Patent Baristas

In another blow against late claiming, the Court of Appeals for the Federal Circuit denied an appeal from a re-examination because the patent applicants “could have filed the present claims” earlier in the application.  Although I suspect the court was just ticked off because the applicants appeared to be gaming the system – the reexamination involved a patent that claimed priority through various continuations dating back to 1954 — it sure makes for awfully murky law.

Basell Poliolefine Italia, S.P.A. appealed decisions of the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences stemming from a Director-ordered reexamination of U.S. Patent 6,365,687 (Reexamination No. 90/006,297).  In Re Basell Poliolefine Italia S.P.A. (07-1450)

The Board affirmed the rejections of all the claims of the ’687 patent as unpatentable under 35 U.S.C. §§ 102(b) and 103(a) and the doctrine of obviousness-type double patenting.  The patent, entitled “Process for the Polymerization and Copolymerization of Certain Unsaturated Hydrocarbons,” was issued on April 2, 2002 and claimed priority from Italian Application No. 25,109, filed July 27, 1954 (almost 48 years later).

The invention relates to “a process for copolymerizing unsaturated hydrocarbons of the formula CH2═CHR in which R is a saturated aliphatic radical with two or more carbon atoms or a cycloaliphatic radical, in the presence of a catalyst comprising a catalytic aluminum alkyl compound and a catalytic titanium halide compound.”

The reexamination was for all claims, which were rejected on double patenting in view of various expired patents The Board affirmed the double patenting rejections but first had to determine whether the patentees were entitled to a one-way or two-way test for double patenting.

The Board found that a two-way test for double patenting didn’t apply since the patentees “significantly controlled the rate of prosecution throughout the chain of ancestor applications,” and thus the one-way test applied.

The judicially created doctrine of obviousness-type double patenting “prohibit[s] a party from obtaining an extension of the right to exclude through claims in a later patent that are not patentably distinct from claims in a commonly owned earlier patent.”

In determining double patenting, a one-way test is normally applied, in which “the examiner asks whether the application claims are obvious over the patent claims.”  In unusual circumstances, where an applicant has been unable to issue its first-filed application, a two-way test may apply, in which “the examiner also asks whether the patent claims are obvious over the application claims.”  See In re Berg.

In the present case, the court wouldn’t go for the two-way test:

As a preliminary matter, we are unpersuaded by Basell’s assertion that the Board erred by failing to apply a two-way test for double patenting.  The two-way test is “a narrow exception to the general rule of the one-way test.”  Id.  The test arose out of the concern “to prevent rejections for obviousness-type double patenting when the applicants filed first for a basic invention and later for an improvement, but, through no fault of the applicants, the PTO decided the applications in reverse order of filing, rejecting the basic application although it would have been allowed if the applications had been decided in the order of their filing.”  Id.  Thus, the two-way test may be appropriate “in the unusual circumstance that the PTO is solely responsible for the delay in causing [a] second-filed application to issue prior to [a] first.”  Id. at 1437.

Those circumstances, however, are not present here.  The record shows that the patentees did not present any claim resembling the claims at issue until 1964, nine years after Natta filed the first U.S. application in the chain of priority and well after Natta filed the application that resulted in the ’987 patent.  Moreover, those claims appear to have been filed for interference purposes only.  In addition, the Board found that since 1954, the patentees repeatedly submitted claims directed to claims covering other inventions, urged the examiner to declare interferences for unrelated inventions, and repeatedly filed continuing applications without appeal.  During the critical co-pendent period of the applications for the ’687 patent and the ’987 patent, Natta could have filed the present claims.  Natta’s actions, or inactions, had a direct effect on the prosecution and thus were responsible for any delay in prosecution.

Left unanswered:   Was it presenting the claims nine years after first filing that got them?  What if they filed in eight years?  Would seven be OK?  Or, was it the repeated interferences that did them in?  If so, how many interferences are too many?  How do we know what to do in future cases?

As mentioned in the AmLaw Daily, Dennis Crouch’s Patently-O blog reported on a newly published patent application by Halliburton Energy Services.  The patent application has claims to what can only be described as a method of doing business when your business is patent trolling, i.e., getting rights to a patent and asserting it against infringers.

Presumably, the part that makes one a troll versus non-troll is whether or not the person/entity asserting the patent rights actually makes their own products.  Here, the key is asserting a patent as a non-inventor.

