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Retailer Lawsuit May be Severed and Stayed Pending Outcome Against Manufacturer

Thu, 04/03/2014 - 14:49

By Dennis Crouch

In re Toyota Motor Corp (Fed. Cir. 2014)

AVS – an Acacia company – sued Toyota for patent infringement in the Eastern District of Texas. As part of the litigation strategy, AVS included Gulf States Toyota – a large Texas-based dealer/distributor as a co-defendant. The AIA limited joinder of multiple unrelated defendants in a single infringement action. However, here joinder of these defendants appears proper because the manufacturer and distributor are both dealing in the same infringing products – Toyota vehicles.

Although venue is “proper”, Toyota argues that E.D. Texas is an inconvenient forum under 28 U.S.C. §1404(a) and that a better venue is E.D. Michigan, both because of the location of witnesses and because that court has previously adjudged the patent in question. That proposal wouldn’t exactly work because the Michigan court apparently has no personal jurisdiction over Gulf States. Thus, Toyota and Gulf States collectively argued that the case against the franchisee (Gulf States) should be severed and stayed pending outcome of the Toyota case. District Court judge Schneider rejected those proposals – finding that the case would not be moved to Michigan even if Gulf States were not a defendant and that therefore there was no cause to either transfer or sever.

On Mandamus, the Federal Circuit has vacated the district court denial – holding instead that (1) absent Gulf States as a defendant, the case against Toyota should be transferred to Michigan; and (2) therefore the district court should reconsider the request for severance-and-stay on remand.

This decision seemingly serves as the Federal Circuit’s first pass at addressing retailer/customer lawsuit concerns that are at the heart of legislative patent reform initiatives. The proposed legislation would provide a right to stay customer lawsuits while the current law seemingly only provides that such a stay can occur at a district court’s discretion. The provision most on point is likely Fed. R. Civ. Proc. 42(b) that calls for a district court to hold separate trials on various issues or claims “for convenience, to avoid prejudice, or to expedite and economize.”

 

Guest Post by Prof. La Belle: Demand Letters, DJ Actions, and Personal Jurisdiction

Wed, 04/02/2014 - 21:26

Demand Letters, DJ Actions, and Personal Jurisdiction

Guest Post by Megan La Belle, Associate Professor, Catholic University of America, Columbus School of Law

For more than fifteen years now, accused infringers have faced substantial personal jurisdiction obstacles in patent declaratory judgment (DJ) actions.  In Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998), the Federal Circuit held that patent owners are not subject to personal jurisdiction in DJ actions based exclusively on the sending of demand letters to accused infringers in the forum state.  Red Wing Shoe was a purely policy-driven decision: if demand letters could create jurisdiction, patent owners would hesitate to send them and fewer patent disputes would settle out of court.  Because the policy favoring settlement is “manifest,” the Federal Circuit reasoned,  personal jurisdiction doctrine should facilitate—not discourage—the use of demand letters to settle patent disputes.  Since Red Wing Shoe, the Federal Circuit has reaffirmed this holding repeatedly, and other courts have extended it to the copyright and trademark contexts.  See, e.g., Integrity Mgmt. of Fla., LLC. v. Dental Websmith, Inc., 2008 WL 4372878, *5 (D. Neb. Sept. 19, 2008); Lab. Corp. of Am. Holdings, Inc. v. Schumann, 474 F.Supp.2d 758, 762 (M.D.N.C. 2006).  Indeed, the Federal Circuit’s rule has gone virtually unchallenged, as I’ve discussed in other writings.

Recently, however, the use of demand letters by patent owners has come under attack.  Both federal and state lawmakers have criticized patent owners who send demand letters to multiple alleged infringers looking for quick settlements.  Some states have already passed laws aimed at curbing this practice, and the Senate is currently considering various bills that would make the sending of certain types of demand letters an unfair or deceptive act or practice under the Federal Trade Commission Act.  The Executive, likewise, is taking a stand against patent demand letters.  In February, the White House launched a website at http://www.uspto.gov/patents/litigation/index.jsp  “to empower those who have received a demand letter or may be threatened with a patent lawsuit with information about their options.”  The website provides, among other things, that a DJ action may be an option for an accused infringer.

Yet, these legislative and executive efforts to curtail patent demand letters are undermined by the Federal Circuit’s rule in Red Wing Shoe.  Not only does the rule encourage the use of demand letters, but it often insulates patent owners from a DJ suit in the accused infringer’s home state.  Arguably, this special jurisdictional rule for patent DJ actions never made much sense.  As I suggest in this recent article, however, the current debate surrounding demand letters signifies that the time has come for Congress—or perhaps the Federal Circuit itself—to take a hard look at this jurisdictional rule.

Ed.: You can read the full text of Prof. La Belle’s article at http://www.vanderbiltlawreview.org/2014/03/against-settlement-of-some-patent-cases/  

Hricik on Ethics

Tue, 04/01/2014 - 12:10

Tomorrow: David Hricik on Patent Lawyer Ethics: http://tinyurl.com/l2e238a.  

Topic: Spotting Current Client Conflicts of Interest in Patent Practice: Litigation; Opinions; and Prosecution. AIPLA Webinar from 12:00 – 1:30 EST.

Patent Reform Moving Forward in Congress

Tue, 04/01/2014 - 10:58

By Dennis Crouch

While the attention of the patent community rightly be focused on the Supreme Court for the next few months, patent reform initiatives are rapidly moving forward in Congress, the US Patent Office, State Legislatures, and the Court of Appeals for the Federal Circuit. The only area where patent reforms are seemingly stalled is WIPO.

Congressional Patent Reforms: In particular, I expect that major patent reforms will pass in the Senate by May 2014 in a strongly bi-partisan bill supported by President Obama. This is one area where the parties see the potential for getting something done and are ready to move. The House of Representatives has already passed a companion bill that would (a) dramatically raise the pleading standards for filing a patent infringement action; (b) require that courts award the prevailing party attorney fees and expenses except for certain cases; (c) allow defendants to force joinder of those with a direct financial interest in the patents at issue as a mechanism for both ensuring that the prevailing party fees are paid and that the financial interests behind patent litigation become public; (d) limit discovery until after claim construction; (e) require more particular pre-filing notice for willful infringement; (f) boost transparency of patent ownership requirements; (g) limiting PGR estoppel only to actually raised issues and eliminating the “reasonably could have raised” provision; (h) etc.

The Senate is moving forward with consideration of its leading patent reform bill, S. 1720 known as the Patent Transparency and Improvements Act of 2013. The Judiciary Committee is holding hearings on the proposal on April 3, 2014.

