||"ENTER: Human-Made Inventions, Living or Not"
||Hayden A. "Bud" Carney
The US patent statute is sufficiently broad in scope that it opens the doors of the Patent and Trademark Office (PTO) to applicants who seek to patent living things made by them. However, those doors are closed to applicants who seek to patent products of nature. That is the essence of a December 2001 decision by the United States Supreme Court.
The Court's decision, from which two justices dissented, was rendered in J.E.M. Ag Supply Inc. v. Pioneer Hi-Bred International Inc. ("Pioneer Hi-Bred"). The inventions at issue in that case pertained to inbred and hybrid corn seeds on which Pioneer Hi-Bred had obtained several conventional patents. Both types of seeds are "products of man," not products of nature. This difference was the key to the Supreme Court's decision.
Section 101 of the patent law defines the subject matter that can be patented. Section 101 provides that "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor" if other conditions and requirements are met. Twenty-one years ago, in Diamond, Commissioner of Patents and Trademarks v. Chakrabarty, a divided Supreme Court ruled that Section 101 is sufficiently broad in scope that the PTO should not have refused an application to patent a genetically engineered strain of bacteria on the ground that bacteria are living things outside the scope of the patent laws. The bacteria in question were engineered to feed on petroleum and are useful in attacking marine oil spills. The Court observed that the relevant distinction is "not between living and inanimate things, but between products of nature, whether living or not, and human-made inventions."
The PTO understood and paid heed to the Chakrabarty decision. By the time the Pioneer Hi-Bred case reached the Supreme Court, the PTO had granted over 1800 utility patents for plants, plant parts, and seeds.
Pioneer Hi-Bred owned 17 of them. As noted, they covered inbred and hybrid corn seed products. Inbred corn plants differ from products of nature by being highly inbred for several generations to produce a plant line which is homogenous and has desirable characteristics. Inbreds are often weak and have a low yield; their value lies primarily in the making of hybrids. Hybrid seeds result from the crossing of two inbred lines. Hybrid seeds are valuable because they produce strong and vibrant plants with selected, highly desirable characteristics. However, hybrid plants generally do not reproduce true to type, so farmers who wish to grow more hybrid plants generally need to buy more hybrid seed.
Pioneer sold its hybrid seeds in packaging that licensed use of the seeds only for production of corn and/or forage, not for propagation or for development of hybrid or different variety seed. J.E.M. Ag Supply, dba Farm Advantage, bought and resold Pioneer's bags of seeds, in violation of that limited license. Pioneer sued for infringement of its patents.
Farm Advantage's defenses in the infringement litigation included an attack on the validity of Pioneer's patents. Farm Advantage argued that plants and seeds are protected solely by two other statutes: The Plant Patent Act of 1930 ("PPA") and the Plant Variety Protection Act of 1970 ("PVPA"). As compared to Section 101 of the patent statute, the PPA and PVPA provide different, and arguably lesser, types of protection. For example, the PPA protects only against unauthorized asexual reproduction of plants patented thereunder. The PVPA, although encompassing sexually reproduced plants (plants propagated from seeds), only prohibits a restricted range of uses of plants. Farm Advantage argued that the PPA and the PVPA evidenced an intent by Congress that Section 101 was not open to plants and seeds, and that the PPA and the PVPA provided the exclusive pathways to protection of that subject matter. That defense was not accepted by either the trial court or the Court of Appeals for the Federal Circuit.
The Supreme Court also rejected Farm Advantage's contention that the PPA and the PVPA have the effect of removing plants and seeds from the ambit of the general patent statute. The Court's majority, concurring, and dissenting opinions deal with the rather esoteric and technical problem of statutory construction, namely, when do later acts of Congress have the effect of limiting or nullifying provisions of an earlier, more general statute. A solid majority of the Court concluded that, because of their more restricted eligible subject matter and more restricted scopes of regulated conduct, the PPA and PVPA did not close the general patent statute to coverage of plants and seeds. In reaching that conclusion, the Court emphasized several things that should be encouraging to all persons who would seek U.S. patent protection, including:
- "In choosing such expansive terms as 'manufacture' and 'composition of matter', modified by the comprehensive 'any', Congress plainly contemplated that the patent laws would be given wide scope."
- Section 101 "is a dynamic provision designed to encompass new and unforeseen inventions."
- "Denying patent protection under Section 101 simply because such coverage [for plants] was thought technologically infeasible in 1930, however, would be inconsistent with the forward-looking perspective of the utility patent statute. As we noted in Chakrabarty, 'Congress employed broad general language in drafting Section 101 precisely because [new types of] inventions are often unforeseeable.'"
The Supreme Court has declared that the general patent statute opens the doors of the Patent and Trademark Office to admission of unknown technologies and developments crafted by human mind and hand. The PTO - and patent practitioners - will continue to grapple with the ever broadening landscape of patentable subject matter.
||"SpaceShipOne" Named Invention of the Year
||John D. Carpenter
Christie, Parker & Hale is pleased to congratulate one of its clients, Burt Rutan, who recently received special recognition for his ingenuity. Time magazine named Rutan's SpaceShipOne the invention of the year for 2004. The inventor and his invention are on the cover of the November 29, 2004 issue of Time, which carries a detailed escription of the invention, along with 35 other innovations reviewed by the magazine.
In October of 2004, SpaceShipOne captured the $10 million Ansari X Prize for being the first craft to travel to space twice within two weeks, while carrying the pilot and a load equivalent to two additional passengers.
SpaceShipOne is a rocket ship which is carried to an altitude of about 9 miles by a launch aircraft (the White Knight). The rocket ship is dropped, and its rocket motor ignited for about 3 minutes, accelerating the craft almost vertically to a speed of 2,200 m.p.h. The rocket motor, fueled by rubber and laughing gas (nitrous oxide), shuts down at an altitude of about 30 miles, and the craft continues to an altitude of more than 64 miles, where the daylight sky is black and the curvature of the earth is easily seen.
The craft experiences weightlessness for about 4 minutes, beginning with the shut down of the rocket motor, and gradually ending as the craft reenters the earth's tmosphere. To prepare for reentry, unique twin tail booms on the craft rotate upward 65 degrees to cause the craft to fall nose first, very much like a badminton bird.
SpaceShipOne descends to an altitude where the atmosphere is sufficiently dense to permit gliding, the twin tail booms are retracted to the normal horizontal position, the landing gear is lowered, and the craft lands as a glider.
A remarkable aspect of the invention is that Rutan's group achieved it all using only private funds, and with sufficient speed and efficiency to beat twenty-four other teams competing for the X Prize.
The invention also shows commercial promise, as Rutan's firm, Scaled Composites, has orders from Virgin Galactic for five larger versions of SpaceShipOne, with seats for five passengers and a pilot. Commercial flights could start as early as 2007.
||50 Years of IP Excellence
||John D. Carpenter
In June of this year, Christie, Parker & Hale celebrated an important milestone when it reached its 50th anniversary. From its humble beginnings in 1954, through its tremendous growth in the 1990's, to its current place among the nation's elite intellectual property law firms, CP&H has been fortunate to have wonderful clients and a cast of talented lawyers and support staff. We look back with pride at the firm's history, and forward with great expectations for the years ahead.
