In 2009 Cordis sued Abbot for infringing two of its drug-eluting stent patents. US Patent Nos 6,746,773 and 7,591,844. Abbott then petitioned the USPTO for inter partes reexamination of the two patents (pre AIA). As part of the reexamination both parties submitted expert affidavits. Then, in October 2011, Cordis petitioned the Virginia federal court – requesting two subpoenas duces tecum asking that court to compel discovery to further the reexamination process. The district court refused and, using one of my favorite words, quashed the subpoena. The Federal Circuit has now affirmed.
35 U.S.C.§ 24 requires federal courts to support the discovery process for "any contested case in the Patent and Trademark Office." Under the statute:
The clerk of any United States court for the district wherein testimony is to be taken for use in any contested case in the Patent and Trademark Office, shall, upon the application of any party thereto, issue a subpoena for any witness residing or being within such district, commanding him to appear and testify before an officer in such district authorized to take depositions and affidavits, at the time and place stated in the subpoena. The provisions of the Federal Rules of Civil Procedure relating to the attendance of witnesses and to the production of documents and things shall apply to contested cases in the Patent and Trademark Office.
Every witness subpoenaed and in attendance shall be allowed the fees and traveling expenses allowed to witnesses attending the United States district courts.
The issue on appeal is whether an inter partes reexamination counts as a "contested case." In any ordinary sense of the phrase, the inter partes reexamination is contested. However, both the district court and the Federal Circuit hold that the statutory meaning of the phrase does not include these reexaminations. The court writes that a "contested case" under the statute only includes those cases "in which the PTO has provided for the taking of depositions for use in that proceeding." With a substantial dose of circular reasoning, court deduces the following: (1) since the PTO has not provided for depositions in inter partes reexaminations; it follows that (2) inter partes reexaminations cannot be "contested cases"; and thus (3) no depositions can be taken in an inter partes reexamination.
The proper interpretation of section 24 is a question of first impression in this court. We construe the term "contested case," as used in section 24, as referring to a proceeding in which the PTO has provided for the taking of depositions for use in that proceeding.
The court's basic logic is that 35 U.S.C. §23 gives the PTO power to decide when discovery should be allowed and that the congressional deference should carry-over into Section 24. The USPTO argued that reexamination is "examinational" as evidenced by legislative history associated with the AIA. Of course, that retrospective consideration should does not supplant the actual meaning of a statute.
Looking Forward for Inter Partes Review and Post Grant Review: Of course, inter partes reexaminations are a thing-of-the-past and have been replaced with inter partes reviews and post grant reviews. Because the new statute does provide for discovery and testimony in these review proceedings then they should be treated as contested cases. The new rules for these procedures provide avenues for discovery from the parties. Section 24 could be invoked to pursue discovery of a non-party. However, the PTO has instituted regulations that would bar the filing of a subpoena with a federal court without authorization of the PTAB. 37 C.F.R. § 42.52.
The statute generally states that additional discovery should be allowed when "otherwise necessary in the interest of justice." In a recent decision, the PTAB outlined a five factor analysis that it will use to determine whether to allow additional discovery. Garman v. Cuozzo, IPR2012-00001 (26) (PTAB 2013).
More Than A Possibility And Mere Allegation — The mere possibility of finding something useful, and mere allegation that something useful will be found, are insufficient to demonstrate that the requested discovery is necessary in the interest of justice. The party requesting discovery should already be in possession of evidence tending to show beyond speculation that in fact something useful will be uncovered.
Litigation Positions And Underlying Basis — Asking for the other party's litigation positions and the underlying basis for those positions is not necessary in the interest of justice. The Board has established rules for the presentation of arguments and evidence. There is a proper time and place for each party to make its presentation. A party may not attempt to alter the Board's trial procedures under the pretext of discovery.
Ability To Generate Equivalent Information By Other Means – Information a party can reasonably figure out or assemble without a discovery request would not be in the interest of justice to have produced by the other party. In that connection, the Board would want to know the ability of the requesting party to generate the requested information without need of discovery.
Easily Understandable Instructions — The questions should be easily understandable. For example, ten pages of complex instructions for answering questions is prima facie unclear. Such instructions are counter-productive and tend to undermine the responder's ability to answer efficiently, accurately, and confidently.
Requests Not Overly Burdensome To Answer — The requests must not be overly burdensome to answer, given the expedited nature of Inter Partes Review. The burden includes financial burden, burden on human resources, and burden on meeting the time schedule of Inter Partes Review. Requests should be sensible and responsibly tailored according to a genuine need.
Jurisiction of the Court of Appeals: This is another case where the Federal Circuit has refused to consider its appellate jurisdiction in the wake of Gunn v. Minton other than writing that "[w]e have jurisdiction under 28 U.S.C. § 1295(a)(1)." However, the appeal here is a discovery dispute pending before the Virginia district court and, although it involves interpretation of the patent statute, the appellate court's jurisdiction is not entirely clear.
Intellectual Ventures has received billions of dollars in investment & revenue for its patent licensing program. Almost surprisingly, the company has rarely resorted to litigation in order to enforce its rights. Rather, it seems that most would-be defendants are willing to buy a license before litigation. However, Symantec won't roll over.
Intellectual Ventures I v. Symantec (D.Del. 2013)
In a new lawsuit, Intellectual Ventures (IV) has sued Symantec for infringing three separate patents: U.S. Patent Nos. 5,537,533; 6,598,131; and 6,732,359. In an ongoing lawsuit, IV is also alleging that Symantec infringes its U.S. Patent Nos. 5,987,610; 6,073,142; 6,460,050; and 7,506,155. IV is a master at bundling patents together to cover a particular market area. Here, I looked up the ownership history of all the patents being asserted and they turn out to be a diverse group:
The '533 patent was originally assigned to the Portland-based company MiraLink. When that company went through bankruptcy (restructuring), a shell company known as "So. Pak Pte., LLC" purchased the patent and later transferred it to Intellectual Ventures. I presume that So.Pak was an intellectual ventures shell company.
The '131 patent was originally owned by the now-defunct Ondotek company. When that company closed, intellectual ventures purchased the patent through a shell company known as Oxtapro Tre ME, LLC.
The '359 patent was originally owned by BellSouth who then sold its rights to Dono Tech Services that appears to also be an ongoing intellectual ventures shell company.
The '610 patent was originally owned by Ameritech who then transferred its interests to the University of Texas who then spun-out the IP enforcer "Verve LLC" who then transferred rights to AUCTNYC8 and then to IV. My suspicion is that IV controlled the game by the time that AUCTNYC8 purchased the rights.
The '142 patent was originally owned by the Park City Group who sold the patent to sold the patent rights to the shell company known as Pait Capital Facility who then transferred rights to IV.
The '050 patent was invented by two guys running their own company who then sold their rights to intellectual ventures.
The '155 patent was originally owned by InfoBahn before being transferred to GateKeeper then GK Webb Services and finally to Intellectual Ventures.
One thing that is unclear at this point is the extent that the original sellers retain back-end compensation rights associated with these patents.
In a recent article [2], Matt Rappaport argues for the need for greater transparency in the "marketplace" for transactions involving patents. Rappaport points out several inefficiencies that may result from a lack of transparency regarding the holdings of an entity that is seeking to license one or more of its patents. These inefficiencies result from a potential licensee being unable to readily obtain information regarding the complete holdings of the licensor, and the resultant uncertainty that may introduce regarding relevant prior art, other assets of interest, preferred negotiating tactics, etc. In general, the author thinks that the lack of transparency that results from the use of "shell" companies or other methods of disguising the actual owner of an asset create difficulties for the negotiation process, cause a failure to provide "notice" of the real party in interest (which may impact negotiations and legal options, as well as prevent knowledge of the true holdings of an entity), and subjects potential licensees to a situation in which they are at a disadvantage before even beginning a licensing discussion. There has been an increasing amount of discussion and proposed actions related to making information available regarding the entire patent holdings of patent buying entities when they seek to license portions of their patent portfolios [3].
Although some may argue that a "level playing field" (or at least a more level one) is not necessarily required for every transaction and is not something that a party is entitled to in a marketplace, this article will discuss some of the reasons why it may be beneficial to introduce a more level playing field into the market for patents. Because of the strong public policies that underlie the creation and administration of the patent system, there is a related public interest in how that system is operated. As a result, this public interest may be sufficient to justify introducing a greater degree of transparency into the "market" for patents. This greater degree of transparency may be achieved via judicial decisions, but may be more effectively introduced through enforcement of competition related laws or even new regulations (in order to produce a desired degree of uniformity in how any new requirements are implemented).
