Federal Circuit Holds Defendant’s State of Incorporation (Delaware) Improper Venue

By Dennis Crouch

In re Link_A_Media Devices Corp. (LAMD) (Fed. Cir. 2011)    

Introduction: The Federal Circuit has again asserted mandamus power to order a patent case to be transferred to a more convenient forum under 28 U.S.C. § 1404(a) – holding that Judge Robinson's denial of transfer out of Delaware was an abused of discretion.

Three facts make the case somewhat interesting and novel. First, the transfer is not out of Texas, but rather from Delaware to the Northern District of California. Second, the defendant, LAMD, who requested the transfer is a Delaware Corporation (although its operations are in California). Finally, the plaintiff, Marvell Int'l., is a foreign entity based in Bermuda although its subsidiary, Marvell Semiconductors, and the named inventors are all based in California.

Legal Background: The due process clauses of the US Constitution have been read to place personal jurisdiction limitations on the power of courts to pass judgment on non-resident parties. In patent cases, personal jurisdiction is rarely an issue because most defendants are national-players that have sufficient minimum contacts in every local jurisdiction.

Even when a court has personal jurisdiction over a case, the laws of civil procedure allow a court to transfer a case to a different jurisdiction "[f]or the convenience of the parties and witnesses, in the interest of justice." 28 U.S.C. § 1404(a). This provision in the law is derived from the common law doctrine of forum non conveniens and there continues to be cross-talk between the two docrines.

Lower Court Decision: In her decision to keep the case in Delaware, Judge Robinson primarily gave weight to three factors: (1) the plaintiff's choice of forum; (2) the defendant's choice of Delaware as its state of incorporation; and (3) the international (rather than regional) nature of the defendant. In addition, the court found no "congestion" problems or identified problems "with discovery or witness availability."

On appeal, the Federal Circuit reversed – holding that the fact that a defendant is incorporated in the forum state is only one factor to be considered in the analysis.

The Federal Circuit particularly pointed to four errors in the district court's analysis.

Choice-of-Forum: First, the court indicated that "far too much weight" was given to the plaintiff's choice of forum. While some weight may be given to that choice, the plaintiff's choice is given less deference when the forum is not the home-forum of the plaintiff. (Note, this result has the potential of being discriminatory to foreign entities under TRIPs because the foreign entities have no "home forum" in the US.)

State of Incorporation: Second, the appellate court held that heavy reliance on state of incorporation is inappropriate.

Neither § 1404 nor Jumara [the leading 3^rd Circuit 1404 case] list a party's state of incorporation as a factor for a venue inquiry. It is certainly not a dispositive fact in the venue transfer analysis, as the district court in this case seemed to believe.

Convenience of Records: Judge Robinson refused to give weight to the convenience of witnesses and location of books and records – holding that those traditional 1404 factors are "outdated" except where truly regional defendants are litigating. The Federal Circuit held that at least some consideration should have been given to these factors.

Public Interest: Finally, the court looked to the interest of the forum jurisdiction (Delaware) in deciding the case and found it had very little interest because the state had no connection to the dispute and no connection to the parties other than the fact that LAMD is incorporated there.

Holding: The District Court is ordered to direct transfer of the case to the United States District Court for the Northern District of California.

• It is important to note here that the Federal Circuit based its mandamus decision on 3^rd Circuit law rather than Federal Circuit law.
• Pilar G. Kraman discussed the district court decision at the Delaware IP Law Blog.

Patently-O and the Top 100 Legal Blogs: Vote Here

The ABA Journal has again chosen Patently-O as one of the top-100 legal blogs along with Gene & Renee Quinn's IP Watchdog and Evan Brown's Internet Cases. This is the fifth year that the ABA Journal has published this list, and Patently-O has made the list each and every year. 

We've made a number of major improvements to Patently-O's coverage over the past year. Most notably, Professor Jason Rantanen is now a co-author, Lawrence Higgins is covering Bits and Bytes, and we have published a number of excellent guest posts both on the blog and in the associated short form Law Journal. Ryan Swarts is managing the Patently-O Job Board and he reports that we've had more job postings the past year than ever before (36 last month) and more readers as well (500,000 page views).

Some Stats: During the past year there have been more than 700,000 unique visitors to the Patently-O website and the vast majority of visits are return-visits. In addition, these days well over 20,000 patent law professionals receive Patently-O through a free daily e-mail service.

We have several projects that we hope to implement over course of the next few months. Most importantly, we'll be rolling-out a complete of the site on a new blogging platform that allows for better control of comments through moderation and comment-ranking as well as easier navigation through the site archives and a high quality mobile version of the site. We're also talking with several potential regular contributors who could provide additional case studies on patent prosecution, litigation, examination and licensing. As always, please let me know if you have concerns or ideas for the site. dcrouch@patentlyo.com.

How can you help: In addition to the top-100 list, the ABA is also holding a popularity contest. I would appreciate your vote in the IP Law Category. To vote, you have to register but you don't have to provide the ABA with actual identifying information. VOTE HERE.

Thanks again!

Dennis

Teva v. Astrazeneca: Invalidating a patent with secret prior art

By Jason Rantanen

Teva Pharmaceutical Industries Ltd. v. Astrazeneca Pharamceuticals LP (Fed. Cir. 2011) Download 11-1091
Panel: Rader, Linn (author), Dyk

"Secret" prior art is prior art that is not available to the public as of the date of invention for the relevant patent.  The most well-known category of secret prior art is that of pre-publication patent applications. 35 U.S.C. 102(e).  Less commonly asserted is prior invention by another under 102(g)(2).  This case illustrates the strength of such prior art under the current novelty framework.

Teva, the owner of Patent No. RE39,502, sued AstraZeneca, asserting that an AstraZeneca drug (CRESTOR) infringed several claims of the '502 patent covering a pharmaceutical formulation stabilized exclusively by an amido-group containing polymeric compound ("AGCP compound").  The problem Teva faced was that AstraZeneca had made the first batches of its drug in the summer of 1999, prior to Teva's asserted invention date of December 1999. Given this prior invention by AstraZeneca, the district court granted summary judgment of anticipation under 102(g)(2). Teva appealed.

Teva's principal argument on appeal was that because AstraZeneca had failed to appreciate the stabilizing role the AGCP compound played in its drug product in 1999, it had not conceived of – and therefore not made – the invention as required by 102(g)(2).  This argument rested on the undisputed fact that although AstraZeneca's drug contained an AGCP compound, it was designed to use a non-AGCP compound as the stabilizer; the AGCP compound was believed to be a disintegrant.

Note: Because both the product that Teva accused of infringing and the 1999 batches were the same formulation, AstraZeneca conceded infringement for purposes of its motion for summary judgment of invalidity.  In other words, it was undisputed that the AGCP compound was acting as the exclusive stabilizer even if AstraZeneca was unaware of that fact in 1999.

Conception requires an appreciation of what is made, not why it works: Rejecting Teva's argument, the panel concluded that AstraZeneca had met the requirement for conception of its prior invention by appreciating "that the compound it created was stable and what the components of the formulation were."  Slip Op. at 12.  AstraZeneca did not need to appreciate which component was responsible for the stabilization or why the invention worked.

The "invention" as distinct from the claims for purposes of 102(g): In arriving at its ultimate conclusion of anticipation, the court drew a distinction between the "invention" and the claims, at least for purposes of 102(g).  Traditionally, an anticipation analysis involves first establishing that something is prior art and then demonstrating that this prior art contains all the elements of the claimed invention either expressly or inherently.  Under a conventional approach to anticipation, then, Teva's claims would be invalid once the prior art status of AstraZeneca's 1999 batches was established since there was no dispute that the batches met all the limitations of Teva's claims.

Section 102(g) operates somewhat differently, however, due to its origins in the interference context. It requires that another inventor have made "the invention" that is at issue.  To address this issue, the court in Teva invoked a broad view of what constitutes the "invention" that allowed it to conclude that AstraZeneca had conceived of the same invention as Teva despite AstraZeneca's failure to think of it in the claimed terms.  Quoting from Dow Chemical Co. v. Astrao-Valcour, Inc., 267 F.3d 1334 (Fed. Cir. 2001), the court applied a concept of the "invention" as distinct from the claims.  "The invention is not the language of the [claim] but the subject matter thereby defined."  Slip Op. at 12, quoting Dow (quoting Silvestri v. Grant, 496 F.2d 593, 597, 599 (CCPA 1974)).  “The language of the count is but one way to define the new form and certainly not a unique definition [. . . and a]ny claim they might have written, based on this or other information specific to [the new form] would still define the same subject matter as the count even though in different terms.” Slip Op. at 9, quoting Silvestri at 601 (CCPA 1974)).  “[T]hat which we call a rose [b]y any other name would smell as sweet.”  Slip Op. at 9, quoting William Shakespeare, Romeo and Juliette act 2, sc. 2.  Based on this view of the "invention" as a metaphysical entity existing independent of any defining claim language, the court held that AstraZeneca had conceived of Teva's invention, despite doing so in different terms than Teva chose to use in the patent claims. 

The Impact of the AIA: With the change to a first-to-file-or-first-to-disclose system, the America Invents Act eliminates 102(g)(2) prior art.  The impact of this change is significant in cases such as this one: under the future 102, AstraZeneca would not have been able to bring this validity challenge.  Nor is it probable that AstraZeneca could seek protection under the framework of prior user rights: even if its batches met the requirement of being a composition of matter used in a commercial process (there's a strong argument they would not), AstraZeneca's manufacture began less than one year before the filing date of Teva's provisional patent application.

Correction: The first sentence of the original version of this post referred to secret art as art that is unavailable to the public as of the patent's priority date.  That is incorrect.  Secret prior art is prior art that is unavailable to the public as of the invention date for the patent (the relevant date for purposes of 102(e), (f), and (g)). 

Addendum: Several of the comments have pointed to the sentence in the court's opinion that says "By late summer 1999, AstraZeneca had disclosed the ingredients and quantities for its rosuvastatin formulation matching those of all commercial drug dosage strengths," and pointed out that this implies that AstraZeneca's formulation was publicly disclosed prior to Teva's invention date.  The court's use of "disclosure," however, appears to just be an unfortunate word choice.  According to AstraZeneca's brief, the only relevant events that took place during that time period were the manufacture of the batches and an internal company presentation on the finalized sales formulation of the tablets.  Any form of public disclosure took place much later, such as through its patents and applications, the first of which was filed in Great Britain on January 26, 2000.

