Patent Law Blog (Patently-O)

Patently-O Bits and Bytes No. 78

• FTC Hearings on the "evolving IP marketplace" http://www.ftc.gov/opa/2008/11/ipmarketplace.shtm. December 5. How it will play out: In the next year, the FTC will likely publish a new report on the state of patent law in the US. That report will serve as the basis for any patent reform measures in 2010.
• Interesting article by Jim Klaiber in IP Today. He writes about a recent nonprecedential CAFC that seemingly expanded the limitations on claim amendments during reexamination. His piece is titled: Reexamination Amendments Made for an Improper Purpose – A New Basis For Invalidity Under 35 U.S.C. § 305.
• I am now on twitter: http://twitter.com/patentlyo. tweet tweet.
• The Federal District Courts in New Jersey are contemplating new local patent rules. IPO offers its "six principles" for local patent rules:
  • (1) early identification and mutual mandatory disclosure of essential infringement and validity-related discovery and consideration of staying non-essential discovery until after a claim construction decision is issued in a case;
  • (2) early disclosure and appropriate staging of detailed infringement and invalidity contentions;
  • (3) early supplementation of detailed infringement and invalidity contentions supported by identification of specific evidence produced in the early mandatory disclosures;
  • (4) scheduling any claim construction procedure early in the case but after detailed contentions have been exchanged;
  • (5) identification of claim limitations most important to the outcome of the case; and
  • (6) consideration of dispositive motions as early as appropriate to narrow issues or resolve cases without non-essential discovery.
• TIME: Best Inventions of 2008
• Wish List 2008: For the past few years, I have assembled a top-ten list of holiday gifts for patent attorneys and agents. I have heard from several spouses that actually used the list. So – let Santa's helper (me) know if there are any particular machines or articles that should make the list.

Software Method Claims: Bilski in light of Benson

In re Bilski and Gottschalk v. Benson

It is important to remember that the Supreme Court's decision in Gottschalk v. Benson is still controlling law. In that 1972 decision, the Supreme Court held unpatentable a method of converting a signal from "binary coded decimal" into "binary." The Benson method operates by using a "reentrant shift register" – a particular electronic memory circuit of the day. The rejected claim reads as follows:

8. The method of converting signals from binary coded decimal form into binary which comprises the steps of: storing the binary coded decimal signals in a reentrant shift register, shifting the signals to the right by at least three places, until there is a binary `1' in the second position of said register, masking out said binary `1' in said second position of said register, adding a binary `1' to the first position of said register, shifting the signals to the left by two positions, adding a `1' to said first position, and shifting the signals to the right by at least three positions in preparation for a succeeding binary `1' in the second position of said register.

In Bilski, the en banc court struggles with Benson because – on its face – the rejected Claim 8 from Benson satisfies the machine-or-transformation test of Bilski. The claimed BCD conversion method is tied to a particular machine. The Bilski majority admits as much: "the claimed process operated on a machine, a digital computer, but was still held to be ineligible subject matter." According to the en banc panel however Benson's claim still fails the machine-or-transformation test because the claimed physical limits were "not actually limiting." In particular, since the only uses of the BCD converter would be on a computer, tying the claims to a computer offered no practical limitation to the otherwise preemptive claim of an algorithm.

"[I]n Benson, the limitations tying the process to a computer were not actually limiting because the fundamental principle at issue, a particular algorithm, had no utility other than operating on a digital computer."

Thus under Bilski/Benson, tying a software algorithm to particular computer hardware may well be unpatentable subject matter if the patent would still preclude all practical uses of the otherwise unpatentable algorithm.

Notes:

• Patently-Unobvious suggests that careful drafting could have avoided the whole problem for Benson: "If only the inventors had been less forthcoming, more obtuse, and called their claim a method for operating a shift register, who would have seen that the machine-implemented signal processing method surprisingly also happens to convert a binary coded decimal signal into a binary coded one?"

NonObviousness: Analogous Arts Test Still Strong

Anderson v. Pella (Fed. Cir. 2008)(non-precedential)

Anderson sued Pella and WL Gore for infringement of its window screen patent. Apparently, the patented screen allows ventilation and blocks insects, but is easier to see through than traditional screens. The claims focus on the diameter and strength of the screen wires and as well as on the screen's "transmittance" and "reflectance" properties.

