Particularity Standard Precludes Magic Incantations of Inequitable Conduct
Bayer Patent Is KSR'd As "Obvious to Try"
Infringing Characteristic Need Not Be Present in Finished Product
Rejections Reversed Where Board Just Did Not Understand Claim Limitations
Lab Notebook Entries Save the Day for University of Pittsburgh in an Inventorship Contest
Adding Material from an Ancestor Application to an Issued Patent During Reexamination Not Allowed
Patentee's Actions Before USPTO Determine Admissibility of New Evidence in Section 145 Cases
Twenty-One Day Safe Harbor Applies To Rule 11—No Matter What
Virginia Court Has Jurisdiction over Canadian Attorney Who Never Entered the State
En Banc Federal Circuit Overturns Union
Carbide and Rules that Methods Are Not Subject to § 271(f)
Infringement Claims
By Paul Devinsky
The en banc U.S. Court of Appeals for the Federal Circuit has overturned its 2007 Union Carbide Corp. v. Shell Oil Co. precedent, ruling that 35 U.S.C. § 271(f) does not cover method claims. Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., Case Nos. 07-1296, -1347 (Fed. Cir., Aug. 19, 2009) (en banc) (Lourie, J.) (Newman, J.; dissenting).
Section 271(f) provides a form of offshore patent infringement relief against persons who sell the "components" of a patented invention in the United States for assembly abroad. The statue provides that one who "supplies ... in or from the United States, all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components" shall be liable as an infringer.
The History of § 271(f) at the Federal Circuit and Supreme Court
In its 2005 decision in Eolas Technologies, Inc. v. Microsoft Corp., the Federal Circuit held that Microsoft could not avoid § 271(f) liability by exporting golden master disks containing software code that were subsequently copied onto computer hard drives and sold outside the United States. Although the Eolas decision involved both product and method claims, the context of "patented invention" in that case that was an apparatus claim. In holding that Microsoft was liable under § 271(f), the Court found that the software code on Microsoft's master disks was a "component" of a patented invention under § 271(f) and that the term "component" was not limited to physical items.
Shortly thereafter the Federal Circuit issued its decision in AT&T Corp. v. Microsoft Corp. (AT&T I). AT&T I involved a factual scenario similar to that in Eolas; Microsoft exported golden master disks containing software that was covered by a patent held by AT&T. The software, once shipped abroad, was copied onto hard drives and sold to foreign customers. In AT&T I, the Federal Circuit, relying on its Eolas decision, held that intangible software code was capable of being a component of a patented invention and that such software was "supplied" for purposes of § 271(f) when a "single copy [was sent] abroad with the intent that it be replicated."
In 2006, in Union Carbide a Federal Circuit panel explicitly held that § 271(f) applied to method claims. The Union Carbide case involved the export of a catalyst for performing a patented method for producing ethylene oxide. The panel held that the exportation of the catalyst and use of the patented method abroad implicated § 271(f), finding the catalyst to be "component" under § 271(f). The panel held that "because § 271(f) governs method/process inventions, [defendant's] exportation of catalysts may result in liability" under that section.
Then, in 2007, the Supreme Court granted certiorari and reversed the Federal Circuit decision in AT&T I (AT&T II). In AT&T II, the Supreme Court held that Microsoft did not supply combinable components of a patented invention when it shipped master disks abroad to be copied. Because the foreign-made copies of Windows that were installed on computers were supplied "from places outside of the United States," the Supreme Court held that Microsoft had not supplied components from the United States. However, the Supreme Court reserved the issue of whether "an intangible method or process ... qualifies as a 'patented invention' under § 271(f)," but noted that if so, the "combinable components of that invention might be intangible."
Federal Circuit Analysis
Against that background, the Federal Circuit took, en banc, the issue of whether § 271(f) applies to method claims—and ruled that it does not.
The Court disagreed with Cardiac's definition of "component" that would encompass "the apparatus that performed the process" as "clearly contrary to the text of § 271(f)" and inconsistent with the statute considered in context. As the Court explained, § 271(c) contrasts "a component of a patented machine, manufacture, combination, or composition" with a "material or apparatus for use in practicing a patented process" thus evidencing the belief of Congress that a "component" was separate and distinct from a "material or apparatus for use in practicing a patented process." On this basis the Court reasoned that "a material or apparatus for use in practicing a patented process is not a component of that process. The components of the process are the steps of the process." As the majority explained, § 271(f) "requires that components be 'supplied' and it is that [that] requirement that eliminates method patents from § 271(f)'s reach ... since supplying an intangible step ... is a physical impossibility."
