Tag Archives: Federal Circuit En Banc

Law Review Case Note Topics for 2010-2011

Academic Studies, Articles and Publications, Law School, Patent, , , , , , , ,

Dear Law Review Editors: Please send me a note (dcrouch@patentlyo.com) to let me know about patent law focused articles that you publish in your journal so that I can highlight them on Patently-O.

Student Note Topics: Here are some suggestions for patent law focused law review topics for 2010-11 that I would like to see for my own edification. Please send me an e-mail if you choose one of these.

Tags:

Federal Circuit Holds-Line on Patent Misuse Defense

Doctrine of Patent Misuse, Infringement, Patent, Patent Cases 2010,

By Dennis Crouch

In a split decision, an en banc Federal Circuit has held that the non-statutory equitable doctrine of patent misuse should be narrowly applied. Here, the court held that an anticompetitive agreement between companies to suppress a given technology would not constitute misuse of a patent covering an alternative technology being promoted by the companies. Thus, the patents can still be enforced. Of course, companies following this pathway could still be liable for antitrust violations.

Princo Corp. v. International Trade Commission and U.S. Philips Corp. (Fed. Cir. 2010) (en banc)

The alleged patent misuse was associated with a CD-R/RW patent-pool arrangement between Philips and Sony. The two companies chose a particular method (Raamaker) of encoding location information on the CD to serve as the standard and then allegedly suppressed another method (Lagadec). (Both methods were covered by patents held by the companies.)

Princo argued here that creation of the patent pool licensing the Raamaker method and the suppression of the Lagadec method constituted patent misuse and should render the patents undenforceable.

Patent Misuse:     

The doctrine of patent misuse is … grounded in the policy-based desire to 'prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right.' Mallinckrodt, 976 F.2d at 704. It follows that the key inquiry under the patent misuse doctrine is whether, by imposing the condition in question, the patentee has impermissibly broadened the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects. B. Braun, 124 F.3d at 1426. Where the patentee has not leveraged its patent beyond the scope of rights granted by the Patent Act, misuse has not been found. See Monsanto, 363 F.3d at 1341 ("In the cases in which the restriction is reasonably within the patent grant, the patent misuse defense can never succeed."); Virginia Panel, 133 F.3d at 869 (particular practices by the patentee "did not constitute patent misuse because they did not broaden the scope of its patent, either in terms of covered subject matter or temporally"). . . .

Given that the patent grant entitles the patentee to impose a broad range of conditions in licensing the right to practice the patent, the doctrine of patent misuse "has largely been confined to a handful of specific practices by which the patentee seemed to be trying to 'extend' his patent grant beyond its statutory limits." USM Corp. v. SPS Techs., Inc., 694 F.2d 505, 510 (7th Cir. 1982).

Recognizing the narrow scope of the doctrine, we have emphasized that the defense of patent misuse is not available to a presumptive infringer simply because a patentee engages in some kind of wrongful commercial conduct, even conduct that may have anticompetitive effects. See C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340 (Fed. Cir. 1998) ("Although the defense of patent misuse . . . evolved to protect against 'wrongful' use of patents, the catalog of practices labelled 'patent misuse' does not include a general notion of 'wrongful' use."). Other courts have expressed the same view. See Kolene Corp. v. Motor City Metal Treating, Inc., 440 F.2d 77 (6th Cir. 1971) (There is no such thing as "misuse in the air. The misuse must be of the patent in suit. An antitrust offense does not necessarily amount to misuse merely because it involves patented products or products which are the subject of a patented process." (citations omitted)); McCullough Tool Co. v. Well Surveys, Inc., 395 F.2d 230 (10th Cir. 1968) (the defense of patent misuse has been allowed "only where there had been a misuse of the patent in suit"). While proof of an antitrust violation shows that the patentee has committed wrongful conduct having anticompetitive effects, that does not establish misuse of the patent in suit unless the conduct in question restricts the use of that patent and does so in one of the specific ways that have been held to be outside the otherwise broad scope of the patent grant.

On appeal, the en banc Federal Circuit held that this case does not fit with other misuse precedent. "This case presents a completely different scenario from the cases previously identified by the Supreme Court and by this court as implicating the doctrine of patent misuse." In particular, the alleged misuse was alleged agreement to suppress "an entirely different patent that was never asserted." "Even if such an agreement were shown to exist, and even if it were shown to have anticompetitive effects, a horizontal agreement restricting the availability of Sony's Lagadec patent would not constitute misuse of Philips's Raaymakers patents or any of Philips's other patents in suit."

Reduced to its simplest elements, the question in this case comes down to this: When a patentee offers to license a patent, does the patentee misuse that patent by inducing a third party not to license its separate, competitive technology?

The court answered this question with a resounding "no" – such an action "would not fall within the rationale of the patent misuse doctrine as explicated by the Supreme Court and this court." In particular, the patent-in-suit there must be a direct connection between the patents-in-suit and the alleged misconduct.

Dissent: Judge Dyk (joined by Judge Gajarsa) wrote a 32-page dissent arguing that the patent misuse doctrine should be given teeth:

Evidently the majority thinks it appropriate to emasculate the doctrine so that it will not provide a meaningful obstacle to patent enforcement. . . . Indeed, the majority goes so far as to suggest that the misuse doctrine be eliminated entirely. I read the relevant Supreme Court cases and congressional legislation as supporting a vigorous misuse defense, clearly applicable to agreements to suppress alternative technology. The majority cabins the doctrine in contravention of this Supreme Court authority. I respectfully dissent.

