Tuesday, December 15, 2009

Upcoming Conference: ITC Litigation & Enforcement

The American Conference Institute (ACI) will be holding its 2nd Expert Forum on ITC Litigation & Enforcement Wednesday, February 24 to Thursday, February 25, 2010 in New York.  The conference provides inside, in-depth guidance on this growing critical practice from a faculty of judges, senior ITC officials, and litigators.  Topics include:

  • Evaluating Where to Litigate International IP Disputes
  • Positioning Complainants, Respondents and Intervenors in Section 337 Cases
  • Successfully Working the Logistics of Section 337 Litigation
  • Coordinating Related Parties & Proceedings Managing Litigation through Discovery, Claim Construction, Summary Determination and Trial
  • Meeting the Challenge of the ITC’s Unique Trial Procedures
  • Seeking Commission Review and Modification of ALJ Decisions
  • Understanding and Maximizing the Available Remedies in Section 337 ITC Cases
  • Addressing Downstream Remedy Strategies Post-Kyocera
  • Meeting the Challenges Faced by In-House Counsel in Section 337 Cases
The conference also includes a "View from the Bench" session that includes ITC Chief Administrative Law Judge Paul J. Luckern and ITC Judges Theodore R. Essex and Robert K. Rogers.
Early registration will be available through December 18th - you can register for this conference
By phone: 888-224-2480
By Facsimile: 877-927-1563
Email: CustomerService@AmericanConference.com
Or visit the ACI website at http://www.americanconference.com/itclitigation.htm
271 Patent Blog Readers are eligible for a $200 discount - enter discount code "Patent 271" when registering online.

Thursday, December 10, 2009

UK "Patent Box" Program Slashes Corporate Taxes on Patent Income

The UK is introducing a "patent box" regime that will impose a lower rate of corporate tax on patent income as an attempt to boost to Britain's creative industries.  The government has yet to release details of how the scheme will operate, although Chancellor of the Exchequer Alistair Darling confirmed in his pre-budget speech to the House of Commons on December 9 that patent income (e.g., royalites) will be subject to a 10% rate of corporate tax after legislation is passed.  This would represent more than a 50% cut.

Before passing any legislation, the government intends to consult with industry, and final legislative proposals are unlikely to emerge until the 2011 Finance Bill. The program is scheduled to be put in effect after April 2013.

It didn't take long for Glaxo to announce that it expected to spend some 500 million pounds building a new factory to make biotech drugs and on expanding an existing plant to make next-generation respiratory medicines.


NYT: "Patent Tax Scheme Encourages Glaxo to Invest In UK" (link)

TimesOnline: "Pre-Budget Report 2009: Industry welcomes 10% 'patent box'" (link)

USPTO Launches Patent Quality Improvement Initiative

The USPTO has been establishing procedures for measuring the quality of patent examination and to improve overall patent quality (together with the Patent Public Advisory Committee (PPAC)).  The Office is now seeking help from the public.  From a recent Federal Register Notice:

As part of this effort to improve the quality of the overall patent examination and prosecution process, to reduce patent application pendency, and to ensure that granted patents are valid and provide clear notice, the USPTO would like to focus, inter alia, on improving the process for obtaining the best prior art, preparation of the initial application, and examination and prosecution of the application. The USPTO is seeking public comment directed to this focus with respect to methods that may be employed by applicants and the USPTO to enhance the quality of issued patents, to identify appropriate indicia of quality, and to establish metrics for the measurement of the indicia. This notice is not directed to patent law statutory change or substantive new rules. It is directed to the shared responsibility of the USPTO and the public for improving quality and reducing pendency within the existing statutory and regulatory framework.
For purposes of this notice, a "quality patent" is defined as a patent:

(a) For which the record is clear that the application has received a thorough and complete examination, addressing all issues on the record, all examination having been done in a manner lending confidence to the public and patent owner that the resulting patent is most likely valid;

(b) for which the protection granted is of proper scope; and

(c) which provides sufficiently clear notice to the public as to what is protected by the claims.

Notably, the term ‘‘quality patent’’ does not include the economic value of the resulting patent.

For ease of organization and analysis, the areas for which the USPTO is requesting comment are divided into specific categories:

Category 1—Quality measures used: metrics that would supplement or improve current metrics (i.e., Allowance Compliance Rate and In-Process Revbiew Compliance)

Category 2—Stages of Monitoring: stages of examination where quality metrics should be measured

Category 3—Pendency: 'nuff said

Category 4—Pilot Programs: feedback regarding the effect on patent quality and examination quality resulting from various pilot programs (e.g., Peer-to-Patent, Pre-Appeal Brief Conference Pilot, First Action Interview Pilot, Continuing Education for Practitioners (CEP) Pilot)

Category 5—Customer Surveys Regarding Quality: feedback on past USPTO surveys of the patent community and proposed modifications for future surveys.

Category 6—Tools for Achieving Objectives: requesting identification of existing tools which are, or can be made, available to users and the USPTO to enhance the quality of the USPTO’s processes. This would include, for example, software tools that  will provide meaningful monitoring, search tools, claim analysis tools, and case law identification tools.

Category 7—Incentives:  requesting comments on means to incentivize applicants and USPTO personnel to adopt procedures and practices that support the achievement of patent quality. Notes the PTO: "It is recognized that any additional effort to increase the quality of the product has an associated cost."

Written comments must be received on or before February 8, 2010. No public hearing will be held.  Written comments should  be sent by email addressed to patent_quality_comments@uspto.gov.

Download a copy of the Notice here (link)

Monday, December 07, 2009

Marshall, TX Treating Plaintiffs So-So in 2009

From Michael Smith's Eastern District of Texas Federal Court Practice Weblog:

Last Thursday a Marshall jury in Judge Ward's court in Fiber Systems Int'l v. Applied Optical, 2:06cv473 returned a defense verdict on infringement in a patent case . . . I think that's the third defense jury verdict in the district this year in patent cases (two Marshall and one Beaumont), not counting Judge Davis' ruling in favor of Microsoft after jury selection in the Fenner case in March, and Judge Ward's granting of JMOL in defendant's favor at the conclusion of the plaintiff's case in Paradox. That's without getting into the sticky issue of how you count defense wins on damages (Retractable) or on postverdict JMOLs on damages (Hearing Components - award reduced postverdict from $4.6 million to $1.39 million). By my count then, you can score it this year so far anywhere from 8-3-1 to 6-6-1 (depends on whether you count a post-jury selection grant of summary judgment or not) depending on what you count as a plaintiff win and what as a defense win. The tie is, of course the Thermapure case, which as I posted last was, was a plaintiff win on infringement but a hung jury on damages, which will be retried on damages next March

USPTO To Fast-Track "Green" Patents

From today's USPTO press release:

WASHINGTON - The U.S. Commerce Department’s Patent and Trademark Office (USPTO) will pilot a program to accelerate the examination of certain “green” technology patent applications, Secretary Gary Locke announced today. The new initiative, coming days before the United Nations Climate Change Conference in Copenhagen, Denmark, will accelerate the development and deployment of green technology, create green jobs, and promote U.S. competitiveness in this vital sector.

[P]ending patent applications in green technologies will be eligible to be accorded special status and given expedited examination, which will have the effect of reducing the time it takes to patent these technologies by an average of one year. Earlier patenting of these technologies enables inventors to secure funding, create businesses, and bring vital green technologies into use much sooner.

Patent applications are normally taken up for examination in the order that they are filed. The average pendency time for applications in green technology areas is approximately 30 months to a first office action and 40 months to a final decision. Under the pilot program, for the first 3,000 applications related to green technologies in which a proper petition is filed, the agency will examine the applications on an accelerated basis.
To be eligible for the expedited review, the patents must "materially contribute" to environmental quality, discovering or developing renewable energy resources, improving energy efficiency or reducing greenhouse gas emissions.  While it is alwys good to see the USPTO make steps to reduce pendency, one has to question why the USPTO is choosing to engage more in technologically-specific pilot programs that appear more as political patronage than sound patent policy (timing the announcement just prior to the Climate Change Conference in Copenhagen doesn't help either).

Clearly, "green" technologies are important (depending how you define it), but should the PTO be in the business of pitting technologies against one another as part of its examination policy?   The examination process at the USPTO is, more or less, a zero sum game right now - if you reduce the pendency for certain applications, you will likely increase the pendency for others (the PTO will not hire additional employees for the pilot program).  And, unlike business-method and software patent applications, green technology was never identified as experiencing any unusual pendency problems.  Why the sudden urgency?

