Debra Anderson recently published her checklist for ensuring that the PTO is notified of all relevant prior art and public uses of an invention. What is on your checklist?
Remind your client of the duty to disclose relevant prior art, including related copending applications (and make sure to file this prior art with the United States Patent and Trademark Office).
Make sure that the examiner at the patent office is aware of activity in related cases, if handled by other examiners.
Ask [inventors and in-house attorneys] about attendance at conferences [including notes taken], posters, and abstracts submitted to journals.
Remember to file prior art uncovered in foreign searches.
Ask about offers for sale or other public disclosures through use or publication.
If you are filing a declaration, make certain that it is clear to the PTO where the interests of the declarant lie. Do not conceal from the PTO facts known to you that are adverse to your client’s position (such as negative data), in order to advance your client’s case.
Discuss the date of invention and related evidence with your client.
EISAI v. DR. REDDY’S LABORATORY and TEVA PHARMACEUTICALS (Fed. Cir. 2008)
Eisai’s blockbuster ulcer drug AcipHex boasts over $1 billion in annual worldwide sales. The company holds a patent covering the active ingredient – rabeprazole – and its salts. Dr. Reddy’s and Teva each filed ANDAs and Eisai filed suit to block generic entry.
Eisai won a summary judgment decision that the patent is infringed and enforceable. The appeal focuses on obviousness and inequitable conduct.
Obviousness of Chemical Compounds: Structural similarity is the touchstone of the obviousness inquiry for patents claiming a novel chemical compound. A looming question for pharmaceutical companies, however, is how the Supreme Court’s decision in KSR v. Teleflex will impact chemical patents.
In KSR, the Supreme Court eased a defendant’s pathway for invalidating a patent as obviousness. KSR’s focus, however was on inventions created by combining known elements. Here, the individual components of Eisai’s claimed compound were all known. However, the Eisai decision cabins-in KSR’s importance by showing that the assumptions found in KSR often do not apply to chemical compound cases.
“The Supreme Court’s analysis in KSR thus relies on several assumptions about the prior art landscape. First, KSR assumes a starting reference point or points in the art, prior to the time of invention, from which a skilled artisan might identify a problem and pursue potential solutions. Second, KSR presupposes that the record up to the time of invention would give some reasons, available within the knowledge of one of skill in the art, to make particular modifications to achieve the claimed compound. Third, the Supreme Court’s analysis in KSR presumes that the record before the time of invention would supply some reasons for narrowing the prior art universe to a “finite number of identified, predictable solutions.” In Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc., 520 F.3d 1358, 1364 (Fed. Cir. 2008), this court further explained that this “easily traversed, small and finite number of alternatives . . . might support an inference of obviousness.” To the extent an art is unpredictable, as the chemical arts often are, KSR’s focus on these “identified, predictable solutions” may present a difficult hurdle because potential solutions are less likely to be genuinely predictable.”
Thus, in chemical compound cases, “a prima facie case for obviousness for a chemical compound still, in general, begins with the reasoned identification of a [prior art] lead compound.” Obviousness can then based on structural similarity along with some “motivation that would have led one of ordinary skill in the art to select and then modify a known compound (i.e. a lead compound) in a particular way to achieve the claimed compound.” Although the motivation to modify the prior art can come from many different fields, some motivation is needed. In chemical cases, this motivation may be proved by showing a ‘sufficiently close relationship’ between the prior art and claimed compound that would ‘create an expectation . . . that the new compound will have similar properties to the old.’ (internal quotation marks removed). In other words, an obvious substitution would be ‘predictable.’
In this case, the lead compound – Lansoprazole – is quite similar to the claimed compound Rabeprazole. The difference is only found in a trifluroethoxy substituent at the 4–position (see figure) versus a methoxypropoxy substituent. Although structurally similar, the CAFC could not find any motivation to substitute the active groups. In particular, the court noted that it would not make sense to drop trifluroethoxy from the prior art — since it is that substituent that activated Lansoprazole.
“The record, however, shows no discernible reason for a skilled artisan to begin with lansoprazole only to drop the very feature, the fluorinated substituent, that gave this advantageous property.”
Nonobviousness affirmed.
A High Bar for Inequitable Conduct: As usual, Judge Rader took a hard stance against inequitable conduct. He writes:
“Inequitable conduct in prosecuting a patent application before the United States Patent & Trademark Office may take the form of an affirmative misrepresentation of material fact, a failure to disclose material information, or the submission of false material information, but in every case this false or misleading material communication or failure to communicate must be coupled with an intent to deceive. Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1378 (Fed. Cir. 2008). Materiality, defined as “what a reasonable examiner would have considered important in deciding whether to allow a patent application,” and intent are both questions of fact, and require proof by clear and convincing evidence. Id. To satisfy the “intent” prong for unenforceability, “the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive.” Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc) (citing Norton v. Curtiss, 433 F.2d 779 (CCPA 1970)). Gross negligence is not sufficient. Id. This is a high bar.”
This opinion along with Judge Rader’s recent dissent in the Aventis case may show a growing split within the court on the issue of inequitable conduct.
Notes:
I updated this report to add a squishy word: “often.” The modified sentence now reads: “However, the Eisai decision cabins-in KSR’s importance by showing that the assumptions found in KSR often do not apply to chemical compound cases.”
Nowotarski and Bakos propose opening the patent prosecution process to third parties – at least to allow some forms of protests or pre-issuance oppositions. Those activities are expressly barred by 35 U.S.C. 122(c). [LINK]
Although no direct oppositions are available to third parties worried about pending patent applications, an increasing number of attorneys are employing a strategy that could be termed a ‘poor-man’s opposition.’ The round-about strategy relies on the patent applicant’s duty of candor to ensure that opposition materials be submitted to the PTO.
