Wednesday, May 26, 2010

Judge Plager on "Indefiniteness"

Today, the Federal Circuit denied a petition for en banc rehearing in the case of Enzo Biochem, Inc. v. Applera Corp. (2009-1281).

One of the issues in this case was the use of the term "not interfering substantially" in the claims of patents directed to the detection and labeling of nucleic acids.  The Federal Circuit overturned the district court's finding of indefiniteness, noting that

Because the intrinsic evidence here provides “a general guideline and examples sufficient to enable a person of ordinary skill in the art to determine [the scope of the claims],” . . . the claims are not indefinite even though the construction of the term “not interfering substantially” defines the term without reference to a precise numerical measurement.

While the Federal Circuit appeared to be satisfied with the decision, and the current state of indefiniteness, Judge Plager voiced his displeasure in a sharply-worded dissent:

Despite the varying formulations that this court has used over the years in describing its “indefiniteness” jurisprudence to which the petitioner in this case points, the general conclusion from our law seems to be this: if a person of ordinary skill in the art can come up with a plausible meaning for a disputed claim term in a patent, that term, and therefore the claim, is not indefinite.1 At least not so indefinite as to run afoul of the statutory requirement that claims shall “particularly point[ ] out and distinctly claim[ ] the subject matter which the applicant regards as his invention.” 35 U.S.C. § 112, second paragraph.

The corollary derived from this understanding is that if several persons of ordinary skill come up with competing but plausible interpretations of a disputed term—as is typically the case with competing “expert witnesses” in patent infringement litigation—the problem is not one of an inherently ambiguous and potentially indefinite claim term, but rather the problem becomes simply one of picking the “right” interpretation for that term. Since picking the “right” interpretation—claim construction—is a matter of law over which this court rules, and since the view of the trial judge hearing the case is given little weight, so that the trial judge’s view on appeal becomes just a part of the cacophony before this court, it is not until three court of appeals judges randomly selected for that purpose pick the “right” interpretation that the public, not to mention the patentee and its competitors, know what the patent actually claims. The inefficiencies of this system, and its potential inequities, are well known in the trade.

The United States Patent and Trademark Office (“PTO”), by contrast, appears to be taking steps to give the statutory requirement real meaning. In 2008, the patent examining corps was given a five-page instruction on “Indefiniteness rejections under 35 U.S.C. 112, second paragraph.” [link] . . . This memo was followed later in the year by a rare precedential opinion issued by the Board of Patent Appeals and Interferences (“Board”) in Ex parte Miyazaki.

* * *

The Board is clearly right in recognizing that the circumstances are different between pre-issuance and post-issuance application of the definiteness standard with regard to claim terms. At the same time, the PTO and the Board are clearly right in insisting that, if the public notice function of the patent law is to be honored, claim terms must particularly point out and distinctly claim the subject matter of the invention. In my view, this court’s definiteness doctrine could go considerably further in promoting that objective than it currently does, with the not inconsequential benefit of shifting the focus from litigation over claim construction to clarity in claim drafting.

To begin the discussion of how this court could move in that direction, I would grant the petition for panel rehearing. The court now spends a substantial amount of judicial resources trying to make sense of unclear, over-broad, and sometimes incoherent claim terms. It is time for us to move beyond sticking our fingers in the never-ending leaks in the dike that supposedly defines and figuratively surrounds a claimed invention. Instead, we might spend some time figuring out how to support the PTO in requiring that the walls surrounding the claimed invention be made of something other than quicksand.

Read/download the opinion here (link)

Tuesday, May 25, 2010

Three Year Period of Silence Leads to Equitable Estoppel

Aspex Eyewear Inc. v. Clariti Eyewear, Inc., No. 2009-1147 (Fed. Cir., 2010)

In March 2003, Aspex sent Clariti a letter identifying 4 Aspex patents relating to magnetically attachable lenses and stating "[i]t is our understanding that some of the products sold by you may be covered by the claims of the above mentioned patents . . . It has been our policy and continues to be our strong intention to fully and vigorously enforce our rights under the exclusive license to these magnetic frame attachments . . . We look forward to your immediate reply to this very urgent and serious matter."

After a brief back-and-forth correspondence period, Clariti responded in June 2003 that "we believe that the products of Clariti Eyewear do not infringe any valid claims of the [] patents.”

