Maryland Intellectual Property Law Blog : Maryland Intellectual Property Lawyer & Attorney : Brian Wm. Higgins : Serving Baltimore, Columbia, Frederick

     Today the U.S. Patent and Trademark Office (USPTO) announced it will pilot a program to accelerate the examination of certain “green” technology patent applications. Under the pilot program, patent applications meeting certain criteria will be accelerated in order to "further the development and deployment of green technology, create green jobs, and promote U.S. competitiveness," a USPTO press release said. Pending patent applications in green technologies will be eligible to be accorded special status and given expedited examination, which will have the effect of reducing the time it takes to patent these technologies by an average of one year, the USPTO said. The press release stated that earlier patenting of green technologies enables inventors to secure funding, create businesses, and bring vital green technologies into use much sooner. 

     Green technologies are defined as those patent applications pertaining to environmental quality, energy conservation, development of renewable energy resources, or greenhouse gas emission reduction.

     Under the pilot program, patent applications are normally taken up for examination in the order that they are filed. The average pendency time for applications in green technology areas is approximately 30 months to a first office action and 40 months to a final decision. Under the pilot program, for the first 3,000 applications related to green technologies in which a proper petition is filed, the USPTO will examine the applications on an accelerated basis (i.e., 12 months to a final decision).

     Critics have complained that green patents mean higher prices for these newest pollution-reducing technologies due to licensing fees sought by patentees, fees that effectively put the technology out of reach of companies and countries that can’t pay the premiums.  The result is that companies and countries that need the most pollution abatement will look to older, less efficient technologies because they are less expensive than state of the art technologies being patented today.

     Federal Register Notice: 74 FR 64666

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     U.S. Patent & Trademark Office (PTO) records show that for the year ending June 30, 2008, the PTO granted 1,983 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO). That represents a 1% increase in the number of patents issued to Maryland inventors for the previous year ending June 30, 2008 (1,956), but a 4% decline over the year ending June 30, 2007 (2,071).

      The number of published patent applications naming at least one Maryland inventor during the year ending June 30, 2009, was up 3% compared to the previous two years. According to the PTO, 3,172 patent applications naming at least one Maryland inventor were published during the year ending June 30, 2009, compared to 3,076 patent applications published in the year ending June 30, 2008, and 3,066 applications published in the year ending June 30, 2007.

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     In their forthcoming Berkeley Technology Law Journal article (alternative link), visiting University of Maryland Associate Professor of Law Davida Isaacs and University of Kentucky Assistant Professor of National Security Robert Farley discuss the Military and State Secret Privilege and its negative impact on innovation, the discovery process, and government procurement.  As previously noted on this blog, the counties surrounding Washington, D.C., are home to many government contractors, possibly triggering use of the privilege.

     In the article, Isaacs and Farley review the Federal Circuit's Crater Corp. v. Lucent Techs., 423 F.3d 1260 (Fed. Cir. 2005), cert. denied, 547 U.S. 1218 (2006), case in some depth, suggesting that there are some troubling constitutional issues regarding the assertion of the privilege, and arguing that widespread use of the privilege could have a significant negative effect on military innovation and procurement.  On the former point, where the information involved constitutes “trade secrets”, the authors point out that effective quashing of litigation through invocation of the privilege arguably amounts to an unconstitutional taking. On the latter, the authors note that loose use of privilege endangers the intellectual property rights of companies interested in doing business with the military, and in particular of small companies that cannot depend either on their connections with the Pentagon or on an expectation of repeat business for protection. (This is particularly problematic given the stated interest of the Pentagon in pursuing non-traditional defense contractors for innovative technologies.)

     The Military and State Secrets Privilege has been receiving an enormous amount of attention lately, write Isaacs and Farley.  As the article also notes, just a few months ago Congress proposed legislation that is meant to rein in the Government’s use of the privilege, or at least encourage independent judicial consideration of the privilege’s application. But, the authors argue, particularly with regard to the use of intellectual property, this legislation still does not go far enough in ameliorating the negative effects described above.

• Cite:  D. Isaacs and R. Farley, Privilege-Wise and Patent (and Trade Secret)-Foolish?: How the Courts’ Misapplication of the Military and State Secrets Privilege Violates the Constitution and Endangers National Security; 23 Berkeley Tech. L.J. __ (2009) (forthcoming).

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• UPDATE: Star Scientific vs. R.J. Reynolds Tobacco Co.

     Next Monday, Petersburg, Virginia-based Star Scientific, Inc. and R.J. Reynolds Tobacco Co. will resume their battle over allegations of RJR's infringement of Star's U.S. Patent Nos. 6,202,649 and 6,425,401, as the parties open the first of five days of their jury trial in the courtroom of the Honorable Marvin Garbis of the U.S. District Court for the District of Maryland. Star's lawsuit has a long history, including a bench trial on the issue of the enforceability of the asserted patents in 2005. On June 25, 2007, Judge Garbis found Star’s patents to be unenforceable on the basis of inequitable conduct by Star’s attorneys during prosecution of the patents before the U.S. Patent & Trademark Office. On appeal, the U.S. Court of Appeals for the Federal Circuit (Judges Michel, Dyk, and Schall) reversed, and now the case is back before the trial court. Start time: 10:00 am, May 18.

Related posts:  Inequitable Conduct, Conspiracy Theory

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     The table below shows how Maryland ranked among other U.S. District Courts in terms of the number of lawsuits that were filed raising patent issues in 2008 (source Justia.com). Table values are based on the number of complaints filed in 2008.  As shown, 31 patent lawsuits were initiated in the U.S. District Court for the District of Maryland (Greenbelt and Baltimore divisions combined) in 2008, which is nearly a 30% increase over the number of patent lawsuits initiated in Maryland in 2007. In terms of the number of parties involved in those lawsuits, there were more parties named in patent lawsuits in 2007 compared to 2008, due to one patent infringement lawsuit initiated in 2007 that involved over a hundred defendants. 
 

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     Ever wonder what the "LR" or "L&R" code means in the electronic file history of a pending patent application?  It refers to the Patent Office's Licensing and Review function, which is an early screening function applicable to all provisional applications filed under 35 U.S.C. 111(b), nonprovisional applications filed under 35 U.S.C. 111(a), and international applications filed under the Patent Cooperation Treaty (PCT).  During L&R screening, applications are reviewed for the purposes of issuance of a foreign filing license and to identify subject matter that, if disclosed, might impact national security. If warranted, applications may be referred to an appropriate governmental agency for consideration of restrictions on disclosure of the subject matter, which may ultimately lead to a Secrecy Order being issued (see MPEP). 

     The number of Secrecy Orders issued in FY '08 are shown (parenthetical values reflect change relative to FY '07 data) (source: FAS):

• Total Secrecy Orders in Effect FY08: 5,023 (-21)
• New Secrecy Orders Imposed: 68 (-60)  
  • ARMY: 8 (-14)
  • NAVY: 8 (-20)
  • AF: 20 (-25)
  • NSA: 20 (-1)
• Secrecy Orders Rescinded: 47 (-21)
• "John Doe" Secrecy Orders: 22 (-31)

     As was noted previously on this website, patent secrecy activity is relevant to Maryland because the counties surrounding Washington, D.C., are home to many government agencies and government contractors that may be involved in patent activity possibly triggering secrecy review. According to Patent Office statistics, many of the agencies/contractors in this area are high on the list of the number of patents issued each year to Maryland organizations, including Johns Hopkins University, which operates the Applied Physics Laboratory (Howard County), a major government defense contractor; the Navy, which operates the Naval Research Lab (Prince George's County); the Army, which operates the Army Research Lab and biodefense research agencies in Frederick, MD; Northrop Grumman (Anne Arundel County); the National Security Agency (NSA) (Anne Arundel County); and a few of the over 300 biotechnology companies in Maryland (mostly located in Montgomery County).

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     U.S. Patent & Trademark Office (PTO) records show that for 2008, the PTO granted 1,942 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO). That is a 1% decline in the number of patents issued to Maryland inventors for the same period in 2007 (1,963), and an 8% decline over 2006 numbers (2,116).

     The number of published patent applications naming at least one Maryland inventor in 2008 was up compared to last year. According to the PTO, 3,187 patent applications naming at least one Maryland inventor were published during 2008, which is a 7% increase in the number of patent applications published in 2007 (2,992 patent applications), and a 3% increase over 2006 numbers (3,082).

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• Nacre AS v. Silynx Communications, Inc., matter, No. 07-cv-02676, filed Oct. 2, 2007; assigned to J. Williams

For those of you following the Nacre AS v. Silynx Communications, Inc., matter (and many of you are, based on traffic on this website), the parties jointly filed a stipulated schedule with the court, which was granted by U.S. District Court for the District of Maryland Judge Williams in September 2008.  According to the schedule, the parties are exchanging claim construction briefs in January and February 2009, and trial is expected in August 2009. 

The patents at issue, as indicated in the complaint, are U.S. Patent No. 7,039,195 (“Ear Terminal”) and U.S. Patent No. 6,567,524 (“Noise Protection Verification Device”).

Both parties engage in the development and manufacturing of noise protection/cancelling communications headsets used by military forces (and others). 

Please search "quietpro" on this website for more information about the lawsuit.

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     Hat tip to Philip Brooks for noting the upcoming Bio/Pharmaceutical Summit on Intellectual Asset Management Strategies to be held in Baltimore, MD, on January 20-21, 2009.  The Summit's organizer, The Center for Business Intelligence (CBI), plans a two-day, CLE-available conference that includes workshops covering the Hatch-Waxman Act, the MMA, the USPTO and expectations for patent reform, and conference presentations covering antitrust law and LCM, the expected implications of the EC Pharma Inquiry on Industry, tips for assessing your patent portfolio to assign value and identify risks and opportunities, and many others.

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Calling for Copyright Reform

• "Given where we are on the patent reform debate, is it time to move patent reform off the table and work on copyright reform?" That is the question posed by Kristie Prinz at the Silicon Valley IP Licensing Law Blog.

No More Committee on Intellectual Property

• "House Judiciary Committee Chairman John Conyers (D-MI) will abolish the Subcommittee on Courts, the Internet, and Intellectual Property in the new Congress and instead keep intellectual property issues at the full committee level, a Judiciary aide told Congress Daily today." (source: Congressional Daily)

District Court Clarifies How PTO Should Compute Patent Terms

• Wyeth v. Dudas, No. 07-1492 (D.D.C. 2008): on September 30, 2008, the U.S. District Court for the District of Columbia issued a decision concerning 35 U.S.C. § 154, the procedure the U.S. Patent and Trademark Office (PTO) uses to calculates a patent's term.  Sec. 154 states that a patent grant shall be for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States or, if the application contains certain specific references to an earlier filed application or applications, from the date on which the earliest such application was filed. The 20-year term may be adjusted by the PTO to account for certain delays during prosecution. The Wyeth decision means that the PTO must alter its methods for adjusting patent terms, especially where prosecution lasts longer than three years as measured from the filing date. For a detailed analysis of Wyeth, see Down a Rabbit Hole: Court Slaps Down Patent Office’s ‘Explanation’ of PTA Rules (Patent Baristas).

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     Seven weeks after Senator Jon Kyl (R-AZ) introduced S.3600, the Patent Reform Act of 2008, on September 25, 2008 (source: GovTracks), the reaction has been predictable, with stakeholders on the pro- and anti-reform sides making their views known. The Advanced Medical Technology Association (AdvaMed) said “improving and modernizing the patent system is clearly important to all sectors of the U.S. economy and we applaud Sen. Kyl and his staff for their leadership and inclusive approach to developing this legislation.” The Biotechnology Industry Organization’s (BIO) President and CEO Jim Greenwood immediately praised Kyl’s legislation, stating that "BIO appreciates the efforts of Senator Kyl and his staff to address the concerns of many stakeholders with the patent reform legislation currently pending in the Senate, and commends him for introducing the Patent Reform Act of 2008 (source: IPWatchdog).

     How will other stakeholders react? If past efforts are any indication, technology companies like Blackberry-maker RIM, which reportedly spent hundreds of thousands of dollars lobbying Congress on legislation including patent reform in 2007, may take the same stance with the 2008 legislation, as will Microsoft, Google, and other tech companies, which formed the Coalition for Patent Fairness and fought big pharmaceutical companies to keep portions of the existing patent system in tact during the battle over the 2007 patent reform effort.

     Bloggers have weighed in on the new legislation, too. “There is practically zero chance that this bill will pass in the current [110^th Congress] session” (source: Peter Zura at the 271blog). Ex-AIPLA executive director Michael Kirk agrees. "Even if the Democrats get to 60 seats in the Senate, I would not count on the legislation being passed,” Kirk said in an exclusive interview with IAM (source: IAM Blog).

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• In Re Bilski (Fed. Cir.; October 30, 2008)

     In In Re Bilski, the Court of Appeals for the Federal Circuit in Washington, DC, sitting en banc, considered the issue of whether certain so-called business methods and other “processes” are eligible for patent protection. Less than a day after the court’s eagerly-anticipated decision, general and legal news media outlets proclaimed the end of patent protection for software-related business methods, and shortly thereafter business associations called for patent reform legislation to expand the Patent Act’s scope to reestablish protections for software inventions. It may take days and perhaps weeks for the debate to subside over exactly how far the Bilski court swung the pendulum away from the pro-patent apex. What is clear, however, is that Bilski did not do away with business methods and general software process patents entirely, although it did tighten the patent eligibility standard for inventions involving processes.

     Section 101 of the Patent Act identifies four categories of patent-eligible subject matter: processes, machines, manufactures, and compositions of matter. The patent claims at issue in Bilski involved a computerized process, specifically a method of hedging risk in the field of commodities trading. 

     Drawing extensively from the Supreme Court’s holding and analysis in Diamond v. Diehr, 450 U.S. 175 (1981) and Gottschalk v. Benson, 409 U.S. 63, 67 (1972), the Federal Circuit recognized that “the question before us then is whether Applicants' claim recites a fundamental principle [i.e., "laws of nature, natural phenomena, and abstract ideas"] and, if so, whether it would pre-empt substantially all uses of that fundamental principle if allowed.” The definitive test, the court said, involves a determination of whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself.

     A claimed process, the court said, is patent-eligible under § 101 if:  (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

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     Below is a Wordle based on the last several months worth of posts on this website.  A Wordle is a “word cloud” generated from text in which greater prominence is given to words that appear more frequently in the source text.  In the Wordle below, one can see that the words "patent," "Maryland," "district," "court," and "judge" have found their way into the posts on this website more frequently than other words.

     Jonathan Feinberg of IBM Research is credited for providing the on-line Wordle tool.

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• Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., No. 2007-1448 (Fed. Cir., argued March 7, 2008; opinion August 25, 2008)

     Petersburg, Virginia-based Star Scientific, Inc., sued R.J. Reynolds Tobacco Co. for infringement of U.S. Patent Nos. 6,202,649 and 6,425,401 in the U.S. District Court for the District of Maryland in 2001. A bench trial on the issue of the enforceability of the asserted patents was held in 2005. On June 25, 2007, the District Court found Star’s patents to be unenforceable on the basis of inequitable conduct by Star’s attorneys during prosecution of Star’s patents before the U.S. Patent & Trademark Office. Thereafter, Star characterized the decision as “stunning and totally without support in the record,” and concluded that “the opinion ignores significant portions of the record, distorts others, and spins a tale that is unrecognizable to those who attended the trial.” The Federal Circuit reversed.

Background

     In August 1998, Star's Jonnie Williams, the named inventor, engaged Delmendo of Sughrue to prosecute a patent application on a tobacco curing process aimed at lowering TSNA levels. Delmendo was sent a letter on August 28, 1998, by Star consultant Dr. Harold Burton in which Burton wrote that Chinese tobacco products contain very low TSNA levels, probably due to radiant heating. Delmendo testified that he spoke with Burton, analyzed the letter, and ultimately concluded that neither it nor its content was material to the contemplated patent application.

     Delmendo later filed a provisional patent application for Williams disclosing that some nations, including China, still utilize radiant heat curing, and stating "It has been determined that [the radiant heat] process as applied to tobacco grown in the United States yields tobacco products with high levels of TSNA." Exactly one year later, Delmendo filed a non-provisional application that deleted the statement that radiant heat curing of U.S.-grown tobacco produced "high levels of TSNA." Instead, the application disclosed: "I have discovered that it is possible to somewhat reduce the TSNA levels by not venting combustive exhaust gases into the curing apparatus or barn."

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• Hillcrest Laboratories, Inc. v. Nintendo Co., Ltd. et al

     Hillcrest Labs sued Nintendo of America (based in Redmond, WA, Nintendo Ltd. is based in Kyoto, Japan), maker of the widely-popular "Wii" (TM), for patent infringement on August 20, 2008, in the US District Court for the District of Maryland one day after its U.S. Patent 7,414,611 issued (three other US patents being asserted are 7,139,983, 7,158,118, 7,262,760). Rockville, MD-based Hillcrest alleges that Nintendo's "Wii" video game machines and remote controllers directly, contributorily, induce, and willfully infringe its patents. Hillcrest also filed a separate patent infringement action with the US International Trade Commission.

     Claim 1 of the '611 patent recites:

1. A system comprising: means for generating, from a first sensor, a first output associated with motion of a handheld device; means for detecting, by a second sensor, acceleration of said handheld device and outputting at least one second output; and means for processing said first output and said at least one second output, said processing means including: means for determining an orientation in which said handheld device is held using said at least one second output; and means for compensating said first output based on said determined orientation by performing a two-dimensional rotational transform on said first output to generate an output which is substantially independent of said orientation.

     Hillcrest is seeking monetary damages from Nintendo Japan and Nintendo of America, and a permanent injunction. In a published statement, Hillcrest states that since 2001 it "has pioneered technology that allows consumers to interact with digital media on television using motion-control and pointing techniques. The company holds 29 patents in this area worldwide, and has filled for more than 100 related patents."

     The Washington, DC, office of Finnegan Henderson filed the complaint on behalf of Hillcrest.

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     According to statistics compiled by Kyle Fleming at the Patent Appeal Tracker Blog using PACER data, there were 241 patent litigation cases filed in July 2008 in 50 different judicial districts. That's 14 fewer lawsuits than in June 2008. The Eastern District of Texas led the way with 25 filings, followed by Central District of California (21), Northern District of California (19), District of New Jersey (17), and District of Delaware (16). The US District Court for the District of Maryland was tied for 24th with just two new filings in July.

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     Maryland's SafeNet announced earlier this month that it had been hired by CCTV, the national television network of the People's Republic of China, to secure from copyright infringement CCTV's live and on-demand online video footage of the 2008 Summer Olympic Games. SafeNet, which has 43 patents and 31 patent applications currently pending, is employing digital rights management (DRM) software to prevent video from being distributed and viewed by anyone except those who are authorized. According to the company's announcement, SafeNet's technology was given a trial and evaluated during the CCTV.com broadcasts of the 2008 European Cup soccer tournament earlier in 2008.

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• Senate Passes Bill to Fix Administrative Law Judge Status

Reacting to revelations that several PTO Administrative Law Judges may have been appointed to their positions without proper authority, the Senate introduced and then passed S.3295 on July 22, 2008. The legislation, if enacted, would allows the Secretary of Commerce, in his or her discretion, to deem the appointment of an administrative patent or trademark judge who, before the date of the enactment of the legislation, held office pursuant to an appointment by the Director, to take effect on the date on which the Director initially appointed the administrative patent or trademark judge.  The bill, introduced by Sen. Patrick Leahy, Chairman, Senate Judiciary Committee, would also provide those ALJs a statutory defense if someone were to challenge their initial appointment.