CP&H -The Early Years¹
James B. Christie, Robert L. Parker, and C. Russell Hale formally started their namesake firm in 1954, after having practiced together for a short while as the Law Offices of James B. Christie. The three founders' diverse backgrounds — mining, chemistry, and electrical engineering; law degrees from Fordham University and Loyola University — were complementary and placed the firm on a very solid technical and legal footing.
An important early client was United Geophysical Corporation, a Pasadena-based company headed by Herbert Hoover, Jr., the son of the President of the United States. Also significant was Consolidated Engineering Corporation, the manufacturing and research arm for United Geophysical. Much of the work involved seismic exploration, with its attendant need for precise, accurate geophones, galvanometers, and recording equipment. Southern California, with its oil fields and burgeoning electronics and aerospace industries, was a perfect locale within which to practice patent law.
As Consolidated Engineering grew, so did CP&H. Vacuum tubes gave way to solid state devices, computer software became patentable, and long-time clients transformed themselves and were joined by other worthy enterprises. Consolidated Engineering became Consolidated Electrodynamics, then CEC, and then was acquired by Bell & Howell, which later spun off ElectroData, an early computer company. ElectroData was in turn acquired by Burroughs Corporation, which became a substantial client of the firm. Another branch of CEC yielded Unitek Corporation, which developed — and patented — such diverse products as orthodontic appliances and precision welding equipment. Union Oil, which long had benefited from Bob Parker's counsel, tapped CP&H as patent lawyers for CUSS: a consortium of oil companies who were developing pioneering technology for off-shore drilling from floating vessels and stationary platforms. The technology led to what would become another firm client: Global Marine Drilling Corporation, a worldwide provider of off-shore drilling expertise for global oil companies.
Jim Christie passed away in 1959 at the relatively young age of 55. After his death, Bob Parker and Russ Hale managed the firm through steady growth until Bob's death in 1980 and Russ's retirement in 1986. Today, Russ enjoys a comfortable retirement in Rancho Santa Fe, California. Although its founders are no longer with it, Christie, Parker & Hale continues to benefit from their legacy of technical and legal knowledge, commitment to clients, and consideration of others.
Over the years, CP&H has been truly fortunate to represent many successful clients, from nearly every corner of the globe. In addition to the CEC family of clients, Union Oil, and the CUSS consortium, another important early client was Lear, Inc. (and the related company, Lear Siegler), a leader in gyroscopic platforms for navigational systems. In the late 1960's, Russ Hale, assisted by Edwin Hartz, represented Lear in a bitter patent infringement and licensing dispute with Adkins. Russ argued his case before the United States Supreme Court, ultimately convincing it to overturn the doctrine known as "licensee estoppel," which had theretofore prevented patent licensees from challenging the validity of patents under which they were licensed. The result was an important legal and economic victory for Lear.
Today, CP&H represents some of the world's largest companies — and many smaller clients — as well as individuals. Included are some of the most prolific patent and trademark filers in the world: Alcatel, Avery Dennison, Boeing, Broadcom, Caltech, Discus Dental, Fujitsu, Gemstar, Samsung, and the University of California. CP&H is recognized as one of the top patent and trademark law firms in the United States, easily competing with general firms and IP firms over ten times its size. In the mid-1990's, a team of CP&H lawyers successfully defended McGaw, Inc. (now B. Braun Medical) in a patent infringement action filed by a major international health care provider. $100 million in asserted damages were at stake, but McGaw prevailed and was awarded its attorneys fees. (The opponent's patents were also held to be unenforceable.) In 1997, David Dillard and Art Hasan won a $20 million verdict for Super Health Institute, a small importer of Chinese health foods and supplements — one of the largest verdicts ever rendered in a trademark action.
Representation of international clients is an important part of CP&H's practice. As one example, we have filed hundreds of U.S. patent applications for Samsung, the largest manufacturer of plasma display panels in the world. Many other companies from Asia, Europe, Australia, and other parts of the world look to CP&H for patent and trademark protection.
CP&H lawyers also assist their clients with national and international licensing programs. Bob Green, for example, is outside counsel to Ronald A. Katz, the holder of an extensive portfolio of patents in the telephony field. The "Katz portfolio" has been licensed to many of the largest companies in the telephone, banking, and computer industries, and has generated hundreds of millions of dollars in license royalties.
A Culture of Collegiality and Excellence
Half a century has passed since three lawyers formed a partnership in 1954, and the firm has grown in size. The firm's culture, however, remains unchanged. Collegiality, legal and technical expertise, and a strong commitment to clients; these are the hallmarks of Christie, Parker & Hale. The firm's 50 attorneys share lunch each Friday at a "PQ"² seminar, with the Pasadena and Newport Beach Offices connected by video. These seminars enable CP&H attorneys and law clerks to stay abreast of the law, and foster a sense of firm community and camaraderie. Monthly dinners and an annual retreat further strengthen the informal relationships between attorneys.
In keeping with the founders' tradition, nearly every lawyer at Christie, Parker & Hale has a degree in a field of science or engineering, and many of the attorneys have advanced degrees. The entire spectrum of modern technology is represented: chemistry, physics, math, biology, computer science, metallurgy, materials science, and many fields of engineering, including electrical, mechanical, civil, and aerospace. Bud Carney, now of counsel to the firm, even has a degree in naval architecture! Of course, the practice of patent, trademark, copyright, and other types of intellectual property law, requires skilled lawyers, and we believe that Messrs. Christie, Parker, and Hale would be as proud of our attorneys' legal credentials as of their technical expertise. CP&H lawyers have degrees from some of the finest law schools in the country, and distinguished themselves with law review memberships, moot court performances, and other honors. CP&H attorneys enjoy both the firm's well-developed reputation as an elite IP boutique, and the personal reputation of expertise and commitment that comes from active membership in legal organizations, distinguished conduct before the Patent and Trademark Office, and regular appearances before the state and federal judiciary.
50 Years of IP Excellence. We look forward to the next 50 years.
¹ We are indebted to retired partners Bill Johnston and Russ Palmer, both of whom still practice as counsel to the firm, for their fine work in preparing an early chronology of Christie, Parker & Hale.
² So-called because the cases that are discussed are reported in U.S. Patents Quarterly (PQ), a legal reporter of recent patent, trademark, and other intellectual property law cases.
||Thomas J. Daly
Daniel R. Kimbell
FOR 141 YEARS, the false patent marking of products has been against the law.1 Since 1952, federal law has prohibited false patent marking and provided for a $500 fine for each violation.2 In 2009, after the Federal Circuit decided in Forest Group, Inc. v. Bon Tool Company to apply the $500 penalty on a per-article basis, hundreds of lawsuits alleging false marking have been filed, making it more important than ever that attorneys representing patent owners, licensees, and manufacturers understand how to counsel their clients on this issue.3 In the aftermath of Forest Group, at least one court found the false marking provision unconstitutional,4 and Congress is debating ways to amend the law, adding to the possibility of confusion and increasing the need for clear advice.
Until Forest Group, the false patent marking law was largely ignored, because the penalties under the law as it was interpreted were relatively small. However, the new interpretation of Forest Group has considerably increased the risk of litigation for patent owners, licensees, manufacturers, and even sellers of patented goods with marked patent numbers. These parties will need to ensure that their goods bear valid, applicable, and enforceable patent numbers, or else they may face suits by false patent marking opportunists or counterclaims from anyone they sue for patent infringement. Attorneys for patent holders should be aware, however, that the reasons for placing patent numbers on products remain compelling.
