The patent holder, Myriad, identified the precise location and sequence of two genes, BRCA1 and BRCA2.  Mutations of these genes were determined to be associated with a significant increase in a risk of breast cancer.  Myriad ultimately used the isolated genes to develop a test for breast cancer.  However, they obtained patent claims on the isolated genes themselves.  The issue of whether methods of using the isolated genes to test for breast cancer was not decided.

“Genes” are portions of a DNA molecule that affect certain hereditary traits.  Thus, the claims at issue in Myriad concern isolated DNA sequences.  Techniques for performing the isolation are well known.  The difficulty arises in identifying which genes are relevant for a particular disease or condition (e.g., breast cancer) and the location of the genes.  Myriad identified the location of the BRCA1 and BRCA2 genes on chromosomes 17 and 13 (humans have 22,000 genes on 23 pairs of chromosomes).

Conflicting Perspectives: Chemistry and Biology

In arriving at its holding, the Supreme Court held that isolated genes are not eligible for patent protection because of the well- established rule that “laws of nature” cannot be patented.  In other words, one cannot patent something that simply exists in nature.  However, the Myriad opinion reveals that there are two competing frameworks through which to view the issue of whether an isolated gene is merely a product of nature: 1) chemistry, and 2) biology.

From a chemical perspective, DNA is a very long molecule defined by strands of nucleotides that bond to form a double helix.  A particular gene is only a portion of the molecule.  Thus, the sequence that defines a particular gene does not exist in isolated form in nature.  To obtain the isolated sequence, chemical bonds must be broken.  Thus, chemically, an isolated gene is different from the DNA molecule from which it is extracted.

From the biological perspective, however, the genetic information in the isolated gene sequence is unaltered relative to the DNA molecule from which the gene sequence originates.  The nucleotide sequence is the same as are the proteins that are encoded by the sequence.  Thus, the Supreme Court held that “Myriad did not create anything.  To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.” Slip opinion at 12. The Court went on to hold that “[g]roundbreaking, innovative, or even brilliant discovery does not by itself satisfy the § 101 [statutory subject matter] inquiry.”  Id.

The Court adopted the biological perspective to hold that the isolated gene is merely a product of nature, and therefore, ineligible for patent protection.  The Court explained its rationale as follows:

Nor are Myriad’s claims saved by the fact that isolating DNA from the human genome severs chemical bonds and thereby creates a nonnaturally occurring molecule.  Myriad’s claims are simply not expressed in terms of chemical composition, nor do they rely in any way on the chemical changes that result from the isolation of a particular section of DNA. 

Slip Opinion at 14.

What Is the Impact of Myriad on Biotechnology Companies?

The Myriad opinion acknowledges that the Patent Office has created “reliance interests” by adopting a policy of granting isolated gene patents.  One of the judges in the Federal Circuit Court of Appeals (Judge Moore) found such reliance interests compelling enough to hold that isolated genes should be eligible for patent protection.  However, the Supreme Court disagreed, holding that such concerns are better directed to Congress.  We did a brief search for U.S. patents that claim “isolated DNA” and found that over 2800 of them had been issued.  The actual number of patents impacted by Myriad is likely much higher because of the variations in claim language used to cover isolated genes.

Myriad did not hold that methods of using isolated genes to identify individuals with susceptibility to breast cancer could not qualify for patent protection.  Thus, Myriad and others may be able to protect their discoveries by patenting methods of use.  In addition, the Myriad opinion upheld claims directed to “complementary DNA” or “cDNA” because their nucleotide sequences differ from those in the naturally occurring DNA molecule.  It is unclear from the opinion how lucrative a monopoly on a cDNA would be and whether it would prevent others from exploiting the basic discovery of the location and identity of the relevant genes for detecting breast cancer.

Some commentators have noted that trade secret law also provides an important means for Myriad to monetize its investment in discovering the BRCA1 and BRCA2 genes.  http://www.patentlyo.com/patent/2013/06/myriad.html.  One commentator indicated that Myriad maintains a database of gene mutations used in its testing as a trade secret.  Id. The database may provide a competitive advantage notwithstanding the loss of patent protection.  Myriad suggests that perhaps biotechnology companies may want to consider protecting isolated genes and their biological significance as trade secrets and avoid disclosing them in patent applications.

A lot has already been written about the recently published decision of the en banc Federal Circuit Court of Appeals in CLS Bank International, et al. v. Alice Corp Pty. Ltd., Case No. 2011-1301 (Fed. Cir. May 10, 2013).  By and large, the opinion is a disappointment because it fails to provide any practical guidelines for advising clients regarding whether and under what circumstances business methods and software will be patentable.  The opinion of the Court was a brief per curiam opinion holding, without explanation, that the patent holder’s method and “computer readable medium” claims were not patentable.  The Court split on whether system claims were patentable.  The Court issued five different opinions concerning the judges’ varying views on the proper guidelines for deciding statutory subject matter issues.

CLS Bank involved four patents that describe a computerized trading platform for conducting financial transactions in which a third party (e.g., an escrow agent called an “exchange institution”) settles obligations between a first and second party to eliminate “settlement risk” (i.e., the risk that only one of the two parties will pay its obligations).  Here is a representative method claim:

33. A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and

(d) at the end-of-day, the supervisory institution instructing ones of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

A majority of the en banc Court agreed this claim was not eligible for patent protection despite disagreeing on the reasoning.  A majority also agreed that the claims directed to a “computer readable medium” with software instructions for performing the method were not patent eligible.  However, the outcome of this case again begs the question:  Are business methods actually eligible for patent protection?

In Bilski v. Kappos, 130 S.Ct. 3218 (2010), the Supreme Court held that business methods are not categorically excluded from patent protection under the Patent Statute.  At the same time, however, it held that “abstract ideas” are not eligible for patent protection and invalidated a patent claim directed to a method of hedging against the risk of price changes as being impermissibly “abstract.”  Navigating the contours of the “abstract idea” exception has proven to be difficult.

