Thursday, November 29, 2007

Disclaimed or Not Disclaimed? That is (Still) the Question . . .

Elbex Video Ltd. v. Sensormatic Electronics Corp. (2007-1097) November 28, 2007

During litigation, the district court granted SJ of noninfringement, where part of the decision was based on prosecution history estoppel. Specifically, one claim recited:

receiving means for receiving said video signals and said 1st code signals . . .

said receiving means including a monitor for displaying images corresponding to the video signals received in said receiving means . . .
The district court found that during prosecution before the PTO, the inventor had limited the "receiving means" to a "monitor" that receives the video and first code signal. The district court concluded that "whether by mistake or otherwise," the inventor "agreed" to limit the "‘receiving means’ to a structure through which a video monitor receives the 1st code signal from a camera." This "agreement" appeared in a response to an office action.

Interestingly, the response to the office action appeared to have errors that were inconsistent with the specification and the putative operation of the disclosed device. Although the district court acknowledged that obvious errors in statements made before the PTO are not necessarily binding, it concluded that the patentee's statement was nevertheless binding, since the prosecution statements "would not have been viewed by one of ordinary skill in the art to be obvious errors."

The CAFC reversed, finding that the statements did not amount to a clear and unmistakable surrender of claim scope:
First, the statement in the prosecution history is unsupported by even a shred of evidence from the specification. The specification never suggests that the monitor of the receiving means receives first code signals and returns a corresponding code to the cameras . . . There is nothing in the specification to suggest that the first code signal ever reaches the monitor.

Second, read in isolation, the statement in the prosecution history could be argued to be a disclaimer. When the prosecution history as a whole is considered, the inventor’s response to the PTO is not as clear . . . two paragraphs after the alleged disclaimer, the inventor also included [an additional statement] to distinguish a reference relied on by the PTO examiner . . . This statement, unlike the alleged disclaimer, is fully supported by the written description and provides further indication that the earlier statement in the same document was not a clear and unmistakable surrender.

Third, reading the specification and remainder of the intrinsic record as a whole would lead those skilled in the art to the conclusion that the inventor’s statement that the monitor received the first code signals and, "based upon" that code, transmits a second code signal "back to the camera" was not a clear and unmistakable surrender of claim scope . . . This prosecution statement if taken literally would result in an inoperable system . . . Even Sensormatic’s own technical witness testified that he "ha[d] trouble figuring out how [transmitting the code signals to and from the monitor] would work."

AFIIRMED-IN-PART, REVERSED-IN-PART, and REMANDED

Judge Cote's Dissent (sitting by designation):
I believe that when the prosecution history and the patent are considered together, the evidence is clear and unambiguous that Elbex’s reference to a "monitor" in its response to the PTO Office Action was a strategic choice and an unmistakable surrender of claim scope. Elbex made significant revisions to Claim 1 in what became the ‘085 patent in order to obtain the patent, and is now trying to recapture what it chose to abandon in the proceedings before the PTO. I would affirm.

Wednesday, November 28, 2007

Japan Claims Dominant Position in Fuel Cell Patents

Earlier this year, the Japanese Patent Office (JPO) published a report on fuel cell-related patent applications, and found that, in the current push to create a hydrogen-based society, Japan has taken a commanding lead in terms of patent applications filed.

How big? Well, according to the report, two out of three fuel cell patent applications (67%) from 1998 to 2004 were made by Japanese companies, totaling 32,209 patents. Compared to the US and Europe, Japan filed 2.5 times more patents than US applicants and 2.9 times more than European applicants.

More than 15 percent of the filings were made by three Japanese auto manufacturers, Nissan, Toyota and Honda, which filed 1,980, 1,546 and 1,526 applications, respectively.

Regarding the type of technology, most of the applications featured proton-exchange membrane fuel cells (81-83 percent), solid-oxide fuel cells (10-12 percent) and direct methanol fuel cells (5-7 percent).

Read "Japanese Automakers Round Out Top 3 in Fuel Cell Patent Application" (link)

Tuesday, November 27, 2007

USPTO Back in Court on Continuation Rule Changes

Dr. Tafas, GlaxoSmithKline and the PTO are scheduled to be back in court today, arguing over whether the depositions of Jon Dudas, John Doll, John Love and Robert Bahr should be allowed to take place. Additionally, the plaintiffs are seeking an order to compel document production from the PTO based on the fact that the Administrative Record is not complete due to the fact that certain documents have been withheld on the basis of privilege, as admitted by the PTO when the Administrative Record was certified.

The hearing will not only help resolve issues of discovery, but will also impact scheduling of the case. The preliminary schedule appears below.

Moving summary judgment briefs
If no discovery - Thursday, December 20, 2007
If discovery is ordered - Friday, January 25, 2008

Amici in support of GSK’s motions
If no discovery - Thursday, December 20, 2007
If discovery is ordered - Friday, February 1, 2008

Opposition briefs
If no discovery - Thursday, January 24, 2008
If discovery is ordered - Monday, March 3, 2008

Reply briefs
If no discovery - Thursday, February 7, 2008
If discovery is ordered - Friday, March 21, 2008

Hearing
If no discovery - Friday, February 15, 2007
If discovery is ordered - Friday, April 4, 2008 or Friday, April 11, 2008

For more information (and for additional juicy tidbits), read the blow-by-blow coverage at the PLI bog here and here.

UPDATE: The court denied the motions for discovery from the bench at the conclusion of the hearing earlier today. Thus, the Patent Office will not be required to provide a privilege log and can simply claim a blanket and unsubstantiated privilege at least in this case challenging the claims and continuations rules. Also, according to the earlier schedule, Summary Judgment motions will be due for Tafas and GSK on or before December 20, 2007. It is unclear whether that will also be the date by which Amici must also file. See more from PLI here.

N.D. Cal.: "Close" Case VItiates Willful Infringement under Seagate

Informatica Corp. v. Business Objects Data Integration, Inc. (02-03378) N.D. Cal., October 29, 2007

Jury trial in this patent infringement case commenced on March 12, 2007 and concluded with a verdict in favor of Informatica in the amount of $25,240,000 on April 2, 2007. On August 16, 2007, the Court denied Defendant’s Renewed Motion for JMOL and granted Defendant’s Motion for New Trial on damages unless Plaintiff accepted the Court’s remittitur in the amount of $12,115,200. On September 10, 2007, Informatica accepted the remittitur.