Poor-Man’s USPTO Opposition Procedure:
Create package of prior art and report explaining why pending claims are unpatentable;
Forward package to attorneys representing patentee with reminder of the duty of candor (retain evidence of submission);
Applicant should submit entire package to PTO;
Monitor PAIR to ensure that examiner receives and uses package;
If necessary provide follow-up evidence and reports.
If the patent applicant fails to submit either the prior art or the associated reasoning, any issued patent may well be found unenforceable due to inequitable conduct during prosecution. An additional feature of this procedure is that the opposing party can – at its option – remain anonymous. Many attorneys don’t like this process because of the lack of control and because it “shows your hand.”
Scanner Technologies Corp. v. ICOS Vision Systems (Fed. Cir. 2008)
There are many companies that value quick prosecution and issuance. Yet, few have taken the PTO’s offer of accelerated examination (AE). Potential applicants avoid the accelerated examination program for several reasons – most of which are associated with the AE requirements to (i) search for prior art; (ii) identify all claimed elements found in each relevant reference; and additionally (iii) prepare an explanation of why the claims are patentable over the references. These AE requirements are costly and potentially open the applicant to charges of inequitable conduct (as well as narrow claim scope).
In this case, Scanner saw ICOS products at a trade show and subsequently filed a petition to make special in the hopes that its patent would issue more quickly. The petition argued that the petition should be granted based on ICOS products. The petition was granted and the patent issued within the year.
After Scanner sued for infringement, the district court found the patent unenforceable due to inequitable conduct in filing the petition to make special. On appeal, the CAFC reversed – but in the process revived aspects of the inequitable conduct inquiry. The particular conduct at issue included statements in the petition that infringement was clear even though the accused product had not been fully inspected.
Broad Concept of Materiality: Although inequitable conduct issues often focus on whether the misconduct was “material to patentability.” The CAFC began by quoting its own 1994 GE v. Samick opinions holding that a false statement in a petition to make special should be considered “material” if “it succeeds in prompting expedited consideration of the application.” This broad consideration of materiality follows the Nilssen decision holding that misrepresenting an applicant’s status as a small entity (in the payment of post issuance maintenance fees) may also be considered material.
“[W]e must reject Scanner’s view that inequitable conduct cannot be shown absent a misrepresentation that bears on the patentability of the claims in the application. When the setting involves a petition to make special, as is the case here, we reaffirm that a false statement that succeeds in expediting the application is, as a matter of law, material for purposes of assessing the issue of inequitable conduct.”
Reasonable Inferences Favor Patentee: Although the CAFC agreed that the type of conduct here could be inequitable conduct, this case did not present sufficient evidence. Because materiality and intent must both be proven with clear and convincing evidence, the appellate panel requires that all reasonable inferences be given weight:
“Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference.”
Because the CAFC found potential reasonable explanations for the claims of infringement, it held that those statements could not be considered false or misleading, and thus not material.
By clearing the inequitable conduct charges, Scanner avoids paying ICOS attorney fees. However, the CAFC affirmed that all claims of the patents were invalid and not infringed.
Notes:
Interesting statement: “We also affirm the district court’s judgment invalidating all claims of the patents in suit given the stipulation between the parties that the case would be tried on a representative claim.”
In 2007, a unanimous CAFC panel affirmed a district court’s finding that Ole Nilssen’s light bulb patents were unenforceable due to inequitable conduct. The improper prosecution conduct included failing to disclose a close relationship with a 132 declarant; misleading priority claims; and improper payment of a small entity fee.
Now on appeal is whether Nilssen owes attorney fees under 35 U.S.C. § 285. As with most civil cases in the US, the general rule in patent cases is that each party pays their own attorney fees. Section 285 of the patent act provides a limited exception — providing that a district court “in exceptional cases may award reasonable attorney fees to the prevailing party.” Here, the district court found the case exceptional based on the aforementioned inequitable conduct as well as “litigation misconduct” and the filing of a “frivolous lawsuit.”
Benign Inequitable Conduct: Nilssen argued that his alleged inequitable conduct had very little real impact — i.e., that it was benign. The CAFC rejected that argument — finding that inequitable conduct is never benign. “In fact, it is a contradiction to call inequitable conduct benign.”
Building a Mountain from Pebbles: Nilssen makes a good argument that none his individual acts of misconduct appear bad enough to call the case ‘exceptional.’
These acts of misconduct include late production of documents, disavowal of a prior interrogatory response (and never filing a formal correction), attempting to exclude interrogatories that were never signed; informally withdrawing patents from suit, but waiting until only a few months before trial to formally withdraw the patents; and waiving attorney client privilege without providing formal notice to Osram.
Each of these actions can rather easily be explained as “either harmless oversight or permissibly rough litigation tactics.” This is perhaps especially true when you consider that the K&E firm – well known for its relentless bull dog litigation style — represented Osram.
To the CAFC panel, however, the “multiplicity” of these individual elements were sufficient to warrant the exceptional case finding — even without an individual smoking gun.
In dissent, Judge Newman did not see an exceptional case:
The statutory authority to award attorney fees was intended to “prevent gross injustice,” not to shift the economic balance against the unsuccessful plaintiff.
Notes:
The first line of the case reads: “Nilssen is the owner and principal inventor of over 200 patents…” What does the court mean by “principal inventor” and is there any legal significance associated with that designation?
TALtech v. Esquel Apparel (Fed. Cir. 2008) (nonprecedential)
Summary: (1) An applicant need not disclose its own prior work or inspiration for invention if merely cumulative of other references cited; (2) Failing to identify the brand of adhesive tape used in the invention was a best mode violation — resulting in claim invalidation; (3) There is no presumptive order of the steps in a process claim – unless the claim language “requires an ordering of steps” either implicitly or explicitly.
