Tag Archives: Claim Construction

Sarnoff: The Patent Act’s Mention of Business Method Patents Does Not Mean that Section 101 Should Extend to Cover Business Methods

Patent,

Section 273 of the Patent Act mentions the possibility of a patent covering “a method of doing or conducting business.” Part of Bilski’s petition for certiorari relies on that section as an argument that Congress intended for Section 101 to cover business methods. That argument is a red herring — The Federal Circuit's Bilski decision did not eliminate business method patents. Rather, the decision only requires that any claimed process meet the machine-or-transformation test.

In his Federal Circuit amicus brief, professor Joshua Sarnoff wholly rejected the implication that Section 273 proves that Congress intended the Patent Act to extend coverage to novel business methods. He argues as follows:

Sarnoff: … [T]he State Street Bank decision did not motivate the enactment of Section 273’s prior user rights provision. Rather, it motivated restriction of that provision to business methods from an earlier and broader proposal.[2] Congress did not approve of this Court’s decision, but focused on business methods because it felt that the strongest fairness arguments for a prior user defense existed in regard to the newly patentable subject matter.[3] As stated by Senator Schumer, Section 273 “should be viewed as just the first step in defining the appropriate limits and boundaries of the State Street decision…. I believe that it is time for Congress to take a closer look at the potentially broad and, perhaps, adverse consequences of the State Street decision.”[4]

Ratification should not be found here, given that Congress did not amend Section 101 or otherwise specifically address patent eligibility.[5] Instead, Congress created only an isolated change to the law that responded to specific concerns raised by this Court’s changed interpretation of Section 101. See, e.g., Alexander v. Sandoval, 532 U.S. 275, 292 (2001) (“when, as here, Congress has not comprehensively revised a statutory scheme but has made only isolated amendments, we have spoken more bluntly: ‘It is “impossible to assert with any degree of assurance that congressional failure to act represents” affirmative congressional approval of the Court's statutory interpretation.’”) (citations omitted). Similarly, ratification should not be found here, given that the State Street Bank holding was a significant change to the law and conflicted with binding Supreme Court precedent. See, e.g., Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 185 (1994) (ratification is implied when Congress “reenact[s] statutory language that has been given a consistent judicial construction”).[6] Had Congress thought that adopting a new defense to liability might affect subsequent interpretation of Section 101, it could have expressed its intent either to alter or to preserve earlier law – as it did with regard to Sections 102 and 103. See 35 U.S.C. § 273(b)(9) (2000).[7]

Moreover, ratification of the “useful, concrete, and tangible result” test as applied in State Street Bank would pose serious constitutional concerns by authorizing patents for claims reflecting only insignificant post-solution activity. The test would thereby encroach on permissible public uses of categorically excluded public domain information, potentially extending protection beyond any inventive concept properly attributable to the applicant and retarding rather than promoting sequential innovation. It would require patents for non-technological inventive concepts, extending protection to activities that may not be within the useful arts (however broadly or narrowly that category is construed).

Given the reasonable alternative interpretation discussed above, this Court should not construe Section 273 to have ratified the “useful, concrete, and tangible result” test as applied in State Street Bank. See, e.g., Gomez v. United States, 490 U.S. 858, 864 (1989) (describing “settled policy to avoid an interpretation of a federal statute that engenders constitutional issues if a reasonable alternative interpretation poses no constitutional question”); Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 346-48 (Brandeis, J., concurring) (establishing the policy). Finding such ratification would force the Court to decide whether Section 101 (at least since 1999) is constitutional. Cf. Richardson v. United States, 526 U.S. 813, 820 (1999) (“We have no reason to believe that Congress intended to come close to, or to test, those constitutional limits when it wrote this statute”). Without ratification, the binding Diehr-Flook precedent remains the law and avoids any such constitutional concerns.

[1] See, e.g., H.R. Rep. 106-464, 121 (1999) (Conf. Rep.) (“business methods and processes, many of which until recently were thought not to be patentable”); id. at 122 (the “1998 opinion … in State Street Bank … which held that methods of doing business are patentable, has added urgency to the issue.… [T]housands of methods and processes used internally are now being patented.”). See also H.R. Rep. 106-287, 45-46 (1999) (“many businesses … thought secrecy was the only protection available,” and such methods “previously had been thought to be unpatentable”); Cong. Rec. E1789 (Aug. 5, 1999) (speech of Rep. Coble) (same); Cong. Rec. S13259 (Oct. 27, 1999) (statement of Sen. Hatch) (same).

[2] See, e.g., Cong. Rec. H6944 (Aug. 3, 1999) (statement of Rep. Rohrbacher). Cf. H.R. Rep. 106-464, 121 (noting importance of the “earlier-invention defense” to “any business that relies on innovative business processes and methods”).

[3] See, e.g., Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer) (the “decision has raised questions about what types of business methods may now be eligible for patent protection…. It has created doubt regarding whether or not particular business methods … might now suddenly become subject to new claims under the patent law.”); Cong. Rec. H6947 (Aug. 3, 1999) (statement of Rep. Manzullo) (Congress “felt that those who kept their business practices secret had an equitable cause not to be stopped by someone who subsequently reinvented the method”). Congress limited the defense to business methods because it believed that the law had been changed only in regard to such methods. See id.

[4] Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer)

[5] Congress expressly acknowledged that State Street Bank altered the law in regard both to “the business method exception” and to “the essential question of whether the invention produced a ‘useful, concrete, and tangible result.’” H.R. Rep. 106-464, 122.   However, Congress did not approve of that result. Rather, it noted only that the new defense applied to systems as well as to processes. See id. at 123.