Why Increased Oversight or Regulation May Be Justified
While some may argue that patent aggregators, non-practicing entities (NPEs), or patent assertion entities (PAEs) (collectively, "patent buying entities") represent a business model that is counter-productive to the goals of the patent system or to notions of fairness, such comments seem more of a visceral response or value judgment, rather than a conclusion supported by facts. Instead of arguing about whether such entities should exist, it may be more productive to address the possible consequences of their operational methods when they purchase patents or patent applications. Specifically, how a lack of transparency in their operations can create distortions in the efficient operation of a "market" for patent rights. Even if it is uncertain whether such entities are operating in a manner that is supportive of the goals of the patent system, there appear to be strong reasons for advocating greater transparency in their operation, as this would be expected to establish a more efficient and trustworthy "market" for patents. An additional benefit is that this will also enable a more accurate determination of whether the existence and operation of these entities support, inhibit, or are effectively neutral with respect to achieving the goals of the patent system.
There are strong public policies behind the creation and operation of the patent system and as a result, both the Federal government and the public have an inherent interest in that system. This clear from the concern for providing protection for inventions that is expressed in the U.S. Constitution [4] and the Federal statutes based on that expression [5]. The Federal government has an interest in seeing that the patent system operates in a way that enables the system to achieve its stated purpose(s), while observing its obligations to the public. The public has a similar interest in seeing that the patent system fulfills its stated purpose(s), since the system is operated by the Federal government as a service for the public.
Because of the strong public interest in the operation of the patent system and its impact on the public, I believe that the exchange of patent rights should not be exposed to the benefits and disadvantages of the free market system without a careful consideration of whether additional controls should be applied to ensure that the market operates efficiently and fairly for the participants, while supporting (or at least not harming) the interests of the public [6].
That a "market" is being developed for patents and the rights that they enable the owner to exercise is shown by the development of patent trading systems, the holding of patent auctions, and the general increase in attention paid to the value of patents as business assets [7]. However, the asset being traded in such a market is of a different nature than most assets. Patents represent a conscious decision by the Federal government to encourage certain types of behavior by members of the public by creating a new type of property. As a result, patents themselves and the operation of the system that grants them are invested with a stronger government and public interest than is the transfer of most other types of property. This suggests that justification exists for a greater degree of scrutiny into whether the operation of entities that engage in the buying, selling, and licensing of patents do so in a way that supports (or at least does not frustrate) achieving the goals of the patent system.
Should the Patent "Market" Be Considered Part of the Patent System?
A threshold issue is whether a marketplace for the transfer of patent assets should be considered as part of the overall patent system, or instead whether it should be considered a part of the free market system (and as such, evaluated independently of its impact on the patent system). The existence of patent aggregators, NPEs, and PAEs would be expected to have at least some impact on the innovation process; such entities provide an additional exit strategy to enable inventors and companies to recoup some portion of their investment in generating the assets. In addition, the ability to sell a patent may enable an inventor to continue working on other projects, which may lead to more innovation. In general, having a marketplace in which patents may be sold is a positive development, as it may prevent a waste of assets, which is typically a desirable outcome. Therefore, it would seem that having this exit strategy would provide an incentive for at least some additional risk taking and investment in innovation.
At the least, it seems disingenuous to say that the existence of such patent buying entities has no impact on the innovation process or other aspects of the patent system. Given that there is at least a possible impact, I believe that there is justification for considering the still-developing market for patent assets as part of an overall patent system that is intended to fulfill specific goals. And, if the existence of that market is part of a system that is supposed to create an incentive for innovation, then it stands to reason that a properly functioning market is desirable in order to ensure a proper level of incentives and to most efficiently produce the desired benefits of those incentives.
Assuming that there is some impact on the patent system and its operation that can be traced to the operations of patent buying entities, what (if anything) should be done about it? Given the possible inefficiencies or distortions in the operation of a market for patents (and the overall patent system) that can result from a lack of transparency, one could simply accept this as a by-product of exposing patent rights to the operation of a free market system. However, because patents are a property right created by the Federal government for a specific purpose, it may be preferable to recognize a strong enough public interest in the operation of the market for patent rights to justify considering additional controls that would increase the transparency in transactions that occur within that market. This approach seems desirable for at least two reasons: (1) until we can be more certain that such patent buying entities are not having an undesirable impact on the patent system, it is more likely to be in the public interest to err on the side of requiring increased transparency rather than accepting decreased transparency; and (2) since the overall patent system is one designed around establishing and fostering incentives to innovate, it is expected that greater transparency would be more conducive to achieving the proper incentives than would less transparency. If controls that functioned to increase transparency were to be adopted, then such controls would assist in ensuring that the proper incentive structure was in place for an efficiently operating market, and one which presumably would operate more effectively in achieving the goals of the patent system.
Arguments for Increased Buy-Side Transparency
As noted, the article referred to in the Introduction discusses some of the problems caused by a lack of transparency in the patent licensing operations conducted by patent aggregators, NPEs, and PAEs. However, there is another aspect of the use of shell companies and other factors that reduce transparency that may impact the proper operation of a marketplace for patent assets. This is the impact such a practice has on the buying side operations of these entities; specifically, how a lack of transparency may distort the operation of a market for patents, including by preventing a more accurate valuation of patents. The lack of an accurate valuation (or at least the existence of obstacles to a more accurate valuation) does not serve the interests of those selling patents or those to whom they have a fiduciary obligation (such as venture capital investors or stockholders in a company that is selling some of its patent assets).
For example, by using shell companies and preventing disclosure of the ultimate purchaser (and in some cases the beneficiaries of a purchase) of a patent portfolio, a patent buying entity is allowed to distort the market for the value of the rights they are negotiating to purchase. This is because an inventor or other potential seller of a patent portfolio has a reduced amount of information about who wants to buy their patents and what previously existing agreements are in place between the buyer and other parties. For example, such agreements might result in the buyer granting a license to a party that might have paid much more for the patents if the seller had negotiated with them directly.
In the case of the seller being an operating company, such agreements may cause the undesired result of granting a license to a competitor with whom the company would have rather negotiated in an effort to obtain an agreement of greater value to the company (such as a joint development agreement, co-marketing agreement, more desirable distribution terms, a patent cross-license, etc.). The use of a shell company and the failure to disclose existing agreements that may impact the licensing of a purchased patent portfolio may therefore place the seller at a severe disadvantage during negotiations. In addition, due to the lack of transparency, a seller is unable to evaluate how their patents fit into the overall holdings of the prospective buyer. This is likely to further impact the seller's appreciation of the potential value of their own patents to the buyer. Investors in a selling company may not recapture the full value of a patent that resulted from a company's investment in research and development (R&D) if the market value for a patent is distorted. Thus, it is in the interests of the investors of the selling company to have increased transparency since it impacts the valuation of the company and may impact how investors view the decisions made by the executives of the company.
The seller's lack of knowledge regarding the actual buyer and any possible beneficiaries of the sale of their patents prevents them from determining the true demand for their asset, and hence its actual value in the marketplace. As is the case with a lack of transparency in other markets, this distorts the valuation of the assets being exchanged and introduces inefficiencies into the operation of a market for such assets. However, in contrast with transactions involving other goods, the lack of transparency may also introduce a need for greater oversight in order to protect the public interest and prevent unfair and/or anti-competitive business practices that act to prevent (or at least lessen) the ability to achieve the goals of the patent system.
Increased oversight may be provided by one or more suitable mechanisms. These include interpreting unfair competition laws to require disclosure of the actual purchaser and any expected beneficiaries of the purchase of a patent portfolio, or by the establishment of new requirements on the transfer of patents as part of the Federal laws that establish and regulate the operation of the patent system. Judicial action may also have a role, such as where a Court decides that proper valuation of a patent cannot be determined without knowledge concerning the actual purchaser and its holdings, or that the validity of a patent that is being asserted cannot be determined without knowing the full holdings of the party asserting the patent.
Other Operational Aspects That May Be of Concern
The previous discussion has focused on the impact of the lack of transparency arising from using shell companies to obscure the actual buyer of a patent and/or beneficiaries of a purchase on the seller of a patent. In addition, there may be other aspects of patent buying entities that should be considered in order to determine if the operations of such entities are supportive of the goals of the patent system.
Consider the situation where a patent buying entity has investors. If the entity is publicly traded, then disclosure obligations will presumably act to make sellers (i.e., inventors or corporations that employs inventors) aware of at least some of the implications of selling their patents to the entity. However, if the entity is private, many of these obligations do not apply and information regarding operational methods may not be available. In such a case, if a patent buying entity has investors, it may be useful to know if those investors have input into what portfolios are being bought. This is because such inputs or direction may act to further reduce efficient operation of the market by hiding the interest of those investors in a particular portfolio. This affects valuation because it prevents a seller from knowing which parties may be most interested in their patents, and hence the potential demand for the assets. It therefore may enable the investors to acquire patents or licenses at less than the true market value of such assets.
Perhaps, more importantly, it may also raise antitrust or unfair competition concerns because the lack of transparency can permit investors to hide behind the buying entity while having their risk exposure to the patent assets reduced. This may reduce competition by (1) permitting investors to cooperate in efforts to reduce their risk by purchasing certain patents at below market value, and (2) providing the investors with a mechanism for asserting the purchased patents against competitors of the investors. Further, if the investment opportunity in the patent buying entity is not open to all, then those excluded may be at a competitive disadvantage relative to those that are able to invest and exercise some direction over how the patents are asserted. Another benefit to investors in a patent buying entity is that they do not have to make the R&D investment that would typically be required in order to obtain the purchased patents.
