Publications / McDermott Newsletters / IP Update, Volume 5, No. 10, October 2002

IP Update, Volume 5, No. 10, October 2002

October 2002

IN THIS ISSUE

Patents / Legislation

Congress Amends Reexamination Practice in the USpto
by Kenneth Cage and Lawrence T. Cullen

The U.S. Congress amended the reexamination statute and the inter partes reexamination statute to broaden the scope of the prior art that may be used to request a reexamination and further amended the inter partes reexamination statute to allow a third-party requester to appeal to the U. S. Court of Appeals for the Federal Circuit.

Prior Art in Reexaminations

Prior to the enactment of this statute, the Federal Circuit held in In re Portola Packaging that a reexamination request could not be granted if it was solely based on prior art that was previously relied upon by the examiner in an examination of the claims because that would not raise a "substantial new question of patentability." The new legislation effectively overrules the holding of In re Portola by amending 35 U.S.C. §§303(a) and 312(a) to add the sentence, "The existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office."

Right of Appeal

Prior to the new legislation, a third-party requester in an inter partes reexamination could appeal or participate in an appeal only to the U.S. Patent and Trademark Office’s (USPTO) Board of Appeals and Interferences. Under the new legislation, a third-party requester in an inter partes reexam may appeal to or participate in an appeal to the Federal Circuit

The inter partes reexamination chapter still retains estoppel provisions that prevent a third-party requester (and its privies) from challenging the patent in a civil action or in a subsequent reexamination on the basis of any grounds (prior art) that they raised or could have raised in the inter partes reexamination. However, allowing a third-party requester to appeal to, or participate in an appeal to, the Federal Circuit may mitigate the estoppel’s harsh effects and remove a significant deterrent to electing an inter partes reexamination over an ex-parte reexamination.

Both amendments are effective as of the date of passage of the legislation and apply to "any determination of the Director of the United States Patent and Trademark Office" to initiate a reexamination proceeding that is made "on or after the date of enactment." Thus, the amendments apply to a reexamination or an inter partes reexamination that was requested prior to the enactment but declared by the USPTO (or commenced) after the date of enactment.

Patents / Litigation-Europe

The Entire Claim Rule Applies to Independent Claims Presented in Two-Part EPO Format
By Justin Hill

The English High Court has recently held that in accordance with Section 125 of the Patents Act 1977 (English domestic law), an invention is defined by the whole claim, as interpreted by the description and any drawings. The Court further held that the protocol on interpretation, Article 69 of the European Patent Convention, applies for this purpose and that a limitation has no less weight merely because it appears in the pre-characterising part of an independent claim cast in a two-part format. Storage Computer Corp. UK Limited v. Hitachi Data Systems Ltd., Case No. HC 01 No. 0101244, English High Court (August 21, 2002).

According to an approach preferred by the European patent office, independent claims are frequently cast in a two-part format, with the first part setting out features known from the closest prior art and the second part reciting novel features of the invention. The first part is called the "pre-characterising" part, and the second part is called the "characterising part." The protocol on interpretation states that claims should not be interpreted to limit the scope of protection by the strict, literal meaning of the words used in the claims, the description and drawings being employed only for the purpose of resolving ambiguity in claim language. Neither should claim language be interpreted as a mere guideline, the actual scope of protection extending to that contemplated by a patentee based on a consideration of the description and drawings by a skilled person in the art. Instead, claims are interpreted as defining a position between these extremes to provide a fair protection for the patentee and a reasonable degree of certainty for third parties.

Storage Computer brought infringement claims under two European patents against Hitachi Data Systems. The independent claims of the first patent were in the conventional two-part European format and included various limitations in the pre-characterising portion. The parties agreed that Hitachi did not "literally" infringe the claim. However, Storage Computer argued that in accordance with the protocol on interpretation of Article 69, the unsatisfied limitation should be disregarded because it did not relate to the "real" invention. In other words, Storage Computer conceded that Hitachi did not literally infringe the claim but argued that since the limitation relied upon by Hitachi for its non-infringement defense appeared only in the pre-characterising part of the claim (acknowledged to be old), rather than the characterising part of the claim that defines the invention, infringement should be found nonetheless.