[6] Cf. Food and Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 157 (2000) (finding effective ratification from enactment of a specific set of separate regulatory provisions, at a time when the agency’s interpretation had historic “consistency”); Brown v. Gardner, 513 U.S. 115, 121 (1994) (“‘[w]here the law is plain, subsequent reenactment does not constitute an adoption of a previous administrative construction.’”) (citation omitted); Fogerty v. Fantasy, 510 U.S. 517, 532 (1994) (rejecting effective ratification and noting that “this is hardly the sort of uniform construction that Congress might have endorsed.”).

[7] See also H.R. Rep. 106-464, 124-25; H.R. Rep. 106-287, 49.

Patently-O Bits and Bytes No. 86

Bits and Bytes, Patent
  • Supreme Court Petitions Pending:

    • FTC v. Rambus: Duties of a patent holder in standard setting negotiations. (To be discussed in more detail this week.)
  • Apotex Corp. v. AstraZeneca AB: This case involves a burden of proof. Should an accused product be found non-infringing if the accused demonstrates that it merely practiced the prior art. Non-infringement is proven by a preponderance of the evidence rather than clear and convincing evidence.
  • MuniAuction v. Thomson Corp.: Challenges the Federal Circuit’s single actor requirement for patent infringement.
  • Forest Labs. v. Caraco Pharmaceutical: Whether DJ jurisdiction can exist after the patentee has granted an ANDA applicant a covenant not to sue.
  • Burandt v. Dudas: When is a failure to pay “unavoidable”
  • Apotex v. Roche: Is there any meat in the reverse doctrine of equivalents.
  • Energizer v. ITC: How should a court conduct claim construction?
  • 800 Adept, Inc. v. Murex Securities: De novo review of claim construction.

  • New Patent Law Jobs:

  • Oblon Spivak next door to the PTO
  • US Patent Attorney in Japan
  • Dolby Labs in San Francisco
  • Warner Norcross firm in Grand Rapids
  • Leonard Hope is giving up blogging and is looking for a buyer for his domain patentprosecutionblog.com. Let me know if you restart the site.

    • Supreme Court Patent Update

    Claim Construction, Inequitable Conduct, Patent, State Immunity,

    Completed Cases: The Supreme Court has denied certiorari of two pending appeals: BPMC v. California and Rattler Tools v. Bilco. In BPMC, the patentee had challenged the Western state’s defense of sovereign immunity. In Rattler Tools, the appeal challenged a non-precedential claim construction opinion.

    Upcoming Case: In a recently filed petition, 800 Adept has asked the Supreme Court to build on its 1995 Markman decision and consider “whether a district judge’s construction of a patent claim is ever entitled to deference upon appellate review, or, instead, are all such claim constructions reviewable only de novo, as the Federal Circuit has, over many dissenting opinions, held?” In this case, the Federal Circuit had reversed the lower court’s claim construction and – as a consequence – also reversed the jury verdict of infringement. [Link]. FTC v. Rambus is the most likely candidate of patent cases in the petition stage. That case involves the activities of a patentee during a standard setting process. In a related case, well respected Federal Judge Sue Robinson held that Rambus could not enforce twelve of its patents against Micron as a penalty for litigation misconduct. [Link]

    Muddling Through Claim Construction

    Claim Construction, Patent, Patent Cases 2009,

    Vehicle IP v. General Motors Corp. and OnStar (Fed. Cir. 2009)(Nonprecedential)

    VIP’s patent covers a vehicle navigation system. After construing the asserted claims, the W.D. Wisc. court granted summary judgment of non-infringement. This appeal focuses on construction of the phrase “a notification region defined by a plurality of notification coordinates.”

    The infringing systems use scalars – such as a distance – and the debate is whether those scalars fit the claimed “coordinates” limitation. The majority opinion (Prost & Bryson, JJ) held that the “plain language of the claims precludes the possibility that a coordinate can be a scalar.” According to the claim, the location of the device must “substantially corresponds to a notification coordinate,” and a bare distance does not correlate to a location. The majority also found suggestions in the prosecution history supporting a narrow construction of coordinate.

    In dissent, Judge Mayer would not have limited the coordinate to “a longitude latitude pair.”

    “In mathematics, there are many types of coordinate systems and the common ground is that they all define a point. For instance, in a curvilinear system, coordinates are defined with a fixed origin point, and a scalar distance offset from that point along a known curve, such as a section of road. A distance offset necessarily has a “partner” to define a point, as offsets are necessarily set off from another known point. A coordinate should not be construed to exclude defining a point by an offset from another point along a known path.”

    In Hal Wegner’s words, this decision “demonstrates the different views that can be reached by reasonable minds on claim construction issues which, due to appellate de novo review, creates the opportunities for so much judicial uncertainty.” And, as suggested by dissenting judges in Phillips v. AWH, that en banc decision did little to create predictability in claim construction.

    PTO must interpret claims in light of specification and as they would be interpreted by PHOSITA

    Patent, ,

    In re Wheeler (Fed. Cir. 2008) (non-precedential).

    Wheeler’s patent application covers a fishing pole with an illuminated transparent rod. A light in the handle illuminates the whole rod. The BPAI found the invention anticipated by another illuminated fishing rod patent. On appeal, however, the Federal Circuit reversed.

    The difference is one of claim construction. The BPAI held that the claim only required a portion of the rod be illuminated, but the Federal Circuit interpreted the claims to require that the entire rod be illuminated. Since the prior art only disclosed a partially illuminated rod, the question of anticipation turned on this claim construction issue.

    PTO Claim Construction: As with district court decisions, BPAI claim construction decisions are reviewed de novo on appeal. However, the law of claim construction allows the PTO to construe claims much more broadly than would a district court. In particular, during prosecution, claims are given their “broadest reasonable interpretation to facilitate precision in claiming.” Of course, even at the PTO “claim language should be read in light of the specification as it would be interpreted by one of ordinary skill in the art.”

