IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

The Court also determined that claim 1 recites a mathematic formula and therefore falls under the law of nature exception to patentable subject matter. Chief Judge Davis compared claim 1 to the claims found invalid in Gottschalk v. Benson, which were directed to “converting one form of numerical representation to another,” Gottschalk v. Benson, 409 U.S. 63, 65 (1972). Like the claims in Benson, Chief Judge Davis found that claim 1 recites “a procedure for solving a given type of mathematical problem,” and therefore preempts “the mathematical formula and in practical effect” covers the algorithm itself. Id. at 65, 72.

Further, the Court concluded that although claim 1 “constitutes an improvement on the known method for processing floating-point numbers” disclosed in IEEE Standard 754, the “improvement over the standard is insufficient to validate Claim 1’s otherwise unpatentable subject matter.” Uniloc, Dkt No. 38 at 9. This reasoning buttressed the fact that even when tied to computing, “a patent on Claim 1 would cover vast end uses, impeding the onward march of science.” Id.

While this opinion might likely have minimal precedential influence, it nonetheless serves as a warning against asserting method claims that are not tied to a machine, are non-transformative, or are merely recited steps of a mathematical calculation.

Gibbons will continue to track the status of this case, and will report any further developments as they arise.

Robert E. Rudnick is a Director in the Gibbons Intellectual Property Department.

The language of section 24 states that “[t]he clerk of any United States Court for the district wherein testimony is to be taken for use in any contested case in the Patent and Trademark Office.” 35 U.S.C. § 24. Focusing on “testimony,” the Court considered the history of the Patent Act. Abbott, at 8. In section 1 of the Patent Act of 1861, sections 23 and 24 were a single sentence, specifically enacted to assist the PTO in obtaining “needed testimony.” Id. at 10. In its present form, section 23 allows the Director to establish rules for taking depositions as authorized by law in district court and to take such depositions for use by the PTO. 35 U.S.C. § 23. The panel considered section 24 as clarified by section 23 and construed “contested cases” as limited to include only those in which PTO regulations authorize the parties to take depositions. Id. at 14.

With regard to taking depositions, the panel reviewed PTO regulations and recognized that the regulations discriminate between matters before an examiner and matters before the board with specific mention of deposition powers in the latter and recognizing no such power in the former. Id. at 15-16. Accordingly, the Court held that 35 U.S.C. § 24 only empowers a district court to issue subpoenas for use in a proceeding before the PTO if the PTO’s regulations authorize parties to take depositions for use in that proceeding, i.e. proceedings before the board, including: interferences, derivation proceedings, and the new Board proceedings created by the AIA. Id.

Based on this decision, inter partes re-examination proceedings, held before an examiner, are not “contested cases” within the meaning of section 24, and, therefore subpoenas under section 24 are not available.

However, as suggested by the panel, section 24 subpoenas would be presumptively available in “adjudicative proceeding[s]” of the PTO, including the IPR, post-grant review (“PGR”) proceedings  under the transitional program for covered business method (“CBM”) patents introduced by the America Invents Act (“AIA). Id. at 15. Although a potentially significant tool, its application will no doubt be impacted by the general discovery limitations of PTO adjudicative proceedings relative to district court litigation. We will continue to monitor and report on issues and trends in PTO adjudicative proceedings under the AIA as experience grows with them.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department.

The Patent Public Advisory Counsel noted that the fees were correlated to reducing pendency, and set goals of 10 months to the first Office action by 2016 and 20 months of total pendency by 2017. The Office is forecasting a reduced backlog and inventory of approximately 335,000 patent applications by 2016. Additionally, the new final filing fees appear to be a continued effort on the part of the USPTO to generate sufficient revenues to recover its costs while furthering key policy considerations, namely: “(1) fostering innovation; (2) facilitating effective administration of the patent system; and (3) offering patent prosecution options to applicants.”

The new rules are also ushering in a new class of fees for micro entities. While previously the Patent Office provided fees for large entities and small entities, the AIA added a third category of fees for micro entities. The Act defines a micro entity as: (1) an applicant that would otherwise qualify as a small entity, (2) that has not been a named inventor on 4 previously filed utility application, (3) that has a gross income that is less than 3 times the median household income, and (4) has not assigned the application to an entity with a gross income that is greater than 3 times the median household income. While the previous law provided that small entities shall have their fees reduced by 50%, the AIA reduced micro entity fees by 75%. These rules provide for the first time fees to be paid by applicants that qualify as micro entities.

The current fee schedule, for comparison purposes, is available here.

Christopher H. Strate is an Associate in the Gibbons Intellectual Property Department. Jillian A. Centanni, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

According to the Board’s Trial Order, SAP had demonstrated that it was more likely than not that the claims of the ’350 patent were unpatentable under 35 U.S.C. §§ 101 and 102. The Board also issued a Scheduling Order stating that an oral hearing be conducted by October 1, 2013. Accordingly, the schedule should provide a written decision by the Board in about one year from the January 9, 2013 Trial Order, as mandated by statute.

Gibbons will continue to monitor developments and to provide counsel in this emerging area of patent law practice.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department.

Otsuka Pharm. Co., Ltd. v. Apotex Inc. et al., (citing Otsuka Pharm. Co., Ltd. v. Sandoz, Inc., No. 3:07-cv-1000, 2010 U.S. Dist. LEXIS 132595, at *52-53 (D.N.J. Dec. 15, 2010)). In its decision, the Federal Circuit agreed that the POSA would have considered the only marketed antipsychotic compounds at the time - clozapine and risperidone - as viable lead compounds and not the carbostyril compound developed by Otsuka.

Furthermore, the Federal Circuit concluded that the District Court properly rejected the defendants’ proposed lead compounds. It held that a POSA would not have understood that each of a “laundry list” of carbostyril derivative compounds disclosed in a prior art reference to possess the reported central nervous system controlling effects. Nor would a POSA select a compound that was inferior to other test compounds or shown not to be an acceptable therapeutic candidate.

Charles H. Chevalier is an Associate in the Gibbons Intellectual Property Department. Todd M. Nosher, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

For the roundtable discussions, the planned topics are: improving clarity of claim boundaries that define the scope of patent protection for claims that use functional language; identifying additional topics for future discussion by the Software Partnership; and a forthcoming Request for Comments on Preparation of Patent Applications. An opportunity for oral presentations on the Request for Comments will be provided to attendees physically attending the Silicon Valley and New York City roundtable events.

As IP practitioners are aware, the Software Partnership comes at a time when the Federal Circuit is set to hear en banc arguments on February 8 in CLS Bank Int’l v. Alice Corp. Pty. Ltd., a dispute regarding whether an abstract idea implemented using computer software is patentable.

Gibbons will participate in the roundtable events, and will continue to monitor developments and to provide counsel in this area.

Thomas J. Bean is Counsel to the Gibbons Intellectual Proparty Department. Robert E. Rudnick, a Director in the Gibbons Intellectual Property Department, co-authored this post.

Another proposed correction that generated substantial controversy was a proposal to eliminate 35 U.S.C. § 154(c)(1). For applications filed prior to June 8, 1995, this section provides that the patent term will be determined as the greater of 20 years from the effective U.S. filing date or 17 years from grant. By eliminating the section, the proposed correction removes the option of obtaining a 17 year term from grant or applications filed prior to June 8, 1995 in order to eliminate the possibility of substantially extended terms for so-called “submarine patents.” In amended H.R. 6621, this correction is withdrawn. Representative Smith indicated in a speech to the House of Representatives on December 30, 2012, that the correction would be replaced by a provision requiring the PTO to prepare a report providing “relevant information” about currently pending applications filed prior to June 8, 1995 in order to understand whether any additional actions should be taken.

H.R. 6029 - increasing EEA penalties

Representative Smith introduced H.R. 6029 to Congress on June 27, 2012, as a measure to increase penalties for violations of the Economic Espionage Act of 1996, codified as 18 U.S.C. §§ 1831. As amended by the Senate, H.R. 6029 maintains a maximum prison term penalty for individual offenses at Section 1831(a) at 15 years, but increases the present limit for individual fines from $500,000 to $5,000,000. In addition, amended H.R. 6029 increases the upper limit for corporate offenses of Section 1831(b) from $10,000,000 to the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including “expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided.”

H.R. 6029 follows the Theft of Trade Secrets Clarification Act of 2012 (S. 3642), which became law on December 28, 2012. As we previously reported, the legislation was prompted by a district court decision in United States v. Aleynikov, which overturned a jury verdict finding that the defendant violated 18 U.S.C. § 1832(a) by stealing computer code from his employer. In that decision, the Federal Circuit Court narrowly construed trade secrets as defined in § 1832(a) as “related to or included in a product that is produced for or placed in interstate commerce” to mean an actual product that was either placed in interstate commerce or intended ultimately to be placed in interstate commerce.” Amended S. 3642 revised § 1832(a) to broaden the definition of trade secrets as being “related to a product or service used in or intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof.” With this revision, there is no longer any requirement for the trade secret to be embodied in a commercial product.

Gibbons will continue to monitor developments and to provide counsel regarding H.R. 6621 and H.R. 6029.

Thomas J. Bean is Counsel to the Gibbons Intellectual Property Department. Todd M. Nosher, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

We are also awaiting the launch of the Intellectual Property Exchange International, Inc. (IPXI) - the first exchange focused on IP.

Gibbons will continue to monitor these and other IP law developments. We wish all our readers a Happy New Year!

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department. Jillian A. Centanni, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

The Court agreed with Gilead -- and the above-listed District of Delaware opinions -- that a later-issued, earlier-expiring patent cannot invalidate an earlier-issued, later-expiring patent on the basis of obviousness-type double patenting. The Court reasoned that the ’375 patent cannot serve as a reference patent since it was issued after, and terminates before, the ’483 patent, and therefore does not unlawfully extend Gilead’s right to exclusivity. Accordingly, the Court found that the lifespan of Gilead’s patents was not a result of gamesmanship, but instead resulted from changes to the patent laws.

Todd M. Nosher is an Associate in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

While first to file is the hallmark of the AIA, other newly enacted provisions have ushered considerable transformation to Office practice, including: Inter Partes Review, Post Grant Review, Supplemental Examination, and Third Party Preissuance Submissions, to name other newly enacted provisions . Moreover, during his tenure and in accordance with the AIA, Kappos set up the USPTO’s first-ever satellite office in Detroit and identified other satellite locations in Denver, Dallas, and San Jose. Though Kappos most likely will be remembered for implementation of the AIA, prior to assuming his role as IP chief, Kappos’ top priority was to dramatically reduce the time to patent examination process for newly filed applications.

