Patent Law Blog (Patently-O)

Patent Application Pendency: Percent of Applications Still Pending

2009-07-17T02:17:42-04:00

The large backlog of cases at the PTO has added greatly to the problem of long patent application pendency. There are other contributors to the problem – such as applicants and examiners unwilling to reach a compromise solution (often based on the demands of superiors).

To provide some measure of pendency, I created a database of 20,000+ randomly selected patent applications and issued patents filed 2000 - 2007. For each of case, I tallied the final status as of mid-July 2009. (Status is either patented, abandoned, or pending). Using that data, I created a chart of the percent of utility applications still pending as of July 2009. This data can be helpful for someone considering whether their still-pending application is an anomaly. Over 84% of the applications filed in 2007 are still pending (+/– 2% at 95% CI) , while less than 1% of applications filed in 2000 are still pending (+/– 1% at 95% CI).

The second chart standardizes the same data according to the amount of time in prosecution.

Notes:

This data only includes applications that were either (1) published or (2) patented. I do not know the percentage of cases unpublished cases that are still-pending versus those that are abandoned.
The data presented here does not distinguish between technology centers, continuations, etc. The still-pending rates varies considerably within those different categories.
The pendency rate for applications filed Q4 2004 appears unexpectedly high and the rate for Q1 2005 appears unexpectedly low.. That is at least partially explained by a data collection artifact. My data sample includes a relatively large number of applications filed in late December 2004 and early January 2005 rather than being more evenly distributed throughout the respective three months.

More False Marking: Forest Group v. Bon Tool

2009-07-13T12:32:25-04:00

The Forest Group v. Bon Tool

A company that falsely marks or advertises a product as patented "for the purpose of deceiving the public" can be held liable to the government for "not more than $500" for each offense. 35 USC 292. The statute gives standing to "any person" to sue and collect one-half of the award.

Forest Group originally sued Bon Tool for infringement of its patent on stilts used primarily in construction work such as hanging drywall. Forest's claims were dismissed on summary judgment for lack of infringement.

Based on the court's claims construction, It turns out that Forest Group's stilts are not covered by its own patent either. You see, the asserted patent requires "a resiliently lined yoke" but Forest Group's products (marked as patented) do not include that element.

The court found a false marking elements were met, but refused to find false advertising under Section 43(a) of the Lanham Act because Bon Tool did not prove that the deceptive marking was "likely to influence the purchasing decision" of consumers.

On damages, the court awarded only $500 (with $250 going to the government) because Bon Tool could point to only one factory-order of marked products after Forest Group had "knowledge" that its stilts were not covered by the listed patent.

"That single decision constitutes a single offense for purposes of calculating damages under § 292. The Court assesses a penalty in the amount of $500.00 against Forest pursuant to § 292(b)."

The case is on appeal at the Federal Circuit. Patent Attorney Paul Hletko filed an amicus brief in that appeal arguing that damages should be applied on a per-article basis. Hletko's company Heathcote Holdings sued Church & Dwight for false marking of its Mentadent products.

District Court Decision 282158.pdf
Hletko Brief Brief 07-11-09 235833.pdf

Office Actions

2009-07-12T13:55:03-04:00

Although not necessarily any indication of quality, the length of non-final office actions has been increasing over time – shifting from an average of 7.5 pages in 2003 to 10.7 pages in 2009. The chart below – shows that the increase has been relatively steady over the past six years based on a sample of 8400 non-final office actions from patent applications filed 2001–2007. (Page count includes cover page and summary).

What is the cause of this rise?

Ranking of Patent Law BLogs

2009-07-11T19:22:11-04:00

Gene Quinn – author of IP Watchdog – spent a good amount of time cataloging and ranking the various patent law focused blogs from around the world. His rankings are based on website popularity and popular influence with three primary inputs: (1) voting by readers; (2) Technorati.com ratings (based on links to the site); and (3) Alexa.com ranking of website popularity. I’m happy that Patently-O received the top rank. However, I encourage you to check-out the other blogs on the list. I read about 15 of them on a regular basis. Thanks Gene.

Quinn’s 2009 Patent Blog Ranking:

Patently-O
IPWatchdog.com
IP Kat
Spicy IP
Patent Baristas
Intellectual Property Watch
Patent Docs
271 Patent Blog
BlawgIT
Patent Prospector
The Invent Blog
IP Think Tank and The Prior Art
-
Orange Book Blog
IPJUR and European Patent Caselaw
-
Promote the Progress
IP NewsFlash
Anticipate This!
Patentably Defined
India Patent
Intellectual Asset Management
Against Monopoly
Patent Circle
I/P Updates
PHOSITA
IP Spotlight
Chicago IP Litigation
The IP Factor
Patent Arcade and File Wrapper
-
Securing Innovation
Patents 101 and IP Estonia
-
PatLit
Just An Examiner
The Business of Patents
Patentability
Inventive Step
Holman’s Biotech IP
Washington State Patent Law
California Biotech Law
Patent Infringement Updates and Patent Assassins
-
Russian Patents
Georgia Patent Law
Patentnapsis
Honoring the Inventor
OC Patent Lawyer
Nanomedicine & IP

False Marking Case Dismissed

2009-07-10T17:31:33-04:00

Pequignot v. Solo Cup (E.D. Va.)

Judge Brinkema has dismissed Matthew Pequignot’s false marking case against Solo Cup and cancelled the trial previously set to be heard this month. [Order] At oral arguments, the Judge indicated that the ruling is intended to "get [the] case teed up for the Federal Circuit."

In this case, Solo knew that its patents had expired but continued to use the same molds to make its coffee cup lids and other disposable products. During that time - between 20 and 50 billion products were manufactured - each marked as patented. The falseness of the marking was not in serious dispute. Nonetheless, Judge Brinkema ruled that Pequignot did not have any direct evidence to prove that the false marking was done “for the purpose of deceiving the public” as required by the statute. 35 USC 292.

On appeal the Federal Circuit will likely be asked to clarify the level of culpability or intent necessary for a finding of purposeful deception. The choice may follow the same lines of debate as the issue of willful patent infringement. The Federal Circuit recently shifted the law of willfulness to require at least objectively reckless acts of infringement (Seagate) and away from any affirmative duty of caution (Underwater Devices). Professor Winston has argued that intent to deceive should be presumed.

Although the Federal Circuit will probably not be able to reach this issue, the parties hotly dispute the appropriate remedy. The statute calls for a maximum penalty of "not more than $500 for every such offense." Here, the question is whether damages should be calculated based on one offense per product line or one offense per item marked.

[AP Article by Matthew Barakat]

Mexican Yellow Bean Patent Finally Cooked

2009-07-10T14:33:37-04:00

In re POD-NERS (Fed. Cir. 2009)

Larry Proctor purchased a package of Mexican beans of various colors. He separated-out the yellow ones and spent three years selectively breeding the plants. He then named his line "Enola" and obtained utility patent protection for the bean, its plant, its pollen, and the method of producing it. Pat. No. 5,894,079. Proctor also obtained a US Plant Variety Protection Act (PVPA) Certificate.

Soon thereafter, Proctor's company POD-NERS wrote to importers of Mexican beans asking for a royalty of 6 cents per pound. Mexican government officials identified the patent as "Mexican bean biopiracy" and that they would "do everything necessary, anything it takes, because the defense of our beans is a matter of national interest." The not-for-profit International Center for Tropical Agriculture (CIAT) requested an ex parte reexamination in 2000 (Procter also filed for a reissue so that claims could be added). A non-final rejection was mailed in 2003, a final rejection in 2005, and a BPAI decision affirming the decision in 2008. Now, the Federal Circuit has affirmed the "decision of the Board that all the claims here would have been obvious and therefore that they are invalid."

This decision makes sense - a published article compared the DNA of Enola with ordinary mexican yellow-seeded beans and found them identical.

One of ordinary skill in the art seeking to reproduce (and hopefully improve) the yellow beans that Proctor brought back from Mexico would have done what he did: plant the beans, harvest the resulting plants for their seeds, planting the latter seeds, and repeat the process two more times.

There is no indication that in taking these steps Proctor sought to provide beans of the particular narrow range of yellow that the claims specified. To the contrary, it appears that all Proctor was attempting to do was to reproduce the yellow beans he had acquired in Mexico, and hopefully to improve them.

To do so he followed normal and well-established agricultural methods and techniques for doing that. See KSR Int’l v. Teleflex Inc., 550 U.S. 398, 418 (“a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ.”) He does not contend that he devised or applied new or unexpected techniques in reproducing the beans.

Although happy with the outcome, public interest groups have labelled the process a "travesty." "In essence, the U.S. patent system allowed the owner of a flagrantly unjust patent to legally monopolize markets and destroy competition – for close to half the 20-year patent term." [Link]

The Pope on Patents

2009-07-09T13:15:28-04:00

In a recently published encyclical letter, Pope Benedict XVI has taken a stand against strong patent rights because of they way that the exclusive rights of patents tend to promote wealth inequality at the expense of development in the world's poorest countries.

"On the part of rich countries there is excessive zeal for protecting knowledge through an unduly rigid assertion of the right to intellectual property, especially in the field of health care."

