Tag Archives: anticipation

Delano Farms v. California Table Grape Commission (Fed. Cir. 2015)

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by Dennis Crouch

Like their utility and design patent brethren, plant patents must also satisfy the patentability requirements of Section 102 and 103 of the Patent Act. In Delano Farms v. California Table Grape Commission (Fed. Cir. 2015), the plant patents at issue relate to Scarlet Royal and Autumn King table grapes. Plant Patent Nos. PP16,229 and PP16,284.  The declaratory-judgment plaintiffs are grape growers seeking to invalidate the patents so that they can grow the grapes without continuing to pay a license fee.

Public Use: Under pre-AIA law, Section 102(b) renders patents invalid if the claimed invention was “in public use” more than one year before the application priority filing date and here, the question is whether certain proven third-party uses count under the law.

Interesting Factual Story: The patented grapes here were created through a USDA project and the patents are owned by the USDA. More than one year before filing the patent applications, the USDA held an open house where it displayed the two varieties.  At the event, a USDA employee (Klassen) gave some of the plants to a local grower (Ludy) but asked Ludy not to sell the grapes he might grow.  Ludy also apparently understood at the time that Klassen had no authority and should not have given out the plants.  Nevertheless, Ludy did grow the variety and also gave some buds to his cousin for him to grow.  However, Ludy testified that his cousin also understood that he should keep the variety secret until it was commercially released by the USDA.  (However, there was nothing written regarding the secrecy needed).   The cousin grew several hundred plants but did not sell any of the resulting grapes before the one-year critical 102(b) date.  Finally, Ludy also showed the plants to Sandrini who was an outside marketer of grapes for both Ludy and his cousin.

Public Use: In interpreting the public use prong of 102(b), the Federal Circuit has focused on whether the invention was either accessible to the public or commercially exploited.  Importantly, the court has previously held that “secret or confidential third-party uses do not invalidate later-filed patents.” Dey v. Sunovion.  But the Leading public use case continues to be Egbert v. Lippmann, 104 U.S. 333 (1881).  In that case, the inventor gave an under-garment corset to his love (who was not yet his wife) who wore it in various forms for 11 years before the patent application was filed.  Even though there was no evidence that anyone in the public saw the corset, the Supreme Court found an impermissible public use and the patent void writing:

If an inventor, having made his device, gives or sells it to another, to be used by the donee or vendee, without limitation or restriction, or injunction of secrecy, and it is so used, such use is public, even though the use and knowledge of the use may be confined to one person.

The challengers in the grape case here latched onto Egbert and argued that there was no real secrecy limitation here despite the fact that only a few individuals actually knew of the public use.

Siding with the USDA Patentee, the Federal Circuit affirmed the district court’s factual findings that the patentee did not authorize Klassen to facilitate third party use of the invention and that Ludy understood that he should keep the variety secret until publicly released by the USDA. “The findings of the district court clearly establish, therefore, that both Ludys knew that they were not authorized to have the plants and that they needed to conceal their possession of the plants.”

Distinguishing Egbert, the Federal Circuit noted that case turned on the inventor’s lack of effort to maintain secrecy.  Here, the USDA made attempts to keep secrecy and, to a large extent, was successful.  The tale here is interesting because of the way it softens the otherwise harsh limits under Section 102(b).

Impact of the AIA: This case was decided under pre-AIA law because the patent application was filed prior to March 2013.  The AIA rewrote much of the novelty provision of Section 102, but included the limit on patenting inventions already “in public use.”  I would expect that under the new law, these same activities would likewise not be seen as being in public use. One difference with the AIA is that the critical date for public use is no longer one-year prior to the application filing date, but instead is moved-forward the actual filing date itself.  In this case, that change would likely have made a difference because the third-parties were less private in the year leading up to the application filing, including commercial sales of the grapes.

USPTO Too Broad in its Broadest Reasonable Interpretation

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by Dennis Crouch

Stoller holds several patents directed to a winterizing golf course greens.  In particular, Stoller’s approach is to roll-out a rubber blanket over the turf.  His most recent patent application was rejected by the USPTO examiner — with the broadest claim being anticipated and the dependent claims obvious. That decision was then affirmed by the PTAB.  Now, the Federal Circuit has largely affirmed — finding that the anticipation finding was erroneous but that the obviousness findings were correct.  The result then is that on remand the examiner should now also reject the broadest claim as obvious.

The broadest claim requires a layer of polyurethane “laminated” to a fabric layer and the primary dispute on appeal is the broadest reasonable interpretation of laminated clause. The importance of the construction comes up because the prior art uses for the anticipation rejection fastens its layers together by with strings going through a series of grommets at the cover’s perimeter.  The USPTO took the position that be broadest reasonable interpretation of a laminated structure would require only that the structure have multiple layers while Stoller argued that laminated requires a fusing or bonding.

The application itself provides no definition of the term but it does provide an example that requires using a molten polymer to bond the layers and repeatedly explains the durability benefits of the laminate approach. [I should note here that I’m hard-pressed to understand how the Court’s broadest reasonable construction is different or any broader than the seemingly more narrow construction that would be used post-issuance.]

On appeal, the Federal Circuit sided with the patent applicant – finding that even a broad dictionary definition of the laminate terms requires “uniting” layers in a way that goes beyond simply stacking them together.

Because the cited anticipation reference did not disclose laminated layers, the rejection was improper.  On the other hand, a number of additional references taught laminating in its ‘properly’ construed form and those references were included in the obviousness rejections of the more narrow claims. As such, the court found those obviousness rejections proper.

Thus, we’re left with the odd situation that the broader claim is not rejected while the narrower claims are rejected.  Addressing that situation, the Federal Circuit refused to take the logical step of finding the the broader claim obvious as well. Instead, the court simply remanded with – I assume – the expectation that the USPTO will make that determination for itself.

We do not turn a blind eye to the many references in this record that demonstrate that laminating two (or more) layers together was well-known in the art. The only rejection of claim 35 before us, however, is a § 102 rejection based only on Sibbet. That rejection is not supported in the record. Accordingly, we reverse the rejection of claim 35.

Read the decision.

Upcoming Conferences and Workshops

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By Jason Rantanen
Three upcoming conferences that may be of interest to readers:
This Friday and Saturday, January 16 and 17, the University of San Diego School of Law’s Center for Intellectual Property Law & Markets is holding its 5th Annual Patent Law Conference.  This year’s topic is “Patent Invalidity after the America Invents Act.”  Speakers include Judges Bencivengo, Bartick & Chen.  I attended last year as part of PatCon and thought it was a great event.  More details here: http://www.sandiego.edu/law/centers/ciplm/detail.php?_focus=49377#overview
Hal Wegner’s 3rd Annual Naples Patent Law Experts Conference will be held February 9 and 10.   This beachfront Conference in Naples, Florida, will involve  an interactive discussion by more than thirty faculty members.  Topics to be covered include recent and pending Supreme Court patent law decisions, potential legislative activity, issues of international law, and more. Further information from the sponsoring organization, the University of Akron, is available here: http://www.uakron.edu/law/ip/naples-midwinter.dot
On March 5-6, Don Chisum and Janice Mueller will conduct a two-day patent roundtable seminar.  The program is limited to a total of ten participants to maximize opportunities for interactive discussion and debate.  All sessions are led by treatise authors and educators Don Chisum and Janice Mueller. Coverage focuses on recent significant patent decisions of the Federal Circuit and U.S. Supreme Court. Topics currently planned for discussion include:
  • The Supreme Court’s Alice Corp. decision on patent-eligible subject matter and subsequent Federal Circuit decisions applying Alice; 
  • The Supreme Court’s grant of certiorari in Commil USA concerning the intent requirement for inducing infringement;
  • The Supreme Court’s grant of certiorari in Kimble v. Marvel concerning the propriety of post-patent expiration royalties;
  • The Supreme Court’s pending decision in Teva v. Sandoz on review of patent claim construction;
  • The Federal Circuit’s grant of en banc review in SCA Hygiene to determine whether the Supreme Court’s Petrella decision changed the law of laches as a defense to patent infringement;
  • Patent Practice Gone Wrong: Lessons from Patent Malpractice, Exceptional Case and Rule 11 Sanctions, and Inequitable Conduct Cases;
  • Patent Claim Construction and Definiteness in the Wake of Nautilus (and Anticipating Teva); and
  • Inter Partes Review: Two-Year Snapshot and Lessons from Case Studies.
No advance preparation is expected or required. The Supreme Court of Ohio Commission on Continuing Legal Education has approved the seminar for 12.0 hours of CLE instruction. For additional details on the venue, topics, and registration form, see http://chisum-patent-academy.com/upcoming-patent-law-seminars/advanced-patent-law-seminars-cincinnati-oh/ or e-mail info@chisum.com.

 

Non Practicing Entities in Europe

Patent

Guest Post by Peter Arrowsmith. Arrowsmith is a patent attorney and partner at the London based firm Cleveland IP.

Non practicing entities (NPEs) are a familiar part of the IP landscape in Europe, just as they are in the US. However, NPE activity has historically been lower in Europe. This article analyses the present situation in Europe compared to the US. In addition, we analyse how NPE activity might develop in Europe with the anticipated arrival of the Unified Patents Court (UPC).

 Factors that encourage NPE activity

There are various factors in a patent system that might influence or encourage activity by a NPE.  A non-exhaustive list of possible factors is outlined below, and Europe is compared against the US.

1. Low cost risk in litigation

A NPE is likely to be encouraged to litigate if they can initiate infringement proceedings without incurring a significant cost risk. In the US this is often possible because the losing side does not typically pay the winner’s legal costs. Additionally, NPEs can often find a law firm willing to take the case on a conditional fee basis. In Europe, by contrast, the losing side is typically required to pay at least a portion of the winner’s legal costs. Conditional fee arrangements are also less common.