Director Kappos states: "“Every day an important green tech innovation is hindered from coming to market is another day we harm our planet and another day lost in creating green businesses and green jobs . . . Applications in this pilot program will see a significant savings in pendency, which will help bring green innovations to market more quickly.”  Aside from being cliché, this statement is somewhat insulting: what technological sector doesn't view their patents as "important" and vital to job creation?

See NYT, "Obama Admin Will Speed Reviews of 'Green' Patents" (link)

Wednesday, December 02, 2009

BPAI Starts Issuing Decisions on NTP/RIM Patent Reexaminations

It's hard to believe, but it has been almost 5 years since the NTP v. RIM case dominated the headlines and became a rallying point for much of the patent reform efforts we have seen to date.  In that case, NTP successfully asserted 5 patents against RIM, receiving judgment in the amount of $53.7M, as well as a permanent injunction.

The district court stayed the injunction, pending appeal to the Federal Circuit.  On appeal, the court upheld most of the lower court's findings, and remanded the case on claim construction issues (read the December 14, 2004 opinion here).  Just prior to the remanded proceedings, RIM settled the case and paid NTP $612.5 million "in full and final settlement of all claims against RIM, as well as for a perpetual, fully-paid up license going forward."

While the court proceedings raged on, a similarly heated battle took place at the USPTO, where NTP's patents were subjected to multiple reexaminations; one of the requests were ordered by the USPTO Commissioner himself.  The PTO's unusual interest in the reexamination, along with alleged improper contact between RIM and the PTO, sparked controversy in the patent community, where some argued that the PTO's actions gave the appearance that the proceedings were "fixed" against NTP (for more info, see here).  Even congressman Howard Berman, chairman of the House subcommittee on courts, the Internet and intellectual property, was concerned enough about an alleged meeting between the CEO of RIM and high level PTO officials that he formally questioned then-PTO Director Dudas in a list of oversight inquiries.

While this controversy continues to linger, the BPAI has released opinions on 3 of the 5 NTP patents that were rejected during reexamination.  In the opinions, some of the rejections were reversed, but most of the rejections, particularly the obviousness rejections (now subject to KSR), were upheld.  It appears that all of NTP's claims are rejected.  The opinions are an interesting read, but long - in total, the 3 opinions are almost 800 pages in length and address hundreds of different claims.

NTP US Patent No. 5,436,960 BPAI reexamination opinion (link) (252 pages)

NTP US Patent No. 5,819,172 BPAI reexamination opinion (link) (318 pages)

NTP US Patent No. 6,317,592 BPAI reexamination opinion (link)  (219 pages)

It is worthwhile to note that NTP is also in litigation with Sprint, T-Mobile, AT&T and Palm on these and related patents.  The BPAI has issued opinions on these patents as well - just as in the RIM case, the BPAI reversed some of the rejections, but upheld rejections based on obviousness.

NTP US Patent No. 5,438,611 BPAI reexamination opinion (link) ( 251 pages)

NTP US Patene No. 5,479,472 BPAI reexamination opinion (link) ( 214 pages)

Monday, November 30, 2009

SD Cal.: Evidence Relating to Reexamination Proceedings Excluded Fom Trial

Presidio  Components Inc., v. American Technical Ceramics Corp., No. 08-CV-335 (S.D. Cal., November 13, 2009, order)

During litigation, ATC submitted a request for reexamination to the USPTO, which was subsequently granted.  Soon thereafter, Presidio moved the court to exclude all evidence relating to the reexamination proceedings, arguing that the evidence is irrelevant and not probative of unpatentability.  The district court granted the motion:

Presidio argues persuasively that “the grant by the examiner of a request for reexamination is not probative of unpatentability.” . . . “The grant of a request for reexamination, although surely evidence that the criterion for reexamination has been met (i.e., that a ‘substantial new question of patentability’ has been raised, 35 U.S.C. § 303), does not establish a likelihood of patent invalidity.” . . . On the contrary, although it appears that the USPTO grants about 92% of the requests for reexamination, in only 12% of cases does that reexamination result in all claims being cancelled. . . . There is thus a “substantial likelihood” that, despite the grant of reexamination, the USPTO will uphold the patentability of some or all of Presidio’s claims.

Moreover, even if the reexamination proceedings are somehow relevant on the issues of obviousness or willfulness, they are nevertheless unfairly prejudicial. See FED. R. EVID. 403. As noted above, because the reexamination proceedings before the USPTO are still incomplete and based solely on the evidence provided by ATC in its replacement request for reexamination, there is very little probative value to the grant of reexamination. On the other hand, the prejudicial effect as well as potential for jury confusion is great. Thus, because the prejudicial potential of the evidence “substantially outweigh[s]” any probative value, it should be excluded.
Interestingly, the court granted ATC’s earlier motion to exclude from trial any reference to the “presumption of validity”  based on the reexamination.  The court remarked that "[w]ith any reference of the 'presumption of validity' excluded, allowing the jury to hear about incomplete USPTO proceedings will be unfairly prejudicial to Presidio, and could potentially confuse the jury as to who has what burden throughout the trial."

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

Tuesday, November 17, 2009

How Not to Invent a Patent Crisis

F. Scott Kieff and Henry E. Smith authored a chapter in the book "Reacting to the Spending Spree: Policy Changes We Can Afford" which examines challenges the Obama administration faces today, and in the foreseeable future, and the administration’s planned responses.

Kieff and Smith's contributions deal with the topic of patent reform and the authors' view that in light of the rapid (and arguably excessive) changes that have already occurred in the courts, patent law needs "a tweaking of existing safety valves and processes" and not an "opening [of] the floodgates to more discretion and uncertainty."  Essentially the authors argue that ever-increasing discretionary power in the courts and the PTO will eventually gum up the innovative process.

For example, on the issue of obviousness, the authors discuss the early proposal to modify section 103 so that patents would be denied for inventions that were a “non trivial advance” on the state of the art.  Supporters of this modification argue that the change would be in line with the KSR decision.  Some supporters see the KSR decision as standing for the proposition that government decision makers, such as judges, now have increased discretion to pronounce what the prior art teaches and would like to extend such discretion to patent examiners. Kieff and Smith argue that this is a bad idea:
The proposed statutory changes would implement the same flexible approach urged by one side of the KSR debate. We think that flexibility can be carried too far and that the flexibility approach on offer relies on two false premises about how the system actually works. 
The first false premise is that beefing up the patent examiner’s resources would help her find the key prior art. Of course, our examining corps should have good access to Internet databases and ample time and training to peruse them. But no realistically available amount of time and training will help an examiner at his desk obtain the laboratory notebook of an individual researcher at some company or university or an obscure student thesis on the bookshelf of a foreign library, which is where the key prior art is often found.
The second false premise is that discretionary decision making, whether in court or the Patent Office, can be immune from political and other pressure. Asking a decision maker to use her legal or technical expertise as the primary basis for deciding what she thinks the state of the art was at a particular time in history gives her greater discretion than asking an ordinary jury whether a particular document or sample product existed at a particular time and what that document actually contains. By increasing the discretion of government bureaucrats, flexibility increases uncertainty and gives a built-in advantage to large companies with hefty lobbying and litigation budgets.

So what should be done in reforming the patent system?  Kieff and Smith have a number of proposals:
Remove the presumption of patent validity. [D]ialing down the present presumption of validity to something like the ordinary standard for civil cases would decrease the bad, in terrorem, effect [of aggressive patent litigation]. When litigation is needed, the carefully crafted Federal Rules of Civil Procedure govern the procedures for joinder, compulsory counterclaims, and against relitigating issues and claims decided in previous litigation, which are collectively designed to avoid abusive and repetitive process. The Federal Rules also provide streamlined procedures such as summary judgment, which avoids long trials where there is no genuine issue of material fact.

Institute symmetric fee shifting. Symmetric fee shifting would allow alleged infringers to collect attorney fees from a patentee who brings an infringement case after having been warned, for example, about a particular item of invalidating prior art. This practice of fee shifting when a patentee makes baseless arguments in defense of the patent’s validity would match the present rules in Sections 284 and 285 of the statute that allow patentees to get fees and (potentially) treble damages from infringers who should have known about their own infringement and have thus mounted baseless arguments in their defense. Such symmetry in fee shifting would encourage parties to exchange information and resolve disputes before undertaking expensive litigation

Equity in remedies. We think that the best way to implement eBay is to take this equitable approach seriously and apply it in the traditional (and sensible) fashion. Crucially, the equitable approach is a safety valve for those situations in which someone who is otherwise a good candidate for getting an injunction—such as a patentee whose patent has been infringed—should not get one because of some glaring injustice. The equitable approach is flexible but not boundlessly so, in contrast to currently proposed reforms that elevate discretion to new heights. Moreover this safety valve is probably all we would need.

