Intellectual Property Law Blog

Last month, the Court of Appeals for the Federal Circuit decided (sua sponte) to reconsider its landmark State Street decision on patentable subject mater , and ordered an en banc hearing for an appeal in the case of In re Bilski.  In its order, the Court presented the following five questions:

The push to reform the U.S. patent system tracks back to February 2003 with the publication of the USPTO's 21st Century Strategic Plan.  Other studies followed, identifying key areas for reform: improving the quality of patents, litigation reform, and harmonization of U.S. patent law with the laws of the U.S.'s major trading partners.

Nintendo and Sony face a patent infringement lawsuit filed by Copper Innovations Group in the United States District Court for the Western District of Pennsylvania. The Pennsylvania based company filed a patent in 1996 for a "Hand Held Computer Input Apparatus and Method." The method described therein provides for hardware identification numbers to be assigned to specified device transmissions that would then be used as a means to organize the input of these transmissions when connecting them to a system. The suit targets the Remote and Nunchuk from Nintendo's wildly popular Wii gaming system in addition to Sony's Sixaxis controller and Blu-ray remote.

The patent law and business communities spent much of 2007 waiting anxiously to learn whether the Patent Reform Act of 2007 would become law.  We now know the answer - it will not.  Though once again Congress has failed to adopt meaningful patent reform, patent law continued to evolve in 2007 through several significant decisions handed down by the United States Supreme Court and the Court of Appeals for the Federal Circuit.  Generally speaking, these several decisions improved the ability of an accused infringer to defend itself.

One of the most significant and closely watched business cases to be decided by the United States Supreme Court this year involves the over one hundred year old doctrine of "patent exhaustion" or "first sale."  The case, Quanta Computer, Inc. v. LG Electronics, Inc., pits a Taiwan based computer manufacturer against a Korean based electronics giant.  As an indication of the commercial significance of the issues to be decided by the Supreme Court, over twenty amicus (or friend of the court) briefs have been filed by major technology companies, industry associations and the United States Patent Office.  A decision on the case is expected to be rendered by June, 2008.

The U.S. District Court for the Eastern District of Virginia has issued an order enjoining the implementation and enforcement of the new U.S. Patent and Trademark Office (“PTO”) rules related to claims and continuation practice, one day before the new rules were set to take effect on November 1, 2007.

Click here to view a PDF copy of the document.

When attempting to prove inducement of infringement under 35 U.S.C. § 271(b), must the patentee prove that the alleged inducer knew or should have known that his or her actions would induce an actual infringement?  Or does it suffice to show that the alleged inducer intended to cause the acts that constituted direct infringement, regardless of whether the alleged inducer also knew or should have know that these acts would constitute direct infringement?

Under the recently revised continuation rules, patent applicants may submit more than five independent claims or twenty-five total claims in an application, only if the applicant files an “Examination Support Document” (ESD) before to the first Office Action.

This article from The Economist provides an excellent overview of the U.S. Patent Office’s “Peer to Patent” program, which aims to open the examination of patent applications to the public.

As discussed in connection with a previous post (please click here), the Senate and the House of Representatives ("House") were each considering their own versions of bills to reform the patent system (S. 1145 and H.R. 1908, respectively), each bill sparking substantial debate among politicians, judges, special interest groups and businesses large and small, given the "sweeping" nature of their reforms.

Click here to view a PDF copy of the document.

Click here to view a PDF copy of the document.

In Seagate, the en banc Federal Circuit resolved several issues relating to willful infringement of a patent.  The case came to the court on defendant Seagate Technology’s petition for a writ of mandamus.  At the district court, Seagate had asserted the advice of counsel defense to willful infringement based upon three written opinions prepared by its opinion counsel.  Although Seagate produced all of the opinion counsel’s work product and made its opinion counsel available for deposition, the plaintiff in the case wanted more.  The trial court obliged, ordering Seagate to produce all communications with any attorney (including in-house counsel and trial counsel) and all attorney work product relating to the subject matter of the opinions.  The Federal Circuit stayed the district court’s order pending its decision on whether to grant Seagate’s petition.

On August 10, 2007 the United States Patent and Trademark Office ("USPTO") announced that it is proposing new rules for the examination of any claim using alternative language directed to more than one independent and distinct invention.  The USPTO believes the new rules will improve an examiner’s ability to focus the examination process for these types of claims.

The USPTO announced on July 25, 2007 that the Office of Management and Budget ("OMB") completed its review of the new rules regarding continuation applications and claims limits, and that the final rules will be made public when they are published in the Federal Register, which is expected to be later this summer. The rules will become effective at least 60 days after publication in the Federal Register, and no earlier than October 1, 2007. Abstracts of the new continuation and claims rules can be found on the Federal Regulatory Information website and via the hyperlinks below.

