Tag Archives: Abstract Idea

Microsoft v. AT&T: Transnational Patent Law At The Supreme Court

Patent, Patent Cases 2006, Software, Transnational, , , ,

Microsoft v. AT&T (Supreme Court 2006)

Transnational patent law is a hot topic, and one the Supreme Court cannot ignore. The issue de jour involves the question of unauthorized export of patented software.  AT&T holds the speech compression patent that is infringed by Microsoft Windows. (RE 32,580). Microsoft exports the software code from Redmond to various international locations.  Once abroad, the code is then copied and installed in computers that are then sold abroad.  As the invention is claimed, the code alone does not infringe. Rather, infringement would only occur once the code is combined with the computer hardware. 

Under traditional notions of patent law, Microsoft’s actions are not infringement because the code alone does not infringe the patent, and (for the purposes of this case) the code is not combined with the hardware within the U.S. 

Here, however, traditional notions of territoriality have been supplanted by statute.  Under 35 U.S.C. 271(f), supply of only a portion of a component of a patented invention from the U.S. can be infringement.

35 U.S.C. 271(f) prohibits the “suppl[y] . . . from the United States . . . [of] all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States,” as well as the “suppl[y] . . . from the United States [of] any component of a patented invention that is especially made or especially adapted for use in the invention.” 

Microsoft, of course, wants to avoid infringing the U.S. patent for its activity abroad and gives two separate reasons why its activity of exporting software do not fall within the parameters of 271(f). (I) Software code is an intangible string of information not a “component” as required by the statute. (II) Because copies of the code were used to create the infringing software/hardware combination, no physical particle that Microsoft exported actually became part of the finished product.  According to Microsoft, this means that nothing in the infringing combination was actually supplied from the U.S. as required by the statute. I term these two arguments the tangibility requirement and the molecular conservation requirement.

Microsoft and its supporters have now filed their merits briefs to the Supreme Court, and my reading of their arguments is that there is strong support for molecular conservation, but only weak support for tangibility. The Bush Administration supports this distinction in its brief filed jointly by the DOJ and PTO. 

On tangibility, the Government argues that software can certainly be a component, and that the statute is not limited to “only tangible components” as Microsoft suggests. Although not cited by the Government, Section 271(c) provides a statutorily distinct way of limiting components.  In referring to infringement through importation, that clause identifies only components of certain types of inventions such as machines and compositions.

On molecular conservation, the Government correctly notes that the statute requires that the exported components be the same components that are combined in the infringing manner. “Conduct that merely induces the combination of foreign-made components does not violate Section 271(f).” The statute, according to the Gov’t, leaves foreign manufacturers “free to manufacture and assemble copies of the identical components overseas” so long as none of the components actually assembled were made within the US.  Applying their argument to this case, we know that the software was copied and only those copies were combined with hardware in a would-be infringing manner.

A group of electronics companies led by Amazon filed a colorful brief that also supports the requirement of molecular conservation.

No matter where their unique arrangement was invented or dictated, if each molecule in the machine was supplied from outside the U.S., then no component was supplied from the U.S. In the present case, Microsoft did not supply even a single molecule of the foreign machines at issue.

Amazon also raises the slippery slope issue.  According to the brief, if Microsoft is liable here, then the Court would open the door to infringement for export of blueprints or a CAD/CAM design scheme.  That result, the brief argues, goes against congressional intent. As an aside, Amazon cited Wikipedia but did not include it in its list of “authorities.”  Although they do not cite it, the Pellegrini case holds that plans or instructions for a patented item cannot serve as components under 271(f).

In support of the molecular argument, a group of professors led by professors Lemley (Stanford) and Duffy (GWU), looked appropriately at the language of 271(f):

[A]s a matter of grammar that the phrase “such components” refers back to the components that have been “supplied” from United States. Thus, the plain language of the statute requires that inducing an extraterritorial combination constitutes an act of infringement if and only if the combined components are in fact the same components that were “supplied in or from” the United States.

For the professors, supplying exact copies does not meet the requirement. Most of the briefs come-up with some hypothetical metaphor to explain their situation — a guy memorizing some code and flying on an airplane, a hard-copy print out of some code that runs a fuel-injection system, CAD/CAM instructions, blueprints, etc.  The idea apparently is that if we allow copies of software to be considered components, then these situations necessarily also provide for infringement actions.  More accurately, however, they are just poor hypotheticals.

