No foreseeability bar in the doctrine of equivalents, says the US Federal Circuit

Do you foresee a bright future
for the doctrine of equivalents?

Last week, besides discussing the proper standard for reviewing a district court’s claim interpretation (see David's post here), the Court of Appeals for the Federal Circuit also examined the doctrine of equivalents, evaluating whether foreseeability of an equivalent at the time of patenting prevented its use. In Ring & Pinion Services Inc. v ARB Corporation Ltd., the court held that 'foreseeability does not create a bar to the application of the doctrine of equivalents', in light of the copious case law according to which the concept of 'known interchangeability' supports a finding of infringement under this doctrine. The judges also clarified the relationship between the doctrine of equivalents and claim vitiation, reversing the district court's decision on the matter.

The case originated from a declaratory judgment action for non-infringement filed by Ring & Pinion Services against ARB Corporation, before the District Court for the Western District of Washington. The plaintiff sought declaratory judgment that one of its products did not infringe US Patent No. 5,591,098, which claimed an improved automobile locking differential. The parties agreed that the plaintiff's product met every limitation of Claim 1 of the '098 patent, except the limitation concerning 'cylinder means formed in said differential carrier and housing an actuator position[ed] to cause movement of said locking means relative to said carrier'. They also acknowledged that the product included an 'equivalent' cylinder, which would have been foreseeable to a person of ordinary skill in the art at the time of patent filing. In light of these considerations, the parties stipulated that the outcome of the case depended upon the resolution of a single legal issue, namely whether foreseeability precluded the application of the doctrine of equivalents. The district court provided a negative answer to this question, holding that foreseeability of an equivalent at the time of application did not prevent use of the related doctrine. The court, however, ruled that a finding of infringement under the doctrine of equivalents would have vitiated the claim limitation. Thus, it granted summary judgment of non-infringement to the plaintiff.

The Federal Circuit clarified that '[t]here is not, nor has there ever been, a foreseeability limitation on the application of the doctrine of equivalents'. In this perspective, the panel recited previous case law according to which 'known interchangeability' is a key factor to be taken into account when establishing infringement under the doctrine of equivalents analysis (see, inter alia, Abraxis Bioscience Inc. v Mayne Pharma Inc. and Interactive Pictures Corp. v Infinite Pictures Inc.). It also rejected Ring & Pinion's reliance on Sage Products Inc. v Devon Industries Inc. and on Chiuminatta Concrete Concepts Inc. v Cardinal Industries Inc.. With regard to the first case, the court observed that it merely recognized the possibility that a finding of infringement under the doctrine of equivalents may vitiate a claim limitation. On the second case, the judges clarified that:

In Chiuminatta, we explained that there are two differences between the equivalence determination made for literal infringement purposes under § 112(f) and a doctrine of equivalents determination for the same limitation: timing and function. Equivalence under section 112(f) is evaluated at the time of issuance [Al-Site Corp. v VSI International Inc.]. Equivalence under the doctrine of equivalents, in contrast, is evaluated at the time of infringement. Hence, an after-arising technology, a technology that did not exist at the time of patenting, can be found to be an equivalent under the doctrine of equivalents even though it cannot be an equivalent under the literal infringement analysis of § 112(f).

The second difference between literal infringement and doctrine of equivalents infringement under § 112(f) relates to the function of the element. For literal infringement, the accused structures must perform the function recited in the claim (identical function). The doctrine of equivalents covers accused structures that perform substantially the same function in substantially the same way with substantially the same results. The doctrine of equivalents thus covers structures with equivalent, but not identical, functions. This is true whether the accused equivalent was known at the time of patenting or later arising.

The appellate court, however, did not uphold the judgment of non-infringement rendered at first instance, noting that claim vitiation 'is not an exception to the doctrine of equivalents, but instead a legal determination that the evidence is such that no reasonable jury could determine two elements to be equivalent' (Deere & Co. v Bush Hog LLC). The panel noted that, in the case in hand, the parties had jointly stipulated to equivalence, agreeing that there were no remaining issues of fact. Thus, it concluded that the district court should have granted summary judgment of infringement to the patentee, in light of its findings on the applicability of the doctrine of equivalents, and of the parties' joint stipulation.

No, you can't be served with any more pleadings, judge tells defendants

Last Friday Mr Justice Mann, sitting in the Patents Court, England and Wales, gave a ruling in a hearing relating to the service of further pleadings in a patent infringement action. The case, Electromagnetic Geoservices ASA v Petroleum Geo-Services ASA & others, is not reported on BAILII but a note has been published on the subscription-based Lawtel service.

