Tag Archives: First to Invent

CAFC Applies KSR: Affirms Obviousness

Patent,

Leapfrog v. Fisher-Price (Fed. Cir. 2007).

In their first true application of the Supreme Court’s obviousness pronouncement in KSR v. Teleflex, the Court of Appeals for the Federal Circuit (CAFC) affirmed a finding of obviousness.

Leapfrog and Fisher-Price compete in the toy market. In this case, leapfrog sued Fisher-Price — alleging that Fisher-Price’s PowerTouch Learning System infringes claim 35 of Leapfrog’s patent.

The trial court found the patent not-infringed and invalid as obvious.  On appeal, the CAFC affirmed, noting that the obviousness analysis requires a common sense approach rather than any rigid formula.

An obviousness determination is not the result of a rigid formula disassociated from the consideration of the facts of a case. Indeed, the common sense of those skilled in the art demonstrates why some combinations would have been obvious where others would not. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. __ (2007) (“The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.”).

The results may have serious implications for Internet-related patents that have a close non-Internet corollary. The two pieces of prior art were Bevin (electro-mechanical, but not electronic, toy for phonetic learning) and SSR (electronic book-type toy). Together, the two references teach almost all the elements of the asserted claim, and the courts found their combination to be appropriate.

We agree with the district court that one of ordinary skill in the art of children’s learning toys would have found it obvious to combine the Bevan device with the SSR to update it using modern electronic components in order to gain the commonly understood benefits of such adaptation, such as decreased size, increased reliability, simplified operation, and reduced cost. While the SSR only permits generation of a sound corresponding to the first letter of a word, it does so using electronic means. The combination is thus the adaptation of an old idea or invention (Bevan) using newer technology that is commonly available and understood in the art (the SSR). We therefore also find no clear error in the finding of the district court that one of ordinary skill in the art could have utilized the electronics of the SSR device, with the method of operation taught by Bevan, to allow a child to press each individual letter in a word and hear the individual phonemes associated with each letter to sound out the words.

The one remaining limitation — a “reader” — was “well-known in the art at the time of the invention” and its combination. That known element could be combined because it provides “an added benefit and simplified use of the toy for the child in order to increase its marketability.”

Finally, the court gave the patentee a chance to avoid the combination.

Leapfrog presents no evidence that the inclusion of a reader in this type of device was uniquely challenging or difficult for one of ordinary skill in the art. Nor does Leapfrog present any evidence that the inclusion of a device commonly used in the field of electronics (a reader), and even in the narrower art of electronic children’s toys, represented an unobvious step over the prior art.

Secondary factors not enough to save the day:

The district court explicitly stated in its opinion that Leapfrog had provided substantial evidence of commercial success, praise, and long-felt need, but that, given the strength of the prima facie obviousness showing, the evidence on secondary considerations was inadequate to overcome a final conclusion that claim 25 would have been obvious.

Obviousness affirmed.

Notes:

  • Judgment of non-infringement was also affirmed.
  • Read the case 

2007 Patent Reform: Proposed Amendments on Damages

Damages, Patent, ,

By Professor Amy Landers

The proposed 2007 Patent Reform Act (the “Leahy-Berman bill”)[1] details modifications to 35 USC § 284 that will most certainly reduce many patent infringement damages awards. Three portions of the Leahy-Berman bill concern monetary compensation: First, the bill seeks to limit reasonable royalty damages to the inventive aspects of the claim. Second, the bill restricts the use of the entire market value rule. Third, the bill expressly confirms a fact finder’s ability to rely on certain types of evidence to measure compensatory harm.[2]

Reasonable Royalty: Relationship to Contribution over the Prior Art and Consideration of Relevant Factors.

Perhaps the most striking change in the Leahy-Berman bill is a proposed limitation to reasonable royalty recovery. Under current law, a reasonable royalty is calculated by envisioning the result of the parties’ hypothetical negotiation for a license to the claimed invention at the time infringement began.[3] This determination is made by a fact finder (whether judge or jury) and is guided by the application of the Georgia Pacific fifteen-factor test.[4]

Current patent law permits a reasonable royalty calculation for use made of “the invention”—that is, an infringed claim. Of course, few–if any–patent claims are entirely novel. Most claims are an improvement over the prior art. Further, combination claims aggregate prior art elements in a novel way, or else a combination of novel elements together with prior art elements.

The Leahy-Berman bill specifically requires a limit on reasonable royalty recovery to the “economic value properly attributable to patent’s specific contributions over the prior art,”—that is, the inventive portion of the claim. Such an aggressive limit on monetary relief for patent infringement has not been apparent in the case law for decades.[5] A statement by Sen. Leahy (link) explains that this limitation is intended to provide for compensation solely for “the truly new ‘thing’ that the patent reflects,” in response to a concern that “litigation has not reliably produced damages awards in infringement cases that correspond to the value of the infringed patent.” This reasonable royalty limitation, which is likely to affect patents in all technology sectors, promises to be controversial.

Additionally, the Leahy-Berman bill asks trial courts to exercise more control over the fact finder’s consideration of the reasonable royalty and to create a more defined record for appellate review. Under current law, a typical reasonable royalty jury instruction lists all fifteen Georgia Pacific factors although fewer than all factors may be relevant in any particular case.[6] Further, a verdict form asks a jury to set a royalty figure, but jurors are rarely asked to create a record as to how their result was reached.

Under the Leahy-Berman bill, the trial court must “identify all factors relevant to the determination of a reasonable royalty” and then the fact finders are limited to consider only the factors identified by the district court in awarding a reasonable royalty. As an example of this provision in operation, a trial court might make an initial determination as to whether derivative or convoyed sales exist, such that the sixth factor of the Georgia Pacific test is relevant. If no such sales are in evidence, under the Leahy-Berman bill a trial court must preclude a jury’s consideration of this sixth factor.

Significantly, the proposed legislation’s use of the word “factors” does not appear to be limited to the Georgia Pacific factors specifically and presumably would apply to any factor that might be considered, including those listed in proposed section 284(a)(4).

Apportionment: The Entire Market Value Rule

As a general rule, patent damages are linked to the subject matter of the invention.[7] In some cases, an infringed claim relates to only one part of an entire multi-functional infringing product or system. In those circumstances, apportionment is the general rule—that is, damages are based on either lost profits or reasonable royalty apportioned for the infringing part as distinct from the remainder of a device that is outside the infringed claim’s scope. For example, damages for a claim directed to an improved windshield wiper are calculated based on the value of the infringing wiper, and not the sales price of the entire car into which the wiper is installed.

