Patent Baristas

In a counter to the Coalition for Patent Fairness, Pat Choate, Ph.D. has published an analysis of the Patent Reform Act of 2007 for the Manufacturing Policy Project.  Entitled, The Patent Reform Act of 2007: Responding to Legitimate Needs or Special Interests?  The “Patent Fairness” Issue, Choate responds to the assertions put forth in favor of reform.

Dr. Choate, an economist and author specializing in patent issues and the money politics that now infect our nation’s capitol, uses factual research to examine the arguments in favor of patent “reform” that are being advanced by the Coalition for Patent Fairness, the organization representing Big Tech corporations on the issue.

These bills have three core features:

1. They would change the calculations of damages imposed on patent infringers in a way that will drastically limit the amounts they must pay patent owners;

2. They would create a new post-grant, quasi-judicial review process that will provide infringers new opportunities to challenge patents that have already issued;

3. They would change the rules on venue – where a patent holder can sue an infringer – in a way that will favor infringers over patent owners.

Dr. Choate concludes that rather than trying to alter their business practices to conform to existing U.S. patent laws, these corporations are trying to alter those laws to fit their business model.

See the entire paper here:  Patent Reform Act Analysis by Choate

Showing that Patent Reform has become as polarizing as major politics these days, supporters for each camp sent their respective support letters to the Senate.

Supporters of patent reform and the Coalition for Patent Fairness sent a letter signed by a total of 128 companies and associations from across the U.S. in support of the Patent Reform Act of 2007 (S. 1145).

Supporters of patent reform and the Coalition for Patent Fairness, an alliance of large and small businesses and associations in the technology, financial services, energy, chemical, manufacturing and media industries, expressed strong support for S. 1145 claiming the bill will stimulate American innovation, growth and competitiveness by restoring balance to our patent system. In the end, it will benefit all American workers and American consumers.

On the other side, more than 430 organizations — representing American innovation from all 50 states and the District of Columbia in fields including agriculture, alternative energy, biotechnology, chemicals, computer hardware, computer software, computer networking, cosmetics, entertainment, financial services, food/beverage, health care, heavy industry, life sciences, manufacturing, medical devices, material science, nanotechnology, optics, security, semiconductors, space systems, startup incubation, telecommunications, venture capital, and internet-based businesses — signed a letter to raise their concerns regarding S. 1145, The Patent Reform Act of 2007.

See the letters here:

Coalition for Patent Fairness-128 (pdf)

Senate Letter 430 (pdf)

See the best duality representation here.

See more on the Patent Reform Act here:  House Passes Amended Version of Patent Reform Act of 2007

Judge Cacheris of the Eastern District of Virginia has granted a preliminary injunction prohibiting the USPTO from moving forward with its proposed changes to the patent rules on continuations and claims.  Download the injunction order here:

GSK Preliminary Injunction Order (pdf)

The rules, labeled “Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications,” 72 Fed. Reg. 161 at p. 46716 (Aug. 21, 2007), were scheduled to come into effect November 1 (cue collective sigh here).

In a lawsuit against the USPTO, SmithKline Beecham Corporation (d/b/a GlaxoSmithKline) filed suit in the United Stated Federal District Court asking the court to preliminarily and permanently enjoin the PTO from implementing the Final Rules contending that the Final Rules are vague, arbitrary and capricious, and prevent GSK (not to mention everyone else) from fully prosecuting patent applications and obtaining patents on one or more of its inventions.

This case is consolidated with an earlier suit, Triantyfyllos Tafas vs. John Dudas and the United States Patent and Trademark Office, where Plaintiff Tafas also alleged that the PTO’s promulgation of the Final Rules will cause him harm.

In filing a Partial Motion to Dismiss and a Memorandum in Support of Defendants’ Partial Motion to Dismiss, the PTO has taken the position that one may not be able to establish harm caused by the Final Rules except by demonstrating specific examples of harm caused to pending patent applications. In addition, the Final Rules apply retroactively to pending applications.

Kelley Drye & Warren, representing Dr. Tafas in the Tafas/Glaxo USPTO litigation, filed an opposition to the USPTO’s motion to dismiss Dr. Tafas’ amended complaint. Below are the papers filed along with a reference copy of Dr. Tafas’ amended complaint. The video clip below was an exhibit to the motion to dismiss opposition.

Tafas Brief (pdf)

Tafas Amended Complaint (wmv)

Inequitable Conduct Video (wmv)

Dennis Crouch of Patently-O has a nice listing of various documents filed in the case here.

The PLI Patent Blog shows it’s not over yet here.

Time is running short for actions to stop implementation of the USPTO’s “Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications,” 72 Fed. Reg. 161 at p. 46716 (Aug. 21, 2007).