The intellectual property statements only make up a few lines in the 144-page letter. However, they fit with the overall theme - that relying solely on monetary greed as an incentive does not lead to the right kind of development and actually creates instability.

The letter does not edify official Church doctrine, but it is used by Church leaders around the world in setting priorities.

In response, the IPO released a statement that it is "working to educate on the incentives that IP rights provide for advancing knowledge and creating jobs."

See “Encyclical Letter Caritas In Veritate Of The Supreme Pontiff Benedict XVI To The Bishops Priests And Deacons Men And Women Religious The Lay Faithful And All People Of Good Will On Integral Human Development In Charity And Truth,” June 29, 2009. [Link][Related Post]

Sanctions for Frivolous Lawsuit: Fraser v. High Liner Foods

2009-07-09T11:34:48-04:00

Fraser v. High Liner Foods, et. al. (Fed. Cir. 2009)(non-precedential)

Acting pro-se, Alfred and Paul Fraser sued a handful of fish-stick makers for patent infringement. The Frasers apparently run

The Fraser Patent No. 4,781,930 covers a method of soaking fish in oil before freezing the fillets. The only claim reads as follows:

A method of preparing a fish product comprising filleting a fish to appropriate thickness, immediately immersing the filleted fish in a vegetable oil for a period of 5 to 10 minutes at room temperature to effect absorption of the oil to a depth such as to inhibit excretion of the natural fluids from the fillet and prevent incursion of air and moisture, draining the excess oil from the surface, covering the surface with crumbs and then freezing the fillet.

The district court granted summary judgment in favor of the defendants:

Defendant Midship could not be liable because that company was dissolved more than six years before Frasier filed suit. 35 U.S.C. § 286.
Defendant Good Harbor was dissolved bankruptcy in 2006. It cannot be held liable.
Defendants UNFI and National Fish were never properly served and thus cannot be required to appear in court. The court noted that “A return of service merely noting delivery to ‘girl at front disk’ does not comply with the strictures of Fed. R. Civ. P. 4(h) or Mass. R. Civ. P. 4(d)(2) with respect to service on a corporation.”
Defendants Gorton’s, Roche Bros., ConAgra, High Liner, and Pinnacle did not infringe, literally or by equivalents. “None of the five appellees immerse their frozen fish products in a vegetable oil for a period of 5 to 10 minutes at room temperature. Further, none of these appellees begin preparing frozen fish fillets using fresh fillets.”

The Federal Circuit affirmed each of these decisions and then turned to the issue of sanctions:

“The district court noted that Appellants did not provide any of the defendants with any notice of their patent, that they did not question any defendant concerning the manner of fish processing, and in the case of Midship and Good Harbor, that they did not even inquire as to the existence of these defendants prior to bringing suit. The record shows that Appellants proceeded to file suit without ascertaining correct names of some defendants. Despite detailed letters from counsel for various defendants explaining their clients’ processes and pointing out the differences between those processes and the patented process, Appellants continued to press forth the litigation. Appellants continued despite the district court’s clear explanation at a hearing that they could not prove infringement merely by proving the presence of oil as an ingredient on the list of the products at issue.”

In the end, the court affirmed the minimal sanction of only $500 per defendant.

The Changing Nature Inventing: Collaborative Inventing

2009-07-09T09:28:19-04:00

Although inventing can still be a solo endeavor, patenting data indicates that paradigm no longer predominates. Over the past four decades, the number of inventors per patent has steadily crept upward. The first chart below shows the average number of inventors per patent moving from 1.6 for patents issued in the 1970’s to 2.5 for patents issued since 2000.*

As the chart below shows, this rising average is being driven by a dramatic increase in the proportion of “highly collaborative” inventions with three or more listed inventors. That rise is coupled with a proportional decrease in the proportion of solo inventions. Interestingly, the proportion of two-inventor patents has stayed relatively steady throughout the entire time period.

Some areas of technology lend themselves to team work. Biotech research and drug development is typically extremely expensive and done in structured teams while lower-tech areas may not be so structured. Compare, for instance patents in classes 514 (drugs) and 435 (chemistry of molecular biology) with patents in classes 135 (tents) and 297 (chairs). The first group averages three times the number of inventors as the second group.

It may also be that team-built inventions are more likely to get funding and be patented. Thus, non-US applicants are more likely to spend patenting money in the US on multi-inventor applicants. Likewise, multi-inventor applications are likely to have larger patent families through continuations and CIPs.

The rugged individualists are still out there – they are just getting more lonesome.

Notes:

This data is derived from a sample of 750,000 patents issued from August 1971 through February 2009. All reported results are significant at the 99% confidence level.

Inter Partes Reexamination Statistics

2009-07-07T11:55:19-04:00

In August 2008, Messrs Baluch and Maebius of Foley & Lardner published an interim report on the results of inter partes reexamination proceedings. At the time of their writing, however, only 30 inter partes reexaminations had been pushed-through to conclusion with a reexamination certificate. In the past year, that total has more than doubled to 73 issued reexamination certificates.

Of course, the main point about inter partes reexaminations is that the process can be incredibly slow if either party pushes. Only about 50% of the inter partes reexaminations filed 2001-2005 have been completed either through issuance of a reexamination certificate (on the merits) or procedurally terminated. Overall, the reexamination certificates took an average of 37.5 months to issue (median of 34.4 months). When all is said and done, this pendency will be much longer since the slow and/or hotly disputed cases are all still pending. Only one (1) of the completed cases received a BPAI decision (all claims were cancelled after BPAI affirmed) and no completed cases have received a court decision.

Results of the reexamination certificates: Inter partes reexaminations continue to show promise as a mechanism for "killing" patent claims. Of the 73 issued reexamination certificates, 60% (44) cancel all the claims and only 12% (9) confirm all the original claims as patentable. The remaining 27% (20) change the claimset in some way. For the 19 inter partes reexamination certificates issued on patents with co-pending litigation, 42% (8) resulted in all claims being cancelled; 5% (1) confirmed all claims as patentable; and 53% (10) changed the claimset in some fashion.

En Banc Federal Circuit To Rehear Tafas v. Doll

2009-07-06T17:21:02-04:00

Tafas v. Doll (en Banc)

The Federal Circuit has granted Tafas & GSK’s petition for a rehearing en banc. This case focuses on the USPTO’s power to impliment rules restricting the number of ways an applicant can claim a single invention as well as the number of continuation applications that may be filed based upon an original patent application.

Appellant’s briefs are due in early August (“thirty days” from July 6, 2009) and the opposing brief will be due within twenty days of that filing.

Briefs of amici curiae must follow Fed. Cir. Rule 29 – and either obtain permission of the court or permission of all parties. Briefs in support of Tafas & GSK will be due “no later than 7 days after the principal brief of the party being supported is filed.”

Read the order

Federal Circuit Rules

Amended Rules

Ex Parte Reexamination Pendency

2009-07-06T15:52:39-04:00

The timing of reexaminations is especially important because a large percentage (around 30%) are associated with co-pending litigation. The chart above reports on the current status of ex parte reexaminations as of June 5, 2009. The vertical axis measures the percentage of reexaminations that have been completed – i.e., cases where either a reexamination certificate has been issued or the reexamination was otherwise terminated. The horizontal axis groups the data by filing year of the reexamination.

The prosecution history of these files shows that on average, the PTO issues a first non-final rejection within about one year of the filing of the reexamination (360 days). For reexaminations filed 2001-2004, the average pendency is just over three years (1120 days). This average will increase as the still-pending reissues are eventually completed.

In September 2009, I will be speaking on reexamination issues at the IPO annual meeting in Chicago.

Happy Fourth-of-July

2009-07-03T10:59:59-04:00

Dennis Crouch

The Flawed Nature of the False Marking Statute

2009-07-02T18:08:56-04:00

A new working paper by Professor Elizabeth Winston (Catholic U) discusses problems in court interpretations of the false marking statute 35 U.S.C. § 292. Professor Winston argues that false marks should be presumptively actionable:

"A party who falsely marks their innovation as patented should be presumed to have done so with the intent to deceive the public, and the burden should rest on the marker to prove that they lacked such intent. Furthermore, the penalty should reflect the culpability of the marking party, taking into account various mitigating factors, including whether the public was actually deceived, the materiality of the marking and the harm to competitors caused by the marking. Only then can the false marking statute ring true as the effective and economically efficient vehicle it was designed to be."

The statute is receiving attention in the courts as well. PubPat has filed suit against Cumberland Packing (Sweet-n-low), McNeil-PPC (Tylenol), Iovate (Xenadrine), and Glaxosmithkline (CITRUCEL) for false marking. Attorney Matthew Pequignot has filed suit against at least Gillette, Arrow Fastener, and Solo Cup for false marking.

Read Professor Winston's Draft Article

Assistant Examiners and Patent Term Adjustment

2009-07-01T04:11:00-04:00

Newly minted patent examiners play the role of "assistant examiners" at the US patent office. The work of assistant examiners is reviewed by primary examiners, and both are reviewed by supervisory patent examiners as well as quality control specialists.

Of the roughly 160,000 utility patents issued in the past year (June 29,2008 – June 29, 2009), about 37% were examined by an assistant examiner with the remaining 63% handled by primary examiners working alone. This proportion varies according to Technology Center.