The chapter concludes
The approach we propose will decrease slightly the average value of all patents because patentees will now have to fight harder on the issue of validity when they assert their patents in court. But this is not necessarily bad. The costs of arguing to the Patent Office to get patent rights in the first instance will be less than in a system under which the examiners have largely unfettered discretion to reject applications.
Most important, the approach we propose directly addresses the fears of those held hostage under the current system by the threat of litigation costs surrounding patents that are merely presumed to be valid. Under a decreased presumption of validity, such a terrorizing effect largely evaporates. With fee shifting, meritless suits against infringers will be discouraged, and the full traditional but limited use of equitable discretion will provide all the safety valves we need for good-faith infringers and those facing true patent trolls.
These approaches should be given time to work. The prudent course for the country is to embrace a strong patent system based on predictability and facts, which will benefit all players, large and small, in their contributions to American innovation and economic growth.

An excellent, concise paper (24 pages), worthy of a read for anyone interesting in reforming our patent system.

Read/download a copy of "How Not to Invent a Patent Crisis" here (link

More information on "Reacting to the Spending Spree: Policy Changes We Can Afford" (link)

Monday, November 16, 2009

ED Tex: Computerized Business Method Patent Fails Bilski Test Under 35 USC 101

H&R Block Tax Services v. Jackson Hewitt Tax Services Inc., No. 6:08-cv-37 (E.D. Tex., Nov. 10, 2009)

H&R Block sued Jackson Hewitt in February 2008 alleging infringement of patents relating to "a system and method for distributing payments to individuals and, more particularly, to a system and method for allocating a portion or all of an individual’s payment into a spending vehicle."  Jackson Hewitt subsequently moved the court to find the patent invalid for claiming ineligible subject matter on summary judgment

Unlike Bilski, H&R argued that the business method was tied to a machine (i.e., computer) and pointed to specific claims directed to "a computerized system for distributing spending vehicles."

Since the court did not issue a claim construction opinion, Magistrate Judge Love accepted plaintiff’s contentions that the patents claim “computerized systems” that are capable of performing certain functions as defined by the claims allegedly functional language.

A financial relationship is simply an abstract intellectual concept. Absent the recitation of a computer, the ‘862 patent would certainly claim unpatentable subject matter. See Benson, 409 U.S. at 67 (reiterating “the long standing rule that ‘(a)n idea of itself is not patentable’”). Plaintiff argues the present recitation of a computer imposes meaningful limits on the scope of the claim such that a fundamental principle is not fully preempted. The Court disagrees. The computer component is not a particular, special purpose machine; it is capable of no more than storing and retrieving data memorializing associations. The computer is an insignificant, extra-solution component of the claimed system. Cf. Bilski, 545 F.3d at 961-963 (concluding that data gathering steps are insignificant extra-solution activity). If an extra-solution step is insufficient to render an otherwise unpatentable process claim valid, then by analogy an extra-solution component is insufficient to render an otherwise unpatentable “system” claim valid. Thus, the addition of a generic computer, capable only of storing and retrieving data associating payments with spending vehicles, to the claimed system fails to impose meaningful limits on these claims. Therefore, the Court finds the claims of the ‘862 patent invalid for claiming unpatentable subject matter.

* * *

[T]he Court finds that none of the remaining claims at issue pass the transformation prong of the test. Plaintiff argues that the ‘829 claims transform “tax return data into an anticipated tax refund amount which is transformed into a spending vehicle issued by a third party provider” and that the ‘425 method claims transform “an individual’s income and expense data into an estimated income tax return amount which is transformed into a loan distributed to a tax payer.” PL.’S RESP. at 24. Plaintiff argues the data “represent real world items (e.g., money).” Id. at 25. It argues that income and expense data do not represent hypothetical income and expenses but rather “actual money which has been earned and spent.” Id. The final transformation, it urges, is from data to a loan for a specific amount of money. Id. At all steps in the claimed processes, the manipulated data represent legal obligations and relationships. See Bilski, 545 F.3d at 963. However described, the data and resulting loan represent money. Although tangible in some forms, money is simply a representation of a legal obligation or abstract concept. Therefore, the Court finds that the claims of the ‘829 patent and the method claims of the ‘425 patent fail the transformation prong of the machine-or-transformation test.

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

From Docket Navigator

Wednesday, November 11, 2009

Bilski Movie Spoof

For whatever reason, numerous spoofs have been made using the "Hitler rant" scene from Der Untergang ("Downfall"), ranging from US elections, the real estate market, ACORN, etc.

Well, a spoof relating to patent law (and more specifically Bilski) has now been made, and it's quite funny, although at times you can't tell if the character playing Hitler is pro-patent or anti-patent . . .

Tuesday, November 10, 2009

Kappos Blog Up and Running on the PTO Website

To read the blog, click here.

Also, the blog has been bookmarked on the 271 Blogroll, and may be conveniently accessed there too.

Finally, the PTO appears to be warming up more to RSS feeds (or maybe I'm just getting around to noticing it) - the blog has a variety of RSS feeds that the public may use to follow the blog, as well as other news from the PTO site.

Monday, November 09, 2009

Bilski Oral Argument at the Supreme Court

"If you're not confused, you're not paying attention."   -- Tom Peters

Well, the analysis has started to roll in, and one thing is certain about the Bilski case: almost no one believes that the claims on appeal will be held patentable.  Not one Justice defended Bilski's method claim directed to hedging risks in commodities trading.  What appeared to bother the court the most was the concept of business methods based entirely on human activity, or, as Bilski's attorney Michael Jakes put it, "methods of organizing human behavior."

The Court didn't care much for these types of patents, and they made this clear - over and over - by citing examples of  trivial patents throughout the arguments, almost as a taunt to Bilski's counsel in the hopes that he would eventually stop mid-argument and acknowledge "you know what, your honor - that's a pretty stupid invention right there; someone would need to have their head examined before filing a patent application on that."  Some theoretical patents proposed by the Justices:

- How to resist a corporate takeover (Ginsburg)
- How to choose a jury (Ginsburg)
- Patent the method of speed dating (Sotomayor)
- A "great, wonderful, really original method of teaching antitrust law [that keeps] 80 percent of the students awake" (Breyer)
- "I buy low and sell high.  That's my patent for maximizing wealth" (Roberts)
-  Questioning whether a person at the Bureau of Statistics can compile statistics on life expectancy and get a patent (Kennedy)
-  "Let's take training horses. Don't you think that -- that some people, horse whisperers or others, had some, you know, some insights into the best way to train horses? And that should have been patentable on your theory." (Scalia)

And so on.  Entertaining?  Yes.  Helpful?  Not really.  The Justices were quite frank in telling the counsel that they were having trouble formulating any kind of concrete test for patentable subject matter:
JUSTICE BREYER: [I]n the nineteenth century, they made it one way with respect to machines. Now you're telling us: Make it today in respect to information. And if you ask me as a person how to make that balance in respect to information, if I am honest, I have to tell you: I don't know. And I don't know whether across the board or in this area or that area patent protection will do no harm or more harm than good.
So that's the true situation in which I find myself in respect to your argument. And it's in respect to that, I would say: All right, so what do I do?

* * *

JUSTICE SOTOMAYOR: And so it begs the question, because we go around in a circle: What does "process" mean in a patent law that was passed in 1952 that had one set of manufacturing and other items that are technologically tied and this is not? So how do we discern Congress's intent, other than by the use of the word "process" in context?

* * *

JUSTICE BREYER: Now, [the Federal Circuit has] left much unresolved. One, transformation; how broad or narrow is that? We don't know. Many people's problems will be solved if it's broad on the one hand or narrow in the other.
Two, are you automatically patented -- in the patent statute, if you just sort of reduce this to a machine by adding a computer on at the end? They've flagged that as a problem. They haven't answered it. Could there ever be a situation where it doesn't meet this test but still is patentable? We are not sure.
At this point, the Justices appeared to tacitly accept the Federal Circuit's "machine-or-transformation" (MOT) test by default - i.e., unless they hear of something better, the MOT test will have to do for now.
JUSTICE SOTOMAYOR: Well, isn't the manipulation of electronic signals a substance that is different in kind from just a method of how to go about doing business or a method of how to approach a particular problem?
Isn't there -- isn't that what the Federal Circuit was trying to explain, which is that there has to be something more substantive than the mere exchange of information; that it has to involve -- it used the word "transformation." It hasn't defined the outer limits of what it means by that.

