Tuesday, February 27, 2007

Berman: Pharma to Blame For Holding Back Patent Reform

Congressman Howard Berman (D-Ca) recently spoke at the opening of the Tech Policy Summit in San Jose, where telecommunications and high-tech speakers gathered to discuss issues ranging from trade agreements to patent rules to Internet traffic. Yesterday's discussions included numerous topics related to patent reform, and included speakers Jon Dudas, Mark Lemley, and Nathan Myhrvold, among others.

A wide number of bloggers from ZDNet and other groups are attending the conference, and have provided some interesting feedback on the positions taken by various speakers:

Mark Lemley

The USPTO backlog is killing the patent system. Add to the fact that a fair portion of patent applications are borderline frivolous (e.g. using laser pointer to exercise a cat), lots of time is needlessly wasted, thus increasing the backlog.

Standards setting organizations need to figure out what a "reasonable royalty" is, and patent infringement settlements need to be more in line with the actual value of the intellectual property.

With the recently invigorated Supreme Court: "It's a question of whether they take a hatchet to the rules or a more measured approach. We are starting to see a swing away from patent owners to the other side of the spectrum."

Nathan Myhrvold

Myhrvold complained that some tech companies are allergic to paying patent-related royalties. "Most tech companies play 'catch me if you can'" (although AutoDesk's CEO Carl Bass later countered that "if companies concerned with innovation infringe on someone else's patents, you can't protect your own").

Market rates for patent royalties need to be established, much like the consumer electronics industry or publishing industry. "Unfortunately, even without people colluding in some way [which could have anti-trust implications], there is not much of a market if you do patent deals without litigation and keep it secret."

Howard Berman

Legislation to overhaul aspects of the patent system could take shape in as few as two or three weeks, and will happen before any copyright reform.

Previous attempts at patent reform died in a crossfire between the technology industry, which broadly supported changes, and the pharmaceutical industry, which opposed them. Berman claims he had been pushing for changes since 2000.

Berman also claimed the pharmaceutical industry relied on its strong ties to the Republican leadership to reject changes to patent law. “The order came from on high, not to move legislation. Rather than a mechanism to work through differences, essentially, it was a sham process, because the [Republican] leadership of the committee was told not to move the bill.”

Berman added that “this is an issue that doesn’t break down on partisan grounds,” and the technology sector’s desire to seek changes in patent laws has “created a groundswell, a strong momentum for reform, to make it the highest priority of our subcommittee.”


See blogging and other coverage on the event:

Tech Policy Summit Blog

ZDNet

TechDirt

The Technology Chronicles

Uberpulse

The 463 Blog

Tech Daily Dose

Funny quote from the 463 Blog: "It took Andrew Noyes [from Tech Daily Dose] 23 hours to get to San Jose; he lost his luggage; but, he is still the best dressed here."

Monday, February 26, 2007

MP3's, Patents and Lawsuits, Oh My!

By now, everyone has heard about Alcatel-Lucent's stunning $1.5 billion verdict handed down last week in the Southern District of California (to view a copy of the jury verdict, click here). Over the weekend, I've gotten e-mails from readers giving updates and asking for more details on the case to find out which patents were involved in the verdict.

Alcatel-Lucent Patents

The jury found infringement on claims 1, 3, and 4 of reissue patent RE39,080 ("Rate loop processor for perceptual encoder/decoder "), and claims 1, 5, and 10 of U.S. patent 5,341,457 ("Perceptual coding of audio signals").

Claim 1 of the '080 patent reads as follows:

1. A method of coding an audio signal comprising:
(a) converting a time domain representation of the audio signal into a frequency domain representation of the audio signal, the frequency domain representation comprising a set of frequency coefficients;

(b) calculating a masking threshold based upon the set of frequency coefficients;

(c) using a rate loop processor in an iterative fashion to determine a set of quantization step size coefficients for use in encoding the set of frequency coefficients, said set of quantization step size coefficients determined by using the masking threshold and an absolute hearing threshold; and

(d) coding the set of frequency coefficients based upon the set of quantization step size coefficients.

Claim 1 of the '457 patent reads as follows:

1. A method of processing an ordered time sequence of audio signals partitioned into a set of ordered blocks, each said block having a discrete frequency spectrum comprising a first set of frequency coefficients, the method comprising, for each of said blocks, the steps of:

(a) grouping said first set of frequency coefficients into at least one group, each group comprising at least one frequency coefficient;

(b) generating at least one tonality value, each group having an associated tonality value, said at least one tonality value reflecting the degree to which said time sequence of audio signals comprises tone-like quality;

(c) generating at least one noise masking threshold, each said at least one noise masking threshold being based upon at least a portion of said at least one tonality value; and

(d) quantizing at least one frequency coefficient in said at least one group, said quantizing based upon said at least one noise masking threshold.

The Fraunhofer/Thomson Patents

Microsoft was spared from willfull infringement, in large part, because they had joined the rest of the industry in taking a license from notorious Fraunhofer/Thomson portfolio of MP3 patents. Alcatel-Lucent successfully argued that the '080 and '457 patents were not covered by the license. To view the list of patents from the Fraunhofer/Thomson portfolio, click here.

Texas MP3 Technologies taking on MP3?

Word has also spread about the company Texas MP3 Technologies, Ltd. (which apparently has no web presence), and their lawsuit against Apple, Samsung, and Sandisk over U.S. Patent 7,065,417 ("MPEG portable sound reproducing system and a reproducing method thereof "). Being true it its namesake, the plaintiff launched the suit in the E.D. Texas (2-07cv-052).

The patent issued in June 2006, and has experienced a winding ownership path from Sigmatel to Texas MP3 Technologies (view assignment records here). When announcing the sale of the patent, Sigmatel stated that "[b]ecause these are such basic patents to digital music, we believe it will be difficult to design around these patents and have a commercially viable player."

You be the judge:

1. A portable audio device suitable for reproducing MPEG encoded data, the
portable audio device comprising:

a plurality of inputs, including a forward input, a reverse input, a play control input, and a random input;

a non-removable data storage to store compressed digitized audio data;

a display;

an audio output;

at least one processor, responsive to selection of at least one of the plurality of inputs, to convert selected compressed digitized audio data stored in the non-removable data storage for reproduction by the audio output and to provide information to the display;

a battery;

and wherein, when a first selection of compressed digitized audio data is being reproduced, the display provides at least one of the first selection's title, type, remaining playtime, and reproduction time;

wherein, when a second selection of compressed digitized audio data is being reproduced and in response to selection of the forward input for a first amount of time, the portable audio device advances to another selection of compressed digitized audio data;

wherein, when a third selection of compressed digitized audio data is being reproduced, in response to selection of the reverse input for a second amount of time, the portable audio device begins playing the third selection from a beginning of the third selection of compressed digitized audio data;

wherein, when a fourth selection of compressed digitized audio data is being reproduced, in response to selection of the play control input, the portable audio device stops playing the fourth selection of compressed digitized audio data;

wherein, in response to selection of the random input, the portable audio device reproduces selections of the compressed digitized audio data stored in the non-removable data storage in a random order; and

wherein, when the portable audio device is in a selected mode of operation and a voltage of the battery falls below a selected level, the display provides an indication relating to a power level of the battery.

To view a copy of the complaint, click here.

