Archive for November, 2009

Federal Circuit Chief Judge Michel to Retire

November 23, 2009

Federal Circuit Chief Judge Paul R. Michel announced on Friday that he will retire from the Federal Circuit on May 31, 2010.  Judge Michel was the keynote speaker at the Federal Circuit Bar Association’s annual dinner.

Judge Michel, 68, has served on the court since his appointment by President Reagan in March 1988.  He has served as the Chief Judge since December 25, 2004.  Judge Michel is eligible to continue his service on the court by taking senior status.  Reports indicate, however, that he plans to step down from the court completely.

Judge Michel’s retirement creates a second opening on the court after Judge Schall took senior status last month.  President Obama has not yet announced a replacement for Judge Schall.

Under Federal Court rules, Judge Randall Rader will replace Judge Michel as Chief Judge of the court upon the latter’s retirement.  Judge Rader, 60, was appointed to the Court of Claims by President Bush in 1989 and to the Federal Circuit in 1990.

Other Possible Vacancies

Among the other active judges on the Federal Circuit, several others may possibly retire in the near future.

The senior active judge on the court is Pauline Newman.  Judge Newman, 82, was appointed to the court by President Reagan in 1984.  She hasn’t given any indication that she may retire, but at her age you never know.

Judge H. Robert Mayer, 68, has been on the court since 1987 and served as chief judge from 1997-2004.  He is eligible for senior status.

Judge Alan Lourie, 74, has been on the court since 1990.  He is also eligible for senior status.

Judge Rader, 60, would be eligible for senior status in 2014.

Judge William Bryson, 64, has been a member of the court since 1994.  Judge Bryson is eligible for senior status in 2010.

Judge Arthur Gajarsa, 68, has been a member of the court since 1997.  He has recently achieved sufficient time on the bench to be eligible for senior status.

Judge Richard Linn, 65, joined the court in 2000.  Judge Linn will become eligible for senior status in 2013.

Judge Timothy Dyk, 72, has also been on the court since 2000.  He will be eligible for senior status in 2010.

Only Judges Sharon Prost, 58, and Kimberly Moore, 41, who joined the court in 2001 and 2006, respectively, will not be eligible for senior status in the upcoming years.

Thus, by 2014, only two of the 11 currently active judges on the court will not be eligible to retire or take senior status.  The court’s full capacity of judges is currently set at 12.  There may be big changes ahead for this court.


Final Federal Circuit Order in PTO Rules Case

November 16, 2009

Last week, the Federal Circuit issued an order in the PTO rules case, Tafas v. Kappos.  The order granted the joint motion of the parties to dismiss the case as moot given the PTO’s decision to rescind the controversial rules.  The court did, however, side with Dr. Tafas in denying the PTO’s motion to vacate the district court opinion.  The district court’s opinion stated that the PTO does not have substantive rule-making authority and that the agency exceeded its power in promulgating the rules.  This opinion will remain a precedent of that court.

The court’s order cited Supreme Court precedent that:

Vacatur . . . is appropriate if the mootness arises from external causes over which the parties have no control, or from the unilateral act of the prevailing party, but not when the mootness is due to a voluntary act by the losing party, such as a settlement.

The PTO argued that an intervening regulatory change is analogous to an intervening statutory change.  In other words, the new PTO leadership decided the rules were not to be pursued, which is similar to Congress acting to prevent an agency from enacting rules.  The Federal Circuit disagreed, holding that the unilateral act of the PTO to rescind the rules was not the same as an intervening statutory change.  Thus, the PTO, as the losing party, should not benefit from vacatur of the district court opinion.

Impressions of Bilski Argument

November 12, 2009

The Supreme Court heard argument in Bilski v. Kappos on Monday.  The transcript is available here.  Many others have provided summaries; the following are my impressions of the argument.

Bilski’s Argument

As one would expect, the questioning seemed to be more extensive during the petitioner’s argument than during the government’s argument.  As feared, Chief Justice Roberts, and several others, had difficulty focusing on the statutory subject matter question and leaving aside whether the invention is novel and non-obvious.

