Thursday Shorts

Federal Circuit Updates Internal Operating Procedures - After providing proposed changes to the public on Internal Operating Procedures (IOPs), the court recently voted to approve the changes. In addition to general changes to update the IOPs, the Federal Circuit also added two new sections in response to suggestions from the public. First, the Federal Circuit added a new paragraph briefly explain how cases are assigned to merits panels. Second, the Federal Circuit added a new paragraph that briefly explains how precedential opinions are circulated before issuance. Download a copy of the procedures here.


Chamber of Commerce Publishes Draft Report on "Fixing" the PTO - classifying the Office as an "agency in crisis", the 41-page draft outlines many of the problems, and provides recommendations on:

- Improving the quality of U.S. patents
- Providing adequate resources to do the job
- Reforming the patent examiner production system
- Improving timeliness of administrative actions
- Strengthening the PTO's relationship with the user community
- Enhancing organizational management
- Appointing a well-qualified under secretary and director
- Permitting applicants to defer patent examination
- Rethinking the current fee schedule
- Enhancing efficiency of the examination process by reforming examiner/applicant incentives.

Download the draft here (courtesy of Patent Hawk)


FTC Hearings on IP Marketplace - earlier studies (2003) by the FTC were cited copiously during last year's patent reform efforts, and now, the agency wants to update its information on IP and patents.

Beginning on December 5, 2008, in Washington, DC, the FTC will examine changes in IP law, patent-related business models, and new learning about the operation of the IP marketplace since the issuance in October 2003 of the Commission report To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (link).

The Commission seeks the views of the legal, academic, and business communities on the issues to be explored at the hearings. In its Federal Register Notice the agency set out a list of specific questions on which it is particularly seeking comments. The agency will consider any comments received as it prepares for the hearings.

Get more details from the FTC website here.

View the agenda and press release.

The FTC is also making a Webcast available, where a live webcast will be available on the day of the event (bookmark this page and come back on December 5 to link to the webcast).

CAFC: Improper Revival of Abandoned Application Is No Defense For Infringement

Aritocrat Technologies Australia PTY Lmtd. v. International Game Tech., September 22, 2008 (08-1016)

Aristocrat accused IGT of patent infringment, where the patents-in-suit were revived in the USPTO after being abandoned for paying the national filing fee one day late. During litigation, IGT argued that the PTO improperly revived the applications under the "unintentional" standard, instead of the "unavoidable" standard. The district court agreed that the patents were "improperly revived" and invalidated the patents.

On appeal, the CAFC turned to 35 U.S.C. 282, which catalogs defenses for patent infringement: (1) noninfringement, (2) invalidity, and (3) "any other fact or act made a defense by this title." Under section 282(2), an invalidity defense may be based "on any ground . . . as a condition for patentability."

After review, the CAFC did not hold revival of an abandoned application a condition for patentability. In fact, only sections 101-103 apply:

It has long been understood that the Patent Act sets out the conditions for patentability in three sections: sections 101, 102, and 103 . . . While there are most certainly other factors that bear on the validity or the enforceability of a patent, utility and eligibility, novelty, and nonobviousness are the only so-called conditions for patentability.

* * *

The salient question . . . is whether improper revival is "made a defense" by title 35. We think that it is not. Congress made it clear in various provisions of the statute when it intended to create a defense of invalidity or noninfringement, but indicated no such intention in the statutes pertaining to revival of abandoned applications . . . Rather, these provisions merely spell out under what circumstances a patent application is deemed abandoned during prosecution and under what circumstances it may be revived. Because the proper revival of an abandoned application is neither a fact or act made a defense by title 35 nor a ground specified in part II of title 35 as a condition for patentability, we hold that improper revival may not be asserted as a
defense in an action involving the validity or infringement of a patent.

REVERSED AND REMANDED

Breathing room for prosecutors - quoting from Magnivision, Inc. v. Bonneau Co., 115 F.3d 956 (Fed. Cir. 1997), the CAFC stated:

"Procedural lapses during examination, should they occur, do not provide grounds of invalidity. Absent proof of inequitable conduct, the examiner’s or the applicant’s absolute compliance with the internal rules of patent examination becomes irrelevant after the patent has issued . . . Imperfection in patent examination, whether by the examiner or the applicant, does not create a new defense called ‘prosecution irregularities’

Thus, absent some inequitable conduct, prosecution irregularities should not be the focus in subsequent litigation:

There is good reason not to permit procedural irregularities during prosecution, such as the one at issue here, to provide a basis for invalidity. Once a patent has issued, the procedural minutiae of prosecution have little relevance to the metes and bounds of the patentee’s right to exclude. If any prosecution irregularity or procedural lapse, however minor, became grist for a later assertion of invalidity, accused infringers would inundate the courts with arguments relating to every minor transgression they could comb from the file wrapper. This deluge would only detract focus from the important legal issues to be resolved—primarily, infringement and invalidity.

CAFC: Prior Art Recycling Permitted For Reexamination

In Re Swanson, September 4, 2008 (07-1534)

In 1997, the CAFC decided In re Portola Packaging, holding that “prior art previously considered by the PTO in relation to the same or broader claims" would preclude reexamination requests on the same art.

In 2002 Congress amended § 303(a) to include an additional sentence, explaining that the amendment “overturns the holding of In re Portola Packaging" and that "[t]he existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office."

Swanson's (aka Abbott's) Case: Abbott Laboratories (“Abbott”) licensed Swanson's patent, and sued Syntron Bioresearch, Inc. for infringement. Syntron countered that Swanson's patent was invalid, and cited prior art that included a reference ("Deutsch") that was considered by the PTO during the original prosecution.

