Tag Archives: Trade Secrets

The following are a collection of posts on trade secrets. Trade secrets are essentially of two kinds. On the one hand, trade secrets may concern inventions or manufacturing processes that do not meet the patentability criteria and therefore can only be protected as trade secrets. This would be the case of customers lists or manufacturing processes that are not sufficiently inventive to be granted a patent (though they may qualify for protection as a utility model). On the other hand, trade secrets may concern inventions that would fulfill the patentability criteria and could therefore be protected by patents. In the latter case, the SME will face a choice: to patent the invention or to keep it as a trade secret.

Bits and Bytes No. 122: Nominees

Patent,

According to reports, David J. Kappos has now been confirmed by the US Senate as the Under Secretary of Commerce for Intellectual Property and Director of the US Patent and Trademark Office. Director Kappos was nominated in June and has received praise from many quarters because of his career-long experience in working with patents. Congratulations, now get to work!

It is likely in the first few weeks, DIrector Kappos will review the proposed rules being challenged in Tafas v. Dudas and somewhat alter the PTO’s course.

John Doll (Acting Director) and Peggy Focarino (Acting Commissioner of Patents) should both be commended for their proactive leadership over the past eight months during a difficult financial situation.

Statement of David J. Kappos, Nominee for Under Secretary of Commerce for Intellectual Property

Patent,

Statement of David J. Kappos
Nominee for Under Secretary of Commerce for Intellectual Property
and Director of the United States Patent and Trademark Office
Nomination Hearing before the Senate Judiciary Committee
July 29,2009

Chairman Leahy, Ranking Member Sessions and distinguished members of the Senate Judiciary Committee, thank you for the opportunity to appear before you today. I am grateful to President Obama and to Secretary Locke for the trust they have placed in me and to you for considering my nomination to serve as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

… It is exceptional and humbling under any circumstance to have the chance to serve one's country. But it is particularly so for me as the son and grandson of immigrants – my father came to this country from Greece and my mother's parents came to the US from Italy. So, the opportunity to be here today is particularly poignant for me, as it is for my family.

If recommended by this Committee and confirmed by the Senate, I look forward to joining Secretary Locke and his team at Commerce in their mission as stewards of American economic growth, job creation and innovation.

I have spent nearly my entire professional career in the field of intellectual property law, and indeed my entire career around technology and innovation. After receiving my education from the University of California system, first in electrical and computer engineering and subsequently in law, I went to work for IBM as an intellectual property law attorney.

During my career at IBM, I have held intellectual property law positions in nearly all of its business units. I have written and prosecuted patent applications in many technical areas and I have searched the prior art files of the USPTO alongside other patent professionals, including examiners themselves. I have handled many trademark matters in the US and globally. I managed IBM's IP law interests across the Asia-Pacific region, and lived in Japan during that period. Currently and for the past six years, I have served as Vice President and Assistant General Counsel for intellectual property law at IBM's corporate headquarters. In that role, I am responsible for the management of intellectual property interests – patents, trademarks, trade secrets and copyrights – on a worldwide basis. Additionally, I have served in leadership positions in the major professional associations that represent the intellectual property law community in this country and globally, including the Intellectual Property Owners Association and the American Intellectual Property Law Association.

I care passionately about this field and the role intellectual property plays in advancing American innovation. So, it is particularly exciting for me to be considered for the position of Director of the USPTO, an organization that traces its roots to the founding fathers and their understanding that promoting and rewarding innovation is critical to our country's success.

The PTO faces many challenges. Most immediate are those resulting from the current economic downturn, the need for a stable and sustainable funding model, the need to address pendency concerns while preserving and enhancing patent quality, and the imperative to attract and retain skilled personnel at a time of fiscal constraint. Secretary Locke has personally asked me to make it my number one priority to refashion the patent examination process to meet these challenges. In carrying forward this direction, I will focus substantial personal attention within the USPTO. Additional challenges flow from a rapidly globalizing trade environment , impacting trademark and patent interests, as well as respect for intellectual property and the consequences where IP is not respected.

Longer term, the USPTO must keep abreast of the astounding pace of technological change across a broad range of scientific disciplines. It needs to understand new modes of innovation and their effect on its mission. And it will need to constantly rethink how to maintain and enhance the constitutional imperative to promote innovation and scientific advancement for the public good – both in terms of the technology confronting the Office and in terms of leveraging and applying the law to that technology.

I welcome this challenge and pledge to you all of my energy, creativity and intellect should I be confirmed. As I consider this challenge, I am mindful of several things.

I am mindful that the USPTO serves the interests of ALL innovators in this country, small and large, corporate and independent, academic and applied, and – most importantly — the public interest. While I have spent my career to date at a large corporate enterprise, I am familiar with the concerns and issues of all USPTO constituents – including small and independent inventors, the venture and start-up community, public interest groups, the patent bar and many others – and will reach out to all of them.

