When Considering PTO Reform, Look to KIPO For Clues

Earlier in the month, The US Patent Policy Advisory Committee issued its 2008 report that explored ways to tackle various quality and pendency issues affecting the PTO. The report concluded that application backlog "reached truly unacceptable levels in 2008."


Not long after, various former PTO officials testified before Congress on the same issues, and referred to the backlog problem as "horrendous."


More recently, The US Chamber of Commerce officially released Recommendations for Consideration by the Incoming Administration Regarding the US Patent and Trademark Office. This report cited the 750,000-application backlog as a significant contributor to "an agency in crisis."


While it is convenient to think of this as a "USPTO problem", the EPO and the JPO have experienced similar backlogs, and other national patent offices (e.g., SIPO) have comparable problems. However, as Joff Wild from the IAM blog puts it, "there is one country that has managed to do something" about application backlogs - the Korean Patent Office (KIPO).

From the most recent annual report (link):

To swiftly and accurately grant rights for the ever-growing number of IP applications, we undertook various measures to drastically improve the efficiency of our examination process. For instance, we adopted the Six Sigma method of management; we expanded our outsourcing of certain examination tasks; and we promoted online and at-home examinations. As a result, by the end of 2007, we succeeded in shortening the first action pendency period for patent examinations to a mere 9.8 months, which means we now have the fastest patent examination service in the world. Moreover, the examination periods were shortened to 5.7 months for trademarks and 5.5 months for designs.

This is quite remarkable, considering that pendencies as recent as 2002 were averaging 22.6 months (and as long as 21 months in 2004).

In addition, KIPO made recent changes in their patent laws to allow "customer-tailored" examination schedules that come in 3 varieties: accelerated, normal, and delayed examination.

Under the "accelerated" examination track, applicants receive office actions within 2-3 months of filing their petition; certain applications should include a prior art search from one of the four authorized organizations (designated by KIPO). Under a "delayed" examination track, applicants can choose the time for KIPO examination ranging from 18 months to 5 years after the filing date. For the "normal" examination track, KIPO claims to keep the average pendency of the first office action to less than 16 months (see here and here).

Of course, nothing here is new to the USPTO. And with the exception of delayed examination, these programs have already been in use by the Office. So the question is, how did KIPO manage to do it, and how can the USPTO replicate their success?

More on Article One Patent Project

Earlier the 271 Blog covered Article One's entry into the "patent bounty" space, where the company claimed to be something akin to a "Peer-to-Patent" project that compensated participants. While Article One's presence is heralded as something of a welcome addition, the company's operation appears to be more than a reheated "Bountyquest" effort.

In an earlier Forbes article, the following was written about the company:

The business model of Article One executes on the value of the research, which can be sold directly to parties interested in the subject patent, or used to execute market trades based upon expert opinions drawn from the research. This powerful, self-supporting revenue model provides for the significant bonuses of up to $50,000 for specific prior art found, and rewards the community through a powerful Profit Sharing Plan compensating all members who actively participate and build the Advisor community.

Thus, vetted prior art will not only be offered for sale to defendants, but to anyone (including Article One) looking to take a market position on the prior art information. Indeed, Article One's terms of use state the following:

Article One and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of the material on our Site, may from time to time have "long‟ or "short‟ positions in, act as principal in, or buy or sell the securities (or derivatives thereof) of, the companies mentioned on the Site.

Clever stuff. You can sell invalidating art and short the company at the same time. A more recent Forbes article on Article One states the following:

Say a visitor sends Article One evidence (an article in an obscure academic journal, for example) that calls into question the validity of one of Pfizer's patents for cholesterol reducer Lipitor. Milone would make that information public on the site--and, at the same time, she could short the stock of Pfizer and go long on the stock of competitors eager to sell a generic version of Lipitor. In theory, she'd make a bundle once the industry finds out what she knows.

And if Milone doesn't see a way to make money on the markets using her newfound information? She could try selling the information to Pfizer directly--or to one of its competitors. "Our interest is first to monetize our research, to maintain our revenue stream," Milone says.

Time will tell how this business model will succeed.

