New Legal Resources

In addition to the new regional IP blogs, here are several new legal resources:

  • 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.

Ray Niro & Dennis Crouch on Anonymous Blogging

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.

Troll Tracker Allowed to Blog

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.

Anonymous Bloggers Carry on Tradition of the Federalist Papers

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.


Federal Circuit Reverses Construction But Upholds Noninfringement

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.

Patent Reform: It's Baaaaaaaaack!

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:

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:

Quanta v. LG: Commentary Roundup

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-O271 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.

Supreme Court Hears Patent Exhaustion Case Tomorrow

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.

In Memory of Mark Banner

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.

Chicago's 37Signals One to Watch in 2008

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.

Court Will Not Dismiss PTO's Deputy Director

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:

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.

 

Blawg Review #133

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.

Continuation Rules Would Cause GSK Irreparable Harm

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:

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

PTO Preliminarily Enjoined From Using New Continuation Rules

This morning, the Eastern District of Virginia held a hearing on SmithKline's motion for a preliminary injunction against the PTO to prevent the new continuation rules from becoming effective tomorrow, November 1st -- click here for the Blog's coverage of the case this morning.  Gene Quinn and John White of the PLI Patent Practice Center Blog, who attended the hearing, are reporting that the Court preliminarily enjoined the PTO from making the new continuation rules effective.  Of course, the injunction is only preliminary so there is no way to tell what the ultimate result will be.  But everyone that was busy trying to file one last continuation today and worried about whether the PTO's e-filing system would crash under the weight of all of the last minute filings, can put down their pens and rest easy.  The deadline may still come, but it is no longer today.

Trick or Treat: Have a Preliminary Injunction to Eat

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.

Federal Circuit Further Defines Ordinary Observer Test

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.

Chicago IP Blog in the News

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):

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

Can Patent Reform Cross the Finish Line?

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:

 

* 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!

Patents -- Profit or Cost Centers?

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.

The Federal Circuit's Chief Judge Michel on the Patent Reform Act of 2007

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:

Obviousness Redux: Arm-chair Quarterbacking KSR v. Teleflex

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

Congress Turns to Patent Reform

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