"INFORMATION PLEASE!" – BILSKI TAKES IT TO THE SUPREMES

Reading the transcript of the oral arguments presented yesterday (a copy is attached at the end of this posting) as Bilski was presented to the Supreme Court, I was struck by how quickly certain Justices homed in on one of the last frontiers of patentable subject matter, namely whether or not the simple transmittal of information from one person to another should be patentable subject matter. Particularly, Justice Breyer’s first question was to ask whether or not a method of teaching antitrust law could be patentable subject matter [laughter]. Justice Sotomayor then mentioned “speed dating.” Bilski’s counsel replied that, while the data itself is not patentable, “but if it is a series of steps,” it might be. Breyer demanded that counsel “make that balance in terms of information.” Sotomayor asked “[Doesn’t there have] to be something more substantive than the mere exchange of information; that it has to involve…’transformation’? [The Fed. Cir.] hasn’t defined the outer limits of what it means by that.” Counsel Jakes, “Yes.”

Suddenly, I thought of a fairly obscure but interesting decision, In re Ngai, 367 F.3d 1336 (Fed. Cir. 2004). The claims in question were to a “kit” for amplifying RNA comprising certain known reagents and “instructions describing the [amplification] method of claim 1.” In other words, the only “point of novelty” was the instructional material. The court affirmed the rejection below, and distinguished In re Gulack (where a sort of circular slide rule was claimed), stating:

As the Gulack court pointed out,”[w]here the printed matter is not functionally related to the substrate, the printed matter will not distinguish the invention from the prior art in terms of patentability.” If we were to adopt Ngai’s position, anyone could continue patenting a product indefinitely provided that they add a new instruction sheet to the product. This was not envisioned by Gulack. Ngai is entitled to patent his invention of a new RNA extraction method, and claims covering that invention were properly allowed. He is not, however, entitled to patent a known product by simply attaching a set of instructions to that product.”

“Hold on,” you may say, “this is a section 102 rejection, not a section 101 decision.” But I re-read this decision after being asked to opine about the potential patentability of claim in a published application. I will simplify it as follows: “A method of increasing the safety of drug x by providing instructions to a patient taking drug x to stop taking drug x if side effect y is observed.” One of the other claims recited the further step of providing drug x to the patient and then providing the patient with the warning (label, most likely). But there was no step involving administering the drug or adjusting the dosage.

This is about as pure a claim to a transmittal of information between two people as I can think of, that does not come off as a judicial joke (“speed dating”). It might be categorized broadly as a method of medical treatment. As Justice Sotomayor questioned, “Do you think that there is some benefit to society from patenting a method to cure someone that just involves human activity, as opposed to some machine, substance or other apparatus to help that process?” The answer is “yes.” In fact, there was some discussion before the Supreme Court relevant to the fact that pure surgical methods are patentable, even after Congress acted to limit damages for infringement.

The “warning claim” I summarized would also seem to be an attempt to answer this question affirmatively, and to patent “the mere exchange of information.” Hopefully the Bilski Court will not attempt to resolve this question, as they deal with the “machine or transformation test” that is before them, but a number of the Justices are certainly interested in the broader issue a la the Metabolite Labs, dissent by Justice Breyer et al. Mr. Stewart for the PTO made it clear that he hoped that the S. Ct. would not muck around in “software innovations or medical diagnostic techniques.” We can only hope.

Bilski Transcript.pdf

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OUTSIDE OPINIONS ARE STILL KEY TO AVOIDING WILLFUL INFRINGEMENT

By A. J. Nelson

The October 29th IPO summary reports on the Senate version of the bill (attached below) regarding willful infringement:

SENATE BILL CODIFIES SEAGATE STANDARD FOR WILLFUL INFRINGEMENT AND IMPOSES ADDITIONAL LIMITATIONS ON FINDING WILLFULNESS — Section 4 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at p. 30 amends 35 U.S.C. §284 on willful infringement. The section continues the statutory provision that allows a court to increase damages up to triple the normal amount for willful infringement and adds extensive language to define “willfulness.” The section incorporates the “objective recklessness” standard of the Federal Circuit’s 2007 Seagate opinion and prescribes requirements for notice of infringement. Other permitted grounds for willfulness include intentional copying with knowledge of the patent and a second infringement finding. Willfulness cannot not be found if there was an informed, good faith belief of patent invalidity, unenforceability or no infringement. Willfulness cannot be pleaded until after a finding of infringement. IPO POSITION: IPO believes that in light of the Federal Circuit’s 2007 opinion in the Seagate case, patent reform legislation should not include any provision on willful infringement.

