Tag Archives: First to Invent

EBay v. MercExchange: Automatic Injunction in Patent Cases

Patent,

MercExchangePatent_small1eBay v. MercExchange (on petition for certiorari).

In July, 2005, eBay filed a petition for writ of certiorari, asking the Supreme Court to review the Federal Circuit’s decision to grant a permanent injunction to MercExchange.  In this case, the Federal Circuit held that, absent exceptional circumstances, a district court should issue a permanent injunction after a finding of infringement.

I. eBay’s Petition: In its petition for certiorari, eBay spells out the traditional four-factor injunctive relief test and argues that the four-factor test should apply to patent cases rather than the de facto per se test applied by the CAFC.  The four-factor test includes consideration of (i) irreparable harm from not issuing an injunction; (ii) whether an adequate remedy exists in law (damages); (iii) whether the injunction would be in the public interest; and (iv) whether a balance of hardships would tip in the plaintiff’s favor.  Download eBay Brief.pdf (4452 KB)

II. MercExchange’s Opposition: MercExchange opposes the petition.  In its brief, MercExchange first point to the statutory guidelines:

  • 35 USC 154: Every patent shall contain . . . a grant . . . of the right to exclude others from making, using, offering for sale, or selling the invention . . .
  • 35 USC 261: . . . patents shall have the attributes of personal property . .
  • 35 USC 283: . . . courts having jurisdiction . . . may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.

Citing a series of Supreme Court cases that support the patentee’s right to exclusivity, MercExchange argues that eBay’s argument would require overruling long established precedent. Additionally, MercExchange provides its own argument under the four-factor test — explaining how it would easily fit within that test as well. Download MercExchange Brief.pdf (3480 KB)

III. Electronic Frontier Foundation in Support: In support of eBay’s petition, the EFF argues that the CAFC’s ‘per se’ injunction is inconsistent with 35 USC 283 and does not consider “countervailing free speech interests.”

Regarding free speech, the EFF argues that patent rights are “increasingly affecting free expression online” and that consideration of the public interest should not be limited to exceptional cases — rather those considerations should be routine.

The most offensive element . . . is [the CAFC’s] promulgation of an impoverished vision of the public interest. While public health concerns are doubtless important . . . courts must be encouraged to consider other public interests as well. In particular, the Federal Circuit offers little, if any, room for consideration of an increasingly evident public interest in patent litigation—free speech. . . . [C]ourts of equity must be free to weigh the need for injunctive relief against the potential impact such relief may have on speech and speech related activities.

Download the EFF brief. 

IV. Computer & Communications Industry Association in Support: With a litany of complaints against the Federal Circuit and PTO, the CCIA asked the Supreme Court to turn the tide of potent, low quality patents.  Specifically, CCIA argues that:

  • The CAFC has made patents more potent.
  • The CAFC has made patents easier to get.
  • The CAFC has made patents more versatile and broadly available.
  • The CAFC has made patents easier to assert.
  • The PTO’s Bureaucracy undermines patent quality.
  • And, that the automatic injunction rule exacerbates these problems by encouraging litigation.

Download the CCIA Brief.

Links:

BlackBerry Case Makes Major Precedential Changes

Patent, Patent Cases 2005, ,

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NTP v. Research-In-Motion (Fed. Cir. 2005)

The CAFC has released a new appellate opinion that modifies the court’s analysis of Section 271 of the Patent Act but leaves the decision against RIM largely intact.

In December 2004, the Federal Circuit released its original opinion that pushed against the territorial bounds of patent law.  In that opinion, the CAFC found that U.S. patent law covers instances where infringing elements are located abroad — so long as the “control and beneficial use” of the infringing system is within U.S. territory.  This legal finding meant that RIM’s BlackBerry business, which spanned across the U.S. and Canadian borders, could be found to infringe NTP’s patent.  Soon thereafter, RIM filed a motion for rehearing and rehearing en banc as well as other legal pleadings at the CAFC, district court, and PTO. 

Rather than taking up the question in an en banc hearing, the original three-member panel (Judges Michel, Schall, and LINN) granted the petition for rehearing and revised portions of the opinion that discussed Section 271 — and thus withdrawing the December 14 opinion.

The new 75 page opinion takes a fresh look at the extent that a patent must be practiced within the U.S. to fall within the guise of 271(a).

