Tag Archives: Enablement

COURT: Twelve Year Old USPTO Rules Cannot be Challenged Even if They Are Only Now Hurting You

Patent

Exela Pharma Sciences, LLC et al v. Kappos et al, 12-cv-0469 (E.D. Va. 2013).  Download Exela v Kappos Dkt 55- Opinion dismissing case

I previously wrote about Exela's lawsuit against the USPTO in an essay titled Suing the USPTO to Cancel Improperly Issued Patents. The patent at issue in this case is Cadence Pharma's U.S. Patent No. 6,992,218 that covers an injectable form of acetaminophen. During prosecution the patentee failed to timely file a US national-stage application before the 30-month PCT deadline. However, the USPTO allowed the patentee to subsequently revive the case and file the national-stage application based on a pleading that the delay was "unintentionally." Exela argues that the Patent Act only permits revival in this situation when the application was unavoidable abandoned – a much more difficult standard to meet. Unfortunately for Exela, improper revival is not a cognizable defense in patent litigation. See Aristocrat Gaming v. IGT and 35 U.S.C. §282. So, when Cadence sued Exela for infringement, Exela filed this collateral action against the PTO – asking the agency to cancel the improperly issued patent.

In his original decision in the case, Judge Grady sided with Exela against the PTO's motion to dismiss – finding that the Administrative Procedures Act (APA) contemplates that parties wronged by an agency action have a cause of action to right those wrongs and that this type of lawsuit is currently the only way that an adversely affected party can take action on this issue (because it is excluded as a defense). The USPTO had argued that some of its decisions should simply not be challengeable. The court entirely rejected that untenable position. "The Court finds no support for the PTO's apparent proposition that certain agency actions should remain entirely unchecked." The district court also held that the case was not time-barred because Exela's standing only recently became ripe.

In a new decision, the district court has flipped its stance and dismissed the case as barred by the six-year statute of limitations defined by 28 U.S.C. § 2401(a) ("Except as [otherwise provided], every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues."). The basic rule applied by the court here is that the statute-of-limitations was triggered when the USPTO created its offensive rule, regardless of whether this particular plaintiff (Exela) would have had standing at that point. In 2000, the PTO finalized Rule 37 C.F.R. 1.137(b) to provide for revival of applications based on an applicant's unintentional abandonment of a PCT application. Case dismissed. Exela will almost certainly appeal with the argument that its right of action did not accrue. It will be interesting to see whether the Federal Circuit applies its own law or the law of the Fourth Circuit to this case – especially since the district court couched its decision as being required by the recent Fourth Circuit decision in Hire Order Ltd. V. Marianos, 698 F.3d 168 (4th Cir. 2012).

Challenging USPTO Rules: An important take-away from this decision is reminder of the six-year deadline for challenging USPTO rules.

Gunn v. Minton: Supreme Court Narrows Arising Under Jurisdiction for Patent Cases

Patent, ,

By Dennis Crouch

Gunn v. Minton, 568 U. S. ____ (Supreme Court 2013)

In a 9-0 decision, the Supreme Court has limited the scope of "arising under" jurisdiction for patent cases and held that the Minton's patent litigation malpractice case does not arise under the patent laws and therefore is not amenable to exclusive federal jurisdiction. This decision collaterally overrules the Federal Circuit's prior case law in Air Measurement Technologies, Inc. v. Akin Gump Strauss Hauer & Feld, L. L. P., 504 F. 3d 1262 (2007) and Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F. 3d 1281 (2007)). As I discuss at the end of this essay, the America Invents Act of 2011 expanded the scope of federal court jurisdiction and thus counteracts some of the impact of this decision.

28 U. S. C. §1338(a) indicates that federal "district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents" and that the jurisdiction "shall be exclusive of the courts of the states." (Note, this language has now been somewhat amended by the AIA).

Gunn used to be Minton's attorney and represented Minton in prior patent infringement litigation. However, in that prior litigation, the district court declared Minton's patent invalid because he had placed it "on sale" more than one year prior to filing his application. Minton later found that he may have won under the "experimental use" exception to the on-sale bar, but Gunn had allegedly failed to advise him on that front. Minton then sued Gunn for attorney malpractice in Texas state court. However, after losing in State court, Minton changed heart and asked that the case be sent to Federal Court based upon Section 1338(a)'s provision for exclusive federal jurisdiction over any case "arising under any Act of Congress relating to patents." The Texas Supreme Court agreed with Minton and found that the exclusivity prong of the federal law denied jurisdiction to the state. Gunn then petitioned the Supreme Court to decide the scope of federal arising under jurisdiction in this case.

The "arising under" language used in Section 1338(a) has its foundation in the U.S. Constitution. Article III states that "[t]he judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution." §1338(a) language is also parallel to §1331's general principle of federal court jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." §1338(a) is particularly limited to "any civil action arising under any Act of Congress relating to patents." However, the statute is also particularly strong because, unlike most causes of action, the statute provides for exclusive federal jurisdiction if the arising under condition is met. §1338(a).

In most patent cases the arising under analysis is simple because the complaint asserts a cause of action that is based on federal patent law, such as patent infringement or declaratory judgment of invalidity. Supreme Court has additionally held that arising under jurisdiction may exist in cases where the cause of action is not based upon federal law, but where there is an underlying federal issue arising from the well pled complaint. Most importantly, see Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U. S. 308 (2005). In Grable, the Supreme Court indicated that this secondary form of arising under jurisdiction only exists when the claim made in the complaint "[1] necessarily raise[s] a stated federal issue, [2] actually disputed and [3] substantial, [4] which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Grable was an interpretation of §1331 arising under jurisdiction, but the court previously held in Christianson v. Colt Indus. that §1331 arising under analysis applies to §1338(a) analysis as well. Christianson v. Colt Industries Operating Corp., 486 U. S. 800, 808–809 (1988).

Regarding the present case, we know that malpractice is ordinarily a state law claim and thus we need to consider whether the case qualifies under Grable. On that point, the Supreme Court agreed that [1] Minton's "experimental use" theory was a federal patent question necessary for his case and that [2] the issue was actually disputed. However, the Court found Minton's case failed [3] to raise a "substantial" federal issue with [4] the appropriate balance of state and federal interests.

Here, the substantiality requirement is focused on the impact that the case may have on the federal system as a whole. The court writes:

[T]he federal issue in this case is not substantial in the relevant sense…. I]t is not enough that the federal issue be significant to the particular parties in the immediate suit; that will always be true when the state claim "necessarily raise[s]" a disputed federal issue, as Grable separately requires. The substantiality inquiry under Grable looks instead to the importance of the issue to the federal system as a whole.

This case, the court found carries no significance with regard to the federal system:

Because of the backward-looking nature of a legal malpractice claim, the question is posed in a merely hypothetical sense: If Minton's lawyers had raised a timely experimental-use argument, would the result in the patent infringement proceeding have been different? No matter how the state courts resolve that hypothetical "case within a case," it will not change the real-world result of the prior federal patent litigation. Minton's patent will remain invalid.

At the creation of the Federal Circuit, patent law was given a somewhat special status based upon the congressional sense for national uniformity of the patent law. The Supreme Court confirmed that notion in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S. 141 (1989). Here, the Supreme Court found that the sense of national uniformity is not disturbed by state law decisions since (1) the federal courts are of course not bound by state court decisions; and these particular malpractice proceedings only ask hypothetical patent questions of "what would have happened."

One point that Minton raised in the case is that the Texas state court applied patent law doctrine in a way that varies from Federal Circuit precedent. On that point, the Supreme Court merely stated that "state courts can be expected to hew closely to the pertinent federal precedents" and that issues not already covered by federal precedent will eventually be "decided by a federal court in the context of an actual patent case, with review in the Federal Circuit. If the question arises frequently, it will soon be resolved within the federal system, laying to rest any contrary state court precedent." This is the one point where the Supreme Court decision is somewhat disingenuous since state courts are not obligated to follow precedent set by either district courts or the Federal Circuit. Thus, the reality is that it is well within a state court's power to unsettle issues seemingly well-settled by Federal Circuit precedent.

Although not so holding, the Supreme Court also suggested that state court decisions on patent issues should not have preclusive effect on other courts. Thus, a state court decision involving a licensing dispute that results in invalidation of a patent would have no preclusive effect on either the USPTO or other Federal Courts. Rather, "the result would be limited to the parties and patents that had been before the state court."

Since Minton failed to prove a substantial Federal interest in deciding the state cause of action., it also follows that Minton fails the fourth prong of Grable that involves the balancing of State and Federal interests.

In its conclusion, the Court makes a clear statement of its decision:

As we recognized a century ago, "[t]he Federal courts have exclusive jurisdiction of all cases arising under the patent laws, but not of all questions in which a patent may be the subject-matter of the controversy." New Marshall Engine Co. v. Marshall Engine Co., 223 U. S. 473 (1912). In this case, although the state courts must answer a question of patent law to resolve Minton's legal malpractice claim, their answer will have no broader effects. It will not stand as binding precedent for any future patent claim; it will not even affect the validity of Minton's patent. Accordingly, there is no "serious federal interest in claiming the advantages thought to be inherent in a federal forum," Grable. Section 1338(a) does not deprive the state courts of subject matter jurisdiction.

The judgment of the Supreme Court of Texas is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

 On remand, the Texas Supreme Court will now be asked to decide the merits of Minton's appeal rather than merely the jurisdictional question.

= = = = =

In many ways, this decision is the echo of EBay and MedImmne where the court basically said: patent litigation is not special, it is just litigation. Patent cases are not untouchable by state courts and Congressional statements regarding the uniformity principle are not statements also declaring that patent law is especially unique.

= = = = =

Impact: This case will have some immediate impact in that patent law malpractice suits currently being litigated in federal court, absent special circumstances or diversity, should be dismissed for lack of subject matter jurisdiction. And, malpractice cases will likely be almost uniformly heard in state court going forward.

Role of the AIA: For licensing dispute, the decision here means that few breach-of-contract allegations will be seen as arising under the patent law. However, the impact of this case on licensing disputes is likely wholly overwhelmed by the changes to §1338(a) and the new removal statue 28 U.S.C. §1454. The new law does not apply to the Gunn case because the complaint was filed before the law was enacted. However, under the new law, the question is not whether the "civil action" arises under the patent laws, but instead whether the lawsuit involves "any claim for relief arising under any Act of Congress relating to patents." Section 1454 makes clear that the federal court will have jurisdiction whenever "any party" asserts a claim arising under the patent laws. Thus, in a breach-of-patent-license dispute it is almost always the case that the accused breaching party can assert a counterclaim of patent invalidity. When that occurs, the new law expressly eliminates state court jurisdiction and offers an option for removal to Federal Court rather than straight dismissal. This change in the law essentially overrules the Supreme Court's decision in Holmes Group, Inc. v. Vornado Aircirculation Systems, Inc., 535 U.S. 826 (2002). In Holmes Group, the Supreme Court held that patent claims that arise only in a counterclaim did not trigger Federal jurisdiction under §1338(a).

Figures in Design Patents

Patent,

By Dennis Crouch

The chart above shows a histogram of the number of figures included in a set of 90,000 US design patents issued over the past several years. The median number of figures is 7 and the average is 7.3 figures. The typical seven views are typically six orthogonal views and one perspective view. Designs with only one figure are typically surface treatments or screen icons. Microsoft’s recent GUI Design Patent No. D675,221 is shown to the right and appears to show an mapping interface for zooming in and out. In utility patents, the figures are used to flesh-out the disclosure and ensure that the requirements of written description and enablement are met. In design patents, the figures have the additional importance of defining the scope of the patent claim. In that vein, each additional figure may add additional limitations to the scope of coverage.