In the meantime (Aug. 20), the CAFC decided In re Seagate (link), which raised the threshold for finding willful infringement. On August 28, Defendant BODI filed a Renewed Motion for Judgment as a Matter of Law or in the Alternative, for the Court to Decline Enhancement of Damages or to Grant a New Trial on Willfulness based on the Seagate decision.

While the court denied BODI's motions, Judge Laporte went ahead to deny any enhancement of damages in the case.

Informatica argued that the district court did not have jurisdiction over the motion because it was not filed within the prescribed time (10 days) after the entry of judgment. The court rejected this argument, stating that no final judgment was made that divested the court of jurisdiction:

[T]he Court has not yet rendered a decision on all the issues as required for a final judgment that may not be revisited unless a party files an appropriate motion within ten days. Moreover, acceptance of Plaintiff’s argument that the Court may only set the amount of enhanced damages at something greater than zero, but may not reconsider Plaintiff’s entitlement to any amount even in light of an intervening change in the law, would elevate form over substance and ignore the wise admonition of Rule 1 of the Federal Rules of Civil Procedure to construe the Rules “to secure the just, speedy and inexpensive determination of every action.” Indeed, the parties agree that if and when the final judgment in this case is appealed to the Federal Circuit, the appellate court will scrutinize the jury’s finding of willfulness under Seagate. The result could be an unnecessary remand and retrial of willfulness under the new legal standard, hardly a speedy or inexpensive result.

On the issue of willful infringement, the court viewed the evidence "in the light most favorable to Plaintiff and drawing all reasonable inferences in its favor," and found that BODI nevertheless willfully infringed Informatica's patent. Nevertheless, in light of Seagate, the court denied any enhanced damages:
Although willful infringement may authorize the award of enhanced damages, “a finding of willful infringement does not mandate that damages be enhanced, much less mandate treble damages.” . . . In this case, the jury found willfulness based on now-obsolete case law. In Seagate, the Federal Circuit overruled the due care standard for evaluating willful infringement adopted in Underwater Devices Inc. v. Morrison-Knudsen Co. . . . and applied by the jury in this case to determine Defendant’s willfulness. Instead, the Seagate court held that “proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness.”

Considering the totality of the circumstances in light of Seagate, which significantly raised the bar for a finding of willfulness, the Court now declines to award any enhancement in this case. Even at the time when the Court determined that a modest enhancement was appropriate, one of the primary Read factors [Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir. 1992)] weighing against a substantial enhancement was the closeness of the case.

Under the Seagate standard, the issue of willfulness becomes even closer; had the Seagate standard been used in this case, Plaintiff might well have lost on willfulness. Moreover, the Court has since determined and Plaintiff accepted a remittitur that represented the high end of damages that a jury might have awarded . . . Based on the totality of the circumstances and in light of Seagate, the Court does not award any enhanced damages in this case.

Read/download the opinion here (link)

Monday, November 26, 2007

The Aftermath of eBay V. MercExchange

Andrew Beckerman-Rodau from Suffolk University looked at 28 district court cases after the Supreme Court's eBay decision to determine how courts handled permanent injunctions. These cases were reviewed to see if the following factors affected the decision whether to grant or deny a permanent injunction for patent infringement:

  • Direct competition between patent owner and infringer
  • Non-practicing entity asserting patent rights
  • Willful infringement
  • Venue
  • Complex invention problem
  • Willingness of patent owner to license patent
  • Likelihood of future patent infringement
Beckerman-Rodau broke down each factor in light of the district court holdings:

Direct competition - The existence or non-existence of direct competition between the patent owner injunctions and the patent infringer appears to be the most significant predictor of whether a permanent injunction will be granted. In most every case in which a permanent injunction was issued the litigants were direct marketplace competitors.

Indirect Competition - the current crop of district court cases suggest that the patent owner would be entitled to an injunction against other companies selling competing products (e.g., product activation software) but not against a company that incorporated a patented product to a larger product but who did not directly compete with the patent owner.

Non-Practicing Entities (NPE's) - In almost every case in which a court denied a permanent injunction for patent infringement the patent owner was a non-practicing entity. The one exception to the general rule is CSIRO v. Buffalo Technology, where the court found it significant that CSIRO was a non-profit organization. Thus, nonprofit enterprises such as universities and research institutes - which typically engage in very basic research - may be able to obtain permanent injunctions despite being non-practicing entities. In contrast, for-profit commercial entities will routinely be denied such relief for infringement of their patents.

Willful Infringement - "['W]illful infringement does not appear to be a significant factor in predicting or explaining judicial decisions that grant or deny permanent injunctions. Of the thirteen cases in which the court found willful infringement, permanent injunctions were granted in nine cases and denied in four cases. Moreover, in the fifteen cases in which the there was no finding of willful infringement, a permanent injunction was granted in thirteen cases and denied in two cases."

Venue - The choice of venue did not appear to affect whether a court will issue or deny a permanent injunction. According to Beckerman-Rodau, "choosing a specific federal circuit or a specific district within a particular circuit, at least based on the limited judicial opinions to date, does not predict the remedy for infringement."

Complex Invention Problem - Justice Kennedy specifically mentioned the situation "when a patented invention is but a small component of the product the companies seek to produce" and stated that in such a situation, "legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest." Beckerman Rodau found that this factor was not determinative of whether or not an injunction would issue. This factor was specifically mentioned in only three cases. In one of these cases a permanent injunction was granted and in two of these cases it was denied.

Willingness of Patent Owner to License - Again, this came out as a wash. This factor was specifically mentioned in only six cases. In three of those cases a permanent injunction was granted and in three of those cases it was denied.

Likelihood of Future Infringement - here, the study found that it may be beneficial for a patent owner to demonstrate a likelihood of future infringement in order to obtain a permanent injunction. This factor was specifically mentioned in only ten cases, but in nine of those cases, a permanent injunction was granted for patent infringement while it was only denied in one.

  • Read/download Beckerman-Rodau, "The Aftermath of eBay V. MercExchange, 126 S. Ct. 1837 (2006): A Review of Subsequent Judicial Decisions" (link)

Tuesday, November 20, 2007

Giving Software Patents a Break

With the curent anti-patent climate running through the media like a bad cold, it's not often that defenders of software patents take a stand and swat at some of the piffle being promoted by activist groups and other anti-software patent organizations. It's almost impossible to read any press coverage on software patent disputes that doesn't include obligatory language from an activist explaining that the mere fact that these disputes exist are proof positive that "the patent system is broken."

