The USPTO has had a fairly large attrition rate over the past 15 years. Part of the cause of the attrition has been within USPTO. However, I believe that the real driving forces have been (1) the private great demand during that time for patent law professionals; and (2) the fact that many of the USPTO new hires were young college graduates who expected to leave their first job within a couple of years.

Training of replacement examiners is slow and expensive and also frustrates patent applicants who expect a professional examination for their $1000+ fee.

Now that the private law market has shifted, the USPTO now sees its opportunity to hire experienced individuals — folks who will “hit the ground running” and who will likely be more stable in their life goals. As a first step, the USPTO is “reaching out to former patent examiners, inviting them to return to the agency.”

In a media quote, USPTO Director David Kappos said: “These examiners can have an immediate impact on the patent examination backlog and reducing the backlog is our top priority.”

The immediate limited program is focused on former examiners who passed their probationary requirements and who resigned less than three years ago or have more than three years experience examining patents. See www.USAJobs.gov (GS 9–14).

A method for reducing a latent distance 20. 

• Attorney Marketing professional Robert Denney publishes an annual year-end report entitled "What's Hot and What's Not in the Legal Profession." First on his list for What's Hot: Intellectual Property. Not only litigation. Patent prosecution is heating up again. [LINK]
• One of the more interesting aspects of the recent i4i decision involved the Federal Circuit's interpretation of the first eBay factor: that the patentee "has suffered an irreparable injury." The court held that evidence of past irreparable harm is sufficient to satisfy the requirement of the first factor since the term "has suffered" indicates a past event. [Link] This is only odd because a primary purpose of equitable relief is to prevent future harm.
• Judge Rader will be riding circuit next year. He is scheduled to preside over the patent infringement trials for three Eastern District of Texas Cases. (Based on pacer documents and a preliminary report by Michael Smith.)
• Widevine v. Merimatrix, Case No. 07–cv-0321; Patent No. 7,165,175.
• Performance Pricing v. Google, Case No. 07–cv-0432; Patent No. 6,978,253.
• IP Innovation v. Red Hat & Novell, Case No. 07–cv-0447; Patent Nos. 5,072,412 and 5,394,521.

By Dennis Crouch

i4i Limited Partnership v. Microsoft Corp. (Fed. Cir. 2009) (Judges Schall, Prost, & Moore; opinion by Judge Prost)

The i4i district court decision created some turmoil this past summer when the Eastern District of Texas court ordered Microsoft to stop selling versions of its flagship MS Word product that infringe i4i's patent covering xml editing technology. The injunction was stayed pending appeal, but now the Court of Appeals for the Federal Circuit (CAFC) has affirmed the lower court's findings of validity and willful infringement and its award of enhanced damages and permanent injunctive relief. The only modification made by the court was to push-back the effective date of the injunction from sixty-days to five months (from the original order). Thus, "[t]he injunction's effective date is now January 11, 2010."

To be clear, the permanent injunction "applies only to users who purchase or license Word after the date the injunction takes effect. Users who purchase or license Word before the injunction's effective date may continue using Word's custom XML editor, and receiving technical support." Beginning January 11, 2010, Microsoft will be prohibited from "(1) selling, offering to sell, and/or importing into the United States any infringing Word products with the capability of opening XML files containing custom XML; (2) using Word to open an XML file containing custom XML; (3) instructing or encouraging anyone to use Word to open an XML containing custom XML; (4) providing support or assistance that describes how to use Word to open an XML file containing custom XML; and (5) testing, demonstrating, or marketing Word's ability to open an XML file containing custom XML."

Because the injunction only applies to future purchasers, Microsoft does not need to back-fix its already-distributed software. Rather, it only needs to ensure that software sold on or after January 11, 2010 is non-infringing. Microsoft may request another emergency stay of relief in order to seek en banc review of the decision. However, that process has a low likelihood of success. Because of the large damage award of $240 million, Microsoft will likely push-forward with requests for rehearing en banc and eventually a petition for a writ of certiorari to the U.S. Supreme Court.

Judging Injunctive Relief: A patentee seeking a permanent injunction must show that (1) it has suffered an irreparable injury due to the infringement; (2) remedies available at law (typically monetary damages) are inadequate to compensate for that injury; (3) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) the public interest would not be "disserved" by a permanent injunction. eBay, 547 U.S. at 391. Here the irreparable harm was proven by "evidence that Microsoft's infringement rendered i4i's product obsolete for much of the custom XML market, causing i4i to lose market share and change its business strategy to survive." Monetary damages were inadequate because "a loss of market share, brand recognition, and customer goodwill" typically defy valuation "particularly when the infringing acts significantly change the relevant market, as occurred here." The balance of the hardships favor i4i because the patented technology is "central" to i4i's business, but only a small factor in Microsoft's business. Here, the court held that the "cost of redesigning the infringing products" is irrelevant to the hardship consideration. "Microsoft is not entitled to continue infringing simply because it successfully exploited its infringement." Likewise, the public interest favors upholding patent rights especially here where the injunction is of a "narrow scope." "By excluding users who purchased or licensed infringing Word products before the injunction's effective date, the injunction greatly minimizes adverse effects on the public."