    Here, Wheeler’s patent claims “an illuminated fishing pole…made from a transparent, flexible material.” The specification also states that the entire fishing rod is transparent and lighted along its length. Applying its interpretation, the Federal Circuit found that the claim required that the entire rod be transparent and lit. Because that limitation was not found in the prior art, the claim is considered novel.

    BPAI: PTO Should Apply Broadest Reasonable Claim Interpretation to Section 101 Analysis

    Patent, , ,

    Ex parte Koo (BPAI 2008)

    Acting sua sponte, a BPAI panel recently entered a new ground for rejection against an IBM patent application: That the claimed process is unpatentable subject matter based on the Federal Circuit’s recent en banc decision in Bilski. The claim is directed to a method of optimizing relational database queries and appears to be specifically directed to speeding up queries where a table is joined to itself. Although the preamble does focus on a “relational database management system,” the body of the claim does not refer to any specific machinery beyond queries, sub-expressions, rows, and sets.

    The legal point to consider from this case is that the PTO will apply its “broadest reasonable” claim interpretation during its §101 analysis. Here, the BPAI panel found that the broadest reasonable interpretation of IBM’s claim does not necessarily “require computer or machine implementation” and thus that the claim fails the “tied to a particular machine” prong of Bilski machine-transformation test.

    “Claim 1 does not recite any steps that necessarily involve machine implementation. While the preamble of claim 1 recites a “system,” the “system” of claim 1 is not recited in terms of hardware or tangible structural elements. Rather, the “system” could be a software system, where the elements of claim 1 are implemented solely in software or algorithms. Thus, the nominal recitation of a “system” in the preamble does not transform claim 1 into patentable subject matter under § 101.”

    The BPAI also found that the claim “does not call for any transformation of an article to a different state or thing, nor does it require any transformation of data or signals.” Based on the claimed step of “reforming the query,” I would argue that the claim does require a transformation, but that transformation does not satisfy Bilski because the thing transformed (the query) is not “representative of physical objects or substances.”

    Notes & Comment

    • In the appeal, the BPAI overturned the examiner’s obviousness rejection based on the absence of a “self join” in the cited prior art.
    • The disputed claim:

    1. A method for optimizing a query in a relational database management system, the method comprising:

    • evaluating the query to determine whether a sub-expression of the query is being joined to itself and whether a predicate of the query comprises an equality test between a same column of the sub-expression;
    • determining whether a first row set producible from a first set of references of the query to the sub-expression is subsumed by a second row set producible from a second set of references of the query to the subexpression; and
    • reforming the query to eliminate the joining of the sub-expression to itself based on evaluation of the query and determination of whether the first row set is subsumed by the second row set.

    Means-Plus-Function Fools Gold

    Patent

    Welker Bearing v. PhD, Inc. (Fed. Cir. 2008)

    Mechanism For: Welker’s patent claims a clamping mechanism for holding parts in place when welding. The appeal focuses on construction of a “mechanism for moving said finger.” Affirming a prior similar ruling, the Federal Circuit found that the claim structure “mechanism for [performing a function]” is presumptively interpreted as a means-plus-function claim element.

    “The term ‘mechanism’ standing alone connotes no more structure than the term ‘means.'” Quoting MIT v. Abacus Software, 462 F.3d 1344 (Fed. Cir. 2006).

    Instead of claiming a “mechanism for moving said finger,” the patentee could have claimed a “finger displacement mechanism.” Opining on that counterfactual, the Federal Circuit noted that it would not have presumed a means-plus-function construction.

    “If claim 1 … had recited, e.g., a “finger displacement mechanism,” a “lateral projection/retraction mechanism,” or even a “clamping finger actuator,” this court could have inquired beyond the vague term “mechanism” to discern the understanding of one of skill in the art. If that artisan would have understood such language to include a structural component, this court’s analysis may well have turned out differently. Instead the applicant chose to express this claim element as “a means or step for performing a specified function without the recital of structure, material, or acts in support thereof.””

    A reminder here: means-plus-function language is akin to fools gold. Welker’s “mechanism” claim appears broadly written until means claim interpretation doctrine limited to the particular structures disclosed in the specification that perform the claim function and structures that are only insubstantially different. Here, Welker described a linear finger movement which was considered substantially different from a rotational movement.

    Means-Plus-Function Equivalents versus Doctrine of Equivalents: Means-plus-function claims are interpreted to cover only structures disclosed in the specification that perform the claimed function and, in addition, any equivalents of those disclosed structures.  On its face, this appears duplicative of the traditional doctrine of equivalents (DOE). In this case, the Federal Circuit spells out some differences between the two. Most notably, “an equivalent structure [for means-plus-function analysis] under § 112 ¶ 6 must have been available at the time of the issuance of the claim, whereas the doctrine of equivalents can capture after-arising technology developed after the issuance of the patent.”  This statement by the court does not, however, precisely explain the distinction.  For means-plus-function claims, court precedent allows the doctrine of equivalents to only capture after-arising technology.  [Link] “Indeed this case does not present a case for equivalents under the doctrine of equivalents at all. This case presents only the question of structural equivalents under §112 ¶ 6.”

    Court: Parties Must Justify Need for Claim Construction

    Patent

    IP Cleaning v. Annovi Research (W.D. Wisc. 2008)

    IPC has accused Annovi of infringing its patent covering a high-pressure washer. Although only a single claim is in dispute, both parties requested that the court construe several claim terms. In a recent order, however, the court denied both motions for claim construction because neither party had “persuade[d] the court that construction of each specified term is necessary to resolve a disputed issue concerning infringement or invalidity” beyond the generic statement of resolving issues of infringement and validity. According to the court, it will only resolve claim construction disputes where the parties have a “concrete dispute” that will impact the outcome.

