Patent Reform 2011

By Andrew Wasson

Congress moved closer towards the passage of a major overhaul to the Patent Act on March 1, 2010 with a bi-partisan manager’s amendment to S. 23 (now titled, the “America Invents Act” or in this memo, “the Act”). While failed attempts to effectuate patent reform stretch back to at least 2005, Senator Leahy introduced S. 23 on January 25, 2011. The Judiciary Committee ordered for the bill to be reported favorably with amendments on February 3, 2011. The manager’s amendment passed by a wide margin (97-2) but it appears that Senators may still present additional amendments. Even if the Senate passes the bill, however, the House of Representatives would also need to take up the issue.
The Act makes many complex changes to the Patent Act, however, the following are a few high-level and notable differences:
• Effective filing date: The Act provides for a first-to-file system in lieu of the current first-to-invent system by amending the definition of “effective filing date” to refer to the “actual filing date” of the application.
• Section 102: Abolishes § 102(a) as we know it, leaving in place a provision much like current § 102(b), but without a blanket one-year grace period. The new Act provides for certain exceptions: for example, the Act deems certain disclosures (such as disclosures made by an inventor) as not prior art if they were made during the one-year period prior to the effective filing date.
• Section 103: Section 103 no longer refers to “the time the invention was made” but rather to before the “effective filing date.”
• Interferences: The Act replaces interference practice with “derivation proceedings.” The Act permits a civil action by one patent owner against another patent owner with the same invention but an earlier effective filing date (as long as it is filed within one year of the issuance of the first patent). The Act also provides for a petition procedure before the Patent Office during pending a pending application.
• Damages: While the originally presented Act established the judge as a “gatekeeper” for the methodologies and factors used to determine damages, the manager’s amendment struck the section on damages from the proposed law. Remaining in the Act, however, is a provision stating that the failure to obtain advice of counsel may not be used to demonstrate willfulness.
• Opposition proceedings: The Act provides for inter partes review and post-grant review. Post-grant review allows a petitioner to request the cancellation of one or more claims under any of the defenses under § 282. Inter partes review allows a petitioner to request to cancel one or more claims under §§ 102 or 103.
• No best mode: The Act prohibits using a failure to disclose the best mode as a defense.
• Business method patents: The manager’s amendment also added a post-grant review program specifically allowing petitioners to challenge granted business method patents. The transitional program would start one year from the enactment date of the Act and would sunset four years following the issuance of relevant regulations.
• Preliminary injunctions: The manager’s amendment added a provision that would prevent a court from staying a proceeding in light of a post-grant review if the infringement suit was filed within three months of the patent grant.

Amicus Briefs filed in Global Tech v. SEB

On December 6, 2010, Frommer Lawrence & Haug LLP filed a Brief of Amicus Curiae in Support of Neither Party on behalf of the Federal Circuit Bar Association with the Supreme Court of the United States in Global-Tech Appliances, Inc. and Pentalpha Enterprises, Ltd. v. SEB S.A. (10-6). The Court’s ruling in this case will decide the legal standard for the state of mind element of a claim for actively inducing infringement under 35 U.S.C. § 271(b).

Under review is the judgment of the United States Court of Appeals for the Federal Circuit which applied “deliberate indifference of a known risk” that an infringement may occur as the culpable state of mind necessary to establish active inducement of infringement. This formulation is inconsistent with the Court’s prior case law, which taught that active inducement requires “purposeful, culpable expression and conduct” to encourage an infringement.

The Federal Circuit Bar Association, as amicus curiae, urges the Court to recognize that the state of mind element under § 271(b) is “purposeful, culpable expression and conduct” to encourage an infringement. This standard is consistent with precedential authority from both the Supreme Court and the Federal Circuit. Additionally, the Federal Circuit Bar Association urges the Court to clarify the boundaries of the state of mind element. The brief articulates a practical standard, rooted in Federal Circuit precedent, requiring (1) knowledge of the patent, and (2) knowledge that the induced activity may be an infringement.

