Judge Raymond Chen of the United States Court of Appeals for the Federal Circuit.
Earlier today, at precisely 12:27pm ET, by a vote of 97 – 0, the United States Senate confirmed Raymond T. Chen to be a judge on the United States Court of Appeals for the Federal Circuit. Chen was nominated by President Barack Obama on February 7, 2013.
Prior to becoming the newest member of the Federal Circuit, Chen was the Deputy General Counsel for Intellectual Property Law and Solicitor at the United States Patent and Trademark Office. In this role, he defended the Under Secretary of Commerce and Director of the USPTO and the agency in court. By all accounts he was also a trusted senior member of the USPTO senior management team.
Prior to becoming Solicitor and Deputy General Counsel at the USPTO, Chen was an Associate Solicitor for 10 years. In this capacity he represented the USPTO’s decisions in federal court, briefing and arguing numerous cases before the U.S. Court of Appeals for the Federal Circuit.
Summer is always a busy time for me. Between crisscrossing the country teaching the PLI patent bar review course, I also fit in a week teaching a class at John Marshall Law School. Between keeping up with the Federal Circuit, the inevitable end of term patent decisions from the Supreme Court and whatever nonsense Congress is thinking up (this year relating to patent trolls) I manage to stay pretty busy. What that means is a number of items typically fly under my radar screen until sometime toward the end of July. With this in mind I thought I would do a rundown of some of the more interesting items that perhaps didn’t support an entire article worth of attention.
1. Reed Tech takes over USPTO Contract from Google
Many are probably familiar the fact that the USPTO has wholeheartedly embraced the President’s Open Government Initiative (OGI) to provide increased transparency of government operations and information by making bulk data available directly to the public for no charge. To that end, the USPTO entered into a no-cost contract with Google a number of years ago. Under this no-cost contract Google scraped information from the USPTO servers, transferring the many image files into searchable text documents, which were then released to the public. But all good things must come to an end.
Several weeks ago the United States Court of Appeals for the Federal Circuit issued a rather interesting decision in a case that had initially been appealed up to the Unite States Court of Appeals for the Fifth Circuit. See United States Marine, Inc. v. United States (Fed. Cir., July 15, 2013).
United States Marine, Inc. (USM) sued the United States government in the United States District Court for the Eastern District of Louisiana under the Federal Tort Claims Act (FTCA), 28 U.S.C. § 1346(b)and 28 USC §2674. USM alleged that the United States misappropriated USM’s trade secrets. Specifically, USM claimed that the United States Navy, which had lawfully obtained USM’s proprietary technical drawings under a contract (to which USM was not a party), owed USM a duty of secrecy that it breached by disclosing those drawings to a rival private firm for use in designing military boats for the government.
The case was straight forward enough, at least through the end of trial. After the district court found the United States liable for trade-secret misappropriation and awarded USM damages, the government appealed to the United States Court of Appeals for the Fifth Circuit claiming that the district court lacked jurisdiction.
Last month a coalition of farmers, seed sellers, and agricultural organizations (i.e., hereafter “farmers”), recently received an unfavorable but hardly shocking decision from the United States Court of Appeals for the Federal Circuit. See Organic Seed Growers v. Monsanto. These farmers filed a declaratory judgment action seeking a determination of non-infringement and invalidity with respect to twenty-three patents owned by Monsanto Co. and Monsanto Technology, LLC (collectively, “Monsanto”). The twenty-three patents-in-suit relate to technologies for genetically modifying seeds. The patented technologies are used to incorporate various traits into soybeans, corn, and other agricultural crops, including traits conferring resistance to the herbicide glyphosate (the active ingredient in Monsanto’s product Roundup).
The farmers do not want to use or sell transgenic seed incorporating Monsanto’s technologies. They also oppose the use of glyphosate and do not use it on their crops. So what is the problem then? If they don’t want to infringe and don’t plan on infringing Monsanto patents how could they possibly support a declaratory judgment action against Monsanto? They say they were concerned that if they do indeed become contaminated by transgenic seed Monsanto may come knocking and assert claims of infringement despite the fact that they have done nothing affirmative, unlike farmer Bowman, to infringe the Monsanto patents.
