Tag Archives: First to Invent

Bilski’s Patent Application

Patent, , , , , ,

The Supreme Court is reviewing Bernard Bilski’s patent application to consider whether the application appropriately claims “patentable subject matter” under 35 U.S.C. 101 as interpreted by the Supreme Court. Much of the focus in the case is on the Federal Circuit’s exclusive “machine or transformation” test. However, I thought it would also be important to look at the underlying Bilski patent application because of how it may drive the debate at the Court.

Bilski’s application is not published. However, a copy of the 14-page application was included in a joint appendix submitted to the Federal Circuit during the en banc appeal. The application includes one independent claim; eight subsequent dependent claims; no drawings; and a priority claim to a 1996 provisional application. It appears that Buchanan Ingersoll (Pittsburgh) led the prosecution. The BPAI opinion rejected eleven claims – indicating that some amendments occurred during prosecution. (A docket sheet also indicates that drawings were later added.) Amazingly, Bilski’s case is based on an appeal from a March 2000 final rejection.

The Invention focuses on a method of managing consumption risk by commodity trading something that – in 1996 was “not currently managed in energy markets.” According to Bilski there was a “need for a fixed bill product to manage total energy costs including the consumption of risk.” The general idea of using commodity trading as a hedge against risk has been well known for years. However, Bilski proposes that consumers purchase commodities “at a fixed rate based on historical averages.” In a dependent claims, Bilski indicates that the risk to be avoided is a “weather-related price risk.” Later, that risk is drilled-down to focus on temperature shifts (heating and cooling degree days). Another dependent claim spells-out the equation for calculating the fixed cost based on prior fixed and variable costs, transportation costs, local delivery costs, and a location specific weather indicator. Additional dependent claims require specific Monte Carlo simulations and statistical tests to better calculate the fixed rate. In some claims, the commodity being traded is identified as “energy” and the market participants as “transmission distributors.”

The Claims do not focus on any particular machine or software implementation. Rather, they are organized as “methods” followed by a series of steps such as “initiating a series of transactions . . . “; “performing a Monte Carlo simulation . . .”; and “continuing to re-price the margin in the transaction until the expected portfolio margin and likelihood of portfolio loss is acceptable.”

No Machine: Even an amateur implementation of these methods would make extensive use of software and computer hardware. However, those elements are not present in the claims. Why did Bilski not include software and computer hardware in his application? My speculation: First, it does not appear – at least from the patent application – that he invented any software application of his hedging theory. Second, perhaps Bilski believed that a computer implementation element would unduly limit the scope of his invention.

Obvious and Not Enabled: The claims are likely obvious based on extensive prior art in the industry. In addition, the claims may well fail the tests of enablement and/or written description (if it survives Ariad v. Eli Lilly). However, the PTO worked-hard to properly couch this case as a test of patentable subject matter.

The abstract reads as follows:

A method is provided for managing the risk-associated costs of a commodity sold by a commodity provider at a fixed price. Such risk-associated costs include the weather-related costs of a fixed price-energy bill. The commodity provider initiates a series of transactions with consumers of the commodity wherein the consumers purchase the commodity at a fixed rate based upon historical averages. The fixed rate corresponds to a risk position of the consumers. The commodity provider then identifies market participants for the commodity who have a counter-risk position to that of the consumers. The commodity provider then initiates a series of transactions with the market participants at a second fixed rate such that the series of market participant transactions balances the risk position of the series of consumer transactions.

Read the application here: BilskiApplication.pdf

Bilski Briefs [Updated with 44 Briefs]

Patent, , ,

The question of patentable subject matter has returned to the Supreme Court — this time with a focus on business methods. In January 2009, an en banc Federal Circuit implemented the “machine or transformation test” as the exclusive test for determining whether a claimed process qualifies as patentable subject matter under 35 U.S.C. 101. Now, the case is pending before the Supreme Court with two focused questions:

QUESTIONS PRESENTED

1. Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

2. Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

In this post, I have attached recently filed briefs which either (1) support Bilski or (2) support neither party. The government brief in opposition is due Sept 25 and friendly brief in opposition due within seven days of that filing.

  • Yahoo (Bilski – Yahoo! Amicus Brief (S.Ct) (as filed) (8-6-09).pdf) The focus on physicality does not make sense in today’s technology.
  • IBM (08-964 IBM.pdf) The proper test looks for a “technological contribution.”
  • Regulatory Data Corp ( 08-964 Regulatory Datacorp et al..pdf) Brief by John Duffy focuses directly on the historical importance of the statutory test. “The government is now asking this Court to impose a formalistic restriction on definition of “process” that would create an unprecedented and uncertain judicial limitation on patentable subject matter. This Court should reject that invitation just as it did more than a third of a century ago, when the government unsuccessfully advanced the very same argument. See Gottschalk v. Benson, 409 U.S. 63, 71 (1972).”
  • Accenture (08-964 tsac Accenture and Pitney Bowes, Inc.pdf) Machine or transformation test is not a reliable indicator of anything relevant. The standard for patentability should “usefulness” as set forth in the Constitution, in the patent statute, and by the Court.
  • Austin IP Law Ass’n ( 08-964 Austin Intellectual Property Law Association.pdf) The patent statute explicitly defines process quite broadly in Section 100(b). The Federal Circuit’s version of “process” in 35 U.S.C. § 101 is far narrower than the broad definition of “process” in 35 U.S.C. § 100(b) (2008).   
  • Double Rock and other IP entities (08-964tsacdoublerockcorporation.pdf) The Federal Circuit test conflicts with Supreme Court precedent and Congressional intent.
  • Law Professors [Lemley et al.] (08-964ac20lawandbusinessprofessors.pdf) The distinction on patentable subject matter should be based on the distinction between applied and abstract inventions. Bilski’s claims fail this test.
  • Chakrabarty (08-964 Chakrabarty.pdf) Brief by Scott Kieff and Richard Epstein argue that patent rights operate “like a beacon in the dark” to start conversations between innovative entities and potential users.
  • Franklin Pierce Law Center (Bilski.pdf) Court should adopt the “useful, concrete, and tangible result” test.
  • TeleCommunication Systems (08-964nsactelecommunicationsystemsinc.pdf) Subject matter eligibility should be predictably broad.
  • BIO, AdvaMed, WARF and U of Calif (08-964 tsac Biotechnology Industry Organization et al..pdf) Any decision should be clear that biotechnology is patentable.
  • Conejo Valley Bar Ass’n (08-964.ac.Conejo Valley Bar Association.pdf) The substantive elements of the patent act (102, 103, and 112) do all the necessary work.
  • Novartis (08-964tsacNovartisCorporation.pdf) A process of diagnosis should be patentable.
  • Dr. McDonough (08-964_PetitionerAmCuTMcDounough.pdf) “American innovation is not confined to Industrial Age mousetraps and other cleverly contrived gadgets. The modern economic agent is more likely to encounter innovation today in the services they consume than in the contraptions they use. The present amicus curiae suggests that the decision of the Federal Circuit in this case is an attempt to apply an Industrial Age standard to address a perceived Services Age problem, a problem that the present amicus curiae suggests does not exist.”
  • State of Oregon (08-964_NeutralAmCuOregon.pdf) (The Patent Hawk filed this brief on behalf of all Oregonians – although apparently without any official state approval) The brief makes an important point: Although Section 101 comes first in the statute, it does not make sense to use it as a screening tool at the PTO. Rather, the PTO’s skills are in comparisons of prior art and ensuring that the elements of Section 112 have been satisfied.
  • Chicago IP Law Ass’n (08-964 ac Intellectual Property Association of Chicago.pdf) There are strong parallels here with KSR; CAFC rule is too rigid.
  • Borland (Amicus Curiae Brief (Borland Software Corporation).pdf) The CAFC test does not properly follow Supreme Court precedent.
  • Time Systems (08-964 ac On Time Systems.pdf) Some abstract ideas should be patentable.
  • Monogram BioSciences and Genomic Health (08-964 ac Monogram Biosciences Inc.pdf) Patentable processes can be non-physical.
  • Sachs and Brownstone (08-964 ac Robert R. Sachs.pdf) The CAFC test is limits the patenting of software, and a bad result.
  • Boston Patent Law Association (08-964tsacbostonpatentlaw.pdf) A broad scope of patentable subject matter better preserves the health of an innovative culture; many landmark inventions fail the Federal Circuit’s Bilski test.
  • Georgia Biomedical Partnership, Inc. (08-964 Georgia Biomedical Partnership Inc.pdf) The Supreme Court has consistently refused to offer a “rigid” test.
  • Dolby Labs (08-964 Dolby Laboratories et al..pdf) The important thing is to settle expectations.
  • Teles AG ( 08-964 Teles AG.pdf) Subject matter eligibility should be “dynamic.” “Further, the global nature of today’s economy strongly recommends that the United States patent system be harmonized with robust patent systems of other nations wherever possible.”
  • Medtronic (08-964 Medtronic.pdf) Provides specific examples of medical innovations that may be unpatentable under the Federal Circuit test
  • Intellectual Property Owners (08-964acintellectualproperty.pdf) Machine or transformation test is not the only test; In its transformation test for signals, the CAFC “unduly focuses on the contents of the data . . . rather than the manner in which those signals are generated;” a general purpose computer should be considered a “particular machine.”
  • AIPLA ( 08-964 American Intellectual Property Law Association.pdf) A new exclusionary test is not needed.
  • Houston IPLA (08-964 Houston IP Law Assoc..pdf) The test negatively impacts Dell’s “build-to-order” patent (5,963,743) ; AT&T’s linear programming patent (4,744,028); and Sperry Corporation’s LZW compression patent (4,558,302).
  • Armanta, Asentinel, Cybersource, and Hooked Wireless (08-964 Entrepreneurial Software Companies.pdf) Questions of patentability are causing software companies to lose value.
  • Mr. Meiers ( 08-964 Raymond C. Meiers.pdf) A patentable invention “applies manifestations of nature and achieves a useful result.” This is the tripartite system.
  • Univ. South Florida ( 08-964 University of South Florida.pdf)
  • Awaken IP ( 08-964 AwakenIP.pdf) The CAFC test is unworkable and is as bad as the vague idea/expression dichotomy of copyright.
  • BSA ( 08-964 Business Software Alliance.pdf) Section 101 has been consistently and correctly interpreted to cover software innovations.
  • PhRMA, etc. ( 08-964 PhRMA et al..pdf) Medical processes should be patentable.”
  • Caris Diagnostics ( 08-964 Caris Diagnostics, Inc.pdf) Diagnostic method patents are important and have been called into question by Bilski.
  • AIPPI (AIPPI SupremeCourt_3455697.pdf) A flexible test is better, and TRIPS requires a flexible standard.
  • FICPI ( 08-964 FICPI.pdf) “The § 101 analysis should focus on the section’s substantive utilitarian requirement, rather than retrospectively attempting to rigidly define the categories of patentable subject matter without the foresight of the particular form technological innovations may take in the future.

