In a rare unanimous en banc opinion, the Court of Appeals for the Federal Circuit has revived the value of design patent protection by loosening the standard for infringement. The opinion – penned by Judge Bryson – rejects the “point of novelty” test as a requirement to prove infringement of a design patent. Instead, the judges agree that the 1871 Gorham “ordinary observer” test is the “sole test for determining whether a design patent has been infringed.”
The focus of the Gorham test is to look for substantial similarity between the patented design and the accused design. It is called the ordinary observer test because the similarity is considered from the perspective of an ordinary observer who is familiar with the art. Although Gorham only requires a comparison between the patented and accused designs, prior art designs will generally be useful for highlighting differences. A second pro-patentee rule that emerges from this case is that the burden of production of prior art designs will fall on the accused infringer. On claim construction, the Federal Circuit agreed that a ‘verbal description’ of the diagrams is not required, but will not – by itself – be reversible error.
Ordinary Observer With a Tight Focus: Although the patentee was able to change the law, it actually lost the day. In the appeal, the CAFC concluded that even under the ordinary observer test, “no reasonable fact finder could find that EGI met its burden of showing, by a preponderance of the evidence, that an ordinary observer, taking into account the prior art, would believe the accused design to be the same as the patented design.”
The courts application of the law shows that proving infringement under the ordinary observer test will not be a walk in the park for design patent holders. Many cases will likely still turn on technical points of similarity rather than simply a broader totality of similarity. Yet, despite the potential difficulties, the situation is vastly improved from the hardships imposed by the point of novelty test.
Introduction: The claim construction issues here are interesting, include the question of how attorney-inventor communications impact claim construction. In addition the court takes a surprising approach to limit the scope of a prior settlement agreement.
Howmedica’s U.S. Patent No. 5,824,100 claims artificial knee prosthesis. After a claim construction decision, Howmedica admitted that it could not prove infringement and appealed. Wright cross-appealed – arguing that the case was moot based on a prior settlement agreement and “release” between the parties.
In a 2-1 majority opinion Judge Dyk found that the lower court erred in its claim construction. This is a case where de novo review impacts the result. As Judge Dyk states, “[a]lthough this is a close case, we disagree.” With de novo review, simple disagreement leads to reversal.
The claim introduced a “femoral component including at least one condylar element.” The claim also required “the condylar element” have certain geometric limitations. The issue for claim construction is whether each and every condylar element must have those geometric limitations. The lower court said yes, Judge Dyk said no. In dissent, Judge Prost points out that it would have been quite easy for the patent applicant to clarify its intent.
Patent Attorney Communications: As part of its claim construction argument, Wright presented the contents of an e-mail between the patent prosecution attorney and the patent applicant considering potential limitations in the claims. The majority rejected that document as merely extrinsic evidence to be used only to “help educate the court regarding the field of the invention and can help the court determine what a person of ordinary skill in the art would understand claim terms to mean.” Quoting Phillips.
The letter Wright relies on, reporting to the inventor on the results of an examiner interview, achieves neither of these objectives and is of no value to the construction of the disputed claim language.
Intent of the Release: A second issue on appeal was the impact of a prior settlement agreement between the parties. A plain meaning of the agreement released Wright from all future patent claims. In particular, the agreement released the defendant from “any and all manner of claims . . . that Howmedica . . . has, ha[s] had, or may have against Wright Medical . . . including, but not limited to, any and all claims and counterclaims that were or could have been asserted.” Both the district and appellate courts, however, found that the plain meaning should not apply because neither party intended the release be so broad. As evidence, the court relied on a parallel agreement that was much narrower.
Adept and Targus both hold patents covering systems and methods for routing 1-800 calls to local franchises. In a multi-patent battle, the Orlando Florida jury found Targus liable for infringing the Adept patents and that the Targus patents were invalid.
Claim Construction: The Adept patents include the step of assigning the telephone number of each potential caller to a particular service location or franchise. The claims require that the assignment take place prior to the call being received, but there was a dispute as to whether the assignment can be stored as an algorithm rather than as a full database record-set. On appeal, the CAFC found that the patents focus on storing the assignment information in a database precludes the awkward twist that would all “assignment” to mean “implementing an algorithm to do the assignment.”
As summarized in the abstract, the patents make clear that assignment of service location telephone numbers to potential callers must be completed before a telephone call is ever placed: “Once all such assignments have been made, a database is assembled to be used by a long distance carrier for direct routing of telephone calls.”
Prosecution history: The prosecution history also supported this limited definition of assignment. Notably, the appellate panel agreed that the prosecution history was likely not clear enough for “prosecution disclaimer” but that it could still be used “as support for the construction already discerned from the claim language and confirmed by the written description.”
Because the Targus operation uses an on-the-fly algorithm to associate callers with franchises, it cannot infringe as a matter of law. Reversed.
All Claims Invalid: The jury found that all claims of the Targus patents were invalid. On appeal, the CAFC limited that holding to only the three claims that were actually included in the pretrial statement.
“Adept’s argument that it was unnecessary for its validity expert to put forth a claim-by-claim analysis of the unasserted claims is simply incorrect. Under the patent statute, the validity of each claim must be considered separately.
…
In this case, it is clear from the parties’ pretrial statement and from the trial proceedings that the unasserted claims were neither litigated nor placed in issue during the trial. We therefore reverse the trial court’s judgment of invalidity with respect to the unasserted claims.”
Expert Mistake = New Trial: Adept’s expert, Dr. Brody, made a few mistaken comments about scope of the company’s patent disclosure. According to the court, this was the “primary if not the entire evidence” that the jury could have used in its invalidity decision. New trial ordered on the claims affected.
Tortious Interference: Targus sent infringement allegations to Adept clients, and the jury found tortious interference with business relations. On appeal, the CAFC reversed.
“State tort claims against a patent holder, including tortious interference claims, based on enforcing a patent in the marketplace, are “preempted” by federal patent laws, unless the claimant can show that the patent holder acted in “bad faith” in the publication or enforcement of its patent.… As the Supreme Court said long ago, “Patents would be of little value if infringers of them could not be notified of the consequences of infringement, or proceeded against in the courts. Such action, considered by itself, cannot be said to be illegal.” Virtue v. Creamery Package (1913)”
In these cases, it is quite difficult to prove ‘bad faith’ because the claims of patent infringement must be objectively baseless. On appeal, the CAFC found that standard was not met because “Targus [could have had] a reasonable basis for believing that the patent was valid when it asserted the patent against Adept’s customers.”