Prior to KSR, the district court had rejected the defendant's summary judgment motions on obviousness – finding that the prior art references lacked a motivation to combine. After KSR, the district court reversed course – this time granting summary judgment of invalidity based on obviousness of the claimed screen. In its analysis, the district court asked and answered the following question: "would an insect screen manufacturer of ordinary skill have found it obvious to use the [prior art] screening material, decrease its reflectance value, bond it, and place it in a window frame? The answer, plain and simple is 'Yes.'" According to the lower court, the prior art mesh was the "heart" of the claimed invention, and it was a "simple act of common sense" to slightly modify the mesh and apply it to a window. Although secondary factors of nonobviousness were shown, the lower court found they were not enough to rebut a strong showing of obviousness.

Analogous Arts: On appeal, the Federal Circuit vacated – finding material facts that prevent summary judgment of obviousness. In particular, the appellate panel found that the prior art mesh might not count as nonobviousness type prior art because it "outside the scope and content of the prior art." The court based its decision on three issues: (1) the prior mesh was not in the same "insect screen manufacturing field"; (2) there was some evidence that the prior mesh would not be useable for an insect screen (teaching away); and (3) the PTO specifically considered the reference before granting the patent and should be given some deference.

Upon our review of the record in the light most favorable to Andersen, we find support adequate to overcome summary judgment on the question of whether the TWP mesh was outside the scope and content of the prior art. Andersen put forth evidence in the record that, one, the TWP mesh was not part of the insect screen manufacturing field, and, two, an insect screen manufacturer would have read the prior art to teach away from using a mesh with the characteristics possessed by the TWP mesh. This field-of-invention and teaching-away evidence, combined with the deference owed to the PTO's issuance of this patent after reviewing the same prior art references that form the basis of this obviousness challenge, raises a genuine issue of material fact as to whether an ordinarily skilled insect screen designer would have found the combination of the TWP mesh with the other prior art references obvious.

Teaching away and price feasibility: One of the 'teaching away' arguments accepted by the Federal Circuit was that of price infeasibility. Anderson had argued that the prior mesh would not have been considered by a designer because it was quite "extraordinarily expensive." In its holding, the appellate panel gave backing to the notion that a high price would discourage consideration of a potential prior art reference.

As to the third characteristic, pricing, Andersen's expert, Laurence Armstrong, stated that the TWP mesh was "extraordinarily expensive in comparison with traditional insect screen material, costing about $75.00 per square foot." It is not unreasonable to suggest that a significant difference in cost could discourage an insect screen designer from using the more expensive mesh. . . . On the whole, we think, the record creates a genuine issue of material fact as to whether the durability, transparency, and pricing of the TWP mesh would have discouraged an ordinarily skilled artisan from incorporating the mesh into an insect screen.

Summary judgment vacated.

New PPAC Members

The Secretary of Commerce (with the advice of the PTO Director) has named three new member of the Patent Public Advisory Committee (PPAC): Marc Adler; Stephen Pinkos; and Maureen Toohey. Mr. Adler is well known in the patent community as the past president of both the IPO and the ACPC. Adler has called for patent quality reforms that put more responsibilities on both the PTO and Applicants. Stephen Pinkos is a former deputy director of the PTO where he managed daily operations of the office. Maureen Toohey has her own law firm in Boston. She has apparently represented Dean Kamen in the past and clerked for Judge Rader.

The committee's purpose is to advise the PTO Director on the management of operations of the Office. The nine-member PPAC is on a three-year rotating schedule. Each year three new members are appointed. For each day of actual service, the PPAC members will be paid the equivalent of an Executive Level III salary (annual rate of about $150,000).

Patently-O Bits and Bytes No. 77

• Acting Patent Commissioner Focarino recently reported on the rising use of the Patent Office Electronic Filing System (EFS) for filing patent applications. Kudos to the PTO on a system that works well! (The graph below is built from Commissioner Focarino's data).

  

• I wonder how electronic filing impacts prosecution speed and quality?
• Great article on Biotech 101 (i.e., subject matter patentability of biotech) by Philip McGarrigle and Vern Norviel. It is pre-bilski, but considers many of the same issues. http://www.chtlj.org/pdf/24-2_McGarrigle.pdf.
• BountyQuest II: http://www.articleonepartners.com.
• Patent Law Jobs: Los Angeles / Washington D.C.; ITC Litigator; Part-time; IP Fellowship Washington D.C.; Chicago; Wilmington, N.C.; Orange County & Los Angeles; Alexandria, Va.; Philadelphia; Menlo Park.

Malpractice and the Statute of Limitations

Wright v. Renaldo, 279 Mich. App. 526 (Mich. Ct. App. 2008)

Wright sued Renaldo and her firm for legal malpractice involving the prosecution of his patent directed to an absorbent mat. Renaldo allegedly erred in (1) failing to remove the name of an originally listed co-inventor; (2) "improperly drafted documents submitted to the patent office, and (3) failed to recognize and take steps to correct the patent because it did not adequately protect Wright's invention."

