In re Hyon: Substantial Evidence Standard Helps Preserve Finding of Obviousness

By Chris Reaves

A recent appeal of a lengthy prosecution ended last week, when the Federal Circuit in In re Hyon, 102 USPQ2d 1889 (Fed. Cir. 2012) upheld the Board of Patent Appeals and Interferences (BPAI) findings that a person of ordinary skill would have reason to combine two references to create the invention at issue.  The Board’s decision, though possibly “flawed,” could not be found unreasonable under the applicable standard of review, emphasizing the challenge that patent prosecutors face in overcoming a factual finding.

Background

The applicants, Suong-Hyu Hyon and Masanori Oka, were granted U.S. Patent No. 6,168,626 on a specific type of “Ultra High Molecular Weight Polyethylene” (abbreviated throughout the patent and the opinion as “UHMWPE”), and on the method for creating these material.  The inventors intended the material to be used for artificial joints although the claims were not limited to this embodiment.  The patent had only eleven claims, with limitations such as thickness of the UHMWPE and orientation of the crystal planes within.

Deciding these limitations were unnecessary, the applicants filed a reissue application (No. 10/643,674) within the two-year window, cancelling the original claims and adding several dozen new claims.  These new claims generally consisted of a method of four steps:

(a) crosslinking an ultra high molecular weight polyethylene block having a molecular weight not less than 5 million by irradiating the block with a high energy radiation at a level of at least 1 MR;

(b) heating said crosslinked block up to a compression deformable temperature below the melting point of the UHMWPE;

(c) subjecting said heated block to pressure; and then

(d) cooling said block.

(All claims to the UHMWPE material itself were eventually cancelled voluntarily.)

The examiner rejected all the reissue claims as obvious over two prior art patents, “Zachariades” and “Kitamaru” (Patent Nos. 5,030,402 and 3,886,056, respectively).  As the applicants acknowledged, Zachariades contained all the steps of the applicants’ claims, but in a different order – irradiation occurred after cooling.  (The exact radiation levels and molecular weights also varied, but not to a degree that the examiner thought relevant, and the applicants did not address this difference before either the Board or the Federal Circuit.)  Kitamaru, meanwhile, used a somewhat different method to prepare UHMWPE for use in films and sheets, but it began the process with an irradiation step.  The examiner found that it would be obvious to take the teaching of Kitamaru, to begin with the irradiation crosslinking, and apply it to Zachariades.

The applicants appealed to the Board of Patent Appeals and Interferences, arguing that there was no motivation to combine the references.  The Board, however, affirmed the rejection, and the applicants appealed again to the Federal Circuit.

Ruling: Board Had Substantial Evidence to Support Finding

The majority opinion, written by Judge Bryson and joined by District Judge Jeremy Fogel (N.D. Cal., sitting by designation), opened by recalling that “existence of a reason for a person of ordinary skill to combine references” is a factual finding, reviewed under the “substantial evidence” standard.

Examining the applicants’ arguments, the majority first rejected the suggestion that the prior art came from “fundamentally different material technologies.”  Both patents spoke to the preparation of UHMWPE products, and although each focused on different embodiments, “[n]either reference limits the structure of the UHMWPE product that can be made”.

The majority also found arguments that Zachariades taught against irradiating before molding, or that the examiner and Board had cherry-picked one aspect of Kitamaru to combine with Zachariades, unconvincing.  Although its claims were limited to irradiating after molding, nowhere had Zachariades stated that the opposite was unfeasible or inadvisable.  More importantly, Kitamaru had emphasized that irradiation before molding was the key to creating desired improvements in UHMWPE, namely “a higher melting or softening point, improved transparency, and excellent dimensional stability.”  Therefore, the suggestion to select that element from the reference was in the reference itself.

Judge Newman, in dissent, found it telling that Kitamaru predated Zachariades (indeed, the former issued over a decade before the latter was filed).  It was therefore “noteworthy that Zachariades, seeking mechanical strength and dimensional stability, did not follow the known Kitamaru processing sequence, but instead crosslinked the polyethylene after deformation”.  Newman found this sufficient to show that a person of ordinary skill would not find the results of the combination predictable; had it been obvious to combine, Zachariades would have already done it in his own patent.  The Board, she concluded, had engaged in impermissible hindsight analysis, “reasoning backward from” the patent at issue to see what Zachariades himself had not.

Analysis: Don’t Directly Challenge a “Reason to Combine” Finding

The majority emphasizes the standard of review in its decision.  “Substantial evidence,” a standard used in review of factual findings by both juries and quasi-judicial agency decisions, requires deference to the Board’s decision unless it was without “such relevant evidence as a reasonable mind might accept as adequate to support [the] conclusion” (Universal Camera Corp. v. NLRB, 340 U.S. 474).  In other words, unless no reasonable fact-finder could come to the same conclusion given the same evidence, the appellate court will affirm.