Motions are scheduled to be argued on October 31 in the U.S. District Court for the Eastern District of Virginia regarding a temporary restraining order and preliminary injunction enjoining the United States Patent and Trademark Office from implementing the PTO’s new rules on continuations and claims. The rules go into effect November 1.

AIPLA has now filed an amicus brief in support of a pending motions. The filing addresses :

[T]he irreparable harm flowing from the retroactive application of the new Rules’ restriction on claiming and continuation practice. Implementing the new Rules will, as a practical matter, compel IP owners to (1) abandon pending patent claims, (2) abandon entire patent applications, and (3)surrender currently existing claim scope without adequate opportunity for consideration by the PTO.

The biggest issue, of course is that patent applicants frequently (knowingly or unknowingly) include a number of patentably distinct inventions in a single application.  While applicants will be allowed to seek relief from the retroactive impact of the unexpected limitation of the number of claims using one of the two procedures alluded to above:  by filing a Suggested Requirement for Restriction or by filing an Examination Support Document.  By using the first option (SRR), patent application owners can request that the PTO carve out separate applications and allow them to be prosecuted in parallel.

However, the PTO is not obligated to accept such requests.  Thus, the PTO would have the right to block from substantive consideration future claims to previously-disclosed inventions that application owners have up until now been entitled to present and have reviewed.   That change, as applied to existing applications, will cause irreparable harm to owners of patent applications.  If an examiner chooses not to permit the filing of separate applications, the applicant’s intellectual property — unprotectable by secrecy if the application has been published — will be effectively lost. 

Included with the AIPLA filing are declarations from IBM and from patent practitioners who detail the effects of the rules on pending applications for which they are responsible.  David Kappos, Chief of IP at IBM, filed a declaration in support of the AIPLA brief. Most noteworthy is that Kappos indicated that in order for IBM to comply with the retroactive requirements of Rule 78(f) and to review 30,000 related pairs of cases, IBM would incur over $10 million in legal fees and internal expenses — not including any loss of intellectual property rights.

To read the AIPLA amicus brief, click here.
To read the submitted declarations, click here.
To read the SmithKline memorandum, click here.

In another round of challenges to the proposed rules by the U.S. Patent & Trademark Office, one group looks to challenge the rule change regarding the draft final regulation “Changes to Information Disclosure Statement Requirements and Other Related Matters.”

This is part of the USPTO Master Plan in the published final rules regarding limiting claims and continuations. (72 Federal Register 161 at 46716, “Rules and Regulations Changes To Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent applications; Final Rule”).

David Boundy, Vice President & Assistant General Counsel Intellectual Property at Cantor Fitzgerald, submitted a challenge to the Office of Management and Budget (OMB) that the rules, if enacted, would have the practical effect of dramatically increasing the cost of obtaining patent protection, making it much more difficult for inventors and innovators to protect their legitimate intellectual property rights, and “adversely affecting in a material way the economy, a sector of the economy, productivity, [and] competition.”

They also note that while the preamble of the proposed rule asserts that the rule will generate savings to USPTO, these savings are neither quantified nor reflected in USPTO’s FY 2008 budget submission.

The law governing the conduct of patent applicants and their agents require applicants and agents to fully disclose all potentially relevant information to USPTO or risk losing their patent rights. Through the IDS Rule, the USPTO wants patent applicants stop submitting so much art just to ease USPTO’s workload.

The proposed IDS Rule states that where an applicant is aware of more than 20 prior art references, applicants must submit to the following Hobson’s Choice:

1. Deliberately withhold information from USPTO because the Rule forces applicants to submit only the “most” material information; or
2. Submit a “patentability justification document” describing each prior art reference
   in detail.

Choosing the first option unambiguously violates the failure-to-disclose part of the law of inequitable conduct, and raises a very high risk of losing the property right conveyed by the patent.

Choosing the second option creates a high risk of violating the misrepresentation part of the law of inequitable conduct.

Either way, the costs to the applicant in reviewing and preparing a submission will skyrocket.

See the entire letter here.

In a second challenge to the OMB, Richard B. Belzer, Ph.D. on behalf of an undisclosed client questions whether the PTO properly disclosed to OMB a reasonably accurate estimate of rule’s expected costs. In the Notice of Proposed Rulemaking published in July 2006, the PTO said it had “determined ” that the IDS Rule was “not significant” under Executive Order 12,286, See 71 Fed. Reg. 38819 col. 1, with no supporting rationale. At page 2, Dr. Belzer states:

“’Not significant’ under EO 12866 normally is limited to regulatory actions that have minor consequences and elicit little or no controversy, such as housekeeping actions, and matters for which the agency is willing and able to perform internal oversight equivalent to that of OMB.”

