On his blog, Mike Kondoudis highlights an important point regarding fees. Once an applicant properly establishes small entity status the small entity fees can continue to be paid until the issue fee is due (even if actual status changes). 37 CFR § 1.27(g)(1). However, in the proposed micro-entity rules, the USPTO has proposed that the micro entity status must be repeatedly established throughout prosecution (except for University applicants). In its response to the proposed rules, the AIPLA argues that this process makes the micro-entity status overly confusing and burdensome. "AIPLA's overall recommendation is to simplify the procedures created by the rules."
In a major giveaway to universities, the America Invents Act includes a provision that allows US Universities to take advantage of the 75% reduction in fees offered by the micro entity status. Independent inventor and author Raoul Drapeau wrote to the PTO with the following response: [This] is another sad example of how large organizations have influenced rulemaking to suit their own ends, to the disadvantage of small inventors. How could an institution of higher learning under any interpretation be considered a small – much less a micro-entity." An ongoing question regarding the micro-entity fees is whether university IP holding companies (such as WARF) and university-esque entities (such as Scripps) will receive the reduction in fee status.
Major Loophole: In an e-mail to the USPTO, well known patent attorney Rick Neifeld highlighted a major potential loophole in the statute that would allow virtually any patent applicant to take advantage of the micro entity status by licensing the invention to a US university. The issue stems from the language of newly added 35 U.S.C. 123(d)(2) that allows patent applicants to qualify for micro-entity fees if the subject applicant is licensed to (or under obligation to license to) a US university. The statute:
(d) INSTITUTIONS OF HIGHER EDUCATION.–For purposes of this section, a micro entity shall include an applicant who certifies that—
… (2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education [as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))].
Since US universities are – for the most part – non-practicing entities, granting a limited license to a university would have little negative impact and would open the possibility of qualifying for a 75% fee reduction.
In its proposed rules, the USPTO has offered to close the loophole with a requirement that anyone claiming micro-entity status must also qualify for small entity status. In most situations, the USPTO would not have the authority to make such a dramatic change in the law. However, the new Section 123(e) gives the USPTO Director authority "in the Director's discretion, [to] impose income limits, annual filing limits, or other limits on who may qualify as a micro entity pursuant to this section." Of course, it is quite possible that the USPTO's broad limit set here actually surpasses its discretion. In that case, the rule would be struck-down as in Tafas v. Dudas. Neifeld suggests a more narrow rule that would block micro-entity claims in cases where the university-license was created in order to take advantage of the micro-entity status.
The following is a reprint from the Orange Book Blog and was written by my former office-mate Aaron Barkoff. Aaron is an IP litigator at McAndrews in Chicago – Dennis Crouch
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by Aaron Barkoff
Momenta Pharms. v. Amphastar Pharms., No. 2012-1062 (Fed. Cir.)
Last year, inClassen v. Biogen IDEC, a three-judge panel of the Federal Circuit held that the safe harbor of Section 271(e)(1) "does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained." The majority opinion was written by Judge Newman, with Chief Judge Rader concurring and providing additional views, and Judge Moore dissenting. Apetition for certiorariin the case is currently pending at the Supreme Court, and the Court recently asked the Solicitor General's office to weigh in with its views.
Last Friday, inMomenta v. Amphastar, a case between two manufacturers of generic Lovenox (enoxaparin), a slightly different three-judge panel of the Federal Circuit held that the safe harbor does apply to certain post-approval activities. In the case, Judge Moore wrote the majority opinion, joined by Judge Dyk, and Chief Judge Rader wrote a blistering 29-page dissent. The decisions in the two cases do not seem entirely consistent with each other, which likely raises the odds that the Supreme Court will agree to hear theClassencase.
Momenta is the assignee of U.S. Patent No.7,575,886, which generally relates "to methods for analyzing heterogeneous populations of sulfated polysaccharides, e.g. heparin [and] . . . LMWH [low molecular weight heparin–e.g., enoxaparin]." Two days after Amphastar received final FDA approval to market its generic enoxaparin (and more than a year after Momenta received its own approval), Momenta filed suit against Amphastar, accusing Amphastar of "manufacturing generic enoxaparin for commercial sale" and performing "in their process for manufacturing batches of enoxaparin" an analytical method that infringes the '886 patent. According to the majority opinion, Momenta also alleged that this infringing testing was necessary to "satisfy the FDA's requirements."
The district court granted Momenta a preliminary injunction, concluding that Amphastar's testing falls outside the scope of the safe harbor under Section 271(e)(1): "although the safe harbor provision permits otherwise infringing activity that is conducted to obtain regulatory approval of a product, it does not permit a generic manufacturer to continue in that otherwise infringing activity after obtaining approval." Amphastar appealed, contending that the district court adopted an overly restrictive view of the safe harbor.
The Federal Circuit majority opinion began by addressing Momenta's "contention that the information in question was not 'submitted' to the FDA, but rather was retained by the ANDA holder." Here, the majority concluded that "the fact that the FDA does not in most cases actually inspect [Amphastar's manufacturing test records] does not change the fact that they are for the development and submission of information under a Federal law." The majority cited the Supreme Court'sMerck v. Integradecision for "holding that uses which are not ultimately included in a submission to the FDA are nonetheless exempted by the safe harbor."
The majority then turned to whether Amphastar's submissions are protected by the safe harbor. Here, the majority took pains to distinguish Classen:
At issue inClassenwere [post-marketing] studies to evaluate the association between the timing of childhood vaccinations and the risk of developing certain immune-mediated disorders. The studies themselves were not mandated by the FDA, but any vaccine license holder was required to report to the FDA "adverse experience information," such as adverse side effects, it acquired as a result of vaccine studies. We found that the studies conducted by the vaccine license holder according to patented methods were not insulated by the safe harbor because the studies did not facilitate marketing a generic drug by "expediting development of information for regulatory approval." We, of course, are bound by theClassendecision unless it is overruled en banc or by the Supreme Court. Accordingly, the scope of the safe harbor provision does not extend to "information that may be routinely reported to the FDA, long after marketing approval has been obtained."
This case, however, fits well withinClassenbecause the information submitted is necessary both to the continued approval of the ANDA and to the ability to market the generic drug. Here, the submissions are not "routine submissions" to the FDA, but instead are submissions that are required to maintain FDA approval. . . . Failure to comply with these requirements could result in suspension or revocation of Amphastar's ANDA approval to market the drug.
We also note that, unlike inClassenwhere the patented studies performed were not mandated by the FDA, the information here is not generated voluntarily by the manufacturer but is generated by FDA requirements the manufacturer is obligated under penalty of law to follow. Under such circumstances, the information can be said to have been gathered solely for submission to the FDA and not, as inClassen, primarily for non-FDA purposes. While Momenta urges us to adopt the pre-/post-approval distinction used by the district court, we cannot: Classendid not turn on this artificial distinction, and the plain language of the statute is not restricted to pre-approval activities.
UnlikeClassen, where the allegedly infringing activity "may" have eventually led to an FDA submission, there is no dispute in this case that Amphastar's allegedly infringing activities are carried out to "satisfy the FDA's requirements."
In a strongly-worded dissent, Chief Judge Rader repeatedly refers to Amphastar as a "trespasser" and "infringer." He traces the legislative history of Section 271(e)(1)–which is curious given that the Supreme Court has twice minimized the legislative history and based its decisions instead on the plain (and broad) language of the statute. And he takes great exception to the majority opinion's basis for distinguishingClassen. Finally, he claims that the majority's "interpretation of 271(e)(1) would essentially render manufacturing method patents worthless." While this is an exaggeration, the Supreme Court might reply: "that is a problem for Congress to fix, if they so choose."
Where the scope of the 271(e)(1) safe harbor ends up matters a great deal, particularly as we approach the era of biosimilar patent litigation. Like enoxaparin, biologics are complex molecules and thus analytical-method patents figure to be in the patent portfolios protecting them. The sooner the courts can agree on the scope of the safe harbor, the better for everyone.
This guest post is by Angelos Dimopoulos, Assistant Professor at Tilburg Law School and Petroula Vantsiouri, Doctoral Candidate at the University of Cambridge, Faculty of Law. I invited the pair to write this post to help explain how the new pan-European patent court might fit within the current EU structure (that already includes the EU Court of Justice. – DC
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Any practitioner who has been involved in patent litigation in the European Union (EU) is well aware of the inconsistencies in the Member States patent law and the differences among national litigation systems. Disturbingly often the same case is litigated in several jurisdictions, under different procedural and evidentiary rules with uncertain timing of outcomes. In that respect, it comes as no surprise that the recent initiatives regarding the creation of a European patent with unitary effect (EPUE) and a ‘Unified Patent Court‘ (UPC) are currently the hottest IP topics in Europe. In short, the EU intends to introduce a EU-law based patent right that will be valid throughout the territory of 25 of the 27 EU Member States (Italy and Spain remaining outside) and a single patent court at the European level with exclusive jurisdiction as regards infringement and revocation proceedings, covering the same territory.
The UK government and a number of patent holders are lobbying for limiting the role that the Court of Justice (CJEU), the highest court in the EU in matters of EU law, will play in patent litigation in Europe. In our view this is simply wrong. In our recent paper called “Of TRIPS and traps: The interpretative jurisdiction of Court of Justice of the EU over patent law“, we provide two main arguments in support of this claim. First, we argue that regardless of the final wording or the adoption of the proposed EU legislation, the Court of Justice can acquire a stronger role in the application of patent law by using its interpretative jurisdiction over the patent provisions of the TRIPS Agreement. Secondly, we argue that this role is a significant tool in the process of establishing a complete and uniform framework for patent protection in the EU.
So far the CJEU has been hesitant to apply and interpret the TRIPS patent provisions. In a series of cases concerning the TRIPS Agreement, as they were crystallised in Merck Genericos, the CJEU clarified that the interpretation of the substantive patent provisions of the TRIPS Agreement lie outside its jurisdiction. This means that up to now Member States can decide according to their national laws how to interpret the TRIPS provisions on patents. However, after the entry into force of the Lisbon Treaty (which amended the constitutional charter of the EU in 2009) Merck Genericos is no longer good law. Article 207 of the Treaty on the Functioning of the European Union (TFEU) vests the EU with exclusive competence over commercial aspects of IP and brings the TRIPS agreement within the scope of EU law. In that respect, the CJEU has now acquired significant powers to determine whether national (and in the future Union) patent rules are interpreted consistently with the TRIPS agreement.
This has significant implications for the development of patent rules in the EU. Currently, patent law in the EU is characterized by a lack of harmonization, although there are some uniform rules. All 27 Member States have acceded to the European Patent Convention (EPC), which established the European Patent Organisation (EPO) and a system of law for granting patents for inventions. Thus, national laws of EU Member States are de facto harmonized in the field of patentability and validity but only as regards the grant of patents. Issues of validity and infringement after the patent grant are matters for national law and national courts. But even in the fields covered by the EPC, uniformity is not always present. In many instances the EPO and national authorities interpret the EPC in diverging ways. Many national authorities do not take each other’s case law into consideration, and even if they do, differences in legal traditions, policy choices or practicalities can lead to different outcomes.
The proposed EU patent with unitary effect and the proposed Unified Patent Court cannot change all that. The proposed legislation does not guarantee the establishment of truly uniform rules. As the proposals now stand, substantive issues (prior user rights, assignments, voluntary and compulsory licensees and government use) are left outside the scope of the proposed Unitary Patent Protection. Moreover, if adopted, the proposals will lead to four different types of patents within the EU. Finally, with Spain and Italy not participating in these projects, the EU will be partitioned in three territories.