Under his watch and to address this priority, Kappos significantly increased the number of patent examiners from 6,200 in 2010 to almost 8,000 today. He decreased the backlog of patent applications awaiting first Office Action before the USPTO from 770,000 at the end of 2008 to about 605,000 in 2012. The USPTO, under Kappos’ leadership, has achieved this reduction despite new application totals increasing over five percent (5%) per year during the same period. As further evidence of Kappos’ success in the area, the average time for applications pending a first Office Action decreased from 25.8 months in 2009 to a projected 21.9 months in 2012 and the average total pendency decreased 34.6 months in 2009 to a projected 32.4 months in 2012.

Finally, Kappos has also implemented the track one prioritized examination system and with the European Patent Office jointly launched the Cooperative Patent Classification System (CPC) to bringing harmonization to patent classification and search resulting in increased efficiency.

The Future

As noted above, reducing the patent application was Kappos’ mandate upon entering the USPTO. Yet, as this back log dwindles, what should the USPTO do with all the additional examiners? The obvious choice may be to simply allow attrition to naturally reduce patent examiner ranks. However, increasing examination quality by maintaining the ranks and decreasing examiner counts is a notion that warrants consideration.

Additionally, the USPTO is criticized for issuing too many patents. During fiscal 2012, the Office issued 270,258 patents, an increase of 80,000 since Kappos joined the USPTO in 2009. This criticism is especially true regarding software innovations. Critics complain that patents often do not truly break new ground and choke an overburdened court system with unnecessary lawsuits. It is estimated that patent trolls pursuing weak or invalid software patents cost the economy upwards of $83 billion per year.

In a recent speech before the Center for America Progress and on this topic, Kappos told USPTO critics to “give it a rest already, and give the AIA a chance to work. Give it a chance to even get started. But we’re not done. Not nearly.” Apparently, Director Kappos meant the royal we, as he leaves this and other unfinished USPTO business to his successor.

It is expected that Teresa Stanek Rea, the USPTO’s deputy director, will replace Director Kappos as Acting Director. Before joining the USPTO in 2011, Ms. Rea was a partner in Crowell & Moring LLP’s Washington, D.C. office.

In short, Director Kappos’ impact on the USPTO has been meaningful and positive. He will surely be missed by both the business community and practitioners alike.

Luis J. Diaz is a Director in the Gibbons Intellectual Property Department. John J. Cahill, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

Belkin took its case to the Federal Circuit and argued that once the Director found there was a substantial new question of patentability in view of one reference, then the examiner must review the claims in view of all of the prior art provided to it, including the three other references. In support of its position, Belkin relied on the fact that the Patent Office instructs the examiner in the Code of Federal Regulations (CFR) and Manual of Patent Examination and Procedure (MPEP) to conduct a “thorough investigation of the available prior art” during reexamination and to conduct reexamination “in view of all prior art.” (See 37 CFR §1.104; MPEP §2648.)

The Court, analyzing the statutory provisions for inter-partes reexam (pre-amendment under the America Invents Act) noted that 35 USC §312(a) provides that:

The Director must make a determination “whether a substantial new question of patentability affecting any claim of the patent is raised by the request [under § 311], with or without consideration of other patents or printed publications.” 

The Court also noted that 35 USC §313 provides that:

After the Director has determined that there is a substantial new question of patentability affecting a claim with respect to prior art, an inter partes reexamination is ordered “for resolution of the question.” 35 U.S.C. § 313. The question to be resolved is the substantial new question of patentability determined by the Director.

Based on the statute, the Court first concluded that the examiner could not apply prior art that the Director determined did not raise a substantial new question of patentability. The Court then went on to conclude that inter-partes reexam “may not include other prior art than what constituted the basis of the Director’s determination of a substantial question of patentability.” However, the Court did reserve judgment on whether such a standard would apply if the patent owner amended the claims during reexamination.

As to Belkin’s reliance on the MPEP and the CFR, the Court responded that a “casual reference to ‘all prior art’ in the MPEP or the regulations cannot be interpreted to trump the statutory command. Statutes rank higher than regulations, which rank higher than the MPEP.”

This decision not only affects the scope of inter partes reexam, but may also affect the scope of ex-parte reexam. Like inter-partes reexam, the statue for ex-parte reexam §303 provides that:

The Director will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the [reexamination request or the Director’s own determination].

The statute for ex-parte reexam §304, similar to the inter-partes section, provides that if:

The Director finds that a substantial new question of patentability affecting any claim of a patent is raised, the determination will include an order for reexamination of the patent for resolution of the question.

As a result, per the Federal Circuit’s analysis, it appears that the scope of ex-parte reexamination is also limited to the prior art that the Director determines raises a substantial new question of patentability. This may mean that an examiner may not apply additional prior art submitted during any reexamination proceeding against the claims subject to reexam, whether ex-parte or inter-partes. If an IDS disclosing additional prior art references is submitted to an examiner during reexamination, the examiner may be precluded from considering those references.

This decision may also affect the burden a defendant faces when relying on prior art that the examiner considered during reexamination. If the Director did not identify the prior art as the basis for reexamination, a defendant may argue that the burdens traditionally associated with asserting invalidity based on such prior art cannot apply because the examiner was acting outside the scope of his or her jurisdiction.

Gibbons will continue to monitor developments on this important front.

Christopher H. Strate is an Associate in the Gibbons Intellectual Property Department.

Proposed Rules - “Statements of New Matter” or “New Claim”

Sections 1.55(a)(4) and 1.78(a)(3) of the proposed rules require that if a non-provisional patent application filed on or after March 16, 2013, that claims a priority benefit from a foreign or provisional U.S. patent application filed prior to March 16, 2013, the applicant must provide a statement when applicable upon reasonable belief that the non-provisional application contains at least one claim having a filing date later than March 16, 2013 or subject matter not disclosed in the foreign or provisional U.S. patent application filed prior to March 16, 2013. The rules are intended to assist the USPTO in determining whether to apply pre-March 16, 2012 or post-March 16, 2013 law to determine patentability.

In their letter to the USPTO on October 5, the AIPLA object to the proposed rules as an “unfair shifting of a burden [to the applicant] that properly belongs on the [USPTO].” They suggest the following alternative:

[The] determination of which version of the law applies is most pertinent in the case where intervening prior art is discovered during the transitional period. … In these instances, factual inquiry can best be made [by the USPTO] through the judicious application of 35 U.S.C §112, first paragraph, enablement, and written description analyses as currently used to establish if new matter is present. Where appropriate, a request for information under 37 C.F.R. §105 could be used if the [USPTO] requires additional information after its initial review. In instances where an applicant’s actions necessitate a change from the applicability of pre-AIA to AIA law (or vice-versa), it may be appropriate to make a second action final.

In their letter to the USPTO on October 5, the IPO finds no objection with regard to a required statement relating to claims, but does object to a statement relating to new subject matter:

IPO submits that the proposed rules and guidelines fail to provide a meaningful definition of when “subject matter” would be considered “new.” For example, is subject matter “new” merely because it is not described verbatim in the earlier application? ….

IPO submits that if the applicant is not claiming such “new” subject matter, such a statement does nothing more than put the PTO on notice that the applicant may later amend the claims to incorporate such subject matter. Thus, the benefits to the PTO of requiring identification of applications that have subject matter not disclosed in an earlier application are minimal compared to the burden being imposed on applicants and the risk that applicants may later be accused of inequitable conduct if any differences were not identified.

Proposed Examination Guidelines - Prior Art Exceptions for Grace Period

Under the proposed guidelines, inventors may remove prior art from consideration during examination under a “same subject matter” test:

[The] exception in 35 U.S.C. 102(b)(1)(B) requires that the subject matter in the prior disclosure being relied upon under 35 U.S.C. 102(a) be the same “subject matter” as the subject matter publicly disclosed by the inventor before such prior art disclosure for the exception in 35 U.S.C. 102(b)(1)(B) to apply. Even if the only differences between the subject matter in the prior art disclosure that is relied upon under 35 U.S.C. 102(a) and the subject matter publicly disclosed by the inventor before such prior art disclosure are mere insubstantial changes, or only trivial or obvious variations, the exception under 35 U.S.C. 102(b)(1)(B) does not apply.

Guidelines, Federal Register Vol. 77 at 43767, (July 26, 2012) (emphasis added).

In their letters of October 5, the IPO and AIPLA both suggest that these guidelines are inconsistent with Congressional intent and ineffectual. For example, the IPO makes the following observations:

[The guidelines impose] a verbatim requirement, and [are] directly contrary to congressional intent. Such an interpretation could have far-reaching and unintended consequences. It would appear to allow third parties to usurp a public disclosure by making a minor or trivial change, publishing it immediately, and then precluding the original publisher from obtaining a patent on the disclosed subject matter. This would decimate the grace period contemplated by the AIA.

As a simple solution, the IPO proposes that the guidelines provide that the exception apply if the differences are “mere insubstantial changes, or only trivial or obvious variations.” The AIPLA proposes another alternative:

AIPLA suggests that the Office resolve these issues by interpreting the phrase “subject matter” to mean that material from the third-party disclosure which the Office has identified to justify the rejection. Currently one need only show that the applicant had prior possession of at least as much as is disclosed in the prior art as relied on by the examiner in the rejection, in order to antedate a reference under 37 CFR §1.131. We suggest that a similar principle should apply to the exceptions under 35 U.S.C. §102(b)(1)(B) and (2)(B).

Thomas J. Bean is Counsel to the Gibbons Intellectual Property Department.

The CPC includes approximately 250,000 agreed upon classification symbols based on the International Patent Classification (IPC) for searching. CPC searching also permits access to foreign language document collections. Therefore, review using the CPC will be more straight-forward regardless of initial language or geography using a standardized code.

CPC Definitions

The CPC definitions are based on the template used for IPC definitions and follow the general principles of the IPC. Definitions describe the classification practice in each technical area and clarify the subject-matter falling within each classification. These definitions are particularly useful for controlling classification and search quality. Ultimately, these definitions enhance the legal certainty associated with a granted patent.