Divided Patent Ownership, Equitable Title, and Failed Assignments

by Dennis Crouch

Gellman v. Telular Corp. (Fed. Cir. 2011)

Issues of standing continue to arise in patent infringement litigation. Well established precedent requires that plaintiffs suing for infringement collectively hold "all substantial rights" in the patent being asserted. Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24 (1923). Thus, if two entities jointly own a patent, standing would only be proper if both entities jointly filed the infringement action. A lesser explored area of the law relevant to this case involves the requirements to prove ownership and the potential burden-shifting effect of assignment recordation.

Gellman's lawsuit involves U.S. Patent No. 6,075,451 which lists Mayer Lebowitz and Jim Seivert as co-inventors. (Seivert's name is misspelled as Sievert on the patent document). Both inventors are now dead. Lebowitz's rights to the patent are being held in trust and the trustee has argued that Seivert's rights to the patent were previously assigned to Lebowitz as well. Supporting that assertion is an assignment from Seivert to Lebowitz that was recorded in the USPTO assignment database in 1998. Unfortunately for the Lebowitz Trust, the assignment document filed with the PTO had a blank signature line and the Trust has been unable to produce any evidence that the assignment document was ever signed.

Three important consequences flow from a conclusion that Seivert never transferred his interest to Lebowitz. First, Seivert's heirs,  beneficiaries, or their assigns now share ownership in the patent. In this case, it appears that Seivert did not designate a beneficiary and therefore ownership is split amongst his heirs according to state intestate law. Second, the Lebowitz trust has no standing to sue because it does not hold substantially all interests in the patent. Third, absent prior agreement, each co-owner of a patent has the full right to offer a license to the defendants to practice the invention, normally without any accounting or compensation to the other patent owners. Here, in a filing with the district court the defendants have asserted that they have each obtained a patent license and release from the Seivert estate.

The Lebowitz Trust (Gellman) made two additional arguments in an attempt to prove that rights had been transferred: (1) the consulting contract and (2) the hired-to-invent doctrine.

The consulting agreement between Seivert and Lebowitz included a clause that any “ideas, discoveries, [or] inventions” by Seivert “shall be and remain the exclusive property” of Lebowitz. And, in addition, Seivert agreed “to execute any and all assignments” necessary.  The agreement had a major problem in that the only record available was unsigned.  In examining the contract, the Federal Circuit additionally found that the agreement was inadequate to prove that a transfer occurred even if it had been properly executed. In particular, the court indicated that the future promise to execute an assignment suggested that no transfer had previously occurred.  The court wrote (I would argue incorrectly) that “[o]therwise, the 'execute any and all assignments' language in the contract is surplusage without relevant meaning.”

In reading the promise to assign, the court agreed that it may create an equitable claim to title in favor of Lebowitz.  However, the law is clear that equitable title is insufficient to confer standing.

Of note, the court's interpretation of the contract appears to be based entirely upon Federal Circuit law rather than state law.

Hired to Invent: Normally patent rights are held by the inventors until those rights are assigned in a written agreement.  This is true even when the inventor is an employee and the invention was created within the scope of the employment. There are a few limited exceptions to this practice that transfer patent rights through operation of law rather than through written assignment. One historic exception is the “hired-to-invent” doctrine that some courts have used to transfer ownership of patent rights to an employer when the employee is hired to make a particular invention. See, e.g., Solomons v. United States, 137 U.S. 342, 346 (1890). This hired to invent doctrine cannot help the Lebowitz Trust here because the doctrine has been interpreted to create “creates only an obligation for the employee to assign to his employer.”

Affirmed. Case Dismissed for Lack of Standing.

Next Steps: If the Lebowitz Trust wants to pursue the lawsuit, it will need to first force transfer of rights from the Seivert estate and then refile the suit against the accused infringers.

Patently-O Bits & Bytes by Lawrence Higgins

USPTO's Steve Jobs Exhibit

• On November 16^th the USPTO unveiled the Steve Jobs exhibit, highlighting the Patents and Trademarks of Steve Jobs. "This exhibit commemorates the far-reaching impact of Steve Jobs' entrepreneurship and innovation on our daily lives," said David Kappos. "His patents and trademarks provide a striking example of the importance intellectual property plays in the global marketplace." The exhibit features more than 300 of the patents that Steve bear Steve Jobs name. The exhibit will run through January 15, 2012 and is free and open to the public. [Link] [Link]

Kauffman Foundation

• The Ewing Marion Kauffman Foundation is pleased to announce that the nomination period is now open for the Kauffman Junior Faculty Fellowship in Entrepreneurship Research (KJFF). The Kauffman Foundation will award up to seven Junior Faculty Fellowship grants to junior faculty members in the United States whose research has the potential to make significant contributions to the body of literature in entrepreneurship. Each Fellow's university will receive a grant of $40,000 over two years to support the research activities of the Fellow. Nominees must be tenured or tenure-track junior faculty members at accredited U.S. institutions of higher education who received a Ph.D. or equivalent doctoral degree between January 1, 2007 and December 31, 2010. [Link]

Northern District of California

• The Court is considering adopting a new Civil Local Rule 5-4 that will address the requirements for electronic filing and abrogating General Order 45. The new rule reflects the evolution of the e-filing program and more accurately captures the current requirements than does the general order which was written in 2003 shortly after the inception of the e-filing program. Comments may be submitted by sending an e-mail to evidence@cand.uscourts.gov before 5:00 p.m. (PST) on December 14, 2011. View the notice and the draft rule: [Link].
• On November 10, 2011, the District and Magistrate Judges of the Northern District of California adopted General Order 67, promulgating new procedures for the assignment of patent cases. In order to allow necessary changes to be made to the District's computer-based case assignment system, the new procedures will become effective on January 1, 2012. Earlier in 2011, the Northern District successfully applied to the Administrative Office of the United States Courts for designation as a participating district in the Patent Pilot Program. District Judges participating in the program are: Chief District Judge James Ware, Senior District Judge Ronald Whyte, District Judge Jeffrey S. White, District Judge Lucy Koh and District Judge Edward Davila.
• Although the implementing patent pilot statute refers to District Judges as pilot judges, the Northern District has taken the position that the patent pilot statute does not supersede statutes that allow Magistrate Judges to handle any case pursuant to consent by the parties. Therefore, as the following Magistrate Judges have a particular interest in presiding over patent cases and subject to consent of the parties, the Court will strive to increase the number of patent cases assigned to these judges: Magistrate Judge Elizabeth Laporte, Magistrate Judge Joseph C. Spero, Magistrate Judge Laurel Beeler, Magistrate Judge Donna M. Ryu, Magistrate Judge Paul Grewal, Magistrate Judge Jacqueline Scott Corley and Magistrate Judge Nathanael Cousins. In the remaining weeks of 2011, members of Judge Koh's committee will hold a series of meetings with local bar associations to discuss the new procedures. View the notice and the text of General Order 67: [Link].

Patent Jobs:

• Young Basile is searching for a patent attorney with 1-4 years of experience and a degree in EE or CS. [Link]
• Singleton Law Firm is looking for a patent attorney/agent to work in the electrical area. [Link]
• Coats & Bennett is seeking a patent attorney with a degree in EE and at least 2 years of patent prep and prosecution experience. [Link]
• Sheppard Mullin is seeking 2 attorneys (1) an associate with at least 2 years of patent prosecution experience, and (2) an associate with 2-4 years of patent litigation experience. [Link]
• McDermott Will & Emery is searching for an associate with 2-5 years of patent litigation experience. [Link]
• Howard & Howard is seeking a patent attorney with 3-9 years of experience in patent prep and prosecution and a chemical background. [Link]
• Patterson Thuente IP is looking for a patent attorney with a minimum of 2 years experience in patent prosecution for high tech clients. [Link]
• Michaud-Kinney Group is searching for an IP associate with an electrical or mechanical background and at least 3 years of experience in patent prep and prosecution. [Link]
• O'Brien Jones is looking for patent attorneys/agents with 2-5 years of experience. [Link]
• Buether Joe & Carpenter is seeking 1 or more attorneys with patent infringement litigation experience. (5 or more years of patent litigation experience preferred) [Link]
• Cantor Colburn is searching for a patent attorney with an advanced degree in organic chemistry and at least 2 years of patent drafting experience. [Link]

Upcoming Events:

• On December 1, 2011, the Institute for Intellectual Property and Social Justice (IIPSJ) will co-present with the United States Patent and Trademark Office (USPTO) the Second National IP Empowerment Summit. The IIPSJ/USPTO IP Empowerment Summit will serve the general public and intellectual property professional and activist community in educating and empowering minority and marginalized artists, inventors, entrepreneurs, and other IP stakeholders in underserved communities. The Summit will provide practical information and presentations for creators and inventors regarding the development, protection, and exploitation of their own innovative and creative works as well as works and inventions in the public domain. [Link]
• Indiana University School of Law's Center for IP Law and Innovation will hold "The America Invents Act: Patent Law's New Lease on Life" symposium on December 2^nd. Speakers include a legendary patent law jurist, patent reform leaders, chief corporate patent counsel, leading practitioners and scholars, as well as the PTO's Patent Reform Coordinator. [Link]
• The American Conference Institute's 2^nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7^th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]
• IBC Legal is holding a conference on International Patent Litigation 2011 in London on December 7^th-8^th. Use VIP Code FKW82249PO to get a 10% discount. [Link]
• The Lawyers Association of Kansas City will be presenting a 4 hour CLE on changes to US patent law under the America Invents Act at the offices of Lathrop & Gage in Kansas City, MO on Thursday, Dec. 8, 2011 from 1pm to 5pm. Presenters include: Kent Erickson, Bryan Stanley, and John Garretson. [Link]
• The WSBA IP Section, WSPLA, IEEE IP Professional Initiative, and the University of Washington School of Law's Law, Technology & Arts Group will be presenting an all-day CLE at the University of Washington School of Law on Friday, December 9, 2011 on the impacts of the America Invents Act.
• Fitch, Even, Tabin & Flannery will hold a free webinar, "Collection, Review, and Production of Your Client's Electronic Information," presented by Shane Delsman on December 14, 2011 at 12:00 noon EST. The webinar will cover topics including collecting electronically stored information (ESI) for further use in the e-discovery process; processing collected ESI; reviewing ESI for relevance and privilege; producing ESI in appropriate forms and storage media; and how the Federal Rules affect the above procedures. [Link]
• On December 16, the University of San Diego School of Law will host "A Review of the America Invents Act and its impact on the USPTO," with David Kappos. Kappos will discuss the USPTO's efforts to start implementing the law and also give a broad perspective of the various changes the agency is undertaking to facilitate the public's understanding of regulatory revisions. Also, Leonard Svensson will provide a brief overview of the major changes included in the America Invents Act and what the changes means for the San Diego innovation economy. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Are Patent Filings Increasing or Decreasing?

by Dennis Crouch

The USPTO recently reported that in FY2011 and for the first time in history, more than 500,000 patent applications were filed during the fiscal year. 500,000 is a large number, but it turns out that the report of increased patent filings should not be seen as suggesting an increase in innovative activity. Rather, as the charts below demonstrate, the number of new patent filings has actually decreased over the past five years.

