2009 January « INVENTIVE STEP

Archive for January, 2009

Congress Continues to Sabotage Federal Judiciary

January 12, 2009

Yet again, Congress failed to provide federal judges with a cost-of-living pay increase to which they are entitled. Not only has judicial pay not kept pace with salaries in the legal market, but it has not even kept pace with inflation.

Pay Comparison

In 2008, district court judges were paid $169,300 and circuit court judges were paid $179,500. These seem like pretty good salaries, until one puts them in perspective.

Brand new law school graduates in big city firms are currently earning $160,000, exclusive of any potential year end bonus (although these jobs are harder to come by in the present economy). Meanwhile, profits per partner at the top 100 law firms have risen to $1.3 million, with a number passing the $2 million mark. Meanwhile, the top 50 most highly compensated general counsels at Fortune 500 companies made at least $1.2 million in cash payments, not including stock options and other compensation.

The high salaries are not limited to private law practice and corporate America. According to a USA Today article, salaries of deans at the top 25 law schools are around $430,000, while the median salary of all law school deans in 2005 was $229,600. Senior professors at top 25 law schools earn about $330,000.

Even other government officials earn more than federal judges. For example, a supervisory technology specialist at the Comptroller of the Currency earns $225,000.

Judges are Leaving the Bench

In a September 2007 article, USA Today reported that:

Since 2005, 22 of 875 federal judges serving lifetime appointments have resigned or retired — more than at any time in history, according to the Administrative Office of the United States Courts. Most earned higher salaries after leaving the bench. Of the 19 who have taken jobs, 14 went into private practice and five into education or government.

To put these numbers in perspective, between 1958 and 1969, only three federal judges left the bench. Between 2000 and September 2007, 51 left, with an additional 17 expected to leave before the end of 2009.

Senior Status

Once a judge reaches the age of 65 with at least 15 years on the bench (or a sliding scale up to age 70 with at least 10 years of service), he is eligible for “senior status.” At this point, the judge can continue to be paid his salary with the yearly increases that other judges receive in exchange for a lightened caseload of about one-quarter time of active judges on his court. Conversely, the judge may also retire completely and receive his then-current salary, without subsequent raises, for the remainder of his lifetime.

This seems like a pretty good deal, since a judge that elects “senior status” still performs a quarter of the work of an active judge, while his seat is also filled by a new active judge. It is estimated that senior judges handle about 15% of the federal courts’ workload.

Why would any judge take senior status, since the raises simply haven’t been there?

When adjusted for inflation, federal judges’ real pay declined 25% from 1969 to 2006, while real pay for the average U.S. worker rose 19%.

BNA reports that since 1991, Congress has rejected COLA increases for federal judges six times. During that time judicial pay has increased by 30.7%, while the consumer price index has climbed 51.4%.

Many retired federal judges are instead finding lucrative positions serving as arbitrators after leaving the bench.

What Does This Mean for the Federal Circuit?

By the end of 2009, Judges Newman, Mayer, Michel, Lourie, Schall, Gajarsa, and Dyk, will be eligible for senior status, with Judge Bryson turning 65 in 2010 and Judge Linn reaching the service requirement in the next couple of years. That’s 9 of the 12 active judges on the court.

What will happen to the court if many or all of these judges left the court within a short period of time? It would certainly leave a large void of experienced judges to handle patent appeals.

Posted in Congress | 1 Comment »

Developing and Preserving Evidence of Conception

January 8, 2009

In patent parlance, “conception” refers to “formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is thereafter to be applied to practice.” In other words, conception is the mental act of thinking of the idea of the invention and how it would be implemented.

Reasons to Develop and Preserve Evidence of Conception

There are a number of important reasons to develop and preserve evidence of this conception. First, it may be important to prove accurate inventorship in case a question arises at a later date. In the US, each inventor has an ownership right in a patent application and has the right to license, assign, or transfer his interest in the application without respect to the rights of the other inventors. This right is often restricted by contract, such as an obligation to assign the invention to an employer. Inaccurate inventorship may cause a patent to be unenforceable or invalid.

The US, as opposed to much of the rest of the world, a patent is granted to the first person to invent. If two or more applicants file separate patent applications at the PTO for the same invention, the PTO conducts what is called an “interference.” An interference is basically a mini-trial to determine which inventor invented first and is thus entitled to the patent. Like trials in court, evidence is what wins the day. One applicant may have come up with the idea before the other, but if he cannot prove it, he will not win the interference.

