i4i Prevails on Appeal

Today, the CAFC decided the i4i appeal in what appears to be a sweeping victory for i4i. "We affirm the issuance of the permanent injunction, though we modify its effective date to accord with the evidence. In all other respects, we affirm for the reasons set forth below."

My previous posts on this case are found here. There will certainly be more to say about this opinion, but one thing that jumps out at me immediately is the sharp criticisms of certain decisions made by trial counsel not to seek per-verdict JMOL on the amount of damages.  Failing to seek pre-verdict JMOL is unfortunately a common error, but in this case, the decision appears to have been a deliberate one for strategy reasons.  What strategy, I'm not sure; there is little doubt, however, that Microsoft has some of the most high-powered and talent lawyers, so I'm sure there are reasons.  This is from the opinion:

"Although Microsoft now objects to the size of the damages award, we cannot reach that question because Microsoft did not file a pre-verdict JMOL on damages. ... Had Microsoft filed a pre-verdict JMOL, it is true that the outcome might have been different. Given the opportunity to review the sufficiency of the evidence, we could have considered whether the $200 million damages award was 'grossly excessive or monstrous' in light of Word’s retail price and the licensing fees Microsoft paid for other patents. Cf. Lucent, 580 F.3d at 1325-32.  As this court did in Lucent, we could have analyzed the evidentiary basis for the Georgia-Pacific factors, and whether the benchmark (XMetaL) was sufficiently comparable. Id."

Seattle Patent Litigation Update Fall 2009

Seeing that it has been almost a month since I last posted, I thought I needed to break the silence and provide an update on the world of Seattle patent litigation.

For my part, things have been extremely busy over the last 30 days, which included a trip back to the CAFC to argue a design patent case, one of the first that might extend the Egyptian Goddess holding into determinations of invalidity. The case is International Seaway Trading Corp. v. Walgreens (2009-1237). My panel was made up of Judge Bryson, Dyk, and Clevenger. Here is a link to the audio. On the day I argued, my colleague here at Darby's Seattle office, David Tellekson, argued National Products Inc. v. Gamber Johnson LLC (2009-1195) before a panel made up of Judges Newman, Moore, and Plager. I was able to watch David's argument live (audio link here), after which I retired to the library on the 4th floor of the Howard T. Markey National Courts building to review a few more cases and finish my outline (none of which I was able to give given the constant peppering of questions I received from the panel).

I can report the case that David argued, an appeal from a decision by Judge Jones here in the Western District of Washington, where we represented the appellee, National Products Inc, the panel summarily affirmed under Circuit Rule 36. As for my case, I'm still waiting to hear.

In other Seattle patent litigation news, there have been just four cases filed since August. They are listed below. Year to date, only 30 patent cases have been filed in the WD of WA, that is substantially less than last year at this time, there were 39 patent cases filed by by the end of October 2008.

Here is a list of the cases filed since August.

October 5, 2009
Laughing Rabbit Inc v. Stever (Judge Pechman)

October 1, 2009
Logan v. BabyPlus Company et al (Judge Robart)

September 29, 2009
Lectent LLC v. SAS Group Inc et al (Judge Leighton)

August 25, 2009
National Products, Inc v. Gamber-Johnson LLC (Judge Pechman)

USPTO Acted Within its Rulemaking Authority

The following summary was provided by Joseph R. Robinson of Darby & Darby, New York, NY.

The U.S. Court of Appeals for the Federal Circuit released its opinion in the lawsuit challenging the implementation of the proposed USPTO rules on continuation applications and other USPTO procedures. Tafas v. Doll, Appeal No. 2008-1352 (Fed. Cir. March 20, 2009).

The Federal Circuit has held that Final Rules 75, 78, 114, and 265 are procedural rules that are within the scope of the USPTO’s rulemaking authority. However, Final Rule 78 conflicts with 35 U.S.C. § 120 and is invalid. The lower court’s summary judgment with respect to the invalidity of Final Rules 75, 114, and 265 has been vacated, and these rules have been remanded to the lower court for further proceedings. The Federal Circuit did not decide whether any of the Final Rules conflict with the Patent Act in ways not specifically addressed in the Federal Circuit’s opinion; whether all USPTO rulemaking is subject to prior notice and comment; whether any of the Final Rules are impermissibly vague; or whether the Final Rules are impermissibly retroactive.