The following also submitted amici in this action:

• New Egg, Inc.
• Software Freedom Law Center
• Clearinghouse Association and Securities Industry and Financial Markets Association
• Business Software Alliance
• Google, Inc.
• 41 Law, Economics, and Business Professors
• Motion Picture Association of America and Recording Industry
• Comcast Corporation, Facebook Inc., Intuit Inc., Microsoft Corporation, Netflix, Inc., Overstock.Com, Inc. and SAP America, Inc.
• Yahoo! Inc., Ebay Inc., Electronic Arts Inc., General Motors LLC, Hewlett Packard Company, McAfee, Inc., Red Hat, Inc., and Symantec Corporation
• Cisco Systems, Inc., Dell, Inc., and Intel Corporation
• Intellectual Property Owners Association

Respondent’s brief is currently scheduled to be filed by December 30, 2010. The Court has yet to schedule oral argument.

FLH attorneys providing counsel on the brief were Ed Haug, Mark Walters, and Chiemi Suzuki. Ms. Suzuki is Counsel of Record for the Federal Circuit Bar Association.

Microsoft Wins Mandamus at the CAFC: Allvoice Suit Headed to Washington State

The CAFC granted mandamus yesterday, overruling a decision by Judge Davis (U.S.D.C. Eastern District of Texas) to let a software patent infringement suit against Microsoft continue in Texas rather than Washington state.

According to the ruling (per curium by Judges Newmanm Friedman, and Lourie), all individuals identified by Microsoft as having material information relating to the patents reside within 100
miles of the Western District of Washington "and thus would not have to undergo considerable cost and expense to testify and would also be subject to that district's subpoena powers." The Court further reasoned that "Allvoice has identified 14 witnesses, 12 who reside outside Texas and two who are local Eastern Texas businessmen who bought or used the accused Microsoft products and are not represented as having any knowledge of the patent or the issues of the suit."

According to an article in IP 360, Allvoice apparently "gamed the system by creating the appearance of diversity jurisdiction in the Eastern District of Texas, a no-no that the district court should have identified and stopped."

The patent-in-suit, U.S. Patent Number 5,799,273, claims software dealing with voice recognition in word-processing applications. The specifications discloses, generally, software that creates an interface between voice recognition engines and word-processing documents, such that recognized speech can be directly input into word-processing applications.

Case Transferred to South Carolina

In a case involving allegations of infringement of U.S. Patent No. 6,886,836 for a "Miter Saw Utility Vehicle," Judge Pechman recently granted Defendant Techtronic Industries, Co. Ltd.'s motion to transfer venue under 28 U.S.C. Section 1404 to the District of South Carolina.

The Court's reasons for transfer were simply that "Plaintiffs have minimal contact with this forum and TTi [the Defendant] has met its burden in showing convenience to the witnesses upon transfer to the District Court of South Carolina."

The case is Wise v. Techtronic Indus. Co., Ltd., C10-471-MJP, and it was filed by plaintiffs Robert Wise and RnD Ventures, Inc. According to the Defendant's motion to transfer, "neither this action nor any party has a direct connection to the Western District of Washington. For instance, TTi is a foreign corporation with its headquaters abroad, and the hub of TTi's activities related to the Accused Product take place not in Washington, but in South Carolina." Furthermore, according to the Defendant, "South Carolina . . . is the location of documents and other physical proof relevant to this case, as well as the home of a majority of potential witnesses, inclduing at least two non-party witnesses." The contract at issue in the case also called for the application fo South Carolina law.

Judge Ward's Retirement Highlights Need for Increased Judicial Pay

According to Micheal Smith's ED of Texas blog, Judge Ward from the Eastern District of Texas will not accept an offer to continue judging on senior status, but will instead retire from the bench entirely to resume the practice of law with his son Johnny Ward in Longview, Texas.

Taking the bench in 1999 as a Clinton nominee, Judge Ward presided over a dramatic increase in patent infringement cases in that district from 1999 through 2008. In 1999, there were just 14 patent infringement cases filed in the ED of Texas. By 2006, there were 234 cases. The district is consistently among the eight or so districts handling more than 100 new patent filings each year.

