Tag Archives: Claim Construction

Federal Circuit to PTAB: New Factual Findings Required Following Amended Claim Construction

Patent, , ,

By Dennis Crouch

Tempo Lighting, Inc., v. Tivoli LLC (Fed. Cir. 2013)

The rules of patent trial proceedings continue to develop. One issue that is continually shocking for parties are the short and hard deadlines in the various post-issuance review proceedings and the strong pushback against parties who look to shift their position during the proceedings. Folks are learning that the first-punch in the post grant review proceedings should be at full power and fully thought through. Here, the Federal Circuit pulls the PTAB back somewhat from that approach and finds that the Board improperly found that Tempo had waived certain arguments during the proceedings.

The case itself stems from an inter partes reexamination but is relevant to the new post-issuance review proceedings. The case may also be relevant and important for patent applicants involved in ex parte appeals because of what appears to be an increase Board decisions that implicitly turn on new grounds of rejection offered by the Board.

Tivoli first sued Tempo for patent infringement in 2004 and Tempo responded with the inter partes reexamination request. The district court was then stayed (and has been stayed up to now). Tivoli’s patent at issue here covers a reflective strip that is configured to mount on the “nose” of a stair-step. U.S. Patent No. 6,554,446. Both parties compete in the industry selling lighting products.

As the reexamination plodded along, the Examiner received input from each party and closed prosecution in 2009. The Board then heard the appeal in 2010 and finally issued a decision in 2012. In that final decision, the Board rejected the Examiner’s construction of the claim term “inert to light” but then relied upon the Examiner’s determination that the primary prior art reference lacks the “inert to light” limitation. In the rehearing, Tempo argued that, under the new construction, that the primary references now teach the inert to light limitation. However, the Board procedurally rejected that argument – finding that it was an attempt to argue for an alternative ground for unpatentability being brought in the rehearing.

On appeal, the Federal Circuit found it improper for the Board to directly rely upon the examiner’s factual finding regarding whether the prior art taught the inert to light limitation after it had modified the claim construction. “On remand, the PTO will have the opportunity to make new factual findings under the proper construction.”

A major difference here from traditional ex parte examination is that the reexamination examiner here expressly determined the claim construction. In the ordinary patent application situation, examiners do not spell-out their construction. At times, it may be advantageous to push for an explicit claim construction in the process of setting-up appeal.

Supreme Court Reverses Federal Circuit: Holds that Patentees Always have Burden of Proving Infringement

Patent, Supreme Court, , , ,

By Dennis Crouch

Medtronic v. Mirowski, ___ U.S. ___ (2014) [CaseText]

In a unanimous opinion, the US Supreme Court has reversed the Federal Circuit – holding that the patentee has the burden of proving infringement even in declaratory judgment actions by a licensee in good standing. I had previously noted that the Federal Circuit decision here was “odd” and likely to be rejected by the Supreme Court. The case should generally be seen as further emboldening licensees to challenge their licensed patents.

Medtronic has licensed a number of implantable heart stimulator patents from Mirowski. While still paying royalties (into an escrow account) and remaining in good-standing as a licensee, Medtronic filed a declaratory judgment action asserting that its products were not covered by the patent and that it therefore owed no contract damages. Prior to 2007, the Federal Circuit had ruled that a licensee in good standing had no declaratory judgment standing. However, in MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118 (2007), the Supreme Court held that Article III’s case-or-controversy requirement can be satisfied by the fact that a licensee faced the threat of suit if it ceased making payments).

The district court sided with Medtronic – finding that Mirowski failed to prove infringement. However on appeal, the Federal Circuit vacated – holding instead the ordinary burden of proving infringement shifted in declaratory judgment cases a licensee in good standing. On writ of certiorari the Supreme Court has decided that the district court’s analysis is the better course of action and now holds that:

[W]hen a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee.

The Supreme Court based its decision on three notions: (1) the Patentee ordinarily bears the burden of proving infringement; (2) the Declaratory Judgment Act is only procedural; and (3) the burden of proof is a substantive aspect of the claim. Following this triple premise, the court concluded that the filing of a declaratory judgment action could not shift the burden of proof.

= = = =

The decision is fairly short, but has a few interesting aspects.

First, the court provided a policy-based analysis that calls-to-mind the problems faced by many accused infringers who receive a demand letter or broadly written complaint alleging infringement:

[The Federal Circuit rule can] create unnecessary complexity by making it difficult for the licensee to understand upon just what theory the patentee’s infringement claim rests. A complex patent can contain many pages of claims and limitations. A patent holder is in a better position than an alleged infringer to know, and to be able to point out, just where, how, and why a product (or process) infringes a claim of that patent. Until he does so, however, the alleged infringer may have to work in the dark, seeking, in his declaratory judgment complaint, to negate every conceivable infringement theory.

It is this same sentiment that has been driving a movement to increase the pleading standards in patent cases.

Second, the court re-iterated its historic position that patent rights should be open to challenge as a mechanism for maintaining a well-balanced patent system.

The public interest, of course, favors the maintenance of a well-functioning patent system. But the “public” also has a “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806 (1945). A patentee “should not be . . . allowed to exact royalties for the use of an idea . . . that is beyond the scope of the patent monopoly granted.” Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U. S. 313 (1971). And “[l]icensees may often be the only individuals with enough economic incentive” to litigate questions of a patent’s scope. Lear, Inc. v. Adkins, 395 U. S. 653, 670 (1969). The general public interest considerations are, at most, in balance. They do not favor a change in the ordinary rule imposing the burden of proving infringement upon the patentee.

Read the decision here: https://casetext.com/case/medtronic-v-mirowski

= = = =

Can License Terms Privately Change The Baseline Rules Set Here?: An ongoing and open question is whether the rules regarding licensee standing and burdens are hard-and-fast or instead whether they should are to be treated as default rules that can be altered by contracting parties. As an example, a licensee could agree (as part of a license agreement) not to file a declaratory judgment action challenging patent rights while in good standing or could agree that in a DJ action the licensee had the burden of proving non-infringement. The open question is whether these private contractual provisions would be deemed unenforceable on public policy grounds. Although open, the implicit suggestion from the decision is that those provisions would be unenforceable. I draw that conclusion from the court’s positive citation of Lear, Precision, and Blonder-Tongue.

= = = =

Standing: The Supreme Court began the opinion with a discussion of jurisdiction that seems to step-back somewhat from its recent decision in Minton v. Gunn. The particular question raised was whether the case was a patent lawsuit or instead merely a contract dispute. If the former, then the case is heard in Federal Court and by the Federal Circuit. If the latter, then the case would be in state court unless there the parties exhibit diversity jurisdiction and, a diversity case would have been appealed through a regional circuit court of appeals rather than to the Federal Circuit.

Subject matter jurisdiction over a declaratory judgment action is ordinarily based upon whether the complementary coercive action brought by the DJ defendant would necessarily present a federal question. Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U. S. 1 (1983).

Here, the Supreme Court determined that the potential coercive action was patent infringement. The court based its conclusions upon its reading of the license that gave power to Mirowski to terminate the contract and sue for patent infringement if Medtronic stopped paying royalties. According to the Supreme Court, it is of no matter that Mirowski could instead sue for contract damages – a result that would have been much more likely. In its Amicus Brief, Tessera wrote:

Because there was simply no chance that the licensee suddenly would abandon the contractual dispute resolution procedure after nearly twenty years when it could resolve the very same patent issues within the contractual framework, and when both licensed patents were, in any event, set to expire within a year, a coercive patent infringement action by the licensor cannot reasonably be said to have been anticipated or threatened at the time of the initial filing.

The Supreme Court here rejected Tessera’s argument:

The relevant question concerns the nature of the threatened action in the absence of the declaratory judgment suit. Medtronic believes—and seeks to establish in this declaratory judgment suit—that it does not owe royalties because its products are noninfringing. If Medtronic were to act on that belief (by not paying royalties and not bringing a declaratory judgment action), Mirowski could terminate the license and bring an ordinary federal patent law action for infringement. Consequently this declaratory judgment action, which avoids that threatened action, also “arises under” federal patent law.

With this ruling, the Supreme Court has thrown another wrench in federal patent jurisdiction doctrine.

What does it mean for a device to be “configured to” perform a particular function?

Patent,

By Dennis Crouch Chief Judge Rader recently argued that no patentable weight should be given to claim terms focusing on how a device is “configured to” perform a particular task. See Superior Industries v. Masaba (Fed. Cir. 2014) (concurring opinion). The Chief writes:

A system claim generally covers what the system is, not what the system does. Hewlett–Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464 (Fed.Cir.1990). Thus, it is usually improper to construe non-functional claim terms in system claims in a way that makes infringement or validity turn on their function. Paragon Solutions, LLC v. Timex Corp., 566 F.3d 1075 (Fed. Cir. 2009).

In Superior Industries, the patentee had claimed a dump truck with a “support frame . . . configured to support an end of an earthen ramp.” On remand, the district court will need to determine again whether that language should be interpreted as a positive claim limitation.

One problem with Judge Rader’s opinion is that other judges do not uniformly agree with his perspective. The diversity of court opinion compounds an already difficult process of understanding what potential structures are covered by function-focused claim terms. A third compounding difficulty is the rapid rise in the use of functional claim terms.

The Patent Act expressly provides for the use of functional claim language — written in means-plus-function format. 35 U.S.C. §112(f). The statutory requirements of §112(f) began being more strictly enforced in the mid-1990s and, as a consequence, means-plus-function limitations have fallen from favor. Meanwhile, patentees have caught-on to using “configured to” language as a rough equivalent of a means-plus-function claim term but carefully drafted in order to avoid actually falling under the ambit of that provision. The benefit then for patentees is that the functional language is broad and not limited to particular structural embodiments.

The chart below shows the percentage of issued patents that include at least one “configured to” claim limitation within an independent claim. This dramatic transformation of claiming strategy raises the importance of cases such as Nautilus v. Biosig Instruments (pending Supreme Court case on the proper standard for indefiniteness) and Lighting Ballast (pending en banc decision on claim construction deference with a focus on functional claim terms should be interpreted as falling within 112(f)).

