Federal Circuit Defines When A Prima Facie Case For Anticipation is Met

In In re. Jung, Civ. Case No. 2010-1019 (Fed. Cir. March 28, 2011), Edward K.Y. Jung and Lowell L. Wood, Jr. (collectively, “Jung”) filed U.S. Patent Application No. 10/770,072 (“’072 application”) on January 20, 2004.   On September 14, 2005, the Examiner rejected all claims of the ‘072 application as anticipated by Kalnitsky (U.S. Patent No. 6,380,571).  Among other features, the Examiner indicated that Kalnitsky disclosed “a first well-charge-well [sic] controller (340) operably coupled with said first charge pump (see Col. 5, lines 37-39 and Col. 6, lines 38-44, 64-66)” which corresponded to the recited first well-charge-level controller.  Jung responded by providing a block quote from Kalnitsky, and arguing that the “‘well-charge-level controller’ recitations of [amended] Claim 1 are different from the ‘controller 340’ recitations of [Kalnitsky], and thus controller 340 of [Kalnitsky] does not match the ‘well-charge-level controller’ of herein-amended Independent Claim 1.”  No further explanation was provided.

After the Examiner again rejected the claims, Jung appealed to the Board of Patent Appeals and Interferences.  On appeal, Jung argued that Kalnitsky’s controller 340 is a reset controller which does not “continuously adjust the control signal inputs” as does the recited well-charge-level controller.  The Board rejected this argument, noting that the argument relies upon a feature not recited in the claims and finding that the broadest construction of the reset controller performs a function encompassed by the recited well-charge-level controller.  Jung filed a Request for Rehearing on the grounds that the Board had not addressed Jung’s argument that the Examiner had not made a prime facie case for invalidity under 35 U.S.C. §102, and thus the rejection was procedurally improper under 35 U.S.C. §132.  On rehearing, the Board found that the prima facie case requirement is merely a procedural mechanism for allocating burden, and that the anticipation case was adequately addressed in the original Board decision.

On appeal from the Board, the Federal Circuit outlined how the prima facie case burden is met and its purpose.  Specifically, the Federal Circuit quoted Hyatt v. Dudas, 492 F.3d 1365, 1369 (Fed. Cir. 2007) for the proposition that “the prima facie case is merely a procedural device that enables an appropriate shift of the burden of production.”  The Federal Circuit stated that this burden is met by “adequately explain[ing] the shortcomings it perceives so that the applicant is properly notified and able to respond.” Id, at 1370.   It is only “when a rejection is so uninformative that it prevents the applicant from recognizing and seeking to counter the grounds for rejection” that the prima facie burden has not been met and the rejection violates the minimal requirements of 35 U.S.C. §132.  Chester v. Miller, 906 F.2d 1574, 1578 (Fed. Cir. 1990).

In applying this standard to the instant application, the Federal Circuit declined to require that the prima facie case requires that the Examiner provide an explanation as to the broadest reasonable interpretation of each claim term, as well as evidence “bridging the facial differences between that reasonable claim construction and the purported anticipatory reference” as argued by Jung.  Instead, the Federal Circuit found that the Examiner sufficiently notified Jung by identifying the specific element which anticipated the claim feature (i.e., the reset controller 340), as well as the column and line number explaining the functioning of the reset controller 340 as pertains to the claim feature.  In this manner, the Examiner gave sufficient notice to Jung as to allow Jung the opportunity to respond.  The Federal Circuit then noted that evidence that this notice was sufficient since Jung was able to reply and did not otherwise argue that the correlation between the controller 340 and the well-charge-level controller was not understood.  The Federal Circuit noted that there was no reason to further require the Examiner to fill any gaps between the disclosed feature and the recited feature using evidence since, once the notice requirement of 35 U.S.C. §132 is met, the burden has properly shifted to the applicant.  As such, the Federal Circuit held that “the identification of where each limitation of the rejected claims is shown in the prior art reference by specific column and line number was more than sufficient to meet this burden.”

Significance for Patent Applicants

While it is often tempting to reduce costs during prosecution by not addressing each potential defense to a rejection, Jung shows the importance of ensuring that each traversal is made during prosecution.  This is especially true if the defense is based upon a lack of a prima facie case since the entire premise of this defense is that there is not enough evidence to even respond.  Otherwise, the failure to raise the defense risks the Federal Circuit finding that the prima facie case had been met as evidenced by the applicants’ reply.  Moreover, it also shows how low the bar is for the amount of evidence needed in the context of anticipation: mere notice.  Thus, outside of issues relating to inherency, applicants need to account for Jung when contesting an anticipation rejection based solely on the Examiner’s lack of a prima facie case.