In a refreshing twist, John Keit from Chadbourne & Park published a timely and well-written op-ed piece in Business Week, titled "Give Software Patents a Break." From the article:

Unlike the relatively high regard given hardware patents, the view of software as substandard intellectual property is misguided and potentially harmful to inventors and entrepreneurs. By weakening this alleged barrier to innovation and competition, these detractors are hurting the very underdogs they aim to empower. In reality, smart patent lawyers will always find ways to protect software innovations for well-heeled corporations. But startups that can't afford the legal expertise will have less incentive to invest in intellectual property if it can't be guarded with a strong patent.

The bad news is that this drive against software patents may make them more expensive to obtain. The good news is that this effort is destined to fail.

One needs to understand that there is fundamentally no difference between software and hardware; each is frequently expressed in terms of the other, interchangeably describing the same thing. For example, many microprocessors are conceptualized as software through the use of hardware description languages (HDL) such as Bluespec System Verilog and VHDL. The resulting HDL software code is downloaded to special microprocessors known as FPGAs (field programmable gate arrays), which can mimic a prospective chip's design and functions for testing. Eventually, the HDL code may be physically etched into silicon. Voilà! The software becomes hardware.

Nevertheless, anti-patent sentiment has become such a common theme in tech circles like Slashdot.com that the mere mention of the word "patent" sends readers into a Fred Flintstone fit ("bet, Bet, BET!") extolling their evils. This is a neurotic reaction to patent law.


Read the article in its entirety here (link)

Oddly enough, Slashdot has been eerily silent on this (link)

Monday, November 19, 2007

R.I.P Patent Reform 2007

It appears that passing the Patent Reform Act will not happen in 2007. Despite various comments claiming that "lawmakers are committed to passing the legislation before the end of the 110th Congress", the Patent Reform Act will probably go to the Senate floor after Congress returns from the holidays in early 2008, claims Matthew Sandgren, counsel to Sen. Orrin Hatch (R-Utah).

The biggest sticking point? The "2nd window" of post-grant review, and apportionment of damages. Presumably, much hay will be made over the possible vesting of rulemaking authority in the PTO. At this point, it is likely that the GSK case will survive through summary judgment before Congress decides one way or the other.

Thursday, November 15, 2007

USPTO Releases Fiscal 2007 Year-End Results

It's out - all 146 pages!

According to the PTO, the Office achieved "record breaking year-end numbers that reveal historic improvement in the quality of patent and trademark reviews and subsequently the quality of issued patents and registered trademarks."

In FY 2007, USPTO's patent examiners

  • Examined 362,227 applications - the highest number in history.
  • Quality compliance was 96.5 % - equaling last year's results, "the best in a quarter century."
  • Patent examiner decisions were upheld by the USPTO's patent appeals board 69 % of the time, up from 51 % in 2005.
The PTO seems to be pleased that applications are being rejected. Just as Thomas Blackstone said that "it is better that ten guilty men escape than one innocent suffer," the PTO's current mood appears to be that "it is better to reject ten legitimate inventions than to issue one bad patent."

- One of the highlights touted by the PTO is that, in 2000, a record high of 72 percent of all patent applications became patents. In contrast, 51 percent of patent applications were granted in FY 2007.

- Pendency remains a problem: average pendency is 25.3 months from filing to first action, and 31.9 months until issue or abandonment

- Regarding the Accelerated Examination program, the Office notes that, in the first year of the program, 24 patents were issued (paradoxically, the report doesn't disclose how many applications under the AE program were filed).

- The PTO intends to make 101 issues a tops priority. According to the report, "[b]ecause the boundaries of patent eligibility in certain areas remain ambiguous, we anticipate that the Federal Circuit will issue precedential opinions in these appeals in the next year. These opinions will provide guidance to our patent examiners on evaluating the fundamental issue of what types of claimed inventions qualify for patent protection."

- Reexaminations have jumped to an all-time high. From 2006-07, ex parte reexaminations went from 511 t0 643 (369 of those had known litigation pending). Inter partes reexaminations went from 70 to 126 (81 had known litigation pending).

The must-read report can be downloaded here (link)

NOTE: In the meantime, the continuation rule battle rages on - Dennis over at Patently-O (link) discusses the PTO's response to the Tafas/GSK complaint. As expected, the PTO asserts that they acted within the Patent Act, and that the plaintiffs lack standing. The PTO is asking that all summary judgment briefs be filed prior to the Christmas Holiday. The next hearing is scheduled for tomorrow (November 16).

Wednesday, November 14, 2007

SDNY: "Poor Legal Judgment" Is not a Basis for Rule 11 Sanctions

Capital Bridge Co. Ltd. v. IVL Technologies Ltd., S.D.N.Y. (Case No. 04-CV-4002), October 26, 2007

Capital Bridge (CB) obtained a patent on a wireless, portable, hand-held karaoke device, where users can select songs and musical accompaniment using a keypad on the device and to wirelessly broadcast their voices and music to multiple FM receivers that are tuned to the correct station. The patent was allowed at the PTO only when the claims were amended to include "wireless" transmission. Some of the dependent claims referred to transmission through an antenna. Capital attempted to broaden the claims through reissue, but was rebuked by the PTO for attempting to recapture surrendered subject matter.

The defendants manufacture various hand-held karaoke machines and sell them to national retailers and international distributors. However, the devices do not use wireless transmission. In order to operate, the devices are connected by wires to a television. Also, the devices only send signals to a single receiver.

Capital sent cease-and-desist letters to IVL and its customers. IVL responded (two times) by pointing out the apparent differences between the products and the patent claims. Capital sued, and promptly lost on Summary Judgment. IVL sought sanctions soon thereafter.

The court noted some of Capital's behavior during litigation

- Early in litigation, Capital argued the existence of a laboratory test, performed in Korea (and using Korean law), showing infringement by devices "believed to be" the defendants. Defendants responded by pointing out that the accused devices were already widely available for purchase for less than $100. The explicit findings of the test was not initially given to the court, and additional discovery was requested by Capital.

- When the test was finally produced, technical report explicitly stated that the “wirelessly transmitting” limitation of the ‘553 patent was not infringed by Defendants’ devices.

- During litigation, Capital's reissue application was rejected. Accordingly, Capital modified the infringement claim to state that wireless and wired transmissions were covered under the doctrine of equivalents. When asked how they arrived at this conclusion, Capital requested additional discovery.