In Ex Parte Miyazaki, 89 USPQ2d 1207 (B.P.A.I. 2008), the Board of Patent Appeals revived the old precedent of Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946) in holding that purely functional claim language is not allowable unless done within the scope of 112(f).

This general prohibition against the use of “purely functional claim language” (and the more specific Halliburton rule) has not been completely eliminated. Rather, “purely functional claim language” is now permissible but only under the conditions of 35 U.S.C. § 112, sixth paragraph, i.e., if its scope is limited to the corresponding structure, material, or act disclosed in the specification and equivalents thereof.

In Miyazaki, the problematic claim language was “a sheet feeding area operable to feed at least one roll of paper, at least one sheet of paper and at least one stiff carton toward a printing unit.” In Halliburton, the problematic claim language was “a tuned acoustical means which performs the functions of a sound filter.” In each case, the claims were found indefinite.

Federal Circuit: Claim Construction Should be Avoided Unless Associated with a Recognized Meaningful Case Outcome

Patent,

by Dennis Crouch

Superior Industries v. Masaba (Fed. Cir. 2014)

Superior Indus. is an interesting short non-precedential opinion from the Federal Circuit. Judge Clevenger wrote the opinion whose holding is simply a remand for clarification. However, the case raises important constitutional questions of justiciability and advisory opinions.

At the lower court, the parties argued over construction of the terms "channel beam," "C-shaped channel beam," and "elongate opening." After district court Judge Donovan Frank construed those terms, the patentee (Superior) admitted that it could not prove infringement. Judge Frank then awarded summary judgment of non-infringement without substantive opinion other than noting Superior's admission of liability.

On appeal, Superior challenged the claim construction of those disputed terms, but the Federal Circuit has refused to hear the case because it the record was unclear as to whether a modified claim construction would change the outcome.

It is impossible for us to determine from this opinion which of the thirteen contested claim constructions would "actually affect" the infringement analysis. This poses a risk that our review of at least some of the constructions would amount to an advisory opinion.

The implicit logic here begins with the reality that the dispute is over infringement and validity and the only reason to construe claim terms is when the asked-for construction impacts those dispute end-points. Claim construction decisions that do not impact the final outcome are then advisory opinions barred by both judicial practice and the US Constitution. Often courts must be their own counsel on justiciability questions such as these because they are not waivable even when agreed-to by both parties.

Wither Early Claim Construction?: If we take this logic back to the district court level, the opinion offers important prerequisite to a district court's claim construction – namely that no claim terms should be construed unless & until the district court determines that the construction is meaningful to the outcome of the case at hand. This plays-out with the pending patent reform bills as well that call for early claim construction. To the extent that those bills would force courts to make advisory opinions, they are unconstitutional. See Hayburn's Case, 2 U.S. 408 (1792) "neither the legislative nor the executive branches can constitutionally assign to the judicial branch any duties but such as are properly judicial, to be performed in a judicial manner."

= = = = =

Judge Rader wrote a short concurring opinion tied to Superior's claim in question. Here, Superior's patent claims a dump truck that has a support frame that is "configured to support an end of an earthen ramp." The term is relevant because at least some of Masaba's accused products are not really designed to work on earthen ramps.

Judge Rader writes:

I agree with, and join in, the majority opinion. However, in reviewing the claim constructions articulated by the district court, I observe that it read a great deal into the claims in the process of construing them. Thus, I write separately to articulate a couple claim construction principles that may assist the district court on remand when it revisits its constructions. First, in claim construction, one must not import limitations from the specification that are not part of the claim. Deere & Co. v. Bush Hog, LLC, 703 F.3d 1349, 1354 (Fed.Cir.2012). Indeed, claims generally are not limited to any particular embodiment disclosed in the specification, even where only a single embodiment is disclosed. Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1117 (Fed.Cir.2004). Second, and relevant to this case, a system claim generally covers what the system is, not what the system does. Hewlett–Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1468 (Fed.Cir.1990); see also Roberts v. Ryer, 91 U.S. 150, 157 (1875) ("The inventor of a machine is entitled to the benefit of all the uses to which it can be put, no matter whether he had conceived the idea of the use or not."). Thus, it is usually improper to construe non-functional claim terms in system claims in a way that makes infringement or validity turn on their function. Paragon Solutions, LLC v. Timex Corp., 566 F.3d 1075, 1091 (Fed .Cir.2009).

This framework is an important addition to the ongoing debate over functional claim language.

= = = = =

Nazomi v. Nokia

Patent, ,

By Jason Rantanen

Nazomi Communications, Inc. v. Nokia Corp. (Fed. Cir. 2014) Download 13-1165.Opinion.1-8-2014.1
Panel: Lourie (concurring), Dyk (author), Wallach

Nazomi is a small software and semiconductor development company that sued a set of large technology companies for patent infringement in a series of lawsuits.  This appeal involved the district court's initial claim construction order in one of these suits and its grant of summary judgment of noninfringement in favor of Western Digital and Sling Media. 

Two of Nazomi's patents were at issue in this appeal: Nos. 7,225,436 and 7,080,362.  During the district court proceeding, the defendants moved for a "preliminary" construction of the asserted claims, arguing that all the claims "require that the processor of the claimed apparatus, when operated, will perform the recited functions related to the processing of stack-based instructions without modification."  The court analyzed the issue in the context of representative claim 48 of the '362 patent

48. A central processing unit (CPU) capable of executing a plurality of instruction sets comprising:

an execution unit and associated register file, the execution unit to execute instructions of a plurality of instruction sets, including a stack based and a register-based instruction set;

a mechanism to maintain at least some data for the plurality of instruction sets in the register file, including maintaining an operand stack for the stack-based instructions in the register file and an indication of a depth of the operand stack;

a stack control mechanism that includes at least one of an overflow and underflow mechanism, wherein at least some of the operands are moved between the register file and memory; and

a mechanism to generate an exception in respect of selected stack-based instructions.

Nazomi contended that the claim required only hardware that was capable of performing the claimed functionalities (here, indicated by italics). The district court concluded, however, that the asserted claims required a combination of hardware and software capable of performing the functional limitations.

To understand why this distinction matters, some background in the defendants' products is useful.  Western Digital and Sling Media use a processor designed by another company, ARM.  In 2000, ARM developed a design involving a hardware component called "Jazelle."  However, recognizing that not every product would use every circuitry feature in its processors, ARM also designed its processors so that unused functionality would remain dormant unless activated (and thus not unnecessarily drain resources).  In order to activate the Jazelle circuitry, it is necessary to first install a software package called "JTEK."  In both the accused Western Digital and Sling Media products, Jazelle is dormant and there was no evidence that any end user had installed JTEK.  Nazomi's argument, however, was that Jazelle's presence in the accused products was sufficient sufficient for a finding of infringement (i.e.: hardware "capable").

On appeal, the Federal Circuit agreed with the district court's construction as requiring both hardware and software.  It reasoned that because hardware cannot meet the functional limitations in the absence of enabling software, "the claims are properly construed as claiming an apparatus comprising a combination of hardware and software capable of practicing the claim limitations."  (my emphasis).  In reaching this conclusion, it distinguished cases involving "programmable" language, such as Intel Corporation v. U.S. International Trade Commission, 946 F.2d 821, 832 (Fed. Cir. 1991).  Here, the claims did not merely cover hardware that could be programmed to perform the claimed functionality; they required that the processor be capable of executing the stated instruction sets.  Since hardware alone cannot do that in the absence of enabling software, the only possibility was that the claims required both hardware and software.  

The panel also affirmed the district court's grant of summary judgment of noninfringement (Judge Lourie agreed with outcome, but did not join as to the bulk of the court's reasoning), drawing on precedent that "“an apparatus claim directed to a computer that is claimed in functional terms is nonetheless infringed so long as the product is designed in such a way as to enable the user of that [product] to utilize the function without having to modify the product.”  Silicon Graphics, Inc. v. ATI Technologies, Inc., 607 F.3d 784, 794 (Fed. Cir. 2010).  The critical issue was thus whether the installation of the JTEK software would constitute a "modification" of the accused product. 

The Federal Circuit concluded that installation of the software would constitute a modification because in the asserted claims the software is part of the claimed structure.  In other words, this is not a case where the software component already resided on the hardware and could be unlocked by using a key, or where the claims recited programable software that also resided on the hardware.  Rather, the software was a necessary structural component of the claimed invention and its addition would constitute the addition of functionality that is not currently present.

Federal Circuit Claims Jurisdiction over Regulatory Decision but Denies Nationwide Injunction for State Law Infraction

Patent, , ,

By Dennis Crouch

For many innovative new products, regulatory approval is a much greater hurdle than patent protection. And, unlike patent rights, regulatory approval is often a necessity. The present case is interesting in that the mascara product straddles the border between a lightly regulated beauty aide and a medical drug treatment.

Allergan, Duke University, and Dr. Murray Johnstone v. Athena Cosmetics (Fed. Cir. 2013) (CaseText)

Duke & Dr. Johnstone each hold several patents that are apparently embodied by Allergan's eyelash growth medicine Latisse and exclusively licensed by Allergan. In 2009, these partners collectively sued Athena Cosmetics for selling RevitaLash mascara in a way that infringes the patents. In addition, Allergan alleged violation of state (California) unfair competition law by selling drugs (i.e., medicated mascara) without regulatory approval.

Following some amount of pretrial litigation (including a claim construction and summary judgment of non-infringement), the district court dismissed all of the patent claims without prejudice (stipulated dismissal). A dismissal without prejudice means that the patentee to can re-file those claims at a later date. The district court then found summary judgment for the plaintiffs — holding that Athena violated California's unfair competition law (UCL) by marketing, distributing and selling the mascara without regulatory approval. The district court then ordered a nationwide injunction against the sales.

Federal Circuit Jurisdiction. On appeal, the Federal Circuit first focused on the question of appellate jurisdiction. Under the law, the Federal Circuit has appellate jurisdiction over "any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents."

