IP Law Bulletin

The Board of Patent Appeals and Interferences (the BPAI) recently determined that arguments made for the first time in a reply brief will not be considered on appeal without “good cause.” In a recent precedential opinion, ex parte Atsuhisa Nakashima, the BPAI interpreted 37 C.F.R. § 41 as not requiring the BPAI to consider new reply brief arguments. In its principal brief, the applicant argued that the Examiner’s suggested combination would destroy the functionality of the primary reference and that the references were deficient with regard to an aspect of the claims at issue. The applicant included a new argument in the reply brief that there was no reason to combine the references because the result would be undesirable. The new argument was made without any stated reason as to why it had not been presented in the principal brief. The BPAI refused to consider the new argument, stating that “any argument not timely presented in the principal Brief [sic] will not be considered when filed in a Reply Brief, absent a showing of good cause explaining why the argument could not have been presented in the Principal Brief.” It is worth noting that a pending en banc Federal Circuit case, Hyatt v. Kappos, will consider the limits of new arguments and evidence that can be presented in appeals of BPAI decisions to a District Court under 35 U.S.C. § 145. The outcome of this case may impact an applicant’s strategy for selecting arguments and evidence to present at various stages of appeal.

A copy of the Nakashima opinion can be found on the USPTO website at the following link.

In Therasense, Inc. v. Becton, Dickinson and Co.¹, the Federal Circuit held that an applicant’s characterization of its own prior art reference in proceedings with the EPO that directly contradicts statements made to the USPTO by the applicant regarding the same reference is material to patentability and can serve as the basis of a finding of inequitable conduct. This case was distinguished from previous cases that held that attorney argument concerning the content of prior art is generally insufficient for a finding of materiality because the representations made to the USPTO were factual assertions provided in declaration and affidavit form.

Plaintiffs Therasense, Inc. and Abbott, Inc. (collectively, “the Patent Owner”) sued defendant Becton, Dickinson and Co. for infringement of U.S. Patent No. 5,820,551, entitled “Strip electrode with screen printing” (the ‘551 patent). The U.S. District Court for the Northern District of California determined that several of the asserted claims were invalid as obvious over the Patent Owner’s own U.S. Patent No. 4,545,382 (the ‘382 patent). The district court also found that the entire ‘551 patent was unenforceable due to inequitable conduct.

The ‘382 patent was cited by the Examiner during prosecution of the application that led to the patent at issue, the ‘551 patent. The claimed glucose monitoring system was directed to a membrane-less sensor, and the Patent Owner argued that the ‘382 patent teaches that electrodes for use with whole blood require a protective membrane. Although the specification of the ‘382 patent provides that “[o]ptionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules,” the Patent Owner submitted a declaration and affidavit that asserted that one of skill in the art would have understood from the ‘382 patent disclosure that a protective membrane was necessary with a whole blood sample. The Patent Owner further asserted that one skilled in the art would read the “optionally, but preferably” language as mere patent phraseology, rather than as a technical teaching. The ‘551 patent issued shortly thereafter.

Several years prior to the submission of the affidavit and declaration during prosecution of the ‘551 patent, the Patent Owner prosecuted the corresponding European application of the prior art reference, the ‘382 patent. Before the European Patent Office (EPO), the Patent Owner argued that the ‘382 patent distinguished over a German reference having a semi-permeable membrane because the protective membrane of the ‘382 patent is a safety measure rather than a permeability control. The Patent Owner further argued that the “optionally, but preferably” statement is “unequivocally clear” that the protective membrane is optional when used with whole blood.

Although the Federal Circuit has previously held that attorney argument concerning the content of prior art is generally insufficient for a finding of materiality,² the representations to the USPTO during prosecution of the ‘551 patent were not considered attorney argument. Rather, the Federal Circuit determined that the representations were factual assertions provided in declaration and affidavit form, and were thus distinguished from mere attorney argument. By describing the “optionally, but preferably” language of the ‘382 patent as “unequivocally clear,” the Patent Owner’s representations to the EPO directly contradicted the Patent Owner’s sworn statement to the USPTO that one of ordinary skill would have understood the phrase as mere “patent phraseology.” Further, the Patent Owner’s arguments before the EPO that a membrane was not necessary for testing whole blood in vitro contradicted the Patent Owner’s arguments to the USPTO that a membrane was thought to be necessary for the testing of a whole blood sample.

