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By experimental use, I mean testing an invention.  Conducting a test in public can jeopardize the resulting patent if a patent application was not filed before public testing started.  The patent can be invalidated in at least two ways.  First, the patent can be invalidated if an alleged infringer successfully argues that the public testing qualifies as a public use under 35 USC 102(a)(1).  If the public use occurred more than one year before the filing date of the patent application, then your own public test becomes prior art against your patent application under 35 USC 102(b)(1).  Second, the patent can be invalidated if a third party files a patent application or publicly discloses their own improved version of the original invention before you file a patent application under 35 USC 102(a)(2).

In Polara Engineering Inc. v. Campbell, the alleged infringer (Campbell Company) attempted to invalidate a patent via the first way under 35 USC 102(a)(1).  The alleged infringer argued that the alleged public testing by the patent owner (Polara) was actually a “public use” which occurred more than one year before the filing of the patent application.

The Federal Circuit disagreed with the alleged infringer’s characterization of the testing in public. The Federal Circuit found that the inventor’s use in public qualified as experimentation, not as a public use.  Under US patent laws, a public test (i.e., experimentation) does not start the one year time period within which a patent application must be filed.

Before we discuss the particulars of Polara, let us see how the issue arises and the risks involved in public testing before filing a patent application.

Public use and experimental use exception

A public use is not the same as a public test of the invention.  In a public test, the functionality of the invention is being tested.  If so, the public testing is considered to be experimentation or experimental use which is an exception to the definition of public use.

Sometimes, inventors and businesses might have a need to publicly test an invention before establishing patent pendency (i.e., filing a patent application).  The most popular litigated case on this for patent attorneys is the City of Elizabeth v. American Nicholson Pavement Co..  In City of Elizabeth, the inventor secured a patent directed to a roadway pavement.  To test the safety of the invention (i.e., road), the inventor built a public road and allowed cars to use the invention.  The inventor also had to test the road for a long period of time, specifically, more than one year.  The inventor had tested the product in public for more than one year before filing a patent application.

Fortunately, for the inventor, the public testing of the roadway qualified as an experimental use so that the use in public was not considered a “public use.”.  In particular, US patent law does not consider the start of experimentation as the start of public use which would start the one year time period.

The Federal Circuit identified factors relevant to determining whether a use is experimental in Clock Spring, L.P. v. Wrapmaster, Inc. (Fed. Cir. 2009).  The nonexclusive factors are:

  1. the necessity for public testing,
  2. the amount of control over the experiment retained by the inventor,
  3. the nature of the invention,
  4. the length of the test period,
  5. whether payment was made,
  6. whether there was a secrecy obligation,
  7. whether records of the experiment were kept,
  8. who conducted the experiment,
  9. the degree of commercial exploitation during testing,
  10. whether the invention reasonably requires evaluation under actual conditions of use,
  11. whether testing was systematically performed,
  12. whether the inventor continually monitored the invention during testing, and
  13. the nature of contacts made with potential customers.

I discuss below how these factors relate to the instant Polara case.

Be warned that should you test your product out in the public and leave it out there so that the public can still see the invention after you know that it works, the one year time period will start.  You cannot assert that your use in the public falls within the experimentation exception indefinitely.

Market testing is not experimental use

In my experience, some inventors start to market their invention to others before filing a patent application.  Once they start to market their invention, they might realize that their invention or product is selling very well at a later date and begin to realize that they should file a patent application.  Unfortunately, sometimes, it does take them some time before their marketing efforts really take off to make it worthwhile to spend the money to file a patent application on their invention.  If it takes them more than one year from the first offer for sale, then they cannot seek patent protection for the invention.

In this situation, the marketing efforts of the inventor most likely cannot be characterized as experimental use to fall out of the definition of public use.  Experimental use refers to experiments to test the functionality of the invention, not whether people will purchase the product.  If you go through the factors listed above, it becomes obvious that market testing is not experimental use to test for function.

Public testing invites litigation

If an invention is publicly tested for more than one year, then alleged infringers will argue that the public testing really is not experimental use but rather turned into a public use once the inventor realized that the invention work.

In other words, when the inventor sues a defendant, alleged infringer or competitor, they will always argue that the invention was ready for patenting and that the one year time bar had lapsed before the inventor or business filed the patent application to invalidate the patent.  Even if your public testing clearly falls within experimental use exception, why wouldn’t they make that argument.

Put simply, publicly testing an invention for more than one year without first establishing patent pendency, invites the invalidity arguments and expenses raised in City of Elizabeth and Polara.

If money is not an issue, then the prudent strategy or next step would be to file a patent application before public testing starts on the invention.  Also, a series of patent applications should be filed before publicly testing any incremental improvement.  However, for most companies, filing a series of patent application like this is not financially feasible.

If the company has the funds or if the potential revenue of the invention is too large to take the risk, then the cost for securing patent pendency prior to public testing should be considered just a cost of launching the product.

If it came down to litigation, the cost to litigate the issue of whether the public testing qualifies as experimental use will cost the patent owner significantly more than the cost of serially filing patent applications to protect the invention and any improvements.  The patent owner will spend hundreds of thousands if not millions of dollars litigating the issue if the alleged infringer feels that they have a good shot at invalidating the patent and not pay royalties or the inventor’s lost profits.

The bottom line for high value inventions is to be cautious.   Patent prosecution has many goals.  One of the goals is to mitigate potential arguments that might be raised during litigation.  You can try to rely on your opinion that public testing qualifies as experimental use but opinions differ among reasonable people.  However, by spending a little more money by first establishing patent pendency before publicly testing, the inventor can mitigate or eliminate the associated litigation expense on this issue.

Risks based on first inventor to file rule

With the enactment of the America Invents Act (AIA), the United States went to a first inventor to file rule.  The AIA created additional risks when relying on the experimental use exception that did not exist pre-AIA.

First, if a competitor or a third party views the public testing and files their own patent application on an improved version, then under the first inventor to file rule, the third party will be awarded the patent and not the original inventor.

Moreover, because the third party’s patent application was filed first, the third party’s patent application will be prior art and can be used to reject the original inventor’s later filed patent application.

The AIA does allow the original inventor to overcome the third party’s patent application as prior art by arguing that the original inventor was the first to publish under 35 USC 102(b)(1)(B) and (b)(2)(B).  But, the original inventor has the burden to prove they were the first to publish.

This is a new patent office rule or procedure which has not be litigated.  Patent attorneys just don’t know how the patent office nor the courts will rule in any specific situation.  Put simply, inventor beware if you are relying on these new rules or procedures.

Facts of Polara Engineering Inc. v. Campbell

Polara is a manufacturer of accessible pedestrian signal systems (“APS”) for a cross walk.  They had invented a two-wire version of their prior eight-wire system called the Navigator.

Polara tested prototypes of the two-wired version of the Navigator.  First, they did so in their laboratory.

Next, the tested it publicly at an intersection in Fullerton, California.  After overcoming some problems at this location, they uninstalled the unit.  They then installed the improved system at a busier intersection in Fullerton which was left in place until they filed the patent application which matured into the patent at issue (i.e., USPN 7,145,476).  These installations are referred to as the first and second installations and were installed without a nondisclosure agreement in place.  Even though the first and second installations were installed without a nondisclosure agreement, no one outside of Polara had access to the invention or could tell how the invention worked by merely looking at it, even the city workers. Fullerton was close to Polara’s office and they had full control of the invention.  They installed and monitored the invention.

Polara also later tested the invention in Canada.  However, this installation was done under a confidentiality agreement.

