Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Yesterday, the Federal Circuit handed down its anticipated en banc decision in Therasense, Inc. v. Becton, Dickinson & Co., increasing the standards for inequitable conduct.  The 6-5 majority held that: 

1. an omitted reference is material only if the claim or patent would not have issued, but for omission of the reference;
    
2. specific intent to deceive must be shown by clear and convincing evidence;
    
3. courts can no longer employ a "sliding scale" of intent and materiality, both must be showng by clear and convincing evidence; and
    
4. courts should apply equity to ensure that the remedy is not based upon conduct "immaterial to the issuance of the patent." 

Patent Docs has an excellent explanation of the opinion and the case background.  And there is plenty of commentary about the opinion (see links below).  My initial reaction was that the heightened standards will not actually reduce the number of inequitable conduct claims that are filed, although it may reduce the number of inequitable conduct findings. 

So, while the overall outcomes may change, the general cost and complexity of patent litigation will likely remain the same.  But when I said as much on Twitter (@rdd), I got an interesting reaction from what appears to be an anonymous patent lawyer.  This anonymous person suggested that the heightened standard would actually embolden inventors and patent prosecutors to omit references and hide information from the Patent Office because they are now less likely to be charged with inequitable conduct.  My inclination is to dismiss this theory based upon my operating presumption that most patent prosecutors, and most inventors, are, or at least intend to, zealously advocate for their clients, or themselves, within the Patent Office's rules and the relevant ethics standards.  Of course, I have seen exceptions, and they can be severe.  But my experience is that those are the exceptions, not the rule.  I am curious to hear what others think about this.  Am I wrong?

Here is a round up of some of the blog posts about the decision:

• Peter Zura's 271 Patent Blog "rejoices" that the heightened standards give prosecutors added protection;
   
• Life Sciences Law;
   
• Orange Book Blog;
   
• Patently-O ;
   
• PharmaPatents; and
   
• PLI Blog.

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This post comes more than a week after the Supreme Court decided Bilski.  Last Monday when the decision came down I was struggling with what value I could add to the many reports that would fill the intellectual property blogosphere, and was leaning towards waiting a few days (which also allowed me to deal with various client commitments and new opportunities).  Then a good friend praised me for being the lone IP blog who had not said a word about Bilski on the day of the decision, after receiving an email of the blog's content for the day.  That comment cemented it for me.  I decided to give myself some time to think about the decision before posting here.  Of course, that means that much of what can be said already has been.  So, links to many excellent commentaries are below. 

At its heart, the Bilski decision continues the Supreme Court's patent law trend moving away from bright line rules and allowing the flexibility to adapt the law to future situations.  The business method in Bilski was struck down, but the Court did not strike down all business methods.  And the justices made clear that the machine-or-transformation test was not the only option for determining patentability, increasing the law's flexibility even more.  Having preserved at least some business methods, the Court obviously left software patents intact as well.  So, Bilski was not the death of business methods or software.  And just as after KSR (obviousness) and eBay (injunction standard), the decision injects uncertainty into the law that will take 18 - 24 months to sort out, first in the district courts and then more slowly in the Federal Circuit.  The one thing you can be sure of is that you will see lots of Bilski-based motions over the next year.  And I am sure I will be writing about Northern District Bilski decisions during that time.

Here is some of the commentary from across the blogosphere:

• 271 Patent Blog; 
   
• Chisum's Notes on Bilski;
   
• Filewrapper (noting that the Supreme Court issued grant, vacate and remand orders in two business method cases assuring we will get some realtively quick Federal Circuit guidance on the outlines of Bilski);
   
• IPWatchdog (arguing, among other things, that even in the post-Bilski world one could write claims that would capture Bilski innovation);
   
• New York Times Bits Blog (looking at the uncertainty the decision injects into litigation);
   
• Patent Docs (looking at Bilski's impact upon biotech patents);
   
• Patently-O (and here, here, here and here); and
   
• WSJ Law Blog.

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The Supreme Court heard oral argument in the Bilski case Monday afternoon.  Click here for a transcript of the arguments.  Here are a few of the highlights from Bilski's argument:

JUSTICE GINSBURG: But you say you would say tax avoidance methods are covered, just as the process here is covered. So an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, all of those are patentable?

MR. JAKES: They are eligible for patenting as processes, assuming they meet the other statutory requirements.

JUSTICE BREYER: So that would mean that every -- every businessman -- perhaps not every, but every successful businessman typically has something. His firm wouldn't be successful if he didn't have anything that others didn't have. He thinks of a new way to organize. He thinks of a new thing to say on the telephone. He thinks of something. That's how he made his money.

And your view would be -- and it's new, too, and it's useful, made him a fortune -- anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?

MR. JAKES: It is potentially patentable, yes.

* * *

JUSTICE BREYER: So you are going to answer this question yes. You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. They learned things - (Laughter.)

JUSTICE BREYER: It was fabulous. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?

MR. JAKES:  Potentially.

And here are some of the highlights from the government's argument:

JUSTICE SOTOMAYOR: No ruling in this case is going to change State Street. It wasn't looking at process or the meaning of "process." It was looking at something else.

* * *
 

CHIEF JUSTICE ROBERTS: Mr. Stewart, I thought I understood your argument up until the very last footnote in your brief. And you say this is not --simply the method isn't patentable because it doesn't involve a machine. But then you say but it might be if you use a computer to identify the parties that you are setting a price between and if you used a microprocessor to calculate the price. That's like saying if you use a typewriter to type out the -- the process then it is patentable. I -- I -- it -- that takes away everything that you spent 53 pages establishing.

* * *

CHIEF JUSTICE ROBERTS: But if you look at your footnote, that involves the most tangential and insignificant use of a machine. And yet you say that might be enough to take something from patentability to not patentable.

MR. STEWART: And all we've said is that it might be enough; that is, hard questions will arise down the road as to where do you draw the line, to what extent must the machine or the transformation be central --

CHIEF JUSTICE ROBERTS: So you think it's a hard question. If you develop a process that says look to the historical averages of oil consumption over a certain period and divide it by 2, that process would not be patentable. But if you say use a calculator, then it -- then it is?

MR. STEWART: I think if it's simply using a calculator for its preexisting functionality to crunch numbers, very likely that would not be enough. But what we see in some analogous areas is that the computer will be programmed with new software, it will be given functionality it didn't have before in order to allow it to perform a series of calculations, and that gets closer to the line. And again --
 

CHIEF JUSTICE ROBERTS: Well, your footnote -- I don't mean to dwell on it -- it says to identify counterparties to the transactions. So that if what you're trying to get is the -- the baker who sells bread, because you are going to hook him up with the grocer who sells, you know, in the grocery store, if you punched in in your search station, you know, give me all the bakers in Washington, that would make it patentable?

MR. STEWART: Again, we are -- we are not saying it would be patent eligible. We would have to review those facts, and the PTO would have to review those facts in the context of an actual application.

I guess the point I'm trying to make is simply that we don't want the Court, for instance, in the area of software innovations or medical diagnostic techniques to be trying to use this case as the vehicle for identifying the circumstances in which innovations of that sort would and would not be patent eligible, because the case really doesn't present any -- any question regarding those technologies. And therefore, we --

If those highlights, left you wanting more, check out the following posts that give some additional context to the cold transcript or read the tea leaves, as we all wait for a decision, likely this spring:

• 271 Patent Blog
   
• IPWatchdog (and here)
   
• Patent Docs
   
• Patently-O (and here)
   
• The Prior Art
   
• WSJ Law Blog

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The Supreme Court hears oral argument today in Bilski v. Kappos.  The Court will decide the proper test for Section 101 patentability and will either decide or at least significantly impact the patentability of software and business method patents.  Here are the questions presented:

1. Whether the Federal Circuit erred by holding that a "process" must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing ("machine-or-transformation" test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for "any" new and useful process beyond excluding patents for "laws of nature, physical phenomena, and abstract ideas." 
    
2. Whether the Federal Circuit's "machine-or-transformation" test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect "method[s] of doing or conducting business." 35 U.S.C. § 273.

For more on the history of both the Bilski case, check out my recent article with my colleague Mike Grill in the Northwestern Journal of Technology and Intellectual Property.  Patently-O has compiled the amicus briefs -- click here for the briefs supporting Bilski or neither party, and here for the briefs supporting the government.  The briefs supporting the government include a brief by a group of Internet Retailers that, I am proud to say, cites my law review article arguing for an even application of the Twombly pleading standard as to both patent plaintiffs and patent defendants -- click here for the amicus brief and here for my article from the John Marshall Review of Intellectual Property Law.

Click here for the SCOTUSBlog's preview of the argument.  For post-argument CLE options, click here for a list of courses compiled by Patent Docs and here for information on a CLE from IPWatchdog's Gene Quinn, who plans to attend oral arguments.

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Here are several stories and updates, as well as a new IP blog:

• At Patently-O, Dennis Crouch covers the Federal Circuit decision in the appeal from the Northern District of Illinois case SourceOne Global Partners, LLC v. KGK Synergize, Inc. -- Click here for Crouch's post on the appeal and here for my post on the underlying decision.
   
• The latest installment of Doug Lichtman's IP Colloquium is available -- click here to listen.  Lichtman and his guests from Microsoft, Paramount Pictures and MySpace discuss the protection of content in the digital age.  As always, it is an excellent listen and CLE credit is available.
   
• Seattle Trademark Lawyer Michael Atkins has another great post up about Olympic trademarks, this time featuring an article that ran in the Chicago Tribune (here) and LA Times (here) quoting both Atkins and me.
   
• California attorney and mediator Erica Bristol has started the IP Watchtower blog.  The blog covers all facets of intellectual property and the initial posts suggest it will be a great read.  I have added it to my feed reader.

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Congratulations to Sharon Barner, a Chicagoan and the head of Foley & Lardner's IP practice.  Barner has been nominated to become the next Deputy Director of the Patent & Trademark Office.  Based upon reputation and my limited contact with Barner, including among others speaking on a panel at Northwestern with her, the administration made an excellent choice.  For more on the nomination, check out Patently-O and Chicago Law.

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Here are several stories to start your Monday morning with that I was not able to get to last week because of client commitments and some new business opportunities:

• The first round of Bilski briefing has been filed  with the Supreme Court.  Click here for links to the various amici briefs at Patently-O, and here for an analysis of Bilski's opening brief at BlawgIT.
   
• Victoria Pynchon has an important warning for IP litigators about understanding a client's insurance coverage at her IP ADR Blog -- click here to read the story and here to check out Pynchon's husband's new Catastrophic Insurance Coverage Blog.  The blog appears to be a good read, but more importantly IP litigators should make sure that they investigate client's insurance policies early in a case.
   
• William Patry has a new copyright-related blog, Moral Panics and the Copyright Wars.  It is a companion to his book of the same name, which is excellent.  I had the privilege of receiving an advance copy, which I loved.  I will post a review soon.  For now though, click here for Patry's first post on the new blog.
   
• Finally, last Friday, as they were headed into the August recess the Senate confirmed David Kappos as the next Director of the PTO -- click here for the PTO's press release.

