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Fall 2005
update
Introducing Schiff Hardin New YorkWritten by Mac Waldbaum
This issue of Schiff Hardin’s IP Update focuses on — and containsarticles written by — the firm’s New York office. The lawyers of SchiffHardin’s New York office have substantial experience in intellectualproperty litigation both in New York and across the country. For example,we have litigated in Ohio and Georgia the trade secrets and patentsassociated with LCD screen technology and the manufacture of relatedflexible printed circuit boards for the aerospace industry. We havedeveloped an expertise in laser and CCD optical scanning with respect totwo-dimensional and three dimensional bar coding, fighting five separatecases (in New York, Delaware and California) in eight years to protect therights of one of the few major players in that industry under patent andantitrust laws. More recently, our efforts in Florida and California over thelast two years have resulted in preliminary and permanent injunctions forour clients with respect to such diverse patented products aselectromechanical security devices for department stores andpharmaceuticals/nutriceuticals designed to prevent osteoporosis. Our
Proposed Legislation for Patent Office OppositionWritten by Kelly Morron
In response to an effort to decrease patent litigation costs and increasecertainty regarding the scope of issued patents, there has been agroundswell movement for post-grant review in the Patent Office. Thisinterest — not universally supported — has now resulted in draftlegislation proposing a Patent Office opposition procedure. It is uncertainthat such a procedure, if adopted by the Patent Office, would improve thequality of patents and reduce litigation costs, and even if an oppositionprocedure could do so theoretically, the current proposal will requiresubstantial reworking to make it more likely to achieve its objectives.
The Patent Office annually receives about 350,000 patent applicationsand issues about 180,000 patents. The pressure on the Patent Officehas stoked the perception that the quality of examination has decreased,resulting in a large number of patents of dubious validity. With patentlitigation as expensive as it is — estimates range upwards from about $1-2 million per patent — the pressure for alleged infringers to take licenses
“Proposed Legislation” continued on page 4
“Introducing NY” continued on page 2
Possible Change In Patent
Protection — Patents May
Be Awarded to the “First to
File”Written by Mac Waldbaum
It would appear that very soon the UnitedStates will be changing the system it hashad in place since 1790. Since its origin,the U.S. Patent and Trademark Office(the “PTO”) has awarded patent rights tothe person who first invented a claimedinvention. It appears that this tradition willbe going by the wayside with the adoptionof a new law that will award protection tothe first inventor who files a patentapplication for the invention. Thisfundamental change will cause a majorshift in the entire philosophy of patentfilings. The time of invention, an issuethat inventors and their employers spentsignificant resources to determine anddocument, will become less importantthan when the application is filed.
What does it mean for inventors and thecompanies for which they work? First,people will have to rethink how theyprotect their inventions. There must nowbe — and companies must budget for —a process to accelerate the finalizationand filing of patent applications.Committees that decide whether to fileapplications must act more promptly. Theproceedings in which inventors defendtheir rights will no longer focus upon theconcepts of abandonment, suppression,
“Patent Protection” continued on page 9
New York lawyers work hand-in-hand with Schiff Hardin’sother offices in creating strong teams in Hatch Waxman andother pharmaceuticals litigation and financial instrumentspatents litigation.
Schiff Hardin’s New York office has broad experience in theinternational area, as well. We have worked with majorJapanese companies since 1978 to protect their patents andtrade secrets. We have also negotiated with the majorautomobile manufacturers to introduce well-known patentedJapanese techniques for automobile engines and moldablepart formations for wheels. We have been responsible for thedevelopment of major anti-counterfeiting measures in theUnited States, Hong Kong and Japanese Customs offices toprotect the rights of the U.S. professional sport leagues. Inaddition, the New York office has a significant background in
protecting entertainment personalities — working in theentertainment industry in publishing, film and music — andhas for the last six years represented in litigation the largestclassical music producer in the world.
The New York office also offers significant expertise inresolving intellectual property and other business disputeswithout litigation. For example, Mac Waldbaum has been apatent/trademark arbitrator for World Intellectual PropertyOrganization and the CPR Distinguished Panel of Neutrals forthe past six years, and has presided over 35 arbitrations andmediations.