Belzer lists the PTO sources he consulted for data and analysis of the costs of the proposed IDS Rule, and concluded that PTO had disclosed no useful information. He says on pp. 4-5:

“From the number of public comments submitted to USPTO (65), it is clear that the proposed IDS Rule is at least ‘significant’ under EO 12866. From the contents of these comments, there is a prima facie case that the proposed IDS Rule has effects exceeding $100 million in any one year, and thus is ‘economically significant.’ USPTO did not perform a Regulatory Impact Analysis (RIA), nor did it disclose the basis for its determination that the proposed rule is ‘not significant’.”

This paper estimates the minimum direct paperwork cost for only one part of the IDS Rule at $1.9 billion – more than the PTO’s total budget of $1.7 billion. Four independent patent attorneys peer reviewed this cost estimate, and he attaches their reports.

Then at page 5, Dr. Belzer states:

“Executive Order 12,866. Based on my expertise in regulatory analysis, and more than 20 years’ experience reviewing such analyses (including 10 while employed as an economist at OMB), I am virtually certain that the proposed IDS Rule is economically significant …

“Furthermore, based on my governmental experience it is inconceivable that USPTO could be unaware of the approximate magnitude of these costs, or that it employed any reasonable economic method or logic to determine that the proposed rule was ‘not significant’. … One can infer with reasonable certainty that USPTO deliberately evaded the requirements of Executive Order 12,866.

See Belzer’s submission here.

A new internet launch, SparkIP is an a new online intellectual property exchange for connecting the scientific community with patent information. Described as a “visually rich, categorizing information into a fully-searchable innovation landscape of over 35,000 SparkClusters(TM), self-organizing and self-naming groups of patents and new inventions.” As new innovation is submitted, SparkIP’s arrangement of clusters reorganizes to reflect the growing body of information.

For example, a search of “carbon” shows 1000 patents in 416 clusters.  Selecting one cluster, carbon coated silicon, reveals 119 patents in 42 clusters, e.g., silicon nitride ceramics.  You can eventually get down to the specific patent information for review.

SparkIP is meant to be used by licensors, licensees, universities, government labs, patent attorneys and individual inventors to help identify new opportunities for collaboration and as a way to understand the state of the art.

While cluster searching is not new, this is unique in providing patent searching groups of related patents in such a visual way.  It will take some time to see if it grows to contain all the patent art or just the art submitted.  We recommend you take some time to play around with searching to get a grasp of it’s potential.

This week’s Blawg Review #130 has two hosts, both mediators, and one for each hemisphere. Geoff Sharp, in Wellington, New Zealand, is covering the Southern Hemisphere in his own edition of Blawg Review.  Meanwhile, the Online Guide to Mediation is covering the Northern Hemisphere edition from Boston.

We especially enjoyed the linguistic rollercoaster ride at the Language Log where there is a discussion over a misplaced “not” versus a misplaced brain in a new Arkansas law.  The law seemingly intended to establish 18 as the minimum age to marry while also allowing pregnant minors to marry with parental consent. However, the law as currently written allows any person younger than eighteen (18) years of age to marry (including babies) — as long as they are not pregnant and get parental consent.

We’ll have to get back to you on Lowering the Bar’s review of a woman’s quest to escape state sovereignty.

The U.S. Court of Appeals for the Federal Circuit smacked Apotex with a contempt judgment after finding it filed a repetitive Abbreviated New Drug Application (ANDA) with the Food and Drug Administration (FDA). Abbott Labs v. Torpharm and Apotex (07-1019).

This involves an ongoing dispute with TorPharm and Apotex in trying to market a generic version of Depakote®, an anti-seizure medication containing divalproex sodium patented, produced, and sold by Abbott

The U.S. District Court held Apotex in contempt for violating an injunction barring it from commercially manufacturing, using, selling, offering to sell, or importing into the United States generic divalproex sodium infringing Abbott’s U.S. Patent Nos. 4,988,731 and 5,212,326 until their expiration.

The CAFC upheld the district court’s decision to entertain a contempt proceeding as well within its discretionary authority. However, because the district court erred in finding Apotex in contempt when the conduct at issue was not within the express terms of the injunction, we reverse the district court’s judgment of contempt.

Earlier, Apotex filed an ANDA under the Hatch-Waxman Act to get FDA approval to manufacture and sell a generic version of Depakote®. The active ingredient of Depakote® is divalproex sodium. In its paragraph IV certification, Apotex certified that the Abbott patents were invalid.

Abbott sued and the district court granted summary judgment in favor of Abbott on both validity and infringement. On appeal, the CAFC affirmed the ruling on validity but remanded for a trial on infringement.