35 U.S.C. 271(a): . . . whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States . . . infringes the patent.

The major dispute revolved around the phrase “within the United States:”

The grammatical structure of the statute indicates that “within the United States” is a separate requirement from the infringing acts clause.  Thus, it is unclear from the statutory language how the territoriality requirement limits direct infringement where the location of at least a part of the “patented invention” is not the same as the location of the infringing act. (opinion at 52).

In an affirmative step, the court decided that locating a component outside the U.S. does not necessarily preclude infringement under 271(a). However, the court found that the analysis will depend upon the type of infringing act (use, make, sell) and the type of claim (system, method, product).

  • USE of SYSTEM: The site of the use of a patent is “the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and  beneficial use of the system obtained.”
  • USE of METHOD: Each step must be performed in the U.S. “We therefore hold that a process cannot be used ‘within’ the United States as required by section 271(a) unless each of the steps is performed within this country.”
  • OFFERS to SELL and SELLING: You likely cannot infringe a method claim through sale! “It is difficult to envision what property is transferred merely by one party performing the steps of a method claim in exchange for payment by another party.  Moreover, performance of a method does not necessarily require anything that is capable of being transferred.” NOTE — The court did not explicitly rule on this issue. Rather they only implied what their ruling would be.

Referring to 271(f), the court found that supplying U.S. customers with products does not fall within the clause even if those customers plan to perform a method with the product that would be infringing if performed wholly within the U.S.

Settlement: In the wake of the December opinion, NTP & RIM reportedly reached a settlement that included $450 million for NTP.  The original settlement announcement was based on a 1/2 page term-sheet reportedly signed by the parties.  As would be expected, 50 square inches of paper turned out to create a whole new level of disagreement between the parties who have been working through court mediation to flesh out the agreement. 

In early June, the settlement issue came to a head and the parties staked out their positions on paper.  In a motion filed with the CAFC, RIM argues that the term-sheet was a settlement of the case, and, as such, the case is now moot.  RIM asked the CAFC to stay its decision on the for rehearing and remand the case to the district court to decide whether there has been a settlement.  On the other hand, NTP has argued that the term-sheet was not a settlement and that there was never a “meeting of the minds.” 

Now that the CAFC has remanded, the settlement issue will likely be resolved by the district court. (assuming the CAFC’s decision is not appealed to the Supreme Court).

Reexamination: In a parallel action, the patents at issue in the case (owned by NTP) are undergoing reexamination at the USPTO.  As occurs in almost all inter partes and director-ordered reexaminations, the patent office has issued a non-final rejection in each NTP case that it has examined.  Although this first rejection is a good sign for RIM, a final decision in the reexam will not be any time soon. (i.e., years).  NTP has the opportunity to file a response to the non-final rejection.  The PTO may then issue a final rejection, at which point NTP may ask for reconsideration, appeal to the PTO’s internal board (BPAI), and then appeal to the federal courts (i.e., the courts that have already determined that the patents are valid).

CAFC Narrows Experimentation Defense to the On Sale Bar

Patent, Patent Cases 2005

PatentlyOImage041Electromotive Division of GM v. Transportation Systems of GE (Fed. Cir. 2005).

EMD appealed after its patents on diesel turbochargers were found invalid. On appeal, the CAFC affirmed, finding that the patented invention was subject to commercial sales before the pre-critical date that were not primarily experimental. 

EMD had sold its product more than one year before its patent application filing date, but argued that those sales were negated by an experimental use defense. The appellate panel, however, disagreed.

In its decision, the Federal Circuit panel first provided a full analysis of the law of experimental use in relation to the Section 102(b) public use and on sale bars.  Then, the court tightened its rules — finding that ordinarily, a patentee must prove that (i) control over the experiment and (i) that the customer was aware of the experiment.

Our precedent has treated control and customer awareness of the testing as especially important to experimentation. Indeed, this court has effectively made control and customer awareness dispositive. Accordingly, we conclude that control and customer awareness ordinarily must be proven if experimentation is to be found.

Invalidity Affirmed.

Ex-Post Figures Allowed in Hypothetical Royalty Calculation

Patent,

ScreenShot017Honeywell v. Hamilton Sundstrand (HSC) (D. Del. 2005).

