Patent Happenings Blog

The America Invents Act of 2011 modified the marking statute, 35 U.S.C. § 287(a), to permit a form of virtual marking, i.e., using a website, rather than the product, to identify the specific patents by number associated with specific products.  Under the amended statute “Patentees … may give notice to the public that the same is patented …  by fixing thereon the word ‘patent’ or the abbreviation ‘pat.’ together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent …”

In one of the first opinions to consider the newly amended statute, A to Z Machining Service, LLC v. National Storm Shelter, LLC, No. CIV-10-422-C, 2011 WL 6888543, *3-*4 (W.D. Okla. Dec. 29, 2011), the district court flatly rejected a patentee’s contention that listing patents on a company’s website, by itself, is sufficient to comply with the virtual marking permitted under § 287(a).  The court explained that “it is clear from the … statutory language that a website alone would not satisfy the notice requirements under § 287(a), even if Defendants viewed the website.”  Id. 

Additionally, the court further held that a patentee must mark its product with the word “patent” or a suitable abbreviation and mark the website on the product.  The court concluded that merely affixing the website address to the product, “without including the word ‘patent’ or the abbreviation thereof, fails to give notice under this subpart.”  Id.

For additional discussion on this topic see Robert A. Matthews, Jr., Annotated Patent Digest§ 30:153.50 Virtual Marking.

The amendments to § 292 of the Patent Act by the America Invents Act in 2011 eliminating the qui tam action for false marking suits survived a constitutional challenge in Brooks v. Dunlop Mfg. Inc., No. C 10-04341 CRB, 2011 WL 6140912, (N.D. Cal. Dec. 9, 2011).  

In Brooks, the false marking plaintiff unsuccessfully argued that the retroactive application of the new law eliminating its qui tam standing violated due process and amounted to an unconstitutional “taking” by the federal government. 

The district court held that because Congress had “a legitimate legislative purpose by comprehensively reducing the costs and inefficiencies associated with the ‘cottage industry’ of false marking litigation that developed after the Federal Circuit’s decision in Forest Group, Inc.” the amendments do not violate due process. Id. at *5.

As to the “takings” contention, the court held that a “takings” claim requires a vested property interest.  Since the plaintiff had not obtained a final judgment in its false marking suit, the loss of the right to proceed with the false marking lawsuit to collect a share of the penalty, if the plaintiff prevailed on the merits, was not a vested property interest.  Hence, the takings claim failed because the plaintiff did not establish that “he ever acquired a constitutionally protected property interest” in the false marking suit.  Id. at *6.  

For additional discussion on this topic see Robert A. Matthews, Jr., Annotated Patent Digest § 34:103 Parties That Can Assert a False Marking Violation.

Back in February, the N.D of Ohio held that the qui tam provision of the false marking statute violated the Constitution’s “Take Care” clause.  Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc., 2011 WL 649998, *6-*7 (N.D. Ohio Feb. 23, 2011), vacated and adhered to by, 2011 WL 924341, *2-*4 (N.D. Ohio Mar. 14, 2011).  Since then several other district courts considering the issue held that § 292(b) does not violate the “Take Care” clause.  E.g., Simonian v. Allergan, Inc., No. 10 C 02414, 2011 WL 1599292, *4-*5 (N.D. Ill. Apr.28, 2011); Luka v. Procter and Gamble Co., 2011 WL 1118689, *5-*8 (N.D. Ill. Mar. 28, 2011); Public Patent Foundation, Inc. v. GlaxoSmithKline Consumer, Healthcare, L.P., No. 09 Civ. 5881(RMB), 2011 WL 1142917, *3-*4 (S.D.N.Y. Mar. 22, 2011); Hy Cite Corp. v. Regal Ware, Inc., No. 10–cv–168–wmc, 2011 WL 1206768 (W.D. Wis. Mar. 15, 2011). 

Joining the camp of Unique Products, the E.D. of Pa, in Rogers v. Tristar Products, Inc., No. 11-1111, 2011 WL 2175716, *10-*11 (E.D. Pa. June 2, 2011), concluded that the qui tam provision of § 292(b) does indeed violate the “Take Care” clause.  Contrasting the procedural differences between the protections afforded the federal government under the False Claims Act and the absence of similar provisions in § 292(b), the court determined that § 292(b) “provides no means by which the United States may control the initiation, prosecution, or termination of litigation commenced on its behalf.”  Id. at *10.  Holding the statute unconsititutional, the E.D. Pa court explained: “despite the external protections available, the United States is not able to effectively exercise even a basic degree of control over a section 292(b) relator’s case.  The relator, by bringing the suit, is the master of the suit and-unlike in the False Claims Act context-remains as such.  Indeed, unlike the rights it enjoys in False Claims Act qui tam litigation, the United States has no ability to (1) control the litigation by seeking dismissal or settlement over objection; (2) limit discovery in any meaningful way; or (3) take primary control over the litigation.  For these reasons, the Court finds that section 292(b) fails to provide ‘the Executive Branch sufficient control … to ensure that the President is able to perform his constitutionally assigned [duty]’ to ‘take Care that the Laws be faithfully executed.’  Consequently, the Court concludes that section 292(b) violates the Take Care Clause.”  Id. at *11.