In any event, another interesting tidbit about Article One is that one of the founders has a series of patents on file at the PTO that is best described as the polar opposite of Halliburton's "patent acquisition and assertion by a (non-inventor) first party against a second party" application. The title? "Method and System For Requesting Prior Art From the Public In Exchange For A Reward" (US Patent Pub. 20080270255). From the looks of the claims, the novelty appears to be directed to the "trading a financial instrument" and "realizing profit" from the information:

Claim 1. A method for providing a monetized value of information, said method comprising the steps of:

a) displaying on a computer network for access by a plurality of information providers, (i) an information request, and (ii) a description of compensation for at least one of said information providers who provides information responsive to said information request, wherein said compensation comprises a variable component;

b) receiving at least one response from at least one of said information providers;

c) reviewing said at least one response to form a conclusion, said conclusion comprising whether said information responsive to said information request has been provided;

d) executing a financial transaction, wherein said financial transaction comprises trading a financial instrument;

e) displaying said conclusion or information describing said conclusion on said computer network;

f) realizing profit from said financial transaction; and

g) determining and providing said compensation for said at least one of said information providers, wherein said variable component is determined based on said profit from said financial transaction, thereby providing said monetized value of said information.

Of course, there are plenty of Bilski issues to contend with, but that's another story . . .

CAFC Provides Further Guidance on Means-Plus-Function

Welker Bearing Co. v. PHD, Inc. 08-1169, December 15, 2008

Welker appealed the district court's summary judgment of noninfringement. As part of the appeal, Welker challenged the district court's interpretation of "mechanism for" as a means-plus-function term under §112 ¶ 6. Finding the word "mechanism" to be insignificantly different from "means", the CAFC found that

In this instance, the ’254 patent’s claim language does not include the word “means,” but instead the similar word “mechanism.” . . . This court noted that “[t]he generic terms ‘mechanism,’ ‘means,’ ‘element,’ and ‘device,’ typically do not connote sufficiently definite structure [to avoid means-plus function treatment] . . . The term ‘mechanism’ standing alone connotes no more structure than the term ‘means.’” . . . [t]he unadorned term “mechanism” is “simply a nonce word or a verbal construct that is not recognized as the name of structure and is simply a substitute for the term ‘means for.’”

With regards to infringement, defendant PHD argued that one of the accused products did not "infringe" because they were prototype units that were provided to 3rd parties, but never entered production, sold, or or otherwise used commercially. The CAFC agreed with PHD:

Mere possession of a product which becomes covered by a subsequently issued patent does not constitute an infringement of that patent until the product is used, sold, or offered for sale in the United States during the term of the patent . . . PHD did not have any burden to prove it retracted any putative offer for sale. Rather the burden remains with the patentee to prove infringement, not on the defendant to disprove it. In any event, this court observes that the district court properly concluded, “Defendant’s flat denial, backed by evidence, of any commercial activity after September 7, 2004 stands uncontradicted by anything in the record.” . . . For that reason, this court holds that the district court did not err in granting
summary judgment of noninfringement of the ’478 patent.

Also, with regard to the doctrine of equivalents and §112 ¶ 6, the CAFC clarified that

Structural equivalents and the doctrine of equivalents are “closely related.” . . . They are related in the sense that both § 112 ¶ 6 and the doctrine of equivalents apply “similar analyses of insubstantiality of the differences” between a disclosed structure and an accused infringing structure . . . However, an important difference between the two inquiries “involves the timing of the separate analyses for an ‘insubstantial change.’” . . . Namely, an equivalent structure under § 112 ¶ 6 “must have been available at the time of the issuance of the claim,” whereas the doctrine of equivalents can capture after-arising “technology developed after the issuance of the patent.”

AFFIRMED

Read/download the opinion here.

Friday Shorts: PTO Backlog, More Bilski, Linux Defenders, 2007 Defendant Spike

Former PTO Officials Testify Before Congress: former PTO leaders sharply criticized the PTO’s failure to address the 1.2 million case backlog, one former commissioner calling the problem "horrendous" (link)

Bilski Starts to Pop Up in the District Courts: in the case of Every Penny Counts, Inc. v. Bank of America, plaintiff asserted a business method patent directed to a "rounder system" in which "individual consumer transactions [are] operated on in various ways via a ‘rounder function.’" The function operates "to create and distribute excess funds from consumer spending transactions." Did the recent Bilski decision invalidate the patent? The defendant thinks so, and has recently (Dec. 8) filed a motion to open discover and briefing on this very issue. Read/download a copy of the motion here.