Conflicts between these two companies have already generated Federal Circuit precedent.  Now, in a case involving Honeywell’s patented power supply, the Delaware District Court has determined that HSC’s ex-post sales figures should be used in the calculation of a reasonable royalty.

Once infringement is found, a patentee is entitled to damages that are “in no event less than a reasonable royalty for the use made of the invention by the infringer.” 35 USC 284. The reasonable royalty is generally calculated through a legal fiction known as a “hypothetical negotiation” that would have occurred at a time before infringing activity began.

In this case, the patent issued in 2000, after HSC was already selling its allegedly infringing product. Demand changes due in part to the 9/11 tragedy caused product sales to increase dramatically in 2004 and 2005.  Honeywell argued that, despite their later date, these sales projections could not be ignored in the hypothetical negotiation.  HSC disagreed, arguing that post-negotiation sales projections should be rejected in the context of the hypothetical negotiation construct — particularly where pre-negotiation projections exist.

The court, noting a direct conflict between Fromson v. Western Litho (Fed. Cir. 1998) (later figures may be used) and the 2003 CAFC’s decision in Integra v. Merck KGaA (post-negation figures excluded because they change “risks and expectations of the parties”), sided with Honeywell and held that the post-negotiation figures could be used.

[T]he court is presented with two cases, both of which are binding, that dictate opposite results. . . . HSC suggests that the court should resolve the conflict by following the more recent case,

Integra. The court disagrees. The recent vintage of a case has no bearing on how well it was reasoned. In this case, the court is persuaded that the result dictated by Fromson is the most sensible. First, it promotes flexibility in damage calculations by not erecting an unnecessarily rigid barrier to relevant post-negotiation information. Second, it discourages infringement by placing the risk of success on the infringer. Third, it protects the quid pro quo underlying patent law by preventing a premature valuation of the patent. Finally, it permits a damage award more in keeping with the plain language of § 284 by adequately compensating the plaintiff for the “the use made of the invention” by the defendant. This list is probably not exhaustive, but is, in the court’s view, sufficient to demonstrate that Fromson should control in this case.

HSC’s motion to preclude post-negotiation sales figures denied.

Links:

Blade Wars: Gillette Wins Latest Round in Multi-Blade Razor Patent Litigation

Patent, Patent Cases 2005,

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Gillette’s patent disclosing a three-blade razor also covers a four-blade version.

Gillette Co. v. Energizer Holdings Co. (Fed. Cir. 2005).

By Baltazar Gomez

Gillette owns U.S. Patent No. 6,212,777 for wet-shave safety razors with multiple blades. Gillette sued Energizer in the United States District Court for the District of Massachusetts alleging Energizer’s QUATTRO®, a four-bladed wet-shave safety razor, infringed claims of the patent. The district court denied Gillette’s motion for a preliminary injunction because it found that the claims covered only a three-bladed razor. On appeal, CAFC vacated the district court’s decision and remanded for further proceeding.

The ’777 patent claims a disposable safety razor with a group of blades, each blade placed in a particular geometric position relative to the other blades. Claim 1 describes a progressive blade exposure as follows:

A safety razor blade unit comprising a guard, a cap, and a group of first, second, and third blades with parallel sharpened edges located between the guard and cap… (emphasis added).

In determining the meaning and the scope of claim 1, the CAFC attempted to place the claim language in its proper technological and temporal context. The Court reasoned that the inventors’ statutorily-required written description in the patent itself, including the claims, the specification and the prosecution history, is the primary source of the meaning of disputed claim language.

Using this standard, CAFC determined that the language “comprising . . . a group of first, second, and third blades” can encompass the four-bladed Energizer razors. To begin, CAFC noted that the claim uses “open” claim terms “comprising” and “group of” in addition to other language to encompass subject matter beyond a razor with only three blades. Moreover, although the specification focused on blade units with three blades, the patent also disclosed a plurality of blades showing that the ‘777 patent covers razors with more than three blades. The CAFC further explained that it may be that a four-bladed razor may be less preferred embodiment, but noted that a patentee typically claims broadly enough to cover less preferred embodiments as well as more preferred embodiments, precisely to block competitors from marketing less than optimal versions of the claimed invention.