The patent in this action, which related to electromagnetic surveying for oil, had already been the subject of a previous challenge to its validity. Electromagnetic Geoservices ASA (EGA) claimed that the defendants had infringed the patent. The first two defendants had not served their defences and sought an extension of time. The third defendant had to be served out of the jurisdiction and that had not yet been achieved. According to the defendants, one of the reasons why the defences had not been filed was the uncertain nature of the case on infringement. Accordingly the defendants sought documentation in relation to the previous proceedings, as well as further particulars of the mode of operation which was alleged to infringe. Correspondence between the parties culminated in two letters from EGA's solicitors which gave particulars as to the manner in which the defendants' operations were alleged to infringe the patent, with the caveat that the position might be reconsidered following disclosure and in the light of any further information arising.

In these proceedings the defendants argued that EGA' case on infringement should be embodied in a pleading in order to achieve clarity and so that the defendants (i) could see whether there was a reasonably arguable case, (ii) could assess the shape of the action and formulate their own case, and (iii) could prepare their product and process description (PPD).

Mann J refused the application on the basis that, in the circumstances, the letters from EGA's solicitors were likely to be treated in the proceedings as though they were a pleading. In his view:

* since the defendants' operations took place on ships in the middle of the sea, EGA was relying on publicly available materials in order to give the best particulars it could of the allegedly infringing acts.

* what was requested by the defendant was something that was not usually done in patent cases and which appeared to be unnecessary in the circumstances. The letters from EGA's solicitors appeared to be full, frank and comprehensive. While the case set out in them was subject to variation after disclosure, that would be the normal position with a pleading.

* the defendants were sufficiently tied down to their case in the correspondence, and it would be a waste of time and costs to require a pleading -- there being nothing to be gained from the small degree of additional fixing which would result from a pleading.

* if the defendants wanted to apply to strike out the claim, they had the information on which to make a decision.

* if a pleading gave better particulars, the defendants might even be slightly worse off from that point of view and EGA would not be prevented from adducing further information to meet any strike-out application. 

* it was better not to depart from the usual course in patent actions which turned on issues of construction.

At this distance from the case and with no further facts, it's difficult to know whether the defendants were trying a crafty ploy or genuinely seeking clarification of EGA's claims. Either way, the court appears to have taken an approach which is both cautious and pragmatic.

CAFC Splits Sharply Over Deference To District Courts on Markman Rulings

In a February 20 en banc decision, the U.S. Court of Appeals for the Federal Circuit considered the proper standard for reviewing a district court’s claim interpretation. The court ruled 6-4 to retain its controversial de novo review standard, which considers claim construction afresh without deference to the district court’s ruling. In a strongly worded dissent, Justice O’Malley, a former district judge, criticized the majority. Lighting Ballast Control LLC v. Philips Electron. North Am. Corp., No. 2012-1014 (Feb. 21, 2014) (en banc).

A district court’s Markman hearing and subsequent claim construction order is a pivotal event in most patent infringement actions. One perplexing issue has been the proper standard for reviewing the claim construction ruling on appeal. Generally speaking, appeals courts review legal rulings under a de novo standard, but review factual findings on a deferential “substantial evidence” standard. The deference afforded factual findings reflects the district court’s unique position to evaluate witness testimony and other evidence at the trial level.

Markman rulings do not fall neatly into one category. In the original Markman decision, the Supreme Court ruled that district judges are responsible for construing claim language, but called the task a “mongrel practice” of law and fact with “evidentiary underpinnings[.]” In Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), the court ruled that claim construction ruling are subject to de novo review. That decision has drawn heated criticism, both from commentators and some federal circuit judges.

In Friday’s 6-4 decision, the Federal Circuit put the arguments against de novo review on full display. The majority decision, written by Circuit Judge Pauline Newman, considered three possible approaches to the issue. First, the court could retain the de novo standard it has maintained since Cybor. Second, it could adopt a hybrid standard, reviewing findings based on so-called intrinsic evidence (such as the patent specification and prosecution history) de novo, but granting deference to the district court’s consideration of extrinsic evidence, such as expert testimony at the Markman hearing. Third, it could review the entire claim construction decision under the deferential ‘substantial evidence” standard.