One of TAL’s employees – John Wong – was inspired by TAL’s use of heat-fusible adhesive tape in manufacture raincoats. Over a long process of trial and error, Wong figured out how to use a particular variety of adhesive tape to create a dress shirt that does not pucker after washing.
After receiving a US utility patent, TAL became embroiled an patent litigation with another Hong-Kong based manufacturer – Esquel Apparel. In that litigation, the district court found TAL’s patent unenforceable due to inequitable conduct during prosecution and invalid for failing to submit fulfill the “best mode” requirement of 35 U.S.C. 112 (inter alia). Based on the inequitable conduct, the court also awarded attorney fees to Esquel.
Inequitable Conduct: “In this case, the district court found TAL liable for inequitable conduct because inventor John Wong had not disclosed the raincoat seam that inspired his invention to the PTO.” On appeal, the CAFC first dispelled any notion that a patent applicant is required to disclose the inspiration for the invention. Although not stated by the court, 35 U.S.C. 103(a) arguably indicates that the inspiration is not relevant to the patentability inquiry: “Patentability shall not be negatived by the manner in which the invention was made.”
Here, the CAFC noted that TAL’s raincoat may well have been “merely cumulative” to a German patent application that was submitted during prosecution. “If the undisclosed raincoat seam was merely cumulative to [the German application], then no inequitable conduct lies in its nondisclosure.”
Best Mode: At the time of filing, Wong had settled upon a particular type of adhesive tape – known as Vilene SL33 – as the best way to form the seams. The patent application did not, however, disclose Vilene SL33. A patent may be invalidated for failing to submit a “best mode” if (1) the inventor possessed a best mode at the time of filing; and (2) the written description fails to disclose the best mode in a way to allow one reasonably skilled in the art to practice that mode.
Possession of the Best Mode: The evidence clearly showed that Wong “experimented with many adhesives but settled on a preference for one.” Thus, the court agreed that the first prong was met — the inventor did possess a best mode at the time of filing – i.e., Vilene SL33.
On the second prong the CAFC disregarded the applicant’s argument that the PTO “prefers the use of generic names of products” and that there is no evidence that the Vilene brand products are actually better quality than other brands. Instead, the court honed-in on the result of the first prong – that Vilene SL33 was the best mode known to the inventor – and agreed that the best mode had not been disclosed. “TAL has not explained how the written description teaches one having reasonable skill in the art the way to practice the best mode as found in the analysis of the first prong – the use of Vilene SL33.”
Process Order: “Generally, there is no presumption of order, and so a claim with many steps can be infringed by an accused process performing the claimed steps in any order. However, we will find that the claim requires an ordering of steps when the claim language, as a matter of logic or grammar, requires that the steps be performed in the order written, or the specification directly or implicitly requires such a narrow construction.”
In this case, the claimed process implicitly requires a particular ordering. In particular, the bonding adhesive must be presented before a folding step because the folding step requires that the garment abut the bonding element.
Conclusion: The asserted claims were found invalid and not infringed. The remand appears only necessary to determine inequitable conduct and consequently potential attorney fees.
Aventis v. Amphastar Pharmaceuticals and Teva (Fed. Cir. 2008)
Summary: The CAFC affirmed a ruling that the Lovenox patents – owned by Aventis – are unenforceable due to a failure to submit important experimental information during prosecution. In dissent, Judge Rader could not find clear and convincing evidence of intent to deceive the PTO.
Inequitable Conduct: The Aventis patents are directed toward a heparin based drug used to help prevent blood clots. The specification includes a particular set of experimental examples that show an increased half-life of the claimed admixture. During prosecution, the applicant used those examples along with additional data to prove that its drug was inherently different from a prior art drug.
Aventis did not report to the PTO that its experiments showing an increased half-life of the claimed admixture used a different dosage than those testing the prior art drug. In a non-precedential 2006 opinion, the CAFC found the withheld information was material to prosecution — especially because Aventis argued that the benefit of the longer half-life was a potentially lower dosage. [non-prec decision].
By itself, a material omission does not render a patent unenforceable. Rather, a defendant must also show that the patentee acted with intent to deceive the patent office. The district court found intent through circumstantial evidence, and the CAFC affirmed after failing to find any clear error in the way that the district court interpreted the facts.
Dissent: In a strongly worded dissent, Judge Rader argued that inequitable conduct should only be found in “extreme cases of fraud and deception.” In particular, Judge Rader has seen that the intent requirement has lost its import as the court increasingly allows intent to be inferred from loose circumstantial evidence.
“More recently, however, the judicial process has too often emphasized materiality almost to the exclusion of any analysis of the lofty intent requirement for inequitable conduct. Merging intent and materiality at levels far below the Kingsdown rule has revived the inequitable conduct tactic.”
Here, Judge Rader argues that there is also compelling evidence that Aventis did not intend to deceive the patent examiner. For instance, Judge Rader noted that that Aventis actually “submitted all of the underlying data to the patent office with [its] second declaration on June 9, 1994.” Furthermore, focusing on the Aventis scientist who submitted the half-life studies, Judge Rader noted that his stellar reputation should also sway the court:
“I find it difficult to fathom that a scientist of Dr. Uzan’s caliber and reputation would engage in such deception. As the district court points out, Dr. Uzan has had a magnificent fifty year career with Aventis, has published over 350 scientific articles and has received numerous prestigious awards including the Galien Research Prize, France’s highest award for drug discovery. This world-class scientist would hardly risk his reputation and tarnish his brilliant career for a single example in the prosecution of a patent for an invention in which he was not even involved.”.