On remand, the court concluded that Apotex’s filing of the ANDA infringed the claims of the Abbott patents because Abbott’s claims read on the product that was the subject of the Apotex ANDA. The district court entered the following injunction:

TorPharm, Inc., Apotex, Inc., Apotex Corp., and their respective affiliates, successors in interest, and assigns are enjoined from commercially manufacturing, using, selling, or offering to sell generic divalproex sodium which the Court has found to be infringing within the United States, or from importing such product into the United States, until Abbott’s U.S. Patent Nos. 4,988,731 and 5,212,326 expire and defendants have received final approval from FDA to market generic divalproex sodium.

The effective date of any approval by FDA of ANDA No. 75-112, or any other application concerning defendants’ generic divalproex sodium which the Court has found to be infringing, shall be no earlier than January 29, 2008, the date of expiration of Abbott’s patents.

Apotex tried to design around Abbott’s patent claims and allegedly developed divalproex sodium in the form of a polymer which differs from an oligomer in that the polymer is made up of much more than about 4 to 6 repeating units of divalproex sodium.

But, rather than file a new ANDA itself, Apotex entered into an agreement with Nu-Pharm where Apotex would pay costs but Nu-Pharm would take on the “litigation risks” from the filing. Nu-Pharm then filed the second ANDA with a paragraph IV certification that its product did not infringe the claims of the Abbott patents.

The court found Apotex in contempt for violating the injunction characterizing the injunction as extending to “any ‘generic divalproex sodium’ manufactured by Apotex that has been ‘found to be infringing.’” The court found that there was no difference between Apotex’s old product and its new product. So, the district court “extend[ed] the injunction to embrace” the Nu-Pharm ANDA. Specifically, the expanded injunction prohibited Apotex from:

commercially manufacturing, using, selling, or offering to sell generic divalproex sodium … until Abbott’s U.S. Patent Nos. 4,988,731 and 5,212,326 expire and defendants have received final approval from FDA to market generic divalproex sodium.

The district court stated that should the violation continue, Apotex “will be risking heavy sanctions for its willful disobedience of the injunction.”

On appeal, Apotex argued that the contempt proceeding was beyond the district court’s statutory authority because the Hatch-Waxman Act does not itself grant a district court subject matter jurisdiction to conduct such contempt proceedings. The court agreed stating:

While the Supreme Court has characterized infringement as defined in the Hatch-Waxman Act as “highly artificial,” see Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 678 (1990), by statutory command it is infringement nonetheless. Apotex has failed to provide any authority, be it statute, case law, or legislative history of the Hatch-Waxman Act, suggesting that suits commenced under the provisions of the Act are to be treated any differently than patent infringement suits under 35 U.S.C. § 271(a).

The district court found that “Apotex’s choice of Nu-Pharm to file the ANDA was a subterfuge intended to give Apotex a crack at another district judge” who might find that Nu-Pharm ANDA drug noninfringing. Abbott V, 455 F. Supp. 2d at 835. We do not disturb that finding, and conclude that the district court did not abuse its discretion in electing to try issues relating to the Nu-Pharm ANDA in a contempt proceeding.

Notwithstanding the above, we have held that before entering a judgment of contempt of an injunction in a patent infringement case, a district court must address two separate questions. … First, the district court must address whether a contempt hearing is an appropriate forum for adjudging whether an allegedly redesigned product is infringing. … Second, if contempt proceedings are appropriate, the district court must address whether the accused product infringes the claims of the asserted patent.

Where, as here, a party files a second ANDA to a drug having no more than a colorable difference from the first, the district court is well within its discretion to entertain contempt proceedings.

In looking at the finding of contempt, the Federal Circuit held that:

We hold that the district court made an error of law in interpreting its original injunction to preclude the conduct of which Abbott complains, namely the filing of the Nu-Pharm ANDA, and thereby abused its discretion in holding Apotex in contempt.

By its plain language, the injunction issued in Abbott III only (1) enjoined Apotex from commercially manufacturing, using, selling, or offering to sell generic divalproex sodium which the Court has found to be infringing within the United States and importing such product into the United States until expiration of the Abbott patents, and (2) prohibited the FDA from approving the Apotex ANDA as well as any other ANDA application filed by Apotex directed to generic divalproex sodium which the Court has found to be infringing until expiration of the Abbott patents.

In other words, while contemplating the filing of new and/or amended ANDAs, the injunction only provided the FDA with the necessary “explicit notice” that it was prohibited from approving the Apotex ANDA or any other ANDA concerning Apotex’s generic divalproex sodium which a court found to be infringing prior to expiration of the Abbott patents. The injunction contains no “explicit notice” to Apotex that the filing of a new ANDA, by itself or a straw party, was forbidden.