The Supreme Court today refused to hear RIM’s BlackBerry appeal — another in a series of setbacks in RIM’s patent defense. The Court’s refusal to grant certiorari means that this case will quickly come to a head at the district court level. A hearing is now expected within the next few weeks to determine the scope of any eventual injunction that may be issued.
On a broader scale, the Federal Circuit’s decision opened the gate for patentees to assert their patents against “transnational” systems. In RIM’s case, the appellate court held that NTP’s patent’s could be infringed even though the BlackBerry maker’s routers and servers were located in Canada.
AWH has petitioned the Supreme Court to with the broad question of whether patent claim construction should be reviewed de novo on appeal.
Question Presented: Whether the Federal Circuit is correct in holding that all aspects of a district court’s patent claim construction may be reviewed de novo on appeal.
AWH’s petition picks up where Judge Mayer and Newman’s dissent left off in the en banc Phillips decision. In their dissent, the judges focused their attention on the “futility [and] absurdity” of the de novo rule.
Now more than ever I am convinced of the futility, indeed the absurdity, of this court’s persistence in adhering to the falsehood that claim construction is a matter of law devoid of any factual component. Because any attempt to fashion a coherent standard under this regime is pointless, as illustrated by our many failed attempts to do so, I dissent.
Indeed, many believe that the high reversal rate of claim construction is primarily due to the de novo standard. To that effect, AWH’s petition does not mince words:
Left to its own devices, the Federal Circuit will continue to improperly devote the chief measure of its energy to rejudging the facts of patent claim constructions, rather than to fulfilling its purpose of bringing uniformity to patent law.
Now Phillips has posted his opposition. Phillips argues that claim construction should be considered a matter of law and should continue to receive de novo review.
The construction of written instruments is one of those things that judges often do and are likely to do better than jurors unburdened by training in exegesis. Similarly, the Federal Circuit is uniquely equipped to make such determinations on appeal.
The main thrust of the Phillips argument, however, is that the case is not ripe for review because the CAFC did not rule on the issue of de novo review.
This case involves a patented method of correlating a body protein level with a vitamin B deficiency. (U.S. Patent No. 4,940658). The claim in question (Claim 13) includes two steps: (1) assaying a body fluid for an elevated level of total homocysteine and (2) correlating an elevated level of total homocysteine with a folate deficiency. (paraphrased).
The patent holder won at trial and at the CAFC. The defendant, Metabolite, then brought its case to the Supreme Court arguing that the patent is invalid because it “claim[s] a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.”
Interestingly, the question presented is not firmly grounded in any particular rule of patent law. Rather, it implicitly raises issues of indefiniteness, enablement, written description, and patentable subject matter. (to name a few). However, the Supreme Court has given some indication that it is most interested in this case because of the issue it raises regarding the patenting of natural phenomena under Diehr.
LabCorp has filed its brief on the merits as have a number of third parties:
In Part I, Petitioner LabCorp’s stance is essentially that the law is correct, but that it has been misapplied in this case.
Claim 13 violates this Court’s longstanding rule barring patents on “laws of nature, natural phenomena, and abstract ideas.”
According to LabCorp, the claim involves “no actual invention beyond the scientific discovery it recites.” The claimed correlation is a scientific principle or law of nature, and its discovery alone cannot be patentable. The “trivial pre-solution” activity of assaying “cannot transform claim 13 into a patentable invention.” Here, Petitioner never strays far from the precedential pillars of Diehr, Chakrabarty, Funk Bros., and Flook.
In Part II, LabCorp goes on to argue that the claim is neither definite, enabled, nor adequately described. The Brief appears to ask the court to invalidate any claim that includes a “correlating” step unless the process of how to calculate a correlation is spelled out in the specification.
The Federal Circuit relied on the accepted dictionary definition of “correlate” as meaning “to establish a mutual or reciprocal relationship between.” But nothing recited in the claim or disclosed in the specification tells a practitioner how to actively “establish” a “relationship” between a particular test result and a vitamin deficiency. At most, the Patent discloses that such a scientific relationship
exists.
More is required for a valid claim. . . .
In the remaining sections of the Brief, Petitioner argues that, on policy grounds, a very broad claim hinders scientific and technological progress and that the lower court judgment should be reversed.
Solicitor General’s Amicus Brief for the U.S. GovernmentPDF (165 KB)
The Solicitor General with assistance from the PTO’s counsel has filed its brief that falls closely in line with its prior unsuccessful brief in opposition to the petition for certiorari.