Software as Patentable Subject Matter: The anti-patent activist group SFLC led by Dan Ravicher and Eben Moglen also filed a brief that may be the dark-horse of this debate.  Their brief asks the Court to take a fresh look at the patentability of software.

Software can not be a “component[] of a patented invention” under 35 U.S.C. § 271(f) because software is not patentable subject matter under 35 U.S.C. § 101. As such, the Federal Circuit’s holding to the contrary in this case is erroneous and should be reversed.

It would be odd for the Court to decide the 101 issue in this case after dismissing LabCorp earlier this year.  However, I expect at least one concurring opinion supporting the ideas in this brief.

Impact on Software Industry: If Microsoft loses here, it will at least have a clear avenue to avoid future infringement. Unfortunately for US business, that avenue is to move all software development activities abroad so that components are never exported. This harmful effect was recognized and discussed in SIIA’s brief. SIIA is an industry group of software & technology companies who want to continue to design products in the US, but manufacture those products abroad. This argument is punctuated by BSA’s questionable hyperbole: “The purpose of patent protection is to encourage domestic innovation, not to drive it overseas.”

Impact in Biotech: Although not yet a viable industry, this could have a potentially large impact on biotechnology patent issues.  Like software, DNA code (or other biologics) could be shipped from the U.S. to be copied abroad and incorporated into an organism in an infringing manner.  Even more abstract, the export may merely involve transmitting a sequence listing that would be used to reproduce the sequence abroad.  Any decision on software should consider the potential impact on these areas as well.

Methods: What Professor Wegner has called the “Bizarre Twist” of this case involves the CAFC’s notion of export of components of method claims. In Union Carbide v. Shell, the court found that methods could indeed have components, and those included items used in the method (such as a catalyst).  Thus, in that case, the defendant could be held liable for exporting a stock catalyst if it intended to use the ingredient in a would-be infringing manner. Shell settled its case with Union Carbide, but has filed an amicus brief in this case, arguing that the Federal Circuit “seriously erred” by declaring that “every form of invention eligible for patenting falls within the protection of section 271(f).” 

Statutory Construction Excludes Methods?: Shell compares the use of the term “component” in 271(f) its use in 271(c) — the section addressing importation.  In 271(c), Congress explicitly limited components to “component[s] of a patented machine, manufacture, combination, or composition,” but also included a provision excluding importation of materials used in a patented process.  Shell’s argument: because 271(f) does not include the provision discussing materials used in a patented process, it cannot cover processes.  Of course, the unstated counter-argument to shell is that components discussed in 271(c) are specifically limited to components of machines, while 271(f) components are not so limited — indicating that “component” in 271(f) should receive a broader interpretation.

International Law: All of the transnational patent issues have an impact on international law issues. FICPI, a Swiss-based organization of patent folks filed its brief asking the the U.S. to keep its patents territorial and avoid stomping on the toes of others (as “young nations” are bound to do). FICPI’s implication that the Supreme Court is bound by the Paris Convention is plainly wrong.  The Paris Convention is not U.S. law. However, their point is well-taken, if 271(f) covers software, it thwarts the efforts of other countries to eliminate software patents.

Documents:

  • On the Merits
  • On Petition for Certiorari

    • Important recent 271(f) cases:

    • NTP v. Research in Motion, (271(f) “component” would rarely if ever apply to method claims).
    • AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software being sold abroad);
    • Union Carbide v. Shell Oil (Fed. Cir. 2005) (271(f) “component” applies to method claims).
    • Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software);
    • Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
    • Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).

    Notes:

    • I will be updating this page as more briefs are filed.
    • I will be talking about cross-border liability at Santa Clara University’s 25th Annual Computer & High Technology Law Journal Symposium on January 26 in San Jose. Information here.

    Hindsight Bias

    Patent, ,

    In my patent policy seminar at Boston University Law School, we recently studied hindsight bias and how it can play-out in the innovation sphere.  Professor Gregory Mandel at Albany Law School has a pair of great empirical papers on the topic here and here.  Mandel concludes that a juror’s knowledge of the invention makes the juror much more likely to believe that the invention would have been obvious.

    To reach a proper non-obvious conclusion, the decision-maker must step backward in time to a moment when the invention was unknown. Unfortunately, Humans are cognitively incapable of ignoring what they have learned, as required for the proper ex ante analysis.