Friday, February 23, 2007

Prosecution Disclaimer Narrows Claim Term In Continuation Patent

Hakim v. Cannon Avent Group, PLC, et al. (05-1398) - February 23, 2007

Hakim's patents covered drinking cups that prevent the spilling of liquid if the cup is tipped over. During patent prosecution, Hakim described his distinctions from the cited references by emphasizing that the flexible valve material in his mechanism had a "slit."

Hakim filed a continuation, where the word "opening" replaced "slit." The filing of the continuation was accompanied by an attorney letter stating that Hakim was broadening the claims on this basis.

The defendant's drinking cup has a valve with a flexible diaphragm having a central opening, but the opening is not a slit that opens and closes, but simply a hole in the diaphragm.

In construing the claims of the continuation patent, the district court held Hakim to his arguments in the parent application that the invention includes the presence of a slit in the flexible material. The court stated: "Because Hakim did not retract any of his arguments distinguishing the prior art, he is held to the restrictive claim construction he argued during prosecution of the patent." It was stressed that when Hakim wrote to the examiner that he was broadening the claims, he did not specifically point out that he no longer intended to be limited to the specific mechanism that he had previously argued was the distinguishing feature of his invention.

The CAFC affirmed:

Hakim had the right to refile the application and attempt to broaden the claims . . . However, an applicant cannot recapture claim scope that was surrendered or disclaimed. The district court did not err in holding that the examiner's action in allowing the continuation claims without further prosecution was based on the prosecution argument in the parent . . . Although a disclaimer made during prosecution can be rescinded, permitting recapture of the disclaimed scope, the prosecution history must be sufficiently clear to inform the examiner that the previous disclaimer, and the prior art that it was made to avoid, may need to be re-visited.

Thursday, February 22, 2007

MedImmune v. Genentech: USPTO Issues Final Rejection in Reexamination

While the Supreme Court was deciding issues of standing, a good number of people wondered: "who needs standing when you have reexamination?"

Well the USPTO recently issued final rejections on Genentech's "Cabilly" patents (4,816,567 and 6,331,415). All of the claims of both patent were deemed invalid by the examiner.

Multiple 102 and 103 rejections were issued based on various prior art against the '567 patent. Also, all of the claims of the '415 patent were rejected on multiple non-statutory obviousness-type rejection based on the earlier ('567) patent, as well as other prior art.

Genentech has one more opportunity to respond to the rejections, and, if unsuccessful, will head to the BPAI on appeal.

  • To view the (consolidated) USPTO files for the '567 and '415 patent, click here.
  • Read yesterday's press release on the reexamination here.

Wednesday, February 21, 2007

Supreme Court Hears Microsoft v. AT&T Arguments

The Supreme Court heard oral arguments today on the Microsoft v. AT&T case, which considered

Whether, by exporting the golden masters containing machine-readable object code from which foreign replicated copies were made in foreign countries, installed overseas in foreign-made computers, and sold to foreign end users, Microsoft “supplie[d] . . . from the United States” the “components of a patented invention” in a manner that induced “the combination of such components outside of the United States.”

Theodore Olson argued for Microsoft, while Seth Waxman argued for AT&T (both, incidentally, are former solicitor generals). DOJ attorney Darryl Joseffer argued on behalf of the United States as amicus curiae in support of Microsoft.

To be sure, the arguments quickly became metaphysical, where the Court immediately started digging to determine what the "component" actually was.

Microsoft argued that, if the "component" is the golden master itself, then there is no infringement, because the golden master was not combined in an infringing manner within the U.S. as required by the statute. Moreover, AT&T argued that the object code itself could not be a component, since the object code itself is only an idea:

MR. OLSON: Our position is that it's not a component of the final product computers that are made abroad. What is a component is a replication, a copy of a new hard drive or a new disk that's made a part of those computers which, without which -

JUSTICE KENNEDY: Just the disk but not the information on the disk is the component.

MR. OLSON: The information on the disk is of no use to the computer unless it's made into a physical machine readable document -- object.

* * *

MR. OLSON: The making of the master disk if actually used in a computer with a microphone and a speaker, and that's the liability that existed in the stipulation under 271(a). Making copies is liability domestically under 271(b). If it's going to be liable for foreign made replications, then it must be under 271(f). The language of the statute, we submit is clear. Physical things must be components under 271(f) because they must be supplied from somewhere. Ideas have no physical from. They're in the air. The words used, "supplied from" tells us that it must be a physical thing combined with. Ideas don't combine with physical things to make a patented invention. Physical things do.

The Court accepted (for the most part) that the code and the functional aspects of the code embodied on a physical disk are separable, and thus formed parts of a component that had patentable and non-patentable aspects. Using this rationale, the Court gave AT&T a rough ride on its' position that the object code, and not the disk itself, was the actual component, and that the transmission of the code alone constituted infringement:

JUSTICE STEVENS: [Microsoft doesn't] send [the master disk software] directly from the United States to each of the individual computers in Germany. They send it to a central point which then redistributes it. Is that not right.

MR. WAXMAN: Well, I think that paragraph 7 of the stipulation, it doesn't specify one way or the other, but their case, Justice Stevens, depends upon the following. Because if I -

JUSTICE STEVENS: If you're correct that they're just sending from New York direct to the 500 different machines all on one transmission from New York, there's no lawsuit here.

* * *

JUSTICE SOUTER: Why doesn't that get you right back to the point that Justice Breyer was making? You are saying, I think, in essence if you send a blueprint -- this is like a blueprint. It tells, it tells a machine which may be in Europe how to put the object code on other disks or on hard drives. The machine in Europe is following instructions just the way an artisan would follow a blueprint.

The Jurisdictional Reach of U.S. Patent Law

The Court also raised concerns about applying U.S. patent law on "instructions" that are sent overseas that create an infringing product or process:

JUSTICE KENNEDY: Well, is it an answer to Justice Breyer, or maybe it isn't, that we have no conceptual problem saying there would be liability if this happened within the territorial limits of the United States?

MR. WAXMAN: Absolutely not.

JUSTICE KENNEDY: And so there shouldn't be a greater conceptual problem if you prevail, in applying it abroad.

MR. WAXMAN: That's -

JUSTICE BREYER: Well, sure, there is. It's a bigger [problem].

The CAFC

JUSTICE BREYER: [Y]ou're right, Justice Ginsburg, that the court of appeals for the Federal Circuit thought it was bringing this statute up to date and it even said so. We are making an extension of the statute to keep up to date with the technology. That is not for courts to do.

Software Patents

The Court continued to tease the patent bar with the notion that the Supreme Court may reconsider the patentability of software. During Joseffer's oral argument, the Court raised the issue twice:

JUSTICE BREYER: I take it that we are operating under the assumption that software is patentable? We have never held that in this Court, have we?

MR. JOSEFFER: No, but as I was saying before -

JUSTICE BREYER: So what should we do here? Should, if we are writing this, since it's never been held that it's patentable in this Court -

MR. JOSEFFER: I think if -

JUSTICE BREYER: If I were writing something, should I say on the assumption that it's patentable? Since the issue isn't raised?

* * *

JUSTICE STEVENS: Your time is up, but I want to ask you one yes or no question. In your view is software patentable?

MR. JOSEFFER: Standing alone in and of itself, no.

Read the oral argument transcript here.

Zoltek v. United States - Petition For Certiorari

Zoltek holds U.S. Patent No. RE 34,162, which claims a method for producing carbon-fiber sheets having properties useful in military applications, such as providing stealth qualities to aircraft. The patented method uses partially carbonized fibers that are then processed into sheets for use on military aircraft.