Federal Circuit Finds Specification Precludes Narrow Claim Interpretation

In Arlington Indus., Inc. v. Bridgeport Fittings, Inc., 632 F.3d 1246; 97 U.S.P.Q.2D 1811 (Fed. Cir. 2011), Arlington Industries is the owner of U.S. Patent No. 5,266,050 (hereinafter the ‘050 patent) and U.S. Patent No. 6,521,831 (hereinafter the ‘831 patent).  The ‘050 patent relates to an electrical connector that snaps into electrical junction boxes, whereas the prior art connector required a threaded nut which required two hands to install.  The claimed electrical connector only required one hand, and recites, among other features “a circular spring metal adaptor” in claim 8 of the ‘050 patent and “a tubular spring steel adapter” in claim 1 of the ‘831 patent.

Arlington Industries filed suit in the Middle District of Pennsylvania against Bridgeport Whipper-Snap alleging one set of products infringe claim 8 of the ’050 patent (herein after “Arlington I”).   Arlington Industries later filed a second suit against Bridgeport Whipper-Snap in the Middle District of Pennsylvania  alleging another set of products infringed claim 8 of the ’050 patent and claim 1 of the ‘831 patent (hereinafter “Arlington II”).  In its claim construction, the District Court in Arlington I found that the recited spring metal adaptor of claim 8 did not require the ring to be split but instead be made of a spring metal.  In contrast, the District Court in Arlington II found that the recited spring metal adaptor of claim 8 of the ‘050 patent as well as the spring steel adapter of claim 1 of the ‘831 patent both required that the adapter be split.  Based upon this claim construction, Bridgeport moved for summary judgment in Arlington II since the allegedly infringing products did not include a split.  The District Court in Arlington II granted the motion.

While neither Arlington I nor Arlington II were combined, the District Court in Arlington I agreed to stay the Arlington I proceedings while the Arlington II was on appeal.

On appeal, the Federal Circuit began by noting that “the claims of a patent define the invention to which the patentee is entitled the right to exclude.’” Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc).  Moreover, the Federal Circuit held that the recited “spring metal adaptor” of claim 8 of the ‘050 patent has an ordinary and customary meaning which is consistent with the specification: the adaptor is made of spring metal.  The specification specifically refers to adapter as being formed of spring metal.  As such, the Federal Circuit found that the “spring metal adaptor” of claim 8 must be made of a spring metal.

In supporting the Arlington II District Court’s claim construction, Bridgeport indicated that the term “spring” required that the metal adapter perform a springing function, which would require a split.  Bridgeport pointed to the drawings of the ‘050 patent, all of which include the metal adapter having a split.  In declining to adopt this interpretation, the Federal Circuit again noted that the specification defined the metal adapted as being made of a spring metal, such that the term “spring metal adapter” would refer to the material of the adapter.  Moreover, the Federal Circuit noted that the drawings to a single embodiment do not represent a limitation which is imported into the claim.

Importantly, the Federal Circuit held that allowing such an interpretation would go against the ordinary meaning as well as the findings of the Arlington I court.  Specifically, the Federal Circuit quoted Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1329 (Fed. Cir. 2008) for the proposition that, “[i]n the interest of uniformity and correctness, this court consults the claim analysis of different district courts on the identical terms in the context of the same patent.” Thus, the Federal Circuit rejected the notion that the spring limitation meant a springing function as being contrary to both the ordinary meaning as understood from the specification as well as contrary to a predecessor court decision.

Alternately, Bridgeport indicated that the split was implicitly required even if the term “spring metal adapter” was limited to an adapter made of a spring metal.  However, the Federal Circuit declined to implicitly require the spring metal adapter having the split.  Specifically, the Federal Circuit noted that, while one embodiment shown in the drawings had a split, three other embodiments did not.  Also, the Federal Circuit noted that other claims expressly recite a split such that implicitly requiring the split would run contrary to the doctrine of claim differentiation.  Moreover, the Federal Circuit noted that in a rejection of a claim in the parent application for the ‘050 patent, the applicants specifically amended a claim by including a split feature which was evidence in the prosecution history that the recited spring metal adapter did not necessarily include a split.  While acknowledging that there is a fine line between reading a claim in light of the specification and importing a feature into a claim using the specification, the Federal Circuit determined that the overall facts indicated that there was no intent to implicitly require that the split metal adapter always require the split.  As such, the Federal Circuit found that neither claim 1 of the ‘831 patent nor claim 8 of the ‘050 patent required a split, and reversed the District Court.

Significance for Patent Applicants

Arlington Indus provides yet another reminder as to why it is important to ensure that multiple embodiments are disclosed for a claimed invention.  By including multiple examples within a genus of a claim feature, courts are more likely to give a broader reading by not insisting that the claim can only be commensurate in scope with a single embodiment.  Moreover, the use of claims of varying scope will further help ensure this broad interpretation.  As such, applicants need to ensure that, at the time of filing, applicants have provided as many examples as possible or risk having the claims narrowed to meet the single disclosed example.

