Kappos Confirmation Hearing Set for July 29

The Senate Committee on the Judiciary has scheduled a hearing on nominations for Wednesday, July 29, 2009 at 10:00 a.m. in Room 226 of the Senate Dirksen Office Building.

A live webcast of the hearings will be available here (link)

Also, Senate Judiciary Chairman Patrick Leahy has released the committee's completed questionnaire for David Kappos, which reportedly has some interesting information, according to Tech Daily Dose:

Kappos details his background, professional affiliations and pro bono work as well as his financials. According to the form, he owns vested IBM options valued at approximately $147,000 and those options would be sold within 90 days of his appointment as the PTO's top dog. He also owns unvested IBM options and restricted stock valued at about $1.5 million. All of that deferred income would
be cancelled upon his resignation from IBM. On a more personal note, Kappos owns
property in Tenants Harbor, Maine originally valued at $100,000.

This, and hundreds of other pages of information are available on the committee's Web site here.

Time To Do Away With "Broadest Reasonable Interpretation?" Paper Says "Yes!"

Dawn-Marie Bey and Christopher Anthony Cotropia published a paper recently titled "The Unreasonableness of the Patent Office's 'Broadest Reasonable Interpretation' Standard," and it's a very interesting look at the PTO's claim interpretation methodology. While there have been many articles and studies regarding claim interpretation in the courts, few have looked at claim interpretation in the PTO. Bey and Cotropia took a good look - and they didn't like what they saw.

According to the paper:

(1) The 'Broadest Reasonable Interpretation' standard (BRI) is inconsistent with patent statutes. Because different standards of claim interpretation are applied between the PTO and the courts, a different invention is deemed to exist during enforcement than exists during prosecution.

(2) The BRI Standard is contrary to the unitary appellate structure. Because of these different interpretations, the CAFC ends up applying a different claim interpretation doctrine in USPTO appeals than in district court appeals.

(3) BRI allows examiners and the CAFC to skirt tough claim interpretation issues. BRI explicitly forecloses any need for the examiner to find a "correct claim interpretation." Instead, they just have to be "reasonable." Examiners never need to resolve claims "in light of the specification", and applicants are not required to reply to such analysis.

(4) BRI results in improper denial of patent protection. Not only does the BRI standard make rejections more likely, it also means that some rejections are, in fact, incorrect. They are incorrect because the prior art or an obvious variation of the prior art only falls within the claim scope that exists under the USPTO's interpretation of the claim. Under the normal claim interpretation methodology applied by district courts, the claim is valid because it does not capture this unpatentable subject matter.

(5) BRI forces costly amending of patent claims. Amendments go hand-in-hand with additional USPTO and attorney costs. Also, the requirement to amend also necessarily prolongs prosecution, generating more of a delay. This delay adds to the backlog at the USPTO, which has its own negative impact on patent quality.

(6) The BRI standard is fatally ambiguous. Other than the mantra "broadest reasonable interpretation," there simply is no articulation of how to accomplish this step other than that it should be consistent with the teachings in the specification.

The paper concludes:

The BRI standard has probably lasted this long because its propriety has not been closely questioned. Closer scrutiny leads to the conclusion that there is simply no justification for the "broadest reasonable interpretation" standard. In fact, the standard has the potential to do significant harm. The BRI standard is a judicial construction created by the CCPA and currently used by the Federal Circuit. The Federal Circuit should stop using the standard and officially adopt a unitary approach to claim interpretation, regardless of forum.

Read/download the paper gere (link)

The Vendor-Client Relationship

If you haven't seen it yet, it's only a matter of time:

Doors Are Open: USPTO Officially Launches "e-Office Action" Program

From the USPTO:

The Commerce Department’s United States Patent and Trademark Office (USPTO) announced today the implementation of the e-Office Action program following a successful pilot project. Under the program, patent applicants receive an e-mail notification of office communications instead of paper mailings. An e-mail is sent to program participants when new office communications are available for viewing and downloading in Private PAIR, the patent application information retrieval system that allows applicants electronic access to the entire file history of their applications.