Recent cases dealing with whether business methods are eligible for patent protection seem to consistently turn on the extent to which they include meaningful computerization limitations.  Prior to Bilski, the Patent Office routinely required patent claims to include a “machine or transformation” in order to be eligible for patent protection, which led patent attorneys to draft claims with computerization limitations.  In some cases, the business method would be implemented as software and described as computer executable instructions stored on a computer readable medium. In other cases, the business method might be a “system” implemented across a network of databases and servers.  That being said, the Supreme Court and the Federal Circuit have also made clear that simply adding computer limitations to business method claims is not enough, especially if the computerization aspects of the claims are standard and well-known.

Bilski and CLS Bank raise the following question:  When, if ever, would a pure business method not be deemed an “abstract idea”?  The CLS Bank claim above has detailed limitations concerning the creation of “shadow credit records” and “shadow debit records” and ensuring that the balance of the shadow credit record does not fall below the balance of the shadow debit record so that the “exchange institution” can enforce the obligations of the parties.  At first blush, this seems to be fairly detailed and not merely “abstract.”  Yet, one of the concurrences in CLS Bank characterized the claim as covering “The concept of reducing risk by facilitating a trade through third party intermediation,” which it claimed was a “disembodied concept.”  In similar cases, the Federal Circuit has invalidated as “abstract” certain business method claims that either lacked computer limitations or included only conventional computer limitations.  See Fort Props., Inc. v. Am. Master Lease LLC, 671 F.3d 1317 (Fed. Cir. 2012) (holding claims directed to an investment tool for enabling property sales without incurring tax liability were not patent eligible);  Bancorp  Servs., LLC v. Sun Life  Assur. Co. of Canada, 687 F.3d 1266 (Fed. Cir. 2012) (life insurance policy management system claims were not patent eligible notwithstanding computer limitations); DealerTrack, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012) (computer aided method of managing a credit application was not patent eligible). 

In 2011 the Federal Circuit held that certain business method claims were patent eligible in Ultramercial, LLC v. Hulu, 657 F.3d 1323 (Fed. Cir. 2011).  In Ultramercial, the asserted patent claims were directed to a method for monetizing and distributing copyrighted products over the internet.  The Court noted that the claims related to the “idea that advertising can be used as a form of currency,” but held that the patent in suit “claim[ed] a particular method for monetizing copyrighted products,” and that many of the claimed steps “are likely to require intricate and complex computer programming.”  Ultramercial, 657 F.3d at 1328.  However, Ultramercial was ultimately vacated by the Supreme Court, which ordered that the Federal Circuit reconsider its opinion in view of Mayo v. Prometheus.

Even if the Federal Circuit affirms its 2011 holding in Ultramercial, it seems that pure business method inventions are likely not patent eligible.  The cases suggest that, for all practical purposes, business method claims require detailed and novel computer features that do more than speed up the types of communications, calculations, and information transfer that can be done without a computer.  While none of the cases explicitly acknowledge such a requirement, their holdings collectively suggest it.  On its face, the exclusion of “abstract ideas” from patent protection would not seem to necessarily deprive pure business methods of patent protection, but the courts seem willing and able to reductively characterize pure business methods (or those with trivial or standard computer implementation features) as merely “abstract.”  As a result, it is hard to see how a pure business method could ever be eligible for U.S. patent protection.

In order to deal with the current law of patent eligibility, patent applicants who seek to protect business methods would be well advised to include in their applications claims that are directed to specific implementation details, in particular, computer or otherwise technological implementation details.  It is also advisable to build a case in the patent application for the significance of the computer or technological implementation in overcoming problems in the prior art.  That said, even if such a strategy survives the scrutiny of a Patent Office examiner, it may not survive judicial  scrutiny if the issue goes to court.

]]> http://hanseniplaw.com/are-business-methods-really-patentable-in-the-united-states/feed/ 0 http://hanseniplaw.com/improving-patent-quality-%e2%80%93-reining-in-statements-of-intended-use-in-patent-claims/ http://hanseniplaw.com/improving-patent-quality-%e2%80%93-reining-in-statements-of-intended-use-in-patent-claims/#comments Mon, 15 Apr 2013 16:38:30 +0000 stevehansen http://hanseniplaw.com/?p=1695 There has been a lot of discussion in the patent world recently about how to improve patent quality.  Much of this discussion has been motivated or at least strongly influenced by the surge in patent litigation brought by “patent trolls.”  As we discussed last month, Congress is attempting to reduce the leverage that patent trolls enjoy in patent litigation via the SHIELD Act.

Improving the degree of predictability and certainty in patent litigation is another way to curb perceived abuses of the patent litigation system, including by patent trolls.  This month we will address one way in which this can be done: by eliminating non-limiting “statements of intended use” in patent claims.

The Problem With Statements of Intended Use

The claims of the patent define the scope of what is protected.  A patent claim is infringed if each limitation of the claim is practiced, either literally or under the doctrine of equivalents.  However, one vexing problem that occurs in many lawsuits concerns the issue of whether certain language in patent claims constitutes an actual limitation or instead is merely a “statement of intended use”.  A true statement of intended use, as the name suggests, describes a manner in which a claimed invention may be used, but does not limit the claim and need not be practiced in order to find infringement.  However, in some cases, language that appears to be a mere statement of intended use may be deemed limiting by the courts.  This possibility produces uncertainty in patent litigation, with parties disagreeing over whether particular language is actually limiting.  Here is an example of a claim that includes a statement of intended use from a 1998 Federal Circuit case:

21. A biopsy needle for use with a tissue sampling device having a housing with a forward end, a first slide mounted for longitudinal motion within said housing, and a second slide mounted for longitudinal motion within said housing, said biopsy needle comprising:

a hollow first needle having proximal and distal ends;

a second needle extending through said hollow first needle and freely slidable therewithin, said second needle having proximal and distal ends;

a first head mounted to said proximal end of said hollow first needle, said first head including first flange means associated therewith for coupling said hollow first needle to said first slide for longitudinal motion both toward and away from said forward end of said housing; and

a second head mounted to said proximal end of said second needle, said second head including second flange means associated therewith for coupling said second needle to said second slide for longitudinal motion both toward and away from said forward end of said housing.