While the number of filings in East Texas has been in decline since the CAFC's en banc decision in TS Tech, finding an abuse of discretion for Judge Ward's refusal to transfer a case out of Texas and into a more convenient venue, Judge Ward remains one of the most influential judges in modern patent infringement. His court is reputed to be more friendly to patent infringement plaintiffs, however, even defense lawyers have described Judge Ward as "fair."

I believe that Judge Ward's retirement and return to private practice underscores the need for judicial pay reform. Simply put, the federal judiciary is losing talented judges to retirement with years still left to serve on senior status. And while good, experienced judges are lost to retirement, still other highly qualified judicial candidates will never even make it to the bench for the simple reason that they cannot afford to. Federal dockets in the most favorable venues are backed up due to a lack of judicial horsepower. Justice is suffering.

The statistics of judicial pay increases over the years are startling. Since 1992, the pay of most federal workers has increased by 91 percent, while inflation has increased by 36 percent. However, judicial pay has fallen way behind, increasing by only 39 percent over this time.

While Congress routinely votes in favor of raising its own pay, it has refused judicial pay increases in 1994, 1995, 1996, 1999, 2007, and 2010.

An American Bar Association report from 2001 concluded that "[o]ver the course of the past decade, judges have experienced both an absolute loss in purchasing power and a relative decline in remuneration as the salaries of peer groups have risen dramatically." This report is now almost 10 years old and Congress has done nothing to ensure that judicial pay is brought up to standard with other federal employees, let alone other lawyers.

Seattle Patent Litigation Update October 2010

So I'm back to blogging after a six month hiatus. Several factors contributed to this languorous pause, including (in no particular order and definitely not exhaustive), the break-up of Darby & Darby PC after 115 years in business (for more on this read here), the starting of a new West coast office of Frommer Lawrence & Haug (reminder that this blog is a personal blog and it does not reflect the opinion or position of FLH or any of its partners or clients), Google's decision to discontinue FTP publishing on Blogger, a jury trial, and a host of other things one might call "excuses". The good news is that Seattle Patent Litigation was not waiting for me, it kept trucking along, and in August, Paul Allen decided to dust off several patents claiming credit for inventing the internet (sorry Al Gore). What follows is a list of cases since the beginning of March of this year. Patent infringement filings in Washington are on pace to almost double this year compared to last year's total.

October 8, 2010

RW Distributing, Inc et al v. Waterfall Pond Supply of Washington, Inc et al

October 7, 2010

Brookens v. Barrick Gold Corp

October 4, 2010

Modumetal Inc v. Integran Technologies, Inc.

October 1, 2010

Microsoft Corporation v. Motorola Inc.

September 27, 2010

Sunshine Kids Juvenile Products, LLC v. Indiana Mills & Manufacturing, Inc.

September 17, 2010

Columbia Machine Inc v. Besser Company

August 27, 2010

Interval Licensing LLC v. eBay, Inc. et al

August 13, 2010

Broadband Graphics LLC v. FXCM Holdings LLC et al

August 5, 2010

Stern et al v. Sequal Technologies, Inc..

August 4, 2010

ArrivalStar SA et al v. Agility Logistics, Inc. et al

August 2, 2010

Moricz v. Google Inc

July 20, 2010

Kai U.S.A., Ltd. v. Keeton et al

July 19, 2010

Krausz Industries, Ltd. v. Romac Industries, Inc.

June 28, 2010

Broadband Graphics LLC v. Laszlo Systems, Inc.

June 24, 2010

Washington Research Foundation v. Silicon Laboratories Inc

HTC America, Inc. et al v. ADC Technology, Inc.

HTC America, Inc. et al v. ADC Technology, Inc.

June 11, 2010

ELECTRIC MIRROR, LLC v. Janmar Lighting, Inc.

June 10, 2010

Berg Manufacturing Inc v. AAR Manufacturing Inc

June 4, 2010

Jovanovich et al v. Redden Marine Supply, Inc.

June 4, 2010

Jovanovich et al v. Seattle Marine & Fishing Supply CO

June 3, 2010

Cequint, Inc. v. ABC Company et al

May 24, 2010

Mobile Merchandisers, Inc. v. Rack's, Inc.