Technology Center		Patents Issued 6/29/2008 - 6/29/2009	Percent Handled by Assistant Examiners
1600	Biotechnology and Organic Chemistry	11,667	38%
1700	Chemical and Materials Engineering	16,857	28%
2100	Computer Architecture, Software, and Information Security	16,217	47%
2400	Networking, Mulitplexing, Cable, and Security	3,370	55%
2600	Communications	23,758	42%
2800	Semiconductors, Electrical and Optical Systems and Components	50,812	36%
3600	Transportation, Construction, Electronic Commerce, Agriculture,	18,098	34%
3700	Mechanical Engineering, Manufacturing, Products	18,018	30%
4100	Training Academy	372	98%

For applicants who appreciate delay, patents that were handled by assistant examiners are more likely to be eligible for patent term adjustment due to patent office delay. (This results hold true for each technology center). 80% of patents handled by assistant examiners were awarded some PTA while only 72% of those handled solely by a primary examiner. This translates to an expected PTA of 12 months versus 9 months respectively.

Only applications filed after May 29, 2000 are eligible for a patent term adjustment. More than 99.5% of patents issued thus far in 2009 have a PTA qualifying filing date. Over the past four years, the percent of patents with some patent term adjustment has been steadily rising over time.

Notes:

"The patent term adjustment (PTA) provisions of the American Inventors Protection Act of 1999 (AIPA) allow for term adjustment: (1) if the USPTO fails to initially act on an application within fourteen months of its filing date; (2) if the USPTO fails to respond to a reply or appeal by applicant within four months of the reply or appeal; (3) if the USPTO fails to act on an application within four months of a Board of Patent Appeals and Interferences (BPAI) or court decision in an application containing allowable claims; (4) if the USPTO fails to issue a patent within four months of the date the issue fee was paid; (5) if the USPTO fails to issue a patent within three years of its filing date; (6) if issue of a patent was delayed due to imposition of a secrecy order; (7) if issue of a patent was delayed due to an interference proceeding; or (8) if the issue of a patent was delayed due to successful appellate review. This PTA smorgasbord requires the USPTO and applicants to monitor numerous events during the prosecution of the application to determine the appropriate term adjustment, and often results in applicants obtaining patent term adjustment despite the fact that the patent has an unadjusted term of longer than seventeen years from grant.

The purpose of the patent term adjustment provision in the AIPA was to guarantee that diligent applicants would still have a patent term of at least seventeen years from grant under the twenty-year patent term system. If the USPTO issues the application within three years from its filing date, any patent term adjustment operates to overcompensate the patentee. PTA should be limited to the situations in which the USPTO delayed processing or examination of the patent and this delay resulted in the application pending before the USPTO for more than three years." Via USPTO

Bits and Bites: Voting Again

2009-06-30T21:01:51-04:00

Today (June 30) is the last day to vote in Gene Quinn’s blog popularity contest. VOTE HERE.
Great new site by the guys of PriorSmart: http://news.priorsmart.com/.
I’m going to do an in-depth study of a couple of art units to see the extent of “cherry-picking” of cases out of their usual order. Any suggestions for which art units should be the focus?

Dropping Claim Counts

2009-06-30T06:45:00-04:00

Earlier, I published the results of a study of rising claim counts in issued patents over time. My data for that study ended in 2005. I have now updated the dataset for patents issued from 2006 to mid 2009. The results – based on the average of all utility patents issued during those years – are shown in the table below.

The median number of issued claims has dropped from 15 claims in 2006 and 2007 to 14 claims in 2008 and 2009. The mode claim number continues to be 20 claims as seen in the histogram below.

Several factors are likely leading to the lower claim counts: (1) increased USPTO fees for additional claims; (2) more frequent restriction requirements; (3) a greater internationalization of the patenting process; (3) greater hourly attorney fees; and (4) reduced economic value of patents; etc.

Centocor v. Abbott: $1.67 Billion Jury Verdict

2009-06-29T21:41:50-04:00

Centocor (Johnson & Johnson) & NYU v. Abbott Labs (E.D.Tex. 2009)

In what may be the largest patent jury verdict in US history, an Eastern District of Texas jury held Abbott Labs liable for $1.67 billion in damages for infringing Centocor's patents covering antibodies against tumor necrosis factor. Abbott's drug Humira (adalimumab) was found to infringe. That drug is used to reduce treat arthritis, psoriasis, Crohn's disease, and ankylosing spondylitis and had $4.5 billion in sales last year.

In an interesting split, the Jury awarded $1.168 billion in lost profits and also $504 million in a reasonable royalty. Although double recovery is not allowed, there is no reason why the damages cannot be split between the two theories of recovery.

The jury also found Abbott to be a willful infringer.

Judge Ward will now decide whether to uphold the verdict and whether the adjudged willful infringement warrants additional damages.

According to news reports, Centocor is not seeking injunctive relief.

Centocor_Abbott_Verdict_Form.pdf

Prelim: The Association Between Grant Rate and Pre-Filing Searches

2009-06-29T16:44:00-04:00

In the not too-distant future, the PTO will likely re-invigorate its effort to force patent applicants to conduct pre-filing prior art searches. During his stint as IPO President, Marc Adler suggested that rational patent applicants should already be conducting pre-filing searches in order to assess patentability and define likely claim scope. Marc offered the then unsubstantiated comment that "if the initial search done by the applicant is as comprehensive as the one done by the patent examiner, it should follow that the pendency of the application will be shorter and the patent more likely will be valid." Despite Marc's suggestion, many applicants do not conduct pre-filing searches – largely because of the up-front cost of searching and analysis.

I wanted to test Marc's suggestion that pre-filing searches add value by leading to better patent applications and shorter application pendency. Although applicants do not ordinarily disclose whether a pre-filing search was conducted, this information can be teased-out by looking to see whether an information disclosure statement (IDS) was filed on the same day as the patent application itself. Of course, filing an IDS with the application does not necessarily mean that a pre-filing search was completed since the submitted art may have been obtained other ways. However, the IDS filing at least indicates that specific prior art was considered prior to filing, and I cautiously believe that such an early IDS filing does suggest the existence of a pre-filing search.

Yesterday, I created a set of 3000+ randomly selected patent applications filed in December 2004 and January 2005 and then divided those applications into three groups: Group 1 applications where no IDS was filed during prosecution; Group 2 applications where an IDS filing coincided with the filing of the patent application itself; and Group 3 applications where the first IDS was filed sometime after the application was filed. The data indicates the status of each application (abandoned, patented, or pending) as of June 26, 2009 – about 4 ½ years after filing. For this first pass, I simplified the data by excluding cases that (1) never published as applications (since data is kept secret for most of those cases); and (2) cases claiming priority to a "parent" patent application (since early IDS filing in the child cases provides little indication of whether a pre-filing search was conducted prior to the parent being filed).

Results: Looking 4 ½ years out from the application filing date, 25% of cases fell into Group 1 (No IDS); 26% into Group 2 (IDS filed with application); and 49% into Group 3 (First IDS filed after application). Table 1 shows these results.

		Portion of All Cases
Group 1	No IDS Filed	25%
Group 2	IDS Filed With Application	26%
Group 3	IDS Filed After Application Filing Date	49%
Table 1		±3% margin of error at 99% CI

In my sample, Group 1 applications were much more likely to be abandoned and less likely to be patented within 4 ½ years of filing than the Group 2 applications. Table 2 below shows this result. In particular, 40% of Group 1 (No IDS) applications were abandoned while only 26% of Group 2. Similarly, only 34% of Group 1 applications were patented compared with 46% of Group 2 applications. Pierson's chi-square test of independence results in P=0.000 – indicating that these differences as a whole are statistically significant.

		Abandoned	Patented	Pending
Group 1	No IDS Filed	40%	34%	26%
Group 2	IDS Filed With Application	26%	46%	28%
Group 3	IDS Filed After Application Filing Date*	24%	40%	36%
Table 2

Table 2 shows that Group 3 (applications whose first IDS was filed after the application date) had an even lower average abandonment rate than Group 2. That number is likely skewed, however, because of the confounding relationship between keeping an application alive and filing a late IDS.

In looking at prosecution timing, I did not find a statistically significant difference in pendency between Groups 1 and 2. Group 3 applications did take significantly longer to patent/abandon. However, that result is likely skewed by the selection bias noted above.

Association Between Grant Rate and Pre-Filing Searches: These high-level results shown in Table 2 suggest a relationship between an applicant's success rate (patent vs. abandon) and the early filing of an information disclosure statement.

An alternative explanation for the relationship between higher grant rate and early IDS filing may be that both are indicators that applicants recognize higher-quality inventions and consequently work harder for valuable patent protection. In that scenario, there is no cause and effect relationship between a pre-filing search and a higher patent grant rate. If this quality-recognition theory were true, I would expect that applications filed by patent attorneys/agents (and larger law firms) to be more likely to include a pre-filing search. However to the contrary, my data comparing applications associated with one or more registered patent practitioners with applications not so associated shows very little difference in the rate of pre-filing searches. Rather, practitioners appear to focus on IDS filing more as a CYA burden as suggested by the greater likelihood of late-filed IDSs in practitioner filed cases. Practitioner-associated cases are also more likely to be patented and not abandoned.

