Federal Circuit Divided on Federal Jurisdiction over Legal Malpractice Claims

Stephen Byrne v. Wood, Herron & Evans (Fed. Cir. 2011)

Byrne’s malpractice claim alleges that his former patent attorneys at WHE failed to secure broad enough patent protection for his weed trimming device. See RE 34,815. In 2004, Byrne sued Black & Decker but lost on summary judgment. In that case, the district court ruled that B&D’s device could not infringe because of it did not include a “generally planar outboard flail stabilizing surface” as required by Byrne’s patent claims.

In the subsequent legal malpractice claim, WHE filed a summary judgment motion arguing that the prosecution history showed clearly that the “generally planar” limitation was necessary in order to distinguish Byrne’s invention from the cited prior art.  WHE also argued that Mr. Byrne’s claim should fail because he had so fully participated in the prosecution, including the addition of that limitation into the claim. In the responsive motion, Byrne filed an affidavit discussing the scope of the cited prior art and arguing that the limitation was not necessary for patentability.  Acting sua sponte, the district court rejected Byrne’s testimony — holding that he was not qualified to offer expert testimony as one of ordinary skill in the art.  Without any rebuttal evidence, the court then granted WHE’s motion for summary judgment of no malpractice.

Jurisdiction over Patent Prosecution Malpractice. In several recent cases, the Federal Circuit has expanded the scope of federal court and Federal Circuit jurisdiction over patent malpractice cases. Writing for a 2–1 majority, Judge O’Malley agreed that stare decisis compels federal jurisdiction in this case, but argued that the jurisdictional law should be revisited for cases like this where the cause of action is based upon state-law (malpractice) and the patent issue is only a question of a hypothetical patent claim.

Indeed, it is only the “special and small category” or “slim category” of cases in which a state law cause of action will trigger federal jurisdiction. . . .

[I]t is difficult to see teh federal interest in determining the validity of a hypothetical patent claim that is ancillary to a state law malpractice action. The outcome of such determinations invariably will rest on case-specific inquiries comparing prior art against patent claims that have not and will never issue. As such, these determinations, which involve only application and not interpretation of patent law, have little or no bearing on other cases. On the other hand, finding federal jurisdiction over malpractice cases involving questions of hypothetical patent claims opens the federal courthouse to an entire class of actions, thereby usurping state authority over this traditionally state law tort issue. . . .

Applying these federalism considerations, several courts either have outright disagreed with our analysis or have found a meaningful distinction when only hypothetical patent rights are at stake. . . . In many cases, the procedural posture prevents us from reviewing these decisions, thus allowing courts simply to ignore our law. We address the issues in this appeal, however, because our existing case law compels us to do so.

This is the type of issue that the Supreme Court tends to hear, and a high quality petition for certiorari would have a good chance of gaining the high court’s attention.  Aiding this theory are the growing number of state and federal court decisions that have criticized the Federal Circuit jurisdictional holdings and the general rarity non-patent-related cases of finding federal question “arising under” jurisdiction where no federal cause of action is alleged. 

On the merits, the Federal Circuit ruled that the lower court abused its discretion by refusing to let the inventor testify regarding the scope and content of the prior art and its relation to the invention. The particular problem with the lower court’s finding was that it made no finding of the qualifications of one of ordinary skill in the art and whether Byrne possessed that level of skill.  In several prior cases, the Federal Circuit has held that inventors typically possess at least ordinary skill in the relevant art and therefore “it is especially inappropriate for the district court to strike Byrne’s affidavit without going through the exercise of identifying the requisite level of skill.”  On remand, the district court will likely hear Byrne’s testimony and consequently reject WHE’s summary judgment motion.

Therasense: Encouraging Intentional Deception?

Patent2011053Powell v. Home Depot (Fed. Cir. 2011).

Michael Powell’s invention is fairly simple –  it covers a guard for a circular saw on an arm.  In 2004, Mr. Powell developed the guard and provided several prototypes to Home Depot for the company to use in its in-store saws for cutting raw lumber to customer specifications.  Rather than having Powell manufacture the guards, Home Depot turned to another company for its 2,000 stores.  Powell obtained a patent then sued Home Depot.  After a three-week trial, a Florida jury awarded Powell $15 million in damages.  The district court also awarded enhanced damages, attorney fees, and pre-judgment interest — bringing the total to $24 million.

On appeal, the Federal Circuit affirmed claim construction, infringement, willfulness, inequitable conduct, and damages. Dissenting-in-part, Judge Dyk argued only that the finding of willful infringement was incorrect because Powell did not prove that Home Depot’s non-infringement defense was objectively unreasonable as is required under the objective prong of the willfulness inquiry.

Inequitable Conduct: One interesting element of the appeal involved inequitable conduct.  During prosecution, Powell had filed a Petition to Make Special on grounds that he was obligated to manufacture and supply devices embodying the claims sought. MPEP 708.02.  That original petition was roughly correct based upon ongoing manufacturing negotiations with Home Depot. Although negotiations with Home Depot fell-through before the PTO granted the petition, Powell never informed the PTO that he no longer qualified for the Special designation under the prospective manufacture prong and actively encouraged the PTO to decide the petition.

In a pre-Therasense decision, the district court held that the failure to inform the  PTO was done with intent to deceive the PTO, but that the intentional omission was not material because (1) the timing was not related to patentability and (2) Powell could have instead filed a petition to make special based upon ongoing infringement of the applied-for claims.  Under Therasense, inequitable conduct will not normally be found based upon an applicant’s improper omission unless the omission is the but-for cause of the patent being issued.

On appeal, the Federal Circuit affirmed — holding that:

Where, as here, the patent applicant fails to update the record to inform the PTO that the circumstances which support a Petition to Make Special no longer exist—that conduct does not constitute inequitable conduct. That is so because Mr. Powell’s conduct obviously fails the but-for materiality standard [of Therasense] and is not the type of unequivocal act, “such as the filing of an unmistakably false affidavit,” that would rise to the level of “affirmative egregious misconduct. Id.

This case creates further difficulty for patent attorneys by giving a free-pass to patent applicants who intentionally deceive the PTO in order to benefit their case.  Although participating in such activity violates the rules of conduct for patent law professionals under 37 C.F.R. 10.22, patent owners apparently will not face consequences.  Adding to the incentive for bad behaviour is the PTO’s lax enforcement through the Office of Enrollment and Discipline; the new statute of limitations on attorney misconduct charges; and the new supplemental examination procedures that allows patentees to whitewash patents obtained through inequitable conduct.  For some this may not be intuitive, but the primary solution is not increased enforcement but instead for the PTO to avoid relying upon attorney statements.

Fighting the Retroactive Elimination of False Marking Claims

The Public Patent Foundation (PubPat) has continued its push against "the negative effects that over-patenting, unmerited patenting and excessive patent rights can have on society." The organization, founded by patent attorney Dan Ravicher, typically focuses on what it sees as bad patents being over-exerted. In the false marking heyday, PubPat also filed false marking suits against Cumberland (Sweet'N Low), Iovate (Xenadrine), and McNeil (Tylenol). Unlike ordinary usual public-interest lawsuits, the false marking claims had the potential earning PubPat substantial monetary returns. Under the false marking statute, 35 U.S.C. § 292, PubPat was eligible to receive half of the eventual fine paid by any adjudged false markers.

However, when Congress passed the Leahy-Smith AIA it included a provision that denies standing for any false marking complainant who cannot prove a competitive injury.  The standing provision is retroactive and many of the false marking claims have already been dismissed. 

In a new filing, PubPat has argued that the retroactive denial of standing violates the organizations Fifth Amendment due process rights.

While the claim underlying the cause of action in qui tam cases originally belongs to the United States, qui tam statutes perform a partial assignment of that claim to the qui tam plaintiff and the resulting cause of action is therefore partially the property of the qui tam plaintiff. . . . Retroactive congressional action that deprives a private party of its property violates the Due Process Clause of the Fifth Amendment if it is not “supported by a legitimate legislative purpose.” United States v. Carlton, 512 U.S. 26, 30-31 (1994). Further, the retroactive effect of legislation must separately have a legitimate legislative purpose apart from the prospective substantive changes. Id. . . . The America Invents Act . . . is completely silent as to why the substantive changes are to be applied retroactively. . . . Without being overly cynical, the only honest explanation for the America Invents Act's retroactive elimination of qui tam false marking suits is that it was the result of lobbying efforts by corporations like McNeil who wished to deliberately eliminate the rights of private parties like PUBPAT to continue to pursue pending qui tam cases for false patent marking. This targeting of those who were deliberately induced to file false marking suits is an expressly improper purpose under Carlton and any potential “public good” argument that McNeil or the United States might proffer for the retroactivity would surely be pretextual, further indicating its impropriety. . . . PUBPAT agrees, for example, that “retroactive laws are not [categorically] prohibited by the Constitution.” . . . All PUBPAT suggests is that retroactive statutes can violate the Due Process Clause and that the America Invents Act's retroactive application of substantive changes to the false marking statute in a way that does nothing but deprive PUBPAT of its property interest in order to bestow a private benefit on McNeil is an example of precisely such a violation.