Verdict: US more favourable to NPEs

2. High costs in litigation for the other side

A NPE is likely to benefit in a system where the opposing side will incur high costs in defending themselves. In such a system the pressure to settle will be significant, simply to avoid the costs involved in litigation. In Europe the cost of multi-jurisdictional litigation is likely to be high, but not necessarily higher than the costs involved in US litigation.

Verdict: Dead heat

3. Uncertainty

A NPE is likely to benefit in a patent system where the outcome of a case is difficult to predict, especially if this is coupled with high costs in litigation. This is likely to encourage a NPE to bring more cases on the basis that they are statistically likely to register some wins. In turn, this will increase pressure to settle before trial. Europe may be considered more predictable than the US in this comparison, simply because decisions are made by experienced patent judges, rather than lay juries.

Verdict: US more favourable to NPEs

 4. Size of Market

A NPE is likely to benefit if their patent has a wide geographical scope in an important market because a single adverse decision could have a large economic impact on the other side. In the US a single decision can be effective across the entire country, whereas in Europe it is necessary to enforce patents country-by-country.

Verdict: US more favourable to NPEs

 5. Bifurcation

A system in which the issues of infringement and validity are considered separately is also likely to favour a NPE. In such a system the NPE can obtain a favourable decision on infringement before validity is even considered. This may increase pressure on the other side to settle following an initial decision, even in cases where the validity of the patent is questionable. Europe may be more attractive to NPEs in this comparison since certain countries (notably Germany) permit bifurcation.

Verdict: Europe more favourable to NPEs

 6. Speed

A fast system can allow a NPE to exert pressure on the other side, which can encourage early settlement. These systems are likely to favour NPEs. In this comparison there is little to choose between Europe and the US, since fast or slow decisions are possible in both systems, depending on the forum chosen to commence proceedings.

Verdict: Dead heat

Overall this analysis suggests that the US patent system is more attractive than Europe for NPEs, which is consistent with the reality that we see. The European system is, however, still viable for NPEs, although they may need to be more selective about the cases and targets they pursue.

The Unified Patents Court – a new opportunity for NPEs

NPEs have registered a number of recent successes in European Courts (see, for instance, Vringo vs. ZTE in the UK), demonstrating that the European patent system can support this business model. All of the factors above would need to be considered by a NPE to decide whether litigation would be worthwhile in each case.

Of course, the patent system in Europe is on the verge of significant change, and the Unified Patents Court (UPC) is close to becoming a reality. The introduction of this Court will significantly alter the litigation landscape, meaning that a change in NPE activity can be expected.

In the current European system only national courts of individual countries are competent to decide on the infringement of European patents. Once it is established, the UPC will be competent to decide on validity and infringement of patents across the cooperating states, which covers most of Europe. A significant motivation in the development of this Court has been the desire to increase simplicity and decrease the cost of pan-Europe patent litigation. If successful, the new Court is likely to have many advantages for conventional business. However, a side effect is that the new Court may increase the attractiveness of Europe from the perspective of a NPE.

In particular, the UPC would appear to present a number of potential advantages from the perspective of a NPE.

1. Size of Market

The UPC will issue decisions that are effective across most of the European continent. Thus, the economic impact of individual decisions is likely to be high for the losing party – much higher than in the present system.

2. Bifurcation

The UPC is likely to permit bifurcation in certain instances. This is likely to favour NPEs, since they may be able to obtain a favourable decision on infringement before validity is considered. This is likely to increase the pressure to settle, even in situations where a patent has questionable validity.

3. Uncertainty

There is currently a great deal of uncertainty about how the new Court will operate, especially in the early days, in the absence of a body of case law. This initial uncertainty is likely to favour NPEs, since it will be harder to predict how a case will be decided, increasing the pressure to settle before trial.

Once the UPC is established there will be a period during which patent owners can ‘opt out’ of the exclusive jurisdiction of the Court. During the early years, this will allow patent owners to continue to use national courts, while there is uncertainty over how the UPC will operate.  Many European practitioners anticipate that conventional applicants are likely to exercise this opt out, provided the fee for doing so is not exorbitant. For a NPE there are likely to be more advantages in the UPC than the current system, meaning that few are likely to opt out of the Court’s jurisdiction. This means that a significant number of early cases in the UPC may involve NPEs.

Obviousness: Analogous Art and Hindsight

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by Dennis Crouch

In an interesting September 2014 decision, the Federal Circuit upheld a USPTO determination of obviousness.  The majority decision (authored by Judge Newman) touches on both (1) analogous-art and (2) motivation to combine references. The problem-focused approach taken by the majority in determining analogous art is fascinatingly similar to parts of the abstract-idea analysis in Alice Corp. — looking generally to the problem-to-be-solved as the overarching focus of the invention.  Writing in dissent, Judge Moore characterized the obviousness determination as “[h]indsight, hindsight, hindsight.”  [Decision]

Scientific Plastic Products (SPP) holds a number of patents relating to cartridges for low pressure liquid chromatography (LPLC) with a resealable screw-on cap. See U.S. Patent Nos. 7,138,061, 7,381,327 and 7,410,571. When SPP sued Biotage for infringement, the defendant responded by filing an inter partes reexamination.  Reexam Nos. 95/000,495, ‘496, and ‘497 (filed in 2009, pre-AIA).  Based upon his consideration of the prior art, the patent examiner rejected all of the claims of each patent — finding them obvious under 35 U.S.C. 103. That decision was affirmed by the PTAB and is the subject of the appeal here.  Meanwhile, the district court case has been stayed pending outcome of the reexamination.  On appeal here, a split panel of the Federal Circuit has affirmed the USPTO rejection – with Judge Newman joined by Judge Wallach writing the majority and Judge Moore in dissent.

The primary obviousness reference in the case apparently discloses all of the elements of the patented LPLC cartridge except for one – a tapered lip of the cartridge that corresponds to a taper in the screw-on cap.  The tapering helps create a better seal and avoid leakage when the cap is on.  It turns out that the tapered lip feature is not new, and the USPTO identified two different patents from the soda-pop bottle industry that disclosed the approach.  See for example, Strassheimer (Patent No. 5,100,013).

Obviousness: Section 103 of the Patent Act provides the basic test for obviousness — whether “differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious . . . to a person having ordinary skill in the art to which the claimed invention pertains.”   The two primary interpretations of this decision are Graham v. John Deere Co., 383 U.S. 1 (1966)(outlining test) and KSR Int’l Co. v. Teleflex, Inc, 550 U.S. 398 (2007) (explaining that test should not be rigid but instead apply common sense).

Deere explained that there are four factual prerequisites to consider when determining the legal question of obviousness.

  1. The level of ordinary skill in the art;
  2. The scope and content of the prior art;
  3. The differences between the claimed invention and the prior art;
  4. Any objective indicia of nonobviousness.

Those who know Deere well will notice that I have re-arranged the order of the test by placing the level of ordinary skill in the art as the first step in the analysis. I do that because – as explained below – the scope-and-content of the prior art is impacted by the level of skill in the art.

In many obviousness cases, all of the elements of the invention are found within a limited set of prior art references. The argument then is that it would have been obvious for one skilled in the art to think of combining the elements from those references to create the claimed invention.  In KSR, the Court held that the justification for such a combination can be based upon common sense or other evidence and does not require a particular teaching-suggestion-or-motivation found within the prior art itself.

Scope of the Prior Art: The scope and content of prior art is determined by several factors. First, evidence must fall within the prior art definitions for anticipatory references under 35 U.S. 102.  Second, the prior art must also be seen as “analogous art.”  The analogous art requirement is based upon the idea that someone working in a particular field would be unlikely to search through or know all possible prior art but rather would focus attention on what is known (1) in the same field of endeavor or (2) to be addressing the same problem.  The general question is whether it would have been “reasonable” for a person of ordinary skill in the art to consider the given prior art in order to solve the problem confronting the inventor. In re Clay, 966 F.2d 656 (Fed. Cir. 1992).

Here, the problem identified by the inventor was to prevent leakage on a plastic screw-cap and everyone knows that the soda-pop bottles have solved that problem. From that framework this is an easy case.  However, the patentee here argued that this analysis involves improper hindsight because the leakage problem was one identified by the inventor as part of the invention process and was not previously identified in the prior art.

The Federal Circuit implicitly agreed that it would be improper hindsight to rely upon the problem first identified by the inventor for determining analogous art. However, the court rejected that argument as applied to the facts here.  In particular, the PTAB noted that the primary LPLC reference includes a particular o-ring seal that serves as an implicit recognition leakage could be a problem. On appeal, the Federal Circuit confirmed that the implicit concern was sufficient to avoid  hindsight concerns.  Affirmed.

= = = =

Writing in dissent, Judge Moore argues that majority opinion is hindsight of the worst kind, ‘wherein that which only the invention taught is used against its teacher.’ quoting W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540(Fed. Cir. 1983).

The patents do not indicate that leakage was a problem identified in the prior art or a problem known to those of skill in the art. Rather they indicate that the claimed design will avoid leakage. These inventors identified a design problem, articulated it, and solved it. There is absolutely no evidence of the existence of a known leakage problem that would have motivated skilled artisans to modify Yamada. The Board is taking the ingenuity of these inventors and, without any record basis, attributing that knowledge to all skilled artisans as the motivation to make the inventions at issue. Hindsight, hindsight, hindsight. . . .

I would reverse because I conclude that the Board’s cancellation of the claims at issue was based entirely on hindsight reconstruction—there is no record evidence that one of skill in the art would have been motivated to modify Yamada with soda pop bottle sealing closures.

An implicit suggestion from Judge Moore is that in hotly contested post-issuance cases invalidating evidence should be high quality:

These were inter partes reexamination proceedings between sophisticated parties. Both parties put on expert testimony regarding obviousness. Yet there is no evidence that the chromatography cartridges in Yamada had
a leakage problem that skilled artisans would have been motivated to address.