Without reaching the merits of the malpractice claim, the court agreed that the claim was barred by a Michigan two-year statute of limitations. Under Michigan law, a plaintiff "must file a legal-malpractice action within two years of the attorney's last day of service to the plaintiff or within six months of when the plaintiff discovered or should have discovered the claim, whichever is later." Here, there was evidence that Wright had been planning a malpractice claim for over two years after White revoked her power of attorney and hired different counsel.

A dissenting judge argued that the two-year time line had not expired because Renaldo had not learned of the revocation of the power of attorney until much later.

Although the patent attorney won this case, it should serve as a reminder to counsel to promptly memorialize a disengagement.

Patent Practice: Annual Practitioner Maintenance Fee.

[NEW RULES] The USPTO has announced final rules to implement an annual practitioner maintenance fee. According to the new rules effective December 17, 2008, a practitioner who fails "to pay the annual practitioner maintenance fee required under § 11.8(d) [will] be administratively suspended." Easy to remember, the Fee under Section 11.8 is $118.

What is the point: The $118 fee will raise two or three million dollars for the PTO. Although that money is useful, the primary purpose of the fee is not to raise money. Rather, it an easy way to cull the list of registered practitioners by removing those who are not making money as patent attorneys. In the words of the office, the purposes of the fee include "protecting the public, preserving the integrity of the Office, and maintaining high professional standards."

When folks forget to pay:

[A] paper submitted in good faith by a practitioner who does not know that he or she has been administratively suspended for failure to pay the annual practitioner maintenance fee will be treated as unsigned. In the case of a new complete application, the applicant will receive a filing date because the signature of an attorney or agent on transmittal papers is not required. In the case of an unsigned bona fide response to an Office action, the submission will be treated in accordance with 37 CFR 1.135(c), and applicant may be given a new period of time to supply the omission. Practitioners should be aware, however, that submission of a response having an omission may affect patent term adjustment pursuant to 37 CFR 1.704(c)(7). In the case of an issue fee payment, an unsigned issue fee transmittal form may lead to abandonment of the application, in which case a petition to revive would be required.

 Who can afford this?

The Office estimates that, in 2006, the average annual income in the United States of solo practitioners was $231,777; of patent attorneys who are partners in private firms, $434,464; of patent attorneys who are associates in private firms, $152,677; and of corporate IP attorneys, $198,109; and the average annual salary of patent agents in a firm in the United States was $92,761. AIPLA Report of the Economic Survey 2007.

In many ways, the high average incomes of patent attorneys and patent agents are due to the limits created by the PTO.  When only a few can practice patent law, those few are able to charge higher prices.  Under traditional protectionist thinking, the Bar would want to take steps that solidify the monopoly by encouraging further barriers to entry and take pains to show that the limits on practice lead to better results.

Notes:

• These final rules are based on a minor portion of a five-year-old 2003 notice of proposed rulemaking. [LINK]
• The proposed rules would have added continuing education requirements as well.
• At that time, the AIPLA stated that it was “conceptionally … not opposed to an annual fee for registered practitioners.” The organization was, however, concerned with the practicalities of paying and with the problems created by attorneys forgetting to pay.
• The following anonymous coment was submitted in response to the 2003 rule proposal:

Dear Bureaucrats: Stuff your annual fees for attorneys and agents. You are really getting to be a bunch of greedy pigs. The fee structure is venal and complex enough as it is. Actually taxes should pay for mast of the PTO, but while you are not to blame for that, your asskissing desire to show your superiors haw you can rake in profits with nasty, petty little fees for ever trivial action is on your heads. Stuff your continuing education also. If you people would keep your Rules of Practice up to date and written in intelligible language instead of insider bureaucratic gobbledygook there would be no need for continuing education. How hard is is to keep your Rules up to date in this era of wordprocessing? If the Manual of Patent Examining Procedure has grown from 1 inch to 5 inches in the span of a couple of decades, maybe the problem is with too many stupid petty rules and fees to understand. God knows writing patent applications isn't that hard. We need a five inch manual for this? Are you people martyrs over there? All I ever hear is whining and attitude that the public should do all the work in prosecuting patent applications so the poor bureaucrats can twiddle their thumbs. Why don't you get it over with and specify that applicants should do a self?examination as to patentability and swear that it is accurate under penalty of law so that the Patent Office doesn't have to do anything? You people are out of control. It is time the the PTO is privatized so we get less attitude.