C.R. Bard, Inc. v. M3 Systems, Inc. 157 F.3d 1340, 1348-49 (Fed. Cir. 1998).  The word “for” in a claim is often a signal that the following language may merely be a statement of intended use.  The Bard claim states that it is for a biopsy needle.  However, the underlined limitations concern a housing that is used with the biopsy needle, not the needle itself.  If the housing features are limitations, the claim can only be directly infringed by someone who supplies the needle and the housing.  If the housing features are not limitations, a needle supplier can be held liable for infringement without supplying a housing.  Also, if the housing features are not limitations, they cannot be considered in distinguishing the prior art.

Statements of intended use typically, but not always, arise in claim preambles (the first paragraph of the claim before the word “comprising”).  Statements of intended use may be deemed to be actual claim limitations under certain circumstances.  For example, if the intended use was relied upon to distinguish the prior art during prosecution of the patent, it may be deemed limiting.  Also, if the other portions of the claim refer back to a statement of intended use in the preamble, the statement may be deemed limiting.

The law governing the treatment of statements of intended use produces a great deal of uncertainty during patent litigation as to whether and how such statements may limit claim scope.  With respect to the Bard biopsy needle claim, the Court ultimately held that the housing limitations were not limiting, but that they “provide[d] reference points . . . that aid in defining the needles.”  Id. at 1349.

In May of last year, the Board of Patent Appeals and Interferences (now the Patent Trial and Appeals Board) reviewed a series of appeals in which statements of intended use were included in the body of patent claims and concluded that they were not limiting.  Here is an example from one of the appeals:

1. A networked media station comprising:

at least one network interface; and

at least one multimedia interface;

wherein the networked media station is configurable to receive multimedia data pushed from a multimedia server via the at least one network interface and output the multimedia data to an entertainment de-vice attached to the at least one multimedia interface.

Ex parte Kearney, 2012 Pat. App. LEXIS 2675 at *1 (BPAI 2012).  The Board held that the underlined and bolded language “merely expresses an intended use of the recited ‘networked media station’.”  Id. at *5.  As a result, the Board refused to consider whether the prior art media stations actually received multimedia data in the described way, holding that “the disputed limitation of ‘multimedia data pushed from a multimedia server’ is not positively recited as actually occurring . . . .”  Id.

The problem with this type of claim language is that in many instances, patent examiners do not force applicants to commit to whether features in statements of intended use are meant to limit the claim unless the features are required to distinguish a particular piece of prior art.  If the issue is not addressed during prosecution, once the patent issues the patent holder is free to argue that the language is or is not limiting depending on its particular lawsuit targets.  In the Kearney case, had the patent issued with the foregoing claim, the patent holder would have been able to assert that those who merely supply network media stations directly infringe the claim as long as users use the media station with a multimedia server as claimed.  At the same time, the patent holder would be able to distinguish prior art that does not disclose the claimed relationship between the network media station and multimedia server.  We have seen this sort of claim construction dynamic play out in several patent troll cases to the advantage of the troll and the disadvantage of the accused infringers.  Many of these cases involved multi-component computer or network systems in which the alleged novelty lies in the interaction between the various components, not in any one component itself.  The trolls gain the benefit of the intended use in distinguishing the prior art while still being able to sue companies who supply only one component in the claim for direct infringement.

Forcing Patent Applicants to Commit During Prosecution

If a patent applicant does not intend to limit its claims to an intended use, there would seem to be few benefits—and significant disadvantages—in allowing it to include statements of intended use in its claims.  If the Bard claim was intended to cover only a biopsy needle, the applicant could have readily described the needle as a stand-alone object without introducing the housing.  If the Kearney claim was intended to cover a system comprising a networked media station and multimedia server, it could have positively recited both components.

One way to minimize the ambiguity and uncertainty that statements of intended use produce is to have patent examiners require applicants to commit to the intended scope of their claims during prosecution, even if the prior art does not otherwise require the issue to be raised.  If the applicant wishes to limit the claims to an intended use, the claims should positively recite those features and make clear that they are limiting.  Otherwise, the statements should be removed from the claims.  There is little justification for allowing patents to issue with this type of ambiguous claim scope.   The resulting improvement in the clarity of patent claims would reduce the ambiguity and uncertainty that many patent trolls exploit to their advantage.

Some patent holders may contend that certain inventions are best described in terms of the components with which they are “configured to” or “adapted to” interact and that the language in cases like Kearney is neither a mere statement of intended use or a positive recitation of an entire system (i.e., the network media station and the multimedia server).  The Bard court seemed to take this sort of middle of the road approach.  The Federal Circuit has noted that “In common parlance, the phrase ‘adapted to’ is frequently used to mean ‘made to,’ ‘designed to,’ or ‘configured to,’ but it can also be used in a broader sense to mean ‘capable of’ or ‘suitable for.’”  Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., 672 F.3d 1335, 1349 (Fed. Cir. 2012).  In many cases, patents that use this sort of language do not clearly indicate which meaning is intended.  In such cases as well, it would be beneficial to require the applicant to commit to one position or another because it may significantly impact the scope of the applicant’s claims and the manner in which they relate to potential accused products and the prior art.

It would be inefficient to force patent examiners to require applicants to define or explain the meaning of every term in their claims, especially when their meaning is not called into question by the prior art.  However, statements of intended use and language such as “configured to” or “adapted to” occur frequently and often produce unnecessary ambiguity.  Thus, this is one area where it would be helpful and not necessarily too burdensome to flesh out the applicant’s intended claim constructions during prosecution.

