Archive for November, 2010

Supreme Court Grants Cert. in Microsoft v. i4i.

Monday, November 29th, 2010

Today, the Supreme Court granted Microsoft’s petition for cert. in Microsoft v. i4i. Microsoft asked the Supreme Court to answer the question of whether or not a defendant who asserts patent invalidity based on art not considered by the Patent Office must still overcome the presumption of validity by “clear and convincing evidence” or whether some lower standard of proof, e.g., preponderance of the evidence, should apply.

Early in its history, the Federal Circuit established the clear and convincing evidence standard as the burden of proof required for a defense based on invalidity of the asserted patent, and has adhered to it for more than twenty-five years. The best that defendants have had to work with is language in some decisions to the effect that, while the burden of proof is not lowered in cases in which the asserted art was not before the Examiner, it may be easier for the defendant to meet its burden in such cases.

Over the years, it has become conventional “wisdom” that, if the art was cited to or by the Examiner, it is of no value in an invalidity defense. For years, I have had to explain to litigators that art before the Examiner will still be considered, and can in fact be relied upon to invalidate a patent, particularly when the Examiner misunderstood the content of the art, and/or the attorney mischaracterized it.

However, even with the help of seasoned appellate teams, it is difficult to envision a decision on the question that will be as nuanced as both prosecutors and litigators would wish. All prior art is not created – or presented – equally. In lowering the bar, how much weight should (semi-)cumulative art be given and, after all, when is art that is not identical in text so cumulative that it is entitled to no such weight? And how “before” the Examiner must the art be? Is a full paper less weighty if the abstract has been cited? Is a publication cited in an IDS in the parent application entitled to more weight than a publication cited three applications back in a chain of CIPs and divisionals? What about art that was before an earlier Examiner who leaves the PTO but was not re-cited to the replacement Examiner?

No doubt this decision will be a “game-changer,” but the design of the field we will be playing on in the future is back on the drawing board.

Bayh-Dole Act Turns Thirty – Dec. 1st Fete Planned

Thursday, November 18th, 2010

With major litigation looming over invention ownership rights affected by the Bayh Dole Act (see my post of November 3rd on Stanford v. Roche), the link below is to a site created by AUTM and a number of other organizations concerned with university tech transfer. The site provides some good background on the history and the impact of the Act.  A House resolution honoring the Act has been introduced and a celebration is planned in DC for December 1st.

Since 1980, thousands of companies (not all still with us) have been created in the U.S. due to patenting and licensing activities mandated by the Bayh-Dole Act, and hundreds of millions of dollars in licensing revenue have flowed into universities from patenting and out-licensing technology to established corporations (like big pharma) as well as to start-ups that go the distance (often to take-over by a larger med tech company). I emphasize life sciences commercialization because more than 80% of university/institutional patenting is in this area.  Not bad for an “unfunded mandate.” A recent study that was published in Nature Reviews-Drug Discovery, looked at FDA approvals between 1997 and 2008 and found that 24% of approved drugs originated from university research. All had been licensed to pharma or biotech companies. (Find story here.)

On a more personal note, the first two IP talks I ever did were for the Chemistry and the Law Division of the American Chemical Society at National Meetings in 1987 and 1988. The first was entitled, “Selected Aspects of Patent Law Affecting the University Inventor,” and the second was “”Technology Transfer: From Non-Profit Research to Profit.” I expected a huge audience of professors eager to learn how to commercialize their discoveries but I was ahead of my time, and the meager audience was mostly lonely patent attorneys looking for clients and company. I also spoke at AUTM for the first time in 1989, when it was still the “Society of University Patent Administrators.” I was part of a plenary session and there were probably 50 people in the room, but it was a start, both for me and for university tech transfer. ‘Happy, happy birthday, baby.” You’ve come a long way.

AUTM b-d30

Let’s Get Physical! Australian Patent Office Wrestles With Method Claims

Wednesday, November 17th, 2010

The Australian Patent Office appears to grappling with the requirement that a physical effect take place in order for a business method to be patentable.  This note sent by Bill Bennett of Pizzeys Patent and Trademark Attorneys raises interesting issues about the need for a “physical effect” as “the touchstone of patentability.”

The APO has issued a decision which has created uncertainty regarding the patentability of business methods.