Judge Moore also challenged the PTAB’s failure to determine the level of ordinary skill in the art.  “An ordinarily skilled chemist would have likely looked to a different body of prior art than an ordinarily skilled mechanical engineer with industrial design experience. . . We cannot answer the analogous art question without knowing who the person of ordinary skill is.”

Slicing the Bologna: Judge Chen Distinguishes this Business Method from those Found Ineligible in Alice, Bilski, and Ultramercial

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By Dennis Crouch

Typically, Supreme Court patent cases alter Federal Circuit precedent, while – at the same time – leaving many open questions for the appellate court to address.  That standard certainly fits the recent set of patent eligibility cases.  In Alice Corp v. CLS Bank (2014) the Supreme Court outlined an eligibility test whose practical impact will vary greatly depending upon how it is implemented by the Patent Office and the court: broadly or narrowly?

In DDR Holdings v. Hotels.com, the Federal Circuit has affirmed the patent eligibility of DDR’s eCommerce patent.  U.S. patent No. 7,818,399. Particularly, Judge Chen authored the majority opinion that was joined by Judge Wallach. Judge Mayer wrote in dissent.  The case is close enough to the line that I expect a strong push for en banc review and certiorari.  Although Judge Chen’s analysis is admirable, I cannot see it standing up to Supreme Court review and, the holding here is in dreadful tension with the Federal Circuit’s recent Ultramercial decision.

The basic idea behind DDR’s patent (as claimed) is to allow a website operator to include various pages within its website that each corresponds to a different merchant (such as a cruise line) with products being sold through a broker (such as a cruise broker).  The various pages will have a look-and-feel that corresponds to the particular merchant (by including, for instance the cruise line logo).  And, the system dynamically populates product options on the site by pinging the broker’s server.  To accomplish all this, the invention uses computer networks in what appears to be standard form without what I would call “new technology.”  Judge Chen writes that a major purpose of this setup is to be able to provide a diversity of stores while keeping customers on the same overall website. Representative claim 19 is posted below.  The accused infringers summarize this as simply “syndicated commerce on the computer using the Internet.”

Patent Eligibility under Alice Corp: The two-step approach to eligibility decreed by Alice Corp first queries whether the invention is directed to an abstract idea. And, if so, then looks to whether the invention includes an “inventive concept” sufficient to “transform” that abstract idea into a patentable invention. In Alice, the Supreme Court particularly held that transformation is not satisfied by merely the recitation of generic computer limitations.

Here, Judge Chen finds that neither step of Alice Corp implicate the patent in question.  In doing so, Judge Chen attempts to cabin-in the scope of ideas that qualify as “abstract ideas.”

Not An Abstract Idea: First, Judge Chen found the solution here to be internet-focused with no direct corresponding offline equivalence. That conclusion is important because it helps distinguish Alice Corp where the Supreme Court found the patented invention there abstract because it related to a longstanding business practice. Judge Chen writes:

[The asserted claims do not] recite a fundamental economic or longstanding commercial practice. Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet.

In the dissent, Judge Mayer challenges this conclusion by drawing an analogy to the pre-internet business of having kiosk within a mall or warehouse shore that sells third-party cruise vacation packages.  Judge Chen rejects that analogy because it does not “account for the ephemeral nature of an Internet “location” or the near-instantaneous transport between these locations made possible by standard Internet communication protocols.”  According to Judge Chen, those differences introduce new problems – and it is those problems that are particularly addressed by the patented invention.

In Ultramercial, the Federal Circuit found that even novel ideas can be abstract. Distinguishing from that case, Judge Chen writes that the claims here:

are different enough in substance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added activity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequenceof events ordinarily triggered by the click of a hyperlink.

Moving on, Judge Chen finds that – even if the claims are directed to an abstract idea – they do not preempt that idea but instead represent a “specific way” of creating a composite web page “in order to solve a problem faced by websites on the Internet.”

Writing in dissent, Judge Mayer argues that the patents at issue here are “long on obfuscation but short on substance. Indeed, much of what they disclose is so rudimentary that it borders on the comical.”

DDR’s claims … simply take a well-known and widely-applied business practice and apply it using a generic computer and the Internet. The idea of having a “store within a store” was in widespread use well before the dawn of eCommerce. For example, [NLG], one of the defendants here, previously “sold vacations at . . . BJ’s Wholesale Clubs through point of purchase displays.” . . . DDR’s patents are directed to the same concept. Just as visitors to [BJ’s] could purchase travel products from NLG without leaving the BJ’s warehouse, the claimed system permits a person to purchase goods from a third-party vendor, but still have the visual “impression that she is viewing pages served by the [original host merchant].” Indeed, any doubt as to whether the claimed system is merely an Internet iteration of an established business practice is laid to rest by the fact that one of the named inventors acknowledged that the innovative aspect of his claimed invention was “[t]aking something that worked in the real world and doing it on the Internet.”  . . .

The solution offered by DDR’s claims, however, is not rooted in any new computer technology. Its patents address the problem of preventing online merchants from losing “hard-won visitor traffic,” and the solution they offer
is an entrepreneurial, rather than a technological, one. DDR has admitted that it did not invent any of the generic computer elements disclosed in its claims. There is no dispute, moreover, that at the time of the claimed invention the use of hyperlinks to divert consumers to particular web pages was a well-understood and widely-used technique. While DDR’s patents describe the potential advantages of making two web pages look alike, they do not disclose any non-conventional technology for capturing the “look and feel” of a host website or for giving two web pages a similar appearance.

In concluding that DDR’s claims meet the demands of section 101, the court focuses on the fact that “they recite a specific way to automate the creation of a composite web page . . . .” The Supreme Court, however, has emphatically rejected the idea that claims become patent eligible simply because they disclose a specific solution to a particular problem. . . . Indeed, although the claims at issue in Alice described a very specific method for conducting intermediated settlement, the Court nonetheless unanimously concluded that they fell outside section 101.

= = = = =

This case may end up again delaying the expected USPTO examiner guidance on abstract idea analysis.

= = = = =

The patent itself issued in 2006 but claims priority to a 1998 filing.  Five inventors are listed including father-son pair: DD Ross, Sr. and Jr. – hence DDR Holdings.

= = = = =

Claim 19. A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:

(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages; (i) wherein each of the first web pages belongs to one of a plurality of web page owners; (ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and (iii) wherein the selected merchant, the outsource provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;

(b) a computer server at the outsource provider, which computer server is coupled to the computer store and programmed to: (i) receive from the web browser of a computer user a signal indicating activation of one of the links displayed by one of the first web pages; (ii) automatically identify as the source page the one of the first web pages on which the link has been activated; (iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and (iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) information associated with the commerce object associated with the link that has been activated, and (B) the plurality of visually perceptible elements visually corresponding to the source page.

Federal Circuit Continues to Support Claiming Pharmaceutical Function

Patent,

by Dennis Crouch

Par Pharma v. TWI Pharma (Fed. Cir. 2014)

In a strong opinion, the Federal Circuit has overturned a lower court summary judgment that Par’s megestrol formulation patent claims are obvious.  (U.S. Patent No. 7,101,576).  The case is interesting because it further solidifies the appellate court’s stance that functional claim limitations should be given their full weight and merit even when serving as the point-of-novelty of the invention.

As with many drug-related patents, Par’s claims include limitations regarding the effect of the drug. Here, the real benefit of Par’s formulation is that it is equally effective if administered in both a “fed” and “fasted” state.  During prosecution (and in response to an obviousness rejection), par added the follow food-effect limitation: “wherein after a single administration … there is no substantial difference in the Cmax of megestrol when the formulation is administered to the subject in a fed versus a fasted state.”  The remainder of the claim involves a series of specific dosages and particle size limitations to be used in the drug administration.

At trial, the district found the claims obvious based upon a combination of prior art references. Notably, the prior art was not shown to teach the food-effect limitation. However, the district court determined that the wherein clause deserved no weight in the obviousness analysis because it was simply describing a result inherent to the formulation.

On appeal, the Federal Circuit has vacated that finding — noting that the district court “incorrectly applied our law on inherency in the context of obviousness.”

Inherency: The traditional approach to inherency is with reference to the prior art — even when not expressly disclosed by the prior art, a feature will be deemed inherent to the prior art if “the natural result flowing from the operation as taught would result in the performance of the questioned function.” Hansgirg v. Kemmer, 102 F.2d 212, 214 (C.C.P.A. 1939).  In the obviousness-combination context, the question is whether the non-disclosed limitation is the natural result of the combination of reference.  In re Oelrich, 666 F.2d 578, 581 (C.C.P.A. 1981) (“[M]ere recitation of a newly discovered function or property, inherently possessed by things in the prior art, does not distinguish a claim drawn to those things from the prior art.”).  The Federal Circuit here writes “the limitation at issue necessarily must be present, or the natural result of the combination of elements explicitly disclosed by the prior art.”

Of importance, however, the “natural flow” must be proven with clear and convincing evidence and may not be established by probabilities or possibilities or expectation.

In reviewing the evidence presented in this case, the appellate panel found that the challenger had failed to present sufficient evidence of inherency.   In particular, althought the evidence presented showed that the combination would improve the food-effect, there was no evidence presented that the food effect was substantially eliminated as required by the claims.

While it may be true that a reduction in particle size [as disclosed in the prior art] naturally results in some improvement in the food effect, the district court failed to conclude that the reduction in particle size naturally results in “no substantial difference” in the food effect.

On remand, the district court will likely consider further evidence with regard to inherency.

The case here also ties-in with Mayo v. Prometheus.  Following that decision, the claimed food-effect as a result of the particular administration would be seen as an unpatentable law of nature.  The question then is whether that claimed function can serve as the point of novelty sufficient to overcome the prior art.

 

Looking at Inter Partes Reviews

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Since the new procedure launched in 2011, third parties have filed more than two thousand requests for Inter Partes Review.

IPR Filings

In their new University of Chicago Law Review essay, Professor Brian Love and Shawn Ambwani explore some of the results from these past two years. See Inter Partes Review: An Early Look at the Numbers, 81 U Chi L Rev Dialogue 93 (2014) [Essay].