The district court held the patent was not invalid based on the prior art. Syntron appealed. The CAFC agreed with the district court and held that Swanson's patent was not invalid. Syntron then went to the PTO with the same art seeking reexamination. Despite the fact that (1) the prior art was previously considered in the PTO, (2) the district court considered the same art, and (3) the CAFC agreed with the district court, the PTO nevertheless found a "substantial new question of patentability" under § 303, and subsequently invalidated the patent.

On appeal, the CAFC agreed that, despite the court proceedings dealing with the same issues, the PTO had the right to institute reexamination proceedings anyways:

The the statutory language, legislative history, and different purposes underlying reexamination and federal court proceedings suggest that the determination of a substantial new question is unaffected by these court decisions . . . the legislative history for both the original and amended reexamination statute suggest that Congress was concerned only with the consideration of issues in prior PTO examinations, not prior civil litigation . . . Not once in the legislative history did Congress refer to references or issues addressed in prior civil litigation.

* * *

Section 303’s language and legislative history, as well as the differences between the two proceedings, lead us to conclude that Congress did not intend a prior court judgment upholding the validity of a claim to prevent the PTO from finding a substantial new question of validity regarding an issue that has never been considered by the PTO. To hold otherwise would allow a civil litigant’s failure to overcome the statutory presumption of validity to thwart Congress’ purpose of allowing for a reexamination procedure to correct examiner errors, without which the presumption of validity never would have arisen.

With regard to art before the PTO:

Section 303(a) now mandates that “the existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office.” Thus, under § 303(a) as amended, a reference may present a substantial new question even if the examiner considered or cited a reference for one purpose in earlier proceedings. Nothing in the statute creates an exception to this rule for references considered in the context of a rejection of prior claims. Indeed, such an exception would overwhelm the rule and thwart a central purpose of the amendment, to overrule In re Portola Packaging.

[T]he 2002 amendment removes the focus of the new question inquiry from whether the reference was previously considered, and returns it to whether the particular question of patentability presented by the reference in reexamination was previously evaluated by the PTO. As was true before the amendment, an “argument already decided by the Office, whether during the original examination or an earlier reexamination” cannot raise a new question of patentability.

* * *

Determining the scope of an examiner’s previous consideration of a reference will generally require an analysis of the record of the prior proceedings to determine if and how the examiner used the reference in making his initial decisions. As we believe that this inquiry is most accurately viewed as a question of fact, we will review the Board’s findings regarding the scope of consideration of a reference during prior examinations for substantial evidence.

AFFIRMED

Disclaimer From Familial Patent Nullifies Infringement

Heuft Systemtechnik GMBH v. Industrial Dynamics Co. (07-1417) June 25, 2008 (noprecedential)

Industrial Dynamics Co. (IDC) appealed a district court claim construction which led to a finding of infringment. The patent-in-suit was a divisional application directed to a "method and apparatus for inspecting rotating container," having a thin prosecution history. The parent application, however, contained numerous amendments and arguments regarding the prior art.

IDC argued that the claimed feature of "stably arranging containers" did not include devices having exit angles less than 30 degrees due to prosecution disclaimer in the parent application. Heuft countered that the prosecution history was silent as to the measure of the exit angles, and that any disclaimer that may have arisen in the parent application did not apply to the claims of the patent-in-suit.

Prosecution disclaimer occurs when a patentee, either through argument or amendment, surrenders claim scope during the course of prosecution. Elbex Video, Ltd. v. Sensormatic Elecs. Corp., 508 F.3d 1366, 1371 (Fed. Cir. 2007). Amendments or arguments that are merely vague, ambiguous, or subject to other reasonable interpretation are not sufficient to surrender claim scope. Omega Eng’g, Inc. v. Raytek Corp., 334 F.3d 1314, 1325 (Fed. Cir. 2003). Rather, in order for prosecution disclaimer to attach, the patentee’s actions must be "clear and unmistakable." Id. at 1326.

After reviewing the prosecution history, the CAFC decided that the parent application disclaimed angles less that 30°:

We agree with IDC that in the ’408 patent [the parent], Heuft disclaimed "arranging . . . containers . . . stable" or "means for the stable arrangement of . . . containers" using angles less than 30°. This is because its actions during prosecution were clear and unmistakable.

* * *

[T]hroughout the course of prosecution of the ’408 patent, Heuft not only repeatedly distinguished its claims over the [prior art] on the basis of the large exit angle’s ability to stably arrange the containers, it also amended all of those claims to require an exit angle between 30° to 100°, a span which directly tracks the only discussion in the specification indicating an appropriate range for stably arranging containers. Under these circumstances, we have little difficultly concluding that Heuft clearly and unmistakably disclaimed exit angles less than 30°, at least with respect to the ’408 patent.

With regard to the disclaimer "flowing" from the parent to the divisional,

It is well-settled that "prosecution disclaimer may arise from disavowals made during the prosecution of ancestor patent applications." Ormco Corp. v. Align Tech., Inc., 498 F.3d 1307, 1314 (Fed. Cir. 2007) (quoting Omega Eng’g, Inc. v. Raytek Corp., 334 F.3d 1314, 1333 (Fed. Cir. 2003)). "When the application of prosecution disclaimer involves statements from prosecution of a familial patent relating to the same subject matter as the claim language at issue in the patent being construed, those statements in the familial application are relevant in construing the claims at issue." Id.

