IP Law Bulletin

The United States Patent and Trademark Office (USPTO) recently released the statistics of the Board of Patent Appeals and Interferences (BPAI) for the fiscal year ending September 30, 2009. Of the 6,800 appeals disposed of in FY2009, the examiner’s rejection was wholly affirmed in slightly more than 50% of cases, affirmed-in-part in 14% of cases, and wholly reversed in 25% of cases. Additionally, more than 15,300 appeals were filed during FY2009, representing an increase of more than 140% over those filed in FY2008. Although the BPAI disposed of almost 40% more cases than in FY2008, the astonishing increase in appeals filed in FY2009 bloated the backlog of cases pending before the BPAI to almost 12,500, with an average pendency of 8 months. The BPAI’s Chief Administrative Patent Judge recently warned that, despite the additional 35 judges hired since 2007, the BPAI is ill-equipped to deal with the growing number of appeals. Without additional personnel and resources, the BPAI projects that the backlog of pending appeals could approach more than 21,500 cases, with an average pendency of 14 months, by the end of FY2010. Given that applicants and examiners typically spend about 11 months filing appeal briefs and replies before the case is even forwarded to the BPAI, applicants could soon be waiting on average more than two years after filing a notice of appeal to have their appeal resolved.

Many factors obviously must be considered before deciding to appeal a rejection. These include the strength of the applicant’s case and the extent of prosecution conducted thus far. Keeping in mind that examiners sometimes thwart the appeal process and simply reopen prosecution rather than file an examiner’s answer, other tactics must be considered as well. For example, new arguments and/or amendments may be able to resolve prosecution in a timely and satisfactory manner without an appeal. In some cases, the pre-appeal brief conference program, which offers the potential for an expedited review of the issues and a decision within 45 days of an applicant’s request, can prove to be a useful tool. It is estimated that about one-third of the cases in which the applicant has requested a pre-appeal brief conference result in an allowance or the reopening of prosecution without the applicant having to file an appeal brief. 

In cases where an appeal must be pursued, it is helpful that an applicant is entitled to a patent term adjustment equal to the number of days from the filing of the notice of appeal to a final decision by the BPAI in favor of the applicant. Similarly, a remand by the BPAI entitles the applicant to a patent term adjustment, so long as a request for continued examination (RCE) is not filed prior to the examiner’s issuance of a subsequent office action or a notice of allowance. While patent term adjustments mitigate some of the risk associated with filing an appeal, the current backlog of appeals in the BPAI and the resultant delays should incentivize applicants to carefully consider their options before moving forward with an appeal.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

In July of 1994, Dr. Lister registered with the United States Copyright Office a manuscript describing a method of playing golf in which players use a golf tee on any shot that is not in a designated hazard area or on a green. Later learning that his copyright registration would not protect any potential invention, he filed a patent application directed to his method in August of 1996.

Following several rounds of rejections and amendments, including two appeals to the Board of Patent Appeals and Interferences, the Federal Circuit decided whether Dr. Lister’s registration of his manuscript with the U.S. Copyright Office qualified as prior art under 35 U.S.C. § 102(b) against his own patent application. The Board previously overturned a rejection under 35 U.S.C. § 102(a) that relied on Lister’s manuscript because it was held that an inventor’s own manuscript cannot be prior art under 35 U.S.C. § 102(a). ¹

The parties did not dispute the existence or the date of Dr. Lister’s copyright registration for his manuscript. The parties also did not dispute that the manuscript disclosed the claimed invention. The parties did dispute whether the manuscript was publicly accessible.

Generally, a publication is considered publicly accessible if it is available to persons interested and having ordinary skill. A publication does not need to have actually been accessed to be considered publicly accessible. Further, convenience is not a factor in determining public accessibility. While cases involving disclosures stored in libraries have held that a reference must be cataloged, indexed, and shelved in a meaningful way to provide public accessibility, cataloging and indexing is not a requirement of public accessibility.

Dr. Lister’s manuscript was available to the public both through the U.S. Copyright Office, and through private databases provided by Westlaw and Dialog. In the present case, it was determined that the access provided by the U.S. Copyright Office was not sufficient to be considered publicly accessible because it did not allow for searching in a meaningful way. At the time, searching of U.S. copyright registrations could only be performed by searching the last name of an author or the first word of a title. The Westlaw and Dialog databases, on the other hand, were considered publicly accessible because they allowed for keyword searches of the title (but not the full text) that would have allowed an interested person having ordinary skill to locate Dr. Lister’s manuscript.