Members of New York patent litigation group include MacWaldbaum, Beth Jacob, Kelly Morron, Lori Greendorfer, JohnBecker, Rebecca Griffith and Steve Bocknek.
“Introducing NY” continued from page 1
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Meet Our New York Intellectual Property Lawyers
Maxim H. WaldbaumKelly L. Morron
Steven M. BocknekJohn E. Becker
Lori D. Greendorfer Beth D. Jacob
Rebecca L. Griffith
Inequitable Conduct — A Broad WeaponWritten by: John E. Becker
The process of obtaining a patent often involves a period ofnegotiated give and take between the patentee and the PatentOffice over the patentability of the invention and thepermissible scope of the patent’s claims. During thisexchange, the goals of the patentee are, quite naturally, tohave a patent issue on the application, and for such patent toclaim broadly stated rights. However, patentees that pursuetheir applications in an overzealous and/or careless mannermay be initially successful only to discover later that theirpatent is unenforceable. Indeed, an increasingly importantelement in defending against a patent infringement claim liesin reviewing the prosecution history of the patent at issue for
questionable submissions or omissions before the PatentOffice and putting forth evidence of such conduct at trial.Where such evidence is found sufficient to establish that apatentee engaged in “inequitable conduct” in the prosecutionof a patent, the patent is deemed unenforceable and anyinfringement claims based thereon are dismissed.
The defense of inequitable conduct is grounded in the duty ofa patent applicant to prosecute its patent with candor andgood faith. This duty is breached by an intent to deceive ormislead the Patent Office, together with: an affirmativemisrepresentation of material fact, a failure to disclosematerial information, or a submission of false materialinformation. This is far broader than the common lawstandard. Both intent and materiality must be proven by clearand convincing evidence, and if established, the court must
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“Inequitable Conduct” continued on page 8
We are pleased to announce the addition of two new senior litigators to our Intellectual Property Group.
David Jacoby and Judith Roth, both formerly of Phillips Nizer, will be based in our New York office.
David Jacoby‘s experience includes trademark andcopyright infringement suits, the enforcement of restrictivecovenants, anti-counterfeiting efforts, and the protection ofcontractual rights in a variety of industries. His best stories,though, stem from a matter before the Iran-U.S. ClaimsTribunal at The Hague. He is Vice Chair of the LitigationCommittee of the International Bar Association.
Judy Roth has protected client intellectual property rights inthe negotiation and litigation of trademark, trade dress,copyright and trade secret issues. She brings to usconsiderable breadth of experience in commercial disputesand corporate investigations as well, including the initiationand defense of contract, antitrust, defamation and civil rightsclaims for clients in the apparel and entertainment industries.
We look forward to tapping the many strengths that David and Judy bring to our practice.
and the likelihood that the licensed patents are invalid bothincrease. It was natural to look to other countries for theprocedures used successfully there to challenge patentabilityoutside the litigation context. A Patent Office opposition, suchas that available in the European Patent Office (EPO),appears to be a mechanism that could catch overbroadpatents shortly after issuance, and would shift some of thecost of litigation involving weak patents in the courts toenhancing the quality of patents in the Patent Office, wherethey are prosecuted.
In mid-2005, a draft bill was introduced in the House ofRepresentatives, including a sectiondescribing a post-issuance oppositionprocedure. The current version of thelegislation, H.R. 2795 (amended July 26),warrants consideration with an eyetoward making the procedure more party-neutral and cost-effective. Generally,H.R. 2795 creates a new chapter of thePatent Act which permits any member ofthe public to request the Patent Office toreview a patent right after issuance forinvalidity based on any of sections 101,102, 103, 112, or 251(d) of the Patent Act,or on the basis of double patenting. Thescope of the opposition is thus muchbroader than that for reissue andreexamination proceedings, whichincreases the possibility that an invalidpatent can be cancelled or correctedduring the proceeding. At the same time,the costs for administering the proposedprocedure are going to be proportionallygreater, with the need for additionalqualified examiners — already in shortsupply. It can be expected that the costfor a hotly contested opposition would be at least as much asan interference proceeding.