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**  This post is cross-posted at Patently-O  **

The Northern District of Illinois judges are currently considering public comments on a new set of proposed Local Patent Rules – click here to download a copy of the proposed rules.  The Court expects to enact a finalized version of the proposed Patent Rules later this year. As currently written, the rules likely will have a significant impact on the way that patent cases are litigated in the Northern District, and may result in an influx of patent cases to the Northern District, which is already among the top five for patent cases. As a result, patent litigators throughout the country should keep an eye on the proposed Patent Rules as they progress through the Court's committee. While the proposed Patent Rules resemble those of the other major patent districts such as the N.D. California and the E.D. Texas, they differ in two rather significant respects:

1.      The proposed Patent Rules promote uniformity, not speed.

The proposed Patent Rules contemplate a trial approximately two years after a complaint is filed. During a public comment session, several Northern District judges pointedly stated that, in seeking to promulgate local patent rules, the Court does not want to become a "rocket docket" for patent cases. And the Court does not seek to become the busiest patent docket in the country.   Instead, the aim of the local patent rules is simply to promote uniformity and best practices among the judges of the Northern District. The Northern District of Illinois is one of the largest districts in the country, and uniformity among the District's judges would promote case management predictability for both the Court and the litigants. Each Northern District judge currently schedules patent cases based upon her own experience, with little uniformity among the judges. The proposed Patent Rules attempt to remedy that. 

That said, the rules are optional, not mandatory—individual judges will be able to deviate from the proposed Patent Rules. But the proposed Patent Rules at least will provide a starting point for uniformity and a suggested framework for the judges who choose to adhere to them.

2.      Defendant opens and closes Markman briefing late in fact discovery.

The biggest deviation from the Northern District of California and Eastern District of Texas patent rules occurs in the claim construction phase. Significantly, the proposed Patent Rules do not contemplate two rounds of simultaneous briefing, as has become commonplace in patent cases. Instead, the proposed Patent Rules provide for a single set of briefs: the accused infringer files the opening brief, the patent holder responds, and the accused infringer replies. Notably, the accused infringer—not the patent holder—submits the initial and final briefs. The accused infringer necessarily will not have the benefit of the patentee's claim construction position at the outset of the briefing. The practical impact of having the accused infringer file the opening claim construction brief remains to be seen, although some practitioners view this provision as having the potential to greatly increase the number of patent cases filed in the Northern District. 

At the public comment session held on March 23, the judges on the rules committee explained the rationale behind this provision. Concurrent briefing, they noted, wasted a lot of time. The parties' opening briefs tend to be ships passing in the night—the parties often argue past each other, rendering the opening briefs incomprehensible, or they agree with each other, rendering those points moot. As a result, neither the disputed claims nor the parties' positions are fully understood until the concurrent responsive briefs. The proposed Patent Rules contemplate streamlining the process by eliminating simultaneous briefs.

The judges also addressed their decision to have the accused infringer, rather than the patent holder, begin the briefing. The judges explained that the patent holder's opening argument is often for the "ordinary" meaning of claim terms. As a result, when the patent holder opens the briefing, the accused infringer has no chance to address many of the patent holder's arguments because the patent holder often does not make those arguments until the reply brief. So, the judges explained, the Court and the parties are better served by having the accused infringer open the briefing with the patent holder responding to the accused infringer's claim construction arguments. 

Interestingly, a comment was made at the session pointing out that the Court has not decided how to schedule briefing when both parties assert patents against each other, that is, when each party is a patent holder and each party is an accused infringer. A possible resolution would be to allow two sets of parallel briefs with the accused infringer for each set of patents opening the briefing for those patents.

                                                                        Conclusion

The proposed Patent Rules notably differ from the rules of other courts in two significant respects: the new briefing schedule, and for the fact that they are not aimed at decreasing the time to trial or at significantly growing the Northern District of Illinois's patent docket. Assuming that the Court institutes the proposed Patent Rules with the current claim construction briefing schedule, it will be very interesting to see whether and how the claim construction procedures impact both case outcomes and the number of patent filings in the Northern District of Illinois.

For those interested in the specifics of the proposed Patent Rules, here is a general outline of the timeline and procedure that the proposed Patent Rules outline:

• A standard protective order in place from the beginning of the case, unless and until it is modified, to avoid discovery delays being blamed upon entry of a protective order;
   
• Automatic document production requirements of plaintiff when initial disclosures are served and of defendant when initial noninfringement and invalidity contentions are served;
   
• Plaintiff serves initial infringement contentions two weeks after initial disclosures and defendant respond with initial noninfringement and invalidity contentions two weeks after that, followed two weeks later by plaintiff's response to the invalidity contentions;
   
• Plaintiff files final infringement contentions twenty one weeks after its initial contentions and defendant responds four weeks later with final noninfringement, invalidity and unenforceability contentions (after the final contentions, leave of Court is required for any amendments);
   
• No party can seek a stay pending reexam after serving its final contentions;
   
• The claim construction process begins two weeks after defendant's final invalidity contentions are served;
   
• Defendant files an opening claim construction brief along with a joint appendix including the patents in suit and their prosecution histories consecutively paginated, plaintiff then files a responsive brief within four weeks, and defendant has two weeks to file a reply;
   
• Fact discovery closes forty two days after the claim construction rulings, which triggers expert discovery followed by a dispositive motion deadline; and
   
• A trial is contemplated approximately two years after the filing of the complaint.

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Welcome to the August 2009 Carnival of Trust.  The Carnival of Trust is a monthly, traveling review of the last month's best posts related to various aspects of trust in the business world.  It is much like the weekly Blawg Reviews that I post links to and have hosted (click here and here), but those generally contain far more than ten links.  My job this month was to pick those ten posts for you and provide an introduction to each post that makes you want to click through and read more.  For my regular Chicago IP Litigation blog readers, this will be a slight departure from the case analysis format you have come to expect, but very similar to my earlier stints hosting the Carnival of Trust and Blawg Review. 

It is the trust that matters, not the title.

At IP Think Tank, Duncan Bucknell added to the recent debate in the patent community about whether the IP function should move into the corporate C-level suite, adding a Chief Intellectual Property Office to the ranks of CEO, COO, CTO, CIO, CLO and CMO – click here and here to read Bucknell's posts. Following up on comments by Microsoft's Marshall Phelps and Rockwell Collins' Bill Elkington, Bucknell explained that the issue is not the name, but in a company having an IP champion that earns the organization's trust and respect, whatever title that person is given:

You have to build your own credibility within your organisation as someone who reliably gets the job done.  As you build trust with those senior to you, then your (ongoing?) commitment to communicating the value that can be added using intellectual property will become more prominent. 

Make some (achievable) promises and then deliver.  The more that you do this, the more credibility will be given to the IP function, and the greater awareness those senior to you will have.  Some would call such a person an ‘IP Evangelist’ – I would say that they are just doing their job.  People executing on difficult tasks bit by bit has always been what success is about.

As usual, Bucknell's analysis is excellent. A person's respect within an organization is at least as important as their title.

Running an organization is all about building trust.

The patent community focused much of its attention this week on the confirmation hearings for David J. Kappos, nominee for Director of the US Patent & Trademark Office. Click here for Patentability's summary of the hearing highlights and here for a copy of Kappos's statement at Patently-O. The hearings were relatively short, likely because there appears to be widespread trust in Kappos's background and abilities. And although much of the hearing focused on procedural patent office issues, Kappos showed he deserved that trust by focusing his statement on his plans to earn trust with all of the stakeholders in the patent world. He specifically addressed concerns that his corporate background could disadvantage individual inventors or academics:

I am mindful that the USPTO serves the interests of ALL innovators in this country, small and large, corporate and independent, academic and applied, and – most importantly -- the public interest. While I have spent my career to date at a large corporate enterprise, I am familiar with the concerns and issues of all USPTO constituents - including small and independent inventors, the venture and start-up community, public interest groups, the patent bar and many others - and will reach out to all of them.

Kappos addressed his plans to build trust with his employees at the USPTO:

I am mindful of the incredible dedication of the thousands of USPTO employees, and the essential role they play to the success of the US innovation system. I will work every day with the USPTO employees and the unions that represent them to establish strong, positive relationships grounded in professional treatment for these workers producing work product based on professional judgment.

He addressed the need to build global trust and relationships:

I am acutely mindful that innovation today is global and that IP policy is of paramount importance, not only in our country, but also in the EU and Japan, in China, India, Brazil and many other developing countries. I will use my international experience and my understanding of global IP trends to help this Administration represent, advance, and protect the interests of American innovators in the global arena and to lead the world in developing strong, balanced, inclusive intellectual property systems that advance the well-being of all participants.

And he addressed the need to build trust with the Administration he seeks to join and the American people the Administration serves:

Finally, I am mindful that the office for which I am being considered, working as part of Secretary Locke's team and within the Administration's agenda, must be intensely focused on how to serve the American people at this time of economic uncertainty.

Gene Quinn provides proof that Kappos's trust-building efforts worked in his IPWatchdog post about the hearings (click here to read the post):

In all, what Kappos said was certainly reassuring, and he should have absolutely no problem getting confirmed.  If he does stay mindful of the needs of all those who use the USPTO, small, large and in between, and the interests of the diverse industries who sometimes need contradictory things in order to thrive, he will not only be a good leader, but he will be an exceptional leader and might really reform the Patent Office into the entity it can and should be in order to foster economic development and job creation in the US. 
 

Walter Cronkite personified trust.

The passing of Walter Cronkite last month does not have much to do with intellectual property, but I could not do this month's Carnival of Trust without mentioning Cronkite. To me and so many others, Walter Cronkite embodied trust. Cronkite was the person so many turned to in times of national tragedy, like war, and in times of national triumph, like the Apollo XI moon landing. Naturally, Cronkite's passing caused numerous reviews of present-day news personalities and almost as many questions about whether times have changed so much that we cannot have another Cronkite. In the Chicago Reader blog, Whet Moser decries a poll that found the Daily Show's Jon Stewart to be the most trusted newsperson on the air today – click here to read the post. Frankly, the poll does not appear to be scientific and, therefore, not very trustworthy. But I have trouble arguing with the results. I love news. Three newspapers are delivered to my door every morning, and I read each one. Okay, I at least skim each one. I grew up watching the nightly news, but I now finding myself turning to Stewart for news programming more frequently than I turn to Couric, Gibson or Williams. I like and even trust all three. But Stewart has built a more powerful trust with me by calling out the problems with the 24-hour news cycle and by making me laugh. Stewart has some obvious biases, but he makes sure they are obvious and he creates even more trust by poking fun at both sides of most issues. Truth and laughter are powerful trust builders. 

Cronkite deserves more than one entry in this Carnival, and the second comes from the Carnival of Trust's own Charles Green at his Trust Matters blog – click here to read the post. Green breaks down the components of The Most Trusted Man in America: 1) honesty; 2) selflessness; and 3) integrity. Green also explains that Cronkite's calm, baritone voice reinforced each of the three characteristics. I could not agree more. Hearing Cronkite's voice is an instant dose of trust.

For those not fortunate enough to develop their own "personal," trust relationship with Cronkite through his news programming, check out this NPR obituary to get some measure of the man and his history.

Credentials can generate and regulate trust.

At the Mediation Channel, Diane Levin makes a strong argument that legal mediators need to develop an accreditation system – click here to read the post. And IP mediator Victoria Pynchon responds at her Settle It Now blog with her own arguments for credentialing mediators for the good of mediators, the mediating parties and society's trust in the mediation system as a whole – click here to read the post.

How can companies build trust?