Patently-O Bits and Bytes

Bits and Bytes, Patent
  • Rational Ignorance at the PTO: I received many interesting comments on The Lemley-Cotropia-Sampat article yesterday.  Many of the comments pushed-back against the authors’ conclusions with reasons why applicant-cited art is more-rarely asserted in prior art rejections. Query: Do you have suggestions for going about proving/disproving their conclusion that USPTO patent examiners “effectively ignore” applicant-submitted prior art.
  • Patent Law in Print:
    • Joe Mullin at Corporate Counsel (an ALM Magazine) reports on Patent Attorney Wes Whitmeyer’s patent infringement lawsuits against Brinks Hofer, Dinsmore & Shohl; Benesch Friedlander; Edwards Angell; and WilmerHale. [Link]
    • Susan Pan and Natalya Dvorson have a useful article in IPToday on how to obtain refunds from the USPTO. [Link]
    • Abigail Rubenstein of Law360 has a brief article about the en banc request in Telcordia Tech v. Cisco. In that case, Cisco is asking the Federal Circuit hold that Judges (rather than Juries) should decide whether patent claims are invalid as indefinite.  Microsoft and GM filed a joint brief in support of the petition. [Link]
    • Sharon Oriel has published a short article in Intellectual Asset Managament (IAM) magazine describing “a three-step process to persuade a company that it can prosper and grow through investing in intellectual asset management.” [Link]
  • Recent Patent Law Jobs:
    • Amazon is looking for business-minded corporate counsel with at least 5–years of patent prosecution experience and combination of in-house and law firm experience. [Link]
    • Miller Nash law firm is looking for a patent attorney (or attorneys) with 4+ years experience and a focus on medical devices and life-science related software. [Link]

Patently-O Bits and Bytes

Bits and Bytes, Patent
  • Rational Ignorance at the PTO: I received many interesting comments on The Lemley-Cotropia-Sampat article yesterday.  Many of the comments pushed-back against the authors’ conclusions with reasons why applicant-cited art is more-rarely asserted in prior art rejections. Query: Do you have suggestions for going about proving/disproving their conclusion that USPTO patent examiners “effectively ignore” applicant-submitted prior art.
  • Patent Law in Print:
    • Joe Mullin at Corporate Counsel (an ALM Magazine) reports on Patent Attorney Wes Whitmeyer’s patent infringement lawsuits against Brinks Hofer, Dinsmore & Shohl; Benesch Friedlander; Edwards Angell; and WilmerHale. [Link]
    • Susan Pan and Natalya Dvorson have a useful article in IPToday on how to obtain refunds from the USPTO. [Link]
    • Abigail Rubenstein of Law360 has a brief article about the en banc request in Telcordia Tech v. Cisco. In that case, Cisco is asking the Federal Circuit hold that Judges (rather than Juries) should decide whether patent claims are invalid as indefinite.  Microsoft and GM filed a joint brief in support of the petition. [Link]
    • Sharon Oriel has published a short article in Intellectual Asset Managament (IAM) magazine describing “a three-step process to persuade a company that it can prosper and grow through investing in intellectual asset management.” [Link]
  • Recent Patent Law Jobs:
    • Amazon is looking for business-minded corporate counsel with at least 5–years of patent prosecution experience and combination of in-house and law firm experience. [Link]
    • Miller Nash law firm is looking for a patent attorney (or attorneys) with 4+ years experience and a focus on medical devices and life-science related software. [Link]

Guest Post: The Great Haste and Less Milling of Beer v. United States

CAFC, En Banc, Guest Post, Patent, Patent Cases 2010

 

Guest Post: The Great Haste and Less Milling of Beer v. United States (Fed. Cir. 2010, cert. pet. pending)

By Andrew Dhuey

When patent litigators hear the term “rocket docket”, they usually think of the U.S. District Court for the Eastern District of Virginia, long-known for its dedication to accelerated justice. The term doesn’t usually call to mind the U.S. Court of Appeals for the Federal Circuit, though its docketing-to-disposition time has averaged a reasonable 9-10 months. The recent case of Beer v. United States, however, shows that it is possible to have the Federal Circuit decide your appeal on the merits and rule on your en banc hearing petition in a mere 85 days, docketing to disposition.

Beer concerns a newsworthy issue dear to the hearts of federal judges: their pay. Eight current and former federal judges seek to recover cost-of-living adjustments Congress promised federal judges in 1989, but failed to deliver in 1995-97, 1999 and 2007. While the Beer parties disagreed on whether this deprivation of COLAs was an unconstitutional diminishing of judicial pay, they all agreed that the Federal Circuit rejected this exact position in Williams v. United States (Fed. Cir. 2001). In 2002, the Supreme Court denied cert. in Williams over the dissent of Justice Breyer, joined by Justices Scalia and Kennedy.

With the issue resolved in Williams, why did these federal judges raise the same pay issue again in a 2009 U.S. Court of Federal Claims case? The answer rests not with any changes in the law, but instead with changes in the makeup of the Supreme Court. All four justices who joined the court since 2002 (Chief Justice Roberts and Justices Alito, Sotomayor and Kagan) replaced justices who voted to deny cert. in Williams. Assuming the Beer judges still have the three Williams dissenters on their side, they can win on the merits with two of the four newest justices.  

Of course, before they could even file their cert. petition, the Beer judges needed to work their way through the Claims and Federal Circuit courts. To expedite that process, the judges conceded that both the Claims court and the Federal Circuit panel were bound to follow Williams. Their purpose was to overturn Williams, which could only be done by the Federal Circuit sitting en banc, or by the Supreme Court.

On Nov. 3, 2009, thirteen days after filing their notice of appeal at the Federal Circuit, the Beer appellants filed a Petition for Initial Hearing En Banc or, in the Alternative, Motion for Summary Affirmance. Alas, the clerk’s office rejected this filing since the appellants included a copy of their trial court complaint, and that apparently is not okay. [Side note to Judge Beer, et al: none of your court clerks can hold a candle to Federal Circuit clerks when it comes to finding a way to reject a filing]. Appellants’ counsel, Christopher Landau of Kirkland & Ellis, resolved this problem the following day, and the case was then before all 12 active Federal Circuit Judges.

On Jan. 15, 2010, the court denied the petition for initial hearing en banc over the dissent of then-Chief Judge Michel, joined by Judges Lourie and Moore, and the separate dissent of Judge Newman. With that denial of the en banc petition, a three-judge panel granted the Beer appellants’ motion for summary affirmance, with a concurrence by Judge Mayer, who reiterated his previous view that Williams was wrongly decided, but that “neither Congress nor the Supreme Court has done anything in the interim that would warrant this court taking the matter up again.” The Federal Circuit had thus resolved Beer on the merits, en banc, only 85 days after docketing.  