Unpatentable: See Bilski, Mayo, Flook, and Benson

Mon, 03/31/2014 - 16:38

By Dennis Crouch

The question of patentable subject matter is nominally grounded in the statute 35 U.S.C. § 101. That statute offers patent rights to anyone who “invents or discovers any new and useful process, machine, manufacture, or composition of matter.” However, very few section 101 cases actually refer to the statutory text. Rather, the focus is on the Supreme interpretative stance that the statute also prohibits patents on abstract ideas, products of nature, and natural phenomena. It is the definition of Abstract Idea that is at stake in Alice Corporation Pty. Ltd. v. CLS Bank Int’l. [TRANSCRIPT OF ORAL ARGUMENTS]

Alice Corp.’s patent covers a computerized escrow system and method that CLS Bank allegedly uses in the process of settling trillions of dollars in transactions each week. After Alice Corp., sued CLS Bank for infringement, CLS responsively argued that the patent claims are invalid as impermissibly encompassing an abstract idea.

In the background, the Supreme Court has decided three recent Section 101 cases: Bilski, Mayo, and Myriad. Arguing for CLS Bank, Mark Perry argued that these two cases determine the outcome here.

MR. PERRY: Bilski holds that a fundamental economic principle is an abstract idea and Mayo holds that running such a principle on a computer is, quote, “not a patentable application of that principle.” Those two propositions are sufficient to dispose of this case. If Bilski and Mayo stand, Alice’s patents fail.

Rather, to be patent eligible, CLS Bank argues, the computer implementation must offer a “technological solution.”

MR. PERRY: We know from Benson, the Court’s seminal computer implementation case, that if you can do it by head and hand, then the computer doesn’t add anything inventive within the meaning of the 101 exception. That is the holding of Benson. And the Court reiterated that in Mayo. Flook said exactly the same thing. If you can do it with pencil and paper, then the computer is not offering anything that the patent laws are or should be concerned with.

It is only where the method will not work without a computer, which is not these claims, and where the computer itself is doing something that the patent law is willing to protect.

Justice Ginsburg asked why – if it is such a simple case – why the Federal Circuit struggled so:

JUSTICE GINSBURG: The Federal Circuit in this case split in many ways, and it had our decisions to deal with. You said, given Bilski and Mayo, this is an easy case. What is the instruction that escaped a good number of judges on the Federal Circuit? How would you state the rule?

MR. PERRY: Your Honor, I think there’s a significant element to the Federal Circuit that disagrees with Mayo and has been resistant in applying it. Chief Judge former Chief Judge Michel filed a brief in this Court essentially saying Mayo is a life sciences case, You should limit it to that because if you apply it to everything else, then these patents are no good. Mayo we submit is a technology-neutral, Industry-neutral, exception-neutral framework that can be used to answer all of these questions.

We should note here, that, although CLS Bank sees the Mayo test as exception-neutral, the respondent was not asked to explain why the test was not applied the most recent Section 101 case of Myriad.

The reference to Mayo/Flook is important – with the notion that to be patent eligible there must be a technological innovation rather than discovery of an abstract idea followed by routine technological implementation of that idea. The result of the Mayo/Flook approach is that patent eligibility is temporally dependent. In particular, innovations that were once patent eligible will later be not eligible once the implementing-technology becomes well known. Mr. Perry explains:

JUSTICE SOTOMAYOR: How about email and just word processing programs?

MR. PERRY: At a point in time in the past, I think both of those would have been technological advances that were patentable. . . . Because they would have provided a technological solution to a then unmet problem. Today, reciting, and do it on a word processor is no different than and do it on a typewriter or and do it on a calculator.

The inventive contribution component, which uses specifically the language of conventional and routine and well understood, will evolve with technology. That’s why it’s different than the abstract idea component.

Mr. Phillips responds somewhat weakly that there must be “significant limitations on the extent to which novelty has to be built into 101.

There is some potential that the decision will be rather small – deciding that an escrow-settlement method is an abstract idea and that the routine addition of computers to facilitate the method does not alter that original conclusion. This result would essentially parallel the results of Bilski v. Kappos and would potentially add nothing of substance to the law. Many of the questions followed this line of thinking and Alice’s attorney, Carter Phillips, repeatedly worked to explain how the technological aspect of the invention is much more complex that has been commonly caricaturized. CLS Bank argued the opposite.

JUSTICE GINSBURG: On the abstract idea, you know that the Bilski case held that hedging qualified as an abstract idea. So how is intermediate settlement a less abstract than hedging?

MR. PHILLIPS: … What we claim is a very specific way of dealing with a problem that came into being in the early 1970s of how to try to eliminate the risk of nonsettlement in these very massive multiparty problems in which you need to deal with difficulties that exist at different time zones simultaneously and to do it with a computer so that you not only take them on chronologically, deal with them sequentially, based on the kind software analysis that the patent specifically describes by function.

And it goes even further than that, and does something that no escrow agent and no … settler that I know of. It actually blocks specific transactions that, in the shadow account, would violate the terms of the settlement that would ultimately be implemented.

. . . [This is an invention that] you cannot, absolutely cannot [implement this system without a computer], because it is so complex and so many interrelated parts.

. . . I believe that if you analyze the claims and you don’t caricature them and you don’t strip them out of the limitations that are embedded in there, this is not some kind of an abstract concept. This is not some kind it’s not an abstract idea..

JUSTICE KAGAN: There is something that you’ve patented that has that is not just simple use a third party to do a settlement. . . . And what is that, putting the computer aside?

MR. PHILLIPS: It is well and again, it’s difficult to do that because you absolutely need the computer in order to implement this. But the key to the invention is the notion of being able simultaneously, dealing with it on a chronological basis to stop transactions that will otherwise interfere with the ability to settle on time and under the appropriate circumstances. And the only way you can do that in a realtime basis when you’re dealing with a global economy is to use a computer. It is necessary to the efficacy of this. So in that sense, I can’t I can’t disaggregate it the way in some sense you’re suggesting. It seems to me it’s bound up with in it’s bounds up with the whole notion of is this an abstract concept. . . .

MR. PERRY: On the abstract idea, Justice Ginsburg, you asked Mr. Phillips what’s the difference between hedging and this claim. There is no difference. This is hedging. It is hedging against credit default rather than price fluctuation, but it is simply hedging. . . . Mr. Phillips suggests, well, we have multilateral transactions, global things, chronological, time zones and so forth. None of those are claimed, Your Honor. Those are all recited in specification. The claims read on a single transaction involving two parties.

JUSTICE SCALIA: Why isn’t it why isn’t doing it through a computer not enough? I mean, was the cotton gin not an invention because it just means you’re doing through a machine what people used to do by hand? It’s not an invention. It’s the same old, same old. Why is a computer any different in that respect?

MR. PHILLIPS: At one level I agree with you completely. There is no difference between them.

This Court has, however, said on more than a few occasions, albeit in dicta, that coming up with an idea and then say, use a computer, is not sufficient. And what I’m trying to suggest to you is we don’t fall within that dicta. Now, if you don’t accept the dicta and you say use a computer is fine, then I think we’re done.

