Tag Archives: First to Invent

Copyrighting Your Patent?

Patent,

by Dennis Crouch

Although it sounds of a malformed naive question, at times patent applicants do want to copyright their patent.  The patent application may, for instance, include software code, prose, or particular schematics that would seemingly be amenable to copyright protection.

In 1987, the USPTO created an official policy allowing patentees to include a “Copyright or Mask Work Notice in Patents” in order to “protect the various intellectual property rights of the author or inventor.”  Those instructions were then codified in 37 C.F.R. 1.71(d)-(e)(1988).  The rule requires that a copyright notice be accompanied with with a grant of permission to make certain copies:

A portion of the disclosure of this patent document contains material which is subject to (copyright or mask work) protection. The (copyright or mask work) owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the Patent and Trademark Office patent file or records, but otherwise reserves all (copyright or mask work) rights whatsoever.

See also, MPEP 608(w).

Unfortunately, neither the rule nor statute provide any indication of the impact of a notice failure.

Published works are no longer required to include any copyright notice, and the PTO has never indicated (AFAIK) that submission without the copyright notice constitutes a waiver or abandonment of copyright protections.  However, the failure to include a (c) notice could potentially be relevant to fair-use analysis.

Santa Clara Copyright Law Professor Tyler Ochoa pointed me to Korzybski v. Underwood & Underwood, 36 F.2d 727 (2d Cir. 1929).  In that 75 year old case, the appellate panel held that a patent filing served as a dedication of all rights in the disclosure to the public domain.

When Korzybski filed his application and received his patent, he . . . dedicated it to the public, save for the right to make, use, and vend it during the period for which the patent gave him that monopoly. The public had the right to the information disclosed in his patent and the right to use and copy the text and diagrams. . . . Everything disclosed in the patent became a part of the public domain.

. . . The defendant has done no more than photograph the [patented] anthropometer. This we hold it had a right to do, because the anthropometer was an embodiment of the drawings of the patent. The copyright was invalid, because the subject-matter had become a part of the public domain when complainant filed the prior application which resulted in the grant of his patent.

An inventor who has applied for and obtained a patent cannot extend his monopoly by taking out a copyright.

The Korzybski decision is based two distinct doctrines: (1) failure of formalities (no longer the law) and (2) the traditional judge-made public policy that copyrights should not be used to extent patent rights (likely still the law).

I wanted to look at the number of patents that actually include the copyright notice and how that number has changed over time.  The first chart shows the number of patents issued each year containing the copyright notice and the second chart provides charts the numbers as a percentage relative to the total patents issued each year.

PatentsClaimingCopyright

PatentsClaimingCopyrightPercent
Although the relative percentage has changed over time, it has always remained under 1%.  My basic explanation for the percentage being so low is that the copyright notice requires an express waiver of certain rights – why do that without some justifiable gains?

Federal Circuit Chooses Quantity over Quality in Fight over Electro-Mechanical Stimulation Device Patent

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by Dennis Crouch

A discussion of Lelo v. USITC and Standard Innovation Corp. (Fed. Cir. 2015):

The US International Trade Commission (USITC) provides an alternate/additional forum for asserting patent rights. Unlike district court, the USITC is not empowered to award damages for past infringement but can only enjoin future importation of infringing articles through what is known as an exclusion order.  Although limited, these exclusion orders can carry substantial power – simply because so many high-tech products sold in the U.S. are manufactured abroad.

The Congressionally designated purpose of the USITC is to protect U.S. industry.  In the IP context, this purpose has been implemented as a requirement that USITC patent assertions be associated with a domestic industry.  Under Section 337(a) of the Tariff Act of 1930 (as substantially amended), “with respect to the articles protected by the patent,” the patentee must show that there is, within the U.S.:  “(A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in its exploitation, including engineering, research and development, or licensing.” 19 U.S.C. § 1337(a)(3).  To be clear, although the USITC requires a domestic industry related to products covered by the patent, there is not requirement that the patentee be a U.S. company.

StandardInnovationCorpHere, the owner of the asserted U.S. patent No. 7,931,605 is the Canadian company Standard Innovation Corporation.  The invention covers an “electro-mechanical sexual stimulation device to be worn during intercourse.” The Federal Circuit euphemistically identifies this as a “kinesiotherapy device.”

Standard Innovation has its products manufactured in China, although the company does use some U.S. sourced components (such as the backbone material, rubber, pigment, and control-chip wafer). The manufactured product is then shipped worldwide, including to the U.S. where a wholly-owned U.S. subsidiary distributes the product.

The question on appeal is whether a domestic industry exists under the law.  The ALJ first deciding the case found “no,” but the Commission disagreed. On appeal, the Federal Circuit has sided with the ALJ that no domestic industry exists.

In reviewing USITC decisions, the Federal Circuit generally reviews questions of law de novo but gives substantial deference to factual conclusions (substantial evidence standard).

The court’s reasoning here is somewhat odd — that the statute requires a quantitative analysis of the amount of domestic industry that was not provided by the USITC.

Quantitative Analysis: As mentioned, the domestic industry requirement requires more than an iota of domestic industry – rather  the statute requires “signficant” or “substantial” industry.  According to the court – those heightened requirements are properly interpreted as requiring a quantitative analysis:

All of the foregoing requires a quantitative analysis in order to determine whether there is a “significant” increase or attribution by virtue of the claimant’s asserted commercial activity in the United States.

Rather than conducting a full analysis of domestic industry investment, the USITC simply found that some of the component products were “critical” aspects of the final product.  For example, “the backbone material specifically allowed for beneficial flexibility and resilience, [and] the microcontrollers enabled the devices to function as a vibrator [with multiple modes]”.

On appeal, the Federal Circuit rejected these “qualitative elements” – finding that the statute requires a quantitative analysis of the impact on domestic investment and employment.

= = = =

The USITC argued that its qualitative analysis was in parallel to that done in the prior case of Certain Male Prophylactic Devices, Inv. No. 337-TA- 546, USITC Pub. 4005 (June 21, 2007) (patent at issue).  However, the court found that it didn’t fit. That is, the prior decision was appropriately characterized as quantitative in nature.

Are Specific Information-Processing Claims Abstract Ideas?

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Guest Post by Jeffrey A. Lefstin, Professor of Law at the University of California, Hastings College of Law.

The Supreme Court’s decision in Alice v. CLS Bank resolved the easy cases: claims that merely recite a mode of organizing activity coupled with a generic instruction to “do it on a computer” or “do it on the Internet.” The key question left open by Alice is whether claims to specific information-processing techniques represent ineligible abstract ideas or eligible applications. Answering that question will be critical to resolving cases like California Institute of Technology v. Hughes Communications, Inc., and McRO v. Activision, discussed in Robert Stoll’s Patently-O post last month.

The patents in Caltech were directed to a method of generating error correction codes in digital transmissions. They described a method of generating parity bits by accumulating previously generated parity bits, and a sum of randomly chosen irregular repeats of message bits. Notwithstanding that the patents claimed only information-processing steps, Judge Pfaelzer of the Central District of California ruled that the claims were patent-eligible: while the claims were directed to the abstract idea of error correction, the algorithm for generating parity bits represented an inventive application of the underlying idea.

As Judge Pfaelzer recognized, that holding might be in tension with Digitech Image Technologies v. Electronics for Imaging, where the Federal Circuit, relying on Benson and Flook, suggested that any claim merely transforming information with “mathematical algorithms” is not patent-eligible. So Caltech squarely raises the question of whether specific information-processing algorithms are patent-eligible after Alice.

More generally, the significance of Benson and Flook after Alice is a critical question for future § 101 jurisprudence: much of the difficulty faced by the lower courts and the USPTO arises from attempts to reconcile the Supreme Court’s earlier caselaw with its decisions since Bilski.

It is time to acknowledge that they cannot be reconciled, and they need not be. While the Court maintains a pretense that all its opinions are coherent with each other, the regime the Court has crafted since Bilski represents a sharp break from its earlier decisions. Courts that continue to rely on Benson and Flook have not recognized the significance of Alice’s reaffirmation of the Mayo framework for patent-eligibility. For Mayo established both a different structure and a different rationale for subject matter eligibility than the Court had employed in its prior cases.

First, Mayo provided a new structure for the § 101 inquiry: step one is to identify an abstract idea or law of nature underlying the claim, and step two asks whether the claim further recites an ‘inventive concept’ that transforms the abstract idea or law of nature into a patent-eligible application. If that was not the analytical framework employed in the Court’s earlier cases, then the analysis and holdings of those cases are not necessarily relevant after Mayo and Alice. The Court itself told us in Bilski that its earlier opinions represented nothing more than explanations of the basic exceptions for laws of nature and abstract ideas.

Second, Mayo and Alice reoriented the rationale for subject-matter exclusions. Benson and Flook were premised in large part on the exclusion of subject matter not expressly authorized by Congress, the restriction of patents to tangible processes, or the exclusion of preexisting truths that exist apart from human action. Those premises were rejected in Chakrabarty, Bilski, and Alice, respectively. Instead, Mayo and Alice grounded subject matter exclusions on the ‘building-block’ concern: that patents on fundamental principles risk foreclosing more innovation than they promote.

Given the Court’s reorientation of the doctrine, Benson and Flook’s focus on ‘algorithms’ is no longer relevant. Abstract ideas, after Bilski, Mayo, and Alice, are not characterized by intangibility or field of invention. They are characterized by ‘fundamentalness’ – the concern that patents on basic concepts will foreclose too much further development. In this framework, a specific information-processing algorithm, such as an algorithm for generating parity bits, does not qualify as an abstract idea.

