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35 U.S.C. § 285 provides for attorneys fees and costs, under exceptional circumstances in a patent litigation. This section must be interpreted against the back-ground of the Supreme Court’s decision in Professional Real Estate Investors, Inc. v. Columbia Pictures Indus-tries, Inc., 508 U.S. 49 (1993). The right to bring and defend litigation implicates a party’s First Amendment rights. Therefore, allegedly frivolous conduct can only be sanctioned if a lawsuit is “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.” Id. at 60. “Only if challenged litigation is objectively meritless may a court examine the litigant’s subjective motivation.” Id. In determining whether a particular litigation is “exceptional” under § 285, the relevant standard is set forth in Brooks Furniture Manufacturing, Inc. v. Dutailier International, Inc., 393 F.3d 1378 (Fed. Cir. 2005). An award of attorneys’ fees is permissible “when there has been some material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed. R. Civ. P. 11, or like infractions.” Id. at 1381. A court must find both (1) that a litigation was objectively baseless and (2) was brought in subjective bad faith. Id.; see also Wedgetail Ltd. v. Huddleston Deluxe, Inc., 576 F.3d 1302, 1304–06 (Fed. Cir. 2009) (refusing to find patentee’s unsuccessful case exceptional under Brooks Furniture).
According to the Court of Appeals for the Federal Circuit in a recent decision in iLOR v. Google, an “…infringement action ‘does not become unreasonable in terms of [§ 285] if the infringement can reasonably be disputed,” citing Brooks Furniture, 393 F.3d at 1384. The patentee’s case must (1) have no objective foundation, and (2) the plaintiff must actually know this. And both the objective and subjective prongs of the test “must be established by clear and convincing evidence.” iLOR citing Wedgetail, 576 F.3d at 1304.
Furthermore a “presumption that the assertion of infringement of a duly granted patent is made in good faith” exists. See Id. citing Brooks Furniture, 393 F.3d at 1382 (citing Springs Window Fashions LP v. Novo Indus., L.P., 323 F.3d 989, 999 (Fed. Cir. 2003)). The plaintiff’s state of mind is irrelevant to the objective baselessness inquiry. See Id.; Seagate, 497 F.3d at 1371 (“[S]tate of mind of the accused infringer is not relevant to [the] objective inquiry.”). “Only after this objective baselessness is established by clear and convincing evidence is the subjective bad faith of the plaintiff at issue.” Id. See Id., stating “…we conclude that a finding of objective baselessness has not been met here, and we need not consider the issue of subjective bad faith.” According to the Court of Appeals for the Federal Circuit, the “question is whether iLOR’s broader claim construction was so unreasonable that no reasonable litigant could believe it would succeed”); citing Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008). Under this standard, the defendant’s bears a heavy burden to show that a claim construction is so unreasonable that no reasonable litigant could believe that plaintiff would succeed. Where as in iLOR, the claim construction issues are complex and no summary judgment of noninfringement is granted, it is very difficult to meet the movants heavy burden to show objective baselessness by clear and convincing evidence.
Friday, January 21, 2011
Uniloc Overrules the 25% Rule
A decision in Uniloc USA, Inc. v. Microsoft Corporation overruled any use of the 25% rule as a legitimate rule of thumb in determining a reasonable royalty. Instead, damages experts are left with the Georgia-Pacific factors. In particular, looking at royalties paid or received in licenses for the patent in suite or in comparable licenses and looking at the portion of profit that may be customarily allowed in the particular business for the use of the invention or similar inventions may be the sole legitimate basis for commencing a determination of a reasonable royalty in hypothetical negotiations. It is not clear that this evidentiary ruling will reign in excessive damages based on flawed calculations of unrealistic royalty calculations, but the decision in Uniloc should make it more difficult for experts to hand wave and rule of thumb their way to a reasonable royalty.
Wednesday, November 10, 2010
Claim Drafting Tip #8
When drafting claims, link one element to another. The Court of Appeals for the Federal Circuit has overturned attempts to reject claims as being anticipated over a single reference (under section 102 of Title 35 U.S.C.), when the reference includes all of the elements but fails to show them “arranged as claimed.”[1] By failing to arrange the claim elements within the claim, the claim becomes susceptible to rejection for anticipation.