Result: The direct narrow result of this case is that patent applicants should clearly state experimental differences when comparing a claimed compound or method with the prior art. More broadly, this decision creates yet another reason for applicants to favor short & clean prosecution. It also emphasizes the importance of using a patent attorney or agent that truly understands the science behind each submission.
In re Volkswagen(5th Cir. en banc). A self-titled “ad hoc committee of intellectual property trial lawyers in the Eastern District of Texas” have filed a brief in the pending VW case arguing on the substance that the E.D.Tex. courts do not excessively retain cases in a way that is any different from other jurisdictions. The AIPLA amicus brief in the same case argues that too many cases are being heard in Texas. [Trial Lawyer Brief] [More Info].
The non-profit IP Hall of Fame is asking for nominations for inductees in the 2008 IP Hall of Fame. The award is designed to honor individuals who have made significant contributions to today’s Intellectual Property System. www.iphalloffame.com. The award will be limited to five inductees this year. A couple of notes: (1) The Hall of Fame is non-profit, but sponsored by the for-profit IAM-Magazine. (2) I am a member of the Hall of Fame Academy and will vote on the inductees. (Being on the academy is different from being an inductee).
John Doll (Commissioner for Patents) will be taking questions on May 13 (11:00 am CST) as part of a webinar sponsored by Kirkpatrick & Lockhart. It appears that you must pre-register for this FREE event. LINK.
While much of the proposed patent reform legislation has been directed toward easing pain felt by major corporations being sued for patent infringement, one proposed measure would move inequitable conduct issues to the PTO for a decision. NY Times discussed this last week as a battle between Innovator and Generic Pharma – with the lobbyists winning. [LINK]
The district court granted summary judgment of non-infringement to the defendant CA. On appeal, considers preamble claim construction and also examines the defense of laches, inequitable conduct, and inventorship.
This is the third time that the antivirus patent at issue has been seen by the CAFC. In a prior appeal, Symantec was a defendant. After seeing the light, Symantec purchased the patent and continued a pending lawsuit against CA — this time as the plaintiff.
Preamble Limitation: The asserted claim preamble begins as follows: “In a system for transferring digital data for storage in a computer storage medium, a method of screening the data as it is being transferred.” The question on appeal is whether the preamble limits the claim to coverage of screening that occurs only “as [the data] is being transfered.”
The CAFC found that the preamble term not limiting because the term does not recite “essential structure or steps” nor does is it “necessary to give life, meaning, and vitality” to the claim. One guidepost for ascribing meaning to a claim preamble is a prosecution history of argument based on the preamble. Here, although the preamble term had been added during prosecution, the court found no evidence that the term had its “own independent significance” or that the applicant demonstrated “clear reliance on the preamble during prosecution to distinguish the claimed invention from the prior art.” (Quoting Catalina Marketing, 289 F.3d 801 (Fed. Cir. 2002)).
[I]t is assumed that the preamble language is duplicative of the language found in the body of the claims or merely provides context for the claims, absent any indication to the contrary in the claims, the specification or the prosecution history.
Consequently the preamble term is given no effect. Claim construction reversed and the non-infringement decision vacated in Symantec’s favor. (Based on the new claim construction, validity must also be reconsidered).
Laches: The CAFC dismissed the defendant’s laches claim. Here, the court noted that that laches for delaying litigation is considered on a product-by-product bases and thus the delay is restarted when a defendant substantially changes its product line.
Inventorship: In a cross-appeal, a Mr. Levin asserted that he was a co-inventor to the asserted patent. As a matter of law, a co-inventor’s self-interested testimony is not sufficient to prove inventorship — rather, the inventor must provide corroborating evidence (that is sufficient to prove inventorship by a clear and convincing standard under a rule of reason). Here, Levin proved that he had a meeting with listed inventor and also that the listed inventor lacked proof that he invented a claimed portion. On appeal, the CAFC affirmed that this evidence was not sufficient to prove Levin’s inventorship and that the evidence regarding the listed inventor’s contribution was irrelevant.
Note: My former firm McDonnell Boehnen continues to represent Symantec in this matter.
March 6, 2008, I will be the keynote speaker at the Missouri Inventor of the Year award program sponsored by the Bar Association of Metro St. Louis (BAMSL). I look forward to seeing my fellow Missourians there. 6:00 PM in Forest Park [LINK]
April 11–13, 2008, I will be part of the annual Oregon/Washington Patent Conference — This year at the Salishan Resort on the Oregon coast. The speaker list is stacked, including John Duffy on Obviousness, Ken Port on Trademark Extortion, Paul Janicke with a ‘top ten’ list, Lisa Dolak on Inequitable Conduct, and others. I’ll be speaking about forward looking damages and injunctive relief.
The CAFC once again reaffirmed patent law’s parallel to Chicago democracy: File early and often.
The patentee, Atlanta Attachment, won a summary judgment on issues of infringement and validity. Missouri based defendant Leggett & Platt appealed — arguing that the patented sewing machine had been “on sale” for more than one year before Atlanta Attachment filed its patent application.
The on sale bar of 102(b) invalidates an issued patent that was on sale prior to the one-year critical date. In Pfaff, the Supreme Court defined “on sale” as requiring an embodiment of the claimed invention being subject to a commercial offer for sale and being ready for patenting at the time of the sale. The on sale bar can be negated in certain cases where experimentation was still occurring.
Facts: Atlanta Attachment was working with Sealy to develop a special ruffle producing sewing machine. Over the course of a few years, several prototypes were sent to Sealy for experimentation. Each one was returned to the plaintiff for improvements. The third prototype included all of the claimed elements. Atlanta Attachment invoiced Sealy and was paid for the prototype. Instead of delivering the prototype, however, Sealy merely tested the prototype at the patentee’s facility and was later refunded its purchase price. At that time. Sealy made further suggestions regarding changes. In addition, Atlanta Attachment had offered to sell 50 production units prior to the critical date.