No further contact was reported from Aspex until August 2006, where Aspex wrote that "[i]t has come to our attention that your company is manufacturing a product . . . [that] directly infringes our clients’ patent rights with regard to the ’747 patent. Specifically, your products are covered by claims of these patents, including but not limited to claims 10 and 12. A copy of the patent is enclosed for your reference."  When a resolution could not be reached, Aspex filed suit on March 2007.

Clariti moved to dismiss Aspex's infringement claims on equitable estoppel based on the three year period of silence, and the district court granted the motion.

In the context of patent infringement, the three elements of equitable estoppel that must be established are: (1) the patentee, through misleading conduct, led the alleged infringer to reasonably believe that the patentee did not intend to enforce its patent against the infringer; (2) the alleged infringer relied on that conduct; and (3) due to its reliance, the alleged infringer would be materially prejudiced if the patentee were permitted to proceed with its charge of infringement.

With regard to "misleading conduct", the Federal Circuit stated

[E]quitable relief is not a matter of precise formula. Aspex’s letters to Clariti of March 7 and 10, 2003 can fairly be understood as threats of suit for infringement, for Aspex stated its “understanding that some of the products sold by you may be covered by the claims of the above mentioned patents,” and Aspex’s “strong intention to fully and vigorously enforce our rights” in this “very urgent and serious matter.”  The ensuing silence is analogous to the silence in Scholle Corp. and in Wafer Shave [where equitable estoppel was found].

Aspex argues that its letters did not threaten suit, and highlights the equivocal nature of the statements that its patents “may” cover “some” of Clariti’s products. Aspex points to the letters’ request that Clariti divulge sales information and the source of the accused goods, arguing that this shows that Aspex would not file suit until it received such information. The district court viewed the correspondence as a whole, and concluded that it was reasonably viewed by Clariti as a threat of an infringement suit, and not mitigated by the words “may” and “some.”

With respect to the ’747 patent, the Aspex letter of March 10, 2003 was specific to this patent, but in response to Clariti’s request for the claims thought to be infringed, Aspex on May 12, 2003 identified only claims of the ’054 and ’811 patents. Whether this sequence is fairly viewed as a tacit withdrawal of the ’747 patent, or as misleading silence with respect to the ’747 patent, the result is the same, for it was reasonable for Clariti to infer that Aspex was not continuing the accusation of infringement as to the ’747 patent.

Regarding reliance and prejudice,

It was undisputed that Clariti took into account Aspex’s failure to pursue the ’747 patent while the parties discussed the [other] patents. Clariti’s president referred to the prior patent dispute between the parties, where Aspex did file an infringement suit. In that suit Clariti agreed to an injunction, and withdrew the accused products. Clariti’s president stated that Clariti would likely have done the same with the AirMag® products if Aspex had filed suit in 2003 rather than withdraw into silence. We agree with the district court that reliance on Aspex’s silence was shown.

* * *

We also agree with the district court that Clariti’s development of its AirMag® business, in reliance on Aspex’s silence after its aggressive letters, represents a significant change in economic position and constitutes material prejudice sufficient to support equitable estoppel. Clariti need not show a total loss of value in order to show material prejudice. Prejudice may be shown by a change of economic position flowing from actions taken or not taken by the patentee.

Thus, "[t]he elements of equitable estoppel were established without material factual dispute, and the district court did not abuse its discretion in weighing the equities. We affirm the district court’s ruling that Aspex is equitably estopped from suing Clariti for infringement of the ’747 patent."

RADER DISSENT:

[Aspex's 2003 letter] merely informs Clariti of the patents, points to Aspex’s patent enforcement policy, and requests additional information from Clariti to permit Aspex to evaluate its position. Aspex made no outright “threats of litigation.” . . . Also, Aspex did not accuse specific Clariti products.

Licensing negotiations in which a patentee asserts infringement do not create estoppel . . . In this case, one could find that the letters from Aspex were simply requests for more information to facilitate an informed decision amongst the options of licensing, litigation, or abandonment of the infringement claim. In a case with little evidence beyond the actual letters sent by the parties, the district court should avoid premature conclusions that leap to the drastic punishment of barring all relief.

