IP Law Alert

Recent Impact of Reexams on Stays in E.D. Texas

Frank A. Bruno — Tue, 15 May 2012 09:29:31 -0500

A district court’s inherent powers to control its docket and to stay proceedings are well-settled, harkening back to at least Landis v. N. Am. Co., 299 U.S. 248 (1936). Within the Eastern District of Texas, in determining whether a stay is warranted pending reexamination in a patent litigation, district courts typically consider factors such as whether a stay will unduly prejudice one party; whether a stay will simplify the issues in the case; and whether discovery is complete and a trial date has been set. E.g., Soverain Software LLC v. Amazon.com, Inc., 356 F.Supp.2d 660, 662 (E.D.Tex.2005). A survey of 2012 patent decisions rendered on the topic in the Eastern District of Texas has yielded the following:

Ambato Media, LLC v. Clarion Co., Ltd. Judge Gilstrap denied defendant’s motion to stay pending an ex parte reexamination requested nearly 18 months after the case began. The Court ruled that all three of the Soverain Software factors favored denying the stay. Of note as to the prejudice factor, the Court determined that a stay would unduly prejudice the patentee, commenting that the reexam had barely entered its merit stage and that in all likelihood, could take several years and would not conclude until after the trial date. The Court also remarked that when a case is stayed “witnesses may become unavailable . . . and evidence may be lost while the PTO proceedings take place.” The Court found this possibility of witness and evidence loss “heightened” because defendant admitted that it had discontinued some of the accused products. The Court also determined it was “speculative” for defendant to suggest that reexamination might simplify the case, and noted that granting a motion to stay under such provisional grounds would invite derailment of patent cases by reexamination instead of promoting efficient and timely resolution of patent cases. Lastly, the Court noted that extensive discovery, involving millions of pages of documents, had taken place already, and thus found the third factor to disfavor a stay, as well.

Adrain v. Vigilant Video, Inc. Judge Gilstrap denied plaintiff’s emergency motion to stay where during the ex parte reexamination (initiated by defendant), the PTO had finally rejected all pending claims, and issued an Advisory Action rejecting the subsequently amended claims. Confronting what it referred to as an “atypical” situation, the Court found that the Soverain Software factors still applied, and militated against a stay. The Court found that defendant had a “justiciable interest in the timely resolution of the case” and would be prejudiced by the stay. The Court further noted plaintiff’s chosen timing to file the motion to stay -- after Markman briefing was completed -- weighed against stay. The Court again held that the possibility that some of the claims may be affected was unavailing, preferring to deal with that contingency if and when it occurred, rather than putting the case on hold indefinitely. As to the discovery and trial posture of the case, the Court found this factor to slightly favor denying the stay, noting that claim construction had shifted and discovery was still on-going.

EMG Tech., LLC v. Dr. Pepper Snapple Group, Inc. Judge Davis denied in part and granted in part defendant’s motion to stay proceedings pending reexamination of two patents. As to the denial, the subject patent had reissued with amended claims, so the reason for staying the case relating to that patent was moot. Regarding the other patent, the Court noted that the reexamination itself arose in another patent action, not with the extant defendant, and the PTO had finally rejected all the claims. The Court thus ruled that a stay would not unduly prejudice the patentee and its ability to enforce its patent. The Court also found that a stay would simplify the issues in the case, which was consolidated with another case for purposes of Markman, and which involved the above reissued patent only. Finally, because considerable discovery still remained, the Court held this factor weighed slightly against a stay, but weighing all the factors as a whole, nevertheless granted the stay as to the second patent.

SSL Svces., LLC v. Citrix Sys., Inc. Judge Gilstrap denied defendant’s motion to stay a 2008 litigation pending ex parte reexamination initiated over one year after the case began. First, the Court found that patentee waited four years to enforce its patent rights, and that the pending reexamination might not finish until well after trial. (Citing Ambato, above.) As to the second factor, regarding simplification of issues, the Court reiterated its reasoning that it was unwilling to adopt a per se rule to stay cases pending reexamination, remarking that “the interests of justice will be better served by dealing with that contingency when and if it occurs, rather than putting this case indefinitely on hold.” (Again citing Ambato.) Finally, the Court found that the discovery and trial factor favored denying the stay, where over four million pages of discovery had been exchanged, substantive pre-trial procedures had been completed and just the scheduled trial remained to be carried out.

Practitioners thus should consider these decisions and their underlying factors when litigating patent cases.

Frank A. Bruno is a Director in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

CAVEAT EMPTOR! - USPTO Issues Warning on Misleading Third Party Communications

Catherine M. Clayton — Fri, 11 May 2012 11:10:08 -0500

The United States Patent and Trademark Office (“USPTO”) has issued a warning notice advising trademark owners to beware of third party communications that “mimic the look of official government documents” and request payment of fees. That notice was issued after a number of owners reported to the USPTO that they had made payments in response to such requests, believing that they were for official fees and then learned that they were not.

These types of third-party solicitations often use official-sounding names, as well as formats that are more consistent with the style of government correspondence than that of commercial solicitations. For example, the USPTO specifically mentioned an entity using the name “United States Trademark Registration Office” and provided a copy of a notice that it sent to a trademark applicant.

Trademark applicants and registrants who receive solicitations for payments relating to their trademark filings are encouraged to read that correspondence carefully, or to forward it to their trademark attorneys for attention. All legitimate USPTO correspondence will list the “United States Patent and Trademark Office” as the sender and, if sent by e-mail, will be from an address ending “@uspto.gov.”

Complaints regarding third party solicitations may be lodged online with the Federal Trade Commission, and the USPTO asks that trademark owners forward misleading communications to it by e-mail to TMFeedback@uspto.gov

Catherine M. Clayton is a Director in the Gibbons Intellectual Property Department.

IPXI: Set to Debut This Summer

Ralph A. Dengler — Tue, 01 May 2012 11:01:17 -0500

We previously reported on the Intellectual Property Exchange International (“IPXI”), the “world’s first financial exchange focused on IP rights,” as well as its recent developments and sponsorships.

The IPXI seems on course to commence operations this summer, or early fall. The article, published last week in IP Law360, provides an in depth look at this new market for monetizing IP assets, as well as some considerations for those contemplating the IPXI for their IP portfolios.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department. Todd M. Nosher, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

Intellectual Property and the U.S. Economy

Charles A. Gaglia, Jr. — Thu, 26 Apr 2012 12:43:03 -0500

The U.S. Commerce Department recently released a comprehensive report, entitled “Intellectual Property and the U.S. Economy: Industries in Focus,” which identified 75 industries as IP intensive. The Report found that IP at such industries supported at least 40 million jobs in 2011. As of 2010, IP comprised more than $5 trillion dollars, or 34.8 percent of, U.S. gross domestic product (GDP) and accounted for 27.1 million American jobs. Between 2010 and 2011, the U.S. economic recovery resulted in a 1.6% increase in direct employment in IP-intensive industries, faster than the 1.0% growth in non-IP-intensive industries.