One important aspect of the Patent Office’s Rules for implementing the AIA is that they put the burden on patent applicants to inform the Patent Office if a particular patent application is subject to the First Inventor to File regime.  Specifically, if a non- provisional application filed after March 16, 2013 claims the benefit of an application filed before that date and includes any claims with an effective filing date after March 16, 2013, the applicant must so inform the Patent Office within four months of filing the application.   The text of the new rule is set forth in 37 CFR 1.78(a)(6) and can be viewed here.  If the application does not include such a claim, the applicant does not need to do anything.

This requirement will undoubtedly serve as fodder for inequitable conduct claims for patents issuing from transition applications.  In some cases, determining a claim’s effective filing date can be tricky, especially if the earlier priority application discloses a concept broadly but without much detail.  In that case, the practitioner will have to make a judgment call as to whether the earlier disclosure is sufficient enough to be enabling.  While some may be tempted to adopt a default strategy of identifying patents as subject to First Inventor to File, that may not be advisable.  Whether the First Inventor to File or First to Invent scheme is more likely to result in the issuance of a patent may differ in different cases because the First Inventor to File system both restricts and expands the scope of what is prior art in different ways.  As a result, incorrectly identifying an application as being subject  to the First Inventor to File system may be deemed “material to patentability” because it may exclude prior art that would have otherwise applied under the First to Invent system.

For example, at least as interpreted by the USPTO, the on-sale bar of the AIA only pertains to public sales and excludes those that are private.  Fed. Reg. Vol. 78, No. 31 at 11060 (Feb. 14. 2013).  In addition, a patent or patent application that is commonly owned with the application under examination may be removed as prior art for anticipation purposes, not merely for obviousness purposes as has been the case under the First to Invent regime.  Id. at 11072.  Therefore, in some cases it may be arguable that an application was allowed only because it was identified as being subject to the First Inventor to File regime, thus opening the door to a potential inequitable conduct claim if the identification was incorrect.

The Patent Office has made it easy to identify applications as being subject to the First Inventor to File regime by including a check box on the Application Data Sheet form for making the identification.  In addition, PAIR has been revised to indicate whether a particular application is subject to the First Inventor to File or First to Invent regime as illustrated below (click on the image to enlarge):

It may be advisable to document the reasoning behind identifying (or not identifying) a particular transition application as being subject to the First Inventor to File Regime.  This will help establish that there was no intent to deceive the Patent Office if an application is erroneously identified (or not identified) as being subject to the First Inventor to File regime.  It is unclear whether and to what extent examiners will independently try to determine the prior art regime that is applicable to a particular application.  Thus far, the PTO has stated that it “does not plan to provide a specific explanation in an Office action of why the pre AIA first to invent provisions or the AIA first inventor to file provisions apply to an application unless the matter is called into question”.  Id. at 11061. The PTO has also indicated that it plans to have staff in each Technology Center to assist in determining whether an application is subject to the First Inventor to File system and that an appeal would ultimately be required to resolve a dispute between an examiner and application as to which regime applies. Id. 

Figuring out whether the AIA or pre-AIA law governs any particular patent application is trickier than you may think.  In some cases, it will depend on what you do to the claims during prosecution.  Here’s how it breaks down:

1)              Applications Filed Before March 16, 2013

U.S. patent applications filed before March 16, 2013 are subject to the current first to invent patentability rules.  This is true even if claims are added to the application or amended after March 16, 2013.  The Patent Office has indicated that Requests for Continued Examination will not be treated as new applications for purposes of determining whether an application was filed before or after March 16.  Nor will the entry of a Patent Cooperation Treaty (PCT) application into the U.S. national phase after March 16 be subject to the first inventor to file provisions if the PCT application itself was filed before March 16.

2)            Applications Filed After March 16, 2013

This one is fairly straightforward also.  If an application is filed after March 16, 2013 and does not claim priority to an application filed before that date, the first inventor to file provisions of the AIA will govern its examination.

3)            Applications Filed After March 16, 2013 Which Claim Priority to Applications Filed Before March 16, 2013

Here’s where things get tricky.  The nature of any claim amendments filed after March 16, 2013 may move you from the first to invent to the first inventor to file regime, in particular if you are dealing with non- provisional applications that claim the benefit of provisional or foreign applications filed before March 16, 2013 or continuations-in-part (CIP) of pre- March 16, 2013 applications.

Here is an example.  Suppose you filed a provisional application on March 17, 2012 and now file a non-provisional on March 17, 2013 which claims the benefit of the provisional application’s filing date.  Which law will apply in examining the non-provisional application?  The answer is that it depends on the claims submitted in the non-provisional application and whether they are fully supported by the provisional application.  If a claim is submitted that is not supported by the provisional, its “effective filing date” will be the date that the non-provisional application was filed, not the provisional application.  In that case, the entire non-provisional application will be subject to the first inventor to file law, not just the claim with the post March 16, 2013 effective filing date.  Here’s how the Patent Office explains the rule in the examination guidelines:

If there is ever a single claim to a claimed invention having an effective filing date on or after March 16, 2013, AIA 35 U.S.C. 102 and 103 apply in determining the patentability of every claimed invention in the application.  This is the situation even if all remaining inventions have an effective filing date before March 16, 2013, and even if the claim to a claimed invention having an effective filing date after March 16, 2013 is canceled.

Federal Register, Vol. 78, No. 31 at 11083 (Feb. 14, 2013) (emphasis added).

A true “continuation” or “divisional” application filed after March 16, 2013 and claiming priority to a pre March 16, 2013 application should be subject to the first to invent system because by definition any claims in these applications must be fully supported by the earlier application.  This is not necessarily the case for continuation-in-part applications because, by definition, they include some subject matter that was not present in the earlier application.  Thus, a continuation-in-part of a pre-March 16, 2013 application may have claims with effective dates falling before or after March 16, 2013.