Building trust can be a slow and sometimes uncertain process. At his Touch Points blog, Steve Finikiotis cites a study suggesting that trust in corporation in the United States and other developed countries is at its lowest point ever – click here to read the post. In order to remedy the decreased trust, Finikiotis provides four trust building steps: 1)Focus on understanding and meeting customers’ preferences; 2) Under-promise and over-deliver; 3) Transparency; and 4) Encourage and foster feedback. 

And although Finikiotis did not focus on this example, last month Amazon showed just how those steps do build trust.  Amazon was accused of copyright infringement when a digital book seller used a self-service program to sell unauthorized copies of several books, including George Orwell's 1984, to Amazon Kindle users. When Amazon learned of the alleged infringement, it erased the books from its customers Kindle accounts. As you might expect, there was a public outcry. Kindle users were upset to learn that books they purchased and felt they owned could be removed from their devices and accounts. And Amazon sprang into action following Finikiotis's four steps: 

1. Amazon listened to its customers' frustration at having the books removed and the possibility of future removals;
    
2. Amazon replaced the books;
    
3. Amazon's founder and CEO, Jeff Bezos, issued the following very direct and honest apology:
   
   This is an apology for the way we previously handled illegally sold copies of 1984 and other novels on Kindle. Our “solution” to the problem was stupid, thoughtless, and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we’ve received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission.

With deep apology to our customers,

Jeff Bezos
Founder & CEO
Amazon.com

      4.    Through its response and apology, Amazon fostered feedback.

Amazon turned a negative situation into a very positive one. As a Kindle owner (and lover), I was very happy with the response and it has made me an even more loyal Kindle customer. And others agree. For example, Amazon's response helped convince PublicOrgTheory blog to go ahead with a Kindle purchase – click here to read the post. And In Propria Persona has qualms with copyright law, but saw the apology as good customer service and said it improves the likelihood of him purchasing a Kindle – click here to read the post. Finally, the Below the Line marketing blog says that "Amazon shows how to apologize," and notes that customer comments on the Amazon site have been largely positive since the apology; proof that Finikiotis's steps work. Nice job to both Finikiotis and Amazon.

And with that story of trust done well, thank you for reading, whether you are a regular reader of this blog or a Carnival of Trust groupie.

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Yesterday, President Obama announced his intent to nominate David J. Kappos as the next Director of the Patent and Trademark Office, also known as Under Secretary of Commerce for Intellectual Property.   Kappos is currently IBM's Vice President and Assistant General Counsel, Intellectual Property.  Kappos earned a degree in electrical and computer engineering from the University of California Davis and received his law degree from Berkley.  Here is some of Kappos biography from President Obama's press release on the pending nomination:

Mr. Kappos serves on the Board of Directors of the American Intellectual Property Law Association, the Intellectual Property Owners Association, and the International Intellectual Property Society. He is also the Vice President of the Intellectual Property Owners Association. He has held various previous leadership positions in intellectual property law associations in Asia and the U.S. He has spoken widely in Asia, Europe, and the U.S. on intellectual property topics. Mr. Kappos received his Bachelor of Science Degree in Electrical and Computer Engineering from the University of California Davis in 1983, and his law degree from the University of California Berkeley in 1990. He joined IBM in 1983 as a Development Engineer and has served as an Intellectual Property Law attorney in IBM’s Storage Division and Litigation group, as IP Law Counsel in IBM Software Group, as Assistant General Counsel in IBM Asia/Pacific, IBM Corporate Counsel and as Assistant General Counsel prior to his current position.

For initial reactions from the blogosphere, check out:  ChipLaw; IPWatchdog; Patent Law Insights; and Patently-O.

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Earlier today, the Supreme Court granted cert in Bilski, the Federal Circuit's en banc decision limiting the patentability of business method and software patents.  Many commentators are predicting that the Supreme Court will further restrict business method and software claims through the machine or transformation test, although it is hard to imagine that either type of claim will be completely eliminated.  Of course, the Supreme Court could also move the law back toward the  State Street decision allowing business methods and software to be patented more freely.  The questions presented are:

Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

For more takes on the cert decision and its implications, check out:

• 271 Patent Blog;
   
• IPWatchdog;
   
• Patently-O;
   
• SCOTUS Blog; and
   
• WSJ Law Blog.

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Here are a few stories that do not warrant a full post:

• The mainstream media and the blogosphere are buzzing with predictions of who is on President Obama's shortlist for replacing Justice Souter  The Northern District's Judge Castillo and the Seventh Circuit's Judge Wood are both making many of the lists -- check out one list at the Daily Writ.  Both excellent choices.  Over the weekend, the Chicago Tribune ran a story about a local expectation that someone connected to the University of Chicago would be appointed to the Supreme Court during the Obama presidency.  I also wonder if the Northern District's Judge St. Eve is or should be on some shortlists.
   
• Ronald Slusky is bringing his two-day patent claim drafting seminar to Chicago May 19-20.  Slusky promises to teach "a comprehensive approach to analyzing inventions and capturing them in a sophisticated set of patent claims.  Through this interactive seminar, participants will enhance their skills in a classroom setting."  I have not attended Slusky's seminar myself, so I cannot speak to its value, but it definitely looks interesting.
  
  
• Last week the House held hearings about the Patent Reform Act.  Check out some commentary on the hearings at Patently-O.
   
• I got out of the habit of posting each week's Blawg Review, but last week's was both too good and too unique to pass up.  Blawg Review #209 is up at John Hochfelder's New York Injury Cases Blog (another LexBlog site) -- read it here.  Hochfelder tells the moving story of his father's life, the life of an American hero.   Blawg Review #210 is also available at the China Law Blog -- click here to read it.  It is also an excellent Review based loosely on the 90th anniversary of China's May 4th Movement.

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The Administrative Office of the U.S. Courts has issued its 2008 annually report* analyzing the federal court case load for fiscal year 2008.  The Northern District of Illinois remains an important IP court, ranking fourth in IP case filings for 2008, with 385 cases filed, behind the Central District of California, the Southern District of New York and the Northern District of California.

Nationwide, patent and trademark case filings remained steady with only slight increases, but copyright case filings fell over 25%.  One other interesting note, almost four percent of patent cases terminated in 2008 went through a trial.  That is a relatively large amount of trials in the federal courts where an average of 1% of cases are tried.  The 3% difference is not enough to show a post-eBay trend of increasing trials, but it could be the beginning of such a trend.

For more analysis of the report check out Peter Zura's 271 Patent Blog and Patently-O.

*  Click here to read the report.

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The legal blogosphere is full of analysis and commentary regarding the Patent Reform Act, here is more of the best:

• FileWrapper;
   
• Patent Baristas (surveying industry responses to the Act);
   
• Patent Docs (discussing the witness list for Patent Reform Act hearings);
   
• Patently-O (damages provisions analysis), and here and here;
   
• Washington State Patent Law Blog.

And the Bilski amicus briefs began coming into the Supreme Court today.  Click here for Dennis Crouch's post with links to many of the amicus briefs.  And here for Crouch's post discussing the PTO's Bilski guidance to Examiners.

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As promised, the new Patent Reform Acts were introduced in Congress this week -- click here for the Senate bill and here for the House bill.  While I have not yet done a comprehensive review, I understand that the bills are largely similar.  Here are some highlights of the bills:

• They move from the current first to invent system to the international norm, first to file.
   
• Expanded reexamination and a new period of post-grant review.
   
• Damages provisions require that the specific contribution over the prior art be considered and allow consideration of licensing terms for similar noninfringing substitutes.  As Dennis Crouch points out, for alternatives in the public domain the comparable license could be free.
   
• Specifically allows for Federal Circuit jurisdiction of interlocutory claim construction appeals where the district court approves the appeal.
   
• Federal Circuit judges would no longer be required to live within fifty miles of the District of Columbia.
   
• The venue provisions are changed to narrow possible venues.

There is plenty of commentary in the blogosphere.  Here are some of the best:

• 271 Patent Blog (giving highlights, noting changes from the last version and do not miss Peter Zura's blog makeover);
   
• Patent Docs (discussing the Senate press conference announcing the Senate bill and noting BIO's response to the bills); and
   
• Patently-O (giving highlights and noting changes from the most recent attempted reforms) and here (reposting comments from Google's Head of Patents and Patent Strategy, Michelle Lee).

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IPWatchdog Gene Quinn recently published his list of the top 26 patent blogs, based upon Technorati rankings (Quinn only considered blogs in the top 1M of the Technorati rankings) -- click here to read Quinn's post.  Quinn manually determined which blogs counted as patent blogs, and did nice work.  Although I would add the IP ADR Blog to the list.  While I do not place much weight in blog rangings, the list identified a few new blogs that I plan to follow, and it is gratifying to see that the Chicago IP Litigation Blog has a strong reader base in the patent world.

Here are Quinn's rankings:

1. Patently-O - Technorati Rank 21,202
2. Patent Baristas - Technorati Rank 61,134
3. IPWatchdog - Technorati Rank 80,245
4. Against Monopoly - Technorati Rank 80,245
5. Patently Silly - Technorati Rank 90,082
6. Chicago IP Litigation Blog - Technorati Rank 117,073
7. PHOSITA - Technorati Rank 101,726
8. Spicy IP - Technorati Rank 129,347
9. PLI Patent Practice Center - Technorati Rank 132,753
10. Duncan Bucknell Company’s IP Think Tank - Technorati Rank 136,348
11. Patent Prospector - Technorati  Rank 152,448
12. Securing Innovation - Technorati Rank 162,007
13. Peter Zura’s 271 Patent Blog - Technorati Rank 163,794
14. The Invent Blog- Technorati Rank 167,214
15. Promote the Progress - Technorati Rank 198,166
16. I/P Updates- Technorati Rank 213,371
17. IP NewsFlash- Technorati Rank 221,777
18. Orange Book Blog - Technorati Rank 221,777
19. The IP Factor - Technorati Rank 250,588
20. Philip Brook’s Patent Infringement Updates- Technorati Rank 273,434
21. Patent Docs - Technorati Rank 300,413
22. Antiticpate This! - Technorati Rank 351,677
23. Patent Fools (now operated by IPWatchdog.com) - Technorati Rank 351,092
24. Patentably Defined - Technorati Rank 614,978
25. Steve van Dulke’s Patent Blog -  Technorati Rank 676,101
26. IP Spotlight - Technorati Rank 752,199

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Here are several Northern District and IP news stories that did not warrant separate posts:

• The Northern District's new Rockford courthouse is being named for retired Judge Roszkowski.  Judge Roszkowski was the first federal judge permanently seated in Rockford and served for over twenty years.
   
• Blawg Review #198 is up at the East Central Illinois Criminal Law & DUI Blog (click here to read it).  As you might expect based upon the blog's subject matter, there is not a lot of IP content.  But there are several Illinois-specific stories that Blog readers may find interesting.  For example, My Law Life warns that an Illinois statute makes it illegal to jog (or walk) on Illinois roadways where sidewalks are available -- click here to read the post.
   
• Several blogs are reporting that patent reform may be back on in Congress this year:  Patently-O; and 271 Patent Blog.

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Yesterday, President Obama announced that he was appointing Senator Judd Gregg (R-N.H.) to become the next Secretary of Commerce, a significant position in the intellectual property world.  As Secretary of Commerce, Gregg will oversee the PTO and have a strong voice in any patent reform that might occur while he is Secretary.  The blogosphere and mainstream media are slowly providing background regarding Gregg:*

• Patently-O
   
• Peter Zura's 271 Patent Blog (highlighting this Congressional Quarterly article which points out that Gregg once voted to abolish the Department of Commerce).
   