Love, who tends to favor a strong post-issuance review regime, suggests that (based upon the initial numbers) the regime is doing its job:

Though it would be premature to make sweeping claims about IPR at this time, so far IPR appears to be a powerful shield for those accused of patent infringement (and those who anticipate that they may soon be). Compared to requests for inter partes reexamination, petitions for IPR are currently granted at a similar rate, but once instituted, they result in the elimination of every challenged claim about twice as often, reach a final decision almost twice as quickly, and make accused infringers almost twice as likely to win motions to stay co-pending litigation. In its attempt to create a formidable avenue for administratively challenging issued patents, Congress appears to have hit the mark—but only time will tell for sure.

Looking particularly at NPEs, the article reports that IPR-challenges of patents being elsewhere asserted by NPE are more likely to be instituted (as compared with the population), but less likely to result in cancellation of claims.

Over the next year, the number of results will grow tremendously and we will have a better understanding of the process and its merits. In addition, I suspect that the results will vary over time as Office hones its approach and the composition and leadership of the PTAB changes.

 

Reissue Patent with Shifted Claim Focus Invalid: Not “clearly and unequivocally disclose[d] … as a separate invention.”

Patent,

by Dennis Crouch

In Antares Pharma v. Medac Phama (Fed. Cir. 2014), the court has invalidated Antares’ reissue patent no. RE44,846 — finding that the reissued claims fail to comply with the “original patent” requirement of 35 U.S.C. 251.  This “original patent” requirement is roughly equivalent to both the written description requirement and the prohibition on new matter — all three basically require that the original patent specification disclose the particular invention now being claimed. Here, however, the court takes the requirement a major step further — indicating that the requirement is only satisfied if the newly claimed invention was described as the invention in the original disclosure.  The leading Supreme Court case on the topic is US Industrial Chem v. Carbide & Carbon Chem, 315 U.S. 668 (1942).  In that case, the Supreme Court held the asserted reissue invalid because claimed solution no longer required water even though the original specification had at least hinted that water was optional.  There, the court held that reissued claims must be “the same invention described and claimed and intended to be secured by the original patent.”   Under the Federal Circuit’s interpretation here, the requirement is that new or amended claims are only valid if the original specification “clearly and unequivocally disclose[s] the newly claimed invention as a separate invention.”  Going forward the biggest question is whether this requirement will also be extended to the written description requirement and new matter limitations.

Section 251 of the Patent Act creates the reissue process that allows a patentee to seek correction of errors in an original patent.  In the process, the patentee can broaden its patent scope, but only if the reissue application is filed within two-years of the original patent issuance. Further, a reissue application may not “recapture” scope that was surrendered during the original prosecution in order to obtain allowance nor may the reissue claim an invention that was not fully and expressly disclosed in the original written description.

Here, the patent covers the seeming torture device of a needle-assisted jet injector.  Soon after patent issuance, however, the patentee sought a reissue that removed the “jet injector” limitation and focused on novel safety features that were not originally claimed. The court writes:

The original specification here does not adequately disclose the later-claimed safety features to meet the Industrial Chemicals standard. The specification discussed only one invention: a particular class of jet injectors. . . . Although safety features were mentioned in the specification, they were never described separately from the jet injector, nor were the particular combinations of safety features claimed on reissue ever disclosed in the specification. Rather, the safety features were serially mentioned as part of the broader conversation: how to build the patented jet injection device.  . . . Nowhere does the specification disclose, in an explicit and unequivocal manner, the particular combinations of safety features claimed on reissue, separate from the jet injection invention. This does not meet the original patent requirement under § 251.

Based upon this failure, the patented claims are invalid for violating the original patent requirement of Section 251.

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This is an interesting and important case with regard to reissue applications and it may have important implications for the written description requirement as well.

A few limited remarks:

I should note first that the Federal Circuit here failed to explain how failure of the original patent requirement is a proper validity defense under 35 U.S.C. 282. [Update – I apologize, but I failed to express the point was thinking.  My basic point was that validity challenges for improper reissue are expressly stated in the statute while subject-matter challenges are not there.]

Second, the posture of this case is interesting – the patentee was appealing a denial of preliminary injunction. However, rather than simply affirming the denial (based upon likely invalidity), the Federal Circuit here ruled conclusively that the claims are invalid as a matter of law.

Finally, as alluded-to, this case appears poised to reach well beyond its reissue context and impact the entire population of patents under the context of the written description requirement.  Here, the court indicated that the standard from Industrial chemicals is “analogous to the written description requirement.”  Going forward, the USPTO may well begin limiting applications that shift claim focus under this newly revived doctrine.

Opinion by Judge Dyk, joined by Judges Reyna and Taranto.

Federal Circuit: Novelty in Implementation of an Abstract Idea Insufficient to Overcome Alice

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by Dennis Crouch

The key language from the Federal Circuit’s most recent pronouncement in  Ultramercial v. Hulu (Fed. Cir. 2014) is as follows:

We do not agree with Ultramercial that the addition of merely novel or non-routine components to the claimed idea necessarily turns an abstraction into something concrete. In any event, any novelty in implementation of the [abstract] idea is a factor to be considered only in the second step of the Alice analysis. . . . [And, the Internet] is a ubiquitous information-transmitting medium, not a novel machine. And adding a computer to otherwise conventional steps does not make an invention patent-eligible. Any transformation from the use of computers or the transfer of content between computers is merely what computers do and does not change the analysis.

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Following Alice Corp., the Federal Circuit has now flipped its prior two rulings in the Ultramercial case — finding this time that the computerized business method patent lacks patent eligibility.  Both prior Federal Circuit decisions in favor of patent eligibility had been vacated by the Supreme Court without opinion except with orders to consider Mayo v. Prometheus and Alice Corp v CLS Bank respectively.

This decision offers a strong signal from the Federal Circuit that the court is now understanding what the Supreme Court meant in its recent quartet of Bilski, Mayo, Myriad, and Alice and that the court will support the 101 eligibility decisions being laid-down by the lower courts and the Patent Office.

The patent at issue here covers a method of distributing copyrighted products over the internet – instead of paying for the product, the consumer watches a paid-advertisement. U.S. Patent No. 7,346,545.  The claims include some further limitations, such as using an “activity log” to select the advert to be shown based upon criteria (such as whether the advertiser has paid for another transaction). Claim 1 is pasted below.

It turns out that the advertising model works for the internet just as it previously worked for radio and television. And, as a result, the patent would be quite valuable, but only if it were valid.  It is not valid. The decision here does not eliminate all software patents, but it again calls-into question patents where the focus of the invention is either the content of information being transferred/transformed or a business transaction.  It is telling that the court added the following the caveat to its decision here: “[W}e do not purport to state that all claims in all software-based patents will necessarily be directed to an abstract idea. Future cases may turn out differently.”

The district court in this case found that the claims embodied the abstract idea of using “advertisement as an exchange or currency.” On appeal, the Federal Circuit rejected that restatement for a more detailed analysis:

The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe an abstract idea, devoid of a concrete or tangible application. Although certain additional limitations, such as consulting an activity log, add a degree of particularity, the concept embodied by the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content.

With that abstract idea in hand, the court moved to the second step of the Alice Corp test — whether the claim adds significantly more in its implementation such that the abstract idea is transformed into a patent eligible invention.

We conclude that the limitations of the ’545 claims do not transform the abstract idea that they recite into patent-eligible subject matter because the claims simply instruct the practitioner to implement the abstract idea
with routine, conventional activity. None of these eleven individual steps, viewed “both individually and ‘as an ordered combination,’” transform the nature of the claim into patent-eligible subject matter. The majority of those steps comprise the abstract concept of offering media content in exchange for viewing an advertisement. Adding routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet does not transform an otherwise abstract idea into patent-eligible subject matter. Instead, the claimed sequence of steps comprises only “conventional steps, specified at a high level of generality,” which is insufficient to supply an “inventive concept.”  Indeed, the steps of consulting and updating an activity log represent insignificant “data-gathering steps,” and thus add nothing of practical significance to the underlying abstract idea. Further, that the system is active, rather than passive, and restricts public access also represents only insignificant “[pre]-solution activity,” which is also not sufficient to transform an otherwise patent-ineligible abstract idea into patent-eligible subject matter.

The claims’ invocation of the Internet also adds no inventive concept. As we have held, the use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101. Narrowing the abstract idea of using advertising as a currency to the Internet is an “attempt[] to limit the use” of the abstract idea “to a particular technological environment,” which is insufficient to save a claim. Given the prevalence of the Internet, implementation of an abstract idea on the Internet in this case is not sufficient to provide any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.”  In sum, each of those eleven steps merely instructs the practitioner to implement the abstract idea with “routine, conventional activit[ies],” which is insufficient to transform the patent-ineligible abstract idea into patenteligible subject matter.

That some of the eleven steps were not previously employed in this art is not enough—standing alone—to confer patent eligibility upon the claims at issue. 

While the Supreme Court has held that the machine-or-transformation test is not the sole test governing § 101 analyses, that test can provide a “useful clue” in the second step of the Alice framework. A claimed process can be patent-eligible under § 101 if: “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.”  The claims of the ’545 patent, however, are not tied to any particular novel machine or apparatus, only a general purpose computer. As we have previously held, the Internet is not sufficient to save the patent under the machine prong of the machine-or-transformation test. It is a ubiquitous information-transmitting medium, not a novel machine. And adding a computer to otherwise conventional steps does not make an invention patent-eligible. Any transformation from the use of computers or the transfer of content between computers is merely what computers do and does not change the analysis. Although the preamble of claim 1 also requires a facilitator, the specification makes clear that the facilitator can be a person and not a machine. Thus, nowhere does the ’545 patent tie the claims to a novel machine. The claims of the ’545 patent also fail to satisfy the transformation prong of the machine-or-transformation test. The method as claimed refers to a transaction involving the grant of permission and viewing of an advertisement by the consumer, the grant of access by the content provider, and the exchange of money between the sponsor and the content provider. These manipulations of “public or private legal obligations or relationships, business  risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”  We therefore hold that the claims of the ’545 patent do not transform any article to a different state or thing. While this test is not conclusive, it is a further reason why claim 1 of the ’545 patent does not contain anything more than conventional steps relating to using advertising as a currency.