4)            Applications with Some Claims Having Pre-March 16, 2013 Effective Filing Dates and Other Claims Having Post-March 16, 2013 Effective Filing Dates

There is an additional wrinkle.  Under current law, 35 U.S.C. 102(g) forbids issuing a patent if someone else invented what is claimed prior to the applicant (and did not abandon, suppress or conceal it), regardless of whether the subject of the prior invention was disclosed in a patent, patent application or a product that was publicly used or sold.  Since current Section 102(g) is essentially a “first to invent” rule, you might think it inapplicable to patent applications that are subject to the AIA’s first inventor to file rules.  That is not necessarily the case.

Even though a claim amendment may trigger the applicability of the first inventor to file rules, the application will also remain subject to the prior invention provision of current 35 U.S.C. 102(g) if the application (1) contains or ever contained a claim with an effective filing date prior to March 16, 2013, or (2)is ever designated as a continuation, divisional, or continuation-in-part of an application that contains or ever contained a claimed invention with an effective filing date before March 16, 2013.  Thus, applications that include some claims with pre-March 16, 2013 effective filing dates and other claims with post-March 16, 2013 effective filing dates will be subject to the current Section 102(g), as will patents issuing from them.  Such applications and patents will not be subject to the other provisions of current Section 102. These “mixed claim” applications and patents essentially suffer the burdens of the first to file system without enjoying the benefits of the system because in order to get a patent, the inventor must be both the first to invent and the first inventor to file.

As the foregoing suggests, the process of sorting out whether the AIA or pre-AIA law applies to any particular patent application may be a thorny one.  As the Patent Office put it, “care must be taken to accurately determine whether AIA or pre-AIA 35 U.S.C. 102 and 103 applies to the application.”  Id. at 11084.

There may be another or an additional way to improve patent quality: putting teeth into the enablement requirement during examination.  In our experience, one key issue with “patent quality” concerns the scope of the claims relative to the described embodiments.  In many cases that we have seen which involve questions of patent quality, a patent holder asserts claims against products or methods that bear little relationship to the disclosed embodiments.  This has been especially true in cases involving “non-practicing entities” or “patent assertion entities.”

Under U.S. Patent Law, the full scope of the claimed invention must be enabled. In Sitrick v. Dreamworks, LLC, et al., 516 F.3d 993 (Fed. Cir. 2008), the Federal Circuit granted summary judgment of invalidity on the grounds that the asserted patent claims covered multiple embodiments but were enabled only as to one.  The claims involve integrating a user’s audio signal or video image signal into a pre-existing video image signal.  The described embodiments concerned only video games.  However, the specification stated that the invention could be used for movies.  The Federal Circuit ultimately held that because the claims covered video games and movies, they were invalid for lack of enablement because the specification did not teach one skilled in the art how to use the invention with movies.

All of this may be well and good, but because of the way U.S. Patent Law is applied, the accused infringer in Sitrick bore the burden of proving a lack of enablement by clear and convincing evidence. The clear and convincing evidence standard is applicable to invalidity challenges and is higher (more stringent) than the preponderance of the evidence standard that the patent holder must meet to prove infringement.  However, one may ask why the Patent Office did not raise the issue of enablement during prosecution of the patent in Sitrick, especially if the claim language and specification suggested that the claims could be read on movies or other embodiments other than the video game embodiment that was described.

In our experience, the Patent Office rarely raises enablement challenges, at least outside of the so-called “unpredictable arts” such as biotechnology or chemistry.  The Manual of Patent Examining Procedure (“MPEP”) provides detailed guidelines for addressing enablement challenges during prosecution.  MPEP 2164.01.  However, in our experience, the issue is rarely raised in the mechanical, software, or electrical arts during prosecution.  Examiners are directed to apply the “broadest reasonable interpretation” during examination (MPEP 2111).  However, the particular interpretation is rarely articulated in a direct way.  Instead, it is usually articulated implicitly by an examiner’s prior art rejections which reveal how the claims are being read on the prior art.  While that may suffice when there is close prior art, what happens when there is no close prior art?

It can be difficult to examine claims for enablement during an ex parte patent prosecution because enablement standard is “undue experimentation”, i.e., claims are not enabled if undue experimentation would be required to practice the full scope of the claimed invention.  The Patent Office is not in a position to carry out the type of testing or analysis that is often required to determine what level of experimentation would be required.  Thus, it seems that in many cases, at least outside of the “unpredictable arts” the examination process focuses almost exclusively on prior art invalidity or obvious issues of claim indefiniteness.  The patent holder benefits from this weakness in the ex parte prosecution process because patents are presumed valid and an accused infringer’s burden of proof for proving a lack of enablement is the same as it is for any invalidity defense, even though the Patent Office is often unable to thoroughly examine for enablement.  In many of the cases we have seen, it is unclear whether or to what extent enablement was even considered during the ex parte examination process.

Perhaps one way to address the problem of issuing patents with excessively broad claims is to put more teeth back into the enablement requirement.  One way to do this would be to require examiners to compare the claims to the specification and to identify undisclosed (or poorly described) embodiments upon which the claims may read.  In those cases where the disparity warrants it, examiners could ask Applicants to explain whether they contend that the claims cover such undisclosed embodiments, and if so, how the application enables them.

The authority for allowing examines to make this type of request appears to be provided by the “Requirements for Information” rule set forth in 37 C.F.R. § 1.105.  The rule does not allow examiners to request opinions or to force applicants to develop new information–such as by conducting experiments–that does not already exist.  However, the rule does allow examiners to require applicants to point out which specific parts of an application provide enablement for particular claim elements and the meaning that applicants ascribe to claim elements.  Thus, it seemingly would allow examiners to flesh out enablement problems and use an applicant’s responses to determine if an enablement rejection should be made.  It would also create a more detailed record of the meanings ascribed to claim language, which would be helpful during claim construction proceedings.