* * *

MR. STEWART (USPTO): Well, first of all the only ruling that we're -- backtrack a bit, to say, we oppose,sir, in this case because we recognize that there are difficult problems out there in terms of patentability of software innovations and medical diagnostics.

JUSTICE KENNEDY: You thought we -- you thought we would mess it up.

MR. STEWART: I didn't think --


MR. STEWART: We didn't think the Court would mess it up. We thought that this case would provide an unsuitable vehicle for resolving the hard questions because the case doesn't involve computer software or medical diagnostic techniques, and therefore, we thought the Court would arrive at the position that I think, at least some members are feeling that you have arrived at, that you will decide this case, and most of the hard questions remain unresolved. And, frankly, we think that's true.

JUSTICE GINSBURG: But this case could be decided without making any bold steps.

MR. STEWART: Again, I don't -- I don't think it would be a bold step to say that machine-or-transformation is the test. That is, we have gone for --

JUSTICE GINSBURG: But even the Federal circuit didn't say it was a retest. It said it is for now. We know that things that we haven't yet contemplated may be around the corner, and when they happen, we will deal with them.
For people that still cling to the fantasy that software patents will be banned, you will have to wait for another day.  The court appeared to recognize that this case was not about computers and computer software (in the words of Justice Sotomayor: "no ruling in this case is going to change State Street"), and the majority of the discussion was directed to human-activity business methods.  As such, it is highly unlikely that the Court will rule in any meaningful way against software patents.

One interesting discussion worth noting is the following exchange between Scalia and Jakes, where Scalia appears to contradict the Federal Circuit's holding in In re Nuijten (signal claims are not patentable subject matter):
JUSTICE SCALIA: Sound -- sound is not physical, and electric current is not physical?

MR. JAKES: I think electric current is physical.

JUSTICE SCALIA: Yes, I think so.


JUSTICE SCALIA: Sound is, too.

MR. JAKES: It can be, but when it's transmitted over a wire, it's not. It's something else. It's an electrical current then.

JUSTICE SCALIA: Sound is not transmitted over the wires. Sound has been transformed into current, and current is transmitted over the wire and then transformed back at the other end into sound.

MR. JAKES: Yes, and I would agree --

JUSTICE SCALIA: I think it clearly --clearly would have been covered by -- by the test

Read/download a transcript of the oral arguments here (link)

"On the Scene" Reports and Blogs from SCOTUS Bilski Arguments

From Gene Quinn, IPWatchdog:

Justice Ginsberg seemed to me to be the most openly hostile toward business methods, as well as the US patent system in general. She mentioned with a certain incredulous attitude the thought of patenting tax avoidance methods, estate planning, how to resist a corporate takeover and how to select a jury. Ginsberg then several times later kept asking about how other countries handle this type of invention, noting that other systems work with a technology requirement and do not accept these types of processes as patentable. Jakes correctly pointed out that other systems follow that approach, but there is no support in US law for that approach to be followed here.
Justice Breyer also seemed unfavorable toward business methods being patentable, but seemed to genuinely be trying to figure out where to draw the line, even one time admitting that if he is honest with himself he does not know what the answer is at this point. Breyer did have difficulty with the thought that “anything that helps a businessman succeed would be patentable” if the Supreme Court were to adopt the Bilski proffered approach.

The most junior member of the Supreme Court, Justice Sotomayor, seemed openly hostile toward the Federal Circuit decision in this case. At several times throughout the argument she made her opinion clear that she thought the Federal Circuit had gone too far in its decision, a theme that was picked up on and echoed by several of the other Justices. Specifically, Sotomayor asked: “How do we limit it to something that is reasonable?” She also asked later asked Stewart: “Help us with a test that does not go to the extreme that the Federal Circuit did.”
Read the post in its entirety here (link)

From Lyle Denniston, SCOTUS Blog:
The largest question left unanswered when the one-hour argument was over was whether the Court would go forward and issue a major new ruling interpreting patent law, when the practical result here seemed so evident. Lawyers and judges have invested heavy resources in the Bilski case, and it does raise a fundamental question that may well need answering. But, when there may well be no formulation of patent law that would salvage the Bilski-Warsaw creation, why bother?

* * *

Justice Samuel A. Alito, Jr., promptly asked whether “this is a good case” to get into the broad area of patentability. Stewart suggested it was, at least for a narrow ruling validating the Federal Circuit’s test, leaving harder questions for down the road. But Justice Sotomayor then suggested a concern that seemed to be shared by at least some of her colleagues, commenting that “I have no idea what the limits of the Federal Circuit rule would be in the medical field or the computer world.” Justice Breyer chimed in that the lower court had left “a lot for the future.”
* * *

Justice Breyer also joined the Chief, suggesting that, if all that were needed were to tie a theory to a computer to make it patentable, “all you would need to do would get someone who knows computers asnd he can set up every business application” to make it eligible. Again, Stewart responded by urging the Court to keep its decision narrow, agreeing with a comment by Justice Ruth Bader Ginsburg that the case could be decided “without making any bold steps.”
Still, after this argument, it might be a fairly “bold step” to decide the case at all. Whether the Court is prepared to rule may depend upon the degree to which it accepts the assurances of the Solicitor General that the Federal Circuit would modify its test if it threatened to stifle “emerging technologies.”
Read the entire post here (link)

Tony Mauro, Blog of the Legal Times:
The long-awaited Supreme Court patent law showdown in Bilski v. Kappos is over, and it not looking good for business method patents -- or at least the one at issue in the case. Justices overall seemed hostile to a broad view of patent eligibility that would include intangible business processes.

Justice Stephen Breyer said that if everything that "helps a businessman succeed" is patent-eligible, it would "stop the wheels of progress" by granting exclusive rights to innovations that should be available to all. When J. Michael Jakes of Finnegan, Henderson, Farrabow, Garrett & Dunner, arguing in favor of the patent at issue, said one benefit of patenting innovations is public disclosure, Justice Sonia Sotomayor countered that patents in fact "limit the free flow of information." Sotomayor, a onetime intellectual property lawyer in New York, was viewed as a potential pro-patent vote, but her comments suggested skepticism.

But it's not certain that a defeat for Bilski and Warsaw will mean the Court is embracing U.S. Court of Appeals for the Federal Circuit's narrow view that to be eligible for a patent, an invention must be tied to a machine or a physical transformation. Justice Ruth Bader Ginsburg and others voiced some concern about adopting a rigid rule that would fail to anticipate unknown kinds of innovations in the future.
Read the post here (link)


Wednesday, November 04, 2009

Which Patent Office Does It Best? Survey Says: "The EPO"

Joff Wild at the IAM Blog reported on an on-going benchmarking survey being conducted by IAM magazine and Thomson Reuters on various patent-related topics.  Recently they asked questions to various professionals regarding patent quality at the larger patent offices.


Examination Quality is "Excellent" or Very Good"

EPO - 70%

USPTO - 56%

JPO - 54%

KIPO (Korea) - 25%

SIPO (China) - 18%

Overall, Patent Quality Has Improved/Stayed the Same/Gotten Worse

EPO:  improved = 26%, stayed the same = 71%, got worse = 3%

USPTO: improved = 23%, stayed the same = 61%, got worse = 16%

JPO: improved = 17%, stayed the same = 78%, got worse = 5%

KIPO: improved = 34%, stayed the same = 61%, got worse = 5%

SIPO: improved = 58%, stayed the same = 37%, got worse = 5%

(interestingly, the USPTO's "got worse" rating is over triple the amount of any other office)


Examination Quality is "Excellent" or Very Good"

EPO - 56% (-14)

USPTO - 38% (-18)

JPO - 40% (-14)

KIPO (Korea) - 21% (-4)

SIPO (China) - 20% (+2)

Overall, Patent Quality Has Improved/Stayed the Same/Gotten Worse

EPO: improved = 28%, stayed the same = 64%, got worse = 7%

USPTO: improved = 20%, stayed the same = 62%, got worse = 18%

JPO: improved = 19%, stayed the same = 77%, got worse = 4%

KIPO: improved = 30%, stayed the same = 67%, got worse = 3%

SIPO: improved = 56%, stayed the same = 42%, got worse = 2%

When asked "what are the biggest impediments to quality," the answers were
(1) the pressure to get examinations done more quickly;
(2) the sheer number of applications being submitted; and
(3) government regulations.
Joff notes

Clearly, the EPO is regarded as the pace-setter among the world's leading patent offices; both the Koreans and the Chinese have improved significantly, but still have work to do. What our respondents are telling us about the USPTO, meanwhile, only goes to emphasise the job that David Kappos has in front of him. That said, it seems to me that there are still far too many people who believe that none of the offices we asked about offer high enough standards. There is room for all of them to up their game, at least as far their users are concerned.

