Archive for June, 2013

Patent Drawings

June 28, 2013

One of the reasons that I tell inventors that we need to begin preparing a patent application well in advance of the deadline is the need for properly prepared drawings.

For provisional applications, just about any drawings will do.  Like other aspects of provisionals, the better prepared the provisional, the better chance of being able to properly rely on the provisional filing date.  Thus, even for provisionals, proper drawings are important.

For non-provisional patent applications, drawings are not an afterthought.  There are a number of very specific PTO rules that must be followed in the drawings.  The drawings must show every feature of the invention specified in the claims.  This means that it is not enough to simply discuss the idea of the invention generally in the specification; the invention must be discussed and the drawings described in detail.

When preparing the specification of a patent application, it is important to provide different levels of specificity.  The invention should be described broadly and generally, but also with increasing levels of detail.  This provides support for claims of varying breadth.

The drawings include reference numerals that point to various parts or elements in the drawings.  These numerals are referred to in the specification to describe the invention, including how it is made and used.  In this way, the drawings are not cluttered with a lot of words that make them difficult to read and understand.

Inventors sometimes think they can save money by preparing their own formal drawings.  There are also a number of specific requirements relating to margins, font size, and lead lines used in the drawings.  The rules for PCT applications are even more specific.  In a typical case, patent draftmen who specialize in preparing patent drawings only charge a couple hundred dollars to prepare the drawings for an application.  When I work with inventors who want to do the drawings themselves, I often go through multiple iterations that require a great deal of my time to correct and explain as the inventor works to comply with the drawing rules.  In these cases, the time involved costs a great deal more than a couple hundred dollars.

Like most aspects of patent preparation and prosecution, a patent attorney can easily provide advice and guidance on the preparation of drawings for a patent application.


Federal Circuit Again Holds Internet Monitezation Method is Patent Eligible Subject Matter

June 21, 2013

In 2011, the Federal Circuit reversed a district court dismissal at the pleading stage of a patent infringement claim for failure to state a claim.  The district court held that the claims of the patent were not directed to patentable subject matter.  The Supreme Court entered a GVR order (Grant-Vacate-Remand) and sent the case back to the Federal Circuit for reconsideration.  Upon reconsideration, the Federal Circuit again reversed the dismissal by the district court.  Ultramercial, Inc. v. Hulu, LLC.

The panel, per Chief Judge Rader, held that dismissal for ineligible subject matter at the pleading stage, prior to any discovery or factual development of the case, was particularly inappropriate.  Invalidity of a patent must be proven by clear and convincing evidence.  In ruling on a motion to dismiss, the court is to take the well-pleaded facts of the non-movant as being true.  There must be no plausible reading of the claims that would result in their being upheld.

The legal determination of patentable subject matter includes underlying factual issues.  For example, if the moving party suggests that the claims are an abstract concept, are they actually tied to a specific application of the concept?

Finally, while not always required, the panel suggests that cases should not be dismissed on such grounds prior to a claim construction determination by the court.  This is especially true given any underlying factual disputes (is this a foreshadowing of the dispute or result in Lightning Ballast?).

The court then performed a similar analysis to its earlier decision in the case, while also reviewing it in light of Mayo v. Prometheus.

The court provided some guidance on assessing these types of claims:

When assessing the abstract idea exception, the § 101 inquiry is a two-step one: first, whether the claim involves an intangible abstract idea; and if so, whether meaningful limitations in the claim make it clear that the claim is not to the abstract idea itself, but to a nonroutine and specific application of that idea.

Against this backdrop, the court focused on the use of specifically programmed computers and the internet to perform the method that requires 10 specific steps.  The patent claims “a practical application of the general concept of advertising as currency and an improvement to prior art technology,” and does not claim merely an abstract concept.

Judge Lourie concurred in the court’s result, but wrote separately to caution that the panel should closely follow Mayo v. Prometheus and the plurality opinion in CLS Bank.  The court must determine whether the claims would preempt and abstract idea.  In this case, he focused on the additional limitations to the claims to determine that the claim does not preempt the abstract idea of using advertising as an exchange or currency.  Thus, he would also find the claims in this case to be patent eligible.