The Court found the invention to be defined by the whole (both characterising and pre-characterising portions) claim when properly construed. The Court noted that in balancing the interests of the patentee and the public, it must give due weight to the fact that the specification excludes variants from that which is contemplated by the claims, and further noted that in the present case the description contained no examples of an embodiment where the limitation Storage Computer argued should be disregarded was not present. The Court also gave apparent weight to evidence that the alleged infringement (operating without the limitation in issue) performed significantly better in several key respects.

Disclosure: In the interests of full disclosure, we note that the London office of McDermott, Will & Emery represented Hitachi Data Systems in connection with the matter reported above.

Patents / Claim Construction

A Primer on Construing Sec. 112, Par. 6 Claim Elements
by Paul Devinsky

In affirming a district court decision finding two patents in suit to be "not invalid," the U.S. Court of Appeals for the Federal Circuit has presented a primer on various §112, ¶6 claim construction issues. Creo Products, Inc. v. Presstek, Inc., Case No. 01-1634, 02-1023 (Fed. Cir. Sept. 17, 2002).

First, in rejecting Creo’s argument that Presstek impermissibly broadened the scope of a §112, ¶6 claim element during a reexamination, the Federal Circuit stated that the disclosed structure corresponding to a §112, ¶6 claim element must be measured by the recited function as expressed in the claim element—not in the specification. In this instance, the Court found, in the context of an offset lithography patent, that a recited "means for offsetting," which was originally recited as performing the function of correcting imaging errors, did not require structure for correcting all four types of errors described in the patent. Thus, the corresponding disclosed structure, a computer programmed with offset correcting algorithms, was not limited to a computer programmed to correct for all four types of errors.

Second, Creo contended invalidity on the basis that the specification did not disclose adequate structure to support several §112, ¶6 claim elements. On this issue the Court instructed "[P]roper application of §112, ¶6 generally reads the claim element to embrace distinct and alternative described structures for performing the claimed function. Specifically, "disclosed structure includes that which is described in a patent specification, including any alternative structures identified. …" Accordingly, where the specification discloses different alternative embodiments, the claim is valid even if only one embodiment discloses corresponding structure.

Moreover, the Court noted that "knowledge of one skilled in the art can be called upon to flesh out a particular structural reference in the specification for the purpose of satisfying the statutory requirement of definiteness."

In the present case, where Presstek offered expert testimony that the structures disclosed in the specifications of the patents as corresponding to each of the two disputed limitations were well known in the art; the patents characterized the corresponding structures as "conventional" and "standard" in patent applications filed prior to the filing of the subject patents; and Creo did not present any evidence to rebut Presstek’s expert’s testimony that one skilled in the art would not have known what structures correspond to the disputed limitations, the Court held that Creo had "not made a sufficient showing of indefiniteness to overcome the presumption of validity. …"

Patents / Claim Construction

Step-Plus-Function Analysis Is the "Key" to the Proper Claim Construction
By Paul Devinsky

The U.S. Court of Appeals for the Federal Circuit has articulated a framework in which to construe method claims to determine if a step-plus-function limitation is present. Masco Corp. v. Mas-Hamilton Group, Inc., Case No. 01-5107 (Fed. Cir. Aug. 28, 2002).

This case is related to an earlier lawsuit between Mas-Hamilton and LaGard concerning the parent of patents in suit. In that case, the district court determined (and the Federal Circuit affirmed) that the accused device, an electronic lock that is the same as the one in issue here, did not infringe certain apparatus claims, either literally or under the doctrine of equivalents.

In the present case, the Court of Claims was asked to construe certain method claims directed to use of that electronic lock. In doing so, the court construed various method steps and held that the claimed step of "holding the lever in a position" is not a step-plus-function limitation because "holding" comprises an act that precludes §112, ¶ 6 treatment. Similarly, the court held that the step of "operably connecting the lever and the dial" is not a step-plus function limitation, because "connecting" is an act. However, the court held that the step of "transmitting a force" is a step-plus function limitation, because "transmitting" is a function, not an act.

The Federal Circuit affirmed the Court of Claims ruling regarding "holding the lever" and "operably connecting" steps. However, the Federal Circuit reversed with regard to the "transmitting" step, explaining that in the context of method claims, the use of the term "steps for" signals the drafter’s intent to invoke §112, ¶6. "However, even where the drafter employs the ‘step for’ language, §112, ¶6 is implicated … only when steps plus function without acts are present." (Emphasis in original.)