Lockheed Martin was accused of using Zoltek’s patented process to produce carbon-fiber sheets and imported these materials into the United States for use in making the F-22
Fighter Plane pursuant to a contract with the federal government to design and build F-22 stealth fighters.

Zoltek sued Lockheed and the US government in the CFC under 28 U.S.C. § 1498(a), claiming that Lockheed’s “use or manufacture of [a patented] invention” is “construed as use or manufacture for the United States.” Section 1498(a) further provides that whenever a patented invention “is used or manufactured by or for the United States without license of the owner thereof . . . the owner’s remedy shall be by action against the United States in the [CFC] for the recovery of his reasonable and entire compensation for such use or manufacture.”

The case reached the CAFC, where a per curiam opinion was rendered on two important issues. First, the court addressed the Fifth Amendment takings clause in the context of patents. The CAFC, relying of the 1894 Schillinger decision, held that Zoltek could not assert a Fifth Amendment takings claim, since a particular claim for patent infringement by a government contractor sounded in tort and hence could not be brought against the United States under the Tucker Act. The court rejected the notion that patent rights were “property” protected by the Fifth Amendment, but instead viewed them as “a creature of federal law” protected only by such relief as the federal government saw fit to grant under § 1498.

With regard to § 1498, the CAFC determined that a process is not infringed unless “each of the steps is performed within this country." Since Lockheed's sheets were partially manufactured in Japan, the court ruled that the US has no liability under Section 1498(a).

Zoltek has petitioned for a grant of certiorari, arguing that the CAFC decision "strips an entire class of property owners – patent holders – of their Fifth Amendment right to just compensation for the taking of their patent rights." The petition cites the prominence of IP in today's business world and argues that it is unfair and unwise to exclude patent holders.

Furthermore, Zoltek argues that § 1498 should be interpreted consistently with § 271, which provides an independent right to exclude the products of foreign processes from importation into or use in the United States, as well as the fact that a claim for infringement under § 271(g) arises from the domestic importation or use of those products:

Under the facts of this case, there is no question that, aside from § 1498(a) substituting the Untied States as a defendant under certain circumstances, Zoltek would have a cause of action against Lockheed or any other private party for the importation and/or domestic use of the [products] made by its patented process, regardless whether some or all steps of the patented process itself were performed abroad.
Zoltek Petition for Certiorari

Zoltek Petition Appendix

(Special thanks to Erik Jaffe for forwarding the petitions.)

Original CAFC decision here

CAFC en banc denial, with concurring opinions from Dyk and Gajarsa, and a dissenting opinion from Newman

See article from Professor Adam Mossoff (Michigan State): "Conventional wisdom maintains that early courts never secured patents as constitutional private property under the Takings Clause. In examining long-forgotten judicial opinions and legislative records, this Essay reveals that this is a profoundly mistaken historical claim. "

Upcoming Events

Strategies for Managing Intellectual Property Litigation Summit - February 28, 2007 — New York City

Incremental Advantage is presenting this informative seminar on the management of IP litigation and its impact on the enterprise value of a company. Numerous distinguished IP professionals will discuss best practices for managing intellectual property in terms of deriving shareholder value and in terms of using IP as a strategic weapon. Topics include:

  • An Overview of Breaking IP Litigation Issues
  • Strategies for Managing IP Litigation
  • Financing IP Litigation
  • Computer and Internet Law
  • Patent Trolls: Identifying Them & Mitigating Their Damage
  • Permanent Injunction from an Economist’s Perspective
  • Business Methods Patents
  • Best Practices for IP Litigation, and
  • Trade Secrets and the Protection of Intellectual Property
The seminar will be hosted at the Harvard Club in New Your City. To register by phone or mail, call Neomi Barazani at 609-919-1895 x100, or email neomi@incrementaladvantage.com.


Patent Litigation - March 2, 2007 - Las Vegas

Dunes CLE is presenting this seminar at the Bellagio hotel and casino in Las Vegas. The seminar will include numerous discussions on recent caselaw developments, and will also discuss strategies for implementing successful patent enforcement and defense strategies. Topics will include:
  • Post-Issuance Litigation Matters
  • The Consequences of Failing to Perform an Adequate Pre-Filing Investigation Before Filing a Patent Infringement Action
  • The Interplay Between Patents and Trade Secrets
  • Be Prepared for the Perfect Storm-Litigating Software Patents
  • A Primer on the FRCP's New Electronic Discovery Rules for Patent Litigators
  • I Am an Assignee/Exclusive Licensee, Why Can’t I Sue for Infringement?
To register for this event, click here.

Tuesday, February 20, 2007

Specification, Admissions Vitiate Infringement

MyMail, Ltd. v. America Online et al. (06-1147) February 20, 2007

MyMail appealed a grant of Summary Judgment by the E.D. Tex., finding that 8 Internet service providers did not infringe MyMail's patent (6,571,290). Claim 1 of the patent reads as follows:

1. A method of connecting a use to a given NSP (Network Service Provider) comprising the steps of:

providing a network device user with an initial use set of log-in information for initially communicating with an access [service provider] via an available NSP;

storing in a database of the network device a hidden time shared set of log-in information supplied by said access service for accessing said given NSP; and

causing the network device to reestablish communication with the network via said given NSP using the hidden set of log-in information.

Generally speaking, the the claims use the term Network Service Provider or "NSP" to refer to a party in a generic network performing the function of an ISP and providing modem services to network users. During the Markman hearing, the court construed the term NSP as "a party that provides a connection to the network and authenticates users for access to the network."

MyMail's theory of infringement claimed that third-party modem banks associated with the defendants served as the NSP, and the service providers (i.e., AOL) served as the access service provider, and together they infringed. However, under the district court's interpretation of the claims, only the third-party modems performed authentication, and not the service providers. Thus, summary judgment of noninfringement was granted.

MyMail argued that the authentication did not have to occur at the NSP, but could also be performed by the access service provider. For support, MyMail pointed out an unclaimed embodiment disclosed in the specification.

The CAFC dismissed this argument, and pointed out portions of the specification the defined "the invention," where NSP authentication was "necessary" to allow an ISP to grant access to a user. Regarding the unclaimed embodiment, the CAFC found that the embodiment had no effect on the scope of the claimed subject matter. Furthermore, admissions made by MyMail's counsel made clear that the NSP had to perform the authentication:
In that statement, as in the earlier one, MyMail’s counsel agreed as to the entity that had to perform authentication but disagreed as to the method of authentication, i.e., what information was employed to authenticate the user. Having agreed to that construction before the district court, MyMail "cannot now argue against that claim construction simply because it resulted in an adverse ruling on summary judgment."
AFFIRMED

Fraud in Obtaining Ownership of Patent: The CAFC also considered arguments from the defendants alleging that MyMail fraudulently obtained ownership of the patent. The CAFC noted:
While it is true that later-discovered fraud relating to patent procurement can be raised as a defense in federal court, the same is not true of fraud relating to patent ownership. Fraud in the procurement bears on the enforceability of the patent and thus implicates the public’s interest in ensuring that the grant of patent rights is legitimate . . . Asserting that a third party owns a particular patent, however, is a different matter. In that case, the enforceability of the patent is not challenged; the only question is one of ownership . . . State law, not federal law, addresses such property ownership disputes.