The US has a one year grace period for filing a patent application after certain activities, such as sales or public disclosures. If a patent application is rejected by a prior art reference that is dated within one year of the applications filing date, the inventor may use evidence of prior conception to remove the reference as prior art to overcome the rejection. Again, it is important to have such evidence to submit.

There are also certain circumstances when evidence of prior conception may be used to prove non-infringement or invalidity of a patent that one is accused of infringing.

How to Develop and Preserve Evidence of Conception

It is important to remember that what counts is what can be proved.

Inventors should keep detailed records of their inventive activity. This can be in the form of notebooks or other documents and should include as much of the following as possible:

facts or circumstances leading to the invention;
purpose of the invention or problem the invention is attempting to solve;
description of the structure and function of the invention or the steps of any process that comprises the invention;
sketches, drawings, pictures, or other graphical details of the invention;
any and all known or possible applications of the invention;
advantages of the invention over what is already known; and
any other information that might be relevant to a future proceeding.

The evidence should be signed and dated and preferably witnessed by someone who understands the evidence. As the invention is further developed and refined, additional evidence should be developed at each step of the process to continue to show conception.

Evidence that is contemporaneously developed is almost always better than evidence that is developed at some later date. This is because memories fade and documents or other evidence can be lost. Contemporaneously developed evidence also tends to be more credible because it is not subject to possible taint of a later proceeding.

Evidence of conception will aid a patent attorney in preparing a patent application for the invention, as well as being useful for reasons above.

Posted in Patent Strategies | 2 Comments »

Jon Dudas to Resign as Director of PTO

January 7, 2009

As has been widely expected, PTO Director Jon Dudas will resign by mid-month reports Dennis Crouch of Patently-O. Dudas has been responsible for several significant improvements at the PTO during his tenure as director, such as ending fee diversion, hiring a large number of additional patent examiners, and working on some pilot workshare programs with sister patent offices in foreign countries. He has also, however, been widely critcized as being responsible for many of the PTO woes that have been detailed in this blog: here, here, and here.

According to his PTO bio, Dudas has served as PTO Director since 2004 and as Acting Director and Deputy Director since 2002. Prior to his PTO appointments, Dudas was counsel to the House of Representatives Subcommittee on Courts and Intellectual Property. Other than advising on some legislation, Dudas had little or no background in intellectual property prior to his appointment to the PTO.

Dudas’ predecessor, James Rogan, was a two-term congressman from California. After he was defeated for re-election, has was appointed Director of the PTO by President Bush in 2001. While in Congress, Rogan was a member of the House Judiciary Committee. Like Dudas, other than reviewing some legislation, Rogan had no background in intellectual property. Not since Q. Todd Dickinson during the latter part of the Clinton administration has the PTO Director had significant, or any, experience in patent law.

Acting Deputy Director John Doll is expected to become the Acting Director once Dudas’ resignation becomes official. Doll has spent over 34 years at the PTO working his way up from patent examiner to his current position. It is unlikely that he would be named permanent Director. As a lifetime PTO employee, Doll would not be viewed as a solution to current PTO problems with patents.

Who’s Next?

Barack Obama will have the opportunity to appoint a new PTO director once he takes office. Who will he appoint? Most criticism of the PTO has been on the patent side in recent years, complaints have included poor patent quality and increased backlog and pendency. The patent bar has also been clamoring for a patent-savvy PTO Director. Hal Wegner, highly-respected patent commentator and patent attorney with Foley & Lardner, probably speaks for a large part of the US patent bar when he states the number one priority for the incoming president when it comes to patent policy.

A new Director for the PTO who is a knowledgeable expert can do wonders to turn around the patent ship of state: A President is needed who will understand the significance of this appointment and not treat the Under Secretary title as a fungible political plum to be treated like a FEMA-like appointment.

One of the names that has been mentioned is Shanna Winters, Chief Counsel to the House Subcommittee on The Courts, Internet, and Intellectual Property. Sound familiar? Apparently, she really wants the job. Wegner states that “I’ve heard it from some very reliable people that she is actively seeking” the USPTO post. Winters would appear to be another political appointee who lacks significant patent experience.

There would be opposition to her appointment from some in the patent community. Intellectual Property Watch reports that patent analyst Greg Aharonian would file a lawsuit to stop the appointment.