Although the Westlaw and Dialog databases were considered publicly accessible, the rejection could not be maintained because the examiner was unable to establish when Dr. Lister’s manuscript was made available for search by either Westlaw or Dialog. Further, the evidence did not contain any information related to the general procedures practiced by Westlaw and Dialog for cataloging copyright registrations. In view of prior “thesis” cases that relied on general procedures to prove a likely publication date, it is likely that such information would have been sufficient to prove a likely date by which Dr. Lister’s manuscript was made available for search by either Westlaw or Dialog.

Comparing the situation to one in which an examiner finds a reference on the Internet but is unable to prove when the reference first appeared on the Internet, the Federal Circuit determined that Dr. Lister’s reference could not be relied upon to reject Dr. Lister’s patent application under 35 U.S.C. § 102(b) without first establishing that it was publicly accessible on either Westlaw or Dialog more than a year prior to the filing date of Dr. Lister’s patent application. The Board’s decision was thus vacated and remand ordered.

Despite the favorable decision for Dr. Lister in this particular aspect of his prosecution, we do not believe this case should change the behavior of those filing patent applications. Potential patentees should remain cautious with any publications they make that could include disclosures of potential inventions. As our readers know, the public disclosure of an invention begins the one year window in which patent applicants have to file a patent application in the United States and terminates the opportunity patent applicants have to file a patent application in most every other country. Pinning one’s hopes to some other organization’s publication policies is generally not prudent. Thus, applicants benefit from filing an application before, or at the very least within one year of, any public disclosure that could possibly be construed as disclosing aspects of a potential invention.

 ¹ An inventor cannot disclose his or her own invention before he or she invents it.  Thus, 35 U.S.C. § 102(a) requires disclosure by another  that would provide evidence that a patent applicant is not the first to invent.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

In BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378-79 (Fed. Cir. 2007), the Federal Circuit held that direct infringement of a method claim requires a single party to perform every step of the claimed method. Where the actions of multiple parties combine to perform the steps of a claim, finding direct infringement can be more difficult. Specifically, as clarified by the court in BMC Resources, direct infringement exists in such cases only if one party exercised “control or direction” over the entire process such that every step is attributable to the controlling party.¹  Notably, the BMC Resources court acknowledged that this is an imperfect standard, as parties can conceivably enter into arms-length agreements, in which no direction or control exists, to avoid infringement. As explained below, steps can be taken at the claim drafting stage to help avoid this undesirable possibility.

In BMC Resources, the plaintiff BMC alleged that the defendant Paymentech infringed two of its patents directed to methods for processing debit transactions. BMC conceded that Paymentech did not by itself perform each and every step of the claimed method, but argued that they should nonetheless be liable for infringement since they had allegedly combined with other parties to do so. The court found for Paymentech, affirming the district court’s grant of summary judgment of non-infringement. The court explained that, even if Paymentech did combine with various financial institutions and debit networks to perform the claimed method, they had not exercised “control or direction” over these third parties and thus could not be held liable for direct infringement.

In the BMC Resources opinion, Judge Rader pointed out the fatal flaw in the claims-in-suit – they were drafted to effectively require at least four different entities to carry out the claimed method. For example, one claim recited in part:

A method of paying bills…the method comprising the steps of:

…

[prompting a caller for various information]

…

accessing a remote payment network associated with the entered payment number, the accessed remote payment network determining, during the session, whether sufficient available credit or funds exist in an account associated with the entered payment number to complete the payment transaction,

and upon a determination that sufficient available credit or funds exist in the associated account, charging the entered payment amount against the account associated with the entered payment number…²  

While not apparent from the claim’s plain language, infringement of this claim effectively requires action by as many as four autonomous parties. This is because of the way debit transactions are processed in the real-world. For example, the claimed steps of determining whether sufficient funds exist and charging an account would generally require both a debit network and an underlying card-issuing financial institution.  Neither of these entities would typically perform the various prompting steps recited in the claim, and thus, practically speaking, a payee’s agent is also required. Finally, depending on how the claim is construed, a caller may also be needed. Thus, the claimed method would almost never be performed in the real world without action by four parties: (1) a caller, (2) a payee’s agent (i.e., the party that does the prompting), (3) a remote payment network (i.e., the debit network that checks for sufficient funds and initiates an account charge), and (4) a financial institution (i.e., the bank that informs the debit network whether sufficient funds exist and settles the charge). It is highly unlikely that all four of these parties would ever be under common direction or control such that a single entity could be held liable for infringing the claim.