Read the post in its entirety here (link)

Tuesday, November 03, 2009

BPAI Gives Green Light to Nixing "Black Box" Software Patents Under 35 USC 112

Ex Parte Rodriguez, Appeal 2008-000693, October 1, 2009 (Precedential Opinion)

The application was directed to a computer-based system and method for configuring and verifying a "structurally variable and complex system."  Exemplary claim 1 reads as follows:
1. An apparatus comprising:
a system configuration generator configured to generate a random system configuration file of a structurally variable and complex system;
a system builder configured to (i) build a system level netlist and (ii) generate system parameters in response to said random system configuration file; and
a simulation verification environment configured to verify said structurally variable and complex system in response to said system level netlist, wherein said simulation verification environment is configured to provide automatic random verification of said structurally variable and complex system in response to said random system configuration file.
The text in the specification generally mirrored the claim language, where generic block diagrams were used for describing system components.  Importantly, the disclosure was based on "a conventional general
purpose digital computer" and the specification did not provide any examples of how algorithms were constructed.  Instead, the specification stated that "appropriate software coding can readily be prepared by skilled programmers based on the teachings of the present disclosure, as will also be apparent to those skilled in the relevant art(s)."

The BPAI reviewed the claims and found them to be indefinite under 35 U.S.C. 112.

Starting with the means-plus-function (MPF) claims, the BPAI relied on Aristocrat Techs. Austl. Pty Ltd. v. Inter. Game Tech., 521 F.3d 1328 (Fed.Cir. 2008) for the proposition that MPF claims in which the disclosed structure is a computer, or microprocessor, programmed to carry out an algorithm, the disclosed structure is not the general purpose computer, but rather "the special purpose computer programmed to perform the disclosed algorithm."  As such,  the corresponding structure for a 112 ¶ 6 claim for a computer-implemented function is the algorithm disclosed in the specification.

Turning to the application, the BPAI found that the disclosure was similarly lacking:
The cited portion of the Appellants' Specification describes generally that the system 100 may provide automated random verification of complex and structurally variable systems. However,  the cited portion of the Specification does not provide an algorithm by which the system is able to perform the functions recited in claim 10 to provide automated random verification of complex and structurally variable systems.

The Appellants have failed to disclose any algorithm, and thus have failed to adequately describe sufficient structure, for performing the functions recited in the means elements contained in claim 10 so as to render the claim definite. Accordingly, claim 10 is unpatentable under 35 U.S.C. 112, second paragraph, as indefinite. Aristocrat, 521 F.3d at 1333.

The BPAI next turned to a claim that recited features such as "a system configuration generator configured to . . .", "system builder configured to . . ." and "simulation verification environment configured to . . ." and found that these claims were also subject to 35 USC 112 ¶ 6:
We agree that the claim elements do not use the term "means" which would normally indicate that the claim element is intended to be a "means plus function" element . . . However . . . [w]e must determine "whether the term is one that is understood to describe structure, as opposed to a term that is simply a nonce word or a verbal construct that is not recognized as the name of structure and is simply a substitute for the term 'means for.'

We have looked to both general and subject matter specific dictionaries and we find no evidence that any of these terms have achieved recognition as a noun denoting structure. Therefore, based upon our consultation of dictionaries, a review of the record before us, and a search of the prior art patents in this field, we conclude that none of these three terms is an art-recognized structure to perform the claimed function, and claim 1 does not recite any other structure that would perform these claimed functions . . . we conclude there is no structural context for determining the characteristics of these claim elements other than to describe the function of each element. We further conclude that these claim elements are verbal constructs that are not recognized as the name of a structure and are simply a substitute for the term "means for."

Again, the BPAI found the lack of algorithmic disclosure in the specification rendered the claim indefinite.

Alternately, the BPAI rejected the claims under section 112, first paragraph, ruling that the claim elements are purely functional (i.e., there is no particular structure to support the function being performed) and thus were not enabled without undue experimentation.

Turning to the Wands factors for determining undue experimentation (In re Wands, 858 F.2d at 737) the BPAI considered: (1) the quantity of experimentation necessary, (2) the amount of direction or guidance presented, (3) the presence or absence of working examples, (4) the nature of the invention, (5) the state of the prior art, (6) the relative skill of those in the art, (7) the predictability or unpredictability of the art, and (8) the breadth of the claims.  The BPAI ruled
We recognize that functional language does not, in and of itself, render a claim improper . . . [however] the scope of the functional claim language here in claim 1 is not enabled to its entire scope . . . Appellants' claim recites no meaningful structure. Instead, the scope of the functional claim language of claim 1 is so broad and sweeping that it includes all structures or means that can perform the function. It is not limited to any corresponding structure, material, or act disclosed in the specification and equivalents thereof.

[W]ith this opinion we do not mean to imply that all functional language will violate the Halliburton rule as it does here. We note that functional claim language tied to a definite structure in the claim . . . is unlikely to give rise to an enablement rejection where a person of ordinary skill in the art would likely know how to make and use the embodiments that give rise to the structure. However, in this case and those like it, the purported "structures" in the claims are essentially black boxes not connoting any structure to the skilled artisan, and are merely circularly defined by their desired functions. For the reasons expressed above, these "structures" are not enabled and are properly rejected under 5 112, first paragraph.

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

Wednesday, October 28, 2009

Patent Officials: "Worst Is Yet To Come"

From today's EurActiv.com:

Gerard Torres of the United States Patent and Trademark Office (USPTO) said an analysis of patent filings at his organisation suggests there is usually a lag of about one year between a recession and its effect on patent filings.

"The current recession is typical in this manner, as monthly patent filings did not begin to display weakness until late 2008, early 2009. This may mean the worst is yet to come in terms of the decline in patent filings. Total patent filings are expected to be down by about 1% to 2%," he said.

The EPO acknowledged that a similar picture is evident in Europe where the full impact of the recession on patent filings will not be clear for some time. A spokesperson said companies follow a range of patterns when filing patents in several countries, with timescales ranging from 12 to 32 months.

"We may get the full picture of how the patenting activity was influenced by the crisis later this year, or perhaps only next year," a spokesperson said.

Read "Patents suffer as crisis hits innovation" (link)

Tuesday, October 27, 2009

USPTO Looks to Reduce "Stress" of Data Delivery, Seeks High-Volume Dissemination for Future

Currently, the USPTO is looking to unload about 2 petabytes (i.e., 2000 terabytes) of patent-related data sets to an outside vendor in an effort to segregate public data from the examiner systems, and to make "virtually all public information from the USPTO accessible on the Internet. " Importantly, the PTO wants to make this information free of charge to the public, including current pay-for-service data products (e.g., XML Grants). Also, this change appears to be part of a longer-term "data dissemination solution" for allowing high-volume dissemination.

These data sets include:

• Application documents (Specification, Claims, Amendments, etc.)
• Meta Data associated with the Applications (Application Data/Transaction History/Patent Term Adjustment/Patent Term Extension Foreign Priority/Attorney Address/Continuity Data/Published Documents)
• Assignment Data, including history of assignments
• Fee Data Associated with the Patent Application/Patent
• Application Meta Data (document or paper type/ date of the paper/ page size)

Notably, the USPTO has no current plans to scan or convert paper files into electronic form.

According to the USPTO:

One of the agency’s potential solutions is to enter into one or more no cost contract(s) where the vendor(s) will fund the development of a secure infrastructure at the USPTO that will permit unrestricted delivery (exceptions to this may be treaties with foreign countries or data considered to be sensitive if shared with certain other specific countries/entities) of the data in bulk or a common machine readable format to the vendor. The vendor will be responsible for funding the ongoing operation of the infrastructure, including the maintenance of the historical data and the periodic updates to the data. The vendor will also be required to make the data that is provided by the USPTO available to the public on a no charge basis. As part of any resulting agreement, the vendor will be allowed to maintain, repackage (add value), distribute, and sell any resulting enhanced data sets and retain any fees collected.