MR. PERRY: Of course, a patent that describes sufficiently how a computer does a new and useful thing, whether it’s data compression or any other technological solution to a business problem, a social problem, or a technological problem, would be within the realm of the of the patent laws. That is what the patent laws have always been for. . . . Those algorithms, those inventions are undoubtedly technological. And if they are used in a trading platform or a hedging system or something else, that wouldn’t disable them [as patent eligible].

The bigger version of the decision would more particularly address software patenting. Here, Alice suggests that the case is very much about the ongoing viability of software patents:

JUSTICE KENNEDY: You understand the government to say no software patents.

MR. PHILLIPS: That’s the way I interpret the government’s the government’s brief.

However, both CLS Bank and the Government argue otherwise. Mr. Perry states “this will not affect software patents. . . . [Rather,] we are talking about a group of patents … that’s way out at the tail end of the distribution.” Likewise, the Solicitor General Verrilli argued that “it’s just not correct to say that our approach would make software patenting ineligible. [In our proposed test] any software patent that improves the functioning of the computer technology is eligible. Any software patent that improves that is used to improve another technology is eligible.” In thinking about the consequences for patentees who already hold patents that may become ineligible, Mr. Perry suggested that their problems are minimal because “the patent holder would have the opportunity to institute a reexamination proceeding or some sort of administration process to address that issue.”

Justice Breyer indicated the importance of creating a rule that works:

JUSTICE BREYER: There is a risk that you will take business in the United States or large segments and instead of having competition on price, service and better production methods, we’ll have competition on who has the best patent lawyer. . . . And if you go the other way and say never, then what you do is you rule out real inventions with computers. . . . [The amicus briefs provide] a number of suggestions as to how to go between Scylla and Charybdis. . . . I need to know what in your opinion is the best way of sailing between these two serious arms.

MR. PHILLIPS: Well, Justice Breyer, I guess I would suggest to you that you might want to deal with the problem you know as opposed to the problems you don’t know at this stage. I mean, we have had business method patents and software patents in existence for well over a decade and they’re obviously quite significant in number. And and we know what the system is we have. And Congress looked at that system, right, and didn’t say no to business methods patents, didn’t say no to software patents, instead said the solution to this problem is to get it out of the judicial process and create an administrative process, but leave the substantive standards intact.

So my suggestion to you would be follow that same advice, a liberal interpretation of 101 and not a caricature of the claims, analyze the claims as written, and therefore say that the solution is 102 and 103 and use the administrative process.

. . . . So on the one hand, you’ve got a problem that it seems to me Congress to some extent has said is okay and we’ve got a solution and that solution’s playing through. On the other hand, if this Court were to say much more categorically either that there’s no such thing as business method patents or adopt the Solicitor General’s interpretation, which is to say that there cannot be software unless the software somehow actually improves the computer, as opposed to software improving every other device or any other mechanism that might be out there.

What we know is that this would inherently declare and in one fell swoop hundreds of thousands of patents invalid, and the consequences of that it seems to me are utterly unknowable. And before the Court goes down that path, I would think it would think long and hard about whether isn’t that a judgment that Congress ought to make. And It seems to me in that sense you’re essentially where the Court was in Chakrabarty, where everybody was saying you’ve got to act in one way or the other or the world comes to an end, and the courts have said, we’ll apply 101 directly. . . .

MR. PERRY: That path between Scylla and Charybdis was charted in Bilski and Mayo. Bilski holds that a fundamental economic principle is an abstract idea and Mayo holds that running such a principle on a computer is, quote, “not a patentable application of that principle.” Those two propositions are sufficient to dispose of this case. If Bilski and Mayo stand, Alice’s patents fail.

The Government test is a bit difficult to fully discern and even General Verrili had some trouble explaining:

JUSTICE BREYER: I think you say a computer improvement that, in fact, leads to an improvement in harvesting cotton is an improvement through a computer of technology, so it qualifies. But then I think you were going to say, or I got this also from the brief, a computer improvement that leads to an improvement in the methods of selling bonds over the telephone is not an improvement in technology reached by the computer. Am I right about the distinction you’re making?

GENERAL VERRILLI: I don’t think there’s a yes or no answer to that question. [But,] that is generally the line we’re drawing.

JUSTICE GINSBURG: I have a question about how do you identify an abstract concept. A natural phenomenon, a mathematical formula, those are easy to identify, but there has been some confusion on what qualifies as an abstract concept.

GENERAL VERRILLI: We would define abstract an abstract concept as a claim that is not directed to a concrete innovation in technology, science, or the industrial arts. So it’s the it’s abstract in the sense that it is not a concrete innovation in the traditional realm of patent law.

Although seemingly not relevant to the present case, Alice took some pains to explain why their patent includes no software code:

MR. PHILLIPS: what we did here is what the Patent and Trademark Office encourages us to do and encourages all software patent writers to do, which is to identify the functions that you want to be provided for with the software and leave it then to the software writers, who I gather are, you know, quite capable of converting these functions into very specific code. . . .

It doesn’t actually, obviously, put in the code, but that’s what the PTO says don’t do. Don’t put in the code because nobody understands code, so but put in the functions, and we know and we know that someone skilled in the art will be able to put in the code. And if they aren’t, if they can’t do that, then it’s not enabled and that’s a 112 problem.

This discussion of functionality may foreshadow the upcoming Nautilus case. On that point, Justice Sotomayor asked whether Alice is “trying to revive the patenting of a function?” Mr. Phillips did not directly respond.

In the end, Alice Corp’s case of technological innovation is slight. Mr. Phillips agreed with Justice Kennedy that it would be “fairly easy” for a “second year college class in engineering” to draft the claimed software – giving the court additional fodder for rejecting this case merely with a string citation to Bilski, Flook, and Benson.

Supreme Court to Consider De Novo Review of Claim Construction

Mon, 03/31/2014 - 12:08

By Dennis Crouch

Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (Supreme Court 2014)

The Supreme Court has granted Teva’s petition for writ of certiorari on the issue of de novo review of district court claim construction. Rather than mounting a facial challenge to all de novo review, the petitioner here argues that, at minimum, a district court’s explicit factual conclusions should be given deference. The case will be heard next term.

The question presented is as follows:

Rule 52(a) of the Federal Rules of Civil Procedure provides that in matters tried to a district court, the court’s “[f]indings of fact . . . must not be set aside unless clearly erroneous.”

The question presented is as follows: Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

In its responsive brief, Sandoz re-characterized the question as follows:

Whether Federal Rule of Civil Procedure 52(a) requires an appellate court reviewing a district court’s construction of patent claims to defer to conclusions that are based on a litigation expert’s declaration that expressly contradicts the patent record.