[T]he statements Heuft made during prosecution of the ’408 patent related to the same subject matter that is at issue in the relevant claim limitations of the ’974 patent—namely, "arranging . . . containers . . . stable" and "means for the stable arrangement of . . . containers." Consequently, the arguments and amendments Heuft made during prosecution of the ’408 patent also operate to disclaim exit angles less than 30° in the claims of the ’974 patent.

REVERSED

CAFC: Misrepresentation Does NOT Have to Bear on Patentability For Inequitable Conduct

Scanner Tech. Corp. v. ICOS Vision Systems Corp. N.V. , (2008-1081), June 19, 2008

During prosecution, Scanner became convinced that a new product launched by ICOS was infringing on the claims of a patent application. Accordingly, Scanner filed a Petition To Make Special, pursuant to MPEP 708.02.

The petition contained all the PTO prerequisites, including a statement that a "rigid comparison" of the alleged infringing method with the claims of the application had been made, and that some of the claims are "unquestionably infringed." The petition was accompanied by a statement from the applicant and assignee describing the claimed invention, as well as certain interactions between Scanner and ICOS. The PTO granted the petition, and the application ultimately issued a short time later.

The district court took issue with Scanner's statement in the petition that a "rigid comparison" was made on the ICOS product, which appeared in a trade show. The court found that the ICOS product was not on "open display," but in a "black sealed box" that was not amenable to close inspection. Thus the district court held that the petition statements "were intended to mislead the PTO into believing" that ICOS copied the claimed device.

On appeal, Scanner argued that the district court abused its discretion because the court "misapplied the law relating to materiality by incorrectly concluding that any statement in a petition to make special is per se material if the petition is granted."

Relying on General Electro Music Corp. v. Samick Muic Corp., 19 F.3d 1405, 1411 (Fed. Cir. 1994), the CAFC stated:

It is true that many of our cases, before and after General Electro, examine materiality in the context of whether the alleged inequitable conduct bore directly on patentability of the claims in suit. That fact does not undercut the continuing force of the test for materiality in the setting of a petition to make special, or in other settings where an alleged misrepresentation to the Patent Office resulted in some action other than issuance of a patent . . . [W]e must reject Scanner's view that inequitable conduct cannot be shown absent a misrepresentation that bears on the patentability of the claims in the application. When the setting involves a petition to make special, as is the case here, we reaffirm that a false statement that succeeds in expediting the application is, as a matter of law, material for purposes of assessing the issue of inequitable conduct.

However, the CAFC reversed the district court's finding of inequitable conduct, noting that the district court erroneously failed to give due weight to inferences rebutting inequitable conduct.

Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference. All reasonable inferences must be drawn from the evidence, and a judgment then rendered on the evidence as informed by the range of reasonable inferences. Where the rule is breached, no inequitable conduct may be found. The rule is necessary, for without it findings of inequitable conduct, with the punishment of unenforceability of the entire patent, could wrongly stand.

NOTE: From footnote 3 in the opinion:

We note that not all false statements or misrepresentations contained in a petition to make special are necessarily material even if the applicant succeeded in receiving expedited treatment for his or her application. Rather, in evaluating whether a false statement or misrepresentation in a petition to make special is material, a court must determine whether the false statement was likely a but-for cause of the grant of the petition. If not, a threshold level of materiality has not been established.

- This has been an "inequitable-conduct-heavy" week for CAFC opinions:

Nilssen v. Osram Sylvania (07-1198), June 17, 2008 - attorney fees for inequitable conduct affirmed, based on a multitude of alleged misrepresentations and litigation conduct. Newman dissent: "The statutory authority to award attorney fees was intended to 'prevent gross injustice,' not to shift the economic balance against the unsuccessful plaintiff."

Synthon IP v. Pfizer (07-1344), June 17, 2008 (Nonprecedential) - affirming the findings of inequitable conduct and exceptional case, and the award of attorney fees.

CAFC: Extrinsic Evidence OK When Patentee Chooses Inconsistent Claim Language

Helmsderfer v. Bobrick Washroom Equipment, Inc. (2008-1027), June 4, 2008

The patentee appealed the claim construction for the term "partially hidden from view" on a patent related to baby diaper changing stations. The district court construed the term to mean "hidden from view to some extent but not totally hidden from view."

In contrast, the patentee agued that the plain meaning of the term "partially" would include "totally hidden." In support of its argument, patentee pointed to the written description which stated that a top surface is "generally hidden from view."

The CAFC disagreed with the patentee. Looking to the claim language, the court noted that the terms "generally" and "at least" were used elsewhere in the claim. Applying CAFC precedent, "[i]n absence to evidence to the contrary, [it must be presumed] that the use of these different terms in the claims connote different meanings." Since there was no evidence to rebut the presumption, the court declined to give "partially" the same meaning as "generally" or "at least partially."

In addition, the CAFC found the district court's use of dictionaries proper when construing the term:

Here, partially is not defined in the specification. In fact, the phrase "partially hidden from view" does not even appear in the written description. The district court’s statement that there is no clear meaning of the term "partially hidden from view" apparent from the intrinsic record is correct.

The patentee also argued that the district court's construction was erroneous because it excluded both the preferred embodiment and every illustrated embodiment from the claims. Again, the CAFC disagreed:

Our case law generally counsels against interpreting a claim term in a way that excludes the preferred embodiment from the scope of the invention . . . It is true that the plain meaning of "partially hidden from view" does not include totally hidden from view, and that therefore claims 6-7 do not cover the preferred embodiment or the other illustrated embodiments. However, this does not mean that these embodiments are all excluded from the scope of the invention, but rather that they are excluded from the scope of these particular claims. Without opining on the construction of claims not at issue in this appeal, we note that none of the other independent claims of the ’928 patent recite the term "the platform top surface is partially hidden from view." Therefore, our construction of claims 6-7 leaves open the possibility that claims not at issue in this appeal encompass omitted embodiments. It is often the case that different claims are directed to and cover different disclosed embodiments. The patentee chooses the language and accordingly the scope of his claims.