Federal Circuit Defines When A System Is Being Used Where No Party Owns All of the System Elements

In Centillion Data Systems v. Qwest Communications International, 631 F.3d 1279; 97 U.S.P.Q.2D  1697 (Fed. Cir. 2011), Centillion is the owner of U.S. Patent No. 5,287,270 (the ‘270 patent”), which is drawn to a system for collecting and processing billing information from a service provider and electronically delivering the billing information from the service provider to a customer in a format usable on a personal computer.  As construed by the Federal Circuit, claim 1 recites a system for presenting information comprising “1) storage means for storing transaction records, 2) data processing means for generating summary reports as specified by a user from the transaction records, 3) transferring means for transferring the transaction records and summary reports to a user, and 4) personal computer data processing means adapted to perform additional processing on the transaction records.”  Centillion acknowledged that claim features 1) through 3) are performed at a backend at the service provider and claim feature 4) is maintained by a front end (i.e., the user).

Federal Circuit Clarifies Damages For Patent Infringement

Federal Circuit Finds 25% Damages Rule Is Too Unreliable to be Used In Calculating Patent Damages

In Uniloc USA, Inc. v. Microsoft Corp., Civ Case No. 2010-105, -1055 (Fed. Cir. January 4, 2011), Uniloc owns U.S. Patent No. 5,490,216 (“’216 patent”), which is drawn to a registration system designed to prevent illegal software copying.  Specifically, the ‘216 patent discloses a program which only allows software to run without restrictions on a system when the system determines that the software is legitimate.  Microsoft includes a Product Activation feature in its Windows XP software and accompanying software which requires the use of a product key which, if valid, allows unrestricted use of the software, and if not valid, only allows use of the software in a demo mode.

Uniloc sued Microsoft in the District of Rhode Island alleging that the Product Activation feature infringed the ‘216 patent.   After a first remand from the Federal Circuit rejecting the District Court’s initial claim construction, the jury found that Microsoft had infringed the ‘216 patent, that the infringement was willful, and awarded damages of $388 million based in part on testimony from a damages expert using a “25% rule” as a basis for determining a reasonable royalty.  Microsoft filed six post trial motions including motions JMOL for invalidity, non-infringement, and no willfulness, as well as a motion for a new trial on the issue of damages for improper use of the 25% rule.  The District Court denied the motion JMOL on the issue of invalidity, granted the motion JMOL of non-infringement as well as no willfulness, and granted the motion JMOL new trial on the issue of damages.

On appeal, the Federal Circuit reversed the District Court grant of the JMOL motion of noninfringement and sustained the denial of the JMOL motion on the issue of invalidity, thus sustaining the jury verdict on the issue of infringement of a valid claim.  The Federal Circuit also upheld the District Court grant of JMOL on the issue of no willfulness, noting that the District Court was correct in finding that Uniloc had not presented any evidence of subjective or objective recklessness, especially as the claims involved complex issues relating to equivalencies.  As such, the Federal Circuit found no need for a new trial on the issue of willfulness such that the issues of infringement and willfulness were resolved.

On the next issue of damages, the Federal Circuit also upheld the District Court’s grant of a new trial on the issue of damages.  In order to arrive at the $388 million dollar award, the jury evaluated the testimony of Uniloc’s expert, Dr. Gemini.  As summarized by the Federal Circuit, Dr. Gemini testified that damages should be $564,946,803, which is based upon a hypothetical negotiation using the factors outlined in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970).

As a starting point, Dr. Gemini noted that a Court-accepted methodology used a 25% “rule of thumb”, whereby 25% of the value of a product would go to the patent owner.  In this case, Dr. Gemini valued each Product Activation feature as being worth $10 to Microsoft given the importance of preventing piracy, such that the rule of thumb began with a royalty rate of $2.50 per Product Activation.  From this, Dr. Gemini arrived at a reasonable royalty of $564,946,803.

 

As a check to ensure that this royalty rate was within industry standards, Dr. Gemini testified that this resulted in a royalty rate of 2.9% relative to the $19 billion gross revenue for Windows XP and related software.  In comparison, Dr. Gemini indicated the industry rate was above 10%. Based upon this analysis as well as the comparison of the resulting award against the gross revenue, the jury awarded the $388 billion in damages.

The Federal Circuit, in upholding the District Court’s grant of the motion JMOL to reverse the award and allow a new trial on damages, reviewed the history and use of the 25% rule of thumb utilized by Dr. Gemini.  The Federal Circuit noted that 35 U.S.C. § 284 allows a damages in the amount of a reasonable royalty, which is determined according to a hypothetical negotiation between the parties. Wang Labs Inc. v. Toshiba Corp., 993 F.2d 858, 869-70 (Fed. Cir. 1993).  The Federal Circuit noted that legal scholars have reasoned that the 25% rule of thumb approximates the reasonable royalty by leaving the infringer with sufficient remaining profits (75%) to reward the infringer for the risk of developing and marketing the product. Robert Goldscheider, John Jarosz and Carla Mulhern, Use Of The 25 Per Cent Rule in Valuing IP, 37 les Nouvelles 123 (Dec. 2002).  While enjoying widespread acceptance as a starting point, others have criticized the rule as not correlating to the relative importance of the patent to the product, or any unique relationship between the parties.  Gregory K. Leonard and Lauren J. Stiroh, Economic Approaches to Intellectual Property Policy, Litigation, and Management, 949 PLI/Pat 425, 454-55 (Sept.-Nov. 2008); Richard S. Toikka, Patent Licensing Under Competitive and Non-Competitive Conditions, 82 J. Pat. & Trademark Off. Soc’y 279, 292-93 (Apr. 2000); Ted Hagelin, Valuation of Patent Licenses, Tex. Intell. Prop. L.J. 423, 425-26 (Spring 2004).  The Federal Circuit then noted that, while never formally approved, the Federal Circuit has nevertheless “passively tolerated” its use since the issue was never squarely before the court.

