The Federal Circuit recently affirmed that an admission that an accused infringing device practices an industry standard may, without more, be the basis for a finding of infringement.  Fujitsu, LG and Philips v. Netgear, US Court of Appeals for the Federal Circuit (10-1045).

Philips asserted claims of U.S. patent no. 4,974,952, Fujitsu asserted claims from U.S. patent no. 6,018,642, and LG asserted claims of U.S. patent no. 6,469,993 all against Netgear. Each patent describes and claims a different aspect of wireless communications technologies. They accused Netgear of infringing by implementing wireless networking protocols for sending and receiving messages between a base station, such as a wireless router, and a mobile station, such as a laptop.

The three plaintiffs, part of a licensing pool (Via Licensing) that purports to include patents that any manufacturer of 802.11 and WMM compliant products must license. The plaintiffs never identified particular claims or accused products prior to filing.  The plaintiffs argued that by simply complying with the standard, Netgear necessarily infringed the asserted claims. The court said that the plaintiffs must show evidence of infringement for each accused product. Fujitsu, LG, and Philips appealed the district court’s denial of summary judgment of infringement and grant of summary judgment of noninfringement.

Netgear argued that the court should establish a rule precluding the use of industry standards in assessing infringement. Instead, Netgear wants any plaintiff to separately accuse and prove infringement for all accused products, even if those products all comply with a standard that is relevant to the patent-in-suit. It argued that it is legally incorrect to compare claims to a standard rather than directly to accused products. Netgear also argued that a holding that practicing a standard infringes a patent would amount to an automatic conclusion of infringement against all future accused infringers. It argues that these later litigants would be deprived of a fair opportunity to prove that their products do not infringe.

An amicus brief by Association of Corporate Counsel, supporting Netgear, argued that it is dangerous to assess infringement based on a standard because the text of a standard may not be specific enough to ensure that all possible implementations infringe a patent claim. Further, it argues that many standard sections are optional and that users may never activate a potentially infringing feature. Finally, to allow this type of analysis would have a “chilling effect” on industries that rely on standards. It argues that companies would be less likely to comply with industry standards if a patent owner can argue that all compliant products infringe.

Philips argueds that it is more efficient for courts to assess infringement based on industry standards when applicable. It can alleviate the need for highly technical fact-finding such as the review of complicated source code and save judicial resources by not requiring the courts to separately consider products that all function in accordance with that standard.

The Federal Circuit affirmed that this can certainly be the case:

We hold that a district court may rely on an industry standard in analyzing infringement. If a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement. We agree that claims should be compared to the accused product to determine infringement. However, if an accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product. We accepted this approach in Dynacore where the court held a claim not infringed by comparing it to an industry standard rather than an accused product. An accused infringer is free to either prove that the claims do not cover all implementations of the standard or to prove that it does not practice the standard.

Public policy weighs in favor of this approach. If a court determines that all implementations of a standard infringe the claims of a patent, then it would be a waste of judicial resources to separately analyze every accused product that undisputedly practices the standard. This is not prejudicial to present or future litigants. If two products undisputedly operate in the same manner, a finding of infringement against one will create a persuasive case against the other. In such a case, there will be no prejudice.

We acknowledge, however, that in many instances, an industry standard does not provide the level of specificity required to establish that practicing that standard would always result in infringement. Or, as with the ’952 patent, the relevant section of the standard is optional, and standards compliance alone would not establish that the accused infringer chooses to implement the optional section. In these instances, it is not sufficient for the patent owner to establish infringement by arguing that the product admittedly practices the standard, therefore it infringes. In these cases, the patent owner must compare the claims to the accused products or, if appropriate, prove that the accused products implement any relevant optional sections of the standard. This should alleviate any concern about the use of standard compliance in assessing patent infringement. Only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.

