The U.S. Patent and Trademark Office Launches Roundtable Events for a Partnership to Enhance the Quality of Software-Related Patents
Posted by: Douglas Sorocco of: Dunlap Codding
from Patent Blog: Phosita
1/9/2013

     On January 4, 2013, the US Patent and Trademark office announced some interesting news in the infamous area of software patents. Everyone has heard about software patents, and most people seem to have a strong opinion about them one way or the other. Love them or hate them, it looks as if software patents are here to stay.  

       The Patent and Trademark office has announced a new partnership initiative with the software community aimed at enhancing the quality of software-related patents. The Software Partnership, as it is aptly named, will provide an opportunity for bringing together stakeholders (the software community and members of the public) through a series of roundtable talks, starting with two already scheduled talks—one in Silicon Valley and one in New York City. The goal of these talks is offer a forum for an informal and interactive discussion to share ideas, feedback, experiences, and insights on software-related patents.

       This is a great idea that has a lot of potential to help the Office in creating sensible patent protection for software-related inventions, while ensuring that all stakeholders’ concerns are heard and addressed in a public forum. The Office has set three clear goals for the roundtable talks. Those three goals are explained in detail in the announcement on the Federal Register, and include:

  1. Establishing Clear Boundaries for Claims That Use Functional Language—ensure that claims have clear boundaries, so the public can understand what exactly is protected by the claim and the patent examiner can identify and apply the most pertinent prior art. There are several specific questions relating to this goal, for which the Office is seeking written comments, including means-plus-function clauses, sufficient structural support for functional limitations, claim definiteness, and linking structure to function.
  2. Future Discussion Topics for the Software Partnership—public input as to how this partnership can be enhanced and operated to achieve its stated goals during future Software Partnership events.
  3. Oral Presentations on Preparation of Patent Applications—comments from the public on whether certain practices could or should be used during the preparation of an application to place the application in the best possible condition for examination and whether the use of these practices would assist the public in determining the scope of the claims as well as the meaning of the claim terms in the specification.

       Overall this has the potential to be a very productive partnership. Hopefully this potential will materialize once the reception from the software industry and the feedback from the public becomes available after the first two talks are held. For more information on the Software Partnership, see the original notice in the Federal Register.

Photo credit: kenteegardin / Foter / CC BY-SA


Fewer Jumbo Patents
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/9/2013

Since 2005, the average number of claims in issued patents has fallen rather steadily. The drop is most particularly apparent in patents that include more than 20 claims. The chart below shows the percent of issued patents with more than 20-claims charted as a 20-week moving average by issue date. One trigger for this change was a December 2004 change in the application fee structure that roughly tripled the cost for filing each claim more than the original 20. With that cost-structure, it became cheaper to file a second patent application rather than one application with 40 claims. There are other hypotheses for the shift, such as the commodification of the 20-claim application, downturn in the economy that limited both cash-on-hand (for some companies) and the expected value of issued patents, changes in the value of patent claims, etc. Foreign applicants generally file fewer claims on average than those contained in US originated applications. However, both groups have experienced a relatively similar drop.


ITC pushes back resolution of Apple v. Samsung case by two weeks to March 27, 2013
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/9/2013

The United States International Trade Commission (USITC, ITC) just gave notice of its decision to extend the target date for the investigation of Apple's complaint against Samsung by two weeks to March 23, 2013. Accordingly, the trade panel's decision on whether to review Administrative Law Judge Thomas Pender's initial determination (which was handed down on October 24, 2012, held Samsung to infringe four Apple patents and is supported by the ITC staff, which participates as a third party -- not a decision-maker -- in many investigations), has been postponed from today to January 23, 2013.

This is not the first delay affecting this investigation. The most recent postponement had been ordered in mid-October.

In late December, Judge Pender's recommended remedies entered the public record. He recommended an import ban (the standard ITC remedy), a cease-and-desist order (which is frequently but not always concomitant with an import ban) and a hefty bond of 88% of Samsung's U.S. smartphone sales during the 60-day Presidential review period.

This part of the world-spanning Apple-Samsung dispute is quite important especially in light of Judge Lucy Koh's denial of a permanent injunction (over a separate set of patents found to be or have been infringed by Samsung), which Apple has appealed. The ITC investigation is now Apple's only nearest-term shot at injunctive relief against Samsung in the U.S. market unless the United States Court of Appeals grants a rehearing of a Galaxy Nexus decision with wider implications (which is now quite possible) and modifies that decision in Apple's favor.

One tricky part for the ITC's leadership to rule on is the question of designarounds (workarounds). Samsung presented products that it claimed did not infringe Apple's patents even if the ITC agreed with Apple's infringement arguments (which Samsung also disputed and still disputes). No details of the technical characteristics of those designarounds have been made public, which is why it's impossible to tell right now whether those workarounds are commercially viable options for Samsung or would adversely affect its competitiveness in the U.S. market. Apple took the position that Judge Pender didn't have jurisdiction over those workarounds since Apple didn't accuse the related technologies and a complainant should be in charge of his infringement contentions. But the judge ruled on them anyway, and now the Commission, the six-member decision-making body at the top of the U.S. trade agency, will have to resolve this question as well as various issues concerning the actual infringement contentions brought by Apple and Samsung's invalidity theories.


Supreme Court Denies Cert. in Sherley v. Sebelius
Posted by: Warren Woessner
from Patent Blog: Patents 4 Life
1/9/2013

The pesky worry about a possible Supreme Court review of the ruling by the D.C. Court of Appeals affirming the Circuit Court’s dismissal of a challenge to the 2009 NIH Stem Cell Funding Guidelines – which permitted NIH funding of most stem cell research – was lifted today when the Supreme Court denied plaintiff’s petition for cert. With the re-election of President Obama, who initially lifted the ban on all but very limited stem cell research imposed by President Bush, hopefully the U.S. will return to a position of leadership and help this area of research mature.

Click here to read the story from the Stem Cell Action Coalition.


'Defensive use' exception in FTC-Google deal identified as primary area of concern
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/9/2013

All quiet except on the FRAND front: nine of my ten previous posts discussed FRAND SEP issues, and the tenth one is a case in which the patent-in-suit may be standard-essential as well. The latest news is Google's withdrawal of a request for a U.S. import ban against Microsoft's Xbox over two H.264 SEPs. Considering that the FTC-Google deal can still be revised following the 30-day public comment period, it's worth taking a closer look at the primary issue that has been identified (apart from overall concerns about the complex procedures that may incentivize opportunistic behavior by SEP holders): a defensive suspension provision.

Commissioner J. Thomas Rosch, who supported the FTC's action against Google, already raised this issue in footnote 1 of his separate statement, and expressed the wish that this shortcoming be cured before the agreement is finalized:

"I am also troubled by Section IV.F of the Proposed Order, which provides for a limited 'defensive use' exception to Google's commitment not to seek injunctive relief on its FRAND-encumbered SEPs. That is, under certain circumstances, Google may seek injunctive relief against a firm that itself files a claim for injunctive relief against Google based on the firm's FRAND-encumbered SEPs. However, my concerns in this regard are tempered by the Commission's ability to reconsider this aspect of the Proposed Order based on submissions received during the public comment period."

Microsoft Vice President & Deputy General Counsel Dave Heiner yesterday wrote in the "Microsoft on the Issues" blog that "[this] loophole is of particular concern because it appears to be very broad", as it "appears to say that Google can sue for an injunction even when no firm has sued Google": some conflict between third parties could be alleged by Google to trigger the defensive suspension clause, "and there is often ample room for disagreement about whether a particular patent is a standard essential patent in the first place". Mr. Heiner sums it up like this: "two wrongs don't make a right" -- if two parties commit any wrongdoing, they should both be held responsible for it, but one party's actual or alleged violations shouldn't legitimate the other party's misconduct.

I, too, have a fundamental problem with this approach. I believe in the rule of law. I dread the notion of letting any company -- I don't care whether this means Apple, Google, Microsoft, Oracle, you name them -- take the law into its own hands and use a nuclear patent weapon. That's what I've also been telling to people who argue (as RIM does, for example) that SEP-based injunctions should be allowed if the purpose is to settle broader disputes involving non-SEPs. That's a Wild West mentality. If there's a competition problem with anybody's use of non-SEPs, it should be investigated and dealt with, just like a competition problem relating to SEPs. But arbitrariness is not the answer: only because someone like Google or RIM feels that someone else is abusing patents (actual SEPs, alleged SEPs, or undisputed non-SEPs) doesn't give Google or RIM the right to harm competition and consumers through SEP abuse.

Apart from principle, the "defensive use" clause in the proposed FTC-Google agreement is also counterproductive. The most effective way for the FTC to discourage others from abusing SEPs against Google or its partners is not to lard the Google consent order with unmanageable, ill-conceived exceptions. The clearer and harder to circumvent the order is, the better the rest of the industry will understand what regulatory blow-back it's going to face if it engages in abusive practices. Conduct that is tolerated under some circumstances is conduct that can be condoned, and that situation would contradict the FTC's own positions.