Given this emphasis, the standard was likely what tipped the court.  The applicants may have presented a sufficiently convincing case under a preponderance standard, but could not show that the Board’s decision was “unreasonable.”  (Notably, the dissent did not mention the standard of review once, merely calling the Board’s reasoning “flawed”.)

The substantial evidence standard reminds prosecutors that the Board hearing is the stage to win questions of obviousness.  A Circuit panel with a clear focus on this standard is highly unlikely to overturn such a finding, so prosecutors should treat the Board as their only chance.  Should that fail, however, a prosecutor can also focus more energy on the meaning of claims, both prior art and present, which are reviewed de novo.  Finally, although expensive, a § 145 civil action can reset the entire record and remove all deference (see the recent Kappos v. Hyatt, 132 S.Ct. 1690), should the applicant be in true need of a do-over.

The opinion is available at: http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1239.pdf

Oral arguments may be heard at: http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2011-1239.mp3 (NOTE: the Federal Circuit’s oral argument database has been inconsistently accessible as of this article’s posting)

Federal Circuit Reaffirmed Lead Compound Analysis for Evaluating Obviousness of a New Chemical Compound

James Jang

In Otsuka Pharmaceutical Co. v. Sandoz, Inc., 678 F.3d 1280 (Fed. Cir. 2012), the Federal Circuit affirmed the decision of the district court that the patent was not obvious based on prior art evidence, nor the asserted claims were invalid for nonstatutory double patenting.

The Defendants are drug manufacturers who submitted ADNA filings to the Food and Drug Administration (FDA) for an approval to manufacture, use, or sale of generic aripiprazole products. Otsuka Pharmaceutical Corporation brought action against the drug manufacturers for infringement of patent on the compound claimed in Patent No. 5,006,528, aripiprazole, an atypical antipsychotic compound approved by the FDA for the treatment of schizophrenia. The Defendants counterclaimed that the patent was invalid for obviousness and nonstatutory double patenting. The Federal Circuit analyzed three ‘lead compounds’ asserted by the Defendants, unsubstituted butoxy compound, 2,3-dichloro propoxy compound, and OPC-4392 compound. A ‘lead compound’ means “a compound in the prior art that would be most promising to modify in order to improve upon its … activity and obtain a compound with better activity.” Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., 492 F.d 1350, 1357 (Fed. Cir. 2007). The patents which disclosed the lead compounds, unsubstituted butoxy and 2,3-dichloro propoxy, also disclosed numerous examples of agents useful for the central nervous system, including an antischizophrenia agent.

In its ruling, the Federal Circuit reaffirmed the lead compound analysis, employed in Takeda Chemical Industries and Eisai Co. v. Dr. Reddy’s Labs, 533 F.3d 1354 (Fed. Cir. 2008) for evaluating obviousness of a new chemical compound, which were the first two lead compound cases decided post-KSR. The Federal Circuit explained that the lead compound analysis consists of a two-part inquiry:

First, the court determines whether a chemist of ordinary skill would have selected the asserted prior art compounds as lead compounds, or starting points, for further development efforts . . . . The second inquiry in the analysis is whether the prior art would have supplied one of ordinary skill in the art with a reason or motivation to modify a lead compound to make the claimed compound with a reasonable expectation of success.

The Federal Circuit also noted that for the lead compound selection, mere structural similarity between a prior art compound and the claimed compound is not enough, but it should be guided by the compound’s “pertinent properties.”

Applying this approach, the Federal Circuit rejected the Defendant’s argument that the lead compound analysis applied by the district court was a “rigid” obviousness analysis precluded by KSR because the court assumed that only the most obvious choice could serve as a lead. The Federal Circuit found that after evaluating all of the potential choices available to one of ordinary skill the district court correctly determined that the compounds asserted by the Defendants, unsubstituted butoxy, 2,3-dichloro propoxy, and OPC-4392, would not have been selected as lead compounds. Furthermore, focusing on the pertinent property of the new compound, rather than the structural similarity, Federal Circuit found that two other compounds — clozapine and risperidone — were viable lead compounds because these were the only capable antipsychotic compounds at the time of the invention. The Federal Circuit concluded that the Defendants failed to prove that the patent would have been obvious under 35 U.S.C. § 103.

The ruling in Otsuka Pharmaceutical Co. might be seen as the Federal Circuit’s return to the “rigid” motivation rules precluded by KSR.1 However, It appears that the Federal Circuit attempted to avoid this concern by addressing that to keep with the “flexible” nature of the obviousness inquiry, “the reason or motivation for modifying a lead compound may come from any number of sources and need not necessarily be explicit in the prior art.” This is consistent with the rulings in the previous chemical compound cases after KSR, such as Eisai Co. v. Dr. Reddy’s Labs, where Judge Rader found that the decision in KSR for flexibility would not preclude the Federal Circuit from assessing motivation in the case. Thus, the post-KSR chemical compound cases may imply that the flexible motivation test is still viable.2

“Laundry List” of potential effects is not sufficient to prove the obviousness

The Federal Circuit also rejected the Defendants’ argument that the three lead compounds asserted by the Defendants were known to have antipsychotic activity so that the claimed compound, aripiprazole, would have been obvious to one of ordinary skill. The Federal Circuit found that the patents’ “laundry list” of the potential central nervous system controlling effects, would not have informed one of ordinary skill in the art that the three compounds would have antipsychotic activity.