Graham Analysis Not Necessary for Obviousness-Type Double Patenting Rejection

In re Baselle Poliolefine Italia (Fed. Cir. 2008)

Nobel Prize winning chemist Giulio Natta filed for patent protection in 1954 on a process for polymerizing ethylene. One of Natta's continuation patents issued in 2002. Later that year, the PTO initiated a Director-ordered reexamination based on obviousness type double patenting. Later, the BPAI affirmed the rejection. On appeal, the Federal Circuit affirmed the rejection in a 2-1 split. The majority held that the one-way obviousness type double patenting rejection was appropriate. Judge Newman dissented – arguing that the reexamination was conducted illegally and that the court's findings were unsupported by the evidence.

The interesting legal issue here is the reminder that the obviousness determination for double patenting may be different than Section 103(a) obviousness.

Indeed, "this court has endorsed an obviousness determination similar to, but not necessarily the same as, that undertaken under 35 U.S.C. § 103 in determining the propriety of a rejection for double patenting." In re Braat, 937 F.2d 589 (Fed. Cir. 1991). Hence, we find no basis for reversing the Board's decision merely because the Board failed to expressly set forth each of the Graham factors in its analysis. The Board carefully considered claim 1 of the '987 patent and the claims of the '687 patent and determined that a person of ordinary skill in the art would have found the '687 patent claims to have been obvious. We find no error in the Board's analysis.

Of historical interest here is the timeline:

• 1954: Natta files Italian Appn. No. 25,109.
• 1955: Natta files US Appn. No. 04/514,098 patented in 1971 as No. 3,582,987.
• 1955: Natta files US Appn. No. 04/514,097 (now abandoned) claiming priority to the Italian appn.
• 1958: Natta files US Appn. No. 04/710,840 (now abandoned) as divisional of the '097 appn.
• 1958 – 1983: "multiple interferences."
• 1983: Natta files US Appn. No. 06/498,699 (now abandoned) as continuation of the '840 appn.
• 1986: Natta files US Appn. No. 06/906,600 (now abandoned) as continuation of the '699 appn.
• 1990: Natta files US Appn. No. 07/607,215 (now abandoned) as continuation of the '600 appn.
• 1991: Natta files US Appn. No. 07/719,666 (now abandoned) as continuation of the '215 appn.
• 1992: Natta files US Appn. No. 07/883,912 as continuation of the '666 application.
• 1999: CAFC decides in re Natta, 194 F.3d 1333 (both parties agreed to further examination).
• 2002: PTO issues Patent No. 6,365,687 based on '912 appn.
• 2002: PTO orders reexamination of the '687 patent based on double patenting.
• 2008: CAFC affirms invalidity of the '687 patent based on obviousness type double patenting (as compared to the '987 patent).

Patent Reform: Next Stop USPTO

Ron Katznelson has become a leading patent data guru. In a recent talk at UC Davis Law School, he presented is ideas that the next focus of patent reform should be on USPTO Operations. His focus remains on (1) pendency and (2) quality without limiting patentee rights. Katznelson calls for an optional deferred examination for those applicants willing to go slow. In his schema, a third party worried about a pending application could request examination of a deferred application. With some financial incentives (such as a substantial examination fee), many voluntary deferred applications may become voluntary abandoned claims due based on obsolescence or low market potential (creating a "substantial workload reduction").

As shown below –the pendency problem is growing.

Katznelson also discussed the enjoined PTO continuation & claim rules. The beautiful graph below helps illustrate the significant number (about 30%) of patent applications having more than 5 independent or 25 dependent claims.

On the continuation side, Katznelson had to resort to a logarithmic axis to show the continuity chain distribution at the PTO.

Notes:

• These are reprinted with permission
• Download Ron Katznelson presentation

Patently-O Bits and Bytes

Next PTO Directors: The PTO has 200 years of inertia and set expectations. Today, the PTO is a billion-dollar enterprise and the PTO Director's first job is to manage that ship. However, the director should also have a visions and goals for the future of the PTO and the patent system. Along with Chief Judge Michel and a few other key players, the PTO director is seen as the leader of the US patent system. The vision of the next director will have a great impact on the potential for patent reform; international patent cooperation; and the role for industrial design protection. Part of Obama's overall agenda is to move toward an open and transparent government. The PTO has come a long way, but the new director and deputy should be on board with ways to increase the communication channels and the ability for third parties and competitors to monitor the patenting process. Many are calling for the next PTO director to have patent prosecution experience. I agree that such experience will be helpful – both in understanding the system and for credibility. However, being a career prosecutor does not necessarily coincide with having the vision and leadership necessary for the job. Lots of speculation on upcoming PTO Officials.

