USPTO / EPO / JPO Progress on "Common Application Format" For Expedited Examination

The USPTO, EPO and JPO have been meeting for a while to establish an application format for expediated examination among the offices. Recently, the offices signed a "memorandum of understanding" that allowed a framework for applicants to prepare a single application in a common application format for acceptance in each of the three offices.

Under the BasicPriciples of that Trilateral Work Group, "An application which complies with the Common Application Format shall be accepted without any further amendment by any of the Trilateral Offices as a national/regional application as far as the agreed-upon formal requirements are concerned. Each of the Trilateral Offices may provide requirements which are more favorable for applicants than the requirements provided for by the Common Application Format."

The USPTO released a Pre-OG Notice providing more details on the format that will allegedly "simplify and streamline application filing requirements in each Office to allow applicants to prepare a single application in the common application format for acceptance in each of the three Offices."

The USPTO confirms that the Common Application Format is consistent with current USPTO rules and procedure, and, while some of the requirements of the Common Application Format (CAF) go beyond what the USPTO requires, the USPTO will accept an application in the Common Application Format.

The EPO is planning to implement the (CAF) in the beginning of 2009. Paper, PDF and XML format will be accepted. The JPO is preparing for the introduction of CAF in early 2009, except that the sequence listing is a separate part of the description and that the request contains the number of the figure of the drawings which the applicant suggests should accompany the abstract are scheduled to be introduced in 2011.

For more background on the Common Application Format, see the "Website of the Trilateral Cooperation" with the links to the following information from November 20, 2007:

Basic Principles of the Common Application Format

Annex I: Common Requirements for All Types of Documents

Annex II: Comparative Table of Examples for Each Type of the Applications

As noted by Patent Docs on April 28, 2008, Annex I previously clarified that:

• Applicants will not be required to remove National Legends (i.e., cross references to related applications and statements regarding federal funding) from the description.
• A statement of industrial applicability shall be included when it is not obvious from the description or nature of the invention.
• Applicants will not be required to remove any reference citation list from the description.
• Applicants shall use the International System of Units (SI) in the description, but may use additional alternative unit systems as long as SI units are placed in parentheses.
• Paragraphs of the description (but not the title or section headings) shall be numbered consecutively using Arabic numerals.
• Mathematical or chemical formulae shall be preceded by a sign indicating that the formula is mathematical ("Math.") or chemical ("Chem."), followed by a space, and then by an Arabic numeral (e.g., Chem. 1).
• Tables shall be preceded by a sign indicating that the table is a table ("Table"), followed by a space, and then by an Arabic numeral (e.g., Table 1).
• Claims shall be preceded by a sign indicating that the claim is a claim ("Claim"), followed by a space, and then by an Arabic numeral (e.g., Claim 1).

Hat Tip: I/P Updates - for more info and examples of application format, click here.

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).

NYT: Patent Reform "Boon To Lobbyists", Dudas Claims Applications Are Getting "Worse and Worse"

In a new article, the New York Times discusses some divergent perspectives on the patent reform act, noting that over the last 15 months, the Coalition for Patent Fairness and the Coalition for 21st Century Patent Reform collectively spent $4.3 million lobbying on the legislation (CPF = $2.5M, 21CPR = $1.8M). This number doesn't include amounts spent by other groups and individual corporations that could easily double this amount.

In addition to lobbying, the article also focused on the ongoing debate over inequitable conduct. One noteworthy statistic cited in this regard is specifically aimed at pharmaceutical patents:

In the last 15 years, the United States Court of Appeals for the Federal Circuit, which handles patent cases, has affirmed findings of inequitable conduct in at least 40 cases, including 14 that involved pharmaceutical or health care products. Similar findings have been issued by federal district judges in an unknown number of cases that were not appealed.

One of the more interesting points in the article were the comments of USPTO Director Jon Dudas, who had the following to say:

We are getting more and more unpatentable ideas, worse and worse quality applications. Historically, in the last 40 years, the allowance rate — the percentage of applications ultimately approved — hovered around 62 percent to 72 percent. It went up to 72 percent in 2000, but dropped to 43 percent in the first quarter of this year.

This comment follows his statement at an IP Symposium earlier this month (reported by EE Times), in which he stated:

We've seen a problem with quality . . . [I question whether the current system is] making it too easy for people who want to file poor [patent] applications?

Also, compare this to the comments he made to IAM last month on patent quality:

[W]e’ve determined the quality of patents granted has been improving, and we expect this to continue because of current and future quality initiatives. A major concern we have at the USPTO--and it is a concern I have heard from many IP offices around the world--is the room for improvement in applications coming through our door.

Incidentally, IAM had a great article that discussed the "patent quality debate", where various IP leaders commented on patent quality (to see a brief except, click here). Quite interestingly, Alison Brimelow, President of the European Patent Office noted that, in her view, "[i]n spite of anecdotal evidence to the contrary, there is no hard empirical evidence that patent quality has substantially deteriorated in the last five or 10 years."

CAFC Scolds PTO On Taking 3 Years To Deal With Appeal

In Re Reuning (2007-1535), April 25, 2008 (nonprecedential)

The applicants filed an application in 2001 under a petition to make special in order to accelerate examination. Two years later, the BPAI issued a first decision reversing the rejections on 2 claims, but sustaining the rejection to the other 64 claims, noting that "the appellants have not presented any patentability arguments for these claims." Aside from the procedural issues, no further analysis was given on the merits of reference-specific arguments made on the prior art.

The applicants filed a Request for Rehearing, which the BPAI granted, but refused to modify its original decision, concluding that the applicants "never explained how the limitations of the noted claims are patentable over the combined teachings of the applied references . . . Arguments pointing out the individual shortcomings in each of the applied references are not effective in overcoming a prima facie case of obviousness."

On appeal to the CAFC, the court stated that the applicants "misapprehended" the BPAI's decision, noting that none of the rejected claims contained the limitations which prompted the reversal. Also, the CAFC noted that the applicants admitted that each of the elements in the reversed claim "is known in the art." As a result, "[h]aving acknowledged that certain claim elements are taught by the prior art, Reuning cannot now defeat an obviousness rejection by asserting that the cited references fail to teach or suggest these elements."

The PTO also argued to the CAFC that the court should vacate and remand the decision to consider the merits of Reuning's arguments (since the appeal was based on a procedural issue). Finding this the "proper course," the CAFC vacated and remanded the application to the BPAI.

Which brings us to Judge Linn's concurring opinion:

After twice denying Reuning a substantive review of claims 3-66—and taking over three years in the process—the Board, via the Director, now requests that we remand so that the Board can do what it should have done in the first place; namely, substantively review the examiner’s rejection of claims 3-66. By taking nearly three years to decline to adjudicate the merits of claims 3-66 on a procedural technicality, and by forcing Reuning to appeal before recognizing the superficial nature of its actions, the Board squandered judicial resources and needlessly frustrated Reuning’s interests. This is not a reflection of the Board’s finest work.

Although I assign the lion’s share of the blame to the Board for this case’s current posture, I wish to make clear that Reuning also is not without fault. He compounded the problem, and in a sense, invited the Board’s error, by unduly focusing on claim 1 in his appeal briefs and relying on happenstance for the Board to fill in the gaps. Although not technically improper, Reuning’s appeal brief to the Board was less than comprehensive and demonstrates the adverse consequences that may flow from arguments that are in some measure left to inference.

