The Federal Circuit decides a substantial number of its cases without opinion, but rather simply issues a judgment of “affirmed without opinion.” This procedure began in the late 1980’s and has been relatively noncontroversial. Lately, however, the patent statute has been reconsidered and the process appears to violate Section 144 of the Patent Act.
Although the court ultimately reversed the determination of inequitable conduct based on a lack of intent, its discussion of materiality is significant because the misrepresentation at issue occurred in the patent itself, in the form of statements about a prior art reference. Prosecutors may want to take special note of this opinion in crafting their Background of the Invention sections.
Ring Plus is the assignee of Patent No. 7,006,608 (the '608 patent), which relates to a software based algorithm and method for generating and delivering messages over a phone line that replace or overlay a ring-back signal.
After granting summary judgment of noninfringement, the district court held a bench trial on the unenforceability of the '608 patent. Following the bench trial, the district court concluded that the '608 patent was unenforceable due to inequitable conduct. Ring Plus appealed both determinations, along with the denial of its motion to disqualify Cingular's counsel.
Inequitable conduct: Materiality but no Intent The district court's inequitable conduct determination was based on two alleged misrepresentations concerning the substance of two prior art references, Strietzel and Sleevi. The district court found that the first misrepresentation was in the Background of the Invention section of the '608 patent, which asserted that both references proposed hardware based systems but no software to operate those systems. Contrary to this assertion, the district court found, one of skill in the art would have understood the references to disclose software-based algorithms.1
The panel agreed that this was a material misrepresentation. Although neither reference explicitly disclosed software, the panel could not say that the district court clearly erred in finding that a person of ordinary skill in the art would have understood the references to disclose software-based algorithms.
In arriving at the conclusion that the statement about the contents of the prior art constituted a misrepresentation, the panel rejected the contention that it was merely attorney argument. The court did not address this issue in any depth, merely stating that because the statement was a misrepresentation, it "was outside the boundas of permissible attorney argument." Slip Op. at 9.
Comment: I am a troubled by the court's cursory statement on this point because of the ambiguity it creates. These types of sweeping assertions, made without addressing the substance of the argument or citing relevant authorities, are the kinds of things that are likely to tie attorneys and judges in knots. Indeed, the court's quotation from Rothman is particularly perplexing, as Rothman reached the opposite conclusion on similar facts. At a minimum, one would expect the court to explain why Rothman does not apply.
Ultimately, however, the panel concluded that Cingular had failed to present clear and convincing evidence of intent to deceive. In arriving at this conclusion the court noted that the references were ambiguous as to operating software, and the prosecuting attorney's testimony gave rise to the inference that the applicants believed that the two references did not disclose software for operating a telephone system. Because this inference was as reasonable as the district court's inference of deceptive intent, the district erred in its finding of deceptive intent.
Other holdings The panel also addressed Ring Plus's challenge to the district court's construction of two claim terms, which formed the basis of the noninfringement ruling. The court affirmed the district court's construction, relating to the sequence of steps in the '608 patent. In addition, the court rejected Ring Plus's argument that Cingular's counsel should have been disqualified for ex parte contact with a Ring Plus director and officer. The court concluded that there was no evidence of impropriety under Fifth Circuit law.
1The district court also found that the applicants made a misrepresentation about these references during prosecution; the panel concluded that this statement was not a misrepresentation.
Guest post by Christian Mammen. Mammen is a Resident Scholar at UC Hastings. He also maintains an IP litigation and strategy practice. (He was also my boss when I was a summer associate at the Heller Ehrman law firm.)
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On March 8, 2010, I submitted an amicus brief (click here for a copy) on behalf of a group of nine law professors (Professors Cotter, Dolak, Gallagher, Ghosh, Hricik, Risch, Sarnoff, Takenaka and myself) in support of en banc review of inequitable conduct in Therasense, Inc. et al. v. Becton, Dickinson & Co. et al. The panel decision in Therasense affirmed the District Court’s finding of inequitable conduct. The inequitable conduct finding related to a failure to disclose to the USPTO statements that had been made to the European Patent Office. The majority decision drew a lengthy dissent from Judge Linn.
The law professors’ amicus brief argues that en banc review is appropriate because of the ongoing inconsistency in Federal Circuit precedents concerning inequitable conduct. In particular, the brief focuses on two specific issues: (1) the legal standard for intent and (2) the proper test of materiality.
Legal Standard for Intent: First, the applicable legal standard for the intent element continues to be uncertain. Although some expected that the 2008 Star Scientific decision (Star Scientific , Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008)) would prompt a widespread adoption of its single-most-reasonable-inference test for proving intent via circumstantial evidence, that has not been the case. In Therasense, the majority deferred to the District Court’s five findings on the intent issue, without addressing their legal sufficiency. Two of the five findings pertained solely to the materiality of the nondisclosed information; however, Star Scientific holds that “materiality does not presume intent.” One finding of the five was merely that the individuals knew the information and did not disclose it; again, this is not the standard for intent under Star Scientific. And the last two findings were that the individuals’ testimony should be rejected as not credible; these findings failed to address the single-most-reasonable-inference test set forth in Star Scientific.
In addition, the majority decision (and the underlying District Court opinion) implicate the “should have known” test for intent that has often appeared in the Federal Circuit’s precedents. The law professors’ amicus brief argued that there should be an en banc rehearing because there is a conflict between the Kingsdown-Star Scientific line of cases, on the one hand, which disfavor the “gross negligence” test—and by implication the associated “should have known” test—and the Brasseler-Ferring line of cases, on the other hand, which endorse the “should have known” test.
Objective Materiality: Second, since the 2006 Digital Control ruling (Digital Control v. Charles Mach. Works, 437 F.3d 1309 (Fed. Cir. 2006)), it had appeared that the Federal Circuit would steadfastly apply the older “reasonable examiner” test for materiality, rather than the newer and more objective test adopted by the PTO in the 1992 revision to 37 CFR 1.56 (“Rule 56”). However, in Therasense, the majority applied the 1992 version of Rule 56 as the test for materiality. This arguably creates a split in precedent that provides a basis for en banc reconsideration of the proper test for materiality.
Will this be the case in which the Federal Circuit takes inequitable conduct en banc? It is difficult to predict. Over the past five years, the Federal Circuit has declined en banc petitions in a number of prominent and controversial inequitable conduct cases. It can, however, be confidently asserted that, in the twenty-two years since the Federal Circuit convened en banc in Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988), the Federal Circuit has accumulated an impressive tally of inconsistent and contradictory panel decisions that cry out for en banc review.
Alloc, Inc. v. Pergo, Inc. (Fed. Cir. 2010)(nonprecedential)
Alloc and Pergo both manufacture and sell laminate flooring. Pergo’s patents cover a mechanical joint that allows the “boards” to be joined together without the usual glue or nails. After being threatened, Alloc filed a declaratory judgment action – asking the Wisconsin-based district court to render the patents invalid, unenforceable, and not-infringed. The jury complied and held the patents invalid and not infringed. In a subsequent bench trial, the district court did not find inequitable conduct in the prosecution.
In error, the district court had submitted questions of claim construction to the jury. Claim construction has long been considered a matter of law to be decided only by a judge. On appeal, the Federal Circuit ruled that the jury-submission mistake to be a harmless error. However, the court’s six-page non-precedential opinion creates confusion in my mind. I would have preferred this decision to have been issued as an affirmance without opinion.
On appeal, the appellate court first affirmed — finding the prior art “more than sufficient to support the jury’s finding of obviousness.” Then, when addressing infringement, the appellate court recognized the claim construction error but identified that error as harmless because the claims were also obvious. My outstanding concern is the appellate court’s implicit holding that errors in claim construction do not affect the obviousness determination. That holding is not correct or consistent with the current notion that the obviousness question should focus on the invention as claimed.
It may be relevant to note that the appellate opinion was written by Judge Virginia Kendall sitting by designation from the Northern District of Illinois. Judges Lourie and Dyk joined the opinion. It is probably best to identify this decision as non-precedential and then walk away.
The Federal Circuit has ordered an en banc rehearing of its August 14 decision. The appeal focuses on evidentiary and procedural limits of an appeal of a BPAI decisions to a District Court under 35 USC 145. The Court framed the en banc issues as follows:
(a) Are there any limitations on the admissibility of evidence in section 145 proceedings? In particular—
(i) Does the Administrative Procedure Act require review on the agency record in proceedings pursuant to section 145? (ii) Does section 145 provide for a de novo proceeding in the district court? (iii) If section 145 does not provide for a de novo proceeding in the district court, what limitations exist on the presentation of new evidence before the district court?
(b) Did the district court properly exclude the Hyatt declaration?
Background: Hyatt's district court action was originally filed in 2003 as Hyatt v. Rogan after the BPAI sustained written description and enablement rejections for seventy-nine of Hyatt's claims. The examiner had issued 45 separate rejections of Hyatt's claims based on the doctrines of inadequate "written description, lack of enablement, double patenting, anticipation, and obviousness." Complicating the case is the fact that the application's claimed priority date is 1975.
The issues in this appeal case arose when Hyatt filed a civil action in DC District Court to challenge the BPAI decision. In the civil action, Hyatt submitted a new declaration offering additional evidence of enablement and written description. However, the district court excluded that inventor-declaration from evidence based on Hyatt's "negligence" in failing to previously submit the information to the PTO.
