Archive for the ‘Federal Courts’ Category

New Rules, New Strategies for Innovators

Wednesday, July 31st, 2013

coke bottle patent The past 15 years have seen an unprecedented attack on patents and patent-owners in the United States. Orchestrated by foreign nations, multinational corporations, and a variety of other groups, largely funded by similar vested interests, this attack has reduced much of the value formerly associated with patented innovations. In past issues of our newsletter we have described how patent owners can no longer realistically expect to block sales of products that infringe their patents through the injunction process, how infringers can conspire to divide patented processes among several actors to avoid infringement, how multiple infringers must now be sued separately, rather than joined in a single action, and how delays at the Patent Office and increasing fees put university researchers, solo inventors, and small companies at a disadvantage. We have also been counseling our clients to help them construct valuable patent strategies.

In the latest round of anti-patent actions, a committee of the Federal Courts including some noted judges and attorneys has issued a model order that they recommend be adopted by federal trial courts to govern patent suits. Such model orders are usually adopted quickly and without significant change by courts around the country. What is troubling about the present document, “A MODEL ORDER LIMITING EXCESS PATENT CLAIMS AND PRIOR ART” is that for the history of our patent system, which dates back to the time of Thomas Jefferson, inventors have always been able to present claims in as much detail as they wish, so that their patents would clearly and particularly cover all aspects of their inventions, and, at least since the 1950s, inventors and their attorneys have been required by both the Patent Law and the rules of the Patent Office to submit every relevant item of prior art of which they were aware. The background of the model order cites a study that shows that litigated patents contain an average of 24 claims, and cite 31 prior art references, which the committee calls, “problematically excessive.”

Some recent cases have seen individual judges impose limits on patent owners, requiring that they limit the number of patents in a suit, and that they throw away claims in the patents that they assert to reach some arbitrarily small number. In other cases, the number of products accused of infringement has been limited by court order. All of this trimming is claimed to streamline cases and to promote the administration of justice. In reality, however, such rules are evidence that our judicial system often fails to handle the technical complexity of our modern technological world. When it takes teams of hundreds of researchers years of effort to develop and commercialize complex inventions such as synthetic proteins, chips with millions of components, and software with tens of millions of lines of code, the refusal of our courts to expend the mental energy needed to understand and to protect such innovations harms innovators. For courts to say to inventors, you have done the hard work of creating value, but we require you to be able to explain it to judges and juries in monosyllabic terms, and to choose, “not more than ten claims from each patent, and not more than a total of 32 claims,” means that for some inventors, they will have a more difficult task to defend the value that they create.

Inventors must and will respond. Already, we are counseling clients to submit more patent applications with fewer claims per application. In litigation, the proposed limits will mean that separate law suits will have to be filed on small groups of patents against the same defendant. The erosion of the patent system has caused some innovators to opt for trade secrecy, at least in part, rather than patenting every aspect of their inventions, and this impoverishes our entire society, because it keeps technical advances out of the public view, which slows follow-on innovation.

We are confident that Americans will continue to innovate, despite the limits being imposed on the patent system. We are confident that we, and others who value our tradition of individual innovation will continue to find strategies to protect the value generated by inventors. Because we believe in the long-term value of innovation and the patent system that protects innovation, we at LW&H continue to develop new strategies for our clients, and particularly university researchers, garage inventors, startup companies, and established concerns to implement effective and efficient legal strategies for protecting their inventions.

– Lawrence A. Husick, Esq.

Patentable Subject Matter, the Sequel

Saturday, June 29th, 2013

DNA In the issue that will not die, the Supreme Court again considered what can or cannot be patented.  This time the question was whether human genes can be the subject of a patent.

The U.S. Constitution at Article One, Section 8 gives Congress the power “to promote science and the useful arts, by securing for limited times…to inventors the exclusive right to their…discoveries.”  Congress exercised that authority in Section 101 of the patent statute, which authorizes patent protection to “[w]hoever invents or discovers any new and useful… composition of matter.” In the past, the Supreme Court has created exceptions preventing patenting of laws of nature, natural phenomena and abstract ideas.