A finding of inequitable conduct requires a showing of an affirmative material misrepresentation or failure to disclose material information coupled with an intent to deceive. Information known by an applicant that refutes, or is inconsistent with, a position taken by the applicant in arguing the patentability before the USPTO is considered material information and should be provided to the USPTO.³ In Therasense, the Federal Circuit concluded that “[a]n applicant’s earlier statements about prior art, especially one’s own prior art, are material to the PTO when those statements directly contradict the applicant’s position regarding that prior art in the PTO.” The Federal Circuit found the lower court’s ruling on intent to deceive the USPTO amply supported, and affirmed the unenforceability of the ‘551 patent due to the Patent Owner’s inequitable conduct.

Although the Federal Circuit makes clear that a finding of inequitable conduct requires a high burden of proof, the Patent Owner in Therasense is “one of those rare case in which a finding of inequitable conduct is appropriate.” To avoid such a finding in light of Therasense, practitioners should continue to monitor submissions made to both domestic and foreign patent offices. Practitioners should consider alerting the USPTO of contradictory statements made in a foreign jurisdiction, especially when those statements directly contradict assertions made to the USPTO in the form of an affidavit or declaration. While attorney argument is generally insufficient for a finding of materiality, erring on the side of disclosure may save a patent from being rendered unenforceable.

¹593 F.3d 1289, 93 U.S.P.Q.2d 1489, Civ. Act. No. 2008-1511, -1512, -1513, -1514, -1595 (Fed. Cir. 2010) 
²See Innogenetics, N.V. v. Abbott Labs, 512 F.3d 1363, 1379, 85 U.S.P.Q.2d 1641, 1652 (Fed. Cir. 2008) (holding that possible contradictory statements made by applicant were mere attorney argument related to interpretation of claims and prior art teachings that do not constitute material omissions or misrepresentations.)
³See 37 C.F.R. § 1.56.

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

In a recent Federal Circuit decision, the court held that a defendant that acted with deliberate disregard to an overt risk that a device it copied might be associated with a patent was liable for induced infringement. While induced infringement requires both an occurrence of actual infringement and a finding that the alleged infringer knew or should have known that actions would induce actual infringements, this case makes it clear that pleading ignorance to avoid actual knowledge is not sufficient when there is an overt risk that an element of the offense existed. In SEB v. Montgomery Ward ¹, the company accused of inducing infringement argued that because it had no knowledge of the patent in question, it could not be liable for induced infringement. However, because the accused infringer both admitted to copying a product that was covered by the patent, and failed to mention that it copied the product to the attorney conducting the clearance opinion, the court found that the accused infringer acted with “deliberate indifference,” and thus did have the requisite knowledge for finding induced infringement.

SEB S.A. (SEB) is the owner of U.S. Patent No. 4,995,312 (the ‘312 patent), which is directed to a deep fryer. SEB, along with its co-plaintiff T-Fal Corporation, which distributes SEB’s products in the United States (collectively, SEB), sued Montgomery Ward & Co., Inc. (Montgomery), as well as Global-Tech Appliances, Inc. and Pentalpha Enterprises, Ltd. (collectively, Pentalpha) alleging both direct infringement under 35 U.S.C. § 271(a) and induced infringement under 35 U.S.C. § 271(b). This article focuses on the induced infringement claim. In the present case, because Pentalpha supplied the alleged infringing products to Montgomery, it was Pentalpha that was liable for any induced infringement.

According to 35 U.S.C. § 271(b), “Whoever actively induces infringement of a patent shall be liable as an infringer.” Courts construe this statute to require two elements: (1) an occurrence of actual infringement; and (2) that the alleged infringer knew or should have known that actions would induce actual infringements.