CPC definitions are available for every subclass and contain a description of the technical subject matter covered in the subclass. The CPC definitions have eight sub-sections: 

1. Title;
2. Definition statement; 
3. Relationship between large subject matter areas;
4. References relevant to classification;
5. Informative references;
6. Special rules of classification;
7. Glossary of terms; and
8. Synonyms and keywords.

A more effective patent review process

While implementation and training may take upwards of one to two years, the benefits of the CPC are clear. This system will accelerate global classification, examination and search efforts. The CPC eliminates document reclassification from one office to another and permits searching within a unified classification system. Under the CPC, a search will yield results from the USPTO, EPO, and EPO member states. Such a comprehensive patent document database will reduce or eliminate searching redundancy.

Resource sharing initiatives also will allow users to conduct efficient prior art searches; resulting in improved searching, promoting more efficient examinations and enhancing patent examination quality. In the end, this should lead to a more efficient path to patent grant.

Poised for worldwide acceptance and use

Importantly, the CPC is aligned with the World Intellectual Property Organization (WIPO) classification standards and its IPC structure, and, therefore is compatible with all other major intellectual property offices. Before the CPC, the USPTO was the only major IP office not using an IPC-based primary classification system.

The CPC is perhaps the first step toward the ultimate goal of greater harmonization of the world’s patent systems. Certainly, China, Japan and Korea will be closely watching its implementation.

Examiners and the public will be able to access the full CPC scheme, definitions and e-learning modules in late 2012 or early 2013. Information on the CPC system, including downloadable sections, definitions and concordances are available at the official CPC website.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department.

Travel Caddy countered that because the validity of the ’992 patent had not been included in the complaint involving the ‘992 parent patent, and no prior art or other information had been presented, there was nothing material in the litigation to disclose to the PTO. The CAFC agreed, concluding that the District Court’s ruling was in error. The CAFC held that there was not clear and convincing evidence that information material to patentability of the claims in the ’104 patent application was withheld, regardless of what might have been asserted as “relevant” to the application. Similarly, the CAFC ruled there was no clear and convincing evidence of any deceptive intent by Travel Caddy.

This decision further establishes that materiality and deceptive intent are separate requirements for which the burden for each must be met to prove inequitable conduct in a post-Therasense world. However, this heightened standard should not give practitioners a false sense of believing that inequitable conduct is dead. Rather, a fact specific inquiry regarding materiality, by omission or commission, is required.

Charles H. Chevalier is an Associate in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

A petition for derivation proceeding must show that at least one claim of the petitioner’s patent is the “same or substantially the same as the respondent’s claimed invention; and . . . [t]he same or substantially the same as the invention disclosed to the respondent.” 37 C.F.R. § 42.405. The petition must be filed within one year from publication of the petitioner’s application that claims the same or substantially same invention as the respondent’s earlier filed application.

The new rules set forth that to prevail in such a derivation proceeding, the petitioner faces the burden of proving upon “substantial evidence” that the first to file patentee was told of the invention and was not authorized to file a patent application. The rules also require that the purported true inventor’s testimony must be corroborated by a noninventor. Thus, the bar for proof of derivation will likely be high.

What does this mean for practitioners and inventors? At the least, scrupulous record keeping and clear agreements must be the order of the day when in a joint development or other cooperative research setting.

In a dissenting opinion authored by Judge Linn (and joined by Judges Dyk, Prost and O’Malley), Judge Linn took issue with the majority’s holding that induced infringement may be found absent a finding of direct infringement. Judge Linn asserted that direct infringement is governed by section 271(a) of the Patent Act, and that section 271(a) in fact requires that “all steps of a claimed method be practiced, alone or vicariously, by a single entity or joint enterprise.” In essence, Judge Linn expressed that, opposed to the majority’s holding, “[the] well established doctrine of vicarious liability is the proper test for establishing direct infringement liability in the multi-actor context.”

In a separate dissenting opinion, Judge Newman disagreed with the opinions of the majority and Judge Linn, opining that “[the] en banc court has split into two factions, neither of which resolves the issue of divided infringement.” Judge Newman argued that the majority’s holding, as a “spontaneous judicial creation” that “interactive and collaborative infringement is not actionable,” was wrong and failed to address the issue on which the cases were taken en banc (and which was briefed by a considerable number of amici curiae). Judge Newman disagreed with Judge Linn’s assertion that section 271(a) requires infringement to be performed by a single entity, arguing rather that direct infringement is properly found with the performance of all claimed steps by multiple actors. Addressing the topic of remedies, Judge Newman suggested that each of the actors would be held liable in accordance with traditional tort principles as contributory infringers.

With the lack of agreement by a substantial majority of the panel, we suspect that there is a reasonable likelihood that one or more of the parties may successfully petition the Supreme Court to reconsider the en banc decision. In the meantime, the present holding may make it easier for method patent holders in, for example, the interactive computer services, medical diagnostics and personalized medicine spaces, to enforce their patents. In addition, practitioners should pay attention to the majority opinion’s instructions on remand, and particularly the need to demonstrate knowledge of the asserted patent, inducement of the steps claimed in the patent and that these steps were performed, in order to find liability.

Thomas J. Bean is Counsel to the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

The Akamai and McKesson rulings followed earlier decisions in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), and later Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), where the Court similarly curtailed the ability of a patent holder to assert joint infringement.

The en banc decisions from the Akamai and McKesson rehearings are anticipated to issue shortly, and surely will shape the playing field for joint infringement claims moving forward.

Gibbons will report on these decisions as they issue, with commentary regarding the repercussions for practitioners and the industry.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department. Thomas J. Bean, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

Post Grant Review

The important takeaway here is that a third party requester must be careful in her due diligence to present all defenses, since estoppel may preclude an accused infringer from presenting a defense during litigation. Estoppel exists for any ground that was raised or reasonably could have been raised during this review.

A summary of the components of post grant review to remember is listed below: 

• Post grant review only applies to patents issuing from first-inventor-to-file provisions of the AIA, which is not effective until March 16, 2013.
• Similar to an inter partes review, a person who is not a patent owner and has not challenged the validity of a claim in federal court can initiate a post grant review.
• Unlike an inter partes review, the petition must be filed on or before the 9-months after the patent grant date or issuance of a reissue.
• The petitioner may request to cancel claims on the grounds of invalidity, which include: novelty, obviousness, written description, enablement and indefiniteness (35 U.S.C. § 282(b) paragraph 2 or 3), but not best mode.

Supplemental Examination

The important effect of this provision is that inequitable conduct may be cured even if the USPTO does not find a substantial new question of patentability. Also, the prior art that may be incorporated in this examination request includes patents, printed publications and any information concerning any ground of patentability, i.e., patent eligible subject matter, anticipation, obviousness, written description, enablement, best mode, and indefiniteness.

A listing of the key components of supplemental examination is:

• This provision is only available to a patent owner.
• The patent owner is asking the USPTO to consider, reconsider or correct information believed relevant to the patent.
• Information can concern any ground of patentability and may include: patent eligible subject matter, anticipation, obviousness, written description, enablement, best mode and indefiniteness.
• If the information raises a substantial new question of patentability, the Patent Office will order an ex parte reexamination of the patent.
• As long as all proceedings were brought before a lawsuit, information, including reconsidered or corrected information, cannot be the basis for rendering a patent unenforceable for inequitable conduct.

Third-Party “Preissuance Submission”

An important lesson here is to make sure that the patent applicant is a participant of the agency’s e-Office Action program in order that the applicant can be notified if a third-party submission has been made.

The requirements for the third-party submission are as follows:

• Third-party submissions may include patents, published patent applications or other publications of possible relevance to the examination of the patent application at issue.
• Third-party submissions may be made in any nonprovisional utility, design, plant, or continuing application.
• The submission must include a comprehensive description of the alleged relevance of each document submitted and must be submitted within a time set forth by the USPTO.
• The submission must also have an English translation of any non-English item, a statement verifying that the submission is in accordance with the rules and a fee.
• Third parties are not required to give a patent applicant a copy of the submission, but the USPTO will notify the applicant if the applicant is a member of the e-Office Action program.
• Third-party submissions are not allowed in re-examination proceedings.

Substitute Statement in Lieu of Inventor’s Oath/Declaration

The key here is to make sure that the inventor’s oath/declaration contains the correct information. If the inventor refuses to cooperate or is unavailable, a substitute statement may be filed.

The requirements for an inventor’s oath/declaration and a substitute statement are as follows: 

• An inventor must state: i) he/she is an original inventor of the claimed invention; and ii) he/she authorized the filing of the patent application for the claimed invention.
• A substitute statement may now be filed when the inventor is: i) deceased, ii) incapacitated, iii) unable to be found or iv) refuses to sign an oath/declaration.
• The substitute statement may be filed by: i) the inventor’s legal representative, ii) the assignee, iii) a party to whom the inventor is under an obligation to assign or iv) a party who shows sufficient proprietary interest in the claimed invention.

Transitional Program for Covered Business Method Patents

This program is only available for the next eight (8) years (until September 16, 2020) and to companies that have been sued for infringement of a business method patent, where the patent does not include patents for technological inventions. This proceeding can be filed at any time, except during the period in which a post-grant review could be filed.

Citation of Patent Owner Statements in a Patent File

This provision enables a third party or the patent owner to cite statements of a patent owner filed in a proceeding before a Federal Court or the USPTO in which the patent owner took a position on the scope of any claim in the patent. This can be done at any time.

We, at Gibbons, will continue to update you on how these new AIA provisions are being implemented, and are available to provide counsel on any issues arising from these upcoming changes.

Estelle J. Tsevdos is a Director in the Gibbons Intellectual Property Department. Jillian A. Centanni, an Apprentice in the Gibbons Intellectual Property Department, co-authored this post.

The submission does not create an estoppel; however, post-grant review proceedings bar the same argument. Further, the file history will reveal that the examiner fully considered the submitted documents, thereby elevating the burden of proof at trial in comparison to a circumstance where the references were not before the examiner. A preissuance submission will be most effective for limiting claim scope because the prosecution history will show this disclaimer.

Timing

Under the AIA, the preissuance submissions provision takes effect on September 16, 2012, and applies to any patent application filed before, on, or after that effective date. Preissuance submissions therefore may be filed in applications already on file with the USPTO.

Timeliness

A preissuance submission must be submitted BEFORE:

1. the date a notice of allowance is given or mailed to the applicant; OR
2. the LATER of:
   
   a) six months of the date the application is first published by the Office; or
   
   b) the date any claim is rejected in a reexamination.