The dramatic increase in reported application filings shown by the chart above is entirely explained by the USPTO's odd accounting practice that counts the procedural "request for continued examination" (RCE) as a utility application filing. Under US patent procedures, a patent applicant faces a decision point after receiving a final rejection from the patent examiner. Generally, the applicant can (1) appeal the rejection to the administrative board, (2) abandon the application, or (3) file an RCE along with new material regarding patentability of the invention. Once an RCE is filed (along with the required fee), the same patent examiner is ordinarily required to again review the application and give it full consideration as to the patentability of the claimed invention.

As the chart below demonstrates, the number of RCEs filed annually has increased dramatically – almost doubling over the past five years. At the same time, original utility patent application filings have dropped slightly. I.e., patent filings are down. (To be clear, "original" applications as used here also include utility applications that claim priority to US provisional applications, international patent applications (PCTs), and foreign patent applications.)

What's the point: A rise in filings is helpful for the USPTO because it allows the agency to justify increased funding requests; to show its stature amongst world patent offices; and to demonstrate that the agency truly serves as a gatekeeper. Unfortunately, the report is not accurate. The positive side of these numbers is that the steady filing numbers should give the PTO breathing room to address the backlog of 1.2 million pending utility patent applications. 

Innovation and Competition Policy

By Dennis Crouch

Professor Herbert Hovenkamp (U. Iowa) is the most influential US antitrust scholar and author of the most cited legal treatise on antitrust law. He has written extensively on all areas of antitrust law, including the intersection between antitrust, innovation, and intellectual property.

Although the antitrust treatise sells for over $3,000, Professor Hovenkamp recently made new casebook on innovation and competition available for a free download (subject to an open source license agreement). The casebook is entitled INNOVATION AND COMPETITION POLICY: CASES AND MATERIALS. Professor Hovenkamp introduces the book as follows:

This book … differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). The author uses this casebook for a three-unit class in Innovation and Competition Policy taught at the University of Iowa College of Law and available to first year law students as an elective.

Major topics include

• Impact of patent scope on competition;
• The law of tying;
• Determining harm to innovation;
• Competition policy in patent law;
• Competition policy in copyright and under the DMCA;
• Restraints on innovation;
• Misuse of intellectual property;
• Anticompetitive exclusion;
• Innovation commons; and
• Post-sale restraints that involve IP rights.

In the words of Prof. Solum, Download it while its hot!

USPTO Patent Grants

The USPTO appears headed toward another record breaking year in 2011 — issuing more utility patents in 2011 than in any prior year. I project that the PTO will issue about 225,000 utility patents by the end of the year, slightly more than last year’s record number of just under 220,000.  The vast majority of patents issued this year claim priority to at least one earlier patent document such as an international patent application (PCT), US provisional application, or prior US utility application.

Data is here.

In re Ricoh Patent Litigation: Costs May Be Awarded For Document Production Databases

By Jason Rantanen

In re Ricoh Company, Ltd. Patent Litigation (Fed. Cir. 2011) Download 11-1199
Panel: Lourie, Bryson, Dyk (author)

After seven years of litigation between Ricoh Co., the patent holder, and Synopsys, Inc., the latter party prevailed via summary judgment of noninfringement, a decision affirmed by the Federal Circuit earlier this year.  After Synopsys's victory on the merits, the district court awarded costs totalling $938,957.72.  Ricoh appealed, challenging three categories of costs as not allowed by 28 U.S.C. § 1920, the relevant authorizing statute.  In ruling on Ricoh's challenges, the Federal Circuit applied the law of the regional circuit (in this case that of the Ninth). 

Costs for Document Production Database: A significant expense of patent litigation is that of document discovery and this case was no exception.  During discovery Ricoh sought production of emails and other documents.  Initially the parties were unable to agree on the form of production, but ultimately agreed that Synopsys would produce documents using Stratify, an e-discovery company that provides document processing, review, production and hosting services.  The district court awarded the full cost of using Stratify as "fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case" under § 1920(4).

On appeal the CAFC agreed with the court's characterization of the costs.  "The act of producing documents is not so narrowly construed as to cover only printing and Bates-labeling a document."  Slip Op. at 6.  "Thus, the costs of producing a document electronically can be recoverable under section 1920(4)."  Id. at 7.  In this case, however, Ricoh and Synopsys had agreed during the litigation to share the costs of using Stratify.  The CAFC held that the agreement was controlling, leading it to reverse the district court's award for Synopsys's share of the database.

Note: Although not explicitly addressed by the panel, the parties' briefs suggest that Synopsys used Stratify as a mechanism for both review and production.  The CAFC's opinion is unclear on whether this should make any difference – it both implies that this dual use does not matter ("We do not consider any of the Stratify database costs to fall into the unrecoverable category of 'intellectual efforts,'" Slip Op. at 7), while at the same time leaving open the future possibility of disallowing certain costs tangential to the production itself. ("In light of our decision, we need not decide if the additional challenged items related to the database were improperly allowed.")

 Copying Costs Must Be Specific: The CAFC also declined to affirm the district court's award of copying costs, citing a lack of specificity in the supporting documentation:

When the prevailing party seeks to recover copying costs related to its own document production, to meet the documentation requirements, the prevailing party must establish, in connection with its proposed Bill of Costs, that the reproduced documents were produced by it pursuant to Rule 26 or other discovery rules; that they were copied at the prevailing party’s expense and at the request of the opposing party; and that the copies were tendered to the opposing party.

Depositions and Translation Costs Allowable: Ricoh also challenged the award of costs associated with depositions that were related to issues other than noninfringement.  The CAFC concluded that allowing costs for these depositions was within the discretion of the district court as it was reasonable to expect they would be used in trial.  It further held that the district court appropriately taxed costs for both  videotaping and preparation of written transcripts, rejecting Ricoh's argument that it was limited to one or the other.  

Holiday Gift List for Patent Attorneys and the Like

Happy Thanksgiving!

It is early in the holiday season, but not for mail-order… I'm also posting this list now to give you ample time to forward the list to potential gift-givers. Here are a dozen holiday gifts for patent law professionals.

1. Knives? Yes patent attorneys can be excellent cooks if given the right tools and the right cook books. In my home, I use the very best unpretentious inexpensive knives on the market: Swiss Made Victorinox with Fibrox handles. A solid 8-inch chef knife sells for $26 at Amazon. The best cookbook is by Cooks Illustrated.
2. I have not tried this one — The Celluon Magic Cube Laser Projection Keyboard and Touchpad.  This futuristic device works according to independent reviews that I read.  The idea is that a little device wirelessly connects to your computer, phone, or tablet and then uses a laser to project a workable keyboard onto a flat surface! My photo here shows it in use with an iPad, but it works well with non-Apple equipment. $170. Watch it on YouTube.
3. Making Your Case: The Art of Persuading Judges, by Justice Antonin Scalia and Bryan Garner.  
4. Kindle is still a good bet. I'd go with either the Kindle Touch 3G (without special offers) or else the new Kindle Fire. 
5. Digital Microscope with USB port to plug directly into the computer: Nature + Technology for $99.
6. Utilikey 6-in-1 tool. 
7. A Blue Laser Pointer.
8. Really strong fridge magnets made of the rare earth metal neodymium. ($8 for 10).
9. For those long nights at trial: http://www.iamastuffedanimal.com/
10. Mini-Tripod ($3).
11. BBQ Skewers: Link ($10)

(Special thanks to Erik Flom of Husch Blackwell for his help in compiling this list.)

 

 

New BPAI Final Rules

by Dennis Crouch

There are now 25,000 ex parte cases pending resolution before the Board of Patent Appeals and Interferences. For the most part, cases being decided today are appeals from final rejections mailed back in 2008 – at a time when the backlog was 80% less than today. And, as the chart below demonstrates, the backlog continues to grow at an alarming pace. Today, the USPTO published a new set of final rules of practice regarding ex parte patent appeals before the Board. The new rules do not directly address the backlog, but do refer to "streamlining" as an important purpose of the rules. As an aside, the recently published FY2011 USPTO Performance Report also fails to mention the BPAI backlog.

New Rules: The newly published rules are designed to "streamline" practice before the Board of Patent Appeals and Interferences (BPAI) and only apply to ex parte patent appeals. As published, the rules will become effective in on January 21, 2011. The PTO had previously published a similar final that never went into effect and that is now formally withdrawn.

Changes include:

• Jurisdiction: The Board will take jurisdiction over appeals automatically upon either the filing of the reply brief or expiration of the reply briefing filing deadline. Examiners will no longer be required to acknowledge the filing of a reply brief before the Board claims jurisdiction. (Historically, awaiting examiner acknowledgement took an average of 55 days).
• Petitions During Appeal: Under the new rule, any petition (or information disclosure statement) filed while the Board possesses jurisdiction over the proceeding will be held in abeyance until the Board's jurisdiction ends and will not be considered "of record" in the appeal. The primary exception to this is with regard to a petition seeking review of an examiner's failure to designate a rejection in the answer as a new ground of rejection prior to filing a reply brief. In that case, the applicant can await the petition decision and thereby avoid having to file a request for extension of time in which to file the reply brief.
• New Grounds of Rejection: The rules clarify that an argument in the examiner's answer that uses evidence that was not relied upon in the office action will be considered a new ground of rejection. In addition, a rejection will be considered a "new grounds" when the "basic thrust" of the rejection as presented in the examiner's answer or the Board's decision is different than that presented in the office action. However, an examiner or Board's use of certain extrinsic evidence such as dictionaries will not, according to the new rules, automatically result in a new ground of rejection. The rules also include a loosening of the requirements on requests for re-hearing so that an applicant can present new arguments in a request for rehearing that respond to the merits of a new ground of rejection and allows the applicant to request rehearing for the purposes of arguing that the Board's decision contains an undesignated new ground of rejection.
• Removal of Briefing Requirements: Removal of several briefing requirements, including statements of the status of claims, the status of amendments, and the grounds of rejection to be reviewed on appeal as well as an evidence appendix or a related proceedings appendix.
• Claims Being Appealed: The new rule will require the Board to presume that the applicant is appealing all rejected claims.