This general rule is modified under the judicially created “entire market value rule.” Where the entire market value rule applies, a patentee may recover damages based on the value of an entire apparatus or system that contains both infringing and additional, unpatented features.[8]

In “Let the Games Begin, Incentives To Innovation In The New Economy Of Intellectual Property Law,” I examine how the entire market value rule has recently received expansive application. Historically, the entire market value rule allowed recovery based on the price of entire product only where the “entire value” of the product was attributable to the infringing feature.[9] However, more recently, Federal Circuit cases more broadly apply the entire market value rule so long as there is a “functional relationship” between the infringing and the non-infringing components.[10] Further, patentees can recover for sales of non-infringing components where the patentee demonstrates a “reasonable probability” of selling the non-infringing components with the infringing part.[11]

An example of this expansive application of the entire market value rule can be seen in Lucent v. Newbridge Networks[12], where the district court determined that the jury’s addition of two software programs were properly included in the royalty base even where those programs were non-infringing, were not physically part of the infringing device and were not necessary for the device to operate. More recently, the Alcatel-Lucent verdict against Microsoft concerning the Windows® Media Player was reportedly calculated based on the average cost of a personal computer, and not limited to Microsoft’s Media Player or even Windows®.[13]

The Leahy-Berman bill provides an explicit, definitional standard for the application of the entire market value rule by requiring the patentee to show that the claim’s contribution is “the predominant basis for market demand” of an entire product or process. This standard reigns in the current expansive articulations of the entire market value rule by requiring a patentee to demonstrate that an infringing feature is the single primary reason users select an infringing product or process. If enacted, this subsection will have the overall effect of limiting damages to a particular infringing piece of a multifunctional product or process for both lost profits and reasonable royalty awards.

An open question exists as to the interaction between the proposed subsection (a)(2) governing reasonable royalties and (a)(3) governing the entire market value rule. Specifically, proposed subsection (a)(2) precludes recovery for the value of unpatented features of an infringing product or process. On the other hand, proposed subsection (a)(3) arguably permits such compensation where the inventive element is the “predominant basis for market demand.”

Marketplace Licensing and “Other Factors”.

The Leahy-Berman bill proposes one additional change, which appears of minor importance. That is, the bill expressly states that a fact finder may consider “the terms of a non-exclusive marketplace licensing of the invention” and any “other relevant factors” under the law in the damages determination. This subsection appears to be a codification of the existing law, which permits district courts wide discretion in considering evidence relevant to the damages determination.

Conclusion

As a whole, the Leahy-Berman bill represents an effort to refine and narrow available damages for patent infringement by building on an existing body of case law. The proposed changes to patent damages will undoubtedly present some challenging questions if adopted into law.

Two of the proposed sections require apportionment of inventive claimed matter from that outside the claim scope. The difficulty presented is that apportionment determinations can be difficult to implement. Perhaps the best evidence of this is the pre-1948 law, which relied on apportionment for calculating lost profits and had been described as a “complete failure of justice in almost every case in which supposed profits are recovered or recoverable” due to the time and complexity involved.[14]

Further, the Leahy-Berman bill has the potential for significant consequences for the licensing value of patents more generally. That is, to the extent that licensing determinations may reflect of potential results at trial, one might be expect that licensing negotiations will account for lowered damages the bill is passed into law. 2001).

(more…)

BPAI Appeal Statistics

Patent

I have pulled-together recent appeal statistics from a sample of patent applications published in early 2003.  These applications, some of which are now patented, were, for the most part, initially filed in 2001 and 2002.  The sample-size is admitedly small, but the results are striking.

Beginning with a sample of just under 10,000 filed patent applications, I found 729 cases where the applicant had filed a notice of appeal.  Out of those 720, only 50% (363) ended-up actually filing an appeal brief. That drop-of is not surprising since many prosecuting attorneys use the notice of appeal procedure as a way to “buy time” while deciding whether to file a continuation, appeal, or RCE. 

Reopening Prosecution: Two salient numbers pop-out from the cases where the applicant Rejected as Defective or Incompletefiled an appeal brief: (1) Of the 363 cases where the applicant filed an appeal brief,  25% (90) were rejected on procedural grounds after the PTO found the appeal brief defective or incomplete. Once the appeal was properly filed, Examiner’s filed written answers in less-than-half of the cases.  Although not-yet-documented, the presumption here is that in the other 50% of cases, the rejection was withdrawn and prosecution was reopened.

The problem, it seems, is all too often, the appeal is the first time when the parties actually take time to really understand the invention and the prior art. (This goes both for the applicant and the examiner). The PTO has recognized the problem of prosecution being reopened in so many cases.  As a result, the Office created the pre-appeal-brief conference. 

Patent BPAI Pre-Appeal Conference Pre-Appeal Conferences: My sample included 82 requests for pre-appeal brief conferences.  In 7% (6) of cases, the applicant won and the rejection withdrawn.  In a larger portion of cases, 28% (23), applicant won the day, but prosecution was reopened. In 55% (45) of cases, the PTO thought its position was strong-enough to proceed to the BPAI. 5% (4) were defective and the remaining 6% (5) are unknown (presumably still in process).

BPAI Outcomes: General BPAI decision statistics are available here. In my sample of 56 decisions, the outcomes were virtually evenly-split. 46% affirmed; 45% reversed; and 9% affirmed-in-part. 

Community Review: Volunteers?

Patent,

Some of you may know that the PTO is implementing a new ‘community patent review’ pilot project later this spring.  Applications will be published on a website and the general public will have a chance to identify prior art and vote on its relevance to the pending application.  The public input will then be given to the Examiner to use. (The Examiner will do his own search and will not be required to use the community-identified art).

The initial pilot will be restricted to 250 volunteer applications related to software and technology inventions (TC 2100). Several companies have already volunteered their applications, including GE, HP, IBM, INTEL, M$, Oracle, and others. Some of these same companies have also volunteered employee time to help ‘examine’ the applications.

Volunteer applications will be quickly published (free early publication) and the public will be invited to submit prior art and commentary for four months. After that, the application will be taken out of turn and examined first. There will be a public meeting at the PTO on March 12 to discuss the pilot program.

Let me know if: (1) your client is interested in participating; or (2) you have comments on the program.  (dcrouch@gmail.com)

I see a few reasons why companies may fear participating in the program: (1) funny or erroneous patent applications may be seen as jokes; (2) the publicity may focus the public on the company’s weak and potentially vulnerable patent portfolio — something that may reflect on the quality of R&D; (3) a perception that even if the patent eventually issues, public comments such as “this patent is clearly obvious. . .” could potentially hurt a patentee later-on during litigation; (4) a patent that may otherwise pass through the PTO may be blocked because of prior art found during the community review; and (5) this deviation from the norm could lead to more expense during prosecution.

Some of these same reasons may lead other more aggressive companies or individuals to give the community review process a try: (1) the patents will receive some publicity that may improve the public’s perception of the company’s patent portfolio; (2) a patent that issues should be ‘stronger’ and more likely to be upheld in litigation — much like a patent that has been successfully reexamined; (3) speed.

Leave your comments below regarding reasons for/against participating in the program.

Claim Transitions: "Comprising The Steps Of"

Patent, Patent Cases 2007,

PatentlyO2006047Dippin’ Dots v. Mosey and Dots of Fun (Fed. Cir. 2007). [CORRECTED VERSION]

Everyone should remember their first experience with Dippin’ Dots. I was in Branson at Silver Dollar City. DD owns a patent covering its method of freezing, storing, and serving beads of delicious ice cream. 

Several of DD’s distributors decided to go a cheaper route.  They cancelled their orders with DD and found an alternative source. DD sued for patent infringement. The defendants counterclaimed with Walker Process antitrust claims based on DD’s enforcement of a “fraudulently acquired patent.”  The antitrust claim was based on the inventor’s pre-filing use of the invention that had not been disclosed to the PTO.