    “The reason for the order is not to require parties to parrot its language before the court construes claim terms; it is to avoid the devoting judicial resources to the issuance of advisory opinions on the construction of claim terms about which the parties have no concrete dispute. As much as the parties may hate to show their hands at this early stage, they must do so, if they hope to seek the benefit of claim construction before filing motions for summary judgment. Because the parties have disregarded the order and failed to demonstrate the basis for requesting construction of the terms they dispute, their motions requesting claim construction will be denied.”

    This decision is in tension with O2 Micro v. Beyond Innovation (Fed. Cir. 2008). In that case, the Federal Circuit found that the lower court had improperly refused to construe certain disputed terms. “When the parties raise an actual dispute regarding the proper scope of these claims, the court, not the jury, must resolve that dispute. . . . When the parties present a fundamental dispute regarding the scope of a claim term, it is the court’s duty to resolve it.” O2 Micro. The two cases may be distinguished on the ground that in IP Cleaning, the parties have not yet shown an “actual dispute regarding the proper scope” of the claims.

    Federal Circuit Affirms Narrow Construction of “Internet Billing Method”

    Patent,

    Netcraft Corp v. eBay and PayPal (Fed. Cir. 2008)

    Netcraft sued eBay and PayPal for infringement of its patents that cover an “internet billing method.” During claim construction, the Western District of Wisconsin found that the limitation of “providing a communications link through equipment of the third party” requires that an infringer “provid[e] customers with internet access.” Of course, eBay and PayPal do not provide internet access.

    On appeal, the Federal Circuit affirmed the claim construction and summary judgment of non-infringement.

    Three reasons why the claim was narrowly construed:

    1. In many cases, claim construction issues are won or lost in the process of defining which “term” is going to be construed. The patentee argued that the term “communications link” was broadly written and amenable to broad construction. The defendants argued that the element in question was actually the entire process of “providing a communications link through the equipment of the third party.” That entire process is more amenable to a narrow interpretation.”
    2. The patentee did not help its cause by adding the “communications link” to the claims during prosecution. The term is not used anywhere in the specification – consequently, the patentee had little ammunition for arguing for a broad interpretation.
    3. The specification declares several “objects of the present invention,” including providing internet access. Also, the abstract includes a statement regarding an “agreement between an Internet access provider and a customer.” And, there is no specific language indicating that these statements are directed at “alternative embodiments.” [Note here, a distinction between alternative embodiments and optional functions.]

    Affirmed.

    Federal Circuit Affirms Narrow Construction of “Internet Billing Method”

    Patent,

    Netcraft Corp v. eBay and PayPal (Fed. Cir. 2008)

    Netcraft sued eBay and PayPal for infringement of its patents that cover an “internet billing method.” During claim construction, the Western District of Wisconsin found that the limitation of “providing a communications link through equipment of the third party” requires that an infringer “provid[e] customers with internet access.” Of course, eBay and PayPal do not provide internet access.

    On appeal, the Federal Circuit affirmed the claim construction and summary judgment of non-infringement.

    Three reasons why the claim was narrowly construed:

    1. In many cases, claim construction issues are won or lost in the process of defining which “term” is going to be construed. The patentee argued that the term “communications link” was broadly written and amenable to broad construction. The defendants argued that the element in question was actually the entire process of “providing a communications link through the equipment of the third party.” That entire process is more amenable to a narrow interpretation.”
    2. The patentee did not help its cause by adding the “communications link” to the claims during prosecution. The term is not used anywhere in the specification – consequently, the patentee had little ammunition for arguing for a broad interpretation.
    3. The specification declares several “objects of the present invention,” including providing internet access. Also, the abstract includes a statement regarding an “agreement between an Internet access provider and a customer.” And, there is no specific language indicating that these statements are directed at “alternative embodiments.” [Note here, a distinction between alternative embodiments and optional functions.]

    Affirmed.

    Patently-O Bits and Bytes

    Patent,
    • Model Jury Instructions: More on this in an upcoming post. At Judge Michel’s request an all star cast of patent law experts have hammered out a set of model jury instructions for patent infringement actions. [Link][Comments welcome to PatentJuryInstructions@gmail.com]
    • BPAI Appeal rules have been stayed – Most likely until after January 20.
    • Two keen jobs:
      • Fellow at Berkeley Law School (Sponsored by Microsoft). Apply by February 1, 2009 [Link]
      • Appellate Litigator for the USPTO Solicitor’s Office. Apply by January 9, 2009 [Link]
    • Does stare decisis apply to a previous court’s unappealed claim construction decision? See Shire v. Sandoz
    • Donoghue: “Breach of Patent Settlement Does Not Create Federal Jurisdiction” [Link]
    • Barkoff: “Federal Circuit Affirms $16.8 Million Award of Fees to Takeda in Pioglitazone Case” [Link]
    • In house counsel Brian Schar writes the American Intellectual Property Abstract (American IPA)
    • Mullin provides an update on the Troll Tracker defamation suit.
    • The Trading Secrets blog has some useful information on protecting rights via employee agreements. [Link]

    Patently-O Bits and Bytes

    Patent,
    • Model Jury Instructions: More on this in an upcoming post. At Judge Michel’s request an all star cast of patent law experts have hammered out a set of model jury instructions for patent infringement actions. [Link][Comments welcome to PatentJuryInstructions@gmail.com]
    • BPAI Appeal rules have been stayed – Most likely until after January 20.
    • Two keen jobs:
      • Fellow at Berkeley Law School (Sponsored by Microsoft). Apply by February 1, 2009 [Link]
      • Appellate Litigator for the USPTO Solicitor’s Office. Apply by January 9, 2009 [Link]
    • Does stare decisis apply to a previous court’s unappealed claim construction decision? See Shire v. Sandoz
    • Donoghue: “Breach of Patent Settlement Does Not Create Federal Jurisdiction” [Link]
    • Barkoff: “Federal Circuit Affirms $16.8 Million Award of Fees to Takeda in Pioglitazone Case” [Link]
    • In house counsel Brian Schar writes the American Intellectual Property Abstract (American IPA)
    • Mullin provides an update on the Troll Tracker defamation suit.
    • The Trading Secrets blog has some useful information on protecting rights via employee agreements. [Link]