Linux Defenders Want Your Code: Open Invention Network (OIN) has launched a "Linux Defenders" program, co-sponsored by the Software Freedom Law Center (SFLC) and the Linux Foundation (LF). The program is designed to make prior art more readily accessible to patent and trademark office examiners. The program plans to develop a set of Web-based forms to let interested parties generate "defensive publications." The program will also offer direct consulting, and establish a "Wiki"-like contribution model that calls upon community involvement. Linux Defenders will then post the publications to the IP.com database. Read more here, here, and here.

Patent Defendants Spiked in 2007: Stanford's IP Litigation Clearinghouse was recently unveiled, including data on 78,000 copyright, patent, trademark, and trade secret lawsuits. Recently, data surrounding 23,000 patent suits was made public. One of the findings found that, despite the relatively steady number of patent lawsuits, the number of defendants spiked over 30% in 2007. Joe Mullin has more at The Prior Art Blog here.

"Untenable" Claim Construction Leads to Plaintiff Rule 11 Sanctions

Triune Star Inc. v. The Walt Disney Co., Case No. 07-1256 (C.D. Ill., November 24, 2008)

Triune sued defendants over a patent relating to a “telecommunications locating system.” Defendants moved for summary judgment of noninfringement, claiming, among other things, that prosecution history estoppel unequivocally cleared them of any infringement whatsoever.

During prosecution, the independent claims recited "video means" that were rejected by the PTO. However, dependent claims recited that "the video means is a miniature infrared camera."
The Examiner indicated that the independent claims “would be allowable if rewritten in independent form including all of the limitations of the base claim and any intervening claims.” An amendment was submitted to include the infrared camera, and the patent subsequently issued.

Defendants argued that (1) none of their devices used infrared cameras, (2) a conventional visible-light camera includes an IR cut filter to almost completely inhibit or block infrared radiation, and (2) had plaintiff conducted a reasonable Rule 11 inquiry, they would have known this.

During litigation, Triune alternatively construed the term “infra-red” as either: (1) “the mechanism by which the portions of the camera function” or (2) “a camera that has a spectral response sufficient to capture visible images of the area in the vicinity of the remote unit.” Defendants countered that such a construction is frivolous, as it effectively cuts-out "infra-red" from the claims.

Perhaps unsurprisingly, the district court agreed with the defendants on the claim construction issue, and granted SJ of noninfringement. However, the court took the remarkable step of imposing sanction against Triune for proposing an "untenable" claim construction:

[N]either of Triune’s constructions pass the red face test. There is simply no valid or remotely reasonable basis for ignoring the substantive addition that the specification of an infrared camera made to the claims in Triune’s patent.

Given the undisputed facts in this case, the intrinsic evidence of record, the Court’s construction of the claims . . . and the finding of noninfringement as a matter of law, the Court must conclude that any reasonable pre-suit investigation would have revealed that the allegedly infringing devices did not contain any type of miniature infrared camera and therefore could not have literally infringed Triune’s patent. Likewise, in light of the prosecution history and the doctrine of prosecution history estoppel, there is no nonfrivolous argument for the finding of infringement after applying the doctrine of equivalents.

Accordingly,

The imposition of Rule 11 sanctions is therefore appropriate in this case against
both Triune and its counsel, who represented Triune during the prosecution of the [] patent and were directly involved in the amendment of the claims in question to require a miniature infrared camera in order to overcome the obviousness objection. The direct involvement of Triune’s counsel in the prosecution and amendment of the claims in question negates any reasonable suggestion that Triune’s position was merely erroneous rather than frivolous.

Read/download the order here (link)

BPAI Appeal Brief Rules Delayed, According to Last-Minute PTO Notice

A FR notice will (officially) be published tomorrow, stating that the Appeal Brief Rules will be delayed, pending further OMB review.

From the Notice:

On October 8, 2008, the Office published a 30-Day Federal Register Notice stating that the proposal for the collection of information under the final rule was being submitted to OMB and requesting comments on the proposed information collection be submitted to OMB. The proposed information collection is currently under consideration by OMB. Since the review by OMB has not been completed, the Office is hereby notifying the public that the effective and applicability date of the final rule is not December 10, 2008. The effective and applicability dates will be identified in a
subsequent notice.

DATES: The effective date for the final rule published at 73 FR 32938, June 10, 2008, is delayed, pending completion of OMB review of the proposed information collection under the PRA. The Office will issue a subsequent notice identifying a revised effective date on which the final rule shall apply.

Interestingly, the document is signed and dated for December 5, 2008, yet nothing appears yet on the PTO site.