Notes:

• I4i Appellate Briefs
• Microsoft v. i4i: Relevance of the Pending Reexamination
• Microsoft Ordered to Stop Selling MS Word
• Microsoft Requests Emergency Stay of Injunctive Relief

• A University of Missouri student and entrepreneur was recently sued by the North Face for trademark infringement. The student’s company is called “the South Butt.” On the issue of confusion, the South Butt’s attorney indicated that the public knows the “difference between a face and a butt.” [AP]  The complaint [Download NorthFaceComplaint] includes allegations of trademark infringement, dilution (which does not require proof of confusion), false designation of origin, contributory trademark infringement, common law trademark infringement, common law unfair competition, and violation of the Missouri anti-dilution statute.  I think that SouthButt has a good chance of winning the straight trademark claims based simply on likelihood of confusion.  The defense of parody often turns on the judge's sense of humor.  
• The judge assigned to the South Butt case (Judge Sippel) has presided over several trademark cases in his 12 years on the bench.  His most recent case involves a solar panel manufacturer using the name PRG suing another company who had registered the domain name PRG.com and was selling other solar panels on that site. Patterson v. ABS Consulting. The most recent opinion in that case involved the denial of the defendant's motion to dismiss for failure to state a claim. 
• Google has been ordered to stop scanning French books. The Google Book project has scanned upwards of 10,000,000 books. [NYTIMES]
• I just agreed to speak at the Texas IP Symposium two months from now in Austin (Feb 19). [Info will be available soon]
• Listen to Kevin Noonan (MBHB & PatentDocs) and Dan Ravicher (PubPat) debate Gene Patenting on NPR’s Science Friday. [Link]
• Recent Presumption if Irreparable Harm Cases:
• • Multiquip Inc. v. Water Mgmt. Sys. LLC, 2009 U.S. Dist. LEXIS 117022 (D.Id December 16, 2009)(in breach of contract case, holding that plaintiffs are given no presumption of irreparable harm in the context of a preliminary injunction)
  • Apple Inc. v. Psystar Corp., 2009 U.S. Dist. LEXIS 116502  (N.D. Cal. December 15, 2009) (“Except for trademark infringement claims, there is no presumption of irreparable harm with respect to permanent injunctions.”)
  • BorgWarner, Inc. v. Dorman Prods., 2009 U.S. Dist. LEXIS 115871 (E.D.Mich. December 11, 2009) (in a patent case, finding that the presumption of irreparable harm had not been overcome in the context of a preliminary injunction)
  • Bushnell, Inc. v. Brunton Co., 2009 U.S. Dist. LEXIS 110612 (D. Kan November 25, 2009)(“The Court is persuaded by the reasoning of those courts which have found that the presumption does not apply to preliminary injunctions in patent cases.”)
• See also (cites from Bushnell opinion),
• • Voile Mfg. Corp., 551 F. Supp.2d at 1306 (eBay eliminated presumption of irreparable harm in preliminary injunction context);
  • Tiber Labs., LLC v. Hawthorn Pharms., Inc., 527 F. Supp.2d 1373, 1380 (N.D. Ga. 2007) (eBay eliminates presumption of irreparable injury in patent cases, whether raised at preliminary or permanent injunction phase);
  • Sun Optics, Inc. v. FGX Int'l, Inc., No. 07-137-SLR, 2007 U.S. Dist. LEXIS 56351, 2007 WL 2228569, at *1-3 (D. Del. Aug. 2, 2007) (presumption of irreparable harm in preliminary injunction analysis did not survive eBay);
  • Torspo Hockey Int'l, Inc. v. Kor Hockey Ltd., 491 F.Supp.2d 871, 881 (D. Minn. 2007) (same);
  • Chamberlain Group v. Lear Corp., No. 05 C 3449, 2007 U.S. Dist. LEXIS 56351, 2007 WL 1017751, at *5 (N.D. Ill. March 30, 2007) vacated on other grounds, 516 F.3d 1331 (Fed. Cir. 2008) (same);
  • Canon Inc. v. GCC Int'l Ltd., 450 F.Supp.2d 243, 254 (S.D.N.Y. 2006) (consistent with equitable principles set out in eBay, preliminary injunction movant must demonstrate likelihood of irreparable injury in absence of requested injunction);
  • z4 Techs., Inc. v. Microsoft Corp., 434 F.Supp.2d 437, 440 (E.D. Tex. 2006) (eBay eliminated irreparable harm presumption in permanent injunction context)).
• But see
• • Christiana Indus. v. Empire Elecs., Inc., 443 F.Supp.2d 870, 884 (E.D. Mich. 2006) (eBay did not eliminate presumption);
  • Idearc Media Corp. v. Nw Directories, Inc., 623 F. Supp. 2d 1223, 2008 WL 2185334, at *9 (D. Or. 2008) (copyright case).

The USPTO has released its patent pendency simulator so that you can play at home. 

The Patent Pendency Model (PPM) is a Simulation Tool that predicts patent production output based on actual historical data and input assumptions.   The model uses historical patterns in funding, staffing and pendency.  The model uses an interactive spreadsheet  to make calculations and to create graphs of predicted outcomes.

The Simulator works in Microsoft Excel. Players set various inputs each year, including the number of examiners hired, atrition rate, examiner overtime hours, examiner attrition rate, change in application filings, change in the percent of filings that are RCEs. (In the game, the PTO continues with its notion that RCE’s count as applications…)

Although not quite an FPS, the game is at least free!

• Directions: http://www.uspto.gov/patents/stats/patent_pend_model.jsp
• Play the Simulator: http://www.uspto.gov/patents/stats/pendency_model.xls

Acushnet Co. v. Callaway Golf Co . (on petition for certiorari 2009)

The Supreme Court recently rejected Medela's petition for certiorari arguing that the conclusion of obviousness should be made by a judge rather than a lay jury.

In the wake of Medela's failure, Acushnet (maker of Titleist) is now asking the Supreme Court to hold that "a court reviewing a jury's [obviousness] verdicts must always independently render its own legal conclusion regardless of whether one or all of the jury's underlying findings are accepted as adequately supported by the evidence." Taking that a step-further, Acushnet argues that a jury's verdict on the question of obviousness should be seen as "entirely advisory as to the ultimate legal conclusion."