The majority panel here was written by Judge Lourie and joined by Judge O’Malley.  Judge Mayer (who replaced Judge Rader on the panel) wrote in concurrence to emphasize the following three points:

First, whether claims meet the demands of 35 U.S.C. § 101 is a threshold question, one that must be addressed at the outset of litigation. Second, no presumption of eligibility attends the section 101 inquiry. Third, Alice Corporation v. CLS Bank International, for all intents and purposes, set out a technological arts test for patent eligibility.

Although Judge Mayer’s conclusions here veer somewhat from the patent eligibility doctrine, he provides a roadmap for district courts to use the doctrine in deciding Section 101 cases going forward.

Bucking the Trend: Security Software Patent Not Yet Ruled Ineligible

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ScreenShot142Card Verification v. Citigroup (N.D. Ill. 2014)

A growing number district court decision have followed the Supreme Court’s Alice Corp. decision by finding the asserted patent claims to be patent-ineligible as unduly encompassing an abstract idea.

In one recent decision, N.D. Ill. Judge Kendall has tepidly bucked the trend by denying a Fed R. Civ. Proc. R. 12(b)(6) motion for failure to state a claim — instead finding the asserted claims plausibly eligible.

The asserted patent claims cover a transaction verification method and the Judge agreed with defendant-Citygroup the general idea of verifying a transaction is an unpatentable abstract idea.  (Claim 1 is pasted below. See Patent No. 5,826,245).

Moving to the second step of Alice, Judge Kendall found that the claims plausibly avoid the mental steps doctrine by requiring “pseudorandom tag generating software” and also plausibly requires a sufficiently concrete transformation so as to ground the abstract idea to a particular inventive implementation.  Notably, for the second step, Judge Kendall did not draw the law from Alice, which seemingly required novelty in the ‘something more’ but instead quoted from the Federal Circuit’s 2013 holding that “additional substantive limitations [are required that] narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.” Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1341 (Fed. Cir. 2013).  Applying that law to the case, the court ruled that the claimed process of adding random number tags to data in the computer could be seen as “fundamentally altering the original confidential information.”  With this analysis in hand, Judge Kendall denied the defendants’ motion to dismiss for failure to state a claim without prejudice.

The decision here is probably most important for its procedural stance. First, the defendants’ bold move was to file its motion to dismiss as a R. 12(b)(6) motion even before filing its answer to the complaint that would include defenses and counterclaims.  Under Iqbal and Twombly, the complaint must state a claim that is ‘plausible on its face.’  Here, all that the court held was that the claim is plausible.

Although the outcome favored the patentee, the case is also a break from the tradition that a patent’s presumption of validity is generally sufficient to survive such a motion to dismiss. In Ultramercial, the Federal Circuit addressed a similar finding and held that dismissal at such an early stage is only appropriate when “the only plausible reading of the patent [is] that there is clear and convincing evidence of ineligibility.”  Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir. 2013) vacated on other grounds 132 S. Ct. 24131 (2012). Of course, the clear-and-convincing standard is with regard to questions of fact while the eligibility inquiry is a question of law that depends upon few (if any) questions of fact.

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Read the decision here: Kendall101

Claim 1:

A method for giving verification information for a transaction between an initiating party and a verification-seeking party, the verification information being given by a third, verifying party, based on confidential information in the possession of the initiating party, the method comprising:

on behalf of the initiating party, generating first and second tokens each of which represents some but not all of the confidential information,

sending the first token electronically via a nonsecure communication network from the initiating party to the verification-seeking party,

sending the second token electronically via a nonsecure communication network from the initiating party to the verifying party,

sending the first token electronically via a nonsecure communication network from the verification-seeking party to the verifying party,

verifying the confidential information at the verifying party based on the first and second tokens, and sending the verification information electronically via a nonsecure communication network from the verifying party to the verification-seeking party.

Economics: Explaining Reverse Payments in ANDA Litigation

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Guest Post by Ruben Jacobo-Rubio.  I asked Jacobo-Rubio to write a guest post on his recent article (along with John Turner and Jonathan Williams) on estimating the valuation of Paragraph IV patent litigation.  The basic results here are that brand firms value deterring entry by an order of magnitude more than generic firms value the right to entry.  That economic result helps to explain the incentive for reverse payments. The full paper is available here: http://ssrn.com/abstract=2481908. 

The 1984 Hatch-Waxman Act attempts to strike a balance between promoting innovation of new brand drugs and facilitating generic entry. One of its key provisions, the Paragraph (iv) Abbreviated New Drug Application (ANDA) certification process, creates a specific role for patent litigation in striking this balance. Specifically, the US Food and Drug Administration (FDA) permits generic firms to rely on brand-firm data on safety and efficacy in seeking approval to sell copies of brand drugs, but does not grant entry unless the generic firm successfully challenges all relevant brand-firm patents. As a reward, the first successful generic challenger receives a 180-day marketing exclusivity upon approval of its ANDA (iv). Effectively, the Paragraph (iv) ANDA process seeks an average level of competition, where early entry occurs against weaker patents that do not hold up in court and later entry occurs against stronger patents (Hemphill 2006).

In recent years, however, brand and generic firms have settled Paragraph (iv) litigations out of court with increasing frequency (FTC 2010). Such settlements often involve delayed generic entry and some form of payment from the brand firm to the generic. Economic theory suggests such settlements may be anti-competitive.

In order to inform the courts and stakeholders at large, we study such patent challenges. Counting only the first challenge, and restricting further attention to cases where first-time entry in the entire molecule market is at stake, we collect a sample of 93 cases litigated during 1988-2012. We begin our data capture by using all patents ever listed for approved drugs in the FDA Orange Book since the beginning of the Act. Next, we do an extensive search for lawsuits, first by using all of these patents, a second search using drug names, and a last search using firm names.

After our extensive data capture, we also develop a novel framework, using an event study of Paragraph (iv) litigation decisions and the probabilistic nature of such decisions, to identify key aspects of the distribution of surplus in the US pharmaceutical industry during the Hatch-Waxman era. We assume that the Efficient Market Hypothesis holds; that is, the stock prices of pharmaceutical firms incorporate all available information about firm value. Thus, when there is a decision in a Paragraph (iv) case, investors price the effect of that decision into their valuation of the firm. For example, the two figures below show the raw effects of decisions on brand and generic firm values. The effects are large, timed just after district-court decisions, and move in predicted directions. This gives us confidence in the event-study approach. We use standard event-study techniques to identify cumulative abnormal returns (CARs) from these decisions.

rubio1rubio2

The CARs and other firm information are insufficient for identifying firms’ stakes in the case, for two reasons. First, investors expect Paragraph (iv) challenges to succeed with some probability. Second, district-court decisions are sometimes reversed on appeal. Hence, the change in market value from a district-court decision reflects a change in the probability of an ultimately successful Paragraph (iv) challenge. It does not pin down the difference in firm value between an ultimate win and an ultimate loss. To identify this latter difference—the value of deterrence for the brand and the value of entry for the generic—we weight the estimated change in the firm’s stock-market value from the event study, using formulas incorporating estimates of the probabilities of brand wins and of the probabilities of appellate reversals.

We find that brand firms value deterring entry, on average, at $4.6 billion. In contrast, generic firms value the right to enter at $236.8 million dollars (all values in 2010 dollars). Hence, the value of entry is only five percent of the value of deterrence. This gap suggests that, by settling their disputes, firms would realize sizable additional surpluses. Indeed, we estimate the average bargaining surplus to be about $2 billion per Paragraph (iv) case. This estimate represents a lower bound for the additional consumer surplus realized by permitting patent challenges under the Paragraph (iv) ANDA process, versus blocking entry for the life of the brand firm’s patents.

Next, we study the effect of a more permissive environment for “pay-for-delay” settlements. On June 27, 2002, an Administrative Law Judge ruled in favor of such a settlement in the closely-watched case Schering-Plough vs. FTC (40 LEXIS 244 [FTC 2002]). Since this decision, eventually upheld by the 11th Circuit Court of Appeals (402 F.3d 1056 [11th Cir. 2005]), there had been a surge in Paragraph (iv) settlements (FTC 2010).

When we divide our sample into cases before and after the 2002 Schering-Plough decision, our estimates show that for cases decided after Schering-Plough, the ex ante probability of an ultimate brand victory is 60%, versus just 40% for earlier cases. In addition, the average value of deterrence falls 60% after Schering-Plough, from about $8.8 billion to about $3.5 billion, while the average value of entry falls nearly 67%, from $532.0 million to $173.5 million. The average bargaining surplus falls from about $4.9 billion to about $1.3 billion, a 73% decrease.

Hence, since 2002 it has become increasingly rare for big-dollar Paragraph (iv) cases to complete patent litigation. They more typically settle. These settlements strongly reduce the (per-case) average consumer surplus delivered by Paragraph (iv) litigation.

The courts have yet to clearly delineate the antitrust implications of reverse payments, but the Supreme Court has made an important step. In a 5-to-3 decision on June 17, 2013 in FTC vs. Actavis et al. (133 US 2223 [2013]), the Court instituted a “rule of reason” for courts to apply to such cases (Hovenkamp). They instructed the 11th Circuit Court of Appeals to hear Federal Trade Commission (FTC) antitrust arguments in the Actavis case, and paved the way for the FTC to make such arguments in other cases.

We hope our study sheds light on the economics of these cases.