While in theory, an opposition should be requested wheneverappropriate, the proposed legislation possesses severalprovisions that would facilitate strategic manipulation of thesystem and thus undermine its intended fairness and cost-effectiveness.
1. Timing and Duration of Opposition; Burden of Proof
The proposed legislation, as currently amended, permitsrequests for an opposition only within nine months of issuance(the “request period”), barring patent owner consent. If morethan one entity requests opposition, the proceedings may becombined. The Patent Office may not institute a proceedingbefore the end of the request period, and after the submissionof the request(s), the Director has up to three months to notifythe parties and institute the proceeding, effectively increasingthe period before the institution of the opposition to a full yearafter the patent issues. In conjunction with the time period ofthe opposition proceeding itself (which under the proposed
legislation can take up to 18 months),if “good cause shown” or pendinglitigation is stayed due to theinstitution of an opposition, the timebefore a determination of rights ismade by the Patent Office canincrease to more than two years.
The burden of proof of invalidity in the proposed opposition is“preponderance of the evidence”rather than the “clear and convincing”standard currently imposed inlitigation. This lower standard isexpected to facilitate the invalidation(or cancellation) of more patents overthe same prior art that wasdistinguished during prosecution,especially where the art is close. Thepatent owner may obtain a stay of theopposition by filing suit and obtainingapproval by the Director. This is likelyto lead to the manipulation of thesystem, because the patent ownercan institute litigation to ensure that
the patent's validity is based on the more rigorous standard ofproof, while an alleged infringer is more likely to prefer anopposition to obtain the advantage of the lower standard. Asdiscussed further below, while the draft legislation dictatesthat the standard of proof for cancellation or invalidation ispreponderance, the standard for a determination ofinequitable conduct is higher, at clear and convincing.
Suggestions to shorten the duration of the proposedopposition would include making any “stay” of the opposition
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The proposed
legislation
possesses several
provisions that
would facilitate
strategic
manipulation of
the system...
at the discretion of the court rather than the patent owner andDirector (which would, of course, impose a new set ofburdens on the court to oversee discovery, motion practiceand hearings on this issue), or altering the burden of proof(which would decrease the value of the oppositionproceeding).
2. Discovery
Under the opposition provisions of Amended H.R. 2795, theonly discovery explicitly permitted in the proposed procedureis the deposition of affiants and declarants, but “additionaldiscovery” is permitted when “required in the interest ofjustice” (the standard currently applied in the Patent Office) atthe discretion of the Patent Office. Appeals of an oppositiondetermination are directly to the Federal Circuit, and estoppelapplies to the opposition determinations (see below), so theresolution of discovery issues in the Patent Office can becritically important. Although the limitation of discovery todepositions appears narrowly drawn, the “additionaldiscovery” that is “required by the interest of justice” is asbroad as conceivable by counsel; arguably as broad orbroader than contemplated by the Federal Rules of CivilProcedure, and at the Patent Office's discretion.
One circumstance that would almost certainly warrant“additional discovery” arises from an allegation of inequitableconduct during prosecution. A provision of the proposedlegislation not related to opposition procedure explains thatthe Patent Office shall have the ability to resolve allegationsregarding inequitable conduct. Regardless of any reluctanceof the Patent Office to resolve inequitable conduct issues, thelegislation clearly grants it the authority to do so. Theprovisions governing oppositions do not describe howdiscovery relating to allegations of inequitable conduct will behandled, but should such an allegation be raised, it wouldpresumably be addressed, presenting circumstances underwhich the request for additional discovery would be granted,or at the least be subject to motion practice.
