Monthly Archives: February 2011

Qui Tam Provision for False Marking Held Unconstitutional

  by: Joseph R. Carnicella, Intellectual Property associate at Picadio Sneath Miller & Norton, P.C.

Plaintiff commenced an action in the Northern District of Ohio (Civil Action No. 5:10-cv-1912) as a relator alleging that Defendant falsely marked a series of industrial valve products with a patent that expired and used the patent in advertising its products after the expiration date.  Defendant subsequently moved to dismiss the action on the grounds that the False Marking Statute, 35 U.S.C. § 292(b), violated the Appointments and Take Care Clause of the U.S. Constitution, Article II, § 3.  On February 23, 2011, the Northern District of Ohio agreed with Defendant and declared the qui tam provision of 35 U.S.C. § 292(b) unconstitutional.

The False Marking Statute provides that it is unlawful for one to mark or advertise a product with a patent number that does not exist or has expired.  Also, this statute has a provision that allows any person (a “relator”) to sue for the penalty, wherein the penalty would be divided in one-half between the person suing and the United States.  Previously, the courts have confirmed that relators have standing under Article III to bring such suits in federal court, yet have deferred in deciding whether qui tam suits violate Article II.  In this particular case, upon suggestion by the court, Defendant raised the argument that this statute failed to give the Executive Branch sufficient control over the litigation in which the United States was the real party in interest.  The Take Care Clause of Article II provides that the President “shall take Care that the Laws be faithfully executed,” and Defendant argued that the False Marking Statute violated this clause. 

In support of its holding, the court distinguished between qui tam claims brought under the False Marking Statute and qui tam claims brought under the False Claim Act, 31 U.S.C. § 3730.  Under the False Claim Act, the government (a) must be informed of cases filed and pursued by relators even if the government decides not to intervene, (b) has a right to invervene after first refusing to intervene, upon showing of good cause, (c) has a right to limit the role of the relator in the litigation, and (d) has a right to seal the relator’s filings for more than 60 days.   Thus, the court concluded that the Executive Branch retains sufficient control over the relator’s conduct.  On the other hand, the court in the present case decided that the False Marking Statute lacks any of the statutory controls necessary to satisfy the Take Care Clause of Article II.  The court noted that the False Marking Statute is unlike any other statute in the Federal Code because it allows a person to file a criminal lawsuit in the name of the United States without any approval from or notification to the Department of Justice and that such action could be litigated wihtout any control or oversight. 

Whether this decision will be appealed, whether other district courts will follow such a decision in the interim, and whether this decision will have any impact on the 2011 Patent Reform Act are just some of the questions with answers unknown, and we will continue to monitor this hot topic.

Judge Unclogs Issue on Redirection of Internet Traffic Between Competing Companies

by:  Joseph R. Carnicella, intellectual property associate with Picadio Sneath Miller & Norton, P.C.

On February 15, 2011, Judge Schwab of the Western District of Pennsylvania ruled in favor of Fagnelli Plumbing Company, Inc. on its motion for summary judgment and found that there were no genuine issues of fact relating to the claims against Gillece Plumbing and Heating, Inc., et al., for a cybersquatting violation of the Anticybersquatting Consumer Protection Act (ACPA), a violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A), and common law trademark infringement and unfair competition.  

According to the Judge’s Memorandum Opinion, Fagnelli Plumbing has been the registrant of the domain name “fagnelliplumbing.com” since 2000, and Gillece Plumbing purchased and registered the domain name “fagnelli.com” with GoDaddy in March 2007.  After learning that internet traffic was being redirected to Gillece Plumbing’s website and requesting in a letter that Gillece Plumbing cease and desist from redirecting internet traffic, Fagnelli Plumbing commenced the lawsuit on May 18, 2010. 

With respect to Fagnelli Plumbing’s cybersquatting claim, the Court analyzed the ACPA and concluded that the name “Fagnelli” was a distinctive mark entitled to protection, the registration of “fagnelli.com” was identical or confusingly similar to the name “Fagnelli” and Gillece Plumbing acted in bad faith with the intent to profit.  In regard to the alleged Lanham Act violation, the Court noted that generally the Lanham Act does not protect surnames unless they are distinctive or famous, yet held that “Fagnelli” acquired a distinct and secondary meaning with Western Pennsylvania at the time when Gillece Plumbing began to use the mark.  The Court also determined that Gillece Plumbing’s use of “Fagnelli” created a likelihood of confusion in the marketplace.  Moreover, the Court granted summary judgment on Fagnelli Plumbing’s claims for common law trademark infringement and unfair competition because the Court found these claims to be identical to the violation of the Lanham Act claim.  In addition to granting Fagnelli Plumbing’s motion for summary judgment, the Court also granted a permanent injunction prohibiting Gillece Plumbing from redirecting internet traffic from fagnelli.com or any other domain name using the word “Fagnelli” and owning the domain name fagnelli.com or any similar domain name.  The Court noted that a subsequent proceeding will be held to determine damages against the Defendants.

PIT = Sil Valley East?