Final Rule 78 pertains to continuation applications. Final Rule 78 provides that an applicant was only entitled to file two continuation applications as a matter of right. If an applicant wanted to file more than two continuation applications, he would need to file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application.”

Final Rule 114 pertains to requests for continued examination (“RCEs”). Under this rule, an applicant is allowed one RCE as a matter of right. For each additional RCE, the applicant must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application.” The limitation on RCEs is applied on the basis of patent families rather than individual applications.

Final Rules 75 and 265 require an applicant who submits either more than five independent claims or twenty-five total claims to provide the examiner with information in an examination support document (“ESD”) which requires the applicant to conduct a preexamination prior art search, provide a list of the most relevant references, identify which limitations are disclosed by each reference, explain how each independent claim is patentable over the references, and show where in the specification each limitation is disclosed in accordance with 35 U.S.C. § 112, ¶ 1.

The lower court had found that these four rules exceed the scope of the USPTO’s rulemaking authority and had preliminarily enjoined the enactment of these new rules. The USPTO appealed.

The Federal Circuit first discussed whether the Final Rules were procedural or substantive rules. It agreed that the USPTO has the authority to make procedural rules, but not to make substantive rules. The Federal Circuit has held that the Final Rules challenged in this case are procedural. They govern the timing of and materials that must be submitted with patent applications Although they alter the manner in which the parties present their viewpoints to the USPTO, they do not foreclose effective opportunity to present patent applications for examination.

Regarding Final Rules 78 and 114, Applicants who include in each continuation application all amendments, arguments, and evidence available at the time of filing will not be limited by Final Rule 78. Similarly, applicants who diligently present all of their amendments, arguments, and evidence as soon as possible during prosecution will be granted as many RCEs as they require. Therefore, applications that are submitted in compliance with these timing requirements will be fully examined and given all of the benefits of the U.S. patent laws. The Federal Circuit did not believe that requiring applicants to raise all then-available amendments, arguments, and evidence by the second continuation application or the first RCE is so significant a burden that applicants will be effectively foreclosed from obtaining the patent rights to which they are entitled.

Final Rules 75 and 265 provide that once a satisfactory ESD is submitted, examination will proceed in precisely the same manner as it would have in the absence of the rule. The Examiner cannot substantively reject claims on grounds that the ESD did not prove that the claims are patentable. The Examiner still must set forth his own prima facie case of unpatentability. This rule may put a burden of production on the applicant, but the Examiner maintains the burden of persuasion. A procedural rule does not become substantive simply because it requires the applicant to exert more effort to comply, so long as the effort required is not so great that it effectively forecloses the possibility of compliance.

Judge Rader concurred and dissented because he believed that each of these final rules is substantive, not procedural. Therefore unlike the majority opinion, he would have found all of these Final Rules invalid on this point alone.

The Federal Circuit next considered whether the Final Rules are consistent with the U.S. Patent Act. The lower court had found that Final Rule 78’s requirement for the third and subsequent continuation applications was inconsistent with the portion of 35 U.S.C. § 120 that mandated that qualifying applications “shall have” the benefit of the priority date of the initial application. The lower court also found no statutory basis for fixing an arbitrary limit to the number of continuing applications and that whether there should be such a limit was for Congress to decide, not the PTO.

The Federal Circuit has agreed that Final Rule 78 is inconsistent with 35 U.S.C. § 120. However, the Federal Circuit based its ruling on the fact that Final Rule 78 attempts to add another requirement to 35 U.S.C. § 120 - that the application not contain amendments, arguments, or evidence that could have been submitted earlier. The statute only required four conditions for a continuation application - [1] the invention claimed in the application must have been properly disclosed in a prior-filed application; [2] the application must have been filed by inventor(s) named on the prior-filed application; [3] the application must have been “filed before the patenting or abandonment of or termination of proceedings on the first application or on an application similarly entitled to the benefit of the filing date of the first application”; and [4] the application must contain or be amended to contain a specific reference to the prior-filed application. The USPTO could not add a fifth condition, and Final Rule 78 is invalid.