Caltech defined the abstract idea as the purpose of the claim, recited at a reasonably high level of generality: error correction, in the claims at issue. Identifying the abstract idea with the purpose or effect of the claim follows from the structure of the Mayo/Alice test. Step one defines the abstraction (if any) underlying the claim, while step two asks whether the application of that abstraction contains an inventive concept. The object of step one must therefore be to separate the idea of the invention from the means of application, which will be the subject of step two.

We already differentiate between idea and means of application in the law of inventorship: courts have long distinguished between formulating a goal, effect or result – which is not a contribution to conception – and formulating the means of attaining that result – which is a contribution to conception. So the Caltech analysis merely maps that long-standing distinction onto the subject-matter inquiry under § 101.

I discuss these ideas further, and develop a framework of ‘inventive concept’ applicable to both abstract ideas and laws of nature, in a forthcoming paper available here.

Federal Circuit OK’s Award of 50% of Gross Margin

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Astrazeneca v. Apotex (Fed. Cir. 2015)

Omeprazole (Prilosec) is a proton pump inhibitor (PPI) used to treat stomach acid issues.  In a prior portion of this case, the Federal Circuit affirmed that Apotex’s generic omeprazole infringed the AZ patents and that the patents were not invalid. After that 2007 decision, the company took the product off the market. The present appeal is simply about the damages that Apotex needs to pay based upon its infringement from 2003 – 2007.

A patentee is entitled to “damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.” 35 U.S.C. § 284.  Thus, the statute sets a ‘floor’ of a reaonable royalty but offers the option of proving further damages that would not be accounted-for in such a royalty calculation. This second category is ordinarily thought of as the patentee’s “lost profits” due to the infringement. See Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009).

Reasonable Royalty as 50% of gross margin: Here, the patentee asked for a reasonable royalty, which the district court set at 50% of Apotex’s $150 million gross margin (gross sales minus cost of goods) on the infringing sales.  On appeal, the Federal Circuit has affirmed.

District courts (and juries) are given substantial deference in awarding damages for patent infringement.  Factual conclusions (including the ultimate award) are reviewed only for clear error and the damage computation approach is reviewed for abuse of discretion.

Entire Market Value Rule for Pharma: The most interesting aspect of the case involved a discussion of the “entire market value rule.”

When thinking about damages, the focus should be on the incremental value of the patented invention.  When the patent covers only a small-portion of a multi-component product, the damage award should be based upon how the invention improves that small-portion unless the patentee proves that the patented feature “creates the basis for customer demand” in the whole product or “substantially creates the value of the component part.” quoting Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011).  One way around this is for a patentee to claim the product as a whole, then reciting both the novel features and conventional elements that make-up the rest of the product.  Here, that is exactly what AZ did – claiming a pill containing the (novel) drug covered with a (standard) enteric coating and subcoating. For the Federal Circuit, that claiming trick was sufficient to allow the patentee to focus on the entire market value of the pills rather than on the value of the novel drug component:

Astra’s formulation patents claim three key elements—the drug core, the enteric coating, and the subcoating. The combination of those elements constitutes the complete omeprazole product that is the subject of the claims. Thus, Astra’s patents cover the infringing product as a whole, not a single component of a multi-component product. There is no unpatented or non-infringing feature in the product.

The court did note that the relative proportion of novel-to-conventional parts should have an impact on the ultimate damage awaard:

When a patent covers the infringing product as a whole, and the claims recite both conventional elements and unconventional elements, the court must determine how to account for the relative value of the patentee’s invention in comparison to the value of the conventional elements recited in the claim, standing alone. See Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1233 (Fed. Cir. 2014) (“[T]he patent holder should only be compensated for the approximate incremental benefit derived from his invention.”).

All of these thoughts and concerns regarding proportional valuation go back to the 1884 Supreme Court case of Garretson v. Clark, 111 U.S. 120 (1884). In that case, the court wrote that the patentee:

must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features, and such evidence must be reliable and tangible, and not conjectural or speculative, or he must show by equally reliable and satisfactory evidence that the profits and damages are to be calculated on the whole machine, for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature.

Thus, under Garretson, it should not really matter whether you calculate the reasonable royalty as a smaller percentage of the whole product or instead a larger percentage of the component.  However, there are two reasons why plaintiffs want to use the larger number.  First, there is a sense that a judge/jury is psychologically more likely to award a higher total amount when the pie appears larger.  Second is the reality that the whole product is sold at a point further down the supply chain where prices are higher as opposed to component supply where prices are generally much lower.

= = = =

See also

  • In re Omeprazole Patent Litig., 84 F. App’x 76 (Fed. Cir. 2003) (“Omeprazole I”);
  • In re Omeprazole Patent Litig., 483 F.3d 1364 (Fed. Cir. 2007) (“Omeprazole II”);
  • In re Omeprazole Patent Litig., 281 F. App’x 974 (Fed. Cir. 2008) (“Omeprazole III”); and
  • In re Omeprazole Patent Litig., 536 F.3d 1361 (Fed. Cir. 2008) (“Omeprazole IV”);
  • All relating to U.S. Patent Nos. 4,786,505 and 4,853,230.

Federal Circuit Cases to Watch on Software Patentability – Planet Blue

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 Guest Commentary by Robert Stoll

In the wake of the Supreme Court’s decision in Alice Corp v. CLS Bank (2014), there have been dozens of decisions in federal district courts and at the Federal Circuit that have applied Alice and Section 101 to a wide variety of business method and software related patents. And in the vast majority of these cases, the courts have invalidated the patents.

This trend line has led to rampant speculation about the end of software patents. But a review of the patents in those cases indicates that the claims at issue in most of the district court cases (and arguably all the Federal Circuit decisions) were directed to business methods that would have likely been held invalid under Bilski and other pre-Alice decisions. What we have seen far less is how courts will apply Alice to patent claims directed to software technology (as opposed to business methods).

Arguably the first of those cases is on its way through the Federal Circuit. The McRO (Planet Blue) v. Activision Blizzard, et al. (C.D. Cal. 2014) (“Planet Blue”) appeal pending at the Federal Circuit may be an important indicator of how software patents will be evaluated by the courts going forward.

Unlike many of the other Section 101 cases that have largely involved simple financial/business practices or similar non-technical “inventions,” the patents in Planet Blue are directed to what appear to be actual technological challenges. The patents utilize complex and seemingly specific computer-implemented techniques.

And yet the Planet Blue patents were found invalid under Section 101 in the district court. In deciding the case, Judge Wu did a thorough analysis of the patent claims, starting with the observation that “[f]acially, these claims do not seem directed to an abstract idea” and appear to be directed to a “specific technological process.”  However, interpreting Mayo to require him to disregard any aspect of the claims found in the prior art, he conducted a further analysis to determine what feature of the claims were novel. Wu found that the only aspect of the claims that added to the prior art was an abstract idea:  “the use of rules, rather than artists, to set the morph weights and transitions between phonemes.”

Planet Blue has now appealed to the Federal Circuit, and opening merits briefs were recently filed. These and the subsequent briefs, arguments and decision in this case will be important for practitioners and patent holders for several reasons:

The Federal Circuit will evaluate a patent claim that is technology-based.

An initial read of the claims in the Planet Blue patents seem to be a far cry from basic method claims. The Planet Blue patents are used in animation; the technology helps automate the process of adapting an animated image to mouth words without having to draw or manually program the animated character’s movements. Its’ claims are drawn to the use of three-dimensional synchronization for certain applications in animation.

The district court initially acknowledged that the claims, in isolation, appeared tangible and specific and did not seem directed to an abstract idea: “considered standing alone, the asserted claims do not seem to cover any and all use of rules for three-dimensional synchronization.” In deciding this case, the Federal Circuit will be making an important decision on how to evaluate technology and software claims in a post-Alice environment.

The decision should provide additional guidance on how to apply the ‘significantly more’ test.

In the Alice decision, the Court recognized that patents – even those that are directed to an abstract idea or other ineligible concept – can be made patent eligible if the patent ‘transforms’ the abstract idea, or  does ‘something’ or ‘significantly more’ than a patent on the concept itself. This is the second step of the Alice/Mayo test, which the Court refers to as the search for an inventive concept.  Unfortunately, both the Supreme Court and Federal Circuit have provided scant guidance on what is necessary to satisfy this “significantly more” test.

In this case, the district court found that the claims covered a well-known concept of lip synchronization and weren’t sufficient to meet the ‘significantly more’ test. The Federal Circuit will review the claims, and assess whether the district court’s analysis and conclusion were correct.  The Federal Circuit’s decision should provide some insight as to how ‘significantly more’ test should be performed and how claims should be read moving forward.

Lower courts will be paying close attention to the Federal Circuit’s ruling in this case in their 101 assessments.

Just six weeks after the Planet Blue decision, another Section 101 decision came out from the Central District of California, this one authored by Judge Pfaelzer, in California Institute of Technology v. Hughes Communications, Inc. (C.D. Cal. 2014).  In that case, the court denied Hughes’ motion for summary judgment on Section 101 ineligibility. Judge Pfaelzer also undertook a lengthy analysis of Section 101 case law.  In applying the Mayo/Alice framework, the court found that the Caltech claims were directed to abstract ideas, but that the claims were patentable since they contain inventive concepts.