Yesterday I harshly criticized a DoJ/USPTO policy paper not because of 95% of what it says (and which I wholeheartedly agree with) but because of one loophole I dislike. But even the DoJ/USPTO paper is clear that SEP abuse must not be tolerated, and doesn't advocate a "defensive use" exception. The FTC should recognize that the notion of mutually assured SEP-based destruction was a bad idea in the first place that no one outside the FTC and companies like Google who hope to take advantage of this shortcoming supports.


Google's pursuit of Xbox import ban down to one non-standard-essential patent after withdrawal
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/9/2013

Google's Motorola Mobility has withdrawn two patents declared essential to the H.264 video codec standard from its ITC complaint against Microsoft's Xbox gaming console. In October 2012 Google had already withdrawn from this action two patents declared essential to the IEEE 802.11 (WiFi, or WLAN) standard, leaving only one of the five originally-asserted patents in the game: U.S. Patent No. 6,069,896 on a "capability addressable network and method therefor". This patent has not been declared essential to any particular industry standard. A preliminary ruling by an Administrative Law Judge sided with Motorola on this patent (and three others), but the Commission, the six-member decision-making body at the top of the U.S. trade agency, denied a violation. As a result, Google would need a successful appeal to the Federal Circuit to bring the '896 patent back into the game. In practical terms, this means that no Xbox import ban is going to happen before 2014, if ever.

Google's motion for partial termination was given to the press before it showed up on the ITC's electronic filing system (by the time of publication of this post, it still hadn't appeared in the public record). The first two reports I saw were published by AllThingsD and CNET.

On Friday a Microsoft filing suggested to the ITC not to waste resources on patent claims that would have to be withdrawn soon as a result of Google's agreement with the Federal Trade Commission (FTC). According to Google's motion, the parties were in contact about this on Friday and Microsoft indicated that it would (obviously) not oppose this motion for partial termination. In a reaction quoted by the media, Microsoft welcomes this withdrawal and now expects Google to withdraw injunction requests in other venues and jurisdictions. Google says in its filing that it "intends to enforce its rights for past damages in the District Court lawsuits", which is explicitly not prohibited by the FTC consent order. But Google can and must nevertheless withdraw any prayers for injunctive relief. By the time of publication of this post, Google had not yet made a related filing in the FRAND action in the Western District of Washington, which is not only a rate-setting action but also involves offensive claims, involving injunction requests, by Google. In late November Judge James Robart issued a summary judgment order against Google's injunction requests, but Google could still appeal this decision.

If Google had kept pursuing its SEP-based import ban requests, the FTC would have had a major credibility problem because its chairman said at last week's press conference that he expected such withdrawals to happen. But one such withdrawal, or even the series of withdrawals that I believe we are now going to see in various cases targeting Apple and Microsoft, can't validate the FTC consent order. This is a marathon, not a sprint, as there are many other SEP cases pending and many more that will be filed in the future, by Google and others. The proposed FTC-Google agreement has its shortcomings that could still be fixed, and I'll talk about that some more in a subsequent blog post. If the measure of suitability-to-task of the proposed FTC-Google deal was a bunch of withdrawals, the FTC could simply have entered into an agreement with Google listing the cases/claims to be withdrawn, which could have been done on two pages (but the proposed order has 29 pages including appendices).


How [Not] to Fight PTAB Obviousness Decisions
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/8/2013

By Dennis Crouch

In re Chevalier (Fed. Cir. 2013) (nonprecedential) (Patent Application Ser. No. 11/407,778)

In a non-precedential but instructive opinion, the Federal Circuit has affirmed the USPTO's obviousness rejection of L'Air Liquide's application covering devices used to form gas-liquid dispersions. The Board rejected claim 1 as obvious, over a combination two prior art references – finding that it "would have been obvious to one skilled in the art to modify the Kwak device in view of the teachings of Howk."

= = = = =

The difficulty with appealing PTAB decisions is that conclusions of fact made by the USPTO's appellate board are reviewed for substantial evidence. In order to win an appeal on a factual question, the patent applicant must go quite a bit further than simply proving that the PTAB's decision was wrong. Rather, the PTAB decision will only be overturned if not based on "more than a mere scintilla" of evidence. Restated, the question is whether the factual conclusion is based upon "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." "[T]he possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607 (1966).

This case represent the most frequent form of PTAB decision – that the applied-for patent claim is unpatentable as obvious over a combination of references. The ultimate question of obviousness is a question of law (reviewed de novo on appeal). However, that ultimate conclusion is based upon a set of factual underpinnings as explained by Graham v. Deere. The Federal Circuit has also held that "[t]he presence or absence of a motivation to combine references in an obviousness determination is a pure question of fact." In re Gartside, 203 F.3d 1305 (Fed. Cir. 2000).

= = = = =

Chevalier challenged the combination of references – arguing that the combination of Kwak and Howk would be inoperable. Apparently Chevalier took the drawings from Kwak and Howk and unsuccessfully tried to jam them together. The Federal Circuit saw that process as "misapprehend[ing] the nature of the obviousness inquiry."

The obviousness inquiry does not ask "whether the references could be physically combined but whether the claimed inventions are rendered obvious by the teachings of the prior art as a whole." In re Etter, 756 F.2d 852 (Fed. Cir. 1985) (en banc); see also In re Keller, 642 F.2d 413 (CCPA 1981) (stating "[t]he test for obviousness is not whether the features of a secondary reference may be bodily incorporated into the structure of the primary reference"). Rather, in a case such as this where each of the elements of the claim are known to the art, the obviousness inquiry requires a finding that the combination of known elements was obvious to a person with ordinary skill in the art.

Here, each of the elements of the claim is taught by Kwak with the exception that the Kwak deflector is not attached to the drive shaft. This deficiency in Kwak is supplemented by Howk, which teaches a deflector attached to the drive shaft. The examiner found, and the Board affirmed, that one of ordinary skill would be motivated to modify Kwak in view of Howk because the modification "would facilitate a more rapid and more complete conversion from axial flow to radial flow of the liquid exiting from the bottom of the device." Ex Parte Gilbert Chevalier, 2011 WL 6747404 (B.P.A.I. Dec. 21, 2011). Chevalier does not challenge this finding. Accordingly, we find no error in the Board's determination that Kwak and Howk could be combined to achieve the claimed invention, nor do we find any error in the Board's determination that one of ordinary skill would be motivated to combine these references to achieve an aeration device that more rapidly and more completely converts axial flow to radial flow in the gas-liquid mixture.

The appellate panel then moved to KSR v. Teleflex to bolster its decision:

Our conclusion is strengthened by Chevalier's admission that the deflectors of Kwak and Howk are "recognized equivalents performing the same function of converting axial flow to radial flow." Appellant's Br. 9. The Supreme Court stated in KSR that "when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result." KSR. Here, the claimed invention merely substitutes the deflector of Howk, which is attached to the drive shaft, for the deflector of Kwak, which is attached to the floor of the basin. This substitution achieved only the predictable result of converting the axial flow of the gas-liquid mixture to radial flow.

Rejection affirmed

= = = = =

The problem with the appeal here is that the appellate arguments are essentially a repeat of the lawyerly discussion of facts made to the examiner and PTAB. When those do not work at the PTO, they are highly unlikely to work on appeal to the Federal Circuit. (No factual affidavits were submitted in the case at the PTO). If Air Liquide had wanted to win the case, they would have been better served to hire expert witnesses to provide testimony either as affidavits to the PTAB or else bring forth that evidence in a civil action. Of course, that approach is likely more expensive and raises a greater potential of inequitable conduct charges down the line – especially in cases like these where other members of the patent family have already issued.


DoJ/USPTO position paper on FRAND SEP remedies muddies the water
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/8/2013

I just saw this joint policy paper by the United States Department of Justice and the United States Patent and Trademark Office on "remedies for standards-essential patents subject to voluntary F/RAND commmitments", and while there are some passages in it that I like, I think these two government agencies should have refrained from stating a position at all if for whatever political considerations they weren't able to come up with something that contributes to clarity.

The proposed FTC-Google agreement lacks the absolute clarity of the mid-November FTC-Bosch deal, but if interpreted reasonably it can help solve or alleviate certain problems. By contrast, the DoJ/USPTO paper is going to be part of the problem and not part of the solution.

While the FTC-Google agreement is in many (though not in all) respects consistent with Judge Posner's thinking on FRAND SEP injunctions, the DoJ/USPTO paper is, in terms of the effect that the proposed policies would have if adopted by courts and the ITC, downright antithetical to Judge Posner's stance. The biggest problem I have with the DoJ/USPTO paper is this passage:

"For example, if a putative licensee refuses to pay what has been determined to be a F/RAND royalty, or refuses to engage in a negotiation to determine F/RAND terms, an exclusion order could be appropriate. Such a refusal could take the form of a constructive refusal to negotiate, such as by insisting on terms clearly outside the bounds of what could reasonably be considered to be F/RAND terms in an attempt to evade the putative licensee's obligation to fairly compensate the patent holder. [...] This list is not an exhaustive one."

