undisputed testimony before the Board that at the time of filing of Appellees’ earliest application, the DNA sequence of the poxvirus genome and the locations of essential poxvirus genes had been disclosed in the scientific literature. Adhering to the well-established rule that "[a] patent need not teach . . . what is well known in the art," the Court held that "there is no per se rule that an adequate written description of an invention that involves a biological macromolecule must contain a recitation of known structure." In affirming the Board’s determination that Appellees adequately described the invention, the Court concluded that because "accessible literature sources clearly provided, as of the relevant date, [poxvirus] genes and their nucleotide sequences (here "essential genes"), satisfaction of the written description requirement does not require either the recitation or incorporation by reference (where permitted) of such genes and sequences."

NOTE: This post was written by Donald Zuhn, PhD. Don is a true expert in cutting edge biotech patent law and practices both prosecution and litigation at MBHB LLP in Chicago. (

CAFC “Clarifies” Design Patent Jurisprudence but Denies Rehearing En Banc

AIPLATalk070Lawman Armor v. Winner Int’l (Fed. Cir. 2006, en banc).

In February 2006, the Federal Circuit decided Lawman Armor in a way that utterly devalued design patents.  The decision appeared to read a design patent would never be enforceable if the patent was simply a novel combination of known elements.  Essentially, the decision held that, for the point of novelty test, multiple prior art references could be combined without any prior suggestion or motivation for doing so.  As noted in the AIPLA’s amicus brief requesting rehearing, if this result were true, there would be very few enforceable design patents because most (if not all) designs are combinations of old forms.

On motion for rehearing and rehearing en banc, the original CAFC panel issued a new opinion intended to “clarify” the original:

In our [original] decision, we did not intend to cast any doubt upon our prior decisions indicating that in appropriate circumstances a combination of design elements itself may constitute a ‘point of novelty.’ Such a combination is a different concept than the overall appearance of a design which, as indicated, our cases have recognized cannot be a point of novelty.

Thus, the result:

  • A unique combination of known elements may be a “point of novelty” for design patent infringement analysis; but
  • The “overall appearance” of a design cannot serve as such a “point of novelty.”

As one of the attorneys of record pointed out to me in a post-decision conversation, this distinction does not make sense for this case because the Appellant never argued that the point of novelty was simply the “overall appearance.” Rather, the Applicant set forth eight constituent elements and also argued that the combination of those elements was a ninth point of novelty.

Judge Newman, joined by Judges Rader and Gajarsa would have heard the case in an en banc panel. In a dissenting opinion, those judges argue that the overall appearance of a design should be sufficient to constitute patentable novelty:

The patentability of a design is determined on statutory criteria, as for all patents. The protocol called "point of novelty" has often aided the analysis of the application of these criteria to designs, but it is not a different concept from patentability based on the invention — the design — as a whole, and has not replaced the statutory provisions. Contrary to the panel’s view, the overall appearance of a design can indeed be novel, and can indeed constitute the patentable novelty.



  • Design Patent: Patently-O discussing the petition for rehearing
  • Design Patent: Patently-O discussing the CAFC original panel decision
  • Welch: Discussing the CAFC original panel decision I
  • Welch: Discussing the CAFC original panel decision II
  • Welch: Discussing the rehearing decision
  • Welch: Discussing the Nike Brief
  • Welch: Discussing the IDSA brief