So what, you ask? How could this possibly be of interest to you, a patent litigator? Well, you have a point – you probably won’t have occasion to stipulate at the district court or the BPIA, and on appeal, that your client is toast due to applicable, binding Federal Circuit case law. But some patent litigants are out to make a big, precedential splash (e.g. ,the ACLU in its challenges to the BRCA gene patents). Perhaps in some of these “big picture” cases, a litigant has no realistic hope on the merits, absent the overruling of a Federal Circuit panel decision. [This was not the case for the ACLU, which actually won at the district court].  Or perhaps obliterating a binding precedent would be so valuable to a litigant (e.g., a “frequent defendant”) that it would be willing to concede away weak but non-frivolous arguments on the merits in order to directly attack the harmful precedent, post haste.

Maybe you’ll never have a Beer, but in the right, highly-exceptional patent case, you might want to use the Beer strategy.

Andrew Dhuey is an appellate lawyer last seen being chased by a flower-carrying guy in a dress.

TheraSense v. BD: Briefs on the Merits

En Banc, Inequitable Conduct, Patent, Patent Cases 2010,

By Dennis Crouch

Briefing continues in the en banc appeal of TheraSense (Abbott) v. BD and Bayer. That case stems from a district court finding that the TheraSense patent was unenforceable due to inequitable conduct during prosecution of the patent. The Federal Circuit is taking the case as a vehicle for re-evaluating the judge-made-law of inequitable conduct. I have collected the majority of merits briefs filed thus far in the en banc rehearing.  Becton Dickinson & Bayer’s opposing brief is due October 8, 2010.  Amici-briefs in support of BD/Bayer are due the following week. Oral arguments are scheduled for November 9, 2010 in Washington DC.  (This post merely provides briefs. Analysis to follow.)

Court Decisions:

Party Briefs:

Amicus Brief filed in Support of TheraSense

Amici Briefs filed in Support of Neither Party

Changing the Law of Inequitable Conduct: Abbot Briefs its Case

Amicus Brief, En Banc, Inequitable Conduct, Patent,

TheraSense, Inc. (Abbott Labs.) v. Becton, Dickinson and Co. (Fed. Cir. 2010)(En Banc Rehearing)

In TheraSense v. BD, an en banc Federal Circuit is reconsidering the doctrinal structure that it has created to handle allegations of inequitable conduct. Abbott (the patent holder) has filed its opening merits brief arguing that the current law of inequitable conduct over-extends its proper bounds.  In an eloquent opening statement, Abbott writes:

The question in this case is not whether to reform the doctrine of inequitable conduct, but whether to restore it—to its origins in Supreme Court precedent; to the confines Congress intended in the 1952 Patent Act; to the standards this Court articulated en banc in Kingsdown Medical Consultants v. Hollister, Inc., 863 F.2d 867 (Fed. Cir. 1988); and to the standards that govern in other areas of law. This Court has expanded the inequitable conduct doctrine well beyond those boundaries, and the result has been an “ongoing pandemic” of inequitable conduct charges. Taltech Ltd. v. Esquel Enters. Ltd., 604 F.3d 1324, 1335 (Fed. Cir. 2010) (Gajarsa, J., dissenting). The expansion has rendered valuable patents unenforceable based on minor omissions far afield from the doctrine’s purposes. And it has converted the federal courts into roving commissions to enforce standards of conduct before the PTO without regard to whether the alleged infractions had any impact. . . .

Supreme Court precedent and the legal principles embodied in the Patent Act reserve those extreme consequences for the most egregious circumstances—cases where a party “obtained its patent by fraud.” Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 175, 176 (1965). As this Court has recognized, the Supreme Court has held patents unenforceable “only in cases of ‘fraud on the Patent Office.’” Star Scientific, 537 F.3d at 1365-66 (quoting Hazel–Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 250-51 (1944)); see Larson Mfg. Co. of S.D., Inc. v. Aluminart Prods. Ltd., 559 F.3d 1317, 1343 (Fed. Cir. 2009) (Linn, J., concurring). A party seeking to invalidate a trademark or copyright based on misconduct before the agency must prove it was the product of fraud. The standard should be no less stringent here.

Briefs Filed Thus Far:

PSA For TheraSense Amici: Filing Permission Must Be Requested

Amicus Brief, Patent,

The TheraSense en banc order states that “amicus briefs may be filed without leave of court but otherwise must comply with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29.”  Although I would have guessed that this statement relieved amicus filers from the requirement of seeking permission of the parties or filing a motion, the Federal Circuit clerk is apparently requiring that amici either (1) obtain consent from all parties, or (2) if fewer than all parties consent, submit a motion to the court for permission to file the brief.  Several amicus briefs filed in the case have apparently been rejected for failure to comply with these requirements.

This information comes from Professor Christian Mammen (visiting at Hastings). Mammen is drafting a brief in TheraSense that argues three primary points: (1) that materiality should focus on patentability issues, and should defer to the PTO's Rule 56; (2) that there should be an increased focus on the clear and convincing standard of proof for intent (with corollaries that "should have known" and "gross negligence" should be abolished, and the Star Scientific "single most reasonable inference" test is a good starting point); and (3) if there is a sufficient increase in the required thresholds for both materiality and intent, the balancing step (which is often ignored in any event) may be abandoned.  Legal academics or others potentially interested joining his brief should contact him at mammenc@uchastings.edu.

Prometheus v. Mayo: En Banc Petition on Patentability of Medical Methods

En Banc, Patent,

Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Fed. Cir. 2010)(on petition en banc)

by Dennis Crouch

In the wake of the Supreme Court ruling in Bilski v. Kappos, Mayo has petitioned the Court of Appeals for the Federal Circuit to sit en banc to re-hear its statutory subject matter challenge to the Prometheus  patents. (U.S. Patents 6,355,623 and 6,680,302).

The Prometheus Claims are directed toward an iterative approach of dosing an active drug ingredient (6-thioguanine).  Most of the claims are centered around three ordered-steps of:

  1. administering a dose of the drug to the subject;
  2. determining the amount of the drug in the subject’s blood; and
  3. re-calibrating the drug dosage.

A broader claim (claim 46 of the ‘632 patent) does not require the administering step of claim 1 above.