The first element of induced infringement was virtually conceded by Pentalpha. Pentalpha admitted to purchasing an SEB deep fryer in Hong Kong and copying it. The district court found that Pentalpha copied everything but the cosmetics of the SEB deep fryer. The district court also found that a deep fryer constructed as a design-around by Pentalpha infringed under the doctrine of equivalents. Pentalpha failed to advance any arguments related to infringement on appeal, thereby conceding this first element of induced infringement.

Pentalpha’s defense instead focused on the second element. Pentalpha argued that because it had no knowledge of the existence of the ‘312 patent, that the second element for induced infringement could not be met. To support this position, Pentalpha relied on a Federal Circuit decision from 2006, DSU Med. Corp. v. JMS Co., which stated “[t]he requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”²  (Emphasis added.) While the district court agreed that there was no evidence that Pentalpha was aware of the ‘312 patent prior to being sued, the district court still found the second element met. In affirming the district court, the Federal Circuit agreed.

In distinguishing DSU, the Federal Circuit noted that DSU did not set out the metes and bounds of the knowledge-of-the-patent requirement. The court held that actual or constructive knowledge is appropriate for the second element of induced infringement. Further, in evaluating the “knew or should have known” standard, the court determined that acting with “deliberate indifference” was an extension of the “knowledge” requirement. Both “knowledge” and “deliberate indifference” are evaluated subjectively (unlike “should have known,” which is objectively), and the court held that if a defendant knew of and disregarded the overt risk that an element of the offense existed, this constituted knowledge.³

The court determined that Pentalpha acted with “deliberate indifference” based on two actions in particular. First, the action of copying all but the cosmetics of the deep fryer was an action indicating deliberate disregard of a known risk. While Pentalpha argued that the fryer it copied was not marked with a patent number, both because the fryer was purchased in Hong Kong (where there would be no U.S. marking requirement) and because Pentalpha failed to show that it concluded there was no risk because they did not see a patent number on the fryer, the court was not persuaded. Second, Pentalpha also deliberately disregarded a known risk by failing to disclose the copying of the SEB deep fryer to the attorney that conducted a clearance opinion for SEB. While obtaining a clearance opinion can generally be helpful in negating intent, a clearance opinion in which the party obtaining the opinion withholds a key fact like it copied the invention is not helpful in negating intent. In fact, the court stated that this failure on its face was highly suggestive of deliberate indifference. The court found this withholding even more troublesome because the president of Pentalpha was well-versed in the U.S. patent system. These factors all supported the court’s finding that Pentalpha acted with complete disregard to an overt risk, and thus had knowledge of the ‘312 patent by way of “deliberate indifference.”

In view of this decision, companies should act prudently when monitoring its competitors’ products. Companies should certainly avoid copying competitors’ products. Further, to the extent companies take actions to design-around particular products or particular patents, it is generally a good idea to have an independent clearance opinion performed prior to using, making, or offering for sale the resulting product. Companies should openly disclose to the attorney providing the clearance opinion any products or patents that the resulting product was designed-around.

¹___ F.3d ___, 93 U.S.P.Q.2d 1617, Civ. Act. No. 2009-1099, -1108, -1119, 2010 WL 398118 (Fed. Cir. February 5, 2010).
²471 F.3d 1293, 1304, 81 U.S.P.Q.2d 1238, 1246 (Fed. Cir. 2006) (en banc only on issue of required intent for induced infringement).
³The court noted, however, that a defendant can defeat an allegation of “deliberate indifference” by showing it was genuinely “unaware even of an obvious risk.”

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

In an effort to improve patent quality and accelerate patent examination, the European Patent Office (EPO) adopted a number of rule changes that are set to take effect on April 1, 2010. This article summarizes some of the more-significant changes.

Divisional Applications (Rule 36)

At present, European divisional applications can generally be filed at any time during the pendency of the application to which they claim priority.

Under the new rules, divisional applications must also be filed within 24 months of the first communication from the Examining Division issued in the family or within 24 months of the first lack of unity objection raised in the immediate parent application, whichever is later. It is still required that the immediate parent application be pending for a claim of priority to be made.