Notes:
Adept has also sued various Targus customers in the E.D.Texas, including Federal Express, Enterprise Rent-A-Car, and Domino’s Pizza. Barnes & Thornburg, who represented Targus at trial, is representing the defendants in that case.
DSW holds a utility patent and a design patent on a shoe display system. In 2006, DSW notified off-brand competitor Shoe Pavilion that its displays were infringing. Wanting to avoid trouble, Shoe Pavilion took immediate action and removed the infringing displays. (Although immediately begun, the whole take-down process took seven months.) DSW was not satisfied that the replacement design avoided infringement and subsequently sued.
Damages and Notice: The case raises several issues, but here I will focus on damages. On summary judgment, the district court held that Shoe Pavilion owed no damages for infringement by the initial design because the defendant took immediate action to stop infringing. On appeal, the CAFC vacated that opinion.
The Patent Marking Statute limits damages that may be recovered by a patentee.
In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. 35 U.S.C. §287(a).
The Pre-1952 Patent Statute included a similar restriction on damages. That statute was interpreted by the Supreme Court in Wine Railway (1936). There, the court held that the recovery by patentee who failed to mark products covered by the patent would be limited to damages incurred after actual notice was provided to the infringer.
The policy behind this approach is to give some level of protection to innocent infringers. However, damages begin to accrue as soon as notice is given. Thus, in this case, Shoe Pavilion is liable for the damages that occurred during the seven-month take down process.
“Without a doubt, the law offers an infringer no exception to liability for the time it takes to terminate infringing activities, no matter how expeditious and reasonable its efforts.”
Vacated and remanded.
Notes:
The court also vacated based on an error of claim construction – finding that the claimed “track and roller” was not limited by the preferred embodiment found in the specification.
Dr. Voda’s case is an exciting tale of an individual inventor litigating against a major corporation in the red sandy soil of western Oklahoma.
A jury found that Cordis catheters infringed Voda’s patents and adjudged a reasonable royalty to be 7.5% of gross sales. The jury also found the infringement willful and the patents not invalid. The district court then affirmed the jury verdict but denied Voda’s request for injunctive relief.
Claim Construction: Voda’s claim included the requirement that the catheter be engaged “along a line” of the aorta. The district court, however, found that the claim is not limited to linear portions of the aorta. On appeal, the CAFC confirmed the construction — reminding us that “the context in which a term is used in the asserted claim can be highly instructive.” Phillips. When engaged, it is clear that the catheter may curve along the aorta.
The specification does indicate that the “present invention [includes a] straight portion.” However, the CAFC refused to see that statement as a “clear disavowal of claim scope” because the specification discusses other instances where the same portion could be curved.
Doctrine of Equivalents: Cordis had redesigned some of its products to avoid literal infringement. However, these were found to infringe under the Doctrine of Equivalents. In particular, a “second straight portion” claim element was not literally found in the Cordis products, but the jury found that the products did include an equivalent element.
At the court’s option, either of two tests of equivalent may be used:
Under the insubstantial differences test, “[a]n element in the accused device is equivalent to a claim limitation if the only differences between the two are insubstantial.” Honeywell Int’l Inc. v. Hamilton Sundstrand Corp., 370 F.3d 1131, 1139 (Fed. Cir 2004). Alternatively, under the function-way-result test, an element in the accused device is equivalent to a claim limitation if it “performs substantially the same function in substantially the same way to obtain substantially the same result.” Schoell v. Regal Marine Indus., Inc., 247 F.3d 1202, 1209-10 (Fed. Cir. 2001).
The CAFC looked to Voda’s experts to find evidence of insubstantial difference. In particular, Voda’s expert testified that the Cordis “curve portion” was essentially straight and that “cardiologists would have difficulty distinguishing the two during use.” In addition, Voda introduced evidence that the Cordis curve portion “performed the same function as a straight portion, in the same way, to achieve the same result. . . . Accordingly, we affirm the jury’s findings of infringement with respect to these claims.”
Notes:
EBay: Voda argued for an injunction based on the irreparable harm to its exclusive licensee. The CAFC rejected that justification — finding that the irreparably harmed must be the party seeking the injunction.
Seagate: The CAFC vacated the willfulness finding that was based on pre-Seagate law.
Festo: The CAFC did find that some of Voda’s claims were not infringed under the DOA. Those claims had been narrowed during prosecution and were subject to prosecution history estoppel.
Prior Appeal: In the 2007 appeal in this case, the CAFC held that Voda could not assert its foreign patents covering the same product in US courts. [LINK]
Brady Construction Innovations v. Perfect Wall (Fed. Cir. 2008) (Non Precedential).
This case is simple. Brady filed for a reissue more than two years after the patent issued. The reissue broadened the claims. Those claims are therefore invalid.
Brady’s original patent issued July of 1992. After losing an infringement action in 2003, Brady filed for a reissue patent. The reissue patent issued as RE39,462 in 2007 and Brady again filed suit. The patentee’s press release at the time tells the story:
“Previously, the Court of Appeals had limited the original slotted track patent in a way that Brady never intended. This new patent removes the limitation recently imposed by the Court of Appeals. From this date forward, anyone who manufactures and sells [any style of] slotted track will infringe Brady’s new patent regardless of how the slotted track is installed.”
35 U.S.C. 251 spells out the guidelines for reissue patent applications. Generally, a reissue is available to correct an error made by the patentee. Although the statute specifically allows a reissue to correct an error in “claiming more or less than he had a right to claim in the patent,” the statute also places a strict two-year time limit on enlarging the scope of any claims.
“No reissued patent shall be granted enlarging the scope of the claims of the original patent unless applied for within two years from the grant of the original patent.”
Any enlargement in scope of any claim element will generally run afoul of the limitation. In particular, the CAFC has repeatedly held that a claim will be considered to be enlarged under Section 251 if “it contains within its scope any conceivable apparatus or process which would not have infringed the original patent. A reissue claim that is broader in any respect is considered to be broader than the original claims even though it may be narrower in other respects.”
Here, based on the construction of the original patent by the CAFC, it was clear that the new claim had been broadened – rendering it invalid.