• But first: The National Academy of Science published a book suggesting guidelines for the "most critical" Science and Technology Appointments of the new administration. PTO appointments do not make the list.
• John Doll is expected to become the PTO director temporarily until a new director and deputy are appointed. At that point, he will most likely move back to his role as Commissioner of Patents.
• Several sources (perhaps stemming from the same core) have identified former PTO trademark examiner Shanna Winters as a potential successor to either Mr. Dudas or Ms. Peterlin. Ms. Winters played a key role in the passage of the properly maligned House Patent Reform Act of 2007. Her staff position in the House is necessarily shifting as the IP subcommittee is being abolished. Patent reform in the next Congress will be dealt with directly by the Judiciary Committee – led by Rep Conyers.
• Some are calling for Todd Dickinson to return to his former post. He recently took over as executive director of the AIPLA.
• Professors Rai, Lemley, Noveck, Lesseg (and the vast majority of other law professors) have been strong Obama supporters. Professor Rai was a classmate of Obama at Harvard Law School. She was Executive Editor of the Harvard Civil Rights-Civil Liberties Law Review while Obama led the Harvard Law Review.
• I would be fully behind the nomination of Kevin Noonan.  (* Full Disclosure – Kevin is a partner at MBHB, my former employer and the primary Patently-O advertiser).
• I suspect that none of these folks will get the call.
• Notes: Joff Wild (qualities of PTO director); Gene Quinn (Nominating Paul Kamenski); Hal Wegner (“If you had a very good, honest broker that both sides could admire and respect, then common elements could be found in a solution.”)

Stanford IP Litigation Clearinghouse: Speaking of Mark Lemley – He and attorney Joshua Walker (who also knows Obama…) are leading an amazing new project titled the Stanford IP Litigation Clearinghouse. The free service tracks over 23,000 US District Court cases filed since 2000 and includes in depth real time information "that cannot be found elsewhere in the public domain." [Invitation to Launch]

Wii Infringing? Motiva has sued Nintendo in the Eastern District of Texas. The young superstar plaintiff's attorney Mark Lanier is representing the patentee. U.S. Patent 7,292,151. In his blog, Blaise Mouttet noted the potential that the Wii infringed back in 2007. [Link]

How Long Do I Wait for a First Office Action [Updated Data]

Based on the USPTO's most recent numbers on examination, I created an updated table of the average delay until a first office action is mailed from the PTO. These numbers reflect an average for each technology center as it operates today.  The 3.7 year delay in Fuel Cell and Battery Technology (TC 1795) means that the applications receiving first office actions from that TC during the past three months were filed 3.7 years ago on average — taking us back to early 2005.  The numbers do not necessarily reflect how long it would take for an application filed today to make it through. (Although it is perhaps one of the better estimates that we have on hand.).

Technology Center	Description	Months	Years
1795	Fuel cells batteries solar	44.8	3.7
1791	Tires, adhesive bonding, glass	43.8	3.7
1797	Separation, purification	43.8	3.7
1610	Pharmaceutical formulations	42.9	3.6
3680-B	Business Methods	42.3	3.5
3620	Electronic Commerce	40.7	3.4
1792	Coating etching cleaning	40.4	3.4
1794	Food stock materials	39.4	3.3
2130	Cryptography security	39.2	3.3
2140	Computer networks	38.8	3.2
2190	Interprocess communications	38.5	3.2
2620	Television and TV Recording	37.2	3.1
1796	Organic chemistry and polymers	35.4	3.0
1793	Metallurgy metal working	34.9	2.9
2610	Digital Communications General	34.8	2.9
1620	Organic chemistry	34.1	2.8
3640	Aeronautics	34.1	2.8
3680-A	Business Methods - Finance	33.9	2.8
3630	Static structures	30.5	2.5
3650	Material handling	29.3	2.4
2110	Computer architecture	29.2	2.4
3610	Surface transportation	29.1	2.4
2120	Miscellaneous computer	28.3	2.4
3780	Package and Article Carriers	26.9	2.2
2160	Database and file management	26.9	2.2
3670	Wells earth boring	26.7	2.2
3680-A	Machine elements	26.7	2.2
1630	Molecular biology	25.9	2.2
1650	Fermentation microbiology	25.6	2.1
2180	Computer architecture	24.9	2.1
3750	Fluid handling and	24.9	2.1
1640	Immunology receptor ligands	24.2	2.0
2811+	Semiconductors and	23.9	2.0
2871+	Liquid crystals optical	23.7	2.0
3730	Medical instruments	23.4	2.0
3710	Amusement	22.9	1.9
2816+	Electronic circuits static	22.6	1.9
3660	Computerized vehicle	22.4	1.9
3770	Respirators Therapeutic	21.9	1.8
2831+	Electronic conductors	21.9	1.8
3760	Body treatment	21.4	1.8
1660	Plants	21.3	1.8
3720	Manufacturing devices	20.4	1.7

 

Survey results: Would Metabolite's claim 13 be found patentable under the reasoning of Bilski?