• Enforcement of Intellectual Property Rights Act of 2008

On July 24, 2008, Senators Leahy, Specter, Bayh, Voinovich, Feinstein, and Cornyn introduced S. 3325 Enforcement of Intellectual Property Rights Act of 2008. Among other things, the legislation would authorize the U.S. Attorney General to commence a civil action against any person who engages in conduct constituting a criminal offense under the copyright laws, 17 U.S.C. § 506, upon proof of such conduct by a preponderance of the evidence (compared to the much high criminal standard, the preponderance standard is estimated to result in more enforcement of copyright laws). A person found liable may be subject to a civil penalty under section 504 which shall be in an amount equal to the amount which would be awarded under 18 U.S.C. 3663(a)(1)(B) (i.e., the amount of the loss sustained by each victim as a result of the offense, considering the financial resources of the defendant) and restitution to the copyright owner aggrieved by the conduct.

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     Even in soft economic times, companies continue to protect their intellectual property assets. According to statistics available from Justia.com, 63 complaints alleging liability under patent, copyright, and/or trademark laws were filed in the U.S. District Court for the District of Maryland during the period January 1 through July 31, 2008 (those complaints named approximately 80 defendants, some several times).  For the same period in 2007, just 52 complaints were filed (but close to 100 named defendants). That's a 21% increase in the number of filings in 2008.

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• Merck & Co. Inc. v. Apotex Inc., No. 2007-1362 (Fed. Cir. July 16, 2008) (non-precedential)

     In this appeal, the Federal Circuit affirmed and vacated a decision by the U.S. District Court for the District of Delaware (J. Sleet) in favor of Plaintiff-Appellee Merck & Co., Inc. (“Merck”). 

     Merck obtained approval from the FDA to market the drug FOSOMAX®. It sued Apotex for patent infringement when Apotex filed an Abbreviated New Drug Application (“ANDA”) seeking FDA approval to commercialize a generic version of FOSOMAX®.  Apotex counterclaimed for a declaratory judgment of patent invalidity and noninfringement.

     Following discovery, Merck granted Apotex a covenant not to sue for infringement of all patents-in-suit, and moved to dismiss all claims and counterclaims on the grounds that the case no longer presented an Article III case or controversy. Apotex then moved to amend its counterclaims to add a claim for a violation of the Sherman Antitrust Act, 15 U.S.C. § 2. The district court denied Apotex’s motion to amend its counterclaims, and granted Merck’s motion to dismiss all claims and counterclaims for lack of Article III jurisdiction.

     On appeal, the Federal Circuit affirmed the district court’s denial of Apotex’s motion to add an antitrust counterclaim, and vacated the district court’s decision regarding infringement and invalidity as moot and remanded with instructions to dismiss the claims as moot. In reaching those decisions, the Federal Circuit stated that a justiciable Article III controversy may continue to exist between a patentee drug company and an ANDA filer in the context of the Hatch-Waxman Act even after the patentee drug company has granted the Paragraph IV ANDA filer a covenant not to sue. Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1296-97 (Fed. Cir. 2008).  However, in this case, two events after oral argument on appeal rendered the infringement and validity claims moot:

1. The FDA decided to treat the statutory automatic 30-month stay on Apotex’s ANDA as dissolved once the district court dismissed the case; thus Apotex's ANDA could be approved; and 
   
   
2. Teva, which filed the first ANDA against FOSOMAX®, began marketing its generic FOSOMAX® on or about February 6, 2008, so Apotex no longer suffered a delay in entering the market that is traceable to Merck and redressible by a court judgment.

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     35 U.S.C. § 156(d)(1) requires the submission of a patent term extension (PTE) application within 60 days from the date the patentee obtains permission from the FDA to commercially market or use a drug product that is the subject of a new drug application (NDA). This provision was enacted because FDA review of NDAs may take years after a patent covering the drug that is the subject of the NDA has issued by the PTO.

     On June 23, 2008, the U.S. House of Representatives passed by voice vote H.R. 6344, which had been introduced the same day by Rep. Delahunt (D-MA), and is similar to a provision included in the House version of the Patent Reform Act of 2007. The current bill is entitled "To provide emergency authority to delay or toll judicial proceedings in United States district and circuit courts, and for other purposes." Sec. 4 states:

"The Director may accept an application under this section that is filed not later than three business days after the expiration of the 60-day period provided in subsection (d)(1) if the applicant files a petition, not later than five business days after the expiration of that 60-day period, showing, to the satisfaction of the Director, that the delay in filing the application was unintentional."

     The bill would retroactively cover Massachusetts-based The Medicines Company, which filed a PTE application for U.S. Patent No. 5,196,404 on the 62d day after FDA approved its NDA for ANGIOMAX, an anticoagulant.

     Status: Received in the Senate and read twice and referred to the Committee on the Judiciary.

     Hat tip to the Anticipate This! Patent and Trademark Law Blog.

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    Eric Lane, a patent attorney at Luce, Forward, Hamilton & Scripps in the firm's Intellectual Property and Climate Change & Clean Technologies practice groups, publishes the Green Patent Blog. This relatively new website is dedicated to discussing and analyzing intellectual property issues relating to clean technologies and renewable energy. Mr. Lane's timing couldn't be better, given the media and consumer product industries' hightened interest in all things green.

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     U.S. Patent & Trademark Office (PTO) records show that for the period January through June 2008, the PTO granted 986 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO). That is a 1% decline in the number of patents issued to Maryland inventors for the same period in 2007 (993), and a 5% decline over 2006 numbers (1,038).

     The number of published patent applications naming at least one Maryland inventor in the first half of 2008 was up compared to last year. According to the PTO, 1,579 patent applications naming at least one Maryland inventor were published during the period January through June 2008, which is a 6% increase in the number of patent applications published for the same period in 2007 (1,495 patent applications), and a 5% increase over 2006 numbers (1,511).

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• Nacre AS v. Silynx Communications, Inc., No. 07-cv-02676, filed Oct. 2, 2007; assigned to J. Williams.

     Plaintiff Nacre AS is a Norwegian company that alleges ownership of U.S. registered trademark QUIETPRO, as well as U.S. Patent No. 7,039,195 (“Ear Terminal”) and U.S. Patent No. 6,567,524 (“Noise Protection Verification Device”). In September 2007, Nacre filed a trademark opposition proceeding against Rockville, MD-based Silynx Communications' QUIETOPS mark before the U.S. Trademark Trial and Appeal Board. That proceeding was stayed when, in October 2007, Nacre filed the above lawsuit against Silynx and its CEO, Gil Limonchik, alleging trademark and patent infringement. On June 12, 2008, the infringement allegations against Limonchik were dismissed without prejudice. Memorandum and Opinion (June 12, 2008). Limonchik, who according to court papers was a former Nacre consultant, had filed a motion to dismiss with prejudice under Rule 12(b)(6) (failure to state a claim).

     In granting the motion as to Count I (trademark infringement), Judge Williams stated that in order for a trademark claim against a corporate officer to survive a Rule 12(b)(6) motion, a plaintiff must allege, in addition to a corporation's infringing activity, that the individual corporate officer played an active role in the infringing activity. In this case, Judge Williams found Nacre's complaint failed to state factual allegations to indicate what actions Limonchik had taken in an individual capacity to infringe upon the QUIETPRO (R) mark. The only relevant allegations in Nacre's complaint, Judge Williams said, were "Defendant have and are infringing the rights of Nacre in QUIETPRO (R) under 15 U.S.C. 1125 and the common law" and "Defendants' infringement of Nacre's rights in QUIETPRO (R) is and has been willful."  Neither of those statements mentioned what specific role Limonchik played in the infringement, Williams found.      

     In granting the motion as to Counts II and III (patent infringement), Judge Williams found Nacre's complaint failed to allege facts sufficient to preclude dismissal of these counts. No part of the complaint, he wrote, offered facts to justify piercing the corporate veil, to demonstrate Limonchik's specific intent or action to induce infringement or facts to support contributory infringement liability.

     Nacre's case is not completely lost, however. Judge Williams' dismissal was made, as noted above, without prejudice as to Nacre's right to amend its complaint to add more factual allegations:

"Plaintiff has walked a fine line in drafting the complaint. It is possible to conjecture facts which would support Defendant Limonchik's liability in this case. However, the law requires a plaintiff to allege enough facts to put the defendant on notice of the claims and the grounds for those claims. Here, Plaintiff has not stated clear grounds for the claims alleged in the complaint."

     Judge Williams noted that "[Limonchik] has not offered any evidence that he would be prejudiced by an amendment [of the complaint], that an amendment would be futile, or that Plaintiff engaged in undue delay. * * * Defendant asks for dismissal with prejudice solely on the grounds that Plaintiff has failed to allege sufficient facts."

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     In Victor Stanley, Inc. v. Creative Pipe, Inc., No. 06-2662 (D. Md. May 29, 2008), U.S. Chief Magistrate Judge Grimm describes the proper means for asserting that documents are protected or immune from discovery because of the attorney-client privilege or attorney work product doctrine. Judge Grimm's explanation comes at the end of his opinion in Victor Stanley, published two weeks ago.

The Issue

     Because a party responding to a Rule 34 request for the production of discovery is entitled to refuse to produce documents if they are privileged or work product protected, Judge Grimm pointed out that the Federal Rules of Civil Procedure require that when doing so, the responding party must “describe the nature of the documents, communications, or tangible things not produced or disclosed--and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.” The most common way to do this, he wrote, is by using a privilege log, which identifies

1. Each document withheld,
2. Information regarding the nature of the privilege/protection claimed,
3. The name of the person making/receiving the communication,
4. The date and place of the communication, and
5. The document’s general subject matter.

What Really Happens?

     In actuality, Judge Grimm, who in his position as Magistrate referees all kinds of discovery disputes, found that lawyers infrequently provide all the basic information called for in a privilege log, and if they do, it is usually so cryptic that the log falls far short of its intended goal of providing sufficient information to the reviewing court to enable a determination to be made regarding the appropriateness of the privilege/protection asserted without resorting to extrinsic evidence or in camera review of the documents themselves. Few judges, he said, find that the privilege log is ever sufficient to make the discrete fact-findings needed to determine whether a privilege/protection was properly asserted and not waived.

What Should Lawyers Be Doing? 

     According to Judge Grimm, parties should be wary of filing a response to a Rule 34 document production request that asserts privilege/protection as a basis for refusing to make requested production without having a factual basis to support each element of each privilege/protection claimed for each document withheld, because doing so is a sanctionable violation.

     Insuring that a privilege or protection claim is properly asserted in the first instance and maintained thereafter involves a several step process, Judge Grimm wrote.

(1)  First, pursuant to FRCP 26(b) (5), the party asserting privilege/protection must do so with particularity for each document, or category of documents, for which privilege/protection is claimed.

(2)  After that, if the requesting party challenges the sufficiency of the assertion of privilege/protection, the asserting party may no longer rest on the privilege log, but bears the burden of establishing an evidentiary basis–by affidavit, deposition transcript, or other evidence– for each element of each privilege/protection claimed for each document or category of document. A failure to do so warrants a ruling that the documents must be produced because of the failure of the asserting party to meet its burden.

(3)  If the asserting party makes this showing, and the requesting party still contests the assertion of privilege/protection, then the dispute is ready to submit to the court, which, after looking at the evidentiary support offered by the asserting party, can either rule on the merits of the claim or order that the disputed documents be produced for in camera inspection.

Result

     In Victor Stanley, Judge Grimm said that had he not ruled that Defendant's 165 inadvertently produced documents waived the privilege/protection status of the documents, then the effect of a failure by the Defendants to comply with the court’s order regarding the proper manner in which to assert privilege/protection would have warranted an order to produce the materials for failure to carry the burden of demonstrating the existence of the privilege/protection claimed. 

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     Below are summaries of recent IP-related lawsuits filed in the the U.S. District Court for the District of Maryland in 2008 (source: Justia).

• Magnus v. Association of Pet Dog Trainers, No. 8:2008cv00850; filed April 4, 2008; assigned to J. Williams

   Plaintiff Vicki Lynn Magnus, a Waldorf, MD, resident, filed this declaratory judgment action against the Association of Pet Dog Trainers (APDT), a New Jersey company based in Greenville, SC. APDT allegedly owns the registered mark for its acronym name. According to her complaint, Magnus, a former member of APDT, created an Internet message board on December 1, 2003, "for discussion of issues of common interest" among other APDT members. Claiming the board was protected under the doctrine of fair use (copyright), the Lanham Act (trademark), and free speech under the First Amendment, Magnus received a cease and desist letter from APDT in 2006. When she objected, her membership was allegedly terminated "without cause." About the same time, APDT sent a "take down" letter to the Internet Service Provider and host of the message board, which complied with the request. Magnus is seeking relief in the form of a declaration that her use of the APDT acronym is lawful, noninfringing, and qualifies as a fair use.

• Nutramax Laboratories, Inc. v. Theodosakis, No. 1:2008cv00879, filed April 7, 2008; assigned to J. Blake

     Nutramax is a Maryland company based in Edgewood, MD. Defendants are Jason Theodosakis, M.D., and Supplement Testing Institute, Inc. (STI), which allegedly sell nutritional supplements, including those allegedly covered by U.S. Patent No. 6,797,289, for “Use of anabolic agents, anti-catabolic agents, antioxidant agents, and analgesics for protection, treatment and repair of connective tissues in humans and animals.” Claim 1 of the ‘289 patent covers a “synergistic combination of an aminosugar and avocado/soybean unsponifiables [ASU].” Nutramax sells Cosamin® ASU and Avoca ASU® under the '289 patent. This is the second lawsuit filed this year by Nutramax in which it asserts the '289 patent (see here).

• National Fallen Firefighters Foundation v. TWL Corp., No. 1:2008cv00896, April 9, 2008; assigned to J. Davis

      This trademark infringement lawsuit involves the mark EVERYONE GOES HOME owned by NFFF, and defendants use of EVERYBODY GOES HOME in connection with a training simulation program.

• Bill Me Later, Inc. v. MODASolutions Corp., No. 1:2008cv00897, filed April 9, 2008; assigned to J. Blake

     This trademark infringement, trademark dilution, and unfair competition lawsuit involves the mark BILL ME LATER, allegedly owned by plaintiff, who is seeking monetary damages, and attorney's fee, among other relief, from Canada-based MODASolutions.

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     Employees of Maryland companies with R&D, manufacturing, and other  capabilities located outside the US may be tempted to collaborate with their counterparts located abroad. It's important to remember, however, that exporting technology information outside the US is highly regulated by several US agencies.

     If the exportation of technology information to overseas colleagues (or to anyone else) is for the sole purpose of filing a patent application outside the US, a license to export that information must first be obtained from the U.S. Patent & Trademark Office (PTO). 35 U.S.C. § 184 provides the legal basis for that requirement:

"Except when authorized by a license obtained from the Commissioner of Patents a person shall not file or cause or authorize to be filed in any foreign country prior to six months after filing in the United States an application for patent or for the registration of a utility model, industrial design, or model in respect of an invention made in this country. A license shall not be granted with respect to an invention subject to an order issued by the Commissioner of Patents pursuant to section 181 of this title [Patent Secrecy Act] without the concurrence of the head of the departments and the chief officers of the agencies who caused the order to be issued. The license may be granted retroactively where an application has been filed abroad through error and without deceptive intent and the application does not disclose an invention within the scope of section 181 [i.e, secrecy] of this title."

     The term "application" includes patent applications and any modifications, amendments, or supplements thereto, or divisions thereof.

     For information concerning the consequences of failing to comply with the requirements set forth above, continue reading...

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     The US Patent & Trademark Office (USPTO), the European Patent Office (EPO), and the Japan Patent Office (JPO) agreed on a common patent application format (CAF), which is shown below.

     The USPTO states that its rules and procedure are consistent with the CAF, and that while some of the requirements of the CAF go beyond what the USPTO requires, the USPTO will accept an application in the CAF. It is noteworthy that the CAF does not include U.S.-specific requirements and optional content, including (1) cross-reference to related applications, (2) a statement regarding federally sponsored research or development, and (3) the names of the parties to a joint research agreement. Items (1), (2), and (3) may still need to be included in an application that otherwise follows the CAF.

     The EPO is planning to implement the CAF in the beginning of 2009 (paper, PDF and XML format will be accepted). The JPO is preparing for the introduction of the CAF in early 2009, except that the sequence listing is a separate part of the description, and that the request contains the number of the figure of the drawings which the applicant suggests should accompany the abstract are scheduled to be introduced in 2011.

ACCEPTABLE COMMON APPLICATION FORMAT FOR PATENT APPLICATIONS 

Description

Title of Invention

Technical Field

Background Art

Summary of Invention

Technical Problem

Solution to Problem

Advantageous Effects of Invention

Brief Description of Drawings

Description of Embodiments

Examples

Industrial Applicability

Reference Signs List

Reference to Deposited Biological Material

Sequence Listing Free Text

Citation List

Patent Literature

Non Patent Literature

Claims

Abstract

Drawings

Sequence Listing

Notes:

• Link to the PTO notice
• Link to the MPEP showing the current acceptable application format

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     Below are links to and highlights of recently published blog posts discussing current events relating to the Patent Reform Act of 2007 (s.1145). It appears from all accounts that Sen. Arlen Specter (R-Pa.), ranking minority member of the Senate Judiciary Committee, and his Republican caucus, may block pending patent reform legislation until there is a "fair and equitable treatment" on the confirmation of federal judges, and resolution of provisions concerning apportionment of damages for patent infringement.

• Patent Bill Hits Impass in the Senate, Wall Street Journal (April 18, 2008)

     Gret Hitt, noting that Patent Reform efforts appear to be stalled in the Senate due to an impass over provisions in S. 1145, quotes Sen. Leahy, Chairman of the Judiciary Committee, as saying, "This was a missed opportunity."

• S.1145: "Not dead, but on ice", IPBIZ (April 17, 2008)

     Quoting a Reuters report, Lawrence Ebert points out that Barack Obama and his patent advisor, Mark Lemley, favor patent reforms, while U.S. trade unions oppose the bill.

• US Patent Reform Stalls as Senate Negotiations Break Down, IP Watch (April 15, 2008)

      Describes how Sen. Leahy's plan to bring s.1145 to a vote was derailed when he failed to agree on several provisions with the panel’s ranking member, Sen. Arlen Specter.

• Cracks Forming in the Passage of Patent Reform Act, 271 Patent Blog (April 9, 2008)

     Peter Zura, one of the first to blog that Sen. Specter was pulling his support for s.1145, quoted a report stating that the Senator "cannot join" his colleagues "on some parts of the bill," citing apportionment of damages as a "principle sticking point."

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    The table below identifies the top 10 states having the most copyright, trademark, and patent lawsuits filed in their respective U.S. district courts during the first quarter of 2008 (source Justia.com). The numbers show that California had the most filings, followed by, in order, Texas, New York, Illinois, Florida, Pennsylvania, North Carolina, New Jersey, Ohio, and Michigan.  The table shows Maryland's ranking: 24th overall, but 15th for trademark and copyright filings. 

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     U.S. Patent & Trademark Office (PTO) records show that for the period January through March 2008, the PTO granted 468 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO). However, that is a 7% decline in the number of patents issued to Maryland inventors for the same period in 2007 (502), and a 4% decline over 2006 numbers (485).