Note that even if any direction or guidance exerted by investors is indirect or informal, it may still amount to a business practice which is unfair or which alters the competitive environment. This is because the patent buying entity would be expected to act in the interests of its investors with regards to which patents to purchase and against which targets to assert those patents. Thus, the type and degree of direction exerted by investors (in a formal or in an informal sense) with regards to the purchase and assertion of patents is an aspect of the operation of patent buying entities that may need to be considered.
Regardless of the outcome, it seems appropriate to consider whether the operational behaviors of patent aggregators, NPEs, and PAEs are supportive of (or at least devoid of any negative impact on) achieving the intended goals of the patent system. This would help to ensure that the goals that were intended to be accomplished by the grant of an important Federal right are not being harmed by exposing patents to the operation of the free market system. It is likely that patent aggregators, NPEs, and PAEs are themselves not the problem, but only that certain aspects of their operations need to be modified.
The "Bottom Line"
Because the Federal government created the rights at issue and intended for them to be used for a specific purpose, it may be necessary to introduce additional controls into the operation of the developing market for patent rights. If the actions of, or the methods of operating a business that are practiced by, patent aggregators, NPEs, and PAEs are counter-productive to (or even simply unsupportive of) the goals of the patent system, then additional controls may be justified in order to restore the market for patent assets to a more desirable form. If such controls are to be adopted, their form is uncertain but presumably would include fuller disclosure of the entities that would benefit from a purchase of a patent portfolio, such as the actual buying entity and any other parties that would be expected to benefit by having a license to the purchased assets. The controls may also require disclosure of the investors in a patent buying entity and the ways (if any) in which the investors may impact the acquisition or assertion of patents.
While other markets may accept a similar lack of transparency (and the resulting inequities) as part of the free market process, such an approach may be inappropriate where patents are concerned. At the least, it seems desirable to determine if the lack of transparency being practiced by certain patent buying entities is having an undesired impact on the operation of the patent system.
[1] Alan D. Minsk is a Patent Attorney and former in-house Counsel for Unwired Planet and Intellectual Ventures. His practice focuses on counseling clients with regard to intellectual property issues that arise during the course of their business operations. He has extensive experience as a patent strategist, concentrating on the development and strategic management of patent portfolios, and has represented clients ranging from start-ups to publicly traded companies. Alan received his J.D. from Harvard Law School (1991), and received a Masters degree in Physics and a Bachelors degree in Astronomy from the University of California, Berkeley. The views, statements, and opinions expressed in this article are solely those of the author, and in no way represent or should be associated with those of the author's current employer or of a previous employer.
[3] See "Roundtable on Proposed Requirements for Recordation of Real-Party-in-Interest Information,"http://www.uspto.gov/ip/officechiefecon/roundtable_01-11-2013.jsp.
[4] Congress shall have power . . . To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. U.S. Constit., Art. I, Sec. 8.
[5] The Patent Act, 35 U.S.C.
[6] Note that examples exist of the introduction of federal oversight to establish greater transparency and a more level playing field in other areas, such as the trading of stocks, in order to provide for a more efficient and trustworthy market. With regards to stock transactions, the transparency, disclosure, and insider trading regulations all act to protect the interests of one party (i.e., the public) in a situation in which an imbalance of information exists.
[7] Patents represent more than a collateral output of the product development cycle. Because of the many possible value propositions for a patent, a properly constructed patent portfolio can effectively protect a company's assets and in some cases may be used to reduce operating costs or generate revenue. This perspective on patents as a business asset is discussed in my articles entitled, "Old Model: Patents Protect Products. New Model: Patents Themselves Are Products," Forbes magazine's CIO Central (June 1, 2012), and "Protect Your Company — And Increase its Value with a Strategic Patent Portfolio," Seattle Business magazine (October 2012).
Guest post by James Bessen, Boston University School of Law and Berkman Center for Internet and Society, Harvard, and Michael J. Meurer, Boston University School of Law
As Congress considers the SHIELD Act, it is helpful to review some of the empirical evidence on the economics Patent Assertion Entities (PAEs). Following up on Colleen Chien’s recent post (Patent Trolls by the Numbers), this post looks briefly at data on the 10 publicly listed firms that were predominantly in the patent assertion business during the period from 2005 to 2010 (Acacia, Asure, Interdigital, Mosaid, Network-1, OPTi, Rambus, Tessera, Virnetx, and Wi-Lan). These companies accounted for about one sixth of all PAE lawsuits filed during this period. Although these companies might not represent the entire universe of PAEs, the greater amount of available financial information helps paint a rich picture of their business. We explored three questions:
1. How much licensing revenue do PAEs get per company sued?
We matched these patent trolls to the lawsuits filed listed in Patent Freedom’s database of patent trolls (see our paper The Private and Social Costs of Patent Trolls for details on this database and the matching). During the period from 2005 through 2010, licensing revenues totaled nearly $6 billion. The mean licensing revenue per defendant comes to $3.8 million in 2010 dollars. This figure includes licensing revenues from non-litigated patent assertions. But it understates the magnitude of licensing revenues per suit because it does not account for accruals — much of the revenue from lawsuits filed in 2010 was not collected in 2010 (and there were many more lawsuits in 2010 than in earlier years). Overall, this figure corresponds rather well with survey-based estimates in our paper The Direct Costs of NPE Disputes.
2. How does revenue vary with PAE business model?
We identified three different types of business models: “middlemen” who acquire or license patents from third party inventors (e.g., Acacia), “R&D-based” who conduct R&D and file their own patents (e.g., Rambus), and “salvage” where an operating company becomes a PAE using patents it developed for its own business (e.g., Asure / Forgent). The R&D-based PAEs file fewer lawsuits, but their licensing revenues are much greater. The R&D-based PAEs account for only 6% of the lawsuits, but 83% of the revenues, earning $54 million per defendant. The “middlemen” file 80% of the lawsuits, but earn only $0.7 million per defendant. These wide disparities correspond to other evidence about the high heterogeneity of PAEs and licensing outcomes.
3. How much of the licensing revenue flows to inventors?
Using the firm’s 10-K reports, we estimated the flows of funds to third party inventors as royalties and as patent acquisitions, as well as the flows to PAE’s own R&D departments including capitalized development costs when the PAE exited an operating business. Of the total licensing revenues earned, only 7% flowed to third party inventors. If we look at just the “middlemen” PAEs, 31% of the licensing revenues flow to third party inventors. If we include own R&D in the whole sample of PAEs, total flows to inventors of all types come to 26% of licensing revenues. These numbers suggest that on the whole, not much of the revenue received by publicly listed PAEs ends up supporting independent inventors. They also suggest that most of the licensing revenues are consumed as transaction cost, even for the “middlemen” PAEs.
James Bessen is a former software innovator and an economist studying innovation; Michael J. Meurer is an economist and law professor. Bessen and Meurer wrote Patent Failure, an economic analysis of the performance of the US patent system in 2008 (Princeton University Press).
On March 19, the USPTO’s new fee structure becomes effective. Some fees are going down, others are going up. “Micro entities” will likely wait until tomorrow to take action in their cases because of the new micro entity fee that is a 75% reduction of standard fees. Folks filing on post issuance reexamination or review will also wait one day for substantial savings.
Filing Application (Filing + Search + Examination Fees): $1,600 up from $1,260.
Additional claims: $80 for each additional claim; $420 for each additional independent claim. This is up from $62 and $250 respectively.
Issue fee: $1,780 up from $1,770.
Maintenance (renewal) fees:
Due at 3.5 years: $1,600 up from $1,150.
Due at 7.5 years: $3,600 up from $2,900.
Due at 11.5 years: $7,400 up from $4,810.
Request for Continued Examination:
First Request: $1,200 up from $930.
Second or Subsequent Request: $1,700 up from $930.
Request for Prioritized Examination: $4,000 down from $4,800.
Appeals:
Notice of Appeal: $800 up from $630.
Brief in Support of Appeal: $0 down from $630.
Forwarding Appeal to the Board: $2,000 up from $0. (Essentially, the PTO has pushed-back and increased the payment).
Requesting Oral Hearing: $1,300 up from $1,260.
Extension fees:
One Month: 200 up from $150.
Two Months: $600 up from $570.
Three Months: $1,400 up from $1,290.
Four Months: $2,200 up from $2,010.
Five Months: $3000 up from $2,730.
Post-Grant Proceedings:
Request for ex parte reexamination: $12,000 down from $17,750.
Supplemental Examination: $16,500 with $12,100 refunded if no reexamination is ordered. This is down from $21,260 with $16,120 refundable.
Petition for Inter Partes Review: $23,000 with $14,000 refunded if petition is denied. This is down from $27,200 with no refund.
Petition for Post Grant Review: $30,000 with $18,000 refunded if petition is denied. This is down from $35,800 with no refund.
Provisional Applications: $260 up from $250.