Update: More Briefs

  • Professor Collins (08-964 Prof. Kevin Emerson Collins.pdf) Professor Collins has written a number of very interesting PSM articles. In his brief, he argues that the test should focus on whether “the claim impermissibly seeks a patent on a fundamental principle or an abstract idea.” One concern of the CAFC test is that it takes us off the path toward international harmonization.
  • Legal Onramp (08-964 Legal OnRamp.pdf) “Pure” business methods should not be patentable. “Unlike traditional patents on technological advances, the patenting of pure business methods is a serious obstacle to innovation because it unduly impedes competition.”
  • Eagle Forum (08-964 Eagle Forum Education & Legal Defense.pdf) Reminds us of the important constitutional role of the patent clause. “The decision below usurps the legislative role and adds complexities to patent law that are neither welcome nor justified in the 21st century.”
  • Fed Cir Bar Ass’n (08-964 Federal Circuit Bar Association.pdf) The CAFC test does not follow Supreme Court precedent.
  • Washington State Patent Law Association (08-964 tsac WSPLA.pdf) The Court should focus on Chakrabarty and Diamond v. Diehr: “any,” “new,” and “useful” “process.”
  • San Diego IP Law Ass’n (08-964 ac San Diego Intellectual Property Law Assoc.pdf)

Ex parte Competitive Technologies, Inc. (B.P.A.I. 2009)

Patent, ,

[REPRINTED with permission from the excellent Patent Docs Blog]

Board Finds Metabolite Claim to be Patentable

    By Kevin E. Noonan – 

LabCorpThe most significant non-decision from the Supreme Court in recent memory is Justice Breyer's dissent over the Court's decision to dismiss its granted certiorari petition (as improvidently granted) in the Laboratory Corp. v. Metabolite Laboratories, Inc. case regarding the patent-eligibility of this claim:

13.  A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:  assaying a body fluid for an elevated level of total homocysteine; and correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

Columbia UniversityThe bases for the dissenters' objections to the patentability of this claim has been discussed in prior Patent Docs posts (see "The Supreme Court,In re Bilski and the Lingering Question of Labcorp v. Metabolite").  Today, the Board of Patent Appeals and Interferences issued its decision in an appeal from a final rejection of this claim in reexamination, reversing the Examiner's assertion that the claim was unpatentable for obviousness.

The ex parte reexamination, Control No. 90/008,305, of U.S. Patent 4,940,658was requested on October 23, 2006, and claims 13, 15-17 and 33 were finally rejected for obviousness over the following references:

•  Refsum et al., "Radioenzymic Determination of Homocysteine in Plasma and Urine," Clinical Chemistry 34: 624-28 (1985), cited for teaching methods for determining homocysteine levels in plasma by converted total homocysteine to radiolabeled S-adenosylhomocysteine and then quantifying;

•  Kass, "Cytochemical Detection of Homocysteine in Pernicious Anemia and in Chronic Erythremic Myelosis," American Journal of Clinical Pathology 67: 53-56 (1977), cited for teaching chemical methods of homocysteine detection in permicious anemia to detect B12 deficiency, but which test showed cross-reactivity with Coenzyme A;

•  Wilcken et al., "Homocysteinemia, Ischemic Heart Disease, and the Carrier State for Monocystinuria," Metabolism 32: 363-70 (1983), cited for teaching homocysteine detection in a twin study showing different folate and B12 levels consistently detected from RBCs; and

•  Westhyyzen et al., "Plasma amino acids and tissue methionine levels in fruit bats (Rousettus aegyptiacus) with nitrous oxide-induced vitamin B12 deficiency," British Journal of Nutrition 53: 657-62 (1985), cited for showing in correlation between plasma methionine levels and vitamin B12 deficiency.

USPTO Seal - backgroundThe Examiner rejected the claims in reexamination for obviousness, citing the Refsum reference as the primary reference (showing a method for detecting plasma homocysteine) combined with the other references showing a correlation with vitamin deficiency.  It would have been obvious to combine the teachings of these references, according to the Examiner, "[b]ased on the correlation between the elevated levels of homocysteine (free and/or complexed) in blood and urine samples with deficiency of cobalamin or folate taught by Kass, Wilcken . . . and Westhuyzen."

