Archive for August, 2012

Federal Circuit Permits Multi-Party Infringement, But Only For Inducement

August 31, 2012

The Federal Circuit released its long-awaited en banc opinions regarding multi-party infringement, Akamai Techs., Inc. v. Limelight Networks, Inc. 

Per Curiam

In a 6-4-1 decision, the court held that infringement can be found in cases where (1) a party performs some of the steps of a patented method and induces another party to perform the remaining steps; and (2) where a party induces multiple third parties to collectively perform the steps of a patented method, but no single party has performed all of the steps itself. 

The court’s opinion was per curiam meaning that no particular authorship is attributed.  The judges consituting the majority included Chief Judge Rader and Judges Lourie, Bryson, Moore, Reyna, and Wallach.  The court declined to decide whether direct infringement can be found where the method steps are all performed, but are performed by different entities.

The court had previously held that for a party to be held liable for infringement, direct infringement of the method must be found.  This means that a single entity must have performed each of the method steps.  The court reasoned that because infringement is a strict liability tort (there is no mental requirement of intent or even knowledge), a party may be found liable for infringement by performing some of the method steps, even if it did not know that another party performed the remaining steps.

Inducement, however, requires knowledge that the induced acts constitute infringement.  It requires a specific intent to encourage another’s infringement.  Because there is no such thing as attempted patent infringement, actual direct infringement must occur for there to be liability for inducement.  Simply because the accused infringer has knowingly induced others to commit acts of infringement and the acts are committed by multiple parties is not a reason to immunize the inducing activity.

The court continues its opinion by noting that this result is consistent with the statutory language of § 271 of the Patent Act and with the legislative history of induced infringement.  The court also analogizes the relationship to other areas of the law, including criminal law.

Divided Infringement Dissent

Judge Newman filed a dissenting opinion where she took the court to task for not actually answering the question presented and briefed by the parties.  The court has announced a new rule for inducement, but did not answer the direct divided infringement question that was actually briefed and argued.

Judge Newman would answer the question that “direct infringement may be by more than one entity.”  She argues that until recently, this had been the law.  Nothing in the statute, legislative history, or precedent supports the single entity infringement position.  She argues that patent infringement is not trualy strict liability.  An infringer is not liable for damages until he has actual knowledge of the patent (unless the patented product is properly marked).

Single Entity Infringement Dissent

Finally, Judge Linn, joined by Judges Dyk, Prost, and O’Malley filed a dissent where he argued for the single entity infringement requirement.  Judge Linn argues that the language of the statute requires a single entity interpretation. 

He (similar to Judge Newman) also argues that the court cannot define direct infringement and indirect infringement differently.  There can be no indirect infringement without a finding of direct infringement.  Congress enacted sections on direct infringement (271(a)), inducement (271(b)), and contributory infringement (271(c)).  By the enactment of subsections (b) and (c) (and not other sections on joint liability or other theories of multi-party liability), Congress intended to limit direct infringement in subsection (a) to infringement by a single entity.

He takes issue with Judge Newman’s strict liability assertion.  Just because damages do not apply unless the infringer had knowledge of the patent (or marking), he is still liable for infringement in the absence of such knowledge.  Thus, patent infringement is a strict liability tort.

Finally, Judge Linn again provides instruction to patent applications and attorneys.  This problem can generally be avoided by proper claim drafting to cover the various infringing parties.

Analysis

The court obviously had a lot of trouble with this case.  It was initially argued in November, nearly 10 months ago.  Consensus was apparently elusive.  I assume that the per curiam opinion was all the court could reach a majority on.  Apparently the direct infringement single v. multi-party infringement question could not be resolved.

I don’t buy Judge Linn’s reading that the statute is clear that § 271(a) only applies to a single entity.  The court needs to figure this out, but appears to be stuck on whether patent infringement is a strict liability tort.  It appears worried about “accidental” joint infringement.

Judge Linn’s claim drafting admonition is another reminder that proper preparation of a patent application can have great consequences to the value of the resulting patent.

Judge Linn to Take Senior Status

August 29, 2012

Federal Circuit Judge Richard Linn will take senior status effective November 1.  Judge Linn was nominated to the court by President Clinton and began his service on January 1, 2000. 

It has been my distinct privilege to get to know Judge Linn well given that my wife was one of his early clerks from 2002-04.  All the best to Judge Linn and his family!

While Judge Linn will continue to hear cases in the capacity of senior status, this announcement gives the court a second vacancy.  Unfortunately, politics is holding up confirmation of circuit court judges by the Senate.  It does not appear that the Senate has confirmed a circuit court judge since May. 

