During late 2009 – 2010, we saw a significant number of remarkable decisions from the Supreme Court and the Federal Circuit that impacted the patent community.  From Bilski v. Kappos, to Forest Group v. Bon Tool, to Wyeth v. Kappos, to Ariad Pharmaceuticals v. Eli Lilly, just to name a few.  The following article discussing these decisions was written by Robert Neuner, Partner with Hoffman & Baron and presenter at PLI’s upcoming 5th Annual Patent Law Institute.  Here is an excerpt and a link to the article.

This paper discusses a range of cases decided in late 2009 and 2010 that reflect the current state of the law on issues with which each of us should have at least some familiarity.  Having decided Bilski, the Supreme Court has one again exercised its oversight over the Federal Circuit.  It will review three Federal Circuit decisions concerning the Bayh-Dole Act and the proofs necessary to establish (a) inducement of infringement and (b) patent invalidity.  There is also the blockbuster Myriad case now wending its way to a decision by the Federal Circuit.

Test for the Anticipation of Design Patents

International Seaway Trading Corp. v. Walgreens Corp.

93 USPQ 2d 1001 (Fed. Cir. 2009)

The test for design patent infringement is the impact the overall appearance of the patented and accused designs has on the ordinary observer.  It follows necessarily that the same ordinary observer test should govern the issue of invalidity due to anticipation.  The test for invalidity due to obviousness remains whether a designer of ordinary skill in the art would have found the patented design, as a whole, obvious in light of the prior art.

False Marking

Forest Group Inc. v. Bon Tool Co.

93 USPQ 2d 1097 (Fed. Cir. 2009)

The reader is no doubt familiar with the holding in this case that the plain language of 35 U.S.C. §292 requires courts to impose up to a $500.00 penalty for false marking on a per article basis.  The $500.00 is the upper limit.

The law of false marking requires improper marking with the intent to deceive the public.  In this case, the false marker believed that the marked products were covered by the patent-in-suit based on the advice the patentees had received from the experienced patent lawyer who wrote the claims.  Also, neither patentee had a strong academic background or an in-depth appreciation of patent law.  Additionally, one of the patentees was not a native English speaker.  On these facts, no liability was found.

Importance of Pre-Verdict JMOL Motions

i & i L.P. v. Microsoft Corp.

93 USPQ 2d 1161 (Fed. Cir. 2009)

Rule 50(a) permits a party to move for judgment as a matter of law on any issue as to which the other party has been fully heard.  While the motion is permissive, the consequences of failing to move on an issue are profound.  Absent explicit fact finding by the jury, there is a conclusive assumption that the jury resolved all the underlying facts in the prevailing party’s favor.  In patent cases, such facts include, inter alia, the scope and content of the prior art, the differences between the prior art and the claims, the motivation vel nonto modify the prior art, the level of ordinary skill in the art, and the secondary factors of nonobviousness.

Here, Microsoft never moved for JMOL on the damages issue.  The patentee’s expert had testified that he chose an appropriate bench-mark in order to value Microsoft’s use of the claimed invention at the time of the hypothetical negotiations.  The expert chose a product called XMetaL as his benchmark, which had a retail price of $499.  To calculate the licensing fee, the expert multiplied the price of XMetaL by Microsoft’s profit margin (76.6%), based on his assumption that any licensing fee would be a fraction of the profits.  He then applied the 25-percent rule to this number, which assumes the patentee will keep 25% of the profits from any infringing sales.  This resulted in a baseline royalty rate of $96.

To support his royalty calculation, the expert adjusted the baseline royalty rate using the factors set out in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970).  While disputed on appeal, the Federal Circuit concluded that it was not at liberty to decide whether there was a sufficient evidentiality basis for the damages award.

The Supreme Court has agreed to review this case, but not with respect to the damages issue.  It will decide whether clear and convincing evidence is the quantum of proof required to invalidate a patent where the prior art had not been considered by the PTO.