Ascushnet takes-issue with the Federal Circuit's holding that the "jury could have reasonably concluded that Acushnet failed to prove invalidity due to obviousness." In petitioner's view, the appellate panel should not have given any regard to the jury's legal finding.

AcushnetPetition.pdf

In Ariad, an en banc Federal Circuit is set to determine whether (and how) the written description requirement is separate and distinct from enablement. The questions presented read as follows:

1. Whether 35 U.S.C. § 112, paragraph 1, contains a written-description requirement separate from the enablement requirement.

2. If a separate written-description requirement is set forth in the statute, what is the scope and purpose of that requirement?

I'm interested in finding cases where the written description requirement has been critical to the outcome. More particularly, I'm interested in seeing cases where the invention is sufficiently described but is not enabled. The recent major written description cases are seemingly only tied to written description doctrine because the panels chose to focus on that argument rather than enablement. A case-in-point is Ariad v. Eli Lilly. As in most written description cases, Ariad's patent was also challenged on enablement grounds. However, rather than reaching the enablement question, the panel majority held that question moot in the wake of their finding that the asserted claims were invalid on written description. The same result occurred in University Of Rochester v. G.D. Searle & Co., Inc., 358 F.3d 916 (Fed. Cir. 2004) (holding that "in view of our affirmance of the district court's decisions [invalidating the claims] on the written description ground, we consider the enablement issue to be moot and will not discuss it further."). The LizardTech decision held the asserted claim invalid under both enablement and written description doctrines.

Using the language lf LizardTech, what are examples of cases where the specification provides enough disclosure "to convince a person of skill in the art that the inventor possessed the invention" but not enough to "enable such a person to make and use the invention without undue experimentation."

Ex parte Lin, Appeal No. 2009-4275, Application No. 10/255,216 (BPAI October 30, 2009)

The Examiner rejected Lin's patent application for failure to comply with the best mode requirement of 35 USC § 112p1. The Board reversed that rejection because Lin had not disclosed any embodiments. "The best mode provision of 35 U.S.C. § 112 is not directed to situations where no mode has been set forth, and therefore we cannot sustain this rejection." (Citing Spectra-Physics and In re Glass)

Although Lin won that argument, the board affirmed parallel rejections of lacking enablement, utility, and definiteness.

Under the Federal Circuit's 2002 precedent of Bayer v. Schein Pharma, the best mode requires "actual disclosure regardless of whether [the best mode] would be within the knowledge of one of ordinary skill in the art."

via CNN in an article titled: "Recession's latest victim: U.S. innovation."

Dennis Crouch's Comment: Patent filings are clearly down, but I don't know that I agree with the reporter's conclusion that therefore "U.S. innovation took a step backward for the first time in 13 years."

There is almost certainly a link between patenting and innovation. However, a single-year drop in patenting does not necessarily correlate with a drop in innovation -- especially since there is often a lag of 6-12 months from the invention date to the utility patent filing date.

Further, I tend to attribute huge rise in patenting activity over the past two decades more to a perceived strengthening of the patent right and less to an actual increase in innovations. In recent years, court decisions and threatened action from congress may have reduced the perceived potential value of the patent right -- thus lowering demand. Perhaps now, applicants are filing fewer 'junk' patents.

Finally, the report also misses the reality that about half of US patent applications stem from a non-US entity and those filings often have a multi-year lag between the innovation and the US patent application filing. It will be interesting to see which group (US vs. Foreign entities) have seen greater reduction in their patent filing activity.

The Patent Reform Act of 2009 would replace the current “first-to-invent” (FTI) system with a new “first-inventor-to-file” (FITF) system. While touted as a way to harmonize the US system with “first-to-file” (FTF) systems used in other countries, an experimental investigation of a matrix of two hundred typical fact patterns for two competing inventors was analyzed under all three systems (FTI, FITF and FTF) to test this assumption. Based on the matrix analysis, it appears that if FITF is adopted there likely will be changes in applicant behavior and significant extra costs for at least several years as a result of the transition to a new system; and, it is unclear whether FITF really gets the US any closer to patent harmonization.

 Caption: Scenarios where both parties have filed applications

The proposed FITF system has a tendency to behave as an entirely different system in certain scenarios, rather than as a midway point between the existing FTI and FTF systems. A raw analysis of the results reveals a discrepancy wherein a larger percentage of second inventors are awarded a patent under the FITF system than predicted by a shift toward a FTF system. A weighted analysis reflecting likely applicant behavior from the implementation of the FITF system emphasized, rather than diminished, these discrepancies with expected results.

It appears that the “springing public disclosure” exception created under the proposed FITF system to replace the one-year grace period found in current US patent law is one of the primary reasons for the discrepancies. This exception allows applicants to control the start of the grace period that disqualifies the public disclosures and even prior filed applications of others from being prior art based on the timing of the applicant's own public disclosure. The springing nature of this exception provides unique incentives for applicants to manipulate the timing of the public disclosure of their inventions in order to manipulate the grace period, thereby creating results seemingly inconsistent with core principles of the existing FTI and FTF systems.