When Can the Federal Circuit Hear an Appeal?

June 18, 2013

The cynical answer to the question in the post title is:  whenever they want to.  Seriously though, Federal courts are courts of limited jurisdiction; their ability to decide cases is governed by statute.

Specifically, the Federal Circuit’s appellate jurisdiction is governed by 28 U.S.C. § 1295.  For appeals from district courts in patent cases, the court generally follows the “final judgment rule.”  The Federal Circuit is free to review final judgments of the district courts in patent cases.  A “final judgment” usually means that the district court has nothing left to determine.  The court has determined all questions of liability and damages.

There are, as always in the legal world, exceptions to the final judgment rule.  On occasion, appellate courts may entertain “interlocutory” appeals.  These usually arise in special circumstances where a ruling of the lower court would be dispositive to the outcome of the case or would be unreviewable by the appellate court if an immediate appeal were not allowed.  An example of such a situation is the grant of a preliminary injunction is generally immediately appealable.  District court judges can also ask the appellate court to immediately rule on an issue of which there is substantial uncertainty.

In patent infringement cases, the district court will often “bifurcate” the case into separate trials or proceedings on liability and damages.  In some instances, the court may conduct separate trials on various issues of infringement, invalidity, damages, willfulness, and others.

The Federal Circuit also has a special statute regarding appeals.  28 U.S.C. § 1292(c)(2) provides the Federal Circuit with jurisdiction

of an appeal from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting.

Last week, an en banc Federal Circuit decided the question of what is meant by “except for an accounting.”

Robert Bosch, LLC v. Pylon Mfg. Corp.

The specific question that the court was addressing in this case was whether the court could hear appeals in cases where liability for infringement has been determined, but the district court has not yet ruled on damages or willfulness.  The court held, in a sharply divided 5-4 decision, that it could hear such appeals.  Interestingly, the 5 judges in the majority joined the court in 2001 and earlier, while the 4 dissenting judges were appointed since 2001.


Historically, once liability had been established in a patent infringement case, an “accounting” was an equitable proceeding conducted before an expert “special master” appointed by the court.  Now, however, the generally established practice is for juries to hear evidence and decide issues of damages in patent cases.  These usually include lost profits and reasonable royalties.

The court decided, by a 7-2 margin, that the Federal Circuit can hear appeals from any infringement case where damage determinations have not yet been made, regardless of the fact that a trial on damages was generally not referred to as an “accounting.”  Judge O’Malley wrote a vigorous dissent on the issue.


If an infringer is determined to have “willfully” infringed the patent, the court can enhance the damage award by an amount up to three times the originally determined amount.  The majority of the court ruled, this time 5-4, that historically the determination of willfulness was conducted in the accounting proceedings before the special master.  Since the court had already determined that such proceedings came within the definition of “accounting,” the majority determined that appeals could be heard before a ruling on willfulness.

Judge Moore and Judge Reyna each dissented on this issue.  They each wrote that a determination of willfulness requires the fact-finder to determine the intent or state of mind of the infringer.  Clearly, this does not fall within the plain meaning of the term “accounting.”  The court should review the plain meaning of the term instead of the historical meaning, which may or may not have been different.

Judge O’Malley’s dissent on this issue criticizes the court for making the wrong inquiry.  The question is not whether special masters made determinations of willfulness, but rather whether the meaning of “accounting” included such a determination.  She very strongly argues that it does not.

Supreme Court Strikes Down Isolated DNA Claims; Permits cDNA Claims

June 17, 2013

USSupremeCourtWestFacadeLast week, the Supreme Court issued its decision in Association for Molecular Pathology v. Myriad Genetics, Inc.  Justice Thomas, writing for a unanimous Court, ruled that isolated DNA sequences are not patent eligible.  The Court did permit the patent claims to isolated cDNA to stand.

