In re Lister: Public Accessibility of Prior Art Under 35 U.S.C. § 102(b)
By Naikang Tsao (firstname.lastname@example.org)
The Court of Appeals for the Federal Circuit’s recent decision in In re Lister, 583 F.3d 1307 (Fed. Cir. 2009), provides important guideposts for assessing whether prior art is publicly accessible for purposes of the “printed publication” bar under § 102(b). The case is likely to be frequently cited by litigants asserting a § 102(b) invalidity defense.
The applicant, Dr. Lister, had submitted a manuscript of his invention — relating to a method of playing golf that permitted the use of a tee on most shots — to the U.S. Copyright Office more than a year before he filed his patent application. Based on this earlier disclosure, the Board of Patent Appeals and Interferences (BPAI) affirmed the patent examiner’s § 102(b) rejection.
Dr. Lister appealed to the Federal Circuit, and the issue presented was whether the manuscript was publicly accessible based on its submission to the Copyright Office or its availability on commercial Westlaw and Dialog databases.
The court’s analysis highlights the fact-dependent nature of the public accessibility inquiry.
As a threshold matter, the standard for public accessibility is “whether an interested researcher would have been sufficiently capable of finding the reference and examining its contents” in light of “the facts and circumstances surrounding the disclosure.” While the cataloging and indexing of a reference are relevant considerations, “neither cataloging nor indexing is a necessary condition for a reference to be publicly accessible.” Moreover, “a reference can be considered publicly accessible even if gaining access to it might require a significant amount of travel.” And, “once accessibility is shown, it is unnecessary to show that anyone actually inspected the reference.”
Turning to the facts at hand, the court found that “any member of the public who submits a proper request” to the Copyright Office “is capable of gaining access to the manuscript without any need for special authorization.” However, the fact that the Lister manuscript was available at the Copyright Office “does not end our inquiry. We must also consider whether anyone would have been able to learn of its existence and potential relevance prior to the critical date.”
Because the Copyright Office’s automated catalog was not sorted by subject matter and could only be searched by either the author’s last name or the first word of the title of the work, it was undisputed that the automated catalog alone was insufficient to support a finding of public accessibility.
However, the court reached a different conclusion with respect to the Westlaw and Dialog databases. Because those databases permit the searching of titles by keyword, the court found that a person of ordinary skill “exercising reasonable diligence” would have been able to find the Lister manuscript. Accordingly, the manuscript was publicly accessible as of the date that it was included in either the Westlaw or Dialog databases.
Finally, the court considered whether there was sufficient evidence to show that the Lister manuscript was publicly posted on Westlaw or Dialog more than one year before the application filing date. In answering that question in the negative, the court rejected the government’s argument based on Dr. Lister’s inclusion of his manuscript on the IDS, and found that “the government has not identified any evidence of the general practice of the Copyright Office, Westlaw, or Dialog with regard to database updates. Absent such evidence, we have no basis to conclude that the manuscript was publicly accessible prior to the critical date.” As a result, the court vacated the BPAI’s decision affirming the examiner’s § 102(b) rejection.
In re Lister provides useful guideposts for developing a § 102(b) defense. The ruling notes that keyword-searchable databases such as Westlaw or Dialog provide a higher level of “public accessibility” than the Copyright Office’s automated database. The ruling also highlights the importance of developing the specific facts needed to establish a § 102(b) defense, including the date a prior art publication was first publicly disclosed. In all likelihood, the Lister manuscript was posted on Westlaw or Dialog close to the date it was submitted to the Copyright Office, and qualified as a § 102(b) printed publication. However, the government’s failure to conduct discovery to nail down that point led to the adverse outcome for the USPTO.
Another Case Pried From the Eastern District of Texas: Federal Circuit Grants Third Mandamus Petition in a Year
By Michael Houston (email@example.com)
In early December 2009, the Court of Appeals for the Federal Circuit again granted a petition for mandamus to transfer a case out of the U.S. District Court for the Eastern District of Texas. The Federal Circuit’s decision in In re Hoffman-La Roche, (Fed. Cir., Misc. No. 911, 12/2/09), is the third such mandamus order in less than 12 months. The underlying case was filed in 2007 in the Eastern District of Texas before Judge Folsom by Novartis Vaccines and Diagnostics, which is headquartered in California. Novartis accused defendants Hoffman-La Roche, Trimeris, and others of patent infringement over an HIV-inhibitor drug discovered by researchers at Duke University.