As Judge Rader suggests, had the claim instead been drafted to focus on a single entity, infringement by a single party would be more easily captured. For example, instead of reciting “the accessed remote payment network determining,” the applicant in BMC Resources could have drafted the claim to recite steps such as “sending account information to a remote network” and “receiving a response from a remote network indicating sufficiency of funds.” Such a claim would presumably have been infringed by the defendant and thus have been significantly more valuable to BMC.

A similar claim drafting miscue was highlighted in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). There, the patentee Muniauction, Inc. sued the defendant Thomson Corporation for infringement of its patent directed to methods for conducting bond auctions over the internet. Just like in BMC Resources, the plaintiff in Muniauction conceded that the defendant did not, by itself, perform each of the method steps.  Reinforcing its BMC Resources holding, the Federal Circuit reversed the lower court’s finding of infringement and instead held that the defendant lacked the requisite exercise of direction or control over the third parties with whom it combined to perform each step of the claim. In other words, while Thomson performed most of the “auction” steps recited in the claim, it did not infringe because the recited “inputting” steps were performed by individual bidders over whom Thomson had no control.

Like in BMC Resources, the patentee in Muniauction had drafted claims that would require at least two parties to infringe in most instances. For example, one claim-in-suit³ recited “inputting data associated with at least one bid” (a step typically performed by a bidder sitting at their computer) and various other steps such as computing an interest cost value, submitting the bid over an electronic network, and displaying the bid on an issuer’s computer (all steps typically performed by an online auction system). Muniauction may have prevailed had they simply drafted the claim with only the online auction system’s perspective in mind, i.e., by reciting receiving bid data instead of inputting bid data.

To summarize, for the claims at issue in both BMC Resources and Muniauction, it would be extremely rare for any one entity to perform the entire claim. Accordingly, the claims in those cases are effectively only enforceable in the limited situation where multiple parties acting under common direction or control combine to perform the claim. Unfortunately for the patentees, any such parties could simply enter into arms-length agreements to avoid infringement liability. Had BMC and Muniauction drafted their claims to focus on a single entity, this undesirable result could likely have been avoided. 

 ¹ BMC Resources, 498 F.3d at 1380-81; see also Muniauction, 532 F.3d at 1329.
 ² Claim 7 of U.S. Patent No. 5,870,456, combined here with the independent claim from which it depends and truncated for clarity.  (Emphasis added).
 ³ Claim 1 of U.S. Patent No. 6,161,099.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

Imagine a patent office reform that improves the quality of the examination process and shortens an application’s pendency period. The current reform efforts in the United States Patent and Trademark Office (USPTO) promises just that. On October 19, 2009, USPTO Director David Kappos announced an overhaul of the USPTO’s examiner performance metric system. The new count system gives examiners more time overall, including more time for initial examination and examiner-initiated interviews, while reducing the credits for requests for continued examinations (RCEs). In the long run, the new count system is intended to incentivize examiners to provide applicants with “compact prosecution" of their applications. For the near-term, however, applicants and their attorneys may need to be vigilant in monitoring the examination of their post-RCE applications.

Under the previous count system, examiners received one count for a first action (either initial or after RCE), and one count for a “disposal” either through allowance, abandonment, or appeal. An RCE also counted as a disposal and started a new round of examination. Each round of examination from first action to disposal received two counts total. Under time pressure to reach disposal, the system provided some incentive for the examiner to force a new round of examination after issuing a final Office action. This also led to aggressive restriction requirements that forced the applicant to divide a single application into multiple applications knowing that the resulting divisional applications would most likely be examined by the same examiner.

The new count system awards more counts for first round first office actions (1.25 count) than later round first office actions (1 count after first RCE and 0.75 thereafter). Along with more incentive to front-load examination, the examiners are granted more examination time for each round and additional “non-examining” time for examiner-initiated interviews. Previously, examiners only received additional time for applicant-initiated interviews.

The new system also treats RCEs as any other continuation or divisional application, by placing RCEs on the examiner’s Special New docket. Effectively, examiners are no longer required to take action on an RCE within 2 months. Examiners will now be required to work on the oldest new application every four weeks, or only one case each month from their Special New docket. For current applications in post-RCE examination, this could translate into significant delays. Over time, although additional time and incentives for “compact prosecution” should reduce the number of RCEs, it is apparent that the new system may require the applicant and their attorney to more aggressively pursue an earlier allowance.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

The European Patent Convention (“EPC 2000”) came into effect on December 13, 2007 and represents the most significant change in European patent law since the European Patent Convention was first introduced in 1977. Recently, significant changes were made to the fee structure within EPC 2000. These changes apply to applications filed after April 1, 2009 and International Applications (PCT) which enter the European regional phase after that date.  Applicants and practitioners should be aware of some of the important changes when considering their European filing strategy. A brief review of the changes to the fee structure is outlined below.