Although this new divisional rule applies retroactively to pending applications, a grace period has been established that gives applicants in such cases at least until October 1, 2010, to file divisional applications. Accordingly, applicants should review all of their pending European applications to determine the need for divisional filings. This is especially true for applications that received a first official communication more than two years ago.

Mandatory Response to Search Reports (Rule 161 & Rule 70a)

The new rules also make responses to search reports compulsory in many cases. For example, in PCT applications where the EPO acts as the International Searching Authority (ISA), the EPO will now invite applicants to submit a response to the Written Opinion of the International Search Report (ISR) shortly after entering the European regional phase of prosecution. A response to this invitation is mandatory and must be filed within one month of the EPO communication. This relatively short period for response should be considered when applicants select the ISA for their PCT application, and applicants should begin preparing a response strategy very soon after the ISR is published.

For direct European filings or for PCT applications in which the EPO was not selected as the ISA, the new rules require applicants to respond to objections raised in the European Search Report, a practice that had typically been optional in the past.

Identification of Claims to be Searched (Rule 62a)

Currently, the EPO typically searches all independent claims in an application, even if there are multiple independent claims in the same category (e.g., product, process, etc.). In such cases, the EPO will often require the applicant to restrict the claims during examination to just one claim per category.

Under new Rule 62a, only one independent claim will be searched for each category. When an application contains more than one such claim, the EPO will invite applicants to indicate the claim that should be searched. Unless the applicant responds within two months, the EPO will simply search the first claim in each category.

In view of this rule change and the new time limits on filing divisional applications, applicants should carefully review any applications that contain multiple independent claims to determine the need for divisional filings.

Identification of Subject Matter to be Searched (Rule 63)

In contrast to present practice, the EPO will be permitted under the new rules to require applicants to identify the subject matter to be searched, for example when the EPO deems that the claims are too broad or unclear to conduct a meaningful search, or that the claims are directed to non-patentable subject matter. In such cases, a two month deadline for responding will be set by the EPO.

Amendments to European Applications (Rule 137)

Conclusion

The upcoming European rule changes require applicants to elect subject matter and address claim objections at a much earlier stage of prosecution. They also make it more difficult to protect a number of distinct inventions in a single application filing and greatly reduce the time period in which divisional applications can be filed. These changes can therefore have a dramatic impact on prosecution strategy and budgeting. Applicants should now review applications more closely before filing in Europe, be prepared to file substantive responses much sooner than usual, and work closely with their attorneys to ensure that no loss of rights occur due to missed divisional filing deadlines.

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

In its January 2010 decision in Wyeth v. Kappos¹, the Federal Circuit found that the United States Patent and Trademark Office (USPTO) had been miscalculating Patent Term Adjustment (PTA) for many applications, especially those that were pending for more than three years. In response to this decision, the USPTO announced an interim procedure for requesting PTA recalculation and initiated an overhaul of the computer system used to calculate PTA. This article briefly summarizes the procedures that applicants and patentees can follow to ensure that they are granted the correct amount of PTA.

Patents Issued before March 2, 2010

Although the Wyeth decision was announced on January 7, 2010, the USPTO did not roll out the corrections to its computer program for calculating PTA until March 2, 2010. For all patents that issued prior to March 2, 2010, the USPTO’s recently developed interim procedure can be used to request a recalculation of PTA.

The interim procedure requires filing a simple one-page form (PTO/SB/131). No fee is required, however the form must be filed within 180 days of the issue date of the patent. Unfortunately, there is no straightforward way to request PTA recalculation for patents in which more than 180 days have elapsed since the issue date. Additionally, the interim procedure can only be used to request correction of Wyeth-type PTA errors. All other PTA errors must be addressed using traditional procedures.

Patents Issuing on or after March 2, 2010

For patents that issue on or after March 2, 2010, Wyeth-type PTA errors should no longer occur because the USPTO’s automated PTA calculations should now be consistent with Wyeth. If, however, a Wyeth-type PTA error does occur, the USPTO’s interim procedure cannot be used. Instead, a petition must be filed under 37 C.F.R. § 1.705, and the petition must be accompanied by the appropriate fee.