For a link to the entire paper, go to:http://ssrn.com/abstract=1518660

• Worksharing: Website of the five IP Offices: http://www.fiveipoffices.org.
• GoogleNexis?: Google Scholar now includes judicial opinions and law review articles. [Link] The site does a nice job of ranking opinions according to citation history. However, as with their patent database, Google's caselaw database does not appear to be kept up-to-date. The search features will be useful as a powerful free first-cut, but attorneys will not use the site for any type of comprehensive search or full citation-check. As Law School Librarian Richard Leiter wrote, "I don't think that West or Lexis have much to worry about."
• ABANexis?: If you want to search only law reviews (that are available online), you might look at the ABA's Search Engine (powered by Google). [Link]
• Is the 1981 CCPA case of Rasmussen still good law? [Updated with the right year of the case]

By Dennis Crouch

Global Findability v. Summit Entertainment (D.D.C. 2009)

In an earlier post, I reported on an odd complaint that charges Summit Entertainment with patent infringement based on that company's making and distributing the film "Knowing" that stars Nicholas Cage. In preparation for this post, I watched the movie this past weekend and also contacted the attorneys representing Global Findability.

In the movie, Cage plays the role of an MIT physics professor who sees a string of numbers and correctly determines that those numbers represent prophetic information about particular catastrophic events. In particular, the string of numbers were indicative of the coordinates of the event (lat and long) as well as the date and number of people killed in each event. (Screenshot below). It turned out that the numbers were whispered to little kids by angels/aliens. (I thought they were angels, but my daughter (age 5) thought they were aliens.) The kids then wrote-down the numbers.

As it turns out, Global Findability's asserted patent (No. 7,107,286) covers devices, mediums, and methods for storing global position information (longitude, latitude & altitude) as a single "all natural" number.

Without revealing their particular theory of infringement, Global Findability's attorney agreed that the allegation is "based on the claimed method being performed in the movie." In perhaps the most relevant sequence from the movie, Cage's character identifies a particular sequence of numbers and enters them into Google Maps as a latitude and longitude. The result is a New York City location. Those latitudes and longitudes appear to be actual (rather than made-up) -- providing some amount of credibility to the claims of infringement.

As far as I know, this is the first time that I have seen charges of infringement based upon a performer's actions.

If the case continues to judgment, its outcome will likely turn on questions of infringement and patentable subject matter. Notably, the asserted method is for encoding the single number, while Cage's character only decoded the material. Likewise, there was no indication that the child-actors writing the codes performed the "converting step." Rather, that was done by the angels/aliens presumably acting outside of the US. See RIM v. NTP (each step of a method must be performed within the US). Of course, in creating the script/props, the production company most likely performed the encoding step. One problem with that theory is that the movie was filmed in Australia. These issues could be eliminated if the plaintiffs somehow proved that the "use" distributing/screening the film involved "use" of the method. However, in my mind that theory is extremely lacking.

This case is also interesting as it sits in the shadow of the Supreme Court's hearing in Bilski v. Kappos. That case questions the patentability of newly created methods that are not directly tied to a "machine." In 2004, Andrew Knight filed a series of patents covering various storylines or plots. Cleverly, Knight included a limitation that the plot is within a movie stored on a DVD (or other computer-readable file). Those patents have been rejected as lacking patentable subject matter under Section 101 and are now on appeal to the Board of Patent Appeals (BPAI). In his rejection, the examiner indicated that:

"It is only the technological uses of ... ideas that are patentable -- not merely the association of technology with those ideas. Recording a movie on a DVD is not a patentable technological use [of] and idea because ... this does not do anything unexpected or novel. DVDs play movies. Recording a movie that has a different plot on a DVD does not change the technology of the DVD."

Notes: During prosecution, the applicant (Global Findability) amended the claims to indicate that the single number representation of location was an "all-natural" number. That point was boldly emphasized in a response to an office action rejection. However, "all-natural numbers" are not defined in the specification or in the prosecution history.

The European Union (EU) is working toward a major reform of its patent laws that would create a European Patent and a European Patent Court for handling patent infringement litigation. Although the European Patent Office (EPO) serves as the primary examining body for most patents being prosecuted in Europe, the actual issuance of patent rights as well infringement litigation are still handled country-by-country.

In a December 4, 2009 meeting, a unanimous EU Competitiveness Council adopted a set of conclusions supporting the new regime. Under the proposal, the new patent court would have exclusive jurisdiction over civil litigation related to EU and European patents. The new regime would likely require a revision of the European Patent Convention (EPC).

The Leading UK Patent Blog IPKat indicates that this is "happy news." IPKat quotes a UK IPO press release that "This business-friendly deal will make patenting and innovating easier and more affordable for British companies. In particular, innovative SMEs will have more flexibility when choosing how to patent across Europe".

The EU Press Release suggests that lowering costs is one of the most important goals: "The creation of an EU Patent would help to improve the current situation where a patent designating only 13 EU Member States is already 11 times more expensive than a US patent."

Although more likely now than ever, this same debate has been ongoing for the past 40 years in Europe.

Links:

• IPKat
• CitySpur
• EU Press Release

Guest Post by Paul Cole, Visiting Professor, Intellectual Property Law, Bournemouth University, UK

On Tuesday 24 November, David Kappos made a posting on the Director’s Forum including the following statement:

Some have suggested that the Office is determining obviousness in a way that stifles innovation by refusing patents for truly inventive subject matter. They’ve asked us to provide examples of non-obvious claims in view of KSR. Such examples would serve as a complement to the examples of obvious claims already in the guidelines.

David Kappos gave a presentation at the AIPLA Annual Meeting in Washington on October, and in a question and answer session that followed there were three questions which concerned KSR, more than any other topic. The two questioners who preceded me expressed dissatisfaction with seemingly unjust and arbitrary rejections for lack of inventive step. I asked whether the US examination guidelines on inventive step could be brought into line with those of the EPO, where positive and negative examples are carefully balanced, and the suggestion created a burst of applause from the audience.