Myriad Genetics discovered the precise locations of certain genes, the mutation of which increased the risk of certain cancers.  The U.S. Patent and Trademark Office issued patents to Myriad for the genes.  The Federal Circuit Court of Appeals agreed that Myriad’s discovery of the genes was patentable.

The Supreme Court decided that the naturally occurring genes that Myriad located and isolated are a ‘product of nature,’ fall within the ‘law of nature’ exception and are not patentable; however, genes that were modified by Myriad are patentable.

Naturally-occurring materials are staples of biotechnology patenting. Because of the complex questions involved, the transactional costs for the industry to identify and investigate the effects of the Myriad decision will be very high. We can anticipate that the value of companies holding patents to naturally occurring biological materials may be affected.

– Robert Yarbrough, Esq.

The Fable of the Supreme Court and the Beanstalk

Thursday, May 30th, 2013

Once upon a time, a farmer purchased a magic bean.  The farmer planted his magic bean, as farmers do.  The magic bean grew into a magic beanstalk and made more magic beans.  The farmer harvested the magic beans, as farmers do, and saved the new magic beans for the next year.   For eight years, the farmer planted his new magic beans, grew new magic beanstalks and harvested magic beans for re-planting.

Monsanto, which owned a patent on the magic bean, filed suit against the farmer.  Monsanto believed that the farmer infringed Monsanto’s patent because the farmer made copies of the magic beans, violating the prohibition on making or using a patented product.  Monsanto’s beans were magic because they were genetically modified to survive treatment with glyphosate herbicides.  Use of the genetically modified bean allowed the farmer to kill the weeds in the farmer’s fields using herbicides without damaging his crop.

The farmer believed that once Monsanto sold the magic bean, then Monsanto had no further rights to the bean. The farmer’s friends agreed.  The farmer argued the doctrine of ‘patent exhaustion,’  which means that once a patent owner sells a patented product, the purchaser and any subsequent purchasers can use or sell the product and the patent owner has no further rights to control the patented product.  In this case, the genetically modified soybeans were twice-removed from Monsanto – Monsanto sold the patented soybeans to farmers, the farmers planted the beans, raised crops and sold their crops to a grain elevator, and the grain elevator sold soybeans from the crops to Vernon Bowman, the farmer of our fable.

The case of the magic bean went all the way to the Supreme Court.  On May 13, 2013 a unanimous Court ruled in favor of Monsanto.   The Court concluded that the doctrine of ‘patent exhaustion’ applies only to a particular patented article sold, in this case each genetically-modified soybean sold by Monsanto.  The doctrine allows the farmer to plant or eat soybeans purchased from Monsanto, to grow a crop and to sell the crop.  For soybeans that had the genetic trait and that Mr. Bowman purchased from the grain elevator, Mr. Bowman could re-sell those soybeans, feed the soybeans to animals or eat the soybeans.   However, ‘patent exhaustion’ did not allow Mr. Bowman to make copies of the patented soybeans.  Otherwise, a patent for a seed could never be of any value.  The patent owner could sell the first seed, which would then be copied by infringers, using the self-replicating nature of the seed.  The Court expressly limited the ruling to the facts of the case, recognizing that other situations may arise with other self-replicating inventions, such as computer programs, that might require a different result.

The facts were favorable to Monsanto – Mr. Bowman acted to isolate and duplicate the patented Roundup Ready® soybeans and to take advantage of the herbicide-resistant genetic trait.  He treated his fields with glyphosate herbicide, ensuring that only soybean plants with the Monsanto-owned trait survived.  He also was familiar with the Roundup Ready® beans and used Monsanto-supplied beans for some of his needs.