For more information, see "USPTO's Data Dissemination Solution" via Fed BizOpps.gov (link)

Read the PTO's Q&A document on the project here (link)

For a timeline on the project, click here (link)

For a list of interested vendors competing for this work, see here (link)

See also, "Patent office wants help reselling data" (link)

Monday, October 26, 2009

Study Concludes U.S. Would Benefit From EPO-Style Opposition

Professors Stuart J.H. Graham and Dietmar Harhoff published a paper recently that analyzed the potential effects of a post-grant review procedure (opposition) in the U.S. One particularly interesting aspect of their paper is the comparison of litigated U.S. patents versus their EU counterparts. The paper found that:

• EPO opposition rates of the twins of U.S. litigated patents are about 3 times higher than for non-litigated patents (20% versus 6%). Not surprisingly, EPO applications relating to litigated patents are broader in scope, have more claims, contain more references to earlier patents, and receive more citations from subsequent patents;

• On the opposition outcomes, between 22.6 and 24.4% of litigated patents are revoked at the EPO. This is lower compared to the 27.6-39.5% of non-litigated patents. Surprisingly, approximately 14% of oppositions are abandoned by the owner.

• EPO applications that directly relate to U.S. litigated patents have a higher grant rate (80.3%) than equivalents of non-litigated patents (67.9%); and

• The European model tends to exclude equivalents of litigated U.S. patents due to an increased likelihood of opposition, and not by virtue of lower grant rates, or less favorable opposition outcomes;

Professors Graham and Harhoff then performed certain societal "welfare calculations" to conclude that instituting a post-grant review (PGR) system in the U.S could have quite a significant impact on social welfare, provided that the cost of the PGR system is kept reasonably low (<$500k):

[O]ur analysis and welfare calculations suggest that the benefit from PGR review in terms of social welfare per year—when put in dollar terms—could be nearly $25 billion. The main parameter affecting this estimate is not savings on the cost of litigation, but the social costs of currently unlitigated patents that bestow excessive market power on some applicants. This market power either allows the patentee to extort licensing fees, or force competitors to invent around the respective patent. But even when we draw a conservative scenario, and assume a very low social cost figure of $1 million on average for these patents, our benefit-cost ratios still indicate that the benefits of such an institution compares very favorably to its costs.

For more information, read/download "Separating Patent Wheat from Chaff: Would the U.S. Benefit from Adopting a Patent Post-Grant Review? " (link)

Monday, October 19, 2009

Arti Rai Heads to USPTO; More Patent Reform News

While it has not yet been announced officially, Arti Rai appears to be on her way to becoming the USPTO's next Administrator for External Affairs. In this position Rai will oversee the Office of International Relations , the Office of Congressional Relations and Office of Enforcement. According to at least one report, Rai is expected to arrive "any day now" to take the position.

While being well respected in academic circles, Rai has been a controversial figure on the patent front (see, e.g., "Professor Arti Rai to the Patent Office? I Sure Hope Not!" (link)), particularly for her strong endorsement of the PTO's patent continuation rules; a copy of the "law professor amicus brief" - cheekily referred to as the "dirty dozen" brief - in support of the rules can be downloaded here (link). Also, contrary to the beliefs of many in the patent bar, Rai argues that the patent system would benefit from the USPTO having more control over rulemaking authority (link). Finally, Rai also supports the idea of creating a "gold-plated" patent system applicants, where the "clear and convincing" validity standard would be applied only to patents that have undergone a more rigorous (and expensive) examination process. You can here Rai discussing her views on this, and other topics, here (link)

In related news, Peter Pappas, who previously served in several capacities in the Clinton administration, has been brought on to head up the USPO's communications and public outreach operation.

On the Patent Reform front, reports are surfacing that attempts are being made to schedule debate on the Patent Reform Bill before the end of the year. According to CongressDaily:

Senate Judiciary Chairman Patrick Leahy said Thursday he wants to work with Majority Leader Harry Reid to schedule debate before the end of the year. Leahy made his comments the same day that PTO Director David Kappos told the American Intellectual Property Law Association's annual meeting that a legislative fix is needed immediately. "Not everyone is getting everything they want" in the bill, Kappos said, but it is a "major positive step" for the stakeholders involved.

At this time, at least 12 Senators have written Leahy expressing concern over the "problematic" nature of re-examination requests, arguing that "additional work" needs to be done in that regard:
These so-called post-grant review provisions, as currently crafted, are quite problematic. This language, which would permit serial challenges to patents at the U.S. Patent and Trademark Office and in the courts, threatens to diminish the value and enforceability of U.S. patent rights at a time when America's economic recovery is dependent on the strength of U.S. innovation. Ideally, we hope these issues can be fully resolved before the bill comes to the floor.

Red the letter here (link)

Friday, October 16, 2009

Kappos to Speak at ACCA Meeting in Boston

The Association of Corporate Counsel (ACC) announced this week that it will feature USPTO Director David Kappos at its 2009 Annual Meeting in Boston next week. Kappos will appear on an interactive panel discussion, “Meet the USPTO Brass”, on Tuesday, October 20 at 9 am Eastern at the Hynes Convention Center. The event is presented as part of the ACC Annual Meeting in conjunction with the ACC Intellectual Property Committee.

According to the ACCA website, high-level USPTO personnel will be on hand to "discuss current patent and trademark issues, and more importantly, listen to you — the customer." In addition to Kappos, Commissioner for Trademarks Lynne G. Beresford and POPA President Robert Budens will be on hand to participate and take questions.

For more information, click here (link)

Tuesday, October 13, 2009

Chinese Gov't to Fund Foreign Patent Filings for SMEs

The Chinese Ministry of Finance (MOF) announced today that approximately 100 million yuan ($14.65 million) will be made available to small- and medium-sized enterprises (SMEs) applying for patents abroad. According to one report,

SMEs, 95 percent of which are privately-owned, have played an increasingly important role in China's economy over the last several years. SMEs contribute to 60 percent of China's GDP, 50 percent of tax revenues, 68 percent of exports and 75 percent of new jobs every year, according to official statistics.

SMEs accounted for 66 percent of patent applications in China in 2008, but overseas is a different story.

Ma Hongya, an official from the Beijing Intellectual Property Bureau, told the Global Times that the Chinese firms applying for patents abroad are mainly large companies, and SMEs cannot afford to carry out the procedures and research an application requires.

In order to be eligible, patents must be in PCT format and must first be approved by the State Intellectual Property Office (SIPO). State-owned enterprises will not eligible for the subsidy. Additionally,
[F]oreign patent application projects must either help exert China's industrial advantage and be internationally competitive; be expected to explore the international market or expand its international market share; or have patented products with an expected large capacity in the international market and good market prospects.

Under the proposed policy, the government will provide SMEs as much as 500,000 yuan ($73,238) for each patent application abroad.

Read People's Daily Online "Central government to subsidize foreign patent applications" (link)

See also, "MOF to support overseas patents" (link)

Ranking Government Patents

Government Agencies do not patent heavily, as they account for approximately 1% of all utility patenting per year. Many government agency patenting efforts are more for defensive purposes. However, governments contribute significantly to patenting innovations through funding and grants to both private and public sectors.

Tammy D'Amato of Patent Board has released rankings for the top 10 government agencies having the greatest "technology strength" in their patent portfolios. The rankings, and the 2009 patent grant rate, follow:

(1) Electronics & Telecommincations Research Institute (KR) (286 patents)
(2) United States Navy (236 patents)
(3) United States Department of Energy (194 patents)
(4) United States Army (137 patents)
(5) NASA (85 patents)
(6) Japan MEXT (Ministry of Education, Culture, Sports, Science & Technology) (190 patents)
(7) US Dept. of Health and Human Services (123 patents)
(8) Agency for Science Technology and Research (Singapore) (39 patents)
(9) Japan METI (Ministry of Economic Trade & Industry) (82 patents)
(10) CNRS (Centre Nationale de la Recherche Scientifique) (France) (96 patents)

See the complete statistics here (link)

Read BusinessWeek.com "U.S. Slips to Second in Patents" (link)

Monday, October 12, 2009

Examining Patent Examination

Continuing their earlier work on patent examination and prosecution, professors Mark Lemley and Bhaven Sampat released a draft copy of their paper title "Examining Patent Examinations," which statistically analyzes patent applications filed in the month of January 2001 - the year PAIR was introduced - through April 2006. Here are some of the things they found:

• 85% of the PTO's first office actions are non-final rejections; only 13.5% of granted patents issued on the first office action without any argument or negotiation.

• Almost three-fourths of the applications that do issue (73.1%) do so without ever receiving a "final" rejection. More than half of those applications that received a final rejection had ultimately resulted in a patent

• Amendments are key to obtaining a patent: over 94% of issued and pending applications had some form of amendment during prosecution. After a final rejection, 66.1% of amended applications are patented (versus 29% pf those that were not amended)

• Despite the fact that Examiner amendments are allowed as of right only after a non-final rejection, 77.2% of interviews come after the final rejection. While 50.91% of applications with a final rejection but no interview are eventually patented, 62.6% of those with an interview after final are patented.