ITC Asks Congress For More Funding To Deal With Increased Patent Workload

The International Trade Commission (ITC) has gained considerable clout over the last 5 years in adjudicating patent disputes and continues to serve as a quicker-moving alternative to district court litigation. The six-member commission, empowered by the 1930 Tariff Act to block infringing products from being imported into the U.S., usually delivers a final ruling within 15 months, compared with two or three years for a typical federal-court case.

Patent suits more than doubled between 1995 and 2005, going from 1,212 filings to 2,706. The number of infringement cases before the ITC more than doubled to 40 last year from 2002, and is expected to rise again this year.

To deal with the increased workload, the ITC is asking Congress to boost its budget to $67.1 million next fiscal year from $62.7 million for the year ending Sept. 30. The commission is hiring attorneys and plans to add a fifth administrative law judge plus a replacement for Judge Sidney Harris, who is retiring this week.

See Senate Report 109-280, detailing appropriations for 2007.

Friday, February 16, 2007

BPAI Decides to Test "Pure" Business Methods at CAFC - Holds Application Unpatentable under 35 U.S.C. §101

Ex Parte Bilski (Appeal No. 2002-2257) - Mailed September 26, 2006

This 71-page opinion from the BPAI stems from the recent USPTO policy of publishing "Informative Opinions" that are not precedential, but are intended to inform the patent bar about positions being taken at the USPTO. What is interesting about this opinion is that the Bilski panel (Frankfort, McQuade, Barrett, Bahr and Nagumo) has appeared to take a position that contradicts the majority holding in Ex Parte Lundgren (where ALJ Barrett - the only ALJ participating in Bilski - provided a dissenting-in-part opinion). While Lundgren appeared at first to close the chapter on patentable subject matter at the USPTO, the subsequent actions of the examining corps, the Nuijten case, and now Bilski, make clear that the Office is preparing to test the limits of §101 at the CAFC.

Claim 1 of Bilski's patent application (08/833,892) reads as follows:

1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

During prosecution, the Applicants admitted that hardware, such as a computer, was not necessary to perform the recited steps. In rejecting the application, the examiner relied (almost verbatim) on a Lundgren-type rejection:

"[rlegarding claims 1-11, the invention is not implemented on specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts . . . The definition of 'technology' is the 'application of science and engineering to the development of machines and procedures in order to enhance or improve human conditions, or at least improve human efficiency in some respect.' (Computer Dictionary 384 (Microsoft Press, 2d ed. 1994))"
This time, BPAI skirted the Lundgren result by (1) interpreting the rejection as being one on an "abstract idea," and (2) distinguishing Lundgren by making the rather contorted argument that the abdication of the "technological arts" test didn't affect the requirement that claims possess some aspect of "technology":

The Board held in Lundgren that the 'technical arts' test is not a separate and distinct test for statutory subject matter. Although commentators have read this as eliminating a 'technology' requirement for patents, this is not what was stated or intended. As APJ Barrett explained, "[tlhe 'technology' requirement implied by technological arts' is contained within the definitions of the statutory classes . . . All machines, manufactures, or [man-made] compositions of matter" are things made by man and involve technology. Methods which define a transformation of physical subject matter from one state or thing to another involve technology and qualify as a statutory 'process' under § 101.
Apparently, the Board has chosen to draw a line with applications directed to non-machine-implemented inventions, (grudgingly) noting that all of the CAFC decisions on statutory subject matter were directed to computer-related inventions:
[T]he holding in State Street is "clearly limited to "transformation of data . . . by a machine." AT&T involved a machine-implemented process. Machines are physical things that nominally fall within the class of a "machine" in § 101, and machine-implemented methods inherently act on and transform physical subject matter, such as objects or electrical signals, and nominally fall within the definition of a "process under § 101. No machine is required by the present claims. Until instructed otherwise, we interpret State Street and AT&T to address the "special case" of subject matter that nominally falls within § 101, a general purpose machine or machine-implemented process, but which is nonetheless unpatentable because the machine performs an "abstract idea."

Read the opinion here: Ex parte Bilski. The application has been appealed to the CAFC (case number 07-1130), and briefs will be submitted to the court by March 12, 2007.

See USPTO's database of Informative Opinions here.

See more from the Patently-Unobvious blog, which broke the story.

More comments from Dennis at Patently-O

Thursday, February 15, 2007

"Good Faith" of Patentee Not Relevant to Finding of Inequitable Conduct

Cargill v. Cambra Foods (06-1265) - February 14, 2007

During the prosecution of Cargill's patents on special types of canola oil, Cargill had in its possession a report and test data regarding the subject matter being patented. When the application was initially rejected, Cargill successfully argued that the prior art failed to demonstrate certain stability characteristics possessed by the claimed invention.

When Cargill asserted its patents against Cambra, it was learned that the report and test data was not submitted to the USPTO. Moreover, the district court found that the report and test data contradicted Cargill's USPTO arguments on the claimed stability characteristics. As the information was found to be "highly material," the court found the patent unenforceable due to inequitable conduct.

Cargill argued that the data contained in the report is not material because the tests underlying the report were performed under unusual conditions and were not comparable to the data submitted to the examiner. Cargill also argued that, because the data did not set forth any testing conditions, it too could not be compared with the data before the examiner.

The CAFC rejected those arguments:

Even accepting as true the factual premises of those arguments, the documents withheld during prosecution remain material. "[M]ateriality is determined from the viewpoint of a reasonable patent examiner, and not the subjective beliefs of the patentee" . . . A reasonable examiner would certainly want to consider test data that is directly related to an important issue of patentability, along with the applicant’s interpretation of that data. Whether the examiner would have ultimately allowed the patent to issue is irrelevant because "[u]nder the ‘reasonable examiner’ standard, a misstatement or omission may be material even if disclosure of that misstatement or omission would not have rendered the invention unpatentable."
As for intent to deceive, Cargill submitted that the district court found that the applicant had a good faith belief that the withheld test data did not need to be disclosed to the examiner. As such, this factor would weigh in Cargill's favor against finding inequitable conduct. Again, the CAFC disagreed, and reminded everyone that if you are in doubt, disclose, disclose, disclose!
While gently suggesting that the applicant perhaps honestly believed [the product] to be a patentable invention, the court nevertheless expressly held that the applicant knowingly misled the PTO about the available evidence. Even if there were a mitigating explanation for the withheld data, it was no excuse for the applicant’s purposeful omissions in this case. "Close cases should be resolved by disclosure, not unilaterally by the applicant" . . . That rule is drawn from the policy that "applicants [should] continue to submit information for consideration by the Office in applications rather than making and relying on their own determinations of materiality."
AFFIRMED

Wednesday, February 14, 2007

Reps. Becerra (D-CA) and Eldon (D-Fla) Introduce Bill to Ban Gene Patents

From Representative Xavier Becerra's website:

Friday, February 09, 2007

WASHINGTON, D.C. – Representative Xavier Becerra (CA-31), Assistant to the Speaker and the only congressional member from Southern California on the House Committee on Ways and Means, today introduced the Genomic Research and Accessibility Act, a bill that once enacted, would put an immediate end to the practice of patenting any and all portions of the human genome. Rep. Dave Weldon, M.D. (FL-15) joined Rep. Becerra as the co-author of the legislation.