May 18, 2010

Microsoft Corporation v. Salesforce.com, Inc.

Radio Systems Corporation et al v. Lalor et al.

May 4, 2010

F5 Networks Inc.v Imperva

April 30, 2010

Uroplasty Inc. v. Moses et al

April 19, 2010

Laughing Rabbit, Inc. v. Allstar Marketing Group LLC

April 16, 2010

F5 Networks Inc v. A10 Networks, Inc.

April 14, 2010

Broadband Graphics LLC v. Capital Market Services LLC

April 6, 2010

Kinesis Corporation v. SafeType, Inc.

April 1, 2010

Microsoft Corporation v. Datel Design and Development Ltd. et al

March 19, 2010

Wise v. Techtronic Industries Co. Ltd.

March 12, 2010

Ho Sports Company, Inc. v. Nash Manufacturing, Inc. et al

March 10, 2010

Wang v. ProductWorks, LLC

March 4, 2010

Technogym SpA v. Sports Art America Inc.

March 2, 2010

Motiva LLC v. Nintendo Co Ltd et al

Judge Jones Construes Claims in Toyota Hybrid Case

In a case that features Hollywood's David-versus-Goliath story of inventorship (for example see this link), independent inventor Conrad Gardner is suing Toyota for patent infringement of his U.S. Patent No. 7,290,627. The ‘627 Patent covers hybrid vehicle technology for automobiles. Specifically, the patent relates to the use of an internal combustion engine and a separate electric motor for powering a hybrid vehicle. While Mr. Gardner's patent has a priority date earlier than Toyota's first patent in this area, he has had difficulties in this case. The latest came in terms of claim construction, while it is not clear of the implications.

Claim one of the '627 patent is copied below:

1. A controller of a hybrid electric vehicle having an engine (22)
and a motor (12) for controlling driving of the engine (22) and the motor
12, comprising: a battery (58) for supplying electric power to the motor (12); motor-generated driving force transfer means (14) for transferring the driving force generated by the motor (12) to wheels (18); a power generator (78) driven by the engine (22) to supply generated electric power to the battery (58); engine-generated driving force transfer means (75) for transferring the driving force generated by the engine (22) to the wheels (28); means for detecting a vehicle running state (44); and control means (30) for controlling whether to transfer a driving force generated by an engine (22) to a power generator (78) or wheels (28)in accordance with a vehicle running state, wherein the control means (30) transfers the driving force generated by the engine (22) to wheels (28) when said running state is more than a predetermined value, transfers the driving force generated by the engine (22) to the power generator (78) when said running state is less than a predetermined value.

Judge Jones recently construed this claim and others. In particular, there was a lot to say about whether certain terms should be construed as means-plus-funtion under Section 112 paragraph 6.

From Judge Jones' order:


Mr. Gardner’s proposed construction is confusing, because he both contends that this claim does not have a means-plus-function limitation and also directs the court to the drawings as evidence to support the “well-understood meaning.” Again, Mr. Gardner has unsuccessfully attempted to rebut the means-plus-function presumption. In order to rebut the presumption, the claim language itself would have to define the structure that performs the stated function. Mr. Gardner has not pointed to any language in the claim itself that describes definite structure, and indeed relies on the drawings in order to construct the term. Thus, the court concludes that this is a means plus-function limitation because no specific structure is identified.

Goodbye and Thanks to Sam Darby

The son of James T. and Ellen Doran (Dunman) Darby, Sam Darby was born in Falcon, Arkansas, February 4, 1867. In the fall of 1882, he went to Annapolis, Maryland, as a cadet in the US Naval Academy. He left the Navy after graduation in 1886. Two years later, he started his undergraduate at Georgetown in Washington, D.C., finishing in 1891, with an LL.B and LL.M in law. During law school, he married Estelle Edgar Rawlings, and they had two children, Walter Ayers and Samuel Edgar, Jr. In 1894, Sam Darby Sr. joined Frank T. Brown, forming the firm Brown & Darby in Chicago.