In a passage almost certain to be quoted in scores of future briefs, the Court concluded:
Applied to the facts of this case, the Court found that the implantable cardioverter defibrillators (ICDs) shipped outside of the United States do not infringe Cardiac's method claim, which requires the steps of determining a heart condition, selecting cardioversion as the appropriate therapy and executing a cardioverting shock. Since Cardiac's allegation is only that St. Jude is shipping a device that is capable of performing the claimed method, the court concluded that St. Jude is not liable for infringement under § 271(f) based on ICDs exported abroad.
The Dissent
In Judge Newman's view "the statutory term 'patented invention' in § 271(f) has the same meaning in this subsection as in every other part of Title 35: it is the general term embracing all of the statutory classes of patentable invention."
Judge Newman chides the majority's "physical impossibility" analysis as it relates to delivering "components" of a process claim, noting that "[e]ach step of a process is a component thereof, which, when combined with the other steps, performs the process." She notes that in BMC Resources, Inc. v. Paymentech, L.P., "this court held that process claims are infringed when some steps are practiced by one entity and other steps are practiced by another, provided that the charged entity controls or directs the conduct of the other." In other words, in BMC the court necessarily concluded that "the practice of steps of the patented method can be combined, whereby the party that performs earlier steps 'supplies' this component to the party that performs the later steps." Judge Newman sees the same principle in applying § 271(f) to processes that are partly performed in the United States. "Surely there is no cause to conclude, as the majority concludes, that it is a 'physical impossibility' to read § 271(f) as applying to processes."
Judge Newman is concerned that under the majority view, when a patented process is practiced so that some steps are performed in the United States and other steps are performed offshore, "the purloiner of the patented process may escape liability everywhere, for United States infringement is avoided if all of the process steps are not practiced in the United States, and infringement of foreign patents is avoided for the same reason. It cannot be that the legislators intended to enable avoidance of process patents by this ploy, while correcting it for machine patents. A statutory interpretation that results in all process inventions being seriously devalued, is not free of the charge of 'absurd result.'"
Practice Note: As always, practitioners should endeavor to protect each invention using as many statutory claim forms as possible. Now, with the § 271(f) arrow removed from the patent owners' quiver in terms of enforcing process claims, clear and enforceable product/apparatus claims are more important then ever. Of course method or process claims remain viable enforcement candidates under §§ 271(a)-(e) and (g). The demise of the Union Carbide decision is likely to adversely affect holders of process patents to the advantage of the information and process industries that argued (in amici filings) they were improperly threatened by damage claims based on § 271(f).
Particularity Standard Precludes Magic
Incantations of Inequitable Conduct
By Matthew McCloskey
Following the lead of the U.S. Court of Appeals for the Seventh Circuit, the U.S. Court of Appeals for the Federal Circuit held that when pleading inequitable conduct in patent cases, Rule 9(b) of the Federal Rules of Civil Procedure requires identification of the specific who, what, when, where and how of the material misrepresentation or omission committed before the U.S. Patent and Trademark Office (USPTO). Exergen Corp. v. Wal-Mart Stores, Inc., Case Nos. 06-1491, 07-1180 (Fed. Cir., Aug. 4, 2009) (Linn, J.)
S.A.A.T. Systems Application of Advanced Technology and Daiwa Products, Inc. (SAAT) appealed a district court's denial of its motion for judgment as a matter of law (JMOL) after a jury found that SAAT willfully infringed three of Exergen's patents directed to infrared thermometers. SAAT also appealed the lower court's denial of its motion for leave to amend its answer to allege that two of the patents at issue were unenforceable due to inequitable conduct. Concluding that Exergen failed to introduce substantial evidence to support the jury's finding that two of the asserted patents were infringed and also that all of the claims of the third patent were anticipated by prior art, the Federal Circuit reversed the lower court's holding as to infringement and validity. On the issue of SAAT's motion to amend its answer, the Court affirmed the district court's decision that SAAT's allegations of inequitable conduct failed to satisfy the heightened pleading requirement of Federal Rule of Civil Procedure 9(b).
In the motion for leave of the lower court to amend its answer, SAAT had alleged that two of the Exergen patents were unenforceable due to inequitable conduct by Exergen, its agents and attorneys. The main thrust of SAAT's inequitable conduct contention was that for the prosecution of those two patents, two prior art patents known to Exergen were material and intentionally withheld by Exergen from the USPTO. One of these prior art patents was cited by Exergen for the prosecution of the third Exergen patent-in-suit, but not for the other two patents.