The Federal Circuit, referencing the admonition from the U.S. Supreme Court in Festo that its decision of law should not "disrupt patentees’ settled expectations regarding the scope of their claims," emphasized that "[w]here the claim drafter has not signaled his intent to invoke §112, ¶6 by using the ‘step[s] for’ language, we are unwilling to resort to that provision to constrain the scope of coverage of a claim limitation without a showing that the limitation contains nothing that can be construed as an act." The Court then went on to hold that "where a method claim does not contain the term ‘step[s] for,’ a limitation of that claim cannot be construed as a step-plus-function limitation without a showing that the limitation contains no act."

Patents / Claim Construction

Federal Circuit Imposes Plain Meaning Construction on Claim
By Brian K. Seidleck

The U.S. Court of Appeals for the Federal Circuit has held that a process for the production of ethylene oxide using a catalyst "characterizable" by a mathematical efficiency equation could be infringed by a process using the same catalyst produced in a different manner. Union Carbide Chemicals & Plastics Technology Corp. v. Shell Oil Co., Case Nos. 02-1001, -1020 (Fed. Cir. Sept. 20, 2002).

This case involves technology to improve silver catalysts for the production of ethylene oxide, a chemical used to make substances such as polyester fiber, resin and film and is produced when ethylene is reacted with oxygen. The catalyst may be improved by the addition of other metals to increase the efficiency of the reaction and to prolong the catalyst’s duration. The claim recited that certain constituents in the catalyst are "characterizable by [a recited] efficiency equation."

The district court construed the claim limitation of a catalyst "characterizable by an efficiency equation" to mean a catalyst "determined from" the recited equation. The district court acknowledged that this construction represented a departure from the plain meaning. Based upon that claim construction, a jury determined that there was no infringement.

The Federal Circuit reversed, finding that the plain meaning of "characterizable," which is "capable of being described by an efficiency equation," is the correct interpretation. The Federal Circuit examined the intrinsic evidence of record and found that it did not clearly set forth or clearly redefine the claim language so as to put one reasonably skilled in the art on notice that the patentee intended to redefine the plain meaning of the claim term, and that neither the specification nor the prosecution history justified the district court’s departure from the ordinary meaning. Since both the jury verdict of non-infringement the district court’s judgment on the asserted invalidity defenses were based on an erroneous claim construction, the Federal Circuit reversed and remanded the case for a determination in accordance with the correct claim construction.

Patents / Doctrine of Equivalents

Equivalents May Exist Even Absent a One-to-One Correspondence of Limitations to Structures
By Matthew F. Weil

The U.S. Court of Appeals for the Federal Circuit seems to have eased up a bit on its strict construction of the doctrine of equivalents, signaling a potential future battleground for the "all-elements" rule. Eagle Comtronics, Inc. v. Arrow Communication Laboratories, Inc., No. 01-1544, -1591 (Fed. Cir. Sept. 17, 2002).

Eagle Comtronics alleged infringement by a filter used to unscramble television signals. The invention relates to a self-sealing collet assembly that prevents moisture or other contaminants from entering the filter. The patent holder conceded that there was no literal infringement but argued infringement under the doctrine of equivalents because three of the limitations of the claim (the claimed seal and its adjacent structures) were met by a single structure in the accused device that used an integrated collet assembly. The district court held that prosecution history estoppel precluded a finding of equivalence, relying particularly on statements in the prosecution history emphasizing the advantages of the invention in the context of an embodiment that had a separate structure corresponding to each claim limitation.

The Federal Circuit reversed. In its view, while the patentee repeatedly "distinguished the prior art by noting that the claimed seal was located between the front cap and the rear insert body, its arguments were not based on the fact that the claimed... assembly was made of two pieces or were separable."

Having found no estoppel, the Federal Circuit went on to address an issue not taken up by the district court. Citing to its 1988 ruling in Ethicon Endo-Surgery Inc. v. United States Surgical Corp., the Court held that the "all-elements" rule was not a bar to a finding of equivalents in this case, even though a one-piece assembly performed the functions of three claim elements. "While a claim limitation cannot be totally missing from an accused device, whether or not a limitation is deemed to be vitiated must take into account that when two elements of the accused device perform a single function of the patented invention, or when separate claim limitations are combined into a single element of the accused device, a claim limitation is not necessary vitiated, and the doctrine of equivalents may still apply if the differences are insubstantial." The case was remanded to the district court for a determination of whether the differences between the defendant’s one piece or integrated collet were "insubstantially different" from a collet assembly comprised of the claimed seal sandwiched between the claimed structural elements.