Such a generalized fear, without any preparations to engage in potentially infringing activity, has never been enough to support declaratory judgment jurisdiction. Neither would it be found to support declaratory judgment jurisdiction in this case simply because Monsanto is one of the most hated corporations in the world. Thus, unrealistic hatred and irrational fear of a patent holder, as it turns out, is insufficient to support declaratory judgment jurisdiction.
The law as it relates to software has been in flux over the last 10 years. Many older patent applications simply do not have enough detail to satisfy the current requirements to obtain a patent, although when drafted they would have been sufficient to satisfy the requirements then in place. Describing software as a pure method claim has not worked for a long time despite the fact that in reality software is really a method. Much more than a cursory description of software as a series of steps is required in order to have hope of obtaining patent protection for software.
Indeed, ever since the Federal Circuit en banc decision in Bilski, claims have been required to be tethered to tangible components, such as data storage devices, processors, databases, controllers, servers and the like. Unfortunately, however, the Patent Trial and Appeals Board at the United States Patent and Trademark Office now has taken the position that they will ignore the tangible components within a computer implemented method claim and then look to see what remains before determining whether the claim is patent eligible. See PTAB Kills Software.
Of course, after you remove or ignore the tangible components what remains is a naked process, which is patent ineligible. Thus, deciding to ignore tangible components leads to the inescapable conclusion that no software is patent eligible. Such disingenuous reasoning has the effect of punishing applicants for writing claims as the Patent Office has mandated ever since the machine-or-transformation test was first announced by the Federal Circuit in Bilski. The test announced in SAP/Versata, which was the first covered business method review decision announced by the PTAB, cannot be the correct test, and ultimately the decision (or at least the rationale) will be reversed. Any test that has the net effect of rendering all software patent ineligible, like the SAP/Versata test, is simply not correct as I will explain more clearly below.
Recently the United States Court of Appeals for the Federal Circuit upheld Nintendo’s victory in a patent-infringement case brought against Nintendo by IA Labs CA, LLC. See IA Labs CA v. Nintendo Co., LTD. The Federal Circuit agreed with the the United States Federal District Court for the District of Maryland, issuing what is called a Rule 36 Judgment. A Rule 36 Judgement is one a judgment of affirmance without an opinion. See Rule 36 of the Federal Rules of Appellate Procedure, Federal Circuit Rules.
We do not have any recitation of facts or reasoning explaining the Federal Circuit panel decision because the Per Curiam decision of the panel, which was made up of Circuit Judges Newman, O’Malley and Wallach, merely read: “AFFIRMED. See Fed. Cir. R. 36.” Thus, we must look to the underlying district court proceeding.
At trial it was determined by United States District Judge Peter J. Messitte that Nintendo did not infringe IA Labs’ patent (U.S. Patent No. 7,121,982). Further, Judge Messitte ordered IA Labs to pay Nintendo more than $236,000 in attorneys’ fees because it was an exceptional case due to the fact that the claims were objectively baseless. Also of interest is the fact that IA Labs sought to not post a bond to appeal, which was denied at least in part because the litigation was being funded by a third-party financier.
Three weeks ago Chief Judge Randall Rader of the United States Court of Appeals for the Federal Circuit authored an op-ed article in the New York Times titled Make Patent Trolls Pay in Court. He co-authored this article with Law Professors Colleen Chien (Santa Clara) and David Hricik (Mercer). The premise of the article is simple: there are bad actors who abuse the patent litigation system by buying up and then seeking to enforce dubious patents with vague allegations of infringement that don’t seem to pass muster.
But exactly how do these bad actors abuse the litigation system? Chief Judge Rader explained the business model as follows: “[T]rolls… make money by threatening companies with expensive lawsuits and then using that cudgel, rather than the merits of a case, to extract a financial settlement.” Indeed, these patent trolls rely on the inefficiencies of the litigation process and bring lawsuits solely for the purpose of settling the case for nuisance value before the lack of merit in the case is exposed.
While it may be difficult for some to believe that this type of activity happens, those within the industry with first hand knowledge know it to be true. The problem is real, the damage it causes is significant and the frequency with which it occurs is astonishing. Rader, Chien and Hricik are absolutely correct!
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