In its 2006 decision, The district court held the Prometheus patents invalid under Section 101 — holding that the claims preempt all practical uses of a natural phenomenon.  On appeal, the Federal Circuit reversed that decision — that the claims satisfied the Machine-or-Transformation test. Namely, the Federal Circuit panel held that the steps of “administering a drug” and “determining the level of 6-thioguanine” were both sufficiently transformative of “a particular article into a different state or thing.”

The transformation is of the human body following administration of a drug and the various chemical and physical changes of the drug’s metabolites that enable their concentrations to be determined. Because the claimed methods meet the transformation prong under Bilski, we do not consider whether they also meet the machine prong. . . . [C]laims to methods of treatment . . . are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition. . . .

[T]he determining step, which is present in each of the asserted claims, is also transformative and central to the claimed methods. Determining the levels of 6-TG or 6-MMP in a subject necessarily involves a transformation, for those levels cannot be determined by mere inspection. Some form of manipulation, such as the high pressure liquid chromatography method specified in several of the asserted dependent claims or other modification of the substances to be measured, is necessary to extract the metabolites from a bodily sample and determine their concentration.

Preemption: The original appellate panel addressed preemption issue somewhat indirectly — holding that the claims could not preempt a fundamental principle because they passed the machine-or-transformation test: “Regardless, because the claims meet the machine-or-transformation test, they do not preempt a fundamental principle.”

Following its Bilski decision, the Supreme Court vacated the Federal Circuit’s Prometheus holding and remanded for further proceedings. 

Not Concentric: Some have described the Supreme Court’s Bilski v. Kappos holding as situated somewhere between the broad State Street decision and the narrow machine-or-transformation test. (See Joe Mullin’s article quoting Mark Lemley as saying “Now we're halfway in between.”).  However, Supreme Court’s vacatur in Prometheus suggests that there are cases that would have been patentable under the strict machine-or-transformation test but that are no longer patentable.  (Otherwise, the court could have simply denied Mayo’s petition for a writ of certiorari as it did in Fergusun.) 

Roadmap: The machine-or-transformation test offers a clue to the existence of Section 101 qualifying subject matter. However, Prometheus may well present a situation where the claims satisfy MoT, but fail because of their preemptive nature. In its brief, Mayo argues that the three-justice opinion dissenting from the dismissal (DIG) provides a “roadmap” for this case.

Avid ID v. Crystal Import: En Banc Request Denied On Issue of Inequitable Conduct by Non-Inventor CEO

En Banc, Inequitable Conduct, Patent, Prior Art, statutory bar,

By Dennis Crouch

In Avid ID, the Federal Circuit denied Avid's motion for en banc rehearing on the issue of whether inequitable conduct exists when the non-inventor, non-attorney CEO of a company applying for a patent failed to submit information to the USPTO about pre-filing but non-invalidating trade-show exhibit of a prior version of the patented product. Judge Newman dissented.   

* * *

Avid Identification Systems v. Crystal Import Corp. (Fed. Cir. 2010).

In its original decision in this case, the Federal Circuit held that the president of Avid ID Systems was "substantially involved" with the prosecution of the asserted patent and therefore was subject to the duty of disclosure. The court went on to find that the president had failed that duty by failing to advise the PTO of a trade-show demonstration that occurred more than one-year before the patent application was filed. The inequitable conduct decision was important to the case because the trade-show demonstration of a prior product did not leave the patent invalid under the statutory bar of 102(b)/103(a).   

Avid requested rehearing en banc and that its case join with the pending TheraSense en banc case or, in the alternative, to stay the rehearing decision until after Therasense is decided. The Federal Circuit has denied Avid's motion for rehearing en banc.

Judge Newman dissented from the rehearing denial and would have stayed the case to await changes in the law of inequitable conduct:

The law as applied in Avid is subject to conflicting precedent, a conflict whose resolution is reasonably likely to alter the result. Thus it is prudent, and just, to hold Avid’s petition while the law is clarified. The court today has declined to do so, rendering the subject patent permanently unenforceable, although the patent was found valid on the same prior art that is the basis for its unenforceability.

. . .

This court held that Dr. Stoddard’s demonstration during the Livestock Committee trade show of what the panel calls “some of Avid’s technology,” and Avid calls a “precursor product,” was material to patentability and that Dr. Stoddard was required to assure that the patent examiner was informed. According to the panel opinion, the district court “found that the precursor product, while not invalidating, reflected the closest prior art, and thus was highly material to patentability.” Avid Identification Sys., Inc. v. Crystal Import Corp., 603 F.3d 967, 973 (Fed. Cir. 2010)(“Avid II”). While “closest prior art” has been discussed in the context of whether certain information is cumulative of that already presented to an examiner, see, e.g., AstraZeneca Pharms. LP v. Teva Pharms. USA, 583 F.3d 766, 773-75 (Fed. Cir. 2009), it has never been the law that information is “highly material” simply because it is “closest.” It is not disputed that whatever was demonstrated was not an invalidating disclosure of the patented invention, and not a sale or offer to sell the patented invention, for the jury found that the demonstration at the Livestock Committee was not invalidating. See Avid I, 2007 WL 2901415, at *1.

Dr. Stoddard, who is the president of Avid, is a veterinarian whose principal occupation is running an animal hospital; he is not an electronics engineer and not a chip designer and not an inventor of the patented device and not a lawyer. See Avid II, 603 F.3d at 970. On the undisputed fact that the challenged information is not invalidating, the court’s holding of inequitable conduct is sufficiently questionable to warrant a stay until this court resolves the larger issues before us, including the en banc Order’s query: “Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?” Order, 2010 WL 1655391, at *1. It is at least possible that the court will answer this question in the affirmative. Although I do not venture to guess how Therasense will fare overall, it is not unreasonable to expect that it may affect the Avid decision.

The Avid panel applied the former Rule 56 standard of materiality as stated in J.P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1559 (Fed. Cir. 1984), although this standard was abandoned by the PTO in 1992. The information here criticized does not appear to violate the current Rule 56 standard, and Dr. Stoddard is not within the cadre upon whom is placed the obligation of understanding the patent law, as Judge Linn explained in his dissent. I must, respectfully, dissent from the court’s refusal to stay this appeal in view of the en banc proceeding in Therasense.

