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Intellectual Property Cases to Watch

By Benjamin Bergan

October 2010

Omega v. Costco Wholesale Corporation
The U.S. Supreme Court has granted certiorari in the upcoming October 2010 term to review the lower courts’ decisions in Omega. At issue in the case is whether the “first sale doctrine” of copyright law applies to copyrighted works manufactured and sold abroad with the copyright owner’s permission, then imported and sold in the United States without the permission of the copyright owner. Omega manufactures watches with its copyrighted logo engraved on them in Switzerland and then sells them globally. Omega authorized an initial foreign sale to certain distributors, where the watches were then sold through several third parties to Costco. In this case, Costco sold the watches in California without Omega ever authorizing their importation into the United States. Costco argues that Omega’s right to exclusive distribution is subject to the first sale doctrine and that, therefore, Omega cannot allege infringement after authorizing the initial sale. The federal district court, finding no infringement under the first sale doctrine, granted Costco’s motion for summary judgment. Most recently, the U.S. Court of Appeals, Ninth Circuit, reversed the district court and stated that the first sale doctrine does not apply to copyrighted works manufactured and sold abroad, thereby allowing Costco to be sued for infringement. The Supreme Court’s decision in this case will have significant implications for both copyrighted and patented products manufactured and sold abroad, then resold in the U.S. at a discounted price.

Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co.
In the Federal Circuit case Ariad, research scientist discovered and patented a method of artificially interfering with certain gene expressions that regulate the body’s immune system response to infection, so that harmful symptoms of certain diseases could be reduced. Ariad, the assignee of the ’516 patent, brought suit against Eli Lilly and Co. for infringement, and Eli countersued for invalidity. Lilly challenged the validity of the ’516 patent on the grounds that it failed to satisfy the written description requirement found in Section 112 of the U.S. Patent Act. The U.S. District Court for the District of Massachusetts rendered a jury verdict in favor of Ariad, finding infringement by Lilly. The District Court denied Lilly’s motion for judgment as a matter of law (JMOL). The Federal Circuit Court reversed the District Court’s denial of Lilly’s JMOL and found the ’516 patent invalid for failing to satisfy the written description requirement.

Ariad petitioned for a rehearing en banc, arguing that Section 112 has no written description requirement separate from enablement, that a patent applicant only need to describe the invention so one with ordinary skill in the art could make and use it. The Federal Circuit Court again ruled in favor of Lilly, holding that the specifications in a patent must describe the invention and how one can make or use the invention. Thus, the court reaffirmed the current statutory interpretation of Section 112 as requiring a separate written description and enablement requirement. The written description requirement of Section 112 shall remain in effect, unless the U.S. Supreme Court grants review and holds to the contrary.

Prometheus Labs. v. Mayo Collaborative Services
On September 1, the Federal Circuit requested the parties of Prometheus to file briefs addressing the effect of U.S. Supreme Courts decision on business method patents in Bilski v. Kappos on the biotech industry. Prometheus sued the Mayo Clinic for infringement of patents that described methods for identifying metabolites of thiopurine, a drug used to treat various gastrointestinal disorders. The Supreme Court’s Decision in Bilski held that the machine transformation test is not the only test for determining the validity of patentable subject matter in a business method patent, but did not specify what other tests should be used. Therefore, the Federal Circuit court, in determining whether subject matter of the ’623 and ’302 biotech method patents are patentable, the court will likely develop new tests to determine patent eligibility. The Federal Circuit Court’s decision should provide the guidance to the biotech industry that the U.S. Supreme Court did not.

New Bill Strives to Protect Fashion Designs

By Jacob Berger

September 2010

On August 5, Senator Charles Schumer, D-NY, sponsored the “Innovative Design Protection and Piracy Prevention Act. The bill, S.3728, seeks to provide copyright protection to fashion designs and designs for vessel hulls, which include items such as purses and duffle bags. The bill seeks to amend title 17 of the U.S. code by providing protection for three years on fashion designs and ten years on vessel hull designs.

If passed, this legislation would extend intellectual property law into a field that has previously lied beyond the scope of protection. Although the legislation would mark quite a change, the bill itself is nothing new. In 2009, a similar bill was introduced in the House by William Delahunt, D-MA; however, it never gained much momentum or made it out of subcommittee.

Although Senator Schumer has garnered some attention for the bill, not all of the attention has been positive. There has been much debate as to whether copyright protection for fashion designs is really necessary. An article was recently published in the Washington Post presenting an interesting counterargument to the Bill. Although the article fails to distinguish between the protection of patents and copyrights, and even seems to use the terms interchangeably, it presents a solid argument for why this protection is not needed.

The discussion centers on whether this protection will actually spur or hinder continued innovation in fashion design. The major issue arises when larger companies or manufacturers copy designs from smaller companies. In this instance, these smaller companies can no longer compete and end up going out of business. This protection would provide a three-year window where the designs of a smaller company could not be copied. For larger more prestigious companies, name recognition may play just as important a role as design and, therefore, the protection may not actually help them.

Either way, this is a key area of debate and will continue to be so as the bill moves through the legislative process. Intellectual property lawyers should follow the course of these events as passage of the bill could create a new area of clientele that require legal assistance in obtaining protection for their fashion designs.

Business Method Patents Still Viable Post-Bilski

By John Amandolare

September 2010

The U.S. Supreme Court’s ruling in Bilski et al v. Kappos last June considered patent eligibility qualifications under § 101 of the Patent Act, and the results have drawn mixed opinions. Justice Kennedy avoided penning a bright-line rule, much to the relief of those seeking protection for business method patents, and upheld the lower court’s decision that the claim offered by Bilski was abstract and therefore unpatentable. Followers in the IP industry wondered if the Court would use the case to clarify § 101 and the usage of business method patents by restricting its scope. Instead, the Court cited prior decisions to reach a conclusion, upholding the “machine-or-transformation” test as one of the ways in which an inventor can secure a patent.

The Court found that, under Patent Act §101, an invention seeking patent protection as a ‘process’ must produce a “useful, concrete, and tangible result and that the standard was not met.” The “machine-or-transformation” test previously employed by the Federal Circuit was upheld as one way to determine whether a claimed method was patentable or not. Justice Stevens’ long concurrence offered a much narrower interpretation of the standard – that business methods were categorically unpatentable. Major patent holders, including IBM, Google and Microsoft, all of whom wanted clarity but did not necessarily share views on how best to handle business methods, filed amicus briefs. Some followers of the case felt that IBM, a world leader in patents annually, got what it had hoped for in the court’s reasoned ‘middle ground’.

For now, business method patents are safe, and the petitioners in Bilski are rewording their patent application and hoping for a better outcome the second time around. The Court’s opinion will likely lead to more disagreement over what constitutes a business method, however, and the only certain result is increased legal risks that must be confronted by companies seeking protection for their inventions.

The PTO has issued an “Interim Guidance for Determining Subject Matter Eligibility for Process Claims in View of Bilski v. Kappos” in the July 27 Federal Register (75 Fed. Reg. 43,922. Any member of the public may submit written comments on the Interim Bilski Guidance.

White House Releases Historic Plan to Enforce IPR

By Amy Kim

September 2010

On June 22, Vice President Joe Biden and US Intellectual Property Enforcement Coordinator Victoria Espinel announced the creation of the 2010 Joint Strategic Plan on Intellectual Property Enforcement to bring together the knowledge and expertise of all the federal agencies responsible for enforcing intellectual property rights. As the level of intellectual property theft increases, the government’s plan indicates a commitment to cracking down on domestic and international infringement of software and other copyrighted products.

Every year, companies lose millions to intellectual property theft; it is estimated that the US software industry, for example, loses more than $50 billion a year. The Business Software Alliance (BSA) President and CEO, Robert Holleyman, stated that “Since 60 cents of every dollar spent on software globally goes to American companies, illegal use of software products impedes US job creation and economic growth . . . Stealing it gives companies in China and other countries an unfair cost advantage over their American counterparts that pay for software tools as they should.” So, iIn order to encourage private investments in research and development, the government has taken the first step by providing a coordinated inter-agency effort to combat intellectual property theft.

The plan consists of six categories comprised of recommendations for improving the current practices and policies:

(1) Leading by example. The plan recommends the establishment of a government-wide group to study methods of reducing the risk of purchasing or using infringing products within the US government. By doing so, it hopes to lead others to follow its example and institute policies against the use of products that infringe on IP rights. Another initiative within this category includes the review of current policies and procedures to ensure that contractors only use legal software for their businesses.

(2) Increasing transparency. By increasing transparency in the development of the enforcement policy, information sharing, and reporting of law enforcement activities, the government hopes to provide effective enforcement against IP violations.

(3) Ensuring efficiency and coordination. The three goals within this category include strengthening the coordination of law enforcement efforts at all levels of government (federal, state, local); organizing the efforts of personnel stationed overseas; and providing international training and capacity building efforts.

(4) Enforcing IP rights internationally. To protect US intellectual property rights holders, the government plans to strengthen enforcement by pursuing a number of goals. The first is to enhance foreign law enforcement cooperation and target foreign-based and foreign-controlled websites and Web services that infringe on American IP rights.

(5) Securing a supply chain. Due to the rise in counterfeit medical and pharmaceutical products, the plan outlines initiatives that would result in more controlled processes that limit the chances of counterfeit products entering the stream of commerce. For example, the plan mandates the use of electronic tracking and tracing of medical and pharmaceutical products. It also targets and penalizes exporters of counterfeit goods.

(6) Building a data-driven government. The improvement of data and information collected from IP-related activities will allow the government to evaluate domestic and foreign laws, as well as enforcement activities, in order to allow an open and fair environment for American IP right holders. The plan mandates a review of existing IP laws to determine if any legislative changes must be made.

Going forward, a new interagency committee on IP enforcement will create four working groups; they will be focused on government procurement, counterfeit pharmaceutical drugs, international capacity building and training, and the economic impact of intellectual property-intensive industries. As the government works to implement the plan, it will continue to speak with, and receive feedback from, the public.

WIPO Prepares for Uncertain Future

By Amy Kim

September 2010

At the start of the summer, a Consultation paper was presented to the Member States of the World Intellectual Property Organization (WIPO) for a Medium-Term Strategic Plan. This was the first step of a consultative process in which Member States are given an opportunity to comment on the proposal. Comments were taken, and the revised strategic plan will be submitted to WIPO General Assemblies for final review and adoption on September 20-29. The paper proposes seven goals that WIPO must meet in order to be in an advantageous position for the next six years. These include:

(1) Balanced evolution of the international normative framework for IP. This initiative seeks full engagement of Member States to develop agreements on “legislative and practical measures in areas of common interest to adjust the existing international IP framework.”

(2) Provision of premier global IP services. WIPO plans on improving its global systems and alternative dispute resolution services to become systems of first choice for users. By providing cost-effective services, WIPO hopes to keep users by adding value to their systems.

(3) Facilitation of the use of IP for development. By assisting developing countries with increased use of IP systems, WIPO hopes to contribute to their social, cultural and economic development.

(4) Coordination and development of global IP infrastructure. To enhance international cooperation in infrastructure and data flow throughout the IP system, WIPO plans to develop a global IP database platform. This would strengthen the infrastructure of developing countries as well as benefit developed countries by having a single source for IP information.

(5) World reference source for IP information and analysis. By creating a single reference source, WIPO could provide stakeholders with accurate and current IP content in specific industries to help them analyze their response to economic stimuli.

(6) International cooperation on building respect for IP. Piracy and counterfeiting are constant problems that plague IP rights holders. An international initiative to respect IP laws would reduce the level of illegal IP rights violations, and promote the passing of new IP laws in countries that lack strict regulations.

(7) Addressing IP in relation to global policy issues. By working in partnership with agencies and processes within the United Nations system, WIPO can contribute its unique IP expertise to international policy debates.

Elena Kagan's Background in IP

By Erin Lawless

June 2010

On May 9, President Obama chose Elena Kagan as his nominee to succeed Supreme Court Justice John Paul Stevens. If and when she is confirmed by the Senate, Kagan will be the first justice in about forty years without prior experience as a judge (In 1972, the late Judge Rehnquist was confirmed to the Supreme Court without any prior experience on the bench).

After graduating from Princeton, Oxford and Harvard Law School, Kagan served in judicial clerkships for the Court of Appeals and then the Supreme Court under Justice Thurgood Marshal. Next, Kagan became a professor at the University of Chicago Law School until she was appointed Associate White House Counsel and later policy advisor to President Clinton. When Clinton left office, Kagan became a professor at Harvard Law School and was subsequently named its Dean. In early 2009, Kagan was appointed Solicitor General by President Obama and has served there since. If confirmed, Kagan will likely begin her Supreme Court service in late fall of 2010.

As with any Supreme Court nominee, there has been much speculation regarding how Kagan would rule on particular issues if confirmed. One of the challenges with Kagan is that, since she has not served as a judge, there are no previous case law decisions to use as a baseline for how she might rule in the future. Furthermore, her career is heavy with service to the government—which again cloaks her own views on particular subjects where she is representing the interests of the government. However, one can examine her academic career and publications to gain insight into some of her personal philosophies and thereby speculate on how she might rule as a Supreme Court Justice.

In her career, Kagan has a reputation as a consensus builder, and it will be interesting to see if this follows her to the Supreme Court. Kagan’s friend Jeffery Toobin commented on her time as editor of the Harvard Law Review, “At the time, the law school was a politically charged and divided place. She navigated the factions with ease, and won the respect of everyone.” Also, as Harvard’s Dean, she was noted to bring faculty members together across ideological lines to create a more cohesive environment.

Certain important decisions she has made might hint at her legal perspectives. For example, there has been speculation that Kagan’s decision as Dean of Harvard Law School to recruit Lawrence Lessig and others who take a strongly liberal position on fair use in copyright disputes might point to Kagan’s own beliefs on the subject. Another key decision Kagan made while Dean was to be lenient on two law professors who had unintentionally committed plagiarism. While students who commit such infractions are typically asked to leave the school, Kagan did not ask the professors to leave. She was widely criticized for this decision.

Another key to identifying her judicial philosophy lies in Kagan’s academic writings. While at Chicago, Kagan published three articles: “Regulation of Hate Speech and Pornography After R.A.V.,” “Private Speech, Public Purpose: The Role of Governmental Motive in First Amendment Doctrine,” and “Confirmation Messes, Old and New.” While at Harvard, Kagan published one article: “Presidential Administration.” In one of these articles, Kagan argued that the government has the right, even considering the First Amendment, to restrict free speech when the government believes the speech is harmful, so long as the restriction is done with good intentions.

Finally, it would be remiss not to mention at least a few of Kagan’s IP-related perspectives as Solicitor General, even if such perspectives are not Kagan’s personal beliefs but rather those she is representing in service to the government. One of her perspectives in particular that has been criticized in the IP community includes Kagan’s work on the big Cablevision case. The Supreme Court asked Kagan to weigh in on the case in her official capacity as Solicitor General. The Cablevision case was a dispute regarding the remote storage of television programs on computer servers rather than hard-top boxes. This practice worried TV studios and producers who felt that such storage was tantamount to copyright infringement. The 2nd Circuit overturned a lower court ruling and said that the technology would not violate copyright. In Kagan’s brief to the Supreme Court, she argued that the Court should not take the case as the storage practice was clearly fair use.

Another highly contested IP case that Kagan worked on as Solicitor General is Bilski v. Kappos, which involved a dispute about what qualifies as patentable subject matter. As Solicitor General, Kagan represented the government’s side of the issue and defended the PTO’s position in the case. In this role, Kagan implored the court not to define a broad patentability rule that would extend to business methods generally or to other technologies, such as medical diagnostics. However, again, it is important to remember that Kagan was representing the government’s opinions here, so this might not be the best way to speculate on how Kagan would rule.

Interestingly, critics tend to agree that the briefs Kagan has filed on the government’s behalf in key IP disputes have shown an attempt to reach a middle ground between owners and challengers and to encourage courts to limit holdings to the facts of each case. Again, we see Kagan’s propensity to build consensus and find a sufficient commonality between opposing sides. Perhaps this trait will follow her to the highest court, but for now, it’s all speculation. Hearings are scheduled to begin June 28th.

Panel Decries Ruling on Gene Patents

By Erin Lawless

June 2010

It was late March when the district court found that the genes associated with breast cancer were not patentable subject matter under the Patent Act, since the genes were “products of nature”; and this May, at the BIO 2010 Conference in Chicago, panelists had plenty of criticism about the finding.

At this year’s annual conference of the Biotechnology Industry Organization, during the panel entitled “Patenting Genes: In Search of Calmer Waters”, panelists discussed the recent ruling in the district court case Myriad Genetics. The panel began with a headcount of how many in attendance agreed with the decision. The count was zero.

Panelists criticized the decision based on four main issues—the lack of a clear standard for what is patentable, standing, the court singling out the biotech industry in this instance, and general disagreement about what qualifies as “injurious to trade”.