CHIEF JUSTICE ROBERTS: Well, but your Claim 1 it seems to me is classic commodity hedging that has been going on for centuries. 
J. Michael Jakes, arguing for the petitioner, rightfully noted that if that was the case, the claim would run into problems under section 103 of the Patent Act.

Justice Ginsburg asked several questions about a technological arts test.  She noted that they use such a test in Europe to exclude patenting of business methods, so maybe the US should do something similar.  The petitioner answered the question by noting the “technology” is specifically defined in the European statute to exclude business methods; such is not the case here.

Much of the petitioner’s argument focused on the fact that while industrial processes had been the most important innovations in the past, now information and electronic signals have overtaken machines as the new currency of business.  Justice Scalia asked why there weren’t patents on methods of training horses in the past when the US economy was based on horses.  Jakes answered that he didn’t know, but there may have been concerns with enforcement of such patents.

Interestingly, Justice Stevens noted an admiration for the late Federal Circuit Judge Giles Rich, who wrote the original State Street Bank opinion.  He inquired as to Judge Rich’s writings on these issues.  Jakes pointed him to that opinion and the In re Alappat opinion that noted that there is no statutory exception to patenting business methods.

Justice Breyer gave a rather lengthy diatribe on his take of the patent system.  He sees two positive and two negative results of patents.  The positive results are that by granting a monopoly, the patentee will produce more, and that the patentee must disclose the invention.  The negatives are that the patent results in monopoly pricing and that requiring others to get permission from the patentee to practice an invention slows or destroys further advances in the field.

Finally, at the conclusion of the petitioner’s argument, Justices Sotomayor and Scalia had a lengthy discussion with Jakes regarding the patentability of patents relating to Morse Code and telegraphy.

PTO’s Argument

Perhaps surprisingly, the PTO is seeking a narrow ruling in this case.  The PTO argued that they did not want the Supreme Court to use this case for a rule that all business methods, all software, all diagnostic methods are unpatentable.  Several of the justices seemed surprised by this position, they seemed to hope the PTO would go farther in its position.

Chief Justice Roberts demonstrated that he doesn’t fully understand computers or computer-implemented methods.  He seems to think that an interactive website where parties are matched together for a common transaction is no more than looking in the yellow pages.  Similarly, a computer programmed with new software to perform new functions is no more than using a calculator to perform the functions.

Finally, Justices Stevens, Kennedy, and Breyer tried to get the PTO to agree that the State Street Bank case should come out differently under the machine-or-transformation test.  They didn’t understand the PTO’s position that State Street did not involve a process, but instead involved a machine, a programmed computer.  These justices do not understand how a programmed computer can be a new machine; they believe that because a computer is old that only the novel process could make it patentable.  The PTO did not take this position.


It’s hard to make a prediction about how the case will come out based on the argument.  Some of the justices clearly espouse a view that patentability of these types of methods should be further limited, perhaps even limiting software patents.  On the other hand, there was also some discussion that the some justices do not want to foreclose patentability of future processes that are not yet known.  Thus, a narrower decision may be warranted.

A decision should be forthcoming in the spring of 2010, and in any event by the end of the current term in June.

Handicapping Bilski

November 9, 2009

USSupremeCourtWestFacadeThis afternoon, the Supreme Court will hear arguments in Bilski v. Kappos which focuses on statutory subject matter and the patenting of business methods, software, and other similar inventions.  The Federal Circuit ruled that methods do not contain patentable subject matter unless they include a machine or there is a physical transformation involved.  It is hard to overestimate the importance of this case to the fields of business methods, software, diagnostic methods, and other inventions that do not include a tangible machine.

How do we predict what the outcome of the case will be at the Supreme Court?  And what is this case really about?


