Tag Archives: obviousness

In my view, Obviousness is the most fundamental of patent law doctrines, and certainly much of the work of patent attorneys is to convince patent examiners that the claims are not obvious.

Bilski v. Kappos

Patent, Patentable Subject Matter, Software, , , ,

Although Bilski's claims were held unpatentably abstract, the Supreme Court has re-affirmed that the door to patent eligibility should remain broad and open.

Bilski v. Kappos (Supreme Court 2010)(08-964)

The Supreme Court has issued its opinion in Bilski v. Kappos. In the decision, the Supreme Court affirmed that Bilski’s risk-management method was not the type of innovation that may be patented. However, rather than using the Federal Circuit's "machine-or-transformation test", the court simply relied on prior precedent to find the claimed method unpatentably abstract. Justice Kennedy authored the majority opinion. Justices Breyer and Stevens both wrote concurring opinions.

Business as Usual: In general, the opinion offers no clarity or aid for those tasked with determining whether a particular innovation falls within Section 101. The opinion provides no new lines to be avoided. Rather, the outcome from the decision might be best stated as "business as usual."

Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas. The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr.

By refusing to state any particular rule or categorical exclusion, the Court has almost certainly pushed Section 101 patent eligibility to the background in most patent prosecution and litigation.

Business Methods: Section 101 does not categorically exclude business methods from patentability. Rather, the court noted that the prior-use defense found in Section 273(b)(1) of the Patent Act "explicitly contemplates the existence of at least some business method patents. . . . [B]y allowing this defense the statute itself acknowledges that there may be business method patents."
Software: Although the court expressly refused to rule on the patentability of software, it appears that software will largely remain patentable. At minimum, the decision would bar any categorical exclusion of software patents. The court neither endorsed nor rejected the Federal Circuit's past interpretations of Section 101 — Noting that "nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357."

Abstract Idea: The one thing that all nine justices agreed upon is that Bilski's method of hedging risk was not patentable because it is an abstract idea "just like the algorithms at issue in Benson and Flook."

 

The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook. Allowing petitioners to patent risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.

Petitioners’ remaining claims are broad examples of how hedging can be used in commodities and energy markets. Flook established that limiting an abstract idea to one field of use or adding token postsolution components did not make the concept patentable. That is exactly what the remaining claims in petitioners’ application do. These claims attempt to patent the use of the abstract idea of hedging risk in the energy market and then instruct the use of well-known random analysis techniques to help establish some of the inputs into the equation. Indeed, these claims add even less to the underlying abstract principle than the invention in Flook did, for the Flook invention was at least directed to the narrower domain of signaling dangers in operating a catalytic converter.

It is unclear to me how patent office examiners will be able to apply the test for abstract ideas in any meaningful way. I suspect that they will not. Rather, the best advice for the USPTO is to focus on Section II-A of Justice Kennedy's opinion. There, the opinion recognizes that Section 101 patent eligibility is "only a threshold test." To be patentable, the invention must also "be novel, see §102, nonobvious, see §103, and fully and particularly described, see §112."

What is the test?: 35 USC 101 offers patent protection for "any new and useful process, machine, manufacture, or composition of matter." Here, the focus was on the definition of a "process" because Bilski's patent application was written to claim a method of hedging risk. Although the majority opinion refused to define the term process, it did write that the machine-or-transformation test developed by the Federal Circuit does not define what is (and is not) a patentable process. Rather, the Court held that the machine-or-transformation offers "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible process." As a "clue," the machine-or-transformation test likely correlates with the existence of patentable subject matter. However, some patent claims that fail the test will still be patentable and other patent claims that pass the test will still be ineligible.   

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BPAI Review of Obviousness Rejections

BPAI, Obviousness, Patent,

Ex parte Quist (BPAI 2010) (precedential opinion)

In only its second precedential opinion of 2010, the Board of Patent Appeals and Interferences (BPAI) has further developed its procedures for its review of obviousness rejections and consideration of evidence of nonobviousness.

On Board review, if the appellant raises the issue as to whether the examiner’s conclusion of obviousness was in error, based in part on the proffered evidence of secondary considerations, the panel must consider if the examiner erred in determining patentability, based upon the totality of the record. In such instances, the Board panel must consider anew all the relevant evidence of obviousness, both for and against, in view of the argument on the issue. One such instance requiring a reweighing is seen in the present appeal – if the Appellants argue that the Examiner erred in determining that the weight of the evidence supports a conclusion of obviousness, the Board must review that conclusion of obviousness anew to see if the preponderance of relevant evidence properly before the Office supports that conclusion.

This decision should be seen as a continuation of the Ex parte Frye (BPAI 2010) holding that the Board must review "the particular finding(s) contested by an appellant anew in light of all the evidence and argument on that issue.”

Despite taking a fresh look at the evidence and conclusions, the BPAI held that the examiner had been correct in determining that the claimed "process for the manufacturing of decorative boards with an abrasion resistant surface and edges" was indeed obvious.

Over 85% of BPAI appeals focus on obviousness. The BPAI has a current backlog of over 16,000 cases. At its current rate of disposal, this figure represents a 29-month backlog.

 

Terminal Disclaimers and PTO: Proposal for a Test Case

Obviousness, Patent, Patent Applications,

Obviousness-type non-statutory double patenting is a judicially created doctrine that operates to prevent patentees from improperly extending a patent's effective term through successive patent grants.

The non-statutory double patenting doctrine was created at a time when patent term was measured from the grant date. At that time, it was easy to "play games" with the patent terms by using a series of continuation applications. Because patent term (for new patents) is now defined by the filing/priority date, most of the potential for games has been eliminated because a family of related applications will typically have the same term. However, a growing issue is patent term adjustment (PTA) that increases the patent term for applications with long prosecution pendency. Because of the increased backlog and changes to PTA calculations, it is likely that later-issued applications in a family will have a longer PTA.

Courts and the PTO have agreed that a patentee can overcome a non-statutory double patenting problem by filing a terminal disclaimer that ties the patent-term of a later-granted patent to the patent term of an earlier-granted patent.

The impact of a terminal disclaimer depends upon what was actually disclaimed. Although applicants can draft their own terminal disclaimer, most folks use the form provided by the USPTO. (SB-0025). The PTO Form disclaims the term of the later-issued patent that extends beyond the earlier-issued patent's term. Regarding PTA, the Form expressly ties the later-issued patent's term to the PTA-adjusted term of the earlier-issued patent.