Practice Note: The holding in this case appears to counter a recent trend of cases restricting the doctrine of equivalents.

Patents / Prosecution Laches

Federal Circuit Affirms USPTO Rejection Based on Prosecution Laches
By Scott D. Paul

The U.S. Court of Appeals for the Federal Circuit has now affirmed a U.S. Board of Patent Appeals and Interferences (BPAI) rejection finding that an applicant forfeited his right to a patent by failing to advance prosecution for an unreasonably long period. In re Stephen B. Bogese II, Case No. 01-1354 (Fed. Cir. Sept. 13, 2002).

This case involves technology that permits quick connections between telephone wires and electrical connectors used in computers. The application at issue claims priority back to an application filed in 1978. The original priority application was abandoned in favor of a continuation application. The continuation application reached the Federal Circuit in 1984 and again in 1987. In the 1987 decision, the Federal Circuit affirmed the BPAI’s rejection that the claims were obvious under §103. From that time forward, Bogese filed 11 file wrapper continuation applications, during which the claims were never amended, culminating in the filing of another application in 1994.

In the final rejection of that application, the examiner stated: "[T]he next continuation of this series may be rejected by invoking the equitable doctrine of laches, absent any substantive amendment to advance prosecution." In response, Bogese filed yet another file wrapper continuation application without making any amendments to the claims or arguments regarding the claims. The examiner rejected the claims under §103 and the equitable doctrine of laches. The applicant responded by amending the claims and arguing the rejections. The examiner maintained the rejection under the equitable doctrine of laches, and the BPAI affirmed the examiner’s rejection.

Bogese appealed. The Federal Circuit, relying on its recent holding in Symbol Technologies, Inc. v. Lemelson Medical, affirmed that the U.S. Patent and Trademark Office (USPTO) has authority to reject a patent application under the equitable doctrine of laches. The Federal Circuit reasoned that the USPTO should have the same power that the Federal Circuit recognized for the district courts in Symbol Technologies, and that the USPTO’s authority to sanction for undue delay should be even broader. The Federal Circuit noted that the examiner gave Bogese fair notice that the equitable doctrine of laches was going to be applied, and Bogese did not argue that the USPTO acted unreasonably.

Judge Newman issued a strong dissent on the basis that Bogese complied with the statutes regarding continuation applications. Judge Newman further argued that laches is an equitable remedy that may be invoked only by a defendant, but there is no defendant because patent examination is not litigation.

Patents / Experimental Uses

Permissible Use of Patented Technology by Nonprofit Universities and Institutions
By Christopher D. Bright

In a case brought by a former research professor against Duke University for infringing two patents relating to free electron laser technology, the U.S. Court of Appeals for the Federal Circuit held that "experimental use" lives on as a narrow defense to a claim infringement. Madey v. Duke University, Case No. 01-1567 (Fed. Cir. Oct. 3, 2002).

The Federal Circuit held that despite the U.S. Supreme Court ruling in Markman that intent plays no role in the application of the doctrine of equivalents, the defense of "experimental use" is not "inescapably" an intent inquiry and that the defense persists, "albeit in the very narrow form articulated by this court in Embrex. …" The Federal Circuit further explained that experimental use is not necessarily an affirmative defense and need be raised as such, i.e., in the answer to the complaint, in order to be preserved. Finally, the Court noted that the accused infringer must establish the defense, if available.

In this case, the Federal Circuit reversed the district court’s grant of summary judgment that Duke University’s use of the patented technology was experimental, holding that "regardless of whether a particular institution or entity is engaged in an endeavor for commercial gain, so long as the act is in furtherance of the alleged infringer’s legitimate business and is not solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry, the act does not qualify for the very narrow and strictly limited experimental use defense. Moreover, the profit or nonprofit status of the user is not determinative."

Trademarks / Lanham Act Damages

Court May Not Treble Defendant’s Profits for Lanham Act Violation
By John J. Dabney

The U.S. Court of Appeals for Federal Circuit has held that a court may not automatically treble an accounting of the defendant’s profits awarded to a prevailing plaintiff in a Lanham Act case. Thompson v. Haynes, 2002 U.S. App. LEXIS 20658 (Fed. Cir. Sept. 30, 2002).

