Tag Archives: Licenses

NPEs Solidify Enforcement Jurisdiction at USITC

January 10, 2013PatentDamages, Federal Circuit En Banc, LicensesDennis Crouch

By Dennis Crouch

InterDigital v. USITC and Nokia (Fed. Cir. 2013) (en banc)

An en banc request for rehearing in the Interdigital case has been denied, but the panel majority has released a new opinion particularly addressing the patent-troll-domestic-industry question. Judge Newman has also released a new dissenting opinion.

The question in the appeal raised by Nokia is whether InterDigital's patent licensing activities satisfied the "domestic industry" requirement of section 337 of the Tariff Act of 1930, 19 U.S.C. §§ 1337(a)(2) and 1337(a)(3). Here, the court again sided with InterDigital and held that the "most natural reading" of the statute indicates that section 337 relief is "available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing." There is no requirement for manufacture by the patentee or any other domestic party. Rather, "[a]s long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337." The majority opinion was written by Judge Bryson and joined by Judge Mayer.

In dissent, Judge Newman argued that a domestic industry requires domestic manufacture. No other judge joined Judge Newman in dissent – suggesting that the majority opinion is on solid footing with the court. And the result is that NPE lawsuits in the ITC are also on solid footing. The benefit of ITC litigation is the stronger likelihood of injunctive relief and the potential of industry-wide enforcement. To collect monetary damages, that injunction would need to be translated into a license agreement.

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19 U.S.C. §1337(a)(2) creates a prerequisite to IP enforcement in the USITC that "an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask work, or design concerned, exists or is in the process of being established."

19 U.S.C. §1337(a)(3), as amended in 1988 describes the "industry in the United States" as follows:

[A]n industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned—

(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.

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Apart from jurisdiction, there has been a recent push for the USITC to consider delaying, reducing, and rejecting injunctive relief in situations where the patentee's motivation for an injunction is to force a monetary settlement. See Colleen V. Chien and Mark A. Lemley, Patent Holdup, the ITC, and the Public Interest, 98 Cornell Law Review 1 (2012). The statute provides that:

If the Commission determines, as a result of an investigation under this section, that there is a violation of this section, it shall direct that the articles concerned, imported by any person violating the provision of this section, be excluded from entry into the United States, unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.

19 U.S.C. § 1337(d)(1).

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Nokia is expected to file a petition on this issue to the Supreme Court.

Does License of Future Inventions Invoke Patent Law Based Court Jurisdiction?

January 7, 2013PatentFirst to Invent, Licenses, Supreme CourtDennis Crouch

By Dennis Crouch

National Pasteurized Eggs v. Davidson (Fed. Cir. 2012)

In yet another patent contract dispute, the Federal Circuit has transferred appellate jurisdiction back to the regional circuit. Here, it appears that the mistake was due to an error by the district court clerk who thought of the case as a patent case.

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National Pasteurized Eggs (NPE) filed the case in 2007 asking the New Hampshire district court to quiet title in several US and foreign patents. From the complaint:

By this action, NPE seeks a declaratory judgment of rightful ownership of three United States patents and two international patent applications and resulting foreign patents, as specified below.

Download Davidsoncomplaint.

The patents at issue all list Mr. Leon J. Davidson (LJD) as the inventor and involve methods of pasteurizing in-shell chicken eggs and treating eggs with anti-bacterial agents. See U.S. Patent No. 6,322,833.

Davidson founded the Pasteurized Egg Corporation (PEC). When he left the company in 2000, he signed an assignment and further cooperation agreement. [Appendix to Complaint] PEC went bankrupt in 2003 and its intellectual property assets were purchased by National Pasteurized Eggs (NPE) who is looking to ensure all of the Davidson patents are assigned to the company. (Note – the Davidson's brand shown to the right is also owned by PEC).

In considering what rights Mr. Davidson retains, the agreement uses the term "inventiveness." The agreement states:

New processes or intellectual property ("inventiveness") developed prior to January 1, 2001 ("Old Inventiveness"), including a method for extending the shelf life of pasteurized eggs by treatment with antibacterial agents, shall be the property of PEC and LJD shall take such actions as may be reasonably required by PEC to assist PEC to complete the development, improvement, documentation, protection and patenting of such Old Inventiveness.

Inventiveness developed by LJD, whether in combination with "Old Inventiveness" or prior inventiveness, which results in protection from new patents or patent applications providing broader or improved protection, on or subsequent to January 1, 2001 ("New Inventiveness") shall be considered the property of LJD.

It is this poorly written agreement that has led to the legal conflict.

Davidson filed a number of patent applications following the 2001 agreement and argued that those applications involved new inventiveness. In its ruling, the district court sided with NPE – holding that the inventiveness associated with the primary disputed patent occurred prior to the 2001 date since testing had already begun on the new process. Download Davidsonfinaljudgment. It is this decision being appealed.

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After losing at the district court, Davidson filed a Notice of Appeal to the First Circuit. However, the district court clerk sent the docket and certificate to the Federal Circuit. On unopposed motion, the Federal Circuit has now transferred the case to the First Circuit.

In its order, the Federal Circuit suggested, but did not decide, that the First Circuit is the proper site of appellate jurisdiction. In this case, however, the transfer was required because the Fed. R. App. P. 3(d)(1) does not allow a district court clerk to unilaterally change the appellate court.

Fed. R. App. P. 3(d)(1) states that the clerk of the district court "must promptly send a copy of the notice of appeal and of the docket entries .,. to the clerk of the court of appeals named in the notice."

Because of the mandatory language of Rule 3(d)(1), we believe we must transfer this appeal to the First Circuit, i.e., the clerk of the district court was required to send the notice of appeal to that court. Although we do not address jurisdiction, the case appears to involve ownership of patents rights and contract interpretation. See Luckett v. Delpark, Inc., 270 U.S. 496 (1926).

The appeal will now be heard by the Court of Appeals for the First Circuit.

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There is some chance that the Federal Circuit will see the case again – depending upon whether the First Circuit sees a substantial question of patent law buried in whether Davidson's new patents include some "inventiveness developed by LJD . . . subsequent to January 1, 2001."

Federal Circuit Refuses to Hear Contract Dispute over Patent Assignment and Royalty Contract

January 4, 2013PatentClaim Construction, Damages, First to Invent, Licenses, USPTO Director, VenueDennis Crouch

By Dennis Crouch

DeRosa v. J.P. Walsh & J.L. Marmo Enterprises (Marmo) (Fed. Cir. 2013) (nonprecedential)

In the face of Supreme Court scrutiny over its jurisdictional power, the Federal Circuit has taken a step back from its historic approach of expanding patent law jurisdictional reach.

DeRosa is the inventor of a cam-less chuck for use in a router. These have been available for some time with ordinary drills, but the large size and high rotation speed made the same type of assembly more difficult for a router. DeRosa’s provisional patent application was filed back in November 1998 and, at the same time, DeRosa assigned his rights in the invention and “further improvements” to Marmo in return for a promise that a promise that Marmo would manufacture and sell the device and that DeRosa would receive royalties on those sales.

