Net Metering

By Pablo N. Garcia Rodriguez

Nowadays renewable energies are a popular topic due to the benefits that they provide for our environment and our health. Moreover, 15 years ago, a new mechanism was implemented in the United States which enables people to get money from using alternative ways of energy. This is Net Metering.

Its first implementation was in 2003 but, as it was a new technology, it was not allowed in several states. Today, considering that this system has improved people’s lives economically, new regulations allow its use in 38 states plus D.C. The chart below shows Net Metering increasing since 2003 to 2010.

NetMeteringCustomers_graph Chart from Eia.Gov, 2018, https://www.eia.gov/todayinenergy/detail.php?id=6270.

The following presentation is to provide an understanding of the basics of Net Metering and to present some existing policies that regulate this mechanism in the states of Delaware, Maryland, New Jersey and Washington D.C.

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Lost Profits Arising from Foreign Sales: WesternGeco LLC v. ION Geophysical Corp.

By Alex Rhim

Summary:

The US Supreme Court held in favor of Petitioner WesternGeco LLC (“WesternGeco”) on the issue of whether 28 U.S.C. § 271(f)(2) (2010) and 28 U.S.C. § 284 (2012), taken together, entitled damages award for lost foreign profits against Respondent ION Geophysical Corp. (“ION”). Since the Court found that the combined focus of the two statutory provisions recognizes inclusion of foreign lost profits resulting from a domestic infringement, WesternGeco was entitled to damages award. 

Facts:

ION manufactured and shipped components to companies abroad. The shipped components were assembled by those foreign companies after shipment into a system used to survey the ocean floor. This system was indistinguishable from patents owned by WesternGeco. 

Procedural History:

WesternGeco sued ION for patent infringement under §§ 271(f)(1) and (f)(2) in the United States District Court for the Southern District of Texas. The jury found ION liable and awarded WesternGeco damages of $12.5 million in royalties and $93.4 million in lost profits under § 284. ION moved to set aside the verdict, arguing that WesternGeco could not recover damages for lost profits because § 271(f) does not apply extraterritorially. The District Court denied the motion.

On appeal by ION, the Court of Appeals for the Federal Circuit reversed the award of lost-profits damages. ION was liable for infringement under § 271(f)(2), the Federal Circuit reasoned, but § 271(f) does not allow patent owners to recover for lost foreign profits. WesternGeco petitioned for review in the US Supreme Court. On review, the Court vacated the Federal Circuit’s judgment and remanded for further consideration in light of Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S.Ct. 1923 (2016). The Federal Circuit reinstated the portion of its decision regarding § 271(f)’s extraterritoriality on remand. The Court granted certiorari again to review this case. 

Relevant Statutory Provisions:

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

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

“Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.” § 284.

Holding:

The US Supreme Court held WesternGeco’s damages award for lost profits was a permissible domestic application of § 284. The Court reversed the Federal Circuit’s decision to deny damages award and remanded for further proceedings.

Reasoning:

While there is a presumption against extraterritoriality when applying federal statutes, this presumption can be overcome by a two-step test: “whether the presumption against extraterritoriality has been rebutted” or “whether the case involves a domestic application of the statute.” The first step can be rebutted by a “clear indication of extraterritorial application” in the text of the statute. The second step can be determined by identifying the focus of the statute and whether a conduct relevant to that focus has occurred domestically.

The Court deliberately and expressly avoided discussing the first step because such discussion can potentially have far-reaching effects on statutory interpretation of statutes other than the Patent Act, which is not something the Court was ready to decide on.

Under the second step, a statute’s focus is identified by analyzing the provision at issue with attention to context. The focus and the overriding purpose of § 284 is the infringement. In addition, the focus of § 271(f)(2) is domestic conduct. Taken together, domestic infringement is the focus of the statute in this context. The conduct at issue here was directly relevant to the focus of domestic infringement because ION supplied the infringing components from the United States.