The patent was found obvious and DD, the patentee, was held liable for antitrust violations.

Comprising the steps of: The accused products included a diversity of shapes of ice cream pellets — some spherical and others irregular. DD made two infringement arguments based on its claim language of “comprising the steps of . . . beads . . .” DD’s first argument, that all the pellets, regardless of shape, are beads was shot-down by the appellate panel who decided beads must be “spherical” based on limitations explicitly written in the specification. (In this case, the addition of silly wiggle language would have likely saved the day — especially since the drawing being described did not show spherical beads.) 

DD’s second argument, that the “comprising” transition allows for infringement based on the accused spherical beads regardless of the existence of irregular pellets was also shot-down.  

“As to DDI’s second argument, we acknowledge that the term “comprising” raises a presumption that the list of elements is nonexclusive. See Genentech (Fed. Cir. 1997). However, “‘[c]omprising’ is not a weasel word with which to abrogate claim limitations.” Spectrum (Fed. Cir. 1998). “Comprising” appears at the beginning of the claim—”comprising the steps of”—and indicates here that an infringing process could practice other steps in addition to the ones mentioned. Those six enumerated steps must, however, all be practiced as recited in the claim for a process to infringe. The presumption raised by the term “comprising” does not reach into each of the six steps to render every word and phrase therein open-ended—especially where, as here, the patentee has narrowly defined the claim term it now seeks to have broadened.”

Thus, the claimed step of [(3)] freezing said dripping alimentary composition into beads, could not be interepted to as “freezing the alimentary composition into both beads and irregular pellets.”

At first glance, this case seems odd, but the underlying decision rests on a common sense approach to the claim language.  The court essentially found that “freezing said dripping alimentary composition into beads” meant that all of the dripping alimentary composition was frozen into beads. If the step was performed properly there would not be any ‘dripping alimentary compisition’ remaining to form the irregular pellets.

CAFC: Construction of Essential Features and Impermissible Recapture

Patent, Patent Cases 2007,

ScreenShot071MBO v. Becton Dickinson (Fed. Cir. 2007).

MBO’s patent is directed to a hypodermic syringe that helps avoid needle sticks. After claim construction, the district court awarded summary judgment of noninfringement to BD.

On appeal, the CAFC recited the rules for claim construction sources:

The most relevant source is the patent’s specification, which is “the single best guide to the meaning of a disputed term.” Next in importance is the prosecution history, which is also part of the “intrinsic evidence” that directly reflects how the patentee has characterized the invention. Extrinsic evidence—testimony, dictionaries, learned treatises, or other material not part of the public record associated with the patent—may be helpful but is “less significant than the intrinsic record in determining the legally operative meaning of claim language.”

Essential Feature: Several of the asserted claims include a preamble precluding needlestick injury “immediately and positively.”  Interpreting the term “immediately,” the CAFC determined that an “essential feature” of the invention is ensure a safe needle immediately “upon removal from the patient.” (rather than immediately after some other event). 

The patentee here has clearly indicated via the specification and the prosecution history that the invention provides, as an essential feature, immediate needle safety upon removal from the patient. It is therefore appropriate to construe the claims so as to ensure that they, too, require that feature.

Interestingly, two of the claims did not include the ‘immediate’ language. For those claims, the court could find no textual hook for inserting the essential feature and thus did not burden those claims with the immediacy requirement.  Between the lines, the court implied that it could have found a textual hook through other claim terms, but stated that it “lack[ed] the power to construe other terms not disputed by the parties.”

Impermissible Recapture: Claim scope which has been surrendered in order to obtain issuance of a patent cannot be later reclaimed through a reissue proceeding.  The district court found that MBO’s patent had improperly expanded the scope of a term and thus construed the terms meaning narrowly.

On appeal, the CAFC held that the recapture rule should not be used to rewrite claim language. Although claim construction should be applied with an eye toward validity, that maxim should only be applied at last resort. Rather, the court should first construe the claims and then later determine if the broadened claims are valid .

Whether those broadened claims are invalidated by the recapture rule is an issue separate from construction.

Affirmed-in-part, reversed-in-part, vacated, and remanded.

11th Amendment Immunity Waived by Requesting an Interference Proceeding

Patent

ScreenShot070Vas-Cath v. University of Missouri (Fed. Cir. 2006).

Interference proceedings arise when two patent applicants both hope to obtain a patent on the same invention. 35 USC §135. The PTO holds a mini-trial and (usually) grants a patent to the party with priority. This case arose over claims to a dual-lumen catheter used in prolonged hemodialysis.

The University of Missouri filed its patent application first, but Vas-Cath pushed its through the PTO more quickly — resulting in an issued patent. On Missouri’s request, the PTO initiated an interference — a process that lasted six years and eventually resulted in all nineteen claims being awarded to the University.

Vas-Cath appealed and the case was heard in the Western District of Missouri. Unfortunately for Vas-Cath, the district court quickly dismissed the case based on Missouri’s Eleventh Amendment immunity from suit in federal court. (District Court Decision).  Vas-Cath then appealed to the Court of Appeals for the Federal Circuit (CAFC).

11th Amendment Sovereign Immunity: The 11th Amendment, ratified in 1798 provides that:

The Judicial powers of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

This has been interpreted to provide a state (or a state university) with absolute immunity from an action in federal court unless the immunity is waived or the State’s actions violate someone’s 14th Amendment due process guarantee. In general, a state’s participation in the patenting process does not imply any waiver of immunity.

Here, Vas-Cath argued that the University’s request for and participation in the interference constituted waiver, and the CAFC agreed:

[T]he University did not simply procure a patent through the routine of ex parte examination, but requested the PTO to conduct litigation-type activity, obtaining a favorable agency ruling for which the statute authorizes judicial review.

The CAFC found that the University had indeed waived its immunity by voluntarily entering into the litigation-type interference — thus negating its “assertion of immunity to bar appeal of that adjudication.”

Notes:

CAFC Reverses Medrad Reissue Case

Patent, Patent Cases 2006, Patent Prosecution,

Patentlyo025Medrad v. Tyco (Fed. Cir. 2006).

In October 2005, I discussed the district court case involving Medrad.  In that case, the district court held that a Section 251 Reissue can only be used to correct an error in the specification, drawings or claims and cannot be used to correct a procedural error that is not reflected in the patent grant itself. During prosecution, the patentee had filed a second reissue to correct a mistake made during the prosecution of the first reissue. (The patentee failed to file a supplemental reissue declaration in compliance with PTO Rule 1.175). The lower court found that correction of that mistake did not fall within the guidelines of Section 251.

On appeal the CAFC sided with the patentee by giving a broad meaning to the statutory phrase “[invalid] by reason of the patentee claiming more or less than he had a right to claim in the patent.” In particular, the unanimous appellate panel found that the phrase does not literally mean “claim more or less” but rather that the phrase “encompass[es] any error that causes a patentee to claim more or less than he had a right to claim.”  Thus, a reissue can apparently be filed based on any error that would result in invalid claims.

Notes:

  • 35 USC 251 reads as follows:

Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Director shall, on the surrender of such patent and the payment of the fee required by law, reissue the patent for the invention disclosed in the original patent, and in accordance with a new and amended application, for the unexpired part of the term of the original patent. No new matter shall be introduced into the application for reissue.