Although not expressly stated, the Form seems to imply that the PTA of the later-issued patent can be cut-short by the disclaimer. That result, however, is not compelled by the law. In theory (and largely in practice) PTA is based on patent office delay. As such, the equitable basis of the non-statutory double patenting doctrine might not apply to require disclaimer of PTA.

A patent applicant may want to pursue a test-case by modifying the terminal disclaimer form to expressly state that the disclaimer does not cut short the PTA of that later-issued patent. Thus, the term of a later-issued patent with a 400-day PTA and a terminal-disclaimer would limited to the term of the earlier-issued patent plus 400-days.

 

Osenga: The PTOs Fast Track Takes Us in the Wrong Direction

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Professor Kristen Osenga (Richmond) has written a new essay for the Patently-O Patent Law Journal entitled The Patent Office’s Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89. In a 2005 article, Professor Osenga proposed a multi-tiered approach to patent examination. In her Patently-O essay, Professor Osenga explains why her suggestions are “better than the system proposed by the Patent Office.”

  • Download the Patently-O Patent Law Journal Essay: [File Attachment: Osenga.pdf (32 KB)].
  • Read Osenga’s 2005 Article titled Entrance Ramps, Tolls, and Express Lanes – Proposals for Decreasing Traffic Congestion in the Patent Office [Link].
  • On his blog “Inventive Step”, Patent Attorney Matt Osenga (Prof Osenga’s husband) provides further discussion. [Link]

Other Recent Patently-O Patent Law Journal publications:

Transition: Chief Judge Michel –> Chief Judge Rader

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Transition: May 31 is Chief Judge Paul Michel’s last day on the bench.  Judge Randall Rader will become the next Chief Judge of the Court of Appeals for the Federal Circuit. 

The Court today released two interesting patent opinions authored by the Chief: Dow Jones v. Ablaise (finding patent invalid as obvious) and Leviton v. Universal Security Instruments (vacating summary judgment of inequitable conduct). 

There are several pending en banc cases, including Princo v. ITC (patent pools and antitrust), Hyatt v. Kappos (Admissibility of new evidence in a Section 145 action), Therasense v. BD (standards of inequitable conduct), and TiVo v. EchoStar (contempt proceedings against adjuged infringer who introduced new infringing products). 

Combinatorics: With Chief Judge Michel gone, it may be more difficult for en banc panels to overturn prior precedent.  With Chief Judge Michel, the court has 11 members and needs a 6–judge majority to overturn prior precedent. Without the Chief, the court will have only 10 members but will still need 6–judges for such a “majority.” With the 11–judge panel, half of the potential outcomes result in majority panel sufficient to overturn prior precedent. With a 10–judge panel, only 38% of the potential outcomes have the same result. (This assumes a binary yes/no on the potential majority position).  Chief Judge Michel is particularly important because of his tendancy to side with the majority. In the past decade, Judge Michel has filed fewer dissinting opinions than any other Judge on the Circuit except for Judge Moore (who has only been on the bench for three years).  (Judge Newman has filed the most dissenting opinions.)

Next Vacancies: Several other Federal Circuit judges are currently eligible to take senior status. These include Judges Newman, Mayer, Lourie, Gajarsa, and Dyk. Judge Byrson will be eligible in August 2010.

Next Chief Judge After Judge Rader: Judge Kimberly Moore sits as the heir apparent following Judge Rader — assuming that he remains Chief Judge for a full seven years. If Judge Rader vacates the Chief position within six-years, Judge Prost would become Chief.

Donald Chisum: Ariad (2010) and the Overlooked Invention Priority Principle

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In a new essay for the Patently-O Patent Law Journal, Donald Chisum considers the "invention priority principle" and its role in the written description analysis. 

There may be a solution: application of an established patent law priority principle. The principle focuses on a specific embodiment of a generically claimed invention as a constructive reduction to practice, that is, as a completion of the inventive process. Adopting this solution would preserve the written description of the invention's (WDIs) independence and applicability to original claims but would remove WDI as a standard for assessing the scope of a patent claim. WDI would continue to govern whether, at the time an applicant files an application, he or she has completed the inventive process, that is, "possesses" the invention. But only enablement would govern how broadly the applicant is entitled to claim that invention. It may be possible to implement this priority principle interpretation of Ariad without contradicting its clear holdings.

Cite as Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently-O Patent L.J. 72.

Other Patently-O Patent Law Journal publications: 

Donald Chisum: Ariad (2010) and the Overlooked Invention Priority Principle

Patent, , , ,

In a new essay for the Patently-O Patent Law Journal, Donald Chisum considers the "invention priority principle" and its role in the written description analysis. 

There may be a solution: application of an established patent law priority principle. The principle focuses on a specific embodiment of a generically claimed invention as a constructive reduction to practice, that is, as a completion of the inventive process. Adopting this solution would preserve the written description of the invention's (WDIs) independence and applicability to original claims but would remove WDI as a standard for assessing the scope of a patent claim. WDI would continue to govern whether, at the time an applicant files an application, he or she has completed the inventive process, that is, "possesses" the invention. But only enablement would govern how broadly the applicant is entitled to claim that invention. It may be possible to implement this priority principle interpretation of Ariad without contradicting its clear holdings.

Cite as Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently-O Patent L.J. 72.

Other Patently-O Patent Law Journal publications: 

Recordation of Assignment Creates Rebuttable Presumption that Assignment is Valid, etc.

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PatentLawPic967

SIRF Technology v. ITC and Broadcom (Fed. Cir. 2010)

In a 2009 decision, the International Trade Commission (ITC) ruled that SIRF and four others were violating Section 337 of the US Tariff Act of 1930 by importing and selling products with GPS devices that infringe patents owned by Broadcom (via a 2007 acquisition of Global Locate). See U.S. Patent Nos. 6,417,801, 6,606,346, 6,651,000, 6,704,651, 6,937,187, and 7,158,080.  The patents claim various forms of “assisted-GPS” that improve GPS signal reliability and location calculation speed.

Patent Ownership and Standing: One of the inventors conceived of the invention while an employee of Magellan (another GPS company) and while under an employee agreement that operated as an effective assignment of “all inventions . . . which are related to or useful in the business of the Employer . . . and which were . . . conceived . . . during the period of the Employee’s employment, whether or not in the course of the Employee’s employment.”  Magellan was aware of the inventions, but never pursued ownership rights.  Here, in an effort to disrupt Broadcom’s standing to sue, the defendants asserted that Magellan should be considered a co-owner of the patent rights.

Many patent assignment issues are determined under the appropriate state law. However, federal patent law is used to determine whether an assignment is an automatic assignment or only an agreement to later assign rights.  Applying federal law, the Federal Circuit interpreted this agreement as an automatic assignment that effectively assigns rights to inventions automatically upon their invention. 