Some background is necessary to understand the importance of drafting the claims to survive challenge by the patent office. The patent office adopts a “broadest reasonable interpretation” of the claims, and there has been a tendency for the examiners to push this “BRI” standard to make it easier to reject the claims. An overly broad interpretation under the BRI standard makes its difficult to overcome a rejection without further limiting the claims. Prosecution history estoppel limits the scope of equivalence available to the claim elements under the Doctrine of Equivalents, which is a doctrine intended to prevent an infringer from avoiding infringement by making merely insubstantial changes to a device that would otherwise infringe the claims of a patent. In patent litigation, the Doctrine of Equivalents levels the playing field, creating uncertainty in any legal theory that a device does not infringe the claims asserted by the patentee, but further limiting the claims gives rise to a presumption of no scope of equivalence (under prosecution history estoppel) for claim elements that are limited for reasons of patentability. Forcing a more reasonable interpretation of the claims gives rise to this presumption if the claim is further limited by amendment of the claims. The drafter of claims should consider the importance of the Doctrine of Equivalents and the effect of prosecution history estoppel on the scope of equivalence, when drafting claims.
By properly linking the claim elements, the claim drafter makes it more difficult for the patent office to overly broadly interpret the claims under the broadest reasonable interpretation standard, because in order to reject the claims as anticipated by a cited reference (under section 102 of Title 35 U.S.C.), the examiner must show not only that the elements are disclosed in the reference but also the reference must disclose the very same arrangement of the elements as recited in the claims. The alternative for the examiner is to reject the claims as obviousness over one or more cited references under Section 103 of Title 35 U.S.C. However, obviousness can be successfully overcome by arguments or declarations, characterizing the level of ordinary skill in the art, lack of any motivation to combine teachings, or other secondary considerations of nonobviousness, such as failures, unexpected advantages, surprising results, synergy, commercial success and the like, which tend to show that the invention is nonobvious in the particular art. A new arrangement of known components that achieves unexpected advantages over the prior art, and is not merely one of a finite number of possible arrangements obvious to a person having ordinary skill in the art, is likely patentable.
A claim to a four-legged chair may comprise a seat, four legs and a backrest. This list of claim elements is incomplete, if the seat, four legs and backrest are not defined and joined to each other in some way. For example, the seat may be defined as having a surface for accommodating a user’s buttocks, and the legs may have a first end coupled to the seat and an opposite end, such that the four legs extend from the seat, and when the opposite ends of the legs are in contact with the ground, the legs support the seat above the ground. The backrest may be coupled to the seat or the legs, the backrest extending operatively in relation to the surface for accommodating a user’s buttocks such that, when a user’s buttocks is seated on the surface of the seat, a portion of the user’s back is capable of resting against the backrest. To make clear that the human is not a part of the claim, the user’s buttocks and the portion of the user’s back should be introduced in the preamble of the claim. For example, the claim may recite the following independent claim:
1. A chair for accommodating a buttocks of a person, a user of the chair, and for supporting a portion of the user’s back, comprising:
a seat having a surface for accommodating the user’s buttocks;
four legs, each of the four legs having a first end coupled to the seat in spaced relation to the other of the four legs and an opposite end, such that the four legs extend from the seat, and when the opposite ends of the four legs are supported on the ground, the four legs support the seat above the ground; and
a backrest coupled to the seat or the legs, the backrest extending operatively in relation to the surface for accommodating the user’s buttocks such that, when a user’s buttocks is seated on the surface of the seat, the portion of the user’s back is capable of resting against the backrest.
This example functionally arranges the claim elements, without unnecessarily limiting the structure of the invention. Nevertheless, the arrangement of the elements introduces functional limitations on the elements and an arrangement of the elements that might prevent an overly broad interpretation of the elements from being rejected as anticipated by a single reference cited by the examiner.
It is important to capture the nature of the invention in the broadest claims, without unduly limiting the scope of the invention, while preventing an overly broad interpretation of the claim during prosecution of the application before the patent office. Careful attention to the way that one element is linked with the others goes a long way in achieving these objectives and might allow a claim to issue that would otherwise require a limiting amendment, giving rise to a presumption of no scope of equivalence for a claim element.