The end result is that as to claims 3-66, the parties are now back to where they started, albeit without the time and money it took them to get there. This wasteful course of proceedings does not promote the fair and efficient administration of justice and is inconsistent with the PTO’s mission "to ensure that the intellectual property system contributes to a strong global economy, encourages investment in innovation, and fosters entrepreneurial spirit." . . . I have the utmost respect for the members of the Board, the leadership of the PTO, and the members of the patent bar, and while I would like to believe that this case represents an aberration from the standards of practice I have long admired and have come to expect, I am concerned that it does not.

N.D. Ill. Stays Global Patent Holdings Infringement Claim

Global Patent Holdings LLC v. Green Bay Packers (00-C-4623), April 23, 2008

Back in July of 2000, Global Patent Holdings (GPH) (formerly Techsearch LLC) filed suit against numerous defendants alleging infringement of U.S. patent No. 5,253,341, which claimed an improved method and apparatus for downloading compressed audio and visual data as well as other graphical information from a remote server to an end user station for the purpose of decompressing and displaying the data.

Subsequently, a first reexamination proceeding was carried out, where the Board of Patent Appeals cancelled the 16 claims of the original patent and declared a new claim (claim 17) patentable. During that time, GPH requested and obtained dismissal of its complaint with leave to reinstate the case if the reexamination was resolved in its favor.

On August 8, 2007, Global Patent sued CDW Corporation and Motorola, Inc., in Global Patent Holdings v. CDW Corp., case No. 07 C 4476. In the meantime, a second reexamination request was filed in the PTO, and the Defendants moved to stay the proceedings in the case pending the outcome of the second reexamination procedure.

The district court agreed that a stay was warranted:

Global Patent contends that the PTO has already contributed its expertise to this matter via the first reexamination proceeding and thus there is little to be gained from waiting for the second to run its course. However, as Defendants point out, claim 17 was not in the original patent but was added by amendment during the previous reexamination. The previous reexamination thus functioned as an original examination of that claim rather than a reexamination of a previous stamp of approval, as was the case with the original 16 claims. Moreover, because the reexamination was conducted ex parte, there could be no participation from anyone other than GPH when claim 17 was being examined. Accordingly, the association of claim 17 with the prior reexamination did not result in the same application of the PTO’s expertise on patentability that is available for the original 16 claims that
were rejected.

No discovery has been conducted and little judicial effort has been expended in either of the cases now before us. Though we are mindful that four years was consumed in waiting for the result of the reexamination of the original 16 claims, a significant amount of time and effort in claim construction and other litigation would have been wasted if we had forged ahead without the benefit of the PTO’s examination (and subsequent rejection) of those claims. Also, the fact that this examination will focus on a single claim makes it unlikely that a similar amount of time will be spent in reaching resolution of the new reexamination. The questions of validity, patentability, and claim content are common to the issues before this court and before the PTO, so the more prudent course of action is to stay these cases while the reexamination proceeds. Defendants’ motion requesting that relief is therefore granted.

Download a copy of the opinion here (link)

Appeals Court Throws Out FTC Ruling Against Rambus

Earlier, the Federal Trade Commission determined that Rambus, while participating in a standard-setting process on DRAM memory, deceptively failed to disclose to the standard setting organization (JEDEC) the patent interests it held in four technologies that were standardized.

On appeal, Rambus argued that the Commission erred in finding that it violated any JEDEC patent disclosure rules and thus that it breached any antitrust duty to provide information to its rivals. Second, it asserted that even if its nondisclosure contravened JEDEC’s policies, the Commission found the consequences of such nondisclosure only in the alternative: that it prevented JEDEC either from adopting a non-proprietary standard, or from extracting a RAND commitment from Rambus when standardizing its technology. As the latter would not involve an antitrust violation, there would be insufficient basis for liability.

The Appeals Court agreed with Rambus, noting that they had "serious concerns about the breadth the Commission ascribed to JEDEC’s disclosure policies and their relation to what Rambus did or did not disclose." Noted the court:

Here, the Commission expressly left open the likelihood that JEDEC would have standardized Rambus’s technologies even if Rambus had disclosed its intellectual property. Under this hypothesis, JEDEC lost only an opportunity to secure a RAND commitment from Rambus. But loss of such a commitment is not a harm to competition from alternative technologies in the relevant markets. . . . Indeed, had JEDEC limited Rambus to reasonable royalties and required it to provide licenses on a nondiscriminatory basis, we would expect less competition from alternative technologies, not more; high prices and constrained output tend to attract competitors, not to repel them.

The court pinged the FTC for stretching a very thin evidentiary record to establish anticompetitive behavior. The parties stipulated earlier that, as of Rambus’s last JEDEC meeting, it held no patents that were essential to the manufacture or use of devices complying with any JEDEC standard, and that when JEDEC issued the SDRAM standard Rambus had no pending patent claims that would necessarily have been infringed by a device compliant with that standard.

As such, the only apparent grounds for supporting the FTC's opinion was that Rambus failed to fully disclose pending applications, as well as disclose progress on unfiled amendments at the PTO. However, the Appeals court found that the JEDEC policies did not explicitly address such situations, and, after looking at the trial record, concluded that "[w]e don’t see how a few strands of trial testimony would persuade the Commission to read this language more broadly."

Also, the Court had some words to share on the JEDEC patent policy:

As the Federal Circuit has said, JEDEC’s patent disclosure policies suffered from “a staggering lack of defining details.” . . . Even assuming that any evidence of unwritten disclosure expectations would survive a possible narrowing effect based upon the written directive of Manual 21-I, the vagueness of any such expectations would nonetheless remain an obstacle. One would expect that disclosure expectations ostensibly requiring competitors to share information that they would otherwise vigorously protect as trade secrets would provide “clear guidance” and “define clearly what, when, how, and to whom the members must disclose.”. . . This need for clarity seems especially acute where disclosure of those trade secrets itself implicates antitrust concerns; JEDEC involved, after all, collaboration by competitors. . . . In any event, the more vague and muddled a particular expectation of disclosure, the more difficult it should be for the Commission to ascribe competitive harm to its breach.

The D.C. Circuit's decision does not end the Rambus litigation, but merely returns the case to the FTC for possible retrial consistent with the court's opinion.

Download the opinion here (link)

SIDE NOTES: From CNNMoney.com: "Michael Cohen, an analyst at Pacific American Securities, has estimated that Rambus could realize as much as $11.7 billion in total royalties from all makers of DRAMs, assuming the company was able to clear all of its legal hurdles."

Rambus currently has patent-infringement cases against many DRAM makers, including Samsung Electronics Co., Micron Technology Inc., Hynix Semiconductor Inc., and Nanya Technology Corp.

Any Idea What This May Be?

I just noticed this from the OMB:

AGENCY: DOC-PTO	RIN: 0651-AC19
TITLE: Changes to Implement Electronic Patent Publication
STAGE: Proposed Rule	ECONOMICALLY SIGNIFICANT: No
RECEIVED DATE: 03/06/2008	LEGAL DEADLINE: None

I originally thought I was out of the loop on this one, and then I couldn't find any notices from the PTO, and no chatter from the blogosphere. I'm currently at a loss as to what this is - any ideas?

CAFC Reverses Key Parts of Judgment in Finisar v. DirecTV

Finisar Corp. v. The DirecTV Group (2007-1023) April 18, 2008 (link)

By a jury verdict, the E.D Texas found that DirecTV willfully infringed Finisar's U.S. Patent No. 5,404,505 (the ’505 patent), and the jury awarded $78.9 million in reasonable royalty damages, and $25 million in enhanced damages. On appeal, DirectTV challenged numerous issues in the case.

