In an opinion issued Novartis AG v. Lee (No. 2013-1160, -1179) yesterday, the Federal Circuit clarified the standards for how much additional time the USPTO should add to the term of an issued patent under 35 U.S.C. § 154(b) when a patentee requests a continued examination.
When Congress changed the effective term of a patent from 17 years after issuance to 20 years after filing, it provided that extensions would be granted in certain circumstances where the delay in issuing the patent was due to the USPTO’s actions or inactions. The rules governing this extension are set forth in 35 U.S.C. § 154. In general, the term of a patent will be extended by one day for each day after three years of examination (subject to some exclusions), or when there are delays due to an interference, secrecy order, or successful appeal.
At issue in this appeal was the proper application of the provisions of 35 U.S.C. § 154(b)(1)(B)(i), which exclude “any time consumed by continued examination of the application requested by the applicant under section 132(b).” With respect to two patents, Novartis requested continue examination under § 132(b). The USPTO Director refused to grant any extensions for the time from the request until issuance of the patents.
Novartis first argued that § 154(b)(1)(B)(i) does not apply if the request for continued examination occurs more than three years after the filing of the application. The Federal Circuit rejected this argument because the purpose of the statute and the other aspects of the statutory structure did not support it. The Court did acknowledge that the language was unclear, but ultimately concluded that Novartis’s position was incorrect.
Novartis next argued that the § 154(b)(1)(B)(i) exclusion only applies to the time from the request to the notice of allowance (not to the date of issuance). The Federal Circuit agreed. The allowance to issuance time period is not related to the continued examination and involves time spent in the office of publication, not with the examiner. The Court felt it inappropriate to not credit the patentee with any delays caused during that part of the process. To the extent that there are any unusual delays relating to the examination after allowance, the USPTO can make appropriate adjustments where appropriate.
While this decision is not likely to affect many patents, practitioners should be aware of this change in these circumstances to make sure that the USPTO is properly calculating any extensions that are due to the patentee.
The Federal Circuit issued an interesting opinion today in Pacific Coast Marine Windshields Ltd. v. Malibu Boats, LLC (Case No. 2013-1199) and authored by Judge Dyk, holding for the first time that prosecution history estoppel applies to design patents and that a patentee can surrender subject matter during prosecution through its actions.
Background
The owner and CEO of Pacific Coast filed a design patent application in which he submitted drawings showing five “patentably distinct groups of designs” and claimed an “ornamental design of a marine windshield with a frame, a tapered corner post with vent holes and without said vent holes, and with a hatch andwithout said hatch, as shown and described.” The examiner issued a restriction requirement and required the applicant to elect a single group (and file additional applications for the remaining groups, if desired).
In response, the applicant chose the first designated group and amended the claim to remove the vent hole and hatch language: “the ornamental design of a marine windshield with a frame, and a pair of tapered corner posts.” He also cancelled figures 7-12, leaving just the embodiment with four circular holes on the corner post and a hatch on the front of the windshield. The remaining figures (1-6) showed alternated views of the four-hole embodiment. The amended application ultimately issued as a design patent.
Pacific Coast filed suit against Malibu Boats for making and selling windshields with three trapezoidal holes on the corner posts (shown above). Malibu Boats moved for summary judgment of non-infringement, arguing that Pacific Coast surrendered the non-four-hole embodiments on the grounds of prosecution history estoppel. The District Court agreed, and entered summary judgment in favor of Malibu Boats. Pacific Coast appealed.
The Federal Circuit Reverses and Remands
The Court first noted that while prosecution history estoppel is more often raised in the context of utility patents, the doctrine nonetheless applies to design patents. Surprisingly, this was an issue of first impression for the Court (although recognized in treatises and by district courts previously). The Court did note that the context is somewhat different, however.
For utility patents, infringement can occur either literally or under the doctrine of equivalents. Design patents are different and do not require literal identity to impose liability. Instead, liability arises if someone applies the patented design or any colorable imitation of it (in other words, sufficient similarity is sufficient). Thus, literal infringement and equivalents infringement are intertwined from the start.
The Court determined that doctrine of prosecution history estoppel should apply to design patent prosecution in order to preserve the public notice function of the process. A patentee should not be able to recapture subject matter that it abandoned during prosecution.