Saith the Board:  We disagree.  The panel first stated the principle, enunciated in KSR International Co. v. Teleflex Inc., requiring "some articulated reasoning with some rationale underpinning to support the legal conclusion of obviousness" (550 U.S. 398, 418 (2007)).  Here, the Board opined that the claimed invention requires assaying for "total" homocysteine, which comprises four species (homocysteine, homocystine, homocysteine-cysteine disulfides, and protein-homocysteine mixed disulfides), based on specific findings of fact, and correlating elevated levels with folate and/or vitamin B12 deficiency (without discriminating between the two).  The panel then distinguished the cited secondary references (which the Examiner used to establish the correlation between elevated homocysteine levels and vitamin deficiency) from the claimed invention.  According to the Board, Kass teaches a chemical reaction test that measures not only homocysteine (and not "total" homocysteine) but also Coenzyme A and further distinguishes between B12 and folate deficiency (contrary to the claimed invention).  The Board further opined that the ordinarily skilled worker would not have "reasonably" read the Wilcken reference as teaching a correlation between elevated total homocysteine levels and either folate or B12 deficiency, since neither twin was reliably deficient in either folate or B12.  The Westhuyzen reference does suggest a correlation between elevated plasma homocysteine and B12 deficiency, the Board conceded, but only detects homocysteine, not total homocysteine, and there is no evidence that the detected increased in homocysteine would "necessarily mean an increase in 'total' homocysteine."  In addition to these deficiencies, the Board found that none of the cited references show any correlation between plasma homocysteine levels and folate deficiency.

The Board then held that "[t]he Examiner has failed to provide a sufficient factual basis to support her conclusion of obviousness i.e. that the applied prior art teaches or suggests all of the claim limitations" (phraseology applying — but not rigidly applying — the traditional TSM test remaining as one option underKSR and the Patent Office Guidelines for implementing the KSR decision).

Competitive TechnologiesThis decision cannot be appealed by the third-party requester, and at least with regard to claim 13 provides no basis for appeal by the patentee (since the patentability of this claim was affirmed in unamended fashion by the Board's decision).  It is unlikely that this determination would change Justice Breyer's mind, in any event, since he is on record as believing that:

Even were I to assume (purely for argument's sake) that claim 13 meets certain general definitions of process patentability, however, it still fails the one at issue here:  the requirement that it not amount to a simple natural correlation, i.e., a "natural phenomenon."  See Flook, supra, at 588, n. 9 (even assuming patent for improved catalytic converter system meets broad statutory definition of patentable "process," it is invalid under natural phenomenon doctrine); Diehr, 450 U. S., at 184–185 (explaining that, even if patent meets all other requirements, it must meet the natural phenomena requirement as well).

At most, respondents have simply described the natural law at issue in the abstract patent language of a "process."  But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge.  Cf. id., at 192 (warning against "allow[ing] a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection").  One might, of course, reduce the "process" to a series of steps, e.g., Step 1: gather data; Step 2: read a number; Step 3: compare the number with the norm; Step 4: act accordingly.  But one can reduce any process to a series of steps.  The question is what those steps embody.  And here, aside from the unpatented test, they embody only the correlation between homocysteine and vitamin deficiency that the researchers uncovered.  In my view, that correlation is an unpatentable "natural phenomenon," and I can find nothing in claim 13 that adds anything more of significance.

The Board's decision properly addresses the legal flaw in Justice Breyer's reasoning, as explicated by Judge Rich in In re Bergy:  the question of patent eligibility is distinct from whether an invention satisfies the statutory requirement for patentabity.  The Board has affirmed that Claim 13 is patentable; perhaps the Supreme Court will use its review of In re Bilski to address the question of whether the claim is also patent-eligible.

Ex parte Competitive Technologies, Inc. (B.P.A.I. 2009)
Panel: Administrative Patent Judges Spiegel, Adams, and Delmendo
Opinion by Administrative Patent Judge Spiegel

BPAI Precedential Opinion on Rejecting Software Means Claims

BPAI, Indefinite, Patent, Patent Cases 2009,

Ex parte Catlinpic-32.jpg (BPAI 2009)(precedential) fd073072.pdf.

The first-time around, the BPAI found some of Catlin’s claims patentable. On rehearing (requested by the SPE), the BPAI reversed course – finding the means-plus-function claims indefinite under 35 USC § 112.

Catlin’s claim one reads as follows:

1. A method for implementing an on-line incentive system, said method comprising the steps of:
providing, at a merchant’s web site, means for a consumer to participate in an earning activity to earn value from a merchant; and
transferring value from said merchant to said consumer for participation in said earning activity, if said consumer qualifies, without re-directing said consumer away from said merchant’s web site, whereby said consumer’s focus of activity remains at said merchant’s web site.

The Patent Act allows a patentee to claim inventive elements using “means plus function” language. A means plus function term is construed to cover the corresponding structures as described in the specification as well as any equivalents. This rule of construction means that seemingly broadly written means limitations are often quite limited in practice — especially when the specification is not thoroughly drafted.

If no corresponding structure can be identified in the disclosure, then the claim will be found “invalid as indefinite.”

Here, the claim recites a “means for a consumer to participate in an earning activity to earn value from a merchant.” On rehearing, the BPAI could not find any corresponding structure in the specification. In particular, the Board was looking for an algorithm for performing the claimed function.

[W]e have thoroughly reviewed the Appellants’ Specification and have not been able to locate an adequate disclosure of structure, material, or acts corresponding to the functions of allowing a consumer to participate in an earning activity and earn value from an earning activity. In particular, the Specification does not disclose any specific algorithm that could be implemented on a general purpose computer to allow a consumer to participate in an earning activity and earn value from an earning activity.

Holding: Claims indefinite.

Claim Construction Disclaimer & Judicial Estoppel

Patent,

Fitness Quest (FQ) v. Jonathan Monti (Fed. Cir. 2009) (non-precedential)

In 2002, Monit – an individual inventor – approached FQ with his idea for personal exercise equipment. FQ agreed to a confidentiality & nondisclosure agreement, but FQ eventually walked away from the deal.

In 2003, FQ began making the now-popular “Ab Lounge” and Monti sent a letter accusing the company of infringement and breach of the confidentiality agreement. FQ quickly filed for declaratory relief.

The district court ruled for FQ on summary judgment – finding that FQ had not violated the confidentiality agreement and that its new product did not infringe Monti’s patent. On appeal, the Federal Circuit vacated-in-part – holding that summary judgment of non-infringement was improper as to claim 28 of Monti’s patent.

Disclaimed Needed Scope: Claim construction focused first on the term “back extension” in the apparatus claims. Monti argued that “back extension” could include pushing back in the Ab Lounger. The court rejected that argument because Monti’s application specifically disclaimed coverage of back extensions that require pushing.

From the patent: “Many Nautilus TM type machines have been constructed in the prior art to mimic this movement and add resistance to it, biomechanically, the core movement of this type of machine was a pushing movement. This is a distinct disadvantage of the prior art methods of back extension. Also, this does not fall within the scope of Kinesiologically Correct TM [i.e., this invention].”

One of the asserted claims (claim 28) does not, however, include the back extension limitation. Apparently, the disclaimer only applies to the coverage of the “back extension” term. Consequently, the Federal Circuit held that that claim may still be infringed (pending reconsideration by the lower court.)

Judicial Estoppel: During litigation, Monti explained the claim term “selectively applying a force” as applying a different force based on the weight of the user, but then later wanted to expand the definition after learning that the relevant portion of the Ab Lounger does not apply a force based on the weight of the user. Following the equitable doctrine of judicial estoppel, the district court refused to allow Monti to change his argument.

Monti clearly advocated that the system must determine that amount of force to apply with reference to the weight of the individual using the device. This position is directly contrary to his current position, which is that the force producing assembly applies a force irrespective of the user’s weight. The Court adopted Monti’s previous construction and finds that FQ would suffer an unfair detriment if Monti was not estopped because Monti could defeat summary judgment by assuming a contrary position now that the facts show his prior position is unhelpful to him.

In New Hampshire v. Maine, 532 U.S. 742, 750-51 (2001), the Supreme Court outlined the guidelines for finding judicial estoppel in federal courts:

First, a party’s later position must be “clearly inconsistent” with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party’s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled. Absent success in a prior proceeding, a party’s later inconsistent position introduces no risk of inconsistent court determinations, and thus poses little threat to judicial integrity. A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.