Also as a matter of federal patent law, the court held that recordation of an assignment creates a rebuttable presumption that the assignment is valid.  Here, the appellate panel agreed that the defendants had not provided sufficient evidence to rebut that presumption.  In particular, the defendants had failed to prove that the prior-employer Magellan was the true owner. 

“If Magellan and Abraham recognized that Global Locate was the owner of the trade secret rights to the invention, it logically follows that Magellan and Abraham did not think that Magellan was the owner of similar rights that eventually became the subject of the ’346 patent.”

Patentable Subject Matter: The asserted claims included several methods of calculating position. On appeal, the Federal Circuit confirmed that those methods fit within the machine-or-transformation test of Bilski and therefore are patentable. In Bilski, the court held that the a patentable method claim must be either (a) implemented using particular machine or (b) transform an article from one state to another.  In addition, the machine-or-transformation must create a “meaningful limit on the scope of the claims.”  Here, the court held that the methods as claimed “could not be performed without the use of a GPS receiver.”  And that limits were meaningful because the GPS receiver is not simply “an obvious mechanism for permitting a solution to be achieved more quickly.” 

We also think that the presence of the GPS receiver in the claims places a meaningful limit on the scope of the claims. In order for the addition of a machine to impose a meaningful limit on the scope of a claim, it must play a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations. We are not dealing with a situation in which there is a method that can be performed without a machine. Contrary to appellants’ contention, there is no evidence here that the calculations here can be performed entirely in the human mind. Here, as described, the use of a GPS receiver is essential to the operation of the claimed methods.

Comment: I certainly believe that the patents are directed toward the type of subject matter that should be patentable. However, the Federal Circuit’s analysis here is not convincing. Rather, the fact that “a GPS receiver is essential to the operation of the claimed methods” indicates that inclusion of the “GPS receiver” limitation is not meaningful. 

The question of whether the inventions were “related to or useful in the business” of Magellan was a matter of California state law.

Divided Infringement: An portion of the decision that will be interesting for patent prosecutors is directed toward joint infringement. Here, the court upheld the patentee’s efforts to direct claims toward certain particular actors and therefore avoid the Muniauction problem. Here, the steps of “communicating” and “transmitting” to a user-device were interpreted as steps that did not require end-user action even though the actual process involves end-user devices downloading the transmitted data.  Thus, despite what your speech teachers taught, communication can be one-way.

Are Appeals at the Federal Circuit a “Coin Flip”?

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Guest Post by Professor Ted Sichelman, University of San Diego School of Law

A general patent counsel at a Fortune 500 company recently remarked, "[T]he Federal Circuit does a coin flip and reverses district court decisions left and right. You might as well just roll the dice."[1] When I was in legal practice, many patent litigators echoed this sentiment.

In a recent article, I collected data from the University of Houston's PatStats project, Professor David Schwartz's exhaustive study on claim construction appeals, internal studies by the Federal Circuit, and the Administrative Office of the Courts to test this seemingly widespread belief.

By and large, the belief is false. Reversal rates for patent cases at the Federal Circuit are not particularly high, and roughly the same as civil reversal rates in other circuits, especially those for complex civil cases. On an issue-by-issue level, although claim construction, § 102(a) anticipation, indefiniteness, and a few other issues have noticeably high reversal rates, for most patent law issues, the rates are about average when compared with rates for private civil appeals in other circuits.

Figure 1 below shows case-by-case reversal rates at the Federal Circuit from 2000-2009 for patent infringement cases appealed from district courts. (This data includes cases that were fully reversed or vacated, and appears to take into account summary affirmances.)

Figure 1. Reversal Rates at the Federal Circuit for District Court Patent Appeals (2000-2009).

In comparison to the 8-18% rates shown in Figure 1, the private civil litigation reversal rates across the regional circuit courts are roughly 7-18%. The reversal rate in 2009 for bankruptcy cases in the regional circuit courts was 15.1%. Although it is somewhat out-of-date, the most exhaustive study of securities and contract appeals in federal courts reports reversal rates of 29.4% and 22.8%, respectively, from 1988-1997. In sum, the case-by-case reversal rates at the Federal Circuit are roughly the same or lower than the reversal rates in the regional circuits for private civil actions, particularly complex ones, like bankruptcy, securities, and contracts cases.

Figure 2 below shows issue-by-issue reversal rates at the Federal Circuit from 2000-2007 for those issues appealed in at least 20 cases (for a more exhaustive set of reversal rates, see my article). According to the data sources I used to compile these figures, these rates derive from all appeals decided by the Federal Circuit, including summary affirmances. (However, I believe some of the summary affirmances from the early 2000s may be missing from one of the sources–if so, this would only lower the issue-by-issue reversal rates, strengthening my argument.)

PatentLawPic965 

As Figure 2 shows, the average reversal rate across all issues (other than claim construction) is 18% and 21% (including claim construction). Of course, a number of issues appear to have inordinately high reversal rates–with the oft-appealed issue of claim construction (at 33%) near the top of the list. But like the case-by-case reversal rates, the average reversal rate across all issues–that is, even taking into account the large number of claim construction reversals–is roughly the same as the overall civil reversal rate in other circuits, and roughly the same or lower than case-by-case reversal rates for complex civil cases.

Thus, the actual reversal rates–whether generated on a case-by-case or issue-by-issue basis–belie the assertion that appeals at the Federal Circuit are a "coin flip" or "dice roll." When compared with reversal rates for private and complex civil actions in other circuits, the Federal Circuit rate is no different, perhaps even lower. So why do so many attorneys believe otherwise?

I think two forces are at work here. First, nearly all of the widely publicized studies on the Federal Circuit have focused on claim construction and obviousness–both of which have high reversal rates. And some of these studies excluded summary affirmances, a practice which artificially inflates the reversal rates by roughly 30%. Second, my sense is that many attorneys who regularly appear before the Federal Circuit are subject to "memory bias." Specifically, as a number of psychologists have generally recognized, these attorneys very likely recall their unpredictable appeals and forget their predictable ones.

Hopefully, the data presented here and in my article will help dispel these widespread myths and diminish some of the undeserved criticism of the Federal Circuit regarding appeals.

Ted Sichelman is an Assistant Professor at the University of San Diego School of Law, where he teaches patent law and other intellectual property courses.

[1] Patent Troubles: Does The Patent System Need Fixing?, Corporate Legal Times, June 2005, at 61 (statements of Richard J. Rodrick, General Patent Counsel, S.C. Johnson & Son Inc.).