The e-Office Action program minimizes the possibility of lost or delayed postal mail and makes it faster and more efficient for participants to process and docket USPTO communications in electronic format, thus reducing processing costs. During the pilot, participants were able to retrieve office communications several days faster than postal mail. Participants in the pilot program have also suggested several enhancements to the system which will be under consideration for future implementation as the IT infrastructure is strengthened.

Participation in the e-Office Action program is optional and open to any registered attorney or agent of record, or pro se inventor who is a named inventor, in a patent application associated with a customer number. Program participants also will have the flexibility to opt-out of the e-Office Action program at any time and return to receiving office communications through the postal mail.

The program includes provisional applications and non-provisional applications including utility, plant, design, and reissue applications and national stage applications. International applications, reexamination proceedings, and interference proceedings are not included in the program.

Read the PTO press release here (link)

To access the PTO's e-Office Action page, click here (link)

Study: Post-Grant Review Could Increase PTO Pendency by 25%

Professor Scott Shane of Case Western Reserve University, released analysis of the impact of proposed post-grant review and expanded inter partes reexamination of U.S. patents. According to Shane, the proposed changes will have the following likely effects:

• Increase the length of patent pendency. Under the proposed changes, the length of time between patent application and patent issuance would increase from 32 months to 40 months.
• Increase the costs of defending patent validity by an estimated $2.2 billion over the current cost of litigation.
• Reduce investment in R&D. Reducing the value of patents significantly reduces investment in R&D. The proposed changes would lead to an annual reduction of $4.4 billion in industrial R&D.
• Compromise certainty about patent validity. The new post-grant review and expanded inter partes reexamination processes would make uncertain the validity of approximately $1.4 billion to $1.7 billion of patents issued annually, totaling $8.1 billion to $10.3 billion of patents over the six years it takes to get an outcome of the average review case.
• Hinder efforts of U.S. universities to transfer their inventions to the private sector.
• Weakening patent protections through expanded administrative challenges would jeopardize over $1 billion annually due to a reduction in the amount of university technology that would be commercialized by industry.
• Increase strategic patenting behavior by large, established firms. Strategic efforts to hinder the performance of competitors by forcing them to defend their patents against multiple challenges, beginning with reexamination and review proceedings and ending with litigation, are a likely outcome of the proposed changes.

Moreover, the study concludes that the proposed legislation will (1) not improve patent quality,
(2) not reduce the cost of patent litigation, and (3) not speed the determination of patent validity.

The study is made available through the Manufacturing Alliance on Patent Policy, and may be accessed here (link)

Judiciary ranking member Jeff Sessions requested that Shane examine the issue earlier this month as staffers for Leahy and Sessions continue meeting with stakeholders about the topic.

See Tech Daily Dose: "Study: Patent Proposal Could Be Costly" (link)

USPTO Publishes Latest Reexamination Statistics

The USPTO published the most recent statistics on inter-partes and ex-parte reexaminations, and both reports show that reexaminations continue to grow in popularity, and continue to be effective weapons for challenging validity.

Ex-Parte Reexamination

Ex-parte filings continue to grow - 2009 is on pace to almost double the number of filings from 5 years ago:

2002 - 274 filings
2003 - 392 filings
2004 - 441 filings
2005 - 524 filings
2006 - 511 filings
2007 - 643 filings
2008 - 680 filings
2009 - 481 filings (through 6/09)

Of these filings, 31% are known to be in litigation. Just as before, reexamination requests are overwhelmingly granted - currently 92% of requests are pushed forward towards full reexamination proceedings. On pendency, ex parte reexamination requests have an average pendency of 25.1 months, and a median pendency of 19.1 months.

Requesters continue to be favored during reexamination. Of all requests, only 25% of reexamined patents emerge with a certificate having all claims confirmed. 64% of reexamined patents emerge with claim changes, and 11% emerge with all claims canceled.