Judge Bryson, in a concurrence, also believed that Final Rule 78 might be invalid because it would change the current law that all continuances in a series are deemed to have the same effective date as the first application, as long as at least one parent application is pending when the continuation application is filed. However, the majority did not address this point.

The lower court had found that Final Rule 114 (the availability of RCEs) conflicted with the Patent Act because it limits RCEs by application family rather by individual application and because it gives the USPTO Director the right to grant an unlimited number of RCEs per application at the USPTO’s discretion. The Federal Circuit has disagreed and has held that Final Rule 114 can properly be applied on a per family basis. Nothing in the U.S. Patent Laws prevents the USPTO from limiting the availability of second and subsequent RCEs.

The lower court had found that the ESD requirement violated 35 U.S.C. §§ 102, 103, 112, and 131, as well as the Federal Circuit’s precedent that applicants have no duty to search the prior art. However, the Federal Circuit has found that Final Rules 78’s and 256’s requirement for an EDS does not limit the applicant’s right to have as many claims as he desires. They simply require the applicant to submit an EDS. Additionally, the Federal Circuit found that requiring applicants to conduct a prior art search in conjunction with an EDS was within the PTO’s powers. Finally, the Federal Circuit found that requiring an EDS does not change the burden of proving unpatentability from the PTO to the applicant.

In Re Comiskey: Fed. Cir. Narrowly Denies Rehearing En Banc

Rehearing en banc was denied today in the closely watched case dealing with patentable subject matter under 35 USC Section 101, In re Comiskey. The petition for rehearing en banc failed by two votes, (failing to achieve a majority of seven judges) as only Newman, Mayer, Rader, Bryson, Moore, JJ., voted to rehear the case en banc. Hal Wegner, gave a great summary of the decision today:

"The nub of the controversy is the "affirmance" of the PTO’s denial of claims based upon a new ground of rejection, patent-eligibility under 35 USC § 101, as opposed to the PTO’s affirmance of the Examiner on the basis of obviousness under 35 USC § 103.

As explained in an important dissent from denial of rehearing en banc, "[t]his case goes to the fundamental role of the appellate court – to review the decision appealed. In this case, the court declined to address the only ground for rejecting the patent claims decided below and appealed by the parties (§ 103). Instead, the court reached out to decide a new ground of rejection (§ 101), raised sua sponte by the court. The court evaluated both the process and machine claims under its chosen ground, § 101, concluding that the process claims were not directed to patentable subject matter, but that the machine claims, in light of our well established precedent were directed to patentable subject matter." Comiskey, __ F.3d at __ (Moore, J., dissenting from the denial of the petition for reh’g en banc, joined by Newman, Rader, JJ.)

Defending the panel’s action, the author of the panel opinion issued a separate opinion, Comiskey, __ F.3d at __ (Dyk, J., joined by Michel, C.J., Prost, J., concurring in the denial of rehearing en banc). Judge Lourie also issued a concurring opinion, while Judge Newman issued a dissenting opinion.

Open and Troubling Questions Raised by the Dissent: It is difficult to understand how a brand new ground to deny a patent can sua sponte be raised by the court which has nothing whatsoever to do with the proceedings below. Indeed, it is difficult to challenge the logic of Circuit Judge Moore in her opinion. Does the majority’s action now mean that a party can come up with a brand new basis to challenge patent validity in the context of a patent interference? If a party cannot, how can the court sua sponte do so?"

National Products, Inc. Wins at Federal Circuit

National Products Inc., a local maker of mounting products under the trademark RAM, won a victory at the CAFC yesterday. The opinion, authored by Chief Judge Michel, affirmed an order from the USDC in the Central District of California (Judge Audrey B. Collins) dismissing an action for declaratory judgment that was filed against NPI about a year ago by Panavise, Inc. Because NPI is a Darby client, I won't comment further other than to include some language from Judge Michel's opinion: "we do note that this appeal approaches wasting the court’s time and unduly delaying more deserving litigants."

Federal Circuit Grants Mandamus, Transfers Case Out of E.D. of Texas

It was bound to happen sooner or later. Initiating patent litigation in East Texas--and keeping it there--just got a littler harder. Today, the CAFC granted an extraordinary writ of mandamus filed by TS Tech. USA Corporation, transferring a patent case out of the E.D. of Texas that was filed by Lear Corp., No. 2:07-CV-406. Applying Fifth Circuit law, Judge Rader wrote for the panel (Rader, Michel, and Prost), finding that the district court (Judge Ward) abused its discretion in an order refusing to transfer a case to Ohio pursuant to a motion under 28 U.S.C. 1404.