In 2010, DeRosa sued Marmo in Virginia state court – alleging that the company had failed to live up to its continued contractual obligations to manufacture and sell the device. In the lawsuit, Marmo asked for both contract damages and a reversion of ownership rights in the patent. The case was first removed to Federal Court on diversity grounds and then removed to an arbitrator based upon the contract terms. The arbitrator found for DeRosa on breach of contract but held that Marmo was still the proper patent owner. That decision was confirmed by the E.D. Virginia District Court in an April 6, 2012 order.

On appeal, the Federal Circuit has refused to decide the case – holding that it lacks jurisdiction and that the proper venue is the Court of Appeals for the Fourth Circuit. The reason here is that the complaint did not raise any substantial questions of patent law but rather simply focused on the contract. Judge Bryson writes:

Causes of action based on contractual rights in a patent assignment or license agreement as a general rule do not arise under the patent laws. See Luckett v. Delpark, Inc., 270 U.S. 496, 502-03 (1926); New Marshall Engine Co. v. Marshall Engine Co., 223 U.S. 473 (1912). Marmo nonetheless argues that the appeal is properly before this court because the complaint specifically requests a restoration of ownership in patent rights.

That DeRosa’s complaint ultimately sought to restore ownership in the invention is of no great significance. The focus of the jurisdictional inquiry is whether the plaintiff “set up some right, title or interest under patent laws, or at least makes it appear that some right or privilege will be defeated by one construction, or sustained by the opposite construction of these laws.” Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 807-08 (1988).

The complaint in this case did not turn on such a claim. The alleged harm stated was Marmo’s failure to abide by its “contractual and financial obligations under the contract” resulting in DeRosa not having received the “bargained for benefit” of “a steady flow of manufacturing business and the timely payment for the product.” Although a restoration of patent ownership is sought in the complaint, such relief is entirely premised on the claim that Marmo’s failure to fulfill its obligations under the contract warrants a remedy of rescission. As such, this case does not arise under the patent laws, and we do not have jurisdiction.

In Jim Arnold Corp. v. Hydrotech Systems, Inc., 109 F.3d 1567 (Fed. Cir. 1997), a case very similar to this one, this court held that a plaintiff seeking rescission of a patent assignment agreement in order to restore ownership rights in a patent could not meet the jurisdictional test set forth in Christianson. As in the present case, the plaintiff in Jim Arnold had no rights in the patent without judicial intervention and was thus left only to argue that ownership of the patents should be restored based upon a breach of contract claim. Because a plaintiff under such circumstances could at best only present a frivolous allegation of ownership of the patents at issue sufficient to confer jurisdiction under section 1338, we transferred the case to the regional circuit. Since the same outcome is warranted here, pursuant to 28 U.S.C. § 1631, we transfer the case to the Fourth Circuit.

The court ignored Marmo’s most compelling argument – that the action was implicitly a move by DeRosa to quiet title in his further improvements that he later patented and now manufactures through another source. Marmo argued that mapping the contracted-for improvements to the various patents necessarily requires a substantial consideration of patent law issues. The case will now move to the Fourth Circuit to see whether the arbitration award was properly confirmed.

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Minton v. Gunn: This term, the Supreme Court is considering Minton v. Gunn, a patent litigation malpractice case. Legal malpractice is ordinarily a state law claim. Here, however, the court is considering whether the malpractice action arises under the U.S. patent laws in such a way that would confer both federal jurisdiction at the district court level and Federal Circuit jurisdiction on appeal.

America Invents Act: The Leahy–Smith America Invents Act (AIA) expanded the scope of federal jurisdiction to include cases whose only substantial patent claim is filed in a compulsory counterclaim. See 28 U.S.C. § 1295(a)(1) as amended. However, that change in the statute does not impact this case because it only applies to civil actions commenced on or after September 16, 2011.

Notice of Arbitration Awards: 35 U.S.C. § 294(d) requires that a notice of arbitration award be filed with the USPTO. Under the statute, “[w]hen an award is made by an arbitrator, the patentee, his assignee or licensee shall give notice thereof in writing to the Director.” The submission is required to include a number of details as well as “a copy of the award” itself. Under the law, that award becomes a public record and part of the patent file. As a kicker, law states that “[t]he award shall be unenforceable until the notice required by subsection (d) is received by the Director.”

In this case, the notice of award was probably not required because the statute further limits its focus to arbitration of validity or infringement issues. Here, the dispute was over contract terms and ownership.

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Bits & Bytes

January 4, 2013PatentLicensesJonathan Hummel

Canadian IP Specialist Barry Sookman has written an analysis of the world’s “most popular intellectual property and technology law blogs” on his eponymous blog: http://www.barrysookman.com/.
23 Killer Business Lessons from Shark Tank: http://www.bradaronson.com/shark-tank/
The FTC has released Google from its antitrust investigation with a “wrist slap.” More from Wired; WashingtonPost; and WSJ. Regarding its industry-standard patents (largely inhereted from Motorola), Google promised again to license those patents in a manner that complies with its FRAND promise of “fair, reasonable and non-discrimantory” terms. Google also promised to commit to binding arbitration of license rates.

Bits & Bytes

January 4, 2013PatentLicensesJonathan Hummel

Canadian IP Specialist Barry Sookman has written an analysis of the world’s “most popular intellectual property and technology law blogs” on his eponymous blog: http://www.barrysookman.com/.
23 Killer Business Lessons from Shark Tank: http://www.bradaronson.com/shark-tank/
The FTC has released Google from its antitrust investigation with a “wrist slap.” More from Wired; WashingtonPost; and WSJ. Regarding its industry-standard patents (largely inhereted from Motorola), Google promised again to license those patents in a manner that complies with its FRAND promise of “fair, reasonable and non-discrimantory” terms. Google also promised to commit to binding arbitration of license rates.

Bits & Bytes

January 4, 2013PatentLicensesDennis Crouch

Canadian IP Specialist Barry Sookman has written an analysis of the world’s “most popular intellectual property and technology law blogs” on his eponymous blog: http://www.barrysookman.com/.
23 Killer Business Lessons from Shark Tank: http://www.bradaronson.com/shark-tank/
The FTC has released Google from its antitrust investigation with a “wrist slap.” More from Wired; WashingtonPost; and WSJ. Regarding its industry-standard patents (largely inhereted from Motorola), Google promised again to license those patents in a manner that complies with its FRAND promise of “fair, reasonable and non-discrimantory” terms. Google also promised to commit to binding arbitration of license rates.

Structuring a Privateering Contract

December 14, 2012PatentLicenses, VenueDennis Crouch

By Dennis Crouch

The world of patent deals and monetization schemes are difficult to report on because the details of most deals (and often all aspects of the deals) are kept secretly buried under binding confidentiality clauses. Patrick Anderson recently wrote about US Patent 6,081,835 and its unique ownership setup. The information on the patent ownership is now public through an interesting decision by Judge Ellis. Download SuffolkTech.EllisDecision. The patent is being asserted by Suffolk Tech against Google, and Google challenged Suffolk's standing to sue – claiming that the company did not hold complete rights to the patent. With that defense in mind, Judge Ellis explored the ownership structure.

