UPDATED 5/12/2013 at 3:31pm

In what can only fairly be characterized as utterly ridiculous, 5 of the 10 judges on the Federal Circuit to hear CLS Bank v. Alice Corporation en banc would find that claims that satisfy the machine-or-transformation test are not patentable. While I think it is inappropriate to find the systems claims patent ineligible that isn’t what makes the decision utterly ridiculous. The decision is an embarrassment because 5 other judges would have found the systems claims patent eligible. Thus, we have an even split of opinion at the Federal Circuit.

The Federal Circuit decision in CLS Bank v. Alice Corp. is now being horribly mischaracterized in the media, which will now only further complicate the matter in the court of public opinion. This decision offers no precedent whatsoever regarding systems claims because it was a tie. Alice Corporation loses the systems claims not because that is the law of the land announced by the Federal Circuit, but rather because a single district court judge determined that the systems claims were patent ineligible. Had that same district court judge found the systems claims patent eligible then Alice would have prevailed.

In other words, the Federal Circuit is essentially abdicating its authority relative to whether systems claims are patentable to the district courts and presumably also to the Patent Trial and Appeals Board at the United States Patent and Trademark Office. Whatever the district court or PTAB does is just fine. Well, not quite.

UPDATED: 2:07pm ET

Well, the United States Court of Appeals for the Federal Circuit sort of decided CLS Bank v. Alice Corporation earlier today. Truthfully, all the important questions that we thought might be answered remain completely and totally unanswered because there were only 10 judges who sat on the en banc tribunal and no more than 5 judges signed on to any one opinion.

The only thing we know is this — the Federal Circuit issued an extraordinarily brief per curiam decision, which stated:

Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. § 101. An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.

Thus, all of the asserted claims are not patent eligible. At the moment I am completely flabbergasted and don’t know what to say.

As readers of IP Watchdog are aware, Federal Circuit Chief Judge Rader recently delivered an important and noteworthy defense of the U.S. patent system at the recent annual meeting of the Association of University Technology Managers (AUTM). I did not attend the event, but others have recounted that Chief Judge Rader’s remarks reminded attendees that the patent system is intended to promote innovation and asserted that patent litigation abuse is the main problem of our patent system.

According to Chief Judge Rader, patent litigation abuse (which he referred to as “litigation blackmail”) occurs when a plaintiff patent owner attributes a high value to an asserted patent with the intention of extracting a small settlement from an alleged infringer defendant. He went on to outline a four step approach to curb patent litigation abuse, summarized simply as:

Several weeks ago I attended the annual meeting of the Association of University Technology Managers (AUTM). I spoke at the event on the Bayh-Dole panel, explaining how Universities and the start-ups that they form can better get their positive innovation stories to the media. See Getting Your Invention Story to Journalists Who Care and Time to Take a Stand. I also attended the fireside chat between Chief Judge Rader and AUTM President Sean Flanigan. See Chief Judge Rader Speaks Out About Patent Litigation Abuse.

The fireside chat between Rader and Flanigan lasted nearly 60 minutes, and the Chief took questions from the audience. I found this entire presentation terribly interesting, but there were several things in particular that I have wanted to get to publishing, which did not neatly fit into the first article about patent litigation abuse. Namely, the Chief discussed the Supreme Court’s aversion to bright line rules and why they are really quite important in the commercial law context. He also discussed what the Federal Circuit has done to bring more certainty to damages, and he provided a razor sharp criticism of Judge Posner of the United States Court of Appeals for the Seventh Circuit.

Chief Judge Randall Rader of the United States Court of Appeals for the Federal Circuit kicked off the public programming at the annual meeting of the Association of University Technology Managers (AUTM) in San Antonio, Texas, last night. He participated in a question and answer session in front of a packed theater at the Henry B. Gonzalez Convention Center in downtown San Antonio, Texas, just a block away from the famed River Walk and only several blocks from the Alamo.