Earlier in the week, I wrote about Bilski in relation to the recent diagnosis patent case of LabCorp v. Metabolite. Metabolite's claim 13 reads as follows:

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of: assaying a body fluid for an elevated level of total homocysteine; and correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

I asked the following question to Patently-O readers and received a response from about 200 readers: It reads as follows:

Would Metabolite's claim 13 be found patentable under the reasoning of Bilski?

The response can be broken down as follows: 31% of responses would find the claim to include patentable subject matter while the remaining 69% would reject the claim under Section 101. Of those who would find the claim patentable, the vast majority (89%) reason that the claim includes a transformation. In my discussion of the case, I indicated one argument for showing how the assay step could be considered a transformation. The remaining 11% of those who would find the claim patentable say that it is tied to a particular machine or apparatus. None of the responses indicated that the claim satisfied both the machine and transformation prongs of the test.

Of the 69% of "unpatentable" responses, the majority (72%) saw the claim unpatentable as neither a machine nor a transformation. 43% of those asserting unpatentability saw the claim as unpatentable under the revived mental steps doctrine of bilski. Included in these figures is the 16% who saw the patent violating both the revived mental steps doctrine and the machine-or-transformation test.

The survey did not ask demographic data. However, of those responses using a USPTO IP address, 86% would find the claim unpatentable under Section 101.

Post-Bilski BPAI Approves of Beauregard Claims

Ex parte Bo Li, Appeal 2008-1213 (BPAI 2008)

Li's patent application claims a computer program product stored on a computer readable memory adapted be executed to implement a report generation method. The computer program product is a typical Beauregard claim. In what appears to be the first decision to cite the new Bilski machine-or-transformation test of patentable subject matter, the BPAI overturned the examiner's Section 101 rejection – finding that the product claim includes statutory subject matter.

Here, the examiner argued that the claimed computer program product could not be patentable because it did not produce "a useful, concrete and tangible result." On appeal, the BPAI held that Bilski expressly rejected that statement from State Street. However, because Li's claim was for a product, the BPAI did not apply the Bilski machine-or-transformation test to determine patentability. Rather, the court merely relied on the notion of that claimed products – even when written as Beauregard claims – are patentable.

"It has been the practice for a number of years that a "Beauregard Claim" of this nature be considered statutory at the USPTO as a product claim. (MPEP 2105.01, I). Though not finally adjudicated, this practice is not inconsistent with In re Nuijten. Further, the instant claim presents a number of software components, such as the claimed logic processing module, configuration file processing module, data organization module, and data display organization module, that are embodied upon a computer readable medium. This combination has been found statutory under the teachings of In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994). In view of the totality of these precedents, we decline to support the rejection under 35 U.S.C. § 101."

Li won the Section 101 battle, but still lost the war – the BPAI affirmed the examiner's contention that the claim was also unpatentable as obvious.

Notes:

• Thanks to Amber Rovney of Weil's Austin office for first noting the opinion.  
• Assignee is IBM, but originally filed as a Korean Application.
• The approved-of claim is drafted as follows:

42. A computer program product, comprising a computer usable medium having a computer readable program code embodied therein, said computer readable program code adapted to be executed to implement a method for generating a report, said method comprising:

• providing a system, wherein the system comprises distinct software modules, and wherein the distinct software modules comprise a logic processing module, a configuration file processing module, a data organization module, and a data display organization module;
• parsing a configuration file into definition data that specifies: a data organization of the report, a display organization of the report, and at least one data source comprising report data to be used for generating the report, and wherein said parsing is performed by the configuration file processing module in response to being called by the logic processing module;
• extracting the report data from the at least one data source, wherein said extracting is performed by the data organization module in response to being called by the logic processing module;
• receiving, by the logic processing module, the definition data from the configuration file processing module and the extracted report data from the data organization module; and
• organizing, by the data display organization module in respone to being called by the logic processing module, a data display organization of the report, wherein said organizing comprises utilizing the definition data received by the logic processing module and the extracted report data received by the logic processing module.