Writing for the majority in the original panel opinion, Judge Michel affirmed the exclusion of evidence – holding that the district court may properly exclude evidence that Hyatt should have produced to the PTO. Judge Moore penned a compelling dissent in support of the patent applicant's right to a full civil action including the right to submit additional evidence when challenging a PTO decision.
Briefing: Hyatt's en banc brief will be due around March 31 and the USPTO's response due 28-days later. Briefs of amici curiae may be filed without leave of the court, but must otherwise comply with FRAP 29 and Fed Cir R 29.
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35 U.S.C. 145 Civil action to obtain patent.
An applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a) of this title may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court for the District of Columbia if commenced within such time after such decision, not less than sixty days, as the Director appoints. The court may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the Board of Patent Appeals and Interferences, as the facts in the case may appear, and such adjudication shall authorize the Director to issue such patent on compliance with the requirements of law. All the expenses of the proceedings shall be paid by the applicant.
Therasense, Inc. (Abbott) v. Becton, Dickinson and Co. (Fed. Cir. 2010) (Case No. 2009-1511)
This detailed 67–page opinion includes several important issues. This post focuses on inequtiable conduct. The Federal Circuit recently released a parallel decision involving the same parties (but different patent) here.
After a bench trial, Northern District of California Judge Alsup held Abbott’s patent unenforceable due to inequitable conduct during prosecution. (Patent No. 5,820,551). On appeal, the Federal Circuit has affirmed that decision — holding that the prosecuting attorneys had violated their duty of disclosure by failing to dislcose statements made by Abbott to the European Patent Office during a proceeding involving the European counterpart of another patent family (the ‘382 patent’ family) also owned by Abbott. Although the court affirmed the finding of inequitable conduct, it offered the fig leaf that such a finding should be “rare.” (Note: Therasense originally filed both patent applications and also made the statements to the EPO. That company was subsequently purchased by Abbott.)
Patent applicants (and their attorneys/agents) are required to disclose to the US Patent Office any information that a reasonable examiner would likely consider important in deciding whether to issue a patent. Failing to submit the required information can lead to a finding of inequitable conduct if the information was both (1) material to patentability and (2) witheld because of an intent to deceive the Patent Office. Inequitable conduct usually results in a patent being rendered totally unenforceable. “The penalty for inequitable conduct is severe, as an entire patent is rendered unenforceable.”
During prosecution, the examiner rejected the application based on Abbott’s own ‘382 patent. In response, Abbott’s Director of Research submitted an affidavit attesting that the one skilled in the art would not consider the ‘382 patent to teach the invention as claimed in the ‘551 patent. [The claimed invention was a glucose-memter electrode strip without an intervening membrane layer — with the absense of the membrane being the distinguishing feature.] Based on that representation, the Examiner allowed the patent to issue. Meanwhile, in Europe, Abbott made the statement that the stated distinction was only a “safety measure” and was “preferred” but not necessary. [“It is submitted that this disclosure is unequivocally clear. The protective membrane is optional, however, it is preferred when used on live blood.”]
Based on these facts, the Federal Circuit found the statements material:
To deprive an examiner of the EPO statements—statements directly contrary to Abbott’s representations to the PTO—on the grounds that they were not material would be to eviscerate the duty of disclosure. Moreover, if this could be regarded as a close case, which it is not, we have repeatedly emphasized that the duty of disclosure requires that the material in question be submitted to the examiner rather than withheld by the applicant.
Lawyer Argument Regarding Prior Art: In several cases, the Federal Circuit has held that contradictory representations made during the prosecution of other patent applications should not be considered material to patentability if made in the form of lawyer-argument. See Innogenetics. Here, the appellate panel distinguished those cases because they all involved US applications rather than statements made to different institutions.
However, all of the cases Abbott cites involve patentees who simply made representations to the PTO about prior art in order to secure the allowance of their patents. None of these cases involved a situation in which contradictory arguments made in another forum were withheld from the PTO. They do not speak to the applicant’s obligation to advise the PTO of contrary representations made in another forum. Before the EPO, Abbott made statements that contradicted the representations Abbott made to the PTO regarding the ’382 patent. An applicant’s earlier statements about prior art, especially one’s own prior art, are material to the PTO when those statements directly contradict the applicant’s position regarding that prior art in the PTO. See 37 C.F.R. § 1.56(b)(2). In any event, the representations to the PTO were not merely lawyer argument; they were factual assertions as to the views of those skilled in the art, provided in affidavit form.
Intent: The Federal Circuit agreed that the lower court’s finding of subjective intent was “amply supported.”
Holding:
Because the district court’s findings that the EPO submissions were highly material to the prosecution of the ’551 patent and that Pope and Dr. Sanghera intended to deceive the PTO by withholding those submissions were not clearly erroneous, the district court did not abuse its discretion in holding the ’551 patent unenforceable due to inequitable conduct.
Judge Linn filed a dissenting opinion: Judge Linn argues (1) that there is an explanation for the statements that does not lead to them being directly contradictory and (2) that the individuals involved “produced a good faith explanation as to why they withheld the EPO submissions.” Such a good faith explanation should defeat charges of inequitable conduct if it is plausible.
The question, thus, is not whether it is plausible that the information is immaterial—a question asked under the objective materiality prong—but rather, whether it is plausible that the individuals subjectively believed that the reference was immaterial at the time they withheld it—a question presented under the subjective intent prong.
The Foundation for a Christian Civilization, Inc. v. Mary Queen of the Third Millennium, Inc. (Fed. Cir. 2010)
If nothing else, the caption of this case is interesting. In 2009, the Trademark Trial and Appeal Board (TTAB) agreed with Mary Queen of the Third Millennium that the Foundation for a Christian Civilization’s “habit” could not be registered as a trademark because (1) the habit was not inherently distinctive and (2) the habit had not acquired distinctiveness. On appeal the Federal Circuit affirmed without opinion.
According to my source (Wikipedia), the Foundation is an alternate name for the American Society for the Defense of Tradition, Family and Property — “an organization of Roman Catholic Inspiration” that “opposes liberal and egalitarian ideas, policies, and trends.” The Foundation traditionally funded a Catholic counterrevolution against communism. Mary Queen of the Third Millennium is part of the a Vatical recognized “private association of Christ’s faithful.”
Members of both organizations wear the habit with its identifying markings.
Wisconsin Alumni Research Foundation (WARF) v. Xenon Pharma, Appeal No. 08-1351 (7th Cir. 2010).
WARF and Xenon jointly filed for patent protection for a cholesterol lowering enzyme known as Stearoyl CoA Desaturase (SCD). Warf also granted Xenon rights as an exclusive licensee and Xenon agreed to pay royalties for sales or sublicense fees. Xenon then sublicensed its rights to Novartis but did not pay royalties to WARF. Xenon's argument is based on the law of concurrent patent ownership. Generally, a patent co-owner is not required to share licensing revenue with other co-owners. The district court rejected that argument here — finding that the contract between WARF and Xenon is controlling over the patent law default rule. At trial, a jury awarded WARF one-million-dollars in royalties. That award was reduced then by the judge to $300,000.
The Seventh Circuit has now affirmed the lower court ruling that Xenon breached its license agreement by granting a sublicense without paying WARF its share.
35 U.S.C. 262 makes clear that each Joint owner of a patent right may make use of the rights "without the consent of and without accounting to the other owners." However, §262 has a major caveat in that it only applies "in the absence of any agreement to the contrary." Picking up on that caveat, the Seventh Circuit made clear that the "statutory default rule therefore controls unless there is an agreement to the contrary." The appellate panel went on to confirm that the WARF/Xenon agreement is certainly an "agreement to the contrary" despite the fact that it does not include a specific and explicit revocation of § 262 rights.
The bargained-for exchange between the parties provided that the Foundation would forego its right to separately license the patent in exchange for receiving a share of the profits from Xenon's commercialization of the technology—either directly or via a sublicense to a third party. Xenon received a significant benefit from the agreement—the exclusive right to exploit the technology protected by the joint patent application. Xenon cannot avoid paying royalties or sublicense fees to the Foundation simply by labeling the Novartis transaction a "license" rather than a "sublicense."
Quiet Title: Xenon also filed for its own patents on PPA compounds used to suppress SCD levels. WARF claimed ownership rights in the PPA because one of its scientists had contributed to the project and sued here to quiet title and also sued for conversion. On appeal, the court sided with WARF — finding that the WARF scientist's assignment of rights to Xenon was void because the scientist has already assigned all interest in future inventions to WARF.
Seventh Circuit: WARF originally appealed its case to the Federal Circuit. However, the Federal Circuit transferred the case to the Seventh Circuit based on a lack of subject matter jurisdiction. In a non-precedential opinion, the court held that the dispute did not "arise under the patent laws." [Link] An interesting aspect of that decision was that the court's statement that the Bayh-Dole Act (35 U.S.C. §§ 200-212) is not "patent law" when considering the question of appellate jurisdiction. The Federal Circuit refused to take the jurisdiction issue en banc. Judge Rader penned the following dissent from the en banc denial:
In an extremely short per curiam opinion with far too little explanation, the panel left the impression that it was giving away this court's jurisdiction over a broad swath of claims potentially arising from the Bayh-Dole Act, 35 U.S.C. §§ 200-212. While non-precedential, the panel's opinion nonetheless unnecessarily suggests that this court's jurisdiction to review these cases is limited. I respectfully dissent from this court's denial of rehearing en banc.