The Intellectual Property Owners Association (“IPO”) recently endorsed legislation to combat forum shopping in patent litigation.  Forum shopping has become a contested issue in patent litigation in recent years and two patent reform bills—H.R. 1908 and s. 1145—may soon move forward to Congress.

Called the most sweeping patent reform in fifty years, the bi-partisan Patent Reform Act of 2007 (S.1145 & H.R. 1908) was introduced on April 18, 2007.  Generally speaking, those proposed reforms include:

Several months ago Representative Xavier Becerra from Southern California, and Rep. Dave Weldon of Florida introduced the Genomic Research and Accessibility Act (H.R. 977) in the U.S. House of Representatives.  As drafted, the bill would amend title 35 of the U.S. Code as follows:

Patent claim drafters are the poet laureates of intellectual property. Although claim drafters do not employ clever figures of speech or deftly rhyme phrases, their poetic art is the ability to describe highly technical corporeal objects using nothing more than cogent stanzas of language.

In Leapfrog Enterprises, Inc. v. Fisher-Price, Inc., 06-1402 (Fed. Cir. 2007) the Court of Appeals for the Federal Circuit’s (“CAFC”) first obviousness opinion since KSR Int’l Co. v. Teleflex Inc., 550 U.S. __, 2007 WL 1237837 (2007) Leapfrog appealed the district court’s finding that the accused PowerTouch device did not infringe Leapfrog’s U.S. Patent No. 5,813,861 (“the ‘861 patent”) and that claim 25 of the ‘861 patent was invalid.  The CAFC affirmed the district court’s findings of noninfringement and invalidity based on obviousness with minimal reference to KSR and almost no guidance regarding the CAFC’s obviousness analysis going forward.

In a case likely to impact intellectual property litigation, the Supreme Court recently issued a ruling that alters the pleading standard necessary to support civil complaints filed in federal court, which governs most IP disputes.  In Bell Atlantic Corp. v. Twombly, 550 U.S. ____ (2007), the Court heightened the pleading standard, requiring that a complaint recite facts sufficient to "plausibly" support the legal claims it sets forth.

On Monday, April 30, 2007, the Supreme Court issued two widely anticipated decisions on patent law – KSR International Co. v. Teleflex Inc. and Microsoft Corp. v. AT&T Corp.

On April 18, 2007, members of Congress introduced the Patent Reform Act of 2007, which contains the following proposals:

In December 2003, the United States Patent and Trademark Office (USPTO) proposed changes to the rules governing disciplinary proceedings for patent attorneys and agents.  A wide spectrum of bar associations, law firms, and other interested people and entities submitted more than 150 written comments to the USPTO in response to the proposed changes.  After reviewing the written comments, the USPTO revised many of the proposed rules and, on February 28, 2007, requested further comments from the public.  Although the USPTO watered down or eliminated many of the more controversial proposals, some of the proposed changes may merit further scrutiny.

This week the United States Supreme Court invited the United States Solicitor General's Office to file a brief expressing the views of the United States regarding a case testing whether a settlement where an accused infringer receives substantial consideration and agrees not to market a generic version of the patented item violates federal antitrust laws.  See Joblove v. Barr Laboratories, Inc., U.S., No. 06-830.  In Joblove v. Barr Laboratories, Inc., consumer and consumer organizations allege that a settlement  between a pharmaceutical company and a generic dug manufacturer violates federal anti-trust law.

The Federal Circuit recently issued two opinions concerning actions taken against customers in patent cases.  For any patent enforcement policy, these opinions must be considered to avoid pitfalls from pursuing customers.

U.S. patent law is set to undergo a change, the scope of which remains to be seen.  The Supreme Court heard oral arguments on November 28, 2006 in KSR Int’l Co. v. Teleflex, Inc. (04-1350), the much anticipated Supreme Court case that considers whether the Federal Circuit’s “teaching, suggestion or motivation” test should be the sole test for whether an invention is obvious, and therefore precluded from patent protection.

Click here to view a PDF copy of the document.

On December 1, 2006, several amendments to the Federal Rules of Civil Procedure ("FRCP") will become effective. The changes that deal directly with electronically stored information ("ESI") will likely affect the means, method, and timing of discovery. Selected amendments to the FRCP are discussed below:

Click here to view a PDF copy of the document.

The case of Nichols Institute Diagnostics, Inc. v. Scantibodies Clinical Lab., Inc., (Fed. Cir. Sept. 20, 2006), just decided by the Federal Circuit, is a reminder that inventors must be cautious about their pre-filing publications.