Although the original complaint clearly raised substantial issues of patent law, Allergan argued that the stipulated dismissal without prejudice removed the arising under jurisdiction. See Gronholz v. Sears, Roebuck & Co., 836 F.2d 515 (Fed. Cir. 1987) (dismissal of patent claims without prejudice operated as an amendment of the complaint and thus eliminated arising under jurisdiction); Rothe Dev. Corp. v. Dep't of Def., 545 F.3d 1023 (Fed. Cir. 2008) ("the basis of a district court's jurisdiction—and thus the path of appeal—may change over time in a case, for example, if certain claims are dismissed without prejudice").

On appeal, the Federal Circuit determined that the non-prejudicial dismissal did not eliminate the court's arising-under appellate jurisdiction. The court agreed that a non-prejudicial dismissal can eliminate its appellate jurisdiction, but distinguished this case because the prior patent rulings in the case indelibly altered the parties legal rights. In particular, the district court's prior claim construction ruling and summary judgment of non-infringement.

In the decision, the Federal Circuit did not discuss either the importance of amendments to the jurisdictional law found in the AIA or the recent Minton v. Gunn decision. By ignoring Minton, the Federal Circuit skipped over the more holistic interests-based approach to arising-under jurisdiction required there in favor of a more bright-line analysis that has been previously rejected by the Supreme Court.

= = = = =

No Nationwide Injunction for Violating California Law: The Federal Circuit agreed that the district court correctly found Athena liable for violating California law, but the Appellate Panel rejected that court's nationwide injunction order as an abuse-of-discretion. The Federal Circuit wrote:

The injunction impermissibly imposes the UCL on entirely extraterritorial conduct regardless of whether the conduct in other states causes harm to California. This injunction is so broad that it would bar Athena from making its product in Idaho, distributing it from a facility in Nevada, and selling it to Connecticut consumers.

Interestingly, because the cause of action here was based on California law, the Federal Circuit looked to see whether California courts would have imposed a nationwide injunction and found that the "[t]he conduct enjoined here is exactly the sort of purely extraterritorial conduct that the California Court of Appeals expressly held could not be regulated by the UCL."

In addition, the Federal Circuit held that such extraterritorial application of California would be a violation of the U.S. Constitution's dormant Commerce Clause.

In short, California may, as it has in this case, conclude that its own unfair competition law has been violated, and it may prohibit any future conduct within its borders that would cause continued violation of its law. California is not permitted, however, to extend its unfair competition law to other states.

The upshot then is that RevitaLash is back on the market, but not in California (as shown in the image above).

= = = = =

Professor Shubha Ghosh has written a number of important and interesting academic works. One is his recent book titled Identity, Invention, and the Culture of Personalized Medicine Patenting (2012 Cambridge Press). That book relates here because Ghosh identifies the '105 patent as a "race specific patent." The patent made Ghosh's book because identifies the race and gender of study subjects: e.g., "[study included] 38 Caucasian, 3 African-American, 1 Asian, 1 Hispanic; 13 male, 30 female." Ghosh argues that race-specific categories should not be allowed to be particularly claimed (they were not in this particular patent).

Reading Patent Law

Patent, , ,

By Jason Rantanen

First, thank you for all the terrific comments I received in response to the Top 10 Patent Cases post.  There were some great ideas there and after substantial reflection I decided that my final list this year will be:

Bowman v. Monsanto, 133 S.Ct. 1761 (2012)
O’Reilly v. Morse, 56 U.S. 62 (1853)
Diamond v. Chakrabarty, 447 U.S. 303 (1980)
Egbert v. Lippmann, 104 U.S. 333 (1881); City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (1878)
Graham v. John Deere, 383 U.S. 1 (1966); KSR v. Teleflex, 550 U.S. 398 (2007)
The Incandescent Lamp Patent case, 159 U.S. 465 (1895)
Phillips v. AWH, 415 F.3d 1303 (Fed. Cir. 2005) (en banc)
Graver Tank v. Linde Air Products, 339 U.S. 605 (1950)
Gorham v. White, 81 U.S 511 (1871)
Bonito Boats v. Thunder Craft Boats, 489 U.S. 141 (1989)

While it's hard to do justice to patent law with just 10 or 12 cases, because this is an Introduction to Intellectual Property class the amount of classroom discussion that can be devoted to individual cases is limited.  Additional cases are discussed in the mini-treatise the students read and I'll cover them in the lecture component as well.  Fortunately, I also teach Patent Law which allows a much more substantive exploration of specific issues in patent law.  Also, the above list is a combination of importance and teaching value: some cases are on there more because they're both reasonably significant and useful teaching tools.

Second, for those of you who are interested in textualism and claim construction, Landslide recently published my review of Justice Antonin Scalia and Professor Bryan A. Garner's Reading Law: The Interpretation of Legal Texts from a patent law perspective.  A copy of the review is available on Landslide's website and I've archived a copy on ssrn. 

I'll also note that Professor Tun-Jeng Chiang wrote to me yesterday to share that his recently published article The Interpretation-Construction Distinction in Patent Law, 123 Yale Law Journal 530 (with Lawrence B. Solum) relates to many of the issues that I discuss in the review, taking on in particular the "argument that the high reversal rate belies the certainty of textualism or suggests that claim interpretation typically involves hard cases from a linguistic standpoint."  While I ultimately don't agree with many of Professor Chiang's arguments, his work is always insightful and worth reading.  His article is available here.

CBT Flint v. Return Path: Applying 28 U.S.C. 1920(4) to E-Discovery Costs

Patent,

By Jason Rantanen

CBT Flint Partners, LLC v. Return Path, Inc. (Fed. Cir. 2013)
Panel: Dyk, O'Malley (concurring-in-part and dissenting-in-part), Taranto (author)

This is an important pair of opinions that anyone interested in the fee-shifting proposals currently pending before Congress should read.  Two aspects are worth noting.  First, the court rejects the argument that Congress's 2008 amendment to section 1920(4) implemented a dramatic change in terms of e-discovery costs.  Second, it implements a granular framework for analyzing e-discovery cost requests that requires complex and careful line-drawing. In addition, both the majority and dissent address the policy concerns implicated in this area.

CBT sued Cisco Ironport Systems and Return Path (who I'll refer to collectively as Cisco, since most of the costs incurred here were sought by Cicso) for patent infringement.  Following claim construction, CBT stipulated to noninfringement and Cisco obtained summary judgment of indefiniteness on one asserted claim.  Cisco moved to recover its costs under 28 U.S.C. § 1920, including $243,453.02 in fees it paid to a company that handled electronic discovery.  The district court granted Cisco's request.  On appeal, the Federal Circuit reversed summary judgment of indefiniteness, construed the claim in question, and remanded for further proceedings.  The district court subsequently granted summary judgment of noninfringement to Cisco, which the Federal Circuit summarily affirmed.

After granting Cisco's motion for summary judgment of noninfringement, the district court again awarded Cisco the fees it paid to an e-discovery vendor. 

The district court's reasoning: The district court's award of costs was implicitly based on 28 U.S.C. § 1920(4), which states:

A judge or clerk of any court of the United States may tax as costs the following:
…
(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

The Federal Circuit described the district court's reasoning as follows:

Based on a “careful review” of the vendor’s invoices to Cisco, the court characterized the services rendered as “highly technical” and “not the type of services that attorneys or paralegals are trained for or are capable of providing.”  The court concluded that the fees Cisco sought to recover were “the 21st Century equivalent of making copies” (although Cisco had not categorized them as such) and held them to be recoverable….In awarding Cisco the requested amounts, the court said that the “enormous burden and expense of electronic discovery are well known” and that “[t]axation of these costs will encourage litigants to exercise restraint in burdening the opposing party with the huge cost of unlimited demands for electronic discovery.” 

Slip Op. at 3 (internal citations omitted).  On appeal, the Federal Circuit reversed in part, vacated in part, and remanded the matter to the district court for further proceedings.

The Narrow Scope of Section 1920: In 2008, Congress amended section 1920(4) to remove a specific reference to "papers."  While the Eleventh Circuit (whose law applied in this case) has not addressed section 1920(4) as amended, its prior caselaw had interpreted section 1920 as being limited to the "reasonable costs of actually duplicating documents, not [] the costs of gathering those documents as a prelude to duplication."  The Federal Circuit concluded that the amendment did not change that interpretation: 

[W]e conclude that recoverable costs under section 1920(4) are those costs necessary to duplicate an electronic document in as faithful and complete a manner as required by rule, by court order, by agreement of the parties, or otherwise. To the extent that a party is obligated to produce (or obligated to accept) electronic documents in a particular format or with particular characteristics intact (such asmetadata, color, motion, or manipulability), the costs to make duplicates in such a format or with such characteristics preserved are recoverable as “the costs of making copies . . . necessarily obtained for use in the case.” 28 U.S.C. § 1920(4). But only the costs of creating the produced duplicates are included, not a number of preparatory or ancillary costs commonly incurred leading up to, in conjunction with, or after duplication.

Slip Op. at 10.

Three stages of e-discovery: To analyze whether the costs fell into the category of producing duplicates versus preparatory or ancillary activites, the court divided the e-discovery process into three stages: imaging and extraction (where source media is copied as a whole and individual documents are extracted), database creation and document identification (where extracted documents are organized into a database and searched), and production copying (where the documents selected for production are copied onto memory media). 

Comment: The opinion specifically refers to this as "the document production process used in this case."  However, these stages are common enough that the court's framework can be applied to most cases involving e-discovery.

However, while they provide a framework, these categories do not answer the question of whether costs may be awarded for the respective activies.  Rather, the court's opinion envisions a careful line-drawing process, in which the specific activities and their context plays a substantial role in determining whether individual costs may be awarded.  For example, in some circumstances, costs for extraction can be recoverable under section 1920 "where they are, in fact, necessary to make copies of information required to be produced and not incurred just to make copies for the convenience of the producing party."  Slip Op. at 13.  However, "if metadata can be preserved without first using imaging and extraction techniques, then those steps are outside section 1920(4)."  Id. at 13-14.  The opinion contains numerous examples of hypotheticals and considerations to take into account, while noting that it is "an inquiry that the district court should perform in the first instance."  Id. at 15. 

