On Friday, May 23, 2014, right before the long holiday weekend, news began to circulate that Chief Judge Rader had announced that he would be stepping down as Chief Judge of the United States Court of Appeals for the Federal Circuit.
Immediately, the Wall Street Journal and Law.com began speculating that Judge Rader’s decision to step down was tied to an email endorsing attorney Edward Reines, a patent lawyer at Weil Gotshal & Manges LLP and president of the Federal Circuit Advisory Council. This speculation picked up when Rader released a letter (see below) to the public addressed to the other members of the Federal Circuit apologizing for the appearance of impropriety associated with his email to Reines (whom he did not name directly), which necessitated his several recent recusals.
I find myself speechless, which doesn’t happen often. On the one hand, those that know Judge Rader know that he is extremely strong-willed and always eager for a vigorous substantive debate. The thought that any familiarity with someone who appears before him would lead to any advantage strikes me as thoroughly nonsensical. On the other hand, ethics for lawyers and even more so for judges is not about truth, but rather appearances.
In Intouch Technologies, Inc. v. VGo Communications, Inc., the patent dispute was about robots. InTouch and VGo both manufacture remote telepresence robot systems. In 2012, InTouch filed a First Amended Complaint in the Central District of California alleging that VGo’s remote telepresence robot system infringed several of its patents, including U.S. Patent Nos. 6,346,962 (“the ’962 patent”), 6,925,357 (“the ’357 patent”), and 7,593,030 (“the ’030 patent”). The asserted patents generally relate to remote telepresence technology regarding camera movement, arbitrating control of a robot, and a call back mechanism to notify a previously denied user that the robot is now available. VGo counterclaimed for declaratory judgment of non-infringement and invalidity.
After a jury trial, the jury returned a verdict of non-infringement of all three asserted patents. It also found claim 79 of the ’357 patent and claim 1 of the ’030 patent invalid based on obviousness. The district court subsequently denied motions for judgment as a matter of law and a new trial regarding non-infringement, invalidity, and evidentiary rulings.
On February 12, 2014, the Federal Circuit issued its decision in Solvay S.A. v. Honeywell International. In this case, Solvay S.A. appealed to the United States Court of Appeals for the Federal Circuit from a judgment of the United States District Court for the District of Delaware in favor of defendant Honeywell International. The district court held that asserted claim 1 of Solvay’s U.S. Patent No. 6,730,817 was invalid under pre-AIA 35 U.S.C. § 102(g)(2). The question at the heart of this appeal, as dictated by the specific factual scenario, was whether an invention conceived by a foreign inventor and reduced to practice in the United States qualifies as prior art under § 102(g)(2). This was the operative question because engineers working at the Russian Scientific Center for Applied Chemistry (“RSCAC”) first conceived the invention, which was reduced to practice in this country by Honeywell personnel pursuant to the RSCAC’s instructions, and they did not abandon, suppress, or conceal it.
At trial, Honeywell argued that the invention was conceived by Russian inventors outside the United States and reduced to practice in the United States by Honeywell personnel following the Russian inventors’ instructions before the ’817 patent’s priority date. As a result, Honeywell argued, the invention qualifies as §102(g)(2) prior art. A jury ultimately determined that, as required by § 102(g)(2), the Russian Scientific Center for Applied Chemistry did disclose the invention of claim 1 in the 1994 Russian patent application, which means that they did not abandon, suppress, or conceal the invention. Based on the jury verdict, the district court entered judgment for Honeywell, finding asserted claim 1 invalid under § 102(g)(2).
Obviousness is where the rubber meets the road in terms of patentability, and it seems that the state of the law of obviousness is anything but clear. It has always been difficult to explain the law of obviousness to inventors, business executives and law students alike. Since the United States Supreme Court issued its decision in KSR v. Teleflex, it has become even more difficult to provide a simple, coherent articulation of the law of obviousness that is at all intellectually satisfying. That is in no small part due to the fact that the determination about whether an invention is obvious is now completely subjective.
If you look at the Federal Circuit cases, it seems that there is a lot of post hoc reasoning that simply justifies a conclusion already formed. De novo review of all the facts allows the Federal Circuit to be a super-panel that can simply supplant its own beliefs for the considered beliefs of patent examiners, the Board, a District Court Judge or even a jury. While conceptually it may seem like a good idea to have a fresh look by a reviewing court, this fresh look at all things leads to no predictability, and obviousness law in utter disarray.
In 1998, the United States Court of Appeals for the Federal Circuit, in State Street Bank & Trust Co. v. Signature Financial Group, Inc., did away with what had previously been come to be known as the business method exception to patentability. The Federal Circuit, per Judge Giles Sutherland Rich (shown left), pointed out that the business method exception had never been invoked by either the Federal Circuit or its predecessor court, the CCPA. Judge Rich explained that “[s]ince the 1952 Patent Act, business methods have been, and should have been, subject to the same legal requirements for patentability as applied to any other process or method.”
Although the United States Supreme Court did away with that test when it issued its decision in Bilski v. Kappos, it is still nevertheless illustrative and the best test that is out there. Simply stated, in order to have a patentable business method, it is necessary for the invention to accomplish some practical application. In other words, in order for a business method to be patent eligible, it must produce a “useful, concrete and tangible result.” Judge Rich was correct to point this out and the Supreme Court has made a horrible mess of the law as it applies to business methods and computer-implemented innovations because it fails to understand what Judge Rich really meant.
If you really understand what Judge Rich meant by “useful, concrete and tangible result,” you come to the inescapable conclusion that it is the appropriate test. Indeed, those drafting patent application would do well to really target the description of the invention to satisfy the test.