So, how can the Court of Justice fix that?
First, although the TRIPS agreement is very broad as regards the subject matter of patent protection, it contains specific rules on prior users’ rights and exceptions, including in particular compulsory licenses, which are subject matters left outside the scope of the proposed regulation. Article 1 TRIPS requires that WTO members “give effect” to its provisions, which signifies that a WTO member should take all reasonable measures to ensure consistency between domestic law and the agreement. So, the CJEU can use its interpretative jurisdiction to establish common minimum rules with regard to the subject matters that could be left outside the scope of harmonization.
Secondly, the Court’s interpretative jurisdiction can result in the establishment of minimum, uniform standards of protection for the different types of patents. In its previous caselaw (Hermes and Dior) the Court held that “where a provision can apply both to situations falling within the scope of national law and to situations falling within the scope of [Union] law, it is clearly in the [Union] interest that, in order to forestall future differences of interpretation, that provision should be interpreted uniformly, whatever the circumstances in which it is to apply.” Considering that the regulation on European Patents with Unitary Effect will be part of Union law, the Court of Justice can employ the TRIPS agreement in order to determine the standards of protection under national and EPO-granted patents by reference to the standards of protection of European Patents with Unitary Effect, so as to ensure uniform implementation of the TRIPS agreement in the EU.
Thirdly, the interpretative jurisdiction of the Court can mitigate the danger that arises from the existence of parallel adjudication regimes for patent protection. By allowing the CJEU to determine whether national courts abide by the TRIPS when they adjudicate patent infringement cases, the CJEU can act as the single, ultimate judicial authority in the EU, ensuring coherence and consistency in the interpretation of the different regimes of patent infringement rules.
In short, although it cannot contribute to the reduction of litigation costs, at least initially, the CJEU’s interpretative jurisdiction over TRIPS provisions can promote legal certainty, and the establishment of uniform and comprehensive patent protection in the EU that would be attractive to the industry and conducive to technological progress. Nevertheless, the power to interpret the TRIPS is not a panacea. It does not result in the establishment of uniform substantive rules, as the TRIPS is a minimum standards agreement, while its success depends on the number and subject matter of the actual cases that will reach its jurisdiction under the preliminary reference procedure.
I just finished (for now) the updated chapter in the second edition of our book on ethical issues in patent prosecution that covers conflicts of interest in patent prosecution. There's very little authority out there, but lots of lawsuits and ethics "experts" with different opinions about what is, and is not, adverse in patent prosecution, so this topic is always interesting.
In updating it, I enjoyed reading the ITC decision denying Google's motion to disqualify Pepper Hamilton. In the Matter of Certain Portable Communication Devices, Inv. No. 337-TA-827 (Order No. 7 Feb. 13, 2012). (Disclosure: I was an expert retained by Pepper Hamilton to provide an opinion.) The case is interesting and provides some light on what might be "adverse" in patent litigation and, in my view, also in patent prosecution. The tone of the ALJ's decision also offers, I think, important lessons on how to approach a motion to disqualify: if you're accusing the side of being unethical, act with very clean hands.
In that case, Pepper Hamilton was prosecuting a few patent applications for Google. It undertook to represent a patentee, Digitude, in an exclusion proceeding before the ITC, seeking an order preventing importation of certain cell phones and other devices.
Google was not a defendant, and its products and services were not accused of infringing the patent involved in the ITC proceeding. Nonetheless, the accused products used Google’s Android software, and that software allegedly satisfied one element of a claim-in-suit. Google intervened in the proceeding, contending that Pepper Hamilton was adverse to it, because Google was a member of a consortium (the “Open Handset Alliance”) that provided, free of charge, the Android software as an open source product to the device makers. Further, the Open Handset Alliance specifically disclaimed any warranty of non-infringement when doing so.
The staff recommended denying the motion to disqualify, and the ALJ did so. The ALJ rejected several arguments presented by Google to establish adversity despite the usual indicia under the burden of proof required in the ITC:
Based on the foregoing, I find that Google has not clearly demonstrated that Pepper Hamilton's representation of Digitude is "directly adverse" to Google. Any finding of a violation of Section 337 in this investigation will not impact Google's legal interests because of the wording of the Apache 2.0 license under which Android is licensed [which disclaimed the warranty of non-infringement]. Moreover, I find that Google did not provide the full factual background when it asserted that Android is a "Google product," as the evidence establishes that Android is an open source project run through the Open Handset Alliance, whereby the software is provided at no cost and everyone is invited to contribute. Google asserts that Pepper Hamilton's representation of Digitude is adverse to Google's business interests as well. Google offers no evidence regarding how Google's business interests will be harmed through this litigation. Instead, Google offers a declaration from its in-house Litigation Counsel that makes conclusory assertions such as "Google has a strong interest in preserving the Respondents' continued importation of devices that incorporate Google's Android technology," and, to the extent that Digitude's infringement claims are directed to Android, "Google's legal and business interests are harmed." Such unsupported assertions do not demonstrate that Google' s business interests will be harmed if Digitude obtains relief against the respondents' Android-based products. Google argues that respondents in this investigation who make products that do not run the Android operating system may assert Google's patents or technology as prior art that invalidates Digitude's patents, thereby requiring Pepper Hamilton to attack Google's prior art patents or technology. Google offers no evidence that any Google patent or technology is being asserted as prior art in this investigation, making Google's argument pure speculation. The mere possibility that Google prior art will be relied upon in this investigation does not give rise to a Rule 1. 7 violation.
Google raises a concern regarding Google's possible involvement in this investigation as a third party. Pepper Hamilton has assured Google that it will not seek any third party discovery from Google in the current investigation. Pepper Hamilton has also assured Google that if another party seeks third party discovery from Google and a deposition takes place, no Pepper Hamilton attorney will examine a Google witness. (ld) I fmd that these assurances are sufficient, and that Pepper Hamilton will be held to these promises, and the other promises included in Mr. Zemaitis' January 20, 2012letter. (ld) Pepper Hamilton shall have noinvolvement in any Google third party discovery in this investigation. This prevents any potential direct adversity from arising.
Google also raises a concern regarding the confidentiality of its information. Google has not offered any evidence that its confidential information has been viewed or used by Pepper Hamilton attorneys representing Digitude. Pepper Hamilton has already established an ethical screen. With this ethical screen in place, Pepper Hamilton attorneys working on this investigation on behalf of Digitude cannot access Google's confidential information, and Pepper Hamilton attorneys working on behalf of Google cannot access confidential information in the current investigation. Digitude offered declarations from the Pepper Hamilton attorneys who have made an appearance in this investigation, with each declaration stating that the attorney has not, inter alia,performed legal work for Google or accessed any Google confidential information while at Pepper Hamilton. Moreover, there is a physical separation of any hard copy documents, as Pepper Hamilton's work for Google takes place in its Pennsylvania and Delaware offices, while Pepper Hamilton's work for Digitude takes place in its Massachusetts and Washington, DC offices. I find that the actions taken by Pepper Hamilton serve as a reasonable precaution to keep the confidential information of Google and Digitude separate. Pepper Hamilton shall ensure that these safeguards are kept in place.
In sum, I find that Google has not met its heavy burden in demonstrating that Pepper Hamilton should be disqualified from representing Digitude in this investigation.
A substantial number of patent lawsuits are declaratory judgment actions that involve a user asking a federal court to rule that it is not liable for patent infringement (either because the user does not infringe or because the patent is invalid/unenforceable). A preliminary issue in these cases is always a determination of whether a sufficient legal dispute exists (a case or controversy) between the parties. Under the U.S. Constitution (as interpreted), a federal court cannot pass judgment on cases that do not meet this threshold. When multiple plaintiffs are present (as in the Myriad case), the court must find at least one plaintiff-defendant relationship that meets this threshold or else the case must be dismissed for lack of standing.
In Myriad, the Federal Circuit ruled that the research of at least one individual (Dr. Ostrer) was hampered by Myriad's patent enforcement activities. Although the court found a controversy in this case, the language that it used to permit the case to continue is quite narrow.
Public Interest Patent Litigation: An important element of the Myriad case is that it has been driven largely by public interest groups operating with an agenda of denuding patents that they see as harmful to public health and fundamental liberties. These parties include the ACLU, PubPat, and the first-named plaintiff, the Association for Molecular Pathology (AMP). Those advocacy groups have no intention of using the patent themselves, but challenging the patent fits within their agenda of protecting the public. In its opinion here, the court holds that those organizations do not have standing in the case.
We … reverse the district court's holding that the various plaintiffs other than Dr. Ostrer have standing to maintain this declaratory judgment action. Simply disagreeing with the existence of a patent on isolated DNA sequences or even suffering an attenuated, non-proximate, effect from the existence of a patent does not meet the Supreme Court's requirement for an adverse legal controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. The various organizational plaintiffs in this suit in particular were not the target of any enforcement action or offered license agreements by Myriad and had made no preparation to undertake potentially infringing activities. They accordingly suffered no injury and thus lack standing to bring this action.
This result obviously makes it more difficult for public interest organizations to take this type of action in the future. However, the court provides a roadmap – simply identify an individual with an actual controversy as the named plaintiff.
Patient / Health Insurance Plaintiffs: Another set of plaintiffs in this case are patients who would like to run the DNA test using an alternative laboratory – either because they want a second opinion or because they want a cheaper test. The court also wrote that those patients likely lack standing to bring a declaratory judgment action in the absence of some affirmative act by the patentee against those defendants.
Certain patients also allege an injury based on their inability to gain access to affordable BRCA genetic testing because of Myriad's patent dominance of such services. While denial of health services can, in certain circumstances, state a judicially cognizable injury, Plaintiffs have not pressed this as an independent ground for standing. Moreover, we fail to see how the inability to afford a patented invention could establish an invasion of a legally protected interest for purposes of standing.
This quote from the court conforms well to the Supreme Court's recent copyright decision Golan v. Holder (2012). In that case, the court wrote that individuals do not have enforceable rights to use the "public domain."
In a sense, it appears that the court here strained toclaim jurisdiction over the case, but was careful to attempt to avoid expanding the scope of declaratory judgment jurisdiction in the process.
Association for Molecular Pathology (AMP) and ACLU v. USPTO and Myriad Genetics (Fed. Cir. 2012)
On remand from the Supreme Court (GVR), a three-member panel of the Court of Appeals for the Federal Circuit has released its highly anticipated decision in AMP v. Myriad. The key results:
Affirmed: The courts properly have jurisdiction over the declaratory judgment case.
Reversed: Myriad's composition claims to isolated DNAs, including cDNAs fall within the scope of Section 101 patentable subject matter.
Affirmed: Myriad's method claims directed to comparing or analyzing gene sequences are not subject matter eligible.
Reversed: Myriad's method claim to screening potential cancer therapeutics via in vitro changes is subject matter eligible.
This decision largely follows the decision previously released by the same panel in 2011. Each member of the court wrote separate opinions, with the opinion of the court filed by Judge Lourie, Judge Moore concurring in part and Judge Bryson dissenting in part. In dissent, Judge Bryson again employed his leaf analogy – arguing that a gene that was merely isolated from the human body cannot itself be patentable in the same way that a naturally grown leaf does not become patentable simply because it is plucked from its tree. Judge Bryson writes:
[E]xtracting a gene is akin to snapping a leaf from a tree. Like a gene, a leaf has a natural starting and stopping point. It buds during spring from the same place that it breaks off and falls during autumn. Yet prematurely plucking the leaf would not turn it into a human-made invention. That would remain true if there were minor differences between the plucked leaf and the fallen autumn leaf, unless those differences imparted "markedly different characteristics" to the plucked leaf.