FM v. Google: Means-plus-Function Indefiniteness and O2 Micro Challenges

Indefinite, Patent, ,

By Jason Rantanen

Function Media, L.L.C. v. Google Inc. (Fed. Cir. 2013) Download FM v Google
Panel: Rader, Newman, Reyna (author)

Function Media sued Google for infringement of three related patents: 6,446,045; 7,240,025; and 7,249,059.  The patents involve a system for facilitating advertising on multiple advertising outlets (such as different websites) with different formatting requirements.  The district court granted summary judgment that the sole independent claim of the '045 patent was indefinite and a jury subsequently found that the asserted claims of the '025 and '059 patents invalid and not infringed.  The district court granted JMOL of validity of four claims but the noninfringement verdict stood.  FM appealed several issues including the indefiniteness ruling and raised a challenge based on O2 Micro. 

Indefiniteness: Claim 1 of the '045 patent reads as follows:

1. A method of using a network of computers to contract for, facilitate and control the creating and publishing of presentations, by a seller, to a plurality of media venues owned or controlled by other than the seller, comprising:

    a) providing a media database having a list of available media venues;
    b) providing means for applying corresponding guidelines of the media venues;
    c) providing means for transmitting said presentations to a selected media venue of the media venues;
    d) providing means for a seller to select the media venues; and
    e) providing means for the seller to input information;
    whereby the seller may select one or more of the media venues, create a presentation that complies with said guidelines of the media venues selected, and transmit the presentation to the selected media venues for publication.

At issue was the italicized "means for transmitting" claim element, which the district court held to be indefinite because the specification did not disclose a structure for carrying out the claimed function, as required by 35 U.S.C. § 112(f) [previously referred to as 112[6]).  

On appeal, the Federal Circuit affirmed the district court's ruling, emphasizing the requirement that an algorithm must be disclosed when using a means-plus-function claim involving software.   "When dealing with a “special purpose computer-implemented means-plus-function limitation,” we require the specification to disclose the algorithm for performing the function."  Slip Op. at 9.  For this claim element, at least, no algorithm was disclosed: "Here, there is no specific algorithm disclosed in prose, as a mathematical formula, in flow charts, or otherwise. FM cites to several places in the specification that it contends describe the software. These citations all explain that the software automatically transmits, but they contain no explanation of how the [Presentation Generating Program] software performs the transmission function."  Id. at 10.  "At most, the ’045 Patent specification discloses that the structure
behind the function of transmitting is a computer program that transmits. Beyond the program’s function, however, no algorithm is disclosed. As in Blackboard, the PGP is “simply an abstraction that describes the function” to be performed. 574 F.3d at 1383." Id.

Nor could FM rely on the knowledge of a PHOSITA: "Having failed to provide any disclosure of the structure for the “transmitting” function, FM cannot rely on the knowledge of one skilled in the art to fill in the gaps."  Id. at 11.  It was irrelevant that a person of ordinary skill could devise some method to perform the function: that goes to enablement, not to definiteness.  

Comment: Ironically here, it was probably the use of the narrowing "means" language that ultimately resulted in the holding of indefiniteness.  If the patentee had instead just referenced "a computer controller transmitting said presentation" (similar to what it did in Claim 1 of the '025 patent), it almost certainly would have survived an indefiniteness challenge.  See Mark A. Lemley, Software Patents and the Return of Functional Claiming (forthcoming in Wisconsin Law Review) at 41-42 (arguing that the Federal Circuit imposes no limit on the functional nature of software claim elements unless they use "means," thus negating the compromise established by 112(f)).  

O2 Micro: In addition to challenging several of the district court's claim constructions (which the CAFC affirmed), FM argued that the court improperly sent issues of claim construction to the jury in contravention of O2 Micro v. Beyond Innovation, 521 F.3d 1351 (Fed. Cir. 2008).  The Federal Circuit rejected FM's arguments, limiting O2 Micro to the rare circumstance when arguments about different claim scopes are actually presented to the jury.  "We disagree with FM that claim construction was decided by the jury because the district court’s construction was correct, and the district court never refused to construe any disputed terms.  Moreover, as with the other terms, FM never objected to any supposed improper argument or testimony."  Slip Op. at 26.  Absent this situation, the issue was whether Google made improper arguments to the jury, an issue on which FM bore an extremely high burden that it could not carry.

CLS Bank v. Alice Corp: Oral Arguments Lead to More Questions

Patent, , , , ,

By Dennis Crouch

CLS Bank v. Alice Corp (Fed. Cir. 2013)

On February 8, 2013, the Federal Circuit held oral arguments en banc in this important subject matter eligibility dispute that focuses on the extent that software can be patented. Under Federal Circuit rules, en banc rehearings include all of the regular circuit court judges as well as any other judge who sat on the original panel. For this case, the nine regular members of the court were joined by Senior Judge Richard Linn who sat on the original panel and penned the opinion of the court that has offended so many anti-software-patent advocates. In the opinion, Judge Linn cabined-in the definition of “abstract” with regard to computer implemented inventions and also indicated that §101 should only be used to invalidate a claim when that result is “manifestly evident.” [UPDATED] With a ten-member panel the accused infringer (CLS Bank) needs six votes to overturn the original panel decision. With a ten member panel, six votes are needed to win. Since the original appellate decision was vacated, this appeal comes directly from the district court. As such, a five-five tie will affirm the lower court holding of invalidity.  While I suspect that Linn’s language putting Section 101 on the back burner will not survive, I suspect that at least some claims will be seen to pass muster under Section 101.

The parties are in relative agreement on many points. None of the parties seriously argue that software per se is patentable – apparently assuming that software apart from its computer implementation always embodies an abstract idea. All of the parties also agreed that a computer specially designed to perform a particular function can also be patentable. The dispute centers on what test should be used to determine when you have such a “specialized computer” and on whether Alice Corp’s claimed invention meets that standard.

Most notably absent from the oral arguments was any discussion of the meaning of an “abstract idea.” Of course it is the ambiguity in the definition of abstract idea that is causing most of the confusion regarding subject matter eligibility.

For decades, patent attorneys have known that software can be patentable if properly claimed in a way that directs attention away from the software nature of the invention. I suspect that the rule-of-thumb for patent eligibility will focus on complexity of the relationship between software and hardware. And, if that is the case patent attorneys will renew their reputation for taking simple ideas and making them appear quite complex.

Mark Perry represented the accused infringer (CLS Bank) and argued that one starting point for subject matter eligibility is the notion that a process accomplished “entirely in the human mind or made with pen and paper” cannot be patent eligible. Further, merely speeding-up that process by using a computer does not somehow transform the process into a patentable invention – “it simply accelerates the process.” The bulk of the questioning focused whether CLS had overgeneralized the claims. For instance, when Mr. Perry began reading from the patent’s invention summary he was stopped by Judge Linn who responded that every claim can be distilled to an abstract summary but “that’s not the way that we assess patent eligibility or patentability.”

Judge Moore focused the questioning on the CLS Bank claim that included the most physical structure. Claim 26 of the ‘375 patent reads as follows:

26. A data processing system to enable the exchange of an obligation between parties, the system comprising:

a communications controller,

a first party device, coupled to said communications controller,

a data storage unit having stored therein

(a) information about a first account for a first party, independent from a second account maintained by a first exchange institution, and

(b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution; and

a computer, coupled to said data storage unit and said communications controller, that is configured to

(a) receive a transaction from said first party device via said communications controller;

(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and

(c) generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

Judge Moore rightly suggested that a computer by itself is clearly a machine and subject-matter eligible. She queried then, how can a more particular invention – the computer with particular functionality – be ineligible? Perry offered two responses. First, he argued that the claim here is really method claim masquerading as a machine claim – that method itself is an abstract idea and the addition of the computer hardware does not make the claims eligible. Further, Perry argued that the claims here are not directed to any particular computer but instead a generic system. Judges Moore and Newman then queried whether the real focus should be on obviousness. Perry admitted that the claims may also be invalid under Section 103, but that the Supreme Court has indicated that Section 101 is a threshold inquiry. In addition, he argued, Section 101 inquiries are often easy because they do not require substantial discovery.

Perry also suggested that the requirement for extensive particular hardware rightly favors companies like CLS Bank and Google who spend millions of dollars to build systems that actually work rather than companies like Alice who merely develop a “McKinsey Report” and file for patent protection.

With Ray Chen on the sideline pending confirmation of his Federal Circuit judicial nomination, Deputy Solicitor Nathan Kelley stepped up and primarily sided with CLS Bank – arguing that software per se cannot be patent eligible because it is an abstract idea and that merely connecting software to a computer is likewise patent ineligible. The oddball test suggested by the PTO borrows the separability concept from copyright law. In copyright, a useful article is only copyrightable if the original expression is at least conceptually separable from the utility of the article. The PTO argues that an inseparability requirement should be put in place for computer implemented inventions. Under that construct, a computer implemented invention that applies an abstract idea would only be patent eligible if the computer is inseparably and inextricably linked to the invention. In oral arguments, Kelley suggested that the approach requires the “fact finder” to “go deeper” in considering whether an inextricable link exists. Mr. Kelly did agree (on questioning from Judge Moore) that the focus in this process should be on the language of the claims.

What the PTO wants out of this is a practical test that its examiners can follow rather than just the notion of an “abstract idea.” I believe that the agency would have been better served if he had focused on that point rather introducing a new concept into the law that does little or nothing to resolve ambiguity.

Adam Perlman argued for the patentee (Alice Corp) and likewise did not defend software patents. Rather, Perlman argued that his client’s patents were technology-focused inventions that wove together software and hardware in a way that “creates a new machine” that clearly satisfies the requirements of Section 101.

There was some back and forth about preemption. Neither party mentioned this, but a point relevant to preemption is likely CLS’s allegations at the district court level that it did not infringe the patents.

The Federal Circuit will likely take a few months to decide this appeal. An important issue will be to see whether the court decides this case quickly or waits for the Supreme Court to release its decision in Myriad. Although not computer implemented, the outcome of Myriad case could impact the law here.

When does the Written Description Requirement Limit Amendments to Design Patent Drawings

Patent,

By Dennis Crouch

In re Owens (Fed. Cir. 2013) (decision pending)

In 2006, P&G obtained a design patent for its Crest brand mouthwash bottle. D531,515. Before that patent issued, the company filed a continuation application and eventually amended the drawings to use ghost-lines (dashed lines) for most of the bottle design and solid design lines for only a small portion of the bottle surface.

In the figures below, the drawing on the left is the design drawing originally filed in the specification and issued in the D'515 patent. The drawing on the right is found in the continuation and the subject of this appeal. In design patents, the drawings are of critical importance because the single allowable design patent claim typically ties the scope of enforceable right to the drawings. Here, for instance, in the D'515 design patent P&G claims "the ornamental design for a bottle, as shown and described."

Now, for claim purposes, ghosted lines have essentially no meaning and are given no weight. Thus, the continuation below claims a portion of the bottle base. The focus of the litigation is on the front portion of the bottle that previously claimed an inverted irregular pentagon and now appears to be limited to only the upper portion of that pentagon in a roughly trapezoidal shape. The base of the trapezoid is ghosted, but the drawing does claim the surface up to the ghosted line. In the photo of the Crest bottle to the right, you can see the inverted pentagon design is created by a label sticker.

During prosecution, the PTO rejected P&G's continuation application — concluding that the new claim (as shown in the drawing) did not satisfy the written description requirement of 35 U.S.C. § 112(a). In other words, it is not apparent from the originally filed specification that that the inventor was at that time in possession of the invention as now claimed. P&G's argument is that the area being claimed was already disclosed in the original application and that is literally true. The PTO responds, however, that the original application did disclose a break-point for the trapezoidal area now being claimed. In other words, nothing in the original application indicates that the portion now claimed could itself be a design. The PTO has proposed a rule it feels is administrable: applicants can amend claims by "ghosting" solid lines and vice-versa, but applicants cannot further partition areas or define new portions without running afoul of the written description requirement.