This is a totally open-ended loophole. The part on a "constructive refusal to negotiate" would be a huge loophole all by itself; the addition that the list is "not an exhaustive one" means that the DoJ and the USPTO aren't serious about curbing SEP abuse. They claim to be "concerned about the potential impact of exclusion orders on 'competitive conditions in the United States' and 'United States consumers' in some cases involving F/RAND-encumbered patents that are essential to a standard, and the conditions under which they may be denied", but they want to keep the door open to SEP-based injunctions. Anyone who understands the practical implications of FRAND SEP litigation just needs to see the paragraph above to understand that the DoJ/USPTO paper is, if evaluated with an effects-based approach, supportive of SEP abuse. Simply put, no SEP holder is going to be hard-pressed to come up with all sorts of theories to claim that an implementer refuses to engage in negotiation by insisting on unacceptable terms. An SEP holder wouldn't sue in the first place if he considered the implementer's proposed license fees acceptable.

Let's compare this to Judge Posner's much better approach:

"Motorola counters that Apple's refusal to negotiate with it after rejecting its initial offer of a 2.25 percent royalty warrants injunctive relief; by opting not to take a license ex ante, it argues, Apple should lose the FRAND safe harbor. But Apple's refusal to negotiate for a license (if it did refuse—the parties offer competing accounts, unnecessary for me to resolve, of why negotiations broke down) was not a defense to a claim by Motorola for a FRAND royalty. If Apple said no to 2.25 percent, it ran the risk of being ordered by a court to pay an equal or even higher royalty rate, but that is not the same thing as Motorola's being excused from no longer having to comply with its FRAND obligations. Motorola agreed to license its standards-essential patents on FRAND terms as a quid pro quo for their being declared essential to the standard. FTC Statement on the Public Interest, supra, at 2. It does not claim to have conditioned agreement on prospective licensees’ making counteroffers in license negotiations."

A world of difference: Judge Posner says that an injunction is inappropriate even if a defendant makes no counteroffer at all, given that a FRAND pledge is not conditioned on such behavior. The DoJ/USPTO paper says that a "constructive refusal to negotiate" justifies injunctions, and its definition of such a refusal knows no boundaries, citing as only one loophole the possibility of a counterproposal being too low in the patent holder's opinion.

One key element of Judge Posner's holdings that not only the DoJ/USPTO paper but also the proposed FTC-Google agreement don't adopt is the following:

"Motorola argues further that deprived of the possibility of injunctive relief, it will not be able to extract a reasonable royalty from Apple. Suppose, hypothetically, that the maximum reasonable FRAND royalty would be $10 million. If Motorola therefore demanded such a royalty, Apple, knowing that litigation is costly, would refuse, and Motorola would accept a lesser amount. Of course litigation would also be costly for Apple, and this might induce it to pay the $10 million rather than fight. But the deeper objection to Motorola’s argument is that the 'American rule,' which with immaterial exceptions makes the winning party in a litigation bear his litigation costs rather than being able to shift them to the loser, does not deem damages an inadequate remedy just because, unless backed by a threat of injunction, it may induce a settlement for less than the damages rightly sought by the plaintiff. You can't obtain an injunction for a simple breach of contract on the ground that you need the injunction to pressure the defendant to settle your damages claim on terms more advantageous to you than if there were no suchpressure."

In the above paragraph, Judge Posner effectively said that the unavailability of injunctive relief (which by definition includes ITC exclusion orders) is a non-issue because the patent holder can sue for damages. As the paragraph quoted further above stated, an implementer who refuses to accede to a royalty demand runs the risk of a court possibly ordering a greater amount -- but even if we forget about this for the sake of the argument, and furthermore ignore that avoiding litigation is also an incentive to take a license, monetary compensation in the form of a damages award isn't inadequate only because the threat of injunctive relief will enable the patent holder to collect more money than otherwise.

If the FTC agreed with Judge Posner on this, it would not allow injunctions based on whether and how a defendant negotiates. But the FTC at least made an effort to define what an implementer needs to do to document a willingness to take a license on terms determined by a court of law or an arbitration tribunal. The DoJ/USPTO paper is a policy paper, not a contract; but in a context like this, where the problem can only be solved by removing the credible threat of injunctive relief over SEPs, a policy paper needs to be just as clear as a well-written contract if it's supposed to be useful and to protect competitive conditions and consumers.

I'm aware of the fact that the ITC's patent enforcement actions are governed by Section 337, and Judge Posner's ruling came down in federal court. Still, it would be possible for the ITC to adopt Judge Posner's common-sense approach to FRAND SEPs. The DoJ/USPTO proposal is the epitome of legal uncertainty. I'm thoroughly disappointed, and I don't know if parties to future patent purchases (especially if the patents involved aren't even standard-essential) will accept to be held by the DoJ to any higher standard than the one outlined in this paper...


USPTO Grant Rate: 2013 Forecast
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/8/2013

by Dennis Crouch

Only two weeks into 2013, the USPTO continues to issue patents at a record pace. New patents are issued each Tuesday morning.  On January 8, 2013 the PTO issued 5,633 utility patents – the most ever issued on a single day.  The prior two weeks rank second and third on the all-time list.  Thus, although we are only two-weeks into the new year, if current projections hold the PTO will issue more than 290,000 patents in 2013. That represents a major jump from 2012’s record of 253,000 issued patents.

Two things are happening to cause this change: (1) the PTO now has a higher grant rate — a grant rate has continued to rise throughout the past two years; and (2) the PTO has a greater number of disposals - primarily because of the agency’s hiring binge.  In 2012, the first of these contributed more to the increased number of grants. I expect that in 2013 the increased throughput will have the greater impact as new examiners get up-to-speed.

The strength of this forecast will largely depend upon whether the Agency continues on the same path after Director Kappos steps-down later this month.  Deputy Director Rea is unlikely to move away from this course and may well push for more efficiency during her expected tenure as Acting Director.  However, the new appointee (yet unnamed) may be a different story.  A second major factor that could negatively impact the grant rate is another budget crisis that would limit the ability of the USPTO to pay examiners for overtime work.


Google's Motorola petitions U.S. trade agency to keep its complaint against Apple alive
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/8/2013

At close of business on Monday, wholly-owned Google subsidiary Motorola Mobility filed a 33-page petition for review with the United States International Trade Commission (USITC, or just ITC) concerning a mid-December preliminary ruling by an Administrative Law Judge on the sole remaining patent in Motorola's complaint against Apple.

Judge Thomas Pender had held that Google's (Motorola's) patent-in-suit, which covers the concept of deactivating a touchscreen when the phone is held close to the user's ear during a call in order to avoid inadvertent input, was invalid because another (earlier-filed) Motorola patent rendered it non-novel. But on remand he had identified an infringement by Apple and deemed the ITC's domestic industry requirement satisfied. This means that a U.S. import ban against Apple's allegedly-infringing products would be a possibility if Google (Motorola) could dissuade the ITC of Judge Pender's invalidity theory.

Apple has filed a 28-page contingent petition for review. It's contingent because Apple preferably doesn't want any review to take place at all. Apple would obviously like the ITC to simply adopt Judge Pender's initial determination, in which case there would be no import ban unless Motorola successfully appealed. But in the event that the ITC grants Google's petition and conducts a review, Apple's contingent petition presents theories that might allow Apple to defend itself successfully against Motorola's complaint even if Judge Pender's invalidity theory was overturned. Both parties' petitions are sealed. I presume that Apple's contingent petition relates to infringement and domestic industry questions, and possibly also to invalidity theories Judge Pender didn't adopt.

The two remaining Google/Motorola patents-in-suit in the Microsoft case, which is why Microsoft told the ITC on Friday it expects the complaint to be withdrawn as a result of the FTC-Google settlement. However, the remaining patent-in-suit in the Apple investigation is not standard-essential. The ITC previously dismissed Google's (Motorola's) claims relating to three other patents, including two declared-essential ones. Google has appealed that decision to the Federal Circuit.


Zumbiel v. Kappos
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/7/2013

By Jason Rantanen

The C.W. Zumbiel Company, Inc. v. Kappos (Fed. Cir. 2012) Download 11-1332
Panel: Prost (dissenting-in-part), Moore, Wallach (author)

Prior to KSR v. Teleflex, the Federal Circuit granted significant deference to the PTO on obviousness determinations; following KSR, that deference has only increased.  Zumbiel v. Kappos represents possibly one of the more extreme examples of that deference.  This appeal is unusual, however, in that it involves substantial deference to the BPAI/PTAB's finding that a claim is nonobvious, deference that is (in the dissent's view) contrary to other aspects of the Court's holding in KSR

639 patent

Graphic Packaging International is the assignee of Patent No. 6,715,639, which is directed to a carton or box that holds containers such as cans and bottles.  Zumbiel filed for an inter partes reexamination of the '639 patent, arguing that the claims were obvious in light of various prior art references.  The BPAI (now the PTAB) determined that some of the claims were obvious (including claim 1) and some were nonobvious (including claim 2).  Both parties appealed the adverse determinations.