Interestingly, Judge Pfaelzer also made a point of discussing the Planet Blue decision.  While respectfully acknowledging that Planet Blue offers valuable contributions to the Section 101 discussion, Judge Pfaelzer noted that Planet Blue ultimately reached the wrong conclusion since courts should not, in her view, apply the point-of-novelty approach in the Section 101 inquiry, citing the Supreme Court’s Diamond v. Diehr decision.

This is the first step in the journey, not the destination. Planet Blue may turn out to be a bellwether case on software patentability, as these patents seem quite similar to so many of the software patents held by companies across the IT industry and beyond.  But the outcome is likely to be highly panel dependent, and it would not be surprising to see a request for en banc consideration at some point down the line. The case is sure to be closely watched, and it will be fascinating to see whether the Federal Circuit follows the lead of Ultramercial (and upholds the lower court decision on patent ineligibility), or whether the reasoning of DDR Holdings will prevail (and the Section 101 decision reversed).

Bob Stoll is a partner at Drinker Biddle and Reath and Co-Chair of the IP Group and a previous Commissioner for Patents at the USPTO.  The views expressed above are his own and do not necessarily represent the views of his firm or its clients.

 

Duty of Candor and Indefinite Claims

Patent,

The Patent Act requires that patent claims be clear and distinct. 35 U.S.C. 112(b)(“The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.”).  Ambiguity is important because it can fundamentally smudge patent scope and resulting enforceability.  As a friend recently commented to me – that ambiguity fuels conflict and (in my view) helps spoil the market for patents.

The rule of definiteness is designed to put the world on notice of the scope of the exclusive patent right. Unduly ambiguous claims are not patentable and – if patented – are invalid.  As the Supreme Court recently held, the scope must be “reasonably certain” to one of skill in the art. Nautilus (2014).  Although not requiring absolute certainty, reasonable certainty remains a high standard that has been thought of as a civil equivalent of the beyond-a-reasonable-doubt standard used in criminal cases and is the same standard used to prove lost-profits damages.

Applicant Responsibilities: The Examiner is the first adjudicator of indefiniteness, but it is applicants who draft and amend patent claims.  The patent system creates some incentive for applicants seek some claims that are ambiguous (with other claims being more well defined).  However rather than addressing that partial incentive for ambiguity, I wanted to think for a moment about the applicant’s requirement under the law.

The Duty of Candor & Good Faith Dealing is a fundamental aspect of the patent prosecution system.  Rule 56 includes:

Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section. The duty to disclose information exists with respect to each pending claim until the claim is cancelled or withdrawn from consideration, or the application becomes abandoned.

37 C.F.R. § 1.56.

Although patent attorneys (and agents) have a duty of zealous advocacy for their clients (37 C.F.R. § 10.84), the duty of candor and good faith dealing is significantly raised in the ex parte patent prosecution process in comparison with traditional adversarial proceedings such as litigation.

It seems to me that the duty of candor would kick-in if the applicant knew a claim term to be unduly ambiguous (scope not reasonably certain).  The bigger question involves other what-ifs: What if the applicant knows of that a term has multiple definitions that leave the term potentially indefinite; and what if the applicant knows that a term is not well defined in the art?

Commil v. Cisco: Opening Briefs on Escaping Inducement Liability

Patent

by Dennis Crouch

The patent statute identifiers “infringers” as those who make or use a patented invention without permission of the patentee. See 35 U.S.C. 271(a) (make, use, sell, offer-to-sell, or import).  The statute goes-on to also create joint-liability for inducting infringement.  35 U.S.C. 271(b) (“Whoever actively induces infringement of a patent shall be liable as an infringer.”).  

In Commil v. Cisco, the Supreme Court is focused on inducement and the question of whether “a defendant’s belief that a patent is invalid is a defense to induced infringement” even when the patent is ultimately found valid and the belief proved unfounded.   The Federal Circuit held such a belief to be sufficient – if in good faith – to excuse allegations of inducement.  Commil challenges that new rule of law.  In its opinion, the Federal Circuit wrote that “[i]t is axiomatic that one cannot infringe an invalid patent” and thus one cannot induce infringement of a patent [wrongly] believed to be invalid.

The first round of merits briefs have been with the Supreme Court. In its brief, Commil does a good job of characterizing the case:

This case presents the question of whether a defendant may know about a patent, know that the patent is potentially relevant to its commercial activities, intentionally cause its customers to act in a manner that directly infringes the patent, and then avoid all liability because it subjectively—but incorrectly—believed that the patent was invalid. Cases in which the defendant’s belief of invalidity was correct, of course, will never implicate this question, as in those cases the patent will be invalidated and a finding of invalidity moots the infringement question.

[Commil Brief].

A core issue in the case is what the court meant in last term’s Global Tech decision when it held: “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.”  Here, Commil seems to have the best historical argument based also upon Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964) (“Aro II”).

In its brief, Commil also does not let go of the sideshow that throughout the trial “Cisco’s counsel used religious references and played on stereotypes about Commil’s owner and inventors, who are Jewish and reside in Israel.”  [See Patently-O]

A number of entities have filed briefs in support of Commil. Writing for the IPO, Paul Berghoff explains:

This new defense is unsupported by the text of Section 271(b), which nowhere mentions validity. Indeed, the patent statute lists noninfringement and invalidity as separate and distinct defenses in Section 282(b). Infringement and validity are independent questions and, although invalidity may preclude a defendant’s liability in a patent suit, it does not preclude a finding of infringement.

In practice, the Federal Circuit’s decision in Commil renders inducement wholly ineffectual as a patent enforcement tool.

[IPO Brief in Support of Commil].

AIPLA largely agrees with the IPO – arguing that the new defense will “significantly undermine the ability of patent owners to enforce their rights against indirect infringers, which is sometimes their only realistic mechanism for enforcement against infringing competitors.” [AIPLA Brief]

Filing its own amicus brief, the U.S. Government (SG) also agrees with Commil – and takes a position that would re-invigorate inducement as a cause of action. Namely, the U.S. Gov’t argues that inducement only requires receipt of the patentee’s viewpoint that the conduct is infringing. See Aro II.  The Government’s point here is that the Federal Circuit is way off-base because its premise – that a non-infringement-belief avoids infringement – is wrong.

[U.S. Gov’t Brief].

Several industry briefs explain the negative impact of the decision on their industry.

  • Gilead Sciences: Treatment method patents are all-but lost.
  • Abbvie: The pharmaceutical industry depends on patents that may only realistically be enforced against indirect infringers.
  • PhRMA: These new uncertainties may chill research.

One of the more interesting briefs was filed by the Medical University of South Carolina (MUSC).

[T]he Federal Circuit’s new rule directly conflicts with the presumption of validity awarded to patents under 35 U.S.C. § 282 and with this Court’s holding in Microsoft v. i4i (2011) that § 282 requires an invalidity defense to be proven with clear and convincing evidence. Furthermore, the Federal Circuit’s new rule will require courts to develop an expansive new body of case law for induced infringement, contrary to this Court’s guidance in Limelight v. Akamai (2014).

[MUSC Foundation amicus].

[Further reading]

 

 

 

Dr. Sheppard Selected as Director of USPTO’s Detroit Office

Patent,

By Jason Rantanen

Congratulations to my colleague at the University of Nebraska College of Law, Dr. A. Christal Sheppard, who I understand has been selected as the first Director of the PTO’s Detroit satellite office.  From her biography at the College of Law:

Dr. Sheppard began her career as a scientist earning a M.S. and Ph.D. in Cellular and Molecular Biology from the University of Michigan.  After receiving a J.D. from Cornell University Law School and interning with Judge Rader at the Court of Appeals for the Federal Circuit and the Executive Office of the President’s Office of Science and Technology Policy, she was a practicing attorney at the law firm of Foley & Lardner earning extensive experience in patent prosecution, client patent counseling and ligation. She then served in the Office of the General Counsel of the United States International Trade Commission working on Section 337 matters, arguing before the United States Court of Appeals for the Federal Circuit. In 2005, Dr. Sheppard also completed Harvard University’s John F. Kennedy School of Government’s Executive Education for Senior Managers in Government program.

Her successful career in intellectual property law and policy included her tenure as Chief Counsel on Patents and Trademarks for the United States House of Representatives Committee on the Judiciary where she was integral in many endeavors including the Leahy-Smith America Invents Act, the most comprehensive change to this nation’s intellectual property laws in over 60 years.

 

Director Lee: Next Step is to Focus on Patent Quality Initiatives

Patent,

by Dennis Crouch

In her confirmation hearings on January 21, Michelle Lee reported to the Senate that both the USPTO and the Courts have taken significant steps in addressing problems in the patent system following enactment of the AIA. However, Lee supports further “balanced” statutory reform to particularly address patent litigation abuses.  However, Lee was unwilling to take a stance on any particular reform, such as the automatic-fee-shifting  that was a central aspect of the Goodlatte patent reform bill in 2014.  Republicans now control the Senate, and thus Republican support is a necessary element of the confirmation hearings.  However, it appears that Lee will garner full support from the committee. A letter sent the same-day to senate leaders signed by 200+ entities also calls for balance and moderation in any patent reforms. [Inventing America Patent Letter]

Lee did take more of a stand in her speech at the Brookings Institute on the 22nd in explaining her major top priority of enhancing the quality of patents issued by the USPTO to reduce the cost associated with issuing patents that should not have issued.  As part of that goal, the agency will soon announce a set of proposed quality initiatives and look for input from stakeholders.  In addition, Director Lee has appointed Valencia Martin Wallace as the first Deputy Commissioner for Patent Quality. Martin Wallace was already an Assistant Deputy Commissioner focused on Electrical Disciplines after rising through the ranks of the PTO.