The defendants sought to transfer venue to North Carolina, where the drug at issue was discovered and developed. However, Judge Folsom twice denied Hoffman-La Roche's motion to transfer, once after the first Federal Circuit mandamus grant in TS Tech in December 2008 and again after the second mandamus grant in Genentech in May 2009. Hoffman-La Roche subsequently petitioned the Federal Circuit for relief.
In granting the petition to transfer venue, the Federal Circuit undertook the now-standard transfer analysis under 28 U.S.C. § 1404(a). However, there are several new points of interest in the Hoffman-La Roche opinion:
While the Federal Circuit relied on many factors in reaching its decision, its holding on this last point may prove to be the most important, since it is not uncommon for patent infringement plaintiffs to form limited liability companies in Texas ahead of filing suit in an apparent attempt to justify venue. The Federal Circuit's ruling in Hoffman-La Roche will undoubtedly be cited against such plaintiffs who resist transfer. In response, plaintiffs will continue to search for additional justifications for maintaining venue in the Eastern District of Texas such as naming as many defendants as possible and including Texas-based entities as defendants whenever feasible.
The fact that the Federal Circuit has, for the third time in less than a year, granted a petition to transfer venue under the very high standard for obtaining mandamus relief, is an indicator of the strong feelings the Federal Circuit must harbor on this issue. However, it remains to be seen whether and how the Federal Circuit will rule in potentially more difficult scenarios where multiple, unrelated defendants are named, especially where one or more of those defendants is based in Texas.
Intent to Use: Recent Decisions Show TTAB Takes the Standard Seriously
By Andrew Baum (firstname.lastname@example.org)
Parties seeking to obtain a federal trademark registration for a mark not yet in use must submit a declaration attesting to their “bona fide intent to use” that mark in the future. In the past, some applicants may have taken that requirement lightly. Recent decisions from the Trademark Trial and Appeal Board (TTAB), however, make clear that the declaration of a bona fide intent to use is not an empty formality. It is a substantive obligation that must be supported by documentary evidence. Failure to produce documentary evidence of an intent to use at or before the filing date will, in itself, likely be sufficient to warrant rejection of the application.
In Research in Motion Limited v. NBOR Corporation, Opposition No. 91179284 (12/2/09), the TTAB granted summary judgment rejecting an application, based on intent to use (ITU), to register the mark BLACK MAIL for computer software for facilitating interactive communication. The owner of the trademark BLACKBERRY opposed the application on the ground of likely confusion. In response to the opposer’s discovery requests, the applicant indicated that it had no plans about how the mark would be used, no projected date of first use, and no determination of the channels of trade, geographic areas of sales, or classes of intended consumers. The applicant produced no documents evidencing any intent to use the mark. The applicant did, however, identify documents pertaining to earlier ITU applications to register the same mark for the same goods.
The opposer amended its opposition to add the ground of lack of bona fide intent to use, and moved for summary judgment. The TTAB granted the motion solely on the ground of lack of intent to use. Relying on Commodore Electronics Ltd. V. CBM Kabushiki Kaisha, 26 USPQ2d 1503, 1507 (TTAB 1993), the TTAB held that “(t)he absence of any documentary evidence on the part of an applicant regarding such intent constitutes objective proof that is sufficient to prove that the applicant lacks a bona fide intent to use its mark in commerce.” Here, the applicant could show no “product design efforts, manufacturing efforts, graphic design efforts, test marketing, correspondence with prospective licensees, preparation of marketing plans or business plans, creation of labels, marketing or promotional materials, and the like.” And the filing of two prior ITU applications for the same mark cut against the applicant. The TTAB pointed to the legislative history of the intent to use provisions of the Trademark Act, which identified the repeated filing and abandonment of ITU applications due to lack of use as a circumstance that would “cast doubt on the bona fide nature of the intent or even disprove it entirely.” S. Rep. No. 100-515 at 23-25 (1988).