Excess Pages Fees

The excess pages fee is now due upon filing or upon entry into the European regional phase, instead of being payable as part of the grant fee. The new excess pages fee is €12 for each page of the specification (description, claims, abstract, and drawings) over 35 pages. For international applications, page count takes into account any changes made before European regional entry, but not any made subsequently.  

Excess Claims Fees

A new higher excess claims fee of €500 for each claim over 50 is now due. The previous fee of €200 for the 16th through 50th claim is still applicable.  

Designation Fees

Designation fees are payable when examination is requested, 6 months after publication of the European search report, or upon entry into the European regional phase. Previously, applicants paid a designation fee for each contracting state up to a maximum of seven, after which all states could be designated at no additional cost. For applications filed on or after April 1, 2009, a single designation fee of €500 is payable regardless of the number of contracting states.  

Renewal Fees

Renewal fees are now only payable up to 3 months before the due date. This means that it is no longer possible to pay the first renewal fee for an International application on entry to the European regional phase along with the other fees due at that time.  

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

The U.S. Supreme Court has yet to issue any intellectual property (“IP”) related opinions since Justice Sotomayor joined the Court, but she will undoubtedly participate in a number of IP cases in the future. One case almost certainly familiar to patent practitioners, In re Bilski 545 F.3d 943 (Fed. Cir. 2008), was recently heard by the Court and will be decided later this Supreme Court term.

Justice Sotomayor has gathered experience in intellectual property issues throughout much of her legal career. After five years as an assistant district attorney in the New York County District Attorney’s Office, Justice Sotomayor joined Pavia & Harcourt in Manhattan. While there in private practice from 1984-1992, she handled a variety of cases in a variety of fields, including international law. Her focus, however, was on IP litigation, primarily related to trademarks and copyrights.

After her tenure in private practice, Justice Sotomayor served as a judge in the U.S. District Court for the Southern District of New York from 1992-1998. As is typical for a judge at the Federal District Court level, Justice Sotomayor heard a wide variety of cases, including a full range of IP issues involving patents, trademarks, and copyrights. She was involved as a District Court Judge with two patent cases that were heard on appeal by the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit affirmed her decision in REFAC Intern., Ltd. v. Lotus Dev. Corp., 887 F.Supp. 539 (S.D.N.Y. 1995), aff’d, 81 F.3d 1576 (Fed. Cir. 1996) holding a patent unenforcable due to inequitable conduct related to affadavits submitted during prosecution to address 35 U.S.C. § 112 issues. Inequitable conduct in patent prosecution has become more of a hot button topic in the legislature and the judiciary in recent years, so it would not be unreasonable to suspect that Justice Sotomayor may revisit the issue as a judge on the nation’s highest court.

In another case at the District Court, Justice Sotomayor made a Markman claim construction ruling that was overturned by the Federal Circuit in Intellectual Property Dev., Inc. v. UA-Columbia Cablevision of Westchester, Inc., 336 F.3d 1308, 1317 (Fed. Cir. 2003) (initial claim construction ruling by J. Sotomayor, 1998 WL 142346 (S.D.N.Y. 1998), subsequent rulings after J. Sotomayor’s departure from the court, 2002 WL 10479 (S.D.N.Y. 2002)).

One of Justice Sotomayor’s most well known cases at the District Court involved a copyright issue. In Tasini v. New York Times Co., 981 F. Supp 841 (S.D.N.Y. 1997), the District Court ruled that the New York Times was permitted to include material in a LexisNexis database that was published by the newspaper but written by freelance journalists. This decision was reversed, however, by the Second Circuit in Tasini v. New York Times Co., Inc., 206 F.3d 161 (2000). The U.S. Supreme Court upheld the Second Circuit’s ruling in New York Times Co., Inc. v. Tasini, 121 S.Ct. 2381 (2001), deciding that the New York Times could not license the work of freelance journalists without the journalists receiving compensation. This case is the only District Court case of Justice Sotomayor’s that was ultimately heard by the U.S. Supreme Court. Copyright cases are not frequently heard at the U.S. Supreme Court, but should one arise during Justice Sotomayor’s tenure on the Court, this case could likely be revisited even if not directly on point with a case’s particular copyright issue.

