Archive for August, 2009

Should Obviousness Be Determined by the Court or by the Jury?

August 28, 2009

The Supreme Court has been asked to hear the case of Medela AG v. Kinetic Concepts, Inc. to decide this question.

In its petition for certiorari to the Supreme Court, Medela argues that the Court has long held that “[t]he ultimate judgment of obviousness is a legal determination.”  Yet, Federal Circuit precedent permits the jury to make this determination, as opposed to the trial judge.

Jury verdicts of obviousness are typically limited to “yes” or “no” answers on a jury verdict form, making review by the district court, or even the appellate court, difficult.  The Federal Circuit’s current procedure for reviewing such verdicts involves

re-creating the facts as they may have been found by the jury, and determining whether such hypothetical facts would be sufficient to support a legal conclusion of validity on any theory.

Obviousness is a legal determination based on underlying facts, such as the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, and objective indicators of non-obviousness. 

The Federal Circuit reviews obviousness by reviewing the facts that the jury found “explicitly or implicitly” for substantial evidence and then the final obviousness determination based on those facts de novo.  The facts the jury relies upon are almost always implicit, as the jury almost never lists all of the facts on its verdict form that it found to be true in making an obviousness determination.  The Federal Circuit then reviews the record and, if there are disputed facts, such as testimony of witnesses, the court will assume the jury found the facts in favor of the verdict.  Thus, the verdict will often be sustained based on such hypothetical fact-finding.

The Cert Petition

The petition first notes that the 7th and 9th Circuits each held en banc “that judges must independently determine whether proven facts lead to a legal conclusion of obviousness.”  This was, of course, prior to appellate jurisdiction in patent cases being exclusive to the Federal Circuit.  The Federal Circuit is not bound by these decisions.

The petition cites fairly extensively to the Supreme Court’s recent KSR decision on obviousness, where the Supreme Court determined that the Federal Circuit’s “Teaching, Motivation, Suggestion Test” was not the exclusive way to find obviousness.  The KSR Court made a number of statements regarding the legal determination of obviousness, such as that factual findings should be made explicit to facilitate judicial review.  The petition further argues that patent law obviousness is too complex for a jury determination.

Next, the petition cites Supreme Court cases that characterize a patent as a legal determination by an administrative agency, the PTO.  Under administrative law and Supreme Court precedent, the PTO’s determination of a patent’s validity should only be disturbed by a court, not by a jury.

Finally, the petition notes that the Supreme Court previously granted certiorari in American Airlines, Inc. v. Lockwood in 1995 to decide whether a patent owner had the right to a jury trial in a declaratory judgment action of invalidity, an issue similar to one in this case.  In Lockwood, the patent owner withdrew its jury demand before the Supreme Court heard the case and the case was dismissed as moot.


The petition was submitted by James Dabney of Fried, Frank and Professor John Duffy of George Washington Law School, who also successfully petitioned the Supreme Court in KSR.  The petition is extremely well written and presents a good case for review and I hope the Court decides to do so.

The only real flaw is that it takes a very condescending view of juries, discussing patent litigation as being in a crisis because more cases are being tried to juries.  My experience is that the decisions made by a collection of 6-12 individuals who listen to the evidence is generally superior to 1 or 3 judges who are simply reviewing the record.

Another question that is not addressed by the petition is how a change in the law would affect the standard of review for obviousness.  A significant criticism of the Federal Circuit’s claim construction jurisprudence is its extremely high reversal rate, in the 30-50% range.  Much of this criticism is the result of the lack of deference given to the trial judge’s determination and the Federal Circuit’s de novo standard of review.  Will the same thing happen in obviousness?  Will patent trials also include obviousness hearings similar to Markman hearings?

A decision by the Supreme Court as to whether to hear this case should happen early in the new term that begins in October.


Director Kappos Seeks to Shift Examiner Rejection Philosophy

August 26, 2009

I previously reported on the PTO philosophy in recent years that high rejection rates equals high patent examination quality.  As noted, this philosophy has largely resulted in the PTO’s current budget crisis due to lower revenue from issue fees and maintenance fees.  It has also resulted in a higher appeal rate, causing a crisis in the backlog of appeals at the BPAI.  It has caused a significant increase in the cost and time required to obtain a patent on many legitimate inventions.  Finally, it has further exacerbated the budget crisis by causing applicants to forego applying for a patent because it seems to be futile.