It turns out that the patent was originally owned by British Telecom based upon an underlying UK invention. BT transferred its ownership interest to IPValue who immediately transferred rights to Suffolk Tech as part of the deal. It was already known that IPValue is a joint venture of Goldman Sachs, General Atlantic Partners and Boston Consulting Group.

In the invest-to-sue market, patent buyers rarely pay cash. Rather, in these deals the majority of compensation to the seller is at the back-end — after the purchaser has successfully licensed the patent rights. In this case, BT sold the patent (transferring title), but and received as compensation a contract right to "50% of the Adjusted Gross Proceeds derived from exploitation of the '835 Patent" with the additional caveat that IPValue's sale of the patent (other than to Suffolk) within one-year of the BT-IPValue deal would result in 90% of the proceeds going to BT. The contract also includes restrictions on fees to contingency counsel; a $10 buy-back clause if IPValue fails to bring in sufficient revenue; and a non-exclusive license-back to BT.

On the standing point, Judge Ellis found that the deal left Suffolk Tech with title, core rights to practice and enforce the patent, and "all other substantial rights" in the patent. "As a result of the assignments, BT retained only a non-exclusive license to practice the patent and the right to share in revenue from the exploitation of the patent." As such, Suffolk Tech can properly assert the patent without joining BT or IPValue as co-plaintiffs.

Joff Wild at iam has some interesting thoughts on the case as well:

It turns out that BT has decided that it does not want to get its hands dirty directly, so like countless others before it (including [Intellectual Ventures]) it has turned to a third party to do the heavy lifting. That is what the privateer model is all about. It is being used, in one way or another, increasingly frequently by operating companies in the US, which for whatever reason decide they would prefer not to become involved in patent monetisation programmes that may involve aggressive assertion. NPEs that I can think of off the top of my head which have had close relationships with operating companies at some time or another include: Rockstar, RoundRock, Acacia, MOSAID, Intellectual Ventures, Sisvel and IPCom. No doubt readers of this blog can think of many more. From where I sit it is a perfectly legitimate activity, aimed as it is at maximising the value of key corporate assets – which is exactly what companies are supposed to do. At least some, however, are a little coy about their arrangements; while it is becoming increasingly clear that US antitrust authorities, and perhaps those in Europe too, are going to take a much closer look at the whole privateer model.

The last line of Joff's statement will continue to raise interest in upcoming years.

Patents Encompassing a Human Organism

December 2, 2012PatentClaim Construction, Licenses, obviousness, USPTO DirectorDennis Crouch

by Dennis Crouch

Ex Parte Kamrava (PTAB 2012), APN 10/080,177 Download 10080177

Most Section 101 subject matter eligibility problems can be cured by integrating the ineligible subject matter with subject matter that is patent eligible. This works because the fact that an invention encompassing some ineligible material does not preclude patentability – as long as the invention also includes sufficient eligible subject matter. Following this theory, the Supreme Court in Diamond v. Diehr, 450 U.S. 175 (1981), agreed that a practical use of a mathematical formula was patentable even though the formula on its own would not have been subject matter eligible.

One exception to the cured-by-integration rule involves the patenting of human organisms. Generally speaking, a patent clam cannot encompasses a human organism and likewise, a claim encompassing an otherwise unpatentable human organism will not become patentable by integrating elements that are subject matter eligible. Following this rule, applicants typically carve-out offending portions of their claims. Thus, recently issued U.S. Patent No. 8,283,517 claims a "transgenic non-human animal" with certain genetic properties that result in alzheimer's-like brain plaques. Likewise, U.S. Patent No. 8,247,644 claims a "method for manufacturing a non-human animal" that is likely to develop a pulmonary tumor. The PTO sees these as subject matter eligible because they have disclaimed any coverage for human animals.

In Kamrava, the patent is generally directed toward a uterine catheter that can be used to deposit a fertilized embryo. Some of the claims also include the embryo as an element of the claim itself with "the catheter … further comprising an embryo in the distal portion." In its November 26, 2012 decision, the Patent Trials and Appeals Board (PTAB) concluded that those claims could not be patentable.

Focusing first on Section 101, the board noted that an embryo is subject matter ineligible because it is a part of the human body. Further, the combination of the ineligible subject matter with the eligible subject matter catheter offers no cure. "To allow one to sidestep 35 U.S.C. §101 by simply pairing in combination patent-ineligible subject matter with patent-eligible subject matter would impermissibly exalt claim strategy (form) over claimed subject matter (substance)." As a second ground of rejection, the Board raised the new Section 33(a) of the Leahy-Smith America Invents Act. That section prohibits the patenting of "a claim directed to or encompassing a human organism."

The PTAB's form-over-substance statement loses significant weight because, in the same paragraph, the Board note that the claims may become eligible by a simple amendment. As the Board notes, on remand to the examiner, applicant can rather easily cure the defect by claiming a catheter "adapted to hold the embryo" rather than claiming a catheter that includes the embryo. The U.S. does grant patents on non-human organisms, such as a genetically modified mouse, soybean, or bacterium. Canada denies patentability on multi-cellular organisms.

The issues presented here have obvious potential ties to the Myriad gene patent case. However, while most practitioners would agree with the idea that human organisms should not be patentable, the bar is much more divided on the question of the patentability of chemical compounds isolated from a human body, and almost all practitioners agree that methods of treating diseases in humans should be patentable. This case is likely most helpful for those supporting Myriad because it indicates that congress and the PTO have both considered the issue and have drawn a line that prohibits certain patents too closely tied to the core of humanity but allows for the patenting of genes.

The language of Section 33(a) was initially pushed by Representative Dave Weldon as a measure to support the sanctity of life. Although Weldon was out of Congress by the time the AIA passed, he spoke on the issue several times. Most poignantly, Weldon spoke on the issues in 2003 after receiving some initial criticism for his proposal.

[S]ome have continued to misrepresent my amendment by claiming it would also prohibit patent claims directed to methods to produce human organisms. Moreover, some incorrectly claim that my amendment would prohibit patents on claims directed to subject matter other than human organisms. This is simply untrue.

What I want to point out is that the U.S. Patent Office has already issued patents on genes, stem cells, animals with human genes, and a host of non-biologic products used by humans, but it has not issued patents on claims directed to human organisms, including human embryos and fetuses. My amendment would not affect the former, but would simply affirm the latter.

At the time, PTO Director James Rogan also submitted a letter to Congress indicating that the language was already "fully consistent with [current PTO] policy." (Note, parallel language has been regularly included in PTO appropriations bills that prohibit the PTO from spending money on issuing patents directed-to or encompassing human organisms.)