“Shanna has no management experience, no experience with patent prosecution or litigation, no experience with information technology management, etc… all essential to restore the health of the PTO,” Aharonian told Intellectual Property Watch Friday. “Shanna’s appointment would be an insult to inventors, patent lawyers and patent examiners, and would further accelerate the decline of patent quality at the PTO.”

Another name that has been mentioned is former PTO Director Q. Todd Dickinson. Dickinson is the recently-named executive director of the American Intellectual Property Law Association (AIPLA) and is a registered patent attorney. Prior to his tenure as PTO Director, Dickinson was Chief Counsel for Intellectual Property and Technology at Sun Corporation and also worked in the IP departments at Chevron and Baxter Travenol Labs. Dickinson clearly meets the desire for a patent savvy director.

Arti Rai, law professor at Duke University, has been mentioned as a possible PTO Director. Professor Rai was a law school classmate of Obama at Harvard. On IP issues, she has been at the forefront of his campaign and is a member of his agency review team on science, technology, space, arts and humanities. She is also one of the authors to an amicus brief supporting the PTO’s ill-conceived continuation/claim limitation rules, a position generally disfavored by the patent bar. While Professor Rai’s paper and academic credentials are impressive, she is not a registered patent attorney and has never written or prosecuted a patent.

Many other names have been suggested, but no one really knows whether Obama will use this nomination as a chance to change and hopefully improve patent practice at the PTO, or if he will simply use it as another political appointment for a favorite supporter. What does this mean for us? We’ll have to wait and see, but we can hope Obama does the right thing.

Posted in US Patent & Trademark Office | 1 Comment »

Can Accused Infringers Finally Escape Marshall?

January 6, 2009

Recently, patent owners have been filing infringement suits in the seemingly patent-friendly courts in the Eastern District of Texas. This may, however, be coming to an end.

In a rare proceeding, the Federal Circuit ordered Judge Ward of the Eastern District of Texas to transfer a patent infringement case to the Southern District of Ohio. Lear Corp., a company located in Southfield, Michigan, had sued TS Tech, located in Reynoldsburg, Ohio, in the Eastern District of Texas. TS Tech moved to have the case transferred to Ohio because none of the parties, witnesses, or evidence had significant connections to Texas. Judge Ward disagreed, holding that Lear’s choice of bringing suit in Texas outweighed any inconvenience to witnesses and TS Tech, and that several vehicles that included the allegedly infringing product had been sold in Texas.

The Federal Circuit held that Judge Ward abused his discretion. Following the recent Fifth Circuit case, In re Volkswagen of America, the Federal Circuit ordered that the case be transferred. In the Volkswagen case, the Fifth Circuit held that venue should be transferred upon a showing that the new venue is “clearly more convenient” than the venue chosen by the plaintiff. In this case, the Federal Circuit found that the factors weighed heavily in favor of transfer.

Why this case is significant.

In the last few years, the Eastern District of Texas has led the nation in patent infringement filings, despite the lack of large technology companies or research firms in towns like tiny Marshall, Texas. In fact, the Eastern District does not include any of the major cities of Texas, like Houston, Dallas, or Austin. In 2003, 14 patent cases were filed in the district. In 2004, the number was up to 59. By 2006, the number of filings grew to an estimated 234. And in the year ending Sept. 30, 2007, 358 cases were filed.

One reason was that the district was perceived as being a “rocket docket,” meaning that cases were resolved quickly. Judge Ward was integral to the increase of patent filings. He would set quick trial dates and discovery deadlines to keep cases moving; the judges in the district were said to actually like patent cases. The increase in filings, however, may be taking a toll on the speed of cases, as some trial dates are being set for late 2011 or early 2012.

Another reason for the increase is the perceived bias towards plaintiffs in these suits. In 2007, a jury in Beaumont rendered a $156 million verdict against AT&T. While this verdict was later set aside by the judge, it shows the perception towards plaintiffs may not be wrong.

Are the good times for patent owners coming to an end in E.D. Tex.?

For years, patent owners have had free reign to file infringement suits against defendants in virtually any district where at least one infringing product was sold. The Volkswagen case from the Fifth Circuit and now the TS Tech case from the Federal Circuit would seem to indicate that the end may be near, at least in Texas. Add to this the new slowdown in case progression and Marshall no longer looks like such a great venue for patent owners. It should be noted, however, that the plaintiff in the Volkswagen case has asked the Supreme Court to review the Fifth Circuit’s decision. If the Supreme Court deigns to hear the case, it may be a year or more before we know the final answer.

Posted in Court Decisions, Federal Circuit | Leave a Comment »

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