Help may finally be on the way.

Patently-O is reporting on an e-mail that new PTO Director David Kappos sent an e-mail to patent examiners where he attempts to debunk the “patent quality equals rejection” mentality.

One key is to expeditiously identify and resolve issues of patentability—that is getting efficiently to the issues that matter to patentability in each case, and working with applicants to find the patentable subject matter and get it clearly expressed in claims that can be allowed. The examiner and the applicant share the responsibility for the success of this process.

On the subject of quality, there has been speculation in the IP community that examiners are being encouraged to reject applications because a lower allowance rate equals higher quality. Let’s be clear: patent quality does not equal rejection. In some cases this requires us to reject all the claims when no patentable subject matter has been presented. It is our duty to be candid with the applicant and protect the interests of the public. In other cases this means granting broad claims when they present allowable subject matter. In all cases it means engaging with the applicant to get to the real issues efficiently—what we all know as compact prosecution.

When a claimed invention meets all patentability requirements, the application should be allowed expeditiously. … [B]y engaging with applicants early on, we certainly can get to the point more quickly, and efficiently allow those claims that are entitled to patent protection.

The reject, reject, reject philosophy has been around for a few years, so it won’t go away overnight, regardless of the e-mail.  It is, however, a huge step in the right direction.  He will need to do something about examiner production requirements and the second eyes review in order to fully implement a new philosophy.  Stay tuned . . .

En Banc Federal Circuit to Review Written Description Requirement

August 24, 2009

35 U.S.C. § 112, ¶ 1 states:

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.

There has been disagreement for some time as to whether the “written description” requirement is simply a part of the enablement requirement, or whether there is a separate statutory “written description” requirement.  Several Federal Circuit panels have suggested that the written description requirement is separate from the enablement requirement:  the inventor must show that he was “in possession” of the invention at the time of application.  See Enzo Biochem, Inc. v. Gen-Probe Inc., 323 F.3d 956 (Fed.Cir.2002)(Lourie, J.); and Univ. of Rochester v. G.D. Searle & Co., 358 F.3d 916, 920 (Fed.Cir.2004)(Lourie, J.)).

The entire Federal Circuit will now review the “written description” requirement in Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co.  Specifically, the court granted a petition for rehearing en banc based on two questions:

a. Whether 35 U.S.C. § 112, paragraph 1, contains a written description requirement separate from an enablement requirement?

b. If a separate written description requirement is set forth in the statute, what is the scope and purpose of the requirement?

The original panel in Ariad had found the patent at issue invalid for failure to comply with the written description requirement, citing Enzo and Rochester, but there has always been considerable disagreement as to whether these cases are good law.

Cases interpreting the statute as having a separate written description requirement were both written by Judge Lourie.  Several other Federal Circuit cases have followed these as binding precedent, but did not always seem to agree with the reasoning.  Judge Linn wrote a separate concurrence in the Ariad panel opinion where he argued as much.  The panel was bound by Enzo and Rochester, but he did not read the statute as requiring a separate written description beyond the enablement requirement.  He had also dissented from the denial to rehear Rochester.  There may be a real fight among the judges on the court on this issue.

The Federal Circuit seems to be taking a lot more issues en banc than it has historically.  Earlier this week, in the court’s most recent en banc opinion, the court noted its appreciation of the amicus briefs filed in that case.  Perhaps the court is giving them more weight in these decisions.  There is sure to be a flurry in the Ariad case.

Culture at PTO Responsible for Rising Rejection Rate

August 20, 2009

An article in the Milwaukee Journal Sentinel has been making its way around the blogosphere.  The article rambles a bit and gets some of its information wrong (Judge Michel is not the Chief Justice of the patent appeals court), but its basic points are interesting.

During the second quarter of 2009, more than 59% of patent applications were rejected.  I believe this is another way of stating that the allowance rate is about 41%.  The article attributes the steep decline in allowances to the negative media publicity surrounding some patents of questionable merit that arose in the late 90s. 

The problems, however, with such a low allowance rate, as detailed in the article, are that many legitimate inventions that deserve patents are being rejected.  Often, the rejections are reversed on appeal, but only after a significant outlay of money and time on the part of the inventor or the inventor’s company.