- At a later judicial conference, Capital Bridge indicated that it had conducted no further inspection of Defendants’ devices other than the previously-disclosed Korean technical report, despite the fact that the Court’s previous Order required production of the allegedly infringing devices and their electrical schematics.

Despite all of this, the court found that sanctions were not warranted in this case. The plaintiff's litigating attorney (Wamsley) filed a declaration with the court, explaining that RF transmission through wire was thought to be "equivalent" to wireless transmission, and thus constituted sufficient pre-filing investigation to escape sanctions:

IVL bases its allegations that Capital Bridge failed to conduct a reasonable pre-filing assessment on the fact that the technical report written by Mr. Sang Mock Lee, in which he applied Korean patent law to compare the claims of the ‘553 patent against Defendants’ allegedly infringing devices, constituted the entirety of Capital Bridge’s pre-filing inquiry. While the Court would be inclined to agree with Defendant that such an inquiry alone would be insufficient to satisfy Plaintiff’s duty, the Court is not as willing as Defendant to disregard the Declaration of Brian L. Wamsley as a complete fabrication. Taking into account the Wamsley Declaration, in which Mr. Wamsley recounts in substantial detail his pre-filing inquiry and good faith basis for bringing the suit, Plaintiff establishes, albeit just barely, that it conducted a sufficient pre-filing investigation.

The court went on to chide the plaintiff over the investigation, but nevertheless concluded that "poor legal judgment" could not be a basis for sanctions:

Although the Court shares Defendant’s skepticism regarding the thoroughness of Mr. Wamsley’s purported pre-filing inquiry – especially in light of Mr. Wamsley’s inability to articulate a cognizable infringement theory at the August 2, 2005 conference, as well as the explicit finding in the Korean technical report that the “wirelessly transmitting” limitation of the ‘553 patent was not infringed by Defendants’ devices – it must be given considerable deference as a patentee asserting infringement is entitled to a presumption of good faith.

[F]urthermore, while the Court continues to view as “absurd” Plaintiff’s contention that the wired transmission of Defendants’ devices is functionally equivalent to the wireless transmission claimed by the ‘553 patent, . . . and while the Federal Circuit’s summary affirmance of summary judgment for Defendants is significant, the Court cannot conclude that Capital Bridge’s decision to continue its infringement action following the limited discovery granted by the Court was the result of anything other than poor legal judgment.

View the opinion here (link)

Tuesday, November 13, 2007

A New Era of IP: Looking at Emerging Business Models in IP

It has become incresingly clear over the last couple of years that the "old economy" model for monetizing and managing IP assets has matured into a more robust model. Since the early 90's, only a select group of large patent holders controlled the majority of IP rights, leaving smaller players with little recourse in establishing and protecting innovative IP rights.

According to Raymond Millien (PCT Capital LLC), and Ron Laurie (Inflexion Point Strategy LLC), we are now living in an era of "IP for the masses"where the IP marketplace operates according to the Golden Rule -- those with the gold (i.e., IP rights) can now make the rules. This new era is characterized by the rise of “market-maker” intermediaries who seek to make IP a liquid asset class and, of course, profit from it. In a recent paper presented at the Sonoma Conference last month, Millen and Laurie take a look at these intermediaries:

Patent Licensing and Enforcement Companies (PLECs) - (Acacia Research, Lemelson Foundation, LPL) These are entities that own one or more patent portfolios, attempt to license them through targeted letter-writing campaigns, and then file patent infringement suits against those letter recipients who refuse to enter into non-exclusive licenses. Those that practice this business model are often called (rightly or wrongly) “patent trolls.”

Institutional Patent Aggregators/IP Acquisition Funds - (Coller IP Capital, Intellectual Ventures) These are entities that operate in a sort of private equity fashion. That is, they typically operate as general partners of a limited partnership and raise money either from large technology companies or from the capital markers (institutional investors (and sometimes high-net-worth individuals). The investors are promised above average ROI from selective, targeted or large-scale patent purchases with the goal of instituting licensing programs and/or employing various arbitrage strategies.

IP/Technology Development Companies - (AmberWave, InterDigital, MOSAID, Qualcomm, Rambus, Tessera) These are entities that engage in R&D activities and produce IP (including both patents and knowhow) much like traditional operating companies; however, the developed technology is not used to manufacture products in the form of physical goods. Rather, the IP associated with the technology is licensed by these entities to one or more operating companies so that the operating company may bring products and services employing the technology and IP to the marketplace.

Licensing Agents - (General Patent Corp., IPValue, ThinkFire) These are entities that function as intermediaries by attempting to assist patent owners in finding licensees. Entities that function under this business model often call themselves “IP advisory,” “IP management” or “technology transfer” firms. While the amount, quality and depth of services vary, to some degree in shape or form, they all earn retainer and/or success fees by assisting patent owners find licensees.

Litigation Finance/Investment Firms - (Altitude Capital, Rembrandt IP Mgmt.) These are entities that are a cross between IP Acquisition Funds and PLECs. That is, like IP Acquisition Funds, they operate as general partners of a limited partnership and raise money from large institutional investors and high-networth individuals. Like PLECs, however, their stated goal is to acquire a financial interest in patent portfolios for assertion.

Patent Brokers - (Iceberg, Inflexion Point, iPotential, Ocean Tomo, Pluritas,ThinkFire) These are entities that function essentially the same as Licensing Agent model discussed above. The key distinction, however, is that they seek to assist patent owners in finding buyers rather than licensees. Also, unlike licensing agents they operate both on the sell-side and the buy-side.

IP-Based M&A Advisory - (Analytic Capital, Blueprint Ventures, Inflexion Point, Pluritas) These are entities that operate in a traditional investment banking model – advising technology companies in their merger and acquisition (M&A) activities and earning fees based on the value of the entire deal (or apportioned according to the value of the IP within the deal).

IP Auction Houses - (IPAuctions.com, IPA GmbH, Ocean Tomo) These entities are auction houses that hold multi-lot, live auctions for patents with the intent of providing a marketplace for facilitating the exchange of such historically illiquid assets. Such auctions enable sellers to offer one or more patents according to a predetermined set of terms and conditions and allows the auction house to charge listing fees, attendance fees, buyers’ premiums and/or sellers’ commissions.

