Category Archives: Patents – Legislation

Local Patent Rules Might Have Unintended Impact.

LegalMetric sends out routine emails referring to its statistical analysis of patent litigation. Recently, it reported the most pro-patentee and [allegedly] pro-infringer districts among the federal courts.

In order, the top 10 districts favoring parties accused of infringement are:

1. Northern District of California  *
2. Southern District of California * 
3. Eastern District of Pennsylvania
4. Central District of California * 
5. Southern District of New York 
6. Southern District of Ohio * 
7. Eastern District of Michigan
8. Western District of Washington *
9. Southern District of Florida
10. District of Arizona

The ten districts most favorable to patentees were, in order:

1. District of Delaware
2. Eastern District of Texas *
3. Middle District of Florida
4. District of New Jersey
5. Western District of Wisconsin
6. Eastern District of Virginia
7. District of Massachusetts*
8. Eastern District of Missouri
9. District of Minnesota*
10. Northern District of Ohio

My curiosity was what neutral factor might bear upon whether a district favored infringers over patentees. As listed above, the asterisks indicate those districts that have local rules for patent litigation.

IMO, the rules that allocate to patentees the burden of going forward with a proposed claim construction, identification of alleged infringing subject matter with claim chart details, etc., tend to be more favorable to infringers. The local patent rules, with links to those district’s webpages, are collected nicely on matthewspatentlaw.com/documents/LR-NJ.pdf

Those districts that still practice using the ‘sporting’ rules of litigation tend to favor a patentee.

It is fair to conclude that my appraisal is unscientific and/or based on too small a sample to draw conclusions. On the other hand, the rating and report of LegalMetric has indicia of scientific reliability.

In re Bilski – Could be Transformative

News that the Supreme Court will review In re Bilski is quick to set off currents of speculation.  In its un-reviewed form, Bilski was relief from the State Street hangover and was a work-around to the stunted state of reforming the Patent Act.  Now, one wonders how the Supremes can keep intact their string of smackdowns on CAFC rulings, when Bilski seems to have been a reaction to prior whippings.

Did the Oracle Ever Speak of The Balance?

If you’ve been to Delphi, and stood at the ruins of Oracle, looking off toward the valley, wondering whether it lies at the line between the cosmological, the meta- and the physical, hinged over a sorcerer’s stone, and not far from the touristical, then you must’ve been experiencing a lot of demestica on that trip.  None of some of the mysteries at the Oracle of Delphi have been recreated at the Oracle of Silicon Valley, but still, there is there some thirst for the unknown.

Oracle entrepreneur and yachtsman Larry Ellison had his name invoked in a court proceeding, reported out of NYC, in which the Master & Commander of the Alinghi team alleges that a spy, (allegedly) from Adm. Ellison’s yacht team, tried “to illegally break into facilities to take photographs and secure information” about the design of the vessel that the Alinghi team will enter in the 2011 America’s Cup.  The interloper was arrested after Alinghi employees saw him scouting around and photographing in the area where they are building their vessel.

Do boat-builders have common law IP rights; or, did Justice S.D. O’Connor rule those out in Bonito Boats?  Perhaps the billionaires, who plan to challenge for the America’s Cup, have their own take on J. O’Connor’s remark that our laws embody a “recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy.”

A Path that is Wide, but the Gate is Narrow.

How many roads must a patentee go down, before he can see the sky?  The patentee wishes to invest in plowshares, but those infringers divert some of the budget to swords.  Then, at the reckoning, what is gained.

Passages from two recent decisions that deny post-judgment recoupment remind us that when the fire burns out, there may be nothing to carry away.

In Star Navigation Systems Group, Ltd. v. Aeromechanical Services Ltd., 2009 WL 1313208 (N.D.Cal. 2009), the accused infringer’s motion was denied after the plaintiff-patentee voluntarily dismissed the case.  A “press release issued after Star voluntarily dismissed [explaining] that Star dismissed the action after concluding any award of damages it might obtain would be outweighed by the costs it would incur in prosecuting the matter” did not prove that Star had prosecuted the suit in bad faith.