The gene patent saga filed by the ACLU on behalf of a large number of plaintiffs has finally come to an end.  After 4 years of litigation and 2 trips to the Supreme Court, the law is that isolated DNA is no longer eligible for patent protection.  cDNA, however, remains patentable.

Given the recent Supreme Court decisions on patent eligibility under § 101, the only surprising thing about the opinion was that they did not strike down all of the claims.  Myriad retains its claims to methods of screening patients for the genetic mutation that indicates a higher propensity for breast and ovarian cancers, and it retains its claims to complementary DNA (cDNA).

The opinion did not seem to conflate patent eligibility with novelty or obviousness as in Mayo v. Prometheus.  The opinion in Myriad started with the statutory language and then turned to the judicial exceptions for “laws of nature, natural phenomena, and abstract ideas.”  The Court then quoted extensively from Mayo to expound on these exceptions:

without [these] exception[s], there would be considerable danger that the grant of patents would “tie up” the use of [basic tools of scientific and technological work] and thereby “inhibit future innovation premised upon them.”

This idea from Mayo is that patents inhibit research and development instead of encouraging it.  It has been thought for years that one of the purposes of patents is to provide an incentive to innovate.  These statements bring that premise into question.

And, of course, by definition a patent will “tie up” the claimed subject matter.  That’s the whole point:  to be able to exclude others from copying the claimed invention.

In the analysis of the isolated DNA, the Court held that Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes.  “Myriad did not create anything,” according to the Court.  “[S]eparating [the] gene[s] from [the] surrounding genetic material is not an act of invention.”  The PTO apparently thought otherwise for about 30 years.  The Supreme Court whisks it all away without providing support for the contention that is does not constitute an act of invention.

The Court did recognize that cDNA is not naturally occurring.  It may retain some characteristics of the isolated DNA, but it is generally created in the lab and does not exist in the human body.  Therefore, cDNA is still patent eligible.

Finally, the Court seemed to try to give some hope and encouragement to the biotechnology industry:

  1. The Court noted that no method claims were included in its opinion.  Innovative methods of manipulating the genes would still be patent eligible.
  2. The Court noted that new applications of knowledge about particular genes may still remain patent eligible.
  3. The Court noted that it provided no opinion on the patent eligibility of DNA in which the order of the naturally occurring nucleotide sequences has been altered.

On the third point, the Court did not provide guidance.  How much alteration is required for patent eligibility?

Justice Scalia wrote a rather bizarre opinion concurring in part and concurring in the judgment.

I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief. It suffices for me to affirm, having studied the opinions below and the expert briefs presented here, that the portion of DNA isolated from its natural state sought to be patented is identical to that portion of the DNA in its natural state; and that complementary DNA (cDNA) is a synthetic creation not normally present in nature.

This is something to keep in mind regarding these cases.  The judges and juries who must ultimately rule on them will very rarely understand the science behind them.  They are usually not this candid in admitting their lack of understanding.


How will this opinion affect the biotechnology industry? Given this and other recent Supreme Court opinions on patentable subject matter, it seems that patents in the area of personalized medicine will be difficult to obtain and enforce. Many biotechnology companies are working on ways to grow organs that can be transplanted into the human body to replace defective organs. The goal is for these organs to be as similar to the natural organs as possible. This opinion seems to indicate that such organs could not be patented.  HT:  IPWatchdog.

Given the extensive costs of research in these areas, will companies continue to make large scale investments? The Supreme Court seems to be arguing, somewhat contrary to historical understandings, that patent inhibit rather than encourage research. Monopoly profits for the limited term of the patent are set to encourage companies to make large initial upfront investments.

What’s Next for Patent Trolls?

June 11, 2013

Last week, the White House released a list of legislative priorities and executive actions aimed at curbing litigation by so-called patent trolls.