More detained comments on the suggestion are found in a paper on KSR that was published in the John Marshall Review of Intellectual Property Law in 2008[1]. For convenience of reference, the final section is set out here:

The USPTO has been accused of having become significantly less applicant-friendly following the KSR decision. This may reflect concerns about “patent quality” and is reflected in the Guidelines given to examiners. A big difference is noticeable between the EPO Examination Guidelines and those of the USPTO.

The EPO Examination Guidelines at Part C Chapter IV give examples relating to the requirement of inventive step. Considerable care has been taken to balance these examples. Examples illustrating the application of known measures in an obvious way and in which inventive step can be ruled out are balanced by further examples showing the application of known measures in a non–obvious way and in which an inventive step is therefore to be recognized. An example of an obvious and consequently non-inventive combination of features is balanced by an example of a non-obvious and consequently inventive combination of features. Examples of obvious and consequently non-inventive selection are balanced by examples of non-obvious and consequently inventive selection. The single example relating to overcoming a technical prejudice shows a situation where the application should be allowed, not refused. A reader of these Guidelines is made aware that although many applications are open to objection, there are many others that cover meritorious inventions and should be allowed.

When the USPTO issued its post-KSR Guidelines, from the standpoint of a prosecution attorney they made depressing reading. For example, the first heading which refers to combining prior art elements according to known methods to yield predictable results gives two examples, one of which is Andersons-Black Rock, Inc. v. Pavement Salvage Co. and the other of which is Ruiz v SAB Chance Co. in both of which obviousness was established. There is no balancing example in which inventive character was established. There follow five other headings illustrated by examples, each and every one of which shows the claimed subject matter to be obvious. The final heading concerns the TSM test which is not illustrated by any example. Under the heading “Consideration of Applicants Rebuttal Evidence” there are cursory indications that an applicant might have something relevant to say in reply, and that, for example, they might argue that the claimed elements in combination do not merely perform the function that each element performs separately. Might it not have been a good idea to inform the Examining Corps that if an applicant can demonstrate a new and unexpected result, this is strong prima facie evidence of inventive step, that this fact is supported by several opinions of the U.S. Supreme Court and that where such evidence is available an applicant should unless there are compelling reasons to the contrary expect a grant decision to follow? Experience in the EPO is that where an applicant can demonstrate a credible technical problem that he has solved, he will almost always be granted a patent and that although other objections, e.g. “one–way-street” or “bonus effect” are available, circumstances where such objections succeed are rare, as acknowledged by the U.K. High Court in Haberman.

Instructions to examiners are of general importance to the public because they are the main tool used during examination and the important event for most applicants is grant or refusal by the patent office, litigation of patents (even in the U.S.) being uncommon. Instructions are even more important for examiners who are trainees and those who have only recently acquired signatory authority because they are likely to rely chiefly on those instructions and to take some time to achieve a deep understanding of case law. It is important to teach examiners when to make objections and the appropriate grounds for doing so, but is it not equally important to teach them when applications should be allowed and to show them examples of patents whose validity has been upheld, as the EPO does? Quality patent examination is not just a matter of ensuring that applications lacking merit are reliably refused but also of ensuring that meritorious applications are reliably granted.

It now seems that there is at least a chance that the suggestion that I and apparently others have made will be acted on, and that the possibility is under active consideration in the USPTO. Examples of decisions on new function or result which are contained in my paper include the nineteenth century Supreme Court cases Winans v Denmead and Washburn & Moen Manufacturing, Co. v. Beat’Em All Barbed-Wire Co, these decisions being selected on the basis of their instructive character and accessibility to the widest possible range of readers.

For the most to be made of this opportunity, we as students and users of the patent system can help by suggesting additional positive decisions which it would be good for the USPTO to include in the revised inventive step Guidelines. Hopefully readers will respond with references to good Board of Appeals, District Court and CAFC cases, and I look forward to reviewing a large number of hopefully constructive suggestions posted here in response.

Guest Post by Ted Sichelman, University of San Diego School of Law

As any diligent reader of Patently-O would know, the Federal Circuit is considering en banc whether to retain the written description requirement—and, if so, in what form—in the pending case, Ariad Pharmaceuticals v. Eli Lilly & Co.

Lilly, which was found liable in the district court, argues in its en banc brief that the Federal Circuit should retain a strong and independent written description requirement. In the event Lilly’s arguments are successful—and Ariad’s patent is invalidated—Lilly stands to save roughly $250 million (in present value) of potential damages and likely settlement payments. (For an explanation of the calculation, click here.)

Yet, in another case pending at the Federal Circuit, Lilly v. Teva, Lilly—as the patentee—is on the other side of the fence on the written description issue. Specifically, Lilly appealed a finding that some of its patents are invalid for lack of written description. If Lilly wins this appeal, assuming infringement holds up, it stands to gain roughly $750 million (in present value) in on-going profits from the sale of its blockbuster osteoporosis drug Evista. (Ironically, Evista is one of the accused infringing drugs in Ariad.)

Thus, in simple dollar terms—focusing on Lilly’s pending patent cases at the Federal Circuit—Lilly has more money to gain by losing the Ariad appeal than winning it. Presumably, Lilly has other financial interests motivating its position in Ariad. For instance, Lilly has been subject to more than several accusations of infringement over the years and its financial wherewithal to engage in intensive R & D may make its patents relatively immune to written description attacks.

But, even so, Lilly might not care as much as the usual appellant if it loses the Ariad case. To be fair to Lilly and its lawyers, I have not seen any evidence showing that they have not vigorously argued their case. Nevertheless, Lilly’s large financial interest in Teva is concerning, especially given that Ariad could be one of the most important Federal Circuit decisions in recent years.