File Attachment: PubPatOpp.pdf (102 KB).


Claim Construction in the Abstract

By Dennis Crouch

Typhoon Touch Tech. v. Dell, Lenovo, Toshiba, Fujitsu, Sand Dune Ventures, Panasonic, Apple, HTC, and Palm (Fed. Cir. 2011)

Touch screen technology has taken-off as an important element of consumer electronics. Typhoon’s US Patent Nos. 5,379,057 and 5,675,362 cover various embodiments of a “portable keyboardless computer system” with a “touch-sensitive screen.”

Typhoon appealed an E.D. Texas ruling that its patents were invalid and not infringed. The appeal focused on the claim construction that served as the basis for both invalidity and non-infringement. The appellate decision is notable for the detached process that the court used to consider claims elements at issue. The opinion never discussed the crux of the invention or its contribution to the art and instead simply looked to the disputed claim terms and the relation of those terms in the specification (as required by Phillips v. AWH).

This week, I participated in a roundtable discussion at Yale Law School sponsored by the Kauffman foundation and by Yale’s Information Society Project (ISP). A substantial amount of the discussion focused on problems stemming from our current claim construction process and our ongoing focus on claim language as opposed to invention or its contribution to the art.

For patent attorneys prosecuting patents, the claims are often seen as equivalent to the invention. The new patent act supports that definition by shifting focus away from the invention and instead onto the “claimed invention.” Thus, the new § 102(a)(1) asks whether “the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” The new statute’s sole focus on invention as claimed is largely just a codification of fairly well accepted Federal Circuit precedent without much thought of the consequences. Of course, broad subject matter eligibility described in State Street Bank and the TSM test for obviousness were, until quite recently, well accepted Federal Circuit precedents as well. In the past few years, the Supreme Court rolled-back the clock on those issues – returning focus to pre-1982 case law. For “invention” however, the new statute appears to lock-in the claimed-invention as the ongoing focus of patent law.

Judge Kimberly Moore highlighted this issue in her recent dissent from the court’s denial of en banc rehearing of Retractable Technologies, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011). In that opinion, Judge Moore noted that the approach of the panel decision in Retractable is evident of a major divide amongst Federal Circuit judges as to whether the inventor’s contribution to the art – “what the inventor actually invented” – should be considered in the claim construction process.

This week, my patent law students each argued a mock-Markman hearing – revisiting the facts of Nystrom v. Trex and arguing over whether Ron Nystrom’s claimed decking “board” should be limited to cover only to wood cut from a log. That litigation was interesting because it involved five different court decisions on the proper construction of the term. The final appellate decision narrowed the term’s meaning in a way that allowed Trex’s composite planking to avoid infringement.

Claim construction has become a fundamental aspect of every patent case – even to the extent that Section 101 patentable subject matter decisions turn on the meaning bestowed upon particular claim terms. For patent attorneys, all of this focus on claim meaning puts more pressure on the drafting of the claims and the specification. The sad thing about Nystrom’s patent is that he would have easily won the case if the patent attorney who drafted the application had thrown-in language indicating that a “board” could be made of various materials, not just wood cut from a log. This counterfactual conclusion is sad for Nystrom as the inventor, but it is also sad that such a major weight is placed on non-inventive boilerplate language. In my mind, the importance of claim construction should push the USPTO to do a better job of ensuring that the terms of issued patents are well defined.


The Typhoon decision is also notable in the way that the court narrowly interpreted functional claim limitations. As background, Typhoon’s claim was directed to a “computer” that included various elements including a “memory for storing [a] data collection application.” Typhoon argued its claimed invention only required that the memory be capable of storing the data collection application. However, the District Court Judge Davis and Federal Circuit agreed that the proper construction required that memory actually be used for storing the data collection application. In so holding, the courts looked to the specification and found that the described embodiments all had memories that actually included the application rather than just the capability.


Finally, the court looked at Typhoon’s “Means for cross-referencing” limitation. The district court held that limitation invalid as indefinite under 35 U.S.C. § 112 because the specification did not include an algorithm adequate to provide sufficient structure for the means-plus-function limitation, citing Aristocrat Technologies Australia PTY Ltd. v. International Game Technology, 521 F.3d 1328, 1334 (Fed Cir. 2008). On appeal, the Federal Circuit rejected that conclusion – finding that the specification did disclose a cross-referencing algorithm in plain language in the text of the specification. The court went on to write that “computer code is not required to be included in the patent specification.” Rather, what is required is disclosure so that one of ordinary skill in the art would recognize the structure as linked to the claimed function.


  • Judge Newman wrote the court opinion and was joined by Chief Judge Rader and Judge Prost;
  • The Appellant-Patentee is represented on appeal by Charles Wolfe (Blank Rome);
  • Ed Reines (Weil Gotshal) and Joe Re (Knobbe) were co-lead-counsel for all the appellee-defendants. Briefs were also signed by attorneys at K&L Gates, Baker Botts, Amster Rothstein, Perkins Coie, Covington & Burling, and Malloy & Malloy, as well as Eric Albritton from the Albritton firm.

Patentable Subject Matter: Relying on Benson; Construing Claims for Eligibility

By Dennis Crouch

FuzzySharp Tech. Inc. v. 3DLabs Inc. (Fed. Cir. 2011)

In a per curiam opinion marked nonprecedential, the Federal Circuit has vacated and remanded the subject matter invalidity finding of a N.D. California District Court and instead ordered the court to rework its decision in light of Bilski v. Kappos, 130 S. Ct. 3218 (2010) and subsequent Federal Circuit decisions on point. As discussed below, FuzzySharp’s invention relates to compression software for computer graphics. U.S. Patent Nos. 6,172,679 and 6,618,047. The main idea of the invention is to avoid calculations associated with always hidden surfaces. Although the specification explains that its implementation uses “fuzzy” math to calculate always hidden surfaces. However, “fuzzy” limitations are not found in the asserted patent claims. The application was filed in 1997, but claims priority to a 1991 Australian patent application.

FuzzySharp’s appeal was filed after the district court determined that the claimed method failed to pass the machine-or-transformation and therefore, under the prevailing law at the time, the method did not constitute patentable subject matter. In re Bilski, 545 F.3d 943 (2008). In its 2010 Bislki decision, the Supreme Court rejected the notion that the machine-or-transformation test could serve as the exclusive test of the patentable subject matter of a newly invented process. In the new rubric, the machine-or-transformation test offers only an important clue.

In its opinion, the Federal Circuit largely agreed with the lower court’s conclusion that the FuzzySharp claims fail the machine-or-transformation test, but, following the new Bilski rubric, remanded for a determination on the ultimate question of patentable subject matter.

Meaningful Limitations: FuzzySharp’s asserted claims involve two elements that are potentially linked to a machine – computation and computer storage. However, the appellate panel found those elements lacked “meaningful limits” on claim scope in the same way that the recitation of a general-purpose-computer is not a meaningful limitation of a software process that will only be performed on a computer. (Citing Gottshalk v. Benson, 409 U.S. 64 (1972)).

Claim Construction: An important and arising issue is the interplay between claim construction and patentable subject matter. Under Federal Circuit precedent, claim construction appears to be a necessary precursor. However, the Supreme Court has regularly ignored details of claim language in making its determinations – focusing instead on what it saw as the invention.

Here, the court held that some claim construction is necessary: “[W]e conclude that … the patent eligibility of at least one of the asserted claims turns on questions of claim construction that the district court did not have the opportunity to address.” It will be interesting to watch how the parties argue on remand for claim construction results that favor their hoped-for subject matter eligibility outcome.


  • The per curiam panel included Judges Bryson, O’Malley, and Reyna.
  • The U.S. application was prosecuted by Carl Oppedahl’s Colorado-based firm.
  • The patentee is represented by Matthew McAndrews from the Niro firm on appeal; Jonathan Baker from Skadden Arps is handling the appellate defense.
  • Here is Claim 12 of the ‘047 patent that the Federal Circuit analyzed:

    12. A method of reducing a step of visibility computations in 3-D computer graphics from a perspective of a viewpoint, the method comprising:

    computing, before said step and from said perspective, the visibility of at least one entity selected from 3-D surfaces and sub-elements of said 3-D surfaces, wherein said computing step comprises:

    employing at least one projection plane for generating projections with said selected set of 3-D surfaces and said sub-elements with respect to said perspective;

    identifying regions on said at least one projection plane, wherein said regions are related to the projections associated with said selected 3-D surfaces, said sub-elements, or bounding volumes of said 3-D surfaces or said sub-elements;

    updating data related to said regions in computer storage; and

    deriving the visibility of at least one of said 3-D surfaces or said sub-elements from the stored data in said computer storage; and

    skipping, at said step of visibility computations, at least an occlusion relationship calculation for at least one entity that has been determined to be invisible in said computing step.