As the issue was now squarely before the court, the Federal Circuit now held “as a matter of Federal Circuit law that the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation.”  Importantly, the Federal Circuit went so far as to hold that any use of evidence related to the rule is “inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.”  Specifically, the Federal Circuit noted that the Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 589 (1993) interpreted Federal Rule of Evidence 702 as requiring that expert testimony be based on a firm scientific or technical grounding. Daubert, 509 U.S. at 589-90.”  Where the testimony does not tie a general rule well to the specific facts of a case, the evidence and testimony is inadmissible.

The Federal Circuit further noted that it has, in the past declared that licenses which were radically different from the facts of a given case were similarly inadmissible in attempting to find a reasonable royalty since these can result in damages in excess of the statutory award. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009); Wordtech Systems, Inc. v. Integrated Networks Solutions, Inc., 609 F.3d 1308 (Fed. Cir. 2010).  According to the Federal Circuit:

The meaning of these cases is clear: there must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25 percent rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement.

Since the 25% rule is not even related to a real negotiation as much as the licenses at issue in ResQNet.com, Inc, Lucent Techs., Wordtech Systems, Inc., the Federal Circuit found that the link between this rule of thumb and any hypothetical negotiations was even more attenuated.

The Federal Circuit further noted that, while the 25% rule was only a starting point, it was a starting point that neither reflected the parties and industries involved, nor the importance of the patents to the infringed products.  As noted by the Federal Circuit, “[b]eginning from a fundamentally flawed premise and adjusting it based on legitimate considerations specific to the facts of the case nevertheless results in a fundamentally flawed conclusion.” Moreover, the Federal Circuit noted that Dr. Gemini had only used the 25% rule as a starting point once in his non-litigation negotiations.  As such, the Federal Circuit found that Microsoft should be allowed a new trial on the issue of damages.

In addition, the Federal Circuit took issue with Dr. Gemini’s use of the $19 billion gross sales figure as the entire market in order to “check” whether the royalty rate of 2.9% was reasonable in the industry.  The Federal Circuit noted that the use of the entire market is only appropriate where the patented feature is the “‘basis for customer demand’ or ‘substantially create[s] the value of the component parts.’ Lucent Techs., 580 F.3d at 1336; Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549-50 (Fed. Cir. 1995).”  As such, the Supreme Court has allowed the entire market to be the basis for a reasonable royalty where there is evidence that the patented feature is what gives value to the entire machine.  Garretson v. Clark, 111 U.S. 120, 121 (1884).  The Federal Circuit next noted that it was undisputed that the Product Activation feature did not create the consumer demand for Windows XP and the accompanying software.  Thus, the $19 billion gross sales figure was irrelevant as a check as to whether the calculated damages were within industry norms for licensing royalty rates.  As such, the Federal Circuit agreed with the District Court that the comparison of the entire market for Windows XP and the accompanying software as a check for whether the award was reasonable in the industry was an inappropriate use of the entire market rule and a new trial was an appropriate remedy.

Significance for Patent Owners and Applicants

Given the reliance on commercial practices for royalty rates, the Uniloc decision at the very least is going to require use of true license comparisons to arrive at damages.  Short cuts, such as the now-discredited 25% rule of thumb, will not be usable as a matter of law.  In theory, starting without this 25% rule should result in lower royalty rates.  For instance, in Uniloc, there was evidence that the actual starting royalty rate used in licensing within the industry was rarely 25%.  However, this does not necessarily mean that all industries experience the same lower royalty rate, and it is further likely that certain technologies as well as pioneering patents could well demand rates in excess of 25%.  All that is certain is that whatever the starting point will be, there must be evidence that it comports with actual commercial standards.

 

Feature Comment: Updated USPTO Program to Accelerate Examination of Green Technologies

By James G. McEwen[1]

I.        INTRODUCTION

With the average pendency for patent applications now 35.3 months and applicants waiting on average 25.7 months for even a first action[2], patent applicants have been searching for new ways to accelerate their applications in order to ensure that the patent protection that they need is acquired within the timeframe needed to protect their commercial embodiment.  Such acceleration is performed by getting an application labeled as Special, which allows the Examiner to examine the application ahead of older applications.  Thus, there is a strong incentive for applicants to find a mechanism to get their application designated Special.

However, the United States Patent and Trademark Office (USPTO) places strict limits on which applications can be designated Special.  Specifically, outside of reissue applications and participants in the Patent Prosecution designated Special using a Petition to Make Special.[3]  While the Petition to Make Special can be an attractive option, the cost and risks of filing the Petition to Make Special (and particularly the cost and risks associated with filing the search document explaining the distinctions between the claimed invention and the prior art) usually outweigh the benefits of immediate examination.  Thus, applicants have not typically used these Petitions except in very exceptional circumstances.