Design patents are largely governed by the same rules as utility patents. This is often unfortunate because the policy goals supporting many of the (utility) patent rules do not map well to the world of design rights. Designs are, for the most part, being used as an additional layer of trademark (trade dress) protection rather than as an incentive to invest in the invention of new designs. This case fits that mold well. But, it is the patent laws that we follow.

In thinking about the written description requirement, a good beginning approach is to try to first uncover the best analogy to utility patent doctrine. One analogy might be to subgenus & subrange claims. Utility patents regularly disclose and claim concentration level ranges, such as "concentration of cardiolipin is between 0.02 and 0.04%." When impinging prior art is discovered, one solution is to amend the claim scope to narrow the claims – perhaps to change the concentration to "between 0.02 and 0.03%." However, the written description requirements limits an applicant's ability to make this narrowing amendment unless there is some evidence that the applicant had (at the time of the application filing date) possession of the invention with the narrower range as well. For these points, the M.P.E.P. cites In re Smith, 458 F.2d 1389 (CCPA 1972) (a subgenus is not necessarily described by a genus encompassing it and a species upon which it reads) and In re Lukach, 442 F.2d 967 (CCPA 1971) (subgenus range was not supported by generic disclosure and specific example within the subgenus range). Of course, the amendment by P&G in the present case is not a narrowing amendment but rather might better be seen as a broadening amendment – of course, broader and narrower in design patent law is somewhat difficult to define. The written description requirement is also used to invalidate claims that have been broadened by eliminating claim limitations. Such cases include ICU Medical v. Alaris Medical System (Fed. Cir. 2009) and the often maligned Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998) (claims to a sectional sofa comprising, inter alia, a console and a control means were held invalid for failing to satisfy the written description requirement where the claims were broadened by removing the location of the control means). See also MPEP § 2172.01.

All-in-all, the PTO's position makes sense to me – that nothing in the new original application suggests the claim limit as suggested by P&G. Design patent claims are considered "as a whole" and refocusing only on a small portion of a design can dramatically alter the impact and overall feel of the design. In the ordinary doctrine of patent law, such a potentially dramatic change in claim scope is only allowed if the original disclosure evidences that the inventor possessed the refocused invention at the time of filing. It is reasonable here to say that Owens did not possess that new invention as now claimed. Here, we should be keen to recognize that the written description requirement is separate and distinct from the enablement requirement – even though both arise from the same statutory phrase in Section 112. Here, there is no question that the enablement requirement is met.

The kicker for the PTO in this case is that written description is a question of fact and PTO determinations on questions of fact are given substantial deference on review by the PTO. There is hardly any question in my mind that the PTO's position passes that low threshold.

The case was recently argued before Judges Prost, Moore, and Wallach. This panel is interesting because of Judge Moore's famous pre-nomination article on the problems of patent continuations. This case arises out of a continuation. P&G wants to claim priority back to the original filing date because the original patent had already been out for more than a year by the time that the amended claims were introduced in the continuation. Thus, if it cannot claim priority then its original work will serve as prior art to block this later patent from issuing. A decision is expected later this spring.

In the trade dress world, this mess would not make such a difference because we don't worry about prior art but rather priority in the marketplace. But again, in the US, design patent rights are squarely within the pigeon hole of patent law.

Related articles
Guest Post by Sarah Burstein: Apple v. Samsung
Mark-Up and Commentary on the Patent Law Treaties Implementation Act of 2012
Moving Away from Beauty as a Factor in Design Patent Validity

EFF: Limit Software Patents

Patent, , ,

Guest Post by Julie Samuels.  Samuels holds an endowed chair at EFF aptly named the Mark Cuban Chair to Elimiate Stupid Patents.  EFF's brief in the CLS Bank case is available here: /media/docs/2012/12/eff–iso-cls.pdf. 

Since the Supreme Court’s 2010 Bilski ruling, the Federal Circuit has been consistent on only one point in its § 101 jurisprudence—and that’s on being inconsistent. In the face of the Federal Circuit’s failure to provide a workable § 101 standard, the Supreme Court issued its unanimous ruling in Mayo v. Prometheus, essentially telling the Federal Circuit to take the patentable subject matter inquiry seriously. Yet the Federal Circuit paid no heed when it issued ruled in CLS Bank v. Alice, all but ignoring the Supreme Court (for many of us court watchers, the Federal Circuit’s failure to address Mayo was shocking; even Judge Prost, in her dissent, admonished the majority for “fail[ing] to follow the Supreme Court’s instructions—not just in its holding, but more importantly in its approach.”).

So it really was no surprise when the Federal Circuit agreed to take CLS en banc. We, along with many others, hope that this case would provide the Court an opportunity to head the Bilski Court’s warning that:

The Information Age empowers people with new capacities to perform statistical analyses and mathematical calculations with a speed and sophistication that enable the design of protocols for more efficient performance of a vast number of business tasks. If a high enough bar is not set when considering patent applications of this sort, patent examiners and courts could be flooded with claims that would put a chill on creative endeavor and dynamic change. (130 S. Ct. at 3229).

As currently interpreted, § 101 leaves parties unable to discern a patent’s metes and bounds or assess its validity, making inadvertent infringement an unfortunate cost of doing business. This has led to a dangerous and dramatic increase in patent litigation, particularly surrounding business method patents or those covering software. For better or worse (and I think worse), the major uptick in these cases involved non-practicing entities. Some data that we included in our amicus brief filed in CLS Bank:

  • From 200-2002, NPE litigation accounting for only about five percent of patent litigation;[1] in 2007 that figure was 22 percent and in 2011 it was 40 percent.[2]
  • Litigation surrounding software patents has also greatly increased:

6a00d8341c588553ef017c34cf3367970b-pi[1][3]

  • For the first time in 2011, spending by both Apple and Google on patents exceeded the firms’ spending on new product research and development.[4]
  • NPEs now disproportionately target small companies; at least 55% of unique defendants sued by NPEs make under $10 million a year.[5]

These statistics are a direct result of the legal instability surrounding § 101. One way to stem this problem is to create incentives for those facing litigation (or litigation threats) to pursue their meritorious defenses of noninfringement and invalidity. Section 101 could play that role, in fact, the Mayo Court seemed to state as much: “to shift the patent-eligibility inquiry entirely to these late sections [§§102, 103, 112] risks creating significantly greater legal uncertainty, while assuming that those sections can do work that they are not equipped to do.” 132 S. Ct. at 1304.

 Yet no version of recent § 101 jurisprudence offers much hope of settling the law. Instead, we recommended in our brief (filed along with Public Knowledge) that the Federal Circuit take another route and adopt a stricter construction of § 112(f), as recently proposed by Prof. Mark Lemley. Specifically, instead of attempting to figure out whether a broad, functional claim is abstract or not, a court may first use § 112(f) to narrow the claim to the structures and their equivalents recited in the patent and then, if questions remain, make a § 101 inquiry.  

 While § 112(f) has traditionally been applied to apparatus claims, it’s clear that Congress intended it to apply to method claims as well. Despite this, software patents often do not detail actual algorithms or explain how to actually carry out the methods they attempt to claim; as such they should be indefinite under cases like Aristocrat Techs. v. Int’l Game Tech. If the claims do specify the algorithms, then the § 101 inquiry will be limited to those algorithms and their equivalents. These questions—of whether §112(f) applies; if it does, how the claims should be limited; and then if § 101 permits that narrowed claim—could all be accomplished at early stages of litigation, before expensive discovery and motion practice.

[1] James Bessen, Jennifer Ford and Michael Meurer, The Private and Social Costs of Patent Trolls, Boston Univ. School of Law, Working Paper No. 11-45, 2011 (“Bessen 2011”), at 6.

[2] Sara Jeruss, Robin Feldman & Joshua Walker, The America Invents Act 500: Effects of Patent Monetization Entities on US Litigation (2012) at 5, 25.

[3] James Bessen, A Generation of Software Patents, Boston Univ. School of Law, Working Paper No. 11-31 (June 21, 2011), at 19

[4] Zak Islam, Smartphone Industry Spent $20 Billion on Patents in 2011, tom’s hardware (October 9, 2012), http://www.tomshardware.com/news/Patents-Smartphone-Apple-Google-Motorola,18231.html

[5] Colleen Chien, Startups and Patent Trolls, Santa Clara Univ. School of Law, Accepted Paper No. 09-12 (September 28, 2012)

Director Kappos’s Speech on Software Patents, the PTO, and Innovation

Patent, ,

By Jason Rantanen

Last week, Director of the USPTO David Kappos delivered a keynote address to the Center for American Progress that focused on software patents and the smartphone "patent wars."  The speech is noteworthy for the Director's strong defense of software patents. The entire speech is worth reading – here are a few excerpts to induce you to read the full speech:

Software patents, like all patents, are a form of innovation currency. They are also ecosystem enablers, and job creators. The innovation protected by software patents is highly integrated with hardware. All of it must remain eligible for protection. The current software patent “war” is hardly the first patent war—and unlikely to be the last in our nation’s patent history. Whenever breakthrough technologies come onto the scene, market players find themselves joined in the marketplace by new entrants. The first instinct of the breakthrough innovators is to bring patents into play. This is not only understandable, it is appropriate. Those who invest in breakthrough innovation have a right to expect others to respect their resultant IP. However, in the end, as history has shown time and time again, the players ultimately end up agreeing to pro-consumer solutions via licenses, cross-licenses or joint development agreements allowing core technologies to be shared.

***

So does that mean we’re done? End of speech? Should we just accept the problems, given the importance of the innovation and the illogic of discriminating against great technology that happens to be implemented in software? Of course not. The right point of inquiry is quality. By getting that right, we grant patents only for great algorithmic ideas worthy of protection, and not for everything else. This administration and its innovation agency understand that low-quality patents do no good for anyone. Low quality patents lead to disputes, uncertainty, and lost opportunity. Quality is central to our mission. All of this especially for software.

So we’ve been working on the underlying drivers for software patent quality from the beginning. Knowing that you get what you measure, starting in the summer of 2009 we assembled a taskforce to devise a comprehensive new set of quality metrics. That work culminated in 2010, when we rolled out the most complete, broad, objective patent quality measurement system on the planet – seven metrics, which we report eagerly to the public. The Lexus of quality metrics. And what do those metrics show? Patent quality isn’t broken at all. In fact, our decisions on both allowances and rejections correctly comply with all laws and regulations over 96 percent of the time.

***

You know, the history of software patents is not a perfect one, although things are improving. Some of the most troublesome patents have expired; others can be challenged with new post-grant proceedings; and newer patents are quantifiably clearer, and aligned with current legal standards. But it’s important to note that, during the so-called smartphone patent wars, innovation continues at breakneck pace. A system like ours, in which innovation is happening faster than consumers can keep up, cannot fairly be characterized as “broken”. Nor can it be said that the U.S. is just a receiver of all this innovation. Most of the innovation is taking place right here. Broken? What?

The fact is, the explosion of innovation—and follow-on litigation—that we see across consumer electronics hardware and software is a direct reflection of how our patent system wires us for innovation. It's both natural and reasonable that in a fast-growing, competitive market, innovators would seek to protect their breakthroughs using our patent system.

The full version of Director Kappos's speech is available here: http://www.uspto.gov/news/speeches/2012/kappos_CAP.jsp

 

 

Transocean v. Maersk, Part II: Secondary Indicia of Nonobviousness Outweigh Prima Facie Case of Obviousness

Obviousness, Patent, , , , ,

Guest post by Professor Lucas Osborn, Campbell University School of Law.  Before joining the academy in 2009, Professor Osborn worked on the Transocean case while at Fulbright & Jaworski, which represented Transocean.

Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc. (Fed. Cir. 2012)

Panel: Prost, Wallach, Moore (author)

This is the second Federal Circuit opinion in this litigation.  Jason Rantanen wrote about the first opinion in 2010.  The patented technology involves offshore deepwater drilling vessels have "dual activity" capability, which is roughly a vessel with two advancing stations that can cooperate together to drill and finish a single oil well at the ocean floor.  The technology decreases the time it takes to drill and complete an oil well compared to the prior art.  Since offshore drilling rigs rent for around $500,000 a day, every time savings counts.  In Transocean I, the Federal Circuit overturned the district court's summary judgment finding of obviousness, noting that although Maersk provided prior art that made a prima facie case of obviousness, the summary judgment was improper in view of Transocean's significant secondary indicia of nonobviousness.  On remand, the trial jury found Transocean's patents were not obvious and awarded Transocean $15,000,000 in damages.  The district court granted Maersk's motion for JMOL notwithstanding the jury's verdict.

Obviousness – Secondary Considerations and Weighing the Strength of the Prima Facie Case

In Transocean I, the Federal Circuit found Maersk had made a prima facie case of obviousness based on two prior art references, and thus the remand was focused on secondary indicia of nonovbiousness.  On remand, the parties fought over whether the jury could consider the two prior art references in addition to the secondary indicia evidence.  Transocean, apparently believing the prima facie case was weak, wanted the jury to consider the two prior art references for two purposes: (1) to determine whether the references taught each limitation of the claims and provided a motivation to combine, and (2) to consider the strength of the prima facie case.  Maersk opposed both, insisting that the only issue was the secondary indicia of non-obviousness.  The district court allowed the jury to review the prior art references for both purposes.  The Transocean II panel said it was error to allow the jury to reconsider whether the references taught each limitation of the claims and provided a motivation to combine: because that issue was decided in Transocean I, it was the "law of the case."  On the other hand, the court held it was not error to allow the jury to weigh the strength of the prima facie case together with the objective evidence of nonobviousness.

This presents a nice strategy for patentees to (essentially) re-litigate the prima facie obviousness determination.  While the jury technically does not get to decide whether a prima facie case of obviousness exists, it might be difficult for jurors to avoid forming their own opinion about the prima facie obviousness issue if it is allowed to learn about the prior art in detail. 

On the ultimate issue of nonobviousness, the court reinstated the jury verdict as supported by substantial evidence.  The evidence of nonobviousness included evidence of commercial success (including customers willing to pay a premium or even requiring rigs with the patented features), industry praise and unexpected results, copying (including by Maersk itself), industry skepticism, licensing, and long-felt but unsolved need.  The court concluded that "Few cases present such extensive objective evidence of nonobviousness, and thus we have rarely held that objective evidence is sufficient to overcome a prima facie case of obviousness. . . . This, however, is precisely the sort of case where the objective evidence establishes that an invention appearing to have been obvious in light of the prior art was not."

The panel also held that substantial evidence supported the jury's finding of enablement. 

Infringement and Damages – Option to Modify to Avoid Infringement

The court also reiterated its Transocean I holding that Maersk may have infringed even though its original contract for "sale" of the rig contained an option to modify the rig before delivery if any patent infringement was likely.  The jury found that Maersk committed infringement when it "offered to sell" and "sold" its rig to Statoil.  The contract evidencing the sale/offer expressly indicated that Maersk could modify the final rig design based on the outcome of then-pending district court litigation between Transocean and a third party based on the same patents.  Before actually delivering the rig, Maersk modified it to avoid infringement.  But the Federal Circuit reiterated that the option to modify and subsequent modification could not save Maersk.  The jury found that the specifications of the rig offered and sold met all the claim limitations.  Post-offer/sale modifications did not matter even though they occurred before actual delivery.

Moving to damages, the panel reinstated the jury's award, but it was sympathetic to Maersk's apparent good intentions to avoid infringement.  The court stated, "We are sympathetic to Maersk's arguments. It offered drilling services which would use an infringing drill, but expressly reserved the right to modify the drill to avoid infringement. It did then modify the drill prior to delivery to avoid infringement – hence never actually using an infringing dual-activity drill."  Nevertheless, the court held that the $15,000,000 reasonable royalty verdict was supported by substantial evidence. 

What can defendants take away from this?  A contract with an option to modify the product will not avoid infringement.  It would seem defendants in situations like Maersk's (i.e., watching a patent to see if it issues or is held valid) should contract not for an "option" to modify, but for a mandatory modification to avoid infringement upon the triggering event (patent issuance or litigation upholding the patent's validity).

The Ignored Issue – When is a "Lease" a "Sale" Under Section 271?

As in Transocean I, the court did not reach a potentially dispositive issue that the parties strongly contested at times in the litigation.  Section 271(a) provides that "sales" and "offers to sell" can be acts of infringement.  Here, however, Maersk did not offer to sell or sell its drilling rig.  Rather, it "leased" and offered to "lease" its rig to a third party.  While previous cases have found that some leases can be tantamount to a sale (and thus infringe under 271), those cases primarily involved the transfer of property indefinitely or for its entire useful life (think of your typically software "license").  See Minton v. Nat'I Ass'n. of Secs. Dealers, Inc., 336 F.3d 1373, 1378 (Fed. Cir. 2003).  This case presented a closer issue:  Here, Maersk argued that it (1) the lease did not last for the entire useful life of the drilling rig, and (2) the contract was for the provision of drilling services and at all time Maersk maintained possession of the rig.  The court ignored this issue and, as it did in Transocean I, referred to the transaction as a "sale" without comment.   

From an economic perspective, "sales" and "leases" would seem to present the same harm to the patentee.  On the other hand, the statute only mentions sales, not leases.  For whatever reason, the Federal Circuit didn't want to touch this issue.  Maybe we will have to wait for Transocean III to know the answer?

Recent Patently-O Posts

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Linking Pigs and Humans through the Enablement Doctrine

Patent,

By Dennis Crouch

Edwards Lifesciences AG v. CoreValve, Inc. (Fed. Cir 2012)

In an opinion by Judge Newman, the Federal Circuit has sided with the patentee – rejecting the challenger’s argument that the patent lacked an enabling disclosure under 35 U.S.C. § 112(1). The claims (and accused infringer activity) are all seemingly focused on using the claimed cardiac valve prosthesis in a human. However, at the time of the patent application, the invention had only been tested in a pig and the human link in the specification was only the statement that “the cardiac valve prosthesis for use in human beings has a corresponding form.” (In its brief, CoreValue also notes that none of the pigs survived more than five hours.). See U.S. Patent No. 5,411,552. The real question was whether the conversion to a human prosthesis would require undue experimentation. If not, then the specification is sufficient.

The court writes:

CoreValve [the accused infringer] argues that in no event does testing in pigs enable use in humans. However, it has long been recognized that when experimentation on human subjects is inappropriate, as in the testing and development of drugs and medical devices, the enablement requirement may be met by animal tests or in vitro data. See MPEP §2164.02 (“An in vitro or in vivo animal model example in the specification, in effect, constitutes a ‘working example’ if that example ‘correlates’ with a disclosed or claimed method invention.”). This general rule has been elaborated in various situations, e.g., In re Brana, 51 F.3d 1560, 1566 (Fed. Cir. 1995) (“one who has taught the public that a compound exhibits some desirable pharmaceutical property in a standard experimental animal has made a significant and useful contribution to the art, even though it may eventually appear that the compound is without value in the treatment in humans”); Scott v. Finney, 34 F.3d 1058, 1063 (Fed. Cir. 1994) (“Testing for the full safety and effectiveness of a prosthetic device is more properly left to the Food and Drug Administration. Title 35 does not demand that such human testing occur within the confines of Patent and Trademark Office proceedings.”).

Rather than following any bright-line rule requiring human testing, the court refocused attention on the so-called “Wands factors” of undue experimentation summarized by the court in the case of In re Wands, 858 F.2d 731 (Fed. Cir. 1988). These factors include:

  1. the quantity of experimentation necessary,
  2. the amount of direction or guidance presented,
  3. the presence or absence of working examples,
  4. the nature of the invention,
  5. the state of the prior art,
  6. the relative skill of those in the art,
  7. the predictability or unpredictability of the art, and
  8. the breadth of the claims.

In this vein, so to speak, the patentee had provided expert trial testimony as to how someone skilled in the art would be able to take the pig results and use them for a human version without undue experimentation. Based upon that testimony, the court was able to confirm that the jury conclusion was based on substantial evidence.

Validity judgment confirmed.

Construing Claims for Enablement: From a doctrinal standpoint, the question of whether a claim is sufficiently enabled should not depend upon the accused infringing activity. In practice that link is regularly found in the caselaw where courts focus the enablement question on activities related to the accused infringement. This case is no different. It turns out that the asserted claims are not expressly limited to a product for use with humans. Rather, the claims are directed toward “a valve prosthesis for implantation in a body channel.” Now, the specification does suggest that the problem being addressed deals with people and that suggestion cold potentially limit the claim scope. However, the court does not deal with the real reality that the claims are drafted in a way that would encompass use of the device in a variety of animals – many of them vastly different from a pig. In mind, this comes together to mean that we have a de facto special claim construction for enablement purposes that is used to understand the “full scope” of the claims.

Note:

  • The case has an important remedies discussion that will be included in a future post.
  • The parallel patent has been already litigated in both Germany and the UK with both cases resulting in non-infringement determinations. The key difference here is that the US courts have more broadly interpreted the claim term “cylindrical” to include shapes that are not really cylindrical. (The relevant portion of the accused device does not have a uniform diameter along its axis). That construction was confirmed on appeal since the specification does not explicitly require constant diameter.
  • In regards to the image accompanying this post, do you read from left-to-right or right-to-left?

Overkill of the Best Mode

Patent, ,

By Dennis Crouch

Joy Mining Machinery v. Cincinnati Mine Machinery (Fed. Cir. 2012) (nonprecedential)

In what may well be its final decision on the best mode requirement of 35 U.S.C. §112(1), the Federal Circuit has reversed a district court judgment invalidating claim 2 of Joy MM's asserted Patent No. 6,662,932. However, the decision will provide additional legal foundation for patent applicants to keep important or sensitive information regarding their invention as a trade secret rather than including that information as part of the patent disclosure.

Here, the court confirms that the best mode requirement does not require actual disclosure of the best mode, but rather only adequate disclosure to enable one of skill in the art to practice the best mode without undue experimentation. Citing See Ajinomoto Co. v. Int'l Trade Comm'n, 597 F.3d 1267 (Fed. Cir. 2010); and Young Dental Mfg. Co. v. Q3 Special Prods., Inc., 112 F.3d 1137 (Fed. Cir. 1997).

In this case, the inventors had apparently decided that the best mechanism for its claimed drive-pin retainer was a press-fitting. However, the applicant failed to identify that particular mechanism in the specification and instead suggested welding. At the time, a press-fitting mechanism was already known to those of skill in the art as one way to construct a drive-pin retainer. As such, the federal circuit found that the failure to disclose that best mode did not qualify as an actionable concealment.

Accordingly, CMM cannot point to any clear and convincing evidence upon which a reasonable jury could rely to find that the omission of press-fitting from the written description of the '932 patent "concealed" its use as a drive pin retaining means from the public.

It is unclear to this author how "concealment" can be read into the statute. Rather, Section 112 affirmatively requires that the applicant "set forth the best mode" not simply avoid concealment. The America Invents Act of 2011 (AIA) substantially alters best mode jurisprudence. Although the statutory change leaves the requirement in place without amendment, the new law prevents any post grant action (either in court or the PTO) that would challenge a patent as invalid or unenforceable based upon failure to disclose the best mode.

