Supreme Court reverts to stricter standard for finding induced patent infringement

Continuing its string of reversals of Federal Circuit patent decisions, the United States Supreme Court has done it again.  In  Limelight Technologies, Inc. v. Akamai Technologies, Inc., the Court ruled that a defendant can be liable for induced infringement of a patented method only if a single entity directly infringed the patent by performing all of the method’s steps.

The Federal Circuit decision at issue made it easier for patent holders to sue in a situations where no single entity performed all of the steps of a patented method, but several parties collectively performed all of the steps. In that decision, the Federal Circuit held that a defendant who performed some steps of a method and encouraged others to perform the rest could be liable for inducement of infringement.

In the Limelight decision, the Supreme Court pulled no punches when explaining that the Federal Circuit got it wrong: Continue reading

Supreme Court: Patents require “reasonable certainty” or may be invalid

With the much-publicized issue of vague patent claims square in its sights, the United States Supreme Court has issued a new standard by which courts may find patents invalid for indefiniteness. The  new standard may give defendants another tool in their arsenal to challenge the validity of patent claims that are not precise or clear.

In Nautilus, Inc. v. Biosig Instruments, the Court addressed the Patent Act’s definiteness requirement, which requires a patent to conclude with “claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as the invention.” 35 U.S.C. § 112 ¶ 2. Under the prior standard, a claim was indefinite only if it were either “not amenable to construction” or “insolubly ambiguous.” Under the new standard, a patent claim is invalid if it fails to “inform those of skill in the art about the scope of the invention with reasonable certainty.”

In its opinion, the Court also noted that indefiniteness is to be assessed: (i) from the perspective of someone who is skilled in the relevant art; (ii) in light of the patent’s specification and prosecution history; and (iii) as of the time of the patent’s filing.

The definiteness requirement has been part of the Patent Act since 1870, and the text quoted above has remained unchanged since 1957. Nonetheless, the Court’s opinion shows that its meaning has remained open to dispute. As it has done in so many recent patent cases, the Court’s new opinion strikes down a standard set by the Federal Circuit for patents.

The Court found the previous “insolubly ambiguous” standard to be, simply, ambiguous.  One part of the Court decision that may be a key to future indefiniteness cases may be the following text:

It cannot be sufficient that a court can ascribe some meaning to a patent’s claims; the definiteness decision trains on the understanding of a skilled artisan at the time of the patent application, not a court viewing matters post hoc. To tolerate imprecision just short of that rendering a claim ‘insolubly ambiguous’ would diminish the definiteness requirement’s public-notice function and foster the innovation discouraging ‘zone of uncertainty’ against which this Court has warned.

Whether the new standard is actually more precise than the previous one remains to be seen as it is applied to specific claims, including the claims in this case on remand.

Patent Quality + International IP Transactions = A Busy Week

In the next week I will talk about the business of intellectual property at two very unique events. I’m excited to share the details of each event below:

First, on May 13, 2014 I will be part of a program entitled “Solving Problems in U.S.-Israel Cross-Border Transactions.” Hosted by Herzog Fox & Neeman in Tel Aviv and co-sponsored by Fox Rothschild, the event will feature two panel discussions providing a spectrum of perspectives on the complex investment challenges of cross-border M&A transactions. In a panel moderated by Michael Sweet, I’ll discuss the intellectual property issues that are most important to U.S. companies who are investing in or acquiring non-U.S. businesses or IP assets. The conference will offer practical solutions to various challenges that may arise during inbound and outbound transactions. Details are available here.

Second, on May 16, 2014, the topic of the Intangible Asset Finance Society’s monthly Mission: Intangible Monthly Briefing will be “IP Quality - 1, 2, 3 What Are We Fighting For?” Intellectual property can be extremely valuable — provided it is really good stuff. Whether it be due to a lack of attention, resources, or knowledge, too often companies build IP portfolios that appear to be strong, but are actually of questionable quality. What are the measures of “good?” John Kepler and I will debate this with host Jonathan Salem Baskin during this online briefing. Details are available here.