From the order:

"Despite correctly applying some of the factors, the district court’s § 1404(a) analysis contained several key errors. First, the district court gave too much weight to Lear’s choice of venue under Fifth Circuit law. While the plaintiff’s choice of venue is accorded deference, In re Horseshoe Entm’t, 337 F.3d 429, 434-35 (5th Cir. 2003), Fifth Circuit precedent clearly forbids treating the plaintiff’s choice of venue as a distinct factor in the § 1404(a) analysis.

***

Second, the district court ignored Fifth Circuit precedent in assessing the cost of attendance for witnesses. It goes without saying that "[a]dditional distance [from home] means additional travel time; additional travel time increases the probability for meal and lodging expenses; and additional travel time with overnight stays increases the time which these fact witnesses must be away from their regular employment." In re Volkswagen AG, 371 F.3d 201, 205 (5th Cir. 2004) ("Volkswagen I"). Because it generally becomes more inconvenient and costly for witnesses to attend trial the further they are away from home, the Fifth Circuit established in Volkswagen I a "100-mile" rule, which requires that "[w]hen the distance between an existing venue for trial of a matter and a proposed venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled." 371 F.3d at 204-05. The district court’s order here completely disregarded the 100-mile rule.

***

Third, the district court erred by reading out of the § 1404(a) analysis the factor regarding the relative ease of access to sources of proof. As acknowledged in the district court’s order, the vast majority of physical and documentary evidence relevant to this case will be found in Ohio, Michigan, and Canada, and none of the evidence is located in Texas.

***

Finally, the district court disregarded Fifth Circuit precedent in analyzing the public interest in having localized interests decided at home. As in Volkswagen I and Volkswagen II, there is no relevant connection between the actions giving rise to this case and the Eastern District of Texas except that certain vehicles containing TS Tech’s headrest assembly have been sold in the venue.

***

The district court’s reason for concluding that the public interest factor disfavored transfer—that the citizens of the Eastern District of Texas had a "substantial interest" in having the case tried locally because several of the vehicles were sold in that venue, Lear, No. 2:07-CV-406, slip op. at 6—was unequivocally rejected by the Fifth Circuit in Volkswagen I and Volkswagen II. Here, the vehicles containing TS Tech’s allegedly infringing headrest assemblies were sold throughout the United States, and thus the citizens of the Eastern District of Texas have no more or less of a meaningful connection to this case than any other venue."

K2 Wins Partial Summary Judgment in Wide Short Ski Case

Inventor Paul Nelson sued K2 for infringement of his US Patent No. 5,603,522 covering a "Wide Short Ski." The specification was drawn to a shaped ski having a range of dimensions in length, side-cut radius, shovel width, and tail width. The claims at issue (added in a CIP) were for much narrower ranges than what was disclosed in the parent application's specification. K2 moved for partial summary judgment, arguing that these claims (the ones added in a CIP) were not supported by the parent application, an argument setting up a motion for summary judgment of invalidity under 35 USC Section 102, because the claims at issue were not entitled to priority filing for failure to satisfy the written description requirement.

From Judge Lasnik's order:

The narrowing of the length and width ranges is significant: more than half of the combinations described in the parent application are excluded from the claimed invention. It is not clear how one skilled in the art of ski design could identify the measurements that were of special interest to the inventor. The 1992 application does not disclose the precise ranges later claimed, nor does it contain descriptive terms that would lead to the claimed ranges.

In a footnote, the Order states that the written description bar has potentially been raised "to a height that may be insurmountable for many inventors." In support of this gloomy outlook for the future, Judge Lasnik cites Judge Learned Hand's decision in Eng'g Dev. Labs v. Radio Corp. of Am., 153 F.2d 523, 526-27 (2nd Cir. 1946), where the distinguished jurist said that meeting the written description requirement was "an impossible task" encouraging "that surfeit of verbiage [in patent claims] which has for long been the curse of patent practice and has done much to discredit it."