In reality, this decision will not have much impact beyond putting another hole in a doctrine whose obituary has already been read.

Notes:

110812_1633_Overkilloft2

Apple v. Samsung: Adding Elements to Avoid Infringement

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By Dennis Crouch

Apple Inc. v. Samsung Electronics Co., Ltd., — F.3d —, 2012 WL 4820601, App. No. 2012-1507 (Fed. Cir. 2012) (N.D.Ill. 12-CV-0630) (APPLE II)

This is my second post on the appellate decision that I term Apple II. [Read the First Apple II Post.] In Apple II, the Court of Appeals for the Federal Circuit vacated N.D. California District Court Judge Koh’s preliminary injunction order that would have forced Samsung’s Galaxy Nexus smartphone off the market pending conclusion of the infringement lawsuit. The appellate court provided two independent reasons for vacating the preliminary injunction order: (1) that Apple had failed to provide proof of irreparable harm due to Samsung’s continued use of the particular invention covered by the patent; and (2) that a finding of infringement is unlikely based upon the claim construction as corrected by the Federal Circuit. This post focuses on the claim construction issue.

The patent at issue in this case is U.S. Patent No. 8,086,604. That patent issued in December 2011 but stems from upon an application originally filed in January 2000 and appears to be largely directed to aspects of Apple’s Siri application (although the original invention is not tied to a mobile device). After construing claim 6 of the patent, the district court found that Samsung’s product likely infringes. On appeal, the Federal Circuit has reversed that claim construction in a way that substantially narrows claim scope and thus negates any likelihood that Samsung infringes. Although the claim-at-issue uses open-ended “comprising” language, the appellate panel held that an apparatus that includes additional similar (but non-infringing) elements would not be covered by the patent.

Claim 6 is directed to an “apparatus for locating information in a network” comprising various software elements. The basic idea is that the system has a set of heuristic modules corresponding to different search areas. We all use heuristics for searching. For example, if you want to find prior art relating to a chemical compound, you might hire an expert chemistry searcher. On the other hand, if your search area is airplane seat design, you might hire someone else. Under the language of the patent, these search strategies could be defined as two different heuristic modules each corresponding to their respective search area. In the lawsuit itself, Apple identified the three heuristic modules as (1) a Google Search Module; (2) a Module that allows for Search of Internet Browsing History; and (3) a Search of a user’s Contacts List. One difficulty with considering this case is that this invention appears in hindsight to be ridiculously obvious. However, obviousness is not the topic of the appeal.

The patent claim requires “a plurality of heuristic modules … wherein: each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm corresponding to said respective area.” Samsung’s product allegedly uses a plurality of heuristic modules corresponding to different search areas. However, the accused product does not use “different, predetermined heuristic algorithm” for each and every different search area. I have modeled this below with a diagram of the Galaxy Nexus Search System associated with five different Search Areas (A,B,C,D,E) but only three different Heuristic Modules (X,Y,Z). Although some of the Heuristic Modules are re-used by the system, Apple argues that the system still infringes under standard patent law that would find the addition of non-infringing elements to an infringing core does not negate infringement. See CIAS, Inc. v. Alliance Gaming Corp., 504 F.3d 1356, 1360 (Fed. Cir. 2007) (infringing device may include additional, unrecited elements).

Writing for the unanimous panel, Judge Prost (joined by Judge Moore and Reyna) rejected Apple’s argument and instead agreed with Samsung that the claim “requires that [each and] every heuristic module within the accused device use a unique heuristic algorithm.”

[D]espite the use of “comprising,” claim 6 is not amenable to the addition of other modules that do not use different heuristic algorithms because such addition would impermissibly wipe out the express limitation that requires every module to have a unique heuristic algorithm.

It appears from the court’s remarks that a simple claim amendment might have saved Apple’s case:

  • Original: “a plurality of heuristic modules … wherein: each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm …”
  • Proposed: “a plurality of heuristic modules … wherein: each of the plurality of heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm …”

However, Apple might not have been able to obtain patent protection if it had clarified that the system might use the same heuristic algorithm for a variety of search areas. In particular, during prosecution Apple used the limitation in question to avoid prior art. The company argued “Andreoli does not describe … that each of the local and remote search operations employs a different heuristic algorithm.” Although the appellate panel based its decision on what I see as odd linguistics, this prosecution history argument is probably the most damning evidence.

Apple has at least one continuation application pending and thus has the opportunity to further shape its claims in a way that captures the market while avoiding prior art. See U.S. Patent Application Pub. No. 2012-0166477. The USPTO is also in the early stages of conducting an inter partes reexamination that was filed in August 2012 by Motorola Mobility (Google). See Inter Partes Reexamination No. 95/000,685.

THOSITA: Obvious to a Team Having Ordinary Skill in the Art

Patent, ,

By Dennis Crouch

Inventors Per Patent: The number of inventors per patent has risen fairly steadily for the past 40 years. Today, most patents are directed toward inventions created by teams of two or more inventors working in a collaborative environment. When done well, teamwork can add tremendous value to the creative process and can also provide a combined depth of knowledge beyond most individuals.

Individual PHOSITA: From its inception, the 1952 Patent Act allowed for joint inventors. However, the question of obviousness focuses on a single hypothetical individual: "a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103. The AIA slightly amends this portion of Section 103 to clarify that the "said subject matter" is "the claimed invention." This is a change made throughout the statute and puts-to-rest ongoing arguments for identification of a "core" invention for each patent.

PHOSITA as a Team: In its most recent decision, the UK Royal Court of Justice appellate panel took a different path – finding that question of obviousness should be judged from the viewpoint of a "skilled team." MedImmune v. Novartis, [2012] EWCA Civ 1234 (Kitchen, LJ). For the case in question, the court found that the "patent is addressed to a team of scientists with differing backgrounds in areas such as immunology, in particular antibody structural biology, molecular biology and protein chemistry, but with a common interest in antibody engineering."

The skilled team construct is not entirely new to UK case law. See, for example, Schlumberger Holdings Ltd v Electromagnetic Geoservices AS, [2010] EWCA Civ 819 (Jacob LJ), and Halliburton Energy Services, Inc. v. Smith International (North Sea) Limited, [2006] EWCA Civ 1715 (Jacob LJ). The starting point for these UK courts is essentially identical to that of US courts. In particular, the UK Patents Act 1977 defines "inventive step" as being "not obvious to a person skilled in the art." The corresponding language is found in Article 56 of the European Patent Convention (defining inventive step with reference to being obvious to a person skilled in the art). In building the notional teams, the UK courts have been somewhat careful to avoid hindsight bias in the process. Dyson Appliances Ltd v Hoover Ltd [2001] EWCA Civ 1440. Despite the progress, it is clear to me that the UK courts are still working out what it means to be obvious to a team as opposed to obvious to an individual person.

What is added by a Team Analysis?: In 2011, I questioned whether obviousness analysis should reflect some nuances of teamwork:

As compared to a solo worker, teams often have an overall broader depth of knowledge, but are often plagued by communication difficulties. In the obviousness analysis, this shift could be reflected in a broader scope of potential prior art but a more rigorous analysis of whether the ordinary team would make leaps of analysis necessary to combine disparate prior art.

Despite providing arguments on both-sides, I suspect that a notional team would tend to make an obviousness conclusion more likely. The knowledge of those of skill in the art is considered in other areas of patent law such as claim construction, enablement, and definiteness.

THOSITA under US Law: One statutory question moving forward is whether a section 103 "person" can be interpreted to encompass a team of persons. The answer is almost certainly yes. Perhaps the greatest driving factor for this conclusion is found in Section 102 that begins with the statement that "A person shall be entitled to a patent unless…" For that statute, the term person certainly apply to teams of joint inventors.

One major problem with my starting point of increased-team-size is the reality that the obviousness question is not designed around a "skilled inventor" threshold but that of a skilled craftsman of "ordinary skill." This means that there is not really any statutory hook for pushing the obviousness analysis to track the culture of innovation and creative experimentation. Rather, the focus is merely on ordinary craftsmen and what would have been common sense at the time. By design, this creates a low inventiveness threshold intentionally does not consider the particular inventive path taken. "Patentability shall not be negated by the manner in which the invention was made." 35 U.C.C. 103 (post-AIA).

See:

  • Dennis Crouch, Person(s) Skilled in the Art: Should the Now Established Model of Team-Based Inventing Impact the Obviousness Analysis?, Patently-O (2011)
  • Jonathan J. Darrow, The Neglected Dimension of Patent Law's PHOSITA Standard, 23 Harvard JOLT 227 (2009)

Did the AIA Eliminate Secret Prior Art?

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In many ways, prior art is the core of the US patent system. Patentability requires that any invention-to-be-patented be “new” as defined by 35 U.S.C. §§ 101, 102, and 103. Prior art serves as the underlying evidence to prove that the invention is not new. As implied by its name, prior art has a temporal aspect in that the “prior art date” must come before (i.e., be prior-in-time to) the critical patentability date of the invention in question. Sometimes, the identical invention is found within a single prior art reference. In that case, the newness doctrine of “novelty” as defined by 35 U.S.C. § 102 will do the invalidating work. However, more often than not, a prior art reference will only teach a portion of the purported invention. In that case, the prior art may still serve a useful roll when applying the obviousness doctrine defined by 35 U.S.C. § 103.

We’ve talked about two key features of prior art: (1) being earlier in time and (2) teaching some aspect of the invention being claimed. Those two elements are never sufficient to satisfy the evidentiary requirements of prior art. Rather, the law always requires one additional element to take this information from being merely prior private knowledge to being prior art. As part of the America Invents Act move to a first-to-file regime, this additional step will always involve (3) transferring knowledge.

One argument favoring a first-to-file regime is its focus on publicly available information rather than privately held knowledge. And, in most cases, the step of transferring of knowledge highlighted above is a public act. Thus, prior art may be created through publication, patenting, or public use. 35 U.S.C. § 102(a)(1) (post-AIA). The AIA retains one form of temporally-secret prior art in that the prior filing of a patent application by “another inventor” will be deemed prior art as of its filing date. 35 U.S.C. § 102(a)(2) (post-AIA; formerly defined by § 102(e)). This is secret prior art because patent applications are typically kept secret by the USPTO for 18-months after they are filed. However, I term § 102(a)(2) prior-art-as-of-filing-date as only temporally (or temporarily) secret because such a reference cannot be used as prior art unless and until the prior-filed application is made public through either publication or patenting. Perhaps because of the unfairness of associated with its secrecy, most other countries besides the US only allow this type of prior art for novelty arguments and not for questioning obviousness (inventive step).

The AIA did eliminate several types of secret of prior art, including prior secret invention by another inventor under pre-AIA § 102(g) and prior knowledge transferred from another to the patent applicant under pre-AIA § 102(f). The individualized secrecy of these prior art references created two main problems: (1) that patentability could not be fully evaluated with going through the arduous process of obtaining additional information from interested parties and (2) that the secrecy gave interested parties more of an opportunity to fraudulently create (or destroy) documents after-the-fact. Making patentability based upon publicly available information can hypothetically lead to some unjust outcomes, but it has the enormous benefit of providing clear(er) notice to anyone who cares to look.

Two important secret prior art questions remain — namely whether either (1) secret commercial uses (by the patentee) or (2) secret on-sale activity (by anyone) create prior art that can invalidate a patent on novelty grounds and contribute to invalidation on obviousness grounds. The Patent Act never expressly authorized the first type of prior art and has arguably now rejected the second. Advocates for a transparent prior art system argue that the AIA should be interpreted as eliminating both.

