IP Law Bulletin

Late last year in Ex Parte Rodriguez (October 1, 2009, Appeal No. 2008-000693), the Board of Patent Appeals and Interferences (BPAI) ruled that a claim in means-plus-function format was invalid under 35 U.S.C. § 112, second paragraph, as being indefinite because structure other than a computer, i.e., an algorithm, was not provided in the specification for performing claimed functions. This precedential decision thus serves as a helpful reminder to patent application drafters of the importance of clearly identifying structure in the specification for every means-plus-function claim element and of carefully considering whether a claim is a means-plus-function claim despite omitting the traditional means-plus-function claim phrase “means for.” The BPAI further determined that non-means-plus-function claims are invalid under § 112, first paragraph, as not being enabled if they do not particularly identify structure, i.e., an algorithm, for performing the claimed functions. Ex Parte Rodriguez also highlights the BPAI’s power to introduce new grounds of rejection, a potential hazard practitioners are prudent to consider in deciding whether to appeal rejected claims.

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

In an effort to reduce the backlog of patent applications, the USPTO has created a temporary additional basis under which a small entity applicant may have an application accorded special status for examination. Applications accorded special status will be placed in front of the Examiner for initial examination more quickly than other applications, but the examination process itself will not include expedited response periods. To take advantage of this program, an applicant who qualifies as a small entity can expressly abandon one application and file a petition seeking special status for a second application. 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 program is now in effect and is being adopted on a temporary basis until February 28, 2010, although the USPTO may choose to extend it.

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

The USPTO has announced a “Green Technology Pilot Program” in which an applicant may have an application accorded special status and thereby be examined more quickly. The pilot program was implemented on December 8, 2009 and is made available to applications pertaining to environmental quality, energy conservation, development of renewable energy resources, and greenhouse gas emission reduction. To participate in the program, an application must have a filing date earlier than December 8, 2009, and the applicant must file a petition to make special with the USPTO before December 8, 2010 and before a first Office Action is issued. There is no fee required for participating in the program, but the USPTO will accept only the first 3000 petitions to make special.

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

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 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 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.

On August 19, 2009, the U.S. Court of Appeals for the Federal Circuit held in Cardiac Pacemakers Inc. v. St. Jude Medical Inc. (Nos. 07-1296 and 07-1347) that 35 U.S.C. §271(f), which concerns enforcement of patent rights against components originating in the U.S. and combined into the potentially infringing product outside the U.S., does not apply to method claims. Thus, U.S. patent applicants should carefully consider claim drafting strategies for method-base inventions to most effectively encompass infringing activity that may not occur entirely within the U.S. Businesses should also be cognizant of current and future business activities that may fall under §271(f) but may nevertheless be non-directly infringing of competitors’ method patent claims.

The U.S. Court of Appeals for the Federal Circuit held en banc on May 18, 2009 in Abbott Laboratories v. Sandoz, Inc., 566 F.3d 1282, that infringement of a product-by-process claim requires showing that an equivalent process was used in making the alleged infringer’s product. Accordingly, the Court rectified a 17 year conflict between its decisions in Atlantic Thermoplastics Co. (970 F.2d 834 (Fed. Cir. 1992) and Scripps Clinic & Research Foundation (927 F.2d 1565 (Fed. Cir. 1991). Writing for the majority, Judge Rader stated that process terms in product-by-process claims serve as limitations in determining infringement, expressly overruling Scripps. With respect to situations where a product whose structure is not fully known or too complex to analyze, the decision explained that “the inventor is absolutely free to use process steps to define this product . . . [and] will not be denied protection. Because the inventor chose to claim the product in terms of the process, however, that definition also governs enforcement of the bounds of the patent right. This court cannot simply ignore as verbiage the only definition supplied by the inventor.” Judge Newman’s dissent noted that “[f]or the first time, claims are construed differently for validity and for infringement,” i.e., product-by-process claims are product claims for validity interpretations but process claims for infringement interpretations.