37 C.F.R. § 1.705 generally provides two different situations in which a petition for PTA recalculation can be filed. In one situation, § 1.705(b) provides a mechanism for requesting reconsideration of the PTA indicated in the notice of allowance. Petitions under § 1.705(b) must be filed no later than the date the issue fee is paid. In a second situation, § 1.705(d) provides a mechanism for requesting reconsideration of the PTA indicated on the issued patent. Petitions under § 1.705(d) must be filed within two months of the date that the patent issued, but will be dismissed as untimely if they raise issues that were raised, or that could have been raised, in a petition under § 1.705(b).

One example of a petition that could not have been raised under § 1.705(b) relates to the three-year pendency provision. The USPTO does not calculate and inform the applicant of the PTA based upon the three-year pendency provision of 35 U.S.C. § 154(b)(1)(B) in the notice of allowance because the USPTO must know the date the patent will issue to be able to calculate the PTA based upon this provision. Thus, reconsideration of the PTA indicated in the issued patent as it relates to the three-year pendency provision of 35 U.S.C. § 154(b)(1)(B) is not considered a matter that could have been raised in an application for PTA reconsideration under § 1.705(b)². A request for reconsideration of the PTA calculation based on the three-year pendency provision of 35 U.S.C. § 154(b)(1)(B) will therefore be considered timely under § 1.705(d) if filed within two months of the date the patent issued. In other words, even if there appears to be a Wyeth-type error in the PTA indicated in the notice of allowance, there is generally no need to file a petition before paying the issue fee. Instead, the PTA should be checked again when the patent ultimately issues to determine if the error is still present and thus if a § 1.705(d) petition is needed to correct the PTA.

¹ 591 F.3d 1364, 93 U.S.P.Q.2d 1257, Civ. Act. No. 2009-1120 (Fed. Cir. 2010).

² United States Patent and Trademark Office – Official Gazette, October 6, 2009, 1347 OG 49.

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

In general, the patent term for a United States patent extends 20 years from the earliest U.S. filing date from which the patent application claims priority. Because the patent term is calculated from the filing date, prosecution delays at the United States Patent and Trademark Office (USPTO) will shorten patent term. Often, due to the patent examination backlog at the USPTO, prosecution delays are significant. In order to minimize the effect of the prosecution delays on patent term, the USPTO implemented a policy of Patent Term Adjustment (PTA) procedure by which additional patent term is added to the standard 20 year patent term to compensate for excessive USPTO prosecution delays. For many patents, especially those in the pharmaceutical arts, the length of patent term can greatly affect the value of the patent. For these types of patents, as well as many other patents, the calculation of PTA becomes critically important.

The recent decision of Wyeth v. Kappos¹, which held that the method used by the USPTO to calculate PTA improperly limited the length of PTA, highlighted the importance of the issue of PTA. This article focuses on how to avoid PTA reduction resulting from the filing of information disclosure statements (IDS), and particularly 37 C.F.R. § 1.704 of the U.S. Patent Rules.

As set forth in 37 C.F.R. § 1.704, the filing of an IDS can result in a reduction of the PTA in several circumstances. Specifically, the filing of an IDS can reduce the PTA when an IDS is filed: (1) less than one month before the mailing of an office action or notice of allowance that requires the mailing of a supplemental office action or supplemental notice of allowance²; (2) after a response to an office action has been filed³; (3) after a decision by the Board of Patent Appeals and Interferences or Federal Court, less than one month before the mailing of an office action or notice of allowance that requires the mailing of a supplemental office action or supplemental notice of allowance⁴; and (4) after a notice of allowance has been mailed⁵. The PTA reduction resulting from the filing of an IDS in these circumstances generally is equal to the lesser of four months or the number of days required for the USPTO to mail a supplemental office action or supplemental notice of allowance in response to the IDS (situations (1), (3), and (4) above), or the number of days between the date the response to the office action was filed and the date the IDS was filed (situation (2) above).

