IP Law Bulletin

In Invention Pathways, the Australian Patent Office denied the protection of business method claims because the use of a computer was considered merely incidental or peripheral. In this perfectly meta-aware scenario, the applicants attempted to claim a computer-aided process to ensure that all commercialization activities are completed within the time constraints during the lifecycle of a patent application, in accordance with various international treaties and legal jurisdictions. The specification disclosed one embodiment as a planning software package using a computer implemented checklist without any specific technical details.

In the decision, a Delegate of the Commissioner of Patents confirmed that a patentable method must produce “a concrete, tangible, physical, or observable effect.” The Delegate further required that the “concrete effect” must be one that is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way.  

The Delegate viewed the computer implemented checklist as one that provided “no substantive effect produced through the operation of the computer…and such an effect does not arise from a synergistic interaction in the operation of the method on the computer or other physical elements,” and so it was, therefore, not patentable subject matter.

In doing so, the Delegate has imported considerations which are normally reserved for novelty or inventive step into a threshold, patentable subject matter inquiry. The Delegate also concluded that “the authorities make it clear that in many circumstances a method including the processing of information and the production of a substantive effect in or through a computer or peripheral, if novel and not obvious, will result in patentable subject matter.”  

Therefore, what is “incidental” or “peripheral” and what is not, for the patentable subject matter inquiry, will have to be clarified in future Australian Patent Office decisions or by the Australian Federal Court.

In Canada’s Amazon, Inc. v. Canada, the Commissioner of Patents rejected Amazon's one-click patent application—pejoratively calling the invention a “business method.” The Commissioner's legal hook for rejection was that business methods do not fit within the legal definition of “invention” required by s. 2 of the Canadian Patent Act. The text of that provision was derived from United States law and closely follows the language of 35 U.S.C. § 101.

On October 15, 2010, the Federal Court of Canada reversed the Commissioner’s rejection and held that business methods “can be patented in appropriate circumstances.”

In particular, the Court held that Amazon’s one-click online purchase processing system qualified as patentable subject matter because the system claims require a machine as an essential element of the invention, the method claims result in a “physical effect” “through the use of cookies, computers, the internet and the customer’s own action,” which moved the one-click system beyond a “mere business scheme” or “disembodied idea” having no “practical embodiment.”

Instead of granting a patent outright, however, the Court remanded the decision for an “expedited re-examination.” Here, though the Court appears to have followed the U.S. Supreme Court’s recent decision in Bilski v. Kappos, it fails to clearly signal as to whether a shift from Canada's long standing denial of business method patents is afoot.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

It’s been two years since the Federal Circuit’s ruling in Egyptian Goddess Inc v. Swisa. This landmark ruling, which effectively reset the standard for design patent infringement, has made a once relatively obscure and murky area of patent law only slightly clearer.

For over 25 years, infringement in design patent cases was determined by a two-pronged test. To infringe, the accused device had to meet both the so-called “point of novelty test” and the “ordinary observer” test. In Egyptian Goddess, the Court eliminated the requirement that a patent holder needed to show that the accused device “appropriated the novelty in the patented device which distinguishes from the prior art,” and re-established the “ordinary observer” test as the sole criteria for (literal) infringement in design patent cases.

The Standard for Infringement: Ordinary Observer

Under the “ordinary observer” test, as reformulated and reiterated by the Federal Circuit in Egyptian Goddess, infringement is found when the accused design is found to be substantially similar to the patented design, as determined by the ordinary observer. The Court has made it clear that it is the “overall appearance” of both the accused and patented designs that needs to be considered and specific features or points of novelty are no longer the proper bases for comparison.

The Standard for Anticipation: Ordinary observer

The Court has recently gone on to establish that the “ordinary observer” test is the only proper comparison when determining design patent validity. See International Seaway Trading Corp. v. Walgreens Corp. Specifically, the Court reasoned that because the “ordinary observer” test is the correct standard for infringement it must therefore also be the correct standard when comparing the patented design to the prior art. In short, it is clear that anticipation in design patent cases occurs if (and only if) the “ordinary observer” determines that the patented design is “substantially similar” to cited prior art.