Newman concluded that the court should retain the de novo standard. The principal reason for that conclusion was adherence to stare decisis, and the absence of any compelling justification for adopting a different standard: 

Stare decisis is of “fundamental importance to the rule of law.” The doctrine of stare decisis enhances predictability and efficiency in dispute resolution and legal proceedings, by enabling and fostering reliance on prior rulings. By providing stability of law that has been decided, stare decisis is the foundation of a nation governed by law. The Supreme Court has said: “we will not depart from the doctrine of stare decisis without some compelling justification.” 

Slip op. at 17 (citations omitted). Judge Newman then concluded that such a compelling justification to overturn the Cybor rule does not exist: 

Applying these premises, we have reviewed the arguments for changing the Cybor procedure of de novo review of claim construction. First, we have looked for post-Cybor developments, whether from the Supreme Court, from Congress, or from this court, that may have undermined the reasoning of Cybor. None has been found, or brought to our attention. There has been no legislative adjustment of the Cybor procedure, despite extensive patent-related legislative activity during the entire period of Cybor’s existence. 

 We have looked for some demonstration that Cybor has proved unworkable. No proponent of change has shown that de novo review of claim construction is unworkable — nor could they, after fifteen years of experience of ready workability. Nor has anyone shown that Cybor has increased the burdens on the courts or litigants conducting claim construction. 

 To the contrary, reversing Cybor or modifying it to introduce a fact/law distinction has a high potential to diminish workability and increase burdens by adding a new and uncertain inquiry, not only on appeal but also in the trial tribunal. No consensus has emerged as to how to adjust Cybor to resolve its perceived flaws. Despite probing questioning at the en banc hearing, and despite the extensive amicus curiae participation, there is no agreement on a preferable new mechanism of appellate review of claim construction; there is no analysis of how deference would be applied to the diversity of old and new technologies and modes of claiming, no clear exposition of fact or law as could be applicable to the millions of unexpired patents, each on a different new technologic advance. As will be discussed, no one, including the dissent, proposes a workable replacement standard for Cybor, no workable delineation of what constitutes fact and what constitutes law. 

 Disentangling arguably factual aspects, some in dispute and some not, some the subject of expert or other testimony and some not, some elaborated by documentary evidence and some not, some construed by the district court and some not, some related to issues to be decided by a jury and some not—and further disentangling factual aspects from the application of law to fact—is a task ripe for lengthy peripheral litigation. We are not persuaded that we ought to overturn the en banc Cybor decision and replace its clear de novo standard with an amorphous standard that places a new, cumbersome, and costly process at the gate, to engender threshold litigation over whether there was or was not a fact at issue. The principles of stare decisis counsel against such an unnecessary change. 

Slip op. at 20-22. Newman also concluded that the de novo rules as critical to maintaining consistency and uniform interpretation of patents across the nation.

In a dissent, Circuit Judge Kathleen M. O’Malley, writing for three other judges including Chief Judge Rader, criticized the Cybor approach. She pointed out that the Federal Circuit judges have regularly objected to the standard, including Judge Newman and other judges joining the majority. She tweaked those judges, commenting that, “In fact, it appears that some members of today’s 6–4 majority believe the pull of stare decisis is so strong that it prevents them from acting on their long-term convictions that Cybor was wrongly decided. No reasoned application of stare decisis principles supports that conclusion." O’Malley, dissent at 2-3.

The dissent’s fundamental complaint about the Cybor rule is that it ignores the reality of the claim construction process, which – as the Federal Circuit in Phillips acknowledged – involves the consideration and weighing of testimony and evidence by the district court. O’Malley stressed that the Cybor rule directly violates the Federal Rules of Civil Procedure: 

Stare decisis also must give way because, by refusing to acknowledge the factual component of claim construction, Cybor contravenes the clear directives of Federal Rule of Civil Procedure 52(a)(6). When a district court makes findings of fact—as claim construction sometimes requires — Rule 52(a)(6) provides clear instructions to this court: “Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous . . . .” The rule is clear on its face, and decisions interpreting it show that it makes no exception with regard to fact-finding in the claim construction context. As the Supreme Court has observed, “Rule 52(a) broadly requires that findings of fact not be set aside unless clearly erroneous. It does not make exceptions or purport to exclude certain categories of factual findings from the obligation of a court of appeals to accept a district court’s findings unless clearly erroneous.” Thus, there is direct conflict between Cybor—which expressly calls for de novo review of “any allegedly fact-based questions relating to claim construction,”— and Rule 52(a)(6) — which requires deference to all fact-findings that are not clearly erroneous. 

O’Malley, dissent at 23-24 (citations omitted).