• Washington Post's 44 Blog.

*  I will update this post with more links if I see anything especially valuable.

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Here are several blog posts that are worth your time on this Monday morning:

• At Deliberations, Anne Reed warns of six mistakes that can derail voir dire -- click here to read the post.  Anyone who follows Deliberations knows that when Reed discusses voir dire, everyone should listen.
   
• The Federal Circuit heard oral argument in Tafas v. Dudas last week.  Here is some of the commentary:  Patent Baristas; Patently-O; & PLI Blog.
   
• At IP ADR Blog, Victoria Pynchon offers to arbitrate your patent case and says under expedited AAA commercial rules you can get a decision within 45 days of selecting the arbitrator -- click here to read the post.  Amazing, I may try that in the dispute resolution clause of my next license agreement.
   
• Anyone who read his 2007 NYC Marathon Blawg Review will not be surprised that Eric Turkewitz's post-Thanksgiving Blawg Review last week at his New York Personal Injury Law Blog was one of the best of the year -- click here to read it.

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Time has  published a list of 2008's best inventions -- click here to read it.  Here are a couple of inventions with Chicago connections:

• 12.  MacroMarkets -- MacroMarkets was instrumental in  starting  housing futures trading on the Chicago Mercantile Exchange (the Chicago connection).  Now MacroMarkets is working on exchange-traded funds that allow regular investors to bet on housing futures.
   
• 23.  The Branded Candidate -- This invention is actually about a trademark and a brand.  Chicago's own President-elect Obama created a marketing sensation with his branding this year.  Here is how Time describes it:

Barack Obama hat: $15. Barack Obama special-edition Beyoncé T shirt: $60. Devising a system to make and sell your own swag and garner millions in profits, not to mention the phone numbers and addresses of hundreds of thousands of potential volunteers? Priceless.

Hat tip to Dennis Crouch who identified Time's list at Patently-O.

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The Bilski analyzers are moving away from the opinion itself, and toward the practical impacts of the decision and the unanswered questions it left, as opinions always do.  Here are several of the best:

• 271 Patent Blog (asking whether a method for swinging on a swing meets the Bilski standard);
   
• FileWrapper;
   
• Maryland IP Law;
   
• Patently-O (and here and here and here and here); and
   
• The Prior Art.

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In re Bilski, __ F.3d __ (Fed. Cir. 2008) (en banc).*

Chief Judge Michel, writing for a nine judge majority, affirmed the Board of Patent Appeals and Interferences' finding that Bilski's invention -- a commodities trading method for hedging risks -- did not meet the 35 U.S.C. § 101 patentable subject matter requirement.  The Federal Circuit held that State Street's "useful, concrete, and tangible result" test was insufficient to determine patentability -- disagreements have already started regarding whether State Street was narrowed or overturned.  The Federal Circuit held that the Supreme Court's "machine-or-transformation" test was the only test for determining patentability:

A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

I found Judge Dyk's concurrence tracing the history of the "machine-or-transformation" test back to the Patent Act of 1793 especially interesting:

In fact, the unpatentability of processes not involving manufactures, machines, or compositions of matter has been firmly embedded in the statute since the time of the Patent Act of 1793, ch. 11, 1 Stat. 318 (1793).

As with any major appellate decision, we will need eighteen to twenty four months of district court and Federal Circuit decisions to flesh out and fully understand Bilski's implications.  While we argue those cases and await the decisions, there will be plenty of law review and blog analysis.  Here are some of the first (I will update with additional posts as they come):**

• 271 Patent Blog (glad to see Peter Zura back in the blogosphere);
   
• IP ADR Blog;
  
  
• Likelihood of Confusion;
  
  
• Patent Baristas;
   
• Patently-O (with Crouch's usual, in-depth analysis);
   
• The University of Chicago Law Faculty Blog (Randy Picker has an exceptionally detailed take on the opinion); and
   
• WSJ Law Blog (saying experts are torn as to whether Bilski will make it to the Supreme Court).

*  Click here for the opinion.

**  I have updated the list of Bilski blog posts with some new ones.

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 New Medium LLC v. Barco N.V., No. 05 C 5620, 2008 WL 4615682 (N.D. Ill. Oct. 16, 2008) (Posner, J. sitting by designation).

In my previous entry about this case, I linked to a copy of this decision and briefly explained the result, but did not provide any analysis of the opinion because I was previously involved in the case -- click here to read that entry in the Blog's archives.  Since that post, Dennis Crouch has provided some excellent analysis of the opinion -- click here to read it at Patently-O.  Thanks Dennis.

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Nike, Inc. v. Wal-Mart Stores, Inc., No. 08 C 5840 (N.D. Ill.) (Hibbler, J.).

As I have said before, I generally do not discuss complaints, but Nike's design patent suit against Wal-Mart last week has drawn significant blog coverage  -- click here for the complaint.  And most of that coverage has missed the most interesting element of the complaint, from a legal procedure perspective (and yes, legal procedure is interesting, at least to me):  Nike's detailed pleadings.  Instead of simply identifying its design patents (related to its Nike Shox product line) and Wal-Mart's allegedly infringing shoes, Nike put detailed design patent claim charts in its complaint showing an accused product from the same angle as each figure in the design patent.  Here is a portion of one of the charts:

Of course, claim charts for design patents are less detailed and time-intensive to create than utility patent charts.  But claim charts in the body of a complaint are relatively rare for any type of patent case.  This may suggest a recognition that the Supreme Court's Twombly antitrust decision which required pleadings to meet a new "plausibility" standard coud be applied in patent cases -- click here for more coverage of Twombly-related issues in the Blog's archives.  Of course, I just finished writing an article for John Marshall's Review of Intellectual Property Law about how courts are dealing with the Twombly standards in patent cases, so I may just be seeing Twombly everywhere.I expect my article to be published next month, and I do not want to scoop it by describing my finding here.  I can say, however, that my research suggests that Twombly is being applied (nationwide, not necessarily in the Northern District) in some interesting and uneven ways.  More on that in a few weeks, after the article publishes.

For more coverage of this case, check out:

• IP Watchdog (focused on the Egyptian Goddess case);
   
• Patently-O (discussing damages and marking issues); and
   
• WSJ Law Blog.

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Last week’s Olympic edition Blawg Review focused on the medals. Building on that, this week I discuss the elements of a world record swim. If you were watching last week, instead of blogging, you saw 20 of them in the Olympic pool; seven by Mr. Phelps.

Practice

Nothing is more critical than preparation. A big part of preparation is tightening your stroke and cutting out unnecessary motion. Reese Morrison, at the Law Department Management blog, discusses blunt suggestions for trimming legal bills.

Endless hours in the pool alone are not enough, you need a good coach. Business development coach Cordell Parvin provides an excellent three part series at his Law Consulting Blog – one, two, and three – on persistence, an important element of any Olympic training program. In an Olympic caliber display of persistence, Drug & Device Law had an exhaustive post discussing and classifying each medical device preemption case since the landmark Supreme Court decision in Riegel v. Medtronic, Inc., 128 S. Ct. 999 (2008).

You also need a support network to help you get through all of the pool time. Bruce Allen, at Marketing Catalyst, teaches us how to avoid the cocktail conversation you cannot escape from at a networking event. At Copyblogger, John Morrow explains that content is no longer king in the blogosphere, you need friends. And he teaches you how to get them. At BlawgIT, Brett Trout – who is a fighter, not a swimmer – has an interesting post about how to work together as a community to thwart webjackings (the hijacking of a website). And Mediation Channel’s Diane Levin discusses the social side of blogging, and reading blogs.

Of course, if you do not have time to practice you will never set the record. So, you need a job, or at least some cash. On that note, Harmful Error posts the great news that loan forgiveness programs were expanded this week for legal aid lawyers, state prosecutors and public defenders. 

The Suit

The clothes make the man (or the woman). This year the go-to duds were Speedo’s LZR suits. Patent Librarian Michael White tells us that, no surprise, Speedo patented the LZR. IPKat expands on swimming patents, providing a broader view of Olympics-related patents.

Genes

As a guy who swam for a lot of years and practiced hard throughout, I can tell you not everyone has what it takes to set world records. The closest I came was getting beat by an Olympian and world record holder. Of course, you might be less impressed by my loss if you knew that at the time his Olympic medals were four or five decades old, and I was 19. At Idealawg, Stephanie West Allen discusses the traits that make entrepreneurs entrepreneurial.

                                                                     Mental Focus

One of the big stories on Phelps this week was how he thinks of nothing but not losing during a race. At Litigation & Trial, Maxwell Kennerly tells us that you have to know when you are sweating the details more than your client would want by over emphasizing proof-reading. Of course, even Kennerly agrees that some details matter. 

                                                                  Knowing the Rules 

You have to know the rules. Turn wrong or break the rules for your stroke and beating a record by ten seconds will not matter. At the Legal Juice, John Mesirow reports that kids at the Lake County Florida library are allowed to rent R-rated movies because they believe it is an unconstitutional delegation of authority for the Motion Picture Association of America’s guidelines for determining obscenity. I am sure kids from all over that area are flocking to the Lake County library because the rules are on their side, at least for now.

Filewrapper reports on a Federal Circuit decision holding that copyright infringement, and not just breach of contract, when the terms of an open source license governing the copyrighted material are breached. For more on this major decision in the IP world, check out: BLT; Law Pundit; and Patently-O.

Seattle Trademark Lawyer Mike Graham shows the consequences of not following the rules using two Western District of Washington opinions.

Ethan Lieb, guest blogging at Freakonomics, argues that we need to change the rules requiring unanimous juries. And the WSJ Law Blog discusses a judge and a juror who clashed over jury nullification.

The Start

A bad start is hard to recover from, especially when you are chasing the fastest time ever. Evan Schaeffer shows how to open well at trial at the Illinois Trial Practice Weblog, and he links to Trial Theatre’s opening statement quiz.

Turns

Coming off the wall in a turn is the fastest a swimmer goes during a race. So, you need good turns. IntLawGrrls discuss how to turn around the conflict between Georgia and Russia (sorry the turns section was tough).

Legal Literacy discusses Whole Foods’ turned around (or recalled) beef and looks behind the scenes at how it happened and Whole Foods’ impressively quick response.

The Finish

Do you do an extra stroke or do you glide in hard? Always a tough question, but the .01 seconds the decision costs you can mean the race and the record.

At his E.D. Texas Weblog, Michael Smith reports that while the E.D. Texas started out as a rocket docket, particularly for patents, it has now slowed down and let many other districts catch it with a time to trial of 24 – 30 months.

The Law and Magic Blog reminds us that we cannot always win, and that trying to rig the system to guarantee wins – he is talking about the stock market, but it holds true for the pool – is dangerous work.

At the IP ADR Blog, Victoria Pynchon praises several Perkins Coie attorneys who went the distance for their pro bono clients at Gitmo and earned the clients’ respect for providing them an able defense.

** Images provided via a Creative Commons license by A. Dawson or Andre from Flicker. **

Next week's Blawg Review will be at fellow LexBlog site, the Texas Appellate Law Blog.

Blawg Review has information about next week's host, and instructions on how to get your blawg posts reviewed in upcoming issues.