After just seven years in practice, Sam Darby Sr. appeared before the U.S. Supreme Court, arguing on behalf of William R. Warner & Co., the founder of Warner-Lambert, a company that is now part of Pfizer. While he lost the case, Warner v. Searle, 191 U.S. 195 (1903), Sam Darby made important contributions to trademark law by helping to define the scope of descriptive trademarks. The mark at issue was PANCREOPEPSINE, which described an amino acid used to help cure indigestion (this also became the primary ingredient of PEPSI). Sam Darby Sr., went on to represent a number of other IP rights holders in cases that made important contributions to our existing laws.

Sam Darby Jr. probably joined his father in practice sometime around 1920. By that time, the firm had moved from Chicago to New York City, somewhere downtown. He appears as counsel for the infamous, self proclaimed "Father of Radio," Lee de Forest (http://www.leedeforest.org/) as early as 1924, see In Re De Forest Radio Telephone & Telegraph Co., 264 U.S. 568 (1924). Lee de Forest was one of the founders of the "electronic age" and the inventor of the "audion" which led to development of the triode, a device that was important for FM radio transmission. Lee de Forest "was involved in several patent lawsuits and he spent a substantial part of his income from his inventions on the legal bills," (source: http://en.wikipedia.org/wiki/Lee_De_Forest) most of which were likely paid to Darby & Darby, considering the volume of reported cases Sam Darby Jr. handled for Mr. De Forest. Lee's primary legal foe was Edwin Armstrong, the prolific inventor whose patent for the regenerative circuit had been issued in 1914. Armstrong's lawsuit with de Forest lasted twelve years, winding its way through the appeals process and ending up before the Supreme Court in 1926. The Supreme Court ruled in favor of De Forest, "although the view of many historians is that the judgment was incorrect." (Source: http://en.wikipedia.org/wiki/Lee_De_Forest) … but that's what I call some good lawyering).

While Sam Darby Jr. may have benefited from Lee de Forest's legal entanglements, he paid dearly as well, because he was indicted along with Lee de Forest for mail fraud, but was later acquitted. The firm moved to the Chrysler Building, 405 Lexington Avenue, in 1931 (one of the building's first tenants). Sam Jr. appears on dozens of U.S. Supreme Court cases of significance until his untimely death in 1947, he was probably not yet 60 years old.

Walter Darby also practiced with his brother and father. He died in 1949. He appears on very few cases, and was reportedly interested in admiralty law more than IP.

The legacy of Darby & Darby was passed down to Louis Fletcher, Floyd Crews, Don Overocker, Harvey Mortimer, and Morris Relson. According to some old letter head, these were the partners in 1961. Associates at this time were Robert Maikis, Robert Keegan, Howard Miskin, Gordon Copelein, and William Dudine, Jr. Prior to the decade that began in 1960, another Darby partner of note was Russell Pelton, who left to go in-house in 1957 with Norelco.

During the 1950s and 60s, Floyd Crews, Morrie Relson, and Louis Feltcher appear on dozens of CCPA and Supreme Court cases. According to Gordon Copelein "Floyd Crews was instrumental in having Giles Rich appointed to the CCPA." Gordon also reports that during the 1960s, many partners and associates would lunch at Schraft's restaurant. On occasion, the Darby lawyers were joined by judges, including some CCPA judges like Judge Rich. Mike Sweedler may remember some of these lunches, and I will leave the details to him.

The 1970s ushered in new associates, including the likes of Peter Ludwig, Mel Gardner, Adda Gogoris, Ethan Horwitz, and others. I know little of these details, from 1970 to when I joined in 2007, so Mel, or Peter will have to fill these in for me.

Over the last 115 years, Darby & Darby has represented some of this Nation's most prolific inventors and the companies they worked for. Companies etched in the American psyche, like Warner; Emerson Radio, Dumont and Olympic Television, Polorad Electronics; Fairchild Aircraft; Walter Kidde; Nokia; Yahoo; Boston Scientific; American Home Products; Wyeth; and a host of others. I'm proud to be a part of this history, and while today is a sad day because it marks the end of Darby & Darby, we can all take comfort in knowing that we were a part of something bigger than ourselves.