Documents:

Advanced Magnetic Closures v. Rome Fastener

Guest Post, Inequitable Conduct, Patent, Rantanen, ,

By Jason Rantanen

Early this week, I wrote about Leviton, former Chief Judge Michel's last opinion on inequitable conduct before leaving the bench.  Advanced Magnetic Closures brings another perspective on the issue – this time in the form of a comment from the new Chief Judge about issuing inequitable conduct opinions while Therasense v. Becton, Dickinson is pending en banc.

* * * *

Fastener Advanced Magnetic Closures, Inc. v. Rome Fastener Corp. (Fed. Cir., June 11, 2010)

In Advanced Magnetic Closures, the court reviewed a district court determination that U.S. Patent No. 5,572,773 is unenforceable due to inequitable conduct by the alleged inventor.  The panel also reviewed the district court’s entry of attorney fees against both the patent holder (AMC) and its attorney. 

Inequitable conduct: The focus of the inequitable conduct determination was on the district court’s finding that the alleged inventor falsely claimed to the PTO that he was the inventor of the claimed magnetic fastener when, in fact, he was not.  Applying the Star Scientific standard, the panel concluded that the district court did not err by finding that “the single most reasonable inference able to be drawn from the evidence is that [the alleged inventor] intended to deceive the PTO.”  Slip Op. at 19 (internal quotations omitted). 

Attorney’s Fees: After concluding that the exceptional case determination was appropriate on the basis of both inequitable conduct and litigation misconduct (an issue that the appellant waived by failing to include it in its briefs), the court addressed the attorney sanctions entered against AMC’s attorney under 28 US.C. § 1927.  Applying Second Circuit law, the Federal Circuit concluded that the district court abused its discretion by sanctioning the attorney.  The court noted that attorney sanctions under 28 U.S.C. § 1927 require a finding of bad faith, as opposed to objective unreasonableness, and concluded that the district court’s single statement that the attorney “should have been aware” of the deficiency of AMC’s patent infringement claim was insufficient to rise to this level.  

Chief Judge Rader’s Concurrence: The most notable aspect of the opinion comes at the end, in the form of the new Chief Judge’s concurrence.  While Judge Rader agreed with the outcome of the appeal, he wrote separately to stress that “absent extreme facts such as those found in the present case, this court should refrain from resolving inequitable conduct cases until it addresses the issue en banc.”  He also provided the following interesting comment regarding Therasense:

“In Therasense, this court has been asked to address the transformation of inequitable conduct from the rare exceptional cases of egregious fraud that results in the grant of a patent that would not otherwise issue to a rather automatic assertion in every infringement case. The exception has become the rule. Generally, I would hold inequitable conduct cases until after this court reexamines whether to put the doctrine back into the exception category.”

Although no Federal Circuit decisions involving inequitable conduct have issued since Advanced Magnetic Closures, only a short time has passed.  It remains to be seen whether the Chief Judge’s proposed policy on inequitable conduct determinations will be followed for the coming months.

* * * *

For the sake of full disclosure, I note that I previously represented Abbott Laboratories in connection with the Therasense litigation.  I no longer represent clients, including Abbott.

Attorney Fees and Equal Treatment for Plaintiffs and Defendants

Attorney Fees, Infringement, Patent, Patent Cases 2010,

Media Queue v. Netflix (Fed. Cir. 2010)

This case involves a classic “improvement patent” scenario. Nick Gross was a longtime Netflix user when he came-up with the idea that the service should provide additional user notifications — such as when the movie queue runs dry. Just before filing suit, Gross and partners formed Media Queue as a holding company. Media Queue then sued Netflix, Blockbuster, and others for patent infringement. Nick is also a patent attorney and a nice guy. We met at a conference last spring.

After construing the claims, the district court dismissed the case based on its summary judgment finding of non-infringement.  The court, however, refused to award attorney-fees to the defendants because the case was not entirely frivolous or filed in bad faith.  Media Queue has appealed the summary judgment.  However, the more interesting aspect of the case is the counter-appeal by Netflix asking the Federal Circuit for an en banc hearing to on the issue of when a court may find an “exceptional case” and award attorney fees to the prevailing party. In particular, Netflix argues that the current law of attorney-fee awards is imbalanced in favor of the plaintiff-patentee.

35 USC 285 simply states that “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”  Several decisions have held that a prevailing-patentee may obtain attorney fees based on a finding of willful infringement — i.e., that the accused infringer was aware of an objectively high likelihood that the patentee would prevail.  Willfulness can be found even when the defendant has a non-frivolous non-infringement of invalidity argument. On the flip-side, however, a prevailing-defendant (accused infringer) seeking attorney fees must show a seemingly higher standard of litigation misconduct or inequitable conduct.

The appeal asks the Federal Circuit to apply the Supreme Court precedent of Fogerty v. Fontasy, Inc. (1994) in holding that plaintiffs and defendants in patent cases are entitled to equal treatment in obtaining attorneys' fees.

The appeal is filed by Mark Lemley’s team at Durie Tangri. Amazon, Facebook, Microsoft, Oracle, Toyota, and others “frequent defendants” have filed briefs supporting en banc hearing.

Documents:

Statutory Guidelines for Inequitable Conduct

Amicus Brief, En Banc, Inequitable Conduct, Patent,

In TheraSense, the en banc Federal Circuit is looking to rewrite the rules of inequitable conduct. By both its name and historic precedent, inequitable conduct appears to stem from non-statutory doctrines of equity. However, as with other equitable doctrines (such as injunctive relief), inequitable conduct could be somewhat tamed by the language of the Patent Act. In his TheraSense amicus brief, Professor Hricik is taking a useful approach by focusing on the statutory basis for holding claims unenforceable.

Two provisions of the Patent Act come to mind. One is general and the other specific. The general statute is 35 USC 282(1). That portion of Section 282 identifies "unenforceability" as a defense to patent infringement. In TheraSense, the court's first goal should be to interpret the meaning of unenforceability as found in that statute.