The panel concluded, albeit without much analysis, that WARF's complaint did not allege that the Bayh-Dole Act creates a cause of action. Thus it was entirely unnecessary for the panel to opine as to whether the Bayh-Dole Act is a "patent law" or not. And indeed, the Bayh-Dole Act, in my view, is most certainly a patent law. While the panel dismissed the notion that the Bayh-Dole Act's "mere inclusion" in Title 35 does not make it a "patent law," it seems to me that this is actually a pretty good indicator. After all, Title 35 is itself entitled "Patents," and Chapter 18, which encompasses only §§ 200-212, is called "Patent Rights in Inventions Made with Federal Assistance." Also, the language within some of the sections of the Bayh-Dole Act suggests its provenance as a patent law. For example, 35 U.S.C. § 201(d) defines "invention" as "any invention or discovery which is or may be patentable…." Section 201(e) explains that a "subject invention" is an invention conceived of or first reduced to practice by a contractor. "Conception" and "reduction to practice" are familiar patent law terms of art. Also, § 200 states that the Act intends "to use the patent system to promote the utilization of inventions arising from federally supported research or development…." The Bayh-Dole Act is, "at its heart," a patent law, albeit a patent law that employs some government contract rules to facilitate its patent-related policy objectives.
Although this court's panel opinion did not mention it, the reason that the "improvements" clause in this case does not require an infringement analysis is that the WARF/Xenon agreement features no issued patents, just patent applications. Thus, no court need perform a true infringement analysis. See GAF Building Materials Corp. v. Elk Corp., 90 F.3d 479, 483 (Fed.Cir.1996) (no declaratory judgment jurisdiction for infringement/invalidity of a design patent that had not issued when suit was filed; without an issued patent, there can be no infringement and thus no Article III controversy). Unlike GAF, however, this case features an undeniable controversy between the parties. To resolve this dispute, some court will have to compare the claims of the pending patent applications of the WARF/Xenon agreement with the alleged "improvements," and the contract's use of patent infringement parlance to define this term will necessitate some sort of patent analysis, starting with construction of the pending claims. Thus, this is a patent dispute for still another reason.
Intellectual Science and Technology v. Sony Electronics (Fed. Cir. 2009).
This decision follows a long line of cases warning against the use of means-plus-function claim language. The decision should also be seen as guidance to technical experts (to be more technical).
Intellectual Science’s Patent No. 5,748,575 covers a computer configured to simultaneously access multiple optical discs (such as CD-ROMS). According to the description, an “intelligent time-division multiplexer” is used to combine the multiple information sets into a single data stream for the host computer to process. Following the advice of an appointed special master, the district court on summary judgment held the patent not-infringed. On appeal, the Federal Circuit affirmed.
The appeal focused on the claimed “data transmitting means.” The parties agreed that the limitation should be interpreted under 35 U.S.C. 112p6 as a means-plus-function term. The dispute turned on whether the claimed means covers the accused device.
For a means-plus-function claim term, the term literally covers an accused device if the relevant structure in the accused device performs the identical function recited in the claim and that structure is identical or equivalent to the corresponding structure in the specification.
The patentee’s problem was that its technical expert’s report failed to tie the accused device to the claimed means and its corresponding structures found in the patent specification.
[T]he problem . . . is the absence of any showing that the identified structure accomplishes the same function in the same way as the claimed structure. . . . [T]he record must specifically identify the infringing features of those components and the reason that one of skill in the art would recognize them as infringing. Without that further identification and explanation, a reasonable juror would not be able to determine that those allegedly infringing components are actually present.
A court can properly find summary judgment of non-infringement if the patentee’s expert fails to provide “foundation for his infringement opinion in sufficient detail for the court to be certain that features of the accused product would support a finding of infringement under the claim construction adopted by the court, with all reasonable inferences drawn in favor of the non-movant.” Here, the Federal Circuit held that the patentee’s expert had failed that test.
Judgment of NonInfringement Affirmed.
Notes: There is nothing “wrong” with writing means-plus-function claim language — especially to accompany a well drafted specification. However, an applicant should not expect that its broadest claim is the MPF.
Claim 1 of the patent reads as follows:
1. An information processing apparatus with multitasking function, the information processing apparatus comprising:
(a) a plurality of turntables, each comprising a disc-setting table for mounting an optical disc;
(b) a plurality of optical units, each comprising a driving means and an optical read head, wherein said driving means is provided for moving said optical read head in a radial direction of said optical disc to a predetermined disc position on a surface of said optical disc;
(c) means for simultaneously controlling a plurality of said driving means to move a plurality of said optical read heads to a plurality of predetermined disc positions on at least two optical discs for retrieving information stored thereon;
(d) a plurality of signal-process systems for converting a plurality of information sets retrieved by said plurality of optical read heads from a compact disc format to the original state of the information; and
(e) data transmitting means for transmitting a plurality of the information sets converted by said plurality of signal-process systems to a host computer.
Perfect Web’s asserted patent covers a method of managing bulk e-mail distribution. Claim 1 of the application (filed in 2000) reads as follows:
1. A method for managing bulk e-mail distribution comprising the steps:
(A) matching a target recipient profile with a group of target recipients;
(B) transmitting a set of bulk e-mails to said target recipients in said matched group;
(C) calculating a quantity of e-mails in said set of bulk e-mails which have been successfully received by said target recipients; and,
(D) if said calculated quantity does not exceed a prescribed minimum quantity of successfully received e-mails, repeating steps (A)-(C) until said calculated quantity exceeds said prescribed minimum quantity. (Pat. No. 6,431,400).
The district court held the claims invalid as anticipated and obvious as well as for failing to claim statutory subject matter under Section 101. On appeal, the Federal Circuit upheld the obviousness finding and left the alternative reasons undecided.
Of course, in 2000, targeted bulk e-mail was already around, and the defendants provided prior art evidence of steps (A)-(C). That is, marketers were already identifying target recipients, sending out e-mails, and calculating the percent received. Missing from the prior art was step (D) – iteratively repeating steps (A)-(C) until the number of recipients reaches the a prescribed quantity.
Evidence of Common Sense: The district court held on summary judgment thatKSRstyle “common sense” would lead one of ordinary skill in the art to perform the iterative step (D). On appeal, the Federal Circuit affirmed that finding – holding particularly that the finding of common sense does not require “explication in any reference or expert opinion.”
Although a court need not have documentary support of its common sense analysis, a court (or patent examiner) must at least clearly explain its reasoning.
We reiterate that, on summary judgment, to invoke “common sense” or any other basis for extrapolating from prior art to a conclusion of obviousness, a district court must articulate its reasoning with sufficient clarity for review.
In this case, the appellate panel agreed that the idea of repeating already known steps until a threshold is met was simply a common sense extension:
Thus, this last step, and the claim as a whole, simply recites repetition of a known procedure until success is achieved. Recognizing this, the district court explained: “If 100 e-mail deliveries were ordered, and the first transmission delivered only 95, common sense dictates that one should try again. One could do little else.”
The court added an interesting caveat regarding expert testimony and the level of one of skill in the art — noting that expert testimony may well be necessary for “complex” technology.
If the relevant technology were complex, the court might require expert opinions. Here, however, the parties agreed that ordinary skill in the relevant art required only a high school education and limited marketing and computer experience. No expert opinion is required to appreciate the potential value to persons of such skill in this art of repeating steps (A)-(C).
Obvious to Try: As a corollary to its common sense holding, the appellate court also held that the additional step (D) would have been “obvious to try” under KSR. “[S]imple logic suggests that sending messages to new addresses is more likely to produce successful deliveries than re-sending messages to addresses that have already failed. . . . [I]ndeed, the predictable and actual result of performing step (D) is that more e-mail messages reach more recipients.”
Long-felt Need: The patentee argued that a nonobviousness conclusion was supported by evidence of the secondary consideration of long-felt need. Particularly, the method helps solve the recognized competing problems of reaching customers without “burning up” the mailing list by oversending.
The Federal Circuit rejected these arguments because the patentee had failed to provide any evidence of improved efficiency beyond “bare assertion.” In addition, the court suggested that any proof of long-felt need would be insufficient to “overcome [the] strong prima facie showing of obviousness.” (quoting Asyst Techs (2008))
Claim Construction: Interestingly, the court issued its summary judgment order prior to claim construction. The Federal Circuit found no error because construction of the disputed claim terms would not have changed the obviousness outcome.
Notes: The patent was originally titled “Statement regarding federally sponsored research or development.” That is apparently a typographical error fixed in a subsequent certificate of correction.
The four Edwards patents all relate to internal blood-vessel grafts for treating aneurisms. The grafts are designed to be inserted endovascularly without the need for open surgery. After construing the claims, N.D. Cal. District Court Judge Jeffrey White granted summary judgment of non-infringement to the two defendants, Cook and Gore. On appeal, the Federal Circuit affirmed.