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Bits and Bytes by Dennis Crouch

PTO Funding:

• PTO Funding: The US Joint Select Committee on Deficit Reduction (i.e., the Congressional Super-Committee) is unlikely to come to any agreement before its statutory deadline of November 23, 2011. The result is that the PTO’s allowed expenditures will likely be reduced in the resulting across-the-board cuts.
• PTO Funding: Senator Kyl had pushed for a USPTO-funding provision in the Super-Committee agreement that would give the agency full authority to spend fees collected. However, that result is unlikely even if an agreement is eventually reached.
• PTO Funding: As expected, the PTO received a rush of filings in the days leading up to the 15% fee hike on September 26, 2011. The PTO will not be allowed to spend that money because those payments were received in FY2011 and because the PTO had already collected more than its $2.09 billion authorization. Thus, for FY2011, $209 million in fee-revenue will be kept by the Treasury and spent on other governmental programs. The “reserve fund” was not established until the start of FY2012.

Dispute Resolution:

• Dispute Resolution: Professor S.I. Strong and I both recently joined the Patent Mediation Task Force of the International Institute for Conflict Prevention and Resolution. The Patent Mediation Task Force is chaired by Manny Schecter of IBM. Our Task Force is focusing on both addressing particular hurdles that patent litigation presents for the mediation process and promoting mediation as a valuable tool resolving and narrowing patent disputes.
• Dispute Resolution: I am also happy to announce that I recently joined University of Missouri’s Center for the Study of Dispute Resolution as a Senior Fellow.

iPad App:

• iPad App: The folks at Cooper Legal have developed a Patent Portal App for searching for and viewing patents and patent applications.
• iPad App: Tom Brow has developed an iPad app for logging in to EFS-web and PrivatePAIR.  The app securely transmits your PKI certificate and password to a remote server, which logs you in, then discards the certificate and password.  EFS and PrivatePAIR can then be used as usual, with no further server involvement.  Brow is looking for testers in the private beta.

Evaluating Supplemental Examination

By Jason Rantanen

As seen in the recent Powell v. Home Depot case that Professor Crouch wrote about last week, the net effect of a weakened inequitable conduct doctrine post-Therasense is an increase in the ability of applicants to engage in troubling behavior during patent prosecution.  My colleague Lee Petherbridge and I expressed this concern shortly after Therasense issued, particularly warning about its consequences for patent prosecutors who are arguably worse-off post-Therasense, caught between clients who may be more interested in playing fast and loose with the rules and their own ethical and legal responsibilities.

Therasense was not the only significant development in the area of inequitable conduct this year, however.  The creation of a mechanism for supplemental examination in the Leahy-Smith America Invents Act further alters the landscape of inequitable conduct, and not necessarily in a positive way.  In a short essay recently published in Michigan Law Review First Impressions, Professor Petherbridge and I examine the supplemental examination mechanism created by the AIA and conclude that it may jeopardize American innovation, job creation, and economic competitiveness.

A copy of the piece is available via SSRN.

Patent Models

By Jason Rantanen

As every student of patent law knows, inventors were required to submit a working miniature model of their invention along with their patent application until the late nineteenth-century.  Famous models include those of such iconic inventions as the Whitney cotton gin, the Singer sewing machine, and the Morse telegraph register.  A substantial number of those models still exist, although virtually all are in private collections. 

The Smithsonian Institute recently opened a a two-year exhibition of patent models from the collection of Alan Rothchild, offering everyone an opportunity to view examples of these models.  Entitled "Inventing a Better Mousetrap: Patent Models from the Rothschild Collection," the curated exhibit runs until November 3, 2013.  If you are in Washington D.C., it may be worth your while to wander over to the American Art Museum to check it out. 

Bonus: the Rothchild Peterson Patent Model Museum website has a page explaining what the models are and linking to the patents themselves.  

Federal Circuit Divided on Federal Jurisdiction over Legal Malpractice Claims

Stephen Byrne v. Wood, Herron & Evans (Fed. Cir. 2011)

Byrne’s malpractice claim alleges that his former patent attorneys at WHE failed to secure broad enough patent protection for his weed trimming device. See RE 34,815. In 2004, Byrne sued Black & Decker but lost on summary judgment. In that case, the district court ruled that B&D’s device could not infringe because of it did not include a “generally planar outboard flail stabilizing surface” as required by Byrne’s patent claims.

In the subsequent legal malpractice claim, WHE filed a summary judgment motion arguing that the prosecution history showed clearly that the “generally planar” limitation was necessary in order to distinguish Byrne’s invention from the cited prior art.  WHE also argued that Mr. Byrne’s claim should fail because he had so fully participated in the prosecution, including the addition of that limitation into the claim. In the responsive motion, Byrne filed an affidavit discussing the scope of the cited prior art and arguing that the limitation was not necessary for patentability.  Acting sua sponte, the district court rejected Byrne’s testimony — holding that he was not qualified to offer expert testimony as one of ordinary skill in the art.  Without any rebuttal evidence, the court then granted WHE’s motion for summary judgment of no malpractice.

Jurisdiction over Patent Prosecution Malpractice. In several recent cases, the Federal Circuit has expanded the scope of federal court and Federal Circuit jurisdiction over patent malpractice cases. Writing for a 2–1 majority, Judge O’Malley agreed that stare decisis compels federal jurisdiction in this case, but argued that the jurisdictional law should be revisited for cases like this where the cause of action is based upon state-law (malpractice) and the patent issue is only a question of a hypothetical patent claim.

Indeed, it is only the “special and small category” or “slim category” of cases in which a state law cause of action will trigger federal jurisdiction. . . .

[I]t is difficult to see teh federal interest in determining the validity of a hypothetical patent claim that is ancillary to a state law malpractice action. The outcome of such determinations invariably will rest on case-specific inquiries comparing prior art against patent claims that have not and will never issue. As such, these determinations, which involve only application and not interpretation of patent law, have little or no bearing on other cases. On the other hand, finding federal jurisdiction over malpractice cases involving questions of hypothetical patent claims opens the federal courthouse to an entire class of actions, thereby usurping state authority over this traditionally state law tort issue. . . .

Applying these federalism considerations, several courts either have outright disagreed with our analysis or have found a meaningful distinction when only hypothetical patent rights are at stake. . . . In many cases, the procedural posture prevents us from reviewing these decisions, thus allowing courts simply to ignore our law. We address the issues in this appeal, however, because our existing case law compels us to do so.

This is the type of issue that the Supreme Court tends to hear, and a high quality petition for certiorari would have a good chance of gaining the high court’s attention.  Aiding this theory are the growing number of state and federal court decisions that have criticized the Federal Circuit jurisdictional holdings and the general rarity non-patent-related cases of finding federal question “arising under” jurisdiction where no federal cause of action is alleged. 

On the merits, the Federal Circuit ruled that the lower court abused its discretion by refusing to let the inventor testify regarding the scope and content of the prior art and its relation to the invention. The particular problem with the lower court’s finding was that it made no finding of the qualifications of one of ordinary skill in the art and whether Byrne possessed that level of skill.  In several prior cases, the Federal Circuit has held that inventors typically possess at least ordinary skill in the relevant art and therefore “it is especially inappropriate for the district court to strike Byrne’s affidavit without going through the exercise of identifying the requisite level of skill.”  On remand, the district court will likely hear Byrne’s testimony and consequently reject WHE’s summary judgment motion.

Patently-O Bits & Bytes by Lawrence Higgins

Business Plan Competition

• The Licensing Executive Society Foundation 2012 International Graduate Student Business Plan Competition registration has started. Graduate students, including MS/MBA/MD/JD/PhD and postdoctoral scholars, from across the globe are invited to register (http://les2012.istart.org) to participate in the 2012 LES Foundation Graduate Student Business Plan Competition, which uniquely focuses on business plans that include an overview of IP assets and describe how those assets will be managed and commercialized to achieve business goals. Student teams will compete to win expenses-paid trips to the Final Round of Competition at the LES (USA & Canada) Spring Meeting in Boston, MA, May 15-17, where they will attend educational sessions, mingle with global IP leaders and compete for the $10,000 Grand Prize and valuable in-kind prizes or the $5,000 Global Award. Runner-up teams receive $1,000. Students receive comprehensive feedback throughout the process from IP business leaders who share valuable expertise earned in the trenches of businesses ranging from start-ups to Fortune 500 companies. [Link]

The American Growth, Recovery, Empowerment and Entrepreneurship (AGREE) Act

• On November 15, Senators Chris Coons and Marco Rubio introduced a jobs bill, the AGREE Act. Title VI: Protecting American Businesses Against Illegal Counterfeiting, of the Act reads: "The Coons-Rubio bill helps to protect American IP from counterfeit or otherwise infringing commercial activity. Specifically, the bill clarifies the Trade Secrets Act, making it explicitly clear that it is not a crime for federal officials, in the performance of their duties, to share information about suspected infringing products with the right holder of a trademarked good." This language will supposedly allow custom and border patrol agents to determine if merchandise is legitimate by asking the owner of the trademark that appears on the product. Further, Title II: Encouraging Cutting Edge-Research and Innovation, discusses various tax credits for businesses and is supported by BIO and the Semiconductor Industry Association. [Link]

.xxx and Cybersquatting

• It seems that many universities and companies are playing it safe and are acquiring .xxx domain names. Organizations can currently pre-register .xxx domain names for around $200 dollars. The University of Missouri recently pre-registered mizzou.xxx, missouri.xxx, and missouritigers.xxx, because they do not want people coming across their trademarks on porn sites. It would seem ideal for educational institutions to pre-register .xxx domain names. However, should every trademark owner be so cautious? Cybersquatting is registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. Cybersquatters can cost organizations money and time in their pursuit to try to get rights to a domain name. Therefore, I would think that it would be better to play it safe in this situation, and pre-register .xxx domain names. However, in the near future, there may be some very interesting cases of cybersquatting if an organization fails to pre-register. [Link] [Link]

Patent Jobs:

• Baker & Hostetler is seeking a patent attorney with 5-8 years of experience. [Link]
• Hewlett-Packard Company is searching for a patent counsel with a degree in EE, CE, Physics, or CE and 0-6 years of experience. [Link]
• Hiscock & Barclay is looking for a patent attorney/agent with 3-5 years of experience. [Link]
• Pramudji Law Group is seeking a patent attorney/agent with at least 2 years of experience and a degree in EE or physics. [Link]
• Thompson Hine is searching for an associate with 3-5 years of experience and a degree in engineering or physics. [Link]
• Abel IP is looking for a patent attorney with 4+ years of experience and a background in chemical and/or ceramic materials. [Link]
• Oblon Spivak is seeking associates with 3-7 years of experience and a background in electrical or mechanical arts. [Link]
• Shumaker & Sieffert is searching for patent attorneys with 2-5 years of experience and a background in EE, CE, CS, or physics. [Link]
• Patent GC is looking for a trademark attorney and a patent attorney with an EE or CS background and 10+ years of experience in each case. [Link]
• Mannava & King is looking for an electrical engineering patent attorney/agent and at least 2 years of experience. [Link]
• Kacvinsky is seeking lateral associates with 4+ years of patent preparation experience and a degree in EE, CE, or CS. [Link]