These issues will be interesting as we move forward with the gene patent debate. However, the history of patentability limitations suggest that, unless the Supreme Court takes a radical step in its decision, skilled patent attorneys will continue to be able to protect innovations through the patent system.

There is unlikely to be any successful appeal of this case to the Federal Circuit. Importantly, the applicant had not challenged the notion that an embryo is a human organism. Rather, the applicant argued that the examiner had erred in the claim construction and that the proper claim scope did not include the embryo. In addition, the applicant's patent attorneys at Blakeley Sokolof have withrdawn from the representation and Dr. Kamrava's medical license has been revoked.

Can the 271(e)(1) Safe Harbor Help DuPont Escape its $1 Billion Verdict?

December 1, 2012PatentLicensesDennis Crouch

Professor Holman has an interesting new post on his blog involving the ongoing battle between Monsanto, E.I. DuPont, and Pioneer HI-Bred. Earlier this year, a jury concluded that DuPont owed Monsanto $1 billion in reasonable royalty even though DuPont had only done research on its potential product and had never brought it to market.

In post verdict briefing, DuPont is raising an important question of the scope of the Hatch-Waxman Safe Harbor (271(e)(1)). That statute might be called a “fair use” statute in the way that it identifies a class of unauthorized uses of a patented invention and excuses those uses from infringement liability. In particular, the statute allows unlicensed use of a patented invention for purposes “reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

Holman notes that the district court has issued a judgment rejecting the safe harbor for these GM foods. However, certain food additives do count as drugs under FDA rules. The interesting thought is that a greater regulatory scheme monitoring the use of genetically modified organisms would likely result in a broader safe harbor. In my view, the safe harbor is unlikely to apply because GMO foods have been classified in the GRAS category – Generally Regarded as Safe. Holman sees some potential that the Federal Circuit would arrive at the opposite conclusion.

Read: Holman, District Court Rejects Argument that Hatch-Waxman Safe Harbor Applies to Genetically Modified Crops at http://holmansbiotechipblog.blogspot.com/2012/11/district-court-rejects-argument-that.html.

Patent Prosecutors Licensing of Copyrights for Prior Art Submissions

November 29, 2012PatentCopyright, Damages, LicensesDennis Crouch

By Dennis Crouch

CCC v. Oblon Spivak (license agreement)

The Copyright Clearance Center (CCC) is a collective agent for many copyright holders and serves as a one-stop-shop for folks to license copyrights for use. CCC offers licenses to many (perhaps most) of the academic publications (non-patent literature) submitted to the USPTO under the Rule 56 duty of disclosure. In recent years, CCC has implemented a buffet license approach that allows a business to use their entire catalog for a fixed negotiated price.

Until recently, few patent law firms have seen any copyright infringement risk associated non-patent prior art because the copies are most typically obtained from a licensed database and the submission to the PTO and file-copies are both likely fair use and therefore would not constitute copyright infringement. Thus, most firms have developed their its patent prosecution practices with an implicit belief that its prosecution related uses of scientific journal articles are noninfringing uses of the articles. In the spring of 2012, the publisher John Wiley began suing patent law firms – taking the contrary view that (1) making file copies; (2) sharing copies with clients; and (3) submitting copies to the USPTO each constitute actionable copyright infringement. These lawsuits are ongoing.

The CCC license would allow both internal copying and submitting copies to the USPTO, although it does not allow the sharing copies with clients. Of course, these actions were all previously thought to be fair use. Professor Jamie Boyle has an interesting essay from 2007 discussing the problems with this license. His main point is that once we start paying for fair use material it stops being fair use going forward and moves toward a “culture of permission” that, in his view, is normatively bad.

I contacted the CCC folks and received some information from CCC’s General Counsel Frederic Haber. The first point is that the Wiley articles that are the subject of the lawsuits are included within the license (still, the blanket license still does not include sharing articles outside of the firm). The second point is costs. CCC uses a model of basically charging on a per-professional-employee basis. For patent law firms, their current negotiated going rate is around $300 per year per registered attorney. The third point is that the form license includes a waiver of any unasserted claims of past infringement (with the caveat that the waiver only takes effect after one-year of license coverage). The fourth point is that the downside of losing a lawsuit is statutory damages.

Oblon is in a special case because the firm has the highest patent throughput of any firm in the country. Because of that, the firm would have likely been part of any upcoming second round of lawsuits. On that note, Oblon’s Managing Partner Brad Lytle writes that the “license allows us to go about our business and focus our efforts on protecting the intellectual property of our clients.” In other words, the license allows the firm to avoid the annoyance of a lawsuit. The question for firms and attorneys moving forward is (1) whether the fair use argument is sufficient and (2) whether your firm is small enough to fly under-the-radar. And, of course, there is the remaining problem that the license does not allow for the sharing of the articles with folks outside of the firm.

Update: A further communication from the folks at CCC indicates that, although “the repertory license is specifically designed for the internal use of the licensed organization”, “one exception to that general rule is that the licensee may provide individual copies (paper or electronic) to prospects, clients or customers of the licensee in response to requests from those outside people.”

Director Kappos’s Speech on Software Patents, the PTO, and Innovation

November 25, 2012PatentEnablement, Licenses, USPTO DirectorJason Rantanen

By Jason Rantanen

Last week, Director of the USPTO David Kappos delivered a keynote address to the Center for American Progress that focused on software patents and the smartphone "patent wars." The speech is noteworthy for the Director's strong defense of software patents. The entire speech is worth reading – here are a few excerpts to induce you to read the full speech:

Software patents, like all patents, are a form of innovation currency. They are also ecosystem enablers, and job creators. The innovation protected by software patents is highly integrated with hardware. All of it must remain eligible for protection. The current software patent “war” is hardly the first patent war—and unlikely to be the last in our nation’s patent history. Whenever breakthrough technologies come onto the scene, market players find themselves joined in the marketplace by new entrants. The first instinct of the breakthrough innovators is to bring patents into play. This is not only understandable, it is appropriate. Those who invest in breakthrough innovation have a right to expect others to respect their resultant IP. However, in the end, as history has shown time and time again, the players ultimately end up agreeing to pro-consumer solutions via licenses, cross-licenses or joint development agreements allowing core technologies to be shared.

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So does that mean we’re done? End of speech? Should we just accept the problems, given the importance of the innovation and the illogic of discriminating against great technology that happens to be implemented in software? Of course not. The right point of inquiry is quality. By getting that right, we grant patents only for great algorithmic ideas worthy of protection, and not for everything else. This administration and its innovation agency understand that low-quality patents do no good for anyone. Low quality patents lead to disputes, uncertainty, and lost opportunity. Quality is central to our mission. All of this especially for software.

So we’ve been working on the underlying drivers for software patent quality from the beginning. Knowing that you get what you measure, starting in the summer of 2009 we assembled a taskforce to devise a comprehensive new set of quality metrics. That work culminated in 2010, when we rolled out the most complete, broad, objective patent quality measurement system on the planet – seven metrics, which we report eagerly to the public. The Lexus of quality metrics. And what do those metrics show? Patent quality isn’t broken at all. In fact, our decisions on both allowances and rejections correctly comply with all laws and regulations over 96 percent of the time.