Claim Construction: On appeal, the CAFC found that the district court provided an "unjustifiably broad" interpretation to a key term found in each asserted claims. More interestingly, the CAFC reached this conclusion after turning to a claim construction provided by the N.D. California in a related case (Comcast v. Finisar):

Given “the importance of uniformity in the treatment of a given patent,” . . . this court would be remiss to overlook another district court’s construction of the same claim terms in the same patent as part of this separate appeal. In the interest of uniformity and correctness, this court consults the claim analysis of different district courts on the identical terms in the context of the same patent. Here, the Northern District of California’s efforts in the Comcast case are particularly helpful because that court repeatedly referred back to the Eastern District of Texas’s constructions—the subjects of this appeal.

Grammatical interpretation of prior art - Quite a bit of hay was thrown about over the interpretation of a passage in an anticipatory prior art reference. After analyzing referential and qualifying words and phrases, preceding antecedents, commas and modifiers, the CAFC concluded that "to avoid slipping into a realm of ambiguity that could render jury verdicts wholly unreviewable, this court imputes an understanding of English grammar and usage to the jury."

Finding that the new grammatical interpretation, coupled with additional supporting disclosure in the prior art, clearly and convincingly disclosed claimed features, the CAFC reversed the district court's denial of JMOL on anticipation.

Willfulness: The CAFC took issue with the district court faulting DirecTV in part for not obtaining an opinion on validity, weighing its failure to do so in Finisar's favor on the question of willfulness. Noting the Graco decision (“[t]here is no requirement that an opinion must address validity to negate a finding of willful infringement”), the CAFC concluded that "a competent opinion of counsel concluding either that DirecTV did not infringe the ’505 patent or that it was invalid would provide a sufficient basis for DirecTV to proceed without engaging in objectively reckless behavior with respect to the ’505 patent."

Software and Means-Plus-Function: Beware! Finisar's patent covered software elements, claimed in MPF format. However, the specification provided "nothing more than a restatement of the function, as recited in the claim." The CAFC upheld the finding of indefiniteness:

For computer-implemented means-plus-function claims where the disclosed structure is a computer programmed to implement an algorithm, “the disclosed structure is not the general purpose computer, but rather the special purpose computer programmed to perform the disclosed algorithm.” . . . Thus the patent must disclose, at least to the satisfaction of one of ordinary skill in the art, enough of an algorithm to provide the necessary structure under § 112, ¶ 6. This court permits a patentee to express that algorithm in any understandable terms including as a mathematical formula, in prose . . . or as a flow chart, or in any other manner that provides sufficient structure.

The district court correctly determined that the structure recited in the ’505 specification does not even meet the minimal disclosure necessary to make the claims definite. Simply reciting “software” without providing some detail about the means to accomplish the function is not enough . . . This court does not impose a lofty standard in its indefiniteness cases . . . But in this case, the claims are already quite vague. Without any corresponding structure, one of skill simply cannot perceive the bounds of the invention.

AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED

Patent Reform on Wobbly Legs in Senate

On Friday, the Wall Street Journal ran an article claiming that S. 1145 has hit an "impasse" at the Senate, and quoted Pennsylvania's Sen. Arlen Specter as saying "I think we need more time to get it right." More telling however, was a quote from Senate Judiciary Chairman Patrick Leahy, who spoke of the bill in past tense, saying that the bill "was a missed opportunity," adding that the dispute over S. 1145 was over "just a handful of words" and further warning that "thousands of hours" spent on negotiations were at risk of being wasted.

Also, it was reported by Hal Wegner that after last Wednesday's Giles Sutherland Rich American In of Court meeting, John Whealan announced to several members that he would be leaving his temporary position with Senator Leahy on May 1, 2008. Whealan has been the Deputy General Counsel for Intellectual Property Law and Solicitor for the USPTO since 2001. Over the last year, he has been on leave to assist Leahy with S. 1145. Some are questioning if Whealan's move is indicative of a dying bill that has, so far, failed to generate the level of support hoped by its proponents . . .

More on Patent Revenue and Distribution

Last week, Peter Detkin, founder and Vice-Chairman of Intellectual Ventures (IV) was quoted as saying that small inventors only received the "crumbs" when it came to patent licensing revenue. Apparently, this statistic was generated by IV, but has been picked up from the likes of Acacia Research, which claims in this presentation from March 2008 that only 1% of patent revenue and distribution is received by small companies, individual inventors, universities and research labs.

Citing an earlier Deliotte & Touche study, The Acacia presentation breaks down patent licensing for some of the biggest players:

- Qualcomm = $2B/year licensing CDMA patents (89% margins)

- IBM = $1.5-2B/year

- Philips Electronics = $570M/Year (100% of earnings for Consumer Electronics Business)

- Thomson = $390M/year (75% of total earnings)

Interesting Statistic Cited By Peter Detkin

The Embedded Systems Conference is taking place today and tomorrow at the Fairmont Hotel in downtown San Jose, California. Today's IP Symposium included Peter Detkin, founder and Vice-Chairman of Intellectual Ventures, as a keynote speaker. EDA DesignLine reported on the symposium and attributed the following to Detkin (link):

He [Detkin] said that the mission of the patent system is to encourage and reward inventions and disclosures. Small inventors, defined as those entities that have less than 500 employees are responsible for 60% of US patents while the remaining 40% are granted to large companies. On the other hand, large companies collect over 90% of revenues derived from patents, while small companies are left with the "crumbs". He also pointed out that the average time required to go through the patent application process is now close to four years, and that, on the average, it takes just as long for a small inventor to negotiate licensing rights with a large company.

I haven't encountered any statistical breakdowns of licensing revenue along these lines, and I'd be interested to find out where Detkin obtained these numbers. If the statistics are accurate, this could easily serve as fodder for any upcoming patent reform debates.

New Pre-First Action Pilot Program Announced at the USPTO

From the PTO:

The United States Patent and Trademark Office (USPTO) is initiating a pilot program in which, in certain art areas, applicants who comply with the requirements set forth in this notice will receive the results of a prior art search conducted by the examiner, via a condensed Pre-Interview Communication, and then be permitted to conduct an interview with the examiner to discuss the cited prior art references, before the examiner issues an Office action on the merits that sets forth the rejections.

Eligibility for the program is broken down according to Groups I and II:

Group I:

(1) Filed on or before September 1,2005, and prior to a first action on the merits;

(2) Classified in Class 709 (Electrical Computers and Digital Processing Systems: Multi Computer Data Transferring); and

(3) Assigned to an art unit in either working group 2140 (group art unit 214x) or 2150 (group art unit 215x).

Group II:

(1) Filed on or before November 1,2006, and prior to a first action on the merits;

(2) Classified in Class 707 (Data Processing: Database and File Management Data
Structures); and

(3) Assigned to an art unit in working group 2160 (group art unit 216x).

The pilot program will last until November 1, 2008. Any request for a first action interview filed on or after April 28, 2008, and before November 1, 2008, will be granted if all of the requirements set forth in the Requirements section of this notice are satisfied.