This application appears to be an attempt to make a social commentary (or flat out joke) about so-called patent trolls.  The application is for “patent acquisition and assertion by a (non-inventor) first party against a second party.” It was amended to include an element about a “secret aspect” — whatever that means — which may be a nod to In re Bilski (that is, adding in a hardware requirement).

It claims:

1. (Amended) A method for a non-inventor first party to acquire and assert a patent property against a second party, the method including the first party performing the following acts:

obtaining an equity interest in the patent property;
writing a claim within the scope of the patent property, the claim being written to cover a product of the second party, where the product includes a secret aspect, the secret aspect including an unobservable aspect, where writing the claim includes performing research using a computer to convert the unobservable aspect to an observable aspect;
filing the claim with a patent office;
offering a license of the patent property to the second party after the patent property issues as a patent with the claim; and
attempting to obtain a monetary settlement from the second party based on the assertion of infringement of the claim.

AmLaw Daily called Halliburton to ask about the application and received a response stating:

It is important to note that Halliburton has no intention of applying the technique offensively. Rather, Halliburton intends to use any patent that may issue from this application defensively to discourage entities that engage in such tactics.

The filing may be an honest attempt to keep from being forced into making payments to patent holders but nothing in this claim appears to be outside what everyone has a legal right to do within the patent system.  Every citizen is allowed to (a) acquire patent rights, (b) amend their claims, and (c) offer licenses.  I struggle to find what could possibly be novel.

Gene Quinn of IPWatchdog believes that re-examination may be the better solution to a non-inventor first party asserting a patent property against a second party.  Statistics show that ex partes reexamination is granted 92% of the time, with all claims being canceled in 10% of cases and at least some claims being changed in 64% of cases.  Inter partes reexamination is granted 95% of the time, with all claims being canceled in 78% of cases and at least some claims being changes in 15% of cases.  Thus, quality reexamination representation would seem a far better route.

Whether this filing is just a form of protest or commentary on the present state of patent litigation or an honest attempt to stop (perceived)  patent litigation abuse, I can’t help but wonder if these kinds of filings don’t make the Patent Office even more hardened against allowing applications.

I struggle daily to get applications allowed over rejections that there is some lack of written description regarding the structural characteristics of the claimed genus, despite years of research data. Will I get even more responses of “Applicant’s arguments have been carefully considered but are found not persuasive“?

Send me a note and tell me what you think.

(Note to Dick Cheney:  Everything contained in this post is satire.  And thanks for the invite to go duck hunting.)

Now that it appears that we are in a recession — and there’s no good way to nuance that anymore — what does is mean for the legal profession? The legal area was once considered recession-proof with some areas even going up as companies focus on competitors.  Now, the demand for legal services is certainly going to change.

Bruce MacEwan, over at Adam Smith, Esq., compares the current legal business to Motown’s Big Three.  Citing reader Brent Jeffcoat, of McGuire Woods’ Charlotte office, he questions if law firms need a bailout:

After all, think of all the people we affect: our young associates marry and live in condominiums in urban centers.  We probably support Starbucks.  Allen Edmonds is toast. … Think of all those poor guys in Scotland who will not be able to sell their single malt whiskeys.  It would be a global crisis of unimaginable proportions if one or two of the AmLaw 100 were to fail.

Now, the ABA Journal is surveying lawyers about the job market and the current state of the economy.  Specifically, they want to know how you think the recession will affect the legal profession.

Please click below to take the two-minute survey. The survey results will be published in the January issue of the ABA Journal. Your answers will be kept confidential, and used only in combination with all other responses received.

Take the quick survey here.

Note to non-lawyers:  No, entering law school is not a smart way to deal with the terrible job market, as you and the other 100,000 students graduate en masse in three years creating a glut of new associates in the market.

cul·ture (n.) the set of shared attitudes, values, goals, and practices that characterizes an institution or organization (Merriam-Webster’s Dictionary Online).

The book “Intellectual Property Culture: Strategies to Foster Successful Patent and Trade Secret Practices in Everyday Business” by Eric Dobrusin and Ronald Krasnow is much better than its bland title or cover would belie. This is a book that weaves together deeper ideas on what principles should guide a company with specific details useful in day-to-day practice.