Federal Circuit Again Declines to Revisit Cybor

By Jason Rantanen

Retractable Technologies, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011) (CAFC en banc denial) Download 2010-1402 en banc order
Before Rader (dissenting), Newman, Plager, Lourie, Bryson, Linn, Dyk, Prost, Moore (dissenting), O'Malley (dissenting), and Reyna.

As in the past, the Federal Circuit has again expressly declined an invitation to revisit its 1998 en banc holding in Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 that claim construction is reviewed de novo.  Once again, however, that decision was not without dissent.  Both Judge Moore, joined by Chief Judge Rader, and Judge O'Malley wrote to express their view that Cybor should be revisited. Professor Tun-Jeng Chiang expresses his views on this issue below.

In addition to recommending that the court reconsider the issue of deference, Judge Moore's dissent emphasizes the problematic nature of claim construction review by the Federal Circuit itself: on the one hand, "[c]laim construction is the single most important event in the course of a patent litigation"; on the other, "our rules are still ill-defined and inconsistently applied, even by us."  Moore dissent at 1.  This problem is especially acute in Retractable Technologies: "Retractable simply cannot be reconciled with our en banc decision in Phillips."  Id. at 4.  Here, Judge Moore asserts, the majority applied its own approach to claim construction, not that of Phillips, "[c]hanging the plain meaning of a claim term to tailor its scope to what the panel believes was the actual invention."  Id. at 6.  This is not an isolated instance, Judge Moore points out, but is a common practice that points to a fundamental split on the court about the nature of claim construction: a disagreement over whether claim scope should be limited to "what the inventor actually invented" or instead construed according to the plain meaning to one of skill in the art, a meaning that may be informed – but is not dictated – by the specification.

Note: In  support of her view that the Federal Circuit's own claim construction is ill-defined and inconsistently applied, Judge Moore cited the views of several commentators who "have observed that claim construction appeals often lead to frustrating and unpredictable results for both the litigants and trial courts," including Dennis's post on the panel decision and Hal Wegner's post on Arlington Industries v. Bridgeport Fittings on IP Frontline

Ongoing Battles over Patentable Subject Matter

By Dennis Crouch

In Ultramercial v. Hulu, the Federal Circuit held that Ultramercial's asserted Patent No. 7,346,545 fit within the subject matter eligibility guidelines of 35 U.S.C. § 101 and was not merely an unpatentable abstract idea. The patent claims a method of distributing copyrighted products (such as a movie) over the internet. The novel idea is that the copyrighted product be both (1) offered for sale and (2) delivered for free if the consumer agrees to view an advertisement. The district court held the patent invalid under section 101. On appeal, however, the Federal Circuit reversed – holding that the patent claims a "practical application" of the idea that "advertising can serve as a currency." An important element of the decision was the finding that "[v]iewing the subject matter as a whole, the invention involves an extensive computer interface."

Now, WildTangent (one of the accused infringers) has petitioned for a rehearing en banc. The public interest organization Electronic Frontier Foundation (EFF) has filed a brief in support of the rehearing – arguing that an en banc determination is necessary in light of (1) the court's failure to follow Bilski v. Kappos; (2) inconsistencies in application of the law apparent from the court's recent decisions in Ultramercial, Classen Immunotherapies v. Biogen IDEC, and CyberSource Corp. v. Retail Decisions, Inc.; and (3) a growing intra-circuit division regarding patentable subject matter jurisprudence. This filing ties-in closely with the pending Supreme Court case of Mayo v. Prometheus, which questions the patentability of a method of personalizing the dosage of a pharmaceutical and the pending case of AMP v. Myriad, which questions the patentability of isolated human DNA. Other pending Section 101 cases include DealerTrack, Inc. v. Huber (App. No. 2010-1544) (Claims 1, 3, and 4 of U.S. Patent No. 7,181,427); FuzzySharp Tech., Inc. v. 3DLabs Inc. (App. No. 2010-1160) (U.S. Patent Nos. 6,172,679 and 6,618,047); CLS Bank Int'l. v. Alice Corp (App. No. 2011-1301) (Patent No. 7,725,375); Cognex v. ITC (App. No. 2011-1098) (Patent Nos. 7,016,539 and 7,065,262); and Fort Properties, Inc. v. American Master Lease LLC (App. No. 2009-1242) (Patent No. 6,292,788).

Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making

Last year, Professor Merges and I co-authored this short article on the administration of Bilski. In light of the pending Section 101 cases and Judge Rader's opinion in Classen Immunotherapies v. Biogen, I thought I would post it here again. Download the twenty-page essay from SSRN.

Here is the introduction:

Now that the Supreme Court has decided Bilski v. Kappos, there is an enormous amount of speculation about the case's impact on patent applicants, litigants, and other participants in the patent system. Most of the commentary is concerned with the holding in Bilski, how this holding will be applied by courts and the Patent Office, and ultimately, the effect of the holding on inventors, and those who hold and seek patents.

We take a different approach; rather than try to cut through the complexity of Bilski, or predict how it will be applied, we talk about how to avoid it. We are interested in how to minimize the cost and confusion that accompany a review of patents for § 101 subject-matter eligibility. To be specific, we propose that the § 101 issue of Bilski be considered only when doing so is absolutely necessary to determine the validity of a claim or claims in a patent. We believe any claim that can be invalidated under one of the less controversial and less complex requirements for patentability—§§ 102, 103, and 112, for instance—ought to be disposed of without considering subject matter patentability. In other words, the Bilski issue should be avoided wherever it is not strictly necessary. To support this conclusion, we present a set of empirical data that indicates that the vast majority of patent claims challenged on subject matter eligibility grounds were also challenged on other patentability issues.

We set the stage for our proposal in Part II, which briefly reviews the history behind Bilski and explains its open-ended holding and individualized approach. The difficulty of applying the Bilski ruling to different types of patent claims leads us to Part III, in which we call into question an accepted (if largely implicit) principle of patent law—that the lexical priority of statutory provisions in the 1952 Patent Act dictates a necessary logical sequence of invalidity tests. We reject this widespread assumption. There is nothing in the statute that requires this.

Indeed, in Part III we argue that in many ways the very idea of a sequence of discrete patentability requirements is conceptually misleading. Claims can be and often are rejected by the Patent Office for multiple reasons, suggesting that at least certain claims suffer from defects that transcend specific statutory validity requirements. We argue further that the policy underpinnings of various requirements overlap in complex ways, so that in reality patentability doctrine does not test for a series of discrete and independent qualities that are distinct from and mutually exclusive of each other. In the same way, transcendent qualities of an invention can influence multiple doctrines simultaneously, with pioneering inventions (due to both a liberal treatment under enablement, and a broad reach under infringement doctrines) being a prime example. This demonstrates again that there is not and should not be a strong separation between various patent law doctrines. Another argument along these lines recognizes that while patentability doctrines are not discrete entities, neither is "the invention" whose validity is being considered. Patent applicants routinely present multiple, overlapping claims, all of which cover fine-grained variations on a central inventive insight or advance. So it is inaccurate to visualize patentability as a stepwise series of tests applied to a single "invention." It is not true for example that "invention X" passes § 101 and should thus proceed in logical sequence to be tested under § 102. One claim growing out of inventive insight X might present no § 101 problems at all, yet another claim in the same patent application might raise a difficult issue under this provision. Each claim, being a unique slice of the overall inventive insight, ought to be considered on its own terms, and in whatever order makes the most sense. Put another way, the mental model of a stepwise sequence of patentability determinations overlooks the highly granular nature in which different slices of the inventive concept are presented for validity testing.

This analysis is further developed in Section III.A. When a claim fails to pass muster under any single test of validity, that claim should be invalidated. No further tests should be applied. We describe this as "chain" theory of validity: once one link in the chain is broken, the claim fails, and there is no reason to proceed further. Beyond that point, any expenditure of resources on validity questions is inefficient. Pragmatic considerations enter at this point. Issues of cost, justiciability, and spillover effects are perfectly appropriate in determining the actual sequence in which validity tests are applied with respect to any particular patent claim. The non-linearity of patent validity tests, together with the principle of efficient administration, yields a simple rule: start with chain links that are, in general, easiest and cheapest to test, and when the chain fails, stop the process. That way, the costliest and most complex doctrines—the trickiest "links in the chain"— are often avoided, and in any event are put off until later. Therefore, § 101 should often be avoided, both at the Patent Office and in the courts. We justify this not only on efficiency grounds, but also by analogy to the Supreme Court rules of avoidance.