The Report concluded that the innovation protected by IP rights were key to creating new jobs and growing exports, all with a positive pervasive effect on the entire economy. IP-driven benefits flowed both upstream and downstream to every sector of the U.S. economy, and not just the final product of workers and companies: every job in some way produces, supplies, consumes, or relies on creativity and commercial distinctiveness to compete. Protecting ideas and IP promotes open and competitive markets, and will help ensure that the U.S. private sector remains America’s innovation engine.

Principal findings of the Report include:

The entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it.
IP-intensive industries accounted for about $5.06 trillion in value added, or 34.8% of U.S. gross domestic product (GDP), in 2010. Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7% of total U.S. merchandise exports.
IP-intensive industries directly accounted for 27.1 million American jobs, or 18.8% of all employment in the economy, in 2010.
A substantial share of IP-intensive employment in the U.S. was in the 60 trademark-intensive industries, with 22.6 million jobs in 2010. The 26 patent-intensive industries accounted for 3.9 million jobs in 2010, while the 13 copyright-intensive industries provided 5.1 million jobs.
While IP-intensive industries directly supported 27.1 million jobs either on their payrolls or under employment contracts, these sectors also indirectly supported 12.9 million more supply chain jobs throughout the economy.
In other words, every two jobs in IP-intensive industries support an additional one job elsewhere in the economy. In total, 40.0 million jobs, or 27.7% of all jobs, were directly or indirectly attributable to the most IP-intensive industries.
Jobs in IP-intensive industries pay well compared to other jobs. Average weekly wages for IP-intensive industries were $1,156 in 2010 or 42% higher than the $815 average weekly wages in other (non-IP-intensive) private industries. This wage premium nearly doubled from 22% in 1990 to 42% by 2010.
Patent- and copyright-intensive industries have seen particularly fast wage growth in recent years, with the wage premium in patent-intensive industries increasing from 66% in 2005 to 73% in 2010. And the premium in copyright-intensive industries rising from 65% to 77%.
The comparatively high wages in IP-intensive industries correspond to, on average, the completion of more years of schooling by these workers. More than 42% of workers aged 25 and over in these industries in 2010 were college educated, compared with 34% on average in non-IP-intensive industries.
Due primarily to historic losses in manufacturing jobs, overall employment in IP-intensive industries has lagged other industries during the last two decades. While employment in non-IP-intensive industries was 21.7% higher in 2011 than in 1990, overall IP-intensive industry employment grew 2.3% over this same period.
Because patent-intensive industries are all in the manufacturing sector, they experienced relatively more employment losses over this period, especially during the past decade.
While trademark-intensive industry employment had edged down 2.3% by the end of this period, copyright-intensive industries provided a sizeable employment boost, growing by 46.3% between 1990 and 2011.
Between 2010 and 2011, the economic recovery led to a 1.6% increase in direct employment in IP-intensive industries, faster than the 1.0% growth in non-IP-intensive industries.
Growth in copyright-intensive industries (2.4 %), patent-intensive industries (2.3%), and trademark-intensive industries (1.1%) all outpaced gains in non-IP-intensive industries.
Data on foreign trade of IP-intensive service-providing industries is limited. However, this Report does find that exports of IP-intensive service-providing industries accounted for approximately 19% of total U.S. private services exports in 2007.

Charles A. Gaglia, Jr. is Counsel to the Gibbons Intellectual Property Department.

Patent Litigators: Be Careful What You Plead

Ralph A. Dengler — Wed, 25 Apr 2012 11:16:01 -0500

Last month, in a sua sponte Memorandum Order in Technology Licensing Corp. v. Pelco, Inc., 11-cv-8544 (N.D. Ill. Mar. 5, 2012), Senior U.S. District Court Judge Milton I. Shadur recently took defendant to task for its answer and counterclaim.

In paragraphs 3, 5 and 6 of its answer defendant pled the boilerplate language that it was without knowledge or information sufficient to form a belief about the truth of the allegations of paragraph [ ] and therefore denies those allegations.” Judge Shadur rebuked defendant for this latter clause, stating it was “oxymoronic” that a party could assert in good faith that it did not have enough information to form a belief about an allegation, and then proceed to deny it.

The court also took issue with defendant’s affirmative defenses (“AD”) to the complaint. As to AD 1, which asserted noninfringement, the court criticized the response as violating the nature of an AD -- accepting all of the allegations of the complaint -- but then explaining why it was nevertheless not liable. The court outright struck AD 2, which asserted invalidity as directly at odds with §§ 7 and 8 of the complaint, which alleged direct and indirect infringement by defendants. As to AD 3, the court criticized it as “an impermissible laundry list that gives no clue as to the grounds for any of the contentions set out there.” The court noted that under the Federal Rules, notice pleading is required of defendants as well as plaintiffs, and so struck AD 3 without prejudice.

Finally, as to the declaratory judgment counterclaims, defendant asserted counterclaims of non-infringement and invalidity, citing 28 U.S.C. § 2201 et seq., the Federal Declaratory Judgment Act, for the former. Here the court requested that defendant provide “a brief explanation . . . of the reason that patent infringement cases so often spawn counterclaims seeking declaratory judgments--counterclaims that are nothing more than the flipside of the complaints involved,” noting that “the practice cannot stem from any requirement in 35 U.S.C. §285, which [defendant’s] counsel cite as supporting part of the relief sought, for that provision permits the award of fees to the ‘prevailing party’ without reference to which side of the ‘v.’ sign that party occupies.

The decision there is consistent with other recent district court orders, such as Ferring v. Watson Labs, where the District of Nevada Court held the affirmative defense of invalidity was insufficiently pled; GemcoII LLC v. Electroimpact Inc., where the District of Kansas Court dismissed the counterclaims of invalidity and patent misuse as inadequate; and Armstrong Pump Inc. v. Hartman et al., where the Western District of New York Court dismissed counterclaims of patentability and invalidity for lacking adequate factual support.

The takeaway from all these cases is that practitioners on both sides of the “v.” must pay careful attention to the adequacy and sufficiency of their respective pleadings.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department. Lisa H. Wang, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

Patent Litigation at the ITC: Views from the Government, In-House Attorneys and Outside Counsel

Gibbons P.C. — Mon, 23 Apr 2012 10:41:03 -0500

On April 26, the Gibbons Institute of Law, Science & Technology, Seton Hall University School of Law, and the New Jersey Intellectual Property Law Association will present, "Patent Litigation at the ITC: Views from the Government, In-House Attorneys and Outside Counsel."

Throughout the afternoon, two panels comprised of various government officials and in-house counsel will come together to share their views on patent litigation and how it is approached in their specific practice areas.