The Federal Circuit affirmed the district court’s finding that the first and second Fullerton installations qualified as an experimental use primarily based on the first factor, the need for public testing.  They stressed the importance of testing life safety equipment.  The Federal Circuit also appeared to appreciate other facts of the case and how those other facts favored the inventor or patent owner.

Factor Evidence or discussion
(1) the necessity for public testing, Evidence was submitted regarding the need to test for durability and safety.
(2) the amount of control over the experiment retained by the inventor, For the first and second Fullerton installations, Polara had complete control except that the city workers had to open up the traffic signal boxes for the Polara employees.
(3) the nature of the invention, Life safety equipment
(4) the length of the test period,
(5) whether payment was made, No payment was made.  Polara started to sell the units after the patent application was filed.
(6) whether there was a secrecy obligation, No secrecy obligation in terms of the first and second Fullerton installations.  However, it appears that the court appreciated the fact that Polara had maintained complete secrecy.
(7) whether records of the experiment were kept,
(8) who conducted the experiment, Polara, not the City of Fullerton, CA installed the units
(9) the degree of commercial exploitation during testing, The invention was sold only after filing the patent application.
(10) whether the invention reasonably requires evaluation under actual conditions of use, Life safety device needs to be tested
(11) whether testing was systematically performed, Polara appeared to incrementally improve the invention.
(12) whether the inventor continually monitored the invention during testing, and Yes for all installations in Fullerton and Canada.
(13) the nature of contacts made with potential customers. Either Polara controlled the experiment or the experiment was performed under a confidentiality agreement.

On appeal, the alleged infringer only alleged that the first and second Fullerton installations did not qualify as experimental use.  The alleged infringer did not argue that the Canadian installation was not an experimental use.

In my opinion, the major difference between the Fullerton and Canadian installations was the confidentiality agreement.  A confidentiality agreement was not signed for the Fullerton installations but one was signed for the Canadian installation.  However, in both situations, the internal working of the invention was kept secret from those people outside of Polara.

The basic recommendation to companies that want to publicly test their invention before filing a patent application is to not do so.  If funds are available, they need to identify the core inventive aspect and at the very least, prepare and file a patent on the core inventive aspect(s).  If funds are tight, they need to pick and choose which aspects of the invention they want to file on.    I do not think that it is sound advice to just publicly test and try to rely on the experimental use exception to the public use bar and the one-year time period.  Taking this approach appears to invite litigation instead of mitigating it.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

The post Experimental use of invention jeopardizes validity of patent appeared first on Patent Attorney | Orange County | OC Patent Lawyer.

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Why innovation matters to Orange County?

Innovation matters to the local economy where innovation occurs.  Innovation brings jobs and revenue to the local economy.  We can see that innovation has helped develop new products that otherwise would not have been created.  But for the incentive of a patent, many new drugs that have high research and development costs but are easy to copy once they are available to the public would not have been invented and brought to market.  The patent data for Orange County, California shows that the top 2 innovative companies are in the fields of medical devices and pharmaceutical.  Patent protection also offers inventors and businesses the opportunity to secure new funding for startups and small businesses.  New products and processes mean new businesses, more jobs, increased efficiencies and more opportunities.

The data below focuses on the 4 most innovative OC companies.  Why the top 4?  The reason is that the number of patents for each company below the top 4 dropped off significantly compared to the top 4.

Source: USPTO filing and patent grant data

The companies in the top 4 are based on the number of patents issued to the companies for the year of 2017, according to data at the United Stated Patent & Trademark Office.  The data below cover not only the number of patents issued, but also the top areas of innovation, the top innovators at those companies, and other statistics.  The data show the relationship between the important areas of innovation in each company, as well as the more-prolific inventors in the company.

How far above “average” are OC’s top innovators?

The top 4 most-innovative companies in Orange County were granted 66 patents on average in 2017.  To put that into context, the average number of patents held by a company that received at least 1 patent in 2017 was 3.43 patents per company.  Compared in those terms, the top 4 most-innovative companies were granted about 19 times more patents than were granted “average” company that is granted patents.

Most companies in Orange County, California were not awarded even a single patent in 2017, because relatively few companies apply for patents at all.  Based on 2016 Census data, there were 94,703 businesses in Orange County, California.[1]  Assuming that this statistic stayed roughly the same for 2017, only 471 companies were granted a patent in 2017.  This means that only 0.5% of all Orange County companies were granted a patent in 2017.

What industries are the top innovators in?

The data below shows that the top innovators in Orange County, California invent in the areas of pharmaceuticals, medical devices, software and electronics.

Which companies are the top innovators in Orange County?

The most innovative companies in Orange County, California are:

  1. Allergan, Inc.
  2. Broadcom Corp.
  3. Edwards Lifesciences Corp.
  4. Universal Electronics, Inc.
Allergan, Inc.

Allergan plc (NYSE:AGN) is a global pharmaceutical company.  On its website, Allergan boasts commercial operations, manufacturing and R&D in more than 100 countries.  Although Allergan is headquartered in Dublin, Ireland, the company assigns most of its patents to Allergan, Inc., based in Irvine, California.  A search of the USPTO database shows that the USPTO assigns a few patents to Allergan Industrie SAS in Pringy, France and Allergan Pharmaceuticals International Limited or Allergan Holdings Unlimited Company, which are located in Dublin, Ireland.

The United States Patent and Trademark Office categorizes all ideas into 8 different sections, known as the Cooperative Patent Classifications (CPC).  Each of these 8 different sections is further categorized into smaller subsections.  The CPC sections are:

A: HUMAN NECESSITIES

B: PERFORMING OPERATIONS; TRANSPORTING

C: CHEMISTRY; METALLURGY

D: TEXTILES; PAPER

E: FIXED CONSTRUCTIONS

F: MECHANICAL ENGINEERING; LIGHTING; HEATING; WEAPONS; BLASTING

G: PHYSICS

H: ELECTRICITY

You can find out more information about the CPC at the Patent Classification homepage.

Table 1 below shows the number of patents granted to Allergan in each of the subsections of the CPC and their respective % with respect to the total number of patents granted to Allergan.  This should give you a sense of their focus areas of innovation.

Top areas of innovation for Allergan

CPC Subsection Title

Number of patents categorized in CPC section % of total number of patents

A61: Medical or Veterinary Science; Hygiene

49

62%

C07: Organic Chemistry

23

29%

C08: Organic Macromolecular Compounds

3

4%

G01: Measuring and Testing

1 1%

B01: Physical or Chemical Processes or Apparatus in General (e.g., furnaces, kilns, ovens)

1

1%

A47:  Furniture 1

1%

Grand Total: 79

Table 1

A patent will list the inventors that contributed to the invention.  Collectively, they are known as the inventive entity.  At Allergan, an average of 2.3 inventors were listed on each patent granted.[2]  In a sense, this indicates the level of cooperation between departments and innovators within the company.  A higher number might indicate a more collaborative environment between people in the R&D department of the company.  A lower number might indicate that people in the R&D department work independently and in silos instead of collaboratively.

When the same inventor is listed on multiple documents, this may indicate that the individual is the main driver of innovation for the company, a group, or a particular technology within the company.

Table 2 lists the top 4 inventors based on the number of patents for which they were included as part of the inventive entity.

Inventor

Number of Patents

John E. Donello

12

Michael E. Garst

11

Richard L. Beard

9

Veena Viswanth

9

Table 2

As noted above, Allergan was granted the most number of patents in CPC subsection A61.  In particular, they were granted 49 patents in this subsection.  A61 relates to Medical or Veterinary Science and Hygiene.  To get a feel for the specific types of invention in this subsection, the list below is a sampling of the Allergan patents in this section.