Here, the Federal Circuit vacated the finding of judicial estoppel – finding that Monti’s new claim construction argument was not “clearly inconsistent” with his prior winning position. Rather, the Federal Circuit saw Monti’s explanation as an attempt to distinguish “selectively applying” in the asserted claim from a “selectively adjusting” limitation in another claim. “This was not “clearly inconsistent” with his arguments on summary judgment, making the application of judicial estoppel inappropriate.”

Breach of Contract (Confidentiality): The breach of contract ruling is also interesting. During discussions Monti sent the following message to FQ: “After using the machine I noticed that it would be better for me to take the back extension out and lower the pivot point.” According to Monti, FQ then disclosed the beneficial aspects of lowering the pivot point (but not removing the back extension). On appeal, the Federal Circuit did could not find any breach of confidentiality because Monti had not disclosed that “lowering the pivot point alone has any benefit.”

 

Federal Circuit Applies Phillips to Limit Gift Card Claim Construction

Claim Construction, Patent, Patent Cases 2009,

Every Penny Counts, Inc. v. American Express, Visa, Green Dot, MasterCard, First Data, etc. (Federal Circuit 2009)

Dr. Burke is a psychoanalyst who never liked change. I’m not talking Obama style change. No, Burke patented a method for donating leftover change (“excess cash”) to charities (or to store it in a separate savings account.)

Burke’s company (EPC) sued a host of defendants. who sell gift cards — alleging that the retail sale of gift cards along with merchandise infringe upon his patents because the gift card sales “loading value onto accounts at a point-of-sale terminal.” EPC’s argument was that the purchaser was using “excess cash” to buy the gift card.

On appeal, the Federal Circuit rejected the patentee’s argument for a broad claim construction – instead holding that the claimed “excess cash” was an “amount selected by the payor beyond the total amount due at the point of sale.”

Looking at the specification as “the primary basis for construing the claims,” the appellate panel noted that the specification repeatedly described the method’s purpose as allowing someone to conveniently donate to charities or to painlessly save money. From the specification:

In current shopping situations a clerk inputs the price of all items in a cash register and the latter totals the price. The consumer offers either the exact amount of cash or a sum exceeding the price, and the clerk enters that amount. The cash register then subtracts the price from the cash.

The excess cash offers the customers an opportunity to save small amounts of money painlessly. It also affords the consumer to donate [sic] small amounts of money to charity.

Interpreting this, the Federal Circuit determined that the claimed “excess cash” must be only what is left over after all items (including gift cards) are paid for. “Where the consumer does not offer a sum in excess of the total displayed on the cash register, then there is no excess cash.”

Non-infringement affirmed.

Notes:

  • Read the Opinion: 08-1434.pdf.
  • The Federal Circuit remarked that EPC wasted its appellate time arguing process – that it didn’t get a fair chance to argue claim-construction below. Claim construction is reviewed de novo, and the appellant needs to focus on why it should win on the merits, not on whether the district court was listening. “EPC has surprisingly little to say about what it alleges is substantively wrong with the district court’s construction, or why its proposed construction would be better on the merits. Instead, it attempts to assign error to the district court’s construction on a number of procedural grounds. Principally, it argues that the court erred by (1) spending a portion of the claim construction hearing considering the meaning of the phrase “sales price,” which was not a disputed claim term; and (2) using the accused products to tailor a construction of the patent claims that would make it impossible for EPC to prove infringement. Neither of these arguments has merit.”
  • As a rule, the Federal Circuit is respectful to both parties as well as their arguments and positions. Here, Senior Judge Cudahy went about as far as the Court ever does by describing Burke’s invention only within quotation marks (Burke’s “invention”) and once referring to the “‘invention’, such as it is.” The court more explicitly showed its disdain by awarding costs to the defendants.
  • Some of you may have heard of Bank of America’s “Keep the Change” program. According to the company brochure: “Each time you buy something with your Bank of America Check Card, we’ll round your purchase to the nearest dollar amount and transfer the difference from your checking account to your savings account. You get to keep the change and grow your savings. What could be easier?” EPC’s litigation against BOA continues.

Bits and Bytes No. 106: Patent Reform

Bits and Bytes, Patent, Patent Legislation, , , ,
  • [UPDATED] Hal Wegner Reports the Following:
    • Phil Kiko of Foley Public Affairs reports that Secretary of Commerce Gary Locke has announced that he has chosen the next Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office. The chosen candidate, who is being vetted, was not named.
  • Congress is Moving Forward with Patent Reform:
    • April 30, 2009 hearing of the House Judiciary Committee.
    • Here are some comments on the testimony:
      • Jack Lasersohn (venture capitalist): Venture capital requires strong and certain patents. The damage reforms create potential problems because sometimes a relatively minor product innovation will dramatically change the market position. “A new coating on a solar cell , that increases it’s conversion efficiency just a little bit, can dramatically shift the market for entire multi-billion dollar solar energy plants. A better drug on a drug eluting stent can shift the entire stent market. In either case, the question is ‘who is entitled to the profits arising from the use of the invention, the inventor or the infringer’?”
      • Dean Kamen (Inventor & Businessman): patents should be strong and policy should be directed to support small innovative organizations.
      • David Simon (Intel): patents are meant to allow manufacturing companies to fight each other – not for non-manufacturing inventors or their assigns to slow-down manufacturers. [This is a very rough paraphrase of Simon’s 13 page rant against non-practising entities.]
      • Philip Johnson (J&J) on behalf of the 21st Century Patent Reformers wants money for the PTO, international harmonization (first-to-file), expanded post-grant review (12–month window), no change to the current damages system, only a codification of Seagate, no changes to venue law.
      • Jay Thomas (Georgetown) argues that patent infringement damages are too unpredictable and that additional rules of evidence and practice can help solve the problem.
      • Mark Chandler (Cisco) supports the reforms to halt the problem of non-practising entities who demand licenses.
      • Bernard Cassidy (Tessera): Please do not change the patent law in ways that hurt small companies. The courts have already done enough through eBay, KSR, Medimmune, Microsoft v. AT&T, Seagate, Bilski, and TS Tech.
      • [WRITTEN TESTIMONY.zip (3794 KB)]
  • Absent from this testimony: Any representative from the Patent Office. At least three candidates are rumored to have been interviewed for the post of PTO Director – including former PTO Director Todd Dickinson and IP Hall of Fame member Mike Kirk. [See updated news above]

Federal Circuit Affirms (Not) “Obvious to Try” Jury Instructions

Patent, , ,

Rentrop v. Spectranetics Corp. (Fed. Cir. 2008)

Dr. Rentrop is the chief of research at St. Vincent’s Hospital in NYC. For several years Rentrop used Spectranetics optical catheters to deliver LASER treatment. The Spectranetics catheters came in various tip diameters ranging from 1.4 mm to 2 mm. Finding those diameters too inflexible, Rentrop had the idea of using a 0.9 mm tip. Rentrop told Spectranetics of his idea and help them to create a prototype. Eventually Spectranetics obtained FDA approval and began marketing. In the meantime, the parties began to dispute over financial issues. Rentrop wanted a cut of the profits and so he filed for patent protection and eventually sued Spectranetics for infringement. The jury awarded $500,000 in damages.

On appeal, the Federal Circuit quickly affirmed. The most interesting legal issue of the case involves the pre-KSR jury instructions. The first part focused on the teaching-suggestion-motiviation test:

“In evaluating the scope and content of the prior art, you should keep in mind that there must have been some suggestion for a person skilled in the art to make the combination covered by the claims of the patent in issue in order for the claims to have been obvious. In other words, a claim in a patent is not obvious and invalid, simply because the claim combines elements that can all be found among the prior art references. It must have been a motivation or a suggestion to combine the limits in a manner disclosed by the patent.”

The Federal Circuit found this instruction proper – in context – because the instructions defined motivation as potentially arising “from common knowledge, or common sense of the person of ordinary skill in the art, without any specific hint or suggestion in a particular reference.”