Legislative Recommendations

  1. Require patentees and applicants to disclose the real party in interest.
  2. Permit more discretion in the awarding of fees to winners in patent cases.
  3. Expand the PTO’s transitional program for covered business method patents.
  4. Protect off-the-shelf use by consumers and businesses of products purchased and used for its intended purpose.  This would include staying proceedings against consumers if the manufacturer, retailer, or vendor has also been sued.
  5. Change the ITC standard for issuing injunctions to match the judicial standard set forth in eBay v. MercExchange.
  6. Incentivize public filing of demand letters to make them searchable by the public.
  7. Permit the ITC to hire more qualified judges.

Executive Actions

  1. PTO rulemaking will require patent owners and applicants to update regularly ownership information.
  2. Tighten functional claiming by training examiners to better examine such claims.
  3. The PTO will publish new education and outreach materials to help consumers who may be targeted by patent trolls.
  4. Continue and expand outreach and study by the PTO, FTC, and DOJ to reach consensus on updates to patent laws and policies.
  5. Strengthen ITC exclusion orders to make them more transparent, effective, and efficient.

New York Times Editorial

Perhaps more surprisingly, an editorial appeared in the New York Times last week “Make Patent Trolls Pay in Court.”  The editorial was written by Chief Judge Randall Rader and Professors Colleen Chien of Santa Clara University and David Hricik of Mercer University.

The editorial attacks frivolous lawsuits by patent trolls.  It suggests that patent trolls have a significant number of advantages over the entities they sue for infringement.  First, they don’t need to fear a countersuit because they don’t make anything and therefore would not infringe any patent.  They are also not worried about their reputations with the public like other companies are.

Second, patent trolls often hire attorneys on a contingent fee basis:  they only pay their attorneys if they win the lawsuit.  Conversely, defendants must typically pay their attorneys on an hourly basis.  Thus, even if the defendant prevails in a lawsuit, it may have run up a large legal bill.  This causes defendants to settle cases more quickly to avoid such costs, which in turn encourages more suits by the patent trolls.  If the trolls lose, they don’t have large legal bills to pay.

The authors argue that patent trolls should pay for abusive litigation.  Section 285 of the Patent Act and Rule 11 of the Federal Rules of Civil Procedure permit judges to shift the costs of litigation to the losers in the case of litigation abuse.  The authors note that only such shifting occurred in only 20 out of 3,000 patent cases filed in 2011.

How does one decide if the litigation tactics are abusive?  One sign, according to the authors, is where the patent troll sues a large number of end users of a patented invention rather than the manufacturer itself.  Other signs include where demands for settlement are a fraction of the defense costs or where patent trolls continue to pursue settlements against product users even where courts have already ruled against the patent owner.  Finally, abusive litigation tactics include where patent owners pursue litigation against defendants that already have a license to the patent or where they seek to enforce the patent vastly beyond its plain meaning and precedent.


The Obama Administration has now thrown its weight behind the anti-patent troll lobby.  It is a bit late to the party, as most of its proposals are already pending in bills before Congress.

Of the legislative proposals, the real-party-in-interest requirement is contained in several congressional bills, as is the expansion of review of business method patents by the PTO.  The hiring of qualified ITC judges should be a no-brainer.  Qualified judges are always going to be an improvement over those appointed for political reasons.

Changes to ITC injunction standards have been discussed in the past.  The problem with this proposal is that the ITC cannot award damages, which are the alternative to an injunctions at the district court.  If a patent owner can’t get an injunction at the ITC–or if the chances for such an injunction are significantly reduced–that owner won’t file at the ITC.  He will instead pursue his case in district court.  Do we really want to shift more cases to court from the ITC?

There is nothing to prevent the recipient of a demand letter from making its existence and contents public.  Most companies, however, choose not to do so.  If there was an accessible and searchable database of such letters, it is very possible that patent owners would forego sending such letters and simply file infringement suits prior to seeking settlement.

I will discuss the end user and fee shifting proposals below with respect to the editorial.

On the executive front at the PTO, there are some good proposals.  Further training of examiners is always a good idea.  As anyone who has written a patent application knows, there are some inventions that are more easily claimed functionally, rather than structurally.  There are some inventions that are best claimed both ways.  Functional language can seem overly broad.  If properly examined, however, the language can be limited to only cover the invention sought to be protected.  Examiners need to understand this and properly reject overly broad claims, whether functional or structural in nature.