* * *

To my eyes, this record also lacks any material prejudice. Prejudice hinges on any changes in economic position that Clariti undertook during the period of delay due to the actions taken or not taken by Aspex.  Marketing products, which is all Clariti did here, generally does not require the same kind of investment as developing and manufacturing products . . . In this case, the record leaves many questions about economic prejudice because Clariti did not manufacture any products but simply marketed them.

[B]ecause of these lingering questions of fact, this case was not ripe for summary judgment. Affirming the grant of summary judgment expands the equitable estoppel doctrine beyond this court’s precedent with respect to both misleading conduct and material prejudice.

Thursday, May 20, 2010

The "German Bilski"? DE High Court Declares Client-Server Software Patentable Subject Matter

The Federal Court of Justice ("Bundesgerichtshof") is the supreme court (court of last resort) in all matters of  law in Germany.  Recently, the Court was asked to evaluate whether a client-server system, configured to dynamically generate structured documents, is sufficiently of a "technical nature" to warrant patent protection.

Unlike the US, Germany follows the EU prohibition on patents directed to "computer programs as such."  While this term is interpreted differently in different EU jurisdictions, German law requires software inventions to solve a "technical problem" in order to be eligible for patent protection. 

The (machine-translated) claim in question read

A method for dynamic generation of structured documents (SD) to at least one with a client (CL) communicating, with limited resources, a host computer (SRV), comprising the steps of:

receiving request data (REQ) of the client (CL) on the host computer (SRV);

extracting parameters from the request data request (REQ);

mapping the request parameter using a control module (CRT) on an instruction set of a software architecture-specific interface module (IF) of the master computer (SRV);

dynamically generating the structured document (SD) using at least one presentation document (TD) with included calls of service takers (JB), with instructions of the service takers (JB) through the interface module (IF) extracts and were confined to one corresponding to a section of service takers of will command the interface module (IF shown),


which are executed with the assistance of the depicted request parameters in a runtime environment of the control module (CRT) and define the content after the execution and / or structure of the structured document (SD) . . .
The Applicant argued that the invention addresses a "technical problem"  by providing a method that allows dynamically structured documents to be delivered to clients having computers of limited resources.  Since the method addresses a hardware-based problem (limited resources), it is "technical" in nature, and thus patentable.

The Court agreed, and overturned the (lower) Federal Patent Court.
[Machine translation]: A technical means to solve a technical problem exists not only when equipment components are modified or addressed fundamentally different. It is sufficient that when the ending of a data processing program that is used to solve the problem, is determined by technical factors outside the data processing system or if the solution consists precisely in a computer program in such a way that the technical characteristics of the data processing system have regard to.   That condition is satisfied in this case. The invention relates to teaching, such as the Patent Court in law, the basic approach for the generation of dynamic documents.  It is aimed not so to the programmer, but to the system designer who has the overall architecture of the data processing system in the eye and takes into account the different characteristics and performance of hardware and software components. Precisely for this reason it concerns the use of technical means to solve the underlying technical problem.
Read/download the original German Opinion (PDF)

Read the Google-translated version of the opinion here (link)

The anti-software patent community is apoplectic about this decision and has started to weigh in on the ruling - see Florian Mueller, "German high court declares all software potentially patentable" (link)

Monday, May 17, 2010

Comprehensive Patent Reform Stalled; USPTO Fee -Setting Provisions to be Passed Tomorrow

Patent reform has stalled yet again in Congress; House Judiciary Chairman John Conyers Jr. recently remarked “we’re intransigent now. We seem to be stuck.”  Accordingly, The House is scheduled to vote on a bill tomorrow that would give the USPTO new authority to set or adjust patent and trademark fees. The measure will be considered under suspension of the rules, an expedited process that requires a two-thirds majority for passage.

Read CQ Politics: "With Overhaul of Patent Law Stalled, House To Consider Narrower Bill" (link)

On Tuesday, the House will meet at 12:30 p.m. for Morning Hour and 2:00 p.m. for legislative business with votes postponed until 6:30 p.m..  The "Patent and Trademark Office Fee Modernization Act of 2010" is one of 18 bills scheduled for a vote under suspended rules  (see more here)

Monday, May 10, 2010

Kappos on the Written Description Requirement

From the Director's latest blog entry:

The Ariad decision is important for the Office because written description is a critical tool for ensuring that an applicant does not claim more than she is entitled to claim.  The Office recently conducted a survey of 6,865 final rejections issued over a 4.5 year period between 2005 and 2010.  A written description rejection was made in about 9.7 percent of all applications during this time period.  This data shows that the written description doctrine is essential to the Office’s ability to perform its basic examination function. 