Holding:
On Sale: Although never actually delivered, prototype was sold an invoice was sent and paid. Additionally, the offer to sell the 50 production units constitutes an offer to sell. Here, the invention was considered on sale because the asserted claim was broadly written – even though the prototype was not the eventual preferred embodiment.
Experimental Use: First, the CAFC held that the experimental use exception does not apply after a commercial offer for sale has taken place. Additionally, Atlanta Attachment cannot claim the experimental use exception for Sealy’s tests since “experimentation conducted to determine whether the invention would suit a particular customer’s purposes does not fall within the experimental use exception” and because Atlanta Attachment did not control the testing. This is a subtle point – the patentee apparently retained control over the device by keeping it in its facility, but did not control the testing of the device.
Ready for Patenting: A prototype that is reduced to practice and works for its intended purpose is ready for patenting. The “intended purpose” here is shaped by the patent claim. And, later refinement of a device does not mean that it wasn’t ready for patenting.
Thus the claim is invalid under the on sale bar of 35 U.S.C. §102(b). Additionally, the CAFC asked the court to reexamine whether the patentee’s failure to submit information about the prototypes would be sufficient to lead to a finding of unenforceability due to inequitable conduct.
Concurrence: Judges Prost and Dyk joined the majority opinion, but also penned a separate concurring opinion begging for en banc review of the “confusing” jurisprudence on the experimental use exception to 102(b). “Without considering these issues in a comprehensive manner in future cases, we will never escape from the confused status of our current caselaw.” They specifically believe that this and other CAFC decisions are wrongly decided because of the absolute disregard of any experimental use after an invention is reduced to practice.
Claim 17 of Erico’s patent covers a method of supporting communication cables with saddle-hooks so that the sag distance (B) is less than 30 cm. During an earlier reexamination, the PTO cancelled several claims, but the validity of claim 17 was reaffirmed. Doc’s copied Erico’s saddle-hook design (called j-hooks) and follows the patented method in its daily business. Litigation ensued.
During litigation, the district court granted a preliminary injunction against Doc’s — finding that Erico had sufficiently satisfied the traditional four factor test of equitable preliminary relief: (1) patentee’s likely success on the merits; (2) irreparable harm associated with continued infringement; (3) a balance of hardships favoring the patentee; and (4) the public interest favoring preliminary relief.
Preliminary Injunction: For preliminary relief, the first factor is critical. Without showing probable success, a plaintiff has no chance of succeeding on the motion. More to the point, this usually requires proof of infringement of a valid enforceable claim. Here, the lower court considered issues of novelty, obviousness, and inequitable conduct in determining that the asserted claim was likely valid and enforceable.
Substantial Question of Validity: On appeal, the CAFC vacated the PI, finding that the defendant had raised sufficiently “substantial question of invalidity to show that the claims at issue are vulnerable.” According to the divided appellate panel (Judges Rader & Dyk), the threshold substantial question is met when the evidence “cast[s] doubt on the validity” of the asserted claims.
Here, the panel was able to find doubt because of a combination of prior art and their “reasonableness” of combination.
“It is reasonable to see that downwardly flared flanges coupled with the EIA spacing requirements could implicitly motivate a person of ordinary skill to use J-Hooks with the EIA spacing to achieve cable sag of no more than about 30 centimeters. See KSR”
Looking next at secondary considerations of validity, the majority panel found that such considerations cannot overcome the reasonable inference found above.
“Thus, Doc’s invalidity challenge based on obviousness cast enough doubt on the validity of Claim 17 to negate likelihood of success on the merits as to infringement of a valid patent. At this point, of course, Doc’s has only cast doubt on the validity of the ‘994 patent.”
Abuse of Discretion: A preliminary injunction is overturned only for clear error or mistake of law. Consequently, the majority’s holding is not simply a difference of opinion — rather it is a finding that the lower court committed an abuse of discretion by weighing the validity issues in the patentee’s favor.
Preliminary injunctions were difficult to obtain even before the Supreme Court’s decision in EBay and KSR. This decision simply moves the ratchet another half turn.
In Dissent, Judge Newman makes three primary arguments: (1) that preliminary injunctions should be easier to obtain because they preserve the status quo; (2) that the first factor of equitable relief should not determine the outcome (all four factors must be considered); and (3) that, even if the first factor is most important, a defendant simply ‘casting doubt’ on a patent’s validity is not sufficient. Rather, the inquiry should focus on which party is more likely to actually succeed on the merits.
Notes:
Board Decision: Ex parte Raimond Scott Laughlin, Appeal No. 2002-0244 (heard on May 14, 2002).
Asserted claim of U.S. Patent No 5,740,994: “17. A method of supporting a run of a bundle of low voltage communication cable, comprising the steps of providing spaced supports, each comprised of a curved saddle having smooth down-turned obtuse angle lateral edges, suspending the run from saddle to saddle, and spacing the saddles along the run so that the run sags between saddles no more than about 30 cm below the saddles.”
“. . . For several years, modernizing the patent system has been at the front and center of our mutual legislative agenda. Meaningful patent reform is crucial to America’s ability to maintain its competitive edge in the world, and now — after years of careful spadework — Congress has the chance to move forward.
The Patent Reform Act of 2007 (S.1145) is the product of years of deliberation and study within Congress and by many esteemed agencies and institutions, including dozens of hearings with the testimony of scores of witnesses, extensive and substantive mark-up sessions, and hundreds of meetings and discussions with countless stakeholders representing a sweeping array of interests in the patent system.