In Part IV, we apply this simple principle. It leads to several recommendations. First, though the PTO has good reasons for its longstanding practice of rejecting claims for multiple reasons, we recommend that §101 be used only as an exception or last resort even at the PTO. Next, we contend that the courts should proceed in a stepwise fashion, beginning with §§ 102, and 103, and 112, changing the order of doctrines as dictated by pragmatic considerations, and stopping as soon as a claim is conclusively invalidated. In all cases, the complex and costly process of deciding whether a claim presents patentable subject matter under § 101 should be deferred until very late in the process. Therefore, we recommend, courts should in effect hold off on the difficult task of evaluating claims under § 101—ideally deploying the full § 101 analysis only when that is essential, i.e., when a claim passes muster under the other validity doctrines.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1953512. Thanks!

UK Patent Case Lowers Bar on Utility (Industrial Application)

Human Genome Sciences v. Eli Lilly (UK Supreme Court, 2 Nov 2011) [Decision] Case No. [2011] UKSC 51.

The Supreme Court of the United Kingdom (UKSC) began hearing cases in 2009 — taking on the role of court-of-last-resort formerly played by the House of Lords. The UKSC normally sits in five-member panels — here the panel consisted of Lords Hope, Walker, Neuberger, Clarke, and Collins. 

This decision focuses on EPC and UK version of the utility doctrine — the requirement that a patentable invention be “susceptible of industrial application“. In a unanimous decision, the court determined that US utility doctrine creates an unduly high bar of patentability.  Thus, rather than requiring proof of specific, credible, and substantial utility at the time of filing, the UK court agreed that HGS’s genetic sequence coding for Neutrokine-α was patentable even though there was no known use of the protein at the time the patent application was filing. The patent did not reveal how the protein “could be used to solve any particular problem” nor did it identify “any disease or condition which it could be used to diagnose or treat.”  Yet, the UK court held that the industrial application requirement was met because the protein a member of a “TNF ligand superfamily” and all members of that family have been associated with important biologic activity.  “[A]ll known members of the TNF ligand family were expressed on T-cells and were able to co-stimulate T-cell proliferation, and therefore Neutrokine-α would be expected to have a similar function.”  The UK Court of Appeals (Sir Robin Jacob) had previously held the patent invalid.

In his opinion, Lord Neuberger explicitly rejected the US cases of Brenner v Manson, 383 U.S. 519 (1966) and in re Fisher, 421 F 3d 1365 (2005) — finding that “there are obvious risks in relying on US jurisprudence when considering the precise nature of the requirements of Article 57 in relation to a claim for a patent for biological material under the EPC.” 

There have been moves over the past fifty years (and more) to harmonise patent law across jurisdictions (the EPC and TRIPS – the Trade-Related Aspects of Intellectual Property Protection – being two important examples), and it is a laudable aim to seek to ensure that all aspects of the law of patents are identical throughout the world. However, the achievement of such an aim is plainly not currently practicable, and, although they have a great deal in common, there are significant and fairly fundamental differences (over and above the different words used in Articles 52 and 57 of the EPC and section 101 of 35 USC) between US patent law and the EPC (two notorious examples being the first to file rule in Europe, and file wrapper estoppel in the US).

Accordingly, particularly when it comes to a nice question such as the precise delineation of boundaries between patentability and unpatentability on the ground of industrial application, it would be unsurprising if the law was not identical under the two jurisdictions.

Instead of following US law, the panel instead latched onto the jurisprudence of the EPO — the body that also interprets the European Patent Convention (EPC).


  • The UK court of first instance (Kitchin J) found the patent invalid while the EPO Board had held the patent valid.
  • The patent in question is European Patent 0,939,804
  • Of course, it is interesting that both HGS and Lilly are US-based companies.

Mayo v. Prometheus: the Patentee’s Section 101 Argument

Mayo Collaborative Services v. Prometheus Labs., Inc. (Supreme Court 2011)

The briefing continues in this patentable subject matter case pending before the US Supreme Court. (Read Professor Golden's discussion of the first round of merits briefs).  In its newly filed merits brief, Prometheus attempts to refocus attention on the "concreteness" of its patented method of personalizing the dosage of a particular drug treatment. The refocus begins with the statement of the question presented.  Download 2011-10-31_Prometheus Merits Brief

Mayo, the petitioner challenging the patent, opened briefing with a question of whether a patent that "covers observed correlations between blood test results and patient health, so that the patent effectively preempts use of the naturally occurring correlations, simply because well-known methods used to administer prescription drugs and test blood may involve "transformations" of body chemistry."  This language of Mayo's question is directly suggestive of the decisions of Benson and Flook — both of which held claimed methods to be unpatentable.

In its brief, Prometheus restates the question in a way that instead highlights the concrete and practical application language found in Diehr and Brenner v. Manson. Prometheus asks: "Whether the Federal Circuit correctly held that concrete methods for improving the treatment of patients suffering from autoimmune diseases by using individualized metabolite measurements to inform the calibration of the patient's dosages of synthetic thiopurines are patentable processes under 35 U.S.C. §101."

Prometheus describes its challenged invention as follows:

First, most of the claims begin with the administration of a thiopurine compound to a patient with an autoimmune disorder. As noted, the thiopurine converts within the body into metabolites that do not otherwise exist in nature.

Second, the patient's metabolite levels are determined. Because "metabolite levels are not detectable in raw human tissue," all methods for measuring their concentration require "significant chemical and physical alteration of blood or human tissue" and sophisticated laboratory equipment and machines. Some of the dependant claims, for example, specify the use of high pressure liquid chromatography (HPLC), which entails an intricate series of operations on the blood (including heating, centrifuging, separating, and adding various reagents), running the resulting solution through a computer-controlled chromatography instrument, calculating the peak height or peak area, and feeding those figures into an equation, which finally outputs the metabolite levels.

Third, the metabolite measurements are compared to the patents' reference levels, "warning" the physician about the potential efficacy or toxicity of the patient's dosage.

Several important points are hidden by the patentee's statement of its invention: First, although most of the patented claims do require administration of thiopurine some claims do not include that particular step.  Second, although current technological methods of measuring metabolite levels apparently require the extraction of human tissue and the use of "sophisticated laboratory equipment," the broadest claims only require "determining" of the metabolite levels.  Finally, it is likely important to recognize that the claimed method is about tweaking the dosage of thiopurine and at the time of the invention most of the individual elements of the claim were already well known: It was well known that thiopurine could be used to treat IBD; it was well known that that the body converted thiopurine to the claimed metabolite; it was known that individuals had varying responses to thiopurine; and it was known that dosage should be adjusted so that it would be both effective and nontoxic.

Summary of the Prometheus argument:

First, to be patent-eligible, a process must really be a process—a series of steps that involve physical action in the real world, as opposed to merely an idea or principle stated in the abstract. Second, that process must be described at a narrow and specific enough level of generality that it does not preempt abstract ideas or basic building blocks of science that go far beyond what the patentee actually invented: A process for using a telegraph is patentable; the basic idea that information might be transmitted at a distance by exploiting laws of electromagnetism is not.

A. Prometheus's patented methods describe concrete methods for improving treatment of seriously ill patients with specific synthetic drugs. These patents do not claim the "correlations" they employ in the abstract, but as part of specific physical processes employing drugs and machines. . . . As the Federal Circuit recognized, the patents-in-suit pass [the machine-or-transformation] test with flying colors and easily satisfy the requirements of §101. Mayo attempts to avoid that conclusion in three ways, none of which has merit. First, Mayo invites this Court to discard the two initial steps (administering the thiopurines and determining the resulting metabolite levels) because they were "well known" in the art. But this Court rejected that "point-of-novelty" approach over 30 years ago in Diehr and again recently in Bilski. Second, Mayo argues that those same two initial steps should be disregarded because, according to Mayo, they are not "central" to the patents' purpose. Mayo does this only by ignoring the Federal Circuit's settled construction that the claims are limited to patient treatment (a question not presented here) and that those two steps are essential to that purpose. Third, Mayo invites this Court to invent, out of whole cloth, a categorical rule that processes ending with the provision of useful information cannot be patentable—even if preceding steps involve machines and physical transformations. That argument also is inconsistent with Bilski, and it would impose an arbitrary and (in the information age) absurd limitation on patentability.