The majority (here judges Lourie and Moore) disputed the leaf analogy based upon the apparent technical difficulty of isolating human DNA.
It is also important to dispute the dissent's analogy to snapping a leaf from a tree. With respect, no one could contemplate that snapping a leaf from a tree would be worthy of a patent, whereas isolating genes to provide useful diagnostic tools and medicines is surely what the patent laws are intended to encourage and protect. Snapping a leaf from a tree is a physical separation, easily done by anyone. Creating a new chemical entity is the work of human transformation, requiring skill, knowledge, and effort.
Although it may well be comparatively difficult to isolate DNA, at the time of the invention (and even more so today) the process of isolating human DNA was well known and (once the gene sequence was known) was not something difficult for one skilled in this art. I personally isolated selected portions of DNA (non-human) back in 1992 (before the priority date) as part of the introductory biology course that I took in college. It was easy. The majority's analysis here essentially rejects any notion that the Mayo courtwould find an invention consisting of a combination of old-technology + newly-discovered-product-of-nature to be subject matter ineligible.
The core of the majority argument regarding the isolated DNA claims is that the process of removing the DNA from the human body necessarily transforms those molecules into something new and different. As Locke might say, the mixture of the naturally occurring DNA with human ingenuity and labor resulted in a new arrangement of matter heretofore never seen. The Judge Lourie writes:
The isolated DNA molecules before us are not found in nature. They are obtained in the laboratory and are man-made, the product of human ingenuity. While they are prepared from products of nature, so is every other composition of matter. All new chemical or biological molecules, whether made by synthesis or decomposition, are made from natural materials. For example, virtually every medicine utilized by today's medical practitioners, and every manufactured plastic product, is either synthesized from natural materials (most often petroleum fractions) or derived from natural plant materials. But, as such, they are different from natural materials, even if they are ultimately derived from them. The same is true of isolated DNA molecules. . . .
While purified natural products thus may or may not qualify for patent under § 101, the isolated DNAs of the present patents constitute an a fortiori situation, where they are not only purified; they are different from the natural products in "name, character, and use." (quoting Chakrabarty).
To be clear, the change in the molecule that the court is discussing is that the isolated DNA molecule is cleaved from the larger chromosomal DNA molecule by enzymatically cutting it off at each end and slightly altering the terminal amino acid groups. In a concurring opinion, Judge Moore agreed that the isolated DNA is patent eligible, but rejected the notion that the chemical difference between the in situ gene (part of the chromosome) and the isolated gene is sufficient to justify the conclusion. Rather, Judge Moore identified the altered chemical along with the new and beneficial utility achieved because of the isolation as dual keys to patent eligibility. (Note – for further study – Lourie's dicta that isolation for new purpose is insufficient).
The point of this rehearing was to consider the impact of Mayo on this case. As suggested by the above paragraph, the Judge Lourie's answer here is basically that Mayo has no impact here. Of importance, the court indicated that the holding in Mayo should be limited to method claims and thus cannot be applicable to Myriad's DNA composition claims.
The principal claims of the patents before us on remand relate to isolated DNA molecules. Mayo does not control the question of patent-eligibility of such claims.
This cabining of Mayo will be the key to any petition for a writ of certiorari. To be fair, when considering the Supreme Court's analysis in Mayo v. Prometheus, the CAFC found that precedent applicable to analysis of the method claims. Of course, the CAFC had already held those method claims ineligible even before Mayo (in its prior decision). Interestingly, even though in dissent, Judge Bryson agreed that the "Supreme Court's recent decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1293 (2012), does not decide this case." Judge Bryson implicitly agrees that the distinction is based upon claim form – because Mayo "involved method claims." However, he did draw the same analogy that I penned immediately following the Mayo decision – that the discovery of the DNA sequence is the heart of the invention and that the rest of the claim structure is merely window dressing.
In Mayo, which involved method claims, the representative claim involved the steps of administering a drug to a subject, determining a metabolite concentration in the subject's blood, and inferring the need for a change in dosage based on that metabolite concentration. The [Supreme] Court found that the method was not directed to patent-eligible subject matter because it contributed nothing "inventive" to the law of nature that lay at the heart of the claimed invention. . . . In concluding that the claims did not add "enough" to the natural laws, the Court was particularly persuaded by the fact that "the steps of the claimed processes . . . involve well-understood, routine, conventional activity previously engaged in by researchers in the field."
Just as a patent involving a law of nature must have an "inventive concept" that does "significantly more than simply describe . . . natural relations," a patent involving a product of nature should have an inventive concept that involves more than merely incidental changes to the naturally occurring product. In cases such as this one, in which the applicant claims a composition of matter that is nearly identical to a product of nature, it is appropriate to ask whether the applicant has done "enough" to distinguish his alleged invention from the similar product of nature. Has the applicant made an "inventive" contribution to the product of nature? Does the claimed composition involve more than "well-understood, routine, conventional" elements? Here, the answer to those questions is no.
Neither isolation of the naturally occurring material nor the resulting breaking of covalent bonds makes the claimed molecules patentable. We have previously stated that "isolation of interesting compounds is a mainstay of the chemist's art," and that "[i]f it is known how to per-form such an isolation doing so 'is likely the product not of innovation but of ordinary skill and common sense.'" Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1302 (Fed. Cir. 2007). Similarly, the structural changes ancillary to the isolation of the gene do not render these claims patentable. The cleaving of covalent bonds incident to isolation is itself not inventive, and the fact that the cleaved molecules have terminal groups that differ from the naturally occurring nucleotide sequences does nothing to add any inventive character to the claimed molecules. The functional portion of the composition—the nucleotide sequence—remains identical to that of the naturally occurring gene.
The majority suggests that I have "focus[ed] not on the differences between isolated and native DNAs, but on one similarity: their informational content." In light of Mayo, that approach seems appropriate. The informational content of the nucleotide sequences is the critical aspect of these molecules; the terminal groups added to the molecules when the covalent bonds are broken—to which the majority and concurring opinions attribute such significance—are not even mentioned in the claims. The nucleotide sequences of the claimed molecules are the same as the nucleotide sequences found in naturally occurring human genes. In my view, that structural similarity dwarfs the significance of the structural differences between isolated DNA and naturally occurring DNA, especially where the structural differences are merely ancillary to the breaking of covalent bonds, a process that is itself not inventive.
Regardless of your policy perspective on patent eligibility, Judge Bryson's opinion is clearly the most faithful to the Supreme Court's Mayo decision. The only problem is that Judge Bryson ignores other relevant subject matter eligibility cases such as Chakrabarty and Funk Bros. Of course, this highlights a real problem with subject matter eligibility doctrine – the cases do not fit together in any coherent fashion.
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An interesting aspect of Judge Lourie's opinion is his attempt to wash his hands of the public policy results of the decision:
[I]t is important to state what this appeal is not about. It is not about whether individuals suspected of having an increased risk of developing breast cancer are entitled to a second opinion. Nor is it about whether the University of Utah, the owner of the instant patents, or Myriad, the exclusive licensee, has acted improperly in its licensing or enforcement policies with respect to the patents. The question is also not whether is it desirable for one company to hold a patent or license covering a test that may save people's lives, or for other companies to be excluded from the market encompassed by such a patent—that is the basic right provided by a patent, i.e., to exclude others from practicing the patented subject matter. It is also not whether the claims at issue are novel or nonobvious or too broad. Those questions are not before us. It is solely whether the claims to isolated BRCA DNA, to methods for comparing DNA sequences, and to a process for screening potential cancer therapeutics meet the threshold test for patent-eligible subject matter under 35 U.S.C. § 101 in light of various Supreme Court holdings, particularly including Mayo.…
Congress is presumed to have been aware of the issue [of gene patents], having enacted a comprehensive patent reform act during the pendency of this case, and it is ultimately for Congress if it wishes to overturn case law and the long practice of the PTO to determine that isolated DNA must be treated differently from other compositions of matter to account for its perceived special function. We therefore reject the district court's unwarranted categorical exclusion of isolated DNA molecules.
In other words, we don't make policy, we just call balls and strikes.
Next Steps: In my estimation, this case is not over. There is a strong possibility of either an en banc rehearing by the full 12-member Federal Circuit and/or a grant of certiorari by the US Supreme Court.
Last year, I wrote about the problem of courts that injudiciously seal records in patent cases. See Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent L.J. 6. In that essay, I explained how allowing access to court records is important because it teaches the public about our legal system. This in turn provides an important check on the law. Public outcry over unjust decisions can often lead to legislative or judicial reform.
Unfortunately, this problem has raised its ugly head again in the high profile Monsanto v. DuPont patent case. This case has made headlines because Monsanto has recovered $1 billion in damages even though DuPont has never even been accused of selling any seeds that infringe Monsanto’s patent for genetically modified Roundup Ready soybeans. Rather, the infringement is based on some Roundup Ready soybeans that the defendants developed but did not sell and the award appears to be based on the royalties that DuPont would have paid had it negotiated a license ahead of time. I use “appears” because Monsanto’s damages theory is hidden from the public view.
I have previously written on patent damages and was puzzled by how DuPont could be liable for $1 billion when it did not actually sell any infringing seeds. Consequently, I went to the case’s docket in the Eastern District of Missouri hoping to learn about Monsanto’s damages theory. There are several entries that might explain the theory that led to a $1 billion verdict. For example, DuPont filed a motion to exclude the opinions of Monsanto’s damages expert, Michael Keeley. Of course Monsanto filed a response and DuPont replied. These briefs and their exhibits were filed entirely under seal. In other words, there is no public redacted version of any of these documents. What’s more there is nothing in the docket that shows how the district court ruled on the DuPont’s motion. Even if the court’s ruling were in the docket, it probably would not have been available. Other docket entries show that the court has regularly sealed many of its other rulings including decisions on several motions for partial summary judgments, a motion to compel and a motion to strike. In other words, there is no way to understand many of the basic theories underlying Monsanto’s case and Dupont’s defenses.
Now you don’t need to read all the press coverage to understand that Monsanto v. DuPont is one of the most important cases in patent law. There appears to be a novel damages theory that led to $1 billion verdict. There are likely issues of first impression that relate to patents on genetically modified organisms. Indeed, the outcome has important ramifications for agribusiness generally. Yet, the critical court records are under seal and everyone is left in the dark. I won’t repeat my entire argument here. But, I will repeat my plea. At a minimum, the court should force parties in patent cases to file public versions of their briefs. They can leave out their profit margins and trade secrets. We don’t care about such things. But the public needs to know the basic facts and theories underlying these cases. Similarly, to the extent that courts seal their decisions, they need to publish public versions that explain the reasoning underlying their rulings.
Although not patent-specific, it's worth a read if you're going that route. It's here. Also be sure to think through export issues, foreign filing licenses, etc….
JURY VERDICT For: Plaintiffs Against: Defendants In the Amount of: One Billion Dollars. (Entered: 08/02/2012)
In his August 6 order, Judge Webber confirmed the jury verdict that DuPont/Pioneer willfully infringe Monsanto's GMO roundup-ready seed patent. The jury rejected the defendants' claims that the asserted patent was invalid; that the patent had been finally obtained through inequitable conduct; and that the reissue patent improperly expanded the scope of the original claims. The judge also confirmed the jury's reasonable royalty damage award of "One Billion Dollars ($1,000,000,000)."