9763958 Preservative free bimatoprost and timolol solutions
9763959 Compositions and methods for stimulating hair growth
9764009 Treatment of psychological trauma
9765065 Therapeutic substituted cyclopentanes
9775846 Hypotensive lipid-containing biodegradable intraocular implants and related implants
9775849 Implants and methods for treating inflammation-mediated conditions of the eye
9782492 Stabilization of therapeutic agents to facilitate administration
9782517 Crosslinked hyaluronic acid-collagen gels for improving tissue graft viability and soft tissue augmentation
9795615 Methods for fat reduction

Top Allergan inventors in CPC Subsection A61 are shown in Table 3.

Inventor

Number of Patents

Chetan P. Pujara

6

John E. Donello

5

Table 3

John E. Donello made both lists.  He was named on the most number of patents and listed on the most number of patents within the primary area of innovation for Allergan.  Moreover, although Chetan P. Pujara was not identified as a prolific inventor, Pujara is a prolific inventor within the primary area of innovation for Allergan.

Broadcom Corp.

In 2016, Broadcom Corp. (NASDAQ:AVGO) located in Irvine was merged with Avago Technologies located in San Jose, California.  As such, the current patent assignment data for Broadcom appears to be the remains of the merger between Broadcom and Avago, and may not accurately reflect the total number of patents granted to Broadcom.  Eventually, I suspect that Broadcom’s patent applications will eventually be assigned to Avago Technologies, not Broadcom.  Just as an FYI, in 2017, Avago was granted 874 patents.

Broadcom primarily innovates in electric communication techniques.  As shown in Table 4, They were awarded 53 patents in 2017 in this area of technology.  This represents 64% of the total number of patents granted to Broadcom.  This is aligned to their core business as a supplier of semiconductor technologies within four primary markets: wired infrastructure, wireless communications, enterprise storage and industrial and others.

CPC Subsection Title Number of patents categorized in CPC section % of total number of patents

H04: Electric Communication Technique

53

64%

H01: Basic Electric Elements

8

10%

H03:  Basic Electronic Circuity

6

7%

H02: Generation: Conversion or Distribution of Electric Power

4

5%

G01:  Measuring; Testing

4

5%

Y02

2

2%

G10:  Musical Instruments; Acoustics 1 1%
G11:  Information Storage 1 1%
G02: Optics 1 1%
G05: Controlling; Regulating 1 1%
B60:  Vehicles in General 1 1%
A63:  Sports; Games; Amusements 1 1%
Grand Total: 83

Table 4

On average, 2.3 inventors were listed on each patent.[3]  Broadcom and Allergan reflect the same level of teamwork to innovate between departments and innovators within the company.

Table 5 lists the top 3 inventors based on the number of patents for which they were included as part of the inventive entity.

Inventor Number of Patents
Xuemin Chen 10
Ahmadrez (Reza) Rofougaran 6
John Walley 5

Table 5

As noted above, Broadcom was granted the most number of patents in CPC subsection H04.  In particular, they were granted 53 patents in this subsection.  H04 relates to Electric Communication Technique.  To get a feel for the specific types of invention in this subsection, below is a sampling of the Broadcom patents in this section.

9537684 Adaptive transmit beamforming for frequency division duplexing systems
9538199 Data transmission across independent streams
9544074 Time-shifting distribution of high definition audio data
9544095 Channel estimation for phase-only feedback and methods for use therewith
9544117 Adaptive reference signal mapping in wireless multi-access communication networks
9544586 Reducing motion compensation memory bandwidth through memory utilization
9544638 Method for reconstructing system time clock (STC) without carrying PCR
9544665 Providing multiple ABR streams using a single transcoder

Top Broadcom inventors in CPC Subsection H04 are shown in Table 6.

Inventor Number of Patents
Xuemin Chen 9
Rajesh Shankarrao Mamidwar 4

Table 6

Edwards Lifesciences Corp.

Edwards Lifesciences Corp. (NYSE: EW) is a global leader in patient-focused medical innovations for structural heart disease, as well as critical care and surgical monitoring.

Edwards Lifesciences innovates in the same technology area as Allergan because its primary area of innovation is in CPC Subsection A61, as shown in Table 7.  However, it does not appear that the two companies are direct competitors.  Moreover, Edwards Lifesciences is highly focused in its pursuit for patent protection. As shown in the table below, Edwards Lifesciences received 90% of its patents in the CPC Subsection A61, whereas Allergan received 62% of its patents in this area.

CPC Subsection Title Number of patents categorized in CPC section % of total number of patents
A61: Medical or Veterinary Science; Hygiene 44 90%
Not categorized 4 8%
A01: Agriculture; Forestry; Animal Husbandry; Hunting, Trapping; Fishing 1 2%
Grand Total: 49

Table 7

On average, 2.5 inventors were listed on each patent.[4]  The data suggests that Edwards Lifesciences has the greatest level of cross pollination of ideas between departments and innovators within the company compared to Broadcom and Allergan.

Table 8 lists the top 5 inventors based on the number of patents for which they were included as part of the inventive entity.

Inventor Number of Patents
Manouchehr A. Miraki 5
Scott Heneveld, Sr. 4
Louis A. Campbell 4

Table 8

As noted above, Edwards Lifesciences was granted the most number of patents in CPC subsection A61.  In particular, they were granted 44 patents in this subsection.  A61 relates to Medical or Veterinary Science and Hygiene.  To get a feel for the specific types of invention in this subsection, below is a sampling of the Edwards Lifesciences patents in this section.

9675452 Artificial heart valve with scalloped frame design
9675453 Methods of identifying and replacing implanted heart valves
9675455 Method of positioning a minimally-invasive heart valve with cusp positioners
9693862 Holders for prosthetic heart valves
9707074 Method for treating an aortic valve
9707078 Expansion device and method for treating vascular passageways
9717591 Prosthetic valve for replacing mitral valve

Top Edwards Lifesciences inventors in CPC Subsection A61 are the same as the list above because Edwards focuses their patenting efforts to be narrowly tailored into their niche area of innovation.

Universal Electronics, Inc.

Universal Electronics Inc. (NASDAQ: UEIC). is a worldwide leader in universal control and sensing technologies for the smart home.  They have four main innovative areas of technology: connectivity, device discovery and control, voice control and advanced navigation and integrating smart devices into home entertainment, as shown in Table 9.  According to the USPTO database, their primary area of innovation is in CPC Subsection G06 which is related to Computing; Calculating; Counting.  50% of their patents in 2017 where related to this field.

CPC Subsection Title Number of patents categorized in CPC section % of total number of patents
G06: Computing; Calculating; Counting 17 50%
                  G08: Signalling 8 24%
G05: Controlling; Regulating 4 12%
None 4 12
G11: Information Storage 1
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The Berkheimer holding has the potential to swing the pendulum favorably back for software patents.  In particular, the patent allowance rates for software inventions could rise significantly from the low levels they are at now.  The Berkheimer holding sounds innocuous but the ramifications are significant.  In particular, Berkheimer stands for the proposition that patent eligibility analysis can include questions of fact.  Because of this, it makes it harder for the examiner to reject a claim of a patent application as being ineligible for patent protection.  It also makes it harder for the defendant or alleged infringer to ask the court to dismiss the lawsuit for failure to state a claim (i.e., Rule 12(b)(6)).

Current state for protecting software with patents

Currently, the allowance rate for software based inventions is grossly lower than the allowance e rate for other types of inventions (e.g., mechanical).  The average allowance rate for all inventions fluctuates between 45% and 60% depending on various factors under one director to the next.  For software inventions, the allowance rate is currently below 10%.  The statistics themselves show that software inventions are being singled out and treated differently from other types of inventions.