On the issue of establishing a clear standard, one panelist said, “A troublesome question for me is the lack of legal standard for making this decision. In an obviousness analysis, there are some neutral steps that I can apply. But using Section 101 to say that the subject matter is unpatentable is so blunt a tool that there is no neutral step to allow me to say that there is a line here that must be crossed and that this particular patent claim crosses it or does not.” He concluded, “This approach is subjective, and, to be frank, it's politics.”

In regard to the issue of standing, panelist John Whealan, Associate Dean for Intellectual Property Law Studies at George Washington University Law School, pointed out that there was never a trial in this case because there was never a claim of infringement. Rather, the case hinged on the alleged constitutionality of patenting genetic materials. As Whealan put it, “The plaintiffs simply did not like the patents at issue, and there is ample case law that states that patents cannot be challenged in this way.” Needless to say, Whealan disagreed with the court’s decision not to dismiss the case based on standing.

Another issue cited at the conference was the fact that the Court has laid out the exceptions to patentability without much detail about what they are—which led to questions regarding why gene technology in particular was being singled out as unpatentable. Whealan asked, “How is deciding whether you have a disease or a propensity for a disease any less important than the drug that will treat the disease, which can be patented? Don't we want people to find out if they are sick? When the Supreme Court exempted products of nature from patentability, I don't think that's what they had in mind.”

Interestingly, panelists also took issue with whether or not patenting genes would be injurious to trade. A number of panelists cited studies that found no chilling effect on genetic technology advancements where such materials have been patented. However, this was not an issue in the Myriad case. Also, as one panelist pointed out, the audience at such a biotechnology industry event is predisposed towards viewing patents as a positive rather than a negative force in the market.

Espinel Heads Anti-Infringement Reform

By John Amandolare

June 2010

Victoria Espinel, the U.S. Intellectual Property Enforcement Coordinator (IPEC), is directing the White House’s efforts to curb patent infringement and the rise of counterfeit goods in America – both of which pose a threat to the global competitiveness of the United States, in the view of President Obama. Espinel has been tasked with creating the first-ever IP strategy crafted by the federal government, with the aim of improving coordination between a host of federal agencies currently responsible for protecting America’s intellectual property. After months of outreach, her office is preparing to launch the comprehensive strategy this summer.

Espinel has been in communication with industries comprising the spectrum of America’s economy, including publishers, movie studios, music companies, small businesses as well as airplane, auto, biotech and software manufacturers. CEOs from Intel, eBay, Google and Pandora have offered her their input. IP infringement affects all of them, and any reform measures adopted will have a major impact on their business models – Espinel’s office has received hundreds of comments and suggestions for strategies to adopt in the new plan.

Academics, online auctioneers, and consumer rights organizations are just some of those who fear that an overhaul of IP enforcement strategy might damage technological innovators and those who adapt to existing material on a smaller and more individual level. Under stricter rules, the qualifications for violating another’s IP rights can be so broad that individuals who record or photograph live events could be in violation. Concerned commenters are stressing that a distinction should be made between those in willful violation of intellectual property for commercial gain, and those who violate for creative means.

Those in favor note that stricter enforcement will not just protect large music recording and film companies who lose revenue from pirated material, but also small companies whose existence relies on licensing agreements. Once their IP rights are violated and their material is distributed without their consent, the value of their product diminishes rapidly. IPEC hopes that providing a single framework for guidance will ensure that the Federal Communication Commission, the Department of Justice and the U.S. Trade Representative, to name a few, work together to allow for a healthier, more competitive IP economy.

ABA and SJC Back Patent Reform

By Amy Kim and John Amandolare

May 2010

The American Bar Association (ABA) and the Senate Judiciary Committee have reaffirmed their support for the Patent Reform Act of 2010. The Act is the third attempt at a major overhaul of the US patent system since the 1950s. Past proposals have failed due to lack of support for various controversial sections included in the bill. This new bill, however, makes considerable steps to find common ground between various opponents. It ultimately aims to increase the quality and efficiency of US patent laws while making them more compatible with international laws.

The major changes being proposed are expected to update the US patent system so that it reflects the economic changes that have arisen since its inception. One of the key amendments to the current bill is the Managers’ Amendment, which proposes significant changes, such as converting the current system to a first-inventor-to-file system. This allows persons seeking IP protection to gain shelter more quickly by simplifying the application system, reducing costs, and improving the competitiveness of American inventors that are seeking global protection. Another noted change is the move to improve patent quality. By allowing third parties to comment on pending patent applications, the USPTO greatly enhances it ability to remove patents that should not have been issued. Within the legal system, a change is proposed that will give the courts a more procedural gate-keeping role. Judges will assess the legal basis to determine the specific damages, and will consider jury instructions sought by the parties. Doing so will improve the consistency, uniformity and fairness of how the courts administer patent damages. This amendment to the bill is being praised as a much-needed boost for innovation in the United States.

In late March, the ABA wrote the Senate Judiciary Committee to express its support for the bill. It stated that a bipartisan compromise on the contents of the bill had been achieved, therefore resulting in “numerous improvements in US patent laws.” The ABA listed some of the improvements which ranged from the inclusion of “enhanced patent quality through procedures for third-party pre-issuance submission of prior art, improved efficiencies by utilizing an ABA-supported first-inventor-to-file system, improved patent quality by providing a fair and cost-effective post-grant review procedure, and clarification of the gate-keeping responsibilities of district courts in determining damages.” Although Don Martens, Chair of the ABA’s Section of Intellectual Property Law, acknowledged that the organization disagreed with some of the contents of the bill, he continued by stating that it was the “best possible” bill that could be created.

Senate Judiciary Chairman Patrick Leahy (D-VT) has come to an agreement with the Committee’s Ranking Republican, Jeff Session (R-AL), on the language of the amendment. There is growing support for the amendment passing this year in the Judiciary Committee, and moving to the Senate floor very soon thereafter. Once it gets to the floor, many expect it to become law quickly because of its “hot line” status. With this designation, the amendment to the Reform Act can be streamlined to passage without the standard floor debate. If any Senate members have concerns about the language, they can contact Senate Majority Leader Harry Reid to discuss them directly. The “hot line” is a procedural step enacted with the support of the Majority Leader that can dramatically speed up the process of enacting law. Senator Leahy prefers to introduce the patent bill before the Senate finishes action on financial regulatory legislation and food safety legislation. A Judiciary spokeswoman stated, “Senator Leahy has sought Senate consideration of the patent reform for some time and will continue to work with the majority leader to identify floor time for it.”

Report to UN Weighs Human Rights Against IPR

By Erin Lawless

May 2010

The United Nations Human Rights Council recently received a report claiming that the United States is violating the human rights of the world’s poor. More specifically, the report claims that by promoting international intellectual property and pharmaceutical regulations that restrict access to affordable medicines, the United States is violating human rights. The report is part of a UN initiative to review human rights conditions in member states.

The Human Rights Council is an inter-governmental body within the United Nations that is responsible for strengthening the protection and promotion of human rights around the globe. Currently, 47 member states participate in the Human Rights Council.

Professor Sean Flynn of American University Washington College of Law drafted the report on behalf of several health advocacy groups participating in the school’s Program on Information Justice and Intellectual Property. Flynn is the Associate Director of the program, the ultimate goal of which is to assist the U.N. in preparing the first-ever “Universal Periodic Review” to detail the human rights records of U.N. member states. As part of the program, the Human Rights Council seeks to collect comments from universities, research institutions, and non-governmental organizations as part of a streamlined process to assess compliance with human rights obligations. Guidelines for these obligations are drawn from the U.N. Charter, the Universal Declaration of Human Rights, human rights treaties ratified by each member country, each county’s voluntary commitments, and international law.

In particular, Flynn’s report took issue with the United States’ use of trade agreements, foreign aid, technical assistance, and diplomatic pressure to promote intellectual property rights (IPR) at the expense of human rights. Specifically, the report cited U.S. sanctions on Guatemala, India and Thailand that have caused affordable generic drugs to be taken off the market and have led to price increases for medicines of over 800%. The report stated that, “Intellectual property is a prime determinate of access to needed medicines because it is a form of social regulation that, by design, raises prices through the extension of monopoly rights.” Professor Flynn continued, in the press release, stating “These are clear and flagrant violations of human rights for which the U.S. should be called to account.”

This is no simple debate. On the one hand, those who advocate the sharing of innovations claim that patents occasionally prevent helpful new technologies from being used by those who need them most -- the impoverished and the needy. On the other hand, proponents of patent protection argue that innovation is stimulated by the possibility of profit, and that scientific progress would be slowed if not for the involvement of investors. In response to this report, the U.S. government will submit to the U.N. its own report evaluating its own human rights record. This report will be released in November of 2010.

Likely Supreme Court Justice Picks

By Erin Lawless

May 2010 

While President Obama and White House officials contemplate candidates to replace Justice John Paul Stevens as our newest Supreme Court Justice, the media speculates and weighs the likely nominees. Among pundits and newscasters, the general consensus is that the next Supreme will be one of the following.

Merrick Garland
Judge Garland is currently considered a moderate on the U.S. Court of Appeals for the District of Columbia Circuit. He studied law at Harvard Law School and has worked in the Justice Department under President Carter, H.W. Bush and Clinton.

Jennifer Granholm
Currently a second-term governor in Michigan, Ms. Granholm studied law at Harvard Law School and was Michigan’s first female attorney general.

Elena Kagan
Ms. Kagan is currently a U.S. solicitor general who argues cases in front of the Supreme Court. She studied law at Harvard Law School and later served there as a professor and dean. Ms. Kagan has also held positions as Associate Counsel to the president at the White House and Deputy Assistant to the President for domestic policy. She was a finalist when Sonia Sotomayor was appointed to the Supreme Court in 2009.

Martha Minow
Ms. Minow is currently Dean of Harvard Law School. She also serves on the bipartisan board of Legal Services Corporation, where she was appointed by President Obama to help provide legal help to low-income Americans. She studied law at Yale Law School.

Carlos Moreno
Judge Moreno is currently the lone Democrat on the California Supreme Court. While serving, he opposed Proposition 8, the voter-approved referendum to ban gay marriage. He studied law at Stanford Law School.

Janet Napolitano
Ms. Napolitano is currently the Secretary of the Department of Homeland Security. She studied law at the University of Virginia School of Law and has served as the governor of Arizona.

Leah Ward Sears
Ms. Sears is currently an Atlanta, Georgia lawyer. She studied law at the Emory University School of Law and the University of Virginia School of Law. Ms. Sears has previously served as Chief Justice of the Georgia Supreme Court, where she was the first female African American Chief Justice.

Sidney Thomas
Judge Thomas is currently considered a liberal on the U.S. Court of Appeals for the 9th Circuit. He studied law at the University of Montana School of Law and was a professor at Rocky Mountain College.

Ann Claire Williams
Judge Williams is currently considered a moderate on the 7th U.S. Circuit Court of appeals, which is based in Chicago, Illinois. She studied law at the University of Notre Dame and has previously worked as a public school teacher in Detroit, Michigan.

Diane Wood
Judge Wood is currently considered a consensus builder on the 7th U.S. Circuit Court of Appeals in Chicago, Illinois. She studied law at the University of Texas at Austin. Judge Wood previously served as Deputy Assistant General in the antitrust division of the U.S. Department of Justice. She was a finalist when Sonia Sotomayor was appointed to the Supreme Court in 2009.

Future Uncertain for Gene Patents after Ruling

By John Amandolare

April 2010

A ruling in New York’s Southern District Federal Court on March 29 has invalidated 7 patents related to genes being studied in cancer research, and the potential repercussions, if upheld upon appeal, could cause thousands of patented human genes to be invalidated. Judge Robert Sweet of the U.S. District Court in Manhattan issued a 152-page decision finding that the genes patented by Myriad Genetics and the University of Utah’s Research Foundation were improperly distinguished from DNA as it exists in nature, despite their being isolated from the human body.

The Association for Molecular Pathology, along with the ACLU and other supporters, hope that the decision will open up gene research and lead to fairer competition and access to the preventative care made possible through gene analysis. Myriad Genetics was charging over $3,000 for a test that searched for certain gene mutations, which are indicators of a higher likelihood of forming certain cancers. If upheld, Judge Sweet’s decision will likely force Myriad to decrease the price of the test as they begin to face stiffer competition as companies gain access to their once-patented genes. Invalidating the patents, the Plaintiffs argued, would end Myriad’s monopoly over the genes used to test for breast and ovarian cancer.

Following the decision, fears quickly arose from Silicon Valley venture capitalists that
patents protecting inventors would no longer deflect the costs borne by genetic research. Without patent protection, they believe, the only groups able to continue costly research would be universities funded by the federal government, which could lead to government control of the scope and direction of future gene research.

In the wake of Judge Sweet’s decision, the biotechnology industry is facing very serious short- and long-term impacts. If upheld, thousands of gene patents could be invalidated and research conducted by biotech firms could become profitless. Myriad has announced that it will appeal, but until the dispute is resolved, business will continue as usual for biotech companies conducting gene research and using patents to secure their findings.

Patent Act’s Written Description Confirmed

By Amy Kim

April 2010

On March 22, The U.S. Court of Appeals for the Federal Circuit issued its en banc decision regarding Ariad Pharmaceutical’s (“Ariad”) patent infringement case against Eli Lilly & Co. (“Lilly”), and although the decision followed current patent case law, it provided patent applicants and defendants of infringement suits with a more detailed understanding of the Patent Act’s written description requirement.

At the trial, the jury determined that Lilly infringed on Ariad’s patent. Lilly then filed a motion for judgment as a matter of law (JMOL), which was denied by the district court. The case was appealed to the Federal Circuit, which reversed the district court’s decision on the JMOL but held that the claims were invalid due to a lack of a written description on the patent application.

The en banc panel discussed the two issues presented for the rehearing: (1) whether the Act contained a written description requirement separate from an enablement requirement; and (2) the scope and purpose of the separate written description requirement as set forth in the statute. The panel affirmed the Federal Circuit’s holding that the written requirement is separate from the enablement requirement, and clarified the standard by stating that the description must “enable a person of ordinary skill to make and use the invention.” The degree of specificity needed in order to satisfy the requirement on the patent application depends on the nature and scope of the claims, as well as the complexity and predictability of the technology.

Legal analysts predict that this decision will likely impact researchers in the biotechnology industry. According to past case law, the Federal Circuit has historically demanded more detailed written descriptions in patent applications submitted for “unpredictable” technologies like biotechnology and chemical patents than for “predictable” technology like mechanical, electrical, or software technology. Researchers in academic or research organizations will have to conduct additional studies to meet the level of detail required for this description. Critics of the opinion are concerned that this decision may stifle the progress of biotechnology research.

In response to Ariad’s argument that the requirement would prevent universities from patenting the results of basic scientific research, the court refused to be swayed. The Court determined that “patent law has always been directed to the ‘useful arts’” but “[m]uch university research relates to basic research, including research into scientific principles and mechanisms of action.” It reiterated that patent protection is granted for practical applications, not basic research. The decision resolves a fundamental question about the basic requirements for a valid patent and confirms previous case law regarding the separate written description requirement. It maintained the long-standing doctrine within patent law that “[p]atents are not awarded for academic theories, no matter how groundbreaking or necessary to the later patentable inventions of others.”

US Patent Reform Act of 2010

By Erin Lawless

April 2010

The Patent Reform Act of 2010 has arrived – albeit in the form of an Amendment to S. 515 – with an estimated cost of about $3 million. Currently, critics agree that the Act seems to establish a simpler, more transparent system to patent law; but what remains unclear is how the Act will pan out. The following is an outline of the proposed reforms.

Administrative Post-grant Review of Patents
The new system will provide both post-grant review and reexamination proceedings, to increase the probability that only valid patents survive. Both procedures will contain safeguards to prevent the harassment of patent owners, and Administrative Law Judges will handle the procedures as opposed to the current patent examiners. These higher thresholds will minimize the initiation of unwarranted proceedings, thus decreasing the patent backlog.

Best Mode
The current patent system requires the applicant to “set forth the best mode contemplated by the inventor of carrying out his invention.” Failure to comply with this requirement can render an otherwise good patent claim invalid or unenforceable; however, this requirement was only serving as a costly weapon in litigation. Therefore, the Act eliminates this requirement as it provided the public no real benefit.

The Act installs a gatekeeper to ensure that courts and juries consider only damages that are actionable at law and supported by substantial evidence. Thus, patentees will more likely receive appropriate compensatory damages for the unauthorized use of their patented inventions, but it is similarly more likely that runaway jury awards will also not be issues.

Enhanced Patent Quality
The PTO will strengthen patents by allowing public participation and strengthening administrative procedures for post-grant review.