Federal Circuit Enforces Agreed-To but Unsigned Settlement Terms

Patent,

MedPointe Healthcare v. Walter Kozachuk (Fed. Cir. 2010)(nonprecedential)

Kozachuk is a former employee of MedPointe’s predecessor company and as part of his employment agreement, Kozachuk had agreed to assign “any and all inventions, discoveries, or improvements made, discovered, or conceived by him during his employment.” About 18-months after leaving his job, Kozachuk began filing patent applications on clinical uses of the drug Felbamate for the treatment of neurological problems. In 2004, MedPointe sued – claiming ownership rights and breach of the employment agreement.

Settlement: In May 2008, the parties reached an agreement on the material terms of a settlement. The terms (including the transfer of patent rights to MedPoint and a small payment ($60k) to Kozachuk) were put “on the record” by the magistrate judge who was mediating the settlement negotiations. Kozachuk, however, refused to sign the final settlement agreement and instead argued that he had been inadequately represented in the negotiations. Despite the lack of a signed document, the district court agreed to enforce the settlement, ordered Kozachuk to sign the documents and hit Kozachuk with $30k in sanctions.

On appeal, the Federal Circuit affirmed. Applying New Jersey law, the court found that a settlement agreement “is a binding contract enforceable regardless whether it has been reduced to writing” and that a contract is created once the parties agree upon the “essential terms of the settlement.” The kicker here was that Kozachuk had agreed to the terms on the record.

Kozachuk’s complaints of inadequate assistance of counsel went nowhere: “In light of Kozachuk’s high level of education, his obvious familiarity with the litigation process, and his failure to express any lack of understanding except after the fact, the court did not clearly err in finding that a binding settlement agreement had been formed.”

Appellate Jurisdiction: One issue not addressed by this case is why the Federal Circuit is hearing the appeal of an employment dispute. I looked up the original complaint to find the answer: The complaint seeks to correct inventorship of the patents under 35 U.S.C. § 256. As such, the case arises under the US patent laws and therefore provides the Federal Circuit with appellate jurisdiction over the final judgment. Hunter Douglas, Inc. v. Harmonic Design, 153 F.3d 1318, 1330 (Fed. Cir. 1998).

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Hearing Components, Inc. v. Shure, Inc., Appeal No. 09-1364 (Fed. Cir. 2010)

This case has three interesting issues: (1) the definiteness of “terms of degree” claim elements; (2) interpreting means-plus-function claim limitations; and (3) the standard for appellate review of a jury’s non-obviousness determination. In this decision, the resolution of each of these issues favors the patentee, Hearing Components.

Terms of Degree: The patents-in-suit all relate to hearing-aide elements. Claim 1 included a long-preamble with the statement that the device is configured to be “readily installed and replaced by a user.” The district court had difficultly drawing a boundary between devices that are readily installed and those that are not readily installed and therefore found the claim indefinite and invalid. On appeal, the Federal Circuit reversed.

In Datamize, the Federal Circuit held the claim term “aesthetically pleasing” to be indefinite. In the process, however, the court noted that these seemingly loose terms of degree will not be considered indefinite if the patentee “provides some standard for measuring that degree.” In the present case, the court found several hints as to the standard for “readily installed.” First, the patentee had argued that the readily limitation helped the claim avoid prior art – thus defining a category of items that were not readily installed. Second, the patent application discussed user installation “without tools.” The Federal Circuit held that this discussion suggested another way to measure “readily.” Based on these findings, the appellate panel rejected the indefiniteness holding because – in the words of Datamize – the specification “supplies some standard for measuring the scope of the phrase.”

Means-Plus-Function Claims: The patent claimed a “means … for disposably attaching” a duct of the hearing aide to a connector. The specification included several examples, but did not include the specific arrangement of the accused device. The jury found infringement, but the district court flipped that decision in a post-verdict order. On appeal, the Federal Circuit confirmed and reinstated the jury verdict of infringement.

Means-plus-function claims often appear to be broadly written, but are limited to specific structures described in the specification and equivalents to those structures. Thus, a means-plus-function element is infringed if the accused device includes a relevant structure that performs the same function as described in a way that is at least equivalent to one described in the specification.

Here, Federal Circuit held that the jury had permissibly found that the accused product’s “interference fit” was equivalent to the “screw threads or ball-and-socket attachment” disclosed in the application.

There was evidence that the inventors knew of the potential of using an interference fit attachment but chose not to disclose it in the specification. The defendant argued that evidence of prior knowledge should limit the scope of equivalents under a doctrine akin to estoppel. Instead, the Federal Circuit held that the “known interchangeability” weighs in favor of a finding of equivalence.

Reviewing a Non-Obviousness Determination: In John Deere, the Supreme Court divided the issue of obviousness into a series of factual inquiries leading to an ultimate conclusion of whether a patent is obvious. The ultimate question of obviousness is an issue of law reviewed de novo on appeal. However, a jury’s findings regarding the question’s many underlying factual predicates are reviewed for substantial evidence. This structure is normally ignored in a jury decision because the jury is typically not asked to explain its factual predicates. Rather most juries just answer the yes/no question: “Is the claim obvious?” When unpacking the decision on appeal, the Federal Circuit gives the jury the benefit-of-the-doubt by looking for any way that the evidence presented can support the jury’s conclusion. Thus, the question on appeal boils down to whether the factual evidence presented could be sufficient to support the legal conclusion on obviousness.

The Relevance of Invention Date in Patent Prosecution: Part V (Strategies)

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This is Part V of my series on the relevance of the invention date in patent prosecution. You may download my entire paper here. This part discusses results of my survey on patent practitioner strategies in choosing whether to swear behind prior art.

* * * * *

As part of my 2009 survey, I asked a final question that focused on the relative strategic merits of (1) asserting first-inventor rights to negate putative prior art references or (2) distinguishing the scope of the invention from the disclosures found in the references. Responders were offered a hypothetical situation where either strategy might succeed. The question read as follows: Assume that you receive non-final prior art rejection. You believe that you could distinguish the reference without amending any of your claims. However, you also have sufficient evidence to swear behind the reference based on an earlier invention date. Which approach do you take?

Responders were asked to choose one of three options: “Swear behind the reference,” “Distinguish your claims from the prior art,” and “Swear behind the reference and distinguish the claims.” In addition, responders were asked to “Explain your answer.”   