Quality Review

This culture of “reject early, reject often” stems from the PTO’s “second pair of eyes” review.  The Office of Patent Quality Assurance randomly pulls allowed cases or issued patents and checks to determine whether the patent was properly allowed.  According to the article, close calls should be rejections.  If the application should have been rejected, the examiner can be penalized by a higher error rate that affects his bonus and even his job retention.

The PTO is trumpeting its decreasing error rate as a way to show that examining quality is increasing.  This may simply be the result, however, of the reduction in time for the quality review from 7 hours per case to only 3 hours per case.  Less time to check cases for errors results in finding fewer mistakes. 

The PTO claims to also check rejections to be certain that they are proper, but its internal philosophy of “reject, reject, reject” seems to have instituted fear in the examining corps.  Examiners seem to have much more leeway in issuing rejections than in allowances.  Thus, it is hardly surprising that the allowance rate has plummeted.


Also, hardly surprising, the rate of appeals has increased dramatically.  Worse than that, however, more than 25,000 appeal briefs were filed during FY2008, but only 6,385 appeals were forwarded to the Board of Appeals.  It is possible that some of those cases were still in the briefing stage at the end of the fiscal year, but it appears that well over half, probably over two-thirds, of appeals are sent back to the examiner for further prosecution.  Given the cost of preparing an appeal brief, that is simply not acceptable.

Because of the ridiculous backlog of applications and the soaring rejection rate, many inventors are not applying for patents.  It’s simply not worth it.  This is, of course, another reason for the plummetting number of filings.

The article concludes with some optimism about the new Director David Kappos.  Not only does he need to deal with the financial issues at the PTO and the burgeoning backlog, he needs to change the entire culture at the PTO.  Good luck.

Federal Circuit Holds 271(f) Does Not Apply to Method Claims

August 19, 2009

In a decision that must be characterized as predictable, the Federal Circuit held that section 271(f) does not apply to method claims.  The issues in Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc. are set forth here.

The court overruled Union Carbide v. Shell Oil Co. and relied on the Supreme Court’s admonition to exercise extreme care when interpreting a statute to have extra-territorial effect.  In AT&T Corp. v. Microsoft Corp., the Court had reserved judgment on whether an intangible method or process could qualify as a patented invention under section 271(f), but sent a clear message that territorial limits should not be lightly breached.

In Cardiac Pacemakers, the Federal Circuit held that a “component” of a method claim is a step of that method.  Section 271(f) requires that “components” of a patented invention be “supplied” by the infringer.  The court found this term to be fatal to the argument that section 271(f) applies to method claims.  “Supplying an intangible step is [] a physical impossibility.”  The court noted that only one of all of the amicus briefs filed in the case suported the position that section 271(f) applies to method claims and that the legislative history of section 271(f) is almost completely devoid of the mention of method claims.

Judge Newman issued the lone dissent, where she argued that the court’s holding “is contrary to the text of the statute, ignores the legislative history, is without support in precedent, and defeats the statutory purpose.”  She argued that the term “patented invention” should have the same meaning in the entire Patent Act and includes method claims.

It is interesting to note that the court referred to amicus briefs several times in the en banc section of its opinion, even adding a footnote expressing appreciation to those who submitted them.  This could be a signal that the court may be giving more credence to such briefs in the future.

News Update

August 19, 2009

There are a number of news stories of note since my last post.

David_Kappos_being_sworn_as_USPTO_Director_%282009-08-13%29Kappos is Confirmed and Sworn in as PTO Director

The Senate confirmed David Kappos as Under Secretary of Commerce for Intellectual Property and Director of the Patent and Trademark Office.  He was sworn in August 13.  At the time of his swearing in, Kappos announced several key intiatives that he plans to undertake to improve operations at the PTO.

First, he announced an intention to cut application pendency dramatically while maintaining high examination standards.  Next, he intends to listen to the domestic patent community and minimize overseas travel.  He also pledged to improve the PTO’s financial footing for FY2010 and beyond.  He implied that significant fee adjustments will be necessary.  He couched these comments in reference to improving examiner job security.  He also pledged to review and revamp the examiner “count” system.