For additional discussion on this topic see Robert A. Matthews, Jr., Annotated Patent Digest § 34:103.10 “Take Care” Clause.

No Duty to Disclose Prior Art in Patent Term Extension Proceeding

Granting summary judgment and dismissing an inequitable conduct claim in Schering Corp. v. Mylan Pharmaceuticals, Inc., No. 09-6383 (JLL), 2011 WL 1885709, *3-*5 (D.N.J. May 17, 2011), the district court held that an applicant for a § 156 patent term extension has no duty to disclose to the PTO in that term extension proceeding any prior art that allegedly is material to the validity of the claims.  Instead the applicant only has a “a duty to disclose ‘material information adverse to a determination of entitlement to the extension sought, which has not been previously made of record in the patent term extension proceeding ….’ 37 C.F.R. § 1.765(a).”  Thus, “even assuming that counsel for [an applicant] knowingly fail[s] to disclose potentially invalidating prior art to the PTO in connection with the term extension proceedings for the ‘721 patent, such information [i]s not material [to] those proceedings.”  Id  The court instructed that “the relevant statute and rule simply do not require the disclosure of such material [i.e., material prior art] or the communication of any ‘knowledge’ of the legal conclusions that could be drawn therefrom.  Id.

For additional materials on duty to disclose applicable to PTO proceedings see generally Annotated Patent Digest § 27:8 PTO Regulations Applicable to Specific PTO Proceedings.

First-to-File Rule Barred Second False Marking Suit

Granting a Rule 12(b)(6) dismissal with prejudice, the district court in Champion Labs., Inc. v. Parker-Hannifin Corp., No. 1:10-CV-02371-OWW-DLB, 2011 WL 1883832, *4-*9 (E.D. Cal. May 17, 2011), held that as the government is the real plaintiff in a false marking suit, the first-to-file rule applies to bar a second suit brought for the same acts of alleged false patent marking by a different relator.  Thus, “[t]he qui tam statute provides for a single claim for false marking, not multiple claims for multiple penalties.”  Id. at *6 (emphasis in original)

For additional materials regarding multiple false marking suits see generally Annotated Patent Digest § 34:103.50 Different Suits by Different Plaintiffs on Same Alleged Acts of False Marking.

Computer Method Claim Held Invalid on Rule 12(b)(6)

Addressing a § 101 invalidity challenge on a Rule 12(b)(6) motion to dismiss, the district court in Glory Licensing LLC v. Toys “R” Us, Inc., No. 09-4252 (FSH), 2011 WL 1870591, *2-*4 (D.N.J. May 16, 2011), held invalid a claim reciting:

A method of processing information on a first computer system comprising at least one computer, which comprises:

a. receiving a file by transmission from another computer system external to said first computer system and automatically displaying said file on a computer display as a template;

b. automatically selecting and extracting information from said file according to content instructions; 

c. providing utilities capable of automatically routing the extracted information as input information to an unrestricted diversity of application programs according to customizable transmission format instructions tailored to enable correct processing of the input information by any application program that requires said input information;

d. transmitting said input information to each application program requiring said input information; and

e. automatically processing said input information by said each application program.”

The court concluded that the claim did not claim a machine as “[t]he case law is clear that simply the use of a programmed computer is not sufficient to satisfy the machine or apparatus prong of the test.”  Additionally, the court found the claim did not address any transformation since “the relevant claims in the Glory Patents address a ‘mere transfer’ of data from an electronic or hard copy document to an application program.  Glory cannot claim that the data itself is transformed or even changes at all.”   

For additional materials regarding § 101 challenges and computer/business methods see generally Annotated Patent Digest § 20:14 Mathematical Algorithms/Computer Programs; § 20:15—Cases Finding Invention With Mathematical Algorithm Had Patentable Statutory Subject Matter; § 20:16 —Cases Finding Invention With Mathematical Algorithm Lacked Patentable Statutory Subject Matter; § 20:18.100 Post-Bilski Cases Finding Claimed Business Method was Not Patentable Subject Matter.

Under the doctrine of no licensee estoppel set forth in Lear v. Adkins, 395 U.S. 653 (1969), public policy demands that a patentee generally cannot contractually prohibit a licensee from challenging the validity of a patent.  Applying this doctrine, the district court in Rates Technology Inc. v. Speakeasy, Inc., No. 10 Civ. 6482(DLC), 2011 WL 1758621, *3-*5 (S.D.N.Y. May 9, 2011), held unenforceable a liquidated damages provisions in a licensing agreement entered into to settle a patent infringement dispute before litigation commenced that provided that in the event the licensee challenged the validity of certain patents owned by the licensor, the licensee would have to pay $12 million in liquidated damages to the licensor. 

