Weekend Shorts - CAFC Statistics, China, Patent Reform, and New IAM Publications

State of the Federal Circuit: On May 15, 2008,Chief Judge Michel addressed the Federal Circuit Judicial Conference and gave a "State of the Court" speech on the CAFC. The transcript, along with some statistical charts, may be downloaded here (link). Some of the interesting factoids include:

• Despite over 100 Petitions for Rehearing En Banc each year (slide), the CAFC grants approximately zero to one each year.

• According to Chief Judge Michel, "[d]espite news reports of a surge in the last three years in the Supreme Court review of our patent cases, the data shows little change (slide). I believe these data illustrate how well our panels do in nearly all appeals."

• Cases continue to move faster in the CAFC. The court now approaches the ideal of achieving a disposal rate such that if no new appeals were filed, the CAFC would conclude all pending appeals in just six months (which is the standard recommended by the ABA).

Patent Filings in China: Domestic patent filings continue to skyrocket; this year, China becomes the first country to break the 700,000 patent filings per year barrier. Protection of design patents continues to be an untapped resource for foreign filers - the U.S. and other foreign entities make up about 5% of the 270,000 Chinese design patent applications. View the latest statistics from SIPO here (hat tip to professor Hal Wegner).

Bush Administration Looks to Re-Ignite Patent Reform: U.S. Secretary of Commerce Carlos Gutierrez reportedly met with technology leaders in San Jose to discuss ways in which Patent Reform can be salvaged for this year. According to Gutierrez, "arguably the first serious effort in 50 years to systematically improve our innovation pipeline has stalled in the Senate, in large part because of an inability to agree on how patent holders should be compensated in cases of infringement." View last week's op-ed piece in the Mercury News here.

Two New IAM Publications Available (Free) Online: (From the IAM Blog) IAM has just published two guides, both of which are available online and completely free of charge:

• Brands in the Boardroom, released to coincide with next week’s INTA meeting in Berlin, examines how Playboy and E&J Gallo manage their respective brands portfolios, and also takes an in-depth look at Google’s controversial AdWords program. In addition, there are a series of other articles detailing key trademark issues in some of the world’s major jurisdictions.

• Patents in Europe, first made publicly available the other week at the European Patent Forum in Ljubljana, has been produced in association with the European Patent Office. The publication is divided into two parts: in the first, chapters – including an introduction from EPO President Alison Brimelow – look at recent developments inside the EPO and in Europe generally; in the second, there are detailed guides on how patent litigation is conducted in 21 European jurisdictions, including all the big players.

For more info, see here.

CAFC: Lack of Diligence Does Not Convert PTO Error Into An Applicant Error

E.I. DuPont v. MacDermid Printing Solutions (2007-1568), May 14, 2008

When DuPont asserted its patent and sought a preliminary injunction, MacDermid countered that the patent was invalid for public use prior to the 102(b) critical date. While DuPont initially conceded the critical date, a closer examination discovered that the patent stemmed from a provisional application that was listed in the application, but priority was not properly claimed due to a PTO oversight. DuPont successfully petitioned for correction, and continued with the litigation.

MacDermid argued that DuPont was not entitled to the provisional application because (1) the non-provisional application names inventors not named in the provisional application; (2) DuPont did not use the “proper language” in claiming priority to the provisional; (3) the filing receipt, published application, and issued patent did not reference the provisional, showing that the PTO did not recognize priority to the provisional; (4) DuPont did not alert the PTO that the priority information was missing until the patent issued; and (5) the Certificate of Correction that added the priority information was wrongly issued. MacDermid also argued that it would be unfairly prejudiced by DuPont’s change of position.

The district court found it could not grant a preliminary injunction on the record because DuPont did not sufficiently prove it was entitled to the earlier critical date, and that DuPont's earlier admission as to the later critical date raised a substantial question as to validity.

On appeal, the CAFC found that the lower court abused its discretion on the issue of priority. It was particularly significant that, while priority wasn't formally claimed, the Application Data Sheet on the non-provisional application identified priority to the provisional application. Noted the court, "[s]ince MacDermid admittedly was aware of the provisional application, it is difficult to see how MacDermid would be prejudiced by its consideration in evaluating validity."

With regard to the other issues, the CAFC found that the provisional application shared one common inventor (see MPEP 201.03), had supporting disclosure under section 112, and was filed less than one year before the nonprovisional application. Accordingly:

The only issue is the legal significance of these facts, i.e. whether the non-provisional application is entitled to claim the priority date of the provisional application. Determination of the priority date (e.g., the effective filing date) is purely a question of law if the facts underlying that determination are undisputed . . . it is unclear what necessary evidence the district court thought was missing from the preliminary injunction record.