     The number of published patent applications naming at least one Maryland inventor in the first quarter of 2008 was up compared to last year. According to the PTO, 857 patent applications naming at least one Maryland inventor were published during the period January through March 2008, which is an 11% increase in the number of patent applications published for the same period in 2007 (773 patent applications), and a 15% increase over 2006 numbers (743).

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     On April 18, 2008, the University of Maryland School of Law Intellectual Property Law and Business Law Programs, and the Journal of Business & Technology Law, will host a panel discussion entitled "The New Private Ordering of Intellectual Property: The Emergence of Contracts as the Drivers of Intellectual Property Rights." The panel will address the renewed U.S. Supreme Court interest in patent cases, and the increasing importance of better defining contracts to govern patent rights among parties to the agreement. Speakers include: Jonathan Klein-Evans (IP Counsel, MedImmune), Thomas Woolston (CEO, MercExchange), Gregory Castanias (Partner, Jones Day), Jeffrey Wang (Partner, Wang, Hartmann, Gibbs & Cauley, PLC), F. Scott Kieff (Professor of Law, Washington University in St. Louis), and Andrew Beckerman Rodau (Professor of Law, Suffolk University Law School).

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• Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., No. 2007-1448 (Fed. Cir., argued March 7, 2008)

     Update: Petersburg, Virginia-based Star Scientific, Inc., sued R.J. Reynolds Tobacco Co. for patent infringement in the U.S. District Court for the District of Maryland in 2001. A bench trial on the issue of the enforceability of the asserted patents was held in 2005.  On June 25, 2007, the District Court found Star’s patents to be unenforceable on the basis of inequitable conduct by Star’s attorneys during prosecution of Star’s patents before the U.S. Patent & Trademark Office.  Thereafter, Star characterized the decision as “stunning and totally without support in the record,” and concluded that “the opinion ignores significant portions of the record, distorts others, and spins a tale that is unrecognizable to those who attended the trial.” 

     On appeal, the Federal Circuit (Michel, Dyk, Schall) heard lengthy arguments on March 7, 2008, concerning the District Court’s judgment, which centered on the actions of five lawyers in four different law firms and how they acted in view of their knowledge of a key prior art memorandum—the Burton letter—which discusses features of the invention claimed in Star’s patents, and which was communicated to the inventor prior to his filing his first patent application.

   During the oral argument, the Federal Circuit Judges framed the inequitable conduct issue as follows:

“The issue here we’ve been discussing is intent. Is it possible to find the requisite level of intent without implicating the attorneys? In other words, assume for the moment that one were to come to the conclusion that the attorneys in this case, starting with the Sughrue firm through the Banner firm through the Crowell firm, acted in good faith, does that take away necessarily the determination of intent that is needed to support inequitable conduct?”

     Inequitable conduct--also referred to as fraud on the Patent Office--is often plead as a defense in patent infringement lawsuits. Typically, the defense involves allegations that individuals involved in prosecuting a patent application intentionally misrepresented information provided to the PTO by making false or misleading statements, or withheld material prior art from the PTO by not disclosing closely-related, or "material" publications or test data. Allegations of inequitable conduct by prosecuting attorneys, who are usually not parties to the case in which the allegations are raised, are viewed with interest, not only because allegations of inequitable conduct in court papers are often publicized in the media, but also because a finding of inequitable conduct by members of the patent bar can result in suspension. 35 U.S.C. § 32.

     Perhaps that is why Carter Phillips, lead counsel for Star Scientific, argued the issues on appeal as involving lawyer reputations:

“The District Court analyzed this case as if there was a rather substantial conspiracy among four quite reputable law firms [Sughrue, Mion, Banner & Witcoff, Paul Hastings, and Crowell]. And in making that determination, it was very critical to [the Judge’s] analysis that he says, and this is the quarantine portion of the analysis, and this is the linchpin of the District Court’s analysis: it is the isolation of the Banner firm—that’s the recipient [of the prosecution files]—the isolation of the Banner firm from predecessor counsel was part of an intentional effort to avoid tainting the Banner firm with Delmendo’s [Sughrue's] knowledge, with whatever concerns he may have had about this particular letter, the Burton letter. And then subsequently, the District Judge also says, the Court finds that if Star had not prevented contact between Delmendo and Rivard, Delmendo would have communicated his knowledge and information [to the Banner firm]. So that this entire analysis, predicated on the assumption that there is somehow a nefarious conspiracy going on here, is complete fabrication. There is no evidence that supports it. And yet it is the critical element for the District Court to finding intent.”

     At the conclusion of the argument, Judge Michel, in a somewhat unusual move but one underscoring the importance of this case, ordered the parties to submit additional briefs to clear up exactly what each of the lawyers who knew about the Burton letter said and did, and where that evidence is found in the record:

“Requesting from both counsel letter briefs not exceeding 10 pages on the factual guts of particularly with regarding to the position and activities of Delmendo and the others who’ve been mentioned here so we can trace the chain of what did each of these people say and where do we find it in the record. Because obviously great interest on our our part in understanding exactly what the evidence was so we can compare the evidence, the actual words of testimony, with  the findings that the District Judge made, which explicitly or implicitly have to rest on those bits of testimony.”

 

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• Nacre AS v. Silynx Communications, Inc., No. 07-cv-02676, filed Oct. 2, 2007.

     Update:  Rockville, MD-based Silynx Communications and Norway's Nacre AS have been facing off on all fronts in their battle to gain control of the U.S. military tactical hearing protection and communications headset market, including the intellectual property front. In September 2007, Nacre, which owns the QUIETPRO trademark, filed a trademark opposition proceeding against Silynx's QUIETOPS mark before the U.S. Trademark Trial and Appeal Board. That proceeding was stayed when, in October 2007, Nacre filed a trademark and patent infringement lawsuit against Silynx in the U.S. District Court for the District of Maryland, which is pending (additional counsel for Nacre just recently motioned for pro hac admission to the Maryland court). In January 2008, Silynx lost its protest of an award from the Dept. of the Navy to Nacre to acquire a quantity of combat radio headsets from the company.

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     On March 12, 2008, Senate Judiciary Committee Chairman Patrick Leahy (D-VT) issued a press release outlining possible amendments to S.1145, the Patent Reform Act of 2007. As stated in the press release:

"Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), Committee Member Orrin Hatch (R-Utah), and Ranking Member Arlen Specter (R-Pa.), have been working for months with a bipartisan coalition of senators in preparation of floor consideration of the Patent Reform Act, which would make the first reforms to the country's patent laws in more than 50 years. The Judiciary Committee passed the legislation last July, and Leahy, Hatch and Specter have held dozens of meetings and briefings in the months since, listening to concerns from stakeholders, and working to address the concerns of the wide cross-section of interested parties."

     Apparently, at least some of the Judiciary Committee members and other Senators have been "urging consideration of the legislation in the full Senate for months, and Majority Leader Harry Reid (D-Nev.) has signaled the chamber could take up the bill in April."

     The major proposed amendments to the bill are summarized below and contained in detail here (zip file):

• “Best Mode” – eliminates ‘best mode’ as a ground for invalidating a patent, but maintains it as a requirement to obtain a patent
  
  
• Ex Parte Provision – restores third party ex-parte reexamination
  
  
• Federal Circuit Judges – ensures that any Federal Circuit judge who does not reside within a 50-mile radius of Washington, DC, must use the chambers of an existing courthouse in the district where they reside
  
  
• Interference – provides technical amendment to allow for appeal to the Federal Circuit of USPTO board interference decisions commenced prior to the date of the Act; and amends the bill to delete interference-related provisions and replace with new derivation-related provisions
  
  
• Interlocutory Appeals – limits interlocutory appeals of claim construction orders to those for which the District Court determines there is a reasonable basis for disagreement and the appeal may advance the ultimate termination of the litigation
  
  
• Marking Provision – deletes the marking provision in the bill and maintains the current law
  
  
• “Objective Recklessness” – codifies the Federal Circuit court’s ruling in Seagate, holding that infringement is only willful if the infringer acts with objective recklessness of the patent
  
  
• Patent and Trademark Board Judges – ensures that the appointment of patent and trademark judges is consistent with the Appointments Clause
  
  
• Patent Board Judges – technical amendment to clarify that the Patent Board’s duties include the conduction of derivation proceedings
  
  
• Post-Grant Review – provides technical amendment to delete a redundancy in sec. 338 as created in S. 1145; corrects an inconsistency between S 337 (1) and (2), to preclude requesting or maintaining a post-grant review proceeding after a final decision in litigation on the same patent, based on any issue that was raised or could have been raised, in the litigation; defines “final decision” in the estoppel provision; and provides for technical amendment to delete a redundancy
  
  
• Severability – establishes a severability clause in the bill 
   

    Several sources have reported in the last few weeks that proponents of the bill may not have the required votes to invoke the Cloture Rule, which limits the amount of debate on the floor prior to a vote (thereby blocking any filibuster).

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• #16: Wolsey v. Tactical Medical Solutions, LLC, No. 1:2008cv00546; filed February 28, 2008; assigned to J. Quarles

    

     Plaintiffs Henry Garnet Wolsey and Althea Wolsey are residents of the United Kingdom, and the inventors of U.S. Patent No. 6,067,803 for “Cooling Pouch,” which they describe as being used for cool storage of vials containing medicine. Plaintiffs’ sell in the U.S. the Frio Wallet, a flat foldable storage device with pockets similar to FIG. 1 from the ‘803 patent.

     Plaintiffs allege that Tactical Medical Solutions, Inc., and Tactical Medical Solutions, LLC, both reportedly South Carolina entities, have infringed the ‘803 patent by selling the “I.V. Evaporative Cooling System” (IVECS™) to the U.S. Army Medical Research & Material Command, which is a Command organization headquartered at Ft. Dietrich, MD. Plaintiffs are seeking an injunction and unspecified monetary relief.

     Daniel Chemers and Sherry Flax of Saul Ewing (Baltimore) filed the complaint on behalf of the Plaintiffs.

• #17: Simon Sys., Inc. v. Corel Corp., No. 8:2008cv00568; filed March 3, 2008; assigned to J. Messitte

     Rockville, Maryland's Simon Systems, Inc., sued Corel Corp., which is based in Ontario, Canada, for infringement of SSI’s U.S. Patent No. 5,559,562, entitled “MPEG Editor Method and Apparatus.” SSI alleges that Corel has sold in Maryland, MPEG editing equipment that infringes the ‘562 patent, and further alleges that such sales were willful and deliberate. Damages are estimated at “well in excess of $1,500,000.”

     Daniel Ward of Ward & Ward, PLLC, filed the complaint on behalf of SSI.

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Today's lawsuit summaries involve patent and trademark issues (source: Justia). 

• #13: Pennzoil-Quaker State Co. v. Anton Schmidt, Jr., No. 8:08cv00430; filed February 15, 2008; assigned to J. Chasanow

     Pennzoil-Quaker State, a Delaware company based in Houston, TX, contends that it is owner of the PENNZOIL logo and related marks (used in commerce for the sale and promotion of lubricants and other petroleum-based products). Defendant Schmidt allegedly does business as and is the owner of Auto Lube, Inc., in Laurel, MD. According to the complaint, Pennzoil and Schmidt entered into a purchase and licenses agreement which provided for the display of the PENNZOIL mark and signs in Defendant’s Auto Lube facility. Pennzoil contends that Schmidt breached the agreement, and is now infringing the mark and logo. 

     Matthew Kirtland and Rena Scheinkman of Fulbright & Jaworski (Washington, DC) filed the complaint on behalf of Pennzoil.

• #14: United States Olympic Committee v. Olympic Supply, Inc., No. 8:08cv00496; filed February 25, 2008; assigned to J. Chasanow

     The USOC is a federally chartered corporation based in Colorado Springs, CO. Under the Olympic Sports Act, the USOC was granted the exclusive right to use the OLYMPIC marks in the United States (including OLYMPIC, OLYMPIAD, the five interlocking rings symbol, and others), and is the owner of the federally-registerd OLYMPIC mark.

     USOC’s complaint states that Defendant Olympic Supply, Inc. (d/b/a Olympic News), is a Maryland entity based in Capitol Heights, MD. The identities of Defendants Does 1-10 are unknown. Defendants are accused of using the OLYMPIC mark as part of a retail trade name despite demands by the USOC to cease and desist such action, in violation of the Olympic and Amateur Sports Act.

     Kevin Arthur and Ezra Gollogly of Kramon & Graham (Baltimore) filed the complaint on behalf of the USOC.

• #15: Nutramax Labs., Inc. v. Genesis Today, Inc., No. 1:2008cv00520; filed February 26, 2008; assigned to J. Davis

     Readers of this website may recall that Nutramax Laboratories is an Edgewood, MD, entity that “researches, develops, manufactures, markets, distributes, sells, and has sold, nutritional supplement products across the United States.” Its complaint alleges that it is the owner of U.S. Patent No. 6,797,289 for “Use of anabolic agents, anti-catabolic agents, antioxidant agents, and analgesics for protection, treatment and repair of connective tissues in humans and animals.” Claim 1 of the ‘289 patent covers a “synergistic combination of an aminosugar and avocado/soybean unsponifiables [ASU].” Glucosamine is an aminosugar. Nutramax alleges that it has sold Cosamin® ASU and Avoca ASU®.

     Defendant Genesis Today, Inc., a Texas corporation, and Defendant Swanson Health Products, Inc., a North Dakota corporation, are accused of infringing the ‘289 patent by selling “4JointHealth” (Genesis) and “Joint Formula w/Hyaluronic Acid” (Swanson), containing the claimed ingredients, and thereby directly competing with Nutramax’s products. Nutramax is seeking an injunction and unspecified monetary relief.

     Robert Bowie and Joshua Glikin of Bowie & Jensen, LLC (Towson) filed the complaint on behalf of Nutramax.

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     Not too long ago, I noticed that Google® Patents was including an "RSS" feed link on some of its hit lists. I started using this feature to track what others are saying in new patent applications about specific pharmaceutical drugs, medical diseases, or a specific patent number (a client's patent, for instance). Here's how it works. 

     If I'm interested in tracking, say, a specific kind of cancer, I can search Google® Patents using that search term. At the bottom of the results page is a link that looks like the following:

"Stay up to date on these results using the patents RSS feed on cancer"

     I then cut and past the link into my RSS feed reader software. Whenever Google® Patents adds a new patent application that contains the search term ("cancer," in this example), my feed reader will grab the text of the application (or a portion thereof) and display it in my reader along with a link to the actual patent application on Google® Patents. 

     This saves me the time of having to manually enter the search every few days or whenever I need to know what others are discussing in patent applications about my topic of interest. This is especially useful when I want to track what others are saying about a client's patent portfolio, or a specific generic drug formulation that I might be researching, or whatever.

     You can do the same thing in Google® Web, if you want to broaden the scope of your search to include the entire Internet.

     "RSS" (stands for "Really Simple Syndication"). Click here for a summary of how RSS works (Wikipedia discussion).

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Below are the 10 most recent popular Google® searches that resulted in hits on this website. Leading the hit parade are two patent and trademark infringement lawsuits in Maryland: Technology Patents v. Deutsche Telekom (for more about this lawsuit, click here, here, here, and here), and Nacre v. Silynx (QUIETPRO) (here and here).

1. "Technology Patents LLC"
2. "Silynx"
3. "technology patents llc"
4. "Technology Patents LLC v. Deutsche Telekom AG"
5. "maryland ip blog blank rome"
6. "quietpro"
7. "district court of maryland sms" *
8. "maryland IP blog"
9. "Gerry Kennedy lonza"
10. "blog on intellectual property law"

* The Technology Patents lawsuit involves SMS technology

I'll have more about the Technology Patents lawsuit soon.

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     Below are summaries of recent IP-related lawsuits filed in the the U.S. District Court for the District of Maryland in 2008 (source: Justia). The first summary involves a discovery matter relating to a patent lawsuit filed in the E.D. Texas.

• #8:  Candela Corporation v. Palomar Medical Technologies, Inc., No. 8:2008cv00268, filed January 31, 2008; assigned to J. Williams

     This lawsuit was filed in and is pending in the U.S. District Court for the Eastern District of Texas (No. 9-06-cv-277RHC). It involves patents covering treatment of wrinkles in the skin using radiation-emitting devices (U.S. 5,810,801; 6,120,497; and 6,659,999). 

     The case is before the U.S. District Court for the District of Maryland to enforce a subpoena duces tecum issued from the Maryland court to Dr. Hema Sundaram, ordering her to permit production, inspection, and copying of specified documents sought by patentee Candela. Candela's theory of infringement is that Palomar has induced physicians and others to use the accused devices, and it now seeks information from 16 physicians about how they operated the accused devices, and whether communications from Palomar to those physicians indicated how the accused devices should be operated for wrinkle treatment. That type of evidence is classic inducement evidence that patentees typically seek. 

     Candela's motion recognizes a number of privacy issues involved in seeking production of medical-related documents from physicians in patent infringement cases. Objecting to the subpoena, Dr. Sundaram's counsel stated that the protective order in place was insufficient to protect medical records or patient information in view of the Health Insurance Portability and Accountability Act (HIPAA). Patent counsel need to be aware of HIPAA's requirements because redactions alone may not be in compliance unless they remove all "individually identifiable health information."

• #9:  Green v. Conagra Foods, Inc., No. 1:2008cv00296, filed February 4, 2008, assigned to J. Quarles

     Green, a Michigan resident, alleges ownership of U.S. Patent No. 5,315,083, which is directed to a microwave cooking utensil as shown in the patent (see below). Green sued ConAgra, which is reportedly a Nebraska company, in Maryland because ConAgra sold infringing utensils in Maryland, according to the complaint.

• #10:  The Lindy Bowman Company v. Jeanmarie Creations, LLC, No. 1:2008cv00313, filed February 5, 2008, assigned to J. Quarles

      This trademark infringement, false designation of origin, unfair competition, and passing off case involves Elkridge, MD-based The Lindy Bowman Company, and defendants Jeanmarie Creations and Walgreens. Plaintiff alleges ownership and use of GIFT WRAP IN A SNAP mark for pre-packaged gift wrap kits. Plaintiff is seeking an injunction, an accounting, and unspecified monetary relief.

• #11:  EO Mfg., Inc. v. Ridge Tool Co., No. 1:2008cv00311, filed February 5, 2008; assigned to J. Bennett

     This patent infringement case involves EO Mfg., an Illinois company and the assignee of U.S. Patent No. 7,096,764, which is directed to a pipe wrench. Defendant Ridge Tool is an Ohio company. Jurisdiction is predicated on allegations of defendant's sale of allegedly infringing products in Maryland.

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     The following lawsuit filed in the U.S. District Court for the District of Maryland pits brand and generic drug makers (source: Justia).

• #7: Forest Laboratories, Inc. v. Lupin Pharmaceuticals, Inc., No. 1:2008cv00239, filed January 28, 2008; assigned to J. Legg

     This Hatch-Waxman lawsuit involves Namenda® (memantine HCl). According to the complaint, plaintiff Forest Labs., Inc., a Delaware corporation based in New York, is the exclusive licensee of Orange Book-listed U.S. Patent No. 5,061,703. Plaintiff Forest Labs. Holdings, Ltd., is an Irish company based in Bermuda; plaintiffs Merz Pharma GmbH & Co. KGaA and Merz Pharma GmbH are German companies.