It is hoped that adopting a first-inventor-to-file system will make patent protection easier and less expensive to get. In turn, this change aims to stimulate investment in new technologies. Currently, inventors must prove they were not only the first to file, but also the first to invent. Proving the latter can be costly. Studies show that the current system can be most difficult for independent inventors. The new system will make it easier for such inventors to obtain rights over their inventions – so long as they are the first to file. As this new method is more akin to international systems, this is likely to help American inventors export their inventions in a more timely and cost-effective way.

Inequitable Conduct
The Act will allow patent owners to request supplemental examination prior to litigation where there is an allegation of misconduct. Supplemental examination will not allow anyone in the process to avoid sanctions if violations exist, but is meant to serve as an opportunity for reevaluation where the costs of litigation may be avoided.

Litigation Reforms
Litigation reforms were some of the most controversial areas of the Act because only some of the changes were recommended by the NAS, while others were urged by various special interest groups; however, the Senate Judiciary Committee accommodated the developments of the reforms – and all were approved for the Act.

Patent Fee Setting Authority and Ending Diversion
Due to the economic downturn, the PTO is experiencing a significant reduction in income associated with fees generated by patent applications. Currently, the PTO cannot cover the cost of examining and granting patents from filing fees because a portion of the fees collected must go to the US Treasury. The reform will allow the PTO to increase its fee collection and reevaluate the portion of the fee retained by the PTO, but the Act does not address the issue of past fees lost. Some critics believe that an amendment will address this issue later.

Pilot Program for District Courts
The Act will create a pilot program to help train judicial experts in patent cases to reduce the rate of reversal in patent cases and improve the efficiency of courts in handling such cases.

Pre-grant Submission of Prior Art
This new procedure of pre-grant submission of prior art will help ensure that all possible information is considered in a timely fashion. By increasing reliability in the first round of review, the need to clean up procedures via post-grant reviews can be reduced.

The Act provides an approach to reining in forum shopping. Now, in order to transfer a patent infringement action, there must be a showing that the transferee venue is “clearly more convenient than the venue in which the civil action is pending.”

Willful Infringement
A valid defense for a claim of willful infringement was that the defendant relied in good faith on the opinion of counsel that a supposed patent was invalid or not infringed. This defense led to the practice of lawyers giving “opinions” that the patent was invalid or not infringed at costs reaching $100,000 or more. As a result, the bill follows the Federal Circuit’s en banc decision in In re Seagate Tech, where the Court found the “duty of care” rule. Now, for willful infringement to take place, a lawyer’s opinion is not per se evidence that infringement was not willful. Rather, some level of “objective recklessness” must be involved. It is hoped that the broader adoption of the Seagate standard will help to curtail unfounded charges of willful infringement.

KIPO Denies Compulsory License Request for AIDS Drug

By Erin Lawless

March 2010

The Korean Intellectual Property Office (KIPO) turned down the petition of Korean civic groups seeking a compulsory license against Korean patents covering AIDS drug Fuzeon last June. Recently, this decision became final as the due date for appeal expired with no appeal having been made. Fuzeon is one component used in triple combination therapy for HIV/AIDS patients who have developed a resistance to standard, first-line therapies.

Although Fuzeon was granted market approval in 2004, its arrival to market was stalled by price negotiations with the Korean Ministry for Health, Welfare and Family Affairs (MOH). In 2008, when the drug continued to be unavailable on the Korean market, civic groups filed for a compulsory license.

In part, a patent system acts as an incentive to promote invention, invention disclosure, and investment in experiment, as well as to bring new products to market – all of which are in the interest of the public – however, the government maintains march-in rights in the event that an inventor, after patenting an invention that could help the public greatly, subsequently refuses to make it available. Therefore, having a patent system also aims to protect public interest.

In making the decision to deny the compulsory license, KIPO weighed public interest against the totality of circumstances as required by the Korean Patent Act of 2005. According to KIPO’s reasoning, the granting of a compulsory license would cause substantial damage to the Korean patent system’s ability to protect patented inventions.

Costliness, KIPO ruled, was not enough to merit a compulsory license unless it was paired with a contagious (i.e., airborne) disease or an urgent national or social crisis. Also, it was noted that government-sponsored programs were in place to reduce the financial burden of expensive drugs. With the help of these programs, consumers were only paying 10% of the drug’s price. Also, even though the drug was unavailable on the Korean market, it was readily available via importation, which seems to have influenced KIPO’s decision to deny the compulsory license.

This decision marks a change in the standard that KIPO applies when evaluating compulsory licenses. According to the Korean Court’s decision, rather than the previous standard of being “necessary for the public interest”, petitioners now must show that the product is “especially necessary for the public interest”.

Prop 8 Supporters Sue over Logo Infringement

By John Amandolare

March 2010

Recently, Protect Marriage clashed with the Courage Campaign, accusing them of infringing a copyrighted logo. Protect Marriage, a California-based organization devoted to upholding the state’s ban on same-sex marriage (also known as ‘Proposition 8’), has been using a stick-figure representation of a man and woman holding hands above a boy and girl as their logo. Their opposition, a progressive organization called the 'Courage Campaign' which advocates the right to same-sex marriage, is using a design that's identical in all respects except for the fact that the stick figures are both women.

The Courage Campaign is being accused of profiting from the mark and knowingly using a logo that closely resembles that of Protect Marriage. In this dispute, a federal court in Sacramento was tasked with determining whether the logo is traditionally permitted free speech action under the First Amendment or constitutes a misappropriation of the original trademark that is likely to confuse supporters of Prop 8.

Courage Campaign is using their new version of the logo to drum up support for Perry v. Schwarzenegger, an ongoing case currently being heard in Federal District Court in Northern California. That case is considering the constitutionality of Prop 8, and since it will decide a widely debated and popular issue, both sides are seeking to generate as much support as possible. The Courage Campaign logo is being used to lead followers to an online “Prop 8 Trial Tracker” that will offer live updates from the courthouse.

U.S. District Court Judge Lawrence Karlton denied ProtectMarriage’s requests for a temporary restraining order against the usage of the Courage Campaign’s parody logo. He cited the First Amendment, describing the trial tracker logo as an expressive parody that was clear in nature and not misleading to supporters of Prop 8. If the trial were to continue, he said, a misleading relationship between the Courage Campaign trial tracker and supporters of Prop 8 was not likely to be found.

PTO Implements New Patent Term Extension

By Erin Lawless

February 2010

According to a recent ruling by the U.S. Court of Appeals for the Federal Circuit, the method by which the U.S. Patent and Trademark Office (PTO) has been calculating patent term adjustments is in error in its underestimation of the statutory requirements. Recently, the PTO announced that the ruling would not be challenged.

As a result, the PTO’s new patent term calculations will yield longer patent terms for those patentees whose applications had not been granted in a timely manner, which is defined by statute as within three years of the application date.

There are two stages in which a patent could be delayed: (1) during the initial office action timeframe and (2) during the three-year overall deadline. In the past, the PTO granted an extension for the greater of the two delays. However, according to the ruling, what they should have been doing was granting an extension for the combination of the two.

This flaw in the PTO’s procedure was discovered when the term length of two patents owned by Elan Pharma International Ltd. and Wyeth were calculated differently by the PTO and the companies. The discrepancy was called to attention because, in the pharmaceutical industry, a difference of just a few months can create a huge profit differential.

Currently, the PTO is preparing a guidance document to help expedite requests for recalculation of the patent term; however, in their announcement of agency action, the PTO also warned that the burden falls on the patent holder to raise the patent term readjustment issue within 180 days of patent issuance.

BPLA’s Amicus Brief Supports Gene Patents

By Erin Lawless

February 2010

On January 13, the Boston Patent Law Association (BPLA), a nonprofit organization, filed an amicus brief in support of Myriad Genetics Inc. and the PTO in a suit where the American Civil Liberties Union (ACLU) and co-plaintiffs are attempting to invalidate Myriad’s patents on human genes. Specifically, Myriad Genetics holds patents on particular genes that, when found in mutated form, indicate a patient’s increased likelihood of developing hereditary breast and ovarian cancers.

For about the last 20 years, the government has issued patents on thousands of human genes. This concerns the ACLU because, in essence, the government is thereby giving private corporations, individuals and universities exclusive rights to genetic sequences and their usage. The lawsuit claims that gene patents stifle biomedical research and make genetic testing, in some cases, prohibitively expensive.

However, the PTO has currently sided with Myriad Genetics and upheld the patent based on the reasoning that “DNA compounds having naturally occurring sequences are eligible for patenting when isolated from their natural state and purified.” This holding has been met by criticism because the phrase “isolated and purified”, in the realm of genes and DNA, can be taken to have two meanings, depending on what side of the issue you are on. To some, it means that the gene has been plucked from the body and is now held separate. To others, it means that scientists have done something to the gene to alter it from its natural state aside from removing it from the body.

In the amicus brief, BPLA argues that patents are generally good, encourage technological advancement, and foster healthier economies. BPLA adds that the subject matter here in question fits Congress’ definition of what is patentable – “any new and useful” product.

The BPLA repels ACLU’s notion that the patents in question cover only the naturally existing genetic material, and states that the matter is not in its natural state. According to BPLA, the patent is “directed to new compositions that did not exist in nature but rather possess qualities and properties distinct from those of the naturally occurring genes.” The brief does not, however, explain in any further detail what such “qualities and properties” may be that are purportedly different from what occurs naturally. In BPLA’s opinion, Myriad has developed a new diagnostic that has practical applications for helping many women in the early detection of breast and ovarian cancer and, for that reason, merits a patent.

First IP Enforcement Coordinator Nominated and Confirmed

By Erin Lawless

January 2010

Victoria A. Espinel was nominated by the Senate Judiciary Committee (November 19) and confirmed by the Senate (December 3) as the nation’s first intellectual property enforcement coordinator.

This position, commonly referred to as the ‘IP Czar’, was created under the umbrella of the Prioritizing Resources and Organizations for Intellectual Property Act of 2008 (PRO-IP Act), which former President George W. Bush signed into law in October 2008 despite concerns from his own administration.

Ever since President Obama first suggested Espinel for the post in September, she has made it clear that her job as IP Czar would focus on making agencies throughout the government more responsible for aspects of IP rights enforcement. One way of accomplishing this, she said, would be to encourage agencies to work together.

Espinel said she acknowledges that those involved in enforcing IP rights must balance such considerations against the rights of the public to make legal use of intellectual property. Achieving such a balance, said Espinel, will require that she consult with both agencies and private parties interested in IP rights enforcement and free speech. These remarks were made amid concerns from some critics that an overzealous IP Czar could hinder some of the ingenuity that is necessary to foster a strong economy.

During the course of her confirmation, when asked about her intentions to work with and testify in front of the Judiciary Committee, Espinel indicated that the IP Czar position is fully accountable to Congress and that she looked forward to working closely with the Judiciary Committee.

Espinel previously served in the Office of the U.S. Trade Representative during the Bush administration, where she was the assistant trade representative for intellectual property. Upon leaving that office, Espinel became a visiting professor of law and international trade at George Mason University in Arlington, Virginia. She comes from a long career in a number of congressional staff positions, and she practiced law at Covington & Burling in both Washington, D.C. and London as well as at Sidley, Austin, Brown & Wood in New York.

Espinel graduated from Georgetown University in Washington, D.C. with a bachelor’s degree in foreign affairs and a law degree. She also graduated from the London School of Economics with a Master of Laws degree.

Tafas Won, Says U.S. Court of Appeals

By Erin Lawless

January 2010

On November 13, the Tafas case came to an end (again) with an order from the U.S. Court of Appeals for the Federal Circuit in favor of Tafas and against the U.S. Patent and Trademark Office (PTO).

The original case, Tafas v. Dudas, involved the PTO’s attempt to limit the number of continuation applications and the number of claims that can be filed per patent. In April 2008, the District Court granted the plaintiff’s motion for summary judgment, finding that the PTO’s new rules were an improper extension of the authority granted to the PTO by statute.

After summary judgment had resolved the case, however, it was still unclear who had officially prevailed because both parties and co-plaintiffs had filed motions to drop the appeal. Then, when Triantafyllos Tafas, the independent inventor who had begun the case, wanted to collect money to pay his legal fees, it became necessary to know who had won. For a litigant, prevailing in the action is a necessary and definitive component of qualifying to collecting attorney’s fees and other expenses under the Equal Access to Justice Act. So, by statute, Mr. Tafas could only collect such money if he was the official “winner” of the original case.

In the most recent action, the question at issue was whether Tafas was in fact a prevailing party in the original action where summary judgment was granted. Since the court ruled that Tafas had won this latest action, which shows by order that Tafas also won the original case, the independent inventor now qualifies to collect attorney’s fees under the Equal Access to Justice Act. This new order denied the PTO its motion to vacate a ruling that lacked substantive rulemaking authority.

Because the Federal Circuit sided with Tafas, the inventor is now eligible to collect attorney’s fees, thus taking some of the financial burden off of the independent inventor who stood up to the government in Tafas v. Dudas. Tafas made public comments that, despite the litigation, he is satisfied and appreciates PTO Director David Kappos’ withdrawal of the proposed rules. In general, Tafas told reporters, he is extremely pleased by the new direction Kappos is taking at the PTO.

Bilski v. Kappos: Supreme Court Hearing Overview

By Erin Lawless

December 2009

On November 9th, in a case that is being closely monitored by software and bioscience companies, the Supreme Court heard oral arguments for the patent law issue on whether processes and methods of doing business should be eligible for patents like those granted to physical devices. The methods under consideration include software programs, medical procedures, financial transactions and other intangible inventions; and the difficulty exists in the drawing of a fine line between “abstract processes” and “concrete applications”.

The case initially arose in 1997 when the U.S. Patent and Trademark Office (USPTO) denied a patent to inventors Bernard Bilski and Rand Warsaw, who had applied for a patent on a process to be used by “residential and commercial customers to lock in fixed energy bills, even during an unusually cold winter.” The USPTO based its decision on the conclusion that the process was too abstract.

The U.S. Circuit Court of Appeals for the Federal Circuit upheld the USPTO’s decision last year and held that a process is eligible for a patent only if it is "tied to a particular machine or apparatus" or if it "transforms a particular article into a different state or thing." According to the circuit court, Bilski and Warsaw’s process did not meet that test.

Michael Jakes, the attorney representing Bilski and Warsaw in the Supreme Court, argued that the test was too "rigid and narrow" and would exclude too many “useful innovations in today's information-based economy, including his clients' hedging technique.”

During the November 9 oral arguments before the Supreme Court, it was apparent that the justices were doubtful that Bilski and Warsaw’s business method deserved a patent. Raising the concern that Bilski’s argument would leave room to patent just about any method for doing business, Justice Breyer stated that "every successful businessman typically has something. His firm wouldn't be successful if he didn't have anything that others didn't have . . . And your view would be . . . anything that helps any businessman succeed is patentable?" Bilski’s attorney replied affirmatively.

Malcolm Stewart, arguing on behalf of the Obama administration, suggested that certain inventions should qualify for patent protection as long as they are tied to a machine, such as a computer. He noted that "hard questions will arise down the road as to where do you draw the line" and urged the court not to use the current case to determine the patentability of software, medical diagnostic tests and other inventions typically patented as processes.

Currently, the case is being discussed by pundits on a wide range of blogs, including Patent Baristas, Patent Docs, PatentlyO, IPBIZ, SCOTUSBLOG, IP Watchdog, and the Wall Street Journal Opinion Journal, and a transcript of the argument can be found at Scribd. Also, in order to foster a direct dialogue between the USPTO’s stakeholders and the general public, the Undersecretary of Commerce for Intellectual Property and Director of the USPTO, David Kappos, launched a public blog.

Nearly 70 amicus briefs have been filed, some predicting dire financial consequences for various industries should the court rule one way or another. A decision is expected to be issued in July.

GIPC Offers Advice to Developing World

By Amy Kim

December 2009

On November 11, in an effort to promote intellectual property as a necessary element of advancing technology in the developing world, the U.S. Chamber of Commerce's Global Intellectual Property Center (GIPC) issued a report detailing various methods of technology diffusion and aiming to systematically disprove the common misconception that IP is a barrier to technology diffusion.

In the process, the report listed and analyzed threats to technology diffusion, including inadequate infrastructure, extraordinary tariff and non-tariff barriers, protectionist industrial policies, limited human capital, insufficient financing, corruption, and poor governance.

Among their recommendations for improving technology diffusion, the GIPC touched on the legal environment, the state of research and development, economic policy, local infrastructure, and human capital.

The report offers governmental strategy for developing countries to obtain better technology. First, the report suggests, governments should eliminate tarriff and non-tarriff barriers on technology imports. This would benefit the developed countries by opening up developing markets to already developed companies.

Next, the report suggests that developing governments establish a strong legal environment. One of the benefits of a legal environment is that it provides strong, predictable and enforceable IP rights—which the report described as “essential to giving innovators the ability to efficiently manage the movement of their products into global markets.”

Another way of increasing technology in the developing world, as recommended by the report, is to stimulate R&D. The report explains that technology breakthroughs only come from massive amounts of R&D work. Logically, such work is derived from investment in R&D. If governments make a priority of basic scientific research, it will encourage global collaboration, according to the report’s findings.