By Prof. Paul M. Janicke, HIPLA Professor of Law, University of Houston Law Center< ?xml:namespace prefix ="" o ns ="" "urn:schemas-microsoft-com:office:office" />
In the 1980s patent practitioners were being pressed by clients to keep costs down. At the same time they were seemingly presumed by courts to understand right away any prior-art reference that made its way into their offices, and how that reference might relate to patent applications they were writing or prosecuting. They were rather upset with the drift of the law on inequitable conduct. It seemed the courts were allowing something short of intentional deception to make out that defense and to ruin a client’s otherwise solid case for validity and infringement. Language like “gross negligence” had crept into some of the appellate decisions. With enough time and funding by the challenger, many non-cited things in a patent practitioner’s possession could be made years later to look important to patent prosecution, and explanations for non-citation always seemed at that late date a little lame. All the challenger needed to do is find one of those things and persuade the judge to label the non-citation as gross negligence.
The Federal Circuit recognized the problem and in 1988 handed down Kingsdown Medical Consultants Ltd. v. Hollister Inc.,[1] wherein the court reiterated that intent to deceive the PTO had to be proved by clear and convincing evidence. In an in banc section of the opinion labeled “Resolution of Conflicting Precedent,” the court held that gross negligence could not alone suffice to make out inequitable conduct.[2] The profession breathed a little easier. They were perhaps out of the frying pan.
However, shortly after Kingsdown a number of other cases rightly pointed out that deceivers seldom come forth and say they acted with intent to deceive. “Such intent usually can only be found as a matter of inference from circumstantial evidence.”[3] Through the 1990s the Federal Circuit appreciated the continuing need to make an actual finding that a particular person acted to mislead the PTO in a particular way. It told us “a finding of intent to deceive the PTO is necessary to sustain a charge of inequitable conduct.”[4] In a withholding-type accusation, reaching that conclusion of course requires a subsidiary finding that the person appreciated the significance of the withheld item. Without that appreciation, he can hardly be trying to deceive the examiner about the item.
In the last three years Federal Circuit panels have slipped back into “should have known” language to arrive at the conclusion of intent to deceive or mislead the PTO.[5] That is the language of simple negligence. Even more troublesome, they seem to have reached the “should have” finding by reference to the importance (materiality) of the item to the prosecution proceeding, the logic of which is somewhat elusive. In 2008 a number of cases have now explained how all this is consistent with Kingsdown. Negligence alone might not be enough, but when material information is found in the hands of persons connected to patent prosecution, they need to provide a “credible explanation” or suffer a finding of bad intent.[6]
The trouble with this approach is that it allows even simple negligence (“should have known”) to shift the burden of persuasion on intent to the patent owner. This shift will happen in just about every case, because the finding of materiality in a combative courtroom setting will nearly always generate the “should have known” prong, shifting the entire burden of credibly showing benign intent onto the patentee. In the dynamic of actual patent litigation years after the events in question, that burden is indeed a fearsome one. In life, consider how often we ask ourselves when bad situations arise: “Why did I do that? Why didn’t I see the connection?” Credible-sounding explanations are not that easy to come by, even when we know we are innocent. Explanations on the ground of human fallibility feel hollow, and this is especially so in the majestic setting of a court proceeding. The patent bar and their clients have gone out of the frying pan and into the fire.
Some rays of hope have appeared for rectifying the situation. Judge Newman dissented in Nilssen, the small-entity status case.[7] And Judge Rader has seen the problem in what I regard as its proper light. In May of this year two panel judges sitting with him upheld a district court’s finding of inequitable conduct in a withholding-of-information case. The two were unwilling to reverse the lower court’s conclusion that the explanation given for non-citation was not credible.[8] Dissenting, Judge Rader said: “[M]y reading of our case law restricts a finding of inequitable conduct to only the most extreme cases of fraud and deception. . . Although designed to facilitate USPTO examination, inequitable conduct has taken on a new life as a litigation tactic. The allegation of inequitable conduct opens new avenues of discovery; impugns the integrity of patentee, its counsel, and the patent itself; excludes the prosecuting attorney from trial participation (other than as a witness); and even offers the trial court a way to dispose of a case without the rigors of claim construction and other complex patent doctrines.”[9] Amen to that. This is not the place to try to rectify perceived weaknesses in the patent examination process or to make amends with district judges by according more weight to their rulings. Worthy and important goals those may well be, but shifting burdens on inequitable conduct is not the way.
Inequitable conduct burdens have in the past rightly been placed on the challenger. Establishing this defense has required a finding not about what a person should have known, but that the person involved actually did appreciate of the significance of the information to the prosecution process. Now the burden on the intent prong has de facto shifted. Hopefully it will return to where it was. I have always thought the relative importance of the item as seen years later has little to do with finding an intent to mislead. Most of the time it is just as easy in life to fail to connect important dots as unimportant ones.
[4]RCA Corp. v. Data General Corp., 887 F.2d 1056, 1065 (Fed. Cir. 1989), emphasis in original.
[5] See Ferring BV v. Barr Labs. Inc., 437 F.3d 1181, 1191-92 (Fed. Cir. 2006) (applicant should have known non-disclosed relationships of affiants to assignee company were important); Cargill Inc. v. Canbra Foods Ltd., 476 F.3d 1359, 1367-68 (Fed. Cir. 2007) (applicant should have known lab tests on a property were important); Bruno Indep. Living Aids Inc. v. Acorn Mobility Services Ltd., 394 F.3d 1348, 1351 (Fed. Cir. 2005) (from what was said to FDA, applicant should have known prior powered staircase was important to PTO).
[6] See Nilssen v. Osram Sylvania, Inc., 528 F.3d 1352, 1359-60 (Fed. Cir. 2008) (inequitable conduct finding upheld based on wrongful claiming of small entity status, where explanation testimony was not credible); Pfizer Inc. v. Teva Pharms. USA, 518 F.3d 1353, 1367 (Fed. Cir. 2008) (finding of no inequitable conduct in non-citation of reference showing similar structure affirmed where explanation was credible); Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d 1229, 1241 (Fed. Cir. 2008) (inequitable conduct finding upheld where explanation for non-citation of meeting notes was not credible).