Operation of the patent office as well as applicant behavior both vary depending upon the technology at issue. Table 3 shows IDS timing for each examination technology center. Applications in TC 1600 (Biotechnology and Organic Chemistry) are often seen as more valuable on a per-application basis. However, TC 1600's applications are less-likely than average to include an IDS filing with the original application. (χ² P=0.000). Consistent with disclosure statements as merely CYA material, however is the fact that TC 1600 has the highest rate of later-filed IDS's.

	IDS Timing
Tech Center	Group 1 No IDS	Group 2 With Application	Group 3 Later
1600	11%	24%	64%
1700	16%	24%	57%
2100	29%	26%	40%
2400	28%	22%	41%
2600	20%	33%	40%
2800	22%	27%	47%
3600	35%	27%	38%
3700	27%	28%	38%
Table 3

Notes:

Of course, this comes with the baggage of a retrospective study.

This is a continuing project – suggestions are welcome.

Effect of a Stipulated Dismissal

2009-06-26T13:09:04-04:00

Garber v. Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT) (Fed. Cir. 2009)

Garber first brought his patent infringment suit against the CME and CBOT in 2004. However, he had some trouble finding adequate representation and offered to dismiss without prejudice. The parties then filed an stipulated motion to dismiss without prejudice.

In his order dismissing that case, Judge Castillo (N.D. Ill.) added a statement that appears to be a typographical error giving Garber one-month “to move to reinstate this case or this lawsuit may be dismissed without prejudice.”

Two facts indicate to me that that Judge Castillo intended to threaten a dismissal “with prejudice” rather than “without prejudice.” First, the case was already dismissed without prejudice; and second, soon after his deadline had passed, Judge Castillo ordered the case dismissed with prejudice.

In any event, Garber did not re-file until 2008, and Judge Castillo refuesd to re-open the case. On appeal, the Federal Circuit reversed – finding that the joint stipulation of dismissal divsted the court of its power over the case – rendering the court’s dismissal “void ab initio.”

The appellate panel based its decision on Fed. R. Civ. Pro. R. 41(a)(1) which provides that “the plaintiff may dismiss an action without a court order by filing … a stipulation of dismissal signed by all parties who have appeared” and Seventh Circuit law on-point. See Smith v. Potter, 513 F.3d 781 (7th Cir. 2008).

Reversed.

Notes:

A caution for patentees considering such a stipulation: Rule 41(a)(1)(B) makes clear that the stipulated dismissal is presumably without prejudice only if the plaintiff has not previously dismissed another action “based on or including the same claim.”
Garber’s asserted patent No. 5,963,923 is titled “System and method for trading having a principal market maker.”
Compact Prosecution: The patent application was filed July 1997. The Examiner issued a first non-final rejection in February 1998 and a second non-final rejection in December 1998. The notice of allowance was then mailed in April 1999.
According to the complaint, Garber has been a Chicago based trader since 1972.

Evidence Based Prosecution: The Status of Applications Filed 4 ½ Years Ago

2009-06-25T19:52:05-04:00

This morning I created a dataset of prosecution information for 462 randomly selected utility patent applications filed in December 2004 and January 2005 to get a sense of where those applications stand after 4 ½ years of prosecution. Overall, 48% of the applications have issued as patents; 26% have been abandoned; and 26% are still pending. (Note – I excluded the 12% of cases from my sample that were never published as applications because data is not available for most of them).

Table 1 below shows the detailed status for each case as provided by the USPTO's PAIR system. All but two of the pending cases have received at least an initial examination. The two still-unexamined cases are both software-related applications.

High-Level Status	Status	Percent of Cases
Patented	Patented Case	47.8%
Abandoned	Abandoned -- Failure to Respond to an Office Action	25.2%
Abandoned	Abandoned -- Failure to Pay Issue Fee	0.7%
Abandoned	Expressly Abandoned -- During Examination	0.2%
Pending	Non Final Action Mailed	8.9%
Pending	Final Rejection Mailed	6.4%
Pending	Response to Non-Final Office Action Entered and Forwarded to Examiner	5.0%
Pending	On Appeal -- Awaiting Decision by the Board of Appeals	1.0%
Pending	Notice of Allowance Mailed -- Application Received in Office of Publications	1.0%
Pending	Notice of Appeal Filed	0.7%
Pending	Publications -- Issue Fee Payment Verified	0.5%
Pending	Examiner's Answer to Appeal Brief Mailed	0.5%
Pending	Docketed New Case - Ready for Examination	0.5%
Pending	Appeal Awaiting BPAI Docketing	0.5%
Pending	Withdrawn Abandonment awaiting examiner action	0.2%
Pending	Response after Final Action Forwarded to Examiner	0.2%
Pending	Appeal Brief (or Supplemental Brief) Entered and Forwarded to Examiner	0.2%
Pending	Advisory Action Mailed	0.2%
Table 1

An often frustrating aspect of application pendency is that abandoned cases can be kept alive by filing a continuation application. Of those cases that have been either patented or abandoned, 25% have one or more descendents in the form continuation or CIP applications. (I have not determined whether those continuations are themselves still pending.)

Of the cases already completed (no longer pending), the median patent took 2.6 years to issue while the median abandonment did not occur until 3.1 years into prosecution. Along this line, the longer a case was pending, the greater the likelihood that the case was abandoned. Thus, 71% of cases that were pending for fewer than three years were allowed while only 29% of cases that were pending for three to four and a half years were allowed.

The chart below shows the percentage of applications pending as a function of the number of years in prosecution. Although the average time in prosecution for this cohort cannot be calculated yet (because so many cases are still pending), the median time in prosecution – as seen in the chart – is 3.3 years.

The patent office examination corps is divided into various technology centers. In my sample, TC 2800 (Semiconductors, Electrical and Optical Systems and Components) had allowed the highest percentage of cases (70%) and had the lowest rate of applications still-pending after 4 ½ years (3%). TC 1600 (Biotechnology and Organic Chemistry) has the highest abandonment rate (36%) while TC 2600 has the highest percentage of cases still pending (48%).

Timeline of the BPAI Backlog

2009-06-25T10:49:30-04:00

I used data reported by the Board of Patent Appeals and Interferences (BPAI) to compile the chart above. The chart reports the number of pending appeals each month from October 1997 – May 2009.

Bits and Bytes: In the News

2009-06-25T07:36:41-04:00

PTO Funding Emergency: Andrew Noyes reports on an emergency funding bill for the PTO that would allow the agency to use surplus funds from its trademark budget to fund the growing shortfall on the patent side. Link. The current trademark budget surplus is estimated at $60 million. [Diane Bartz’s Reuters article on the same topic]
John Duffy: Michael Orey of BusinessWeek has published an article recognizing the ongoing contributions of Professor Duffy: A Scholar-Activist Challenges U.S. Patent Law.
Todd Dickinson: Joff Wild of IAM recently interviewed former PTO Director Todd Dickinson and posted the 9 minute video on YouTube. [Watch the Video][IAM Blog]. Dickinson walks through the three major priorities for the next director: Priority I: Reestablish the stakeholder relationship with the PTO; Priority II: Pendency & backlog (in the shadow of the financial shortfall); Priority III: Quality.
False Marking: PUBPAT continues its campaign against false marking. Earlier, I reported on its false marking lawsuits against Cumberland (Sweet'N Low) and Iovate (Xenadrine). Last week, the nonprofit filed a false marking suit against McNeil (Tylenol) and filed an amici brief in Pequignot v. Solo Cup. In that brief, PUBPAT argues that damages should be based on "each falsely marked article." The brief also spells out some of the harms of falsely marked products:

"The reason why companies mark and advertise their products as patented is because they expect doing so will provide them some benefit in the marketplace, such as by winning over consumers, building a superior brand associated with innovativeness, implying that their product has been reviewed and approved by the federal government, or implicitly threatening actual or potential competitors with allegations of patent infringement. Thus, when products are falsely marked or advertised as "patented" or with the numbers of expired, invalid, or inapplicable patents, such false marking provides these potential benefits to the false marker/advertiser without any commensurate justification and, as such, creates the potential to negatively impact the marketplace, the public interests, and the integrity of the patent system."
File Attachment: SoloAmiciBrief.pdf (1100 KB)
File Attachment: PUBPAT v McNeil - Complaint.pdf (321 KB)

Patently-O Bits and Bytes

2009-06-23T09:10:43-04:00

The AP on Hugo Chavez: Venezuelan officials plan to invalidate some pharmaceutical patents and allow domestic manufacturers to produce licensed medicines, an action that could cause shortages and scare off foreign investment, industry leaders said Sunday. [AP][via PatentHawk]
BPAI Data: An updated version of yesterday’s paper on BPAI decision data is available online here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1423922. Comments are welcome.
New Blog: Rocket Docket IP Litigation (E.D. Va. Patent Focus). The blog is edited by the folks at Williams Mullen. Their latest post is an update on the false marking litigation against Solo Cup.
National Patent Jury Instructions: A comittee assembled by Chief Judge Michel has released its set of model jury instructions. Although Judge Michel assembled the committee, the introduction makes clear that the instructions “have not been endorsed by the Federal Circuit Court of Appeals, and are not “official” jury instructions.” However, the instructions are likely to serve as the ongoing model. http://www.nationaljuryinstructions.org/.