I am mindful of the incredible dedication of the thousands of USPTO employees, and the essential role they play to the success of the US innovation system. I will work every day with the USPTO employees and the unions that represent them to establish strong, positive relationships grounded in professional treatment for these workers producing work product based on professional judgment.

I am acutely mindful that innovation today is global and that IP policy is of paramount importance, not only in our country, but also in the EU and Japan, in China, India, Brazil and many other developing countries. I will use my international experience and my understanding of global IP trends to help this Administration represent, advance, and protect the interests of American innovators in the global arena and to lead the world in developing strong, balanced, inclusive intellectual property systems that advance the well-being of all participants.

Finally, I am mindful that the office for which I am being considered, working as part of Secretary Locke's team and within the Administration's agenda, must be intensely focused on how to serve the American people at this time of economic uncertainty. I believe the USPTO can play a significant role in enhancing economic growth, creating jobs and advancing American innovation. I hope to play a part in this important mission.

Again, I am grateful for the opportunity to address you today. I am honored by the opportunity to serve and I look forward to joining this Administration and Secretary Locke's team should I be confirmed.

I am pleased to answer any questions.

David J. Kappos

Bits and Bytes No. 106: Patent Reform

Bits and Bytes, Patent, Patent Legislation, , , ,
  • [UPDATED] Hal Wegner Reports the Following:
    • Phil Kiko of Foley Public Affairs reports that Secretary of Commerce Gary Locke has announced that he has chosen the next Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office. The chosen candidate, who is being vetted, was not named.
  • Congress is Moving Forward with Patent Reform:
    • April 30, 2009 hearing of the House Judiciary Committee.
    • Here are some comments on the testimony:
      • Jack Lasersohn (venture capitalist): Venture capital requires strong and certain patents. The damage reforms create potential problems because sometimes a relatively minor product innovation will dramatically change the market position. “A new coating on a solar cell , that increases it’s conversion efficiency just a little bit, can dramatically shift the market for entire multi-billion dollar solar energy plants. A better drug on a drug eluting stent can shift the entire stent market. In either case, the question is ‘who is entitled to the profits arising from the use of the invention, the inventor or the infringer’?”
      • Dean Kamen (Inventor & Businessman): patents should be strong and policy should be directed to support small innovative organizations.
      • David Simon (Intel): patents are meant to allow manufacturing companies to fight each other – not for non-manufacturing inventors or their assigns to slow-down manufacturers. [This is a very rough paraphrase of Simon’s 13 page rant against non-practising entities.]
      • Philip Johnson (J&J) on behalf of the 21st Century Patent Reformers wants money for the PTO, international harmonization (first-to-file), expanded post-grant review (12–month window), no change to the current damages system, only a codification of Seagate, no changes to venue law.
      • Jay Thomas (Georgetown) argues that patent infringement damages are too unpredictable and that additional rules of evidence and practice can help solve the problem.
      • Mark Chandler (Cisco) supports the reforms to halt the problem of non-practising entities who demand licenses.
      • Bernard Cassidy (Tessera): Please do not change the patent law in ways that hurt small companies. The courts have already done enough through eBay, KSR, Medimmune, Microsoft v. AT&T, Seagate, Bilski, and TS Tech.
      • [WRITTEN TESTIMONY.zip (3794 KB)]
  • Absent from this testimony: Any representative from the Patent Office. At least three candidates are rumored to have been interviewed for the post of PTO Director – including former PTO Director Todd Dickinson and IP Hall of Fame member Mike Kirk. [See updated news above]

Best Practices for Trade Secret Protection

Articles and Publications, Patent, Trade Secret

I recently attended a conference of senior corporate patent counsel. Much of the discussion focused on cost savings in a tight economy. In patent prosecution, this process has been going on for years by limiting prosecution fees and filing abroad only on important cases. Part of the discussion focused on short-term mechanisms to push off cost – such as using provisional and timing PCT applications.

New Focus on Trade Secrets: One alternative suggested is increased reliance on trade secret. Trade secrets are relatively much cheaper than patents. Trade secret protection is automatic so long as sufficient steps are taken to keep the secret and the secret is economically valuable. Patent filings are dropping and many companies are taking a harder look at trade secret law as a mechanism to at least temporarily protect rights.

The public benefit of public disclosure is often touted when comparing patents with trade secrets. Patents require public disclosure with the aim of promoting the flow of ideas and information. Trade secret laws prohibit disclosure.

The private benefit of private disclosure: Anyone who has practiced trade secret law intuitively knows that patents naturally create additional information benefits that I call “private disclosure.” I note two of these benefits below: The benefit of defining rights

Value of Defining Rights: Despite serious problems with claim scope unpredictability, patents do a good job of explicitly stating the rights being claimed. Defined rights can be sold, traded, and accounted-for both externally and within the company. And, patent law facilitates a process for looking at by-product innovations to consider whether they should be pursued. These benefits flow from Coase’s work on property rights. Although trade secrets can also be well defined, trade secret law does not require explicit pre-identification nor does it provide such a mechanism. Rather, in most cases, a company’s knowledge about its own trade secret information is left nebulous and largely undefined.