Novo Nordisk v. Sanofi-Aventis (Fed. Cir. 2008) (nonprecedential)
Novo sued Sanofi alleging infringement of its patent covering an insulin pen. In a Feb 19, 2008 order, the district court denied Novo’s request for a preliminary injunction – finding that Sanofi has a strong non-infringement argument. On appeal, the CAFC quickly affirmed.
The decision to not issue a preliminary injunction rests within the discretion of the district court.
We will reverse such a decision only when an appellant demonstrates that the “factors relied on by the district court [were] clearly erroneous” and “that a denial of the preliminary relief sought would amount to an abuse of the court’s discretion upon reversal of an erroneous finding.” New Eng. Braiding Co. v. A.W. Chesterton Co., 970 F.2d 878 (Fed. Cir. 1992).
In this case, the district court did not construe the claims prior to denying the PI request. It did note, however, that “questions exist” as to whether the patented invention requires direct gearing and a non-rotatable piston — elements not found in the accused product.
In its appellate decision, the CAFC found that the lower court had acted properly in denying the PI request without deciding the claim construction issue:
At the preliminary injunction stage, however, it is irrelevant whether this case presents greater issues of claim construction or validity—the existence of one or both of these issues is sufficient to justify the district court’s decision to deny a preliminary injunction.
Affirmed
Note: My former firm, MBHB, represents Sanofi-Aventis in this appeal.
In 2005, UT filed suit against a total of fifty-six defendants alleging infringement of claims 10 and 11 of its patent that converts text messages into binary syllabic elements before transmission. After claim construction, the district court granted summary of non-infringement.
Construction of Amended Claim: The appeal focuses on the term “syllabic element.” UT wanted the phrase to be broader than “a character set of one syllable.” In its analysis of claim construction, the CAFC looked to the prosecution history.
After receiving a rejection during prosecution, UT added the “syllabic element” term to replace “an alphabetic character string” and cancelled a dependent claim directed toward matching whole words. On appeal, the CAFC gave “substantial weight” to these amendments — presuming that the amended phrase could not be as broad as the original:
“[C]laim 10 originally recited matching with an alphabetic character string, while one of its dependent claims specified that this string comprised a word. After the examiner identified a reference that showed matching with a word, the Board of Regents limited claim 10 to require matching with syllabic element(s) and canceled the dependent claim that required matching with words. The cancellation of this dependent claim indicates that the set of “syllabic elements” does not include all words.”
In addition, because the amendment was made in order to overcome a prior art reference, the CAFC found it would be nonsensical to give the claim a definition as broad as the original:
“Moreover, if “syllabic elements” included words, then [the prior art] disclosure of matching with words would teach the portion of claim 10 that was amended to distinguish [the prior art]. We decline to adopt a construction that would effect this nonsensical result.”
Finally, the CAFC chose to hold the prosecution history against the patentee by ignoring potential arguments that lack explicit support in the intrinsic record.
“While the Board of Regents might have been able to distinguish [the prior art] on this ground, the intrinsic record fails to support the argument that it actually did so.”
Intermittent Infringement: The asserted method claim uses a comprising transition and requires that “each pre-programmed code being representative of a syllabic element.” The accused products do use pre-programmed codes, but only some of them are representative of syllabic elements. Thus, the question on appeal was whether the claims require a vocabulary that includes only syllabic elements. With some sophistry, the CAFC arrived at the result that an infringing vocabulary would only include syllabic elements. In particular, the claim reads as follows:
“…matching said binary code with one or more pre-programmed codes, each pre-programmed code being representative of a syllabic element; [and]
[f]orming a representation of the word from the one or more syllabic elements represented by the matched one or more pre-programmed codes…“
Here, the CAFC used its grammatical analysis to find that the “matched” pre-programmed codes are a subset of the whole set of “each” pre-programmed code. The claim requires each pre-programmed code to be a syllabic element, ergo the entire set of pre-programmed codes must be in syllabic element form. q.e.d.
Claim construction and resulting summary judgment affirmed.
Muniauction’s patent relates to municipal bond auctions. During cross examination at trial, Muni’s expert admitted that two of the claims were identical to the prior art except for the patentee’s use of a web browser to access the auction. Despite that admission, the Pittsburgh jury refused to invalidate the patent leading to an award of $77 million for willful infringement. On appeal, the CAFC reversed – finding the claimed invention obvious.
No Obvious Deference: Like claim construction, obviousness is a question of law that is reviewed de novo on appeal. Despite that similarity, obviousness is normally decided by a jury. This difference is justified by the relatively small number of “underlying facts” in contention during claim construction as compared with plethora of factual issues that build up to a conclusion of obviousness. As the CAFC explained in the 2007 Dippin’ Dots opinion, “[t]hose factual underpinnings include the scope and content of the prior art, differences between the prior art and the claims at issue, and the level of ordinary skill in the art.”
Here, the court cited KSR to hold – as a matter of law – that the Muniauction improvement was nothing “more than the predictable use of prior art elements according to their established function.”
Broad Claims Create Trouble for Secondary Factors: Broadly written claims increase the chance that some prior art will be found to invalidate the claimed property right. Here, the CAFC also found that broad claims make it difficult to use secondary factors of patentability to establish nonobviousness. The particular issue here is that a tight nexus must link the claimed invention to the secondary factors (such as long felt need & market success).
“[C]ommercial success or other secondary considerations may presumptively be attributed to the patented invention only where ‘the marketed product embodies the claimed features, and is coextensive with them.'” Quoting Ormco v. Align.
Muni showed success of its products. However, the reports of success focused only on one portion of the invention as claimed. The appellate panel compared those narrow reports of success with the broad claims – finding that the success “lacks the required nexus with the scope of the claims.”
Judy Jarecki-Black from Merial Limited has been named the “Best Chief IP Counsel” by 2008″ by Global Counsel Awards 2008. Glacéau was awarded the “Best IP Counsel Team.” [LINK]
Eastern District of Texas Settlement: SAP agrees to pay $83 million to i2 Technologies. [LINK] In what appears to be primarily a trade secret case, Oracle is seeking $1 billion in damages from SAP. (Oracle’s no-patent strategy may prove successful).
Shen Wei v. Ansell Health Care (N.D. Ill 2008) (Claim Construction Issue Preclusion): The patentee lost a claim construction argument in earlier litigation against another party. In this case, Judge Guzman held that the patentee could not re-argue the construction based on collateral estoppels / issue preclusion. [LINK]
BPAI Constitutionality Problem: Representative Berman has introduced H.R. 6362 to fix the BPAI judge appointment problem by returning the duty of appointment to the “Secretary of Commerce, in consultation with the Director of the United States Patent and Trademark Office.”