SCHALL-sep03Judge Schall to Take Senior Status in October

Next, IPO reports that Federal Circuit Judge Alvin Schall will take senior status in early October.  This will give President Obama his first Federal Circuit vacancy.  Judge Schall was appointed to the court by President Bush in 1992.  Patently-O is reporting that several law professors may be considered for the opening, including Mark Lemley of Stanford, Arti Rai of Duke, and Beth Noveck of New York Law School.  There is also considerable support for appointing an experienced district court judge to the Federal Circuit, something that’s never been done before.

Bilski Briefs

Patently-O has collected 44 briefs that have been filed in the Bilski case.

Tafas v. Kappos

The Federal Circuit granted the stay of en banc proceedings (motion reported earlier here) in the PTO rules case until 60 days after confirmation of the new PTO Director.  Kappos was confirmed by the Senate August 7.  This means that the proceedings should be stayed until October 6.  By that time, we should know if the new Kappos Administration at the PTO plans to pursue the case or drop the ill-advised rules package.

Petitioner’s Brief in Bilski

August 6, 2009

USSupremeCourtWestFacadeLast week, the petitioner filed its opening brief at the Supreme Court in Bilski v. Doll.  Bilski’s arguments are not surprising given what has transpired in the case.  The following is a summary of the arguments presented in the brief.

Petitioner’s Arguments

First, Bilski argues that the language of § 101 of the Patent Act is very broad, providing for patent eligibility for “any” new and useful process.  There is no statutory basis for the Federal Circuit’s adoption of a special test to determine patent eligibility for processes. 

The Federal Circuit’s test also conflicts with Supreme Court precedent.  The only limitations should be for natural laws and phenomena, because these cannot be invented at all, and abstract ideas, because these are not “useful” and must be put to a practical use before they can be patented.  Indeed, the Supreme Court has twice before rejected the machine-or-transformation test in Gottschalk and Flook.

Second, the Federal Circuit’s machine-or-transformation test conflicts with the congressional recognition of business method patents in the enactment of § 273’s defense to infringement for business methods.  In enacting this defense, Congress embraced State Street Bank‘s “useful, concrete, and tangible result” test.  Bilski’s invention clearly fits within the congressional definition of a business method.

Third, the Federal Circuit’s machine-or-transformation test disrupts settled expectations of thousands of patent owners and inventors.  The court has, in effect, legislated business method patents out of existence.  This is an area where Congress should act, not the Federal Circuit.  In this section of its brief, the petitioner cites extensively to Judge Newman’s dissent.

Other sections of the Patent Act, such as those that proscribe patents that are not novel, are obvious, or are indefinite, should be used the curb business method patents that appear trivial.  Where have I heard that before?  Perhaps here and here.

Fourth, abstract ideas, laws of nature, and natural phenomena are not themselves patentable.  Supreme Court precedent, however, makes it clear that if these have a “practical application”, they are patent eligible.  The machine-or-transformation test is not necessary so long as the methods have a practical application.

Finally, all of the claims of Bilski’s application involve specific series of steps that have a practical application.  The claims do not merely recite abstract ideas.


Bilski’s brief is well written and well argued.  Will it persuade the Supreme Court to reverse the Federal Circuit?  That is difficult to predict.  One the one hand, the Court would not have agreed to hear the case if it didn’t have anything to say about statutory subject matter.  On the other hand, given its typical docket, the Court may view this as an arcane patent law issue that doesn’t warrant a lot of time and consideration.  Also, given that the invention is of suspect novelty and obviousness, it may be hard to get the Court to focus on the patent eligibility question without focusing on whether the invention meets the other statutory requirements for patenting.

Whatever they do, it can hardly be worse than the machine-or-transformation test.

Other Reaction

The American Bar Association has passed a resolution to file an amicus brief supporting the PTO.  The ABA plans to argue that Bilski seeks to patent an abstract idea.

Bett Trout of BlawgIT has posted an analysis of Bilski’s brief that was re-printed on Patently-O.

Update: Senate Judiciary Committee Approves Kappos Nomination

August 6, 2009

The Senate Judiciary Committee has approved the nomination of David Kappos as Under Secretary of Commerce for Intellectual Property and Director of the PTO. 

Sen. Patrick Leahy (D-VT) has been quoted during the confirmation process:  “I don’t know whether to give him congratulations or condolences. It’s going to be one of the toughest jobs in the government.”  Amen to that.