The case involves Teva’s multi-billion-dollar drug Copaxone that is arguably covered by a set of nine different patents. The appellate decision by the Federal Circuit rejected the lower court’s claim construction and, as a consequence, found several of the patents invalid. The result is that the remaining patents expire in May 2014 rather than September 2015. Teva’s daily US sales of the drug are about $8 million.

I’ll speculate here that the result will be a unanimous rejection of the Federal Circuit’s no deference policy.

Supreme Court to Address Standard of Review for Claim Construction

Mon, 03/31/2014 - 12:01

This morning the Supreme Court granted Teva’s petition for certiorari in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.  Teva’s petition presents the following issue:

Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Federal Rule of Civil Procedure 52(a) requires.

This case will be heard next term.  You can find the briefs on Scotusblog: http://www.scotusblog.com/case-files/cases/teva-pharmaceuticals-usa-inc-v-sandoz-inc/

Edit: See above for Dennis’s more thorough discussion of the parties’ positions!

 

Alice Corporation Pty. Ltd. v. CLS Bank International

Mon, 03/31/2014 - 09:56

By Dennis Crouch

Today, the Supreme Court will hear oral arguments in the patent subject matter eligibility case of Alice Corporation Pty. Ltd. v. CLS Bank International. Alice Corp.’s patent covers a computerized escrow system and method that CLS Bank allegedly uses in the process of settling trillions of dollars in transactions each week.

Question presented

Whether claims to computer-implemented inventions-including claims to systems and machines, processes, and items of manufacture-are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?

As petitioner, the patentee (Alice Corp) will argue first. Respondent’s time will be split between CLS Bank and the US Government who has filed an amicus brief highlighting a misguided argument that “the abstract idea exception is patent law’s sole mechanism for excluding claims directed to manipulation of non-technological concepts and relationships.”

A transcript should be available in the afternoon.

See: Dennis Crouch, Software Patent Eligibility: Alice Corp v. CLS Bank on the Briefs (March 13, 2014).

= = = = =

The Supreme Court is working through a number of patent related decisions this term:

  • Alice Corporation Pty. Ltd. v. CLS Bank International (subject matter eligibility of computer implemented inventions and software). Oral arguments March 31, 2014 with decision expected June 2014.
  • Teva v. Sandoz (whether a district court’s finding of fact in support of claim construction should be reviewed de novo as required by the Federal Circuit). Petition granted March 31, 2014.
  • Lexmark Int’l v. Static Control (allegations of patent infringement against non-competitor can create Lanham Act claim). Decided March 25, 2014.
  • Octane Fitness v. Icon Health & Fitness (proper standard for determining an “exceptional case” in the attorney fee shifting context of 35 U.S.C. §285). Oral arguments held February 26, 2014 with decision expected by June 2014.
  • Highmark v. Allcare Health Mgmt. (standard of appellate review for fee shifting decisions). Oral arguments held February 26, 2014 with decision expected by June 2014.
  • Nautilus v. Biosig (standard for determining when a patent claim is invalid as indefinite). Oral arguments scheduled for April 28, 2014 with decision expected in June 2014.
  • Limelight v. Akamai (determining whether inducement should be severely narrowed by the no-joint-infringement doctrine). Oral arguments scheduled for April 30, 2014 with decision expected in June 2014.
  • Medtronic v. Mirowski (holding that patentee has the burden of proving infringement even in declaratory judgment actions by a licensee in good standing). Decided January 22, 2014.
  • Petrella v. MGM (considering the laches doctrine in the copyright context). Argued January 21, 2014, awaiting decision.
  • ABC, Inc., v. Aereo, Inc (when does an internet transmission count as a “public performance” under the copyright laws?). Argument scheduled for April 22, 2014.
  • POM Wonderful v. Coca-Cola (who has standing to challenge a food or beverage label as misleading or false under the Lanham Act). Argument scheduled for April 21, 2014.

Preclusion in Patent Litigation

Sun, 03/30/2014 - 21:54

By Dennis Crouch

Brain Life, LLC v. Elekta (Fed. Cir. 2014)

Res Judicata: Patent litigation preclusion doctrines are – at times – confusing. The doctrine of claim preclusion is linguistically challenging in patent cases because the precluded “claim” does not refer to a patent claim as found in the issued patent but instead to a legal claim or cause of action asserted in a lawsuit. I think it is helpful to think of the legal claim as being broader than a patent claim. As an example, lawsuit alleging that a product of infringes patented Claim 1 and its dependent Claim 2 would be seen as asserting a single legal claim that is, for claim preclusion purposes, indivisible. In that vein, if the patentee had instead asserted infringement of only Claim 1, claim preclusion may well block a later lawsuit asserting infringement of Claim 2.

This case involves the second time that Elekta is defending its products against Brain Life’s medical imaging software patent. U.S. Patent No. 5,398,684 (claiming functional integration of scans from a variety of image sources). In the first case, Elekta’s products were found non-infringing based upon a Federal Circuit claim construction decision. However, the original case only focused on the asserted patent’s apparatus claims. (Prior to trial, the court had dismissed the method claim allegations without prejudice.) In the new lawsuit, Brain Life has asserted the accompanying method claims from the patent that appear to be somewhat broader in scope (and thus may well capture Elekta’s activities).

In defense, Elekta argues res judicata. Res Judicata, a.k.a. claim preclusion, bars a later lawsuit where a prior lawsuit (1) involved the same legal claim or cause of action; (2) reached a final judgment on the merits; and (3) involved the same parties or their privies. Importantly, claim preclusion applies both to legal claims that were actually asserted as well as those that could have been brought. (Note here that issue preclusion is a wholly separate, but often overlapping preclusion doctrine).

In thinking through the problem here, the Federal Circuit first noted that “without a doubt” the final judgment associated with the apparatus patent claims has a res
judiciata effect later assertion of the method claims. However, the court notes two major caveats:

  1. Scope of Infringement: The res judicata effect will only apply when the accused infringing acts are “essentially the same” as those that were the subject of the original lawsuit; and
  2. Timeline of Infringement: The res judicata effect will only apply to accused infringing acts that could-have-been the subject of the original lawsuit.

According to the Federal Circuit this second caveat means that res judicata does not apply to acts of infringement that occurred following final judgment in the original case. This result follows from the Federal Circuit’s legal construct that each act of infringement is a separate and distinct tort rather than merely being part of a flow or a temporally extended tort.

[T}o the extent Brain Life's allegations of infringement are directed to products created and, most importantly, acts of alleged infringement occurring after entry of the final judgment in the MIDCO Litigation, those claims are not barred by the doctrine of claim preclusion. Quite simply, Brain Life could not have asserted infringement claims against the products in question for acts of alleged infringement that postdate the final judgment in the MIDCO Litigation in the current litigation.

The district court had applied claim preclusion and thus was reversed-in-part on that issue.