On appeal, SAAT argued that its allegations of Exergen's inequitable conduct were sufficient under the U.S. Court of Appeals for the First Circuit's "time, place, and content" test for Rule 9(b). The Court, however, disabused SAAT on this point, noting that the Federal Circuit properly applies its own law, not the law of the regional circuit, to the question of whether inequitable conduct has been pleaded with sufficient particularity under Rule 9(b). Regarding the "particularity" requirement of Rule 9(b), the Court adopted the test of the Seventh Circuit in Dileo v. Ernst & Young and held that in pleading inequitable conduct cases, Rule 9(b) requires identification of the specific who, what, when, where and how of the material misrepresentation or omission committed before the USPTO.
Noting that SAAT's factual allegations were not specific and that deceptive intent was pleaded solely on information and belief, the Court stated that the district court was correct not to draw any permissive inference of deceptive intent with regard to the prior art patent that was cited for just the sole Exergen patent, "lest inequitable conduct devolve into 'a magic incantation to be asserted against every patentee' and its 'allegation established upon a mere showing that art or information having some degree of materiality was not disclosed.'"
Practice Note: Going forward, supplemental inequitable conduct pleadings may be required after initial discovery to meet the standard announced in this case.
Bayer Patent Is KSR'd As "Obvious
to Try"
By Paul Devinsky
Affirming the district court ruling invalidating Bayer's patent covering the birth-control drug Yasmin® on the basis of obviousness, a divided panel of the U.S. Court of Appeals for the Federal Circuit held that claims to a "microized" (in terms of particle size) drug formulations was an obvious way to try to increase the exposed surface, notwithstanding prior art that said it couldn't be done. The dissent argued that what might seem obvious to judges in retrospect, was not obvious to scientists at the time the drug was developed. Bayer Schering Pharma AG v. Barr Laboratories, Inc., Case No. 08-1282 (Fed. Cir., Aug. 5, 2009) (Mayer, J.) (Newman, J., dissenting).
The use of drospirenone as an oral contraceptive was well known. In additional to inhibiting ovulation, it was known to be a diuretic and to have anti-acne qualities. However, drospirenone was also known to be acid-sensitive. Also, because drospirenone has poor water solubility, in order to increase bioavailability pharmaceutical producers commonly employ a technique called "micronization," whereby the drug's particle size is reduced, increasing its overall surface area. However, micronizing an acid-sensitive composition has the deleterious effect of increasing its sensitivity to the acid.
One prior art method used to surmount acid-sensitivity was to deliver the drug via an enteric-coated pill, i.e., a pill that releases its drug only after it has passed to the small intestine. However, enteric-coated tablets present an obstacle to absorption, thus further reducing the drug's already limited bioavailability. Such coatings also introduce a significant and patient-variable delay in the onset of therapeutic response, making a one-size-fits-all dose tablet problematic.
Tack, a Bayer scientist, began work in 1983 to develop drospirenone into an oral contraceptive. At the time, another Bayer scientist, Krause, had been working with a related compound, spirorenone, as a diuretic. When consumed, spirorenone metabolizes into drospirenone, which is still a diuretic, but was found to have contraceptive effects resulting from the appearance of drospirenone when it metabolized. Tack considered Krause's work with drospirenone, including in vivo studies that indicated drospirenone was a metabolite of spirorenone.
Tack's studies led him to conclude that an enteric coating was needed. For five years, Bayer used this coated pill in its studies, even reconfirming in 1988 that drospirenone needed an enteric coating because of stomach acid issues. However, during later studies, Tack found that the uncoated pill and the enteric-coated pill resulted in the same bioavailability. Following this study, Bayer developed drospirenone in a "normal," i.e., uncoated pill, which was claimed in the '531 patent.
During prosecution Bayer relied on Tack's finding that drospirenone could be absorbed in an uncoated pill form to overcome an obviousness rejection, noting that the prior art taught against micronizing drospirenone without also using an enteric coating. The examiner allowed the claims, giving the specific reason that the prior art suggested that micronizing drospirenone would not work in an acid environment.
After Barr filed an Abbreviated New Drug Application (ANDA) with the U.S. Food and Drug Administration (FDA) seeking approval to market a generic version of Yasmin®, Bayer filed suit. The parties agreed that if the '531 patent is valid, Barr infringes. Barr alleged that claims were obvious. Based on the Krause studies, the district court found the claims to be invalid as obvious, notwithstanding the prior art teaching that micronizing drospirenone would only increase its sensitivity to stomach acid. The district court reasoned that a person of ordinary skill would be aware of the study's shortcomings, and would verify, with further tests, whether micronized drospirenone could be absorbed. Thus, the district court held that under KSR, it would have been obvious to a person having ordinary skill in pharmaceutical formulation to try an uncoated pill in formulating micronized drospirenone as an oral contraceptive. Bayer appealed.