New Jersey, New York and Pennsylvania CLE credits will be granted at this program. Please click here for additional event details, including a list of featured speakers and pricing levels. To register, click here or call (973) 642-8187.

U.S. v. Aleynikov: Second Circuit Reverses SDNY Due to Statutory Interpretation Errors

Jillian A. Centanni — Fri, 20 Apr 2012 10:10:17 -0500

Following a jury trial in the United States District Court for the Southern District of New York, Sergey Aleynikov was convicted of stealing and transferring a proprietary computer source code used in his former employer’s high-frequency trading system, in violation of the Economic Espionage Act of 1996 (“EEA”), 18 U.S.C. § 1832, and the National Stolen Property Act (“NSPA”), 18 U.S.C. § 2314. On appeal, Aleynikov argued that his conduct did not constitute an offense under either statute because 1) the source code was not a “stolen” “good” within the meaning of the NSPA and 2) the source code was not “related to or included in a product that is produced for or placed in interstate or foreign commerce” within the meaning of the EEA. The United States Court of Appeals for the Second Circuit agreed with Aleynikov and reversed the District Court’s ruling.

Aleynikov worked at Goldman Sachs & Co. (“Goldman”) from 2007 to 2009 as a computer programmer, developing source code for Goldman’s proprietary high-frequency trading system. Goldman does not license this system to anyone, and closely guards its secrecy . The company’s confidentiality policies required Aleynikov to keep all of Goldman’s proprietary information confidential, including any intellectual property created by Aleynikov. These policies also forbid Aleynikov from taking Goldman’s proprietary information with him upon leaving the company.

In April of 2009, Aleynikov joined Teza Technologies LLC as an Executive Vice President to develop Teza’s high-frequency trading system. While it might normally be expected to take years to develop such a system, Teza’s founder conveyed to Aleynikov that he wanted the system completed within six months. On his last day at Goldman in June of 2009, Aleynikov encrypted and uploaded to a server in Germany more than 500,000 lines of source code from Goldman’s trading system, including code for the infrastructure, algorithms, and market data connectivity programs. After the uploading, Aleynikov deleted the encryption program and other artifacts of the uploading. At his home in New Jersey, Aleynikov downloaded the source code from the server in Germany to his home computer and copied some of the files to his other computers. Two months later, Aleynikov flew from New Jersey to Chicago to attend meetings at Teza. He brought a flash drive and a laptop, which contained some of Goldman’s source code. The next day, the FBI arrested Aleynikov upon his return to Newark Airport.

An indictment by the U.S. Government charged Aleynikov with violating the EEA, the NSPA and the Computer Fraud and Abuse Act, (“CFAA”) 18 U.S.C. § 1030. Aleynikov moved to dismiss the indictment for failure to state an offense, and the District Court only dismissed the CFAA count. The jury convicted Aleynikov on the EEA Count and the NSPA counts. Specifically, with respect to the EEA count, the District Court found that the stolen code was a trade secret that the trading system constituted a “product” to which the source code related, and that the system was “produced for” interstate commerce. With regard to the NSPA , the District Court held that the source code for the trading system constituted “goods” that were “stolen” within the meaning of the NSPA. Aleynikov was sentenced to 97 months of imprisonment, a three-year term of supervised release, and a $12,500 fine.

On appeal, the Second Circuit Court of Appeals analyzed the scope of the NSPA and the EEA. First, the Second Circuit examined whether Aleynikov’s acts of uploading source code to a server in Germany, downloading the source code to his computer in New Jersey and later transferring the source code to Illinois qualified the source code to be considered stolen “goods” within the meaning of the NSPA. In determining that the source code did not constitute stolen “goods” within the statutory definition, the Second Circuit joined several other circuits in relying on Dowling v. United States for the proposition that theft and subsequent interstate transmission of purely intangible property is not within the scope of the NSPA. The Court further noted that storing an intangible property on a tangible medium does not transfer the intangible property into a stolen good under the NSPA. Because Aleynikov did not “assume physical control” over a stolen good when he copied the source code and did not “deprive [Goldman] of its use,” he did not violate the NSPA.

The Court next considered whether Aleynikov violated the EEA. In interpreting the EEA, the Second Circuit noted that products “placed in” commerce under the meaning of the EEA are products that have been introduced into the stream of commerce, and have reached the marketplace. Alternatively, products that have not yet been “placed in” commerce but are intended to reach the marketplace can be termed as being “produced for” commerce under the EEA. The Court found that Goldman’s system was neither “produced for” nor “placed in” commerce because Goldman had no intention of selling the system to anyone, and concluded that Aleynikov’s theft of source code relating to that system therefore was not an offense under the EEA. Thus, although Aleynikov should have known that his conduct was in breach of his confidential obligations to his former employer Goldman and dishonest, the Court found that it was not violative of either of the EEA or the NSPA.

For practitioners, the Aleynikov decision is a stark reminder to ensure proper safeguards are in place to prevent and detect the theft or other misappropriation of proprietary information, whether electronically stored or otherwise. At least one commentator has suggested that the U.S. Government might have prevailed in Aleynikov by including a criminal copyright claim in its charges. Aleynikov may of course still face a civil action for trade secret theft in state court.

Jillian A. Centanni is an Apprentice in the Gibbons Intellectual Property Department.

Supreme Court Affirms Kappos v. Hyatt, Paving the Way for New Evidence and Expansive Review of Patent Applications

John J. Cahill — Thu, 19 Apr 2012 08:07:12 -0500

Yesterday, in a unanimous decision, Kappos v. Hyatt, the Supreme Court affirmed a ruling of the Court of Appeals for the Federal Circuit holding that in a civil action under 35 U.S.C. § 145, a patent applicant has the right to present new evidence to the District Court regardless of whether that evidence previously was or could have been presented during the proceedings before the PTO. Further, when such new evidence is presented, the District Court must review any related factual conclusions affected by the new evidence de novo, without giving deference to any prior decision or finding of the PTO.

By way of background, Hyatt’s patent application, related to computer micro-controller designs, was rejected under 35 U.S.C § 112 for lack of written description and enablement. The Board of Patent Appeals and Interferences upheld the rejection and dismissed a request for rehearing on the basis that it raised new issues. Hyatt had submitted a declaration in support of his new and amended claims. In dismissing the request, the Board found that this declaration evidence could have been previously raised to either the examiner or the Board. The District Court agreed with the PTO, ruling that Hyatt’s failure to present the evidence to the PTO constituted a negligent act. The Federal Circuit reversed.