At a Conference on Life Sciences

Ethics,

I’m speaking shortly on ethics (inequitable conduct, mostly), but have been listening intently to the various speakers.  Some big picture issues:

They all think that the 101 jurisprudence is unworkable and puts at risk entire industries. First, (by definition) pretty much everything involves natural phenomenon or a natural product.  Second, it’s idiotic:  if you discover (which, despite the Constitution and the definitions in the statute is not an “invention” according to the Supreme Court) a natural product, if it’s easy to make use of you can’t get a patent; if it’s really hard to use, then you can. (That is, if you can use (viewed post hoc, of course) conventional methods on the newly discovered natural product, you can’t get a patent, but if it takes a lot of new stuff beyond that, you can.)

They’re worried about the Akamai mess and divided infringement and its impact on method claims in this field.

People should obtain opinions of counsel due to the “you believe it’s invalid” aspect of inducement.

More on that point:  suppose I know I induce infringement of a patent. But, I reasonably believe it’s invalid. But it turns out the CAFC, PTO, etc. say it’s valid.  Does it matter for pre- CAFC conduct versus post-CAFC?  What if I have art that the CAFC/PTO didn’t consider?  Commil is wrong, imho.

This was live-blogged so excuse my grammar/typos.

DDR Holdings – Federal Circuit Forges a Sensible Path on Software Patents

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Guest post by Bart Eppenauer. 

Amidst all the angst and uncertainty following the Supreme Court’s decision in Alice Corp. v. CLS Bank (2014), patent owners and inventors in the Information Technology world should be celebrating the decision last week in DDR Holdings v. Hotels.com from the Federal Circuit.  While the Alice decision fell short of ushering in a bright line test with absolute clarity, a vocal minority has grabbed the opportunity to generate headlines suggesting that software patents are all but dead in the water.  This kind of hysteria is not only unfounded, but it sends the wrong message to our policymakers, and to startups and innovative companies of all sizes across all industries.  Perhaps its wishful thinking to expect that DDR Holdings will quell opponents of software patents in any respect, but the decision should send a strong signal that software patents are far from dead.  As I’ve recently urged, the proper course of action at this point is to take a calm, measured and rational approach as we work through the current state of affairs.

As noted by Professor Crouch in his earlier post on DDR Holdings, the DDR ‘399 patent at issue under Section 101 involved an e-commerce syndication system for generating a composite web page that combines selected visual elements of a host website with content of a third-party merchant.  While I can acknowledge the view that the analysis in DDR Holdings could be in tension with the Federal Circuit’s Ultramercial decision, I firmly believe that the DDR patent falls within the contours of patent eligible subject matter.  And I respectfully take issue with the characterization of the DDR patent as a “business method” patent.  In my view, the DDR patent, both in the disclosure and in the claims, sets forth and defines a technical solution to a technical problem through the implementation of computer software in the context of e-commerce.  A cursory review of the specifications and claims of the DDR patent, the representative Alice patent and the Ultramercial patent reveals the stark differences in the level (or absence thereof) of technology-based, software-based disclosure in these patents.

The Alice patents were drawn to an abstract business method for intermediated settlement – i.e., escrow – hardly a new business concept.  The patents contained token references to performing the purported invention on a generic computer.  The patent in Ultramercial involved a business method for allowing consumers to access copyrighted content over the internet in exchange for viewing an advertisement.  In that patent, there is absolutely no disclosure whatsoever of software or computer technology, or of any other technological advancement in the form of computer software or hardware, or anything else.  The Ultramercial patent was simply a business method and nothing more.  In both cases, the now-defunct patents mentioned computers, but did not provide a technological connection between their described method and any kind of actual software innovation.

That connection is exactly what real software enables.  The Supreme Court explicitly stated that the Alice patent claims did not purport to improve the functioning of a computer itself, nor did they advance an improvement in any other technology or technical field.  And contrary to the assertions that the decision threatens all software patents, the Supreme Court specifically acknowledged, as if there was any question to begin with, that many computer-implemented claims (i.e., software) are indeed within the domain of patent-eligible subject matter.  In Ultramercial, the Federal Circuit followed suit in its recognition that at some level all inventions embody or otherwise use abstract ideas or laws of nature, but that they “do not purport to state that all claims in all software-based patents will necessarily be directed to an abstract idea.” Ultramercial at p. 10 (emphasis added).

Turning to the DDR patent, the Federal Circuit justifiably recognized that “the claimed solution is necessarily rooted in computer technology to overcome a problem specifically arising in the realm of computer networks” (DDR at p. 20), whereas the patents from earlier cited decisions claimed nothing more than the performance of abstract business practices on the Internet or using a generic computer.  Just a brief snippet of technical disclosure from the DDR patent illustrates that this is so:

  • The Link Generator allows host to create and maintain the shopping opportunities that they can then place on their site. Each Link is assigned a unique Link ID. The Link ID identifies who the host is, who the merchant is, and what commerce object (catalog, category, product or dynamic selection) is linked to.
  • The first time a host builds a Link to a merchant’s product, category or catalog, an approval of that host for that merchant may be made. Until the host is approved, they cannot see the Link ID that has been assigned to the newly created Link.
  • The code the host embeds on their web site is as follows:
    < !—BEGIN NEXCHANGE LINK—>
    < !—For more information go to http://www.nexchange.com—>
    < !—The following 2 lines MUST NOT BE CHANGED to ensure proper crediting—>
    < IMG BORDER=‘0’ SRC=‘http://www.nexchange.net/img.asp?LinkID=xxxx’>
    < a href=‘http://www.nexchange.net/route.asp?LinkID=xxxx’>
    < !—Substitute your own text or image below—>
    **YOUR TEXT OR IMAGE HERE**</a>
    < !—END NEXCHANGE LINK—>
  • There are several points to note here:
    • The image src (img.asp) is actually an ASP program that returns a single transparent pixel. This is used to track impressions (how many times the link was displayed on the host site).
    • The route.asp page is a page that routes the customer to the shopping page. As additional servers are added, this will become very important for load balancing.
    • The ‘xxxx’ for the LinkID=‘xxxx’ is the Link ID assigned to the Link in the Link Generator.

This, along with many other examples of software-based technical disclosure in the patent specification, supports the Federal Circuit’s conclusion that the DDR patent claims “specify how interactions with the Internet are manipulated to yield a desired result” and “recite an invention that is not merely the routine or conventional use of the Internet.” (DDR at pp. 22-23).  In other words, the DDR patent claims, while relating to a business challenge, are simply not directed to an abstract idea under the Alice test.

So why all the purported confusion surrounding software patents, business method patents, and the differences there between?  After more than two decades in the IP field, I believe it comes down to a fundamental misunderstanding (and sometimes willful disregard to advance an ideology) of the true nature of “software.”

By way of the briefest of explanations, the execution of a typical software program illustrates that software implemented processes perform rapid activation and deactivation of transistors.  Software defined instructions operate on the information stored within transistor elements.  A software program in a modern computer can perform at least hundreds of millions of such operations per second.  In essence, software instructions literally, but temporarily, reconfigure electronic pathways and transform computing hardware to perform real, useful, and physical activity.

When an algorithm is implemented “purely in software,” it necessarily controls hardware components to carry out computerized actions.  I was struck by Professor Crouch’s Halloween report on his 9 year old daughter’s amazingly insightful viewpoint on how software actually transforms computers into different machines and provides very different experiences.  In discussing the differences between using Microsoft Word and playing her WarriorCat game, she explained – “Sure, the box is the same in both situations.  But, Microsoft Word obeys me and the game thwarts my moves. I see them as very different.  Its brain changes.”

Reducing software code to “just math” or sweeping it away as an abstraction is an inaccurate reading of patent case law that could jeopardize the future of innovation in this country.  The vast majority of companies that obtain software patents are manufacturing companies that integrate software into products they manufacture to deliver valuable new advancements.  These inno­va­tions power technologies ranging from modern smartphones to advanced robotic manufacturing, fly-by-wire aircraft systems, artificial retinas, driverless cars, GPS, medical and diagnostic tools, just to scratch the surface.

The past few years have been a time of unprecedented change to patent law.  Clearly there will be many more Section 101 cases to come that land on both sides of the abstract idea line (whatever and wherever that line may be).  While we’re just at the early stages of a post-Alice world, in my view the DDR decision forges a sensible path on software patentability.  With so much at stake in terms of America’s role as an innovation leader and the incredible economic impact that the IT industry fuels, let’s hope that more decisions follow the path of DDR.

Bart Eppenauer is the Managing Partner of the Seattle office of Shook Hardy & Bacon.

Ericsson v D-Link: Standards, Patents, and Damages

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By Jason Rantanen

Ericsson, Inc. v. D-Link Systems, Inc. (Fed. Cir. 2014) Download Ericsson v D-Link
Panel: O’Malley (author), Taranto (dissenting-in-part), Hughes

Standard Essential Patents (SEPs) are an integral part of the modern technological landscape.  As an example, Ericsson, the patent holder in this case, alleged that the patents at issue were essential to a common Wi-Fi standard, 802.11(n); thus all 802.11(n) compliant devices infringe the patents.  Due to their nature (they cover technologies whose widespread use can be as at least as much due to the adoption of the standard as the incremental value of the invention), SEPs pose particular issues when dealing with the question of remedies.