B. The patents-in-suit do not preempt natural phenomena in any relevant sense. Their "correlations" concern certain properties attending certain uses of non-natural thiopurine compounds, which would not exist but for the handiwork of man. A patent system that recognizes thiopurine compounds themselves as potentially patentable subject matter, allowing preemption of all uses of these compounds, cannot be concerned that a process patent may preempt some of their uses. . . .

C. Prometheus agrees with the United States that the Patent Act's express statutory criteria for patentability—under 35 U.S.C. §§102, 103, and 112—make expansive judicial lawmaking under §101, of the sort invited by Mayo's arguments, unnecessary. But the application of those provisions is not before the Court in this case, and presents difficult and fact-bound questions that the lower courts should address in the first instance on remand.

II. Mayo proposes to transform §101 into an invitation for ad hoc, case-by-case evaluation of whether granting a particular patent will promote or retard the progress of the useful arts. That would create an unadministrable morass for courts and patent examiners, doom any hope for consistent administration of the patent laws, and usurp Congress's authority to determine the appropriate scope of the patent laws.

III. Any change in the Court's §101 jurisprudence that permitted a ruling in Mayo's favor, on whatever grounds, would have drastic and unfortunate consequences. It would upend settled expectations by invalidating thousands of diagnostic and personalized treatment patents. And it would stifle investment and innovation in the nascent field of personalized medicine. Contrary to Mayo's understanding, government funding does not translate pure academic research into practical products that benefit patients, and doctors themselves cannot bring to bear the resources necessary to fuel innovation and commercialize inventions on a large scale. Mayo's contention that patents like these hinder medical care is also unpersuasive. The United States is the world leader in biotechnology and personalized medicine, in part because investors have committed billions of dollars in capital in reliance on the prospect of patents like these. Thousands have been issued, including many to Mayo itself. Mayo's short-sighted view would exchange long-term innovation (including cost reductions) for ephemeral savings. In any event, Congress already considered Mayo's invitation to broadly restrict patent protection for medical diagnostic and treatment methods—and chose to adopt a limited personal immunity for doctors instead.

VS Tech v. Twitter: Patentable Subject Matter

VS Tech v. Twitter, 11–cv-0043 (E.D. Virginia 2011)

Trial is set for this week in the patent infringement lawsuit between VS Tech and Twitter.  VS’s asserted U.S. Patent No. 6,408,309 claims a “method of creating an interactive virtual community of people in a field of endeavor” and has a February 2000 filing date.  The inventor is Dinesh Agarwal who has also been a patent attorney since 1985.  VS Tech was formed to pursue the lawsuit and is headquartered in Mr. Agarwal’s law office address. The first two claims of the patent are reproduced below:

What is claimed is:

1. A method of creating an interactive virtual community of people in a field of endeavor, comprising the steps of:
a) selecting a field of endeavor;
b) compiling a list of members in the selected field;
c) selecting a member from the compiled list of members based on a preselected factor;
d) obtaining biographical information about the selected member;
e) processing the biographical information in a preselected format to create a personal profile of the selected member;
f) publishing the profile of the selected member on a machine readable media; and
g) allowing the selected member to interact with the profile.

2. The method of claim 1, wherein the step (f) comprises publishing the profile of the selected member on a network of computers.

In his most recent judgment in the case, Judge Morgan denied Twitter’s motion for summary judgment of invalidity under 35 U.S.C. 101, 102 & 103 and non-infringement.

The section 101 decision is interesting in that the judge treated the machine-or-transformation test as a question of fact to be determined by the jury.  “In light of all of the foregoing considerations, the Court finds that the evidence is sufficient for a reasonable juror to conclude that the ‘309 patent is linked to a particular machine or apparatus.”  Like claim construction and obviousness, patentable subject matter is treated by the courts as a question of law. However, unlike claim construction, the appellate courts have never held that it must be the judge who decides section 101 issues.

When the case was filed in January, Patent Law reporter Joe Mullin wrote “The central role of patent lawyers in suits like this raises questions about the health of the U.S. patent system. Patent lawyers are insiders in this system, and an increasing number of them aren’t satisfied just with being very-expensive service providers to patent owners. They’re seeing the millions made by so-called patent trolls and are eager to get into the game themselves. The patent office simply isn’t set up to say no to a persistent applicant, and the patent lawyers know that as well as anybody.  Mike Masnick filed his story under the “bang-head-slowly dept.”

The following is the text of Twitter’s proposed jury instructions on what it terms “unpatentable subject matter”:

Even if an invention is both new and not obvious, a patent claim may be invalid if its subject matter is not patentable. The law establishes three categories that are not eligible for patents: laws of nature, physical phenomena, and abstract ideas.

Twitter contends that the asserted claims of the ‘309 patent claim an unpatentable abstract idea. Methods which can be performed mentally, or which are the equivalent of human mental work, are abstract ideas which cannot be patented. An abstract idea is unpatentable even if the patent claim limits the idea’s use to a particular technological environment, or adds insignificant post-solution activity. Systems that depend for their operation on human intelligence alone cannot be patented.

A useful and important clue for determining whether a patent claims unpatentable subject matter is whether the claim is tied to a particular machine or apparatus, or transforms a particular article into a different state or thing. This is called the “machine or transformation test.” To satisfy the machine prong of this test, the use of the machine must also impose meaningful limits on the claim’s scope. If the claim does not satisfy the machine-or-transformation test, this indicates that the claim may be invalid because it claims unpatentable subject matter.



Limiting Damages: $107 Million Interest Charge Improperly Awarded On-Top of Pre-Agreed Damages

By Dennis Crouch

Sanofi-Aventis v. Apotex (Fed. Cir. 2011)

The case focuses on Sanofi’s patent covering clopidrogrel bisulfate tablets sold under the trade name Plavix. ($4.5 billion in annual sales). In 2001, the generic drug manufacturer Apotex filed an abbreviated new drug application (ANDA) with the FDA – requesting that it be allowed to manufacture a generic version on the drug and alleging that Sanofi’s patent was invalid. Sanofi sued for infringement.

Pre-Judgment Agreement to Limit Damages: May 2006, the parties came to a limited agreement that any actual damages for infringement would be limited to “50% of Apotex’s net sales.” The agreement stated that:

If the litigation results in a judgment that the ‘265 patent is not invalid or unenforceable, Sanofi agrees that its actual damages for any past infringement by Apotex, up to the date on which Apotex is enjoined, will be 50% of Apotex’s net sales of clopidogrel products . . . . Sanofi further agrees that it will not seek increased damages under 35 U.S.C. § 284.

Apotex subsequently began marking its generic product before being stopped a few weeks later by a preliminary injunction. After Sanofi won the infringement trial, the judge set damages for that infringement at 50% of net sales plus interest. In dollar figures, damages were $442 million and the interest charge was $107 million. The district court had agreed that it should be bound by the prior agreement between the parties, but held that the agreement only limited damages and did not limit interest.

Contract Specification: Of course the contract could have spelled-out whether the limitation applied to interest charges, and the parties most certainly considered that issue during negotiations. But, for whatever, reason, they chose not to specify in the contract whether interest charges should be limited. Thus, the court was forced to consider the proper default rule for this situation.

At the Federal Circuit, Apotex argues that the interest payment should be included as part of the damage award and that the judgment therefore exceeds the agreed upon 50% damage limitation. In a 2-1 decision, the Federal Circuit has sided with Apotex – holding that the phrase “actual damages” as used in the contract “include[s] all damages necessary to compensate Sanofi for Apotex’s infringement.”

Because prejudgment interest is a form of compensatory damages, the district court erred by awarding additional prejudgment interest pursuant to 35 U.S.C. § 284.

In the majority opinion, Judge Moore relied both on the contractual language and on the history of compensatory damages that traditionally include both a reasonable royalty calculated at the point of infringement and interests charges for the delay in payment. Both of those elements are part of the “actual damages” calculation necessary to fully compensate the patent holder for past infringement. This follows the view espoused by the Supreme Court in its 1983 case involving General Motors where the court wrote:

An award of interest from the time that the royalty payments would have been received merely serves to make the patent owner whole, since his damages consist not only of the value of the royalty payments but also of the forgone use of the money between the time of infringement and the date of judgment.

Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983).

Patent Act Damages: As usual, the language of the Patent Act is somewhat ambiguous on the meaning of damages. The first paragraph of Section 284 calls for an award of “damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.” One view of this provision would require damages to be, at a minimum, a combination of a reasonable royalty plus interests and costs. In my view, however, the better plain meaning interpretation of Section 284 is that a court is required to award damages (minimum of reasonable royalty) and in addition must award interest and costs.

The appellate panel rejected the parties’ analysis of the language of the patent act as irrelevant – holding instead that “actual damages” was a contract term and that the interpretation therefore does not depend upon any statutory language.