Obvious to Try: The jury instruction on obviousness also included the statement that a “the test for obviousness is not whether or not it would have been obvious to try to make the invention.” The defendant argued that the instruction violates KSR. In KSR, the Supreme Court held that the Federal Circuit was in error to hold that a “patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try.” The Federal Circuit, however, was able to logically reconcile the two statements – noting that the jury instruction “does not imply that a showing that the specific combination of elements was obvious to try is insufficient to find obviousness.”

Notes:

  • Northern District of California Chief Judge Vaughn Walker authored the opinion while sitting by designation on the Federal Circuit.
  • Spectranetics recently filed for ex parte reexamination of two of Rentrop’s patents. [LINK]

Federal Circuit Affirms (Not) “Obvious to Try” Jury Instructions

Patent, , ,

Rentrop v. Spectranetics Corp. (Fed. Cir. 2008)

Dr. Rentrop is the chief of research at St. Vincent’s Hospital in NYC. For several years Rentrop used Spectranetics optical catheters to deliver LASER treatment. The Spectranetics catheters came in various tip diameters ranging from 1.4 mm to 2 mm. Finding those diameters too inflexible, Rentrop had the idea of using a 0.9 mm tip. Rentrop told Spectranetics of his idea and help them to create a prototype. Eventually Spectranetics obtained FDA approval and began marketing. In the meantime, the parties began to dispute over financial issues. Rentrop wanted a cut of the profits and so he filed for patent protection and eventually sued Spectranetics for infringement. The jury awarded $500,000 in damages.

On appeal, the Federal Circuit quickly affirmed. The most interesting legal issue of the case involves the pre-KSR jury instructions. The first part focused on the teaching-suggestion-motiviation test:

“In evaluating the scope and content of the prior art, you should keep in mind that there must have been some suggestion for a person skilled in the art to make the combination covered by the claims of the patent in issue in order for the claims to have been obvious. In other words, a claim in a patent is not obvious and invalid, simply because the claim combines elements that can all be found among the prior art references. It must have been a motivation or a suggestion to combine the limits in a manner disclosed by the patent.”

The Federal Circuit found this instruction proper – in context – because the instructions defined motivation as potentially arising “from common knowledge, or common sense of the person of ordinary skill in the art, without any specific hint or suggestion in a particular reference.”

Obvious to Try: The jury instruction on obviousness also included the statement that a “the test for obviousness is not whether or not it would have been obvious to try to make the invention.” The defendant argued that the instruction violates KSR. In KSR, the Supreme Court held that the Federal Circuit was in error to hold that a “patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try.” The Federal Circuit, however, was able to logically reconcile the two statements – noting that the jury instruction “does not imply that a showing that the specific combination of elements was obvious to try is insufficient to find obviousness.”

Notes:

  • Northern District of California Chief Judge Vaughn Walker authored the opinion while sitting by designation on the Federal Circuit.
  • Spectranetics recently filed for ex parte reexamination of two of Rentrop’s patents. [LINK]

Applying Bilski to Metabolite’s Diagnosis Claim

Patent, ,

Metabolite’s broadest method claim has two steps: First, assay a body fluid to determine its homocysteine level. Second, correlate the homocysteine level to a vitamin deficiency. It reads as follows:

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of: assaying a body fluid for an elevated level of total homocysteine; and correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

In 2006, the Supreme Court almost took the time to reject this claim under Section 101, but decided that the issue had not been properly raised on appeal. Dissenting from the last minute denial of certiorari were Justices Breyer, Stevens and Souter. In a dissenting opinion drafted by Justice Breyer, the three would have held the invention as claimed an unpatentable “law of nature.” The same anti-preemption theme of Bilski also runs through the Breyer opinion. The courts are concerned with the potential (but unidentified) problems of having a patent that

There can be little doubt that the correlation between homocysteine and vitamin deficiency set forth in claim 13 is a “natural phenomenon.” . . . .

Claim 13 . . . tells the user to use any test at all. Indeed, to use virtually any natural phenomenon for virtually any useful purpose could well involve the use of empirical information obtained through an unpatented means that might have involved transforming matter.

I thought it would be interesting to attempt to apply the Bilski decision to Claim 13 to judge its patentability.

[SURVEY: DOES CLAIM 13 PRESENT PATENTABLE SUBJECT MATTER]

Bilski offers two avenues for showing that a claimed process is patentable. First, the process will be patentable if it is tied to a particular machine or apparatus. Alternatively, the process will be patentable if it “transforms a particular article into a different state or thing.” According to the court, “particular article” does not necessarily need to be physical, but it must at least be “representative of physical objects or substances.”

Machine: Metabolite’s Claim 13 easily fails the first prong of the machine-transformation test because the claimed method is not tied to any particular machine.

Transformation: The “correlating” step could be performed in a human mind and consequently cannot serve as the basis for finding patentable subject matter. As the court noted in Bilski – a process step that “may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing.”

The “assay” step could follow the same analysis – if it is possible to “assay a body fluid for an elevated level of total homocysteine” only using the human mind then no there is no credible transformation. The mental step potential may be true if, for example, the body fluid’s homocysteine level is visually apparent. [Interesting timing issues here, at the time of the invention, the assay involved extensive lab work, but later-invented technology has dramatically changed the process.]

Assuming that “assaying a body fluid for an elevated level of total homocysteine” cannot be done in the mind, we must then ask whether the claim requires a transformation of a particular physical object or substance or at least transformation of a particular article that is “representative of physical objects or substances.” Perhaps the best physically related transformation involves transforming the “body fluid” into an indication of elevated homocysteine level and then into an indication of vitamin deficiency. Under Abele, both homocysteine level and vitamin deficiency do represent physical substances – consequently their ‘creation’ may be “sufficient to render that … process patent-eligible.” [Of course, this analysis may apply a loose definition of ‘transformation.’]

Notes:

Canadian Supreme Court Confirms Plavix Patent Despite Evergreening Charges

Patent, , , ,

Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61 (Canada Supreme Court 2008)

The Supreme Court of Canada has upheld Sanofi’s “selection patent” (the ‘875 patent) covering the blockbuster anti-clotting drug Plavix. A broader “genus” patent (the ‘777 patent) – also held by Sanofi – discloses over 250,000 different compounds. The narrower patent does have some additional patent scope. In particular, while ‘875 patent claims a particular dextro-rotatory isomer, the prior ‘777 patent only describes a racemate of that compound that includes two different isomers.

As an apparent “evergreening” strategy, Sanofi did not claim priority to its earlier patent filing. This allows for an additional decade of patent term. Looking at the case, the Supreme Court determined that it should simply follow the law of novelty and obviousness and not create any special ‘evergreening’ exception:

[97] Evergreening is a legitimate concern and, depending on the circumstances, strategies that attempt to extend the time limit of exclusivity of a patent may be contrary to the objectives of the Patent Act. The Act aims to promote inventiveness by conferring exclusivity for a limited period of time while providing for public disclosure of the invention to enable others to make or use it after expiry of the period of exclusivity.

[98] However, a generalized concern about evergreening is not a justification for an attack on the doctrine of selection patents for two reasons. First, a selection patent may be sought by a party other than the inventor or owner of the original genus patent. In such a case, anticipation or obviousness may be an issue, but evergreening does not arise.

On obviousness, the court found “a significant difference” between the claimed patent and the prior genus patent, and that the “difference was not obvious.”

Patent

I have posted a reprint of my Patently-O post from the first Tuesday of November, 2004. There were no comments added to that original post

Chicago still uses punch-cards for voting. Despite the risk of hanging chads or dimpled marks, the benefit of this system is the paper trail. Many voters, including myself, are reassured by the paper trail. Patent No. 4,445,731 (shown above) was invented by John Ahmann in the early 1980’s. The patent covers the type of portable voting booths used in my precinct. Ahmann is still recognized as an expert in voting technology and testified in the Bush v. Gore controversy of 2000. According to the BBC, about 30% of U.S. voters will use electronic voting (e-voting) machines in today’s election. *2008 NOTE – that number is up to 32% for 2008*

Problems and praise Opponents highlight the problems that have already occurred with the machines – pointing for instance to a congressional race in Ohio in which votes were incorrectly registered due to a problem with the memory cartridges. At the same time however, Georgia’s entirely electronic system appears to have few naysayers after two years in operation – although it is widely believed that the [2004] presidential election will prove the greatest test. The principal criticism remains the lack of paper audit trails. Nevada is the only state using machines that provide voters with the kind of receipt which would, if necessary, allow for a manual recount. But in order to accommodate some of the concerns, a number of states – including California – will give voters the opportunity to vote using electronic machines or a paper ballot form.