For more details on requirements, click here (link)

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

Additionally, the PTO has published updated patent examiner training materials regarding the examination of patent applications under the written description requirement of 35 U.S.C. § 112, first paragraph. These materials have been updated to reflect developments in case law and technology. To view the training materials, click here (link)

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)

Update on Precedential Opinions from the BPAI

Since the beginning of the year, the PTO has released two new precedential decisions:

Ex Parte Letts, Appeal 2007-1392, January 31, 2008 (link)

Instead of separately arguing each claim under a subheading as required by 37 C.F.R. § 41.37(c)(1)(vii), the Appellant in this case generally argued features without making specific references to the claims.

During the Appeal, Appellant offered to cancel the broadest claim set (claim 7), contingent upon the resolution of the other claims sets (claims 1 and 15). While the offer to cancel was made through the Reply Brief, no cancellation was made. Since the Appellant's arguments were not claim specific, the BPAI merits board selected the broadest claim (claim 7), for deciding the appeal. Affirming the rejection to claim 7, the Board applied that result to all of the appealed claims.

On rehearing, the expanded board formally held that contingent arrangements are not to be accepted by the BPAI - appellants must either argue or cancel claims appropriately:

As a matter of policy, based on a need for efficient handling of the ex parte appeal and inter partes interference dockets, the Board of Patent Appeals and Interferences (“Board”) does not enter into contingent arrangements in which the withdrawal or dismissal of a claim is conditioned upon commitments to or restrictions on future Board action . . . Thus, an Appellant in an ex parte appeal may not seek to have a claim withdrawn or dismissed from an appeal based on a condition that the Board take or refrain from taking action on one or more other claims. If an Appellant wants an appeal withdrawn or dismissed as to a particular claim, the proper course of action is to file an amendment canceling the claim.

The saving grace for the Appellants in this case was that (1) the case was one of first impression, and (2) it was clear that everyone understood that claim 7 was to be canceled. Accordingly, in "an abundance of fairness", the expanded board remanded claims 1 and 15 for further consideration that is consistent with the features contained in those claims that were argued by Appellants.

Lest anyone gets any wise ideas from this decision, the Board added:

In taking the action we take today, we wish to make clear that publication of this opinion is intended to put appellants on notice of the ineffectiveness of a conditional withdrawal of a claim. With this notice, appellants should not expect the Board in the future to exercise discretion to permit them from avoiding the consequence of such an approach. Adherence to the requirements of the rules is essential if the Board is to efficiently handle the increasing docket of ex parte appeals it is currently receiving.

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

Ex Parte Nehls et al., Appeal 2007-1823, Decided: January 28, 2008 (link)

The 271 Blog covered this important (albeit bizarre) 35 U.S.C. 101 decision back in February (link), where the expanded board held that utility must be "substantial" and "specific." Shortly after the blog post went up, the USPTO posted the decision as "precedential."

Cracks Forming in the Passage of Patent Reform Act

Today the Congressional Quarterly (CQ) is reporting that Senator Arlen Specter (R-PA) is pulling his support for S.1145, stating that he "cannot join" his colleagues "on some parts of the bill, citing apportionment of damages as a "principle sticking point."

Patrick Leahy, the chairman of the Senate Judiciary Committee has reportedly been working on introducing the amendments to S.1145 for several days and even reserved the television studio two days in a row this week, only to cancel both times. Support for the bill does not appear to be strong at this time - the CQ article notes that Leahy acknowledged that he "will need every vote he can find to advance the bill through the Senate."

Cosponsor Orrin Hatch (R-UT) has also voiced reservations about S.1145, and made clear this week that his support for the bill is contingent on the inclusion of his language for amending inequitable conduct (currently Hatch is "optimistic" that his language will be included).

In a separate but related news story, the Dow Jones Newswires are reporting that Senator Jeff Sessions (R-AL) is dropping the "Check 21" provision completely from the bill, stating "I don't know how [the provision] can be modified" to pass constitutional muster. Tuesday, Sessions indicated that he likely wouldn't attempt to fix the amendment. House Speaker Nancy Pelosi (D-CA) has previously voiced her opposition to the amendment.

The quote that best summarizes the situation is from Senator Sessions himself: "I think this has more to do with lobbyists than it does with merits . . . This has been a lobbyist money machine. They're all over the place around here."

Who at the USPTO Will Fix Inter Partes Reexaminations?

The American Inventors Protection Act, signed into law on November 29, 1999, made a number of landmark patent reforms, including the establishment of an inter partes reexamination procedure.

Initially shunned by 3rd parties, inter partes reexamination practice has grown considerably in the last few years: in 2003, only 23 requests were filed in the USPTO; in 2007, 126 requests were filed (see PTO statistics here).

One very disturbing fact, which has received scant attention, is this:

To date, the BPAI has not issued a single final decision on any inter partes reexamination.

Recently, the BPAI issued Watson & Chalin Manufacturing, Inc. v. Hendrickson USA, L.L.C., 2008 WL 345059 (PTO Bd. App. & Int. 2008), which, as noted by the good professor Hal Wegner, is only the third inter partes decision in history (presuming that Westlaw's reporting is complete). And despite the statutory requirement for "special dispatch", the reexamination languished in the PTO for 5 years (since 2003); the other two BPAI inter partes decisions (Lobo v. Congoleum and NEC v. Entegris) had to wait 4 years to get their decisions.

Why weren't the decisions "final"? In each case, the Board "played examiner" and instituted new grounds of rejection. Because a new rejection is introduced, the decision cannot be final, and cannot be appealed to the CAFC until there has been a rehearing at the Board, or prosecution is reopened.

This is worrisome stuff. Considering that post-grant review is such a crucial part of patent reform, someone at the PTO needs to explain what policies and procedures the Office intends to implement to avoid having the same problem when (if?) patent reform is enacted.

Read the complete story from Hal Wegner (link)

AIPLA Releases Latest Model Patent Jury Instructions

In light of changes to patent law since the last revision (2005), the AIPLA recently published its Model Patent Jury Instructions. The current revision includes case law through
December 31, 2007.

Download a PDF copy here (link)

Download Word copy here (link)

Hat Tip: I/P Updates

Reports Are In on Ocean Tomo's Record-Breaking Patent Auction

Ocean Tomo recently announced that the Spring 2008 Live Intellectual Property Auction, held on April 2nd at The Ritz-Carlton San Francisco, had cumulative sales totaling $19,629,500, with an average sale price per lot of $370,368. From Ocean Tomo's press release:

In a historic moment, Lot 25, a notable IP portfolio owned by the subsidiary of a world-renowned multi-national corporation, sold for $6,600,000, setting a new world record for the highest selling price for a patent lot at a multi-lot live IP auction. In addition to the Lot 25 record-breaking sale, related to the processing of digital data in bit streams, the auction heralded three other transactions in the seven-figure range in the areas of computer systems and software, information management and data system, and location based services and logistics.

Fifty-three of the eighty-five offered lots were sold on the floor for a 62% transaction success rate, and forty-three of the sixty-nine sellers sold lots resulting in a 62% seller success rate. Other successful sellers included venture-backed companies, individual inventors and large multi-national corporations.

Such sales further exemplify the value of IP in today's business world, and also demonstrate the increasing liquidity in IP assets. The Intellectual Asset Management (IAM) Blog picked up on the Ocean Tomo auction and added:

Organisations are willing to pay top dollar when they come across assets they want to get their hands on. And it’s not only at auctions that this is happening. Look at RIM, for example, which last week announced that it had spent over $300 million on acquiring intangible assets in the 4th quarter of its financial year. This amount includes €120 million ($188 million) spent on acquiring a European patent portfolio at the end of last year. Then there’s patent brokerage IPotential, which raised $104 million for clients in 29 transactions during 2007. And these are just two examples of IP monetisation that have come into my head immediately. Many reading this will know of quite a few more, I am sure.