While interesting, these arguments neither illuminate nor resolve the issue before us – the meaning of “actual damages” in the May 2006 agreement. The agreed upon “actual damages” are a creature of contract and not of the Patent Act. By entering into the May 2006 agreement, the parties decided that the agreement itself – not § 271(e)(4)(C) or § 284 – would govern the appropriate measure of damages from Apotex’s infringement.

Writing in Dissent, Judge Newman would have applied the usual background rule that interest is different from damages as a primary driving factor in interpreting the contract. In that framework, the contractual limitation on damages would not apply to limit interest as well.

My colleagues err in reading the contract’s silence on interest for infringement as meaning that the parties intended and agreed to forgo the interest to which the patentee is entitled by statute and precedent. I must, respectfully, dissent


Telegram for the Federal Circuit: Electronic Case Filing Is Now Available

By Andrew Dhuey

“I’m following your case at the Federal Circuit – would you please send me a PDF of the parties’ briefs? Thanks in advance.” Patent litigators and prosecutors throughout the nation have been sending emails with this request for years, relying on the kindness of strangers for a professional courtesy. They do this because there is usually no easy way for them to obtain Federal Circuit briefs. The reason for that is the Court – charged by Congress to resolve the most important technology disputes in the world – still does not have electronic case filing (ECF).

In the federal judiciary, ECF is now operational in all appellate and district courts, save two: the Supreme Court and the Federal Circuit. Some Supreme Court justices are comically unfamiliar with such cutting-edge technologies as texting and email, though the Chief Justice probably does know more about pagers than the typical 20-something today. Fortunately, the technological backwardness of the Supreme Court’s case filing system is of no consequence – you can get just about any petition or merits stage brief you might want from SCOTUSblog, the American Bar Association and other online sources.

At the Federal Circuit, however, odds are you have only three options when seeking a brief or motion: i) pay several hundred dollars for a messenger to go to the Court and copy it, ii) pay Westlaw or Lexis a similar amount to download it (if available) or iii) ask an attorney in the case for the favor of a PDF (tip: ask really nicely).

The Court’s long delay in implementing ECF is puzzling. In case after case, Federal Circuit judges and their law clerks demonstrate their ability to learn and analyze extremely complex technologies in widely disparate fields. Why then is the Court lagging behind every regional circuit court and all district courts in the nation when it comes to adopting technology in its own operations?

ECF is not a newcomer to the federal courts. District courts started using ECF in 2002; circuit courts in 2005. On June 28, 2007, then Chief Judge Michel announced that the Court hoped to utilize ECF in fall 2007. Since then, nothing. Well, slightly more than nothing. This message appears on Federal Circuit electronic docket sheets: “The following documents, filed after 8/13/07, are available for download: official caption, entry of appearance, certificate of interest. No other case documents are available electronically.” I can scarcely imagine any documents of less interest to others than captions, entries of appearances and certificates of interest, yet these are the ones you can obtain electronically.

The Federal Circuit’s lack of ECF is not merely a hassle for lawyers in search of briefs and motions. Scores of non-lawyers, including inventors, veterans, federal employees and vaccine-case claimants, represent themselves in Federal Circuit appeals. That rather challenging task would be less daunting if they had easy access to well-written appellate briefs of experienced counsel.

Federal Circuit judges, please consider this an amicus filing from someone who has great respect for you and the Court – it is time to roll out ECF.

Bosch v. Pylon: jettisoning the presumption of irreparable harm in injunction relief

By Jason Rantanen

Robert Bosch LLC v. Pylon Mfg. Corp. (Fed. Cir. 2011) Download 11-1096
Panel: Bryson (dissenting-in-part), O'Malley (author), Reyna

This is a very important Federal Circuit decision that firmly eliminates the presumption of irreparable harm in the context of injunctive relief.  While laying this issue to rest, however, the court offers an alternative idea: that even post-eBay, courts should (and implicitly must) consider the fundamental nature of patents as property rights when conducting an injunction analysis.

Wiper bladeThis case involves wiper blade technology.  Bosch, the patent holder, sued Pylon for infringement of a set of wiper blade patents.  At the trial court level, Bosch prevailed on a jury finding of validity and infringement before requesting entry of a permanent injunction.  The district court denied the injunction and Bosch sought interlocutory appeal of the denial while the damages determination was pending.

The presumption of irreparable harm is dead. Much attorney and commentator ink has been spilled over whether the presumption of irreparable harm following judgment of infringement and validity survived eBay Inc. v. MercExchange, L.L.C.  The Federal Circuit's opinion in Bosch v. Pylon should put an end to any further debate.  "We take this opportunity to put the question to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief."  Slip Op. at 10.  Although not expressly stated by the court, the unequivocal implication is that this is as true for preliminary injunctions as it is for permanent injunctions.

Long live the requirement that courts acknowledge the fundamental nature of patents as property rights! While affirming the death of the presumption of irreparable harm, Bosch simultaneously suggests an alternative approach that perhaps may turn out not all that different: the importance of recognizing that patents are property rights when performing the injunction analysis.

Although eBay abolishes our general rule that an injunction normally will issue when a patent is found to have been valid and infringed, it does not swing the pendulum in the opposite direction. In other words, even though a successful patent infringement plaintiff can no longer rely on presumptions or other short-cuts to support a request for a permanent injunction, it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude.

Slip Op. at 11. In other words, "While the patentee’s right to exclude alone cannot justify an injunction, it should not be ignored either."  Id. 

In the end, however, Bosch makes little use of this new approach, instead focusing on other types of errors committed by the district court.   Thus, it remains to be seen whether a failure to consider the "fundamental nature" of patent rights will be grounds for reversal. 

Reversal of district court denial of permanent injunction: In reversing the denial of an injunction, the court applies an approach reminiscent of the Supreme Court's own jurisprudence in recent years. 

Over the past quarter-century, this court has encountered many cases involving a practicing patentee seeking to permanently enjoin a competitor upon an adjudication of infringement. In deciding these cases, we have developed certain legal standards that inform the four-factor inquiry and, in particular, the question of irreparable harm. While none of these standards alone may justify a general rule or an effectively irrebuttable presumption that an injunction should issue, a proper application of the standards to the facts of this case compels the conclusion that Bosch is entitled to the injunction it seeks. It is in ignoring these standards, and supplanting them with its own, that the district court abused its discretion.

Slip Op. at 12.  Under this precedent, the court identifies two related legal errors and an error of judgment; taking the all the factors together, the majority concludes, compels the entry of a permanent injunction. The legal errors consisted of the district court's conclusions that the presence of additional competitors in the market, without more, cuts against a finding of irreparable harm, as did the non-core nature of Bosch's wiper blade business in relation to its business as a whole.  "Injuries that affect a “non-core” aspect of a patentee’s business are equally capable of being irreparable as ones that affect more significant operations."  Slip Op. at 16.  Ultimately, the trial court's error "arises from its conclusion that, if a fact supports the granting of an injunction, its absence likely compels the denial of one.  That is not the law, however."  Slip Op. at 17. 

Dissenting in part, Judge Bryson disagreed with the majority's decision to remand with instructions to enter an injunction.  While Judge Bryson would not have affirmed the denial of an injunction, nor would he have expressly reversed, instead preferring to remand the matter back to the district court for further findings of fact and a reweighing of the equities.  

Stay Pending Reissue: Timing and Blog Reliability

Tyco Fire Products LP v. Victaulic Co., 10-cv-4645 (E.D. Pa. October 4, 2011)

by Dennis Crouch

In September 2010, Tyco Fire filed suit against Victaulic alleging infringement of two fire sprinkler system patents. U.S. Patent Nos. 7,793,736 and 7,819,201. Almost one-year into the lawsuit, Tyco Fire filed a pair of reissue application with the PTO – admitting that that both patents have defects that need correcting. The reissue applications request that the PTO narrow the subject matter being claimed with the apparent hope of avoiding an adverse invalidity decision in court.

Patentlyo087_small[1] After filing the reissue applications, the patentee requested that the district court stay the litigation pending the outcome of the reissue. In response, Victaulic cited my post from January 2011 identifying the average five-year pendency for reissued patents. In a brief filed under seal, Tyco's attorneys from Morgan Lewis called my post "unreliable" and "unsubstantiated" because it was found in a blog.

In deciding the issue, the judge correctly found that the reissue will certainly take some time even if my post regarding the average delay does not exactly predict the path for Tyco's applications. A potential important difference is that my data reflects the average for all reissue prosecutions but does not separate-out cases going through expedited reissue. See MPEP § 1442.