In KSR, the Supreme Court stated that an invention may be found obvious if it would have been obvious to a person having ordinary skill to try a course of conduct. The Federal Circuit explained that the "obvious to try" prong of KSR occurs in two settings. An invention would not have been obvious to try when the inventor would have had to try all possibilities in a field unreduced by direction of the prior art. "When what would have been 'obvious to try' would have been to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful an invention would not have been obvious." Rather, an invention is obvious to try only where "the number of options [are] small or easily traversed."
In addition, the Supreme Court explained that "an invention is not obvious to try where vague prior art does not guide an inventor toward a particular solution. A finding of obviousness would not obtain where what was obvious to try was to explore a new technology or general approach that seemed to be a promising field of experimentation, where the prior art gave only general guidance a to the particular form of the claim invention or how to achiever it." This, the Supreme Court explained, comports with KSR's "requirement that the identified solutions be 'predictable.'"
The Federal Circuit reasoned that in this case, a person having ordinary skill in the art would have reached "a crossroads where he must choose between two known options," i.e., delivery of micronized drospirenone by an uncoated pill or delivery of drospirenone by an enteric-coated pill. Concluding that this is a case of finite number of identified, predictable solutions the majority concluded that the invention would have been obvious.
In dissent, Judge Newman argued that "it would [not] have been obvious to do that which was indisputably unobvious to the experienced formulation scientists whose assignment was to formulate the known product drospirenone." Judge Newman faulted her colleagues for "employing their own expertise" in concluding "the scientist working in this field turned out to be mistaken" and that "it would have been obvious that it was not necessary to take steps to prevent acid degradation." Judge Newman further faults the majority for discounting the testimony of the scientists and ignoring the knowledge concerning product instability in acid in order to find that what appeared to be an unlikely to succeed process obviously should have been tried. "That is not the law of obviousness."
According to Judge Newman, the Supreme Court in KSR explained that the standard for "obvious to try" is whether there was a "reasonable expectation of success" at the time. Here , Judge Newman concludes "it was not reasonably expected that uncoated micronized drospirenone would be 99+% effective as an oral contraceptive when ingested into the acidic stomach, when it was known to degrade rapidly in acid."
Judge Newman would reverse the district court, noting that its conclusion regarding obviousness under the "obvious to try" standard was based on a finding that micronization was a viable option, although success was uncertain. In Judge Newman's view, "viability" implies that the experiment may or may not succeed and is not the correct standard. "What the law requires is not guesswork, not dumb luck, but a reasonable degree of predictability of success."
Infringing Characteristic Need Not Be
Present in Finished Product
By Kevin P. Shortsle
The U.S. Court of Appeals for the Federal Circuit affirmed a district court's claim construction, holding that a structural component defined in terms of its function need only be flexible at the time of manufacture and not in the finished product. Gemtron Corp. v. Saint-Gobain Corp., Case No. 2009-1001 (Fed. Cir., July 20, 2009) (Linn, J.).
Gemtron accused Saint-Gobain of infringing Gemtron's patent directed to a two-piece refrigerator shelf comprised of a frame and a glass panel, in which the frame includes "a relatively resilient end edge portion that temporarily deflects and subsequently rebounds to snap-secure" the glass panel. Saint-Gobain did not dispute that during manufacture of the accused shelves, the frame was heated to a temperature at which it became flexible enough to temporarily deflect upon insertion of a glass panel and subsequently rebound to snap-secure the glass panel. However, Saint-Gobain showed that the accused shelves were not sufficiently flexible to allow insertion of glass into the frame at room temperature because the frame lost its flexibility after cooling. The district court construed "relatively resilient" as a characteristic occurring when the glass was inserted into the frame during manufacture, rather than at the time of actual use in a refrigerator or freezer. As a result, the accused shelves were found to infringe the patent-in-suit. Saint-Gobain appealed.
The Federal Circuit affirmed. Saint-Gobain argued that "relatively resilient" should mean that the end edge portion is sufficiently flexible to permit glass in the finished product to be pushed out of the frame and back into the frame. The Court disagreed and found that the claim language suggested that the claimed resilience only needed to be exhibited during assembly. The Court also found that, even though the claim language tied the "relatively resilient" characteristic to its function in assembling the shelf, "that characteristic is nonetheless a structural attribute possessed by the claimed frame and is not a process limitation." In addition, the Court relied on the specification to show that the "relatively resilient" terminology was always mentioned in the context of how the shelf was assembled and was never mentioned any purpose or value of being "relatively resilient" other than in the context of facilitating assembly of the shelf.
