Category Archives: Patents

Why do patents often include method claims and apparatus claims?

When I send a draft patent application to an inventor who is new to the patent process, the inventor often asks why the claims seem to repeat themselves. A patent application often has one group of claims directed to a method, and another group directed to an apparatus or system. This can confuse new inventors because the two claim groups often appear to be very similar.

Why the duplication?  There are several reasons.

One reason is that method and apparatus claims can be directed to two separate groups of infringers. A patent gives its holder the exclusive right to make, use and sell the invention. Method and apparatus claims may each define the invention in a slightly different way. Some entities — such as a distributor or retailer — may sell an apparatus, but they will never practice a method of making or using the apparatus. Other entities (such as end users) may use the invention but not make or sell it. Depending on the situation, one set of the claims or the other could be more useful to assert against a particular infringer.

Another reason to include two groups of claims relates to the point in time at which damages start to accrue for infringing activity. Section 287 of the Patent Act limits recovery of damages for making/using/selling a patented article to the point in time where the infringer had actual notice of the patent, or constructive notice of the patent through marking. Because Section 287 refers to “articles” but not methods, courts have generally limited the notice requirement to apparatus claims, not system claims.

This interpretation by the courts dates back to at least 1936, when in Wine Railway Appliance Company v. Enterprise Railway Equipment Company, the Supreme Court said that Section 287 does not limit damages if the patent holder isn’t actually making articles to mark.

More recently, courts have clarified that if a patent is directed only to a method (i.e., there are no apparatus/article claims), Section 287 does not apply and notice is not required. (See Bandag, Inc. v. Gerrard Tire Co.) If a patent includes both apparatus and method claims, then Section 287 does not apply if only the method are asserted. (See, for example:  American Medical System Inc. v. Medical Engineering Corp., Crown Packaging Technology Inc. v. Rexam Beverage Can Co. and Hanson v. Alpine Valley Ski Area, Inc.) Whether or how Section 287 would apply if both types of claims are asserted has not yet been fully addressed by the Federal Circuit. (See Rembrandt Wirless Technologies, LP v. Samsung Electronics Co., Ltd.)

Because of this method/apparatus dichotomy, as well as the fact that Section 287’s notice requirement does not apply to an entity that holds — but does not practice – the patent, the notice requirement has been criticized as primarily benefitting non-practicing entities. However, so far Congress has not considered this issue to be worthy of an amendment to the Patent Act.

In addition, to avoid issues associated with the notice requirement some patent applicants may consider filing patent applications with only method claims or only apparatus claims. This may mean filing two applications on the same day, or filing a second application that claims priority to a first application. This adds to the expense, but it can help reduce the worry that insufficient marking will limit damages when asserting both method and apparatus claims.

New USPTO fee schedule increases fees for challenging granted patents, adds streamlined reexamination option

The USPTO recently published an adjusted fee schedule for certain patent fees. The new schedule significantly increases the fees for challenging the validity of a patent in inter partes review (IPR), post-grant review (PGR) and covered business method (CBM) proceedings. (A comparison of these three types of proceedings is available from the USPTO at this link.)

The new fees for an IPR proceeding (request fee + post-institution fee) total $30,500 — an increase of $7,500. Additional fees apply if the IPR proceeding involves more than 15 claims.

The new fees for a PGR or CBM proceeding (request fee + post-institution fee) total $38,000 — an increase of $8,000. Additional fees also apply if the PGR or CBM petition involves more than 15 claims.

The office also established a new “streamlined reexamination” option for ex parte reexamination requests that do not exceed 40 pages. Line spacing (double-spaced or 1-1/2 spaced), font size (12-pt non-script), and margin requirements apply. The fee for a streamlined reexamination is $6,000, compared to the standard $12,000 ex parte reexamination fee.

The fee hikes also include:

  • a $100 increase (to $1300) in the fee for filing a first request for continued examination (RCE);
  • a $200 increase (to $1900) in the fee for filing a 2nd or subsequent RCE;
  • a $180 increase (to $760) for the search and examination fees required for new design patent applications;
  • a $240 increase (to $2,240) in the cost of moving an appeal of a final rejection from the briefing stage to the Patent Trial and Appeals Board for review; and
  • other fee increases for various petitions, such as petitions to revive an abandoned patent application and petitions to accept a delayed maintenance fee payment.

The costs listed above are the standard fees. Small entities and micro-entities may qualify for 50% or 75% reductions of certain USPTO fees.

The new fee schedule will take effect on January 16, 2018.

One step forward, two steps back for software patents at the Federal Circuit

In the past year, several Federal Circuit decisions defined situations in which software inventions could be eligible for patenting in the United States. However, two recent Federal Circuit decisions show that the path for patent-eligibility is not yet clear, especially for patents that claim methods of processing or presenting data.