At the same time, there is an increased emphasis on creating and encouraging domestic development of green technologies.  These technologies, however, are subject to the same patent pendency problem.  Arguably, green technologies actually faired worse than average in regards to patent pendency.  According to the USPTO, the “average pendency time for applications in green technology areas is approximately 30 months to a first office action and 40 months to a final decision.”[4]  As a result, the USPTO implemented a pilot program to accelerate the patenting of green technology, and thus “accelerate the development and deployment of green technology, create green jobs, and promote U.S. competitiveness in this vital sector.”[5]

In order to ovecome these problems, the USPTO first implimented a Pilot Program in December 8, 2009 to encourage technology investment in green technologies.  While moderately successful initially, the USPTO has broadened the qualifications to now allow larger categories of applicants to participate in the program.  The below article discusses both the original program, how the USPTO has broadened the qualification requirements, and how applicants can take advantage of these changes.

II.       Original Requirements for Participation in Pilot Program for Green Technologies

When the Pilot Program was first announced, the United States Patent and Trademark Office had not yet indicated how the program was to be run, or even what technologies would be considered a “green technology.”  This deficiency was resolved on December 29, 2009, when the United States Patent and Trademark Office published a Notice for the requirements for participation in the Pilot Program for Green Technologies.[6]

In this Notice, the Pilot Program was limited to the first 3,000 Petitions for previously filed new applications, and is effective as of December 8, 2009 through December 8, 2010.  Further, the application cannot contain more than one invention, and no more than twenty claims and three independent claims.  However, the application can be amended with a Preliminary Amendment accompanying the Petition in order to comply with this requirement.

Scope of Green Technology

As set forth in the Notice, the scope of the program encompasses any green technologies which provide for greenhouse gas reduction.  Specifically listed are technologies related to

• environmental quality,
• energy conservation,
• development of renewable energy resources, or
• greenhouse gas emission reduction.

The Notice specifically lists the patent classifications which are currently considered within these categories, which therefore define the scope of the Pilot Program.    While technologies such as biofuels, wind turbines, fuel cells and solar cells are obviously included in the scope of green technologies, the Notice shows that the USPTO has taken a broad view of what constitutes a green technology.  For instance, examples of Energy Conservation includes “Cathode ray tube circuits (USPC 315/150, 151, 199)”, “Commuting, e.g., HOV, teleworking (USPC 705/13),” and “Roadway, e.g., recycled surface, all-weather bikeways (USPC 404/32-46).”  Thus, merely because a technology is not always thought of as a green technology does not mean that an applicant should not take a closer look to determine whether their pending applications qualify as a green technology for purposes of the Pilot Program.

General Petition Requirements

If a technology is a green technology, the applicant can file a Petition to Make special under the Green Technology Pilot Program.  The Petition itself does not require a fee as the “$130.00 fee for a petition under 37 CFR 1.102 (other than those enumerated in 37 CFR 1.102(c)) is hereby sua sponte waived for petitions to make special based upon the procedure specified in this notice.”

The Petition must be electronically filed prior to December 8, 2010 or prior to the first Office Action, whichever comes first.  When filing electronically, the applicant needs to label the filing as “Petition for Green Tech Pilot”, and should use the newly-created form PTO/SB/420.  However, applicant created forms can be used.

The Petition needs to include a request for early publication with accompanying fee.  Further, the applicant needs to agree to elect between inventions pursuant to a telephone interview should the Examiner determine that the application contains more than one invention.

The Petition needs to include evidence as to how the technology meets one of the two Eligibility requirements.  Specifically, the Petition or the underlying application must indicate how the invention is material to advancing green technology as defined under one of the Eligibility requirements.  Ideally, an applicant should include such a statement in the Petition in order to ensure that the materiality is demonstrated even where the applicant believes that the application clearly indicates how the invention is material to the development of green technology.

Notably, neither Eligibility requirement requires the conducting of a pre-examination search and examination support document.  Thus, the Petition should be cheaper and less risky to file as compared to where a Petition to Make Special is used.

The two Eligibility requirements are set forth below.

 

1.       Eligibility Requirement for Applications Pertaining to Environmental Quality

For applications whose eligibility is related to Environmental Quality, the Petition needs to set forth how the technology will “materially enhance the quality of the environment under the conditions specified in item V of MPEP Sec. 708.02.”  Under this standard, the Petition must specifically state that the Special status is appropriate since the invention “materially enhances the quality of the environment by contributing to the restoration or maintenance of the basic life-sustaining natural elements.”  The materiality standard can be met if the application itself clearly demonstrates the importance of the technology, or if there is a statement included in the Petition which demonstrates how the invention is material.