Posted by Henry M. Sneath, a principal, shareholder and IP Group Chair at Picadio Sneath Miller & Norton, P.C. in Pittsburgh, Pennsylvania

A new report paints Pittsburgh in glowing colors for the availability of high-tech jobs. The Pittsburgh Business Times  (Citing a Dice.com study) reports that Pittsburgh saw an increase of 45% in technology jobs over the past year, and that many tech jobs are still to be filled. The top three areas for tech jobs remain Washington DC, New York/New Jersey and Silicon Valley. Seattle, Detroit and Pittsburgh saw some very high growth in 2010 and are moving up on the ladder of total tech jobs. You’ve gotta give the ‘burgh credit for leveling the rusted steel mills, building high-tech centers and incubators on the vacated slabs, and making the most from the tech transfer operations at Pitt, CMU and Duquesne Universities. The Times suggests that the job board at the Pittsburgh Technology Council is brimming with tech jobs. I had business visitors in from out of town today and as usual, the remarks were aimed at how wonderful this city looks.  This tech growth is a big factor in the feel of the city. As my teenage son says, “it’s all good.”*

*OK – I confess – like most of what a teenagers says, that probably isn’t all true. However, a lot in the Pittsburgh tech community is “all good”.

Supplementary Guidelines Issued By USPTO In Attempt To Improve Overall Quality Of Patents

 byJoseph R. Carnicella, intellectual property associate with Picadio Sneath Miller & Norton, P.C. 

Press Release, 11-11 from the USPTO informs its readers that supplementary guidelines relating to Section 112 of the Patent Act have been issued in an attempt to improve the overall quality of patents.  Specifically, the purpose of the supplementary guidelines is to make sure that applicants and examiners strive to better define the scope of patent rights under 35 U.S.C. § 112.  The general public will benefit tremendously from these guidelines because applicants must now claim the invention in such a specific manner that the public will be on notice of exactly what is being claimed and protected by the patent.  These guidelines are designed to supplement the Manual of Patent Examining Procedure (MPEP) and serve to assist examiners in determining whether claims comply with 35 U.S.C. § 112.  Click here to review the supplementary guidelines, which were publised in the Federal Register on February 9, 2011.

AIPLA Commentary on Patent Reform Act

Posted By PSMN:  Here is the take on this weeks Senate Judiciary Committee Action on the Patent Reform Act as reported by AIPLA DIRECT®:

Legislation/Patent Reform
Senate Judiciary Approves Patent Reform Bill 15-0

 The Senate Judiciary Committee on February 3, 2011, approved 15-0 the “Manager’s Amendment” to S. 23, patent reform legislation that would, among other things, implement a first-inventor-to-file system, revise provisions on damages awards, create a new post-grant review system, and grant the PTO fee setting authority.

At the Judiciary Committee markup session, several amendments to the bill were approved (1) to delete provisions that would have addressed willful infringement; (2) to delete provisions that would have repealed the requirement that Federal Circuit judges reside within 50 miles of the District of Columbia; and (3) to add a provision addressed to Holmes Group v. Vornado Air Circulation Sys., 535 U.S. 826 (2002), defining the Federal Circuit’s exclusive appellate jurisdiction as including compulsory counterclaims arising under the patent or plant variety protection laws.

AIPLA President David Hill said “the Senate Committee’s action is very encouraging, and Senator Leahy’s comments about his cooperation with the leadership in the House have us hopeful that patent reform may soon become a reality.” Referring to next week’s planned hearing in the House on reform legislation, AIPLA Executive Director Q. Todd Dickinson said “We are pleased that both houses are taking up patent reform so soon after convening, which we hope is a positive sign about eventual passage.”

Yet to be resolved are two important proposals: (1) provisions to give the PTO funding that protects against diversion of its fee revenue; and (2) a proposal to create a special reexamination procedure to reconsider the business method patents under Sections 101 and 112 of the Patent Act.

Some other changes have been made to the legislation to refine and clarify language or to make changes that conform to other provisions. For example:

  • Amendments to Section 292(b)  in S. 515 would have eliminated qui tam actions for false marking, allowing only actions for those suffering competitive injury; S. 23 would now also amend Section 292(a) to expressly state that only the United States may bring a penalty action under that provision;
  • Section 32 on the statute of limitations for PTO actions against attorneys for misconduct no longer runs from discover, whenever that occurred; now the provision states that proceedings must begin either within 10 years of the misconduct or 1 year after the misconduct is discovered, whichever is earlier; and
  • Language in Section 282 on the presumption of validity which cross referenced Section 103(b) is deleted because Section 103(b), addressing patented processes to make biological products, would be repealed based on case law development and non-use of this provision.

To read the Manager’s Amendment approved by the Senate Judiciary Committee, click here.

Thanks to AIPLA DIRECT® for this report and update.

Patent Reform Act of 2011 Presented to 112th Congress

Posted by: Joseph R. Carnicella, an intellectual property associate with Picadio Sneath Miller & Norton, P.C.