ION’s counterarguments were unsuccessful in overcoming the Court’s decision. First, ION claimed that the focus of § 284 is “self evidently on the award of damages.” However, the Court rejected this argument since what a statute authorizes, such as damages, is not necessarily the focus. Second, ION asserted that the Court’s decision was an extraterritorial application of § 284 but this argument was also mistaken since the overseas events after shipment were merely incidental to the infringing domestic act of supplying the components. Third, in light of the reasoning in RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090 (2016), ION extracted a general principle that “damages awards for foreign injuries are always an extraterritorial application of a damages provision.” However, this argument was unconvincing to the Court because the interpretation of § 1964(c) in RJR Nabisco was about applying the presumption against extraterritoriality of an injury requirement. Injury requirement and damages requirement are separate legal concepts.

PCT Collaboration Search and Examination Pilot Effective July 1, 2018

By Michael Stein

A new pilot program, the Collaborative Search and Examination (CS&E) under the Patent Cooperation Treaty began effective July 1, 2018, with the United States Patent and Trademark Office (USPTO), the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), and the State Intellectual Property Office of the People’s Republic of China (SIP), collectively known at the IP5 offices, participating in the program.

Instead of other similar pilot programs, applicants will select international patent applications to be handled under the CS&E.  A first, only international applications filed in English will be accepted.  After some time, international authorities that work in languages other than English will begin to accept patent applications in those other languages into the pilot program.

Under the pilot program, an examiner of the IP5 office selected as the International Search Authority (ISA) will perform a search and examination, to generate a provisional international search report and written opinion.  Examiners of the other participating IP5 offices will each provide his/her contribution to the main examiner, taking into account the provisional international search report and written opinion. The main examiner will prepare the final international search report and written opinion after considering the inputs from the peer examiners.

Requests for participation in the pilot program will be accepted from July 1, 2018 to June 30, 2020.

Are 102, 6th Paragraph and 102, 2nd Paragraph the New 101 in Patent Eligibility? Williamson v. Citrix Online Makes One Wonder: Part 2 of a 2 Part Series – Possible Strategies

Are 102, 6th Paragraph and 102, 2nd Paragraph the New 101 in Patent Eligibility?  Williamson v. Citrix Online Makes One Wonder:  Part 2 of a 2 Part Series – Possible Strategies

By Michael Stein, Stein IP LLC

 

This is part 2 of a 2 part series addressing the growing use of 112, 6th and 2nd paragraphs to invalidate claims in the USPTO and the courts, and what the standards are for implementation and application of these sections of 35 USC.  Part 2 explores possible strategies to minimize the impact of 112, 6th and 2nd paragraph, and likely assist in avoiding 101 rejections as well.

 

So, what is a patent attorney to do when faced with the difficult task of preparing a new patent application, whether from scratch or based upon foreign priority, and hopes to avoid either having limitations interpreted as being means plus function limitations under 112, 6th paragraph or being declared indefinite under 112, 2nd paragraph (remember, for the purposes of this article, the pre-AIA references to the 35 USC are being used for the sake of simplicity, but the same holds true under post-AIA situations since the language of the relevant sections has not changed)?

 

The following are some tips which I believe will increase the chances of running into problems with 112, 6th paragraph and 112, 2nd paragraph, and also hopefully 101 as well.  One important consideration is that the specification as originally filed be as detailed, complete and definite as possible, since one cannot amend the specification significantly after filing to overcome any claims rejections.  There is no magic language that can be used as a safe harbor, as the USPTO has clearly indicated in their webinars on 101 (and thus by extension to 112).  So here it goes, in no particular order.