    During prosecution, claims are indefinite when amenable to multiple plausible constructions

    Indefinite, Patent,

    Ex parte Miyazaki (BPAI Precedential 2008)

    In a rare precedential opinion, the Board of Patent Appeals and Interferences (BPAI) has re-defined the standard for a §112 indefiniteness rejection during patent prosecution. The BPAI’s definition for pre-issuance indefiniteness focuses on ‘plausible’ indefiniteness and varies dramatically from the Federal Circuit’s standard of ‘insolubly ambiguous.’ The BPAI argues that a lower threshold of ambiguity is justified pre-issuance because it gives the PTO power to ensure that claims are “precise, clear, correct, and unambiguous.”

    As such, we employ a lower threshold of ambiguity when reviewing a pending claim for indefiniteness than those used by post-issuance reviewing courts. In particular, rather than requiring that the claims are insolubly ambiguous, we hold that if a claim is amenable to two or more plausible claim constructions, the USPTO is justified in requiring the applicant to more precisely define the metes and bounds of the claimed invention by holding the claim unpatentable under 35 U.S.C. § 112, second paragraph, as indefinite.

    The expanded indefiniteness examination runs parallel to the PTO’s approach of broadly construing claims during prosecution. Both tactics are intended to better ensure that issued patents can be counted-on as being valid patents.

    The Federal Circuit’s insolubly ambiguous standard is premised on the strong presumption of validity associated with an issued patent. The BPAI grounds its lower threshold in the notion that patent applications have no presumption of validity.

    Read the BPAI Miyazaki Opinion: /media/docs/2008/12/fd073300.pdf

    Constitutional Separation of Powers

    Patent,

    The structure of the US Constitutional is designed to separate governmental powers. In patent law, separation of powers issues continue to arise – largely because the executive branch (PTO) and the judicial branch (Federal Courts)* decide many of the same patent law issues. Post-grant procedures such as reexamination and reissue complicate the scene because those avenues allow for parallel decisionmaking by the two bodies. Notably, most inter partes reexaminations involve parallel patent infringement litigation. Usually, a district court will reach its result before the PTO, and questions then arise as to the PTO’s subsequent power to affirm or deny patentability.

    Although it appears to be more of a statutory construction issue, BlackBoard recently sued the USPTO (Dudas) in a case involving these issues. Originally, BlackBoard sued Desire2Learn for patent infringement and Desire2Learn subsequently requested inter partes reexamination of the asserted patent. In February 2008, a Texas jury found the asserted claims valid** and infringed. (**i.e., not invalid). The District Court did not issue its final judgment until May 2008. That case is pending appeal at the Federal Circuit. In the meantime, in March 2008, the PTO issued an initial rejection of the claims and has, more recently, refused to end the reexamination.

    Under 35 U.S.C. §317(b), an inter partes reexamination must be stopped by the PTO if the requestor’s invalidity argument is rejected in a civil action and a “final decision has been entered.”

    FINAL DECISION – Once a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28, that the party has not sustained its burden of proving the invalidity of any patent claim in suit … [then] an inter partes reexamination requested by that party or its privies on the basis of such issues may not thereafter be maintained by the Office, notwithstanding any other provision of this chapter. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings. 35 U.S.C. §317(b)

    BlackBoard argues that the final decision by the Federal Court in Texas strips the PTO of authority to maintain the inter partes reexamination. The PTO, on the other hand, maintains that the litigation is not really final until Desire2Learn exhausts all appeals.

    Notes:

    • In addition to the PTO and Courts, the International Trade Commission (ITC) is a third decisionmaking body that is considered a quasi-judicial governmental agency. There are some cases where the same patent and same parties have been simultaneously involved in disputes in all three forums.
    • BlackBoard complaint
    • Desire2Learn Patent Infringement Blog
    • As a work-around, Desire2Learn has its servers located Canada. The only valid BlackBoard claims are “method” claims, and, under RIM v. NTP, a method claim is only infringed if each step of the method is performed in the USA.

    Patently-O Bits and Bytes No. 78

    Patent
    • FTC Hearings on the “evolving IP marketplace” http://www.ftc.gov/opa/2008/11/ipmarketplace.shtm. December 5. How it will play out: In the next year, the FTC will likely publish a new report on the state of patent law in the US. That report will serve as the basis for any patent reform measures in 2010.
    • Interesting article by Jim Klaiber in IP Today. He writes about a recent nonprecedential CAFC that seemingly expanded the limitations on claim amendments during reexamination. His piece is titled: Reexamination Amendments Made for an Improper Purpose – A New Basis For Invalidity Under 35 U.S.C. § 305.
    • I am now on twitter: http://twitter.com/patentlyo. tweet tweet.
    • The Federal District Courts in New Jersey are contemplating new local patent rules. IPO offers its “six principles” for local patent rules:
      • (1) early identification and mutual mandatory disclosure of essential infringement and validity-related discovery and consideration of staying non-essential discovery until after a claim construction decision is issued in a case;
      • (2) early disclosure and appropriate staging of detailed infringement and invalidity contentions;
      • (3) early supplementation of detailed infringement and invalidity contentions supported by identification of specific evidence produced in the early mandatory disclosures;
      • (4) scheduling any claim construction procedure early in the case but after detailed contentions have been exchanged;
      • (5) identification of claim limitations most important to the outcome of the case; and
      • (6) consideration of dispositive motions as early as appropriate to narrow issues or resolve cases without non-essential discovery.
    • TIME: Best Inventions of 2008
    • Wish List 2008: For the past few years, I have assembled a top-ten list of holiday gifts for patent attorneys and agents. I have heard from several spouses that actually used the list. So – let Santa’s helper (me) know if there are any particular machines or articles that should make the list.