Upcoming Events:

• Has Your ADR Neutral Met Their Disclosure Requirement? Webinar will be held on November 18. The webinar is sponsored by the ABA Section on IP Law and ABA-IPL Young Lawyers Action Group. The program will discuss different ethical conflicts that may arise during IP Mediation/Arbitration and the level of disclosure required by the mediator/arbitrator. The webinar will start at 1:00 PM eastern time and last about 90 minutes. [Link]
• On Friday, November 18, the Intellectual Property Institute at the University of Richmond School of Law will host the Fifth Annual Evil Twin Debate, featuring Professor Daniel Crane of University of Michigan Law School and Professor Michael Carrier of Rutgers University School of Law at Camden. The Evil Twin Debate series is founded on the notion that experts are often at loggerheads on important issues of IP policy, yet remain friendly on a personal level. The series therefore brings together pairs of scholars who disagree on an important IP topic, but who can air their disagreements in a friendly exchange — serious in substance but lighthearted in tone. [Link]
• IBC will hold a US Patent Reform Congress Conference on November 18^th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]
• Indiana University School of Law's Center for IP Law and Innovation will hold "The America Invents Act: Patent Law's New Lease on Life" symposium on December 2^nd. Speakers include a legendary patent law jurist, patent reform leaders, chief corporate patent counsel, leading practitioners and scholars, as well as the PTO's Patent Reform Coordinator. [Link]
• The American Conference Institute's 2^nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7^th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]
• IBC Legal is holding a conference on International Patent Litigation 2011 in London on December 7^th-8^th. Use VIP Code FKW82249PO to get a 10% discount. [Link]
• The WSBA IP Section, WSPLA, IEEE IP Professional Initiative, and the University of Washington School of Law's Law, Technology & Arts Group will be presenting an all-day CLE at the University of Washington School of Law on Friday, December 9, 2011 on the impacts of the America Invents Act.

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Inherency and Functional Claim Language

In re Conte (Fed. Cir. 2011)

Patent Attorney Francis Conte's patent application is directed to a fly-swatter in the shape of a pistol. When the trigger is pulled, an elastic lash provides a deadly whip.

The PTO rejected Conte's invention as obvious. On appeal, the Federal Circuit affirmed – holding the patent invalid in light of U.S. Patent No. 1,779,507 ("White") and U.S. Patent No. 2,642,057 ("Watkins"). These two references clearly taught all of the structural elements of the claims, and the court held that "it would have been obvious to one of ordinary skill in the art to combine the features of White and Watkins and arrive at the invention claimed in the '288 application."

All well and good, except for the limitations not discussed by the court.  The White and Watkins references were both directed to toy guns. White shot rubber bands. Watkins used a rubber band to shoot a pellet or pea. Neither was used to kill insects with a whip.   On the other hand, Conte's claimed invention is direted to an "insect swatter" with a distal end "for being aimed at an insect" and a lash for "whipping … against said insect."  Although the Federal Circuit did not address the insect limitations, the government brief noted that the cited prior art is all inherently "capable of being used to shoot insects" and that the claims only require that capability.  The government's interepretation here is the more traditional interpretation of functional limitations. However, that interpretation received some push-back in the Federal Circuit's recent Typhoon Touch decision.

Mr. Conte lost a similar Federal Circuit appeal in a predecessor case but was able to narrow his claims sufficiently to receive a patent. 

 

KISS my Patent

As this photo by Johnathan E. Mansfield shows, the allure of patent law continues to grow.  Professor Holbrook, co-author of the Patent Litigation and Strategy casebook writes that he is "Glad to see our Patent Litigation casebook has such wide appeal."  Judges Kimberly Moore and Paul Michel (retired) are co-authors.

 Of course, there may also be a trademark problem. See U.S. Trademark Serial Nos. 85/239,324, 85/239,312, 85/239,299, and 85/239,285, whose images are shown below.

The following statement is from the bat-wing-face registration: "The mark consists of a make-up design placed over the entire face and featuring bat wings around the eyes and make-up around the lips. The eyeballs, nose, teeth and tongue are not claimed as features of the mark." Although first used in commerce in 1974, the make-up designs were only registered as trademarks in August 2011.

Law School Question: How does the trademark registration impact the band's ability to also claim copyright protection for the design?

Federal Circuit Ducks Question of Federal Mediation Privilege

By Dennis Crouch

Kimberly-Clark Worldwide v. First-Quality Baby Products (Fed. Cir. 2011)

Diapers have been the subject of numerous patents and patent infringement lawsuits. In this case, K-C is suing its competitor, First Quality, for infringing more than a dozen diaper related patents.

The issue on appeal, however, focuses on a procedural matter: Whether K-C can be compelled to disclose information relating to prior alternative dispute resolution (ADR) proceedings between K-C and a different competitor, Proctor & Gamble. K-C argues that those ADR proceedings are privileged and therefore not discoverable.

The prior-ADR agreement between K-C and P&G were termed the ADR process a “non-binding arbitration.” In that process, both parties presented evidence to an agreed-upon neutral arbitrator who made a determination on the case. The loser of the arbitration was required to pay for cost of the arbitration. However, either party could reject the arbitrator’s decision and, if desired, file a district court lawsuit to resolve the dispute de novo. The agreement also included a provision that, if infringement was found, the losing party could avoid any damages at all by stopping the problematic activity within six months.

The Federal Rules of Evidence do not explicitly protect ADR proceedings except that Rule 408 prohibits a party from using certain compromises or “statements made in compromise negotiations” for the purposes of proving liability, invalidity of a claim, damages, or for impeachment of a witness. FRE 408. In addition, Rule 501 permits courts to apply “principles of the common law . . . in the light of reason and experience” in determining what additional information may be considered privileged.

Federal Mediation Privilege: Under the permission of Rule 501, the Pennsylvania District Court in this case followed other federal courts in adopting a “federal mediation privilege” that would privilege information and conduct associated with a mediated settlement process. Up to now, no federal court of appeals have recognized the privilege and, on appeal, the Federal Circuit refused to decide this issue. The appellate court wrote “we decline to determine if, in light of reason and experience, we should recognize a mediation privilege.”

What is a Mediation?: After agreeing that there is indeed a federal mediation privilege, the district court determined that the out-of-court resolution proceeding here did not count as a mediation but was rather an arbitration. As an arbitration, the prior proceedings did not qualify for the privilege. On appeal, the Federal Circuit affirmed – finding that the district court did not abuse its discretion in determining that the non-binding arbitration is not a mediation.

Privileging settlement discussions and mediations has two primary goals: (1) to encourage parties to settle disputes outside of court; and (2) to encourage a frank and candid discussion of the case in the settlement process. If statements from the mediation could later be used in court, parties would be likely to either refuse to participate or merely use the process to puff-up their position. In this case the neutral was charged with making a decision on the merits – i.e., the arbitration setup did not encourage a frank and candid discussion of the case. It is this difference that leads courts away from extending the mediation privilege to the arbitration context.

Affirmed

Notes:

• I thought that the oral arguments by Connie Trela (Sidley) and Michael Underhill (Boies Schiller) were particularly good. It may have been because oral arguments were held while the court was in Oregon sitting before a packed-house of IP attorneys.
• Although information regarding the prior arbitration is now discoverable, it will likely be disclosed only under seal – keeping it from the public purview.
• In a separate case between these same parties, Kimberly-Clark has filed a petition for a writ of certiorari to the Supreme Court asking the court to review the Federal Circuit’s “patent specific standard” for determining whether to grant preliminary injunction. The Federal Circuit recently denied en banc rehearing of the issue over dissents from judges Newman, O’Malley and Reyna. [En Banc Denial][Supreme Court Petition]

Recent Patent Law Scholarship Roundup

By Jason Rantanen

Paul J. Heald and Susannah Chapman, Veggie Tales: Pernicious Myths About Patents, Innovation and Crop Diversity in the Twentieth Century:
Who is correct: the ethnobotanists, with their belief that patents destroyed plant diversity in the twentieth century, or the economists, with their belief that patent law is essential to increasing plant diversity through innovation?  Based on a novel empirical analysis of vegetable crops and apples, Paul Heald and Susanna Chapman conclude that both are wrong: crop diversity has not declined since 1900; it has held steady or even increased.  And patents have played at most a minor role in innovation of new varieties of vegetables and apples.  While the authors' conclusions are not unassailable, they are surprising and thought provoking, and the paper is worth reading by anyone interested in patent policy, crop diversity, or even just the subject of where our food comes from.

One area in which I disagree with the paper's conclusions is in the interpretation of the data about the role patents play in the development of new varieties.  In support of their conclusion that patents played an insignificant role role in incentivizing the creation of new types of apples, the authors point to data suggesting that patented varieties comprised only 10% of the varieties of apple stock available in 2004 but not in 1900 (i.e.: "new" varieties).  Yet, 10% may be a significant figure in terms of marginal incentives, especially in an area where non-patent mechanisms are also likely operating to  encourage invention and where the cost of engaging in inventive activity may be relatively low.  Hobby gardeners, for example, may be producing a significant amount of new diversity in this area.  In addition, the 10% figure is based a whole that includes imported varities and newly identified historic varieties; when limited to new varieties due to innovation alone, the figure would be closer to 22% based on the reported data.

The complete article is available via ssrn here.

Sarah Tran, Patent Powers
Much has been said about the Leahy-Smith America Invents Act, but little intensive scholarly analysis has yet appeared.  Professor Tran engages in such an analysis with respect to a specific aspect of the AIA: the way in which it transforms the Patent and Trademark Office's rulemaking authority and how those changes affect the traditional power dynamic between courts and the PTO.  The PTO's new powers, Professor Tran concludes, "conflict irreconcilably with the Federal Circuit’s traditional view of PTO authority," and "require[] that the Agency engage in complex, policy-based decisions that may carry profound implications for inventors, patent law practitioners, and society at large."  Draft at 6.  To resolve this conflict, she proposes an analytical framework to delineate the proper extent of the PTO's authority under the AIA, one that shifts greater substantive rulemaking authority to the patent office. 

Professor Tran's current draft is available via ssrn here.  The article includes an extensive chart setting out each of the PTO's new rulemaking powers under the AIA. 