Two well-recognized problems are hold-up and royalty stacking.  “Patent hold-up exists when the holder of a SEP demands excessive royalties after companies are locked into using a standard. Royalty stacking can arise when a standard implicates numerous patents, perhaps hundreds, if not thousands. If companies are forced to pay royalties to all SEP holders, the royalties will “stack” on top of each other and may become excessive in the aggregate.”  Slip Op. at 7-8.  Organizations that develop standards, such as IEEE, typically address these potential problems by seeking pledges from their members “that they will grant licenses to an unrestricted number of applicants on “reasonable, and nondiscriminatory’ (‘RAND’) terms.”  Id. at 8.  Ericsson promised to offer such licenses for its 802.11(b) SEPs.

Background: In 2010, Ericsson filed an infringement suit against D-Link, accusing it of infringing a set of its 802.11(b) SEPs.  Ericsson prevailed at the district court, with a jury finding infringement of three patents, rejecting a validity challenge to one, and awarding Ericsson $10 million in damages (a royalty rate of $0.15 per product).  Based on the jury award, the judge found $0.15 per product to be an appropriate running royalty.  On appeal, the Federal Circuit affirmed enough of the district court findings as to liability for the issue to be one of damages.  (Judge Taranto dissented as to one of the infringement conclusions but agreed with the rest of the majority opinion).

Damages and SEPs: The below paragraph from the court’s opinion summarizes its key holdings on damages:

In sum, we hold that, in all cases, a district court must instruct the jury only on factors that are relevant to the specific case at issue. There is no Georgia-Pacific-like list of factors that district courts can parrot for every case involving RAND-encumbered patents. The court should instruct the jury on the actual RAND commitment at issue and must be cautious not to instruct the jury on any factors that are not relevant to the record developed at trial. We further hold that district courts must make clear to the jury that any royalty award must be based on the incremental value of the invention, not the value of the standard as a whole or any increased value the patented feature gains from its inclusion in the standard. We also conclude that, if an accused infringer wants an instruction on patent hold-up and royalty stacking, it must provide evidence on the record of patent hold-up and royalty stacking in relation to both the RAND commitment at issue and the specific technology referenced therein.

Slip Op. at 56.  The first sentence is probably the most widely applicable, and arguably applies beyond the RAND context.  It is legal error to simply recite the Georgia-Pacific factors in a set of jury instructions.  Courts must be cognizant of which factors actually apply in a given situation.  “Although we recognize the desire for bright line rules and the need for district courts to start somewhere, courts must consider the facts of record when instructing the jury and should avoid rote reference to any particular damages formula.”  Slip Op. at 50.

Of course, legal error in a jury instruction does not mandate reversal; that error must still be prejudicial.  Here, the errors were significant and in combination sufficiently prejudicial.  For example, some Georgia-Pacific factors are directly contrary to the RAND commitment, such as factor 4, “'[t]he licensor’s established policy and marketing program to maintain his patent monopoly by not licensing others to use the invention or by granting licenses under special conditions designed to preserve that monopoly.’ Georgia-Pacific, 318 F. Supp. at 1120. Because of Ericsson’s RAND commitment, however, it cannot have that kind of policy for maintaining a patent monopoly.”  Slip Op. at 48.

Another important piece of the court’s holding is its clarification of what the patent remedy must relate to in the context of SEPs: the “incremental value of the invention not the value of the standard as a whole or any increased value the patented feature gains from its inclusion in the standard.”  In other words, just as modern devices incorporate many different technological components, so too do standards include multiple technologies.  “Just as we apportion damages for a patent that covers a small part of a device, we must also apportion damages for SEPs that cover only a small part of a standard.”  Id. at 52.

Finally, on patent hold-up and royalty stacking, an accused infringer can obtain such an instruction but there must be record evidence: “The district court need not instruct the jury on hold-up or stacking unless the accused infringer presents
actual evidence of hold-up or stacking. Certainly something more than a general argument that these phenomena are possibilities is necessary.”  Id. at 54.

Brilliant New Book on Ethics in Prosecution 2015 Edition Out Now!

Attorney Fees, Best Mode, Book Review, Books, conflict of interest, Enablement, Ethics, Fee Shifting, Fees, Inequitable Conduct, Invalidity, Inventorship, Law Firm Practice, Local Rules, Patent, Patent Prosecution, Procedure, PTAB, Work - Patent Agent, Work - Patent Litigation, Work - Patent Prosecution

By David Hricik

Proud to announce that the 3rd edition of Patent Ethics: Prosecution that I co-authored with Mercedes Meyer is now available here!  This edition adds a massive amount of new material to deal with the new PTO ethics rules and the fast-moving, roller coaster world of ethical issues in patent practice!

From the description:

Patent Ethics: Prosecution (2015 Edition), by David Hricik and Mercedes Meyer, is an essential guide to the ethical issues arising in the course of the patent prosecution process. By providing relevant rules and case law, it allows practitioners to identify ethical problems before they arise and to address them most effectively when they do. Patent Ethics: Prosecution is one of two volumes on patent ethics — the second focuses on litigation — and is the first of its kind to combine the United State Patent and Trademark Office (PTO) rules with commentary by the authors, which distills the authors’ own experience and expertise in patent prosecution into effective practice strategies.

The 2015 Edition is particularly relevant considering the significant ramifications with the United States Patent & Trademark Office (USPTO) repealing its existing rules, the USPTO Code of Professional Responsibility, and replacing them with the new USPTO Rules of Professional Conduct. Furthermore, the 2015 Edition also comprehensively discusses ethical issues of major concern for patent law practitioners such as:
•   The increase in malpractice claims based upon patent prosecution as well as recent significant verdicts of $30 million and $70 million.

•   The USPTO’s Office of Enrollment and Discipline’s vigorous enforcement efforts, continued persistence in asserting a broad view of its jurisdiction, and resulting increase in the volume of case law and other authorities.

•   The troublesome issue of best mode and the America Invents Act.

•   The various ethical issues surrounding patent agents.

The 2015 Edition features new analysis of current client conflicts in patent practice, including when prosecution and opinion work become “adverse” to a client, the conflicts of interest created by the AIA’s approach to the best mode, and duty of candor post-Therasense. It also includes an updated PTO Code completely annotated with OED decisions on each provision.

Makes a perfect Christmas present, too!  Buy one for every lawyer in your firm!  Heck, buy two so they have one at home!

Congressional Oversight of the USPTO

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by Dennis Crouch

With the America Invents Act of 2011 (AIA), Congress handed the USPTO a central role in implementing major legislative patent reforms. Those include both designing the structure and procedure for post-issuance review and also taking the first steps at interpreting the new rules of patentability under the first-to-invent system.  For the past few decades, it has been the Federal Circuit’s assumed role to monitor and moderate USPTO activity and decision-making. However, the Supreme Court’s recent repeated rejections of Federal Circuit decisions has significantly reduced that court’s perceived strength.  Further, the express grant of authority in some areas severely limit the Federal Circuit’s review capabilities.  These factors come together to suggest that the PTO is now largely operating without direct checks on its behavior outside of the Administration.

Filling the Oversight Void: Given that members of the Republican party will soon control both the Senate and House of Representatives, I expect this gap in oversight will be at least partially filled by Congressional Oversight.  Adding to the likelihood of oversight is the partisan dynamic associated with shifting into the final two-years of the Obama administration with a high-level of conflict expected between the powerful branches of government.

Unlike Federal Circuit review, rigorous Congressional Oversight would likely not focus on merits of individual decisions but instead on policy implementation, budgetary allocations, overarching policy goals and agency activities.

House Judiciary Chair Bob Goodlatte spoke on this point a couple of months ago:

As the PTO carries out its Constitutional mission, we need to conduct appropriate oversight to ensure that our IP laws are being implemented fairly and in line with Congressional intent.

In recent years the PTO has been tasked with implementing the America Invents Act (AIA). The AIA was the most significant reform to U.S. patent law in my lifetime. I believe that it is imperative for this committee to examine the rules and procedures that the PTO has adopted to implement this important law, in particular the various post grant proceedings called for in the AIA.

Congressional Oversight by itself cannot compel the President to change course.  However, the expectation is that oversight (and the threat of oversight) will encourage a change of behavior and also raise public awareness of administrative issues.  A difficult issue is that we need to drill down beyond the soundbites and Congressional Oversight often remains at too-high a level.  A second difficulty is that none of the Congressional subcommittees are directed toward USPTO policy (or intellectual property administration in general).

The benefit of Congressional Oversight is also that it provides Congress with the opportunity to investigate and perhaps gain a better understanding of the system before passing legislative reforms.

Bucking the Trend: Security Software Patent Not Yet Ruled Ineligible

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ScreenShot142Card Verification v. Citigroup (N.D. Ill. 2014)

A growing number district court decision have followed the Supreme Court’s Alice Corp. decision by finding the asserted patent claims to be patent-ineligible as unduly encompassing an abstract idea.

In one recent decision, N.D. Ill. Judge Kendall has tepidly bucked the trend by denying a Fed R. Civ. Proc. R. 12(b)(6) motion for failure to state a claim — instead finding the asserted claims plausibly eligible.

The asserted patent claims cover a transaction verification method and the Judge agreed with defendant-Citygroup the general idea of verifying a transaction is an unpatentable abstract idea.  (Claim 1 is pasted below. See Patent No. 5,826,245).