    Patently-O Bits and Bytes No. 78

    Patent
    • FTC Hearings on the “evolving IP marketplace” http://www.ftc.gov/opa/2008/11/ipmarketplace.shtm. December 5. How it will play out: In the next year, the FTC will likely publish a new report on the state of patent law in the US. That report will serve as the basis for any patent reform measures in 2010.
    • Interesting article by Jim Klaiber in IP Today. He writes about a recent nonprecedential CAFC that seemingly expanded the limitations on claim amendments during reexamination. His piece is titled: Reexamination Amendments Made for an Improper Purpose – A New Basis For Invalidity Under 35 U.S.C. § 305.
    • I am now on twitter: http://twitter.com/patentlyo. tweet tweet.
    • The Federal District Courts in New Jersey are contemplating new local patent rules. IPO offers its “six principles” for local patent rules:
      • (1) early identification and mutual mandatory disclosure of essential infringement and validity-related discovery and consideration of staying non-essential discovery until after a claim construction decision is issued in a case;
      • (2) early disclosure and appropriate staging of detailed infringement and invalidity contentions;
      • (3) early supplementation of detailed infringement and invalidity contentions supported by identification of specific evidence produced in the early mandatory disclosures;
      • (4) scheduling any claim construction procedure early in the case but after detailed contentions have been exchanged;
      • (5) identification of claim limitations most important to the outcome of the case; and
      • (6) consideration of dispositive motions as early as appropriate to narrow issues or resolve cases without non-essential discovery.
    • TIME: Best Inventions of 2008
    • Wish List 2008: For the past few years, I have assembled a top-ten list of holiday gifts for patent attorneys and agents. I have heard from several spouses that actually used the list. So – let Santa’s helper (me) know if there are any particular machines or articles that should make the list.

    Anticipation Requires More Than Disclosing All the Elements

    Anticipation, Means Plus Function, Patent, Patent Cases 2008, ,

    Net MoneyIn v. Verisign (Fed. Cir. 2008)

    NMI sued Verisign and others for infringing its credit card processing patent. One of NMI’s claims was found anticipated by a single prior art reference. That reference taught each element in the invalidated claim. However, there was no single example that taught all the elements together.

    On appeal, the Federal Circuit reversed – holding that anticipation takes more than simply locating each element within the four corners of a single document.

    In its rebuttal, the appellate panel focused on the concept anticipating the invention. To anticipate, the prior art must teach all the claim elements and the claimed arrangement.

    Section 102 embodies the concept of novelty—if a device or process has been previously invented (and disclosed to the public), then it is not new, and therefore the claimed invention is “anticipated” by the prior invention. . . . Because the hallmark of anticipation is prior invention, the prior art reference—in order to anticipate under 35 U.S.C. § 102—must not only disclose all elements of the claim within the four corners of the document, but must also disclose those elements “arranged as in the claim.”

    Focusing for a moment on arrangement – to anticipate, the reference must teach “all of the limitations arranged or combined in the same way as recited in the claim.”

    Applying the rule to this case, the appellate panel found that the prior art reference was not anticipating. The reference disclosed two transaction protocols, but neither protocol contained all of the elements combined in the manner claimed. “Thus, although the iKP reference might anticipate a claim directed to either of the two protocols disclosed, it cannot anticipate the system of claim 23. The district court was wrong to conclude otherwise.”

    Means Plus Function: After claim construction, the district court also found NMI’s means-plus-function claims invalid because they lacked any corresponding structure in the specification. On appeal, the Federal Circuit affirmed.

    The patent statute allows patentees to draft claims in more generic ‘means plus function’ language. That language allows a patentee claim various elements based on their function. However, means plus function claims are only valid if the specification describes some structure to carry out the proposed function. According to the courts, this structure requirement is separate from any enablement requirement. Thus, some structure must be provided in the specification even if one skilled in the art would not need that disclosure to make the invention.

    Here, NMI claimed a “[a bank computer including] means for generating an authorization indicia” but did not provide any corresponding structure in the specification to perform that structure.

    On appeal, NMI incredibly argued that the claim was not a means-plus-function claim. The Federal Circuit disagreed – finding that the claim lacks structure.

    Searching for structure in the specification, NMI pointed to its recitation of a “bank computer.” Of course that recitation is insufficient.

    ‘To avoid purely functional claiming in cases involving computer-implemented inventions, we have “consistently required that the structure disclosed in the specification be more than simply a general purpose computer or microprocessor.” Quoting Aristocrat

    …

    Consequently, a means-plus-function claim element for which the only disclosed structure is a general purpose computer is invalid if the specification fails to disclose an algorithm for performing the claimed function.

    Holding of MPF claim invalidity affirmed.

    IGT Petitions for En Banc Rehearing: Asking Court to Allow Invalidity Defense for “Improper Revival”

    Patent, ,

    Aristocrat v. IGT (Fed Cir. 2008 – on rehearing) ITG PETITION

    IGT has petitioned the Federal Circuit for a rehearing en banc. IGT asks the court to consider which violations of the Patent Act would be sufficient to render a patent invalid during litigation.

    In this case, Aristocrat filed its US national-stage application one day late. The PTO allowed the applicant to revive the application as unintentionally abandoned. In litigation, IGT argued that the patent should be held invalid as improperly revived because the statute only allows for revival of unavoidably abandoned applications in this situation.

    Without reaching the merits of IGTs validity argument, the Federal Circuit summarily dismissed IGT’s claim – finding that ‘improper revival’ is not a ‘cognizable defense’ because it does not fit within any of the four defenses listed in 35 U.S.C. §282 and it is not otherwise justified in equity.