Enjoy the Weekend

Patent,

From the U.S. Patent Code … in verse by Yehuda Berlinger [LINK].

These verses are part
Thirty five of the code
Of the U. S. of A.
Written down as an ode . . .

102

If already known
Or in print, or described,
Or abandoned, a patent
Cannot be applied

103

A process that anyone could
Discover’s superfluous
You can’t patent it, for it’s
Patently obvious

104

You can only claim patent
If you made the invention
In a country with which we
Have no contention

111

To apply for a patent
You fill out in writing
And you swear and you pay
Isn’t that exciting?

112

You fill out your claim
About what the thing does
And how it all works
And wherefore and because

119

If you’re already registered
Outside the states
You are retroactively granted
Within a year of the date

120

A followup patent
Is often permitted
To be dated to when the
First one was submitted

121

Two inventions should not
Be submitted together
So split them, and next time
Don’t try to be clever

122

Patent applications are
Kept in obscurity
Especially ones that
Affect national security

So what I have written
Be it naughty or nice
Is no substitute for real
Legal advice

Copyright 2006, Yehuda Berlinger.

Book Review: Innovation and its Discontents

Book Review, Patent

Review by Professor Thomas G. Field, Jr.

Jaffelerner Innovation and its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It (2004).
by Adam Jaffe and Josh Lerner

The 2004 book, Innovation and Its Discontents, has received too much attention to ignore. There, and more recently in the Wall Street Journal and elsewhere, Professors Jaffee and Lerner maintain that the patent system is broken, endangering innovation and progress. To their credit, they acknowledge that the alarm has been sounded for centuries. But such ground was well covered in Fritz Machlup’s agnostic study, An Economic Review of the Patent System, published by the U.S. Senate in 1958. Also, to their credit, they criticize, at 158, Nobel Laureates for exceeding the scope of their expertise. Yet, their often-rambling book suffers from the same fault.

Ironically, an introductory section beginning at 18 is entitled "patent medicine." As noted by Wikipedia, for example, "One memorable group of patent medicines — liniments that allegedly contained snake oil, supposedly a universal panacea — made snake oil salesman a lasting synonym for a charlatan." The authors aren’t charlatans, but it is difficult for anyone who knows much about patents to take Discontents seriously.

Jaffee and Lerner put a fresh face on prophesies of doom by linking them to two recent process changes in the patent system — a shift from tax to user-fee funding for the PTO and the creation of the U.S. Court of Appeals for the Federal Circuit. Although they argue that patent policy is too important to leave to patent lawyers, both problems and proposed solutions seem more related to process than policy.

The authors could be taken more seriously if they didn’t persist in flagging a few patents as evidence that, according to their subtitle, "our patent system is broken, endangering innovation and progress." Three mentioned in their book and elsewhere are for sideways swinging, exercising cats with laser pointers, and wristwatches for dogs. They might not resort to such examples, however, if they appreciated that the first is unenforceable, the second could not be enforced except possibly under § 271(b), and the third if enforced would seem unlikely to endanger much of anything.

By citing such patents, Jaffee and Lerner are hardly alone in subjecting the PTO to ridicule, but I fail to see how altered funding of the PTO could have increased the frequency of such patents. Nor do I see how their proposals would reduce it. Although they advocate, for example, earlier publication and expanded opposition, who other than the humorless would oppose? And how much time or money might such humorless individuals be willing to spend?

The relationship between the shift in PTO funding, on the one hand, and the issuance of patents for silly or trivial inventions, on the other, is remote. Indeed, I can think of nothing more likely to deter applications to protect inventions of little or no economic value than the substantial fee increases that followed the shift.

It is unlikely that those who got the swinging and cat-exercising patents harbored delusions about their economic value. Jaffee and Lerner, with most other patent system critics, however, seem not to appreciate why applicants often find such assessments difficult. As I’ve argued repeatedly, applicants unaware of the market value of inventions have far less incentive to scour the literature for potentially fatal art than infringers who subsequently become aware of the stakes. Anyone who understands that should not be surprised that patents are sometimes invalidated. Nor should they protest overmuch that infringers intending to do so must meet a heightened burden of proof. Moreover, they should not be sanguine about the prospects for early opposition.

Turning to Jaffee and Lerner’s claim that the Federal Circuit was a bad idea, I’m even more skeptical. Prior to 1982, only two courts had appellate jurisdiction to review PTO decisions directly — the D.C. Circuit and the CCPA. The 1966 report of an expert commission established by President Johnson faulted the latter as too quick to favor applicants. Fearing erosion of a strong presumption of validity, the Johnson Commission recommended that the CCPA be more deferential. It also recommended that the Office be allowed to appeal from the CCPA to the D.C. Circuit. Because that circuit was unlikely to see infringement appeals, I regard the post-1982 situation as an improvement over what was proposed.

If the Federal Circuit, reviewing directly, adopts rules unduly favoring applicants, the consequences must be faced in collateral review. The substantial price paid for that possibility, apparently unappreciated at the time — and perhaps even now, was the dearth of precedents bearing on the many issues that arise only in the latter context.

Beyond that, some things for which Jaffee and Lerner fault the Federal Circuit, e.g., the strength of the validity presumption, preceded its creation. Others, e.g., the role of juries in patent litigation, are best addressed by Congress or by Supreme Court justices who have made a hash of fact-law distinctions in patent law.

If Jaffee and Lerner, with many others, fear that the fox has been set to watch the hen house, they need to re-evaluate their assumptions about the Federal Circuit and the patent bar. Even if the court were inclined to be the handmaiden of that bar, how would it deal with the many internal conflicts manifested by the diversity of amici in the eBay case? How would it deal with the fact that, for many attorneys, patents are both sword and shield?

On balance I am anything but contented with Innovation and its Discontents. Those who share my belief that two relative newcomers have little grasp of key problems, much less meaningful solutions, should not stand silent.

Note: This review was originally published in PatentCafe’s IPFrontLine. Republished with permission.

Delay alone cannot constitute intentional concealment

Patent, Patent Cases 2006,

Flex-Rest v. Steelcase (Fed. Cir. 2006).

Flex-Rest holds at least two patents on negative-tilt computer keyboards and sued for infringement.  Steelcase, the defendant, had an earlier conception date, but Flex-Rest argued that 102(g) should not apply because Steelcase had concealed the invention (either intentionally or unreasonably).

Here, there was a seven month delay from Steelcase’s reduction to practice and public release of its product (timed with the filing of its own patent application).

Intentional Concealment: As it turns out, a seven month delay alone does not constitute intentional suppression or concealment:

"Intentional suppression, however, requires more than the passage of time. It requires evidence that the inventor intentionally delayed filing in order to prolong the period during which the invention is maintained in secret." quoting Fujikawa.

The record demonstrates that after reduction to practice, Steelcase moved almost immediately towards both filing a patent application and commercially disclosing the KBS device at a trade show, actions which indicate an intent to make a public disclosure.

The CAFC found that keeping the device secret while preparing a patent application and/or preparing for a trade show release "is not, by itself, indicative of intentional suppression or concealment."