Manufacturers can benefit from having applicable patent numbers marked on products. A mark can deter copying, thereby helping manufacturers avoid litigation. Patent law encourages marking by providing that in the event of a failure to mark, “[N]o damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.”5 In view of this provision, patent holding manufacturers often mark their patented goods and packaging with applicable patent numbers, and patent owners that license patent rights will typically include a clause in the license agreement requiring licensees to mark goods.
If goods within the public domain are falsely marked, potential competitors may
be dissuaded from entering the market. “Congress intended the public to rely on marking as a ‘ready means of discerning the status of intellectual property embodied in an
article of manufacture or design.’”6 Acts of false marking deter innovation and stifle competition in the marketplace.7 False marks may also deter scientific research when an inventor sees a mark and decides to forego continued research to avoid possible infringement.8 False marking can cause unnecessary investment in design or costs incurred to analyze the validity or enforceability of a patent whose number has been marked upon a product with which a competitor would like to compete.
Under 35 USC Section 292, a fine of not more than $500 for every offense may be imposed for false patent marking. To encourage enforcement, the law has a qui tam provision, allowing any person to sue for the penalty, in which event half of the fine goes to the person suing and the other half to the United States. The statute lists the prohibited acts of false marking, including using the patent markings of a third party without permission and falsely marking or advertising an article as patented or as being patent pending. In each case, the acts must be committed “with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public” or “for the purpose of deceiving the public.”9
Anyone who makes a Section 292 false marking claim must show not only that an article is falsely marked but also that it was marked with intent to deceive the public.10 As the court noted in Clontech Laboratories, Inc. v. Invitrogen Corporation, “Intent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true.”11 A party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked.12 An assertion by a party that it did not intend to deceive, standing alone, “is worthless as proof of no intent to deceive where there is knowledge of falsehood.”13
Until 2009, the clause stating that violators “[s]hall be fined not more than $500 for every such offense” was interpreted to mean either a decision to mark a product,14 or some time-based formulation based on finding a decision being made every day, week, month, or other period,15 even though Section 292 does not define “offense” in this way. Before Forest Group, it was rare for courts to fine the patent marker for each product marked.16 Few would consider a $500-per-offense penalty, using the decisionbased definition of offense, as much of a deterrent for willful false patent marking or as a windfall to a litigant and the U.S. government.
In Forest Group,17 however, the court ruled that “the plain language of 35 U.S.C. section 292 requires courts to impose penalties for false marking on a per article basis.” On the other hand, the court added, “This does not mean that a court must fine those guilty of false marking $500 per article marked. The statute provides a fine of ‘not more than $500 for every such offense.’…By allowing a range of penalties, the statute provides district courts the discretion to strike a balance between encouraging enforcement of an important public policy and imposing disproportionately large penalties for small, inexpensive items produced in large quantities. In the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty.”
Despite that discretionary caveat, the Federal Circuit considerably raised the stakes for those who may have knowingly and falsely marked their products with expired or inapplicable patent numbers. After Forest Group, a case that involves 100,000 widgets could yield a $50 million penalty. Unsurprisingly, the Forest Group argued to the Federal Circuit that “interpreting the fine of § 292 to apply on a per article basis would encourage ‘a new cottage industry’ of false marking litigation by plaintiffs who have not suffered any direct harm.” In response, the Federal Circuit stated, “This, however, is what the clear language of the statute allows. Section 292(b) provides that ‘[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.’”18 Manufacturers can question whether anyone is harmed by the inclusion of one or more expired patent numbers on articles, but the law currently exposes manufacturers that do not keep their patent number marks up-to-date to lawsuits inspired by Forest Group.
There have been attempts to mitigate the Forest Group decision. In Pequignot v. Solo Cup Company,19 a patent attorney sued the Solo Cup Company for falsely marking 21 billion hot and cold drink cup lids and sought an award of $500 per item, for the sum of $10.5 trillion. Ruling for the defendant, the Federal Circuit determined that the plaintiff had failed to raise any issues of material fact that Solo Cup Company intentionally deceived the public, even though it knew that some of the patent numbers were expired. The court stated, “[U]nder Clontech and under Supreme Court precedent, the combination of a false statement and knowledge that the statement was false creates a rebuttable presumption of intent to deceive the public, rather than irrebuttably proving such intent…Although the presumption cannot be rebutted by ‘the mere assertion by a party that it did not intend to deceive,’ id., Clontech does not stand for the proposition that the presumption is irrebuttable.”20.
\An important fact in the case was that Solo Cup had obtained advice from its patent attorney about what to do with expensive molds bearing patent numbers that would last 15 to 20 years. The advice was that when molds wore out, they would be replaced with molds not bearing the expired patent numbers. Also, at the advice of its patent counsel, Solo began to use language on its packaging that stated, “This product may be covered by one or more U.S. or foreign pending or issued patents. For details, contact www.solocup.com.” The Federal Circuit considered the advice regarding the replacement of worn molds with new ones without expired patent numbers to be a reasonable measure “to reduce costs and business disruption.” However, the language “This product may be covered by one or more U.S. or foreign pending or issued patents” is probably ill advised because it is almost an admission that some of the patents do not apply.
Another case, Stauffer v. Brooks Brothers, Inc.,21 involved a patent attorney who had purchased some bow ties from the clothier that were marked with expired patent numbers. The attorney brought a qui tam action against Brooks Brothers. In a decision reversing the district court, the Federal Circuit decided that the attorney had standing to bring suit, even though he personally did not suffer any injury, because the government had a legitimate interest in ensuring that its laws were enforced, and that standing of the government inured to the attorney as a private party. The Federal Circuit further decided that the U.S. government should have been allowed to intervene in the lawsuit. With that, the Federal Circuit remanded the case back to the trial court for further consideration.
More recently, the U.S. District Court for the Northern District of Ohio, in Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc.,22 found the false marking statute unconstitutional under the take care clause of the U.S. Constitution. The court reasoned that the statute “essentially represents a wholesale delegation of criminal law enforcement power to private entities with no control exercised by the Department of Justice” and, therefore, does not provide “sufficient control to enable the President to ‘take Care that the Laws be faithfully executed.’”23 The U.S. has filed a motion to intervene and for reconsideration in this case. The decision is also subject to appeal. A prior district court looking at the constitutionality of the false patent marking statute did not find it lacking, so it is unclear how the constitutionality of the statute will ultimately be resolved.
Bills to End Nuisance Suits
Until the law is clarified, individuals may continue to bring false patent marking suits, even though they are not personally injured. They must still prove, however, that the patent holder had an intention to deceive, and even if deceitful intent is established, courts have the discretion to determine the per-article penalty.
It has been suggested that the exposure to defendants in false patent marking suits has been overblown.24 A Freedom of Information Act request revealed 100 false patent marking settlements ranging from $2,000 to $350,000, with an average of about $60,000.25 While these may not be particularly dramatic numbers, these nuisance suits also involve significant cost to defendants in time, aggravation, and attorney’s fees.
In response to the patent suits, bills to amend Section 292 were introduced in the 111th session of Congress. None passed. In the Senate, the Patent Reform Act of 2009, introduced by Senator Patrick Leahy, proposed amending Subsection 292(b) to read:
A person who has suffered a competitive injury as a result of a violation of this section may file a civil action in a district court of the United States for recovery of damages adequate to compensate for the injury.