On-Line IP/Technology Exchanges/Clearinghouses - (The Dean’s List, Tynax, Yet2.com) These are entities that function like the business to-business (B2B) web sites that became the rage during the late 1990’s dot com boom. These entities, however, offer web platforms and interfaces specialized for patent and other IP assets. Essentially, this model can be thought of as online classifieds like Craig’s List, but for IP.

IP-Backed Financiers - (IPEG Consultancy BV, Paradox Capital) These are entities that provide financing for IP owners, either directly or as intermediaries, usually in the form of loans (debt financing), where the security for the loan is either wholly or partially IP assets (i.e., IP collateralization). Thus, these parties often function as intermediaries between borrowers and
commercial lending institutions, such as banks.

Royalty Stream Securitization Firms - (alseT IP, UCC Capital) These are entities that counsel, assist and/or provide capital to patent owners performing IP securitization financing transactions (which resemble the more common mortgage-backed securities). In such transactions, the patent owner sells the patents underlying the transaction to a bankruptcy remote entity (a “BRE”), and the BRE grants a license back to the patents to the original patent owner. The BRE in turn issues notes (i.e., IP-backed securities) to investors to raise cash to pay the original patent owner the agreed-upon purchase price. The notes are then backed by the expected future royalties to be earned from licensing the underlying patents (to the original patent owner and/or third parties). At the end of the transaction, the original patent owner has essentially raised funds much more cheaply than a loan backed by its traditional assets.

Patent Rating Software and Services - (1790 Analytics, The Patent Board, PatentRatings, Patent Café) These are entities that provide advanced patent search and analytics software tools that allow patent owners, attorneys, investors and other players in the IP marketplace to obtain various intelligence and data points about a single patent or patent portfolio.

There's much more in this paper, which also looks at additional emerging business models. It's a fascinating paper that adds an important perspective on the emerging IP market. The paper also adds the following comment in the conclusion:

[N]either U.S. Supreme Court decisions such as eBay, nor any of the so-called “anti-patent troll” legislative proposals floating through Congress, will make such intermediary entities such as PLECs, IP outsourcing companies, licensing agents, merchant banks, exchange operators and the like go away. With as much as three-quarters of the value of publicly traded companies in America coming from intangible assets, and global IP licensing revenue now being measured in the hundreds of billions of dollars, there is simply too much economic justification for such entities to exist. In fact, new players implementing the IP business models described herein will come into existence. And, new IP business models will also come into existence. Why? Quite simply, the business of IP (i.e., IP marketplace) itself is not immune to
innovation!

To read/download the paper ("A Summary of Established & Emerging IP Business Models"), click here (courtesy of Patent Troll Tracker)

Thursday, November 08, 2007

Comments Posted on USPTO Regarding New BPAI Rule Changes

The comments are in on the PTO's proposed BPAI rule changes - they are not favorable.

Comments from Intellectual Property Organizations and Government Agencies:

(1) American Bar Association (ABA)
(2) American Intellectual Property Law Association (AIPLA)
(3) Bar Association District Columbia (BADC)
(4) Intellectual Property Owners Association (IPO)
(5) Intellectual Ventures (IV)
(6) Minnesota Intellectual Property Law Association (MIPLA)
(7) National Association of Patent Practitioners (NAPP)
(8) Washington State Patent Law Association

Comments from Corporations and Associations:

(1) 3M Innovative Properties Company (3M IPC)
(2) Alkermes, Inc.
(3) Amylin Pharmaceuticals, Inc.
(4) BIOCOM
(5) Ceres
(6) Eastman Kodak Company
(7) Eli Lilly and Company
(8) IBM Corporation
(9) Microsoft Corporation
(10) Wyeth

To see more, click here (link)

CAFC Adds More Twists to Incorporation by Reference - Improper Language Invalidates Patent

Zenon Environmental, Inc. v. United States Filter Corporation (06-1266) , November 7, 2007

During litigation, USFC challenged the validity of a Zenon patent (the '319 patent) that was the sixth patent to issue from a series of continuation and CIP applications related to skein and gas distribution systems for water treatment filtration. Specifically, USFC argued that an intervening patent (the '250 patent) in the chain did not incorporate all the elements of an earlier patent (the '373 patent). The parties agreed that the earlier patent disclosed each and every element of the asserted patent. Accordingly, Zenon argued that the earlier patent was invalidating art under 35 USC 102(b).

The CAFC agreed with USFC (in a 2-1 decision), after looking at the incorporating language in the intervening patent:

The vertical skein is not the subject matter of this invention and any prior art vertical skein may be used. Further details relating to the construction and deployment of a most preferred skein are found in the parent U.S. Pat. No. 5,639,373, and in Ser. No. 08/690,045, the relevant disclosures of each of which are included by reference thereto as if fully set forth herein.

The district court found this language to be sufficient to incorporate the entire disclosure. However, after noting that incorporation by reference is a matter of law (which is reviewed de novo), the CAFC reversed:

Such an interpretation is inconsistent with the plain language of the statement. The plain language expressly limits the incorporation to only relevant disclosures of the patents, indicating that the disclosures are not being incorporated in their entirety. Moreover, the plain language indicates that the subject matter that is being incorporated by reference pertains to the details relating to the construction and deployment of a vertical skein. Thus, we must look, as one reasonably skilled in the art would, to the grandparent patents to determine what the patentees meant by details relating to the construction and deployment of a vertical skein. (Emphasis added).

* * *

Turning to the written description, the ’373 patent expressly states that the vertical skein consists of three distinct elements, viz., fibers, a pair of headers, and a permeate collection means. Id. at col.1 ll.31-38. Thus, by definition, a skein does not include a gas distribution system . . . As such, a reasonable person of ordinary skill in the art would understand that the gas distribution system covered by the ’373 patent is not a detail relating to the construction and deployment of a vertical skein, but rather is a separate and distinct element of the invention, and thus was not incorporated by reference in the ’250 patent.

Thus, the majority held the patent anticipated by the earlier patent.

Judge Newman's dissent:

The issue in this case is simple. The issue is not whether the invention claimed in the '319 patent could have been claimed in the '373 grandparent; nor is the issue one of priority as against a competing claimant; nor is the applicant reaching out for a broad incorporation of background technology from unspecified parts of unrelated publications. Here, the applicant simply invoked the expedient of incorporating a prior disclosure in a chain of applications on the same subject matter. The gas distribution system described in the '319 patent is the same as that of the '373 patent, with continuity of disclosure that includes an incorporation by reference.