Unfortunately, Bilski’s briefs are not overly helpful or persuasive for convincing the Court of Bilski’s position.  The opening brief quickly glosses over the statutory language of § 101 and instead argues that the Federal Circuit’s new test conflicts with the Supreme Court’s decisions in Gottschalk and Flook.  The brief then spends a great deal of time on the prior user defense of § 273.  The petitioner argues that Congress must have embraced business methods since this defense only applies to “methods of doing business.”

Next, Bilski argues that the Federal Circuit’s new test disrupts the expectations of thousands of patent-holders by effectively invalidating their patents based on the new test.  If change is needed, Congress should act, not the courts.  Bilski makes several other arguments that try to deal with so-called “silly” or “trivial” patents.  Finally, Bilski deals with the difficult issue of convincing the Court that its patent application is patentable.

In its brief, the PTO argues for a return to the “technological arts” test that was rejected by the Federal Circuit:  patentable suject matter should be limited to industrial and technological processes.  The PTO looks a bit at the history of “processes” under § 101 in reaching this conclusion.  The PTO then addresses several other tests that the Federal Circuit rejected and argues that all of them impose meaningful limits on patentable subject matter, including the Federal Circuit’s machine-or-transformation test.

In its reply brief, Bilski spends a great deal of time arguing that thousands of patents and patent applications are being invalidated under the guise of Bilski, by the Federal Circuit, district courts, and the PTO.

The Justices

We know that Justice Breyer was the author of and Justice Stevens joined the LabCorp. dissent that ridiculed the patents covering processes for diagnosing diseases at issue in that case.  The dissent specifically noted that the Federal Circuit’s “useful, concrete, or tangible result” test articulated in State Street Bank and overturned in Bilski was never reviewed by the Supreme Court and was contrary to Supreme Court precedent.  Thus, it seems unlikely Justices Breyer and Stevens would reverse the Federal Circuit’s decision in this case.

In eBay v. MercExchange, the Supreme Court ruled that injunctions should not issue as a matter of course when patent infringement is found, but instead the rules of equity should apply to such situations, just as in other areas of the law.  Several exchanges between the attorneys in that case and the justices may be enlightening to Bilski.  MercExchange claimed that the “Buy It Now” feature on eBay infringed its patents.  First, Chief Justice Roberts seemed to mock the invention during oral arguments.

CHIEF JUSTICE ROBERTS: Mr. Waxman, you mentioned, in — in responding to the suggestion that we’re dealing with a troll, you described — what exactly is the invention here?

MR. WAXMAN: The — the invention is a — it’s — it’s not a business method. It doesn’t claim methods. It claims a system, an apparatus for an electric market for the sale of goods via a network.

CHIEF JUSTICE ROBERTS: Electric. I mean, it’s not like he invented the, you know, internal combustion engine or anything. It’s very vague, I think, and this is one of the considerations the district court mentioned.  

WAXMAN: Look,  I’m not a software developer and I have reason to believe that neither is Your Honor, and I — I can’t — explain specifically what this claims. It’s laid out very carefully in —

CHIEF JUSTICE ROBERTS: I may not be a software developer, but as I read the invention, it’s displaying pictures of your wares on a computer network and, you know, picking which ones you want and buying them. I — I might have been able to do that.

(Laughter in the court.)

MR. WAXMAN: Well — I’ll say respectfully that that is not a fair characterization of the innovation here, the actual innovation.

eBay’s attorney referred to patentees’ success rates in the Eastern District of Texas.  Justice Scalia addressed this issue.

JUSTICE SCALIA: You know, I mean, that’s — that’s a problem with Marshall, Texas, not with the patent law. I mean, maybe — maybe we should remedy that problem.

MR. PHILLIPS: Well, I hope you do.

JUSTICE SCALIA: But I don’t think we should write — write our patent law because we have some renegade jurisdictions.

Chief Justice Roberts also took issue with the fact that the Federal Circuit has often ignored binding Supreme Court precedent.  Earlier this year, in Carlsbad Tech., Inc. v. HIF Bio, Inc., he had the following exchange during oral argument.