* * *

The legislation gives guidance to the USPTO on what is not patentable – in this case genetic material, naturally-occurring or modified. It is not retroactive – it does not rescind the patents already issued. Patents are granted for a period of 20 years from the date that an application is originally filed.

“Thus, if we enact this bill into law quickly, we will reach balance in less than two decades – a patent-free genome that does not hinder scientific research, business enterprise, or human morality,” Rep. Becerra said.

“We seek simply to fix a regulatory mistake,” Rep. Becerra said. “Genes are a product of nature; they were not created by man, but instead are the very blueprint that creates man, and thus, are not patentable. Gene patenting would be the analogous equivalent to patenting water, air, birds or diamonds.

“Enacting the Genomic Research and Accessibility Act does not hamper invention, indeed, it encourages it. The proliferation of scientific prowess, medical innovation, and economic advancement will all occur if the study of genes is allowed to happen unabated. Incredible manifestations of intellectual property will result: medicines, machines, processes – most deserving of recognition, some potentially life-saving, and all worthy of a patent."

See more from Patent Baristas, and Patent Docs.

2007 Patent Reform - It's Off To An Ugly Start . . .

The U.S. House of Representatives Committee on the Judiciary is organizing the Subcommittee on Courts, the Internet, and Intellectual Property for oversight hearings this Thursday (2:00 PM) on patent reform.

The title of the hearings pretty much says it all: "American Innovation at Risk: 'The Case for Patent Reform.'” The current list of witnesses, and their linked testimony, includes:

  • Adam B. Jaffe, Professor of Economics and Dean of Arts and Sciences, Brandeis University Whaltham, Massachusetts (view prepared testimony here)
  • Suzanne Michel, Chief Intellectual Property Counsel and the Deputy Assistant Director for Policy Coordination Federal Trade Commission Washington, D.C. (view prepared testimony here)
  • Mark Myers, Co-Chair of the National Academy of Sciences Report Patent System for 21st Century Unionville, Pennsylvania (view prepared testimony here)
  • Daniel B. Ravicher, Executive Director Public Patent Foundation New York, NY (view prepared testimony here)
The testimony of Myers and Michel lay out the conventional case for patent reform: quality issues at the PTO create uncertainty, trolling litigation exploits the uncertainty, and the lack of challenge mechanisms on validity propagate the uncertainty. Thus, the following reform measures were highlighted
  1. increase scrutiny (i.e., "second pair of eyes") and funding for PTO examination;
  2. provide post-grant opposition to challenge questionable patents;
  3. tighten standards on obviousness and willfulness; and
  4. provide safe havens for prior user rights and research exemptions.

One interesting note on Suzanne's testimony is that she resurrected the "preponderance of the evidence" standard for invalidity which was recently recommended in the FTC's 2002 report on patent policy. Other than noting this recommendation, Suzanne didn't pursue this further in the testimony.

The testimony of Jaffe and Ravicher, however, is another matter. With all due respect, it's just over the top. Some of the testimony is inaccurate and misleading (the USPTO has an 85% allowance rate? Really?) some of it is simply untrue ("through a quota system, patent examiners are given more credit, and evaluated more favorably, if they issue, rather than reject patents"), and some of it is just bizarre. Take this, for example, when Ravicher compares bad patents to condemned prisoners on death row:

[l]itigated patents tend to have a much greater significance to the public, on average, than non litigated patents. To draw an analogy, if 35% of the people on death row who challenged their convictions were actually proven innocent, that wouldn't necessarily mean that 35% of all people on death row, much less 35% of all convicted criminals, were actually innocent (that ratio could be higher or lower), but the severity of each mistake regarding someone on death row is extreme nonetheless. Similarly, the technology involved with litigated patents is almost without exception extremely valuable, so any mistakes regarding the validity of those patents can cause severe harm in and of itself, regardless of the validity rate of issued patents in general.

Of course, the call for banning software and business method patents is urgently argued, as well as reducing wilfull infringement strictly to cases where direct copying is proven. In short, the patent world, according to Jaffe and Ravicher, is populated with good guys and bad guys - and the bad guys are people who dare to exclude others, who purport to have good intentions, from technological advancements.

This is not to say that their testimony is wholly without merit, because they do make a few valid points. However, the rhetoric is simply too much, and frankly, is getting a little old.

Tuesday, February 13, 2007

"Open Source" Approach Being Tested In Industries Outside of Software

Due to the fact that the software landscape intertwines multiple technologies and companies to each other, developers have long recognized that collaborative efforts can sometimes produce superior commercial results as compared to exclusive regimes, where a handful of patent owners try to dictate future innovations in a technological field.

Unlike standardization groups, open source software includes a spectrum of programs, the best known of them the Linux operating system, that are not under the lock and key of a single company but are developed by the communal efforts of volunteers who often start with little more than a common interest.

Two years ago, patent pledges became popular, when IBM pledged 500 patents to the Open Source community. This created more pledges from IBM and other software giants (HP, CA, Microsoft, Red Hat, Sun, Oracle), which ultimately culminated in the Patent Commons Project. Alliances continue to be made with universities and other Open-Source developers in an attempt to spur innovation in software.

Now, the push for Open-Source has spread to electronic hardware. Currently, developers have expressed frustration over hardware with “Linux support” that's used on anything besides x86 GNU/Linux. Lack of source code support for multiple operating systems and hardware platforms have people wondering if hardware isn't due for an "Open Source tune-up" as well.

On Monday, Bruce Perens, an author of the Open Source Definition that codified elements of the collaborative programming philosophy, announced the TAPR Open Hardware License, a document written by John Ackermann designed specifically to govern hardware designs that can be modified and redistrubuted. Perens plans to submit the license to the Open Source Initiative for its as an open-source license.

The license includes provisions to prohibit those who distributed designs under the license from filing patent infringement lawsuits against those who use those designs. The license also includes a central site to which hardware developers can provide feedback on the design and a variation that prohibits commercial use of the design.

On the Biotech side, Novartis, who helped uncover which of the 20,000 genes identified by the Human Genome Project are likely to be associated with diabetes, is deciding to share its information for free on the World Wide Web. Also, Pfizer has promised to make available for free a swath of genetic information emerging from a three-year collaboration with the National Institutes of Health.

Read Stephen Shankland (CNet) , "Perens set to tackle open-source hardware"

See also Matthew Herper and Robert Langreth (Forbes), "Biology Goes Open Source"

Monday, February 12, 2007

"Comprising" Doesn't Expand Explicitly Claimed Process Term

Dippin' Dots, Inc. v. Mosey et al. (05-1330) - February 9, 2007

Dippin' Dots (DDI) sued Thomas Mosey and other defendants for infringing US Patent 5,126,156, titled "Method of preparing and storing a free flowing, frozen alimentary dairy product". The defendants countered that DDI's patent was invalid and not infringed, and further accused DDI of a Walker-Process antitrust violation by asserting a "fraudulently acquired patent." The jury found for the defendants on all counts, ruling that DDI's prior sales of a cryogenically prepared novelty ice cream product predated the critical patent date, and that subsequent 1.132 declarations related to commercial success omitted these sales in the PTO proceedings with deceptive intent.

With regard to claim construction, DDI argued that the term "beads" was erroneously construed (claim 1: A method of preparing and storing a free-flowing, frozen alimentary dairy product, comprising the steps of . . . freezing said dripping alimentary composition into beads). The district court construed the term to mean "small frozen droplets . . . which have a smooth, spherical (round or ball shaped) appearance." The construction explicitly excluded processes which produce "any irregular or odd shaped particles such as 'popcorn.'"