    In class, I followed-suit and gave the students a test of their own hindsight bias.  In one group, students were given a problem and were also told how it was solved.  The other group was simply given the problem. Both groups were asked to rate the nonobviousness of a solution.

    ForesightHindsightII

    Although not statistically significant because of the small seminar size, my class results closely followed Mandel’s results.  Students who did not know of the solution were more likely to think that a solution was nonobvious.  However, after students learned how the problem was solved, they were then more likely to think that the solution was obvious. This is the crux of hindsight bias. 

    Notes:

    • Something that makes the results even stronger is that before the class, all the students were assigned the Mandel hindsight bias reading and they also knew that the topic of the day was hindsight bias. 
    • Professor Joseph Miller at Lewis & Clark Law School is working on this issue as well — he gave me the idea for this specific problem-solution.
    • Peter Zura discusses hindsight bias here.

    Scholarship: Patent Thickets See a New Light

    Articles and Publications, Patent,

    Patent law professor Douglas Lichtman (and my good friend) has an interesting new short article (8 pages of text) about problems of “patent thickets.” 

    Theorists have discussed patent thickets as an example of problematic over-ownership — A.K.A. the tragic “anti-commons.”  When a particular area of technology is blanketed by multiple patents owned by multiple parties, everyone blocks everyone else, and nothing gets done.

    After all, the conventional literature on the tragedy of the anti-commons asserts that resources will be inefficiently under-used in the face of too many overlapping patent rights.

    Lichtman turns this theory on its head and asserts that in actuality, a very thick thicket might result in less litigation.  His idea is in a case of multiple overlapping patents, each patent represents only a small piece of the pie.  And few patentees would be willing to go through litigation simply to recover such a small slice.

    More patents means less money per patent holder. Less money, in turn, means less of an incentive for a firm to strategically delay in the hopes of being a patent holdout, and less of an incentive for an accidental patent holdout to actually bring suit.

    A couple of weeks ago, I would have rejected Lichtman’s argument out of hand.  Under the old rule, every patent holder had a right to force large settlements based on its hold-up threat through injunction.  Now, post eBay, his ideas begin to make more sense. . .

    Supreme Court: LabCorp Briefing Round I [UPDATED]

    Patent, Patent Cases 2005, , , , , ,

    InfringingProducts008LabCorp v. Metabolite (on writ of certiorari).

    This case involves a patented method of correlating a body protein level with a vitamin B deficiency.  (U.S. Patent No. 4,940658).  The claim in question (Claim 13) includes two steps: (1) assaying a body fluid for an elevated level of total homocysteine and (2) correlating an elevated level of total homocysteine with a folate deficiency. (paraphrased).

    The patent holder won at trial and at the CAFC.  The defendant, Metabolite, then brought its case to the Supreme Court arguing that the patent is invalid because it “claim[s] a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.”

    Interestingly, the question presented is not firmly grounded in any particular rule of patent law.  Rather, it implicitly raises issues of indefiniteness, enablement, written description, and patentable subject matter. (to name a few).  However, the Supreme Court has given some indication that it is most interested in this case because of the issue it raises regarding the patenting of natural phenomena under Diehr.

    LabCorp has filed its brief on the merits as have a number of third parties:

    Petitioner’s Brief  PDF (211 KB)

    In Part I, Petitioner LabCorp’s stance is essentially that the law is correct, but that it has been misapplied in this case.

    Claim 13 violates this Court’s longstanding rule barring patents on “laws of nature, natural phenomena, and abstract ideas.”

    According to LabCorp, the claim involves “no actual invention beyond the scientific discovery it recites.”  The claimed correlation is a scientific principle or law of nature, and its discovery alone cannot be patentable.  The “trivial pre-solution” activity of assaying “cannot transform claim 13 into a patentable invention.”  Here, Petitioner never strays far from the precedential pillars of Diehr, Chakrabarty, Funk Bros., and Flook.

    In Part II, LabCorp goes on to argue that the claim is neither definite, enabled, nor adequately described.  The Brief appears to ask the court to invalidate any claim that includes a “correlating” step unless the process of how to calculate a correlation is spelled out in the specification. 