Inter-Partes Reexamination

Inter-partes reexamination requests continue to grow at a much higher pace - the number of requests through June 2009 already exceed the total number of requests from the previous year:

2004 - 27 filings
2005 - 59 filings
2006 - 70 filings
2007 - 126 filings
2008 - 168 filings
2009 - 195 filings (through 6/09)

Of these requests, 66% of the challenged pates are known to be in litigation. Currently 95% of inter-partes requests are granted. On the pendency side, the news is not good. Currently, the USPTO claims an average pendency of 36.1 months, and a median of 33.o months. This is up from December 2008, where the average and median pendencies were 34.9 and 32.5 months respectively. It is worth noting that an earlier study by the Institute for Progess found that actual pendencies for inter partes reexaminations are closer to 43.5 months, and may be high as 97 months (!) (link).

Requester success rates are now higher than ever - only 5% of challenged patents emerge with all claims confirmed. 35% of challenged patents emerge with claim changes, and 60% of challenged patents have all claims canceled or disclaimed. In December 2008, 9% of the challenged patents had all claims confirmed, with 21% having claim changes and 70% having all claims canceled or disclaimed.


- Download USPTO, Inter Partes Reexamination Filing Data - June 30, 2009 (link)

- Download USPTO, Ex Parte Reexamination Filing Data - June 30, 2009 (link)

- See also Reexamination operational statistics - FY 2009 (through 6/30/2009) (link)

District Court Awards almost $2.5M In Sanctions For NPE Asserting Unenforceable Patents

Nilssen, et al v. Wal-Mart Stores Inc, et al, No. 1-04-cv-05363 (N.D. Il., June 30, 2009, order) (R. Gettleman)

Plaintiff Ole K. Nilssen held a number of patents on compact fluorescent lamps ("CFLs") and exclusively licensed them to his not-for-profit Cayman Islands foundation, plaintiff Geo Foundation, Ltd. Plaintiffs entered into a license agreement with Technical Consumer Products, Inc. ("TCP") under which TCP would manufacture "off-brand" CFLs. That license agreement required Geo to bring litigation against the defendants alleging that their sale of off-brand CFLs infringe Nilssen's patents.

At the same time, Nilssen was prosecuting another patent infringement suit against Osram Sylvania, Inc. ("Osram"). On July 6, 2006, after a six day bench trial, the judge in that case issued an opinion holding that Nilssen's patents were unenforceable because of inequitable conduct by Nilssen in the PTO. The case was exceptional and the judge awarded attorneys' fees of some $5.5 million against plaintiffs. The Federal Circuit subsequently affirmed the district court's decision (link).

The defendants in this case followed with a Summary Judgment motion to find the patents unenforceable for the same inequitable conduct. The court quickly granted the motion, noting

This court sees no reason to revisit Judge Darrah's or the majority opinions in the Osram litigation. Far too much judicial resources have been devoted to this losing litigation. Plaintiffs have been found in the Osram case to have intentionally failed to inform the PTO of related litigation, made materially false priority claims with the intent to mislead the PTO, misrepresented that Nilssen was entitled to small entity status (allowing him to maintain his patents for far less money than he would otherwise been required) and failed to cite material prior art when prosecuting its patents with the PTO. Plaintiffs' conduct was intentional, material and repeated. If this isn't an exceptional case, this court fails to see what is.

Accordingly, the parties stipulated to the following amounts, which the court recently approved:

Ikea Illinois, LLC: $994,241 Attorney's Fees, $30,196 Costs
Lowe's Home Centers, Inc.: $815,512 Attorney's Fees
Costco Wholesale Corporation: $642,500 Attorney's Fees, $6,000 Costs

Total amount: $2,488,449

Read the original SJ opinion here (link)

Read the Ikea award here (link)

Read the Lowe's award here (link)

Read the Costco award here (link)

"Patent Marking" Case Against Solo Cup Dismissed in ED Va.

Matther A. Pequignot v. Solo Cup Co., No. 1:07-cv-897 (E.D. Va., July 2, 2009, order) (L. Brinkema)

Washington DC patent attorney Matthew Pequignot filed at least two lawsuits against Solo Cup and Gillette (P&G) alleging that the defendants were engaging in "false marking" of their products.

Under 35 U.S.C. 292, marking an unpatented product as “patented” or marking a product as “patent pending” when no patent is pending can be punishable by “not more than $500 for every such offense.” The false marking activities are only actionable if done “for the purpose of deceiving the public.” As a qui tam right, a private citizen could sue, and if successful, split half of the damages with the government.