Nonstatutory Double Patenting

The double patenting doctrine is a judicially created doctrine “precluding one person from obtaining more than one valid patent for either (a) the ‘same invention,’ or (b) an ‘obvious’ modification of the same invention.” In re Longi, 759 F.2d 887, 892. The latter is referred to as the obviousness-type double patenting. The Federal Circuit differentiated obviousness-type double patenting from obviousness under § 103 by addressing that when examining the obviousness-type double patenting in chemical compound cases, the earlier-filed application need not qualify as prior art and “the issue is not whether a skilled artisan would have selected the earlier compound as a lead compound.” However, the Federal circuit rejected the Defendants’ argument that the double patenting never requires identifying the motivation to modify the earlier claimed compound. The Federal Circuit noted that the identification of the reason for modification is an essential part of the question whether the two claimed compounds are “patentably distinct” in the obviousness-type double patenting analysis.

In concluding that the asserted claims were not invalid for obviousness-type double patenting, the Federal Circuit also noted that predictability is an important element to consider in the obviousness analysis. The Federal Circuit held that given the high degree of unpredictability in antipsychotic drug discovery at the time of the invention, “the prior art would not have provided a skilled artisan with a reason to make the necessary structural changes.”


1. Mark D. Janisal, Tuning the Obviousness Inquiry After KSR, 7 Wash. J. L. Tech. & Arts 335 at 344-45 (2012), available at http://digital.law.washington.edu/dspace-law/bitstream/handle/1773.1/1125/7WJLTA335.pdf?sequence=4.

2. Id. at 342-44.

The “Apple v. Samsung” Global Patent Battles Continue

Meera El-Farhan

 

What started a year ago, with Apple filing suit in the U.S. District Court for the Northern District of California against Samsung Electronics Co., has now expanded to more than 50 patent war lawsuits across four continents and at least eight countries. Throughout this escalating legal global battle, with billions of dollars at stake, the smartphone and tablet powerhouses continue, however, to be dependent business partners, and Samsung remains Apple’s largest semiconductor component supplier for iOS devices (a deal worth $8 billion). [1]

In its initial 38-page complaint, Apple claimed unfair competition, trademark infringements, and patent infringements; whereby, Apple alleged Samsung’s smartphones and Galaxy Tab 10.1 “slavishly” copied the iPhone and iPad designs. Samsung responded to Apple’s design patent and trade dress infringement claims by filing cross-claims. Samsung sought revocation of the patent claims and further alleged that the iPhone and iPad infringed on Samsung’s technology patents (including wireless data communication technology). Additionally, Samsung filed suit in South Korean, Japanese, and German courts.

On December 2, 2011, the district court denied Apple’s motion for preliminary injunction for the following devices:

(1) Samsung Galaxy S 4G and Infuse 4G smartphones for allegedly infringing on U.S. Des. Patent No. 618, 677 (“the D’677 patent”), U.S. Des. Patent No. 593,087 (the D’087 patent”), and (3) U.S. Patent No. 7, 469,381 (the ‘381 patent).

(2) Samsung Galaxy Tab 10.1 tablet computer for allegedly infringing on U.S. Des. Patent No. 504,889 (the D’889 patent”), and U.S. Patent No. 7469,381 (the ‘381 patent).

(3) Samsung 4G LTE smartphone for allegedly infringing on U.S. Patent No. 7,469,381 (the ‘381 patent”)[2]

The federal circuit affirmed the court’s order in part, but remanded for further proceeding with respect to the D’889 Patent. [3]  On June 26, 2012, the district court found the balance of hardship for the D’889 patent to tip in Apple’s favor.[4] The court acknowledged that “although Samsung will necessarily be harmed by being forced to withdraw its product from the market before the merits can be determined after full trial, the harm faced by Apple absent an injunction on the Galaxy Tab 10.1 is greater.”[5]  The court further found the design to be an important driver for sales; thus the injunction was not based on “one aspect of the overall product.”[6] However, as a condition of the injunction, the court ordered Apple to secure a $2.6 billion bond to repay Samsung for any damages in the event the injunction is found to have been issued wrongfully.[7]

With the trial starting on July 30, 2012, Apple demanding $2.5 billion in damages in addition to an injunction barring the sale of any infringing Samsung devices, in addition to the U.S. large electronic consumer market, the two electronic giants face high stakes in the trial’s outcome.