Here is a picture of my neighbor and senate hopeful Barack Obama and his daughter casting his vote.

Anticipated yet Nonobvious

Anticipation, Obviousness, Patent, Patent Cases 2008, ,

Patent.Law159Cohesive Tech v. Water Corp (Fed. Cir. 2008)

Perhaps the most important portion of this case relates to the notion that novelty and nonobviousness are separate and distinct inquiries. And, that a patent may be found anticipated yet nonobvious.

On summary judgment, the district court Cohesive’s HPLC patent might be obvious, but certainly was not anticipated.  Water appealed — arguing that the judgment was logically incorrect if anticipation truly is the “epitome of obviousness.”  On appeal, however, the Federal Circuit confirmed that novelty and obviousness are separate and distinct — one does not necessarily follow the other.

“While it is commonly understood that prior art references that anticipate a claim will usually render that claim obvious, it is not necessarily true that a verdict of nonobviousness forecloses anticipation. The tests for anticipation and obviousness are different.

The court suggested two circumstances where an anticipated claim might still be nonobvious.  First, secondary considerations of nonobviousness may exist that are not relevant in an anticipation claim. Second, although inherent elements apply in an anticipation, inherency is generally not applicable to nonobviousness. 

“[O]bviousness requires analysis of secondary considerations of nonobviousness, while secondary considerations are not an element of a claim of anticipation. And although anticipation can be proven inherently, proof of inherent anticipation is not the same as proof of obviousness.”

The court also gives an example —

“Consider, for example, a claim directed toward a particular alloy of metal. The claimed metal alloy may have all the hallmarks of a nonobvious invention—there was a long felt but resolved need for an alloy with the properties of the claimed alloy, others may have tried and failed to produce such an alloy, and, once disclosed, the claimed alloy may have received high praise and seen commercial success. Nevertheless, there may be a centuries-old alchemy textbook that, while not describing any metal alloys, describes a method that, if practiced precisely, actually produces the claimed alloy. While the prior art alchemy textbook inherently anticipates the claim under § 102, the claim may not be said to be obvious under § 103.”

Patent.Law160Judge Mayer dissented — arguing that anticipation is a subset of nonobviousness. “Although a claimed invention can be obvious but not anticipated, it ‘cannot have been anticipated and not have been obvious.’ In re Fracalossi, 681 F.2d 792, 794 (CCPA 1982).”

“The majority’s assertion that a claim can be anticipated but not obvious, flies in the face of a long line of precedent to the contrary. Not surprisingly, it is unable to cite a case remanding to the district court for consideration of anticipation, while at the same time sustaining a determination that claims at issue are not obvious.”

The practical impact of this case:

  1. Anticipation still gets to a jury even when the defense has a credible obviousness argument.
  2. The Majority’s example might be seen to narrow the scope of documents available for obviousness arguments along a temporal axis. (References from a long time ago shouldn’t be combined with more recent references.)
  3. In some ways, the ‘common sense’ approach of KSR encourages this decision. While anticipation may still be a formal construct, obviousness should focus on what really would have been obvious at the time of the invention.
  4. Professor Ochoa (Santa Clara) reminded me about the European rule that does not allow “secret” prior art to be used in obviousness (inventive step) analysis.  If the US so modified its rules, perhaps the distinction between obviousness and anticipation would begin to ring true.

Evidence Based Prosecution: Why are Deadlines Driving Response Timing?

Academic Studies, Patent, Patent Prosecution
  • I have compiled some data on the timing of initial non-final office action and the ensuing response for 400,000+ patents with patent numbers ranging from 5,800,000 – 7,100,000.  The graphs below show that office action responses are strongly deadline driven. About 60% of responses are filed by the initial three month deadline. However, 2/3 of those early responses are filed within only a couple days of the three month deadline. Similar “rushes” are seen to meet the four, five, and finally the six month date.

PTO Fees are the explanation for the deadline push. Missing the initial three month deadline requires payment of a  $120 fee – not a steep fine – but something that some clients are now refusing to pay. Subsequent monthly surcharges rise more dramatically: first $460 then $1050.  For clients on more of a fixed prosecution budget, attorneys would rather money go toward their fees rather than to the PTO.  Of course, the six month date has the significant legal ramification of abandonment.

The  immediacy of the deadlines hides an important fact in today’s prosecution: Each day of by the practitioner results in one less day that the patent is in force.  The fact that very few responses come quickly (apart from the deadline) indicates a latent demand for delayed prosecution — It seems that most clients do not care whether the patent issues now or six-months from now. Why not eliminate these deadlines or push them back considerably? Applicants with important or easily patentable inventions would continue to respond quickly.  Those who could care less or who need time to build a patenability case could wait. 

Now, there are several reasons to strive for compact prosecution timing. Perhaps most importantly is the notion that both the applicant and examiner will work better and more efficiently if they have seen the case recently.  The tradeoff, however, is that applications sit much longer awaiting initial consideration.

A note about the data below: Responses that appear below to be just after a three, four, five, or six month deadline are typically ‘on time.’ My measurement is from the date the OA is entered in PAIR to the date the response is entered in PAIR (not the mailing dates). This typically adds an extra week or so.

Notes:

  • Jeff Steck, a patent attorney at MBHB LLP, examined the small ‘ripple’ in the histogram and explains that it can be explained by the fact that (most) OA’s are sent out on weekdays and responses are received on weekdays. This ‘weekend effect’ causes the ripple overlay. My original postulation that the ripple is caused by the PTO’s bi-weekly counts is not sufficient since the ripple clearly has a one-week wavelength.

BPAI Factual Findings Affirmed Based on Substantial Evidence

Patent, Patent Cases 2008, ,

In re Stauffer (Fed. Cir. 2008) (nonprecedential)

PatentLawPic381This is a nice idea: A device for automatically printing out caller ID records. What I prefer (and have used in the past) is to receive an e-mail receipt for all incoming calls and with messages attached in an mp3.

SEI (the party in interest) has a simple enough claim:

1. A caller ID printing device, comprising:

a controller configured to detect caller ID information from an incoming call; and
a printer configured to automatically print the caller ID information; and
a message template onto a call record immediately after the first receipt of a first ring signal and without user intervention.

The BPAI rejected the claim as obvious. On appeal, the CAFC reminded the applicant that the BPAI’s underlying factual determinations need only be supported by “substantial evidence.”

‘Substantial evidence is evidence that “a reasonable mind might accept as adequate to support a conclusion.” In re Gartside, 203 F.3d 1305 (Fed. Cir. 2000). “[W]here two different inconsistent conclusions may reasonably be drawn from evidence in the record, an agency’s decision to favor one conclusion over the other is the epitome of a decision that must be sustained upon review for substantial evidence.” In re Jolley, 308 F.3d 1317 (Fed. Cir. 2002). This court will not determine that a decision made by the Board is unsupported “simply because the Board chose one conclusion over another plausible alternative.” Id.’

In this case, the panel easily found that two references combined teach each element of the invention and render it obvious.

Book Review: Markman at the Beach

Book Review, Patent,

Review by Professor Shubha Ghosh

A Patent Lie
A Novel by Paul Goldstein

For those who are planning a summer trip, especially those IP-geeks who cannot completely get away from work, make sure to pack a copy of Paul Goldstein’s latest A Patent Lie. Like his first novel, Errors and Omissions, published two years ago, this new legal thriller transforms intellectual property practice into a tale of murder and conspiracy.