It is not just about the management of intellectual property assets, it is about creating a culture within an organization that recognizes that intellectual property is essential to the very livelihood of the business and knowing how to proactively protect IP assets.

Over the course of its 392 pages, Intellectual Property Culture delivers an excellent guide for any organization that deals in knowledge and technology.  The guiding principal is that any organization that wishes to survive in the knowledge economy must develop an IP culture:

To thrive in the knowledge economy, organizations must cultivate attitudes and behaviors that recognize IP, respect IP, and trade upon the value of IP.  This needs to be done organically, within each individual organization, and to meet the specific needs and characteristics of each such organization.

The trick, of course, is to develop a “healthy IP culture.”

The book is also stocked with practice tips valuable for businesses of all sizes.  In discussing confidential information and effective corporate trade secret programs, the authors note:

While many organizations spend a great deal of time seeking to Protect against intentional taking of confidential information by third parties, often the greater risk lies in the accidental disclosure of confidential information by its own personnel.

Filled with illuminating examples and anecdotes from the authors’ real-world experiences, the book contains valuable practical advice along with sample agreements, notice letters, employee training materials, patent status reports, IP policies, questionnaires, timelines, and other resources. Even the Appendices add niceties such as sample laboratory notebook usage guidelines and a policy and form for review and approval of information prior to disclosure.

I highly recommend this book for anyone set on creating a culture that both manages and respects IP.

About the Authors

Eric M. Dobrusin is a founder and shareholder in the law firm of Dobrusin & Thennisch, where he has concentrated his practice in patent counseling and strategic patent prosecution.

Ronald A. Krasnow is the Senior Vice President of intellectual property and Chief Patent Counsel at Relypsa, Inc., in Santa Clara, California, where he is responsible for all legal functions, including corporate, contract, and intellectual property.

“Intellectual Property Culture: Strategies to Foster Successful Patent and Trade Secret Practices in Everyday Business”
Oxford University Press, USA, is available on Amazon.

There are a number of patent search sites available today.  A new one is a semantic patent search — searching by meaning or interpretation of terms — called Setrue Semantic Patent Search Engine by Transformer.

Setrue touts itself as an answer to the growing need of patent search market to a search engine with semantic capabilities that will enhance the precision of search results as contrast to the current FTS engines (full text search engine).

Currently, the engine contains patents and patent applications from the USPTO — EPO patents with weekly updates and more databases will be acquired in the near future. Setrue Semantic Patent Search system includes:

1.    A natural language query capabilities.
2.    Query auto-complete suggestions.
3.    A detailed class directory structure enabling a one click segmentation of search results to a specific patent class.
4.    A dynamic clustering of search results by classes
5.    A dynamic clustering of search results by years
6.    A dynamic clustering of search results by assignees.
7.    Similar patents segmentation.
8.    A dynamic weighting of search terms
9.    Highlighting of search terms in documents
and more.

Setrue claims its mission is to strengthen the online connection between inventors/entrepreneurs/companies and the professional IP service providers like law firms and individual attorneys.

But Setrue seems to also be in competition with those same professional services providers by offering expert patent searching, patent opinions and even provisional patent filings (as we’ve mentioned with other providers using this model, we’re not sure everyone would understand all the trade-offs of provisional applications).

Setrue’s business model is not based on advertisements but is based on dividing its potential target audience into two groups:

The first one is the professional audience including law firms, private lawyers, patent search agencies, litigation lawyers and corporations that will be asked to acquire a license deal that will include a commercial license to use the search system, targeted advertisement and redirection of patent services requested by inventors.

The second target audience is the private inventors, entrepreneurs and companies that get free usage of the system, access to professional services offered by the site’s professionals, and direct access to professionals’ sites.

You can try it yourself here:

See the Setrue Semantic Patent Search Engine here.

As of July 2008, twenty-five states and the District of Columbia have filed antitrust suits against Abbott Laboratories and Solvay’s Fournier Industrie et Santé and Laboratories Fournier in Delaware District Court, charging them with blocking generic competition by engaging in product hopping, among other “anti-generic strategies.”  Patent Baristas reported the initial filing here.

As Stephen reported: “According to the AGs in the states, the companies made trivial changes to the formulations of TriCor, and marketed those while withdrawing the original drug from the market. The companies deleted references to the original forms of the drug from national drug databases, according to prosecutors, making it more difficult for a generic version of TriCor to obtain generic status.”