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You know, the history of software patents is not a perfect one, although things are improving. Some of the most troublesome patents have expired; others can be challenged with new post-grant proceedings; and newer patents are quantifiably clearer, and aligned with current legal standards. But it’s important to note that, during the so-called smartphone patent wars, innovation continues at breakneck pace. A system like ours, in which innovation is happening faster than consumers can keep up, cannot fairly be characterized as “broken”. Nor can it be said that the U.S. is just a receiver of all this innovation. Most of the innovation is taking place right here. Broken? What?

The fact is, the explosion of innovation—and follow-on litigation—that we see across consumer electronics hardware and software is a direct reflection of how our patent system wires us for innovation. It's both natural and reasonable that in a fast-growing, competitive market, innovators would seek to protect their breakthroughs using our patent system.

The full version of Director Kappos's speech is available here: http://www.uspto.gov/news/speeches/2012/kappos_CAP.jsp

Ritz Camera v. SanDisk: Expansion of Standing for Walker Process claims

November 20, 2012PatentFederal Circuit En Banc, LicensesJason Rantanen

By Jason Rantanen

Ritz Camera & Image, LLC v. Sandisk Corporation (Fed. Cir. 2012) Download 12-1183
Panel: Bryson (author), Dyk, and Moore

In Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), the Supreme Court held that a party who uses a patent procured through intentional fraud on the PTO to obtain or preserve a monopoly may be subject to antitrust liability. Ritz Camera addresses an important standing issue for Walker Process claims: whether a direct purchaser of goods covered by the patent has standing to bring a Walker Process antitrust claim against the patentee even if the purchaser would not be entitled to seek declaratory relief against the patentee under the patent laws. In an opinion authored by Judge Bryson, the court held that such direct purchasers do have standing.

Background: SanDisk is a major producer of NAND flash memory; allegedly, SanDisk controls about three-quarters of the market. It holds several patents relating to the memory products under which it sells and licenses flash memory technology. Ritz is a retailer that purchases flash memory products from SanDisk and its licenses.

In 2010, Ritz filed suit alleging that SanDisk had violated Section 2 of the Sherman Act. Ritz contended that SanDisk had fraudulently procured two patents central to its flash memory business by failing to disclose known prior art and making affirmative misrepresentations to the PTO, that SanDisk established its monopoly position by enforcing those patents and by threats of enforcement, and that these actions caused direct purchasers to pay supra-competitive prices for NAND flash memory products. SanDisk sought to dismiss the complaint on the ground that Ritz lacked standing, an argument that the district court rejected. The appeal arrived at the Federal Circuit on a petition for interlocutory review.

Antitrust Standing Even When No Patent Law Standing: The sole question at issue was:

Whether direct purchasers who cannot challenge a patent's validity or unenforceability through a declaratory judgment action (have not been sued for infringement, and so cannot assert invalidity or unenforceability as a defense in the infringement action) may nevertheless bring a Walker Process antitrust claim that includes as one of its elements the need to show that the patent was procured through fraud.

Slip op. at 5. The Federal Circuit held that direct purchasers do have such standing and, more broadly, that antitrust standing is not limited by the rules of patent standing. Rather, "[t]he “full play” of antitrust remedies encompasses the standing requirements that apply in the antitrust setting,… including the recognition that direct purchasers are not only eligible to sue under the antitrust laws, but have been characterized as “preferred” antitrust plaintiffs." Slip Op. at 6 (internal citations omitted). In Walker Process itself, "[t]he Court did not suggest that the class of “those injured by any monopolistic action” should be limited to those within that class who would have standing to bring an independent challenge to the patents at issue." Id.

In reaching this conclusion, the court expressly rejected SanDisk's argument "that allowing direct purchasers to bring Walker Process claims would allow an intolerable end-run around the patent laws because parties unable to pursue invalidity claims could achieve the same result by way of a Sherman Act claim." Slip Op. at 9. The court noted that a Walker Process claim "is a separate cause of action from a patent declaratory judgment action." Id. It is governed by antitrust law, and the patent issue is only one of several elements that must be proven by the claimant.

Nor did the court agree that the result here "would trigger a flood of litigation and stem innovation," particularly given the demanding proof requirements of a Walker Process claim. Walker Process claims involve patents procurred through intentional fraud, which "cannot well be thought to impinge upon the policy of the patent laws to encourage inventions and their disclosure." Id., quoting Walker Process, 382 U.S. at 176 (Harlan, J., concurring).

Note: Judge Bryson recently annouced his move to senior status, effective January 7, 2013. He has written a number of significant opinions over his tenure, including Phillips v. AWH. Once he assumes senior status, he will have a likely have a reduced caseload and will no longer be eligible to participate in en banc decisions unless he is part of the original panel that heard the case. I will certainly miss reading his opinions as often as I was previously able.

Transocean v. Maersk, Part II: Secondary Indicia of Nonobviousness Outweigh Prima Facie Case of Obviousness

November 18, 2012Obviousness, PatentAIA Trials, Damages, Enablement, Licenses, motivation to combine, obviousness, PGRDennis Crouch

Guest post by Professor Lucas Osborn, Campbell University School of Law. Before joining the academy in 2009, Professor Osborn worked on the Transocean case while at Fulbright & Jaworski, which represented Transocean.

Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc. (Fed. Cir. 2012)

Panel: Prost, Wallach, Moore (author)

This is the second Federal Circuit opinion in this litigation. Jason Rantanen wrote about the first opinion in 2010. The patented technology involves offshore deepwater drilling vessels have "dual activity" capability, which is roughly a vessel with two advancing stations that can cooperate together to drill and finish a single oil well at the ocean floor. The technology decreases the time it takes to drill and complete an oil well compared to the prior art. Since offshore drilling rigs rent for around $500,000 a day, every time savings counts. In Transocean I, the Federal Circuit overturned the district court's summary judgment finding of obviousness, noting that although Maersk provided prior art that made a prima facie case of obviousness, the summary judgment was improper in view of Transocean's significant secondary indicia of nonobviousness. On remand, the trial jury found Transocean's patents were not obvious and awarded Transocean $15,000,000 in damages. The district court granted Maersk's motion for JMOL notwithstanding the jury's verdict.

Obviousness – Secondary Considerations and Weighing the Strength of the Prima Facie Case

In Transocean I, the Federal Circuit found Maersk had made a prima facie case of obviousness based on two prior art references, and thus the remand was focused on secondary indicia of nonovbiousness. On remand, the parties fought over whether the jury could consider the two prior art references in addition to the secondary indicia evidence. Transocean, apparently believing the prima facie case was weak, wanted the jury to consider the two prior art references for two purposes: (1) to determine whether the references taught each limitation of the claims and provided a motivation to combine, and (2) to consider the strength of the prima facie case. Maersk opposed both, insisting that the only issue was the secondary indicia of non-obviousness. The district court allowed the jury to review the prior art references for both purposes. The Transocean II panel said it was error to allow the jury to reconsider whether the references taught each limitation of the claims and provided a motivation to combine: because that issue was decided in Transocean I, it was the "law of the case." On the other hand, the court held it was not error to allow the jury to weigh the strength of the prima facie case together with the objective evidence of nonobviousness.

