Archive for February, 2010

Federal Circuit Provides More Guidance on Design Patents

February 25, 2010

The Federal Circuit continues to issue high profile decisions on design patents, elevating them to a higher status.  Yesterday, the courts issued an opinion in Crocs, Inc. v. ITC where the court reversed the ITC’s decision that a design patent was not infringed.  The court issued guidance on claim construction and application of the ordinary observer test for design patents.

Claim Construction

Design patents do not include claims that consist of numbered paragraphs of varying lengths as do utility patents.  Instead, the claim for a design patent is the various views presented in the drawings.  In performing claim construction of a design patents, courts often issue a detailed verbal description of the drawings.  The Federal Circuit, while not banning this practice completely, continues to caution against this.

 [T]his court warned that misplaced reliance on a detailed verbal description of the claimed design risks undue emphasis on particular features of the design rather than examination of the design as a whole. In many cases, the considerable effort in fashioning a detailed verbal description does not contribute enough to the infringement analysis to justify the endeavor. Depictions of the claimed design in words can easily distract from the proper infringement analysis of the ornamental patterns and drawings.

(references omitted). The court noted that the illustration in the drawings is the best description of what is claimed.

In Crocs, the claimed invention is, of course, the particular type of shoes.

The Administrative Judge had issued a claim construction as follows:

In summary, when the ’789 patent is considered as a whole, the visual impression created by the claimed design includes: footwear having a foot opening with a strap that may or may not include any patterning, is attached to the body of the footwear by two round connectors, is of uniform width between the two round connectors, has a wrench-head like shape at the point of attachment, and extends to the heel of the shoe; with round holes on the roof of the upper placed in a systematic pattern; with trapezoid-shaped holes evenly spaced around the sidewall of the upper including the front portion; with a relatively flat sole (except for upward curvature in the toe and heel) that may or may not contain tread on the upper and lower portions of the sole, but if tread exists, does not cover the entire sole, and scalloped indentations that extend from the side of the sole in the middle portion that curve toward each other.

The Federal Circuit noted that the written claim construction required that the design include (1) a strap of uniform width, and (2) holes evenly spaced around the sidewall of the upper.  Neither of these were required by the drawings.

Ordinary Observer Test

The ordinary observer test for design patent infringement requires that the ordinary observer compared the claimed design to the accused design.  If the ordinary observer would be deceived into believing that the accused products are the same as the patented design, the product infringes the patent.  The comparison is to be conducted for the designs as a whole. 

Instead, due to its erroneous claim construction, the ITC placed undue emphasis on the two features recited in the detailed verbal claim construction.  In its opinion, the court included pictures of the accused products compared to the drawings in the patent.  The court then concluded that the accused products appear nearly identical to the patented designs.  The court was not confident that an ordinary observer could determine which was which.

The ITC had also ruled that Crocs’ products did not meet the industrial applicability requirement for ITC relief.  Basically, this requirement means that the patent owner must practice the patent, i.e., the patent owner’s own products must be covered by the patent.  In this case, due to its erroneous claim construction, the ITC has ruled that Crocs’ own shoes were not covered by the patent.  The Federal Circuit also reversed on this issue.

Crocs also holds a utility patent on its shoe products.  The Federal Circuit reversed the ITC’s ruling that the utility patent was invalid for obviousness.

More Opposition to Patent Reform

February 22, 2010

All has been rather quiet on the patent reform front in recent weeks.  There has been a lot of speculation that patent reform is dead for now.  We all know from experience, however, that Congress tends to do much of its work in back room deals behind closed doors rather than publicly.  Thus, the seemingly stalled reform bills could be revived at any time.

A few weeks ago, several House members sent a letter to the House leadership expressing opposition to the pending bills.  BNA (subscription service) is now reporting that Reps. Michael Michaud (D-ME) and Donald Manzullo (R-IL) are continuing to bring publicity to the provisions of the bill that they oppose.  They conducted a briefing last week with several industry groups.

Although it seems more prudent to not draw further attention to bills that are seemingly dead, Stanley G. Fendley of Corning Inc. said that rumors of an agreement between Judiciary Committee leaders Sens. Patrick Leahy (D-VT) and Jeff Sessions (R-AL) prompted concern that the Senate version might be revived.

During the House briefing, Corning and the United Steelworkers expressed their concerns about the pending legislation, specifically the damages and post-grant review provisions.  Corning expressed support for the Senate compromise on damages, but noted that it is unclear whether the House would adopt the compromise in its version.