Employee Relations: The patent system also creates a nice mechanism for managing employee relations. Inventors typically have a duty to assign all their work-related inventions to their employer. However, that duty is crystalized when the inventor files an oath and an assignment of rights. Often, the inventor gets a cash bonus at that point as well. Although the inventor already had a duty to assign, the actual assignment is important psychologically – to ensure that all the parties agree who owns what. Typical trade secret practice does not involve any explicit acknowledgment of the trade secret nature of particular innovations and information. Some companies attempt an end-of-employment statement that This is important because most trade-secret practice involves former employees using inside knowledge to benefit a competitor.

Best Practices for Trade Secret Law: Most companies have invention disclosure programs, but few of them link those disclosures to trade secret practice. Notably, when a company decides not to pursue patent protection, a process of assignment (and possible small bonus) should still be followed to ensure that the creator understands that the innovation belongs to the company and is not being given to the public. Likewise, companies may consider implementing broader innovation identification programs that encompass both patentable inventions and trade secret information.

Notes:

  • One query: In the US, trade secret law is state specific – although most jurisdictions follow the Uniform Trade Secret Act. Do any jurisdictions have a “working” requirement for trade secret? Take the situation where a company employee creates a new product, but the company decides not to pursue the product and it just sits in the file cabinet?
  • China: In the US, the commercialization of trade secrets will block the user from later obtaining a patent on the otherwise secret information. A Foley & Lardner report by Sharon Barner and Hal Wegner indicates that under Chinese law, there commercialized trade secrets may still be patented. Is this true in other FTF countries?

Judge Linn Calls for En Banc Restatement of the Law of Inequitable Conduct

En Banc, Inequitable Conduct, Patent, Patent Cases 2009, ,

Larson Mfg. Co. v. Aluminart Products Ltd. (Fed. Cir. 2008)

Larson's patent covers a specially designed outside. The appeal focuses on inequitable conduct and the Federal Circuit vacated a district court judgment that the asserted patent was unenforceable. I will return to the decision in a later post, but wanted to focus attention on the concurring opinion by Judge Linn and his call for an en banc review of inequitable conduct jurisprudence. Linn's concerns could be addressed by the Supreme Court in Aventis Pharma v. Amphastar Pharmaceuticals, which is pending certiorari.

I write separately … to express my view that this precedent has significantly diverged from the Supreme Court's treatment of inequitable conduct and perpetuates what was once referred to as a "plague" that our en banc court sought to cure in Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc). …

Symptoms of this plague are apparent from the facts of this case. The patent-in-suit has undergone examination twice in the PTO, and the patentee has been accused of inequitable conduct on each occasion for allegedly withholding material information. During original prosecution, the PTO considered 143 references, 135 of which the submitted two more IDSs in the reexamination, each within approximately one month of the application's Office Actions. The IDSs contained all references relied on in those rejections but did not include the Office Actions themselves. With full knowledge of the co-pending application, the PTO confirmed the patent, which survived reexamination without substantive change to the litigated claims. When the litigation resumed, the accused infringer again charged the patentee with inequitable conduct, this time based on conduct in the reexamination. This second inequitable conduct allegation was the sole issue at trial. Following remand today, the litigation will continue to focus on inequitable conduct, to the exclusion of the patentee's infringement contentions.

The ease with which inequitable conduct can be pled, but not dismissed, is a problem of our own making. The Supreme Court's three inequitable conduct cases involved overt fraud, not equivocal acts of omission. Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 809, 819 (1945) ("patent claims infected with fraud and perjury" where assignee knew that its employee "gave false dates as to the conception, disclosure, drawing, description and reduction to practice" during interference proceeding and then "secured the perjured . . . application and exacted promises from the other parties never to question the validity of any patent that might be issued on that application"); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 243 (1933) (false affidavits and deposition testimonies obtained "for valuable considerations" averring that the prior art use "was an abandoned experiment" and "to keep secret the details of the prior use"); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 240, 243 (1944) (false trade article procured from "an ostensibly disinterested expert" in exchange for $8,000 to gain patent issuance in spite of previously "insurmountable Patent Office opposition"), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976).

We clarified en banc that the "two elements, materiality and intent, must be proven by clear and convincing evidence," and that "'gross negligence' does not of itself justify an inference of intent to deceive." Kingsdown. But in seeming contradiction with Kingsdown, a standard even lower than "gross negligence" has propagated through our case law. This standard permits an inference of deceptive intent when "(1) highly material information is withheld; (2) 'the applicant knew of the information [and] . . . knew or should have known of the materiality of the information; and (3) the applicant has not provided a credible explanation for the withholding.'" Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1313-14 (Fed. Cir. 2008).