The court concluded that the liquidated damages provision “ directly contravenes the public interest in litigating the validity of patents.”  Id.  It further ruled that “strong policy in favor of enforcing settlement agreements,” and therefore enforcing the liquidated damages provision as requested by the licensor, “does not outweigh the specific concerns addressed in Lear and its Second Circuit progeny.”  Id.  Distinguishing the authority cited by the licensor, the district court noted the since the specific agreement was entered into before the parties initiated any litigation, other judicial opinions upholding restrictions on challenging a patent’s validity entered into after the parties had begun litigation were inapposite.

Granting the licensee’s motion to dismiss the licensor’s breach of contract claim, the court ultimately ruled that “[w]here, as here, an agreement purports to deprive a licensee of any opportunity to challenge validity, it directly contravenes ‘the important public interest in permitting full and free competition in the use of ideas.’”  Id.

For additional materials on licensee estoppel see generally Annotated Patent Digest § 35:38 No Licensor Estoppel.

Work-Product Immunity for Patent Holding Co.

After an in camera review, Judge Ward holds that documents a patent-holding company shared with potential investors, under a non-disclosure agreement, to secure funding for litigating and licensing an acquired patent were protected under work-product immunity.  The court explaining: “Some documents reveal Inpro’s overall litigation and licensing strategy and others provide information—such as balance sheets including licensing and litigation revenues—that show the implementation of that strategy.  All of the documents were prepared, however, with the intention of coordinating potential investors to aid in future possible litigation.  The Court holds that these documents are protected by the work product protection.”   Mondis Technology, Ltd. v. LG Elecs., Inc., Nos. 2:07-CV-565-TJW-CE, 2:08-CV-478-TJW, 2011 WL 1714304, *2-*3 (E.D. Tex. May 4, 2011).  For additional discussion and case authority on this topic see Annotated Patent Digest § 42:41.50 Patentee and Financiers of the Litigation; and § 42:161 Prepared in Anticipation of Litigation.

Refusing to Read into Claim a Requirement of FDA Approval

Court rejects contention that a claim to drug composition that was useful to treat an aliment had to meet FDA standards for approval.  The court concluded that because “FDA approval is irrelevant to proceedings before the Patent and Trademark Office” it would not read into the claims the suggested requirement of FDA approval to find that the treatment was useful.  Allergan, Inc. v. Sandoz Inc., 2011 WL 1599049, *8-*10 (E.D. Tex. Apr. 27, 2011).  For additional discussion and case authority on this topic see Annotated Patent Digest § 4:192 “Treat” and § 1:8 Patent Rights do Not Trump State or Federal Regulatory Prohibitions.

False Marking Relator has a Right to a Jury Trial

Ruling that because a qui tam action under § 292(b) seeks a legal remedy, in view of the monetary penalty, a Seventh Amendment right to a jury trial applies.  U.S. ex rel. Hallstrom v. Aqua Flora, Inc., No. CIV S-10-1459 KJM-EFB, 2011 WL 1668984, *2-*3 (E.D. Cal. May 3, 2011). For additional discussion and case authority on right to jury trials see Annotated Patent Digest § 39:135 Supreme Court Cases Addressing Right to Jury Trial.

For many years the Federal Circuit has appeared to hold that an inventor can violate the best mode requirement even if he or she did not intend to conceal the best mode.  For example, in Minco Inc. v. Combustion Engineering Inc., 95 F.3d 1109, 1116 n.* (Fed. Cir. 1996), the court instructed that “invalidity may result from the failure to disclose, regardless of whether the inventor specifically intended to conceal his or her best mode.”  This followed CCPA precedent instructing that “only evidence of concealment (whether accidental or intentional) is to be considered.” In re Sherwood, 613 F.2d 809, 816 (CCPA 1980).  Indeed, one panel of the Federal Circuit has expressly held that “[i]nquiry into an intent to conceal, being subjective, is inconsistent with the objective nature of the second aspect of best mode compliance”, therefore, the “district court did not need to determine that [the inventor] intentionally concealed his best mode[, r]ather it was sufficient that the court held that there was no genuine dispute that the `267 specification did not adequately disclose William’s best mode in a way that would allow those of ordinary skill in the art to practice it.”  United States Gypsum Co. v. National Gypsum Co., 74 F.3d 1209, 1216 (Fed. Cir. 1996).

