ContactSupreme Court Rules on Introduction of New Evidence in Article III Patent Appeals
Posted Wednesday, May 02, 2012 by Mike Gibbons.
In March, the U.S. Supreme Court issued a patent-related opinion in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (Read more about that opinion here.) Little more than a month later, the Supreme Court has now issued a second patent-related opinion in the case of Kappos v. Hyatt. While the Prometheus case was more a question of what types of inventions are patent-eligible, in Kappos v. Hyatt the Court considered an aspect of appeals in patent prosecution.
When an application for a patent has been twice rejected by the USPTO, the applicant may appeal the rejection to the USPTO’s Board of Patent Appeals and Interferences (BPAI). (The BPAI will shortly be renamed the Patent Trial and Appeal Board, aka the PTAB, as a result of the America Invents Act patent reform legislation that was enacted last September. The Supreme Court holding here will apply equally to the PTAB.)
Should the BPAI agree with the patent examiner that the patent application should be rejected, an applicant has two options to continue the quest for the patent. Both options involve legal action in an Article III court. An applicant may appeal the BPAI’s rejection of the application to the U.S. Court of Appeals for the Federal Circuit. (Read more about the CAFC here.) Or, an applicant may initiate a lawsuit in the U.S. District Court for the District of D.C. against the Director of the USPTO. (This route will also change as a result of the America Invents Act, as such a lawsuit will be required to be initiated in the U.S. District Court for the District of Eastern Virginia. The change in venue makes sense geographically, as the USPTO is located in Alexandria, VA.)
It may seem obvious from the names of the courts, but the primary difference between appealing the BPAI’s rejection to the Federal Circuit and suing the Director of the USPTO in the District Court is that the first proceeding is held in an appellate court, while the latter is held in a trial court.
Generally, in any appeal, the panel of appellate judges does not hear new evidence. They consider only evidence which was introduced at the trial level. Therefore, for a patent applicant choosing between the Federal Circuit or the district court, a primary consideration is going to be whether the applicant wants to be able to introduce new evidence that was not previously considered by the USPTO.
Turning to Kappos v. Hyatt, the USPTO was asking the Supreme Court to restrict the ability of patent applicants who bring suit in the district court to introduce new evidence. The PTO wanted new evidence to be allowed only where the applicant was unable to present it to the PTO during the prosecution of the patent. The PTO also asked the Supreme Court to change the standard of review in such litigation, such that the trial court would give deference to evidence that was already in the record from the prosecution. In other words, the PTO wanted future decisions issued by the district court to only be able to be reversed where the court finds clear error on the part of the PTO.
Regarding both issues, the Supreme Court declined to side with the PTO. Writing for the Court, Justice Thomas first found nothing in the text of the statue permitting patent applicants to sue the PTO for a patent which limits the evidence which may be introduced. The only limitations on introduction of evidence will continue to be governed by the Federal Rules of Civil Procedure and the Federal Rules of Evidence.
Secondly, the Court declined to apply the more deferential standard to the PTO’s evidence, requiring trial courts to instead make de novo factual findings. The Court stated that where the applicant’s own evidence newly introduced at trial contradicts the PTO, it does not make sense to deny the trial court the ability to evaluate the evidence the same way it would be reviewed in any other type of trial.
The Supreme Court did rule that a trial court may consider whether the patent applicant had the ability to introduce the evidence at the PTO during prosecution, allowing that fact to influence the weight given to the evidence adduced by the PTO at trial. Apart from that holding, the bulk of the Kappos v. Hyatt decision would seem to be favorable for patent applicants who choose to bring suit in the district court.
Secondary Considerations
Posted Tuesday, April 24, 2012 by Mike Cicero.
A few weeks ago I wrote about the most common type of rejection that is faced by patent applicants, the obviousness rejection created by 35 U.S.C. § 103 (Click here to read Obviousness After KSR v. Teleflex). In making an obviousness rejection, an examiner asserts that the differences between the claims and the prior art “are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill” in the applicable technology. 35 U.S.C. §103. This analysis is done using the four-part test set forth in Graham v. John Deere Co. which requires determinations of (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the claimed invention and the prior art; and (4) the objective evidence of non-obviousness. 383 U.S. 1 (1966). After the first three Graham factors are explored and a prima facie case of obviousness is articulated, the party seeking to obtain or uphold a patent must produce objective evidence of non-obviousness under the fourth factor. However, without doing so a patent application may be rejected and a patent being challenged in the courts may be invalidated.