In another copyright case decided by Justice Sotomayor as a District Court judge, she ruled and the Second Circuit affirmed that a trivia book regarding the television show Seinfeld was protectable expression under the Copyright Act. Castle Rock Entm’t Inc. v. Carol Publ’g Co., 955 F. Supp. 260 (S.D.N.Y. 1997); 150 F.3d 132 (2nd Cir. 1998). A nation rejoices, yada, yada, yada.

Justice Sotomayor also heard IP cases while seated at the Second Circuit from 1998 to immediately before her Supreme Court appointment. With patent cases typically being appealed to the Federal Circuit rather than one of the other appellate courts, Justice Sotomayor heard relatively few patent cases. Of note she was involved with Innomed Labs, LLC v. Alza Corp., 368 F.3d 148 (2nd Cir.2004) and In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124 (2nd Cir. 2001), both concerning patent issues in an antitrust context.

While it is uncertain how many IP-related cases Justice Sotomayor will hear while seated on the Supreme Court and how she will decide such cases, it should be beneficial to the IP community to have a Justice versed in IP cases as a lower court judge and, unique to the Court, as a practitioner.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

The United States Patent and Trademark Office recently announced that it is expanding the First Action Interview Pilot Program to additional art units. It will also be modifying the procedures under the program in an attempt to enhance efficiency and offer more options to participants. Under the program, participants receive a Pre-Interview Communication containing the results of a prior art search performed by the examiner. In response to this communication, applicants can conduct an interview with the examiner to discuss the results of the search and its impact on the claims. One important change in the so-called “enhanced” program will allow participants to waive the interview after receipt of the prior art search and receive a first Office action as under normal prosecution. In the original program, participants who failed to respond to the Pre-Interview Communication or failed to conduct the interview in a timely manner would risk abandonment of the application. Eligibility requirements for the enhanced and original programs are set forth below.

New utility nonprovisional applications that fall within one of the following groups may be eligible for the Enhanced First Action Interview Pilot Program:

1. Applications filed on or before November 1, 2006, and assigned to workgroup 1610 (art units 161X).
2. Applications filed on or before October 1, 2006, and assigned to art unit 1795.
3. Applications filed on or before February 1, 2008, and assigned to workgroups 2150 and 2160 (art units 215X and 216X).
4. Applications filed on or before July 1, 2008, and assigned to workgroups 2440 and 2450 (art units 244X and 245X).
5. Applications filed on or before June 1, 2007, and assigned to art unit 2617.
6. Applications filed on or before May 1, 2008, and assigned to art units 2811-2815, 2818, 2822-23, 2826, 2891-2895.
7. Applications filed on or before December 1, 2007, and assigned to art unit 3671.
8. Applications filed on or before January 1, 2008, and assigned to art unit 3672.
9. Applications filed on or before November 1, 2007, and assigned to art unit 3673.
10. Applications filed on or before February 1, 2008, and assigned to art unit 3676.
11. Applications filed on or before July 1, 2007, and assigned to art units 3677.
12. Applications filed on or before November 1, 2007, and assigned to art units 3679.
13. Applications filed on or before May 1, 2006, and assigned to art unit 3735.
14. Applications filed on or before April 1, 2007, and assigned to art unit 3736.
15. Applications filed on or before December 1, 2006, and assigned to art units 3737.
16. Applications filed on or before August 1, 2006, and assigned to art units 3768.
17. Applications filed on or before December 1, 2006, and assigned to art unit 3739.
18. Applications filed on or before September 1, 2007, and assigned to art units 3762 and 3766.
19. Applications filed on or before September 1, 2006, and assigned to art unit 3769.

Eligibility Requirements for Original First-Action Interview Pilot Program

Previously, new utility applications that fell within either Group I or Group II as outlined below were eligible for the original First Action Interview Pilot Program:

 Group I:

(1) Filed on or before September 1, 2005, and prior to a first action on the merits;
 
(2) Classified in Class 709 (Electrical Computers and Digital Processing Systems: Multi-Computer Data Transferring); and
(3) Assigned to an art unit in either working group 2140 (group art unit 214x) or 2150 (group art unit 215x).

 Group II:

(1) Filed on or before November 1, 2006, and prior to a first action on the merits;
 
(2) Classified in Class 707 (Data Processing:  Database and File Management or Data Structures); and
(3) Assigned to an art unit in working group 2160 (group art unit 216x).

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.