To determine whether prosecution history estoppel applies, the court must consider (1) whether there was a surrender of material, (2) whether it was for reasons of patentability, and (3) whether the accused design is within the scope of the surrender.
For design patents, the drawings define the scope of the invention, not the claims. Therefore, the court must look to what materials in the drawings the applicant surrendered. Here, the applicant removed drawings with two holes and no holes in the corner post. This constituted surrender of these designs and limited the design to a windshield with four holes in the corner post.
The Court next determined that the material was not surrendered for reasons of patentability—e.g., anticipation, obviousness, etc.—but it was surrendered in order to secure the patent. Pacific Coast argued that the doctrine of prosecution history estoppel only applies to surrenders to avoid the prior art, but the Court disagreed, finding the doctrine was broader than that. Any narrowing amendment made to satisfy any requirement of the Patent Act that narrows the scope of the patent qualifies. The Court concluded that amendments to satisfy a restriction requirement for design patents qualify. Notably, the Court specifically stated that it was expressing no opinion on whether this same analysis would apply to utility patents.
Finally, the Court considered whether the accused design was within the scope of the surrender. Malibu Boats argued that everything but a four-hole design was surrendered, but the Court wasn’t so sure. The patentee clearly surrendered a two-hole design and obtained coverage for a four-hole design, but did not seek coverage or surrender a three-hole design. Malibu Boats did not argue that a three-hole design was not colorably different from a two-hole design. Therefore, the Court concluded that no prosecution history estoppel arose because the surrendered material was different from the accused device (two-hole versus three-hole). The Court noted that under these procedural circumstances that it did not have to engage in an analysis of whether the scope of the surrender was to be measured by a colorable imitation standard.
Conclusion
This case presents an interesting new decision in the design patent field. Design patentees need to be careful when faced with restriction requirements, and should seriously consider filing divisional applications to avoid potential problems like these. The case also highlights the dangers of sailing in uncharted legal waters, where the Court may hold the lack of an argument against you when it may not have been clear that you needed to make it in the first place.
A colleague brought to my attention an interesting development in a patent “troll” case in the Southern District of New York that may foreshadow a new approach for companies to defend themselves in these kinds of lawsuits. It is a rather extreme approach, and it will be interesting to see how this case progresses.
Lumen View Technology LLC filed a patent infringement lawsuit against FindTheBest.com, Inc. (Case No. 1:13-cv-03599-DLC). While this case was still pending, FindTheBest filed a separate lawsuit against Lumen View, its principals, and other related entities (Case No. 1:13-cv-06521-DLC), bringing claims under RICO and for extortion, abuse of process, civil conspiracy, and unfair business practices.
Background
According to the two complaints, FindTheBest operates a web site that provides consumers with data-driven comparisons of a wide variety of products and subjects, such as phones, cars, and ski resorts. Lumen View contends that FindTheBest infringes U.S. Patent No. 8,069,073, which relates to a “System and Method for Facilitating Bilateral and Multilateral Decision-Making.”
Lumen View was formed on February 23, 2012 and obtained the patent in suit seven days later. It allegedly conducts no other business aside from filing patent lawsuits and licensing in patents, and has filed more than 20 patent infringement lawsuits relating to the’073 patent in the last 18 months.
On May 30, 2013 (the day after the complaint was filed), FindTheBest claims that it received a letter from Lumen View enclosing the complaint and demanding that FindTheBest pay to settle the lawsuit. Lumen View apparently initially demanded that FindTheBest pay $85,000 for a licensing fee, but dropped that demand to $55,000 the day before FindTheBest’s answer to the complaint was due. FindTheBest rejected Lumen View’s settlement demands and continued with the lawsuit. The parties have submitted a list of claim terms to be construed, and FindTheBest has moved for judgment on the pleadings, arguing that the patent is invalid under 35 U.S.C. § 101.
On September 16, 2013, FindTheBest filed an entirely separate lawsuit in the same court against Lumen View, its principals, and other related entities, bringing claims for violating RICO, extortion, abuse of process, civil conspiracy, and unfair business practices. FindTheBest contends that Lumen View engaged in a criminal enterprise by failing to conduct proper due diligence before filing its lawsuits and knowingly pursuing frivolous cases in order to extort settlement money from its targets. Defendants in this second case have not yet answered the complaint.