    The Federal Circuit relied on the accepted dictionary definition of “correlate” as meaning “to establish a mutual or reciprocal relationship between.” But nothing recited in the claim or disclosed in the specification tells a practitioner how to actively “establish” a “relationship” between a particular test result and a vitamin deficiency. At most, the Patent discloses that such a scientific relationship

    exists.

    More is required for a valid claim. . . .

    In the remaining sections of the Brief, Petitioner argues that, on policy grounds, a very broad claim hinders scientific and technological progress and that the lower court judgment should be reversed.

    Solicitor General’s Amicus Brief for the U.S. Government  PDF (165 KB)

    The Solicitor General with assistance from the PTO’s counsel has filed its brief that falls closely in line with its prior unsuccessful brief in opposition to the petition for certiorari. 

    In line with Petitioner, the Government agreed that the patent “appears to [impermissibly] claim all substantial practical applications of the natural relationship.” However, the Brief specifically states that this case should not be decided on an issue of whether a law of nature has been improperly claimed because the lower court record has not been developed on this issue. Directly addressing Petitioner’s part II, the Government argues that the specification does satisfy the requirements of 35 USC 112 “by describing, enabling, and claiming the method.”

    Intellectual Property Owner’s Association (IPO) Brief  PDF (97 KB)

    IPO realized that the question presented for review in this case does not directly challenge the current standards for patentable subject matter. However, the Supreme Court has indicated an interest in considering whether the patent-in-suit claimed patentable subject matter. 

    IPO believes that the current standards for patentable subject matter, as set forth by the Court in

    Diehr, correctly delineate between those innovations that should be eligible for patent protection and those that should not. Accordingly, IPO believes that this case should not serve as a vehicle for overturning or altering those standards. Rather, this case should reinforce the standards of Diehr and thus, support the expectation that innovations in yet unknown areas of technology will be eligible for patent protection.

    Specifically, IPO argues that a broad scope of subject matter eligibility properly places research and development decision-making into the hands of individuals and private entities rather than in the judiciary. This “free market” approach “beset allocates research and development resources without judicial entanglement.”  The requirements of novelty, nonobviousness, and description protect against over-reaching patents and warrant against further restricting patentability based on subject matter.

    * NOTE: I was a coauthor of the IPO brief along with Paul Berghoff and Joshua Rich from MBHB as counsel for IPO.  The IPO Board of Directors approved the Brief.

    Affymetrix Brief PDF (104 KB)

    Affymetrix is a supplier of commercial DNA microarrays and “has an interest in ensuring that patents not issue on basic laws of nature so as to impede scientific progress in analyzing DNA and gene expression.”  Affymetrix argues that the fact that “elevated levels of an amino acid in the blood correlated to a vitamin deficiency” is a natural phenomenon that leaves claim 13 unpatentable under current precedent.

    Interestingly, Affymetrix argues that ambiguity of whether a claim impermissibly covers a natural phenomena should be resolved in favor of invalidity to avoid serious constitutional questions. (citing Feist).

    Public Patent Foundation PDF (375 KB)

    PubPat argues that the CAFC has gone astray by over-reaching the permissible bounds of patentable subject matter. (Citing Alappat and State Street). Rather, PubPat would have the Court return directly to Flook.

    Reviews Coming:

    Download Bear Stearns & Lehman Brothers Amicus Brief.PDF (3617 KB)

    Download American Heart Association.PDF (3800 KB)

    Download AARP.PDF (4033.7K)

    Download AMA.pdf (2553.5K)

    Download AMEX.pdf (527.0K)

    Download AmerClin.pdf (3007.8K)

    Download CCIA.PDF (2590.7K)

    Download IBM.pdf (2283.3K)

    Download NYCBLA.pdf (691.6K)

    Download PatNotProf.pdf (999.6K)

    Download PeoplMedSoc.pdf (3316.8K)

    First-to-Invent vs The Constitution [Updated]

    Articles and Publications, Patent,

    According to Dave Simon, The First-to-File Provisions of the Patent Reform Act of 2005 Violate the Constitution’s Intellectual Property Clause.

    The Patent Reform Act of 2005 proposes provisions that would change the granting of patents from the so-called first-to-invent system to a first-to-file system. The Intellectual Property Clause limits Congress to granting patents only to “Inventors”. A system enacted by Congress for granting patents to anyone other than a good faith inventor operates outside of the constraints enumerated in the Clause, and therefore is facially impermissible. The first-to-file provisions of the Act are violative of Article I, Section 8, Clause 8 of the United States Constitution.