Issue Preclusion: Where claim preclusion is applied to entire causes of action, issue preclusion is more narrowly focused on issues of fact or law decided in prior cases:

Issue preclusion bars subsequent litigation on an issue of law or fact that was actually litigated. If an issue of fact or law is actually litigated and determined by a final judgment, and the determination is essential to the judgment, that determination is conclusive in any later action between the parties on the same or a different claim. Importantly, where the parties consent to a judgment on an issue prior to trial, it cannot be said that the issue was actually litigated to finality.

Here, the now-asserted the method claims from the '684 patent were, in the original case, dismissed without prejudice and with consent of the parties. Thus those infringement claims "were not fully, fairly, and actually litigated to finality between these parties" and, consequently, " issue preclusion does not stand as a bar to a second suit on those claims."

Kessler Doctrine: In a 1907 case, the Supreme Court announced the little-known Kessler doctrine that adds an additional wrinkle to patent litigation preclusion doctrine. See Kessler v. Eldred, 206 U.S. 285 (1907). Eldred's patent covered an electric lamp lighter. U.S. Patent No. 492,913. Eldred first sued Kessler in Indiana -- alleging that Kessler's electric cigar lighters infringed the patent. The issue as between Eldred and Kessler was fully decided when the Indiana court found no infringement. Issue preclusion would then apply to bar Eldred from re-litigating this issue against Kessler. However, Eldred was not deterred. Rather, the then sued Kirkland in New York for selling a similar lighter and won (on appeal) an infringement holding. Emboldened, Kessler then sued one of Kessler's customers in New York and Kessler intervened on its customer's behalf. After considering the issues, the Supreme Court held that, because the infringement issue was already decided in Kessler's favor, that equity requires that original holding to apply in this subsequent case where Kessler intervened. The Supreme Court expressly refused to speculate what the outcome of the case would have been if Kessler had not intervened.

Interpreting this holding, the Federal Circuit writes:

In sum, the Court granted Kessler a limited trade right to continue producing, using, and selling the electric lighters that were the subject of the first suit and to do so without fear of allegations of infringement by Eldred—even when the acts of infringement occurred post-final judgment and even when it was third-parties who allegedly engaged in those acts of infringement. The Supreme Court concluded that Kessler was entitled to continue the same activity in which it engaged prior to the infringement allegations once it had defeated those contentions in the first suit. The Court did not rely on traditional notions of claim or issue preclusion in crafting this protection for Kessler.

The Federal Circuit applied Kessler in MGA, Inc. v. General Motors Corp., 827 F.2d 729 (Fed. Cir. 1987) in a similar scenario where a manufacturer first won its case and then intervened in a customer lawsuit.

In the current case, we do not have the issue of customer lawsuits. However, the Federal Circuit still found that Kessler applies as something of a broadened issue preclusion doctrine. The court holds that since Elekta's won final judgment of non-infringement of some claims in the '684 patent, those non-infringing products (while in Elekta's hands) are now immune from all claims of the '684 patent. "Elekta's GammaKnife, GammaPlan, and SurgiPlan products have acquired the status of noninfringing products as to the '684 patent."

The hook for this outcome comes from Kessler's statement that "The [trial] court … conclusively decreed the right of Kessler to manufacture and sell his manufactures free from all interference from Eldred by virtue of the [Eldred] patent, and the corresponding duty of Eldred to recognize and yield to that right everywhere and always.” In my view, the Federal Circuit here is likely taking Kessler’s statements out of context since the Supreme Court did not consider the effect of non-asserted patent claims. The oddity of the Federal Circuit’s broad interpretation of Kessler is that the court also expresses reticence about the value of the doctrine altogether. Thought in the end, I would argue that the rule is likely a good one from a policy perspective.

 

Co-Owners Messing with Patent Rights

Sun, 03/30/2014 - 19:31

Assume there are two co-owners to a patent that has never been licensed and one co-owner “waives all right, title, and interest” in the patent, what result?

  1. The remaining co-owner now has full exclusive rights to assert the patent; or
  2. The patent will be deemed granted to the public and therefore unenforceable.

The reason I ask this question is that this is what was alleged to have happened in the StoneEagle case.  That case involves a dispute over ownership.  In particular, StoneEagle’s brief indicates that “[b]y agreement dated July 15, 2010, Defendants waived all right, title, and interest in StoneEagle’s subsequently-issued patent.”

 

Patent Glossary Pilot Program

Sat, 03/29/2014 - 20:42

By Dennis Crouch

In a new pilot program, the USPTO will offer expedited processing of patent applications that include a proper Glossary-of-Terms that define the terms used in patent claims.

Details: The pilot program is limited only to computer-related inventions (Tech Centers 2100, 2400, 2600, and the Business Methods area of 3600) and may be limited to 200 applications that petition to participate. The program runs from June-December 2014. At the time of filing, the application must include a glossary of terms within the specification that presents “positive statement[s] of what [each] term means. A glossary definition cannot consist solely of a statement of what the term does not mean, and cannot be open-ended.” The glossary is not required to define every word found in the claim set. However, it should provide definitions for key claim terminology, terms with a special definition, abbreviations, relative terms, terms of degree, and functional terminology (including means-plus-function limitations).

The pilot program is intended to provide some information about how patent applicants would use the glossaries and whether they will be useful in both better facilitating examination and result in patents with more clarity of scope. On the examination point, many patent attorneys complain that patent examiners apply unduly broad meaning to patent claim terms during the examination process. The glossary would ideally serve to head-off that initial confusion and round of prosecution that is often wasted in merely understanding the claims as submitted.

It will be interesting to see how patent applicants work within this new proposal.

Links:

Federal Circuit: An Author is not an Inventor (And Thus, a Claim of “Authorship” Does Not Raise an Inventorship Dispute).

Fri, 03/28/2014 - 00:17

By Dennis Crouch

StoneEagle Services v. Gillman and Nextpay (Fed. Cir. 2014)

This case offers an important reminder that patent ownership is largely a matter of local law – be it state or foreign-national. The result is that disputes over ownership (as opposed to inventorship) do not raise a federal cause of action. Here, the DJ plaintiff also pled inventorship (normally a federal claim under 35 U.S.C. §256), but that claim failed to keep the case in Federal Court because there was no actual dispute over inventorship. From an academic standpoint, the case is also interesting based upon the Federal Circuit’s conclusion that a claim of “authorship” is nothing like a claim of “inventorship.”

Partnership with Joint Ownership: Several years ago, David Gillman collaborated with Bobby Allen (StoneEagle’s CEO at right) on a project to convert StoneEagle’s automotive industry electronic payment system into one that would also work to process health care claims. The subsequent patent application named only Allen. U.S. Patent No. 7,792,686. According to the documents, Gillman has never claimed to be a co-inventor of the ’686 patent. However, based upon the collaboration agreement, Gillman was a 50% owner of the patent application. Gillman did eventually assign his rights in the application to StoneEagle.