Lumpy Claim Construction: Patent claim construction serves as a prime example of how litigators can take a simple issue and make it quite complicated. For their part, judges are keen to limit the issues. A common approach in claim construction is to group similar claim terms together and give them identical meaning. In this case, the patent used the terms “graft,” “graft body,” graft structure”, “bifurcated base structure,” and “bifurcated base graft structure.” Examining these terms, the appellate panel agreed that these terms could properly be analyzed together because the applicant had used them “interchangeably in the specification,” at least with respect to the disputed differences.
This risk of synonymous meaning is not necessarily bad. Using various terms to describe the same idea helps to flesh out the detail and scope of the idea. However, in most cases, applicants would probably be better off emphasizing distinctions between similar terms. The distinctions may well be useful for ensuring varied claim coverage.
The point from this case is that the distinctions between similar terms must be explicitly emphasized if the applicant wants to have confidence that it can later rely on the differences.
Broadening Claims:During prosecution, Edwards seemingly broadened some of its claims by amending the “intraluminar graft” elements to simply “graft” elements. Despite that change, the court found that the specification’s written description still required that all grafts be intraluminal.
In an interlocutory appeal, SAP challenged Sky’s standing to bring its patent infringement suit – arguing that ownership rights had not been properly transferred. On appeal, however, the Federal Circuit affirmed the decision by Judge Folsom (E.D.Tex.) that title had been “properly transferred by operation of state foreclosure law” even without an affirmative assignment of rights.
Background: The chain of title is somewhat long. Mr. Conkin and his co-inventors assigned rights to the asserted patent to TradeAccess (a company founded by Conkin). TradeAccess later changed its name to Orzo. Orzo, in turn, used the patents as collateral for an investment from Silicon Valley Bank (SVB). SVB assigned its security interests to Cross Atlantic Capital Partners (XACP). Orzo then defaulted and XACP foreclosed. At the foreclosure sale, XACP was the only bidder at a public auction and purchased the patent rights. Then, XACP assigned the patent rights to Sky Technology (another company founded by Conkin and the plaintiff in this case).
Missing from this chain of title is any assignment from Orzo to any other party. Of course, a transfer of rights need not be done through explicit assignment. Interestingly, patent ownership is determined by local (state or foreign) law rather than federal law.
Assignment in Writing: In Akazawa, 520 F.3d 1354 (Fed. Cir. 2008), the Federal Circuit held that patent rights could be transferred through Japanese intestate statute. In the background, however, are (1) 35 U.S.C. Section 261’s requirement that all assignments of patent interest be in writing and (2) the 1881 Supreme Court case of Ager v. Murray holding that patent rights could not be transferred to satisfy a judgment without a written assignment. 105 U.S. 126 (suggesting that a trustee be appointed to assign rights if the inventor refused). In Akazawa, the court avoided those requirements by holding that non-assignment forms of transfer (such as intestate transfer) need not be in writing. I.e., “ownership of a patent may be changed by operation of law” without an explicit assignment from the prior rights-holder.
Likewise, in the present case the appellate panel found that the rights had been properly transferred without an assignment based on Massachusetts implementation of Section Nine of the Uniform Commercial Code (UCC).
We find that Akazawa controls in the instant case, and that the district court’s reliance on its reasoning was appropriate because transfer of patent ownership by operation of law is permissible without a writing. … [A]ssignment is not the only method by which to transfer patent ownership. As noted below, foreclosure under state law may transfer patent ownership. Here, XACP’s foreclosure on its security interest was in accordance with Massachusetts law; therefore, Sky received full title and ownership of the patents from XACP providing it with standing in the underlying case.
…
In the instant case the controlling state law is the Massachusetts UCC. Massachusetts UCC § 9-610 permits a secured party to sell the collateral after default, in a commercially reasonable manner, and that same party may purchase the collateral at a public disposition. Section 9-617 of the UCC states that once a secured party disposes of collateral after default, the transferee for value takes all of the debtor’s rights in the collateral. Because XACP foreclosed on the patents-in-suit in conformity with these provisions, XACP obtained title to the patents on July 14, 2003.
Patentee, His Heirs or Assigns: Section 154(a) of the Patent Act adds an additional complication. That section indicates that patent rights are always granted “to the patentee, his heirs or assigns.” Here, SAP argues that Section 154(a) limits the flow of ownership to only those three categories. The precedent of Akazawa does not create a problem under that theory because that case involved intestate transfer to an heir. Without elaborating, the Federal Circuit rejected that argument – holding simply that “Section 154 does not restrict patent ownership to these three classes of individuals, and moreover, this language fails to specifically address transfers of patent ownership.” Thus, although a patent is granted only “to the patentee, his heirs or assigns,” it may be latter transferred to other parties. This decision creates a potential implication that a creditor foreclosing on a pending patent application may not be able to enforce the future patent rights. Here, the court should have laid that issue to rest by noting that the Section 154 argument fails because a “patentee” includes any successor in title to the interest in the patent application. The definitions in Section 100 suggest this result, but is written in the Act’s typical circular fashion: “The word ‘patentee’ includes not only the patentee to whom the patent was issued but also the successors in title to the patentee.”
Notes:
The well written opinion was authored by Judge Spencer sitting by designation from the US District Court of the Eastern District of Virginia. Chief Judge Michel and Judge Bryson joined Judge Spencer on the unanimous panel. As noted in the final paragraph, however, the courts continued semantic distinction of an “assignee” needs reconsideration in light of modern securities law.
At issue here are U.S. Patent Nos. 6,141,653; 6,336,105; 6,338,050; 7,162,458; and 7,149,724.
The patents describe and claim various iterations of a “multivariate negotiations engine for iterative bargaining” that allow buyers and sellers to do a deal online.
Exergen Corp. v. Wal-Mart Stores, CVS, and SAAT, ___ F.3d ___, 2009 U.S. App. LEXIS 17311 (Fed. Cir. 2009)
This case focuses only on procedure and does not alter the substantive law of inequitable conduct. However, it is likely to have an important impact on patent litigation by tightening the pleading requirements for anyone attempting to plead inequitable conduct.
Exergen's patents cover infrared thermometer technology. U.S. Patents Nos. 5,012,813, 6,047,205, and 6,292,685. A jury found SAAT liable for willful infringement and also awarded lost profits to Exergen. On appeal, the Federal Circuit Reversed-in-Part
Pleading Inequitable Conduct: At some point during the litigation – well after submitting its initial answer to the complaint – SAAT moved to add inequitable conduct as an affirmative defense and counterclaim. The District Court denied that request – properly holding that inequitable conduct is a form of fraud that must be pled "with particularity" under Fed. R. Civ. Pro. 9(b). On appeal, the Federal Circuit affirmed, but in the process provided guidance for how to properly plead inequitable conduct. Notably, "Rule 9(b) requires identification [in the pleading] of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO." (refrain)
The pleading must set forth "the particularized factual bases" that a court would rely upon to decide the substantive elements of inequitable conduct. Here, particularity should be equated with "'in detail . . . the who, what, when, where, and how' of the alleged fraud" Quoting DiLeo v. Ernst & Young, 901 F.2d 624 (7th Cir. 1990).
When the allegation is failure to disclose, the pleadings must "identify the specific prior art that was allegedly known to the applicant and not disclosed." See Cent. Admixture, 482 F.3d 1356.
When the allegation is intentional misleading of the PTO, the pleading must identify the particular misleading actions.
Although Rule 9(b) allows mal-intent to be "averred generally," the pleading must still "allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind."
The court found four specific failings in SAAT's pleadings:
WHO: Failure to "name the specific [duty bound] individual … "who both knew of material information and deliberately withheld or misrepresented it."
WHAT and WHERE: Failure to "identify which claims, and which limitations in those claims, the withheld references are relevant to, and where in those references the material information is found."
WHY and HOW: Failure to provide evidence of materiality by, for instance, identifying the claim limitations absent from information of record.
SCIENTER: Failure to allege facts that "give rise to a reasonable inference of scienter, including both (1) knowledge of the withheld material information or of the falsity of the material misrepresentation, and (2) specific intent to deceive the PTO." Rather, the pleadings merely state that "Exergen was aware" of the prior art without explaining that a particular duty bound person was aware of the relevant portion of the reference.
SAAT based its inference of deceptive intent on the fact that the patentee had cited a particular prior art reference during prosecution of only one of the three patents. The court rejected that factual description – finding it insufficient even for the pleadings:
SAAT's purported basis for inferring deceptive intent is that Exergen had cited the '998 patent when prosecuting the '205 patent but then failed to cite it when prosecuting the '685 patent. The mere fact that an applicant disclosed a reference during prosecution of one application, but did not disclose it during prosecution of a related application, is insufficient to meet the threshold level of deceptive intent required to support an allegation of inequitable conduct. Indeed, SAAT's pleading does not contain specific factual allegations to show that the individual who had previously cited the '998 patent knew of the specific information that is alleged to be material to the '685 patent and then decided to deliberately withhold it from the relevant examiner.
The mere fact that an applicant disclosed a reference during prosecution of one application, but [*45] did not disclose it during prosecution of a related application, is insufficient to meet the threshold level of deceptive intent required to support an allegation of inequitable conduct. Indeed, SAAT's pleading does not contain specific factual allegations to show that the individual who had previously cited the '998 patent knew of the specific information that is alleged to be material to the '685 patent and then decided to deliberately withhold it from the relevant examiner.