Comment: One thing to keep in mind with this opinion: the flexibility that the majority perceived in Eleventh Circuit law here is not uniform across the circuits.  The court's opinion specifically recognizes that its approach to stage one costs is at odds with the Third and Fourth Circuits.  This variation should be kept in mind when applying this opinion. 

Judge O'Malley's Separate Opinion: Writing separately, Judge O'Malley agreed with most of the majority's discussion but disagreed with respect to one category: the pre-duplication expenses that the majority described as "stage one costs."  In her view, the majority's approach, which allows some of these costs to be awarded, improperly broadens the scope of section 1920(4), is inconsistent with the Eleventh Circuit's prior approach to section 1920(4), and creates an unnecessary circuit split. 

References to the Sedona Conference: The opinion references the The Sedona Conference Glossary: E-Discovery & Digital Information Management (Sherry B. Harris et al. eds., 3rd ed. 2010) numerous times.  As I've written before, this is a worthwhile program to consider becoming involved in. 

In addition, the Sedona Conference has put together an all-star program on patent litigation reform called "Patent Litigation Best Practices: A Matter for Congress or for Bench and Bar?" that will be held on January 22, 2014.  The scheduled panelists include Judge O'Malley.

Supreme Court: The Right to a Jury Trial on Obviousness

Obviousness, Patent, , , , ,

By Dennis Crouch

Soverain v. Newegg (on petition for writ of certiorari)

After a trial on the merits, Judge Davis (E.D.Tex.) found that the accused infringer (Newegg) had presented insufficient evidence of obviousness and refused to let that issue go to the jury. Instead, the judge awarded a directed verdict for the patentee (Soverain) that the asserted claims were not invalid as obvious. The jury went on to find Newegg liable for infringement and awarded $2.5 million in damages and also found the patent not anticipated. Following trial, the district court denied Newegg's motion for new trial on obviousness grounds. On appeal, the Federal Circuit took the almost unprecedented stance of reversing the non-obviousness decision. One reason for the rarity of a full-reversal (rather than vacatur) is largely explained by the substantial factual foundation that serves as the basis of an obviousness decision. In its opinion, the Federal Circuit couched its discussion in terms of questions of law – following the Supreme Court's lead from KSR International Co., v. Teleflex, Inc., 550 U.S. 398 (2007). In that case, the Supreme Court was able to make the legal conclusion that the asserted claims were obvious because the factual underpinnings of obviousness were seemingly not in material dispute.

In its petition for writ of certiorari, Soverain focuses on the Seventh Amendment right to a jury trial and argues that the Federal Circuit's approach effectively and improperly redefines obviousness as a pure question of law.

Question Presented:

Whether the Federal Circuit's effective redefinition of obviousness as a pure question of law, allowing it to resolve disputed factual questions in the first instance on appeal, violates the Seventh Amendment and this Court's precedent.

Here, Sovarain points to a number of factual issues that the Federal Circuit identified as questions of law, including assessing credibility of the witnesses, resolving conflict between witness testimony resolving the teaching of prior art references.

The Seventh Amendment provides that:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved…

The Seventh Amendment "preserve[s]" the "common law" right to jury trial and, as a consequence, presents an oddball test that roughly asks whether the cause of action at issue was (or is analogous to) a common law cause of action that was tried before an English jury back in in 1791 and then whether the particular trial decision in question is one that was (or would have been) decided by a jury. See Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

The Supreme Court has indicated that patent infringement lawsuits where the patentee is seeking damages are cases at law protected by the Seventh Amendment right to a jury trial. However, as far as I know, the Supreme Court has never held that the right to a jury particularly to an obviousness challenge or to the underlying factual conclusions that serve as the basis for an obviousness decision. 1800's cases do suggest that the factual underpinnings to the "invention" requirement are subject to a jury determination. See, for example, Battin v. Taggert, 58 U.S. (17 How.) 74 (1854); and Turrill v. Michigan S. & N. Ind. R.R. Co., 68 U.S. (1 Wall.) 491 (1864) ("[T]here was an important question of fact which should have been left to the jury, whether … any of the prior movable pressblocks … were substantially the same as the machine of the patentee."). However, the 1952 Patent Act expressly eliminated the doctrine of invention in favor of the new doctrine of obviousness. In its last foray into this area, the Supreme Court recognized in Markman that claim construction included both questions of fact and questions of law, but ultimately determined that no fundamental right to a jury trial existed for that doctrine.

An interesting inside issue here is that Judge Newman has been a strong proponent of the right to a jury trial on obviousness. See Newell Cos. v. Kenney Manufacturing Co., 864 F.2d 757 (Fed.Cir. 1988) (J. Newman dissenting from holding that ultimate question of obviousness may be decided by judge over party's objection). However, it was Newman who found Soverain's patent obvious in the present case. In the 1988 Newell case, the majority held that the patentee has no right to a jury trial on obviousness unless the factual underpinnings are in dispute.

The defendant was, of course, entitled to have a jury summoned in this case, but that right was subject to the condition, fundamental in the conduct of civil actions, that the court may withdraw a case from the jury and direct a verdict, according to the law if the evidence is uncontradicted and raises only a question of law.

Of course, Judge Nies did not walk through the weeds of history (as required by the Supreme Court) to arrive at this answer but instead only looked to the "fundamental notion" that there is no right to a jury decision regarding a question of law. See also, In re Lockwood, 50 F.3d 966 (Fed. Cir. 1995) (Nies, C.J. writing in dissent) (arguing that a patent is a public right created by Congress and "[a] constitutional jury right to determine validity of a patent does not attach to this public grant") (mandamus vacated without opinion by the Supreme Court).

Focusing back, the Soverain petition does not ask the Supreme Court to overrule Newell, but rather to merely limit courts ability to unilaterally expand take would-be factual question and then make those factual conclusions under the guise of legal determinations. Soverain writes:

The Federal Circuit's decision to take for itself questions this Court has reserved for the trier of fact has significant consequences that threaten the stability and predictability of the patent system. This decision shifts the boundary between the ultimate legal question of obviousness and the underlying factual questions. It thus paves the way for district courts and other panels to decide factual questions and undermines the role that the jury and procedural safeguards play in ensuring that hindsight bias does not skew the analysis of obviousness. By downplaying the factual component of obviousness, the Federal Circuit's decision also erodes the clear and convincing evidence standard for proving invalidity, which this Court reaffirmed in Microsoft Corp. v. i4i Limited Partnership, 131 S. Ct. 2238 (2011).

I also see this case as asking for clarification of the KSR decision in terms of what elements of the "common sense" analysis should be considered determinations rightfully before a jury. I suspect that the brief strategically avoided that issue because the Federal Circuit is a much riper target for review than a recent unanimous and popular Supreme Court opinions.

In an amicus brief supporting the petition, Professor Eileen Herlihy argues that the Federal Circuit systematically gets Seventh Amendment questions wrong and needs to be set straight by the Supreme Court. Herlihy has written two articles on how the Seventh Amendment should be applied to patent cases.

 

IP Law Professors Rise-Up Against Patent Assertion Entities

Patent, , , ,

By Dennis Crouch

A group of sixty US intellectual property law professors have signed a letter to Congress supporting anti-troll patent reform legislation. This effort was driven by Professor Love of Santa Clara and is also signed by Professors Bessen, Goldman, Ghosh, Lemley, Meurer, Samuelson, Sprigman, and others. [Download ProfessorsLetterOnTrolls].

A key introductory line from the letter:

Despite our differences, we all share concern that an increasing number of patent owners are taking advantage of weaknesses in the system to exploit their rights in ways that on net deter, rather than encourage, the development of new technology.

The basic argument is that patent litigation is expensive and frontloaded in such a way that "creates an opportunity for abuse" because early-state settlement is focused more on the cost of litigation rather than the value of the patent or its underlying technology. And, it is the recent "rise of patent assertion entities" that has "disrupted [the] delicate balance" of the patent system.

The professors propose the following six general reforms:

  1. To discourage weak claims of patent infringement brought at least in part for nuisance value, we recommend an increase in the frequency of attorneys' fee awards to accused patent infringers who choose to fight, rather than settle, and ultimately defeat the infringement allegations levelled against them.
  2. To reduce the size and front-loaded nature of patent litigation costs, we recommend limitations on the scope of discovery in patent cases prior to the issuance of a claim construction order, particularly with respect to the discovery of electronic materials like software source code, emails, and other electronic communications.
  3. To further protect innocent retailers and end-users that are particularly vulnerable to litigation cost hold-up, we recommend that courts begin to stay suits filed against parties that simply sell or use allegedly infringing technology until after the conclusion of parallel litigation between the patentee and the technology's manufacturer.
  4. To facilitate the early adjudication of patent infringement suits, we recommend that patentees be required to plead their infringement allegations with greater specificity.
  5. [To increase transparency and confidence in the market for patent licensing, we recommend that Congress require] patentees … to disclose and keep up-to-date the identity of parties with an ownership stake or other direct financial interest in their patent rights.
  6. [To increase transparency and confidence in the market for patent licensing, we recommend that] Congress consider additional legislation designed to deter fraudulent, misleading, or otherwise abusive patent licensing demands made outside of court.

Without a doubt, there is merit to the professors' case, although I bristle at the letter's broad-brush statements and overt stance that is pro-large-corporate-entity. I have a few thoughts regarding the specific suggestions:

(1): Anti-plaintiff fee shifting will have the obvious impact of altering the availability of contingency-fee counsel which may be the motivation of the suggestion. One problem is that almost every patent in litigation is amenable to a good-faith challenge on either invalidity or non-infringement grounds. Predicting winners and losers is a difficult prospect and this gives me little faith that the fee-shifting proposal will primarily target low-quality claims but instead will target risk-averse plaintiffs. The professors' suggestion here to reward non-settlement does not provide me with any confidence that overall litigation costs will be reduced. On the other hand, this proposal (especially if focused on invalidating patents) could serve as something like a bounty for attorneys to challenge bad patents and, as a consequence, would lessen the free-rider problem associated with a single company challenging a patent that is also being asserted against competitors.