The current system allows patent holders to profit from the weakness of the examination process with respect to enablement or other validity issues that are not easily addressed in ex parte proceedings (including other issues such as inventorship and the on sale/public use bars).  Patent holders are able to obtain broad patents that may not be enabled while still enjoying the same presumption of validity and burden of proof that they enjoy when faced with any invalidity challenge in court. 

In our experience, foreign patent offices pay more attention to the relationship and relative breadth between the claims and the specification.  This seems more likely to prevent the issuance of patents with claims that encompass non-enabled embodiments and the leverage that patent holders get from asserting broad yet potentially invalid patents in infringement proceedings.  Perhaps it’s time that the PTO considers paying more attention to these issues as well.

The answer is “maybe,” and the circumstances surrounding the abandonment need to be carefully vetted.  Otherwise, the subject patent or a patent issuing from the subject application may be unenforceable due to inequitable conduct.  In particular, it is important to sensitize clients to this issue so that they are aware of the seriousness of the statements that they make (or that counsel makes on their behalf) to the Patent Office in seeking revival.

There are two types of “petitions to revive” that can be used to revive an abandoned U.S. patent application or issued patent.  The first type of petition is a petition to revive for “unavoidable” abandonment.  The second type of petition is a petition to revive for “unintentional” abandonment.  A petition to revive for unavoidable abandonment requires a stringent showing that the abandonment could not have been avoided, which is far more difficult than the showing required for a petition to revive for unintentional abandonment.  In addition, the USPTO fee for a petition to revive for unavoidable abandonment is one-third of that for a petition to revive for unintentional abandonment.

Both petitions require that the applicant submit the response that was due at the time of abandonment (e.g., the office action response or issue fee payment).  The showing required to establish that abandonment was “unavoidable” is so stringent that many times it is not worth the time and effort (or attorney’s fees) required to attempt it.  According to the Manual of Patent Examining Procedure (MPEP):

A showing of unavoidable delay will (in addition to the above) require: (1) evidence concerning the procedures in place that should have avoided the error resulting in the delay; (2) evidence concerning the training and experience of the persons responsible for the error; and (3) copies of any applicable docketing records to show that the error was in fact the cause of the delay.

MPEP Section 711.03(c)II(C).  The MPEP further notes that petitions to revive for unavoidable abandonment are “significantly less likely to be grantable” than those for unintentional abandonment.  Id. 

In sharp contrast, the Patent Office rarely requires any sort of factual showing for a petition to revive for unintentional abandonment:

While the Office reserves the authority to require further information concerning the cause of abandonment and delay in filing a petition to revive, the Office relies upon the applicant’s duty of candor and good faith and accepts the statement that “the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition pursuant to 37 CFR 1.137(b) was unintentional” without requiring further information in the vast majority of petitions under 37 CFR 1.137(b).

Id.  Clients often are inclined to take a liberal view of the term “unintentional,” and may consider it only from the perspective of whether they currently intend for the application or patent to be abandoned, which is never the case when revival is being sought.  Although the Patent Office will not necessarily ask about it, the facts surrounding the abandonment must indicate that it was truly “unintentional.”  Otherwise, the petition may be “materially false.”  The MPEP points out several situations where an applicant decides not to respond to an office action or pay a maintenance fee which result in an abandonment that is not properly considered “unintentional”:

A) the applicant does not consider the claims to be patentable over the references relied upon in an outstanding Office action;

(B) the applicant does not consider the allowed or patentable claims to be of sufficient breadth or scope to justify the financial expense of obtaining a patent;

(C) the applicant does not consider any patent to be of sufficient value to justify the financial expense of obtaining the patent;

(D) the applicant does not consider any patent to be of sufficient value to maintain an interest in obtaining the patent; or

(E) the applicant remains interested in eventually obtaining a patent, but simply seeks to defer patent fees and patent prosecution expenses.

Id.   Whether an abandonment is truly intentional will typically not be considered by the Patent Office.  Instead, the issue will arise if a patent is obtained (or revived) and an infringement suit is filed based on it.  At that point, you should expect an accused infringer to seek discovery of the circumstances that led to the abandonment.  If the evidence indicates that the abandonment was actually intentional, the infringer will likely argue that the patent should be held unenforceable for inequitable conduct.  Keep in mind that the entire delay between the due date of the required reply (e.g., the office action deadline or maintenance fee deadline) must have been unintentional.

An example of what can occur if a petition to revive is not properly vetted is provided by Network Signatures, Inc. v. State Farm Mutual Insurance Co. (Case No. 11-00982- JVS, C.D. Cal. 2012).  In Network Signatures the U.S. District Court for the Central District of California held a patent unenforceable for inequitable conduct based on an improper petition to revive for unintentional abandonment.  The patent-in-suit went abandoned due to a delayed maintenance fee payment.  Discovery in the case showed that the decision not to pay the maintenance fee was deliberate and that at the time the petition to revive was filed, there was no evidence to suggest that a mistake had been made in deciding not to pay the maintenance fee.  A copy of the decision can be obtained here.

Cases like Network Signatures illustrate why the decision to seek revival of a patent or patent application should not be made lightly.  Without proper guidance, clients may readily attest that an abandonment was “unintentional” even though the circumstances do not warrant it.  It is indeed a pyrrhic victory to revive a lapsed patent or patent application only to find out that enforcement is not possible because of an improper petition to revive.  Similarly, when performing due diligence reviews of patent portfolios, it may be important to investigate any petitions to revive that were filed for patents being purchased to ensure that the patents will be enforceable.