Also denied was a post-judgment motion for attorneys fees, after a jury ruling, a JMOL, and a CAFC reversal, in Sundance, Inc. v. De Monte Fabricating, Ltd., 2009 WL 1324901 (E.D.Mich. 2009).  The Hon. Avern Cohn, who has seen a lot in 30 years on the federal bench, noted all of the hoops that the patentee had hurdled, before the CAFC ruled de novo and declared invalidity ab initio.  “The ′109 patent was not only duly granted; it was thrice examined. That the Court and three (3) patent examiners got it wrong in the view of the Federal Circuit does not make this an exceptional case.”

A variety of reasons suggest why the Patent Act needs to be reformed, but the gauntlet that the CAFC requires be run before a final decision can be reached, is a good one.

Still Trying to Make the Grade.

As the mid-point of 2009 approaches, I hope to get re-grounded in that somewhat worthwhile pursuit of blawging.  As the year began, I had the pleasure of being the guest blawgger on techlawforum.net.  Doesn’t look like anyone picked up that gig after I left it.  Next, I served at the pleasure of my alma mater as an adjunct professor of IP law.  That too was a most worthwhile pursuit, but I should wait until I turn in my grades before calling it a wrap.

What then?  Sure, I’ll get back to posting about the latest cases, even though it’s my sneaking suspicion that the CAFC judges are not taking heed of my insights.

The patent landscape seems to be going from greened-up to a whiter shade of desolation.  Without the Patent Act being revised, decisions and protections will hinge on the ‘yet to be set contours’ of the Festo, KSR, and Bilski rulings.  Having a branch of government, other than the legislative, exercising the power to “promote the Progress of Science and the Useful Arts by securing” IP rights to America’s “Authors and Inventors,” is not what the framers had planned.

It just what we blawgers do. 

When ‘Fudging’ Conduct is Inequitable.

Many proposals for patent reform legislation suggest changes to the inequitable conduct defense. One recurring proposal is to require that the defense spring from information material enough to get the a patent rejected or granted.  Just checking the wrong box on a form, even intentionally, would not be material enough.  Withholding or mischaracterizing prior art, or information about a statutory bar, would be enough for a patent to be declared unenforceable. Those notions of patent reform, though, remain simply notions.

Malfeasance, which may be immaterial to a patent having being granted, is now enough to render it unenforceable.  Perhaps Applied Materials v Multimetrixs (N.D. Cal. 7/22/2008) is such a case or controversy. After an inventor signs a declaration, the PTO rules require no further signature by that inventor (provided he signed a power of attorney).  The Multimetrixs’ inventors did not sign a power, at the outset, and so, they continued to sign filings.  After notice of allowance, the application went abandoned.  Before allowance, one of the named inventors had died.  His signature on his inventors’ declaration was original, but then, was forged on filings made posthumously.  An attorney was hired, and he dealt with the abandonment issue. In the later suit, Applied alleged its engineers, not Multimetrixs, were the true inventors. Applied sought a correction of inventorship, and Multimetrixs counterclaimed for infringement.  The judge declared Multimetrixs’ patent unenforceable, but made no declaration about inventorship.

In the garden-variety case, the applicant withholds prior art or a prior sale, or makes arguments favoring patentability that were contrary to the truth or to other known information.  In this case, the Judge stated that the applicant’s “misrepresentations did not relate to patentability,” and that it was “irrelevant that [the late] David Marguiles’ signature may nor have been required” on the later-filed prosecution.  Seems like a good case for discussion of meaningful patent reform.