  1. In describing the invention, try to avoid using words like “device,” “computing element,” “unit,” “portion,” or even “for …ing”  as examiners and courts are increasingly unpredictable in their applications of § 112, 6th paragraph analysis, more frequently treating such words as “nonce” words.  Instead of saying “processing unit” or “processing module,” simple recite a “processor,” for example
  2. Use “configured to” or “adapted to” if the structure is questionable.  Such language assists in making an argument that the limitation has structure and is not purely functional.
  3. Integrate structural limitations with the functional limitations in the claims.  Sometimes a little more in the claim, to provide some real structure will actually broaden the scope of your claim since the people performing claim construction will not have to go to the specification to determine the breadth and scope of the disclosed structure and its equivalents.  Once a claim constructor goes to the specification, it is very difficult to limit the extent to which the specification is relied upon and the owner of the patent does not want to be limited to only the specific embodiments disclosed in the specification when asserting infringement.
  4. Be careful about language like “determining,” “calculating,” “comparing,” etc., with no explanation as to what parameters are being used and how these activities are being accomplished. Provide specific examples in the specification where possible and practicable to clearly explain the algorithm being used.  See, for example, Ibormeith IP v. Mercedes-Benz,  732 F.3d 1376 (Fed. Cir. 2013) where the court held that there was not sufficient structure for “computational means for weighting the operational model according to the time of deay.. and for deriving, from the weighted mode, driver or operator sleepiness condition and producing an output determined thereby”, when a description of an algorithm that places no limitations on how values are calculated, combined, or weighted is insufficient to make the bounds of the claim understandable.
  5. For the drawings, do not use simplistic line charts (e.g., a box with a few smaller boxes inside to represent a computer) or flow charts, but use complex and layered charts.  Provide a detailed hardware diagram, and flowcharts showing the specifics of what is happening. Relate the hardware to the functionality, such as what gets passed and from where to where.  For algorithms, consider having separate diagrams showing the distinct operations of each step in the most general flowchart(s), so that even if the most basic algorithm is determined to be a means plus function limitation, one can argue that the more detailed diagrams and corresponding description provide sufficient structure, and one can also argue that the more detailed diagrams and corresponding description are not merely abstract ideas with nothing more should a 101 rejection be raised.

 

I have no doubt that there are many other techniques to address the growing use of 112, 6ht and 2nd paragraphs, and different people have different viewpoints.  Not even the judges on the en banc Federal Circuit all agreed when 112, 6th should be used, and in what manner, with the dissent indicating that it will be very difficult in the future to assess the scope of claims in the future based upon the majority’s reasoning.  If they cannot agree, then it cannot be so simple for us practitioners.  We can only do what we feel is best for our clients.

If you have any other techniques to avoid limitations being interpreted as means plus function under 112, 6th paragraph, or to ensure that there is sufficient structure in the specification under 112, 2nd paragraph, please let us know.

Update on Implementation of American Invents Act Effective As of September 16, 2012

By Dennis Clarke and James McEwen

On September 16, 2011, the “Leahy-Smith America Invents Act” (AIA) was signed into law. The AIA makes the most substantial changes in U.S. patent law in decades and sets various dates on which these changes are to take effect.

The most profound of those changes is the switch to a first-inventor-to-file system, in place of the current first-to-invent practice in the U.S. This change takes effect only for applications originally filed on or after March 16, 2013. However, on September 16. 2012, other major changes will take effect, including the possibility of requesting inter partes review and other post-grant trial procedures before the newly renamed “Patent Trial and Appeal BoarcL” This paper will predominantly relate to the new requirements relating to declarations and assignments and other miscellaneous provisions that have an effective date of September 16, 2012. The new trial proceedings are discussed briefly hereinbelow.

Continue reading Update on Implementation of American Invents Act Effective As of September 16, 2012

USPTO Issues Proposed Rules for Implementing the America Invents Act

Charles Pierce and James G. McEwen

On July 25, 2012, the United States Patent and Trademark Office (USPTO) announced proposed rules as a result of changes in the America Invents Act (AIA) converting the U.S. patent system from a first to invent to a first to file system.  These changes will take place on March 16, 2013.

The proposed rules are intended to promote consistency caused by the changes in the AIA for pending applications, and to implement the AIA for future applications.  Comments on the proposed rules are open until October 5, 2012.  Below is a summary of significant elements of the proposed rules.

The proposed rules will treat commonly owned or joint research agreement patents and patent application publications as having the same inventive entity for the purposes of 35 U.S.C. §§ 102 and 103 as required under 35 U.S.C. § 102(c) of the AIA.  35 U.S.C. §102(c) of the AIA essentially broadens the current 35 U.S.C. §§ 103(c) by making these provisions usable for novelty.  The broadened use of this exclusion should be beneficial to holders of large families of patents.