(2) & (4): I agree that there is plenty room for reducing discovery costs and for raising pleading requirements without substantially harming patentee rights. However, one problem for both software and method patents is that some forms of infringement are difficult to truly pin-down absent discovery. Some work must be done on any particular proposals to ensure that the result is not a clear pathway unactionable infringement.

(3) Regarding customer lawsuits, we have a difficulty in line drawing because, for the most part, these are not simply customer lawsuits. Rather, the patents being asserted cover particular methods or systems that take advantage of a particular device on-the-market (such as a wireless router or flat-panel television). In this situation, the differences are such that the manufacturer and retailer typically refuse to honor their implied warrantee that the good is "free of the rightful claim … of infringement or the like." UCC 2-312(3). And so, the question is whether these use cases will fit within the definition. One reason for the downstream lawsuits is that downstreamers typically value the technology more than upstreamers with the result of greater damage award. (We know the downstreamers valued it more because they purchased it from the upstreamers). Since the exhaustion doctrine only allows a patentee to recoup at one point in the stream-of-commerce, it makes sense that they would focus on the highest valued user.

= = = = =

Text of the letter:

To Members of the United States Congress:

We, the undersigned, are 60 professors from 26 states and the District of Columbia who teach and write about intellectual property law and policy. We write to you today to express our support for ongoing efforts to pass patent reform legislation that, we believe, will improve our nation's patent system and accelerate the pace of innovation in our country.

As a group we hold a diversity of views on the ideal structure and scope of our nation's intellectual property laws. Despite our differences, we all share concern that an increasing number of patent owners are taking advantage of weaknesses in the system to exploit their rights in ways that on net deter, rather than encourage, the development of new technology.

Several trends, each unmistakable and well supported by empirical evidence, fuel our concern. First, the cost of defending against patent infringement allegations is high and rising. The American Intellectual Property Law Association estimates that the median cost of litigating a moderately-sized patent suit is now $2.6 million, an amount that has increased over 70% since 2001. These and other surveys suggest that the expense of defending even a low-stakes patent suit will generally exceed $600,000. Moreover, the bulk of these expenses are incurred during the discovery phase of litigation, before the party accused of infringement has an opportunity to test the merits of the claims made against it in front of a judge or jury.

The magnitude and front-loaded nature of patent litigation expenses creates an opportunity for abuse. Patent holders can file suit and quickly impose large discovery costs on their opponents regardless of the validity of their patent rights and the merits of their infringement allegations. Companies accused of infringement, thus, have a strong incentive to fold and settle patent suits early, even when they believe the claims against them are meritless.

Historically, this problem has largely been a self-correcting one. In suits between product-producing technology companies, the party accused of infringement can file a counterclaim and impose a roughly equal amount of discovery costs on the plaintiff. The costs, though high, are symmetrical and, as a result, tend to encourage technology companies to compete in the marketplace with their products and prices, rather than in the courtroom with their patents.

In recent years, however, a second trend – the rise of "patent assertion entities" (PAEs) – has disrupted this delicate balance, making the high cost of patent litigation even more problematic. PAEs are businesses that do not make or sell products, but rather specialize in enforcing patent rights. Because PAEs do not make or sell any products of their own, they cannot be countersued for infringement. As a result, PAEs can use the high cost of patent litigation to their advantage. They can sue, threaten to impose large discovery costs that overwhelmingly fall on the accused infringer, and thereby extract settlements from their targets that primarily reflect a desire to avoid the cost of fighting, rather than the chance and consequences of actually losing the suit.

To be sure, PAEs can in theory play a beneficial role in the market for innovation and some undoubtedly do. However, empirical evidence strongly suggests that many PAEs have a net negative impact on innovation. Technology companies – which, themselves, are innovators – spend tens of billions of dollars every year litigating and settling lawsuits filed by PAEs, funds that these tech companies might otherwise spend on additional research and design. Surveys also reveal that a large percentage of these suits settle for less than the cost of fighting, and multiple empirical studies conclude that PAEs lose about nine out of every ten times when their claims are actually adjudicated on their merits before a judge or jury.

The impact of these suits is made more troubling by the fact that PAE activity appears to be on the rise. Empirical studies suggest that at least 40%, and perhaps as high as 59% or more, of all companies sued for patent infringement in recent years were sued by PAEs. PAE suits were relatively rare more than a decade ago, and they remain relatively rare today elsewhere in the world.

More worrisome than these bare statistics is the fact that PAEs are increasingly targeting not large tech firms, but rather small business well outside the tech sector. Studies suggest that the majority of companies targeted by PAEs in recent years earn less than $10 million in annual revenue.

When PAEs target the numerous small companies downstream in the supply chain, rather than large technology manufacturers upstream, they benefit in two ways. First, for every product manufacturer, there may be dozens or hundreds of retailers who sell the product, and hundreds or thousands of customers who purchase and use the technology. Patent law allows patent owners to sue makers, sellers, or users. Suing sellers or users means more individual targets; some PAEs have sued hundreds of individual companies. And, more targets means more lawyers, more case filings, more discovery, and thus more litigation costs overall to induce a larger total settlement amount.

Second, compared to large manufacturers, small companies like retailers are less familiar with patent law, are less familiar with the accused technology, have smaller litigation budgets, and thus are more likely to settle instead of fight. In fact, many small businesses fear patent litigation to such an extent that they are willing to pay to settle vague infringement allegations made in lawyers' letters sent from unknown companies. Like spammers, some patent owners have indiscriminately sent thousands of demand letters to small businesses, with little or no intent of actually filing suit but instead with hopes that at least a few will pay to avoid the risk.

This egregious practice in particular, but also all abusive patent enforcement to some extent, thrives due to a lack of reliable information about patent rights. Brazen patent owners have been known to assert patents they actually do not own or, conversely, to go to great lengths to hide the fact that they actually do own patents being used in abusive ways. Some patent owners have also sought double recovery by accusing companies selling or using products made by manufacturers that already paid to license the asserted patent. Still others have threatened or initiated litigation without first disclosing any specific information about how, if at all, their targets arguably infringe the asserted patents.

In short, high litigation costs and a widespread lack of transparency in the patent system together make abusive patent enforcement a common occurrence both in and outside the technology sector. As a result, billions of dollars that might otherwise be used to hire and retain employees, to improve existing products, and to launch new products are, instead, diverted to socially wasteful litigation.

Accordingly, we believe that the U.S. patent system would benefit from at least the following six reforms, which together will help reduce the cost of patent litigation and expose abusive practices without degrading inventors' ability to protect genuine, valuable innovations:

  1. To discourage weak claims of patent infringement brought at least in part for nuisance value, we recommend an increase in the frequency of attorneys' fee awards to accused patent infringers who choose to fight, rather than settle, and ultimately defeat the infringement allegations levelled against them.
  2. To reduce the size and front-loaded nature of patent litigation costs, we recommend limitations on the scope of discovery in patent cases prior to the issuance of a claim construction order, particularly with respect to the discovery of electronic materials like software source code, emails, and other electronic communications.
  3. To further protect innocent retailers and end-users that are particularly vulnerable to litigation cost hold-up, we recommend that courts begin to stay suits filed against parties that simply sell or use allegedly infringing technology until after the conclusion of parallel litigation between the patentee and the technology's manufacturer.
  4. To facilitate the early adjudication of patent infringement suits, we recommend that patentees be required to plead their infringement allegations with greater specificity.

And finally, to increase transparency and confidence in the market for patent licensing, we recommend:

  1. that patentees be required to disclose and keep up-to-date the identity of parties with an ownership stake or other direct financial interest in their patent rights, and
  2. that Congress consider additional legislation designed to deter fraudulent, misleading, or otherwise abusive patent licensing demands made outside of court.

In closing, we also wish to stress that as scholars and researchers we have no direct financial stake in the outcome of legislative efforts to reform our patent laws. We do not write on behalf of any specific industry or trade association. Rather, we are motivated solely by our own convictions informed by years of study and research that the above proposals will on net advance the best interests of our country as a whole. We urge you to enact them.

Sincerely,

John R. Allison (Texas); Clark D. Asay (Penn State); Jonathan Askin (Brooklyn); Gaia Bernstein (Seton Hall); James E. Bessen (BU); Jeremy W. Bock (Memphis); Annemarie Bridy (Idaho); Irene Calboli (Marquette); Michael A. Carrier (Rutgers); Bernard Chao (Denver); Andrew Chin (UNC); Ralph D. Clifford (UMass); Jorge L. Contreras (American); Rebecca Curtin (Suffolk); Samuel F. Ernst (Chapman); Robin Feldman (Hastings); William T. Gallagher (Golden Gate); Jon M. Garon (Northern Kentucky); Shubha Ghosh (Wisconsin); Eric Goldman (Santa Clara); Leah Chan Grinvald (Suffolk); Debora J. Halbert (Hawaii); Bronwyn H. Hall (Berkeley); Yaniv Heled (Georgia State); Christian Helmers (Santa Clara School of Business); Sapna Kumar (Houston); Mary LaFrance (UNLV); Peter Lee (Davis); Mark A. Lemley (Stanford); Yvette Joy Liebesman (SLU); Lee Ann W. Lockridge (LSU); Brian J. Love (Santa Clara); Glynn S. Lunney, Jr. (Tulane); Phil Malone (Stanford); Mark P. McKenna (Notre Dame); Michael J. Meurer (BU); Joseph Scott Miller (Georgia); Fiona M. Scott Morton (Yale); Lateef Mtima (Howard); Ira Steven Nathenson (St. Thomas); Laura Lee Norris (Santa Clara); Tyler T. Ochoa (Santa Clara); Sean A. Pager (Michigan State); Cheryl B. Preston (BYU); Jorge R. Roig (Charleston); Jacob H. Rooksby (Duquesne); Brian Rowe (Seattle); Matthew Sag (Loyola Chicago); Pamela Samuelson (Berkeley); Jason Schultz (NYU); Christopher B. Seaman (W&L); Carl Shapiro (Berkeley); Lea Shaver (Indiana); Jessica Silbey (Suffolk); Christopher Jon Sprigman (NYU); Madhavi Sunder (Davis); Toshiko Takenaka (Washington); Sarah Tran (SMU); Jennifer M. Urban (Berkeley); Samson Vermont (Charlotte)

Patent Reform 2013: Measured Reform Proposals from the Senate

Patent, ,

Senators Leahy (D-VT), Lee (R-UT), and Whitehouse (D-RI) have proposed their own patent reform bill titled the Patent Transparency and Improvements Act (PTIA) of 2013 –this one much more narrowly focused on egregious patent enforcement abuses. As compared with the Goodlatte proposal, the Leahy-Lee proposal is much more measured and limited in its action. Democratic leaders on the House Judiciary Committee (Representatives Conyers and Watt) have announced their support of the Leahy-Lee approach over Goodlatte's that would include "far ranging changes to the litigation system, such as limits on pleadings and discovery, and intrusive mandates on the court system." 