Moreover, Brocar’s proposed construction is not consistent with any plain meaning of the term "partially" as interpreted in light of the specification. In this case there is only one ordinary meaning attributable to the word "partially" and this meaning does not include "totally." As Brocar did not act as its own lexicographer and alter the ordinary meaning of the term "partially," we cannot construe these particular claims to encompass the preferred embodiment or other illustrated embodiments. Courts cannot rewrite claim language.

AFFIRMED

CAFC: DJ Plaintiff Must Take "Significat, Concrete Steps To Conduct Infringing Activity" To Satisfy MedImmune Test

Cat Tech LLC v. TubeMaster, Inc. (2007-1443), May 28, 2008

TubeMaster developed a method of putting catalyst into reactor tubes using loading devices. Tube Master designed four different configurations for its devices, and has generated detailed computer drawings drawings for each of its configurations.

Cat Tech sued TubeMaster for patent infringement when one of TubeMaster's four configurations was commercially released ("configuration 3"). TubeMaster counterclaimed seeking a declaration that the accused configuration, along with the other configurations ("configurations 1, 2, and 4"), did not infringe. On summary judgment, the district court found that none of the configurations infringed.

On appeal, Cat Tech challenged the district court's authority to issue a declaratory judgment on all the configurations.

Since the SCOTUS decision in MedImmune, declaratory judgments must satisfy 2 prongs: (1) the party seeking DJ must, "under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment"; and (2) show that there had been "meaningful preparation" to conduct potentially infringing activity.

Here, the DJ was not challenged on the first prong, but on the second prong, namely, that TubeMaster's "other configurations" were not developed enough to quality as potentially infringing activity. While MedImmune did not directly address the second prong, the CAFC concluded that "the issue of whether there has been meaningful preparation to conduct potentially infringing activity remains an important element in the totality of circumstances which must be considered in determining whether a declaratory judgment is appropriate."

Thus, if a declaratory judgment plaintiff has not taken significant, concrete steps to conduct infringing activity, the dispute is neither "immediate" nor "real" and the requirements for justiciability have not been met.

Immediacy

TubeMaster has taken significant, concrete steps to conduct loading activity with configurations 1, 2 and 4. It has developed two basic loading device designs - one with circular plates and one with circular plates with tabs - and has developed four loading device configurations. TubeMaster has generated AutoCAD® drawings for each of its four configurations . . . Because TubeMaster’s loading device designs are customized based upon the dimensions of each customer’s reactor, it can take no further steps toward manufacturing its loading devices until it receives an order from a customer with the appropriate dimensions.

TubeMaster has already successfully manufactured and delivered a loading device using configuration 3 . . . It is prepared to produce loading devices using configurations 1, 2 and 4 as soon as it receives an order with the appropriate dimensions. Furthermore, it expects that it can produce devices using these configurations "within a normal delivery schedule" once it receives an order. Constitutionally mandated immediacy requirements have been satisfied because once the threat of liability to Cat Tech has been lifted, it appears likely that TubeMaster can expeditiously solicit and fill orders for loading devices using configurations 1, 2 and 4.

Reality

In the context of patent litigation, the reality requirement is often related to the extent to which the technology in question is "substantially fixed" as opposed to "fluid and indeterminate" at the time declaratory relief is sought . . . TubeMaster’s technology is "substantially fixed." TubeMaster’s four basic loading device designs are designed "to cover virtually all of the reactor configurations that might be encountered at customers’ facilities." Thus, TubeMaster does not expect to make substantial modifications to its loading device designs once production begins. The dispute with Cat Tech is "real," not hypothetical, because it appears likely that, once the cloud of liability for infringement is eliminated, the accused products can be produced without significant design change.

AFFIRMED

CAFC: Lack of Diligence Does Not Convert PTO Error Into An Applicant Error

E.I. DuPont v. MacDermid Printing Solutions (2007-1568), May 14, 2008

When DuPont asserted its patent and sought a preliminary injunction, MacDermid countered that the patent was invalid for public use prior to the 102(b) critical date. While DuPont initially conceded the critical date, a closer examination discovered that the patent stemmed from a provisional application that was listed in the application, but priority was not properly claimed due to a PTO oversight. DuPont successfully petitioned for correction, and continued with the litigation.

MacDermid argued that DuPont was not entitled to the provisional application because (1) the non-provisional application names inventors not named in the provisional application; (2) DuPont did not use the “proper language” in claiming priority to the provisional; (3) the filing receipt, published application, and issued patent did not reference the provisional, showing that the PTO did not recognize priority to the provisional; (4) DuPont did not alert the PTO that the priority information was missing until the patent issued; and (5) the Certificate of Correction that added the priority information was wrongly issued. MacDermid also argued that it would be unfairly prejudiced by DuPont’s change of position.

The district court found it could not grant a preliminary injunction on the record because DuPont did not sufficiently prove it was entitled to the earlier critical date, and that DuPont's earlier admission as to the later critical date raised a substantial question as to validity.

On appeal, the CAFC found that the lower court abused its discretion on the issue of priority. It was particularly significant that, while priority wasn't formally claimed, the Application Data Sheet on the non-provisional application identified priority to the provisional application. Noted the court, "[s]ince MacDermid admittedly was aware of the provisional application, it is difficult to see how MacDermid would be prejudiced by its consideration in evaluating validity."