Pequignot alleged that Solo Cup marks its paper products with patents that had expired more than ten years ago. Previously, the district court denied Solo's motion to dismiss at an earlier stage in the litigation. More recently, Solo Cup moved for Summary Judgment arguing, in part, that Solo could not have acted with "the purpose of deceiving the public."

The judge agreed with Solo and dismissed the case:

For the reasons stated in open court, to be fully explained in a memorandum opinion, defendant's Motion for Summary Judgment is GRANTED, plaintiff's Motion for Partial Summary Judgment is DENIED, and it is hereby ORDERED that the jury trial scheduled to begin on July 27, 2009 be and is cancelled.

Download a copy of the order here (link)

See AP: "Judge closes door on legal quirk in patent law" (link)

Appeals "Skyrocket" at the USPTO

Law.com issued an article today confirming what most practitioners have known for a while - patent examination has become a stingier process, resulting in more appeals at the BPAI. Over the past year, the PTO reports that appeals have spiked 70 percent. From October through May, 10,870 patent appeals were filed, which is a sharp increase from 6,385 from the previous year.

While the number of appeals increase, the levels of success have not - in fiscal year 2008, the BPAI allowed 44 percent of patents that came before it, which is down from 66 percent five years ago, and 71 percent at the start of the decade.

According to the article,

PTO spokeswoman Jennifer Rankin Byrne said in a statement that a "significant increase" in the ranks of patent examiners has led to more examinations and "more final rejections which could result in an appeal." Examiners will have less time to process applications and hand down rejections, at least in the short term. The PTO suspended overtime pay from June 21 through at least the end of the fiscal year.

* * *

Byrne of the PTO denied that the PTO's current philosophy is to reduce the number of issued patents. "There is not an agency policy to have examiners reject claims without merit," Byrne said. "The examination of applications is constrained by controlling case law. It is this controlling case law that examiners use as guidance in making rejections."

One interesting part of the article deals with the notion that the level of appeals is "boosting back-end work for lawyers at the agency's appeals board" (never mind that in May, Law.com wrote an article on "the trend of companies abandoning patent applications that have already been filed"). According to one attorney interviewed for the article,

Complex appeals cost tens of thousands of dollars . . . [some firms allege to be] charging $6,000 or $7,000 to $20,000 to prepare an appeal brief . . . rates [can typically] run at an average of $600 per page, which adds up to $18,000 for a 30-page appeal brief.

Read the article in its entirety here (link)

Fed. Circuit Grants En Banc Review in Tafas v. Doll

The Federal Circuit has granted Tafas & GSK’s petition for a rehearing en banc, which opens the door on the PTO having the ability to restrict the number of continuation applications and claims used in an application. Appellant’s briefs should come due around August 6, and the opposing briefs around August 26.

According to the order, "[t]his appeal will be heard en banc on the basis of the briefs already on file and additional briefs discussing the issues addressed in the panel opinions." Additionally, "briefs of amici curiae will be entertained in accordance with Federal Rules."

- Read the CAFC's order here (link)

- See Wall Street Journal: "US Appeals Court To Reconsider Challenge To New Patent Rules " (link)

- BLT: "Federal Circuit to rehear Tafas Case" (link)

USPTO News Shorts

USPTO published final rules on PCT procedure - The USPTO has revised the rules of practice in 37 CFR 1.485 on how applicants may make amendments to the claims in an international application. Under the current PCT Regulations, applicants are required to submit replacement pages for only those pages which contain changes, where under the revised PCT Regulations applicants will be required to submit a complete set of the claims when amending any of the claims. This rule went into effect on July 1, 2009.

Read the notice here (link)

e-Office Action Program Delayed - from the PTO "The e-Office Action Program production launch, scheduled for June 29th, has been delayed. It is currently expected to occur in July. Applicants can still participate in the e-Office Action Pilot Program before the launch by sending an e-mail to the PAIR team at PAIR@USPTO.gov and start taking advantage of the many benefits it offers."

For more information on the e-Office Action Program, see here (link) and here (link).