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In March 2010 the United States Patent and Trademark Office (USPTO) and the United Kingdom Intellectual Property Office (IPO) announced plans to begin cooperation on increasing the efficiency and quality of the patent examination process by making greater use of each other’s work on commonly filed patent applications and eliminating duplication of work.  This initiative will yield efficiencies in patent processing and thus shorten the innovation cycle.  Work sharing is central to the efforts of both patent offices to fuel economic growth and create jobs – which are high priorities for both governments.

The offices have completed foundational work and preliminary studies and will begin work-sharing implementation in October.  The initial phase of implementation will focus on maximizing re-use during examination of commonly filed applications by providing access to work completed and currently made available by each office.  This will be combined with examiner training, data collection and analysis to gauge effectiveness and make necessary adjustments.  At the same time the offices will work on such longer-term issues as easier access to each office’s application files to create a more robust work-sharing environment.

“By enabling both offices to maximize the use of each other’s search and examination results, this work-sharing initiative should reduce patent backlogs and help us process patents more efficiently,” Under Secretary and Director of the USPTO David Kappos commented.  “I believe that it will serve as a model for our efforts at work-sharing with other countries as a means to improve the global patent system and bring innovation to market sooner.”

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Seminar – The Entire Market Value Rule and the End of Casual Empiricism

The entire market value rule (or “EMVR”) allows for the recovery of patent infringement damages based on the value of the entire product that contains an infringing component (when the patent-related feature is the basis for consumer demand). It has historically been a potent tool for patentholders claiming damages in intellectual property cases. However, increased scrutiny of the application of the EMVR suggests that more rigorous, empirical approaches are needed to provide adequately detailed evidence of consumer-driven demand. In this seminar:

David C. Giardina, Esq., Partner at Sidley Austin LLP, will address the impact recent cases such as Lucent Technologies v. Gateway Inc. may have on future damages claims and analytic requirements by the courts.

Iain M. Cockburn, Ph.D., George Schultz Professor of Economics, The University of Chicago Booth School of Business; Dean Designate, Yale School of Management, will discuss hedonic analysis, a method that uses actual product, price, and sales data, to evaluate consumer demand.

John R. Hauser, Sc.D., Professor of Marketing and Head of the Management Science Area of MIT Sloan School of Management, will focus on the use of conjoint analysis, a survey methodology that can be employed in the absence of sufficient market data, to assess consumer preferences.

Join a panel of experts, along with moderator Analysis Group Managing Principal Jeffrey A. Cohen, author of Intangible Assets: Valuation and Economic Benefit, as they address these issues and your questions at this complimentary breakfast program.

October 29, 2010

7:30 AM – 9:15 AM (CST)

Gleacher Center, Chicago

Register:  http://www.analysisgroup.com/emvr_chicago_seminar.aspx

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The Program:

Kauffman FastTrac® TechVenture is a hands-on business development program specifically designed to assist scientists, inventors, engineers and IT developers in southwest Ohio to commercialize a new technology or take an existing tech business to the next level.

The Format:

Kauffman FastTrac® TechVenture will be presented over a eight-week period beginning Tuesday, October 19, 2010. Each week local subject experts will discuss business development and management topics, including:

  • Entering and Capturing the Market
  • Financial considerations
  • Entrepreneurship and Building Your Team
  • Protecting Your Intellectual Property
  • Identifying Funding and Working With Investors
  • Cash Management and Operations

In addition to the subject experts, professional business coaches and mentors will then work individually with each company to develop that topic in the company’s business plan.

The Team:

Kauffman FastTrac® TechVenture is sponsored by BIOSTART and Hamilton County Business Center, members of the Ohio Edison Incubation program. The topic presenters, coaches and mentors are high powered, local business professionals who have launched successful careers and businesses.

The Result:

Upon completion of the entire Kauffman FastTrac® TechVenture program, each participant will have the tools to create a world class enterprise or to take an existing business to the next level. All companies that complete the program are also eligible to participate in the TechVenture Cincy Business Plan Competition in January, 2011. Prizes of $5,000, $3,000 and $1,000 will be awarded to the top three business plans.

