Posts in Guest Contributors

By providing a property right in exchange for the disclosure of a novel and useful invention, patent law supplied an incentive to perform risky and expensive scientific research. By embedding a property right in a patent, the market, not a biased government, could pick winners and determine value. A patent embeds a micro-economic property right in an invention from which market-based incentives are derived. From the property right, market competition is developed as multiple competing parties enjoy similar benefits of owning the fruits of discoveries in which they have vested financial interests. The patent system thus levels the playing field for different competitors as it encourages investment in scientific research. From the fair competition that arises in the system of patent rights that protects investment evolves economic and technological progress.

Affinity Labs of Texas, LLC, lost two cases at the Federal Circuit last week, both in decisions authored by Judge Bryson, which Chief Judge Prost and Judge Wallach joining the opinions. Although the patents at issue in the two cases were different, they shared a similar specification. In the DirecTV decision, the Federal Circuit followed the Alice/Mayo framework and found the claims patent ineligible. Perhaps of note, the Court rebuffed Affinity’s arguments regarding novelty, explaining patent eligibility does not turn on novelty of the claims. In the Amazon decision the Federal Circuit ruled that basic user customization is insufficient to qualify as inventive under Mayo and Alice.

Yahoo’s proposed auction of the Excalibur portfolio is likely to be the largest sale of computer-related patents since the Alice Corp. v. CLS Bank Int’l ruling in June of 2014. Alice may reduce the number of overly-broad patents in existence in the long run, but (ironically) in the short term the decision may have skewed patent value calculations in a way that encourages the kinds of behaviors it was supposed to negate. A sale of the Excalibur patents will provide an important test of Alice’s effects in the short term.

In the past decade, economic growth, wage growth, business investment and productivity growth have declined dramatically. Economists have discovered that productivity growth alone explains the dramatic development of industrial economies. Yet, the causes of productivity growth are unclear, with capital, labor and technological contributions. My central thesis is that productivity growth is strongly correlated with a strong patent system. Consequently, I will show that the attack on patent rights starting about 2005 is correlated to the decline of productivity growth. The patent system is designed to induce business investment in technology R&D. In effect, the macroeconomic analysis of productivity growth rests on microeconomic phenomena of decisions made by entrepreneurs to risk capital on technology projects in the expectation of a reward.

In its upcoming term, the Supreme Court will once again consider the extraterritorial effect of U.S. patent law; specifically, whether “the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.” Life Tech. Corp. v. Promega Corp., No. 14-1538. Petitioners (all subsidiaries of Thermo Fisher Scientific Inc., which I shall collectively call “Life”) urge the Court to hold the statute requires “all or a large percentage closely approximating all” of the components of the invention to have been made in the United States. Though Promega Corporation has yet to respond, the Court should decline Life’s invitation. This does not mean, however, that the decision of the Federal Circuit, Promega Corp. v. Life Tech. Corp., 773 F.3d 1338 (Fed. Cir. 2014), should be affirmed. Rather, though none of the briefs filed in the case have said so, the Supreme Court should reverse because the single, commodity component at issue cannot, as a matter of law, even under Promega’s interpretation of the statute, comprise a “substantial portion” of the components of the invention.

On the heels of a busy term last year, the stage is set for the Supreme Court to review two more important issues regarding utility patents during the October term. The first issue involves one aspect of the Federal Circuit’s decision in Promega Corp. v. Life Technologies Corp., 773 F.3d 1338 (Fed. Cir. 2014) — i.e., whether a party who supplies a single, commodity component of a multi-component invention from the United States can be liable for infringement. The second issue arises from SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 807 F.3d 1311 (Fed. Cir. 2015) (en banc), to determine whether laches remains a viable defense to patent infringement with respect to pre-litigation damages in certain circumstances.

Both petitioners’ and patent owners’ reliance on blog articles in the course of post grant proceedings has been approximately equal. However, the manner in which the blog articles were used did vary widely based on the litigator’s position during the proceeding. For petitioners, blog articles were most often cited to construe the claims (Apotex Inc. v. Amgen Inc., IPR2016-01542, Paper 2, p.69), were introduced as previous publications of an expert witness in order to help prove their qualifications (Samsung Electronics Co., v. Papst Licensing, IPR2016-01733, Ex. 1014, p. 99), or were used to bolster the credentials of one or more of the representing attorneys (Google, Inc. et al v. Smartflash, CBM2015-00132, Paper 17, p. 2). For patent owners, blog articles were most often referenced to provide support to summarize and clarify certain legal standards such as claim construction standards (Uniloc USA, Inc. et al v. Allscripts Healthcare Solutions, Inc., IPR2015-01615, Paper 12, p. 8), to clarify legislative history and identify Congressional intent (Coalition for Affordable Drugs VII v. Pozen, IPR2015-01241, Paper 13, p. 47), and to rebut the petitioner’s expert testimony by attacking the expert’s credibility (Coalition for Affordable Drugs VII v. Pharmacyclics, IPR2015-01076, Paper 20, p. 13).

Rather than the drastic measure of abolishing § 101, such as that proposed by previous USPTO Director Kappos, we think that a simple change to § 101 that removes the confusing notion of “inventiveness” from statutory interpretation would do the trick. Our proposal strikes a middle ground, in that, while removing “inventiveness” concepts from § 101 analysis, it retains the historical exceptions rooted in pre-emption that were reiterated in the Triad.

Estimates for renewing the trademark for one term (including the attorney costs) in the U.S. and the other seven Convention countries vary from $320 in Thailand to $2,120 in the U.S., while the same amounts to $4,556 under the Madrid Protocol (Figure 5). The estimates are inclusive of the costs for filing combined affidavits under Section 8 (affidavit of use) and Section 15 (incontestability) in the U.S., in addition to the costs for filing an “Affidavit of Continued Use” under Section 9 in the U.S. The individual country renewal fees under the Madrid Protocol vary from $80 in India to $925 in the EU (Figure 6).

Lifenet’s patent is for plasticized soft tissue grafts used for transplantation in humans. The specification discloses that plasticizers can be removed before implantation, although they need not be, as claim 1 discloses three options for the implanting technician, one option being direct implantation without removing plasticizers. LifeCell’s accused grafts are preserved in a solution prior to implantation, and it is undisputed that significant amounts of plasticizers are removed during this soaking process. During claim construction, the parties disputed the meaning of the term “non-removal.” The district court concluded that construction of this term was unnecessary because it was easily understood by a person of ordinary skill in the art to have its plain meaning.

In a September 13, 2016 decision relating to subject matter eligibility of software patents under 35 U.S.C. § 101, the Federal Circuit vacated the district court’s order granting Defendants’ motion for judgment on the pleadings under Fed. R. Civ. P. 12(c), and held that McRO’s patents were eligible for protection under 35 U.S.C. § 101. The disputed patent claims recited a method for “automatically . . . producing accurate and realistic lip synchronization and facial expressions in animated characters.” The McRO patents identified that a problem in the prior art was that animators, even using the assistance of computers, had to manually manipulate the character model for lip movement. The McRO patents solved this problem by using rules to automatically depict more realistic synchronization of lip movements and speech.

Most CEOs won’t make a move without first consulting their general counsel or other legal adviser. But the general counsel seldom rises to the CEO spot. Why is that? Many corporate counsels work in large companies where each department—including legal—has very specific responsibilities and boundaries. Therefore, it’s harder for attorneys to get involved with key business, non-legal, initiatives that could demonstrate C-level potential. But the path from general counsel to CEO is becoming a lot more common.

On August 31, 2016, the Office of the Inspector General (OIG) of the U.S. Department of Commerce (DOC) released a report titled Investigative Report on Analysis of Patent Examiners’ Time and Attendance, (the Report). The Report lacks a sound statistical basis for its conclusions and recommendations. It should be withdrawn and its errors corrected before further dissemination. Otherwise, the OIG’s credibility will be irreparably damaged and it will deserve not to be taken seriously by the public, the U.S. Patent & Trademark Office (PTO), or other DOC operating units.

Trader Joe’s sued Hallatt (d/b/a Pirate Joe’s) for trademark infringement in the Western District of Washington, invoking the court’s federal question and supplemental jurisdiction. Trader Joe’s alleged that: (1) Hallatt misled consumers into falsely believing Pirate Joe’s was authorized or approved by Trader Joe’s; (2) utilized a confusingly similar “South Pacific” trade dress for his Pirate Joe’s store; (3) displayed Trader Joe’s trademarks in connection with the sale of products at Pirate Joe’s; and (4) resold Trader Joe’s products without authorization and without adherence to Trader Joe’s’ strict quality control practices. Trader Joe’s claimed Hallatt’s behavior diluted its trademarks, confused consumers, and damaged Trader Joe’s reputation by associating it with high price, lower quality products. Trader Joe’s sought damages and to permanently enjoin Hallatt from reselling its goods or using its trademarks in Canada.

If the UN Secretary General and the members of his “High Level Panel on Access to Medicines” thought the State Department was bluffing when it warned against their attempt to make intellectual property the fall guy for the lack of health care in poor countries, they were rudely awakened Friday afternoon. Disdaining diplomatic niceties, less than two days after the UN report issued, State bluntly replied in a statement titled “U.S. Disappointed Over Fundamentally Flawed Report of the UN Secretary-General’s High-Level Panel on Access to Medicines.” Compounding the pain, the same day five prominent university associations issued a joint paper taking the report apart. Being directly and publicly rebuked in this manner is a new experience for the Secretary General and his minions– but one they richly deserve.