     Also according to the complaint, defendant Lupin Pharmaceuticals, Inc., a Virginia company based in Baltimore, MD, is the wholly-owned subsidiary and agent of Lupin Ltd., an Indian company based in Mumbai. Lupin Ltd. allegedly submitted, through its agent Lupin Pharma, an Abbreviated New Drug Application No. 90-051 to the FDA for approval to market generic Namenda®. It sent Forest the required notice of its ANDA submission on December 14, 2007.

     Plaintiff is asserting infringement of the ‘703 patent, and is seeking to enjoin Lupin from marketing its generic formulation before expiration of the '703 patent.

     Interestingly, plaintiffs also filed a concurrent lawsuit in the District Court for the District of Columbia because they claim not to be able to determine with certainty which one of Lupin, Inc., or Lupin Ltd. was the actual filer of the ANDA. This move was in anticipation of a jurisdictional challenge by Lupin (see related post here).

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     David Donoghue at the Chicago IP Lit. Blog reports today about a discovery matter in a Northern District of Illinois patent case: Se-Kure Controls, Inc. v. Diam USA, Inc., No. 06 C 4857, 2008 WL 169029 (N.D. Ill. Jan. 17, 2008) (Cox, Mag. J.). According to David, Magistrate Judge Cox "granted in part a motion to compel discovery regarding defendant’s advice of counsel defense. The Court ordered defendants to product a technical witness that provided opinion counsel information because opinion counsel was unable to remember the substance of conversations between the two. The Court also ordered production of communications between opinion counsel and trial counsel related to the patent in suit. These communications were within the scope of defendant’s waiver, even though a deposition of trial counsel would not have been allowed." 

     This opinion is one of many to be published post-Seagate, and further illustrates the extent to which courts will allow discovery once the opinion of counsel defense is raised by defendants in patent litigation matters. Click here for summaries of other post-Seagate cases.

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     If you are interested in learning the nuts-and-bolts of trying a patent case, join Maryland U.S. District Court Judges Marvin J. Garbis and André M. Davis, other judges, and a large faculty of litigators, in Scottsdale, AZ, on February 28-29, 2008, for Trial of a Patent Case. The live course, which will also be webcasted, is part of the 15th Annual Advanced ALI-ABA Course of Study for the Corporate Counsel and the Private Practitioner. Judges Garbis and Davis presided over a combined four patent lawsuits filed in the U.S. District Court for the District of Maryland in 2007. They also have a perspective on Maryland's comprehensive e-discovery protocol, which other jurisdictions have adopted. George F. Pappas, who is representing Microsoft in the Technology Patents lawsuit pending in the U.S. District Court for the District Maryland, will co-chair the program with Judge Garbis. 

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     A year ago, West Chester, OH-based Contech Stormwater Solutions sued Mount Airy, MD-based BaySaver Technologies, Inc. and AccuBid Excavation, Inc., for allegedly infringing its U.S. Patents Nos. 5,707,527 and 6,027,639 (see related post here). After finding in favor of defendants on the question of liability, the U.S. District Court for the District of Maryland considered defendants’ business tort, and patent invalidity and unenforceability counterclaims in connection with the parties’ summary judgment motions.

Rule 37(c)(1) Sanctions

     At the outset, the court limited defendants’ use of certain evidence as a sanction under Rule 37(c)(1), “because [defendants] failed timely to disclose prior art or the underlying basis for their invalidity claims, and because they failed to demonstrate causation and damages on their business tort claims.” In particular, the court found that,

"[Defendants] did not provide a claim chart or any reasoned analysis showing where in the prior art each element of each allegedly invalid claim is located. Defendants merely attached alleged prior art references to their Opposition without any explanation of why any claim of the asserted patents is invalid over the referenced prior art. Without more, [defendants] have quite simply failed to produce specific facts showing that there is a genuine issue for trial, especially under a clear and convincing standard."

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     A search of Google© on February 4, 2008 (Monday) using the search terms "patent reform" and the date limiter "last 24 hours" returned "about 13,400" hits.  That compares to 15,400 hits for the entire previous week (same search terms, but using the date limiter "last week").  The 24-hour statistic is interesting, because the time period included Super Bowl Sunday when, presumably, even the most staunch advocates for and against patent reform took time off to watch the big game. Today, a search for "patent reform" and "last 24 hours" returned 14,600 hits. Clearly, reporting about patent reform efforts has increased on the Internet. This may be due to the fact that this week and next are considered by many to be the home stretch before the Senate votes on its current version of S.1145, the Patent Reform Act of 2007.

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     The following Notice concerning patent reform was posted on the USPTO website today. Clearly, the Bush Administration is concerned about a potential vote on the Senate's version of the Patent Reform Act of 2007 (S.1145), which was placed on the Senate Calendar in late January. In a letter to Sen. Leahy, dated today, Nathaniel Wienecke, Assistant Secretary of Commerce for Legislative and Intergovernmental Affairs, writes:

"The Administration continues to oppose Section 4, "Right of the Inventor to Obtain Damages." Consequently, we continue to oppose S. 1145 - in its entirety - unless Section 4 is significantly revised, as we believe the resulting harm to a reasonably well-functioning U.S. intellectual property system would outweigh all the bill's useful reforms.

* * *

"Downstream litigation costs can be minimized through patent clarity - offered through such early elucidation mechanisms as applicant quality submissions and post-grant procedures. Flexibility in assessing damages ensures that results can be tailored, avoiding a "one-size-fits-all" approach that pleases no one."

     The entire Notice, which involves a media call tomorrow, is after the jump...

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     As promised in my earlier post regarding In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), below is a summary of cases citing the much talked about Federal Circuit opinion. This survey includes opinions published on or before January 31, 2008, but is not inclusive.

• Federal Circuit: "Under this [objectively high likelihood that its actions constituted infringement of a valid patent] standard, both legitimate defenses to infringement claims and credible invalidity arguments demonstrate the lack of an objectively high likelihood that a party took actions constituting infringement of a valid patent." The court did not elaborate on the meanings of "legitimate" and "credible". Black & Decker, Inc. v. Robert Bosch Tool Corp. (Fed. Cir. 2008)
  
  
• E.D. New York: Motion to bifurcate liability and willfulness issues denied on several grounds, including the overlap of evidence between the two issues. Computer Assoc. Intl., Inc. v. Simple.com, Inc. (E.D.N.Y. 2007)
  
  
• N.D. Illinois: "Because willfulness depends on an infringer's prelitigation conduct, in most circumstances, communications of trial counsel have little, if any, relevance. Thus, trial counsel opinions and work product of trial counsel are not subject to waiver, absent exceptional circumstances." Se-Kure Controls, Inc. v. Diam USA, Inc. (N.D. Ill. 2008)
  
  
• N.D. Illinois: Knowledge of patentee's pending patent application at time of launching new product is not enough to demonstrate willfulness; determination generally is based on post-patent, rather than pre-patent conduct; failure to assert a noninfringement defense and reliance solely on an invalidity defense is not sufficient to establish defendant acted despite an objective likelihood of infringement. Trading Techs. Intl., Inc. v. eSpeed, Inc. (N.D. Ill. 2008)

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     By now, those who follow patent issues in this country will undoubtedly have heard of In Re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007), in which the Federal Circuit heightened the standard for establishing willful patent infringement to a recklessness standard, and clarified the scope of the waiver of attorney-client privilege and work product immunity with regard to opinions of counsel relied on by defendants accused of willfully infringing. Several courts have since addressed the Seagate opinion in some detail, including the U.S. District Court for the Southern District of New York, which is presiding over the original Seagate matter (Convolve, Inc. v. Compaq Computer Corp., No. 00-civ-5141). 

     In the Convolve case, Seagate opposed Convolve's claims of willful patent infringement by relying on an opinion generated by its engineering staff together with its in-house counsel and a patent agent (they also relied on outside counsel’s opinion). Convolve then moved for an order compelling Seagate to allow discovery from Seagate's in-house counsel. The court didn't buy Seagate’s argument that the opinion was simply an engineering report, and instead found that Seagate had waived the attorney-client privilege as to all documents within the scope of the waiver as defined in In re Echostar Communs. Corp. It ordered Seagate to produce not just emails concerning the in-house opinion, which Seagate previously had produced, but any letters, memorandum, conversations, or the like between the Seagate's attorney and his client, as well as any documents referencing the communications between attorney and client concerning the opinion.  Memorandum and Order (Jan. 22, 2008).

     This ruling would have been different had Seagate not conducted its own internal patent infringement investigation before engaging outside counsel, and then relied on that investigation to establish that its actions did not rise to the level of recklessness. Companies that use in-house employees to investigate patent infringement claims (which is common), and then help in-house attorneys to develop an opinion regarding patent infringement, should not expect documents and conversations about that investigation to remain protected under the attorney-client privilege or work product doctrine, even if the company later procures and relies on an opinion from outside counsel. You just never know how far a judge will go with a waiver under In re Echostar.

     Check back later for a summary of what other courts are saying about In re Seagate.

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     I received a Tec Stretch Ear Warmer over the recent holiday season, just in time for last week's cold spell. Made by Baltimore-based 180s, the Tec Stretch product combines ear warmer and headphones in one simple device, so you can listen to your MP3 player and protect your ears from the cold at the same time. In addition to patents covering the ear warmer product, 180s has a portfolio containing over 50 utility and design patents covering a wide range of sports-related apparel and accessories. And it is not afraid to assert those patents: the company has filed no less than eight patent infringement lawsuits in just the last fours years. 

     Which leads me to today's lawsuit summary (source: Justia). 

• #5: 180s, Inc. et al v Gordini U.S.A., Inc., No. 1:2008cv00177, filed January 22, 2008

This patent and trade dress infringement lawsuit involves plaintiffs 180s, Inc. and 180s, LLC (reportedly the licensee of 180s' patents) and defendant Gordini U.S.A., Inc., a Vermont company based in Essex Junction, VT, which, according to its website, develops and manufactures cold weather apparel and accessories. The patents at issue are utility patent 6,978,483 and design patent D545,001; the trademark at issue is Registration No. 3,089,225 for the design shown below. 180s contends that Gordini's Lobz® earmuff product and packaging are similar to 180s' ear warmer product. In its complaint, 180s alleges patent infringement of the '483 and '001 patents, federal trade dress infringement of the '225 registration, and common law trade dress infringement. The company is seeking an injunction, undisclosed monetary damages, and a finding of willful infringement.

Cooley Godward Kronish LLP filed the complaint on behalf of 180s.

     Whether it is successful or not in this lawsuit, this case highlights how different forms of intellectual property protection--utility patents, design patents, and trade dress--can all be used in combination to protect various aspects of a single good or service.

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• IPO Predicts Senate May Attempt to Pass Patent Reform Bill in February

According to the Intellectual Property Owners Association website earlier this week, the "IPO believes Sen. Patrick Leahy (D-VT) will attempt to pass a revised version of S. 1145 [the Patent Reform Act of 2007] in the Senate in February. Major amendments likely will not be available more than a few days in advance of Senate consideration. It is unclear whether the Senate has the votes to pass a bill. If the Senate does pass a bill, it likely will be sent to the House for swift passage by the House without amendments, eliminating the need for a Senate-House conference." 

See this earlier post that discusses some of the obstacles to major patent reform.

• Chart Compares Senate and House Versions

Thanks to lawyer Mark Walters over at the Washington State Patent Law blog for pointing out a useful side-by-side comparison of the House and Senate versions of patent reform legislation currently pending in Congress. The comparison, in the form of a chart, was apparently put together by Foley Hoag last year (so it does not benefit from the Senate's recent Judiciary Committee report) and is available from the Licensing Executive Society website.

• Patent reform comparisons on this blog

     For coverage and comparisons of the patent reform legislation on this blog, see the following previous Patent Reform Act posts: Part 8: Attorney misconduct; Part 7: Submission of prior art search reports; Part 5: 35 U.S.C. § 103(a) (Part II); Part 4: 35 U.S.C. § 103(a) (Part I); Part 3: 35 U.S.C. § 102(a).

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     Below are summaries of the first four IP-related lawsuits filed in the the U.S. District Court for the District of Maryland in 2008 (source: Justia). These lawsuits involve allegations of patent, copyright, and trademark infringement, misappropriation of trade secrets, defamation, and a host of other state law claims. We begin with an interesting case involving Maryland's business trade/company name statute.

• #1:  Nationwide Handyman, LLC v. Nationwide Handyman & Remodeling, Inc., No. 1:2008cv00019, filed Jan. 3, 2008

    This lawsuit pits two Maryland entities and their owners against each other. Plaintiff Nationwide Handyman, LLC alleges ownership of the federally-registered NATIONWIDE HANDYMAN trademark, the same being registered with the State of Maryland as a corporate name. Plaintiff contends that Defendant Nationwide Handyman & Remodeling, Inc., led by principal Joe Butts, violated Maryland Code Annotated § 1-504, which states the following (source: Michie's Legal Resources):

"An entity name must be distinguishable upon the records of the Department [of Assessments and Taxation] from:

(1) The entity name of an entity organized or authorized to transact business in the State;

(2) An entity name reserved or registered under this subtitle; and

(3) The disclosed assumed name adopted by a foreign entity authorized to transact business in this State."

     Plaintiff further alleges that Defendant violated Maryland Code Annotated § 13-301, which defines unfair or deceptive trade practices in Maryland as "false, falsely disparaging, or misleading oral or written statement, visual description, or other representation of any kind which has the capacity, tendency, or effect of deceiving or misleading consumers." Other allegations include violations of the Lanham Act. Plaintiff is seeking an injunction and monetary damages.

     This case highlights one advantage of registering a company name in Maryland: § 1-504 is available as a cause of action to those who register their business name. Thus, companies should register their business name in addition to registering their trademarks with the U.S. Patent & Trademark Office and the Maryland Secretary of State.

     Shawn Whittaker of The Law Offices of Shawn C. Whittaker PC filed the Complaint on behalf of the Plaintiff.

     Three more cases after the jump...

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     Maryland tops the nation in research and development spending at universities, government laboratories, and other private entities and institutions, so it should come as no suprise that Maryland has lots of intellectual property that is available for commercialization. The Maryland Technology Development Corporation (TEDCO), a Maryland State government corporation, is tasked with the responsibility of trying to transfer all of that technology into the private sector in Maryland and elsewhere. 

     Enter Invenio-IP®, a database developed by the University of Maryland through a grant from TEDCO.  Invenio is a free, web-based, searchable access point containing patented and non-patented technologies available for commercialization. The database includes not only technologies developed by Maryland entities and institutions, but those developed outside the state (for now, only Virginia and DC):

• Avanti Therapeutics
• College of William and Mary
• Georgetown University
• Johns Hopkins Applied Physics Lab (Laurel, MD)
• Johns Hopkins University (MD)
• US Army Medical Research & Materiel Command
• University of Maryland Baltimore County
• University of Maryland Biotechnology Institute
• University of Maryland, Baltimore
• University of Maryland, College Park
  

     Don't expect to find only state of the art technologies in the Invenio database. I ran a search for "drug" and was presented with 291 technologies, some of which was patented several years ago. The web interface is not the best I have seen, but it gets you the information quickly. One nice feature is that you can set up an alert that will ping you when technologies matching your keywords are added to the database.

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     Several sources (see 271 Blog, for example) are reporting that another obstacle facing patent reform was overcome yesterday when the Senate Judiciary Committee reported on S. 1145, the Patent Reform Act of 2007. According to the Intellectual Property Owners Association (IPO), the "106-page draft report explains in depth the provisions of the bill as approved by the Senate on July 19, 2007, but does not contain any new or compromise provisions."

     So, will patent reform actually happen this year, as some predict? Gene Quinn over at the PLI Blog notes that "patent legislation usually has a gestation period of between 2 to 3 years, and given that Congress began working seriously on some form of patent reform in 2005 the timing is right." On the other hand, industry associations, individuals, and other stakeholders have been pulling Congressional ears in different directions as long as patent reform legislation has been around, so I'm not sure that we'll see significant patent reforms, especially when you consider that several contentious provisions are still present in the Senate bill. However, it seems likely that at least some reforms will be seen this year, as long as Congress doesn't wait too long and get distracted by the election cycle, and some of those anticipated "compromise provisions" make their way into the legislation before the Senate votes.

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     If you're in the D.C.-Maryland-Virginia area and would like to learn more about managing patent infringement litigation, don't forget about the 2008 Advanced Patent Law Institute being held in Alexandria, Virginia, starting today, January 10, 2008. My colleague, Keeto Sabharwal, a partner in Blank Rome’s Washington, DC, office, will be discussing the law of induced patent infringement tomorrow.  The session will include advice on how to effectively litigate a claim of active inducement from both the plaintiff’s and the defendant’s perspectives, and it will offer a discussion of the most recent federal circuit case law addressing the issue. Here is a link to the course for more information.

     Update:  The presentation mentioned above was switched in the schedule and presented this morning. If you're interested in a copy of the presentation materials, please email me.

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    Twenty-six plaintiffs filed 24 patent infringement lawsuits in the District Court for the District of Maryland in 2007 (see a list of the lawsuits and the parties involved after the jump). The 24 lawsuits involved 181 defendants (individuals and entities) from all over the world. If you don't count the Technology Patents LLC v. Deutsche Telekom AG case, which involved 131 defendants, the total number of defendants sued in Maryland in 2007 was 50.

     One notable change in 2007 compared to 2006 is the apparent increase in the number of patent infringement lawsuits involving life-sciences technologies (e.g., pharmaceuticals, biologics, and medical devices).

     In 2006, 21 plaintiffs filed 23 patent infringement lawsuits in Maryland involving 25 defendants. Thus, while the total number of patent infringement lawsuits in 2007 increased only slightly over 2006 figures, the total number of defendants sued in 2007 compared to 2006 increased significantly. Several factors could push the number of lawsuits even higher in 2008, including a rise in biotechnology litigation, which could involve the 300+ biotechnology companies that call Maryland home, and changes in laws brought about by patent reform legislation, which if enacted could close off certain jurisdictions outside Maryland to plaintiffs that might then consider Maryland as an alternative venue.

     Topping the list of companies filing the most patent infringement lawsuits in Maryland in 2007 were Nutramax Laboratories, Inc., the Edgewood, MD, company that specializes in nutritional supplements, and Israel's Teva Pharmaceutical Industries, Inc. (with its Teva Pharmaceuticals USA, Inc., subsidiary), both of which filed two patent infringement lawsuits in Maryland last year.

     The 24 lawsuits filed last year were assigned fairly evenly among Maryland's District Court Judges: Bennett (2), Blake (3), Chasanow (4), Davis (1), Garbis (3), Legg (1), Motz (2), Nickerson (3), Quarles (1), Titus (1), and Williams (3). 

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     An IP360 email notice last week commented about a pending Central District of California case--Applied Medical Resources Corp. v. U.S. Surgical Corp., No. 03-cv-01267--in which the court (Judge Carney, in this case) reconsidered a defendant's summary judgment motion in view of In Re Seagate Technology, LLC, 83 USPQ2d 1 (Fed. Cir. 2007) (en banc) (Newman, J., Garjarsa, J., concurring). Upon reviewing the motion under the Seagate standard, Judge Carney again denied the defendant's motion, deciding to allow the issue of willful patent infringement to be heard by a jury despite the higher burden on the patentee to establish willfulness under Seagate.