No Double Secret Expedited Reexamination: In Reexamination No. 95/008,972 the PTO recently refused to give any preferential or speedy treatment of the reexamination despite pending litigation. [LINK]
[This post is the third in a series of posts based on empirical research in a new book, Patent Failure, by James Bessen and Michael Meurer. Read Part I and Part II]
Patents on computer programs, financial processes and business methods have been controversial at least since the 1960s. Surveys regularly find that computer programmers are opposed to patents on software by a wide margin. In what other field is the class of inventors so opposed to patents?
Is there a problem?
Some people contend that there is nothing particularly wrong with patents on software, arguing that "patent thickets" are not preventing innovators from entering software markets. But the latest evidence [LINK] suggests that patent thickets do, in fact, inhibit startups in software. More important, patent thickets might not be the only or even the most important problem with software patents.
Indeed, our evidence suggests an important problem of another sort: software patents are four times more likely to be litigated than are chemical patents; business methods patents are twelve times more likely to be litigated; finance patents are 49 times more likely. Moreover, the evidence also suggests that these patents have lower values than chemical patents, so these patents are not being litigated more because they are more valuable.
Other people admit that there are problems with software patents, but they suggest that this is only temporary: once judges and patent examiners understand this technology better, once they have become familiar with the prior art, etc., then the uncertainty about these patents will abate and litigation rates will go down. But the evidence shows that after a decade of issuing software patents in large numbers (over 200,000), the probability that a newly-issued software patent will be litigated is continuing to rise.
So it does seem that patents on software and related technologies at least have a particular problem with litigiousness. And this problem is central to the poor performance of the patent system generally. In the previous post we highlighted how litigation costs have substantially outgrown the profits that public firms receive from patents outside of the pharmaceutical and chemical industries. In 1999, 38% of the cost of litigation among public firms arose from lawsuits involving software patents; preliminary data suggest that this share has increased since then. Litigation over software patents is clearly a major factor in the poor performance of the patent system. So in a very real way, the overall performance of the patent system cannot be fixed unless the particular problems of software patents are also fixed.
Why are there so many lawsuits over software patents?
A variety of evidence leads us to conclude that software patents are involved in relatively more litigation because they are more likely to have "fuzzy boundaries." Statistical evidence shows, for example, that software and business method patents are much more likely than other patents to have their claim construction appealed to the Federal Circuit. Part of this tendency arises because of the nature of the technology and part arises because of the way the courts have treated this technology.
Our reading of the case law convinces us that patent law tolerates too many software claims untethered to any real invention or structure; in such a world clear boundaries are unattainable. When patent claims relate to actual devices or chemical structures, then their meanings can be interpreted by reference to those physical or chemical entities. However, when the words refer to abstract ideas, they are often subject to multiple interpretations and are therefore more ambiguous. For example, many people thought that "point of sale location" (in the famous E-Data patent) was computer industry jargon for that place in a retail store where transactions take place, formerly occupied by a cash register. When the Federal Circuit interpreted this claim, they decided that it referred to any location where an e-commerce transaction might take place, although it is highly unlikely that this is what the inventor had contemplated 17 years earlier. Thus a broadly worded invention for a kiosk in a retail store was read to cover a broad swath of e-commerce. Not surprisingly, this patent generated quite a few lawsuits.
Patent doctrines that might serve to prevent such fuzzy claims have been undermined. For example, the enablement doctrine has historically been used to keep patents from claiming much more than what was actually invented. Unfortunately, as a result of Federal Circuit decisions on software patents during the 1990s, these patents no longer need to provide computer code, a flowchart, nor any detailed description of specific operation in order to be enabled.
Fixing the problem
A lot of people have very strong opinions about how patent policy should or should not change regarding software patents. We wish we had such clarity, but we do not. We are convinced that the current treatment of software patents creates significant problems and that these are getting worse. But the problem is complex and fixing it will likely involve multiple changes in law and institutions.
Certainly, KSR should help and so would a stronger indefiniteness requirement. Additionally, it might help to restore a substantial enablement requirement for software patents so that these patents are restricted to claiming more or less what was actually invented and disclosed.
Possibly, a subject matter test might help. We confess we do not have a rule that cleanly distinguishes inventions using software that should be patentable from abstract processes that should not be patentable. Some people argue that any attempt to proscribe subject matter will only increase uncertainty and encourage avoidance through clever claim drafting. But the evidence suggests that the subject matter tests used following Benson and Flook did not, in fact, encourage excessive litigation during the 1980s, even though there was some evasive claim drafting. Litigation rates for software patents then were about the same as those for all patents. On the other hand, we doubt that a subject matter test by itself would be sufficient to fix the problems of software patents.
Prior to the Markman hearing, the parties jointly requested a page length exception for their briefs. The problem, they argued, was that the three hearing aid patents in suit included a large number of disputed claims.
In a recent order, Eastern District of Texas Judge Clark denied that request and further ordered that “the parties shall elect no more than ten (10) disputed claim terms for construction … [based on] no more than three (3) representative claims from each patent for claim construction and trial.”
Judge Clark justified the limitation based on his duty to ensure a “just, speedy, and inexpensive determination of every action and proceeding.” However, the decision opens the door for appeal for either party based on the Federal Circuit’s April 2008 decision in O2 Micro. In that case, the court held that it is the court’s duty to resolve claim construction disputes:
“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.”
The resolution will be a middle ground that allows courts to control the trial process but gives litigants the right to have their disputes resolved. Perhaps the solution is to require some threshold explanation as to why each additional term needs to be construed.
“This is a patent infringement case pertaining to wall-mounted telephones designed for use by prison inmates.” Both the accused device and the patents focus on a telephone system that operates without the dangers of a phone cord. However, the TIP patents require a “handset” mounted in the wall of the phone box with a mouthpiece that “extends through” the wall. These claims are exemplified in the figures.
The accused devices do not use a traditional handset, but rather use a separate ear-piece and mouthpiece. In addition, the accused device wall is flush – and the mouthpiece does not break through the wall.