What This Case Means
This is an interesting and aggressive approach to fighting back against what FindTheBest apparently believes is a frivolous and improper lawsuit. It is curious that it is bringing this second lawsuit at this time—before the first case is even close to being resolved. One wonders how the Court will respond to this second action. Will it allow it to proceed? Will it stay or dismiss the case pending the resolution of the first lawsuit?
Civil RICO cases are generally disfavored by the courts and notoriously hard to prosecute. In general, such a claim would be extremely difficult for a defendant to bring in a standard patent infringement lawsuit because RICO requires a pattern of racketeering activity and multiple victims. In this case, however, because Lumen View allegedly filed multiple extortionate lawsuits against multiple “victims,” FindTheBest may be able to overcome these pleading hurdles.
Regardless, as long as the second lawsuit exists, it creates immense pressure on the patent holder and the persons and companies associated with it and likely completely changes the settlement dynamic. For one thing, Lumen View likely cannot take the approach that Loadsys did against Kapersky Labs and unilaterally drop the lawsuit if it thinks it will not prevail. Such an action would feed right into FindTheBest’s theory that the lawsuit was a sham and increase the chances that FindTheBest could prevail in its lawsuit.
It will be interesting to follow this case and see how it progresses. If nothing else, it gives all parties something more to think about in lawsuits of this type.
Following a December 2012 Patent verdict in favor of CMU against Marvell in the amount of just over $1 Billion, the trial Judge Nora Barry Fischer of the USDC for the Western District of Pa. has denied the post trial motions filed by Marvell. Carnegie Mellon University v. Marvell Technology Group, Ltd., Case No. 09-290 (W.D. Penn. Feb 28, 2013). She has also found that the infringement was willful, but has not determined yet whether to multiply the verdict as an enhanced award. The lengthy opinion is attached for review. More analysis to come and we will follow what is surely to be an appeal to the CAFC by Marvell. Opinion available only on PACER at the moment but we will search for an independent copy to post.
UPDATE: The full decision of the Court is available here.
Last Thursday, the U.S. Government Accountability Office (GAO) issued a report on patent infringement litigation and recommended steps that may be taken to improve both litigation and the patents themselves. The 61-page report, entitled “INTELLECTUAL PROPERTY: Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality,” makes a number of recommendations, as well as providing a background in this area, including statistics summarizing recent trends in patent litigation.
We’ll be taking a look at this report in more detail and providing some commentary on it in the near future as a part of our ongoing analysis of the issues presented by NPE/PAE/patent troll litigation.
Today – The US Supreme Court in Gunn v. Minton decided that a patent legal malpractice case is properly brought in state court. The court held that even though the “case within a case” standard would require interpretation of a patent and other typically Federal Issues, that “case within a case” is a hypothetical case, that does not need to be in Federal Court. Further the court wrote:
“Because of the backward-looking nature of a legal malpractice claim, the question is posed in a merely hypothetical sense: If Minton’s lawyers had raised a timely experimental-use argument, would the result in the patent infringement proceeding have been different? No matter how the state courts resolve that hypothetical “case with a case,” it will not change the real-world result of the prior federal patent litigation. Minton’s patent will remain invalid.
Nor will allowing state courts to resolve these cases undermine “the development of a uniform body of [patent] law. … Congress ensured such uniformity by vesting exclusive jurisdiction over actual patent cases in the federal district courts and exclusive appellate jurisdiction in the Federal Circuit. … In resolving the non-hypothetical patent questions those cases present, the federal courts are of course not bound by state court case-within-a-case patent rulings. … In any event, the state court case-within-a-case inquiry asks what would have happened in the prior federal proceeding if a particular argument had been made. In answering that question, state courts can be expected to hew closely to the pertinent federal precedents. It is those precedents, after all, that would have applied had the argument been made.”