This test is problematic. First, the "high materiality" prong of the intent element simply repeats the materiality element. Conflating materiality and intent in this manner is inconsistent with the principle that "materiality does not presume intent, which is a separate and essential component of inequitable conduct." Manville Sales Corp. The second, "should have known" prong sets forth a simple negligence standard, lower even than the "gross negligence" standard that was expressly rejected in Kingsdown. I also question whether a fact-finder who has deemed information to be "highly material" would not also be compelled to conclude that a reasonable patentee "should have known of the materiality," at least when the patentee "knew of the information," as prong two requires. Third, the "credible explanation" prong effectively shifts the burden to the patentee to prove a negative: that it did not intend to deceive the PTO. But it is the "accused infringer"—not the patentee—who "must prove by clear and convincing evidence that the material information was withheld with the specific intent to deceive the PTO." Star Scientific, Inc. As to this third prong, we have also explained that "[t]he patentee need not offer any good faith explanation unless the accused infringer first carried his burden to prove a threshold level of intent to deceive by clear and convincing evidence." Id. As explained above, however, the first two prongs are not evidence of deceptive intent. The first is evidence of materiality; the second is evidence of negligence. These two prongs are therefore insufficient as a matter of law to establish a clear and convincing "threshold level" of deceptive intent before the third prong can ever properly come into play.

As it now stands, the test generally permits an inference of deceptive intent to be drawn whenever the three prongs are satisfied. This is in tension with the rule in Star Scientific that "the inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence." Id. It cannot be said that deceptive intent is the "single most reasonable inference" when all that prong two shows is that the patentee "should have known" that the information was material. An equally reasonable inference under this test is that the patentee incorrectly believed that the information was not material, or that the patentee was negligent, or even grossly negligent. None of these gives rise to deceptive intent under Kingsdown, nor is deceptive intent the "single most reasonable inference" under Star Scientific.

For the foregoing reasons, I respectfully submit that the test for inferring deceptive intent, as it currently exists, falls short of the standard "need[ed] to strictly enforce the burden of proof and elevated standard of proof in the inequitable conduct context." Star Scientific. The facts of this case suggest that the time has come for the court to review the issue en banc.

In re Nature’s Remedies: Foreign Regulatory Submission Invalidates Patent Under 102(b)

Anticipation, Patent, Patent Cases 2009, ,

In re Natures Remediesssp_temp_capture.jpg (Fed. Cir. 2009) (nonprecedential)

In October of 2005, a third party (Jemo-Pharm) submitted a request for ex parte re-examination of Natures Remedies patented claim covering an herbal composition of guarana, damiana, and yerbe-mate claimed to cause weight loss. More than one year before Remedies’ filing date, an anticipating composition had been submitted to a Danish regulatory organization as part of a request for approval for clinical testing. (The decision is unclear, but implies that the submission was done by Remedies).

A Danish official provided testimony that the submission was a public record and was open for inspection since its date of submission. Remedies’ expert, however, argued that a Danish trade-secrecy law would have prevented such inspection. The BPAI accepted the open-access line of argument and found the submission invalidating prior art under 35 USC 102(b). The patentee appealed – arguing that the official submission was not sufficiently publicly accessible to be considered 102(b) prior art.

On appeal, the Federal Circuit affirmed – finding that the regulatory submission was publicly available more than one year before Remedies filed its application. The court began by recognizing that the official’s testimony created a prima facie case that the submission was publicly accessible – shifting the burden to the patentee. Of course, BPAI factual findings such as this will be affirmed with a finding of “substantial evidence.”

Because [the Danish Official’s] declaration established a prima facie case of public availability, the onus was on Remedies to demonstrate that the [regulatory submission] was not accessible to interested members of the public. Remedies, however, failed to carry its burden.

Under the Danish trade-secrecy law, the regulatory submissions are kept secret when they are of “material importance” to a company’s “economy.” It appears that Remedies could have proven its case but failed to provide evidence to the Board.

Attorney argument, however, cannot take the place of record evidence. See In re Geisler, 116 F.3d 1465, 1470 (Fed. Cir. 1997); Johnston v. IVAC Corp., 885 F.2d 1574, 1581 (Fed. Cir. 1989). Here, the evidence of record does not establish that Remedies intended to keep the formulation of the Medi-Tab capsule confidential until after the study had been completed and a patent application had been filed.

Rejection affirmed

Notes:

  • 102(b) looks at prior art that was “described in a printed publication” more than one year prior to the date of application for the US patent. Implicit within ‘publication’ is a notion that the material is publicly accessible. Notably, however, there is generally no need to prove that the material was actually accessed. Thus, in this case, there is no discussion of whether the regulatory submission was ever seen by anyone.
  • Read the case
  • Reexam No. 90/007,785 (look it up in PAIR).
  • In some ways, this case is simply an extension of the Pivonka v. Axelrod case where the Federal Circuit held that the applicant has waived arguments by failing to present them at the Board of Patent Appeals.