The CAFC found no error in this construction. DDI also argued that using the term "comprising" raises a presumption that the list of elements is nonexclusive. The CAFC agreed in principle, but stated that in the context of DDI's claims, the word "'[c]omprising' is not a weasel word with which to abrogate claim limitations."

'Comprising' appears at the beginning of the claim—'comprising the steps of'—and indicates here that an infringing process could practice other steps in addition to the ones mentioned. Those six enumerated steps must, however, all be practiced as recited in the claim for a process to infringe. The presumption raised by the term 'comprising' does not reach into each of the six steps to render every word and phrase therein open-ended—especially where, as here, the patentee has narrowly defined the claim term it now seeks to have broadened. The district court’s limitation of the claim scope to exclude processes that produce some irregularly shaped particles is correct.
With regard to the Walker-Process violation, the CAFC found that there was insufficient evidence of DDI's intent to deceive, even thought the omitted evidence was highly material:
We believe, though, that to find a prosecution omission fraudulent there must be evidence of intent separable from the simple fact of the omission. A false or clearly misleading prosecution statement may permit an inference that the statement was made with deceptive intent. For instance, evidence may establish that a patent applicant knew one fact and presented another, thus allowing the factfinder to conclude that the applicant intended by the misrepresentation to deceive the examiner. That is not the case with an omission, which could happen for any number of nonfraudulent reasons . . . In this case, DDI argues that it did not disclose the Festival Market sales to the PTO because it believed that the product there was made without practicing [all] the [steps] of the claim within the specified temperature ranges . . . the defendants submitted no evidence of their own—aside from the absence of the Festival Market sales from the prosecution record—which affirmatively shows DDI’s fraudulent intent. That intent cannot be shown merely from the absence of evidence which would come about from the jury’s discounting DDI’s explanation.

AFFIRMED-IN-PART, REVERSED-IN-PART, VACATED-IN-PART, AND REMANDED

Friday, February 09, 2007

WIPO Releases Annual PCT Statistics for 2006

WIPO recently reported that PCT filings have seen continuous growth with a record 145,300 applications filed in 2006, representing a 6.4% growth over the previous year. The most remarkable growth rates came from countries in north east Asia for the third year running and represented over a quarter (25.3%) of all international applications under the PCT.

The Republic of Korea, which experienced 26.6% growth in 2006, overtook the UK and France to become the 4th biggest country of origin of PCT filings, and applicants from China, whose use grew by a whopping 56.8%, dislodged Switzerland and Sweden to take the position of 8th largest country of origin:

  • United States -- 49,555 (+6.1%)
  • Japan -- 26,906 (+8.3%)
  • Germany -- 16,929 (+5.8%)
  • Republic of Korea -- 5,935 (+26.6%)
  • France -- 5,902 (+2.8%)
  • United Kingdom -- 5,045 (-0.8%)
  • Netherlands -- 4,393 (-2.7%)
  • China -- 3,910 (+56.8%)
  • Switzerland -- 3,403 (+3.8%)
  • Sweden -- 3,123 (+8.7%)

The top 10 PCT applicants for 2006 are:

  • KONINKLIJKE PHILIPS ELECTRONICS N.V. (NL) -- 2,495
  • MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. (JP) -- 2,344
  • SIEMENS AKTIENGESELLSCHAFT (DE) -- 1,480
  • NOKIA CORPORATION (FI) -- 1,036
  • ROBERT BOSCH GMBH (DE) -- 962
  • 3M INNOVATIVE PROPERTIES COMPANY (US) -- 727
  • BASF AKTIENGESELLSCHAFT (DE) -- 714
  • TOYOTA JIDOSHA KABUSHIKI KAISHA (JP) -- 704
  • INTEL CORPORATION (US) -- 690
  • MOTOROLA, INC. (US) -- 637

Among the 20 top filing companies, seven were from the USA, four from Japan and three from Germany. Several new companies joined the top 20 list, including Huawei (China), up 24 places to 13th, Fujitsu (Japan), up 9 places to 15th, LG Electronics (Republic of Korea) up 12 to 16th, and Hewlett-Packard (USA) up 5 to 18th.

The greatest number of PCT applications published in 2006 were in telecommunications (10.5%), pharmaceuticals (10.4%), and information technology (10.4%). The fastest growing technology areas are semiconductors (28% increase), information technology (22%) and pharmaceuticals (21%).

To view the complete report, click here.

New Search Tool: Patent Monkey

A new patent search tool was launched this month called Patent Monkey, and it's worth checking out. Started in part by former USPTO examiner Paul Graham, the search engine has a pretty interesting interface that I think works well. Features include:

  • Fully searchable US patent text database
  • Front page navigation with user-selectable Claims, Abstract or Description section in quick view window
  • Patent status is presented on each patent page so you know which ones are abandoned and expired
  • Create, save and share lists of patents (folders) with your colleagues via the web as well as on blogs
  • Download any single patent PDF for free or bulk download PDFs from a folder as a time saving upgrade
If I have a nit to pick, it would be the purple text, which gets kind of hard to look at after a while. But the interface is pretty intuitive and I like the fact they modeled it partly on the "shoes" that were formerly used at the PTO. They also have a blog that covers various patent-related topics.

Search on Patent Monkey here.

Thursday, February 08, 2007

Should the "Absurdity Doctrine" Be Introduced to Patent Law?

Over at Patently-O, a bit of a cerebral food-fight has taken place on the comment boards (see here and here) over the past few days regarding the In re Nuijten case, in which the applicant is asking the Federal Circuit to recognize the patentability of signals per se, as opposed to the machines or processes/methods that create them (to listen to the CAFC oral arguments, see here) .

GWU Professor John F. Duffy pointed out that Nuijten is more than a case about potentially expanding the list of patentable subject matter; it is about the fundamental approach to interpreting the Patent Act.

One method of interpreting statutes is through textualism. Basically, textualism is a formalist theory of statutory interpretation which holds that a statute's ordinary meaning should govern its interpretation, to the exclusion of such things as legislative intent, problems to be remedied, etc. It just also happens that textualism is fancied by a good number of Justices over at the Supreme Court (Roberts, Scalia, Kennedy, Thomas and Alito). Perhaps this is no coincidence, but the USPTO's brief to the Federal Circuit also followed a textualist approach in its opposition to Nuijten's patent application (download briefs here, courtesy of Patently-O).

A corollary to the textual approach for statute interpretation is the textual approach to claim interpretation. In the Markman decision, the CAFC explained why its ruling on claim construction did not violate the plaintiff's Seventh Amendment right to a jury trial, and rejected arguments which analogized patent claim construction to the search for the parties' intent in a contract. The majority instead analogized patents to statutes since their judicial interpretations are similar.

Professor Joe Miller, who is the author of the Fire of Genius Blog posted an interesting observation on Professor John Duffy's Statutory Construction Blog regarding some ongoing scholarship being conducted on the "patents-as-statutes" approach to claim construction. His observation questioned if the absurdity doctrine should be applied in claim construction the same way it is used in statutory construction. For those not familiar with the term, the absurdity doctrine allows a court to interpret statutes contrary to their plain meaning to avoid absurd results.