The Leahy-Lee PTIA includes a number of interesting provisions. Most of the provisions are replicas of those already proposed in other bills. One new provision here is a statement authorizing the FTC to act against unfair and deceptive practices associated with the sending of fraudulent or materially misleading demand letters in connection with the assertion of a patent. Although not stated, the new law would also be tangentially useful for both state attorneys general and for private class-action plaintiffs to seek compensation against egregious actions.

A key element of the proposal would be to require that any demand letters include a statement of (A) patent asserter's identity; (B) the patent being asserted; and (C) the reasons for the assertion.

Under the proposal, the new statute would state that:

It shall be an unfair or deceptive act … for a person, in connection with the assertion of a US patent, to engage in the widespread sending of written communications that state that the intended recipients or any affiliated persons are infringing or have infringed the patent and bear liability or owe compensation if –

(1) the communications falsely threaten that administrative or judicial relief will be sought if compensation is not paid or the infringement issue is not otherwise resolved;

(2) the assertions contained in the communications lack a reasonable basis in fact or law, including, for example, because—

(A) the person asserting the patent is not a person, or does not represent a person, with the current right to license the patent to, or to enforce the patent against, the intended recipients or any affiliated persons; or

(B) the communications seek compensation on account of activities undertaken after the patent has expired; or

(3) the content of the written communications is likely to materially mislead a reasonable recipient, including, for example, because the content fails to include such facts reasonably necessary to inform the recipient of—

(A) the identity of the person asserting a right to license the patent to, or enforce the patent against, the intended recipient or any affiliated person;

(B) the patent issued by the USPTO alleged to have been infringed; and

(C) the reasons for the assertion that the patent may be or may have been infringed.

The Senators will readily admit that this statute is only directed toward the worst offenders and would not serve the goal of generally weakening the ability of a patent holder to assert its rights.

In addition to the bad faith demand letter rules, the proposal would also improving post-issuance review procedures to require that the PTO apply the same claim construction as used in court rather than the “broadest reasonable interpretation.”  In my view, this change should be implemented across the board so that all interpretations made on the record at the PTO will have a direct and foreseeable impact on the scope actually given to claims during litigation. At the same time, the PTO should be able to maintain wide authority to object to claim terms that are indefinite or poorly defined. 

A full outline of the bill is here and the text is here.  Up next – the Demand Letter Transparancy Act of 2013.

A First IPR Decision on the Merits

Patent, , , , ,

Garmin v. Cuozzo Speed Tech, IPR2012-00001 (PTAB 2013)  Download Final decision-59

In its first full merits decision in an inter partes review case, the Patent Trial and Appeal Board (PTAB) has sided fully with the petitioner Garmin and ordered the three challenged claims cancelled. As you may discern from the docket number, this case was also the first IPR case filed on September 16, 2012 (the first day that such filings were allowed). The patent at issue is No. 6,778,074 and a parallel infringement lawsuit between Garmin & Cuozzo is pending in New Jersey District Court. Although the district court did not stay that case, Magistrate Judge Dickson has slowed the process to avoid making substantive decisions until the PTAB decision. In particular, the claim construction arguments have been delayed.

The patent itself is directed toward a speed-limit indicator tied to a GPS system that provides a signal to the driver when the care is moving faster than the speed-limit. Couzzo has accused several device makers (such as Garmin) as well as automobile manufacturers (such as Chrysler) of infringing the patent.

Garmin's IPR request actually challenged 17 claims of the '074 patent, but the PTAB only instituted the review for claims 10, 14, and 17 as such, it likely that Cuozzo will continue to pursue the litigation with a focus on the remaining claims. Those three claims were all found obvious by the PTAB. Based upon my quick read of the claims, independent claim 10 was the broadest in the patent and its elimination may give Garmin the opportunity to avoid infringement by pushing for a narrow construction of the remaining claims.

Four Reference Rejection: Patent attorneys regularly see obviousness rejections that hinge on the combination of four references.  However, the conventional wisdom is that those complex factual arguments are much less likely to fly in disctrict court litigation.  Here, the PTAB took on the challenge and found the patent obvious based upon four prior art references.  The take-away here is that the PTAB is ready and willing to handle complex invalidity arguments that might not work at the district court level. 

 

Claim Construction: One interesting aspect of the case is the way that the pending parallel litigation is clearly in the forefront of each decision by the parties. One limitation found in each claim of the patent is that a speedometer be "integrally attached" to a speeding-indicator. Couzzo that the proper construction of that term would require that the speedometer and speeding-indicator both be part of the same single component (i.e., shown on the same screen). On that point, the Board sided with Garmin – finding instead that the broadest reasonable interpretation of the claim scope required two separate components. In addition to making the claim more subject to prior art, the seeming result is also that a single Garmin device GPS cannot infringe unless somehow integrated with and integrally attached to a separate vehicle speedometer. Moving forward it will be interesting to see what level of respect the district court gives the PTO decision. I suspect that it will be given a great deal of respect.

Unable to Prove Early Conception  or Diligence: Two of the important prior art references used by the board presumptively qualify as 102(e) prior art in that the references are published US patent applications that were filed prior to Couzzo's application. Under the old first-to-invent rules, the law allows Couzzo prove a prior invention date. Here, Couzzo's proof failed because (1) his conception evidence was based solely on inventor testimony which is never sufficient without corroboration; and (2) his evidence of submission to the "Invention Submission Corporation" was insufficient because the date of submission was not corroborated by any testimony. Thus, the PTAB found that the earliest provable date of conception was December 2000 when the ISC patent attorney sent a letter to Couzzo referencing Couzzo's invention disclosure. Because Couzzo had not yet reduced his invention to practice as of that December 2000 date, the law also requires that he act with "reasonable diligence." Here, Couzzo received a search report from the patent attorney in January 2001; did not respond until March 2001; and did not explain why it took two months to provide comments or his daily progress on the matter. Then, later in March 2001 he received a new favorable patentability report from the patent attorney who stated he would begin work once Couzzo paid a $3,500 fee. However, he did not pay that fee until August 2001. Couzzo stated that he did not have the money at the time, but did not provide any daily progress reports showing what he was doing to get the money. The PTAB found that each of these gaps showed failure of diligence. As such, his attempt to antedate the references was rejected. The unfortunate problem here is that it looks like it was the complexity and tricks of the system that failed Couzzo and that, had he been blessed with more cash-on-hand and more sophisticated patent counsel then he would have avoided these key prior art references either by filing the patent application earlier or by ensuring documentation of conception and diligence. Soon after Couzzo's case was filed, the USPTO went after the Invention Submission Corporation as a scam. My understanding is that InventHelp is the successor-in-interest to ISC.

 

Tuesday: AIPLA Webcast on Spotting Conflicts in Patent Practice

Ethics

I'll be giving a talk — get your ethics CLE! — to select live sites from Atlanta.  You can sign up here.

"A simultaneous in-person and a live video conference luncheon/ breakfast Ethics CLE originating from Atlanta with remote sites in Chicago, Denver, Detroit, Irvine, New York, Palo Alto, Portland, San Diego, San Francisco, and Winston Salem."

Speaker:  Professor David Hricik, Mercer Law School
 
Spotting conflicts of interest in patent practice is not easy.  Checking the names of opposing parties in litigation is only the beginning.   For example, a lawyer who successfully represents a patentee in an infringement suit may cause a client to owe indemnity to the defendant.  Further, even arguing claim construction has been held to be adverse to a client who is not a party to that patent suit.  Opinion work and prosecution create even thornier issues.  To help spot conflicts of interest, Professor Hricik will explain how adversity can arise even without suing a client, and then apply those lessons to opinion work and patent prosecution.

Federal Circuit: Patent Claims Broadened During Prosecution Fail Written Description Requirement

Patent, , ,

By Dennis Crouch

Synthes USA v. Spinal Kinetics (Fed. Cir. 2013)

In a split opinion, the Federal Circuit has affirmed the jury verdict that Synthes’ asserted patent claims are invalid for lack of written description and has also affirmed the district court’s denial of SK’s request for exceptional-case attorney fees under 35 U.S.C. § 285. Judge O’Malley penned the majority opinion that was joined by Judge Prost. Judge Taranto dissented – arguing that the evidence presented at trial was – as a matter of law – insufficient to prove that the claims lacked adequate written description.

Synthes’ U.S. Patent No. 7,429,270 is directed to an intervertebral implant invented by a team of Swiss researchers. The original application was placed on file as an international application (PCT) in 2003. The U.S. national stage application was then filed in 2006. Five-years into prosecution, the patentee substantially amended the claims and added a new set of claims that were then asserted against SK. Claims 29-31. As part of these new claims, Synthes included the new terms “opening” and “plurality of openings” that had not been used previously in the patent application document. The original disclosure was directed more particularly toward grooves rather than the seemingly broader term openings. According to SK, Synthes added these limitations to the claims only after the accused SK product was on the market in a calculated attempt to shift the scope of the patent to cover SK’s improved technology. Under US patent law, that sort of intentional shifting of patent claim scope is permissible so long as the amended claim is sufficiently supported by the original disclosure. See See Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 909 n.2 (Fed. Cir. 2004).