Saint-Gobain also argued that the Court's construction transformed the limitation into a product-by-process limitation. The Court stated that the claim requires the glass panel be snap-secured in the frame, which is a structural relationship possessed by the claimed shelf. Accordingly, defining a structural component by both its functional and physical characteristics was different from defining a structure solely by the process of making the structure. Therefore, the Court concluded that its construction did not transform the claim language into a product-by-process limitation.
Even though Saint-Gobain manufactured the accused shelves outside the United States, the importation and sale of the shelves inside the United States constituted infringement. The Court noted that the claim was directed to an apparatus, not a process, and the "relatively resilient" limitation required that the frame include the structural characteristic of having been deflected and subsequently rebounded to snap-secure the glass at the time of manufacture. Therefore, Saint-Gobain infringed the patent-in-suit by importing and selling shelves having this characteristic in the United States.
Rejections Reversed Where Board Just Did
Not Understand Claim Limitations
By Mary B. Boyle, Ph.D.
Finding that the Board of Patent Appeals and Interferences (Board) may have misunderstood the claim limitations, the U.S. Court of Appeals for the Federal Circuit reversed claim rejections applying the substantial evidence test. The Court also found that based on the date of the mailing of Board decision, the appeal was timely, notwithstanding the date of the Board's decision. In re McNeil-PPC, Inc., Case No. 08-1546 (Fed. Cir., July 31, 2009) (Michel, C. J.) (Dyk, J., dissenting).
The patent is for a tampon for feminine hygiene made of absorbent material with a solid fiber core and radially projecting ribs. As claimed, the fiber core is denser than the ribs. The less dense ribs have a coarser capillary structure than the fiber core. Also, the ribs are narrower at their base where they join the core than at their distal ends.
Patent owner McNeil asked the U.S. Patent and Trademark Office (USPTO) to reexamine its patent in view of an unexamined Japanese application (Sasaki). The examiner rejected the claims for anticipation and obviousness. The Board affirmed the examiner's rejections. The Board found that "Sasaki reasonably appears to depict a tampon having a generally cylindrical absorbent portion with a generally cylindrical compressed solid fiber core from which longitudinal ribs extent radially outward." The Board also found that Sasaki disclosed "a tampon wherein each of the ribs is compressed less than the fiber core, thereby having a coarser capillary structure than the fiber core."
After receiving the appeal, the Federal Circuit issued an order to show cause why the appeal should not be dismissed for lack of jurisdiction. The issue turned on whether the Board "decided" McNeil's motion for reconsideration on May 30 or June 2. The Board's opinion states "Decided: May 30, 2008." The Federal Circuit nonetheless held that the Board issued its decision on the date indicated on the order's mailing sheet, June 2, 2008, which made the appeal timely. McNeil presented a declaration from a retired member of the Board who stated that the time to respond to the USPTO was historically triggered by the date of mailing. The USPTO did not challenge any of the factual assertions in the declaration or provide alternative explanations. Judge Dyk dissented on the grounds that the appeal was too late and beyond the Court's jurisdiction.
On the merits of the anticipation rejection, the Federal Circuit held that the Board's findings were not supported by substantial evidence. The Court found no substantial evidence that Sasaki disclosed a tampon with a "core" at all. Moreover, there was no evidence that Sasaki disclosed ribs that were compressed less than the fiber core. Moreover, the Sasaki patent did not disclose anything regarding relative coarseness of different portions of the tampon. The Court mused whether the Board actually understood the claims and reversed the claim rejections for anticipation and obviousness.
Lab Notebook Entries Save the Day for
University of Pittsburgh in an Inventorship Contest
By Christina A. Ondrick
The U.S. Court of Appeals for the Federal Circuit upheld a district court's finding that based on notebook entries evidencing early appreciation of the claimed inventions by two of the named inventors that five other researchers were improperly named as inventors on a patent. University of Pittsburgh v. Hedrick, Case. No. 2008-1468 (Fed. Cir., July 23, 2009) (Mayer, J.).
The University of Pittsburgh (Pitt) filed suit seeking to remove five inventors from a patent relating to adipose-derived (i.e., fat-derived) stem cells. The patent at issue listed seven inventors. Two prior provisional applications listed four of those seven as inventors. In addition, the improperly named inventors provided information to Pitt to include in the patent application and provided a paper, which was submitted to the Patent Office, showing their research that the adipose-derived stem cells were different from a prior art stem cell.