Secret Sales: One type of prior art that is traditionally thought of as potentially secret is created by what is known as the on-sale bar. An invention that is on sale before the critical patenting date will result in prior art that renders any patent invalid. There are a few ways that a sale or offer-to-sell could be secret: for example, (1) it might be an offer between two individuals that is subject to a (formal or informal) confidentiality agreement or (2) it might be an offer that does not fully disclose the scope of the invention.

The AIA retains the identical language of its predecessor statute regarding on sale activity that occurs prior to the defined critical date. Compare 35 U.S.C. § 102(a)(1) (post-AIA) with 35 U.S.C. § 102(b) (pre-AIA). Although the “on sale” term itself is identical, the context of the new statute is arguably different. In particular, the new statute has added a catchall phrase “otherwise available to the public” that suggests that the on-sale activity must also be available to the public. The new statute reads as follows:

A person shall be entitled to a patent unless — 1. the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or …

The open question is whether the language here creates a legally cognizable implication that the “on sale” activity must be available to the public as well.

Secret Commercialization by the Patentee: In his 1946 decision in Metallizing Engineering, Judge Learned Hand explained that a patentee’s commercial use of its process (even if done secretly behind factory walls) counted as a “public use” sufficient to invalidate the later-filed patent application. The court wrote “That it is a condition upon an inventor’s right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy, or [a patent].” Under the rule, secret commercial uses of an invention by a third party does not count as a public use. This distinction is found nowhere in the patent statute, but has been judicially recognized for many years. While the new statute retains the “public use” language, many suggest that a strong congressional intent that the new statute eliminate the Metallizing rule.

USPTO Proposed Interpretation: In a set of proposed examination guidelines, the USPTO indicated its interpretations that the statute has altered these provisions in favor limiting the application of secret prior art. In particular, the USPTO’s position is that, while the statute is not entirely clear on these points, the legislative history indicates that that prefiling secret sales and commercial uses do not qualify as prior art under the revised Section 102. The PTO writes: “The legislative history of the AIA indicates that the inclusion of this clause in AIA 35 U.S.C. 102(a)(1) should be viewed as indicating that AIA 35 U.S.C. 102(a)(1) does not cover non-public uses or nonpublic offers for sale.

For the most part, patent attorneys appear to agree with the USPTO’s proposals. The American Bar Association’s IP Law Section writes:

ABA IPL respectfully submits that the passage “otherwise available to the public” reflects the touchstone of what constitutes prior art under the AIA under section 102(a)(1). This section requires availability to the public or public accessibility is an overarching requirement. Such accessibility is critical to provide a simpler, more predictable and fully transparent patent system. As such, for a “public use,” for a determination that an invention is “on sale,” as well as to assess whether an offer for sale has been made, the statutory requirements under the AIA require a public disclosure. Thus, non-public offers for sale (and non-public uses) would not qualify as prior art under the AIA.

The AIPLA agrees, writing:

AIPLA believes that an offer for sale needs to be public to qualify as “on sale” prior art under §102(a)(1). . . . AIA §102(a)(1), unlike pre-AIA 35 U.S.C. §102(b), contains the residual clause “or otherwise available to the public.” This is a major policy change achieved by the new legislation, which would further the goal of increasing objectivity in the identification of prior art. . . .

[T]he legislative history of the AIA indicates that the inclusion of this clause in §102(a)(1) should be viewed as indicating that §102(a)(1) does not cover non-public uses or non-public offers for sale. AIPLA believes that such an interpretation reflects the clear intent of Congress. It is also consistent with the broad goal of global harmonization under a first-inventor-to-file system.

The IPO agrees as well – arguing in its comments to the USPTO that the AIA “overrules Metallizing Engineering by excluding ‘secret’ commercial activity from the ‘on sale’ provision” and that the only on sale activity relevant to patentability under the AIA is when an invention is “publicly on sale.” LES is also on board with this interpretation.

Several individuals disagreed, including Lawrence Pope who wrote:

Certainly, any change in patent law which abandoned a long established policy and allowed inventors to engage in secret commercial exploitation of their inventions for as long as they liked without forfeiting their right to obtain valid patent protection on the same, would require quite explicit statutory language. In addition, it would be expected that any such major change would be reflected in a more extensive legislative history than the mere comments of two members. One would at least expect to see it reflected in the Committee Report reporting on the legislation to the House of Representatives.

Mark Lemley also argued that the PTO’s interpretation is quite problematic:

[T}he proposed Guidelines take the position that the AIA has reversed an unbroken line of precedent of both the Federal Circuit and the regional circuits tracing back to Judge Learned Hand’s decision in the Metallizing case. Those cases hold — for impeccable policy reasons — that the term “public use” in old section 102(b) should be interpreted to prevent an applicant from making a secret commercial use for more than a year while delaying the filing of a patent application. A contrary conclusion, as the PTO now proposes, will enable inventors to keep their process inventions secret for years or even decades, and then surface and file a patent application. That is directly contrary to the goals of first-inventor-to-file in the AIA, which encourage early filing of patent applications.

Concluding that Metallizing and the cases that follow it were abrogated will have another, even more pernicious effect. Metallizing, Gore v. Garlock, and other cases interpret the term “public use” in the old statute. One might reasonably conclude that those cases stretch the meaning of that term, but what the courts said they were doing was interpreting “public use.” The term “public use” appears unchanged in new section 102 under the AIA. For the PTO to conclude that the new law opens the door to reinterpretation of the settled meaning of terms present in both the old and new statutes opens a dangerous door. Parties and courts might be expected to try to revisit the meaning of “on sale,” “patented,” “printed publication,” and many other settled statutory provisions, creating enormous uncertainty. To take just one example, the inherency doctrine, like the Metallizing rule, is not articulated expressly in either the old or new statute. If the reenactment of the term “public use” opens the door to revisiting Metallizing, it also opens the door to revisiting inherency, the “ready for patenting” rule in on sale bar, and a host of other settled cases. The PTO, patent applicants, and litigants would be much better served by leaving existing precedent interpreting unchanged statutory terms in place.

Read more comments here: http://www.uspto.gov/patents/law/comments/. (Note, the equally major issue is the USPTO’s interpretation of the disclosure grace period that is also part of the commentary).

What’s the Big Deal?: The USPTO does not have substantive authority to shape the interpretation of 35 U.S.C. § 102. In the end, this issue will be resolved by the courts or else clarified by Congress in a technical amendment. In many ways, the arguments above are simply a preview for a Federal Circuit and Supreme Court ruling on the issue. One problem with the USPTO’s narrow view of the prior art is that it delays the eventual resolution of this issue since it gives patent applicants nothing to challenge. In any event, this is a debate that will continue for at least the next decade and likely beyond.

Supreme Court Questions Whether Patent Law Malpractice Claims “Arise Under” the US Patent Laws (And Thus Are Amenable to Federal Jurisdiction).

Patent, , , ,

By Dennis Crouch

Gunn v. Minton (Supreme Court 2012)

Over the past few years we have seen an ongoing subject matter jurisdictional battle between state courts, regional federal circuit courts of appeal, and the Court of Appeals for the Federal Circuit. The issue as raised in various context is when a complaint stating a non-patent cause of action should be considered to “arise under” the patent laws so as to ensure that the case is heard by a federal district court and subsequently by the Court of Appeals for the Federal Circuit. These non-patent / patent cases can arise in a variety of disputes, including disputes over legal malpractice, contracts and licenses, employment disputes, bankruptcy, challenges to arbitrations, and antitrust disputes.

The issue in the present case is whether state courts in Texas properly have jurisdiction over legal malpractice claims against patent attorneys (or patent litigators). Legal malpractice is generally a state law tort claim, but the Federal Courts have jurisdiction over claims arising under the patent laws. Although there is Federal Circuit precedent on point, this case actually arises from a Texas state court dismissal of Mr. Minton’s malpractice claim based upon the state court’s interpretation of federal law.

Now, the Supreme Court has agreed offer its final view on the question of when the Federal Courts (and the Court of Appeals for the Federal Circuit) have jurisdiction here. Although nominally a patent case, the case could have much broader impact because it will essentially be interpreting the generic constitutional and statutory limitation of “arising under” jurisdiction.

Background on the Dispute: The case started several years ago when Mr. Vernon Minton developed a set of software that he leased to the Texas Int’l Stock Exchange (TISE). That lease to TISE occurred more than one year before he filed a provisional patent application on the invention embodied by the product. The USPTO granted Minton U.S. Patent No. 6,014,643. However, in a later lawsuit against NASDAQ, the patent was invalidated via the on-sale bar of 35 U.S.C. § 102(b) and that invalidity finding was upheld by the Federal Circuit on appeal. Minton v. Nat’l Ass’n of Sec. Dealers, Inc., 336 F.3d 1373 (Fed. Cir. 2003). In that decision, the Federal Circuit confirmed that the lease to TISE constituted a “sale” for 102(b). In a post-judgment motion, Minton asked the district court to consider whether the use by TISE was an experimental use. However, the district court refused to consider that issue because of its untimely introduction.

The present lawsuit arose when Minton sued his patent litigation counsel (who have now joined the Fulbright & Jaworski firm). The crux of the malpractice claim is that the litigation counsel failed to timely plead the experimental use question. Minton filed the lawsuit in Texas state court and lost on a pretrial motion based upon the trial court’s judgment that Minton had failed to present “a scintilla of proof . . . to support his claims.” That no-damages judgment was affirmed by the Texas court of appeals. However, the Supreme Court of Texas took an orthogonal view and held that Texas courts actually lacked subject matter jurisdiction over case. In particular, the Texas Supreme Court held that Minton’s malpractice claim required resolution of a substantial question of patent law and therefore fell within the exclusive “arising under” jurisdiction of the federal courts and, eventually, the Court of Appeals for the Federal Circuit. This ruling gives Minton another shot at winning the case – this time in federal district court. The Texas court wrote:

This case arises out of patent infringement litigation. We consider whether federal courts possess exclusive subject-matter jurisdiction over state-based legal malpractice claims that require the application of federal patent law. The federal patent issue presented here is necessary, disputed, and substantial within the context of the overlying state legal malpractice lawsuit. Additionally, the patent issue may be determined without creating a jurisdictional imbalance between state and federal courts. We conclude that exclusive federal jurisdiction exists in this case. Accordingly, without reaching the merits of the legal malpractice claim, we reverse the court of appeals’ judgment and dismiss this case.

The 5-3 Texas Supreme Court decision follows the lead set by the Court of Appeals for the Federal Circuit in Air Measurement Tech., Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir. 2007) and Immunocept, L.L.C. v. Fulbright & Jaworski, L.L.P., 504 F.3d 1281 (Fed. Cir. 2007). In those cases the Federal Circuit gave a broad interpretation to arising under jurisdiction based upon the court’s congressionally mandated goal of national uniformity in the patent system. Both the Akin Gump and the Fulbright Jaworski cases were decided on the same day by the same panel and both penned by then Chief Judge Paul Michel. (Judges Lourie and Rader joined). Although the Texas court did not treat the Federal Circuit decisions as binding precedent, the Court chose to adopt the logic of those decisions. The dissent argued that the State of Texas has a strong interest in (and a regulatory scheme in place for) ensuring that Texas attorneys maintain a high level of quality and that federalism concerns suggest that many of these cases should be adjudged at the state court level. In a non-patent case, the Supreme Court approved of this more nuanced analysis of arising under jurisdiction in the case of Grable & Sons Metal Products, Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005). In 2012, the Federal Circuit has decided at least three other jurisdictional disputes over attorney malpractice. In each case, Judge O’Malley argued against federal circuit jurisdiction based upon her reading of Grable. See Landmark Screens, LLC v. Morgan Lewis & Bockius, LLP (Fed. Cir. 2012)(O’Malley, J., concurring); Byrne v. Wood, Herron & Evans, LLP (Fed. Cir. 2012)(O’Malley, J., joined by Wallach, J., dissenting from denial of the petition for en banc rehearing); and USPPS, Ltd. v. Avery Dennison Corp. (Fed. Cir. 2012)(O’Malley, J., joined by Mayer, J., concurring).