However, to what extent such additional discovery might beallowed is unclear. The Patent Office has issued no publishedprecedential opinions regarding inequitable conduct discovery(and related disputes), and most of the non-precedentialdecisions on the topic have denied additional discovery.These cases reflect the Patent Office's lack of experience inthis area. Further, there is no guidance in the legislation onhow to reconcile the disparate standards of proof for
cancellation and inequitable conduct, allowing the opportunityfor strategic manipulation to have inequitable conduct decidedby the Patent Office. Despite the fact that the district courtspossess extensive experience in overseeing discovery andrelated disputes, the proposed legislation expands the powerof the Patent Office over discovery affecting substantiveissues, and makes no provision for review of discoverydisputes by the district courts.
Suggestions to increase the certainty and decrease the scopeof discovery by the Patent Office during an opposition wouldbe to delete the provision permitting the Patent Office toadjudicate inequitable conduct (which is independentlysubject to numerous criticisms on other grounds).
3. Estoppel
The proposed legislation provides that, after a determinationby the Patent Office regarding an issue of invalidity, theopposer is barred from asserting in any subsequent court orPatent Office proceeding that any claim of the patent in issueis invalid on the basis of “fact or law actually decided by thepanel and necessary to the determination of that issue.” Thisprovision was intended to avoid duplicate litigation, essentiallylegislating collateral or judicial estoppel based on theadministrative Patent Office proceedings. There is anexception for later-discovered evidence, and should theparties settle, no estoppel will apply. The estoppel provisiondoes not mention whether or how the opposer would beaffected by the decision of any other issue that might bedecided, such as inequitable conduct. Because an appeal issolely to the Federal Circuit, a prospective opposer mustconsider carefully whether it is willing to entrust to the PatentOffice determinations — with the attendant risks of thestandard of review on appeal and estoppel — respecting allthe facts and all the law that might be decided in theopposition proceeding (or later be construed to have beendecided).
Amended H.R. 2795 further provides that when parties settle,the Patent Office has the option to terminate the proceedingor to issue a written “final determination.” This provision issubject to criticism, because although no estoppel applieswhen the proceeding settles, it is fundamentally unfair for thePatent Office to issue a final determination undercircumstances in which the “losing” party (either the opposeror the patent holder), having settled, has no standing todispute or appeal the Patent Office determination that it
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settled to avoid. Such a determination might be considereddictum, and would also be a waste of resources. A suggestionto improve the estoppel provision of the proposed legislationwould be to eliminate the ability of the Patent Office to rendera determination under these circumstances.
In sum, a post-grant opposition is supported by those whobelieve that an opposition procedure would effectivelyaddress issues of patentability, increase certainty, and providea low-cost alternative to litigation, as it is presumed to do inthe EPO. However, patent litigation in Europe is very differentfrom that in the United States, and the benefits flowing from anopposition will not necessarily apply in the same way here.Many practitioners instead favor strengthening current PatentOffice procedures, for example, reissue or reexaminationprocedures could be amended to encompass invalidityissues. In any case, any new opposition procedure shouldavoid obvious pitfalls, including lengthy proceedings,determinations of critical equitable issues (such as inequitableconduct), broad discovery (with attendant discovery disputes),and strategic gamesmanship, all of which heightenuncertainty and increase costs. To that end, the currentlegislation should be amended so that it is more likely toachieve the goals sought by its proponents.
Prosecution History Estoppel in
the Federal Circuit - Slight Turns
for the PatenteeWritten by Steve Bocknek
Following the U.S. Supreme Court decision of Festo Corp. v.
Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002)(“Festo II”) in which the Court reaffirmed the viability of thedoctrine of equivalents in patent law, the Federal Circuit hasadopted an approach to prosecution history estoppelsignificantly less favorable to patentees with some recentexceptions.
In Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 234F.3d 558 (Fed. Cir. 2000) (“Festo I”), the Federal Circuit heldthat a narrowing amendment to a patent claim limitation madefor a substantial reason related to patentability completelybarred the application of the doctrine of equivalents to that
amended claim limitation. Under Festo I, the bar would betriggered by both voluntary amendments as well asamendments responsive to office actions. In overturning theFederal Circuit, the Supreme Court explained that while apatentee will not be allowed to recapture any part of theinvention specifically surrendered in patent prosecution toobtain final claim language, if the changes in question aremerely cosmetic, the prosecution history estoppel doctrine willnot apply. The burden remains on the patentee to show thatthe amendment was not made for a reason that would giverise to estoppel.