The more specific provision is Section 288. It is Section 288 that allows a patentee to assert infringement of remaining claims even after some of the claims are found invalid. Section 288 sets a specific limit on this separability principle. Namely, separability of claims does not apply when an invalidated claim was obtained through deceptive intent.

Whenever, without deceptive intention, a claim of a patent is invalid, an action may be maintained for the infringement of a claim of the patent which may be valid. 35 U.S.C. §288.

Section 288 is not exhaustive in its approach. Rather, the statute is only explicit that the remaining claims of a patent can be asserted even after one of the claims was found invalid, so long as that invalid claim was not obtained with deceptive intent. The statute does not explicitly indicate the result when an invalid claim was obtained with deceptive intent or, for that matter, when a valid claim was obtained with deceptive intent. In his brief, however, Professor Hricik concludes that these statutes should be read to – at times – limit the Court’s ability to automatically render all claims of a patent unenforceable after a finding of inequitable conduct.

Contact Professor Hricik if you (or your firm / company) are interested in joining the brief.

Measuring the Plague of Inequitable Conduct

Patent,

In Therasense, the en banc Federal Circuit is poised to consider fundamental questions of the law of inequitable conduct.  Some members of the court have called the doctrine’s current state a “scourge” and a “plague” on the patent system because inequitable conduct is alleged in so many patent cases. 

I searched LexisNexis for federal district court and appellate decisions that mention the term “inequitable conduct” and used those results to create the time-series charts below. As the charts demonstrate, the number of decisions discussing inequitable conduct has continued to dramatically rise even after the Federal Circuit’s 1988 Kingsdown decision.

PatentLawPic996

PatentLawPic998

In his recent article, Professor Mammen analyzed the prevalence inequitable conduct by looking at federal court complaints (inter alia).  [Read Mammen’s article] I compiled his data into the following chart that shows the dramatic rise in the percentage of patent lawsuits where inequitable conduct is pled (typically in the answer as a defense to charges of patent infringement.)  Mammen article suggests that the chart below is a conservative calculation (because pleadings are difficult to find and search) and that the actual frequency of inequitable conduct allegations may reach to 60% of patent lawsuits.

PatentLawPic1000

Transition: Chief Judge Michel –> Chief Judge Rader

Patent, ,

Transition: May 31 is Chief Judge Paul Michel’s last day on the bench.  Judge Randall Rader will become the next Chief Judge of the Court of Appeals for the Federal Circuit. 

The Court today released two interesting patent opinions authored by the Chief: Dow Jones v. Ablaise (finding patent invalid as obvious) and Leviton v. Universal Security Instruments (vacating summary judgment of inequitable conduct). 

There are several pending en banc cases, including Princo v. ITC (patent pools and antitrust), Hyatt v. Kappos (Admissibility of new evidence in a Section 145 action), Therasense v. BD (standards of inequitable conduct), and TiVo v. EchoStar (contempt proceedings against adjuged infringer who introduced new infringing products). 

Combinatorics: With Chief Judge Michel gone, it may be more difficult for en banc panels to overturn prior precedent.  With Chief Judge Michel, the court has 11 members and needs a 6–judge majority to overturn prior precedent. Without the Chief, the court will have only 10 members but will still need 6–judges for such a “majority.” With the 11–judge panel, half of the potential outcomes result in majority panel sufficient to overturn prior precedent. With a 10–judge panel, only 38% of the potential outcomes have the same result. (This assumes a binary yes/no on the potential majority position).  Chief Judge Michel is particularly important because of his tendancy to side with the majority. In the past decade, Judge Michel has filed fewer dissinting opinions than any other Judge on the Circuit except for Judge Moore (who has only been on the bench for three years).  (Judge Newman has filed the most dissenting opinions.)

Next Vacancies: Several other Federal Circuit judges are currently eligible to take senior status. These include Judges Newman, Mayer, Lourie, Gajarsa, and Dyk. Judge Byrson will be eligible in August 2010.

Next Chief Judge After Judge Rader: Judge Kimberly Moore sits as the heir apparent following Judge Rader — assuming that he remains Chief Judge for a full seven years. If Judge Rader vacates the Chief position within six-years, Judge Prost would become Chief.

Judge Plager: “The Walls Surrounding the Claimed Invention [Should] be Made of Something Other than Quicksand”

Patent, , ,

Enzo Biochem and Yale University v. Applera Corp. (Fed. Cir. 2010)

The district court initially held Enzo’s patent claims invalid as indefinite because of the ill-defined term “not interfering substantially.” On appeal, the Federal Circuit reversed — finding that the someone of skill in the art “would understand what is claimed.”

Applera requested a panel rehearing and rehearing en banc which the Federal Circuit recently denied. However, as part of that denial, Judge Plager penned an important dissent — arguing that indefiniteness law should be given more teeth and that claim construction commands too large of a role in the litigation process.

“In my view, this court’s definiteness doctrine could go considerably further in promoting that objective than it currently does, with the not inconsequential benefit of shifting the focus from litigation over claim construction to clarity in claim drafting. . . . The court now spends a substantial amount of judicial resources trying to make sense of unclear, over-broad, and sometimes incoherent claim terms. It is time for us to move beyond sticking our fingers in the never-ending leaks in the dike that supposedly defines and figuratively surrounds a claimed invention. Instead, we might spend some time figuring out how to support the PTO in requiring that the walls surrounding the claimed invention be made of something other than quicksand.”

PatentLawPic990Read the full dissent here:

Judge Plager: I respectfully dissent from the denial of the petition for panel rehearing on the question of indefiniteness.

Despite the varying formulations that this court has used over the years in describing its “indefiniteness” jurisprudence . . . , the general conclusion from our law seems to be this: if a person of ordinary skill in the art can come up with a plausible meaning for a disputed claim term in a patent, that term, and therefore the claim, is not indefinite. At least not so indefinite as to run afoul of the statutory requirement that claims shall “particularly point[ ] out and distinctly claim[ ] the subject matter which the applicant regards as his invention.” 35 U.S.C. § 112, second paragraph.