[1] Net MoneyIN, Inc. v. Verisign, Inc., 545 F.3d 1359 (Fed. Cir. 2008)
Some background is necessary to understand the importance of drafting the claims to survive challenge by the patent office. The patent office adopts a “broadest reasonable interpretation” of the claims, and there has been a tendency for the examiners to push this “BRI” standard to make it easier to reject the claims. An overly broad interpretation under the BRI standard makes its difficult to overcome a rejection without further limiting the claims. Prosecution history estoppel limits the scope of equivalence available to the claim elements under the Doctrine of Equivalents, which is a doctrine intended to prevent an infringer from avoiding infringement by making merely insubstantial changes to a device that would otherwise infringe the claims of a patent. In patent litigation, the Doctrine of Equivalents levels the playing field, creating uncertainty in any legal theory that a device does not infringe the claims asserted by the patentee, but further limiting the claims gives rise to a presumption of no scope of equivalence (under prosecution history estoppel) for claim elements that are limited for reasons of patentability. Forcing a more reasonable interpretation of the claims gives rise to this presumption if the claim is further limited by amendment of the claims. The drafter of claims should consider the importance of the Doctrine of Equivalents and the effect of prosecution history estoppel on the scope of equivalence, when drafting claims.
By properly linking the claim elements, the claim drafter makes it more difficult for the patent office to overly broadly interpret the claims under the broadest reasonable interpretation standard, because in order to reject the claims as anticipated by a cited reference (under section 102 of Title 35 U.S.C.), the examiner must show not only that the elements are disclosed in the reference but also the reference must disclose the very same arrangement of the elements as recited in the claims. The alternative for the examiner is to reject the claims as obviousness over one or more cited references under Section 103 of Title 35 U.S.C. However, obviousness can be successfully overcome by arguments or declarations, characterizing the level of ordinary skill in the art, lack of any motivation to combine teachings, or other secondary considerations of nonobviousness, such as failures, unexpected advantages, surprising results, synergy, commercial success and the like, which tend to show that the invention is nonobvious in the particular art. A new arrangement of known components that achieves unexpected advantages over the prior art, and is not merely one of a finite number of possible arrangements obvious to a person having ordinary skill in the art, is likely patentable.
A claim to a four-legged chair may comprise a seat, four legs and a backrest. This list of claim elements is incomplete, if the seat, four legs and backrest are not defined and joined to each other in some way. For example, the seat may be defined as having a surface for accommodating a user’s buttocks, and the legs may have a first end coupled to the seat and an opposite end, such that the four legs extend from the seat, and when the opposite ends of the legs are in contact with the ground, the legs support the seat above the ground. The backrest may be coupled to the seat or the legs, the backrest extending operatively in relation to the surface for accommodating a user’s buttocks such that, when a user’s buttocks is seated on the surface of the seat, a portion of the user’s back is capable of resting against the backrest. To make clear that the human is not a part of the claim, the user’s buttocks and the portion of the user’s back should be introduced in the preamble of the claim. For example, the claim may recite the following independent claim:
1. A chair for accommodating a buttocks of a person, a user of the chair, and for supporting a portion of the user’s back, comprising:
a seat having a surface for accommodating the user’s buttocks;
four legs, each of the four legs having a first end coupled to the seat in spaced relation to the other of the four legs and an opposite end, such that the four legs extend from the seat, and when the opposite ends of the four legs are supported on the ground, the four legs support the seat above the ground; and
a backrest coupled to the seat or the legs, the backrest extending operatively in relation to the surface for accommodating the user’s buttocks such that, when a user’s buttocks is seated on the surface of the seat, the portion of the user’s back is capable of resting against the backrest.
This example functionally arranges the claim elements, without unnecessarily limiting the structure of the invention. Nevertheless, the arrangement of the elements introduces functional limitations on the elements and an arrangement of the elements that might prevent an overly broad interpretation of the elements from being rejected as anticipated by a single reference cited by the examiner.
It is important to capture the nature of the invention in the broadest claims, without unduly limiting the scope of the invention, while preventing an overly broad interpretation of the claim during prosecution of the application before the patent office. Careful attention to the way that one element is linked with the others goes a long way in achieving these objectives and might allow a claim to issue that would otherwise require a limiting amendment, giving rise to a presumption of no scope of equivalence for a claim element.
[1] Net MoneyIN, Inc. v. Verisign, Inc., 545 F.3d 1359 (Fed. Cir. 2008)
Friday, August 20, 2010
Medtronic Aquires Osteotech
Osteotech has found an exit strategy, selling its stock to Medtronic for cash: http://www.orthospinenews.com/medtronic-signs-agreement-to-acquire-osteotech
Tuesday, July 6, 2010
Monday, June 28, 2010
Why State Street is Out
State Street is out and is not coming back. The majority of justices believe that State Street’s test was improperly broad. See the footnote in the Court's opinion:
Even if the machine-or-transformation test may not define the scope of a patentable process, it would be a grave mistake to assume that anything with a " ‘useful, concrete and tangible result,’ " State Street Bank & Trust v. Signature Financial Group, Inc., 149 F. 3d 1368, 1373 (CA Fed. 1998), may be patented.