The asserted patent was Monsanto's reissue No. RE 39,247 and the accused product was DuPont's Optimum GAT soybean line that has never been released to the public. Rather, thus far DuPont's use of the patent has been for research purposes. No matter – the US has only a de minimis research defense that certainly does not apply here. See Madey v. Duke. Thus, unlicensed use of the Monsanto genetically modified soybean seed counts as infringement, even if that use was only for the development of a commercial product.
There is no question that this innovation was groundbreaking and has transformed the landscape of American agriculture. The genetic modification makes crops tolerant to the herbicide glyphosate. Although far from organic, glyphosate (RoundUp) has a much smaller negative environmental impact than other herbicides. In addition, the use of glyphosate has allowed for no-till farming that greatly reduces topsoil runoff and energy demands. In his press release, Monsanto's General Counsel David Snively wrote that the verdict "highlights that all companies that make early and substantial investments in developing cutting edge technology will have their intellectual property rights upheld and fairly valued." Snively's remarks are perhaps overstated, but at least have some kernels of truth.
The damages theory was interesting. Since the accused product was not yet on the market, Monsanto did not seek any lost profit. Rather, Monsanto demanded a reasonable royalty for the research-use made by the defendants. Monsanto argued that the use of Monsanto's invention in DuPont's labs and Pioneer's test fields gave those companies an "improper head start" in making the GM seeds. The judge and jury agreed – if those companies wanted to build upon the invention then they should have first obtained a license. In the pharmaceutical world, 35 U.S.C. § 271(e) offers a research exemption for this type of activity. However, that exception does not apply here because of the low level of regulation over genetically modified food-products. The patent is set to expire in 2014. The patentee's right-to-exclusive-research supported by this case means that the 2014 date offers a starting-date for follow-on competitive research. Any actual products building directly upon the patented invention will arrive on the market sometime later.
I sat-in on one day of the jury trial that was held in St. Louis, Missouri. The eight-member jury were largely attentive as they listened to DuPont's technical expert explain DNA and problems with the patent. I smiled at seeing the jury members walk in wearing t-shirts and carrying notepads. Their attitude and attire was a severe contrast to the room full of two-dozen attorneys and experts (each charging hourly). Although I'm sure that Judge Webber could have ably decided the case himself, the jury of individual citizens gave me a bit more confidence in our system and, in my mind, offers the ultimate reality check for this type of case. At least some of the jury members appear to be fans of Dr. Evil.
The level of damages, claim construction, and other issues will be the subject of an appeal the Court of Appeals for the Federal Circuit.
InterDigital is a publicly traded company whose primary revenue comes from patent licenses. The majority of 3G mobile handset manufacturers pay royalties to the company. After conducting its investigation, the US International Trade Commission (USITC) found that Nokia did not infringe InterDigital’s patents. On appeal, the Federal Circuit has reversed based upon the USITC’s improper and unduly narrow construction of the claim terms “code” and “increased power level.”
The USITC was designed to protect US industry from “unfair” foreign competition. Thus, the staute includes a “domestic industry” requirement that must be satisfied as a precondition of enforcing patent rights through the USITC. In the appeal, Nokia argued that InterDigital could not satisfy the domestic industry requirement. That argument was rejected by the USITC and on appeal as well. The Federal Circuit held particularly that “patent licensing alone” can be sufficient to satisfy the US industry requirement and that the statute does not require that any actual articles covered by the patent be manufactured in this country. “That is, the domestic industry requirement is satisfied if there is a domestic industry based on substantial investment in the patent’s exploitation where the exploitation is achieved by various means, including licensing.” (internal formatting removed).
Writing in dissent, Judge Newman would have sided with the accused infringer and held the patent not-infringed. Newman writes:
The panel majority’s enlargement beyond the invention described in the patents, in disregard of the protocols of claim construction, simply adds uncertainty to the patent grant. In today’s technology-based commerce, rational economics requires that the patent provide a reliable basis for investment. The patentee is in control of the specification that describes the invention. The panel majority’s theory that “the inventors’ failure to include a reference to the alternative embodiment in the specification does not justify excluding that embodiment from the coverage of the claims” is a departure from routine rules of the meaning of legal documents, and in negation of the notice purpose of the patent claim. From this unsound approach to claim construction, and its incorrect conclusion on the facts of this case, I respectfully dissent.
Judge Newman’s suggestion here is to give claim terms a narrow definition when the patentee uses an ambiguous term and does not provide any limiting definition to that term.
As part of the America Invents Act, Congress created the new "micro entity" category of patent applicants. See Public Law 112-29, 125 Stat. 283, Section 10(g) (2011). Similar to small entity status, micro entities are entitled to a reduction of patent application fees (75% for micro entities versus 50% for small entities). "Micro entity" is a bit of a misnomer: an applicant can qualify as a micro entity either by having an income of less than three times the median household income (approximately $50,000 based on 2010 incomes) or by being under an obligation to assign or license the application to an institution of higher education. The latter route might be particularly attractive to universities, as it enables micro entity status for most university-affiliated researchers.
The USPTO recently published a set of proposed regulations for establishing micro entity status. In large part, these regulations would implement the micro entity status requirements set out in the AIA, while providing some further clarification in a few areas, such as multi-inventor applications (all must meet the micro entity requirements).
The Federal Register publication also notes some complications arising due to the severance of "applicant" from "inventor." Prior to the AIA, the two terms were synonymous. After September 16, 2012, however, it is possible for an application to be made by someone other the inventor. The micro entity section of the AIA uses the term "applicant;" however, as part of the proposed rulemaking the PTO is seeking comments on whether "inventor" should be used in place of "applicant" at any point in the rules for establishing micro entity status.
Finally, keep in mind that even once these proposed rules are finalized, the discount will not be available until the PTO sets or adjusts patent fees under the fee setting authority provision of the AIA, something that it indicates will not formally occur until around March 2013.
The proposed rules are available here: Download 2012-12971 The comment deadline date is July 30, 2012.
Guest Post by Jeremy Sheff. In view of the pending Monsanto case, I asked Professor Sheff to provide some of his thoughts on the patenting of self-replicating technologies – DC. This essay is cross-posted on PrawfsBlawg.
Self-replicating technologies, once the subject of theory and fantasy, are now upon us. The original self-replicating machine—the living organism—has already been harnessed by biotechnology engineers and, more to the point, their lawyers. The next wave of self-replicating technologies, be they nanomedical robots or organic computers, are not far behind. Rather than triggering a “grey goo” apocalypse, these technologies are, at present, raising far more prosaic issues of intellectual property and antitrust law.
Those issues have now apparently caught the attention of the Supreme Court. A few weeks ago, the Court called for the views of the solicitor general on the certiorari petition in the case of Bowman v. Monsanto. This is the latest in a series of cases in which the Federal Circuit has addressed the application of the doctrine of patent exhaustion to the genetic engineering technology embodied in Monsanto's "Roundup-Ready" herbicide-resistant seeds. Seeds are the prototypical self-replicating technology, and a number of similar herbicide-resistant crops are in the pipeline of the largest agribusiness concerns. In each of the Roundup-Ready cases, a farmer has argued that Monsanto's patent rights do not extend to the second generation of soybeans grown from a patented first-generation seed. In each case, the Federal Circuit found for Monsanto and against the farmers.
Patent exhaustion (or "first sale") doctrine serves as a limit on patent rights, and provides that once a patentee has made an authorized sale of an embodiment of its patented invention, its patent rights with respect to that embodiment are exhausted, and the purchaser is free to use or re-sell the embodiment as it sees fit. Like analogous doctrines in copyright and trademark, it is motivated by competition concerns. Its aim is to enable the creation of downstream or secondary markets in patented articles, and to prevent patentees from using their intellectual property rights to gain market power in markets other than the market for the patented technology. When the Supreme Court last spoke on the issue, it rebuked the Federal Circuit for giving these pro-competitive policies insufficient weight. It seems to be considering an encore in the Roundup-Ready cases. For reasons I'll explain after the jump, I think that would be a mistake.
The Federal Circuit's analysis of patent exhaustion in the Roundup-Ready cases is admittedly not a model of the judicial craft. Framing the issue as a formal question whether a second-generation soybean is a different "article" than the first generation seed from which it grew, the court's main justification for its result was the bare assertion that any alternative result would "eviscerate" Monsanto's patent. But this is a question-begging explanation, and there are other, better reasons why a patentee's sale of a single embodiment of its self-replicating technology ought not to exhaust patent rights with respect to the second, third, or nth generation of the technology that is propagated from that first embodiment. Moreover, these reasons are consistent not only with the reasons for granting patent rights in the first place, but with the pro-competitive principles that justify limiting those rights through exhaustion doctrine.
To get at these reasons, I propose a thought exercise. Let's imagine that the Roundup-Ready cases came out the other way–that purchasers of Roundup-Ready seed from Monsanto were free, as a matter of patent law, to use all subsequent generations of soybeans grown from those first purchased seeds however they saw fit. What would we expect the Monsantos of the world to do? How do we believe their behavior might be influenced by this new legal framework?
One possible answer to this question is: not at all. It may be that the additional revenues to be derived from selling additional embodiments of a self-replicating technology to the same customer are trivial (perhaps due to the structure of demand), and that the prospect of any one customer re-selling a subsequent generation of the technology to another potential customer of the patentee is remote. Nanomedicine, particularly personalized nanomedicine, may one day prove that this is a possible result. But in the agriculture context, it strikes me as unlikely.
Where the technology at issue is an input for the production of a commodity, and the demand for that technology is broad and essentially undifferentiated, I would expect that the possibility of re-sale of nth generation seeds by the patentee's customers would significantly eat into the patentee's revenue stream, potentially making it impossible for the patentee to recoup the investment in research and development required to develop the technology in the first place. This is the classic free-rider problem that patent law is supposed to prevent: we preserve the incentive to engage in costly research and development by giving the inventor a limited-time monopoly. Other scholars have noted that this free-rider rationale is particularly salient for inherently self-disclosing inventions (inventions that are easy to copy once they have been introduced to the public). I would add that self-replication exacerbates the problem of self-disclosure: the patentee selling an embodiment of its invention would not only be teaching competitors how to practice the invention, it would in essence be building their factories as well.
So there are sound justifications grounded in the innovation policies underlying patent law for the Federal Circuit's rulings in the Roundup-Ready cases. But of course, patent exhaustion doctrine is concerned not only with innovation policy, but also with competition policy. This brings me back to my earlier question: how would we expect the Monsantos of the world to react to the free-rider problem if patent law did not protect them against competition from nth generation copies of their own first-generation products? I can imagine two possible strategies a technologist might pursue to circumvent the free-rider problem: contract and secrecy. And I think both of these alternatives are inferior to the patent solution crafted by the Federal Circuit on competition grounds.
Take the contract approach, which has been explicitly advocated by Yee Wah Chin, one of the attorneys representing the interests of Monsanto's farmer customers. To avoid the problem of free-riders Monsanto might, for example, restrict sales of its seeds to customers who sign a license agreement in which the customers undertake to monitor the uses of nth generation embodiments. So, a farmer might have to agree to sell his soybean crop only to buyers who have their own license agreement with Monsanto, or to Monsanto itself. Or Monsanto could include field-of-use restrictions in its licenses, as Ms. Chin proposes: "Monsanto could have licensed seedmakers to sell seed embodying Monsanto technology on condition that the second-generation seed be either consumed or sold to buyers who agree to either consume the seed or isolate that seed from other seed and sell the seed only for consumption."