An equally important piece of the puzzle is ensuring that economic policies induce innovation. The report recommends that developing governments take fiscal measures (e.g., tax incentives) to promote research and research collaboration.

Of course, more is needed to create the ideal environment for technological development and growth. Local infrastructures must be fostered. According to the report, the governments in the developing world should fund projects aimed at increasing and bettering the internal infrastructure. Such projects could include improving roads, building facilities, creating power grids, and improving healthcare.

In order to make such improvements to the infrastructure, and in addition to such improvements, the report recommends investing in human capital too. These kinds of long-term investments help to create a knowledge-based society and include such projects as building an educational system, teaching technical skills, and creating incentives for students to pursue careers in science, technology, engineering, and math.

To support its findings, the report cites a number of studies and research projects, and it reads as a positive manifesto aimed at helping to create a global community of technological advancements.

New Patent Search Methods Emerge

By Erin Lawless

November 2009

A few new methods for patent searching have been made available by recognizable brand names such as Boliven, Google, and Lexis. All three methods of patent searching can be useful to a patent searcher, but the correct fit depends on your budget for searching and your comfort with the various databases. The more a searcher practices using these tools, the better he or she will become at finding patents of interest; but the following is a comparison of their various capabilities and features.

Boliven Patent Searching
Boliven is a free source that can be found online at http://www.boliven.com/patents. The database claims that it contains over 60 million patents and applications. This includes about 200,000 searchable file histories and more than 650,000 assignees and record updates. Boliven is easy to use and allows the searcher to perform simple word searches for related patents. It works quickly and easily like any basic search engine, so users will be automatically familiar with the format based on any prior Internet use.

At first sight, the Boliven patent search seems to give more information than other comparable free patent searches. Application number, filing date, publication date and predicted expiration date are listed down the side of the resulting search so that you don’t have to go looking though the documents for these crucial facts. Also included in easy-to-access list format are the inventors’ and assignees’ names. This searchable database also enables the user to see references and independent claims. While the site allows the user to share their patent searches through Facebook, Twitter or e-mail, as well as save particular searches in a folder, it does not link searches to the USPTO’s website.

Google Patent Searching
Google Patent searching is another free source that can be found online at http://www.google.com/patents. The database claims that it contains over 7 million patents that the user can search. When used, the database results yield only patent number, title and issue date in a list format. While the other information is available, it is not pulled out in a list format, and the user must view the patent through a document viewer or by downloading it for access.

This site also works as a basic search engine. Users familiar with Google can easily operate this tool as it has the same look and feel as the company’s other popular search engines. Users have the option of downloading the patent to their computers or reading the patent on the Internet. This search engine also links patents to their posting on the USPTO’s website, which seems to be a feature that most distinguishes Google patents from other free patent searching databases.

In Google’s usual playful style, they have a randomly selected sampling of five pictures of patents on the home screen where you run your search. So, on any given search, you could come across patents for monkey-shaped camera bags, underwear or a hair dryer. This feature adds a little bit of the unexpected fun that Google users expect from the brand.

Lexis Patent Searching
Another new option for patent searching is Lexis. This form of patent searching is not free. In order to utilize the software, a user must subscribe to LexisNexis. Last week, in a press release that announced the new patent searching capabilities, Lexis claimed to be the first provider of legal information services to integrate the power of semantic search technology with familiar Boolean search technology. The goal of the technology’s new application is to give the patent searcher greater control over the patent research process by streamlining the interface to match what researchers are used to. If, in fact, researchers are used to the Lexis formatting, this could be a valuable tool for law offices, universities, and companies that already have Lexis access available to them.

The new application of technology works to enhance the process by producing more relevant search results by using the “science of meaning in language”, or semantics, in the searching process. Lexis claims that their system contains advantages in patent searching because some of the usual setbacks to data searching that limit search results have been eliminated, including lack of transparency and user control.

Native Americans Tackle NFL Redskins Logo

By John Amandolare

On September 14, 2009, Native American groups collectively filed a writ of certiorari petition asking the Supreme Court to review the 2nd Circuit’s recent decision to protect the NFL’s Redskins trademark. The group alleges that the defense of laches (which, to date, has protected the Redskin logo and team name) does not apply to trademark claims under the Lanham Act, which is a federal statute that lays out the guidelines for when a trademark may be refused.

The Native American groups are hoping that the Supreme Court agrees, despite lower court rulings in Pro Football Inc. v. Harjo that have upheld Pro Football’s right to continue using the Redskin name.

The decision made by the 2nd Circuit Court of Appeals hinged on whether the Native American groups had waited too long before bringing suit, and in doing so, had permitted a defense of laches. By way of explanation, one who sleeps on his rights for a prolonged period of time can be prevented from making a claim by the defense of laches. The court found the Redskins’ economic prejudice defense compelling, in part because of the “significant expansion of [its] merchandising efforts and sizable investment in the mark” from the time of the trademark’s creation. The petitioners originally filed an action in 1992 with the US Patent and Trademark Office (USPTO), seeking to cancel six trademarks that they alleged were impermissibly disparaging against their ethnic group. Yet the Redskins name and logo has been in use since 1967, leaving a 25-year gap in which the team had publicly exercised usage of the mark.

The District Court described a defense against laches as attaching “only to parties who have been unjustifiably delayed” – and stated that such a defense was unpersuasive in this instance, given that standard. The youngest petitioner, Mateo Romero, had some eight years from the time he reached the age of eighteen to the time of filing. By waiting so long, he had “evinced a lack of diligence” that the court was unwilling to overlook.

Native Americans groups have described the usage of the Redskins name and logo as racist and offensive – referring in part to the derogatory term used publicly by the U.S. government to describe bounties placed on Indian scalps. Until the legal process is completed, however, the USPTO will make no final decision on the team’s trademark (which it cancelled once before, in 1999).

Due to the overwhelming amount of petitions filed each year, it will be difficult to convince the Supreme Court to hear the Native Americans’ petition, which is more than 400 pages. Yet, amicus briefs supporting them are expected from the National Congress of American Indians and the Native American Rights Fund.

PTO Director Kappos Sets Patent Process Goals

By Erin Lawless

October 2009

In two speeches delivered within the last month, the New Director of the Patent and Trademark Office (USPTO), David Kappos, announced that there would be “lots of changes to lots of processes.” At the Intellectual Property Owners Association annual meeting on September 14, Kappos commented on many aspects of the patent process that need improvement – backlogs, patent pendency, greener jobs, agency transparency, and patent reform in Congress.

He described an aggressive strategy for lowering backlog and patent pendency that would decrease the backlog from approximately 1.2 million to 300,000 cases as well as reduce first action pendency to 10 months and the pendency of appeals to 3 months. Overall pendency, Kappos claims, will be reduced to 20 months down from 27, even for high-tech patents, for which the wait is currently double that of low-tech patents. Kappos commented that he will not tolerate discrimination among technologies, a note that seems to address the current discrepancy in pendency time between high- and low-tech patent applications.

Another big change that Kappos discussed was the possibility of a satellite examiner program, whereby the PTO could extend its workforce of patent examiners to include a network of examiners working from home. This would help chip away at the backlog and cut pendency times as well.

And in order to increase the transparency of the agency’s information, Kappos plans to hold discussions shortly on how to make PTO information available to the public, an aspect of his plans that falls in line with some of his previous interests; a few years ago, he supported the Peer-to-Patent Program, which was groundbreaking in its effort to open the patent examination process to the public. Some bloggers have commented that Kappos is speaking publicly more often than his predecessor had, which gives credence to the claim that there will be more transparency in the PTO under the Obama administration and under Kappos' reign at the PTO.

Ideally, Kappos also wants to affect change by pursuing patent reform in Congress. He hinted at the fact that the entire patent system needs to be overhauled; however, he also mentioned that the big problem with Congress reshaping patent reform is that funding is lacking.

Copyright, Energy and Tech Czars Get Situated

By Erin Lawless

October 2009


President Obama announced on Friday the appointment of Victoria A. Espinel to the position of Intellectual Property Enforcement Coordinator, commonly referred to as the ‘Copyright Czar’. Espinel will oversee the enforcement of national intellectual property laws as well as protecting U.S. intellectual property rights abroad. Espinel’s position requires Senate confirmation, which is still in progress.

More specifically, the Copyright Czar will oversee government anti-piracy crackdowns, train other countries about IP enforcement, look out for countries that pose threats to U.S. intellectual property, and attempt to work with those governments to take action against any such perpetrators. There is also talk of an FBI piracy unit that would have the authority to demand the forfeiture of equipment used in large pirating operations, as this is what is called for by the PRO-IP Act.

The cabinet-level position of IP Enforcement Coordinator was created by President George W. Bush last year as a part of this act. Bush objected to a Copyright Czar being part of the PRO-IP act, but he was pressured into signing the Czar into law when he approved the act in its entirety. Those who have supported the PRO-IP Act see Obama’s nomination of Espinel as a positive development towards fully implementing and funding the Act.

Espinel has a long record in both teaching and government work. She served as the nation’s top trade negotiator for intellectual property at the Office of the U.S. Trade Representative. Also, she has served as an IP advisor for a number of government organizations, including the Senate Judiciary Committee, Senate Finance Committee, House Judiciary Committee and House Ways and Means Committee, and she has taught intellectual property law and international trade as a visiting professor at George Mason University School of Law.


Carol Browner was appointed by President Obama on December 15, 2008 as the Director of the White House Office of Energy and Climate Change Policy, commonly referred to as the ‘Energy Czar’. In this capacity, Browner will serve as the coordinator for matters related to environment, energy, climate and transport. The position did not require Senate confirmation.

Browner has no policymaking authority, rather the power of her position relies primarily on persuasion. Her main roll is that of an overseer who promotes smooth cooperation among the various energy and climate entities.

Browner came to the White House appointment from a position at the Albright Group, former Secretary of State Madeline Albright’s global strategy firm. Previously, Browner served as a chief administrator at the Environmental Protective Agency (EPA). While there, she put forward a plan to improve the agency’s decision making, conserve money and restore EPA credibility. She also served as Senator Al Gore’s senior legislative aide as well as the head of the Department of Environmental Regulation in Florida.

Browner is married to Thomas Downey, a former Democratic congressman from New York who is also the chairman of a lobbying firm. Prior to Browner’s appointment, some of her husband’s clients included those with interests in energy policy; however, according to the firm, those clients are no longer represented.


Appointed to the post of Chief Technology Officer (CTO), commonly referred to as the ‘Technology Czar’, Aneesh Chopra was confirmed by the Senate on August 7, 2009.

President Obama has defined Aneesh’s role as concerned with promoting technological innovation “to help achieve our most urgent priorities, from creating jobs and reducing health care costs to keeping our nation secure.” Chopra will work closely with the Chief Information Officer or e-Government Czar, Vivek Kundra. Both are charged with making the government more effective, efficient and transparent.

Chopra comes to the White House position from essentially the same job at the state level while working as the Secretary of Technology for Governor Tim Kaine of Virginia. Prior to his government service, Chopra was Managing Director for the Advisory Board Company, a health care think tank for hospitals and heath systems, where he led the firm’s Financial Leadership Council and the Working Council for Health Plan Executives.

Biologic Drugs: The Patent Exclusivity Debate

By Erin Lawless

September 2009

Should biologic drugs get more than 7 years of patent exclusivity? Well, according to Senior White House officials, 7 years is just enough time to protect brand name biologic drugs from their generic competitors.

On one side, the biologic drug industry is calling for 12-14 years of data exclusivity before generic drug makers can swoop in and provide the drugs to consumers at lower costs. In opposition, Representative Henry Waxman (D-Calif.), Chairman of the House Energy and Commerce Committee, recently introduced legislation calling for the Food and Drug Administration (FDA) to approve generic versions of biologic drugs after only 5 years.

Though the White House has suggested a middle ground of 7 years, this suggestion has compromised a deal that the White House had made with drug companies to help get the pharmaceutical industry on board with health care reform.

The biotech industry generally believes that the shorter period of exclusivity will undermine the incentives they deem necessary for the continued research and advancements that produce cures for diseases. A shorter period of exclusivity would translate, they believe, into less advancements towards the discovery of cures for conditions such as multiple sclerosis, rheumatoid arthritis, Alzheimer's disease, and cancer, since the biotech industry is the one who invests the most money into R&D.

Working with the FDA to ensure that biologics are available as generics “as quickly as possible,” White House officials say that “innovation is driven by appropriate competition,” adding that competition will be spurred by shorter periods of exclusivity. According to Representative Waxman, it’s the speed and efficiency of the FDA’s actions that will ultimately determine how quickly, safely and effectively generic biologic drugs can become available to patients. So, he says, a balance must be struck between innovation and competition.

Since brand name versions of biologics can cost patients tens of thousands of dollars each year, providing consumers with low-cost drugs is a big issue for lawmakers and regulators alike.

Backgrounder on Obama’s Science and Technology Czars

By Erin Lawless

September 2009


President Obama nominated David Kappos as the Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office (USPTO), commonly referred to as the ‘Patent and Trademark Czar’. Confirmed this August, Kappos is responsible for an office that provides incentives to help encourage technological advancement, protects business investments, and safeguards against marketplace deception.

Patent lawyers expect Director Kappos to act as a strong voice for patent reform and touch on issues such as the slowness with which the office has been reviewing patent applications. When confirmed, Kappos stated publicly that, “Patent quality equals granting those claims the applicant is entitled to under our laws.” He has made clear that patent quality means more than simply rejecting certain patent applications, seeming to imply a break from the notions of his predecessors. Rather, he claimed, it is the patent examiner’s job to be “candid with the applicant and to protect the interests of the public,” which seems to imply that we can expect communication between the examiner and the applicant to become more open.

Efficiency is a good goal for a director who is inheriting outdated technology systems, a process in need of reform, and a patent application backlog of more than 770,000 applications waiting for patent review. Fortunately, Kappos comes to the PTO with a deep knowledge of the patent system and the respect of a broad cross-section of professionals in industries including biotech, life sciences and high-tech. Previously, Kappos served as the vice president and assistant general counsel of IP at IBM, where he managed IBM’s patent and trademark portfolios and protected licensing IP on the world stage.

While working for IBM, Kappos supported patent reform that would afford high-tech patents with greater protection and better processes, and he also supported post-grant review; however, critics believe that post-grant review would devastate the PTO as it would divert resources to already-passed patents while the backlog of applications waiting review continue to grow. Lawyers are advocates for their clients’ perspectives, though, and not their own, so they often take positions while employed that run counter to their personal beliefs. Nonetheless, critics and fans agree that Kappos is familiar with the patent system and knowledgeable about IP and patent matters. For these reasons, the patent community seems excited to have a “patent guy” running the patent office, which is a refreshing change.


In March, President Obama picked Vivek Kundra as the Federal Chief Information Officer (CIO), commonly referred to as the ‘e-government Czar’.

Kundra has been an essential link in making government transparency work online; for example, he decides which contracts will be presented in whole or in part and which will be summarized. But Kundra’s job doesn’t end there. The Federal CIO directs the policy and strategic planning of federal information technology investments and is responsible for oversight of federal technology spending.
Also, Kundra must ensure system interoperability across the federal government – no small task. Furthermore, the CIO works closely with the Chief Technology Officer (CTO) to help advance President Obama’s technology agenda.

By way of introducing Kundra to the press, President Obama said, “Kundra will bring a depth of experience in the technology arena and a commitment to lowering the cost of government operations to this position. I have directed him to work to ensure that we are using the spirit of American innovation and the power of technology to improve performance and lower the cost of government operations. As Chief Information Officer, he will play a key role in making sure our government is running in the most secure, open, and efficient way possible."

Kundra’s resumé is long and impressive. He served as the CTO for the District of Columbia in Mayor Fenty’s cabinet, where he was responsible for technology operations strategies for 86 separate agencies. He was named the 2008 IT Executive of the Year for his work in increasing government transparency, engaging citizens, and lowering the cost of government operations. Also, he has also worked for Governor Tim Kaine of Virginia as the Assistant Secretary of Commerce and Technology.


President Obama appointed John Holdren, who was confirmed in March, as the President’s Assistant for Science and Technology, Director of the White House Office of Science and Technology Policy, and Co-Chair of the President’s Council of Advisors on Science and Technology, commonly called the ‘Science Czar’.

Holdren comes to the administration from his recent work as Chairman of the Board of Directors of the American Association for the Advancement of Science. Prior to his government appointment, Holdren was the Teresa and John Heinz Professor of Environmental Policy at the Kennedy School of Government at Harvard University. He was also the director of the Science, Technology, and Public Policy Program at Harvard’s Belfer Center for Science and International Affairs. Prior to his Harvard years, Holdren was a professor at the University of California, Berkley for more than 20 years, where his research focused on environmental change, energy policy and technology, nuclear proliferation, and science and technology policy. Holdren earned his Bachelor’s degree from MIT in 1965 and his PhD in plasma physics from Stanford University in 1970.

