Virginia IP Law : Virginia Intellectual Property Lawyer & Attorney : Troutman Sanders Law Firm : Technology & Patent Litigation

On January 29, 2010, Judge Ellis issued a comprehensive, 49-page opinion (available here) on the parties’ motions for summary judgment in Netscape Communs. Corp. v. Valueclick, Inc., et al., Civil Action No. 1:09cv225 (E.D. Virginia). Plaintiff Netscape claims that the Defendants willfully infringed U.S. Patent No. 5,774,670 (the ‘670 Patent), known as the “Internet cookie patent.” After several months of discovery, the parties filed for summary judgment on twelve separate issues. Specifically, the parties filed cross-motions on:

(1) invalidity based on the on-sale bar of 35 U.S.C. § 102(b); and

(2) whether plaintiff waived its right to enforce the ‘670 patent.  

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In view of the Federal Circuit's decision in Wyeth v. Kappos, Case No. 2009-1120 (Jan. 7, 2010), the U.S. Patent and Trademark Office ("PTO") has implemented an interim procedure for patentees to request a recalculation of a patent term adjustment under 35 U.S.C. § 154.  In Wyeth, the Federal Circuit held that "overlap," for the purposes of § 154(B)(2)(A), does not occur unless the delay attributable to the ground(s) specified in § 154(B)(1)(A) ("A delay") occurs at the same time as the delay attributable to the grounds specified in § 154(B)(1)(B) ("B delay").  The A delay grounds relate to the PTO's delay in meeting examination deadlines, and the B delay begins when the PTO fails to issue a patent within 3 years of the actual filing date of the patent application.  Thus, according to Wyeth, the potential for overlapping A delay and B delay can only begin after 3 years from the actual filing date.

In view of Wyeth, the PTO is modifying the computer program it uses to calculate patent term adjustments and such modification should be complete by March 2, 2010.  In the meantime, patentees can request (without a fee) a patent term adjustment recalculation using a form issued by the PTO entitled, Request for Recalculation of Patent Term Adjustment in View of Wyeth.  According to the PTO's interim procedure, a patentee may request a patent term adjustment if (1) the patent issued prior to March 2, 2010, (2) the sole basis for requesting reconsideration of the patent term adjustment is based on Wyeth, and (3) the request is filed within 180 days of the day the patent was granted.  On or after March 2, 2010, a patentee who believes the patent term adjustment calculation for his/her patent is incorrect must file a request for reconsideration under 37 C.F.R. § 1.795(d) that complies with the requirements of 37 C.F.R. 1.705(b)(1) and (b)(2) within two months of the date the patent issued.

For more information, please click here.

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On Friday, the Board of Patent Appeals and Interferences rejected yet another of NTP’s patents, signaling further trouble for NTP’s pending patent lawsuits. 

Those who keep tabs on Virginia IP litigation know NTP as an active patent litigant who brought a high-profile patent infringement case against Research in Motion (RIM), makers of the popular Blackberry PDAs, in the United States District Court for the Eastern District of Virginia (case number 01-cv-00767). 

During the pendency of the litigation, the U.S. PTO began reexamination of five NTP patents, all of which relate to e-mail for mobile devices and all of which were at issue in the RIM suit. (Reexamination is a process where a person can have a patent reexamined by a patent examiner to verify a patent’s validity. To have a patent reexamined, a party must submit prior art that raises a “substantial new question of patentability.” See 35 U.S.C §§ 303 & 304.) 

RIM sought a stay in the litigation two months after the jury verdict in NTP’s favor, but reexamination came too late for RIM. Chief Judge James R. Spencer entered final judgment and ordered a permanent injunction, although he did stay the injunction pending appeal. See Final Order (entered August 5, 2003), available at 2003 U.S. Dist. LEXIS 26837. After a remand on RIM’s appeal, and with the threat of an injunction separating millions from their “Crackberrys,” NTP scored a $612.5 million settlement from RIM in March 2006.