Design Patents:
Filing (Filing + Search + Examination Fees): $760 up from $530. (Updated to fix prior typo)
Obviously patent applicants are impacted by costs just like any other market participant. And, PTO fees appear to akin normal goods in that an increase in price will result in a decrease in the quantity demanded (and vice-versa). However, I also suggest (without too much proof) that most USPTO fees are still fairly inelastic. What this means for the bottom line is that the increase in fees will result in increased revenue for the PTO and that most patent applicants will need to increase their budgets accordingly.
Following President’s Obama remarks and reintroduction of the SHIELD Act, today the House Judiciary Committee Subcommittee on Courts, Intellectual Property and the Internet is holding hearings on litigation abuse by patent trolls (aka patent assertion entities or PAEs). Companies J.C. Penney, SAS, Cisco, Johnson & Johnson, & Adobe, are testifying. Part of the discussion may focus on patent troll metrics, on which I havepreviouslyreported. These statistics draw heavily upon proprietary research as well as my own analyses, so, in the interest of full disclosure, below are the numbers and what I know about them. Some say that the time has come to act, not to further study the PAE phenomenon but I believe in both – that to craft interventions that are both narrowly tailored and actually will work requires a deep understanding and careful analysis.
(It bears mentioning as well that much also can be learned from related experiences — indeed, litigation abuse is nothing new and in fact the Judiciary committee that is hosting today’s hearing held a hearing on litigation abuse in non-patent contexts yesterday. In the patent troll context, many interventions, like fee-shifting, improving patent quality control, special defenses, and maintenance fee tweaking have been suggested/tried before – in the recent past (early 2000s) as well as in the late 1800s, against both farming and railroad patent trolls and related contexts. FWIW, in my paper on the topic, I discuss other fixes like court leadership, industry organizations, collective action, and bolstering protection of users based on what has worked in these settings.)
1. PAEs brought 62% of 2012 patent litigations
According to RPX Corporation PAEs initiated 62% of all patent litigation, or 2,921 of 4,701 suits in 2012. RPX is a publicly-traded company that provides solutions to troll threats for its member companies and has great data, principally maintained by Seth Besse.
Patent Freedom reports 2,923 NPE lawsuits in 2012, as compared to RPX's 2,921 PAE lawsuits, using a slightly different definition.
I compared about 1,000 of RPX's codings with my own, and reported the result in Appendix C of this paper: "The share of disagreements between the databases was 7%, with the net number of trolls varying by 4%."
Comparison to 2011: The share of suits brought by PAEs in 2012 grew from 2011. However, the AIA's misjonder rules, which curbed the troll tactic of naming multiple unrelated defendants in a single suit which had artificially deflated troll suit numbers, are responsible. Thus, the increase in the number of troll suits, post-AIA, is most likely an artifact of the AIA.
2. In 2012, PAEs Sued More Non-Tech Companies than Tech Companies
Though the PAE share may surprise some, patented technologies like software are the building blocks of modern commerce. "Low-tech" industries like funeral homes, advertising agencies, and retailers like JC Penny which is testifying today are all taking steps to protect themselves from troll demands. Though historically a "tech" problem, in 2012 PAEs sued more non-tech companies than tech companies, according to the analysis below by Patent Freedom, which provides market intelligence on patent trolls. Retailers are hit the hardest by non-tech PAE suits, followed by automotive like Ford, which has also testified against trolls, financial services, and consumer products. So expect a broadening of the coalition to deal with trolls especially as many in these sectors are likely being sued over their use rather than making of technology.
3. Individual Inventor v. Corporate PAE suits
Not all trolls are created alike. Individuals get injunctions, corporate trolls don't. (See my paper with Mark Lemley, at FIG 3.) The SHIELD act would force corporate losing trolls to pay, but not individuals. "Non-practicing entities" can also include universities and startups, which is why I created the term PAE to apply to businesses that assert patents as their primary business model – universities and startups don't, they are focused on commercializing or transferring technology. (As Justice Kennedy put it in his eBay concurrence, trolls are firms that "use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.")
Based on data provided by RPX, 94% of 2012 suits brought by entities that don't practice were brought by corporate PAEs. Individual inventors were another 5% and the remaining 1% universities, based on data provided by RPX. However, PWC's excellent litigation report reports much higher "individual NPE" proportion – of 51% but for the 1995-2011 period and likely using a different methodology (the PWC university share is a bit higher). Because the SHIELD act turns on the individual vs. corporate distinction, it would be good to reconcile these numbers.
The Distribution of 2012 NPE Suits by NPE Type (based on RPX data)
4. PAE defendants comprised 59% of all patent lit defendants
Comparison to 2011: As the graph above shows, the absolute number of defendants named in PAE suits in 2011 shrank about 25% in 2012. However, that the relative share of troll defendants only declined by 4% (from 63% to 59%), supports that this trend reflects a general decline in new patent cases brought by practicing and non-practicing entities, rather than a fundamental shift away from the courts by PAEs.
The Success of the Misjoinder Rules
While the share of PAE defendants has not gone down significantly, I do believe, based on unreported analyses that I have performed, that trolls have changed their litigation tactics in at least one respect – they are less likely, because of the misjoinder rules, to name small defendants in lawsuits where they cannot be joined with other parties. In this way, the joinder rules can be said to be having their intended impact of making life harder for trolls. The small companies that actually are sued, however, are arguably worse off because they have fewer joint defense options. And even if they are not sued, many small defendants are receiving letters (see below).
5. 55% of Unique PAE defendants makes $10M or less
Because small companies are sued fewer times than large companies – e.g. Apple gets dozens of PAE demands whereas a small company may only get a handful – the number of total demands is more heavily skewed towards large companies than the unique defendant count. However, I believe 55% to be a conservative estimate because I calculated it based on actual revenue estimates in the RPX database provided by Dun & Bradstreet and commercial providers, and excluded from both the nominator and denominator companies for whom no revenue is reported. If, on the other hand, we assume that companies without coded revenue likely have limited revenue – an assumption other scholars have made– the share would grow. Longer discussion of methodological issues and approaches to filling in missing data here. Also of note, because of the success of the joinder rules in discouraging suits against individual small cos., the 55% number has likely declined in recent months.
6.At the ITC in 2012, PAE complainants brought about 35% of patent complaints and about half of patent respondents.
337 Patent Investigations & Respondents
2011
2012
New Patent Investigations
69
40
PAE Share
23%
30%
New Patent Defendants
226
184
PAE Share
43%
48%
My research assistants worked with me to code the complainants in these cases, using data provided by the ITC. As with district court defendant counts, total ITC investigations and defendants (called "respondents") declined in 2012 from 2011, by about 40% and 20%, respectively. However, the PAE share of investigations and respondents actually increased from 2011 to 2012, from 43% to 48%.
Data checks:
Last summer, the ITC published a report called "Facts and Trends" that tracks NPEs. It reported a combined NPE share of 19% of investigations, and 41% of defendants in 2011, versus my PAE shares of 23% and 43%, respectively (see above). The ITC report also notes that ITC numbers tend to vary greatly from year to year, given their relatively small numbers of investigations, which I tend to agree with.
Covington & Burling's Robert Fram and Ashley Miller, in an excellent unpublished paper The Rise of Non-Practicing Entity Litigation at the ITC: The State of the Law and Litigation Strategy (Jan. 5, 2011), tracked the percentage of companies relying on their licensing activities to show a domestic industry from 13% in 2000-2006 to 35% in the first 8 months of 2010). Based on an extension of their database they shared with me, the rate in 2011 (through Oct. 1) was 41%.
Legislative reform?: Members of the ITC bar and ex-ITC officials remain deeply skeptical of the efforts to reform the ITC legislatively that tech companies are pushing for. Last summer, I argued that the ITC's decision-making was evolving, and recommended revisiting its record in six months to a year. However, the fewer cases and exclusion orders that the ALJs have issued since then have meant a slower evolution of the ITC's law, despite more attention from government agencies and others.
While we wait, I still find it puzzling that entities like Acacia, Industrial Technology Research Institute of Taiwan, Beacon Navigation GmbH of Switzerland, and Intellectual Ventures would put up the considerable funds it takes to bring an ITC case when the ITC can't award the licensing revenues they seek, but only an exclusion order. The best I can tell is that this trend reflects a deeper dissatisfaction of patentholders with the consequences of eBay, rather than a desire to stop unfair importation, particularly since PAEs name domestic defendants more often than foreign ones (see Appendix A).
7. Some High Impact PAE Patents Fit the "Buy and Sue" Pattern
SHIELD has put more emphasis on the provenance of patents, with Joff Wild at IAM estimating that SHIELD might only cover one in four NPEs based on Patent Freedom Data. I really respect Joff's blog and magazine, and recommend it to anyone who is serious about understanding the monetizer perspective (though the magazine is expensive). However, I have a different view of the numbers, that because patent impact is heavily skewed, what matters are high impact patents– that is to say, if just Lodsys and Geotag were discouraged from bringing their suits, many people would have been happy. Through our analysis of "high impact" patents I asked Patent Freedom to put together for another analysis, we found that the nine out of ten were purchased before assertion, rather than owner-asserted.