Although the Federal Circuit affirmed the fraud-pleading holding, it also reversed the final judgment – finding one patent invalid and the other two not infringed.
Gil Hyatt is a prolific inventor who has spent much of his time over the past thirty years challenging the bounds of USPTO practice. This August 11, 2009 opinion marks the seventeenth Federal Circuit decision focusing on Hyatt’s patent rights in addition to the 2003 Supreme Court decision Franchise Tax Bd. of California v. Hyatt.
This Case: During prosecution, the examiner rejected each of Hyatt’s 117 computer memory architecture claims based on anticipation, obviousness, enablement, double patenting, and written description. Hyatt appealed (pro se) to the BPAI who reversed the bulk of the rejections, but affirming only the written description and enablement rejections associated with 79 claims. Hyatt then took his case to Federal Court by filing a civil action in DC District Court grounded in 35 U.S.C. 145.
At the district court, Hyatt submitted a new declaration offering additional evidence of enablement and written description. However, the district court excluded that inventor-declaration from evidence based on Hyatt’s “negligence” in failing to previously submit the information to the PTO.
On appeal, the Federal Circuit affirmed the exclusion of evidence – holding that the district court may properly exclude evidence that Hyatt should have produced to the PTO. (Chief Judge Michel as author joined by Judge Dyk)
Hyatt was obligated to respond to the examiner’s written description rejection by In re Alton, 76 F.3d 1168, 1175 (Fed. Cir. 1996), by explaining where in the specification support for each of these limitations could be found. . . . The Board noted, “It is far easier for appellant to describe where the limitation he wrote is disclosed than for the Office to prove that the limitation is not disclosed.” . . . Hyatt, however, refused to cooperate, even though he necessarily possessed the information the examiner sought by the time he filed his application.
On these facts, the district court’s exclusion of Hyatt’s new evidence must be affirmed. . . . [I]t is clear from the record that Hyatt willfully refused to provide evidence in his possession in response to a valid action by the examiner. Such a refusal to provide evidence which one possessed was grounds in Barrett to exclude the withheld evidence. Similarly, we hold that in light of Hyatt’s willful non-cooperation here, the district court did not abuse its discretion by excluding the Hyatt declaration.
Judge Moore penned a vigorous dissent in support of the patent applicant’s right to a full civil action including the right to submit additional evidence when challenging a PTO decision.
The majority takes away this patent applicant’s fundamental right to a “civil action to obtain [a] patent” as granted by Congress in 35 U.S.C. § 145. Today the majority decides that a patent applicant may not introduce the inventor’s declaration in a § 145 proceeding before the district court because the inventor had an “affirmative duty” or “obligation” to disclose this evidence to the PTO. His failure to fulfill his affirmative duty, by not disclosing evidence he could have disclosed to the PTO, results in such evidence being excluded from the district court § 145 proceeding. The district court made no fact findings indicating willful withholding or intentional suppression; in fact, the district court did not even conclude that Mr. Hyatt’s conduct amounted to gross negligence, but rather excluded the evidence under a negligence “could have” standard. Nor did the PTO even argue, at any stage of these proceedings, that Mr. Hyatt’s conduct in this case was willful or intentional. Nonetheless, the majority concludes that the applicant “owed,” the PTO all evidence he possesses that is responsive to a rejection and that failure to fulfill this newly created “affirmative duty” amounts to willful withholding as a matter of law. There are only two possible ways to interpret the majority’s willful withholding determination. Either the majority is engaging in appellate fact finding or it is determining that breach of its newly created affirmative duty is willful withholding as a matter of law.
. . .
Congress granted patent applicants the right to a civil action in the district court distinct from their right of appeal. It is our obligation to protect the distinction Congress codified in § 145, not to reweigh the virtues of that decision. The § 145 proceeding is a civil action and ought to be governed by the same Federal Rules of Evidence that govern other civil actions. Patent cases do not need, nor should they have, special rules of evidence.
. . .
The statute itself distinguishes the appeal that may be brought pursuant to 35 U.S.C. § 141 because a § 145 action is not an appeal; it is a “civil action.” The statute obligates the district court to adjudicate the facts in this civil action. Because the statute affords no limitations on the type of evidence that ought to be admissible in a civil action brought under § 145, the standard Federal Rules of Evidence that govern all civil actions ought to govern. The legislative histories of § 145 and its predecessor statute, section 4915 of the Revised Statutes, repeatedly and without contradiction indicate that the intent of Congress was to permit a patent applicant to bring a new suit built upon a new record. . . . Congress intended that the district court in a § 145 action have everything that a court would have in an infringement suit. Under this standard, Congress certainly intended for an inventor, such as Mr. Hyatt, to be permitted to introduce his own declaration in a § 145 action.
. . .
The majority holds that by failing to offer his testimony to the PTO, Hyatt has failed to satisfy “an affirmative and specific duty.” Maj. Op. at 2. In this way, this new affirmative duty for prosecution seems to resemble inequitable conduct, though here the applicant is penalized regardless of their intent. . . . With all due respect to the majority, I do not believe a new “affirmative duty” to disclose is warranted, nor do I believe Hyatt was “required by law” or “obligated” to provide his declaration to the PTO. While Mr. Hyatt may have failed to overcome the rejections or to convince the Board based upon his submissions to the PTO, he did not fail to fulfill an “obligation” or “affirmative duty” as the majority alleges.
. . .
In this case, the district court found that Mr. Hyatt’s failure to proffer his
declaration to the PTO was merely negligent. . . . I find troubling the majority’s characterizations of Mr. Hyatt. See, e.g., Maj. Op. at 51 (Mr. “Hyatt purposefully kept [the Board] in the dark”); id. (his “blatant non-cooperation”); id. at 50 (Mr. “Hyatt willfully refused to provide evidence in his possession”); id. (Hyatt “refused to cooperate”); id. (“Hyatt’s willful non-cooperation”); id. at 55 (“Hyatt willfully refused”); id. at 49 (providing his declaration “should have been simple for him”); id. at 55 (that Hyatt’s failure “to perform a simple task that it was his burden to perform is inexcusable”); id. at 54 (“Hyatt’s perverse unhelpfulness”). None of this appears in the district court proceedings, the PTO proceedings, or the record— these fact findings ought to be left to the district court which is in the best position to weigh the contradictory evidence.
. . .
Contrary to the appellate finding of willful withholding, the record contains ample evidence of a lack of willful withholding. Here, the examiner rejected all of Mr. Hyatt’s 117 claims for lack of written description, failure to enable, obviousness-type double patenting (over 8 separate references), and Schneller-type double patenting (over the same 8 references). The examiner also rejected 9 claims as anticipated (Hill reference) and 7 as obvious (over a combination of three references). Technically, Mr. Hyatt was appealing 45 separate issues totaling 2546 separate rejections of his 117 claims to the Board. He wrote a 129-page appeal brief addressing all of these different rejections. And, to be clear, the Board reversed all the examiner’s rejections for obviousness, anticipation, obviousness-type double patenting, Schneller-type double patenting, and many of the written description and enablement rejections. With regard to the written description rejections in particular, the Board reversed the rejections of 38 claims and sustained the rejections of 79 claims. Mr. Hyatt prevailed on 92% of all the examiner’s rejections at the Board level. Despite Mr. Hyatt’s success, the majority declares Mr. Hyatt’s response to be “completely and wholly inadequate” and Mr. Hyatt to have been perversely unhelpful. Maj. Op. at 55, 56.
. . .
Although Mr. Hyatt may have failed to overcome all of the written description rejections based upon his submissions to the PTO, he did not fail to fulfill an “obligation” or “affirmative duty,” and he certainly was not “perversely unhelpful” as the majority alleges. . . I believe the court is wrong to hold that breach of the newly created affirmative duty, i.e., not producing evidence to the PTO, is willful withholding as a matter of law.
. . .
In hindsight, perhaps Mr. Hyatt should have submitted his declaration or that of any other expert earlier in the prosecution process. But hindsight is misleadingly acute. Declarations and expert reports are time consuming and expensive to prepare. It is hardly reasonable or even desirable to require patent applicants to put massive declarations into the record at an early stage of prosecution, weighing the cost to both the applicant and the PTO. See generally Mark A. Lemley, Rational Ignorance at the Patent Office, 95 Nw. U.L. Rev. 1495 (2003) (arguing that it would be inefficient for the PTO to overinvest in examination because so few patents are enforced). In this case, for example, the examiner rejected the claims on many different bases (double patenting on 8 different references, obviousness, anticipation, enablement, written description, etc.), totaling 2546 separate rejections. The Board overturned nearly all of them. It is easy with the benefit of hindsight to say Mr. Hyatt should have introduced more evidence on written description to the Board. But Mr. Hyatt was not facing merely a written description rejection, he was facing 2546 separate rejections on many, many different bases. The majority implausibly asserts that 2546 separate rejections is “proportional to Hyatt’s prosecution of an application containing 117 pending claims spanning 79 pages.” Maj. Op. at 56 n.35. An average of 21 rejections per claim is hardly proportional. Mr. Hyatt was forced to appeal 45 independent issues to the Board when the average is two. Dennis D. Crouch, Understanding the Role of the Board of Patent Appeals in Ex Parte Appeals, 4, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1423922. Despite this challenge, Mr. Hyatt was largely successful on appeal. Further, the length of Mr. Hyatt’s application suggests that his efforts to pinpoint pages containing certain terms was helpful and in good faith. Mr. Hyatt’s response may have been especially valuable in the time before searchable electronic applications.