MR. RHODES: I can’t suggest what the Court might finally decide other than to say that — that, again, the circuit courts of appeal have uniformly applied this. They seem to be —

CHIEF JUSTICE ROBERTS: Well, they don’t have a choice, right? They can’t say, I don’t like the Supreme Court rule so I’m not going to apply it, other than the Federal Circuit.

(Laughter in the court.)

Justice Kennedy wrote a concurring opinion in eBay that was joined by Justices Breyer and Stevens.  In the concurrence, he took serious issue with patent holding companies that do not produce a product.

An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees… For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. 

During oral argument in Microsoft v. AT&T, Justices Breyer and Stevens questioned whether the Supreme Court had ever ruled that software is patentable, despite the Federal Circuit’s precedent that it is.

Justices Ginsburg, Thomas, and Alito have less of a track record to go on as to how they might rule on the case.  Justice Thomas rarely speaks during oral argument and Justices Ginsburg and Alito haven’t expressed strong opinions on the issues at stake.

The IP bar seems to believe that Justice Sotomayor will take a pro-IP stance on issues before the Court given her background in IP litigation.  This also seems less than certain however.


I am not overly optimistic that the Supreme Court will take us back to the pre-Bilski regime.  The way for Bilski to win this case is to argue to the conservative wing of the Court–Justices Scalia, Kennedy, Thomas, and Alito, and Chief Justice Roberts–that the case is really about statutory interpretation.  They simply need to look at the language of § 101 that permits patent for “any new and useful process, machine, manufacture, or composition of matter.”  There is no reference in the statute to machines or transformations and if any change is to be made, it should come from Congress, not the courts.  The other provisions of the Patent Act and a robust examination should keep silly patents from being issued.

If they instead turn this into a policy argument, or worse yet a patent law argument, they are going to have difficulty convincing the justices that patentees who have inventions that they don’t understand or that they don’t feel warrant protection should get patents.  The Court may not grasp the importance of the case.

Stay tuned . . .

I hope to provide an update after the argument.  I will be traveling Tuesday and Wednesday, so the update may not come until later this week.

Kappos Announces New Initiative to Speed Examination for Small Entities

November 9, 2009

kappos_speechOn Friday, PTO Director David Kappos, speaking at the 14th Annual Independent Inventors Conference, announced a new intiative to speed examination for small entities that should also have the benefit of reducing the backlog of unexamined applications.  The text of Director Kappos’ remarks is available here.

For each unexamined application that a small entity agrees to abandon, the small entity may move another pending application to the front of the examination queue.  Details of the program will be forthcoming in the Federal Register, and it will only be available for a limited time.

Kappos also recognized that independent inventors have reservations about a number of provisions in the Patent Reform bills pending in Congress.  The Administration is working with Congress on certain provisions that independent inventors are concerned about, such as post-grant review.  They realize that the threshhold for granting review needs to raised to prevent abuse.  They will also work on provisions to prevent serial filings.  They do believe, however, that independent inventors should prefer post-grant review to expensive litigation.

There is also concern with changing the US from a first-to-invent to a first-to-file regime.  He noted that the impact of this change has been highly overblown.  In 2007, only 7 interference cases were decided where the second party to file came out the winner based on a claim of earlier invention.  This number is so low that it will not really affect many people at all.

Should You File a Patent Application Now or Can You Wait?

November 5, 2009

A recent post on IPWatchdog got me thinking about this issue again.  While I agree with the sentiments made there, I decided to add my own cautionary thoughts to the discussion.

One question that inventors often face is when to file a patent application.  Should they file an application as soon as they are reasonably sure of the details of how the invention can be made and used, or should they wait until all of the various details have been worked out?  Since the US is a first to invent country, it doesn’t matter when you file the patent application, right?

My answer to this question is that a patent application should be filed sooner rather than later. 

First to Invent

Many inventors think that their invention is extremely unique.  It is simply not possible that anyone else has ever thought of it.  They have even searched the Internet and not found their idea.  Therefore, they have plenty of time to file a patent application.