Subsequently, NTP sued Palm, Inc. and AT&T Mobility LLC for patent infringement. Those cases are pending in the Eastern District (case numbers 06-cv-00836 and 07-cv-00550, respectively) but were stayed while reexamination proceedings were pending.

On November 10, the Board upheld the rejection of three of NTP’s patents, and Friday’s announcement spelled doom for a fourth. One patent remains before the Board on appeal. According to a Law360 article, NTP’s attorneys promise an appeal to the Federal Circuit.

Friday’s announcement reinforces that reexamination can be a decisive second-front in a patent litigation war. As the NTP litigation shows, however, the timing of reexamination can make all the difference.

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Yesterday the Supreme Court of the United States heard oral arguments in Bilski v. Kappos (SCotUS case no. 08-964, on appeal from In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)).

The Supreme Court’s website has the oral argument transcript. The Washington Post report shows a recognition of the high stakes and illustrations of skepticism in the justices’ hypotheticals. The New York Times also describes discomfort with the patent at issue and notes the unusual level of attention the case has received, with one GW professor labeling it “the case of the century for patent law.”

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This post continues a roundup of recent Eastern District of Virginia decisions in IP cases, covering a patent summary judgment opinion and a Markman opinion.

In Rutherford Controls Int’l Corp. v. Alarm Controls Corp., Civil Action No. 3:08-cv-369, 2009 U.S. Dist. LEXIS 98762 (E.D. Va. Oct. 23, 2009), District Judge Henry E. Hudson issued an opinion rendering a decision on several summary judgment motions pending before the Court in a patent infringement action consisting of several consolidated cases. Rutherford filed a complaint for infringement against defendants Vanguard Security Engineering Corporation Ltd. and Harco Enterprise, and Vanguard and Harco filed counterclaims against Rutherford seeking declaratory judgment.

In a parallel action, Rutherford filed suit against Security Door Controls, Inc. seeking both damages for infringement and declaratory judgment. Security Door filed a counterclaim seeking declaratory judgment and damages for infringement. At issue were three patents regarding electronic door locking and unlocking mechanisms, often used to control access to buildings or closed areas. Two of the patent belonged to Rutherford and one was assigned to Security Door.

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This blog previously noted the upcoming 21st Annual IP Fall Weekend Seminar, being held by the Virginia State Bar's Intellectual Property Section on October 2 and 3, 2009 at the Omni Hotel in Richmond.

The Honorable David Kappos, Under Secretary of Commerce and the new Director of the United States Patent and Trademark Office, has been added to the schedule recently. He will address the seminar late Saturday morning on his plans for the PTO, and his presentation will include a question and answer session.

See our earlier post for registration links.

David Kappos

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The Virginia State Bar Intellectual Property Law Section will be holding its Twenty-First Annual Fall Weekend CLE on October 2-3, 2009, at the Omni Hotel in Downtown Richmond, Virginia. It will be begin on Friday, October 2, 2009 at 1:30 pm and finish around 1:00 pm on Saturday, October 3, 2009.

The featured topics and speakers include:

• Use of Surveys in Trademark Disputes, presented by Hal Poret, Guideline Market Research

• Patent Reform Status Report, presented by Hon. Q. Todd Dickinson, Executive Director, American Intellectual Property Law Association

• Fraud Standards at the Trademark Office, presented by Linda McLeod, Finnegan Henderson Farabow Garrett & Dunner LLP

• Hot Topics in Patent Law, presented by Stephen Kunin, Oblon Spivak McClelland Maier & Neustadt

• Electronic Copyright Applications, presented by John Jennison, Jennison & Schultz

• Ethics in IP, presented by Deborah Jeffrey, Zuckerman Spaeder

• Bankruptcy and Intellectual Property, presented by Matthew Cheney and Karen Hermann, Crowell & Moring

• Google Adwords/Online Advertising, presented by Brad Newberg, Holland & Knight LLP

For a PDF brochure and full details, please visit: http://www.vsb.org/sections/ip/2009-Fall-CLE.pdf