With regard to DuPont not using the "magic"(i.e. PTO-approved) language for priority,

Here, rather than the precise language suggested in the MPEP, the ADS in the non-provisional application stated: “Continuity Data: This application is a non-provisional of provisional 60/273669 2001-03-06 WHICH IS PENDING.” Contrary to MacDermid’s argument, this reference did not run afoul of the MPEP by failing to use magic words. The MPEP provision requires only that the applicant use a statement “such as” the one provided in Section 201.11. A reasonable person reading the language in the ADS would have concluded that the applicant was claiming priority to an earlier provisional application. Thus, we find no defect in the language used to reference the provisional application here.

And with regard to the certificate of correction:

By putting the continuity data in the ADS, DuPont expected that the PTO would capture the information and place it on the title page of its patent. As MacDermid notes, however, there were some indications during prosecution that the PTO had failed to capture the information. MPEP § 201.11. We hold that a lack of diligence during prosecution, at least under the facts of this case, does not convert a PTO error into an applicant error for the purpose of seeking a post-issuance certificate of correction.

VACATED AND REMANDED

Congress Requests Answers From The USPTO; Rough Times Ahead?

"The ancient Romans had a tradition: whenever on of their engineers constructed an arch, as the capstone was hoisted into place, the engineer assumed accountability for his work in the most profound way possible: he stood under the arch."

-- Michael Armstrong

On April 29, Howard Berman, Chairman, Subcommittee on Courts, the Internet, and Intellectual Property shot off a letter to USPTO Director Jon Dudas, asking some rather pointed questions on USPTO management and practice. What is apparent from the letter is that someone (or some group) has gotten the ear of Congress and is publicly unleashing some pent-up grievances held by practitioners against the PTO.

Of course, there is no hellfire and brimstone in Berman's letter, but is is clear from the tone that something doesn't smell quite right to the Congressman (e.g., pointing out multiple PTO shortcomings, referring to "USPTO estimates" in quotations), and you can feel the sweat rolling off your brow if you imagine yourself being tasked with answering the questions posed.

Some of the highlights of the letter:

• According to the recent GAO report titled "Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog, " the GAO found that the USPTO cannot hire enough patent examiners to reduce patent pendency in the next five years. 1t seems, however, that this projection is based on estimates provided by the USPTO. . . . Please provide all data related to these "USPTO estimates, " including mathematical models, and underlying statistics and assumptions such as examiner retention and productivity. Under these same assumptions, hypothetically, how many patent examiners would have to be hired in the next five years in order to reduce the patent backlog?

• After release of the above mentioned GAO report, the USPTO issued"a press release on October 4, 2007 that stated the USPTO would"review assumptions the agency uses to establish production goals for patent examiners." (See attachment 5). Then, before the Subcommittee, Director Dudas confirmed that the USPTO has begun to study patent examiner production goals. Please provide details on the methodology of the study and personnel conducting it. What is the current progress of the study and when can Congress expect the study to be completed? To what extent is the Patent Office Professional Organization and the Patent Public Advisory Committee involved in this study?
  

• As evidence of greater quality, Director Dudas mentioned in his testimony that in 2000, 70% of all applications led to a patent while in the first quarter of2007, only 44% ofall applications led to a patent. How did the USPTO account in these statistics for Request for Continuing Examination (RCE) applications, continuation applications and the applications that had to be abandoned in order to file continuation applications?
  

Also a question from Representative Darrell Issa:

• Examination on Request (or, as the USPTO called it, Deferred Examination) is used in many countries such as Canada and Japan. Under such a system, applications are not examined automatically, as in the U.S., but only upon a specific Request for Examination within a set time period, say 3 years. If no request is filed within that period, the application is deemed abandoned and is never examined. From experience of other patent offices, 10% to 40% of applications are never examined under Examination on Request systems, resulting in substantial workload reduction. This is due to applicants' voluntary abandonment of obsolete applications prior to the Request for Examination deadline. Under current USPTO practice, applications that become obsolete, but receive examination by the USPTO, are the worst investment the USPTO can make because their obsolescence means that the patents are unlikely to fetch any renewal fees.

• Why did the USPTO reject such a method that has the potential to reduce its workload and increase efficiency?
  

Last, but not least, it appears that "RIM-Gate" continues to hound the PTO. From Berman's letter:

• According to a Time article dated April 2, 2006, and supported by an email allegedly from James Toupin dated January 3, 2005, senior USPTO officials met with Research in Motion (RIM) CEO Jim Balsillie while a reexamination concerning patents owned by NTP and at issue in a lawsuit filed by NTP against RIM, was before the USPTO (See attachments 10 and 1I). Did this meeting take place? What was discussed at this meeting? What is the USPTO's policy concerning ex parte communications between senior USPTO officials and parties who have an interest in the outcome of proceedings before the Office? In what other instances, if any, did senior USPTO officials engage in similar ex parte communications with parties that had an interest in the outcome ofa proceeding being conduct before the Office?
  