Further, CAFC also noted that the specification provided further support for interpreting claim 1 to encompass razors with more than three blades. The first sentence of the written description teaches that the invention relates to razors having a plurality of blades. Moreover, the prosecution of patents related to the ’777 patent also supports reading claim 1 as an open claim. Gillette endorsed an open interpretation of “comprising” when it argued to the European Patent Office (EPO) that a virtually identical claim in Gillette’s European counterpart to the ’777 patent would not exclude an arrangement with four or more blades. Accordingly, the CAFC concluded that the district court erred in limiting the claims of the ’777 patent to encompass razors with three blades because no statement in the ‘777 patent excludes a four-bladed razor.

In dissent, Judge Archer argued that claim 1 should not be construed as permitting a group with more than three blades simply because claim 1 contains the open transition term “comprising” in its preamble.   Judge Archer concluded that a three-bladed razor is not merely a preferred embodiment of the invention, but is the invention itself, and that the inventors did not regard a blade unit with four blades arranged in the described geometry as their invention.

Note: Dr. Baltazar Gomez is a scientific advisor at MBHB in Chicago. Dr. Gomez obtained his PhD in biochemistry from the University of Texas and researched retrovirology as a PostDoc at Cornell University.

Case Questions Fundamental Questions of Patentability Requirements of Nucleic Acid Molecules

Patent, Patent Cases 2005,

In re Fisher: EST Patentability Redux

By Donald Zuhn, Ph.D. (Patently-O Guest Author).

On Tuesday, May 3, 2005, the Federal Circuit will hear In re Fisher, in which the Court will address the utility requirement for the first time since the Patent Office set forth revised Utility Examination Guidelines in January 2001.  Specifically, in Fisher, the issue of patentable utility is being raised with respect to nucleic acid molecules.  In commenting on the possible importance of this case, Harold Wegner has described Fisher as having "the potential of being either the single most important pharmaceutical patent case in recent years – or a yawn."  Amicus briefs filed by recognized biotech and pharmaceutical companies such as Affymetrix, Eli Lilly, and Genentech in support of the Board’s decision in Ex parte Fisher suggest that it may be the former as opposed to the latter.

The particular controversy presented in Fisher can be traced back as far as 1991, when a group of NIH investigators led by J. Craig Venter sought to protect thousands of DNA sequences corresponding to portions of expressed genes.  Venter called these gene fragments expressed sequence tags, or ESTs.  Venter’s group sought to protect not only the ESTs themselves, but also the full-length sequences from which the ESTs were derived and the protein products encoded by the full-length sequences, without first determining the biological function of the encoded protein products.  In several applications filed on its ESTs, the NIH asserted a number of utilities, including the design of oligonucleotides for use in chromosomal analysis, PCR amplification, and recovering the corresponding full-length gene.  After receiving a second rejection on its initial filing, the NIH abruptly abandoned its attempts to protect the ESTs, and withdrew all of its pending EST applications from consideration.

While the withdrawal of these applications temporarily quieted the debate surrounding EST patentability, the Patent Office again stoked the fires of controversy in 1995, when it published new Utility Examination Guidelines.  The new Guidelines removed some of the obstacles to EST patenting by only requiring that an applicant assert a utility that was "specific" and "credible."  The new Guidelines had thus omitted the requirement that the assertion of utility also be "substantial," as set forth by the Supreme Court in 1966 in Brenner v. Manson.  In 1997, the Patent Office further declared that since ESTs were acknowledged to have utility apart from the full-length sequences from which they were derived, an applicant would no longer be prevented from securing protection for an EST by the failure to specify the function of the full-length sequence from which that EST was derived.

The Patent Office reversed course again in 2001 when it published revised Utility Examination Guidelines, reinstating the Brenner substantial utility prong.  The revised Guidelines now required that an applicant assert a specific and substantial utility for the claimed invention that would be considered credible by a person of ordinary skill in the art.  The Patent Office also issued Revised Interim Utility Guidelines Training Materials, which provided Examples indicating how the revised Guidelines were to be applied to thirteen different types of biochemical subject matter, including ESTs, as well as definitions of the three utility prongs.  In particular, the Training Materials defined "specific utility" as utility that is specific to the subject matter claimed, as contrasted with a general utility that would be applicable to the broad class of the invention; "substantial utility" as utility having a "real world" use; and "credible utility" as utility that is believable to a person of ordinary skill in the art based on the totality of evidence and reasoning provided.