This presents a nice strategy for patentees to (essentially) re-litigate the prima facie obviousness determination. While the jury technically does not get to decide whether a prima facie case of obviousness exists, it might be difficult for jurors to avoid forming their own opinion about the prima facie obviousness issue if it is allowed to learn about the prior art in detail.

On the ultimate issue of nonobviousness, the court reinstated the jury verdict as supported by substantial evidence. The evidence of nonobviousness included evidence of commercial success (including customers willing to pay a premium or even requiring rigs with the patented features), industry praise and unexpected results, copying (including by Maersk itself), industry skepticism, licensing, and long-felt but unsolved need. The court concluded that "Few cases present such extensive objective evidence of nonobviousness, and thus we have rarely held that objective evidence is sufficient to overcome a prima facie case of obviousness. . . . This, however, is precisely the sort of case where the objective evidence establishes that an invention appearing to have been obvious in light of the prior art was not."

The panel also held that substantial evidence supported the jury's finding of enablement.

Infringement and Damages – Option to Modify to Avoid Infringement

The court also reiterated its Transocean I holding that Maersk may have infringed even though its original contract for "sale" of the rig contained an option to modify the rig before delivery if any patent infringement was likely. The jury found that Maersk committed infringement when it "offered to sell" and "sold" its rig to Statoil. The contract evidencing the sale/offer expressly indicated that Maersk could modify the final rig design based on the outcome of then-pending district court litigation between Transocean and a third party based on the same patents. Before actually delivering the rig, Maersk modified it to avoid infringement. But the Federal Circuit reiterated that the option to modify and subsequent modification could not save Maersk. The jury found that the specifications of the rig offered and sold met all the claim limitations. Post-offer/sale modifications did not matter even though they occurred before actual delivery.

Moving to damages, the panel reinstated the jury's award, but it was sympathetic to Maersk's apparent good intentions to avoid infringement. The court stated, "We are sympathetic to Maersk's arguments. It offered drilling services which would use an infringing drill, but expressly reserved the right to modify the drill to avoid infringement. It did then modify the drill prior to delivery to avoid infringement – hence never actually using an infringing dual-activity drill." Nevertheless, the court held that the $15,000,000 reasonable royalty verdict was supported by substantial evidence.

What can defendants take away from this? A contract with an option to modify the product will not avoid infringement. It would seem defendants in situations like Maersk's (i.e., watching a patent to see if it issues or is held valid) should contract not for an "option" to modify, but for a mandatory modification to avoid infringement upon the triggering event (patent issuance or litigation upholding the patent's validity).

The Ignored Issue – When is a "Lease" a "Sale" Under Section 271?

As in Transocean I, the court did not reach a potentially dispositive issue that the parties strongly contested at times in the litigation. Section 271(a) provides that "sales" and "offers to sell" can be acts of infringement. Here, however, Maersk did not offer to sell or sell its drilling rig. Rather, it "leased" and offered to "lease" its rig to a third party. While previous cases have found that some leases can be tantamount to a sale (and thus infringe under 271), those cases primarily involved the transfer of property indefinitely or for its entire useful life (think of your typically software "license"). See Minton v. Nat'I Ass'n. of Secs. Dealers, Inc., 336 F.3d 1373, 1378 (Fed. Cir. 2003). This case presented a closer issue: Here, Maersk argued that it (1) the lease did not last for the entire useful life of the drilling rig, and (2) the contract was for the provision of drilling services and at all time Maersk maintained possession of the rig. The court ignored this issue and, as it did in Transocean I, referred to the transaction as a "sale" without comment.

From an economic perspective, "sales" and "leases" would seem to present the same harm to the patentee. On the other hand, the statute only mentions sales, not leases. For whatever reason, the Federal Circuit didn't want to touch this issue. Maybe we will have to wait for Transocean III to know the answer?

Zoltek v. United States: Patents, the Federal Government, and 271(g)

November 15, 2012Patentanticipation, Federal Circuit En Banc, LicensesJason Rantanen

By Jason Rantanen

Zoltek Corporation v. United States (Fed. Cir. 2012) (en banc in part) Download 09-5135
Majority: Rader, Newman, Lourie, Bryson, Linn, Prost, Moore, O'Malley, Reyna, and Wallach
Dissent: Dyk

We recently discussed the Federal Circuit's en banc opinion in Zoltek v. United States from this past spring in the Contemporary Issues in Patent Law tutorial that I run here at Iowa, and it prompted me to write up a summary.

Zoltek is different from your typical infringement case in that it involves a patent claim brought against the Federal Government for a contractor's actions, and thus liability arises through a separate statutory scheme. Zoltek is the assignee of a patent relating to methods of manufacturing carbon fiber sheets with controlled surface electrical resistivity. Lockheed Martin designed and built F-22 fighter jets for the Federal Government; the F-22 contains carbon fiber sheets that allegedly were produced through the method claimed in Zoltek's patents. However, the process for making the sheets was begun in Japan, the partially completed product was imported into the United States, and the process was completed in the United States, which created a significant problem for Zoltek's infringement claim.

In 1996, Zoltek filed a Complaint against the Federal Government in the Court of Federal Claims under 28 U.S.C. § 1498(a). Section 1498(a) states:

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

This statute does two things: first, it acts as a waiver of the government's immunity, and second, it operates an assumption of liability by the government, thus insulating the government contractor itself from liability. However, during an earlier stage of this case, the government argued that because the process was partially performed abroad, it did not fall under Section 1498(a). In a 2006 opinion (Zoltek III), a panel of the Federal Circuit agreed, and held that the scope of 1498(a) was limited to direct infringement under 35 U.S.C. § 271(a). (That opinion also rejected a Fifth-Amendment takings argumen t). Because 271(a) does not include manufacturing processes that are begun abroad and completed in the United States, the court concluded that the United States had not assumed liability under 1498(a).

The practical effect of the Federal Circuit's ruling was that on remand, Zoltek sought leave to amend its Complaint to add a claim against Lockheed for infringement of the patent under 271(g) and to transfer the action to federal district court. In granting Zoltek's motion, the trial court rejected the Government's argument that 1498(a) insulates government contractors from suit even when the government could not be liable. The Court of Federal Claims certified for interlocutory review the question "“whether 28 U.S.C. § 1498(c) must be construed to nullify any government contractor immunity provided in § 1498(a) when a patent infringement claim aris[es] in a foreign country.”

The Federal Circuit did not directly answer that question. Instead, the new appeal caused it to "re-examine the premises on which our earlier opinion in Zoltek III was based, and to reconsider the consequences of that opinion." 672 F.3d 1314. In other words, the panel had erred.

