Intellectual Property Law Blog

This morning, in a highly anticipated decision, a fractured Supreme Court affirmed the Federal Circuit's judgment in Bilski v. Kappos. The Court unanimously upheld the rejection of Bilski's patent claims, which concerned a process for hedging against the risk of price changes in the energy market. But the Court split on the grounds for rejecting the claims, with the majority characterizing the claims as impermissible attempts to patent abstract ideas while explicitly leaving open the possibility of protecting "business method" inventions in other contexts.

The Del Mar office of Sheppard Mullin recently had the rare honor and privilege of hosting an inventors forum with David Kappos, the Director of the United States Patent and Trademark Office, as the guest of honor. During the event, inventors from the general San Diego area had the unique opportunity to ask Mr. Kappos questions, in-person, regarding the patent office, and discuss issues relating to their dealings with the patent office.

On March 29, 2010, in the highly publicized and closely watched case of Association for Molecular Pathology, et al v. U. S. Patent and Trademark Office, et al. (real parties in interest patent holders Myriad Genetics and the University of Utah Research Foundation), the District Court in the Southern District of New York granted summary judgment in favor of Plaintiffs and held that 15 claims in Myriad’s 7 patents relating to human BRCA1 and BRCA2 genes (Breast Cancer Susceptibility genes 1 and 2) (collectively “BRCA1/2”) are invalid because they claim non-patentable subject matter.
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On March 22, 2010, the Federal Circuit issued an important en banc decision upholding a separate written description requirement under 35 U.S.C. § 112. In Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., the Court rejected the patent owner's contention that the written description requirement is simply a part of the enablement requirement, which requires that the specification teach how to make and use the invention. The Court had received over 25 amicus briefs. The decision keeps intact the ability of patent infringement defendants to use the written description requirement to force a narrow construction of broad claims and to invalidate genus claims where the written description is expressly or implicitly limited to a species.

In a much anticipated decision, the Federal Circuit held yesterday that two pharmaceutical companies, Wyeth and Elan Pharma, were entitled to extended patent term adjustments because the U.S. Patent and Trademark Office failed to perform a correct calculation of the adjustment. Wyeth v. Kappos, No. 2009-1120 (Fed. Cir.). The decision has broad implications because the incorrect calculations were performed as a result of a flawed interpretation of the patent term adjustment statute, 35 U.S.C. sec. 154(b), that the USPTO was applying to all patentees.

The Supreme Court recently heard oral argument in In Re Bilski, in which the Court will make a ruling on the limits of patentable subject matter.

The Chinese government’s emphasis on boosting innovation might be proving fruitful. According to the latest statistics from the State Intellectual Property Office (“SIPO”), the government entity responsible for prosecuting patents, there were 426,000 patent applications filed and 252,000 patents granted in China during the first half of 2009. Compared with the first half of 2008, patent filings are up 31.3 percent and patent grants are up 23.1 percent.

The ever-increasing reality of the global marketplace has, for many years, driven U.S. companies to seek intellectual property protection beyond the nation’s borders. Unfortunately, the reality they face is that global patent protection, and even multi-jurisdiction protection, is prohibitively expensive for all but those entities with the deepest of pockets. This, coupled with practicality problems associated with patent enforcement in foreign jurisdictions, has driven companies to develop a more strategic approach to foreign patent filings. There is no one-size-fits-all approach to foreign filing strategies. Each company must consider its business model and channels of commerce for its products, its business goals and objectives, desired utilization for its intellectual property items, and its budgetary constraints in developing a foreign filing strategy that is best suited for its needs while maximizing return on investment. Tough decisions must be made along the way, but with a practical value-minded approach, these decisions can become much easier and can increase the value returned for the foreignrelated expenditures.

With the median damages award in the millions of dollars, a patent infringement lawsuit in the US can be a boon for a patent owner or a headache for an accused infringer. In support of such awards, patent owners often argue that the value of patents, as measured by damages awards in US courts, bolsters incentives to innovate, to the benefit of consumers. Companies that tend to be on the receiving end of US patent infringement lawsuits often counter that patent owners are systematically overcompensated, leading to excessively high prices for patent licenses and actually hurting innovation.

Activision licensed the Gibson trademark and trade dress in November 2006 in connection with Guitar Hero's "custom guitar controller peripheral." Activision paid a one-time fixed license fee to cover the term of the license and Gibson agreed to help promote the Guitar Hero product.

As a result of the Supreme Court's decision eBay Inc. v. MercExchange, L.L.C., a patentee no longer can expect an automatic grant of a permanent injunction after patent infringement and validity is established. Instead, the patentee must satisfy a four-factor test by demonstrating that (1) it has suffered an irreparable injury; (2) remedies available at law (e.g., money damages) are inadequate to compensate for the injury; (3) the balance of hardships between the plaintiff and the defendant warrants a remedy; and (4) the public interest would not be harmed by a permanent injunction.

The Ninth Circuit recently affirmed in part and reversed in part the entry of summary judgment for defendant Abbott Laboratories, Inc. ("Abbott") on claims brought under Section 2 of the Sherman Act.  The Ninth Circuit found that genuine issues of material fact existed as to whether Abbot committed Walker Process fraud, one possible "sham" exception to Noerr-Pennington immunity.  The Court, however, affirmed the absence of evidence of "sham" litigation with respect to the multiple patent infringement suits that Abbott filed against its would-be competitors.  The Court also affirmed judgment for Abbott and its co-defendant on the Section 1 restraint-of-trade claim.  Kaiser Foundation Health Plan, Inc. v. Abbott Laboratories, Inc., __ F.3d __, 2009 WL 69269 (9th Cir. Jan. 13, 2009) ("Kaiser").