Unreasonable Delay: The failure to bring forth an invention, either publicly or in a patent application within a reasonable amount of time will support an inference of suppression or concealment.  "There is no particular length of delay that is per se unreasonable." Here, the CAFC agreed that the seven month delay was not unreasonable:

After reduction to practice, Steelcase resolved design issues and spent $775,000 on tooling for the parts to the KBS device. The lead times for creating the tooling varied from four weeks to approximately six months. Therefore, it does not appear that Steelcase could have brought the KBS device to market much sooner than the trade show unveiling in June 1991.

At the same time, Steelcase’s patent counsel began drafting a patent application for the KBS device, submitting a first draft to Steelcase in March 1991. The draft was reviewed by the four named inventors and filed in May 1991. No evidence indicated that this amount of time was unreasonably long.

In the process, the Court also shot-down the urban myth of a court sanctioned three-month patent prep deadline derived from the old Shindelar case.

Flex-Rest’s argument that Shindelar identifies a reasonable amount of time for drafting when the court stated that “a period of approximately three months could possibly be excused” takes that quote out of context. . . . What constitutes a reasonable time for drafting a patent application will vary with the technology and the particular set of facts involved in each case.

eBay Casualty: E.D. Texas Court Denies Injunctive Relief to Halt Microsoft’s Infringing Activities

Patent, Patent Cases 2006,

Z4I’m writing a paper on this very topic, but history is happening faster than I can type . . .

z4 Technologies, Inc. v. Microsoft (E.D.Texas 2006)

z4 Tech appears to be the first post-eBay decision denying a permanent injunction after a patent has been valid and infringed. Here, the jury found that the patents were willfully infringed by Microsoft and that there was insufficient evidence to find the patents invalid. z4 then asked the Court to enjoin Microsoft from making, using, or selling its infringing product (Windows XP).

The Court followed the “traditional four-factor test used by courts of equity.” to determine whether to issue an injunction:

I. Irreparable Injury to Patentee: The patentee argued that infringement of a patent created a rebuttable presumption of irreparable harm to the patentee.  The district court dismissed this “creative” argument as lacking precedential foundation:

z4’s arguments for the application of a presumption of irreparable harm are creative, but z4 cannot cite to any Supreme Court or Federal Circuit case that requires the application of a rebuttable presumption of irreparable harm with regard to a permanent injunction.

In fact, the court cited the Supreme Court case of Amoco Production for the proposition that a presumption of irreparable harm in the context of an injunction is “contrary to traditional equitable principles.” 

Because z4 does not create any products, the Court found that z4 the first factor weighed in favor of the willful infringer, Microsoft.

In the absence of a permanent injunction against Microsoft, z4 will not suffer lost profits, the loss of brand name recognition or the loss of market share because of Microsoft’s continued sale of the infringing products. These are the type of injuries that are often incalculable and irreparable. The only entity z4 is possibly prevented from marketing, selling or licensing its technology to absent an injunction is Microsoft. As . . . z4 can be compensated for any harm it suffers in the way of future infringement at the hands of Microsoft by calculating a reasonable royalty for Microsoft’s continued use of the product activation technology. Accordingly, z4 has not demonstrated that it will suffer irreparable harm absent a permanent injunction.

II. Remedies Available at Law (Is Money Sufficient?): Here, the court cited Kennedy’s concurring opinion from eBay:

Justice Kennedy specifically mentioned the situation where a “patented invention is but a small component of the product the companies seek to produce” and states that in such a situation, “legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.” . . .

Here, product activation is a very small component of the Microsoft Windows and Office software products that the jury found to infringe z4’s patents. The infringing product activation component of the software is in no way related to the core functionality for which the software is purchased by consumers. Accordingly, Justice Kennedy’s comments support the conclusion that monetary damages would be sufficient to compensate z4 for any future infringement by Microsoft.

In addition, Microsoft has promised that its new version of Windows (2007) will phase out all the infringing components.  Thus, any ongoing royalty would only last for a couple of years.  “For the reasons stated above, z4 has not demonstrated that monetary damages are insufficient to compensate it for any future infringement by Microsoft.”

III. Balance of Hardships: Microsoft argued that it would be really hard to redesign even a small component of Microsoft office.  From what I have heard about the complicated code noodle, that assertion must be true. Thus, the court found that the balance of the hardships weigh in favor of Microsoft.

IV. Public Interest: Microsoft office is really popular, and “it is likely that any minor disruption to the distribution of the products in question could occur and would have an effect on the public due to the public’s undisputed and enormous reliance on these products. . . . Although these negative effects are somewhat speculative, such potential negative effects on the public weigh, even if only slightly, against granting an injunction.”

Commentary: As I predicted earlier, one way to avoid an injunction is to be a very successful infringer.  I would have suspected that Microsoft’s willfulness would have weighed in z4’s favor, but the court did not even mention willfulness in its analysis of the equitable relief factors. 

In a forthcoming paper code-named Injunction Denied, I address the issue of injunctive and monetary relief in patent cases.  In particular, I focus on the situation where equities favor the defendant, and ask the question what monetary remedy a court should then impose? My answer may surprise you. . .

(more…)

DJ Counterclaims Allow Adjudication of Invalidity Counterclaims Even After Noninfringement Decision

Patent, Patent Cases 2006, , ,

The Old Town Canoe Company: Our First Hundred YearsOld Town Canoe v. Confluence Holdings (Fed. Cir. 2006, 05–1123).

Old Town sued Confluence, asserting infringement of its patent covering layered polyethylene canoes. Confluence filed declaratory judgment counterclaims of invalidity and unenforceability.

After a few days of trial, the judge called it quits — first ruling that as a matter of law, the patents were not infringed, and the next day taking further arguments and ruling that the patents were not invalid and not unenforceable.

On appeal, the CAFC majority agreed that the claims were not infringed (based on claim construction) and then bit into the validity analysis.

Enablement: Because the time and temperature settings of the canoe manufacturing process were not disclosed, a jury could find that undue experimentation was required.

Best mode: Best mode requirement only applies to the claimed invention. However, the defendant’s evidence that a preferred mode had not been disclosed to the PTO was enough to overcome the Court’s judgment as a matter of law.

Inequitable Conduct: Without evidence of intent, the patentee’s failure to disclose the best mode is not “material” as a matter of law.

J. Mayer’s Dissent: Dissenting-in-part, Judge Mayer argued that after the district court decided that the defendant did not infringe, the declaratory judgment jurisdiction of the counterclaims vanished.  Those counterclaims became moot.  Thus, the lower court’s decision on validity and enforceability should be vacated.

Practice Strategy: This case is a prime example of why a defendant should include declaratory judgment counterclaims rather than just defenses.  With counterclaims, the plaintiff will need the defendant’s agreement to end the case.

Amazon avoids infringement of on-demand book printing patent

Patent, ,

AIPLATalk182On Demand Machine v. Ingram and Amazon.com (Fed. Cir. 2006, 05–1074).

The district court found Ingram and Amazon.com liable for infringement of On Demand’s patented on-demand book printing system.  The defendants appealed on claim construction.