This revised language gave standing to sue for false marking only to competitors and made damages compensatory rather than punitive. This change would have spelled the demise of opportunistic patent suits and offered relief to manufacturers.
Another bill from the last Congress would have gone even further toward eliminating these suits,26 modifying the penalty for false marking from $500 for each offense to “$500, in the aggregate, for all offenses in connection with such articles.”27 It also would have limited a private right of action to a “person who has suffered a competitive injury as a result of a violation of this section.”
In the 112th Congress, the Senate moved fairly promptly to pass a patent reform bill. It continues to allow the U.S. government— but only the government—to take advantage of the $500-per-offense penalty. Private enforcers would no longer have a share in the spoils. Under S. 23, the Patent Reform Act of 2011, “Any person who has suffered a competitive injury as a result of a violation” of the false marking statute would be able to file a civil action, but recovery would be limited to “damages adequate to compensate for the injury.”28
Advice for Manufacturers
Until the law is changed, those who mark products with patent numbers should protect themselves. These precautions include carefully verifying patent marks. This may involve patent attorneys, engineers, and supervisors who can document their good faith belief that the manufacturer’s patent marks are reasonable. Decisions should be documented as to which products are covered by which patents, and steps should be taken to audit the process and remove patent numbers that no longer apply.
One option is to include expected expiration dates next to patent numbers. A date gives clear notice that the patent is no longer in effect, and thereby thwarts an assertion of deceit. Even under this option, however, diligence is necessary. A failure to pay maintenance fees, for example, or reexamination or litigation could render the patent invalid before the expiration date. A policy should be put in place to remove or revise the markings in these situations.
Attorneys advising clients should also stress that any policies that are adopted should be consistently enforced to allow improper patent markings to be removed from articles and advertisements. Conditional phraseology in markings (such as “this product may be protected by,” or “this product is protected by one or more”) should probably not be used. These phrases imply that the patent owner has not gone to the trouble to determine whether a particular article is covered by a patent. Shifting this burden to the public may not protect the manufacturer.
Some patent owners may decide that the reward of maximizing potential damage recovery in an infringement case is not worth the risk of a false marking suit. If they so conclude, they may stop patent marking. This action also halts the beneficial public relations that come from identifying products as patented. In addition, if patent owners decide to stop marking, notice is lost, and new policy must still be created to identify infringers and place them on notice promptly, since damages are dependent on notice.
Another procedural issue for patent holders is due diligence in transactions. When licensing patents, licensors should put controls in place to ensure that patent numbers are not used on inapplicable articles or past their expiration date. Licensees, who are gener- ally required to apply patent numbers to licensed articles, may be resistant to accepting such clauses. It seems unlikely that patent owners with active license programs will agree to allow licensees to forego patent marking. An active license program usually means that the potential for infringement is high. Also, the presence of licensee products in the market may make it more difficult for the patent owner to detect infringers and put them on notice promptly. Thus, the loss of damage recovery before notice could be significant. Some form of indemnification for licensees may be an acceptable middle ground.
Those who are accused of infringement and choose to resolve the dispute by entering into a license with the patent owner need to be particularly careful. If the accused infringer has previously argued that its products were not covered by the patent at issue, entering into a license that would require marking those products with the patent number could result in false patent marking exposure. In this situation, resistance to agreeing to patent marking may be warranted.
Patent attorneys should encourage the businesses they advise to audit each marked item they are selling to discover whether the markings are proper. If needed, corrective action should be taken. As is generally the case, reasonable steps taken early can avoid large potential exposure to marking suits later. Should a client business face a suit, settlement data can be consulted to help determine an appropriate settlement amount. In addition, for public policy reasons the settlement may be structured to cover all possible false patent marking claims for any patents marked on any of the company’s products. The federal government has approved global settlement terms as long as they did not seek to excuse any future acts of false patent marking.29 Thus, handled correctly, a suit for false patent marking can serve to resolve all potential past claims. Reasonable steps going forward can protect against potential future claims.
Until relief comes from Congress,30 the false patent marking statute remains a choice weapon for qui tam plaintiffs looking for susceptible defendants. For the present, however, patent attorneys should advise manufacturers to ensure that when goods are marked, they are marked correctly.
1 Patent Act of 1870, ch. 230, 16 Stat. 198-217.
2 35 U.S.C. §292. Violations include falsely claiming
that something is patent pending, marking articles
with expired patent numbers, marking articles with
patent numbers that do not apply, using the patent
number of a third-party owner without the consent of
that party, or applying any other patent markings that
3 Id.; Forest Group, Inc. v. Bon Tool Co., 590 F. 3d
1295, 93 U.S.P.Q. 2d 1097 (Fed. Cir. 2009). See
also, e.g., http://www.patentlyo.com (false marking
4 Unique Prod. Solutions, Ltd. v. Hy-Grade Valve,
Inc., No. 5:10-CV-01912-DAP (N.D. Ohio Feb. 23,
5 35 U.S.C. §287.
6 Clontech Labs., Inc. v. Invitrogen Corp., 406 F. 3d
1347, 1356 (Fed. Cir. 2005) (quoting Bonito Boats, Inc.
v. Thunder Craft Boats, Inc., 489 U.S. 141, 162 (1989)).
7 7 DONALD S. CHISUM, CHISUM ON PATENTS
8 See Bonnie Grant, Deficiencies and Proposed
Recommendations to the False Marking Statute:
Controlling Use of the Term “Patent Pending,” 12 J.
INTELL. PROP. L. 283 (2004).
9 35 U.S.C. §292(a). See also 35 U.S.C. §292(b) (qui
10 See Clontech Labs., Inc., 406 F. 3d at 1352.
11 Id. (citing Seven Cases of Eckman’s Alterative v.
United States, 239 U.S. 510, 517–18 (1916)).
12 Clontech Labs., Inc., 406 F. 3d at 1352–53.
13 Id. at 1352.
14 See, e.g., A.G. Design 2009-1044 9 & Assocs., LLC
v. Trainman Lantern Co., No. C07-5158RBL, 2009
U.S. Dist. LEXIS 8320, at *9–10 (W.D. Wash. Jan. 23,
2009) (marking of up to 15,000 lanterns over two
years was a single offense); Undersea Breathing Sys., Inc.
v. Nitrox Techs., Inc., 985 F. Supp. 752, 782 (N.D. Ill.
1997); Sadler-Cisar, Inc. v. Commercial Sales Network,
Inc., 786 F. Supp. 1287, 1296 (N.D. Ohio 1991); Joy
Mfg. Co. v. CGM Valve & Gauge Co., 730 F. Supp.
1387, 1399 (S.D. Tex. 1989); Precision Dynamics
Corp. v. American Hosp. Supply Corp., 241 F. Supp.
436, 447 (S.D. Cal. 1965). All these cases are cited in
15 Icon Health & Fitness, Inc. v. Nautilus Group, Inc.,
No. 1:02 CV 109 TC, 2006 WL 753002, at *16 (D.
Utah Mar. 23, 2006) (a penalty for each week that false
marking occurred); see also Brose v. Sears, Roebuck &
Co., 455 F. 2d 763, 766 n.4 (5th Cir. 1972) (A court
may limit the fine to each day, week, or month the articles
were produced.); Krieger v. Colby, 106 F. Supp.