In line with Petitioner, the Government agreed that the patent “appears to [impermissibly] claim all substantial practical applications of the natural relationship.” However, the Brief specifically states that this case should not be decided on an issue of whether a law of nature has been improperly claimed because the lower court record has not been developed on this issue. Directly addressing Petitioner’s part II, the Government argues that the specification does satisfy the requirements of 35 USC 112 “by describing, enabling, and claiming the method.”
Intellectual Property Owner’s Association (IPO) BriefPDF (97 KB)
IPO realized that the question presented for review in this case does not directly challenge the current standards for patentable subject matter. However, the Supreme Court has indicated an interest in considering whether the patent-in-suit claimed patentable subject matter.
IPO believes that the current standards for patentable subject matter, as set forth by the Court in
Diehr, correctly delineate between those innovations that should be eligible for patent protection and those that should not. Accordingly, IPO believes that this case should not serve as a vehicle for overturning or altering those standards. Rather, this case should reinforce the standards of Diehr and thus, support the expectation that innovations in yet unknown areas of technology will be eligible for patent protection.
Specifically, IPO argues that a broad scope of subject matter eligibility properly places research and development decision-making into the hands of individuals and private entities rather than in the judiciary. This “free market” approach “beset allocates research and development resources without judicial entanglement.” The requirements of novelty, nonobviousness, and description protect against over-reaching patents and warrant against further restricting patentability based on subject matter.
* NOTE: I was a coauthor of the IPO brief along with Paul Berghoff and Joshua Rich from MBHB as counsel for IPO. The IPO Board of Directors approved the Brief.
Affymetrix is a supplier of commercial DNA microarrays and “has an interest in ensuring that patents not issue on basic laws of nature so as to impede scientific progress in analyzing DNA and gene expression.” Affymetrix argues that the fact that “elevated levels of an amino acid in the blood correlated to a vitamin deficiency” is a natural phenomenon that leaves claim 13 unpatentable under current precedent.
Interestingly, Affymetrix argues that ambiguity of whether a claim impermissibly covers a natural phenomena should be resolved in favor of invalidity to avoid serious constitutional questions. (citing Feist).
PubPat argues that the CAFC has gone astray by over-reaching the permissible bounds of patentable subject matter. (Citing Alappat and State Street). Rather, PubPat would have the Court return directly to Flook.
Research-In-Motion v. NTP (Supreme Court). [Updated 12/19/05]
The BlackBerry patent battle continues. In a well written petition, RIM has requested that the Supreme Court hear its appeal from the Federal Circuit’s decision that that was decided in NTP’s favor in August, 2005.
The appeal involves the question of territoriality of the patent laws. Specifically, RIM poses the following question to the Court:
Under § 271(a) of the Patent Act, “use” infringement is expressly limited to use of a patented invention “within the United States.” The question presented is: Whether an Internet-based global telecommunications system, such as the BlackBerry wireless email system, is used “within the United States,” where components crucial to the system’s operation are located outside the United States.
RIM, a Canadian company, maintains its routers in Canada and has argued that because a portion of its allegedly infringing system was outside of the US that it could not infringe a US patent. NTP argued the other side — that the mere fact that some servers were located abroad (while many others were within the US) cannot let RIM escape judgment. For its part, the Court of Appeals for the Federal Circuit split-the-baby and differentiated between system claims and method claims.
For infringement of method claims, each and every step must be performed in the US.
For infringement of system claims, the US must be the place where control of the system is exercised adn beneficial use of the system obtained..
In the past two years, the Court has turned down at least two cases involving extraterritorial application of the patent laws.* Perhaps setting the stage for certiorari here. (odds are still low).
According to news reports, all five of NTP’s patents have received office action rejections at least once in the reexamination proceedings, and three of them have received two non-final rejections. [Link]
Molecular Diagnostics Lab v Hoffman La Roche (D.D.C. 2005)
By S. Richard Carden
MDL, a purchaser of Thermus aquaticus DNA polymerase or “Taq” (a component used in performing polymerase chain reaction), brought suit against Roche, Applera and others for violations of the Sherman Act, allegedly arising from Roche’s enforcement of U.S. Patent No. 4,889,818 (“the ‘818 patent”) knowing that it had been procured through inequitable conduct. The ‘818 patent claims a thermostable DNA polymerase isolated from the Thermus aquaticus bacteria. Defendants moved to dismiss the complaint on several bases including (1) lack of standing, (2) tolling of the statute of limitations, (3) failure to sufficiently allege a conspiracy, and (4) failure to comply with the pleading requirements of Rule 9. The D.C. District Court denied Defendants’ motion in its entirety, with a minor exception that precluded MDL from seeking damages for the period prior to the four year statute of limitations period prior to its filing of the suit.
eBay v. MercExchange (on petition for certiorari).
The Supreme Court has agreed to review the question of “when it is appropriate to grant an injunction against a patent infringer” and will question the century-old precedent of Continental Paper Bag (1908).
The issues before the Court include:
Whether the Federal Circuit erred in setting forth a general rule in patent cases that a district court must, absent exceptional circumstances, issue a permanent injunction after a finding of infringement. (Question proposed by eBay).
Whether this Court should reconsider its precedents, including Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405 (1908), on when it is appropriate to grant an injunction against a patent infringer. (Question proposed by Supreme Court).
In its petition for certiorari, eBay spells out the traditional four-factor test for injunctive relief and argues that the four-factor test should apply to patent cases rather than the de facto per se test applied by the CAFC. The four-factor test includes consideration of:
Irreparable harm from not issuing an injunction;
Whether an adequate remedy exists in law (damages);
Whether the injunction would be in the public interest; and
Whether a balance of hardships would tip in the plaintiff’s favor.
According to regarded patent law professor Joseph Miller, this certiorari decision is breathtaking. “If the Court writes narrowly, it will be the most important patent case since Chakrabarty or Diehr. If the Court writes broadly, it will be the most important patent case (perhaps even the most important patent or copyright case) in a century.”
An injunction in this case would not threaten eBay’s core business, but is directed to the “buy-it-now” feature of the online auctioneer.
AWH has petitioned the Supreme Court to take-up this landmark case with the broad question of whether patent claims should be reviewed de novo on appeal.
Question Presented: Whether the Federal Circuit is correct in holding that all aspects of a district court’s patent claim construction may be reviewed de novo on appeal.
This petition picks up where Judge Mayer and Newman’s dissent left off in the en banc Phillips decision. In their dissent, the judges focused their attention on the “futility [and] absurdity” of the de novo rule.
Now more than ever I am convinced of the futility, indeed the absurdity, of this court’s persistence in adhering to the falsehood that claim construction is a matter of law devoid of any factual component. Because any attempt to fashion a coherent standard under this regime is pointless, as illustrated by our many failed attempts to do so, I dissent.
Indeed, many believe that the high reversal rate of claim construction is primarily due to the de novo standard. To that effect, AWH’s petition does not mince words:
Left to its own devices, the Federal Circuit will continue to improperly devote the chief measure of its energy to rejudging the facts of patent claim constructions, rather than to fulfilling its purpose of bringing uniformity to patent law.
FTC v. Schering-Plough (on Petition for Certiorari).
Odds are good that the Supreme Court will hear this high profile case involving antitrust issues surrounding the settlement of generic-pioneer patent cases. On October 31, the Court asked the USDOJ to provide its stance on the case — a request that is often followed with a grant of certiorari.
It is a bit odd that the High Court asked for the Government’s amicus view on a case where the Government is a party. Although the FTC is not directly under the control of the Administration, this has the appearance of giving antitrust regulators two bites at the apple. On the other hand, this may expose an interesting split between the FTC and DOJ.
In its petition for certiorari, the FTC presents two questions to the Court:
1. Whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade.
2. Whether the court of appeals grossly misapplied the pertinent “substantial evidence” standard of review, by summarily rejecting the extensive factual findings of an expert federal agency regarding matters within its purview.
In its supporting brief, the FTC argues that agreements between competitors should not be per se lawful simply because they are within the “potential” reach of a patent claim.
Laboratory Corp. of America (LabCorp) v. Metabolite Laboratories (Supreme Court 2005).
The Supreme Court has announced that it will hear LabCorp’s appeal that will again question the scope of patentability in the U.S. Specifically, the High Court will review the question of whether a patent can claim rights to a basic scientific relationship used in medical treatment if the claim is limited to “correlating” test results.
The question on review is as follows:
Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to “correlat[e]” test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.
Patent in suit: This case revolves around claim 13 of Metabolite’s U.S. Patent No. 4,940,658
13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:
assaying a body fluid for an elevated level of total homocysteine; and
correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.
Thus, the method comprises two steps, (i) assaying a body fluid and (ii) correlating the measure with a mineral deficiency.
LabCorp’s argument: LabCorp argues that claim 13 is invalid for a number of reasons. Most pointedly, although the claim requires a step of “correlating,” there is no description of how the correlation would take place. According to the petitioner, “[s]uch a vague claim cannot be valid; for if it could be, parties could claim patent monopolies over basic scientific facts rather than any novel inventions.” In addition, the claim arguably fails the written description requirement because “the specification does not describe what a practitioner must do to perform the active ‘correlating’ step.”
Comment: The Supreme Court appears bent on making this case a question of subject matter patentability. If it takes that course, it will likely answer many of the questions left open by Lundgren and Fisher. Of course, as a general rule the decisions from the Court raise more questions than they answer.
After the CAFC denied RIM’s request to stay proceedings pending an appeal to the Supreme Court, RIM took its argument directly to new Chief Justice John Roberts — asking him to stay the issuance of an injunction pending the outcome of the Canadian company’s petition for writ of certiorari. Roberts denied that request without comment and trading of RIM’s stock was again halted.
As predicted by several Patently-O readers, the CAFC has denied RIM’s petition to stay the infringement suit brought by NTP while the case is appealed to the Supreme Court. Now, this case will continue on three parallel tracks: (i) district court adjudication in the wake of the August 2005 revised appellate opinion; (ii) Reexamination of NTP’s patents at the USPTO; and (iii) the petition for writ of certiorari at the Supreme Court.
eBay v. MercExchange (on petition for certiorari).
EBay’s petition for a writ of certiorari had gained further support from a group of patent law professors led by Mark Lemley of Stanford.
In eBay v. MercExchange, the Court of Appeals for the Federal Circuit held that, absent exceptional circumstances, a district court should issue a permanent injunction after finding that a patent is not invalid and infringement.
The amicus brief, signed on behalf of thirty-five of the top patent law professors in the country, argues that the injunction decisions should conform to the traditional principles of of equity and should be reasonable. These principles of equity are grounded in four equitable factors:
(i) whether the plaintiff would face irreparable injury if the injunction did not issue; (ii) whether the plaintiff has an adequate remedy at law; (iii) whether granting the injunction is in the public interest; and (iv) whether the balance of hardships tips in the plaintiff’s favor.
The professors readily admit that “injunctive relief is the appropriate remedy in ordinary patent cases.” However, they that the threat of injunctions without considering the equities may lead irreparable harm to the defendant
[A]n absolute entitlement to injunctive relief can and does permit unscrupulous patent owners to “hold up” defendants by threatening to enjoin products that are predominantly noninfringing and in which the defendant has already made significant irreversible investments. . . .
A microprocessor may include 5,000 different inventions, some made by the manufacturer and some licensed from outside.
If a microprocessor maker unknowingly infringes a patent on one of those inventions, the patent owner can threaten to stop the sale of the entire microprocessor until the defendant can retool its entire plant to avoid infringement. Small wonder, then, that patentees regularly settle with companies in the information technology industries for far more money than their inventions are actually worth.
Although not explicitly included in the brief, Professor Lichtman’s consideration of “Irreparable Benefits” might also be an important factor for consideration.
At trial, Eolas won a half-billion dollar judgment against Microsoft after the jury found that Microsoft’s Internet Explorer violated an Eolas patent. On appeal at the Federal Circuit, Microsoft won a new trial on several issues, but lost a major legal contention that allows Eolas to obtain extraterritorial damages under Section 271(f) of the Patent Act.
Now, Microsoft has asked the Supreme Court to determine whether the Federal Circuit erred in determining that software code can qualify as a “component” of a patented invention under 271(f).
Question Presented: Whether 35 U.S.C. 271(f) — which imposes infringement liability on one who “supplies” “components” of a patented invention from the United States for “combination” abroad — is satisfied if no physical parts are suppled from the U.S. and all that is supplied is software code that foreign computer manufacturers use to program computers that are made and sold outside the U.S.?
Microsoft’s brief in support of the petition outlines jumbled nature of CAFC precedent on this point — Specifically noting cases such as:
Deepsouth (“these acts of Congress do not, and were not intended to, operate beyond the limits of the United States”);
Pellegrini (shipment of design instructions do not qualify under 271(f));
Bayer v. Housey (271(g) limited “component” to physical products);
NTP v. RIM (“it is difficult to conceive of how one might supply or cause to be supplied all or a substantial portion of the steps of a patented method in the sense contemplated by the phrase ‘components of a patented invention’ in section 271(f)”).
Noted attorney and author Hal Wegner has released his first review of IP cases for the October 2005 term of the Supreme Court. Of the seven cases reviewed, two are awaiting oral argument (Unitherm and Illinois Tool); four are awaiting a certiorari decision (Schering-Plough, KSR, Lab. Corp. and eBay); and one is still before the CAFC (RIM v. NTP).
1) Unitherm v. Swift Eckrich: Appellate procedure question of when a court of appeals may overturn a civil jury verdict. Argument scheduled for November 2, 2005.
2) Illinois Tool Works v. Independent Ink:Question of whether a patent creates a rebuttable presumption of market power in a Sherman Act tying case. Argument scheduled for November 29, 2005.
3) FTC v. Schering-Plough: Whether pioneer-generic settlement duopoly settlement agreements are permissible when agreement falls within the scope of the patent. On petition for cert. Odds of being heard are good.
4) KSR v. Teleflex: Whether teaching-suggestion-motivation test for obviousness should be changed. On petition for cert. Odds of being heard are OK.
5) Lab. Corp. v. Metabolite: Whether a medical diagnosis method patent is invalid as non-patentable subject matter under Diamond v. Diehr, 450 U.S. 175, 185 (1981). On petition for cert. Odds of being heard are low.
6) eBay v. MercExchange: Whether the current de facto rule of an injunction always resulting from a finding of infringement and validity should be changed. On petition for cert. Odds of being heard are low — although this is a volatile issue.
7) NTP v. Research in Motion: Extraterritorial reach of U.S. patent law. Last fall, the court denied Pellegrini’s petition for certiorari in a somewhat similar case. These issues will be heard by the Court in some case within the next two years.
A new flurry of appeal briefs further complicates this closely watched case involving the fundamental question of how the U.S. patent laws can be asserted against foreign activities. Canada based Research-in-Motion (RIM) was at the losing-end of a 2003 patent infringement trial that resulted in a permanent injunction against its popular BlackBerry system. That judgment is stayed pending a series of appeals that have included two appellate court opinions. Now, RIM is asking the Court of Appeals for the Federal Circuit (CAFC) to hear the appeal as an en banc panel of all twelve judges.
Background
In August, 2005, the CAFC released a second appellate opinion in the case. The new opinion focused on the extent that a patent must be practiced within the U.S. to fall under the guise of § 271 of the Patent Act and specifically highlighted on the difference between system claims and method claims with relation to international activities. A system, the court held, is used “within the United States” so long as the United States “is the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained.”A method, however, is only used “within the United States” if “each of the steps is performed within this country.”
As such, RIM (RIMM) was able to avoid infringement of NTP’s method claims but not the system claims because “RIM’s customers located within the United States controlled the transmission of information and benefited from the resulting exchange of information.”
The court also opined on the inapplicability of other portions of 271 to method claims:
Sale: The CAFC found it unlikely that a method claim could infringe through the sale provision of 271(a).
Component: Distinguishing Eolas, the CAFC implied that a method claim would rarely if ever trigger 271(f).
Section 271(g): The import provision only applies to physical articles — and thus cannot be used to find infringement of a method for transmitting information (as claimed by NTP).
Rehearing en Banc
In the wake of the revised appellate opinion, RIM has renewed its request for an en banc rehearing – hoping that a full panel of appellate judges will eliminate the “control and beneficial use” standard for transnational infringement.NTP opposes the rehearing.
RIM’s Petition for Rehearing
In its brief, RIM questioned the panel decision that “use” of a “patented invention” occur can “within the United States” under 35 U.S.C. 271(a) even if significant components or acts specified by the claims are outside the United States. RIM further argued that the panel’s distinction between method and system claims was not given any justification and is “untenable.”
The Panel erred on multiple grounds. First, the Panel fails to follow the plain statutory language extraterritorially limiting § 271(a) liability to “uses . . . within the United States.” As a result, the Panel makes an unsupported distinction between method claims and system claims creating a generic rule for all system claims that fails to consider the nature of the actual patented invention. Second, the Panel ignores basic cannons of statutory construction that forbid extending the patent statute extraterritorially absent clear Congressional direction. Third, the Panel erroneously finds § 271(a) liability based on Decca, a case decided under 28 U.S.C. 1498, the statutory language and purpose of which are entirely different from § 271(a). Fourth, the Panel misapplied that analysis and decided fact issues that should be left for the jury.
NTP’s Opposition to the Rehearing
In its opposition brief, NTP continues its barrage on RIM for its “attempts to delay purely for delay purposes.”
The Panel properly focused on the only pertinent activities for the 271(a) question presented: the acts of millions of U.S.-located BlackBerry users that put into service their U.S.-located BlackBerry handhelds to send and receive wireless emails millions of times each day using U.S.-located transceivers and US.-located email systems equipped with thousands of U.S.-located email gateway redirectors sold by RIM. The only pertinent RIM activities are those establishing inducement and contributory liability – activities conceded by RIM on appeal. Other acts that RIM raises are irrelevant. Indeed, under RIM’S reasoning, use by BlackBerry customers in other countries negates the tort of infringement arising from use in the United States. Such analysis lacks any basis in law, precedent, or reason.
NTP argued that the longstanding principles of the Decca case clearly guide this case, and that “unless [the CAFC] sua sponte intends to overturn Decca and Decca II in a manner that the Supreme Court and Congress have refused, RIM presents no issue that warrants further review.”
Microsoft’s Amicus Brief in Support of the Petition
Microsoft took time to point-out the inconsistencies between the NTP decision and the handful of other recent cases involving extraterritorial application of U.S. patent laws, and the software giant asked the court to rehear this case in conjunction with its own pending AT&T v. Microsoft to ensure a “uniform and consistent body of case law concerning the territorial reach of 35 U.S.C. § 271.”
NTP v. Research in Motion, (271(f) “component” does not apply to method claims).
AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. Jul. 13,2005) (271(f) “component” applies to method claims and software being sold abroad);
Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. Mar. 2,2005) (271(f) “component” applies to method claims);
Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).
Regarding policy, Microsoft argued that limiting 271(a) U.S. patent law to not include any foreign actions, would create “an incentive for American companies to locate certain aspects of their systems outside the United States, primarily to avoid infringement liability. Such an outcome would likely result in loss of jobs, skilled workers, capital, and information technology, abroad.” On the other hand, Microsoft argued that allowing infringement for export of components under 271(f) creates “an incentive to move their research aid development abroad.”
Canadian Government’s Amicus Brief in Support of the Petition
In a rare move, the Government of Canada filed a brief supporting the petition for rehearing en banc. The brief notes that the panel opinion does not include any discussion of the principles of comity and international law that should be considered when determining the extent that U.S. laws should be interpreted to limit activities taken on foreign soil.
“The reissued panel opinion lacks any acknowledgment or discussion of the effect of, or the effect upon, long-established international understandings and agreements regarding national jurisdiction over intellectual property. Because the decision of the panel was neither explained nor justified in terms of contemporary, internationally-accepted principles of national jurisdiction, the opinion raises questions concerning fundamental principles upon which this international intellectual property system has harmoniously been based for well over a century.”
The brief recognized that the eventual conclusion may well be that patent laws should extend transnationally. However, the the thrust of this brief is that an expansion of extraterritorial application of the law should include a thorough analysis of the international implications.
Canadian Chamber of Commerce in Support of the Petition
The group of Canadian businesses argue that the standards created by the RIM opinion create confusion by the artificial distinction between system and process claims. Further, the group argue that the court should respect the rule of comity when construing a statute.
As the Supreme Court recently stated, courts “ordinarily construe[] ambiguous statutes to avoid unreasonable interference with the sovereign authority of other nations.” F. Hoffman-La Roche v. Empagran, 542 U.S. 155 (1994).
Seven Networks, Inc. Brief in Support of the Petition
Seven Networks argues simply that patents are “national in scope.” And, without congressional action, patents should remain national in scope.
On its face, 35 U.S.C. §271(a) is national in scope, and the statute has no extraterritorial reach. It applies to “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States”. When a statute is silent as to its extraterritorial application, the presumption is that the statute does not have extraterritorial effect.
With reference to “control and beneficial use” standard derived from Decca, Seven argued that Decca’s decision required ownership of the foreign-located system elements. Because RIM customers do not own the Routers located in Canada, they cannot be said to have control or be beneficially using that element.
Information Technology Association of Canada Brief in Support of the Petition
The ITAC brief takes the stance that method and system claims should be treated consistently. ITAC correctly points out that it is often quite easy to draft a “system” claim that contains the same limitations as a parallel “method” claim.
NTP’s Consolidated Response to the Amicus Briefs
No amici disputes the fact that one of the patents does not even give rise to the issue of territoriality (NTP wants to avoid this altogether and just get paid).
The Canadian Gov’t Brief confirms that U.S. patent laws apply when the RIM system is used Within the U.S.
Microsoft supports the decision finding infringement of the system claims.
The Canadian Chamber of Commerce seeks an improper advisory opinion (on product-by-process claims).
The ITAC brief, prepared by RIM’s patent firm (Kirkland & Ellis) merely rehashes RIM’s old arguments.
Seven Networks hopes to avoid infringement by placing its own routers abroad.
Intel’s Amicus Brief in Support of the Petition
In a brief supporting an en banc rehearing, Intel first noted that this issue is of great importance to today’s economy where many thousands of businesses operate multinationally. Like RIM, Intel could find no “principled or policy basis” for the outcome of a multinational infringement case to depend on the form of the preamble of the claim.
There is no reason to hold that practicing every step is essential to infringement of a claimed process, yet hold that use of every component is not essential to infringement of a claimed system.
Regarding 271(f), Intel discussed the fact that, although the four recent Federal Circuit cases discussing 271(f) purport to distinguish one another, “the ultimate holdings are difficult to square, and they lack a common analytical approach.”(See, Eolas, AT&T, Pellegrini, & NTP). “The Court has yet to take a consistent and holistic view of infringement liability in the transnational context.”
Finally, Intel asked the court to place the burden on patent drafters — arguing that it is possible to draft claims to virtually any invention that avoids the need to extend 271(a) to cover extraterritorial activities.
In a brief filed specifically in response to Intel’s brief, RIM argued (i) that it had been filed after the deadline and thus should be considered untimely; (ii) that Intel does have a financial interest in the case; and (iii) that Intel’s brief simply rehashes old arguments.
After losing at the 11th Circuit, the FTC has filed a petition for certiorari asking the Supreme Court to hear its appeal. In a March 2005 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers regarding the patented blood pressure drug K-Dur. The FTC had concluded that the settlement was an “unreasonable restraint of trade.” The 11th Circuit, however, disagreed, finding that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law. Accordingly, the court SET ASIDE the decision of the Federal Trade Commission and VACATED its cease and desist order.
In its petition for certiorari, the FTC presents two questions to the Court:
1. Whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade.
2. Whether the court of appeals grossly misapplied the pertinent “substantial evidence” standard of review, by summarily rejecting the extensive factual findings of an expert federal agency regarding matters within its purview.
In its supporting brief, the FTC argues that agreements between competitors should not be per se lawful simply because they are within the “potential” reach of a patent claim. The Public Patent Foundation (PubPat) supported the FTC at the Eleventh Circuit and will likely file an Amici Brief in support of the FTC’s petition.
After finding MercExchange’s patent infringed and not invalid, the district court declined to issue an injunction against eBay. In its decision, the district court found that MercExchange’s (i) willingness to license; (ii) failure to practice the patents itself; and (iii) comments to the media regarding its intent to enforce patent rights all weighed against any presumption that it would suffer irreparable harm without an injunction. 275 F.Supp. 2d 695 (E.D. Va. 2003).
On appeal, the Court of Appeals for the Federal Circuit reversed, finding that, absent exceptional circumstances, a district court should issue a permanent injunction after a finding of infringement.
Now, eBay has appealed to the Supreme Court by filing a petition for certiorari asking the court to hear its case. The petition briefly spells out the traditional four-factor injunctive relief test and argues that the four-factor test should apply to patent cases rather than the de facto per se test applied by the CAFC.
In the four-factor test, the court should consider (i) irreparable harm from not issuing an injunction; (ii) whether an adequate remedy exists in law (damages) (iii) whether the injunction would be in the public interest; and (iv) whether a balance of hardships would tip in the plaintiff’s favor.
eBay argues that the move away from injunction as a per se consequence of infringement does not raise the standard for obtaining injunctive relief — rather, it is a move back to the standard originally intended by Congress.
Interestingly, this question arises at the Supreme Court as a proposed statute that would modify the principles of patent injunctive relief is being considered in Congress.
The Supreme Court, in a unanimous decision, has rejected the 9th Circuit’s holding that secondary liability could not apply to a defendant who has no direct knowledge of, nor direct control over, acts of copyright infringement committed by users of the defendant’s file-sharing network. The 9th Circuit’s error, according to Justice Souter’s majority opinion, was that such a ruling overextended the protection offered by the “substantial non-infringing” test in Sony Corp v. Universal Studios. Instead, the Court found that a device’s capability for lawful use is irrelevant to secondary liability when evidence shows that a party has promoted the usefulness of a product they distribute as a means to commit infringement. To support this conclusion for secondary liability, the Court explicitly incorporated into copyright law the inducement theory of liability from patent law:
[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement of third parties.
In addition, the court addressed what evidence was sufficient to support intent toward inducement. First, it was compelling that both defendants had sought to satisfy a known source of demand for copyright infringement by pursuing former Napster users. Second, the Court focused on the defendants’ lack of attempts to discourage infringement by users of the file-sharing network. The Court though was careful to note in a footnote that such negative evidence alone is not sufficient, since that result would be contrary to Sony. Third, the Court held that the business models developed by the defendants lend support to a finding of intent, as their revenues were primarily dependent on the scale of infringement occurring on their networks.
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Finally, in separate concurrences with equal support Justices Breyer and Ginsburg decided to duke it out over what are “substantial non-infringing” uses under Sony. Ginsburg argued that the burden of proof in Sony requires a showing of “substantial or commercially significant” non-infringing uses. To her, potential capability or future possible prospects of substantial non-infringing uses are insufficient. In contrast, Breyer contended that Grokster met the Sony standard based on the evidence provided and its potential for future non-infringing uses. Breyer concludes with an extensive argument that the overall harm to technological developments would outweigh the benefits to copyright holders if the Court were to move to a heightened standard in Sony.
Note: Cory Hojka is a law clerk at McDonnell Boehnen Hulbert & Berghoff LLP and a law student at the University of Chicago Law School in Hyde Park.
The Supreme Court has decided today to hear Illinois Tool Works v. Independent Ink (04-1329).
In this case, the Court of Appeals for the Federal Circuit determined that a rebuttable presumption of market power sufficient to restrain trade under antitrust law arises from the patentee’s possession of a patent used in an explicit tying agreement.
The suit involves an ink jet device patented by Trident, a subsidiary of Illinois Tool Works. Independent Ink manufactures unpatented ink that is usable in Trident’s patented device. However, Trident’s license/purchase agreements require use of Trident’s ink under certain circumstances.
Independent Ink sued alleging an illegal tying arrangement in violation of Section 1 of the Sherman Act. The district court dismissed the claim on summary judgment, but the CAFC reversed — ordering the lower court to presume market power based on the patent tying agreement.
In its opinion, the CAFC admonished the district court for not following clearly established Supreme Court precedent and for dismissing the High Court’s holdings as “vintage.” The appellate panel noted that, although it may be time to abandon the doctrine, it is up to the Supreme Court or Congress to expressly overrule its own precedent — this prerogative does not lie with the district courts. The High Court is expected to hear the case next fall.
Amicus briefs in the petition were filed by the AIPLA, ABA, Pfizer, and the IPO.
In a unanimous decision, the Supreme Court has set aside the Federal Circuit’s holding that narrowly interpreted the statutory safe harbor of §271(e)(1). Writing for the Court, Justice Scalia found that:
“As an initial matter, we think it apparent from the statutory text that §271(e)(1)’s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA.” (emphasis in original).
This includes:
Clinical and Preclinical studies of patented compounds that are appropriate for submission to the FDA;
Studies intended to generate pharmacological, toxicological, pharmacokinetic, and biological qualities of the drug in animals;
Studies intended to generate information regarding a “risk-benefit assessment of the appropriateness of [a proposed clinical] trial.”; and
Safety related tests even if not compliant with FDA regulations.
The court recognized that “scientific testing is a process of trial and error.” As such, 271(e)(1) must also protect research for which an IND is not ultimately filed.
Congress did not limit §271(e)(1).s safe harbor to the development of information for inclusion in a submission to the FDA; nor did it create an exemption applicable only to the research relevant to filing an ANDA for approval of a generic drug. Rather, it exempted from infringement all uses of patented compounds reasonably related to the process of developing information for submission under any federal law regulating the manufacture, use, or distribution of drugs.
Patent Attorney Jason Rantanen points out that the court declined to address two big questions:
The common law experimental use exception and the effect of 271(e)(1) on “research tools.” The latter issue the Court explicitly declined to address, noting in a footnote that it was not expressing a view about whether 271(e)(1) exempts from infringement the use of “research tools” in the development of information for the regulatory process.
Of course, any future case involving research tools will cite Merck v. Integra as persuasive authority of the proposition that 271(e)(1) covers those as well. Rather than settling the law, the Court appears to have created an unfortunate uncertainty regarding the value of patents covering research tools.
Case vacated and remanded to determine whether Integra can prove its case under the Court’s new interpretation of the law.
The Supreme Court today refused to hear RIM’s BlackBerry appeal — another in a series of setbacks in RIM’s patent defense. The Court’s refusal to grant certiorari means that this case will quickly come to a head at the district court level. A hearing is now expected within the next few weeks to determine the scope of any eventual injunction that may be issued. 
Phillips v. AWH (on petition for certiorari)
LabCorp v. Metabolite (on writ of certiorari). 
Research-In-Motion v. NTP (Supreme Court). [Updated 12/19/05] 
Molecular Diagnostics Lab v Hoffman La Roche (D.D.C. 2005) 
eBay v. MercExchange (on petition for certiorari). 
NTP v. Research-in-Motion (en banc review). 
In its brief, RIM questioned the panel decision that 
“The reissued panel opinion lacks any acknowledgment or discussion of the effect of, or the effect upon, long-established international understandings and agreements regarding national jurisdiction over intellectual property. Because the decision of the panel was neither explained nor justified in terms of contemporary, internationally-accepted principles of national jurisdiction, the opinion raises questions concerning fundamental principles upon which this international intellectual property system has harmoniously been based for well over a century.”
FTC v. Schering-Plough (on Petition for Cert). 
eBay v. MercExchange (on petition for certiorari)
The Supreme Court has