The bill includes a provision that willfulness cannot be found (the report incorrectly reads “cannot not”) if there was an “informed good faith belief of patent invalidity. unenforceability or no infringement.” If passed in this form, the provision likely would put back in place the need (but not obligation) to have a competent opinion before launching a product. While touted as a codification of Seagate, this Senate bill is thus a change from the understanding many litigators attribute to Seagate. As currently interpreted by many litigators, Seagate eliminates the obligation and need to have a competent opinion before launching a product. If this bill passes, companies still will not be obligated to have such competent opinions before launching but will have an express need to obtain such opinions. The need is founded upon the provision that willfulness cannot be found if there was a good faith belief of patent invalidity, unenforceability or non-infringement. A clear demonstration of such a good faith belief would be a competent written opinion by outside counsel.

Of course, the IPO, aka The Patent Owners Organization, opposes because the somewhat vague recklessness guideline promulgated by the Court can be seen as permitting very little Due Diligence and FTO work before a product is launched. The business owner can say in that instance “I had no idea that patent was out there. I was not reckless because my technical researchers said I was okay. They know the art. That is my good faith belief. After all, my researchers are at the forefront of this business.”

Many in the business of litigation currently subscribe to the allegedly smart view that the approach of little or no FTO work and no prior formal opinions preserves as much flexibility as possible for patent infringement litigation and does not commit to positions before litigation occurs. Is it smart business, however, to spend thousands or millions of dollars on development of a product without knowing whether or not a U.S. patent may stop sales cold in their tracks?

s.515.pdf

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Who Owns First? Stanford University v. Roche Molecular Systems

Attached is an article written by Ron Schutz of Robins, Kaplan, Miller and Ciresi and is posted with his permission.

APaTS Who Owns First.pdf

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SECOND PAIR OF EYES REVIEW – IS THE WICKED WITCH REALLY DEAD?

I have heard rumors for some months that the dreaded “Second Pair of Eyes” review of Examiners’ intent-to-allow patent applications had been eliminated. For those of you who are not on the front lines of patent prosecution, the “SPOE” review began in 2000 in response to the high rate of allowance of business method patents in Group 705. A “senior examiner and a review panel” (as one writer described it) was inserted between the Examiner and the Office of Patent Quality Assurance (which reviews about 4-5% of all proposed allowances) to block allowed applications in this Group from even reaching OPQA. This apparently worked quite well, and by 2001-02, the PTO had extended SPOE to other examining groups, including biotechnology. Like the sorcerer’s apprentice who could not control the forces he unleashed, SPOE cut the overall allowance rate of patent applications from about 72% in 2000 to about 44% in 2008. One Examiner told me that if he received two “reversals” from an SPOE review, he could be fired. Examiners get points if an application is allowed or abandoned. With this sort of threat hanging over every allowance, which path would you choose, especially if you were an Examiner working in a controversial area like most of biotechnology? But did this program lead to a perception that the quality of issued patents was improving?

Director Kappos apparently does not think so. In his address to the members of AIPLA at their recent annual meeting in Washington, DC, he explicitly called for reform of the present “count system” (which I hear is undergoing reform right now) and implicitly criticized SPOE review, by stating that a system that attempts to measure quality after allowance (that is, after an initial determination of “quality”) was not tenable. As noted above, the very existence of such a system caused Examiners to err on the side of rejection, and the SPOE reviewers necessarily felt pressured to reverse a certain number of Examiners in any case (or why should they be quality reviewers in the first place?). Since then, I have asked many practitioners if SPOE has been terminated. The answers were all ambiguous but seem to add up to a qualified “yes.” Apparently the program will continue to operate at a reduced level to try to control rogue Examiners who issue too few or two many applications (Yes, Virginia, there are Examiners in the latter group). So as Halloween looms, perhaps one of the scariest PTO innovations in a long time will not be stalking our claims much longer.

(I want to thank posts by E. B. Chen, NC Jolt Online Ed. and Gene Quinn in IPWatchdog.com for some background material I used in this note.)

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