Moving to the second step of Alice, Judge Kendall found that the claims plausibly avoid the mental steps doctrine by requiring “pseudorandom tag generating software” and also plausibly requires a sufficiently concrete transformation so as to ground the abstract idea to a particular inventive implementation.  Notably, for the second step, Judge Kendall did not draw the law from Alice, which seemingly required novelty in the ‘something more’ but instead quoted from the Federal Circuit’s 2013 holding that “additional substantive limitations [are required that] narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.” Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1341 (Fed. Cir. 2013).  Applying that law to the case, the court ruled that the claimed process of adding random number tags to data in the computer could be seen as “fundamentally altering the original confidential information.”  With this analysis in hand, Judge Kendall denied the defendants’ motion to dismiss for failure to state a claim without prejudice.

The decision here is probably most important for its procedural stance. First, the defendants’ bold move was to file its motion to dismiss as a R. 12(b)(6) motion even before filing its answer to the complaint that would include defenses and counterclaims.  Under Iqbal and Twombly, the complaint must state a claim that is ‘plausible on its face.’  Here, all that the court held was that the claim is plausible.

Although the outcome favored the patentee, the case is also a break from the tradition that a patent’s presumption of validity is generally sufficient to survive such a motion to dismiss. In Ultramercial, the Federal Circuit addressed a similar finding and held that dismissal at such an early stage is only appropriate when “the only plausible reading of the patent [is] that there is clear and convincing evidence of ineligibility.”  Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir. 2013) vacated on other grounds 132 S. Ct. 24131 (2012). Of course, the clear-and-convincing standard is with regard to questions of fact while the eligibility inquiry is a question of law that depends upon few (if any) questions of fact.

= = = = =

Read the decision here: Kendall101

Claim 1:

A method for giving verification information for a transaction between an initiating party and a verification-seeking party, the verification information being given by a third, verifying party, based on confidential information in the possession of the initiating party, the method comprising:

on behalf of the initiating party, generating first and second tokens each of which represents some but not all of the confidential information,

sending the first token electronically via a nonsecure communication network from the initiating party to the verification-seeking party,

sending the second token electronically via a nonsecure communication network from the initiating party to the verifying party,

sending the first token electronically via a nonsecure communication network from the verification-seeking party to the verifying party,

verifying the confidential information at the verifying party based on the first and second tokens, and sending the verification information electronically via a nonsecure communication network from the verifying party to the verification-seeking party.

Considerations for International Inventions – Foreign Filing Licenses

Patent,

Guest Post by Brent M. Dougal and Philip M. Nelson.  Dougal and Nelson are IP Attorneys with Knobbe Martens Olson & Bear LLP.

In today’s age of international commerce, product development often takes place on an international scale.  Many companies have design centers in multiple countries, with design teams that span the globe.  What are the patent implications if an invention is developed in China or some other country outside the U.S. and the company wants to obtain international patent protection?

U.S. law requires that inventors obtain a “foreign filing license” before filing foreign patent applications on inventions that occur in the U.S.  This allows the government to assess, for example, whether the technology could threaten U.S. national security.  Some other countries such as Spain (Article 119-122), Italy, and India also require foreign filing licenses for inventions developed domestically but for which foreign patent protection is sought.  In countries that provide foreign filing licenses, these licenses generally do not issue quickly or efficiently.  Thus, it is advisable to file first in the country of invention to avoid the delay and difficulty of obtaining the foreign filing license. (The US and Canada are notable exceptions to this general rule.)

By contrast, other countries, such as China (Article 20) and Vietnam, have no provisions for obtaining a foreign filing license. These countries require that patent applications on domestic inventions be filed first domestically.  In China, domestic inventions include all inventions occurring in China, whether or not funded by a foreign company.  Failure to file in China may lead to invalidity of a corresponding Chinese application and criminal penalties if the invention relates to security or other vital state interests.  One way a U.S. or English-language company can deal with this requirement is to file a Patent Cooperation Treaty (PCT) application in English with the Chinese Patent Office as the PCT receiving office.

Canada has one of the most unique foreign filing laws.  There a foreign filing license is only required—and indeed, only available—if the inventor is an employee of the Canadian government. Instead of review by a separate government entity as in the U.S., Canadian government employees must obtain permission of the minister of his or her department.

Other countries, including the U.K. and Germany, have limited restrictions related to national security and military applications (requirements for EPO countries can be found here).  Thus, a foreign filing license is only required for select technologies.

The table below summarizes many of the current restrictions, breaking down the listed countries into four main groups:

 

Foreign Patent Filing Restrictions

None

Limited to National Security and Military Applications

License Required 

First Filing Must be Domestic

Countries

Argentina, Australia, Austria, Brazil, Hong Kong, Indonesia , Ireland, Japan, Liechtenstein, Mexico, Monaco, New Zealand, Philippines, Poland, Portugal, South Africa, Sri Lanka, Switzerland, Taiwan, Thailand, Venezuela

Belgium, Czech Republic, Denmark, Finland, Germany, Israel, Korea, Luxembourg, Netherlands, Slovak Republic, Sweden, United Kingdom

Canada1, France2, India, Italy, Malaysia, Singapore, Spain, United States

Belarus, China, Cyprus3, Greece3, Hungary3, Kazakhstan, Russia, Vietnam4

1 Only required for government employees.

2 Only applies where inventors are French nationals or the company’s principle place of business is France (Article L. 614-18, 614-20). A European patent application can also be filed as the first filing without obtaining a foreign filing license.

3 First filing must be domestic where inventors are nationals (and in some cases permanent residents).

4 Also requires Vietnamese inventors without an obligation to assign to file first in Vietnam.

Though only a limited number of countries have foreign filing restrictions, those that do include many significant markets, not to mention the world’s most populous countries.  As companies continue to expand internationally, their attorneys will need to take an international perspective.  In order to preserve international rights, attorneys should explore inventorship and the foreign filing laws of the country of invention early on in the disclosure and application preparation process.

__________________________

This discussion is provided without guarantees and is not to be considered legal advice. We highly recommend seeking legal counsel in the country of invention.  The information has been compiled with the assistance of foreign associates from various countries, with some independent verification.

Any invention which may have a military application or could be considered important to national security is likely restricted not only by a country’s patent laws, but also by export laws, which are not addressed here.  We highly recommend seeking legal counsel in the country of invention.

Court Affirms Inequitable Conduct for Inventor’s Failure to Submit Prior Art

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American Calcar v. American Honda (Fed. Cir. 2014)

Back-Link: Jason Rantanen previously discussed the court’s first decision in the case here: Calcar v. Honda: CAFC’s First Post-Therasense Inequitable Conduct Opinion (2011).

EvidentiaryStandardsIn a split opinion, the Federal Circuit has affirmed the district court’s determination that Calcar’s three asserted patents are unenforceable due to inequitable conduct during prosecution.  The case teaches about “but-for materiality” and holds that the withholding of information can be the but-for cause of a patent issuance even if that information is insufficient to render any of the patent claims invalid in court. See also Therasense. The court winds this tale by noting the evidentiary difference: PTO only requires a preponderance of evidence of nonpatentability while invalidation in court requires clear and convincing evidence.

Duty of Disclosure, Candor, and Good Faith Dealing: Although lawyers always bear certain good faith obligations, those practicing before the before the PTO bear a more significant duty of disclosure, candor, and good faith dealing.  Failure to meet this high standard has a number of potential repercussions — for patent owners, the greatest issue is the potential that resulting patents may be held undenforceable due to inequitable conduct in proceedings before the USPTO.  Importantly, for any particular patent case, the duty of disclosure extends to all “individuals associated with the filing or prosecution.” 37 C.F.R. 1.56. This certainly includes named inventors as well as “every other person who is substantively involved” with the application.  Id.

Therasense En Banc: In Therasense (Fed. Cir. 2011) (en banc), the court made it a bit more difficult to render a patent unenforceable by requiring (a) proof of a ‘bad’ act that is a but-for cause of the patent issuing as well as (2) particular intent that the act was intended to deceive the PTO.  Conventional wisdom is that Therasense (as well as Excergen) has dampened many claims of unenforceability — especially those where the allegation is merely a failure to fully disclose to the USPTO all information related to patentability of the case in question.

large-luxury-carFailure to Disclose Photos Taken of Prior Art: This case involves a family of three patents directed to a multimedia system used to access vehicle information and control vehicle functions.  The district court found that Calcar’s founder and named inventor Michael Obradovich had particular information about a prior Acura 96RL navigation system that he failed to submit to the PTO.  In particular, prior to starting work on his invention, Obradovich had driven the Acura, operated its navigation system, and taken photographs as well written a “QuickTips” guide.  Although the application identified the 96RL system as prior art, Obradovich did not write a summary of his experiences or submit the photographs or the owner’s manual.  The district court found this failure to be material to patentability and also that the “only reasonable inference from the evidence” was that Obradovich withheld the information with “specific intent to deceive the PTO.”  On appeal, the Federal Circuit affirms.

But For Materiality: An interesting aspect of this case comes from the fact that the jury considered the non-submitted prior art but found that it failed to render any of the patent claims invalid. Yet, the courts here hold that the non-submitted prior art can still be considered a but-for cause of the patent issuing in the first place.  The reasoning for this discrepancy is that that the PTO’s evidentiary standard for refusing to issue a patent is only a preponderance of evidence – a much lower standard that the clear and convincing evidence required to invalidate an issued patent.  Here, the finding is that the USPTO would have found at least one of the claims obvious if it had seen the non-submitted prior art.