124, 131 (S.D. Cal. 1952) (Each day products were
falsely marked constituted a separate offense.). These
cases fall in line with several early false marking cases,
in which penalties were imposed for each day that
products were falsely marked. See, e.g., Hoyt v.
Computing Scale Co., 96 F. 250, 251 (S.D. Ohio
1899); Hotchkiss v. Samuel Cupples Wooden-Ware
Co., 53 F. 1018, 1021 (E.D. Mo. 1891). All these
cases are cited in Forest Group.
16 See Enforcer Prods., Inc. v. Birdsong, No. 1-93-
CV-1701-CC, 1995 U.S. Dist. LEXIS 22524, at *25
(N.D. Ga. Nov. 29, 2005) (cited in Forest Group).
17 Forest Group, Inc. v. Bon Tool Co., 590 F. 3d 1295,
1304 (Fed. Cir. 2009).
18 Id. at 1303.
19 Pequignot v. Solo Cup Co., 608 F. 3d 1356, 95
U.S.P.Q. 2d 1501 (Fed. Cir. 2010).
20 Clontech Labs., Inc. v. Invitrogen Corp., 406 F. 3d
1347 (Fed. Cir. 2005).
21 Stauffer v. Brooks Bros., Inc., 619 F. 3d 1321, 96
U.S.P.Q. 2d 1304 (Fed. Cir. 2010).
22 Unique Prod. Solutions, Ltd. v. Hy-Grade Valve, Inc.,
No. 5:10-CV-01912-DAP (N.D. Ohio Feb. 23, 2011).
23 Id. at 12-13.
24 Press Release, Ryan Davis, Law 360 (Feb. 11, 2011).
26 See http://www.govtrack.us.
27 See Patent Lawsuit Reform Act of 2010, H.R. 6352,
111th Cong. (2d Sess. 2010), available at http://www
28 Patent Reform Act of 2011, S. 23, 112th Cong. (1st
Sess. 2011), available at http://www.govtrack.us.
29 Press Release, Ryan Davis, Law 360 (Feb. 11, 2011).
30 See, e.g., Patent Lawsuit Reform Act of 2011, H.R.
243, 112th Cong. (1st Sess.), available at http://www
||European Union Community Design Protection:
||Oliver S. Bajracharya
Last year, the new European Union Community Design Regulation became effective. Companies that need immediate, low-cost protection against deliberate copying, or that require a longer term and protection against independent creation by non-copyists, now have two avenues to pursue. The Regulation allows an applicant to obtain Community Design protection throughout the European Union*¹, either by making a product design publicly available (the unregistered approach) or by filing a single application to register the design (the registered approach).
How is Protection Obtained?
A Community Design is a product design entitled to protection against copying throughout the EU. The new Community Design Regulation encompasses two types of design protection: unregistered and registered. An unregistered design is protected for three years from the date on which the design is first made available to the public within the EU. Protection without the burden of registration may be more advantageous to those companies producing numerous designs for products having a short market life where the duration of protection is less important.
An alternative, as well as supplemental, form of design protection can be obtained in the EU by registering a design with the Office for Harmonization in the Internal Market (OHIM). Upon registration by the Office, a Community Design is protected for five years from the filing date of the application. The term of protection can be renewed for one or more 5-year periods, up to a total term of 25 years from the filing date. An applicant may also claim more than one independent design per application so long as all designs are in the same formal category, known to practitioners as the Locarno Agreement class. Registered designs are protected from deliberate copying and from independent creation of an identical design.
What is Protected?
As defined by the Regulation, "design" means "the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colors, shape, texture and/or materials of the product itself and/or its ornamentation." Industrial products and handcrafted items are included, as are parts intended to be assembled into a complex product, packaging, set-up, graphic symbols, and typographic typefaces. Computer programs are not included in the product definition; however, user interfaces and internet homepages can be protected by a Community Design. Also not protected under the Regulation are spare parts or accessories. The Regulation was approved with a compromise that the spare parts protection issue will be resolved later. However, protection of spare parts continues to be available under existing national laws.
In order to be protectible, a design must meet the standard of novelty. According to Article 4(1) of the Regulation, "[a] design shall be protected by a Community Design to the extent that it is new and has individual character." A design is considered "new" if no identical design has been made available to the public within the EU as of the priority date. Designs differing only in immaterial details will be considered identical. The "individual character" of a design will be assessed to determine if the overall impression produced on an informed user viewing the design clearly differs from the impression produced on him by existing designs, taking into consideration "the nature of the product to which the design is applied or in which it is incorporated, and in particular, the industrial sector to which it belongs, and the degree of freedom of the designer in developing the design."
A design is considered to be available to the public in the EU if it has been "published, exhibited, used in trade or otherwise disclosed such that these events could reasonably have become known to the circles specialized in the sector concerned, operating within the Community." Thus, it is possible for an unregistered design that has been publicly introduced in Europe to bar registration of that design at a later date. However, companies (as well as individuals) considering registration of a design are allotted a one-year grace period within which to file. That should prevent a company's public disclosure of its design from barring registration. The grace period allows a company to publicly disclose a design up to 12 months before filing for registration, during which the design is afforded unregistered protection.
Infringement and Invalidity Disputes
As noted above, the key difference between unregistered and registered designs, besides the duration of protection, is that registered designs are protected from deliberate copying and independent creation of an identical design, while unregistered designs are only protected from deliberate copying. However, OHIM will check submitted applications only for compliance with the formal requirements for registration, not for legal validity. Examination of legal validity will only take place if an infringement or invalidity action is brought.
Community Design Courts, national courts designated by each EU member, have jurisdiction over infringement actions and invalidity declaration actions. Claims not involving design validity will be decided under the national design laws of the EU member Community Design Court exercising jurisdiction over the matter. Claims for invalidating a Community Design, on the other hand, will be decided based on whether the design meets the requirements for protection, as discussed above.
¹ Twenty-five states are members of the European Union (EU), including ten new members as of May 1, 2004.
||Internet Domain Name Disputes
||Gary J. Nelson
The current Uniform Domain Name Dispute Resolution Policy ("UDRP") is proving to be a powerful and effective tool for trademark owners who wish to stop the incorporation of their trademarks into third party domain names. The UDRP process offers trademark owners a quick and relatively inexpensive way to protect their trademark portfolio. The average time from the filing of a UDRP complaint to an issued decision is approximately two to three months. When compared to the average duration of federal trademark litigation, e.g., two years, a UDRP domain name proceeding can be the ultimate fast track to justice for trademark owners.
The UDRP procedure is a mandatory arbitration for all disputes of domain names ending in ".com," ".net," ".org" and ".tv." Any person or entity that believes it has superior rights to a domain name can initiate a UDRP proceeding by filing a complaint with one of the four accredited institutions set up to handle domain name disputes. The domain name dispute is then assigned to an arbitration panel, which determines ownership on the merits, e.g., either forcing the transfer of the domain name to the party filing the complaint or affirming the original ownership.
A typical scenario occurs when a trademark owner discovers that a domain name identical to one of its trademarks has been registered by a third party. Other times, a trademark owner will discover that a variation of its trademark has been registered as a domain name. In either case, armed with a strong trademark claim, the trademark owner can often force the transfer of ownership of the contested domain name to itself.