The Standard for Obviousness

This, of course, leaves open the issue of obviousness in design patent cases. If the test for anticipation is “substantial similarity,” then what is the standard for obviousness? A few weeks after International Seaway, in Crocs v. International Trade Commission, the Federal Circuit applied the standard test for obviousness used in all patent cases. It examined (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the prior art and the claimed invention; and (4) the extent of any objective indicia of non-obviousness. Ultimately, the International Trade Commission’s finding of obviousness was reversed based on the finding that (a) one or more claimed features were missing from the cited prior art, (b) an ordinary artisan would not have been motivated to try adding the missing element(s), and (c) the accused product had significant commercial success.

The Effect of Functional Elements

One of the looming issues in any design patent case is the issue of what weight should be placed on the contribution of functional elements to the overall design. This was addressed fairly definitively in Richardson v. Stanley Works, where the Federal Circuit made clear that (a) the “deception that arises [must be] a result of the overall design, not of similarities in ornamental features in isolation” and (b) the functional elements of the designs are to be ignored when undertaking that analysis.

Whether this type of analysis is properly within the province of a Markman claim construction hearing or whether it should be left to the jury is still an open question.

What about fashion? Is help just down the catwalk?

Design patents are a useful tool and have been used successfully in a number of industries with longer product life cycles, such as consumer goods, tools, and jewelry. The fashion industry, however, has been clamoring for an efficient way to protect designs in a universe of short product lifecycles and instant knock-offs.

The latest attempt at a legislative “fix” for this problem is the Innovative Design Protection and Piracy Prevention Act (S. 3728). By amending the copyright law, rather than the patent law, this legislation would create a new special form of design right that would be applicable to fashion and fashion related items (e.g., clothing, wallets, handbags, belts, suitcases, and eyeglass frames). The version of the bill as of the date of this IP Bulletin provides three years of protection for any work within these categories that is (a) a result of the designer’s own creative endeavor, and (b) provides a unique non-utilitarian variation over prior designs for the same article. Infringement would require actual copying and the resulting work must be “substantially identical in overall visual appearance” as to the original elements of the protected design. The proposed legislation removes the registration requirement for pursuing an infringement claim and substitutes a more detailed pleading requirement for pursuing such cases.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

In a decision issued prior to the Supreme Court’s ruling in Bilski v. Kappos, the Federal Circuit reversed the district court’s determination that Prometheus’ asserted claims were directed to non-statutory subject matter. See Prometheus Laboratories, Inc. v. Mayo Collaborative Services (2009) (Prometheus I). In Prometheus I, the Federal Circuit panel relied on its own rationale in In re Bilski to conclude that Prometheus’ asserted claims met the machine-or-transformation test, which the Federal Circuit characterized as the “definitive test for determining the patentability of a process under § 101.” In Bilski, however, the Supreme Court ruled that though the machine-or-transformation can serve as a “useful and important clue” and “an investigative tool,” it is not the “sole” test for determining the patent eligibility of process claims. Accordingly, on the day after handing down the Bilski decision, the Supreme Court vacated and remanded Prometheus I for reconsideration in light of Bilski.  

In an opinion that largely mirrors its previous decision in Prometheus I, the Federal Circuit last month reaffirmed the ultimate conclusion that Prometheus’ claims are directed to patent eligible subject matter under 35 U.S.C. § 101. See Prometheus Laboratories, Inc. v. Mayo Collaborative Services (2010) (Prometheus II).

The asserted claims in Prometheus I and II are directed to methods that seek to optimize the therapeutic efficacy of thiopurine drugs such as 6-MP and AZA while minimizing their toxic side effects. The claimed methods typically include two distinct steps: (a) “administering” a thiopurine drug that can be metabolized in a subject, and (b) “determining” the levels of the drug’s metabolites in the subject. The measured metabolite levels can then be compared to pre-determined metabolite levels, “wherein” the measured metabolite levels “indicate a need” to increase or decrease the level of drug to be administered so as to minimize toxicity and maximize treatment efficacy. Several of the asserted claims recite only the “determining” step.