Revisiting the issue en banc, the court concluded that the correct interpretation of 1498(a) is that it creates a cause of action for direct infringement that is separate and different from 271(a), and that it could include conduct falling under 271(g). Infringement under 271(a) is thus not a necessary predicate for liablity under § 1498(a) as the earlier panel had held. Instead, the court reasoned, the Government's liability "under 1498(a) is linked to the scope of the patent holder's rights as granted by the patent grant in title 35 U.S.C. section 154(a)(1). As the patent grant has expanded over the years, so too has the coverage of § 1498(a)." 672 F.3d 1323. Applying this reasoning, the court concluded that the government could be liable here: "we hold that for the purposes of section 1498, the use or importation “within the United States [of] a product which is made by a process patented in the United States” constitutes use of the invention without lawful right because the products embody the invention itself." 672 F.3d 1326.

Judge Dyk, writing in dissent, disagreed both that the court had jurisdiction to address the issue of the scope of 1498 sua sponte, as well with as the court's revised interpretation.

The scope of 271(g): In concluding that the Government could be liable for Lockheed's conduct, the court held that "[i]f a private party had used Zoltek's patented process to create the resulting product there would be liability for infringing Zoltek's patent right under § 154(a)(1) and § 271(g)." 672 F.3d 1323. However, 271(g) states that:

Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent….A product which is made by a patented process will, for purposes of this title, not be considered to be so made after—

(1) it is materially changed by subsequent processes; or

(2) it becomes a trivial and nonessential component of another product.

Here, Lockheed was not importing "a product which is made by a process patented in the United States"; instead, it was importing a nearly-finished component of that process. I haven't found any cases dealing with this scenario in the regular 271(g) context, so it may be a novel issue. The court essentially avoids the issue in Zoltek by imbuing the product of the process with the essence of the process itself: "In the context of § 1498, the product of a patented process is not only the product, but also the physical embodiment of the invention." 672 F.3d 1326. Zoltek itself is of limited use in settling this issue, however, since by the court's express instruction, "nothing in this opinion should be construed to affect our Title 35 jurisprudence." Id.

Patently-O Bits & Bytes by Lawrence Higgins

November 14, 2012PatentInequitable Conduct, Licenses, VenueDennis Crouch

Chisum Patent Academy

The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]

New start-up company (Evtron)

Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.

Patent Jobs:

Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]

Upcoming Events:

Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
IBC Legal's 6^th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
ACI's 14^th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
C5's 5^th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

November 14, 2012PatentInequitable Conduct, Licenses, VenueLawrence Higgins

Chisum Patent Academy

The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]

New start-up company (Evtron)

Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.

Patent Jobs:

Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]

Upcoming Events:

Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
IBC Legal's 6^th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
ACI's 14^th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
C5's 5^th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

November 14, 2012PatentInequitable Conduct, Licenses, VenueDennis Crouch

Chisum Patent Academy

The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]

New start-up company (Evtron)

Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.

Patent Jobs:

Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]

Upcoming Events:

Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
IBC Legal's 6^th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
ACI's 14^th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
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Timing of the First Office Action on the Merits

November 7, 2012PatentClaim Construction, Licenses, USPTO DirectorDennis Crouch

The average US patent issues about 3 ½ years after filing. The bulk of that time can be assigned to the initial examination queue. When USPTO officials refer to the “backlog” of patent applications awaiting examination, they are typically referring to the 600,000 or so applications that have not yet received any substantive consideration. For any given patent application, the backlog delay ends when a patent examiner issues a first action on the merits (FAOM). In the vast majority of utility applications, that first action is an initial non-final rejection of the originally filed (or preliminarily amended) claims. However, in a small percentage of cases the first action is a notice of allowance.

Based upon USPTO reports in the Official Gazette, I created the following chart considers the timeline for receiving first-actions across the various technology centers and art-units within the USPTO.

The USPTO patent examination corps is divided into a number of technology centers, and each technology center is sub-divided into one or more art units. The technology focus of each tech center is listed below.

1600 – Biotechnology and Organic Chemistry
1700 – Chemical and Materials Engineering
2100 – Computer Architecture, Software, and Information Security
2400 – Computer Networks, Multiplex communication, Video Distribution, and Security
2600 – Communications
2800 – Semiconductors, Electrical and Optical Systems and Components
2900 – Designs
3600 – Transportation, Construction, Electronic Commerce, Agriculture, National Security and License & Review
3700 – Mechanical Engineering, Manufacturing, Products

The chart above is a histogram that graphically represent the time from filing to first-action for each technology center and art unit. More particularly, it reports on the pendency of applications at FOAM for each art unit averaged over the months of June, July, and August 2012. You’ll note that only one art-unit has an average time-to-first-action of less than one year. That art unit is something of a cheat because it is the single Design Patent art unit (2900). As I have noted before, the USPTO’s examination of design patents is roughly equivalent to no substantive examination on prior art grounds. The second quickest art unit is 1660 – again a cheat because it is the unit responsible for plant patents. The slowest art unit here is 2190 (data processing). I should note that the “art unit” level that I discuss here are actually grouped by tens such that 2190 is a considered a single art unit for my purposes even though it includes art units 2192-2196.

One focus of the PTO under Director David Kappos and PTO Commissioner Peggy Focarino has been to focus on outliers within the organization and shift resources in order to bring all art units within a tighter sphere of activity. Thus, one of the PTO’s initiatives has focused on ensuring that all very old cases have received at least one office action on the merits. The PTO recently completed its second round of its COPA project (Clearing the Oldest Patent Applications 2.0). In each round, the Office has set a filing date cutoff and pushed examiners to ensure that all applications filed prior to that date had actually been examined. For COPA 2.0, the cutoff date was September 1, 2010. When the project began in at the end of September 2011 there were almost 300,000 applications filed prior to that date that had not yet received any action. At the end of the project in September 2012, there were only about 33,000 remaining in that subset of old cases.

Next time I make this chart, none of the art units should pass the 2.0 year mark for FAOM. Although not the focus of the post, the PTO offers an option for applicants to skip the queue by paying a $4,000 fee to accelerate the examination.

Reviewing Inter Partes Review: After Six Weeks

November 1, 2012PatentAIA Trials, IPR, Licenses, obviousnessDennis Crouch

Six-weeks into the new inter partes review regime, third parties have filed a total of 41 inter partes review requests – each one challenging a single patent. Of these, I identified 34 (82%) as already being involved with prior litigation in court. Most of the prior-litigation is patent infringement litigation. However one case (involving Sony & Tessera) stems from a licensing dispute between the companies. Of the seven patents that have not been subject to prior litigation, five appear to be part of a retaliation game between Intellectual Ventures and Xilinx. IntVen challenged four Xilinx patents in an apparent retaliation against a prior declaratory judgment filed by Xilinx. Not to be outdone, Xilinx then filed its on IPR against an IntVen patent. In a sense, IntVen’s actions may serve as a warning against other potential licensees who refuse to deal. The final two non-litigation IPRs appear to be focal points of disputes between fairly small competitors.