2.      Eligibility Requirement for Applications Pertaining to Energy Conservation, Development of Renewable Energy Resources, or Greenhouse Gas Emission Reduction

For applications whose eligibility is related to Energy Conservation, Development of Renewable Energy Resources, or Greenhouse Gas Emission Reduction, the applicant needs to demonstrate that the invention “materially contribute” to the “The discovery or development of renewable energy resources; the more efficient utilization and conservation of energy resources; or the reduction of greenhouse gas emissions.”

A “renewable energy resource” includes “hydroelectric, solar, wind, renewable biomass, landfill gas, ocean (including tidal, wave, current, and thermal), geothermal, and municipal solid waste, as well as the transmission, distribution, or other services directly used in providing electrical energy from these sources.

For “energy conservation”, the invention must relate to reducing energy consumption in some form of system, including “combustion systems, industrial equipment, and household appliances.”

The reduction of greenhouse gas emissions includes technologies which advance nuclear power generation technology, or “fossil fuel power generation or industrial processes with greenhouse gas-abatement technology.”  Moreover, the technologies need not be directed only to improvements in these technologies, and can also include “inventions that significantly improve safety and reliability of such technologies).”

Where the Petition relates to this second ground of Eligibility, the Petition needs to explain that the Special status is deserved by demonstrating how the materiality requirement is met for these categories.  As with the first Eligibility requirement, where the materiality requirement is not evident from the application itself, the applicant needs to include in the Petition an explanation as to how the technology materially aids in the development of these categories of inventions.

 

III.      NEW CHANGES

Recognizing that the Green Technology program was under performing, the USPTO enacted changes to help stimulate participation.  Specifically, according to the USPTO’s own statistics, the technical requirements of the Petitions had allowed only 48% of all received petitions to be granted participation, whereas 35% were dismissed and 8% were denied.[7]  Indeed, the number of denied petitions exceeded the number of patents issuing under the program. To enhance participation to meet its own expectations, the USPTO has since expanded the program in three significant ways.

First, the USPTO withdrew the requirement that the application fit within pre-determined patent classifications as discussed above.  As noted in the comments accompanying the change, the purpose of using the patent classifications had been to balance the workload within the USPTO, but the requirement had resulted in “denials of petitions for applications that are drawn to green technologies” even though the workload balance had been achieved.[8]  As such, the USPTO eliminated a procedural hurdle which was preventing full use of the program.

Second, the USPTO expanded the program by filing date requirement.  As noted above, the original program only applied to applications filed prior to the start of the pilot program (i.e., filed prior to December 8, 2009).  This change allowed applicants to ensure new inventions can participate in the program, and allows applicants whose petition was refused solely due to the filing date to renewed petition.  The renewed petition was given “priority” over other petitions if the renewal was filed by December 10, 2010.[9]

Third, the USPTO extended the duration of the program for another year.  As such, the program will be closed after December 31, 2011, but will remain limited 3000 granted petitions.[10]  This extension was made to allow further participation in the program since, as of December 13, 2010, only 917 petitions had been granted and only 148 petitions were awaiting a decision.[11]

 

IV.      CONCLUSION

Petitions to Make Special have traditionally been a way for the United States Patent and Trademark Office to ensure that the most important inventions are examined in advance of all inventions.  With the costs and burdens associated with Petitions to Make Special, applicants are generally reluctant to file such Petitions.   However, by making broad categories of green technologies available for Petitions to Make Special without the cumbersome pre-examination searches and supporting documentation, the United States Patent and Trademark Office has taken the unusual step of allowing entire categories of technology to be treated in advance at a relative low cost. Further, through removal of man of the procedural complexities which previously existed, such Petitions are now easier to obtain and simpler to prepare.  Given the uniqueness of this opportunity, applicants would be well advised to review their pending applications to determine if their invention qualifies for this inexpensive mechanism to ensure that their technology is timely protected

 

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[1] James G. McEwen is a partner at Stein McEwen, LLP.  The opinions in this article do not represent the official positions of Stein McEwen, LLP.

[2] FY 2010 USPTO Performance and Accountability Report, Table 4: Patent Pendency Statistics (FY2010) (http://www.uspto.gov/about/stratplan/ar/2010/index.jsp) .

[3] MPEP 708.01.

[4] The U.S. Commerce Department’s Patent and Trademark Office (USPTO) will pilot a program to accelerate the examination of certain green technology patent applications (December 7, 2009) http://www.uspto.gov/news/pr/2009/09_33.jsp.

[5] Id.

[6] 1349 Official Gazette 362

[7] USPTO, Green Petition Report Summary (December 13, 2010).

[8] Elimination of Classification Requirement in the Green Technology Pilot Program, 75 Fed. Reg. No. 98, p. 28554 (May 21, 2010).

[9] Expansion and Extension of the Green Technology Pilot Program, 75 Fed. Reg. No. 217, pp. 69049-50 (November 10, 2010).

[10] Id.

[11] USPTO, Green Petition Report Summary (December 13, 2010).