More than 3,000 domain name disputes have been filed since the UDRP was established, and several patterns have emerged. For one filing a UDRP complaint, success most often occurs when one can prove the following:
- the trademark that has been incorporated into a contested domain name is a "strong" mark,
- the contested domain name is confusingly similar to the trademark,
- the owner of the domain name has no rights or has no legitimate interest in the contested domain name, and
- the contested domain name was registered, and is being used, in bad faith.
Owners of strong trademarks are in the best position to benefit from the filing of a UDRP complaint. Strong marks - those which are fanciful, coined words or phrases, or slightly suggestive - are more likely to be protected than weak, e.g., descriptive, trademarks. The easiest cases tend to involve trademarks that are famous. Examples of famous trademarks from UDRP cases CP&H is handling are "ROSE BOWL GAME," and "KIRK DOUGLAS."
For trademarks that are not quite so famous, a federal trademark registration issued prior to the date the owner of the domain name registered the disputed name is the next best thing. Indeed, in the context of a UDRP proceeding, a federal registration is all that is required to establish the presumption of strong trademark rights.
However, establishing common law trademark ownership in unregistered marks is also possible. Paul McCartney, Julia Roberts, Chuck Berry, and Yanni have all established trademark rights in their names, notwithstanding the absence of a federal trademark registration. In the context of a UDRP proceeding, even less famous citizens can establish ownership of trademark rights in their personal names. CP&H recently secured the transfer of the domain name "martyrodriguez.com" on behalf of Marty Rodriguez, one of Century 21's most successful real estate agents, by establishing that her name had become distinctive through the acquisition of secondary meaning, thereby qualifying for trademark protection.
Whether one's mark is famous or not-so-famous, there are many ways to prove ownership of rights in a trademark related to a domain name. Proving ownership of the mark is an essential prerequisite to initiating a successful UDRP procedure.
The second element that must be established is that the contested domain name is confusingly similar to the trademark holder's trademark. If the contested domain name is identical to the trademark, the UDRP arbitration panel tends to assume that the mark and the domain name are confusingly similar. The same tendency also appears when a slight variation of the mark is used as the dominant portion of the domain name. An example of this is the BROADCOM trademark compared to the "broadcom2000.com" domain name.
It has been our experience that the majority of UDRP decisions do not focus on the "confusing similarity" issue. Rather, if one's trademark is at least the dominant portion of the contested domain name, one is likely to succeed in proving "confusing similarity." We note that this trend is at odds with a traditional trademark infringement action where "likelihood of confusion" is often the heart and soul of the entire case and turns on an analysis of the goods or services offered by the parties, the channels of trade through which they're sold, and other factors in addition to a comparison of the marks themselves.
No Rights Or Legitimate Interest
To succeed in a UDRP proceeding, one of the core elements a trademark owner must establish is that the holder of the domain name has no rights or legitimate interest in the contested domain name. While there are many ways to argue this point, a number of facts have proven to be particularly helpful in persuading the arbitration panel that the domain name owner is a mere intermeddler and/or cybersquatter. These include:
- the domain name does not correspond to the name of the organization (or individual) listed as the owner of the domain name, and/or the owner is not generally referred to by the domain name,
- the registered owner of the domain name is using another's trademark to divert Internet users to its own Web site where similar goods or services may be offered,
- the willingness of the domain name owner to transfer ownership of the domain name, regardless of whether an attempt is being made to sell the domain name, and
- the owner of the domain name is not using the domain name in connection with a bona fide offering of goods or services, as evidenced by the fact that the domain name is not linked to an active web site.
Another core element that must be established for the trademark owner to wrest away control of the offending domain name is that the domain name owner registered, and is currently using, the contested domain name in bad faith. Several fact patterns have proven particularly successful. Actions taken by domain name owners that have been found to constitute bad faith include:
- using another's trademark to divert Internet consumers to one's own web site where competing goods or services are offered,
- classic trademark infringement of another's mark by using the actual trademark on the corresponding web site and not just as a domain name address,
- knowledge by the domain name holder that another owns rights in the corresponding trademark, (for example, a former employee registering the corporate name of his/her former employer as a domain name, and registering domain names that correspond to a known competitor's trademarks),
- attempting to sell a domain name to the owner of the corresponding trademark for an amount in excess of the domain name registration fees (the classic cybersquatter technique),
- speculation in the domain name market place, as evidenced by registration of numerous third party trademarks as domain names, and
- squatting on a well known trademark where one refrains from linking it to an active web site.
Although owning a trademark does not guarantee success in a UDRP proceeding, there is no doubt that the current UDRP arbitration procedure favors trademark owners and provides a quick and easy opportunity to wrestle domain names away from unscrupulous cybersquatters and others who speculate in the domain name market place.
Clients with questions regarding the current UDRP or other alternative solutions to domain name/trademark problems can contact Christie, Parker & Hale for further consultation.
||Protecting Software and Business Methods Around the World
||Robert A. Green
The conflicting web of national treatment of computer software and business method patents, coupled with the interlocking and overlapping nature of international trade, creates problems when companies seek to license or otherwise assert their patent rights in the international realm. The problems include the inability to obtain protection in some jurisdictions, the marketing of parallel or "gray market" goods, and uncertainty as to exactly where infringement occurs.
Software and Business Method Patents Around the World
In the international patent community, each country maintains its sovereignty and has its own patent system. As one might expect, this leads to inconsistent treatment of emerging technologies between the various countries.
Software and business methods are clearly patentable subject matter in the United States, a point driven home by the Federal Circuit Court of Appeals in 1998 in State Street Bank & Trust Co. v. Signature Financial Group, Inc. ("State Street") . In the summer of 2000, at a Trilateral Technical Meeting in Tokyo, the Japanese Patent Office, the United States Patent and Trademark Office, and the European Patent Office reached a consensus that pointed toward likely harmonization of international practice in this important area. Although complete agreement has not yet been reached, it does appear that a "technical aspect" will be required for patentability of a computer-implemented business method in all three patent offices. It is also clear that the automation of a known process with known techniques will not qualify for patent protection.
Although there are barriers in many countries to the patenting of pure software and business methods, astute practitioners can often obtain protection through careful claim drafting.
- In Japan, it is possible to protect most business method inventions by presenting them in the style of software-related inventions. Although business methods, per se, are not currently patentable there, it seems only a matter of time before they are.
- In Europe, protection of computer software and business methods is somewhat problematic. Although software patents have been granted by the EPO for many years, under the European Patent Convention ("EPC") computer programs and business methods are expressly excluded from the statutory definition of "patentable inventions" (EPC, Article 52). For computer software, the exclusion is more apparent than real, however, as claim language reciting a "further technical effect" enables one to characterize an invention in this field as something more than a mere software/computer interaction.
In February of this year, the European Commission published a draft proposal regarding the patentability of computer-implemented inventions. If enacted, the new directive will make it even easier to obtain patents on computer software inventions. Business method inventions that lack a technical character, however, would still find protection to be problematic.
- In Canada, business methods are considered (by commentators) to be protectable; however, the protections appear more limited than those afforded by the U.S. For example, the patent upheld in the United States in the State Street decision was abandoned in Canada. Protection in Canada is considered to be similar to that in the EPO: the inclusion of a physical element in the patent claims - such as a data terminal or numeric keyboard - is generally quite helpful to establish that the invention constitutes patentable subject matter. In at least one case, however, the Canadian Patent Office has rejected claims to a general purpose computer programmed according to a particular method. Advantageous strategies for protecting business methods in Canada include submission of software claims, process claims, apparatus claims (computer programmed in a certain way) and, finally, product claims, known as "Beauregard" claims, of a computer readable memory element.