Representative Claim 1:

1. An enclosed carton for carrying a plurality of containers in two rows, with a top row and a bottom row, said containers each having a diameter, the carton comprising:

a. a top panel, side panels, a bottom panel, and closed ends, at least one of which is an exiting end;
b. a dispenser which is detachable from the carton to form an opening at an exiting end through which the containers may be removed;
c. the dispenser being a unitary structure comprising a portion of the top panel, portions of the side panels, and a portion of the exiting end, said portions being defined by a tear line extending across the top panel, side panels, and exiting end;
d. means for preventing the end container in the bottom row from accidentally rolling out of the carton after the dispenser has been opened, the height of the means above the bottom panel being less than the diameter of said end container; and
e. a finger flap located along the portion of the tear line extending across the top panel for pulling the dispenser open along the tear line,
f. whereby when the dispenser is opened it may optionally remain attached to the carton
at the exiting end to form a basket at the exiting end of the carton.

Representative Dependent Claim 2:

2. The carton of claim 1, in which the finger flap is located between the first and second containers in the top row.

Prior Art Reference 1 (Ellis):

Ellis 242

Prior Art Reference 2 (German '718) (note that there were two additional prior art references):

German 718The Federal Circuit began by affirming the PTAB's determination that representative claims 1 and 13 were obvious.  Among other issues, the court employed a "predictable variations" approach to conclude that a claimed limitation would be met.  German argued that the prior art did not teach the claimed location of the finger flap; the court, however, agreed with the Board that "providing the finger opening on the top wall of the carton would be a predictable variation that enhances user convenience...and is within the skill of a person of ordinary skill in the art."  Slip Op. at 15. 

The court next turned to Zumbiel's appeal of the PTAB determination that representative claim 2 was nonobvious.  The sole additional limitation added by claim 2 is that "the finger flap is located between the first and second containers in the top row."   Thus, "the dispute lies in whether the location of the finger flap between the first and second cans is obvious in light of the prior art."  Slip Op. at 20.  Applying a substantial evidence standard, the majority affirmed the Board's determination that (1) a third prior art reference did not provide the necessary teaching for moving the tear line and (2) "there was little incentive to relocate Ellis's finger flap to a position between cans in order to provide space for the fingers."  Slip Op. at 22.  Based on these findings, the majority held that claim 2 was nonobvious.

Judge Prost's Dissent: In a plain language dissent, Judge Prost strongly disagreed with the majority's determination of nonobvious:

"Failing to apply KSR to the facts of this case, the Board has concluded that the invention recited in claim 2 is non-obvious. Because I believe that a common sense application of the obviousness doctrine should filter out low quality patents such as this one, I cannot join the majority in endorsing the Board’s incorrect approach on this question. Thus, with respect, I dissent."

...

[L]et’s be clear what claim 2 is about. The claimed invention takes the opening from Ellis, takes the stacked can configuration from another box, and puts them together. The result is—as one would expect—a box that has the known benefits of Ellis’s opening and the known benefits of a stacked can configuration.

Why is this assembly non-obvious? Because, the Board explains, the patentee has solved a difficult implementation problem, the solution to which was supposedly not obvious to box makers who lacked extraordinary skill. The secret lies in the proper positioning of the tear line. That is, according to the Board, ordinary box makers would not have put the tear line between the first two cans in the top row.

Where else could have they put it? There are just four other options: (1) above the first can, (2) above the second can, (3) in front of the first can, (4) behind the second can. The first two alternatives are just offensive to common sense: With the cans right below, there would be no room to push the flap through (the flap is positioned at the center of the tear line). The third and fourth options are not quite as illogical, but even without expertise in box making, one may intuit that they make awkward designs (the third opens too little, the fourth too much).

More importantly, however, whether some of the alternatives would work just as well or not, the patentee’s choice of tear-line-placement involves no more than the exercise of common sense in selecting one out of a finite—indeed very small—number of options. And there are no unexpected results[.]

The point here is not that the Board got the facts wrong. The point is that contrary to the Supreme Court’s instructions, an “overemphasis on the importance of [teachings of prior art]” has insulated the Board’s analysis from pragmatic and common sense considerations that are so essential to the obviousness inquiry. KSR, 550 U.S. at 419. The Board’s approach relegates one of ordinary skill to an automaton. Should this approach become commonplace, it would lower the obviousness bar and
hence hinder competition and innovation. That is why, unlike the majority, I do not see any room for deference to the Board’s determination in this case.

 

 

 


Does License of Future Inventions Invoke Patent Law Based Court Jurisdiction?
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/7/2013

By Dennis Crouch

National Pasteurized Eggs v. Davidson (Fed. Cir. 2012)

010713_1547_Does<a href=License1" class="asset asset-image at-xid-6a00d8341c588553ef017ee70a66d4970d" src="http://www.patentlyo.com/.a/6a00d8341c588553ef017ee70a66d4970d-120wi" style="margin: 0px 0px 5px 5px;" title="010713_1547_DoesLicense1" />In yet another patent contract dispute, the Federal Circuit has transferred appellate jurisdiction back to the regional circuit. Here, it appears that the mistake was due to an error by the district court clerk who thought of the case as a patent case.

= = = =

National Pasteurized Eggs (NPE) filed the case in 2007 asking the New Hampshire district court to quiet title in several US and foreign patents. From the complaint:

By this action, NPE seeks a declaratory judgment of rightful ownership of three United States patents and two international patent applications and resulting foreign patents, as specified below.

Download Davidsoncomplaint.

The patents at issue all list Mr. Leon J. Davidson (LJD) as the inventor and involve methods of pasteurizing in-shell chicken eggs and treating eggs with anti-bacterial agents. See U.S. Patent No. 6,322,833.

Davidson founded the Pasteurized Egg Corporation (PEC). When he left the company in 2000, he signed an assignment and further cooperation agreement.  [Appendix to Complaint] PEC went bankrupt in 2003 and its intellectual property assets were purchased by National Pasteurized Eggs (NPE) who is looking to ensure all of the Davidson patents are assigned to the company. (Note – the Davidson's brand shown to the right is also owned by PEC).

In considering what rights Mr. Davidson retains, the agreement uses the term "inventiveness." The agreement states:

New processes or intellectual property ("inventiveness") developed prior to January 1, 2001 ("Old Inventiveness"), including a method for extending the shelf life of pasteurized eggs by treatment with antibacterial agents, shall be the property of PEC and LJD shall take such actions as may be reasonably required by PEC to assist PEC to complete the development, improvement, documentation, protection and patenting of such Old Inventiveness.

Inventiveness developed by LJD, whether in combination with "Old Inventiveness" or prior inventiveness, which results in protection from new patents or patent applications providing broader or improved protection, on or subsequent to January 1, 2001 ("New Inventiveness") shall be considered the property of LJD.

It is this poorly written agreement that has led to the legal conflict.

Davidson filed a number of patent applications following the 2001 agreement and argued that those applications involved new inventiveness. In its ruling, the district court sided with NPE – holding that the inventiveness associated with the primary disputed patent occurred prior to the 2001 date since testing had already begun on the new process.   Download Davidsonfinaljudgment.  It is this decision being appealed.

= = = =

After losing at the district court, Davidson filed a Notice of Appeal to the First Circuit. However, the district court clerk sent the docket and certificate to the Federal Circuit. On unopposed motion, the Federal Circuit has now transferred the case to the First Circuit.

In its order, the Federal Circuit suggested, but did not decide, that the First Circuit is the proper site of appellate jurisdiction. In this case, however, the transfer was required because the Fed. R. App. P. 3(d)(1) does not allow a district court clerk to unilaterally change the appellate court.

Fed. R. App. P. 3(d)(1) states that the clerk of the district court "must promptly send a copy of the notice of appeal and of the docket entries .,. to the clerk of the court of appeals named in the notice."

Because of the mandatory language of Rule 3(d)(1), we believe we must transfer this appeal to the First Circuit, i.e., the clerk of the district court was required to send the notice of appeal to that court. Although we do not address jurisdiction, the case appears to involve ownership of patents rights and contract interpretation. See Luckett v. Delpark, Inc., 270 U.S. 496 (1926).

The appeal will now be heard by the Court of Appeals for the First Circuit.

= = = = =

There is some chance that the Federal Circuit will see the case again – depending upon whether the First Circuit sees a substantial question of patent law buried in whether Davidson's new patents include some "inventiveness developed by LJD . . . subsequent to January 1, 2001."