Richard Taranto was nominated last November to the seat vacated by Chief Judge Paul Michel in May 2010.  This was after the Judiciary Committee refused to take action on the nomination of Edward DuMont.  Taranto was confirmed by the Committee on March 29, 2012.  Since then . . . nothing.  He is awaiting debate and a vote by the entire Senate. 

Hopefully, things will get moving again after the election.  Until then, vacancies on the Federal Courts continue to mount.

Apple Wins $1.05 Billion Verdict Against Samsung

August 27, 2012

Last week, a jury in the Northern District of Calfornia found that Samsung willfully infringed a number of Apple’s patents in the ongoing mobile phone wars.  The jury also found that Samsung infringed Apple’s trade dress in some of its phones.  The jury awarded Apple $1.05 billion in damages.  Samsung had countersued Apple for infringement of its own patents.  The jury found that Apple did not infringe Samsung’s patents.

At this point, the win seems rather complete for Apple in the case.  The district court will next entertain post-trial motions related to an injunction against future infringement by Samsung, as well as Samsung’s motions to overturn the jury verdict or obtain a new trial.  A hearing on injunctive relief is scheduled for September 20.

As expected, Apple praised the verdict in its press release, while Samsung indicated it would continue to fight the case in court.  Samsung characterized the verdict as a loss for consumers. 

The companies are litigating not only in the US, but in other countries as well.  A South Korean court had earlier decided that both companies infringed each other’s patents.

Patently-O has a good summary of the verdict including the jury verdict form.  Further coverage fo the case is also available here.

PTO Forms for Applications Filed On or After September 16, 2012

August 21, 2012

The PTO has published new forms for use for applications filed on or after September 16, 2012.  These mainly include new declaration forms, forms for use when an inventor is unavailable for can’t be found, and forms for supplemental examination or third party submissions.

Carl Oppedahl provided an analysis at Patently-O of the new declaration forms.

As Carl notes, for new applications, each inventor will sign a separate declaration, instead of the current practice of having them all sign a single declaration.  Even though the rules still require each inventor to have read and understood the application and claims and to understand and acknowledge the duty of disclosure, the new declarations do not include these statements.

No longer will Rule 47 petitions be required for inventors who refuse to sign or who cannot be found.  The new procedure will simply permit the applicant to fill out a different form without fees or petitions to cover these inventors.

Carl indicates that the PTO will now use the information from the Application Data Sheet to determine correct inventor information.  These forms had previously been optional, but under the new procedure will be mandatory when filing a new application.

Federal Circuit Holds Isolated Genes to be Patentable Subject Matter – Again

August 16, 2012

I honestly had to check the date on this opinion because it is so similar to the earlier–now vacated–decision from July 2011.  Despite the Supreme Court’s admonition to reconsider its holding in light of Prometheus (Mayo), the court again held that isolated genes constitute patentable subject matter, but that the method claims directed to comparing or analyzing gene sequences do not.  Association for Molecular Pathology v. Myriad Genetics, Inc.

Given that the court basically reiterated its earlier opinion, it is worth noting only how the court viewed the Prometheus decision and its effect on the claims at issue in this case. 

The court noted that the principal claims that it was asked to consider relate to isolated DNA molecules.  “Mayo does not control the question of patent-eligibility of such claims.”  Instead, these claims are directed to compositions of matter that are expressly authorized by § 101 of the Patent Act.  While Mayo and other Supreme Court cases provide valuable insights into the patent eligibility of method claims, the earlier decisions of Chakraborty and Funk Bros. set out the primary framework for determining patent eligibility for composition of matter claims.

The plaintiffs in this case focused on the Supreme Court concern of preemption, where use a law of nature is entirely preempted by the patent method claims.  The court denied this concern.  “A composition of matter is not a law of nature.”  Every one and every thing comes from nature and follows its laws.  This does not render man-made compositions to be natural products.  Creating a new chemical entity requires exactly the type of human transformation, skill, knowledge, and effort that the Supreme Court indicated would render an invention patentable.

The court reaffirmed its decision regarding the patent ineligibility of the claims related to methods of comparing or analyzing gene sequences.  These claims are indistinguishable from the claims struck down by the Supreme Court in Prometheus.

Finally, the court also again found the claim directed to a method of screening potential cancer therapeutics to be patent eligible.  Here, the court spent a great deal of time subtly pointing out flaws in the Supreme Court’s Prometheus opinion. 