The Monsanto patents address DNA having specific characteristics and seed and plants containing that DNA.  The Monsanto genetic modification now has been part of the environment for years and eventually will find its way as a contaminant into many, if not all, soybean crops.  The Court was silent on an issue raised in friend-of-the-court briefs; namely, what happens when an organic farmer who does not use herbicides saves seed contaminated with the Monsanto genetic modification.  Isn’t the organic farmer infringing Monsanto’s patent?  In a related question, how can any farmer ever grow any soybeans without being forced to buy Monsanto’s seed due to unintentional genetic contamination?  Those questions currently are in the courts in Organic Seed Growers & Trade Association v Monsanto.

To Be, or Not To Be..

Thursday, May 30th, 2013

Patent Illustration

Pardon the quote of the Bard, but there is one area of patent law that, indeed, ponders “that is the question.” Bear with us for a moment while we try to set the stage. To qualify for a patent, the patent law statute passed by Congress states that an invention must meet three criteria: it must be new, useful, and non-obvious. For our present purposes, we will set aside the useful and non-obvious qualifications. To be new, in essence an invention must not have been thought of (or at least, disclosed) by anyone else. Simple enough.

But the U.S. Supreme Court, as judge made law, has grafted onto patent law the concepts that one cannot obtain a patent on a law of nature, a natural phenomenon, or an abstract idea. For instance, Einstein’s famous equation E=MC2 is said to represent a law of nature and, therefore, be unpatentable. Devices utilizing the law, like the bomb, are patentable. The idea here is that laws of nature belong to everybody and cannot be the exclusive property of anyone, while new applications of the law are patentable. In concept, a pretty straight forward approach. However, recently in the biotechnology realm, the concept of a law of nature has become twisted, contorted, stretched, strained, and abused – but we’ll talk about that another time.

For today, we weill briefly delve into what is meant by “abstract” although we confess up front, that we cannot give you an unambiguous explanation. The meaning of “abstract” lies hidden under the murky waters of patent law involving much judicial semantic nonsense promulgated in major part by the U.S. Supreme Court. One interpretation is that a basic idea of an invention is abstract if it totally captures all possible uses of an idea. In this guise, patent examiners routinely reject applications that seem to have a mathematical expression at their core, especially computer and software implemented inventions. One court has recently expanded the  concept of what may be abstract to the analysis of a method for hedging risk in financial dealings between two parties. Lest you think that we are ducking a good explanation of abstract, another federal appellate court recently decided (CLS Bank Int’l v. Alice Corp.) such a hedging idea was abstract, but could not articulate a consistent interpretation of why. In fact, seven different opinions were filed including at least three different tests for evaluating patent eligibility. Like pornography, the courts seem to know “abstract” when they see it.

 

Which brings us full circle: To be (abstract) or not to be (abstract), that is the question.

When is a Patent Owner Entitled to a Court Order Stopping Infringement?

Monday, December 31st, 2012

apple v samsung

Consider this scenario: you have gone to all the time and expense to obtain a patent from the U.S. Patent and Trademark Office.   You have launched your product and your sales are good.  Now a pirate is copying your product and stealing your sales.  Are you entitled to a court order stopping infringement of your patent?

Before the U.S. Supreme Court decided the case of eBay v MercExchange in 2006, the answer would have been a resounding ‘yes.’  After the eBay case, the patent holder must demonstrate, among other things, ‘irreparable harm’ from the infringement and that an award of money damages to the patent holder is not enough to compensate the patent holder.  It is not enough to show harm – the patent holder must show that copying of the features specifically protected by the patent caused the harm.

The most recent application of the eBay decision is the ongoing worldwide Apple v Samsung litigation.  Apple recently proved that among other things Samsung copied Apple’s patented designs for the iPhone and iPad.  Apple was awarded a money judgment for $1.049 billion (that’s billion, with a ‘b’).   The trial judge decided on December 17 that Apple is not entitled to an injunction stopping Samsung from selling the infringing products.  The judge concluded that Apple did not show that the harm to Apple resulted from the specific infringement in question.  Apple still has the right to appeal the denial of the injunction to the Federal Circuit Court of Appeals.  Stay tuned.