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          In May 2009, the American Civil Liberties Union and the Public Patent Foundation filed a lawsuit arguing to invalidate a group of patents having claims directed to human genes and the generic testing of human genes to determine their risk of breast and ovarian cancer. The gene patents are owned or licensed by Myriad Genetics.  The inventors of the patents recognized that mutations along the BRCA1 and BRCA2 gene sequences are indicators of an increased risk of breast and ovarian cancer in women. (Details of the lawsuit are available here on the ACLU website.) At least in part, the patents claim methods of determining the risk of these cancers by comparing the BRCA1 and BRCA2 gene sequences of a patient with the normal sequence of the genes. The ACLU and AMA argue that such claims should be found to be invalid and unpatentable as unconstitutional and for reasons of public policy.

          The ACLU filed the lawsuit in U.S. District Court for the Southern District of New York against the U.S. Patent and Trademark Office (PTO) and Myriad Genetics and the University of Utah Research Foundation on behalf of breast cancer and women’s health groups, individual women and scientific associations.

          This week, the American Medical Association along with other medical and genetic organizations have filed a “Brief for Amici Curiae” backing the ACLU position. The brief (found here)argues that the Myriad claims are unpatentable "laws of nature," do not claim patentable subject matter based upon the machine or transformation test as interpreted by the Court of Appeals of the Federal Circuit in Bilski, and provide compelling public policy arguments against the patentability of these claims and similar medical and biotechnology method claims.

          This is an important case to the biotech industry and may change how patent applications are prepared for gene and diagnostic method inventions. 

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            Preparing a strong patent application is a complex and demanding task. The inventor interview is an important part of the application drafting process. Early and effective communication between the inventor and their patent attorney often results in a more detailed description of the invention, stronger claims, and lower fees. 

Two friends recently started a patent boutique, Abbott & Costello LLC. I overheard this discussion in their offices. (With apologies to Bud Abbott and Lou Costello. Here is a video of their classic vaudeville sketch “Who’s on First?”)

Costello: Well, Abbott, we finally got our first patent client. Are you ready to interview the inventor?

Abbott: I certainly am.

Costello: We want to do a great job on this application. You'll need to know the names of the inventors, everything about the invention, the prior art, and other information.

Abbott: I know it all, I’m ready. OK, well, let's see, Who's the inventor, What's the invention, I Don't Know, the joint inventor...

Costello: That's what I want to find out.

Abbott: Well that’s what I’m telling you … Who's the inventor, What's the invention, I Don't Know, the joint inventor

Costello: Did you prepare for this interview?

Abbott: Yes.

Costello: And you know the inventors' names?

Abbott: Well I should.

Costello: Well then, who's the inventor?

Abbott: Yes.

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As you may know, the United States Supreme Court will help clarify what is patent eligible subject matter in the case Bilski v. Kappos.  The holding in Bilski will tell us how determine whether business method/software/medical process inventions are patentable and whether many issued patents with such claims are still valid.  But before the Supreme Court issues its opinion (Oral argument is not scheduled until November 9, 2009), the examiners of the United States Patent and Trademark Office (USPTO) must continue to make decisions on patentability every day.  The examiners just can't wait for the Supreme Court to ponder, mull and then opine on the issue.

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The Journal Sentinel Online in Milwaukee, Wisconsin published an interesting series of articles on the present state of the United States Patent and Trademark Office. 

The articles discuss the present backlog of pending patent applications and the potential effect on present economic recovery, the rise in rejections of patent applications in the name of quality, and employee turnover at the USPTO.

Patent backlog clogs recovery.

Patent rejections soar as pressure on agency rises.

Turnover troubles agency.

David Kappos to the rescue?

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The new Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos was sworn in on August 13, 2009.

Click here for a description of Kappo's background provided by the USPTO on their web site.

Click here for Kappos' remarks at the swearing in ceremony.

And PatentlyO.com printed a recent email of Kappos to patent examiners which states that "patent quality does not equal rejection":

His positive statements should be encouraging to all inventors and patent applicants.  Stay tuned for more change.