Like many of us, not everything in Holdren’s past is listed on his resumé. The issues that critics are finding are big issues for all wavelengths of the political spectrum. While Holdren has published many books throughout his career in academia, the one that’s holding critics attention these days is an all-but-out-of-print, 1000-plus page, 1977 book called Ecoscience that was co-authored with Paul and Anne Ehrlich. In this book, Holdren advocated for mandatory abortions and forced sterilization, mentioning the idea of the covert addition of infertility drugs to municipal water supplies in order to slow population growth. Of great concern to critics is the “amoral” approach Holdren used when addressing touchy subjects like abortion. For example, Holdren suggests in Ecoscience that, “when necessary, compulsory sterilization is justified.”

Holdren does not, however, recommend doping the U.S. water supply with infertility drugs – in fact, he lists many setbacks to this method and proposes instead that the government, instead, require implantation of a contraceptive capsule, leaving its removal to each individual’s discretion but requiring reimplantation after childbirth.

In February’s confirmation hearings, Holdren had the opportunity to address some issues about this when asked what the correct number was for today’s U.S. population. Holdren dodged the question and simply stated that no one knows what the right number is, and that it is no longer productive to “focus on the optimum population.”

A wealth of bloggers point out that President Obama has spoken about putting science before ideology. However, the President has never suggested science be ethics-free. In fact, no one really debates whether or not ethics are needed in science; everyone agrees that ethics are needed and useful – the question remains whose ethics will be considered in the determination of where, and how far, science goes.


In May, President Obama appointed Melissa Hathaway as the Acting Director for Cyberspace for the National Security and Homeland Security Councils, commonly called the ‘Cyber Czar’. In early August, though, Hathaway announced her resignation. After finishing a policy review of cyber security, she claims that the time is now right for her to move on, citing personal reasons for leaving the post. The White House decided not to replace her, yet. Meanwhile, the search for a new Cyber Czar is on.

Franklin Kramer, a former Clinton Assistant Defense Secretary, and Howard Schmidt, a former top security officer at eBay Inc., who has served on presidential cybersecurity panels in the past, are among the new front-runners suspected of being offered the job.

The White House created the Cyber Czar position for an official to have broad authority to develop strategy to protect the nation’s government-run and private computer networks. When President Obama announced the creation of the position, he admitted that the United States was incapable of properly defending its computer networks. Furthermore, cyber threats are one of the most serious economic and military dangers that the nation faces. Over the last year, intelligence officials have grown increasingly concerned about Chinese and Russian cyberspies surveilling U.S. infrastructure and military networks. The Cyber Czar’s job would, in part, be to beef up Internet security.

Reports have indicated that Hathaway’s resignation is a blow for the administration, which has attempted to make Internet security a priority. According to White House officials, finding the right person for this job remains at the top of their list.

The Courts Beat Congress To Patent Reform (Again)

Reprinted with permission of IP Law360

In a recent district court case, Federal Circuit Judge Randall Rader sent a clear signal that reform on patent damages is coming with or without Congress’ intervention.

Sitting by designation, Judge Rader presided over a patent lawsuit brought by Cornell University against Hewlett-Packard Company in the Northern District of New York.

During the course of this litigation, Judge Rader issued two orders that limit a patent holder’s ability to recover a royalty on the entire value of product when the patent only covers a component found within the product.[1]

For several years, the trend in patent litigation has been for patent holders to assert their patents against the farthest downstream entity that sells a product containing the invention in dispute.

For example, if the patent covers memory chips, the patent holder would assert the patent against a personal computer manufacturer rather than the chip maker.

After all, why collect a royalty on a chip that costs a few dollars when it is possible to seek a royalty on a personal computer which that sells for $1,000?

Critics of the current system complain that Federal Circuit precedent permits this practice, and results in a reasonable royalty on an insignificant component to exceed not only the profit attributable to that component, but, in some cases, the entire profit on the product.[2]

This is a primary motivation for current efforts at patent reform legislation that are being directed at revising damages law.[3] The Senate and House are considering different proposals for damages patent reform.

The Senate version does not propose to change the substantive law, but instead adds procedural mechanisms so that judges will more consistently evaluate the evidentiary basis of the parties’ damages contentions.

The House version proposes substantive changes and would require the trial court to select one of three different methods set forth in the statute when calculating reasonable royalties.[4]

Regardless of whether this year’s efforts at patent reform result in some form of legislation, the courts are not sitting idly by.

In Cornell v. Hewlett Packard, Judge Rader signaled his views on damages reform. His decisions suggest that judges acting as the gatekeeper should make sure that a Plaintiff’s damages theory has a “firm basis in accepted economic principles.”

Cornell sued HP for infringing U.S. Patent No. 4,807,115 (“the ’115 patent”) entitled “Instruction Issuing Mechanism for Processors with Multiple Functional Units.”

The ’115 patent claims technology that issues multiple and out-of-order computer processor instructions in a single machine clock cycle.[5]

According to Judge Rader, the “the claimed invention is a small part of the IRB [instruction reorder buffer], which is a part of a processor, which is part of a CPU module, which is part of a ‘brick,’ which is itself only part of the larger server.”[6]

Nonetheless, during trial Cornell’s damages expert attempted to testify that Cornell should recover a royalty on the sales of HP servers and workstations.

Judge Rader interrupted trial and conducted a Daubert hearing to determine whether Cornell’s damages expert testimony was admissible.[7] The court relied on well established criteria for evaluating expert testimony.[8]

Although Judge Rader recognized that there are cases when the “entire market rule” applies and “a patentee can to collect damages on (i.e., include in the royalty base) the unpatented components sold with the patented invention ... rather than simply the portion of sales due to the patented component,” he said those cases are limited to instances where the patented-related feature is the basis for customer demand.[9]

Judge Rader found that Cornell’s expert could not identify sufficient economic proof that the component in question drove demand for the entire server and workstation products.[10]

“At best, the record shows that purchasers opt for Hewlett-Packard products because of their superior performance. Yet the patented invention is still merely one of several—what [Cornell’s expert] calls a ‘handful of components’—in the Hewlett-Packard processor ‘Performance Formula.’”[11]

The court stated the fact “that the patented invention comprises one element of the processors that are just one part of Hewlett-Packard’s server and workstation systems is not sufficient to support application of the entire market value rule.”[12] As a result, the Court excluded Cornell’s expert testimony.[13]

The ruling on the motion to exclude did not end the controversy.

The court was reluctant to leave Cornell without a damages theory and gave Cornell the opportunity to return the next day of trial and offer testimony “on something less that takes into account to some degree ... the fact that the claimed invention is not the entire system but only a component of a component of that system."[14]

Judge Rader cautioned that the admissibility of the testimony hinged on factoring out that Cornell is seeking only compensation for the value of the claimed invention.[15]

Cornell’s expert proceeded to testify that the royalty base should encompass sales of Hewlett-Packard CPU bricks. Cornell eventually prevailed at trial and the jury awarded Cornell $184,044,048 by applying a .8% royalty.[16]

Hewlett-Packard filed a motion for JMOL[17] that the hypothetical processor revenue amount is the proper royalty base, or, in the alternative, remitter or a new trial on damages.

Using essentially the same analysis that he did in ruling on the motion to exclude, Judge Rader granted Hewlett-Packard’s motion.

He stated that once again, “Cornell proffered a royalty base that incorporated much more than the claimed invention without providing any additional evidence demonstrating entitlement to the entire market value of any Hewlett-Packard product.”[18]

Specifically, Cornell failed to “offer evidence that the claimed invention drove demand for Hewlett-Packard’s CPU bricks.”[19]

The Judge went on to provide additional detail on when a patentee could assert the entire market rule.

He said that there needed to be proof of three conditions: “(1) the infringing components must be the basis for customer demand for the entire machine including the parts beyond the claimed invention, (2) the individual infringing and noninfringing components must be sold together so that they constitute a functional unit or are parts of a complete machine or single assembly of parts, and (3) the individual infringing and non-infringing components must be analogous to a single functioning unit.”[20]

Judge Rader went on to note that “Cornell chose this hypothetical royalty base in favor of another alternative more clearly relevant to the value of the patented invention—the revenue Hewlett-Packard would have earned had it sold each infringing processor as just that, a processor, without any additional non-infringing components.”

He reduced the damages award to $53,494,282, in part, by using the hypothetical value (the processors were never actually sold alone) of Hewlett-Packard's processor sales as the royalty base.[21]

Since an appeal in Cornell v. Hewlett Packard pending before the Federal Circuit, nothing is certain. Nonetheless, this decision is more noteworthy than your typical district court case.

Judge Rader normally sits on the Federal Circuit Court of Appeals, and a panel of Federal Circuit Judges recently suggested that the Federal Circuit has not had an opportunity to rule on apportionment[22] issues and that they were eager do to so because they believed that their precedent had been unfairly criticized.[23]

In Cornell v. Hewlett Packard, Judge Rader appears to be illustrating that very point.

In sum, Judge Rader has signaled that at least one Federal Circuit Judge believes that one form of damages reform is already here.

Assuming that he is not alone, and public statements from the Federal Circuit panel presentation in Silicon Valley suggest that he is not, patent defendants should consider filing Daubert motions, motion for summary judgment and JMOLs when a plaintiff seeks to apply the entire market value rule (i.e., seeks to define the royalty base on an entire product as opposed to the component containing the accused technology).

Similarly, patent holders that wish to apply the entire market value rule should develop evidence showing that the patented invention drives demand for the product as a whole.

--Bernard Chao is a partner with Chao, Hadidi, Stark & Barker in the firm's Menlo Park, CA office. The firm has represented Hewlett Packard, but not in the case discussed here. The opinions expressed are those of the author and do not necessarily reflect the views of Portfolio Media, publisher of Law360.

[1] Cornell Univ. v. Hewlett Packard Co., No. 01-CV-1974, 2008 WL 2222189 at *2 (N.D.N.Y. May 27, 2008) (“Cornell I”), Cornell Univ. v. Hewlett Packard Co., 609 F.Supp.2d 279 (N.D.N.Y. March 30, 2009) (“Cornell II”).
[2] See, e.g. Bensen and White, Using Apportionment to Rein in the Georgia-Pacific Factors, 9 Colum. Sci. & Tech. L. Rev. 1 (2008).
[3] Condon, Senate Panel Approves Patent Reform Bill, CNET News (April 2, 2009).
[4] H.R. 1260, Patent Reform Act of 2009, introduced March 3, 2009.
[5] Cornell II, 609 F.Supp.2d at 283.
[6] Id.
[7] Id. at 283-84.
[8] Cornell I at *1 citing to Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (1993), Kumho Tire Co. Ltd. v. Carmichael, 526 U.S. 137 (1999) and Fed. R. of Evid. 702.
[9] Id. at *2 citing to Rite-Hite Corp. v. Kelley Co. Inc., 56 F.3d 1538, 1549
[10] Id. at *3.
[11] Id. at *3.
[12] Id. at *3.
[13] Id. at *4.
[14] Cornell II, 609 F.Supp.2d at 284.
[15] Id.
[16] Id. at 282.
[17] See, Fed. R. Civ. P. Rule 50.
[18] Cornell II, 609 F.Supp.2d at 284.
[19] Id. at 289.
[20] Id. 292-93.
[21] Id. at 292.
[22] One commentator has defined apportionment to refer to the requirement that a patentee’s recovery be based on the economic value contributed by the patent. Bensen and White, 9 Colum. Sci. & Tech. L. Rev. at 3.
[23] The Federal Circuit Visits the Valley, Four Seasons in East Palo Alto, Nov. 5, 2008. The author attended this event and is providing his best recollection of the Judges’ statements.

Sotomayor's IP Law Background

By Erin Lawless

June 2009

The nomination of Sonia Sotomayor to the Supreme Court may result in the seating of a Supreme Court Justice with an unusual amount of experience in the area of Intellectual Property. The following is an overview of her work in the area of IP.

Sotomayor Defends Fendi:
As a corporate litigator at Pavia & Harcourt LLP, a major Manhattan law firm, Judge Sotomayor specialized in intellectual property law. More specifically, she worked on tracking down Fendi counterfeiters and suing importers of counterfeit products.

Speaking to The Wall Street Journal about Judge Sotomayor’s time with his firm, firm founder George Pavia said that Judge Sotomayor enjoyed tagging along with the police once suspect counterfeit goods had been traced to a particular warehouse or store. In fact, Pavia told WSJ, Judge Sotomayor went into busts wearing a Kevlar vest to seize counterfeit goods. On one seizure in Chinatown, he added, where the counterfeiters ran away, Judge Sotomayor got on a motorcycle and gave chase.

In another instance, while working for Fendi at Pavia & Harcourt, Judge Sotomayor helped stage a publicity event to help create awareness about knockoffs. The firm originally planned to stage a bonfire and call the event the “Fendi Burn”; however, the New York Fire Department would not grant a permit for such burning. The firm then decided to stage the “Fendi Crush” where garbage trucks were called in to crush the counterfeit items. The firm, along with Judge Sotomayor, threw “masses and masses of handbags, shoes, and other items into garbage trucks” to be crushed and destroyed.

Sotomayor Finds for Seinfeld:
As a judge, Sotomayor helped protect the creative rights of Seinfeld in her decision Castle Rock Entertainment, Inc. v. Carol Publishing Group. Sotomayor ruled that the trivia contained in the book infringed on the Seinfeld show’s copyright and did not constitute legal fair use.

In part, the decision stated that, “The Seinfeld Aptitude Test seizes upon the notion which lies at the very heart of Seinfeld that there is humor in the mundane, seemingly trivial aspects of everyday life. Simply put, without Seinfeld, there can be no Seinfeld Aptitude Test.”

The United States Court of Appeals for the Second Circuit upheld Judge Sotomayor's ruling. Critics seem to agree that Judge Sotomayor's Castle Rock opinion is solid and demonstrates a deep understanding of copyright. After commenting on this opinion, the Copyrights and Campaigns blog said, “She may be on the left politically, but nothing in this opinion suggests she is on the copyleft.”

Sotomayor’s Decision is Overturned after Ruling for The New York Times:
As a federal judge for the U.S. District Court of the Southern District of New York, Judge Sotomayor ruled on Tasini v. New York Times. In this case, freelance journalists brought a suit against The New York Times, its affiliated publications, and various other news organizations when the publishers distributed articles to the Lexis/Nexis legal database without the express permission of the journalists. The New York Times and its co-defendants claimed they had the right to distribute the articles under §201(c) of the Copyright Act. Judge Sotomayor agreed that the Copyright Act, under the collective work clause, entitled the publishers to reproduce articles on Lexis/Nexis, and ruled in favor of The Times.

The case was reversed, however, by the appellate court and then appealed again to the U.S. Supreme Court. Both courts reversed Sotomayor’s decision, siding with the freelance journalists. The courts reasoned that since Lexis/Nexis displayed search results as if each article were a single work, rather than as a collective work, the Copyright Act could not be applied under the collective work clause.

This particular decision has been widely discussed because some critics fear that if the Supreme Court gets a justice who is a fan of “Big Content” and is willing to rule in favor of “Big Content”, then the Internet that we know today is “toast”.

Worth Noting:
According to Meredith Martin Addy, chair of the appellate group at Brinks Hofer Gilson & Lione, Judge Sotomayor has made public comments that copyright law as currently constructed by Congress was not intended to prevent publication on the Internet. If this is true, it may give insight into how Judge Sotomayor may decide future IP cases that come before the Supreme Court.

Projections and Assumptions:
Some IP law practitioners think that Judge Sotomayor will be another voice opposing the Bilski decision, which the Supreme Court accepted for review last month. In fact, Business Week has reported Judge Sotomayor to be “a moderate on business issues” and noted that the increase of IP cases coming before the Supreme Court makes someone with Judge Sotomayor’s background an ideal candidate.

Patents for Human Genes

By Erin Lawless

June 2009

On May 13, the American Civil Liberties Union (ACLU) and the Public Patent Foundation filed a lawsuit in the Southern District of New York against Myriad Genetics, the U.S. Patent and Trademark Office (PTO), and the directors of the University of Utah Research Foundation to challenge the practice of granting patents on human genes. This suit is the first to challenge the patentability of human genes in the United States.

The genes specifically at issue here are BRCA1 and BRCA2—certain mutations along these genes indicate that a patient faces a significantly higher risk of developing hereditary breast and ovarian cancers.

The University of Utah is the part owner of the BRCA patents while Myraid Genetics is the only licensee of those patents as well as the sole provider of BRCA1 and BRCA2 genetic sequencing for the purpose of preventative measures against breast cancer and ovarian cancer.

For about the last 20 years, the government has issued patents on thousands of human genes. This concerns critics because, in essence, the government is giving private corporations, individuals, and universities exclusive rights to genetic sequences and their usage. The lawsuit claims that gene patents stifle biomedical research and make genetic testing, in some cases, prohibitively expensive.