The district court found the defendant liable for trademark infringement in violation of the Lanham Act. In awarding monetary relief, the district court added the plaintiff’s damages and the defendant’s profits and then trebled that amount pursuant to 15 U.S.C. §1117.

The Federal Circuit reversed and remanded the case to the district court to recalculate the monetary award. The Federal Circuit reasoned that while §1117 authorized the district court to treble an award of damages, it did not authorize the district court to treat an accounting of profits in the same manner. "By the terms of the statute," the Court explained, "damages are to be treated separately from profits. As for damages, the court may award up to three times actual damages, depending on the circumstances of the case. As for profits, however, the court is not authorized to award up to three times the amount proved." Instead, the Court held that for profits "the court is constrained to award the amount proved, subject only to an adjustment, up or down, where the recovery would otherwise be unjust." In all events, the Federal Circuit concluded that "[t]he district court may not, as it did here, simply lump profits together with damages and apply the same measure of enhancement to both." Accordingly, the Court remanded the case to the district court to recalculate the award and admonished it to treat the enhancement of damages and profits separately.

Practice Note:  The Federal Circuit’s decision does not mean that a district court cannot treble an accounting of the defendant’s profits awarded. It simply means that a district court may not rely on §1117 to do so. Indeed, numerous courts have awarded treble an accounting of the defendant’s profits.

Patents / Interferences

Actual Reduction Practice Requires Proof of Inventor’s Appreciation that the Invention Would Work
By Lawrence T. Cullen

The U.S. Court of Appeals for the Federal Circuit has now held that a district court must define an invention in dispute prior to determining issues relating to conception and reduction to practice, and that for an actual reduction to occur, it must be established that the inventor appreciated that the invention will work for its intended purpose. Slip Track Systems, Inc. v. Metal Lite, Inc., Case No. 01-1187 (Fed. Cir. Sept. 11, 2002).

Slip Track Systems, Inc. ("Slip Track"), owner of U.S. Patent No. 5,127,760 ("the Slip Track Patent"), instituted an interference proceedings between its patent and U.S. Patent No. 5,127,203 owned by Metal Lite, Inc. ("the Metal Lite Patent" and "Metal Lite", respectively), in district court. Both patents are directed to an earthquake resistant wallboard structure that permits a wallboard to slide vertically with respect to the supporting wall studs. The parties agreed that the claims of their respective patents interfered.

The Slip Track patent had a filing date later than that of the Metal Lite patent, thus placing the burden on Slip Track to establish priority. Slip Track presented evidence of conception prior to the Metal Lite filing date. Slip Track also contended that it reduced the invention to practice when it made a cardboard model of the invention and presented expert testimony asserting that one of skill on the art would understand that the cardboard model demonstrated that the invention, when made of wallboard, would work. Metal Lite presented no rebuttal expert, but asserted that the cardboard model could not establish a reduction to practice because it was made of a different material than that intended for use as part of the invention. The district court, applying a "clear and convincing" standard, awarded priority to Metal Lite, finding that Slip Track conceived the invention prior to Metal Lite’s filing date, but did not reduce the invention to practice.

The Federal Circuit vacated the award of priority, initially noting that a "preponderance of the evidence" standard, rather than a "clear and convincing evidence" standard, should be used for all priority determinations. The Federal Circuit also held that, prior to determining issues relating to conception and actual reduction to practice, the district court must define the invention in dispute, in a manner similar to the practice of defining a "count" in U.S. Patent and Trademark Office interference proceedings. While noting that a reduction to practice requires that the inventor prove that he constructed an embodiment or performed a process that met all the limitations of the claim, the Federal Circuit held that the invention in dispute did not require the presence of wallboard, and that the cardboard model satisfied all of the limitations needed for an actual reduction to practice. The Federal Circuit pointed out that neither a lack of testing nor a change in materials necessarily defeats a showing of an actual reduction to practice, explaining that testing and the use of the different materials are simply relevant factors to consider in making a determination as to whether the inventor could have determined that the invention would work for its intended purpose. The case was remanded to the district court for fact-finding as to whether the inventor determined the invention would work for its intended purpose based on the cardboard model.

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