He livened up the discussion in extolling that “We [the Patent Office] don’t have a standard so we’d allow every application if it meets the requirements.  Your [Applicants and Attorneys] job is to get all that the applicant is entitled to.”

This is certainly true.  The patent statutes state that “A person shall be entitled to a patent unless” the patent statutes preclude the grant (35 USC 102).  However, the Commissioner’s statements didn’t sit too well given that these came immediately after he described the plummeting allowance rate at the Patent Office.

In describing the Patent Offices Strategic Plan, Commissioner Doll explained the the two major points are to: (1) improve the quality of examination, and (2) improve the efficiency of system.  This is to be accomplished through the four basic principals of quality, timeliness, cost and effect.

In describing Quality, the Commissioner explained that in order to enhance patent quality, the USPTO implemented an improved Quality Assurance Program.  One important component of the improved program is expanding the quality review of work products, through a “second-pair-of-eyes” program in areas of identified need.  The Office of Patent Quality Assurance (OPQA) administers a program for reviewing the quality of the examination of patent applications. The general purpose of the program is to improve patent quality and increase the likelihood of patents being found to be valid.

The Quality Assurance Specialists re-examine a randomly selected sample of allowed applications to determine whether any claims may be unpatentable. Reviewed applications may be returned to the examining TCs for consideration of the reviewer’s question(s) as to adequacy of the search and/or patentability of a claim(s).

The Commissioner pointed out that the review is not just to find allowances of patents that should not be allowed but to look for rejections that shouldn’t have been made.  He did not present any statistics for how many of the latter type of error occurred.

However, in a session entitled “Constructive Ideas on Managing USPTO’s Workload,” the Commissioner showed that in 2008, the USPTO found a 3.7% allowance error rate, which is historically relatively low.  The target error rate for the USPTO is 4%.  So, technically, they’re under goal but they get to decide the target and they decide what constitutes an “error” or not.  With no independent review, is it any surprise that they hit their goal?

In the biotechnology examination group (TC 1600), the allowance error rate is higher at 4.2%.  Generally, the <quote> error <unquote> is that the Examiner gave the claims too narrow of an interpretation thereby allowing a claim that should have been rejected in light of the overlap with the prior art.

The most striking chart displayed by the Commissioner is one that showed the allowance rate for patents over the past twenty-three years.  After remaining fairly steady over decades, allowance rates have now plummeted from over 70% in 2000 to an allowance rate of 44.3 % in 2007.  Not surprising to anyone in the field, the allowance rate in TC 1600 was just 33.6% (click on the graph at left to see the data).

It is noteworthy that the Commissioner revealed that the number of original applications has remained rather constant.  The explosion in filed application numbers (441,637 applications in FY2007) comes from Request for Continued Examination (RCE) filings.  With RCE filings are up up 80% in FY2008, it’s no surprise that the backlog in filings is now over 800,000 applications.

This, despite the fact that — as we can see from the steep slope of the graph — we clearly haven’t hit the bottom of the allowance rate decrease.  Just how low will the allowance rate have to go before there is an uprising among applicants?

Graph of USPTO Patent Allowance Rate

Related posts:

1. U.S. Patent Commissioner Speaks: Current Developments in Patents
2. USPTO Commissioner Calls for Help To Improve Patenting Process
3. Seven Questions in Seven Minutes with USPTO Director John LeGuyader

Joint infringement comes up as a big issue in method claims and devices.  Medical device inventions often have critical method claim that involve a combination of steps by more than one of :

1. Device company;
2. Doctor; and/or
3. Patient.

It had generally not been necessary for the acts that constitute infringement to be performed by one person or entity. When infringement results from the participation and combined action(s) of more than one person or entity, they are all joint infringers and jointly liable for patent infringement.

The basic principal being that infringement of a patented process or method cannot be avoided by having another perform one step of the process or method. Where the infringement is the result of the participation and combined action(s) of one or more persons or entities, they are joint infringers and are jointly liable for the infringement.

In MuniAuction v. Thomson, a case involving a patent directed to electronic methods for conducting “original issuer auctions of financial instruments,” the case stands for the premise that where the difference in claims over the prior are was “do on the internet,” it is clear that merely doing something over internet instead of in reality, not a patentable distinction over land-based activities.

But, the case also showed that one needs one party to infringe or, if two parties, one party must control the other party.  The question that comes up is would technological control be enough?

It is a Vicarious liability standard where a mere arms length cooperation will not give rise to direct infringement.  The claim is directly infringed only if one party exercises “control or direction” over the entire process such that every step is attributable to the controlling party i.e., the evil mastermind standard.