So when I read Lilly’s en banc brief to the Federal Circuit in Ariad, I was surprised that Lilly did not disclose its position in Teva. And it seems very unlikely that Lilly’s lawyers in Ariad were unaware of the issue in Teva, since at least three of them are working on both cases. Moreover, the district court in Teva mentioned the pending Ariad case in its final order, noting that it was bound by existing precedent to apply an independent written description requirement.

The Federal Circuit has a rule that requires litigants to disclose certain information about other pending cases. The applicable rule, Fed. Cir. R. 47.5, reads in relevant part:

Each principal brief must contain a statement of related cases indicating: …. (b) … any case known to counsel to be pending in this or any other court that will directly affect or be directly affected by this court’s decision in the pending appeal. If there are many related cases, they may be described generally, but the title and case number must be given for any case known to be pending in the Supreme Court, this court, or any other circuit court of appeals.

In my view, one could read the rule such that Lilly should have disclosed the Teva case in its Ariad brief. Unfortunately, the scope of this rule is sufficiently ambiguous to be construed otherwise. In particular, it is unclear whether “related cases” in the preamble of Rule 47.5 is, so to speak, a “limitation”—namely, does a case qualifying under Rule 47.5(b) need to be a “related case” in addition to meeting the requirements stated in that sub-section, or does that sub-section fully define the kinds of “related cases” that need to be disclosed? Arguably, the latter is the better reading, but it does not seem compelled by the language of the rule. Moreover, it is unclear exactly what “directly affect or be directly affected by this court’s decision” means. Since the rule contemplates that there may be “many related cases,” arguably this clause should be read broadly, but again, such an interpretation does not seem mandated by the rule.

What does seem clear, though, is that the roughly $750 million Lilly potentially has to gain in Teva from losing the Ariad case is important information that any Federal Circuit judge would want to know when reading Lilly’s briefs and listening to its arguments. As such, the Federal Circuit should clarify the scope of Rule 47.5—like it has done in a few cases (here and here)—or explicitly revise the rule to ensure that parties are clearly required to disclose cases like Lilly v. Teva.

For example, the Federal Circuit could—similar to DC Circuit Local Rule 28(a)(1)(C)—define a “related case” as including “any pending case involving at least one of the same parties and the same or similar issues.” Such a definition would capture cases like Lilly v. Teva, but would not overly burden litigants. With this sort of rule in place, potentially contrary interests of parties in other cases—particularly those worth large sums—would be appropriately unveiled on appeal.

Ted Sichelman is an Assistant Professor at the University of San Diego School of Law, where he teaches patent law and other intellectual property courses. He has neither represented nor has any financial interest (other than from market index funds) in Ariad Pharmaceuticals, Eli Lilly, or Teva.

• Next Monday (December 7, 2009) at 2:00 P.M. in Room 201, the Federal Circuit will hear en banc arguments in the case of Ariad Pharmaceutical v. Eli Lilly. The case questions whether Section 112 of the Patent Act creates a written description requirement that is separate and distinct from the enablement requirement. An audio version of the oral arguments is expected to be available that same day. [Calendar]
• PATracer reports on the pending Federal Circuit case of Kawasaki v. Bombadier. In that case, Kawasaki had sued to enforce the terms of a settlement agreement. Rather than enforcing the agreement, Judge Folsom of the E.D. Tex. dismissed the lawsuit – holding that his court lacked subject matter jurisdiction over what had become a contract dispute. In the 1994 case of Kokkonen v. Guardian Life, the Supreme Court held that unless incorporated into a court order, disputes over a settlement agreement must stand on its own jurisdictional feet. [LINK]
• Eriq Gardner asks Can a Science-Fiction Movie Infringe a Tech-patent? His question is prompted by a lawsuit where – you guessed it – a patentee (Carl Burnett & his company Global Findability) has sued Summit Entertainment for making/distributing the Nicholas Cage film entitled "Knowing" in which Cage is portrayed as acting like he is using an allegedly infringing geo-locator. The complaint was filed by the Cahn Samuels firm in Federal Court in Washington DC. In the movie setup, the geo-locating technology is based on information provided in 1958 (and rediscovered in 2008). If pretending to be an infringer is actionable, this reconstructed history may also render the patent obvious… The movie was critically panned, but Cage's star power still helped bring in almost $80 million in box office revenues.
• Global Findability's patent is actually quite interesting. It focuses on a mechanism that converts latitude, longitude, & altitude readings into a "single discrete all-natural number." I.e., one number to uniquely identify a position anywhere (relative to the earth). [LINK]

For the third-year running, the ABA Journal has selected Patently-O as one of the top 100 legal weblogs — “the best legal blogs as selected by the Journal's editors.” Last year, readers also voted Patently-O as the best blog covering a niche area of law. This year, the voting will likely be more competitive. I would appreciate your vote – this year, the ABA Journal is requiring that voters first register (free). [VOTE HERE]

IP Related Blogs that made the list include:

• Dennis Crouch’s Patently-O
• Eugene Quinn’s IPWatchDog
• Eric Goldman’s Tech & Marketing Blog
• Susan Scafidi’s Counterfeit Chic
• Harvard’s Citizen Media Law Project
• Karst & Wasserstein’s FDA Law Blog
• Ben Scheffner’s Copyright Blog
• Mark Herrmann’s Drug & Device Law Blog
• Marc Randazza’s Satyricon

For Patently-O readers, the listing is probably most useful for locating non-patent blogs that look interesting (especially since many of the best patent-focused blogs were not included in the list).

In re Deutsche Bank Trust (Fed. Cir. 2009) (on motion for stay of order)

Island IP and its corporate parent Double Rock sued Deutsche Bank and others for infringement of their patent covering a bank account management technique to improve “deposit sweep” services. Pat. No. 7,509,286. Charles Macedo is the lead counsel for the patentee. Macedo also handles patent prosecution prosecution for the patentee.