In Secured Mail Solutions LLC v. Universal Wilde, Inc. (Fed. Cir. Oct. 16, 2017), the court considered seven patents covering the use of intelligent mail barcodes, QR codes, and personalized URLs on a package to communicate information about the package. The court considered a representative claim of U.S. patent 8,429,093 that read:

1. A method for providing electronic data to a recipient of a mail object, comprising:

   Generating, by a processor, a barcode for a mail object, said barcode including at least a first set of mail data, said first set of mail data including data corresponding to said recipient of said mail object;
affixing said barcode to said mail object;
   submitting said mail object to a mail carrier for delivery to said recipient of said mail object;
receiving said first set of mail data, including data corresponding to said recipient of said mail object, from a reception device of said recipient via a network;
   providing said electronic data to said reception device via said network in response to receiving said first set of mail data, said electronic data including a content of said mail object;
   wherein said reception device displays said electronic data to a recipient of said mail object by displaying said electronic data on a screen of said reception device.

The district court found all of the patents’ claims to be directed to the abstract idea of “communicating information about [a mail object] by use of a marking.” The Federal Circuit agreed and explained that the claims “are not directed to specific details of the barcode or the equipment for generating and processing it.” The Federal Circuit also noted that in the claims there “is no description of how the unique identifier … is different from a personal name, or return address.”

After agreeing that the claims were directed to an abstract idea, the court noted that the claims did not include sufficiently more than the idea because they were “‘replete’ with routine steps, including ‘affixing mail identification data,’ such as a barcode, to a mail object.” The patent holder argued that the generation of the unique identifier is inventive, but the court noted that “the use of barcodes was commonplace and conventional” when the patent applications were first filed, and “sending a personalized URL to a recipient was not an unconventional use of the Internet” at that time.

In Smart Systems Innovations, LLC v. Chicago Transit Authority (Fed. Cir. Oct. 18, 2017), the court considered four patents relating to open-payment fare systems in mass transit networks. A representative claim from U.S. patent 7,568,617 read:

13. A method for validating entry into a first transit system using a bankcard terminal, the method comprising:
downloading, from a processing system associated with a set of transit systems including the first transit system, a list of bankcards comprising, for each bankcard in the list, a hash identifier of a bankcard previously presented, by a respective holder of the bankcard, to the processing system, wherein the bankcard comprises one of a credit card and a debit card;
receiving, from a bankcard reader, bankcard data comprising data from a bankcard currently presented by a holder of the bankcard;
generating a hash identifier based on the bankcard data from the currently presented bankcard, wherein the hash identifier comprises a hash of at least part of the bankcard data;
determining whether the currently presented bankcard is contained in the list of bankcards;
verifying the currently presented bankcard with a bankcard verification system, if the bankcard was not contained in the list of bankcards; and
denying access, if the act of verifying the currently presented bankcard with the bankcard verification system results in a determination of an invalid bankcard.

The court found the claims to be directed to the formation of financial transactions in the field of mass transit. The court stated: “[t]he Asserted Claims are not directed to a new type of bankcard, turnstile, or database, nor do the claims provide a method for processing data that improves existing technological processes. Rather, the claims are directed to the collection, storage, and recognition of data.” The court also stated that the claims’ improvement on the operation of existing fare collection systems, and their limitation to the field of mass transit, did not save them from being considered an abstract idea.

Notably, in Smart Systems Innovations the court stated: “[o]ur mandate from the Supreme Court under Alice step one is to ascertain what the claims are ‘directed to,’ not the ‘thrust,’ ‘heart,’ or ‘focus’ of the invention.” The court also appeared to limit the applicability of its previous decisions in Enfish Corporation v. Microsoft LLC and DDR Holdings, LLC v. Hotels.com, L.P. to the specific “claims [that the patentee shows] are directed to an improvement in computer technology.” The court also suggested that its McRO v. Bandai NAMCO Games America, Inc. decision was limited to a particular “claimed process us[ing] a combined order of specific rules [that] improved upon existing technological processes.” Continue reading

Patent lawsuit map may shift as Supreme Court restricts venue in patent infringement cases

A much-anticipated decision from the U.S. Supreme Court has scaled back the ability of patent plaintiffs to choose the forum in which they file suit. By limiting a practice that many defendants consider to be forum shopping by patent plaintiffs, the Court’s decision may shift the geography of patent infringement lawsuits from the East Texas heartland to the coasts.  

In TC Heartland LLC v. Kraft Foods Group Brands LLC, the Court considered the patent venue statute, 28 U.S.C. § 1400(b), which states: “Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” The Court held that a patent infringement defendant “resides” only in its state of incorporation, and that “residence” does not include states where the defendant merely conducts business.

In the case, the defendant was organized under Indiana law and headquartered in Indiana. The plaintiff filed suit in Delaware, into which the defendant shipped product but otherwise had no physical or legal presence. The defendant argued that venue in Delaware was improper under the patent venue statute.