    Dave’s paper is premised on the assertion that an invention is only made once, and later independent inventions should not actually be considered inventions.  Dave is not the first to make this argument — his paper, however, is easily accessible online. Download Dave’s paper.  Ed Suominen, patent attorney in Scotsdale made the same argument back in 2001 in a paper published by the JPTOS. Download Ed’s Paper.  

    Of course, it is highly unlikely that any court would agree that a first-to-file system is unconstitutional. Ed agrees — “Eldred proved that Congress can pretty much do whatever it wants about IP as far as this Supreme Court is concerned.”  Professor Mark Lemley gave his remarks in an e-mail:

    I have to disagree with the claim that first-inventor-to-file is unconstitutional. Dave Simon’s reasoning is based on the idea that “inventor” means whoever thought of it first, not simply a person who thinks of it independently. But if that were true, (1) current US patent law would be unconstitutional in the circumstances in which it discounts invention in non-WTO member countries, and the system would have been unconstitutional throughout its history when it was limited to inventive activity in the US; and (2) copyright law would be unconstitutional because it treats any independent creator as an author. Both results seem unlikely to me.

    If you are against a switch to first-to-file, I would not hang my hat on the constitutionality argument.

    USPTO Releases New Business Method Guidelines: Requires “physical transformation” or “concrete and tangible result”

    Patent, Patent Prosecution, ,

    In the wake of the Lundgren case, the USPTO has released a set of interim examination guidelines for determining subject matter eligibility of patent applications. (Link).  The guidelines will be used by examiners “in determining, on a case-by-case basis, whether a claimed invention falls within a judicial exception to statutory subject matter (i.e., is nothing more than an abstract idea, law of nature, or natural phenomenon), or whether it is a practical application of a judicial exception to statutory subject matter.”

    The crux of the new guidelines is that an invention falls within the scope of 35 U.S.C. 101 “if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.”  The application itself should enable one of ordinary skill in the art to understand the utility of the invention.

    (more…)

    Patent Board Eliminates “Technological Arts” Requirement For Business Method Patents

    Patent, Patent Cases 2005,

    Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

    In a landmark decision, the Board of Patent Appeals and Interferences has issued a precedential opinion eliminating the Patent Office procedure of rejecting patents under 35 U.S.C. § 101 as outside of the “technological arts”

    Our determination is that there is currently no judicially recognized separate “technological arts” test to determine patent eligible subject matter under § 101.  We decline to create one. Therefore, it is apparent that the examiner’s rejection can not be sustained. 

    This decision will once again expand the role of business method patents by freeing them from being tied to a computer or other electronic device.  At the same time, this decision widens the gap between the US and many other countries who are still debating patentability of software.

    It is unclear at this point whether the PTO solicitor will ask the Federal Circuit to review this case.

    The Majority Opinion:

    Lundgren had claimed a “method of compensating a manager” that involved several steps of calculating a proper compensation based on performance criteria and then transferring payment to the manager. The examiner rejected the claims arguing that they were “outside the technical arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of a computer, automated means, apparatus of any kind, the invention as claimed is found non-statutory.”

    A five member panel reviewed this action, and three signed on to the per curiam majority opinion that found the claim to “produce a useful, concrete, tangible result” without being a “law of nature, physical phenomenon or abstract idea.”  Regarding the PTO “technological arts” test, the majority found that such a test does not exist under the law.

    Rejection reversed, there is no judicially recognized “technological arts” test for patentability.

    Dissent by Judge Smith:

    Judge Smith dissented, arguing that the “technological arts” standard is simply the modern lexical equivalent to the phrase “useful arts” found in the US Constitution. He then argued that Congress does not have power to pass patent laws that expand beyond those “useful arts.”

    While I do not question the power of Congress to pass laws to carry out this mandate, whatever law passed by the Congress cannot be applied in such a manner as to enlarge the constitutional mandate.  Thus, any laws passed by the Congress to grant patents should be applied in a manner that is consistent with the constitutional mandate. 

    The dissent then implicitly calls for the Federal Circuit to review the case and explicitly calls fro Congress to “step in and clarify the limits of 35 U.S.C. § 101.”

    Dissent by Judge Barrett:

    In a 78 page dissent, Judge Barrett suggests a new test under section 101 that would require some transformation of physical matter.