• 14.4% of all applications have children (continuations, CIPs, divisionals); 15.9% of all applications have RCEs. Of the continuation types, 30.16% are continuations, 20.96% are CIPs and 38.19% are divisionals.

The technology areas with the greatest percentage of continuations:

(1) AU1600 Biotechnology and Organic Chemistry -- 27%
(2) AU1700 Chemical and Materials Engineering -- 20%
(3) AU3700 Mechanical Engineering, Manufacturing, and Products -- 17%
(4) AU2800 Semiconductors, Electrical and Optical Systems and Components -- 15%
(5) AU2600 Communications -- 11%
(6) AU2100 Computer Architecture, Software, & Information Security -- 10%
(7) AU3600 Transportation, Construction, Electronic Commerce -- 10%

The paper concludes:

The evidence illuminates the patent prosecution process as a continuing negotiation between examiner and applicant. That negotiation does not end with an initial or even a final rejection. Interviews and amendments after final play an extremely significant role in generating patents, and in limiting the scope of those claims as well. Nor is that the end of the process. Continuation applications are flourishing. They have broken into two roughly equal groups, with different uses. Many applicants are using RCEs to keep fighting for claims that the examiner wasn’t willing to give them. The second group is filing continuation applications rather than RCEs. They have opted for a slower process, either because they want delay so that they can modify their application to track developments in the marketplace or because they want multiple patents to build an effective fence around a single invention.

Read/download a draft copy of the paper here (link)

Thursday, October 08, 2009

USPTO Continuation Rules *DEAD* (More-or-Less)

Today the USPTO announced that it has filed a joint motion with Plaintiff GlaxoSmithKline to dismiss the lawsuit related to continuation rules. From todays' PTO press release:

Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos has signed a new Final Rule rescinding highly controversial regulations, proposed by the previous administration, that patent applicants felt unduly restricted their capacity to protect intellectual property. The regulations, which addressed the number of continuation applications as well as the number of claims that could be included within each application, were published in the Federal Register in August 2007, but were enjoined and never came into effect.

The USPTO also announced that it will file a motion to dismiss and vacate the federal district-court decision in a lawsuit filed against the USPTO that sought to prevent the rules from taking effect. GlaxoSmithKline - one of two plaintiffs in the Tafas v. Kappos lawsuit - will join the USPTO’s motion for dismissal and vacatur.

“The USPTO should incentivize innovation, develop rules that are responsive to its applicants’ needs and help bring their products and services to market,” Kappos said. “These regulations have been highly unpopular from the outset and were not well received by the applicant community. In taking the actions we are announcing today, we hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive, and transparent to the public.”

Interestingly, plaintiff Tafas has not agreed to drop the action and maintains that the district court decision should be upheld to limit the USPTO’s substantive rulemaking power.

Read the USPTO press release here (link)

Tuesday, October 06, 2009

First Action Interview Pilot Program Expanded by the USPTO

Lat week the USPTO announced that it is expanding its First Action Interview Pilot Program, where an applicant is entitled to an interview with the patent examiner prior to the first office action on the merits in a new utility application.

Previously, the program was limited to two computer-related technology areas, but now includes additional technology areas for a six-month period beginning on October 1, 2009. According to the USPTO, the initial pilot program showed that

[T]he patent process benefits when interaction between the applicant and the examiner are enhanced at the beginning of examination because patentability issues can be resolved early when the applicant and the examiner discuss them one-on-one. For the applications involved in the initial pilot, the First-Action Allowance rate increased six-fold when compared to applications from the same technology area not involved in the pilot.

Currently, an applicant may request an interview prior to a first action. However, granting of an interview is within the discretion of the examiner who has not yet reviewed the case, and the applicant may be required to identify relevant documents and explain how the invention is patentable over these documents.

Under the expanded pilot program, the examiner will conduct a prior art search and provide the applicant a pre-interview communication, which is a condensed preview of objections or rejections proposed against the claims. Within 30 days from the issue date of the pre-interview communication, the applicant must either choose not to have a first action interview with the examiner, or schedule the interview and file a proposed amendment or remarks (arguments).

Should the applicant choose not to have a first action interview, a First Action Interview office action will be promptly issued and the applicant will have one month or 30 days, whichever is longer, to reply. If an interview is scheduled, the applicant must be prepared to discuss issues related to the patentability of the claims. In this interview, if the applicant and the examiner reach agreement on all claims in regards to patentability, a notice of allowance and fees due will be issued. If agreement is not reached on all claims in regards to patentability, the applicant will be given a First Action Interview office action setting forth any requirements, objections and rejections to which the applicant will be given one month or 30 days, whichever is longer, to reply, with limited extensions of time. It is this First Action Interview office action that is considered the first action on the merits in the application.

There have been several improvements made to the program since the initial pilot. For example, the response period to reply to the pre-interview communication can now be extended by 30 days. Also, the applicant can now waive receipt of the First Action Interview office action during the interview with the examiner, convert the previously-submitted draft amendment to a formal amendment and proceed directly to the second substantive examination. This may be preferable to those who would prefer not to wait for the First Action Interview office action and refile the proposed amendment formally.

For details regarding eligibility and criteria for participation in the pilot, click here (link) (to see the enhanced page, click here)

Read the USPTO press release here (link)

- Generally, an applicant's request to participate in the program must be filed during the six month life of the program and at least one day before a first Office action on the merits of the application appears in the Patent Application Information Retrieval (PAIR) system.

- The request to enter the Pilot Program must be made via EFS-Web

Thursday, October 01, 2009

USPTO Alert: Software Not Calculating National-Stage Patent Term Adjustments Correctly

The following notice from the PTO is important for any overseas patent filer having recently allowed or issued patents stemming from § 371 applications:

The USPTO is in the process of correcting an error in the computer program that it uses to calculate the patent term adjustment that affects patents issuing from international applications entering the national stage as to the United States pursuant to 35 U.S.C. § 371. The USPTO's computer program incorrectly calculates the three-year pendency provision of 35 U.S.C. 5 154(b)(l)(B) in international applications as being measured from the date that the requirements of 35 U.S.C. 9 371 were fulfilled rather than the date the national stage commenced under 35 U.S.C.4 371(b) or (f) in the international application.

Read the full notice here (link)

N.D. Illinois Issues Local Patent Rules

From the Northern District of Illinois website:

"The judges of the Northern District of Illinois have enacted the Court’s Local Patent Rules to guide the pretrial procedures in patent cases. The Local Patent Rules are effective as of October 1, 2009, and are available on the court’s web site, www.ilnd.uscourts.gov, under Local Rules."

Click here to view the local rules from the court's website.


Final Local Patent Rules (link)

Final Estimated Patent Case Schedule (link)

Appendix A (link)

Appendix B (link)

Judge Michel on the Patent System

On the nomination of Kappos as USPTO Director:

I think the selection of David Kappos as the director of the USPTO is the clearest indication of the new administration's appreciation of IP issues . . . This appointment is salutary - Kappos is a highly experienced lawyer with a worldwide perspective and strong management, as well as legal and technical, skills.
On USPTO funding:

The US Congress decided some years ago that the USPTO must be self-supporting. However, this works only if the fees are adequate to generate the revenue needed for a high-quality, speedy process for both trademarks and patents. I think the reality is that the fees, although they have been raised over the years, are still woefully inadequate to support the examination and IT resources required on the patent side and they barely cover the internal costs incurred on the trademark side. In my opinion, Congress has relied excessively on fee revenue to support the office. During the current economic crisis it would make sense to alter the financing arrangements in place for the USPTO so that it can draw on both taxpayer and fee-generated funds. I am not suggesting that this dual-funding option should be ongoing, but I do think it would be justified as an emergency stop-gap measure. A transfusion of public money to the USPTO would help rescue it from its current mission impossible. It simply cannot do the job needed by industry, the corporate world and ultimately the national economy with the totally inadequate resources it currently commands.
Michel's remarks can be viewed in full at World Trademark Review (registration required). You can also read comments from Joff Wild at the IAM Blog here (link).

Also, Judge Michel does not appear to be enamored with the tenor of arguments in favor of patent reform, or the diversity of voices - recently, he implored a group of lawyers to "voice their views" in the congressional debate over patent reform, and "lamenting that California technology companies are currently driving the discussion." Michel remarked:
Patent legislation is an opportunity for things to get much better, but it's also a risk for things to get much worse, and it's not entirely clear which direction it's going to head in . . . It will depend a lot on what people in the profession do. If we each do our part, then I think the odds go up greatly that the outcome will be favorable to the broad mass of companies.
From today's article from Law.com:
Michel estimates that 14 Silicon Valley companies, which mainly produce computer and telecommunications equipment, are influencing the debate the most. The interests of many other industries and geographic regions and the bulk of some 30,000 U.S. companies with more than 100 employees, he suggested, are not being heard.