- CNET has a great "on the scene" report on the Ocean Tomo auction, and can be accessed here.

- Read more from the IAM Blog here and here.

- There's also this interesting report from Market Watch, which highlighted the plight of one inventor (Yongyong Xu), who didn't generate much interest from the bidders, but, "[a]s the auction drew to a close, however, Xu slipped into conversation with a group of men outside in the hallway. He reported later that there is some enthusiasm about 'licensing and litigation' opportunities for his patent, though the interested parties would like more time to examine it."

Friday Shorts

Standard for Invalidity Tested at SCOTUS: In Microsoft Corp. v. z4 Tech., Microsoft argued that z4's patent was invalid under 102(g), and sought a lowered standard of invalidity for art that was not considered by the PTO. Relying partly on the dicta from the SCOTUS KSR decision ("[w]e nevertheless think it appropriate to note that the rationale underlying the presumption [of validity] - that the PTO, in its expertise, has approved the claim - seems much diminished here"), Microsoft is asking the SCOTUS to formally take a stance on the presumption. The question presented is:

When a defense of invalidity under Section 282 rests on documentary evidence that was not considered by the United States Patent and Trademark Office, whether the factual predicates of the defense must be proved by “clear and convincing evidence” or some lower burden of proof.

Read the petition here (link), and read more over at Patently-O.


Reduced Patent Grants - the EPO Gets On Board: the EPO has announced that, despite an increase in patent applications, the grant rate has now dropped almost 13% over the last year:

Last year, the EPO received a record total of 218,200 patent filings, compared to 210,600 the previous year. At the same time, the 54,700 European patents granted in 2007 represented a decrease of 12.9% over the previous year (62,800 granted patents).

Read the press release over at the EPO (link)


Debate on Patent Reform Act to Begin "As Early As Next Week": A spokeswoman for Senator Harry Reid (D-Nev.) said the majority leader is committed to bring S.1145 to the Senate floor in the current working session which ends in late May. "It could come up as early as next week," she said (link).


Sen. Clinton Questioned on Patent Reform on Campaign Stop: A local inventor and entrepreneur reportedly pushed and shoved his way through a crowd in Pennsylvania to ask Sen. Hillary Clinton a question on the Patent Reform Act. According to the inventor, she opposes anything in the bill that would hurt manufacturers (link).


Rating the Examiners: A new website has been created that has a message board allowing people to "rate" examiners (and also allow examiners to rate practitioners). There's even a kind post from an alleged EPO examiner that names yours truly (in case you're feeling cynical, no: I didn't put that post there myself). Click here for more info (link).

Commerce Department Renews Support for AQS's in S. 1145

Carlos Gutierrez from the Department of Commerce sent a letter today to Arlen Specter, expressing "strong support" for a "key element" of S. 1145: Applicant Quality Submissions (AQS).

The Administration strongly supports the AQS provision in the bill in its current form and believes that enactment will prove to be the strongest step toward improved patent quality. By reducing the number ofpoor quality and imprecise applications, applicant quality standards will result in dramatic reductions in patent pendency and backlog, as well as reduce the likelihood of excessive litigation. The current misalignment of information incentives slows and degrades the patenting process.

Interestingly, the PTO appears to charge rejected applicants with draining PTO resources that would be better spent on examining "important innovations." Of course, the context of "important innovations" is unclear. However, it is clear that the PTO is expecting applicants to demonstrate their knowledge of the art before considering a patent application:

There is no one who has greater opportunity, information, or incentive to explain why an application deserves a patent grant than the applicant. There has been a sharp decline in the percentage of patents allowed, due in part to comprehensive internal quality improvements. However, the USPTO is now applying more than 55 percent of its examination resources to examining applications that do not warrant a patent. In order for additional quality and efficiency gains to accrue, the system must focus on the quality of applications. Stated simply, our innovation system can no longer afford the time and the cost of heavily subsidizing poor quality patent applications, which crowd out our most important innovations. Applicant quality standards are essential to improving and expediting the process by which new and innovative ideas become reality.

Also, the PTO made clear that changes to inequitable conduct must be accompanied by "strong provisions" requiring AQS - anything short of that would "invite fraud on the patent system":

[T]he Administration strongly opposes any statutory changes to the doctrine of inequitable conduct in the absence of a strong provision requiring Applicant Quality Submissions. Applicant quality standards and inequitable conduct reform are inextricably linked. Diminishing the penalties for misrepresenting facts before the United States Patent and Trademark Office (USPTO) without also increasing the robustness of the process for eliciting quality information from applicants may lead to poorer quality applications, in tum increasing the difficulty of conducting accurate examinations. Inequitable conduct reform alone, without Applicant Quality Submissions, would merely invite fraud on the patent system.

Read/download the letter here (link)

*** USPTO Continuation Ruled Dead (For Now) ***

Judge Cacheris from the ED Va. granted GSK’s and Tafas’s Motions for Summary Judgment finding that the PTO’s "hard limit" on the number of continuation applications and claims per patent were excessive extensions of PTO authority:

Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not
extend to substantive rules, and because the Final Rules are substantive in
nature, the Court finds that the Final Rules are void as ‘otherwise not in
accordance with law’ and ‘in excess of statutory jurisdiction [and] authority.’
5 U.S.C. § 706(2).

The 26 page opinion mainly addressed the "substantive" aspect of the rules and didn't stray further.

Expect the PTO to hit Congress hard on S.1145 to give it statutory authority - such a provision would effectively override the district court's ruling.

Read opinion here (link)

Read order here (link)

271 Blog On Vacation

Although I have been remiss in keeping everyone posted, the 271 Blog has been off on vacation for the last week. I anticipate being back on Wednesday, and will resume posting shortly thereafter. See you soon!

- Peter

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

PTO Budget Amendment Approved

From the Congressional Daily (link):

The Senate unanimously approved last week an amendment to the fiscal 2009 budget resolution condemning the diversion of funds from the Patent and Trademark Office.

When PTO funds are diverted for other purposes, the office's examiners cannot approve patents as quickly and that hinders the economic benefits these innovations could potentially bring, according to Sen. Orrin Hatch, R-Utah, who sponsored the language.

"Considering the value of our nation's intellectual property and its contribution to building a strong and vibrant economy, it is incomprehensible to siphon these funds away from their intended use, especially during these trying economic times," said Hatch, a cosponsor of a pending bill that would overhaul the U.S. patent system.

The Senate plans to debate and vote on that legislation when it returns from the two-week spring recess.

Gor Blimey! Software Patent Rejection Gets Pipped at the Post (UK-IPO)

Lest anyone think the USPTO is the only office having issues with patentable subject matter, the UK-IPO is now in full-fledged "struggle" mode trying to conform the Office's policy on software patents with that of the EPO.

The UK Patents Act is aligned with the European Patent Convention (EPC). Among other things, the Act states that patents are not available for computer programs as such. Accordingly, patent protection is typically denied for applications that are solely computer programs, such as an improved word processing program.

In the case of Symbian's Patent Application, the UK-IPO rejected an application directed to dynamic link library (DLL) access algorithms because it related to "nothing more than a computer program" (read the decision here).