    Notes:

    • The BPAI holds its appeals in secret — and the Ex parte Lundgren opinion is yet to be officially released by the Board.  I published this article on the case after receiving copies of the opinion from reliable sources. Opinion.v1; Opinion.v2.
    • Link. Read more about Dr. Lundgren.

    Ninth Circuit Upholds Semiconductor Chip Protection Act Claim Asserting Protection for Logic Groupings

    Patent,

    Image012Altera v. Clear Logic (9th Cir. 2005).

    The Semiconductor Chip Protection Act of 1984 (SCPA) fills a perceived gap between copyright law and patent law and is intended to provide an incentive for investment in novel chip layouts (mask works).

    The SCPA grants the owner of a mask work the exclusive rights to reproduce the mask work and to “import or distribute a semiconductor chip product in which the mask work is embodied.” 17 U.S.C. § 905.

    Altera sued Clear Logic for violation of its SCPA rights and won a $30 million+ jury verdict. On appeal to the 9th Circuit, Clear Logic argued that the district court misinterpreted the SCPA.

    Specifically, Clear Logic argued that its chips were only similar to Altera’s registered mask at a level of abstraction, and that only those ideas that are “physically expressed in the mask work are subject to protection under the SCPA.”

    However, the 9th Circuit affirmed the district court’s application of the SCPA — finding that “groupings” shown in the mask (a level of abstraction) were “physically a part of the mask work.” As such, the groupings are protectable.

    The placement of logic groupings in a mask work is not an abstract concept; it is embodied in the chip and affects the chip’s performance and efficiency as well as the chip’s timing.

    In concurrence, Judge Rymer suggested that “this is the type of case in which it might have been useful to have a court-appointed, independent expert [to provide n]eutral definitions and a common understanding of the underlying technology.”

    Link:

    Metabolite Labs versus LabCorp — Request for Certiorari.

    Patent, Patent Cases 2005,

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

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

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

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

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

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

     

    High Court asks for government’s view on patentability of tests to determine vitamin deficiency.

    Patent, Patent Cases 2005, ,

    LABORATORY CORP. OF AMERICA (LabCorp) V. METABOLITE LABORATORIES, ET AL. (on petition for cert at the Supreme Court 2005).

    The Supreme Court moved a step closer to granting cert in the case by inviting the Acting Solicitor General to file a brief expressing the views of the United States on the following question:  

    Respondent’s patent claims a method for detecting a form of vitamin B deficiency, which focuses upon a correlation in the human body between elevated levels of certain amino acids and deficient levels of vitamin B. The method consists of the following:

    First, measure the level of the relevant amino acids using any device, whether the device is, or is not, patented;

    second, notice whether the amino acid level is elevated and, if so, conclude that a vitamin B deficiency exists.

    Is the patent invalid because one cannot patent laws of nature, natural phenomena, and abstract ideas? Diamond v. Diehr, 450 U.S. 175, 185 (1981).

    In the opinion below, the CAFC (Rader, J.) affirmed the jury verdict of indirect infringement and breach of contract, and affirmed the district court’s award of over $8 million in damages to Metabolite (including damages for willfulness).  The dissent (Schall, J.) argued that claim interpretation had been mishandled. Metabolite Laboratories, Inc. v. Laboratory Corp. of America Holdings, dba as LabCorp., 370 F.3d 1354 (Fed. Cir. 2004) (read my summary)

    The question that the High Court is now considering does not appear to have even been addressed by the CAFC decision.  The Court’s docket shows that the case has already been distributed for conference five times since January 1, 2005.  

    In its petition for a writ of certiorari, LabCorp presented three questions to the Court:

    1. Whether liability can be imposed for willfully inducing patent infringement under 35 U.S.C. § 271(b) based solely on evidence that a party has disseminated a basic scientific fact to others.

    2. Whether an express limitation in a patent claim can be ignored so as to allow the patent to cover the exact opposite of what was claimed.

    3. Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to “correlat[e]” test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.

    The Court, however, appears to be interested only the extent that a basic scientific relationship used in medical treatment is patentable.  LabCorp’s introduction provides a compelling story and sets the stage for the debate:

    The holding of the Federal Circuit in this case is truly extraordinary. The court construed a patent to confer on respondents a legally-protected monopoly to bar any doctor in the Nation from even about a well-known scientific correlation. It then went even further, holding—in conflict with other Federal Circuit decisions—that petitioner LabCorp indirectly “induced” such infringement merely by publishing truthful information informing doctors of this basic scientific fact. And further compounding its errors, the Federal Circuit violated well-established tenets of patent law by expanding the patent beyond its express terms, and by upholding its validity.