The panel majority's holding casts doubt on the reliable use of this expedient, lest an earlier patent become an invalidating reference against its successors in the chain of filings. The majority's rejection of the factual foundations of incorporation by reference and creation of a new area of de novo appellate authority, raise new risks of patent drafting. The apparent requirement that all subject matter must be reproduced in all continuing applications adds nothing to the knowledge disclosed to the public, adds nothing to the information provided to the patent examiner, and adds nothing to compliance with 35 U.S.C. '120; it simply adds costs and pitfalls to inventors, as they attempt to walk new judicial tightropes.

Wednesday, November 07, 2007

Another Business Method/Patentable Subject Matter Challenge at the CAFC

This week is turning into the "patentable subject matter blog" - over at Patently-O, Dennis posted the most recent challenge to the USPTO's position on patentable subject matter. Specifically, the applicant is challenging the 101 rejection given to the following exemplary claim in the application (09/387,823):

Claim 24. A paradigm for marketing software, comprising:

a marketing company that markets software from a plurality of different independent and autonomous software companies, and carries out and pays for operations associated with marketing of software for all of said different independent and autonomous software companies, in return for a contingent share of a total income stream from marketing of the software from all of said software companies, while allowing all of said software companies to retain their autonomy.

For starters, the Appellant's Brief points out that the PTO, through their Interim Guidelines, is erroneously analyzing patentable subject matter by limiting the analysis only to two specific tests:

The Guidelines allow for two and only two tests for subject matter patentability: 1) concrete useful and tangible result, and 2) transformation of something to a different state or thing . . . However, with all due respect, it is believed that the Guidelines have improperly and overly narrowly interpreted the holdings of these cases. These tests were intended to be non exclusive tests for subject matter patentability. They were not intended to be the ONLY allowable tests for subject matter patentability. In fact, the provision of a single test would seem contrary to Supreme Court cases, e.g. Chakrabarty, supra. This is supported by the plethora of Recent Supreme Court
cases expressing their view that there cannot be rigid rules for patentability. See Ksr International Co.v Teleflex Inc, 550 U. S. ____, 127 S.Ct
1727(2007).

Also, the Appellant's Brief provides an interesting distinction for "pure" business method patent claims (i.e., a method for performing a business transaction) over business methods that rely on mathematical algorithms. Specifically, the Appellant asserted that showing a “concrete, useful and tangible result” is only relevant to a claim that recites a law of nature or mathematical algorithm:

Page 15 of Appellee’s brief attempts to establish that a Concrete, Useful and Tangible result is required in order for a claimed process to be subject matter eligible. With all due respect, however, this has never been required unless the claim recites, directly or indirectly, a law of nature/mathematical algorithm. These present claims do not recite such a law of nature/ mathematical algorithm.

Appellee’s brief, page 15, subheading 3, appears to contend this point -- by stating that the “useful concrete and tangible result” test is about “the eligibility of machines and machine-implemented methods employing mathematical algorithms” (emphasis added). This is further confirmed on page 18 of Appellee’s brief. All of the cases cited in favor of the Appellee's arguments, however, were in the context of a claim that recited a mathematical algorithm.

Changes in legal and financial obligations certainly is an invention under the sun that was made by man, and should be patentable for these reasons.

There's much more in the briefs that should ultimately provide much-needed clarification in the world of business method patents. Oral arguments are set for December 5th, with a decision likely in February or March of 2008.

View Appellant's Blue Brief here (link)

View PTO's Red Brief here (link)

View Appellant's Reply Brief here (link)

Coalition Being Formed Next Month to Restrict Software Patents

Smelling blood in the patent waters, the Free Software Foundation has spearheaded an organization, called the "End Software Patents" (ESP) coalition, that aims to curb software patents in the U.S. While the organization has not officially formed yet, the coalition has obtained seed funding of a quarter million dollars (from sources that aren't being disclosed), and is planning on a formal launch towards the end of November.

The coalition leader will be Ben Klemens, guest scholar at the Brookings Institution, and author of Math You Can't Use: Patents, Copyright, and Software. Klemens commented that the group will be active in advocacy projects, and intends to partake in legislative in judiciary matters in an effort to redefine patentable subject matter. "Our sole goal is to fix patentable subject matter. That's the gaping wound in patent law today. Not everything should be patentable, and this is true whether you look at it legally, economically, or ethically."

According to ESP organizers, there has "never been a better time to challenge software patents directly in the United States . . . Once we restore a rule that not everything can be patented, the rest of patent reform will either fall into place naturally or be much easier to fix."

• Read Linux.com article "Software patent abolition campaign will launch next month" (link)

• Read Klemens article "Drawing the Line: The Rise of the Information Processing Patent." (link)

• Read the transcript from Brookings Institution symposium "Software and Law: Is Regulation Fostering or Inhibiting Innovation?"

• See earlier 271 Blog coverage on Klemens here (link)

Tuesday, November 06, 2007

Chaos: Patentable Subject Matter Rejections at the USPTO

The recent trouble with software patents arguably began with the oral arguments in the Microsoft v. AT&T case back in February:

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 [DOJ Atty]: 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 -

* * *

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.

While the Supreme Court didn't ultimately rule on this issue, the PTO "ran with the ball" over the last year, creating a slew of conflicting rationales over the patentability of specific software and algorithmic processes. By the time the CAFC decided Comiskey and Nuijten, the BPAI was in full assault mode on algorithms. Now, it is becoming apparent that the PTO's issues with software are going to get worse before they get any better.

• In the case of Ex Parte Yang-Huffman (link), decided on October 4, 2007, the BPAI took a unique approach to rejecting the claims, in a manner eerily similar to EPC's Article 52, finding that "software per se" was not patentable subject matter:

The Examiner has made a direct point that the claimed [invention], based on the Specification as filed as well as their own recitation in the respective claims on appeal, directly relate to software elements per se. Appellant has not indicated among the claims rejected what structural relationships are actually stated in the claims on appeal despite his general argument to that affect. Moreover, we do not agree with Appellant’s view that MPEP § 2106 clearly indicates that software is not per se non-statutory. We do not view the claims as being consistent with any permissive language contained within this section of the MPEP. Nevertheless, there is no authority that we know of which permits software per se to be considered statutory within 35 U.S.C. § 101. Appellant’s arguments in the Brief and Reply Brief do not contest the Examiner’s view that the noted features in the claims are actually software elements per se.
Oddly enough, the BPAI suggested that, since the claims recited the processing of "mere informational elements", the subject matter was not new and/or nonobvious. Nevertheless, the BPAI rejected the claims under 35 USC 101:
To be sure, the mere receipt and providing features of representative independent claim 1 on appeal are not characterized as being unique methodologies per se, but only the nature of the information related to or the characterization of the information element is argued to be operatively unique. These considerations are prompted by the recent decision by our reviewing court in In re Comiskey, Slip Op. at 21 (Fed. Cir. Sep. 20, 2007).
• In Ex Parte Kinzhalin et al. (link), decided October 24, 2007, the BPAI found it insufficient that the claim recited an "automated" procedure that was clearly described in the specification as a computer-related process:

We come to the crux of the matter: do the words "method for automated acquisition" in the preamble serve to tie the claimed mental steps "to a particular machine"? We cannot see that they do; "automated" is merely an expression of intended use that, at best, recites a desired result of the claimed method. Crucially, however, the claim fails to positively recite any concrete, physical implementation to achieve this "automated" result as the term is wholly unsupported by physical steps or structure in the claims. Perhaps the intended use of the method will involve a machine, but we decline to infer such intentions suggested in the present specification into the claims.
• In Ex Parte Rodriquez et al. (link), decided on September 21, 2007, the applicant recited "a computer program product in a computer readable medium for use in a data processing system." While the issue of patentable subject matter wasn't raised by the examiner, the BPAI, in an apparent nod to the Nuijten decision, reasoned that, since the specification referred to "transmission type media," the specter of non-statutory subject matter had reared its head:
Examiner is alerted to the wording in the Specification at the bottom of page 15, and repeated in FF 2 above. An example of a computer readable medium as specified in claims 15 and 16 is defined by the Specification to include "transmission type media such as … wireless communication links using … radio frequency transmissions." . . . Thus, as defined in this application, a computer readable medium includes a mere signal under transmission, not necessarily a physical tangible object. Such a claim for computer instructions is not considered by this office to be statutory under 35 U.S.C. 101. As claims 15 and 16 have received affirmance of their rejections under the art of record, a rejection for lack of statutory subject matter is not considered at this moment to be necessary. However, Examiner is advised to keep this consideration in mind if the prosecution continues.

Thursday, November 01, 2007

Wi-LAN Experiments with the "CSIRO Approach" to Injunctions

Yesterday, it was announced that Wi-LAN filed two separate lawsuits in the ED Tex. against over 22 companies alleging infringement of three of its patents, two of which relate to Wi-Fi technology and one that involves power consumption in DSL (digital subscriber line) products.

A number of interesting side-notes to this litigation:

The effect of Medimmune - Jim Skippen, chief executive of Wi-LAN, spoke to CNNMoney.com about the litigation, and commented on how Medimmune affected his enforcement strategy. Instead of facing the possibility of one or more declaratory judgement actions, Wi-LAN chose the "sue first, ask questions later" approach: "We were concerned that we would be forced into other courts through declaratory-judgement actions if we did not sue virtually all of the likely defendants."

Increasing the number of defendants - following recent trends in "non-practicing entity" (NPE) patent litigation, Wi-LAN found it beneficial to clump multiple defendants in each action. While minimizing the risks of DJ actions, Wi-LAN commented that there are "significant economies of scale" in suing multiple defendants.

Transforming NPE's into "research institutions" - Earlier in June, the ED Tex. heard the case of CSIRO v. Buffalo Technology, Inc., E.D. Tex. (see 271 blog coverage here), where Judge Davis carved out a de facto "research group" exemption to permanent injunctions. From the order granting a permanent injunction to CSIRO:

While CSIRO does not compete with Buffalo for market share, CSIRO does compete internationally with other research groups—such as universities—for resources, ideas, and the best scientific minds to transform those ideas into realities. CSIRO’s reputation is an important element in recruiting the top scientists in the world. Having its patents challenged via the courts not only impugns CSIRO’s reputation as a leading scientific research entity but forces it to divert millions of dollars away from research and into litigation costs . . . Thus, the harm of lost opportunities is irreparable. They cannot be regained with future money because the opportunity that was lost already belongs to someone else.

Now - and don't say you didn't see this coming - Wi-LAN is in the research business. From CNNMoney:

On Oct. 10, Wi-LAN announced the hiring of Robert Wu, who will head a small research and development team at Wi-LAN tasked with developing wireless technologies and patents. In Thursday's interview, Skippen said the team will consist of three to four engineers and will work on problems like bringing WiMAX technology directly into the home. Skippen didn't quantify the team's budget, but said it was "relatively modest." He also noted that Wi-LAN provides funding to some universities conducting research into wireless technology.

In addition to providing Wi-LAN with future patents, Skippen acknowledged that the firm's research and development activities and university funding may also help the firm obtain permanent injunctions in litigation, as the courts could recognize the firm's status as a research and development organization.


View Wi-LAN's complaints (link1) (link2).

See CNNMoney.com article "Wi-LAN Goes Big, Sues 22 Firms For Patent Infringement" (link)

IEEE Releases List of "Top Patent Companies"

It's been stated that one of the most valuable assets financial analysts and other potential stakeholders should consider are the number of patents held by a company. Taking this principle to heart, IEEE Spectrum has published a study, conducted by 1790 Analytics, that analyzes patent portfolios of 1,178 organizations and compares those portfolios on the basis of patent citations. Referencing patent citations serve as indicators of technological output and information flow. Ultimately, the goal of the study was to identify the organizations with the most influential— and potentially the most lucrative— patent portfolios.

The study identifies the top ranking companies for the following industry sectors:

--Aerospace and Defense
--Computer Peripherals and Storage
--Computer Systems and Software
--Electronics
--Medical Equipment/Instruments
--Semiconductor Equipment Manufacturing
--Semiconductor Manufacturing
--Telecom Equipment
--Telecom Services

View/download the results here (link)

See the IEEE article online here (link)

For more information on the article, fell free to contact b.mcgurr@ieee.org.

The Morning After - Dissecting Judge Cacheris's Preliminary Injunction

In considering GSK's motion for preliminary injunction, the four factors relevant to the Court’s decision to grant or deny the injunction are: (1) the likelihood of the plaintiff’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.

LIKELIHOOD OF SUCCESS ON THE MERITS

GSK first argued that they will succeed on the merits because the PTO lacks the authority to promulgate substantive rules and therefore the PTO’s interpretation of the Patent Act is not owed Chevron deference. Instead, under Adams Fruit, the PTO is entitled no deference, since Section 2(b)(2) of title 35 does not vest the PTO with any substantive rulemaking power.