While no period to correct or amend a non-compliant submission is set, late submissions will not be accepted.

The law and rule eliminate 37 C.F.R. § 1.99 regarding: “Third-party submission in published application.” In contrast to the recently published rule, the old rule did not permit any description explaining the relevance of each document to accompany the submission. Under the old rules, timely submissions were limited to the earlier of two months after the date of publication or the mailing of a notice of allowance, thereby placing a significant burden on third parties to monitor both competitor activity and the USPTO’s Gazette.

Gibbons will continue to monitor developments relating to the AIA, and its impact on businesses.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department. Lisa H. Wang, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

There to meet these expanding biotech clients' needs, the Gibbons Intellectual Property Group offers the largest intellectual property group among all general practice law firms in New Jersey, including ranks of attorneys with life sciences experience prepared to counsel on all aspects of IP law. Bill Epstein, Charlie Gaglia, George Gould, David De Lorenzi, Sheila McShane, Hain Swope, Estelle Tsevdos, Lisa Wang, Charles Chevalier, Jay Cahill and Jillian Centanni, among others, bring diverse and deep industry and legal experience to the firm’s IP practice, with vast acumen in handling issues from IP clearance, procurement to enforcement, monetization and litigation.

The ’148 Patent covers Mintz’s Jif-Pak products. Package Concepts & Materials, Inc., (“PCM”) filed a declaratory judgment action against Mintz, who in turn sued PCM for infringement alleging that PCM’s knitted meat encasement products infringe the ’148 Patent. In ruling on cross-motions for summary judgment, the District Court granted PCM’s and denied Mintz’s motions on validity and infringement.

The district correctly found all limitations in the prior art except the disputed limitation, that “each longitudinal and lateral strand of the netting arrangement intersect in locking engagement with one another.” The Court further determined that it would have been obvious to a person skilled in the art to include the “intersecting in locking engagement” claim limitation. Under a common sense analysis, the lower court reasoned that providing such a locking engagement for the intersection of each lateral and longitudinal strand would have been obvious to try when a checkerboard pattern on a meat product is desired.

On appeal of invalidity, the Federal Circuit reversed finding the District Court overreached and made a clear error to hold that it would have been “obvious to try” a locking engagement under a common sense approach. Slip Op. at 8. Common sense is nothing more than the knowledge and skill set of an ordinary meat encasement artisan. Id. at 8-9. The District Court used knitting references as analogous art to that of the claimed invention. Id. at 8. But the Court discounted that the relevant art was meat encasement. Id. Absent a record showing the pivotal knowledge resided within one of skill in the relevant art, the Federal Circuit held the lower court’s view was prohibited reliance on hindsight.

In overruling the obvious determination, the Federal Circuit found that the District Court also erred by using the invention to define the problem that the invention solves. The District Court had ruled that in solving the problem of forming a checker-board pattern, it would have been obvious to try the claimed solution, i.e., “fix each point of intersection.” Id. at 9. Chief Judge Rader construed this framing of the problem using the patented solution as another forbidden use of hindsight. Id.

Redefining the problem, the Federal Circuit held that PCM must prove by clear and convincing evidence that a person of ordinary skill in the art of meat encasement at the time of the invention would have recognized the problem and found it obvious to produce the meat encasement structure disclosed in the ’148 Patent to solve that problem. Id.

Finally, the Federal Circuit chided the lower court for failing to give substantive consideration to the objective indicia of non-obviousness. Id. at 10-11. Mintz presented considerable evidence of non-obviousness, including unexpected results, expert skepticism, copying, commercial success, praise by others, failure by others, and long-felt need. Id. at 11-12. The Federal Circuit characterized the objective indicia of non-obviousness as a powerful tool for avoiding subconscious reliance on hindsight and deemed its consideration as mandatory. Id. at 10.

The lower court had held PCM’s products do not infringe the ’148 Patent because they do not contain the claimed limitation requiring “longitudinal and lateral strands of said netting arrangement each intersecting in locking engagement with one another to form a grid-like pattern comprising a plurality of four-sided shapes.” Id. at 15. The CAFC upheld this part of the order of non-infringement because the PTO granted the ‘148 Patent based on the claim limitation that each longitudinal and lateral strand intersect in locking engagement.

Ultimately, the Federal Circuit could have simply upheld non-infringement. Yet, Mintz afforded the Court the opportunity to circumscribe hindsight in an “obvious to try” analysis.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department.

A recent Wall Street Journal article on Twitter’s plan cited the “buzz” Twitter has started among principals at some tech start-ups, along with their insights on the present patent system, and the costs and inefficiencies inherent there. The article described that the IPA is viewed by some as a positive initiative to stem the chilling effect patent litigation has on innovation. Critics of Twitter’s move, the article reported, describe it as a public relations ploy, a “P.R.-and-pray strategy,” to discourage suits being brought against it. The impact of this development will be closely watched.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department.

“[T]here are no limitations on a patent applicant’s ability to introduce new evidence in a §145 proceeding beyond those already present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure.” Kappos, slip op. at 14. Specifically, the Court rejected importing principles of the Administrative Procedue Act, which provides that review is limited to the administrative record and affords deference to the administrative rulings. “[I]f new evidence is presented on a disputed question of fact,the district court must make de novo factual findings that take account of both the new evidence and the administrative record before the PTO.” Id. If no new evidence is introduced, then the Court reviews the action on the administrative record and deference will be given to PTO factual findings subject to the agency’s standard of review. As with any evidence introduced in a civil action, if the District Court questions its credibility or reliability based upon the proceedings before and findings of the Patent Office, the District Court may give less weight to evidence introduced by the applicant in a § 145 action. The Court rejected a heightened standard proposed by the Director, where only new evidence that could not reasonably have been provided to the agency in the first instance is admissible in a § 145 action. The Court also rejected the Director’s proposed clear error standard of review.

In concurrence, Justice Sotomayor, joined by Justice Breyer, opined that an applicant should be estopped from later introducing evidence it had purposely withheld, but “when a applicant fails to present evidence to the PTO due to ordinary negligence, a lack of foresight, or simple attorney error, the applicant should not be estopped from presenting the evidence for the first time in a §145 proceedings.” Id. at 2-3 (Sotomayor, J., concurring). Notably, Hyatt filed the application before the 1995 rule change and, therefore, any delay in issuance likely means additional revenue persisting for 17 years from the issue date.

The significance of a § 145 civil action is that it affords an applicant the opportunity to introduce new evidence after the close of the administrative proceedings. In practice, this ruling allows an applicant to proceed with an ex parte appeal as part of regular prosecution practice with the knowledge that a civil action, whereby new evidence, such as expert testimony or test data obtained after proceedings before the Board, is available. This is especially important in light of limitations in which testimony may be presented in an ex parte appeal.

With the Kappos v. Hyatt decision, patent practitioners now have new considerations when facing a patent application rejection.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department.

A common sequence of events during the prosecution of a patent application is as follows:  

• The examiner issues a first office action rejecting all claims in view of reference A.
• The applicant amends the claims to differentiate the invention from reference A.
• The examiner performs a new search, identifies reference B and rejects all claims in view of reference B. Because the rejection and search were made in response to an amendment by the applicant, the rejection is final.
• The applicant recognizes that the invention can be easily distinguished from reference B by another amendment and submits the amendment to the examiner within 2 months of receiving the final office action.
• However, the examiner feels that the amendment will require additional searching to verify that the newly amended claim is valid in view of the prior art. As a result, the examiner will only issue an advisory action stating that the amendment will not be entered because the amendment will require the examiner to perform an additional search.
• The applicant must now file a continuation or request for continued examination, along with the required fees, in order to have the amendment entered and considered by the examiner.

Since the examiner was not permitted to enter and consider the amendment, this policy by the Patent Office contributed to an increase in the amount of time that applications remained pending. It also increased the cost that an inventor faced in obtaining a patent.

The AFCP offers a potential solution to help both issues. Under the AFCP, the examiner is now permitted to enter an after final amendment when:  

• The amendment places the application in condition for allowance by incorporating limitations from objected-to claims into independent claims, if the new claim can be determined to be allowable with only a limited amount of further consideration or search.
• The amendment can be determined to place the application in condition for allowance with only a limited amount of further search or consideration, even if new claims are added without canceling a corresponding number of finally rejected claims.
• The amendment can be determined to place the application in condition for allowance by adding new limitation(s) which require only a limited amount of further consideration or search.

The AFCP grants the examiner an additional 3 hours to consider the amendment and perform any additional search. As a result, if an Applicant can introduce an amendment that will differentiate the claims from a newly cited reference and an extensive prior art record has already been presented to the examiner, it is likely that the examiner will enter the amendment and move the application on to allowance.

While the AFCP is not as elaborate as other proposals made by the Patent Office, it has the potential to be a practical solution that will reduce the number of applications pending at the PTO and reduce the cost of the patent application process.

Christopher H. Strate is an Associate in the Gibbons Intellectual Property Department. Charles A. Gaglia, Jr., Counsel to the Gibbons Intellectual Property Department, co-authored this post.

Additionally, the Court also looked at other cases, Neilson v. Harford, Webster’s Patent Cases 295, 371 (1841), Bilski v. Kappos, and Gottschalk v. Benson, 409 U.S. 63 (1972), to support its position that appending conventional steps to laws of nature, natural phenomena and abstract ideas does not makes those laws, phenomena and ideas patentable. The Court continued to emphasize its concern that “patent law not inhibit further discovery by improperly tying up the future use of laws of nature.” Mayo, slip op. at 16. Notwithstanding, Prometheus Labs’ arguments to the contrary, the Court declined to change its conclusion that the claimed processes are not patentable. Here, the Court emphasized that its concern relates to “how much future innovation is foreclosed relative to the contribution of the inventor” and noted that “even a narrow law of nature [ ] can inhibit future research.” Id. at 20.

This decision undoubtedly will ripple across many industries, as patent practitioners attempt to apply the holding of the case.

Robert E. Rudnick is a Director in the Gibbons Intellectual Property Department. Jillian A. Centanni, an Apprentice in the Gibbons Intellectual Property Department, co-authored this post.