Since new 35 U.S.C. §102(b) provides exceptions to 35 U.S.C. §102(a) based upon prior disclosure by the inventor, the rule changes also allow the submission of affidavits or declarations to show that a disclosure upon which a claim rejection is based was made by an inventor, joint inventor, or someone who obtained the disclosed subject matter from the inventor or a joint inventor.  These provisions will also allow the submission of affidavits to show that there was a prior public disclosure by an inventor, joint inventor, or someone who obtained the disclosed subject matter from the inventor or a joint inventor.  This will be codified in 37 CFR §§ 1.104, 1.130, and 1.131.

Another change being implemented relates to using the effective dates of foreign priority applications against third party patents.  In order to ensure that the foreign priority documents are received in time for publication and use, the USPTO is now requiring that the certified copy be received within the deadline now only required for submitting the priority claim: the later of four months from the filing date or sixteen months from the foreign priority date.  The claim must also be included in an Application Data Sheet.  While these changes are likely not an issue where the applicant is able to retrieve priority documents using the priority document exchange (PDX) system, this timing will be an issue for all other applications.  Therefore, applicants need to ensure that the certified copies are provided as soon as possible in the prosecution process or be required to file a Petition for late acceptance.

The last major change in this round of AIA rulemaking is relate to the transitional period between first to invent and first to file, and probably will have the greatest short term impact on patent practitioners.  In order to ensure that the USPTO can properly evaluate which set of rules to apply when faced with priority claims for applications filed prior to March 16, 2013, the USPTO is requiring the applicants identify which rules will apply.

Specifically, where the application is filed after March 16, 2013, but claims the benefit of a foreign, provisional, or nonprovisional application having an effective filing date prior to March 16, 2013, the applicant will need to provide a statement whether the claims in the application are entitled to the earlier effective filing date.  Also, if the nonprovisional application that claims such benefit does not contain a claim to a claimed invention that has an effective filing date on or after March 16, 2013, but discloses subject matter not also disclosed in the prior application, the applicant must provide a statement to that effect.  For example, under proposed 37 C.F.R. 1.55, where the application claims priority to a foreign application filed prior to March 16, 2013, the applicant will need to specify if there is new matter in the application, and whether the claims are supported by the foreign priority date.  Examples of such statements include “upon reasonable belief, this application contains subject matter not disclosed in the foreign application” or “upon reasonable belief, this application contains at least one claim that has an effective filing date subject matter on or after March 16, 2013”.

These statements will have to be filed within the later of four months from the actual filing date of the later application, four months from the date of entry into the national stage in an international application, or sixteen months from the filing date of the prior filed application, or the date that a first claim to a claimed invention that has an effective filing date on or after March 16, 2013 is presented in the application.  Failure to make such a statement after these deadlines will require a Petition, and any changes will result in the Examiner issuing a Request for Information under 37 CFR 1.105 to require the applicant to prove by line and element number where support is found.  For continuations, divisionals, and continuation in part applications, this requirement will be codified in 37 CFR § 1.78.

As these rules are still only being proposed, applicants and the legal community are reviewing the proposed changes and preparing comments.  While many of the changes seem consistent with the requirements of the AIA, the transitional requirement for identifying whether disclosures and claims can have an effective filing date in a prior application are likely the most controversial and the most likely to cause significant problems for applicants having families of patents.  Therefore, as a short term solution, in order to avoid these potential issues should the USPTO not retract this provision, applicants should ensure that they file applications prior to March 16, 2013 if any priority claim is going to be made to an application filed prior to March 16, 2013.

Per se legal? The Eleventh Circuit Rejects FTC’s “Unlikely to Prevail” Antitrust Challenge to “Reverse Payment” Patent Settlements

By Meera El-Farhan

In F.T.C. v. Watson Pharmaceuticals, Inc., 677 F.3d 1298 (11th Cir. 2012) the U.S. Court of Appeals for the Eleventh Circuit rejected the Federal Trade Commission’s (“FTC”) antitrust challenge to “reverse payment” patent settlements. Under the terms of the “reverse payment” (or “pay-for-delay”) agreement, the patent owner of AndroGel, Solvay Pharmaceuticals, Inc. (“Solvay”), agreed to make over $20 million annual payments to the generic challengers Watson Pharmaceuticals, Inc., Par Pharmaceuticals, Inc., and Paddock Laboratories, Inc. In return, the generic challengers agreed to stay out of the market until 2015, unless another generic version was to enter the market before then.