It is not surprising that the infringement litigation turned on the proper construction of the “plurality of openings.” As is usual for patent litigation, the patentee was working to find a “right-sized” patent that was broad enough to cover the accused product but narrow enough to still be valid. Here, the approach was to create a term “opening” in an implant-plate that was generic enough to both (1) be described by the disclosed radial plate grooves and (2) capture the elongated circle slots of the accused device. However, the jury sided with the accused infringer and found the claims invalid under the written description doctrine.

On appeal, the Federal Circuit affirmed – finding that the substantial evidence supported the jury verdict.

Sufficiency of written description requires that the original disclosure reasonably convey to PHOSITA that the inventor had possession of the claimed subject matter at the time of filing. The exact level of detail required depends upon “the nature and scope of the claims and on the complexity and predictability of the relevant technology.” See Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc).

In affirming the jury verdict, the basically followed the precedent of Leibel-Flarsheim to find that increased breadth-of-claim was not supported by the more narrow original specification. In particular, the court noted that the original disclosure only included “groove” examples, not slots or openings on the plate. (“The written description, however, never discloses anything broader than using grooves to anchor the fiber system to the cover plates.”) That intrinsic evidence was then bolstered by expert testimony regarding the important differences between grooves, slots and other openings. Based upon this evidence, the court found substantial evidence for the jury verdict of invalidity.

[T]he jury was asked to determine whether the written description disclosure of “grooves” “reasonably convey[ed] to those skilled in the art that the inventor had possession of [an intervertebral implant that could utilize any sort of opening located anywhere on the cover plates to anchor the fiber system] as of the filing date.” Ariad, 598 F.3d at 1351. The jury did not believe so and, when all reasonable inferences are drawn in favor of the jury verdict, we must affirm that decision.

One tricky issue here is the various burdens. On review, the appellate court looks for substantial evidence (more than a mere scintilla) but the jury had to find clear and convincing evidence of invalidity.

Writing in dissent, Judge Taranto framed this case is one where the “structural claim language … is broader than the specific embodiments disclosed in the written description.” Of course, Federal Circuit precedent allows claims to be broader than the specific embodiments. See In re Rasmussen, 650 F.2d 1212, 1215 (CCPA 1981). According to Taranto, in this type of situation (alleged over-breadth), the challenger must show that the “particular difference” between the claim and the disclosure “has a material effect on whether the product or process would achieve the aims of the claims at issue, with materiality of the effect not the same as non-obviousness but related to predictability.” In other words, broader conceptions of the invention that would be predictable by PHOSITAs mind after reading the specification should be deemed to fit within the written description.

= = = = =

On the concept of attorney fees under 35 U.S.C. § 285 – the court reiterated its rule sanctions against a losing patentee can only be imposed after a showing of clear and convincing evidence of either (1) litigation misconduct; (2) bringing the litigation in subjective bad faith; or (3) bringing objectively baseless litigation. Here, the appellate court agreed with the district court that SK had failed to demonstrate clear-and-convincing evidence of any one of those three justifications for fees.

Patent Reform 2013: Pending Bills

Patent, , ,

By Dennis Crouch

I wrote earlier about the pending Innovation Act (H.R. 3309) as proposed by a bipartisan set of Congressional leaders led by Rep. Bob Goodlatte. A host of other patent related bills are also pending in the House and Senate. The following is a rundown of some:

Manufacturing Innovation in America Act of 2013 (H.R. 2605)

Tax deduction carryover for patent development expenditures where profit is made years later.

Patent Abuse Reduction Act of 2013 (S. 1013) (Senators Cornyn and Grassley)

Smaller version of Goodlatte's Innovation Act that would focus on (1) raising pleading requirements (2) limiting discovery costs (especially pre-claim-construction); and (3) awarding attorney fees for the prevailing party.

End Anonymous Patents Act (H.R. 2024)

Requirement that the patent owner regularly update ownership information in the public record, including the "ultimate parent entity."

Patent Litigation and Innovation Act of 2013 (H.R. 2639)

Includes many provisions in parallel to the Goodlatte Innovation Act, but also includes a "sanction for abusive litigation" with mandatory review of each case by the court to ensure that no Rule 11(b) violations occurred.

MODDERN Cures Act of 2013 (H.R. 3091)

Extension of patent term for four to seven years for diagnostic medical tests. The program would be run through the FDA.

PATENT Jobs Act (H.R. 2582)

Proposed elimination of the PTO from the sequestration rules.

STOP Act (H.R. 2766)

Expanding the covered-business-method post-grant-review to also cover non-financial business methods and removal of the sunset provision. This is roughly parallel to the Patent Quality Improvement Act of 2013 (S. 866)

PACES Act (S. 1478) (Senator Cardin)

The Bill would remove certain patent infringement actions from Federal District Courts to the Court of Federal Claims. In particular, the bill focuses on causes of action against the unlicensed use patented inventions in the provision of 9-1-1, enhanced 9-1-1, or other emergency services. The CFC tends to favor the accused infringer both in terms of procedure and remedies available.

PARTS Act (S.780)

Act would prevent design patent owners from using those patents to prevent the use unauthorized spare-parts in the auto industry.

Medical Innovation Prize Fund Act (S. 627) (S. Sanders)

The bill would seemingly end drug patents with the text "no person shall have the right to exclusively manufacture, distribute, sell, or use a drug, a biological product, or a manufacturing process for a drug or biological product in interstate commerce."

New Patent Legislation: Innovation Act of 2013

Patent, , , , ,

By Dennis Crouch

Representative Bob Goodlatte (R-VA) with the bipartisan support of ten other members of the House has introduced a new set of proposed patent reforms currently tiled the “Innovation Act.” (H.R. 3309) The proposed bill includes a number of provisions disparate provisions that would have a substantial impact on patent enforcement, procurement, and ownership. Some of the changes include severe increases in the requirements associated with filing a patent infringement complaint; Major statutory limitations on discovery; Elimination of the patent applicant option of filing a civil action to obtain a patent under Section 145; Forcing the USPTO to use standard claim construction (rather than BRI) in post-grant proceedings; Introduction of a new Double-Patenting rule; etc. the 50+ page bill is somewhat complex and, as Hal Wegner wrote, “[e]very organization impacted by patents must carefully study the Goodlatte bill for hidden features or suffer the consequences.” [Text][Sectional-Analysis]

Major Proposed Changes include the Following:

  1. A heightened pleading requirement for filing patent infringement claims, including a particularized statement “with detailed specificity” as to “how the terms in each [asserted] claim … correspond to the functionality of [each] accused instrumentality.” A brand-generic infringement action under § 271(e)(2) need not comply with the heightened pleading requirements. In addition, the Judicial Conference would be ordered to modify the form complaint for patent infringement to reflect the heightened pleading.
  2. An assumption that attorney-fees will be awarded to a prevailing party. The new provision would require an award of fees “unless the court finds that the position of the nonprevailing party . . . was substantially justified or that special circumstances make an award unjust.” On its face the provision is largely party-neutral with two caveats. First, the provision allows prevailing-accused-infringers to collect fees from non-plaintiffs who have a substantial interest in the patent-at-issue in the case. Second, the provision indicates that a patentee who extends a covenant-not-to-sue to the other party will be deemed a non-prevailing party and thus subject to attorney fees.
  3. Discovery will be limited until after a ruling on claim construction. In addition, the US Judicial Conference would be ordered to develop rules “to address the asymmetries in discovery burdens and costs in any civil action [relating to patents].”
  4. Transparency of Ownership. As a new required disclosure, the patentee in an infringement litigation must disclose anyone with a financial interest in either the patents at issue or the patentee and must additionally disclose the “ultimate parent entity” of the patentee. In the appropriate Federal Regulations, an ultimate parent entity is ethereally defined as “entity which is not controlled by any other entity.”
  5. Stay for Customer Suits. When both a manufacturer and its customer are sued for infringing the same patent, customer suit would be stayed so long as the customer agrees to be bound by the results of that case.
  6. IP in Bankruptcy. Under the new law, when a foreign company goes bankrupt, its trustee would no longer have the power to cancel licenses associated with US patent rights.
  7. No Civil Action to Challenge PTO. The new law would eliminated the civil action option found in 35 U.S.C. § 145. Patent applicants refused by the patentee would rather only have the option of appealing directly to the Federal Circuit.
  8. Shrinking Post-Grant-Review Estoppel. Under the current law, a post-grant review proceeding creates an estoppel against the petitioner later arguing in other forums “any ground that the petitioner raised or reasonably could have raised during that post-grant review.” 35 U.S.C. § 325(e). The new law would narrow that estoppel only to grounds actually raised.
  9. Patent Office Claim Construction. During Post-Grant Reviews and Inter Partes Reviews, the new law would require the patent office to use the ordinary “district court claim construction” law, that is, “construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”
  10. Double Patenting. There is some potential that the judicially created obviousness-type double patenting doctrine was eliminated by the recently implemented first-to-file regime. The new law would codify that doctrine.
  11. Covered Business Method Patent Review. The AIA creates an option for third parties to attack patents covering non-technological “covered business method” innovations through the use of a new post-grant review proceeding. The new law would somewhat restrict the scope of CBM review to only cover first-to-invent patents (rather than pre-AIA patents) as defined in Section 3(n)(1) of the AIA. The new law would also, inter alia, codify the USPTO’s somewhat broad definition of “financial product or service” described in the Versata case.
  12. Patent Term Adjustment. The new law would eliminate any patent term adjustment for “B delay” occurring after an applicant files a request for continued examination. This change would have a significant impact on the patent term of a large number of issued patents. The amendment proposes to be effective with regards to any “patent application or patent” pending on the Act’s date of enactment. (Note – it is unclear what it means for a “patent” to be “pending” in this context.)
  13. Federal Jurisdiction over Patent Cases. Although not a statutory change, the new law would make the “clarifying” statement that: “The Federal interest in preventing inconsistent final judicial determinations as to the legal force or effect of the claims in a patent presents a substantial Federal issue that is important to the Federal system as a whole.”