Read/download the notice here (link)

Hat Tip: David Boundy

Claim Construction Estoppel Heads to the CAFC

Shire LLC v. Sandoz, 07-CV-00197-PAB, December 5, 2008 (D. Co.)

The district court issued an Order and Memorandum construing the claims in the patents at issue. In the Order, the Court declined to apply the doctrine of issue preclusion to another district court’s claim construction with respect to the same patents.

Defendant moved the Court to certify the Order for immediate interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Specifically, defendant requested that the Court certify two issues addressed in the Order, one of which was “whether collateral estoppel and/or stare decisis applies to a previous court’s unappealed claim construction."

After further review, the district court determined that appeal to the CAFC was warranted:

The Court further finds that there is substantial ground for difference of opinion as to the application of issue preclusion to another district court’s unappealed claim construction. There is no definitive guidance from the Supreme Court, the Tenth Circuit, or the Federal Circuit on this question. District courts have reached conflicting positions. Compare, e.g., TM Patents, L.P. v. Int’l Bus. Mach. Corp., 72 F. Supp. 2d 370, 377 (S.D.N.Y. 1999) (holding that claim construction in a Markman hearing is a final judgment for purposes of issue preclusion), with Kollmorgen Corp. v. Yaskawa Elec. Corp., 147 F. Supp. 2d 464, 469 (W.D. Va. 2001) (holding that issue preclusion applies only if the earlier claim construction “was essential to a final judgment on the question of the patents’ infringement”), and Graco Children’s Prods., Inc. v. Regalo Int’l, LLC, 77 F. Supp. 2d 660, 663 (E.D. Pa. 1999) (holding that, “despite a previous court having held a hearing on the claim construction of a patent pursuant to Markman,” issue preclusion would not apply under the facts of the case). Thus, the question presents a novel legal issue whose correct resolution is not substantially guided by prior precedent, as required by 28 U.S.C. § 1292(b).

Read/download the opinion here (link)

Tafas v. Dudas Oral Arguments Completed at the CAFC

Today, a panel of the Court (Rader, Bryson, Prost) heard oral argument in Tafas v. Dudas before a jam-packed courthouse. Early reports indicate that the CAFC recognized, despite PTO assertions to the contrary, that the proposed continuation rules effectively set a “hard limit” of two continuing applications, and are potentially in conflict with the statute.

The court also seemed wary of the Examination Support Document (ESD) requirement (Tafas' counsel refered to it as an "Express Suicide Document"), and sharply questioned the PTO in this regard. From Hal Wegner's account:

The [PTO] General Counsel was asked whether – if he were counsel to a pharmaceutical client – he could recommend the ESD: He answered unequivocally in the affirmative. To this answer, and accompanied by laughter from the packed courtroom, the presiding judge advised the General Counsel to seek employment in the electronics or other industries.

Read more detailed accounts on the oral arguments at the PLI Blog (link1) (link2)

Also, the oral arguments are available in MP3 fromat from the CAFC website (link)

Study: Patent Pools May Discourage Innovation

Stanford University's Ryan Lampe and Petra Moser saw that regulators favor patent pools as a means to encourage innovation in industries where overlapping patents and excessive litigation cause problems. While the theory appears sound in principle, does the aggregation of patent rights actually spur innovation? Lampe and Moser decided to look at this issue in their recently published paper titled "Do Patent Pools Encourage Innovation? Evidence from the 19th-Century Sewing Machine"

As you can tell from the title, Lampe and Moser had to go quite a ways back to see how innovation was affected - after all, it takes decades, if not a century, to determine the effects of patent pooling on an entire industry. More specifically, the authors looked at the first patent pool in U.S. history, the Sewing Machine Combination (1856-1877) to see and analyze the final result.

So what did they find?

Our data confirm that pools reduce litigation risks for members and that pool members patent more in the years leading up to the pool. Pool members, however, patent less as soon as the pool is established and only resume patenting after the pool dissolves. We construct objective measures of performance to examine whether such changes reflect changes in strategic patenting or actual effects on innovation. Performance data suggest that innovation slowed as soon as the pool had been established and resumed only after the pool had been dissolved. Why might patent pools discourage innovation? Our data indicate that pools may discourage innovation by increasing litigation risks for outside firms and by diverting research by outside firms to inferior technologies.

Read the entire paper here (link).