Germany: a preliminary injunction in August of 2011 was ordered by a German court to ban the sales of Galaxy 10.1 Tab in all the European Union except for the Netherlands. A week later, the ban was scaled back to Germany, and the 10.1 tab was returned to the EU shelves. Samsung sidestepped the injunction by introducing a Galaxy Tab 10.1N model for Germany. Apple contested the new design immediately. Although Apple lost twice on appeal for banning the sale of the 10.1 Tab, the German court in July, 2012 ruled in favor of Apple by banning the sale of Galaxy Tab 7.7 in Europe.

Australia: the battle extended to an Australian Federal Court in October, 2011. Apple sought, and was granted, an interlocutory injunction restraining Samsung from releasing the 10.1 Tab. Although the Australian Court granted Apple an interlocutory injunction, Samsung won on appeal. Apple continued to file for an appeal to the High Court.  The High Court, in refusing a special leave, allowed Samsung to sell the 10.1 just in time for  Christmas season. Samsung counter-sued Apple in April, 2012. The federal court began its hearing in late July, 2012.

Other Countries: The UK court ruled in favor of Samsung by finding Tablets 10.1, 8.9, and 7.7 did not infringe upon the alleged Apple patent.  Samsung and Apple continue to battle in patent-related lawsuits in Japanese, Korean, and European courts.

 

Aftermath

The multi-billion dollar patent warfare is likely to reshape legal and production strategies for both parties. Unfortunately, in the expanding smartphone market, price effects on consumer electronics are too uncertain to predict for now; however, the outcome of lawsuit battle will draw the line between competition and protection of intellectual property in the smartphone industry.


[2] Apple, Inc. v. Samsung Electronics Co., Ltd., 11-CV-01846-LHK, 2011 WL 7036077 (N.D. Cal. Dec. 2, 2011) aff’d in part, vacated in part, remanded, 678 F.3d 1314 (Fed. Cir. 2012)

[3]Apple, Inc. v. Samsung Electronics Co., Ltd., 678 F.3d 1314 (Fed. Cir. 2012)

[4] Apple, Inc. v. Samsung Electronics Co., Ltd., 11-CV-01846-LHK, 2012 WL 2401680 (N.D. Cal. June 26, 2012)

[5] Id.

[6] Id.

[7] Id.

Federal Circuit Rules that the Invention of a Method of Making Chemical Compounds May Be Sufficient Contribution to Qualify for Joint Inventorship of the Compounds

By Charles Pierce

In Falana v. Kent State Univ., 101 USPQ2d 1414 (Fed. Cir. 2012), the Federal Circuit affirmed the district court’s order that Dr. Olusegun Falana (Falana) be added as an inventor to U.S. Patent No. 6,830,789 (the ‘789 patent), and did not address the district court’s award of attorney’s fees to Falana.

Kent Displays, Inc., a private spinoff of Kent State University (collectively, KDI) was attempting to develop proprietary chiral additives with high, temperature independent helical twisting power (HTP) for use in liquid crystal displays.  They hired Dr. Alexander Seed (Seed), who in turn hired Falana.  While working for KDI, Falana developed a synthesis protocol for making naphthyl substituted TADDOLs.  He used his synthesis protocol to create such a TADDOL, which was designated Compound 7.  Compound 7 was found to be significantly temperature independent, and represented significant progress for the project.  Falana left KDI soon after this development. Continue reading

The “America Invents Act” to Improve and Harmonize the U.S. Patent Filing System

By Kyle Meziere

On March 16, 2013, the United States will transition from a “first to invent” patent system to a “first inventor to file” system under the Leahy-Smith America Invents Act (AIA).[i] The AIA is an effort to both reform the U.S. patent system and harmonize the U.S. system with foreign systems. Most notably, the AIA changes an underlying principle of how the U.S. patent filing system functions. It implements the basic “first to file” principle, but maintains some features that are characteristic of “first to invent” systems.

Presently, the U.S. system for identifying who has a right to a patent differs substantially from most international systems. Currently, U.S.C. §102 governs the U.S. system according to a “first to invent” principle.[ii] When two parties contest the right to a particular valid claim, the U.S. system awards the patent to the first applicant to reduce the invention to practice, either actually or constructively. Also, the system allows the inventor a one year grace period in which to file after the subject matter of a prospective patent has been publicly disclosed.

Most foreign jurisdictions utilize some variation of a “first to file” system. If two parties apply for the same valid patent claim, then the party who files for a patent first has the superior right.

The European Patent Convention (EPC) is one example of a “first to file” based patent regime. [iii] In general, the first person to file for a patent within the EPC system has a right superior to all others to the claim. Another characteristic of the EPC is its strict public disclosure rule. The European system bars patenting subject matter that has been publicly disclosed. Exceptions exist only for disclosures made as a result of an abuse of a special relationship with the applicant or for disclosures made at specific international conventions.  As a result, under the EPC there are a lot more scenarios where nobody has a valid claim.

Other foreign jurisdictions use a “first to file” system that incorporates a broader grace period for inventors to file after subject matter has become publicly available. The Japanese patent system offers a six month filing grace period to inventors who publish an article on their work, or who present at an approved exhibition or academic meeting. [iv] The six month grace period is also available for inventors whose material is made public against their will.