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In Abbott Labs. v. Sandoz, Ins. (“Abbott”), an en banc Court of Appeals for the Federal Circuit has clarified its own previously issued inconsistent holdings on determining infringement of product-by-process claims. 

Historically, product-by-process claims have been limited to claims in chemical patents and were originally used to claim products that could not be analyzed to determine their precise chemical composition. The inventor knows how he made it and what it does, but not exactly what it is.  If a chemical product cannot be precisely defined except by the process that produces it, a claim to such a product defined by its method of preparation is proper. Manual of Patent Examining Procedure § 706.03(e). The so-called "product-by-process" format utilizes process limitations to define the composition. Despite the process limitations, the claim has always been considered a “product” or “composition of matter” claim by the USPTO and not a “process” claim. The USPTO defines a product-by-process claim as a product claim in which the product is defined, in whole or in part, by the process used to make the product. 

The applicability of the product-by-process claim with modern laboratory analytics is limited, but still may be appropriate in some cases.  However, patent practitioners still often include a product-by-process claim in a case with other structurally defined product claims. This use of the product-by-process claims is outside the original intent of the claim format.  There should be an either/or situation, either you can define the product structurally or you can only define it by the process used to make it, not both. However, practitioners feel adding a product-by-process claim to in addition to the structurally defined claim may broaden patent protection and more easily capture infringers.

In Abbott, the CAFC clarified the test for infringement of product-by-process claims. There was uncertainty due to previous CAFC holdings; in Atlantic Thermoplastics, the CAFC held that to infringe a product-by-process claim the accused infringer must have performed all the process steps defined in the claim, however, in Scripps the CAFC stated that the process steps were not important in determining infringement, the court should only consider whether the accused product infringed the claim regardless of the process steps performed to prepare the product. Reasonable minds can disagree, but when the reasonable minds are the decision makers, uncertainty results. 

The en banc panel in Abbott held that to infringe a product-by-process claim, you must infringe the process steps and the product is irrelevant to the infringement analysis. Therefore, while determining infringement is based upon the process limitations, the USPTO continues to determine patentability of product-by-process claims based upon the product.

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In 2008, the Court of Appeals for the Federal Circuit (“CAFC”) issued an opinion in In re Bilski establishing the rule for determining whether a new process or improvement to a process is eligible for patent protection. Generally, processes are patentable subject matter in the United States. U.S. Patent Law provides that “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

The CAFC held Mr. Bilski’s process, a method of managing the risk for commodity seller, was ineligible for patent protection because it did not meet their “machine or transformation” test. In stating the test, the CAFC held that a “process is surely patentable subject matter if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” This test does not establish the clearly resolve the question of whether business method or software inventions are patentable subject matter. It is surely not a bright line test. The CAFC opinion leaves open that other processes or methods may be eligible for patent protection, but if meets the “machine or transformation” test is surely patentable subject matter. The CAFC also stated that the old test stating that the method must produce a “useful, concrete and tangible result” test from State Street is not to be relied upon by patent owners.

This week, the justices of the U.S. Supreme Court granted Bilski’s petition for writ of certiorari and will review the decision of the CAFC. Hopefully, the Supreme Court will be able to review the precedent and provide clarity to the issue. Many issued patents include claims directed to business methods, biotechnology, and software may not meet this “machine or transformation” test. The validity of these patents and patentability of many pending patent applications is at stake in this case. We anticipate many amicus briefs zealously arguing both sides of this contentious issue.

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What does it mean to you?

A few years ago, every patent attorney was on pins and needles awaiting the decision from the Court of Appeals for the Federal Circuit (“CAFC”) in AWH v. Phillips describing the method  courts should use to determine the scope of a claim of a patent. Controversy had been dividing the judges of the CAFC, blogs blossomed discussing the issue, water cooler arguments were frequent, more paper was consumed by amicus briefs than all the stimulus bills, attorneys argued for the proper balance of intrinsic and extrinsic evidence, patent attorneys with engineering degrees happily drew complex flow charts describing claim construction, those were days. 