10 High-Impact PAE Patent Campaigns: 9 out of litigated patents were bought, not owner-asserted
.
Also, I understand that the Patent Freedom folks have a different view of their own data than IAM so if you are interested follow them on Twitter:@PatentFreedom.
8. PAEs are Less Successful than Practicing Entities in Litigation
PWC's excellent annual litigation report is chock full of statistics about patent litigation and in particular, with respect to NPEs, that: they look to juries more (but the differences are declining), a higher median damage award and a lower than practicing company success rate (34% practicing co v.23% NPE ) that is declining (Chart 5B).
John Allison, Mark Lemley, and Josh Walker's paper documents that the "most litigated" (8x or more) NPE patents lose more than 90% of the time in court. Data provided by RPX found that such repeat litigants dominate PAE cases – 61% of defendants named in 2011-2012 were sued by a PAE who had brought the case 8+ times (see page 33).
9. Public PAEs
Myresearch assistant and I have been working on profiling public company PAEs – those which derive a majority or significant revenue from asserting patents. Depending on how you slice it, we have found about 16 of them (ACTG, ASUR, DEMO: OTC, NSSI, OPTI, RMBS, VHC, WIN:TO, VRNG, PANL, DSS: NYSE Amex , WDDD: OTC, BB,PCO, PRKR, UPIP); a number of the stocks are very volatile and live and die by litigation outcomes – invest with caution.
10. What We Need to Understand Better: Demands , Users, the Differential Impact of Interventions
Litigations are only a tiny part of the story. While good data on patent demand letters is lacking, here are a few data points:
In my survey of startups, among companies that had received threats (N=79), in some cases many threats, less than a third had been sued. This survey is being redistributed to a larger and more representative sample which should yield better estimates when it is concluded.
In its RICO complaint against Innovatio, Cisco reported that over 8,000 letters had been sent, even though there were only 26 named defendants, a ratio of 276:1.
We also need to understand how many of these suits are user based ones – in my survey (N=79), 40% of respondents said the demand was based on a technology they were using, not making. Such suits seem hard to justify as anything but nuisance-based.
What really matters is not PAE litigation itself but the impact it has on businesses, innovation, and the economy, and in particular how these impacts are distributed and also the justice or injustice of the claims – that is why there is so much heat on the PAE issue –because people who are sued feel that had no ability to anticipate or avoid it. My research has documented the positive impacts of a liquid IP market, and that startups are selling to trolls and benefiting from that monetization. However, it also documents a significant emotional toll: people said demands have "invoked rage over the waste of time," made a target "very very angry," "ruined family friends" and caused "stress" and "ill-will generation [sic]": "it was agonizing to hand over all the money we had earned from a product we had invented and created ourselves to a firm that invents nothing and creates nothing. Our founder has since lost his house, car [sic] all his assets." As the numbers of impacted companies and industries continues to grow, don't be surprised if the ranks of those who support curbing most egregious litigation abuses – the practices of going after end-users, rather than manufacturers and extracting from small companies nuisance-based rather than value-based settlements – continues to swell as well.
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Notes:
With thanks to my research assistants Aashish Karkhanis, Nicole Shanahan, Teri Karobonik, John Neal, and Coryn Millslagle and to RPX Corp., Patent Freedom, Gazelle Technologies, Robert Fram and Ashley Miller.
I was just looking at the jury verdict in this patent infringement case. Stryker sued on about twenty claims patents coming from three different patents. The jury found the patents infringed and not invalid.
The damages section of the verdict has three interesting elements.
Backup Award: The court asked the jury to decide both lost-profits and, as a backup, a reasonable royalty. That approach stems from the patent statute that sets reasonable royalty as a floor for compensatory damages. The jury found that Stryker had proven lost profits of $70 million and alternatively should be awarded 25% royalty on Zimmer's the $254 million in revenue from infringing sales. Assuming the verdict holds up, Stryker should receive $70 million lost profit award since it is greater than the $63 million reasonable royalty calculation. This is area where a more detailed verdict form actually helps the plaintiff.
Creating Its Own Form: Part of the power of jury verdicts is that they operate as a black-box decision making tool. Since the jury does not explain its decision, it is difficult to point out errors in that decision making process on appeal. The losing party often has to resort to the difficult task of proving that no reasonable jury could have reached the ultimate conclusion based upon the evidence. In this case, the jury may have given the defense a bit of a boost. In addition to setting the reasonable royalty at 25%, the jury added its own explanation – writing that the 25% is "double initial percentage of [a low comparable] license as we felt 32.2% [requested by the plaintiffs] was too high." We'll see whether the defense is able to use this added tidbit to challenge the verdict.
Three Patents, One Royalty: The theory for calculating damages when multiple patents is a bit dicey and ill defined. Here, three patents were at stake and the jury was asked "Do you find that the reasonable royalty rate would be any different if fewer than all three of the patents in suit are valid and infringed?" The jury answered "no." That response creates some hypothetical problems – most pointedly would be whether this result is the same if the patents were each held by a different entity.
SMU Dedman School of Law 10th Annual Symposium on Emerging Intellectual Property Issues
On Friday, March 22, the SMU Dedman School of Law will be hosting its 10th Annual Symposium on Emerging Intellectual Property Issues in Dallas, Texas. This year’s Symposium focuses on the U.S. Court of Appeals for the Federal Circuit and its unique role in the development of the nation's patent law. The folks at SMU have assembled a terrific program with a great lineup of speakers.
Speakers at this year's Symposium include:
Federal Circuit Judges Raymond C. Clevenger, III, Timothy B. Dyk, and Sharon Prost
General Counsel of the U.S. Patent and Trademark Office, Bernard J. Knight, Jr.
Distinguished professors and practitioners from around the United States
For more information, e-mail SMU Dedman School of Law Professor David Taylor at dotaylor@smu.edu.
MCLE Credit This course is pending approval by the State Bar of Texas for 5.5 CLE hours. Sign-in sheets and/or certificate of attendance will be available for ALL states
Function Media, L.L.C. v. Google Inc. (Fed. Cir. 2013) Download FM v Google Panel: Rader, Newman, Reyna (author)
Function Media sued Google for infringement of three related patents: 6,446,045; 7,240,025; and 7,249,059. The patents involve a system for facilitating advertising on multiple advertising outlets (such as different websites) with different formatting requirements. The district court granted summary judgment that the sole independent claim of the '045 patent was indefinite and a jury subsequently found that the asserted claims of the '025 and '059 patents invalid and not infringed. The district court granted JMOL of validity of four claims but the noninfringement verdict stood. FM appealed several issues including the indefiniteness ruling and raised a challenge based on O2 Micro.
Indefiniteness: Claim 1 of the '045 patent reads as follows:
1. A method of using a network of computers to contract for, facilitate and control the creating and publishing of presentations, by a seller, to a plurality of media venues owned or controlled by other than the seller, comprising:
a) providing a media database having a list of available media venues; b) providing means for applying corresponding guidelines of the media venues; c) providing means for transmitting said presentations to a selected media venue of the media venues; d) providing means for a seller to select the media venues; and e) providing means for the seller to input information; whereby the seller may select one or more of the media venues, create a presentation that complies with said guidelines of the media venues selected, and transmit the presentation to the selected media venues for publication.
At issue was the italicized "means for transmitting" claim element, which the district court held to be indefinite because the specification did not disclose a structure for carrying out the claimed function, as required by 35 U.S.C. § 112(f) [previously referred to as 112[6]).
On appeal, the Federal Circuit affirmed the district court's ruling, emphasizing the requirement that an algorithm must be disclosed when using a means-plus-function claim involving software. "When dealing with a “special purpose computer-implemented means-plus-function limitation,” we require the specification to disclose the algorithm for performing the function." Slip Op. at 9. For this claim element, at least, no algorithm was disclosed: "Here, there is no specific algorithm disclosed in prose, as a mathematical formula, in flow charts, or otherwise. FM cites to several places in the specification that it contends describe the software. These citations all explain that the software automatically transmits, but they contain no explanation of how the [Presentation Generating Program] software performs the transmission function." Id. at 10. "At most, the ’045 Patent specification discloses that the structure behind the function of transmitting is a computer program that transmits. Beyond the program’s function, however, no algorithm is disclosed. As in Blackboard, the PGP is “simply an abstraction that describes the function” to be performed. 574 F.3d at 1383." Id.
Nor could FM rely on the knowledge of a PHOSITA: "Having failed to provide any disclosure of the structure for the “transmitting” function, FM cannot rely on the knowledge of one skilled in the art to fill in the gaps." Id. at 11. It was irrelevant that a person of ordinary skill could devise some method to perform the function: that goes to enablement, not to definiteness.