Even if some would consider 9.7 percent to be little used, "little used" should not be conflated with “useless.”  Far from it, the written description requirement is an essential “backstop” against overclaiming.  And the written description doctrine is particularly useful in examining claims that employ functional language, or that merely set forth a desired result without any indication of what achieves that result.  I call these “result-orientated” or "results obtained" claims, and strongly support our examiners using the written description requirement to prevent issuance of such vastly overbroad recitations. Unless an applicant has devised every solution to a problem, the applicant is not entitled to patent every solution. 

The majority in Ariad noted that functional claims have the potential to pose especially difficult problems, particularly when functional language is employed in a genus claim:  “For example, a generic claim may define the boundaries of a vast genus of chemical compounds, and yet the question may still remain whether the specification, including original claim language, demonstrates that the applicant has invented species sufficient to support a claim to a genus. The problem is especially acute with genus claims that use functional language to define the boundaries of a claimed genus.”

Thus, when confronted with functional claims, as with results obtained claims, I encourage examiners to carefully consider whether such claims -- amended or original -- are adequately supported by the specification. And the essential tool in this inquiry -- the written description requirement. Little used perhaps, but extremely useful to protect the integrity of the patent system, and the public, against the issuance of overbroad patents.

Tuesday, May 04, 2010

Startups Push Congress to Maintain One-Year "Grace Period" for Patent Reform

A group of 100 startup companies sent a letter petitioning the U.S. Congress to support the current one-year grace period for filing a patent application.   Current reform measures directed to a "first-to-file" regime arguably weaken or eliminate any grace period for disclosed inventions.  That, according to the group, would be a really, really bad idea:

Without the grace period, the patent system would become far more expensive and less effective for small companies. It would create the need to “race to the patent office” more frequently and at great expense before every new idea is fully developed or vetted. The pressure for more filings will affect all American inventors – not only a few that end up in interferences under current law. Because filing decisions must be made based on information that will be preliminary and immature, the bill forces poor patenting decisions. Applicants will skip patent protection for some ultimately valuable inventions, and will bear great costs for applications for inventions that (with the additional information that is developed during the grace period year of current law) prove to be useless, and subsequently abandoned. The evidence for this high abandonment trend under systems having no grace period is readily available from European application statistics.

The proponents of S. 515 suggest that the harm of the weak grace period of proposed § 102(b) can be overcome if an inventor publishes a description of the invention, allowing filing within a year following such publication. Underlying this suggestion are two errors. First, no business willingly publishes complete technical disclosures that will tip-off all competitors to a company’s technological direction. We generally do not, and will not, publish our inventions right when we make them, some 2.5 years before the 18-month publication or 5-7 years before the patent grant. Confidentiality is crucial to small companies.

Second, even if we were to avail ourselves of such conditional grace period by publishing first before filing, we would instantly forfeit all foreign patent rights because such publication would be deemed prior art under foreign patent law. No patent attorney will advise their client to publish every good idea they conceive in order to gain the grace period of S. 515. The publication-conditioned “grace period” in S. 515 is a useless construct proposed by parties intent on compelling American inventors to “harmonize” de facto with national patent systems that lack grace periods. S. 515 forces U.S. inventors to make the “Hobson’s Choice” of losing their foreign patent rights or losing the American grace period. It should be clear that the only way for American inventors to continue to benefit from a grace period and be able to obtain foreign patent rights, is to keep intact the current secret grace period that relies on invention date and a diligent reduction to practice.
Read the letter in its entirety here (link)

See EETimes, "Startups petition Congress on patent reform" (link)

See also David Boundy letter of February 1, 2010:
Under the amendment to 35 U.S.C. § 102 proposed in S.515, the one-year grace period becomes extremely fragile—every business must assume there is no grace period, and that an application must be filed before any discussion of the invention with any other investor or strategic partner. S.515’s weak grace period will impose huge costs on every innovator that cannot assemble all necessary financial, R&D, manufacturing and marketing resources within a single firm, or that has to do significant testing outside the firm. Independent inventors, startups, and university inventors will be forced to make “use it or lose it” patent decisions about a year earlier than under current law, which in turn will require filing of many more patent applications. Each application drains many thousands of dollars of capital from productive uses to speculative patent filings, many of which will turn out to be useless. S.515 will strangle many companies in their cribs, by sucking capital out to the patent attorneys.