The Federal Circuit held that the patent resulted from the work of only two Pitt researchers, Katz and Llull, and that the other five inventors should be removed. Lab notebook entries and an article confirmed that Katz and Llull discovered that the mature fat cells could transform into more primitive stem cells and then transform back into mature fat cells. In addition, the inventors had recorded in the lab notebook entries ways to isolate such cells from each other and ways to differentiate the adipose-derived stem cells into muscle, nerve, bone and cartilage cells.
The removed inventors did not challenge the factual findings, but rather argued that Katz's and Llull's research was highly speculative and inconclusive until others added their efforts. They further argued that Katz and Llull were required to know that the invention contained every limitation of each claim at the time of conception and further asserted that Katz and Llull did not have such knowledge until other researchers confirmed the claimed properties.
The Federal Circuit found that the removed inventors misunderstood what it means to "know" the limitations of the claims. Knowledge by an inventor "does not mean proof to a scientific certainty that the [inventive] construct is exactly what a scientist believes it is. Conception requires a definite and permanent idea of the operative invention, and necessarily turns on the inventor's ability to describe his invention. Proof that the invention works to a scientific certainty is reduction to practice." According to the Court, in the absence of evidence to corroborate the true inventors' actual knowledge, corroboration can be provided from the knowledge of one of ordinary skill in the art at the time of the alleged conception. Here, the knowledge of one of ordinary skill in the art corroborated obvious properties of stem cells as claimed in the patents. The Court concluded that it was entirely proper for the district court to credit Katz and Llull as having a firm and definite idea that these properties existed in the cells.
Practice Note: This case highlights the importance of implementing effective lab notebook programs and demonstrates how the knowledge of one of ordinary skill in the art can support conception claims.
Adding Material from an Ancestor
Application to an Issued Patent During Reexamination Not
Allowed
By Hankil D. Kang
Addressing the issue of permissibility of adding a subject matter from its ancestor application back into the issued patent during its reexamination, the U.S. Court of Appeals for the Federal Circuit upheld the finding of the Board of Patent Appeals and Interferences (Board) that it is impermissible to do so without showing that the subject matter was inherently present in the continuation-in-part application for the patent. In re Reiffin Family Trust, Case No. 08-1544 (Fed. Cir., July 27, 2009) (Bryson, J.) (non-precedential).
In 1982, Martin G. Reiffin filed a patent application that disclosed an invention for providing compilation of a software program concurrently as the program is being entered or edited by the programmer. The application disclosed the compiler function of the system is interrupted in favor of the editor function, but not vice versa. The application also disclosed the compiler that performs "lexical, syntactic and semantic analyses of the source code" and informs the programmer if the sequence of symbols violates a syntactic or semantic rule.
In 1990 and 1994, Reiffin submitted two continuation applications that ultimately issued, respectively, U.S. Patent Nos. 5,694,603 and 5,694,604. The '604 patent is directed to a "preemptive multithreading computer system with clock activated interrupt" and some of the claims are directed to the spell-checking and grammar-checking functions. Although syntactic and semantic analyses performed by the compiler are included in the 1982 application, Reiffin omitted the material in his 1994 application.
In 1998, Reiffin sued Microsoft Corporation alleging that the operating system and the spell-checking and grammar-checking features of Microsoft's Word program infringed his '604 patent. The district court ruled that the '603 patent was invalid for failing to comply with the written description requirement and that the '604 patent was not entitled to claim priority to a filing date of 1990 or earlier. Reiffin then voluntarily requested re-examination of the '604 patent, arguing that he had disclosed "multithreading" in his 1982 application and that the '604 patent is entitled to a 1982 priority date. The examiner found that the 1982 application did not describe multithreading and the Board agreed with the examiner in finding that "multithreading" requires all threads to be interruptible, but the 1982 application did not disclose the editor to be interruptible. The Board found that the '604 patent was entitled to 1994 priority date and held most of the claims invalid as anticipated or obvious by a 1988 prior art.
The Board also rejected the '604 patent claims directed to the spell-checking and grammar-checking functions for lack of written description. Although a continuous chain of copending applications allows the applicant to add matters from an earlier application to be added through amendment to a continuation-in-part application, the Board found that Reiffin's decision to omit the relevant material in his 1994 application created a break in the chain of disclosures when he let the '604 patent issue without amending its application; the break cannot be cured by an amendment during reexamination of the patent.
In affirming the Board's findings, the Court reasoned that although a patentee is permitted to amend both the claims and the specification of his patent on reexamination, he is not allowed to do so in a manner that has the effect of enlarging the scope of the patent's claims. The Court acknowledged that Reiffin did not directly seek to broaden the scope of claims in question, but the amendment he sought would have had the same effect and broadened the scope of the invention and expanded the universe of potentially infringing products. The Court went on to apply the rule of Dart Industries, Inc. v. Banner, which had a similar facts involving reissue application instead of reexamination. The Dart court also concluded that continuity was lost when the continuation-in-part application was filed without the material from its prior application. When the patent issued from the continuation application, the applicant's "failure to maintain a continuity of disclosure of [the feature in question] became uncorrectable."