The law governing U.S. software patents sometimes shifts like the ground here in California – a point illustrated by the recent decision of the Court of Appeals for the Federal Circuit (CAFC) in Aristocrat Technologies Australia PTY Ltd. v. International Game Technology, 521  F.3d  1328,  1333 (Fed. Cir. 2008).
 

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Design patent owners have reason to celebrate the Federal Circuit Court of Appeals' recent decision in Egyptian Goddess, Inc. v. Swisa et al.  543 F.3d 665 (September 22, 2008).  The Federal Circuit streamlined design patent infringement analysis by disposing of the long-standing "point of novelty" test, which required the patentee to point out exactly how its patented design differed from the prior art.  Patentees now only have to demonstrate that, to an ordinary customer familiar with the prior art, an infringer's accused design “embodies the patented design or any colorable imitation thereof."  This is a wake up call for manufacturers, designers, and other entities interested in capitalizing on popular design trends – design patents have sharper claws now, and thus merit careful consideration.

How can the Obama administration fix a patent system in crisis?  The United States Chamber of Commerce has some ideas.  In its December 11, 2008, report entitled "Recommendations for Consideration by the Incoming Administration Regarding the U.S. Patent and Trademark Office" ("Report"), a bipartisan panel of the United States Chamber of Commerce makes the case that the United States Patent and Trademark Office (PTO) is deteriorating, and offers a series of suggestions to improve the quality of the United States patent system.

As the volume of global patent filings rises, patent offices around the world continue to face increasing patent administration demands.  Currently, applicants for U.S. biotechnology and organic chemistry patents can expect an average of close to two years before a first action by the United States Patent and Trademark Office (USPTO), and a total average patent application pendency of close to three years.  As part of an effort to address the challenges presented by such backlog, on September 22, 2008, the USPTO announced the establishment of a one-year Patent Prosecution Highway (PPH) pilot program between the USPTO and the European Patent Office (EPO), effective September 29, 2008.

The Federal Circuit’s recent decision in Muniauction, Inc. v. Thompson Corp., 532 F.3d 1318 (Fed. Cir. 2008), has significant implications for software and Internet patents.

Recently the inventor of an electromagnetic data signal filed a petition for certiorari, asking the Supreme Court to overturn the Federal Circuit's affirmation that his invention does not represent patentable subject matter.  See In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007) ("Nuijten" pronounced approximately "noy-ten").   While the Federal Circuit found the signals to be new and useful, the Court held that the signals were not patentable because they do not fit into any of the four statutory categories of 35 U.S.C. § 101 ("101"), required for patentability.

The United States Court of Appeals for the Federal Circuit clarified the law of design patents on Monday (September 22, 2008), with its ruling in Egyptian Goddess, Inc. v. Swisa, Inc.[1]   Prior to this decision, owners of design patents were required to satisfy the following two tests to hold infringers accountable for their alleged design misdeeds:

The Supreme Court may soon consider an issue of sovereign immunity that, depending on the outcome, could open the door to private patent holder lawsuits against state governments.  Attorneys for Biomedical Patent Management Corp. (BPM), a small California biotech, are seeking certiorari in a Federal Circuit case against California that was dismissed on grounds of sovereign immunity, thus denying the BPM patent holder millions it says it is owed in royalties from the state.  Biomedical Patent Management Corp. v. California Department of Health Services, 505 F.3d 1328 (Fed. Cir. 2007) (petition for cert. filed, 2008 WL 194299 (U.S. Jan. 22, 2008) (No. 07-956).  The crux of BPM's argument is that California, through its aggressive patent enforcement in the courts, has basically litigated away its sovereign immunity.  Or stated broadly, BPM argues that any state's repeated and voluntary invocation of the jurisdiction of federal courts to adjudicate its rights under federal patent laws constitutes a general waiver of its sovereign immunity to private suits under those same laws.

There has been an important decision in the antitrust litigation against Rambus for failing to disclose patents to JEDEC, a standard setting body (SSO).  In Rambus v. FTC, No. 07-1086 (D.C. Cir. 2008), the D.C. Circuit Court unanimously set aside the Federal Trade Commission's decision holding that Rambus' conduct constituted monopolization under Section 2 of the Sherman AntiTrust Act.  The D.C. Circuit held that the FTC failed to carry its burden to show the conduct was exclusionary.  In dicta, the Court also suggested that the FTC had taken "an aggressive interpretation of rather weak evidence" to conclude that the failure to disclose was a violation of JEDEC disclosure rules.

On June 9, 2008, the United States Supreme Court issued its unanimous decision in Quanta Computer, Inc. v. LG Electronics, Inc. and held that the patent law cannot be used to control the subsequent use or disposition of a product "that substantially embodies a patent" once the product has been sold with authority of the patent owner.  "The authorized sale of an article that substantially embodies a patent exhausts the patent holder's rights and prevents the patent holder from invoking the patent law to control postsale use of the article."  Moreover, patent exhaustion applies whether the patents are directed to products or to methods.  "Our precedents do not differentiate transactions involving embodiments of patented methods or processes from those involving patented apparatuses or materials."  In reaching its holdings, the Supreme Court reversed the Court of Appeals for the Federal Circuit which, in a line of cases, had steadily eroded the  patent exhaustion doctrine and had allowed patent owners to structure transactions providing post-sale patent restraint.

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.

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.

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.

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.

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?

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.

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:

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.