The corollary derived from this understanding is that if several persons of ordinary skill come up with competing but plausible interpretations of a disputed terms is typically the case with competing “expert witnesses” in patent infringement litigation—the problem is not one of an inherently ambiguous and potentially indefinite claim term, but rather the problem becomes simply one of picking the “right” interpretation for that term. Since picking the “right” interpretation—claim construction—is a matter of law over which this court rules, and since the view of the trial judge hearing the case is given little weight, so that the trial judge’s view on appeal becomes just a part of the cacophony before this court, it is not until three court of appeals judges randomly selected for that purpose pick the “right” interpretation that the public, not to mention the patentee and its competitors, know what the patent actually claims. The inefficiencies of this system, and its potential inequities, are well known in the trade.

The United States Patent and Trademark Office (“PTO”), by contrast, appears to be taking steps to give the statutory requirement real meaning. In 2008, the patent examining corps was given a five-page instruction on “Indefiniteness rejections under 35 U.S.C. 112, second paragraph.” The memo initially observes that “[t]he primary purpose of the definiteness requirement for claim language is to ensure that the scope of the claims is clear so that the public is informed of the boundaries of what constitutes infringement of the patent.” The memo reviews in detail a recent opinion of this court, following which the memo states the position of the PTO: “If the language of a claim, considered as a whole in light of the specification and given its broadest reasonable interpretation, is such that a person of ordinary skill in the relevant art would read it with more than one reasonable interpre-tation then a rejection of the claim under 35 U.S.C. 112, second paragraph, is appropriate.”

This memo was followed later in the year by a rare precedential opinion issued by the Board of Patent Appeals and Interferences (“Board”) in Ex parte Miyazaki. The Board noted that this court has in post-issuance patent infringement cases held “that the definiteness requirement ‘does not compel absolute clarity’ and ‘[o]nly claims “not amenable to construction” or “insolubly am-biguous” are indefinite.’” Recognizing that this court has never set forth a different standard of review for indefiniteness under 35 U.S.C. § 112, second paragraph, for pre-issuance pending claims as compared with post-issuance patent claims, the Board concluded that the Federal Circuit’s reading of the indefiniteness requirement was counter to the PTO’s broader standard for claim construction during prosecution. Accordingly, the Board announced that, “rather than requiring that the claims are insolubly ambiguous, we hold that if a claim is amenable to two or more plausible claim constructions, the USPTO is justified in requiring the applicant to more precisely define the metes and bounds of the claimed invention by holding the claim unpatentable under 35 U.S.C. § 112, second paragraph, as indefinite.”

The Board is clearly right in recognizing that the circumstances are different between pre-issuance and post-issuance application of the definiteness standard with regard to claim terms. At the same time, the PTO and the Board are clearly right in insisting that, if the public notice function of the patent law is to be honored, claim terms must particularly point out and distinctly claim the subject matter of the invention. In my view, this court’s definiteness doctrine could go considerably further in promoting that objective than it currently does, with the not inconsequential benefit of shifting the focus from litigation over claim construction to clarity in claim drafting.

To begin the discussion of how this court could move in that direction, I would grant the petition for panel rehearing. The court now spends a substantial amount of judicial resources trying to make sense of unclear, over-broad, and sometimes incoherent claim terms. It is time for us to move beyond sticking our fingers in the never-ending leaks in the dike that supposedly defines and figuratively surrounds a claimed invention. Instead, we might spend some time figuring out how to support the PTO in requiring that the walls surrounding the claimed invention be made of something other than quicksand.

I respectfully dissent from the loss of that opportunity through the panel’s denial of rehearing.

Substantially: As a claim limitation, “substantially” is being used less frequently than ever before. The chart below shows the percentage of issued patents that include “substantially” as a claim limitation. The data is grouped accourding to the patent issue year. (For the 1980’s and 1990’s, I grouped the data by decade.)

PatentLawPic991

PatentLawPic992

 

 

 

Chief Judge Michel: State of the Court

Patent,

Chief Judge Paul Michel will be retiring from the bench later this month after more than twenty-two years on the bench and five as the chief judge.  He recently offered his annual “state of the court” address at the court’s annual judicial conference. [Read Judge Michel’s remarks].

As Chief, Judge Michel has taken a specific interest in ensuring that the court runs efficiently and quickly. His remarks:

By every measure our decisions continue to be issued more rapidly. As a result, our inventory of pending appeals has dropped from over 1,400 just a few years ago to only 819 as of April 30. Indeed, as of October 1, 2009 it was 897, so the reductions continue.

One benefit is that we hear cases more quickly. In Fiscal year 2006, for example, only 49% of ready cases could be scheduled for argument without delay. By last year, the number was 84%. This year it will likely rise even further.

Another metric we watch is the percentage of appeals decided within 90 days of argument. This number has ranged recently from 75 to 83%. Likely it will reach 85% this year.

Judge Michel also briefly discussed the pending en banc cases:

  • Last October we agreed to rehear en banc Princo v. ITC, involving a patent misuse defense based on a patent pool licensing agreement. Argument was held in March. [This case was argued by Edward DuMont. DuMont has been nominated to fill Judge Michel’s place on the bench]
  • In February, we granted rehearing en banc in Hyatt v. Kappos, asking the parties to brief any limitations on admissibility of evidence in § 145 patenting actions in district court. Argument is scheduled for July 8.
  • In March, we agreed to rehear Slattery v. United States, a Winstar case, asking whether the FDIC is a non-appropriated funds instrumentality and how the answer to that affects the jurisdiction of the Court of Federal Claims.
  • In April we granted rehearing en banc in Therasense v. Becton, Dickinson, in which we will reconsider the standards for determining inequitable conduct. 
  • This month, we granted rehearing in TiVo v. Echostar, concerning when contempt proceedings are appropriate as opposed to a new infringement trial on a product that has been altered after the original was found to infringe.
  • And of course all eyes are on the impending decision in In Re Bilski, concerning the test for patent eligibility.

Although stepping-down from the bench, Chief Judge Michel is “not retiring, but merely changing mission.” He reports that he expects to play a greater role for campaigning for stronger support the courts and USPTO and may also spend some time as a mediator.