Practice Note: This case highlights the importance of maintaining the continuity of disclosure when filing subsequent copending patent applications. A thorough analysis of prior applications' disclosure to ascertain continuity is vital as it will no longer be correctable once the patent issues.
Patentee's Actions Before USPTO
Determine Admissibility of New Evidence in Section 145
Cases
By Isaac Crum
The U.S. Court of Appeals for the Federal Circuit recently considered whether evidence not introduced during proceedings at the U.S. Patent and Trademark Office (USPTO) could be considered by a district court in a 35 U.S.C. §145 action. The Court held that such actions are not truly de novo. Rather, restrictions on the introduction of new evidence should be considered in light of the patentee's conduct before the PTO. Hyatt v. Doll, Case No. 07-1066 (Fed. Cir. Aug. 11, 2009) (Michel, C. J.) (Moore, J., dissenting).
Hyatt, a registered patent agent, prosecuted his own patent application dealing with computer and software technology. The application consisted of 117 claims, a 238-page specification and 40 pages of drawings. The patent examiner rejected all 117 of Hyatt's claims for, inter alia, a lack of adequate written description. Hyatt chose not to disclose to the Board of Patent Appeals and Interferences (Board) or the examiner the particular sections in the specification that dealt with particular limitations. The Board affirmed most of the examiner's rejections. After Hyatt's request for rehearing was denied, he filed suit in the U.S. District Court for the District of Columbia under 35 U.S.C. §145. Shortly thereafter, the USPTO filed a motion for summary judgment which Hyatt opposed. In support of his opposition, Hyatt proffered his own declaration and his request for rehearing before the Board. The USPTO objected to the declaration on the ground that Hyatt failed to submit it before the Board in a timely manner. The court agreed, finding that Hyatt had been negligent in failing to submit the declaration to the examiner or the Board. The court granted the USPTO's motion for summary judgment based solely on the record before the Board. Hyatt appealed.
The Federal Circuit agreed with the D.C. district court's decision to exclude the declaration offered by Hyatt. After tracing the history of §145 actions, the Court determined that the Administrative Procedures Act (APA) limits evidence in §145 actions. Thus, the Court concluded that a §145 trial is not truly de novo. Further, the Court found that the negligence standard (adopted by some judges) inappropriately implied a duty where the submission of information often is up to the judgment of the patentee.
Instead of the existing negligence standard, the Federal Circuit focused on the "pertinent factors" concerning whether new evidence should be admitted. Here, ostensibly, the pertinent factors included Hyatt's failure to provide information sought by the examiner, his failure to cooperate with the USPTO, his willful decision to "keep the PTO in the dark" and his lack of an acceptable excuse. While focusing on these case-specific factors, the Court explicitly decided to "express no opinion as to admissibility of evidence in ... factual scenarios that may arise in the future." Instead, the Court held that whether or not new evidence should be permitted must be answered in light of the patentee's actions before the USPTO.
Twenty-One Day Safe Harbor Applies To Rule
11—No Matter What
By Leigh J. Martinson
The U.S. Court of Appeals for the Federal Circuit confirmed that the service and filing of a motion for sanctions under Rule 11 must occur prior to final judgment or judicial rejection of the offending motion in order to prevail. Orenshteyn v. Citrix Systems, Inc., Case Nos. 03-1427, 08-1378, -1400 (Fed. Cir., July 24, 2009) (Lourie, J.) (non-precedential).
Alexander Orenshteyn sued Citrix System (Citrix) for patent infringement on April 9, 2002. On March 6, 2003, after the close of discovery, Citrix moved for summary judgment of non-infringement and invalidity. Citrix presented its motion for Rule 11 sanctions to Orenshteyn's counsel on May 16, 2003. Four days later, the district court entered final judgment of non-infringement. On June 19, 2003, 35 days after presenting its motion to counsel, Citrix filed its motion for Rule 11 sanctions with the district court. Rule 11 requires that a motion for sanctions "must not be filed ... if the challenged ... claim ... is withdrawn within 21 days after service." The district court found Orenshteyn liable for sanctions under Rule 11 and his attorneys both liable under both Rule 11.
Orenshteyn and his counsel appealed. The Court reviewed the construction of the term "controller" and determined the district court erred by improperly limiting the term to exclude CPUs. Thus the Court held that summary judgment based on the district court's construction was erroneous.