Patently-O Bits and Bytes No. 95

Bits and Bytes, Injunctions, USPTO News,
  • Injunctive Relief: I re-read Michelle Lee’s (Google) statement about the need for patent reform. One issue that jumped-out this time: No mention of injunctions. Money is still at stake, but Google appears confident that it won’t face a shut-down even if it loses a patent case. In that sense, Google is lucky that it is being sued by non-practicing entities who as a de facto rule don’t get injunctive relief against infringers who have a major market share.
  • Benefit of Trade Secrets: Avoid Charges of Infringement. In some senses, google is very public. Yet, its actual operation is quite secretive. One benefit of that type of operation is that it helps avoid charges of patent infringement. If patentee’s can’t tell how you operate, it makes it much more difficult to assert charges of infringement.
  • Warranties and Copyright: My colleague Marc Roark has an interesting new paper: Limitation of Sales Warranties as an Alternative to Intellectual Property Rights: An Empirical Analysis of Iphone Warranties’ Deterrent Impact on Consumers.
  • The BPAI Watchdog: http://bpaiwatchdog.blogspot.com/. So far, Leigh Martinson is focusing on the BPAI’s application of Bilski.
  • European Bilski: The Enlarged Board of Appeal of the EPO is looking for third-party input on four issues:
    1. Is it only proper to exclude patents covering computer programs as such when explicitly claimed as a “computer program”?
    2. Does a claim avoid the computer program as such exclusion by mentioning a computer or data storage medium? (If not, what technical effect is needed?)
    3. Can a technical effect be non-physical? Is it sufficient if the physical entity is an unspecified computer?
    4. Does the activity of programming a computer necessarily involve technical considerations?
  • Input on the European questions are due by the end of April. http://www.epo.org/topics/news/2009/20090219.html.
  • Application for the job of PTO Director (by Prof Morris) http://www.stanford.edu/~rjmorris/pto.htm. I maintain that it is possible to find an excellent nominee who is not a patent attorney. However, any nominee who does not have extensive experience with the patent prosecution process will face an uphill credibility battle from day one.

Patently-O Bits and Bytes No. 90

Bits and Bytes, Patent, Patent Legislation,
  • Patent Reform I: In a recent article, DC insider Hal Wegner noted that there is “reason for optimism that patents will not be put on the back burner by the new President.” Wegner pointed to the President’s pro-reform start and to the President’s Technology Agendy that calls for: (1) ensuring that American IP is protected abroad and (2) reforming the patent and copyright systems “while ensuring that intellectual property owners are fairly treated.” The agenda speaks specifically to patent reform: “Reform the Patent System: Ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration. Give the Patent and Trademark Office (PTO) the resources to improve patent quality and open up the patent process to citizen review to help foster an environment that encourages innovation. Reduce uncertainty and wasteful litigation that is currently a significant drag on innovation.” [Read the Technology Agenda]
  • Patent Reform II: Although Wegner noted “optimism,” many patent industry insiders may be pessimistic that there is a high likelihood of patent reform. In particular, the technology agenda statements, coupled with Professors Sprigman and Rai as advisors, further coupled with the rumored appointment of John Thompson as Secretary of Commerce point toward legislative patent reforms being along the same lines as eBay (weakening injunctions), KSR (making it easier to find patents obvious); VW (weakening plaintiff’s choice of forum); Bilski (limiting patentable subject matter); and Seagate (limiting damage awards).
  • Patent Reform III: On the other hand, Professors Rai and Sunstein are both major administrative reformers. There is hope that their style of internal PTO reforms – made through rule changes and standard operating procedures – could dramatically change the PTO for the better.
  • Role of the Secretary of Commerce: 35 USC 1(a) establishes the Patent Office (PTO) within the Department of Commerce. However, the statute is clear that the PTO has some power independent of the larger department: “The [PTO] is established as an agency of the United States, within the Department of Commerce. In carrying out its functions, the [PTO] shall be subject to the policy direction of the Secretary of Commerce, but otherwise shall retain responsibility for decisions regarding the management and administration of its operations and shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions in accordance with this title and applicable provisions of law.”

Patently-O Bits and Bytes

Patent,
  • Model Jury Instructions: More on this in an upcoming post. At Judge Michel’s request an all star cast of patent law experts have hammered out a set of model jury instructions for patent infringement actions. [Link][Comments welcome to PatentJuryInstructions@gmail.com]
  • BPAI Appeal rules have been stayed – Most likely until after January 20.
  • Two keen jobs:
    • Fellow at Berkeley Law School (Sponsored by Microsoft). Apply by February 1, 2009 [Link]
    • Appellate Litigator for the USPTO Solicitor’s Office. Apply by January 9, 2009 [Link]
  • Does stare decisis apply to a previous court’s unappealed claim construction decision? See Shire v. Sandoz
  • Donoghue: “Breach of Patent Settlement Does Not Create Federal Jurisdiction” [Link]
  • Barkoff: “Federal Circuit Affirms $16.8 Million Award of Fees to Takeda in Pioglitazone Case” [Link]
  • In house counsel Brian Schar writes the American Intellectual Property Abstract (American IPA)
  • Mullin provides an update on the Troll Tracker defamation suit.
  • The Trading Secrets blog has some useful information on protecting rights via employee agreements. [Link]