Comment: Ironically here, it was probably the use of the narrowing "means" language that ultimately resulted in the holding of indefiniteness. If the patentee had instead just referenced "a computer controller transmitting said presentation" (similar to what it did in Claim 1 of the '025 patent), it almost certainly would have survived an indefiniteness challenge. See Mark A. Lemley, Software Patents and the Return of Functional Claiming(forthcoming in Wisconsin Law Review) at 41-42 (arguing that the Federal Circuit imposes no limit on the functional nature of software claim elements unless they use "means," thus negating the compromise established by 112(f)).
O2 Micro: In addition to challenging several of the district court's claim constructions (which the CAFC affirmed), FM argued that the court improperly sent issues of claim construction to the jury in contravention of O2 Micro v. Beyond Innovation, 521 F.3d 1351 (Fed. Cir. 2008). The Federal Circuit rejected FM's arguments, limiting O2 Micro to the rare circumstance when arguments about different claim scopes are actually presented to the jury. "We disagree with FM that claim construction was decided by the jury because the district court’s construction was correct, and the district court never refused to construe any disputed terms. Moreover, as with the other terms, FM never objected to any supposed improper argument or testimony." Slip Op. at 26. Absent this situation, the issue was whether Google made improper arguments to the jury, an issue on which FM bore an extremely high burden that it could not carry.
The Supreme Court today heard oral arguments in the case of Jerry Gunn, et al. v. Vernon Minton. In the case, Mr. Minton has alleged that his former litigation counsel committed legal malpractice resulting in a dramatic loss of potential patent licensing revenue.
A malpractice claim against a lawyer is traditionally a state law claim. The question that has reached the Supreme Court is, despite the underlying state law claim, whether the Federal Courts have exclusive jurisdiction over this case because it requires substantial consideration of patent law issues. If the Federal Courts have jurisdiction than the Federal Circuit would also have jurisdiction on appeal.
Although there are some nuances, the basic malpractice claim is that his attorneys should have argued that the public use and sale of his patented product was an experimental use and therefore did not create self-sacrificial prior art or trigger the statutory bar of (old) 102(b).
From prior Supreme Court decisions such as Grable, we know that the current rule is that Federal Courts have subject-matter jurisdiction over State Law claims when the well pled complaint includes a “substantial” “contested issue” of Federal law.
The most likely focus of an opinion in this case will be a further definition of the meaning “substantial” and what is meant by a “contested issue.” My take-away is that the Supreme Court has no inclination of severely restricting arising under jurisdiction.
The first question of the case came from Justice Ginsburg who pointedly asked the law firm’s attorney (Ms. Webre) “what do you mean by ‘substantial’? The answer:
I would answer in two layers. First, Mr. Minton’s claim did not involve a legal question of … how does the experimental use doctrine work; how is it applied, what are its parameters. . . .
And it is not a substantial question because, first, from a unique case perspective, it involved merely a hypothetical determination. There were no actual patent rights that would be at issue. Those were already fully, finally, irrevocably determined in the underlying patent litigation in Federal court.
And second, from a jurisprudence standpoint, the question of uniformity of patent law, any decision by a State court in Mr. Minton’s legal malpractice claim would not be binding in any way on either the PTO in a patent application, or on any subsequent Federal court deciding a real patent case.
Ms. Webre’s key argument here is separate that notion of an issue necessary to resolve the case from that of a “substantial issue.” Both are required for Federal Jurisdiction under Grable.
The discussion later moved to the Federal Circuit’s aggrandizement of jurisdiction. Ms. Webre again:
I think it’s interesting to back up a little bit and look at the Federal Circuit’s evolved perception of its own exclusive jurisdiction. In the early years of the Federal Circuit in 1984, the first Chief Justice — the first chief judge of the court, Chief Judge Markey, in the Atari case … the Federal Circuit wrote, “Congress was not concerned that an occasional patent law decision of a regional circuit court or of a State court would defeat its goal of increased uniformity in the national law of patents.”
That was the view of the Federal Circuit’s own jurisdiction in 1984. But in the time evolved, the Federal Circuit has changed its perception of its own jurisdiction and that’s why we are here today. In 2007, the Federal Circuit went awry and changed the standard that no longer follows what this Court articulated in Grable.
They have improperly conflated the necessity and substantiality components of an appropriate Grable analysis, and they totally disregard a proper balance of the State and Federal interests. The Federal Circuit announced that there’s an interest in — Federal interest in uniformity of patent law, and then that was that. That was the end of the inquiry. There is no balance if you don’t look at the State interest on the other side.
In rebuttal, Mr. Michel (attorney for the plaintiff) argued that patent law is fairly unique because the law exclusive Federal jurisdiction. In his view, the exclusivity shows congressional intent that even seemingly minor patent issues should be seen as substantial. Mr. Michel also discussed the potential impact on patent attorneys in each state who will be bound by the patent law malpractice rules derived from state court decisions even though the state courts are not bound to follow Federal Circuit precedent. He particularly pointed out that the Texas state court did not follow the Federal Circuit in this very case. Here, for instance the Texas trial court based its conclusion of no-malpractice on a concept of experimental use that departs severely from Federal Circuit precedent. In the final minutes of her response, Ms. Webre suggested that patent attorneys buck-up and recognize that they are bound by both federal and state law.
H.R. 6621, officially titled An Act To correct and improve certain provisions of the Leahy-Smith America Invents Act and title 35, United States Code was signed into law by President Obama on January 14, 2013 and, for the most part, the provisions of the law are now effective.
Here is the official summary:
Amends the Leahy-Smith America Invents Act (AIA) to make technical changes regarding the transitional program for covered business method patents and joinder of parties.
Applies, to any civil action commenced on or after enactment of this Act, the AIA's bar on using an accused infringer's failure to obtain the advice of counsel to prove that any infringement was willful or induced. (Currently, the bar would not take effect until one year after the AIA's enactment.)
Prohibits a nine-month waiting period for inter partes review from applying to issuances of first-to-invent patents ineligible for post-grant review. (Currently, the remaining first-to-invent patents to be issued prior to the effective date of the new first-to-file patent system have no avenue for review during the first nine months because they must wait nine months for inter parties review and are ineligible for post-grant review.)
Revises the filing deadline for inter partes review to be after the later of either: (1) nine months after the grant of a patent (currently, nine months after such grant or the issuance of a reissue patent), or (2) the termination date of any post-grant review.
Extends the time period for an applicant to file an inventor's oath or declaration, substitute statement, or recorded assignment until the date on which the issue fee for the patent is paid. (Current law permits a notice of allowance of a patent application only after such a filing.)
Makes provisions concerning travel expenses for employees of the U.S. Patent and Trademark Office (USPTO) and the payment of administrative judges effective as of September 16, 2011.
Modifies requirements and time periods for activities relating to patent term adjustments. Revises the patent extension period for certain international applications. Specifies that a civil action filed in the U.S. District Court for the Eastern District of Virginia is the exclusive remedy for challenging a USPTO decision on a request for reconsideration of a patent term adjustment determination.
Repeals a provision prohibiting the USPTO from accepting certain international applications designating the United States from anyone not qualified under specified application requirements.
Revises USPTO funding requirements to make all federal patent law fees available for expenses relating to patent processing and to permit patent and trademark fees to be used interchangeably to cover proportionate shares of the USPTO's administrative costs. (Currently, patent fees are used to cover administrative costs relating to patents while trademark fees are used to cover administrative costs relating to trademarks.)
Modifies requirements for applicants filing petitions to institute derivation proceedings and delineates the criteria applied to deem an application as an earlier application with respect to an invention relative to another application.
Sets forth authority for the Patent Trial and Appeal Board to conduct, and for courts to review appeals from, interference proceedings declared after enactment but before the effective date of certain AIA amendments replacing interference proceedings with derivation proceedings.
Modifies the original appointment terms for members of the Patent Public Advisory Committee and the Trademark Public Advisory Committee. Directs the Secretary of Commerce to designate, from among the appointed members, a Chair and Vice Chair of each committee.
In the face of Supreme Court scrutiny over its jurisdictional power, the Federal Circuit has taken a step back from its historic approach of expanding patent law jurisdictional reach.
DeRosa is the inventor of a cam-less chuck for use in a router. These have been available for some time with ordinary drills, but the large size and high rotation speed made the same type of assembly more difficult for a router. DeRosa’s provisional patent application was filed back in November 1998 and, at the same time, DeRosa assigned his rights in the invention and “further improvements” to Marmo in return for a promise that a promise that Marmo would manufacture and sell the device and that DeRosa would receive royalties on those sales.
In 2010, DeRosa sued Marmo in Virginia state court – alleging that the company had failed to live up to its continued contractual obligations to manufacture and sell the device. In the lawsuit, Marmo asked for both contract damages and a reversion of ownership rights in the patent. The case was first removed to Federal Court on diversity grounds and then removed to an arbitrator based upon the contract terms. The arbitrator found for DeRosa on breach of contract but held that Marmo was still the proper patent owner. That decision was confirmed by the E.D. Virginia District Court in an April 6, 2012 order.