On appeal, the Federal Circuit reversed the BPAI. In an opinion for the court authored by Judge Dyk, the Federal Circuit reviewed the legislative and decisional history with regard to broadening reissue applications, beginning with the Patent Act of 1870 and concluding with the Patent Act of 1952. The Federal Circuit noted that the law of broadening reissues was first developed by the Supreme Court in the 1881 decision Miller v. Brass Company, in which the Court held that the 1870 Act allowed for broadening reissues, subject to rule of laches. As to laches, the Federal Circuit cited several subsequent Supreme Court decisions finding that a delay of longer than two years should be excused only under “special circumstances.” This two-year rule was codified in 35 U.S.C. § 251 as part of the 1952 Act. In Doll, the CCPA held that the two-year time limit applied only to the filing of a first broadening reissue application.

In Staats, the USPTO urged that Doll be distinguished because the claims in dispute in the later-filed broadening reissue application there were related to the claims in the earlier-filed application, while the claims at issue in Staats were not related to claims in the earlier-filed reissue applications. As a result, the USPTO argued that the intended notice requirement of 35 U.S.C. § 251 is not met in Staats. Judge Dyk found the USPTO’s argument to be unavailing, noting that “Doll itself made no distinction between related and unrelated claims” and offering that “[if] the PTO believes we should overrule Doll, that is a matter that must be presented to the en banc court.”

In an apparent effort to discourage the en banc review, Judge O’Malley authored a concurrence in which she disagreed with the majority’s analysis seemingly relying on Doll alone. In summary, Judge O’Malley emphasized that “[the] plain language of 35 U.S.C. § 251, coupled with the legislative history, long-standing unambiguous regulations implementing the statute, all relevant case law, and common sense, compel reversal in this case.” As to the USPTO’s notice arguments, Judge O’Malley suggested that “[given] the limited life of additional claims which can be sought through the type of continuing reissue practice at issue here, the protections afforded by the intervening rights provisions in 35 U.S.C. § 252, and the countervailing implementation concerns [that are raised by requiring claim relatedness to be judged for the purposes of evaluating the applicability of the two-year requirement], the PTO’s arguments are overstated - substantially so.”

Significantly, in view of Staats, a patentee that has failed to maintain a continuation chain by filing a continuation application prior to the issuance of a patent can effectively re-establish that chain by filing a broadening reissue application within two years following the patent grant. However, unlike other continuing applications, a broadening reissue application and any continuation applications filed based on it will be subject to the intervening rights provisions of 35 U.S.C. § 252 and case law prohibitions against the recapture of canceled subject matter in an original patent.

Thomas J. Bean is Counsel to the Gibbons Intellectual Property Department. Michael Cukor, a Director in the Gibbons Intellectual Property Department, co-authored this post.

Also, as of November 2011, the SIPO of the PRC and the United States Patent and Trademark Office (“USPTO”) extended the Patent Prosecution Highway Pilot Program between the two nations. Under the Patent Prosecution Highway, “an applicant receiving a written opinion or an international preliminary examination report from either the SIPO or the USPTO that at least one claim in a PCT application has novelty, inventive step, and industrial applicability may request that the other office fast track or expedite examination of corresponding claims in corresponding applications.”

Moreover, China amended the Patent Law of the PRC in 2009 to revamp the Chinese national patent system. The impact of the amendment to the Patent Law is two-fold. First, it enhances China’s position to meet the goals highlighted above. Second, it attempts to align Chinese patent practice with much of the rest of the world. For example, in the recent amendment, China has retained a utility model patent, which is available in many countries worldwide with the United States being one exception. The utility model patent provides protection for a product’s shape or structure or combination thereof with a 10-year term from its filing date. Utility model applications are favorable to establishing rapid patent rights because they are cost effective, there is no substantive application examination, and rights are normally granted within one year from the filing date. The 2009 amendment to the Patent Law also provides rules and regulations for exploiting these utility model patents both alone and in conjunction with a more traditional invention patent. While traditionally not exploited by foreign filers, the utility model is utilized by many Chinese entities. For example, a Chinese patent infringement case based on a utility model patent granted to Chint Group resulted in a 335 million yuan ($45 million) verdict in a court of first instance against rival Schneider Electric of France. Thus, a foreign corporation considering entry into China should take into account the advantages of a utility model patent, especially for important products.

In addition, many changes were made to the Patent Law to assuage the fears of foreign corporations in conducting technology focused business with China. For example, China is a first to file system, and a recent amendment changed its patent law to one of absolute novelty. Thus, often feared patent hijacking, whereby a third-party could theoretically seek patent protection in China for another’s invention first disclosed outside China is now illegal under Chinese law. Overall, the 2009 amendments to the Patent Law have augmented China’s position as a trade partner and provide a basis to encourage foreign investment in technology and innovation in China.

In sum, China is driving its intellectual property system to grow at an astounding rate. While this presents great opportunity, the relative newness, complexity, and evolving nature of Chinese intellectual property laws, rules and regulations may create certain risks. In the next 10 to 20 years the Chinese intellectual property system will likely undergo substantial development and change. Thus, when evaluating whether to invest its technology and intellectual property in the Chinese market, a foreign entity should not only consider the current state of China’s intellectual property laws, rules and regulations, but should also take into account likely future evolution of the Chinese intellectual property system. The challenge is to help clients become competitive and successful in doing business in China by developing a solid intellectual property strategy that assists navigation of the Chinese legal, regulatory and business environment.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department.

The issue before the district court hinged on standing to sue under 35 U.S.C. § 271(e)(2)(A), i.e., whether a cause of action was made out with respect to Defendants’ proposed uses relative to the patents’ claims. The relevant language of 35 U.S.C. § 271(e)(2)(A) is:

2) It shall be an act of infringement to submit -

(A) an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act or described in section 505(b)(2) of such Act for a drug claimed in a patent or the use of which is claimed in a patent.

Before the Delaware District Court, Defendants moved to dismiss for lack of subject matter jurisdiction, arguing that the Hatch-Waxman Act created an infringement claim only if the generic manufacturer sought approval for the specific methods of treatment claimed by the patent. According to Defendants, Plaintiffs case under 35 U.S.C. § 271(e)(2)(A) lacked merit because of the generics’ non-infringing uses. The district court agreed with Defendants and Plaintiffs appealed.

In oral arguments before the Federal Circuit in November, Plaintiffs argued that the mere filing of an ANDA for rosuvastatin calcium tablets was an act of infringement under the Hatch Waxman Act even though the ANDA was for non-infringing uses of the drug. Plaintiffs also urged that there was enough evidence in the generic manufacturer’s proposed labeling and elsewhere to support the likelihood of induced infringement.

Chief Justice Rader and Justice Moore pointed out several times during oral arguments that in order for 35 U.S.C. § 271(e)(2)(A) to apply, it requires that the ANDA seek approval for the use of a drug which is claimed in a patent. In this case, the ANDA does not seek approval for a patented use. The Justices cited the Warner-Lambert Co. v. Apotex Corp. decision, which held that “where a product has substantial non-infringing uses, intent to induce infringement cannot be inferred even when the [alleged inducer] has actual knowledge that some users of its product may be infringing the patent.” Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1365 (Fed. Cir. 2003). “[I]nducement requires that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement.” DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc in relevant part). Plaintiffs argued that Warner Lambert did not apply to the facts at hand.

Chief Justice Rader also indicated to Defendants’ counsel that due to the limited uses in the ANDA, there was a substantial likelihood the generics would induce infringement. He raised the question as to whether the generic companies could win an inducement to infringement suit.

A decision for AstraZeneca would strengthen method of treatment patents for prescription drugs and expand the reach of Hatch-Waxman. Gibbons P.C. will stay tuned to this development.

Charles A. Gaglia, Jr. is Counsel to the Gibbons Intellectual Property Department.

Comment

Consider whether there might not be a different result if the Examiner in In re Klein had rejected the claims based on a reference, such as Greenspan, disclosing a vessel having a stationary, water-tight partition intended to separate water from a solid in combination of another reference, such as Roberts, teaching a vessel having movable partitions intended to separate material retained therein. The Examiner’s argument could be that it would be obvious to modify the vessel of the primary reference (e.g., Greenspan) to make the partition movable if it were desired to change the ratio of the two substances contained in the vessel prior to filling. This argument could possibly be compatible with the Supreme Court’s decision in KSR. KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398 (2007).

Non-analogous art? The Federal Circuit found the references non-analogous as discussed above. It is true that the vessel claimed by Mr. Klein is filled by a consumer who can change the ratio of sugar and water, where the vessel described, for example, in Greenspan is filled by a manufacturer. However, in both instances, the partition is moved prior to filling and neither vessel has the capacity to vary the concentration of the “ultimate” solution once it is filled. Thus, it is a close call whether the art is analogous.

The foregoing comments are intended as food for thought. Mr. Klein’s invention is certainly convenient for a user and he may well have other secondary considerations in his favor as were as noted by the Federal Circuit. Id. at 1352. Hence, he may well prevail at the end of the day.
 

R. Hain Swope is Counsel to the Gibbons Intellectual Property Department. Andrew P. MacArthur, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

Hence, were there no other legal constraints on the exportation of the necessary patient samples from the U.S. and importation into another country, the method claims could be freely practiced abroad. The potential value of such method claim protection should be carefully weighed before embarking on an extensive foreign patent program.

R. Hain Swope is Counsel to the Gibbons Intellectual Property Department.

During the pendency of the district court proceedings, HemCon requested reexamination of the ’245 Patent with the United States Patent and Trademark Office (“PTO”). The examiner, in rejecting all of the claims, initially adopted a different claim construction than that of the district court. The examiner also determined “biocompatible” meant “low variability, high purity, and little or no detectable reactivity.” Further, the examiner noted that the district court’s construction was inconsistent with the numerous dependent claims that required a specific elution test score of zero, one or two.

Marine Polymer argued that the district court’s interpretation should be adopted and “biocompatible” should be construed to mean “no detectable biological reactivity.” Marine Polymer then cancelled the six original dependent claims that had specifically required an elution test score of 1 or 2. The language of the remaining claims, including all of the claims HemCon had been found to infringe by the district court, was unchanged.

Intervening rights do not apply where the accused product “infringes a valid claim of the reissued patent which was in the original patent.” 35 U.S.C. § 252. Therefore, intervening rights are available only if the original claims have been substantively changed, and in determining whether substantive changes have been made, the court must discern whether the scope of the claims has changed, not merely whether different words are used.