This does not strike me as a pro-competitive result, for a few reasons. First, it incentivizes Monsanto to extend its influence into downstream markets–such as the market for commodity soybeans and their derivative products–in ways that it would have little incentive for under the Federal Circuit's approach. This downstream market creep is precisely the type of expansion of patent rights that exhaustion doctrine is supposed to prevent, out of fear that the patentee's interests are not likely to be consistent with the efficient functioning of those downstream markets. Second, and perhaps more importantly, forcing Monsanto to look to contract rights to protect its investment in research and development shifts the costs of monitoring and enforcing the Roundup-Ready patents from Monsanto itself onto its customers, who are likely to face higher monitoring costs.
We must remember, Monsanto's customers are largely farmers, who lack Monsanto's economies of scale, its greater expertise with its own technology, and its understanding of the functioning of the markets for that technology. Moreover, shifting enforcement responsibility from the patentee to its customers is likely to create agency costs where they would not otherwise exist. A farmer who is paying Monsanto a premium for Roundup-Ready seeds probably has far weaker incentives to vigorously monitor for violation of Monsanto's license terms than does Monsanto itself, which is reaping the premium. Finally, in the event that a customer breaches these monitoring obligations, either maliciously or negligently, Monsanto's technology could fall into the hands of a competitor who is not in privity of contract with Monsanto and thus (absent any unfair competition type of claim) would be free to use the nth generation seed (in which Monsanto's patent rights are exhausted) to compete with Monsanto. An individual farmer is likely to be judgment-proof in the face of the claims Monsanto might make should such a competitive threat emerge outside the reach of its licensing provisions, which once again leads us to the original problem: how would we expect Monsanto to respond to this risk of free-riding?
This brings me to the last alternative to the Federal Circuit's solution in the Roundup-Ready cases: secrecy. Monsanto might seek to prevent free-riding by refusing to release its technology to public view, and relying on trade secret protection to protect against free-riding. But in order to preserve its secret (a prerequisite of trade secret protection), Monsanto would have to ensure that nothing it released into the market disclosed its genetic technology. As I noted above, self-replication can be seen as a heightened form of self-disclosure, and so this type of secrecy would be fairly hard to maintain. Indeed, I think the only plausible way of doing so would be to pursue a course of comprehensive vertical integration. Monsanto would not only have to be in the business of propagating seeds, but also in the business of cultivating and harvesting soybeans, and processing them into useful products (oil, animal feed, industrial adhesives, tofu, you name it) that do not reveal the genetic material at the core of Monsanto's invention. Even if this were technically possible (a big if), the effect on all sorts of markets, both for inputs and outputs of the soybean market, is likely to be catastrophically anti-competitive. Where the alternative is such drastic shocks to competition in the market for, e.g., miso paste, soy-fed livestock, and arable land, the Federal Circuit's decisions in the Roundup-Ready cases start to look surprisingly pro-competitive.
The big question in my mind, then, is not whether the Federal Circuit's reached the right result in the Roundup-Ready cases. Given the factual setting of those cases, I think the answer to that question is a relatively uncontroversial yes. The real question, to me, is whether the same holds true for self-replicating technologies other than seeds for agricultural commodities. I already noted above one type of self-replicating technology–personalized nanomedicine–that may not present the same incentives for patentees, their customers, and their competitors, as do herbicide-resistant soybeans. Given how little we can presume to know about the future development of other self-replicating technologies, it is likely unwise to try to set a rule today to govern the rights of downstream users for all such technologies that may arise tomorrow. And for this reason alone, it may be worth getting some discussion of the issue from the Supreme Court, which seems particularly sensitive (almost to a fault) to the hazards of establishing brittle legal rules to govern the unknown future of technology. If the analysis that emerges is more substantive and functionally-minded than the under-argued, formalist analysis of the Federal Circuit (admittedly, another big if), I would be happy to see the Court take the case, if only to put the type of issues I've discussed in this post on the table.
John Wiley & Sons v. McDonnell Boehnen Hulbert & Berghoff (MBHB) (N.D. Ill.) (Complaint)
Earlier this year, Wiley sued the MBHB law firm for copyright infringement. The basis of the lawsuit stems from the firm’s compliance with its duty to inform the USPTO of information materially related to the cases that it is handling. See 37 C.F.R. 1.56. The complaint identifies two short scientific articles that the firm submitted to the USPTO:
Raznikov, V., et al., “A new approach to data reduction and evaluation in high resolution time-of-flight mass spectrometry using a time-to-digital convertor data recording system,” Rapid Communications in Mass Spectrometry, vol. 15, No. 8, pp. 570-578 (2001); and
Erchak, A., et al., “Enhanced coupling to vertical radiation using a two dimensional photonic crystal in a semiconductor light-emitting diode,” Applied Physics Letters, vol. 78, No. 5, pp. 563-565 (2001).
The crux of Wiley’s argument is that the firm infringed Wiley’s exclusive rights by submitting these documents to the USPTO as well as by allegedly sharing the articles with the inventors and storing a copy in the firm’s files. I contacted one of the authors – Nobel Laureate, Dr. Alan Heeger – from the parallel Schwegman case. Dr Heeger had not previously heard of the lawsuits. He had only two comments: (1) that the lawsuits seem “somewhat strange” and (2) that he is not receiving any royalties from the article.
The MBHB law firm has now filed its answer to the complaint – arguing that Wiley’s lawsuit is both troubling and disruptive to the operation of the US patent system.
Plaintiffs seek in this case to create unprecedented liability for law firms filing patent applications that would change long established practices in fulfilling legal obligations under the Patent Law and Regulations requiring patent practitioners to disclose prior art to the United States Patent and Trademark Office (“USPTO”). Such a result would undermine the Patent Office’s ability to get full disclosure of relevant prior art to the detriment of our patent system and, thus, to innovation in general. Fortunately, Plaintiffs’ claims are without merit.
The process of securing U.S. patents is dictated by complicated USPTO Rules and Federal regulations. Failure to comply with those Rules and Regulations could lead, among other things, to fraud on the USPTO and could jeopardize a patent’s scope, validity and enforceability. . . .
Now, Plaintiffs John Wiley & Sons, Ltd. and American Institute of Physics (“Plaintiffs”) attempt to introduce a costly new requirement into this long-standing practice. They seek to impose a requirement on those practicing patent prosecution to negotiate a license with the holder of the copyright in the journals before complying with the Patent Office’s prior art submission requirements. Plaintiffs’ misguided attempt to change established practice will only serve to undermine the full disclosure requirements of the USPTO and interfere with access to the constitutionally mandated patent system.
Because of the negative impact of claims such as the Plaintiffs’ on the patent system, and thus on its goal of encouraging innovation, the Patent Office has taken the unusual step of posting on its website a position paper from Bernard J. Knight, Jr., General Counsel of the USPTO, stating the USPTO’s position that copying and submitting non-patent literature (“NPL”) by patent applicants in order to satisfy the USPTO’s disclosure requirements is fair use. The official position paper addressed all four fair use factors and concluded that “we believe that it is a fair use for an applicant to make copies of NPL and submit those copies to the USPTO during examination in an [Information Disclosure Statement].” The General Counsel’s position was based in part on the fact that “the applicants here are not ‘exploiting’ the copyrighted work, and are instead merely submitting it, pursuant to a legal requirement, based on its factual, rather than its expressive, content [and] the use could be considered transformative.” The General Counsel also concluded that “there is no basis for concluding that the applicants submission of NPL to the USPTO has any significant negative impact on the market for the submitted NPL.”
Plaintiffs’ attempt to characterize MBHB’s alleged use of the scientific journal articles as anything but a legal, customary practice by attorneys to comply with their legal obligations during patent prosecution is unavailing. MBHB is being sued simply for following the requirements of the patent regulations. An adverse judgment against MBHB would harm not just MBHB, but all firms who practice in this area, and interfere with the federal government’s interest in promoting an inexpensive and efficient patent system whereby prior art is appropriately disclosed. Plaintiffs’ allegations, thus, fit squarely within the parameters of what the Copyright Act deems as a fair use. Accordingly, as a matter of law, Plaintiffs lack meritorious grounds for their copyright infringement suit.
The answer claims includes a number of defenses including fair use; copyright misuse; immunity under the Noerr-Pennington doctrine; and implied license.
Standards are powerful market tools that enable products and services offered by different vendors to interoperate: think WiFi, USB, and the pervasive 3G and 4G telecommunications standards. Yet once standards are widely adopted, markets can become "locked-in" and switching to a different technology can be prohibitively costly. Because patent holders have the potential to block others from deploying technology covered by their patents, the industry associations that develop standards ("standards development organizations" or "SDOs") often demand a trade-off from the companies that participate in standards-development: you can have a say in the technical direction of the standard, but in return you must license your patents that are essential to the standard on "fair, reasonable and non-discriminatory" (FRAND) terms.
Last month, I discussed a series of statements released by Apple, Microsoft and Google seeking to clarify how they interpret FRAND licensing commitments. Both the U.S. Department of Justice and the European Commission looked carefully at these interpretations in evaluating Google's $12 billion acquisition of Motorola Mobility, Apple's purchase of a number of Linux-related patents, and the $4.5 billion acquisition of Nortel's patent portfolio by a group including Microsoft, Apple, and RIM. The agencies concluded that these transactions did not present significant antitrust concerns, basing their reasoning in part on the interpretations of FRAND offered by Apple, Microsoft and Google.
Independently of these agency determinations, there continues to be significant disagreement among market participants over the meaning of FRAND. This disagreement arises both in reference to the level of royalties that should be considered "reasonable", and whether other tactics, such as seeking injunctive relief, are fair game when FRAND commitments have been made. Such disagreements have serious consequences because a commitment to grant a license on FRAND terms is not itself a license. A license to operate under a patent is not granted until the parties can agree on those "fair, reasonable and non-discriminatory" terms. So, if the parties can't agree on the terms of the FRAND license for a particular "standards-essential" patent, the frustrated licensee must either refrain from implementing the standard (and lose a significant market opportunity) or risk infringing the patent. The typical result: litigation.
To help get a handle on the current state of play in the courts, Table 1 offers a summary of some of the principal cases in which FRAND issues are currently being litigated in the U.S. and Europe. These disputes form only a part of the larger patent wars currently being waged across the smart phone industry. That wide-ranging litigation involves even more players and extends to patents that are not necessarily essential to the implementation of industry standards. But the more focused skirmishes over FRAND issues are important too, as some of the most basic technology needed to make mobile devices interoperate is covered by standards, and the terms on which "standards-essential" patents will be licensed will affect all players in the market, both large and small. Thus, while the scale, complexity and rapid pace of this litigation virtually guarantees that any summary will be incomplete and quickly outdated, I hope that it will be useful (at least temporarily) for those who want an overview of the current state of play regarding FRAND.
Table 1 – Current FRAND Litigation
Parties
Court
FRAND Issue(s)
Status
W.D. Wash
Royalty rate, injunctions
Summary judgment hearing scheduled May 2012, trial scheduled Nov. 2012.
Moto currently enjoined from enforcing German injunctions
European Comm'n
Injunctions, licensing conditions
EC investigation announced in Apr. 2012
N.D. Ill. & W.D. Wis.
Royalty rate
Ill. trial scheduled June 2012; Wis. trial scheduled Nov. 2012
S.D. Cal.
Defensive suspension, injunctions
Apple complaint filed Feb. 2012
N.D. Cal.
Injunctions, failure to disclose
Summary judgment motion scheduled for hearing May 2012; mediation pending
Netherlands – Hague
Injunctions
European Comm'n
Injunctions
EC investigation announced in Jan. 2012
Del. Ch.