DATES: Tuesdays from 10/19 through 12/7/10

TIME: 6:00pm – 9:00pm

LOCATION: Hamilton County Business Center (HCBC)
1776 Mentor Avenue
Conference Room 160
Cincinnati, OH 45212

COST: $250 per person (an $895 value)

BUSINESS PLAN COMPETITION: January, 2011 (date TBA) Open only to program participants.

Visit BioStart to complete an application. Class size is limited to 10. For more information regarding Kauffman FastTrac® TechVentureTM contact:  Carol Frankenstein (BIOSTART) or  Mary Myers (HCBC)

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The still fresh ruling by CAFC on Goeddel v. Sugano reversed the decision by BPAI which held that Sugano is entitled to its filing date of its initial Japanese application and BPAI consequently awarded Sugano priority on counts of two interferences. The decision highlights the BPAI’s misinterpretation of PHOSITA’s function and we are encouraged to look at the non-obviousness requirement and PHOSITA once more and consequently agree with CAFC’s reversal of BPAI’s decision.

Let us acquaint ourselves with brief facts of the case before moving on to the discussion. The patents in question relate to human fibroblast interferon (“hFIF”), also called interferon beta or b-IF. This interferon is produced in the human body and is effective in combating pathogens and tumors. Scientists therefore sought to produce this interferon in large quantities for therapeutic use.

In the human body, there exists a genome that codes for hFIF. There exists a precursor form of hFIF (with 187 amino acids) and a mature form with 166 amino acids.

The subject matter for both patents is a recombinant DNA process for directly producing the mature hFIF.

Following are the details regarding date of filing for Sugano and Goeddel.

Sugano:

  • Japan: 19th March 1980
  • US: 5th June 1995

Goeddel:

  • US: 25th Sept 1980

Goeddel’s claim is that Sugano’s earlier application does not comply with the written description and enablement requirement of 35 U.S.C. § 112 and would not function to produce mature hFIF. Sugano claims that a person skilled in the art (PHOSITA) could “envision” how to modify the precursor gene to obtain the mature hFIF.

Any mention of PHOSITA must start with the non-obviousness condition fulfillment for patentability.

Non-obviousness is often explained by using the reference of PHOSITA. A person having ordinary skill in the art is a legal fiction defined in the Patent Act of many jurisdictions. The PHOSITA is a test of “obviousness” which is one of the largest gray areas in patent law.

The US Patent Act defines obviousness as follows:

A patent may not be obtained though the invention … if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made. (35 U.S.C. § 103 (A))

KSR v. Teleflex described how obviousness should be determined:

“In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the patentee controls. What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under §103. One of the ways in which a patent’s subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent’s claims.”

In the Windsurfing case, the obviousness requirement was explained as follows. The test for obviousness postulated a person who was skilled in the field but not inventive and was invested with the common general knowledge available in the field at the priority date, being presented with the prior knowledge or prior use relied upon. The test is to ask whether the alleged inventive step would have been obvious to that person.

Clear guidelines exist for determination of obviousness and can be summarized as follows:

  1. Construe prior document as at the date of its publication
  2. Compare disclosure in each prior document separately with the disclosure in the patentee’s claim
  3. To ask whether on making the comparison the prior document discloses the same invention as that disclosed in the patentee’s claim.

The non-obviousness criterion asks whether the claimed invention would have been obvious to a person of ordinary skill in the art the time the claimed invention was made. The non-obviousness inquiry allows for a combination of prior-art references while the novelty requirement is based on a single prior-art document. The test for non-obviousness is not an objective one and hence this is a much litigated field. The test for non-obviousness brings to the forefront the PHOSITA – person skilled in the art. The reason the role of the PHOSITA becomes crucial where doctrine of equivalents is concerned is because of the knowledge regarding the interchangeability of the elements that give rise to the infringement.