Following the Supreme Court’s decision in Festo II, theFederal Circuit summarized the ways in which a patenteecould rebut the Festo presumption. Festo Corp. v. Shoketsu
Kinzoku Kogyo Kabushiki Co., 344 F.3d 1359 (Fed. Cir. 2003)(“Festo III”). Festo III as directed by the Supreme Courtexplained that the patentee has three options though moreheavily narrowed by the Federal Circuit: (1) the patentee maydemonstrate that the alleged equivalent would have beenunforeseeable at the time the application was filed, that is, ifthere were art around at that time the applicant was requiredto take that into consideration; (2) the patentee maydemonstrate that the rationale behind the narrowingamendment merely bore a tangential relationship to theequivalent; or, (3) the patentee may show that there is someother reason why the patentee could not have reasonablyexpected to have described the alleged equivalent and theFederal Circuit indicated there would not be many suchreasons.
The light at the end of the tunnel comes with Insituform
Technologies, Inc. v. Cat Contracting, Inc., 385 F.3d 1360(Fed. Cir. 2004) where the patent in question described aprocess for rehabilitating underground sewer pipes withouthaving to dig them up. Claim 1 of the patent claimed aprocess for impregnating a flexible tube liner with resin prior toinsertion of the liner into a damaged sewer pipe. In its originalform, claim 1 did not limit the number of cups that could beused to create the vacuum necessary to impregnate the resin.The patentee amended the claim to the use of one vacuumcup, explaining that the amendment was necessary toovercome the prior art teaching creation of a single sourcevacuum situated in such a way as to require a large suctioncompressor. The patentee brought suit against severaldefendants who were using a multiple cup process ofimpregnating tube liner. The Federal Circuit initially applied
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the complete bar of Festo I, determining that the changeconstituted a narrowing amendment that precluded thepatentee from asserting infringement under the doctrine ofequivalents and held that the defendants’ multiple cupprocess did not infringe. However, following Festo II andFesto III, the court held that the patentee successfullyrebutted the Festo presumption in that the amendment wasfor the purpose of overcoming the need for the largecompressor and therefore bore no more than a tangentialrelationship to the multiple cup equivalent.
Other decisions by the Federal Circuit involving the modifiedFesto analysis have followed suit.
For example, in Business Objects, S.A. v. Microstrategy, Inc.,393 F.3d 1366 (Fed. Cir. 2005), the Federal Circuit revieweda holding by the U.S. District Court for the Northern District ofCalifornia that the patentee was precluded from claimingequivalents of one claim on the basis of an amendment duringprosecution that narrowed the scope of the claim. The patentin question claimed a product that allowed lay users to searchcomputerized relational databases. The defendant’s accusedproduct, designed to achieve the same result, used a moresophisticated approach to generating search queries. Claim4 was added during the prosecution of the patent and itmodified claim language that read “translating said user queryinto a structured query language (SQL) equivalent statement,”to “generating queries in the predetermined query language.”The district court held that the amendment narrowed thescope of the function of the query engine means for purposesof patentability and raised a Festo presumption. However,citing Festo III, the Federal Circuit concluded that theamendment did not narrow the scope of the claim limitationand the patentee was not, therefore, precluded from claimingequivalents of the query engine means in the accusedproducts.
In Schwarz Pharma, Inc. v. Warner-Lambert Co., 95 Fed.Appx. 994 (Fed. Cir. 2004), the patentee’s claims as originallydrafted disclosed a “metal containing stabilizer” and an “alkalior alkaline earth-metal salt.” After the examiner rejected themas obvious, the patentee amended the claims to disclose an“alkali or alkaline earth metal carbonate.” The patenteebrought suit, claiming equivalents of the term “carbonate.” Inresponse, the defendant argued that the amendmentnarrowed the claims in order to distinguish the prior art andestopping the plaintiff from claiming any range of equivalents
to the term “carbonate.” The Federal Circuit noted that theterm “carbonate” has two ordinary, art-recognized meanings:a narrow definition limited to the carbonate ion, and a broaderdefinition including both the carbonate and bicarbonate ions.The court held that, unless compelled to do otherwise a courtwill give a claim term the full range of its ordinary meaning asunderstood by an artisan of ordinary skill, and thus that thebroader meaning should apply and that the patentee had notdisavowed or disclaimed the full range of the term eventhough the specification incorporated by reference priorpatents that arguably narrowed its scope. The court thereforevacated the district court's summary judgment decision ofnon-infringement in favor of the defendant and remanded tothe district court for further proceedings.
Additionally, in Transonic Systems, Inc. v. Non-Invasive
Medical Technologies Corp., 2005 WL 1723214 (Fed. Cir. July15, 2005), the Federal Circuit vacated the district court'simposition of prosecution history estoppel on the grounds thatthe opinion below insufficiently set out the analysis requiredunder Festo. The case was therefore remanded to the trialcourt with instructions that an analysis be undertaken thatidentifies: (1) the patent claim amendment at issue; (2) theclaim scope deemed to be surrendered; (3) the argumentsmade by the plaintiff to overcome any presumption ofsurrender under Festo; and (4) the basis for finding sucharguments insufficient.
As a practical matter, therefore, recent case law appears toindicate that the Federal Circuit has receded from its originalsuggestions of narrowed, structured limitations unfavorable topatentees — undoubtedly in response to heavy criticism oftheir work from the patent community. Of course, if a patenteediscloses but fails to claim subject matter at original filing, anysuch unclaimed subject matter is dedicated to the public andcannot be recaptured through assertion of the doctrine ofequivalents. See Johnson & Johnston Assoc., Inc. v. R.E.
Service Co., 285 F.3d 1046, 1054 (Fed. Cir. 2002).
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make an equitable determination regarding whetherinequitable conduct occurred and the patent should bedeemed unenforceable. See Purdue Pharma L.P. v. Endo
Pharaceuticals, Inc., 410 F.3d 690, 695 (Fed. Cir. 2005).
Under the standard currently being applied by the courts,information is material if (1) it is not cumulative to informationalready before the Patent Office, and (2) it either establishesunpatentability of the article at issue or is inconsistent with aposition adopted by the patentee with respect to patentability.See Bruno Independent Living Aids, Inc. v. Acorn Mobility
Services, Ltd., 394 F.3d 1348, 1352 (Fed. Cir. 2005). Thispurposely broad standard captures nearly anything that is notalready before the Patent Office that speaks to thepatentability of the product, process, etc., at issue, and itsbreadth is a warning to patent applicants to be especiallydiligent and forthcoming during the application process.Recent case law provides examples of the types of potentiallymaterial information that informal investigation or formaldiscovery during trial may uncover, including: (a) test resultsinconsistent with the conclusions made in applicant’sdeclaration (see Monsanto Co. v. Bayer Bioscience N.V., 363F.3d 1235 (Fed. Cir. 2004)); (b) misstatements in theapplication regarding the contents of a relevant previouslyissued patent (see Alza Corp. v. Mylan Laboratories, Inc., 391F.3d 1365 (Fed. Cir. 2004)); (c) failure to disclose that claimsand descriptions made regarding a control releasedmedication were not supported by any experimental resultsbut were based only on insight (see Purdue Pharma L.P. v.
Endo Pharaceuticals, Inc., 410 F.3d 690 (Fed. Cir. 2005)); and(d) submission of a video as demonstration of the inventioncontaining photos taken with a different photographic lensthan that being presented for patent protection (see Frazier v.
Roessel Cine Photo Tech, Inc., 2005 WL 1803862 (Fed. Cir.Aug. 2, 2005)).
Moreover, the Federal Circuit has repeatedly stated that“direct proof of wrongful intent is rarely available but may beinferred from clear and convincing evidence of the surrounding circumstances.” Purdue Pharma, 410 F.3d at700. Thus the issue of intent will almost invariably requiresubjective analysis and determination by the courts, andjudges often reach contrary determinations on the same facts.Much can depend, therefore, not only upon the availableevidence but also upon how effectively the issue is presentedto the court by the opposing parties.
In Alza Corp. v. Mylan Laboratories, for example, theapplication for patent on a skin permeable form of the narcoticfentanyl had been supported by the inventor’s declarationstating that the product covered in a previous patent was“unsuitab[le] for transdermal administration” because the latterwas incapable of reaching effective transdermaladministration rates. The trial court found this statement to beliterally true, but that it “had the potential to mislead theexaminer because it was technically possible to use the [prior]patent to create a fentanyl transdermal system” that didachieve adequate flux. The trial court nevertheless held thatthis statement did not amount to inequitable conduct becausein light of all the circumstances the court could not find therequisite deceitful intent. Alza Corp, 391 F.3d at 1373-74. TheFederal Circuit affirmed this decision, however not without astrong dissent from Judge Dyk who opined that there was nobasis for finding the applicant’s statement “literally true” andthat the case should therefore be remanded on the question ofintent. Id. at 1376-77.
In Monsanto Co. v. Bayer Bioscience N.V., the trial courtgranted summary judgment for the defendant holding the fourpatents at issue unenforceable due to inequitable conduct onthe Patent Office. The applicant had submitted test resultsand a declaration of an employee attesting that he knew of notest results that were contrary to or inconsistent with thosesubmitted. The trial court granted summary judgmentcrediting evidence of test results that it found so plainlymaterial that it was proper to infer an intent to deceive, anddiscounting a affidavit submitted by the employee assertingthat the cited tests were in his opinion inconclusive for variousreasons. The Federal Circuit disagreed with and reversed thelower court’s decision on the basis of the employee’s latterassertions, stating that “summary judgment of inequitableconduct should be rare” and that the employee’s affidavitdisputing the conclusive nature of the cited tests had raised anissue of fact for trial. Monsanto, 363 F.3d at 1237-40.
With respect to the doctrine of inequitable conduct, therefore,case law thus highlights the facts (1) that materiality is abroadly defined concept, and (2) that determining the issue ofintent to deceive is a highly subjective undertaking that leavesroom for both sides in an infringement litigation to frame andpresent the issues and potentially affect the outcome. Themessage for patent applicants (and thus for potentialinfringement plaintiffs) is the importance of full and carefulidentification and disclosure of material information during theapplication process — obtaining a patent subject to later being
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concealment, and due diligence, although such concepts willstill exist with respect to third party rights and whether they areproper prior art.
Interference practice in the United States will also face radicalchange. Under the new “first to file” rule, there will no longerbe any need for interference practice to prove firstinventorship, and many of the nuances, vagaries and arcanematters associated with interference practice will soondisappear. Adversaries now will focus upon the specificdeterminations that can be made from the applicationsthemselves, e.g., whether there is sufficient written descriptionof the invention to “enable” one skilled in the art to practice it.The new rules therefore will make it critically important forinventors to file complete and sufficiently detailed applicationsin order to satisfy any complaints in that regard. Under ourtraditional “first invention” formula, you could always presentexpert testimony and other “extrinsic” evidence to support thespecification and explain concepts. This entire process islikely to change under a first-to-file rule.
What does this mean for corporate executives and patentdepartment practitioners? They can expect the time periodsfor developing language to describe the invention to beshortened and accelerated, and the pressure to prioritizeinventions to increase. Invention forms will probably have tobe changed, as there no longer will be any need to prove thedates of conception and reduction to practice, as a matter ofcourse. (Because such evidence is likely to remain pertinentto disprove allegations of inequitable conduct, there mayremain some need for this documentation. However, somecurrent reform efforts seek to eliminate inequitable conductfrom court proceedings and place that issue solely in thepatent office.)
The primary concern for executives and patent departmentpractitioners is to expedite the writing of patent applicationswithout sacrificing quality and completeness. Indeed, morecare should be taken in writing applications than is necessaryunder the current system. A rushed application is more likelyto contain flaws or omit pertinent information, and maytherefore be more vulnerable to challenge in a PTO oppositionproceeding. In addition, proposed reforms would require allapplications to be published within 18 months, and the PTO iscurrently operating at an 18-month delay for the issuance ofoffice actions. It therefore is critical that applications, and the
claims therein, be as complete as possible in order to qualifyas notice to infringers. The prosecution practitioner must lookat the claims both before the initial filing and in that 18-monthperiod to make sure that the claims would support a damageremedy as the case winds its way toward allowance.
One of the major concerns with the first to file system is theeffect on a prior user, i.e., a person who has made, offered forsale or used the invention and continues to do so prior to thefiling date of the first to file inventor. It is expected that, as inreissue, those rights will be carved out in the first-to-filesystem. However, there may be complications. For example,if the prior user improves upon an invention that waspreviously published by the later-filed applicant, and the prioruser files before the later-filed applicant, the later-filedapplicant’s patent filing is no longer viable. There is also theissue of derivation where some countries have not protectedthe first-to-file inventor and have allowed prior users to derivefrom a published report of that first-to-file inventor to make,use, sell — and be protected. Such a result makes littlesense. These are some of the problems created with theadoption of a first-to-file system that contains a grace period ofthe type more commonly seen in first-to-invent jurisdictions.Indeed, this has been the case in Canada, which continued itsgrace period even when Canada changed its laws in 1989 toadopt a first-to-file system.
This sea change in patent application procedure will increasepatent costs in some ways, and reduce them in others. Forexample, even though patent applications will almost certainlybe filed more quickly, those applications will probably be moreexpensive, e.g., due to the increased cost of expedition.However, the costs of patent litigation may be lessened. Oneof the benefits of a first-to-file system is the elimination (inmost cases) of the need for documented proof on the timing ofthe invention. Not all historical documents will be irrelevant,however. Patent lawyers will always look to past history forprior art with which to challenge a first-to-file application.Similar cost reductions may occur at the Markman hearingstage as the parties address claim construction and focusmore upon the language found within the application itself (asopposed to extrinsic evidence) consistent with the directionsignaled by so many of the judges of the Federal Circuit.
It would not be surprising if there is at least one constitutionalattack on this proposed change, as Article I, Section 8 gives
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found unenforceable is of questionable value. Thus, for patentapplicants and potential plaintiffs, the creation of the stepsnecessary to enforce valuable inventions requires continuouslyalerting research and development personnel to state onlywhat is correct and to refrain from overreaching statements.Zealous advocacy of counsel is not appropriate for does nottranslate to a company’s scientists or engineers. Further, suchpersonnel should be instructed to be alert for any publicationsor statements that might impact the company’s patent portfolioand/or patent enforcement efforts. For defendants, carefullyreviewing the prosecution history of relevant existing patent[s],either prior to producing a competing product or upon theinitiation of litigation, is an important and often critical business
and litigation strategy.
rights to the first to invent, and not to the first to file. However,the practicality of creating a world order with regard to patentprocedure will probably prevail. As our friends in Canadalearned two decades ago, it is possible to switch to a first-to-file system, and such a change will not bring about the end ofthe world. Of course, as a result of Canada’s change, manyCanadian inventors did indeed choose to file first . . . in theUnited States. One must wonder whether maintaining ourcurrent system, in contrast to those adopted by our globalneighbors, has inured to our benefit, and whether theconsistency created by joining with those neighbors in acommon system will outweigh the costs of the change.
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““Inequitable Conduct” continued from page 8 “Patent Protection” continued from page 9
Editor NotesIf you have an intellectual property issue that youwould like to see addressed in future editions ofthis newsletter, please contact
UPDATE’s Editor, Linda K. Stevens, 312.258.5667, [email protected] Assistant Editor, Patricia J. Fokuo,312.258.5657, or [email protected]
Andrew M. [email protected]
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