Understanding the Role of the Board of Patent Appeals: Ex Parte Rejection Rates on Appeal

2009-06-22T10:19:07-04:00

By Dennis Crouch PDF Version of the Article

Abstract:

This study provides an issue-by-issue analysis of decisions on ex parte appeals by the Board of Patent Appeals and Interferences (BPAI) of the United States Patent and Trademark Office (USPTO). All the cases in this study were appealed to the BPAI after one or more of the pending claims were rejected by a patent examiner.

In the study, I report that most BPAI appeals focus on two or more issues. Of those, the majority of issues (61%) are affirmed and the remainder reversed. When more issues are presented, the case as a whole becomes more likely to be affirmed-in-part. In addition, I find that the likelihood that a case is affirmed has increased over time (Jan 2008 - May 2009).

By far, the most common issue on appeal is obviousness. I find that 87% - 90% of ex parte BPAI decisions decide an issue of obviousness. Only 4% of appeals consider neither obviousness nor novelty. The major aberration of this trend is for cases involving biotechnology and organic chemistry (TC 1600). 18% of BPAI decisions arising from TC 1600 focus on issues other than obviousness and novelty.

In comparing results by issue, I find that obviousness rejections are more likely to be affirmed than are other types of rejections. Most cases (74%) that discuss neither obviousness nor novelty are reversed.

The BPAI is becoming increasingly important. Over the past several years, the BPAI has seen a dramatic rise in the number of appeals being filed. In addition every recent patent reform legislative proposal has included an increased role for the Board.

Bits and Bytes: Kappos & Dudas

2009-06-21T23:38:49-04:00

From Hal Wegner:

A few weeks ago Dave Kappos was involved in a webinar with Jon Dudas which provides some perspectives on the new Director’s views. It is available at http://www.foley.com/news/event_detail.aspx?eventid=2779. The webinar itself is available at http://www.foley.com/multimedia/multimedia_detail.aspx?multimediaid=58221724.

The May 8, 2009 webinar focuses on patent reform; technology issues; and reexamination.

A final version of the new Patent Case Management Judicial Guide is in print. It is also freely available on SSRN.

Understanding the Role of the Board of Patent Appeals: Ex Parte Rejection Rates on Appeal

2009-06-19T21:29:04-04:00

Every proposed patent reform measure includes an expanded role for the US Patent & Trademark Office's administrative patent court - known today as the Board of Patent Appeals and Interferences, the BPAI, or simply the Board. Even without legislation, the role of the BPAI has expanded greatly in the past few years. The number of ex parte appeals in FY2009 is expected to at least double the record-filing of 6,400 appeals in FY2008. I suggest that two factors have led to this short term dramatic rise in appeals: (1) an increase in rejection-rate by patent examiners; and (2) attempts by the PTO to limit non-appeal avenues for achieving full claim scope. These limits include the PTO's proposed rules that would curtail the applicant's ability to file multiple requests for continued examination (RCEs), continuation applications, and a multitude of claims. Although these rules have only been threatened, they impact appeal practice because they may apply to already-pending applications. Although more gradual, two additional influences on the rise in appeals include: (1) the continued perceived value of patent rights and (2) the continued rise in the number of patent application filed each year.

During patent prosecution, an applicant has a right to appeal to the Board after its application is twice rejected. 35 U.S.C. 134. In this short article, I look at how the Board responds to those rejections on appeal. Many appeals involve multiple rejections each of which may be affirmed or reversed. In addition, the Board occasionally introduces a new ground for rejection even after reversing an examiner decision. This analysis opens-up these decisions and provides data issue-by-issue.

My data comes from two primary sources. First, using Westlaw, I downloaded copies of the approximately 6,000 ex parte BPAI decisions issued between January 2008 and May 2009. Using an automated script, I extracted data from each of those appeals, including the holding and the extent of discussion of various issues. (i.e., how often "obviousness" or "enablement" is discussed in the opinion.) In addition, just under 200 ex parte decisions from 2009 were randomly selected and scored by hand to determine how the BPAI decided individual issues within the appeals. Board decisions typically identify a series of issues and then decide each issue. In Ex Parte Cypher, 2009 WL 1162435, 2008-4722, (Bd. Pat. App. Inter. 2009), for instance, the Board identified two issues: "(1) Claims 1-4 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh in view of McFarling. (2) Claims 9-11 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh and McFarling in view of Yeh." In Cypher, both issues were affirmed. As a consequence, the data for this case reflects that two obviousness issues were raised, both of which were affirmed.

Results:

In the hand-scored sample, the average Board decision considered 2.1 issues (median of two issues). Approximately 61% of decided issues are affirmed on appeal and 39% are reversed. (In this study, fewer than 1% of issues were expressly not decided.) The issue-by-issue analysis fits with the overall holdings for cases on appeal. In the hand-scored sample, 59% of the cases were affirmed as a whole, 12% were affirmed-in-part, and 29% were reversed. (This sample parallels the Board's own statistics for FY2009 which indicate that 60% of its decisions on the merits are affirmances, 15% affirmance in part, and 25% reversals). Table 1 shows the issue-by-issue results alongside the overall case-holding for the hand-scored sample.

	Issue-by-Issue Results	Case-by-Case results
Affirmed	61% of issues affirmed	59% of cases affirmed
Affirmed-in-Part	N/A	12% of cases affirmed-in-part
Reversed	39% of issues reversed	29% of cases reversed
Table 1

As you might expect, when there is a strong correlation between the overall case holding of an appeal and the holdings on individual issues at issue in the appeal. When the overall case-holding is affirmed, the vast majority of issues are also affirmed. However, in the hand-scored sample, about 10% of cases that were affirmed included some individual issues that were reversed. Often, the reversed issues were rejections argued by the examiner in the alternative. In Ex Parte Mcquiston, 2009 WL 598537, 2008-3224 (Bd. Pat. App. Inter. 2009), for instance, applicant's claim 1 had been rejected as (1) anticipated by Golds; (2) obvious over Golds; (3) anticipated by Simso; and (4) obvious over Simso. The Board rejected the first three of these rejections, but the claim remained unpatentable as obvious over Simso and the examiner's decision affirmed as a whole.

Table 2 compares the case-holding with the issue-by-issue analysis based on our hand-scored sample of 200 BPAI decisions. As seen in Table 2, when a case is affirmed-in-part, roughly half (on average) of the issues are affirmed and half are reversed. In cases that were reversed, every issue was also reversed. (?² P<.01).

Case Holding	Percent of Issued Affirmed	Percent of Issues Reversed
Affirmed	92%	8%
Affirmed-in-Part	51%	49%
Reversed	0%	100%
Table 2

Number of Issues on Appeal: In Mcquiston, the applicant needed to address each alternate reason for rejection in order to win on appeal. In most cases, however, each claim is rejected for only a single reason - usually obviousness. See infra. The applicant can then choose how to group issues on appeal. If, for instance, claims 1-10 are each rejected as obvious, the applicant could choose to argue each claim separately or cluster the claims into one or more groups that are then argued as a unit. Chart 1 uses the hand-scored data to presents the likelihood of a particular case-holding as a function of the number of issues on appeal.

When only one issue is presented, the result in the case tracks the result of that issue. As more issues are presented, the likelihood of a split affirmed-in-part decision rises dramatically while the likelihood of either complete affirmance or complete reversal drops. Chart 2 is a cumulative frequency for the number of issues presented on appeal. In our sample, the number of claims ranged from 1 to 8. The median was 2 claims and the mode 1 claim. About 94% of decisions discussed four or fewer issues.

The Board is authorized to offer new grounds for rejection, and did-so in about 4% of the cases in the hand-scored study. The most common new ground was for obviousness.

Obviousness: Obviousness is the bread and butter of patent examinations. In this study, I also show that it is the mainstay of BPAI ex parte appeals. 90% of appeals in my hand-scored study included at least one obviousness issue that was decided on appeal. More than half of the appeals (54%) focused only on obviousness. The closest runner-up issue – anticipation – was an issue in 37% of the appeals. Other issues on appeal (each with a frequency of < 5%) included in descending frequency: written description requirement; indefiniteness, patentable subject matter, obviousness-type double patenting, and enablement.

For applicants, the fact that the majority of issues involve obviousness spells trouble for applicants. In the hand-scored data, the Board affirmed obviousness findings much more often it did for other grounds of rejection. Specifically, the Board affirmed 65% of the appealed obviousness issues, but affirmed only 52% of the appeal issues made on grounds other than obviousness. Table 3 compares these results for the hand-scored sample of 200 cases. (?² P<.05).

Issue Holding	Obviousness Rejection	Other Grounds of Rejection
Affirmed	65%	52%
Reversed	35%	48%
Table 3

The pervasiveness of obviousness issues is further confirmed by the larger sample of 6,000 ex parte decisions issued between January 2008 and May 2009. Using a parsing script, I looked for discussions of obviousness issues by counting the number of times that the terms such as "obvious" and "35 U.S.C. § 103(a)" appeared in each opinion. In that sample, 87% of the decisions discussion obviousness while only 13% do not discuss obviousness. Table 4 shows the roughly parallel results.