Whether the difference in allowance rate is fair or good, in my opinion, is determined based more on one’s perspective of the patent system.  Do you believe that the patent system has been a force for good to promote innovation and the betterment of people’s lives?  Then the low allowance rate for software inventions is not good.  Or, do you believe that the patent system has been a force for bad as a means to disrupt a business by patent trolls? Then, the low allowance rate is good.

The low allowance rate for software invention started in 2014 when the courts decided Bilski, Alice and Mayo which opened up Pandora’s box.  Since then, the patenting community (e.g., USPTO, inventors, businesses, Federal Circuit) have been adjusting to the new normal.  These cases dealt with the issue of which types of inventions should be eligible for patent protection as a threshold issue.  It was not addressing whether the invention was new and nonobvious which have been the predominant issues before Bilski, Alice and Mayo.

Current patent eligibility analysis was implemented by the USPTO in a way that most software patent applications were rejected during examination as being ineligible for patent protection.  Moreover, current patent eligibility analysis is used during litigation by defendants or infringers to dismiss the litigation.

Berkheimer v. HP

Recently, in Berkheimer v. HP (Case No. 2017-1437, February 8, 2018), the Federal Circuit (i.e., 3 judge panel) held that the eligibility analysis can includes questions of fact in the second step of the Mayo/Alice framework. From this, the Federal Circuit vacated the district court’s grant of summary judgement that the claims were ineligible for patent protection under § 101. On its face, the holding of the court sounds innocuous enough but the ramifications are significant.  Berkheimer has the ability to swallow up most of the negative effects of the current patent eligibility analysis.  In other words, allowance rates for software inventions could rise again.

The defendant in Berkheimer requested an en banc hearing (i.e., rehearing by the full panel of judges at the Federal Circuit).  En banc hearings are granted for:

(a) Necessity of securing or maintaining uniformity of decisions;

(b) Involvement of a question of exceptional importance;

(c) Necessity of overruling a prior holding of this or a predecessor court expressed in an opinion having precedential status; or

(d) The initiation, continuation, or resolution of a conflict with another circuit.

Denial of en banc review of Berkheimer decision

On May 31, 2018, the Federal Circuit denied the request for an en banc hearing but in denying the en banc hearing, a multi dissent opinion was rendered which provided insight into how the judges think that the Berkheimer decision might affect examination at the USPTO and also during litigation.

The majority of the judges that denied the en banc hearing did so for the following reasons.  35 USC 282(a) places the burden to show that the patent claim is not patent eligible.  Rule 56 of civil procedure requires that summary judgement be denied if there is a genuine dispute of material fact.  In the second step of the Alice/Mayo framework, the court looks to whether there is an inventive concept.  If the identified inventive concept is “well understood, routine, and conventional” to a skilled artisan in the relevant field, then the identified inventive concept does not transform the patent claim into one that is eligible for patent protection.

In Berkheimer, a genuine dispute of material fact.  In particular, whether the claim limitation of a “one to many change” was well known, routine or conventional.  The defendant’s only evidence was an expert witness’ testimony that such limitation was a known function.  The Federal Circuit made a distinction that even though a function is known, it does not mean that it is a well-known function.  Hence, there was a genuine dispute of material fact of whether such limitation was well known.

The Federal Circuit noted that whether a limitation was well known, routine or conventional can be determined from the specification if the specification admits that the limitation is well known, routine or conventional.

How does this arise?  Patent drafters use language to broaden up the patent specification.  For example, they might say that two parts might be attachable with an adhesive or mechanical fastener or other attachment mechanisms known in the art.  Unfortunately, by using the phrase “known in the art,” it could raise issues as to whether the specific fasteners mentioned in the patent specification is well known.  Patent drafters should reevaluate those broadening types of language when drafting a specification.  Simply put, you may want to consider not using those types of language.

USPTO memorandum on changes to examination procedure based on Berkheimer

On April 19, 2018, the USPTO published a memorandum explaining changes in examination procedure pertaining to subject matter eligibility in view of the Berkheimer decision.  The primary focus on the memorandum dealt with the issue of when an examiner could state conclude an element is well known, routine or conventional.

In particular, the examiner can conclude that a limitation or element is well known, routine or conventional if the “examiner can readily conclude that the element(s) is widely prevalent or in common use in the relevant industry.”  For example, if the element is so well known that it doesn’t need to be described in the patent specification then it is well known, routine and conventional.

The USPTO now requires examiners to find:

  1. A citation in the specification that states that the element is well known, routine or conventional.
  2. A court decision that found the element to be well-known, routine or conventional.
  3. A citation to a publication that demonstrates the well-understood, routine, conventional nature of the additional element.
  4. A statement that the examiner is taking official notice. See MPEP 2144.03 on whether the official notice is appropriate.

The above description is a brief description of the ways that the examiner can find an element to be well-known, routine or conventional.  Read the full memorandum especially if you are responding to a rejection based on patent eligibility under § 101.

As you can see, Berkheimer makes it harder for the courts to dismiss a case based on patent eligibility under § 101 and harder for examiners to reject a patent claim based on patent eligibility under § 101.

If Berkheimer is a significant case to swing the pendulum in favor of software patents, then the real fight will be on the standard for determining whether something is well known, routine or conventional.

This opinion is favorable to software inventors.  However, we have had other opinions that were favorable to software inventors but did not significantly increase the patent allowance rate.  I would just keep track of the progress to see if Berkheimer does change the needle on patent allowance rates.  See the following articles as examples:

  1. Enfish v. MSFT (Fed. Cir. 2016)
  2. Bascom v. AT&T (Fed. Cir. June 27, 2016)
  3. Internet Patents Corp. v. Active Networks (Fed. Cir. 2015)

If the standard becomes high or harder for defendants and examiners to prove, then more software patents will be held valid and more patents will be granted for software patents, and vice versa.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

The post Berkheimer and its ramifications on the future of software patents appeared first on Patent Attorney | Orange County | OC Patent Lawyer.

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Lost foreign profits are defined as profits that the patent owner could have made overseas or outside of the United States.  Normally, patent owners can only recover for lost profits that they incur based on a competitor’s activity within the United States.  To put it differently, patent owners generally cannot recover for lost foreign profits based on activity outside of the United States.  In WesternGeco LLC v. Ion Geophysical Corp (S. Ct. 2018), the Supreme Court held that recovery of lost foreign profits is permissible in some cases, as discussed below.

Lost foreign profits are permissible

To clarify the holding, the Supreme Court emphasized that this opinion only deals with the permissibility of awarding lost foreign profits.  Lost foreign profits are not mandatory.  For example, to limit exposure, competitors are free to argue that the infringing activities was not the proximate cause of the lost profits.  In support thereof, footnote 3 of the opinion stated that “In reaching this holding, we do not address the extent to which other doctrines, such as proximate cause, could limit or preclude damages in particular cases.”  As such, this opinion is good news for patent owners but has its limits.

Fact pattern of WesternGeco LLC

The specific facts of this case are discussed below.  The patent owner (Westerngeco) owns patents related to a system for surveying the ocean floor.  The system uses lateral-steering technology to produce higher quality data than prior art survey systems.  In its business structure, the patent owner “does not sell its technology or license it to competitors.  Instead, it uses the technology itself, performing survey for oil and gas companies.”

The infringer (ION Geophysical Corp.) “began selling a competing system.  It manufactured the components for its competing system in the United States and then shipped them to companies abroad.  Those companies combined the components to create a surveying system indistinguishable from WesternGeco’s and used the system to compete with WesternGeco.”

The patent owner (WesternGeco) lost 10 contracts outside of the United States because of the infringer’s activity of selling a component part and exporting such components overseas for assembly into the infringing product.  The patent owner could have made a profit of $12.5 million on those contracts, and thus was awarded that amount in damages.