 

 

Software as an Abstract Idea

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Amdocs v. Openet Telecom (E.D.Va. 2014)

In yet another case, a district court has invalidated a set of software patents as unduly abstract under Alice Corp., Mayo, and 35 U.S.C. 101.  In this case, E.D. Va. Judge Brinkema issued a judgment-on-the-pleadings that all of the asserted claims of the four Amdocs patents were invalid as patent-ineligible. The Decision.

In Alice Corp., the Supreme Court outlined a two step process for determining eligibility: (1) determine whether the claim encompasses excluded subject matter and then (2) determine whether the claim includes “something more” sufficient to “transform the nature of the claim into a patent-eligible application.”  As it turns out, neither of these tests are straightforward.

The patents-in-suit here relate to computer software designed for reporting network usage. Claim 16 of Amdocs Patent No. 6,836,797 is on point:

16. A computer program product stored in a computer readable medium for reporting on a collection of network usage information from a plurality of network devices, comprising:

computer code for collecting network communications usage information in real-time from a plurality of network devices at a plurality of layers;

computer code for filtering and aggregating the network communications usage information;

computer code for completing a plurality of data records from the filtered and aggregated network communications usage information, the plurality of data records corresponding to network usage by a plurality of users;

computer code for storing the plurality of data records in a database;

computer code for submitting queries to the database utilizing predetermined reports for retrieving information on the collection of the network usage information from the network devices; and

computer code for outputting a report based on the queries;

wherein resource consumption queries are submitted to the database utilizing the reports for retrieving information on resource consumption in a network; and

wherein a resource consumption report is outputted based on the resource consumption queries.

In applying Alice, Judge Brinkema first examined the claim to determine whether it is directed to an abstract idea.  Brinkema’s particular approach here follows the “gist approach” used by other post-Alice district court decisions.  Notably, to find the abstract idea, Brinkema “look[ed] past the mere claim language” to determine that the claim is “directed to the abstract idea of using a database to compile and report on network usage.”  It is probably important to pause here to consider what considerations make us think that a network usage database creation and report tool is abstract.  Unfortunately, Judge Brinkema does not.

At step two, Judge Brinkema looked for “something more” but found instead that “the claim does not add much” beyond the stated abstract idea.

In claim 16, a generic computer collects, filters, aggregates, and completes network communications information.  The generic computer then stores the information in a database, and queries the database to retrieve reports. Collecting, filtering, aggregating, and completing network information amounts to “electronic recordkeeping,” which is “one of the most basic functions of a computer.” (quoting Alice).  Similarly, storing and querying information in a database, and building reports based on that information, is one of the most basic functions of a database system. Accordingly, claim 16 is directed to a computer functioning in a conventional way, and a database functioning in a conventional way. The claim does not add any specific implementation beyond the abstract idea that information is collected and stored, and reports are generated.

The result then is that the claim is ineligible and thus invalid. The opinion similarly walks through other challenged claims and rejects them.  Throughout the opinion, the Judge’s largest concern appears to be that the claims lack “specific hardware” as well as “any detail” regarding how the claimed functions actually operate.

The Judge was also clear that overall novelty is irrelevant to patent eligibility. “That argument misses the point. The concern of § 101 is not novelty, but preemption.”

A person may have invented an entirely new and useful advance, but if the patent claims sweep too broadly, or only claim the idea that was achieved rather than implementation of the idea, § 101 directs that the patent is invalid. Amdocs’s asserted claims recite such conventional operation, in such a general way, that even if the inventor had developed an actual working system, the patent claims could foreclose fields of research beyond the actual invention. Accordingly, all asserted claims are invalid as patent-ineligible.

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Notes:

Software?: Although the court made a few pushes for “hardware” in its analysis, it did not make any express statements that software is problematic from an eligibility standpoint. An open question following Alice Corp., is whether any claimed invention would be patent eligible if beginning with the preamble: “A computer program product stored in a computer readable medium…”

Proving Non-Obviousness with Ex-Post Experimental Evidence?

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by Dennis Crouch

The Federal Circuit has rejected BMS’s petition for en banc rehearing in its chemical compound obviousness case. However, four additional opinions either concurring or dissenting show that the court does not speak with one-mind on the issue. Obviousness is the central patentability doctrine and thus, even small modifications to the doctrine can have important systemic impacts. En Banc Denial Opinions.  The patent in question – if valid – is worth hundreds of millions of dollars and so we can expect a petition for writ of certiorari to the Supreme Court.

In Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc., the Federal Circuit panel affirmed a lower court finding that BMS’s patent covering the Hep-B drug entecavir is invalid as obvious. Patent No. 5,206,244. Judge Chen drafted the original opinion that was signed by Chief Judge Prost and Judge Plager.  Prof Rantanen covered the original decision here.

The obviousness approach for newly invented chemical compounds typically involves identifying the closest analog compound (lead compound) and then determining whether it would have been obvious to create that new compound based upon the lead prior art.  Here, the basic holdings of the Federal Circuit were: (1) affirming that “those of ordinary skill in the art would have selected 2′-CDG, a carbocyclic analog, as a lead compound for further development efforts;” (2) affirming that the same PHOSITA would have been motivated to modify the lead compound; and (3) holding that the secondary indicia of non-obviousness were insufficient to transform the obviousness determination.

In its petition for rehearing, BMS presented two primary arguments:

  • That the court improperly refused to consider post-invention discoveries regarding the invention and prior art that showed significant differences between the two.  In particular, the appellate panel found it irrelevant that the lead-prior art compound is highly toxic to humans since – at the time of the invention – the compound was generally regarded as safe.
  • With regard to objective indicia of non-obviousness – that the court improperly separated the analysis on a property-by-property basis (finding each merely difference-in-degree) rather than looking at the alleged dramatic (difference-in-kind) impact of the drug when considered as a whole.

In his opinion discussed below, Judge Taranto sets the stage:

In short, the Bristol-Myers compound, which is a novel molecule, is dramatically different from the prior-art compound in providing practical human benefits: one provides such benefits, the other does not. But that difference was identified only after Bristol-Myers filed for its patent, because the prior-art compound, not having been tested in animals or humans, was not then known to be toxic.

A number of Amici supported the petition, including BIO, Pfizer, Eli Lilly, PhRMA, IPO, and Merck.

The basic issue here is that pharmaceutical companies regularly perform tests to compare their newly-invented drug treatment to the prior art in order to prove that the two are quite different.  However, as a general matter, those tests are performed after the invention and application is already on file.  The companies then have a major concern that this decision will deny the relevancy of those objective but ex post results.

The trouble for the patentee in this case is the statute — that expressly calls for considering what was known by PHOSITA at the time of the invention (pre-AIA; in future we the time is at the effective filing date of the patent application).  Under the statute it seems that post-filing information should only be relevant to showing what PHOSITA would have been thinking back at the critical date.

Although the entire court did not explain its reasons for denying the rehearing, Judges Dyk (joined by Judge Wallach) and Judge O’Malley wrote separate opinions concurring in the denial.

Judge Dyk:

This case presents a question of obviousness, in particular whether evidence postdating the invention can be used to establish unexpected results. The panel holds that it cannot be considered in the circumstances of this case. That position is correct. It is mandated by the statute, which provides that an invention is not patentable if it “would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.” 35 U.S.C. § 103 (emphasis added).

The patent applicant’s discovery of unexpected results at the time of the invention can help to establish that the invention would not have been obvious to another skilled person. But hindsight bias must be avoided in determining obviousness. And under longstanding Supreme Court authority, the pertinent knowledge is that possessed at
the time of the invention.

You will note that Judge Dyk cites the new-103 rather than pre-AIA 103(a), but that does not significantly change the point he is making here.

Judge O’Malley:

I write to assuage Bristol-Myers Squibb Co.’s (“BMS”) and the amici’s1 fears that this panel decision has rewritten the test for obviousness for pharmaceutical patents. In my view, the concerns expressed are unjustified and mischaracterize the opinion. This case does not forge new ground or set down immutable principles. It simply decides that, on the record before it, the district court did not err in finding the asserted claim of the ’244 Patent invalid as obvious. . . .

Our case law clearly allows the consideration of later discovered differences between the prior art and the invention. . . . These differences inform the obviousness analysis and thus can be considered when assessing what was understood by one of skill in the art at the time of the invention and what expectations may have been reasonable. . . . Like all evidence of objective indicia, the point of considering later-understood evidence regarding the properties
of the invention is to guard against hindsight bias by assessing claims of a motivation to combine as of the time of invention in light of later surprises or developments.

Judge Newman dissented from the denial with an opinion joined by Judges Lourie and Reyna.  Judge Newman, inter alia, walks through the lengthy list of cases that where ex post evidence was relied upon to prove non-obviousness and sees the panel decision here as a major departure.

Judge Taranto’s dissent basically argues that the panel decision was sloppy and, because it can be read in the extreme way suggested by the petitioner, that it should be modified.

How is Patent Litigation like Baseball?

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By Jason Rantanen

I’m a moderately-dedicated baseball fan*, so I’ve been listening** to quite a few baseball games over the past few weeks.  And as I’ve been listening to the games, it’s struck me that in many ways, patent litigation is a lot like a baseball game well beyond the Cubs reference.  Both are a game of one against many on a field where the participants operate under asymmetric rules.  For both, too, the individual success rate in an active contest isn’t all that high.

One of the most distinguishing aspects of baseball is the challenge an individual batter faces in actually achieving a positive result at the plate.  Most of the time, players don’t actually get a hit; a batting average of over .300 is considered exceptional.  This statistic has sparked the idea that baseball is a game of failure: there are numerous references to even the greatest baseball legends being failures 7 times out of 10.  Even when other measures of success are taken into account (such as drawing a walk), it’s still the case that most of the time a batter will make an unproductive out.

But, as other folks have pointed out, a batter’s performance is not so much a question of the individual triumph (or failure) of the batter; rather, it is a contest between the batter and the pitcher.  When the batter loses, the pitcher wins.