    Documents:

    Thanks to Jonathan Franklin at Hogan & Hartson and Glenn Beaton at Gibson Dunn for copies of the briefs and to appellate attorney Howard Bashman at How Appealing for the heads-up on the case.

    Eight is Enough: Eight important patent cases for Spring 2005

    Patent, Patent Cases 2005, , , , , , , ,

    There are lots of great cases on the Federal Circuit’s spring calendar.  Several cases pending at either the Federal Circuit or Supreme Court that are ‘worth a special look,’ according to Hal Wegner.  Here are some highlights of Mr. Wegner’s list, with my own comments.

    • Merck v. Integra, Supreme Court decision by June 27, 2005.
    • LabCorp v. Metabolite, petition for cert submitted, Supreme Court has requested Solicitor General’s Opinion on Cert.  The case involves a patentability question — whether Metabolite’s patented method of detecting vitamin B deficiency should be invalid as "because one cannot patent laws of nature, natural phenomena, and abstract ideas." 
    • Purdue Pharma v. Endo, CAFC heard oral arguments in early November on the question of whether patentee’s conduct was ‘inequitable’ for failing to disclose that results used to establish patentability were prophetic rather than experimental. A decision is expected soon.
    • SmithKline Beecham v. Apotex, awaiting decision on petition for rehearing.  This case now revolves around the question of whether use of an invention to confirm utility for FDA approval is an ‘experimental use’ that saves a patent from anticipation under 102(b).
    • Phillips v. AWH, awaiting en banc decision on claim construction methodology.
    • Eolas Technologies v. Microsoft, Federal Circuit decision awaited, hopefully discussing the scope of 271(f). The upcoming appeal of AT&T v. Microsoft presents the same ‘golden master disk‘ scenario as Eolas, and will become important if Eolas is decided on other grounds.
    • Independent Ink v. Illinois Tool Works, In January, the CAFC determined that, in an antitrust tying case, a patent presumptively defines the relevant market as the nationwide market for the patented product itself.  There is some potential for cert in this case.
    • NTP, Inc. v. Research in Motion, Ltd., there is a good chance for a rehearing in this case involving RIM’s BlackBerry product.  This case will be important in defining extraterritorial application of U.S. patent laws in the modern era of networked computing systems.
    • In re Fisher is not yet on the CAFC calendar.  In this case, the BPAI affirmed a rejection for lack of utility and enablement (101 and 112 p1) because the specification lacked a specific teaching of a substantial utility.  According to the decision, without a specific teaching of substantial utility, then virtually all chemicals would meet the requirements of section 101 as at least "useful in research."

    Although not patent litigation, Sarah Stirland (one of the few reporters focusing on intellectual property) at the National Journal has written a nice article regarding the potential for legislation in the 109th Congress.

    Printable Version

    (more…)

    Dennis Crouch’s January 2005 Report on New Academic Research

    Articles and Publications, Patent, , ,

    Each month I post a note discussing the academic side of patent law.  My on-line sources for material are the SSRN electronic library, a few hard copy journals, and several more that are freely available on-line.  Most of my material, however, comes from articles directly e-mailed to me from professors and law review editors.  Please feel free to e-mail articles for February’s edition. (Include information on where the article is being published). — DDC

    1) In a forthcoming paper, Professor Joseph Miller provides a new solution for making claim construction more predictable.  His idea is to require that patentees provide certain additional disclosures up-front — Disclosures that will appear in express statements on the face of the patent itself. 

    Four additional patentee disclosures: (a) the field of art to which the claimed invention pertains; (b) all problems that the claimed invention helps solve; (c) a lexicon of all claim terms to which the applicant gives a meaning other than its accustomed meaning to people having ordinary skill in the pertinent art; and (d) a list of preferred objective reference sources, such as technical treatises and dictionaries (general or specialized), to which an interested reader should refer to learn about the ordinary meaning of the remaining claim terms to a person having ordinary skill in the art. [SSRN Link]

    According to Miller’s approach, in any subsequent claim construction process, whether for licensing, design-around, or litigation purposes, parties would have the benefit of patents enriched with this new information.  The paper will come out in March in the Lewis & Clark Law Review.