We previously reported on this case and will follow for any interesting cases which actually try one of these malpractice cases in state court. Here is the opinion delivered by Chief Justice Roberts: http://tinyurl.com/a474okm
By Henry M. Sneath, Esq. – Chair of the Picadio Sneath Miller & Norton, P.C. Intellectual Property Group. Contact him at hsneath@psmn.com
Last week a Pittsburgh federal court jury found on behalf of local university CMU against hard drive chip maker Marvell (See attached photo) on claims of patent infringement and willfulness. The $1.17 Billion award was huge by any standards and still faces post trial motions which could vacate the verdict or increase it for willfulness, which the jury found. Judge Fischer could grant any number of what will surely be multiple post trial motions including a motion for mistrial, which was made by Marvell counsel during CMU’s closing argument and on which she denied the motion without prejudice to rule on it after the announcement of a verdict. In other words, she could still grant a mistrial and vacate the one month trial and verdict. She could also increase the verdict by as much as threefold based on the willfulness finding. The article attached below indicates that no tech verdict this large has ever stood the test on appeal. Here is one of a number of good descriptions of the case as it has been written about extensively over the last week: http://arstechnica.com/tech-policy/2012/12/jury-slams-marvell-with-mammoth-1-17-billion-patent-verdict/
Here also is an interesting video take on the case. http://www.bloomberg.com/video/david-martin-on-carnegie-mellon-marvell-patent-case-er1U0P~yQXC616MuXqU_Hw.html
The USDC for the Western District of Pennsylvania enacted local patent rules in 2005. The court has also been designated as one of a number of courts in the country that are part of a Pilot Program where patent filings will be monitored and wherein participating courts will establish certain practices for the administration of Patent cases. While patent filings have been rather flat in the Pa. Western District in the last few years, the number has skyrocketed in 2012. There were 11 Patent cases filed in 2011, but this year, through July, there have already been 28 filings, or more properly, 11 actual filings and 17 transfers of cases from the Eastern District of Texas, or which relate to those transferred cases.
These latter 17 cases have related to the same or similar patents held by a company called Maxim Integrated Products, which is suing numerous big name companies, and which is being sued in declaratory judgment actions by many other big name companies. Many of their suits were filed, not surprisingly in Texas Eastern, but were transferred to Pa. Western.
Declaratory Judgment actions followed and have been filed here by other companies whom Maxim allegedly threatened with suit. The patent (s) at issue relate to the transfer of “cash” between secure devices (eg: mobile to mobile). The Summary of the Invention in this ‘510 patent is set forth as:
“The present invention is an apparatus, system and method for communicating a cash equivalent electronically to and from a portable module. The portable module can be used as a cash equivalent when buying products and services in the market place. The present invention comprises a portable module that can communicate to a secure module via a microprocessor based device. The portable module can be carried by a consumer, filled with electronic money at an add-money station, and be debited by a merchant when a product or service is purchased by the consumer. As a result of a purchase, the merchant’s cash drawer will indicate an increase in cash value.”
We will follow these cases and report more in the future.
As reported earlier, the United States District Court for the Western District of Pennsylvania was chosen to be one of 14 District Courts nationwide to participate in a 10-year Patent Pilot Program to study the effects of providing specialized patent judges on patent litigation. On October 12, 2011, the Court issued an order setting forth the procedures it will use in implementing this program. Among other things, the Court identified four judges who are designated as the official Designated Patent Judges for the Court:
Under the Court’s guidelines, patent cases are still randomly assigned to all Judges in the District, regardless of whether they are Designated Patent Judges. However, a non-Designated Patent Judge has the option of declining the case. If he or she does so, the case will be randomly reassigned to one of the Designated Patent Judges.
Since the Court’s implementing order, it has added twonew Designated Patent Judges:
The Court has created a special Patent Pilot Program page on its website, which has a variety of information about the program, including the Court’s Local Patent Rules.
Contact our Pittsburgh Intellectual Property, Cyber and Data Security, Trade Secret, DTSA and Technology Attorneys at Houston Harbaugh, P.C. through IP and Litigation Sections Chair Henry M. Sneath at 412-288-4013 or sneathhm@hh-law.com. While focusing first on health care and prevention issues for family, friends and employees, we are also beginning to examine the overall Covid Law related issues in business litigation, contract force majeure, trusts and estates litigation and insurance coverage issues that will naturally follow the economic disruption of the Covid-19 pandemic.
Some posts herein are from the HH-Law resources of PSMN® and PSMNLaw®. Business Litigation. Pittsburgh Strong® and DTSALaw®, PSMN® and PSMNLaw® are federally registered trademarks of HH-Law. See Firm Website at: https://www.hh-law.com/Professionals/Henry-Sneath.shtml
In an opinion issued Novartis AG v. Lee (No. 2013-1160, -1179) yesterday, the Federal Circuit clarified the standards for how much additional time the USPTO should add to the term of an issued patent under 35 U.S.C. § 154(b) when a patentee requests a continued examination.
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