Like the complaints of previous opponents to genetic patents, this complaint claims that patenting genes is unconstitutional and therefore invalid because “laws and products of nature” are typically not patentable. The complaint reads, in part, “Defendant Myriad did not invent, create, or in any way construct or engineer the human BRCA1 or BRCA2 genes. These genes are existing products of nature, naturally occurring within the human body. Myriad located them in nature and merely described their informational content as it exists and functions in nature.”

More interestingly, the complaint also claims that the practice of patenting genes interferes with scientific freedom. In fact, ACLU states that patenting genes violates the First Amendment by limiting research and the free flow of information.

"Knowledge about our own bodies and the ability to make decisions about our health care are some of our most personal and fundamental rights," said ACLU Executive Director Anthony D. Romero, as reported by CNN. "The government should not be granting private entities control over something as personal and basic to who we are as our genes."

So far, the PTO has upheld the patent because it reasons that "DNA compounds having naturally occurring sequences are eligible for patenting when isolated from their natural state and purified." However, this holding has been met by criticism because the phrase “isolated and purified”, in the realm of genes and DNA, can be taken to mean that the gene has been removed from the natural chromosome but not otherwise changed.

Bilski Goes to the Supreme Court

By Erin Lawless

June 2009

The U.S. Supreme Court will decide In re Bilski, eventually. The long-debated, often confusing case that has already impacted potential software, biotech, and business method patents was appealed to the Supreme Court because the “machine or transformation” test purportedly conflicts with the broad language of the patent statutes and possibly with congressional intent. On June 1, 2009 the Supreme Court granted certiorari to consider the case. The Court has not considered a similar question since 1981.

On face value, the case seems simple. In re Bilski asks the question of “just what is patentable” in terms of software and business strategies.

Bilski argues that patents should be available to help encourage innovation in an ever-growing, global, information-based economy. Those on the other side of the controversy, such as consumer advocacy groups and free-marketeers, worry that patent monopolies could tie up methods of creative thought processes.

The en banc Federal Circuit decision earlier this year held that Bilski’s claims are not eligible for patenting. A single “definitive” test was set forth for determining whether a process was eligible for patent. Under the test, a method must be tied to a particular machine or apparatus OR it must transform a particular article into a different state or thing in order to be eligible for patent.

Now, the Supreme Court will consider the rule and its applicability in relation to 35 U.S.C. § 101, which grants broad statutory patent eligibility for any new and useful process. Also, the Supreme Court will look at the holding in relation to 35 U.S.C. § 273, which seems to indicate that Congress intended business methods to be protected by patents.

Obama Taps Sunstein for OIRA Chief

By Erin Lawless

May 2009

The Office of Information & Regulatory Affairs (OIRA) is responsible for making judgment on most proposed government rules, especially those regarding the environment, public health and safety. To fill the vacancy in this position, President Obama picked Cass R. Sunstein, who comes to the OIRA with a strong resumé. He was a former colleague of Obama at the University of Chicago Law School and currently teaches at Harvard Law School.

During the Bush years, the OIRA, under John Graham, shut down most proposed rules regarding the quality of air, and other such concerns that businesses thought would be too costly. Sunstein has one major similarity to Graham—both insist upon using cost-benefit analysis in determining which regulations should stick.

This similarity has critics concerned. When regulators use a cost-benefit analysis to make decisions on health and safety, some critics believe that this fundamentally impedes the government’s ability to protect the environment as well as the public.

When Obama was elected, he was thought to be a de-regulator. To critics, though, the implications of this appointment seem to be that change is not on the horizon. Critics of Sunstein’s appointment worry that, if the public wants rules that are not supported by a cost-benefit analysis, there may be a clash in values between Sunstein and public opinion.

Sunstein has not yet been formally confirmed. On May 12, the Senate held a hearing on his nomination, a recording of which can be seen here on the website of Senate Committee on Homeland Security and Governmental Affairs.

USPTO Adds Germany to the PPH

By Eric Berlin

May 2008

On April 27, as part of a plan to address the backlog of patents that accumulated under the Bush Administration, the United States Patent and Trademark Office (USPTO) began a 2-year Patent Prosecution Highway (PPH) pilot program in partnership with their counterparts at the German Patent and Trademark Office (GPTO). By sharing information between patent offices, this partnership aims to reduce the examination workload, expedite processing, lower costs, improve patent quality, and expand a worldwide network, thereby giving more inventors access to the benefits of this process.

In a statement, PTO Director John J. Doll explains "The Patent Prosecution Highway will leverage fast-track patent examination procedures already available in both offices to allow applicants in both countries to obtain corresponding patents faster and more efficiently.”

This will be the ninth such partnership that the USPTO has entered into with a foreign Patent and Trademark Office (PTO). Previously, the USPTO only partnered with the PTOs of Canada, Europe, Japan, Korea, UK, Australia, Denmark, and Singapore.

With this program, applicants can essentially wait in several lines at the same time. The USPTO website explains: “Under PPH agreements, an applicant receiving a favorable ruling from one nation's patent office on at least one claim in an application may request that the corresponding application filed with the other nation advance out of turn for examination. By coordinating patentable results between both nations' offices, applicants can expect to obtain patents in both nations more quickly.”


Supreme Court May Consider a New Defense to Patent Infringement

By Erin Lawless

April 2009

The United States Supreme Court is being asked to expand the defenses available to defendants in a patent infringement suit on a petition for certiorari from the District Court case IGT v. Aristocrat Tech.

In this case, the gaming company IGT allegedly infringed two of Aristocrat Tech’s slot machine patents; however, Aristocrat Tech missed the filing deadline for the U.S. Patent and Trade Office (“PTO”) and therefore unintentionally abandoned its slot machine patent.

Shortly after the patent was abandoned, Aristocrat Tech was successfully able to convince the PTO to revive its unintentionally abandoned patent application. Such a decision on the part of the PTO is not irregular. The PTO revives about half of all intentionally abandoned patents each year, despite the fact that the patent statute only allows revival of applications upon which there is proof that the tardiness was unavoidable.

Currently, the defenses in litigation under Section 282 of the Patent Act defines the defenses available for patent infringement as follows:

1. Noninfringement;
2. Invalidity of the patent or any claim in suit on any ground specified in part II of this title as a condition for patentability;
3. Invalidity of the patent or any claim in suit for failure to comply with any requirement of sections 112 or 251 of this title;
4. Any other fact or act made a defense by this title.

If the U.S. Supreme Court decides to take this case, they would be asked to consider whether a patent infringement defendant may assert as a defense the fact that the patent resulted from an abandoned application that was not revived according to the requirements prescribed by Congress. There just may be an additional defense available for patent infringers.

Patent Reform Legislation: Compromise Approved

By Melissa Dobson

April 2009

On April 2, 2009, the Senate Judiciary Committee approved a modified version of Patent Reform Bill, S. 515, with a sharply curtailed damages provision. The revised Patent Reform Act of 2009, passed on a vote of 15 to 4, allows for trial judges to limit the evidence that can be introduced and for damages calculation factors to be presented in the jury instructions. The bill eliminates any attempt to define an “essence of the invention”, without mention of limiting or eliminating the “entire market value” rule or applying “prior art subtraction” before determining a royalty base.

Senator Orrin G. Hatch (R-Utah), cosponsor of the bill, objected to the compromised version, taking issue with the bill's lack of a provision limiting the inequitable conduct defense in patent infringement actions. Additional amendments to raise the standard for granting inter partes patent reexamination and post-grant opposition, as well as to end fee diversion from the Patent and Trademark Office, were voted down, with further negotiations anticipated as the bill is reported to the full Senate.

Currently, calculation of damages for infringement in patent cases is governed by Section 284 of the Patent Act, 35 U.S.C. §284. As to compensatory damages, the provision states that “[u]pon finding for the claimant, the court shall award the claimant damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.”

In general, opponents to reform believe that the current text provides sufficient flexibility, including jury instructions on royalty-determination factors first articulated in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 166 USPQ 235 (S.D.N.Y. 1970). Opponents of reform include pharmaceutical and biotechnology firms, “traditional” manufacturing firms, and organized labor.

Proponents of damages reform include the financial services, technology, energy, and media industries. As evidence, they point to cases where juries have made calculations using the “entire market value”, such as the market for Microsoft Windows-based computer sales, as the base for royalty determinations, when the infringed patent's invention may include nothing more than a small component of that base.

Slightly more than a year ago, with respect to a similar bill in the last Congress, it was anticipated that a balance could be achieved. Again, it is anticipated that the bill will go to the full Senate for a vote before the House takes up H.R. 1260. Skeptics, however, still suggest that the bill is a long way from approval.

Gene Sequence Patent Attempt Fails Based on ‘Obvious to Try’ Standard

By Melissa Dobson

April 2009

The U.S. Court of Appeals for the Federal Circuit recently discredited its In re Deuel precedent by the U.S. Supreme Court’s decision on obviousness in KSR (See KSR International Co. v. Teleflex Inc., 127 S. Ct. 1727, 82 USPQ2d 1385 (2007)). The Court of Appeals held that “well-known cloning techniques” could derive the “readily knowable and obtainable structure of an identified protein” coded by that gene (In re Kubin, Fed. Cir., No. 2008-1184, 4/3/09).

The biotechnology industry has relied on the In re Deuel precendent as key to classic biotechnology patents. In Deuel, the Federal Circuit made two holdings key to biotechnology patenting: “knowledge of a protein does not give one a conception of a particular DNA encoding it,” and “obvious to try” is an inappropriate test for obviousness.

When Marek Kubin and Raymond Goodwin submitted a patent application (No. 09/667,859) for polynucleotides encoding natural killer (NK) cell activation inducing ligand polypeptides (NAIL), the USPTO examiner responded in a rejection of this and other claims under obviousness of 35 U.S.C. §103, and for lack of enablement and written description under 35 U.S.C. §112, para. 1. Because NK cells are implicated as mediators of host defenses against infection in humans with diseases such as varicella zoster, herpes simplex, hepatitis B, they are also involved with resistance and control of the spread of cancer. The Board of Patent Appeals and Interferences (BPAI) relied upon the earlier KSR decision of 2007, concluding that “at least one of appellants claimed polynucleotides would have been obvious to one of ordinary skill in the art at the time Appellants' invention was made” 83 USPQ2d 1410 (BPAI, 2007).

The Federal Circuit acknowledged “some minor advance in the art” with the Kubin/Goodwin invention, but affirmed the obviousness decision of the BPAI, and quoted KSR where “[g]ranting patent protection to advances that would occur in the ordinary course without real innovation retards progress.” Amicus briefs in support of Kubin have since been submitted by Novartis Vaccines and Diagnostics Inc., the Biotechnology Industry Organization, and SmithKline Beecham Corp. (d/b/a GlasoSmithKline) (on behalf of Johnson & Johnson and Amylin Pharmaceuticals Inc.), and Eli Lilly & Co. advocating reversal on the obviousness finding.


Federal Circuit to Get a Makeover

By Melissa Dobson

March 2009

The U.S. Court of Appeals for the Federal Circuit is expecting an overhaul in the next few years as 8 of the 12 judges sitting on the bench will become eligible for retirement or senior status. While the Federal Circuit rules on government contracts, veterans’ benefits, and other matters, it is also well known for its decisions regarding patent law. With an increase in patent filings and patent litigation, patent law prevails as one of the most important government policies related to innovation and economic growth.

Experts speculate about the incoming considerations for Federal Circuit judges and agree that it is less important to have a judge with expertise in patent law than one who concentrates on clear, consistent, and predictable legal decision-making. Other experts prefer new appointees with a mix of experience to contribute both perspectives.

In the past, the Federal Circuit has been criticized for lacking deference to district judges’ claim construction rulings. Lisa A. Dolak, professor at the Syracuse University College of Law, has stated that judges with legislative experience or work experience at the U.S. Patent and Trademark Office ("PTO") would be beneficial, though a trial judge appointment may open up dialogue on the issue.

Potential nominees for the U.S. Court of Appeals for the Federal Circuit include district court judges, private practice attorneys, and patent experts at universities. According to The National Law Journal, the university considerations may include: Mark A. Lemley, intellectual property professor at Stanford Law School; Robert P. Merges, patent expert at the University of California, Berkeley School of Law; Arti K. Rai, patent professor at Duke University School of Law; and John M. Whealan, Associate Dean for IP Law Studies at George Washington Law School.

Congress Reviews Patent Examiner Goals

By Erin Lawless

March 2009

The appropriations bill will provide the U.S. Patent and Trademark Office with $2.01 billion, but not without a catch – the money must be obtained by PTO pass-through fees.

In part, the appropriations bill states that as much as $5 million will be held back from the PTO until the PTO agrees to complete “a comprehensive review of the assumptions behind the patent examiner expectancy goals . . . and adopt a revised set of expectancy goals for patent examination.”

Some critics believe that the bill does little to effect actual change or improvement in the patent system. Under the new bill, it is feared that patent examiners will get paid more to do the same work without any substantive improvements being made. This is problematic in that the money is supposed to act as an incentive to improve the quality of patent examiners’ work – not as a pay scale upgrade.

Reform Priorities for 2009

By Erin Lawless

February 2009

Just before President Obama’s inauguration, the IP Section of the American Bar Association ("ABA") sent a report to his transition team indicating their priorities for reform in intellectual property law.

Among other things, the report recommended the expansion of the public’s right to submit prior art in pending patent applications. The ABA insinuated that submitters currently tend to avoid including prior art in submissions to the United States Patent and Trademark Office ("USPTO") due to a fear that the examiner will not appreciate the prior art’s significance. One reason for this fear, the ABA postulates, is that under current law, a submitter cannot make any kind of statement about the relevance of prior art.

The report also suggested that the PTO expand its Peer-to-Peer Pilot Program. This program would allow members of the public to pool their knowledge online and locate potential prior art.

In terms of improvements to the examination process, the ABA recommended that the PTO offer better opportunities for advancement and competitive compensation to help improve the quality of existing examiners’ work.

IP Legislation in 2009

By Erin Lawless

February 2009

Will there be any significant IP legislation in 2009? Some lawyers doubt it. Because efforts to pass a patent reform bill have fizzled out in so many past Congresses, it’s hard for some lawyers to imagine that this year will be any different.

In 2007, The Patent Reform Act passed in the U.S. House of Representatives; however, the companion bill in the Senate never really got off the ground and was halted in 2008.

For those longing for change, though, this isn’t all bad news. Court developments, over the last few years, have changed the needs for reform in several major areas, including venue reform and the standard for proving willfulness in infringement cases.

In Re Seagate Technology LLC
This case, in the U.S. Court of Appeals for the Federal Circuit, established a new test that requires patentees to show that the accused infringer acted with “objective recklessness”. In essence, this makes it much more difficult to achieve enhanced damages because there is a higher standard to prove.

In Re Volkswagen of America Inc.
This case, in the U.S. Court of Appeals for the Fifth Circuit, established a precedent that defendants could move cases to more convenient locations when plaintiffs filed in notoriously plaintiff-friendly districts, such as the Eastern District of Texas. The decision was based on the convenience of the witnesses, the ability of the parties to compel unwilling witnesses to testify, and the location of the evidence. This decision could make it easier for defendants to transfer in future patent cases.

Despite the case precedents set in the last year that mitigate some need for reform, skeptics point to the PRO-IP Act of 2008 (Prioritizing Resources and Organization for Intellectual Property), which Bush singed into law before leaving office. This Act could indicate that there will be more enforcement in 2009; however, more will be known once the position of “IP czar” is filled.

Technology Legislation for Startups in 2009

By Erin Lawless

February 2009

Technology Legislation is expected to advance in 2009. Issues to watch include net neutrality and green technology.

After the FCC upheld a complaint brought by subscribers who accused Comcast of interfering with online access to file-sharing applications, FCC Commissioner Kevin Martin commented that whenever net neutrality does get a full airing by the government, “it's going to be a complicated and contentious proceeding.”

Net neutrality, which has been one of President Obama’s concerns, is basically the prospect that the Internet should be free of restrictions on content, sites, or platforms; on the kinds of equipment that may be attached; and on the modes of communication allowed. Net neutrality also includes the concept of communication not being unreasonably degraded by other communication streams.

Another one of President Obama’s issues that is likely to get legislative attention early in the administration is green technology. This is particularly relevant for technology startups because $20B of the economic stimulus package is aimed at green jobs, so startups may be able to turn towards the government rather than high-overhead venture capital funding.

When money is being poured into green technology, though, patents matter a lot. If a startup’s patent policy is not in good working order, time and money can be lost in hold-ups that stem from patent issues in the commercialization process.