Given the critical nature of claim construction in patent litigation, the controversy over the proper standard is not likely to disappear. The majority and dissenting opinions may tee the issue up for consideration by the Supreme Court. The full opinions, plus a concurring decision by Judge Lourie, are HERE.

Denmark and the UPC: breaking news

If Denmark's national aquarium looks like this, can
anyone imagine what its UPC building might look like?

From our friend George Brock-Nannestad comes news, fresh from Danish Radio station P1, that the current two-party Government in Denmark has entered into a political agreement with the parties outside the government Venstre, De Konservative, Liberal Alliance and SF (who broke away from the Government a couple of weeks ago) that a local department of the Unified Patent Court UPC) should be created in Copenhagen. There had previously been a proposal to create a Nordic local department. George adds:

Before getting further details about the agreement I consider this an attempt to make sure that the proposal for Danish ratification does not fall at the referendum that is to be made on the same date as the elections for the European Parliament on 25 May. The public debate has been very tiny, and it has been driven by the parties Dansk Folkeparti and Enhedslisten, who believe that how the UPC will actually function in practice is too uncertain to accept from the outset. 

An attempt to support ratification by the Government was tried a couple of weeks ago in newspaper debate, but it was completely overshadowed by the disruption of the Government. My own view is that there has been far too little information on the flood of patents that will submerge Danish SMEs: 10 times as many per year as the Danish validations of European patents as we know it.

White House Announces Array Of Programs To Fight Trolls, Improve Patent Quality

In his State of the Union address last month, President Obama promised further action to improve the U.S. patent system, stating (to significant applause) that the government should "pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation."  While more than a dozen patent-related bills percolate in the Congress, Obama has taken some steps to advance his goals through executive actions.

On February 20, the White House announced a series of programs to combat the patent troll problem and to improved the quality of patents generally. Three new programs were announced: (1) new procedures to allow examiner to take advantage of "crowd-sourced" prior art by making it easier for members of the public to bring prior art to the attention of the office; (2) better training for examiners in areas of rapidly-advancing technology; and (3) expanding the USPTO's patent pro bono initiative to cover low-income inventors in all 50 states.

The Whites House also reported on its progress on initiatives announced earlier.

• The USPTO has proposed a new rules requiring patentees to report the "attributable owners" of patents, making it harder for trolls to operate anonymously through shell companies. Those rules are in the public comment stage.
• A better training program for USPTO examiners, focusing on improving claims; 
• A new "toolkit" on the USPTO website proving small businesses with advice on what to do if sued by a patent troll. You can access a beta version of that toolkit HERE.
• Better outreach to stakeholders and expanding the Edison Scholars program to enlist more academics and researchers to study the NPE problem. 
• New procedures relating to enforcing exclusion orders from the ITC.

You can download a detailed Factsheet about these efforts from the White House website HERE. Although these steps seem incremental, and largely symbolic, they do suggest an effort to keep some momentum behind legislative patent reform efforts.

Mobile Devices in Oral Proceedings Before the EPO Boards of Appeal

If you ever wanted to call your psychiatrist in the course of oral proceedings before the EPO boards of appeal but did not dare to do so, you may be relieved by taking note of the following notice published Wim van der Eijk Vice-President DG3:

In oral proceedings before the Boards of Appeal under Article 116 EPC the parties and their representatives are allowed to have with them and to use portable computers such as laptops, tablets or other electronic devices provided that their use does not create any nuisance or disturbance. Where, for example, the use of an electronic device disturbs the oral proceedings, the chairperson may decide to forbid its use.

This blogger wonders whether the gender-neutral word "chairperson" will become a trend in our business. Actually, in the EPO context the word chairperson has recently appeared in the rules of procedure of the EPO select committee for implementing the tasks in connection with the patent with unitary effect. The first decision of the select committee was, however, singed by a chairman. The agreement on the UPC is not quite consistent in this point. According to Art. 12(5) of the agreement,
the Administrative Committee shall elect a chairperson from among its members years, whereas Articles 9, 10 and 18 refer to a chairman of the Administrative Committee.

It appears that we all will have to get used to this.