Another Means-Plus-Function Patent: Invalid as Indefinite

Indefinite, Patent,

By Dennis Crouch

Ibormeith IP v. Mercedes-Benz (Fed. Cir. 2013)

Ibormeith’s patent covers a “sleepiness monitor” intended to sense when a vehicle driver is getting sleepy. This is obviously an important topic that results in thousands of annual traffic accidents. Ibormeith’s solution is to monitor both the time-of-day (circadian rhythm inputs) and unusual steering movement (vehicle inputs) and then use an algorithm to determine the likelihood of sleepy driving. The result then could be to warn the driver by beeping or perhaps taking more automated control of the vehicle. The patent (No 6,313,749) was issued back in 2001 around the time when attorneys were coming-round to the notion that means-plus-function claims lead to trouble – either comedy or tragedy depending upon your point-of-view.

The patent statute allows for patent claims to be written as a “means for” accomplishing a particular function. 35 U.S.C. § 112(f). When written in claim form, a “means for” claim appears extremely broad because it suggests coverage of all possible means or mechanisms for accomplishing the stated goal. However, the statute says otherwise. Rather than covering all possible mechanisms, Section 112(f) requires that the limitation be construed to only cover the “corresponding structure … described in the specification and equivalents thereof.” Since 1994, the Federal Circuit has supported this narrow construction. See In re Donaldson, 29 USPQ2d 1845 (Fed. Cir.1994). As Judge Taranto writes in this case “The price of using this form of claim … is that the claim be tied to a structure defined with sufficient particularity in the specification.”

Taking all of this a step further, the courts have also repeatedly held that a patent is invalid as indefinite under Section 112(b) if a claimed “means” if no particular corresponding structure is disclosed in the specification. See, e.g., Function Media, LLC v. Google, Inc., 708 F.3d 1310, 1319 (Fed. Cir. 2013); Blackboard, Inc. v. Desire2Learn Inc., 574 F.3d 1371, 1382-83 (Fed. Cir. 2009).

Here, the patent claims at issue all include a “computational means” that figure out whether or not someone is sleepy. And, on summary judgment, the district court found the claims indefinite because the claimed computational means were not supported by structure in the specification. That decision has been affirmed in a unanimous opinion written by Judge Taranto. Oddly, adequate disclosure under § 112(b) is a question of law reviewed de novo on appeal. That lower standard still did not carry the day for the patentee.

As in so many cases, the claimed “means” is really an algorithm being run on a computer to accomplish some particular goal. The court has ruled that the algorithm needs to be one that is “sufficiently defined to render the bounds of the claim . . . understandable to the implementer.” Here, the specification defines a set of input variables and a “sleep propensity algorithm” that is the sum of those variables. The specification also indicates the potential for various warning thresholds associated with the sleep propensity algorithm. However, the specification does not include any real examples for how the algorithm would work.

For Judge Taranto, the decision is largely about litigation strategy. The patentee argued that the algorithm is very broadly defined by the specification. The point of that argument was to ensure broad claim scope. However, the results is a finding that the algorithm is not particularly defined and therefore that the claim is invalid.

With means-plus-function claiming, the narrower the disclosed structure in the specification, the narrower the claim coverage. To succeed in ultimately proving that the “computational means” elements cover the accused Mercedes products … Ibormeith’s [argued that the algorithm of] Table 10 … is broad enough to reach the accused products. With consequences of such importance, Ibormeith’s position as to Table 10’s breadth is fairly treated as a binding admission. . . . That position, however, fails in the necessary attempt to steer a course that permits proof of infringement yet avoids invalidity.

Judge Taranto’s analysis here makes sense within the context of litigation strategy and holding parties to their litigation admissions. The major problem with this approach, however, is that allows patentees to hold-in and maintain ambiguity until the point of litigation.

= = = = =

The patent at issue here is based upon the invention by Dr. Louise Reyner and Dr. Jim Horne who are both sleep researchers at Loughborough University in the UK and who won the Queen’s prize in 2007 for their work on road death reduction through their work on driver sleepiness research. In March 2010, the UK company Astid Ltd. recorded its ownership of the patent and that same day Ibomeith was formed that is one of Michael Connelly‘s companies.

Patent Invalid for Failure to Claim “What the Applicant Regards as His Invention”

Patent,

by DennisCrouch

Juxtacomm-Texas Software v. Tibco Software, et al. (Fed. Cir. 2013)

In this case the Federal Circuit only offered one paragraph of substantive analysis:

The decisions of the district court … , construing the relevant claim language of U.S. Patent No. 6,195,662 and granting the motion for summary judgment of invalidity based on 35 U.S.C. § 112 ¶ 2, are affirmed on the basis of the district court's opinions. The language of the claims controls their construction, and the invention set forth in the claims "is not what the patentee regarded as his invention." Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1349 (Fed. Cir. 2002).

Under Allen Eng'g, section 112 ¶ 2 requires that the patent "set forth what the applicant regards as his invention and … do so with sufficient particularity and distinctness." (Section 112 has now been rewritten and § 112 ¶ 2 is renumbered as § 112(b)). In most cases, 112 ¶ 2 challenges focus on the requirement of "sufficient particularity and distinctness" in the form of a definiteness challenge. However, this case focuses on the first portion of the provision and finds that the patentee failed to claim "what the applicant regards as his invention." And, that failure results in the relevant claims being held invalid. The district court wrote:

Section 112 ¶ 2 contains two requirements: "first, [the claim] must set forth what the applicant regards as his invention and second, it must do so with sufficient particularity and distinctness, i.e., the claim must be sufficiently definite." Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1348 (Fed.Cir.2002) (internal quotes removed) (quoting Solomon v. Kimberly–Clark Corp., 216 F.3d 1372, 1377 (Fed.Cir.2000)). A claim is invalid under the first prong of 35 U.S.C. § 112 ¶ 2, when one of skill in the relevant art, reading the specification would not understand the invention set forth in a claim is what the patentee regarded as his invention.

Juxtacomm's basic problem in this case is that the plain interpretation of its asserted claims result in a system that the patent document itself does not describe.  The patent here is directed to a data transformation system and all asserted claims include some form of a "script processor for utilizing metadata from [a] metadata database to control data transformation within [a] systems interface and [to control] movement of said data into and out of a distribution system." The claim includes a limitation that a "script processor" that is designed "to control data transformation within said system interface." However, Juxtacomm's specification does not describe data transformation within the system interface. Based upon that difference, the court found an "irreconcilable contradiction" between the specification and the claims that renders the claims invalid under § 112 ¶ 2.

= = = = =

A major question left unaddressed by the court here is the overlap between, on the one hand, this § 112(b) issue of "irreconcilable contradiction" when comparing the specification with the patent claim and, on the other hand, the requirement of § 112(a) that the specification set forth a written description of the claimed invention. For its part, the district court here suggested in a footnote that the two doctrines have substantial overlap – writing that "the Court would [also] find it exceedingly difficult to preserve the validity of the ′662 in light of the requirements set forth in 35 U.S.C. § 112 ¶ 1 … [since] the specification simply does not disclose [the claimed] invention."

It appears to me that the overlap is likely complete. However, there is one important procedural distinction – that the inquiry under § 112(a) is generally seen as a question of fact while the inquiry under § 112(b) is a question of law. See Enzo Life Sciences, Inc. v. Digene Corp., 305 F.Supp.2d 406 (Fed. Cir. 2004). All things being equal, questions of law tend to be easier to resolve earlier in the case – such as on summary judgment. However, questions of law are also ordinarily more vigorously reviewed on appeal.

= = = = =

Read the CAFC Opinion and the District Court Opinion.

Federal Circuit Affirms District Court’s Refusal to Allow Amendment of Contention Interrogatories

Ethics

Emphasizing that even though discovery had not closed, the court unanimously affirmed a district court's decision not to permit amendment of contentions relating to infringement and claim construction.  The cae is Kruse Techn. Partnerships v. VW, opinion by Judge Linn (joined by Judge Newmann).  Judge Wallach dissented on claim construction grounds.

This is one of those tough issues:  you have to get your claim construction contention correct, early, but… even what the district court holds has a large chance of being wrong.  Bottom line is amend early, though not often.

Judge: Abolish Exclusive Jurisdiction of CAFC Over Patent Appeals

Ethics, , ,

Chief Judge Woods of the Seventh Circuit spoke recently and said that the CAFC was "uniformly bad."  An article with link to the text of her remarks, is here.  The link to the text is here.

Wow.

I started doing patent cases in September, 1989.  At that time, I could argue anticipation from multiple unrelated references.  Claim construction?  Maybe leave it for the jury, maybe the judge, maybe never decide it.  DOE was the wild west.  The court has done a lot of good.

Nowadays the disputes to me are narrower, but important.  Section 101 is an obvious (ha, ha) area where the make-up of the panel could be outcome determinative.  But that would probably be the case no matter who was trying to understand what the Supreme Court believes the law ought to be.  

Those key splits I mentioned up front were, in contrast, fundamental questions that had never been resolved among the circuits despite 30 years of work with the patent act.   Patent law is a lot better than it was — better — and it is a lot more efficient than it was — I know who is going to tell me what the claim means, and a lot of (albeit indeterminate) rules to help me figure that out.  DOE is nowhere like it was.  Damages — you would not recognize the damaegs theories we used to be able to assert.

Could it be better?  I have no doubt about that it can: it is a human institution.  The role of prior panel decisions sometimes is not given enough weight (a pet peave I'll write about under Section 285, shortly).

Would replacing it with the "old" system make it better?  I have no doubt whatsoever that it would not.  I have no doubt it would make things worse.