In reviewing most of the congressional testimony from the past five years, Michel said he found it lacking. Specifically, he said statements that the patent system has been ruined by an explosion of litigation and that there have been rampant and excessive damage awards are wrong. Both the number of patent infringement cases filed and the median award in those cases have been stable for the past 15 years, he said.
Read Law.com "Judge Michel Calls for More Voices in Patent Reform Debate" (link)

"That's One Small Step . . ." Kappos Starts PTO Reform By Tweaking Examiner Productivity Metrics

Yesterday, the PTO published a briefing paper that was provided to the USPTO examining corps (via POPA) on a proposal that would change the "count system" in the USPTO, which is universally blamed as being a large contributor to the current backlog. Under the current count system, examiners are paid using a modified GS schedule and earn more money through productivity "count" incentives. As examination progresses, examiners get counts to earn incentive credits at various stages. The more "counts" an examiner gets, the more money he/she typically earns.

Of course, this has led to accusation of examiners (as well as applicants) "gaming" the system to gain an advantage (e.g., "RCE churning"). The current proposals are aimed at curbing these practices.

The modified count proposal rests on the following:

• Combining count system with more time for examiners;

• Providing more time overall for examiners by: (1) adding 2 hours to each examiner’s FY09 Hrs/BD); and (2) add additional time, if necessary, to account for reduction in RCE counts so that every examiner gets at least 1 net additional hour over their FY09 expectancy;

• Give more time for First Action on the Merits - shift counts so FAOMs get more credit, and subsequent actions get less;

• Diminish credit for Requests for Continued Examination (RCEs);

• Provide time for examiner-initiated interviews - one hour of non-examining time would be granted for conducting the interview and preparing the post-interview documentation for examiner initiated interviews (interviews for restrictions would be excluded); and

• Provide consistent credit for transferred or “inherited” amendments - initial or first Office Action done by the new examiner on the transferred or “inherited” amendment will get a set amount of counts (non-RCE transfers = 1.5 additional counts total; RCE transfers = 1.75 counts).

With regard to patent quality review:

- No examiner shall receive an oral warning based upon a single clear error in Patentability Determination.

- No examiner shall be deemed to have failed an oral warning improvement period on the basis of a single clear error in Patentability Determination.

- However, an examiner may receive an oral warning for multiple clear errors in Patentability Determination over a period of two or more consecutive quarters during a fiscal year.

As a side note, the Kappos proposal is not final - the modifications must still be approved by agency employees in the coming weeks. If enacted, the modifications to the count system would be the first major change since 1976.

Applicants should be encouraged that this proposal came so quickly after Kappos took over in the USPTO. Additionally, the USPTO has traditionally been less-than-eager to post or otherwise publish these types of internal documents - the openness of the current regime is certainly refreshing.

To view the briefing paper, click here (link)

Tuesday, September 29, 2009

PTO Extends Comment Period for 101 Interim Examination Instructions

After releasing the interim examination instructions for evaluating patent subject matter eligibility under 35 U.S.C. 101 on August 29, the USPTO issued a notice on Sept. 17 requesting comments from the public. Strangely, the PTO only provided 11 days for the public to submit all comments (Sept. 28). The USPTO has now extended the comment period to October 17. From the the latest notice:

The USPTO is extending the comment period to ensure that members of the public have sufficient opportunity to submit comments on the Interim Patent Subject Matter Eligibility Examination Instructions. A notice extending the comment period will be published in the Federal Register, and it will provide a new comment deadline of 30 days from the publication date of the notice in the Federal Register. The USPTO will revise the instructions as appropriate based on comments received. Comments that have already been received are under consideration.
Read the full notice here (link)

Do Assignments Require Express Language to Cover CIP Patents?

Gerber Scientific Int'l v. Satisloh AG, No. 3:07-CV-1382, (D. Conn., September 25, 2009, order) (P. Dorsey)

Gerber obtained patents via a broadly-worded assignment conveying all "rights, title and interest" in "the inventions covered thereby and any division reissues and extensions thereof." Notably absent from the assignment was the conveyance of continuation-in-part (CIP) patents and applications.

During litigation, Satisloh moved to dismiss the enforcement of a patent stemming from a CIP related to the previously-assigned patents, arguing that Gerber did not own the patent, and thus had no standing to bring suit. The district court initially dismissed Satisloh's motion. However, on further motion by Satisloh, the court amended the dismissal and certified the issue for interlocutory appeal for the Federal Circuit.

Although the entire ruling will be certified, the Court believes that the issue over which substantial grounds for disagreement exist is whether the Pilkington to Coburn Assignment included the continuation in part (“CIP”) which resulted in the ‘771 patent. The ruling held that although the assignment did not specifically use the term “continuation in part,” the CIP was included in the assignment. The assignment was broadly worded and specifically assigned all “rights, title and interest” in “the inventions covered thereby and any division, reissues, continuations and extensions thereof.”

However, Defendants convincingly argue that reasonable grounds exist for a difference of opinion. Although courts have found variously worded assignments to include CIPs, Defendants are correct that there is no binding precedent holding that an assignment with the exact terms cited above includes CIPs. Furthermore, a substantial ground for difference of opinion can be found even in Rowe Int’l Corp. v. Ecast, Inc., 500 F. Supp. 2d 887, on which the Court heavily relied. Although Rowe held that an assignment’s failure to use the “magic words” [CIP]” “is of no consequence,” the Rowe assignment specifically included “improvements.” Rowe, 500 F. Supp. at 891. The Pilkington to Coburn assignment, in contrast, did not mention “improvements” or use other language that referred specifically to CIPs.

[F]or the reasons stated above, Defendants’ Motion to Amend and Certify for Interlocutory Appeal is granted. All further proceedings in this case are stayed, pending resolution of the interlocutory appeal by the Court of Appeals for the Federal Circuit.

Read/download the order here (link)

Read/download Satisloh's brief for interlocutory appeal here (link)

Thursday, September 24, 2009

BPAI: 101 Rejections Shouldn't Be Based on Implication If Hardware is Disclosed

Ex Parte Azuma, Appeal 2009-003902 (BPAI, September 14, 2009)

The Appellant filed a patent application which claimed, among other things,

“[a] computer program product for causing a computer to translate a text in a first language into a second language, the computer program product comprising: a computer usable medium having computer usable program code embodied therewith.”
The specification disclosed that storage media could be a memory, hard disk, floppy/disk drive and "various other hardware configurations" such as, a CD-ROM or DVD-ROM drive. The computer program for controlling the CPU was disclosed as being stored upon such computer usable media as “a distributed magnetic disk, an optical disk, semiconductor memory, or other recording media, or distributed over a network.”

In light of this, the Examiner rejected the claims as being directed to nonstatutory subject matter.

Specifically, the Examiner argued that, even though the Specification suggests that the computer usable medium may be a CD-ROM or DVD-ROM, the Specification also suggests that "other configurations are possible as well." The Examiner therefore concluded that the computer usable medium is open to any reasonable interpretation and that one of ordinary skill in the art can appreciate that a computer usable medium can be interpreted as a carrier wave or a network signal, both of which are considered non-statutory under 35 U.S.C. § 101.

The BPAI ruled that since hardware was disclosed, the Examiner could not implicate non-statutory subject matter into the meaning of the claim term
Referring to the Examiner’s finding that the Specification also suggests that "other configurations are possible as well," we find that the Specification teaches in particular that “various other [hardware] configurations are possible” . . . Since hardware is a tangible medium, we find that the reference to “various other [hardware] configurations” meets the tangibility requirement to be a manufacture.

Thus, based upon the Specification as a whole, we find that Appellant’s description of a ‘computer usable medium’ is based upon tangible storage media, such as a server, floppy drive 109, main memory 103 and hard disk 105 as specified by Appellant.

We find that the Examiner erred in finding that the cited claims implicate the use of carrier waves that embody a machine executable program or data structure. Therefore, since Appellant’s independent claim 13 is limited to being recorded on a (tangible) computer-readable medium, we reverse the Examiner’s rejection of independent claim 13 under 35 U.S.C. § 101 as being directed to nonstatutory subject matter.
The BPAI should consider issuing a precedential or informative opinion on the practice of reading non-statutory features into claims by implication. This has become a common practice in certain areas of the USPTO that creates needless conflict for Applicants when a Specification contain catch-all statements ("other configurations are possible") with regard to mediums.

Read/download the opinion here (link)

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