The decision lacks the step of “balancing” the materiality and the intent.  The forgery plainly was intentional, but there was not much in the materiality bucket to balance that.  In place of that analytical step, the Judge hits hard on the lack of credibility of the applicants-cum-forgers.  The opinion even recites the ‘other bad acts’ evidence abpout one of the named inventor’s conviction for “selling freon for meth[] and for money laundering,” and added for emphasis, that it was for “selling four times the amount of freon necessary to satisfy the meth[] needs of the entire California Bay Area for a year.”  That’s plainly pertinent to credibility, but the fact of forging the dead inventor’s signature was never really in doubt.  What was missing was materiality, not more evidence of intent.  The applicant’s conduct cannot be condoned, but either the patent is valid, and the inventorship is correct, or it is invalid or derives from a false claim of inventorship.  That what is material, not how much freon the applicant sold. 

Note: the author had a past, attorney-client relation with Applied, but has no knowledge of any aspect of this lawsuit other than what is set out in the recent court opinion.

Patent Sharks and a Euro Perspective on Circumnavigating Them.

The June issue of Harvard Business Review published the opinion and suggestions of Prof. Henkel of Munich Univ. of Tech., and Asst. Prof. Reitzig of the London Business School, about the pursuits of “patent sharks” in the U.S.  While no mentions of the CAFC, or of any past or proposed patent reforms, was refreshing, the Professors’ assessment and suggestions offer an unlikely way forward.

One repeated premise is the problem of “hidden” patents, and companies’ lack of awareness until being sued for infringement. Drawing upon the lurking “shark” metaphor, the article highlights the “kind of patent [that] remains hidden” and the problems “When patents are hidden.” How are patents, hidden? It notes that “Had Boston Scientific known of [Dr.] Saffran’s patent while” it was developing its stent, then “it most likely would have invented around his [Saffran’s’] technology.” My reaction, knowing little about that infringement case, was why would a company proceed to market in a crowded field of art like stents without going to school on all the prior art? To launch a $1B product, without having “known” what was in published, issued patents, and not having “known” in 2003 of an ‘invent-around’ option for a patent issued in 1997, seems like taking on avoidable, forseeable risks.

Another premise is that only “sharks” can obtain never-commercialized patents at, for example, a bankruptcy sale. What keeps tech companies from buying at fire sales, when the bankrupt was known to be doing development in their tech space? Again, these sales are on public notice, and open to the public – not hidden. If some start-up tanks, and it has the earliest-filed patent application in your company’s field of art, then get someone over to the auction to bid.

The Professors set out five suggestions. Numbers 1 and 5 urge fewer patents. #1 says to “move away from building huge patent portfolios” because that IP cannot be cross-licensed to a patent shark to end litigation. #5 says companies “must stop flooding patent offices with insignificant inventions.” Both of these may be wise, but neither offer any certain means to avoid or negate infringement suits. Suggestion #2 regards standards-setting, and avoiding development where the core technololgy may end up patented by one company, i.e., the Rambus cases. My perception is that Rambus doesn’t fit the profile of a patent “shark,” but that their transgressions are more remediable. The suggestion #3 to work with “competitors early in the R&D” stage is consonant with new business models, but again, it offers little direct insurance against being sued by some non-operating, patent holding company. The suggestion #4 to get the patent lawyers involved earlier in the project is the proposal closest to providing meaningful defenses to newly-developed technology being accused of infringing obscure, but findable, patents.

The article is just one more voice on the topic, and a non-legal perspective on remedying the problem with offered solutions. By never mentioning the ‘iceberg’ or the ‘fog’ out there, from the jurisprudential, uncertainties over the meaning of patents and their scope, the article is a bit adrift and looking out only for sharks.

Patent Reform Dayplanner.

Instead of devoting time to reading legislative rumblings about patent reform bills, or perusing lenghty studies about ‘bad’ patents and scumsucker patent plaintiffs, or searching for some common threads among all the amicus and public-interests commentaries about patent reform, it seems a better use of time to propose some radically simple change to the patent paradigm.  Here it is.