On remand, the Federal Circuit limited briefing to the effect of Bilski on the Federal Circuit’s previous ruling in Prometheus I.  Regarding Bilski, Prometheus argued that the Supreme Court did not overrule the long-established view that claims that satisfy the machine-or-transformation test necessarily satisfy Section 101. Rather, Bilski only stands for the proposition that claims that do not satisfy the machine-or-transformation test are not necessarily non-patentable. Mayo, on the other hand, argued that the Supreme Court reaffirmed that “preemption” is the controlling standard for Section 101. That is, claims that wholly preempt all practical use of naturally occurring correlations (e.g., between metabolite levels and drug efficacy or toxicity) are invalid.

The Federal Circuit disagreed with Mayo that the Supreme Court’s Bilski decision dictated a wholly different analysis or result. Rather, because the “administering” and “determining” steps are both transformative within the meaning of the machine-or-transformation test (albeit as an “investigative tool” rather than as a “definitive” test), the Federal Circuit arrived at the identical “clear and compelling conclusion” as in Prometheus I that the asserted claims comply with Section 101. Regarding the “administering” step, the transformation is of the human body and its components following the administration of a specific class of drugs and the various chemical and physical changes of the drugs’ metabolites that enable their concentrations to be determined. “The fact that the change of the administered drug into its metabolites relies on natural processes does not disqualify the administering step from the realm of patentability” as administering the drug itself is not a natural process. Regarding the “determining” step, the Federal Circuit reaffirmed that “[s]ome form of manipulation, such as the high pressure liquid chromatography method…, is necessary to extract the metabolites from a bodily sample and determine their concentration.” Though Mayo further argued that each of these are merely data-gathering steps for use of the correlations, the Federal Circuit concluded that the transformations are central to the method of treatment because measuring the levels of metabolites of administered drugs is what enables dosage adjustments to optimize efficacy or reduce toxicity during a course of treatment. Finally, the Federal Circuit reaffirmed that though the final “wherein” clauses of the asserted claims are mental steps that are not patent-eligible on their own, a subsequent mental step does not, by itself, negate the transformative nature of prior steps.

In Prometheus II, the Federal Circuit also concluded that the Bilski decision did not undermine its previous preemption analysis. As before, the Federal Circuit held that Prometheus’ claims are drawn to a particular application of a naturally occurring phenomenon and not to a law of nature itself. That is, the claimed steps involve a particular application of the natural correlations: the treatment of a specific disease by administering specific drugs and measuring specific metabolites. As such, the asserted claims do not preempt all uses of the natural correlation between metabolite levels and drug efficacy or toxicity, but rather utilize them in a series of specific steps. See also Diamond v. Diehr (“Their process admittedly employs a well-known mathematical equation, but they do not seek to preempt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process.”).

Like Bilski, the decision by the Federal Circuit in Prometheus II does little to shed light on the bounds of patent-eligible subject matter, especially with regards to business methods per se. Nonetheless, because the Federal Circuit continues to rely on the machine-or-transformation test as a “useful and important clue” in determining compliance with 35 U.S.C. § 101, applicants who draft claims to meet this test may continue to have a safe harbor.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

What is the key to keywords?

Let’s see if we can pick the lock (last play on words, I promise!) about whether and when it is OK for you to buy someone else’s trademark (or something close to it) as a keyword in order to attract eyeballs to your web site.

Can you even do this legally? Answer: probably yes, with one major proviso and one minor one. The minor one is that you should check with your lawyer because different courts around the country are still grappling with this issue and you might be living where the courts have taken no, or a dim, view of keyword-buying.

The major proviso is to make sure the purchased keyword does not appear misleadingly in the text of your sponsored link(s) (or your own web pages). In other words, “invisible” use of someone else’s trademark as a keyword is permissible, but the trademark cannot be visible in your sponsored link(s) yielded by the search. There’s a rationale for such a bright-line rule that permits use of a competitor’s trademark as a keyword but prohibits its use in your sponsored link. It derives from (a) human nature, and (b) modern technology.