Under the non-obviousness requirement, the question one asks is whether a person with ordinary skill in the art would have known to make the appropriate changes in the prior art so as to arrive at the invention in question. If the answer is yes, the invention is unpatentable. The interchangeability standard asks whether a person with ordinary skill in the art would have known that the element in the claim can be replaced by its equivalent. If the answer is yes, infringement exists because the differences between the accused and original invention are insubstantial.

Thus, both the non-obviousness requirement and the doctrine of equivalents, rely on the opinion of the PHOSITA as a deciding factor. The birth of PHOSITA occurs for the first time in Hotchkiss as “skill possessed by an ordinary mechanic.” The role gets more definitive in Graham v. Deere and attains its present form in KSR v. Teleflex.

Hotchkiss v. Greenwood

Hotchkiss was the owner of a patent for door knobs made out of porcelain and of all kinds of clay used in pottery. Greenwood infringed on their patent. Upon filing a suit for infringement, Greenwood’s defense was that Hotchkiss’ patent did not fulfill the requirement of non-obviousness as the material was in common use and no other skill or ingenuity was involved in the construction of the door knob.

The court condemned the patent holding that there was an absence of skill, novelty and ingenuity and that the improvement of using clay over other previously used material was not the work of an inventor but that of an ordinary mechanic.

“[U]nless more ingenuity and skill . . . were required . . . than were possessed by an ordinary mechanic acquainted with the business, there was an absence of that degree of skill and ingenuity which constitute essential elements of every invention. In other words, the improvement is the work of the skillful mechanic, not that of the inventor.”

The Hotchkiss test laid the cornerstone of the judicial evolution suggested by Jefferson and left to the courts by Congress. The language in the case, and in those which followed, gave birth to “invention” as a word of legal art signifying patentable inventions.

Graham v. Deere

Petitioners sued for infringement of a patent, consisting of a combination of old mechanical elements, for a device designed to absorb shock from plow shanks in rocky soil to prevent damage to the plow.

Petitioners claim that the small difference in flex effectively absorbs the tremendous forces of the shock of obstructions.

Court held that “person having ordinary skill in the prior art would immediately see that the thing to do was what Graham did.”

Holding that the patent did not fulfill the non-obviousness requirement the Court laid down that obviousness should be determined by looking at:

  1. the scope and content of the prior art;
  2. the level of ordinary skill in the art;
  3. the differences between the claimed invention and the prior art; and
  4. objective evidence of non-obviousness.

KSR v. Teleflex

Teleflex sued KSR for infringement of its patent for adjustable pedal assembly with electronic throttle control.

The court sought to resolve the question of non-obviousness with more consistency and has applied the TSM test.

If the inventive step or technique used to improve one’s device is recognizable by a person skilled in the art, the non-obviousness criterion is not fulfilled.

Thus PHOSITA plays a crucial role in determining non-obviousness of an invention. Extrapolating this legal fiction’s role into doctrine of equivalents, if a person with ordinary skill in the art could have known of the interchangeability of an ingredient not contained in the patent with one that was, infringement under doctrine of equivalents can be established.

The only difference in the role of PHOSITA between the two scenarios is the timing. The non-obviousness question is raised before the issuance of a patent while the question of interchangeability arises at the time of infringement.

Reverting back to the case on hand, BPAI misinterpreted the role of PHOSITA and the written description and enablement requirement. The question is not whether PHOSITA could envision the conversion from precursor form to mature form of hFIF or not. It was whether the written description accompanying the patent application can actually convey to PHOSITA that the applicant is in possession of the method of conversion from precursor to mature hFIF. Sugano’s Japanese application fails to describe the exact method of converting from precursor form to mature form of hFIF.

BPAI must not undermine the importance of precedents in construing the function of PHOSITA. Courts at various levels have at various times highlighted the non-obviousness requirement and PHOSITA’s function and how the two are to be determined. One would do well to heed these decisions.

Today’s post is by Guest Barista Shalini Menezes of ::O.bi:t.er: D:ic.t:um.

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Fellow bloggers J. Matt Buchanan (matt@bnip.com) and Stephen M. Nipper (steve@bnip.com) are joining forces to create a new law firm Buchanan Nipper LLC.

In 2008, Matt opened the doors to his new firm, Buchanan Intellectual Property Office LLC (BIPO). Steve has been with Dykas, Shaver & Nipper, LLP in Idaho.

The new firm is set to open October 1, 2010.

Best wishes Matt & Steve!

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The Licensing Executives Society is holding its Annual Meeting in Chicago at the Chicago Sheraton Hotel & Towers September 26-29. Themed ‘Deals, Deals and more Deals’ the meeting will focus on the critical role IP plays in today’s most successful business strategies and will explore ways to leverage IP to maximize deal-making and profitability. This is the premier meeting of the year for IP licensing and business development professionals.

Plenary Highlights

The SuperFreakonomics of IP Licensing – Do Patents Slow Innovation? - Steven Levitt, co-author of the New York Times best-seller Freakonomics: A Rogue Economist Explores the Hidden Side of Everything and its recent follow-up SuperFreakonomics, will present a keynote address on the unintended impact of the patent system on innovation. He will also discuss his groundbreaking research on the effects of incentives on economics and market behavior as they relate to innovation. A book signing will follow Mr. Levitt’s presentation.  You can buy SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance by Steven D. Levitt and Stephen J. Dubner via Amazon.

Is the U.S. Patent System Under Siege: Congress, the PTO, the FTC and the Supreme Court -The Honorable Judge Paul Michel, retired Chief Judge of the United States Court of Appeals for the Federal Circuit will look at the many challenges facing the U.S. patent system including the reform legislation currently pending in Congress, the USPTO’s efforts to reduce backlogs and improve the quality of issued patents, and increased scrutiny by the Supreme Court and FTC.

IP as a National Responsibility: A Global Outlook for Strategies, Policies and Laws — Economist and Former Vice Presidential Candidate Pat Choate, will join John Whealan, Associate Dean of Intellectual Property Law at George Washington University Law School and Suzanne Michel, Deputy Director of FTC’s Office of Policy Planning to discuss how the United States, Europe, Asia and developing countries might leverage IP to secure future wealth and what this could mean for commercial collaboration across national boundaries.

IP100 Recap: IP Hot Topics 2010 — Over the course of 2010, LES has hosted innovative IP100 forums comprised of high-level IP leaders who have analyzed several hot IP topics. This panel will revisit the topics, review previous findings and discuss what we’ve learned from the world-class IP100 panels about best practices in licensing. Key ‘take-aways’ will be included in a white paper available after the meeting for attendees.

Register now here and save!  Rates increase $100 on September 1st.

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The Patent Buddy’s blog is looking for nominations for America’s Top Patent Prosecutors.  Do you have what it takes?

Who is a Top Prosecutor?

A Top Patent Prosecutor is any patent attorney who has achieved a reputation among their peers for high quality work product and counseling skills in patent preparation and prosecution. In order to receive recognition, you must be a registered patent attorney who is actively engaged in the preparation and prosecution of U.S. Patent applications. No more than ten percent of all patent prosecution attorneys will be awarded this recognition.

What does it take to become a Top Prosecutor?

Patent Buddy believes that very few of America’s best patent prosecutors get the recognition they deserve. In order to provide recognition to these attorneys Patent Buddy has created the Top Prosecutor’s recognition program. To qualify for this recognition, a registered patent attorney must have obtained a high degree of accomplishment in patent prosecution.

Patent Buddy Nomination Process

How does the nomination process work? Any registered patent attorney with five or more years of experience can nominate a Top Prosecutor.  Just simply fill out an on-line ballot to nominate up to ten registered patent attorneys either within or outside your organization, either in private or corporate practice, and that you feel should be recognized for their distinguished abilities and achievements. You may designate any one of a variety different technology or legal specialties for your nominees.

Nominations are being received through September 15th, 2010.

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