ITC exclusion orders
Huawei complaint filed Oct. 2011
Microsoft v. Motorola (W.D.Wash, Case No. C10-1823-JLR): This case relates to Motorola patents covering the IEEE's 802.11 (WiFi) standards and the ISO/IEC's and ITU's H.264 video codec standards. In 2010, Motorola offered to license these patents to Microsoft at a proposed royalty of 2.25% of the end product (i.e., each Xbox 360, PC/laptop or smart phone implementing the standard). Microsoft did not take a license, sought declaratory relief that Motorola breached its FRAND obligations to the SDOs, and Motorola sued Microsoft for patent infringement. The crux of Microsoft's argument is that Motorola's license offer is inherently unreasonable because it is not tied to the value of Motorola's technical contribution and because it seeks to assess royalties on the price of a PC/laptop rather than Microsoft's contribution to that product (i.e., the Windows operating system). Microsoft has also contended that the absolute value of Motorola's royalty demand (about $4 billion, presumably across all product lines) is unreasonable and far exceeds the amounts that Microsoft pays to other holders of larger numbers of standards-essential patents. Motorola counters that its 2.25% royalty rate has been offered for many years and is well within industry norms (citing examples of royalty rates much higher than this). It also contends that Microsoft refused to negotiate in good faith, thereby repudiating its right to receive a FRAND license. In February, the District Court denied Microsoft's first motion for summary judgment, but each party has made additional motions for summary judgment relating to FRAND and breach of contract issues, which will be heard in May.
Last week, the court granted Microsoft a preliminary injunction and temporary restraining order preventing Motorola from enforcing injunctions enjoining the sale of Microsoft products in Germany, a matter on which the Mannheim Regional Court is scheduled to rule shortly. Microsoft has requested that the International Trade Commission (ITC) similarly postpone ruling on Motorola's infringement claims until the Washington court has had the opportunity to rule on the FRAND matter.
European Commission Investigations. On April 3, the European Commission (after receiving complaints from Microsoft and Apple) announced that it initiated an investigation to determine whether Motorola violated European competition law by failing to comply with its FRAND commitments to standard-setting organizations. In particular, the EC has stated that it will investigate whether Motorola's attempts to obtain injunctions on the basis of standards-essential patents, and the licensing terms that it has offered, amount to an abuse of dominant position in violation of Article 102 of the EU Treaty. In January, the EC opened a similar investigation of Samsung to determine whether its attempts to obtain injunctive relief in various European patent actions pending against Apple violated Samsung's FRAND commitments to ETSI and otherwise ran afoul of EC competition law. The EC has actively investigated FRAND compliance in the past, most notably the allegedly excessive royalty rates charged by Qualcomm on the CDMA and WCDMA wireless 3G communications standards. The Qualcomm investigation, which was initiated in October 2007, was closed in November 2009 after Qualcomm reached settlements with the original complainants in the case.
Apple v. Motorola (N.D. Ill, Case No. 1:11-cv-08540, transferred in part from W.D. Wis., Case No. 10-CV-00662-BBC). Apple and Motorola have been embroiled in patent litigation over smart phones and other products since late 2010. Not all of the patents at issue relate to standardized technology, but in a few critical cases standardization and FRAND issues are front and center. Most significant is the dispute playing out in the Northern District of Illinois before Judge Richard Posner, sitting by designation. In that case, Apple argues that Motorola should be equitably estopped from enforcing certain patents relating to the ETSI GSM/WCDMA and UMTS/3GPP standards. The gist of Apple's complaint appears to be that Motorola did not offer to license Apple on terms that were FRAND. Yet Motorola maintains that it did, beginning in 2007, offer to license its patents to Apple at its customary rate of 2.25%. The dispute, then, revolves around the issue whether this licensing offer complies with Motorola's FRAND obligations to ETSI and possibly other SDOs and, if not, what remedies are available to Apple. Trial is scheduled for June. Trial in Illinois is scheduled in June. It appears that some, but not all, of the FRAND-related claims in this case remain in the Wisconsin court, which is scheduled for trial in November.
Apple v. Motorola (S.D. Cal., Case No. 12CV0355 JLS BLM). Last year the Apple-Motorola patent litigation spread to Germany and Motorola obtained an injunction against the sale of certain Apple products (e.g., iPhones) from the Regional Court (Landesgericht) of Mannheim (the injunction was recently suspended by the Higher Regional Court (Oberlandesgericht) in Karlsruhe pending further proceedings). Among the many patents being asserted by Motorola are two that are essential to the GPRS standard developed at the European Telecommunications Standards Institute (ETSI). This February, Apple brought a declaratory judgment action against Motorola in the Southern District of California, alleging that Motorola violated its FRAND obligations to ETSI when it sought an injunction from the Mannheim court. Apple bases its FRAND claim on a license that Motorola previously granted to Qualcomm, the supplier of GPRS-based communication chips used in the iPhone. Based on the pleadings, it appears that under the Motorola-Qualcomm license Motorola covenants not to sue Qualcomm's customers (such as Apple) for using Qualcomm's GPRS-based chips. However, Motorola seems to have revoked Apple's immunity under the Qualcomm license, asserting that Apple's enforcement of different patents against Motorola triggered the "defensive suspension" provisions of that license. In the California suit Apple seems to claim that either Motorola's revocation of Apple's rights under the Qualcomm license, or its enforcement of patents against Apple in Germany, violates Motorola's FRAND obligations to ETSI. The case is still at an early stage, and Apple's FRAND-based arguments, as well as Motorola's defenses, will presumably be clarified in the future.
Apple v. Samsung (N.D. Cal. Civil Action No. 11-CV-01846-LHK). Apple is also involved in wide-ranging patent litigation with Samsung, maker of the Galaxy smart phone than runs Google's Android operating system. In the Northern District of California, Apple and Samsung are each asserting patents against each other. Apple has moved for partial summary judgment arguing that Samsung failed to disclose patents essential to the ETSI UMTS telecommunications standard used in the iPhone and iPad, that Apple is licensed under these patents pursuant to a cross-license between Samsung and Intel (the supplier of chipsets used in these Apple products), and that Samsung's FRAND commitments to ETSI prevent it from now seeking injunctive relief against Apple. Apple's FRAND argument is interesting, in that it relies on French law (which purportedly governs the ETSI IPR policy and declarations). Samsung counters that Apple only sought a FRAND license from Samsung after Apple initiated litigation, then rejected Samsung's FRAND license offer and "steadfastly refused to engage in meaningful FRAND negotiations" (Samsung's Opposition to Apple's Motion for Partial Summary Judgment, Apr. 2, 2012, at 11). The sum of these actions, according to Samsung, is that Samsung's FRAND obligations should no longer prevent it from seeking an injunction against Apple under these circumstances. A hearing on Apple's motion is scheduled for May, 2012. The case is particularly noteworthy, as it involves not only FRAND issues, but also allegations that Samsung violated ETSI's patent disclosure rules (thus rendering Samsung's patents unenforceable), allegations reminiscent of those made inRambus v. Infineon, 318 F.3d 1081 (Fed. Cir. 2003), cert. denied, 124 S.Ct. 227 (2003), and Qualcomm v. Broadcom, 584 F.3d 1004 (Fed. Cir. 2008). This month, the parties agreed to submit at least part of the dispute to mediation.
Apple v. Samsung (District Court – Hague, Netherlands, Case numbers 400367 / HA ZA 11-2212, 400376 / HA ZA 11-2213 and 400385 / HA ZA 11-2215). In March, a district court in the Hague, Netherlands, denied Samsung's request for an injunction against Apple, basing its reasoning (according to newsreports – I do not have access to an English translation of the decision) on Samsung's commitment to grant FRAND licenses. The court apparently found that because Apple was willing to negotiate in good faith, Samsung's request for an injunction against the sale of Apple products in the Netherlands would not be sustained.
Huawei v. InterDigital (Del. Ch., No. 6974). InterDigital Communications has asserted eight patents relating to 3G telecommunications standards against Huawei in the ITC, seeking an exclusion order against the importation of infringing Huawei products into the U.S. Huawei alleges in an action brought in the Delaware Chancery Court that InterDigital has breached its commitments to ETSI and 3GPP by seeking to enforce its patents against Huawei products without first offering to enter into a FRAND license. Because an exclusion order is the only remedy that the ITC is authorized to grant, Huawei seeks to have the ITC action dismissed on this basis, as well as the establishment of a FRAND royalty rate for InterDigital's 3G patents.
Kirtsaeng v. John Wiley & Sons, Inc. (Supreme Court 2012)
The Supreme Court has granted certiorari in another international copyright exhaustion case. Previously, in Omega v. Costco, the court stalled in a 4-4 tie and left the case without an opinion. Copyright exhaustion – also known as the “first sale doctrine” – is codified under 17 U.S.C. § 109(a) and allows the holder of a copy of a work “lawfully made under this title” to sell or otherwise dispose of the copy without the copyright holder’s permission. Without this doctrine, such a sale could be considered a violation of the copyright holder’s exclusive distribution rights under section 106(3). The question in this case is whether the exhaustion doctrine applies to authorized copies manufactured outside of the US and then imported. Copyright holders argue that exhaustion does not apply because the foreign copies were not “lawfully made under this title,” but instead were lawfully made in a region not subject to US copyright law. A win for the copyright holders would support a system of price discrimination that would allow a rights-holder to block third-party imports of legitimate (non-counterfeit) products into the US. The rule would also tend to encourage foreign manufacture.
The question presented:
How do Section 602(a)(1) of the Copyright Act, which prohibits the importation of a work without the authority of the copyright’s owner, and Section 109(a) of the Copyright Act, which allows the owner of a copy “lawfully made under this title” to sell or otherwise dispose of the copy without the copyright owner’s permission, apply to a copy that was made and legally acquired abroad and then imported into the United States?
The case is expected to be argued this fall.
Exclusive Rights of Importation: The particular facts of the case are interesting. John Wiley sells textbooks at a reduced rate in Thailand. Kirtsaeng imported eight Wiley books and resold them in the US. Although Wiley had profited from the original sale in Thailand, the company argued that the importation also violated US law because the foreign sale did not exhaust the copyright and that, therefore, Wiley maintained exclusive rights of importation and distribution. A jury awarded Wiley statutory damages of $75,000 per copy for a total of $600,000 for the eight books. The Second Circuit affirmed that judgment.
Patent Law: Patent law’s exhaustion doctrine is not based upon a statute but does run roughly parallel to the copyright law as outlined above. In the Jazz Photo cases, the Federal Circuit ruled that international sale does not exhaust US patent rights. If the Supreme Court reverses in Kirtsaeng, this will likely be seen as an implicit reversal of Jazz Photo and its progeny. Thus, the case will obviously impact patent law. The AIPLA filed a brief in support of the petition – focusing on the need for resolving the circuit split.
John Wiley’s cases are still pending against various patent law firms for failing to obtain a license to make copies of prior art documents before making copies and submitting those to the USPTO as required by law. The defendant law firms are expected to file their answers later this month.
Are Companies Acting as Government Contractors Immune From Patent Infringement Suits?
The CAFC, in Zoltek Corp. v. United States, No. 2009-5135 (Fed. Cir. Mar. 14, 2012), Zoltek was the assignee of a patent for manufacturing carbon fiber sheets with controlled surface electrical resistivity. The carbon fiber at issue was used by Lockheed Martin to build the F-22 fighter jet, pursuant to a government contract. The manufacturing of the fibers started in Japan, and thereafter imported into the US, where the fibers were processed into sheets and used for F-22.