To say that Mr. Hyatt had an affirmative duty to introduce all evidence to the Board or that he “owed” (Maj. Op. at 56) all the evidence he possessed is to put an enormous and undesirable burden on the patentee, one that will foreclose patent protection for many small inventors. Congress foresaw exactly this problem and ameliorated it with § 145 by providing applicants a way to initiate a civil action and introduce new evidence after Board proceedings when the issues are much more succinct and consolidated. This is illustrated perfectly here, where the applicant was contending with 2546 rejections on many different bases before the Board. After the Board overturned nearly all of them, only a small number of rejections—based on written description/enablement—were maintained. Hence at the district court the applicant could proffer much more extensive evidence because the universe of issues was greatly narrowed. This is the sensible approach Congress enacted. The statute even places the cost of the proceeding on the party better positioned to know the value of the application—the applicant. The majority’s new exclusionary rule based upon its new affirmative duty upsets this balance.
Notes: I expect that Hyatt will ask for reconsideration and will then push for Supreme Court review.
The most significant non-decision from the Supreme Court in recent memory is Justice Breyer's dissent over the Court's decision to dismiss its granted certiorari petition (as improvidently granted) in the Laboratory Corp. v. Metabolite Laboratories, Inc. case regarding the patent-eligibility of this claim:
13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of: assaying a body fluid for an elevated level of total homocysteine; and correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.
The bases for the dissenters' objections to the patentability of this claim has been discussed in prior Patent Docs posts (see "The Supreme Court,In re Bilski and the Lingering Question of Labcorp v. Metabolite"). Today, the Board of Patent Appeals and Interferences issued its decision in an appeal from a final rejection of this claim in reexamination, reversing the Examiner's assertion that the claim was unpatentable for obviousness.
The ex parte reexamination, Control No. 90/008,305, of U.S. Patent 4,940,658was requested on October 23, 2006, and claims 13, 15-17 and 33 were finally rejected for obviousness over the following references:
• Refsum et al., "Radioenzymic Determination of Homocysteine in Plasma and Urine," Clinical Chemistry 34: 624-28 (1985), cited for teaching methods for determining homocysteine levels in plasma by converted total homocysteine to radiolabeled S-adenosylhomocysteine and then quantifying;
• Kass, "Cytochemical Detection of Homocysteine in Pernicious Anemia and in Chronic Erythremic Myelosis," American Journal of Clinical Pathology 67: 53-56 (1977), cited for teaching chemical methods of homocysteine detection in permicious anemia to detect B12 deficiency, but which test showed cross-reactivity with Coenzyme A;
• Wilcken et al., "Homocysteinemia, Ischemic Heart Disease, and the Carrier State for Monocystinuria," Metabolism 32: 363-70 (1983), cited for teaching homocysteine detection in a twin study showing different folate and B12 levels consistently detected from RBCs; and
• Westhyyzen et al., "Plasma amino acids and tissue methionine levels in fruit bats (Rousettus aegyptiacus) with nitrous oxide-induced vitamin B12 deficiency," British Journal of Nutrition 53: 657-62 (1985), cited for showing in correlation between plasma methionine levels and vitamin B12 deficiency.
The Examiner rejected the claims in reexamination for obviousness, citing the Refsum reference as the primary reference (showing a method for detecting plasma homocysteine) combined with the other references showing a correlation with vitamin deficiency. It would have been obvious to combine the teachings of these references, according to the Examiner, "[b]ased on the correlation between the elevated levels of homocysteine (free and/or complexed) in blood and urine samples with deficiency of cobalamin or folate taught by Kass, Wilcken . . . and Westhuyzen."
Saith the Board: We disagree. The panel first stated the principle, enunciated in KSR International Co. v. Teleflex Inc., requiring "some articulated reasoning with some rationale underpinning to support the legal conclusion of obviousness" (550 U.S. 398, 418 (2007)). Here, the Board opined that the claimed invention requires assaying for "total" homocysteine, which comprises four species (homocysteine, homocystine, homocysteine-cysteine disulfides, and protein-homocysteine mixed disulfides), based on specific findings of fact, and correlating elevated levels with folate and/or vitamin B12 deficiency (without discriminating between the two). The panel then distinguished the cited secondary references (which the Examiner used to establish the correlation between elevated homocysteine levels and vitamin deficiency) from the claimed invention. According to the Board, Kass teaches a chemical reaction test that measures not only homocysteine (and not "total" homocysteine) but also Coenzyme A and further distinguishes between B12 and folate deficiency (contrary to the claimed invention). The Board further opined that the ordinarily skilled worker would not have "reasonably" read the Wilcken reference as teaching a correlation between elevated total homocysteine levels and either folate or B12 deficiency, since neither twin was reliably deficient in either folate or B12. The Westhuyzen reference does suggest a correlation between elevated plasma homocysteine and B12 deficiency, the Board conceded, but only detects homocysteine, not total homocysteine, and there is no evidence that the detected increased in homocysteine would "necessarily mean an increase in 'total' homocysteine." In addition to these deficiencies, the Board found that none of the cited references show any correlation between plasma homocysteine levels and folate deficiency.
The Board then held that "[t]he Examiner has failed to provide a sufficient factual basis to support her conclusion of obviousness i.e. that the applied prior art teaches or suggests all of the claim limitations" (phraseology applying — but not rigidly applying — the traditional TSM test remaining as one option underKSR and the Patent Office Guidelines for implementing the KSR decision).
This decision cannot be appealed by the third-party requester, and at least with regard to claim 13 provides no basis for appeal by the patentee (since the patentability of this claim was affirmed in unamended fashion by the Board's decision). It is unlikely that this determination would change Justice Breyer's mind, in any event, since he is on record as believing that:
Even were I to assume (purely for argument's sake) that claim 13 meets certain general definitions of process patentability, however, it still fails the one at issue here: the requirement that it not amount to a simple natural correlation, i.e., a "natural phenomenon." See Flook, supra, at 588, n. 9 (even assuming patent for improved catalytic converter system meets broad statutory definition of patentable "process," it is invalid under natural phenomenon doctrine); Diehr, 450 U. S., at 184–185 (explaining that, even if patent meets all other requirements, it must meet the natural phenomena requirement as well).
At most, respondents have simply described the natural law at issue in the abstract patent language of a "process." But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge. Cf. id., at 192 (warning against "allow[ing] a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection"). One might, of course, reduce the "process" to a series of steps, e.g., Step 1: gather data; Step 2: read a number; Step 3: compare the number with the norm; Step 4: act accordingly. But one can reduce any process to a series of steps. The question is what those steps embody. And here, aside from the unpatented test, they embody only the correlation between homocysteine and vitamin deficiency that the researchers uncovered. In my view, that correlation is an unpatentable "natural phenomenon," and I can find nothing in claim 13 that adds anything more of significance.
The Board's decision properly addresses the legal flaw in Justice Breyer's reasoning, as explicated by Judge Rich in In re Bergy: the question of patent eligibility is distinct from whether an invention satisfies the statutory requirement for patentabity. The Board has affirmed that Claim 13 is patentable; perhaps the Supreme Court will use its review of In re Bilski to address the question of whether the claim is also patent-eligible.
The Michigan-based district court found that Saint-Gobain’s refrigerator shelves infringe Gemtron’s patent No. 6,679,573 and awarded a permanent injunction against further infringement. The shelves were unique – primarily because the glass panel shelf securly snaps into its plastic frame rather than being held by adhesives. The claims required the plastic fram to be “relatively resiliant” so that the glass could snap into place.
The claim construction issue was interesting because it focused on timing. Saint-Gobain’s plastic frame was resiliant while still warm immediately after forming. However, it quickly hardened and became brittle afterward. The accused infringer argued that the limitation “‘relatively resilient’ should not mean ‘temporarily resilient immediately after cooking in an oven and before any opportunity to cool.’”
On appeal, the Federal Circuit affirmed – finding that the purpose of the resiliance (to install the glass panel) “suggests that the claimed resilience of the frame need only be exhibited during assembly.”
There is no discussion in the specification of any purpose for or value of the “relatively resilient” structural characteristic …, other than to facilitate assembly of the shelf. This indicates that the end edge portions of the frame have the claimed structural characteristic—“relatively resilient”—if they are able to deflect at the time the shelf is assembled, to “snap-secure” the glass panel within the frame.
Affirmed.
Note: The permanent injunction was affirmed without comment.
Fraser v. High Liner Foods, et. al. (Fed. Cir. 2009)(non-precedential)
Acting pro-se, Alfred and Paul Fraser sued a handful of fish-stick makers for patent infringement. The Frasers apparently run
The Fraser Patent No. 4,781,930 covers a method of soaking fish in oil before freezing the fillets. The only claim reads as follows:
A method of preparing a fish product comprising filleting a fish to appropriate thickness, immediately immersing the filleted fish in a vegetable oil for a period of 5 to 10 minutes at room temperature to effect absorption of the oil to a depth such as to inhibit excretion of the natural fluids from the fillet and prevent incursion of air and moisture, draining the excess oil from the surface, covering the surface with crumbs and then freezing the fillet.