     One of the interesting aspects of Judge Carney’s decision is that the jury will consider willfulness at the same time it considers evidence of infringement liability because “some of the same evidence that supports of finding of infringement supports of a finding of willfulness.” To illustrate, Judge Carney noted that a jury may use evidence regarding whether the structure of an accused product is equivalent to a claimed element in the patent-in-suit “not only to decide whether infringement occurred but whether the structures are so similar that there was an objectively high likelihood of infringement (the first prong of the willfulness analysis).”

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     The District Court for the District of Columbia dismissed a lawsuit today brought by Gregory Aharonian and others against Carlos Gutierrez, Secretary of Commerce, in April 2007 after Margaret J.A. Peterlin was sworn in as Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office (USPTO).

     Aharonian's complaint asserted that Peterlin's appointment was improper because Peterlin "is not a citizen of the United States who has a professional background and experience in patent or trademark law,” citing 35 U.S.C. § 3(b).

     Judge James Robertson found that the text and the legislative history of the statute does not evince congressional intent required to establish a private cause of action – that is, intent to create both a private right and a private remedy. Robertson went on to say that there must be a presumption in this case that decisions involving high level policymaking personnel are left primarily to the executive. "In such a situation," he said, "one would expect Congress to speak in precise terms if it intended the courts to monitor the minimal qualifications for agency officers. Here, Congress has given only the broadest of instructions – that the Deputy Director should have 'a professional background and experience in patent or trademark law.' ”

     Because the statute is silent as to the terms "professional background" and "experience," the Court was not compelled to evaluate whether the Deputy Under Secretary/Deputy Director has or needs a law degree, whether the appointee took law school courses in intellectual property, whether the individual has a certification to practice before the USPTO, whether the appointee has law firm experience, and, if so, how many years of such experience. Noting that if Congress had intended the "extraordinary situation in which judicial review would reach to the very qualifications of agency officers for their policymaking positions, its statute would not be drawn 'in such broad terms that . . . there is no law to apply.'” Citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410 (1971).

     Link to Memorandum Opinion.

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     Of the many IP cases summarized on the Maryland IP Law blog recently, two have garnered the most attention from site visitors: Technology Patents LLC v. Deutsche Telekom, which I summarized in November, and Nacre v. Silynx Communications, which I discussed in October. I can understand why the Technology Patents case has received attention: the patent infringement allegations involve popular text messaging technology, and the number of defendants that have been sued (131) makes the lawsuit one of the largest ever filed in the District Court for the District of Maryland.

     It is not as apparent, however, why the Nacre v. Silynx case has received the attention that it has. Perhaps it is the subject matter of the lawsuit, which, according to Nacre's complaint involves “two-way radios and wireless communicators for use in combat, in battlefield conditions, in military, military special forces, and law enforcement activities.” This would seem to be a huge market today.

     Or perhaps it is the competitiveness between the parties, both of which claim on their respective websites to be the "world's leader" in communications equipment that incorporates sophisticated noise canceling/noise protection technology. Nacre sells to the U.S. and foreign governments. Rockville, MD-based Silynx Communications states on its website that its headsets are used by the U.S. Special Operations Command (USSOCOM), U.S. Army, USMC and the world’s elite Special Forces.

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     Below is a summary of the four IP-related cases filed in the the U.S. District Court for the District of Maryland last week (source: Justia). They involve a patent infringement case involving prostate cancer, a trademark infringement case involving rock climbing walls, a copyright infringement case involving Bob Marley's music, and a franchisor-franchisee trademark dispute.

• Lonza Group AG v. Northwest Biotherapeutics, Inc., No. 8:2007cv03177, filed Nov. 27, 2007

     Switzerland-based Lonza Group AG is reportedly the exclusive sub-licensee of U.S. Patent No. 5,122,464 ("Method for dominant selection in eucaryotic cells"), U.S. Patent No. 5,770,359 ("Recombinant DNA sequences, vectors containing them and method for the use thereof"), and U.S. Patent No. 5,827,739 ("Recombinant DNA sequences, vectors containing them and method for the use thereof"). It is reportedly the owner of U.S. Patent No. 5,591,639 ("Recombinant DNA expression vectors"), U.S. Patent No. 5,658,759 ("Recombinant DNA expression vectors"), U.S. Patent No. 5,879,936 ("Recombinant DNA methods, vectors and host cells"), U.S. Patent No. 5,891,693 ("Recombinant DNA methods vectors and host cells"), and U.S. Patent No. 5,981,216 ("Transformed myeloma cell-line and a process for the expression of a gene coding for a eukaryotic polypeptide employing same").

     Defendant Northwest Biotherapeutics is headquartered in Bethesda, MD. According to Lonza's complaint, Northwest has been conducting Phase II/III clinical trials involving its DCVax prostate product, which Lonza believes uses Lonza's patented GS expression technology. It is asserting patent infringement, conversion, and unjust enrichment.

     See previous post here concerning an injunction against Lonza recently issued by the District Court for the District of Maryland. 

     Nixon Peabody's (Washington, D.C.) Robert Fletcher and colleagues filed the complaint on behalf of Lonza.

• Pyramide USA, Inc. v. Meissner et al., No. 1:2007cv03198 , filed Nov. 26, 2007

     This case was brought by Frederick, MD-based Pyramide USA, Inc., which sells modular fiberglass climbing wall systems. In its complaint, Pyramide contends that it is the owner of the federally registered AQUACLIMB trademark, which it uses in connection with climbing walls installed poolside. Richard K. Meissner and HI5 Climb, LLC allegedly sell poolside climbing walls under the name AQUACLEAR. Mr. Meissner is apparently the owner of U.S. Patent No. 6,872,167, which is directed to "Artificial rock climbing arrangement adapted for water environment."

     Pyramide is alleging trademark and trade dress infringement, tortious interference with contractual and business relationships and prospective business relationships, unfair competition, and market endangerment. It is seeking a declaratory judgment of noninfringement and invalidity of the '168 patent. 

     Pyramide's "market endangerment" claim is particularly interesting. Pyramide contends that defendants' installation of poolside climbing walls creates a risk of injury (because defendants' products are allegedly "unsafe, untested, and unapproved") where none previously existed in the market, and thus creates the potential for foreclosure of the market to pool side climbing walls. This, in turn, according to Pyramide, endangers its reputation (by confusion of its products with defendants' products), and has allegedly exposed Pyramide to potential liability risks.

     Joseph Zito of ZITO TLP (Washington, D.C.) filed the complaint on behalf of Pyramide.

• Odnil Music Limited et al v. 132 Dock Street Corporation et al, No. 1:2007cv03203, filed Nov. 27, 2007

     This copyright infringement case was brought by Odnil Music and Fifty-Six Hope Road Music, alleged owners of rights in certain Bob Marley and Vincent Ford music compositions (e.g., "Is This Love," "No Woman, No Cry"), against 132 Dock Street, which owns Annapolis' Armadillo's, for alleged unauthorized public performances of the compositions. Plaintiffs are seeking statutory damages, costs, and legal fees.

• Maid to Perfection Corp, v. Vernet et al, No. 1:2007cv03175, filed Nov. 27, 2007

     Plaintiff MTP is a Maryland corporation based in Hagerstown, which allegedly owns the MAID TO PERFECTION service mark. Defendant Vernet is allegedly a Maryland resident. Defendant Maid to Perfection of Washington, DC, is allegedly a DC corporation controller by Vernet. In its complaint, MTP contends that defendants entered into and then breached a franchise agreement, have infringed and diluted the aforementioned service mark, have unfairly competed against MTP, and have falsely advertised their association with MTP. Nixon Peabody's John Bramlette and Andrew Zappia filed the complaint on behalf of MTP.

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     Peter Zura suggested in his article "R.I.P. Patent Reform" (271 Patent Blog) that the Senate will not take action on the Patent Reform Act of 2007, S. 1145, this year. His prediction is based on comments by Matthew Sandgren, counsel to Sen. Orrin Hatch (R-Utah), that were presented at a speech in Washington, D.C. in early November. Peter noted that the biggest sticking points preventing a full Senate vote today are the second window of post-grant review and apportionment of damages provisions. The FDANews Drug Daily Bulletin for Nov. 19, posted a similar summary of Sandgren's comments. The Intellectual Property Owners Association reportedly expects the Senate will consider patent reform in February 2008. 

     The BNA Daily Report for Executives, Nov. 7 and 16, 2007 (subscription required), and other sources suggest that the following stakeholders have been or are still opposed to portions of the Patent Reform Act, and many may continue to yield as much influence as possible to win over Senators: the venture capital industry (at least 30 members who sent Senators a letter earlier in November); Innovation Alliance; American Bar Association's Intellectual Property Law Section; AFL-CIO; Paul R. Michel, Chief Judge of the U.S. Court of Appeals for the Federal Circuit; The Patent Officials Professional Association (the union representing patent examiners); Coalition for 21st Century Patent Reform, whose members include the American Intellectual Property Law Association, as well as companies from the manufacturing, information technology, consumer products, energy, financial services, medical products, pharmaceutical, and biotechnology industries.

     Of course, there are many in favor of the current bill, and would love to see an up vote sooner rather than later. Certain technology companies strongly back patent reform legislation because of provisions they see as leveling the playing field in lawsuits brought by non-practicing entities and so-called "patent trolls."

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Osiris Clinical Study Shows Promise for Osteoarthritis Pain Sufferers

     Columbia, MD-based Osiris Therapeutics Inc. announced yesterday a positive one-year interim result in the evaluation of Chondrogen, a preparation of adult stem cells formulated for direct injection into the knee.

     Data from the one-year Phase I/II double-blind, controlled study of 55 patients evaluating the safety and exploratory effectiveness of Chondrogen in patients undergoing surgery to remove a torn meniscus, showed improvement in joint condition that correlated with a clinically and statistically significant improvement in pain in patients with osteoarthritis (OA) who received Chondrogen as compared to those treated with the control, hyaluronic acid (HA).  See full press statement.

     Osiris's investment in clinical trials would not be feasible without patents protecting its core technology. Osiris owns several patents relating to the use of adult stem cells, including its base patent U.S. Pat. No. 5,486,359, entitled "Human Mesenchymal Stem Cells" (1996), which claims "An isolated, homogeneous population of human mesenchymal stem cells which can differentiate into cells of more than one connective tissue type."  Other Orisis patents include U.S. Pat. No. 6,835,377, entitled "Osteoarthritis Cartilage Regeneration" (2004), which claims "A method for regenerating articular cartilage defects in a host in need thereof, comprising administering to said host cultured human mesenchymal stem cells, said human mesenchymal stem cells having a fibroblastic morphology."

     See related articles:  Maryland Daily Record, Baltimore Business Journal

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     According to U.S. Patent & Trademark Office statistics (hat tip to Steven Aftergood for gathering the statistics every year), the number of secrecy orders in effect at the end of Fiscal Year 2007 (ending September 30, 2007) reached a 12-year high, at 5,002. Secrecy orders are issued by the government when inventions submitted to the Patent Office have national security implications. Inventions falling into this category are first spotted by the Patent Office during the initial intake and scanning of patent applications, which involves a keyword search for sensitive words that can lead to a full review by a government agency (the keywords are, I believe, classified, but you can easily guess some of the words that might trigger a full review). A secrecy order means the PTO cannot issue a patent for the invention covered by the order until the order is lifted (inventors are also prohibited from disclosing the invention). Below are some of the statistics for FY '07 (parenthetical values reflect change relative to FY '06):

• Total Secrecy Orders in Effect: 5,002
• New Secrecy Orders Imposed: 128 (+19%)
  • ARMY: 22
  • NAVY: 28
  • AF: 45
  • NSA: 21
• Secrecy Orders Rescinded: 68 (-16%)
• "John Doe" Secrecy Orders: 53 (+83%)

     These statistics are seen as being relevant to Maryland because the counties surrounding Washington, D.C., are home to many government agencies and government contractors that are likely involved in patent activity that may result in secrecy orders. In fact, if you look at Patent Office statistics, many of the agencies/contractors in this area are high on the list of the number of patents issued each year in Maryland (see Rank Ordered Listing of Organizations Receiving 5 or More Utility Patents During the Period Originating From MARYLAND). Johns Hopkins University, which topped the list in 2006, operates the Applied Physics Laboratory (Howard County), a major government defense contractor. Third on the list is the Navy, which operates the Naval Research Lab (Prince George's County). The Army, which operates the Army Research Lab and biodefense research agencies in Frederick, MD, is sixth on the list. Northrop Grumman and the National Security Agency (NSA) (both Anne Arundel County) are also high on the list. And, of course, there are over 300 biotechnology companies in Maryland (mostly Montgomery County), some of which may be involved in technologies that involve national security issues.

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Summary: Patentee’s “incorporation by reference” language falls short of requirements, ends up invalidating its own patent

     In Zenon Environmental, Inc., v. United States Filter Corp., No. 2006cv1266, 1267 (Fed. Cir. Nov. 7, 2007) (Newman, J., dissenting), the Federal Circuit reversed a district court’s judgment that Zenon’s U.S. Pat. 6,620,319 patent is not invalid as anticipated by U.S. Pat. No. 5,639,373, which is an ancestor of the ’319 patent. In doing so, the Federal Circuit found that the ‘319 patent does not adequately incorporate by reference the subject matter of its ancestor patents, thus breaking the chain of continuity that would otherwise remove the earlier family patents as prior art.

     35 U.S.C. § 120, which governs entitlement to an earlier filing date in the United States, provides that:

An application for patent for an invention disclosed in the manner provided by the first paragraph of section 112 of this title in an application previously filed in the United States . . . which is filed by an inventor or inventors named in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application[.]

 

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A man walked into a bar with his alligator and asked the bartender, "Do you serve lawyers here?".  "Sure do," replied the bartender.  "Good," said the man. "Give me a beer, and my 'gator will have a lawyer." 

The patent attorney turns away from his window, the invention in his hand, and exclaims to the inventor: "Death ray my ass! It hardly even slows them down!" 

Lawyers and computers have both been proliferating since 1970. Unfortunately, lawyers, unlike computers, have not gotten twice as smart and half as expensive every 18 months.

Source: link.

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     A week ago, Judge Cacheris of the District Court for the Eastern District of Virginia, preliminarily enjoined the U.S. Patent & Trademark Office (PTO) from implementing new PTO rules that would have restricted the number of continuations and continuation-in-part applications that can be filed in a patent family, as well as the number of claims permitted in any given application. The rules caused a great deal of tension among stakeholders, hype, unecessary CIP filings, constant predictions about injunctions, non-stop bloggings, and, of course, litigation, and all for good reason. So how did we get here, and where do we stand today? Read on... 

     The PTO had planned to implement new rules on November 1, 2007. As we now know, the rules caused nothing short of an avalanche of protest from the day the Notice of Proposed Rulemaking was published in the Federal Register, with nearly everyone finding something unpalatable in the rules. SmithKline Beecham Corporation (doing business as GlaxoSmithKline (“GSK”)), stepped up and sued the PTO, seeking both a preliminary injunction and a permanent injunction to prevent the new rules from going into effect. It would be fair to say that a rallying cry in support of GSK swept the patent world. 

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Summary:  As reported in September, the first eight months of 2007 saw a decline in the number of patents granted to Maryland inventors compared to the previous year. That trend continued into September and October.

     U.S. Patent & Trademark Office (PTO) records show that for the period January through October 2006, the PTO granted 1,799 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO). However, the PTO only issued 1,658 patents to Maryland inventors for the same period in 2007, an eight percent decline over 2006 numbers.

     For the month of October 2007, the PTO granted 192 patents naming at least one Maryland resident as an inventor or joint inventor. The PTO had issued 207 patents to Maryland inventors in October 2006, a 7% difference.

     The number of published patent applications naming at least one Maryland inventor in October 2007 was also down, continuing a trend seen in the first eight months of 2007 (compared to 2006). According to the PTO, 249 patent applications naming at least one Maryland inventor were published in October 2007, compared to 252 patent applications published during the same period in 2006, just a 1-percent difference (the overall trend for the year--ten months--shows barely a two-percent decline over the same period in 2006).

Comments:

• See related posts for June, July, and August (sorry, no September data)
  
  
• As I've stated before, an eight percent decline in the number of patents issued to Maryland inventors is not insignificant and clearly suggests a decline in innovation; however, it would be incorrect to conclude that the number of issued patents (or published patent applications) is the best indicator of the level of innovation in Maryland, as many other variables also correlate with innovation.  There may also be certain conditions affecting the number of patents being issued by the PTO today compared to last year, including the availability of PTO Examiners.

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This is from Martek Biosciences's (Columbia, MD) website:

"Martek Biosciences Corporation (NASDAQ: MATK) today announced that a judge in the United States District Court in Wilmington, Delaware, has ruled on various post-trial motions and will enter a permanent injunction in Martek's favor against the defendants in the patent infringement suit brought by Martek against Lonza, Ltd., Nutrinova Inc. and Nutrinova Nutrition Specialties & Food Ingredients GmbH. The suit involves Lonza's U.S. sale and use of a fatty acid product currently marketed under the brand name Lonza DHA for use in functional foods and dietary supplements and does not involve Martek's core infant formula patents.

"The judge upheld the October 2006 jury verdict that the defendants infringed all of the asserted claims of U.S. Patent Nos. 5,340,594 and 6,410,281 (the "'281 Patent") and that these patents were valid. The judge indicated that he will grant a permanent injunction against Lonza with respect to those two patents. The judge also upheld the jury verdict that Lonza had acted willfully in its infringement of the '281 Patent. Regarding the third patent involved in the case, U.S. Patent No. 6,451,567 (the "'567 Patent"), the judge reversed the jury verdict and found that there was insufficient evidence to show that the claims of this patent are enforceable against the defendants. Martek does not believe that this decision will have an adverse effect on the strength of the permanent injunction to be issued by the Court.

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     Below is a summary of the IP-related cases filed in the the U.S. District Court for the District of Maryland during the week beginning October 11, 2007 (source: Justia). This time, two patent cases and a trademark case make up the week's docket:

• American Silver LLC v. General Resonance LLC, No. 07 Civ 02807, filed Oct. 15, 2007

     Plaintiffs are American Silver LLC and its subsidiary American Biotech Labs LLC, both Utah companies. ABL owns U.S. Patent No. 7,135,195 and several other patents directed to silver products used in the life sciences field.

     Defendant General Resonance LLC is a Nevada company with its corporate headquarters located in Havre de Grace, MD. Defendants Juliana Brooks and Mark Mortenson are reportedly residents of Maryland. Ms. Brooks is allegedly the Senior Managing Director of General Resonance. Mr. Mortenson is allegedly a lawyer licensed to practice in Virginia and registered to practice before the PTO. According to court papers, Mr. Mortenson acts as General Resonance's general counsel.

     Plaintiffs seek to quiet title to the ownership interests of an invention and related patent applications, including PCT/US05/047699. Other counts in the complaint include fraud, misrepresentation, breach of fiduciary duty, fraud by concealment, constructive fraud, breach of contract, conversion, misappropriation of scientific ideas, negligent misrepresentation, tortious interference, legal malpractice, and civil conspiracy.

     George Ritchie of Venable filed the complaint on behalf of the plaintiffs. 

• Raymond Geddes & Company, Inc. v. J. Rousek Toy Co. Inc.,No. 07 Civ 02818, filed Oct. 16, 2007

     On October 11th, Raymond Geddes & Co., Inc. a Maryland company with its headquarters in Baltimore, MD, sued Los Angeles, CA-based Nakajima USA, Inc. for alleged infringement of its U.S. Patent No. 6,158,871, which is directed to an "Illuminated Ball-Point Pen" (advertisement). Infringement allegations were based on Nakajima's sale of the Hello Kitty light up pen. (Related post).