The court held that when the US is subject to suit under 28 USC 1498(a) for alleged infringement of a patent by a contractor acting by and for the US, the contractor by law is rendered immune from individual liability for the alleged infringement. The court further held that, when a product of a patented process is… imported into the US by or for the US, there is direct infringement under a 1498 action. (In addition the US waives sovereign immunity) Opinion
28 USC 1498
(a) 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.
(c)The provisions of this section shall not apply to any claim arising in a foreign country.
USPTO Will Admit 10 Additional Schools into its Patent Law Clinic Certification Pilot Program
The Pilot Program started began in 2008 with 6 schools and expanded in 2010 to 16 schools. Students in the patent program can expect to draft and file a patent application and respond to an office action. Each law school clinical program must meet and maintain the requirements for USPTO certification in order for student practitioners to practice before the USPTO. The program provides real-world experience to students interested in the field of IP. Submissions will be accepted through June 1, 2012. [Link]
Patent Jobs:
Hoffmann & Baron is seeking a patent attorney/agent with a minimum of 3-5 years of experience in the areas of computers and business methods to work in their Parsippany, NJ office. [Link]
Faegre Baker Daniel's is searching for a patent agent with a degree in EE or CS and patent experience to work in their Chicago office. [Link]
Larson Newman is looking for patent attorneys with an EE degree and 3-5 years of experience to work in their Austin office. [Link]
Akerman Senterfitt is seeking a chemical patent associate with 1-3 years of experience to work in their Denver office. [Link]
Gilead Sciences is searching for patent litigation counsel with a BS in life sciences and 5-8 years of experience to work at their Foster City, CA office. [Link]
Carlson, Gaskey & Olds is looking for a patent attorney with 4-8 years of patent litigation experience to work at their Birmingham, MI office. [Link]
Klarquist Sparkman is seeking a litigation associate with 1-2 years of experience to work in their Portland office. [Link]
Klarquist Sparkman is seeking a patent attorney/agent with an advanced degree in organic chemistry and 3+ years of experience to work in their Portland office. [Link]
Cardinal Intellectual Property is looking for a patent search professional with a JD degree and a technical degree to work remotely. [Link]
Berkeley Lab is searching for a patent attorney with at least 5 years of experience as a patent attorney/agent. [Link]
Faegre Baker Daniels is seeking a trademark litigation associate with 2-3 years of trademark and copyright litigation experience to work in their Minneapolis office. [Link]
Cardinal Intellectual Property is looking for a patent search attorney to work at their Evanston, IL location. [Link]
Wellstat Management Company is searching for a patent attorney/agent with at least 5 years of experience and a background in biomedical or mechanical engineering to work at their Gaithersburg, MD location. [Link]
Stroock
Faegre Baker Daniels is looking for a junior patent litigation associate with 1-2 years of experience to work in their Denver or Boulder office. [Link]
Nixon & Vanderhye is searching for a patent attorney/agent with experience drafting and prosecuting patent applications to work in their Arlington, VA office. [Link]
The DuPont Company is seeking patent agents with experience in preparing and prosecuting patent applications under USPTO TC1600 to work at their Wilmington, DE location. [Link]
Covidien is looking for an IP attorney with 4-6 years of experience to work at their New Haven, CT location. [Link]
Hagens Berman is searching for a patent litigation attorney with 3+ years of experience to work at their Seattle office. [Link]
The USPTO is seeking patent examiners with an engineering degree to work at their Alexandria or Detroit locations. [Link]
Upcoming Events:
On April 10th join the United States Patent and Trademark Office Managers, Design Examiners, Design Patent Practitioners and Industrial Designers from across the country in a lively and thought-provoking discussion at the USPTO. They will discuss rules and techniques relating to proper graphic descriptions of design patent claims, confer on best practices aimed at the broadest protection of industrial designs in the United States, and hear from members of the design community on the importance of strong industrial design protection in an increasingly design-conscious world. [Link]
The IP Section of the Atlanta Bar Association and Georgia State University Law School will hold its 8th annual SpringPosium at the Barnsley Gardens resort on April 13 &14. Some example seminars will include: the new America Invents Act, Federal Court best practices, IP law and life practice management, and recent developments in damages law. Guest speakers include: Clerk of Court and Chief Deputy Clerk of the US Court of Appeals for the Federal Circuit, Jan Horbaly and Pamela Twiford and Clerk of Court of the US District Court for the North District of Georgia, James Hatten.
The European Generic Medicines Association is hosting the 10th EGA International Symposium regarding Biosimilar Medicines on April 19-20 in London. Greenblum & Bernstein is providing a pre-symposium workshop on April 19, 2012 titled: Biosimilars In America: IP Strategy and Due Diligence. The workshop will explore the mechanics of the Biologics Act with an emphasis on how the Act relates to the involved intellectual property and how the intellectual property may impact the biosimilar applicant's strategy for entering the market. [Link]
The University of Colorado School of Law will hold a conference on April 24th. The conference, Patents on the Range or Wild Frontier, will discuss the future of patent policy. Guest speakers include: David Kappos, Don Rosenberg, John Thorne, Paul Ohm, Bernard Chao, and many others. [Link]
ACI will hold its 6th Annual Paragraph IV Disputes conference on April 24-25 in New York City. The conference will cover topics such as: the impact of the AIA on Hatch-Waxman litigation, claim construction, prior art obviousness and obvious-type double patenting, and many other topics. (Patently-O readers register with PO 200 for a discount). [Link]
The World Research Group is holding its 4th Annual Corporate IP Counsel Forum on May 16-17 in NYC. The Corporate IP Counsel Forum will address key issues and uncover latest developments related to IP in the form of case studies and panel discussions. Some of the topics include, but are not limited to: The America Invents Act and its impact on patent litigation and prosecution, IP monetization strategies for small and mid-size companies, Patent valuation, The top 10 most influential court cases in IP this year, Patent eligibility, Invention mining, Divided infringement, Best practices for combating non-practicing entities, Appeals to the U.S. Court of Appeals for the Federal Circuit, Copyright infringement. [Link]
The Annual DRI Business Litigation and Intellectual Property Seminar will be held May 16-18, 2012, in New York City. Attendees will learn trial and appellate advocacy skills in business litigation get up-to-date on the last trends in intellectual property and business litigation, and network with in-house counsel, business and intellectual property trial lawyers and experts from across the country. Speakers include: Former ABA President, Dennis W. Archer, Dennis Archer PLLC, and David Leitch, VP and General Counsel of Ford Motor Company. [Link]
The San Francisco Intellectual Property Law Association is hosting its annual seminar in Healdsburg, the center of one of California's best wine regions, from June 1-3. Speakers include Hon. Margaret A. (Peggy) Focarino, USPTO Commissioner of Patents, Hon. Robert Stoll, former USPTO Commissioner of Patents, Hon. Gerard F. Rogers, Chief Administrative Trademark Judge of the TTAB, Hon. Randy R. Rader, Chief Judge of Federal Circuit, Hon. Susan Illston, Judge of N.D.CA, Hon. Edward J. Davila, Judge of N.D.CA, as well as professors and leading practitioners. [Link]
On May 21-22 Ronald Slusky will hold a seminar in Chicago, the seminar teaches a comprehensive approach to analyzing inventions and capturing them in a sophisticated set of patent claims. The seminar is based on Ronald's book, Invention Analysis and Claiming: Patent Lawyer's Guide. [Link]
ACI will hold a Biosimilars conference May 22-23 in New York, NY. The conference will focus on the legal, regulatory, and commercial realities of biosimilars. [Link]
Are Companies Acting as Government Contractors Immune From Patent Infringement Suits?
The CAFC, in Zoltek Corp. v. United States, No. 2009-5135 (Fed. Cir. Mar. 14, 2012), Zoltek was the assignee of a patent for manufacturing carbon fiber sheets with controlled surface electrical resistivity. The carbon fiber at issue was used by Lockheed Martin to build the F-22 fighter jet, pursuant to a government contract. The manufacturing of the fibers started in Japan, and thereafter imported into the US, where the fibers were processed into sheets and used for F-22.
The court held that when the US is subject to suit under 28 USC 1498(a) for alleged infringement of a patent by a contractor acting by and for the US, the contractor by law is rendered immune from individual liability for the alleged infringement. The court further held that, when a product of a patented process is… imported into the US by or for the US, there is direct infringement under a 1498 action. (In addition the US waives sovereign immunity) Opinion
28 USC 1498
(a) 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.
(c)The provisions of this section shall not apply to any claim arising in a foreign country.
USPTO Will Admit 10 Additional Schools into its Patent Law Clinic Certification Pilot Program
The Pilot Program started began in 2008 with 6 schools and expanded in 2010 to 16 schools. Students in the patent program can expect to draft and file a patent application and respond to an office action. Each law school clinical program must meet and maintain the requirements for USPTO certification in order for student practitioners to practice before the USPTO. The program provides real-world experience to students interested in the field of IP. Submissions will be accepted through June 1, 2012. [Link]
Patent Jobs:
Hoffmann & Baron is seeking a patent attorney/agent with a minimum of 3-5 years of experience in the areas of computers and business methods to work in their Parsippany, NJ office. [Link]
Faegre Baker Daniel's is searching for a patent agent with a degree in EE or CS and patent experience to work in their Chicago office. [Link]
Larson Newman is looking for patent attorneys with an EE degree and 3-5 years of experience to work in their Austin office. [Link]
Akerman Senterfitt is seeking a chemical patent associate with 1-3 years of experience to work in their Denver office. [Link]
Gilead Sciences is searching for patent litigation counsel with a BS in life sciences and 5-8 years of experience to work at their Foster City, CA office. [Link]
Carlson, Gaskey & Olds is looking for a patent attorney with 4-8 years of patent litigation experience to work at their Birmingham, MI office. [Link]
Klarquist Sparkman is seeking a litigation associate with 1-2 years of experience to work in their Portland office. [Link]
Klarquist Sparkman is seeking a patent attorney/agent with an advanced degree in organic chemistry and 3+ years of experience to work in their Portland office. [Link]
Cardinal Intellectual Property is looking for a patent search professional with a JD degree and a technical degree to work remotely. [Link]
Berkeley Lab is searching for a patent attorney with at least 5 years of experience as a patent attorney/agent. [Link]
Faegre Baker Daniels is seeking a trademark litigation associate with 2-3 years of trademark and copyright litigation experience to work in their Minneapolis office. [Link]
Cardinal Intellectual Property is looking for a patent search attorney to work at their Evanston, IL location. [Link]
Wellstat Management Company is searching for a patent attorney/agent with at least 5 years of experience and a background in biomedical or mechanical engineering to work at their Gaithersburg, MD location. [Link]
Stroock
Faegre Baker Daniels is looking for a junior patent litigation associate with 1-2 years of experience to work in their Denver or Boulder office. [Link]
Nixon & Vanderhye is searching for a patent attorney/agent with experience drafting and prosecuting patent applications to work in their Arlington, VA office. [Link]
The DuPont Company is seeking patent agents with experience in preparing and prosecuting patent applications under USPTO TC1600 to work at their Wilmington, DE location. [Link]
Covidien is looking for an IP attorney with 4-6 years of experience to work at their New Haven, CT location. [Link]
Hagens Berman is searching for a patent litigation attorney with 3+ years of experience to work at their Seattle office. [Link]
The USPTO is seeking patent examiners with an engineering degree to work at their Alexandria or Detroit locations. [Link]
Upcoming Events:
On April 10th join the United States Patent and Trademark Office Managers, Design Examiners, Design Patent Practitioners and Industrial Designers from across the country in a lively and thought-provoking discussion at the USPTO. They will discuss rules and techniques relating to proper graphic descriptions of design patent claims, confer on best practices aimed at the broadest protection of industrial designs in the United States, and hear from members of the design community on the importance of strong industrial design protection in an increasingly design-conscious world. [Link]
The IP Section of the Atlanta Bar Association and Georgia State University Law School will hold its 8th annual SpringPosium at the Barnsley Gardens resort on April 13 &14. Some example seminars will include: the new America Invents Act, Federal Court best practices, IP law and life practice management, and recent developments in damages law. Guest speakers include: Clerk of Court and Chief Deputy Clerk of the US Court of Appeals for the Federal Circuit, Jan Horbaly and Pamela Twiford and Clerk of Court of the US District Court for the North District of Georgia, James Hatten.