– Robert Yarbrough, Esq.

Patentable Subject Matter – The Issue That Will Not Die

Tuesday, July 31st, 2012

Whether an invention is the sort that can be patented is determined by §101 of the patent statute. That section states:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

The issue of patentable subject matter is not a problem for physical inventions in the mechanical or electrical arts, but can present thorny problems for less concrete inventions, such as processes in the pharmaceutical, software and financial fields.

The U.S. Supreme Court has interpreted §101 several times, most recently in Mayo Collaborative Services v Prometheus Laboratories, 132 S. Ct. 1289 (2012).   The invention before the Court was a method of treating a particular disease by administering a particular drug, monitoring levels of breakdown products of the drug in the patient’s blood, and adjusting the dosage to achieve a specified range of concentrations.  The Court held that the invention was nothing more than an unpatentable ‘natural law;’ namely, the natural process occurring in the patient’s body of breaking down the drug in a way that indicated the effectiveness of the drug.  The other steps of the invention were not enough to convert this unpatentable ‘natural law’ into a patentable invention.  In considering whether the other steps were sufficient, the Court found persuasive that the drug, the breakdown products and the tests were old and well known.  The Court was concerned that patenting this or any other ‘natural law’ would preclude other researchers from utilizing the same law.

The Court specifically refused to adopt the PTO’s argument that whether an invention was old, obvious or vague should be considered under other sections of the patent law  and not under §101.   The Court flatly stated that those concepts are incorporated into §101.

The net result of Prometheus and other Supreme Court precedent is that at the margins patentable subject matter is a bit like pornography – the Supreme Court justices know it when they see it.  This approach makes life unpredictable for the PTO, for the Federal Circuit Court, and particularly for inventors in the pharmaceutical, computer software and financial services industries.  The dust from the Prometheus decision still has not settled and several cases are pending in the Federal Circuit that will apply the decision.

– Robert Yarbrough, Esq.

Federal Courts’ Continued Hostility Toward Complex Patent Issues

Monday, February 28th, 2011

Call CenterIn the recently-decided case of In re Katz Interactive Call Processing Patent Litigation, the Court of Appeals for the Federal Circuit (which hears all appeals of patent cases) determined that trial courts may limit the number of patent claims that may be asserted by a patent owner in a litigation, regardless of the complexity of the invention or the number of defendants who allegedly infringe the patent. This decision is yet-another example of the unwillingness of the Courts to take on the often-intricate issues involved in patent enforcement litigation.

The Katz case involved 25 cases filed against 165 defendants, and 31 patents covering call processing systems that are commonly used by companies operating customer service call centers. The 31 patents contained a total of 1,975 claims. (The number of claims per patent was much larger than average, but the courts have previously ruled that there is no limit on the number of claims that an inventor may file, as long as the fees are paid to the Patent Office.)

The trial court, citing a need to efficiently manage the combined multidistrict litigation, ruled that Katz had to limit his case to 64 of his claims, and Katz appealed the ruling, claiming that the court had denied him due process and deprived him of property rights (by not allowing him to enforce his other claims.) Katz knew that claims not asserted could not be enforced later because of other rules.

The Court of Appeals ruled against Katz, stating that Katz, “has failed to demonstrate that the allocation of burdens in the claim selection procedure adopted by the district court unfairly prejudiced it by creating a significant risk that Katz would be erroneously deprived of property rights in unselected claims.” The Court said that because some claims were duplicative of others, Katz had to identify those claims that raised separate legal issues. This ruling seems to conflict with prior decisions that state that separate issued claims are presumed to differ from each other.

While there may be simple procedural explanations for the Katz decision, inventors and patent owners should beware that having a large number of claims that cover a complex invention may cause judges to run for cover, rather than to impartially preside over an attempt to enforce the patent in litigation.

–Lawrence A. Husick, Esq.