Monday, May 03, 2010

Into the Final Stretch: Surveying Bilski's Treatment in the Lower Courts

While everyone continues to fret over the issuance of the SCOTUS Bilski decision (which, by the way, is rumored to be delayed until at least May 17th), Blake Reese has published a timely article that survey's Post-CAFC-Bilski jurispridence in the Federal Circuit and the district courts.  The results aren't pretty - most of the patents challenged on section 101 grounds were found invalid.

FEDERAL CIRCUIT

In re Ferguson, 558 F.3d 1359 (Fed. Cir. 2009)
CLAIMED: A process for “marketing a product … using a shared marketing force” and a “paradigm for marketing a company….”
HELD: Unpatentable.  Methods of “organizing business or legal relationships in the structuring of a sales force (or marketing company)” do not transform “physical objects or substances” or “representati[ons] of physical objects or substances.”

Prometheus Labs., Inc. v. Mayo Collaborative Servs., 581 F.3d 1336 (Fed. Cir. 2009)
CLAIMED: "Methods for calibrating the proper dosage of thiopurine drugs, which are used for treating both gastrointestinal and nongastrointestinal autoimmune diseases.”
HELD: Patentable. The claims are transformative as that “[t]he transformation is of the human body following administration of a drug and the various chemical and physical changes of the drug’s matabolites that enable their concentrations to be determined.”   Unlike mere “data-gathering steps,” “[t]he asserted claims are in effect claims to method of treatment, which are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesiredcondition.”

--------------------

DISTRICT COURTS

Transamerica Life Ins. Co. v. Lincoln Nat’l Life Ins. Co., No. C 06-110-MWB, 2010 WL 785905, (N.D. Iowa March 8, 2010)
CLAIMED: “A five-step computerized method for administering a variable annuity plan having, inter alia, a guaranteed minimum payment feature associated with a systematic withdrawal program.”
RESULT: Court denied the alleged infringer's motion for leave to amend its pleadings aftger the CAFC Bilski decision was rendered.  However, the court interpreted Bilski to mean that the “machine-or-transformation test” is the sole test to determine the patent eligibility of method claims.

King Pharms., Inc. v. Eon Labs, Inc., 593 F. Supp. 2d 501 (E.D.N.Y. 2009)
CLAIMED: A method of “administering metaxalone to a patient with food.”
HELD: Unpatentable.  “The act of informing another person of the good effect of metaxalone does not transform the metaxalone into a different state or thing.” Id. court also noted that the claim’s recitation of “a particular transformation … must not constitute mere ‘insignificant postsolution activity.’”

Fort Props., Inc. v. Am. Master Lease, LLC, 609 F. Supp. 2d 1052 (C.D. Cal. 2009)
CLAIMED: A “method for creating an investment instrument out of real property.”
HELD:  Unpatentable.  The claims at issue “involve only the transformation or manipulation of legal obligations and relationships.”  In particular, those claims “only transform or manipulate legal ownership interests in real estate” and, therefore, “[u]nder Bilski, the [c]ourt [could not] find that those claims transform an article or thing.

CyberSource Corp. v. Retail Decisions, Inc., No. C 04-03268, 2009 WL 815448 (N.D. Cal. May 26, 2009)
CLAIMED:  “A method and system for detecting fraud in a credit card transaction between a consumer and a merchant over the internet.”
HELD:  Unpatentable.  Performing the method “over the Internet” was not a tie to a particular machine because “the internet is an abstraction … as [o]ne can touch a computer or a network cable, but one cannot touch ‘the internet.’ . . . [under Bilski] the use of the internet does not impose meaningful limits on the scope of the claims.”   Uunpatentable subject matter “does not become patentable by tossing in references to internet commerce.”