In the appeal to be heard Tuesday, appellants Dane Fisher and Raghunath Lalgudi (employees of Monsanto Co., the real party in interest) seek to reverse the Board’s decision affirming the final rejection of a claim directed to five ESTs isolated from maize leaf tissue.  The five ESTs constitute only a small portion of the 4,013 sequences that appellants originally claimed and an even smaller portion of the 32,236 sequences that appellants disclosed in their application.  Appellants also asserted a number of utilities for the claimed ESTs in their application, including the use of the ESTs to identify polymorphisms (i.e., alternate forms, or alleles, of the claimed sequences), to design oligonucleotide probes or primers for use in isolating DNA sequences from other plants and organisms, and to measure mRNA expression levels in plant cells using microarray technology.

The Board, in Ex parte Fisher, analyzed Brenner and subsequent CCPA and CAFC decisions in In re Kirk, In re Ziegler, In re Jolles, Cross v. Iizuka, and In re Brana, and determined that "[r]ather than setting a de minimis standard, Section 101 requires a utility that is ‘substantial’," or in the words of the Brenner court, "one that provides a specific benefit in currently available form."  The Board then examined appellants’ asserted utilities and determined that none of the claimed ESTs provided a specific benefit in its currently available form.  In particular, with regard to appellants assertion that the claimed ESTs could be used to measure mRNA expression levels in plant cells using microarray technology, the Board declared that "the asserted utility of the claimed nucleic acid – as one component of an assay for monitoring gene expression – does not satisfy the utility requirement of Section 101."

In briefing the issues before the Federal Circuit, appellants argue that the Board erred in concluding that an EST is "subject to a heightened standard of utility . . . that hinges upon some undefined ‘spectrum’ of knowledge about the function of the gene that corresponds to the EST."  Appellants also contend that the Board erred in concluding that the claimed ESTs lack patentable utility "despite the undisputed existence of eight scientifically useful applications for the claimed ESTs and a commercially successful industry built upon the sale and licensing of ESTs corresponding to genes of unknown function, just like those at issue here."  In arguing against the Patent Office’s application of a "heightened standard" of utility in this case, appellants note that the Patent Office has set forth "three substantially different constructions of the utility standard over the last decade alone," and that the Board has adopted a test "so ambiguous and impracticable that even the PTO cannot articulate with any reasonable certainty when the claimed ESTs – or any other EST – might be entitled to patent protection."  Appellants also contend that the Patent Office has applied the wrong test in determining whether there is an assertion of specific utility, since "the specific utility prong only requires the existence of an identifiable benefit for the claimed invention; it does not require a benefit that is unique to the claimed invention."

The Patent Office, on the other hand, denies that appellants’ ESTs have been subjected to a heightened standard, arguing instead that appellants merely failed to assert a specific and substantial utility for the claimed ESTs that would be considered credible by a person of ordinary skill in the art. In its brief, the Patent Office often focuses on appellants’ failure to satisfy the specific utility prong, arguing, for example, that appellants’ asserted utilities "would apply not only to the over 32,000 ESTs Fisher discloses, and to the over 600,000 ESTs disclosed in Monsanto’s [six] related appeals, but also to any ESTs derived from any organism." In particular, the Patent Office counters appellants’ argument that because each EST only specifically binds to its complement, the specific sequence of each EST makes its use as a probe or primer specific, by stating that "there is no specific reason for using the EST to bind its complement," and therefore, "[t]o the extent that more sequence data could be acquired by using the ESTs as probes, that result would likely be true for any scrap of DNA derived from nature." Finally, in responding to appellants’ assertion that ESTs have a real world value as part of a multi-billion dollar industry, the Patent Office contends that "batches of ESTs of unknown significance are sold for the purpose of finding targets worthy of further development, not because the individual ESTs have any specific currently available benefit."

NOTE: This post was written by patent attorney Donald Zuhn, PhD. Don is a true expert in cutting edge biotech patent law and practices both prosecution and litigation at MBHB LLP in Chicago. (zuhn@mbhb.com). His article "DNA Patentability: Shutting the Door to the Utility Requirement," published in the summer 2001 issue of the John Marshall Law Review, contains a more thorough discussion of the history of the utility requirement, particularly with respect to the patentability of DNA sequences.

CAFC: Licensee must hold all substantial rights under a patent to bring an infringement suit.