The AIA system combines elements characteristic of “first to file” systems with elements typical of “first to invent” systems. Like the EPC, the AIA will generally grant the patent to the first party who files. Like the current U.S. system, it allows a broad one year grace period for public disclosures made by the applicant. The AIA synthesizes particular “file to file” and “first to invent” characteristics, resulting in a system closer the international norm.

Although the AIA results in greater harmony amongst the world’s patenting systems, there will still be some dissidence. The differences between the EPC strict novelty standard and the exceptions to the novelty requirement in the AIA could potentially cause the AIA system to function starkly different than the EPC system.[v] For example, an inventor who independently invents second and files second could win the patent. This would result if he publishes before the first inventor files or publishes. Typically, this result could not occur under either the current U.S. or European systems. Ostensibly, it could occur under the Japanese system due to its broader scope of exceptions to what qualifies as prior art. Also worth noting is that the EPC does not distinguish between disclosures made by the applicant and ones made by a third party. The AIA, like the Japanese system, allows mostly only disclosures made by the applicant to qualify for the grace period.

The drafters of the AIA desired to both harmonize the U.S. system with foreign systems and improve its functionality and efficiency.[vi] The legislature endeavored to accomplish this by taking the best elements of the “first to invent” and “first to file” systems and combining them.[vii]   The legislator utilized what they deemed to be the best elements of each filing system while managing to move the U.S. system closer to an international norm. The largest remaining difference, which could seriously affect how the different systems behave, is the length and scope of the respective grace periods.


[i] Leahy-Smith America Invents Act of 2011, Pub. L. No. 112-29, 125 Stat. 285 (amendment effective 18 months after enactment date).

[ii]35 U.S.C.S §102 (2010), amended by Pub. L. No. 112-29, 125 Stat. 285 (2011).

[iii] European Patent Convention art. 55, Oct. 5, 1973, 1065 U.N.T.S. 254 as revised Dec. 13, 2007, available at http://www.epo.org/law-practice/legal-texts/html/epc/1973/e/contents.html.

[iv] Tokkyo Ho [Japanese Patent Law], Law No. 121 of 1959, arts. 29-30 (Japan).

[v] Brad Pedersen and Justin Woo, The Matrix for Changing First-to-Invent: an Experimental Investigation into Proposed Changes in U.S. Patent Law, 1 Cybaris An Intell. Prop. L. Rev. 1, 5 (2010).

[vi]  H.R. Rep. No. 112-98, pt. 1, at 39-40 (2011).

[vii] Id. at 42.

Supreme Court Holds that New Evidence May Be Presented in § 145 Actions, Must Be Reviewed De Novo

By Charles Pierce

In Kappos v. Hyatt, 566 U.S. ___ (2012), the Supreme Court unanimously ruled that in a 35 U.S.C. § 145 action, there are no evidentiary restrictions beyond those imposed by the Federal Rules of Evidence, and the Federal Rules of Civil Procedure.  The Supreme court also held that when new evidence is presented, the district court must make a de novo finding on a disputed question of fact.

In 1995, Gilbert Hyatt filed U.S. Patent Application No. 08/471,701 (the ‘702 application), “Improved Memory Architecture Having a Multiple Buffer Output Arrangement.”  After amendments, the ‘702 application had a total of 117 claims, which were all rejected by the examiner.  Hyatt appealed to the Board of Patent Appeals and Interferences,  and the Board approved 38 claims, but upheld the examiner’s rejection for lack of adequate written description for the rest.  Hyatt then filed an action under 35 U.S.C. § 145 in District Court.

35 U.S.C. § 145 states,

An applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a) of this title may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court for the District of Columbia if commenced within such time after such decision, not less than sixty days, as the Director appoints. The court may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the Board of Patent Appeals and Interferences, as the facts in the case may appear, and such adjudication shall authorize the Director to issue such patent on compliance with the requirements of law. All the expenses of the proceedings shall be paid by the applicant.

In his § 145 action, Hyatt submitted to the District Court a written declaration identifying portions of the patent specification that he viewed as supporting his claims.  The District Court declined to consider Hyatt’s declaration, on the ground that applicants may not present new issues unless there was some reason presented for failure to present the issue to the Patent Office.  The District Court then granted summary judgment to the Director of the Patent Office, after reviewing the remaining evidence under the substantial evidence standard.

On appeal, the Federal Circuit first affirmed the district court’s decision, then granted rehearing en banc and held that new evidence in §145 proceedings is subject only to the Federal Rules of Evidence and the Federal Rules of Civil Procedure, and that when new evidence is introduced, the district court must make a de novo finding.  The Director then appealed, and the Supreme Court affirmed the en banc decision.

The Supreme Court reasoned that “§ 145 neither imposes evidentiary limits nor establishes a heightened standard of review.”  566 U.S. ___, ___ slip op. at 6.  Rejecting the Director’s argument that administrative law principles should apply to § 145, the Supreme Court noted that unlike the APA, 35 U.S.C. § 145 does not limit judicial review to the administrative record.  The Supreme Court also cited the lack of limits in the text of the statute, the competence of a district court to receive new evidence and act as fact finder, and that § 145 does not provide for remand to the PTO.