Stop using words in applications and patents.  Replace that with visuals and videos showing how to make and use the invention, visuals to show how the claimed invention is an advance over the prior art, and require visuals, drawings and charts to claim the invention.

Just think, the Markman issues, the defenses of enablement, best mode and written description would fall away.  Isn’t that what the CAFC spends most of its time with?  All patents would be based on something akin to 112P6, such as a visual plus function claims, or that, melded with the design patent practice where the depiction sets the limits of the patent.  For business methods, or internet building blocks, the application would have to have more detailed flowcharts and stated business rules.

It’s the words that have overtaken the technology, and patents without words would negate many of the present areas of controversy and calls for reform.

The Litigation Reform Aspects of H.R. 1908

Others can comment on the prosecution side of the patent reform debate.  Developments in patent litigation, which the recently-passed House bill 1908 may provoke, are more in my field of interest.  Specific attention was given to the amended provisions on venue, interlocutory appeals, and inequitable conduct.

The bill would extensively amend 28 U.S.C. 1400(b), so that venue for patent cases could be only those locales with “substantial” connections to the parties, events, or operations.   One can try to predict how courts might apply the “substantial” standards in the amended provision.  Venue would be proper if the defendant has its “principal place of business or is incorporated” there; or, if there, the defendant “committed a substantial portion” of the infringing acts “and has” a business located in that venue that “constitutes a substantial portion of defendant’s operations.”  A patent plaintiff is supposed to sue in a venue where it does “substantial” R&D or manufacturing “related to the patent” in suit.  Courts have applied a substantial presence standard to personal jurisidiction questions, but not to patent venue issues.  About the only place in the present statute that uses similar language is 35 U.S.C. 271(f) as to supplying a “substantial portion of the components” of a patented combination.  It thus is unknown what makes activity “substantial” enough to secure venue. 

A prohibition in the venue provision of the bill would ensure that no party shall “manufacture venue.”  Another implies that, even if there was a last-minute run to file cases before the statute became effective,  cases filed after 7SEP07 “shall be transferred” to a venue meeting the statute’s new precepts of “substantial” nexus.  In my mind’s eye are ‘available to sublet’ signs in Marshall, TX.

A provision would amend 28 U.S.C. 1292 to allow interlocutory claim construction rulings to be appealed, if the district court allows that in its “discretion.”  A district court may grant leave for an interlocutory appeal, but that does not ‘manufacture’ appellate jurisdiction, and the CAFC is not required to review the ruling.  Anyway, Markman is so nineties,  now everyone plays the new KSR game.

Inequitable conduct gets some needed specificity in the as-passed version of H.R. 1908.  The threshold standard of materiality is art that supports a “prima facie finding of unpatentability,” which is “not cumulative” to art “of record.”  {Quare: can art be both cumulative and indicative of unpatenability?}.  The bill promotes employment of former examiners, who now can work as experts on whether “a reasonable examiner would have made” that “finding of unpatentability.”  Q: Were you formerly a patent examiner? A: Yes.  Q: Were you reasonable? A: Yes.  To Bench: I move to have him accepted as a prima facie expert.

The second test of “materiality” is withheld information that “refutes or is inconsistent” with arguments for patentability.  One unclear aspect is that the withheld information be “otherwise material.”  If that means material enough to support a finding of unpatentability, then less material art being withheld may be “inconsistent” with an argument, but not to the point of being inequitable conduct.

Some study will be needed to divine the two burdens of proof.  The “defense” must be “established by clear and convincing evidence,” but the materiality standard, i.e., the prima facie proof of unpatentability, needs only “a preponderance of the evidence.”  Also, prima facie was a term chosen advisedly, since when evaluating it, “rebuttal evidence shall not be considered.” 