In the end, the judge refused to stay the litigation based upon the potential delay and the fact that the reissue does not appear to be likely to narrow the issues in the litigation. In addition, the court found that the reissue was motivated by claim construction questions posed by the defendant in the litigation. This timing issue (first seeing the claim construction arguments, then filing for reissue) raised "alarm bells" with the judge who identified the move as a potential "litigation gambit" intended to give the plaintiff a tactical advantage.

Stay denied.

Note: I contacted the Morgan Lewis attorneys who submitted the brief for a comment on what was particularly unreliable or unsubstantiated regarding my post. They have not responded.

BPAI’s ex parte Decision Based Upon New Factual Findings Constitutes a New Ground of Rejection

Patent2011031In re Stepan Co. (Fed. Cir. 2011)

by Dennis Crouch

This is an important administrative patent law case holding that when the Board of Patent Appeals (BPAI) affirms a rejection based upon a new factual finding, it must identify the holding as a new ground for rejection.  This holding benefits patent applicants because it creates a right to either reopen prosecution or request a rehearing based upon the new ground.

Here, the examiner rejected Stepan's claims as anticipated and obvious.  Stepan had submitted a Rule 1.131 affidavit claiming a prior invention date in order to antedate one of the references. However, the examiner gave the affidavit no legal effect based upon the judgment that a prior public use of a portion of the invention qualified as 102(b) prior art because it occurred more than one year before the application filing date.

In the administrative appeal, the Board ruled that the applicant could claim priority to an earlier application and that, therefore the the prior art was no longer 102(b) prior art. However, the Board affirmed the rejection after holding that the prior use was still 102(a) prior art because the content of the Rule 1.131 affidavit was insufficient to prove Stepan's prior invention rights.

Writing for the Court of Appeals for the Federal Circuit, Judge Prost vacated the Board's decision — holding that the Board's factual finding on the sufficiency of the content of the affidavit was a new factual finding that was not a basis of the examiner's rejection being reviewed and, therefore, that the Board must identify the affirmed rejection as a new ground of rejection.

Notice does not focus on the applicant’s arguments divorced from the examiner’s rejections of record that are actually appealed to the Board.  Instead, it focuses on the “adverse decisions of examiners” during prosecution which form the basis of the Board’s scope of review.  35 U.S.C. § 6(b).  Because Stepan did not have prior notice of the Board’s intent to craft and rely on new findings of fact to support a §§ 102(a)/103(a) rejection and because it failed to identify this rejection as a new ground, Stepan’s notice rights were violated.  5 U.S.C. § 554(b)(3); 35 U.S.C. § 6(b).  Had the Board labeled its rejection as a new ground of rejection, Stepan could have reopened prosecution to address the newly-alleged deficiencies in its Declaration with the examiner. 

Note: Although this case involves an ex parte reexamination, the principles here apply equally with ordinary ex parte examination.  However, the decision will not apply to the new post grant review proceedings under the Leahy-Smith AIA because the review goes directly to the Board (the newly named Patent Trial and Appeal Board or PTAB) rather than an examiner.

The Narrows: Winning by Arguing Both Trade Secret Misappropriations and Patent Infringement

Atlantic Research Marketing Systems (ARMS) v. Troy Industries (Fed. Cir. 2011)

By Dennis Crouch

This appeal stems from a 2007 patent infringement and business tort lawsuit filed by ARMS against its former employee and current competitor (Mr. Troy). ARMS' reissue patent claims a firearm hand-guard with an attachment point at the firearm's barrel nut. The original patent application included both the barrel nut attachment and a sleeve support as claim limitations. However, the reissue patent does not require the sleeve support. That change is important for the case because TROY's competing hand-guard uses the barrel nut as the single attachment point.

On summary judgment the district court ruled the patent invalid for failing the written description requirement of 35 U.S.C. § 112 p1.

Written Description Requirement: Section 112 p1 of the Patent Act requires that a patent specification include "a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same." In Ariad, the Federal Circuit reaffirmed that this provision creates the separate and distinct requirements of written description and enablement. The test for written description considers whether, after reading the original specification, one of skill in the art would understand that the inventor was in possession of the claimed invention. Most written description cases arise in situations like this where the patentee has amended its claims well after the application filing date.

Although not cited here, this case is similar to the Federal Circuit's Gentry Gallery decision where an element in the original claims was omitted in a broader-amended claim. In Gentry Gallery, the original application was directed to a pair of recliners with controls located on a console. The amended claims removed any restriction on the console location. The Federal Circuit held those broader claims invalid because "the patent disclosure did not support claims in which location of recliner controls was other than on the console."

On appeal here, the Federal Circuit agreed that the broader claims are invalid under the written description requirement because it the specification does not provide any evidence that the inventor invented a hand-guard that uses the barrel nut as the one and only attachment point.

[I]t is undisputed that the written description for the '465 patent does not disclose to a person of ordinary skill in the art an invention where the yoke/barrel nut attachment point provides complete support for the handguard accessory. Claims 31-36, however, clearly cover such a design. Put differently, claims 31-36 [as amended] exceed in scope the subject matter that [the inventor] chose to disclose to the public in the written description. Therefore, we hold that the district court properly granted summary judgment invalidating claims 31-36 for failing to satisfy the written description requirement of 35 U.S.C. § 112. Mr. Swan used the reissue process to impermissibly obtain claims unsupported by the written description.

ARMS had also sued TROY for trade secret violation and argued in court that ARMS version of the barrel-nut-only attachment was a trade secret stolen by TROY. That testimony bolstered the court's conclusion that the asserted claims lacked the written description support to cover a barrel-nut-only attachment.

[ARMS] cannot now "have it both ways" by reaching back and relying on the disclosures in the '245 patent to claim an invention he was purposely shielding from the public.

Trade Secret Violation: Although TROY won the patent dispute, the jury found troy liable for trade secret misappropriation and breach of a fiduciary duty to his former employee. The award was $1.8 million in damages under Massachusetts Trade Secret Law. (Massachusetts has not adopted the UTSA). As noted above, the alleged trade secret is the method of attaching the hand-guard to a firearm using only the barrel nut. The jury was instructed that any protectable trade secret must go beyond what was disclosed in the '245 patent. Based upon that instruction, the Federal Circuit affirmed – finding no clear error.

This strategy worked perfectly for ARMS who would likely be satisfied winning either patent infringement or trade secret misappropriations. Although the court clearly sympathized with TROY's position, it noted that the legal positions taken by the two parties meant that ARMS was likely to win one of its claims.

Troy's argument illustrates the inherent tension Atlantic Research created by contending that Troy misappropriated trade secrets, while simultaneously asserting that the products Troy developed with the misappropriated trade secrets infringed its patent. In response, Troy contended that Atlantic Research's patent disclosed the trade secret, but also contended that the patent asserted against it was invalid for failing to disclose a written description of a handguard that attaches solely at the barrel nut. These conflicting positions left little room for either party to prevail on both claims.

The problem: In the end, the Federal Circuit vacated the jury verdict on a "jury taint" issue. One juror brought a plumbing clamp from home during deliberations to show other jurors and the appellate panel held that the judge should have taken more dramatic steps to ensure that the clamp did not have any "prejudicial effect on the jury as a whole."

Kimberly-Clark v. First Quality Baby Products: No CAFC en banc resolution of standard for preliminary injunctions

By Jason Rantanen

Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products, LLC (precedential order denying rehearing en banc) Download 10-1382 order
Newman, O'Malley and Reyna dissenting

During the last few years a significant intra-circuit split has developed at the Federal Circuit over the appropriate standard to apply to likelihood of success determinations made in the context of requests for a preliminary injunction.  Last week the Federal Circuit declined to take the issue en banc in a move that prolongs the uncertainty but perhaps paves the way for Supreme Court review.

As in other areas of the law, the determination of whether to grant a preliminary injunction requires the applicant to establish four factors: a likelihood of success on the merits, irreparable harm in the absence of preliminary relief, that the balance of equities tips in the applicant's favor, and that an injunction is in the public interest.  The judges of the Federal Circuit disagree, however, about the standard for demonstrating a likelihood of success on the merits, as well as whether such a showing is a necessary prerequisite for entry of a preliminary injunction.