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Bill Patry announced that he is ending his blog, the Patry Copyright Blog.  I will miss Patry's insight into the copyright world.  For the last several years I have routinely turned to his blog when I needed a fresh take on or a deeper understanding of a current event in the copyright world.  Patry's posts were always thoughtful, detailed and powerful, sometimes even provocative.  Sadly for me, I will have to turn elsewhere the next time I struggle with a copyright issue.  And I am not alone in my disappointment:

• Fire of Genius
  
• Patently-O
  
• Rob Hyndman

Bill, Thank you for your time and your insight over the last several years and 800 posts.

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Nilssen v. Osram Sylvania, Inc., No. 2007-1998, -1348 Slip. Op. (Fed. Cir. June 17, 2008).

The Federal Circuit affirmed Judge Darrah's award of defendant's/appellee's attorney's fees – click here to read the Blog's post about the inequitable conduct opinion. Judge Darrah previously held and the Federal Circuit previously affirmed that plaintiffs committed inequitable conduct by, among other things: (1) falsely claiming small entity status; (2) failing to disclose material prior art to the PTO; and (3) failing to disclose related litigation to the PTO. Judge Darrah then held that the case was exceptional based upon plaintiff's inequitable conduct, filing of a frivolous suit, and litigation misconduct. Because the case was exceptional, Judge Darrah awarded defendants their attorney's fees.

The Federal Circuit agreed with plaintiffs, holding that an inequitable conduct finding did not require a case be deemed exceptional. But the Court held that Judge Darrah's findings were supported by evidence and, therefore, were within his discretion.

Judge Newman dissented, stating:

The court today promotes unexceptional trial procedures and non-culpable prosecution errors into an "exceptional case" of such severity as to warrant the award of attorney fees. That is not what the status, or precedent, or policy contemplates. I respectfully dissent.

Check the following blogs for more on this opinion:

• Filewrapper
  
• Patently-O

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The Supreme Court concluded its latest review of the patent laws Monday when Justice Thomas delivered the Court's succinct, unanimous decision in Quanta v. LG.  Client obligations this week prevent me from providing a detailed analysis today.  But, no surprise, there is plenty of commentary out there already.  For more about decision, check out:

• 271 Patent Blog

• Agricultural Law

• FileWrapper

• IP Thinktank

• Patent Docs
  

• Patently-O

• WSJ Law Blog

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• Startup guru Guy Kawasaki has started the Alltop project which categorizes blogs by subject matter and aggregates blog content  for each subject on a single page.  The law Alltop site is excellent, although I would suggest adding the Chicago IP Litigation Blog.  It is like having someone else set up and update feed readers for you.  This is how Alltop describes itself:

We help you explore your passions by collecting stories from “all the top” sites on the web. We’ve grouped these collections — ”aggregations” — into individual Alltop sites based on topics such as environment, photography, science, celebrity gossip, fashion, gaming, sports, politics, automobiles, and Macintosh. At each Alltop site, we display the latest five stories from thirty or more sites on a single page — we call this “single-page aggregation.”

• The Patent Appeal Tracer follows patent cases from filing of a Federal Circuit appeal, after many of the regional IP blogs stop following them, until an opinion issues, when Patently-O and others take over.  It is an interesting idea and a well written blog.  As an example of what they do, check out this recent post on the Federal Circuit appeal of Northern District case Ball Aerosol and Specialty Container, Inc. v. Limited Brands, Inc., No. 05 C 3684 (N.D. Ill.) (Der-Yeghiayan, J.) -- click here or here for coverage of the case in the Blog's archives.

[UPDATE]:  The Chicago IP Litigation Blog has been added to Alltop's law page.  Thanks Guy.  Now, if I could just get Kawasakied.

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I thought I was done discussing anonymous blogging -- click here for my posts about Troll Tracker and anonymous blogging.  But the Legal Talk Network's Lawyer 2 Lawyer podcast has just published an edition about Troll Tracker and anonymous blogging featuring Ray Niro Sr. of Niro Scavone (who offered $15,000 for anyone who revealed Troll Tracker's identity) and Dennis Crouch of Patently-O.  It is a very interesting set of interviews.  I only wish that Niro and Crouch had been on together, instead of in separate interviews.  Here are some highlights:

• Niro stated that no one has claimed the $15,000 reward for identifying Troll Tracker.
  
• Niro emailed Troll Tracker and offered to donate the reward to charity (at that time it was $10,000) and fly Troll Tracker to Chicago to meet with Niro and see his firm.

• Niro went back and forth between saying that anonymous blogging was wrong and that it was harmful and should not be allowed because you could not judge the author's credibility.
  
• Crouch supported anonymous blogging, done correctly, but acknowledged that anonymous comments on his site tended to be more aggressive than those with identified authors.
  
• Crouch offered Troll Tracker an opportunity to contribute to Patently-O.
  
• Crouch sees much of this as a generational change.  Among other things, those under thirty have no expectation of privacy or concern at revealing their identity on the internet.  Those over thirty are careful with their privacy and identity, making anonymity more enticing.  That suggests that anonymous blogs will become less prevalent with time.  Troll Tracker is likely mid-thirties, putting him right on the cusp of Crouch's dividing line.
  
• Crouch's generation-split argument may have been displayed when Niro and Crouch were asked for their contact information.  Crouch told people to go to Patently-O.  Niro was uncomfortable providing his contact information and, when gently prodded, explained that he could be contacted through his firm, Niro Scavone.  Of course, Niro's reluctance could also be explained by the anonymous threats made against him in the recent past.

Finally, Business Week has a good article detailing the Troll Tracker story -- click here to read it.

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Dennis Crouch at Patently-O is reporting that Cisco has amended its employee blogging policy to require that any Cisco employee blogging about issues involving or related to Cisco identify themselves as a Cisco employee and provide a disclaimer that the opinions are those of the employee alone and not necessarily Cisco.  This is a reasonable policy.  It provides Cisco's employees the freedom to blog while protecting both Cisco and its employees.  And it prevents future occurences of the mistake Troll Tracker made (anonymously commenting on cases his employer was involved in), as I discussed in my post on anonymous blogging last week, click here for the post.

Cisco also told Crouch that Troll Tracker would be free to continue blogging, presumably as long as he follows the policy.  Hopefully, that means that Troll Tracker will return to the patent litigation conversation soon, although it is easy to believe that this experience may have soured him on blogging or changed his voice substantially.  Here is Cisco's explanation of Troll Tracker's status from Cisco's official blog, The Platform:

As an employee, Rick is free to continue his personal blog, Patent Troll Tracker, in compliance with the revised policy. Rick has many fans who appreciate the information he collects and disseminates on patent litigation trends and recognize his blog as an important voice in the on-going national dialogue on patent issues.

IP Law360 (subscription required) has a detailed article this morning outlining Troll Tracker's history, including several quotes from Ray Niro of Niro Scavone who received substantial media attention after offering a reward for Troll Tracker's identity.  Niro reportedly likened Cisco's policy to "repairing a sidewalk after someone was hurt" and said that some of Troll Tracker's statements were "hurtful, harmful and, in many cases, 100% inaccurate."  According to the article, Niro plans to depose Troll Tracker in Illinois Computer Research, LLC v. Fish & Richardson, No. 07 C 5081 (N.D. Ill.) (Pallmeyer, J.) -- click here to read more about the case in the Blog's archives.

Another note on anonymous blogging and commenting, Rob LaGatta at LexBlog addressed the Troll Tracker situation and my anonymous blogging post last week with an important point, click here for Rob's post.  Anonymous blogging and commenting is a relatively small part of legal blogging and most anonymous material is not problematic.  It is easy to get side-tracked by the occasional offensive anonymous content.  But the vast majority of legal blogs operate without problems with either unprofessional or anonymous content.

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There has been a lot of coverage of Troll Tracker's recently disclosed identity.* Troll Tracker ended his anonymity a few weeks ago and now faces a libel law suit along with his employer, Cisco, based upon statements he made about a case involving Cisco -- this is one of the many reasons I do not write about cases that my firm or I are involved in.

I did not intend to weigh in on this story because there was not much to add (see below for links to some of the best coverage). But then I read Joe Hosteny's March 2008 IP Today article – click here for the article -- about anonymous blogging and anonymous commenting. Hosteny is a partner in the Niro Scavone firm, a firm that was often a focus of Troll Tracker's posts. I have not always seen eye to eye with Hosteny in the courtroom, but I found his article both very good and thought provoking.

Hosteny raises real concerns about how the anger surrounding the non-practicing entity dispute has gotten out of hand. Death threats over patent litigation (even assuming they are idle threats) cannot be tolerated. These threats make me question whether the patent litigation bar is maintaining the levels of civility and sanity required by our professional standards.

Violent threats and, more broadly, incivility have no more place in the realm of legal blogs than in the legal system. But it does not follow that anonymous blogging and commenting are inherently bad – the issue is more complex than that. Lots of electrons have been spilled over the pros and cons of anonymous blogging – blog guru Kevin O'Keefe is no fan of anonymous blogging, whereas the anonymous editor of Blawg Review provides a great service to both the legal and the blogging communities with the weekly Blawg Review, despite his anonymity.

Anonymous blogging is not the problem. The problem is with anonymous bloggers who believe that anonymity allows them to comment on cases involving themselves or their clients , or to post threatening comments (Troll Tracker, of course, never posted any threats that I am aware of). If Troll Tracker had not blogged about his client's case and if he had stuck to the verifiable facts, he likely would not have gotten sued.

Similarly, anonymous commenting is not the problem if legal bloggers, including Troll Tracker, monitored and approved comments before** they went live, the death threats against Niro never would have been published. I moderate the comments to this Blog and, as a result, angry rants against a judge or an attorney (none have been violent) do not make it on the Blog. And that anonymity may have provided the writer with false courage. But I prevent that, and so can any blogger, by acting as a gatekeeper.

Hosteny argued that anonymity is cowardly and not in the tradition of the First Amendment because the Declaration of Independence was signed by the Continental Congress. But he leaves out that the Federalist Papers were signed with aliases. Anonymity can be useful in that it can provide courage to voice ideas that otherwise might not be interjected into public discourse. For that reason, I think there is a place for anonymous blogging and commenting, as long as anonymous bloggers do not use anonymity as an excuse to avoid the rules of our profession and of common sense.

As promised above, for more coverage of Troll Tracker and the defamation suit, see:

E.D. Texas Blog

IP Law360 (subscription required, but a very thorough history)

Patently O -- discussing a related federal suit filed in the District of Arkansas, including a link to the complaint.

Prior Art Blog -- detailing the history of the suit and here and here on other aspects of the story as well.

WSJ Law Blog

[Update]:  Blawg Review #151 at Lex Ferenda was just updated discussing this post.

* There are no Troll Tracker links because the site is currently either down or subscriber only.

**  Troll Tracker did remove violent and offensive comments, but only after they were posted and he became aware of them.

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Emergis Techs., Inc. v. PNM Resources & Otter Tail Corporation, Nos. 2007-1247 & 1252, Slip Op. (Fed. Cir. Jan. 31, 2008) (Moran, Sen. Jr.).*

Judge Moran, sitting by designation, authored the Federal Circuit’s decision reversing in part the District of New Mexico’s and the District of Minnesota’s claim constructions and upholding the Court’s findings of noninfringement. The Court held that payments that went “directly” from customer to invoicer were correctly construed as requiring no third party involvement. But the Court held that based on the specification, “customer invoice account number” was an invoice number as opposed to a more generic customer number. The Court upheld the non-infringement decision because the accrued systems either used third parties to process payments or did not use an invoice number.