Judge Cacheris sided with GSK here, noting that

GSK raises serious concerns as to whether the Final Rules comport with the Patent Act. In addition, the Court also believes that GSK has created a colorable question as to whether the Final Rules are truly substantive. Thus, the Court will find that there is a genuine possibility that GSK will succeed on this issue.
Limiting Continuations

Regarding Final Rule 78, which limits the number of continuing applications, GSK argued that Section 120 of Title 35 prohibits the PTO from limiting the number of continuing applications that may be filed (Section 120 states that later filed applications “shall have the same effect” as pending previously-filed applications). While the PTO relied on the "prosecution laches" holdings from the CAFC (In re Borgese, In re Henricksen, Symbol Tech.), Judge Cacheris noted that
Section 120 as interpreted in [these cases] prevents the PTO from crafting its own limitations to the number of continuation applications that may be filed . . . the Federal Circuit held that the doctrine of prosecution laches “should be used sparingly lest statutory provisions be unjustifiabaly vitiated.” . . . This holding suggests that a decision by the PTO to limit the number of continuing applications would run contrary to the mandate of Section 120.
Limiting RCE's , and the 5/25 Rule

GSK further argued that 35 U.S.C. § 132 prohibits the promulgation of Final Rule 114, which governs RCEs. Section 132(b) requires that the PTO “prescribe regulations to provide for the continued examination of applications for patent at the request of the applicant.” The PTO argued that Final Rule 114 complies with Section 132, even though it requires that a petition and showing accompany the filing of a second RCE.

Likewise, for Final Rules 75 and 265 (limiting the number of claims), it was argued that, under 35 U.S.C. 111 and 112, the PTO doesn't have the authority to place a limit on the number of claims an applicant may file. In both these instances, the court found this matter a wash:

Given the limited briefing of this issue by both parties, the Court will find that, for the purposes of this motion, neither party can claim a strong likelihood of success on this issue.
Retroactivity of the Continuation Rules

Here, GSK made a clever move: instead of arguing that rights in patent applications were threatened, GSK argued that rights in trade secrets were threatened, since these potential secrets were sacrificed in the act of filing a patent application (this was also argued in the AIPLA amicus brief).

[A]s GSK noted at oral argument, by seeking patent protection inventors like GSK sacrifice their trade secrets, and the United State Supreme Court has found that trade secrets are property rights . . . GSK, then, has voluntarily surrendered its property rights in exchange for a guarantee from the PTO that it will have a “full and fair opportunity to seek a spectrum of patent protection adequate to protect [its] investments.” . . . While “an individual [that] discloses his trade secret to others who are under no obligation to protect the confidentiality of the information, or otherwise publicly discloses the secret,” loses that property right . . . the Final Rules retroactively alter the bargain on which inventors like GSK rely in making their decision to surrender their rights. The Final Rules thus impair GSK’s right to this bargain.
Examination Support Documents

GSK argued that Final Rule 265, which delineates the requirements of an ESD, is unconstitutionally vague because it fails to provide “any boundaries on the scope of the search.” Specifically, GSK complains that the “rule does not indicate whether the applicant must conduct electronic searches, manual searches, or both; in which countries’ databases the applicant must search; or which libraries it must search." According to GSK, the ESD requirement forces applicants to “search the patent literature of the entire world, as well as
unspecified yet relevant ‘non patent literature.’”

While the PTO maintained that the ESD requirements are clear (noting the "Guidelines for ESD" document published last month), GSK countered that the need for official guidance suggests an admission of vagueness. Moreover, any guidance documents generated by the PTO outside of the notice and comment rulemaking process violate the Administrative Procedure Act. The court sided with GSK:
[B]ecause the Court believes that GSK has raised serious concerns as to whether a reasonably prudent person would be able to comply with the ESD requirements, the Court will find that GSK has demonstrated a real likelihood of success on this issue.
IRREPARABLE HARM

Briefly stated, the court found the uncertainty over the new rules to be a key factor in determining harm:

Although GSK cannot pinpoint an exact amount of monetary loss, the uncertainty caused by the regulations will cause harm to their investments and provide a disincentive to their filing of new patent applications for researching new pharmaceutical products. In addition, there is still some question as to whether following the complicated steps outlined by the PTO will indeed guard against lost patent protection. Finally, GSK will be unable to recover their losses if the Final Rules are ultimately determined to be invalid. Therefore, the Court finds that GSK is likely to suffer irreparable harm if the preliminary injunction is not granted.
BALANCE OF HARDSHIPS

Here the court sided with GSK, since the harship on the PTO was related to "sunk costs already incurred by training personnel and changing the computer systems." The PTO's position, pending the resolution of the case, would be to merely maintain the status quo. In contrast, the harm to GSK would be "immediate" once the rules went in effect.

THE PUBLIC INTEREST

The court sided with GSK, that argued that "stability" in the patent office was key, and also found the amicus briefs persuasive (hint, hint):

GSK asserts that preserving the status quo while the litigation proceeds is important for maintaining stability for patent holders. Innovation is encouraged when patent holders and applicants have certainty about how their patents will be treated. The fact that three amicus briefs were filed by organizations representing a wide array of industries, all urging the Court to grant the preliminary injunction because their interests will otherwise be harmed, further demonstrates the possibility of potential immediate harm to the public if the rules are allowed to go into effect on November 1. Many companies rely upon the stable, reliable protection afforded by the current patent system in determining whether it is cost effective to abandon their trade secret protection by pursuing a patent. Implementation of the Final Rules changes those companies’ calculus and immediately decreases their ability to
pursue costly new innovations.
NOTE: GSK also argued that the rules violated the APA, since they were "arbitrary and capricious." While the court didn't exactly embrace the USPTO's position, Judge Cacheris stated that

Though the Final Rules would reduce the PTO’s backlog by only 2.7% and, by their own admission, are insufficient to reduce the backlog to a reasonable level, PTO models show that they will have an impact on the backlog . . . Thus, the PTO’s rationale appears to be sufficient to satisfy arbitrary and capricious review, and the Court will find that GSK has not shown a real likelihood of success on this issue.
How long does the injunction last? "This Order shall expire upon the entry of a final judgment in this matter, unless otherwise ordered by the Court."

Read the Opinion here (link)

View the order here (link)

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