Activities that constitute patent infringement

A patent provides a patent owner a right to exclude others from making, using, offering to sell, or selling within the United States or importing any patented invention into the United States.  When patent attorneys explain the rights that a patent gives the patent owner, this is the bundle of rights that are listed and is based on 35 USC 271(a).  These rights are all based on activities based within the United States and any damage award is based on a competitor’s activity within the United States as well.  However, Section 271 has other sections that provide other patent rights which if violated constitutes patent infringement.

Under Section 271(b), inducing someone else to infringe a patent constitutes patent infringement.

Under Section 271(c), importing a unique component especially made for a patented machine constitutes patent infringement.

Under Section 271(f)(1), whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Under Section 271(f)(2),  whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Under Section 271(g), importing a product made by a patented process into the United States constitutes patent infringement.

In the instant case, the infringer was found to infringe the patent based on Section 271(f)(2) listed above. They supplied a unique component of the patented invention from within the United States which was then assembled outside of the United States into a product that infringed the patent.

Analysis of whether lost foreign profits is permissible

Now, the issue before the court was whether the infringer is liable for the lost profits that the patent owner would have made on those 10 lost foreign contracts or for something less such as the lost profits for the unique component sold by the infringer to others.  Presumably, the profit on 10 components would be substantially less than the service contract using those components.

In general, courts presume that federal statutes like the patent statute apply only within the territorial jurisdiction of the United States.  However, this presumption can be overcome which in this case it was.  The basic reason was that the type of infringing activity that was being regulated was that of “exporting” components from the United States.  The court also referenced Section 284 which sets an award of damages for patent infringement so that the damage aware completely compensates the patent owner due to the infringement.  To compensate the patent owner, this includes lost profits but also includes lost foreign profits.

This case dealt with the availability of lost foreign sales based on infringement under Section 271(f)(2) but the court expressly stated that this holding does not apply to infringement under Section 271(f)(1).  Section 271(f)(2) addresses the activity of supplying a unique component of a patented invention from the U.S. to outside the U.S., whereas Section 271(f)(1) addresses activities of supplying a generic component from the United States to a foreign country and inducing others to infringe use the component outside of the U.S. to infringe the patent.  Because of the differences in standards for what constitutes infringement under the two subsections, the court reserved the decision as to whether recovery of lost foreign sales for infringement under Section 271(f)(1) for a later date.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

The post Lost foreign profits recoverable by patent owners appeared first on Patent Attorney | Orange County | OC Patent Lawyer.

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On June 19, 2018, the United States Patent and Trademark Office (USPTO) granted its 10 millionth patent. Since the inception of the patent system and grant of the first patent, the rate of technological improvement has increased 25-fold as discussed below.

The 10 millionth patent (i.e., U.S. Pat. No. 10,000,000) was for Coherent LADAR using Intra-pixel Quadrature Detection. LADAR stands for laser detection and ranging. Put simply, the invention was for detecting objects such as cars with an optical detector. The specific technology described in USPN 10,000,000 may not be significant, but it is a good time to humbly look back and recognize the collective technological improvements of people and appreciate the ingenious mind granted to man by God.

Overview of the 10 million patents
Patent Number Title Grant Date
USPN 10,000,000 Coherent LADAR using Intra-Pixel Quadrature Detection June 19, 2018
USPN 9,000,000 Windshield Washer Conditioner April 7, 2015
USPN 8,000,000 Visual Prosthesis August 16, 2011
USPN 7,000,000 Polysaccharide Fibers February 14, 2006
USPN 6,000,000 Extendible Method and Apparatus for Synchronizing Multiple Files on Two Different Computer Systems December 7, 1999
USPN 5,000,000 Ethanol Production by Escherichia Coli Strains Co-expressing Zymomonas PDC and ADH Genes March 19, 1991
USPN 4,000,000 Process for Recycling Asphalt-Aggregate Compositions December 28, 1976
USPN 3,000,000 Automatic Reading System September 12, 1961
USPN 2,000,000 Vehicle Wheel Construction April 30, 1935
USPN 1,000,000 Vehicle Tire August 8, 1911
USPN 1 Traction Wheels July 13, 1836

Above is a table of patents at each million-patent grant milestones. We can see two different trends.

First, we can see the direction of technological improvements. At the inception of the patent system, the United States was in a sort of a caveman primitive state. We were focused on wheels and tires. We are now patenting in areas of sensing cars.

Second, we see that the speed of innovation has increased over the past 200 years. The first million patents were granted over a period of 75 years. By 2018, the last one million patents were granted over a period of 3 years. This is better illustrated in the graph of patent number versus the grant date shown below.

What does USPN 10,000,000 represent?

Looking back at these patents, one can’t stop but think about what all 10 million patents represent:

First, they represent the collective ingenuity of the inventing community.

Second, each patent represents a new invention or incremental improvement to what already existed before it.  Also, these patented inventions or improvements had to be significant or nonobvious.  They were not trivial improvements.  Of course, some represent incremental improvements to existing devices and methods of doing things.  But, others were truly revolutionary innovations.

Third, the 10 million patents represent millions and billions of dollars in research and development that the public and competitors did not need to spend to make and use the patented technology.

Beneficially, all of the technology and innovation described in these patents have been or will be dedicated to the public.  This means that the public and competitors can build upon the patented technology and save money on research and development.  These patents teach them to make and use the patented technology.

If not for the patent system, many of the inventions would remain in someone’s garage or utilized as a trade secret without ever being transferred to others.

Fourth, the 10 millionth patent also symbolizes the successful functioning of the U.S. patent system.

Congratulations to the inventing community and to all the people at the Patent Office that make the patent system function.

More innovation is still to come

Friends, family and laypeople, not familiar with the patent system, are amazed that innovation still exists today.  In some ways, I am also amazed that the USPTO has issued its 10 millionth patent.  However, as long as we would want to do something faster, cheaper, easier, more efficiently, those means of doing so are all inventions ready to get patented.

25-fold increase in the rate of technological advances since 1836

Based on the graph, we can visualize that the pace of technology is much faster now than it was back in 1836.  The USPTO is currently granting about 333k patents per year, whereas in 1836, the USPTO granted about 13,333 patents per year.  The pace of technology has certainly increased over time by a factor of 25 (i.e., 333k divided by 13.3k).

As I mentioned above, the initial patents were directed to wheel and rim devices.  It might appear that technological advances have moved on from wheel and rims to self-autonomous cars.  However, that simply is not true.  There is still more to be invented, even in wheel and rim technology.  We now have improved tread designs to achieve better traction (See USPN 8,215,568) or tire technology related to tire tread wear sensor (See USPN 7,180,409).  In other words, even if you are not in an emerging area of technology shown in mainstream media, you can still innovate in your area of expertise.  Don’t give up hope.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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Although Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals (Fed. Cir. April 13, 2018) is in the field of medicine, it could be applicable to other fields as well because in a broad sense Vanda is dealing with a distinction between diagnosing a condition (ineligible) versus a method of treatment (eligible).  For example, is a method of detecting an underground leak ineligible subject matter?  The USPTO and the federal courts have yet to expand the analysis of patent ineligible subject matter outside of the software and medical fields, but theoretically, nothing is stopping it from such expansion application.

Since 2014, U.S. patent laws have changed significantly in what is patent eligible subject matter.  The standard advice used to be that “anything made under the sun by man” was eligible for a patent as long as the invention was novel and nonobviousness.  Now, that has all changed for some types of inventions such as with medical diagnostic tests.  The United States Patent and Trademark Office (USPTO) and the federal courts now consider diagnostic tests to be ineligible for patent as an abstract idea.