The CAFC disagreed with the lower court on many points of claim construction.  Interestingly, for the second time in as many weeks, an appellate panel found that the preamble of a claim was limiting.  Here the preamble was written as follows:

8. A method of high speed manufacture of a single copy of a book comprising . . .

According to the court, high speed manufacture of a single copy is “fundamental” to the invention because “the specification highlights that the customer may have a printed and bound copy within “three to five minutes.”  Here, the defendants can avoid infringement because the customer must wait a week to get their copy of the book.

Notes:

. . . From a Reader:

This CAFC decision should be of considerable interest to the book publishing, printing and distributing industries for several reasons.

First, this is a decision against a “print on demand” book printing patent of general industry interest, as evidenced by a pending SECOND adverse reexamination against it. This second reexamination is not even mentioned in this decision, only the first one is. Yet some of this Court’s comments about prior art, etc. may become relevant in this pending second reexamination?

On another matter, of general patent litigation interest, the Court says: “The court’s award of a royalty-bearing license during appeal and refusal to issue an immediate injunction are reviewed on the standard of abuse of discretion.” [emphasis added]

Later on, in its Conclusion, the Court merely adds: “The cross-appeal relates to the district court’s denial of an immediate injunction upon entry of the district court’s judgment, and the court’s setting of a royalty for continuing operations during appeal. That remedy is within the district court’s discretion. However, in view of our holding of non-infringement, the cross-appeal is moot, and is dismissed.”

There is no mention of the Sup. Ct. taking of eBay v. MercExchange for decision, in which even the Solicitor’s brief criticizes the CAFC for not spelling out the statutory test for granting injunctions. Yet they did it again! – the above is ALL this Panel said on this subject. I.e., even in this latest case, the Court does not cite or discuss the statute, or even the standards for stays of injunction during an appeal. Note that this panel did not approve a stay of an injunction pendant lite here, it merely held this issue to be MOOT, hence the above is mere DICTA.

Finally, this Court’s specific non-infringement distinctions should be cautionary for specification and claim drafters to avoid inadvertent or unintended claim scope limitations.

Construing Claims “Without Reference to the Accused Device” Is Put to the Test

Patent, Patent Cases 2006,

AIPLATalk174Wilson Sporting Goods v. Hillerich & Bradsby (Fed. Cir. 2006, 05–1103).

By Jeff Steck

Following Federal Circuit precedent that “claims may not be construed with reference to the accused device,” it is common for district courts to construe patent claims before they know anything about the products at issue in the case. Through an uncommon procedural twist leading up to Wilson Sporting Goods Co. v. Hillerich & Bradsby Co. (05-1103), the Federal Circuit found itself in the same position as those district courts. 

 

Wilson owns a patent on a non-traditional softball bat that is best described as being “corked” with, essentially, a beer can. The defendant, H&B, was accused of infringing this patent. Although the Federal Circuit did not have “any information about the accused products,” it is safe to conclude that H&B’s most celebrated product, the solid ash Louisville Slugger, was not at issue.

 

Before the district court, Wilson essentially lost the case when the court issued a narrow construction of the shape and rigidity of the beer-can insert. Instead of pressing forward with an unfavorable construction, Wilson stipulated that there was no infringement under that construction, and the district court entered a final judgment.

 

Wilson appealed the claim construction to the Federal Circuit. With no record on the accused products, the Federal Circuit found itself in the position of so many district courts: both sides were fighting over claim construction, and the court had no idea why. With no information about the accused products, the court complained that “this sparse record lacks the complete context for accurate claim construction.” As a result, the court refused to provide its own claim construction, choosing instead to identify just enough errors in the district court’s construction to send the case back on remand.   < ?xml:namespace prefix ="" o />

 

Although the only issue in the case was claim construction—ostensibly an issue of pure law—the Federal Circuit wanted to understand the accused device. Faced, however, with its own rule that “claims may not be construed with reference to the accused device,” the court had difficulty explaining the contradiction between what it permits in claim construction and what it wants in claim construction. Cf. CVI Beta Ventures Inc. v. Tura LP, 43 U.S.P.Q. 2d 1860, 1861 (Fed. Cir. 1997) (Mayer, J. dissenting) (“[T]he court once again shows that we are solecists…. [W]e are bound to interpret law according to specific rules. By violating these interpretive rules, or by exposing them to exceptions so that our court can amass decisionmaking authority … we inappropriately encumber the process with ambiguity….”).

 

Hoping, perhaps, that contradiction would prove more enlightening than troublesome, the court restated the relevant law on claim construction in a form more characteristic of a koan than a rule of law:  

while a claim is not to be construed in light of the accused device,
in an infringement case,
it must inevitably be construed in context of the accused device.

 (citing SRI Int’l v. Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1118 (Fed. Cir. 1985)) (scansion added, odd grammar in original). 

 

The panel tried unsuccessfully to show that it was not the first to require evidence of the accused product before conducting claim construction. Citing Bayer AG v. Biovail Corp., 279 F.3d 1340, 1340 (Fed. Cir. 2002), the court noted that it had previously declined to construe claims based on an incomplete record. In Bayer, however, the record was “incomplete” because it was missing “evidence of the meaning of the terms to one of skill in the art at the time of invention”—i.e. the usual evidence in claim construction—not because it was missing evidence on the accused product.

 

The court then tried to restate the rule against construing claims “with reference to the accused device,” concluding that the rule is simply a prohibition against “biasing the claim construction process to exclude or include specific features of the accused product.” As such, the rule “does not forbid any glimpse of the accused product” before claim construction. The issue, however, is not whether a court is permitted to see the accused product, but whether the court is required to see the accused product.

 

By remanding this case without a conducting a complete claim construction, the Federal Circuit has sent the message that a district court’s claim construction must include some analysis of the accused products. The district court had given hope to the promise of Markman: an infringement allegation was resolved with no need for a costly trial, or even summary judgment proceedings; the Federal Circuit’s remand showed that promise to be illusory.

Jeffrey Steck is a partner at MBHB and an experienced litigator. He was an editor of the California Law Review at the University of California at Berkeley, where he received his JD.

Ebay v. MercExchange: The Law of Patent Injunctions

Patent, Patent Cases 2006,

eBay v. MercExchange (on writ of Certiorari 2006).

Later this month, the Supreme Court will hear this case to determine when a patentee should have a right to stop an infringer from making or selling unlicensed products once the patent has been found valid and infringed.  Because this issue is so fundamentally important to patent law, eBay v. MercExchange will likely be the most important patent case for the past decade.

As it stands, the Federal Circuit has a “usual rule” that once a plaintiff shows that a defendant infringes a valid patent, an injunction should issue.  According to the appellate court, the usual rule should be followed “absent special circumstances.”

In this case, a jury found that eBay infringed MercExchange’s patent, but the court refused to issue an injunction. Stating the “usual rule,” the Federal Circuit reversed, finding that an injunction should issue.  Now, Supreme Court has agreed to hear the case and determine the proper standards for issuing an injunction.

In January, eBay and its supports filed their briefs asking the court to overturn the Federal Circuit’s usual rule.  Respondent’s brief was due Friday, March 10, 2006. The following is a short review of the briefs in-hand.

Respondent MercExchange’s Brief: MercExchange’s brief is one of the best that I have ever read. In a twelve-page fact section, MercExchange tells its story and leaves little doubt that it will likely win its case, regardless of the rule eventually created by the high court. 