Miller notes:


In the last five years, it seems (to me) that the Federal Circuit has moved strongly against the notion that an absurd claim construction can be avoided; instead, the claim is simply construed with the absurdity, and whatever consequences may follow ensue (e.g., impossibility of infringement, as a practical matter; or inoperability; etc.). It would be interesting, first, to verify my sense of the Federal Circuit cases; and second, to provide a theory, if there is one, that explains why an absurdity doctrine for statutes makes sense and a refusal of absurdity-preventing constructions in patent law also makes sense. Of course, perhaps the better view is that patent law's refusal of an absurdity doctrine points the way we should take with statutes (or vice
versa).
At the outset, it would seem that 35 U.S.C. 112 inherently encompasses this doctrine, but I suspect that Miller may be referring to cases that are "on the margin," where the reading of claims in light of their (presumably poor) description in the specification collides with a plausible interpretation that preserves validity.

In any case, it's an interesting topic that deserves a closer look.

Additional Information:

Glen Staszewski, "Avoiding Absurdity"

Lemley & Burke, "Policy Levers in Patent Law" (arguing that technology-neutral legal standards clash with technology-specific innovations)

Wednesday, February 07, 2007

Patents and Innovation: Friends or Foes?

Last week, French Economic IP scholars François Lévêque and Yann Ménière published an excellent paper on patents and their economic impact on innovation, aptly titled "Patents and Innovation: Friends or Foes?"

This 82-page study covers a broad range of patenting perspectives across a wide range of industries, and is an excellent read for anyone looking to understand business outlooks on patents and the economic effects patents have on industry and innovation.

At the outset, the study points out the obvious that patents are not the only available mechanism for enabling firms to recoup their investments in R&D. In fact, according to a recent survey of US companies, secrecy and lead time are more popular than patents amongst R&D managers to protect product and process innovations. The question then is: what additional protection and/or advantages does the patent system offer for innovators?

R&D Value of Patents

Lévêque and Ménière first look at the value of patents in terms of the type of patenting that occurs to protect an innovation the effect patents have on R&D expenditure. Generally, an innovation is not protected by a single ironclad patent, but rather by a series of patents that confer a protection whose reliability were admittedly difficult to predict. Nevertheless, his type of protection demonstrates that options exist for innovators, who can chose patents to complement innovation, or replace patents with other means of protection for their intellectual assets (i.e., secrecy, lead time, etc.).

Across all industries, each innovation is estimated to be protected by an average of 5.6 patents. In specific industries, the following estimates (patents per innovation) were determined:

  • Rubber Products - 8.8 patents
  • Semiconductors - 7.8 patents
  • Petroleum Refining and Extraction - 6.9 patents
  • Other electrical equipment - 6.7 patents
  • Machinery - 6.7 patents
  • Industrial Chemicals - 6.6 patents
  • Metals - 6.1 patents
  • Electronic Components - 5.7 patents
  • Computers and Office Equipment - 5.1 patents
  • Medical Instruments - 4.7 patents
  • Communication Equipment - 2.9 patents
  • Biotech - 2.2 patents
  • Drugs and Medicine - 2.0 patents

An approximation was also made to compare the value of patents to the amount of R&D expenditures. As an example, the value of patents owned by US chemical firms in the early1990s represents 14% of their investments in R&D. Such a ratio gives an idea on the share of R&D that may be recouped through patents, or, to put it another way, on the subsidy that firms would need in order to maintain their current level of R&D in absence of patents. The subsidy rate for different industries was estimated as follows:

  • Communication Equipment - 39%
  • Semiconductors - 23%
  • Metals - 23%
  • Pharmaceuticals - 22%
  • Medical Instruments - 21%
  • Rubber Products - 19%
  • Instruments - 16%
  • Industrial Chemicals - 14%
  • Electronic Components - 13%
  • Computer - 8%

A second methodology for assessing the additional effect of patents on R&D consists in calculating the difference between the value of the innovation before and after it has been patented (i.e., the patent "premium"). It was found that the premium amounted to 75% to 125% of the value of patented innovations. In other words, the value of the innovations were doubled thanks to patents.

Information Disclosure

The study confirmed that patents increase the amount of technological information that is publicly available, because patent owners must deliver a precise description of their invention. In turn, the information is used by other innovators and makes their R&D more effective and less costly.

According to a survey on American, European and Japanese firms, 88% of respondents report that the information disclosed in patents are useful for designing and implementing their own R&D strategy. In fact, patents are a key source of information on competitors.

Another comparative study shows that patents are the first information channel on R&D of competitors in Japan and comes third in importance after scientific publications and informal exchanges in the U.S. Thus. patent information disclosure enables firms to save useless duplication of R&D costs and to devote their resources to research areas that are less explored.

Cumulative R&D

In situations where final products include numerous patents, the study also confirms that patents on cumulative and complementary innovations raise the risks to block downstream innovations (e.g., a patent that gives a monopoly on a critical research tool in gene sequencing) and to create royalty stacking (e.g., the MPEG-2 standard for digital video compression contains about a thousand patents belonging to 26 companies). Economic theory has characterized these risks and has demonstrated that in certain circumstances they may be severe enough to make patents hindering innovations rather than stimulating it. The perceived "low" quality of patent examination according to some observers, is one of these circumstances.

However, companies have put in place multiple organizational solutions (e.g., cross-licensing, patents pools) and defenses (e.g., patent commons) to mitigate those risks. Also, in many cases,
patents also allow the division of labor between entities (e.g., universities, biotech firms and
pharmaceuticals) through licensing. Surveys in the biotech field that focused on the risk that patents restrict access to research tools for academic and industry researchers conclude that this is not currently the case. Concerning computers and electronics, available evidence suggests that patents as a whole have a positive impact on innovation, although they may generate legal
uncertainties and obstruct the growth of small firms. For the software industry, the study states that there is insufficient evidence to conclude whether patents are helping or hindering innovation.

The paper covers a myriad of other issues concerning technology transfers and transaction costs, IP market measures, and IP litigation (too many to be effectively covered in a blog post). Overall, the conclusion is that patents indeed help innovation across the globe in a small, but significant way. However, the paper recognizes that some flaws exist in the system, and proposes some policy areas in which industry, the courts and legislatures can act to refine and better the current system.

Download/read the paper here.

See other publications by professors Lévêque and Ménière here and here.

Monday, February 05, 2007

Rep. Boucher (D-Va.) Promises "Early" Passage of Patent Reform In 2007

Last Wednesday, U.S. Rep. Rick Boucher (D-Va.) predicted before an early morning crowd at the State of the Internet Conference that the tech industry's interest in patent reform would be rewarded early in the 110th Congress.

Reports stated that, hours after the conference, Boucher and Rep. Howard Berman (D-Calif.) (re)introduced the Patents Depend on Quality Act of 2006 (PDQ Act). Boucher said hearings would begin this month, and he hoped for a full floor vote by March or April.

The reports don't provide any further detail on the proposed law (and Thomas and GovTrack don't show any updates yet), but it is presumed that the current PDQ Act is substantially the same as H.R. 5096 introduced in April of '06 (see text here).

For those keeping track, the PDQ Act is considered to be the narrowest of various reform acts that were paraded through Congress in '05 (H.R. 2795) and '06 (S.3818). So far, none of the proposed laws have seen the light of day.