 

Patently-O Bits & Bytes by Lawrence Higgins

New Patent Search Tool

• ArchPatent is a brand new, free-to-use patent search resource that went live to the public on October 11th with US patents extending back to 1920. ArchPatent will be supported mainly by ad revenue. It was developed with the help of many PatenlyO readers, by aerospace engineers, and managers who specialize in data analysis and management. One of Arch PatentFounders, Brad Chassee indicated, "This tool was developed for those frustrated with the difficulty of using existing patent search tools. By providing simple yet powerful filtering tools, ArchPatent can drastically reduce search times, and our intuitive workspace functionality can greatly simplify larger, more complex search tasks." Many new features suggested by users are in the works for integration in future releases include: collaborative workspaces, matching of search terms within a single claim, filtering and advanced processing based on patents referenced and in-page PDF display. [Link]

Barnes & Noble Complains about Microsoft

• Barnes & Noble wants the DOJ to go after Microsoft because of their licensing tactics. Barnes & Noble asked the DOJ to investigate Microsoft for using patents to keep new players out of the market. It seems that Microsoft may have asked Barnes & Noble, maker of the Android powered Nook, to enter into license agreement. Barnes & Noble said in a letter to the DOJ that "Microsoft is attempting to raise its rivals' costs in order to drive out competition and to deter innovation in mobile devices." Microsoft is accusing Barnes & Noble of infringing 5 patents and Microsoft has filed a complaint with the ITC. Barnes & Noble claims that when they asked Microsoft for more detailed information related to these patents, Microsoft refused, claiming that the information was confidential and could not be shared, unless Barnes & Noble first executed a nondisclosure agreement. [Link] [Link]

Book Review

• I recently received a free copy of "Patent Professional's Handbook: A Training Tool for Administrative Staff," it is a book geared toward administrative staff/non-attorneys to give them an overview of what steps are involved in patent prosecution. The book starts with an explanation of patent basics and moves on to explain how to do business electronically with the USPTO. There are sections on establishing user accounts and accessing the USPTO's patent information website. The book includes numerous screen images to help the reader understand how to navigate the PTO website. The book is very easily understandable and gives step-by-step instructions on what needs to be done when communicating with the USPTO. This is the first book on the market addressed directly to non-attorneys and does not give any legal advice. This would be a great beginner book for individuals that want to be involved in the patent world in an administrative role or individuals that are currently in an administrative role as a go to guide. The author of the book is Susan Stiles; she has been a Legal Assistant for more than 25 years, with 19 years experience in IP. [Link]

Patent Jobs:

• Shuffle Master Inc. is looking for IP counsel with a minimum of 5 years of experience and an engineering background. [Link]
• Myers Wolin is seeking a patent attorney with 3-5 years of experience and a degree in electrical engineering. [Link]
• Cantor Colburn is seeking an associate patent attorney with 3-5 years of experience and a degree in electrical engineering. [Link]
• Toler Law Group is searching for patent attorneys with a degree in EE, CE, or CS. [Link]
• Cesari and McKenna is looking for patent attorney with 2-4 years of experience and a degree in EE, CS, or related area of technology. [Link]
• Sandia National Laboratories is searching for patent assistants with experience working with USPTO rules. [Link]
• Baker & Daniels is seeking a patent agent with a degree in EE or CS and patent experience to work in their Chicago office. [Link]
• The Storella Law Group is searching for a contract patent attorney or agent with a background in biotechnology. [Link]
• DIRECTV is seeking a senior patent analysis counsel with 6 or more years of experience in patent law. [Link]
• Wells St. John PS is looking for a patent attorney with 4+ years of experience in all aspects of IP. [Link]
• Harrity & Harrity is seeking a patent attorney with 2+ years of experience as a patent associate, agent, or examiner. [Link]
• Baker & Daniels is searching for an IP associate with 2-4 years of experience and a degree in EE or CS to work in their Indianapolis office. [Link]
• Skiermont Puckett is seeking 1 or more attorneys with 3 or more years of experience in a technical degree. [Link]
• Guntin Meles & Gust is searching for patent attorneys with 2+ years of experience and a degree in EE or CE. [Link]

Upcoming Events:

• World Research Group, an official Patently-O Jobs sponsor, is hosting the 3rd Annual Social TechNet Intellectual Property Forum Nov. 16-17 in New York. This conference provides solutions to the most prevalent in-house software and online IP protection and management issues. (Patently-O readers can save $200 by using promo code ABY668) [Link]
• IBC will hold a Standards and Patents Conference in London on November 16^th & 17^th. The conference will analyze the interplay between standards, intellectual property and competition law. There will be 28 speakers representing various organizations, such as, the European Commission, Mr. Justice Floyd, IBM, Qualcomm Europe, Nokia, GE Healthcare and Intel. (Patently-O readers receive a 10% discount) [Link]
• Fitch, Even, Tabin & Flannery will hold a free webinar, "The Leahy-Smith America Invents Act: A Further Look into First-to-File," presented by Jeffrey Chelstrom on November 17^th at 12:00 noon EST. The webinar will review and discuss many topics such as: the "effective filing date" of a patent application, changes to Section 102 and Section 103. New definitions to prior art, and many more topics. [Link]
• On Friday, November 18, the Intellectual Property Institute at the University of Richmond School of Law will host the Fifth Annual Evil Twin Debate, featuring Professor Daniel Crane of University of Michigan Law School and Professor Michael Carrier of Rutgers University School of Law at Camden. The Evil Twin Debate series is founded on the notion that experts are often at loggerheads on important issues of IP policy, yet remain friendly on a personal level. The series therefore brings together pairs of scholars who disagree on an important IP topic, but who can air their disagreements in a friendly exchange — serious in substance but lighthearted in tone. [Link]
• IBC will hold a US Patent Reform Congress Conference on November 18^th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]
• Indiana University School of Law's Center for IP Law and Innovation will hold "The America Invents Act: Patent Law's New Lease on Life" symposium on December 2^nd. Speakers include a legendary patent law jurist, patent reform leaders, chief corporate patent counsel, leading practitioners and scholars, as well as the PTO's Patent Reform Coordinator. [Link]
• The American Conference Institute's 2^nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7^th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]
• IBC Legal is holding a conference on International Patent Litigation 2011 in London on December 7^th-8^th. Use VIP Code FKW82249PO to get a 10% discount. [Link]
• The WSBA IP Section, WSPLA, IEEE IP Professional Initiative, and the University of Washington School of Law's Law, Technology & Arts Group will be presenting an all-day CLE at the University of Washington School of Law on Friday, December 9, 2011 on the impacts of the America Invents Act.

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Therasense: Encouraging Intentional Deception?

Powell v. Home Depot (Fed. Cir. 2011).

Michael Powell’s invention is fairly simple –  it covers a guard for a circular saw on an arm.  In 2004, Mr. Powell developed the guard and provided several prototypes to Home Depot for the company to use in its in-store saws for cutting raw lumber to customer specifications.  Rather than having Powell manufacture the guards, Home Depot turned to another company for its 2,000 stores.  Powell obtained a patent then sued Home Depot.  After a three-week trial, a Florida jury awarded Powell $15 million in damages.  The district court also awarded enhanced damages, attorney fees, and pre-judgment interest — bringing the total to $24 million.

On appeal, the Federal Circuit affirmed claim construction, infringement, willfulness, inequitable conduct, and damages. Dissenting-in-part, Judge Dyk argued only that the finding of willful infringement was incorrect because Powell did not prove that Home Depot’s non-infringement defense was objectively unreasonable as is required under the objective prong of the willfulness inquiry.

Inequitable Conduct: One interesting element of the appeal involved inequitable conduct.  During prosecution, Powell had filed a Petition to Make Special on grounds that he was obligated to manufacture and supply devices embodying the claims sought. MPEP 708.02.  That original petition was roughly correct based upon ongoing manufacturing negotiations with Home Depot. Although negotiations with Home Depot fell-through before the PTO granted the petition, Powell never informed the PTO that he no longer qualified for the Special designation under the prospective manufacture prong and actively encouraged the PTO to decide the petition.

In a pre-Therasense decision, the district court held that the failure to inform the  PTO was done with intent to deceive the PTO, but that the intentional omission was not material because (1) the timing was not related to patentability and (2) Powell could have instead filed a petition to make special based upon ongoing infringement of the applied-for claims.  Under Therasense, inequitable conduct will not normally be found based upon an applicant’s improper omission unless the omission is the but-for cause of the patent being issued.

On appeal, the Federal Circuit affirmed — holding that:

Where, as here, the patent applicant fails to update the record to inform the PTO that the circumstances which support a Petition to Make Special no longer exist—that conduct does not constitute inequitable conduct. That is so because Mr. Powell’s conduct obviously fails the but-for materiality standard [of Therasense] and is not the type of unequivocal act, “such as the filing of an unmistakably false affidavit,” that would rise to the level of “affirmative egregious misconduct. Id.

This case creates further difficulty for patent attorneys by giving a free-pass to patent applicants who intentionally deceive the PTO in order to benefit their case.  Although participating in such activity violates the rules of conduct for patent law professionals under 37 C.F.R. 10.22, patent owners apparently will not face consequences.  Adding to the incentive for bad behaviour is the PTO’s lax enforcement through the Office of Enrollment and Discipline; the new statute of limitations on attorney misconduct charges; and the new supplemental examination procedures that allows patentees to whitewash patents obtained through inequitable conduct.  For some this may not be intuitive, but the primary solution is not increased enforcement but instead for the PTO to avoid relying upon attorney statements.

Fighting the Retroactive Elimination of False Marking Claims

The Public Patent Foundation (PubPat) has continued its push against "the negative effects that over-patenting, unmerited patenting and excessive patent rights can have on society." The organization, founded by patent attorney Dan Ravicher, typically focuses on what it sees as bad patents being over-exerted. In the false marking heyday, PubPat also filed false marking suits against Cumberland (Sweet'N Low), Iovate (Xenadrine), and McNeil (Tylenol). Unlike ordinary usual public-interest lawsuits, the false marking claims had the potential earning PubPat substantial monetary returns. Under the false marking statute, 35 U.S.C. § 292, PubPat was eligible to receive half of the eventual fine paid by any adjudged false markers.

However, when Congress passed the Leahy-Smith AIA it included a provision that denies standing for any false marking complainant who cannot prove a competitive injury.  The standing provision is retroactive and many of the false marking claims have already been dismissed. 

In a new filing, PubPat has argued that the retroactive denial of standing violates the organizations Fifth Amendment due process rights.