The Committee approval moves the nomination to the Senate floor.  It is uncertain, however, whether there is sufficient time for a vote of the entire Senate before it adjourns tomorrow for its August recess.

Inequitable Conduct Defense Requires That Specific Facts Regarding Circumstances and Intent to Deceive Must Be Included in Pleadings

August 5, 2009

Yesterday, in Exergen Corp. v. Wal-Mart Stores, Inc., the Federal Circuit held that allegations of inequitable conduct must be pled with particularity.  The court affirmed the district court’s denial of a motion by the defendant to add inequitable conduct as an affirmative defense and counterclaim.  The court held that the proposed pleading by the defendant was inadequate under Federal Rule of Civil Procedure 9(b).  That rule requires that allegations of fraud or mistake be pled with particularity, i.e., the circumstances surrounding the fraud or mistake must be included.

Judge Linn, writing for the court, wrote that specific facts regarding the substantive elements of inequitable conduct, namely that (1) an individual associated with prosecution of the application made a misrepresentation, failed to disclose material information, or submitted false information, and (2) that it was done with a specific intent to deceive the PTO, must be included in the pleading.

The two elements of inequitable conduct can be broken into the specific facts surrounding the allegation and the mindframe or intent element.  Regarding the specific facts, the court held that:

in pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.

The mindframe or intent element requires that inequitable conduct include (1) knowledge of the withheld material information or the falsity of the material information, and (2) specific intent to deceive the PTO.

In sum, to plead the “circumstances” of inequitable conduct with the requisite “particularity” under Rule 9(b), the pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO. Moreover, although “knowledge” and “intent” may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.

LinnIt is rare the the Federal Circuit provides such explicit guidance on an issue of law like this.  Exergen continues Judge Linn’s campaign to reform or reduce the “plague” of inequitable conduct on the patent system.  He had earlier called for the court to revisit the standard for proving intent to deceive.

Thanks to Hal Wegner for bringing this case to my attention.

BPAI Reverses Rejection of Metabolite Claim

August 4, 2009

Last week, the Board of Patent Appeals and Interferences (BPAI) at the PTO reversed a rejection that the claims in a reexamination proceeding were invalid for obviousness in Ex parte Competitive Technologies, Inc.  Normally, this would not be especially interesting news, but the patent is one that’s been heard from before.

This is the same patent that was at issue in the Supreme Court’s infamous dismissal of a grant of certiorari in LabCorp v. Metabolite Labs in 2006.  In LabCorp, the Federal Circuit had ruled that the claims were valid and infringed.  The Supreme Court granted certiorari, but then dismissed the case as improvidently granted, presumably because the issue that the Court was to decide in the case had not been considered by the lower courts.  Justices Breyer, Stevens, and Souter filed a vigorous dissent from the dismissal, where they argued that the patent claimed unpatentable subject matter, namely that it claimed a “phenomenon of nature.”

A few months after this dissent, a defendant in another case involving the patent, General Atomics, filed a request for reexamination of the patent at the PTO.  The examiner rejected the famous claim 13, cited in the Supreme Court’s dissent as being obvious.  Claim 13 reads:

A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:

assaying a body fluid for an elevated level of total homocysteine; and

correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

The BPAI reversed the examiner’s rejection by finding that the the examiner failed to provide sufficient factual basis for the conclusion of obviousness.  The prior art did not teach or suggest all of the claim limitations.  In ex parte reexamination proceedings, the requester does not have any right to appeal.

The BPAI did not address the question of whether the patent claimed unpatentable subject matter; indeed, the issue was not raised during the reexamination.  The requester did cite to Justice Breyer’s dissent in the request for reexamination, but in general, reexamination requests are limited to substantial new questions of patentability based on “patents and printed publications.”  This does not, however, stop the examiner or BPAI from raising the issue sua sponteThe Federal Circuit rejected a similar claim in December, and the BPAI has not been shy about rejecting computer claims.  They typically cite Bilski.

What does any of this mean for Bilski at the Supreme Court?  Probably nothing.  Of the “Breyer Three,” Justice Souter will not hear the case.  We’ll have to wait and see.

Kevin Noonan of Patent Docs provides further analysis.