	Hand-Scored Sample	Automatically Parsed Sample
	(n ˜ 200)	(n ˜ 6,000)
Obviousness at Issue	90% of cases decide an obviousness issue	87% of cases discuss either obviousness or Section 103(a)
No Obviousness Issue	10% of cases do not decide any obviousness issue	13% of cases do not discuss obviousness or Section 103(a)
Table 4

In order to ensure that I was picking up an actual obviousness issue, I created a script that looked for cases where obviousness was more intensely discussed, i.e., where obviousness terms were mentioned at least three times. In those cases where obviousness was intensely discussed, the Board affirmed the examiner's rejections decisions 59% of the time. In cases where obviousness was not discussed at all, the examiner was affirmed in only 37% of cases. Table 5 compares these results for the automatically-parsed sample of 6000 cases. (?² P<.01).

Case Holding	Obviousness Intensely Discussed	No Discussion of Obviousness	No Discussion of Obviousness or Novelty
Affirmed	59%	37%	22%
Affirmed-in-Part	15%	10%	4%
Reversed	26%	47%	74%
Table 5

The far right column of Table 5 provides a compelling statistic. 358 cases in the sample had no discussion of either obviousness or novelty. Of those cases, 74% were reversed on appeal.

Technology Center Specific Results: Patent examination is divided amongst various technology centers. Although the substantive patent laws do not vary across technology lines, patent practice can vary greatly. The BPAI regularly updates a statistical breakdown of its opinions by tech center. [Link]. Table 6 is derived directly from the BPAI statistics for FY2009 through May 2009 and shows the percentage of decisions on the merits from each tech center that arrive affirm, affirm-in-part, or reverse, respectively.

Technology Center	Affirmed	Affirmed-In-Part	Reversed
1600 Biotechnology and Organic Chemistry	59%	15%	27%
1700 Chemical and Materials Engineering	69%	11%	20%
2100 Computer Architecture, Software, and Information Security	63%	13%	24%
2600 Communications	64%	14%	21%
2800 Semiconductors, Electrical and Optical Systems and Components	65%	11%	24%
3600 Transportation, Construction, Electronic Commerce, Agriculture,	47%	22%	31%
3700 Mechanical Engineering, Manufacturing, Products	53%	17%	30%
Table 6

Focusing in on obviousness again, it is interesting to see that appeals from Tech Center 1600 (Biotechnology and Organic Chemistry) are the least likely to discuss obviousness. The most appeal decisions emerge from Tech Center 1700 (Chemical and Materials Engineering), and those appeals are the most likely to include a discussion of obviousness. In particular, a discussion of obviousness is found in 92% of TC 1700 appeals but only 76% of TC 1600 appeals. (?² P<.01). The difference is partially explained by TC 1600's more rigorous application of the Section 112 issues of written description, enablement and indefiniteness. Table 6 is again derived from the automatically-parsed sample of 6,000 Board decisions. For each tech center, Table 7 indicates the percent of cases that discuss obviousness; both obviousness and novelty; novelty; and neither obviousness nor novelty. This table again highlights (1) the focus of the PTO on obviousness issues (and to a lesser extent novelty issues) and (2) the differences of TC 1600 from the rest of patent practice.

	Percent of Cases Issue on Appeal
Technology Center	Obviousness+	Obviousness and Novelty	Novelty+	Neither Obviousness Nor Novelty
All	87%	31%	40%	4%
1600 Biotechnology and Organic Chemistry	76%	20%	26%	18%
1700 Chemical and Materials Engineering	92%	29%	34%	3%
2100 Computer Architecture, Software, and Information Security	82%	29%	43%	3%
2600 Communications	89%	31%	39%	3%
2800 Semiconductors, Electrical and Optical Systems and Components	88%	35%	45%	3%
3600 Transportation, Construction, Electronic Commerce, Agriculture,	87%	30%	40%	2%
3700 Mechanical Engineering, Manufacturing, Products	87%	37%	47%	2%
Table 7

Notes:

Thanks to two of my research assistants – Patrick Barnacle and Jaron Brunner – for helping me to score the individual decisions by hand.

The BPAI only publishes opinions once the underlying application is either published or issued as a patent. Consequently, this article misses those

David Kappos: Next USPTO Director

2009-06-18T20:21:16-04:00

Congratulations!

The White House has announced its intent to nominate David J. Kappos as Director of the United States Patent and Trademark Office (USPTO) with the official title of Under Secretary of Commerce for Intellectual Property. Mr. Kappos has spent his entire career with IBM – both as an electrical engineer and later as a patent attorney. Kappos ends his IBM career (at least for now) as Vice President and Assistant General Counsel, Intellectual Property Law. He is a board member of both AIPLA and IPO.

From the get-go, Mr. Kappos has been a rumored frontrunner to replace Director Jon Dudas and Interim Director John Doll. In a May 2009 article, I announced my support for Mr. Kappos. In that article, I noted the value of having “a patent office director who understands patents and who has been fully involved with all aspects of the patent system for the past twenty years. I believe that Kappos will be a careful shepherd of the system - leaving it better off in six years than it is today.”

As someone who writes daily about US Patent Law, I am excited about the Kappos nomination because he is likely to open access to previously hidden data and information. He will also work to create systems that work and measures that are meaningful.

I suspect that the biggest challenge for Mr. Kappos will be moving beyond the unique IBM perspective. Big Blue is an atypical patent owner in its internal systems, patenting volume, and licensing power. As I discussed earlier, it will be important for him to spend time understanding how the rest of the patent community operates.

Notes:

White House Announcement
Leahy Statement: “The USPTO faces serious challenges in this difficult economic environment, and the office requires strong leadership. David Kappos is such a leader. I look forward to working with him on issues confronting the USPTO, including reducing the backlog and pendency of patent applications and modernizing the patent system as Congress considers the Patent Reform Act.”
EETimes Article: Quoting Mark Lemley: "The PTO is in crisis, and I think Dave Kappos understands that, and will work creatively to try to find ways out of the crisis, I also think he is sensitive to the need for patent reform, which is a good thing."
March 2009 Testimony of Kappos
IP Law Insights (Perkins Coie Blog) summarizes an earlier Kappos article: (1) Patent applicants are responsible for the quality and clarity of their patent applications. (2) Patent applications should be available for public examination. (3) Patent ownership should be transparent and easily discernable. (4) Pure business methods without technical merit should not be patentable.
Patent Prospector on Kappos and the recent poorly researched WSJ Article.
From the USPTO Website: “If he is confirmed by the U.S. Senate, Kappos will take control of an office that provides incentives to encourage technological advancement and helps businesses protect their investments, promote their goods and safeguard against deception in the marketplace. The office continues to deal with a patent application backlog of more than 770,000, long waiting periods for patent review, information technology systems that are regarded as outdated and an application process in need of reform.”

Preliminary Injunctions and Obviousness in Design Patent Law

2009-06-17T22:44:54-04:00

Titan Tire Corp. v. Case New Holland, Inc. 2008-1078 (Fed. Cir. 2009)

Titan (the patentee) and Goodyear (the exclusive licensee) combined to sue Case for infringement of its tractor tire design patent. (Des. Pat. No. D. 360,862). The district court rejected Goodyear's motion for preliminary injunctive relief - finding that the evidence indicated that the patent claim was probably obvious. On appeal, the Federal Circuit affirmed.

Standard for Preliminary Relief: In order to obtain the "extraordinary" relief of a preliminary injunction to stop infringement before a final judgment, the a patentee must prove that "(1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm in the absence of a preliminary relief, (3) the balance of equities tips in its favor, and (4) an injunction is in the public interest." The likelihood of success requires proof that the patentee "will likely prove infringement, and that it will likely withstand [validity] challenges, if any." When a defendant challenges a patent's validity, the district court must weigh the evidence (both for and against) to determine whether the challenge "raises a substantial question" of validity.

"Thus, when analyzing the likelihood of success factor, the trial court, after considering all the evidence available at this early stage of the litigation, must determine whether it is more likely than not that the challenger will be able to prove at trial, by clear and convincing evidence, that the patent is invalid. We reiterate that the “clear and convincing” standard regarding the challenger’s evidence applies only at trial on the merits, not at the preliminary injunction stage. The fact that, at trial on the merits, the proof of invalidity will require clear and convincing evidence is a consideration for the judge to take into account in assessing the challenger’s case at the preliminary injunction stage; it is not an evidentiary burden to be met preliminarily by the challenger."

The trial court's decision on preliminary injunctive relief is reviewed for abuse of discretion.

Obviousness of Design Patents: Design patent claims are subject to the nonobviousness requirement of Section 103(a) -- asking whether “the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved.” However, it is unclear how KSR applies to design patent cases. Unfortunately, this decision provides no answers except that "it is not obvious that the Supreme Court necessarily intended to exclude design patents from the reach of KSR."

Ordinarily, design patent obviousness analysis begins with a primary reference with design characteristics that "are basically the same as the claimed design." Secondary references are then combined so long as the secondary references are "so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other." Here, the lower court did not use the language of "primary and secondary references", but the Federal Circuit found that the lower court's obvious analysis was sufficient to for its denial of preliminary relief.

"[W]e cannot say the trial court abused its discretion in concluding that Titan was unlikely to withstand Case’s challenge to the validity of the ’862 patent on obviousness grounds.

Notes:

Read the case: 08-1078.pdf
The court explicitly avoided indicating whether obviousness analysis for design patents should be modified to conform to either KSR or Egyptian Goddess.

Appealing BPAI Rejections to the Federal Circuit

2009-06-17T00:44:11-04:00

In re Baggett (Fed. Cir. 2009) (nonprecedential)

The Board rejected Bagget's patent claims as obvious. On appeal, the Federal Circuit largely affirmed - holding that the the administrative body's factual findings were supported by the requisite "substantial evidence" and that the Board had properly “articulated [its] reasoning with some rational underpinning to support the legal conclusion of obviousness" as required by KSR. (Quoting KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007)).

The only portion vacated involves an error interpreting the term "memoization." The Board had initially misinterpreted the term as memorization. After a petition for rehearing, the Board corrected its mistake - but only as to one of the four claims containing the term. On appeal, PTO Solicitor Chen explained that Baggett had only addressed the one claim in the petition for rehearing, but offered that a remand would still be appropriate.

Notes:

This case may serve to emphasize the difficulty in appealing an obviousness decision from the Board of Patent Appeals & Interferences. The "substantial evidence" standard is low, i.e., "more than a mere scintilla of evidence." Likewise, the legal conclusion of obviousness now looks merely for "some rational underpinning."
In a note, Hal Wegner identifies four Federal Circuit appeals up for review that may focus on obviousness: In re Applied Materials Israel Ltd., Fed. Cir. No. 2009-1083 (argument July 7, 2009); In re Mettke, Fed. Cir. No. 2009-1125; In re Roth, Fed. Cir. No. 2009-1223; and In re Rivera, Fed. Cir. No. 2009-1123.
Although it may have been amended during prosecution, the original claim 1 reads as follows: 1. A method of producing constructed fares that includes an arbitrary added to a published fare, said method executed in a computer system, the method comprising: determining interior cities that appear with gateway cities in arbitraries for the airline; searching for gateway cities corresponding to the determined interior cities appearing in the arbitraries; and applying an arbitrary corresponding to one of the interior cities to a published fare involving one of the gateway cities to produce the constructed fare.
Read the decision: 09-1029.pdf

Bits and Bytes: Data, Damages & Deferred Examination

2009-06-14T04:01:03-04:00

Data.Gov: As part of the transparent government project, we now have the website Data.Gov with the purpose of "increas[ing]public access to high value, machine readable datasets generated by the Executive Branch of the Federal Government." So far, the PTO has only included two datasets -both of which were already available through the PTO website. Hopefully there will be more to come - including opening access to PAIR. [More here].
IP Colloquium: Professor Lichtman has released a new edition of his audio-program IP Colloquium. This month's program focuses on reforms of the patent damages laws. [LINK] The program offers CLE Credit.
Deferred Examination: Comments on a potential deferred examination program are here.
Deferred Examination: Intel's comments are interesting. The company argues that the success of deferred examination in other countries is a facade. Rather, the high rate of drop-out during prosecution in countries such as Japan, Germany, and Korea is due to the inventor compensation schemes in those countries. So the story goes - companies in those countries tend to file more low-quality local patent applications for the purpose preempting inventors from asserting rights on their own.

"We actually believe that the reason that deferred examination has had little success in the United States is due to the inventor compensation schemes that exist in many countries such as Japan, Germany and Korea.

In essence, under the regimes in these countries, if the company fails to patent the invention, the inventor has the right to file on his or her own behalf. Having inventors file on their own behalf is generally viewed as undesirable. As a result, the companies file disproportionately more applications in their home jurisdictions than normal prudence would otherwise suggest. Since they are filing these in part to pre-empt the inventor’s rights and to avoid having additional inventor compensation issues, we believe that this contributes to an inclination to avoid paying the examination fee and then to abandon the patent application.

However, outside their home jurisdictions, these companies have a tendency to file a fraction of the patents that they file in their home jurisdictions. Having filed in the home jurisdiction, they have little or no concern that the inventor has the right or will file the application overseas. Apparently, as a result, they do not appear to abandon nearly as high a percentage of the patent applications that they file outside their home jurisdictions as they file in their home jurisdictions.

Of course, the US does not have such inventor compensation statutes. Those foreign companies that file and abandon so heavily in their home jurisdictions exhibit radically different behavior in the US. They file less and abandon much less. Hence, we believe that this helps explain the disparate experience of deferred examination in other countries. It means that the practice in these other countries is not likely to be a good indicator for practice before the USPTO."

BPAI Backlog

2009-06-11T17:23:08-04:00

In January 2009, I reported on a dramatic rise of BPAI Appeals and the associated backlog. Since then, the backlog has almost doubled to over 10,000 pending appeals. This is the largest backlog on record and tends to explain why the Board is attempting to implement procedures to streamline the process.

At the Board's average rate of 500 disposals per month, the backlog would take over 20 months to eliminate. However, that result requires the counterfactual assumption that no additional appeals will be filed during that period. Rather, though four months remain in FY2009, the number of ex parte appeals filed this year will likely more than double the record-filing of 6400 ex parte appeals in FY2008. Thus, appeals are being filed at a rate about 2 1/2 times faster than the Board's usual work flow rate. In May 2009, for instance, the Board disposed of 523 appeals, but received 1641 new appeals to decide.

See, BPAI WEBSITE; PATENTLY-O POST.

Lack of Standing: Dismiss with(out) prejudice

2009-06-11T00:56:26-04:00

University of Pittsburgh v. Varian Medical (Fed. Cir. 2009)

The district court dismissed Pitt's infringement action for lack of standing because Carnegie Mellon is a co-owner. Ordinarily all co-owners must join as plaintiffs in an infringement suit, and here Carnegie Mellon did not join. Notably, the district court dismissed the case with prejudice - barring Pitt from later re-filing the lawsuit once Carnegie is on-board.

On appeal, the Federal Circuit took a minimalist approach - holding only that the district court abused its discretion in dismissing with prejudice rather than without prejudice.

Federal Rule of Civil Procedure 12(b)(7) allows a district court to dismiss an action for failure to join a party under Rule 19. However, it is clear that a dismissal for failure to join a party is not an adjudication on the merits, and thus, should not have preclusive effect—i.e. such a dismissal should be without prejudice. See Hughes v. United States, 71 U.S. (4 Wall.) 232, 237 (1866).

...

Fieldturf, Inc. v. Sw. Recreational Indus., 357 F.3d 1266, 1269 (Fed. Cir. 2004) (“Ordinarily, dismissal for lack of standing is without prejudice. On occasion, however, a dismissal with prejudice is appropriate, especially where it is plainly unlikely that the plaintiff will be able to cure the standing problem.”).

08-1441.pdf

Court Costs: $1,000,000 in Translation Costs Awarded to Prevailing Party

2009-06-11T00:30:22-04:00

Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc. (Fed. Cir. 2009)(Dyk, J.),

In 2005, the Federal Circuit affirmed a district court ruling in this case supporting the validity of Daiichi's Levofloxacin's patent.

Under the Federal Rules of Civil Procedure (R. 54(d)), non-attorney-fee costs are presumptively awarded to the prevailing party. These usually include costs associated with court fees, subpoena fees, transcripts, copying, and translations.

Daiichi calculated its costs as $2.2 million, but the district court reduced those costs to $1.3 million (including $1 million in translation costs). On appeal, the Federal Circuit affirmed these costs.

The one exception to the affirmance involves a parallel case against Teva. Although there was no joint discovery agreement, some depositions were taken jointly by Mylan and Teva for the convenience of Daiichi. Because the Teva case settled, the court in that case did not award any costs. However, Mylan argued that Teva's portion of the costs was implicit in the settlement payment. The Federal Circuit agreed - holding that Mylan should not be required to pay more than 50% of the costs for the joint depositions.

Here it is apparent that Daiichi has in effect already recovered some amount of costs through its settlement agreement with Teva. Although Teva did not actually pay costs to Daiichi in cash, the taxable costs in the New Jersey action (including deposition costs) were unquestionably taken into account by the parties’ settlement, in which Daiichi agreed not to seek actual payment of costs as consideration for Teva foregoing its appeal. Having recovered the value of those costs in the form of the foregone appeal, Daiichi cannot now recover more than its total entitlement by obtaining those same costs again from Mylan. . . . Because the district court here did not apportion costs between the two actions, we vacate the award of costs in this one respect and remand for further proceedings.

Affirmed in part

Read the Decisions:.08-1600.pdf

Injunctive Relief: District Court Abused Discretion by Failing to Consider eBay Factors

2009-06-09T22:35:46-04:00

Ecolab v. FMC Corp. (Fed. Cir. 2009)

Both Ecolab and FMC sell chemical mixtures used by beef and poultry factories to help protect raw meat from "pathogens, such as E. coli and salmonella." Both parties hold patents on their mixtures, and in litigation each asserted infringement against the other. A jury awarded both parties damages for infringement. However, the district court refused to issue permanent injunctive relief. On appeal, the Federal Circuit invalidated Ecolab's claims and then focused on whether the district court erred in refusing to grant an injunction to stop Ecolab from infringing.

Injunctive relief is awarded according to the traditional principles of equity. In eBay v. MercExchange, the Supreme Court interpreted those principles to require a patentee seeking injunctive relief to demonstrate "(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction."

In this case, the district court did not explicitly consider any of the eBay factors. "That is an abuse of discretion." In this instance, the Federal Circuit refused to consider whether – based on the fact at hand – an injunction would be proper. Rather, on remand the district court must consider whether relief is warranted based on a consideration of the four listed factors.

Note:

While construing claims, the decision distinguishes Chef America's statement that claims are construed "as written, not as the patentees wish they had written it." "Because the claim language at issue in Chef America was unambiguous, that case is distinguishable from the present case. In the present case, the definition of "sanitize" is ambiguous in that it does not indicate when consumption is to take place . . . and the district court did not err when it construed the term "sanitize" to mean that the treated meat has become safe for human handling and post-cooking consumption."

Bits and Bytes

2009-06-08T13:58:19-04:00

Comments on Patently-O: I have updated the commenting software. Now there are threaded comments, so it is easier to reply directly to a prior comment. If you sign-up for a free Typepad account then you can personalize the image associated with your moniker.
Law Firms as Patent Owners: Photo site SmugMug recently filed a declaratory judgment action against the patent holding entity VPS, LLC. VPS previously settled with Pictage earning a "multi-million dollar fee" as well as with Kodak Gallery and Shutterfly. VPS's ownership is interesting. Its managing partners are all patent attorneys: Carl Moore (patent attorney at Marshall Gerstein); Timothy Vezeau (patent attorney at Katten Muchin); and Nate Sarpelli. The VPS patents were originally assigned to Monet, Inc. but subsequently assigned to the Marshall Gerstein firm. In 2002, the law firm assigned the rights to VPS. (See Pat. No. 6,321,231). SmugMug Complaint for Declaratory Judgment.pdf
Design Patent Customs Registration: The IPO has voted to support a statutory change that would create a design patent registry within the Customs and Border Protection (CBP) bureau of the Department of Homeland Security. The CBP already keeps a registry of trademarks and copyrights to assist customs agents in preventing infringing importation through any of the 317 official ports of entry into the US. [CBP E-Recordation System] (No bill has been proposed.)
Tivo v. DISH and EchoStar: $190 million.
Update Your PTO Registration Data Online: Link. Before you can use the system, the OED will first send a letter to you with a User ID. After you respond, you will be sent a password.

Speeding-Up Design Patents

2009-06-08T07:47:30-04:00

Design patents are cheap and usually involve little prosecution. In a recent report at "Design Day", the USPTO noted that the agency is working to further shrink the timeline. Notably, the average number of days from payment of the issue fee to issuance of the patent has shrunk by 2/3 since 2006. In FY2009 (thus far), the delay averages 52 days while in FY 2006, the delay averaged 140+ days. The average pendency is about 16 months. Applications in the "rocket docket" issue within 6 months on average.

Written Description: Araid Petitions en banc Federal Circuit to Eliminate Separate Written Description Requirement

2009-06-07T22:21:02-04:00

Ariad v. Eli Lilly (en banc suggestion 2009)

Ariad has petitioned the Federal Circuit for an en banc rehearing - boldly asking the court to eliminate the written description test as a distinct requirement of patentability under 35 USC Section 112, paragraph 1. The petition - drafted by Professors Duffy and Whealan - is essentially a well-formed collage of quotations from Federal Circuit dissents and 19th Century Supreme Court decisions.

The petition raises the following two questions:

(1) Whether this Court has erred by "engrafting . . . a separate written description requirement onto section 112, paragraph 1 .... " Ariad Pharms., Inc. v. Eli Lilly & Co., 560 F.3d 1366, 1380 (Fed. Cir. 2009) (Linn, J., concurring).

(2) What is the proper test to satisfy the requirement in Section 112, paragraph 1, that a patent specification contain "a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same"?

Apart from the merits of this case, the brief notes that half of the Federal Circuit judges "have either voted to grant en banc review of this Court’s written description jurisprudence (Newman, Rader, Bryson, Gajarsa, and Linn, JJ.), or have expressly noted that future en banc review may be appropriate because this Court’s written description standards are unsatisfactory. (Dyk, J.).

Notes:

Ariad Brief: ariadrehearingpetition.pdf
Federal Circuit Decision
The original opinion was written by Judge Moore and joined by Judge Prost. Judge Linn wrote a concurring opinion as a reminder of his belief that the written description requirement should be eliminated and enablement be allowed to do its job.
Patent Docs has more.

Tafas v. Doll (En Banc Suggestion)

2009-06-05T14:13:35-04:00

Tafas v. Doll (En Banc Suggestion)

Both Tafas and GlaxoSmithKline (GSK) have filed petitions for en banc rehearing asking the Federal Circuit to stop the US Patent & Trademark Office (PTO) from implementing any of its proposed rules on continuations and claims.

The proposed rules can be split into two major categories: Rule 75 (requiring applicants to submit Examination Support Documents (ESD) to accompany any application that includes more than five independent or 25 total claims); Rule 78 (limiting applicants to two continuation applications absent a showing of need for more).

In a split decision, the Federal Circuit held that the limitations on continuations improperly conflict with 35 U.S.C. § 120, but that the remaining limits are "within the scope of the USPTO's rulemaking authority." (Limitations on RCEs do not create a problem).

In the motion for en banc rehearing, GSK raises the the questions of:

Whether the Panel majority erred in rejecting the test for determining whether a Patent and Trademark Office ("PTO") rule is "substantive," as set forth in the controlling precedent of Chrysler, supra; Animal Legal Defense Fund, supra; and Cooper Technologies, supra.
Whether the Panel majority erred in holding that the challenged Final Rules, 72 Fed. Reg. 46,716 (Aug. 21, 2007), fall within the PTO's limited, non-substantive rulemaking authority.

Tafas raises similar questions of whether the Federal Circuit:

misapplied significant binding Supreme Court and Federal Circuit precedent concerning the correct standard for classifying administrative rules as "substantive" versus "non-substantive";
failed, contrary to Supreme Court and Federal Circuit precedent, to fully consider evidence that the Final Rules significantly and adversely affect individual rights and obligations under the law;
failed to correctly address, as required by Supreme Court precedent, the threshold question of whether the PTO has the jurisdictional authority under 35 U.S.C. § 2(b)(2) to enact the Final Rules; and
misapplied Chevron deference to its improper determination that Final Rules 75, 265 and 114 were not "inconsistent with existing law".

The federal circuit majority opinion by Judge Prost included a dissent by Judge Rader (arguing that the rules are substantive) and a concurring opinion by Judge Bryson (arguing that the conflict with Section 120 only applies to continuations that are co-pending with the first-filed application).

The diversity of opinion here gives this case an excellent chance at being heard by the full 12-member court. The important administrative law issues will also be appealing to the Supreme Court when it comes time to petition for certiorari.

Fractured Claim Construction

2009-06-05T12:11:37-04:00

Agilent Tech., Inc. v. Affymetrix, Inc. (Fed. Cir. 2009)

Agilent's microarray hybridization genetic analysis patent issued in 2003. After seeing those issued claims, Affymetrix amended a pending application by adding identical claims in order to provoke an interference. The Agilent patent has a priority date of 1998 while the Affymetrix application claims priority back to 1995. The Board of Patent Appeals and Interferences (BPAI) awarded priority to Affymetrix in 2006. That holding was upheld by a N.D. California district court in 2008.

Here, the Federal Circuit reverses - holding that Affymetrix cannot claim priority back to its 1995 filing because that original application "does not satisfy the written description requirement for the claims at issue." Written description is particularly relevant in interference cases where one party typically copies claims from another patent document.

Claim Construction in an Interference: Several articles have been written on the complicated and ever-changing scope of a patent claim. At the PTO, claims are usually given their broadest reasonable meaning while in litigation, courts look for how a PHOSITA would interpret the scope, etc.. Phillips teaches that proper claim construction looks at the literal language of the claims as well as supporting information from the specification and prosecution history. In an interference, however, the copied claims originally came from another application.

Faced with a split of precedent, the Federal Circuit here decided to continue with multiple interpretations of an individual claim. Following Spina, the court holds that - for the purposes of the written description requirement - the newly added claims should be interpreted based on the specification and history of the opposing source application. However, following Rowe, the Federal Circuit held that for the purposes of novelty and nonobviousness, the newly added claims should be construed based on the specification and history of the amended application.

To be clear, as this court explained in Rowe, when a party challenges written description support for an interference count or the copied claim in an interference, the originating disclosure provides the meaning of the pertinent claim language. When a party challenges a claim’s validity under § 102 or § 103, however, this court and the Board must interpret the claim in light of the specification in which it appears.

This change in primary interpretative materials allowed the Federal Circuit to also change the claim construction and consequently hold that Affymetrix's application "does not satisfy the written description requirement for the claims at issue."

Notes:

As a pending application, Affymetrix's claims had no presumption of validity. "Thus, Agilent’s burden of proving a lack of written description in Affymetrix’s Besemer application is a simple preponderance of the evidence. Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1365 (Fed. Cir. 2004)."