The district court granted summary judgment in favor of the defendants:
Defendant Midship could not be liable because that company was dissolved more than six years before Frasier filed suit. 35 U.S.C. § 286.
Defendant Good Harbor was dissolved bankruptcy in 2006. It cannot be held liable.
Defendants UNFI and National Fish were never properly served and thus cannot be required to appear in court. The court noted that “A return of service merely noting delivery to ‘girl at front disk’ does not comply with the strictures of Fed. R. Civ. P. 4(h) or Mass. R. Civ. P. 4(d)(2) with respect to service on a corporation.”
Defendants Gorton’s, Roche Bros., ConAgra, High Liner, and Pinnacle did not infringe, literally or by equivalents. “None of the five appellees immerse their frozen fish products in a vegetable oil for a period of 5 to 10 minutes at room temperature. Further, none of these appellees begin preparing frozen fish fillets using fresh fillets.”
The Federal Circuit affirmed each of these decisions and then turned to the issue of sanctions:
“The district court noted that Appellants did not provide any of the defendants with any notice of their patent, that they did not question any defendant concerning the manner of fish processing, and in the case of Midship and Good Harbor, that they did not even inquire as to the existence of these defendants prior to bringing suit. The record shows that Appellants proceeded to file suit without ascertaining correct names of some defendants. Despite detailed letters from counsel for various defendants explaining their clients’ processes and pointing out the differences between those processes and the patented process, Appellants continued to press forth the litigation. Appellants continued despite the district court’s clear explanation at a hearing that they could not prove infringement merely by proving the presence of oil as an ingredient on the list of the products at issue.”
In the end, the court affirmed the minimal sanction of only $500 per defendant.
Every proposed patent reform measure includes an expanded role for the US Patent & Trademark Office’s administrative patent court – known today as the Board of Patent Appeals and Interferences, the BPAI, or simply the Board. Even without legislation, the role of the BPAI has expanded greatly in the past few years. The number of ex parte appeals in FY2009 is expected to at least double the record-filing of 6,400 appeals in FY2008. I suggest that two factors have led to this short term dramatic rise in appeals: (1) an increase in rejection-rate by patent examiners; and (2) attempts by the PTO to limit non-appeal avenues for achieving full claim scope. These limits include the PTO’s proposed rules that would curtail the applicant’s ability to file multiple requests for continued examination (RCEs), continuation applications, and a multitude of claims. Although these rules have only been threatened, they impact appeal practice because they may apply to already-pending applications. Although more gradual, two additional influences on the rise in appeals include: (1) the continued perceived value of patent rights and (2) the continued rise in the number of patent application filed each year.
During patent prosecution, an applicant has a right to appeal to the Board after its application is twice rejected. 35 U.S.C. 134. In this short article, I look at how the Board responds to those rejections on appeal. Many appeals involve multiple rejections each of which may be affirmed or reversed. In addition, the Board occasionally introduces a new ground for rejection even after reversing an examiner decision. This analysis opens-up these decisions and provides data issue-by-issue.
My data comes from two primary sources. First, using Westlaw, I downloaded copies of the approximately 6,000 ex parte BPAI decisions issued between January 2008 and May 2009. Using an automated script, I extracted data from each of those appeals, including the holding and the extent of discussion of various issues. (i.e., how often “obviousness” or “enablement” is discussed in the opinion.) In addition, just under 200 ex parte decisions from 2009 were randomly selected and scored by hand to determine how the BPAI decided individual issues within the appeals. Board decisions typically identify a series of issues and then decide each issue. In Ex Parte Cypher, 2009 WL 1162435, 2008-4722, (Bd. Pat. App. Inter. 2009), for instance, the Board identified two issues: “(1) Claims 1-4 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh in view of McFarling. (2) Claims 9-11 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh and McFarling in view of Yeh.” In Cypher, both issues were affirmed. As a consequence, the data for this case reflects that two obviousness issues were raised, both of which were affirmed.
Results:
In the hand-scored sample, the average Board decision considered 2.1 issues (median of two issues). Approximately 61% of decided issues are affirmed on appeal and 39% are reversed. (In this study, fewer than 1% of issues were expressly not decided.) The issue-by-issue analysis fits with the overall holdings for cases on appeal. In the hand-scored sample, 59% of the cases were affirmed as a whole, 12% were affirmed-in-part, and 29% were reversed. (This sample parallels the Board’s own statistics for FY2009 which indicate that 60% of its decisions on the merits are affirmances, 15% affirmance in part, and 25% reversals). Table 1 shows the issue-by-issue results alongside the overall case-holding for the hand-scored sample.
Issue-by-Issue Results
Case-by-Case results
Affirmed
61% of issues affirmed
59% of cases affirmed
Affirmed-in-Part
N/A
12% of cases affirmed-in-part
Reversed
39% of issues reversed
29% of cases reversed
Table 1
As you might expect, when there is a strong correlation between the overall case holding of an appeal and the holdings on individual issues at issue in the appeal. When the overall case-holding is affirmed, the vast majority of issues are also affirmed. However, in the hand-scored sample, about 10% of cases that were affirmed included some individual issues that were reversed. Often, the reversed issues were rejections argued by the examiner in the alternative. In Ex Parte Mcquiston, 2009 WL 598537, 2008-3224 (Bd. Pat. App. Inter. 2009), for instance, applicant’s claim 1 had been rejected as (1) anticipated by Golds; (2) obvious over Golds; (3) anticipated by Simso; and (4) obvious over Simso. The Board rejected the first three of these rejections, but the claim remained unpatentable as obvious over Simso and the examiner’s decision affirmed as a whole.
Table 2 compares the case-holding with the issue-by-issue analysis based on our hand-scored sample of 200 BPAI decisions. As seen in Table 2, when a case is affirmed-in-part, roughly half (on average) of the issues are affirmed and half are reversed. In cases that were reversed, every issue was also reversed. (?2 P<.01).
Case Holding
Percent of Issued Affirmed
Percent of Issues Reversed
Affirmed
92%
8%
Affirmed-in-Part
51%
49%
Reversed
0%
100%
Table 2
Number of Issues on Appeal: In Mcquiston, the applicant needed to address each alternate reason for rejection in order to win on appeal. In most cases, however, each claim is rejected for only a single reason – usually obviousness. See infra. The applicant can then choose how to group issues on appeal. If, for instance, claims 1-10 are each rejected as obvious, the applicant could choose to argue each claim separately or cluster the claims into one or more groups that are then argued as a unit. Chart 1 uses the hand-scored data to presents the likelihood of a particular case-holding as a function of the number of issues on appeal.
When only one issue is presented, the result in the case tracks the result of that issue. As more issues are presented, the likelihood of a split affirmed-in-part decision rises dramatically while the likelihood of either complete affirmance or complete reversal drops. Chart 2 is a cumulative frequency for the number of issues presented on appeal. In our sample, the number of claims ranged from 1 to 8. The median was 2 claims and the mode 1 claim. About 94% of decisions discussed four or fewer issues.
The Board is authorized to offer new grounds for rejection, and did-so in about 4% of the cases in the hand-scored study. The most common new ground was for obviousness.
Obviousness: Obviousness is the bread and butter of patent examinations. In this study, I also show that it is the mainstay of BPAI ex parte appeals. 90% of appeals in my hand-scored study included at least one obviousness issue that was decided on appeal. More than half of the appeals (54%) focused only on obviousness. The closest runner-up issue – anticipation – was an issue in 37% of the appeals. Other issues on appeal (each with a frequency of < 5%) included in descending frequency: written description requirement; indefiniteness, patentable subject matter, obviousness-type double patenting, and enablement.
For applicants, the fact that the majority of issues involve obviousness spells trouble for applicants. In the hand-scored data, the Board affirmed obviousness findings much more often it did for other grounds of rejection. Specifically, the Board affirmed 65% of the appealed obviousness issues, but affirmed only 52% of the appeal issues made on grounds other than obviousness. Table 3 compares these results for the hand-scored sample of 200 cases. (?2 P<.05).
Issue Holding
Obviousness Rejection
Other Grounds of Rejection
Affirmed
65%
52%
Reversed
35%
48%
Table 3
The pervasiveness of obviousness issues is further confirmed by the larger sample of 6,000 ex parte decisions issued between January 2008 and May 2009. Using a parsing script, I looked for discussions of obviousness issues by counting the number of times that the terms such as “obvious” and “35 U.S.C. § 103(a)” appeared in each opinion. In that sample, 87% of the decisions discussion obviousness while only 13% do not discuss obviousness. Table 4 shows the roughly parallel results.
Hand-Scored Sample
Automatically Parsed Sample
(n ˜ 200)
(n ˜ 6,000)
Obviousness at Issue
90% of cases decide an obviousness issue
87% of cases discuss either obviousness or Section 103(a)
No Obviousness Issue
10% of cases do not decide any obviousness issue
13% of cases do not discuss obviousness or Section 103(a)
Table 4
In order to ensure that I was picking up an actual obviousness issue, I created a script that looked for cases where obviousness was more intensely discussed, i.e., where obviousness terms were mentioned at least three times. In those cases where obviousness was intensely discussed, the Board affirmed the examiner’s rejections decisions 59% of the time. In cases where obviousness was not discussed at all, the examiner was affirmed in only 37% of cases. Table 5 compares these results for the automatically-parsed sample of 6000 cases. (?2 P<.01).