For more information, see Patently-O (link), and also take a good look at NTP's April 2006 response during reexamination (hint: start at page 74), where many of the juicy bits are displayed for the public.

Download a copy of Berman's letter here (link)

Updates on Congressional IP/Legal Legislation

House Passes H.R. 4279 - Last Thursday, the House passed H.R. 4279, titled "Prioritizing Resources and Organization for Intellectual Property Act of 2008" (PRO-IP). While patent reform continues to stumble, copyright protection is getting stronger than ever. Under H.R. 4279, federal copyright law would be amended to:

(1) provide a safe harbor for copyright registrations that contain inaccurate information;
(2) provide that copyright registration requirements apply to civil (not criminal) infringement actions;
(3) require courts to issue protective orders to prevent disclosure of seized records relating to copyright infringement;
(4) revise standards for civil damages in copyright infringement and counterfeiting cases; and
(5) prohibit importing and exporting of infringing copies of copyrighted works.

Also, the federal criminal code would be amended with respect to copyrights/TM's to:
(1) enhance criminal penalties for infringement of a copyright, for trafficking in counterfeit labels or packaging, and for causing serious bodily harm or death while trafficking in counterfeit goods or services; and
(2) enhance civil and criminal forfeiture provisions for copyright infringement and provide for restitution to victims of such infringement.

- View a copy of H.R. 4279 here.

Upcoming Amendments to Attorney/Client Privilege (S. 2450) - While this isn't necessarily "new", it is worth noting that amendments to the Federal Rules of Evidence were approved last February in the Senate, and continue their way through the House. Under S. 2450, the Federal Rules of Evidence would be amended with respect to the disclosure of a communication or information covered by the attorney-client privilege and work product protection.

The proposed legislation provides that, when such a disclosure is made and waives the attorney-client privilege or work-product protection, the waiver extends to an undisclosed communication or information in a federal or state proceeding only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together.

Also, when the disclosure is made, it does not operate as a waiver in a federal or state proceeding if: (1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error.

- View a copy of S. 2450 here

Friday Shorts: Bilski, Troll Tracker, Patent Reform

Bilski Oral Arguments Aweigh! Yesterday, the CAFC heard oral arguments for In re Bilski, No. 2007-1130 to consider what, and what is not, patentable subject matter. To listen to an MP3 of the oral arguments, click here.

Eyewitness accounts are rolling in - over at the PLI Blog, Gene Quinn has a good play-by-play of the oral arguments (link). Josh Sarnoff over at the AU Program on Information Justice and Intellectual Property Blog (link) has an eyewitness account and some additional thoughts. Charley Mecedo kindly emailed me his account of the argument

InformationWeek also has an article here (link), and the Associated Press weighed in here (link).

No one has a sense of how the CAFC will exactly rule on this issue. The consensus, at this point, is that State Street will likely be intact, software will still be patentable, and we can expect another layer of analysis to be added to the onion skin of patentable subject matter (e.g., post-solution activity, etc.).

Patent Troll Tracker Litigation Update: Joe Mullin has the latest on the fireworks surrounding the defamation lawsuit against Frenkel (aka The Patent Troll Tracker). There's a lot in his latest post (link), including commentary from none other than Ray Niro.

Is Patent Reform Getting Ready For a Tapout? From the Economist: "While the arguments rage in the courts, Congress seems content to do nothing at all about patent reform. On May 5th the Senate removed the bipartisan Patent Reform Act from its calendar."

D.C. District Court Unleashes On Patent Holding Company

In Re Papst Licensing GMBH & Co. KG Litigation, District Court For the District of Columbia, May 6, 2008, Misc. Action No. 07-493 (RMC)

A spat broke out between the parties during discovery that resulted in an order levying multiple sanctions against the patent holder, Papst. Papst objected to the Magistrate Judge’s ruling that it waived all objections based on attorney client privilege, consulting expert privilege, protection under the work product doctrine, and relevance and that Papst is liable for monetary damages. Papst asserted that waiver is too harsh because Papst’s conduct grew out of a misunderstanding of the court order for discovery “to proceed.”