With regard to the other issues, the CAFC found that the provisional application shared one common inventor (see MPEP 201.03), had supporting disclosure under section 112, and was filed less than one year before the nonprovisional application. Accordingly:

The only issue is the legal significance of these facts, i.e. whether the non-provisional application is entitled to claim the priority date of the provisional application. Determination of the priority date (e.g., the effective filing date) is purely a question of law if the facts underlying that determination are undisputed . . . it is unclear what necessary evidence the district court thought was missing from the preliminary injunction record.

With regard to DuPont not using the "magic"(i.e. PTO-approved) language for priority,

Here, rather than the precise language suggested in the MPEP, the ADS in the non-provisional application stated: “Continuity Data: This application is a non-provisional of provisional 60/273669 2001-03-06 WHICH IS PENDING.” Contrary to MacDermid’s argument, this reference did not run afoul of the MPEP by failing to use magic words. The MPEP provision requires only that the applicant use a statement “such as” the one provided in Section 201.11. A reasonable person reading the language in the ADS would have concluded that the applicant was claiming priority to an earlier provisional application. Thus, we find no defect in the language used to reference the provisional application here.

And with regard to the certificate of correction:

By putting the continuity data in the ADS, DuPont expected that the PTO would capture the information and place it on the title page of its patent. As MacDermid notes, however, there were some indications during prosecution that the PTO had failed to capture the information. MPEP § 201.11. We hold that a lack of diligence during prosecution, at least under the facts of this case, does not convert a PTO error into an applicant error for the purpose of seeking a post-issuance certificate of correction.

VACATED AND REMANDED

CAFC: Unasserted/Cancelled Claims are "Probative Evidence" of Embodiments Covered

PSN Illinois, LLC v. Ivoclar Vivadent, Inc. (2007-1512)

After reexamination, PSN was left with a single claim in a patent covering a method of fabricating porcelain veneers for teeth. The method recited the step of eroding away a "statute" of a tooth from a porcelain veneer restoration "leaving said restoration ready for mounting on said tooth." The claim language did not define what was meant by "ready for mounting," and the specification provided no explicit definition.

While the summary of the invention provided additional examples of a restoration that was "ready for mounting," the district court focused on a preferred embodiment in the detailed description, which was stated to be "a feature of this invention." Taking this narrow construction, the district court granted summary judgment of noninfringement.

On appeal, the CAFC found the district court incorrectly placed greater weight on the detailed description, noting that the detailed description expressly provided that the embodiment "may" be used when performing the claimed method. Also, PSN cited the recent CAFC case of Oatey Co. v. IPS Corp., 514 F.3d 1271, 1277 (Fed. Cir. 2008), which held that

At leas[t] where claims can reasonably [be] interpreted to include a specific embodiment, it is incorrect to construe the claims to exclude that embodiment, absent probative evidence on the contrary (emphasis added).

While finding discrepancies in the claim construction, the CAFC nevertheless found that "'ready for mounting' can and should be construed in a way that encompasses the preferred embodiment."

We note that Oatey is not a panacea, requiring all claims to cover all embodiments. Instead, courts must recognize that disclosed embodiments may be within the scope of other allowed but unasserted claims. Likewise, during prosecution, an applicant may have cancelled pending claims but not amended the specification to delete disclosure relevant only to the cancelled claims. In such cases, unasserted or cancelled claims may provide "probative evidence" that an embodiment is not within the scope of an asserted claim.

AFFIRMED

New Study On Claim Construction Reversal Rates

"Learn from the mistakes of others - you can never live long enough to make them all yourself"

- John Luther

With all the talk of claim construction and CAFC reversal rates, Professor David Schwartz from the John Marshall Law School set out to see if there was any empirical data that could signal a possible solution to the courts and the claim construction conundrum (the "Safire-esque" sound to this phrase is purely coincidental). Specifically, a core premise of the U.S. legal system is that legal doctrine is taught by the higher courts, and applied by the lower courts (i.e., the "teacher-learning theory"). Applying this theory to the CAFC, the court would presumably teach district courts how to construe claims, and they would apply CAFC tautology to a given set of facts to achieve a relatively predictable result.

However, this is clearly not happening, especially on issues of claim construction. Professor Schwartz poked at some statistics to see if he could uncover why. A few of his findings follow.

Active Judicial Districts

Theory: Jurisdictions that appear the most before the CAFC on claim construction issues would absorb the most institutional knowledge and, thus, have the more accurate take on claim interpretation during litigation.

Finding: Not really. In fact, the second busiest district (C.D. Cal.) had the highest reversal rate of claim construction (43.5%). The most active judicial districts, appearances at the CAFC on claim construction, and % of claim construction appeals reversed or vacated because of claim construction error are:

(1) N.D. Cal. - 84 (28.6% reversed or vacated)
(2) C.D. Cal. - 69 (43.5% reversed or vacated)
(3) N.D. Ill. - 65 (26.2% reversed or vacated)
(4) D. Del. - 54 (22.2% reversed or vacated)
(5) S.D.N.Y. - 45 (28.9% reversed or vacated)
(6) D. Mass. - 42 (26.2% reversed or vacated)
(7) D. Minn. - 33 (36.4% reversed or vacated)
(8) E.D. Mich. - 29 (31.0% reversed or vacated)
(9) D.N.J. - 28 (32.1% reversed or vacated)
(10) E.D. Va. - 27 (22.2% reversed or vacated)
(11) N.D. Tex. - 21 (42.9% reversed or vacated)
(11) S.D. Tex. - 21 (23.8% reversed or vacated)
(13) W.D. Wisc. - 19 (21.1% reversed or vacated)
(14) W.D. Wash. - 18 (38.9% reversed or vacated)
(14) D. Col. - 18 (27.8% reversed or vacated)