The removal of estoppel provisions for arguments that could have been raised in inter partes reexamination or post-grant opposition proceedings and the ability to tie up an issued patent in such proceedings for years are two additional provisions that cause the groups to be concerned.

United Steelworks added several additional concerns related to requiring 18 month publication of all applications regardless of whether they will be filed internationally and the lack of sufficient funding for the PTO.  Many of the provisions in the legislation require additional work and the expediture of additional resources on the part of the PTO, yet the bills fail to give the PTO any additional resources.  Simply giving the PTO more work to do without giving it the resources to do it will fail.

Corning did express support for the provisions that would limit forum shopping and would support a limited 12-month window for post-grant opposition that would not permit serial challenges to a patent.

If the rumors are correct and an agreement has been reached to revive the bills, this is par for the course for Congress.  Such a piece of legislation that will have a large economic impact on our country deserves to have open hearings with all affected parties.  It’s simply too important to be legislated by back room deals. 

Congress refused to have open hearings on health care, why would they do so on patent reform?

International PCT Filings Dropped in 2009

February 17, 2010

WIPO has announced that PCT filings were down 4.5% in 2009 compared to 2008.  This comes on the heels of 2008, when PCT filings grew at a much smaller rate than prior years

WIPO is the international organization that oversees PCT patent application filings and acts as a clearinghouse for international applications prior to the applications being filed in individual countries.

Although the US remained the top PCT-filing country, US-based PCT applications dropped by 11.4% in 2009.  East Asian countries, by contrast, continued to increase filings.  Japan filed 3.6% more applications, the Republic of Korea filed 2.1% more applications, and China increased its filings by 29.7%.  Most other industrialized countries saw declines, led by Israel (-17.2%), Canada (-11.7%), Sweden (-11.3%), and Germany (-11.2%).

Among the top PCT-filing companies, the US saw a significant increase from Qualcomm, which moved into 5th place.  It was the only US company in the top 10.  Four of the top ten companies were from Japan, and one each from China, Germany, the Netherlands, the US, Sweden, and Korea.

Among industry sectors, computer technology saw the largest decline (-10.6%) in filings, followed by pharmaceuticals (-8.0%), and medical technology (-5.95).  The largest increases were in micro-structural and nano-technology (+10.2%), semiconductors (+10%), and thermal processes and apparatus (+7.2%).

Impact

The reduction in filings is certainly no surprise given the economic situation.  What is concerning is that the US is losing its place of prominence in the global marketplace.  It is certainly not time to panic yet, as the US still files nearly 30% of all PCT applications.  For the first time in 2009, Japan, Korea, and China together filed more PCT applications than those that originated in the US.  If this trend continues, global innovation may be shifting to the Pacific Rim.

It is vital that US lawmakers focus on strong intellectual property rights and incentives for US companies to increase research and innovation.  Otherwise, we will lose our place as the world leader in these areas.  Our economic recovery depends on it.

Indirect Patent Infringement

February 11, 2010

In general, a patent is infringed by one who makes, uses, sells, offers to sell, or imports a patented invention without the permission of the patent owner.  This would mean that a wholesaler is liable for sales it makes to retailers, but not for the sales that retailers make to customers.  These types of actions are generally referred to as direct infringement of the patent.

There are also two forms of indirect patent infringment–contributory infringement and induced infringement.  No party can be liable for indirect infringement unless a direct infringement of the patent has occured.

Contributory Infringement

Contributory infringement permits the patent owner to sue one who supplies a component of a patented machine or process, knowing that it may be used to infringe a patent.  Contributory infringement is set forth in 35 U.S.C. § 271(c):

Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.

The elements of contributory infringement include the supplying of a component of a patented machine, manufacture, or material that can be used in a patented process; the knowledge that it may be used to infringe a patent; and that the supplied component is not simply a staple product that may have substantial non-infringing uses.  Unlike direct infringement, contributory infringement includes a knowledge requirement.  In general, one has to be aware of the patent to be guilty of contributorily infringing that patent.

Induced Infringement

Induced infringement is covered by 35 U.S.C. § 271(b):

Whoever actively induces infringement of a patent shall be liable as an infringer.

Congress provided much less guidance for how to determine if one is liable for induced infringement.  Courts have generally required liability for induced infringement to result from an intent to lead a party to directly infringe the patent.  This could occur by including instructions or other types of assistance to a third party to infringe the patent.  Thus, the requirement for liability for induced infringement requires that the infringer “knew or should have known” that its actions would induce infringement.  Previously, Federal Circuit cases required that the infringer have actual knowledge of the patent.  The Federal Circuit also has noted that liability requires a specific intent to encourage another’s infringement. 