While addressing the award of the Rule 11 sanctions, the Court looked to the U.S. Court of Appeals for the Eleventh Circuit, which had interpreted the safe harbor provision as requiring a motion for Rule 11 sanctions to be filed prior to final judgment. In doing so, the Eleventh Circuit sided with the with the U.S. Court of Appeals for the Second, Fourth and Sixth Circuits, which had previously determined that "the service and filing of a motion for sanctions must occur prior to final judgment or judicial rejection of the offending motion. Any argument to the contrary renders the safe harbor provision a mere formality. The provision cannot have any effect if the court has already denied the motion; it is too late for the offending party to withdraw the challenged contention."
Here, the district court entered its final judgment of non-infringement four days after Citrix presents its motion to Orenshteyn's counsel. Citrix did not file its motion with the court until after the final judgment was entered. Therefore, Orenshteyn was unable to avail himself of the 21-day safe harbor provision. Thus, the Court determined that the "district court awarded Rule 11 sanctions in circumstances where Orenshteyn was deprived of a benefit provided by the rule, in effect, on an erroneous view of the law."
Practice Note: When Rule 11 sanctions may be at issue, be sure to pay particular attention to the timing of the filing of your motion.
Virginia Court Has Jurisdiction over
Canadian Attorney Who Never Entered the State
By Charles J. Hawkins
Addressing the issue of personal jurisdiction in the context of attorney malpractice, the U.S. Court of Appeals for the Federal Circuit reversed and remanded a district court's dismissal of a malpractice suit against a Canadian law firm and patent attorney. Touchcom, Inc. v. Bereskin & Parr, Case Nos. 08-1229 (Fed. Cir., August 3, 2009) (Lourie J.) (Prost, J., dissenting).
Plaintiff Touchcom, Inc. engaged the defendants to procure patents covering inventions relating to a pump system. Bereskin & Parr (B&P) filed a Canadian application that included a complete set of the relevant source code. Later, however, B&P filed a Patent Cooperation Treaty (PCT) application that did not contain the complete set of code. The PCT application, with the code omitted, was later transmitted to the U.S. Patent and Trademark Office (USPTO) as part of a national phase application.
In due course, the applications issued into patents. Several years later the plaintiff commenced patent infringement actions in the United States. In the course of those actions, its patents were held invalid for indefiniteness as a result of the missing code. Touchcom filed a malpractice action. B&P moved to dismiss the complaint for lack of personal jurisdiction and the district court granted the motion, focusing on Fed. R. Civ. P. 4(k)(1)(A) and the requirements of the applicable Virginia long-arm statute. Touchcom appealed.
The Federal Circuit performed a personal jurisdiction analysis under both Fed. R. Civ. P. 4(k)(1)(A) and 4(k)(2), noting that plaintiff failed to raise Rule 4(k)(2) as a basis for jurisdiction at the lower court. Under Rule 4(k)(1)(A), the Federal Circuit found that defendants were not subject to personal jurisdiction, concluding that the defendants did not purposefully avail themselves of the privilege of doing business in Virginia and thus, under the Virginia long-arm statute, did not have minimum contacts. The only relevant contact in Virginia was the filing of the patent applications and B&P had not even visited Virginia in the course of prosecution.
The Court then looked to Rule 4(k)(2), which requires three things: a claim arising under federal law; that the defendant is not subject to jurisdiction in any other state in the United States and that due process is not violated. Under the first element, the Court concluded that the malpractice claims arose under federal law because patent scope and validity were ultimately at issue. Next, the Court found that it was B&P's burden to show that it was subject to personal jurisdiction in another U.S. jurisdiction and that B&P had not done so.
In considering the third element, the Court used a due process analysis different than the one under Rule 4(k)(1)(A) because Rule 4(k)(2) considers nationwide contacts. In considering fairness in this context, the Court considered five factors: the burden on the defendant, the forum's interest in the dispute, the plaintiff's interest in obtaining relief, the interstate judicial system's interest in obtaining the most efficient resolution and the shared interest of the states in furthering fundamental policies. The Court concluded that a finding of personal jurisdiction under Rule 4(k)(2) did not violate due process. Thus, the Federal Circuit reversed the lower court and found that the district court possessed personal jurisdiction over the defendants.
In dissent, Judge Prost agreed with the majority's analysis of Rule 4(k)(1)(A) and its treatment of the first two elements of Rule 4(k)(2). Judge Prost stated further that this was one of the "rare situations" in which minimum contacts are present, but exercising personal jurisdiction would nevertheless violate due process because of the attenuated nature of plaintiff's interest and state's interest in adjudicating the dispute in the forum.
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