Thus the average % of cases reversed or vacated among the top 15 is about 30.12%, and 4 out of the top 10 exceed this amount. Since Markman, 32.4% of overall claim terms were "wrongly" construed by the lower court, and 38.2% of cases had at least one term wrongly construed. Moreover, 30% of cases overall had to be reversed, vacated or remanded because of an erroneous claim construction. As a point of reference, the CAFC's overall reversal rate of district court judges' judgments in patent cases was 13% for each of the years 2004-06.

Number of Previous Appeals

Theory: A district court judge with more prior CAFC feedback should have a lower reversal rate than a judge with less experience.

Finding: "There does not appear to be a clear trend that the reversal rate decreases when a district court judge appears multiple times before the Federal Circuit on claim construction."

Looking at judges having 1, 2, 3, 4, or "5 or more" previous appeals, the reversal rates appear to be the same throughout, with the exception of judges that had exactly four prior claim construction appeals. In this case, the chances of an erroneous claim constructions upticks to 56.7%, and the chance of a case being reversed or vacated jumps to 50%.

Prior Reversals

Theory: When a particular district court judge has been reversed, vacated or remanded at least once due to an erroneous claim construction, the judge will "learn the lesson" and perform better on subsequent constructions.

Finding: "The first reversal does not have a substantive or statistically significant effect on future performance . . . It does not appear that district court judges improve their claim construction accuracy after their first reversal from the Federal Circuit."

Judges With Experience

The paper also looked at Judges with the most patent experience, and overall judicial experience. While a slight decrease was detected for judges with the most overall experience, no substantive effects were detected.

Age of Judges

Interestingly, the trend in reversal rates generally decrease until the district court judge is 70 years old. Thereafter, the reversal rate spikes to nearly 35-40%. One possible explanation for this is that judges seventy or older are more likely to have taken senior status, and that senior status affects claim construction accuracy.

The study concludes:

As to the specific problem in patent law, the article points to three possible explanations for the lack of improvement: (1) an indeterminate nature of claim construction; (2) a failure of the Federal Circuit to teach properly how to construe claims; and (3) a failure of district court judges to learn claim construction. The data suggests that quasi-specialized patent trial judges, as proposed in pending legislation, will not automatically reduce the reversal rate . . . Further, with regard to the court system more broadly, the data leads one to consider whether the teaching-learning hypothesis should be revisited. Further empirical studies should be considered to see if what is happening in the patent context, namely a failure to learn or teach, occurs in other areas of law. If trial courts do not learn from appellate courts, a different model of understanding the entire court system, not just as applied to patent law, may be necessary.

Download a draft copy of Professor Schwartz's paper here (70 pages).

CAFC: Patentee Has Burden To Establish Priority of CIP

PowerOasis Inc. v. T-Mobile USA, Inc., (2007-1265), April 11, 2008 (link)

A CIP patent asserted by PowerOasis was challenged in the district court over prior art that became available before the CIP, but after the filing date of the parent patent. After finding that the parent application did not provide support for the subject matter claimed in the CIP (i.e., could not be relied on for priority), the district court granted summary judgment of invalidity in favor of T-Mobile.

On appeal, PowerOasis argued that it was improper for the district court to place the burden on the patentee to show that it was entitled to the priority date of the Original Application. Additionally PowerOasis argued that the district court erred in denying priority, and, at a minimum, there was general issue of material fact that prevents summary judgment of invalidity.

The CAFC disagreed, stating that, unless priority was addressed by the PTO during examination (or, during an interference proceeding), the burden rests on the patentee to establish priority. This is primarily because such determinations are not normally made by the PTO:

Unless the filing date of the earlier nonprovisional application is actually needed, for example, in the case of an interference or to overcome a reference, there is no need for the Office to make a determination as to whether the requirement of 35 U.S.C. 120, that the earlier nonprovisional application discloses the invention of the second application in the manner provided by the first paragraph of 35 U.S.C. 112, is met and whether a substantial portion for all of the earlier nonprovisional application is repeated in the second application in a continuation-in-part (MPEP §201.08).

According to the CAFC, “[s]ince the PTO did not make a determination regarding priority, there is no finding for the district court to defer to.”

On the written description requirement, the CAFC added:

To satisfy the written description requirement the disclosure of the prior application must “convey with reasonable clarity to those skilled in the art that, as of the filing dat sought, [the inventor] was in possession of the invention.” . . . While a prior application need not contain precisely the same words as found in the asserted claims . . the prior application must indicate to a person skilled in the art that the inventor was ‘in possession’ of the invention as later claimed. . . . Entitlement to a filing date does not extend to subject matter which is not disclosed, but would be obvious over what is expressly disclosed. . . . Compliance with the written description
requirement is a question of fact but is amenable to summary judgment in cases where no reasonable fact finder could return a verdict for the non-moving party.

Since the CAFC did not find support in the original application for the disputed feature, the court affirmed the denial of priority and findings of invalidity.

Regarding expert testimony that declared that the disputed features were "well known to those of ordinary skill," the CAFC rebutted that "[a]t best, this is a statement that it would be obvious to substitute a customer laptop for the user interface disclosed on the vending machine. Obviousness simply is not enough; the subject matter must be disclosed to establish possession."