UPDATE TO POST BELOW:  Please see the following from our friends at DRI (www.dri.org and http://www.dritoday.org ):
SENATE JUDICIARY COMMITTEE APPROVES PATENT REFORM BILL S. 23 WITH AMENDMENTS –  This week, the Senate Judiciary Committee approved Patent Reform Bill S. 23 with amendments. Most notably, the committee deleted proposed amendments clarifying the standard for awarding enhanced damages for willful infringement (ALB11066) , changed the effective date of the amendments from one year after enactment to 18 months, and added provisions related to the removal of patent actions and requiring the mandatory remand of claims not falling within the original or supplemental jurisdiction of the federal courts (GRA11079). In addition, the amendments added a provision requiring the Federal Circuit to transfer appeals that do not involve a patent or plant variety protection claim to the appropriate circuit court. (GRA11079).

ORIGINAL POST:  On January 25, 2011, President Obama stressed during his State of the Union Speech that Americans must focus on innovation, research and new technologies in order to be able to compete in this new technologically-advanced world.  Also on this same day, patent reform legislation (S. 23) was reintroduced to the 112th Congress.  The key provisions of the new legislation include the following: (a) changing from a first-to-invent to a first-to-file system, which would create a U.S. patent system that is more similar to other countries; (b) creating a post-grant review procedure, which would allow challenges on the validity of issued claims based on patentability to be raised within nine months of the grant of an issued patent; (c) creating a new system for determining damage awards; and (d) limiting standing for false marking claims to the United States and those who have suffered a competitive injury as a result of the alleged violation.  

Advocates believe that the new legislation would serve to reduce the amount of frivolous patent lawsuits, streamline the application process, improve the overall quality of patents and create jobs.  On the other hand, opponents believe that the new legislation could ultimately decrease the level of innovation and result in a loss in value for companies that currently own patents. 

If you would like to read the complete text of the proposed bill, click here.  Patent Reform Act 2011.  We will continue to monitor and update the progress of this new legislation.

Pittsburgh Technology Start-Up Funding

Posted by Henry M. Sneath, a principal, shareholder and IP Group Chair at Picadio Sneath Miller & Norton, P.C. in Pittsburgh, Pa.

The Pittsburgh technology community continues to grow and prosper. Old steel mill slabs are now covered with high-tech facilities and incubators. The Commonwealth of Pennsylvania pumped some new money into the Pittsburgh economy with 3 funding awards approved and administered by the Ben Franklin Technology Partners http://benfranklin.org/ (BFTP), a long time Pennsylvania authority which places state funding money with deserving partners. Through a competitive process, the following Pittsburgh based awards were approved by BFPT:

  • $100,000 for Idea Foundry for a technology development grant to help entrepreneurs in information technology or related engineering field create a business. With this funding, the nonprofit organization, which offers market analysis, product management, management team development and other services, is expected to spin out five new companies.
  • $450,000 for the Pennsylvania NanoMaterials Commercialization Center for a university research commercialization grant aimed at developing an industry and university network for building the state’s energy sector.
  • $600,000 for the University of Pittsburgh for a university research commercialization grant for an electric power and energy research project aimed at items such as power electronics, renewable energy and smart grid technology.
  • Read more: Pennsylvania hands out $4M in tech commercialization grants | Pittsburgh Business Times

Thanks to the Pittsburgh Business Times for reporting on these awards.

Big Patent Paydays for Pennsylvania Doctor

Posted by Henry M. Sneath, a principal, shareholder and IP Group Chairman at Picadio Sneath Miller & Norton, P.C. in Pittsburgh, Pa.

At the other end of the Commonwealth, there are some big paydays for a patent holder who developed a drug coated arterial stent. While a medical resident, interventional radiologist Bruce Saffran developed technology that resulted in three patents for this drug delivering arterial stent system. This is his second large verdict against major medical companies. This time, a Marshall Texas Jury awarded $482,000,000 against Johnson and Johnson and its subsidiary Cordis Corp for Patent infringement. He has previously hit Boston Scientific for $431,000,000, but settled for $50,000,000. Don’t cry however for J&J/Cordis as they are  alleged to have sold over $13,000,000,000 in these stents.  This seems to be the price of doing business these days when your due diligence on the openness of the marketplace to your product is poor or incorrect, your assessment of the patent holder’s patent validity is incorrect, or if your design around just doesn’t go far enough around. We will follow the case for any post trial opinions or posting of trial transcripts to see if there is a way to determine more details about the case and whether these issues played a part. There were some interesting pre-trial rulings on Daubert Motions and Markman Claim Construction which are interesting reading.  See below.

Here are some rulings from the court on the eve of trial in response to the Daubert motions: http://scholar.google.com/scholar_case?case=1316670698427000974&hl=en&as_sdt=2&as_vis=1&oi=scholarr

Here is the court’s opinion on Markman issues including an analysis of the difficult state of claim construction on “means plus function” issues: http://scholar.google.com/scholar_case?case=4276281445267303239&hl=en&as_sdt=2&as_vis=1&oi=scholarr