Or more accurately, when the batter loses, the other team wins.  This is a large part of what makes baseball so fascinating to me: it’s a lone batter facing off against a whole squad of nine opponents.  One against many.  Even the best players in the world are still the underdog here: Ted Williams, the all-time leader in getting on base, did so about 48% of the time over his career.

So too in patent law.  A patent holder is only one against many.  True, like a batter, the patent holder has an advantage: the patent, with its presumption of validity.  But there is only one patent holder and there is a whole world of potential infringers.  Including many creative, knowledgeable, and smart players who can develop arguments and theories and ideas that the patent holder could never have anticipated.

The end result is that perhaps we shouldn’t be all that surprised when patent holder success rates in infringement litigation tend to look a lot like batting averages.  Added to the challenge of one patent holder against many possible infringers is the difficulty of actually winning a patent suit: there are a multitude of possible validity challenges that an alleged infringer might raise and the patent holder must win on them all – and prove infringement – in order to prevail.   As in baseball, patent infringement litigation is an asymmetric contest with different rules for the batting team and the fielding team.***

None of this is to discount the very real challenges that our patent system faces, particularly when it comes to anything other than substantive merits determinations by a court.  We don’t really have a good sense from an empirical standpoint about the nature of post-filing settlements, let alone those that occur prior to the filing of the complaint.  And none of this should suggest that patent litigation is working as optimally as it might; it’s still extremely costly, complex litigation and there’s always room for improvement in patent law.  But thinking of patent litigation as akin to a baseball game also might help to put the Allison/Lemley/Schwartz study I posted about earlier this week in some context.

*By which I mean that I watch a fair number of Giants games via MLB TV, listen to many more, and have been to a dozen games or so over the last seven years.  Of course, it’s easy being being a fan when the team you follow makes it to the World Series three times out of the past five years…

**A cost of getting rid of cable tv is that one can only listen to postseason baseball games that are currently being played.  Which is actually my preferred way to follow the game.  Except for the constant repetition of political advertisements directed at a state in which I do not live.

***There are another analogies I could draw, such as the role of money in paying for players in the game.  Of course, that didn’t work out to well for the Dodgers this year…

Also, at some point the analogy stops working; a baseball game in its entirety is not all that asymmetric.  The team that bats will get its turn in the field.  The team that fields will get its turn at bat.  The analogy works best when talking about batting success.

Allison, Lemley & Schwartz on Patent Litigation

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By Jason Rantanen

In 1998, John Allison and Mark Lemley published a groundbreaking empirical study of patent litigation, Empirical Evidence on the Validity of Litigated Patents.  Allison and Lemley’s focus in that article was on written, final validity decisions by either district courts or the Federal Circuit from 1989 through 1996.  The basic study design philosophy was to look at patent case outcomes; that is, what was the final outcome for patents that were litigated.  That study is still widely cited.

Working with Dave Schwartz, Allison and Lemley recently completed an updated (and much expanded) version of their 1998 study.  The results of that study are being published in several articles, but the one that links most closely with the earlier study is Understanding the Realities of Modern Patent Litigation.

Their undertaking in this project is truly quite impressive.  The authors expanded their scope to all available decisions (not just those that were published in the U.S.P.Q., as in the earlier study) for utility patent infringement suits filed in 2008 and 2009, and personally coded the relevant case information from the docket sheets, district court opinions, briefs, and Federal Circuit decisions for hundreds of cases.  As in the earlier study, the record unit they used were patent cases, with only final decisions for a given patent being counted; in other words, where there was more than one decision in a case, they reported the last final decision on the validity of the patent.  Thus, if there was a final Federal Circuit decision, it superceded a previous district court decision; if there was a remand and subsequent final decision by the district court, it superceded the Federal Circuit ruling, and so on.  Within this set of cases, Schwartz and Lemley coded information about the cases while Allison coded patent-specific information.

Study Findings

The vast majority of patent cases still settle: Out of the roughly 5,000 patent infringement suits filed in 2008 and 2009, only 290 patents went to trial.  All together, less than 10% of the patent suits filed in these years resulted in any merits decision (that is, a summary judgment ruling or trial).  The remainder settled before that point (although, the authors note, there are a small number of cases still pending that may add another 2-3% to the number of suits resulting in a merits decision).

More indefiniteness challenges: One notably change from the 1998 study was the dramatically grater number of indefiniteness challenges.  Out of the 555 summary judgment motions brought on validity issues by either the patent challenger or the patent holder, 176 decided summary judgment motions involved the issue of indefiniteness, a dramatic increase from the 1998 study.  And the authors observed a less substantial, but still noticeable, increase in summary judgment decisions based on patentable subject matter (26), a category that has likely continued to experience growth.  For context, there were 149 decided summary judgment motions on obviousness and 154 on anticipation.

Many arrows in the challenger’s quiver: In terms of the success rates on motions for summary judgment of invalidity, challengers tended to lose on individual issues: with the exception of patentable subject matter challenges, the percentage of successful summary judgment motions of invalidity was 20% or below for each individual issue (102, 103, indefiniteness, enablement, written description).  But, the overall rate of invalidation on summary judgment was 30% and the overall rate at which patent challengers successfully won on invalidity was 42%.  This is an example of what Lemley has called the “fractioning” of patent law; that is, the idea that a patentee must win every issue in a case while the accused infringer must prevail on only one issue; a particular challenge with patent law and its multiple grounds for invalidation.

Overall, patent challengers tend to win: Overall, patent holders tended not to win in cases that went to a definite merits resolution.  Overall, patentees won only about 26% of the time (164/636 definitive merits rulings).  In addition to invalidity, patent holders lost on frequently-brought motions for summary judgment of noninfringement 54% of the time (257/473) and infrequently obtained summary judgment on more rarely-brought motions for summary judgment of infringement (41/128).  Thus, although patentees had a fairly high success rate at trial (winning on 59% of patents when juries made the decision and 64% when the bench did), the 1-2 punch of summary judgment followed by trial meant that most patent cases that went to judicial resolution were resolved in favor of the patent challenger.

I’ve only covered some of the data presented in the paper and barely scratched the surface of the authors’ analysis.  If you’re interested in reading more, the article can be downloaded directly from the Texas Law Review’s website or via ssrn: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2442451 

Right Round: Comparing US and European Software Patent Eligiblity

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Guest Post by Michael Williams. Williams is a UK and European Patent Attorney and Partner at the London based Cleveland-IP firm.

In the book “Through tAlicehe Looking-Glass”, Alice compares her drawing room to the one reflected in the mirror.  She notes that everything is the same “only the things go the other way”.

In the recent Alice Corp[1] decision, the US Supreme Court set out a framework for assessing whether claims are patent eligible under 35 U.S.C. § 101.  In this article I shall compare this framework with that used by the European Patent Office, and consider the similarities.

The US Alice Approach

In a memorandum dated June 24, 2014, the USTPO has set out its Preliminary Examination Instructions to the Patent Examining Corps in view of the Alice Corp decision[2].   In the Instructions, a three stage framework is set out which is summarized below:

  1. Determine whether the claim is directed to one of the four statutory categories of invention, i.e., process, machine, manufacture, or composition of matter. If the claim does not fall within one of the categories, reject the claim as being directed to non-statutory subject matter (§ 101).
  2. If the claim does fall within a statutory category, determine whether the claim is directed to an abstract idea. If not, proceed with examination of the claim for compliance with other statutory requirements.
  3. If an abstract idea is present in the claims, determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself. If there are no meaningful limitations in the claim, reject the claim as being directed to non-statutory subject matter.

The Examiner should then proceed to examine the claim for other patentability requirements, whether or not a rejection under § 101 has been raised.

I have illustrated the three-stage “Alice” approach in Figure 1.

Fig1

The EPO approach

The approach of the EPO to claims with potentially excluded subject matter is summarised below.

  1. Examine the claim to establish whether it relates to excluded subject matter as such. This is done by assessing whether the claim has a technical character.  If there is no technical character at all, the claim is rejected under Article 52 EPC for relating to excluded subject matter as such[3] .
  2. If the claim has technical character, it is examined for novelty and inventive step. In the case of inventive step, it is determined whether the invention involves an inventive step in a technical field.  If the claim lacks an inventive step in a technical field it is rejected under Article 56 EPC.

In the case of a claim with a mix of technical and non-technical features, the following steps are followed when assessing inventive step[4]:

  1. Identify the non-technical aspects of the claim,
  2. Select the closest prior art on the basis of the technical aspects,
  3. Identify the technical differences from the closest prior art,
  4. Determine whether or not the technical differences are obvious.

If there are no technical differences, or if the technical differences are obvious, the claim is rejected for lack of inventive step.

I have illustrated the overall approach in Figure 2.  In order to facilitate comparison, I have separated the approach into stages which correspond roughly with those of the USPTO approach.  I have also assumed that there are differences between the claimed invention and the prior art (otherwise there would be lack of novelty).

Fig2

Comparison of the two approaches

A comparison of the flow charts in Figures 1 and 2 shows a striking similarity between the first stages of each approach.  In each case, it is in effect determined whether the claim relates to no more than excluded, or ineligible, subject matter.  In both cases this acts as a filter to weed out claims which do not have any technical subject matter.

The second stages of each approach also bear comparison.  In the case of the EPO, it is determined whether or not the claim includes both technical and non-technical features.  In the case of the USPTO it is determined whether the claim is directed to a (non-technical) abstract idea.  However, since the claim must contain some technical subject matter (or it would have been weeded out at stage one), this is akin to determining whether there is a mix of technical and non-technical features. In both cases, the second stage flags up cases where there might still be a problem with excluded subject matter.

In the third stage of each approach we come to the nub of the matter.  It is here that borderline cases will stand or fall.  It is therefore worthwhile analysing this stage of each approach.