Patent Term Adjustment

Wyeth v. Kappos

93 USPQ 2d 1257 (Fed. Cir. 2010)

This case concerned the proper construction of 35 U.S.C. §154(b) which provides:

(A) Guarantee of prompt Patent and Trademark Office responses.  –Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to [meet deadlines specified in clauses (i)-(iv)]…

the term of the patent shall be extended 1 day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

(B) Guarantee of no more than 3-year application pendency.  –Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States…

the term of the patent shall be extended 1 day for each day after the end of that 3-year period until the patent is issued.

(C) Guarantee or adjustments for delays due to interferences, secrecy orders, and appeals. –Subject to the limitations under paragraph (2)… the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.

Section 154 guarantees patentees patent term adjustments for three types of delays, “A”, “B”, and “C” in the issuance of a patent.  An A delay results from the failure of the Patent and Trademark Office to meet certain examination deadlines, i.e., the issuance of a first response to a filed application, a B delay results from the PTO’s failure to issue a patent within 3 years from actual filing date of the application in the United States, and a C delay results from interference proceedings, secrecy orders, and appeals.  Delays attributable to the patentee’s failure to engage in reasonable efforts to conclude prosecution count against the A, B, and C delays.

Under its rules, the PTO used either the greater of the A delay or the B delay to determine the approximate adjustment, but never combined the two.  As the Federal Circuit explained,

Reading this framework into sections 154(b)’s limitation provision makes it clear that no “overlap” happens unless the violations occur at the same time.  Each “period of delay” has its own discrete time span whose boundaries are defined in section 154(b)(1).  That is, each has a start and an end.  Before the three-year mark, no “overlap” can transpire between the A delay and the B delay because the B delay has yet to begin or take any effect.  If an A delay occurs on one day and a B delay occurs on a different day, those two days do not “overlap” under section 154(b)(2).

Terminal Disclaimers and Section 121

Boehringer Ingelheim International GmbH v. Barr Laboratories, Inc.

93 USPQ 2d 1417 (Fed. Cir. 2010)

In this case, the Federal Circuit referred to the decision in Perricone v. Medicis Pharm. Corp., 432 F.3d 1368, 1375 (Fed. Cir. 2005) for the proposition that there is no “prohibition on post-issuance terminal disclaimers” and that “[a] terminal disclaimer can indeed supplant a finding of invalidity for double patenting”.

The question presented in Boehringer is whether a retroactive terminal disclaimer – i.e., a terminal disclaimer that is filed after the expiration date of an earlier commonly owned patent – is effective to overcome obviousness-type double patenting.  The court said “no”.  It said “no” because by failing to terminally disclaim a later patent prior to the expiration of an earlier related patent, a patentee enjoys an unjustified advantage – a purported time extension of the right to exclude from the due date of the expiration of the earlier patent.  The patentee cannot undo this unjustified time wise extension by retroactively disclaiming the term of the later patent because it has already enjoyed rights that it seeks to disclaim.  Permitting such a retroactive terminal disclaimer would be inconsistent with “[t]he fundamental reason” for obviousness-type double patenting, namely, “to prevent unjustified time wise extension of the right to exclude.”  Van Ornum, 686 F.2d at 943-44 (emphasis removed).  The court thus concurred that a terminal disclaimer filed after the expiration of the earlier patent over which the claims have been found obvious cannot cure obviousness-type double patenting.

As to the safe harbor provision of § 121, it may apply to a divisional of a divisional of the application in which a restriction requirement was entered.  The court noted that this holding is fully consistent with the purpose  of § 121 – namely, to prevent a patentee who divides an application in which a restriction requirement has been made from risking invalidity due to double patenting.

Click here for the remainder of The Current State of Patent Law .

Tags: Anticipation of Design Patents, Bayh-Dole Act, Bilski v. Kappos, False Marking, Forest Group Inc. v. Bon Tool Co., i & i L.P. v. Microsoft Corp., International Seaway Trading Corp. v. Walgreens Corp., JMOL motions, patent term adjustment, Wyeth v. Kappos

This entry was posted on Monday, January 31st, 2011 at 16:10 and is filed under Bilski, False Marking, Federal Circuit Cases, inequitable conduct, Patent Damages, Patent Issues, Patent Law Institute, posts, Supreme Court Cases. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.