The responses show a large preference for distinguishing claims from the prior art rather than asserting first-inventor rights by filing a Rule 131 affidavit. While 51% of responders would have distinguished the claims, only 31% would have asserted first-inventor rights, and 18% would have attempted to both distinguish the claim and assert first-inventor rights. The responders in the survey who would have distinguished the claims showed more support for a shift to first-to-file and indicated that they had comparably less experience in handling cases associated with Rule 131 affidavits. However, those differences were not statistically significant.

Many responders offered an expositive statement of their strategy selection. These results create a richer data set susceptible to qualitative analysis. Analysis and categorization according to a set of themes that emerged from the statements allowed for a thematic tallying in Table 12.


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Responders who preferred to assert first-inventor rights primarily mentioned the concern that distinguishing the prior art creates potential estoppel issues that would limit claim scope. The following examples embody typical responses:

Swearing behind the reference limits the amount of prosecution history estoppel in the case and avoids making statements on the record that may later be used to limit the scope of the claims.

Why go on the record against your claims when you can make the prior art disappear?

It is crazy to make any substantive argument to distinguish over a reference that is not in fact prior art. Why limit the interpretation of your claims?

Responders who preferred to distinguish the claimed invention from the prior art rather than assert first-inventor rights most often mentioned the concern that Rule 131 declarations create their own litigation problems by raising questions of invalidity and inequitable conduct. The following examples embody typical responses:

[Because] swearing back does not provide absolute victory (as a 102g date may later be found), I would always attempt to distinguish first, all other factors being equal.

I would prefer to avoid the risk of an unintentional error in the declaration. If discovered, it would raise inequitable conduct (perhaps groundless, but would still have to be defended) and raise a question of validity.

131 declaration should be a last resort. [T]he resulting patent is weaker (creates [inequitable conduct] issues, defendants can prove an earlier date, etc) plus it looks bad—as if you’re admitting your claims are obvious over the cited reference.  

Many responders shared the concern that swearing behind a cited reference while failing to distinguish the claims on their merits “looks bad” and amounts to a tacit admission that the reference is good but for its effective date. Indeed, one self-described former examiner suggested that swearing behind a reference without addressing the scientific merits of the reference creates a specific challenge for a patent examiner—to find the same prior art, but with an earlier effective date:

Swear[ing] behind the reference may satisfy some, but most [examiners] will try to thwart the swear behind by locating another, similar reference. Practically speaking, to get the case allowed, amend the claims minimally, distinguish from the prior art, and lastly swear behind it, in that order. This provides the examiner enough cover to allow the case.

Some of the responders (12.2%) offered the reminder that patent prosecution is an ongoing process—a series of events or a story unfolding.

Many suggested that if one argument fails, an applicant should move to the next argument. However, many responders, who indicated that they would both assert first-inventor rights and distinguish the invention, suggested that the better approach is to include all arguments within a single response. The following examples embody typical responses:

If you don’t swear behind at the non-final stage the office will go final and not accept the 131 dec[laration] at that stage without the filing of a[ Request for Continued Examination]. A similar situation arises if you rely on the dec[laration] and don’t argue to distinguish. You’ll have to file an RCE to get the arguments considered.

As an examiner, I can tell you this is the best way to get around the reference. More than likely one or the other submitted [sic] on its own will likely have some deficiency. Therefore, doing both will be more persuasive.

Taking the “belt-and-suspenders” approach of both filing a 131 and distinguishing the claims saves time and money for my client. Just because the Examiner has cited a reference with a certain date does not mean that s/he cannot make another rejection based on other art that has an earlier date for the base reference. I prefer to be safe and plan for both eventualities, as long as the claim amendments do not drastically change the claim scope.  

Responders who indicated that they would both assert first-inventor rights and distinguish the invention most often mentioned that their approach increases the odds of obtaining patent protection.  

The cost of patent prosecution certainly drives some applicant behavior. There was some disagreement, however, on which choice was the least-cost mechanism. On one hand, 21.1% of responders who preferred to distinguish the invention suggested that their choice was at least partially driven by the high cost of preparing and filing a successful Rule 131 declaration:

It generally costs much less to distinguish prior art than to do everything necessary to file a 131 Declaration.

Declarations are more work. Specifically, gathering facts related to conception + diligence or actual RTP is time consuming.

As a practical matter, it’s often difficult to track down corporate-type inventors two or three years after the app is filed, so as to be able to get them to sign a Rule 131 dec[laration].  

A handful of responders who preferred to assert first-inventor rights indicated that was the cheaper approach:

It is hard to justify to the client doing all the extra work of distinguishing the claims.

Finally, 13.0% of responders who selected the dual strategy suggested that—in the long run—their approach was more cost-effective.

Fleshing-Out Design Patent Infringement Doctrine

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Crocs, Inc. v. US International Trade Commission (ITC) (Fed. Cir. 2010) (“In the matter of CERTAIN FOAM FOOTWARE”)

In 2006, the ITC began an investigation to determine whether knock-off imports of the iconic Crocs foam shoes infringed either the Crocs utility patent (Patent No. 6,993,858) or the Crocs design patent (Patent No. D. 517789). After a full investigation, the ITC found no patent violation – holding instead that the utility patent was obvious and that the design patent was not infringed. The ITC also held that Crocs had not established a “domestic industry” relating to the patented product and thus, that the Commission did not have standing. On appeal, the Federal Circuit reversed.

Design Patent Claim Construction:

As is ordinary, the Crocs design patent claims “the ornamental design for ___, as shown and described.” Here, the blank (___) was filled by the word “footwear.” Following utility patent claim-construction precedent the ITC had described the drawings and used that description to limit the claim scope. On appeal, the Federal Circuit rejected that approach and instead holding that in the usual case, a design patent’s drawings typically needs very little textual description. The court also held that design patent claim construction should be less textually detailed because design patent infringement (and validity) are judged by looking at the design as a whole. An element-by-element description unduly draws attention to the details and “away from consideration of the design as a whole.”

This case shows the dangers of reliance on a detailed verbal claim construction. The claim construction focused on particular features of the ‘789 patent design and led the administrative judge and the Commission away from consideration of the design as a whole. This error is apparent in the Commission’s explicit reference to two details required by the written claim construction but not by the ‘789 drawings: (1) a strap of uniform width, and (2) holes evenly spaced around the sidewall of the upper. As shown in Figure 1 of the ‘789 patent, the strap bulges to a greater width at the middle of the strap on the far left of the figure. Thus, the design figure does not require a strap of uniform width between the two round connectors. Also, as shown in Figure 4 of the ‘789 patent, the holes are not evenly spaced. Figure 4 shows a gap in the spacing (particularly towards the big toe). Nonetheless, the written claim description required uniform strap width and uniform hole spacing—contrary to the claimed invention. This error distorts the infringement analysis by the ordinary observer viewing the design as a whole. The administrative judge and the Commission needed to apply the ordinary observer test to “the design shown in Figures 1–7.”