. . . the current law was last thoroughly updated more than 50 years ago, and much has changed since then. Think about this: The last time the patent system was significantly changed, the structure of DNA had not been discovered; gasoline was around 27 cents a gallon; and we had not yet sent a man to the moon. Our economy is no longer defined by assembly lines and brick-and-mortar production; we are living in the Information Age, and the products and processes that are being patented are changing as quickly as the times themselves. Unfortunately, Congress has neglected to modernize our patent system to keep pace with the boom in American innovation. Recent Supreme Court decisions have nudged things in the right direction, reflecting the growing sense that questionable patents are too easy to get and too hard to challenge. But the Court is constrained in its decisions by the laws on the books. It is time to dust off and refresh our patent laws.
If we are to maintain our position at the forefront of the global economy and continue to lead the world in innovation and production, we need an efficient and streamlined patent system that issues high-quality patents while limiting wheel spinning and counterproductive litigation. Our bipartisan reform bill is a solid step toward achieving these goals.
In 2003, the Federal Trade Commission reported that patents of questionable validity were inhibiting innovation and competition, harming consumers and businesses and our overall economy. The FTC further found that relying on court battles to challenge questionable patents was unduly costly and cumbersome. To address this problem, our bill would set up an administrative, post-grant review procedure. This would not only cut down on legal costs for the patent holder and the patent challenger, but it would also leave the issue to those best equipped to review patents — the experts at the U.S. Patent and Trademark Office.
We must also restore fairness to the rules that govern how courts determine damages when a patent is infringed. The threat of excessive damages is ruthlessly curtailing progress, and the loss of jobs and innovation is directly linked to litigation costs. . . .The goal of our reforms is to ensure that patent holders will be able to obtain appropriate compensation in case of infringement.
Under today’s rules … [p]laintiffs can “forum shop,” filing their lawsuits in jurisdictions that have virtually no relevance to the underlying case, but everything to do with where the plaintiff stands the best chance of winning the case. Our bill would prevent this gaming of the system….
Another provision to clarify and limit use of the so-called inequitable conduct defense would also bring balance to the patent system. …
…
As legislators, we know we are headed in the right direction when everyone is complaining that the entire bill is not going their way. We see this as a necessary, albeit somewhat difficult, part of the legislative process. But we welcome it. But at the end of day, we are confident that we will resolve the remaining issues in ways that should make everyone comfortable and will ensure final passage.
The Senate has a tremendous and historic opportunity — and a constitutional responsibility — to further strengthen our nation’s competitiveness through meaningful patent reform. Now is the time.
Bayer holds several patents relating to genetically modified Bt corn. This case arose when Monsanto sued Bayer in Missouri for a declaratory judgment stating that the patents were not infringed; invalid; and unenforceable. The Eastern District of Missouri Court (Judge Webber) held all the patents unenforceable due to inequitable conduct during prosecution. On appeal, the Federal Circuit affirmed the holding of unenforceability.
Bt corn contains a gene that codes for Bt toxin — an insect repellent protein found naturally in Bacillus thuringiensis (Bt) bacteria. Bayer’s patents cover the chimeric Bt-plant-promoter gene; plant cells expressing Bt toxin; plants expressing Bt toxin; and the method of modifying plants to express Bt toxin.
Notes from a Conference: Before Bayer’s patent application, another scientist (Dr. Wayne Barnes) attended a conference and presented a poster on Bt genetic issues. One Bayer scientist attended the conference and took extensive notes from the poster. Those notes were given to other Bayer Bt scientists including the individual responsible for prosecuting Bayer’s patent applications.
During prosecution, Bayer submitted Dr. Barnes Abstract, but did not submit the notes. According to the court, those notes were material because they provided evidence of Dr. Barnes disclosure. (A reasonable examiner would have considered them “important in deciding whether to allow the … application”). The inference of intent was easily made since Bayer took a position at the PTO that was directly refuted by information contained in the note.
Not Prior Art: One important – but unstated – aspect of this case is that the notes are not prior art. Rather, in this case the prior art was the publicly displayed poster. Thus, the reminder: Rule 56 requires submission of prior art as well as information about the prior art that is either (1) material to patentabilty or (2) a reasonable examiner would consider important in deciding whether to allow the application.
Declaratory Judgment Power: Monsanto filed its DJ action against four Bayer patents. In response, Bayer provided a “statement of non-liability” along with a promise not to sue Monsanto on three of the patents. Under CAFC precedent, such a statement normally removes a court’s jurisdiction over those patents — except where, as here, the court retains separate jurisdiction based on a Section 285 request for attorney fees. Thus, because the patents are still before the court, it retains jurisdiction to hold them unenforceable. In addition, the CAFC noted that the recent Nilssencase also allows a court to hold patents unenforceable even after being dropped from the lawsuit.
Innogenetics holds a patent covering a method of detecting Hepatitis C Virus (HCV) using hybridizing probes complementary to the 5’ untranslated region of HCV. The patent was found infringed and not invalid.
On appeal, Abbott follows the currently favored “kitchen sink” approach:
On appeal, Abbott challenges a myriad of issues, including the district court’s claim construction [of the word “as”], summary judgment of literal infringement, evidentiary exclusions as to Abbott’s obviousness and anticipation defenses, judgment as a matter of law that the Resnick patent did not anticipate claim 1 of the ’704 patent, summary judgment of no inequitable conduct, award of attorney’s fees to Innogenetics for Abbott’s counterclaim of inequitable conduct due to its exceptionality, and grant of a permanent injunction.
The appellate panel patiently discussed each issue. Here, we only discuss a few:
Infringement by Later-Invented Technology: Abbott proposed that it could not infringe because its particular “Realtime PCR” method of detecting HCV had not yet been invented at the time of the patent application. Although the CAFC held that Abbott had procedurally forfeited that argument, the appellate body also noted that the argument is “lacks merit.”