The Supreme Court also based its reasoning on Butterworth v. United States ex rel. Hoe, 112 U.S. 50 (1884), a case filed under R. S. 4915, the direct predecessor to § 145.  In Butterworth, the court had described R. S. 4915 proceedings as independent from Patent Office hearings, and ruled that parties may introduce additional evidence.  The Supreme Court also distinguished Morgan v. Daniels, 153 U.S. 120 (1894) (which applied a deferential standard to an R. S. 4915 review), as Morgan involved an interference proceeding and such proceedings are no longer addressed in the same section of the Patent Act as district court challenges.  Finally, in Morgan, no new evidence was presented.  Butterworth being closer than Morgan to the facts of this case, the Supreme Court held that new evidence may be presented with no restriction save for the Federal Rules of Evidence and the Federal Rules of Civil Procedure, and that where new evidence is presented, the district court must review it de novo.

Introducing Stein McEwen LLP Fall 2012 IP Training Program October 1-19, 2012

 Stein McEwen LLP is pleased to announce that it will be hosting an intellectual property training program from October 1-12 with an add-on session from October 15-19, 2012 in Washington DC.

 The purpose of the Stein McEwen LLP Fall 2012 IP Training Seminar is to provide an overview of U.S. Intellectual Property Law, including patents, trademarks, copyrights, and trade secrets. The lectures will cover fundamentals of patent procurement, with optional sessions extending to the scopes of trademarks and copyrights, IP licensing, and IP litigation. A series of lectures will be presented by Stein McEwen LLP attorneys regarding these subjects, including workshops for the participants to receive hands-on experience.  These workshops will include activities such as reviewing disclosures of an invention and drafting sample claims to cover the subject matter of the invention. Tours of the U.S. Patent and Trademark Office, the U.S. Court of Appeals for the Federal Circuit, and a U.S. District Court will allow the participants an opportunity to understand the complexities of these agencies and courts.  At the U.S. Court of Appeals for the Federal Circuit, the participants will likely have an opportunity to observe a portion of a hearing involving patents. The IP Training Seminar is intended to provide a broad-based understanding of U.S. Intellectual Property Law, with a strong emphasis on patents. The already-implemented and still-to-take-effect provisions of the Smith-Leahy America Invents Act (AIA) will be woven throughout the syllabus.

 

Who Should Attend?

In-house staff members of corporate IP departments, patent attorneys, staff members of overseas law firms, inventors, and members of academia who deal in some aspect of IP.

Basic understanding of patent law for at least one country is recommended. No formal registration of any country’s patent office is required.

More information can be found at www.smiplaw.com/seminar_ipt.cfm.

If you have any questions, please contact Sarah Brogi at sbrogi@smiplaw.com or SM2012training@smiplaw.com.

Board of Patent Appeals and Interferences Rules on Indefiniteness of the Term “Substantially Filled,” Prima Facie Obviousness in an Engine Cooling Method

By Charles Pierce

In Ex Parte Evans et al. (Appeal 2011-004119; Application serial no. 11/823,993), the Board of Patent Appeals and Interferences reversed examiner rejections under 35 U.S.C. § 112 for indefiniteness, and 35 U.S.C. § 103(a) for obviousness.

Claim 1 of the patent states:

A method for cooling an internal combustion engine using a reduced toxicity, ethylene glycol and water based heat transfer fluid, said method comprising the steps of:

(a) formulating a heat transfer fluid comprising (1) a glycol component consisting of ethylene glycol and propylene glycol, wherein the weight of the propylene glycol is between 5% less to less than 30% of the total weight of the glycol component and wherein the glycol component is less toxic than 10,000 mg/kg on an acute LD50(rat) oral toxicity basis, and (2) water, wherein the water comprises between 40% and 70% by weight of the total weight of the heat transfer fluid; and

(b) substantially filling the cooling system of the internal combustion engine with the heat transfer fluid such that the heat transfer fluid absorbs heat that is produced by the internal combustion engine and releases the absorbed heat to the atmosphere. (emphasis added).

The examiner rejected this claim reasoning that because the term “substantially” is not defined, the specification does not sufficiently describe the invention such that a person of ordinary skill in the art would be reasonably apprised of its scope.  The board disagreed.  They noted that “substantially” was used to describe how much a cooling system should be filled, and any person skilled in the art would know what can be considered substantially filled.  The term “substantially” was used to avoid a strict measurement,  because slight variations in the amount of fluid may still be considered to have filled a cooling system.  The board decided that the claim was sufficiently definite.

The board also disagreed with the examiner’s obviousness rejections.  The examiner’s rejection was that the claims were prima facie obvious.  The board noted that no reference disclosed the weight range of the propylene glycol in the glycerol component, or the weight range of the glycerol in the polyhydric alcohol component.  Because the references also disclosed only the components of the invention, the board ruled that they were not enough for a person of ordinary skill in the art to create the claimed cooling method.

