Archive for February, 2014

Federal Circuit Holds That Claim Construction Should Should Continue to Be Reviewed De Novo

February 21, 2014

The Federal Circuit has issued its long-awaited opinion in Lightning Ballast Control LLC v. Phillips Electronics N.A. Corp.  By a 6-4 decision, the en banc court held that claim construction should remain a matter of law with no deference accorded to the district court judge’s findings on appeal.

Majority Opinion

NewmanJudge Newman wrote the opinion for the court and relied extensively on uniformity and finality as reasons to retain the current system.  She argued that different cases involving the same patent may result in different conclusions as to the meaning of claim terms if the Federal Circuit had to decide the cases with deference to the rulings of the trial court judges.  This would result in increased uncertainty, costs, and litigation.  The public needs to know definitively what a patent claim means.  Thus, the Federal Circuit should rule on the issue for all the world and not just the parties at hand.

Judge Newman’s opinion relies extensively on stare decisis, the principle that courts should adhere to their previous decisions and not overrule them unless absolutely necessary.  She goes on to state that there is no real impetus to overrule the previous case holding that claim construction is a matter of law to be reviewed de novo on appeal and nobody has provided a workable solution if such an impetus did exist.

Finally, Judge Newman spends a great deal of time attempting to rebut the arguments raised by the dissent that the de novo rule is extremely unpopular and leads to tremendous uncertainty in claim construction appeals.  This seems to be a serious factual dispute between the judges in the majority and those in dissent.


lourieJudge Lourie filed a concurring opinion where he made several interesting arguments.  First, he said that there are really not factual disputes with respect to claim construction.  Although there are a number of actors involved in the patent process, such as hired experts that really don’t know what was meant by the patent terms anyway.  Hired scientific experts do not lie, so the judge’s determination of a witness’s credibility is irrelevant.

Next, he argues that, yes, claim construction rulings are considered on appeal de novo, they aren’t really.  The Federal Circuit provides informal deference to the district court judge’s ruling.  The Federal Circuit will affirm the district court when appropriate and reverse when appropriate.  These points are somewhat baffling to me.


O'MalleyJudge O’Malley (a former district court judge) wrote at great length and rather scathingly for the four dissenting judges.  She argued that a cursory review of the history of de novo review of claim construction demonstrates its error.  There are clearly determinations of underlying factual issues that are entitled to deference on appeal.

When a case is wrongly decided, as the case that dictated de novo review on appeal was, stare decisis does not require the court to adhere to the erroneous decision.  Indeed, en banc review is precisely for overruling such decisions.

The judges in these opinions seem to have gotten a bit personal.  Judge Newman emphasizes that the rule upheld in this case has been settled for 15 years, while Judge O’Malley indicates that it has been a short time.  Judge O’Malley cites Judge Newman’s views from the earlier decision where Judge Newman criticized the de novo review as ignoring the underlying factual issues involved in claim construction.  Judge O’Malley seems shocked that several members of the majority in today’s opinion, including Judge Newman, were among the harshest critics of the de novo review rule.

The result in this case is indeed shocking.  The overwhelming majority of the patent community recognizes that it makes little sense for judges that are far afield on appeal get to determine whether the trial court correctly determined underlying factual issues related to claim construction.

It is likely that this case is headed to the Supreme Court.

White House Executive Action on Patent System

February 20, 2014

ObamaToday, the White House released a FACT SHEET on executive action to strengthen the patent system and foster innovation.  A number of new initiatives are listed in the fact sheet by the administration:

  1. Promoting transparency with the proposed convoluted rule to identify the attributable owner of a patent or application.  It is questionable whether the PTO has the authority to make such a rule, as the courts have held that the PTO does not have substantive rule-making authority.
  2. The PTO has begun further training of patent examiners to help them better understand and examine applications that include functional claims, i.e., parts that are defined a function they perform instead of their structure.  The PTO also plans to launch a program to include glossaries in patent specifications to promote clarity.
  3. The PTO is launching an online toolkit to provide the public with information on patent litigation suits that are pending, as well as on specific patents.  This is intended to aid the public in understanding the risks and benefits of litigation.
  4. The PTO plans to expand the use of academic scholars to produce studies and collect data on patent issues, as well as to continue to expand the use of round table discussions with various members of the patent community.
  5. The White House proposes to strengthen enforcement of ITC exclusion orders.
  6. The White House proposes to continue to strengthen the Patents for Humanity program.
  7. The PTO is announcing a new initiative to use crowd sourcing for prior art to aid examiners.  Presumably, this would be similar to the peer-to-patent system.
  8. The PTO is requesting that technologists, engineers, and experts volunteer their time to aid in training patent examiners to stay up-to-date with the latest technologies.
  9. The PTO plans to increase its pro bono and pro se programs.

Finally, the administration is renewing the call to pass meaningful legislation to combat the problem of patent trolls.

On one hand, it is good to see that the White House recognizes that innovation and the patent system are vital to our economy and recognizes the importance of patents.  Past administrations ignored patents and appointed PTO leadership that knew nothing about the patent system.

On the other hand, the Obama Administration is seeking to make what should be a nonpartisan system political.  For one thing, what is the hold up on naming a new PTO director?  If the president is serious about the PTO, why not give the agency a permanent leader?  This seems to be more of his go-it-alone approach to governing.  A new director would require Senate confirmation.  It is hard to understand why that would be difficult (especially given the “nuclear” option that now only requires a majority vote).  The president seems to think that he is above dealing with Congress and so doesn’t even want to go through confirmation of a new PTO leader.

HT:  Hal Wegner.

PTO Seeks to Require Identification of Attributable Owner

February 6, 2014

The PTO has published an extensive proposed rule to require patent and patent applications to identify the “attributable owner.”  The PTO asserts that the public should be able to identify the true owner of a patent, many patent owners–including the infamous and scary patent assertion entities–are seeking to hide the identity of the true owner.  Therefore, the PTO is seeking to require the true owner to be identified.

As noted in the summary by Patently-O, however, this is not nearly so simple as it sounds.  Many patent owners have complex corporate structures that include parent companies, partially or wholly-owned subsidiaries, and multiple entities at various levels.  Property ownership is generally governed by state law with some patent ownership rules governed by federal law, not to mention foreign entities whose existence is governed by the laws of its country of origin.  Thus, there is a veritable panoply of entities that may be involved in patent ownership.

And, beyond that, property rights can be divided in a number of ways.  There are actual title-holders, such as assignees; there are licensees who may have some rights to the property and not others; there are parties that have equitable interests in property; there are easement-holders.

To cover the myriad of possibilities, the PTO seeks the identity of the “attributable owner.”  This means that the actual titleholder or assignee must be identified.  Certainly this would include the ultimate parent entity of the titleholder as well.  Any other parties that are necessary for enforcement of the rights in that patent need to be identified.  This would include exclusive licensees and other parties that would be necessary for enforcement.  Finally, the PTO seeks information on entities that temporarily divest or prevent vestment of ownership or other rights in the patent.  This would include trusts, proxies, and similar entities.  These seem to be some of the entities that the PTO considers to be used to hide the true identity of real parties in interest.

Proposed Rules

The proposed rules would require that the attributable owner be identified at the time of filing a patent application, when there is a change in the attributable owner during pendency of the application, at the time of payment of the issue fee or any maintenance fees, and when a patent is involved in any type of post grant review, including ex parte reexamination, supplemental examination, or proceedings before the Patent Trial and Appeal Board.

Applicants and patent owners will generally be given three months from the date of these events to provide the PTO with this information.  If the applicant or patent owner fails to do so, the patent or application will be deemed abandoned.

The PTO is also seeking information from patent applicants and owners regarding licensing information and offers.  The PTO would like to make this information available to the public in an online format.  It is assumed that this information would be provided voluntarily.

Given the complexity of property ownership, the proposed rules are quite extensive.  The PTO seeks comments on the rules by March 25.

HT:  Patently-O and Hal Wegner.