The shift to a first inventor to file system represents a significant change in U.S. Patent Law that is intended to better harmonize U.S. standards for patent eligibility with the rest of the world.  Under first inventor to file, as between two competing inventors who come up with the same invention, the first one to file a patent application will be eligible for a patent.  Under the existing “first to invent” system, the first inventor to reduce an invention to practice is entitled to a patent unless a competing inventor conceived of the invention first and was diligent in reducing the invention to practice from the time the first inventor conceived of it.

Although the change in the law is significant, it is not clear that it will necessitate any fundamental shifts in how companies prepare and prosecute patent applications.  However, some changes in filing and prosecution strategies are advisable.

Clearly, it is advisable to file patent applications as early as possible under the first inventor to file system, but that has also been the case under the first to invent system.  Under the first to invent system, if two competing inventors seek patents for the same invention, interference proceedings are used to determine which inventor has priority, and therefore, is entitled to the patent.  Interference proceedings are costly litigation proceedings handled by an administrative law judge in the Patent Office.  Thus, it has always behooved inventors to file for patents early because interferences are a difficult and sometimes cost-prohibitive remedy.  In addition, interference proceedings require conflicting patent claims, and the first to invent system prohibits adding conflicting claims to a patent application if they were published more than one year earlier in another inventor’s application.  As a result, under the current system, the first inventor may still be foreclosed from obtaining patent claims that he would otherwise have been entitled to if he was unaware of their earlier publication in a  competing inventor’s patent application.

Because of the ever increasing globalization of the economy, many companies seek patent protection outside of the United States, which means that they have been living with a first to file system for some time.  For these companies, the incentives to file quickly and beat competitors to the Patent Office have already existed because of the importance of foreign patents to their businesses.

That said, there are some things companies can do to better position themselves against their competitors under the first inventor to file system.  Because most, if not all companies, are operating under some sort of resource constraints, under the first inventor to file system, it will be more important to develop a system for prioritizing the preparation and filing of patent applications.  Unless money and time are unlimited, it is not possible to file everything more quickly simply because the law has changed.  Here are some questions that can be used to prioritize filings:

1.  How Active Are Competitors in the Technology?—Some technologies are highly competitive from a patenting stand point, with  multiple players working on solving the same problems at the same time.  In this type of environment, it is more likely that multiple inventors will come up with the same invention at the same time.  Thus, a higher priority should be assigned to filing quickly for inventions in highly competitive technology areas.

2.  How Important Is Patent Protection for the Invention?  Of course, this is a question that should be asked under the first to invent system as well.  However, one consideration in prioritizing filings is the significance of not obtaining a patent if a competitor files first.

 3.  How Damaging Would It Be If Another Patented the Invention?  This question relates to number 2, but considers it from a defensive stand point.  If another company were to patent the invention, what would it do to your market share?  Are good design-around options available that would allow you to still effectively compete?

4.  Would It Be Better to Publish the Invention Defensively than to Seek a Patent?  It is less expensive (and time consuming) to publish an article that can be used to prevent others from patenting an invention than to seek a patent for it. In addition, the AIA provides a one year grace period to file patent applications if the invention is published by the inventors or those who obtained the subject matter directly or indirectly from the inventors.  Thus, if you ultimately decide that you do want a patent, you may not be foreclosed from doing so if you published the invention defensively less than one year prior to filing a patent application.

5.  How Likely Is it that a Patent Will Be Obtained?  This is another consideration that applies under the first to invent system as well, but those applications with a relatively lesser chance of success should be assigned a lower priority than those with a relatively greater chance of success.

In addition to prioritizing filings, under the first inventor to file system, it is advisable to make more frequent application filings as an invention develops.  Inventions often go through an evolution from making a core discovery to developing critical implementation details to developing improvements.  One issue that companies face now is determining when to file patent applications as an invention evolves.  Under the first to invent system, this was less of a problem because if a competitor filed for a patent on a refinement or development, you could still obtain priority by proving prior inventorship.  Under the first inventor to file system, that is no longer the case.  Therefore, as different milestones are reached in the evolution of an invention, you will want to more closely consider whether each of them merits a new patent application filing.

One strategy that may be worth pursuing is to file multiple provisional applications, starting with one that discloses the basic invention and following it up with others during the one year following the filing of the first application.  Provisional application filing fees are not steep, and you can incrementally add to the first application as new developments occur.  A non-provisional application and foreign applications would then be filed within one year of the earliest filed provisional application so that the
priority can be claimed to each provisional in the chain.

Under the first inventor to file system, filing a provisional application earlier in the invention development process may also be a good idea.  In general, a provisional application is only as good as what it actually discloses.  However, it is difficult to predict how thorough a provisional application’s disclosure will have to be in order to survive a challenge later on, or whether such a challenge will even be made.  In general the thoroughness of a provisional application will not even become an issue unless prior art surfaces which has an effective date after the application was filed.  However, there will be greater risk in waiting to file under the new system.  Thus, under the first inventor to file system, it is better to err on the side of filing a provisional that is insufficiently developed than to wait and have a competitor win the race to the Patent Office.

There is something of a conundrum in the way the courts apply the doctrine of equivalents which was discussed but not resolved by the Federal Circuit in Deere & Co. v. Bush Hog, LLC this past week. A copy of the opinion can be obtained here.

In 1997 the Supreme Court addressed the doctrine of equivalents in the Warner-Jenkinson decision and explained that the doctrine must be applied on an element-by-element basis.  In other words, it is not enough to show that an accused product is equivalent to a patent claim overall. Instead, the doctrine must be applied to individual elements of the claim and cannot be applied so as to “effectively eliminate an element in its entirety.” The application of the doctrine of equivalents in a way that would eliminate a claim element in its entirety is often referred to as “vitiation”.  In other words, the doctrine of equivalents may not be applied so as to “vitiate” or “write-out” a claim element.