The event was billed as a fireside chat with Chief Judge Rader, sans fire. Nevertheless, those familiar with the fireside chat genre get the feel for the evening. It started out a bit biographical before it turned to an in depth discussion of the patent system and heavy issues of the day. The conversation was lead by Sean Flanigan, who is President-Elect of AUTM. Questions were also taken from the audience, which I would estimate at well over 500.

Chief Judge Rader is known for his frank discussions, and he is not afraid to defend the patent system. He did not disappoint with his candor. Very early on in response to a question from Flanigan, the Chief Judge said matter-of-factly: “Yes, I do think there is a litigation abuse problem.” Game on! Chief Judge Rader would go on to discuss the blackmail-like shake-downs that are plaguing the industry and giving the patent system an unjustified bad name.

On Monday the United States District Court for the Northern District of California refused to issue a permanent injunction against Samsung’s continued infringement of Apple’s patents. That ruling was reached despite the fact that Apple’s patents withstood invalidity challenges from Samsung, despite the fact that Apple prevailed in the patent infringement litigation AND despite the fact that the district court found that Apple and Samsung were direct competitors. For my rant on the decision explaining why it was wrong and the damage done to the patent system by failure to grant permanent injunctions to victorious patentees who are competitors see No Permanent Injunction for Apple in Samsung Patent Battle.

On Wednesday, December 19, 2012, in a wholly unrelated case, but one that shares important factual similarity to the aforementioned Apple/Samsung matter, the United States Court of Appeals for the Federal Circuit determined that the United States Federal District Court for the Southern District of California abused its discretion when it refused to award a victorious patent plaintiff a permanent injunction where the patentee directly competes with the infringer. The case is Presidio Components v. American Technical Ceramics. The opinion was authored by Chief Judge Rader and joined by Judge Plager and Judge Wallach.

Perhaps this case will be a turning point, something of a Twisted Sister moment. You know — “we’re not gonna take it, no, we ain’t gonna take it, we’re not gonna take it anymore…” I sure hope so!

Last week the Federal Circuit decided the case of Santarus, Inc. v. Par Pharmaceutical, Inc., which dealt with whether a drug covered by an Abbreviated New Drug Application (ANDA) infringed the patents owned by that patent owner relative to the proton pump inhibitors (PPI) product omeprazole.  The big issue in the case is what might at first glance seem to be a rather innocuous statement relative to the support necessary in a patent specification for a negative claim limitation.  But after reading the Newman dissent (which joins in the other aspects of the Court’s decision) it starts to become clear that this could be a much larger issue of significant consequence.

The appeal came to the Federal Circuit from the judgment of the United States District Court for the District of Delaware. The plaintiff, Santarus, Inc., is the exclusive licensee of patents on specified formulations of benzimidazole PPI – a class of chemical compounds that inhibit gastric acid secretion and help prevent and treat stomach acid-related diseases and disorders. The patents are for the inventions of Dr. Jeffrey Phillips, and are assigned to the University of Missouri. Santarus provides the PPI product omeprazole in the formulations covered by the Phillips patents, with the brand name Zegerid®.

A key provision of the Hatch-Waxman Act resides in 35 U.S.C. § 271(e)(1) which provides immunity from a patent infringement suit where the testing of the patented invention is for the purpose of securing regulatory approval from the FDA.  Or to use the specific language of 35 U.S.C. § 271(e)(1), there is no patent infringement if the use of the patented invention is “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.”

This Hatch-Waxman provision, commonly known as the “safe harbor,” has been construed twice by the Supreme Court, and in an expansive manner to immunize alleged infringing activity.  First, in the 1990 case of Eli Lilly & Co. v. Medtronic, Inc., the Supreme Court ruled that this “safe harbor” applied to medical devices, not just drugs as was originally believed (including by the respective House and Senate floor managers for the Hatch-Waxman Act).  In fact, the basis for the holding in the Medtronic case makes this “safe harbor” essentially applicable to the testing of any patented invention that is for the purpose of securing regulatory approval from the FDA (e.g., food additives, cosmetics, etc.).  See Guttag, “The Ever Expanding ‘Safe Harbor’ of Hatch-Waxman:  The Merck v. Integra Lifesciences Case,” Cincinnati Bar Association Report, page 16 (August 2005).

Many of us in the patent world (me included) have pounded our heads against the reasoning (not result) expressed in Mayo Collaborative Services v. Prometheus Laboratories, Inc.  See A Matter of Patent Law Despotism: The Nonsensical Reasoning in the Supreme Court’s Mayo Collaborative Services Decision Part 2*.  The reasoning in Mayo Collaborative Services makes no patent law logical sense on numerous grounds, including disregarding an important paragraph in the Supreme Court’s 1981 case of Diamond v. Diehr that is not only binding precedent, but also tells us that Breyer’s opinion repeatedly does what this paragraph from Diehr says not to do in an analysis of method or process claims under 35 U.S.C. § 101.

But the question now becomes what do we do to keep the reasoning in Mayo Collaborative Services from exploding into completely irrational, as well as patent law insane doctrine?  The way forward to patent-eligibility rationality, as well as sanity, is through the remand decision in Classen Immunotherapies, Inc. v. Biogen IDEC.  See CAFC on Patent-Eligibility:  A Firestorm of Opinions in Classen.  Put differently, there may yet be “light” in this currently “dark” patent-eligibility tunnel.

Last week at the 6th Annual Patent Law Institute presented by the Practising Law Institute last week in New York City I found myself a little star struck; or maybe “surprised” is the right way to characterize it.  The term “All Star Panel” is thrown around too liberally in the CLE world and relative to programming at various annual meetings.  Having said that, the panel titled “Dialogue Between the Bench and Bar” was comprised of some of the biggest names in the industry, and they didn’t seem interested in pulling punches.  Nothing seemed sacred, at least in terms of topics, which lead to a lively and entertaining discussion that lasted 90 minutes without a single question from either the live audience or the webcast audience.

The panel that ended the first day of the program was moderated by Don Dunner of Finnegan, Henderson, who is the unofficial “Dean of Federal Circuit Advocates.”  I had the pleasure of interviewing Dunner nearly a year ago and always enjoy listening to his thoughts and soaking in his wisdom.  To his left was Chief Judge Randall Rader of the United States Court of Appeals for the Federal Circuit, and to Rader’s left was Seth Waxman former Solicitor General of the United States and now of Wilmer Hale.  To Dunner’s right was Judge William Young of the United States Federal District Court for the District of Massachusetts, and to Young’s right was John Whealan, currently of George Washington Law School and former USPTO Solicitor.

The discussion was lively, perhaps even explosive.  You could nearly see sparks fly when Chief Judge Rader continued to pepper Waxman with question after question about his opinion on the propriety of parties lobbying the White House in order to obtain a favorable amici brief from the Department of Justice.  Rader zeroed in on the slippery slope and obviously is not pleased with the mixing of law and politics, saying: “this is a cause for concern… Politics and law have a divide.”

The United States Patent and Trademark Office earlier today welcomed 10 new Administrative Patent Judges of the Board of Patent Appeals and Interferences.

At 10:00am this morning in the North Auditorium of the Madison Building on the campus of the USPTO, Federal Circuit Chief Judge Randall Rader administered the oath of office to Jacqueline Wright Bonilla, Erica Franklin, James Housel, Deborah Katz, Neal Abrams, George Best, Andrew Caldwell, Thomas Giannetti, Andrew Metz and Grace Obermann.

The ceremony lasted approximately 45 minutes.  It was well done, together with several musical numbers.  After USPTO Director David Kappos’ brief opening remarks, Laverne Smith, a Board Supervisory Paralegal, sang “My Country, ‘Tis of Thee.”  The program was then concluded with “God Bless America,” which was sung by April Mosby, a Board Patent Attorney.

Earlier today the United States Court of Appeals for the Federal Circuit decided not grant a petition for en banc rehearing in Retractable Technologies Inc. v. Becton, Dickinson and Company.  See Order and dissents. While a failure to order rehearing en banc is typically not newsworthy, this one was because there were two separate and passionate dissents. Judge Moore wrote the first dissent and was joined by Chief Judge Rader (who was on the original panel along with Judge Lourie and Judge Plager). The second dissent was written by Judge O’Malley. Both dissents make compelling cases for this case to have been reheard en banc to once and for all address the split among the Federal Circuit relative to claim interpretation.

On Monday, April 30, 2007, the United States Supreme Court issued its much anticipated decision in KSR International Co. v Teleflex, Inc.  For many months patent pundits tried to predict how the Supreme Court would handle the Federal Circuit “teaching, suggestion and motivation” test, used to determine whether a particular patent claim is obvious.  Predictions of this sort are usually no more reliable than predictions of any other kind, and while everyone had an opinion, few actually anticipated what the Supreme Court would do.  Whether the surprise that was KSR was owing to the patent bar being willful blind or simply having misplaced hope is another story for another day.

The Supreme Court dislikes bright line rules, but surely they wouldn’t opt for a totality of the circumstances approach to obviousness and throw away TSM, thereby leaving some 6,000+ patent examiners to make their own determinations about the qualitative value of an invention?  Isn’t that what erasing “flash of creative genius” was meant to do away with? Sadly, the Supreme Court put on display their severe lack of understanding for all to see, believing obviousness to be about common sense.  But who’s common sense?  What boundaries would be put in place?  As is all to familiar, the Supreme Court took the “we decide, you figure it out” approach.  I guess they loathe showing their work, which is probably why they aren’t mathematicians!

On Friday, September 30, 2011, the University of New Hampshire School of Law celebrated the opening of the newly minted Franklin Pierce Center for Intellectual Property. Many of those in attendance were distinguished alumni and numerous Judges. Three Judges from the United States Court of Appeals for the Federal Circuit were on hand — Judges Rader, Newman and Gajarsa specifically.

During his contemporaneous, unscripted speech, Chief Judge Randall Rader made several remarks about the access to justice that raised some eyebrows.  On Friday we were told that we need to tolerate the injustice of certain rules that might lead to an unfair result, but then on Saturday morning during the Judges’ panel we were told that rules of thumb couldn’t and shouldn’t apply to the law of damages. Rader on one hand was saying that certainty and relatively bright line rules are necessary to control the process of litigation, but then on the other hand saying that a flexible, case-by-case approach needs to be what we pursue.  In short, it seems to me that Judge Rader wants to have his cake and eat it too!

I dissented in person, and I dissent here and now.

On Friday, September 30, 2011, the University of New Hampshire School of Law unveiled its new Franklin Pierce Center for Intellectual Property, which is a new 12,000+ square-foot building located in Concord, New Hampshire. I was in attendance for the festivities, which included speeches, a dinner, a lifetime achievement award for Judge Pauline Newman and a Conference.

There is much to write about the event, but I will start my week long coverage with an overview of the event. As the week progresses I will delve into some interesting substantive discussions that took place over this Intellectual Property weekend in the Granite State, including: (1) Chief Judge Rader tell me during the Judges’ panel: “You aren’t making any sense…” (check back Tuesday afternoon 10/4/2011 for more on this); (2) Chief Judge Rader daring anyone to come up with proof that the Supreme Court’s decision in KSR did anything to change previous Federal Circuit case law on obviousness (I’ll take that challenge!); and (3) Jon Dudas, the former Under Secretary of Commerce for Intellectual Property, succinctly (and correctly) explaining that the funding of the United States Patent and Trademark Office is similar in ways to a Ponzi scheme.