Microsoft notifies ITC of FTC-Google settlement, expects Motorola to withdraw complaint
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/7/2013

On Friday, the day after Google's antitrust settlement with the Federal Trade Commission (see my initial reaction, explanation of mechanics, comparison with other SEP case), Microsoft filed a "notice of development in connection with Motorola's H.264 standard essential patents" with the United States International Trade Commission (ITC), expressing the expectation that Google's Motorola Mobility will withdraw its Xbox complaint shortly. The notice was filed "so that the resources of both the ITC and the parties may be conserved and not wasted on issues that Motorola has agreed to withdraw as a result of its settlement with the FTC". It entered the public electronic record today.

Following Google's (Motorola's) unilateral withdrawal of its WiFi patents-in-suit in October 2012, the remanded investigation is down to two H.264 video codec patents.

Anything less than an immediate withdrawal (or at least a motion for a stay during the public comment period on the proposed settlement) would call into question the suitability-to-task of the FTC-Google agreement as well as Google's intent to comply. FTC Chairman Jon Leibowitz expressed at last week's press conference the understanding that Google is going to abandon its quest for SEP-based import bans. Microsoft's filing quotes an excerpt from the press conference (the question was asked by Politico's Michelle Quinn, and the Chairman responded personally):

Q. "HAS GOOGLE OR IS GOOGLE SAYING THEY'RE GOING TO WITHDRAW THEIR CASES AT THE ITC?
AS YOU KNOW, THE ITC'S ONLY REMEDY IS [T]O BLOCK PRODUCTS COMING INTO THE UNITED STATES.

A. "YES, THEY'RE CERTAINLY -- THEY SHOULD BE.
I SHOULD HAVE MENTIONED THIS EARLIER. ... MY UNDERSTANDING IS WILL BE -- THEY'RE GOING TO STOP TRYING TO SEEK ... [AN] EXCLUSION ORDER AT THE I.T.C."

This was also my understanding. Microsoft has a case pending in Seattle that serves the purpose of a FRAND determination (term-setting) under the FTC-Google deal. Unlike Apple, Microsoft unconditionally committed to take a license on court-determined terms -- and the FTC-Google deal is even meant to protect Apple, provided that it will commit to a license deal going forward. If Google kept pursuing its ITC case against Microsoft, it would almost certainly do so against Apple as well (the SEP-related part of the Apple ITC case was dismissed but is being appealed). This is the first test (but certainly not the last) for the FTC-Google agreement.

Reactions to the FTC-Google deal have been mixed. I, too, was torn because on the one hand I can see how the FTC tries to address certain issues that have come up in recent SEP enforcement actions but on the other hand there's legitimate concern that its complexity may be perceived by some SEP owners as an invitation to argue that their rivals are all "unwilling licensees". Orrick, Herrington & Sutcliffe's Jay Jurata, Monte Cooper and Neel Chatterjee authored this analysis, which is also quoted in this Reuters story and says, among other things, that "by establishing elaborate procedures that Google must follow before invoking an 'unwilling licensee' exception to the general rule, the decree might have the unintended consequence of encouraging opportunistic behavior by SEP owners in an attempt to portray companies as 'unwilling licensees.'"

I look forward to seeing Google's response to Microsoft's notice and will report on it.


Judge Bryson Assumes Senior Status
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/7/2013

Today, Judge William C. Bryson of the United States Court of Appeals for the Federal Circuit assumed senior status.  Judge Bryson joined the court in 1994.  A true career civil servant, his experience prior to joining the bench was extraordinary: he served as a law clerk to both Judge Friendly of the Second Circuit and Justice Thurgood Marshall, and spent seventeen years at the Department of Justice (including two stints as Acting Solicitor General) prior to his appointment to the Federal Circuit. His work ethic, keen intelligence, and sense of fairness are legendary on the court.

One short story of my own: A few hours after interviewing with Judge Bryson, I was ecstatic to receive a phone call from the judge offering me a position in his chambers.  But Judge Bryson made the offer with a  condition: he required me to wait at least a week before I could accept the offer, so that I could really think about the offer and weigh any offers from other judges.  In today's day of hour-long exploding clerkship offers, Judge Bryson's practice really stands out in sharp contrast (admittedly, I don't know whether he still follows this rule).  Of course, I accepted the offer as soon as I was permitted to!

In celebration of Judge Bryson's service on the Federal Circuit, I reached out to several of his other former clerks for their thoughts on the judge.  There were far more than I could possible include here, but the comments below are representative:

  • "The best thing I learned working for Judge Bryson is not to be so enamored of the easy parts of your case that you lose sight of the hard parts.  Work to find the hardest question that a judge or an opponent might put to your case.  If you can’t figure that out, you don’t know your case well enough.  Then work to find the best answer to that hard question.  If you don’t have a good answer, you are not doing everything that you can to win.  Surprisingly, many attorneys arguing at the Court seemed shocked to be challenged or have their arguments tested."
  • "I have had many senior partners, clients, superiors, etc. tell me over the years that they want my unvarnished views and don’t want “yes men” to just nod along.  Judge Bryson embodied the rare person who really meant that when he said it."
  • "Judge Bryson was assigned the standard floor space in the Markey courthouse -- three bay windows' worth -- and was allowed to configure his chambers as he saw fit.  He took none of the windows for his own office.  Instead, he sat in a windowless room and used the bay windows for a library and conference room open for use by (and frequently used by) all of chambers staff.  This unusual and perhaps unique arrangement speaks volumes to Judge Bryson's humility, collegiality, and work ethic." (This specific recollection was shared by many of Judge Bryson's former clerks).
  • "Probably every person that argues in front of Judge Bryson lives in respect of his hypotheticals.  He has a good knack for boiling down the essential point of a case into a hypothetical question or statement.  As a clerk, the amusing aspect of the hypotheticals was that many attorneys could not decide whether they should agree, or disagree, with his hypothetical.  The deer-in-the-headlights look from these attorneys was priceless."
  • "If you have a good substantive case, you want Judge Bryson on your panel.  If you don’t have a good substantive case, you don’t want to see him show up on your panel."
  • "At the end of our clerkship during a recruiting dinner, I had a very senior figure at one of the top patent firms (you’d know his name immediately) say to me  “You know… some people would say that Judge Bryson is the smartest judge on the bench.”     I’ve had this statement repeated to me many times by members of the Fed Cir bar over the last 11 years."
  • "When I brought my kids into chambers, I was worried about them overstaying their welcome and bothering Judge Bryson.  To the contrary, I think that if Judge Bryson had had his way, he would have spent the whole afternoon looking up countries on the globe and drawing on the white board with them."
  • "I think of Judge Bryson as extraordinarily dedicated to reaching the correct decision in any appeal. For patent cases, I remember that he would always spend a great deal of time attempting to understand the underlying technologies. One time, I saw him studying briefs while he was waiting for the Metro at McPherson Square."
  • "During the clerkship, I was endlessly impressed by how Judge Bryson was always able easily to pierce through a complicated record to identify what was central to the disposition of a case --- and how he worked through all issues with such integrity.  Various former clerks of Judge Friendly (the Second Circuit titan for whom Judge Bryson had also clerked) have often spoken about how their judge didn't really need any law clerks, because his knowledge of the law was just so encyclopedic, and because he was so efficient and self-sufficient; I feel the same way about Judge Bryson.  And on top of it all, he is a true and kind mentor.  Those of us who have had the privilege of clerking for Judge are truly lucky."
  • "Judge Bryson's questions at argument could be difficult to deal with, even for seasoned attorneys.  In one example, an attorney attempted to sidestep one of Judge Bryson's questions (or at least buy himself time), arguing that "I'm from Texas, I think slow and I talk slow."  Judge Bryson was not so easily brushed aside, responding something like, "I'm from Texas too, but I would like you to answer my question.""
  • "During the clerkship, I was endlessly impressed by how Judge Bryson was always able easily to pierce through a complicated record to identify what was central to the disposition of a case --- and how he worked through all issues with such integrity.  Various former clerks of Judge Friendly (the Second Circuit titan for whom Judge Bryson had also clerked) have often spoken about how their judge didn't really need any law clerks, because his knowledge of the law was just so encyclopedic, and because he was so efficient and self-sufficient; I feel the same way about Judge Bryson.  And on top of it all, he is a true and kind mentor.  Those of us who have had the privilege of clerking for Judge are truly lucky."
  • "Judge Bryson is easily the smartest lawyer I've ever known, and yet also one of the most unassuming people I've ever known.  I recently read a biography of Judge Bryson's former boss Judge Friendly.  I frequently recalled my year as a clerk for Judge Bryson as I read about Judge Friendly's intellect, work habits, non-ideological approach to judging, and how his clerks apparently had to work hard to come up with things that the judge hadn't already figured out on his own.   Much like Judge Friendly was, though, Judge Bryson is not the least bit pretentious or taken with his own intellect -- despite having infinitely more skill and experience than his clerks, Judge Bryson treated his clerks as colleagues and was always open to hearing their ideas.  I can think of no better way to have started my legal career than the year I spent as a clerk for Judge Bryson."