Despite these and other similar precedents some members of the Federal Circuit have stated their view that a best mode violation requires intent to conceal.  One of the most notable supporters of this view has been Judge Newman.  E.g., High Concrete Structures, Inc. v. New Enterprise Stone and Lime Co., 377 F.3d 1379, 1383 (Fed. Cir. 2004) (Newman, J.) (“Invalidation based on a best-mode violation requires that the inventor knew of and intentionally concealed a better mode than was disclosed.”); Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1575 (Fed. Cir. 1992) (Newman, J.) (“Invalidity for violation of the best mode requires intentional concealment of a better mode than was disclosed[.]” (emphasis added, citing Engel Indus., Inc. v. Lockformer Co., 946 F.2d 1528, 1531, 20 USPQ2d 1300, 1302 (Fed. Cir. 1991) (Newman, J.))

In the court’s most recent opinion addressing best mode, Judge Rader appears to agree with Judge Newman’s view as to the necessity of finding an intent to conceal before a best mode violation will be found.  In Wellman, Inc. v. Eastman Chemical Co., No. 2010-1249, __ F.3d __, __, 2011 WL 1601994, *9 (Fed. Cir. Apr. 29, 2011) (Rader, CJ.), the panel, quoting and following High Concrete Structures, affirmed a finding of a best mode violation because the “record also shows that [the inventor] intentionally concealed the best mode.” Id. 2011 WL 1601994, at *9.  The court specifically relied on evidence of intentional concealment of the best mode proven by the patentee’s “choosing to maintain [the best mode] as a trade secret.”  Id. 

Wellman and High Concrete appear in direct conflict with United States Gypsum Co. as to the requirement of an intent to conceal the best mode.  In most instances an apparent conflict in Federal Circuit authority would strongly suggest the need for en banc rehearing.  But, should patent reform pass, with its provision to eliminate best mode as an invalidity defense assertable by an accused infringer, a practical need for resolving this difference of opinion may be diminished. 

For additional discussion and case authority on this topic see Annotated Patent Digest § 21:44 Necessity of Intent to Conceal.

On numerous occasions the Federal Circuit has found that a statement in the specification describing the “present invention” as having a certain characteristic can operate to limit the scope of the claims.  Indeed, the court has instructed that “[w]hen a patent thus describes the features of the ‘present invention’ as a whole, this description limits the scope of the invention.”  Verizon Service Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1308 (Fed. Cir. 2007). 

The key to properly applying this legal principle requires determining whether the “present invention” statement truly describes the invention as a whole, or whether it merely describes one preferred embodiment.  As shown by the recent district court opinion in LG Elecs. U.S.A., Inc. v. Whirlpool Corp., 2011 WL 1560592, *14 (D.N.J. Apr. 25, 2011), not all “present invention” statements will limit claim scope. 

In LG, the court determined that a “present invention” statement did not limit claim scope because the statement merely referred to one preferred embodiment, not the entire invention.  Specifically, the court held that a statement reciting “the structure for supplying water to the dispenser and the icemaker, according to the present invention will be described with reference to Fig. 6,” did not describe the entire invention, but only described one particular embodiment, and therefore did not limit the scope of the claim.

Differences of opinion may exist as to whether a statement referring to patent figures, as the one in LG, does or does not refer to the invention as a whole.  But the legal principle that “present invention” statements do not limit claims if they only refer to a preferred embodiment, and not the whole invention, has strong judicial support especially where other portions of the specification describe the invention more broadly.   E.g., Sanders v. The Mosaic Co., No. 2010-1418, 2011 WL 1491248, *2-*3 (Fed. Cir. Apr. 20, 2011) (nonprecedential).

For additional discussion and case authority on this topic see Annotated Patent Digest § 5:17.50 “Present Invention” or “The Invention” Statements.  See also Annotated Patent Digest § 5:58 Explicit Statements Limiting Scope of Claimed Invention.

January 2010 – Click for full issue

• Federal Circuit holds that the penalty for false marking under § 292 must be assessed on a per article basis with the district court setting the amount of the penalty anywhere from a fraction of a penny to a maximum of $500 per article falsely marked
• E.D. Texas applies on-going royalty to redesigned product since it was not more than colorably different from original adjudicated infringing product
• Lessons to note from the Federal Circuit’s opinion in i4i on the need for JMOL motions and opinions of counsel
• Mandamus granted to transfer infringement action to forum where accused product was developed since original forum had no “relevant factual connection” to the infringement action

April 2010 – Click for full issue

• Post Seagate cases show that the failure to obtain an opinion of counsel still weighs heavily in determining whether to enhance damages
• Using royalty rates in licenses given to settle infringement actions as evidence of a royalty rate in a hypothetical negotiation
• Accused infringer’s failure to challenge scope of a permanent injunction when appealing a final judgment precluded later challenge to the injunction’s scope when defending against a charge of contempt
• Federal Circuit overrules PTO’s methodology of calculating patent term adjustments where Period A delays “overlap” Period B delays