Patent, Patent Cases 2005,

Aspex Eyewear v. E’lite Optik (Fed Cir. 2005) (04-1292)(NON PRECEDENTIAL).   PatentlyOImage001

by Joseph Herndon

In general, a licensee is not entitled to bring suit in its own name as a patentee, unless the licensee holds all substantial rights under the patent.

Aspex appealed the decision of the District Court stating that Aspex lacked standing to sue as an exclusive licensee for infringement of two patents (one naming Richard Chao as the sole inventor and the second being a CIP of the first with brothers David and Richard Chao as the named inventors). 

Aspex entered into a written license agreement with Chic that granted Aspex an exclusive license in the U.S. to any rights Chic had acquired from third parties relating to patents involving magnetic eyewear. Later, Richard Chao granted Chic an exclusive license for two patents.

In September 2000, Aspex sued E’Lite for infringement of the two patents. Chic was not named as a party to the suit. The district court concluded that Aspex lacked standing to sue because Chic did not convey any future-acquired patent rights to Aspex, and thus Aspex was not an exclusive licensee of the asserted patents.

On appeal, the Federal Circuit held that the plain language of the Chic-Aspex Agreement makes it clear that the agreement relates only to patents then-owned by Chic, not future-acquired ones. The court contended that if the parties had intended to include future-acquired patents, it more likely would have stated “is and/or will become the owner,” within the agreement. The court also looked to use of the past tense “LICENSED” in term “LICENSED PATENTS” to suggest which patents were at issue.

The court further iterated that even though the license covered patents “relating to magnetic eyewear for eyeglasses,” a provision which certainly covers the two patents at issue, the specific grant provisions control the scope of the license agreement—not the general subject matter of the license. Thus, the court held Chic did not grant an exclusive license to either of the patents to Aspex, and as such, Aspex lacks standing to sue.

Joseph Herndon is a law clerk and at MBHB and is a registered patent agent. Joe has a stellar background in electrical engineering and will graduate from law school this year. herndon@mbhb.com.

CAFC refuses to hear arguments not raised in JMOL.

Patent

Junker v. Eddings & Galt (Fed. Cir. 2005)

Junker holds a design patent on a funny looking sheath used to insert catheters.  Junker had been hired by the defendant to help design the catheters, and the defendant also obtained a patent on the device, but did not name Junker as an inventor.

The Texas jury found that Junker’s patent was valid and that he had sustained $813,550 in damages, and the court awarded Junker this amount at final judgment.  The district court also awarded Junker attorney fees of $275,000 under 35 U.S.C. § 285.

On appeal, the defendant argued that "no reasonable jury could have concluded that Junker was first to invent the design claimed in the patent."  However, the court refused to hear the argument because the defendant "did not adequately raise the issue" in its post-trial JMOL motion.  Thus, the Appellate Panel held that Galt cannot now pursue that contention.

The court did vacate the award of attorney fees because the district court did not adequately describe the reasons for the award.

As in Water Technologies, "we are unable to find sufficient support in the record to perform a meaningful review of the reasonableness of the attorney fees award." 850 F.2d at 674. Accordingly, as in that case, we vacate the award of attorney fees and remand to the district court for further proceedings. In so doing, we intimate no view on what would be a reasonable attorney fee, in this case — a determination that lies primarily within the discretion of the district court. We assume that the district court will fully explain the basis for any subsequent award of attorney fees it may make.

Judges: Newman, FRIEDMAN, Bryson

35 U.S.C. Section 103 Amended to Encourage Cooperative Research

Patent, Patent Legislation,

The ‘Cooperative Research and Technology Enhancement Act (CREATE Act) of 2004′ easily passed both the House and Senate and has been signed into law by President Bush today, December 10, 2004. (see Thomas).  The purpose of the Act is to promote cooporative research — such as between a university and start-up company.  The main thrust of the new law is to exclude some prior art from obviousness (103) consideration if the invention arose from a joint research agreement.

What You Need to Know:

If you are involved in cooperative research, you need to have a joint research agreement to ensure that your work will not invalidate patents that you apply for sometime in the future.  If you already have a joint agreement, you may need to make amendments to the agreement to ensure that it qualifies under the new law.

In order to qualify under the law, currently pending applications should be amended to disclose the names of the parties to the joint areement.  You may also consider a broadening reissue if your claims were restricted by now excluded prior art.