In the case Iron Grip Barbell Co., Inc. v. USA Sports, Inc. the court explored the fourth Graham factor but ultimately held that the patent at issue was invalid due to being obvious. 392 F.3d 1317 (Fed. Cir. 2004). Iron Grip Barbell Co. (Iron Grip) is a manufacturer of weight plates and was the assignee of a patent which claimed, in basic terms, a weight plate for physical fitness with exactly three elongated handle openings for grasping the weight by a single hand to transport it. Iron Grip brought a patent infringement claim against USA Sports for manufacturing a weight plate having three handle openings and USA Sports defended on the basis that the patented claims were obvious and, therefore, the patent was invalid. The first three of the Graham factors together indicated that the patented claims were obvious and, as a result, the court held that “absent substantial evidence of pertinent secondary factors supporting patentability” the claims would be invalid. Id. The court went on to consider whether Iron Grip could demonstrate sufficient secondary evidence of non-obviousness.
The factors that this court cited as relevant to the issue of secondary considerations included commercial success, satisfaction of a long-felt need, and copying by others. Iron Grip was unable to persuade the court through evidence of the secondary considerations that the patent claims were non-obvious.
The evidence of commercial success that Iron Grip offered was that six competitors began to offer weight plates with three grips, and that three of those competitors entered license agreements with respect to the patent in question. “Commercial success is relevant because the law presumes an idea would successfully have been brought to market sooner, in response to market forces, had the idea been obvious to persons skilled in the art.” Merck & Co., Inc. v. Teva Pharmaceuticals USA, Inc., 395 F.3d 1364, 1376 (Fed. Cir. 2005). However, in order for commercial success to be used as evidence of non-obviousness there must be a nexus between the commercial success and the actual technical innovations of the claimed invention. If the product is brought to market by a popular brand and the overall popularity is the source of the commercial success of the claimed product, not the product’s technological advancement, then this would not be viewed as proof of non-obviousness. Here, the court did not view the license agreements as strong evidence that the commercial success because Iron Grip could not show the required nexus. The court held that “without a showing of nexus, the mere existence of … licenses is insufficient to overcome [a strong prima facie case of obviousness].” Iron Grip, . 392 F.3d at 1325. Therefore, this factor did not weigh in favor of Iron Grip.
Although Iron Grip showed that before its patent issued there was no three grip plate on the market, the court found that Iron Grip was unable to “[present any] evidence of a long-felt need for three-grip weight plates or the failure of others.” Id. at 1322. The court reasoned that the passage of time alone cannot be used to support a finding of non-obviousness under this factor. As such, this factor did nothing to bolster Iron Grips contention that the patented claims were non-obvious.
Finally, Iron Grip argued that because USA Sports later began to produce a three grip plate there was evidence of copying by others. Interestingly, the court noted that “every competing product that arguably fails within the scope of a patent is evidence of copying. Otherwise every infringement suit would automatically confirm the non-obviousness of the patent.” Id. at 1325. In this case, the court was not persuaded that any competitors had copied the invention in the relevant sense, and so this factor as well did not cut in the favor of Iron Grip. Therefore, the patent was held invalid as being obvious under §103.
CAFC Issues Opinion on Declaratory Judgment Actions
Posted Thursday, April 12, 2012 by Mike Gibbons.
The Court of Appeals for the Federal Circuit (CAFC – read more about the CAFC here) last month issued a ruling having to do with declaratory judgment actions in patent cases. The suit being heard on appeal was 3M Company v. Avery Dennison Corp., in which Avery Dennison (“Avery”) held a patent it believed 3M may have infringed.
Avery, the patentee, was not the plaintiff in the case. In a patent infringement case, often the suit is brought by the holder of the patent, who files a complaint naming another party as a defendant and claiming the other party infringed the patent. However, that is not the only manner in which patent litigation may be started.
Say, for example, that a party is selling a product. Another party holds a patent (we may call this party the patentee) which the patentee believes is being infringed by the product sold by the first party. Rather than file a patent infringement lawsuit, the patentee might instead get in touch with the seller of the purportedly-infringing product (we can call this party the purported-infringer) regarding the patent.
In such instances, the purported-infringer, believing they do not actually infringe the patent, might initiate a lawsuit of their own seeking a legally-binding ruling that they have not infringed the patent. Such a suit is called a declaratory judgment action.