The Federal Circuit stated thusly:

The control or direction standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method.

The law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method.  But, often incredibly difficult to prove direct infringement.  Now, need to show vicarious liability.

How avoid this result?  Try to get infringement of at least one claim without requiring multiple parties to come up with infringement.  One way is to try to have what amounts to a system claim.

In RIM v. NTP, NTP had system claims.  Since the Blackberry relay was all in Canada, the court said the method claims were not infringed for that reason.  But, NTP had system claims and the court looked at 35 USC 271, which states:

[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

So, although the system was out of US, the beneficial use of the system is within the US.

Therefore, while joint infringement can be established where one party performs some/most of the steps of a patented process and the other steps are performed at the first party’s direction, the recommendation now is to ensure you at the very least have a claim drafted in a manner that all of the steps of the claimed method can be performed by a single infringer.

Related posts:

1. No Patent Infringement if Any Steps of a Method Can be a “Service”
2. Can You Get an Injunction Against A Possible Contributory Infringer?
3. UK Courts Set Limits on Claim Coverage of Unknown Technologies

Section 101 of the Patent Act defines what types of inventions are patentable as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” The Supreme Court construed this section broadly, stating it includes “anything under the sun that is made by man” with three exceptions of “laws of nature, natural phenomena and abstract ideas.”

In State Street Bank v. Signature Financial Group, the Federal Circuit held that ideas about how to conduct business aren’t always unpatentably abstract. So, any business method that produces a “useful, concrete and tangible result” can be patented as a “process” under Section 101.

In re Nuijten

Our problems start back at In re Nuijten (en banc denied 2008), a case that looked at whether a transitory propagating signal is proper patentable subject matter.  Here, the court looked at patent claims to signals and ruled that signals are “just too transient” to be patentable subject matter  because it does not fit within any of the four statutory categories of process, machine, manufacture, or composition of matter.  This case is an example of the court parsing technological differences as a politician would, not as a scientist would.

In re Comisky

We continue on to In re Comisky where the courts looked at claims directed to a method and system for mandatory arbitration involving legal documents, such as wills or contracts.

The Court concluded that the independent method claims “claim the mental process of resolving legal disputes between two parties by the decision of a human arbitrator[,]” and are therefore, “directed to an abstract idea itself rather than a statutory category” and are unpatentable. However, two independent system claims in Comisky’s application did incorporate various modules and a database as part of the system and were found to contain patentable subject matter for purposes of section 101. The Court explained that “[w]hen an unpatentable mental process is combined with a machine, the combination may produce patentable subject matter[.]” 

As a result of this decision, applications involving mental processes will be required to combine a particular technology such as a computer with such mental processes for the subject matter to meet the statutory requirement of patentable subject matter.  

In re Bilski

Finally, we get to In re Bilski, in which the Federal Circuit looked en banc at when does a claim that contains both mental and physical steps create patent-eligible subject matter and whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101.

Here, the court looked at an abstract idea or mental process.  But, what about where a claim contains both mental and physical steps to create patentably eligible subject matter?  Must a method claim need to result in physical transformation of an article or be tied to machine under 101?

For the biotech industry, to see the possible effects it’s important to also look back at LabCorp v. Metabolite for determining patentably eligible subject matter under section 101, which looked at whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to “correlat[e]” results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.

The application claimed a method for detecting a deficiency of cobalamin or folate by assaying homocysteine and correlating elevated level with a deficiency.  The Supreme Court declined to weigh in but we know that Justice Breyer wanted this decided and said that the Court should invalidate as “claim 13 is invalid no matter how narrowly one reasonably interprets” the claim.

The problem here is that anyone performing the test for other reasons can’t avoid infringing if do test and “think” about the correlation knowing it exists.

The panel wrapped up stating that the consequences of LabCorp and Bilski for the biotech business is the impact on:

• Mechanism of action claims
• Pro-drug claims
• Diagnostic tests
• Adverse effects or other clinical trial/regimen claims

Clearly, claims will need to rely on more than “mental steps” and claims should always be included that tie the steps to physical materials or transformation.

To see the courts movement on invalidating methods on natural phenomenon see the pending case of Classen Immunotherapies v. Biogen, awaiting an appellate decision. This case, seemingly a do-over of the Metabolite case, involves patents involving a mechanism for evaluating the safety of vaccine administration schedules by comparing or identifying the adverse events associated with various vaccine schedules.

The district court held that the claims were invalid as an attempt to patent the idea of a correlation between vaccine schedules and immune mediated disorders (natural phenomenon).

Related posts:

1. Bilski: Much Ado About (almost) Nothing