Supreme Court opens door to expanded fee-shifting in patent infringement litigation

Patent holders may consider hitting the “pause” button before enforcing their patents, based on a pair of U.S. Supreme Court decisions that relaxed the standard for awarding fees to the prevailing party in patent litigation. While several news outlets are (correctly) reporting that the Supreme Court rulings will make it easier for lower courts to impose financial penalties on so-called “patent trolls,” the facts behind the rulings suggest that the Court’s new standard may have an even broader effect.

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International patent strategy: tips for selecting countries in which to file

A question that patent attorneys often receive from clients who are relatively new to international patent filing procedures is “where outside of the U.S. should I file my patent application?” While the attorney typically can’t provide the answer — each client must choose the countries that make sense for its business —  the attorney can help lead the client to the answer that’s right for them by asking a few key questions. Here are key factors that I typically ask clients to consider when deciding where to apply for patent rights outside of the U.S:

What is the cost in each country?

The budget is always going to be a very important factor. After the U.S. patent application is filed, international filing costs typically vary from about $2,000 to $8,000 per country.  Costs of prosecution and maintenance can raise the cost to $20,000 or more per country over the life of the patent.

Since 148 countries are currently parties to the Patent Cooperation Treaty, international filing costs can add up very quickly.  Patent applicants should balance the cost of filing in each country against the benefits of filing or losses that can result from not filing  (more on that below) and select countries where the costs are justified.

Where are your customers?

A key reason to apply for patent protection is to protect market share for a product or service. Any country where the market is likely to be significant — or at least a substantial multiple of the patent cost —  is a candidate for patent protection.

However, patent applicants should balance market size against the practical realities of market opportunities. China and India are by far the world’s largest markets, but unless a company has the connections, expertise and resources to break into the Chinese or Indian market, a patent filing may be wasted in those countries.

In addition, in some cases one or two countries may be sufficient to protect the lion’s share of the market in a particular region.  For example, if 80% of a company’s South American sales occur in two South American countries, then filing in those two countries may be sufficient to deter others from trying to capture your South American market.

Where are your competitors?

This question may yield the same answer as the “where are my customers” question. However, a patent provides exclusive rights to make, use and sell an invention. Often, a product may have a large market in one country, but manufacturing may occur in another country where costs are lower. Filing in countries where key competitors have their manufacturing operations can help you stop infringement at its source.

Where are your suppliers?

If you are contracting your manufacturing to an overseas supplier, you will be teaching that supplier exactly how to make your product. The supplier and its personnel will gain expertise, and perhaps even have tooling in place that is especially suitable for the product. If your relationship with the supplier sours, a patent can help you ensure that the supplier won’t continue to supply your product or service to others without you.

Where might I set up a regional operation in the future?

Enforcement efforts are often more successful for businesses with “boots on the ground” (and eyes and ears, too) in a country. If you are planning a regional office in a location, then it can be valuable to have patents in that location because your local representatives can help you yield results from those patents.

Are there any country-specific laws to consider?

Finally, a handful of countries have laws can affect a patent filing decision.  For example, countries such as India have imposed compulsory licensing requirements on certain drug patents. While the licensing requirements can still result in royalties, these laws change the economics and need to be considered. As another example, Europe generally frowns on software patents, although devices and systems that perform certain processes often can be patented in Europe.

10 things software patent applicants need to know about the USPTO’s Glossary Initiative

In an effort to combat criticisms about poor quality and ambiguity in software and business method patents, the USPTO has announced a new “Glossary Pilot Program” that encourages applicants to provide a glossary of clear definitions for important claim terms.

Patent applicants who include such a glossary can benefit from expedited processing up to the first Office Action. In addition, the USPTO is hopeful that the clarity resulting from the use of a glossary will improve examination and patent quality, resulting in more certainty for patent applicants and those who are accused of infringing the patents.