Question Presented: The attorneys challenging federal jurisdiction raised the following questions:

Did the Federal Circuit depart from the standard this Court articulated in Grable & Sons Metal Products, Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005), for “arising under” jurisdiction of the federal courts under 28 U.S.C. § 1338, when it held that state law legal malpractice claims against trial lawyers for their handling of underlying patent matters come within the exclusive jurisdiction of the federal courts? Because the Federal Circuit has exclusive jurisdiction over appeals involving patents, are state courts and federal courts strictly following the Federal Circuit’s mistaken standard, thereby magnifying its jurisdictional error and sweeping broad swaths of state law claims – which involve no actual patents and have no impact on actual patent rights – into the federal courts?

In his responsive brief, Minton reframed the question as follows:

Minton filed a legal malpractice claim against the Attorneys arising from a patent infringement lawsuit. Do federal courts have exclusive “arising under” jurisdiction where the sole substantive issue is the application of a patent law doctrine which is an essential element of Minton’s malpractice claim?

Underlying Law: As suggested by both questions presented, the underlying law on federal court jurisdiction over patent cases begins with the federal statute – 28 U.S.C. § 1338(a).

The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases.

28 U.S.C. § 1338(a). There are two key phrases here. First, federal jurisdiction only exists when the civil action is considered to be “arising under [an] Act of Congress relating to patents.” Second, if federal circuit exists then it is exclusive of state jurisdiction.

Not a Constitutional Question: The statutory “arising under” language is intended to reflect the parallel language found in Article III, Section 2 of the U.S. Constitution that limits federal judicial power to cases “arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority…” However, the two sources have been interpreted somewhat differently. The constitutional “arising under” limits have been broadly interpreted to allow courts to hear cases even when the federal claim is only raised in a defense or counterclaim. See Osborn v. Bank of the United States, 22 U.S. 738 (1824). On the other hand, the “arising under” language in sections 1338 and 1331 have been more narrowly interpreted under the well pleaded complaint rule. In his 2004 article on Holmes Group, Professor Cotropia writes:

The phrase “arising under” originated from Article III of the Constitution, defining the jurisdiction of the federal court system. The Supreme Court interpreted this phrase, as it appears in Article III, to extend the constitutional grant of federal judiciary power to every case where federal law potentially forms an ingredient of a claim. Article III allowed “[t]he mere existence of a latent federal ‘ingredient’ that might in theory be dispositive of the outcome of a case . . . to bring the entire case, including ancillary nonfederal issues, within the jurisdiction of the federal courts.” An implementing statute is needed, however, for lower federal courts to exercise the powers conferred by Article III. With such an implementing statute, lower federal courts could enjoy some or all of the constitutional “arising under” grant of jurisdiction.

Christopher Cotropia, Counterclaims, the Well-Pleaded Complaint, and Federal Jurisdiction, 33 Hofstra L. Rev. 1 (Fall 2004); See also Donald L. Doernberg, There’s No Reason for It; It’s Just Our Policy: Why the Well-Pleaded Complaint Rule Sabotages the Purposes of Federal Question Jurisdiction, 38 Hastings L.J. 597 (1987).Because the Constitutional limitation has been so broadly interpreted, all of the practical discussion is focused on the meaning of “arising under” as it is found in the statutory context.

In Grable (following a long line of precedent), the Supreme Court confirmed that – under the statute – a case may “arise under” federal law even when the cause of action is purely a non-federal state-law claim. However, when the cause of action is not based on a federal claim, Grable requires (1) a substantial underlying contested federal issue and (2) that federal jurisdiction over the case “be consistent with congressional judgment about the sound division of labor between state and federal courts.” Grable interpreted the “arising under” language of 28 U.S.C. § 1331 rather than the patent jurisdictional statute of section 1338. However, in Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988), the Supreme Court recognized that those two statutes should be interpreted in parallel.

Is Patent Law Different?: Although I wrote above that the case has non-patent implications, patent law presents some particulars that might not exist in other areas of law. These involve the particular exclusive jurisdictional statute for patent law. Thus, although state courts have jurisdiction to also decide most federal claims, they cannot decide patent claims. In addition, Congress has spoken regarding its desire for uniformity in the application of the patent laws. These stated federal interests could be sufficient to explain a difference between federal jurisdiction over patent law malpractice claims and not over say trademark law malpractice claims. The malpractice is a relatively minor question compared with jurisdiction over contract claims that involve patent rights (such as a patent license or sale). It would be a big deal if the Supreme Court opened the door to greater federal jurisdiction over these claims. As I explain in the next paragraph, I think it is unlikely that this case would be a vehicle for expanding federal jurisdiction and instead will more likely be a vehicle for contracting federal jurisdiction – at least when compared with the holdings in Akin Gump and Fulbright jurisdictional decisions discussed above.

Grable is the Supreme Court’s most recent pronouncement on this issue and that case the court tempered federal arising under jurisdiction by requiring courts to be mindful of the appropriate balance of power between state and federal courts. Despite Grable, both the Federal Circuit and now the Texas Supreme Court have continued to maintain broad jurisdictional reach over these malpractice cases. In these cases, the minority dissenting viewpoint has argued for less expansive jurisdiction. In this setup, the Supreme Court is more likely to resolve the conflict between these ranges than it is to identify a result to the extreme. In addition, in the years since Grable, there has been a continued focus and recognition of legitimizing State’s rights. This notion of the importance of State’s rights places an additional thumb the scale of reduced federal jurisdiction over these types of cases.

AIA Expands Arising Under Jurisdiction: Although not applicable for this case, the Leahy-Smith America Invents Act (AIA) has altered federal court jurisdiction in a way that overrules the Supreme Court decision in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002). In that case, the Supreme Court interpreted the applied the well pleaded complaint rule to the Federal Circuit appellate jurisdiction statute (28 U.S.C. § 1295) in holding that patent issues raised only in counterclaims do not “arise under” the patent law in a way that creates Federal Circuit jurisdiction. The AIA amends the statute to clarify that Federal Circuit jurisdiction includes cases where the patent issue is first raised in a compulsory counterclaim. In addition, the new law indicates that “No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents” and also provides a right of removal from state court if either party raises a claim for relief “arising under any Act of Congress relating to patents.”

USPTO Press Release on Preissuance Submissions

Patent, , , ,

USPTO Encourages Third Parties to Participate in Review of Pending Patent Applications

Crowdsourcing Initiative with Stack Exchange Enables Experts to Introduce Prior Art and Improve Quality of 
Examination Process

WASHINGTON — The U.S. Department of Commerce's United States Patent and Trademark Office (USPTO) encourages subject-matter experts to take advantage of a new rule implemented under the Leahy-Smith America Invents Act (AIA) that—for the first time in the history of U.S. patent law—allows third parties to submit relevant materials to patent examiners in any given examination. Submission of proposed prior art helps examiners determine whether the innovation in the application is patentable. The new provision, 35 U.S.C. 122(e), was implemented by the USPTO on Sunday, Sept. 16, and applies to any pending application.

Today, efforts are already underway in the private sector to crowdsource the identification of prior art.  One such initiative, utilizing input from the USPTO, is a newly launched social network known as Ask Patents by Stack Exchange, in which subject-matter experts volunteer to suggest prior art for given applications, as well as to offer their input on the proposed value of those suggestions from others.

"By introducing third party input into the examination process for the first time since the inception of our nation's intellectual property system, we're able to expand the scope of access to prior art in key areas like software patents. This will improve the examination process and advance the Administration's ongoing commitment to transparency and open government," said Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos. "We encourage our nation's innovators to follow Stack Exchange's example and assist us as we improve the examination process and resulting patent quality that will drive our economy and create jobs and exports."

The submission by third parties of prior art—the library of published patents, applications, or other publications in a specific technology area—allows the USPTO to tap directly into the U.S. innovation community. Submissions provide a fuller, more exhaustive scope of materials for examiners to review in determining the novelty of a given application. This new mechanism will help ensure that truly novel, useful, and non-obvious innovations obtain the intellectual property protection they deserve.

Stay current with the USPTO by subscribing to receive email updates. Visit our Subscription Center atwww.uspto.gov/subscribe.

The America Invents Act: One Year Later (Pt. 4)

Academic Studies, Patent, , , ,

By Jason Rantanen

Liveblogging the America Invents Act: One Year Later conference at the Indiana University Mauer School of Law. Warning and disclaimer: Quality may vary and these don't necessary reflect my opinions.

Keynote speaker – Director David Kappos

Director Kappos – Going to talk about what the USPTO is working on. 

Satellite offices – USPTO has been around since around 1790; always had only one location.  First satellite office: Detroit.  That office now up and running, and first class of examiners is examining applications.  Hired about 12 judges there.  On time, below budget.

Opening up three more offices.  Dallas-Fort Worth, Denver, Silicon Valley.  Denver location has been chosen already; doing site surveys for the other two locations.  Have vacancy notifications for hiring requests for judge out now; will be putting out hiring announcements for examiners soon.  Love to hire law school graduates.  In addition to hiring in Alexandria, there are going to be hiring opportunities in these areas.  Great place to start your career; but also a good place for a long term career.

IP Critical to GDP and Jobs – conducted a recent study called "Industries in Focus" that reports on the importance of innovation/IP rights for the GDP.  Also a recent study by BIO that reports on the enormous contribution of universities to GDP through Bayh-Dole.

AIA- AIA is a lot about balance between first inventors and follow-on competitors.  On Sunday, the first major piece of the AIA goes into effect.  Follow-on competitors are great – produce great products at great prices; produce innovations of their own.  The AIA isn't about advantaging anyone; it's about balancing both sides.

Major tenets of AIA: enabling the patent system to work for everyone, in every industry. 

Increase certainty of patent rights – includes backstop provisions, such as post-grant review;

Remove or prevent low quality patents- no way, consistent with any cost-effective business methodology, that you can do a perfect job.  Also, courts have consistently not chosen the easy way out in terms of flexibility rather than hard, categorical rules.  PTO promulgates a lot of guidelines – useful, but not perfect. This is why post-grant is so important – when the PTO gets it wrong in the first instance, there's a backstop.

Build a 21st century patent system – this leads to the world's first 21st century patent system.  This is not the most-cautious approach.  It's not a Swiss watch, it's innovation friendly.

More than halfway done with implementing provisions of the AIA.  After Sunday, just the 18-month rules to go into effect. 

Challenging fee-setting process is in progress.  Started this process with the academy, with IP-law economists.  They helped design a system that sets fees that are consistent with policy.  It will take several iterations, but he's serious about listening to the academy on this issue.

2012 Fall Roadshow in progress this month.  Lots of good feedback from these. Notes that new forms (not samples) that are to be used starting Monday are now available on the USPTO website.

Track One statistics – fast tracking of applications accompanied by a petition.  Now almost a year out from creation.  Average days to final disposition is 153.8 days.  About 5,500 applications so far.  Petition gets granted 96% of the time; 47 days to first office action. Of the 1716 final dispositions mailed, 867 allowances mailed.  Not a fast way to get a rejection; a fast way to get a patent if you should be getting a patent. Also, examiners want to pick up Track One first, because (1) it shows the applicant is serious; (2) probably an important innovation; and (3) applicant will be willing to engage with the examiner to get the job done.