Broadening Reissue Application Filed Within Two Years Allows Subsequent Broadening Reissue Applications After the Two Year Bar Regardless of Whether the Claim Language is Related

By Kevin M. Repper

In the case of In re Erik P. Staats and Robin D. Lash, No. 2010-1443 (Fed. Cir. 2012), the Federal Circuit made a decision based on their interpretation of 35 U.S.C. §251 and the precedent court case In re Doll, 419 F.2d 925 (C.C.P.A).  35 U.S.C. §251 discloses that “whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Director shall, on the surrender of such patent,…reissue the patent… for the unexpired part of the term of the original patent.” The reissue statute imposes a two-year limit when the patentee intends on broadening the scope of the claims of the original patent.

Doll interpreted section 251 and explicitly rejected the PTO’s argument that “claims presented in a reissue application filed within two years of the original patent grant are barred by 35 U.S.C. §251 when such claims are not submitted until more than two years after the grant and are broader in scope than both the original patent claims and the broadening reissue claims originally submitted.” Therefore, it is allowable for one to file broadening claims outside of the two year window as long as the patent holder filed initial broadening claims within the two year window. In the present case, the court must decide whether the Board correctly held that a broadening reissue application filed outside of the two year period is not timely if it is not related to an earlier application filed within the two year period.

Staats filed an application for a patent with the USPTO and it was issued on August 17, 1999 as U.S. Patent Number 5,940,600 (‘600 patent). The ‘600 patent described improvements to the management of isochronous data transfers such as the transfer of real-time video data from one component in a computer system to another component in the computer system. The ‘600 patent included a first embodiment, which used a linked list of buffers and a second embodiment that did not use the linked list of buffers. Both the first and second embodiments were described in the specification, however only the first embodiment was claimed in the original patent.

Staats timely filed a broadening re-issue application relating to the first embodiment in the specification.  Staats filed a second broadening reissue application on May 12, 2004, as a continuation of the first broadening reissue application. Again, the second broadening reissue application only addressed errors related to the first embodiment.  Almost seven years after the original ‘600 patent issued, Staats filed a third broadening reissue application as a continuation of the second broadening reissue application.  In the third broadening reissue, Staats added claims that were drawn towards the second embodiment that did not include the linked list of buffers.

Although acknowledging the precedent in Doll, the examiner rejected the third reissue application under 35 U.S.C. §251 after finding that the new broadened claims were not related in any way to what was covered in the original broadening reissue.  On appeal, although recognizing that it was bound by Doll, the Board found that the newly added broadening claims were directed to an invention that was independent and distinct from that claimed in the original patent application and the first broadening reissue application. According to the Board, the broadening sought in the third application was unforeseeable from the original reissue application and the public notice function of 35 U.S.C. §251 had not been met.

The PTO argued that the language of the statute, requiring that the broadening reissue be applied for within two years, does not suggest that the first broadening reissue can serve as a placeholder for later applications. The PTO contended that a patentee must give the public adequate notice within two years of what the patentee intends to broaden and Staats clearly did not do in regards to the claims listed in the third broadening re-issue application.

The PTO continued to argue that while Doll is binding it is nevertheless distinguishable. According to the PTO, the broadened claims challenged in Doll were related to the subject matter covered by the claims identified and broadened within the two-year window and thus was adequately notified of Doll’s later broadening.  The court rejects this argument because the court in Doll never made the distinction between related and unrelated claims.  Doll simply ruled that the two year window only applies to the first broadening reissue application.  The court further points out that the PTO’s approach is unmanageable because it would be difficult to distinguish one patent embodiment from another or to determine when a later claim is related to an earlier one.

According to the court, as long as you file the first broadening reissue application within section 251’s two year limit, you may continue to file reissue applications outside of the two year limit, regardless of whether the claim language is related. Staats filed his first broadening reissue application within the two year window and therefore the Board’s rejection of the third reissue application was remanded for further proceedings consisting with the opinion.

Fort Properties, Inc. v. American Master Lease LLC

By Zi Wang

In Fort Properties, Inc. v. American Master Lease LLC, 2012 WL 603969 (Fed. Cir. 2012), the Federal Circuit affirmed the district court’s holding that a method patent for creating real estate investment instrument adapted for performing tax-deferred exchanges is invalid because it is directed at an unpatentable abstract idea, even though the claim language of the patent at issue recited a computer in certain operations.

American Master Lease LLC (“AML”) holds the ‘788 patent at issue.  The ‘788 patent discloses an investment tool designed to enable property owners to buy and sell properties without incurring tax liability pursuant to a tax law provision that exempts certain investment property exchanges when an owner of investment property exchanges one property for another of like kind and certain conditions are met.