In the case of the EPO approach, the technical and non-technical features of the claim are first separated out.  The technical features which are not present in the prior art are then identified.  It is then determined whether or not those technical features are non-obvious.  In doing so, it is assumed that the non-technical features are already present in the prior art.  If the technical features which are not present in the prior art are obvious, the claim is rejected for lack of inventive step.

In the case of the USPTO approach, stage three involves determining whether there are any elements in the claim which amount to significantly more than the abstract idea itself.  This in effect requires two steps, as follows:

  1. Identify the elements which are not an abstract idea, and
  2. Determine whether those elements amount to significantly more than the abstract idea itself.

It is notable that step a is similar to the EPO approach of identifying the non-technical aspects of the claim.

With regard to step b, this begs the question: how much more is “significantly more”?  According to the Instructions there must be “meaningful limitations” in the claim, but how meaningful do they have to be?

We can assume that the elements which must be “significantly more” than the abstract idea are technical (since otherwise the claim would have been weeded out at stage one).  It is also the case that, in order to be “significantly more”, those technical elements must be meaningful.  If they must be meaningful, does this mean they must contain the inventive concept?

My guess is that, in practice, persuading the USPTO to allow claims of this type is probably going to involve arguing that the elements which are significantly more than the abstract idea are somehow tied in with the inventive concept.  Otherwise they would not be “meaningful”.  This then starts looking very much like arguing for non-obvious technical subject matter; in other words, an inventive step in a technical field.

There will of course be differences between the two approaches, not least due an imprecise alignment of the concepts of “abstract” and “non-technical”.  However it seems to me that both approaches are seeking to achieve something similar, namely, an assessment of whether the innovation itself lies in a non-excluded field.

Thus, to my mind, we are now in a situation where, in practice, the two approaches are considerably aligned, albeit “the other way round”.

Alice2Conclusion

As readers of the book will recall, when Alice actually goes through the looking glass, she finds it to be completely different from what she first saw.  I suspect that, as case law and practice develop, we will find that USPTO and EPO practice will differ.  However it is notable that, at least on the face of it, there are now considerable similarities.

= = = = =

[1] Alice Corporation Pty. Ltd. V CLS Bank International, et al

[2] http://www.uspto.gov/patents/announce/alice_pec_25jun2014.pdf

[3] Guidelines for Examination in the European Patent Office G-II, 2.

[4] Guidelines G-VII, 5.4

A Major Drop in Patent Infringement Litigation?

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New patent litigation (original complaint filing) is down 40% from this time last year. The chart below comes from LexMachina whose founder, Mark Lemley, offers the speculation that the drop is largely due to the Supreme Court’s recent patent law activity — especially the fall-out from Alice Corp.  Along with Alice, we have a set of additional legal issues that favor accused infringers, including indefiniteness (Nautilus) and fee shifting (Octane Fitness).  Further, we are also well into the reign of post-issuance reviews (IPR, CBM, and now PGR) and the vast majority of repeatedly-asserted patents are involved in a parallel administrative review.  All these factors come together to provide plenty of reason for patent holders to slow-down on complaint filings. Of course, the change and the purported cause cannot be said to be ‘significant’ in the statistical sense.

PatentCases

We previously discussed the jump in April 2014 as a likely artifact caused by a threatened retroactive fee-shifting legislation.

In thinking about this issue, I was surprised to see HP’s most recent lawsuit as a plaintiff where it asserted three seemingly weak patents. U.S. Patent Nos. 6,089,687, 6,264,301, and 6,454,381.  These patents serve as HP’s attempt to control the market for replacement ink cartridges for its printers and have titles such as “providing ink container extraction characteristics to a printing system”; “identifying parameters in a replaceable printing component”; and “specifying ink volume in an ink container.”  The defendant in this case is Chinese ink-knockoff manufacture Ninestar.

The claims of these patents are clearly susceptible to Alice Corp in that the seeming points of novelty are basically very simply data structures.

The following is claim 1 of the ‘687 patent:

1. An ink-jet printing system comprising:

a printer portion for depositing ink on media in response to control signals, the printer portion configured for receiving a supply of ink;

a replaceable ink container for providing a supply of ink to the printer portion, the replaceable ink container including an electrical storage device for providing parameters to the printer portion, the electrical storage device containing:

an ink container scale parameter for selecting an ink container volume range from a plurality of ink container volume ranges,

a fill proportion parameter for specifying a fill proportion for the selected ink volume range;

wherein the printer portion determines an ink volume associated with the ink container based on the fill proportion parameter and the selected ink volume range.

Here, my understanding is that the hardware components were all known prior to the application here and the invention is simply to store two parameters on the cartridge (ink container scale parameter (specifying container volume) and fill proportion parameter (specifying how full it is)). The use of these parameters was also well known prior to the invention, but (apparently) they had never been put on an ink cartridge before.  Until recently, we would think this claim has an obviousness problem.  Now, it looks like it has patent eligibility problems as well. See HP v. Ninestar, 14 cv 4473 (N.D. Cal., complaint filed October 6, 2014).

The New Role for Post Grant Review Proceedings (PGR)

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by Dennis Crouch

It has now been just over 18-months since we started filing patent applications under the new first-to-file patent system mandated by the America Invents Act (AIA) of 2011.  And, slowly but surely, FTF patents are now beginning to issue.  Those new patents also bring us into a new era of Post-Grant-Review-Proceedings (PGR).

My expectation is that PGR will quickly prove itself as an incredibly powerful tool for challenging patents. Importantly, PGR proceedings allow a third party to challenge the validity of a patent on any of the validity grounds that could be raised in court as a defense under 35 U.S.C. 282 – these include novelty, obviousness, written description, enablement, indefiniteness, utility, and subject matter eligibility. This list represents a major expansion of challenge-justifications over inter partes review (IPR) proceedings or reexaminations. These same doctrines have already been available for covered-business-method review (CBM) proceedings and have been used successfully if only on a narrow class of patents (those covering financial business methods).

Two recent PGR proceedings have been filed.  In one case, LaRose Indus. has challenged Patent No. 8,684,420 that covers the popular children’s “Rainbow Loom.”  Although the patent claims a 2010 priority date, the particular application was filed as a continuation in July 2013 and, at least according to the petitioner, added new mater to the claims at that point.  The second case PGR case involves Patent No. 8,598,291 that covers a liquid formulation of a particular nausea control drug used by chemotherapy patients. The petition argues that the claims fail the requirements of written description, enablement, and definiteness.

The most important limitation on the PGR process is the relatively short 9-month window for filing a PGR petition. Namely, the petition must be filed within 9-months of the patent issuance.  This puts some pressure on parties to monitor competitor patents and patent families.  It also provides patent owners at least some incentive to hold-off asserting their patent until after that window has closed (unless the patentee would welcome the review).  I suspect that the set-up in the LaRose Rainbow Loom market will be fairly common. The patentee (Choon) had previously sued LaRose on a previous patent and so LaRose has been closely monitoring the continuation applications.

= = = = =

In thinking about how soon the AIA cases will come on-board, I created the chart below. The chart provides some information on the timing of patent issuance — showing the percentage of patents issued with 18-months of filing and 36-months of filing respectively.  A big caveat for this particular chart is that it looks at the actual application filing date and does not consider the priority date that will typically control whether a patent will be examined under the AIA. Thus, even at the three-year date (March 2015), I would expect that significantly less than half of the recently issued patents would be FTF patents.

You’ll note the trend beginning in FY2011 of issuing more patents more quickly.  I largely attribute the change to two initiatives pushed by David Kappos during his term as PTO Director that resulted in (1) more funding to hire more examiners; and (2) a greater allowance rate.  Those factors have continued through the succeeding interim leadership terms of Terry Rea, Peggy Focarino, and now  Michelle Lee.

TimingOfPatentIssuance

Double Patenting when you have a Common Assignee but No Common Inventors

Patent,

This is a bit of an in-the-weeds question, even for Patently-O.

Because firms tend to operate within a certain market area and use a particular technological approach, it makes sense that a patentee may well create prior art that blocks future innovations. One solution offered by the law is the “common owner ship excption.”  In particular, the statutory definitions of prior art include the ‘common owner exception’ that excludes a right-owner’s prior-filed patent applications from the scope of prior art for later-filed applications so long as those prior applications were not published by the filing date of the later applications.

AIA Expansion of Exception: This is one area where the AIA reduced the scope of prior art. Namely, before the AIA the common owner exception excluded the prior applications only with regard to obviousness consideration (assuming different inventors). The AIA expands the exception to also exclude these prior-applications from anticipation consideration.  With this expansion, we might expect some increase in double patenting problems.

Double Patenting Common Assignee but No Common Inventors: My question relates to the statements in MPEP 804 that examiners should issue double-patenting rejections when two commonly-owned inventions claim the same subject matter even when there is no overlapping inventorship:

Claims in commonly owned applications of different inventive entities may be rejected on the ground of double patenting. This is in accordance with existing case law and prevents an organization from obtaining two or more patents with different expiration dates covering nearly identical subject matter. See In re Zickendraht, 319 F.2d 225, 138 USPQ 22 (CCPA 1963) (the doctrine is well established that claims in different applications need be more than merely different in form or content and that patentable distinction must exist to entitle applicants to a second patent) and In re Christensen, 330 F.2d 652 (CCPA 1964). . . .

[A rejection is proper even when] the reference … and the pending application are … by a different inventive entity and are commonly assigned even though there is no common inventor.

 

The problem with the MPEP here is that the cases cited are not on-point – i.e., they do not say anything about whether a double patenting rejection may persist when there are no inventors in common.  We know that statutory-double patenting is said to stem from 35 U.S.C. 101 and, likewise, we learned in AbbVie v. Kennedy Institute that obviousness-type-double-patenting also finds its roots in Section 101.  The problem with that approach is that Section 101 remains old-school and still focuses on “inventors” rather than applicants or owners.

My Question: What is the legal source of the MPEP’s declaration that a double patenting rejection is proper based upon common-ownership even when the two documents have no common inventor?  I suspect that there is a case on this, but I don’t know.