Questionable claims of infringement are naturally resolved by a Markman hearing and subsequent summary judgment of noninfringement. Here, the district court found (i) that the claimed handset must include a handle with both an ear-piece and mouthpiece and (ii) that the mouthpiece must pass through an aperture in the front wall of the phone box. It was clear that the accused device did not exhibit either of these features and thus could not infringe.
The definition of the handset was made easy because the claims stated that: “a telephone handset being a handle with an ear-piece at one end and a mouthpiece at an opposite end.” The exact definition is support from the figures is also provided in the specification.
The CAFC affirmed on claim construction then went on to consider whether the elements may still be covered under the doctrine of equivalents (DOE).
If an element is not literally covered by a claim, the device may still be considered infringing if the accused element is equivalent to the claimed element. Thus, to infringe a patent, each claim element or its equivalent must be found in an accused device.
Whether equivalency exists may be determined based on the “insubstantial differences” test or based on the “triple identity” test, namely, whether the element of the accused device “performs substantially the same function in substantially the same way to obtain the same result.”
The game in the doctrine of equivalents is defining an ‘element.’ The patentee wants a broad definition (the telephones as a whole are very similar) while the defendant argues for a narrow definition. Here, the defendants won when the courts found that a “handle” is an element of the claim. Since the accused devices have no structure that is similar to a handle, they cannot infringe even as an equivalent.
ADC Telecommunications v. Switchcraft (Fed. Cir. 2008)(nonprecedential)
Patent law precedent requires a judge to interpret any disputed claims of a patent prior to sending the case to a jury to determine factual issues of infringement.
“First, the court determines the scope and meaning of the patent claims asserted. . . . [Second,] the properly construed claims are compared to the allegedly infringing device.” Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir. 1998) (en banc) (citations omitted).
There is a strong tendency, however, to push the judge toward deciding the infringement issue within a Markman hearing — leading to a potentially quick summary judgment conclusion. Thus, parties often ask the judge to determine whether or not claimed element “X” should be interpreted to cover “Y” – where Y is an element of the accused product.
This infringement litigation involves a patent covering a coaxial switch that includes a mechanism for impedance matching. Dueling experts used different testing mechanisms to prove (non)infringement of the accused device. Hoping to short-circuit the infringement determination, the defendant argued that that proper construction of the claims require a its method for testing for infringement. The CAFC disagreed because the claims lacked any textual hook for requiring a particular testing method and because the specification lacked “any clear indication” of a particular test. Relying upon its 2005 Union Carbide decision, the court found that “[b]ecause the claim language does not require a particular form of testing, this inquiry is not a claim construction question, which this court reviews de novo. Rather, this court reviews this inquiry as a question of fact.”
Thus, the CAFC affirmed the lower court’s decision and ruling that the “dispute over the proper testing method is … a factual question that the district court properly submitted to the jury.”
Helmsderfer v. Bobrick Washroom Equipment (Fed. Cir. 2008)
John Helmsderfer sued Bobrick for infringement of its patent covering tamper-resistant diaper changing stations. After a markman hearing, the Southern District of Ohio district court awarded the defendants summary judgment of non-infringement. Helmsderfer appeals on claim construction.
Partially Hidden from View: The claims include a top surface platform that is “partially hidden from view.” On appeal, the patentee argued that “partially hidden” could include “totally hidden.” The CAFC disagreed for two textual reasons:
The patent used “generally” in other portions of the claim but not for this element — providing evidence that the patentee was intentionally distinguishing between those two modifiers.
The patent used “at least” in other portions of the claim but not for this element — providing evidence that in this case the patentee did not intend to claim “at least partially.”
Quoting its own 2000 CAE Screenplates decision, the court reasoned that “[i]n the absence of evidence to the contrary, we must presume that the use of these different terms in the claims connotes different meanings.” Here, the court could find no evidence to find that partially should include totally.
Exclusion of preferred embodiment: The applicant did point that its preferred embodiment and also “every illustrated embodiment” would be excluded by the narrow definition of “partially hidden.” The CAFC, however, rejected that such an exclusion creates any problem here. In particular, the court noted that it was analyzing only teh two claims (6–7) at issue in the case — “[O]ur construction of claims 6–7 leaves open the possibility that claims not at issue in this appeal encompass omitted embodiments. It is often the caes that different claims are directed to and cover different disclosed embodiments. The patentee chooses the language and accordingly the scope of his claims.”
The appellate panel gave lip service to the precedential canon of avoiding claim interpretation that “excludes the preferred embodiment from the scope of the invention.” However, in the end the court gave absolutely no weight to that “caution” in its claim interpretation. Rather, the decision notes the distinction between the patent as a whole and the particular asserted claims. In this case, the court noted that other claims are included in the patent and that those may be the ones that cover the preferred embodiment.
This interpretation falls on the heels of the PSN Illinois v. Ivoclar Vivadentholding that sometimes unasserted or cancelled claims directed to a particular disclosed embodiment may actually serve as evidence that the scope of the asserted claims does not extend to that embodiment. PSN Illinois – written by Judge Michel – applies the sensible notion that non-asserted or cancelled claims should be examined to determine if the preferred embodiment is found there. Helmsderfer extends that notion by creating an apparent presumption that – if non-asserted claims exist, then the court need not consider the rule of construction that encourages encompasing preferred embodiments.
Notes:
Preferred Embodiment: Relation to Tafas v. Dudas: Although the patentee lost here, Judge Moore’s decision here creates some interesting support for the Tafas case – by holding that it is the patentee’s right to file alternative claims to cover various parts of the disclosed embodiment.
Drafting Thoughts: Non-numeric range limitations – such as “partially” – have benefits and potential liabilities. When including a limitation of this type, you may do well to consider what prior art you are attempting to avoid — and consequently claim either “at least partially” or “at most partially.”
Lawler Mfg. v. Bradley Corp. (Fed. Cir. 2008)(nonprecedential)
In 2001, Lawler and Bradley settled a patent infringement lawsuit and entered into a contractual license agreement. Bradley was given the right to practice Lawler’s plumbing valve patents in exchange for a 10% royalty. The license included a combination royalty provision. The royalty licensed parts sold in combination would be charged at a separate (likely lower) royalty rate.
The dispute on appeal was whether a set of example combinations included in the contract limited the “combination” royalty rate to only a limited set. The particular contract provision read as follows:
“If a Licensed Unit is invoiced or shipped in combination in another product such as an emergency shower or eyewash, [then the combination rate applies.]”