- In Finland, business methods can be protected in the context of technical methods.
- In Mexico, Article 19 of the Industrial Property Law excludes software and business methods, but practice shows that patents are being allowed as long as the software or method is not claimed, per se, and a "tangible technical effect" is obtained. An example of a tangible technical effect is the inclusion of network transmission as a claimed step.
- In Russia, business administration and management methods, computer programs ("algorithms as such"), and methods of performing intellectual operations, are not patentable. However, other business methods can be patented, if presented as an action or series of related actions, with a temporal sequence and conditions to be fulfilled prior to the performance of such actions. It is also advisable to recite how the method is implemented by technical means, if possible.
Extraterritorial Application of United States Patent Law
The patent laws of a particular country normally are not applied extra-territorially. In Rotec Industries, Inc. v. Mitsubishi Corp., the Federal Circuit held that infringement was not established where there was no evidence that the defendants supplied or caused to supply any component of the patented invention in or from the United States. The cases in this country that have been thought to cast doubt on this proposition are more properly understood as attaching significance to the effect within the United States of extraterritorial acts.
U.S. courts have the power to enjoin unauthorized importation of patented products. U.S. courts will exercise their power, and have gone so far as to require a foreign company to mark all of its products with labels clearly identifying that they are not for import into the United States. The intent is to control acts that impact directly on the domestic economy of the United States. Other United States statutory provisions that potentially interface with actions taken in other countries include the prohibition against offering to sell an invention, the prohibition against exporting non-staple components of a patented combination for assembly in another country, and the prohibition against importing a product produced in another country by a method patented in this country.
In our next newsletter, we will consider cross-border licensing as a mechanism for addressing disparate national treatment of business method and software inventions.
||The Uncertain Future of the Doctrine of Equivalents
||Thomas J. Daly
In June of this year, the Supreme Court agreed to review the Federal Circuit's ruling in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd. Known to practitioners as simply "Festo", the case is quite controversial because it significantly diminishes the scope of protection accorded to patent owners. Until a final ruling is made by the Supreme Court, inventors, patent owners, and patent attorneys need to adjust their approach to avoid potential limits on the scope of patent protection that would otherwise follow from the Festo decision.
The Court of Appeals for the Federal Circuit has exclusive appellate jurisdiction over all cases arising under the patent laws of the United States. In Festo, the Court held that no range of equivalents is available for a narrowing limitation to a patent claim, where the claim is amended during prosecution for a reason related to patentability. All twelve members of the Court considered the Festo appeal, with a solid majority agreeing to overturn an earlier decision in the same case by a three-judge panel of the Federal Circuit.
Utility patents end with one or more numbered sentences called "claims". A patent claim sets forth the elements or "limitations" that must be present for a product or process to be covered by the claim, and thereby defines the scope of the claimed invention. Anyone who makes, uses, imports, offers to sell, or sells a product or process that is covered by a claim without the permission of the patent owner may be liable for patent infringement. If the potentially infringing product or process literally has all of the limitations recited in a claim, it is said to literally infringe. However, even if one or more elements or limitations are not literally present, the potentially infringing product or process might still be found to infringe under an equitable doctrine developed by the courts, called the Doctrine of Equivalents.
The Doctrine of Equivalents arose to extend patent protection to products or processes not literally covered by a patent claim, where an element of the claim has been replaced by a substantially equivalent element. Thus, it removes the unfairness that could result from an overemphasis on the literal language of patent claims, and thereby expands the scope of protection accorded to claims. However, courts have also placed limitations on the Doctrine of Equivalents so that persons evaluating patent claims will have adequate notice of the scope of coverage provided by the claims and can direct their activities accordingly. The tension between avoiding undue literalism and providing adequate notice to the public runs throughout most cases dealing with the Doctrine of Equivalents, and is at the heart of the Festo decision.
One limitation on the Doctrine of Equivalents is called Prosecution History Estoppel. The process by which an application for a patent is examined by the U.S. Patent and Trademark Office for patentability is referred to as "prosecution". The course of that examination, and its documentation, which is made public once the patent issues, is known as the "prosecution history" of a patent. During prosecution, it is common for patent applicants to make amendments to proposed claims, and/or arguments, to overcome an Examiner's position that the claims are unpatentable. Such amendments and arguments are then reflected in the prosecution history of the patent. Should the patent owner later attempt to use the Doctrine of Equivalents to recapture claim scope given up during prosecution by way of amendment or argument, Prosecution History Estoppel prevents such a recapture.
Before Festo, it was clear that the doctrine of Prosecution History Estoppel would prevent a patentee from recapturing, under the Doctrine of Equivalents, a scope of claim coverage that was clearly given up during prosecution. This is illustrated in the following scenario: A patent application initially claims a chemical process that includes a temperature limitation of 20°F to 40°F. The patent examiner rejects the claim based on an earlier patent that recites a temperature range of 40°F to 50°F. To overcome the rejection, the applicant amends the claim to recite a temperature of 25°F to 35°F. Based on the amendment, the patent owner would be legally barred or "estopped" from later asserting infringement against someone who practices the process at 40°F. Before Festo, however, the patentee might still enjoy some range of protection outside the literal limits of 25°F to 35°F, under the Doctrine of Equivalents. The analysis would tend to focus on what was relinquished during prosecution, and the reasons for that relinquishment. Thus, under the above example, a patent owner might have had a reasonable possibility of using the Doctrine of Equivalents to cover a potentially infringing process operating at 22°F, because the relinquishment of the lower end of the temperature range was not needed to distinguish the prior patent. More difficult to predict would have been the likelihood of covering a potentially infringing process operating at 38°F, a temperature between the range in the ultimate patent claim and that of the prior patent.
In Festo, which involved amendment-type Prosecution History Estoppel as a limit on the Doctrine of Equivalents, the Court of Appeals held that no range of equivalents is available for a narrowing limitation made by amendment during prosecution, where the amendment is made for a reason related to patentability. Thus, in the example above, once the temperature limitation was narrowed by amendment to 25°F to 35°F, no range of equivalents would be available. The claim would thereafter only be entitled to its literal scope, i.e., a temperature range of 25°F to 35°F. Moreover, an earlier U.S. Supreme Court decision held that, if no other explanation is given, amendments made during prosecution are presumed to be for a reason related to patentability. Accordingly, narrowing claim amendments made during prosecution will now almost always trigger the Festo bar on any range of equivalents. It remains to be seen whether the reasoning of Festo will be applied to argument-type Prosecution History Estoppel such that arguments made during prosecution will also bar any range of equivalents.
The import of the Festo decision is clear: narrowing amendments during prosecution are to be avoided. How such amendments can be avoided while still preserving the ability to work with examiners during prosecution is being addressed by patent attorneys. But inventors and patent owners can also take steps to help preserve the broadest possible scope of protection for their claimed inventions. Some key steps are outlined below.