Essentially, Abbott argues that a patent can never be literally infringed by embodiments that did not exist at the time of filing. Our case law allows for after-arising technology to be captured within the literal scope of valid claims that are drafted broadly enough. See SuperGuide Corp. v. DirecTV Enters., Inc., 358 F.3d 870, 878-80 (Fed. Cir. 2004).
Late Disclosure: Abbott disclosed a prior art reference (the Cha patent) the day before discover closed (and after all depositions had been completed). Then, on the day before trial, Abbott requested that the jury instructions be amended to include the Cha patent as an anticipatory reference. The district court denied Abbott’s motion as unduly late and prejudicial to Innogenetics. On appeal, the CAFC affirmed — taking Abbott to task for its hard litigation tactics.
This case aptly demonstrates the pitfalls of playing fast and loose with rules of discovery. Conclusory expert reports, eleventh hour disclosures, and attempts to proffer expert testimony without compliance with Rule 26 violate both the rules and principles of discovery, and the obligations lawyers have to the court. Exclusion and forfeiture are appropriate consequences to avoid repeated occurrences of such manipulation of the litigation process.
Anticipation: The kitchen sink tactic worked — The CAFC did agree with Abbott that its expert’s testimony on anticipation had been improperly disregarded. The district court had disregard the testimony – finding that the expert had based his conclusions on an incorrect understand of the claim term ‘genotyping.’ On appeal, the CAFC used its own knowledge of biotech law to find that the district court’s findings on this issue were ‘clearly erroneous.’ Consequently, Abbott gets a new trial on the issue of anticipation.
Injunctive Relief: The plaintiff agreed to jury instructions that would allow the jury to award both past and future damages. The award of $7 million appeared to include both past and future damages. In addition, the court issued an injunction to halt future infringement. On appeal, the CAFC held that the plaintiff was improperly double-dipping — a patentee may not collect a lump-sum for future damages and, at the same time, be awarded injunctive relief to stop future infringement.
The reasonable royalties awarded to Innogenetics include an upfront entry fee that contemplates or is based upon future sales by Abbott in a long term market. When a patentee requests and receives such compensation, it cannot be heard to complain that it will be irreparably harmed by future sales. . . . As a result, the district court’s grant of an injunction prohibiting future sales of Abbott’s genotyping assay kits was an abuse of discretion and must be vacated.
Patent Reform: A draft report on S.1145 is available here. [via PatentDocs]. Although currently supported by more Democrats than Republicans, this is a bipartisan bill that could pass. A summary:
Change the system to a “first-inventor-to-file” system;
Reduce patent damage awards;
Enhance post-grant opposition proceedings;
Provide for publication of all applications;
Allow for better third-party submissions;
Limit patent infringement venues;
Allow the PTO to set its own fees;
Remove the residency restriction for judges on the United States Court of Appeals for the Federal Circuit;
Authorize USPTO to require pre-filing patent searches and explanations;
Re-vamp the doctrine of inequitable conduct;
Clarify the rules on unintentional delays in filing;
Limit patent infringement liability for electronic check processing;and
End USPTO “fee diversion”.
Patent Reform: Remember, the House has already passed the companion bill. Passage could allow President Bush to ride out of office as the innovation president.
In 2001, Armament Systems (ASP) sued IQ Hong Kong and twenty-three other companies for infringement of its LED flashlight patent. (Patent No. 6,190,018). Litigation was stayed while the PTO conducted a defendant-requested ex parte reexamination. The patent subsequently was re-confirmed by the PTO as valid and litigation resumed in 2004.
During reexamination, the inventor (and ASP president) submitted a Rule 131 declaration evidenced by an early sketch of the invention.
Inequitable Conduct: The defendants allege that the sketch submitted during re-exam was a false document that had been fraudulently back-dated to overcome cited prior art.
A patent applicant’s inequitable conduct during prosecution can render a patent unenforceable. Inequitable conduct is proven with (1) affirmative misrepresentations of material facts with (2) intent to deceive the PTO. Because most PTO proceedings are ex parte, inequitable conduct has been seen as an important tool to ensure proper applicant behavior.
ElectroStatic Detection: The defendants forensic expert used an ElectroStatic Detection Apparatus of the submitted sketch to uncover imprints of other sketches made on the same graph pad but with much later signature dates. Using the physical evidence, the expert (former FBI chief of questioned documents) testified that it was a ‘near certainty’ that the submitted sketch had been falsely back-dated.
The inventor disputed these charges and instead offered several alternative potential methods by which the imprints could have occurred. This amorphous story did not help his cause — as noted by the court: “[The inventor’s] evidence, taken as a whole, demonstrates that ASP has offered shifting, inconsistent, and un-corroborated explanations to account for indentation of the later sketches on Q1. As such, the evidence undermines the credibility of the [new] explanation offered by [the inventor] for the first time a trial.”
Occam’s Razor: Applying Occam’s Razor, the court sided with the simplest explanation — that of falsification. As the basis for allowance, the submission was clearly material. Falsification secured a finding of intent. Thus, the court found the patent unenforceable for inequitable conduct.
In a unanimous panel opinion, the CAFC has affirmed a district court finding that Ole Nilssen’s patents are unenforceable due to inequitable conduct. Although Nilssen prosecuted his own patents pro se, the CAFC cut him no slack since he was smart enough to “cite the [MPEP], patent statutes and regulations, and case law during prosecution.”
Unenforceability of Non-Asserted Patents: In a related family of patents, misconduct during prosecution of one of the patents can lead to the whole family being found unenforceable. Reversing that theory, the CAFC agreed that the lower court properly found several of Nilssen’s non-asserted patents to be unenforceable. (Although the court did not create any strict limit on the potential bleed-through, it should be noted that Nilssen originally asserted infringement of those patents, but later dropped those claims.)