Of course, all activity, whether chemical, biological, or physical, relies on natural laws. But, more to the point here is that claim 20 applies certain steps to transformed cells that, as has been pointed out above, are a product of man, not of nature. The Court, in its evaluation of the Mayo method claims, found that the additional steps of those claims were not sufficient to “transform” the nature of the claims from mere expression of natural laws to patent-eligible subject matter. By definition, however, performing operations, even known types of steps, on, or to create, novel, i.e., transformed subject matter is the stuff of which most process or method invention consists. All chemical processes, for example, consist of hydrolyzing, hydrogenating, reacting, etc. In situations where the objects or results of such steps are novel and nonobvious, they should be patent-eligible. It is rare that a new reaction or method is invented; much process activity is to make new compounds or products using established processes. Thus, once one has determined that a claimed composition of matter is patent-eligible subject matter, applying various known types of procedures to it is not merely applying conventional steps to a law of nature. The transformed, man-made nature of the underlying subject matter in claim 20 makes the claim patent-eligible. The fact that the claim also includes the steps of determining the cells’ growth rates and comparing growth rates does not change the fact that the claim is based on a man-made, non-naturally occurring transformed cell—patent-eligible subject matter.

Judge Moore once more issued her lengthy concurrence.  When addressing the Prometheus opinion, she did provide her insight.  First, she believes the the Supreme Court opinion applies to composition as well as method claims.  Because it did not overrule Chakraborty and Funk Bros., however, those cases control the present appeal.  In proceeding under the rubric of those two cases, she was easily able to distinguish the isolated gene sequences from the subject matter at issue in Prometheus.

Judge Bryson reiterated his dissent that the isolated DNA sequences are not patent eligible.  He does agree, however, that he Prometheus opinion does not decide this case.

What’s Next?

Another cert. petition is almost undoubtedly in the cards as the ACLU is seeking a definitive ruling from the Supreme Court that isolated genes are not patent eligible.  Judge Lourie’s opinion was certainly a repudiation fo the Supreme Court’s unintelligible Prometheus opinion where it continued the confusion between patent eligibility and the other aspects of patentability.  It is likely that this case is heading back to the High Court for a ruling on the merits.

AIA Implementation: Final Rules

August 14, 2012

Final rules are being published in the Federal Register today regarding implementation of a number of the provisions of the America Invents Act.  Most of these provisions go into effect on September 16, 2012.

Meanwhile, the PTO is conducting an AIA Roadshow in September.  PTO personnel will travel to various sites around the country to discuss and explain the implementation of the new rules that take effect next month.

Final rules regarding first-to-invent that take effect March 16, 2013 will be forthcoming at a later date.

Is a District Court Infringement Determination Final for Appellate Review?

August 8, 2012

Typically, in patent infringement cases, the Federal Circuit only has jurisdiction to hear appeals from “final” judgments of the district courts (yes, there are always exceptions).  Yesterday, the Federal Circuit issued an order sua sponte that it will decide whether it has jurisdiction to hear a patent infringement appeal from a district court decision that is final with respect to an infringement determination, but not yet final with respect to an accounting of damages or a determination of willfulness.  Robert Bosch LLC v. Pylon Mfg. Corp.

At times, the district court will bifurcate a patent infringement trial into separate hearings on liability and damages and/or willfulness.  In this case, the court entered a final judgment on the issue of liability, but had not yet determined an accounting for damages or made a determination as to whether infringement was willful.

As noted by Patently-O, the Federal Circuit’s precedent on this issue has not been clear.  The court has now asked the parties to brief the issues for a special en banc argument.  Because damages could arguably be called an “accounting,” the court has phrased two separate questions for the parties:

1.Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred?

2.Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when willfulness issues are outstanding and remain undecided?

SHIELD Act Introduced in House

August 7, 2012

Innovators and the patent community are still recovering from the significant changes wrought on the patent system by the America Invents Act enacted by Congress last year.  We also brace for the implementation of various parts of the Act that go into effect in September and March.

Those changes weren’t enough, however, for certain members of Congress.

Congressmen Jason Chaffetz (R-UT) and Peter DeFazio (D-OR) introduced the Saving High Tech Innovators from Egregious Legal Disputes (SHIELD) Act.  The Act would create a special rule for patents involving computer hardware or software. 

With limited exceptions, US law provides that all parties to litigation to cover their own attorneys’ fees and costs, whether they win or lose.  This is said to encourage parties to bring legal disputes without fear of a huge fee and cost judgment in the event that they lose the case.  Under other systems, such as the English system, the loser of a lawsuit pays.

Under current patent law, the normal US rules apply, except for “exceptional cases” under 35 U.S.C. § 285.  Exceptional cases are rare and are usually limited to cases where a party has brought the lawsuit in bad faith, has engaged in litigation misconduct, or has engaged in inequitable conduct.  Even in such cases, the court has discretion as to whether to award attorneys’ fees.