On this issue, several of the judges (including Judges Dyk and Prost, who participated on the panel in this case) apply the standard that an applicant fails to establish a liklihood of success on the merits if the accused party raises a defense that "does not lack substantial merit," and that such a failure precludes entry of a preliminary injunction.  This was the standard applied in the Kimberly-Clark opinion itself, in which the panel vacated a district court's entry of a preliminary injunction with respect to three patents (although it did affirm an injunction based on a fourth patent, concluding that the accused infringer "failed to raise a substantial issue of patentability"). Download 10-1382

Other judges, most vocally Judge Newman, take the view that a defense that does not "lack substantial merit" does not equate with a failure to establish a likelihood of success on the merits, and in any event should not automatically preclude entry of a preliminary injunction.  In her dissent in the denial of rehearing en banc in Kimberly-Clark, for example, Judge Newman – joined by Judges O'Malley and Reyna – criticizes the alternate rule as an absurdity.  "This standard essentially negates the possibility of grant of a preliminary injunction to preserve the status quo during patent litigation, for in today’s complex patent law it is hard to imagine a case in which a defense that is “not substantially meritless” cannot be devised at the preliminary stage."  Dissent at 5-6.  In support of her view, Judge Newman points to the disconnect between "lacks substantial merit" and the standard applied by everyone besides the Federal Circuit.  "The panel's approach is in conflict with not only the Supreme Court, but with every other circuit."  Id. at 6. Nor should a defense that lacks substantial merit automatically preclude entry of a preliminary injunction if the balancing of the four factors necessitates otherwise. See id. at 10-12. Judge O'Malley, writing separately, expressed her strong agreement with the points raised by Judge Newman, as well as concerns about the difficulties faced by district courts in resolving the court's precedent in this area.

Regardless who is correct on the appropriate standard for a preliminary injunction, it is apparent that a sharp split exists within the Federal Circuit that it will be unable to resolve on its own in the near future.  The denial of the en banc request suggests two possible outcomes: (1) that success of a preliminary injunction appeal to the Federal Circuit will continue to be heavily panel-dependant for foreseeable future, or (2) that the Supreme Court will intervene in this case or another to resolve the split and restore some predictability to the area of preliminary injunctions.

Federal Circuit Upholds Strong Domestic Industry Requirement for USITC Patent Litigation

John Mezzalingua Associates (d/b/a PPC, Inc.) v. International Trade Commission (Fed. Cir. 2011)

by Dennis Crouch

Most U.S. patent litigation takes place in federal district courts. However, when an infringing product is imported into the U.S., the patentee typically has a right to complain to the U.S. International Trade Commission (USITC) and to request an order that blocks the infringing products from entering the U.S. under Section 337 of the Tariff Act of 1930 (as amended). The USITC was formerly known as the U.S. Tariff Commission and, despite its current "international" name, the agency is fully within the U.S. government.

The USITC offers benefits for patentees over federal court litigation. In particular, the USITC often reaches its conclusion in less time and is not bound by the equitable limitations on injunctive relief. However, damages are not available and USITC orders are subject to more political control via presidential review of exclusion orders.

A major caveat to the Section 337 actions is that the USITC only has power to act to protect a "domestic industry." In this case, the Federal Circuit appellate panel has affirmed the USITC's judgment that the patentee, PPC, failed to prove the existence of a domestic industry related to its patented coaxial cable connectors. (U.S. Design Patent No. D.440,539).

Domestic Industry. Section 337(a)(3) defines a domestic industry for articles protected by intellectual property. Under the statute, a domestic industry "shall be considered to exist if there is in the U.S."

A. significant investment in plant and equipment;
B. significant employment of labor or capital; or
C. substantial investment in its exploitation, including engineering, research and development, or licensing.

To qualify, these activities must be tied to the patent, copyright, trademark, mask work, or design being protected. To be clear, the nexus must be fairly tight.  Here, the ITC ruled that there was a domestic industry for some of PPC's asserted patents but no domestic industry for this particular patent –  even though the patents are in the same priority family.

PPC is a US company that designs and manufactures cable connectors. PPC does not itself manufacture any product covered by the '539 patent. However, it has previously filed (and won) a number of prior lawsuits against infringers and, in one instance, licensed the '539 patent as part of a settlement agreement.  Here, it was clear that PPC had made "substantial investment" in protecting its patent rights through litigation and the patentee argued that investment fits within the "licensing" prong of 337(a)(3)(C)'s domestic industry definition.

On appeal, the Federal Circuit acknowledged that the statute does not indicate whether litigation expenses can count toward licensing investment.  In resolving the issue, the panel held that infringement litigation expenses will not normally be counted as licensing investment even if the result of the litigation is a license — otherwise the domestic industry requirement would be effectively meaningless. The court noted that litigation expenses may count toward licensing investment if, for instance, PPC had offered to license the patent prior to litigation or otherwise conducted settlement or licensing negotiations during the litigation.  The fact that PPC asked for injunctive relief in the prior litigation was also used as evidence that the prior litigation was directed toward protecting exclusive rights rather than part of a licensing initiative.

Standing: PPC had actually won its case at the USITC, but on a different patent. In the appeal, the USITC argued that PPC had no standing to appeal the favorable decision. The Federal Circuit rejected that argument — holding that PPC had a separate interest in obtaining a general exclusion order in the '539 patent even though all currently identified products will be excluded based upon the separate patent.

Dissent: Judge Reyna dissented — arguing that a patentee's infringement litigation expenses should count toward the licensing prong of the domestic industry requirement. Judge Reyna here provides a full analysis of the case that both explains his legal and factual arguments for reversal.

Verizon and Google combined forces to file a brief of amici curiae arguing that litigation expenses should not be counted in the domestic industry inquiry.  These industry-giants were concerned that the court would open the door for non-practicing entities to assert their rights in the USITC.  They argue "Patent litigation is not a protectable domestic industry."  Download GoogleVerizonITCBrief.

For those interested in studying USITC litigation, some excellent recent analysis of the judicial body has been done by Colleen Chien and Sapna Kumar.  You may also want to download the Section 337 Practice Guide.


No Litigation Estoppel until All Appeals Exhausted in Inter Partes Reexamination

Bettcher Industries v. Bunzl USA (Fed. Cir. 2011)

by Dennis Crouch

For one summer during college, I worked in a meat packing plant. In one hand, I wielded a power-operated knife while the other, gloved in chain-mail, held thawing pork-bellies. This case involves litigation over a hand-held rotary blade used in the commercial food processing industries. As is now common, after Bettcher filed its infringement lawsuit, Bunzl, the defendant, requested the patent undergo inter partes reexamination at the USPTO. Bunzl asserted the same prior art in both its reexamination request and in its invalidity defense before the district court.

The issue on appeal is the timing of the estoppel provision associated with inter partes reexamination under 35 U.S.C. § 315(c). Under the statute,

"[a] third-party requester whose request for an inter partes reexamination results in a[ reexamination] order … is estopped from asserting at a later time, in any civil action [related to patent law] … the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.

As I read the statute, a reexamination requester is blocked from making particular invalidity arguments in court if certain conditions are met. These conditions include: (1) a final determination that the reexamined claim is valid; and (2) a finding that the invalidity argument is based on grounds that were or could-have-been raised by the requester during the inter partes reexamination.

In the case at hand, the USPTO had granted Bunzl's reexamination request, but the reexamination examiner had rejected Bunzl's position and issued a right-to-appeal-notice to Bunzl. Bunzl appealed to the BPAI, and recently lost the appeal, but had now requested rehearing by the Board. If Bunzl loses at the BPAI, it has a right to further appeal the reexamination to the Court of Appeals for the Federal Circuit.

In summary, at this point, the USPTO Examiner has made a "final" decisions that the claim is valid, and the BPAI has made a "final" decision that the claim is valid. However, Bunzl still has a right to appeal. The question from those facts is whether the claim is "finally determined to be valid" under the statute.

Deciding the issue, the Federal Circuit held that a claim is not "finally determined to be valid" under Section 315 until all appeals are exhausted.

[T]his court agrees with Bunzl that the estoppel provision of § 315 is triggered not when examination is completed but only after all appeal rights have been exhausted.

On remand, the district court will need to determine whether a new trial is necessitated by the additional prior art made available by the lack of estoppel.

Judge Reyna dissented – arguing that the estoppel issue is moot because the claim is anticipated as a matter of law.

The plain meaning of the claim language of the '325 patent reads on Bettcher's own prior art products, which include all of the structural features required by the claims, and which possess the capability of satisfying the functional or intended use limitations.

. . . .

No reasonable jury could conclude that the claims of the '325 patent were novel over the pre-1998 blades because none of the dispositive facts were disputed and the law is clear. I would reverse the district court and enter judgment as a matter of law of anticipation.

In reaching his outcome, Judge Reyna is finding that, as a matter of law, the wrong conclusion was reached by the trial jury, the district court judge, the original patent examiner, the reexamination examiner, the BPAI, and the other two judges on the court.

Comments by Crouch: This case is in tension with the recent Federal Circuit decision of Marine Polymer Tech. v. Hemcon, Inc. In that case, the court held that non-final arguments made during reexamination created intervening rights that relieved an accused infringer from liability, and that the intervening rights were created at the point of the arguments even though the reexamination was ongoing.