Trends in patent complaints

Prof. Paul Janicke at the University of Houston Law Center is an expert on patent litigation statistics. He recently sent me a note about some recent trends in the filing of patent complaints.

Over the last three years, patent lawsuit filings have been fairly steady at around 2,700 annually. This year to date they seemed on track to stay at that level or a little higher, with filings through Oct. 31 standing at 2,327. However, filings in recent months are down about 20%, possibly due to the general financial conditions of September and October.

Patent Suits filed in September and October (all districts):

Year	Filings in Sept.-Oct.
2008	409
2007	513
2006	486

Eastern District of Texas patent suit filings in September and October:

Year	ED Tex Filings in Sept.-Oct.
2008	55
2007	68
2006	59

Firm Disqualified from Representing Patentee in Malpractice Suit After Defending Deposition of Prosecuting Attorney

Touchcom v. Bereskin & Parr (Fed. Cir. 2008)(non-precedential order)

This is an attorney malpractice case. The Canadian firm Bereskin & Parr prepared and prosecuted Touchcom’s US patents relating to fuel pumps. Touchcom then sued Dresser, Inc, but lost when the district court granted summary judgment of invalidity under 35 USC 112 (indefiniteness). After that loss, Touchcom sued the B&P for malpractice in preparing and filing the patent application.

Wildman Harrold represented Touchcom in the original infringement action and also in the malpractice case. During the original litigation, Wildman Harrold had also defended the deposition of the B&P patent agent who had filed the case.  Based on that conflict, B&P asked that Wildman firm be disqualified from arguing the appeal, and the Federal Circuit agreed.

In a non-precedential order, the Federal Circuit agreed to disqualify the Wildman Harrold firm. Because the malpractice case arose in the Eastern District of Virginia, the court applied Virginia Professional Conduct Rule 1.9.  That rule prohibits (without consent) an attorney from being adverse to a former client in a matter substantially related to the prior representation.

“A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless both the present and former client consent after consultation.” Rule 1.9.

Wildman agreed that it had represented the patent agent and that the matter was substantially related. However, Wildman argued that it could turn against its former client because the firm was representing both Touchcom and the B&P patent agent.  And, the nature of the litigation meant that the B&P patent agent had no expectation that Wildman would keep any secrets from Touchcom.

Following the only Virginia case on point (an unpublished opinion), the Federal Circuit disqualified the Wildman Firm — finding that Rule 1.9 establishes broad “standards of attorney loyalty” that go beyond client confidences.

Holding: The motion to disqualify is granted to the extent that attorneys from Wildman Harrold are disqualified from representing Touchcom in this case. Replacement counsel for Touchcom is directed to file an entry of appearance within 30 days of the date of filing of this order.

 

Patent Demand – A Simple Path to Patent Reform

[Read Tim Wilson’s Paper] Tim Wilson (Senior IP Counsel at SAS US) has been concerned about patent quality for some time. In part, the sheer number of patent applications being filed creates a host of problems. Wilson's solution is to raise patent fees – he says the fees should go as high as $50,000 for large corporate applicants. The result – according to natural tendencies of supply and demand – is that fewer applications will be filed and fewer patents will issue. In all likelihood, however, those that are filed will be better applications covering higher quality inventions.

Wilson did not simply pull his $50,000 figure out of his ear. Using the powerful computing resources of SAS, Wilson calculated an estimated demand curve for patent applications using both (1) historical filing reactions to increases in PTO fees and (2) an assumption that the budgets of corporate patent departments is fairly inelastic. Wilson then created his Figure 5 – showing the demand curve for patent applications drawn with respect to the patent application fees.

Wilson's approach is admittedly only an estimate, but his intuition has to be correct that a dramatic increase in PTO fees would lead to a dramatic decrease in PTO filings.

An average high technology patent contains a minor improvement on a small portion of a product and the patent application is typically written using outside counsel working for a flat fee of a few thousand dollars. Imagine what would happen to the high technology company's patent process if each patent application cost $50,000 just to file. The high technology company would file far fewer, but more important patent applications and they would spend more time and effort doing so. The pharmaceutical company's process probably would not change much because a billion dollar decision depends on the outcome of the patent process. What would happen to non-practicing entities, sometimes derisively referred to as patent trolls? I believe that these entities will change to patent market facilitators, or cease to exist. When the value of all patents is increased substantially, it is very unlikely that any patent will be available to fall to these non-practicing entities. First, each individual patent will be more valuable to the current owner of that patent, so it will be less likely that an owner would be willing to part with it to a troll. Second, if a company does fail, competitors of that company may be more willing to buy that patent rather than allow it to fall to a company that may sue the competitor. Finally, fewer issued patents mean that it will be easier for companies to monitor patents issuing in their product space and less likely that they will allow those patents to fall into the hands of a troll.