Unexamined patent application backlog – backlog is going down.  New narrative is "optimal inventory" – want to come to the right level of backlog/inventory.  What about unintentional consequences: when they changed a lot of the incentives, it sent backlog numbers in the right direction.  However, the consequence was that doing this unintentionally sent a message to examiners to sit on RCE's; this is what they're working on now.  Soon, the RCE backlog will go like the unexamined patent application backlog. 

What is "inventory"?  The about of applications available fluctuates, but there needs to be work available to everyone to work on every day.  If the inventory gets too low, there are days when some people don't have enough work and others have too much.  So now the PTO needs to make sure that the inventor doesn't crash through the optimal inventory level.

Forward looking pendency – now down in the 16 month range.  Goal is 10 months; not that far off from that goal.  Less than two years from now they'll be at the optimal level. 

IP Awareness Assessment Tool – enables a non-lawyer to navigate a number of questions that adjusts the question to understand whether they might have possible issues in patent/trademark/trade secret areas.  Idea is to help small businesses understand when and how they need legal advice, and to navigate IP-issues before talking to a lawyer.

The H-Word: Harmonization.  Of forms of IP, patent laws are the laggard in terms of harmonization.  Working with patent systems of other countries to continue moving towards harmonization, especially grace period.  This is an area where further industry and academy support would be very welcome.  Trading partners need to change their laws to adopt the grace period. 

Social Enterprises: 2010-2011 – green tech pilot.  Totally maxed out.  This was the prototype for Track One.  Now they're working on the pro bono program.  A year into the program – have already issued patents, have inventors with products in the marketplace.  Launching in other cities.  By 2014, plan to have every region of US covered so that if you have a great idea, but not the resources to hire a patent attorney, you can get one through this system.  "No Invention Left Behind."  Looking to expand globally, with modifications.

Patents for Humanity – currently running.  Lot of applications coming in; closes in mid-October.  Involves patents that are being used for humanitarian purposes.  http://patentsforhumanity.challenge.gov.  Gives access to accelerated PTO processes, including appeals.

Education outreach – Put in place an education outreach to all kids in America.  Want to get positive, age-appropriate information out to kids of all ages so that they view themselves as innovators, they respect their innovations, they respect the innovations of others.

Software patents – came to the PTO to try and help with this.  Been working on making sure the agency doesn't issue patents that it shouldn't.  Championed stronger disclosure requirements; 112 guidelines specifically directed to software; trained examiners on using these guidelines; rise in 112 rejections on software patents.  This is a specific area where they're trying to improve patent quality. 

Question – how do you sort the good examiners from bad examiners?

Answer: USPTO has a LOT of data.  They track the data down to the individual examiner level.  Allowance rates – too high/too low.  Prosecution efficiency – have a new measure called compact prosecution that looks at whether the prosecution gets done.  Quality – check when they grant and reject cases.  Some of the best examiners are taken off the line and used as quality assurance supervisors.  What they've been finding is that even as you improve throughput and quality, there will be pockets (art units, departments, examiners) who need some help.  Data is also being given to the examiners on a monthly basis.  Also focusing on art units that exhibit significant deviations to see if there's an issue. Seeing improvement.

Bob Armitage – Thanked Director Kappos for the America invents Act.

The America Invents Act: One Year Later (conference)

Patent, , , ,

By Jason Rantanen

Liveblogging the America Invents Act: One Year Later conference at the Indiana University Mauer School of Law.   Warning and disclaimer: Quality may vary and these don't necessary reflect my opinions.

Session 1:

Mark Janis – opening remarks.  Hard to believe it's been a year act since AIA was signed.  Still at the beginning of understanding the AIA provisions.  Exciting times.  Lots of patent law thought leaders here today – Bob Armitage, Director K appos. 

Come back in ten days for the next conference.

Bob Armitage – wants to the the upbeat, inspirational speaker that we all need at 8:30 am. 

Some things that need to be done with the AIA in terms of legislative correction of errors.  Suggests that different constituencies in patent law work together on this goal in the immediate future – before the next election.

The AIA is the most profound change to the patent system since 1836 patent statute.  He's been involved in the process of patent reform for the last 30 years.  Shortly after he left law school, he realized that we had a law school that we had a patent system that didn't work very well.  Some of the things that we needed to do to improve the patent system was to eliminate first to invent, have a more transparent grace period, and eliminate recurring patent terms. 

Sees the AIA as major constituencies coming together to move the patent system in the direction of transparency and objectivity.  If the implementation of the AIA goes well, this is the patent system we'll have.  A more predictable patent system.  Much of this comes down to invalidity defenses – under the AIA these are much simpler. 

We were the last to the table in terms of modernizing our patent system.  Prior 1999, we really had a secret patent system. With the AIA, the patent system was opened up even further.  After AIA, there's no-fault correction of misnaming of inventors; the technical filing of an affidavit that mis-names the inventor is no longer a worry; best mode is no longer a concern for patent applicants; patent prosecutors are better off because of supplemental examination.  If they're deposed, and things arise, the patent holder can, in a pre-litigation context, go back to the patent office. (me: Query how this is viable, since depositions often arise during litigation.  Could make sense for a sequential litigant).

Other big changes: deceptive intent removed throughout the application process; patent owner can seek the patent as the applicant; no more supplemental oaths. 

Post-grant review: patents are now open to more challenges after the patent issues.  It's any issue of patentability that you can raise in court, you can raise in the PTO.  Why is this important?  This lets parties challenge patents the day patents issue, not six years down the road.  Challenging patents in court is expensive.  Post-grant review allows parties to resolve these issues in the matter of months, not years, at a fraction of the cost.

Sees the AIA as increasing transparency, objectivity, predictability, simplification of patent system.  Patent validity is reduced to just four objective legal standard: sufficient differentiation from prior public disclosures and earlier patent filings of others; sufficient disclosure to identify the claimed embodiments and enable them to be put to a specific practical, and substantial use; sufficient definiteness to differentiate subject matter; sufficient concreteness to avoid excessively conceptual or otherwise abstract subject matter.  That's all there is to the patent law.  These are objective standards that don't require you to know anything about what the inventor did, thought, etc. 

The national embarrassment of the first-to-invent system will now end. Example Gore-Tex case of why this was a problem.  Interference count practice was problematic.  It was an embarrassment and it's gone. 

The AIA is an attempt to be a codification of the way Congress wants the law, not a codification of what the law is. 102(b) was a colossal mess because of the attempt to codify existing law.  Under the AIA, there are no new AIA patent law doctrines.  Legislative history says "apply as written."  Example: 102 – only new phrase is "available to public."  Apply as written – this means that prior art is that art which is publicly accessible (comment: this issue is one of the most debated issues in the new AIA).

Who benefits from the AIA?  Those with the least resources, capital available.  It's a patent system optimized for small inventors, universities.  For those engaged in commerce of patents, supplemental examination allows for due diligence to be more effective, since it will allow the curing of inequitable conduct.

Beyond Question: RMail Challenges the Use of Subject Matter Eligibility as an Invalidity Defense

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RMail v. Amazon.com and PayPal (E.D.Tx 2012)

Over the past few weeks we have been having an interesting debate over whether subject matter eligibility under 35 U.S.C. § 101 constitutes as valid defense to patent infringement that may be raised in litigation. Section 282 of the Patent Act defines defenses available to an accused infringer and that statute has been interpreted to limit defenses available only to those that fit the statutory list. Thus, because improper revival of an abandoned patent application does not fit on the list, the Federal Circuit ruled that mistake by the patentee and USPTO could not be used to later invalidate the patent during litigation. One problem with Section 282 is that it is not a simple list of references, but is instead really a pointer to other sections of the Patent Act. Thus, an accused infringer can assert an invalidity defense based upon "any ground specified in [Sections 100-188] as a condition for patentability" as well as "any requirement of section 112, except that the failure to disclose the best mode." Now, we normally think of the doctrines of invalidity deriving from Sections 102 (anticipation); 103 (obviousness); 112 (written description; enablement; indefiniteness); and 101 (utility and subject matter eligibility). Now, Section 112 is clearly identified as a defense, and the patent act particularly identifies section 102 and 103 as creating the "conditions for patentability" required under Section 282. The lone outsider then is Section 101 whose status as creating conditions for patentability has not been established. Professor Hricik introduced this argument and began the statutory analysis in a post titled Are the Courts Correct in Their Assumption that a Patent Issued on Non-patentable Subject Matter is Invalid?. I continued the argument by considering its application to the new post grant review program in a post titled Can a Third Party Challenge Section 101 Subject Matter Eligibility in the USPTO's new Post-Grant Review Procedure?. Now, in RMail, lawyers are asking Judge Gilstrap (E.D.Tx.) to decide the issue.

RMail's asserted patents are directed to a new way to authenticate service of electronic messages – i.e., to prove that an e-mail was actually sent and received without relying upon key encryption. U.S. Patent Nos. 6,182,219 and 6,571,334. Many of the claims are not limited to any particular "technology" except for various simple data structures. Instead, the claims simply focus on the sending and receiving of the various data elements in ways that could all seemingly be done offline using pencil and paper.

After being sued, PayPal filed a motion for partial summary judgment – asking the court to rule those claims invalid under 35 U.S.C. § 101 as lacking subject matter eligibility.

In response, RMail has argued that subject matter eligibility is not a proper invalidity defense permitted to be raised under Section 282 (in addition to providing arguments on the merits).

VI. CONGRESS DID NOT PERMIT SECTION 101 TO SUPPLY A LITIGATION DEFENSE

Rmail closes by asking the Court to recognize and apply all appropriate statutory barriers against entertaining Defendants' Section 101 defense. The entire jurisprudential "murky morass" of subject matter eligibility need not arise again in any litigation. Myspace, 672 F.3d at 1260 (using "murky morass" label). Rmail acknowledges that this argument is for the good faith extension or modification of existing caselaw. Courts until now have uniformly overlooked Congressional will on this question.

Namely, while Section 101 analyses are appropriate in Patent Office application proceedings, this Court lacks any statutory basis for analyzing Section 101 issues as a litigation defense. Patent defenses are statutory. Under the Patent Act of 1952, only enumerated patent defenses exist. Aristocrat Tech. v. Int'l Game Tech., 543 F.3d 657, 661-63 (Fed. Cir. 2008). If an issue is not denominated an infringement defense within the Patent Act, then the Court lacks jurisdiction to address it. Id.

. . . .

It does not matter that the statutory misinterpretation has lasted so long, or so pervades conventional thinking. Even a long-term statutory misconstruction will not bar restoring the patent system to its statutory limits. See Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 177, 191 (1994). . . . Four recent Supreme Court cases arose in the USPTO administrative context, and are thus consistent with Rmail's argument: Benson, Flook, Diehr, Bilski. A fifth, Prometheus, admittedly arose within an infringement defense context. However, no one seems to have pointed out to the Supreme Court this important threshold issue of statutory construction, and statutory limitations on the powers of the federal courts. Prometheus thus does not bar this Court from issuing a correct ruling in the present adversarial context.

PayPal's response is fairly weak – that the dicta of Aristocrat identifies Section 101 as a condition for patentability. (To be clear, the PayPal briefs are quite good – they just lightly treat this particular issue).

The landmark 1996 Supreme Court case of Graham v. John Deere is interesting and sends somewhat mixed signals in its dicta describing the patent act. In that case, the court wrote that "The [Patent] Act sets out the conditions of patentability in three sections. An analysis of the structure of these three sections indicates that patentability is dependent upon three explicit conditions: novelty and utility as articulated and defined in § 101 and § 102, and nonobviousness, the new statutory formulation, as set out in § 103." The odd element of the Supreme Court statement is that it does not identify subject matter eligibility as a defense created by § 101. In Aristocrat, the Federal Circuit explained away the gap by noting "it is beyond question that section 101's other requirement, that the invention be directed to patentable subject matter, is also a condition for patentability." I guess that question is no longer unaskable.

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