As to human nature, we (humans) are lazy. We love shortcuts and abbreviations. How else do you explain the word “thingamajig?” If you want to buy a pocket-size telecommunication device that doubles, triples, quadruples, etc., as a camera, music player, GPS, television, calculator, etc., etc., you’re not going to fill in all the “etc.’s” and go looking for something that takes a paragraph to describe. Instead, your lazy mind is going to cast around for something much shorter…I’ve got it…iPHONE!

As for life in The Digital Millennium, you’re going to go shopping online and start with a search.

So into the search field goes “iPHONE” as your search term.

Steve Jobs already sells a lot of iPhones. Yeah, he’s a genius, and he’s entitled to the fruits of his labor. But let’s say all use by third parties of iPHONE (or any variant) as a keyword were illegal.

Then the lazy online shopper would land in a sponsored link universe that was all Apple Computer all the time. The average human shopper (this is based on this writer’s self-knowledge) would say, “OK, that’s it. I guess I’ll buy an iPhone.” Steve Jobs would quickly figure this out (remember, he’s a genius) and the price of an iPhone would move (I’ll let you figure out in which direction). In other words, the pro-competition, anti-monopoly, benefit of keyword-buying outweighs the burden on a trademark owner of the free and ephemeral “bask in reflected glory” that purchased keywords afford to the owner’s competitors.

Or at least it’s defensible to make this analysis and reach this conclusion. “Old law” and “new technology” can be ships that pass in, or ignorant armies that clash by, night. Why not try to reconcile the old and the new by the light of day?

Consider a homo sapiens (as opposed to digital) analogy. You walk into a Wal-Mart store looking for blue jeans and tell the greeter, “I need some Levi’s.” If you think of the greeter as your corporeal search engine, you’ve given him “Levi’s” as your keyword. Does this mean that the greeter has to take you directly to the shelves that display only LEVI STRAUSS & CO. dungarees, or, if Wal-Mart doesn’t carry Levi’s, that he has to escort you back out to the parking lot and tell you to look elsewhere?

Would he be barred from taking you down the aisles where jeans from LEE, WRANGLER, GUESS, EDDIE BAUER, etc., were on sale?

Good Lord, you could end up wearing khakis for the rest of your life!

For a recent example of these issues, see the District of Utah’s December, 2010 decision in 1-800 Contacts, Inc. v. Lens.com, Inc.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

The start of a new year is always a time to reflect on the year that has passed before looking forward. To that end, below is a recap of some of the intellectual property news highlights from the year (in no particular order):

    Supreme Court Addresses Patent Eligibility of Business Methods in Bilski Case

In June, the Supreme Court handed down its long-awaited decision on “business method” patents in the case of Bilski v. Kappos. In a rare instance of unanimity, the justices agreed that Bilski’s method of hedging risks in commodity trading was not eligible for patent protection. The Court reached this determination by taking a simple approach—relying on long-standing precedent that one cannot patent an abstract idea. The Court affirmed the judgment of the Federal Circuit but rejected that court’s rationale. The Court refused to endorse the so-called “machine-or-transformation” test as the standard to determine patent eligible subject matter, though the Court did indicate that the test can provide a “useful and important clue” for such determinations. While a number of questions about the patentability of business methods remain, applicants desiring business method claims should draft claims that do not portray the inventive methods as abstract ideas. Applicants may further consider drafting claims that do pass the “machine-or-transformation” test as a possible safe harbor. For more information on this issue, see the discussion of the Federal Circuit’s Prometheus decision in this issue. More information on the Bilski decision can be found in Nutter’s July edition of the IP Bulletin.

The Court did divide on the issue of whether business method patents are categorically excluded from patent-eligibility. Justice Kennedy, writing for the majority, suggested that “…the Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter…." In a separate opinion, Justice Stevens concluded that Congress never intended to make any methods of doing business patentable. According to him, “[t]he breadth of business methods, their omnipresence in our society, and their potential vagueness also invite a particularly pernicious use of patents that we have long criticized.”