Under the SHIELD Act:

Notwithstanding section 285, in an action disputing the validity or alleging the infringement of a computer hardware or software patent, upon making a determination that the party alleging the infringement of the patent did not have a reasonable likelihood of succeeding, the court may award the recovery of full costs to the prevailing party, including reasonable attorney’s fees, other than the United States.

This bill is clearly geared toward so-called patent trolls, entities that hold patents but don’t actually market products or services.  Don’t get me wrong, if a party brings a lawsuit that does not have a reasonable likelihood of succeeding, I am in favor of sanctions against that party.  There are, however, several problems with this bill.

First, there shouldn’t be special laws or sections of the Patent Act geared toward certain technology areas that don’t apply to others.  This includes the special post-grant review provisions under the AIA directed to the financial services industry.  The Patent Act should not become a mishmash of various provisions favored by lobbyists from certain industries.  The same rules should apply to all.

Second, this bill is completely unnecessary.  As noted above, the power to award attorneys’ fees to the prevailing party already exists under § 285.  Perhaps this section should be applied with more frequency than it currently is.  This would be a simpler fix than that proposed by the SHIELD Act.

Another option, of course, is to award fees to the losing party in all patent lawsuits.  This is not a good idea because patent suits are too unpredictable.  The reversal rate by the Federal Circuit on issues of claim construction is too high.  Parties bringing or defending suits in good faith would often end up the losing party and be required to pay large fee awards.

In either case, the litigation must progress to final judgment before fees can be awarded.  This does not stop companies from bringing frivolous suits in the hope of extorting a quick settlement to avoid the high cost of litigation.  Having the potential for getting a fee award, however, will aid defendants in settlement negotiations.

Weeding out frivolous lawsuits, not just in patent law but in all areas of the law, is an admirable idea.  The SHIELD Act, however, does not appear to be the answer.

Design Patents

August 2, 2012

Utility patents get all of the publicity in when discussing innovation.  Another option that an inventor may want to consider is a design patent.  Utility patents cover structural and functional aspects of an invention, while design patents cover the asthetic features.

Design patents differ from utility patents in a number of basic ways.  A design patent is granted to cover the ornamental design of an object that has practical utility.  For example, a design patent may be obtained for a new shape of a beverage container, the particular shape and features of the tread of a shoe, computer icons, and other items that have practical utility. 

A design patent is not permitted for something that exists for purely aesthetic reasons, such as a work of art.  A painting, sculpture, or other work of fine art would be protectable by copyright and possibly other intellectual property rights, but would not be eligible for design patent protection.

An invention may be entitled to both a utility patent and a design patent since a utility patent protects the structure of an article and the way it is used and works; a design patent protects the way an article looks.  If the design–the way the article looks–is dictated primarily by the article’s function, it would not properly be the subject of a design patent.  An example may be the shape of a gear that is designed primarily to fit with other gears and not for aesthetic purposes.

The requirements for obtaining a design patent are similar to that for utility patents.  The design must be novel and non-obvious; the examiner will perform a search of the prior art to be certain that the design meets these requirements.  Furthermore, the drawings must clearly show the features sought to be protected by patent.  The drawings will typically be more detailed than in a utility application as they will often show more views of the invention.  The drawings contitute the claims of the design patent.  Because they don’t require a detailed specification like a utility patent, design patents are also less costly to prepare and file.

Design patent protection lasts for 14 years from the date the patent issues compared to 20 years from the earliest filing date for a utility patent.  No maintenance fees are required for design patents.

Another advantage of design patents over utility patents is that they seem to be much easier to obtain.  In recent years, design patents have had an allowance rate of about 90% over the last few years, compared to utility patent allowance rates of under 50%.  Over 80% of design patent applications are allowed without rejection; only 1.2% are rejected based on prior art with a larger number rejected on formality grounds.

In an era of increasing backlog and pendency of utility applications, more than half of design patents are pending for less than a year, with the average pendency being about 16 months.  Applicants should keep in mind, however, that foreign design applications based on US applications (and vice versa) must be filed within 6 months of the first application filing.  This is a shorter time period than the 12 months for utility patent applications.

For an invention where design and utility patent protection are both appropriate, I would not skip the utility patent.  An inventor should at least file a utility application for its broader scope of coverage and should also consider a design patent.  A design patent would provide some protection while waiting for a utility patent to issue.  They are also cheaper since they don’t involve a great deal of preparation and prosecution.  Inventors should always consider whether their inventions are eligible for design and utility patent protection.


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