The truth is that our current societal needs and problems and our collective understanding of scientific principles lead many people to seek solutions to the same problems with the same basic understandings of the potential solutions at the same time.  And generally, there are only a finite number of solutions to these problems.  Think about the biggest perceived problems in our society today.  How many inventors are working on solutions to the swine flu or to the energy crisis of the last few years?

While it is true that the US still has a first to invent patent regime, this only benefits an inventor who can prove that he was actually the first to invent.  This means that documentary proof is needed to demonstrate earlier invention.  Proving prior invention can be especially difficult and expensive in an interference proceeding.  These proceedings are basically administrative trials within the PTO to prove who was the actual first inventor if two or more parties have both filed a patent application claiming the same invention.  The party that has the most convincing evidence in a form that is persuasive often prevails in such proceedings, regardless of whether that party was the actual first inventor.  Laboratory notebooks, witnessed drawings and sketches, and other documentary proof is vital in such a proceeding.

One Year Grace Period

Another reason that many inventors choose to wait to file a patent application is that the US permits a one year grace period after an invention has been disclosed publicly or offered for sale before a patent application must be filed.  Leaving aside the fact that most foreign jurisdictions require absolute novelty, there are other reasons not to use the grace period.

First, when does the grace period actually begin?  If an inventor creates a prototype for the purpose of testing it, does the clock begin to run on the first public test?  What if he tells someone about the invention and they offer to buy the product once the inventor has sufficient quantity?  What if the inventor shows plans for the invention to potential investors or business partners or others?

The law does permit some sort of period prior to the one year grace period clock beginning for testing and making changes to the invention to determine whether it works for its intended purpose.  In the context of offers for sale, the Supreme Court has stated that the clock begins to run once the invention is “ready for patenting”, whatever that means.  Finally, if third parties are subject to confidentiality or non-disclosure agreements, this should keep the clock from running because these are not “public” disclosures. 

But can an inventor be assured of exactly when the clock begins to run?  A safer course of action is to file the patent application earlier rather than later.

Prior Art

In general, an invention may be awarded a patent if it is novel and non-obvious.  What exactly does this mean?  Section 102 of the Patent Act defines prior art, albeit in a rather obtuse way. 

Subsection (a) states that a patent is not permitted for an invention that “was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention [date].”  For the purposes of this paragraph, whether the patent application is filed sooner rather than later is less important because prior art is defined in terms of what was done prior to the invention date.  Thus, if an inventor can prove (there’s that word again) that he invented prior to the date that the invention “was known or used by others in this country, or patented or described in a printed publication in this or a foreign country,” those activities do not count as prior art against his invention and he is still entitled to a patent.

Subsection (b) states that a patent is not permitted for an invention that “was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent.”  This paragraph is more problematic for inventors that wait to file their applications.  This is the paragraph that sets the one year grace period for the inventors own activities, public disclosure, offers for sale, etc. as described above.  It also describes “printed publications.”  This is where press releases, Internet disclosure, and other publications come into play.  Occasionally, an inventor will even publish an article that discloses the invention prior to filing a patent application.

Note that activities in this subsection are measured backwards from the date of application for patent, and it covers activites of third parties.  Thus, even if an invention was invented prior to a public disclosure or publication (by the inventor or a third party), if more than a year has elapsed since the time of the public disclosure or publication, the inventor is barred from getting  a patent.  If others may be working on similar inventions at the same time, as discussed above, filing an application sooner than later will reduce the risk that a third parties’ disclosure may be a bar to getting a patent.

Other subsections of section 102 deal with an inventor abandoning an invention or not being the actual inventor.  The more time that goes by from the time an inventor conceives of an invention until a patent application is filed, the greater the chance of potential evidence of abandonment or that another person is the actual inventor.

Finally, subsection (g) deals with situations where it may be necessary to prove that the inventor did not abandon, suppress, or conceal his invention and that he proceeded with reasonable diligence from conceiving of the invention to its reduction to practice.  Filing a patent application should demonstrate that the invention has not been abandoned, suppressed, or concealed and that the inventor has proceeded with reasonable diligence.