Under the now defunct “point of novelty” tests for both infringement and validity, courts had some justification for describing specific elements of the patented design because those elements would potentially be considered as points of novelty. Although not spelled-out by the court, the recent elimination of the “points of novelty” tests also eliminates that justification.

Design Patent Infringement:

The Federal Circuit outlined the “ordinary observer” test of design patent infringement in its en banc Egyptian Goddess decision. Here, the court fleshed-out that test with further details and nuances. Infringement of a design patent requires proof that an “ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design.” The hypothetical ordinary observer is considered to have knowledge of the prior art. Thus, “if the claimed design is close to the prior art designs, small differences between the accused design and the claimed design assume more importance to the eye of the hypothetical ordinary observer.” “The ordinary observer test applies to the patented design in its entirety, as it is claimed. [Therefore, minor differences between a patented design and an accused article’s design cannot, and [do] not, prevent a finding of infringement.” (quoting Payless Shoesource and Litton Sys.).

The court again emphasized that the test considers the design as a whole and that the court should not use drawing details to create an infringement checklist because “concentration on small differences in isolation distract[s] from the overall impression of the claimed ornamental features.” Rather, a better tool for determining infringement is a side-by-side comparison of the patented design and the accused product.

On the facts of this case, the Federal Circuit found that the allegedly infringing shoes were “nearly identical” to the patented design. “If the claimed design and the accused designs were arrayed in matching colors and mixed up randomly, this court is not confident that an ordinary observer could properly restore them to their original order without very careful and prolonged effort. . . . [T]his court perceives that the accused products embody the overall effect of the ’789 design in sufficient detail and clarity to cause market confusion. Thus, the accused products infringe the ’789 design.”

Domestic Industry:

In a decision of some interest for design patent utility patent holders alike, the Federal Circuit suggested what seems a tight definition of the domestic industry requirement of an ITC Section 337 action. The court wrote:

The test for the technical prong of the industry requirement “is essentially the same as that for infringement, i.e., a comparison of domestic products to the asserted claims.” Alloc, Inc. v. Int’l Trade Comm’n, 342 F.3d 1361, 1375 (Fed. Cir. 2003). In other words, the technical prong requires proof that the patent claims cover the articles of manufacture that establish the domestic industry. Put simply, the complainant must practice its own patent.
Although it so stated, I don’t believe that the court actually intended to require that a “complainant must practice its own patent” in order to satisfy the technical prong of 19 U.S.C. 1337(a). Rather, the statute requires that “an industry in the United States, relating to the articles patent . . . exists or is in the process of being established.” The “technical prong” of 337(a)(3)(A)-(B) require significant domestic investment or employment, but neither of those sections require that the complainant be the party that invests.  In the cited Alloc decision, the court stated instead that the question is whether the “industry produces articles covered by the asserted claims.” Here, the dicta is irrelevant because Crocs does manufacture shoes covered by the patent.

Federal Circuit Confirms that Patents Must Meet Both the Written Description and Enablement Requirements of Section 112.

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Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co. (Fed. Cir. 2010) (En Banc Decision).

In a 9-2 decision, an en banc Federal Circuit has confirmed that 35 USC § 112 ¶1 includes separate written description and enablement requirements. “If Congress had intended enablement to be the sole description requirement of § 112, first paragraph, the statute would have been written differently.” The court also clearly confirmed the prospect that originally filed claims can violate the written description requirement:

Although many original claims will satisfy the written description requirement, certain claims may not. For example, a generic claim may define the boundaries of a vast genus of chemical compounds, and yet the question may still remain whether the specification, including original claim language, demonstrates that the applicant has invented species sufficient to support a claim to a genus. The problem is especially acute with genus claims that use functional language to define the boundaries of a claimed genus. In such a case, the functional claim may simply claim a desired result, and may do so without describing species that achieve that result. But the specification must demonstrate that the applicant has made a generic invention that achieves the claimed result and do so by showing that the applicant has invented species sufficient to support a claim to the functionally-defined genus.

Possession vs Disclosure: The court did step away from “possession” as the hallmark of the written description requirement. Rather, the court wrote that “the hallmark of written description is disclosure. . . . [T]he test requires an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art. Based on that inquiry, the specification must describe an invention understandable to that skilled artisan and show that the inventor actually invented the invention claimed.”

General Principles: The court presented “a few broad principles that hold true across all cases”: “the written description requirement does not demand either examples or an actual reduction to practice”; however “actual ‘possession’ or reduction to practice outside of the specification is not enough; and a “description that merely renders the invention obvious does not satisfy the requirement.”

Basic Research – Tough Luck: The court recognized that the written description requirement makes it more difficult to patent “basic research” that has not yet been fully reduced to a practical implementation. The court’s reaction to that problem was tough luck. “That is no failure of the law’s interpretation, but its intention. Patents are not awarded for academic theories, no matter how groundbreaking or necessary to the later patentable inventions of others.”

That research hypotheses do not qualify for patent protection possibly results in some loss of incentive, although Ariad presents no evidence of any discernable impact on the pace of innovation or the number of patents obtained by universities. But claims to research plans also impose costs on downstream research, discouraging later invention. The goal is to get the right balance, and the written description doctrine does so by giving the incentive to actual invention and not “attempt[s] to preempt the future before it has arrived.” Fiers, 984 F.2d at 1171.

Holding: For the foregoing reasons, we hold that the asserted claims of the ‘516 patent are invalid for lack of written description, and we do not address the other validity issues that were before the panel. We also reinstate Part II of the panel decision reported at 560 F.3d 1366 (Fed. Cir. 2009), affirming the district court’s finding of no inequitable conduct. The majority opinion was written by Judge LOURIE and joined by Chief Judge MICHEL and Circuit Judges NEWMAN, MAYER, BRYSON, GAJARSA, DYK, PROST, and MOORE. Judges NEWMAN and GAJARSA filed concurring opinions.

Judges RADER and LINN each filed opinions in dissent. [I will write more on this later]

Settlement + Vacatur: Whitewashing an Invalidated Patent

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In Gracenote, Inc. v. MusicMatch, Inc., the District Court (N.D. Cal. Judge Wilken) granted MusicMatch’s motion for partial summary judgment – holding the claims of one of the patents invalid as anticipated. Within months, the parties settled (motivated in part by the anticipation of Yahoo!’s purchase of MusicMatch). As part of the settlement, MusicMatch agreed not to oppose vacatur of the summary judgment decision. On motion, the court did vacate its holding.