As a senior judge, Judge Bryson will continue to sit regularly on the court, although with a reduced docket.  We can hope that he will do so for many years! 


Carani on Design Patent Infringement
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/6/2013

Christopher Carani is one of the leading design patent practitioners in the US. His recent ManagingIP article highlights the design patent elements of Apple v. Samsung and other famous design patent cases in order to tease out some methodology for knowing which design patents are likely to be infringed. The four-page article offers a concise design patent infringement primer.

Carani writes:

Indeed, even if well-versed in design patent jurisprudence, one of the most difficult questions an intellectual property practitioner can be asked is whether a given product infringes a design patent. Like it or not, there is an inherent subjective component to the design patent infringement analysis that is often unnerving to seasoned pros and novices alike.

One of the few guiding lights to aid practitioners through these murky waters is a firm grasp of the patented and accused designs implicated in, and the holdings of, past decisions. It is only through this type of empirical study and ocular inspection that one can get a feel for the central question of "how close is too close" for design patent infringement. To that end, set forth below is a visual comparison of exemplary cases where there were findings of infringement, and in others non-infringement.

I've posted the article (with permission) here: Download Carani.apple .


Comparison of the FTC's standard-essential patent agreements with Google and Bosch
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/4/2013

There's still an intense debate over yesterday's FTC-Google settlement. In my first reaction and my subsequent explanation of the mechanics of the patent part of the deal, I focused on the implications of the agreement for Google's (Motorola's) ongoing disputes with Apple and Microsoft, and to a lesser degree on related cases such as Samsung's pursuit of injunctive relief against Apple, but not at all on the question of whether the FTC should have done more. However, in light of ongoing processes in other jurisdictions, particularly Europe, there will be some more talk about whether the framework the FTC agreed upon with Google is a useful blueprint for FRAND abuse prevention.

Settlements are always a suboptimal way to set the record straight on an issue of transcendental importance. They are legally binding with respect to only the issues settled and have merely persuasive impact on similar cases (in addition to indicating to third parties what kinds of commitments they may have to make at some point in order to avoid an antitrust proceeding). Consent means no appeal, but an order by a regulator that is upheld by an appeals court becomes a formal precedent. The risk to the regulator is that the decision may be reversed or vacated in whole or in part -- but to the extent the regulator prevails, a decision that survived an appeal has broader impact.

The European Commission issued a Statement of Objections (SO) against Samsung irrespectively of Samsung's unilateral withdrawal of its European SEP-based injunction requests. As a result, Samsung may be fined for its past conduct. In that event, if Samsung appeals the decision and an EU court upholds the decision, there will be a Europe-wide effect on the case law. If Samsung accepted a fine without an appeal, the EU decision would still be more influential than a mere settlement. With or without an appeal, but provided that there's a ruling and not just an agreement, the European Commission could achieve some harmonization of national rules (particularly with a view to the German Orange-Book-Standard framework). National courts would take note of any settlements but wouldn't really have to change their own approach unless they want to, while they can't ignore EU-level decisions.

Still, settlements are important signals to the market, and the strongest signals are the ones that are easiest to decipher. After I read the FTC-Google consent order for the first time, I knew what kinds of steps Google and a potential licensee could take, but it still wasn't clear to me at which point a given party would have to take a certain initiative in order to keep the door open or closed to the pursuit of injunctive relief. I had to re-read the document (29 pages including appendices) to get that message, and after reading it for a third time I finally felt I was able to summarize the stipulated mechanics, but still couldn't say with certainty that there are no loopholes (I did, however, acknowledge that a number of common loopholes appeared to have been closed). And I was actually in a privileged position to figure out the deal, having read each and every FRAND-related pleading in any pending actions involving Google's Motorola Mobility, Samsung and certain other players. By contrast, it took me only a couple of minutes (!) to fully understand the concise SEP-related part of the November 2012 FTC agreement with Bosch, despite the fact that I'm entirely unfamiliar with the field of air conditioning recovery, recycling and recharging (ACRRR) products and any litigation involving Bosch or SPX.

The SEP part of the FTC-Bosch SEP deal is easily explained: no SEP-based injunctions ever except ("if, and only if") one of three things applies -- an SEP is being used for purposes other than implementing the relevant standard, a defendant declares itself (in writing) unwilling to take a license or refuses to take a license on terms that "that have been determined to comply with the [FTC-Bosch deal] through a process agreed upon by both parties or through a court". This means that a defendant who uses those SEPs only for the implementation of a standard and isn't crazy enough to declare in writing a categorical unwillingness to take a license doesn't have an obligation to do anything in order to avoid injunctions other than take one on terms that a court (or, if the parties agree on arbitration, an arbitration tribunal) ultimately deems to be in line with FRAND.

In practical terms, this means that implementers don't face the risk of injunctions even if they completely ignore any legal letters from Bosch. All that Bosch can do is sue for FRAND royalties. That is, by the way, consistent with Judge Posner's approach.

Compared to that straightforward structure, the FTC-Google agreement is much more complex, and that complexity comes with potential risks. Implementers of standards might make formal mistakes or miss deadlines, and then the patent holder would be free to seek injunctions. Even if defendants act in good faith and try to do what the FTC expects them to do, Google could still try to argue that a requirement wasn't met, or that some exception applies. Microsoft points out one loophole in its reaction to the FTC-Google deal:

"Google can even continue to use its standard essential patents to fend off patent infringement actions against it: the proposed decree gives Google leeway to sue for an injunction on its standard essential patents if it takes the position that injunctive relief sought against it is based on a patent that is standard essential. Since it is often hard to tell which patents are standard essential, the risk of injunction lawsuits from Google may dissuade firms from seeking to enforce their non-standard essential patents against the company."

That strategy of invoking a defensive provision, possibly even in absurd cases only to create legal uncertainty, would not work for Bosch under its deal with the FTC.

I don't believe Google is going to successfully seek or enforce injunctive relief against Apple or Microsoft. Microsoft brought a FRAND contract lawsuit more than two years ago and is now just awaiting the district court's rate-setting decision. Apple may have temporarily overplayed its hand in a somewhat similar case, but it was willing to drop its somewhat arrogant "no more than $1 per unit" position in the context of reciprocity, and it still has all options to sort out any SEP issues with Google. But if the sole purpose of this exercise had been to protect Apple and Microsoft from Google's abusive conduct, the most efficient and, especially, most clear-cut solution would have been to have Google withdraw its pending SEP injunction requests against those companies and to promise not to bring any new ones. If the objective was to set a policy for SEP enforcement, then the straightforward agreement with Bosch has just been diluted by a convoluted set of rules -- a downgrade.

The length and complexity of the Google order suggests to me that the FTC was well aware of the various games that Google and some other SEP holders try to play, but that the regulator wasn't prepared to present Google with the choice between making an easy-to-understand, impossible-to-circumvent commitment and facing formal antitrust charges.

When discussing the work that the FTC did here, let's distinguish between "doing things right" and "doing the right things". At the level of "doing things right" in detail, I have a lot of respect for all the scenarios and possible loopholes the FTC took into consideration when drafting the order, though there may be some weaknesses (such as the possible loophole of Google saying that a non-SEP enforced by someone else is standard-essential, creating legal uncertainty about the availability of injunctive relief). But at the strategic level of "doing the right things", I'm unconvinced to say the least and hope that better solutions to the rampant problem of SEP abuse will be found elsewhere.


Bits & Bytes
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/4/2013

Federal Circuit Refuses to Hear Contract Dispute over Patent Assignment and Royalty Contract
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/4/2013

By Dennis Crouch

DeRosa v. J.P. Walsh & J.L. Marmo Enterprises (Marmo) (Fed. Cir. 2013) (nonprecedential)

In the face of Supreme Court scrutiny over its jurisdictional power, the Federal Circuit has taken a step back from its historic approach of expanding patent law jurisdictional reach.

DeRosa is the inventor of a cam-less chuck for use in a router. These have been available for some time with ordinary drills, but the large size and high rotation speed made the same type of assembly more difficult for a router. DeRosa's provisional patent application was filed back in November 1998 and, at the same time, DeRosa assigned his rights in the invention and "further improvements" to Marmo in return for a promise that a promise that Marmo would manufacture and sell the device and that DeRosa would receive royalties on those sales.

In 2010, DeRosa sued Marmo in Virginia state court – alleging that the company had failed to live up to its continued contractual obligations to manufacture and sell the device. In the lawsuit, Marmo asked for both contract damages and a reversion of ownership rights in the patent. The case was first removed to Federal Court on diversity grounds and then removed to an arbitrator based upon the contract terms. The arbitrator found for DeRosa on breach of contract but held that Marmo was still the proper patent owner. That decision was confirmed by the E.D. Virginia District Court in an April 6, 2012 order.