The European Generic Medicines Association is hosting the 10th EGA International Symposium regarding Biosimilar Medicines on April 19-20 in London. Greenblum & Bernstein is providing a pre-symposium workshop on April 19, 2012 titled: Biosimilars In America: IP Strategy and Due Diligence. The workshop will explore the mechanics of the Biologics Act with an emphasis on how the Act relates to the involved intellectual property and how the intellectual property may impact the biosimilar applicant's strategy for entering the market. [Link]
The University of Colorado School of Law will hold a conference on April 24th. The conference, Patents on the Range or Wild Frontier, will discuss the future of patent policy. Guest speakers include: David Kappos, Don Rosenberg, John Thorne, Paul Ohm, Bernard Chao, and many others. [Link]
ACI will hold its 6th Annual Paragraph IV Disputes conference on April 24-25 in New York City. The conference will cover topics such as: the impact of the AIA on Hatch-Waxman litigation, claim construction, prior art obviousness and obvious-type double patenting, and many other topics. (Patently-O readers register with PO 200 for a discount). [Link]
The World Research Group is holding its 4th Annual Corporate IP Counsel Forum on May 16-17 in NYC. The Corporate IP Counsel Forum will address key issues and uncover latest developments related to IP in the form of case studies and panel discussions. Some of the topics include, but are not limited to: The America Invents Act and its impact on patent litigation and prosecution, IP monetization strategies for small and mid-size companies, Patent valuation, The top 10 most influential court cases in IP this year, Patent eligibility, Invention mining, Divided infringement, Best practices for combating non-practicing entities, Appeals to the U.S. Court of Appeals for the Federal Circuit, Copyright infringement. [Link]
The Annual DRI Business Litigation and Intellectual Property Seminar will be held May 16-18, 2012, in New York City. Attendees will learn trial and appellate advocacy skills in business litigation get up-to-date on the last trends in intellectual property and business litigation, and network with in-house counsel, business and intellectual property trial lawyers and experts from across the country. Speakers include: Former ABA President, Dennis W. Archer, Dennis Archer PLLC, and David Leitch, VP and General Counsel of Ford Motor Company. [Link]
The San Francisco Intellectual Property Law Association is hosting its annual seminar in Healdsburg, the center of one of California's best wine regions, from June 1-3. Speakers include Hon. Margaret A. (Peggy) Focarino, USPTO Commissioner of Patents, Hon. Robert Stoll, former USPTO Commissioner of Patents, Hon. Gerard F. Rogers, Chief Administrative Trademark Judge of the TTAB, Hon. Randy R. Rader, Chief Judge of Federal Circuit, Hon. Susan Illston, Judge of N.D.CA, Hon. Edward J. Davila, Judge of N.D.CA, as well as professors and leading practitioners. [Link]
On May 21-22 Ronald Slusky will hold a seminar in Chicago, the seminar teaches a comprehensive approach to analyzing inventions and capturing them in a sophisticated set of patent claims. The seminar is based on Ronald's book, Invention Analysis and Claiming: Patent Lawyer's Guide. [Link]
ACI will hold a Biosimilars conference May 22-23 in New York, NY. The conference will focus on the legal, regulatory, and commercial realities of biosimilars. [Link]
3M Company v. Avery Dennison Corporation (Fed. Cir. 2012) Download 11-1339 Panel: Rader, Lourie (author), Linn
There's a fine (and perhaps rather fuzzy) line between engaging in patent licensing discussions that are sufficient to trigger declaratory judgment jurisdiction and those that are not. In 3M v. Avery, the court perhaps made that line a bit clearer for those trying to stay on one side of it.
According to 3M's declaratory judgment complaint, in March 2009 Avery's Chief IP Counsel called 3M's Chief IP Counsel to tell him that a new 3M product "may infringe" two of Avery's patents and "licenses are available." 3M subsequently rejected Avery's licensing offer, and in the course of that discussion was told that Avery had performed an analysis of 3M's product in connection with the two patents and that Avery would send claim charts. No claim charts were ever sent.
Over a year later, 3M filed an action seeking a declaratory judgment of noninfringement, invalidity, and intervening rights as to the two Avery patents. The district court dismissed the action, concluding that "'even accepting the facts as set forth by 3M,' subject matter jurisdiction did not exist at the time 3M filed its declaratory judgment complaint." Slip Op. at 5. In response to 3M's appeal, the Federal Circuit vacated and remanded for factual determinations.
Defining the line: In general, establishing the existence of a case or controversy for purposes of declaratory judgment jurisdiction requires something more than just "a communication from a patent owner to another party, merely identifying its patent and the other party's product line." Slip Op. at 11 (citing Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009)). How much more is determined "on a case-by-case basis," Slip Op. at 11, although 3M v. Avery provides an important data point for identifying behavior that goes too far.
In vacating the district court's dismissal, the CAFC concluded that the facts alleged by 3M in this case amounted to Avery "effectively charg[ing] 3M with infringement of [the patents-in-suit]." Id. That Avery's counsel (who initiated the communication) said "may infringe" rather than "does infringe" was immaterial in light of the license offer, the representation that Avery had analyzed 3M's product, and the statement that claim charts would be forthcoming. Especially in light of the facets of the case that the court held to be immaterial discussed below, the opinion suggests that there is a narrow gap indeed between the non-case or controversy creating communication discussed in Hewlett Packard and communications sufficient to establish jurisdiction.
Immaterial Facts: The CAFC considered several other facts in reaching its ultimate decision to vacate, but concluded that all were immaterial or equivocal. Two related to time: Avery had not provided a deadline for responding to its licensing offer and 3M's declaratory judgment action was filed more than a year after the parties' discussions. Neither fact significantly favored the conclusion that a case or controversy was lacking. "[W]e note that, as part of a pre-filing investigation, it takes time to review a set of asserted patents, the record generated before the PTO, and the accused products before a potential infringer can make an informed decision to file a declaratory judgment complaint." Slip Op. at 15.
On the other side of the equation, neither the history of litigation between the parties nor the fact that Avery had initiated reissue proceedings for the patents weighed strongly in favor of a finding a case or controversy. Here, while there was much prior litigation between the parties, it involved different products and patents, and thus was not the type of pattern of litigation leading to the reasonable assumption that the patentee will bring suit based on the patents in suit. Similiarly, as to the reissue proceedings, the court commented that "[t]he purpose of reissue proceedings is to correct errors in an issued patent…and, in this case, even with the unrelated litigation between the parties, there is no evidence that an objective observer in 3M's position would conclude that Avery initiated reissue proceedings for the purpose of bringing a lawsuit against 3M accusing [its product] of infringement." Slip Op. at 14.
Remand for factfinding: Because the district court concluded that 3M failed to allege a justiciable controversy on the fact of its complaint, it had not resolved two key factual disputes: the actual content of the statements made by Avery's counsel and whether the parties' discussions were covered by a confidentiality agreement that precluded their use to establish jurisdiction. Given the disputed nature of these facts, the CAFC remanded to the district court for resolution.
In a bold move, non-practicing patent holder CCI has sued a group of tech companies and the patent aggregator RPX for price fixing and conspiring to restrain trade in violation of the Clayton and Sherman Acts as well as under California state antitrust law. The allegation is that RPX and its members decided as a group to boycott negotiations with Cascades except through their aggregator RPX.
Defendants HTC, LG, Motorola, Samsung and Dell sell more than 95 percent of all mobile phones and tablets that use the Android operating systems in the United States and are an important part of the Android market, and related, relevant sub-markets (including products that require a license from Cascades under its patented technology). The manufacturing defendants constitute nearly the total demand for the licensing of Cascades’ patented technology and collectively enjoy substantial market power in that market and, together with others in the industry, have exercised their power to control the acceptance and terms and conditions of licenses from Cascades. The power is augmented by the willingness and agreement of the manufacturing defendants to infringe Cascades’ patents until such time as Cascades capitulates by either going out of business, declining to enforce the patents or offering defendants patent license terms below fair market value.”
In her recent guest post for Patently-O, Susan Glovsky lamented the inadequate system for recording assignments of, and security interests over, patents in the United States and called for the introduction of a national system for recordation of patent rights. This post gives a brief account of Australia's recent experience in this area.
The Australian patents legislation (the Patents Act 1990 (Cth)) requires assignments of patents to be in writing signed on behalf of the assignor and assignee (§14). If the particulars of an assignment are not entered on the Patents Register, the document is not admissible as evidence of the assignee's interest unless the proceedings fall within one of a number of limited exceptions (for e.g., if a Court otherwise directs or to enforce equities). The enforcement of equities in relation to patents and patent licenses has changed with the introduction of the Personal Property Securities Act 2009 (Cth) (PPSA).
The PPSA brings significant reform to the law in relation to security interests in personal property – which includes registered and unregistered intellectual property. One of the most important aspects of the PPSA is the implementation of a new public-access PPS register which has been promoted as a simple and inexpensive single repository for the registration of security interests. That register went live on 30 January 2012. The PPS register can be viewed at http://www.ppsr.gov.au.
A key driver for the establishment of the PPSA register was to harmonise the over 70 separate Acts that regulated security in personal property. The PPSA establishes a complete set of rules for determining priority between security interests and also for determining under what circumstances a purchaser of collateral will take the collateral free of the security interests in it. The old common law and equitable principles have been replaced.
Under the PPSA, "personal property" is any form of property other than land and certain statutory licences. It includes IP and IP licences. The definition of IP under the PPSA includes: "the right to exploit or work an invention, or to authorise another person to exploit or work an invention, for which a patent is in effect under the Patents Act 1990". A "security interest", for the purposes of the PPSA, is defined broadly as an interest in personal property provided for by a transaction that, in substance, secures a payment or the performance of an obligation.
Under the PPSA, protection of a security interest involves three steps: attachment, enforcement and perfection. Perfection is particularly important because, in the event of the insolvency of a grantor, any unperfected security interests that exist in relation to the grantor's assets are vested in the grantor, and a secured party that has not perfected its rights loses that security interest. Once a security interest is perfected, there are two general rules that apply: first, perfected interests take priority over unperfected interests; second, perfected interests take priority in the order of perfection. Although there are exceptions to these rules, including (importantly) under the transitional provisions, all the applicable rules are contained within the PPSA.
The PPSA contains numerous provisions that particularly affect intellectual property rights holders. For example, it provides that a registered security interest over an IP license continues to exist when the underlying licensed IP is transferred by its owner (§ 106). Unless the parties have contracted out of §106, a licensee will be able to grant security interests in an IP license in favor of a third party whose security interest can then be registered by that third party.
The PPSA also contains provisions relevant to security interests in intellectual property in overseas jurisdictions, such as foreign patents. Where the grantor of the security interest is located overseas, the security interest is generally governed by the law of the grantor's jurisdiction, and not by the PPSA.