Patently-O Bits and Bytes

Patent,
  • Model Jury Instructions: More on this in an upcoming post. At Judge Michel’s request an all star cast of patent law experts have hammered out a set of model jury instructions for patent infringement actions. [Link][Comments welcome to PatentJuryInstructions@gmail.com]
  • BPAI Appeal rules have been stayed – Most likely until after January 20.
  • Two keen jobs:
    • Fellow at Berkeley Law School (Sponsored by Microsoft). Apply by February 1, 2009 [Link]
    • Appellate Litigator for the USPTO Solicitor’s Office. Apply by January 9, 2009 [Link]
  • Does stare decisis apply to a previous court’s unappealed claim construction decision? See Shire v. Sandoz
  • Donoghue: “Breach of Patent Settlement Does Not Create Federal Jurisdiction” [Link]
  • Barkoff: “Federal Circuit Affirms $16.8 Million Award of Fees to Takeda in Pioglitazone Case” [Link]
  • In house counsel Brian Schar writes the American Intellectual Property Abstract (American IPA)
  • Mullin provides an update on the Troll Tracker defamation suit.
  • The Trading Secrets blog has some useful information on protecting rights via employee agreements. [Link]

BPAI: “Programmed Computer Method” Not Patentable Subject Matter

Patent

Ex parte Halligan (BPAI 2008)

Halligan’s patent application claims a “programmed computer method” that operates to identify trade secret information. (Claim 119). In essence, the computer program has the common law rules of trade secrets hardcoded, and those rules are applied to determine whether particular information is a “trade secret.” Applying the machine-or-transformation test of Bilski, the Board of Patent Appeals and Interferences (BPAI) rejected Halligan’s claims as lacking patentable subject matter under 35 USC § 101.

Under Bilski, “[a] claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” To avoid preemption the Federal Circuit emphasized that “the use of a specific machine or transformation of an article must impose meaningful limits on the claim’s scope to impart patent-eligibility;” that “the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity;” and that the transformation “must be central to the purpose of the claimed process.”

Transformation: As in Bilski, the transformation here involves legal rights and “does not represent physical and tangible objects.” Therefore, it fails the transformation prong of the test.

Machine: Claim 119’s only tie to a machine is the preamble statement that the method is a “programmed computer method.” The BPAI listed several reasons why that recitation is insufficient to satisfy the machine prong of Bilski:

“This recitation fails to impose any meaningful limits on the claim’s scope as it adds nothing more than a general purpose computer that has been programmed in an unspecified manner to implement the functional steps recited in the claims. Were the recitation of a “programmed computer” in combination with purely functional recitations of method steps, where the functions are implemented using an unspecified algorithm, sufficient to transform otherwise unpatentable method steps into a patent eligible process, this would exalt form over substance and would allow pre-emption of the fundamental principle present in the non-machine implemented method by the addition of the mere recitation of a “programmed computer.” Such a field-of-use limitation is insufficient to render an otherwise ineligible process claim patent eligible.”

Means-Plus-Function language: A second set of claims were directed to the “programmed computer.” Functional elements of the software were described as “means for ___.” The structure of a means plus function element is presumably particular enough to constitute a “particular machine.” However, the BPAI expressly did not reach that issue – rather, the Board rejected those claims under 35 USC § 112 as indefinite for lacking any description of particular structure in the specification. Following Aristocrat, the opinion noted that software-type means should include a disclosure of an algorithm. “The Appellant has failed to disclose any algorithm, and thus has failed to adequately describe sufficient structure, for performing the recited functions of claims 1 and 121 so as to render the claims definite.”

Notes:

   

Patently-O Bits and Bytes

Patent,
  • Poor Economic Forecast and Patent Prosecution:
    • Bad: Patent value is based on potential market for patented products when the market shrinks, so does the value of the patents;
    • Bad: Patent prosecution is generally a cash-heavy endeavor, and many firms are low on cash/credit;
    • Bad: The smaller market and lack of cash may also depress research & development expenditures – potentially leading to a time-lagged depression in patent applications.
    • Good: When times are tough, folks save their scraps. Patents are one way to do that;
    • Good: Patents are something that can be more easily sold or licensed (as compared with trade secrets, for instance). Companies looking for alternative cash streams; to sell-off portions of the corporation; or to retain some value in bankruptcy may look to patent protection.
  • I spent a summer at Heller Ehrman while in law school. The firm dissolved earlier this fall. Using Patent Buddy, I graphed the number of registered patent practitioners at Heller over the past several years. Their patent department shows problems stretching back to 2007.

  • Figure 2 below shows the same information for the law firm of Akin Gump. Patent Buddy’s data comes directly from the PTO’s enrollment database. That database is usually a bit outdated because many patent attorneys are slow to update their records.