Ninth Circuit Finds Refusal To Transfer Website Domain Registered In Good Faith Can be Bad Faith “Use” For Purposes of the Anti-Cybersquatting Consumer Protection Act

In DSPT Int’l, Inc. v. Nahum, 624 F3d 1213, 97 USPQ2d 1022 (9th Cir. 2010), DSPT International, Inc. (DSPT) is a clothing designer, manufacturer and importer.  Paulo Dorigo, owner and founder of DSPT, hired Lucky Nahum, who was a friend of Dorigo, to help launch EQ, a new brand for DSPT.  Dorigo and Nahum set up a website in 1999 for EQ, and Nahum’s brother was to design and produce the website “http://www.eq-Italy.com” in order to display DSPT clothing under the EQ brand.  Nahum, who exclusively working for DSPT, registered the website domain name under his personal name, for a cost of $25 USD.

Federal Circuit Finds Declaratory Judgment Not Available Against Field of Use Licensee Where Patent Owner Could Not Be Joined

In A123 Systems, Inc. v. Hydro-Quebec, 626 F.3d 1213 (Fed. Cir. 2010), Hydro-Quebec (HQ) is a licensee of U.S. Patent Nos. 5,910,382 and 6,514,640, which are owned by the Board of Regents for the University of Texas System (UT).  The license gives HQ an exclusive license within a specified field of use.  HQ had threatened suit against A123 for infringement of these patents, whereby A123 filed a Declaratory Judgment against HQ in the District of Massachusetts claiming non-infringement on August 14, 2006.  HQ moved to dismiss alleging that UT was a necessary party and could not be joined due to Eleventh Amendment immunity, and filed its own suit with UT in the Northern District of Texas.  A123 further filed a reexamination request for the patents, which resulted in the Texas action being stayed and the Massachusetts was dismissed without prejudice while the reexamination continued.  On conclusion of the reexamination, A123 motioned to reopen the Massachusetts action, which HQ opposed on the grounds that the Massachusetts action would be dismissed for failure to join UT as a necessary party.  The District Court denied’ A123’s motion, agreeing with HQ that the Massachusetts action would be dismissed and yielded jurisdiction to the later-filed action in the Northern District of Texas.

On appeal, A123 argued that the license conferred sufficient rights to HQ as to not require the joinder of UT, and further, that Rule 19 of the Federal Rules of Civil Procedure would allow the suit to continue even without UT.  On the issue of the license, A123 noted that HQ had held itself as an exclusive licensee having the right to enforce the patents, and had even brought suit against another party, Valence Technology, Inc. as this exclusive licensee.  In response, HQ argues that the suit against Valence Technology was within its exclusive field of use, and even assuming arguendo that HQ had made incorrect assertions about its rights, such assertions do not affect UT’s actual rights under the license.  The Federal Circuit agreed with HQ, noting testimony confirming that the license allowed UT the right to license in other fields of use, and that HQ’s statements in the other suit were consistent with this interpretation.  As such, since HQ did not receive all substantive rights in relation to the technology at issue with A123, A123 could not bring a Declaratory Judgment action against HQ without the participation of UT.

Having decided that UT was a necessary party, the Federal Circuit noted that UT could not be forced to join the Massachusetts action due to the sovereign immunity conferred by the Eleventh Amendment in light of College Savings Bank v. Florida Prepaid Postsecondary Education, 537 U.S. 666 (1999).  While A123 had relied upon a market participation theory, the Federal Circuit confirmed that this theory was rejected by the Supreme Court and by Federal Circuit precedent even where the same subject matter was brought by the state in another forum.  As such, despite being a necessary party, UT could not be joined in Massachusetts without its consent.

A123 next argued that Rule 19 allows a suit to be maintained despite the non-joinder of a necessary party except where party is indispensible, and that the District Court had not specifically found UT to be indispensible.  In reviewing this argument, the Federal Circuit noted that the court is required to review with to allow a suit to proceed without a necessary, but not indispensible, party.  Dainippon Screen Mfg. Co., Ltd. v. CFMT, Inc., 142 F.3d 1266, 1272 (Fed. Cir. 1998); Vaupel Textilmaschi-nen KG v. Meccanica Euro Italia SPA, 944 F.2d 870, 876 n.1 (Fed. Cir. 1991).  The factors as to whether a party is indispensible are set forth in Rule 19(b) as follows:

[T]he court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed. The factors for the court to consider include:

(1) the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties;

(2) the extent to which any prejudice could be lessened or avoided . . . ;

(3) whether a judgment rendered in the person’s absence would be adequate; and

(4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder.

 

Citing to In re Olympic Mills Corp., 477 F.3d 1, 8-9 (1st Cir. 2007), A123 largely contended that only the first factor was relevant, and in weighing the first factor in favor of A123 was warranted as both UT and HQ share a common goal in defending the patents, and therefore there would be no prejudice to UT should it not be joined.  In rejecting this argument, the Federal Circuit first noted that the District Court did address the first factor, and noted that both parties did not have identical interests since HQ’s interest was in ensuring a claim construction that was consistent with its field of use, whereas UT’s interest was for the entire patent.  Thus, there was a risk to UT which was not ameliorated by the similar, but not identical, interests of HQ versus UT.