Versata Software, Inc. v. Sun Microsystems, Inc., No. 2-06-CV-358 (TJW), Memorandum Opinion & Order, Dkt. No. 90, at p. 2 (E.D. Tex. Aug. 19, 2008)
CLAIMED:  "A computer-based configuration system" for modifying configuration instances in a computer model.
RESULT: The accused infringer filed a motion for judgment on the pleadings, based on the recently-issued (CAFC) Bilski decision.  The court denied the motion, noting that the Federal CIrcuit "declined to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles …[and noted] the process claim at issue in the appeal is not, in any event, a software claim. Thus, the facts here would be largely unhelpful in illuminating the distinctions between those software claims that are patent-eligible and those that are not.

Every Penny Counts, Inc. v. Bank of America Corp., No. 2:07-cv-042, slip op. (M.D.Fla. May 27, 2009)
CLAIMED: “A system whereby consumers can save and/or donate a portion of a credit or debit transaction.”
HELD:  Unpatentable.  The claimed “process” includes “a mathematical algorithm [that] uses machines for data input and data output and to perform the required calculations.”  But, “those machines do not … impose any limit on the process itself.”

DealerTrack, Inc. v. Huber, 657 F. Supp. 2d 1152, 1153 (C.D. Cal. July 7, 2009)
CLAIMED: “A computer aided method of managing a credit application.”
HELD:  Unpatentable.  Each of the structures were not a “particular machine” pursuant to Bilski.  The patent “does not specify precisely how the computer hardware and database are ‘specially programmed,’ and the claimed central processor is nothing more than a general purpose computer that has been programmed in some unspecified manner.”

Research Corp. Techs. v. Microsoft Corp., No. CV-01-658, 2009 WL 2413623. (D. Ariz. July 28, 2009)
CLAIMED: “Image halftoning technology used in computers and printers.”
HELD:  Unpatentable. While other claims reciting “the production of an image as a result of the comparison numbers” were transformative, the claims at issue that merely “assembl[ed] … gray scale images to generate final dot profiles” were not transformative because they did not “mandate a further visual display or image."


Abstrax, Inc. v. Dell, Inc., No. 2:07-CV-221-DF-CE, 2009 WL 3255085, at *2 (E.D. Tex. Oct. 7, 2009)
CLAIMED:  “a method for assembling a product having components wherein the variable portions of a set of abstract assembly steps are resolved in accordance with data from a desired configuration.”
HELD: Patentable.  The data in the claim “represents physical and tangible objects and their respective structures” because it concerns “how parts, pieces, or components of a product fit together and how they are configured . . . the raw data is transformed into assembly instructions for assembling the product to have the requested configuration.”

Fuzzysharp Techs. Inc. v. 3D Labs Inc., Ltd., No. C 07-5948 SBA, 2009 WL 4899215, at *1 (N.D. Cal. Dec. 11, 2009).
CLAIMED: “mathematical algorithms that can be used to reduce the number of calculations required to determine whether a 3D surface is visible or invisible on a display screen.”
HELD:  Unpatentable.  “The salient question is not whether the claims are tied to a computer,” but “[r]ather, as Bilski makes clear, the question is whether the claims are ‘tied to a particular machine.’ . . . Courts applying Bilski have concluded that the mere recitation of ‘computer’ or reference to using a computer in a patent claim is insufficient to tie a patent claim to a particular machine.”

Accenture Global Servs. GmBH v. Guidewire Software Inc., --- F. Supp. 2d ---, 2010 WL
771595, at *2 (D. Del. 2010)
CLAIMED:  Patent directed to “a computer program for developing component based software for the insurance industry. The program includes a data component, a client component, and a controller component. The client component is responsible for allowing users to edit tasks, add new tasks, and ‘achieve an insurance-related goal upon completion,’ as well as to generate a historical record of completed tasks.”
HELD:  Wait until SCOTUS issues opinion.  In the meantime, the court found that the claims manipulated “non-tangible information” such as “the cost of automobile repair, hours worked, or the amount of medical expenses.”  Accordingly, “even if a tangle visual ‘display’ [was] provided, that visual image would not represent any specific tangible objects (or type of data).”

 
Read/download "Judicially Re(De)Fining Software Patent Eligibility: A Survey of Post-Bilski Jurisprudence" (link)

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