Tag Archives: PGR

Guest Post: Ariad v. Lily: Choosing to Not Disrupt the Settled Expectations of the Patent Community

Patent, , , , ,

I asked Howard Skaist for his views on the recent decision in Ariad v. Eli Lilly. He wrote the following:

* * * * *

By Howard Skaist of Berkeley Law, LLC.

In an en banc case closely watched by the patent bar, the Federal Circuit made little change to the law regarding written description and provided little additional guidance, despite a majority opinion nearly 40 pages long, two concurrences, two dissents and having received 25 amicus briefs. At a high level, the case can probably be best understood as having been resolved on policy grounds in the face of an unclear statute and Supreme Court precedent that does not directly address the question at hand; however, policy is only a portion of the justification that the majority of the full court uses for the outcome. 

The fundamental question is whether or not a separate and independent written description requirement exists under 35 USC section 112, first paragraph.  The majority answers the question in the affirmative, relying on the language of the statute, Supreme Court precedent and policy considerations.  However, the concurrence and dissenting opinions demonstrate that this language of the statute is far from clear and that the Supreme Court precedent does not really address the question directly.  Therefore, the main division among the judges appears to rest on policy considerations.  In addition to the policy considerations regarding the advisability of a written description requirement, the majority apparently does not want to “disrupt the settled expectations of the inventing community….”  Majority Opinion at 16. 

The facts of this case suggest that it may have been a good one to test policy rationales since it was brought by a variety of academic and research institutions, including MIT and Harvard, against Eli Lilly.  The inventors had made a fundamental research discovery in biotechnology and hypothesized several possible ways to take advantage of it, but it took those working in the field several more years to successfully develop a product exploiting the discovery.  Therefore, at the core of this case, a legitimate question exists regarding the role or purpose of a patent system and how research or academic institutions should fare under existing legal standards.  Also telling is the citation by Gajarsa in his concurrence of work by Dennis Crouch and Chris Holman showing that few cases have invalidated claims based on written description.  Linn, in his dissent, also cites to Crouch’s work. 

Ariad and a variety of institutions sued Eli Lilly on US Patent 6,410,516 the day the patent issued.  The inventors were the first to identify NF-xB and uncover the mechanism by which it activates gene expression underlying the body’s immune response to infection.  Thus, the inventors recognized and suggested that artificially interfering with NF-xB activity could reduce harmful symptoms of certain diseases.  At the District Court level, a jury determined that Lily infringed the four claims asserted and determined the patent to not be invalid for anticipation, lack of enablement or lack of written description.  However, on appeal, the Federal Circuit reversed and held the patent invalid under 35 USC 112, first paragraph, for failing to provide an adequate written description.  Ariad petitioned for en banc review and the Federal Circuit granted the petition. 

In the en banc opinion, the majority does a good job clarifying the heart of the dispute by stating: “[A]lthough the parties take diametrically opposed positions on the existence of a written description requirement separate from enablement, both agree that the specification must contain a written description of the invention to establish what the invention is.  The dispute, therefore, centers on the standard to be applied and whether it applies to original claim language.”  The point of departure therefore appears to center more upon whether or not original claims can be held invalid for lack of written description or not.  The conventional view had been that a claim supports itself.  However, Federal Circuit decisions in the last few years have challenged that thinking, such as Fiers v. Revel, Enzo v. Gen-Probe and LizardTech v. Earth Res. Mapping.  Here, the Federal Circuit establishes that those decisions were correct. 

As alluded to above, the majority does not agree with Ariad’s arguments about the wording of the statute or its characterization of the relevant Supreme Court precedent.  However, Gajarsa, while concurring, states: “[T]he text of section 112, paragraph 1 is a model of legislative ambiguity.”  Likewise, even the majority, in discussing the Supreme Court precedent concedes: “Although the Court did not expressly state that it was applying a description of the invention requirement separate from enablement, that is exactly what the Court did.” Majority Opinion at 14. Therefore, Ariad’s points may have more substance than the majority concedes. Nonetheless, the Federal Circuit states that “[a]s a subsidiary federal court,” majority opinion at 15, it is obligated to follow such precedent.  The Federal Circuit, however, does directly address Ariad’s contention that original claims should be treated differently than amended claims saying that the distinction does not exist in the language of section 112 and that Ariad has not provided a principled basis for making the distinction being asserted.  Majority Opinion at 19. 

The court challenges directly the thinking that an original claim necessarily supports itself under written description: 

“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.”  Majority Opinion at 20. 

The majority does provide a few clarifying points regarding application of written description: 

“[The] hallmark of written description is disclosure. Thus, ‘possession as shown in the disclosure’ is a more complete formulation. Yet whatever the specific articulation, the test requires an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art.”  Majority Opinion at 24 

The court also acknowledges the disadvantage that this law creates for basic research institutions: 

“[T]he patent law has always been directed to the ‘useful Arts,’ U.S. Const. art. I, § 8, cl. 8, meaning inventions with a practical use, see Brenner v. Manson, 383 U.S. 519, 532-36 (1966). Much university research relates to basic research, including research into scientific principles and mechanisms of action, see, e.g., Rochester, 358 F.3d 916, and universities may not have the resources or inclination to work out the practical implications of all such research, i.e., finding and identifying compounds able to affect the mechanism discovered. That is no failure of the law’s interpretation, but its intention.” 

Conceding that enablement and written description are similar, the court nonetheless maintains that in some fields they can be quite different, particularly in chemistry and biotech: 

“Perhaps there is little difference in some fields between describing an invention and enabling one to make and use it, but that is not always true of certain inventions, including chemical and chemical-like inventions. Thus, although written description and enablement often rise and fall together, requiring a written description of the invention plays a vital role in curtailing claims that do not require undue experimentation to make and use, and thus satisfy enablement, but that have not been invented, and thus cannot be described.”

Challenging the Strong Presumption of Patent Validity

Academic Studies, Articles and Publications, Invalidity, Patent,

One of the next major legal challenges to patent rights will be against the strong presumption of validity associated with the patent grant. Section 282 of the patent act says only that a patent and its claims "shall be presumed valid." Under longstanding doctrine, this presumption can only be overcome with clear and convincing evidence of invalidity. The challenge to this presumption is most likely on two fronts: (1) expanded post-grant review and (2) court challenges to the weight of the presumption.

Expanded Post Grant Review: The PTO uses the lower preponderance (more likely than not) standard when refusing to grant patent rights, and expanded post-grant oppositions will likely allow would-be defendants to challenge patents at the lower standard.

Challenging the Weight of the Presumption: The greater change would come, however, if the Supreme Court takes a case on point. Since the 1952 Supreme Court has not definitively weighed-in on the the level of proof necessary to overcome the statutory presumption of validity, and the Court's Radio Corp (1934) opinion arguably sums up the pre-unification state of the law: "The force of that presumption has found varying expression in this and other courts." Of course, the unified Federal Circuit cleared the air by firmly establishing the clear and convincing standard as the standard. In a 2004 article, Mark Janis reviews the history of the presumption – finding that the clear and convincing standard was already the majority rule prior to unification, but that the Federal Circuit made the standard "meaningful once again." His message: "there is no strict, inevitable correlation between the words of the evidentiary standard and the overlying message delivered by the presumption of validity."

More recently, in KSR the Supreme Court all but suggested one potential petition question: "whether the failure to disclose [relevant prior art] during prosecution … voids the presumption of validity given to issued patents." A more likely focus may be on reducing strength of the presumption over prior art that was not considered during prosecution.

Question: How would patent practice change if the strong presumption of validity was only applicable over prior art actually considered during prosecution?

Notes:

  • I do not believe that the presumption of validity should be reduced. However, I wrote this post to let folks know that it is on the horizon and that a change is somewhat likely during the life of any currently pending patent application.
  • Mark Janis, Reforming Patent Validity Litigation: The "Dubious Preponderance", 19 Berkeley Tech. L.J. 923 (2004).
  • This post was prompted by an e-mail amongst IP law professors with special input from Mark Lemley, Arti Rai, David Hricik, Howard Skaist, Josh Sarnoff and Tom Field. See also Mark A. Lemley and Douglas Lichtman, Rethinking Patent Law's Presumption of Validity, 60 Stanford Law Review 45 (2007)(suggesting gold-plated patents).

Bits and Bytes No. 101: Patent Bill & the Patent Lobby

Patent, , , ,
  • Reform: Today, the Senate Judiciary Committee met shortly and announced that an agreement is “close” on all of the controversial issues and that the compromise will result in a major overhaul of S. 515. Gene Quinn has instant-comments. Potential changes include: (1) codifying the existing law of damages rather than changing it – except that a judicial check on jury-awarded damages would be added; (2) eliminate “best mode” as a ground for invalidating a patent; (3) lowering the standard for post grant review to an “interesting question” rather than a “substantial new question of patentability.” We should see some language this week.
  • Reform: A reader sent me the following points on the potential agreed-to compromise Bill in the Senate:
    • Damages. The amendment will strike the contentious calculation of reasonable royalty damages provision and will replace it with the gatekeeper language developed by Senators Feinstein and Specter, which will provide more of a role for the judge to identify the appropriate legal standards and relevant factual contentions for the jury.
    • Inter partes reexamination. The amendment will strike the controversial “in public use or on sale” additions on inter partes reexamination.
    • Best mode. The amendment will retain the requirement that a specification contain the best mode of carrying out the invention as part of the patent application, but not allow best mode to be used as means to invalidate a patent.
    • Interlocutory appeals. The amendment will tighten the interlocutory appeals provision. The bill as introduced would have given the district court complete discretion whether to approve an application for interlocutory appeal of a claims construction hearing. This amendment will provide district court with specific standards that it must certify have been met.
    • Willfulness. The amendment tightens the willfulness provision to ensure is in line with the Federal Circuit’s decision in Seagate.
    • Venue. The amendment will strike the current subsection on venue, and replace it with a codification of the Federal Circuit’s recent decision in TS Tech.
  • Lobby Lobby: The IPO reports that “by early afternoon yesterday, 16 paid ‘line sitters’ were already in line in the corridor outside the [committee] room, holding places for lobbyists to be admitted to the room this morning.”
  • Patent Jobs: The Patently-O Job board has picked-up some steam over the past week. Here are some recent job postings.

Gholz: Linking Post-Grant Review with Interference Procedure

Guest Post, Interference, Patent, Patent Legislation, Post Grant Review, ,

Guest Post by Charles ("Chico") Gholz. Gholz is the head of the Interference Section at Oblon Spivak, a former chair of the Interference Committee of the AIPLA, and a frequent author on interference law and practice. I asked him to provide some thoughts on the proposed post-grant review proposals in the Patent Reform Act of 2009, telling him that I was especially interested in whether we should try to use the interference procedural structure for the new post-grant challenges.

It is my understanding that "the PTO" (actually, the PTO officials directly involved in administering interference matters—by which I mean Chief Administrative Patent Judge Fleming, Vice-Chief Administrative Patent Judge Moore, and Senior Administrative Patent Judge McKelvey) have expected the cancellation proceedings to be a species of the genus contested case and that, accordingly, they would be governed by Part 41, "Practice Before the Board of Patent Appeals and Interferences," Subpart D, "Contested Cases," of 37 CFR. To those of us in the interference bar, that makes perfect sense, since the cancellation proceedings will be very, very similar to the first phase (formerly known as the "preliminary motions phase") of patent interferences—except that only one party will be filing substantive motions.

However, proposed 35 USC 326 in both bills provides that "The Director shall prescribe regulations…" governing the post-grant review proceedings (what I'm referring to herein as "cancellation proceedings"). Apparently the drafters of the bills (who I suspect are not members of the patent bar, let alone members of the interference bar!) either were unaware of 37 CFR 41 Subpart D or felt that either additional or different rules would be required for the cancellation proceedings.

Whether the cancellation proceedings are to be governed by Subpart D or by a different set of rules is not an insignificant point. Proposed 35 USC 326(a)(3) in both bills would require the Director to prescribe regulations "setting forth procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceedings, and [that] the procedures for obtaining such evidence shall be consistent with the purpose and nature of the proceeding." However, while that language could be read as mandating real discovery (i.e., discovery similar to the discovery available in district courts), the bills then go on to mandate that, "In carrying out paragraph (3) [i.e., in providing the rules for discovery], the Director shall bear in mind that discovery must be in the interests of justice," which might be read a giving the PTO room to provide for only the extremely limited kind of discovery that is currently available in interferences. See Gholz, Patent Interferences – Big Ticket Litigation With No Effective Discovery, 4 Intellectual Property Today No. 9 at page 10 (1997).

Similarly, proposed 35 USC 326(b) in both bills would provide that "Regulations under subsection (a)(1) [including the regulations governing discovery]…shall provide for discovery upon order of the Director [actually, it would presumably be upon order of the APJ handling the proceedings]," indicating that, in contrast to district court procedure, the burden of showing entitlement to discovery would be on the party seeking discovery, rather than imposing on that party's adversary the burden of showing why discovery should not be obtained.

Proposed 35 USC 326(b) in both bills would also require the Director to issue regulations providing "for filing under seal exempt from publication requirements" and providing for "protective orders governing the exchange and submission of confidential information"—both of which would be sharp departures from current interference practice. See Gholz, Compelled Testimony, Testimony Abroad, and Protective Orders in Interference Proceedings Under the New Rules, 67 JPTOS 239 (1985). However, 35 USC 326(b) then goes on to say that the Director's regulations "shall ensure that any information submitted by the patent owner in support of any amendment entered under section 329 is made available to the public as part of the prosecution history of the patent." Since the "confidential information" is more likely to be submitted by the patent owner than by its adversary, I wonder how often a protective order will actually issue. Or is the point that the protective order will automatically expire upon conclusion of the cancellation proceeding?

Both the House version and the Senate version of proposed 35 USC 334 govern the effect on cancellation proceedings of decisions in other proceedings (only an infringement action in the Senate version, but either an infringement action or an ITC action in the House version). Surprisingly, both versions seem to assume that the decisions of the courts (or the courts and the ITC), on the one hand, and the decisions of the Board, on the other hand, are of identical issues—despite that fact that the party attacking a patent has a lower burden of proof before the Board and therefore might win before the Board even though it would lose before a court or the ITC on identical evidence.

In sum, I'd like to express my hope that the drafters of the two bills will consult with experts on interference law and practice, both in the PTO and in the private bar, before passing either version of the bill.

Guest Post: Hot Topics in US Patent Reexamination

Academic Studies, Articles and Publications, Guest Post, Patent, Reexamination, , ,

By Robert Greene Sterne. Rob Sterne is a founding director of the IP firm Sterne Kessler Goldstein & Fox. I asked him to write about current ‘hot topics’ in patent reexamination.

pic-11.jpg

The marked increase in the use of reexamination has naturally caused more frequent and closer evaluation and scrutiny of its unique procedures by involved parties and the courts. In FY2008, according to official USPTO (PTO) statistics, 168 inter partes reexams and 680 ex parte reexams were instituted. Compare this to FY2005, where 59 inter partes reexams and 524 ex parte reexams were instituted just three years ago. In short, it is becoming one of the faster developing areas of intellectual property law and, in the words of top PTO officials, it is a true “work in progress.”

Developed in conjunction with the Sedona Patent Litigation Conference and a team of my colleagues (and incorporating feedback of dozens of sources including judges, senior officials from the PTO, patent litigators, patent prosecutors, academics, bloggers, and interested members of the public), a comprehensive and neutral white paper overview of this subject matter provides an in-depth review of hot issues currently confronting parties that find themselves in the “parallel universe” of patent reexamination and concurrent litigation in the district courts and USITC. The hot topics addressed include (A) impact of PTO decisions on stock price, (B) reexamination pendency, (C) substantial new questions of patentability, (D) real party in interest, (E) duty of disclosure, (F) protective orders, (G) stay of litigation in view of reexamination, (H) appeals from the Central Reexamination Unit to the Board of Patent Appeals and Interferences, (I) the impact of reexamination on settlement, and (J) page and time limits in reexamination proceedings.

Here is a closer look at three of these topics:

  • Litigation Stays: Reality or Myth – The percentage of reexams that are in the ‘parallel universe’ of district court or USITC patent litigation continues to climb. For example, in FY2008, 62% of current inter partes reexams and 30% of ex parte reexams were in parallel litigation. Judges have wide latitude in granting or denying stays and litigants must carefully evaluate prior stay decisions from their judge and the court they are in to effectively prognosticate how the judge will rule. Especially with respect to inter partes reexams, the grant of a stay can effectively be “game over” for the patent owner.
  • Stock Fluctuation: Impact of PTO and Court Decisions on Stock Price – The practical impact of reexam on patent owners can be enormous. There are recent celebrated examples of stocks dropping 40% in hours after the release of a non-final office action rejecting claims in a suit, even though this development is not controlling on a court case because the reexam is not final. Third party requestors engage in litigation in the press by issuing inflammatory press releases that spin the truth. Patent owners need to be prepared for this media battle to protect their stock price. Moreover, the PTO mails decisions to parties in the reexam, putting the patent owner at a real disadvantage in dealing with the potential reexam media war.
  • Reexamination Pendency: So How Long Does it Take? – The stated goal of the PTO CRU is 24 months from the time the reexam is instituted to a Final CRU office action or action closing prosecution. By statute, the CRU must handle reexams with “special dispatch.” However, there are no definitive statistics on how long it takes for a reexam to be handled to completion by the CRU and then through appeal at the BPAI. Our current best estimate is that it takes approximately two to four years for the CRU to complete a reexam, typically a little faster for ex parte reexams, and two to four years for the BPAI to complete a reexam appeal. Thus, the reexam process could take four to eight years before it arrives at the US Court of Appeals for the Federal Circuit on appeal. This is a significant amount of time and requires additional strategy and tactical decisions by the parties.

For additional insight into patent reexamination, download recent podcasts – “2008 Patent Reexamination Trends” (Episode #1) here and “The Parallel Universe of Patent Reexamination and Litigation” (Episode #2) here.Download the latest version of the Sedona Conference related paper referenced above here, where you can read in-depth about the full list of hot topics identified above.

Guest Post: Monsanto Company’s View on Patent Reform – Protect Innovation:

Articles and Publications, Guest Post, Patent, Patent Legislation, , ,

PatentLawPic699 David Snively is Monsanto's General Counsel. He read Google's calls for patent reform and penned the following response. Monsanto's business model relies heavily on its ability to protect its innovations through intellectual property and contract in the US and Globally. Monsanto has also been the defendant in numerous patent battles.

Dr. Alan Greenpan's keynote speech on "Markets and the Judiciary" noted that "critical to economic growth is a rule of law, particularly protection of the rights of individuals and property". His remark that for IP law, the constancy of the protection afforded under the Constitution of the United States and our fully-functioning legal system is the basis for the U.S. economy's sustaining lead – even in difficult economic times with broken markets. Our patent system is the envy of the globe and while capable of thoughtful adjustment should not be hijacked by international pirates or corporations seeking to dilute legitimate protection that breeds investment and jobs. This is why Monsanto Company, as a global leader for innovation and technology in agriculture, is joined by trade unions and countless other groups who strive to assure Greenspan's voice is not lost in the din from hedge funds, offshore interests or others seeking short term gain by weakening our great patent system.

I respectfully disagree with the recent blog post by Google's Head of Patents and General Counsel, commenting on the perceived risks from damage awards in patent cases. Monsanto has faced billion dollar damage claims as a wrongly sued patent defendant and also knows the true benefits from avoiding the encouragement of willful infringement based on a smaller party's calculated gain in the face of limited risk of a meaningful award of damages if infringement is established. With full knowledge of all these issues and our substantial alignment with Google and the information technology industry over the legitimate need to curtail patent trolls and a myriad of other concerns – we encourage thoughtful reform. Last year Congress passed without public objection Public Law 110-403 the "Prioritizing Resources and Organization for Intellectual Property Act of 2008" which was designed to significantly enhance government law enforcement resources for combating certain kinds of intellectual property (IP) theft, e.g. criminal counterfeiting and infringement of computer software. The law helps protect investments in the research, development and marketing of certain kinds of innovative American products and services. The information technology industry was rightly bothered that its intellectual property rights were being trampled on by "pirates".

But, according to the financial sector and the information technology industry it seems that too many other people have too many patents that get in the way of too much "innovation" that is being marketed by an industry that doesn't own the rights to the "innovation". Some say that innovation can't stand still while somebody does a patent search to make sure that the "innovation" that is being marketed won't infringe any of those too many patents. So the complaint is "we are getting sued too much by these innovators who are stifling our innovation". Unlike the solution for rampant copyright infringement the perverse solution for rampant patent infringement is to propose "reforms" that would both reduce incentive to invest in research, development and marketing of innovative American products and services and provided impediments for improving patent quality. Dr. Greenspan's Georgetown keynote aptly recalled the copyright situation when he quoted Stephen Breyer from the Harvard Law Review decades prior to becoming a Justice "the case for copyright…rests not upon the proven need, but rather upon the uncertainty as to what would happen if protection were removed. One may suspect the risk of harm is small, but the world without copyright is nonetheless [in the words of Hamlet] 'undiscover'd country' which 'puzzles the will,/And makes us rather bear those ills we have/Than fly to others that we know not of.'

The problems posed by the patent reform bill are many:

  • It would change the calculation of damages that an infringer (pirate) would pay as compensation for trampling on patent rights, encouraging only more callous disregard of patent rights and piracy.
  • It would change the venue provisions in a way that would impose a substantial burden and inconvenience on patent owners by limiting access to the judicial system, encouraging only more callous disregard of patent rights and piracy.
  • "Technical" changes would weaken protection and encourage piracy via removing the estoppels provisions and expanding the prior art basis for engaging in inter partes re-examination, in effect providing a system of post grant review that will serve only to harass patent owners by effectively taking patents out or service for the duration of unlimited re-examinations, encouraging only more callous disregard of patent rights and piracy.

Transparency is critical to society today yet the patent reform bill would not require publication of all patent applications at 18 months reducing the public knowledge of prior art making it harder to avoid investment in patent-free technology and reducing the likelihood that quality patents will issue.

Thoughtful patent reform is needed. There are things to support in the House version of the patent reform bill. For example, the House bill while strangely modifying the damages calculation would authorize a study to see if such a modification is needed. Such studies are available and do not support the anecdotes that say damage awards are out of control.

Patent Reform that discourages investment in research and development and the job growth and economic stimulus that is spawned by thousands of small companies as well as large companies that rely on a robust and strong patent system is bad for America. Monsanto invests over $2M every day in research and is committed publicly to helping double food yield in corn, soy and cotton by 2030 while using 1/3 fewer natural resources and improving the lives of farmers globally. Accomplishing this task of sustainable agriculture requires a patent system and rule of law that Dr. Greenspan says has always been found in the Constitution of the United States.

Patent Reform Act of 2009

Damages, Patent, Patent Legislation, Reexamination, , , , , ,

Patent reform legislation has now been introduced in both the House and the Senate. The provisions call for major reforms and mirror much of the proposed legislation from 2008. If anything, this is not a consensus Bill. File Attachment: SenateBill.pdf (116 KB) File Attachment: HouseBill.pdf (180 KB)

Proposed changes in the Senate Bill include:

  • First to File: Moving to a first-to-file system that credits invention based on the filing date of the patent application rather than on the date of actual invention.   The provision eliminates the one-year grace period for most cases. Thus, any independent third-party publication prior to filing is considered prior art regardless of the date of invention. Likewise, secret prior art (102(e)) cannot be ‘sworn behind’ based on prior invention. This provision obviously hurts folks who delay in filing patent applications.
  • Damages: Must look to the invention’s “specific contribution over the prior art” to determine damages. There is an interesting provision that a reasonable royalty may be calculated as the price of licensing a “similar noninfringing substitute in the relative market.” In some cases, this could push damages to zero if the noninfringing substitute is in the public domain. The provision also codifies that treble damages are limited to instances where a judge finds that an adjudged infringer recklessly continued to infringe after receiving particularly specified written notice sufficient to create declaratory judgment jurisdiction and without relying on reasonable advice of counsel.
  • Expanded Reexamination Proceedings: Reexaminations may be requested based on published prior art, or evidence of prior public use or sale in the US. Inter partes reexaminations would begin to look more like court cases and would be heard by administrative patent judges. The Bill would clarify that parties would be estopped from filing inter partes reexamination requests after a district court judgment.
  • Additional Post Grant Review: Within 12 months of issuance, a third party can file a cancellation petition based on any ground of invalidity (rather than simply prior art). The post grant reviews would also be conducted by the administrative patent judges.
  • Pre-Issuance Submissions: Third parties can submit prior art during examination of the patent as well as a statement regarding the relevance of the art. The art should be submitted the latter of (1) six months after publication or (2) before the first office action on the merits.
  • Patent Litigation Venue: “A party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district court.” Venue is only proper were (a) defendant is incorporated; (b) defendant has its principle place of business; (c) where the defendant is permanently located and has committed substantial acts of infringement; or (d) where the plaintiff resides if the plaintiff is a nonprofit or individual inventor. The court should transfer venue to avoid evidentiary burdens when transfer can be accomplished without causing undue hardship to the plaintiff.”
  • Interlocutory Appeals: The Federal Circuit will have jurisdiction over interlocutory appeals of claim construction when approved by the lower court.
  • Administrative Patent Judges: The BPAI would become the Patent Trial and Appeal Board (PTAB). Interferences would be gone, however they would be replaced by derivation proceedings as well as reexamination and post-grant trials.
  • PTO Powers: The PTO has power to set its fees, including reducing fees.
  • Oath: Easing the rules to more easily allow rights-holders to file patent applications on behalf of the inventor.
  • Federal Circuit Judges: Making legal it for a Federal Circuit judge to reside more than 50 miles from DC.

As you can see, this is very much the type of reform that companies like Google would like to see. Google is regularly faced with charges of patent infringement and rarely sues for infringement. Some of these changes will benefit the system as a whole, but it is clear that this is not “balanced” reform. The damages provision will almost certainly reduce patent awards. And, perhaps equally important, the damages provision provides adjudged infringers a real cause to appeal jury awards if they did not directly follow the expert testimony.

I believe that the expanded use of reexaminations and post grant review and prior art submissions will be beneficial, and I have faith that the administrative patent judges will be able to handle their newfound responsibilities. That said, these provisions provide challengers with new ways to attack patent rights.

The plaintiff bar in the Eastern District of Texas is quite good, and defendants are doing what they can to escape from their grasp. The venue provision moves in that direction and would thus weaken the value of patents.

The trick with the first to file system is to realize that it is not about some mythical race to invent between competitors. Rather, it is about keying the priority on the date of filing the application rather than the date of invention or even one year prior to filing. This provision weakens patent rights because more materials will be considered prior art. It is possible to switch to a first-to-file system without eliminating the grace period so dramatically – this legislation does not, however meet that standard.

The Bill is sponsored by both Senators Leahy (D-VT) and Hatch (R-UT). Representative Conyers (D-Mich) introduced parallel legislation in the House, the legislation is largely similar, but does contain some differences. (I have not reviewed the House version in detail). Some opposition has already formed. Reps Manzullo (R-IL) an Michaud (D-ME) issued a joint press release titled “New patent bill encourages IP theft, destroys American jobs.” Their focus was on the damages provision.

There are some changes from the 2008 legislation.

  • The Bill does not require that all applications be published at 18 months.
  • Applicants would not be required to search prior art.
  • The 2009 Bill allows public use or sale in the US to be reasons for challenging patents.
  • CHECK 21 provisions are gone.
  • Fee Diversion is allowed in the 2009 Bill. (Oddly, Leahy explained that PTO Examiners perfer a system of fee diversion)
  • The 2009 Bill does not address inequitable conduct.

Links:

Peer-to-Patent Project Begins Post-Issue Review

Patent,

The Electronic Frontier Foundation (EFF) and Public Patent Foundation (PubPat) started the ball rolling with public interest challenges to patents via reexamination. Now the Center for Patent Innovations at NYLS have set their sights on post grant reviews. By leveraging their peer-to-patent system, the group hopes to help discover prior art that will invalidate issued claims. "Our citizen-experts have already found a number of items of prior art relevant to patents being asserted againt Microsoft, Google, and Facebook." (Post-Issue) The project is looking for law students to help. Not relying on altruism — Article One Partners has offered $50,000 for helping invalidate several Rambus patents. "If one or more references show a patent to be invalid, the first respondent who found the research earns the reward." (Article One) If you do find the Rambus prior art, please post a note here first so that we can all sell short.

* Note — I am an Advisory Board Member of the Center for Patent Innovations (although I did not know about this recent development until it had already been released).

Should the Supreme Court Grant Cert in Rambus?

Patent, , , , ,

This post was written by Professor Josh Wright. Wright is a professor at George Mason University Law School, but is visiting this semester at the University of Texas Law School in Austin. This post was originally published on the blog Truth on the Market.

As noted, the FTC has exercised its right under 15 USC 56(a)(3) to petition for a writ of certiorari to review the judgment of the D.C. Circuit in its FTC v. Rambus. The FTC press release is here. The petition is here. The questions presented, as framed by the Commission are:

1. Whether deceptive conduct that significantly contributes to a defendant’s acquisition of monopoly power violates Section 2 of the Sherman Act.

2. Whether deceptive conduct that distorts the competitive process in a market, with the effect of avoiding the imposition of pricing constraints that would otherwise exist because of that process, is anticompetitive under Section 2 of the Sherman Act.

I do not believe the FTC has presented a convincing case for granting cert. Further, I don’t think the Supreme Court should grant cert in Rambus for reasons I’ll discuss in the post. For a more detailed exposition on some of the issues touched upon by this post, see my article with Bruce Kobayashi, Federalism, Substantive Preemption and Limits on Antitrust: An Application to Patent Holdup (forthcoming in the Journal of Competition Law and Economics).

The FTC lists what I count as five separate reasons to grant the petition:

(1) the D.C. Circuit applied an overly restrictive “but-for” causation standard that would require the Commission to show that Rambus’s conduct was anticompetitive (”the court of appeals erred in supposing that a Section 2 tribunal must identify a particular anticompetitive effect in order to find liability”);

(2) the court erred in its application of NYNEX v. Discon, Inc. to Rambus to conclude that the loss of an opportunity for the SSO (JEDEC) to obtain a RAND commitment from Rambus was not an anticompetitive effect under the antitrust laws;

(3) the Supreme Court should grant the petition to clarify “the governing standards of causation in Section 2 cases”;

(4) the D.C. Circuit decision is at odds with the Third Circuit’s Broadcom decision which held that the loss of a RAND commitment due to deception is a proper basis for Section 2 liability; and

(5) the set “inconsistent set of rules” creates a conflict that “threatens confusion regarding the conduct of participants in industry-wide standard setting,” “will discourage participation in standard setting proceedings,” and “ultimately harm consumers.”

I want to examine some of those issues more closely, sketching out reasons why I do not believe that they warrant cert, and also highlight some issues the FTC did not but should have addressed in its brief to make the case more compelling. All of that below the fold. (more…)

PubPat: Proposed Post-Grant Review Cuts-Out Public Interest

Patent, Reexamination, ,

RavicherThere is a possibility that a passed Patent Reform statute would eliminate third-party-requested reexaminations (ex parte and inter partes) and yet fail to create any substantive third-party initiated post-grant procedure to replace the current options.

In addition, the proposed post-grant review procedure would block a non-threatened party from challenging the validity of a patent more than a year after its issuance. In a letter sent today to the Senate reformers, Dan Ravicher of PubPat asks that third-party reexamination be preserved.  The non-profit groups such as PubPat and EFF have filed dozens of reexamination requests asking the PTO to invalidate “wrongfully issued” patents.

The Current Proposal Found in S.1145: The proposed system of post-grant review would have two windows for third-party filings:

  • First Window: Post-Grant oppositions filed by anyone within one year of issuance.  Patents reviewed in the first window would not be given any presumption of validity.
  • Second Window: Opposition must be filed by party who has a likelihood of feeling “significant economic harm” based on the patent. A presumption of validity would apply in reviews within the second window.

The PTO would be required to complete its review work within 18 months. Post grant reviews would be conducted by a three-member panel of administrative judges rather than by examiners. Parties to the review may settle the case.

  • PubPat Recent Successes:
    • Forgent Networks ‘672 "JPEG" patent: Broadest claims finally rejected;
      Patentee abandoned assertion of patent.
    • Columbia ‘275 Axel Cotransformation Patent: All claims finally
      rejected; Patentee abandoned assertion of patent.
    • Microsoft ‘517 FAT Patent: Patentee modifies claims, which are allowed.
    • Pfizer ‘156 Lipitor Patent: Patentee modifies claims, which are allowed.
    • WARF Stem Cell patents and Gilead Tenofovir (AIDS drug) patents have had all claims non-finally rejected, but are still pending. 

Review: EBay v. MercExchange Amici Briefs

Patent, Patent Cases 2006, ,

eBay v. MercExchange (Supreme Court 2006).

This year, the Supreme Court will determine whether a patentee should have a right to an injunction once infringement is found.  This issue is fundamentally important to the practice, and a number of amici have filed briefs. (briefs in support of MercExchange will be filed later this spring). 

The following is a review of the briefs received thus far.  Copies of the briefs are available for download at the bottom of this post.[*]

Yahoo!’s Brief

Yahoo!, with the support of professor Robert Merges takes issue with patent trolls, and their propensity to ambush and cause harm.  According to the brief, patent trolls are “entities whose primary purpose is to prey on innovators who actually produce societally valuable products.”

Yahoo!’s solution is that the “availability of injunctions should turn largely on whether the patentee engages in research and development and should discourage entities whose sole business is patent litigation.”

Electronic Frontier Foundation Brief

EFF thinks about free speech and argues that “automatic injunctions” pushes against our first amendment protections. EFF cites the importance of blogging and the potential of patent owners to claim control over internet publishing mechanisms.

AIPLA & FCBA Joint Brief

AIPLA is nominally in support of neither party, but is in fact in support of MercExchange.  AIPLA argues that the CAFC’s “general rule” of issuing injunctions after a finding of liability is correct because the harm caused by continued infringement is “inherently irreparable.” The brief also argues that, in this case, the CAFC is not guilty of expanding the power of patents.  Rather, the general rule of issuing injunctions has long been a part of patent practice and is consistent with the analysis in other areas of law such as trademarks.

Fifty-Two Law Professors Brief

Professor Lemley along with fifty-one other professors filed their brief in support of eBay. Notably, the professors attempt to make a distinction between a district court’s refusal to grant an injunction and a compulsory licensing scheme.

Interestingly, professors are clear that courts should be given discretion to deny injunctive relief, but that such discretion should not be used regularly or even often.  This implies that the professors are at least in favor of a presumption that an injunction will issue.

Brief of Professors Pollack & Reynolds

Another set of law professors and legal scholars (Including Instapundit) argue that the Constitution supports a “presumption that injunctions are unwarranted for patent holders who are neither practicing their infringed inventions nor making good-faith efforts to prepare to practice their inventions.”

Teva’s Brief

Teva, primarily a generic drug manufacturer, filed its brief arguing that (1) district court’s should have discretion and (2) the public interest should be represented in any injunction decision.

Computer & Communications Industry Association (CCIA) Brief

CCIA argues that the CAFC continues to make patents stronger while the PTO continues to weaken patent quality. This combination, according to the advocacy group, encourages litigation and impedes innovation.

Bar Assn. of the District of Columbia’s Brief

The district court questioned the “unsettled political nature” of business method patents. In its brief, the BADC questions whether politics or draft legislation can be considered when determining an injunction.

IBM’s Brief

 IBM argues that Section 283’s permissive language (“may”) requires that courts examine equitable principles before issuing an injunction.  Furthermore, the patent leader argues that the Supreme Court’s Continental Bag precedent also requires examination of the equitable principles.

Franklin Pierce Law Professors Brief

The law professors, led by Thomas Field, argue that the right to injunction should be strong and not variable according to patentee’s use of the patent. “The trial court accepted arguments analogous, given the apparent economic disparity between the parties, to ones Goliath might have made in asking that David be disarmed.”

Brief of Intel, Microsoft, Oracle, and Micron

The four technology giants have joined together in an “Innovator’s Alliance” and filed a brief in support of eBay’s position. The brief reviews some historical aspects of patent law and argue that the Founding Fathers would not have approved of automatic injunctions for patent infringement.

Brief of the Securities Industry

Several securities industry groups joined together to file a brief in support of eBay. The brief discusses their worries that a patent infringement lawsuit could hamper the reliability of financial markets

Brief of Research-In-Motion

RIM argues that the patent enforcement system must promote the useful arts

Nokia’s Brief

Nokia follows a similar vein as the EFF, but argues that interoperability of networks and systems is extremely important, and patents on de facto standards should not be granted injunctions.

Brief of the Bar of the City of New York

The NY Lawyers argue that injunctions should not be the general rule. Rather, courts should consider a broad range of factors that may sway the decision of whether to grant an injunction. These include irreparable harm; whether infringing activity was lawfully initiated (e.g., prior to issuance of the patent); whether patentee delayed in asserting a claim; whether there is a disputed question of law (e.g., claim construction); harm of an injunction to the infringer compared to benefit of the injunction for to patentee; extent of harm to third-parties.

Files (thus far):

  • Party Briefs on the Merits

  • Amici Briefs on the Merits

  • Briefs for/against Certiorari:

    • Other

     * cite as Dennis Crouch, Review: EBay v. MercExchange Amici Briefs, Patently-O, January 30, 2006, at https://patentlyo.com.

     

    Patent Office Asks Congress to Amend Patent Act to Create Better Options for Post-Grant Review and Inter Partes Reexaminations

    Patent, , ,

    Under the American Inventors Protection Act (AIPA), the Patent Office is required to submit a report to Congress evaluating the success of the newly enacted inter partes reexamination proceedings.  Today, the PTO released its Report to Congress on Inter Partes Reexamination [PDF].

    Over the past several years, the buzz surrounding inter partes reexamination has increased.  However, the report notes that the growth of such re-exams has been slow.  For example, only 27 inter partes reexaminations were filed in 2004.

    Based upon a review of the statute and comments from interested parties, the USPTO released a set of recommendations for amending the Patent Act in order to improve inter partes reexamination.  The PTO points to three areas that need improvement:

    • Clarifying the inter partes reexamination estoppel provisions.
    • Permitting the requester of an inter partes reexamination additional opportunities to provide input as to Office actions.
    • Extending the requester’s statutory for comment (currently 30 days) after the patent owner responds to an Office action, or to permit the USPTO Director to set the period for comment by rule.

    In addition, the Patent Office noted that their Post-Grant Review proposal offers “a comprehensive and desirable way to address patentability issues after a patent has been awarded.”  Generally, the proposed Post-Grant Review would provide a more comprehensive review model and allow a more adversarial review presided over by USPTO administrative patent judges. The Review would include closely controlled discovery and cross-examination upon the challenger’s presenting sufficient grounds that one or more of the patent claims are unpatentable.