Maybe the third time's the charm for this bill. As mentioned above, this bill is a retread of H.R. 5096, which, in turn, is a retread of H.R. 5299 ("Patent Quality Assistance Act of 2004"). In short, the PDQ Act proposes many of the more widely-accepted aspects of patent reform: post-grant review within the PTO, 3rd-party submission of prior art following publication, and removal of the estoppel provision for inter partes reexamination. However, the PDQ Act does contain the controversial "second window" for post-grant review, which may cause some problems (see more from Matt Buchanan's blog post here).

Andrew Noyes, who posts on the Tech Daily Dose blog for the National Journal's Technology Daily, was present at the conference in which Boucher made his remarks, and adds the following tidbits:

Aaron Cooper, a staffer for Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., said his boss and Sen. Orrin Hatch, R-Utah, will likely introduce a bill similar to the one they sponsored last year (S.3818).

But Ryan Triplette, who works for the panel's Ranking Republican Arlen Specter of Pennsylvania, said her boss wants in on the action. He was not at the negotiating table last year so "we're not as wedded to S.3818," she said. The issue is a top priority for Specter. "This is something that can get done this Congress," Triplette
said.

In the House, Reps. Rick Boucher, D-Va., and Howard Berman, D-Calif.,
will lead the charge. Amy Levine, a staffer for Boucher, said "you will see real initiative and a real drive to get patent reform legislation through."

Branden Ritchie, who works for Rep. Bob Goodlatte, R-Va., agreed that lawmakers "moved the ball pretty far" last year through a series of hearings and legislation. "We're looking forward to doing that again this time."


See report from InternetNews.com here.

On a side-note, Andrew also blogged about copyright issues discussed at the conference, and particularly about user-generated content. A panel featuring Jim DeLong of the Progress & Freedom Foundation, Pam Samuelson of the Berkeley Center for Law & Technology and Steven Starr from Revver.com started their session off with a video called "Brokeback to the Future," which induced more than a few chuckles in the audience - to view the video, click here.

Chicago IP Day - Feb. 7

The Chicago Intellectual Property Alliance (CIPA) has announced its second "IP Day in Chicago," a one day conference on Wednesday,February 7, 2007, held at Loyola Law Center.

This year's conference will focus on IP and the Supreme Court, in recognition of the extraordinary number of IP cases recently litigated, or soon to be litigated at the Supreme Court. Speakers represent a range of interests, including the IP bar, corporate counsel, and the Solicitor of the USPTO, John Whealan.

The conference will be held from 9:00 a.m. to 4:45 p.m. in Rubloff Auditorium (located on the first floor of the Loyola Law Center, 25 East Pearson St). The luncheon and reception will be held in the Kasbeer Hall, 15th Floor (same building).

The registration fee is $250 per person and covers the full conference, including a continental breakfast, lunch, and a post-conference reception. In addition, students and full-time faculty may attend free of charge.

Due to limited seating, prompt registration is encouraged. Students and faculty may register by sending their name and institution to cnemes@luc.edu.

Registration forms may be found here.

See program schedule here.

Study Indicates "Explosive" Growth in WiMax Patent Activity

A recent 500-page study published by West Technology Research Solutions (WTRS) shows that WiMax patent activity has experienced a dramatic surge in the last year. WiMax is primarily used for providing Nomadic connectivity, connecting Wi-Fi hotspots with each other and to other parts of the Internet, and providing a wireless alternative to cable and DSL. Cellular companies are evaluating WiMAX as a means of increasing bandwidth for a variety of data-intensive applications; Sprint Nextel has announced in mid-2006 that it will be investing about US$ 3 billion in a WiMAX technology buildout over the next few years, together with Interl, Motorola and Samsung.

WTRS has provided previous editions of the "WiMax Patent Directory" - the most notable aspect of this year's study is that last year's directory covered about 50 new patents and this year's new Report studies over 475.

Patents are tracked for mobile and fixed WiMAX and related technologies such as WiBRO. Both US and worldwide patents are evaluated by company, with a focus on fundamental network architecture, enabling software, and RF chipsets. The Report also offers analysis of current and pending WiMAX-related patent litigation, and analysis of IP and Patents with registered IEEE Letters of Assurance.

To view the table of contents, and to order the report, click here.

Friday, February 02, 2007

D.Mass. - Defendants Go First To "Level the Field" in Patent Cases

Hal Wegner provided a report on a fascinating situation developing in the case of
Ethos Technologies, Inc. v. RealNetworks, which was tried in the district court of Massachusetts.

In 2002, Boston-based company Ethos Technologies asserted that Real infringed on two patents relating to downloading technology. In April of 2006, a jury returned a unanimous verdict finding that Real did not infringe on any of the 10 asserted claims, and that 7 of the 10 asserted claims were invalid. Ethos has since appealed the case to the CAFC (06-1552).

On thing quite unusual about this case was that the judge decided, in the interest of fairness, that the defendant should be allowed to proceed first with evidence of invalidity, before the plaintiff proceeds with infringement. Since patentees enjoy a presumption of validity, the court reasoned, it only seems fair to allow defendants the equalize their position by addressing the presumption early in the case. The court indicated that it intends to continue this approach in subsequent cases.

In a footnote, the court explains its rationale (and also cites Judge Moore's paper titled "Judges, Juries and Patent Cases: An Empirical Peek Inside the Black Box"):

The Court employed one procedural innovation in the trial of this patent case, requiring the defendant to present the issues of anticipation and obviousness to the jury followed by the plaintiff's rebuttal. Next, the plaintiff presented its evidence of infringement and the defendant rebutted. Last, the plaintiff proceeded to the damages phase. This approach was eminently satisfying. Presentation of the
anticipation defense allows the jury at once to consider the patented advance against the backdrop of the prior art.

The Court intends to continue using this approach to evaluate its fairness and functionality. As the Court explained in The Holmes Group,Inc. v. West Bend Housewares, LLC, Civ. No. 05-11367-WGY [Doc. No. 44], at 46-47 (D.Mass. Sept. 27, 2006) (transcript of Markman hearing):

I've done this once and I liked it so much I'm going to do it again. If anticipation, obviousness are defenses, and they are, I take it prior art ... is a defense, when we get before the jury[, the defendants are]going first. And the reason I like that, and now I'm talking it up, is that the statistical, the studies by [Kimberly Moore suggest] that these cases go [in favor of] plaintiff because the plaintiff is the patent holder. [Kimberly Moore, Judges, Juries, and Patent Cases - An Empirical Peek Inside the Black Box, 99 Mich. L.Rev. 365, 385, 391 (2000).]

I think a case should be tried right down the middle. And the commentators keep saying, well, the jury is in love with inventors and inventors hold the patents and therefore the inventor wins. [Id. at 372 (collecting citations).]

[The defendants are] just going to go first. We're not going to then send the jury out. But [the defendants will] put on prior art, all of those defenses. I will charge as to clear and convincing evidence, then [the plaintiff will] put on infringement, and then we'll deal with damages and [the defendants can] rebut damages. That's how we will try the case.

The great advantage of that is the jury sees what's out there and then they can assess how the patented device advances on the knowledge that's out there generally. I find that very helpful."


The appellant-patentee has appealed to the CAFC that it was unfair for the accused infringer
to put on an invalidity attack before the patentee put on his case.

A number of big questions stem from this case: (1) will the CAFC uphold this approach? (2) will other jurisdictions follow suit? And more importantly, (3) will this case open the door for bifurcation of obviousness in patent cases (see here and here)?

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