On appeal, the Federal Circuit has refused to decide the case - holding that it lacks jurisdiction and that the proper venue is the Court of Appeals for the Fourth Circuit. The reason here is that the complaint did not raise any substantial questions of patent law but rather simply focused on the contract. Judge Bryson writes:

Causes of action based on contractual rights in a patent assignment or license agreement as a general rule do not arise under the patent laws. See Luckett v. Delpark, Inc., 270 U.S. 496, 502-03 (1926); New Marshall Engine Co. v. Marshall Engine Co., 223 U.S. 473 (1912). Marmo nonetheless argues that the appeal is properly before this court because the complaint specifically requests a restoration of ownership in patent rights.

That DeRosa's complaint ultimately sought to restore ownership in the invention is of no great significance. The focus of the jurisdictional inquiry is whether the plaintiff "set up some right, title or interest under patent laws, or at least makes it appear that some right or privilege will be defeated by one construction, or sustained by the opposite construction of these laws." Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 807-08 (1988).

The complaint in this case did not turn on such a claim. The alleged harm stated was Marmo's failure to abide by its "contractual and financial obligations under the contract" resulting in DeRosa not having received the "bargained for benefit" of "a steady flow of manufacturing business and the timely payment for the product." Although a restoration of patent ownership is sought in the complaint, such relief is entirely premised on the claim that Marmo's failure to fulfill its obligations under the contract warrants a remedy of rescission. As such, this case does not arise under the patent laws, and we do not have jurisdiction.

In Jim Arnold Corp. v. Hydrotech Systems, Inc., 109 F.3d 1567 (Fed. Cir. 1997), a case very similar to this one, this court held that a plaintiff seeking rescission of a patent assignment agreement in order to restore ownership rights in a patent could not meet the jurisdictional test set forth in Christianson. As in the present case, the plaintiff in Jim Arnold had no rights in the patent without judicial intervention and was thus left only to argue that ownership of the patents should be restored based upon a breach of contract claim. Because a plaintiff under such circumstances could at best only present a frivolous allegation of ownership of the patents at issue sufficient to confer jurisdiction under section 1338, we transferred the case to the regional circuit. Since the same outcome is warranted here, pursuant to 28 U.S.C. § 1631, we transfer the case to the Fourth Circuit.

The court ignored Marmo's most compelling argument – that the action was implicitly a move by DeRosa to quiet title in his further improvements that he later patented and now manufactures through another source. Marmo argued that mapping the contracted-for improvements to the various patents necessarily requires a substantial consideration of patent law issues. The case will now move to the Fourth Circuit to see whether the arbitration award was properly confirmed.

= = = =

Minton v. Gunn: This term, the Supreme Court is considering Minton v. Gunn, a patent litigation malpractice case. Legal malpractice is ordinarily a state law claim. Here, however, the court is considering whether the malpractice action arises under the U.S. patent laws in such a way that would confer both federal jurisdiction at the district court level and Federal Circuit jurisdiction on appeal.

America Invents Act: The Leahy–Smith America Invents Act (AIA) expanded the scope of federal jurisdiction to include cases whose only substantial patent claim is filed in a compulsory counterclaim. See 28 U.S.C. § 1295(a)(1) as amended. However, that change in the statute does not impact this case because it only applies to civil actions commenced on or after September 16, 2011.

Notice of Arbitration Awards: 35 U.S.C. § 294(d) requires that a notice of arbitration award be filed with the USPTO. Under the statute, "[w]hen an award is made by an arbitrator, the patentee, his assignee or licensee shall give notice thereof in writing to the Director." The submission is required to include a number of details as well as "a copy of the award" itself. Under the law, that award becomes a public record and part of the patent file. As a kicker, law states that "[t]he award shall be unenforceable until the notice required by subsection (d) is received by the Director."

In this case, the notice of award was probably not required because the statute further limits its focus to arbitration of validity or infringement issues. Here, the dispute was over contract terms and ownership.

= = = =


Apple appeals dismissal of FRAND case against Google's Motorola to the Federal Circuit
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/4/2013

Apple just filed a notice of appeal with the United States District Court for the Western District of Wisconsin in the FRAND contract case it brought against Motorola in 2011 in the form of counterclaims removed from an ITC investigation. A bench trial was supposed to start on November 5 but canceled after Judge Barbara B. Crabb dismissed the case after Apple had declared itself willing to take a license on court-determined terms only if the royalty rate for Google's (Motorola Mobility's) was not going to exceed one dollar per device or, as Apple subsequently proposed, if the court was going to simultaneously set a rate Google would have to pay for Apple's standard-essential patents or at least ensure that the related rate would be set in accordance with the same principles.

Originally the dismissal would have been prejudicial to Apple's FRAND claims, but Apple won a modification of the ruling that turned the dismissal into one without prejudice, which was a strategically important achievement that went largely unnoticed.

Here's Apple's notice of appeal (click on the image to enlarge or read the text below the image):

NOTICE OF APPEAL

Notice is hereby given that Apple Inc., plaintiff and counterclaim defendant in the above named case, hereby appeals to the United States Court of Appeals for the Federal Circuit from the final judgment entered in this action on December 5, 2012 (Dkt. 510) and the portions of all orders underlying that judgment that were adverse to Apple.

This appeal is particularly relevant in light of yesterday's FTC consent order. For as long as any FRAND rate-setting action is pending, Google is barred from seeking or enforcing injunctive relief. If Apple's appeal succeeds, the case will most likely be remanded to the district court, and the canceled trial will then take place. Should Apple's appeal fail, Apple could still bring a new FRAND determination action and further bar Google from the pursuit of injunctive relief.

Apple's appeal could also re-raise its antitrust claims that Judge Crabb dismissed on summary judgment in August 2012. The FTC's settlement with Google does not preclude private parties, Apple in this case, from antitrust litigation over the same issues. I don't know if Apple plans to pursue its antitrust claims on appeal or will instead focus entirely on the FRAND contract issues.


Big Improvements to Our Online TMEP
Posted by: David Kappos of: USPTO
from Patent Blog: USPTO
1/4/2013

Guest blog by Commissioner for Trademarks Deborah Cohn

We recently introduced a new, more user-friendly interface for the Trademark Manual of Examining Procedure (TMEP). If you haven’t had the opportunity to use it yet, I’m confident you’ll be pleased with it. The TMEP provides trademark applicants (and their attorneys and representatives) and our trademark examining attorneys with a reference on the practices and procedures for prosecution of applications to register marks with the USPTO.

The new interface offers users a more sophisticated and efficient method of getting needed information quickly. Searching is simplified so it is more similar to searching the Internet. When a search is executed, users receive weighted results which can give added focus. The display can also be modified to suit user needs. Browsing the TMEP is simpler, with a table of contents that can be hidden. In this way, the user can maximize the screen space available to display the content. Another recent, behind-the-scenes enhancement simplifies and shortens the process to publish the TMEP, allowing us to serve you better with more frequent updates.

The first publication using the new system took place on October 31, when we published the October 2012 update of the TMEP. With that update, we now identify the TMEP by the month and year in which it is issued (i.e., October 2012). This is a change from prior versions, which were identified using edition and revision numbers. At a roundtable I attended in Detroit in mid-November, practitioners told me they were very pleased with the new interface. One reported that it was the best IT improvement we have made to date.

We hope you’ll feel the same and we look forward to hearing your feedback on the new interface and TMEP update. Send your thoughts about the new TMEP to us by email at tmtmep@uspto.gov.


Cold Spring Harbor Laboratory Conference on Patenting in the Life Sciences
Posted by: Warren Woessner
from Patent Blog: Patents 4 Life
1/4/2013

I will be speaking at this conference in March, 2013.

*************************

GENES & DIAGNOSTICS:
A MYRIAD OF ISSUES IN BIOTECH IP
March 10 – 13, 2013

REGISTRATION DEADLINE: March 1st

http://meetings.cshl.edu/meetings/2013/patent13.shtml

Cold Spring Harbor Laboratory is pleased to announce a special conference on Patenting in the Life Sciences, which for its first iteration will focus on issues surrounding the patenting of genes and diagnostics. We anticipate that this will be the first in a regular series of special Cold Spring Harbor conferences addressing the relationship between intellectual property and the life sciences.

The conference will begin the evening of Sunday, March 10, and end at lunchtime on Wednesday, March 13. Ample time for extensive discussion, panel debates, and other networking opportunities will be included in the format of the conference.

Discussion Topics

  • Gene patents in the era of publicly available whole-genome sequences
  • The Judiciary’s view on patenting genes and diagnostics
  • Global perspectives on patentability, validity, and enforceability
  • How recent court decisions will affect the biotech industry
  • The impact of Prometheus on personalized medicine
  • Policy and ethics

Read the rest of this entry »


NPE asserts foundational British Telecom patent against Apple, RIM, Android companies, carriers
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/4/2013

BT (British Telecommunications) continues to aggressively monetize its wireless patent portfolio through direct and indirect litigation against other industry players. Today a non-practicing entity named Steelhead Licensing LLC filed a host of simultaneous lawsuits in the District of Delaware over a foundational wireless patent that belonged to BT until very recently, and I'd be very surprised if BT wasn't going to get a large cut of any licensing income Steelhead is now going to generate. The complaints were filed against nine handset makers (Apple, HTC, Kyocera, LG, Motorola Mobility, NEC, Pantech, RIM, Sony, ZTE) and five carriers (AT&T, MetroPCS, Sprint Nextel, T-Mobile).