A four justice minority thought that all business method patents should not be considered as a patentable process. Justice Scalia joined Breyer in the summary that states:
“In sum, it is my view that, in reemphasizing that the ‘machine-or-transformation’ test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach.”
No 5 justice majority could be found to support any reading that a process claim should be patentable if it achieves a "useful, concrete and tangible result." The Supreme Court has left the door open to software claims that are not merely seeking to patent “abstract” ideas, but the Supreme Court only cites to Diehr for an example of how this can be accomplished. Diehr is the original “transformation and reduction of an article to a different state or thing” case, when “a process claim does not include particular machines.” Diehr at 184. Breyer’s concurrence, which Justice Scalia joined, criticizes the Federal Circuit’s State Street decision in no uncertain terms. This makes at least 5 of the 9 justices to be on record against the test in State Street. Some examples:
“although the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a ’useful, concrete and tangible result’” … is patentable.
“[T]his Court has never made such a statement and, if taken literally, the statement would cover instances where this Court has held the contrary.” Laboratory Corp.
State Street’s decision preceded “the granting of patents that ‘ranged from the somewhat ridiculous to the truly absurd.’”
“To the extent that the Federal Circuit’s decision in this case rejected that approach, nothing in today’s decision should be taken as disapproving of that determination.”
So, it is clear that at least 5 justices concur that the decision in State Street was wrong and should not be followed, as least as far as its “useful, concrete and tangible result” test is concerned.
Even if the machine-or-transformation test may not define the scope of a patentable process, it would be a grave mistake to assume that anything with a " ‘useful, concrete and tangible result,’ " State Street Bank & Trust v. Signature Financial Group, Inc., 149 F. 3d 1368, 1373 (CA Fed. 1998), may be patented.
A four justice minority thought that all business method patents should not be considered as a patentable process. Justice Scalia joined Breyer in the summary that states:
“In sum, it is my view that, in reemphasizing that the ‘machine-or-transformation’ test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach.”
No 5 justice majority could be found to support any reading that a process claim should be patentable if it achieves a "useful, concrete and tangible result." The Supreme Court has left the door open to software claims that are not merely seeking to patent “abstract” ideas, but the Supreme Court only cites to Diehr for an example of how this can be accomplished. Diehr is the original “transformation and reduction of an article to a different state or thing” case, when “a process claim does not include particular machines.” Diehr at 184. Breyer’s concurrence, which Justice Scalia joined, criticizes the Federal Circuit’s State Street decision in no uncertain terms. This makes at least 5 of the 9 justices to be on record against the test in State Street. Some examples:
“although the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a ’useful, concrete and tangible result’” … is patentable.
“[T]his Court has never made such a statement and, if taken literally, the statement would cover instances where this Court has held the contrary.” Laboratory Corp.
State Street’s decision preceded “the granting of patents that ‘ranged from the somewhat ridiculous to the truly absurd.’”
“To the extent that the Federal Circuit’s decision in this case rejected that approach, nothing in today’s decision should be taken as disapproving of that determination.”
So, it is clear that at least 5 justices concur that the decision in State Street was wrong and should not be followed, as least as far as its “useful, concrete and tangible result” test is concerned.
State Street Is Dead; Long Live Bilski?
It is clear from the decision that State Street Bank is dead and buried. No need to cite to this opinion from the CAFC in the future for the repudiated "useful, concrete, and tangible result" language in that decision. On the other hand, processes implemented in software that are tied to a particular machine or that result in a transformation of matter are alive and well. The big questions about how to claim patentable software processes and other processes that are not merely abstract ideas have not been answered in any way by the decision in Bilski. Business method patents are on life support. While business methods that claim steps that comprise more than mere mental steps might be patentable, even if not tied to a particular machine and not transforming matter in some way, there is no support in the Supreme Court decision for getting these types of business method claims allowed. Justice Breyer's summary of the mood of the court, which is how I read his concurring opinion, does not provide much comfort to those clients who want to receive a patent on a new business method.
Clarifying Concurrence from Justice Breyer:
"In sum, it is my view that, in reemphasizing that the"machine-or-transformation" test is not necessarily the sole test of patentability, the Court intends neither to deemphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach."
Clarifying Concurrence from Justice Breyer:
"In sum, it is my view that, in reemphasizing that the"machine-or-transformation" test is not necessarily the sole test of patentability, the Court intends neither to deemphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach."
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