The Federal Circuit found that in narrowing the definition of “biocompatible” by argument, all of the remaining claims of the ’245 Patent had been substantively narrowed thereby substantially changing the scope of the claims. The Federal Circuit therefore determined that absolute intervening rights under the statute applied in this case. The specific products made before the date of reissue, which infringed the new reissue claims, were absolutely free of the reissued patent and may be used or sold after the date of the reissue without regard to the patent.

Under the Patent Statute, there are two types of intervening rights: (1) absolute intervening rights, which bar claims for infringement based on specific products that were manufactured before the reissue or reexamination; and (2) equitable intervening rights, which bar claims for infringement for new products and newly manufactured versions of prior existing products made after the reissue or reexamination. See 35 U.S.C. §§ 252, 307.

The Federal Circuit remanded to the District Court to determine whether the fact based doctrine of equitable intervening rights applies. The doctrine of equitable intervening rights allows the court to permit the continued manufacture, use, or sale of additional products covered by the reissued or reexamined patent when the accused infringer made, purchased, or used identical products before the reissue or reexamination date. It also protects a newly created product that was not of a type produced before the reexamination if the accused infringer made substantial preparations for manufacture of the product before the reissue or reexamination.

Charles A. Gaglia, Jr. is Counsel to the Gibbons Intellectual Property Department.

Some predict that application and claim quality will decrease with the “race” to file applications. However, the quality of European patents under a similar first-to-file system has shown that this will unlikely be the case. Moreover, 35 U.S.C. §102, as revised, provides a unique protection for inventors that publish or publicly disclose their invention less than one year before filing their patent application. Under this new standard, third party patent application filings or publications that occur after the inventor’s publication or public disclosure will not be invalidating prior art. A company or inventor that makes the decision to pursue a patent in the United States only and in no other country, and who wants to obtain the earliest possible priority date, may consider publishing their invention or an embodiment of their invention on their website first. This will provide the practitioner and the client time to prepare a thorough patent application to submit to the Patent Office. One point of caution, though, is that this provision is unique to U.S. patent law and will cause the applicant to forego any opportunity to file for patent protection on the same invention in foreign countries.

One element of uncertainty that will be created by this Act, at least for the next five to ten years, is the definition of invalidating prior art. Prior to this reform, decades of case law had been established to define what was necessary for prior art to be invalidating because it was “known,” “used,” “patented,” “described in a printed publication,” “in public use” or “on sale.” However, 35 U.S.C. §102, as amended, has introduced a new standard of “otherwise available to the public.” The statute does not define this phrase and it will take time for the Federal Circuit to sort out. While this Act has created some certainty as to what may qualify as invalidating prior art with respect to the invention date, it has introduced a new level of uncertainty as to what types or quality of publications or events may qualify as invalidating prior art.

While first-to-file reform may be one of the most significant changes in U.S. patent law provided by the America Invents Act, other provisions relating to patent validity, prosecution and litigation will also have significant effects, and will be discussed in later Gibbons P.C. postings.

Christopher H. Strate is an Associate in the Gibbons Intellectual Property Department.

• Post-Grant Review Proceedings.

(i) Replaces “optional interpartes reexamination” with “interpartes review” to be conducted by Patent Trial and Appeal Board within 1 year. The threshold showing is “reasonable likelihood” that the petitioner will prevail based on published prior art. The estoppel standard is “raised or reasonably could have raised” before the USPTO and the courts. Appeals are directed to the Federal Circuit.

(ii) Establishes a “post-grant review” before the Patent Trial and Appeal Board to review validity of issued patents within 9 months of grant on any patentability issue. The threshold showing is "more likely than not" that at least 1 claim is unpatentable. The estoppel standard is “raised or reasonably could have raised” before the USPTO and the courts.

(iii) Establishes an 8-year transitional post-grant review proceeding for review of the validity of business method patents for financial products or services by defendants accused of infringement.

(iv) Allows a pre-issuance submissions procedure for published prior art but not public, use, sale or improper inventorship, which current 35 U.S.C. 122(c) continues to provide for. Submission must be made before the earlier of (a) allowance, or (b) later of 6 months after the date of application publication or the date of first rejection.

• USPTO's Fee Setting Authority and Funding. Provides the Director with fee setting authority to cover operating and administrative costs. This authority is subject to a 7 year sunset clause. Fees in excess of appropriated amounts still require authorization under the Appropriations Act.

Practitioners should take note of the effective dates for the key provisions as they differ. The “first-inventor-to-file” provision takes effect 18 months from the passage of the Act for patents and applications with a claim having an effective date on or after the bill is passed. Post-grant review proceedings such as inter partes review, post-grant review, certain business method review, and pre-issuance submissions, become effective 1 year after enactment and applies to patents issued before, on, or after that effective date. The USPTO's fee setting authority takes effect immediately upon passage of the Act.

Luis J. Diaz is a Director in the Gibbons Intellectual Property Department. Lisa H. Wang, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

IP Registration Firms
IP registration firms generate a list of IP applicants and owners from public notifications of filings for trademarks, domain names, and patent applications. These firms then contact the applicants and owners with letters or e-mails bearing official-looking logos and titles seeking fees to “register” the IP property in the registration service’s private database. The firms do not explain the benefits of such a “registration” and often none exist, that is customers may not gain any legal rights or advantages as a result.

The letters from the IP registration firms identifies the IP property using details obtained from public notifications in a manner intended to give the correspondence an air of propriety. The letters often bear a name and header that are confusingly similar to those of official agencies. Thus, the documents are particularly provocative because it appears to have been issued by a legitimate, official organization, such as the World Intellectual Property Organization (WIPO). This appearance may coax the recipient to pay the fee or to forward the letter within a corporate entity for payment. WIPO addresses this issue on its website - Warning: Request for Payment of Fees - and includes links to examples of over 30 letters from IP registration firms. WIPO advises that these organizations have no connection to WIPO, and these organizations are unrelated to the processing of patent applications filed under the international Patent Cooperation Treaty. Other national IP offices that post similar warnings on their websites about unsolicited mail from IP registration services include the Australian, Austrian, Swiss, German, European, Great Britain, Israel, and Japanese patent offices.

All requests to register your IP assets, especially those including demands for fees, should be carefully reviewed to evaluate whether the solicitation is valid. One way is to visit the WIPO website and consult its listing of offenders and sample correspondence. Before entering into a contract with an invention promoter/ promotion firm, visit the USPTO and FTC inventor fraud prevention websites identified above.

Regarding Microsoft’s alternative argument that a preponderance standard should be applied at least to evidence before the fact finder that was not before the Patent Office, the Court found that its pre-codification cases never “adopted that kind of fluctuating standard of proof . . . .” Slip Op. at 15. Plus, the Court found there was nothing in the text of s 282 to suggest that Congress meant to enact a sliding scale for the standard of proof. Slip Op. at 16.

In his concurrence, Justice Breyer called for special jury verdict forms that separate legal conclusions from factual findings. He called on courts to keep the “standard within its proper legal bounds by separating factual and legal aspects of an invalidity claim,” Breyer concurrence Slip Op. at 1. Separating these aspects might keep non-novel, obvious subject matter from improperly retaining legal protection.

This decision adds certainty to patent enforcement. Patentees’ right to exclude is secure in all but those patents which are susceptible to invalidity challenges meeting the clear and convincing standard, and accused infringers will have to continue to formulate invalidity challenges which meet that standard.

Richard J. Katz is Counsel to the Gibbons Intellectual Property Department.

Centillion Data Systems, Inc. accused Quest Communications International and other Quest companies of infringing U.S. Patent No. 5,287,270. The claims-in-suit are directed to a system for presenting cost-of-service information to a customer, and recite server-side elements (a storage means, a data processing means, a transferring means) and a client-side element (a personal computer data processing means). Quest’s customer phone call transaction records are stored on the server-side storage means, and the data processing means generates a summary report as specified by the customer. The transferring means transfers the transaction records and summary reports to a customer, where the personal computer data processing means perform additional processing on the transaction records.

Centillion held that the customer “puts the system as a whole into service, i.e., controls the system and obtains benefit from it.” Centillion at 10. It did not matter to the court that the back-end processing was “physically possessed” by Quest and not the customer. What did matter to the court was that “but for the customer’s actions, the entire system would never have been put into service.” Id. at 11. The court reasoned that “[b]y causing the system as a whole to perform [server-side] processing and obtaining the benefit of the result, the customer has ‘used’ the system under [35 U.S.C.] § 271(a).” Id. at 10. The Federal Circuit held that the district court erred as a matter of law when it concluded that no single party could be liable for use of the patented invention. Id. at 11.

Prior to this decision, a patentee would likely have thought it necessary to name both a web-based enterprise and the enterprise’s third-party server farm host as joint infringers. By extending Centillion, the patentee could now assert that the web-based enterprise alone controls the claimed system and obtains benefit from the system. Naturally, patent claims are better drafted to capture a single class of infringers, and patent applicants would be wise to keep this in mind as they review the claims of their patent applications drafted during prosecution of the patent.

Richard J. Katz is Counsel to the Gibbons Intellectual Property Department.

Part 2 of the Guidelines addresses examination issues such as functional claiming as they relate to “computer-implemented inventions.” In an invention claimed using functional language, the so-called “written description” requirements of 35 U.S.C. § 112, 1 are not met when patent specification fails to “sufficiently identify how the invention achieves the claimed function.” For computer-implemented inventions, the Guidelines specify that a “determination of sufficiency “must be applied both to the disclosed hardware as well as the disclosed software. A sufficient disclosure will describe “the computer and the algorithm (e.g., the necessary steps and/or flowcharts) [ ] in sufficient detail such that one of ordinary skill in the art [ ] would know how to program the disclosed computer to perform the necessary steps.” With reference to prior art rejections of computer-implemented inventions based on 35 U.S.C. §§ 102, 103, Part 2 warns that “functional claim language that is not limited to a specific structure [will cover] all devices that are capable of performing the recited function.” For example, if the structure claimed is simply a “computer,” any known computing device capable of performing the claimed function will satisfy this claim element. Part 2 also notes that claims that are simply directed to a computer and claim no more than the implementation of a known function on a computer will not be patentable.

The Guidelines break little new ground with regard to current examination practice. It appears that they may be directed to emphasize the examination of patent claims for compliance under 35 U.S.C. § 112 early on during prosecution, and to provide a template for examination that can facilitate dialogue between the examiner and the patent applicant with regard to indefiniteness issues. Part 2 of the Guidelines complements Interim Guidance for Determining Subject Matter Eligibility for Process Claims in View of Bilski v. Kappos, issued by the USPTO on July 27, 2010 as a guide to subject matter eligibility for process claims under 35 U.S.C. § 101.