A second recent case shows that the obligation to produce documentary evidence of intent to use applies even where the application is based solely on a foreign registration. Honda Motor Co., Ltd. v. Friedrich Winkelman, Opposition No. 91170552 (4/8/09). Again, the applicant produced no “current business plans, ongoing discussions, promotional activities, or anything else” to corroborate his alleged intent to use. His ownership of foreign trademark registrations and scant evidence of some use in Europe was held insufficient since these facts had nothing to do with any intent to use the marks in the United States. Summary judgment was granted to the opposer in this case as well.
These cases lay out a road map for discovery in oppositions to ITU applications. Opposers should always serve discovery directed to this issue. If the applicant produces little or nothing, the TTAB will be receptive to motions for summary judgment. An opposer must remember, however, to amend its notice of opposition beforehand, if this ground was not pleaded at the outset. On the other hand, those applying to register based on intent to use should make sure that they have in their files some documentary evidence of their intent to use the mark. A mere statement of subjective intention will not be enough.
Is the Federal Circuit Instituting Patent Reform on Its Own? Lucent v. Gateway Demonstrates a New Willingness to Review Damage Awards
By George Best (email@example.com)
The Court of Appeals for the Federal Circuit's September 2009 decision in Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009), suggests that many of the goals urged by supporters of patent reform legislation may be achieved by applying existing law. In particular, the decision suggests that existing law may provide judges with the means to control jury awards without new legislation.
Proposals to change the rules governing patent damage awards, especially awards based on a “reasonable royalty,” have been at the center of the current patent reform debate. In Lucent, the Federal Circuit used existing law to vacate a $357-million damage award against Microsoft and remanded the case for a new trial on damages. The decision may bolster the position of patent reform opponents who argue that current law is sufficient to address some of the perceived problems with patent litigation.
In 1986, three computer engineers at AT&T filed a patent application that eventually issued as the Day Patent. The Day Patent's claims are generally directed to a method of entering data into fields on a computer screen without using a keyboard. In 2002, Lucent, the patent's assignee, sued a series of personal computer manufacturers, alleging that the sales and use of several different programs infringed several patents, including the Day Patent. Because Microsoft sold several of the accused programs, it intervened to defend the suit.
At trial, a jury awarded Lucent more than $357 million, excluding prejudgment interest, in damages for infringement of the Day Patent. The Federal Circuit vacated that award on appeal after conducting a detailed analysis of the evidence relevant to the jury's award.
A Careful Review of the Evidence
The Court's review of the damage award is instructive and suggests that the Federal Circuit — and, by extension, district courts — will carefully consider the actual evidence presented to support a jury's damage award. In this case, the parties had both followed the hypothetical negotiation approach to determining a reasonable royalty and used the framework provided by the Georgia Pacific factors to guide their analysis .
Other Licenses in Evidence Not Comparable. The parties disagreed about the form of the royalty that would have resulted from the hypothetical negotiation. In particular, the parties disagreed about whether the royalty should consist of a single upfront payment or a running royalty on all sales, including future sales. Microsoft contended that the negotiation would have resulted in a one-time, $6.5-million payment, while Lucent argued for an eight-percent royalty on the sales price of each copy of the software.
Because the verdict form indicated that the jury had awarded a lump-sum damage award with no provision for a running royalty on future sales, the Court determined that much of Lucent's evidence did not provide support for the jury's verdict. For example, only four of the eight license agreements offered as evidence by Lucent were lump-sum agreements. The licenses that were not lump-sum agreements could be disregarded.
As for the remaining licenses offered by Lucent, the Court distinguished and diminished their evidentiary value. The Court stated that so little information had been presented about the scope and nature of three of the licenses that it was impossible to determine whether they were comparable to the hypothetical agreement in the present suit. The final license was so different in scope from the agreement that would have resulted from the hypothetical negotiation that “a reasonable juror could only conclude that [it was] directed to a vastly different situation than the hypothetical licensing scenario of the present case.”
Because none of the licenses was comparable to the jury's award, the license agreements could not provide support for the jury's verdict. As the Court concluded:
Lucent had the burden to prove that the licenses were sufficiently comparable to support the lump-sum damages award. The law does not require an expert to convey all his knowledge to the jury about each license agreement in evidence, but a lump-sum damages award cannot stand solely on evidence which amounts to little more than a recitation of royalty numbers, one of which is arguably in the ballpark of the jury's award, particularly when it is doubtful that the technology of those license agreements is in any way similar to the technology being litigated here.