    This unanimous decision – signed by Judges Newman, Bryson, and Linn – has broader implications. It calls into question whether traditional invalidity defenses such as nonstatutory double patenting and improper inventorship remain. IGT provides its own list of challenges that will be barred even after PTO error. Notably the gaming company argues that under the new rule, improper revivals of any type could not be challenged nor could failure to pay the maintenance fees.

    In its brief, IGT seeks to overturn the panel’s narrow interpretation of a “condition for patentability.” Section 282(2) allows for an invalidity defense based on failure to meet a condition for patentability. However, the appellate panel limited that section only to issues of novelty, utility, and nonobviousness.

    ‘Section 131 supports [a] common sense reading of the statute. It states that the PTO “shall issue a patent” only if “the applicant is entitled to a patent under the law.” 35 U.S.C. § 131. The plain meaning of that provision is that lawful entitlement to a patent is a condition of patentability. An applicant who abandoned its application without reviving it under the statutory mandated standard is not lawfully entitled to a patent and should have no right to enforce it. The panel’s decision overthrows these common-sense principles as set forth in the Patent Act.’ IGT rehearing motion.

    IGT also argues that improper revival was “made a defense” by Congress when it created the law of abandonment that allows only revival for unavoidable delay in cases like these. IGT argue essentially that failure to comply with any patent statute is sufficient to render the patent invalid in litigation.

    Notes:

    • DDC Comment: The Case Should be Heard. The Patent Office serves as a threshold check to establish presumptive property rights. However, both the technology and the law are complicated enough to warrant a ‘second look’ to ensure that each legal requirement is met. It is clear that a significant number of issued patents would be found invalid if challenged. The second look could be through litigation challenges, reexamination proceedings, or some other ex post proceeding. This opinion, however, concludes that no challenge is available in a variety of potential cases. That result is wrong from a policy perspective and It appears that IGT has a strong statutory construction argument as well.
    • Hat Tip: Thanks to Chico Gholz and Mark Lemley for suggesting specific implications of the panel holding.

    “Indefiniteness is a Matter of Claim Construction”

    Indefinite, Patent, Patent Cases 2008,

    Praxair v. ATMI (Fed. Cir. 2008)

    Praxair’s patents cover pressurized storage containers for potentially hazardous gasses. The patents teach safety mechanisms to help prevent accidental rapid discharge. Of the three patents asserted against ATMI, the Delaware district court found two unenforceable due to inequitable conduct during prosecution. The asserted claims of the third patent were held invalid as indefinite under 35 U.S.C. §112¶2. On appeal, the Federal Circuit reversed-in-part.

    Inequitable Conduct: Each patent applicant has a duty to act with “candor, good faith, and honesty” when prosecuting patent applications. Material breach of this duty can result in any resulting patents being held unenforceable due to inequitable conduct. Proof of inequitable conduct has been divided into two parts – requiring “clear and convincing evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO].” Quoting Cargill v. Canbra Foods, Ltd., 476 F.3d 1359 (Fed. Cir. 2007).

    Direct evidence is rarely available to prove intent to deceive the PTO when the patent applicant is accused of withholding material information. Rather, the intent element is typically inferred by the proof that the material withheld was highly material; that the applicant knew (or should have known) of the materiality; and that the applicant has no credible excuse for withholding information.

    Highly Material Based on Statements in Prosecution: Looking at Praxair’s ‘115 patent, the court did not see the withheld prior art as highly material on its own. However, the reference became highly material based on Praxair’s statements during prosecution. Specifically, the reference became highly material when Praxair told the PTO that the prior art does not teach the elements found in the withheld art. Testimony of the inventors proved that they knew that those elements were, in fact, in the prior art.

    Because those same prosecution statements were not submitted during prosecution of Praxair’s ‘609 patent, the Federal Circuit held that the withheld references could not be considered highly materiality.

    “At the time the four statements discussed were made during the prosecution of the ‘115 patent, there had already been a notice of allowability indicating that all claims of the ‘609 patent would be issued. ATMI has not established, or even asserted, that the statements in the prosecution of the ‘115 patent somehow infected the prosecution of the ‘609 patent. Absent the four statements, the district court did not make any finding of intent with respect to the withholding of RFO art during the prosecution of the ‘609 patent.”

    Thus, the Federal Circuit affirmed the unenforceability holding as to the ‘115 patent, but reversed as to the ‘609 patent. On remand, the lower court will reconsider infringement of the ‘609 patent based on a claim construction error.

    Indefinite Claims:

    “Indefiniteness is a matter of claim construction, and the same principles that generally govern claim construction are applicable to determining whether allegedly indefinite claim language is subject to construction. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1348 (Fed. Cir. 2005). Indefiniteness, like claim construction, is a question of law, and we review a district court’s entry of summary judgment on the issue of indefiniteness de novo.”

    Claims are generally only found indefinite if they are “insolubly ambiguous, and no narrowing construction can properly be adopted.” Here, the district court found the claim term “port body” of the third patent to be indefinite because it was “not described, labeled, or coherently discussed in the patent.” On appeal, however, the Federal Circuit reversed that finding – holding instead that the patent’s specification was adequate although not eloquent.

    “Although the discussion of the port body in the ‘895 patent’s specification may not be a model of clarity, the specification adequately explains that the port body is a housing that sealingly engages the outlet of the cylinder and defines the fluid discharge path.”

    Extrinsic evidence: As with claim construction, the use of extrinsic evidence in determining definiteness is only secondary if applicable at all. In this case, the patentee’s expert was unable to point to any specific portion of the structure that could be considered the “port body.” On appeal, the Federal Circuit rejected that factual element as lacking impact on the legal question of indefiniteness.