The Bilski decision leaves many questions unanswered. Following its time-honored traditions, the Court chose to avoid far-reaching pronouncements and let the law of patent-eligible subject matter evolve in due course. Those who seek business method patents in the future, however, will need to carefully consider their claims because Justice Stevens and the other three Justices who joined in his concurring opinion clearly share the view that business method patents are not authorized by U.S. Patent laws. Hence, in the short term, applicants seeking business method patents may want to draft their claims in a way that avoids their rejection as merely “abstract” ideas. Moreover, since both Kennedy and Stevens’ opinions agreed that the “machine-or transformation” test is, while not an exclusive test, nevertheless “a useful and important clue” for determining patent eligibility, applicants who draft claims to meet this test may well continue to have a safe harbor. This decision also suggests to applicants in the biotech and gene patenting world that diagnostic method patents will likely be patent eligible, and might serve as a useful alternative to isolated gene patents, which, in light of the Myriad decision discussed below, may be of questionable patent eligibility.

    Federal Circuit Confirms the Written Description Requirement for Patent Application

The May issue of Nutter’s IP Bulletin discussed the Federal Circuit’s en banc decision in Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., holding that there was a “written description” requirement that is distinct from other requirements of the patent laws. The decision all but assures that the USPTO will continue its policy of heightened scrutiny for biotechnology patent applications.

Critics of the Ariad decision argue that finding a separate written description test in 35 U.S.C.  § 112 requires a strained grammatical reading of the statute, and that such a reading has no support in the legislative history of the patent act. Moreover, they note that Section 112 clearly requires that patent applicants must provide an “enabling disclosure” of their inventions and that this is a clearer test—and one that makes the written description requirement redundant.

The Ariad decision itself does not provide much useful guidance on how the separate “written description” test should be applied. The majority opinion states that the applicant must “possess” the claimed invention but fails to explain how this test should be applied in practice to “genus” claims. The opinion suggests that a written description of a genus requires either (1) a representative number of species falling within the genus, or (2) description of “structural features common to members of the genus so that one skilled in the art can ‘visualize or recognize’ members of the genus.” However, the opinion is not particularly enlightening on the status of species that fall within a claimed genus but are not specifically disclosed by the patentee. Moreover, the “visualize or recognize” test appears to bring the factual inquiry back to an enablement test.

The Federal Circuit’s opinion noted that “the level of detail required to satisfy the written description requirement varies depending on the nature and scope of the claims and on the complexity and predictability of the relevant technology.” Thus, for predictable arts (e.g., mechanical inventions) the written description requirement may have little impact, but inventions in the fields of biotechnology and pharmacology are likely to be more strictly scrutinized for their level of detail in the written description.

The big winner in the Ariad case appears to be the USPTO because the opinion gives tacit approval to the government’s current strict approach to the examination of biotechnology inventions. Since 2001 the USPTO has had guidelines in place for examiners that assume the written description test is indeed a separate test and that it should be applied to all inventions in unpredictable arts. Critics of the USPTO training materials have suggested that the guidelines encourage examiners to question every aspect of the disclosure—including many aspects where one skilled in the art would recognize that a single example is indeed sufficient to possess many obvious alternatives. Practically speaking, these critics complain that biotechnology inventions are scrutinized for their concrete examples and examiners seek to limit the claims to cover only specific disclosed embodiments.

In the wake of the Ariad decision, it appears that applicants should expect this heightened scrutiny and challenges from examiners at every turn. Practitioners should also be aware that in Ariad the written description was used as a litigation tool to invalidate a patent. Therefore multiple examples, multiple species, and detailed characterization of the features of the invention should ideally be presented in an application whenever possible. Common features or structures between the species should also ideally be identified. The written description requirement may require further disclosure of numerous ranges bracketing the specific examples to provide fallback positions. For example, if the DNA sequence encoding a protein agonist is all that is known, it may be helpful to claim other sequences that have 70% identity, 80%, 90%, etc.

The problem presented in the Ariad case, however, will be difficult for applicants to overcome because the discovery of a new pathway may indeed be insufficient to claim methods of treatment by modulating the pathway. Unless a representative number of working examples of compounds that can actually perform the method are presented, the “written description” requirement may preclude patentability.