* Click here for the opinion.  And thanks to Dennis Crouch of Patently-O for pointing out this decision.

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The Patent Reform Act is on the Senate’s calendar and is expected to be voted on in February. The version voted out of the Senate Judiciary Committee is different than the version passed by the House. Experts expect that, instead of forming a joint committee to resolve the differences which generally requires a second vote by both chambers, the House will vote on any version of the Patent Reform Act passed by the Senate.

That means that it is time to take a close look at the Senate version of the Patent Reform Act. The damages and venue provisions continue to be some of the most significant and hotly-contested. And it is no surprise that the various stakeholders are making their positions heard loudly again. I considered analyzing each provision of the current Senate bill, but Patent Docs beat me to it and did an excellent job:

• First to File
  
• Assignee Filings, Mandatory Publication, and Third Party Submissions
  
• Interlocutory Decisions & Venue
  
• Damages
  
• Applicant Quality Submissions & Micro-Entities
  
• Post-Grant Procedures
  
• Inequitable Conduct Provisions
  
• Late Patent Filings         

Several other blogs are also keeping a close eye on the stakeholders and the sausage-making aspects of the Patent Reform Act, among the best:

• 271 Patent Blog
  
• Filewrapper
  
• IP Biz
  
• Patent Baristas
  
• Patently-O
  
• Maryland IP Law Blog (and here regarding the increased internet coverage of Patent Reform during February)

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The blogs are full of commentary about yesterday's Supreme Court patent exhaustion argument.  But no one is declaring a winner.  Instead, like my earlier post, people are focusing on trends in the Justices questions.  Here are some of the best commentaries:

• Amster, Rothstein & Ebenstein has a guest post all over the blogs -- read it at Patently-O, 271 Patent Blog, and Philip Brooks' Patent Infringement Updates.
  
• Anticipate This!
  
• I/P Updates -- quoting Chief Judge Roberts:  "We've had experience with the Patent Office where it tends to grant patents a lot more liberally than we would enforce under the patent law."  Ouch.
• ScotusWiki -- This is a companion to the well-known SCOTUSblog (which does not have any commentary about the argument posted yet).  ScotusWiki does not provide any commentary, but it is a great resource for information about this case, and any other Supreme Court case.
  
• Troll Tracker -- predicting a 5-4 or 6-3 reversal of the Federal Circuit (although only "leaning" that way and only predicting a "slight" reversal) and, similar to my post, picking up on Justice Breyer's cycling theme, but without professing a love for the sport.

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Tomorrow, the Supreme Court hears arguments in Quanta Computer Inc. v. LG Electronics Inc., 06-937 -- click here for a collection of the many briefs filed in the case at Patently-O.  The Court will be deciding whether parties can contract around patent exhaustion.  The patent exhaustion doctrine, also known as the first sale doctrine, holds that a royalty can only be charged once per product.  Once one link in the supply chain has paid a royalty for a patented product, or a key component, the patent is exhausted and no other link in the chain must pay a royalty for the same patent.  LG Electronics attempted to contract around patent exhaustion.

LG Electronics owned a group of patents claiming microprocessors used in personal computers.  They licensed the patents to Intel, but expressly excluded from the license any Intel customer that combined a licensed Intel microprocessor with non-Intel components.  As part of the license, Intel sent letters to its customers warning of this license exclusion.  LG Electronics sued Intel's post-license customers that were allegedly combining the licensed Intel chips with non-Intel products.   

The district court held that Intel's license exhausted LG Electronics' downstream patent royalty rights.  But the Federal Circuit reversed, holding that when parties expressly restrict a license a court should infer that the parties also negotiated a more limited royalty to reflect the limited rights given in the license.  As a result, patent exhaustion should not apply to restricted licenses.  Quanta argues that the Federal Circuit's decision contradicts a long history of both Federal Circuit and Supreme Court precedent requiring that patent licenses cannot be restricted to one link in the supply chain.

This is another case that has major implications for the business of patent law.  If the Supreme Court overturns the Federal Circuit it could dramatically change the model of many patent licensing programs.  I will keep you posted both on what occurs during the argument and the Court's ultimate decision.

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I am sad to report that Mark Banner of Banner & Witcoff passed away over the weekend.  Mark was an important member of Chicago's IP bar and an active participant in educating numerous lawyers as an adjunct professor at both John Marshall in Chicago and my alma mater the Georgetown University Law Center.  My condolences go out to Mark's family and the Banner & Witcoff firm. 

Here is some more information on Mark's legacy from Banner & Witcoff:

Mark was the lead trial counsel in many successful intellectual property trials from both the plaintiff's and the defendant's perspectives. He had a particular passion for jury trials of patent cases and computer-related technologies. Despite battling cancer for the last five years, Mark continued his involvement in litigation and counseling work. “Mark made significant contributions to the field of intellectual property law. He was an extremely gifted attorney, a loyal partner, and a devoted friend. Mark was an integral part of the firm and will be greatly missed,” said Thomas K. Pratt, President of Banner & Witcoff.

Mark was a Past-Chair of the American Bar Association (ABA) Section of Intellectual Property Law. He served as a member of the 16-lawyer Council of the ABA Section of Intellectual Property Law for many years. He was the past Editor of the ABA Section of Patent, Trademark and Copyright Law, and a past Contributing Editor of the Quarterly Journal of the American Intellectual Property Law Association. He was a past chairman of the Illinois State Bar Association Section of Intellectual Property Law. He was named one of the top 10 lawyers in the state of Illinois as chosen through a peer balloting process involving 47,000 Illinois lawyers and through a research and review panel
organized by Law & Politics magazine.

Mark frequently lectured on patent law, patent trials, trade secrets, and other intellectual property matters. He served as a faculty member of the first National Institute of Trial Advocacy program specially designed to develop patent litigation trial skills. He was also an adjunct professor at the John Marshall Law School and the Georgetown Law Center, teaching courses on patent trial advocacy and enhanced use of technology in the trial of complex cases. He was also a bar course administrator for the Master Class on Appellate Advocacy, taught by the Hon. Paul R. Michel, Chief Judge, United States Court of Appeals for the Federal Circuit, at the Center for Intellectual Property Law at the John Marshall Law School.

A graduate of Purdue University, West Lafayette, Indiana, and the John Marshall Law School in Chicago, Illinois, Mark was a member of the Law Review and graduated with high honors. Mark was born in Pontiac, Michigan, January 21, 1950.

He was preceded in death by his mother, Ruth, who died in 1985 and his father, Donald W. Banner, who died in 2006. He is survived by his wife Kathie German. He is also survived by his sisters Peggy (Mrs. James) Dau of Bartlesville, OK, and Pamela (Mrs. Robert) Banner Krupka of Los Angeles, CA, and brothers Donald J. (Helen) of Pueblo, CO, and Brian E. (Cathleen) of Washington, DC. Mark is also survived by his stepmother Jean Banner of Tucson, Arizona and his step sisters Nancy (Mrs. Robert) Phipps of Nashville, TN, Helen (Mrs. George) Smith of Atlanta, GA and Louise (Mrs. Robert) Whitaker of Franklin, TN.

The family is planning a memorial service for Mark in January 2008 in Chicago, Illinois.

The family requests that memorials be made to the Donald W. Banner and Mark T. Banner Scholarship Fund at the John Marshall Law School (315 South Plymouth Court, Chicago IL 60604).

Thanks to Dennis Crouch at Patently-O for bringing this sad news to my attention.

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Lots of blogs have been doing top ten lists or posts pondering their past year or resolving to do more in 2008. That is not my style.* But Wired’s top ten list of startups to watch in 2008 caught my eye because of a Chicago connection – click here for the entire list. Second on the list (alphabetically) is Chicago company 37Signals, a company that makes a suite of personal and business management software. I am trying out their web-based calendar and organization tool Backpack and, so far, I have been impressed.  Here is what Wired says about 37Signals:

There's a reason nobody ever uses the phrase, "It's as simple as computer programming." But Chicago's 37Signals has made life simpler for programmers and small businesses alike with products such as Basecamp (project management software) and an increasingly popular open source web framework called Ruby on Rails. The company ditches the philosophy of "more features, more better" in favor of simplicity and accessibility: Focus only on the most important features and make things easier to use. The company itself embodies its keep-it-simple philosophy: Fewer than 10 staffers, working from humble offices, create programs quickly and nimbly adapt them based on user feedback. 37Signals released version 2.0 of Ruby on Rails in December, which should give many programmers a happy new year.

Founders: Jason Fried, Ernest Kim, Carlos Segura

Funding: Undisclosed sum from Bezos Expeditions

Employees: 8

For some other good IP-related top ten or end of the year lists, check out:

• Patent Docs (Top fifteen Patent Docs stories of the year, 11-15, 6-10 and 1-5)
  
• Patently-O (Hal Wegner's top ten 2008 patent cases)
  
• TinyTech IP (Top ten nanotechnology patents)

* I will say that the Blog’s top two stories of the year were without question the Patent Reform Act and Trading Technologies v. eSpeed.

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Aharonian v. Gutierrez, No. 07-1224, 2007 WL 9282064 (D.D.C.) (Robertson, J.).

The District Court for the District of Columbia (“D.D.C.”) recently dismissed a suit seeking the dismissal of the PTO’s Deputy Director Margaret Peterlin for lack of sufficient experience. The D.D.C. held that the Act establishing Ms. Peterlin’s position did not create a private cause of action for removal and the Administrative Procedure Act did not allow for review of the appointment. 

There is little I can say about the decision that has not already been said. For more check out:

• 271 Patent Blog
• I/P Updates
• Maryland IP Blog
• Patently-O

But I can add a human element to the issue. I know Ms. Peterlin.  I have met her in social settings (she and my wife were law school classmates). My limited interactions with her made clear to me that while she may not have the IP-specific experience that might be ideal, Ms. Peterlin is as capable as anyone without that background to learn the law and do an excellent job.

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Last week the intellectual property world obsessed over injunctions – specifically, a preliminary injunction hearing in the Eastern District of Virginia resulting in an injunction against the U.S. Patent & Trademark Office’s (“PTO”) new continuation rules. There was a lot of analysis about the injunction, including live blogging by Patent Practice Center Patent Blog and a lot of post-injunction analysis by, among others: 271 Patent Blog; FileWrapper; Patent Baristas; Patent Docs (and here); Patent Prospector; PHOSITA; Patently-O; WSJ Law Blog; and Washington State Patent Law Blog. For those of you who have no idea what a continuation is or just do not care about the particulars of the rules, I promise that I am done with patent continuations for this post. Honestly, I find the rules rather tedious myself. I prefer to focus on litigating patents, rather than the PTO’s prosecution rules. So, today we talk about injunctions:

According to TechCrunch, Patent Monkey received a permanent injunction when it was sold to the Internet Real Estate Group. But Patent Monkey’s patent search technology will see its injunction lifted when it is used on www.patents.com. Hopefully, for those like me who enjoyed it, Patent Monkey’s Infinite Monkey Theorem Blog will also see its injunction lifted.

Virtually Blind has an interesting report on Second Life’s* new Patent & Trademark Office, the SLPTO. No word on whether the SLPTO and the Second Life legal system generally will allow for any permanent injunctions. Right now it appears that the SLPTO will be heavily skewed toward copyright and trademark, which makes sense in a virtual world. And before we learn whether the SLPTO has any enforcement mechanisms, Blawg IT is offering to represent virtual clients before the SLPTO. I would get a retainer up front Brett – virtual clients can be difficult to track down when the bills are due.