The dispute arose when Gillman later declared at a meeting that he held ownership rights and that the patent documents were on his PC. According to the complaint “Gillman suddenly and falsely claimed that it is his patent, that he wrote the patent, that it is on his computer, and that he ‘authored’ or ‘wrote’ it, or words to that effect.’ Gillman allegedly threw down his business cards and left the meeting.”

StoneEagle then sued for declaratory judgment that it was sole owner and that Allen was the sole inventor. In addition, the lawsuit alleged a variety of state law trade secret and contract claims. The district court issued a preliminary injunction against Gillman on the trade-secret and contract claims that gave Gillman the immediate right to appeal.

The declaratory judgment act provides that

In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration . . .

28 U.S.C. §2201. The Supreme Court broadly interprets the DJ act has extending to the constitutional limits of Article III jurisdiction. Thus, “the facts alleged, under all the circumstances, [must] show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune. Here, Gillman’s attorney basically admitted that an actual case-or-controversy exists between the parties, but that controversy is over a state-law-claim of ownership and the DJ statute requires a case-or-controversy over an issue “within [the federal court's] jurisdiction.”

In reading StoneEagle’s complaint here, the Federal Circuit found that the pleading lacks sufficient allegations of a controversy concerning inventorship.

[J]urisdiction in this case turns on whether StoneEagle’s complaint alleges a sufficient controversy concerning inventorship. It does not. . . . As StoneEagle’s only factual allegations concerning inventorship are that Gillman authored the patent application, the complaint, viewed in its totality, has not alleged a controversy over inventorship that satisfies Article III.

On remand the case will be dismissed and perhaps re-filed in Texas state court.

= = = =

The case has some interesting discussion of the role of patent attorneys in this process. Here, Gillman (a non patent-law professional) had drafted the patent application at issue. At oral arguments, Judge Rader noted that, although only certain folks are allowed to actually file a patent application with the USPTO, “anyone can help write it.” The decision then goes into some detail on how a patent drafter should not be considered an inventor:

In this case, the most favorable inference from the record in favor of StoneEagle shows only that Gillman assisted in constructively reducing an invention to practice. See Solvay S.A. v. Honeywell Int’l, Inc., 622 F.3d 1367, 1376 (Fed. Cir. 2010). Those activities confer no more rights of inventorship than activities in furtherance of an actual reduction to practice. Otherwise, patent attorneys and patent agents would be co-inventors on nearly every patent. Of course, this proposition cannot be correct.

No inventing happens by scriveners who merely write down the invention.

= = = =

In part, this decision turns on the Federal Circuit’s knowledge that copyright law is very different from patent law, although both arise from the same Constitutional provision, “authors” get copyright and “inventors” get patent. Although the court understands this distinction quite well, most people do not. On at least a weekly basis, I talk with incredibly intelligent people who get confused over the differences and their importance. [Note here - Monday's Supreme Court oral arguments]. It looks like the DJ plaintiff could have done a much better job of providing evidence alerting the court to this real-world fact that people are confused on this topic and that Gillman’s claim of authorship was reasonably understood by folks in the room as a claim of inventorship.

 

Supreme Court Opens Door on Unfair Competition Lawsuits

Wed, 03/26/2014 - 10:52

By Dennis Crouch

Lexmark Int’l v. Static Control (Supreme Court 2014)

In a unanimous opinion penned by Justice Scalia, the Supreme Court has ruled that standing in §1125(a) false-advertising claims are not limited to competitors. Rather, it can be sufficient that a plaintiff have a commercial injury “flowing directly from the deception wrought by the defendant’s advertising.” The standing decision here is not testing the Constitutional limits of judicial power under Article III but rather is one of statutory interpretation. In particular, the statute provides that a cause of action is available to “any person who believes that he or she is or is likely to be damaged by such act [of false advertising].” Although expanding the scope of potential plaintiffs, the court seemingly continued to hold the line against giving the statute its plain English interpretation that would allow consumer class actions.

False Patent Infringement Claims: Of interest to patent attorneys, the alleged false advertising claims here involve public allegations of patent infringement. The court writes.

First, Static Control alleged that Lexmark disparaged its business and products by asserting that Static Control’s business was illegal. See 697 F.3d 387 (6th Cir. 2012) (noting allegation that Lexmark “directly target[ed] Static Control” when it “falsely advertised that Static Control infringed Lexmark’s patents”).

Under the Supreme Court’s interpretation of the law, those statements (with the requisite intent and resulting harm) can be sufficient to create a cause of action for false advertising.

The meaning of “intellectual property”

Fri, 03/21/2014 - 14:42

Energy Recovery, Inc. v. Hauge (Fed. Cir. 2014) 13-1515.Opinion.3-18-2014.1
Panel: Rader, Reyna, and Wallach (author)

At the heart of this case lies the question of “what is intellectual property?”  Here, the answer has more than philosophical implications: a finding of contempt hinges on it.

Leif Hauge was a former president of Energy Recovery, Inc. (“ERI”), a company specializing in “pressure exchangers,” which are used in reverse osmosis.  Mr. Hague and ERI apparently had a falling out, and in 2001 they entered into a settlement agreement, adopted by the district court, that included a section entitled “ABSOLUTE TRANSFER OF ALL RIGHTS IN PATENTS, PATENT APPLICATIONS AND ALL RELATED INTELLECTUAL PROPERTY, TO ENERGY RECOVERY.”  That paragraph specified that Mr. Hauge:

“irrevocably and absolutely assign[s]” to ERI “all right, title and interest along with any and all patent rights,” [], which Mr. Hauge had in “(i) the patents and patent applications . . . ; (ii) any and all patent rights . . . , intellectual property rights, property rights . . . ; and (iv) all other intellectual property and other rights relating to pressure exchanger technology predating this Order.”

Slip Op. at 8 (citations to Joint Appendix omitted).  He also agreed to a non-compete clause that prohibited him from making or selling energy recovery devices for use in RO salt water desalination for two years.  Id. at 3.

After the non-compete clause expired, Mr. Hauge obtained a new patent on pressure exchanger technology and formed a company, Isobarix, that began selling its own pressure exchanger.  In 2013, the District Court (acting on ERI’s Motion for Order to Show Cause) entered an order finding that allowing Mr. Hauge “to . . . develop new products using the very technology he assigned to ERI solely because those new inventions post-date the Agreement would render the Settlement Agreement and its assignment of ownership rights useless,” finding him in contempt of the 2001 Order, and enjoining him and Isobarix “from manufacturing and selling pressure exchangers and replacement parts for ERI’s pressure exchangers.”  Slip Op. at 4.

On appeal, the analysis focused on whether Mr. Hauge had violated clause (iv) of the agreement, which required him to “irrevocably and absolutely assign”…”all right,
title and interest along with any and all patent rights,” which he had in “(iv) all other intellectual property and other rights relating to pressure exchanger technology predating this Order.”