Declaratory judgment actions (“DJ actions”) are not unique to patent law, but in general, in a DJ action a party who would be a defendant if sued actually brings suit first seeking a declaration that they are not liable to the other party. A primary benefit to the party that initiates a DJ action is that the party can get the lawsuit going in the venue of their choosing. Considering that the parties might be geographically located on opposite sides of the country, one can see that it would be more convenient to be in court locally. Starting the lawsuit in your own district courthouse rather than being named a defendant in a suit across the country can be beneficial for a variety of reasons. DJ suits are permitted by Federal law under the Declaratory Judgment Act, 28 U.S.C. §2201(a), which permits such actions “in a case of actual controversy.”
The term “actual controversy” stems from Article III of the U.S. Constitution, which grants judicial power in various “cases and controversies,” including “all cases … arising under … the laws of the United States,” of which U.S. patent law is included. However, what constitutes an “actual controversy,” under which circumstances litigation may be launched, can be a tricky question.
If a patentee sends a certified letter to a purported-infringer including a copy of a patent, a page from the purported-infringer’s catalog with a picture of a product for sale, and a cover letter unequivocally stating, “your product infringes our patent, and you must stop selling it or we will sue,” commentators would likely agree that presents a set of facts under which a declaratory judgment action could be brought. The US Supreme Court concurs, stating if “a party has actually been charged with infringement of the patent, there is, necessarily, a case or controversy adequate to support [declaratory judgment] jurisdiction.” Cardinal Chem. Co. v. Morton Int’l, 508 U.S. 83, 96 (1993).
But what if the patentee merely calls the purported infringer, and meekly says, “it is possible something you sell might infringe a patent we hold?” Would that justify the recipient of the phone call in immediately going to court and filing suit against the caller seeking a legal opinion that they don’t infringe? What does a patentee need to have done to have established a controversy sufficient for the other party to initiate a declaratory judgment suit?
That question is the crux of the 3M v. Avery Dennison appeal. Avery had a patent which they believed 3M might be infringing. Avery, located in Washington, had contacted 3M, of Minnesota, regarding 3M’s product and the patent held by Avery. The result of the contact was that 3M felt it in their best interest to initiate a DJ action, seeking a judgment that 3M was not actually infringing the Avery patent, among other things. 3M filed suit in the United States District Court for the District of Minnesota, which would be much preferable to 3M rather than to have Avery file a suit in the Western District of Washington or some other venue.
The District Court dismissed the case upon a motion to dismiss by Avery. Among the reasons for the dismissal was that the matter had not yet become “a case of actual controversy” for which a lawsuit could be heard. In other words, the matter was non-justiciable. It didn’t present a set of facts capable of being ruled upon by a court of law. (In a motion to dismiss, the court assumes all the facts alleged by the non-moving party are true. If, even given all those facts assumed true, there is not enough of an injury for a ruling in favor of the non-moving party to be possible, the case will be dismissed.)
What were the alleged facts that led 3M to seek the DJ action, and which the District Court felt created insufficient grounds to permit a suit to proceed? Here, the Chief Intellectual Property Counsel of Avery was alleged to have phoned the Chief Intellectual Property Counsel of 3M. Avery’s counsel allegedly said the 3M product “may infringe” the Avery patent and that “licenses are available.” The allegations in the complaint continued that two days later, 3M’s counsel called Avery’s counsel back, refused to take the license that had been offered, and asked if there was any new information Avery could provide that might cause 3M to revisit its decision. Avery said it had claim charts analyzing the purportedly-infringing product vs. the patent claims, and said it would send them to 3M. Avery never actually sent the charts. A little more than a year later, 3M started the DJ action.
While the District Court felt that the content of the phone calls and the offer to send claim charts, even if true, still didn’t justify 3M in filing the suit, the CAFC didn’t necessarily agree. Writing for the 3-judge panel, Judge Lourie wrote that, if the alleged facts were true, “Avery effectively charged 3M with infringement.” It wasn’t enough for Avery to go light, telling 3M the patents “may infringe” instead of “do infringe” to prevent 3M from filing the DJ action. Rather, the words “may infringe” in conjunction with the offer to license and the statement that claim charts would be forthcoming would be sufficient for an “actual controversy” to exist.
For that reason, the CAFC vacated the order dismissing the case, and remanded the case to the District Court for a determination of whether the facts alleged by 3M were true, in order to make a proper trial court judgment of whether the case should be dismissed or permitted to go forward.