In its motion for vacatur, Gracenote indicated that it “intends to seek re-examination of the ‘593 patent.” This result apparently made the vacatur appear more palatable and potentially allow Gracenote to achieve a narrower (but now valid) claimset. Gracenote wrote the following in its motion:

Gracenote hereby requests that the Court vacate its [Summary Judgment Order and] Reconsideration Order. As Gracenote has set forth in its various briefs filed with this Court, Gracenote believes that the Court erred in finding that xmcd and CDDB anticipate or render obvious certain claims of the ‘593 patent. Accordingly, Gracenote intends to seek re-examination of the ‘593 patent, and to submit evidence of xmcd and CDDB to the PTO. Gracenote will likewise submit the relevant orders of this Court to the PTO at that time. Accordingly, Gracenote respectfully requests that the Court vacate the above cited orders and allow the PTO to determine the relevance of xmcd and CDDB to the claims of the ‘593 patent. . . . Gracenote requests the orders be vacated in fairness so that it can pursue re-examination of the ‘593 patent before the PTO.

Although Gracenote seemingly promised to seek reexamination, no reexamination request has been filed in the six years since this case was decided. It is unclear to me whether that failure would rise to the level of contempt of court.

Notes:

  • Gracenote, Inc. v. MusicMatch, Inc., 2004 U.S. Dist. LEXIS 17617 (N.D. Cal. 2004).
  • Block Financial v. LendingTree (W.D. Mo. 2010).
  • File Attachment: GracenoteMotion.pdf (168 KB)
  • See also, Persistence Software, Inc. v. The Object People, Inc., 200 F.R.D. 626,627 (N.D. Cal. 2001) (vacating prior summary judgment motion of invalidity for the express purpose of allowing “future actions against third parties for patent infringement”.); United States Gypsum Co. v. Pac. Award Metals, Inc., 2006 U.S. Dist. LEXIS 47237 (N.D. Cal. 2006) (vacating judgment that patentee was estopped from claiming infringement under the doctrine of equivalents due to prosecution history estoppel).

The BPAI’s Standard of Review for Examiner Rejections

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Ex Parte Frye (BPAI 2010) (precedential opinion)

In a newly issued precedential opinion, the Board of Patent Appeals and Interferences (BPAI) has ruled that examiner findings are given no deference when challenged on appeal.

“[T]he Board reviews the particular finding(s) contested by an appellant anew in light of all the evidence and argument on that issue.”

However, examiner findings that are not specifically challenged will not normally be disturbed by the BPAI.

“If an appellant fails to present arguments on a particular issue – or, more broadly, on a particular rejection – the Board will not, as a general matter, unilaterally review those uncontested aspects of the rejection. . . .  For example, if an appellant contests an obviousness rejection only on the basis that a cited reference fails to disclose a particular limitation, the Board need not review the other, uncontested findings of fact made by the examiner underlying the rejection, such as the presence of uncontested limitations in the prior art.”

The BPAI opinion is also notable because its signatories include the USPTO Director (Kappos) and Deputy Director (Barner). Although it is unusual for the PTO director to take part in BPAI decisions, the Director is a statutory member of the BPAI under 35 U.S.C. 6(a). Based on the 2008 “Duffy amendments” to Section 6, the Deputy Director apparently now has the same status. I say “apparently” because Westlaw claims that the amendment was technically deficient.

Director Kappos has written a blog post about the opinion.

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Frye’s claim is directed to a shoe having a reverse-incline. On the merits of the appeal, the BPAI reversed the examiner rejection — finding that the examiner had interpreted the prior art in a manner that was “unreasonably broad.”

Patent Reform Act of 2010: Proposed First-to-File Statute

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35 USC 100 Definitions

    (g) The terms ‘joint inventor’ and ‘coinventor’ mean any 1 of the individuals who invented or discovered the subject matter of a joint invention. 

    (h) The term ‘joint research agreement’ means a written contract, grant, or cooperative agreement entered into by 2 or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.

    (i)(1) The term ‘effective filing date’ of a claimed invention in a patent or application for patent means—

            (A) if subparagraph (B) does not apply, the actual filing date of the patent or the application for the patent containing a claim to the invention; or 

            (B) the filing date of the earliest application for which the patent or application is entitled, as to such invention, to a right of priority under section 119, 365(a), or 365(b) or to the benefit of an earlier filing date under section 120, 121, or 365(c). 

        (2) The effective filing date for a claimed invention in an application for reissue or reissued patent shall be determined by deeming the claim to the invention to have been contained in the patent for which reissue was sought. 

    (j) The term ‘claimed invention’ means the subject matter defined by a claim in a patent or an application for a patent.

35 USC 102 Conditions for patentability; novelty

    (a) NOVELTY; PRIOR ART.—A person shall be entitled to a patent unless—

        (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

        (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

    (b) EXCEPTIONS.—

        (1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—

            (A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or 

            (B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor. 

        (2) DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS.—A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if—

            (A) the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor;

            (B) the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

            (C) the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

    (c) COMMON OWNERSHIP UNDER JOINT RESEARCH AGREEMENTS.—Subject matter disclosed and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person in applying the provisions of subsection (b)(2)(C) if—

        (1) the subject matter disclosed was developed and the claimed invention was made by, or on behalf of, 1 or more parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention; 

        (2) the claimed invention was made as a result of activities undertaken within the scope of the joint

research agreement; and (3) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

    (d) PATENTS AND PUBLISHED APPLICATIONS EFFECTIVE AS PRIOR ART.—For purposes of determining whether a patent or application for patent is prior art to a claimed invention under subsection (a)(2), such patent or application shall be considered to have been effectively filed, with respect to any subject matter described in the patent or application— 

        (1) if paragraph (2) does not apply, as of the actual filing date of the patent or the application for

patent; or 

        (2) if the patent or application for patent is entitled to claim a right of priority under section 119, 365(a), or 365(b), or to claim the benefit of an earlier filing date under section 120, 121, or 365(c), based upon 1 or more prior filed applications for patent, as of the filing date of the earliest such application that describes the subject matter.

35 USC 103. Conditions for patentability; nonobvious subject matter

A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.

35 USC 291. Derived patents

    (a) IN GENERAL.—The owner of a patent may have relief by civil action against the owner of another patent that claims the same invention and has an earlier effective filing date if the invention claimed in such other patent was derived from the inventor of the invention claimed in the patent owned by the person seeking relief under this section

    (b) FILING LIMITATION.—An action under this section may only be filed within 1 year after the first publication of a claim to an invention that is the same or substantially the same as the earlier applicant’s claimed invention.