On the legal issues, MercExchange argues that the CAFC’s “usual rule” has been mischaracterized by eBay as an “automatic injunction” provision. Rather, the patent holder argues that courts have discretion to deny injunctions. The “usual rule,” they argue, flows naturally because it is only in “rare cases” that “any balance of hardships or the public interest favor the adjudged infringer.”  Rather, “in most cases those factors will strongly favor the patent holder.”

MercExchange also discusses the fundamental nature of a patent. 

The patent right’s fundamental aspect—its sum total—is “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States.”

It is this right to exclude and not a ‘right to damages’ that defines the essence of a patentee’s rights.

MercExchange then walked through each of the district court’s stated factors that it used to originally deny the permanent injunction:

  • Willingness to license — According to MercExchange, it is “extraordinarily strange” to think that a patent holder’s willingness to license would be an indication that money damages may be adequate. (Land-owner example: you may allow your friends on your property, but may still want to exclude your enemies.)
  • Business method patents — According to MercExchange, Congress should address this issue.
  • Pending reexamination of MercExchange patents — According to MercExchange, this issue “is not properly before this court.”
  • Non-practice — MercExchange tried for years to practice the invention, and it does license its invention, which is as good as practicing the invention.  
  • Contempt proceedings — The threat of contempt proceedings against eBay for violating an injunction should not stop the court from issuing an injunction.
  • Failure to seek a preliminary injunction — MercExchange argues that this litigation strategy should not be held against it, and that requiring PI requests before granting permanent injunctions would further complicate the patent litigation procedure.

MercExchange’s only vacuous argument comes at the end where it essentially argues that all patentees are trolls to some extent because every patent includes at least some claim-scope that is not being practiced.

Government Brief: In the BlackBerry case, the Government sided with RIM, asking the district court to not issue an injunction.  Here, however, the DOJ has apparently flipped and now supports MercExchange. 

The Government argues that this case really involves a minor slip-up by the CAFC.  That court simply did not “adequately articulate” the principles regarding equitable relief. However, the Government argues that the court of appeals did reach the correct decision.

This position goes along with my own thoughts that the Supreme Court will hold that a court should weigh the pros and cons of an injunction before shutting down an infringer, but that there will still be a strong presumption that an injunction will grant — especially when the infringement is willful. 

* Query whether this brief provides any general indication of the Republican party stance regarding patent injunctions? [WSJ Blog][AuctionBytes][Patent Hawk]

Academics take sides: Two major groups of law professors have taken-sides in the debate.  First, a group of fifty-two patent-law professors, led by Mark Lemley of Stanford, filed a brief in support of eBay.  They argue that court’s should be given discretion to deny injunctive relief – even if such discretion is not used regularly or often.  The patent-law professors also make a distinction between a district court’s refusal to grant an injunction and a compulsory licensing scheme. (Patent-Law Professors Brief).

On March 10, a new brief, filed by nine professors of Law and Economics (L&E) takes the other side.  Professors Richard Epstein, Scott Kieff and Polk Wagner filed the brief in support of respondent, MercExchange.  They argue that the patent-law prof. brief “confuses the issues and muddies the waters in ways that weaken the structure of exclusive patent rights on which today’s elaborate system of licenses and other voluntary agreements rest.”

The L&E Professors take the position that the Federal Circuit’s jurisprudence is correct, and that “injunctions should generally issue except in those unusual cases in which good cause is shown for denying that form of relief.”  Where the L&E brief differs from the patent-law prof. brief is in the proposed route for determining when to refuse an injunction.  Specifically, the L&E brief argues that any exceptions to the general rule must fall within a specific category of exception, while the patent-law professors focus on more discretionary or ad hoc determinations.

PhRMA: PhRMA is an industry group that includes the major U.S. pharmaceutical research companies. The business models of those companies rely heavily on patent rights to protect innovations that may cost hundreds of millions to develop. PhRMA argues that the billions spent on R&D is predicated on assurances that the resulting IP rights will be strongly protectable.  This case threatens that long-held belief.

The industry group also notes that, if a hardship balance is considered, that the infringer’s hardship should not be considered when the hardship results from its obligation to stop infringing.

BIO: Like PhRMA, the members of the Biotechnology Industry Organization (BIO) argue that the right to injunctive relief is “vital in ensuring innovation” in their industry.  BIO quoted the 1824 case of Ex parte Wood for the proposition that our common law history unquestionably supports a strong right to injunctions against infringers.

The securing to inventors of an exclusive right to their inventions, was deemed of so much importance, as a means of promoting the progress of science and the useful arts, that the constitution has expressly delegated to Congress the power to secure such rights to them for a limited period. The inventor has, during this period, a property in his inventions; a property which is often of very great value, and of which the law intended to give him the absolute enjoyment and possession.

Ex parte Wood, 22 U.S. (9 Wheat.) 603, 608 (1824) (Story, J.) (emphasis added). Bio also favorably cites Hal Wegner’s article for the proposition that a compulsory license may well “run afoul” of the U.S. obligations under TRIPS.

GE, 3M, P&G Du Pont, and J&J: The group of industry giants support the presumptive right to an injunction that is “deeply rooted in the Constitution, the Patent Act, and 200 years of judicial precedent.”  This brief directly addresses eBay’s statutory hook of 35 U.S.C. 283, which only allows that courts “may grant injunctions in accordance with principles of equity.”  To quote Justice Marshall: “discretion is a motion, not to its inclination, but to its judgment; and its judgment is to be guided by sound legal principles.” I.e., a lower court’s discretion does not indicate that there should not be a strong presumption.

Rembrandt IP Management: Rembrandt is a “non-practicing entity” or NPE — meaning that it is a company that invests in patents but does not practice them. Rembrandt’s brief outlines the beneficial role that NPE’s can perform in the marketplace and in furtherance of the goals of the patent system. For instance:

  • Patent rights, like other property rights, benefit the community most when they are freely transferable.  Limiting the rights of certain patent holders practically limits the right to transfer.
  • Independent inventors and university researchers often have a niche in developing new ideas and new technology, but do not have the capital or the necessary tools to successfully bring products to market — inventors should not be penalized for not having a marketing wing.

Rembrandt also makes the point that without the threat of injunctions, “a well-funded infringer either would not take a license from an independent inventor at all, or would do so on a playing field that vastly favored the infringer.”

Intellectual Ventures: Intellectual Ventures has not been publicly termed a troll — perhaps because they have thus far been able to obtain licenses without litigation — but the secretive Washington State company does have a very high PPR (patent to product ratio).  Two dozen well known inventors signed-on to Intellectual Venture’s brief to send their message patent exclusivity promotes the progress of science and technology and promotes investment in research.  Perhaps more than any other groups, small entities and individual inventors rely on the potential for exclusivity to protect their work and to provide the incentive to research and develop new products.

Qualcomm: QualComm is an interesting story.  They used-to manufacture products, but now they primarily invent, design, and license.  They have proven that a big company can be competitive even when their only product is intellectual property.

Qualcomm and its co-amicus Tessera argue that eBay’s brief wrongly characterizes the patent marketplace. eBay and its supporters contentions of a “broken patent system” is not supported by the evidence.