Specifically, the claims require the aggregation of a number of properties into a “real estate portfolio.”  The property interests in this portfolio are then divided into shares, called “deedshares”, and are sold to investors much in the same way that a company sells stock.  Each deedshare can be encumbered by its own mortgage debt, which provides flexibility to real estate investors attempting to structure their debts in a way that complies with the exemption provision of tax law.

All claims in the ‘788 patent are method claims.  Claim 1 discloses:

  1. A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising:

aggregating real property to form a real estate portfolio;

encumbering the property in the real estate portfolio with a master agreements; and

creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision in the master agreement for reaggregating the plurality of tenant-in-common deeds after a specified interval.

Two of the other independent claims, claims 22 and 32, are nearly identical to claim 1—though claim 32 contains an additional limitation requiring a computer to “generate a plurality of deedshares.”  The only other independent claim, claim 11, discloses a method of transferring ownership of deedshares in a manner consistent with the tax law provision discussed above.

Fort Properties, Inc. brought action against AML and moved for summary judgment of invalidity in the district court.  The district court invalidated all claims in the ‘788 patent for failing to claim patent-eligible subject matter under 35 U.S.C. § 101.  In reaching its decision, the district court relied on In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) and applied the machine-or-transformation test.  The court held that the patent failed both prongs of the test and accordingly invalidated the whole patent.  AML appealed the decision to the Federal Circuit.

In its opinion, The Federal Circuit cited to four seminal Supreme Court cases that deal with the question of when an invention qualifies as a patent-eligible process as opposed to an abstract idea, namely, Bilski v. Kappos, 130 S.Ct. 3218 (2010); Diamond v. Diehr, 450 U.S. 175 (1985); Parker v. Flook, 437 U.S. 584 (1978); and Gottschalk v. Benson, 409 U.S. 63 (1972).  The Federal Circuit analogized the invention in the ‘788 patent to the invention in Bilski, which is an investment tool not requiring the use of a computer.

AML argued that claims 1-31 constitute a patentable process and not an abstract idea because they require a series of steps to take place in the real world that involve real property, deeds, and contracts.  More specifically, AML contended that the deeds remove the invention from the realm of the abstract because they are physical legal documents signifying real property ownership.  Fort Properties, on the other hand, argued that the claimed method of aggregating property, making it subject to an agreement, and then issuing ownership interests to multiple parties consists entirely of mental processes and abstract intellectual concepts.  Fort Properties pointed out that the Bilski invention’s intertwinement with deeds, contracts, and real property does not transform the abstract method into a patentable process.

The Federal Circuit sided with Fort Properties and drew extensive similarities between the invention at issue and the Bilski invention.  The Federal Circuit further stated that its reasoning is in accord with its own precedent in In re Comiskey, 554 F.3d 967 (Fed. Cir. 2009), and in In re Schrader, 22 F.3d 290 (Fed. Cir. 1994).

The court then turned to the question of how claim limitations involving computers apply in the § 101 analysis.  The court relied on three of its own 2011 and 2012 cases: Cybersource v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011); Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323 (Fed. Cir. 2011); and Dealertrack, Inc. v. Huber, 2012 WL 164439 (Fed. Cir. 2012).  The court opined that the basic character of a process claim drawn to an abstract idea is not changed by claiming only its performance by computers, or by claiming the process embodied in program instructions on a computer readable medium.  Instead, to impart patent-eligibility to an otherwise unpatentable process under the theory that the process is linked to a machine, the use of the machine must impose meaningful limits on the claim’s scope.  As a positive example, the court pointed to the claimed invention in Ultramercial, which “required intricate and complex computer programming” and “specific application to the Internet and a cybermarket environment.”  The addition of the computer to the claims was not merely insignificant post-solution activity; rather, the invention
itself involved “advances in computer technology,” and it was thus sufficient to qualify the claims for patent eligibility under § 101.

The court then held that the computer limitation in the patent at issue is akin to that in Dealertrack, and does not play a significant part in permitting the claimed method to be performed.  The computer limitation here is a broad and general limitation that does not impose meaningful limits on the claim’s scope.  AML simply added a computer limitation to claims covering an abstract concept—that is, the computer limitation is simply insignificant post-solution activity.  Therefore the computer limitation cannot impart patent-eligiblity here.

In this case the Federal Circuit once again took on the task of drawing the line between patentable process claims and patent-ineligible abstract ideas after Supreme Court’s Bilski v. Kappos decision.  Together with patents in Cybersource and Dealertrack, the patent in the present case was struck down for covering unpatentable abstract ideas, recitation to computers notwithstanding.  In the most likely scenario, method patent claims that are otherwise unpatentable under § 101 will not be upheld by the court if the recitation to a computer is simply post-solution activity.  To put it in another way, if a computer merely facilitates practice of an invention, rather than enables it, the recitation to a computer in patent claims is superfluous for § 101 purposes.  On the other hand, if an invention has a complicated-enough interface with computerization that it can be described as an advance in computer technology, then Ultramercial should control and it is possible for the patent to be upheld.