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

Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 6, 2008) (Moran, Sen. J.).*

After a two-day hearing and two rounds of briefing, Judge Moran held that defendants (collectively “eSpeed”) had not met their burden of proving that plaintiff Trading Technologies (“TT”) engaged in inequitable conduct before the Patent & Trademark Office (“PTO”). The Court held that one of the TT patent's inventors engaged in commercial use between the priority dates for the patent's provisional and parent applications. But the Court held that TT was not required to disclose the commercial use to the PTO because it was not material to patentability. First, TT sought priority from its provisional application in good faith and had a reasonable belief that priority from the provisional was warranted. The reasonableness of the belief was born out when both the jury and the Court determined that the patent could claim priority from the provisional application. Because the commercial use happened after the patent's critical date (based upon the provisional application), it was not material.**

Additionally, TT did not commit inequitable conduct when it responded to the Examiner's request for, among other things, “any use of the claimed invention” with a series of brochures and presentations that described the software's features, but without identifying the inventor's commercial use. TT argued that the Examiner was seeking an explanation of all of the features of TT's software because it had identified anticipatory prior art from TT's website in a prior Office Action. The Court held that this was a reasonable reading of the Examiner's request because the Examiner accepted TT's response which did not address whether the software had been in use. Had the Examiner wanted an answer to that question, he could have asked again, instead of allowing the patent to issue.

Many readers will be wondering what is next. The Court has a few more pending motions, and a motion for reconsideration would not be surprising in this case. But for the most part, I suspect that this case is now on a fast track to the Federal Circuit, where the Court predicted it was going months ago. As always, I will keep you updated as the case develops, both in the Northern District and at the Federal Circuit.

* Click here to read much more about this case in the Blog’s archives and click here for this opinion.

** Click here and here for more on the determination of the appropriate priority date in the Blog's archives.

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Se-Kure Controls, Inc. v. Vanguard Prods. Group Inc., No. 02 C 3767, 2008 WL 169054 (N.D. Ill. Jan. 17, 2008) (Cox, Mag. J.).*

Judge Cox denied plaintiff’s motion to exclude defendants’ patent law expert witness, but placed limits on the expert’s testimony. The Court held that a patent expert’s testimony could aid the Court’s understanding of Patent Office procedures and of what would have been material to a reasonable patent examiner. But the patent law expert was not allowed to testify as to any legal conclusions. And the testimony would be given outside the jury’s presence to avoid any prejudice. Because the Court decides inequitable conduct, there was no need for the jury to hear the expert’s testimony.

* Click here for more on this case and related cases in the Blog’s archives. Also, note that this opinion also uses footnote citation.

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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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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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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.

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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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Farag v. Defense Threat Reduction Agency, No. 07 C 1688, 2007 WL 2404625 (N.D. Ill. Aug. 15, 2007) (Hart, J.).

Judge Hart dismissed for lack of subject matter jurisdiction plaintiff's suit seeking that the Court order the PTO to place a secrecy order on plaintiff's patent application for a process of separating an isotope from uranium for use in nuclear applications.  Plaintiff's application is about to be published and plaintiff believes that publication of the application would allow use of his process for illicit purposes that might threaten national security.  The Invention Secrecy Act provides a patent applicant the right to appeal the issuance of a secrecy order, but not the right to appeal the denial of a secrecy order.  See 35 U.S.C. Section 181; 35 C.F.R. Section 5.4.  The Invention Secrecy Act also permits a suit for compensatory damages, but only based on damage created by a secrecy order, not the absence of one.  Finally, the Court noted that plaintiff might have a claim pursuant to the Administrative Procedure Act (the "APA"), but the APA requires that the plaintiff by harmed by the agency (PTO) action.  The Court noted that potential threat to national security based upon a review of plaintiff's patent application was too remote and general to create standing pursuant to the APA.  As a result, the Court dismissed plaintiff's complaint.  It is also interesting to note, the Court instructed plaintiff to file any appeal with the Seventh Circuit, instead of the Federal Circuit despite the fact that the case is focused on PTO procedure. 

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I received an email from the PTO this week asking that I post about a free webcast the PTO is holding this Thursday, August 23 from 12:00 pm - 2:00 pm CT.  The webcast will explain the new continuation and claims rules that become effective November 1st.  The rules were published this morning.  For summaries and explanations of the changes, here is PTO document explaining the highlights  and a specific identification of each amendment.  You can register for the webcast here.  The PTO's press release is reprinted below:

USPTO Webcast on New Claims and Continuations Rules Thursday, August 23rd

Date: Thursday, August 23, 2007

Time: 12:00 p.m. (CST)

Register:

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Intel's General Counsel, Bruce Sewell, had an interesting commentary piece in yesterday's Wall Street Journal:  Patent Nonsense (because it is from the Op/Ed pages, I do not think a subscription is required).  On the day that the Senate Judiciary Committee renewed its consideration of the Patent Reform Act of 2007, Sewell makes many of the arguments that led to the changes proposed by the Act.  Sewell argues that the number of patent law suits is increasing, damages awards are rising (he states that there have been at least four settlements or judgments in excess of $500M in the last five years) and the more and more "questionable, loosely defined patents" are being issued.  Sewell's remedies to these problems include:

• limiting damages to the patented component not the entire product (i.e., a patentee's damages should be based on its patented engine component, not the entire car);
  
• strong post-grant PTO review;
  
• strengthening of venue requirements so that suits must be brought in a forum with an actual connection to the alleged infringement; and
  
• requiring a showing of actual bad faith for a willfulness finding.