I had heard a rumor that Goldstein’s second novel would be about a Markman hearing. Fortunately, the proceeding plays only a small part in the story which involves Buffalo attorney Michael Seeley (referred to as Seeley throughout the book) being called to the Bay Area by his brother to represent a South San Francisco start-up in a patent infringement suit against a Swiss pharmaceutical company. All of this is a routine matter except that previous counsel met an early demise (called a suicide) under a commuter train. Patent litigation often is not a matter of life or death, but adding to the tension is the patent at issue in the case, which covers a treatment for AIDS. But unlike the global corporate conspiracy at the heart of another recent novel dealing with pharmaceuticals, The Constant Gardener, at stake in A Patent Lie are the details of litigation, which rise above the mundane with the personal, political, and professional relationships that Goldstein depicts compellingly.

At one point in the novel, a character notes that "not only are cases mostly about facts, but no facts are more important than the personalities of the participants." And it is the personalities that drive the story here. Michael Seeley, Goldstein’s protagonist who appeared in the first novel, is the world weary East Coaster, retreating to his home town of Buffalo, New York, to deal with professional and personal crises. The West Coast offers temptations represented here by Seeley’s brother whose involvement in the start-up and the law suit becomes more diabolical by degrees. Temptations also beckon in the character of Lily Warren, a brilliant research scientist who may or may not have been the first to invent the invention in dispute. I doubt that priority disputes have ever taken such inscrutable, or romantic, turns. The law suit takes several twists with an important reversal of interests occurring at the end. Finally, the pushes and pulls on Michael Seeley force him to confront many tensions: his rivalry with his brother, the ethical conundrums of suing a competitor, and the role of a patent lawyer within the patent system.

The book is a real treat for those who like intellectual property (despite the anti-patent message of the book) and may offer something for the generalist reader who likes to get lost in a legal thriller while basking in the summer sun. After reading Goldstein’s latest, try his first book, which manages to make copyright clearance somewhat riveting. Let me also recommend Killer Smile‘>Lisa Scottoline’s Killer Smile, another legal thriller involving patent law.

So what will Goldstein’s next thriller be about? Antidilution? Misappropriation? Exhaustion? The Unpredictability of Fair Use? Whatever the topic, I am sure it will add color to the black letter of intellectual property law.

CAFC Affirms Exceptional Case Attorney Fees Based on Multiplicity of Minor Acts of Misconduct

Attorney Fees, Dissent, Inequitable Conduct, Patent, Patent Cases 2008, ,

PatentLawPic365Nilssen v. Osram Sylvania (Fed. Cir. 2008)

In 2007, a unanimous CAFC panel affirmed a district court’s finding that Ole Nilssen’s light bulb patents were unenforceable due to inequitable conduct.  The improper prosecution conduct included failing to disclose a close relationship with a 132 declarant; misleading priority claims; and improper payment of a small entity fee.

Now on appeal is whether Nilssen owes attorney fees under 35 U.S.C. § 285.  As with most civil cases in the US, the general rule in patent cases is that each party pays their own attorney fees.  Section 285 of the patent act provides a limited exception — providing that a district court “in exceptional cases may award reasonable attorney fees to the prevailing party.”  Here, the district court found the case exceptional based on the aforementioned inequitable conduct as well as “litigation misconduct” and the filing of a “frivolous lawsuit.” 

Benign Inequitable Conduct: Nilssen argued that his alleged inequitable conduct had very little real impact — i.e., that it was benign.  The CAFC rejected that argument — finding that inequitable conduct is never benign. “In fact, it is a contradiction to call inequitable conduct benign.”

Building a Mountain from Pebbles: Nilssen makes a good argument that none his individual acts of misconduct appear bad enough to call the case ‘exceptional.’ 

These acts of misconduct include late production of documents, disavowal of a prior interrogatory response (and never filing a formal correction), attempting to exclude interrogatories that were never signed; informally withdrawing patents from suit, but waiting until only a few months before trial to formally withdraw the patents; and waiving attorney client privilege without providing formal notice to Osram.

Each of these actions can rather easily be explained as “either harmless oversight or permissibly rough litigation tactics.”  This is perhaps especially true when you consider that the K&E firm – well known for its relentless bull dog litigation style — represented Osram.

To the CAFC panel, however, the “multiplicity” of these individual elements were sufficient to warrant the exceptional case finding — even without an individual smoking gun.

In dissent, Judge Newman did not see an exceptional case:

The statutory authority to award attorney fees was intended to “prevent gross injustice,” not to shift the economic balance against the unsuccessful plaintiff.

Notes:

  • The first line of the case reads: “Nilssen is the owner and principal inventor of over 200 patents…”  What does the court mean by “principal inventor” and is there any legal significance associated with that designation?

 

 

A First Look at Who Files Provisional Patent Applications

Academic Studies, Accelerated Examination, Articles and Publications, Patent, Provisional Patent Application, Transnational

Patent.Law083As part of the 1995 patent law overhaul, the USPTO began allowing patent applicants to file provisional patent applications.  Over a decade later, these lower-cost provisional filings have taken hold.  According to PTO annual reports, over 132,000 provisional patent applications were filed in fiscal year 2007. In perspective, that number is over 30% of the number of the 439,000 non-provisional utility patents filed during the same period. This proportion has been slowly rising since 2002 when the provisional applications filing rate was about 27% of the non-provisional rate.[1] That year (2002), the PTO recorded just under 90,000 provisional applications and 332,000 non-provisional patent applications.

Interestingly, in my study of recently issued patents, only 21% reference a provisional application as a parent. (In the study, I look at approximately 15,000 utility patents issued in April and May 2008.) [2] 

Patent.Law085National Tool: Over half of the recently issued patents that listed an assignee indicated that the assignee was a foreign (non-U.S.) corporation or agency.[4]  Although foreign entities are not prohibited from filing provisional applications, the provisional tool was designed to benefit U.S. entities. Thus, it is not a surprise that only 5% of the patents assigned to international applicants were associated with a provisional application while 30% of the patents assigned to a U.S. applicant were associated with a provisional application.  Two countries – Israel and Canada – stood out as filing the highest proportion of provisional parent claims. Both of these countries are known for having patent attorneys with a high level of familiarity with U.S. laws.  Only 2% of the Japanese & Korean patents included provisional parent claims. [Updated June 03 with Corrected Figure]

The provisional application provides a potential extra year of patent eligibility at the end of the term.  Thus, it is also not surprising that new drug inventions – where a potential year at the end of the term is most valuable – have the highest rate of association with a provisional application.[5]  Likewise, patents on electrical and electronic applications had the lowest rate of provisional filing even after excluding the international applications.

The provisional filings appeared to have almost no impact on the pendency time of a patent application as measured by the number of days from filing the nonprovisional to issuance.  This makes sense as no examination takes place until the nonprovisional application is filed.

The following table also provides some interesting comparisons of patent strategy.[6]

Type of Technology< ?xml:namespace prefix ="" o />

Number of Utility Patents in the Sample

Number of Patents Referencing Provisional Parent

Assignee

Mechanical

24

1

4%

Ford

25

13

52%

GM

Drugs & Medical

7

4

57%

Wyeth

8

7

88%

Genentech

11

1

9%

Boston Scientific Scimed

21

10

48%

Medtronic

Computers & Communications

15

12

80%

InterDigital

23

7

30%

Oracle

31

11

35%

QUALCOMM

44

25

57%

Broadcom

114

16

14%

Microsoft

Chemical

6

6

100%

Bristol-Myers Squibb

9

4

44%

Procter Gamble

10

3

30%

3M Innovative Properties

14

9

64%

EI du Pont de Nemours

17

0

0%

General Electric[7]

17

16

94%

Genentech

 

[1] This information comes from PTO annual reports for FY 2006 and 2007.

[2] These patents were downloaded on May 30. I excluded the few patents filed prior to the 1995 introduction of provisional patent applications.

