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image Federal Circuit Nixes Software Claims: In CyberSource Corp. v. Retail Decisions, Inc. (Fed. Cir. 2011), the Federal Circuit affirmed the district court’s grant of summary judgment of invalidity of claims 2 and 3 of U.S. Patent No. 6,029,154 (the ‘154 patent). The ‘154 patent disclosed a method and system for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet. The Federal Circuit found that the claimed method could be performed entirely mentally, and thus was unpatentable under 35 USC 101. Moreover, the Federal Circuit further found that if a method is capable of being performed entirely mentally, it is not made patentable by claiming the method embodied as program instructions on a computer readable medium.

image Narrowing Amendment Bars Infringement by Doctrine of Equivalents: In Duramed Parmaceuticals (Teva Women's Health) v. Paddock Labs. (Fed. Cir. 2011), the Federal Circuit found that a narrowing amendment made during prosecution of the patent at issue prevented the application of the doctrine of equivalents. In this case, Duramed filed a patent application that claimed a conjugated estrogen pharmaceutical composition "coated with a moisture barrier coating." During prosecution, Duramed amended the claims to recite that the composition was coated with "a moisture barrier coating comprising ethylcellulose." Later, Paddock filed an ANDA for a generic version of Duramed's hormone replacement therapy product, and Duramed sued alleging infringement of its product under the doctrine of equivalents because Paddock used polyvinyl alcohol (PVA) as the moisture barrier coating (MBC). Several pre-amendment references discussed the use of PVA-based MBCs. Ultimately, Duramed could not show that PVA was an unforeseeable alternative to ethylcellulose as an MBC, and thus, the narrowing amendment prevented the application of the doctrine of equivalents.

image Supreme Court Grants Certiorari for Three Patent Related Cases: Within the past couple of weeks, the U.S. Supreme Court has granted writs of certiorari to hear three patent related cases. In Mayo Collaborative Svcs. et al. v. Prometheus Labs., Inc., the Court will decide whether a particular medical diagnostic method qualifies as patentable subject matter under 35 U.S.C. 101. In Caraco Pharmaceutical, et al. v. Novo Nordisk A/S, et al., the Court will consider the scope of a generic drug maker's right to assert a counterclaim challenging the patent information submitted to the FDA by a brand name drug maker. Finally, in Kappos v. Hyatt, the Court will decide whether a patent applicant may present new evidence in a Section 145 civil action, and whether the court may decide the factual issues related to the new evidence de novo.

image En Banc Federal Circuit Adjusts the Law of Inequitable Conduct: In Therasense, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011) (en banc), the Federal Circuit tightened the standards for proving inequitable conduct. Inequitable conduct is a defense to patent infringement where an accused infringer alleges the patentee misrepresented or omitted material information with the specific intent to deceive the PTO. In the past, the court considered the elements of materiality and intent on a sliding scale, where strong evidence of one element could make up for weak evidence on the other. The court's decision dismissed this practice and raised the bar for proving each element. Regarding intent, the court noted that knowledge and a deliberate action are necessary, and that gross negligence or negligence under a "should have known" standard will not satisfy the intent element. Regarding materiality, the court adopted a "but-for" materiality standard. In other words, "but-for" the misrepresentation or omission, the PTO would not have allowed the claim.

image Supreme Court Hears Oral Argument in Microsoft v. i4i regarding the Presumption of Validity: On April 18th, the U.S. Supreme Court heard oral argument in the highly anticipated Microsoft Corporation v. i4i Limited Partnership case. This dispute involves the Federal Circuit's clear and convincing evidentiary standard for overcoming the presumption of validity that attaches to issued patents under 35 USC 282. Microsoft argued that a preponderance of the evidence standard should apply in all cases where patent validity is at issue, and not just in cases where the prior art was not previously considered by the USPTO. On the other hand, i4i argued that when Congress enacted 35 USC 282 its intent was to codify the clear and convincing standard as explained by Justice Cardozo in the Supreme Court’s RCA v. Radio Eng'g Labs., Inc. opinion. Moreover, i4i advocated that Congress has acquiesced to the Federal Circuit's long-standing clear and convincing standard for overcoming the presumption of validity. An opinion from the Court is expected to be issued sometime in June.

image Fight Continues Over Rights in the BUD Trademark in Europe: On March 29, 2011, the European Court of Justice remanded to the lower General Court a long-running trademark battle over rights in the BUD mark between Anheuser-Busch InBev NV and Czech company Budejovicky Budvar. Anheuser-Busch filed with the OHIM four Community trademark applications for the figurative and word mark BUD for various goods, including beer, between 1996 and 2000. Budvar filed notices of opposition against each application claiming that it had certain rights in the BUD mark for beer. The OHIM concluded that Budvar’s oppositions should be dismissed. Budvar appealed the OHIM’s dismissals to the General Court, which found legal errors in the dismissals. Anheuser-Busch then appealed the General Court’s decision to the Court of Justice. In the March 29th opinion, the Court of Justice found that the General Court’s decision contained three errors of law and referred the case back to the General Court for further consideration.

image Qui Tam Provision of False Marking Statute Found Unconstitutional: In Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc. (N.D. Ohio Feb. 23, 2011), the district court found the qui tam provision of the false patent marking statute (35 U.S.C. §292(b)) unconstitutional under the Take Care Clause of Article II of the U.S. Constitution. The court noted that the statute does not give the government enough control to enable the President to "take Care that the Laws be faithfully executed." Examples of such lack of control include: plaintiffs may file a false marking suit without having to notify the government; the case may be litigated without any oversight by the government; the government may not dismiss the lawsuit; and the government has no statutory right to intervene in the lawsuit. It will be interesting to see whether defendants in other jurisdictions will put forth a similar argument and whether the courts in those jurisdictions will follow the lead of the Northern District of Ohio.

image Patent Litigation Ramps Up In 2010: The University of Houston Law Center's Institute for Intellectual Property & Information Law recently released statistics regarding patent related law suits filed in the U.S. in 2010. The data indicated that 3,605 new patent suits were filed in the district courts, which represents over a 31% increase from 2009. However, much of the increase is directly attributable to the explosion of false marking law suits filed in 2010. The statistics indicate that 752 false marking suits were filed. Factoring out the false marking cases, the number of patent related law suits filed in 2010 increased 4% from the previous year.

image CAFC Discusses Meaning of "Exclusive Licensee": In WiAV Solutions, LLC v. Motorola, Inc. (CAFC 2010), the CAFC addressed the issue of whether WiAV was an "exclusive licensee” of a number of patents owned by Mindspeed Technologies, Inc. The Mindspeed patents were subject to a number of licensing agreements among several third parties. WiAV brought suit against Motorola and other defendants claiming infringement of patents owned by WiAV and the Mindspeed patents. The defendants argued that Motorola lacked constitutional standing to assert the Mindspeed patents because several third parties retained limited rights to license the patents, and thus WiAV was not an exclusive licensee. The district court agreed and dismissed all counts relating to the Mindspeed patents. The CAFC reversed the district court and rejected the defendants' argument. In doing so, the CAFC noted that "a licensee is an exclusive licensee of a patent if it holds any of the exclusionary rights that accompany a patent." The CAFC concluded that WiAV would have the requisite standing to sue any party that did not already possess a license or could not obtain a license in the future.

image U.S. Supreme Court to Decide Standard for Invalidity: On November 29, 2010, the United States Supreme Court granted Microsoft's petition for a writ of certiorari to determine whether the patent infringement defense of invalidity must be proved by clear and convincing evidence. The CAFC has long required that invalidity of a patent claim be proved by clear and convincing evidence. In its petition, Microsoft asked that the standard for proving invalidity be lowered to a preponderance of the evidence, especially in the case where the evidence was not previously considered by the USPTO during prosecution or re-examination. Should the Supreme Court decide the issue in favor of Microsoft's position, it could make it much easier to successfully challenge the validity of a patent.

image Infringement Found Even Though Defendant Practiced Invention First: In Solvay v. Honeywell (Fed. Cir. 2010), the CAFC found that Honeywell infringed Solvay's patent for a process of manufacturing HFC-245fa even though Honeywell had practiced the process prior to Solvay's priority date of October 23, 1995. The primary issue on appeal was whether Honeywell qualified as a prior inventor under 35 USC 102(g)(2). In 1994, Honeywell entered into a research contract with a Russian agency to commercialize a process for making HFC-245fa. The Russian agency developed the process and reduced it to practice in Russia, and sent Honeywell a detailed report of its findings. In early 1995, Honeywell practiced the process according to the Russian report and carried out further work to optimize the process. Based on these facts, the CAFC reversed the district court's finding that Honeywell was a prior inventor under 102(g)(2). In reaching its conclusion, the CAFC noted that Honeywell was not an inventor because it did not conceive the process; rather, it merely reduced the Russian process to practice. As a result, the CAFC found that Solvay's patent was not invalid under 102(g)(2) and that Honeywell's process infringed Solvay's patent.

image TTAB Affirms Refusal to Register "ESCAPE" for Golf Clubs: King Par Corp. whiffed in its attempt to overcome a likelihood of confusion refusal of the ESCAPE mark for golf clubs. The TTAB affirmed the refusal to register the ESCAPE mark finding it to be confusingly similar to the previously registered THE GREAT ESCAPE mark, which is also used for golf clubs. As to the goods, King Par argued that its "golf clubs" were sand wedges that are sufficiently different from registrant's "golf clubs," which are "trouble woods." However, the TTAB found this argument to be out of bounds and noted that the analysis of the goods must be based upon the identification of goods recited in the application and registration. As to the marks, the TTAB found them to be similar in sound and appearance and concluded that each creates the impression that "the club will allow a player to 'escape' a tough situation…." Based upon the goods being identical and the marks being similar, the TTAB affirmed the refusal to register.

image Facebook Sues Teachbook for Trademark Infringement: On August 18th, Facebook, Inc. filed a complaint in the U.S. District Court for the Northern District of California alleging that, LLC is infringing the FACEBOOK mark by using the TEACHBOOK mark for a social networking website designed for teachers. The complaint notes that the TEACHBOOK mark “rides on the coattails of the fame and enormous goodwill of the FACEBOOK trademark.” The famousness of the FACEBOOK mark will likely play an important role in the suit. The complaint also asserts that the BOOK portion of the FACEBOOK mark is highly distinctive for its goods and services and that allowing others to use “generic plus BOOK” would dilute the value of the FACEBOOK mark. Facebook, Inc. previously opposed the registration of the TEACBOOK mark at the Trademark Trial and Appeal Board, but the opposition proceeding has been suspended pending the disposition of the lawsuit.

image Common Sense Dooms Patent: In Wyers v. Master Lock, the CAFC reversed a jury's decision that found Master Lock failed to prove that Wyers' patents covering trailer hitch locks were obvious. The patents-in-suit dealt with improvements to prior art trailer hitch locks. One improvement was a series of sleeves to allow the lock to fit snugly in various sized apertures, while another improvement dealt with an external seal configured to keep contaminants out of the locking mechanism. After a trial, the jury returned a verdict finding that the hitch lock improvements were not obvious. The CAFC found that the prior art of record disclosed similar sleeve devices and external seals, and concluded that Wyers' patents were obvious. In reaching its conclusion, the CAFC relied heavily on the Supreme Court's opinion in KSR v. Teleflex. Particularly, the CAFC noted that it was simply a matter of "common sense" to combine the prior art of record to arrive at the inventions claimed by Wyers.

image Supreme Court Finally Decides Bilski: On June 28, 2010, the U.S. Supreme Court handed down its long-awaited opinion in the Bilski v. Kappos case. As expected, the Court affirmed the Federal Circuit's judgment that Bilski's claimed method for hedging risk was not a patent eligible “process” under 35 U.S.C. Section 101. However, the Court rejected the Federal Circuit's "machine-or-transformation test" as the sole test for determining whether an invention is a patent eligible process. Instead, the Court noted that the "machine-or-transformation test" is a "useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under Section 101." The Court went on to explain that Bilski's claimed method was not a patentable-eligible process because it was merely an attempt to patent an abstract idea. Unlike the result expected by many commentators, the Court refused to provide a clarifying rule as to what types of processes are patent eligible under Section 101. As a result, it appears that little has changed with respect to the law on patent eligible subject matter.

imageThree Years of Silence Prevents Enforcement of Patent Rights: In Aspex Eyewear Inc. v. Clariti Eyewear, Inc. (Fed. Cir. 2010), the CAFC concluded that three years of silence after sending a letter pointing out that some products may infringe claims of several patents was enough to preclude a patent infringement suit. In March 2003, Aspex sent a letter to Clariti stating that some of Clariti's products may infringe some of the claims of four patents held by Aspex. After several rounds of correspondence, Clariti notified Aspex in June 2003 that its products did not infringe any valid claims of Aspex's patents. This was the last correspondence between Aspex and Clariti until August 2006 when Aspex sent another letter that listed the specific Clariti product that Aspex believed infringed specific claims of one of their patents. The issue was not resolved and Aspex filed suite against Clariti in March 2007 for patent infringement. The CAFC affirmed the district court's grant of summary judgment to dismiss the suit based upon the doctrine of equitable estoppel. The CAFC noted that after a three year period of silence, it was reasonable for Clariti to infer that Aspex was not continuing its accusation of infringement.

imageFalse Marking Fine Exceeds Gross Revenue: Since the beginning of 2010 there have been over one hundred false patent marking lawsuits initiated across the country. The false marking suits target companies that sell products marked with a designation to indicate that the product is patented, such as the word "patented" or a patent number, when the product is not patented or the relevant patent has expired. In a case that made it to the Federal Circuit (CAFC) and was remanded to the district court to recalculate the appropriate false marking fine, the district court recently issued an order requiring the false marker to pay a fine that was more than the revenue generated by selling the falsely marked product. Forest Group v. Bon Tool (S.D. Tex 2010). Under 35 USC 292, the fine for false marking is to be "[no] more than $500 for every such offense." In this case, the evidence showed that 38 pair of falsely marked construction stilts were sold at a price of between $103 and $180. The district court fined the false marking offender at a rate of $180 per set of stilts sold, for a total of $6,840. The court noted that using the highest point in the price range for each set fulfilled the deterrent goal of 35 USC 292.

imageFederal Circuit Upholds Separate Written Description Requirement: In Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co. (Fed. Cir. 2010, en banc), the Court of Appeals for the Federal Circuit (CAFC) recently held that the first paragraph of 35 USC section 112 includes a written description requirement that is separate from the enablement requirement. Ariad argued that paragraph one of 35 USC section112 contained a written description requirement and that such a requirement was satisfied by providing a written description that identifies the invention in such a way that those skilled in the art are able to make and use the invention. The CAFC noted that, "[i]f Congress had intended enablement to be the sole description requirement of section112, first paragraph, the statute would have been written differently." The CAFC went on to say that a patent's specification should not only enable a person skilled in the art to make and use the invention, but must also fully describe the invention and show that the inventor actually invented the invention that is claimed.

imagePatent Held Unenforceable for Inequitable Conduct: In Sabasta v. Buckaroos, Inc., (S.D. Iowa 2010), a U.S. District Court found that U.S. Patent No. 6,751,995 (the ‘995 patent) was unenforceable for failure to disclose material prior art that the patentee knew about. Patent applicants and their attorneys have a duty to disclose to the Patent Office all information that they are aware of that would be considered material to patentability. The ‘995 patent was directed to a roll-bending die used to make saddles for pipe insulation. In arriving at his invention, Sabasta utilized a roll-bending machine, the Acrotech Model 1618, that had been commercially available for several years. During prosecution of the ‘995 patent, Sabasta used features of the Acrotech machine in making arguments to overcome the rejections. However, Sabasta and his attorneys did not disclose any information concerning the Acrotech machine or the manual that accompanied the machine. The court found that the Acrotech machine and manual would have been highly material to patentability and that Sabasta and his attorneys knowingly failed to disclose the Acrotech machine and manual with an intent to deceive the Patent Office. As a result, the court held the ‘995 patent to be unenforceable due to inequitable conduct.

imageUSPTO Miscalculated Patent Term Adjustment: In Wyeth v. Kappos, (Fed. Cir. 2010), the Federal Circuit (CAFC) recently determined that the USPTO has been shortchanging the amount of patent term adjustment available to patentees. The USPTO is required by statute (35 U.S.C. 154(b)(1)(A)-(C)) to extend the term of a patent based for delays by the USPTO in the prosecution process. Under “part A" of the statute, the USPTO must respond to certain actions in a certain amount of time. If the USPTO does not respond within the specified time, then the term of the patent is extended one day for each day after the time period expires. Under “part B" of the statute, the USPTO provides a day of patent term adjustment for each day that the patent was pending over 3 years from the actual filing date of the application. These delays are subject to a limitation that limits the amount of term adjustment when the “part A" and “part B" delays overlap. The USPTO interpreted the statute in a way that gave patentees the greater amount of term adjustment resulting from a “part A" delay or a “part B" delay, but not both. The CAFC found this interpretation to be incorrect, and noted that the statute unambiguously sets forth the “periods of delay" and when the “overlap" limitation applies. The USPTO is currently taking steps to ensure that future patent term adjustment calculations are made correctly.

imageThe North Face sues The South Butt: The North Face Apparel Corp. has filed a lawsuit in the U.S. District Court for the Eastern District of Missouri against Jimmy Winkelmann and his company, The South Butt, LLC. In the lawsuit, The North Face alleges that Winkelmann's use of "The South Butt" mark in connection with fleece jackets, t-shirts and other apparel infringes upon and dilutes its famous "The North Face" trademarks. It seems fairly obvious that "The South Butt" is being used to parody "The North Face," and that no one is likely to be confused as to the source of each party's respective goods. However, it will be interesting to see how this suit plays out, particularly with respect to the trademark dilution claims.

imageMagazine Ad Invalidates Patent During Litigation: In Iovate Health Sciences, Inc. v. BSN, Inc. (Fed. Cir. 2009), the CAFC affirmed the district court's grant of summary judgment in favor of BSN, Inc. finding the asserted claims of U.S. Patent 6,100,287 (the '287 patent) invalid for being anticipated by a magazine advertisement. The '287 patent claimed a method for "enhancing muscle performance or recovery from fatigue" by performing the single step of administering a composition containing a ketoacid and either a cationic or dibasic amino acid. To show that the patented method was not novel, BSN, Inc. relied upon a June 1996 issue of Flex Magazine that contained an ad for Weider's VICTORY Professional Protein. The ad listed the product ingredients, which included a ketoacid and a cationic or dibasic amino acid, as well as directions for administering the product. The CAFC found that the magazine ad qualified as an anticipatory printed publication under 35 USC 102(b) that rendered the asserted claims invalid.

imageFraud Summary Judgment Motion Denied by TTAB: Applying the CAFC's recent decisions in Exergen and Bose, the Trademark Trial and Appeal Board (TTAB) denied Asian and Western Classics' motion for summary judgment based on fraud in an ongoing cancellation proceeding. Asian and Western Classics B.V. v. Lynne Selkow, Cancellation No. 92048821 (October 22, 2009). The TTAB looked to the pleadings and found that petitioner's fraud allegations were insufficiently pled. Specifically, the TTAB noted that when allegations of fraud are made on “information and belief” there must be "specific facts upon which the belief is reasonably based." In this case, the petitioner merely relied on its “information and belief,” and did not support its fraud allegations with any specific facts. Moreover, the TTAB reminded the petitioner that "[a] pleading of fraud on the USPTO must also include an allegation of intent." Here the petitioner alleged that the registrant “knew or should have known" that the statements it made to the USPTO were false. However, as the CAFC noted in Bose, "knew or should have known" implies a negligence standard, which is not enough to infer fraud.

imageCAFC Reverses the TTAB's Fraud Standard: In In re Bose Corporation, (Fed. Cir. 2009), the Court of Appeals for the Federal Circuit (CAFC) reversed a growing line of decisions by the Trademark Trial and Appeal Board (TTAB) regarding the standard for determining fraud in trademark cases. Previously, the TTAB would find that a trademark registration was fraudulently obtained if the applicant or registrant made material representations of fact in a declaration to the USPTO which it knew or should have known to be false or misleading. The CAFC noted that the TTAB was basically using a negligence standard for determining fraud by equating “should have known” with a subjective intent. Finding this standard lacking, the CAFC raised the bar for proving fraud by holding that a trademark registration is fraudulently obtained “only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the USPTO.”

imageCAFC Clamps Down on Pleading Inequitable Conduct: In Exergen, Corp. v. Wal Mart Stores, Inc., (Fed. Cir. 2009), the Court of Appeals for the Federal Circuit (CAFC) reminded practitioners that inequitable conduct must be pled “with particularity” under Rule 9(b) of the Federal Rules of Civil Procedure. Defendant SAAT appealed the denial of a request to amend its answer to include inequitable conduct as an affirmative defense and counterclaim against Exergen's asserted patents. In affirming the district court, the CAFC held that “pleading inequitable conduct in patent cases…requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.” The CAFC noted that SAAT's pleadings failed to meet this standard because: (1) the specific individual who knew of the material information and misrepresented it or withheld it was not named; (2) the particular claims, and the limitations in those claims, to which the information was relevant and the specific location of the information were not identified; and (3) an explanation of why the information was material and how the information would have been used by an examiner to assess patentability were not presented. Thus, the CAFC reiterated that in pleading inequitable conduct, one must provide the specific factual circumstances of the inequitable conduct, not general allegations of wrongdoing.

imageStatistics of USPTO Inter Partes Reexamination Proceedings: Since its inception back in 1999, there have been over 670 requests for inter partes reexamination filed with the USPTO. The number of requests filed has increased each year, with nearly 200 requests filed thus far in FY2009. The USPTO reports that the request for inter partes reexamination is granted 95% of the time. The USPTO statistics also indicate that since 1999, a total of 77 inter partes reexamination certificates have been issued and that 60% of these certificates issued with all claims canceled or disclaimed. Also of note, the USPTO reports that the overall average pendency for a complete inter partes reexamination proceeding, i.e., filing date to certificate issue date, is just over three years.

imageProduct Mark Added to Registered Mark is Likely to Cause Confusion: In In re Toshiba Medical Systems Corporation, Serial No. 79046106 (June 18, 2009), the Trademark Trial and Appeal Board affirmed a Section 2(d) likelihood of confusion refusal of Toshiba's VANTAGE TITAN mark for "medical magnetic resonance imaging diagnostic apparatus, namely, MRI diagnostic apparatus." The refusal was based on the registered mark TITAN for "medical diagnostic apparatus, namely, medical ultrasound device." The Board first looked to the similarities and differences between the marks, and concluded that the term TITAN in VANTAGE TITAN would "retain its identity as a separately identifiable term in the mark." As such, the Board ultimately found that Toshiba's addition of its VANTAGE product mark was not enough to avoid confusion and that the marks were similar. Next, the Board analyzed whether the goods of each party were related. The Board noted that both goods were medical diagnostic equipment with imaging functions, and that both types of goods may originate from the same source. These facts persuaded the Board to conclude that the goods were, in fact, related. Finally, Toshiba attempted to argue that due to the expensive nature of the goods, the potential purchasers would be highly sophisticated and would not likely be confused as to the source of the goods. The Board disagreed and noted that "even sophisticated purchasers may be confused."

imageCAFC Interprets Product-by-Process Claims: The Court of Appeals for the Federal Circuit (CAFC) recently restated that the process steps of a product-by-process claim are to be considered as limitations in determining infringement. In Abbott Labs v. Sandoz, Inc. (Fed. Cir. 2009), the court reviewed the Eastern District of Virginia's claim construction of the patent claims covering Abbott's Omnicef antibiotic. Sandoz and Lupin filed Abbreviated New Drug Applications (ANDA) with the FDA to market generic versions of Omnicef, which resulted in Abbott bringing the patent infringement suits. The court determined that Sandoz and Lupin did not infringe Abbott's patent claims primarily because the generic Omnicef was produced by a process not covered by Abbott's claims. Interestingly, three judges dissented from the portion of the opinion regarding the interpretation of the product-by-process claims. Led by Judge Newman, the dissenters argued that the majority ignored longstanding practice and precedent by “ruling that all claims containing a process term…must be construed, for purposes of infringement, as limited to use of any process term that was used to assist in defining the product.” The dissenters felt that the majority's decision creates a “new restraint on patents for new products.” As a result, new, complex compositions that cannot be fully described structurally, but instead are claimed as a product-by-process, can only be infringed if the alleged infringer practices all of the process steps, paying no regard to the product itself.

imageEach Inter Partes Reexamination Party May Seek Stay of Litigation Proceedings: The Court of Appeals for the Federal Circuit (CAFC) recently reiterated the fact that both the patent owner and the accused infringer may seek a litigation stay when there is a concurrent inter partes reexamination proceeding pending with the USPTO. In The Procter and Gamble Company v. Kraft Foods Global, Inc., (Fed. Cir. 2008), the court noted that the district courts have broad discretion when it comes to managing their dockets. Procter and Gamble attempted to argue that the applicable statutory section, 35 U.S.C. Section 318, allows only the patent owner to seek a stay of litigation proceedings when there is a pending inter partes reexamination. It's true that the text of Section 318, on its face, would support such an argument. However, the court quickly pointed out that the district courts have always had an inherent power to grant stays in pending litigation. In driving home the point, the court noted that there is no such statutory section applicable to ex parte reexamination proceedings, and patent owners have always relied on the district courts' inherent power in seeking stays in those situations.

imageTTAB Finds Tray Design Trademark Functional: The Trademark Trial & Appeal Board (TTAB) determined that the tray design mark of applicant Gratnell's Limited was functional under the Trademark Act's Section 2(e)(5). In re Gratnell's Limited, Serial No. 78450327 (April 8, 2009). The trademark laws do not afford trademark protection to designs that are functional, regardless of whether the design has acquired distinctiveness. In Gratnell's, the TTAB was convinced that the tray design was functional by Gratnell's own advertising materials. The advertising focused on the trays' functionality by noting that the design allows the trays to be stacked, that the trays save space, and that the trays fit nicely into standard school furniture. Gratnell's argued that the laudatory advertisements were merely puffery. However, the TTAB pointed out that the advertisements pointed to “specific characteristics of the applicant's product.”

imageFederal Circuit Panel Overturns District Court in Patent Rules Dispute: On March 20, 2009, the Federal Circuit vacated a portion of the U.S. District Court for the Eastern District of Virginia's summary judgment decision in Tafas v. Dudas that found the USPTO's new rules pertaining to claim limits, the number of Requests for Continued Examination (RCEs) that may be filed, and the number of continuation applications that may be filed were substantive and beyond the USPTO's rulemaking authority. The Federal Circuit disagreed and concluded that the new rules were procedural rather than substantive because they do not “foreclose effective opportunity to make one's case on the merits… they govern the timing of and materials that must be submitted with patent applications.” However, the Federal Circuit affirmed the district court's decision regarding the limits on continuation applications. In reaching its conclusion, the Federal Circuit noted that the new rule for limiting continuation applications imposed additional requirements not found in the statutory provisions covering continuation applications. This case has been remanded to the district court for further proceedings.

imagePatent Term Adjustments After Wyeth v. Dudas: An issued patent may be subject to certain time extensions and adjustments. Such extensions and adjustments result from specific types of delays that occur during the patent prosecution process. For example, under 35 USC Section 154(b)(1)(A) (so called "A delays"), the patent term is adjusted for the USPTO's failure to act within a certain timeframe, such as failing to issue a first office action by 14 months from the patent application filing date. Additionally, 35 USC Section 154(b)(1)(B) (so called "B delay") provides that the patent term is adjusted when a patent issues more than three years from the filing date. The USPTO has long held the position that the patent term may be adjusted by the larger of the "A delays" or the "B delay," but never a combination of both types of delay. In Wyeth v. Dudas, 88 U.S.P.Q.2d 1538 (D.D.C. 2008), the U.S. District Court for the District of Columbia held that the USPTO's method of calculating the patent term adjustment was incorrect. The court noted that as long as the delays did not occur on the same day, then they may be combined. The USPTO has appealed the court's ruling.

imageCounterfeiters Beware: Recently, President Bush signed a "Pro-IP" act into law which increases the statutory damages awards in civil counterfeiting cases. Under the "Pro-IP" act a defendant may be liable for up to two million dollars for willfully using another's trademark on counterfeit goods. Furthermore, the "Pro-IP" act shores up inadequate remedies available to plaintiffs in criminal counterfeiting and piracy cases. In addition to stronger remedies, the "Pro-IP" act makes the Bush administration's Strategy Targeting Organized Piracy (STOP) Initiative and the administration's coordination of inter-agency IP efforts permanent.

imageAnticipation of Patent Claims: Recently, the United States Court of Appeals for the Federal Circuit (CAFC) rendered a decision in Net MoneyIn v. Verisign (Fed. Cir. 2008) that in order for a prior art reference to anticipate under 35 U.S.C. Section 102, the reference must disclose all the elements of a claim AND the elements must have the same arrangement as in the claim. In Net MoneyIn, Verisign was being sued for infringing NMI's credit card processing patent. A single prior art reference anticipated one of NMI's claims. Each element of NMI's claim was addressed within the four corners of the prior reference. However, the reference failed to claim the elements in the same arrangement as NMI's claim. The trial court rendered judgment in favor of NMI. After which, Verisign appealed the judgment. The CAFC held that the trial court erred; and in order for a reference to anticipate a claim, all elements of a claim must be found within the four corners of a prior art reference AND the elements must be arranged in the same manner as in the claim.

imageAnticipated and Non-Obvious: The Federal Circuit Court, in Cohesive Tech v. Water Corp, recently ruled that an invention may be anticipated by prior art, and still be non-obvious. The Court stated that as a general rule, anticipating prior art usually renders a claim as obvious. However, it is not necessarily true that a non-obvious claim is not anticipated. Obviousness requires analysis of secondary considerations of non-obviousness, while secondary considerations are not an element of a claim of anticipation. The Court gave the example of a non-obvious metal alloy that had a long felt need, where others tried and failed to produce such an alloy, and upon disclosure the alloy received high praise and experienced commercial success. However, the claimed alloy would be anticipated if a centuries old alchemy book described a method that, if precisely followed, produced the claimed alloy; even though the book never actually described the metal alloy. Therefore, the prior art alchemy textbook inherently anticipates the claimed alloy under Section 102, even though the alloy is non-obvious under Section 103. In conclusion, the Federal Circuit Court has ruled that novelty and non-obviousness are determined by two different inquiries, and that novelty and obvious are not only separate, but also distinct.

imageA New Design Patent Infringement Test: Recently, the United States Court of Appeals for the Federal Circuit (CAFC) unanimously ruled that the “point of novelty test” is no longer valid for determining infringement in design patent cases. In the place of the old test, the Court instructed that an “ordinary observer” test should be used. Furthermore, the Court held that the district courts no longer have to issue a detailed verbal description of the design claims if the description would not prove useful. Additionally, the Court held that the patentee continues to bear the burden of proof in regards to infringement. If the accused infringer chooses to use a comparison of prior art as a defense, they must produce the prior art and define what an ordinary observer is most likely to regard as the differences between the claimed and accused designs.

imageSeek a Non-Infringement Opinion or Else It May Serve As Evidence of Intent to Induce Infringement: In Broadcom v. Qualcomm, Qualcomm was found liable for inducing the infringement of three Broadcom patents. On appeal, Qualcomm argued that the Federal District Court's altering of the standard to determine willful infringement should apply to inducement of infringement as well. The new willful infringement test does not require an "affirmative duty of due care" to avoid infringement. As a result, the new test for willful infringement makes it harder to recover treble damages. The Court held that under an inducement of infringement action, the "specific intent" requirement only requires evidence that the defendant "intended to cause the acts that constitute the direct infringement," and "knew or should have known that its action would cause the direct infringement." Furthermore, the Court held that a failure to procure a non-infringement opinion amounts to circumstantial evidence of intent to infringe another's patent. As a result, the Court upheld the trial court's ruling.

imagePrevailing on an Inequitable Conduct Claim, Defendant's Burden of Proof: In Star Scientific v. R.J. Reynolds Tobacco, (Fed. Cir. 2008), the Federal Circuit court reversed and remanded a district court's holding that Star's tobacco curing patents were unenforceable because of inequitable conduct during its prosecution. Star's patent entailed a method of making a tobacco with lower levels of nitrates and other undesirable chemicals. The attorneys representing R.J. Reynolds claimed that the prosecuting attorney received a letter from the Star scientist that contained information that tobacco from China had lower levels of nitrates and other undesirable chemicals. Additionally, R.J. Reynolds claimed that the Star patent should be invalidated because of Star's inequitable conduct of failing to disclose the letter to the Patent Office. R.J. Reynolds claimed that Star had the specific intent to deceive the Patent Office when it switched law firms during the patent's prosecution in order to avoid disclosing the letter. R.J. Reynolds failed to obtain any testimony or other evidence that showed that Star knew of the letter's contents before switching law firms. The Federal Circuit court held that in order to prevail on a claim of inequitable conduct, the accused infringer must show "evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO]." The burden of proving inequitable conduct lies with the accused infringer because an issued patent is presumed valid and enforceable. Only after the accused infringer meets his or her burden of proof of a threshold level of intent to deceive with materiality by clear and convincing evidence, must the patentee give a good faith explanation as to the circumstances. Additionally, even if both requirements are met, the court should equitably weigh the facts of the case in order to decide if the evidence supports a finding of inequitable conduct. R.J. Reynolds circumstantial evidence lacked materiality and did not meet the threshold to support an inference of intent to deceive. Consequently, the case was reversed and remanded.

image ‘Making Available' Theory of Copyright Infringement Rejected: In 2006, Pamela and Jeffrey Howell were sued by the RIAA for copyright infringement. The RIAA claimed that the Howells made copyrighted files available for download online through file sharing software. Additionally, the RIAA claimed that making the files available equated to copyright infringement. The Electronic Frontier Foundation (EFF) argued that the RIAA claim of copyright infringement by making files available “amounts to suing someone for attempted distribution, something the Copyright Act has never recognized.” The judge agreed with the EFF's argument, stating “The court agrees with the great weight of authority that section 106(3) is not violated unless the defendant has actually distributed an unauthorized copy of the work to a member of the public.” “Merely making an unauthorized copy of a copyrighted work available to the public does not violate a copyright holder's exclusive right of distribution.” As such, the ‘making available' theory of copyright infringement was been rejected.

image U.S. Patent & Trademark Office Comments on Outsourcing: The U.S. Patent & Trademark Office (USPTO) recently issued a notice regarding the outsourcing of invention information to foreign countries for the purpose of preparing patent applications. In the notice, the USPTO states that it has become aware of the fact that many foreign law firms and service providers have contacted U.S. patent practitioners to offer their services in helping prepare patent applications for filing in the United States. The notice reminds applicants and patent practitioners that the exportation of subject matter abroad pursuant to a license from the USPTO is to be used only for the purpose of filing foreign patent applications. The USPTO advises that applicants who are considering sending information outside of the U.S. for the purpose of the preparation and filing of a U.S. patent application should contact the U.S. Department of Commerce's Bureau of Industry and Security. Failing to receive the appropriate clearances prior to exporting the information could lead to civil and criminal penalties.

image U.S. Supreme Court Decides Patent Exhaustion Case: In Quanta Computer, Inc. v. LG Electronics, Inc. (2008), the U.S. Supreme Court recently concluded that the doctrine of patent exhaustion prevented LG Electronics (LGE) from asserting its patent rights against computer manufacturers that used Intel products made and sold under a license from LGE. The licensed LGE patents were directed to computer systems and methods. The license from LGE to Intel noted that the terms of the license did not extend to products made by combining an Intel product with a non-Intel product. Quanta purchased the Intel products made under the license and used the Intel products along with non-Intel products to manufacture computers. The Supreme Court held that the doctrine of patent exhaustion applies to method patents, and because the license authorized the sale of products that substantially embodied the method patents at issue, Intel's sale to Quanta exhausted LGE's patent rights.

image Amendment of Preamble in Response to Office Action Not Limiting: In Symantec Corp. v. Computer Associates (Fed. Cir. 2008), the CAFC concluded that an amendment to the preamble was not a separate claim limitation. The technology in this case dealt with anti-virus software. The preamble, along with the body of the claim, was amended in a response to an Office Action to read as: "In a system for transferring digital data for storage in a computer storage medium, a method of screening the data as it is being transferred…." (emphasis added). The Court found that the addition of "as it is being transferred" did not constitute an additional claim limitation because the language did not recite essential structure or steps, and was not "necessary to give life, meaning, and vitality to the claim." Additionally, the Court noted that the preamble was not amended to distinguish the invention from the prior art.

image Use of Memorized Client List Violates Ohio's Trade Secrets Act: The Supreme Court of Ohio recently decided a case where the main issue was whether the use of memorized trade secret information, as opposed to information in a tangible form, can be a basis of a trade secret violation under Ohio's Uniform Trade Secrets Act. Al Minor & Assoc., Inc. v. Martin, 117 Ohio St.3d 58 (Ohio 2008). In this case, the defendant was employed by the plaintiff before going into business for himself. When defendant started his business he successfully solicited the business of several of plaintiff's clients by using client lists he had memorized while employed with plaintiff. The Court determined that the information contained in the client lists did not lose its status as a trade secret merely because the information was memorized. Furthermore, the Court noted that it is the trade secret information itself that is protected, "regardless of the manner, mode, or form in which it is stored – whether on paper, in a computer, in one's memory, or in any other medium."

imageDistrict Court Permanently Enjoins Implementation of USPTO Rules:
In Tafas v. Dudas, et al. (ED Virginia 2008), U.S. District Judge James C. Cacheris granted a motion for summary judgment in favor of plaintiffs Triantafyllos Tafas and Smithkline Beecham Corporation. The court permanently enjoined the USPTO from implementing its Final Rules, which would have limited the number of continuation applications an applicant could file and the number of claims that could be filed in a patent application. The court specifically noted that the USPTO does not have substantive rule making authority and that the proposed Final Rules were substantive in nature. The USPTO has indicated that it will appeal this ruling to the Court of Appeals for the Federal Circuit.

imageCAFC Invalidates Claim Finding No Experimental Use: In Atlanta Attachment Co. v. Leggett & Platt, Inc. (CAFC 2008), the CAFC reversed the district court, finding that claim 32 of Atlanta Attachment's U.S. Patent No. 6,834,603 was invalid based on the on-sale bar of 35 USC 102(b). The claim was directed to a system for attaching a gusset to a panel of a pillowtop mattress. Atlanta Attachment was working with Sealy to develop the device and had sent several prototypes to Sealy for testing. The third prototype included all of the elements recited in claim 32, and Atlanta Attachment invoiced Sealy and was paid for this prototype. Atlanta Attachment had also offered to sell 50 production units to Sealy before the critical date established by 102(b). The CAFC found that Atlanta Attachment's offer to sell the production units before the critical date implicated the on-sale bar of 102(b). In its defense, Atlanta Attachment argued that the experimental use exception to 102(b) applied in this case. However, the CAFC rejected this notion and found that the experimental use exception does not apply after an offer for sale has occurred. Additionally, the CAFC found that Atlanta Attachment did not retain control over the prototypes tested by Sealy and that the experimental use exception does not apply when experimental testing is used "to determine whether the invention would suit a particular customer's purpose…."

imageTiVo Wins Appeal: In 2004 TiVo sued EchoStar, which operates DISH Network satellite television, for infringing TiVo's patents relating to its DVR hardware and software technology. The lower court found that EchoStar infringed TiVo's patent claims directed to hardware and software. The jury awarded $73 million in damages, and the judge ordered a permanent injunction. A CAFC panel affirmed infringement with respect to the software claims, but found the claims directed to the hardware not infringed. However, the panel affirmed the damages award and noted that the permanent injunction against EchoStar will be reinstated when the appeal becomes final.

imageLost Profits Awarded for Offers to Sell Infringing Product: In American Seating Co. v. USSC Group, Inc., the CAFC ruled that lost profits may be awarded based on offers to sell an infringing product even when a noninfringing product is actually delivered. In this case, USSC Group offered to sell its VPRo I wheelchair restraint system that was eventually determined to infringe American Seating's patent related to a wheelchair restraint system. In the meantime, USSC notified its customers that orders for the VPRo I system would be filled with the VPRo II system, which did not infringe American Seating's patent. The jury awarded American Seating lost profit damages due to the sell of the VPRo II systems. The CAFC upheld the awarding of lost profits noting that the evidence was sufficient for the jury to conclude that "absent USSC's offer to sell the VPRO I, the sales would have gone to American Seating."

imageSupreme Court Grants Cert to Decide Patent Exhaustion Case: LG Electronics licensed a portfolio of patents to Intel, but the license expressly excluded Intel’s customers and any non-Intel product made containing the licensed products. Subsequently, LG electronics sued a number of computer manufacturers that incorporated the licensed Intel chips in their computers. The computer manufacturers argued that Intel’s sale of chipsets were authorized under the LG license, and therefore, LG’s patent rights are exhausted. Under the principle of patent exhaustion, also known as the first sale doctrine, the first unrestricted sale of a patented item exhausts the patentee's control over that particular item. In this case, the lower court found that Intel’s sale of the licensed chips exhausted LG’s rights, but the CAFC reversed based on the express conditions placed on the use of Intel’s licensed chips. The U.S. Supreme Court has granted a writ of certiorari to decide the issue.

imageCAFC Reverses PTO Claim Construction: In In re Buszard, the CAFC overturned a decision by the Board of Patent Appeals and Interferences (BPAI) for improper claim construction. The USPTO found the applicant’s invention to be anticipated by a prior patent. Buszard’s application was directed to a flame retardant composition containing a flexible polyurethane foam. The specification and claims in Buszard’s application noted the specific requirement of a flexible foam. The cited prior art reference described only a rigid foam product formed from a rigid foam reaction mixture that could only be rendered flexible by mechanically crushing the rigid product. The CAFC noted that cited reference could not reasonably be construed to anticipate a flexible foam product formed from a flexible foam reaction mixture.

imageCAFC Overturns Long Standing Precedent: In a unanimous en banc decision (In re Seagate Technology), the CAFC changed the standard for proving willful patent infringement, which, if found, allows for enhanced damages. Under the court’s new ruling, proof of willful patent infringement will now require a showing of objective recklessness. The previous standard imposed an affirmative duty of care on those who received notice that they might be infringing a patent. Thus, the new standard announced by the CAFC is projected to make it much more difficult for plaintiffs to receive an enhanced damages award.

imageEvidence Rebutting Obviousness Must Be Considered: In In re Sullivan, the CAFC overturned a decision by the Board of Patent Appeals and Interferences (BPAI) for failing to consider rebuttal evidence offered by the patent applicant. The USPTO found the applicant’s invention to be obvious in light of the applicant’s own publications and other references. In rebutting the finding of obviousness, the applicant presented three declarations that tended to show that the invention was, in fact, not obvious. The BPAI affirmed the USPTO’s finding, but did not consider the applicant’s three declarations in reaching its decision. The CAFC reversed, noting that applicant’s evidence rebutting obviousness must be considered.

No Revival Allowed For “Unintentionally” Missed National Stage Filing Deadline: In Aristocrat Technologies Australia (ATA) v. International Gaming Technologies (IGT) (N.D.Cal. 2007), the court found that ATA’s national stage application could not be revived. ATA filed an Australian provisional application on July 8, 1997, and filed a PCT application on July 8, 1998. When the 30 month national stage entry deadline arrived, ATA filed a U.S. national stage application…the only problem was that it was filed one day late. The patent application was revived by the USPTO under the “unintentional” revival standard. However, during litigation IGT challenged the “unintentional” standard, arguing that the standard for revival of a national stage application should be “unavoidable.” The court agreed…application abandoned.

imageGrammatical Error Invalidates Patent: A patent held by Microstrategy, Inc. was found indefinite by a Federal Circuit panel due to a grammatical error. Several claims of Microstrategy’s U.S. Patent No. 6,658,432 used the phrase “the client system using and transmitting the retrieved information to the at least one web server.” The panel noted that the claims were indefinite because the word “using” did not have an object, and there was more than one way to correct the error (i.e., by simply adding an object or deleting the phrase “using and”). Invalidity affirmed.

imageMeans-Plus-Function Element Found Indefinite: Under 35 USC 112 paragraph 6, a patent applicant may broadly claim a “means” for executing a specific function. However, the applicant must define some structure which performs the specified function. In Biomedino v. Waters Technology (Fed. Cir. 2007), a CAFC panel held that several of the claims in Biomedino’s U.S. Patent No. 6,602,502 were indefinite because the specification did not define any structure for the claim limitation “control means.” The specification merely stated that there were known methods for carrying out the specified control function, and that any of those methods would be acceptable. However, the court noted that “a bare statement that known techniques or methods can be used does not disclose structure.” Invalidity affirmed.

imageInequitable Conduct Leaves Patent Unenforceable: In McKesson Information Solutions v. Bridge Medical (Fed. Cir. 2007), the CAFC affirmed the district court’s finding that the patent at issue was unenforceable due to inequitable conduct. The finding of inequitable conduct was based on three items deemed to be material to the prosecution of the application that the prosecuting attorney failed to disclose to the patent examiner. Specifically, the prosecuting attorney did not disclose a prior art reference, office actions, and the allowance of a co-pending, related application that the prosecuting attorney was handling at the same time. The CAFC affirmed the district court’s conclusion that each item was material to prosecution, and that intent to deceive could be inferred from the prosecuting attorney’s actions and inactions.

imageCAFC Vacates BPAI’s Priority Determination: In Henkel v. Procter & Gamble (Fed. Cir. 2007), the CAFC vacated and remanded the BPAI’s award of priority to Procter & Gamble (P&G) in an interference proceeding. An interference was declared between P&G’s patent and Henkel’s patent applications, each claiming dishwashing detergent tablets having two separate regions that dissolve at different rates. The BPAI concluded that Henkel did not show that its named inventors had “appreciate[d] that which [t]he[y] ha[d] invented” at the time of their conception and reduction to practice. The CAFC disagreed and held that the Henkel inventors only had to demonstrate an appreciation for the subject matter of the invention. The CAFC noted that the BPAI’s findings were sufficient to establish the fact that Henkel appreciated that it had produced dishwashing detergent tablets having two separate regions that dissolve at different rates.

imageU.S. Supreme Court Issues KSR v. Teleflex Opinion: The U.S. Supreme Court at long last handed down its opinion in the KSR v. Teleflex case on April 30, 2007. This case represents the Court’s seventh opinion regarding the patentability issue of obviousness. Many legal commentators have already begun to speculate on the impact of the case. Some commentators note that the opinion “does not radically change the notion of obviousness,” while others think there will be “a dramatic change to the method by which the Patent Office, the courts, and the bar conduct their obviousness analyses.” Regardless of the speculation, we will soon know the impact of this opinion when the Court of Appeals for the Federal Circuit and the district courts begin to apply its teachings.

image35 USC Sect. 271(f) Does Not Cover Foreign Duplication of Software: In Microsoft v. AT&T (2007), the U.S. Supreme Court held that Section 271(f) of the Patent Act does not cover foreign duplication of software. The statutory provision at issue provides that infringement may be found when one “supplies . . . from the United States,” a patented invention’s components for “combination of such components outside of the United States….” Here, AT&T owns a patent covering a computer that encodes and compresses recorded speech. A computer installed with Microsoft’s Windows operating system potentially infringes AT&T’s patent. Microsoft was supplying master versions of Windows to foreign computer manufacturers who in turn made copies for installation on the foreign-made computers. The Court found that a copy of Windows qualifies as a “component” of the foreign-made computers, but since the “actual copies” are produced by the foreign manufacturers, Microsoft could not be found liable under Section 271(f).

imageFull Scope of Claim Must be Enabled: In Liebel-Flarsheim v. Medrad (Fed. Cir. 2007), the Court of Appeals for the Federal Circuit (CAFC) affirmed the district court’s invalidation of Liebel’s claims drawn to a front-loading fluid injector with a replaceable syringe. Liebel’s patent claims covered embodiments of an injector with or without a pressure jacket. However, the specification only discussed embodiments having a pressure jacket. The CAFC found that Liebel did not satisfy 35 USC Sect. 112, paragraph 1 because the specification failed to provide an enabling disclosure for injectors that did not have a pressure jacket.

imageHatch-Waxman Term Extension Allowed:
In Merck v. HI-TECH (Fed. Cir. 2007), the Court of Appeals for the Federal Circuit (CAFC) held that term extensions provided under 35 USC Sect. 156 (Hatch-Waxman Term Extension) are applicable to terminally disclaimed patents. In fact, the court noted that if all the requisite conditions under 35 USC Sect. 156 are met the extension is mandatory, as evidenced by the statute’s “shall be extended” language.

imageComprising the steps of” Does Not Make Each Step of a Process Claim Open-Ended: In Dippin’ Dots, Inc., et al. v. Mosey, et al. v. Esty, Jr., et al. (Fed. Cir. 2007), the Court of Appeals for the Federal Circuit (CAFC) was tasked with construing the transition phrase “comprising the steps of.” The claim at issue was directed to a process for making the well-known “Dippin’ Dots” ice cream product. The patentee claimed the process using the transition “comprising the steps of” followed by a recitation of six steps. One of the steps was directed to “freezing [the] composition into beads….” The patentee argued that because the open-ended transition “comprising” was used, the claim’s scope included processes that produced irregular shaped particles, as well as beads. The CAFC disagreed and noted that “the term ‘comprising’ does not reach into each of the six steps to render every word and phrase therein open-ended….” Instead, the transition “comprising” makes the process claim open-ended to the extent that later processes that include the six enumerated steps plus any additional steps would still infringe the original process.

imageRecord Year for PCT Filings: The World Intellectual Property Organization (WIPO) recently announced that a record 145,300 PCT applications were filed in 2006. The United States led the way with just under 50,000 PCT applications filed, representing 34% of all PCT filings. Japanese applicants ranked second with 18.5% of the total applications, while Germany, the Republic of Korea and France rounded out the top five. The top applicants were Philips Electronics N.V. (Netherlands) (2,495 applications published), followed by Matsushita (Japan) (2,344), Siemens (Germany) (1,480), Nokia (Finland) (1,036), and Bosch (Germany) (962). The top technology areas for published PCT applications were telecommunications (10.5%), pharmaceuticals (10.4%), and information technology (10.4%).

imageUSPTO Announces Patent Allowance Rate: Recently the U.S. Patent & Trademark Office announced its final numbers for fiscal year 2006. One interesting statistic was the patent allowance rate. The patent allowance rate is the percentage of applications reviewed by patent examiners that are approved to issue as a patent. For fiscal year 2006, the allowance rate was 54%, the lowest rate on record. The rate was much lower than many had previously estimated. Some had estimated an allowance rate as high as 90%, while others estimated a rate around 70%. This allowance rate may be an indication that the USPTO is toughening its examination of patent applications. However, the allowance rate at the USPTO is not nearly as low as the rate observed in the Japan Patent Office, which consistently remained around 30% for the past few years.

imageCAFC Interprets “About”: In the recent CAFC decision of Ortho-McNeil Pharm. v. Caraco Pharm., the court was tasked with construing the phrase “about 1:5.” Ortho’s patent was directed to a pain-relieving composition of tramadol and acetaminophen having a ratio of “about 1:5.” Caraco intended to make and sell the same composition, but at a ratio of 1:8.67. Ortho argued that Caraco’s ratio of 1:8.67 infringed it’s claimed “about 1:5” ratio. The CAFC disagreed. In construing the term “about 1:5,” the CAFC first looked at the intrinsic evidence. The court noted that the intrinsic evidence pointed to a narrow reading of the “about 1:5” limitation. Specifically, the court pointed out that the “about 1:5” limitation was “distinctly claimed and distinguished from other broader weight ratios in the patent.” In this case, the court reasoned that to give the distinctly claimed “about 1:5” ratio a broad interpretation could leave other claimed ratios meaningless. Furthermore, the court noted that the meaning of the term should be interpreted narrowly because Ortho “could easily have claimed a [broad] ratio range…but they did not.”

image USPTO Statistics From FY 2006: The close of another fiscal year at the USPTO brings forth some interesting statistics. For instance, the number of new patent applications filed in FY 2006 rose to 443,652, up over 8% from the 409,532 applications filed in FY 2005. Despite the USPTO hiring over 1200 new patent examiners, the number of pending patent applications increased over 13% in the past year to 1,003, 884. According to the statistics, an applicant, on average, will not receive a first office action until nearly two years after their application is filed. Furthermore, the average total pendency of an application in the USPTO has risen to over two and a half years.

image CAFC Clarifies Intent Requirement for Inducing Infringement:In DSU Medical Corp. v. JMS Co., LTD. (Fed. Cir. 2006), the CAFC, sitting en banc, addressed the intent required for inducing the specific acts that lead to patent infringement. Under 35 U.S.C. Section 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” DSU argued that liability for inducing infringement attaches if it can be shown “that the inducer had knowledge of the acts alleged to constitute infringement.” The CAFC disagreed and held that inducement requires specific intent to encourage another’s infringement, or in other words, “that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.”

image "Secured” Does Not Mean "Permanently Secured": In Akeva v. Adidas-Salomon (Fed. Cir. 2006, Non-precedential), the CAFC upheld a district court's claim construction that the term “secured” does not mean “permanently secured.” At issue were two patents, U.S. Patent Nos. 6,662,471 and 6,604,300, owned by Akeva directed to shoes having rotatable or detachable rear soles. Akeva sued Adidas for infringement of these patents based on Adidas's shoes which have permanently fixed rear soles that do not rotate. The CAFC noted that the specifications of each patent disclose rear soles that are detachable or rotatable, but not permanently fixed. Thus, applying the rule of construction that claim terms are to be construed in light of the specification, the CAFC found that the term “secured,” as used in the ‘471 and ‘300 patents, could not be construed to mean “permanently secured.”

image Newly Discovered Properties of Known Composition Are Not Patentable: In Abbott Labs v. Baxter Pharm. (Fed. Cir. 2006), the CAFC invoked the inherency doctrine to invalidate the asserted claims in Abbott's U.S. Patent No. 5,990,176 (the ‘176 patent). Previously, Abbott had recalled its sevoflurane inhalation anesthetic due to degradation caused by the presence of Lewis acids. Subsequently, Abbott scientists found that a water-sevoflurane mixture would prevent the degradation reaction. This Lewis acid inhibiting composition was the subject of the ‘176 patent. Baxter argued that the ‘176 patent was anticipated by U.S. Patent No. 5,684,211 (the ‘211 patent), which disclosed a composition of water-saturated sevoflurane, but did not disclose that the composition would resist Lewis acid degradation. In its discussion, the CAFC noted that “[a] prior art reference may anticipate without disclosing a feature of the claimed invention if that missing characteristic is necessarily present, or inherent, in the single anticipating reference.” Since a water-sevoflurane mixture has the property of resisting Lewis acid degradation, the composition of the ‘211 inherently possessed this property. Thus, the CAFC agreed with Baxter and found that the ‘176 patent was anticipated by the ‘211 patent.

imageCAFC Broadly Construes 35 U.S.C. Section 251: In Medrad v. Tyco (Fed. Cir. 2006), Medrad challenged the district court's interpretation of 35 U.S.C. Section 251 that led to a finding of invalidity of its '602 reissue patent. The relevant language of Section 251 provides that a patent may be reissued when "the patentee claim[s] more or less than he had a right to claim." Medrad failed to file a required supplemental reissue declaration in prosecuting its first reissue patent, which led to the filing of a second reissue application resulting in the '602 patent. Tyco argued that the basis for the second reissue was defective because the error did not occur in the actual claims of the patent, and therefore, the '602 patent was invalid. However, the CAFC interpreted the relevant language as "encompass[ing] any error that causes a patentee to claim more of less than he had a right to claim," with no requirement that the error has to appear in the claim language. Thus, the CAFC's interpretation of Section 251 seems to suggest that any error resulting in an invalid patent may be corrected through reissue.

imageCAFC Finds Double Recovery in Damages Award: Aero Products International, Inc. (Aero) owns a patent directed towards an inflation control for air mattresses that it markets under the "One Touch" registered trademark. Aero sued Intex Recreation Corp. (Intex), and others, for patent and trademark infringement. A jury found that defendants infringed Aero's patent and trademark, and the court awarded damages in the amount of $6.9 million, representing $5.9 million for patent infringement and $1 million for trademark infringement. On appeal, the CAFC vacated the trademark award based on double recovery for the same injury. Aero argued that infringement of its patent and trademark constituted two separate compensable wrongs. However, the CAFC noted that Aero did not provide any evidence to support its trademark damages other than sales of the infringing Intex mattresses, which were also used to prove patent infringement damages. The CAFC concluded that since Aero was fully compensated for defendant's patent infringement based on the sales of the infringing mattresses, it could not also recover trademark damages based on those same sales.

imageExpert Testimony Provides Motivation to Combine References In Alza Corp. v. Mylan Labs., Inc. (Fed. Cir. 2006), the Court of Appeals for the Federal Circuit (CAFC) affirmed the district court's finding that Alza's patent (U.S. Patent No. 6,124,355) for an extended release formulation of the anti-incontinence drug oxybutynin was invalid on obviousness grounds. This case turned on whether a person having ordinary skill in the art would have been motivated to combine prior art references to arrive at the claimed invention and whether they would have had a reasonable expectation of success in doing so. Alza argued that back in 1995, there was no reasonable expectation that oxybutynin would be absorbed in the colon, and thus no motivation to produce the extended release formulation. Mylan presented evidence in the form of expert testimony that there was a general understanding in 1995 that oxybutynin would be absorbed in the colon based on its lipophilicity. The district court cited Mylan's expert's testimony in support of its conclusion that "a person of ordinary skill in the art in 1995 would reasonably expect oxybutynin to absorb in the colon [and] have a reasonable expectation of success of producing a 24 hour oxybutynin formulation meeting the claims of the '355 patent." Under a clear error standard, the CAFC agreed noting that the evidence, viewed as a whole, clearly demonstrated that one with skill in the art would have perceived a reasonable likelihood of success and would have been motivated to combine the prior art to achieve the claimed invention.

imageReissue Recapture Rule Uses Objective Standard: In Kim v. ConAgra Foods, Inc. (Fed. Cir. 2006), the Court of Appeals for the Federal Circuit (CAFC) clarified the standard to be used when determining whether a patentee has violated the rule against recapture. The recapture rule provides that a reissue applicant cannot regain subject matter that he surrendered during prosecution of the original patent. A surrender of subject matter can occur by amendments or arguments made to overcome prior art rejections. Relying on previous CAFC case law, the district court in this case suggested that a "patentee's subjective intent should be evaluated in determining whether the patentee surrendered subject matter." The CAFC dismissed the district court's suggestion by noting that the standard to determine whether subject matter has been surrendered is an objective one, specifically "whether an objective observer viewing the prosecution history would conclude that the purpose of the patentee's amendment or argument was to overcome prior art and secure the patent." The CAFC further noted that an objective standard is proper because it gives the public a better understanding of when they can rely on a patentee's admissions during patent prosecution.

imageFederal Circuit Invalidates Patent Under 35 U.S.C. 112, Paragraph 4: In Pfizer v. Ranbaxy (Fed. Cir. 2006), the Court of Appeals for the Federal Circuit (CAFC) for the first time invalidated a patent for failure to comply with 35 U.S.C. 112, Paragraph 4. At issue in the case were two of Pfizer's patents covering the world's largest selling drug, Lipitor ® (atorvastatin). The district court found that Pfizer's patents were valid and infringed by Ranbaxy. On appeal, however, the CAFC found that one of Pfizer's patents (the '995 patent) was invalid under Section 112, Paragraph 4. Under Paragraph 4, a dependent claim is required to incorporate by reference all the limitations of the parent claim to which it refers and also specify a further limitation. In this case, Pfizer only asserted claim 6 of the '995 patent. Claim 6 was directed to "the hemicalcium salt of the compound of claim 2." Claim 2 was dependent on claim 1, which recited the following compounds: (1) atorvastatin acid; or (2) atorvastatin lactone; or (3) pharmaceutically acceptable salts thereof. Claim 2, however, only recited atorvastatin acid. Thus, Ranbaxy argued that claim 6 did not satisfy Paragraph 4 because it did not import all of the limitations of claim 2 and specify a further limitation of the subject matter. The CAFC agreed with Ranbaxy.

imageTransitional Phrase "Consisting Of" Does Not Exclude Impurities: The Court of Appeals for the Federal Circuit (CAFC) affirmed a district court's finding that Energy & Environmental International (EEI) infringed two of Conoco's patents related to friction reducing agents that are introduced to oil and gas pipelines to make pumping operations more efficient. Conoco's '937 patent contained a "consisting of" transitional phrase that recited "water and water-alcohol mixtures" for use as suspending mediums. The transitional phrase "consisting of" is a term of art in patent law that restricts the claim by excluding any element, step, or ingredient not specified in the claim. However, the transition "consisting of" has been interpreted to include impurities ordinarily associated with the component. EEI argued that its accused process did not infringe Conoco's patent because its suspension medium included a non-alcohol, which avoids the key limitation. The district court found as a matter of fact that non-alcohol was an impurity that was normally associated with industrial alcohols to reduce tax liability. The CAFC, reviewing the case for clear error, found that there was substantial evidence to support the district court's findings.

imageSupreme Court to Address Patentability Obviousness Standard: Recently, the Supreme Court granted KSR's writ of certiorari and will address questions related to the obviousness standard for patentability. KSR petitioned the Supreme Court after the CAFC decided Teleflex v. KSR - holding that when combining two or more references in an obviousness finding, there must be a suggestion or motivation to combine the teachings. In KSR, the Supreme Court will answer the question of whether a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. S 103(a), without proof of some "teaching, suggestion, or motivation" that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed. Obviousness issues are raised in nearly every patent case prosecuted before the USPTO, as well as during infringement litigation. Thus, the impact of the Supreme Court's decision in this case will be felt across all spectrums of patent practice.

image Sale of Patented Device Does Not Exhaust Method Claims: In LG Electronics (LGE) v. BizCom (Fed. Cir. 2006), the Court of Appeals for the Federal Circuit (CAFC) reversed the trial court's holding that LGE's system claims were exhausted and affirmed the trial court's holding that the exhaustion doctrine did not apply to LGE's method claims. LGE sued various Intel customers for infringement of several of its patents related to personal computers. Under a licensing agreement, Intel was authorized to sell the LGE products subject to the condition that the products would not be combined with non-Intel products. Intel, in fact, informed the defendants that combining the licensed products with non-Intel products was not covered under its licensing agreement. The CAFC noted that "an unconditional sale of a patented device exhausts the patentee's right to control the purchaser's use of the device thereafter." In this case, however, there was a condition, i.e., Intel's licensed products were not to be combined with non-Intel products. Thus, since there was an express condition related to the licensing agreement, the exhaustion doctrine did not apply. The CAFC reiterated its position on the exhaustion doctrine as related to method claims: "the sale of a device does not exhaust a patentee's rights in its method claims."

image Claims Lacking Antecedent Basis Not Automatically Subject To Indefiniteness Rejection: The Court of Appeals for the Federal Circuit (CAFC) in Energizer Holdings v. ITC(Fed. Cir. 2005) held that the failure to follow strict rules in drafting patent claims will not automatically render the claims invalid for indefiniteness under 35 U.S.C. §112 2. The International Trade Commission (ITC) previously found the claims of U.S. Patent No. 5,464,709 ('709) invalid on the ground that the claim term “said zinc anode” lacked antecedent basis in the claim, and that the claims were unclear or ambiguous. However, the CAFC reversed the ITC, emphasizing the point that claim definiteness is analyzed in light of the prior art, and as it would be interpreted by one possessing the ordinary level of skill in the pertinent art. In reversing the ITC, the CAFC held that "when the meaning of the claim would reasonably be understood by persons of ordinary skill when read in light of the specification, the claim is not subject to invalidity upon departure from the protocol of 'antecedent basis."

image Blackberry Dispute Highlights Different Infringement Standards For Different Claims: The Supreme Court recently declined to review the Federal Circuit's ruling that the Blackberry email device, produced in Canada, infringed a U.S. Patent held by NTP, Inc. Due to the Supreme Court's refusal to hear this appeal, the law as it pertains to “system” claims practiced only partially within the U.S. remains the same. Therefore, a patent's “system” claims can be infringed where only some components of the accused system are practiced within the United States. The Federal Circuit held that use of the claimed system under 35 U.S.C. § 271(a) is the location where beneficial use of the system is obtained. However, the Federal Circuit also highlighted the requirements to show infringement for “method” claims is different, holding that in order to infringe a “method” claim, the plaintiff must show that all steps for the claimed method are carried out within the United States.

imageNo Inference of Deceptive Intent in Failure to Cite Reference: In Warner-Lambert Co. v. Teva Pharmaceuticals USA, Inc., a federal district court properly refused to infer an intent to deceive from the failure of the applicants to disclose to the patent examiner prior art showing a high degree of relevance to the materiality of the invention. In finding the district court's decision of no inequitable conduct reasonable, Judge Alvin Shall wrote, “[D]etermining whether there was intent to deceive is still a contextual exercise, and materiality does not presume intent, which is a separate and essential component of inequitable conduct.”

image Submission of Inaccurate Video Information is Inequitable Conduct: In Frazier, et al. v. Roessel Cine Photo Tech, Inc., et al. in which an applicant submitted video evidence of the invention during the prosecution of the patent, the patent was later held unenforceable. In the case, the applicant submitted video purportedly shot with the invented lens to show novelty, but in reality the video was shot by another lens. In order to find inequitable conduct, the court found materiality and an intent to deceive the USPTO.

imageUSPTO Denies Patent for a Too - Human Hybrid. Scientist Sought Legal Precedent to Keep Others From Profiting From Similar 'Inventions'

The Motion Picture Association of America launched a new legal campaign Tuesday targeting the BitTorrent and eDonkey file-swapping networks, two technologies widely used to trade movies online. For complete story click here.

Commentators call for reform of the current patent system to prevent “squatters, trolls, and terrorists” from capitalizing on the unwary.


imageThe Motion Picture Association of America launched a new legal campaign Tuesday targeting the BitTorrent and eDonkey file-swapping networks, two technologies widely used to trade movies online.



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