The earlier in the process an application is filed, the less these issues should come into play.

What Should an Inventor Do?

Ideally, the inventor would file patent applications early and often.  By this, I mean that an application should be filed early in the invention process once the inventor is reasonably confident that he knows how to make and use the invention and that it will basically work as intended.  This should be done prior to any public disclosure.  This procedure has the added benefit of preserving foreign rights.  A provisional application may be a good option.

Then, as the inventor works to perfect the invention, he should file additional patent applications when milestones are reached.  For example, if the inventor overcomes a problem in the development, a new application should be filed for the solution. 

If this is done during the period when the provisional application is pending, the non-provisional application filed at the end of 12 months could include the changes and improvements.  It is also during this time period that a patent search could be performed to aid in the preparation of the non-provisional application.  Going forward, additional patent applications should continue to be filed on these new inventions and improvements.  A determination would need to be made as to whether the new applications can stand alone as new, unrelated applications, or whether they should claim priority to the original application.

But isn’t this expensive to file multiple patent applications for an invention?  It can be.  Each new application will require an additional filing fee at the PTO.  It is unlikely that the cost of preparing each application would be the same however.  For applications that build on prior applications, only the cost of describing and claiming the modifications will be incurred.  It will cost a great deal more if patent rights are lost due to not filing early and often.

The risks of delay in filing a patent application and potentially losing patent rights far outweigh the costs of preparing more than one application.

District Court Denies Motions to Dismiss in Gene Patent Case

November 3, 2009

In the continuing saga in the lawsuit seeking invalidation of gene patents, Patently-O is reporting that Senior Judge Robert W. Sweet has denied the defendants’ motions to dismiss the case in its entirety.  The court issued an 85 page opinion on the issues.

Initially, the court recognized that:

[t]his action is unique in the identity of the parties, the scope and significance of the issues presented, and the consequences of the remedies sought.  . . .  The challenges to the patents-in-suit raise questions of difficult legal dimensions.

The PTO argued that the “comprehensive statutory scheme” set forth in the Patent Act precludes suits of this type against it, as well as that the suit was precluded by sovereign immunity.  The court rejected the PTO’s arguments and held that the Patent Act did not preclude constitutional challenges to PTO actions and that the PTO does not enjoy sovereign immunity from such constitutional challenges.

Next, the defendants argued that the plaintiffs lacked standing to bring this action because there is no case or controversy between the parties.  In effect, the plaintiffs have no reason to believe they will be sued for infringing the patents.  Again, the court rejected this argument because the argument did not address the alleged unconstitutional practices and policies of the PTO, but instead was only addressed to statutory violations. 

The court also cited MedImmune in holding that the particular facts of this case warrant a finding of jurisdiction.  The court analyzed the actions of defendant Myriad in enforcing the patents and threatening or suing others to determine that there was an actual case or controversy between the parties.

Finally, the court held that the plaintiffs’ allegations of constitutional violations are adequate.  The plaintiffs challenge specific examination guidelines that were published in the Federal Register in 2001.

Other Issues

The court had stayed proceedings dealing with the plaintiffs’ motion for summary judgment while it considered the motions to dismiss.  Now that it has ruled on these motions, the summary judgment proceedings and arguments will take place in December.

It is important to note while the plaintiffs did overcome a major hurdle in the motions to dismiss, they still have a long way to go to proving their claims and winning the case.  When a court considers a motion to dismiss, it considers the case in the light most favorable to the non-moving party.  Thus, it considers the facts alleged in the complaint to be true.

Judge Sweet

Judge Sweet was born in 1922 and was appointed to the federal bench by President Carter in 1978.  He became a senior district court judge in 1991.  Judge Sweet is a member of and serves on the advisory board for Law Enforcement Against Prohibition (LEAP), a group of police officers, government agents, and other law enforcement officers who oppose the War on Drugs and seek to legalize drugs.