Here is where the split over the meaning of “intellectual property” comes into play.  ERI argued that Mr. Hauge was not, under the settlement agreement, able “to appropriate the very pressure exchanger technology” that he explicitly transferred to ERI in 2001.  This was a view that the district court apparently agreed with when it concluded that Mr. Hauge should not be allowed to “develop new products using the very technology he assigned to ERI.”  Id. at 4.  Both approaches treat “intellectual property” as meaning “technology.”  In other words, what mattered was that Mr. Hauge was allegedly using ERI’s own technology, including technical knowledge that he acquired while its president.

The Federal Circuit, on the other hand, agreed with Mr. Hauge’s view: that he had complied with the settlement agreement by “transfer[ring] ownership of the pre-Agreement pressure exchanger intellectual property.”  Slip Op. at 8.  He was “not claiming ownership of ERI’s intellectual property,” id. at 9, and “[n]othing in the 2001 Order expressly precludes Mr. Hauge from using any manufacturing process.”  Id. at 8.  Under the Federal Circuit’s approach, “intellectual property” is not treated as the technology itself, but the rights over that technology, rights that Mr. Hauge properly assigned to ERI.  (To spark yet another debate: This is, in my view, the only correct way to view the term.  Using “intellectual property” to refer to the underlying technology, as opposed to the legal regimes surrounding that technology, leads to chaos, confusion, and erroneous views about the law).

What about the argument that Mr. Hauge maintained ownership of ERI’s trade secrets, which operate a much grayer area of intellectual property law?  The Federal Circuit declined to treat these as “intellectual property and other rights,” at least for purposes of a civil contempt finding.  “Civil contempt is an appropriate sanction only if the district court can point to an order of the court which ‘sets forth in specific detail an unequivocal command which a party has violated.’”  Id.  Here, there was no such command.

Presidential Innovation Fellowship for USPTO Data Initiatives

Thu, 03/20/2014 - 18:43

By Dennis Crouch

Can you Step Up? Patent attorneys often remember Judge Rich and his important contribution to the development of U.S. patent law. One important element of Judge Rich’s legacy is that he was just one person acting on his own, but acting with vigor, persistence, and honor. Even in trillion dollar industries, it is still the passion of individuals who drive change. The White House is looking for some such individuals to join its Presidential Innovation Fellowship. The fellowship program is administered through the office of the U.S. Chief Technology Officer, Todd Park. It is Park’s office that is also leading the charge in patent reform initiatives.

Now in its third round, the program is now looking for an Innovation Fellow to work with “Crowdsourcing to Improve Government.” From the Patent side, one White House idea is “Using the Crowd to Improve Patent Quality.”

To help ensure that U.S. patents are of the highest quality, the U.S. Patent and Trademark Office is launching a new initiative focused on expanding ways for companies, experts, and the general public to help patent examiners, holders, and applicants find “prior art”—that is, the technical information patent examiners need to make a determination of whether an invention is truly novel or “patent-worthy.” This effort will focus on driving valuable contributions to the patent process and enhancing patent quality—strengthening a process that is vital to innovation and economic growth.

More Prior Art and More Accessible Prior Art: The general thrust of this project is to figure out how to ensure that the best prior art is truly available to patent examiners. The approach has several potential prongs. We are already familiar with the ongoing application-specific prior art submissions by third parties. Some work needs to be done on that program to continue to improve its effectiveness. In addition, the government is looking for new streams of prior art coming from industry leaders such as IBM, Microsoft, Cisco, and others that can go to examiners in a form that is easily searchable. Having quality prior art is obviously critical. However, in my mind, we still have a very long way to go in terms of helping examiners find the best prior art from the millions of potential references at their fingertips. One idea that I have is that each office action rejection that is issued by an examiner could be used to automatically annotate the associated prior art references in a way that facilitates future searches by other examiners. In turn, that result may also serve as a valuable mechanism for making use of the high level knowledge held by the 9,000 USPTO examiners.

Applications will be accepted through April 7, 2014, and can be found here: https://gsafas.secure.force.com/apply

 

Bose v. SDI: Post-verdict intent

Wed, 03/19/2014 - 16:54

Bose Corporation v. SDI Technologies, Inc. (Fed. Cir. 2014) (nonprecedential) 13-1347.Opinion.3-12-2014.1
Panel: Chen, Clevenger (author), Hughes

Despite being nonprecedential, this opinion is interesting because it’s the first time to my knowledge that the Federal Circuit has endorsed a “points in time” approach to an intent-based patent infringement doctrine such as inducement.

Background: Bose alleged that SDI indirectly infringes Patent No. 7,277,765, relying on both inducement and contributory infringement theories.  The district court granted summary judgment of noninfringement in SDI’s favor based a failure to meet the claim limitations as construed (for 144 of the accused products) and on a lack of intent to infringe (for the remaining product).

Intent to infringe: On appeal, the Federal Circuit reversed the district court’s grant of summary judgment as to the inducement issue. (It affirmed, however, the court’s ruling of noninfringement with respect to the other 144 products on claim construction grounds).

On the issue of intent, the Federal Circuit agreed that there were periods of time during which SDI might have possessed the requisite level of intent, and thus summary judgment as to those periods was inappropriate.  First, between the time when SDI learned of the patent and May 22, 2009, when it received an opinion of counsel, SDI may have possessed the requisite intent – that was an issue for the jury to decide:

Where the record reveals no basis for a good-faith belief sufficient to thwart liability, summary judgment of no liability cannot stand. Whether SDI had such a good-faith
belief prior to receiving the opinion of counsel is a triable issue for the jury to consider. Therefore the summary judgment incorrectly absolves SDI of liability from December 10, 2008 until May 22, 2009, when SDI received the opinion of counsel.

Slip Op. at 18.  The CAFC did conclude that for the period after SDI received the letter, it could not be liable for inducement, particularly since Bose never challenged the competency of the counsel who drafted the letter or even entered it into evidence despite possessing a copy.

But, the CAFC declined to extend that conclusion into the future – specifically, to the period after judgment would be rendered in this case:

Bose further argues that the District Court improperly allowed the opinion of counsel to absolve SDI of potential post-verdict liability. The District Court found that the patent’s validity and the iW1 device’s infringement were both triable issues for the jury. A jury could, at trial, find the patent not invalid and infringed. In this scenario, SDI’s opinion of counsel would not shield it from postverdict liability because SDI could not credibly argue that it maintained its good-faith belief of invalidity following a verdict to the contrary. The summary judgment improperly absolved SDI of potential post-verdict liability.