US Chamber of Commerce Suggests Reforms for the USPTO

By Melissa Dobson and Erin Lawless

January 2009

In late December, 2008, the U.S. Chamber of Commerce’s Global Intellectual Property Center ("GIPC") outlined its recommendations for the Obama administration. Overall, the recommendations call for an increase in IP enforcement. More specifically, the Chamber has suggested that the administration renegotiate the current fee schedule, facilitate ongoing training and retention of quality examiners, and transition the USPTO from a government agency to a government corporation.

Key issues facing the incoming administration include a massive USPTO backlog, a staff of limited examining experience, and another possibility of patent reform legislation. Options have included outsourcing particular searches to vendors; shortening the pendency of applications, which allows applicants an interview with the patent examiner prior to a first office action on the merits; and expanding the agency’s peer-to-patent program, which allows public evaluation of an invention via the Web.

The Chamber’s recommendation for restructuring the USPTO’s fee schedule requests that the new administration deal with the agency’s budget shortfalls while incentivizing practices that would speed patent examinations and enhance quality decision making. Additionally, the Chamber has urged the Obama administration to appoint a well-qualified undersecretary and director with patent and trademark prosecution or litigation experience, knowledge of information technology, and managerial experience with large businesses.

Similarly, the Chamber suggested that continuous relevant training for patent examiners may better support agency initiatives. For example, facilitating ongoing professional education for examiners, as well as offering incentives such as work flexibility, may increase retention of experienced examiners. In turn, by becoming a government-owned corporate entity, the USPTO could offer more competitive pay packages to bring about long-term career opportunities for examiners. Overall, these implemented changes would seek analysis of problems and offer potential solutions that would enable high-quality performance of the USPTO.

The Chamber encouraged Obama to conclude talks with major trading partners on the Anti-Counterfeiting Trade Agreement (“ACTA”). ACTA has been in the works for the last several years under the Bush administration but has thus far been hampered by watchdog agencies that are unimpressed by the operation’s lack of transparency.

Also, the GIPC recommended that the budget and resources for the IP division of U.S. Customs and Border Protection be increased. The Chamber stressed that in uncertain economic times, it’s more important than ever for the government to aggressively protect the rights of the innovative sectors.

Rocket Docket Shows Signs of Turning Plaintiff Hot Spot Cold

By Erin Lawless
January 2009

On December 29, 2008, the U.S. Court of Appeals for the Federal Circuit issued a writ of mandamus that will help defendants escape the Eastern District of Texas. This district has become known as “the rocket docket” due to its speedy handling of patent infringement suits and its penchant for siding with plaintiffs in patent litigation. It is also notorious for its reluctance to allow changes of venue.

The transformation of this district into a patent litigation hot spot has been attributed largely to the influence of Judge John Ward; however, after Judge Ward kept a products liability case from transferring in late December, the Federal Circuit ruled that he had “clearly abused” his discretion. TS Tech Co. had made a motion to transfer to a more convenient venue where the company had been sued for patent infringement on headrest assemblies, and Judge Ward denied the motion, basing his opinion on the Eastern District’s “substantial interest” in the case and citing the fact that some headrests were sold in that area. Judge Ward failed, however, to consider that the headrests were sold not only in the Eastern District of Texas but all across the country, leading the Federal Circuit to conclude that the Eastern District of Texas has no more substantial interest in this case than any other U.S. District.

IP Law Seems Recession-Proof

By Melissa Dobson

January 2009

Despite the economic downturn of 2008, the field of Intellectual Property (IP) remains strong. Though it is costly to obtain patents and trademarks, and further to protect them against alleged infringers, all companies are seeking to protect their assets – especially their IP assets.

As many companies scale back, they become even more aggressive about protecting their IP, doing everything possible to obtain and maintain a market share. Companies that want to protect their long-term position cannot afford to forgo their IP work. No matter the economy, corporations continue to protect their innovations; however, cost containment strategies may enable clients to seek greater efficiency in IP processes.


President Bush Signs the PRO-IP Act into Law

By Erin Lawless and Ju-Hyun Yoo

December 2008

Just prior to becoming a lame duck, President Bush took one last flight over the regulatory forefront of patent law, strengthening federal efforts against counterfeiting and piracy. On October 13, 2008, he signed the Prioritizing Resources and Organization for Intellectual Property Act ("PRO-IP Act"), formerly called the ‘Enforcement of Intellectual Property Rights Act’ (Pub. L. 110-403). The Act reinforces U.S. intellectual property laws by consolidating federal efforts under a new White House cabinet position—a U.S. Intellectual Property Enforcement Coordinator (“IPEC”)—commonly referred to by journalists and IP law firm blogs as the “Copyright Czar”.

The Coordinator’s team will be primarily responsible for developing a Joint Strategic Plan at the federal level to reduce counterfeiting and infringement. In addition to the executive branch, the Department of Justice will also receive increased resources (i.e., personnel, training, and equipment) to coordinate federal and state efforts against counterfeiting and piracy.

This legislation increases the minimum and maximum statutory damage awards in civil counterfeiting cases, and it increases the monetary payments in criminal cases involving counterfeiting and piracy as well.

By ensuring the enforcement of intellectual property rights, this law is expected to play a critical role in the development of the U.S. economy. Accordingly, the American business community and its advocates have been supportive.

Because Senate approval is a prerequisite for the creation of this executive position, it will most likely be President-elect Obama who appoints the first “Czar”, after taking office in January. Commentators have speculated that Obama will likely choose his former University of Chicago colleague Larry Lessig, an opponent of the expansion of IP protection.

USPTO: The Year in Review

By Erin Lawless

December 2008

  On November 17th, the USPTO released its year-end report, in which the organization claims to have “met and, in some cases, exceeded its patent pendency, production, and quality targets.”

Slight Increase in Pendency
Pendency—the time from filing until a patent is issued or the application is abandoned—was marginally higher in 2008 than in 2007.

Increased Production
Production is defined as the amount of patent applications that have been examined. Compared to the year-end report for 2007, the agency’s production has increased 14 percent. Compared to the year-end reports for the last four cumulative years, the agency’s production has increased 38.6 percent. In fact, in 2008, examiners handled 448,003 applications, the highest number in history.

Near-Perfect Quality
The USPTO reported a 95.8 percent quality level for first actions and a 97.2 percent quality level for final actions. Not only did these quality levels meet statutory compliance rates, but also they represent the highest levels ever achieved by the USPTO.

Electronic Filing
The agency received a record number of patent applications filed electronically— 332,000 applications, which is more than 72 percent.

Egyptian Goddess, Inc. v. Swisa, Inc.:
Court of Appeals for the Federal Circuit Clarifies Design Patent Infringement Test

By Alison M. Taroli and Elizabeth A. Urciuoli

November 2008

On September 22, 2008, the U.S. Court of Appeals for the Federal Circuit (“CAFC”), in Egyptian Goddess, Inc. v. Swisa, Inc., rejected the “point of novelty” test for design patent infringement, thereby lowering the applicable infringement standard and strengthening the potential value of design patents.

Courts previously applied two separate tests for design patent infringement. The first test – the “ordinary observer” test – was first articulated in Gorham Co. v. White, 81 U.S. 511, 528 (1871), in which the Supreme Court held that a design patent is infringed “if, in the eye of the ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other . . . .” The second test – the “point of novelty” test – was originally set forth by the CAFC, which held that, “[f]or a design patent to be infringed . . . ‘the accused device must appropriate the novelty in the patented device which distinguishes it from the prior art.’ That is, even though the court compares two items through the eyes of the ordinary observer, it must nevertheless . . . attribute their similarity to the novelty which distinguishes the patented device from the prior art.” Litton Systems, Inc. v. Whirlpool Corp., 728 F.2d 1423, 144 (Fed. Cir. 1984).

In Egyptian Goddess, however, the CAFC held that the “point of novelty” test was unnecessary to protect against unduly broad assertions of design patent rights because an “ordinary observer” is presumed to be familiar with the prior art. Id. at 17. The CAFC also noted that, unlike the simpler “ordinary observer” test, the “point of novelty” test proved problematic for courts to apply when a challenged design patent had multiple possible points of novelty. Id. at 19. Accordingly, the CAFC concluded that the “ordinary observer test should be the sole test” for design patent infringement. Id. at 21.

Senate Passes Orphan Works Act Over Copyright Owners’ Objections

By Erin Lawless

November 2008

On September 26, 2008, the U.S. Senate passed the Shawn Bentley Orphan Works Act of 2008 (“Orphan Works Act”) (S. 2913), which would limit the civil remedies for copyright infringement of “orphan works” – copyrighted works whose owners cannot be identified or located. A similar bill (H.R. 5889) is currently pending in the U.S. House of Representatives.

The Orphan Works Act was first introduced by Senators Patrick Leahy (D-VT), Robert Bennett (R-UT), and Orrin Hatch (R-UT) on April 24, 2008, in response to a report by the U.S. Copyright Office, which described the orphan works “problem [as] pervasive.” Citing the risk that universities, museums, libraries, and other would-be users might otherwise be denied access to these orphan works, the co-sponsors seek to limit the statutory or punitive damages for copyright infringement if the “infringer performed and documented a reasonably diligent search in good faith to locate and identify the copyright owner before using the work, but was unable to locate and identify the owner . . . .” S. 2913, 110th Congress (2008). The bill also requires good faith users of orphan works to provide “reasonable compensation” if an owner is subsequently identified or located.

The Orphan Works Act and its counterpart House bill have provoked considerable debate among would-be users, including universities, museums, libraries, archives, and filmmakers, as well as copyright owners, who fear that the legislation may substantially limit their ability to protect and, if necessary, recover damages for the unlicensed use of their works.


Top Universities for Research-Related Returns on Investment

By Erin Lawless

October 2008

In a recent report, Forbes ranked universities according to their success in commercializing research. Based on data collected by the Association of University Technology Managers in its 2006 survey of 189 research universities, Forbes calculated each university’s return on its research-related investments, i.e., its research-related revenue as a percentage of research-related expenditures. For example, New York University generated $157 million of research-related revenue from $210 million of research-related expenditures, which yields a 75% return on investment. The top fifteen research universities ranked by their returns on investment:

1. New York University: 75%
2. Wake Forest University: 41%
3. Stevens Institute of Technology: 16%
4. Ohio University: 13%
5. Brigham Young University: 11.7%
6. University of Rochester: 11%
7. University of Minnesota: 9.4%
8. University of Florida: 9.3%
9. Stanford University: 8.7%
10. Northwestern University: 8.6%
11. Mount Sinai School of Medicine: 7.5%
12. University of Massachusetts: 6.7%
13. University of Utah: 6.6%
14. University of California: 6.4%
15. University of South Alabama: 5.9%

Many of these universities rely on a few major breakthroughs to generate most of their revenue. For example, most of New York University’s revenue is attributable to Remicade, a rheumatoid arthritis drug. Similarly, two meningitis-related vaccines (Hibtiter and Prevnar) account for the majority of the University of Rochester’s revenue.

In re Swanson: Federal Circuit Clarifies the Scope of Patent Reexamination Proceedings

By Heather Giglio and Jennifer Reimers

October 2008

In April 1997, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) held that it was “inappropriate for the [U.S. Patent and Trademark Office (“PTO”)] to re-evaluate previously considered questions of patentability” in patent reexamination proceedings. In re Portola Packaging, Inc., 122 F.3d 1473 (Fed. Cir. 1997). In 2002, however, Congress amended the controlling statute, which permits reexamination proceedings where there is a “substantial new question of patentability,” to clarify that the “existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the [PTO] or considered by the [PTO].” 35 U.S.C. §303.

In its recent decision on September 4, 2008, In re Swanson, No. 07-1534, 2008 WL 4068691 (Fed. Cir. 2008), the CAFC addressed whether a secondary prior art reference cited in an initial patent examination and in prior infringement litigation precluded reexamination proceedings under the “substantial new question of patentability” standard. The patent at issue (No. 5,073,484) had been challenged, inter alia, on the grounds that a prior art reference warranted reexamination. In response, the patent holders argued that there was no “substantial new question of patentability” where the prior art reference had already been considered in prior litigation and the PTO’s initial examination.

The CAFC, however, noted that the prior art reference had only been cited in the initial examination for a limited contextual purpose and, therefore, concluded that, “[i]n light of the extremely limited purpose for which the examiner considered [the prior art] in the initial examination, the Board is correct that the issue of whether [the prior art] anticipates the method [subject to re-examination] . . . was a substantial new question of patentability, never before addressed by the PTO.” Similarly, the CAFC held that “Congress did not intend a prior court judgment upholding the validity of a claim to prevent the PTO from finding a substantial new question of validity regarding an issue that has never been considered by the PTO.”

Tiffany, Inc. v. eBay, Inc:
Court Holds eBay Not Liable for Contributory Trademark Infringement

By Jared M. Slater

September 2008

In its decision dated July 14, 2008, the U.S. District for the Court Southern District of New York held that eBay, Inc. (“eBay”) was not liable for direct or contributory trademark infringement related to the sale of counterfeit Tiffany, Inc. (“Tiffany”) merchandise on eBay’s website. Judge Richard J. Sullivan concluded that the “law is clear: it is the trademark owner’s burden to police its mark and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites.”

Tiffany’s principal argument was that an “overwhelming majority” of the jewelry sold on eBay using Tiffany’s mark was counterfeit. Tiffany further alleged that eBay was on notice that such counterfeit jewelry was being sold through its website and failed to take appropriate steps to curtail the problem. In response, eBay pointed to security measures that it had implemented to limit counterfeit sales and noted that its policy was to immediately remove the listings of counterfeit items upon notification. eBay also argued that Tiffany bore the ultimate responsibility to protect its mark.

In its analysis, the court analogized eBay to a flea market, as opposed to an online classified ad service, and found that eBay had sufficient control of its users’ actions. The court then examined eBay’s alleged actions under the standard articulated in Inwood Labs v. Ives Labs, 546 U.S. 844 (1982), which holds, in part, that contributory liability is warranted if a manufacturer or distributor continues to supply its product to a party it knows or has reason to know is engaging in trademark infringement.

Applying this standard, the court pointed to the absence of any specific instances in which eBay allowed trademark infringement to occur with specific knowledge of such infringement and ruled that Tiffany’s assertion that eBay had general knowledge of infringement was insufficient to meet the “know or reason to know” standard under Inwood. The court explained, “[w]ere Tiffany to prevail on its argument that generalized statements of infringement were sufficient to impute knowledge to eBay of any and all infringing acts, Tiffany’s right in its mark would dramatically expand, potentially stifling legitimate sales of Tiffany goods on eBay.”

Senate Judiciary Committee Approves
Enforcement of Intellectual Property Rights Act

By Erin Lawless

September 2008

On September 11, 2008, the U.S. Senate Judiciary Committee approved the Enforcement of Intellectual Property Rights Act of 2008 (“Enforcement Act”), which would permit the Department of Justice to litigate civil suits for copyright infringement on behalf of copyright owners and grant the president the authority to appoint an “Intellectual Property Enforcement Coordinator” to manage inter-agency enforcement actions.

Under the Enforcement Act, copyright owners would be entitled to damages awarded in enforcement actions. This provision, however, has prompted criticism that taxpayers will be required to fund enforcement actions on behalf of private copyright owners.

The “Intellectual Property Enforcement Coordinator” proposed by the Enforcement Act would be responsible for coordinating the enforcement actions of several federal agencies, including the Department of Commerce, Copyright Office, and Patent and Trademark Office.

The Enforcement Act also:

• Permits federal agencies to seize certain property used to infringe copyrights and trademarks;
• Directs the Comptroller General to research the impact of intellectual property piracy on domestic manufacturers; and
• Includes a non-binding resolution that the Department of Justice should prioritize cases involving software piracy and the willful theft of intellectual property for commercial or financial gain.

The Enforcement Act must still be submitted for a floor vote. In addition, certain provisions of the Enforcement Act must be reconciled with similar intellectual property enforcement legislation passed by the U.S. House of Representatives on May 8, 2008.

Quanta Computer, Inc. v. LG Electronics, Inc.:
Supreme Court Addresses the Patent Exhaustion Doctrine

June 2008

On June 9, 2008, the U.S. Supreme Court reversed the Court of Appeals for the Federal Circuit in a unanimous decision, Quanta Computer, Inc. v. LG Electronics, Inc., No. 06-937, that substantially strengthens the scope and potential application of the patent exhaustion doctrine. Under the patent exhaustion doctrine, a patent owner who makes an unrestricted and authorized sale of a patented technology is precluded from recovering additional consideration from or imposing additional usage restrictions on downstream purchasers.

In its decision, the Supreme Court held that the patent exhaustion doctrine precluded a patent owner’s infringement claims against downstream purchasers where the patent owner had previously granted an unrestricted license for the disputed technologies to a manufacturer that, in turn, sold products that “substantially embodied” the patented technologies to the downstream purchasers. Id. at 19. The Supreme Court also concluded that the patent exhaustion doctrine applied equally to both apparatus and method patents because “methods nonetheless may be ‘embodied’ in a product, the sale of which exhausts patent rights.” Id. at 9-10. Significantly, however, the Supreme Court declined to address “whether contract damages might be available even though exhaustion operates to eliminate patent damages.” Id. at 18 n.7.