Sewell also argues that the allegedly increasing number of "questionable, loosely defined patents" chills research and development in technology areas covered by the patents.  But I am not sure this argument is correct.  In my experience, a patentee, assignee or exclusive licensee with a broad patent tends to assert its patent when the technology is developed and a large chunk of the research investments have already been made.  That is the point when the alleged infringers have developed a market and, therefore, potential damages.  So, while I am all in favor of careful examination by the PTO (as are most people involved in this debate, I think), I am not sure that the problem with the broad, questionable patents is that they chill research and development investment.

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Murata Mfg. , Ltd. v. Bel Fuse, Inc., No. 03 C 2934, 2007 WL 781252 (N.D. Ill. Mar. 8, 2007) (Cole, Mag. J.).

Judge Cole held that plaintiff's inequitable conduct defense did not waive its privilege and, therefore, denied defendant's motion to compel privileged documents.  Defendant asserted that plaintiff engaged in inequitable conduct by failing to disclose an allegedly material piece of prior art during prosecution of the patent-in-suit.  Defendant's defense was essentially that their counsel and inventors fully understood their disclosure obligations and chose not to disclose the alleged prior art because  it was not material or even similar to the patent-in-suit.  Defendant argued that plaintiff waived its privilege when its 30(b)(6) deponent testified that:  1) he had been told that plaintiff's in-house counsel instructed its prosecuting attorneys to disclose all relevant prior art to the PTO; and 2) that he was confident that the inventors understood their duties of disclosure based upon their past experience as patentees and the fact that they had each had several conversations with plaintiff's prosecution counsel.  But the Court held that disclosure of the occurrence of these conversations, without disclosing any of the contents did not act as waiver.   The Court noted that if disclosure of the existence of these conversations without elaboration constituted wavier, then the exchange of privilege logs would also constitute waiver.

Defendant also argued that plaintiff impliedly waived its privilege by arguing that the allegedly material art was not material.  Defendant argued that this argument calls into question the understanding and beliefs of prosecution counsel, thereby waiving the privilege.  But the Court held that plaintiff's contentions can be tested without any privileged information, simply by reviewing the prior art reference and comparing it to the patented invention.  The Court also noted that if it found waiver, any patentee faced with an inequitable conduct charge would be forced to choose between defending the charge and waiving privilege or acquiescing to the inequitable conduct charge to maintain its privilege.

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Big Dipper, Inc. v. Wells' Dairy, Inc., No. 05 C 5395, 2006 WL 2711843 (N.D. Ill. Sept. 20, 2006) (Manning, J.).

In this trademark action, Judge Manning denied defendant's Rule 11 motion without considering it on the merits because defendant failed to comply with Rule 11's "safe harbor period."  Rule 11(c) requires that before filing a Rule 11 motion, the party serve the motion on its opponent and give the opponent at least 21 days to correct the issues raised in the motion.  Defendant's Rule 11 motion was also defective because defendant combined its Rule 11 motion with its response to plaintiff's motion to strike. As the Court noted, a Rule 11 motion must be filed as a separate, standalone motion. 

Defendant had ample opportunity to notify plaintiff of the Rule 11 issue. Plaintiff filed a motion to dismiss defendant's counterclaims.  The counterclaims challenged the validity of plaintiff's marks.  In response to the counterclaims, plaintiff served defendant a proposed motion to strike them.  Defendant responded to the proposed motion with a faxed letter objecting to the motion and asking plaintiff not to file it, but did not mention Rule 11 in the letter. 

Plaintiff then filed the motion to strike.  Defendant did not file a separate response to plaintiff's motion, but instead addressed plaintiff's substantive arguments in its motion to strike and in its reply to plaintiff's responsive briefing.  The Court held that, in addition to failing to meet the Rule 11(c) safe harbor requirement, defendant's motion was also defective because it was not filed separate from its response to plaintiff's underlying motion to strike.

In addition to Rule 11 issues, the Court's opinion also considered substantive trademark issues.  Specifically, the Court considered whether it lacked jurisdiction over defendant's invalidity counterclaim because defendant had not exhausted its invalidity challenge within the PTO (defendant had a pending cancellation proceeding before the TTAB).  The Court held that where the unexhausted validity issues are related to a claim with independent federal jurisdiction (in this case, plaintiff's trademark infringement claims) both the infringement and the validity challenge should be heard together.

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