The Court agreed with the defendant. Focusing on the meaning of the phrase “where the defendant resides,” the Court held that the term “residence” means only an entity’s state of incorporation, and the term does not include states where an entity merely does business.

The case may deal a blow to the Eastern District of Texas, which has served as the epicenter of patent patent infringement litigation in recent years. However, the Court did not negate the second half of the patent venue clause, which also supports venue “where the defendant has committed acts of infringement and has a regular and established place of business.” Texas ranks second in a list of states where the most Fortune 500 companies are headquartered. Thus, at least some new cases that previously would have gone to the Eastern District of Texas may now shift to other Texas district courts such as the Northern District of Texas (in which Dallas is located) or the Western District of Texas (in which Austin is located).

It is even more likely that new patent filings will spread out to other venues such as the District of Delaware (where more than 2/3 of the Fortune 500, and more than 1 million companies in total, are incorporated) ; the Northern District of California (home to the tech giants of Silicon Valley); or the Southern District of New York (where more Fortune 500 companies are headquartered than in any other state).

The new decision also will make it harder for patent plaintiffs to sue multiple defendants in a single case. If the accused infringers are organized in different states and have different corporate office locations, the patent holder may need to file multiple suits in multiple states.

[Image credit:  Bram Janssens]

Federal Circuit finds credit reporting patent ineligible; calls it the “height of abstraction”

A recent Federal Circuit decision illustrates the high eligibility hurdles that fintech software patents continue to face in view of the Supreme Court’s 2014 Alice v CLS Bank decision.

In Clarilogic, Inc. v. FormFree Holdings Corp. (Fed. Cir. Mar. 15, 2017), the court addressed the eligibility of U.S. Patent 8,762,243, which was directed to methods for electronic account certification and  credit reporting. The representative claim of the patent was: Continue reading

SCOTUS: No laches in patent infringement cases; six-year limit on damages is the rule

A recent Supreme Court decision may make it easier for patent holders to assert older patents, as the decision significantly restricts the availability of laches (i.e., unreasonable delay) as a defense to a patent infringement claim.

The doctrine of laches allows a court to deny a claim if the plaintiff delayed filing the suit and the delay was unreasonable and prejudicial. The Patent Act also includes a six-year limit on the recovery of damages for patent infringement activities.

Until now, most courts interpreted these two legal doctrines as requiring a patent holder to promptly bring suit upon learning of infringing activity, and in any event no longer than six years from the date that the patent holder places the infringer on notice of the claim. The reason for this is to prevent a patent holder from lying in wait by sending a cease and desist letter but never seeking to resolve the dispute in court.

A recent Supreme Court decision has changed this long-standing interpretation. In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC (Mar. 21, 2017), the patent holder (SCA) sent a letter accusing First Quality of infringement in 2003. In 2010 — seven years after sending the letter — SCA filed suit against First Quality. First Quality argued that SCA’s claim was time-barred under the doctrine of laches. The district court agreed and dismissed the case. The Federal Circuit affirmed, stating that laches prevents recovery of all damages, including those incurred during the 6-year period prior to filing the suit.

The Supreme Court disagreed, noting that “[l]aches is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.” Because Section 286 of the Patent Act imposes a six-year statute of limitations, the Court found that the Patent Act had no gap to fill:  “Laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.”

[Image copyright: Lightwise]

Can a patent expire before it issues?

 

In certain situations, yes.  Ordinarily, the term of a patent begins on the grant date and ends twenty years after the filing date of the patent. If the patent claims priority to an earlier-filed nonprovisional patent application, then the twenty-year term is calculated from the filing date of the earlier-filed application.

However, an unusual situation can arise if a patent claims priority to a patent application that was filed more than twenty years ago. A recent court decision from the Eastern District of Texas found such a situation in U.S. Patent 9,094,694. The application for the ‘694 patent was filed in July 2014, and the patent issued in July 2015. However, the ‘694 patent was a continuation of three previous patent applications, the first of which was filed in July 1995. Because of this, the effective filing date of the ‘694 patent was July 8, 1995 and its grant date was July 28, 2015 — more than twenty years after the effective filing date.

There are circumstances in which a patent’s term can be extended beyond the twenty-year term. For example, if a patent application’s processing is held up due to Patent Office delay, the term of the patent can be extended to account for that delay. However, this opportunity for patent term adjustment is lost if the applicant also causes certain delays during prosecution, such as by taking an extension of time or filing a supplemental amendment after filing an additional amendment.

In the case of the ‘694 patent, the USPTO determined that no patent term adjustment applied.  Thus, the term of the patent was not extended beyond the standard twenty-year term. The ‘694 patent also included a terminal disclaimer with respect to patent 8,769,561, which did have a patent term adjustment but which still expired in 2016. Thus, the court determined that the ‘694 patent expired before it granted.

The case discussed above is Bartonfalls LLC v. Turner Broadcasting System, Inc. (E.D. Tex. March 15, 2017).

[Image copyright:  W. Scott McGill]]