Text of the Act:

Section 103(c) of title 35, United States Code, is amended to read as follows:

    (c)(1) Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.

    (2) For purposes of this subsection, subject matter developed by another person and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person if–

      (A) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made;

        (B) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and

          (C) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

          (3) For purposes of paragraph (2), the term `joint research agreement’ means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.

        EFFECTIVE DATE

          (a) IN GENERAL- The amendments made by this Act shall apply to any patent granted on or after the date of the enactment of this Act. (Exception: The legislation does not not affect the right of any party in any action pending before the United States Patent and Trademark Office or a court on the date of the enactment of this Act to have that party’s rights determined on the basis of the provisions of title 35, United States Code, in effect on the day before the date of the enactment of this Act.

        MESSAGE TO RESEARCHERS:

        If you work collaborate on work with individuals from other legal entities, you need to have an agreement up front as to how that collaboration is going to be handled. Contact your patent attorney to ensure that the agreement is properly created to fall within the scope of the new law.

        BACKGROUND ON THE LAW:

        Texas Republican Lamar Smith introduced the legislation in 2003 to promote research between universities and the private sector.

        According to co-sponsor Senator Leahy, this Bill will circumvent the ruling in OddzOn Products, Inc. v. Just Toys, Inc. (Fed. Cir. 1997) (holding that non-public information may be used as prior art under certain circumstances), thus allowing more collaboration. Philip McGarrigle published an article in IDEA discussing the OddzOn Products. Brian Murphy disagreed with OddzOn Products in the Fordham IP Law Journal. Additionally, James Gambrell discusses the use of section 102(f)/103 prior art in the Federal Circuit Bar Journal.

        Analysis and discussion of the Act from the House Committee Report:

        In particular, Sec. 103(c) is amended to add a new paragraph that permits reliance on the provisions of 103(c) by parties that have not commonly assigned their rights to subject matter and the invention at the time a claimed invention was made. It does so by construing the phrase `owned by the same person or subject to an obligation of assignment’ in newly redesignated 103(c)(1), to include circumstances in which the parties have entered into a qualifying joint research agreement before to making the invention. The amendments made in this Act do not alter existing law governing inventions under 103(c) where the invention and the subject matter at issue are commonly owned or subject to an obligation of common assignment.

        A party who seeks to gain the benefit of the amended Sec. 103(c) must comply with certain conditions. First, the invention and the subject matter (i.e., prior art or information qualifying solely under 35 U.S.C. 102(f)) that is being excluded must be owned by, or otherwise subject to the control of, one or more of the parties to the joint research agreement. While the subject matter being excluded may pre-date the joint research agreement, the claimed invention must be made after the date of such agreement. Second, the invention must arise from work performed by or on behalf of the natural or legal persons that are party to the eligible joint research agreement. Third, the identities of the parties to the joint research agreement must be disclosed in the patent. This information may be included in the original application, through an amendment to the application, or added by an amendment to the patent (e.g., by a certificate of correction) pursuant to the amended law. The omission of the names of parties to the agreement is not an error that would justify commencement of a reissue or reexamination proceeding.

        Thus, by entering into a joint research agreement before making the claimed invention, disclosing the names of the parties in the patent application or amendment, and ensuring that the claimed invention resulted from activities under the agreement, subject matter developed by another person and the claimed invention will be deemed to be commonly owned.

        Section 2 also defines the term `joint research agreement’ as a `written contract, grant, or cooperative agreement.’ By doing so, Congress does not intend to prescribe the specific form of the agreement parties must use to benefit from this Act nor to require the writing be contained in a single instrument. Congress does intend the writing to demonstrate that a qualifying collaboration existed prior to the time the claimed invention was made and that the claimed invention was derived from activities performed by or on behalf of parties that acted within the scope of the agreement.

        The term `joint research agreement,’ used in section 2 of the Act, is not limited to joint research agreements under the Bayh-Dole Act (Sec. 200 et seq. of the Patent Code), but also includes other governmental or private sector cooperative research agreements, development agreements, and other transaction agreements, including Government Cooperative Research and Development Agreements (15 U.S.C. 3701a), and Department of Defense or National Aeronautics and Space Administration (NASA) `other transaction’ agreements (10 U.S.C. 2371, 42 U.S.C. 2473).