De Novo Construction: Looking much like a claim construction opinion, the CAFC reviewed the contract language de novo (following Indiana law) and reversed the lower court interpretation. In particular, the court found that the “such as” language of the contract limited the combination royalty to only a limited set of combinations. The CAFC found its interpretation necessary to give meaning to the such as clause. As with Federal Circuit claim construction law, Indiana contract law has a preference for giving meaning and effect to all written terms.
“The question before us is whether that term, read in the context of the agreement, is restrictive, as Lawler urges, or merely explanatory, as the court found. We find that it is restrictive. “Such as” refers to items similar to what are recited rather than indicating that the recited items are just examples of what is covered by that provision. . . . The parties’ inclusion of the “such as” phrase … must either have been intended to provide some guidance as to the limited types of combinations that the parties contemplated … or to provide meaningless surplusage. Indiana law constrains us from finding the latter.”
Reversed and remanded.
In dissent, Judge Mayer saw the “such as” language as merely providing examples in much the same way that embodiments provide example implementations of an invention. “[E]mergency eyewashes and showers are examples of combination products, but they are not the only combination products covered by section 3.1 of the licensing agreement.”
Rattler Tools v. Bilco Tools (Fed. Cir. 2008) (nonprecedential)
Rattler sued Bilco in the Eastern District of Louisiana — alleging that Bilco’s magnetic scrapper (used to clean out oil wells) infringed several patents. After a bench trial, the district court found the patents completely non-infringed. In particular,the district court held that the “accused products and methods did not meet any of the thirteen limitations ofthe ten asserted claims.”
Rattler appealed — asking for a new claim construction for each of those thirteen limitations. Without any detail analysis, the CAFC politely showed Rattler the door. “We have considered all of Rattler’s arguments. Having done so, we see no reason to disturb the careful and thorough post-trial decision of the district court.”
This case is unremarkable in its short analysis, but does serve as a reminder of the current state of patent appeals. The conventional wisdom that the CAFC re-writes a large percentage of claim construction decisions leads most losing parties to appeal on claim construction. At the same time, appellants are also including more claim construction arguments in each appeal.
TALtech v. Esquel Apparel (Fed. Cir. 2008) (nonprecedential)
Summary: (1) An applicant need not disclose its own prior work or inspiration for invention if merely cumulative of other references cited; (2) Failing to identify the brand of adhesive tape used in the invention was a best mode violation — resulting in claim invalidation; (3) There is no presumptive order of the steps in a process claim – unless the claim language “requires an ordering of steps” either implicitly or explicitly.
One of TAL’s employees – John Wong – was inspired by TAL’s use of heat-fusible adhesive tape in manufacture raincoats. Over a long process of trial and error, Wong figured out how to use a particular variety of adhesive tape to create a dress shirt that does not pucker after washing.
After receiving a US utility patent, TAL became embroiled an patent litigation with another Hong-Kong based manufacturer – Esquel Apparel. In that litigation, the district court found TAL’s patent unenforceable due to inequitable conduct during prosecution and invalid for failing to submit fulfill the “best mode” requirement of 35 U.S.C. 112 (inter alia). Based on the inequitable conduct, the court also awarded attorney fees to Esquel.
Inequitable Conduct: “In this case, the district court found TAL liable for inequitable conduct because inventor John Wong had not disclosed the raincoat seam that inspired his invention to the PTO.” On appeal, the CAFC first dispelled any notion that a patent applicant is required to disclose the inspiration for the invention. Although not stated by the court, 35 U.S.C. 103(a) arguably indicates that the inspiration is not relevant to the patentability inquiry: “Patentability shall not be negatived by the manner in which the invention was made.”
Here, the CAFC noted that TAL’s raincoat may well have been “merely cumulative” to a German patent application that was submitted during prosecution. “If the undisclosed raincoat seam was merely cumulative to [the German application], then no inequitable conduct lies in its nondisclosure.”
Best Mode: At the time of filing, Wong had settled upon a particular type of adhesive tape – known as Vilene SL33 – as the best way to form the seams. The patent application did not, however, disclose Vilene SL33. A patent may be invalidated for failing to submit a “best mode” if (1) the inventor possessed a best mode at the time of filing; and (2) the written description fails to disclose the best mode in a way to allow one reasonably skilled in the art to practice that mode.
Possession of the Best Mode: The evidence clearly showed that Wong “experimented with many adhesives but settled on a preference for one.” Thus, the court agreed that the first prong was met — the inventor did possess a best mode at the time of filing – i.e., Vilene SL33.
On the second prong the CAFC disregarded the applicant’s argument that the PTO “prefers the use of generic names of products” and that there is no evidence that the Vilene brand products are actually better quality than other brands. Instead, the court honed-in on the result of the first prong – that Vilene SL33 was the best mode known to the inventor – and agreed that the best mode had not been disclosed. “TAL has not explained how the written description teaches one having reasonable skill in the art the way to practice the best mode as found in the analysis of the first prong – the use of Vilene SL33.”
Process Order: “Generally, there is no presumption of order, and so a claim with many steps can be infringed by an accused process performing the claimed steps in any order. However, we will find that the claim requires an ordering of steps when the claim language, as a matter of logic or grammar, requires that the steps be performed in the order written, or the specification directly or implicitly requires such a narrow construction.”
In this case, the claimed process implicitly requires a particular ordering. In particular, the bonding adhesive must be presented before a folding step because the folding step requires that the garment abut the bonding element.
Conclusion: The asserted claims were found invalid and not infringed. The remand appears only necessary to determine inequitable conduct and consequently potential attorney fees.
Patent claims define the scope of an invention much like metes and bounds define real property boundaries or a statute delineates the difference between criminal and non-criminal activity. Often, patent applicants submit a series of claims all directed toward the same invention. Various independent claims allow an applicant to focus on various aspects of the invention. These broad aspects may be directed to various nodes of a larger system or regions of a compound, processes for creating or using various elements, etc. Dependent claims by definition add additional limitations. Thus, for instance disputed claim 1 and 2 from the recent Lovanex dispute reads as follows:
1. A heterogeneous intimate admixture of sulfated heparinic polysaccharides … consisting essentially of
from 9% to 20% of polysaccharide chains having a molecular weight less than 2,000 daltons from 5% to 20% of polysaccharide chains having a molecular weight greater than 8,000 daltons, and from 60-86% of polysaccharide chains having a molecular weight of between 2,000 and 8,000 daltons ….