But Obviousness is a Question of Law: Under Graham and KSR, obviousness is a question of law that relies upon an underpinning of factual determinations. Although the court ignores the Graham inquiry in its analysis here, it appears that the only disputed issue is the ultimate legal question of obviousness and not the factual underpinning.  The fact that we’re talking about a question of law is important because questions of law are not governed by evidentiary standards but rather both the PTO and Courts must approach that ultimate question with the same framework of simply correctly determining the law based upon the evidence presented.

The majority opinion was written by Chief Judge Prost and joined by Judge Wallach. Judge Newman wrote in dissent.

Judge Newman focuses on an interesting issue. She argues that, rather than speculating about what the PTO might do, lets look at what it actually did when it saw the references.  Namely, the ‘497 patent (invalidated by the jury and not at issue here) was reexamined by the PTO during the course of the litigation and the examiners reviewed the previously non-submitted prior art and then confirmed all of the claims as patentable.  However, Judge Newman’s arguments appear more appropriately addressed to the earlier court opinion in this case.

Nonetheless, my colleagues rule that the patents are unenforceable based on the initial failure to send the Owner’s Manual and photographs to the PTO. The inequitable conduct with which Mr. Obradovich is charged is that he “did not tell Mr. Yip [his patent attorney] about his experience with the 96RL, nor did he provide Mr. Yip with the Owner’s Manual or the photos of the navigation system display screens.” Dist. Ct. Op. at 11. However, the PTO established, on reexamination of the ’497 patent, that the purportedly withheld information was not material to patentability. In accordance with Therasense this ended the inequitable conduct inquiry, for the PTO sustained patentability in view of this information.

In addition, there was no evidence of intent to deceive the PTO. The panel majority impugns Mr. Obradovich’s credibility, although they do not say what is disbelieved. The jury heard and saw Mr. Obradovich, on examination and cross-examination, and did not find deceptive intent. My colleagues “infer” clear and convincing evidence of deceptive intent from Mr. Obradovich’s initial failure to send his patent attorney the Owner’s Manual and the photographs of the Acura display. They postulate that a savvy inventor and businessman such as Mr. Obradovich
would have known the information was material to patentability and would therefore withhold it in order to deceive the PTO. However, a more likely inference is that a savvy inventor and businessman would know that a patent obtained through concealment of a material reference is not a reliable commercial asset.

 

Doctrine of Equivalents: What Elements Are you Narrowing?

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Capture2Millipore v. AllPure (Fed. Cir. 2014)

Patent cases are incredibly expensive to litigate.  However, in a series of recent cases courts have appeared more willing to dismiss cases on summary judgment or even on the pleadings.  This case follows that trend with a holding that the defendant does not infringe the asserted patent claims — neither directly nor under the doctrine of equivalents.  In a prior generation patentees could typically get to a jury with an allegation of infringement doctrine of equivalents. However, the court has simultaneously tightened the rules for DOE infringement and loosened the rules summary judgment — result being that infringement under the doctrine of equivalents is now regularly a summary judgment issue.

Millipore’s U.S. Patent No. 6,032,543 covers an aseptic system designed to add & remove fluid from a container without contamination.  The asserted claims require, inter alia, a “removable, replaceable transfer member . . . comprising a holder, a seal for sealing said aperture, a hypodermic needle . . . wherein the seal has a first [bellows-shaped] end . . . and a second [self sealing membrane] end.” Now, it turns out that the accused AllPure TAKEone industrial aseptic sampling system has all these elements – a holder, a seal with the bellow and membrane ends, and the needle.  In addition all of these parts are removable and replaceable.

Capture

AllPure’s key difference from the patented claim is that the collection of these parts are not removable as a unit but rather may only be removed by dis-assembly.  In construing the claims, the district court wrote: ““the [remove] implies movement or separation of something as a whole, whereas [disassemble] implies deconstruction. . . What Millipore characterizes as removal of a transfer member from the magazine part is, in fact, disassembly of a transfer member.”  Based upon that characterization of the patent and the accused device, District Court Judge Woodlock (D. Mass) found that the claims were not infringed.

On appeal, the Federal Circuit has affirmed — finding that the claimed “removable” transfer member requires that the transfer member be removable as a unit.

We agree with AllPure and the district court. If a transfer member does not exist when the device is disassembled, as even Millipore’s counsel admitted, then there is no genuine issue of material fact over whether the TAKEONE device contains a “removable, replaceable  transfer member” as is literally required by claim 1.

Doctrine of Equivalents: Section 271 of the patent act identifies an infringer as someone who “without authority makes, uses, offers to sell, or sells any patented invention.”  Although the “patented invention” is defined by patent claims, courts have long allowed patentees to enforce their exclusive rights to stop activity that is just-outside the literal scope of the claims. This doctrine of equivalents (DOE) has been with us for over 150 years  See Winans v. Denmead, 56 U.S. 330 (1853)(‘The exclusive right to the thing patented is not secured, if the public are at liberty to make substantial copies of it, varying its form or proportions.’).  However, the doctrine has been substantially limited by the all-elements-rule, Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17 (1997), prosecution history estoppel, Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002), and the doctrine of vitiation. see Wright Medical Technology, Inc. v. Osteonics Corp., 122 F.3d 1440 (Fed. Cir. 1997).

Narrowing Amendment Estoppel: In this case (as in most patents), the applicant had amended its claims during prosecution following a rejection by the patent office examiner to specify the portions of the seal (bellow-shaped and membrane ends).  Although at the time the applicant also made a broadening amendment, this particular amendment was seen as narrowing and designed to recite limitations not found in the prior art.  In particular, following the amendment the patentee argued that “none of the references show or disclose a seal formed like the present one.”  A narrowing amendment is seen as a no-no for the doctrine of equivalents since allowing DOE would essentially allow the patentee to regain patent scope that had been given-up during the prosecution process.  Under Festo, a narrowing amendment during prosecution creates a rebuttable presumption of prosecution history estoppel (PHE) with the result of estopping the patentee from claiming equivalents (DOE) to recapture the narrowed scope.  Here, the appellate panel found that presumption had not been overcome and thus that the patentee was estopped from claiming equivalents.

Narrowing of Sub-Assembly = Narrowing of Whole Assembly: A problem with the defendant’s argument here (and what Judge Prost failed to explain) is the linkage between the narrowing amendment and the asserted equivalents.  In particular, the narrowing amendment added limitations to the definition of the seal sub-assembly but the claimed equivalent was focused on the nature of the whole accused assembly as being disassemblable rather than removable as claimed. The only clue offered by the court is one phrase indicating that the amendment “narrows the seal limitation, which in turn narrows the transfer member limitation.”

Hierarchy of Elements: The battle over a hierarchy of limitations is common in modern doctrine of equivalents. Typically, the battle plays out in terms of the all-elements rule that requires the accused infringer practice each element of the asserted claim either literally or by equivalent.  For patentees, this type of equivalents is typically easier to prove when each “element” is seen as a grouping of limitations – such as the “removable, replaceable transfer member” – and defendants typically look to further granularize the invention so that the “removable” limitation itself would be an element that must satisfy the function-way-result test.   In this case – involving prosecution history estoppel – the patentee would have been better off with the more granularized framework in order to logically separate the “removable” limitation from the narrowed seal limitations.  However, the appellate court glosses-over all of this analysis in its short decision with the unfortunate result of leaving district courts to do the same.

Does Obviousness Type Double Patenting Survive the AIA?

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by Dennis Crouch

In Abbvie Inc. v. Kennedy Institute, the Federal Circuit confirmed that the judicially created doctrine of obviousness-type double patenting (OTDP) continues to be a viable defense following the Uruguay Round Agreements Act (URAA) even though the change to a priority-date-based patent term greatly reduced the potential for abuse. Looking forward, the decision begs the question as to whether the OTDB doctrine has been eliminated as to patents examined under new the America Invents Act of 2011 (AIA). For the first time the rewritten patent statute particularly defines what evidence counts as prior art — now leaving little room for the judiciary to create further categories.  

Obviousness-type double patenting (OTDB) has long been an element of patent law that operates to prevent a patent applicant from chaining-together a time-series of multiple patents in order to extend the exclusive rights beyond the expected 20-year term.  Historically, the potential term expansion was made possible by filing a second or subsequent patent application (often a continuation application) that issues several years after the original patent.  Because the patent term was 17-years from the issue date, later-issued patents would have additional patent term beyond the expiry date of the first-issued patent. The OTDP doctrine operates to block this outcome of extended patent term whenever the invention claimed in the extended-term-patent would be obvious (not patentably distinct) in light of the invention claimed in the first-expiring patent.  In that situation, the extended-term patent is held invalid or unenforceable unless the patentee had submitted a “terminal disclaimer” that disclaims the potential extra term and also links the two patents together as if they were one big patent. Writing on this topic in a 1963 CCPA decision, Judge Rich noted:

The public should also be able to act on the assumption that upon expiration of the patent [the public] will be free to use not only the invention claimed in the patent but also any modifications or variants thereof which would have been obvious to those of ordinary skill in the art at the time the invention was made, taking into account the skill of the art and prior art other than the invention claimed in the issued patent.

See MPEP 804.

Declining Policy Concerns: Much of the need for the OTDB doctrine evaporated with the 1995 patent term transformation enacted with the URAA. Under the new law, US patent term is now calculated from the application priority date rather than the issue date with the result being that the a divided application no longer necessarily extends the patent term.