On Sale Bar
Posted Friday, April 06, 2012 by Mike Cicero.
Under United States patent law there are certain activities which amount to statutory bars against obtaining a patent. These activities are defined by 35 U.S.C. §102(b) which states “[a] person shall be entitled to a patent unless…the invention was … on sale in this country, more than one year prior to the date of the application for patent in the United States.” Because the critical date here is one year before the actual filing date, as opposed to the effective filing date, the applicant cannot swear back of an offer for sale. Moreover, nothing in this statute limits the bar to sales by the inventor or applicant; thus, even an unauthorized offer for sale of the invention by a third-party can act as a statutory bar. Because the exact meaning of this language can have enormous consequences for an invention of high economic value, it has been the subject of extensive litigation. One very difficult issue that has been the subject of such litigation is: at what developmental stage must an invention be before an offer for sale will start the 1-year countdown to a statutory bar?
The issue of developmental stage of the invention was litigated in Pfaff v. Wells Electronics, where the Supreme Court of the United States determined “whether the commercial marketing of a newly invented product may mark the beginning of the 1-year period even though the invention has not yet been reduced to practice.” 525 U.S. 55 (1998). Because the petitioner in this case, Wayne Pfaff, filed the relevant patent application on April 19, 1982, any activity that happened prior to April 19, 1981, and would trigger the on-sale bar 1-year countdown, would constitute a statutory bar against his obtaining a patent.
The relevant activities in Pfaff can be summarized in roughly chronological order as follows: (1) Pfaff sent detailed engineering drawings to a manufacture in February or March of 1981; (2) sometime prior to March 17, 1981, Pfaff showed a sketch of the concept to Texas Instruments; (3) on April 8, 1981, Texas Instruments provided written confirmation to Pfaff of an orally placed order for 30,100 units for a total price of $91,155 (the invention had not been made, tested, or otherwise reduced to practice); (4) sometime between receiving the drawings from Pfaff and July 1981, the manufacturer built the custom tooling required to produce the invention; and, finally, (5) around July 1981, Pfaff reduced the invention to practice and filled the order placed by Texas Instruments.
Pfaff was issued Patent No. 4,491,337 on January 1, 1985, and later sued Wells Electronics alleging infringement of that patent. Wells Electronics countered that the patent was invalid due to an on-sale bar under §102(b). In response, Pfaff argued that an on-sale bar cannot occur until the invention is actually reduced to practice. Ultimately, the Supreme Court granted certiorari (review) to explore the relevancy, if any, of an invention’s reduction to practice on a §102(b) statutory bar.
At the onset of its analysis, the Court flatly stated that the word “invention” in 35 U.S.C. 102 “unquestionably refers to the inventor’s conception rather than to a physical embodiment of that idea.” Id. The Court further notes that the statute does not require an invention to be reduced to practice prior to obtaining a patent (although filing for a patent does constitute a constructive reduction to practice assuming its description is enabling under 35 U.S.C. §112), and that the only reference to reduction to practice in the statute comes from the language of 102(g) for deciding an interference proceeding. Thus, “[the Court could] find no basis in the text of §102(b) or in the facts of [the] case for concluding that Pfaff’s invention was not ‘on sale’ within the meaning of the statute until after it had been reduced to practice.” Id. In other words, answer to the issue the Court set out to settle is: yes, the commercial marketing of an invention can start the 1-year clock event though the invention has not yet been reduced to practice.
The Court went on to state that the word “invention” must refer to a completed concept rather than one that one that is merely “substantially complete.” Id. While an actual reduction to practice is sufficient to prove that the inventive concept is complete, it is not a necessary condition for an inventive concept to be complete.
In conclusion, the Court held “that the on sale bar applies when two conditions are satisfied before the critical date (the date 1 year prior to the filing date).” These conditions are that the invention must be (1) the subject of a commercial sale, and (2) ready for patenting. In this case, prior to the critical date Pfaff’s invention was the subject of a commercial sale, evidenced by the written confirmation provided by Texas Instruments, and was ready for patenting, evidenced by the fact that detailed drawings enable the manufacture to make the invention. Therefore, Pfaff’s Patent No. 4,491,337 was held to be invalid.
Analagous Art
Posted Wednesday, March 28, 2012 by Mike Cicero.