35 USC 135. Derivation proceedings

    (a) INSTITUTION OF PROCEEDING.—An applicant for patent may file a petition to institute a derivation proceeding. The petition shall set forth with particularity the basis for finding that an earlier applicant derived the claimed invention from the petitioner and, without authorization, filed an application claiming such invention. Any such petition may only be filed within 1 year after the first publication of a claim to an invention that is the same or substantially the same as the earlier applicant’s claimed invention, shall be made under oath, and shall be supported by substantial evidence. Whenever the Director determines that a petition filed under this subsection demonstrates that the standards for instituting a derivation proceeding are met, the Director may institute a derivation proceeding. The determination by the Director whether to institute a derivation proceeding shall be final and nonappealable.

    (b) DETERMINATION BY PATENT TRIAL AND APPEAL BOARD.—In a derivation proceeding instituted under subsection (a), the Patent Trial and Appeal Board shall determine whether the earlier applicant derived the claimed invention from the petitioner and, without authorization, filed an application claiming such invention. The Director shall prescribe regulations setting forth standards for the conduct of derivation proceedings.

    (c) DEFERRAL OF DECISION.—The Patent Trial and Appeal Board may defer action on a petition for a derivation proceeding until 3 months after the date on which the Director issues to the earlier applicant a patent that includes the claimed invention that is the subject of the petition. The Patent Trial and Appeal Board also may defer action on a petition for a derivation proceeding, or stay the proceeding after it has been instituted, until the termination of a proceeding under chapter 30, 31, or 32 involving the patent of the earlier applicant.

    (d) EFFECT OF FINAL DECISION.—The final decision of the Patent Trial and Appeal Board, if adverse to claims in an application for patent, shall constitute the final refusal by the Office on those claims. The final decision of the Patent Trial and Appeal Board, if adverse to claims in a patent, shall, if no appeal or other review of the decision has been or can be taken or had, constitute cancellation of those claims, and notice of such cancellation shall be endorsed on copies of the patent distributed after such cancellation

    (e) SETTLEMENT.—Parties to a proceeding instituted under subsection (a) may terminate the proceeding by filing a written statement reflecting the agreement of the parties as to the correct inventors of the claimed invention in dispute. Unless the Patent Trial and Appeal Board finds the agreement to be inconsistent with the evidence of record, if any, it shall take action consistent with the agreement. Any written settlement or understanding of the parties shall be filed with the Director. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents or applications, and shall be made available only to Government agencies on written request, or to any person on a showing of good cause.

    (f) ARBITRATION.—Parties to a proceeding instituted under subsection (a) may, within such time as may be specified by the Director by regulation, determine such contest or any aspect thereof by arbitration. Such arbitration shall be governed by the provisions of title 9, to the extent such title is not inconsistent with this section. The parties shall give notice of any arbitration award to the Director, and such award shall, as between the parties to the arbitration, be dispositive of the issues to which it relates. The arbitration award shall be unenforceable until such notice is given. Nothing in this subsection shall preclude the Director from determining the patentability of the claimed inventions involved in the proceeding.


The Role of Claim Construction in the Obviousness Determination

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Alloc, Inc. v. Pergo, Inc. (Fed. Cir. 2010)(nonprecedential)

Alloc and Pergo both manufacture and sell laminate flooring. Pergo’s patents cover a mechanical joint that allows the “boards” to be joined together without the usual glue or nails. After being threatened, Alloc filed a declaratory judgment action – asking the Wisconsin-based district court to render the patents invalid, unenforceable, and not-infringed. The jury complied and held the patents invalid and not infringed. In a subsequent bench trial, the district court did not find inequitable conduct in the prosecution.

In error, the district court had submitted questions of claim construction to the jury. Claim construction has long been considered a matter of law to be decided only by a judge. On appeal, the Federal Circuit ruled that the jury-submission mistake to be a harmless error. However, the court’s six-page non-precedential opinion creates confusion in my mind. I would have preferred this decision to have been issued as an affirmance without opinion.

On appeal, the appellate court first affirmed — finding the prior art “more than sufficient to support the jury’s finding of obviousness.” Then, when addressing infringement, the appellate court recognized the claim construction error but identified that error as harmless because the claims were also obvious. My outstanding concern is the appellate court’s implicit holding that errors in claim construction do not affect the obviousness determination. That holding is not correct or consistent with the current notion that the obviousness question should focus on the invention as claimed.

It may be relevant to note that the appellate opinion was written by Judge Virginia Kendall sitting by designation from the Northern District of Illinois. Judges Lourie and Dyk joined the opinion. It is probably best to identify this decision as non-precedential and then walk away.

First to Disclose: A Caveat to the Patent Reform Act of 2010

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David French has been writing about the proposed change to a first-to-file system in the Patent Reform Act of 2010. Mr. French was closely involved with Canada’s 1989 switch to a first-to-file system.

Rather than moving to an absolute novelty system, the proposal calls for a limited grace period for “disclosures made one year or less before the effective filing date of the claimed invention.” To qualify for the grace period, the disclosures must either (A) come from the inventor(s), either directly or indirectly or (B) disclose subject matter that had already been publicly disclosed by the inventor(s), either directly or indirectly.

Section 102(b) EXCEPTIONS:

DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION

A disclosure made one year or less before the effective filing date of the claimed invention shall not be prior art to the claimed invention under subsection(a)(1) if

(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

In a limited sense, this rule promotes pre-filing disclosure because the grace period is only available for those who publicly disclose the invention before filing. I am confident that the prudent approach will usually be to file the patent application as early as possible.

It is unclear to me how the provision would operate during a nonobviousness determination. I.e., what if the inventor disclosed INV-A; then a few months later someone else disclosed INV-B; and then the inventor filed on INV-A? Would the grace period apply to “knock-out” the INV-B disclosure as prior art?

I would personally prefer the addition of a caveat (C) to the grace period that “the subject matter had been previously invented by the inventor or a joint inventor.”

Federal Courts Closely Scrutinizing and Slashing Patent Damage Awards

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Michael Kasdan and Joseph Casino discuss recent shifts in reasonable royalty jurisprudence with a particular focus on the recent cases of Cornell, Lucent, and Lansa.  Together, these decisions "indicate an emerging trend to more carefully scrutinize the evidentiary and economic basis of reasonable royalty-based patent damages awards in the setting of the appropriate royalty base, the application of the entire market value rule, and the calculation of the appropriate royalty rate." [Download Kasdan.Casino.Damages]

Other recent Patently-O Patent Law Journal Articles: