In the past, I’ve been given some grief for covering unpublished opinions on the blog. The Federal Circuit has even threatened sanctions against any attorney who cites those opinions in a court filing. Now however, the Supreme Court has voted to require courts to allow citation of unpublished (nonprecedential) appellate opinions.

Chief Justice John Roberts has been quoted as strongly against these hidden opinions— “A lawyer ought to be able to tell a court what it has done.”

According to a Law.com article by Tony Mauro, 9th Circuit Judge Alex Kozenski has been firmly against allowing citation of unpublished opinions:

When the people making the sausage tell you it’s not safe for human consumption, it seems strange indeed to have a committee in Washington tell people to go ahead and eat it anyway.

The rule will not be effective until January 1, 2007.

• Federal Circuit Warns Against Citations of Non-Precedential Opinions
• Citation of Unpublished Opinions 
• Citation of Unpublished Opinions
• CAFC’s Opposition to the Change
• J. Craig Williams Lends His Voice

• [PDQ Redline.doc (63 KB)] Redline showing how the proposed changes would integrate into the Statute. (Created by Aaron Homer, a law student in Texas)
• Patents Depend on Quality Act of 2006 [LINK] introduced April 5, 2006;
• News reports;
• Nipper on Patent Reform;
• Buchanan on Patent Reform.

If a generic manufacturer wants to begin selling a pharmaceutical drug before the innovator company’s patent is expired, the generic can file an Abbreviated New Drug Application (ANDA) with the FDA along with a certification that asserts that either (i) the patents listed in the Orange Book are invalid or (ii) the listed patents do not cover the generic’s product.  This certification is known as a “paragraph IV certification.”

Once an ANDA is filed, the patent holder has a strong incentive to act quickly to charge the generic with infringement.  If charges are filed within 45 days, an automatic statutory stay is triggered that delays approval of the generic’s ANDA for thirty-months.

Senators Stabenow (D, MI) and Lott (R, MS) have recently submitted a bill (S.2300) to the Senate that would allow courts to shorten the thirty-month stay based on a “totality of the circumstances, including whether the plaintiff sought to extend the discovery schedule, delayed producing discovery, or otherwise acted in a dilatory manner, and the public interest.  According to the Bill, this is necessary to “prevent[] abuse of the thirty-month stay-of-effectiveness period.”  The Bill would actually require that approval take place at least by the end of thirty-month months, thus preventing any further delay.

The proposal also limits the extent that patent exclusivity can be extended in return for ensuring pediatric safety and effectiveness.

The Patent Reform Act of 2005 will not be enacted this year.  There is still a possibility of a back-door push to include some provisions in an omnibus appropriations bill, but at this point it is unclear what those provisions would be and whether they would be successful.

The failure of reforms this year has several sources:

1. Lack of time: In the Senate, the committee handling intellectual property law is the same as the judiciary committee.  This term has been filled with long debates on judicial appointments that left little time for patent reform.
2. Patents are not yet hot: It is still difficult to get Washington excited about patent law.  Historically, reform measures have taken years to build up enough inertia to get through both the House and Senate.
3. Overreaching: The proposed reforms ended up being overreaching in a way that pitted major lobbying groups against one another.  This impasse eventually killed the possibility of moving forward with substantive changes this year.

One of the proposed measures would have eliminated the best mode requirement.  Dale Carlson of Wiggin & Dana has written a short article explaining his reasons for keeping best mode. [Article].

The recording industry is moving quickly toward technological ways to prevent digital copying and thus promote digital rights management (DRM).  One recognized vulnerability is the “analog hole” or more blandly, the analog reconversion issue. 

Analog Hole: When the information is converted to a perceptible analog form, there are no restrictions on the resulting analog signal, and the content can be captured back into digital form with no restrictions. (from Wikipedia).

Oddly, the Hollywood endorsed Analog Content Security Preservation Act Of 2005 would transform the Patent Office (USPTO) into a regulatory agency by giving the agency the job of enforcing a Copy Generation Management System for Analog (CGMS-A).

Read the proposed changes to 35 U.S.C. 101.

35 U.S.C. 271(g) makes clear that importation of a product that is made by a patented process is infringement. However, the statute includes limitations that the “product” is no longer infringing if it is either “materially changed by subsequent processes” or is “a trivial and nonessential component of another product.”

Kinik v. ITC: In 2004, the Federal Circuit determined that the language of 271(g) does not apply to Section 337 * actions at the ITC. [Opinion]  In that decision, court noted that the statute explicitly limits itself “for the purposes of this title.”

Thus, when a defendant is accused of improper imports under Section 337, he cannot raise the defenses of material change by subsequent processes or trivial component.

Amendment: Now, there is a movement afoot to change this aspect of the law, striking words that limit those defenses to actions under the Patent Act so that they could be applied with equal force at the ITC.

* Section 337: The Tariff Act of 1930 allows administrative relief through the International Trade Commission (ITC) to determine whether there is unfair competition in the importation of products into the US. Section 337 of the act makes infringement of a US patent an unlawful practice in import trade.  ITC actions are extremely fast as compared to traditional patent infringement suits and are often the best way to stop an infringing importer.

Shashank Upadhye of Eon Labs & I have created a marked-up version of the Patent Act showing changes that would be implemented if the Act was enacted into law.  This document is very useful to help better understand what changes are being made and what sections are left unchanged.

• Download Redlined Patent Act of 2005.doc (NOTE: In this version, we do not include sections that were not changed.  Full version of the Patent Act to follow). [Last updated June 21, 2005]

The partisan nature of politics often falls apart on patent reform issues. For instance, IP subcommittee leaders Lamar Smith (R) and Howard Berman (D) both support patent reform efforts — although it is unclear if either support all the provisions in the proposed draft legislation.  Now, the New Democrat Coalition (NDC), a group 43 of “pro-growth” Democratic Representatives, has sent an open letter to Smith and Berman supporting the legislative initiative.  The NDC is specifically supporting some of the most controversial aspects of the legislation — including limits to injunctions and damages.

[W]e urge you to include the following among the many important patent reform items in your legislation:

1) Third Party Submission of Prior Art. . .

2) Injunctions: We believe injunctive relief is an important legal reform element of patent reform and we encourage the Committee to take aim at those who seek to abuse the patent system for profit.

3) Treble Damages: . . . this legal standard should be revised. While courts should be able to assess higher damage amounts when a defendant’s actions warrant, treble damages should be limited to those cases where intentional or egregious conduct warrants a punitive measure of damages.

4) Apportionment of Damages: . . . Today, complex products such as semiconductors or software programs include thousands of features, many of which are patented.  As these products have become more complex, the old methods for determining the value of infringement have become strained and have led to some unfair results.

From the side of special interests, I see three major coalitions forming:

1) Large high-tech companies, including Microsoft and Intel, with the goal of reducing the strength of patents. These companies have major patent portfolios, but fear small companies and individuals that may develop blocking patents.  This group is also garnering support from denouncers of software patents.

2) Other large patent holders, including Big Pharma, with the goal of strengthening and streamlining patents by changing to a first-to-file system and encouraging a post-grant opposition.

3) Start-ups and individual inventors, with the goal of keeping the status quo.

The question is: where does your company fit into the picture?

Links:

• Read Matt Buchanan’s take;
• File Attachment: PatentReformNDCLetter.pdf (274 KB) (provided by Buchanan);
• Lawyers Weekly USA article on patent reform (quoting both me and Buchanan).

Summer is almost here — How would you fare on this final exam question:

The Progress Clause (Article I, Section 8, Clause 8) of the U.S. Constitution provides that:

“Congress shall have the power… To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Using this clause as a basis for analysis:  

1. Would it be Constitutional for Congress to eliminate the right to an injunction for patent infringement?
2. Would it be Constitutional for Congress to modify the right to an injunction so that one is only available if the patentee is “making use” of the invention?

House Subcommittee on the Courts, the Internet and Intellectual Property, chaired by Congressman Lamar Smith (R Tex) has released a patent legislation discussion draft that includes a number of proposed patent reform measures.  The House Subcommittee is scheduled to hold an oversight hearing on the discussion draft on Wednesday, April 20, 2005 at 4:30 PM. [Link].  The witness list includes J. Jeffrey Hawley of Eastman Kodak testifying on behalf of the Intellectual Property Owners Association (IPO); Richard J. Lutton of Apple, testifying on behalf of the Business Software Alliance; Jeffrey Kusham, testifying on behalf of Genentech; and William LaFuze of the ABA.  In a parallel action, the Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April 21. [Link]. [NOTE — Strong indications are that the Senate will postpone the hearing to April 25].

Links:

• Patent Reform Proposal

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

The current patent statute (35 USC §283) allows courts to grant injunctions to prevent violation of patent rights, but provides little guidance, specifying only that injunctions be "in accordance with the principles of equity."  The terms of the injunctions need only be "as the court deems reasonable."

The proposed statute would keep the current language intact, but would add another section spelling out the grounds for granting such injunctions.  Under the new language, "a court shall not grant an injunction unless it finds that the patentee is likely to suffer irreparable harm that cannot be remedied by the payment of money damages."  In making this finding, the court is not to presume the existence of irreparable harm, but is instead required to "consider and weigh evidence" relating to equitable factors.  One of these factors is "the extent to which the patentee makes use of the invention."

One result of the proposed new language is that, in a preliminary injunction determination, a reasonable likelihood of success on the merits would no longer lead to a presumption of irreparable harm.  The concept of "irreparable harm" has been extensively adjudicated; that body of case law would seem to remain largely relevant in making the determination called for by the proposed statute.

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

In the recent case of Eolas v. Microsoft, the Court of Appeals for the Federal Circuit expanded the scope of Section 271(f) – a section that creates a cause of action for infringement due to foreign sales when a component of a patented invention is supplied from the U.S., knowing that the component will be combined in an infringing manner outside the U.S.  The court ruled that the statute (i) had no tangibility requirement and (ii) was not limited to apparatus claims.

The proposed legislation would make it clear that a component "is a tangible item that is itself combined physically with other components to create the combination that is alleged to infringe."

This change would essentially overrule Eolas v. Microsoft.

• File Attachment: Draft Patent Statute (182 KB)

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

Under the current statute, an employer has quite a bit of trouble filing a patent application when the inventor refuses to sign a declaration or is otherwise unavailable.

In order to file the application without the inventor’s help, the statute (35 U.S.C § 118) requires a proof that such action is “necessary to preserve the rights of the parties or to prevent irreparable damage.”

The proposed changes make it easier for the company to file the application without the inventor’s assistance.  Specifically, the proposal allows an assignee (or a person owed an obligation to assign) to apply for a patent after showing that the action is “appropriate.”

• File Attachment: Draft Patent Statute (182 KB)

The attached legislative proposal was prepared by the House Subcommittee on Intellectual Property chaired by Congressman Lamar Smith (R Tex).  Although the proposal is merely a discussion draft at this point, it is expected that a parallel Bill will be introduced within the next few days.  The Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April [25th].  It is quite possible that this proposal will serve as an agenda for the Senate hearings.

The proposed legislation includes changes to:

• Creating a post-grant opposition procedures;
• Willfulness: Increased damages may not be awarded based merely on the knowledge of a patent or its contents;
• Taking away the clear right for an injunction for infringing activity;
• First-to-file (rather than first-to-invent) rights;
• Expanded definitions of prior art;
• Assignee may file for the application and be granted a patent (rather than the inventor);
• Elimination of the best mode requirement;
• Changes to the duty of candor and unenforceability;
• Damages: when invention is a portion of a larger product, royalties are only calculated for a portion of the product;
• Publication of all patent applications after 18 months;
• Prior user rights;
• Overruling Microsoft v. Eolas — component must be tangible;
• and more.

Over the past year, the AIPLA, IPO, Microsoft, and others have all been beating the patent reform drum — each with a separate agenda.  This proposal appears to be an amalgamation of all the proposals — with enough controversial points to get most everyone up in arms. 

Over the next few weeks, Marcus Thymian, Jennifer Swartz, and I will discuss the various sections of the proposal in a series of posts.

• File Attachment: Draft Patent Statute (182 KB)