Practitioners who prosecute U.S. applications that have pending foreign counterpart applications often receive prior art and/or examination reports from these foreign jurisdictions that must be submitted in IDSs at various stages of U.S. prosecution, including circumstances (1) – (4) above, and often during the later stages of U.S. prosecution. Therefore, the filing of these IDSs can trigger significant PTA reductions under 37 C.F.R. § 1.704.These reductions in PTA can be avoided, however, by filing a statement under 37 C.F.R. § 1.704(d).

37 C.F.R. § 1.704(d) states:

a paper containing only an information disclosure statement in compliance with  §§ 1.97 and 1.98 will not be considered a failure to engage in reasonable efforts to conclude prosecution (processing or examination) of the application under paragraphs (c)(6), (c)(8), (c)(9), or (c)(10) of this section if it is accompanied by a statement that each item of information contained in the information disclosure statement was first cited in any communication from a foreign patent office in a counterpart application and that this communication was not received by any individual designated in § 1.56(c) more than thirty days prior to the filing of the information disclosure statement. This thirty-day period is not extendable. (Emphasis added.)

Therefore, if an IDS citing newly-cited prior art from a communication from a foreign patent office is filed within thirty days of receipt along with the statement set forth in 37 C.F.R. § 1.704(d), the filing of the IDS will not result in a loss of PTA. Accordingly, 37 C.F.R. § 1.97(d) can effectively prevent the loss of PTA when IDSs citing newly-discovered prior art from foreign counterpart applications are filed late in prosecution.

Certification under 37 C.F.R. § 1.97(e)(1)

The statement under 37 C.F.R. § 1.704(d) should not be confused with the certification under  37 C.F.R. § 1.97(e)(1), which states that the items submitted in the IDS were cited in a communication from a foreign patent office not more than three months prior to the filing of the IDS. This certification under 37 C.F.R. § 1.97(e)(1) generally is used to avoid paying a fee when the IDS is filed after a first office action⁶, or to force the consideration of the IDS after a final office action or notice of allowance⁷. Unlike the statement under 37 C.F.R. § 1.704(d), the statement under 37 C.F.R. § 1.97(e)(1) has no effect on preventing PTA reduction.

Recommendations

To fully utilize the provisions of 37 C.F.R. § 1.704(d) and maximize PTA, all foreign associates should be made aware of the provisions of 37 C.F.R. § 1.704(d) and encouraged to send to the prosecuting U.S. attorney all prior art cited in the counterpart foreign patent applications as soon possible within the thirty day period. Because foreign associates can be considered to be an “individual” as defined in 37 C.F.R. § 1.56(c), the thirty day period may begin when the foreign associate receives the office action/references from the foreign patent office.  Prior art brought to the attention of the U.S. attorney by foreign associates should be submitted in an IDS as soon as possible upon receipt so that the art can be submitted in conjunction with the § 1.704(d) statement within the thirty day period. Also, as 37 C.F.R. § 1.704(d) applies to only “first cited” prior art, not previously known prior art, all relevant art should be cited as soon as possible during prosecution.

¹591 F.3d 1364, 93 U.S.P.Q.2d 1257, Civ. Act. No. 2009-1120 (Fed. Cir. 2010).
²See 37 C.F.R. § 1.704(c)(6).
³See 37 C.F.R. § 1.704(c)(8).
⁴See 37 C.F.R. § 1.704(c)(9).
⁵See 37 C.F.R. § 1.704(c)(10).
⁶See 37 C.F.R. § 1.97(c).
⁷See 37 C.F.R. § 1.97(d).

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

Our January 2010 issue included a report about the initiative implemented by the USPTO to reduce the backlog of patent applications by permitting small entity applicants to expressly abandon one application and file a petition seeking special status for a second application. This initiative is sometimes referred to as the “Bump and Dump” program. To be eligible for this program both applications must be unexamined, must have been filed earlier than October 1, 2009, and must either be owned by the same party or have at least one common inventor. Further, the abandoned application cannot be revived and fees associated with the abandoned application cannot be recovered. The USPTO recently announced that this program has been extended through June 30, 2010. Small entity applicants that have unexamined applications that they are no longer interested in pursuing should consider taking advantage of this rule to expedite examination of another application.

Additional details and requirements are available from the USPTO website via the following link.