Under U.S. patent law, when the PTO denies an application for patent, an applicant has two routes of judicial review: an appeal of the denial to the Federal Circuit under 35 U. S. C.§ 141, or file a civil action in district court under 35 U. S. C.§ 145, whereby the Court will determine whether the applicant is entitled to receive a patent for his invention. In a § 141 proceeding, the Federal Circuit reviews the Board’s decision on the administrative record that was before the PTO and, therefore, no opportunity exists for the applicant to offer new evidence. Further, the Federal Circuit may only review factual findings if unsupported by substantial evidence. In a § 145 action, the patent applicant sues the Director of the PTO in District Court. The applicant may present new evidence, but until today, limitations on the applicant’s ability to introduce new evidence and the appropriate standard of review were as yet determined.

“[T]here are no limitations on a patent applicant’s ability to introduce new evidence in a §145 proceeding beyond those already present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure.” Kappos, slip op. at 14. Specifically, the Court rejected importing principles of the Administrative Procedue Act, which provides that review is limited to the administrative record and affords deference to the administrative rulings. “[I]f new evidence is presented on a disputed question of fact,the district court must make de novo factual findings that take account of both the new evidence and the administrative record before the PTO.” Id. If no new evidence is introduced, then the Court reviews the action on the administrative record and deference will be given to PTO factual findings subject to the agency’s standard of review. As with any evidence introduced in a civil action, if the District Court questions its credibility or reliability based upon the proceedings before and findings of the Patent Office, the District Court may give less weight to evidence introduced by the applicant in a § 145 action. The Court rejected a heightened standard proposed by the Director, where only new evidence that could not reasonably have been provided to the agency in the first instance is admissible in a § 145 action. The Court also rejected the Director’s proposed clear error standard of review.

In concurrence, Justice Sotomayor, joined by Justice Breyer, opined that an applicant should be estopped from later introducing evidence it had purposely withheld, but “when a applicant fails to present evidence to the PTO due to ordinary negligence, a lack of foresight, or simple attorney error, the applicant should not be estopped from presenting the evidence for the first time in a §145 proceedings.” Id. at 2-3 (Sotomayor, J., concurring). Notably, Hyatt filed the application before the 1995 rule change and, therefore, any delay in issuance likely means additional revenue persisting for 17 years from the issue date.

The significance of a § 145 civil action is that it affords an applicant the opportunity to introduce new evidence after the close of the administrative proceedings. In practice, this ruling allows an applicant to proceed with an ex parte appeal as part of regular prosecution practice with the knowledge that a civil action, whereby new evidence, such as expert testimony or test data obtained after proceedings before the Board, is available. This is especially important in light of limitations in which testimony may be presented in an ex parte appeal.

With the Kappos v. Hyatt decision, patent practitioners now have new considerations when facing a patent application rejection.

John J. Cahill is an Associate in the Gibbons Intellectual Property Department.

Patent Office Introduces After Final Consideration Pilot

Christopher H. Strate — Wed, 18 Apr 2012 10:32:52 -0500

On April 2, 2012, the United States Patent and Trademark Office announced the implementation of a new After Final Consideration Pilot. The AFCP will allow an examiner to consider and enter amendments submitted after a final rejection that will require new searching by the examiner.

For a long time the Patent Office has been monitoring the length of time that applications have been pending and the increasing number of applications filed. The Patent Office has proposed numerous solutions that attempt to bend the application curve, including accelerated examination, pre-appeal brief conferences, and limiting the number of requests for continued examinations and continuation applications. The AFCP is another effort that has the potential to help reduce the application volume.

Prior to the introduction of this pilot, an examiner would only enter an after final amendment in very limited circumstances. An examiner may enter such an amendment when the “amendment merely cancels claims, adopts examiner suggestions, removes issues for appeal, or in some other way requires only a cursory review by the examiner.” M.P.E.P. 714.13.

A common sequence of events during the prosecution of a patent application is as follows:

The examiner issues a first office action rejecting all claims in view of reference A.
The applicant amends the claims to differentiate the invention from reference A.
The examiner performs a new search, identifies reference B and rejects all claims in view of reference B. Because the rejection and search were made in response to an amendment by the applicant, the rejection is final.
The applicant recognizes that the invention can be easily distinguished from reference B by another amendment and submits the amendment to the examiner within 2 months of receiving the final office action.
However, the examiner feels that the amendment will require additional searching to verify that the newly amended claim is valid in view of the prior art. As a result, the examiner will only issue an advisory action stating that the amendment will not be entered because the amendment will require the examiner to perform an additional search.
The applicant must now file a continuation or request for continued examination, along with the required fees, in order to have the amendment entered and considered by the examiner.

Since the examiner was not permitted to enter and consider the amendment, this policy by the Patent Office contributed to an increase in the amount of time that applications remained pending. It also increased the cost that an inventor faced in obtaining a patent.

The AFCP offers a potential solution to help both issues. Under the AFCP, the examiner is now permitted to enter an after final amendment when:

The amendment places the application in condition for allowance by incorporating limitations from objected-to claims into independent claims, if the new claim can be determined to be allowable with only a limited amount of further consideration or search.
The amendment can be determined to place the application in condition for allowance with only a limited amount of further search or consideration, even if new claims are added without canceling a corresponding number of finally rejected claims.
The amendment can be determined to place the application in condition for allowance by adding new limitation(s) which require only a limited amount of further consideration or search.

The AFCP grants the examiner an additional 3 hours to consider the amendment and perform any additional search. As a result, if an Applicant can introduce an amendment that will differentiate the claims from a newly cited reference and an extensive prior art record has already been presented to the examiner, it is likely that the examiner will enter the amendment and move the application on to allowance.

While the AFCP is not as elaborate as other proposals made by the Patent Office, it has the potential to be a practical solution that will reduce the number of applications pending at the PTO and reduce the cost of the patent application process.

Christopher H. Strate is an Associate in the Gibbons Intellectual Property Department. Charles A. Gaglia, Jr., Counsel to the Gibbons Intellectual Property Department, co-authored this post.

Robert E. Rudnick to Speak at Joint Patent Practice Seminar on April 17

Gibbons P.C. — Mon, 16 Apr 2012 16:17:10 -0500

Robert E. Rudnick, a Director in the Gibbons Intellectual Property Department, will be speaking at the Annual Joint Patent Practice Seminar on April 17, 2012, at the New York Marriott Marquis on the Federal Circuit’s decision in General Protecht Group, Inc. v. Leviton Mfg. Co., Inc. The case involved a forum selection clause in a patent settlement agreement. Mr. Rudnick’s presentation can be accessed here.

Over 400 individuals are expected to attend the seminar. The program for the event is available here.

Gibbons Intellectual Property Department Chair Listed in New Jersey Super Lawyers

Gibbons P.C. — Mon, 16 Apr 2012 10:26:58 -0500

David E. De Lorenzi, Chair of the firm's Intellectual Property Department, was listed in New Jersey Super Lawyers as a leader in his field. Overall, 69 Gibbons attorneys were listed in New Jersey Super Lawyers and New Jersey Super Lawyers Rising Stars.

The Super Lawyers selection process comprises hundreds of thousands of statewide or regional surveys supplemented by a comprehensive examination of each nominee’s background and experience, focusing on such criteria as verdicts and settlements; transactions; representative clients; honors and awards; educational background; and other outstanding achievements. Only 5 percent of the total lawyers in the state are selected for inclusion in Super Lawyers. Those receiving the highest point totals in the nomination process are included in the statewide top 100 attorney and top 50 women attorney lists.

CAFC Chief Judge Rader on Curbing E-Discovery, Part II

Ralph A. Dengler — Fri, 13 Apr 2012 13:16:07 -0500

In succession to remarks he made this past Fall about the soaring costs of electronic discovery in IP cases and unveiling the Model Order Regarding E-Discovery in Patent Cases, Federal Circuit Chief Judge Randall Rader recently told the ABA Section of IP Law that both the bar and the bench together, must continue to rein in the high costs of e-discovery. Chief Judge Rader suggested that attorneys’ need to limit their e-discovery requests and courts should consider implementing rules to facilitate efficient and cost effective discovery, as many have begun to do. The text of Chief Judge Rader’s speech may be viewed here.

The Chief Judge noted that in other countries, discovery practice is much more restrictive than in the U.S., making patent litigations, among other cases, easier and quicker to handle. In recent years, there has been significant movement in the U.S. to curtail e-discovery. For example, the Districts of Delaware, Kansas and Maryland all have adopted some form of default standards for e-discovery. The Seventh Circuit is in the second phase of its electronic discovery pilot program, and the U.S. International Trade Commission is considering implementing its own rules.

Most recently, in early March, the Eastern District of Texas proposed a Model Order that is based off of Chief Judge Rader’s Model Order, but differs in many ways. The Federal Circuit’s Model Order suggests that a requesting party be limited to e-mail discovery from five custodians with five search terms per custodian, while the Eastern District of Texas’ proposal calls for limits of eight custodians and 10 search terms. Additionally, the Eastern District of Texas’ proposal provides for limited written discovery and a deposition before the service of e-mail production requests.

Although the Eastern District of Texas’ proposed e-discovery order differs from the Federal Circuit’s Model Order, it reflects the intentions Chief Judge Rader had when he introduced the Model Order. Among the Chief Judge Rader’s other comments on the topic, he noted that some type of limitation on e-discovery is called for, regardless of the method and how closely it follows the Federal Circuit’s actual model.

Gibbons will continue to monitor e-discovery developments, and their impact on our clients.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department. Charles H. Chevalier, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

Program in Pharmaceutical Management - April 26-27, 2012

Gibbons P.C. — Tue, 10 Apr 2012 10:35:49 -0500

Gibbons is proud to once again sponsor lunch at the Rutgers Business School’s Blanche and Irwin Lerner Center for Pharmaceutical Management Studies Program on Thursday, April 26, and Friday, April 27, at Rutgers Business School - Newark, One Washington Park, Room 1027, 10th Floor.

Prior to the lunch on April 26, Charlie Gaglia and Sheila McShane of the Gibbons Intellectual Property Department will present, “Patents and Intellectual Property Rights" from 10:50 am - 12:05 pm.

The two-day program will address timely topics in the pharmaceutical industry, including the regulatory environment; intellectual property issues; marketing, biotech emergence; financial performance metrics; managed care and drug development.

The full agenda for this insightful two-day program can be viewed here.

Gibbons Welcomes Charles H. Chevalier, Esq.

Gibbons P.C. — Wed, 04 Apr 2012 12:56:17 -0500

Gibbons is pleased to announce that Charles H. Chevalier, Esq. has joined the firm as an Associate in the Intellectual Property Department. He will reside in Gibbons Newark office.

Prior to joining Gibbons, Charles was an attorney at Fitzpatrick, Cella, Harper & Scinto, where he focused his practice on complex patent litigation. Charles received his J.D., cum laude, from Seton Hall University School of Law and his B.A., in Biochemistry, from Swarthmore College.

Charles is admitted to practice in the States of New York and New Jersey and is registered to practice before the U.S. Patent and Trademark Office.

Federal Circuit to Revisit Myriad after Mayo Decision

Todd M. Nosher — Fri, 30 Mar 2012 08:30:32 -0500

On Monday, the United States Supreme Court granted certiorari in the well-publicized Assn. For Molecular Pathology v. Myriad Genetics, et al. case (“Myriad”) for the purpose of vacating the underlying Federal Circuit decision -- finding isolated DNA sequences from human genes as patentable subject matter -- and remanding the case for reconsideration in view of its recent ruling in Mayo Collaborative Services, et al. v. Prometheus Laboratories, Inc. (“Mayo”).

We have previously written on both Myriad and Mayo. In Myriad, the Federal Circuit held that DNA sequences in their isolated state “are not the same molecules as DNA as it exists in the body; human intervention in cleaving or synthesizing a portion of native chromosomal DNA imparts on that isolated DNA a distractive chemical identity from that possessed by native DNA,” and upheld the validity of a patent claiming isolated DNA sequences. But last week, in a much anticipated case, the Supreme Court determined in Mayo that appending conventional steps to the laws of nature, natural phenomena and abstract ideas does not make such laws, phenomena and ideas patentable. Indeed, the Court expressed concerns that “patent law not inhibit further discovery by improperly tying up the future use of laws of nature.” Mayo, slip op. at 16.

Whether the Federal Circuit can reconcile its position in Myriad with the recent Mayo decision -- and the Court’s concerns stated therein -- remains to be seen. In the meantime, pundits and practitioners will continue to speculate on and grasp the influence of Mayo on Myriad, and beyond. As always, Gibbons P.C. will track the progress of these developments and provide updates accordingly.

Todd M. Nosher is an Associate in the Gibbons Intellectual Property Department. Charles H. Chevalier, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

Pinterest: Potential IP Pitfalls for New Social Networking Trend

Owen J. McKeon — Fri, 30 Mar 2012 08:01:44 -0500

Pinterest, a play on words of “pin” and “interest,” is a virtual, online “pin board,” where user’s can organize and share things they find on the web. While Pinterest is attracting a loyal community of social media users, the site is also the source of some concern for those same users and owners of intellectual property.

The stated Mission of Pinterest is “to connect everyone in the world through the ‘things’ they find interesting . . . a favorite book, toy, or recipe [which] can reveal a common link between two people. With millions of new pins added every week, Pinterest is connecting people all over the world based on shared tastes and interests.” According to the website, a “pin” is an image added to a user’s Pinterest “board” from either a website or as an uploaded image from a user’s computer. Users add the “Pin It” applet to their web browser, which then allows a user to add a pin (an image) by clicking on the “Pin It” button, and adding the requested pin to the user’s pinboard.

For those individuals and companies looking to capitalize on the free promotion that Pinterest offers, they can add a “Pin It” button to their webpages which looks and functions similarly to the buttons offered by other social media websites. Adding another “button” to companies’ webpages is another avenue to increase the social awareness of a brand or products. While many brand owners, companies and individuals will appreciate being “pinned” by users, there will undoubtedly be those who object.

In an effort to clarify policies and protect itself from liability for infringement, Pinterest founder Ben Silbermann posted a blog entry on Friday, March 23, 2012 announcing that the website would be updating its terms of service effective April 6, 2012, including privacy policies and acceptable-use. Pinterest’s newly-adopted policies will likely provide it with the full protection of DMCA and insulate it from claims of infringement.

The bigger threat to Pinterest’s long term viability, however, could come from concerns that its users may be exposing themselves to potential liability by “pinning” third parties’ content without permission. In reality, a sure way for Pinterest users to avoid problems is for Pinterest users to pin only content they create or have permission to use. Only time will tell whether users’ liability concerns will impact Pinterest’s increasing popularity.

For the time being, interest in Pinterest will continue to grow, as will the copyright and trademark implications for the site. With offices in New York City, Newark, Trenton, Philadelphia and Wilmington, Gibbons P.C. stands ready to provide counsel on this, and all other IP matters.

Owen J. McKeon is a Director in the Gibbons Intellectual Property Department. Todd M. Nosher, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

Zoltek Corp. v. U.S.: Federal Circuit En Banc Reverses Zoltek III and Rules That 28 U.S.C. § 1498(a) Can Waive Immunity for Infringement Under 271(g)

Vincent E. McGeary — Thu, 22 Mar 2012 15:16:34 -0500

The Federal Circuit recently demonstrated how active the Court is, and will continue to be. After having ruled in Zoltek III that the United States did not waive immunity from suit except for acts that would constitute direct infringement under 35 U.S.C. § 271(a), the Court voted sua sponte to reconsider the question en banc.

On March 14, 2012, the Court of Appeals for the Federal Circuit decided the issue of whether the Court of Federal Claims, following the Federal Circuit decision in Zoltek III, erred in allowing Zoltek to amend its complaint and transfer its claim for infringement under 35 U.S.C. § 271(g) against Lockheed Martin to the United States District Court for the Northern District of Georgia. Although the trial court concluded that the requirements under the transfer statue, 28 U.S.C. § 1631, were satisfied and allowed the amendment and transfer, the Federal Circuit determined that this was clear legal error. The en banc panel overruled the portion of Zoltek III limiting the government’s immunity waiver to § 271(a), reversed the trial court’s decision and remanded the case to the trial court.

By way of background, Zoltek is the assignee of United States Reissue Patent No. 34,162 (the “RE ‘162 Patent”), titled “Controlled Surface Electrical Resistance Carbon Fiber Sheet Product.” In its infringement contentions, Zoltek only asserted the method claims of the RE ‘162 Patent, 1-22 and 33-38, which contained the two steps of partially carbonizing the fiber starting material and then processing the fibers into sheet products. The products at issue were used in the F-22 jet aircraft, which Lockheed designed and built as the result of a contract with the U.S. government.

In 1996, Zoltek sued the United States under 28 U.S.C. § 1498(a), alleging that the invention covered by the RE ‘162 Patent was infringed because the resulting product was used or manufactured by or for the United States. The United States moved for partial summary judgment and argued that Zoltek’s claim arose in a foreign country and therefore, its sovereign immunity was not waived under 28 U.S.C. § 1498(c). In Zoltek I, the trial court held that § 1498 “does not [waive the Government’s sovereign immunity] as to all forms of direct infringement as currently defined in 35 U.S.C. § 271.” 51 Fed. Cl. 828, 837 (2002). Subsequently, both parties appealed after the trial court stayed Zoltek’s taking claim and denied the government’s motion in Zoltek II. 58 Fed. Cl. 688, 707 (2003). Then, the Federal Circuit reversed the trial court’s ruling that Zoltek could allege patent infringement as a Fifth Amendment taking under the Tucker Act and also held that Zoltek’s infringement allegations were precluded by § 1498, but for different reasons than the trial court. Zoltek III, 442 F.3d 1345, 1353 (Fed. Cir. 2006). Specifically, the majority stated § 1498(a) was the basis without looking at § 1498(c), and remanded the case.

On remand, Zoltek sought leave to amend its complaint to add a claim against Lockheed for infringement of the RE ‘162 Patent’s method claims under 35 U.S.C. § 271(g) and to transfer the claim to the Northern District of Georgia under 28 U.S.C. § 1631. The trial court held that Zoltek lacked jurisdiction against the government, but Zoltek had jurisdiction against Lockheed. Zoltek IV, 85 Fed. Cl. 409, 413, 418 (2009). As a result of the trial court’s ruling, Zoltek amended its complaint and the Court of Federal Claims certified to the Federal Circuit for interlocutory appeal the issue of whether 28 U.S.C. § 1498(c) must be interpreted to nullify any government contractor immunity provided for in § 1498(a) when a patent infringement claim arises in a foreign country.

In deciding this issue, the Federal Circuit looked at the two consequences that would result. The Federal Circuit had to either conclude that the patentee’s well-pleaded complaint of infringement failed to state a cause of action against both the government and the government’s contractor, or override the longstanding principle that a contractor working for the government was immune from individual liability for patent infringement occurring during the course of business. The Federal Circuit concluded that Zoltek III panel’s limitation of § 1498(a) to infringement under § 271(a) is inconsistent with the plain language of the statute and the panel misapplied the case law in deciding to limit § 1498(a). The panel’s ruling created at least three results that were meant to be avoided: 1) The ruling results in Lockheed having liability for conduct immunized by § 1498(a); 2) The ruling creates the possibility that the procurement of the United States’ military materiel could be interrupted by infringement actions against government contractors; and 3) The ruling spoils the Congressional intent in 35 U.S.C. §§ 154(a)(1), § 271(g), 19 U.S.C. § 1337, and 28 U.S.C. § 1498.

After reviewing the legislative intent of § 1498 and Zoltek III panel’s interpretation, the Federal Circuit held that 35 U.S.C. § 1498(a) creates an independent cause of action for direct infringement by the government or its contractors and is not dependent on 35 U.S.C. § 271(a). Under § 1498(a), the government has waived its sovereign immunity for direct infringement, which extends to acts under § 271(a) and § 271(g). When the product of a patented process is used in or imported into the United States, there is direct infringement for the purpose of a § 1498 action. Having ruled that the United States could be sued, its contractor, Lockheed, was found immune from suit. Additionally, the Federal Circuit held that 35 U.S.C. § 1498(c) does not apply in this case.

In dissent, Judge Dyk demonstrated just how far the Federal Circuit needed to reach to address the issue. The dissent argued that the certified order from the Court of Federal Claims did not confer appellate jurisdiction over the earlier dismissal of infringement claims against the United States, citing United States v. Stanley, 483 U.S. 669 (1987). Judge Dyk also disagreed with the majority’s interpretation of 35 U.S.C. § 1498(a), and would have held the United States immune from suit and permitting a suit against the contractor.

Vincent E. McGeary is a Director in the Gibbons Intellectual Property Department. Jillian A. Centanni, an Apprentice in the Gibbons Intellectual Property Department, co-authored this post.

Prometheus Re-bound: Supreme Court Reverses in Mayo v. Prometheus Labs

Robert E. Rudnick — Tue, 20 Mar 2012 15:08:12 -0500

In a much anticipated decision, a unanimous Supreme Court today reversed the ruling of the Federal Circuit Court of Appeals, and held that Prometheus’ process is not patent eligible. Mayo Collaborative Servs. v. Prometheus Labs., Inc., No. 2008-1403, slip. op. (Fed. Cir. Dec. 17, 2010), rev’d, 566 U.S. __ (2012).

Mayo purchased and used medical diagnostic tests based on Prometheus Labs’ patents, but later sold and marketed its own diagnostic test. Prometheus Labs brought suit, asserting that Mayo’s test kits infringed its patents. The District Court found that while the test kit infringed Prometheus Labs’ patents, the court granted summary judgment that the processes claimed by the patents were not patentable subject matter under 35 U.S.C. § 101, because they claimed natural laws or natural phenomena, specifically, the correlations between thiopurine metabolite levels and the toxicity and efficacy of thiopurine drugs. On appeal, the Federal Circuit reversed, finding the processes to be patent eligible under its “machine or transformation test.” The case was remanded by the Supreme Court for reconsideration in light of Bilski v. Kappos, 561 U.S. __, slip. op. (2010), which sought to clarify the jurisprudence surrounding the “machine or transformation test,” and holding that the latter is not a definitive test of patent eligibility.

In Mayo, the Supreme Court held that the claimed processes have not transformed unpatentable natural laws into patentable applications. As a result, the processes are not patentable and therefore, the claims are invalid. In reaching its decision, the Court looked at the controlling precedents of Parker v. Flook, 437 U.S. 584 (1978) and Diamond v. Diehr, 450 U.S. 175 (1981). In both cases, the Court pointed out that a basic mathematical equation, like a law of nature, was not patentable. In Diehr, the Court held that the process was patent eligible because “of the way the additional steps of the process integrated the equation into the process as a whole.” Mayo, slip op. at 11-12. The process did not suggest that all the steps or a combination of those steps were obvious, already in use or conventional. Id. at 12. In Flook, the process was held not patentable because the claimed process only provided ‘an unpatentable formula for computing an updated alarm limit.’ Id. at 12. The Court then examined the instructions for those who administer doses of thiopure drugs and concluded that the instructions add “nothing specific to the laws of nature other than that is well-understood, routine, conventional activity, previously engaged in by those in the field.” Id. at 13.

Additionally, the Court also looked at other cases, Neilson v. Harford, Webster’s Patent Cases 295, 371 (1841), Bilski v. Kappos, and Gottschalk v. Benson, 409 U.S. 63 (1972), to support its position that appending conventional steps to laws of nature, natural phenomena and abstract ideas does not makes those laws, phenomena and ideas patentable. The Court continued to emphasize its concern that “patent law not inhibit further discovery by improperly tying up the future use of laws of nature.” Mayo, slip op. at 16. Notwithstanding, Prometheus Labs’ arguments to the contrary, the Court declined to change its conclusion that the claimed processes are not patentable. Here, the Court emphasized that its concern relates to “how much future innovation is foreclosed relative to the contribution of the inventor” and noted that “even a narrow law of nature [ ] can inhibit future research.” Id. at 20.

This decision undoubtedly will ripple across many industries, as patent practitioners attempt to apply the holding of the case.

Robert E. Rudnick is a Director in the Gibbons Intellectual Property Department. Jillian A. Centanni, an Apprentice in the Gibbons Intellectual Property Department, co-authored this post.

gTLDs Pose New Threats in Cyberspace

Luis J. Diaz — Fri, 16 Mar 2012 11:41:42 -0500

On January 12, 2012, ICANN, the Internet’s domain name registration watch dog, began accepting applications for new generic Top-Level Domains (gTLDs) to add to those already in existence, including .com, .net, .biz and others. Under the new scheme, any company can apply for a gTLD, thereby expanding the domain name system (DNS). Ultimately, this expansion will change the Internet forever. Each new gTLD poses an incremental risk for trademark owners who are already under heavy assault in cyberspace from cybersquatting (registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark owner), brandjacking (assuming the online identity of another entity for the purposes of trading on another’s brand equity), and typosquatting (registering URLs with common misspellings) by those seeking to generate illicit profits. According to the Coalition Against Domain Name Abuse (CADNA), cybersquatting already costs trademark owners more than $1 billion each year due to lost sales, lost goodwill, and increased enforcement costs. However, with a major increase in gTLDs, many corporations fear an expansion in expensive litigation to enforce their brands and trademarks.

To safeguard its valuable marks, a company should be proactive. Steps to consider are: First, the company should register its service marks or trademarks with the USPTO. Second, the company should consider registering its marks with the newly created Trademark Clearinghouse and Claims Service, which will serve as a central repository for trademark information submitted by trademark owners. Third, the company should monitor the first round of gTLD applications published by ICANN and file a “Legal Rights Objection” to any gTLD that infringes its marks. Fourth, the company should consider a defensive strategy by registering gTLD domain name variants within the 30 days after each new gTLD is launched. Lastly, the company should actively monitor new gTLD registrations as it does existing TLDs for key terms and marks and challenge potentially infringing domain names utilizing the most appropriate means, namely the Federal Trademark Dilution Act (FTDA), the Anticybersquatting Consumer Protection Act (ACPA), the Uniform Domain Name Dispute Resolution Policy (UDRP), or the new Uniform Rapid Suspension System (URS).

Upon identification of an alleged infringer, a mark owner may first consider serving a cease and desist letter to the alleged infringing entity to halt an activity (cease) and not to take it up again later (desist) or else face legal action. In many instances, the cease and desist leads to a negotiated settlement. Failing that, trademark owners have three avenues of relief in cybersquatting cases. They can pursue legal action in federal court under the FTDA, Lanham Act or, more commonly, the ACPA. Alternatively, a trademark owner can seek to recover the domain name under ICANN’s UDRP. UDRP is a good option when there is evidence of bad faith by the domain name registrant. The UDRP allows a trademark owner to challenge domain name registrations in expedited administrative proceedings. UDRP proceedings can be faster and cheaper for trademark owners than litigation and outcomes tend to be pro-plaintiff. Lastly, the new URS process promises to provide trademark owners with an even faster and less expensive means of preventing trademark abuse. However, trademark owners in URS matters will face a higher burden of proof - clear and convincing evidence - and a finding against the trademark owner is always without prejudice. Thus, a secondary proceeding under URS, UDRP, or in federal court may be required.

Some trademark owners prefer to bring ACPA claims in the first instance because they offer more remedies than the cancellation or transfer of the domain name (the only remedies available under UDRP proceedings). In addition to corrective measures, a federal court can issue an injuction; award damages, including enhanced damages for willful infringement; and provide costs and/or attorney’s fees to a prevailing owner. A court ruling also provides a mark owner with final resolution of the matter and as such, a suit under the ACPA may deter future cybersquatters more effectively than a UDRP proceeding.

In order to prevail on a ACPA case, the trademark owner must prove that the domain name registrant (1) has a bad faith intent to profit from the mark and (2) registers, traffics in, or uses a domain name that is (a) identical to or confusingly similar to a distinctive mark, (b) identical to, confusingly similar to, or dilutive of a famous mark. In Mayflower Transit, L.L.C. v. Prince, the court found that while the plaintiff had a registered mark and that defendant’s domain “mayflowervanline.com” was confusingly similar, the court found that the defendant had a bona fide noncommercial use of the mark, therefore, the claim failed and the defendant was not liable for injunctive or monetary relief. 314 F. Supp. 2d 362, 367 (D.N.J. 2004). In contrast, in Verizon California, Inc. v. Navigation Catalyst Systems, the court found registration of numerous websites in a very short time that were confusingly similar to the Verizon mark was evidence of a bad faith intent to profit and held defendants liable. 568 F. Supp. 2d 1088, 1092-97 (C.D. Cal. 2008).

The impact of gTLDs on the Internet and their intersection with trademark law, among others, will be closely monitored.

Luis J. Diaz is a Director in the Gibbons Intellectual Property Department. John J. Cahill, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

In re Staats: Two-Year Time Limit for Reissue Applications

Thomas J. Bean — Fri, 09 Mar 2012 09:13:07 -0500

In In re Staats, a Federal Circuit panel including Judges Dyk, O’Malley and Reyna found that the requirement set forth in 35 U.S.C. § 251 for filing broadening reissue application within two years of patent issuance is met once a first broadening reissue application has been filed within that time period, and that subsequently-filed and broadening continuation applications based on the first broadening reissue application need not be filed within the two-year period. In reaching this decision, the Federal Circuit interpreted and affirmed a ruling made by its predessor court, the United States Court of Customs and Patent Appeals (CCPA) in In re Doll.

Staats’ original patent, U.S. Pat. No. 5,950,600 entitled “Isochronous channel having a linked list of buffers,” granted on August 17, 1999 to Apple Computer Inc. On August 17, 2001, exactly two years after the patent grant, Staats filed a first broadening reissue application with claims directed to a first disclosed embodiment pertaining to a method for handling data on an isochronous channel using a linked list of buffers to implement a CPU-based interrupt system. A first reissue patent, U.S. RE38,641, issued on October 26, 2004.

Staats filed a second broadening reissue application on May 12, 2004 as a continuation of the first broadening reissue application, which issued as U.S. RE39,763 on August 7, 2007. In addition, Staats filed a third broadening reissue application on August 11, 2006, as a continuation of the second broadening reissue application. During prosecution, Staats added broadened claims directed to a second disclosed embodiment pertaining to a method which established the isochronous channel directly between a sensor node and a receiver node, without participation by the CPU. The U.S. Patent and Trademark Office (USPTO) rejected the third application as time-barred according to 35 U.S.C. § 251, and Staats appealed to the USPTO Board of Patent Appeals and Interferences (BPAI). Aware of Doll, the BPAI nevertheless affirmed by finding that, by including claims for the first time directed to the second embodiment, the broadening sought was unforeseeable and the public notice function inherent in the two-year broadening reissue filing requirement of 35 U.S.C. § 251 had not been satisfied. Staats appealed the BPAI decision to the Federal Circuit.

On appeal, the Federal Circuit reversed the BPAI. In an opinion for the court authored by Judge Dyk, the Federal Circuit reviewed the legislative and decisional history with regard to broadening reissue applications, beginning with the Patent Act of 1870 and concluding with the Patent Act of 1952. The Federal Circuit noted that the law of broadening reissues was first developed by the Supreme Court in the 1881 decision Miller v. Brass Company, in which the Court held that the 1870 Act allowed for broadening reissues, subject to rule of laches. As to laches, the Federal Circuit cited several subsequent Supreme Court decisions finding that a delay of longer than two years should be excused only under “special circumstances.” This two-year rule was codified in 35 U.S.C. § 251 as part of the 1952 Act. In Doll, the CCPA held that the two-year time limit applied only to the filing of a first broadening reissue application.

In Staats, the USPTO urged that Doll be distinguished because the claims in dispute in the later-filed broadening reissue application there were related to the claims in the earlier-filed application, while the claims at issue in Staats were not related to claims in the earlier-filed reissue applications. As a result, the USPTO argued that the intended notice requirement of 35 U.S.C. § 251 is not met in Staats. Judge Dyk found the USPTO’s argument to be unavailing, noting that “Doll itself made no distinction between related and unrelated claims” and offering that “[if] the PTO believes we should overrule Doll, that is a matter that must be presented to the en banc court.”

In an apparent effort to discourage the en banc review, Judge O’Malley authored a concurrence in which she disagreed with the majority’s analysis seemingly relying on Doll alone. In summary, Judge O’Malley emphasized that “[the] plain language of 35 U.S.C. § 251, coupled with the legislative history, long-standing unambiguous regulations implementing the statute, all relevant case law, and common sense, compel reversal in this case.” As to the USPTO’s notice arguments, Judge O’Malley suggested that “[given] the limited life of additional claims which can be sought through the type of continuing reissue practice at issue here, the protections afforded by the intervening rights provisions in 35 U.S.C. § 252, and the countervailing implementation concerns [that are raised by requiring claim relatedness to be judged for the purposes of evaluating the applicability of the two-year requirement], the PTO’s arguments are overstated - substantially so.”

Significantly, in view of Staats, a patentee that has failed to maintain a continuation chain by filing a continuation application prior to the issuance of a patent can effectively re-establish that chain by filing a broadening reissue application within two years following the patent grant. However, unlike other continuing applications, a broadening reissue application and any continuation applications filed based on it will be subject to the intervening rights provisions of 35 U.S.C. § 252 and case law prohibitions against the recapture of canceled subject matter in an original patent.

Thomas J. Bean is Counsel to the Gibbons Intellectual Property Department. Michael Cukor, a Director in the Gibbons Intellectual Property Department, co-authored this post.