During the litigation, the defendants requested a “patent prosecution bar” be placed against Macedo that would exclude him from continued involvement in prosecution of Double Rock’s patents. The defendants argue that Macedo’s access to the defendants' confidential information in the litigation will be used for competitive decisionmaking during prosecution.

The district court (adopting the magistrate decision) rejected the defendants’ argument – finding that a party’s right to choose its own counsel prevails over the potential risk of disclosure. This decision would lift an interim protective order that had prevented Macedo from prosecuting patents.

The Federal Circuit has now granted a stay of the order pending its decision on whether to grant a writ of mandamus. [Link] In its argument, Deutsche Bank cited a half dozen similar cases where district courts limited the litigating attorney from prosecuting the patents at the same time.

"The majority of district courts, including the courts in the Second Circuit, have found that an attorney who has obtained access to an adversary’s confidential information during the course of litigation should not be permitted to make use of that information in prosecuting his own client’s patent applications." (Quote form DB brief)

Notes:

• File Attachment: DB Brief.pdf (47 KB)
• Macedo has been a past contributor to Patently-O and recently published a book “The Corporate Insider’s Guide to US Patent Practice.
• The patentee recently submitted a brief in the Bilski case arguing for broad patent subject matter. [Link]. The patent claims asserted here will pretty clearly face an uphill battle under the Federal Circuit's Bilski analysis. Claim 1 is reproduced below:

1. A method for managing funds of a plurality of respective client accounts associated with a plurality of respective clients participating in a program, comprising:

maintaining a plurality of FDIC-insured and interest-bearing aggregated deposit accounts, each of the aggregated deposit accounts being interest-bearing, with one or more of the aggregated deposit accounts held in each different one of a plurality of financial institutions in the program;

maintaining funds of a plurality of the clients in the plurality of aggregated deposit accounts so that each aggregated deposit account holds funds of a plurality of the clients, with each client account in a subset of the plurality of client accounts having funds in their respective client account over a predetermined amount, with each of the respective client accounts in the subset having funds deposited in a plurality of the aggregated deposit accounts;

maintaining or having maintained or accessing by computer an electronic database, on one or more computer-readable media, comprising a respective balance of funds for each of a plurality of the respective client accounts in the subset and information on funds held by each of the plurality of clients of the subset in the plurality of aggregated deposit accounts;

receiving electronic client transaction data describing debit and/or credit transactions made by a plurality of clients against their respective client accounts;

updating the respective balance of funds in the database associated with each of the respective client accounts in the subset based on one or more debit and/or credit transactions made by the respective client;

determining electronically for each of the plurality of the client accounts in the subset of client accounts a respective interest rate from among a plurality of interest rates in an interest-allocation procedure based at least in part on the updated balance of funds associated with the respective client account in the subset;

calculating electronically a respective interest for a period to be posted to each of a plurality of respective client accounts in the subset, with the respective interest to be posted to a respective client account determined based on the respective interest rate determined for that respective client account in the subset, with the calculating being independent from the respective client account pro rata share in earnings posted to the plurality of the aggregated deposit accounts holding funds of the respective client account;

determining interest earned during the period by each of the plurality of aggregated deposit accounts in the program; and

posting electronically the respective interest calculated for each of the plurality of respective client accounts based on the respective interest rate determined for the respective client account.

• Texas Juries: Michael Smith reviews E.D. Texas patent trial verdicts for 2009 (thus far). Depending upon how you count, the score ranges "from 8-3-1 to 6-6-1 (depend[ing] on whether you count a post-jury selection grant of summary judgment or not)." [Link]
• Judge Michel: A transcript of Chief Judge Paul Michel's recent speech to the FCBA is now available through that organization's website. [Link] In addition to announcing his retirement, Judge Michel argued strongly against a statutory right to appeal claim construction decisions. His discussion also touched on the fact that eight of the twelve Federal Circuit judging slots could open within the next 12-months. He suggests that the replacements should include (a) a district court judge and (b) a patent litigator who has extensive experience trying commercial cases in front of juries. Judge Michel suggested room for diversity on the court since all members are white and only 25% are women.
• Appointing Judges: Regarding Federal Circuit appointments. The Obama administration is already focused on ensuring that minorities and women receive their share of appointments. In the words of Judge Michel, it is the Bar's job to help "assure that the appointees to the Court are selected based on merit, on experience, on quality, on intellect, on intelligence, on energy, and not because they’re, you know, somebody’s cousin or whatever the other considerations might be."
• Concentration of Ownership: Hal Wegner and Justin Gray review the top 150 patent holders and reports on growing ownership concentration. [Link][See also Patent Prospector]
• Written Description: Amicus Briefs in Ariad v. Lilly: Patent Docs Review the Briefs. [Link]
• Presumption of Validity: Lucent v. Gateway: The Federal Circuit has denied Microsoft's petition for rehearing. Microsoft is expected to file a petition to the Supreme Court focusing on the interpretation of Section 282's "presumption of validity." Microsoft questions whether that statute is properly construed to always require clear and convincing evidence of invalidity.
• Presumption of Validity Redux: In a recent article, Scott Kieff and Henry Smith argue for a reduction in the presumption of validity. [Link]
• Reexaminations: Reexamination Statistics: Of the 734 inter partes reexaminations that have been requested in the past decade, 498 (68%) are "known to be in litigation." [Link]

Under the TRIPS agreement member Nations can force compulsory patent licenses at their discretion. The 2001 Doha declaration clarifies this point: "Each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted."