DDC Comment: Wilson's proposal has some merit, and his work on the demand curve is especially interesting. However, the proposal suffers from three fundamental problems: First, the proposal implicitly equates economic value with technologic value – the two are related but different. Many important technical advances have only limited economic value, but still serve as building blocks for future advances. (i.e., standing on the shoulders of giants). Second, the proposal greatly favors technologies where the economic value is well known up front. Again, many important technologies are eventually found valuable – but the very high up-front price will greatly limit those applications – and consequently, the upstream incentive to innovate in that area. Third, the proposal favors firms with cash – i.e., those that have performed well in the past and have saved their money. However, many innovation experts believe that most of the breakthrough work comes from these mainstream companies. To his credit, Wilson addresses this problem by stating that the high-price only applies to large companies. However, that approach would tend to allow the "non-practicing entities" to continue to obtain patents (against one of Wilson's primary goals). In addition, the prospect of small entities paying only $500 while large entities pay $50,000 would surely lead to other political and practical problems.

• Tim's paper is published in the recent edition of the International In-house Counsel Journal.

  

Applying Bilski to Metabolite’s Diagnosis Claim

Metabolite's broadest method claim has two steps: First, assay a body fluid to determine its homocysteine level. Second, correlate the homocysteine level to a vitamin deficiency. It reads as follows:

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of: assaying a body fluid for an elevated level of total homocysteine; and correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

In 2006, the Supreme Court almost took the time to reject this claim under Section 101, but decided that the issue had not been properly raised on appeal. Dissenting from the last minute denial of certiorari were Justices Breyer, Stevens and Souter. In a dissenting opinion drafted by Justice Breyer, the three would have held the invention as claimed an unpatentable "law of nature." The same anti-preemption theme of Bilski also runs through the Breyer opinion. The courts are concerned with the potential (but unidentified) problems of having a patent that

There can be little doubt that the correlation between homocysteine and vitamin deficiency set forth in claim 13 is a "natural phenomenon." . . . . Claim 13 . . . tells the user to use any test at all. Indeed, to use virtually any natural phenomenon for virtually any useful purpose could well involve the use of empirical information obtained through an unpatented means that might have involved transforming matter.

I thought it would be interesting to attempt to apply the Bilski decision to Claim 13 to judge its patentability.

[SURVEY: DOES CLAIM 13 PRESENT PATENTABLE SUBJECT MATTER]

Bilski offers two avenues for showing that a claimed process is patentable. First, the process will be patentable if it is tied to a particular machine or apparatus. Alternatively, the process will be patentable if it "transforms a particular article into a different state or thing." According to the court, "particular article" does not necessarily need to be physical, but it must at least be "representative of physical objects or substances."

Machine: Metabolite's Claim 13 easily fails the first prong of the machine-transformation test because the claimed method is not tied to any particular machine.

Transformation: The "correlating" step could be performed in a human mind and consequently cannot serve as the basis for finding patentable subject matter. As the court noted in Bilski – a process step that "may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing."

The "assay" step could follow the same analysis – if it is possible to "assay a body fluid for an elevated level of total homocysteine" only using the human mind then no there is no credible transformation. The mental step potential may be true if, for example, the body fluid's homocysteine level is visually apparent. [Interesting timing issues here, at the time of the invention, the assay involved extensive lab work, but later-invented technology has dramatically changed the process.]

Assuming that "assaying a body fluid for an elevated level of total homocysteine" cannot be done in the mind, we must then ask whether the claim requires a transformation of a particular physical object or substance or at least transformation of a particular article that is "representative of physical objects or substances." Perhaps the best physically related transformation involves transforming the "body fluid" into an indication of elevated homocysteine level and then into an indication of vitamin deficiency. Under Abele, both homocysteine level and vitamin deficiency do represent physical substances – consequently their 'creation' may be "sufficient to render that … process patent-eligible." [Of course, this analysis may apply a loose definition of 'transformation.']

Notes:

• What do you think: [SURVEY: DOES CLAIM 13 PRESENT PATENTABLE SUBJECT MATTER]. I'll post results on Thursday or Friday. [See ongoing results here]
• Want more on Bilski: Professors Merges (UC Berkeley), Duffy (GWU), and Lichtman (USC) discuss Bilski on Professor Lichtman's new radio show - the www.ipcolloquium.com (Free CLE)