Method of treatment is patent eligible subject matter

Vanda is important because:

  1. the majority opinion makes a distinction between a method of treatment for a disease which is eligible for patent protection, whereas a method for diagnosing a condition for efficacy of a pharmaceutical drug is not; and
  2. the arguments presented by the dissenting opinion tries to enlarge the scope of inventions that would be ineligible for patent protection.

The majority opinion was written by Circuit Judge Lourie and joined by Circuit Judge Hughes.  The dissenting opinion was by Chief Judge Prost.

Method of treatment claims recites specific dosage levels based on condition

In Vanda, the patent was related to a method of treating schizophrenia patients with iloperidone wherein the dosage range is based on the patent’s genotype.  The patent claim went above and beyond just diagnosing the patient’s genotype thought.  The claim included the specific dosage in the treatment steps:

if the patient has a CYP2D6 poor metabolizer genotype, then internally administering iloperidone to the patient in an amount of 12 mg/day or less, and

if the patient does not have a CYP2D6 poor metabolizer genotype, then internally administering iloperidone to the patient in an amount that is greater than 12 mg/day, up to 24 mg/day.

Diagnostic method only reciting an indication to change dosage is ineligible for patent protection

The Federal Circuit contrasted this claim with the claim of Mayo directed to a diagnostic method.  The patent claim of Mayo claimed a method for “optimizing” the dosage of thiopurine drugs by administering thiopurine drugs to a patient and measuring the levels of certain metabolites in the blood, wherein the level of metabolites indicates whether to adjust the dosage.  The patent claims of Mayo recited:

wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject. (emphasis added).

The patent claims of Mayo did not specify how-to adjust the dosage but merely that the dosage would need to be adjusted.  The patent claims of Mayo only indicated a need to adjust.  Because of this, the Federal Circuit described the patent claims of Mayo as being directed to a natural law with a limitation to “apply it,” whereas the patent claims of Vanda went further and provide clear instructions to doctors how to adjust the dosage.

Let’s consider how the Federal Circuit came to this distinction.

Two step Alice/Mayo framework for patent eligible subject matter

In analyzing patent eligible subject matter under Section 101, a federal court as a first step determines whether the claims are “directed to” an abstract idea.  If so, then as a second step, the federal court determines whether claims recite something more or an inventive step.

In Vanda, the Federal Circuit recognized the specific dosage level adjustments and held that because the claims actually recited the dosage levels or how to adjust the dosage levels based on the patient’s genotype, the patent claims were directed to a method of treatment for a disease, and not to a mere diagnostic method or a test to determine a condition.  Hence, the Federal Circuit held that the patent claims for a method of treatment for a disease is eligible for patent protection.

Dissenting opinion

As stated above, the dissenting opinion was written by Chief Judge Prost.  The dissenting opinion tried to, but in my opinion, failed to make his case as to why the majority was wrong.  In particular, the dissent reasoned that the patent claims of Mayo also specified the specific dosage levels and the court there held that the patent claims were ineligible for patent protection, and thus the instant claims even if it recites specific dosage levels should also be ineligible for patent protection.

For the two judges that made up the majority opinion, the issue of patent eligible subject matter was dealt with in the first step.  The Federal Circuit never answered whether there was something more or an inventive step as required by the second step.  This is significant because once a claim is identified as being directed to an abstract idea, then in my opinion, it becomes significantly more difficult to show that the claims also recite an inventive step in the second step so that the claims are still eligible for patent protection. The inventive step by its nature requires an inquiry into what already existed (i.e., novelty) and whether the claimed improvement is an inventive step (i.e., nonobviousness).

As shown above by comparing the claims of the instant case with the claims of the Mayo case, the claims of the instant case provided more information whereas the patent claims of the Mayo case only recites an indication of a need to adjust but did not specify how to make the adjustment.

The dissenting opinion is more interesting for what the dissent is trying to convince the other judges to agree to.  The dissent argues that the majority opinion should have held that the claimed invention in Vanda was directed to an abstract idea.  The dissent urged the majority to subscribe to an analysis where more inventions would be deemed to be directed to an abstract idea.  Because the “inventive step” standard is harder to overcome, this would mean that more patents would be invalidated compared to the approach of the majority.

I’m sympathetic to the notion that a law of nature and natural phenomena would be not novel.  Law of nature, natural phenomena and abstract idea are the three exceptions to the general rule that anything made by man under the sun is eligible for patent protection.  A law of nature and natural phenomena always existed.

However, an abstract idea has not always existed, at least by the way the federal courts are using the term.  The Section 101 framework should not look to whether an idea is new or nonobvious (i.e., inventive step) to determine if it is abstract.  This has been one of the complaints in the two step Alice/Mayo framework.  see USPTO report on patent eligible subject matter. In Vanda, the dosage levels based on the patient’s genotype is new.  There is nothing abstract about the specific dosage levels.  Anyone can apply it without thinking.  It is a purely mechanical application of the relationship between the drug and the patient’s genotype.  Moreover, there does not appear to be anything abstract about identifying a medical condition as in Mayo.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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On May 8, 2018, the United States Patent and Trademark Office (USPTO) announced press release #18-06 regarding the future of claim construction during post grant proceedings at the USPTO.  The press release indicated that all post grant proceedings such as the Inter Partes Review, Post Grant Review and Covered Business Methods will no longer use the “Broadest Reasonable Interpretation” (BRI) to determine the scope of the claims.  They will be transitioning to the ordinary and customary meaning which is advantageous for patent owners.

The policy change is not in effect at this moment.  The USPTO will release proposed rules in the Federal Register on May 9, 2018.  Unofficial copy: Changes to Claim Construction Standard for Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal Board.  Finalized proposed rule for Changes to Claim Construction Standard for Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal Board will be posted on May 9, 2018.  I will update this blog post as developments arise.  The public will be able to comment on the proposed rule.  To provide your comment, see instructions below.  The Patent Office will formalize the proposed rules and take into consideration the public’s comments.

The USPTO stated several rationales for the proposed rule change:

  1. Greater uniformity and predictability of the patent grant
  2. Increase judicial efficiency
  3. Address concerns of unfairness between the BRI and ordinary and customary meaning standards

This policy change is disadvantageous to alleged infringers.  Inter Partes Review and other post grant proceedings allowed alleged infringers to use a broad definition for the claims to invalidate the patent claims being asserted against them through the post grant proceedings.  Using a broad definition of the claim terms under the broadest reasonable interpretation standard increased the odds that a prior art reference would anticipate or make obvious the patent claims, and thus invalidate the patent claims.  Not after the rule change comes into effect.

I’ve written many articles that highlight the benefits of the broadest reasonable interpretation standard for alleged infringers.

Related articles:

In contrast, for an alleged infringer to invalidate a claim in federal courts, the claims would be given their “ordinary and customary meaning,” not the broadest reasonable interpretation.  As such, during litigation in federal courts, it would be significantly more difficult to invalidate the patent claim.  This distinction between the broadest reasonable interpretation and the ordinary and customary meaning was a significant benefit to alleged infringers.

The stated goal for the policy change is to more closely align the interpretation used by the PTAB in post grant proceedings to the claim interpretation used in federal courts or the International Trade Commission.  The press release did not specifically indicate that the post grant proceedings will interpret the claims under an ordinary and customary meaning standard.  However, the preliminary proposed rules below indicate that is goal.