With apologies to Garrison Keillor, it's been a quiet summer in the Central District of California, my home town. While the Eastern District of Texas has been stirring things up with its reading of the Supreme Court's eBay v. MercExchange case in z4 Technologies, Inc. v. Microsoft Corp., the Central District has published few patent decisions of note.

On August 21, 2006, the USPTO released for public comment a proposed five-year strategic program. The proposed five-year program seeks to achieve several goals: optimize patent and trademark quality and timeliness, and improve foreign and domestic IP protection. One initiative presented under the patent quality and timeliness prong seeks to create a pilot program for streamlining the USPTO’s patent review and approval process. Specifically, under the subheading “Strategy: Improve and enhance examination efficiency and effectiveness” the five-year program seeks to create “a peer review mechanism in which public sector volunteer experts will review published applications and provide prior art.” Thus the USPTO has proposed the launch of a pilot project to improve the efficiency and quality of its patent review process by supplementation with public peer to peer review. How did the USPTO get to this point?

On May 15, the Supreme Court, in its decision in eBay v. MercExchange, 547 U.S. 206, held that the traditional four-factor test applied by courts of equity when considering whether to award permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent Act.

Having inventors and companies explore the full potential and ramifications of their inventions is often overlooked in many companies. Here are some simple techniques that inventors, team managers, and in-house patent counsel can use to get more out of their patent claims.

Claims that a patent is unenforceable because of inequitable conduct on the part of the patentee are frequently made but rarely effective. To render a patent unenforceable, the challenging party must demonstrate by clear and convincing evidence that the patentee made a material misrepresentation with the intent to deceive the Patent Office. Normally, this is very difficult, but following a recent Federal Circuit decision, the failure to maintain detailed laboratory records might result in a court finding a patent unenforceable.  

The Supreme Court recently decided to hear KSR Intern. Co. v. Teleflex , in which the appellant challenges the traditional Federal Circuit "teaching-suggestion-motivation" test for obviousness challenges to patent validity.  This test requires that a party attacking a patent as invalid for obviousness must present objective evidence of a particular teaching, suggestion, or motivation in the prior art to combine prior art references.  KSR's petition for certiorari was supported by the Solicitor General, and corporations such as Microsoft and Cisco Systems participated in "friends of the court" briefs.  The USPTO has also abandoned its traditional neutrality and is supporting the Solicitor General's position.

The U.S. Patent and Trademark Office (“USPTO”) has announced that it is implementing a new accelerated examination program in which it hopes to provide patent applicants with a final decision on whether a patent application will be granted or denied within 12 months of the filing date of the application.

In today’s increasingly competitive generic drug market, the Court of Appeals for the D.C. Circuit has issued a ruling that makes it more difficult for generic drug manufacturers to use patent lawsuits as a vehicle to trigger, or avoid triggering, the 180-day exclusivity period for generic drugs. In Apotex, Inc. v. Food & Drug Administration, the D.C. Circuit upheld the Food & Drug Administration’s (“FDA”) rule that a court decision triggers the beginning of the 180-day exclusivity period only if it includes an actual holding on the merits as to the invalidity, non-infringement or unenforceability of a patent.

In Pactiv Corp. v. Dow Chemical Co., Plaintiff Pactiv Corporation appealed a lower court's order dismissing its declaratory judgment action for noninfringement, invalidity, and unenforceability against patent owner Dow Chemical Company. The Federal Circuit affirmed, finding that Pactiv’s claims were barred by the doctrine of res judicata.

In 1995, Dow sued Pactiv for infringement of two patents, and Pactiv counterclaimed for invalidity and unenforceability. The litigation eventually resulted in settlement/license agreements, and the suit was dismissed with prejudice. Pursuant to the settlement/ license agreements, Pactiv began paying royalties to Dow for its continued use of the patents until 2002. In 2003, Pactiv filed a lawsuit seeking declaratory judgment that the patents were not infringed, invalid, and unenforceable. Dow moved for dismissal, arguing that Pactiv’s suit was barred by the doctrine of res judicata.

The Federal Circuit affirmed the district court’s ruling dismissing Pactiv’s declaratory judgment action, finding that the settlement/license agreements failed to preserve Pactiv’s right to litigate a claim that would otherwise be barred by res judicata, stating that: 

“The question is not whether the 1998 Agreement precluded Pactiv from future litigation; the question is whether the 1998 Agreement expressly permitted Pactiv to participate in future litigation.” (emphasis in original)

Thus, an accused infringer that settles a patent infringement case may be barred from challenging the patent at issue in the future unless the settlement/license agreement expressly reserves the party’s future right to challenge the patent at issue.

Today, more than ever, companies are confronted with a broad array of electronic document issues, including data retention policies and e-discovery during litigation. Failing to comply with rules regarding such electronic data can cost millions of dollars.