This case itself shows that willful infringers are not cowed by the prospect of an injunction after an unsuccessful litigation defense and are not coerced into any settlement. To the contrary, large corporate infringement defendants often pursue a scorched earth defense strategy, particularly when they are sued by smaller entities.

Qualcomm also makes the important point that if eBay’s proposed changes were effectuated, they would result in a patent’s value depending upon the category of the owner — rather than on any intrinsic value of the claimed invention. “That world would be a distortion of the marketplace. The value of property should not depend on legal rules that are different for different owners.” 

ABA: The American Bar Association has sided with the patent holder MercExchange, arguing that the longstanding role of injunctions in patent cases should continue.  Interestingly, the ABA makes the novel argument that if we were to apply any new equitable considerations, those are “properly addressed” by Congress, not by the federal courts.

COPIES OF THE BRIEFS:

  • Party Briefs on the Merits

  • Amici Briefs on the Merits

    • Supporting MercExchange (Strong Injunctions)
  • Supporting Ebay (Weaker Injunctions)
  • Supporting Neither Party

  • Briefs for/against Certiorari:

  • Other

    •  * cite as Dennis Crouch, Review: EBay v. MercExchange Amici Briefs, Patently-O, March 13, 2006, available at https://patentlyo.com.

     

    CAFC: Diligence Easier to Prove than Conception

    Patent, Patent Cases 2006

    Brown v. Barbacid (Fed. Cir. 2006).

    Both Brown and Barbacid claim to have invented a method for inhibiting cell growth control factors (farnesyl transferase). The effective filing dates at the PTO were April 18, 1990 and May 8, 1990 respectively.

    In an interference proceeding, the PTO’s BPAI found that Brown had the earlier conception date, but that the early date was moot because Brown had “failed to provide corroborated evidence of diligence” in reducing the invention to practice.

    Under 35 USC 102(g), the party that is the first to conceive of an invention is entitled to a patent over a later inventor — so long as the early inventor “exercised reasonable diligence from a time before the other party’s conception date to his own reduction to practice date.”

    The CAFC found the time-line in this case as follows:

    November 15, 1989 — Brown conception
    March 6, 1990 — Barbacid conception and reduction to practice
    April 18, 1990 — Brown constructive reduction to practice
    May 8, 1990 — Barbacid constructive reduction to practice

    Thus, in order to ensure priority over Barbacid, Brown must show continual diligence from before March 6 to April 18.  Furthermore, evidence is required to corroborate claims of diligence. However, such evidence can come from a variety of sources and is generally less rigorous to prove than conception.

    The basic inquiry is whether, on all of the evidence, there was reasonably continuing activity to reduce the invention to practice. There is no rule requiring a specific kind of activity in determining whether the applicant was reasonably diligent in proceeding toward an actual or constructive reduction to practice.

    Here, the BPAI refused to find diligence, and specifically found that the researcher’s laboratory notebook to be too cryptic to provide useful evidence. The appellate panel disagreed, finding that the evidence should be considered as viewed by persons skilled in the art. Specifically, there is no need to “reproduce on each page a statement of the larger research purpose” of the experiment because “this purpose may reasonably be shown in the various declarations.”

    AIPLATalk053

    Links:

    CAFC: When is trash “in” a trashcan?

    Patent,

    BreastPumpPatentCannon Rubber v. The First Years (Fed. Cir. 2005, NONPRECEDENTIAL).

    In a claim construction dispute over the term “in,” the CAFC used its trashcan analogy:

    As an initial matter, we note that the term “in” is a simple, non-technical term, and that under its ordinary meaning, a “diaphragm disposed in the body” includes diaphragms contained entirely and partially in the body. For example, a trash bag is “in” a trashcan even though a portion of it is hanging outside of the trashcan.

    NOTE: It is good that this decision is nonprecedential because it does not follow Phillips v. AWH. Rather, the case merely cites Phillips for the proposition that the construction may depart from the plain meaning of a claim term “when the patentee has acted as a lexicographer or when the patentee has clearly limited the scope of the invention through a disclaimer in the specification or prosecution history.” . . .  

    CAFC reverses jury finding of invalidity and noninfringement.

    Patent, Patent Cases 2005, , , ,

    InfringingProducts009Callicrate v. Wadsworth (Fed. Cir. 2005).

    Callicrate sued Wadsworth for infringement of its patented bull castration tools. After a trial, a jury found all of the claims anticipated, obvious, and not infringed.  On appeal, the CAFC disregarded the jury verdict and reversed.

    Infringement:  The defendant admitted that its devices include all of the claim elements. Based on that admission, the CAFC determined that the jury had “no basis” for finding no infringement and that there is “no reason for a new trial.”  (Although each element was included, the defendant argued that the components were “not connected in the particular manner recited in the claims.  The CAFC does not seem to have addressed that point specifically since the jury instructions asked simply whether “each and every element” of the claim was included).

    Enabling Disclosure: Callicarate’s patent claim priority to an earlier patent, but could be invalidated if they were shown to be not fully enabled by the earlier patent.  The district court found that the earlier patent did not contain adequate disclosure to support the claimed mechanism because (1) the only disclosure of the claimed mechanism is in the background section of the earlier patent; (2) the background section contains disparaging remarks about this mechanism; and (3) the patentee distinguished his assembly mechanism from the claimed mechanism during prosecution.

    However, the CAFC held that these reasons were insufficient for a finding of a lack of enablement.  First, the background section can be used to enable a claim. Second, disparaging remarks do not make it any less likely that one of ordinary skill in the art would, after reading the background, know how to make and use the invention.

    Defendant Challenging Claim Construction: In a cross-appeal, the defendant challenged certain claim construction terms.  However, the CAFC refused to hear that appeal because the defendant had not objected to the district court’s construction and had conceded infringement of the newly challenged element. (note: the CAFC has finally drawn a line for when it will not review claim construction).

    Conclusion: Reversed and remanded because jury verdict was against the weight of the evidence.

    CAFC applies Pfaff case to public use defense.

    Patent

    Invitrogen v. Biocrest (Fed. Cir. 2005)

    Invitrogen sued several defendants for infringement of its patent that broadly covers a method of growing E.coli cells.  On summary judgment, the district court found Invitrogen’s patent invalid under the public use bar of 35 U.S.C. § 102(b).  102(b) codifies a “critical date” of one year before filing of the patent application (or priority document).  Public use or sale of the invention before the critical date will invalidate the patent.

    Invitrogen had used the claimed process before the critical date, within its own laboratories.  However, the process was kept confidential within the company, the process was not sold, and no products of the process were sold.

    Rule: On appeal, the CAFC first determined that the Supreme Court’s analysis in Pfaff should be extended to cover public use — noting that both the public use and on sale bars are “based on the same policy considerations.  Under the new rule, a patent will be invalid if it is (1) in public use and (2) ready for patenting before the critical date. (Explicitly rejecting the old ‘totality of the circumstances’ test).

    Public Use: “The proper test for the public use prong of the § 102(b) statutory bar is whether the purported use: (1) was accessible to the public; or (2) was commercially exploited.” In this case, because there was no evidence that Invitrogen received compensation for internally, and secretly, exploiting its cells, Invitrogen’s use cannot constitute “public use.”

    File Attachment: Invitrogen.pdf (78 KB)