Further public education and outreach of the public with respect to patent infringement is a noble endeavor.  Most people don’t know about or understand patents in any significant way.  They merely hear about patents in the media where such stories are sensationalized and are not based on any solid understanding either.  Continued to study and improvement of the patent system is also good, especially if it can result in changes that have a consensus among all interested parties.  The problem is that, due to sequestration and fee diversion, the PTO does not have the money to continue its current reform efforts and to perform these public services.  Congress needs to end fee diversion for good before this will work.

The New York Times editorial is a bit surprising.  Chief Judge Rader has a reputation for being in favor of a strong patent system.  This seems a bit out of character for him.

Where to start here . . .

Fee shifting is generally disfavored in the US system.  We generally believe that each party should pay its own way in litigation.  This will encourage suits by smaller companies or individuals, without the fear of being stuck with the legal bill of a large entity or corporation should it lose the suit.

That being said, the statutory and rule provisions cited in the editorial do exist.  If a party brings a frivolous lawsuit or engages in abusive litigation tactics, whether in the patent field or in any civil litigation, it should be sanctioned by the court.  Such sanctions should include payment of the other parties fees and expenses in responding to such a lawsuit or tactic.  Courts should more commonly exercise their discretion in awarding such fees and costs.

Why don’t the courts currently award fees in such cases?  One reason is the Federal Circuit.  As long as reversal rates are at 40-50% in patent infringement cases, district court judges will have a difficult time determining a suit to be without merit.  Who knows what the appellate court will decide on appeal?  The Federal Circuit itself has provisions for awarding costs in its rules.  Yet, it very rarely does so.  Perhaps the Chief Judge should start with his own court on this issue.

Next comes the issue of suits against end users of products that infringe patents.  The Patent Act currently makes “use” of a patented article to be an act of infringement.  Yet, the Obama Administration wants courts to stay such suits if the manufacturer, retailer, or vendor are sued.  And the authors of the editorial believe such such for “use” of a patented article are abusive.  Do they propose to change the statute to eliminate “use” as an act of infringement?  This is peculiar to say the least.

Patent Trolls

It’s time to address patent trolls in a bit more detail.  A big question that arises is:  where do they get the patents that they seek to enforce?  I’m not sure anyone has actually done an analysis of this question.

The Patent Act does not require that an applicant actually make (reduce to practice) its invention to obtain a patent for the invention.  Thus, it is possible that some of the so-called trolls actually employ inventors that come up with novel and non-obvious inventions that they don’t actually make.  They file disclosures of these inventions, and provided they meet the requirements of the Patent Act, obtain patents for them.  Is this a bad thing?  Are none of the patents they obtain worthwhile?  Then, why are companies infringing the patents?

In the US, we have historically sought to protect the “garage inventor” (at least until the AIA) or university inventors.  We do this by offering reduced PTO filing fees and other incentives.  Often, such small inventors come up with new inventions, but are not able to bring the invention to market.  Many large companies are not willing to pay them for the inventions.

A potential source of funding for such inventors are the patent trolls.  If the trolls are not able to enforce the patents after acquisition, it is unlikely that they will pay small inventors for the patents.  In that case, many of these inventors would not be able to have the funding to do the inventing.  Patent trolls are often a source of funding for small inventors.

Patent trolls often acquire the assets, or at least the patents, of companies when they go through bankruptcy proceedings.  In this case, they provide the bankrupt estate with some funds to pay creditors.  If they could not enforce the patents, they would not provide such funds for them.

While the term certainly carries a pejorative connotation, they are simply not all bad.

Don’t get me wrong, some patent trolls are absolutely engaged in abusive tactics by sending out unwarranted demand letters, filing frivolous suits, and seeking overly broad patent claim interpretations.  But these tactics are not limited to patent trolls.  Companies in other fields seek to do exactly the same thing.

Fee shifting for frivolous suits or abusive tactics is appropriate and should become more common . . . in all civil litigation.