   

  

Patently-O Bits and Bytes

Patent,
  • Poor Economic Forecast and Patent Prosecution:
    • Bad: Patent value is based on potential market for patented products when the market shrinks, so does the value of the patents;
    • Bad: Patent prosecution is generally a cash-heavy endeavor, and many firms are low on cash/credit;
    • Bad: The smaller market and lack of cash may also depress research & development expenditures – potentially leading to a time-lagged depression in patent applications.
    • Good: When times are tough, folks save their scraps. Patents are one way to do that;
    • Good: Patents are something that can be more easily sold or licensed (as compared with trade secrets, for instance). Companies looking for alternative cash streams; to sell-off portions of the corporation; or to retain some value in bankruptcy may look to patent protection.
  • I spent a summer at Heller Ehrman while in law school. The firm dissolved earlier this fall. Using Patent Buddy, I graphed the number of registered patent practitioners at Heller over the past several years. Their patent department shows problems stretching back to 2007.

  • Figure 2 below shows the same information for the law firm of Akin Gump. Patent Buddy’s data comes directly from the PTO’s enrollment database. That database is usually a bit outdated because many patent attorneys are slow to update their records.

 
 

  

Junk Patents

Patent

In 2007, Haliburton filed for patent protection – claiming a method of “patent acquisition and assertion by a (non-inventor) first party against a second party.” It looks like the company wants to be able to sue non-inventing entities who try to patent and assert technology against a company who has been using the technology as a trade secret. Bilski wipes cleanly out the claims – except for those claiming the step of “performing research using a computer.” The inventor Clive D. Menezes is a Halliburton patent attorney. The prosecuting attorney is Howard Speight.

The Trade Secret Value of Early Patent Filing

Academic Studies, Articles and Publications, Patent, Trade Secret, , , ,

Patent.Law168The patent laws promote an early filing doctrine.  Most directly, by filing patent application documents early, an applicant can avoid problems created by pre-filing disclosures that can negate patentability.[1]  Inter alia, early filing also provides a presumptive date of invention and reduction to practice that may have important evidentiary benefits for the applicant.[2]  Some doctrines push against early filing. Notably, earlier filed applications may be more likely to have inadequate disclosure.  A rushed disclosure could result in the patent application being rejected under the utility, written description, or enablement requirements of the Patent Act.[3] Alternatively, if the application is filed prior to gaining an understanding of the eventual market, an applicant may have insufficient disclosure to support the most valuable claims potential. 

Going unrecognized is another benefit of early filing – the ability to keep secret later developed innovations and parameters.  That secret information can then be protected and exploited as trade secret information.

At the time of filing, the applicant must provide a complete description including the best mode contemplated by the inventor. However, many if not most patent applications are filed well before the associated product or method is ready for public consumption – before the inventor knows the best commercially viable mode.  Post-application developments could take any number of forms, such as particularly operative formulations; ideal antibiotic manufacturing parameters; software code that implements a novel algorithm; a more durable circuit arrangement; etc. Commonly, these tweaks and advances may take the form of a specific species of a disclosed and claimed genus.  Of course, this later-stage developments could be incredibly important to anyone wanting to practice the invention or develop some follow-on technology.

Even though product development typically continues after the patent application is filed, the law allows the patent applicant to legitimately keep any later developed information as trade secret.  Patent applications are not allowed to add ‘new matter’ to a patent application during prosecution. Likewise, the applicant has no duty to otherwise inform the patent office or the public of ongoing development. Rather, the application is set at filing and ex post developments are generally irrelevant to patentability.[4]

In a later post, I’ll explore whether this potential overlap of patent and trade secret rights is good from a policy perspective.



[1] 35 U.S.C. §102(b).  This is especially critical if filing foreign applications.

[2] See, for example, 35 U.S.C. §102(g) and §102(a).

[3] See 35 U.S.C. §101 and §112¶1.

[4] There may be some exception here when arguing secondary factors of nonobviousness.

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Patently-O Bits and Bytes No. 55: IP Scholars Edition

Patent
  • A Debate on Patent Policy: Obama (representatives) vs. McCain (representatives). August 28 in Denver (on the last day of the Democratic convention). See Professors Sprigman and Rai defenda Obama against Reines and Gifford. [LINK]
  • Stanford’s IP Scholars Conference included lots of interesting academic works in progress. Here are a few examples [LINK].
    • Chiang (George Mason): Ex Post Claiming – “Patent law permits moving the fence to enclose the neighbors’ new house, and then evicting the neighbors for trespassing.” Chiang proposes a rule to eliminate any claim amendments made after a patent has issued (i.e., no continuation amendments). Pre-allowance amendments would be given the priority date of the amendment.
    • Chien (Santa Clara): The Cold War is not over. Discussing how the arms-race justification of filing patents is alive and well.
    • Cotropia (Richmond): Proposing a requirement that inventions be reduced to practice before patent filing.
    • Crouch (Missouri): Considering the justification of design patent protection as an alternative rule of evidence for protecting trade dress rights.
    • Greenbaum (Stanford): Explaining why University Tech Transfer offices should be abolished and university inventors should get to keep their rights.
    • Hemphill (Columbia): Empirical work on generic drug settlements in the shadow of Hatch-Waxman.
    • Kapczynski (Berkeley): India’s progress in implementing TRIPS obligations for pharmaceutical inventions.
    • Liivak (Cornell): Examining ways of modifying patent law to encourage competition without relying solely on granting anti-competitive rights.
    • Masur (UChicago): Discussing the positive value of costly patent prosecution. It serves as a screen to block many worthless patents.
    • Pulsinelli (Tennessee): Proposing that new matter restrictions be softened to allow the addition of best mode information. This is important for international applicants who do not face the best mode requirement in their home countries.
    • Sichelman (Berkeley): Proposing a new form of intellectual property based on commercialization of new technology.
    • Vermont (George Mason): Narrowing the doctrine of equivalents over time.
  • Non-patent, but really interesting:
    • Bartow (South Carolina): Counterfeits, Copying, Class, and Confusion.
    • Oliar and Sprigman (Virginia): IP norms in Stand-up Comedy.
    • Rowe (Florida): New Generation Employees and Trade Secrets