Among other requirements, for the claims of a patent to be allowed by the Patent Office and to survive post grant litigation, both of 35 U.S.C. §§ 102 and 103 must be satisfied. To meet the requirements of 35 U.S.C. §102 the invention must be novel which means it is different from the “prior art.” The invention is different from the prior art unless each element of the invention is present within a single prior art reference. For purposes of 35 U.S.C. § 102, prior art can be generally thought of as all information that has been made public in any form prior to a certain date (this definition is a generalization of prior art as defined by 35 U.S.C. § 102). It is immaterial to a 35 U.S.C. § 102 rejection whether or not the prior art is at all related to the claimed invention, if each element of the invention is present in the prior art reference the rejection is appropriate. In order to reject or invalidate patent claims under 35 U.S.C. § 103, elements from multiple references can be combined to recreate the claims at issue. However, for purposes of 35 U.S.C. § 103 the scope of the available prior art is more limited.
A reference can qualify as prior art for a determination of obviousness under 35 U.S.C. § 103 only when it is analogous to the claimed invention. Innovention Toys, LLC v. MGA Entertainment, Inc., 637 F.3d 1314 (2011). The reason for limiting the availability of prior art references to analogous art can be inferred from 35 U.S.C. § 103(a) which states that a “patent may not be obtained … if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.” It can’t be assumed that a person of ordinary skill in one art would possess the knowledge of all prior art teachings from an entirely different art. Therefore, it would be inappropriate to combine elements from non-analogous arts to recreate an invention from that recreation deem it obvious. It is necessary then to determine which prior art references are analogous to the inventors field of endeavor and to limit the prior art available under 35 U.S.C. § 103 to these references.
Whether a prior art reference qualifies as analogous art hinges on two questions. First, is the art from the same field of endeavor as the claimed invention? If the answer to this question is yes then the reference is analogous and it can be used to support a finding that 35 U.S.C. § 103 is not satisfied. Second, even if the reference is not within the same field of endeavor is it reasonably pertinent to the particular problem the inventor is attempting to solve? If either of these two questions can be answered in the affirmative then the reference qualifies as analogous art for purposes of 35 U.S.C. § 103.
A recent example where prior art was found to be analogous is where Innovention Toys, LLC (Innovention) sued MGA Entertainment, Inc. (MGA) for infringing on a patent related to a strategic game. Innovention Toys, LLC v. MGA Entertainment, Inc., 637 F.3d 1314 (2011). MGA counterclaimed by both denying infringement and claiming that Innovention’s patent was invalid under 35 U.S.C. § 103 as being obvious over the prior art. Innovention argued that the prior art references were non-analogous because the references were not from the same field of endeavor. Innovention’s patent related to a physical board game which included a tangible board and playing pieces whereas the prior art reference relied on by MGA was an electronic game. Both references related to a laser based strategy game. The court was not persuaded by Innovention’s arguments that the prior art references relied on by MGA were non-analogous because the references related to the same goal which was defined as “designing a winnable yet entertaining strategy game.” The court did not determine whether the references were from the same field of endeavor. Like many cases that discuss the issue of analogous art, this case exemplifies the importance of framing the problem favorably for your side.
A recent example where prior art was found to be non-analogous is where inventor Arnold G. Klein appealed a final decision of the Board of Patent Appeals and Interferences (BPAI) to the United States Court of Appeals which reversed that decision. In re Klein, 647 F.3d 1343 (2011). Mr. Klein had invented a mixing device for preparation of sugar-water nectar for birds and butterflies. The device was a container capable of receiving a divider at several different predetermined locations. When the divider was placed in one of these locations, two separate and water tight volumes were created the ratios of which corresponded to a predetermined ratio of sugar to water for producing nectar. After the user filled one volume with water and the other with sugar the divider is removed and the contents stirred to produce nectar. The BPAI had originally sited five references to support its finding of obviousness, three related to storage containers with movable dividers and two related to liquid containers with non-movable partitions. The Court of Appeals examined each reference in turn and held that each was non-analogous. The three related to storage containers with movable dividers were held to be non-analogous because each was designed to keep the contents separated rather than to facilitate mixing of the contents. The two references related to liquid containers were found to be non-analogous because neither addressed multiple ratios or had a movable divider and therefore an inventor considering the problem of “making a nectar feeder with a movable divider to prepare different ratios of sugar and water for animals,” would have had no motivation to consult these references. In re Klein, 647 F.3d 1343 (2011).
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