This product hopping amounts to little more than a thinly disguised scheme to game the pharmaceutical industry’s regulatory system. It entails introducing a product change that serves little purpose but to impair generic competition and reduce the market for generics.  But product hopping is not an easy target for antitrust enforcement.  Brand name manufacturers are under no legal duty to help their generic competitors by curtailing formulation changes that broaden the selection of prescription drugs on the market and may better meet consumer preferences.  Most importantly, generic manufacturers remain free to enter the market and sell versions of the old formulation under their own separate brand name. That rival brand name manufacturers are more powerful competitors — engaging in successful advertising campaigns and directing consumers to the new formulation — falls short of an antitrust violation.

But there might be a way around this.  The Supreme Court’s 2004 decision in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko emphasized the importance of attention to an industry’s regulatory regime in determining the role of antitrust law and suggested a possible “expansion of the contours” of the Sherman Act in certain regulatory contexts. Trinko may have interesting implications for antitrust enforcement in the pharmaceutical industry which, though heavily regulated, lacks an industry regulator that polices competition.

As Trinko noted, the role of antitrust law in a heavily regulated industry depends on whether “the [regulatory] regime is an effective steward of the antitrust function.”  Two Supreme Court decisions represent the extremes of antitrust law’s role in a regulated industry: (1) where unsupervised private firm discretion dominates the market and any regulatory intervention fails to police competition, as in Silver v. New York Stock Exchange, antitrust law has an active role to play, and (2) where anti-competitive conduct is thoroughly policed by the industry’s regulator,” as in Trinko, antitrust law has been ousted from its role as the guardian of competition.

In the pharmaceutical industry, while the FDA goes to great lengths to regulate drug safety and efficacy, it deliberately avoids regulating competition in the pharmaceutical industry.  According to the FDA’s stance, “the whole point of the [Hatch-Waxman] Act’s [ANDA IV] scheme is to let private parties sort out their respective intellectual property rights [and the market exclusivity they confer] through patent infringement suits while the FDA focuses on its primary task of ensuring that drugs are safe and effective.”  Since anti-competitive conduct would easily slip under the pharmaceutical industry’s regulatory radar, the industry’s regulatory system accordingly leaves ample room for antitrust law to intervene with full force, rather than squeezing it out.

Unlike in Trinko’s telecommunications industry, antitrust law has a role to play in the pharmaceutical industry.  In dicta, Trinko recognized the possible “expansion of the contours of [Sherman Act] § 2″ depending on the regulatory context.  An article by Professor C. Scott Hemphill proposes that the application of antitrust law to the heavily regulated pharmaceutical industry depends on the regulatory regime itself, particularly “its role as a congressional judgment about the proper balance between [policy goals] and competition.”  Such enforcement of the Sherman Act extends beyond policing ordinary market antitrust concerns to condemning conduct that directly undermines the specific type of competition the legislature sought to establish in fashioning the regulatory system.

The relevant regulatory system in the context of product hopping is a regime of state drug product selection (DPS) laws.  Today, every state has passed DPS laws that allow for generic substitution, though the specific provisions vary state by state.  Where a physician prescribes a brand name drug, generic substitution under state DPS laws allows pharmacists to fill that prescription with a generic equivalent.  DPS laws reflect a legislative decision to contain prescription drug costs through generic substitution, sacrificing even-footed competition between brand name manufacturers and their generic rivals.

Disfavoring the unfettered market competition of other unregulated industries, states recognized that the forces of competition don’t map on well to the prescription drug market where the customer pays but doesn’t choose, and the physician chooses but doesn’t pay.  DPS laws accordingly sought to establish a specific type of generics-favoring competition between brand name manufacturers and their generic rivals: Though brand name manufacturers may succeed in winning the prescription of physicians, there must be a choice at the pharmacy-level to fill that prescription with a generic version (unless a prescription indicates the physician’s unwillingness to permit substitution).

In this light, the real anti-competitive harm from Abbott and Fournier’s product hopping is straightforward.  In each hop, Abbott and Fournier, without justification, contacted First Data Bank and set in motion changes that ultimately prevented pharmacists from substituting prescriptions for older formulations with their generic equivalents.  This strategy stopped generic substitution that should — and would — have taken place under DPS laws.  This obstruction is the real harm Abbott and Fournier’s product hopping inflicted on competition:  They impermissibly undermined the specific type of generics-favoring competition state legislatures sought to establish in fashioning DPS laws and accordingly raises compelling regulatory antitrust concerns.

This is a summary of an earlier Law Review Note “An Antitrust Analysis of Product Hopping in the Pharmaceutical Industry,” 108 Colum. L. Rev. 1471.  See the full Note here.

This post was contributed by Guest Barista Jessie Cheng, currently a 3L at Columbia Law School.

Doug Lichtman, a Professor of Law at UCLA, has alerted us to the fact that he sat down this past weekend with Professor Rob Merges from Berkeley and Professor John Duffy from GW, and they recorded a one-hour audio podcast about Bilski.  They have posted it for free, and in downloadable form, on the Web.

In going through the decision, Rob and John have helpful perspectives, not only because they are prominent patent academics, but also because they were each involved in the case and, indeed, Duffy was one of the four lawyers invited to present oral argument.

Special Offer:  Just to make things better for listeners, any lawyer who listens can get CLE credit (again, for free!) in New York, California.  They are expecting to be able to add Ohio, Illinois, Texas, Delaware, and Washington state.

The audio is part of an on-going series of intellectual property podcasts Professor Lichtman is doing with senior academic and industry guests.  At the site is an archive and a list of future programs, in case you are interested.  All are free, downloadable, possibly interesting, and come with the CLE, too.

What more could you ask for?

Check out the Bilski show at the IP Colloquium website here.  The Bilski audio is the featured audio on the splash page.

Also see:  How Did We Get to Bilski and What Can We Do About It?

In the ten weeks between the election and the inauguration, we will have plenty of time to ponder what changes, if any, might be in store for the U.S. Patent and Trademark Office.  Many believe its interminable quest to improve so-called patent quality has led to a precipitous drop in patent allowances.

The question is, will there be some shift in policy that might ease the tension between the Patent Office and the patent community? First, we have to look at what the Obama administration might want to do.  According to an Obama campaign statement:

Reform the Patent System: A system that produces timely, high-quality patents is essential for global competitiveness in the 21st century. By improving predictability and clarity in our patent system, we will help foster an environment that encourages innovation. Giving the Patent and Trademark Office (PTO) the resources to improve patent quality and opening up the patent process to citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation. With better informational resources, the Patent and Trademark Office could offer patent applicants who know they have significant inventions the option of a rigorous and public peer review that would produce a “gold-plated” patent much less vulnerable to court challenge. Where dubious patents are being asserted, the PTO could conduct low-cost, timely administrative proceedings to determine patent validity. As president, Barack Obama will ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration.

References to predictability and clarity in our patent system may signal a need to clarify issues with the obviousness standard set out by KSR. which has been made into a hammer by the Patent Office.  But then, there is that statement about wanting to “improve patent quality and opening up the patent process to citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation,” which is a clear hat tip to the high tech industry.

It would be a shame if the a “gold-plated” patent scenario where to be implemented.  It would seem to amount to a stamp marking all other patents as “crap” patents. Better time and resources could be put towards the need for administrative proceedings to determine patent validity, if made to be truly low-cost and timely.

And what about the USPTO administration itself?  Currently, Jon W. Dudas serves as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).  He was nominated by President George W. Bush.

As Under Secretary of Commerce for Intellectual Property, Mr. Dudas advises the President of the United States, the Secretary of Commerce, and the Administration about intellectual property matters. As Director of the USPTO, he administers the laws of granting patents and trademarks and the day-to-day management of the $1.8 billion agency and its more than 8,900 employees.

Most likely, we will see Director Dudas leave his position by inauguration day since he a political appointee — appointed by the President after Senate confirmation. The Deputy Director is also a politically-appointed position (by the Secretary of Commerce)  but the previously embattled Deputy Director Margaret Peterlin has already announced her resignation.

Commissioner for Patents John Doll and Commissioner for Trademarks Lynne Beresford are appointed by the Secretary of Commerce for 5-year terms that are not tied to the date of election of the President. They may or may not bere-appointed when their terms expire.

Most likely, any changes will come slowly.  We’ll keep you informed.