The Claimed Invention Is a Small Part of a Larger Product. The Court also found that the size of the damage award was inconsistent with the patented feature’s small contribution to the product as a whole. The Court noted that the infringing feature was only one of “hundreds, if not thousands or even more” features in the accused software and that much of the profits from and demand for the accused software are the result of these other features.
Similarly, the Court noted that Lucent failed to present any evidence showing how often the infringing feature was used. Lucent, therefore, could not argue that frequent use of the claimed invention supported the size of the damage award.
The Royalty Base and the Entire Market Value Rule. The Court rejected Microsoft's argument that the jury improperly based its royalty calculation on the sales price of the accused software rather than the value of the specific infringing feature. As the Court noted, the literal application of the entire market value rule would be legally erroneous because there was no evidence showing that the infringing feature was the basis of consumer demand for the accused software.
The Court, however, did note that “the base used in a running royalty calculation can always be the value of the entire commercial embodiment, as long as the magnitude of the rate is within an acceptable range (as determined by the evidence).” As the Court noted, parties routinely enter into licenses that use the sales price of the commercial product as a royalty base. “There is nothing inherently wrong with using the market value of the entire product, especially when there is no established market value for the infringing component or feature, so long as the multiplier accounts for the proportion of the base represented by the infringing component or feature.” The Court, however, provided little guidance on how to determine whether a particular multiplier is appropriate.
Implications for Patent Reform Legislation
The Federal Circuit's careful review of the damage award in Lucent demonstrates that courts can be deeply involved in the analysis of damages award and are aware of the patent reform debate on Capitol Hill. A key sticking point in the legislative debate continues to be the calculation of damages — particularly the entire market value rule and apportionment of damages. Each side of the debate will likely argue that the Lucent decision proves that Congress should adopt its position.
Judicial decisions can have a significant impact on the debate in Congress. In previous legislative sessions, patent reform advocates contended that it was crucial to change the statutes governing injunctions. That issue receded, however, after the U.S. Supreme Court addressed the standards for issuing injunctions in eBay, Inc. v. MercExchange, LLC, 126 S. Ct. 1837 (2006).
At the beginning of the current Congress, key senators and representatives introduced nearly identical provisions to address damages issues. Both bills focused upon reasonable royalties and defined entire market value, marketplace licensing, and apportionment of damages. Opponents of these provisions argued that Georgia Pacific already provided sufficient authority for judges to properly guide juries for determining damages. They argued that the proposed damages provisions would inappropriately limit the judge's flexibility to consider all the relevant factors in a damages calculation.
Staff members for the House and the Senate Judiciary Committees are continuing to meet and determine how to fashion a compromise bill that will be well received by both bodies and the patent community. During the next several months, we will see how Congress attempts to resolve these contentious issues, and Lucent may be as much of a game-changer as was e-Bay.
In the next few months, there will be new legislation (or, failing that, continued antitrust agency enforcement efforts) to restrict the use of litigation settlement agreements to resolve disputes between pharmaceutical industry IP rights holders and generic drug companies. The settlements typically involve 1) a payment to a generic drug manufacturer to resolve patent infringement litigation and 2) an agreement by the generic manufacturer to delay its entry into the segment of the drug market covered by the pharmaceutical company’s IP rights.
The main argument of those advocating for restrictions on payments to settle generic drug patent suits is that such settlements are essentially horizontal market division agreements that would normally be considered illegal per se under Section 1 of the Sherman Act, 15 USC §1. Critics contend that the settlements deprive consumers of the benefits of price competition that come from early generic entry into the market to compete with branded drugs. The Federal Trade Commission has asserted that the settlements are anticompetitive and, in its view, “impose enormous costs on consumers and the health care system.”1
Yet the picture is not always that simple. According to the proponents of such settlements, they are essential to resolve disputed infringement claims,2 and complicating these disputes will only protract litigation and further delay entry of generic drugs.
The problem for settlement opponents, like the FTC and the Antitrust Division of the U.S. Department of Justice, is that they have lost virtually every challenge so far. While there have been some limited exceptions, courts have regularly approved the settlement of IP litigation even if the settlement delays generic entry into the market, and have dismissed efforts to block such resolutions.3 The rationale seems to be fairly straightforward: The IP rights holder has a constitutionally protected right to exclude from the marketplace products infringing that monopoly right.