The doctrine of vitiation is important in patent infringement cases because vitiation it allows courts to preclude patent holders from arguing infringement under the doctrine of equivalents to the jury.  However, by definition the doctrine of equivalents only comes into play when a claim element is “missing.”  In some sense, there is always an aspect of a claim that is necessarily “vitiated” when the doctrine of equivalents is applied.  So, how can courts apply vitiation without allowing it to effectively swallow the entire doctrine of equivalents?

In Deere the Federal Circuit acknowledged this problem and then did little to solve it.  The patent claim at issue involved a “rotary cutter deck” that required two portions of an “upper deck wall” to come “into engagement with” a lower deck wall. The trial court held that “engagement” required “direct contact,” and therefore, that the accused product did not literally infringe the claim.  Having held that “direct contact” was required, the trial court further held that applying the doctrine of equivalents to an accused product lacking such “direct contact” would improperly vitiate the requirement of direct contact.  Based on this holding, the trial court granted summary judgment of non-infringement in favor of the accused infringer.  The Federal Circuit noted that if taken at face value, the trial court’s reasoning would convert vitiation into the proverbial exception that swallows the rule and effectively foreclose the application of the doctrine of equivalents under any circumstances.

The Deere court considered the trial court’s application of vitiation to reflect a “common misperception” and held that vitiation is “not an exception to the doctrine of equivalents.”  Instead of applying vitiation as its own doctrine or exception, Deere instructs trial courts to simply consider the equivalence issue using the standard applicable to summary judgment motions, i.e., to determine whether “no reasonable jury” could find equivalence.

Despite having offered this instruction to trial courts, Deere cites with approval cases that precluded the application of the doctrine of equivalents “where the accused device contains the antithesis of the claimed structure.”  However, this formulation again seems to be one that swallows the doctrine of equivalents.  In many (or all) cases, an alleged equivalent can be characterize as something that is “not” the actual claim limitation.  For example, “indirect contact” could be characterized as the opposite or antithesis of “direct contact.”  In one of the cases cited in Deere, “before” was deemed to be the antithesis of “after.”

One distinction that may be helpful is the distinction between a claim element and a property of a claim element. In Deere the claim at issue required a lower deck wall, an upper deck wall, “front and rear portions” and “right and left-hand end wall structures.”  In Deere there was no dispute that these elements were present in the accused product.  Instead, the parties disputed only whether the elements interacted in the manner called for by the claim.  Thus, Deere seems to reflect a distinction between whether the accused product includes structures that could potentially correspond to those that are claimed versus particular properties of those structures.  Of course, this distinction begs the question of what defines a “structure” and how a “structure” can be distinguished from its properties, but it may be a distinction that is helpful for litigants in some circumstances.

Unfortunately, Deere provides little insight into whether and under what circumstances courts should find that an equivalence argument improperly writes out a claim limitation.  If anything, Deere appears to diminish the applicability of the vitiation doctrine and may make it easier for patent holders to get to the jury with an infringement case that relies on the doctrine of equivalents.

Last month, the PTO issued its 2012 Annual Report, which is full of interesting data.  For 2012, the average pendency of an application prior to issuance as a patent (or abandonment) was just shy of three years, 32.4 months.  The average pendency of an application before it received a first office action was just shy of two years, 21.9 months.  Clients may be surprised to hear that this is an improvement over years past, but it is.  Consider that in 2012, there were 565,566 patent applications filed.

Of course, clients are also surprised to hear that they have no enforceable rights while they are merely in “patent pending” status.  So, what can you do to expedite the processing of your applications?

The PTO has a program called “Track One” that will allow you to get a final disposition of your application in 12 months if you request it at the time the application is filed.  The program applies to non-provisional utility applications, not design applications.  In order to use this process, you will have to pay a fee of $4,800 (large entity) or $2,400 (small entity) in addition to the regular filing, search, and examination fees.  You will also have to pay a $300 publication fee at the time of filing (this is normally deferred until you pay the issue fee) and a $130 processing fee.  However, there is no requirement that you perform a prior art search or make any statements at the time of filing as to how the invention distinguishes the prior art.  The PTO will only accept 10,000 Track One applications in a fiscal year.  After that number is reached, the process is not available.  According to the PTO’s 2012 Annual Report, it issued 606 patents through Track One in Fiscal 2012, and it did so in an average of less than six months.

In order to qualify for Track One processing, the application cannot include more than four independent claims, thirty total claims, or any multiple dependent claims.  Track One cannot be used for PCT applications entering the national phase in the U.S., but it can be used for U.S. non-provisional applications that claim the benefit of an earlier filed PCT application under 35 U.S.C. § 120.  The PTO has an excellent list of answers to frequently asked questions at

http://www.uspto.gov/patents/init_events/track1_FAQS.jsp.

The PTO also has an Accelerated Examination Program which seeks to complete examination within 12 months of filing an application.  However, this program requires the applicant to conduct a pre-examination search and to submit an “examination support document” in which the applicant identifies where the prior art discloses the various claim limitations.  The applicant must also provide a detailed explanation of how the claims are patentable over the references and correlate the applicant’s claims to the supporting disclosure in the application.  Thus, the Accelerated Examination Program forces the applicant to make many admissions that could be problematic during future litigation.  However, the only fee for requesting Accelerated Examination is the petition fee (currently $130), so it is far cheaper than Track One.  Unlike Track One, the Accelerated Examination Program may be used for utility and design applications.

A special expedited examination procedure exists for design patents.  The applicant must conduct a pre-examination search and certify that was conducted.  However, there are no required admissions regarding the disclosures of the prior art or their relationship to the claimed design as in the case of the Accelerated Examination Program.  The current fee for requesting expedited examination of a design application is $900.

Thus, while applications can typically take on the order of two years to be examined and three years to reach final disposition, the PTO has several procedures for expediting examination.  Selecting the right procedure involves considering the type of application(utility or design), the price, and your sensitivity to making admissions regarding the prior art that could be used against you in the future.