    Myriad’s Gene Patents

In March, the Southern District of New York decided Association for Molecular Pathology v. U.S. Patent and Trademark Office involving patent claims related to so-called “gene patents.” The plaintiffs asked the federal district court to invalidate several gene patents owned by the University of Utah and Myriad Genetics that are directed to two isolated gene sequences, BRCA1 and BRCA2, that researchers had discovered were correlated with a heightened susceptibility to breast cancer. In an important decision largely affecting research institutions and pharmaceutical companies (and seemingly ignoring Federal Circuit precedent), the court determined that various ones of the patents’ claims were invalid for encompassing non-statutory subject matter. For further discussion of this case, see the May issue of Nutter’s IP bulletin. As expected, the case has been appealed to the U.S. Court of Appeals for the Federal Circuit (Case No. 2010-1406).

On October 29, 2010, the U.S. Department of Justice (DOJ) filed an amicus brief in support of the S.D.N.Y. decision that isolated human genomic DNA is not patentable, a position counter to that of the USPTO. The DOJ drew a line between human-engineered DNA, which it believes are patent-eligible, and isolated, but otherwise unmodified DNA, which it believes are not patent eligible. Critics argue in support of the Myriad patents, stating that isolated genes are not merely products of nature and differ from naturally occurring genes.

While the case remains pending, prosecution strategies for DNA-related patents should be carefully considered. Recitation of “isolated” genes or DNA could raise potential issues. Emphasis should perhaps be placed on the non-naturally occurring aspects and associated human-effort, such as difficulties in, and inventive aspects of, isolating, purifying, and characterizing the gene. The use of genes in diagnostic assays might also be an effective strategy, given the Supreme Court’s Bilski decision (discussed above).

    Federal Circuit Expected to Clarify Inequitable Conduct Standards in Therasense Appeal

The March issue of Nutter’s IP Bulletin reported that a three judge panel of the Federal Circuit upheld a finding of inequitable conduct in Therasense, Inc. v. Becton, Dickinson and Co. The Federal Circuit holding was based on an applicant’s characterization of its own prior art reference in proceedings with the European Patent Office (EPO) that were deemed to directly contradict statements made to the USPTO by the applicant regarding the same reference. The statements made to the EPO regarding the reference were found to be material to patentability, and thus the failure to disclose such statements was ruled to be an appropriate basis for finding inequitable conduct. As reported in the May issue of Nutter’s IP Bulletin, on April 26, 2010, the Federal Circuit issued an order vacating the holding of the earlier three judge panel. The Federal Circuit decided to hear the appeal of the decision of the United States District Court for the Northern District of California en banc. In issuing its order vacating the previous opinion, the Federal Circuit presented six issues for the parties to consider for briefing; each of which relates to inequitable conduct. The doctrine of inequitable conduct allows a patent to be rendered unenforceable if it is found that a person associated with the filing and prosecution of a patent failed to disclose information to the USPTO that is material to the determination of patentability and withheld that information with intent to deceive the USPTO.

The six issues specified by the Federal Circuit order are:

1. Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?
2. If so, how? In particular, should the standard be tied directly to fraud or unclean hands?  See Precision Instrument Mfg. Co. v. Auto Maint. Mach. Co.; Hazel-Atlas Glass Co. v. Hartford-Empire Co. (overruled on other grounds by Standard Oil Co. v. United States); Keystone Driller Co. v. Gen. Excavator Co. If so, what is the appropriate standard for fraud or unclean hands?
3. What is the proper standard for materiality? What role should the USPTO’s rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?
4. Under what circumstances is it proper to infer intent from materiality? See Kingsdown Med. Consultants, Ltd. v. Holllister Inc.
5. Should the balancing inquiry (balancing materiality and intent) be abandoned?
6. Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.

The Federal Circuit’s decision to rehear the appeal en banc has been well received, as many in the patent community believe that current rules related to inequitable conduct need to be changed. Many members of the patent community hope that the Federal Circuit will clarify the doctrine of inequitable conduct and, in doing so, help ease the growing burden on applicants that the current rules create with respect to the duty of disclosure. Several amicus briefs have been filed and oral arguments were heard from Plaintiff Abbott (i.e., Therasense), Defendant Becton, Dickinson, Defendant Nova, and the USPTO on November 9, 2010. The decision is expected to provide clarification on both the materiality and intent standard of inequitable conduct.