IEEE Publishes Interesting Study on Solar Panel Patenting

IEEE reported on a a study from Semiconductor Insights analyzing U.S. patents in solar technology and trends in U.S. solar patents by company and technology. The study found that Canon, TSMC and Samsung are among the largest patent holders in solar photovoltaic panels, although they have no products in the field today. By contrast, the study found that many of the world's biggest producers of solar panels hold relatively few patents on the technology.

From the article:

The panel makers may be adopting a strategy of getting to market quickly by licensing or acquiring existing technology, the report said. "Surely, they may face big challenges from companies with more solid patent portfolios and who are savvier when it comes to protecting their intellectual property," it added.

As many as 600 companies are involved in solar panel market, with as many as 60 new companies joining each year since 2000, according to the report. "This has produced an extremely fragmented market and will no doubt provide many opportunities for consolidation over the next decade," it concluded.

Read the article here (link)

S.D.N.Y.: Patentee Estopped From Asserting Patent After 4+ Year Delay

Aspex Eyewear, Inc. et al v. Clariti Eyewear, Inc. (1-07-cv-02373) SDNY, November 26, 2008

After Clariti initiated a product release, they received a letter from Aspex on March 2003, identifying 4 patents, along with a demand, stating that the matter was "very urgent and serious." After further exchanges, Clariti responded some 3 months later denying infringement.

Aspex and Clariti had no further communications until August 2006, when Aspex again accused Clariti of infringing one of the four previously-identified patents. In March 2007, Aspex filed a complaint against Clariti for allegedly infringing the patent.

Clariti filed a summary judgment motion claiming, among other things, that Aspex should be equitably estopped by the doctrine of laches because their delay in bringing suit was misleading and inequitable.

Under equitable estoppel, a defendant must show (1) the patentee, through misleading conduct, led the defendant to reasonably infer that the patentee did not intend to enforce its patent gainst the defendant, (2) the defendant actually relied on the patentee's misleading conduct, and (3) due to the reliance, the defendant will be materially prejudiced if the patentee is allowed to
proceed with its claim. Additionally, because the defense is an equitable one, a court must "take into consideration any other evidence and facts respecting the equities of the parties in exercising its discretion and deciding whether to allow the defense of equitable estoppel to bar the suit."

After reviewing the factors, the district court ruled that Aspex was equitably estopped from enforcing its patent:

No triable fact issue exists as to the misleading nature of plaintiffs' conduct. Aspex, through its counsel, placed Clariti "on notice" about several of its patents in its March 2003 letters, and declared its policy and intention to "fully and vigorously enforce our rights." When Clariti sought additional information about which claims might be involved, however, Aspex failed to assert any claims of the '747 Patent in its May 12, 2003 response. Yet Aspex's counsel explicitly noted that it was responding to Clariti's query and included information about claims of the [other] Patents. Aspex did not mention any of the patents again until 2006. In this context, its silence and inaction were misleading as a matter of law.

* * *

Aspex's March 2003 letters were not mere invitations for a "prompt and reasonable resolution" with Clariti. Rather, Aspex characterized the matter as "very urgent and serious" in its letters, discussed litigation, and noted that courts could award attorneys' fees and treble damages for infringement. Aspex was not proposing a licensing or other arrangement in its communications; rather, it was threatening litigation. Following Clariti's June 26, 2003 response denying infringement of the [other] Patents, however, Aspex failed to follow up about any of its patents for more than three years. The only reasonable inference to be drawn from Aspex's conduct was that it had threatened litigation but no longer intended to pursue any claims against Clariti under the '747 Patent or any other patent.

* * *

For the foregoing reasons, Clariti's motion for summary judgment is granted and the complaint dismissed in its entirety under the doctrine of equitable estoppel.

Read/download the opinion here.

Interesting Claim on Big-3 Patents

James E. Malackowski, president and CEO of Ocean Tomo LLC, writes an editorial in today's Detroit News:

As Washington decides on aid to the ailing auto industry, top consideration should be given to the significant potential of these Big 3 technologies for stimulating economic and job growth and creating a greener and more fuel-efficient world . . .

Consider that:

• GM has higher average quality and newer green technology and patents than the other 14 automakers combined.

• Ford and GM together hold approximately a third of all green technology patents and the related value.

• GM has 70 percent of the patents in the emerging technology category. This domestic share increases to 85 percent if Ford is added.

• Ford owns 30 percent of all patents with a similar related value measure in
emission control innovation.

Read the entire editorial here.