Let's see what happens next. Perhaps an appeal? Settlement? My personal view is that the viability of this decision on appeal depends greatly on the make up of the reviewing panel at the CAFC. Decisions on the written description requirement from the CAFC have been rightly criticized as "opaque to the point of obscuring other areas of . . . [patent] law."


K2%20Nelson%20Order%20Granting%20MPSJ.pdf

CAFC Reverses WDWA Decision on Personal Jurisdiction

In Campbell Pet Co. v. Maile, the Federal Circuit reversed an order finding personal jurisdiction lacking over an out-of-state defendant who had attended a trade show in Seattle and made verbal threats of patent infringement litigation. This decision reverses Judge Leighton's decision finding personal jurisdiction absent under Federal Circuit law (see my previous post on this decision here, where my description of the district court's order is rather prescient).

Here is some good coverage of the decision from the PLI patent law blog:

In June 2007, Ms. Miale (hereinafter "defendant") attended a three-day convention in Seattle, Washington, sponsored by the American College of Veterinary Internal Medicine. During that convention, the defendant demonstrated her products and offered them for sale. In the course of the convention, she took two orders for tables from residents of Virginia and New York, for a total purchase price of $9,400. Plaintiff Campbell also had a display at the convention featuring its products. In the course of the convention, the defendant and her mother confronted several of Campbell’s employees who were attending the convention and accused them of infringing the Miale patents.
In the month following the convention, Ty-Lift sent a letter to Campbell claiming that Campbell’s mobile folding stretcher infringed the Miale patents. Shortly thereafter, Campbell filed suit in the United States District Court for the Western District of Washington seeking a declaration of noninfringement and invalidity with respect to the Miale patents. In response, Ty-Lift moved to dismiss the complaint for lack of personal jurisdiction. The district court did granted the motion to dismiss, deciding that the level of contact between the defendants and the forum state was not sufficiently “substantial” and “continuous and systematic” to justify the exercise of general jurisdiction.
The Federal Circuit agreed that the district court was clearly correct in ruling that it did not have general jurisdiction over the defendants, but did not agree that there should be no specific jurisdiction. Specifically, in order to determine whether specific jurisdiction exists the court must determine whether the defendant has purposefully established minimum contacts with the forum state: (1) whether the defendant “has purposefully directed his activities at residents of the forum”; and (2) whether “the litigation results from alleged injuries that arise out of or relate to those activities.” When considering these inquiries the district court characterized the defendants actions at the June 2007 convention as constituting nothing more than attempts to inform Campbell of suspected infringement. This determination is what the Federal Circuit took issue with and ultimately disagreed with.
Employees’ affidavits asserted that the defendant did more at the trade show than simply inform Campbell that its animal stretchers might infringe her patents. The affidavits state that the defendant attempted to have plaintiff’s allegedly infringing products removed from the convention and that she told the plaintiff's customers that the products being sold were infringing. The Federal Circuit noted that it is critically important to the issue of personal jurisdiction that the defendant's patent rants were targeted at injuring the plaintiff's business in Washington and, therefore, could fairly be characterized as attempts to limit competition at the Seattle convention. Those efforts go beyond simply informing the accused infringer of the patentee’s allegations of infringement and open the defendant up to suit in Washington.

AIPLA Submits Amicus Brief in Bilski Case, Arguing for Broad Patentable Subject Matter

Here is a Link to the AIPLA Brief in the Bilski case. My post on this case is found here.

This is from the AIPLA post on the case:

AIPLA on April 7, 2008, filed an amicus brief with the en banc Federal Circuit, arguing that it is improper to apply the subject matter categories at 35 U.S.C. §101 narrowly to require that a process claim must be implemented by an apparatus in order to be patent-eligible under Section 101. In re Bilski, en banc Fed. Cir., No. 2007-1130.
According to the brief, Section 101 broadly encompasses anything under the sun made by man, and is limited only by the judicially-developed exclusions for laws of nature, physical phenomena, and abstract ideas. The brief maintains that this formulation provides a flexible rubric that promotes disclosure and adapts to yet unforeseen technologies, while retaining the safeguard against overbreadth in the traditional patentability requirements of novelty, non-obviousness, and sufficient disclosure to the public.