The patent-in-suit is U.S. Patent No. 5,491,834 on a "mobile radio handover initiation determination". The complaints allege that devices implementing the 3G (UMTS) or 4G (LTE) cellular standards infringe this patent when performing a handover from one cell to the next -- it's hard to think of a more basic element of cellular wireless networks. It's unclear whether this patent is subject to any FRAND pledge made by BT with respect to standard-essential patents.

As of the time of publication of this post, the official assignment record for the patent still has only one entry: the original assignment by the inventor to British Telecommunications (presumably his then-employer) back in 1993. Steelhead Licensing now claims to own all substantial rights, so I'm sure an assignment by BT to Steelhead will soon be recorded in the USPTO assignments database. The reason for which the assignment doesn't appear in that database yet is presumably just a minor administrative delay.

Two months ago Google complained about BT using a patent troll as a front. BT is also suing Google directly over a number of patents.

I'm not going to follow Steelhead's lawsuits in detail unless any exceptionally interesting issues concerning post-transfer assertions of FRAND-pledged patents (if the patent-in-suit is an SEP, which is at least a possibility based on how the complaints are worded) come up as litigation unfolds.


Federal Circuit Judicial Nomination Watch
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/3/2013

By Dennis Crouch

Failure to Confirm: We all still remember Paul Michel as Chief Judge of the Federal Circuit, but it wasn't yesterday that he stepped down. Rather, we are nearing the three anniversary of his 2010 retirement (as a Federal Judge). In 2010, President Obama nominated Edward DuMont to replace Judge Michel. However, DuMont's nomination floundered. In 2011, President Obama nominated Richard Taranto for the post. However, the Senate has now failed to confirm Taranto's nomination. I expect that President Obama will re-nominate Taranto this month – giving the Senate another two years to consider filling the slot. No Senator has voiced any opposition to Taranto's nomination.

Two additional Openings: President Obama has not yet nominated a replacement for Judge Richard Linn who took Senior Status on November 1, 2012 after thirteen years in office. In addition, Judge William Breyer is scheduled to take Senior Status on January 7, 2013.

Future Openings?: Judges Newman, Lourie, and Dyk are all eligible for senior status.

Over the past two years, Judges Newman, Bryson, Linn, & Dyk have shown the highest propensity for participating in a panel opinion that includes a dissent. Judge Newman continues to be the most frequent dissenting author, followed by Judges Dyk and O'Malley. These results are shown in the chart below that includes results from all Federal Circuit opinions coded in Westlaw (CTAF) for 2011-2012.


Explained: the mechanics of the FTC Google consent order on standard-essential patents
Posted by: Florian Mueller
from Patent Blog: Foss Patents
1/3/2013

In my first reaction to the FTC's consent order on Google's assertion of standard-essential patents (SEPs) I already explained that "[s]imply put, someone who triggers a court action or arbitration to have the FRAND [fair, reasonable and non-discriminatory] terms set, and is willing to take a license on the final terms, should be on the safe side now". Now that I have had the opportunity to digest the full text of the consent order in detail, I can explain more specifically how it works.

This summary of the key terms is not meant to express an opinion on whether the FTC should have sanctioned Google for its past conduct (as opposed to settling on the basis of a consent order), and is entirely unrelated to the search engine case.

In terms of impact on other cases, the order is a consent decree: Google accepted it as part of a broader settlement. It nevertheless ups the ante for Samsung and various other SEP holders pursuing injunctive relief because it will bear considerable weight with U.S. courts and the ITC.

The order establishes a set of rules that limit Google's pursuit of SEP-based injunctive relief to a specific set of scenarios and, conversely, enable implementers of standards to fend off the threat of injunctive relief through behavior that meets certain criteria. While I haven't had enough time yet to think about any loopholes that may still exist, my impression so far is that the FTC has really thought this through and is aware of a number of tactics commonly employed by SEP abusers. Over the last couple of years I've been watching a certain pattern of companies making licensing offers on outrageous, totally unacceptable terms, knowing that no one in his right mind would accept them, only to then seek injunctive relief against an allegedly-unwilling licensee. In addition to making prohibitive demands they were also looking for other excuses for the pursuit of injunctions, such as arguing that someone who disputes that a given patent is valid or infringed (or that it is truly essential to a particular standard) somehow waives his entitlement to a FRAND license. The FTC undoubtedly wanted to put an end to these games, recognizing that the mere specter of a sales or import ban is sufficient to result in an agreement on non-FRAND terms and, consequently, distortions of competition as well as harm to consumers, who would face fewer choices and/or higher costs.

In my understanding, the FTC's approach is that there should be a window during which the parties can negotiate without the threat of an injunction hanging over the potential licensee, but if the parties can't reach an agreement, they should have a U.S. district court or an arbitration tribunal set the terms for them. Either way, the outcome will be a license agreement, and on the road to such an agreement there generally won't be any injunctions.

The agreement defines circumstances under which Google does remain free to seek and enforce injunctions:

  1. a potential licensee is outside the jurisdiction of the United States district courts;

  2. a potential licensee "has stated in writing or in sworn testimony that it will not license the FRAND Patent on any terms", which is a very extreme scenario and is explicitly not meant to be a loophole for seeking or enforcing injunctions against those who challenge the validity, value, actual infringement or standard-essentiality of a given patent (in this regard the FTC order is clearly more helpful to implementers of standards, and in my view more balanced, than the way certain German courts apply the Orange-Book-Standard decision to FRAND cases);

  3. a potential licensee refuses to enter into a license agreement on the terms set by a final court ruling or through binding arbitration; or

  4. a potential licensee fails to provide a written confirmation in response to a "FRAND Terms Letter" from Google, which is a mechanism enabling Google to ensure that the other party will also make its own patents essential to the relevant standards available on FRAND terms (reciprocity).

Assuming that none of these unusual circumstances applies, the FTC order defines a variety of criteria that must be met well ahead of any pursuit of injunctive relief:

  1. At least six months prior to the pursuit of injunctive relief, Google must provide the potential licensee with a copy of the consent order and an offer to license. The only acceptable condition for the offer to license is reciprocity, and that concept does not give Google the right to demand a license to non-SEPs (or other types of non-standard-essential intellectual property), or to patents that are essential to other standards. Google can always offer additional patents, but those parts of an offer would simply not fall within the scope of the consent order.

  2. At least 60 days prior to the pursuit of injunctive relief, Google must make an offer to arbitrate the terms of a license agreement. If the potential licensee also wants to go down the arbitration avenue, the consent order then defines certain rules for the related next steps.

If Google fails to do (1) or (2) or both, it can't pursue injunctions. It's furthermore precluded from the pursuit of injunctions if the potential licensee has filed a request for a FRAND determination no more than seven months after the offer to license or three months after the offer to arbitrate (whichever is later), unless such action is dismissed upon a final ruling.

The combination of all these advance-notice periods has the following implications for the licensee: The potential licensee is in no rush after Google makes an offer to license and can negotiate for several months, except that confirmation of reciprocity must be given quickly. If negotiations haven't led to a result after four months, Google will have to send an offer to arbitrate (it can also do so earlier). Now the potential licensee (who is presumably interested in keeping the door to injunctive relief closed) must decide whether to submit to binding arbitration or to refer the matter to a United States district court. In the latter case, it must file a request "in any United States District Court of competent jurisdiction that the court determine at least the royalty terms of a global license for use of Respondents' FRAND Patents Essential to a Standard, to the extent the use of the relevant FRAND Patents is not covered by an existing license".

The FTC order also addresses potential issues relating to arbitration. For example, the parties may not agree on certain terms. It's clear that any disputed contract terms must be put before the arbitration tribunal, and reciprocity is the only acceptable precondition. Ideally the parties will agree on an arbitration organization, but if they can't, then the potential licensee can always propose the American Arbitration Association (AAA) or JAMS.

The FTC order furthermore ensures that Google can't leverage a Wisconsin-based court's dismissal without prejudice of a FRAND contract action in a way that would deprive Apple of the benefits of the consent order. Apple can simply bring a new request if necessary. But next time it really has to accept to take a license on court-determined terms.

The order will be in effect for ten years and there will be annual reviews of the situation. In the very short term, Google must demonstrate its compliance, which presumably means that we'll see various filings with courts and the ITC withdrawing requests for injunctive relief. And now there will be a 30-day period during which the FTC will accept comments on the proposed consent order.


Patents per year
Posted by: Dennis Crouch of: University of Missouri
from Patent Blog: PatentlyO
1/3/2013

PatentlyO186

 


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