On appeal, the Federal Circuit has refused to decide the case – holding that it lacks jurisdiction and that the proper venue is the Court of Appeals for the Fourth Circuit. The reason here is that the complaint did not raise any substantial questions of patent law but rather simply focused on the contract. Judge Bryson writes:
Causes of action based on contractual rights in a patent assignment or license agreement as a general rule do not arise under the patent laws. See Luckett v. Delpark, Inc., 270 U.S. 496, 502-03 (1926); New Marshall Engine Co. v. Marshall Engine Co., 223 U.S. 473 (1912). Marmo nonetheless argues that the appeal is properly before this court because the complaint specifically requests a restoration of ownership in patent rights.
That DeRosa’s complaint ultimately sought to restore ownership in the invention is of no great significance. The focus of the jurisdictional inquiry is whether the plaintiff “set up some right, title or interest under patent laws, or at least makes it appear that some right or privilege will be defeated by one construction, or sustained by the opposite construction of these laws.” Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 807-08 (1988).
The complaint in this case did not turn on such a claim. The alleged harm stated was Marmo’s failure to abide by its “contractual and financial obligations under the contract” resulting in DeRosa not having received the “bargained for benefit” of “a steady flow of manufacturing business and the timely payment for the product.” Although a restoration of patent ownership is sought in the complaint, such relief is entirely premised on the claim that Marmo’s failure to fulfill its obligations under the contract warrants a remedy of rescission. As such, this case does not arise under the patent laws, and we do not have jurisdiction.
In Jim Arnold Corp. v. Hydrotech Systems, Inc., 109 F.3d 1567 (Fed. Cir. 1997), a case very similar to this one, this court held that a plaintiff seeking rescission of a patent assignment agreement in order to restore ownership rights in a patent could not meet the jurisdictional test set forth in Christianson. As in the present case, the plaintiff in Jim Arnold had no rights in the patent without judicial intervention and was thus left only to argue that ownership of the patents should be restored based upon a breach of contract claim. Because a plaintiff under such circumstances could at best only present a frivolous allegation of ownership of the patents at issue sufficient to confer jurisdiction under section 1338, we transferred the case to the regional circuit. Since the same outcome is warranted here, pursuant to 28 U.S.C. § 1631, we transfer the case to the Fourth Circuit.
The court ignored Marmo’s most compelling argument – that the action was implicitly a move by DeRosa to quiet title in his further improvements that he later patented and now manufactures through another source. Marmo argued that mapping the contracted-for improvements to the various patents necessarily requires a substantial consideration of patent law issues. The case will now move to the Fourth Circuit to see whether the arbitration award was properly confirmed.
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Minton v. Gunn: This term, the Supreme Court is considering Minton v. Gunn, a patent litigation malpractice case. Legal malpractice is ordinarily a state law claim. Here, however, the court is considering whether the malpractice action arises under the U.S. patent laws in such a way that would confer both federal jurisdiction at the district court level and Federal Circuit jurisdiction on appeal.
America Invents Act: The Leahy–Smith America Invents Act (AIA) expanded the scope of federal jurisdiction to include cases whose only substantial patent claim is filed in a compulsory counterclaim. See 28 U.S.C. § 1295(a)(1) as amended. However, that change in the statute does not impact this case because it only applies to civil actions commenced on or after September 16, 2011.
Notice of Arbitration Awards: 35 U.S.C. § 294(d) requires that a notice of arbitration award be filed with the USPTO. Under the statute, “[w]hen an award is made by an arbitrator, the patentee, his assignee or licensee shall give notice thereof in writing to the Director.” The submission is required to include a number of details as well as “a copy of the award” itself. Under the law, that award becomes a public record and part of the patent file. As a kicker, law states that “[t]he award shall be unenforceable until the notice required by subsection (d) is received by the Director.”
In this case, the notice of award was probably not required because the statute further limits its focus to arbitration of validity or infringement issues. Here, the dispute was over contract terms and ownership.
The Patents County Court has been deciding "small" patent cases for the past 20 years. Under Hon. Colin Birss, the court now limits claims to £500,000. Larger claims can be brought in the High Court. In the US, all patent infringement cases are heard in Federal District court. And, it ordinarily does not make much sense to file a patent lawsuit when there is less than $1,000,000 at stake.
Over the next year, the USPTO and perhaps other agencies will be holding hearings on whether the US should develop a small claims proceeding for lower-value patent enforcement actions. In a recent release, the USPTO has asked for input on whether this type of enforcement proceeding would have market value and, if created, what parameters should guide its implementation.
Among the information of interest to the USPTO is whether there is a need and desire for this type of proceeding, in what circumstances is this proceeding needed if such a need exists, and what features this proceeding should possess. In particular the USPTO seeks information about core characteristics of a patent small claims proceeding including characteristics such as subject matter jurisdiction, venue, case management, appellate review, available remedies, and conformity with the U.S. constitutional framework (e.g. 7th Amendment).
The world of patent deals and monetization schemes are difficult to report on because the details of most deals (and often all aspects of the deals) are kept secretly buried under binding confidentiality clauses. Patrick Anderson recently wrote about US Patent 6,081,835 and its unique ownership setup. The information on the patent ownership is now public through an interesting decision by Judge Ellis. Download SuffolkTech.EllisDecision. The patent is being asserted by Suffolk Tech against Google, and Google challenged Suffolk's standing to sue – claiming that the company did not hold complete rights to the patent. With that defense in mind, Judge Ellis explored the ownership structure.
It turns out that the patent was originally owned by British Telecom based upon an underlying UK invention. BT transferred its ownership interest to IPValue who immediately transferred rights to Suffolk Tech as part of the deal. It was already known that IPValue is a joint venture of Goldman Sachs, General Atlantic Partners and Boston Consulting Group.
In the invest-to-sue market, patent buyers rarely pay cash. Rather, in these deals the majority of compensation to the seller is at the back-end — after the purchaser has successfully licensed the patent rights. In this case, BT sold the patent (transferring title), but and received as compensation a contract right to "50% of the Adjusted Gross Proceeds derived from exploitation of the '835 Patent" with the additional caveat that IPValue's sale of the patent (other than to Suffolk) within one-year of the BT-IPValue deal would result in 90% of the proceeds going to BT. The contract also includes restrictions on fees to contingency counsel; a $10 buy-back clause if IPValue fails to bring in sufficient revenue; and a non-exclusive license-back to BT.
On the standing point, Judge Ellis found that the deal left Suffolk Tech with title, core rights to practice and enforce the patent, and "all other substantial rights" in the patent. "As a result of the assignments, BT retained only a non-exclusive license to practice the patent and the right to share in revenue from the exploitation of the patent." As such, Suffolk Tech can properly assert the patent without joining BT or IPValue as co-plaintiffs.
It turns out that BT has decided that it does not want to get its hands dirty directly, so like countless others before it (including [Intellectual Ventures]) it has turned to a third party to do the heavy lifting. That is what the privateer model is all about. It is being used, in one way or another, increasingly frequently by operating companies in the US, which for whatever reason decide they would prefer not to become involved in patent monetisation programmes that may involve aggressive assertion. NPEs that I can think of off the top of my head which have had close relationships with operating companies at some time or another include: Rockstar, RoundRock, Acacia, MOSAID, Intellectual Ventures, Sisvel and IPCom. No doubt readers of this blog can think of many more. From where I sit it is a perfectly legitimate activity, aimed as it is at maximising the value of key corporate assets – which is exactly what companies are supposed to do. At least some, however, are a little coy about their arrangements; while it is becoming increasingly clear that US antitrust authorities, and perhaps those in Europe too, are going to take a much closer look at the whole privateer model.
The last line of Joff's statement will continue to raise interest in upcoming years.
Pei-Herng Hor and Ruling Meng v. Ching-Wu "Paul" Chu (Fed. Cir. 2012)
Sometimes I'm surprised that there are not more inventorship disputes. But, the rise in power of HR managers in most corporate settings has helped to lock-down rights through initial employment or consulting contracts. On the other hand, the loose liberalism of the university setting continues to create problems on this front. One element that adds complexity for universities is that, in most cases, universities provide a percentage of any patent-related revenue to the inventors – in this case 50%. For the most part, major US corporations do not use that approach.
This dispute stems from the work of award winning and highly regarded University of Houston Professor Paul Chu. The superconductor innovator (Chu) is listed as the sole inventor of U.S. Patent Nos. 7,056,866 and 7,709,418, but his former assistants (Hor and Ming) argue that they should also be listed as co-inventors. The original applications were filed in 1987 and 1989 and did not issue until 2006 and 2010 respectively. The bulk of the long prosecution was occupied by an interference proceeding in the '418 case that was eventually resolved in Chu's favor. During that time, the original application was also put on hold pending the outcome. The interference was prompted by a former Chu lab assistant who had by then moved to the University of Alabama.
The patents cover a super-conducting material that does not require liquid nitrogen coolant. So far, the patents have netted $680,000 based upon a DuPont option on the patent. UH gave half of that money to Chu who, in turn, distributed about $140,000 to the lab assistants, including Hor, Meng, and the Alabama Elephant. Apparently those few thousand dollars were not enough.