Cornell University Secures $184 Million Patent Infringement Verdict
Against Hewlett Packard Co.

June 2008

On June 2, 2008, following an eight-day trial in the U.S. District Court for the Northern District of New York (J. Rader, sitting by designation), a jury awarded Cornell University (“Cornell”) damages of $184 million in a patent infringement action against Hewlett Packard Co. (“HP”).

The case, which was originally filed by Cornell in December 2001, involved HP’s alleged infringement of a patent (No. 4,807,115) for a computer instruction processing technique that increases the efficiency of multi-processor computers. The technique was first created in 1982 by professor emeritus H.C. Torng of Cornell’s School of Electrical and Computer Engineering; Cornell obtained a patent on the technique in 1989.

In its complaint, Cornell alleged that HP had infringed on the disputed patent since 1995 and originally sought $575 million in damages. In response, HP asserted that it had developed and used its own non-infringing technique for increasing processor efficiency. The jury, however, found that HP had infringed on the patented technique (although the jury did not find willful infringement).

The jury based its $184 million damages award on a royalty rate of 0.8 percent applied against HP’s sales of $23 billion over the relevant time period. Pursuant to Cornell’s patent policy, which grants faculty inventors a share of royalties and related proceeds from patented technologies, Torng is entitled to approximately 25 percent of the net proceeds. HP, however, has announced its intention to appeal the verdict.

Senate Withdraws Vote on Patent Reform Act

By Drew Berweger

May 2008

A scheduled floor vote on the Patent Reform Act of 2007 (“Reform Act”) was withdrawn from the U.S. Senate’s calendar on May 2, 2008. The Senate’s version of the Reform Act has stalled as legislators attempt to reach agreement on certain damages-related provisions.

In advance of the scheduled floor vote, members of the Senate Judiciary Committee, which had previously recommended the legislation for consideration by the full Senate, proposed several amendments to the Reform Act. To date, however, the legislators have been unable to agree on certain key provisions, including the calculation of damages awards in patent infringement actions.

There is currently no timeline for rescheduling the legislation for a floor vote. The U.S. House of Representatives passed similar patent reform legislation on September 7, 2007.

USPTO Affirms Validity of Key Stem Cell Patents

By Heidi M. Pease

May 2008

The U.S. Patent and Trademark Office (“USPTO”) has affirmed the validity of three embryonic stem cell patents held by the Wisconsin Alumni Research Foundation (“WARF”), a nonprofit patent and technology licensing affiliate of the University of Wisconsin-Madison (“UW”). The three patents are based on human and primate embryonic stem cell lines that were isolated a decade ago by James Thompson, a UW professor of anatomy and the director of regenerative biology at the Morgridge Institute for Research. Since these patents were issued (in 1998, 2001, and 2006), however, several advocacy groups have challenged these patents as overbroad to the extent that they grant WARF controlling rights to all human and primate embryonic stem cell populations derived from fertilized embryos.

In July 2006, the Public Patent Foundation and Foundation for Taxpayer and Consumer Rights requested that the USPTO reexamine the validity of the three WARF patents on the grounds that these patents are based on “obvious” methods, overbroad in scope, and contrary to the public interest in promoting stem cell research. In April 2007, the USPTO issued a preliminary rejection of the three patents and initiated formal reexamination proceedings.

The USPTO, however, subsequently upheld one of the embryonic stem cell patents (U.S. Patent No. 7,029,913) in February 2008 and affirmed the validity of the remaining two patents (U.S. Patent Nos. 5,843,780 and 6,200,806) in March 2008. In its decisions, the USPTO concluded that the methods utilized to isolate the human and primate embryonic stem cell lines were “not obvious” from prior research. The USPTO’s decision regarding the first patent may be appealed to the USPTO’s Board of Appeals, but its decision regarding the remaining two patents is final and non-appealable.

Significantly, WARF clarified the scope of the claims asserted under the three patents and waived its entitlement to certain potential damages during the USPTO’s reexamination proceedings. Over the last year, WARF has also eased its requirements for licensing the disputed stem cell lines, including the grant of free licenses to academic and nonprofit organizations that use the patented stem cell lines solely for research purposes.

In Re Bilski: The Federal Circuit Re-Examines Method Patents

By Blaine T. Bettinger

April 2008

When the Supreme Court dismissed certiorari in Laboratory Corp. of America Holdings v. Metabolite Labs., Inc. 126 S. Ct. 2921 (2006), Justice Breyer (joined by Justices Stevens and Souter) noted that, although the Court of Appeals for the Federal Circuit (“Federal Circuit”) has previously held that a process involving a “useful, concrete, and tangible result” could be patentable subject matter, State Street Bank & Trust Co. v. Signature Fin. Group, Inc. 149 F.3d 1368 (Fed. Cir. 1998), the Supreme Court has “never made such a statement, and if taken literally, the statement would cover instances where this Court has held the contrary.”

Soon after Metabolite, in the dissent from another patent case, Justice Kennedy (joined by Justices Stevens, Souter, and Breyer) expressed his concern regarding “the potential vagueness and suspect validity of [business method] patents.” eBay, Inc. v. MercExchange, L.L.C. 126 S. Ct. 1837 (2007).

These two Supreme Court cases indicate that at least four Justices are concerned about the patentability of method patents. In this current atmosphere, the Federal Circuit is hearing an en banc appeal from a decision of the Board of Patent Appeals and Interferences (“BPAI”) that may reinforce or reject the Federal Circuit’s prior holding in State Street Bank.

On April 10, 1997, inventor Bernard Bilski filed a patent application entitled “Energy Risk Management Method.” The U.S. Patent and Trademark Office (“USPTO”) examiner rejected Bilski’s claims under 35 U.S.C. § 101 because he claimed an “abstract idea.” On appeal, the BPAI held that the Bilski application involved a “non-machine-implemented” method since certain claims were broad enough to be performed without the use of a machine. As such, the BPAI concluded that the outcome of the appeal was not controlled by State Street Bank because that case involved the transformation of data through the use of a machine. As a result, the BPAI concluded that the challenged claims did not claim patentable subject matter and affirmed the USPTO’s rejection of Bilski’s application.

The Federal Circuit heard oral argument regarding the Bilski application on October 1, 2007, but on February 15, 2008, the court issued Order No. 07-1130 (“Order”), which asked the parties to file supplemental briefs addressing the following issues:

(1) Whether claim 1 of the [Bilski] patent application claims patent-eligible subject matter under 35 U.S.C. § 101;

(2) What standard should govern in determining whether a process is patent-eligible subject matter under section 101;

(3) Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter;

(4) 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; and

(5) Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case; and, if so, whether those cases should be overruled in any respect.

The parties filed supplemental briefs on March 6, 2008, and non-party amici briefs were filed on April 7, 2008. Oral argument will be heard en banc on May 8, 2008. 

Court Permanently Enjoins USPTO-Proposed New Rules

By Drew Berweger

April 2008

On April 1, 2008, the U.S. District Court for the Eastern District of Virginia (J. Cacheris) permanently enjoined the U.S. Patent and Trademark Office (“USPTO”) from implementing its proposed new patent rules, which would have restricted the number of continuing applications (to 2) and requests for continuing examinations (to 1) and required additional documentation for applications that contained more than 5 independent claims or 25 total claims, on the grounds that the proposed rules are in excess of the USPTO’s statutory authority.

Plaintiff Glaxo Smith Kline (“GSK”) had challenged the proposed rules as an unlawful agency action under Section 706(2) of the Administrative Procedure Act. In response, the USPTO asserted that the proposed rules are procedural, rather than substantive, in nature because they govern the conduct of proceedings before the USPTO. The court, however, found that the USPTO’s “rulemaking authority . . . does not extend to substantive rules, and . . . the [proposed] [r]ules are substantive in nature” because they would have affected “individual rights and obligations.” Accordingly, the court granted GSK’s motion for summary judgment. The court had previously issued a preliminary injunction enjoining the implementation of the proposed rules on October 31, 2007.

Patent Auctions: Another Option for Unlocking Liquidity

By Drew Berweger 

April 2008

For patent owners wary of making the leap from the laboratory to the marketplace, a patent auction offers another possible option for extracting value from patents and other intellectual property assets. A patent auction provides sellers with immediate liquidity and frees them from future potential costs and/or legal challenges. Several companies, including 33M+, RKS Guitars, and MyoRx, have used patent auctions to liquidate unused assets in their patent portfolios. Conversely, a patent auction may provide bidders with an efficient method for filling gaps in their patent portfolios as well as protecting current and future products.

In a recent auction by Ocean Tomo Auctions, LLC (“Ocean Tomo”) on April 2, 2008, cumulative sales totaled almost $20 million, with an average sale price of $370,368 per lot. Four lots sold for more than $1 million, and approximately 62% of the offered lots were sold during the auction. For all lots sold during an auction, Ocean Tomo charges the buyers a 10% commission and the sellers a 15% commission. Ocean Tomo’s next patent auction is scheduled for June 25-26, 2008.

The U.S. District Court for the Eastern District of Virginia
Enjoins the USPTO-Proposed New Rules 

by Drew Berweger 

March 2008

The new rules proposed by the U.S. Patent and Trademark Office (“USPTO”), which were to go into effect on November 1, 2007, have temporarily been put on hold by the U.S. District Court for the Eastern District of Virginia because of a challenge filed by Glaxo Smith Kline (“GSK”). The USPTO has proposed several new rules in an attempt to improve the quality of patents issued and decrease the time required for patent issuance.

Specifically, the USPTO has proposed to change rules relating to continuing applications, Requests for Continued Examination, and limitations on patent claims. The proposed rules would restrict patent applicants to two continuing applications and one Request for Continued Examination as well as require an applicant to submit a lengthy Examination Support Document for applications with more than 5 independent claims or 25 claims in total.

GSK alleged that the USPTO’s proposed rules were promulgated without proper legal authority and were vague, arbitrary, and capricious. Accordingly, GSK requested that the district court issue a preliminary injunction restraining the USPTO from enacting the proposed rules. The district court found that there was a genuine possibility that the USPTO would lose the lawsuit, GSK would suffer irreparable harm if the proposed rules went into effect, the balance of hardships favored GSK, and the public interest would not be adversely affected by a preliminary injunction.

The USPTO-proposed rule changes are different and separate from the changes contemplated by the Patent Reform Act, which is currently being considered in Congress. A Patent Reform Act bill has been passed by the House of Representatives, and a similar bill is still being debated in the Senate. The current USPTO rules will remain in effect until the Senate passes the Patent Reform Act or until a decision on the merits is issued by the district court.

China: A Quick Overview of an Emerging Patent System

By Drew Berweger

March 2008

Similar to the United States, China has 3 types of patents - invention, utility, and design. An invention patent will protect a product or method for 20 years from the date the patent application is filed. A utility patent only covers a product and has a 10-year life from the date of filing. A design patent covers the ornamental design of a product and also has a 10-year life from the date of filing. An invention patent is examined for novelty, inventiveness (i.e., non-obviousness), and industrial usefulness. By comparison, a utility patent is for simple improvements on existing inventions and is not subject to substantive examination based on novelty or inventiveness; instead, a utility patent is only subject to a procedural examination to assure that the correct forms have been used and the necessary information has been provided.

There are also restrictions on the subject matters considered eligible for a patent in China. For example, a patent cannot be granted for an invention or creation that is contrary to the laws of the state or social morality or that is detrimental to public interest. Other subject matters which are not eligible for patent protection in China include methods for the diagnosis or treatment of diseases, animal and plant varieties, substances which could be obtained by means of nuclear transformation, and mental activities (i.e., business methods).

Two other points of note: (1) patent applications in China must be submitted in the Chinese language or translated within 20 months of filing; and (2) the average examination time for invention patents in China is 22 months.

For additional information:

Venue: Where Will All the Patent Infringement Suits Go?

By Drew Berweger 

March 2008

The proposed Patent Reform Act may have a major impact on where future patent infringement suits are filed. Currently, the U.S. District Court for the Eastern District of Texas is the most favored venue for filing patent infringement suits. From August 1, 2007 to November 1, 2007, 110 patent infringement cases were filed in the Eastern District of Texas, which was 47 more cases than the second most popular court, the U.S. District Court for the District of New Jersey. However, under the proposed Patent Reform Act, few plaintiffs would be able to file patent infringement actions in the Eastern District of Texas.

Under the present law, an infringement suit may be brought where the defendant resides or where the infringement occurred, so long as the defendant has a regular and established place of business in that jurisdiction. This expansive standard made it possible to file an infringement suit nearly anywhere in the United States by simply purchasing an “infringing” product at a retail store in that particular jurisdiction. The "infringement" would thus occur where the product was purchased, and as long as the product remained on sale, the defendant would be deemed to have an established or regular place of business in that jurisdiction.

House Bill 1908, however, limits the potential venues for any civil action for patent infringement or any action for declaratory judgment relating to a patent. If the Senate passes a similar bill, which is currently under deliberation, these venue provisions will restrict a plaintiff's options for filing a patent infringement suit. The bill would not allow a party to create venue by assignment, incorporation, or joinder or to otherwise invoke the venue of a specific district court. Below is a summary of where, under House Bill 1908, a patent infringement suit may be brought: .

1. Where the defendant has its principal place of business or is incorporated;

2. Where the defendant has committed a substantial portion of the acts of infringement and has an established physical facility that the defendant controls which constitutes a substantial portion of the defendant’s operation;

3. Where the plaintiff resides if the plaintiff is one of the following:

a. An institution of higher learning;
b. A non-profit organization that serves primarily as the patent and licensing organization for an institution of higher learning.

4. Where the plaintiff has a place of business that is engaged in substantial:

a. Research and development;
b. Manufacturing activities; or
c. Management of research and development or manufacturing activities related to the dispute.

5. Where the plaintiff resides if the plaintiff is a named inventor and has not assigned, conveyed, or licensed any rights in the patent.

If these venue provisions are adopted, they will apply retroactively to all cases commenced in a U.S. district court on or after September 7, 2007. If a case has been filed in a venue that is not proper under the proposed venue provisions, it will be transferred to the jurisdiction in which it would have been initially proper to bring the case.
Likely Supreme Court Justice Picks

By Erin Lawless

May 2010

While President Obama and White House officials contemplate candidates to replace Justice John Paul Stevens as our newest Supreme Court Justice, the media speculates and weighs the likely nominees. Among pundits and newscasters, the general consensus is that the next Supreme will be one of the following.

Merrick Garland
Judge Garland is currently considered a moderate on the U.S. Court of Appeals for the District of Columbia Circuit. He studied law at Harvard Law School and has worked in the Justice Department under President Carter, H.W. Bush and Clinton.

Jennifer Granholm
Currently a second-term governor in Michigan, Ms. Granholm studied law at Harvard Law School and was Michigan’s first female attorney general.

Elena Kagan
Ms. Kagan is currently a U.S. solicitor general who argues cases in front of the Supreme Court. She studied law at Harvard Law School and later served there as a professor and dean. Ms. Kagan has also held positions as Associate Counsel to the president at the White House and Deputy Assistant to the President for domestic policy. She was a finalist when Sonia Sotomayor was appointed to the Supreme Court in 2009.

Martha Minow
Ms. Minow is currently Dean of Harvard Law School. She also serves on the bipartisan board of Legal Services Corporation, where she was appointed by President Obama to help provide legal help to low-income Americans. She studied law at Yale Law School.

Carlos Moreno
Judge Moreno is currently the lone Democrat on the California Supreme Court. While serving, he opposed Proposition 8, the voter-approved referendum to ban gay marriage. He studied law at Stanford Law School.

Janet Napolitano
Ms. Napolitano is currently the Secretary of the Department of Homeland Security. She studied law at the University of Virginia School of Law and has served as the governor of Arizona.

Leah Ward Sears
Ms. Sears is currently an Atlanta, Georgia lawyer. She studied law at the Emory University School of Law and the University of Virginia School of Law. Ms. Sears has previously served as Chief Justice of the Georgia Supreme Court, where she was the first female African American Chief Justice.

Sidney Thomas
Judge Thomas is currently considered a liberal on the U.S. Court of Appeals for the 9th Circuit. He studied law at the University of Montana School of Law and was a professor at Rocky Mountain College.

Ann Claire Williams
Judge Williams is currently considered a moderate on the 7th U.S. Circuit Court of appeals, which is based in Chicago, Illinois. She studied law at the University of Notre Dame and has previously worked as a public school teacher in Detroit, Michigan.

Diane Wood
Judge Wood is currently considered a consensus builder on the 7th U.S. Circuit Court of Appeals in Chicago, Illinois. She studied law at the University of Texas at Austin. Judge Wood previously served as Deputy Assistant General in the antitrust division of the U.S. Department of Justice. She was a finalist when Sonia Sotomayor was appointed to the Supreme Court in 2009.