Today, the UK-IPO issued a press release announcing that the High Court overturned the rejection. While the decision hasn't formally published, it's big news for software developers in the UK, who have wondered recently whether improvements in computer technology would ever be patentable in the UK if they didn't involve novel hardware elements.

The High Court has picked up on this as well. Recently, Justice Kitchin in Aerotel/Macrossan, stated the following to the UK-IPO:

The question I must now consider is whether the decision prohibits the patenting of all computer programs and, in particular, those which under the old approach would have been considered to make a conventional computer operate in a new way so as to deliver a relevant technical contribution . . . UK-IPO has apparently concluded that it does and so has reverted to its previous practice of rejecting all computer program claims . . . I do not detect anything in the reasoning of the Court of Appeal which suggests that all computer programs are necessarily excluded

It is presumed that similar reasoning exists in the soon-to-be-published Symbian decision. Additionally, and perhaps more importantly, it appears that UK-IPO's handling of software patents conflicts with EPO practice. From the UK-IPO press release:

[The opinion] observes that the UK-IPO's decision in this case illustrates the divide which exists between the UK-IPO and the European Patent Office (EPO) about how the patentability of inventions involving computer programs is assessed. This is because although the UK-IPO refused Symbian’s patent application, the EPO has granted Symbian a patent for its invention.

Not daunted on the reversal, the UK-IPO vows to fight on:

The UK-IPO believes that when deciding whether this computer implemented invention is patentable, Mr Justice Patten did not apply the so-called "Aerotel/Macrossan test", which was established by the Court of Appeal in an earlier case, in the way intended by the Court of Appeal. This in UK-IPO's view has created uncertainty about how the Aerotel/Macrossan test should be applied for inventions of this type.

The UK-IPO will therefore appeal this judgment with a view to seeking clarification from the Court of Appeal. Pending a decision by the Court of Appeal, the UK-IPO will be continuing to follow the practice, set out in its Practice Notices issued in November 2006 and February 2008, which are founded on the established Aerotel /Macrossan test. When applying this test, the UK-IPO will take account of the Symbian judgment in appropriate cases.

Read the press release here.

P.S., in case you're wondering about the "Aerotel/Macrossan test", it's basically a four-step process for determining patentable subject matter. The adjudicator must:

• Properly construe the claim;
• Identify the actual contribution;
• Ask whether the contribution falls solely within excluded subject matter; and
• Check whether the contribution is technical in nature.

The Latest From Delaware

The good people at the Delaware IP Law Blog have picked up steam after a quiet February and are back with some great posts. Last week, there was the interesting observation that, as a per cent of the civil case load, Delaware outranks the E.D. Texas and E.D. Virginia:

In 2007, IP plaintiffs filed 181 cases, 30 more than in 2006. These 2007 IP cases (patent, trademark, and copyright) filled nearly 20 percent of the District of Delaware’s entire civil docket. To put the number of IP cases our judges handled in perspective, consider that in all of last year, the Court received only 46 non-IP tort complaints. Of all civil categories, only prisoner petitions exceeded IP filings, and not by much: 202 to 181.

By comparison, the Eastern District of Texas’s 338 IP cases filed in the twelve-month period ending March 2007 (the latest stats available) represented 11 percent of its civil docket. The 144 IP cases filed in the Eastern District of Virginia in the same period comprised only 4 percent of that Court’s civil filings.

Coupled with a low reversal rate, Delaware is indeed a good place to be. While the “rocket dockets” shift in and out of favor (see IP Law 360’s recent take on this development), Delaware will continue business as usual.

See full post here.

Also, there was a noteworthy case in Siemens Medical Solutions USA Inc. v. Saint-Gobain Ceramics & Plastics Inc., C.A. No. 07-190-SLR (D. Del. March 7, 2008), where the patentee/licensor apportioned the right to sue by requiring the licensee to notify the licensor of any 3rd party infringement. If the licensor did not file suit within 90 days, the licensee would be free to initiate its own action against the 3rd party. According to the court, such an arrangement did not convey "all substantive rights" to a licensee:

While the license clearly gives [licensor] the exclusive right to sue during the first 90-day period, there is no specific, reciprocal language giving [licensee] the exclusive right to sue after the first 90-day period.

As such, the licensee had no standing to sue (at least until the licensor is joined). See the full post here.

Latest Ex Parte Reexamination Statistics from the PTO

The latest statistics on Ex Parte Reexamination (through December 2007) have been released by the PTO. As expected, the number of reexamination requests continue to climb:

2002 - 272 filings
2003 - 392 filings
2004 - 441 filings
2005 - 524 filings
2006 - 511 filings
2007 - 643 filings
2008 - 165 filings

The success rate for requestors has not changed, and continues to favor requestors. Overall, all claims are confirmed in 26% of reexams, claims are changed in 64% of reexams, and 10% of reexams result in all claims being cancelled.

Average pendency of an ex parte reexamination is 2 years, and median pendency is just over a year-and-a-half (18.6 months).

Read/download PTO Ex Parte Reexamination statistics here (link)

Latest Amendments to S.1145

The Senate has released the latest amendments to the Patent Reform Act in advance of Senate Floor Debate:

Interlocutory appeals: limits interlocutory appeals of claim construction orders to those which the district court determines have a reasonable basis for disagreement, and the appeal may advance the ultimate termination of the litigation;

Best Mode amendment: best mode would be considered for obtaining a patent, but not for invalidating;

Reexamination amendment: restores third-party reexamination;

The "CAFC Telework" amendment: ensures that CAFC judges that do not reside within a 50-mile radius of Washington DC use chambers of an existing courthouse in the district where they reside.

Derivation proceedings amendment: clarifying procedures relating to derivation proceedings (which will "replace" interference practice when it is gone);

Interference appeals amendment: allow CAFC to hear BPAI interference decisions commenced prior to the effective date of the act;

Marking provision amendment: deletes marking provision and maintains current law;

In re Seagate amendment: codifies the "objective recklessness" standard;

Post-grant review amendment #1: corrects inconsistency between section 337 (1) and (2) by disqualifying post-grant reviews where issues were raised (or could have been raised) in the litigation;

Post-grant review amendment #2: defines "final decision" for estoppel purposes.


More amendments are expected to follow in the coming weeks.

PWC Releases 2008 Patent Damages Study

Aron Levko, together with Vincent Torres and Joseph Teelucksingh have released the 2008 PricewaterhouseCooper Patent Litigation Study, and it appears from the study that previous trends in patent litigation have continued into this year. Specifically, the study found that:

• The annual median damages award since 1995 has remained fairly consistent, when adjusted for inflation.

• Reasonable royalties continue to be the predominant measure of damages awards.

• Certain federal district courts (particularly Virginia Eastern, California Central, and Pennsylvania Eastern) continue to be more favorable to patent holders, with shorter time-to-trial, higher success rates, and higher median damages awards.

There are some new trends being followed as well:

• The disparity between jury and bench awards has widened and is likely the contributing factor in the significant increase in use of juries since 1995.

• Alleged infringers increase their trial success rates slightly as plaintiffs, but have not experienced the same increased success in summary judgments.

• While the median time-to-trial has remained fairly constant since 1995, significant variations arise by jurisdiction, and patent holder success rates tend to decrease with longer time-to-trial, up to a point.

Overall, the study found that patent holders have been successful 37% of the time overall, with a 19% win rate in summary judgments and a 57% win rate at trial. 32% of summary judgments are appealed, with 59% modified or reversed; while 43% of trial decisions are appealed, with 67% modified or reversed.