    “Even if we were to agree that Dr. Fronczak was unable to reach a single consistent construction of the port body, such extrinsic evidence would not prove the ‘895 patent invalid, since indefiniteness is a legal rather than a factual question.”

    Indefiniteness holding reversed.

    Dissenting in part, Judge Lourie saw no inequitable conduct with either patent. In particular, Judge Lourie noted that the evidence of intent to deceive the PTO was quite weak.

    “While a smoking gun may not be needed to show an intent to deceive, more is needed than materiality of a reference. The district court did not find anything further here. In addition, the court did not engage in any balancing of materiality and intent as is required by our precedent.”

    Federal Circuit: Failure to Obtain Non-Infringement Opinion May Serve As Evidence of Intent to Induce Infringement

    Inducement, Patent, Patent Cases 2008, ,

    Broadcom v. Qualcomm (Fed. Cir. 2008)

    A California jury found Qualcomm liable for infringing or inducing infringement of three Broadcom patents covering 3G mobile phone technology. (US Pat. Nos. 6,847,686, 5,657,317, and 6,389,010). On appeal, the Federal Circuit has invalidated one of the patents, but left the judgment and injunction standing.

    Seagate and Inducement: Like willfulness, inducing infringement requires proof of culpability. In Seagate, the Federal Circuit altered the standard for willful infringement – making it more difficult for a patentee to obtain treble damages. Consequently, in the willfulness context, there is no longer an “affirmative duty of due care” to avoid infringement. Here, Qualcomm argued (unsuccessfully) that the evidence available to prove inducement should be changed as well.

    More generally, the defendant argued that it could not be liable for inducement if it was not liable for willfulness because the specific intent standard for inducement is greater than the recklessness associated with willful infringement. On appeal, the Federal Circuit rejected these arguments – finding the inducement standards unchanged and finding that inducement may be found even when willfulness is absent. The crux of the holding may be that the “specific intent” requirement of inducement is not so specific. Under the leading inducement case DSU v. JMS, proof of inducing infringement requires evidence that the accused “intended to cause the acts that constitute the direct infringement,” and that the accused “kn[ew] or should have known [that] its action would cause the direct infringement.”

    The evidentiary argument was whether – for its inducement decision – the jury could consider Qualcomm’s decision to seek advice of counsel as circumstantial evidence of intent. The appellate panel saw such evidence as fair game.

    “Because opinion-of-counsel evidence, along with other factors, may reflect whether the accused infringer “knew or should have known” that its actions would cause another to directly infringe, we hold that such evidence remains relevant to the second prong of the intent analysis. Moreover, we disagree with Qualcomm’s argument and further hold that the failure to procure such an opinion may be probative of intent in this context. It would be manifestly unfair to allow opinion-of-counsel evidence to serve an exculpatory function, as was the case in DSU itself, see 471 F.3d at 1307, and yet not permit patentees to identify failures to procure such advice as circumstantial evidence of intent to infringe. Accordingly, we find no legal error in the district court’s jury instructions as they relate to inducement.”

    Too Broad: Prosecutors are typically careful to ensure that claims will be given a broad interpretation during litigation. If the claim is too broad, however, it will likely be found invalid. Here, Broadcom’s ‘686 patent digital video signal processor. The district court found that a ‘global controller’ was required for operation of the processor, but the Federal Circuit could not find that limitation in the claims or any justification from the specification. Without that limitation, the claim was invalid as anticipated.

    Broadcom’s argument for a narrow interpretation was based on its discussion of prior art admissions in the specification – arguing that its admitted prior art would invalidate a broad claim. The Federal Circuit did not reject that contention per se. Rather, the court rejected Broadcom’s version because the company had failed to show that its admitted prior art would actually anticipate the broad claim. “Because Broadcom has not demonstrated that “every limitation” of claim 1 is found in this reference, its self-invalidating argument must fail.”

    Late Claim Construction: Claim construction can happen at any stage of a case. Here, however, Qualcomm did not request a construction of the “network” term found in the ‘317 patent until after the jury had returned its verdict. On appeal, the Federal Circuit agreed with the lower court that Qualcomm had waived its right to demand construction of that term. “We agree that Qualcomm cannot be allowed to create a new claim construction dispute following the close of the jury trial.”

    ‘Qualcomm’s eleventh-hour attempt to litigate a newly minted claim construction controversy falls squarely within our holding in Eli Lilly & Company v. Aradigm Corporation, where a party “never requested that the district court construe any terms in [the relevant claim] and never offered a construction of [that claim],” but rather “[o]nly after the presentation of all of the evidence to the jury . . . even suggest[ed] that claim construction might be helpful to determine the proper scope of the claimed invention.” 376 F.3d 1352, 1360 (Fed. Cir. 2004).’

    Injunctions: District courts issue injunctions while sitting ‘in equity.’ This typically gives the court discretionary power to shape and craft relief in a way that best achieves the right result. Here, the district court pushed enforcement of the injunction back to January 31, 2009. In the meantime, Qualcomm pays mandatory damages and Broadcom has now power to stop continued infringement in this period.

    In the appeal, Broadcom argued that, under eBay, no permanent injunction should be awarded. In particular, Qualcomm had licensed its patents to Verizon for money – indicating that monetary relief is adequate and because the injunction will disrupt (non-Verizon) CDMA carriers (hardship) and will also be tough on the public. On appeal, the appellate panel rejected those arguments and instead found that the district court acted within its proper discretion by issuing the injunction order. (more to come on injunction order)

    Notes:

    • In the parallel Broadcom v. ITC, last week the Federal Circuit vacated the ITC’s non-infringement finding of another Broadcom patent. The ITC will reconsider that issue.

    A third parallel case, Kyocera v. ITC, is pending appeal at the Federal Circuit. In that case, the cell phone companies are appealing the ITC’s exclusion order regarding yet another Broadcom patent.