Cordance Wins JMOL in Amazon One-Click Patent Suit

Looks like local software company, Cordance may get a chance to have a jury determine the amount of damages Amazon owes for infringing certain patents covering aspects of the popular One-Click ordering system. In a case pending in USDC, District of Delaware, Cordance Corporation v. Amazon.com, Cause No. 06-491-MPT, a jury found late last year (among other things) that certain patents asserted by Cordance were infringed but invalid. The patents-in-suit are U.S. Patent Nos. 6,757,710; 6,269,369; 6,044,205; 5,862,325 and 6,088,717. Today, in a ruling issued by U.S. Magistrate Judge Thynge, JMOL was granted that (1) claims 7–9 of the ‘710 patent are not invalid for lack of written description; (2) claims 1, 2, 3, 5, and 7–9 of the ‘710 patent are not invalid as anticipated by Amazon's 1995-96 shopping cart system; and (3) claims 1, 3, 5, 7 and 8 of the ‘710 patent are not invalid under 35 U.S.C. 102(f).

A bench trial will commence on certain Amazon defenses, and if those do not succeed, Damages will likely need to be calculated, probably by another jury (separate from the one that had held these patent claims invalid).

In one interesting point of note, Judge Thynge passed on Cordance's invitation to eliminate the written description requirement of 35 U.S.C. Section 112, paragraph 1 in advance of the CAFC deciding Ariad.

"The court recognizes that the Federal Circuit has heard oral argument in Ariad Pharms., Inc. v. Eli Lilly & Co. and that the Federal Circuit’s forthcoming decision in that case may alter the scope and purpose of the written description requirement. However, this court, like the Informatica Corp. court, is constrained to follow existing standards under Federal Circuit law, and Federal Circuit precedent 'clearly recognizes a separate written description requirement.'" (internal footnotes and citations omitted)

Fed Cir. Reverses WDWA on Rare Interference Ruling

I previously posted about this case here, when Judge Pechman dismissed a suit brought by Philips Electronics seeking to overturn a ruling made in an interference. The Board of Patent Appeals and Interferences had ruled an inventor at Philips Electronics, Morgan, was not the first to invent certain defibrillator methods claimed in US Patent No. 6,241,751. The invention claimed in the '751 patent involved considering patient impedance levels and adjusting the pulse of the defibrillator in response to those impedance levels. According to the Board, an inventor at Cardiac Science, Owen, was the first to invent defibrillators with this capability. Philips asked the USDC here in Seattle to review the Board's decision under 35 USC section 146, and Judge Pechman affirmed the Board on all issues. Most notably, Judge Pechman decided that the Board was not required to construe the terms "impedance-compensated defibrillation pulse," because no matter how those terms were construed, the specific interpretation would not have impacted the Board's ultimate decision.

Yesterday, the CAFC reversed in an opinion authored by Judge Garjarsa (with him were Chief Judge Michel and Friedman, J.) stating that the lower court's ruling was "tantamount to sua sponte summary judgment." Slip Op. at 6. In its opinion, the CAFC explained "[t]hough the court suggested during the last hearing that it need not consider the merits of the interference if it agreed with the Board’s procedural grounds, § 146 grants parties the right to present new testimony and requires the court to review the Board’s factual findings. See Winner, 202 F.3d at 1345; Estee Lauder Inc. v. L’Oreal, S.A., 129 F.3d 588, 592 (Fed. Cir. 1997) (“Section 146 actions have been described as a hybrid of an appeal and a trial de novo.”)."

The CAFC also noted that "there remains a genuine dispute as to material facts between the parties. For example, the parties still disagree on whether the Owen application contains an adequate written description for the term “impedance-compensated defibrillation pulse” and on whether the Gliner patent anticipates Owen’s claim 38. Cardiac Science argues that Philips failed to inform the district court that it would need to address other issues after ruling on the motion for a claim construction hearing. But Cardiac Science ignores clear statements to the contrary."