Four years later, we all know how to properly construe a claim according to the CAFC. We don’t talk about it anymore; patentable subject matter, obviousness, licensing, and the authority of the USPTO occupy our time and energy. 

We were taught to understand (or construe) a claim, initially -

Intrinsic evidence is used:

• The language of the claims themselves is construed directly; and

• This construction may be modified based upon:

  • The description of the invention and the definition of claim terms in the specification; and statements and arguments in the prosecution history of the patent.

Then, if necessary, extrinsic evidence may be used:

• Unbiased extrinsic evidence such as dictionaries; and

• Potentially biased extrinsic evidence such as expert testimony may be used last to complete our understanding. 

Of course, this method still allows for significant creativity, argument and other fun in construing the claims for litigation and opinion work. 

One significant part of the analysis is often overlooked. Though claim construction is a matter of law, the goal of claims construction is to determine the meaning of a claim as understood by a person of ordinary skill in the art at the time of filing. 

This cannot be emphasized enough; claims are to be interpreted as understood by one skilled in the art. Too often, I encounter inventors or patent owners that do not focus on an understanding of the claims – they leave it to their attorneys. Attorneys all too often accept this responsibility. A proper claim construction determines the value and the validity of a patent. Though understanding a claim can be difficult, patent holders and attorneys should carefully review all the claims together to confirm that come to a proper understanding of how the claims may be understood by one skilled in the art. It is important that clients and attorneys have a meeting of the minds over claim meanings or the claims should be amended.

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A recent ruling in a Federal District Court in the Eastern District of Virginia could make patent term extensions available to many more patented pharmaceuticals. 

First a little background: Generally, a patent issuing from the USPTO is given an enforceable term that begins on issuance of the patent and ends twenty years from the filing date of the patent. In some cases, however, the United States Patent and Trademark Office (“USPTO”) may grant an extension to the normal patent term ("Patent Term Extensions") for patents claiming pharmaceuticals.  The Patent Terms Extensions may be granted to compensate for delays occurring during the approval process of the Food and Drug Administration. For successful pharmaceuticals, each day of patent term is extremely valuable and this approval process may consume a significant portion of the valuable patent term. To compensate for government delay, the patent term extension statute, 35 U.S.C. § 156(a)(5)(A), allows the patent owner to recapture some of the economic benefit or their patent term lost during the approval process. A patent term may be extended for a patent claiming a pharmaceutical if permission for the commercial marketing or use of the “product” is the first permitted commercial marketing or use of the “product” under the provision of law causing the delay. In PhotoCure, the ED VA had to consider what the term "product" means in the statute.

PhotoCure ASA patented (U.S. Patent No. 6,037,267) and applied for FDA approval of methyl aminolevulinate hydrochloride (“MAL hydrochloride”) for the treatment of actinic keratosis, a pre-cancerous skin lesion. After issuance, PhotoCure applied for a patent term extension in the USPTO to compensate for term "lost" during its FDA approval process, but the patent term extension was denied. In reaching their decision, the USPTO interpreted the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean an “active moiety.” An “active moiety” is considered by the USPTO to be a portion of a compound that is responsible for its pharmacological activity. The USPTO cited the commercial marketing for a different compound with the same “active moiety,” aminolevulinic acid ("ALA"), as the first permitted commercial marketing of the "product," MAL hydrochloride. The chemical structures or ALA and MAL hydrochloride are below:

                                 ALA                                                         MAL hydrochloride

Though the compounds are not identical they are similar, the USPTO decided that MAL hydrochloride has the same “active moiety” as previously marketed ALA and is, therefore, not elgible for a patent term extension.

PhotoCure sued the USPTO in the Eastern District of Virginia. In its decision, the ED VA boldly struck down the USPTO interpretation of “product” as meaning merely an “active moiety. The ED VA held that sharing an active moiety should not be the test for whether “product” has already be permitted to be commercially marketed. The court held that by using the term "product" the statute requires a comparison of the entire “active ingredient." The court held that the compounds were structurally different and, therefore, different “products” under the law. The court further stated that the USPTO’s decision to deny a PTE based merely on an "active moiety" was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law” under the Administrative Procedure Act. It is expected that the USPTO will appeal the case to the Federal Circuit to provide clarity in this important issue to the patent bar and the pharmaceutical industry.