While the claim underlying the cause of action in qui tam cases originally belongs to the United States, qui tam statutes perform a partial assignment of that claim to the qui tam plaintiff and the resulting cause of action is therefore partially the property of the qui tam plaintiff. . . . Retroactive congressional action that deprives a private party of its property violates the Due Process Clause of the Fifth Amendment if it is not “supported by a legitimate legislative purpose.” United States v. Carlton, 512 U.S. 26, 30-31 (1994). Further, the retroactive effect of legislation must separately have a legitimate legislative purpose apart from the prospective substantive changes. Id. . . . The America Invents Act . . . is completely silent as to why the substantive changes are to be applied retroactively. . . . Without being overly cynical, the only honest explanation for the America Invents Act's retroactive elimination of qui tam false marking suits is that it was the result of lobbying efforts by corporations like McNeil who wished to deliberately eliminate the rights of private parties like PUBPAT to continue to pursue pending qui tam cases for false patent marking. This targeting of those who were deliberately induced to file false marking suits is an expressly improper purpose under Carlton and any potential “public good” argument that McNeil or the United States might proffer for the retroactivity would surely be pretextual, further indicating its impropriety. . . . PUBPAT agrees, for example, that “retroactive laws are not [categorically] prohibited by the Constitution.” . . . All PUBPAT suggests is that retroactive statutes can violate the Due Process Clause and that the America Invents Act's retroactive application of substantive changes to the false marking statute in a way that does nothing but deprive PUBPAT of its property interest in order to bestow a private benefit on McNeil is an example of precisely such a violation.

File Attachment: PubPatOpp.pdf (102 KB).

 

Next Federal Circuit Judge Nominee: Richard G. Taranto

The White House has announced the nomination of Richard G. Taranto to fill the final remaining open circuit judge position on the Court of Appeals for the Federal Circuit.  Mr. Taranto is an appellate and Supreme Court litigator at the small but well established DC firm of Farr & Taranto. He has participated in dozens of Federal Circuit patent appeals, including several Rambus cases, Verizon v. Cox, Lucent v. Gateway, Syngenta v. Monsanto, and others. Mr. Taranto has argued three IP cases before the U.S. Supreme Court: MGM v. Grokster (contributory copyright infringement), Warner Jenkinson v. Hilton Davis (patent law doctrine of equivalents), and Two Pesos v. Taco Cabana (trade dress infringement). Westlaw lists Mr. Taranto as counsel in over 90 reported court decisions. He has taught a variety of classes as an adjunct professor, including patent law at Harvard in 2002.

Taranto graduated from Yale Law School in 1981. He clerked for Judge Abraham Sofaer on the Southern District of New York; Judge Robert Bork on the D.C. Circuit; and Justice Sandra Day O’Connor on the Supreme Court. 

 

USPTO Management Shake-Up Continues

USPTO Director David Kappos circulated an internal e-mail today announcing that Peter Pappas has become the USPTO Chief of Staff. Since 2010, Drew Hirshfeld has been Dir. Kappos’ chief of staff. Hirshfeld is staying with the PTO and will return to his post as Associate Commissioner for Patent Examination Policy. Bob Bahr has been the acting Associate Commissioner for Patent Examination Policy during this time. (Note, this is not Robert Bahr of Berkeley and Cisco).

Peter Pappas joined the USPTO as Chief Communications Officer and latter added the official title of “Senior Advisor to the Undersecretary.” Secretary Kappos wrote about Mr. Pappas’ new role:

In his new role as Chief of Staff, Peter will serve as my principal political advisor, oversee all public engagement functions and manage the interagency coordination process. He will serve as the USPTO’s chief liaison to the White House and Department of Commerce and continue to supervise the strategic communications function of the Office. He will also continue to serve as a member of the USPTO’s Executive Committee.

Congratulations to Drew on a job well done and congratulations to Peter on your new and expanded role. In a separate shake-up of senior USPTO management, last week, the USPTO announced the retirement of Patent Commissioner Bob Stoll. This is a natural time for a leadership change at the USPTO. The office has been pushing through legislative patent reform measures for the past several years. Now, it is time for implementation. Drew Hirshfeld’s new role as head of examination policy will be especially difficult because of the oncoming rash of new law and administrative procedures.

Don’t update Java on your Computers

I just received an unconfirmed report that users who install the most recent updates of Oracle’s Java software will not be able to access the USPTO’s Private PAIR system. The update was apparently released on October 18 for PCs and November 7 for Macs. The USPTO has also been informed of the problem, but has not yet released any work-around. So, the cautious advice is to not update your system until the USPTO has updated its system.

When I say “unconfirmed,” I should qualify that the report came from a patent attorney who is suffering under the problem. In addition, I was unable to access Private PAIR on my office computer (that had updated Java) but can still access the system from my personal computer (that has not been updated).

Edward DuMont is Out: DuMont Requests that President Obama Withdraw his Federal Circuit Nomination

Once Judge Wallach is sworn-in, the Court of Appeals for the Federal Circuit will have 11 members on the full bench. In early 2010, President Obama nominated WilmerHale attorney Edward DuMont for the job as a circuit court judge on the Court of Appeals for the Federal Circuit. The Senate did not act upon that nomination in 2010 and the President resubmitted the nomination again to the new congress in January 2011. The ABA gave DuMont its highest rating for the job — “unanimously well qualified.” However, the Senate Judiciary Committee never held a hearing on DuMont’s nomination. Now, DuMont has requested that President Obama withdraw his nomination. In his letter to the President, DuMont indicates that the “inaction results from opposition on the part of one or more members of the [Senate Judiciary] Committee minority.”

DuMont writes:

Under these circumstances, drawing the process out further does not seem either sensible for me or fair to the Federal Circuit, which has important work to do and deserves to be able to address it with a full complement of active judges.

If he had been confirmed, DuMont would have been the first openly gay judge on any U.S. Court of Appeals. [See my prior post on the topic] At this point, it is unclear whether the holdup was simply based upon the fact that DuMont is openly gay or instead if that was only one factor in the Senate’s decision making process. Senator Grassley’s spokesperson recently suggested that the delays were sparked by “questions about his background.”

The Senate Judiciary Committee includes Democratic Senators Leahy, Kohl, Feinstein, Schumer, Durbin, Whitehouse, Klobuchar, Frankin, Coons, and Blumenthal; and Republican Senators Grassley, Hatch, Kyl, Sessions, Graham, Cornyn, Lee, and Coburn.

Next in line: …

Claim Construction in the Abstract

By Dennis Crouch

Typhoon Touch Tech. v. Dell, Lenovo, Toshiba, Fujitsu, Sand Dune Ventures, Panasonic, Apple, HTC, and Palm (Fed. Cir. 2011)

Touch screen technology has taken-off as an important element of consumer electronics. Typhoon’s US Patent Nos. 5,379,057 and 5,675,362 cover various embodiments of a “portable keyboardless computer system” with a “touch-sensitive screen.”

Typhoon appealed an E.D. Texas ruling that its patents were invalid and not infringed. The appeal focused on the claim construction that served as the basis for both invalidity and non-infringement. The appellate decision is notable for the detached process that the court used to consider claims elements at issue. The opinion never discussed the crux of the invention or its contribution to the art and instead simply looked to the disputed claim terms and the relation of those terms in the specification (as required by Phillips v. AWH).

This week, I participated in a roundtable discussion at Yale Law School sponsored by the Kauffman foundation and by Yale’s Information Society Project (ISP). A substantial amount of the discussion focused on problems stemming from our current claim construction process and our ongoing focus on claim language as opposed to invention or its contribution to the art.

For patent attorneys prosecuting patents, the claims are often seen as equivalent to the invention. The new patent act supports that definition by shifting focus away from the invention and instead onto the “claimed invention.” Thus, the new § 102(a)(1) asks whether “the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” The new statute’s sole focus on invention as claimed is largely just a codification of fairly well accepted Federal Circuit precedent without much thought of the consequences. Of course, broad subject matter eligibility described in State Street Bank and the TSM test for obviousness were, until quite recently, well accepted Federal Circuit precedents as well. In the past few years, the Supreme Court rolled-back the clock on those issues – returning focus to pre-1982 case law. For “invention” however, the new statute appears to lock-in the claimed-invention as the ongoing focus of patent law.

Judge Kimberly Moore highlighted this issue in her recent dissent from the court’s denial of en banc rehearing of Retractable Technologies, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011). In that opinion, Judge Moore noted that the approach of the panel decision in Retractable is evident of a major divide amongst Federal Circuit judges as to whether the inventor’s contribution to the art – “what the inventor actually invented” – should be considered in the claim construction process.

This week, my patent law students each argued a mock-Markman hearing – revisiting the facts of Nystrom v. Trex and arguing over whether Ron Nystrom’s claimed decking “board” should be limited to cover only to wood cut from a log. That litigation was interesting because it involved five different court decisions on the proper construction of the term. The final appellate decision narrowed the term’s meaning in a way that allowed Trex’s composite planking to avoid infringement.

Claim construction has become a fundamental aspect of every patent case – even to the extent that Section 101 patentable subject matter decisions turn on the meaning bestowed upon particular claim terms. For patent attorneys, all of this focus on claim meaning puts more pressure on the drafting of the claims and the specification. The sad thing about Nystrom’s patent is that he would have easily won the case if the patent attorney who drafted the application had thrown-in language indicating that a “board” could be made of various materials, not just wood cut from a log. This counterfactual conclusion is sad for Nystrom as the inventor, but it is also sad that such a major weight is placed on non-inventive boilerplate language. In my mind, the importance of claim construction should push the USPTO to do a better job of ensuring that the terms of issued patents are well defined.

###

The Typhoon decision is also notable in the way that the court narrowly interpreted functional claim limitations. As background, Typhoon’s claim was directed to a “computer” that included various elements including a “memory for storing [a] data collection application.” Typhoon argued its claimed invention only required that the memory be capable of storing the data collection application. However, the District Court Judge Davis and Federal Circuit agreed that the proper construction required that memory actually be used for storing the data collection application. In so holding, the courts looked to the specification and found that the described embodiments all had memories that actually included the application rather than just the capability.

###

Finally, the court looked at Typhoon’s “Means for cross-referencing” limitation. The district court held that limitation invalid as indefinite under 35 U.S.C. § 112 because the specification did not include an algorithm adequate to provide sufficient structure for the means-plus-function limitation, citing Aristocrat Technologies Australia PTY Ltd. v. International Game Technology, 521 F.3d 1328, 1334 (Fed Cir. 2008). On appeal, the Federal Circuit rejected that conclusion – finding that the specification did disclose a cross-referencing algorithm in plain language in the text of the specification. The court went on to write that “computer code is not required to be included in the patent specification.” Rather, what is required is disclosure so that one of ordinary skill in the art would recognize the structure as linked to the claimed function.