The reforms on the intent element are that “specific facts beyond materiality …must be proven” to establish intent, such as, “circumstances that indicate conscious or deliberate behavior” to mislead or deceive.  In recent CAFC caselaw only a few cases had evidence, apart from materiality, that would prove “conscious or deliberate” misconduct.  Moreover, it’s expensive to discover this evidence.   No express burden is set out for proving “intent” to “mislead or deceive the examiner,” but again, “Circumstantial evidence may be used” to prove intent.

The bill does not expressly allocate the issues are those for a jury or for a judge to decide, but apparently, the jury could decide all the issues, and leave to the court to “balance the equities to determine which” remedy to impose.  Moving the ‘balancing’ away from the evaluation of materiality and intent, and over to the selection of remedy is an excellent reform.  The present “sliding scale” applied to materiality and intent is hopelessly vague, maleable, and effectively unreviewable.

In addition to the former examiner full-employment provision, the bill includes another aspect to grow domestic service industries.  It enables the USPTO to require by regulation that applicants “submit a search report.”  That prior art search “must be performed by …individuals who are United States citizens or by a commercial entity that …employs United States citizens to perform such searches.”

The bill is a good start to reforming and standardizing these litigated issues.

Reforms That Codify, Promote Progress, and are Useful.

A lot of ink went for naught in analysis of the Leahy-Hatch 2007 patent reform bill.  Now though, a House version has moved to the floor for vote.  Patent litigators should favor Sections 10 and 11 in the “Amendment in the Nature of a Substitute to H.R. 1908” put forth by Hon. Messrs. Berman, Smith, Conyers and Coble.

Section 10 permits, but does not grant a right to, an interlocutory appeal of claim construction rulings.  The Leahy bill stayed the case upon the filing of these appeals.  The Berman bill grants the district judge “discretion whether to approve” the appeal request, and “if so, to stay proceedings” during the interlocutory appeal.  This revision, IMO, accords control properly to the district judges, rather than forcing an appeal and a stay after every Markman ruling.  Too often, patent reform proposals try to divest the district judges of control, and push everything back to the patent office or up to the CAFC.

Section 11 in the Berman bill adds back in a provision on inequitable conduct that I have been pushing for since 2004. (note to link below).  It codifies the essential aspects of the defense, rather than leave it all to any one court’s efforts to divine all that represents CAFC panels’ decisions on materiality, intent, balancing, and exceptions thereto.  The Leahy bill had no provision on inequitable conduct. 

The Berman bill codifies that the defense (1) must be pleaded with particularity, and (2) proven by clear and convincing evidence.  It defines the two elements of proof, a “material” omission or submission, and intent to deceive.  Materiality is that which a “reasonable patent examiner would consider important in deciding whether to allow” the application.  That excludes technical omissions like an inventor’s address or mistakes about small entity status.  Information that is “cumulative to information already in the record” is outside the definition of material information. 

One excellent aspect of the intent definition is that the proof must be evidence “beyond materiality of the information” omitted or submitted.  This prevents the defense from collapsing into the one issue of materiality.  Further, the proofs must evince “conscious or deliberate behavior” and that keeps a negligence case from being twisted into an intentional wrong.  These definitions, by the lack of mention, hopefully take away the “balancing” test created by the CAFC, along with the “discretion” to invalidate aspect.  The Berman bill recognizes that patents related to one “found enforceable …may also be held to be unenforceable.”  Again, this puts the proper authority with a district court, which “may” extend the determination of unenforceability to related applications.  Other proposals were wide of the mark, either limiting unenforceability to only one or more claims, or requiring that all patents in the family be deemed unenforceable.

It had been hoped that a patent reform bill would “define the contours” of the defense, and provide a “blueprint for district judges” so that inequitable conduct was handled uniformly by our courts.   That hope for codification, as expressed in my comments at an FTC Town Hall (link below, at pgs. 102 – 105), never got much traction until this amended H.R. 1908.  Finally.

http://www.aipla.org/Content/ContentGroups/Meetings_and_Events1/Roadshows
/20058/TownMeeting_Chicago_Transcript.pdf