 

The FTC brought suit against all parties to the agreement. The FTC challenged the “pay-for-delay” settlement on the basis of unfair restraint of trade (the settlement allegedly being an “unlawful agreement not to compete,” in violation of section 5(a) of the Federal Trade Commission Act[1] (“FTCA”)). The FTC argued that such monopolies allow both generic and patent holding pharmaceuticals to make more profits at the expense of consumer welfare (increasing drug costs by an estimated amount of $3.5 billion per year). On appeal, the FTC argued, among other things, that Solvay’s ‘894 patent [2] was “unlikely to prevail.” According to the FTC, because the patent was unlikely to bar Watson and Par, and Paddock’s generic drug from entering the market the settlement was an unlawful restraint on competition.

The Eleventh Circuit rejected the “more likely than not” standard contended for by FTC. The court held the “unlikely to prevail” standard to be insufficient to state a claim; thus, a patent did not thereby exceed its “exclusionary potential.” The court adhered to the test set-forth by its precedent: “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.”[3]

Although critics of the court’s decision argue such a test makes reverse payments “per se lawful” due to resulting difficulty in challenging reverse payment agreements, the Eleventh Circuit proffered convincing arguments for rejecting the FTC’s challenge. Among other things, the court argued FTC’s “predict-the-likely-outcome-that-never-came” approach would not only impose a retrospective burden on parties and courts (even if the burden of proof fell on the plaintiff), but also, such a test would not align with the strong public policy favoring settlements.

The court noted that parties settle patent litigations to “cap the cost” of litigation and avoid the “all or nothing” outcomes from courts. Settlements are one option for parties who “might not want to play the odds for the same reason that one likely to survive a game of Russian roulette might not want to take a turn.” The Eleventh Circuit further explained that the costly and tedious process of developing new drugs should also be supported by strong public policy favoring settlements over costly litigation. The court, with reference to the maxim “More Money, More Problems,” sided with pharmaceutical companies’ incentive to recoup costs of research and development. The court proffered additional reasons such as the exclusive appellate jurisdiction of the U.S. Court of Appeals for the Federal Circuit over patent cases and the court’s lack of expertise to rule on the patent.

The heart of resolving such cases, as noted by the Eleventh Court, is in striking the balance between antitrust law interests (promoting competition) and intellectual property law interests (allowing temporary monopolies to provide innovators with incentives to create). Antitrust laws aim to protect consumers from artificially high prices, maximize efficiency of the market, and also promote improvement of products through competition. On the other hand, granting patents ensures parties have the incentive to innovate in the first place. Although one can easily recognize the tensions between antitrust law and intellectual property law, one must also recognize the common goal: promoting innovation for a better future.

However, there is no consensus over resolving this tension yet. In the Sixth Circuit and the District of Columbia Circuit, reverse payment agreements are per se unlawful under the Sherman Act.[4] However, the Second Circuit, like the Eleventh Circuit, refused to assess the ex post validity of the patent at trial, but instead the court held that the question is whether “the exclusionary effects of the agreement exceed the scope of the patent’s protection.”[5] In devising a test that can better serve both interests, per se rules are unlikely to accommodate such a goal. However, with a growing circuit split among federal courts, in addition to a silent United States Supreme Court (as it passed the opportunity to articulate a unifying a standard at this point in time), the FTC will have many more opportunities to argue for, perhaps better, multi-factored tests.


[1] 15 U.S.C. §45(a)(1) (2006).

[2] U.S. Patent No. 6,503,894 (filed Aug. 30, 2000) (issued Jan. 7, 2003).

[3] F.T.C. v. Watson Pharmaceuticals, Inc., 677 F.3d 1298, 1312 (11th Cir. 2012)

[4] See In re Cardizem CD Antitrust Litig., 332 F.3d 896 (6th Cir. 2003); see also Andrx Pharmaceuticals, Inc. v. Biovail Corp. Int’l, 256 F.3d 799 (D.C. Cir. 2001)

[5] In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 213 (2d Cir. 2006)