Thomas J. Bean is Counsel to the Gibbons Intellectual Property Department.

As reported in the October 7 press release, the USPTO believes that in order to provide a “balanced approach to measurement of examination quality,” these measurements will “address errors and positive action taken in both allowance and rejection, as well as matters such as search and restriction.,” and will complement other activities including the USPTO’s pendency initiatives, Patent Examiner Technical Training Program, and proposed Three-Track Examination initiative.

The USPTO intends to report the composite quality metric as a component of its "Patent Dashboard." It is expected that the metric will be reported to the public at the middle and end of each fiscal year, although some of the factors may be reported on a quarterly basis. It will be interesting to see what, if any, impact the new quality procedures will have, in particular in combination with the revisions made to the patent examiner count system adopted in September 2009. In the meantime, the USPTO encourages interested members of the public to comment on their experience with all of these initiatives via its “Feedback Channel” blog.

Thomas J. Bean is Counsel to the Gibbons Intellectual Property Department.

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"American economic security is threatened in a way Congress has failed to recognize. Our biggest challenge is stemming the outflow of jobs, talent, technology and manufacturing. All four losses drain away national economic power. All result from the same cause: chronic under-financing of our innovation infrastructure. Although invisible, it is our nation’s greatest asset. Strengthening it can assure our prosperity and restore our technological leadership. We urgently need to increase invention and make new products that Americans and others will need, want and buy. To increase innovation, however, we must increase investment.

And it is needed immediately because we are already losing our international lead in technology and our global competitiveness. In a recent study, the United States came in dead last of the 40 top technology countries in the world in strengthening its innovation infrastructure over the last decade. Foreign inventive activity has surged to the point where filings in the United States Patent and Trademark Office by foreign entities now equal filings by Americans. Filings in the Chinese patent office by Chinese companies show exponential advances in twelve out of twelve top technologies.

Public finance for increased investment in innovation, however, is not available. It has been exhausted by the cost of two, concurrent and continuing wars and a decade of fiscal mismanagement, saddling us with a huge annual debt payments and recent annual budget deficits of many hundreds of billions of dollars, and this year of $1.5 Trillion. In this recession when tax revenues are down, obtaining even a modest increase in public R&D funding will be difficult, if not impossible. Actually, the challenge will be to avoid cuts in government R&D funding. The Administration recently instructed all agencies except the Defense Department to plan for a 5% reduction. At best, agency budgets will be frozen. Anyway, private investment has always supported much R&D by research-based companies, universities, and other innovators. Only increased private finance, then, can fund the needed increase in research and development. But how do we incentivize increased private investment in innovation? The answer is simple: strengthen the intellectual property systems – patents, trademarks, trade secrets, copyright, but especially patents. What we most need is faster, sounder patent grants, plus swifter, stronger, subtler court enforcement. After all, no one can be expected to invest without confidence in a return. Patents, and the protection of investment they afford, provide the only incentives strong enough to cause a big enough increase in private investment in innovation.

A primary engine of American recovery and resurgence therefore will have to be an improved patent system. Without that, both short-term recovery and long-term prosperity will be stunted. By “system”, I mean primarily the Patent and Trademark Office and the Federal courts, which, along with the International Trade Commission, afford the only mechanisms to enforce patent rights.

Using patents to spur both economic and technological advances is hardly a new idea. They have been a primary engine of economic growth and technological progress since 1790 when the First Congress passed the first Patent Act. Unlike today’s Congress, the founders knew patents promote national prosperity, economic growth, and technological progress. Patents have promoted repeated surges of technological advance, the most recent in the information technology revolution of the 1990’s. Notice that this was the last time our country had a balanced budget. And now, bio-tech shows promise of another surge.

Note, too, that if we strengthen the patent system, the job creation needed if our country is to rehire the 15 million unemployed workers, half from the recent recession, and add 13 million new jobs by 2018 to absorb a growing labor force will naturally follow. So will migrations of the technologically talented. If more R&D is done here, they will come here and stay, at least if we fix our broken visa system. Otherwise, foreign talent studying at our research universities will all return home. Our own leading technologists will also go elsewhere, just as is now happening with U.S. companies such as Intel and Applied Materials. Both will soon open large research laboratories headed by their top American researchers, not in California but in China.

A few commentators, despite all evidence, still assume the nation could afford a large increase in public R&D funding. Others assume that even though public revenue is unavailable, the needed R&D can be funded by company revenues. But that is not realistic. Most innovative companies are new and small. Many do not yet make profitable products. Some do not yet sell any products. Yet the majority of new technologies and 75% of new jobs are now being created by small, young, companies. Therefore, the firms with the least revenue to support their R&D are those most needing and deserving private investment. Biotech start-ups are only one example. Without it, many of them will die. With it, medical science, public health and national wealth will surge. Besides, 2/3 of the economic growth and ¾ of the new jobs since WWII came from innovation, and technology-related jobs pay 2.5 time average salaries.

Well, what is wrong with the present patent system? First, and foremost: delay -- health and welfare-diminishing, wealth-reducing, job- destroying, technology-impeding delay. In some technologies it now takes, at least, 4-6 years even to get a patent. The product life-cycle is often shorter than that. For all technologies the average wait is three years. That is two times longer than in 1990. Too long! And it is going up. Even worse, because nearly all applications must by law be published at 18 months, foreign competitors can pirate inventions for years before the patents issue, for until then patent owners have no rights against infringements whether produced here or imported. No wonder foreign competitors minutely monitor the PTO website! The story is told that thousands of Chinese engineers sit at computers reading U.S. patent applications rather than doing research in labs.

Why such extensive delay? Because for two decades the patent office has been grossly underfunded. And it is still losing ground. It operates entirely on user fees paid by applicants and patent owners -- fees that were set by Congress six years ago -- at levels that do not support necessary operations. The PTO lacks sufficient numbers of examiners, especially experienced examiners, and modern computer systems. Imagine, the government’s own technology agency using decades-old computer technology! These are the principal reasons delays are so long.

The patent system is failing primarily because the patent office is failing. In a single, blunt word, the patent office has become dysfunctional. Applications have tripled, and the PTO simply cannot keep up. Over 735,000 applications sit unread in a warehouse in Alexandria, Virginia. Note that the warehoused applications equate to almost two years worth of filings. Although some 490,000 applications are being examined, their progress is far too slow. And every year another 460,000 more are filed. Of the 1.2 million applications currently awaiting final disposition, only about 350,000 complete the examination process each year. So the backlog, already intolerable, is actually growing by 110,000 applications per year. It is now four times the backlog of 1990.

There are too few examiners – mostly young engineers and scientists -- and too few with experience. Nearly one third of the examiner workforce has been at the PTO for less than 3 years. But it takes at least 3 years for new examiners to become both competent and efficient. Faulty decisions by inexperienced examiners, like delay itself, harm the system and therefore innovation; such examiners allow patent claims they should reject, blocking innovation, and reject ones they should allow, causing further unnecessary delays and costs for Board appeals. And the lack of quality assurance undermines the presumption of patent validity provided by law and also the credibility of patents in the eyes of the media, academia and the Congress.

The trial courts too are hobbled. Most lack sufficient numbers of judges to expeditiously enforce good patents and invalidate bad ones. Almost 100 judicial vacancies remain unfilled, the highest vacancy rate in the history of the country. Most of these have gone unfilled for many, many months, and some for years. That means the courts are normally 12% understaffed. And almost 100 additional district and circuit judgeships are desperately needed but have yet to be authorized by Congress despite repeated requests by the Judiciary for two decades. So, the courts struggle with almost 200 too few judges because of two decades of Congressional neglect, just like the Congressional neglect of the patent office.

The result of course is long litigation delays that diminish the value of patents and add uncertainty that impedes invention and economic growth. Most patent infringement cases now take 3-5 years to verdict, with each appeal adding at least another year. Like patent examinations, litigations are simply too slow both for the pace of technological advances and for domestic and global markets. Delay must be cut at least in half, and soon. Because of delays caused by chronic underfunding of the Judiciary, innovation incentives are shrinking just when the nation needs them to be growing.

The gears of our patent system seem seized up. Ironically, Congressional inaction is discouraging private action. Obviously we need to strengthen and speed up both examinations and litigations, but only public funds can jump start the process. How so? Although PTO operations should remain financed by user fees, it needs an emergency transfusion of public money to overcome its warehouse backlog of 735,000 and equip it to keep up with the annual influx of 460,000 new applications. It needs thousands of additional examiners and salary increases to retain experienced, quality examiners. Most of all, it needs new computer systems and new space to house the existing workforce, as well as new hires. At present, two thousand of the six thousand examiners work at home, as the PTO lacks sufficient workspace for one-third of its workforce. Thus, even if Congress finally raises the fees, which it should, resolving the current crisis still requires a large infusion of public money. That is because much of the fee revenue arrives only years after the patents issue as maintenance fees. But money is needed now. Deferral will have corrosive consequences that cannot be undone. Therefore, I suggest the following emergency steps:

First, a one-time capital investment in the PTO of one billion dollars. It could be spent over the next several fiscal years, but it should be authorized and appropriated promptly. That should be enough to replace the IT systems, which the Director correctly calls “moribund,” and secure work space for the examiners. It probably could also pay for new hires to beat down the backlog.

Second, the Congress must guarantee by law that the PTO can spend an amount equal to the user fees paid by patent applicants and holders. Between 1992 and 2010, Congress diverted $759 million in fees paid to the PTO by patent holders and applicants and directed them instead to other governmental activity. In this year alone, Congress will siphon off an estimated $230 million in PTO user-paid fees. Essentially, PTO users have unwittingly been paying an additional tax subsidizing governmental expenditures that have nothing to do with PTO functions. Permanently ending this Congressional practice, called “fee diversion”, is a necessary precondition to reviving the PTO. If Congress continues spending user fees for other purposes, raising fee levels will have little effect.

But there is a Catch-22. If public R&D funding is already “maxed out” and other public funding otherwise already committed, then how could Congress find a billion dollars for the PTO? Well, when Congress wishes, it freely spends many billions of dollars, such as the $700 billion it provided to Wall St. I suggest only $1 billion, once. Just $1 billion, spread over several years, but provided soon.