The Patry Copyright Blog shows why Second Life injunctions may be necessary. Six Second Life players have sued a Queens man in the Eastern District of New York for trademark and copyright infringement based upon sales of goods in Second Life. I wonder if the trademarks and copyrights were registered with the SLPTO or the US PTO/Copyright Office. And does the E.D.N.Y. have authority to issue cyber-injunctions?

Promote the Progress provides an interesting piece on the long-term effects of last week’s injunction against the PTO on shaping patent reform.

SportsBiz explains that plaintiffs who were bilked out of millions in attorneys’ fees by their now-jailed lawyers were not irreparably harmed. A Kentucky court awarded them a 20% ownership interest in Curlin, the prize race horse and Breeder’s Cup Classic winner partially owned by the jailed lawyers.

Adams Drafting issues its own injunction against using virgules. Using what? The virgule, or the forward slash. He explains that it is frequently used to mean: 1) “per” – 50 miles/hour; 2) “or” – and/or; and 3) “and” – all parents/subsidiaries/affiliates are bound by the obligations. The problem is that the various uses create ambiguity. Adams acknowledges that he cannot find any litigation specifically about the virgule. But the best solution is to remove the virgule from your writing before you become embroiled in the first litigation over one. And when it comes to rules of writing and grammar, the best solution is to listen to Adams.

What if you do not want an injunction or just want a faster, cheaper resolution? The IP ADR blog is talking about last week’s big settlement between Vonage and Verizon. They suggest that you consider using contingent agreements to control for changing future conditions and charitable contributions. They also point out that creativity and out-of-the-box thinking are important elements for reaching settlements.

Another way to avoid an injunction is to understand how best to argue against the opposing party and their counsel. The Center for Internet & Society discusses how men and women in the United States and in other cultures communicate and suggests that understanding the nuances of how different people communicate around the globe could advance legal discourse.

Lowering the Bar reports on a Michigan man sentenced to sixty days in jail for a home invasion that ended in him throwing two large pickles at residents of the home. No word on whether he will be enjoined from pickle ownership. Okay, that is a weak tie-in, but who can resist a pickle invasion story.

Deliberations discusses one of the basic truths of trial law – you must connect with your jury about basic truths of your case. That is equally true when seeking an injunction – if the judge senses something is not right about your argument, you will not get your injunction.

The writers’ strike that is expected this week is not an injunction, but it will mean an end to new scripted television and movies. Concurring Opinions has an interesting post about a brewing legal dispute between the studios and the writers’ union, the Writers Guild of America (“WGA”). The WGA is requiring that members provide information on all unproduced projects and an update on the status of those projects, as per the labor agreement between the WGA and the studios. But the studios, based upon their individual agreements with writers, are warning writers that the studios  own the scripts and the writers are barred by contract from giving the WGA any information about the projects. These conflicting contracts place the writers in quite a pickle (I could not resist), and it poses an interesting legal question as to which contract controls.

And I end with a post that is actually about an injunction. The Maryland IP Law Blog (another LexBlog creation) posted about a District of Delaware court that upheld a jury verdict of patent infringement and plans to enter a permanent injunction against Lonza, Ltd., Nutrinova Inc. and Nutrinova Nutrition Specialties & Food Ingredients GmbH prohibiting the U.S. sale and use of a fatty acid product currently marketed under the brand name Lonza DHA for use in functional foods and dietary supplements.

Thanks for reading. And for the Blog’s regular readers, I will be back to my usual Northern District of Illinois focus tomorrow.

* Second Life is an internet-based virtual world where “residents” interact through avatars. For example, the Seventh Circuit’s Judge Posner appeared in Second Life with an avatar closely resembling him to answer questions from, among others, a DC IP lawyer using an avatar of a humanized raccoon. Check out the New World Notes blog for a transcript and some screenshots.

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Yesterday, I blogged briefly about the Eastern District of Virginia's injunction preventing the PTO's new continuation rules from taking effect today, November 1st.  But the Court's order was not available yet.  The order has been issued -- click here for a copy -- and it is very interesting.  The Court held that plaintiff GSK had shown a likelihood of success on the merits regarding several issues:

• That limiting the number of continuations a party can file violates 35 U.S.C. Section 120, which states that later filed applications have the same effect as their parent applications.
  
• That the new rules are impermissably retroactive because the limits on numbers of claims and continuations will change the terms of the bargain struck between inventors currently prosecuting their applications and the PTO when those inventors filed their applications, prior to the new rules going into effect.
  
• That the requirements for Examination Support Documents ("ESD") are impermissably vague because they do not sufficiently define the paramters of the search required.

The Court also held that GSK would be irreparably harmed by implementation of the rules because GSK has about 2,000 pending applications and GSK's rights in each of those applications would be materially altered by the new rules. 

[Updated with more links after the jump.]

The balance of hardships weighed in GSK's favor.  The PTO's losses were sunk costs -- updating computer systems and training staff.  But if the PTO wins the suit and later implements the continuation rules, the new computer systems and the employee training will still be valuable.  On the other hand, the entry of the continuations rules will materially limit GSK's rights in its 2,000 pending patent applications.

Finally, the public interest is in maintaining the status quo, rather than allowing the implementation of a new set of rules which could be reversed by the Court in a matter of months.

For more on the preliminary injunction and thoughts about whether the PTO will file an emergency appeal with the Federal Circuit, check out:

• Patently-O
  
• FileWrapper
  
• 271 Patent Blog
  
• WSJ Law Blog
  
• Patent Practice Center Patent Blog
  
• Patent Baristas
  
• Patent Docs and here
  
• Patent Prospector
  
• PHOSITA
  
• Washington State Patent Law Blog

I will continue to update this post with coverage of the injunction and any appeals throughout the day.

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Usually I post a holiday-related patent on major holidays (which Halloween is in my house).  But in light of today's Eastern District of Virginia preliminary injunction hearing regarding whether to allow the PTO's new continuation rules to take effect tomorrow, November 1, as planned, I thought a post on the continuation rules was more appropriate.  The patent world, and more particularly the patent prosecution world, has been busy analyzing and preparing for the new continuation rules for several months.  For analysis of the new rules check out the Maryland Intellectual Property Law Blog (click here and here) and the 271 Patent Blog (click here).

While most were just probing the rules for loopholes or preparing to comply with them, two also filed suits in the Eastern District of Virginia seeking to enjoin enactment of the new rules -- Triantafyllos Tafas v. Dudas, No. 07 C 846 (E.D. Va.) and SmithKline Beecham Corp./GSK v. Dudas, No 07 C 1008.  Click here for Patent Docs' excellent coverage of the SmithKline/GSK suit.

The two suits were consolidated and a preliminary injunction hearing has been set for today -- click here and here to download the briefs at Patently-O.  Numerous entities have taken sides, filing amicus briefs -- click here for a list of the briefs and links to some of them at the PLI Patent Practice Center Blog.  And for those of you who cannot wait to read the result here shortly after it comes out and who are not busy with legal work or preparing for tonight's trick or treating, click here for the PLI Patent Practice Center Blog's live blogging coverage of the PI hearing.

Update:  Click here for more coverage of the Eastern District of VIrginia cases by the WSJ Law Blog and click here for even more briefing from Patently-O.

Happy Halloween.

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Arminak & Assocs., Inc. v. Saint-Gobain Calmar, Inc., No. 06-1561, Slip Op. (Fed. Cir. Sept. 12, 2007) (Holderman, C.J., sitting by designation.).*

On behalf of Chief Judge Michel and Judge Gajarsa, the Northern District’s Chief Judge Holderman affirmed C.D. California’s holding that declaratory judgment plaintiffs’ (“Arminak”) “AA Trigger” shroud design for a spray bottle did not infringe declaratory judgment defendant’s (“Calmar”) design patents covering certain design elements of shrouds. The main issue, and one of first impression, was whether the “ordinary observer” for purposes of design patent infringement should be the end-user/purchaser of spray bottles or the industrial purchaser that buys triggers or shrouds for assembly into a finished spray bottle product. The district court held that the ordinary observer was the industrial purchaser and the evidence clearly established that industrial purchasers would not be confused by similarities between Arminak’s and Calmar’s patented shrouds. Calmar argued, however, that the Supreme Court in Gorham Mfg. Co. v. White, 81 U.S. 511 (1871), expressly excluded experts from being ordinary observers and that, therefore, retail purchasers had to be the ordinary observer. But the Federal Circuit noted that did not sell shrouds or fully assembled spray bottles including their respective shrouds to retail purchasers. The parties sell shrouds to industrial purchasers. Industrial purchasers, therefore, are the appropriate population of ordinary observers. The ordinary observer is:

A person who is either a purchaser or, or sufficiently interested in, the item that displays the patented designs and who has the capability of making a reasonably discerning decision when observing the accused item’s design whether the accused item is substantially the same as the item claimed in the design patent.

* This is not an appeal from the Northern District, but I am covering it because Chief Judge Holderman authored the Opinion. Thanks to Dennis Crouch at Patently-O for bringing the case to my attention.

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My recent story about Ebert's use of his "Two Thumbs Up" has been receiving a lot of attention (and I even scooped the Sun-Times):

• Likelihood of Confusion -- Ron Coleman agrees with E. Leonard Rubin, interviewed in the Chicago Tribune today, who says that the written "Two Thumbs Up" mark is pretty strong.
  
• Robert Feder of the Chicago Sun-Times -- Feder says that the "Two Thumbs Up" mark is "the most powerful and influential symbol in movie marketing."

The fact that the Patent Reform Act has stalled in Congress, which I discussed earlier this week, has been picked up by several blogs:

• Maryland IP Law Blog -- Citing my post.
  
• Patently-O -- Dennis Crouch says that the Patent Reform Act is not just stalled, it is dead.
  
• 271 Patent Blog -- Leads with a great Simpsons' quote in saying the Act is on hold.

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This week the House Judiciary Committee sent its version of the Patent Reform Act of 2007 to the full body for a vote.  The damages provisions that Federal Circuit Chief Judge Michel publicly spoke against remained in the House bill, but the controversial post-grant review process was removed completely, instead of being limited as many interested parties are suggesting.  The Senate continues to markup its version of the Patent Reform Act, but so far has tightened venue requirements and is debating the damages provisions.  The Patent Reform Act feels like a long breakaway in the Tour de France.*  When a group of riders is leading the peloton (the large group consisting of most of the riders in the race) they each want to win the day's race, but in order to do that they must work together until the last 200-500 meters of what may be a 200 km ride.  If they stop cooperating before the last several hundred meters, they become disorganized, slow down and get swallowed by the peloton.  They are generally exhausted from their efforts in the breakaway and have no chance of winning once they rejoin the peloton -- all of their individual efforts are thrown away because they stopped cooperating with their competitors too early.  Cooperating with competitors is difficult and counter-intuitive, but is often the only way to achieve individual success.  The Patent Reform Act is just such an effort, but it looks like the interested parties may not win this race.

You can read more about Congress's deliberations at:

• Patently-O
  
• FileWrapper
  
• Patent Prospector
  
• Patent Baristas
  
• 271 Patent Blog
  
• Maryland Intellectual Property Blog -- a new regional IP blog & a new member of the LexBlog family.  Welcome to the conversation Brian.