    Wyeth and the USPTO’s Miscalculation of Patent Term Adjustment

In January, the Federal Circuit decided Wyeth v. Kappos, affirming that the USPTO had been miscalculating, and typically under-calculating, Patent Term Adjustment (PTA). The case was first discussed in the January issue of Nutter’s IP Bulletin. The miscalculations occurred especially in cases where applications were pending for more than 3 years. A patent is valid for 20 years from its filing date; PTA extends the effective term of a patent due to delays in its issuance. Under 35 U.S.C. § 154(b), a patent can receive a term adjustment for, among other things, (a) delays caused by the USPTO in meeting certain examination deadlines and (b) each day that issuance of the patent is delayed longer than 3 years due to delays by the USPTO. These delays are subject to an “overlap limitation,” which says the “the period of any adjustment granted…shall not exceed the actual number of the days the issuance of the patent was delayed.” The dispute in this case centered on the interpretation of how to calculate the actual number of days the issuance of the patent was delayed in an overlap situation. The Federal Circuit sided against the USPTO’s method of calculation, and as a result the decision may give many patent holders an increase in patent term. Patent owners should consider reviewing any PTA calculations provided by the USPTO and compare the USPTO’s calculation to the post-Wyeth calculation method.

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. For more information on this program, see the March issue of Nutter’s IP Bulletin. As of March 2, 2010, PTA calculations should be calculated properly by the USPTO computer systems. Nevertheless, patent owners should continue to monitor their patents to confirm the accuracy of PTA calculations. Further, patent owners should particularly review patents that were issued between September 2, 2009 and March 1, 2010, which is the time period during which PTA calculations were likely not calculated correctly. For patents issued during this time period, applicants have 180 days to petition to correct the PTA. Unfortunately, there is no straightforward way to request PTA recalculation for patents in which more than 180 days have elapsed since the issue date. Applicants should also understand the measures they can take to correct any miscalculated PTA for patents that issue on or after March 2, 2010. Some patent owners are challenging the USPTO for older patents as well. For example, Novartis filed suit in the District of Columbia earlier this year challenging PTA on several patents with grant dates going as far back as 2003.

The spotlight now shining on PTA provides an opportune time to consider simple ways practitioners can limit any loss of PTA. As discussed in the March issue of Nutter’s IP Bulletin, many practitioners are unaware that the filing of an information disclosure statement (IDS) can result in up to a four month loss of PTA. PTA loss can occur when an IDS results in the mailing of a supplemental office action or notice of allowance. PTA loss can also occur in certain situations when an IDS is filed after a response to an office action, after a decision by the Board of Patent Appeals and Interferences (BPAI) or a federal court, or after a notice of allowance. However, any PTA loss that results from filing an IDS can be avoided if the IDS is filed in conjunction with filing a statement under 37 C.F.R. § 1.704(d), which affirms that any cited reference was first cited in any communication from a foreign patent office in a counterpart application and that such communication was not received by any individual designated in 37 C.F.R. § 1.56(c) more than thirty days prior to the filing of the IDS.

    Other IP Highlights During 2010:

• The USPTO initiated and extended the “Green Technology Pilot Program,” which allows for an applicant to petition for his or her application to be examined more quickly if the application pertains to the development of a renewable energy source or energy conservation, or the reduction of greenhouse gas emissions, discussed in both the January and November issues of Nutter’s IP Bulletin.
• The Board of Patent Appeals and Interferences clarified the standard of review for an examiner’s rejection in ex parte Frye, discussed in the May issue of Nutter’s IP Bulletin.
• The USPTO issued 2010 KSR Guidelines Update for the evaluation of obviousness, discussed in the November issue of Nutter’s IP Bulletin.