Is my suggestion realistic? Yes, if Congress were to follow proper priorities. This public investment is absolutely necessary to our country’s short-term and long-term prosperity.

Well, would such capital investment fix everything that is wrong with the patent office? Maybe not everything, but certainly all the big problems. And, without it, other reforms will surely not suffice. Although other remedial steps are also necessary, most have already been started, at least on a pilot basis, by the new Director, David Kappos. But without an immediate, large, one-time dose of public funding, even his very sound leadership initiatives cannot produce the needed results and do so fast enough. In fact, despite his initiatives, the examiner corps is still shrinking, losing 500 examiners in the last several years. A net loss is again predicted for this year. So just when the patent office needs more examiners, it has fewer.

In his recent testimony before a House Appropriations Subcommittee, Director Kappos admitted that it will take many years to achieve timely examinations even if in the next two fiscal years Congress allows him to hire 1,000 new examiners per year. But since each year 500 leave, the total gain would only be 1,000, not 2,000. A much larger increase in examiners is needed to eliminate the backlog of 735,000 warehoused applications and assure timely examination of 460,000 new applications. My estimate is 3,000 additional examiners are needed if the PTO is to examine all incoming applications within one year.

What else? First, let the PTO open satellite offices in places like Detroit, and Houston, and hire unemployed engineers, patent agents and patent attorneys who are already experienced IP professionals. They can be productive immediately, unlike new graduates who need years of training. But again, Congressional authorization is probably needed. Under current law, most employees must work at the PTO campus in Alexandria, Virginia, or at home with regular reporting in person if living over 50 miles away.

Second, pay examiners better. Congress also controls the pay structure for examiners. But the gap between the examiner pay schedule and the General Schedule for non-technical civil servants is shrinking. Industry, I am sure, would willingly pay higher fees to enable the PTO to pay more competitive salaries to retain skilled examiners. Congress should raise these fees and pay levels.

What about ending the delays in court? In addition to promptly filling nearly 100 vacancies and Congress adding the nearly 100 judgeships long requested, what else could be done?

First, more frequent use of expert special masters to do claim construction and magistrate judges to police discovery would help. Second, discovery should be narrowed. If discovery were limited largely to evidence that can actually be used at trial, much delay as well as excess cost could be avoided. Staging discovery by issue also looks promising. But both require closer judicial supervision which in turn requires more magistrate and district judges.

The bottom line is this: unless Congress invests more in the America patent system, private investors will not. We must encourage investors to boost their investments in order to surge American R&D. The PTO and the courts both need more money, more space and more adjudicators. Congress must “prime the pump”. Only then can private investment take over. This is the only practical way to increase innovation and restore our nation’s competitive advantage. This strategy could restore us as the technology leader of the world, increase private and public revenues and stock values, raise our standard of living and create millions of new, high-paying jobs. With so clear and compelling a strategy, Congress need not hesitate to act.

But because members don’t understand that patents increase prosperity, they must first hear from you, from private sector leaders in law, business, media, and academia. The question is: Will you advocate these reforms to Congress?"

David E. De Lorenzi is Chair of the Gibbons Intellectual Property Department.

Good Practices to Speed Up Any Examination
To achieve such a quick turn around, a priority application will be placed in a queue for all priority applications separate from Tier II cases, ensuring they will be taken up and considered in a more timely manner. Applications claiming priority from prior filed foreign applications will have to wait a bit and furnish some additional information before jumping onto the Tier I examination track. As explained in the Federal Register, to maximize the benefits of the priority examination, an applicant should be knowledgeable of the prior art, draft claims as broad as possible in view of the art and as narrow as one is willing to accept, respond within the shortened statutory periods, and be prepared to conduct examiner interviews.

Speed Comes With a Price
Anyone seeking to utilize Tier I or prioritized prosecution will be required to pay an additional fee to cover the priority request. The as yet-to-be-determined fee, will be used to hire and train the additional examiners needed to ensure that priority examination can be completed within the projected time frames. Additionally, to facilitate the processing of Tier I applications, the USPTO is considering limiting the number of claims in a Tier I application to 4 independent claims and 30 total claims.

Tier III examination on the other hand will allow an applicant to defer docketing of an application for review for up to 30 months after filing. By choosing to delay examination, an applicant can explore the market and focus on commercialization. If at any time during that 30 month period, the applicant deems the invention worth pursuing, they can request examination (and pay the fee) anytime prior to the expiration of the period. Failure to request examination will result in abandonment. The realization that one size does not fit all is a refreshing and welcome attempt by the USPTO to speedup the examination process and offer an applicant more choices.

Andrew M. Grodin is an Associate in the Gibbons Intellectual Property Department.

While the argument for cost savings is noted, overall this change may be more beneficial to only a relatively small number of pro se applicants who prepare and file applications on their own behalf without the assistance of skilled patent attorneys or agents. For those pro se applicants, this additional time would seem to allow them the opportunity to attempt to commercialize their potential patent while avoiding their only out of pocket expense of having to pay a large portion of the filing fees and ultimately, if and when a patent were to issue, the maintenance fees.

For all other applicants, including nearly all businesses and most individuals, relying on patent attorneys or agents for preparing patent applications, the cost of careful preparation of a patent application by the patent attorney or agent is the majority of where the out of pocket costs are spent rather than in the filing fees. Most business entities advantageously rely on in-house attorneys and/or retained outside patent counsel to draft the patent application for obtaining broad patent protection. As a consequence, it would be rare that such an applicant under the present rules would be willing to pay extension fees for merely delaying payment of the search fee.

Further, the USPTO notes that with regard to this proposed change, the non-provisional patent application need only include a single claim. However, the cost of preparing additional claims is incremental to the cost of preparing the patent application specification and single claim. Furthermore, it will be questionable whether this additional time will even be used to its fullest extent since the revision is adding just under half a year to the process in light of the current time to respond to a missing parts notice of up to seven months. Comments are to be submitted to the USPTO on or before June 1, 2010. Stay tuned - we will keep you updated.


Robert E. Rudnick is a Director in the Gibbons Intellectual Property Department.

The Dual Requirements for Written Description Are Part of 35 U.S.C. §112

With respect to a patent specification, the first paragraph of 35 U.S.C. § 112 sets forth that the specification shall contain a written description of:

1. the invention; and
2. the manner of making and using the invention (the enablement requirement)

Therefore, there are two requirements set forth in this statute with respect to the written description, one as to the invention and the other as to enablement (the manner of making and using the invention). The case of In re Barker, 194 U.S.P.Q. 474 (C.C.P.A. 1977) explicitly articulated that 35 U.S.C. §112 first paragraph set forth these two separate requirements for written description. To provide a written description of the invention, the specification must include a written description of each and every element of the claimed subject matter. This was enunciated by the Federal Circuit in Lockwood v. American Airlines. In the Lockwood case, the Federal Circuit specifically stated that:

It is the disclosure of the application that counts. Enablement of a filing date does not extend to subject matter which is not disclosed but which would be obvious over what is expressly disclosed.

The Written Description Requirement Has Been The Backbone of U.S. Patent Law Well Before 1967

The requirement for written description was reiterated by the C.C.P.A. in In re Ruschig. In Ruschig, the C.C.P.A. specifically held that a description of a genus does not constitute a description of a claimed subgenus unless that specific claimed subgenus is specifically described in the specification. The Ruschig case was directed to whether the specification contained a written description of a specific claimed compound. The claimed compound in Ruschig had a phenyl group substituted with chlorine and the C.C.P.A., in a prosecution and interference setting, held that there was no written description of this compound even though the application disclosed that phenyl ring could be substituted with chlorine or bromine. Discussing the written description requirement of 35 U.S.C. §112, first paragraph, the C.C.P.A. stated as follows:

Appellants refer to 35 USC 112 as the presumed basis for this rejection and emphasize language therein about enabling one skilled in the art to make the invention, arguing therefrom that one skilled in the art would be enabled by the specification to make chlorpropamide. We find the argument unpersuasive -- the question is not whether he would be so enabled but whether the specification disclosed the compound to him, specifically, as something appellants actually invented.

379 F.2d at 995.

Ariad May Not Affect the Law as to the Written Description Requirement and Its Dual Nature

The outcome of the per curiam appeal in the Ariad case may not affect the law as to the written description requirement and its dual nature because the appeal does not challenge these requirements for written description. The issue in Ariad is whether the describing of a claimed method which utilizes a compound to regulate by altering the transcription factor of specific genes to express proteins is sufficient to provide a written description for this method, even though no specific compound is disclosed for such regulation. Therefore, the Ariad application claims the use of any compound which provides a specific function and the issue is whether this description is sufficient for a written description of the invention and to enable the invention. The issue presented in Ariad is not directed to the fact that there is no new matter claimed which is not disclosed but whether the written description of the invention in chemical and biotech cases requires the definition of compounds by structure, formula, chemical name or physical properties and not by function. Therefore, the Ariad case never really challenges the basic requirements of 35 U.S.C. §112 for written description that, for at least 40 years, have and remain instrumental to the operation of the U.S. patent system.


William H. Epstein is Counsel to the Gibbons Intellectual Property Department.

A few years later, during prosecution of the ‘551 patent, the prosecuting attorney, who was familiar with the EPO opposition proceedings, established a new point of novelty before the USPTO to advance the prosecution of the ‘551 patent. That new point of novelty was that never before was the sensor known to work without a membrane. This assertion directly contradicted an earlier statement made by the applicant during the EPO opposition proceedings.

The Federal Circuit affirmed the district court’s finding of invalidity of U.S. Pat. No. 5,820,551 due to inequitable conduct by applying the standard recently summarized by the Federal Circuit in McKesson Info. Solutions, Inc. v. Bridge Med., Inc.

To establish inequitable conduct by failure to disclose, the asserting party must show materiality of the information and the intent to deceive. The trial court held that the prosecuting attorney knew that to disclose the EPO opposition arguments would defeat the patent grant before the USPTO. The trial court then balanced the levels of materiality and intent, and found the withheld information “richly material” and that the prosecuting attorney had no explanation for his conduct, and that this was proved by clear and convincing evidence.

As we previously posted, a patent applicant’s duty of disclosure may also extend to references and office actions in “similar” but unrelated, co-pending patent applications. The Therasense and McKesson cases show continued development in the caselaw of inequitable conduct. Stay tuned for future developments.