     In the present case, Raymond Geddes has sued J. Rousek Toy Co., a Bishop, CA company apparently doing business as Giggletime Toy Co.  In this matter, however, Raymond Geddes is asserting its U.S. Des. Patent No. 550,772, which is directed to a design for an "eraser cap for a writing instrument."

     Infringement allegations in the complaint are based on Rousek's sale of an eraser cap advertised as the "Extendo" cap. 

     Sterne Kessler's Tracy-Gener Durkin filed the complaint on behalf of Raymond Geddes.

• Nutramax Laboratories, Inc. v. Newton-Everett, L.L.C.,  No. 07 Civ 02833, filed Oct. 18, 2007

     This is a false advertising action under the Lanham Act against Newton-Everett, which Nutramax Labs alleges manufactures, markets, and sells a joint health supplement for cats and dogs called COSEFLEX that competes directly with Nutramax's COSEQUIN. Nutramax is a Maryland corporation based in Edgewood, MD, and claims to have "started the glucosamine/chondroitin sulfate revolution." Newton-Everett is a Scottsdale, AZ company (jurisdiction is predicated on website sales in the Maryland forum).  The single count in the complaint is for violation of Sec. 43(a) of the Lanham Act (false advertising).

     Robert Bowie of Bowie & Jensen LLC filed the complaint on behalf of Nutramax.

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     Below is a summary of the IP-related cases filed in the the U.S. District Court for the District of Maryland during the week beginning October 11, 2007 (source: Justia). This time, two patent cases make up the week's docket:

• Raymond Geddes & Company, Inc. v. Nakajima USA, Inc., No. 07 Civ 02771, filed Oct. 11, 2007.

     Raymond Geddes & Co., Inc. is a Maryland company with its headquarters in Baltimore, MD.  It alleges that Los Angeles, CA-based Nakajima USA, Inc. has infringed its U.S. Patent No. 6,158,871, which is directed to an "Illuminated Ball-Point Pen" (advertisement), by making, using, and/or offering to sell the Hello Kitty light up pen.  Sterne Kessler's Tracy-Gener Durkin filed the complaint on behalf of Raymond Geddes.

• Simon Systems, Inc. v. Corel Corporation, No. 07 Civ 02765, filed Oct. 12, 2007.

     Rockville, MD-based Simon Systems, Inc., filed this patent infringement suit against Delaware entity Corel Corporation (which allegedly has a regular place of business in Annapolis, MD, for purposes of asserting personal jurisdiction). The patent at issue is U.S. 5,559,562, which is entitled "MPEG Editor Method and Apparatus." SSI's complaint includes a bare allegation that Corel has infringed the patent by its "manufacture, use and/or sale of MPEG editing equipment."  Ward & Ward's Daniel Ward of Washington, DC filed the complaint on behalf of Simon Systems.

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Summary:  Patent Reform Act of 2007 would require courts to forward the identify of registered patent practitioners to the Patent Office if practitioners' conduct is linked to an act of inequitable conduct.

     It's not everyday that patent agents and attorneys registered to practice before the U.S. Patent & Trademark Office are found to have committed inequitable conduct by a court of law, despite the fact that inequitable conduct is "indiscriminately pled in nearly every case" as a defense to patent infringement (AIPLA Reports 2007). Nevertheless, patent reformers in Congress have proposed new provisions to the Patent Act, as shown below, which require the Patent Office to consider "appropriate disciplinary action" under 35 U.S.C. § 32 where inequitable conduct is attributed to a registered patent attorney:

"ATTORNEY MISCONDUCT- Upon a finding of inequitable conduct, if there is evidence that the conduct is attributable to a person or persons authorized to practice before the Office, the court shall refer the matter to the Office for appropriate disciplinary action under section 32, and shall order the parties to preserve and make available to the Office any materials that may be relevant to the determination under section 32."

That excerpt is from Section 12 of the Patent Reform Act of 2007, H.R. 1908.

     In case you're a patent practitioner and haven't read section 32 since your patent bar exam days, it says:

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Summary:  The U.S. Patent Office issues guidance and revisions to its "claims and continuations" practice rules.

• Revised rule permits filing "one more" continuing application on or after Nov. 1, 2007, without a petition or showing, in certain circumstances.
  
  
• For certain CIP applications, depending upon filing date and issuance or not of a first office action on the merits (FAOM), the requirement of 37 C.F.R. 1.78(d)(3) than applicant identify the claim or claims in the CIP for which the subject matter is disclosed in the manner provided by 35 U.S.C. § 112, first paragraph, in the prior-filed application is either waived or postponed until Feb. 1, 2008 (a three-month compliance deadline extension).
  
  
• Disclosing the identify of other pending or patented applications is not required for certain applications filed before Nov. 1, 2007, depending on the filing dates and priority filing dates for the other applications. Disclosure is not required for applications filed on or after Nov. 1, 2007, in limited enumerated circumstances.

     The complete requirements are found in the guidance document "Clarification of the Transitional Provisional Relating to Continuing Applications and Applications Containing Patentably Indistrinct Claims," which is available here.

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     Below is a summary of the IP-related cases filed in the the U.S. District Court for the District of Maryland during the week beginning October 1, 2007 (source: Justia), beginning with an IP NIMBY case: 

• Invenergy Wind North America LLC v. John Doe Numbers 1 Through 10, 07civ02643, filed Oct. 1, 2007. 

     According to the complaint, this case arises from an email that plaintiff Invenergy, a Delaware entity based out of Chicago, alleges that opponents to its proposed Moresville Energy wind turbine energy project sent to landowners and leaseholders of land Invenergy needs for its project. The complained of email, which included Invenergy's logos and trademarks, was allegedly designed to look like it originated from Invenergy itself. The complaint includes claims of trademark and copyright infringement, trademark dilution, tortious interference, and libel.

     Although the planned facility is to be located in Delaware County, New York, Maryland was chosen as the venue for the litigation, apparently because the permit applicant for the wind energy facility is Rockville, MD-based Moresville Energy LLC (a wholly-owned subsidiary of Invenergy), and because the email was allegedly sent by ten unidentified "John Does" (or "Jane Does") over networks owned by Hughes Network Systems , LLC, which is a Germantown, MD-based company.

     Thelen Reid's DC office filed the complaint, which did not identify local Maryland counsel.

     In the "old days," someone with a NIMBY (not in my backyard) issue would simply lie in front of a bulldozer, chain themselves to a Redwood, maneuver a boat in front of a fishing vessel, organize a protest rally, or file a lawsuit against the federal or state agency that issued a permit for a project they disagreed with (or all of the above). Apparently, if the above complaint is true, surreptitious emailing can now be added to the list of protest tactics.

     Three more interesting cases after the jump...

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Summary:  The U.S. Patent & Trademark Office today issued a press release concerning long-awaited Examination Guidelines to help Examiners make appropriate decisions regarding the obviousness of claimed inventions in light of the Supreme Court’s decision in KSR International Co. v. Teleflex Inc.

     Mention "KSR" and "obviousness" to patent practitioners and you'll get a wide range of responses, with some claiming the Supreme Court's decision in KSR International Co. v. Teleflex Inc., 550 U.S. __, 82 USPQ2d 1385 (2007) will lead to fewer inventions being patented, and others predicting the opinion will eventually jeopardize the validity of many previously-issued patents.

     One thing most practitioners will agree upon, however, is that uniform and concrete guidance is needed from the PTO (and eventually the courts) to remove the guesswork out of predicting how the PTO and courts will deal with inventions under the KSR standard. After all, when it can cost upwards of $50,000 to $100,000 to prosecute a patent application (U.S. and internationally), inventors and their employers are understandably wary about making the investment in today's uncertain environment. 

     The PTO took steps today to alleviate some of that concern. Today, the PTO issued its long-awaited PTO Examination Guidelines concerning KSR, which had been tied up in the Office of Management and Budget (OMB) through much of the summer and early fall (see related post here). Below is a summary of the Guidelines.

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Summary: A judicial opinion involving environmental-related patents that was issued as “not available for publication” limits what could be an important decision by the Federal District Court for the District of Maryland

     I have to admit that I was eager to post a summary of Judge Catherine Blake’s memorandum opinion in the matter of Contech Stormwater Solutions, Inc. v. BaySaver Technologies, Inc. and AccuBid Excavation, Inc., No. 07 Civ. 358 (D. Md. Sep. 26, 2007). After all, the opinion is at the crossroads of patent law and environmental technologies, two of my favorite topics (check out my bio, and you’ll understand).

     After summarizing the case, however, it became apparent that the Contech opinion concerns an issue of importance beyond just the merits of the two environmental-related patents-at-suit: the opinion was issued as “not available for publication,” meaning it has limited authority in the District Court for the District of Maryland where it originated, as well as in other Fourth Circuit courts (and possibly in the Federal Circuit), despite Rule 32.1 of the Federal Rules of Appellate Procedure which says:

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     During the floor debate in Congress over H.R.1908, the Patent Reform Act of 2007, on September 7, 2007, Maryland’s 6th District Representative, Roscoe G. Bartlett, a Republican, rose to criticize last-minute efforts by colleagues whom he contends pushed amendments to the proposed legislation through the House of Representatives.  Apparently, those amendments found their way into the legislation in the late evening hours the night before the full House vote (no doubt by overworked staffers). Dr. Bartlett knows a few things about patents: a scientist himself, one of only three in the House of Representatives, he is the named inventor or co-inventor on several U.S. patents, including those listed below. Of the eight Maryland Representatives in Congress, Bartlett was the only one to vote against passage of H.R.1908 (see related post here). For those interested, the amendments to H.R. 1908 may be viewed here (then scroll down to the 1:33 pm entry).

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     The U.S. District Court for the District of Maryland was chosen as the forum for litigating the following case(s), as published by Justia:

• Stertil B.V. et al v. Automotive Lifts & Machinery Corp., Case Number 1:2007cv02411, filed September 12, 2007
  
  According to court papers, Plaintiffs Stertil B.V. (The Netherlands) and Stevensville, Maryland-based Stertil-Koni, Inc., have sued Defendant Automotive Lifts & Machinery Corp. (ALM) for direct and/or indirect infringement of U.S. Patent No. 6,315,079. The '079 patent is directed to heavy vehicle lifting devices.

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Summary:  The Court of Appeals for the Federal Circuit clarifies the standard for assessing whether two different entities are jointly liabile for patent infringement.

     As illustrated in a post on this web site over a month ago, consider the hypothetical situation where a business performs steps A and B of a patented process, and another company performs steps C and D. Neither company would appear to be a direct infringer of a patent claim reciting steps A, B, C, and D. And as long as no one is directly infringing the claim by practicing all steps A through D, neither company should be held liable for contributory or induced infringement of the claimed process either. That's where the theory of "joint" or "divided" patent infringement liability comes into play. In BMC Resources, Inc. v. Paymentech, L.P., 2006-1503 (Fed. Cir. 2007), the Federal Circuit considered the proper standard for joint or divided infringement by multiple parties of a single claim.

     At the outset, the Federal Circuit reiterated that liability for patent infringement requires a party to make, use, sell, or offer to sell a patented invention, meaning the entire patented invention. For example, direct patent infringement requires a party to perform or use each and every step of a claimed method. When a defendant participates in or encourages infringement but does not directly infringe a patent, the normal recourse under the law is for the court to apply the standards for liability under a theory of indirect infringement. However, the court said, indirect infringement requires, as a predicate, a finding that some party amongst the accused actors has committed the entire act of direct infringement.

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Summary: The House version of the Patent Reform Act of 2007 would bar submission of search reports prepared by non-U.S. citizens.

     H.R.1908, the Patent Reform Act of 2007, was introduced in the House of Representatives on April 18, 2007. As proposed, the Bill did not include Section 12, entitled "Additional Information," which made its way into the legislation when the House debated, and eventually passed, H.R.1908 on September 7, 2007. The table below, left column (after the jump), shows the original language of the provision, which would add a new Sec. 123 to Title 35 U.S.C. and grant the PTO authority to require prior art search reports. House Report 110-314 describes the measure as follows:

"The USPTO has discussed the need for some sort of examination support document [ESD] or applicant quality submission to improve the examination process. It may include a thorough search of the art in the field of the invention and in related fields in which one skilled in the art pertaining to the invention would expect to find information applicable to the invention. It is also expected that the information discovered by the search that is material to the patentability of the claimed invention be disclosed to the USPTO along with an analysis of how the information relates to the claimed invention and how the claimed invention is distinguished over the prior art information."

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     In Wyeth v. Lupin, Ltd. and Lupin Pharmaceuticals, Inc., No. 07, Civ. 0632 (D. Md Sep. 11, 2007), the District Court for the District of Maryland denied Baltimore-based Lupin Pharmaceuticals, Inc.'s (LPI) motion to dismiss an action against it and its parent, Mumbai, India-based Lupin Ltd. (Lupin), brought by pharmaceutical giant Wyeth. In reaching its decision, the District Court concluded that "when a wholly-owned U.S. subsidiary of a foreign corporation exists to distribute foreign-produced generic drugs in the U.S. and is actively involved in the ANDA process, the subsidiary also 'submits' an ANDA application" making it subject to the Hatch-Waxman Act like its parent.

     This case began when Lupin filed an Abbreviated New Drug Application (“ANDA”) with the FDA seeking approval to market a generic version of EFFEXOR® in the U.S. Under the Hatch-Waxman Act, the filing of an ANDA is an act of infringement. Accordingly, Wyeth, which owns U.S. Patents 6,274,171; 6,403,120; and 6,419,958 for venlafaxine hydrochloride (marketed by Wyeth as EFFEXOR® XR capsules), sued LPI and Lupin within the statutory 45-day period after receiving Lupin's "Paragraph IV" Notice Letter on January 30, 2007.

LPI's Motion to Dismiss

     LPI moved, under F.R.C.P. Rule 12(b)(6), to dismiss the complaint against it, arguing that under the Hatch-Waxman Act, the only act of direct infringement under 35 U.S.C. § 271(e)(2)(A) was Lupin's filing of the ANDA with the FDA. Wyeth sought to maintain LPI in the lawsuit, arguing that there is no “one-defendant-per-ANDA” rule under the Hatch-Waxman Act. LPI, Wyeth said, acted in concert with Lupin to violate Wyeth’s patents.

     The District Court began its analysis by noting that Lupin had made the same arguments, unsuccessfully, in Aventis Pharma Deutschland GMBH v. Lupin Ltd., 403 F. Supp. 2d 484, 494 (E.D. Va. 2005). In that case, the district court found:

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     Yesterday, Part 1 of this post identified issues of potential concern regarding the impacts of the new U.S. Patent & Trademark Office (PTO) rules on the number of continuation, continuation-in-part (CIP), and Request for Continued Examination (RCE) applications being prosecuted at the PTO for an invention. Below are some suggestions for dealing with the rule's limitations on the number of claims permitted in those patent applications, as suggested by Peter Weissman, a Partner at Blank Rome LLP.  In particular, patent applicants and their representatives should:

• Carefully consider all claims in an application to ensure they add benefit to the application;
  
  
• Review pending unexamined applications that exceed the 5/25 number of claims limitation in preparation to limit the number of claims or conduct a search prior to receiving a notification from the PTO; 
  
  
• Be mindful of disclosed but unclaimed embodiments in the specification;
  
  
• Consider conducting a search prior to filing an application, because a search could be used for the combined purpose of accelerating examination in one application and requesting additional claims beyond the allotted 5/25 limit in another application. But remember that these procedures could have a substantial negative impact on the scope of claims.

Comments:

• Click here for part 1 of this post
  
  
• Final Rule:  "Changes To Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications" 72 FR 46716 (Aug. 21, 2007)
  
  
• Thanks to Peter Weissman for granting permission to use his article"Patent Prosecution Considerations under the New U.S. Patent & Trademark Office Rules," which may be found here

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     Although there are 45 days remaining before the new U.S. Patent & Trademark Office (PTO) patent rules take effect November 1, 2007, the number of visitors to this blog looking for information about the rules suggests that patent applicants and their representatives are actively looking for the best ways to comply with the rules today. That’s not a bad idea, considering how the new rules will substantially limit how patent applications are prosecuted at the PTO, and may require applicants to modify their patent filing strategies for both prospective as well as pending patent applications. According to Peter Weissman, a Partner at Blank Rome LLP, applicants should begin considering strategies for complying with the new rules.  In particular, Peter says, given the limited number of continuations, continuation-in-part (CIP), and Request for Continued Examination (RCE) applications allowed under the new rules, applicants should:

• Consider relying more on interviews with Examiners, particularly personal interviews, which tend to substantially advance prosecution and reduce the need for filing continuations and RCEs;
  
  
• Carefully review all claims, including dependent claims, after a first action on the merits (FAOM) to ensure that the case is in condition for an appeal; all “formal” matters should be resolved at that stage as well;

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     With so much talk about climate change, it's good to see that Congress, including a few notable Presidential candidates, is pursuing meaningful technology-based legislation that tackles at least some of the complex issues associated with global warming. In January of this year, Senator Joe Lieberman introduced S.280, the Climate Stewardship and Innovation Act of 2007, which was quickly co-sponsored by 11 Senators, including Presidential candidates Hillary Clinton, Barack Obama, and John McCain.  The bill was referred to the Committee on Environment and Public Works, which held a hearing in July.

     Of particular interest is Section 318 of the Act, entitled "Patent Study," which calls for the Director of the Patent and Trademark Office, in consultation with representatives of interested parties in the private sector, to conduct a study to determine the extent to which changes to the United States patent system are necessary to increase the flow of climate change-related technologies. The Study is suppose to address:

(1) the balance between the protection of the inventor and the disclosure of information;

(2) the role of patents in innovation within the covered sectors;

(3) the extent to which patents facilitate increased investments in climate change research and development;

(4) the international deployment of United States developed climate change related technologies on the United States patent system;

(5) ways to leverage databases as innovation tools;

(6) best practices for collaborative standard setting; and

(7) any other issues the Director deems appropriate.

     It's not clear what is meant by "increas[ing] the flow of climate change-related technologies," but the language suggests that one goal of the Study is to find ways to make obtaining patents less of a burden and faster to get, which would, presumably, encourage innovation (or at least not stymie innovation).  To get a sense of the number of climate change-related patents already issued, I did a quick search of the PTO on-line database for patents issued with the term "global warming" and came up with the following trend:

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     The table below shows how Maryland was represented on the House floor during yesterday's vote on passage of H.R.1908, the Patent Reform Act of 2007. 

Comments:

• To see how other legislators voted, click on Final Vote Results for Roll Call 863
  
  
• The see the resolution that was approved by an earlier vote, click on House Report 110-319
  
  
• Click on the Patent Reform Act link to the right for more on this topic

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     The House of Representatives today voted to pass H.R.1908, which is entitled the "Patent Reform Act of 2007."  The final vote, covered live by C-SPAN this afternoon, was 220 in favor of passage, 175 against. The House Report 110-319 can be found here, and includes several Amendments not included in the introduced version of the bill.