Until recently, our advice to clients was that business methods were patentable in AU, provided that the claims were limited to execution of the business method in a computer environment.

The APO has now issued the Iowa Lottery decision in which the Deputy Commissioner of Patents concludes (at para 17) that:

I do not believe there is any authority in Australian law for the proposition that the mere identification of a physical effect is sufficient for patentability. (underlining added)

The decision can be viewed here:

The above reference to “physical effect” is a reference to the precedential decision of the Full Federal Court in the Grant case.  In 2006, the Full Federal Court concluded in the Grant case (at para 32) that:-

A physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation is required. In NRDC, an artificial effect was physically created on the land. In Catuity and CCOM as in State Street and AT&T, there was a component that was physically affected or a change in state or information in a part of a machine. These can all be regarded as physical effects. (underlining added)


Thus, the Full Federal Court in Grant found that “physical effect” is the touchstone of patentability.  It is especially noteworthy that the Full Federal Court expressly referred with approval to cases where a business method was implemented in a computer environment such that performance of the method resulted in a “change of state or information” in a part of the computer.

We find it very difficult to reconcile the Deputy Commissioner’s statement in Iowa Lottery with the precedential statements of the Full Federal Court in Grant.  The apparent discord between the Deputy Commissioner’s view and legal precedent may ultimately only be clarified by further appeals to the Federal Court by patent applicants denied claims to business methods.

Until such time that the law is further clarified, our practical advice to applicants is to draft and claim inventions in the context of being a method of operating a computer (as opposed to being a business method which happens to be implemented in a computer).  Such description and claims should focus heavily on the changes in state or information which occur within the computer and should make these features central to the invention.  For cases which have already been filed in AU, we suggest re-drafting, within the limits of allowable amendments, to focus heavily on the changes in state or information that occur within the computer.

PTO Proposes Simplified Appeal Process – Compared to What?

Tuesday, November 16th, 2010

On November 15th, Director Kappos published 21 pages of proposed rulemaking entitled “Rules of Practice Before the [BPAI] in Ex parte Appeals.” 75 Fed. Reg. 69828 (Nov. 15, 2010). (A copy is available at the end of this post.) There is an entire column of “Background” which summarizes the fate of the rule changes first proposed on July 30, 2007, widely criticized, never implemented, currently stayed and now proposed to be rescinded in favor of these new proposed rules. The new rules have two main thrusts: to simply the briefing process and to get the appeal before the Board more quickly (and to keep it there).

To provide some context, I filed an Appeal Brief under the rules then in effect on Oct. 12, 2007, the Examiner filed an answer in January 2009 and I filed a Reply in February 2009. The application was not forwarded to the Board and docketed until January 2010 (!) Most of the delay was apparently caused by the Examiner’s failure to list one piece of art in the “evidence relied upon” section of his Answer. The new rules intend to prevent this sort of delay by transmitting the appeal to the Board after the Reply is received (and the Examiner would not be able to respond to the Reply Brief). The Board has the sole authority to determine non-compliance but would not be able to remand an application to the Examiner without the Director’s approval. There are many other changes, too numerous to “reprint” here, but some stuck in my head after reading most of the notice.

Preparation of the Brief is simplified somewhat by not requiring a statement of the detailed history of the claims on appeal, not requiring that support be given for every claim limitation in the independent claims – only those in dispute — and by omitting the requirement for the “claims appendix” and the “evidence appendix.” The Board is to presume that the appeal is taken from all claims under rejection, even if appellant fails to list them all. The options if the Examiner enters a new ground of rejection are clarified (I think), as well as the required statement of related appeals, interferences and judicial proceedings (I think), and examples of new grounds of rejection are given. The proposed rules make it perfectly clear, however, that substantive prosecution stops after filing the appeal brief (not upon filing the notice of appeal). However, applicants can still send in case law that advances their position. Importantly, the new rules eliminate the “presumption of Examiner correctness” from the rules. For background on this presumption, see 75 Fed. Reg. at 69835.

With the Board currently affirming rejections 65-70% of the time, the new rules, even if they are finalized, may only smooth your prosecution highway to the edge of a cliff, but at least the Director seems well aware that “justice delayed is justice denied.” Now let’s work on the “justice” part a little harder.

75 FedReg at 69835