Slip Op. at 18.  This move is significant because it’s the first time that I’m aware of that the Federal Circuit has considered the state of mind of the accused infringer at various time periods when evaluating intent (rather than adopting some sort of “omniscient being” standpoint) or adopted a post-verdict theory that intent must follow (which both I and Tim Holbrook have argued is the right way to think about intent in inducement cases).  Here, I think the court gets the reasoning exactly right.

What does the Constitution mean by “Discoveries?”

Tue, 03/18/2014 - 21:20

By Dennis Crouch

The 18th Century French Encyclopédie of Diderot & d’Alembert was an important and well-known encyclopedia available at the founding of the U.S. and well known to founding fathers, including Madison and Jefferson. The link with Madison is important since it was Madison who proposed the intellectual property clause of the U.S. Constitution – giving Congress the power to award exclusive rights for limited times. One element of the clause that has long confounded patent scholars is the meaning of “Discoveries.”

The clause: [Congress has the power] To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

Seemingly taking its lead from the Constitution, Congress enacted that patent statute that awards rights to one who “invents or discovers.” In today’s usual parlance, a discovery is often thought more as an unearthing rather than a creation. That is confounding because of the newness requirement of patentability and the ban on the patenting of natural phenomena.

In a recent article, Professor Sean O’Connor (UW) argues that the Encyclopédie offers a key to understanding the meaning of Discovery as used in the Constitution. See O’Connor, The Overlooked French Influence on the Intellectual Property Clause (2014). His approach is a departure from the more traditional Anglo-centric view on constitutional history. A review of the translation leaves little doubt that the source is important. In particular, the ~2,000 word entry on discoveries begins as follows:

Discovery: In general this name can be given to everything that is newly found in the Arts and the Sciences; however, it is scarcely applied, and ought not to be applied, except to that which is not only new, but also curious, useful, and difficult to find, and which, consequently has a certain degree of importance. The less important discoveries are simply called inventions.

[Link to translation]. With that contemporary definition in mind, we can take it as important that the founders used the term “Discoveries” rather than “Inventions.” O’Connor argues that Discovery as found in the Constitution is consequently higher standard than mere novelty. The Encyclopédie include additional entries on “Art,” “Science,” “Inventions,” and “Writers/Authors,” and O’Connor takes these together to begin a new and interesting conversation on the meaning of the intellectual property clause.

Judge Kozinski Reversed by Federal Circuit: Google May be Liable for Street View

Tue, 03/18/2014 - 06:12

By Dennis Crouch

Vederi v. Google (Fed. Cir. 2013)

This case arises from a decision by Alex Kozinski who is Chief Judge of the Ninth Circuit Court of Appeals who sat by designation in deciding on summary judgment that Google’s streetview product does not infringe Vederi’s asserted patents. U.S. Patent Nos. 7,239,760; 7,577,316; 7,805,025; and 7,813,596. Through his role on the Ninth Circuit, Judge Kozinski has played an important role in the development many areas of intellectual property and internet law. However, as with Judge Posner of the Seventh Circuit, Judge Kozinski has largely been denied any direct input in the patent context.  Here, that denial continues as the Federal Circuit has vacated Judge Kozinski’s decision — finding that Judge Kozinski erred in his claim construction that resulted in a non-infringement determination.

The patent here covers the method of mounting a set of cameras atop an automobile to capture images as the vehicle moves throughout a geographic area. Those images are then integrated with into a system that allows virtual visual navigation.

All of the asserted claims include a limitation that the views be “substantially elevations” Here, the term elevation appears derived from architectural usage meaning a flat representation of one façade of a structure and the Google Streetview images are better thought of as a perspective view. This difference can be seen somewhat by comparing Jefferson’s Rotunda sketch with a photograph of the Rotunda.


Judge Kozinski found that the Google Streetview images were not elevation views because they show images that are curved representation of the world.

On appeal, the Federal Circuit found that Kozinski’s view of something being substantially an “elevation” view was too limiting based upon the intrinsic evidence. In particular, the patent specification discloses the use of a fish-eye lens to create a photograph of the street in “substantially elevation” form. In the usual case, a fish-eye photo of a building will not be in elevation form but instead provide a curved representation of reality. The result then, according to the Federal Circuit, is that the “substantially” element of the claim provides substantial leeway on the meaning of elevation. The broader claim construction means that now Google may well infringe.

= = = =

An interesting element of the provisional priority document (filed in 2000) is that it includes a listing of the actual software code for taking the GPS and image data to create panorama views and allow a user to navigate through those results. The inventors here, Enrico Di Bernado and Luis Goncalves actually built the system back in 2000 while graduate students at Caltech by attaching a set of cameras and a GPS monitor atop Di Bernado’s car and driving around Pasadena. The results were then made available on the City of Pasadena website.

Gone Fishing: 25 year old patent application rejected again

Mon, 03/17/2014 - 04:55

By Dennis Crouch

In re Rudy (Fed. Cir. 2014)

Back in 1988, Christopher Rudy filed a patent application for a fishing hook that is both colored and translucent. An illustrative pending claim is as follows:

21. In an article of manufacture, which is a fishing hook, which is disintegrated from but is otherwise connectable to a fishing lure or other tackle and has a shaft portion, a bend portion connected to the shaft portion, and a barb or point at the terminus of the bend portion, thus itself not being a fishing lure to include a fishing lure in imitation of an insect or part of an insect to include an insect body, and which is made of suitable material, the improvement comprising where the hook is made of a suitable material, which permits transmittance of light therethrough and is colored a color, selected from the group consisting of red, orange, yellow, green, blue and purple, in nature.

In reading the claims, you might think that this is an abstract idea case since the invention is based upon the law of nature or abstract idea that the translucence and color of a fishing hook correlate with a fish’s proclivity to bite and, although the patent does claim a physical hook, that application merely uses well known technology in a way that basically occupies the same space as the abstraction itself. 

 

However, the PTO rejected the claim under 35 U.S.C. § 103 as obvious in light of the prior art. The prior art apparently teaches transparent fishing hooks as well as fishing hooks that are both translucent and colored but that are shaped like insects. Although neither of those references teach all of the elements of the claim, the USPTO found that it would have been obvious back in 1988 to combine the references to form Rudy’s invention. Rudy submitted a number of affidavits explaining the invention’s importance. However, the USPTO found those statements from the inventor and his “friends and family” to be insufficiently anecdotal to overcome the rejection. On appeal, the Federal Circuit has affirmed the rejection without opinion.

The only interesting part of the oral arguments came when the court asked the USPTO to explain why the case was still alive and pending after 26 years. The USPTO placed full blame on Mr. Rudy. Explaining that “Mr. Rudy is a very zealous advocate on his own behalf.” In particular, during this time Mr. Rudy has apparently filed thirteen amendments to the claims; seven petitions; eight extensions of time; twenty nine miscellaneous letters; enjoyed three appeals; and has abandoned his action only to later revive it to be considered again.

On remand, I expect that Rudy will amend his claims and try again.