AFFIRMED

PowerOasis v. Wayport, Inc., (2007-1369), April 11, 2008 - in a related case, the CAFC vacated SJ of noninfringement, and remanded the case in light of the finding of invalidity in the T-Mobile case (link)

CAFC Chides Counsel, Court, On Claim Construction Conduct

LSI Industries, Inc. v. ImagePoint, Inc., (2007-1292), March 19, 2008

In this nonprecedential case, the CAFC reversed almost every disputed claim term construed by the district court which was the basis for summary judgment of noningfringement. During litigation, the district court openly admitted it was in over its head with the patent case, and reached out to counsel for guidance. Apparently, that's not what it got in return:

At the claim construction hearing, the district court judge communicated his lack of familiarity with patent law . . . (“I get a patent case about every three years. In the 27 years, I’ve only had about five of them. And this seems to be the most complex so far.”), and repeatedly requested guidance from counsel on both sides on how to construe the claims. The record reveals that counsel made little effort to simplify the case, but instead presented the district court with a firestorm of issues and arguments, fueled by the voluminous reexamination record and an aggressive use of statements in that record to support multiple contentions that subject matter was disavowed. In the end, counsel for LSI was successful in persuading the district court to adopt constructions for each of the disputed terms that, in most instances, inappropriately imported limitations from the specifications and prosecution histories into the claims. The victory was short-lived, however, and warrants our reemphasizing that an attorney has a duty not only to zealously advocate on behalf of his client, but also to aid the court in the fair and efficient administration of justice. Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1356 (Fed. Cir. 2002) (“Counsel must remember that they are not only advocates for their clients; they are also officers of the court and are expected to assist the court in the administration of justice, particularly in difficult cases involving complex issues of law and technology.”).

The district court didn't get off much easier:

The district court also has an obligation, despite any obfuscation or lack of assistance of counsel, to carefully consider, and independently decide, the issues in the case. Following the claim construction hearing, the district court adopted LSI’s proposed findings of fact and conclusions of law verbatim . . . While this practice is not prohibited, it is frowned upon because, in situations such as these, it gives the impression that there was insufficient independent evaluation of the parties’ arguments and evidence.

VACATED AND REMANDED

Monday Shorts - Business Method Challenge at the CAFC

Bye Bye Business Methods? The CAFC decided, sua sponte, to order an en banc rehearing of In Re Bilski. The following 5 questions were presented:

1. Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. § 101?

2. What standard should govern in determining whether a process is patent-eligible subject matter under section 101?

3. Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?

4. Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101?

5. Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

See more details over at Patently-O (link), along with related briefing on similar matter in the Metabolite v. LabCorp case (link1, link2, link 3)


Chief Judge Michel Weighs In (Again) On Patent Reform: Chief Judge Michel gave the keynote speech at the Association of Corporate Patent Counsel on January 28, 2008. The following is an excerpt of the address:

When I joined the court almost 20 years ago, 90 percent of our cases were from completed trials, bench trial or jury trial. Now, today, between 70 and 80 percent of our cases are from summary judgments. So we already have a huge number of interlocutory [appeals], i.e., pretrial appeals where the critical issue is claim construction. So the question becomes, well, do we need a lot more of those? Are we missing a large portion of the cases in which the claim construction is so decisive that we better have an immediate appellate review of the district judge’s construction? Well, maybe so but it’s not obvious to me that it’s the case and the [Senate] report, at least as I read it, doesn’t make much of a case, and it certainly shows no awareness at all of the fact that the vast majority of our appeals are pretrial appeals and do turn on claim construction.

Read the entire transcript here (link).


PTO Releases Prior Copies of MPEP: On February 7, the PTO announced that all prior editions and revisions of the MPEP are available in PDF format on the MPEP webpage (link). An interesting quote from the original 1949 MPEP (section 3) :

An art, process or method is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject matter to be transformed an reduced to a different state of thing. Cochrane v. Deener, 1877 C.D. 242. A method which produces an intangible result, such as transmitting speech by a telephone comes within this definition also.

PTO Updates Declaration Docs and Other Forms: On February 13, the USPTO has modified its Declaration form (PTO/SB/01) to include a checkbox which provides the applicant with the option to preauthorize the EPO and JPO to access its US application(s) [in order to obtain priority documents]. Essentially, this updated Declaration form bypasses the need to file a separate form PTO/SB/39, "Authorization to Permit Access to Application by Participating Offices." See other form updates here, courtesy of I/P Updates.


CBO Estimates Cost of Patent Reform: On February 15, the CBO estimated the costs of enacting S. 1145:

CBO estimates that enacting the bill would increase direct spending by $26.9 billion and revenues by $25.5 billion over the 2009-2018 period. Much of that change would result from making permanent PTO’s authority to collect and spend certain fees, thus shifting the collections and spending out of PTO’s appropriation account. In total, those changes would increase budget deficits (or decrease surpluses) by $1.4 billion over the 2009-2018 period.

View the entire report here (link)

Once Again: Claim Amendment Sinks DOE

International Rectifier Corporation v. IXYS Corp. (2007-1063), September 11, 2007

Earlier, this case was tried before the CAFC, where the court vacated-in-part and reversed-in-part a summary judgment of direct infringement on patents relating to MOSFET technology. Subsequently at the district court, a jury found IXYS infringed patents under the doctrine of equivalents. IXYS appealed (again).