In my opinion, this greatly reduces the attractiveness of Inter Partes Review, Post Grant Review and Covered Business Methods review before the Patent Trial and Appeal Board.  I expect that the number of petitions filed at the USPTO is expected to go down but only time will tell after the proposed rule change goes into effect. There still are benefits to petitioning for a post grant proceeding compared to litigation.  One of them being cost and the ability of the defendant to address invalidity before the PTAB with judges that are more adept at patent law compared to federal judges that might handle just a few patent cases or less per year.

I invite you to contact me with your patent questions at (949) 433-0900. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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Basic background of inter partes review

An IPR refers to an inter partes review.  The IPR is an administrative proceeding before the Patent Trial and Appeal Board (PTAB) of the USPTO in which a petitioner can request claims of a patent be invalidated to avoid patent infringement liability.  The petitioner is normally a business competitor to the patent owner wherein the patent owner has alleged patent infringement.  Under SAS Institute, Inc. v. Iancu (S. Ct. 2018), all challenged patent claims by petitioner must be included in the IPR if the single claim threshold is met.

Benefits of IPR

In a federal court where patent infringement is litigated, the alleged infringer would have to litigate multiple issues such as validity and noninfringement at the same time.  The IPR allows the alleged infringer to focus their resources to first attack the validity of the challenged patent claims before having to spend the time and money on arguing noninfringement.

In my opinion, the IPR is a preferred venue to challenge the validity of the patent.  One reason is that the IPR allows the alleged infringer to argue for the “broad reasonable interpretation” of the terms of the patent claims.  With the broadest reasonable interpretation (BRI), the claims are read broadly, and thus the prior art references are more likely to invalidate the patent claims based on a lack of novelty and obviousness.

If the challenged patent claims survive the IPR, then the alleged infringer can argue for the “ordinary meaning” of the challenged patent claims during litigation in federal court.  The ordinary meaning of a claim term is a narrower than the broadest reasonable interpretation, and thus, the alleged infringer would be less likely to infringe the patent claims.  The alleged infringer can have claim construction beneficially construed in their favor in both stages of the litigation by taking advantage of the IPR.

All challenged patent claims must be instituted in IPR, no partial institution

In SAS, the issue before the Supreme Court was whether the PTAB could institute an IPR on some but not all of the claims identified in the petition for IPR by the petitioner.  Before SAS, PTAB would be able to pick and choose which claims would be considered in the IPR under the power of a USPTO regulation “partial institution.”  In SAS, the Supreme Court held that the PTAB did not have the power of “partial institution.”  The USPTO has already issued its Guidance on the impact of SAS on AIA trial proceedings.

Before SAS, the alleged infringer could only take advantage of the IPR proceeding for those patent claims that the Board instituted.   The petitioner would petition the Board to cancel as unpatentable 1 or more claims of the patent by identifying the claims, providing grounds that the identified claims are not novel or obvious and submitting the evidence supporting the challenge.  The patent owner would then argue why no IPR should be instituted.  If the petitioner was successful in convincing the Board that at least 1 claim (i.e., single claim threshold) would be invalidated, then the Board could pick and choose which claims of the patent should be a part of the IPR. “The Director did all this on the strength of a Patent Office regulation that purported to recognize a power of “partial institution.”

In SAS, the Director of the USPTO argued that the power of “partial institution” was found in the language of the statute.  In particular, the Director pointed to various sections of the IPR statute which gives the Director discretion and authority to institute the IPR.  The Director construed those sections to say that they allowed the Director to institute the IPR on a claim by claim basis and was not forced to institute the IPR as a group as chosen by the petitioner.  Also, the Director made policy arguments based on efficiency and stare decisis that the courts should give deference to agency regulations under Chevron. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

The majority opinion written by Justice Gorsuch disagreed.  In fact, the majority opinion stated that proper statutory construction begins with the language of the statute.  Based on the language of the IPR statute, partial institution was not found anywhere.  As for the efficiency argument, the majority opinion indicated that the agencies should make regulations based on the statute as written and not based on policy.  Congress makes the laws based on policy and that the policy making discretion is not within the purview of the agency.  Also, agency deference under Chevron is given only if the meaning of the statute cannot be discerned after employing traditional tools of statutory construction. As discussed in the opinion, the meaning of the statute was easily discerned.

Before SAS, the Board was allowed to resolve less than all challenged patent claims chosen by the petitioner under the USPTO’s regulation of “partial institution.” In SAS, the U.S. Supreme Court held that the Board must resolve every challenged patent claim raised by the petitioner once the IPR is instituted by the Board.  They cannot pick and choose which patent claim to resolve.  Patentability on some of the challenged patent claims cannot be decided by the Board while the rest are litigated in federal courts.  The division is not for the Board to make.  The petitioner has the power to choose which claims should be included in the IPR, not the Board.

Ramifications of SAS opinion

The SAS opinion makes an IPR an even more attractive vehicle for challenging the validity of a patent.  Before SAS, the alleged infringer had to hope that the Board would institute the IPR for the claims (i.e., problematic claims) they thought they were most likely to infringe.  After SAS, the alleged infringer is given complete control over which claims are considered in the IPR so long as the single claim threshold is met.

This brings us to another benefit of an IPR to alleged infringers.  Before SAS, the alleged infringer had to spend the time and money to focus on all claims, especially the problematic claims to make sure that the problematic claims would be included in the IPR, if the IPR was instituted.

Now, the burden on the alleged infringers appear to have been lowered.  In particular, the alleged infringer can focus on one or more claims that is likely to meet the single claim threshold, while spending less time and money on the other claims that they want included in the IPR because the PTAB must institute the IPR on all challenged patent claims as long as the single claim threshold is met.  Presumably, this should reduce the cost to alleged infringers for preparing a petition for an IPR.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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What is a claim of priority?

A claim of priority is a reference in a later filed patent application back to an earlier filed patent application.

What is the benefit?

The claim of priority allows the later filed application to enjoy a priority date as of the filing date of the earlier filed patent application and not the actual filing date of the later filed patent application.  If the later filed patent application is rejected based on intervening prior art dated between the two filing dates of the earlier and later-filed patent applications, the claim of priority eliminates that intervening reference as prior art.  That can be the difference between an allowance or rejection of a patent application.

Does everything in the later filed patent application enjoy a priority date of the earlier filed patent application?

The claim of priority does not give the later filed patent application the benefit of the filing date of the earlier filed patent application for everything described or disclosed in the later filed patent application.  Rather, only those things that are described in both the earlier and later-filed patent applications enjoy a priority date of the earlier filed patent application.

A good way to understand this concept is to cover the terms used to describe the various types of patent applications.  A continuation patent application is a refiling of the original patent specification of the earlier filed patent application with claims relating to the same invention.  A divisional patent application (MPEP 201.06) is a refiling of the original specification of the earlier filed patent application with claims relating to a different aspect of the invention.  A continuation in part application is a refiling of the original patent specification and includes new features of the invention and has claims directed to the new features.

A claim of priority in a continuation or divisional patent application enjoys the priority date of the earlier filed patent application because they share the same specification.  Everything described in the later filed application is also described in the earlier filed patent application.  For a continuation in part application, the later filed patent application enjoys the earlier priority date only for the common subject matter and not for the new features.  The new features have an effective filing date as of the filing date of the continuation in part application.

Using a claim of priority to develop a patent portfolio around cornerstone technology

A claim of priority is made in a later filed patent application back to an earlier filed patent application when developing a portfolio of patents around cornerstone technology or technology that is important to a business.

A patent portfolio is a group of patents that may or may not be related to each other by a claim of priority.  For those that are related to each other by a claim of priority, they share a common specification.  The later filed patent application is a refiling of the earlier filed patent application with a new set of claims and includes the claim of priority.