###

• Judge Newman wrote the court opinion and was joined by Chief Judge Rader and Judge Prost;
• The Appellant-Patentee is represented on appeal by Charles Wolfe (Blank Rome);
• Ed Reines (Weil Gotshal) and Joe Re (Knobbe) were co-lead-counsel for all the appellee-defendants. Briefs were also signed by attorneys at K&L Gates, Baker Botts, Amster Rothstein, Perkins Coie, Covington & Burling, and Malloy & Malloy, as well as Eric Albritton from the Albritton firm.

Senate Confirms Evan Wallach as Next Federal Circuit Judge

In a unanimous vote, the Senate has confirmed President Obama’s nomination of Judge Evan Wallach as Circuit Judge on the Court of Appeals for the Federal Circuit. In the mid-1990’s Wallach was appointed by President Clinton as an Article III judge on the U.S. Court of International Trade (CIT) – handling disputes regarding import transactions and federal statutes affecting international trade. Although the court has limited subject matter jurisdiction, the CIT otherwise has general legal and equitable powers. Judge Wallach is already familiar with Federal Circuit judges and Federal Circuit practice because CIT decisions are appealed to the Federal Circuit. In addition to his work in international trade, Judge Wallach is recognized as a leading expert on the international law of war. During a decade of private practice, Wallach represented business and media interests at the Las Vegas firm of Lionel Sawyer. He is a Vietnam War veteran (army) and later served as a Judge Advocate General. In the 1980’s Wallach also served as counsel for Senator Harry Reid. He holds degrees from Arizona (Journalism), Berkeley (JD), and Cambridge (LLB).

While Judge Wallach does not have extensive experience handling patent law issues. He did preside over a two-week patent infringement jury trial in Nevada. Mikohn Gaming Corp. v. Acres Gaming Inc., No. CV-S-97-1383 (D. Nev. Aug. 2, 2001).  In that case, the jury found the patent infringed and awarded $1.5 million in damages.

In his responses to questions from the Senate, Judge Wallach indicated his view that the “most important attribute of a judge” is: “Commitment to fundamental rule of law principles, including predictability, uniformity, transparency, neutrality and stare decisis.”

• Tony Dutra and Matt Osenga write more

Patently-O Bits & Bytes by Lawrence Higgins

Apple v. Samsung

• Christopher Carani recently wrote an article about the Apple v. Samsung smartphone war. In the article, Carani provides the facts and background necessary to understand the current design patent dispute and offers insight into the merits along with potential outcomes. For example, Carani writes that Judge "Koh may find that Apple has not met its burden on validity at this stage of the case and deny the motion for preliminary injunction with respect to all patents." The article is a great source for information about the exciting smartphone battle between the top two smartphone makers in the world. [Link]

Spangenberg Family Foundation

• The Spangenberg Family Foundation gave Case Western University School of Law a $2 million gift to endow the Spangenberg Family Foundation Chair in Law and the Arts. Eric Spangenberg is the founder and chairman of Dallas-based IP Navigation Group, a patent monetization company.

IP Hall of Fame

• The process to find inductees into the IP Hall of Fame for 2012 is currently underway. The IP Hall of Fame enables the IP community to honor individuals from business, politics, the law, finance, academia and anywhere else, who have made a significant contribution to IP. Any member of the IP community can make a nomination, and all nominations will be considered by the IP Hall of Fame Academy. [Link]

Executive Director

• The Engelberg Center on Innovation Law and Policy at New York University School of Law is seeking applicants for the full-time position of Executive Director. They seek an Executive Director with an entrepreneurial approach who would be an engaged participant in formulating and implementing an ongoing vision for the Center's programs in competition, innovation, and information law. Specific duties will be determined in consultation with the Center's faculty directors, but should be expected to include: developing a policy-oriented research agenda, preferably in a way that could involve students, fundraising for the Center from industry, foundation, or government sources, and planning conferences and other events (with the help of the center's administrator). More information about the Center and its activities is at [Link].

Applications should be emailed by December 10, 2011, to Nicole Arzt, nicole.arzt@nyu.edu, and should include: a cover letter, curriculum vitae, copies of any publications or other relevant writing, and the names and contact information of three references.

Patent Jobs:

• Roberts Mlotkowski Safran & Cole is searching for an IP attorney with 2-4 years of patent prosecution experience and a degree in EE. [Link]
• Roberts Mlotkowski Safran & Cole is seeking an IP attorney with 2-4 years of patent prosecution experience and a chemical or chemical engineering degree. [Link]
• iRobot is looking for a patent agent with 5-8 years of experience. [Link]
• Greenblum & Bernstein is seeking a patent associate with an EE or CE background and 2-3 years of experience. [Link]
• Steptoe & Johnson is searching for IP associates with a minimum 4 years of experience in litigation and a technical background. [Link]
• Fiala & Weaver is looking for a patent attorney/agent with 1 or more years of experience. [Link]
• Myers Wolin is seeking a partner level attorney (patent or trademark) or small practice group. [Link]
• Edell, Shapiro & Finnan is searching for associates with backgrounds in EE or mechanical engineering. [Link]
• The IP group of Sutherland is seeking a patent agent with 1-3 years of experience and a chemical engineering degree. [Link]

Upcoming Events:

• The ITC Trial Lawyers Association Annual Meeting will be held on November 9^th in Washington D.C. Guest speakers includes Deanna Okun and former Chief Administrative Judge Luckern. [Link]
• World Research Group, an official Patently-O Jobs sponsor, is hosting the 3rd Annual Social TechNet Intellectual Property Forum Nov. 16-17 in New York. This conference provides solutions to the most prevalent in-house software and online IP protection and management issues. (Patently-O readers can save $200 by using promo code ABY668) [Link]
• IBC will hold a Standards and Patents Conference in London on November 16^th & 17^th. The conference will analyze the interplay between standards, intellectual property and competition law. There will be 28 speakers representing various organizations, such as, the European Commission, Mr. Justice Floyd, IBM, Qualcomm Europe, Nokia, GE Healthcare and Intel. (Patently-O readers receive a 10% discount) [Link]
• IBC will hold a US Patent Reform Congress Conference on November 18^th in London. The conference will focus in the impact of the Leahy-Smith America Invents for the European practitioner, with expertise from the EPO, AIPLA, USPTO and more. (Patently-O readers receive a 10% discount) [Link]
• The American Conference Institute's 2^nd Annual Forum on: Paragraph IV Disputes will be held in San Francisco on December 7^th. Experienced faculty of renowned litigators and judges will guide attendees through every stage of a Paragraph IV challenge to help them formulate offensive moves and defensive plays. (Patently-O readers can receive a discount by registering with code PO 200) [Link]
• IBC Legal is holding a conference on International Patent Litigation 2011 in London on December 7^th-8^th. Use VIP Code FKW82249PO to get a 10% discount. [Link]
• The WSBA IP Section, WSPLA, IEEE IP Professional Initiative, and the University of Washington School of Law's Law, Technology & Arts Group will be presenting an all-day CLE at the University of Washington School of Law on Friday, December 9, 2011 on the impacts of the America Invents Act.

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patentable Subject Matter: Relying on Benson; Construing Claims for Eligibility

By Dennis Crouch

FuzzySharp Tech. Inc. v. 3DLabs Inc. (Fed. Cir. 2011)

In a per curiam opinion marked nonprecedential, the Federal Circuit has vacated and remanded the subject matter invalidity finding of a N.D. California District Court and instead ordered the court to rework its decision in light of Bilski v. Kappos, 130 S. Ct. 3218 (2010) and subsequent Federal Circuit decisions on point. As discussed below, FuzzySharp’s invention relates to compression software for computer graphics. U.S. Patent Nos. 6,172,679 and 6,618,047. The main idea of the invention is to avoid calculations associated with always hidden surfaces. Although the specification explains that its implementation uses “fuzzy” math to calculate always hidden surfaces. However, “fuzzy” limitations are not found in the asserted patent claims. The application was filed in 1997, but claims priority to a 1991 Australian patent application.

FuzzySharp’s appeal was filed after the district court determined that the claimed method failed to pass the machine-or-transformation and therefore, under the prevailing law at the time, the method did not constitute patentable subject matter. In re Bilski, 545 F.3d 943 (2008). In its 2010 Bislki decision, the Supreme Court rejected the notion that the machine-or-transformation test could serve as the exclusive test of the patentable subject matter of a newly invented process. In the new rubric, the machine-or-transformation test offers only an important clue.

In its opinion, the Federal Circuit largely agreed with the lower court’s conclusion that the FuzzySharp claims fail the machine-or-transformation test, but, following the new Bilski rubric, remanded for a determination on the ultimate question of patentable subject matter.

Meaningful Limitations: FuzzySharp’s asserted claims involve two elements that are potentially linked to a machine – computation and computer storage. However, the appellate panel found those elements lacked “meaningful limits” on claim scope in the same way that the recitation of a general-purpose-computer is not a meaningful limitation of a software process that will only be performed on a computer. (Citing Gottshalk v. Benson, 409 U.S. 64 (1972)).

Claim Construction: An important and arising issue is the interplay between claim construction and patentable subject matter. Under Federal Circuit precedent, claim construction appears to be a necessary precursor. However, the Supreme Court has regularly ignored details of claim language in making its determinations – focusing instead on what it saw as the invention.

Here, the court held that some claim construction is necessary: “[W]e conclude that … the patent eligibility of at least one of the asserted claims turns on questions of claim construction that the district court did not have the opportunity to address.” It will be interesting to watch how the parties argue on remand for claim construction results that favor their hoped-for subject matter eligibility outcome.

Notes:

• The per curiam panel included Judges Bryson, O’Malley, and Reyna.
• The U.S. application was prosecuted by Carl Oppedahl’s Colorado-based firm.
• The patentee is represented by Matthew McAndrews from the Niro firm on appeal; Jonathan Baker from Skadden Arps is handling the appellate defense.
• Here is Claim 12 of the ‘047 patent that the Federal Circuit analyzed:

  12. A method of reducing a step of visibility computations in 3-D computer graphics from a perspective of a viewpoint, the method comprising:

  computing, before said step and from said perspective, the visibility of at least one entity selected from 3-D surfaces and sub-elements of said 3-D surfaces, wherein said computing step comprises:

  employing at least one projection plane for generating projections with said selected set of 3-D surfaces and said sub-elements with respect to said perspective;

  identifying regions on said at least one projection plane, wherein said regions are related to the projections associated with said selected 3-D surfaces, said sub-elements, or bounding volumes of said 3-D surfaces or said sub-elements;

  updating data related to said regions in computer storage; and

  deriving the visibility of at least one of said 3-D surfaces or said sub-elements from the stored data in said computer storage; and

  skipping, at said step of visibility computations, at least an occlusion relationship calculation for at least one entity that has been determined to be invisible in said computing step.