One set of claims required that the semiconductor wafer include a “lightly doped” region that is “adjoining” a “region of opposite conductivity type.” On appeal, IXYS argued that an amendment during prosecution adding the word "adjoining" should have precluded IR from claiming infringement under the doctrine of equivalents. IR responded that: (1) the amendment was broadening, not narrowing, since the claims are directed to structure rather than function, and the “adjoining” limitation simply clarified what structure was claimed; and (2) the amendment in question was "only tangentially related" to the asserted equivalent.

The CAFC did not find IR's arguments convincing:

IR is correct that the amendment broadened the claim in certain respects . . . At the same time, however, IR chose to introduce the term “adjoining.” This term excludes structures that might have been covered by the original claim language, because the “support body” of the old claim . . . was only required to “support[] said lightly doped major body portion,” not necessarily to touch it. The amendment therefore narrowed the scope of the claim, at least with respect to the addition of the term “adjoining.” Under such circumstances, IR cannot argue that the amendment was broadening merely because it eliminated some claim limitations.

As to IR’s second argument, we disagree with IR that the purpose of the amendment was tangential to the asserted equivalent . . . IR is correct that the claim is not necessarily limited to a particular mode of operation, but rather covers a particular structure that, in practice, may or may not function in unexpected ways. However, IR’s decision to claim that structure using the limiting term “adjoining,” whether or not required to overcome the rejection, cannot be described as only tangentially related to the equivalency of a structure with non-adjoining regions. With the amended language, IR recited precisely the structure it disclosed, and thereby overcame the examiner’s § 112 rejection.

[T]he damages award and permanent injunction are vacated. IXYS is entitled to entry of final judgment in its favor as to all claims. There shall be no further proceedings in this case regarding any questions of infringement, either literally or under the doctrine of equivalents.

REVERSED

CAFC: Unindexed Document on FTP Server Questioned as Publicly-Accessable Prior Art

SRI International v. Internet Security Systems, Inc. (2007-1065) January 8, 2008

Prior to filing its patent application, SRI posted a document on an FTP server pursuant to ongoing research. The document contained subject matter that overlapped the filed application. Just over one year prior to filing, SRI emailed certain individuals involved in the research, and informed them of the document, providing the path and filename of the document.

After the patent issued, SRI sued a number of defendants for infringement. The defendants argued that the patent was invalid under 102(b), due to the posting and directing of individuals to the FTP document. The lower court agreed and granted summary judgment on invalidity.

On appeal, SRI argued that the FTP document was not a "printed publication" and also argued that the document was not enabling as a 102 reference. On the enablement argument, the CAFC disagreed with SRI:

Both the '212 patent specification and the EMERALD 1997 paper contain similar sections explaining statistical detection . . . Furthermore, the identical figures are a graphical depiction of a network monitor to scrutinize an event stream and a diagram of a resource object that configures the network monitor. These figures show an architecture for network monitoring based on a profile engine and configurable event structures sufficient to enable one skilled in the art.

Indeed, these disclosures helped the inventors obtain issuance of the '212 patent. The issuance itself shows that the specification satisfied the enablement requirements of 35 U.S.C. § 112, ¶ 1. With the 1997 paper providing similar, or even a partially identical, disclosure to the '212 patent specification, the record meets the lower enablement standard for prior art under 35 U.S.C. § 102(b). Thus, the 1997 publication with its similarities in technical scope and description to the specification of the '212 patent meets the enabling hurdle for a prior art reference.

Regarding the FTP document being a "printed publication", the CAFC held that there was insufficient evidence showing that the document was "publicly accessible":

The record on summary judgment does not show that an anonymous user skilled in the art in 1997 would have gained access to the FTP server and would have freely navigated through the directory structure to find the Live Traffic paper. To the contrary, the paper’s author, Mr. Porras, thought it necessary to provide Dr. Bishop with the full FTP address for the file. Surely Dr. Bishop, the Program Chair for SNDSS, would have qualified as one of ordinary skill in the art in 1997. Yet, despite his knowledge of the field, FTP servers, and the paper, Dr. Bishop apparently would not have found the reference without Mr. Porras's precise directions. It is doubtful that anyone outside the review committee looking for papers submitted to the Internet Society’s Symposium would search a subfolder of an SRI FTP server. These are separate entities. It is also doubtful that anyone outside the review committee would have been aware of the paper or looked for it at all in early August 1997. These facts seem to militate against a finding of public accessibility. At least they warrant examination upon remand.

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

Judge Moore (dissenting-in-part):

This case is quite unlike the uncatalogued, unshelved thesis in a general university library in Application of Bayer, 568 F.2d 1357 (CCPA 1978). In this case, the Live Traffic paper existed on an FTP server that was used for cyber security work, in a subdirectory named for a specific, well-known cyber security project (EMERALD). As the district court pointed out, it is ironic that SRI, which is in the intrusion detection business, argues that those skilled in the art of intrusion detection could not detect information purposefully posted on the internet by a member of the cyber security community.

* * *

SRI does not contend that papers on an FTP server are difficult for a user to copy or print. It is undisputed that at the touch of a button, the entire Live Traffic paper could be downloaded or printed. Copying could not be simpler. Unlike Klopfenstein, where members of the public would have to quickly transcribe the text or graphics of the poster during a conference, members of the public could download or print the Live Traffic paper immediately upon accessing the paper, and at any time of the day or night during the seven days it was posted on the FTP server.

Whether the case is analyzed under the rubric of the library thesis cases or the temporary dissemination cases, the result is the same. The defendants carried their burden under Rule 56(c). Because SRI presented no evidence showing genuine issues of material fact for trial, I would affirm the district court’s ruling of invalidity based on the Live Traffic paper.