= = = = =
35 U.S.C. §256 implicitly provides the basis for a federal court action to correct the inventor inventorship. Hor filed his complaint in 2008 and Meng joined the action in 2010. However, the district court dismissed the case as barred by laches since those parties should have known for a long time that they were not named inventors on the patent application.
On appeal, the Federal Circuit has rejected the lower court's decision on laches – holding that the period for laches for a section 256 inventorship action cannot begin to run until the patent-in-question actually issues even if "the omitted inventors knew or should have known prior to patent issuance that their names were omitted."
The lower court also held that the action was barred by equitable estoppel. On appeal, the Federal Circuit also rejected the equitable estoppel claim because it had been raised sua sponte by the lower court and without notice to the parties. On remand, the court will need to more fully develop the law of equitable estoppel as it relates to this dispute – of interest will be whether the court applies Texas law of equitable estoppel or else some federal patent law version of the doctrine.
= = = = =
The majority decision was written by Judge Prost and joined by Judge Newman. Judge Reyna wrote a concurring opinion that agrees with the statutory interpretation of Section 256 but argues that the statute is poorly drafted. Judge Reyna argues that a better approach would encourage the alleged co-inventors to take action under Section 116 to correct the inventorship during prosecution of the application. The weight of Judge Reyna's argument may well be determined based upon how the lower court rules on the equitable estoppel claim and whether that doctrine serves as a sufficient substitute for laches.
= = = = =
We have had something of a shift in the culture of inventorship in the 25 years since Chu filed his original application in 1987. Back then, the vast majority of patent applicants listed only one inventor as "the inventor." Today, most new applications at least two inventors. And, in highly-scientific fields such as Dr. Chu's, the number of inventors-per-application is even higher. A key question to be discerned is whether the difference between then and now reflects differences in the process of inventing or rather does it reflect a difference in how we identify inventors. If filing his Reardon metal patent today, perhaps Hank Rearden would have included co-inventors. One element of American ethos is steeped in the idea and ideal of rugged individualism. As President Obama's recent public statements to the contrary are absorbed into our culture, I expect that our notion of inventorship will continue to shift as well.
The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]
New start-up company (Evtron)
Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.
Patent Jobs:
Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]
Upcoming Events:
Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
IBC Legal's 6th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
ACI's 14th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
C5's 5th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)
The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]
New start-up company (Evtron)
Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.
Patent Jobs:
Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]
Upcoming Events:
Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
IBC Legal's 6th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
ACI's 14th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
C5's 5th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)
The Chisum Patent Academy will hold its next Advanced Patent Law seminar February 20-22, 2013, in New York City (Midtown Manhattan). Because each three-day Chisum Patent Academy seminar is uniquely limited to ten (10) participants, they offer an unparalleled opportunity for interactive roundtable discussion and debate. Each seminar is led by patent law educators and treatise authors Donald Chisum and Janice Mueller. The New York seminar will focus in great depth on two timely and controversial patent law topics: patent claim interpretation and active inducement. They will also cover America Invents Act developments including the USPTO's final rules on first inventor to file (taking effect three weeks after the New York seminar); preliminary injunctions and design patents; and inequitable conduct decisions post-Therasense. A more detailed description of the topics to be covered and registration details are available on the Academy's website. [Link]
New start-up company (Evtron)
Evtron is a new start-up company that specializes in data storage. The company made a storage device (Evtron CELL) that can fit 120 hard disk drives into a storage platform. The design created by Evtron will supposedly make it 60% more efficient in data density, when compared to similar data storage products currently available on the market. NetApp and EMC are the two leading companies in this technology market, with annual revenue between $7 billion and $22 billion. Evtron may be able to compete with these companies but only if they are granted their pending patent and the patent cannot be worked around. The patent application to my knowledge is not currently public. There have been rumors that Facebook may be interested in the technology. This should be a very interesting company to watch, in terms of the patent application, lawsuits that may arise, and the change of the data storage space.
Patent Jobs:
Fenwick & West is seeking patent associates with 1-4 years of experience and an EE, CS, CE, or physics background, or equivalent experience to work at their Silicon Valley office. [Link]
Armstrong Teasdale is looking for an experienced trademark associate to work at their St. Louis office. [Link]
Harrington & Smith is seeking a patent associate with a degree in EE or physics and at least 2 years of experience to work at their Shelton, Connecticut office. [Link]
Krieg DeVault is looking for an IP associate with 3-7 years of experience to work at their Indianapolis office. [Link]
Harrity & Harrity is searching for patent attorneys/agents with a background in EE, computer science, or physics and a minimum of 2 years of experience to work at their Fairfax, VA office. [Link]
Honigman is seeking a patent attorney/agent with a degree in EE or computer science to work at their Oakland Count, Michigan office. [Link]
Byrne Poh is looking for a patent attorney/agent with a degree in EE or computer science to work at their New York office. [Link]
The Ollila Law Group is seeking a patent attorney with an EE and at least 2 years of experience to work at their Boulder office. [Link]
Abel Law Group is seeking a chemical practitioner with 2+ years of experience to work at their Austin office. [Link]
Klarquist Sparkman is seeking an IP Litigation Associate with 1-2 years of experience to work at their Portland office. [Link]
Upcoming Events:
Santa Clara Law will be hosting its conference Solutions to the Patent Problem this Friday, November 16, featuring industry and government folks such as Kent Walker (Google), Brad Burnham (USVentures), Ben Lee (Twitter), Edith Ramirez (FTC), and Paul Grewal (N.D. Cal) in addition to about 20 academics. The event will be streamed and Wired is running opeds from the conference as part of its Patent Fix series.
IBC Legal's 6th Annual Standards and Patents Conference 2012 will be held on November 27-28 in London. The dynamics of the relationship between standards and patents poses a plethora of challenges for patentees, licensees, standard setting organizations, innovators, commercial users and implementers. Guest speakers include Mr. Justice Ford (Jude, Patent Court) and Richard Vary. [Link] (PatentlyO readers save 10% by quoting VIP code: FKW82336PTOL)
ACI's 14th Advanced Forum on Biotech Patents will be held on November 28-29, in Boston. ACI's 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. [Link] (PatentlyO readers register for with PO 200 for a discount)
The ACI's Orphan Drugs and Rare Diseases conference will take place on November 28-29 in Boston. There are an estimated 6,000 rare diseases currently recognized in the U.S. alone; European authorities recognize as many as 8,000 rare diseases. With only approximately 150 treatments for these diseases approved so far according to the FDA's orphan designation database, there is a unique opportunity for companies of all sizes to invest in research and development to try to capture this lucrative market share. Indeed, according to a leading industry report, the orphan disease therapeutics market will continue to see a marked increase in value through the decade, increasing from 2010's $2.3 billion to an estimated $6 billion in 2018. [Link] (PatentlyO readers register for with PO 200 for a discount)
ACI's Paragraph IV Disputes conference will be held on December 4-5 in San Francisco. An experienced faculty of renowned litigators and judges will guide you through every stage of a Paragraph IV challenge. Additionally, in the wake of major developments in pay-for –delay, learn what the FTC deems foul and fair in the settlements of Paragraph IV disputes in order to draft and structure settlements that will receive FTC approval. [Link] (PatentlyO readers use code PO 200 a discount)
C5's 5th Annual Forum on Biotech and Pharma Patent Litigation is scheduled for January 29-30 in Amsterdam. [Link] (PatentlyO readers use code PO10 for a 10% discount)
Historically about two thirds of ex parte reexaminations were filed by third-party filers. In recent years, that figure has risen so that now around 90% of ex parte reexamination requests are filed by third-parties. The America Invents Act of 2011 (AIA) made only a very limited change to the ex parte reexamination structure. The greatest change, however, came about on September 16, 2012 when the USPTO instituted a new fee regime that boosted the cost of ex parte reexaminations from $2,520 to $17,750.
In the days leading up to September 16, 2012 there was a rush to file these ex parte reexamination requests in order to beat the fee deadline. The 200 or so requests filed in the final week is equivalent to about four months of filing in more ordinary weeks. With that in mind, it is not surprising that the post-September-16 filings are at a much lower rate – about one third of the pre-implementation rate for the past seven weeks.
By new year (January 2013), any gap created by the rush to file should be dissipated. However, I don’t expect for the ex parte reexamination filings to be back to their normal pre-AIA rate because of the new high-cost of filing ex parte reexaminations and because supplemental examination is now a better alternative for the majority would-be owner-filed reexaminations. The one caveat is that the new increased expense of inter partes review may push some challengers toward the ex parte approach.
Notes
Upcoming – A review of recently filed supplemental examination requests.
If you are worried that the drop in filing post-implementation will harm the USPTO’s bottom line, don’t worry. The PTO’s CFO should see the raise in fees as a very good business move. The PTO now has two thirds less work coming-in but each bit of work receives seven times more revenue. More money for less work is never a bad thing (unless you are the customer).
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DeRosa v. J.P. Walsh & J.L. Marmo Enterprises (Marmo) (
by Dennis Crouch 
By Dennis Crouch 