PatentLawPic989

Patently-O Bits and Bytes

Patent, , ,
  • Trademark / Antitrust: The Supreme Court has ruled against the National Football League (NFL) in an antitrust suit involving the NFL’s exclusive apparel licensing deal with Reebok/Adidas. The court held that the NFL was not a single business entity, but rather 32 separate business entities. Any antitrust violation involves an underlying market. Here, the supreme court identified that as the market for intellectual property: “Directly relevant here, the teams are potentially competing suppliers in the market for intellectual property. When teams license such property, they are not pursuing the common interests of the whole league, but, instead, the interests of each corporation itself.” In Princo, the Federal Circuit is now considering antitrust issues in the scope of patents and standard-setting organizations. [Read NFL v. American Needle] [Read about Princo v. ITC]
  • The Chisum Patent Academy is offering its second annual Intensive Patent Law Training Workshop in Seattle on July 29-31, 2010. See http://www.chisum-patent-academy.com. The workshop will focus on substantive patent law (patentability and enforcement) through analysis of critical Federal Circuit and Supreme Court decisions. [Syllabus for 2009 workshop]. New material for 2010 likely include business method patentability post-Bilski, written description requirement compliance post-Ariad, and the evolving landscape of inequitable conduct as reflected by the Federal Circuit’s recent grant of rehearing en banc in Therasense. The workshop is team-taught in seminar style (maximum of 10 students) by Donald Chisum, author of the treatise Chisum on Patents, and Professor Janice Mueller, author of Patent Law, 3d Edition (Aspen 2009). Chisum and Mueller have a combined total of over 40 years experience teaching patent law. The workshop’s coverage is geared for junior patent attorneys, summer associates, engineers, scientists, paralegals, information specialists, and attorneys experienced in non-patent fields who desire an intensive introduction to patent law. Eighteen hours of CLE credit have been applied for.
  • USPTO News:
    • The USPTO is further developing its patent prosecution highway and has eliminated the associated fee. [Link]
    • USPTO is on Facebook [Link][Me on Facebook]
    • Green Technology: The USPTO has expanded the number of technology classes that count as “green technology” and that are therefore eligible for expedited processing. [Link]

Kathy Bates on NBC as a former patent attorney. Best quote of the clip is 30–seconds-in.

 

 

Patently-O Bits and Bytes

Patent, , ,
  • Trademark / Antitrust: The Supreme Court has ruled against the National Football League (NFL) in an antitrust suit involving the NFL’s exclusive apparel licensing deal with Reebok/Adidas. The court held that the NFL was not a single business entity, but rather 32 separate business entities. Any antitrust violation involves an underlying market. Here, the supreme court identified that as the market for intellectual property: “Directly relevant here, the teams are potentially competing suppliers in the market for intellectual property. When teams license such property, they are not pursuing the common interests of the whole league, but, instead, the interests of each corporation itself.” In Princo, the Federal Circuit is now considering antitrust issues in the scope of patents and standard-setting organizations. [Read NFL v. American Needle] [Read about Princo v. ITC]
  • The Chisum Patent Academy is offering its second annual Intensive Patent Law Training Workshop in Seattle on July 29-31, 2010. See http://www.chisum-patent-academy.com. The workshop will focus on substantive patent law (patentability and enforcement) through analysis of critical Federal Circuit and Supreme Court decisions. [Syllabus for 2009 workshop]. New material for 2010 likely include business method patentability post-Bilski, written description requirement compliance post-Ariad, and the evolving landscape of inequitable conduct as reflected by the Federal Circuit’s recent grant of rehearing en banc in Therasense. The workshop is team-taught in seminar style (maximum of 10 students) by Donald Chisum, author of the treatise Chisum on Patents, and Professor Janice Mueller, author of Patent Law, 3d Edition (Aspen 2009). Chisum and Mueller have a combined total of over 40 years experience teaching patent law. The workshop’s coverage is geared for junior patent attorneys, summer associates, engineers, scientists, paralegals, information specialists, and attorneys experienced in non-patent fields who desire an intensive introduction to patent law. Eighteen hours of CLE credit have been applied for.
  • USPTO News:
    • The USPTO is further developing its patent prosecution highway and has eliminated the associated fee. [Link]
    • USPTO is on Facebook [Link][Me on Facebook]
    • Green Technology: The USPTO has expanded the number of technology classes that count as “green technology” and that are therefore eligible for expedited processing. [Link]

Kathy Bates on NBC as a former patent attorney. Best quote of the clip is 30–seconds-in.

 

 

Defending Yourself in Inequitable Conduct Proceedings

Patent,

An en banc rehearing is now pending before the Federal Circuit in the case of Therasense (Abbott) v. BD. The case focuses on questions of patent unenforceability due to the patentee’s inequitable conduct during prosecution.  The court opinions focus on the actions of Mr. Lawrence S. Pope who was the attorney responsible for prosecution of the asserted patent.  The district court held that pope “acted with specific intent to deceive” the patent examiner and the USPTO. Based on that finding, Pope has been investigated by both the PTO Office of Enrollment & Discipline (OED) and the Illinois Attorney Registration and Disciplinary Commission (ARDC).

There is no doubt that the finding of intentional deception has substantially and negatively impacted Mr. Pope.  As a pro-active attorney, Mr. Pope (who is no longer with Abbott) attempted to intervene in the case to defend his own record. After receiving briefs on the motion to intervene, the Federal Circuit denied the request. 

Writing as the motions judge, Judge Gajarsa wrote:

Pope asserts that he meets the standards for intervention, i.e., that he has a substantial interest in the appeal, that his interests will not be adequately represented by Abbott, and that intervention will not cause any undue delay or harm. . . . In Nisus Corporation v. PermaChink Systems, Inc., 497 F.3d 1316, 1319-20, 1322-23 (Fed. Cir. 2007), we affirmed a district court's denial of a motion to intervene by an attorney who had prosecuted a patent and who sought to challenge factual findings concerning his conduct that were related to a finding of unenforceability. We expressly distinguished Penthouse Int'l because it involved an attorney who sought to intervene after a district court sanctioned the attorney and directed the attorney to pay a sanction. In this case, Pope has shown no similar type of sanction. Nisus, 497 F.3d at 1319 ("Critical comments, such as in an opinion of the court addressed to the issues in the underlying case, are not directed at and do not alter the legal rights of the nonparty.").

Documents: