Oblon, Spivak, McClelland, Maier & Neustadt Ranked Top Patent Firm

Oblon, Spivak, McClelland, Maier & Neustadt has again been ranked #1 on the Top Patent Firms list by Intellectual Property Today. Timothy and Christopher Maier, of Maier & Maier, are the sons of Gregory Maier, a founding member of Oblon, Spivak, McClelland, Maier & Neustadt. Tim and Chris have used what they have learned from their father's firm as a model for growing the Maier & Maier firm. Having witnessed first-hand the operation of such a successful firm throughout their lives has proven an invaluable resource, and they congratulate Oblon, Spivak, McClelland, Maier & Neustadt for their accomplishment.

You can view the entire Top Patent Firms list here: http://iptoday.com/issues/2014/03/top-patent-firms.asp.

NAUTILUS, INC. v. BIOSIG INSTRUMENTS, INC. 572 U. S. ____ (2014)

The Supreme Court has lowered the bar for finding patent claims invalid for indefiniteness. The new standard finds a patent invalid for indefiniteness "if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” The full opinion by Justice Ginsburg can be read here.

The Court of Appeals for the Federal Circuit had previously applied a definiteness standard that only required a patent claim to be “amenable to construction” and not “insolubly ambiguous” as construed. The opinion stressed that finding definiteness must focus “on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post hoc.” Justice Ginsburg further expressed that the updated standard is important for maintaining the public-notice function of the patent system and for reducing uncertainty.

The new standard set by the Supreme Court could have a major impact on the current landscape of patent litigation and licensing. It may be much more difficult for patent owners to enforce or leverage broad or vague patents without facing a formidable invalidity challenge.

USPTO Preissuance Submissions Information Page

The USPTO has created a Preissuance Submissions page on its website devoted to "Third-Party" Preissuance Submissions. Preissuance Submissions, which became effective on September 26, 2012, allow third-parties to submit patents, published patent applications, or other printed publications that may be relevant to examination. The submissions must include a concise statement of relevancy for each document and the submission must be filed before either 1) the later of 6 months after publication or the date of a first office action on the merits or 2) before the date of allowance, if earlier.

The page provides announcements, presentations and blogs, statistics, filing information, rules, and other resources pertaining to preissuance submissions. Within these sections, the page offers helpful information to applicants and filers such as what qualifies as a proper concise statement. There is additional information pertaining to the success of the program, including public comments, press releases, detailed statistical analysis, and examiner sentiments.

Current information on the page indicates that over 70% of preissuance submissions have been properly filed. Of applications with Office Actions after a proper submission, approximately 12.5% of the office actions relied on the third party submission. Examiners reported that 87% of the time, submissions offered at least limited helpfulness. 23% of the time, submissions were deemed greatly helpful by examiners.

For more information on "Third-Party" Preissuance Submissions, you can visit the USPTO page here.

Read Our Patent FAQ Documents

The team at Maier & Maier understands how confusing patents can be, as well as all of the legal issues that come along with obtaining, reexamining, and reissuing patents. Because these legal issues are not well known, our team has compiled two FAQ documents for your convenience.

Click the links below to view our Patent Reexamination FAQ and Patent Reissue FAQ documents. These documents can help you learn why it is important to reexamine a patent, or to reissue a patent application. We will walk you through each of the most common questions for each issue so that you can make a confident decision as you seek to pursue a patent.

Have more questions than our documents answer? Give us a call at (703) 740-8322 today or contact us online using our easy form!

Early Trends in Review Proceedings

As part of the reform to U.S. patent law under the America Invents Act, new proceedings for challenging patents became available. The new proceedings include Inter Partes Review, Post Grant Review, and the Covered Business Method Review. The Inter Partes Review and Covered Business Method proceedings have been underway since September 16, 2012. However, Post Grant Review is only available for claims having an effective filing date after March 16, 2013, under the first to file rules. The first final decisions in review proceedings by the Patent Trial and Appeal Board (PTAB) have just recently been issued. The early decisions show a strong trend in the challengers' favor, as many of the challenged claims have been canceled.

Based on the success of challengers, PTAB review proceedings have proven an effective and favorable means to challenge or invalidate patent claims. These can be particularly effective for defendant's trying to invalidate claims asserted against them in litigation and may lead to a stay in the litigation pending an outcome of the review proceeding. In addition to the favorable record for challengers, the decisions indicate that it is difficult for patent owners to succeed on motions to amend the claims during a proceeding. If subjected to litigation, instituting review proceedings may be a very effective defense tactic.

On the other hand, if filing an infringement action, it is clear that one must be prepared to face such a proceeding. There are a few strategies for improving the chance of surviving a review proceeding, including drafting several variations of claims in hopes that if one is canceled, at least one alternative will endure. Additionally, if able, keeping a continuing application alive during the life of a patent facilitates later claim modifications in response to the results of a review proceeding.

The White House Announces Three New Executive Actions Pertaining to Patent Reform

Today, the White House issued a press release addressing Executive Actions to strengthen the patent system and foster innovation. This announcement comes on the heels of President Obama’s State of the Union Address which reiterated his call for patent legislation to protect innovators from abusive litigation. The announcement highlights three new Executive Actions to “encourage innovation and further strengthen the quality and accessibility of the patent system.” It also provides updates on the progress of prior patent related Executive Actions implemented in June of 2013.

New Initiatives

The three new initiatives involve crowdsourcing prior art, improving technical training of examiners, and providing pro bono and pro se assistance to applicants. Prior art includes references or material that could affect the patentability of an invention. Currently, examiners primarily rely on references supplied by the applicant and references found during the examiner’s search to evaluate novelty and other prerequisites for patentability. Crowdsourcing could allow companies, experts, and the public to more easily provide information surrounding relevant prior art in an application. The USPTO will be exploring possible ways to implement crowdsourcing and will be seeking public input.

To improve the technical training of examiners, the USPTO will make it easier for engineers and technologists in industry and academia to provide training for examiners on the state of the art. To assist in encouraging volunteers assist in training, the USPTO will make its four regional satellite offices permanent. This will allow for in-person or virtual contribution from stakeholders at these locations.

The final new initiative focuses on aiding applicants who struggle with prosecution and may not have the benefit of representation. The USPTO will provide education and practical resources and will appoint a Pro Bono Coordinator. This will improve coordination with the AIA Pro Bono Advisory Council and will expand the existing pro bono program to cover all 50 states. Members of the patent bar will be called on to participate.

Update on June 2013 Executive Actions

To improve transparency in patent ownership, the USPTO has proposed a new rule to require the reporting of people or companies with ownership interests in a patent or application. Providing information on the “attributable owners” of patent rights will improve public awareness of the competitive landscape, facilitate technology transfer, and reduce abusive litigation.

To enhance claim clarity, the USPTO has developed a training program for examiners and judges that strives to improve consistency in evaluating functional claims and the clarity of examination records. The USPTO will also implement a pilot program to enhance claim clarity with the use of glossaries in specifications.

To ensure consumers and main street retailers are not unfairly disadvantaged in knowing their rights, the USPTO is launching an online toolkit with relevant demand letter and patent litigation information. The toolkit also includes frequently asked questions and links to third party resources that provide relevant services and information.

To expand outreach and focused study, the USPTO has increased its public outreach efforts and improved its Thomas Alva Edison Visiting Scholars Program. Three new scholars were selected to study various aspects of the patent system in order to reduce unnecessary litigation and improve patent quality.

To strengthen exclusion order enforcement, the U.S. Intellectual Property Enforcement Coordinator will review the current practices for exclusion order enforcement and will issue recommendations to improve efficacy, transparency, and efficiency based on those findings.

Michelle K. Lee Appointed Deputy Director of the USPTO

Michelle K. Lee has been appointed as the next Deputy Under Secretary of Commerce for Intellectual Property and the Deputy Director of the USPTO. The U.S. Secretary of Commerce Penny Pritzker made the announcement on December 11, 2013. Ms. Lee is set to begin January 13, 2014. Due to the vacancy at the Director position, Lee will assume the duties and responsibilities of the Director of the USPTO.

The future Deputy Director has a strong background in patents and intellectual property, including her current role with the USPTO as Director of the USPTO's Silicon Valley satellite office. In this capacity, she has most recently spearheaded the effort to establish a permanent office on the west coast, which will be located in San Jose. She also previously served on the Patent Public Advisory Committee, advising on the performance and policies of the USPTO.

Ms. Lee's educational and professional fields include law and an engineering. She attained her B.S. and M.S. degrees in electrical engineering and computer science from Massachusetts Institute of Technology, after which she worked as a computer scientist for Hewlett-Packard Research Laboratories and the M.I.T. Artificial Intelligence Laboratory. She later graduated from Stanford Law School and began her legal career clerking at the U.S. District Court for the Northern District of California and later the U.S. Court of Appeals for the Federal Circuit. She continued her legal career in private practice focusing on patent law, intellectual property, litigation, and corporate law. Eventually, she attained the title of Deputy General Counsel and Head of Patents and Patent Strategy for Google.

We wish Ms. Lee all the best in her new role as Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO.

For more information on the appointment of Michelle K. Lee, please view the official press release on the USPTO website.

After Final Consideration Pilot 2.0 Extended to September 30, 2014

The United States Patent and Trademark Office has announced that it will extend its After Final Consideration Pilot 2.0 program. The program was created as an improved follow-on to the After Final Consideration Pilot program. The goal of the program is to improve prosecution by providing applicants and examiners with an additional opportunity to collaborate and communicate to achieve allowance or an understanding of the considerations involved in the rejection. The After Final Consideration Pilot 2.0 program was initially scheduled to last until December 14, 2013, but now will extend to September 30, 2014.

To achieve its goal, the After Final Consideration Pilot 2.0 allows examiners to conduct minimal searches and considerations of post final rejection responses. Under the guidelines, an examiner is authorized to use up to 3 hours of non-production time for plant and utility applications and up to 1 hour, plus interview time, for design applications. In addition to using the time for searching and considering post final rejection responses, the time may also be used in the form of an interview to discuss the search and considerations with the applicant, particularly if the post final rejection response does not put the application in allowance. This can be very beneficial to an applicants' understanding of a rejection.

Patent Law Treaty Implementation in the United States

On December 18, 2013, the United States' implementation of the Patent Law Treaty will become effective. The implementation brings changes to current rules and procedures. Particularly, the implementation provides a remedy for the failure to file a U.S. application within the 1 year Paris period or the 1 year U.S. provisional period. The change will apply to not only future filings, but also to existing U.S. applications and existing patents. The failure to timely file will be correctible if the U.S. application is filed within 2 months after the 1 year deadline has passed.

An Affirmative Act of Egregious Misconduct

In Intellect Wireless, Inc. v. HTC Corporation, the Court of Appeals affirmed the District Court's ruling that Intellect's inventor, Mr. Henderson, had engaged in affirmative acts of misconduct by filing false statements and the patent was therefore invalidated.

The patents:

Mr. Henderson invented patents 7266186 and 7310416, which he assigned to Intellect. The patents relate to a patent system that uses Caller ID. The invention allows the message recipient to view who is sending the message before the recipient views the message. This cuts down on the receipt/opening of unsolicited and inappropriate messages.

The false statements:

Mr. Henderson was found to have made false statements in order to overcome a prior art reference. To overcome the prior art, he stated that he had actually reduced the invention to practice and demonstrated this invention at a meeting. The district court found that the invention had only been constructively reduced to practice.

Intellect claims that its attorney filed an amended declaration which fixed these mistakes. Mr. Henderson states that his attorney made clear to the Examiner that they were relying on constructive reduction to practice.

The Court of Appeals found that the District Court did not err in finding affirmative acts of deception because Mr. Henderson and his attorney did not take the necessary steps to correct the falsehood (i.e. inform the PTO and the Public).

The standard used by the Court:

The District Court and Court of Appeals relied on previous case law to provide the standard for unclean hands. For unclean hands, there must be an intentional misrepresentation to the USPTO and the misrepresentation must be material. The Court stated:

"When the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material." Therasense, Inc v. Becton, Dickinson & Co., 649 F.3d 1276, 1292 (Fed. Cir. 2011) (en banc). "We review the district court's ultimate finding of inequitable conduct for abuse of discretion, and review the underlying findings of materiality and intent for clear error." Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., 719 F.3d 1346, 1357 (Fed. Cir. 2013).

In this case, the District Court found (and the Court of Appeals affirmed) that Intellect, through Mr. Henderson, had made affirmative statements that were false and failed to properly correct the false statements. Therefore, the false statements were material.

Conclusion:

The Court was stringent on what a party must do to rectify any previous false statements. A party who does not take the required steps, could be found to have affirmatively misled the PTO and therefore have unclean hands. If the party has unclean hands, the patent can be invalidated.

A Healthy Debate on Patent Reform

Continuing our contemplation of Non-Practicing Entities and their oft debated status under the current patent laws, this entry asks what reform is the right reform. Congress is wrestling with demands to amend the current laws in response to the influx of patent lawsuits filed by Non-Practicing Entities. But is excessive or misguided reform a threat to the United States' premier Intellectual Property regime? Some people certainly think so.

Many of the calls for reform rest on the concept of saving businesses and individuals from the wrath of Non-Practicing Entities that are accused of impeding innovation and draining the economy. But are all Non-Practicing Entities created evil? It is important to know how every person or business would be affected by laws targeting these entities before the legislature takes action.

Some activists target all Non-Practicing Entities with their calls for reform. But as Don Rosenberg, executive vice president and general counsel of Qualcomm, notes in his Wall Street Journal article, First Rule of Patent Reform: Do No Harm, many research institutions and educational entities qualify as NPEs. While these institutions are not situated to bring their products to market, they are able to license their inventions and consequently fund future developments. Similarly, some small businesses that cannot afford to enter a marketplace might have to resort to licensing or enforcing their patents as a NPE to maintain existence. The point here isn't to argue the legitimacy of NPEs or Patent Assertion Entities (PAE), it is to show that there are many defensible sides to the reform debate and each should be evaluated by lawmakers. If the lawmakers decide NPEs or PAEs do have a negative effect on society and therefore should be targeted by reform, the consequences on entities outside the target zone can't be overlooked.

The FTC has announced it will evaluate how PAEs operate and what effect they have on innovation and competition. On its website, the FTC defines PAEs as "firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technologies." (See: http://www.ftc.gov/opa/2013/09/paestudy.shtm). This definition would certainly create a different target than a definition including research institutions and educational entities. It appears not only should all sides be heard, but their common terms must be constructed.

Don Rosenberg's article raised concerns about three specific reform proposals: the staying of judicial proceedings against vendors and end users when upstream distributors have also been sued; the diminished protection for software patents; and making it more difficult for the International Trade Commission to ban infringing products at the border. To view his opinions, please read his article on www.wsj.com. IP professionals have debated the various positions on each proposal, but these discussions must carry over to the lawmakers. You can find many differing opinions on patent reform proposals through a simple internet search. However, since congress lacks infinite time and wisdom, the debate and discussion over reform will be limited. It is important that the pragmatic concerns of all sides are heard and understood.

Trademark Cancellation Proceedings

A Trademark Cancellation Proceeding is a process by which a party opposing a trademark asks the USPTO to declare that the mark is not valid. This process takes place after the mark in question has already been placed on the register. 15 USC §1064 states that a trademark cancellation proceeding may be filed by "anyone who believes that he or she will be damaged…by a registration of a mark on the principal register."

Filing the Petition

Who can file?

A trademark cancellation proceeding may be filed by "anyone who believes that he or she will be damaged…by a registration of a mark on the principal register." A cancellation may be filed in the USPTO Office. The petition to cancel must contain a proof of service on the trademark owner or their registered agent.

What are the possible grounds for filing?

Some of the possible grounds for filing a trademark cancellation include:

the registrant's mark is likely to be confused with a registered mark; the mark offends certain groups; at the time of filing the application, the registrant had no intention of using the mark; the registrant was not the owner of the mark at the time of the application and is not the owner of the mark now; the registered mark has been abandoned; the mark is an individual's name and that individual did not consent to the use of his or her name; plaintiff's mark is famous and the registrant's mark would dilute plaintiff's mark; and the registrant received its registration through fraud.

Timing?

15 USC §1064 states that a petition to cancel must be filed:

within five years after the mark has been registered; at any time if the mark is generic, is abandoned, is obtained by fraud, or is used by the registrant (or with registrant's permission) to misrepresent the source of the goods or services; or at any time with a certification mark if the registrant does not have control of the use of the mark, markets or produces goods that pertain to the certification mark, uses the certification mark for any purpose other than to certify, or arbitrarily refuses to certify goods which meet the certification standards.

Cost?

To file a petition to cancel a trademark, the fee is $300 per class.

The Proceeding

Discovery?

When appropriate, the Federal Rules of Civil Procedure (FRCP) apply to discovery. There should be a discovery conference before or on the day discovery opens. A Judge may participate in the conference, if requested by any party. Discovery will last 180 days. Initial disclosures must be made within 30 days of discovery opening. Experts may be obtained, but parties must disclose experts as required by the FRCP.

Depositions must be taken in the Federal judicial district where the person resides, is regularly employed, or where the parties agree. A party may serve up to 75 interrogatories on another party. If a party fails to respond to discovery, the party requesting discovery can make a motion to compel discovery. A motion to compel initial disclosures or expert testimony must be made before discovery closes.

Briefs at Final Hearing?

The brief of the plaintiff (party seeking cancellation) is due no later than 60 days after the date set for rebuttal testimony. The defendant's brief is due 30 days after plaintiff's brief. The plaintiff may then submit a reply brief no later than 15 days after defendant's brief is due.

Oral Arguments – Reconsideration?

If a party wants to have an oral argument, the party must make a separate motion and file it no later than 10 days after the due date for the last reply brief. The oral arguments are made in front of three Trademark Judges from the Trademark Trial and Appeal Board (TTAB). Oral arguments are limited to 30 minutes. A party may request a rehearing or reconsideration after the final hearing. The request must be made no later than one month from the date of the decision. A brief must be submitted no later than 15 days after the request for rehearing or reconsideration.

Are amendments allowed?

No amendments or disclaimers that affect the substance of the mark are allowed in a cancellation proceeding, except with the agreement of the parties and approval of the TTAB.

Post-Cancellation Proceedings

Either party, if not happy with the decision by the TTAB, may appeal that decision.The appeal will be decided by the U.S. Court of Appeals for the Federal Circuit. The party appealing the decising must give written notice of appeal to the Director at the USPTO within 2 months from the decision the party is appealing. The party appealing the decision must file a copy of the notice and pay the fee with the court.


How Does the America Invents Act Affect Non-Practicing Entities?

In the past few Blogs, we have been discussing Non-Practicing Entities and the effect they have on the patent system. We now focus on a different, but still important, question: How does the America Invents Act (AIA) affect non-practicing entities (NPE's)? Although the AIA will affect all patent owners filing after the effective date, there are certain provisions that seem targeted at NPE's.

How will the AIA affect NPE's?

1. Assignees can file the patent. A NPE usually engages in the business of buying patents. If the NPE buys the patent, they are not the inventor, but rather the assignee. Allowing the assignee to file the patent gives the NPE more control over the wording of the patent which could prove important in patent litigation suits down the road.

2. A patent can no longer be found invalid in a counterclaim because it lacks a Best Mode Requirement. This means that if a NPE sues another entity for infringement, and the other entity claims that the NPE's patent is invalid because it failed to disclose a best mode, the court will say that the failure to disclose a best mode is not fatal to the patent. Now, the best mode is still a requirement, but if the patent is issued by the Examiner, then best mode cannot be used to find the patent invalid.

3. Most NPE's do not qualify for micro-entity or small entity status. Some costs and fees are cut in half for small entities and micro-entities. The definitions of micro-entities and small entities are important because even if the inventor initially qualifies for the discount, the status is lost once the inventor assigns the patent to a NPE that is not itself a small or micro-entity.

4. The AIA changes joinder, thus limiting the number of defendants.

35 USC § 299 states that defendants may be joined in one action if:

(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and

(2) questions of fact common to all defendants or counterclaim defendants will arise in the action.

NPE's, on average, add more defendants to a suit than do other entities. Therefore, this new joinder standard will affect the NPE's more. This joinder standard requires the plaintiff to show that there is some connection between the defendants, not just that the defendants infringed the patent in separate occurrences. The plaintiff needs to show that the defendants infringed the patent in a common transaction or series of transactions.

5. If a civil action for infringement is already pending, then neither of the parties can bring an inter partes review or a post grant review unless the civil action is stayed. In other words, if a NPE has brought a civil suit, they will not be able to utilize the new and expedited proceedings.

Conclusion

The America Invents Act makes many changes to the patent system. In particular, there are provisions that predominantly affect NPE's. As with any patent owner, NPE's should become familiar with the AIA and analyze how it affects their company.

Government Accountability Office's (GAO) Report on Non-Practicing Entities (NPE's)

Why has the number of patent suits increased dramatically over the past few years? Is it because patents are broader, more confusing, or more valuable than once thought? Congress has recently taken to the view that Non-Practicing Entities (NPE'S) are a big factor. The Government Accountability Office (GAO) was asked to do a study on the increased patent litigation. Congress is trying to understand what factors are contributing to this increased litigation.

Statistics from the GAO Report:

What did the GAO find?

1. A long patent "wait" time. The GAO found that, on average, it takes 18 months for an examiner to issue a response to a submitted patent application. It takes around 30 months from the time an application is filed with the USPTO to the time the patent is issued. The American Invents Act (AIA) offers an expedited process that takes around 12 months.

2. An increased number of Software patents. The ratio of software patents compared to the total numbers of patent applications filed has grown. In 2011, more than half of all the issued patents related to software. The software patents were not issued just to technology companies. From 2007 to 2011, non-technology companies (such as retailers), accounted for around 39 percent of the software patent lawsuits.

3. A wish to avoid the America Invents Act (AIA). In 2011, there was a 31 percent increase in the number of patent suits filed. This means that about 900 extra patent suits were filed in 2011. It is important to note that the AIA limits the number of defendants that can be added to a suit. Therefore, some companies were trying to sue before 2012, which is when the AIA became effective. NPE's do tend to add more defendants to law suits than other companies. From 2007 to 2011, NPE's averaged 4.1 defendants per suit and other companies averaged 1.9 defendants per suit. It should also be noted that the GAO did not include research universities as NPE's.

4. Certain patents contain confusing subject matter. It seems that it takes a specialized knowledge of relevant patent subject matter to truly be able to "judge" a case. How are courts dealing with this? First, courts are teaming with software experts to better understand the subject matter. Second, there is a judicial training system that is being piloted. Judges from the chosen districts are going to complete an in-depth training on how to decipher patents and judge whether they meet certain criteria. This training takes many years.

Conclusion:

As is usually the case, no one reason seems to be the cause of the increased patent litigation. It seems that although NPE's may have been a contributing factor in the request for the report, the GAO found other compelling causes of the increased patent litigation. It seems that maybe Congress needs to focus not only on NPE's, but on how to make patents more succinct and understandable.

Non-Practicing Entities

A Non-Practicing Entity (NPE) is also referred to as a Patent Assertion Entity and, even though it is politically incorrect, a Patent Troll. A NPE is a person or entity who buys rights to a patent or creates technology to acquire a patent, but does not use the patent rights to make or sell the patented invention. Normally, a person invents something so that they can use it in their business. However, the NPE does not want to use the invention; they merely want to monitor and exclude others from using the patent. They receive money through making others pay a royalty to use the invention. They usually can get a royalty by just threatening to file suit, since patent litigation is expensive.

NPE's have become more prevalent as patents have become more lucrative. The source of the information in the graph below comes from PatentFreedom © 2013.

How long have NPE's been around?

NPE's have been around for more than one-hundred years. George Sheldon is one of the oldest examples of a NPE. Sheldon had a patent, which was granted in 1895, for a three cylinder motor vehicle. George Sheldon was a Patent Attorney from NYC who tried to claim that Henry Ford infringed his patent.

What relief can a NPE get?

Damages (Legal Relief): 35 USC §284 states:

"Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court."

This means that if the NPE can't show that they lost any profit (because they were not in the business of selling the product), they will most likely get a reasonable royalty (a forced license). For more information on damages.

Injunction (Equitable Relief): The Sumpreme Court has stated that the award of an injunction in patent cases is no longer assumed to be the remedy. See Ebay v. MercExchange, 547 US 388.

Is Congress passing legislation?

Congress has taken a strong stand that NPE's are high on their list of priorities. For example, the proposed Shield Act (HR 845) would provide litigation costs to a party opposing a patent infringement if all of the following are satisfied: the patent holder is not the original inventor; the patent holder has not used or invested money in the production or sale of the invention; and the patent holder is not an institution of higher education (university). The Shield Act could be important because a lot of small companies are forced to buy a royalty from NPE's since they cannot afford to defend infringement suits.

Conclusion:

NPE's are real and they are growing in number. It is hard to predict how this affects the patent world and what changes will be made in the future. Congress has taken an interest in the issue and we may be seeing new laws passed in the next year or two. The Shield Act shows great progress by protecting small businesses who probably cannot afford litigation.

PTAB Issues First CBM Review Decision

On June 11th, 2013, the USPTO's Patent Trial and Appeal Board (PTAB) issued its first final written decision in a Post Grant Review proceeding under the Transitional Program for Covered Business Method Patents (CBM review). (CBM2012-00001: SAP America, Inc. et al. v. Versata Development Group, Inc.) This decision follows the oral hearing held on April 17th, 2013. Since that oral hearing, in a parallel action, the Federal Circuit affirmed damages award portions of a district court decision and remanded the injunctive portion to the district court for correction. Also, in a separate parallel action, Versata has challenged the USPTO's institution of this CBM review in the Eastern District of Virginia.

The PTAB's decision found all of the challenged claims of Versata's U.S. Patent No. 6,553,350 unpatentable under 35 U.S.C. § 101. In its decision, the PTAB affirmed that their use of the USPTO's broadest reasonable interpretation (BRI) standard for interpreting the claims, as opposed to the claim construction provided in the parallel district court and Federal Circuit proceeding, was proper. The lengthy justification for applying the BRI standard was likely included in the decision as a not-so-subtle attempt by the PTAB to respond to Versata's Eastern District of Virginia challenge.

Moving to the validity of the claims themselves, the PTAB held that Versata's claims 17, and 26-29 are unpatentable under 35 U.S.C. §101 and ordered them cancelled. Specifically, the PTAB held that the claims recite unpatentable abstract ideas and that the claims lack enough significant meaningful limitations to transform the abstract ideas into patentable applications of the abstractions. The takeaway from this result is that any party that has been sued for infringement of a patent that could be characterized as relating to a CBM may be well advised to consider seeking CBM review of the patent claims asserted against them.

Patenting in Myriad: Isolated DNA is Out, cDNA is In, For Now...

The Supreme Court issued their unanimous opinion in Association for Molecular Pathology v. Myriad Genetics on Thursday. The Court held that isolated DNA from the body is not patentable under §101, but that synthesized cDNA survives the §101 inquiry. The Court noted that because Myriad's claims were directed to the encoded genetic information, something Myriad did not create or even alter, the claims fall into the law of nature exception and are therefore invalid. This decision has the potential of rendering thousands of gene patents invalid.

At issue in this case was both isolated DNA which had a nucleotide sequence indistinguishable from native DNA in the body and complimentary DNA, or cDNA. cDNA makes use of the fact that genes encoded in native DNA in the body are typically in pieces, called exons, separated by non-coding sections of DNA called introns. The body's normal processes can distinguish between the two and proteins produced from mRNA correspond to the DNA sequence of the exons only, due to the mRNA only transcribing the exons. cDNA is the equivalent sequence which would result from splicing the coding exons together without the introns. The nomenclature "complimentary" derives from the fact that its sequence is complimentary to the mRNA.

Myriad discovered the precise location and sequence of the BRCA1 and BRCA2 genes, mutations of which are linked to an increase in risk of breast and ovarian cancer. They then applied for, and received, patents covering isolated DNA sequences. Some claims at issue in this case covered the isolated form of the native DNA, while others covered cDNA sequences. The Court looked to the both the recent Mayo decision from last year and Diamond v. Chakrabarty from 1980, reinforcing the requirement that the patents at hand must claim a "new and useful…composition of matter" and not be "manifestation…of nature" (Chakrabarty).

The Court notes that Myriad did not create anything. True, it discovered a useful gene, but "separating that gene from its surrounding genetic material is not an act of invention" (Myriad). Further, the Court states that the severing of chemical bonds to create a non-naturally occurring material does not help Myriad either because the claims at issue are not expressed in terms of chemical composition but instead focus on the genetic information encoded in the BRCA1 and BRCA2 genes.

The Court, in a short single-paragraph postscript states that in theory cDNA can pass muster under the §101 standard, it being created in a lab and not in nature. This being so, Myriad's claims for cDNA are still invalid because they are overbroad in scope and cover the naturally occurring genetic sequences without alteration.

The Court made sure to note that their decision regarding cDNA as not unpatentable only considered §101, and they expressed no opinion regarding the other sections of the Patent Act (§102, §103, or §112). They therefore leave open the possibility of challenges based on those sections, some of which was hinted at during oral argument regarding the possibility of cDNA being obvious in light of the mRNA and known body processes.

Continuing the Software Patent Debate

Should patents be awarded to software? Conflicting answers to this question were published by The Wall Street Journal on May 13, 2013, by two recognizable players in the industry. Mr. Martin Goetz –the recipient of the first ever issued software patent—answered in the affirmative, highlighting the importance of software patents to technological advancement and innovation. On the other side of the argument was Mr. Brian Love, an intellectual property professor at the Santa Clara University School of Law, who argued that innovation would be promoted by eliminating software patents.

Professor Love uses examples to back up his opinion, stating that a major problem of software patents is shown by the overspending by large players in acquiring other companies' patents. He uses Apple and Google as an example, who have combined to spend roughly $15 billion buying other companies' patents in 2011—a figure higher than that spent on research and design. While this number is certainly staggering, what Mr. Love fails to account for is the $15 billion gained by smaller players, some perhaps individual researchers, who have sold their patents to companies like Apple and Google.

This point is similar to that of Mr. Goetz, who states that patents are very effective at protecting both individual and corporate investments. Many different kinds of potential inventions could be patented with "software patents," including new video games, websites, Google's driverless cars, and Argus II's artificial retina. Taking these as examples: if software patents are eliminated, would Argus II be able to benefit from their novel visual prosthesis? Would Google be able to give society a driverless car or Google Glasses?

The patent system is in place to bolster innovation by protecting novel ideas and designs. Software patents have helped corporations like Apple, Microsoft, and Google deliver efficient products to society. Software patents have further helped individuals who invested their time and money into researching and designing code and software by protecting their innovations and enabling the individuals to either market the product themselves, or to sell their patent to a larger corporation with a bigger market presence.

In sum: when effectively written, software patents have proved vital in protecting the time and effort put forth by all innovators, whether they are large corporations or individual researchers.

CLS v. Alice: What did they do and what does it mean?

The Federal Circuit in a decision handed down today invalidated claims of 4 patents, the oldest of which was issued in 1999, under § 101 grounds following Bilski and Mayo stating that the claims cover ineligible subject matter. Alice's claims were to "a computerized trading platform used for conducting financial transactions in which a third party settles obligations between a first and a second party so as to eliminate 'counterparty' or 'settlement' risk." CLS Bank Int'l v. Alice Corp., No. 2011-1301 (Fed. Cir., May 10, 2013) This platform essentially allowed financial institutions to conduct online transactions with each other without having to worry that the other side won't follow through.

The court issued no bright line rule instead stating to use an included "flexible method" to determine subject matter eligibility for future cases. A clearly exasperated Chief Judge Rader effectively filed 3 dissents to this decision. Below is our attempt at breaking down this "flexible method" into something useable.

1) Does the claimed invention fits within one of the four statutory classes set out in § 101?

2) Does the claim raises § 101 abstractness concerns?

3) Is there a judicial exception to subject-matter eligibility?

4) Does the claim pose any risk of preempting an abstract idea? To which the court says "In most cases, the answer plainly will be no." but clearly if you're doing this analysis you don't know.

5) Identify and define whatever fundamental concept appears wrapped up in the claim so that the subsequent analytical steps can proceed on a consistent footing. "Conducting a claim construction analysis before addressing § 101 may be especially helpful in this regard by facilitating a full understanding of what each claim entails."

6) There must be an "inventive concept." "[A]n "inventive concept" under § 101—in contrast to whatever fundamental concept is also represented in the claim—must be 'a product of human ingenuity.' … that human contribution must represent more than a trivial appendix to the underlying abstract idea.

7) Perform a § 101 preemption analysis by evaluating the balance of the claim to determine whether in practical terms it covers the full abstract idea itself. Don't forget to consider additional substantive limitations that narrow, confine, or otherwise tie down the claim. The § 101 preemption analysis centers on the practical, real-world effects of the claim; limitations that represent a human contribution but are merely tangential, token, trivial limitations, vague limitations cast in 'highly general language,' routine, well-understood, conventional, bare field-of-use limitations, or limitations that in practice fail to narrow the claim relative to the fundamental principle therein, cannot confer patent eligibility where the claim as written still effectively preempts all uses of a fundamental concept within the stated field.

The following is the Court's example of a § 101 preemption analysis: "For example, the 'administering' and 'determining' steps in Mayo might have appeared to be concrete limitations representing true human contributions to the claimed methods; it is difficult to see how giving a particular man-made drug to a patient or drawing and testing blood could be considered purely abstract or preordained. Yet the Court held that those steps failed to render the claims patent eligible because, as a practical matter, they were necessary to every practical use of what it found to be a natural law and therefore were not truly limiting."

Are you as exasperated as Judge Rader?

Stopping the Trolls in their Tracks

Big tech companies like Google, Blackberry, Red Hat and EarthLink are joining forces to combat patent trolls or, “Patent Assertion Entities” (PAEs), wherever they may be lurking. This past April, the aforementioned companies submitted joint comments to the Department of Justice and the Federal Trade Commission outlining their frustration and the data surrounding trolls’ disruptive activities. And according to them, “the worst is yet to come.”

The statistics are alarming; over 2/3 of patent litigation is clogged by PAEs and the total cost of PAEs' patent litigation rings in at a cool $80 billion when, "accounting for all costs – direct and indirect." In a recent blog post, Matthew Bye, Google's Senior Counsel, recently outlined the fact that companies are now more apt to outsource their patents to PAEs. This practice, commonly known as, "patent privateering" increases the likelihood they will pursue patent litigation against their competitors. Bye argued that this new normal in the patent world disturbs the precious, "patent peace" and is fundamentally inconsistent with the objectives of the patent system. One of the crucial aspects of this nefarious IP practice is that trolls can sue at will because, in many scenarios they cannot be countersued (since they don't make anything).

We in the IP community will continue to await a response from Congress and the antitrust agencies. After President Obama's recent comments stating that PAEs "hijack" and "extort" the hard work of others, we hope it is only a matter of time until the U.S. Government takes a pragmatic approach to eradicate PAE practices and restore the patent peace.

First Covered Business Method review hearing held by PTAB

On April 17, 2013, the USPTO’s Patent Trial and Appeal Board (PTAB) held the first ever covered business method (CBM) review trial hearing. CBM reviews are a new transitional proceeding created by the America Invents Act (AIA) and are regarded by statute as a post-grant review. CBM reviews became available on September 16th, 2012, and are available to parties that have been sued for infringement of a CBM patent as a means to challenge the patent’s validity.

SAP filed its petition for a CBM review of Versata’s U.S. Patent No. 6,553,350 on the first day it was made available. The patent relates to a system that organizes various pricing tables and price adjustment tables and various products and purchasing organizations based on "who" (i.e. which purchasing organization) is purchasing "what" (i.e. which product). The system and method organizes various purchasing organizations and products into hierarchical tables. These hierarchical tables are called organizational groups and product groups. Various price adjustments may be specified for each level of the organizational groups and product groups hierarchies. Back in May of 2011, Versata secured a $391 million dollar verdict in the Eastern District Court of Texas against SAP for infringement of the ‘350 patent. The verdict is currently on appeal to the Court of Appeals for the Federal Circuit (CAFC).

Just to be eligible for CBM review the petitioner must establish: 1) the patent claims involve “the practice, administration, or management of a ļ¬nancial product or service,” and (2) the patent is directed to a “technological invention.” Previously in the proceedings, the PTAB panel of Administrative Patent Judges, Sally C. Medley, Michael P. Tierney, and Rama G. Elluru, construed these perquisites broadly and held that the challenged claims of the ‘350 patent did constitute CBMs. By granting SAP’s petition and initiating CBM review, the PTAB panel has indicated the statutory threshold for review, which requires the petitioner to demonstrate that it is more likely than not that the claims of the patent are unpatentable, has been met.

If Versata had not yet taken the initiation of the CBM review as a serious signal of their ‘350 patent’s impending invalidity, the line of questioning posed by the PTAB panel in today’s hearing should definitely put to rest any lingering sense of hope of validity. Today’s trial hearing certainly reinforces the notion that any party that has been sued for infringement of a patent that might be characterized as relating to a covered business method may be well advised to consider seeking CBM review of the patent claims asserted against them. Stay tuned, in future posts we will delve into the specific issues faced by Versata in defending the ‘350 patent.

Patents in America: from Metropolitan Concentrate

A recent report published by the Brookings Institution reveals that America's innovators are highly confined to only a few metropolitan areas- 20 to be exact. The report cites some obvious contenders like high-tech hot spots in the California corridor of Silicon Valley and San Francisco, along with lesser known urban locations with large universities such as Boulder, Colorado and Rochester, Minnesota. Unsurprisingly, the largest subcategories of patents include communications, biotechnology and computer hardware.

In greater detail, Brookings' report serves as one of the first projects to track patenting trends on a regional level starting in 1980 through 2012. The report tries to answer questions like: "Why are some areas of the US more inventive than others?" and "How does patent traffic serve as an indicator of the economic health of the nation?" Additionally, the report reveals important trends and facts like:

  • The rate of patenting in the US has been growing in recent history
  • 2/3 of patents in the US are produced by people residing in roughly 20 metro areas
  • The ecosystem most conducive to patent creation in metro areas is one with a STEM oriented workforce and research-centered universities.

While the USPTO's new satellite offices in places like Denver, Dallas-Fort Worth, Detroit and Silicon Valley mirror the report's findings, post grant patent procedures including patent reexamination, derivation proceedings and the latest patentability trials under AIA, will exclusively remain at the Alexandria, VA headquarters.

The graphics below demonstrate key features of the report which track patents granted per capita beginning in 1790 as well as the relationship between geographic locations and their patent clout.

History of patented U.S. inventions per capita

Total granted patents and patenting rate by metropolitan area

Brookings offers an informative analysis of innovation in the US and its corresponding geographic trends over time. While its conclusions may seem obvious to some: "patenting is associated with higher metropolitan area productivity," and "patents cause growth," the intense debate concerning whether or not innovation is waning in America continues. Peter Thiel, founder of PayPal and initial investor in Facebook, described America's ability to innovate as, "somewhere between dire straits and dead," an idea further explored in a recent article in The Economist titled, "Has the ideas machine broken down?" Thiel's sentiment is mirrored by many of his peers who fantasized of ground breaking innovations that would combat some of humanity's greatest challenges like poverty and disease, rather than apps for personalized restaurant picks and digital chirps of 140 characters or less. It was George Mason University economist Tyler Cowen, author of "The Great Stagnation" who wrote in the first lines of his book that, "America is in disarray and our economy is failing us."

Perhaps speculation of America's ability to continue to innovate may actually be an issue of time. Forbes suggests that the time between investments and innovation in regards to IT and communications, lasts anywhere from 5 to 15 years. This may especially hold true for industries such as energy and security, where results from "big data" have only begun to make tangible inroads.

Regardless of economic sector, we consider intellectual property to be one of the most vibrant expressions of human ingenuity and creativity and a reliable benchmark by which to measure mankind's ability to continue to perfect the world around us.

(Image credits: Brookings Institution)

The Proof is in the...Patent?

On October 5, 2012, the Supreme Court decided to hear a case centered on the interpretation of intellectual property rights. That case, Bowman v. Monsanto, is set to begin with oral arguments commencing on February 19, 2013, here in Washington. The dispute occurs between Vernon Hugh Bowman, an Indiana soybean farmer, and Monsanto, the world's largest seed company whose "cash crops" include genetically modified corn, cotton and soybeans.

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Some of the central questions presented in the case concern whether the first-sale doctrine permits the buyer of patented material to make, use and sell an unlimited number of new copies of the patented invention that have never been sold. In addition, how patent law is applied to the biological offspring of patented plants?

Plant patents, according to the  USPTO , must be reproduced asexually and are valid for 20 years from the application's filing date:

Plant patents are issued for a new and distinct, invented or discovered asexually reproduced plant including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state, it permits its owner to exclude others from making, using, or selling the plant for a period of up to twenty years from the date of patent application filing.

Monsanto, a passionate patent protector, argues that Bowman infringed on its patents when he saved the "second generation" of Monsanto's patented, genetically modified seeds, he had previously purchased and replanted  without paying proper "technology fees". Bowman is appealing a 2011 decision by the U.S. Federal Circuit Court of Appeals to uphold a damages award totaling approximately $85,000 for Monsanto.

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As reported by NPR, the Judge that first heard the case in Indiana, the Honorable Richard Young, highlighted the need for a discussion of policy in regards to the patentability of genetically modified crops; "Monsanto's domination of the soybean seed market," he wrote, means that all the cheap "commodity" soybeans that farmers might want to use for seed are now laden by patents.

According to the American Soybean Association, "soybeans were planted on 75 million acres in 2011, producing 3.056 billion bushels of soybeans. The average price paid to farmers was $11.70 per bushel. The total 2011 crop value exceeded $35.7 billion."

It remains to be seen which of the parties, akin to David and Goliath, will emerge victorious; however, it will surely prove a landmark case in patent litigation, whose decision will have an impact on the IP community in the United States and beyond.  

The case is Bowman v. Monsanto Co et al, No. 11-796 a.

A Call for Comments: The Developing Dialogue on Software Patents

On January 3, 2013, via the Federal Register, the USPTO published a notice calling for comments and collaboration from software community members in order to facilitate and improve the system of software related patents. The notice outlines key aspects where software patents could potentially be improved and proposed a series of bullet points which will help steer the scheduled "Software Partnership" discussion that is to take place in New York and San Francisco in February 2013.

In the first point, "Establishing Clear Boundaries for Claims That Use Functional Language," it appears the UPSTO hopes to discuss means-plus-function (mpf) claims and their range in relation to software patents. Means-plus-function claims, which differ from typical patent claims, depending on the interpretation, can encompass a wider presentation of inventive features. It is possible that the USPTO hopes to narrow the scope of future software patents by giving applicants less room to assert a multitude of means-plus-function claims.

Should There be a Patent Small Claims Court?

The USPTO has published a request in the Federal Register requesting comments on a patent small claims proceeding. The USPTO is seeking comments both on whether a need exists for such a proceeding and on which characteristics the proceeding would have, such as venue, subject matter jurisdiction, procedure, and available remedies.

 

One of the barriers to enforcing intellectual property is the enormous cost of patent litigation, a barrier that affects smaller entities substantially more than large corporations. This is especially true when the remedy sought is relatively small and comparable to (or less than) the costs to enforce patent rights. This problem and the accompanying proposed solution are not new. Over 20 years ago, at a conference at the Franklin Pierce Law Center, the idea of a patent small claims court for streamlining the patent litigation process was examined. Soon thereafter, both AIPLA and the ABA's IP section adopted measures to support a patent small claims court. More recently, in 2012, the USPTO and the Copyright Office co-sponsored a discussion at the George Washington Law Center to discuss a possible small claims proceeding for patents and copyrights. Now, the USPTO is seeking comments from the public.

 

One issue which will surely be raised is how to integrate this idea with the new AIA proceedings. The new inter partes review and forthcoming post grant review proceedings are both new tools in the field of patent litigation, and it remains to be seen how they will affect litigations in the long-term. A small claims proceeding would create an additional option that smaller entities can choose.

 

The USPTO's request for comments states no particular goal or driving force behind the idea of establishing small claims proceedings, but asks for any and all comments that may be relevant. The posting can be found at 77 Fed. Reg. 74830.

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