Expert Testimony: Following Ferring, the CAFC agreed that Nilssen’s failure to disclose a close relationship with his 132 declarant constituted inequitable conduct.
Small Entity Fees: Although not during prosecution, pretending to be a small entity when paying maintenance fees can also lead to unenforceability. Here, the court found that payment of the small entity fee after licensing to Philips demonstrated an “obvious intent to mislead.”
Priority Claims: Misleading priority claims can also constitute inequitable conduct.
Legislative patent reform still has a long road to travel before reaching its conclusion. However, the passage of H.1908 by the House of Representatives represents a major leap forward along the path. The following are some highlights of the statute as passed. [H.1908.As.Passed].
First to file system: Obviousness and novelty would now be considered as of the “effective filing date.” Novelty grace period would be eliminated except for the inventor’s own disclosures. Although unclear, the grace period appears to be completely eliminated for obviousness analysis. Interferences are gone.
Damages: Reasonable royalty calculations (the most common damage awards) would all require courts to conduct a thorough analysis to ensure that damages are equal to the “economic value [of the invention] properly attributable to the patent’s specific contribution over the prior art.” The entire value of a product or process can only be the basis for royalty calculations if the innovation is the “predominant basis” for market demand of the product. (a showing that may be impossible in most cases). Overall this would reduce damage awards.
Search Reports: PTO would be granted discretion in ordering search reports for all applications except those by a new group called ‘micro-entities.’
Treble Damages: The statute explicitly calls-out ‘willfulness’ as the sole reason for enhanced damages then severely limits the facts where willfulness can be found. Overall this reduces the likelihood of awarding treble damages.
Post-Grant Review: In addition to reexamination, a post-grant review proceeding would be available if filed within 12–months of issuance or with the patentee’s permission.
Open Examination: Anyone may submit prior art for any patent or pending application along with an explanation of why the art is important.
Tax Methods: A patent would not be available for a newly invented tax planning method. Tax planning methods do “not include the use of tax preparation software or other tools used solely to perform or model mathematical calculations or prepare tax or information returns.”
Venue and Jurisdiction: Strong limitations on venue would likely eliminate E.D.Texas as a potential choice.
Interlocutory Appeal: A district court would be given discretion to certify interlocutory appeals of claim construction decisions.
Inequitable Conduct: Inequitable conduct must be pled with specificity following FRCP Rule 9b. Inequitable conduct rules would be made explicit in the statute. Overall, this weakens the defense of inequitable conduct.
PTO Regulatory Power: The statute would give the PTO power to make the continuation rule changes that it has already implemented.
Patent Trial and Appeal Board: Following John Duffy’s Suggestion, the statute would have the board appointed by the Secretary of Commerce rather than the PTO Director.
Study of Patent Damages: The PTO will study how damage awards have changed based on the changes in the law.
Nisus Corp. v. Perma-Chink Sys. v. Michael Teschner (Fed. Cir. 2007).
Nisus Corp’s patent relates to a method of putting Boron in a tree to kill termites and prevent forest fires. After a bench trial, the patent was found unenforceable due to inequitable conduct. Apparently, Nisus had failed to disclose material documents from a prior lawsuit involving closely related patents. The court specifically mentioned Nisus’s former patent attorney, Michael Teschner, as one cause of the inequitable conduct.
Teschner sued to intervene in the case and clear his name, but the district court denied him the opportunity. On appeal, the CAFC likewise found Teschner without standing.
Appeal by Nonparty: Usually, a nonparty has no standing to appeal. However, an attorney that is formally reprimanded may appeal to the CAFC. However, other (informal) “judicial criticisms of lawyers’ actions are not reviewable.” The court’s comments regarding Teschner here do not rise to a formal reprimand, and thus offer no standing for appeal.
To allow appeals by attorneys, or others concerned about their professional or public reputations, merely because a court criticized them or characterized their conduct in an unfavorable way would invite an appeal by any nonparty who feels aggrieved by some critical statement made by the court in an opinion or from the bench. Treating such critical comments by a court as final decisions in collateral proceedings would not only stretch the concept of collateral proceedings into unrecognizable form, but would potentially result in a multiplicity of appeals from attorneys, witnesses, and others whose conduct may have been relevant to the court’s disposition of the case but who were not parties to the underlying dispute. Nor would it be appropriate to limit such appeals to attorneys, while forbidding others from appealing from critical court comments, as such a limitation would smack of special treatment for members of the bar and would be difficult to justify as a matter of principle.
Thus, a finding of inequitable conduct does not create any standing for an aggrieved prosecuting attorney to appeal.
Postscript: Mr. Teschner declined my offer for an interview, noting that the matter is still pending at the PTO. His lone statement is that he is “glad that the Federal Circuit found merit in [his] argument.”
EISAI v. DR. REDDY’S LABORATORY and TEVA PHARMACEUTICALS (
Scanner Technologies Corp. v. ICOS Vision Systems (
Nilssen v. Osram Sylvania (
TALtech v. Esquel Apparel (
Aventis v. Amphastar Pharmaceuticals and Teva (
In re Volkswagen(5th Cir. en banc). A self-titled “ad hoc committee of intellectual property trial lawyers in the Eastern District of Texas” have filed a brief in the pending VW case arguing on the substance that the E.D.Tex. courts do not excessively retain cases in a way that is any different from other jurisdictions. The AIPLA amicus brief in the same case argues that too many cases are being heard in Texas. [
Symantec Corp. v. Computer Associates (
Atlanta Attachment v. Leggett & Platt (
Erico Int’l v. Vutec & Doc’s Marketing, 
Monsanto v. Bayer (
ASP v. IQ Hong Kong (