Because of the claim of priority, the earlier filed patent application is not prior art to the later filed patent application at least for the common subject matter between the two. Otherwise, the earlier filed patent application when it matures into a patent or is published as a pre-grant publication will be prior art against the later filed patent applications which will be devastating to the later filed patent application because it is almost impossible to overcome your own patent application if it becomes prior art.

How do you make a claim of priority?

The requirement for making a claim of priority is discussed in Manual of Patent Examining Procedure (MPEP) Section 211: Claiming the Benefit of an Earlier Filing Date Under 35 U.S.C. 120 and 119(e).  For information on claiming priority to a foreign patent application, see MPEP Section 213: Right of Priority of Foreign Application.

A claim of priority in a later filed patent application can be made to an earlier filed provisional patent application, nonprovisional patent application, a design patent application or a foreign patent application.

The following highlights the more crucial aspects of the claim of priority.

A claim of priority is made when:

  1. The later filed patent application includes a specific reference to the earlier filed patent application;
  2. The specific reference is made within 16 months from the filing date of the earliest priority application or 4 months from the filing of the later filed patent application;
  3. The later filed patent application is filed before the abandonment or grant of the earlier filed patent application. The earlier and later filed patent application must be co-pendening with each other at some point in time.
Specific reference

The specific reference is a statement in the later filed patent application which refers back to the earlier filed patent application.   The specific reference must specify:

  1. Application Serial Number of the earlier filed patent application and
  2. The relationship (e.g., continuation, divisional, continuation in part, provisional) between the earlier and later filed patent application.

The specific reference is made by inserting the information in the Application Data Sheet (ADS).  The ADS is a document submitted with the patent specification.  The patent specification along with the ADS form a part of the overall patent application package.  The section of the ADS that needs to be filled out is shown in the example below.

Timing of specific reference

The specific reference needs to be made during a certain period of time.  It needs to be made within 16 months of the filing of the earliest filed patent application or 4 months after the filing of the later filed patent application.

Co-pendency requirement

The later filed patent application needs to be filed with the United States Patent and Trademark Office before the earlier filed patent application is abandoned or granted.   For example, if a provisional patent application is filed, the nonprovisional patent application must be filed while it is pending.  The provisional patent application is pending only for one year from its filing date.  When a nonprovisional patent application is allowed, then the follow-on patent application needs to be filed before it is granted.  If a patent application is rejected, then the follow-on patent application needs to be filed before the due date to file a response (i.e., date of abandonment).

How do you fix a defective claim of priority?

A defective claim of priority may be fixed before the patent application is granted through a petition to the Patent Office or after the patent is granted by way of a reexamination request.  The cheaper method is the petition.  The reexamination proceeding is a significantly more expensive procedure.  For both methods, the reason for the defective claim of priority must be unintentional.  A claim of priority can be fixed with a certificate of correction if the mistake was made by the Patent Office.

Reference MPEP 201 for the various petitions for fixing a defective claim of priority.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

The post Claim of priority to an earlier filed patent application appeared first on OC Patent Lawyer.

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Collateral estoppel is a legal rule that protects a party from having to litigate issues that have already been fully and fairly tried in a previous action and adversely resolved against a party-opponent.  This rule can work against the patent owner or the defendant during litigation.

Collateral estoppel works against the patent owner

In general but not always, collateral estoppel works against the patent owner and helps the alleged infringer.  For example, if a term in a patent claim being asserted by the patent owner has already been construed by a court in prior litigation, then the patent owner cannot contest the correctness of the claim construction of the patent claim in a subsequent patent litigation against the same defendant.  This was the case in Nestle USA, Inc. v. Steuben Foods, Inc. (Fed. Cir. March 13, 2018).  It is also true for a different defendant which was not a party to the original litigation.

The patent owner must accept the claim construction that was previously determined by the court.

This is not the case for the defendant who was not involved in the original litigation.  The defendant does not need to accept the claim construction previously decided by the court.  The defendant can argue that the claim construction was too broad or too narrow.  This defendant did not have the full and fair opportunity to litigate the issue unlike the patent owner.  Hence, the defendant can take the position that the claim term should be interpreted much more broadly so that the patent claim would be invalid for being anticipated or obvious by the prior art.  Conversely, the defendant can take the position that the claim term should be interpreted much more narrowly so that the patent claim would be sufficiently narrow so that the defendant’s products or actions would avoid infringement of the patent claim.  This would be the defendant’s prerogative but not the patent owner’s.

Collateral estoppel works against the alleged infringer

Collateral estoppel can work against the alleged infringer in the case where there is multiple litigation on one or more related patents and a court in prior litigation ruled against the alleged infringer.  For example, if the alleged infringer advocated for a certain meaning of a claim term but lost, then in subsequent litigation against the patent owner, the alleged infringer cannot advocate for a different meaning for the claim term for a related patent.

Nestle USA, Inc. v. Steuben Foods, Inc.

In Nestle USA, Nestle filed an Inter Partes Review proceeding with the Patent Trial and Appeal Board (PTAB) in an attempt to invalidate Steuben’s patent.  Presumably, Stueben (Patent owner) alleged that Nestle (Alleged infringer) infringed on Stueben’s patent.  Steuben owns multiple related patents directed to systems for aseptic packaging of food products.

In a prior litigation, Nestle (Alleged infringer) appealed and won on the claim construction issue for the claim term “aseptic” on a different but related patent.  In that prior litigation, the court construed the term “aseptic” to mean “FDA level of aseptic.”  Nestle now argues that a term similar to “aseptic” in the current litigation should have the same meaning as in the prior litigation.  That is the extra wrinkle or issue in the case.  The issue is whether collateral estoppel applies to claim language not identical but similar to the prior case.  In the prior litigation, the court construed the term “aseptic” to mean “FDA level of aseptic.”  In the current litigation, Nestle wanted the court to adopt the same definition for the claim phrase “aseptically disinfecting.”

The Federal Circuit explained that it was clear that identical claim terms are subject to collateral estoppel.  The Federal Circuit went further to say that since collateral estoppel applies to the identity of the issues and similar claim terms or variants thereof are also subject to collateral estoppel.

The Federal Circuit vacated the Board’s construction of “aseptically disinfecting” and construed it to mean “FDA level of aseptic.”

Ramifications of collateral estoppel on patent prosecution

The complexity of collateral estoppel increases because collateral estoppel transcends the current patent when the patent is a part of a portfolio of patents.  For example, if a patent portfolio is being developed for a particular technology through the filing of one or more continuation, divisional and continuation-in-part patent applications, then the identical claim terms across the related patents that are subject to collateral estoppel.  If the patent owner litigated one patent against a defendant, then the arguments and words used to define the terms of the patent claim in that patent will be applied to the identical claim terms across the related patents in the family.

The ramification of the Nestle opinion is that the patent litigator needs to be cognizant of the ramifications of the arguments being presented and how it affects the patents in the portfolio for similar claim terms.

Moreover, if the patent family still has a pending patent application that is being prosecuted, then patent prosecutor needs to be aware of the litigation arguments.  One because the patent prosecutor needs to advise the examiner when arguments in litigation might be inconsistent with arguments presented during patent prosecution.  Secondly, because merely using different but similar claim terms will not avoid the negative effects of collateral estoppel against future patents acquired later on. The patent prosecutor may have to find a solution to use terms that can be described not as similar but significantly different to mitigate the effects of collateral estoppel.

Because of the application of collateral estoppel across the entire patent portfolio, patent prosecution of subsequent patent applications may benefit from a consideration of how to craft different claim terms to mitigate the negative effects of collateral estoppel that may arise if litigation ensues.

I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

The post Collateral estoppel applies to similar claim terms in a patent family appeared first on OC Patent Lawyer.

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