Comments:

• Attention now turns to the Senate to see if patent reform will finally see passage in Congress after three years of debate
  
  
• To illustrate how divisive patent reform has become, one Representative called H.R.1908 the "Steal America's Inventions Act" during the debate

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     The table below shows how Maryland ranks among other states in terms of the number of lawsuits filed in federal district courts that raise patent, trademark, and/or copyright issues.  The table values are for the last twenty months.

Notes:

• Rankings are based on number of complaints filed between January 1, 2006, and August 31, 2007, and include cases filed in the District of Columbia.  States with multiple jurisdictions/divisions are combined.  Complete table available (please email me a request).
  
  
• Source: Justia.com.

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Summary:  Foreign supplier of active pharmaceutical drug to U.S. applicant seeking FDA approval to market generic Lexapro® was enjoined along with the U.S. applicant based on supplier's commercial partnership with the U.S. applicant.  Case:  Forest Laboratories, Inc. v. Ivax Pharmaceuticals, Inc., 07civ1059 (Fed. Cir. 2007) (Schall, J., dissenting-in-part).

     Ivax Pharmaceuticals, Inc., submitted an Abbreviated New Drug Application (ANDA) to the FDA seeking approval to market generic tablets containing escitalopram oxalate (“EO”), the active ingredient in Lexapro®.  Forest Laboratories, Inc., which owns the patent for Lexapro®, sued Ivax under the Hatch-Waxman Act, which provides that the mere filing of an ANDA is an act of infringement.  During discovery, Forest learned that part of Ivax's ANDA submission included information provided by Mumbai-based Cipla, Ltd., Ivax's alleged EO drug supplier. Cipla was joined in the lawsuit. After the parties stipulated to infringement and the district court found the patent-at-issue not invalid nor unenforceable, it included Cipla in the injunction against Ivax.

     On appeal, the Federal Circuit agreed with the district court's decision to include Cipla:

"Here, we do not know if Cipla first approached Ivax or vice versa, but the plan to manufacture, import, market, and sell the EO products described in the ANDA was undoubtedly a cooperative venture, and Cipla was to manufacture and sell infringing EO products to Ivax for resale in the United States. Under the standards for inducement which we apply to 35 U.S.C. § 271(b), Cipla has therefore actively induced the acts of Ivax that will constitute direct infringement upon approval of the ANDA, and it was thus not inappropriate for the district court to include Cipla within the scope of the injunction."

     The Federal Circuit cited Allergan, Inc. v. Alcon Labs, Inc., 324 F.3d 1322 (Fed. Cir. 2003) for the notion that merely filing an ANDA is a constructive act of infringement, and may support a cause of action for induced infringement.

     The dissent asserted that the safe harbor provision of § 271(e)(1) exempted Cipla from being enjoined with Ivax; however, the majority disagreed with that conclusion, saying:

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     As reported last month, the first seven month of 2007 saw a decline in the number of patents granted to Maryland inventors compared to the previous year. That trend continued into August. U.S. Patent & Trademark Office (PTO) records show that for the period January through August 2006, the PTO granted 1,425 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO). However, the PTO only issued 1,313 patents to Maryland inventors for the same period in 2007, an eight percent decline over 2006 numbers. 

     For the month of August 2007, the PTO granted 150 patents naming at least one Maryland resident as an inventor or joint inventor. The PTO had issued 207 patents to Maryland inventors in August 2006, a 28% difference.

     The number of published patent applications naming at least one Maryland inventor in August 2007 was also down, continuing a trend seen in the first seven months of 2007 (compared to 2006). According to the PTO, 296 patent applications naming at least one Maryland inventor were published in August 2007, compared to 307 patent applications published during the same period in 2006, a four-percent difference.

Comments:

• See related posts for June and July.
  
  
• Although an eight percent decline in the number of patents issued to Maryland inventors is not insignificant and clearly suggests a decline in innovation, it would be incorrect to conclude that the number of issued patents (or published patent applications) is the best indicator of the level of innovation in Maryland, as many other variables also correlate with innovation.  There may also be certain conditions affecting the number of patents being issued by the PTO today compared to last year.

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     In an earlier post this week--Seagate vs. Patent Reform Act of 2007--I included a link to R. David Donoghue's Chicago IP Litigation Blog and his post "Is the Patent Reform Act Stalled?"  David may have been onto something, as only a day later blogger Dennis Crouch reported in his post "Congressional Patent Reform is Dead; Long Live Adminstrative Patent Reform" that Congressional Republicans have asked Speaker Pelosi to put the brakes on patent reform legislation. In their letter to Pelosi (D-CA) dated August 30, 2007, available here, Representatives Boenner (R-OH) and Blunt (R-MO) asked for the reprieve to allow additional consensus building "so that all U.S. companies benefit from reforming the patent system rather than advantaging one business model over another." 

Comments:

• The introduced Senate and House versions of patent reform legislation are: S.1145 and H.R.1908, respectively
  


• A search of the Internet revealed Patent Reform Acts of 2005, 2006, and 2007; perhaps we should start looking forward to the 2008 or 2009 versions
  


• The Pelosi letter was copied to Representatives Conyers (D-MI), L. Smith (R-TX), Berman (D-CA), and Coble (R-NC), all members of the House Judiciary Committee (Subcommittee on Courts, the Internet, and Intellectual Property)

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Summary: The PTO must consider “relevant rebuttal evidence” submitted by patent applicants to overcome a prima facie case of obviousness. Such evidence must  be in the record. Cite: In Re Sullivan, No. 2006, Civ. 1507 (Fed. Cir. 2007).

     At issue in this appeal from the PTO's Board of Patent Appeals and Interferences, was joint inventor Sullivan’s and Russell’s U.S. patent application Serial No. 08/405,454, which is directed to an antivenom composition. The application had been finally rejected by the PTO as being obvious under 35 U.S.C. § 103(a) over the inventors’ own prior art publication in view of a publication by Coulter, a decision that was affirmed by the Board in two PTO appeals. During those appeals, the Board concluded that “the [antivenom] composition taught by the combination of Sullivan and Coulter would have been expected by a person of ordinary skill in the art at the time the invention was made to neutralize the lethality of the venom of a rattlesnake” (the underlined portion was added during prosecution).

     On appeal to the Court of Appeals for the Federal Circuit (CAFC), the Federal Circuit found that the Board’s obviousness conclusion was not unreasonable, in that one skilled in the art of snake venom could consider that a fragment of a whole antibody that neutralizes one type of venom (i.e., the prior art) might be used to neutralize the venom of another species (citing from KSR Int’l Co. v. Teleflex Inc.: “if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill”).  However, the Federal Circuit also found that “the claimed composition cannot be held to have been obvious if competent evidence rebuts the prima facie case of obviousness.” The PTO (the Board, in this case) must consider any “relevant rebuttal evidence” when an applicant puts forth such evidence in response to an obvious rejection (in this case three declarations containing evidence of unexpected result from use of the claimed composition, how the prior art taught away from the composition, and how a long-felt need existed for a new antivenom composition).

     Conclusion: the Board failed to give any weight to rebuttal evidence of record regarding the nonobviousness of the invention. Vacated and remanded to the Board to consider the evidence.

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Summary:  Don't get too comfortable with Seagate's "objective recklessness" standard for determining willfulness in patent litigation: the Patent Reform Act of 2007 could change everything.

     35 U.S.C. § 284, enacted in 1952, provides that a court "may increase damages up to three times the amount found or assessed" in the case of willful patent infringement. In 1983, the Federal Circuit established the standard for evaluating willfulness: 

“Where . . . a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing. Such an affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity.”

Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389-90 (Fed. Cir. 1983)(emphasis added).  Thus, an accused infringer could establish that its continued accused activities were done in good faith if it reasonably relied on advice from counsel. The duty of care standard survived until just recently, when the Federal Circuit overruled the standard and held that:

"Proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness." 

In re Seagate Technology, LLC, Civ. No. 830 (Fed. Cir. 2007) (en banc) (Newman, J., Garjarsa, J., concurring).  Under Seagate, a patentee must show by clear and convincing evidence "that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent."  Once the threshold objective standard is satisfied, the patentee "must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer." According to the Federal Circuit, the state of mind of the accused infringer is not relevant to this objective inquiry.

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Summary:  New rules will curb the practice of filing multiple continuation applications at the PTO, force inventors and their patent counsel to be selective in how they claim inventions, and potentially increase the cost of obtaining patents.  Final Rule:  72 FR 46716 (Aug. 21, 2007)

     For those of you who have frequented this and other blogs the last two days hoping to learn more about the PTO's extensive new rules promulgated August 21, 2007, I have unwelcome news:  it will take time to dissect and analyze the 129-page rule and the PTO's 109-slide "summary" (??!!) of the same.  In the meantime, the PTO has provided plenty of useful information about the so-called "Claims and Continuation Practice Rule" on its web site, enough to keep those interested busy reading for weeks.

     The official rules are entitled "Changes To Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications."  Yesterday, the PTO held a special webcast to present the rules to the public.  After an introduction by Margaret J.A. Peterlin (Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the PTO), Robert W. Bahr, Esq. (Sr. Patent Counsel at the PTO) led a lengthy presentation and Q&A session covering the highlights of the new requirements, which become effective November 1, 2007.  Here are some of the major points presented during the webcast.

• The new rules apply to new applications and applications entering national stage filed on/after November 1, 2007
  
• The new rules are intended to improve quality and efficiency of prosecution, with a goal of ensuring the U.S. patent system is "the best in the world"
  
• The new rules are designed to "encourage applicants to use greater clarity and precision in describing the scope of their inventions"
  
• The new rules will force applicants to submit "focused claims," and, if more claims are submitted, the burden of searching and analyzing those claims shifts to the applicant
  
• Applicants will be allowed to file up to 5 independent claims and 25 total claims (i.e., the 5/25 limit) in an application
  
• Applicants will be allowed to file up to 15 independent/75 total claims (i.e., 15/75 limit) per invention without justification or an Examination Support Document (ESD)
  
• The 15/75 limit applies to an initial and two continuation or continuation-in-part applications, plus one Request for Continued Examination (RCE) application 
  
• An applicant may file additional claims above the 5/25 or 15/75 limits, but must submit an ESD, which must be submitted before a first office action on the merits (FAOM) 
  
• For commonly owned applications having at least one patentably indistinct claim, the PTO will treat each application as having the total number of claims present for purposes of determining whether each application exceeds the 5/25 limit
  
• An ESD must include
  • A preexamination search statement,
  • A list of references deemed most closely related to the subject matter of the claims,
  • An identification of all claim limits that are disclosed in each reference,
  • A detailed explanation that particular points out how each of the independent claims is patentable over references, and
  • A showing of where each limitation has 35 U.S.C. sec. 112 support in the specification.
  
  
• Applicants must file a supplemental ESD if amended claims are not covered by the original ESD analysis, or if applicant files an IDS with new reference closely related to the claims
  
• ESD practice affects patent term adjustment calculation
  
• Existing applications that have not received a FAOM before November 1, 2007, and that have more than 5/25 claims, will require either an ESD, a suggested restriction requirement (SRR), or an amendment that reduces the number of claims to 5/25
  

Comments: 

• No sooner had the ink dried on the new rules, then an inventor with pending applications (Dr. Tafas) challenged the new rules by filing a lawsuit against the PTO in the E.D. Virginia (see Peter Zura's blog post here)
  
  
• The new rules may have the goal of increasing efficiency, but part of that efficiency is obviously the result of shifting much of the analysis of the patentability of claims to applicants who submit more than 5/25 claims in an application, and by curtailing what had been an applicant's right to file multiple continuation applications
  
  
• Preparing Examination Support Documents (ESD) will obviously add to the costs applicants pay to obtain patents (to add insult to injury, the PTO announced yesterday new higher government fees associated with obtaining patents; see Final Rule "Revision of Patent Fees for Fiscal Year 2007", which will become effective September 30, 2007)

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     In an earlier post, the proposed new 35 U.S.C. § 103(a), set forth in the Patent Reform Act of 2007, was summarized.  To illustrate how an obviousness analysis might be approached under the new § 103(a), assume I “invent or discover” a new invention on Day 1 in the U.S., reduce the invention to practice on Day 60, file a provisional patent application in the PTO on Day 80 (without any claims), and file a nonprovisional application on Day 250 (claiming the invention).  Under this scenario, Day 80 could be my “effective filing date” even though the provisional application did not include any claims:

“The ‘effective filing date of a claimed invention' is--(1) the filing date of the patent or the application for patent containing the claim to the invention; or `(2) if the patent or application for patent is entitled to a right of priority of any other application under section 119, 365(a), or 365(b) or to the benefit of an earlier filing date in the United States under section 120, 121, or 365(c), the filing date of the earliest such application in which the claimed invention is disclosed in the manner provided by the first paragraph of section 112.”   See proposed new § 100(h).

     However, if the invention is not adequately disclosed in the provisional application, my “effective filing date” could be Day 250. 

Comments:

• Clearly the proposed new § 103(a) statutory framework encourages me to rush to the Patent Office to file a patent application as soon as possible after my invention/discovery on Day 1.
  
  
• It wouldn't be too much of a stretch to say that many organizational patent departments operate in a somewhat leisurely manner (or carefully and calculating, depending on your perspective) when it comes to processing invention disclosures.  That's understandable, given that under the first-to-invent system currently in place in the U.S., there is no real urgency when it comes to submitting a patent application to the PTO (absent the need to protect the invention for foreign filing purposes, or if there is a current infringer in the market knocking off your invention).  Invention disclosures will obviously need to be handled in a more expeditious manner under the first-to-file system.

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Summary: The Federal Circuit clarifies the scope of the waiver of attorney-client privilege and work product protection that results when an accused patent infringer asserts an advice of counsel defense to a charge of willful infringement. Case:  In Re Seagate Technology, LLC, Civ. No. 830 (Fed. Cir. 2007) (en banc) (Newman, J., Garjarsa, J., concurring).

     Convolve, Inc., and MIT (“Convolve”) sued Seagate, alleging willful infringement of U.S. Patent Nos. 4,916,635, 5,638,267, and  6,314,473. Prior to the lawsuit, Seagate had obtained from outside counsel three opinion letters covering infringement, validity, and enforceability of those patents. Seagate notified Convolve of its intent to rely upon the three opinions in defending itself against willful infringement.  It then disclosed its outside counsel’s work product and made him available for deposition. Convolve then moved to compel discovery of any communications and work product of Seagate’s other counsel, including its trial counsel. The S.D.N.Y. sided with Convolve, concluding that Seagate waived the attorney-client privilege for all communications between it and any counsel, including opinion, trial, and in-house counsel, concerning the subject matter of the opinion letters. 

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          The doctrine of obviousness has been called the “cornerstone of American patent law.” That could explain why the Supreme Court’s KSR v. Teleflex decision, which arguably tightened the doctrine in a way that could make it increasingly harder for inventors to obtain patents in the U.S., has resonated so loudly over the last several weeks. On the heels of KSR, however, is another possible shake up of the doctrine, this time emanating from the Legislative Branch in the name of Patent Reform. While it may be too early to ascertain whether the Patent Reform Act of 2007 will make the prospects of obtaining patents in the U.S. more uncertain, it is clear that it will affect the way inventions are analyzed under the doctrine of obviousness.

          Traditionally, the question of whether an invention was obvious under 35 U.S.C. § 103(a) involved considering the four “Graham factors”: (1) the scope and content of the prior art; (2) the level of ordinary skill in the prior art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness. Graham v. John Deere, 383 U.S. 1 (1966). However, under the proposed new § 103(a), as shown in the table below (juxtaposed with the current version of the law and showing proposed changes), the Graham factors may need to be applied in a different manner in the future.

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Below is a list of recent trade secret, patent, trademark, and copyright news, announcements, and other information of some interest:

Trade Secrets:

• The new Intellectual Property Section of the Maryland State Bar Association (a new web site) is hosting a seminar and Webinar entitled Theft of Intellectual Property, Trade Secrets and Proprietary Information: Forensic Traces to Make Cases on Friday, September 28, 2007, from 8:00 – 10:00 a.m. at the University of Maryland School of Law, Room 107.

Patents:

• The PTO has proposed new rules to improve patent quality and reduce pendency during prosecution:  see the Notice of Proposed Rulemaking in the Federal Register for details, or the PTO's announcement for a summary

Trademarks/Trade Names:

• The PTO has finalized new rules affecting Trademark Trial and Appeal Board rules:  see the Final Rule in the Federal Register for details
• Useful form:  registration application for a Maryland Trademark or Servicemark
• Useful form:  application for Maryland Trade Name
  

Copyrights:

• The launch of a new Internet-based electronic search system for copyright registrations and recordations is still scheduled for roll-out in "Mid August" according to a Copyright Office announcement

General:

• A newly-formed entity in Maryland called the Center for New Technology Enterprise will be opening its virtual doors soon.  Headed by veteran serial entrepreneur and CEO Fred Provorney, the Center will provide a comprehensive trans-disciplinary program for facilitating technology commercialization and fostering collaboration among universities, research institutions, governmental research facilities and other individuals and entities, whether public or private.  The Center should be well received, especially in Maryland, with its large number of start-up biotechnology and other high technology companies, major University research centers, and several Government laboratories and research organizations.  Check back here for more information about this venture. 

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Summary:  Although teasing about things to come, the Court of Appeals for the Federal Circuit (CAFC) adverted to, but then sidestepped, the question of whether two separate entities can jointly infringe a patent.

      If you're a patent practitioner, this issue has likely come across your radar screen at some point.  Say a business performs steps A and B of a patented process, and another company performs steps C and D.  Neither company would appear to be a direct infringer of a patent claim reciting steps A, B, C, and D.  And as long as no one is directly infringing the claim by practicing all steps A through D, neither company should be held liable for contributory or induced infringement of the claimed process either.  That's where the theory of "joint" or "divided" patent infringement liability comes into play.

     In PharmaStem Therapeutics, Inc. v. Viacell, Inc., No. 05 Civ. 1490 and 1551 (Fed. Cir. July 9, 2007) (Newman, J., dissenting), the CAFC acknowledged that the parties and the district court discussed the issue of joint infringement in the context of determining whether there was infringing conduct sufficient to serve as a predicate for a finding of contributory infringement.  Under that theory, the court said, "two related parties are both deemed liable for direct infringement of a method patent when each performs some steps of the claimed method."  However, while recognizing that the viability and scope of the joint theory of liability has been the subject of considerable debate, the CAFC said the issue was not squarely raised on appeal such that it could address the merits of the theory, leaving the liability "loophole" in tact. 

      So what about the tease mentioned above?  The CAFC pointed out that the joint liability issue has been directly appealed in another case--BMC Resources, Inc. v. Paymentech, L.P., No. 2006-1503--currently pending before the CAFC.  Perhaps, then, the bar will have some clarity soon.

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Summary:  A recent survey asked corporations "Overall, has your company made money from the patent system?"  Pharma and biotech companies responded with a resounding "Yes."

In a survey conducted August 7, 2007, University of Missouri School of Law Associate Professor and Patently-O blawger Dennis Crouch asked companies whether they had made money from the patent system.  His published results showed that:

"On average, pharmaceutical companies see patents as a profit center while software companies see patents as an overall loser. (At 95%CI, Software & EE results each differ significantly from Pharm results)."

The survey results are based on responses from 131 corporate employees who claim to be "highly involved with their company patents."  See the Overall, has your company made money from the patent system? survey for details and graphical results. 

Comments:

• Although the survey was admittedly non-scientific, the responses and trends are consistent with anecdotal evidence that I am familiar with:  in general, chemical, pharmaceutical and biotechnology companies see value in their patent portfolios more so than, say, software companies (especially those with financial services software patents).
  