SEB S.A. v. Montgomery Ward & Co., Inc.

Last week, the Federal Circuit issued its opinion in SEB S.A. v. Montgomery Ward & Co., Inc.  In SEB, there was no evidence that the infringer had knowledge of the patent at the time it was found to be liable for induced infringement.

The Federal Circuit found that because the infringer had deliberately disregarded a known risk that the plaintiff had a patent, it should be liable for induced infringement.  The infringer hired a patent attorney to perform a freedom-to-operate search, but did not tell the attorney that it had based its own product on the plaintiff’s product.  While the infringer did not know that the product was covered by a patent, it might have at least had its attorney check this fact when he did the search.  The record included evidence that the infringer had experience with patents and thus should have appreciated the risk.

A failure to inform one’s counsel of copying would be highly suggestive of deliberate indifference in most circumstances. 

Thus, the Federal Circuit affirmed that jury verdict of induced infringement.

Patent Reform Legislation Update

February 4, 2010

It’s been a while since we’ve heard much on the Patent Reform bill that is pending in Congress.  The last we heard, Secretary Locke was pushing the bill forward and Sen. Leahy promised to bring it to the Senate floor before the end of the 2009. 

That obviously didn’t happen as Congress has been busy with things like health care reform and bailouts.  And in 2010, it would seem that legislators would be more concerned with reelection than mundane things like patent reform.

On Tuesday, a group of House members, including Mike Michaud (D-ME), Dan Manzullo (R-IL), Dana Rohrabacher (R-CA), and Marcy Kaptur (D-OH), sent a letter to the House leadership expressing opposition to the currently pending bill. 

The letter urges that strong patent protection is needed to drive recovery from the current economic slump.  The legislators some expressed support for the Senate compromise on damages, but criticized the “apportionment-centric” system of damages in the bill.  They called the changes to post-grant opposition and inter partes reexamination unnecessary because they will not result in a decrease in patent litigation and will make it too easy for large companies and foreign competitors to challenge US patents.

The letter also notes that there are many constituencies who would be affected by the bill and urged the House Judiciary Committee to hold open hearings on the legislation to get input from these parties.

The letter appears to have been prompted by President Obama’s recent calls for reforms of the nation’s intellectual property laws.  The President seems to be focused on changes to intellectual property laws abroad as he has been referring to cheap knock-offs from countries such as China.

Legislation of this type is always difficult in an election year.  Now that health care reform is not taking up all of Congress’ time, however, it is possible that it may revisit patent reform.  There is a need to improve the patent system, but most of the changes necessary are within the PTO.  New Director Kappos is making improvements, but requires additional time and funding to continue these efforts. 

If Congress is to move this legislation forward, it should do so in an deliberate manner with open hearings to get input from all concerned parties, not in a rushed manner as the Senate Judiciary Committee did in 2009.

Obama’s FY2011 PTO Budget

February 2, 2010

Yesterday, the White House sent its proposed budget for FY2011 to Congress.  Included in the budget is a significant increase in funding for the PTO to $2.322 billion, up from $1.887 billion for FY2010.  The funding request is a 23% increase from FY2010.  The budget is also expected to give the PTO full access to all of the fees that it collects, unlike in other years such as FY2010.

The increase would come not only from anticipated increase in filings, but also from a 15% surcharge to be assessed for patent filings.  The surcharge is expected to generate over $200 million in additional revenue.

The budget states that the increased funding “will be used in support of USPTO’s strategic priorities to improve patent pendency, improve examination quality, invest in and improve IT infrastructure and tools and demonstrate global leadership in all aspects of IP policy and development.”

The budget increase should permit the PTO to hire more examiners after facing a hiring freeze in recent years.  Director Kappos has also identified the PTO’s computer system as “antiquated” and in serious need of replacement.  Unfortunately, that may take several years and hundreds of millions of dollars.

The Obama Administration is on the right track with the PTO budget.  Once Congress gets done with it, it could be another story as they seem to like to trim spending in areas such as the PTO. 

Nobody likes to to see fee increases, but most PTO users will support a fee hike provided that all of the PTO revenue is used for PTO operations and not siphoned off by Congress.  If it reduces pendency and improves quality, I say go for it.


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