Patent Reform 2008: (fixing constitutional errors)

Patent,

PatentLawPic390The only patent reform bill to make it through both the House and Senate in 2008 may well be the “Duffy Provision.” In an article first published in Patently-O on July 23, 2007, Professor John Duffy of GWU Law School argued that current provisions for appointing members of the Board of Patent Appeals and Interferences are unconstitutional. According to Duffy’s article, the constitution requires that these inferior officers (BPAI judges) must be appointed by either the President of the US or a “Head of Department” such as the Secretary of Commerce. I conducted a study in June 2008 and found that 83% of recent BPAI decision panels included at least one panel member that had been illegally appointed under the Duffy construction. In my study, a significant number of panels (44%) included a majority of illegally appointed judges, and about half of the opinions were authored by illegally appointed judges. John Welch, an expert on the Trademark Trial & Appeal Board suggested that TTAB judges would fall in the same category. [LINK] 

The House and Senate have acted on the issue and have now sent a Bill to the President that would correct the appointment process for both the BPAI and the TTAB by placing the appointment duty in the hands of the Secretary of Commerce.

The Bill also includes a “defense to challenge appointment.”  In particular, the new statute would read that “It shall be a defense to a challenge to the appointment of an administrative patent judge on the basis of the judge’s having been originally appointed by the Director that the administrative patent judge so appointed was acting as a de facto officer.”

Notes:

  1. Library of Congress Information on the Bills;
  2. Duffy is also a member of the McCain Justice Advisory Committee.

PTO Press Release: Deputy Peterlin Leaving PTO

Patent,

Margaret Peterlin has announced that she will be leaving the PTO in August.  She has sparked resistance from the patent community ever since her appointment as deputy director of the USPTO in May 2007. She is considered an expert at legislative tactics at a time when the PTO was asking for legislation opposed by many patent practitioners.  In late 2007, a DC District dismissed a lawsuit against the USPTO requesting that Peterlin be removed from office. The complaint alleged that she lacked the intellectual property law experience required by statute for her position.  In many ways, the negative reaction to Peterlin was simply a reflection of frustrations felt by many patent practitioners.  In an internal message to PTO employees, Director Jon Dudas indicated that Peterlin is also expecting her first child later this year.  Congratulations and Good Luck!! (more…)

Outsourcing of Patent Preparation: PTO Says Beware

Patent, Patent Prosecution, Transnational, ,

In a recent notice, the PTO has indicated that it may be illegal to outsource invention information to a foreign county for the purposes preparing a US patent application.

  1. A foreign filing license from the USPTO does not authorize the exporting of subject matter abroad for the preparation of patent applications to be filed in the United States.
  2. Applicants who are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances.

(more…)

Patently-O Bits and Bytes No. 48

Bits and Bytes, Patent, ,
  • Judy Jarecki-Black from Merial Limited has been named the “Best Chief IP Counsel” by 2008″ by Global Counsel Awards 2008. Glacéau was awarded the “Best IP Counsel Team.” [LINK]
  • Eastern District of Texas Settlement: SAP agrees to pay $83 million to i2 Technologies. [LINK] In what appears to be primarily a trade secret case, Oracle is seeking $1 billion in damages from SAP. (Oracle’s no-patent strategy may prove successful).
  • Shen Wei v. Ansell Health Care (N.D. Ill 2008) (Claim Construction Issue Preclusion): The patentee lost a claim construction argument in earlier litigation against another party. In this case, Judge Guzman held that the patentee could not re-argue the construction based on collateral estoppels / issue preclusion. [LINK]
  • BPAI Constitutionality Problem: Representative Berman has introduced H.R. 6362 to fix the BPAI judge appointment problem by returning the duty of appointment to the “Secretary of Commerce, in consultation with the Director of the United States Patent and Trademark Office.”
  • No Double Secret Expedited Reexamination: In Reexamination No. 95/008,972 the PTO recently refused to give any preferential or speedy treatment of the reexamination despite pending litigation. [LINK]