  
• The explanation for the survey results?  It largely depends on whom you ask.  Bio and pharma companies invest significant sums of money to develop a single drug or biologic candidate that may or may not receive market approval.  They want to recoup that investment, and the exclusivity of a patent grant represents a means to achieve that goal. 
  
  
• This survey should come as no surprise (okay, maybe a little surprise) to a majority of the estimated 300 Maryland companies operating in the biotechnology and pharmaceutical sectors of the economy. 
  
  
• FYI:  Maryland, has the fourth largest cluster of biotechnology companies among states in the U.S. (Source: Ernst & Young, Beyond Borders, Global Biotechnology Report 2006).  Many of them consistently rank among the top entities in Maryland receiving patents from the PTO each year (see Patenting By Geographic Region: Maryland, 2005).

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As reported last month, the first half of 2007 saw a small decline in the number of patents granted to Maryland inventors compared to the previous year. U.S. Patent & Trademark Office (PTO) records show that for the period January through June 2007, the PTO granted 993 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO).  The PTO had issued 1,038 patents to Maryland inventors for the same period in 2006. 

Data available for the month of July 2007 continue that downward trend.  In July 2007, the PTO granted 170 patents naming at least one Maryland resident as an inventor or joint inventor.  The PTO had issued 180 patents to Maryland inventors for the same period in 2006.

The number of published patent applications naming at least one Maryland inventor in July 2007 was also down, continuing a trend seen in the first half of 2007 (compared to 2006). According to the PTO, 232 patent applications naming at least one Maryland inventor were published in July 2007, compared to 242 patent applications published during the same period in 2006.

See related post here.

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Summary:  Federal Circuit affirms judgment declaring D.C.'s Prescription Drug Excessive Pricing Act of 2005 preempted by federal patent laws and enjoining its enforcement.

In Biotechnology Industry Organization v. District of Columbia, No. 2006 Civ. 1593 (Fed. Cir. 2007), the Federal Circuit affirmed the District Court for the District of Columbia's judgment in favor of the Plaintiffs declaring the District’s Prescription Drug Excessive Pricing Act of 2005 preempted by the federal patent laws and enjoining its enforcement.  The Plaintiffs' complaint centered on the following provision of DC's law:

"It shall be unlawful for any drug manufacturer or licensee thereof, excluding a point of sale retail seller, to sell or supply for sale or impose minimum resale requirements for a patented prescription drug that results in the prescription drug being sold in the District for an excessive price. *** A prima facie case of excessive pricing shall be established where the wholesale price of a patented prescription drug in the District is over 30% higher than the comparable price in any high income country in which the product is protected by patents or other exclusive marketing rights."

Plaintiff Pharmaceutical Research and Manufacturers of America ("PhRMA") filed suit in the District Court for the District of Columbia, alleging that the Act was invalid in light of the Commerce Clause of the Constitution and it was preempted by the federal patent laws. Plaintiff Biotechnology Industry Organization ("BIO"), which includes as its members nearly 60 Maryland biotechnology companies, filed a similar suit, which was consolidated with PhRMA's.

On appeal, the Federal Circuit stated:

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Although the Senate and House versions of the Patent Reform Act of 2007 (S.1145 and H.R.1908, respectfully) may not find their way into a compromise bill that lands on the President's desk in 2007, the bills provide a glimpse into what the final legislation may look like.  For example, the new law will apparently contain substantial changes to section 102--Conditions for Patentability; Novelty--in order to implement the much-debated "first to file" system of granting patents.

Not everything will change, however.  A new section 102(a)(1)(A) of the law, which may look like the identical versions introduced in the Senate and House, could include some familiar provisions:

"(a) A patent for a claimed invention may not be obtained if--(1) the claimed invention was patented, described in a printed publication, or in public use or on sale--(A) more than one year before the effective filing date of the claimed invention"

That provision looks like the tried and true absolute novelty bar that patent practitioners are accustomed to (note the familiar one-year grace period).

Section 102(a)(1)(B) of the law, however, could be completely new:

"(a) A patent for a claimed invention may not be obtained if--(1) the claimed invention was patented, described in a printed publication, or in public use or on sale--(B) one year or less before the effective filing date of the claimed invention, other than through disclosures made by the inventor or a joint inventor or by others who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor"

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The U.S. District Court for the District of Maryland was chosen as the forum for litigating the following case(s), as published by Justia:

• Global Barbeque, LLC v. Rub, LLC, Case Number 1:2007cv02021, filed July 27, 2007

New York City-based Global Barbeque, LLC, and Rub BBQ Restaurant # 1 (the RUB BBQ restaurant) have sued Michael Marx (alleged owner of Baltimore's Rub Barbeque restaurant) and RUB, LLC, for alleged trademark infringement, dilution, and state law claims arising out of the use of the word RUB in connection with its retail food services.  Plaintiffs are seeking, among other relief, an injunction, an order barring use of the word RUB in connection with Defendants' web site URL, an accounting of profits, and compensatory and punitive damages.

• Tarpo Music Publishing v. Lifestyle, LLC, Case Number 1:2007cv02029, filed July 30, 2007 

Plaintiffs Tarpo Music Publishing, EMI April Music Inc., Notting Dale Songs, Inc., Controversy Music, Basement Boys Music, Inc., C-Water Publishing, Inc., WB Music Corp., Webo Girl Publishing, Inc., EMI Waterford Music, Inc., Jobete Music Co., Inc. and Rodsongs have sued Defendants Lifestyle, LLC, Leonard Clarke and Gyeong M. Cho for alleged copyright infringement based on "public performances of copyrighted musical compositions" at Baltimore's Red Maple bar, which is reportedly operated and managed by Defendants (see complaint).  Listed compositions include Ain't No Mountain High Enough, among five others alleged to be infringed. 

• Plastic Safety Systems, Inc. v. Road Safety, LLC, Case Number 1:2007cv02068, filed August 2, 2007

Cleveland, OH-based Plastic Safety Systems, Inc., has sued Glen Burnie, MD-based Road Safety, LLC and Millersville, MD-based Reliable Contracting Company, Inc., for allegedly infringing Plastic Safety's U.S. Patent No. 5,234,280, which is directed to traffic "channeling" devices in the form of large drums (see image).  According to its complaint, Defendants allegedly used or induced the use of infringing drums along Rt. 50 in Annapolis. 

• Young Again Products, Inc. v. JMS Partners Enterprises, Ltd., Case Number 1:2007cv02072, filed August 3, 2007

Plaintiff Young Again Products, Inc., a Maryland company that describes itself as being "in the business of production and sale of health and nutritional supplements," has sued JMS Partners Enterprises, Ltd., for allegedly "engag[ing] in the unauthorized use of the Young Again™ Mark by selling products displaying the Mark and by using the Mark on its website to sell its products" in violation of 28 U.S.C. 1338.  Other claims include unfair competition under 15 U.S.C. 1125(a) (Lanham Act), and dilution of a famous mark under 15 U.S.C. 1125(c).  Young Again Products is seeking a declatory judgment enjoining JMS from using the Young Again mark, and other relief.

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According to the University of Baltimore School of Law web site, staff from the U.S. Patent and Trademark Office (PTO) will provide free training on Tuesday, August 7, 2007, to inventors, would-be inventors, entrepreneurs, law firms, research firms and similarly interested parties in searching for U.S. patents and trademarks.  The training, conducting in cooperation with the Law School's Law Library, will teach how to use the PTO web site to search patents and trademarks, and how to access the PubWEST database, which is the same search tool used by PTO patent examiners.  Registration and continental breakfast are to begin at 8 a.m., followed by a training program from 9 a.m.-4 p.m.

Contact information:  Joanne Dugan; (410) 837-4373; patentlibrary@ubalt.edu.

Comments:

• UB's Law Library is one of two Patent and Trademark Depository Libraries (PTDL) in Maryland, and the most recent to be so designated.  The other PTDL is located in the Engineering and Physical Sciences Library in College Park, MD

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The U.S. District Court for the District of Maryland was chosen as the forum for litigating the following case(s), as published by Justia:

• STX, L.L.C. v. J. deBeer & Son, Inc., Case Number 1:2007cv01939, filed July 20, 2007 (okay, this was overlooked last week).

Plaintiff STX, LLC, a Baltimore-based lacrosse equipment manufacturer, has sued Defendant J. deBeer & Son, Inc., for allegedly infringing STX's U.S. Patent No. 5,651,744 by selling lacrosse products through its catalog to Maryland residents.  According to its complaint, STX is seeking a preliminary injunction, damages, and other relief

• Sandler Systems, Inc. v. Rothfeld, Case Number 1:2007cv02005 , filed July 27, 2007

Plaintiff Sandler Systems, Inc., a Stevenson, Maryland-based corporation, has sued Defendants David Rothfeld and Creative Sales + Management, Inc., for allegedly willfully infringing Plaintiff's copyrighted works under 17 U.S.C. 501 et seq. and for certain state law claims.  According to its complaint, Sandler Systems is seeking a permanent injunction and actual, statutory, and exemplary damages among other relief

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In Integra Lifesciences I, Ltd. v. Merck KGaA, No. 02 Civ. 1052, 1065 (Fed. Cir. 2007) (Rader, J., dissenting), the Court of Appeals for the Federal Circuit addressed the Food & Drug Administration (FDA) pharmaceutical research exemption (i.e., "safe harbor") provision under 35 U.S.C. 271(e)(1), which states that,

"It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products."

The research exception was intended to encourage the development of new drugs by allowing researchers to collect information for FDA submissions, such as Investigational New Drug applications, New Drug Applications, and Abbreviated New Drug Applications, without fear of liability to patent holders.

The research at issue in this case involved studies of the efficacy, mechanism of action, pharmacology, pharmacokinetics, and safety of three structurally related RGD peptides, included the following testing:

• αvβ3 receptor binding assay (efficacy);
• angiogenesis chick chorioallantoic membrane (CAM) assay (efficacy, mechanism of action, and pharmacokinetics);
• angio-matrigel tests (efficacy and mechanism of action);
• cell adhesion assay (efficacy);
• chemotaxis assay (efficacy and mechanism of action);
• chick embryo pharmacokinetics assay (pharmacokinetics);
• fluorescence-activated cell sorting (FACS) analysis (mechanism of action and efficacy); and
• rabbit pharmacokinetics assay (pharmacokinetics)
  

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No sooner had I posted on this blog that the Senate had not voted a patent reform bill out of the Senate Judiciary Committee, the Committee, like the House Judiciary Committee a few days earlier, produced its own version of patent reform legislation for the full Senate to consider.  Based on a statement by Sen. Patrick Leahy, the Senate bill would:

• Reduce the incentives for patent litigation by making it harder for patent owners to show that another company has willfully infringed its patents (and consequently making it harder to receive an award of treble damages and possibly attorney’s fees);
  
  
• Establish regulatory procedures for re-evaluating patents after they are granted;
  
  
• Include limitations on the availability of jurisdictions where patent holders can file lawsuits by requiring suits to be filed where the plaintiffs or defendants are located, where the alleged infringement took place, or where the parties were incorporated or formed (this limitation could affect the number of filings in popular forums like the plaintiff-friendly Eastern District of Texas, which in 2006 surpassed the Central District of California as the hot-bed of patent litigation in the U.S., according to statistics provided by The Patent Troll Tracker).

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In Benitec Australia, Ltd. v. Nucleonics, Inc., the Federal Circuit affirmed a district court’s judgment dismissing Nucleonic’s declaratory judgment counterclaims against Benitec for lack of subject matter jurisdiction after the district court granted Benitec’s motion to dismiss its infringement claims without prejudice. In reaching its decision, the Federal Circuit evaluated the standard for declaratory judgment at two time periods: (1) at the time the declaratory judgment counterclaims were initially filed, and (2) at a later time after intervening events had affected the parties’ relationship.

With regard to the first time period, the Federal Circuit noted that at the time Nucleonics filed its counterclaims for declarations of invalidity and unenforceability, Benitec’s patent infringement claims were pending. Thus, because Nucleonics had been charged with infringement of Benitec’s U.S. Patent No. 6,573,099 (which is directed to RNA-based disease therapy), there existed a case or controversy adequate to support jurisdiction at that time.

With regard to the second time period, the Federal Circuit noted that it had previously rejected the argument that subsequent events cannot divest a trial court of jurisdiction. In this case, the district court and Federal Circuit considered a number of intervening events, including:  (1) Benitec had withdrawn its infringement claims, (2) Benitec had given Nucleonics a covenant not to sue, and (3) Nucleonics was not close to filing a New Drug Application (NDA) for its RNA drug products. 

Considering point (3), the Federal Circuit commented that the Supreme Court’s Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005) “read[] expansively the pharmaceutical research exception of § 271(e)(1)”: 

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          According to the U.S. Patent & Trademark Office (PTO) web site, the PTO has sent to the Office of Management and Budget (OMB) for review draft final guidance for use by patent examiners in determining if an invention is obvious in view of the U.S. Supreme Court’s decision in KSR v. Teleflex.  The PTO will reportedly make the final guidance document available on its web site after OMB concludes its review (a link to the guidelines will be posted on this web site when they become available).  Until the guidelines are finalized, the PTO will train its examiners on how to implement KSR.  Practitioners should expect to see more Office Actions containing rejections based on KSR in the immediate future.

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          The U.S. House of Representatives Judiciary Committee this week unanimously voted to move patent reform legislation out of committee and onto the floor of the House of Representatives, a move that makes the Patent Reform Act of 2007 closer to becoming law.  The Senate Judiciary Committee, however, is still evaluating similar legislation and has yet to vote a similar bill out of committee.  It's anyone's guess as to when a final bill will be sent to the President for his signature.

           Those who have followed patent reform legislation will be familiar with the current Judiciary Committee bill, which would, among other things, change the US patent system from one that awards priority of invention to the first person to file a patent application for an invention, regardless of whether someone else came up with the idea first.  The Judiciary Committee's bill retains reforms that would affect the course and outcome of future patent litigation matters in the US.

• Manager's Amendment for the Patent Reform Act of 2007

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          In PharmaStem Therapeutics, Inc. v. Viacell, Inc., No. 05 Civ. 1490 and 1551 (Fed. Cir. July 9, 2007) (Newman, J., dissenting), the Court of Appeals for the Federal Circuit (CAFC) affirmed a district court’s judgment that PharmaStem's evidence of direct infringement failed to show that six defendants had infringed the claims of PharmaStem's patents. Id., slip. op. at 5. At issue were two patents--U.S. Patent No. 5,004,681 and U.S. Patent No. 5,192,553--that are directed to compositions and methods of treating persons with compromised blood and immune systems using hematopoietic stem cells, particularly cells obtained from umbilical cord blood. To prove direct infringement, PharmaStem was required to adduce evidence that the defendants’ cord blood units contained a sufficient supply of stem cells to effect successful reconstitution of an adult. Id.

          To establish the sufficiency of the defendant's blood units, PharmaStem introduced at trial defendants' own advertising materials by way of expert opinion testimony. Upon defendants' motion for JMOL, the trial court excluded the expert's testimony, concluding that while PharmaStem's expert was "an accomplished stem cell biologist," she was not qualified as an expert in marketing or advertising and "her so-called analysis of the defendants’ marketing materials was well within the jury’s common knowledge, common sense and common experience." Id. at 6. The court then explained that PharmaStem had not attempted to prove by testing or by reference to data collected by the defendants that at least some of the cord blood samples preserved by the defendants satisfied the sufficiency requirement. Instead, the trial court noted, PharmaStem "adopted the strategy of trying to prove, principally through representations made by the defendants in their marketing materials and other documents, that all of the preserved cord blood samples infringed." Id. at 6-7.

          The CAFC agreed with the district court, stating that PharmaStem's expert's "testimony [was] unhelpful to the jury, and not an appropriate subject for expert evidence, because it consisted almost entirely of her quoting from the promotional information and other materials in which the defendants described their business operations for potential customers and investors, and drawing inferences from those materials." Id. at 17. The CAFC also recognized PharmaStem's failure to establish through experimental evidence that any of the preserved cord blood samples contained sufficient stem cells to reconstitute an adult, stating:

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          Petersburg, Virginia-based Star Scientific, whose published corporate mission is to “reduce toxins in tobacco so that adult consumers can have access to products that expose them to sharply reduced toxin levels,” sued R.J. Reynolds for patent infringement in the District Court for the District of Maryland in 2001. A bench trial on the issue of the enforceability of the asserted patents was held in 2005. Apparently put off by what it viewed as an excess delay in receiving the District Court’s decision, Star petitioned the Court of Appeals for the Federal Circuit (CAFC) seeking a writ of mandamus from the court that would order the Maryland District Court to issue its decision regarding unenforceability within 30 days. Star's petition was filed before June 7, 2007, which is the date the Maryland District Court issued an order stating that its decision would be posted on June 29, 2007.   Defendants/respondents R.J. Reynolds Tobacco Company (a North Carolina corporation) and R.J. Reynolds Tobacco Company (a New Jersey corporation) opposed Star’s petition. 

          In an Order signed June 25, 2007, Federal Circuit Court Judge Pauline Newman denied Star’s petition, stating that the company had not “met its burden in this case,” which, for a writ of mandamus, required Star to establish that there had been a “clear abuse of discretion or that the District Court has ‘obstinately refuse[d]’ to adjudicate the matter” (citing Will v. Calvert Fire Ins. Co., 437 U.S. 655, 666-67 (1978)). 

          Ironically, the same day the Federal Circuit issued its Order denying Star’s petition, the Maryland District Court issued its decision on enforceability, effectively mooting Star’s petition to the CAFC. The District Court found Star’s patents to be unenforceable on the basis of inequitable conduct by Star’s attorneys during prosecution of Star’s patents before the U.S. Patent & Trademark Office. Star responded forcefully to the decision.  In a June 27, 2007, press statement, it stated:

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          The first half of 2007 saw a small decline in the number of patents granted to Maryland inventors. U.S. Patent & Trademark Office statistics show that for the period January through June 2007, the PTO granted 993 patents naming at least one Maryland resident as an inventor or joint inventor (based on residence addresses supplied by patent applicants to the PTO).  The PTO had issued 1,038 patents to Maryland inventors for the same period in 2006.  Patents are issued, on average, about three years after the underlying patent applications are filed, so the number of patents issued in the first half of 2007 reflects patent activity in approximately 2004.

          The number of published applications naming at least one Maryland inventor (again based upon residency information) in the first half of 2007 was also slightly down from 2006 numbers.  According to the PTO, there were 1,495 patent applications naming at least one Maryland inventor published during the first half of 2007, compared to 1,511 patent applications published during the same period in 2006.

          Those figures are consistent with 2004 and 2005 numbers (which are the most recent compiled statistics based on geographic regions available from the PTO). Considering the top 10 Maryland organizations receiving patents in 2004 and 2005, all but one (i.e., Human Genome Sciences) saw the number of patents acquired slip in 2005 compared to 2004. Johns Hopkins University, for example, received 65 patents in 2005, down from 85 in 2004. Black & Decker saw its numbers drop to 43 patents received in 2005, down from 52 in 2004.  Individual Maryland inventors did not fare much better, receiving 183 patents in 2005, a nearly 20% drop from the 225 patents received in 2004.

Comments and notes:

• The number of patents issued and patent applications published are only two variables reflecting the level of innovation in Maryland.

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