    Big IP News on the 2011 Horizon:

• The Supreme Court has agreed to hear Microsoft’s appeal in Microsoft Corp. v. i4i Ltd. Partnership, where it will decide whether clear and convincing evidence—or some lesser standard—should apply to evidence presented to a jury about a prior art reference that was not considered by a patent examiner during prosecution. Oral arguments will be heard early this year. For more information, see the discussion in this issue.
• The Supreme Court granted a writ of certiorari in Global-Tech Appliances Inc. v. SEB SA, a case where the Federal Circuit held that a potential infringer can have the necessary intent to commit induced infringement by acting with “deliberate indifference of a known risk.” This case was discussed in the March issue of Nutter’s IP Bulletin. 
• The Supreme Court also granted cert in a case related to patent ownership stemming from the Bayh-Dole Act. In Board of Trustees of the Leland Stanford Jr. Univ. v. Roche Molecular Sys. Inc., the Court will determine the ownership rights of universities in inventions derived from federally sponsored research. This case was also discussed in the March issue of Nutter’s IP Bulletin.

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

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

The Supreme Court issued a per curiam decision in Costco Wholesale Corporation v. Omega S.A. on December 13, 2010. The case concerns Omega’s attempt to prevent Costco from buying authentic Omega watches from resellers abroad and importing them for sale in the U.S. Because the goods at issue are authentic, Omega cannot attack the practice on counterfeiting grounds. Instead, Omega relies on a small copyrighted emblem placed on the underside of every watch to attack Costco’s practice using the right to control distribution of a work that is conferred by the Copyright Act. Costco’s defense hinges on the first sale doctrine, which prevents copyright owners from controlling re-sales of their goods by purchasers. The equally divided court affirmed the 2008 decision of the Court of Appeals for the Ninth Circuit without any opinion. The court’s equal division was possible because Justice Elana Kagan recused herself as a result of her earlier involvement in the case as Solicitor General. The Court’s affirmation lets stand the Ninth Circuit’s decision that copyrighted goods manufactured abroad are not “lawfully made” under the Copyright Act and are therefore not subject to the first sale doctrine. This means copyright owners who manufacture goods abroad can control their importation into the U.S., even after their initial sale. The decision may have far-reaching implications, as it appears to provide more protection to goods manufactured abroad than to those made in the U.S. However, the even split of the court, the absence of an opinion, and the fact that this question remains unresolved with respect to other intellectual property may indicate that this issue has not been considered for the last time.

To read the (very short) Supreme Court slip opinion, click here.

To read the Ninth Circuit opinion, click here.

On November 29, 2010, the Supreme Court granted certiorari to the third patent law case in the current term by accepting Microsoft’s petition in Microsoft Corp. v. i4i L.P. Microsoft is appealing a $290 million verdict from the Eastern District of Texas concerning infringement of i4i’s U.S. Patent No. 5,787,449 by Microsoft’s Word 2003 and 2007 software programs. Microsoft is challenging the clear and convincing evidence standard that has been associated with the invalidity defense under 35 U.S.C. § 282 since the Federal Circuit’s 1984 decision in American Hoist & Derrick Co. v. Sowa & Sons, Inc. Microsoft contends that the correct evidentiary standard should be “preponderance of the evidence” when an invalidity defense relies on prior art that was not originally before the USPTO. The Court’s decision in this case could significantly impact the strength of any patent owner’s case if the burden to prove invalidity is lowered.

To read Microsoft’s petition, i4i’s opposition, and the certiorari amicus briefs, click here.

To read the Federal Circuit’s 2010 decision, click here.

The March and July, 2010 issues of Nutter’s IP Bulletin reported on the USPTO’s Patent Application Backlog Reduction Stimulus Plan, more colloquially known as the “Bump and Dump” program. On November 22, 2010, the USPTO announced that the program is being extended through December 31, 2011, or until 10,000 petitions have been granted, whichever occurs earlier. The program provides an applicant the opportunity to “bump” one application up in the examination queue if they agree to “dump” (i.e., abandon) another pending unexamined application. Applicants should consider reviewing their portfolios and determining if any applications awaiting a first Office Action, or any future filings, are appropriate for this expedited process.

For more details on the extension of the “Bump and Dump” program, click here.

For more details on the “Bump and Dump” program, click here.