Thorough Pre-Filing Evaluation of the Prior Art
One way to minimize claim amendments during prosecution is to start with claims that clearly distinguish the prior art even though they are drafted to be as broad as they can be in view of that prior art. This is already an important goal when preparing claims. But, for the effort to be truly effective, the most pertinent prior art must be identified and evaluated before the original claims are finalized and the application is filed. Independent prior art searches are possible and should be conducted whenever the time and financial resources are available. However, inventors and/or patent owners may already be aware of or have ready access to information on prior art. Extensive knowledge of the prior art should not be feared; it is to be encouraged and should be communicated to the patent attorney. The patent attorney can use that prior art to draft claims that require fewer, if any, amendments, and take advantage of the Doctrine of Equivalents.
"Means Plus Function" Claim Limitations
The patent laws allow claim limitations to "be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof". Such a claim limitation is then literally "construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof". Therefore, the use of such built-in equivalents can appear to survive the bar of Festo. In theory, even if a "means plus function" claim limitation is narrowed during prosecution - making the Doctrine of Equivalents unavailable - the claim would still be entitled to some equivalents within its literal scope based upon what is described in the specification of the patent.
One might anticipate that patent attorneys will make greater use of "means plus function" claim limitations in view of Festo. However, for the built-in equivalents of such claims to be worthwhile, it is necessary that the description in the specification supporting such limitations provide multiple alternatives and a broad discussion of possible equivalents. Thus, inventors and patent owners should work with patent attorneys to make sure that the various features and aspects of an invention are addressed to identify potential alternatives, modifications or interchangeable components. The essential nature of the various features and aspects of an invention should also be identified so that potential equivalents can be broadly defined in the patent specification itself. Once again, these were already good ideas before Festo, but the holding of Festo makes such brainstorming exercises even more important.
Comprehensive Claim Sets
Including a comprehensive set of claims in a patent application as it is originally filed, which characterize the invention in a variety of ways, can increase the likelihood that some of the claims will not need to be amended during prosecution. Inventors and patent owners should work with patent attorneys to identify many different features, aspects, or components of an invention that are believed to be different from the prior art. This will allow claims to be presented that contain a variety of combinations or subcombinations of elements or limitations. Different ways to view the invention or think about what is new and unobvious about the invention should also be brainstormed to develop alternative approaches to claiming the invention.
By working with patent attorneys, inventors and patent owners can help secure the broadest possible scope of protection for their inventions, even in the aftermath of Festo and other decisions elevating the notice function of patent claims.
||Transforming The Patentability Of Business Method Patents
||Raymond R. Tabandeh
David W. Klinger
In the late 1990's, the Court of Appeals for the Federal Circuit opened the door to the patentability of business methods. Two cases were key. The first was State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998), where the Federal Circuit determined that a computer configured to convert financial data into a share price, enabling more effective management of a mutual fund that would not be viable without the use of a computer, was patentable subject matter because it produced a "useful, concrete and tangible result." The second was AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), where the Federal Circuit held that methods lacking any physical structure are still patentable subject matter as long as they produce a useful, concrete and tangible result.
Recently, in In re Bilski, 545 F3d 943 (Fed. Cir. 2008), the Federal Circuit reversed course. The Court held that its "useful, concrete and tangible result" test was too broad. In its place, the Court has adopted a "machine or transformation" test. This has broad implications for business method, software, and medical treatment patents. Specifically, the Federal Circuit held that a process that involves "fundamental principles," such as abstract ideas and mental processes, laws of nature, and natural phenomena, is not patentable unless the process uses a machine or transforms a particular article into a different state or thing. According to the Court, the "use of a specific machine or transformation . . . must impose meaningful limits on the claim's scope" and the "involvement of the machine or transformation . . . must not merely be insignificant extra-solution activity."
In Bilski, the patent was directed to a "method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price." Claim 1 recited, in part:
- initiating transactions between a commodity provider and consumers of the commodity at a first fixed rate;
- identifying market participants for the commodity having a counter-risk position to the consumers;
- initiating transactions between the commodity provider and the market participants at a second fixed rate so that the transactions between the commodity provider and consumers and commodity provider and market participants balance the risk position.
The Federal Circuit did not address the machine or apparatus prong of the test, as the applicant admitted that the claims did not encompass a particular machine or apparatus. The decision did, however, provide some insight into the sort of transformation that is required to meet the transformation prong of the test. The Court ruled that such transformation "must be central to the purpose of the claimed process." Furthermore, the transformation must transform a "physical object or substance, or an electronic signal representative of any physical object or substance." Therefore, the court reasoned, the transformation of "legal rights" to purchase a commodity, in claim 1 of Bilski's patent application, is neither physical, nor representative of something physical. Accordingly, because Bilski's patent does not recite a particular machine or sufficient transformation that imposes meaningful limitations, it is not drawn to patentable subject matter.
As identified by Judge Rader in the dissent, the Bilski decision raises a number of questions: What form or amount of transformation suffices? When is a representative of a physical object sufficiently linked to that object to satisfy the transformation test? What link to a machine is sufficient to invoke the machine prong? Concrete answers to these questions may never be provided.
It is likely that Bilski will render many issued patents invalid and make patents on business methods and software more difficult to obtain. However, there are a number of creative patent drafting strategies that may help inventors obtain patents on business methods, software, and other processes by meeting the Federal Circuit's machine or transformation test.
- Include both a transformation element and a machine element in the claims, with detailed support in the specification, if possible. If data transformation is represented in the claims, be sure to indicate the steps of the data transformation, and what the data being transformed represents, with as much clarity as possible. If the data in some way represents a physical object, specifically state the physical object in the claims. Explain in the claim steps how the physical object, or data representing the physical object, is transformed.
- Include sufficient structure (a machine) in the claims if possible. For a business method patent, this means including a computer, CPU, input device, memory, display unit, etc., if applicable. These structural limitations should be included and integrated into the claims. Failure to integrate sufficient structure in the claims could make the process steps either "meaningless limitations" or "insignificant extra-solution activity" and thus not patentable subject matter under Bilski. Claim limitations such as "providing a CPU to . . . ;" "providing an input device in communication with the CPU to receive data . . .;" or "receiving X by the input device . . ." should be considered.
- If the invention utilizes a mathematical formula or algorithm, be sure the claims include the formula or algorithm. Rather than reciting 'balancing the risks of two types of transactions,' as in Bilski, recite the actual formula or algorithm steps used to balance the risk. If the algorithm is integrated with a structure, be sure to integrate the algorithm with the structure in the claims. Integrating the steps of the algorithm with a machine will aid in making the machine more than a "meaningless limitation." For example, a business method claim could include: "A method for displaying Y comprising: receiving a first set of data X by an input device; storing X in a memory; retrieving X from the memory; calculating Y in Y = X² + B by a CPU; and displaying Y on a display unit as a list of data points." Alternatively, in each step of a claim for computing an algorithm, one may use the limitation of "electronically performing" the steps. Such language necessarily implies some sort of machine, and thus may satisfy the machine prong of the machine or transformation test.
- In a medical treatment claim, specifically list the steps required to implement or use the scientific principle in the claim. For instance, in a claim reciting a correlation between a protein found in the body and a medical condition, specifically describe in the claim how the protein level determines the medical condition. Also, include as many tangible objects as possible, and integrate the tangible objects into the claim.
We have witnessed a significant increase in the number of rejections for lack of patentable subject matter from the Patent Office since Bilski, most of which have been overcome by using one or more of these claim-drafting strategies.