Here are the key features of the new Glossary Initiative that patent applicants need to know:

  1. Only new applications filed on or after June 4, 2014 are eligible. The Glossary Pilot Program is only available to original, non-provisional applications.  Continuation, divisional, reissue and national stage applications are not eligible.  However, continuations-in-part and utility applications that claim priority to a provisional application may be eligible for the program.  The request to participate in the Program must accompany the original filing.
  2. Only certain technologies are eligible. The Program is only open to applications that the USPTO assigns to its Technology Center 2100 (Computer Architecture, Software, Information Security), 2400 (Computer Networks, Multiples Communication), 2600 (Communications), or the Business Methods area of Technology Center 3600. Although an applicant may suggest a particular classification, Technology Center assignment is ultimately a decision of the USPTO.  So, an applicant won’t know whether it will satisfy this requirement until after it files the application.
  3. Act fast – supplies are limited.  The Pilot is only available to the first 200 applicants, or until December 31, 2014, whichever occurs first.
  4. Limit your claims.  The application may contain no more than 4 independent claims, no more than 30 total claims, and no multiple dependent claims.
  5. Formatting requirements apply.  The glossary must be at the beginning of the Detailed Description section of the specification, identified with a heading, and presented on filing the application. The glossary can’t be a separate filing, an appendix, or added after the filing date.
  6. The definitions must be useful. According to the USPTO:  “The glossary should include definitions that will assist in clarifying the claimed invention and creating a clear application file wrapper record. Suggestions for definitions include key claim terminology (such as a term with a special definition), substantive terms within the context of the invention, abbreviations, acronyms, evolving technological nomenclature, relative terms, terms of degree, and functional terminology.”
  7. The definitions must not be open-ended or incomplete. The glossary can’t refer to or rely on other parts of the application, nor may it incorporate other documents by reference.  The glossary may include examples, but a particular definition may not rely solely on examples. In addition, the glossary cannot define a term solely by what it doesn’t mean.
  8. The applicant must not contradict the definitions. The description may not disavow or contradict the claim terms, such as by stating that the definitions aren’t limiting. This requirement applies to other parts of the application, as well as subsequent communications with the USPTO.
  9. Use the form and file electronically.  The application must include a completed USPTO Form PTO-SB-436, and it must be filed through the USPTO’s electronic filing system.
  10. The Glossary Pilot Program provides a quicker, but not necessarily the fastest, option.   Expedited processing is likely to result in a much shorter wait time than the current 19-to-24 month average wait for first action in software and business method patent applications. However, expedited processing is not a guarantee of action within any particular time period.  Other options, such as the USPTO’s Track One Examination Program, typically yield a final result within one year of the filing date. That said, the Glossary Pilot is certainly a less expensive option:  Track One requires a substantial ($2,000 – $4,000) additional filing fee.

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Penn State University to license patents via online auction

Penn State University is primed to launch the country’s first online auction of patent rights resulting from university research. According to a Penn State news release:

About 70 engineering patents in areas as diverse as acoustics, fuel cells and sensors will be available for license in this first auction. Required bid minimums on many will be as low as $5,000.

Available patents are listed on the Penn State Intellectual Property Auction Website. Bidders must pre-register to participate in the action. In addition to single patents with minimum bids as low as $5,000, the auction will include several patent bundles with minimum bids ranging from $10,000 to $50,000. The auction will open March 31, 2104 and close on April 11, 2014.

Winning bidders will need to enter into a license agreement with the University’s Office of Technology Management. The agreement will require the winning bidder to also pay all patent maintenance fees. However, unlike typical university research licenses, no ongoing royalties will be due. Penn State also retains the right to pursue third-party infringers; the licensee can only participate in enforcement if Penn State’s enforcement efforts are not successful after a six month period.

Patent auctions have met with limited success over the years. However, Penn State is tempering expectations with low minimum bids and realistic public statements. Penn State’s news release notes that a key goal of the auction is to “raise awareness among interested parties in business and industry that the University does have licenses available whose commercial applications could prove extremely valuable.”

A small license fee is certainly better than no license fee, especially for patents that are just sitting on the shelf.  In addition, by calling attention to its portfolio of IP in fields such as antenna systems, superconductors, and ground water remediation, the auction will certainly help draw attention to the university’s diverse research capabilities.