[3] In a follow-on study, I will look at published patent applications claiming priority to provisional applications to get some sense of how often folks abandon provisional patent applications.

[4] 6823 were assigned to foreign entity while 6457 were assigned to a U.S. entity. Another 1922 had no listed assignee.

[5] My study included 677 patents having a primary U.S. Classification in a “drug” field and also assigned to a U.S. entity. Of those, 48% were associated with a provisional application.

[6] Note, my assignee ‘scrubber’ is not yet perfect. Thus, it is likely that some patents associated with listed assignees are not included in the table.

[7] Some companies, such as GE hold patents in several different categories – this table looks only at those patents in the particular identified category.

CAFC: Failing to Submit Invention Inspiration OK; Failing to Submit Product Code of Preferred Input Not OK.

Best Mode, CAFC, Patent, Patent Cases 2008, , ,

PatentLawPic305TALtech v. Esquel Apparel (Fed. Cir. 2008) (nonprecedential)


Summary: (1) An applicant need not disclose its own prior work or inspiration for invention if merely cumulative of other references cited; (2) Failing to identify the brand of adhesive tape used in the invention was a best mode violation — resulting in claim invalidation; (3) There is no presumptive order of the steps in a process claim – unless the claim language “requires an ordering of steps” either implicitly or explicitly.

One of TAL’s employees – John Wong – was inspired by TAL’s use of heat-fusible adhesive tape in manufacture raincoats. Over a long process of trial and error, Wong figured out how to use a particular variety of adhesive tape to create a dress shirt that does not pucker after washing. 

After receiving a US utility patent, TAL became embroiled an patent litigation with another Hong-Kong based manufacturer – Esquel Apparel. In that litigation, the district court found TAL’s patent unenforceable due to inequitable conduct during prosecution and invalid for failing to submit fulfill the “best mode” requirement of 35 U.S.C. 112 (inter alia).  Based on the inequitable conduct, the court also awarded attorney fees to Esquel.

Inequitable Conduct: “In this case, the district court found TAL liable for inequitable conduct because inventor John Wong had not disclosed the raincoat seam that inspired his invention to the PTO.” On appeal, the CAFC first dispelled any notion that a patent applicant is required to disclose the inspiration for the invention. Although not stated by the court, 35 U.S.C. 103(a) arguably indicates that the inspiration is not relevant to the patentability inquiry: “Patentability shall not be negatived by the manner in which the invention was made.”

Here, the CAFC noted that TAL’s raincoat may well have been “merely cumulative” to a German patent application that was submitted during prosecution. “If the undisclosed raincoat seam was merely cumulative to [the German application], then no inequitable conduct lies in its nondisclosure.”

Best Mode: At the time of filing, Wong had settled upon a particular type of adhesive tape – known as Vilene SL33 – as the best way to form the seams.  The patent application did not, however, disclose Vilene SL33.  A patent may be invalidated for failing to submit a “best mode” if (1) the inventor possessed a best mode at the time of filing; and (2) the written description fails to disclose the best mode in a way to allow one reasonably skilled in the art to practice that mode.


Possession of the Best Mode: The evidence clearly showed that Wong “experimented with many adhesives but settled on a preference for one.” Thus, the court agreed that the first prong was met — the inventor did possess a best mode at the time of filing – i.e., Vilene SL33.

On the second prong the CAFC disregarded the applicant’s argument that the PTO “prefers the use of generic names of products” and that there is no evidence that the Vilene brand products are actually better quality than other brands.  Instead, the court honed-in on the result of the first prong – that Vilene SL33 was the best mode known to the inventor – and agreed that the best mode had not been disclosed. “TAL has not explained how the written description teaches one having reasonable skill in the art the way to practice the best mode as found in the analysis of the first prong – the use of Vilene SL33.”

Process Order: “Generally, there is no presumption of order, and so a claim with many steps can be infringed by an accused process performing the claimed steps in any order. However, we will find that the claim requires an ordering of steps when the claim language, as a matter of logic or grammar, requires that the steps be performed in the order written, or the specification directly or implicitly requires such a narrow construction.”

In this case, the claimed process implicitly requires a particular ordering. In particular, the bonding adhesive must be presented before a folding step because the folding step requires that the garment abut the bonding element.

Conclusion: The asserted claims were found invalid and not infringed. The remand appears only necessary to determine inequitable conduct and consequently potential attorney fees.

CAFC Gives Patentee Leeway in Claiming Priority and Correcting PTO Mistakes

Patent

ScreenShot028E.I. du Pont v. MacDermid Printing (Fed. Cir. 2008).

Rapid Appeal: The first thing that is surprising about this opinion is the quick decision pace. The N.J. district court denied DuPont’s preliminary injunction on August 13, 2007. The CAFC heard oral arguments on April 9, 2008 and then issued its precedential opinion on May 14, 2008. The decision time is well under half of the average in-process time for precedential CAFC opinions. Knowing that, it is not surprising that the opinion was written by Chief Judge Paul Michel and included CIT Judge Pogue sitting by designation. One of Judge Michel’s top priorities as Chief is to speed the appeal process and help avoid serious detriment caused by delay.

Summary: The CAFC vacated a lower court’s denial of preliminary relief — finding that the lower court had improperly refused to recognize DuPont’s patent priority claim to an earlier provisional application.

Claiming Priority: DuPont first filed a provisional application; followed eleven months later by a non-provisional utility application claiming priority using non-standard language. (“This application is a non-provisional of provisional 60/273669 2001-03-06 WHICH IS PENDING.”) The issued patent did not reference the original provisional until after DuPont obtained a certificate of correction.  To complicate the matter, DuPont’s litigation counsel originally made “incorrect statements as to the priority date” — apparently forgetting the legal effect of a provisional application.

35 U.S.C. § 119(e)(1) provides four requirements to claim priority to a provisional application:

  1. The provisional must adequately disclose the claimed invention;
  2. The non-provisional must be filed within 12–months of the provisional;
  3. Inventorship must overlap; and
  4. The non-provisional must include a specific reference to the provisional.

ScreenShot029Overlapping Inventorship: The specification of the provisional and non-provisional were identical. However, the provisional named only one inventor while the non-provisional named five. The defendant here argued that the provisional application should have been amended to properly identify the five inventors. On appeal, the CAFC rejected that argument in two steps: First, the appellate panel held that – as a matter of law – inventorship overlaps when both applications include at least one common inventor. Second, the panel re-affirmed that correction of inventorship for a provisional application is only necessary to establish an overlap of inventorship. See MPEP § 201.03. 

Specific Reference to the Original: DuPont used non-standard language in the non-provisional application data sheet (ADS) to claim priority to the provisional. On appeal, the CAFC held that there are no “magic words” required by MPEP § 201.11.  Rather, the standard is whether a “reasonable person reading the language … would have concluded that the applicant was claiming priority to an earlier provisional application.”  There is no question here that the language used by DuPont conveys the proper message.

Notice of PTO Error: The prosecution history included evidence that the PTO did not originally recognize DuPont’s priority claim. MacDermid argues that once an applicant is on notice of a PTO error — it should be required to ensure that the error is corrected before the application issues. In essence, MacDermid argues that the error in failing to reference the provisional in the originally issued application was DuPont’s error because the company was on notice of the PTO mistakes. On appeal, the CAFC rejected the notion that an applicant’s failure to diligently prosecute converts a PTO error into an applicant error.

“We hold that a lack of diligence during prosecution, at least under the facts of this case, does not convert a PTO error into an applicant error for the purpose of seeking a post-issuance certificate of correction. . . . It is, of course, desirable to have applicants correct the PTO’s mistakes in pending applications as soon as possible so that the correct information is reflected in published applications and issued patents. Nevertheless, nothing in the statute conditions eligibility for a certificate to correct PTO error on the applicant’s diligence in correcting the mistake, and the statute does not set any time limit for seeking such corrections.”

Vacated and Remanded