Interestingly, with the alleged "explosion" in patent litigation, there were no identifiable increases in time-to-trial. In fact, since 2005, the median time-to-trial has dropped by more than 6 months.

Regarding the "Top Ten" Rocket Dockets, the breakdown is as follows, along with the median time-to-trial (in years):

1) ED Virginia - 0.88
2) WD Wisconsin - 0.91
3) CD California - 1.71
4) MD Florida - 1.71
5) ED Texas - 1.79
6) Delaware - 1.89
6) Kansas - 1.89
8) ED Pennsylvania - 1.91
9) SD Texas - 1.99
10) ED Michigan - 2.03

Some notable "Crawler" dockets include Massachusetts (3.76 years) and Connecticut (4.66 years).

The "Top Five" patent-friendly jurisdictions, along with overall success rates, include:

1) MD Florida - 66.7%

2) ED Texas - 54.6%

3) CD California - 51%

4) ED Virginia - 50%

5) WD Wisconsin - 50%

The "Bottom Five" jurisdictions for patentees, along with overall success rates, include:

1) Connecticut - 15.8%

2) ED Michigan - 18.5%

3) SD Florida - 25%

4) SD New York - 30.6%

5) ND California - 33%

The "Top Five" districts with the highest appeal rates, along with their affirmance and modified decision/reversal rates are:

1) Massachusetts - 46% appealed (36% affirmed, 64% modified/reversed)

2) ND California - 42% appealed (38% affirmed, 62% modified/reversed)

3) ND Illinois - 41% appealed (29% affirmed, 71% modified/reversed)

4) Delaware - 35% appealed (54% affirmed, 46% modified/reversed)

5) SD New York - 34% appealed (36% affirmed, 64% modified/reversed)

There is much more information in the study - MediaFire is down right now, but I will post a copy of the report later this morning.

In the meantime, if you want additional information, email Aron Levko at aron.levko@us.pwc.com

UPDATE 1: MediaFire is still down - as soon as it comes back, I will post the study.

UPDATE 2: View/download the report here (link)

Patent Troll Tracker Litigation Update

Joe Mullin, reporter at IP Law & Business magazine and author of the Prior Art Blog has some additional information on the Ward/Albritton lawsuit against Frenkel and Cisco (see 271 Blog post below). As many have noticed already, the Ward complaint "making the rounds" is an amended complaint. According to the the case docket in Gregg County District Court (link), the case was originally filed as John Ward, Jr. v. John Doe et al. on Nov. 7, 2007, and it is presumed that the complaint was filed with the notion of deposing someone at Google, who oversees the Blogger.com sevice used by Frenkel.

Since filing the complaint, the timelines are as follows:

Jan. 24: Petition to depose granted.

Feb. 23: Troll Tracker is revealed to be Rick Frenkel, an IP director at Cisco Systems.

Feb. 27: Ward Jr. filed an amended complaint claiming defamation against Cisco and Frenkel.

March 3: Eric Albritton files a separate complaint against Cisco and Frenkel.

This is going to be an interesting case to watch. According to Joe, there appear to be some discrepancies in the Troll Tracker posts that are alleged to contain the defamatory statements. The original post-in-question was changed by Frenkel after receiving additional information from a reader. Frenkel acknowledged those changes when they were made. However, only the original post was submitted to the court. Read Joe's post in its entirety here.

Also, as noted by Dennis at Patently-O, the PACER filing information still reflected that the case had been originally filed on the 15th, but the PACER complaint filing date now indicated October 16 (see here and here).

*TROLL TRACKER SUED*

"I am altering the deal. Pray I don't alter it any further"

- Darth Vader, Empire Strikes Back (1980)

John Ward v. Cisco Systems, Inc. (2007-2502-A), 188th District, Gregg County Texas

On February 27, John Ward filed a complaint in district court alleging defamation against Richard Frenkel (aka the Patent Troll Tracker) and Cisco. According to the complaint:

On or about October 18, 2007 Defendant Frenkel made statements to the effect that Plaintiff had conspired with others to alter the filing date on a civil complaint that Plaintiff filed on behalf of Plaintiff's client in Federal Court in the Eastern District of Texas, Marshall Division. Defendant alleged that Plaintiff had engaged in this felonious activity in order to create subject matter jurisdiction against the defendant named in the civil complaint. The defendant in the civil complaint was Cisco Systems, Inc., which also happened to be Defendant Frenkel's employer.

* * *

As a direct and proximate result of Defendant Frenkel's false and defamatory statements, the Plaintiff has endured shame, embarrassment, humiliation, and mental pain and anguish. Additionally, the Plaintiff has and will in the future be seriously injured in his business reputation, good name, and standing in the community, and will be exposed to the hatred, contempt, and ridicule of the public in general as well as of his business associates, clients, friends, and relatives. Consequently, the Plaintiff seeks actual damages in a sum within the jurisdictional limits of this Court.

Read/download a copy of the complaint here (link)


Reports are starting to come in from the blogosphere:

- The Prior art Blog (link)

- Robert Ambrogi (link)

- Legal Pad (Cal Law) (link)

- Legal Satyricon (link)

UPDATE: The 271 Blog received the following statement from Cisco:

"The parties have mutually agreed to make no comment on the lawsuit in question at this time. That said, we would like to underscore that the comments made in the employee's personal blog represented his own opinions and several of his comments are not consistent with Cisco's views. We continue to have high regard for the judiciary of the Eastern District of Texas and confidence in the integrity of its judges."

PTO Publishes Impact Analysis on "Alternative Claim Language" Proposal

Examination of Patent Applications That Include Claims Containing Alternative Language (RIN 0651–AC00), March 10, 2007

In August 0f 2007, the PTO issued a notice stating that Markush-type claiming and other alternative claiming formats were being restricted for practice before the PTO:

The Office is proposing to revise the rules of practice pertaining to any claim using alternative language because patent applicants sometimes use Markush or other alternative format to claim two or more independent and distinct inventions and/or to recite hundreds, if not thousands, of alternative embodiments in one claim. Such claims are confusing, difficult to understand, and frequently border on being unmanageable. Proper search of such complex claims, particularly those using Markush language, often consume a disproportionate amount of Office resources as compared to other types of claims. The prosecution of these complex claims likewise often requires separate examination and patentability determinations for each of the alternatives within the claim . . . the variety and frequency of alternatives recited in claims filed in applications pending before the Office, driven in part by trends in
emerging technologies, have exacerbated problems with pendency.

In light of comments recently received by the PTO, a study was conducted to see how the proposed rule would impact small entities, which are also affected by the proposed rule change.

The PTO estimated that 21.9% of all applications from small entities contain alternative language in the claims. Broken down by technology, 43.4% of biotech and chemical small entities use alternative language, with electrical/mechanical coming in at 15.8%.

Since each claim under the proposed rules must be limited to a single invention, claims with alternatives will require a new format similar to the PCT Guideline, i.e., requiring that the number and presentation of alternatives in the claim not make the claim difficult to construe, and requiring that each alternative within a list of alternatives must be substitutable one for another.
After conducting its analysis "the Office believes that an applicant would need to file at most approximately seven divisional applications following an examiner’s restriction requirement, even if more were needed to seek patent protection for the full scope of the originally claimed inventions."