2. The heterogeneous polysaccharide admixture as defined by claim 1, comprising less than 2% of dermatan sulfate.
Claim 2 is interpreted to include all the limitations of claim 1 with the additional limitation of “less than 2% of dermatan sulfate.” See 37 CFR 1.71(c).
Earlier this week, I polled Patently-O readers on why they file dependent claims and received just over 1000 responses. (Listed below).
Theory of Dependent Claims
Why do you file dependent claims?
Percent of Responses
Answer Options
Strongly Agree
Mostly Agree
Neither Agree nor Disagree
Mostly Disagree
Strongly Disagree
Rating Average
Dependent claims are backup in case the independent claim is rejected in prosecution.
59%
34%
4%
2%
0%
1.51
Dependent claims are backup in case the independent claim is found invalid in litigation.
59%
31%
6%
3%
1%
1.56
Claim Differentiation: The dependent claims expand or alter scope of other claims.
47%
37%
8%
6%
3%
1.82
Dependent claims focus on particular commercial embodiments to make infringement easier to explain to a jury.
29%
44%
21%
4%
2%
2.07
I primarily include dependent claims with nonobvious additional limitations.
19%
45%
25%
9%
1%
2.29
I was taught to draft dependent claims.
26%
34%
26%
8%
7%
2.35
USPTO fees: Patent office does not charge extra for first twenty-claims.
Dependent claims are easier to draft and manage than independent claims.
6%
23%
37%
23%
11%
3.08
Client demands a certain number of claims.
6%
16%
29%
25%
23%
3.42
Dependent claims help avoid restriction requirements.
2%
13%
39%
31%
15%
3.44
A longer application is more valuable.
2%
13%
29%
34%
22%
3.60
answered question
1029
skipped question
0
Responses were also allowed to add additional reasons in the comment section. I have compiled a few of those individual responses below.
Drafting Process: A few responses commented on the iterative process of drafting a patent. For some, drafting the dependent claims helps refocus and redefine potentially problematic terms from the independent claims. For many, the dependent claims also serve as a guide for fully drafting the specification.
Prosecution Process: Some responses proposed that the dependent claims are helpful during prosecution for several reasons. First, there is a perception amongst patent practitioners that examiners read and consider the claim-set before looking at the actual specification. For that reason, the claims should be considered as a way to teach the examiner about the features and purpose of the invention. For some, obvious limitations in a dependent claim are useful in that regard to show the examiner an intended use (practical embodiment) of the invention. For those who see patent prosecution as a negotiation, a series of narrowing dependent claims speed up the the process — the applicant and examiner need only agree upon how narrow the claims need be. Some propose at least some dependent claims being “super narrow” to serve as a “foot in the door” to increase the likelihood that there is at least some patentable subject matter. Once you have agreed that a patent will issue, it may be easier to debate the scope of the eventual claims. On a practical note, the existence of dependent claims means that an applicant can get to a post-final rejection allowance without filing a request for continued examination. These practical concerns are important considering that the vast majority of patent applicants amend their claims during prosecution.
Claim Differentiation: Most practitioners agreed that the claim differentiation benefit of dependent claims is important. The doctrine encourages courts to consider that each claimed element covers something different than the others. Pushing that line, a typical reasoning is that two or more dependent claims providing alternative implementations of a term from an independent claim will help ensure that the independent claim element is not limited to a single embodiment. Some folks quibbled with my statements regarding dependent claims “expanding scope” of other claims and instead used a more PC version of “aiding construction.” It is important to realize that the originally filed dependent claims also form part of the specification and can thus help overcome enablement and written description hurdles.
Appeasing Clients: Many inventors see their invention narrowly — as their particular embodiment. Dependent claims provide an easy way to satisfy the inventor’s desire to claim their invention without limiting legal rights. On this “politics” side — dependent claims also give reason to add joint inventors, which may be good for office politics. “An invention may only warrant one independent claim embodiment, but many clients like to see many claims. They believe the more claims they have the stronger the patent and that they are getting value for there money.So you add them, e.g., a blue widget, a red widget. It is like chicken soup for a cold, it can’t hurt.”
Ease of Analysis: “Filing dependent claims rather than only independent claims makes it much easier for several parties (attorneys prosecuting the application, examiners and the BPAI examining the patent, attorneys analyzing the issued patent, courts analyzing the issued patent) to more readily evaluate the differences and similarities of claims.” Others noted that it is also useful as a way for potential licensees to know that the proposed product is literally and explicitly covered. For some patent owners, this “ease of analysis” is actually a negative. (Try to read NTP’s $600,000,000 claims). A long claim-set makes it more likely that a potential defendant will easily cave rather than pursue an expensive invalidity / noninfringement study.
Capture “minor inventions”: Dependent claims allow an applicant “to capture improvements to the invention that are not important enough to justify a separate application, but that one would want to avoid having a competitor step in and patent something similar.”
Tradition: There is nothing wrong with tradition and custom. It helps ensure that we’re all on the same page. For many the 3/17 rule of independent/dependent claims serves as a default rule that can be adapted for unique circumstances.
International: Internationally, patents use fewer independent claims than in the US. One European attorney made the following comment: “Multiple independent claims in the US style cause major headaches and costs in Europe, so one good independent, with well gradated dependents, is the best solution for me.”
HowMedica Osteonics v. Wright Medical (
DSW Shoe Warehouse v. Shoe Pavilion (
Dr. Voda v. Cordis Corp. (
Brady Construction Innovations v. Perfect Wall (
The Federal Circuit recognized the problem and in 1988 handed down 
Novo Nordisk v. Sanofi-Aventis (
Judy Jarecki-Black from Merial Limited has been named the “Best Chief IP Counsel” by 2008″ by Global Counsel Awards 2008. Glacéau was awarded the “Best IP Counsel Team.” [
against another party. In this case, Judge Guzman held that the patentee could not re-argue the construction based on collateral estoppels / issue preclusion. [
TIP Systems v. Phillips & Brooks (PBG) (
ADC Telecommunications v. Switchcraft (
Helmsderfer v. Bobrick Washroom Equipment (
Lawler Mfg. v. Bradley Corp. (
TALtech v. Esquel Apparel (