Whatever the technical merits and complexities of the issues, the antitrust enforcement agencies and their allies in Congress are actively pushing a legislative resolution that would make these settlements much more difficult to achieve. Opponents of certain such legislative proposals have not been limited to those that bring infringement actions against generic drug companies alleged to be infringing IP rights. For example, the Generic Pharmaceutical Association, reacting to action in July 2009 by a House of Representatives Committee, said that bans on settlements could have “the unintended effect of benefitting the brand industry and ultimately harming consumers by keeping more affordable generics from getting into the market in a timely manner.”4
Nevertheless, momentum continues to build for legislative action. On October 15, 2009, the Senate Judiciary Committee approved legislation to make most “reverse payment settlements” illegal under the U.S. antitrust laws. The Senate Judiciary Committee bill, which is now awaiting full Senate debate, would ban such settlements unless the proponents of the settlement can establish that the settlement will promote competition by “clear and convincing evidence.”5 Similarly, in early November 2009, the full House of Representatives passed its version of health care legislation that contained restrictions on generic drug settlements.
There are a number of considerations that make resolution of this issue complex. These include:
Where the line is properly drawn seems increasingly lost in some of the rhetoric of the political debate. One can be assured, however, that challenges by patent owners to products alleged to infringe will not disappear, and, if settlements of these disputes are complicated or restricted, these suits are less likely to end until there is a resolution of the underlying infringement claims.
1 Prepared Statement of the Federal Trade Commission before U.S. House Subcommittee on Commerce, Trade and Consumer Protection on "How Pay-For-Delay Settlements Make Consumers and the Federal Government Pay More For Much Needed Drugs" (March 31, 2009) (Presented by Commissioner Rosch). See www.ftc.gov.
2 Testimony of Bruce Downey, CEO of Barr Pharmaceuticals. In hearings on “Paying off Generics to Prevent Competition with Brand Name Drugs,” Hearings before the Senate Judiciary Committee (January 17,2007).
3 See, e.g., In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed.Cir. 2008), cert. denied, Arkansas Carpenters Health and Welfare Fund, Paper, A.F. of L. v. Bayer AG, 129 S.Ct. 2828 (2009); Schering-Plough v. FTC, 402 F.3d 1056 (11th Cir. 2005); In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187 (2d Cir. 2006); Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 11th Cir. 2003); but see, Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003).
Foley’s Sharon Barner Named Deputy Director of the USPTO
In October 2009, Foley was pleased to announce that Sharon Barner, former chair of the firm’s Intellectual Property Department, was named the new deputy director of the USPTO.
Her appointment by Secretary of Commerce Gary Locke puts her in a leadership position to work with Under Secretary David J. Kappos and the USPTO leadership to modernize and strengthen a federal agency with more than 6,000 professional employees dealing with administration of the U.S. patent system.
“We're very proud that Sharon has accepted this position,” said Foley Chairman and CEO Ralf Böer. “Given the increasing importance of intellectual property in this knowledge-based economy and Sharon’s broad-based experience as a counselor, litigator, and leader, she is an excellent pick for the post.”
“A strong, efficient, and transparent patent system is critical to the ability of the United States to remain competitive and to maintain its role as a leading innovator,” Barner said. “I am very grateful for the opportunity to work with Secretary Locke and Dave Kappos to accomplish this goal.”
Barner had previously served as chair of Foley’s Intellectual Property Litigation Practice. A 1982 graduate of the University of Michigan Law School, Barner spent more than a quarter century as an intellectual property counselor and patent litigator, helping clients add value and protect their innovation across a broad spectrum of technologies, including biotechnology, software, and Internet inventions.
Stephen B. Maebius has replaced Barner as chair of Foley's Intellectual Property Department. Maebius is a member of the firm's Management Committee and co-chair of the Life Sciences Industry Team. Prior to becoming an attorney, he was a patent examiner at the USPTO in the Biotechnology Group. He has experience handling many types of intellectual property work for his clients, including IP diligence reviews, opinions, international portfolio management, licensing, litigation, reexaminations, patent term extensions, and interferences.