Comments on the proposed rule changes in the Alternative Claims Notice of Proposed Rule Making should be addressed to markush.comments@uspto.gov

Read the Notice, which contains additional statistical analysis here (link).

CPF Ups the Ante on Patent Reform, Spells Out Damage Apportionment

On March 5, the Coalition for Patent Fairness (CPF) issued a letter to Senators Leahy, Specter and Hatch proclaiming that, not only is damage apportionment necessary, apportionment considerations need to be codified to provide a template for judges to instruct juries:

A serious and continuing problem in the calculation of a reasonable royalty is the lack of adequate jury instruction. Juries are not given enough guidance and are too often left to sift through facts and factors without clear guidance on which of the many factors presented are relevant. As a result, judges have been compelled to either take the difficult step of vacating the jury’s award, with the resulting disruptions and inefficiencies, or let the unfair verdict stand. To address these concerns, and based on the work conducted through consultations hosted by Senator Specter, we suggest adding a substantially clarified role for judges.

Much discussion in Senator Specter’s process has focused on whether the judge is compelled to direct the jury to apply a single method to calculating a reasonable royalty. We understand this concern, and our suggestion provides the judge the clear discretion to put before the jury a single method, or more than one method, in the interest of justice.

Much discussion has also focused on whether the changes made by the bill should be limited to just a clarified role for judges as gatekeepers. We believe that a clarified “gatekeeping” role for judges is a necessary but not sufficient element of the bill. We believe it is indispensable for the bill also to provide judges with the legal guidance on how a reasonable royalty is to be calculated. Without this guidance judges would be left with a mandate to apply the law and instruct juries, but without the guidance on the legal principles needed to fulfill that mandate. Such a situation would be akin to requiring persons to take a road test to obtain a driver’s license, while leaving the DMV examiner without guidance on the skills the applicant must demonstrate, or requiring a referee at a basketball game to officiate without a rulebook.

Specifically, CPF proposes a statutory analysis "to ensure that a reasonable royalty is determined on the basis of the portion of the economic value of the infringing product … that is properly attributable to the infringer’s use of the elements of the invention that were novel and nonobvious … and shall permit the jury to hear only evidence relating to that economic value.”

The CPF has also provided a mark-up of the proposed statutory language in the attached document. As Hal Wegner noted this weekend, "[t]he Business Software Alliance (BSA) has now thrown what must be considered the ultimate bomb to blow up any realistic chance of compromise [for the Patent Reform Act]."

Read/download the letter, along with supporting documents here (link)

USPTO: The Toughest Place to Get a Patent?

Earlier, the 271 Blog reported on USPTO Commissioner Dudas' testimony before Congress (link), where he commented that the allowance rate for applications has dropped to 44%. As recently as November 2007, the USPTO indicated that allowance rates were at 51% (link).

Of course, this comment sent people scrambling to find out what's going on. The good people at Intellectual Asset Management Magazine (IAM), and particulary Joff Wild, decided to dig deeper and contacted Dudas. Here's what Dudas said:

At the USPTO, our objective measurements tell us that patents today are of a higher quality than they were 10, or even 5 years ago. In 2006 and 2007, the USPTO had its lowest examination error rates in the last quarter century--which is mainly due to adding significant new quality measures in recent years. By every objective measurement —including end-of-process and in-process reviews, certification and recertification of examiners, and percentage of affirmances at the Board of Patent Appeals and Interferences — we’ve determined the quality of patents granted has been improving, and we expect this to continue because of current and future quality initiatives. A major concern we have at the USPTO--and it is a concern I have heard from many IP offices around the world--is the room for improvement in applications coming through our door. There has been a dramatic decrease in the allowance rate, or the percentage of patent applications that ultimately get approved. Our allowance rate has dropped from 72 percent in 2000, to 44 percent in the first quarter this year. This is due partly to our quality initiatives, but much is due to the lack of quality in many applications we receive.

In other words, the PTO is retroactively accusing applicants, who filed between 2003-05, of producing "low quality" applications that forced the rejections by the PTO. Dudas is partly right. Few would deny that certain practices used 5-6 years ago would be ineffective today. If your prosecution "ammo chest" hasn't changed stock since 1996, you shouldn't be surprised if dramatically fewer applications are being allowed.

But, again, the concern here is that the PTO is implicitly equating patent "quality" with the number of rejections issued by the examining corps. This, in and of itself, is not a tenable policy. At 44%, the USPTO acceptance rate is now well below the last annual rate reported by both the EPO (56% in 2006) and the JPO (48.5% in 2006).

In the upcoming issue of IAM, the magazine will look at the controversial subject of "patent quality:" what does it mean, how can it be identified, is it possible to measure? Contibutors to the article will include Jon Dudas, Alison Brimelow, president of the EPO; Judge Pauline Newman, of the US Federal Circuit; Masanobu Katoh, head of IP at Fujitsu; Horacio Gutierrez, VP of licensing at Microsoft; and Sherry Knowles, head of IP at GlaxoSmithKline. The article is scheduled to be published at the end of March.

See IAM Blog: "Patent quality and the plummeting USPTO approval rate" (link).

W.D. Wis.: "A Few Examples" Of Allegedly Infringing Products is Insufficient Notice

Taurus IP, LLC v. Ford Motor Company, Western District of Wisconsin, Case 3:07-cv-481, February 4, 2008

Taurus launched a patent infringement suit against 3 car companies, alleging infringement of their patent relating to a computer system for managing sales information. The complaint alleged that the defendants were infringing the patent by

[M]aking, using, offering products for sale, and/or selling products and/or services including, without limitation, products that are available for configuration at [list of 6 public websites] and, upon information and belief, internal websites and dealer portals.

Defendants objected to the vagueness of the allegations, noting that the complaint “provides little specificity as to which products or services available at the identified websites are accused of infringement” and “provides no specificity or guidance as to which internal websites and dealer portals” are accused of infringement. As such, they requested that plaintiffs provide a statement including either (1) a list of allegedly infringing products or (2) plaintiff’s working criteria by which it believes defendants’ products are infringing.

Looking at the websites, the court noted that they "contain links to thousands of products, parts, services and other websites that contain many more links." Finding that the complaint only gave "clues" or "examples" of potentially infringing products, the court found that such pleadings were insufficient to satisfy the notice provisions of Fed. R. Civ. P. 8 and 12(e) :

By listing some examples of allegedly infringing products and specifying the patent alleged to be infringed, plaintiff has given some clues to defendants as to the scope of its claim. But plaintiff must do more than give clues to meet even the broad Rule 8 notice requirements . . . “[i]n the context of alleged patent infringement, [notice] means at least that the plaintiff must tell the defendant which products allegedly infringe the plaintiff’s patent. Failing to identify the infringing product in a patent case is akin to failing to identify the retaliatory action in a civil rights case.” . . . Moreover . . . a party’s failure to specify which claims of a patent allegedly infringe may run up against the same notice problems . . . At the very least, a plaintiff’s failure to specify which claims it believes are infringed by a defendant’s products places an undue burden on the defendant, who must wade through all the claims in a patent and determine which claims might apply to its products to give a complete response. A plaintiff’s failure to specify patent claims hinders the defendant’s ability to prepare a defense.

The court concluded:

To the extent further infringed claims or accused products are identified during discovery, plaintiff is expected to amend the original complaint to specify each claim and each accused device by the deadline for submitting amended complaints. Plaintiff will not be allowed to assert a claim or accuse a device that is not specifically identified in the pleadings.

Read download the opinion here (link)