    2) I just found out that an old college friend is quickly becoming a leader in the area of Patent-Antitrust law.  In the recent Issue of the Richmond Journal of Law & Technology, Aaron Rabinowitz writes on Antitrust Liability for Refusals to Deal in Patented Goods. The article highlights the circuit split between the Ninth Circuit and the Federal Circuit over whether patent holders must have a business reason for refusing to sell or license patented products.  In Kodak II, 125 F.3d 1195 (9th. Cir. 1997), the California based appeals court determined "that a patentee who refuses to license his patented invention to others without legitimate business justifications for doing so has violated antitrust law."  However, CSU v. Xerox, 203 F.3d 1322 (Fed. Cir. 2000), the Federal Circuit held that a patentee may refuse to license or sell a patented invention without violation of the patent laws, regardless of his business justification.

    3) Bill Burgess, a 3L at Penn has written an interesting comment on the "Failed Promise of Cybor" published in the UPenn Law Review.  In Cybor, the Federal Circuit held that claim construction is a matter of law that is reviewed de novo by the Appellate Court.  Bill makes the arguments that (i) the ‘bright-line rule’ of Cybor has resulted in less rather than more consistency in how claims are construed and (ii) Cybor is actually inconsistent with the Supreme Court’s Markman decision.

    More on Rational Ignorance at the Patent Office

    Articles and Publications, Patent, ,

    Professor Mark Lemley has promoted an idea of “rational ignorance” at the patent office. In his now famous article, Lemley argues that patent examiners should not attempt to completely search all prior art because such searches would be too expensive. Thus, according to Lemley, the patent office should issue patents even when there is a substantial likelihood that prior art could be found by mounting a more thorough search. Because the vast majority of patents are never litigated, Lemley argues that good cost saving measure is to perform a minimal search during patent prosecution and delay a more complete search until the time of litigation (if any).

    In their recent article Professors Ghosh and Kesan take issue with Lemley’s results. Although they agree with proposition that the “USPTO cannot be omniscient,” Ghosh and Kesan question Lemley’s empirical bases.

    But we question his basis for determining how much the USPTO should be expected to know and not know. This inquiry rests on an assessment of the social benefits of patents, not just on the private decision of the USPTO and its examiners. We would agree with Professor Lemley that simply devoting more time to patent review is not the solution. But Professor Lemley frames the debate as a choice between administrative restructuring and more extensive judicial review. He opts for the latter because so few patents are actually litigated, and therefore the benefits from reduced litigation are not justified by the increased costs in administrative review. We contend that such an argument ignores (in neither a rational nor an optimal way) the benefits of a patent system. It is far from clear that more extensive judicial review is more effective than some restructuring of the USPTO in terms of more careful scrutiny or more rigorous assessment and accumulation of the prior art. The judicial option is more dubious in light of the USPTO’s mandate of promoting progress and its practical purpose in resolving the revelation and appropriation problem. Professor Lemley provides an assessment of the private and social costs without proper attention to private and social benefits.

    What Do Patents Purchase?: In Search of Optimal Ignorance in the Patent Office, with S. Ghosh, 40 HOUS. L. REV. 1219 (2004).

    Conclusions: Improved prior art searching at the patent office can be accomplished through a combination of improved information systems and increased funding for Patent Examiners. There is certainly an optimal limit to searching by the patent office. However, we have been given no indication that the limit has been reached.

    Update: LB Ebert has more criticism of Lemley here.

    Personal Liability for Corporate Patent Infringement

    Articles and Publications, Patent,

    Currently, the Federal Circuit requires a “piercing of the corporate veil” for individual liability of corporate officers in a patent infringement suit. In a new manuscript, Lynda Oswald (Michigan) argues that the current standard is wrong and overly broad.

    In adopting this piercing standard, the Federal Circuit has inadvertently and radically expanded the scope of individual officer liability and has exposed corporate officers to a form of strict liability for their corporation’s infringing activities. I propose instead a standard that parallels the “personal participation” standard of traditional corporate doctrine, which would ensure that culpable corporate actors are held liable in appropriate circumstances, but would avoid wholesale imposition of personal liability upon officers for the patent infringement of their corporations.

    IDEA: The Journal of Law and Technology, Vol. 44