Case Holding
Obviousness Intensely Discussed
No Discussion of Obviousness
No Discussion of Obviousness or Novelty
Affirmed
59%
37%
22%
Affirmed-in-Part
15%
10%
4%
Reversed
26%
47%
74%
Table 5
The far right column of Table 5 provides a compelling statistic. 358 cases in the sample had no discussion of either obviousness or novelty. Of those cases, 74% were reversed on appeal.
Technology Center Specific Results: Patent examination is divided amongst various technology centers. Although the substantive patent laws do not vary across technology lines, patent practice can vary greatly. The BPAI regularly updates a statistical breakdown of its opinions by tech center. [Link]. Table 6 is derived directly from the BPAI statistics for FY2009 through May 2009 and shows the percentage of decisions on the merits from each tech center that arrive affirm, affirm-in-part, or reverse, respectively.
Technology Center
Affirmed
Affirmed-In-Part
Reversed
1600 Biotechnology and Organic Chemistry
59%
15%
27%
1700 Chemical and Materials Engineering
69%
11%
20%
2100 Computer Architecture, Software, and Information Security
63%
13%
24%
2600 Communications
64%
14%
21%
2800 Semiconductors, Electrical and Optical Systems and Components
Focusing in on obviousness again, it is interesting to see that appeals from Tech Center 1600 (Biotechnology and Organic Chemistry) are the least likely to discuss obviousness. The most appeal decisions emerge from Tech Center 1700 (Chemical and Materials Engineering), and those appeals are the most likely to include a discussion of obviousness. In particular, a discussion of obviousness is found in 92% of TC 1700 appeals but only 76% of TC 1600 appeals. (?2 P<.01). The difference is partially explained by TC 1600’s more rigorous application of the Section 112 issues of written description, enablement and indefiniteness. Table 6 is again derived from the automatically-parsed sample of 6,000 Board decisions. For each tech center, Table 7 indicates the percent of cases that discuss obviousness; both obviousness and novelty; novelty; and neither obviousness nor novelty. This table again highlights (1) the focus of the PTO on obviousness issues (and to a lesser extent novelty issues) and (2) the differences of TC 1600 from the rest of patent practice.
Percent of Cases Issue on Appeal
Technology Center
Obviousness+
Obviousness and Novelty
Novelty+
Neither Obviousness Nor Novelty
All
87%
31%
40%
4%
1600 Biotechnology and Organic Chemistry
76%
20%
26%
18%
1700 Chemical and Materials Engineering
92%
29%
34%
3%
2100 Computer Architecture, Software, and Information Security
82%
29%
43%
3%
2600 Communications
89%
31%
39%
3%
2800 Semiconductors, Electrical and Optical Systems and Components
Boss sued Yamaha for infringement of its patents covering a snowmobile seat. After an unfavorable claim construction, Boss admitted that it could not prove infringement. On appeal, the Federal Circuit affirmed the construction and the verdict of noninfringement.
The interesting portion of the opinion focused on the alleged discovery abuses by Yamaha’s counsel. Although a moot point (because Boss did not appeal its motion for sanctions that had been denied), the Federal Circuit felt compelled to at least verbally admonish the attorneys “unacceptable” conduct.
[I]t appears from the record presented to us that Yamaha’s discovery practices were less than commendable. For example, on several occasions Yamaha date-stamped documents to be filed with the district court using the court’s time stamp, but did not actually place the document in the court’s drop-box at that time. Rather, Yamaha actually filed the documents, by placing them in the drop-box, several days after the “filed” stamp was placed on the documents. After the district court realized that this was not an isolated incident, but happened several times, it admonished Yamaha, stating that “[t]his deceitful conduct will not be tolerated” and that this inappropriate practice “is particularly egregious when . . . the court is liberal in granting extensions of time.” The court further noted that “counsel in this case have been admonished before about the gamesmanship that has been taking place in this lawsuit.” In addition, regarding Yamaha’s interpretation of communications with the district court, the court further characterized Yamaha’s actions as “unreasonabl[e]” and “disingenuous.” This type of conduct during litigation is unacceptable and reflects a lack of respect for both the opposing party and the court.
Despite the ruling on misconduct, Yamaha walks away without any sanctions.
Farrago v. Rawlings Sporting Goods (Fed. Cir. 2009)
Farrago’s patent covers a pad for relieving knee stress. The argument focused on whether Rawlings’ product has four surfaces (as claimed) or only three surfaces (as Rawlings argues). On appeal, the Federal Circuit quickly affirmed summary judgment of noninfringement without opinion. (A narrowing amendment during prosecution precluded application of the doctrine of equivalents.)
I’ll only focus here briefly on the appellate practice. Farrago submitted a sample of the accused product to the appellate court so that the judges and clerks could examine the product prior to oral arguments. During oral arguments, the court thanked Farrago’s attorney – noting that the sample “was very helpful.” Of course, the court needed only 24 hours to release its opinion against Farrago.
Altana’s Patent No. 4,758,579 claims the proton pump inhibitor pantoprazole – the active ingredient the anti-ulcer drug Protonix®. Of course, PPI’s were known before Altana’s patent and even one of Altana’s own prior patents discusses a “compound 12” that is structurally similar to those claimed in the ‘579 patent.
Teva and Sun filed for permission to begin making generic versions of the drug, and Altana subsequently filed this infringement action. (Altana filed separate actions that were consolidated.)
This appeal stems from the New Jersey district court’s denial of Altana’s motion for a preliminary injunction. The lower court found that the patentee had failed to prove two critical prerequisites of equitable preliminary relief: (1) a likelihood of success on the merits and (2) irreparable harm.
The equitable test for preliminary injunctive relief requires that the requesting party prove:
a reasonable likelihood of success on the merits;
irreparable harm if an injunction is not granted;
a balance of hardships tipping in its favor; and
the injunction’s favorable impact on the public interest.
Although the ultimate grant or denial of preliminary relief is within the “sound discretion of the district court,” failure to abide by these four factors would be reversible error. Orders to grant or deny a preliminary injunction are immediately appealable.
Likelihood of Success: The Federal Circuit has held that preliminary relief should be denied if the accused infringer raises a “substantial question” of invalidity of the asserted claims. At the PI stage, the court need not consider the ultimate “clear and convincing” standard. Rather, the focus is on “vulnerability.”
Obviousness of Chemical Compound: When considering the obviousness of a chemical compound, courts ordinarily first look for a “lead compound” known in the prior art and then consider whether a chemist would have had some reason to modify the known compound in the particular manner to achieve the new compound. Courts are not rigidly bound by this ordinary approach – thus, for instance, a court may look to multiple lead compounds:
Moreover, to the extent Altana suggests that the prior art must point to only a single lead compound for further development efforts, that restrictive view of the lead compound test would present a rigid test similar to the teaching-suggestion-motivation test that the Supreme Court explicitly rejected in KSR.
Here, the appellate panel found “ample evidence” that a chemist would have chosen “compound 12” as a natural choice for further PPI research. The particular modification of compound 12 was then suggested in articles by Sachs and Bryson who were researching properties of effective PPIs.
Considering this evidence as a whole, the Federal Circuit found it sufficient to raise a substantial question of obviousness.
Irreparable Harm: The district court could not find any irreparable harm of allowing infringement during the course of the litigation. Often, money damages are seen as insufficient when the defendant does not have cash-on-hand. Here, however, Teva and Sun both have plenty. The court also found that Altana almost certainly has a business plan to deal with the launch of generics. During the litigation, Nycomed purchased Altana — seemingly in the lower court’s view, that purchase also indicates that money damages are adequate (since a price can be placed on the company & its patent rights).
Perhaps most harmful to Altana was that the lower court found the patentee’s statements of harms “exaggerated” and lacking “credibility.” A court sitting in equity righty places a dim light on activities suggestive of unclean hands.
On appeal, the Federal Circuit affirmed without significantly commenting on the merits. Rather, the court made this case about equitable discretion: “the law cited by the district court highlights this court’s deference to a district court’s determination whether a movant has sufficiently shown irreparable harm.”
Denial of Preliminary Injunction Affirmed
Judge Newman wrote a short concurring opinion.
Although the evidence presented to the district court does not, in my view, establish invalidity of the patent on the pharmaceutical product pantoprazole, see, Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006) (“the burdens at the preliminary injunction stage track the burdens at trial.”) at this preliminary stage deference is warranted to the district court’s weighing of the conflicting expert opinions interpreting the evidence. On this basis, I concur in sustaining this discretionary action.
The Foundation for a Christian Civilization, Inc. v. Mary Queen of the Third Millennium, Inc. (Fed. Cir. 2010)
According to my source (Wikipedia), the Foundation is an alternate name for the American Society for the Defense of Tradition, Family and Property — “an organization of Roman Catholic Inspiration” that “opposes liberal and egalitarian ideas, policies, and trends.” The Foundation traditionally funded a Catholic counterrevolution against communism. Mary Queen of the Third Millennium is part of the a Vatical recognized “private association of Christ’s faithful.”
Wisconsin Alumni Research Foundation (WARF) v. Xenon Pharma, Appeal No. 08-1351 (
Sky Technologies v. SAP AG (