In October 2009, Ecuador's president issued a decree that allows its Ministry of Public Health to issue compulsory licenses based on public interests such as access and costs. According to IP Watch, the government is now "working on a mechanism for issuing those licenses" on a case-by-case basis. [Link]

Spinning this decision, Access-to-Medicines advocate Peter Maybarduk indicated that the US is the world leader in compulsory licensing:

Many countries have used compulsory licenses to promote public interests and remedy anti-competitive practices in a variety of sectors. Today, the United States is perhaps the most frequent user of compulsory licensing; including the government use of defense technologies, and judicially-issued licenses to remedy anti-competitive practices in information technology and biotechnology, among others. Canada routinely issued compulsory licenses during the 1960s and 70s to develop its national pharmaceutical industry. In recent years, a number of countries have issued compulsory licenses to improve access to medicines, including Thailand, Malaysia, Eritrea, Mozambique and Indonesia, among others.

In 2007, Brazil issued a compulsory license for the HIV/AIDS medicine efavirenz. Brazil has provided treatment to hundreds of thousands of people living with HIV/AIDS and saved well over US$1 billion through its combined medicines strategy of domestic production, importation, negotiation and compulsory licensing. [Link]

Major pharmaceutical companies have reportedly agreed to work with the government in collecting royalty payments. [Link] The same report indicates that Ecuador plans to obtain drugs both through local manufacture and imports. Prior to TRIPS, more than four-dozen countries categorically refused to grant patent rights on pharmaceuticals.

Jobs Postings from the Past Week:

• Patent Portfolio Manager - Small Corporation - Mississauga, Ontario
• IP Attorney - Large Corporation - Holmdel, N.J. (Updated Link)
• Patent Agent - Large Corporation - Ardsley, N.Y.
• Patent Attorney/Agent - Small Corporation - San Diego, Calif.
• Experienced Patent Attorney - Law Firm - Flexible
• Patent Prosecutor - Law Firm - Woodbridge, N.J.
• Patent Counsel - Small Corporation - Cambridge, Mass.
• Patent Attorney (Prosecution) - Law Firm - Alexandria, Va.
• Sr. Intellectual Property Counsel - Law Firm - Boston, Mass.

Interviewing Director Kappos: Tony Mauro writes a comical story about one reporter's quest to interview David Kappos:

[W]hen ABA Journal senior writer Terry Carter got nowhere in his recent effort to reach Patent and Trademark Office director David Kappos . . . he decided on a characteristically novel approach: on Tuesday he drafted and posted a humorous patent application for a "method to get an interview with USPTO Director David Kappos." Edward Adams, editor and publisher of the ABA Journal, wrote in this story at the Journal Web site, "We figured the problem was that Carter was not speaking the agency's language." [Link][Read the Application]

Next Federal Circuit Judges and en banc petitions:

• There is currently one open slot on the Federal Circuit. In the interim, it should be statistically slightly easier to get the court to agree to an en banc rehearing. Instead of convincing seven of twelve (58%), now a successful petitioner need only convince six of eleven (55%).

Federal Circuit Chief Judge Paul Michel was the featured speaker at the November 20, 2009 Federal Circuit Bar Association Annual Dinner. At that dinner, Chief Judge Michel took that opportunity to announce that he will step-down as from the Bench at the end of May 2010. Although eligible for 'senior status,' Michel indicated that he plans to stop judging rather than take senior status.

The FCBA released the following statement:

The 25th Annual Federal Circuit Bar Association Dinner was a night to remember. The featured speaker, Chief Judge Paul R. Michel, announced that he would step down as Chief Judge and as a member of the judiciary, effective May 31, 2010. His moving speech rallied the community to serve and protect the Federal Circuit and the judiciary, as well as all institutions of governance. The record setting crowd included many of Chief Judge Michel's colleagues, who honored him with several standing ovations.

Chief Judge Michel has been a tireless and passionate leader of the Court, as well as a friend of the Association and the broad spectrum legal community within its jurisdiction. Those attending were heartened by the Chief's promise to continue his impressive career of public service after leaving the Court. We are confident that he will do so in new and important ways. His 21 years of service on the Court, capped by his tenure as Chief Judge, make for an enduring legacy on top of all his other accomplishments. We are proud to have shared his night with him and his wife, Brooke. We are confident of exciting new horizons for them both.

Judge Randall R. Rader, another great friend of the Circuit and its community, is next in line for Chief Judge. The Association looks forward to continuing its unwavering support for the Court and the next Chief Judge as the Circuit continues to write its history as the national court of appeals.

Iovate & University of Florida Research Foundation v. Bio-Engineered Supplements & Nutrition (BSN) (Fed. Cir. 2009) (Download 09-1018)

Iovate is the exclusive licensee of UF's patented method for "enhancing muscle performance or recovery from fatigue." Pat. No. 6,100,287. The method includes the single step of administering a coposition that contains a ketoacid and either a cationic or dibasic amino acid. Eschewing their home-state courts, the patentee filed suit in the Eastern District of Texas -- alleging that BSN was selling infringing supplements.

On summary judgment, district court judge Ron Clark held the patent invalid as anticipated under 35 U.S.C. 102(b). The most relevant prior art was a series of advertisements found in Flex Magazine.

Each ad includes a list of ingredients, directions for administering the dietary supplement orally to humans, and marketing claims and testimonials from bodybuilders extolling the virtues of the product. . . . The ad also describes how the product is made, including the four steps used to isolate the protein components from milk whey; lists a price of $24.99; states that the product is available at GNC and other health food stores or by phone; instructs the user on the amount to take; and offers a manufacturer’s rebate of $5.00 for mailing in a coupon with proof of purchase before July 31, 1996.