The point of all this is fairly obvious – that inter partes reviews are being used only when there is a major dispute between the patentee and the third-party filer. The filings used in parallel to district court and ITC litigation were entirely expected. It was not so apparent that inter partes review would be used as a pawn in a larger battle between companies. The small number of filings helps to confirm the strong prediction that inter partes reviews will not be used as a tool to limit the number of “bad” patents.

In these cases, the patent owner has three months to file a preliminary response (or waive that filing). Following that, the USPTO has three months to determine whether or not to grant the inter partes review request. At that point, the statute calls for a final determination from the PTO within 12 months.

Kirtsaeng v. John Wiley Oral Arguments

October 29, 2012PatentDamages, LicensesDennis Crouch

Kirtsaeng v. John Wiley & Sons, Docket No. 11-697 (Supreme Court 2012)

Here are a few quotes from today’s oral arguments. More discussion of the case here.

….

MR. ROSENKRANZ: (on behalf of accused infringer Kirtsaeng): What [copyright holders] got [with the passage of Section 602] was a much more powerful weapon than a contract. [A] copyright weapon gives you injunctive relief, gives you multiples of damages which you don’t get out of a contract remedy.

MR. ROSENKRANZ: The moment that a manufacturer learns that this Court says you get what we’ve called the Holy Grail of manufacturing, endless eternal downstream control over sales and rentals, you can ruin secondary markets that are competing with you, the moment that happens, that will be yet another reason for manufacturers silently to decide that they’re headed — that they’re sending their manufacturing overseas.

….

JUSTICE KAGAN: Mr. Rosenkranz, can I take you back to Justice Ginsburg’s opening question? Just as a matter of copyright theory, I had always understood [that] a copyright holder has a kind of a bundle of rights. It’s not one right that applies everywhere in the world. It’s you have your U.S. rights and you have your Chinese rights, you have your rights under each jurisdiction’s law. And your position is essentially to say that when I sell my Chinese rights to somebody, I’m also selling my U.S. rights to that same person, because the person who has the Chinese rights can just turn around and import the goods. I mean, that’s the nature of your position, isn’t it, that your U.S. rights are always attached when you sell more — your rights under the jurisdiction of another country?

MR. ROSENKRANZ: Well — so first, Your Honor, back in 1976, this notion of geographic division was very, very new, so it’s not at all clear what Congress was thinking with that — with respect to that. But secondly, no, we’re not — we’re not saying that when the owner sells his Chinese — its Chinese rights to the Chinese company, it is selling all rights. Certainly, the Chinese company cannot sell everywhere, but after that first sale, all of the manufacturer’s rights are cut off.

….

JUSTICE BREYER: I mean, an American copyright holder licenses a British company to publish the work under British copyright law. 602(a) says he can’t import the books into the United States, period…. The question is what happens when he sells it to his bookstore and you or I go in and buy it and we want to give a copy to our wife when we get back to the United States. The question is, … is that unlawful? … [What if] I bring back five copies and I give one to my son?

MR. OLSON (arguing on behalf of the copyright holder John Wiley): Well, there are fair use exceptions …

….

JUSTICE BREYER: [I]magine Toyota, all right? Millions sold in the United States. They have copyrighted sound systems. They have copyrighted GPS systems. When people buy them in America, they think they’re going to be able to resell them…. Under their reading, the millions of Americans who buy Toyotas could not resell them without getting the permission of the copyright holder of every item in that car which is copyrighted?

MR. OLSON: … that is not this case….

JUSTICE KENNEDY: You’re aware of the fact that if we write an opinion with the — with the rule that you propose, that we should, as a matter of common sense, ask about the consequences of that rule. And that’s what we are asking….

JUSTICE BREYER: I would like to know, if you were the lawyer for the Toyota distributor, and if you were the lawyer for the Metropolitan Museum of Art, or you are the lawyer for a university library, and your client comes to you and says, my God, I just read the Supreme Court opinion. It says that we can’t start selling these old books or — or lending them or putting them in our word processor or reselling the Toyota without the — without looking — displaying the Picasso without the permission of the copyright holder, who may or may not be Toyota itself. What, as their lawyer, do you tell them? Do you tell them, hey, no problem; or, do you tell them, you might become a law violator; or, do you tell them, I better litigate this? What do you tell them?

MR. OLSON: Well, each one of those situations that you posit, Justice Breyer, has a whole panoply of set of facts. With respect to the museums, with respect to the person bringing books into the United States, there are other defenses, including fair use. There are other defenses under the copyright law. But — and one of the things is that, to a certain extent, if you’re going to use the product created by someone else in a way that’s contemplated by the copyright laws, maybe it’s required that you actually comply with the copyright laws by going to the owner of the copyright and saying, look, here’s what I propose to do, can I have a license to do this?

…

JUSTICE GINSBURG: Mr. Olson, do you have an answer to the outsourcing problem and the charges that if you read the statute as you are urging, then you are inviting the outsourcing of manufacturing jobs?

MR. OLSON: There are several answers to that. One, that’s Congress’s concern. And — and there is no evidence that that would really actually happen. And Congress was concerned with creating a segmentation of the market. But it’s entirely speculative as to whether or not people are going to start manufacturing books or other items outside the United States. Congress can address that if that should become a problem, but it’s not something that was suggested as a part of what was taking place at that time.

…

JUSTICE BREYER: Well, the word has grounding. [What about the ancient principle found in] Coke on Littleton, 1628, where it says that “if a man be possessed of a chattel and give or sell his whole interest upon a condition, that condition is no good.” And Coke says, and that’s how it should be. And now that’s picked up in Bobbs-Merrill; it’s picked up in Dr. Miles. It’s been the law. Now if, in fact, there are two ways of interpreting the statute, and one is consistent with that basic principle of commercial law, and the other produces some of the complexities that you have just mentioned, isn’t it better to go with the common law and simply reaffirm a principle that’s been in the commercial law almost forever?

MR. STEWART (arguing as amicus on behalf of the US Government): I give two answers for that. And the first is that Coke was saying that, in most circumstances at least, a sale is sufficient in order to divest the owner of his prior right to control distribution, but it doesn’t say that a sale is necessary. And my point is that when Mr. Rosenkranz says the hypothetical foreign publisher who makes copies with authorization but ships … them into the United States without [authorization] could be held liable for infringement, there is nothing in section 109(a) that would allow a court to draw that distinction; that is, although 109(a) is sometimes referred to as a codification of the First Sale Doctrine, it doesn’t require an antecedent first sale. So as long as the foreign publisher was the owner of the books at the type — time they were manufactured, if those books were lawfully made under this title, under Petitioner’s reading they could be imported and distributed. We know also that this was not an oversight, that Congress didn’t intend the provision to be subject to a sort of implicit first authorized sale requirement, because the language was intended to cover copies that were made pursuant to a compulsory license.

….

No direct mention of patent law in the oral arguments.