The Federal Circuit also reviewed the record and noted that the plaintiff, A123, does have an adequate remedy based upon the Texas action as all defenses available in Massachusetts would also be available in the Texas action to which UT had waived its sovereign immunity.  Thus, on balance, the Federal Circuit found that the Rule 19(b) weighed in favor of UT being labeled an indispensible party, and affirmed the dismissal on those grounds.

Significance for Technology Companies

While the Supreme Court’s decision in MedImmune, Inc. v. Genentech Inc., 549 U.S. ___; 81 USPQ2d 1225 (2007) did broaden the standard for bring declaratory judgments, it is apparent that this standard remains confused where a sovereign entity is involved.  While some courts have allowed suits to be maintained where the Federal Government refused to be joined under Rule 19 as in Sourceone Global Partners LLC. V. KGK Synergize, Inc., Civ. Case No. 08 C 7403 (N.D. Il. May 13, 2009), A123 Systems shows that Rule 19 does not always allow such suits to be maintained where the non-joining sovereign is amendable to suit in another jurisdiction.  Thus, prior to bringing such a declaratory judgment action involving a sovereign actor, plaintiffs need to account for the uncertainties involved in Rule 19 in case the sovereign entity refuses to be joined.

 

Federal Circuit Finds Prosecution History Narrowed Literal Scope of Claims

In Erbe Elektromedizin GmbH v. Canady Tech. LLC, 97 USPQ2d 1048 (Fed. Cir. 2010), ERBE Elektromedizin GmbH and ERBE USA, Inc. (collectively, “ERBE”) is the owner of U.S. Patent No. 5,720,745 (“’745 patent”), which is directed generally to argon gas-enhanced electrosurgical products for electrosurgery.  The ‘745 patent includes a “low flow” limitation in the independent claims as follows:

1. Claim 1 recites that the “gas flows from the source, through the tube and exits through the opening at the distal end of the tube at a low flow rate of less than about 1 liter/minute”; and
2. Claim 35 recites that “supplying the inert gas from the source of said gas through the tube to the distal end opening of said tube with such a low flow rate, that gas exiting through said distal end opening is a not directed, non laminar stream but forms an inert gas atmosphere” and has a depending claim 38 which defines that “the stream of gas exits through said distal end opening with a flow rate of less than about one liter per minute.”

The “low flow” feature was added during prosecution in response to the Examiner’s construction of the prior art as containing “argon flow rates ranging from 1 to 12 liters per minute, but did not disclose argon flow rates of “less than 1 liter per minute.”  In response, ERBE indicated that the low flow rate distinguished from the 1 to 12 liters per minute since a “flow rate of 1 litre per minute leads to a flow velocity of 19 m/h” and “12 litres per minute gives an outlet gas speed of 229 km/h”, which “would certainly be classified as laminar jets and would likely lead to” problems including being toxic to the patient.  In response to the amendment and argument, the Examiner allowed the application.

Feature Comment: Building a Solid IP Portfolio – Strategies for Innovator Pharmaceutical Companies

By John K. Weatherspoon, PhD[1]

The importance of having valid, enforceable patent protection was a key theme discussed at the recent Life Sciences Summit held in Long Island, NY, from September 22-23, 2010.   With over 400 attendees at the summit, primarily from the pharmaceutical and biotechnology industries, there was extensive discussion of having solid Intellectual Property (IP) protection which is critical especially for commercializing new therapeutics.  By “solid” IP protection, and in the case of patent protection, this is intended to refer to patents that are ultimately deemed both valid and enforceable. With representatives from large, midsize and emerging biopharmaceutical companies present at the summit, there was particular interest in the importance of IP in the commercialization of new therapeutics, including new pharmaceutical products or “Active Pharmaceutical Ingredients” (APIs).  The importance of solid IP protection can’t be emphasized enough, especially in today’s challenging economic climate.  In the case of emerging biopharmaceutical companies seeking investor funding, a solid IP portfolio is essential.  Also, as discussed at the recent Life Sciences Summit, there are many instances where a major innovator pharmaceutical company seeks to in-license or acquire the IP of a target company, in order to expand its product portfolio.

Seventh Circuit Finds Insurance Company Has Duty to Defend Against Trademark Infringement

In Santa’s Best Craft, LLC. v. St. Paul Fire & Marine Ins. Co., 2010 U.S. App. LEXIS 13470 (7th Cir. July 1, 2010), Santa’s Best Craft, LLC (SBC) sought a decision requiring its insurance company St. Paul Fire & Marine Ins. Co. (St. Paul) to defend SBC against a charge of trademark infringement brought by JLJ.  JLJ alleged that SBC copied JLJ’s “Stay Lit” lights packaging design, and specifically that SBC sold Stay-On lights using false and deceptive language.  As such, JLJ sued SBC for trademark infringement, false designation of origin, false advertising, trademark dilution and deceptive trade practices. SBC asked its insurer, St. Paul, for a defense citing the coverage for advertising injuries included in its Commercial General Liability (CGL) policy.