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OK, so patent laws are complex and the courts have decided to keep changing the rules.  We have deal with it.  However, I strongly believe and will argue in this blog that strong patent laws accelerate innovation and the limited monopoly provided in exchange for disclosing and enabling an invention can be arranged as a fair exchange.  An ideal patent is balanced such that only “inventions” are found to be patentable and the claim scope granted in the patent is commensurate with the invention.  In such a system, the public would benefit equally with the inventor from disclosure and use of an invention.  However, implementing a system of laws that defines what is useful, new, nonobvious, clear, and enabled and thus eligible for a “right to exclude other” from performing has proven complex.

The complexity, exacerbated by frequent changes in the law by the Supreme Court and the Court of Appeals for the Federal Circuit, has created a grey area between technology that may protected by enforceable patented technology and technology that is in the public domain.  For example, the patent office due to budget problems and frequent examiner turn over has issued patents with questionable validity.  Further, several court decisions have moved enforceable patents from enforceable intellectual property to the public domain.  These patents are left “squatting on the public domain.”

These squatters are costly to business and a drag on the innovation.  Businesses must decide how to deal with these squatters.  Here are the options:
 

• Design around Squatting Patent;
• Invalidate the Squatting Patent:
  • Reexamination – ex parte reexamination or inter partes reexamination; or
  • File declaratory judgment suit if threatened;
• License the Squatting Patent; or
• Produce the product and risk “infringement suit.”

There certainly is value in owning even unenforceable patents.  In fact, every patent holder should understand whether they are merely squatting in the public domain to understand the value of their own patents.  More later . . .

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The purpose of the patent system is “[t]o promote the progress of science and useful arts. . .” Does it? I believe it does, though there are too many factors that go into “promoting the progress” to provide an adequate answer. However, it cannot be argued that the most technically developed countries have strong patent systems and one of the essential steps a developing nation must make to continue economic progress is to implement strong patent laws. In these developing countries, it can be argued that a weak patent system can fuel early and fast economic growth but a stronger system of patent laws is required to maintain and sustain a strong economy.

There has been much recent discussion concerning whether the patent system stimulates or stifles innovation. Members of the software industry have consistently argued that the present patent system undermines that purpose. This is not a new argument, President Lincoln, a patent holder and strong advocate of the patent system, declared that "The patent system added the fuel of interest to the fire of genius." The United States has always had a strong patent system and has a reputation of encouraging innovation.

The basic design of the patent system is for the government to grant a limited monopoly, exclusive right, to an inventor is exchange for disclosure to the public of the invention. The patent system should be properly designed and balances such that each party, the inventor and the public, is properly rewarded on a substantially equal basis. The Courts and the United States Patent and Trademark Office apparently believe that the balance ahs shifted too far toward that inventor and have begun to shift the balance back to the public. Recent cases, KSR (making it harder to get a patent by making it easier for the USPTO to reject a claim), In re Bilski (limiting the subject matter that is available for patenting), In re Seagate Technology (making it harder to obtain injunctions against infringers, and the USPTO proposed rule changes limiting the ability to file continuation applications.

The proper balance of rewarding the inventor and providing a steady and consistent flow of scientific information to the public is the heart of the patent system. For every disclosed innovation, several uses of the innovation become obvious and free for the public to use, several improvement innovations are developed that allow the first commercial products embodying the innovation to be brought to the market, several uses of the innovation become obvious and free for the public to use, a person with entrepreneurial skill may contact the inventor and they both will reap the rewards of the invention. The patent system should not be analyzed solely on the basis of the one monopoly that has been granted on a patent that you or your company wants to practice but by the systemic economic effects a patent system has on the economy of a nation.

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