Needless to say, Judge Collyer was not pleased with Pabst's litigation tactics, and was certainly not swayed by the objection:

Before addressing the merits of the parties’ positions, the Court describes the nature of the parties and this litigation to put this matter in context. Casio USA sells digital cameras in the United States. Papst is a German company that produces no products; it acquires patents on products or methods allegedly invented by others and then searches the world for patents it might challenge for infringement. At one of the first status conferences of the MDL, when the Court queried whether this was old-fashioned “claim-jumping,” counsel for Papst readily agreed that it had been called worse. Of course, this is a perfectly lawful and respectable business. But it underscores that the business of Papst is litigation, not invention or production. Litigation is the business model whereby Papst, when successful, achieves royalty payments from others. As is clear from this record, the threat of litigation alone often achieves royalty payments.

* * *

The Court finds that waiver of privileges is not too harsh a sanction under the circumstances presented here. Papst’s failure to respond to Casio USA’s discovery requests, as directly ordered, was entirely unjustified and inexcusable and smacks of bad faith. How difficult is it to understand a district court order that discovery is “to proceed”? Were there any doubt, Papst might have inquired. It did nothing. It merely delayed—a delay that continues, in part, to this day. It may be a successful business model, when the “business” of a business is litigation, to interpose delay at any possible opportunity. Delay costs money to opponents and may, in the end, cause an opponent to settle a case. Ultimately, Papst offers no good reason why its experienced counsel should be allowed, without sanction, to ignore totally a court order on which they had been heard fully.

Accordingly, Papst is required to respond to Casio USA’s initial discovery requests without objection based on attorney client privilege, consulting expert privilege, or attorney work product. Casio has agreed, and there is now a Protective Order entered by the Court, that will shield Papst’s confidential documents from public display.

* * *

Finally, Papst argues that the sanction requiring it to pay Casio USA’s costs and attorney’s fees is unjust. Again, Papst contends that it was merely mistaken regarding its interpretation of the district court’s order for discovery “to proceed.” As explained above, this contention by Papst’s experienced counsel is not credible. The sanction shall remain in place.

Download a copy of the opinion here.

Thomson Reuters Publishes New Study on Patents and Innovation

Thomson Reuters recently published two issues of World IPToday, analyzing global patent activity and technology innovations for2007. The first report, "World IP Today: A Thomson Reuters Report On Global Patent Activity in2007" highlights patent output from the G8 countries (Canada, France, Germany,Italy, Japan, Russia, the United Kingdom and the United States) plus Chinaand South Korea. The findings indicate:


• Global patent activity has grown by 21% between 2003 and 2006, with 2007 shaping up as another year of growth for patents.

• Japan is still the world’s leading filer of patents, but continues to decline slowly. Its lead over the U.S. and China is eroding as their patenting activity increases.

• Academic innovations are at their highest ratio in China and Russia where they represent nearly 25% of total patenting activity.

• South Korea safeguards more inventions worldwide than ever before, while the U.S. has greatly
decreased the number of patents it files across the key patent regions.

To download a copy of the report, click here.

The second report, World IP Today: A Thomson Reuters Report On Global Technology Innovationsin 2007, reviews technology innovations developing globally in 2007, highlighting tri-lateral inventions or inventions that have been filed in theU.S., Europe and Japan. Among the key findings:

• Four areas of technology are truly exemplary in protecting high volumes of inventions: consumer electronics, computing, telecommunications and entertainment and business services technology.

• Protection for computing inventions in the three largest markets, Japan, the U.S. and Europe, has been more prevalent than in other technology sectors.

• Innovation within the computing industry is far more evenly distributed between countries than with other technologies.

• Of the top ten patent assignees based on innovations filed in the United States, Europe and Japan during 2007, most are from Japan.

• When the technology produced by the top ten patentees were further analyzed, some
interesting changes were found in the volumes between 2001 and 2007. Specifically, there has been a significant drop in innovation within the industrial and audio/visual and data recording sectors, as well as a dramatic fall in the semiconductors field which decreased by 26% between 2001 and 2007.

One interesting note is that patenting in the computer industry "is far more evenly distributed between the countries than with other technologies." Notes the report:

Here, Japan and the U.S. comprise only about 40%, whereas in other disciplines these two countries normally hold about 60% of the global patenting. This shows that generally patenting organizations feel that protecting computing inventions in the three largest markets, Japan, the U.S. and Europe, is much more important for innovation within computing than in other technology sectors.

Also, the report tabulates the top ten patent assignees based on innovations filed in the U.S., the EU and Japan during 2007. The "top ten" list includes:

(1) Konink Philips Electronics NV
(2) Matsushita Electric Ind. Co. Ltd.
(3) Sony Corp.
(4) Samsung Heavy Ind. Co. Ltd.
(5) Canon KK
(6) General Electric Co.
(7) 3M Innovative Properties Co.
(8) Bayer AG
(9) Hitachi Ltd.
(10) Siemens AG

Download a copy of the report here.