Of course, there are some caveats to the notion that OTDB is now an unnecessary relic: First, the term of a patent may be adjusted or extended due to a variety of factors with the result that family member applications may have differing expiry dates. The second source of potential term-separation comes from the statutory definitions of prior art that excludes certain prior applicant disclosures from the scope of prior art. These prior-art exclusions include certain pre-filing disclosures by the applicant as well as prior applications on file with the PTO that are not yet published as of the application latter filing date. The first situation (PTA) was a focus of Gilead Sciences v. Natco Pharma (Fed. Cir. 2014) and the second situation was the focus of AbbVie.

In AbbVie, the patentee held two separate patents both covering aspects of a rheumatoid arthritis treatment. Although both patents were part of the same patent family, only one claimed priority to a certain earlier application. It turns out that the early priority date was not needed because no intervening prior art had been identified. Under the 20-year term rules, the two patents were scheduled to have two different expiry dates.  In the appeal, however, the Federal Circuit affirmed that the second patent was invalid for obviousness type double patenting because it was not patentably distinct from the claims of the first patent.

An interesting aspect of the decision involves the court’s attempt to ground the doctrine in statute rather than the judicial creation heritage that Judge Rich had accepted and recognized.  Judge Dyk writes:

While often described as a court-created doctrine, obviousness-type double patenting is grounded in the text of the Patent Act. . . .  § 101 forbids an individual from obtaining more than one patent on the same invention, i.e., double patenting. As this court has explained, “a rejection based upon double patenting of the
obviousness type” is “grounded in public policy (a policy reflected in the patent statute).”

Although the policy notion may be grounded in Section 101, the court explains that the practical application of the doctrine “looks to the law of obviousness generally” and is “analogous to an obviousness analysis under 35 U.S.C. § 103.”  (quoting Amgen).

While unimportant for the AbbVie decision, the particular grounding of the doctrine may be important going forward because the law of obviousness has been rewritten as part of the America Invents Act of 2011.

The AIA redefines prior art in a number of particular ways. Notably for this discussion, the law spells out the scope of prior art along with certain “exceptions.” These exceptions include disclosures originating from the inventors (Section 102(b)); as well as prior patent applications from the same patent-owned and that were still unpublished by the latter filing date (Section 102(b)(2)(c)). Section 102 has also been rewritten to expressly state that it is defining “prior art” — presumably the entire scope of potential prior art.  When the obviousness provision in Section 103 refers to “prior art” it is now clear that we are talking about prior art as defined in Section 102 with the exceptions as noted.

Although a seeming small change in the statute, these alterations repeatedly make clear that certain prior disclosures by an inventor/owner simply don’t count as prior art either for novelty or obviousness purposes. At the margins there continues to be potential for applicants to “play games” with the filing system in order to extend their effective patent term. However, that potential is so reduced from ages past and the statute now defines prior art at such an explicit level of detail that we leave little room for a judicially created doctrine that further eliminates patents.

Creating versus Eliminating Prior Art: At this point, it would be rather odd for the court to create additional forms of prior art that extend beyond the statute.  What is unclear is whether the courts will be willing to apply the rewritten statute in a way that eliminates old forms of prior art that are no longer part of the statute.  Like OTDP ‘prior art,’ the court will be faced with a similar situation involving prior secret sales or non-public commercial uses by the patentee that previously served as prior art but that do not seem to fit within the re-written definition of Section 102.

One problem with the doctrine is that it is slowly developing. The first challenges may come from a patent applicant who refuses to file a terminal disclaimer in order to get its patent allowed.

= = = = =

I should say that Congress potentially recognizes that double patenting doctrine is potentially problematic and Rep. Goodlatte has proposed an amendment that would codify double patenting.

Federal Circuit Defies Supreme Court in Laches Holding

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by Dennis Crouch

SCA Hygiene v. First Quality (Fed. Cir. 2014)

Rather than focusing on a single event, allegations of patent infringement generally involve a series of actions that each constitute an infringement.  Courts identify each act (making, using, selling, …) as a separate and actionable infringement of the patent.  This notion of repeated acts of infringement (the “separate-accrual rule”) is only occasionally important, but comes up most often in the context of the impact of delays in pursuing court action with the effect of making delays look less egregious.

The Patent Act includes a six-year limitation on collecting back-damages. 35 U.S.C. 286. The old equitable doctrine of laches has also traditionally been available to cut-off damages when the patentee unreasonably and inexcusably delayed in bringing suit.  Under the Federal Circuit’s 1992 en banc Aukerman decision, courts generally apply the same six-year timeline for laches – finding that a six-year delay in filing suit creates a presumption of unreasonable delay that, when coupled with detrimental reliance leads to a laches finding.  Although it only creates a presumption of unreasonableness, in my experience, this six-year delay makes laches much much more likely to be found. Laches then has the ordinary result of cutting-off all pre-suit damages. However, based on the aformentioned theory of individualized acts of infringement, a remedy remains available for infringement that occurs after the lawsuit is filed as well as the potential for further equitable relief to stop future infringement.

Laches is based on a tradition of equity and has no direct tie-in to the patent statute itself. Likewise, Laches is not found in the list of defenses under Section 282 nor identified as an aspect of the statutory limitation on damages. Of course, that is the tradition of equity — existing for times when the law fails.

Putting this entire area somewhat astir is the Supreme Court’s 2014 copyright laches decision in Petrella v. Metro-Goldwyn-Mayer, 134 S.Ct. 1962 (2014).  In similar manner to patent law, the copyright statute has a three-year statute of limitations on filing suit.  In the case, the (alleged) copyright holder had delayed for 18-years in filing suit.  The statute-of-limitations cut-off all but the last three years of recovery and the lower court found that laches blocked recovery for those remaining three years.  However, in Petrella the Supreme Court revived the copyright claim and held instead that laches should not apply because Congress has taken fully spoken on the issue with its statute.

Laches, we hold, cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window. . . .  [L]aches is a defense developed by courts of equity; its principal application was, and remains, to claims of an equitable cast for which the Legislature has provided no fixed time limitation. See 1 D. Dobbs, Law of Remedies 104 (1993) (“laches . . . may have originated in equity because no statute of limitations applied, . . . suggest[ing] that laches should be limited to cases in which no statute of limitations applies”). Both before and after the merger of law and equity in 1938, this Court has cautioned against invoking laches to bar legal relief. See Holmberg v. Armbrecht, 327 U. S. 392 (1946) (in actions at law, “[i]f Congress explicitly puts a limit upon the time for enforcing a right which it created, there is an end of the matter,” but “[t]raditionally . . . , statutes of limitation are not controlling measures of equitable relief “); Merck & Co. v.Reynolds, 559 U. S. 633 (2010) (quoting, for its current relevance, statement in United States v. Mack, 295 U. S. 480 (1935), that “[l]aches within the term of the statute of limitations is no defense [to an action] at law”); County of Oneida v. Oneida Indian Nation of N. Y., 470 U. S. 226, n. 16 (1985) (“[A]pplication of the equitable defense of laches in an action at law would be novel indeed.”).

An important element of the holding is the ongoing separation of legal and equitable remedies — with the notion that laches may still be obtained to block equitable remedies, but not to bar a traditional legal remedy such as past-damages.

In Petrella, the Supreme Court limited its particularly holding to copyright law and noted that “[w]e have not had occasion to review the Federal Circuit’s position” on laches in patent cases. Of course, the parallels between copyright and patent are strong in this situation and so we would expect the Federal Circuit to seriously consider whether Petrella should be applied to overrule Aukerman.

SCA v. First Quality: In 2003, SCA sent a C&D letter to First Quality in 2003 regarding patented adult diapers. However, in 2004, SCA filed for ex parte reexamination that was completed in 2007 with a confirmation of patentability. Finally, in 2010, SCA filed the lawsuit against First Quality.  By that time (beginning in 2006) First Quality had greatly expanded its use of the underlying concepts of the invention (it doesn’t leak).  Rather than deciding the lawsuit, the district court dismissed the case based upon the delay finding both laches and equitable estoppel.

On appeal, the Federal Circuit has affirmed – most notably holding that the Petrella decision has no impact on the adjudication of laches in patent cases.  However, rather than addressing the clear and obvious tension, the court simply wrote:

Petrella notably left Aukerman intact. See id. at
1974 n.15 (“We have not had occasion to review the Federal Circuit’s position.”). Because Aukerman may only be overruled by the Supreme Court or an en banc panel of this court, Aukerman remains controlling precedent.

While clinging to the Aukerman approach, affirmance was easy because the six-year delay creates a strong presumption of unreasonable delay.  However, the court did reverse the summary judgment of equitable estoppel because there was no evidence of the required affirmative act such as a misleading communication leading to detrimental reliance on the notion that the defendant’s infringement would be permissible.

The decision here is notable for its glaring reticence. The panel of Judges Reyna, Wallach, and Hughes are all relatively new and perhaps expect en banc review of this issue.  Many (perhaps most) other judges on the court would have made their mark rather than simply passing.

Although I believe, on balance, that Petrella controls here, the case is not open-and-shut because there are important distinctions as you move from copyright to patent. Notably, the copyright statute of limitations is a more direct and total limit on filing suit while in patent law the statute only limits the collection of too-far-back damages. Thus, in this situation, Congress seems to have spoken more fully in the copyright realm. Additionally, the three versus six year limit appears important because, in the time-scale of lawsuits and three years is a relatively short time while six-years begins to allow for much more unreasonableness and detrimental reliance.  That time differential is further compounded by the fact that three years is quite a small bit of the copyright term (5%) while six-years is often more than 1/3 of the patent term — suggesting that a patentee’s should move more quickly.

If anything, this issue will be interesting to watch.