For instance, in United States Securities and Exchange Commission v. Morgan Stanley & Co., Inc., No. 06 0882 (D.C., May 12, 2006), the SEC alleged that defendant failed to produce tens of thousands of emails sought by the SEC in two investigations. The court entered an 8-page consent judgment against defendant. Three of the major points in the judgment are:

1. Defendant was ordered to pay $15,000,000
2. Defendant was permanently enjoined from violating Section 17(b) of the Securities Exchange Act of 1934 (requiring a prompt document production, including electronic documents); and
3. For one year, Defendant, at its own cost, was ordered to hire an independent consultant (acceptable to the SEC) to review and evaluate defendant's policies, procedures, and training in order to comply with the judgment. The independent consultant is to make recommendations which must, absent undue burden or impracticality, be adopted by Defendant.

The United States Supreme Court recently ruled, in a unanimous decision, that a successful plaintiff in a patent lawsuit is not necessarily entitled to a permanent injunction.  Instead, the District Court must analyze the propriety of a permanent injunction under the standard four-factor injunction test comprising the following factors:

1. The existence of an irreparable injury;
2. Whether remedies available at law, such as monetary damages, are inadequate to compensate for that injury; 
3. Whether the balance of hardships favors injunctive relief; and
4. Whether an injunction would serve the public interest.

In reaching this decision, the Court rejected precedent holding that the grant of an injunction is nearly automatic in cases where patent infringement is found.  See e.g. Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1246-47 (Fed. Cir. 1989)("It is the general rule that an injunction will issue when infringement has been adjudged, absent a sound reason for denying it.").  However, the practical effect of the Court's ruling is hotly debated by practitioners. 

Chief Justice Roberts' concurring opinion states that in exercising their equitable discretion under the eBay test, courts should be mindful that historically, injunctions have usually been granted where patent infringement is found.  Many commentators cite this concurrence in support of their belief that courts will still grant injunctions in most cases. 

Others contend that injunctions will rarely be granted, particularly in cases of so called "patent trolls"—those who own patents and license them, but don't produce or sell any goods themselves.  They argue that in such cases, monetary recovery will often be adequate to compensate the patent holder and thus under the Supreme Court's test, an injunction would properly be denied.

Click here to view a copy of the opinion

On May 15-16, 2006, the U.S. Patent and Trademark Office will present a "Conference on Intellectual Property in the Global Marketplace."

The first day's presentations will "help conference attendees identify intellectual property assets and the steps needed to protect those assets in the United States and abroad." The second day's presentations will focus on "enforcement issues that may arise in protecting intellectual property rights in the United States and abroad."

In Kyocera Wireless Co. v. President Elec., LTD, Plaintiff appealed a lower court's order granting Defendant's motion for summary judgment of non-infringement of a design patent for a "portable cellular handset telephone." Plaintiff argued that summary judgment was improper without expert testimony; however, the Federal Circuit disagreed, stating:

The record does not reflect that any of the parties sought to introduce expert evidence, and expert evidence is not always necessary to resolve questions of patent infringement. See, e.g., Union Carbide Corp. v. Am. Can Co., 724 F.2d 1567, 1573 (Fed. Cir. 1984). While expert evidence may be necessary in cases involving complex technology, see Centricut, LLC v. Esab Group, Inc., 390 F.3d 1361, 1369 (Fed. Cir. 2004), this is not such a case, and [Defendant] does not explain how expert evidence would have been helpful. Because we find no error in the district court's disposition of this case, we affirm the judgment below.

Kyocera Wireless Co. v. President Elec., LTD, No. 06-1131 (Fed. Cir. May 2, 2006) (unpublished opinion).

Research institutions and certain biotechnology companies may breathe a bit easier now. That's because, in September, the Federal Circuit affirmed a decision of the Board of Patent Appeals and Interferences finding patent claims for "expressed sequence tags" unpatentable for lack of utility and lack of enablement.

The case, In re Fisher, No. 04-1465, 2005 WL 2139421 (Fed. Cir. Sept. 7, 2005), was closely followed in biotech circles. By affirming the finding of unpatentability, the Federal Circuit has likely ended a rush to patent certain small pieces of DNA sequence that can give researchers a quick and cheap way to discover new genes, get data on gene expression and regulation, and construct genome maps. The Federal Circuit has also laid down important new precedent governing the utility requirement of 35 U.S.C. § 101, a provision often forgotten in other areas of patent law.

The result: Some patent applicants in the biotech field will have to work harder to attain allowable subject matter. Also, biotech companies that are working on identifying expressed sequence tags will have to reap the rewards of this work through something other than patent law, unless they can show the utility of the underlying genes.

Click here for full article