* Forgive the analogy, but I love the Tour and today is the first individual time trial of this year's race.  Go Levi, Alberto & the rest of the Discovery Channel team!

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Two patent professors, James Bessen and Michael Muerer, have published portions of their upcoming book, Innovation at Risk, online.  The book promises an empirical study showing that the current patent system discourages innovation and suggesting ways to fix the system, presumably to encourage innovation.  The suggested fixes are not fully described online yet, but some of the empirical basis for the problem is and it is generating a fair amount of conversation -- see the New York Times, Wired, Patently-O and Wired GC, for example.  The authors say they have analyzed emperical patent litigation data from 1974 until 1999 (the last for which information was fully available).  Their numbers show that profits/damages from pharmaceutical and chemical patent litigation have generally increased as patent litigation costs have increased and maintained a substantial profit margin -- in 1999, patent litiation resulted in worldwide profits of over $12B (in 1992 USD) with US litigation costs of just over $4B (in 1992 USD).  For all other technology areas, however, patent litigation profits/damages have remained relatively flat while patent litigation costs have increased substantially -- profits have hovered around $2-3B per year (in 1992 USD) while costs have gone from a little more than $2B in 1994 to almost $12B in 1999.

These numbers could be terrifying to a casual reader, and they fit nicely with the current Patent Reform Act efforts in Congress.  But I suspect that much of the increased patent litigation costs come from companies that are bringing questionable cases based upon inflated damages theories or refusing to settle infringement cases against them despite the fact that the facts do not support their case.  One of the most important skills in patent litigation is self-reflection.  You have to be able to take a step back and review your case with a disinterested eye to truly determine your strengths and weaknesses.  An outside counsel who has the ability and the courage to do that for a company is an invaluable asset, who will likely save you far more than he or she will ever cost the company in legal fees.

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On a related note, Chief Judge Michel of the Federal Circuit has written a letter (following up an earlier, broader letter and his Congressional testimony, discussed at Patently-O) strenuously arguing that the Act's damage apportionment sections are impractical and that Congress should either retain the current damages law which has undergone "decades of refinement" and is "highly stable and well understood by litigators as well as judges."  Here is some discussion of Judge Michel's letter:

• Patently-O
  
• Patent Baristas

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KSR v. Teleflex, 550 U.S. __ (2007).

A unanimous Supreme Court rolled back the Federal Circuit's teaching, suggestion or motivation obviousness test in favor of the Court's prior, and substantially broader, test as set forth in Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966).  Justice Kennedy delivered the Court's opinion and called the Supreme Court's approach to obviousness "broad and flexible."  The Court also noted that because the parties did not dispute the prior art, the claim's scope or the level of ordinary skill in the art and because obviousness is a legal question, the district court was correct to grant summary judgment in this case.

In addition to bringing the Fed. Cir. down to size, the Supreme Court also took a swipe at the PTO:

We need not reach the question whether the failure to disclose [the prior art reference] during the prosecution . . . voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption - that the PTO, in its expertise, has approved the claim - seems much diminished here.

The KSR decision opens up obviousness and will make obviousness a much larger issue in patent cases.  And whatever else the "new" old law may do, it will keep patent litigators very busy for years to come.  You can download a PDF of the Court's opinion from the Blog's archives.

Here is a list of links to other KSR commentary across the internet, as you can see you could read about KSR all week:

Patently-O

Prof. Sarnoff via Patently-O

WSJ Law Blog (with interesting comments from several key players and practicioners)

Patent Docs

Infinite Monkey Theorem

File Wrapper

271 Patent Blog

Tech Dirt

Patent Prospector

Fire of Genius and here

Orange Book Blog (for the decisions effect on pharma patents)

Michael Barclay of Wilson Sonsini via the SCOTUS Blog

Dan Bromberg of Quinn Emanuel via the SCOTUS Blog

Chicago Tribune

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Yesterday, Senators Leahy (D-Vt) and Hatch (R-Utah), and Representatives Berman (D-Calif.) and Smith (R-Texas) announced their new Patent Reform Act.  You can read their press release on the Act here.  The Act is very far reaching and is worth review, in order to prepare for it and/or inject yourself into the debate over it.  Here are the the portions of the Act I found to be the most interesting (the other major changes follow in a list after the jump):

• Expands reexam procedures and allows third parties to file “petitions for cancellation” with the Patent Trial and Appeal Board asserting issues pursuant to 35 U.S.C. Section 282(a)(2) & (3).  This proceeding will include a discovery mechanism and the patent will not be afforded a presumption of validity.
• Limits venue to districts in which either party resides or in which defendant committed infringing acts and has a regular place of business. 
• Gives the Federal Circuit jurisdiction over interlocutory claim construction appeals.

Each of these is a major change.  Petitions for cancellation could develop into another fast-track strategy for plaintiffs, like ITC proceedings for goods shipped internationally.  And the lack of presumption of validity could make the proceedings very popular.  The venue limits, though perhaps not surprising, could have a big impact.  They will likely reduce the number of pre-answer, non-substantive litigation skirmishes that "venue shopping" results in.  And they could be harmful to some communities, like Marshall, Texas, that have developed cottage industries around patent litigation.  Finally, giving the Federal Circuit jurisdiction for interlocutory claim construction appeals may save money by reducing discovery, dispositive briefing and trials that are overruled by claim construction reversals.  But it could also dramatically increase the Federal Circuit's docket, if it has to see most cases twice, thereby doubling the volume of briefing, instead of once.

Here are the other less-major changes:

• Implements a pure first-to-file system, which would bring the United States in-line with the international patent community.
• "Streamlines" the process for submitting substitute statements in lieu of an inventor's oath where the inventor is unavailable or unwilling to sign the oath.
• Allows assignees, or others with sufficient proprietary interest, to apply for the patent in their own name.
• Limits damages awards so that reasonable royalties are no greater than the invention's contribution to the art.
• Requires that courts consider any non-exclusive licensing  in determining reasonable royalty rates.
• Requires that a plaintiff make heightened proofs for a finding of willful infringement.

For more on the Act, check out Patently-O, 271 Patent Blog, Patent Prospector, the new Filewrapper Blog, Infinite Monkey Theorem and Patent Docs.

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The big news in patent law this week is the Supreme Court oral argument in Microsoft v. AT&T.  Microsoft exports software from the United States to various countries.  The software code alone cannot infringe AT&T's patents until it is combined with the hardware, which only occurs after the software has left the United States.  So, exporting the software is not an act of infringement.  The issue, therefore, is whether, pursuant to 35 U.S.C. Section 271(f), exporting the software constitutes:

suppl[y] . . . from the United States . . . [of] all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States,” as well as the “suppl[y] . . . from the United States [of] any component of a patented invention that is especially made or especially adapted for use in the invention.

For more on the issues, you can find the briefs at Patently-O. 

The case has received substantial media attention both because it was granted cert and because the case could have effects far beyond the international exportation of software.  The oral arguments were interesting (transcript here) and both the main stream media and blogs are frantically reading the tea leaves.

My favorite oral argument quotes both came from Justice Scalia:

JUSTICE SCALIA:  Mr. Olson, before you get into the merits I have a question, a preliminary question. I understand from AT&T's brief that there has been a stipulation entered into between the parties after the judgment below which preserved Microsoft's right to appeal and prescribed different dollar amounts that Microsoft must pay AT&T depending on the outcome of the appeal. Does that raise any, any muteness problem? Can you sort of wager on the outcome of an appeal that way?

                                                               * * *

JUSTICE SCALIA:  I hope we can continue calling it the golden disk. It has a certain Scheherazade quality that really adds a lot of interest to this case.

(Laughter.)

For more on the oral arguments and analysis of the case generally, check out:

Patently-O -- Discussion of the oral argument and quotes from the transcript.

The BLT (Blog of the Legal Times)* -- Coverage of Solicitor General Ted Olson accidentally referring to Justice Stevens (a former Chicagoan) as Justice Scalia and Chief Justice Roberts recusing himself based upon his stock holdings. 

The WSJ Law Blog -- Focusing on Justice Breyer's statement to AT&T:  "I don’t see how to decide for you.”

The WSJ print story (subscription required) -- A broader overview of the story, including a discussion of the fact that the Supreme Court has never held that software is patentable.

271 Patent Blog -- Focusing on the "metaphysical" aspects of the case with extensive quotes from the oral argument.

IP Kat -- A pre-argument case detailing the parties' arguments.

*  This is a new blog that is well worth checking out and adding to your RSS feeds.

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In January the House of Representatives passed a bill that would establish a pilot program in five district courts to develop district court judges with patent expertise.  The program will provide judges in the five districts the opportunity to get specialized patent training.  Cases, including patent suits, in the five districts will continue to be randomly assigned, but judges without the specialized patent training will have the option to transfer the cases to one of the patent-trained judges.  Each of the five district's will also be allowed to hire patent law clerks available to help judges on patent cases.  I assume these clerks will be like habeas clerks that many district courts already have or staff clerks/attorneys at some of the regional circuits.

I expect that many district court judges will, quite reasonably, believe they already have gained the necessary experience through their own hard work, but will also appreciate the extra law clerk help and the training.  It is a very interesting proposal which many expect to be approved by the Senate and signed into law this year.  For more on the pilot program, check out Patently-O, the Infinite Monkey Theorem Blog (a new blog affiliated with www.patentmonkey.com  - both of which are worth checking out), the IP Blawg and the WSJ Law Blog (an older post, but with some good information).

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The Northern District of California is considering revising its patent rules (enacted in January 2001).  To start its review, the Northern District of California is seeking public comments.  Comments must be sent by December 15, 2006 to patentlocalrulescommittee@gmail.com.  The notice is here.   The Northern District of California Local Rules are not directly relevant to Northern District of Illinois cases, but because the Northern District of California's patent rules serve as a pattern for courts across the country, including in the Northern District of Illinois, any changes to the Northern District of California's rules could effect courts in the Northern District of Illinois and across the country.

Thanks to Dennis Crouch at Patently-O for identifying the request for comments and for an interesting post, followed interesting comments, on proposed changes.

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Following up on my post yesterday, The Chicago Daily Law Bulletin has published this story regarding today's Supreme Court argument in KSR International Co. v. Teleflex Inc.  The argument centered around whether the Federal Circuit's obviousness test should be revised (more on the KSR case from Patently-O here and here).  Of course, Justices often play devil's advocate in oral arguments, so it is dangerous to presume outcomes based upon oral argument, but it looks like it was good legal theater. 

Here are a few of the most interesting comments as reported in the Chicago Daily Law Bulletin piece:

Justice Scalia "derided the test as 'gobbledygook.'''

Chief Justice Roberts:  called the current test "a confusing 'layer of Federal Circuit jargon [that is] worse than meaningless.'''

Just Souter wondered whether overturning the current obviousness test would generate a flood of law suits.

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I worked with Jim while I was at Kirkland & Ellis and can say that, in addition to having extensive intellectual property litigation and mediation experience, he is an excellent person and will do a tremendous job running the Federal Circuit's mediation program.  Congratulations to Jim on this exciting opportunity and to the Federal Circuit for making such an astute appointment.  Also, a practice tip for anyone in mediation with Jim:  be prepared, Jim is extremely hard working and sharp and, I suspect, he will hold counsel in his mediations to the same high standards he sets for himself.

Thanks to Dennis Crouch at Patently-O for the heads up to Jim's appointment.

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