New Name and New Invalidity Procedure for German Registered Designs

Cornelia Rudloff-Schäffer - a friend
of handy names - at least for IP rights

The German IP right formerly known as Geschmacksmuster is a fairly powerful tool but has hitherto lingered in a niche existence. One of the reasons might have been that its name was difficult to pronounce for foreign applicants and even for the German public not very telling. According to the press release:

From 1 January 2014, designs - previously named "Geschmacksmuster" in German - will be called "eingetragenes Design" - meaning "registered design" - in Germany. The Act Modernising Designs Law and Revising Provisions for Notifications on Exhibition Protection (Gesetz zur Modernisierung des Geschmacksmusterrechts sowie zur Änderung der Regelungen über die Bekanntmachungen zum Ausstellungsschutz) of 10 October 2013 (Federal Law Gazette I 2013, no. 62, p. 3799) has also implemented other changes facilitating procedures for designs.

"With the renaming, we accommodate language developments," says Cornelia Rudloff-Schäffer, President of the DPMA. "The IP right's subject matter will become easier to understand, referring to both form and appearance of a product."

Invalidity proceedings for registered designs will also be introduced. The designs unit in Jena can declare a registration invalid if a respective application has been submitted. It can be based on absolute or relative grounds for invalidity. In civil proceedings, invalidity of a registered design can only be achieved by putting forward a counterclaim before the designs courts of the Länder from 1 January 2014.

Assessing the new European patent package: Newport, here we come!

Not everything to do with the new European patent package revolves round London and other major conurbations in which patent litigators tend to congregate -- and here's the proof.  "The Unitary Patent and Unified Patent Court: An Assessment and Outlook”, a seminar talk by Dr Thomas Jaeger, will take place at the University of South Wales (Newport City Campus) on 17 July 2014, 10.30 am to 12 noon. Attendance is free of charge, but you still have to register by emailing Ana Ramalho at ana.ramalho@southwales.ac.uk

Here's an abstract of the talk, in case you're interested: 

“The EU’s patent package enacted in 2012/13 ended a decade-long dispute whether an EU patent was needed and how cross-border patent enforcement could be made more effective. One would expect that the outcome of such a long debate should incorporate an optimal system. However, the contrary seems to be the case: Compromises successively introduced for legal and political reasons significantly altered the shape of the package as compared to the original plans. The substantive patent now envisaged is a strangely hybrid and, upon closer examination, deficient legal title. Likewise, the patent court as it is now designed neither seems to remedy key deficits of current cross-border enforcement, nor does it provide sufficient legal certainty and equal opportunities for potential users.

This lecture seeks to inform about the current state of affairs for the package. It will start with a brief outline of the substantive and structural elements of the patent package, then venture into a by a discussion of its principal shortcomings and close with an outlook and assessment on the pitfalls still ahead until the package may become operable”.

Inventions using publicly available stem cell lines involving destruction of human embryos found unpatentable under the EPC

In a decision of 4 February 2014, the Board of Appeal of the European Patent Office examined the patentability of inventions which make use of publicly available human embryonic stem (HES) cell lines, initially derived by a process resulting in the destruction of the human embryos. The Board ruled that, under the framework of Article 53(a) and Rule 28(c) of the European Patent Convention, it is necessary to evaluate all the steps which constitute a necessary precondition for carrying out the claimed inventions. Therefore, the panel found such inventions to be unpatentable, even if they do not directly involve the destruction of human embryos, which instead takes place at a preceding, but necessary, stage. The decision shares the same perspective adopted by the EU Court of Justice in case C-34/10 (Brüstle v Greenpeace).

The appeal concerned the rejection decision taken by the examining division against the European patent application No. 03751238.1. The invention essentially claimed methods of maintaining human embryonic stem cells in an undifferentiated state through the use, inter alia, of human foreskin cells. The examining division, noting that the human embryonic stem cell lines referred to in the application were not publicly available at the date of filing, had concluded that the only possibility of putting the claimed methods into practice implied the destruction of human embryos. Therefore, it had found the invention to be unpatentable under Article 53(a) and Rule 28(c) EPC. Challenging the decision of the examining division, the appellant had argued that, while the claimed methods did not refer to any specific deposited cell line, several suitable cell lines were indeed publicly available before the priority date.

The Board first looked at the technical teaching of the patent application, following the interpretation of Rule 28(c) given by the Enlarged Board of Appeal in decision G 2/06. According to this decision, ‘[w]hat needs to be looked at is not just the explicit wording of the claims but the technical teaching of the application as a whole as to how the invention is to be performed’. The Board found that the patent application disclosed several ways of obtaining HES cells: a first embodiment described their isolation from human blastocysts, a procedure requiring the destruction of human embryos and thus unpatentable; a second method consisted in the use of commercially available HES cells.

Evaluating this second embodiment, the Board noted that, despite the additional documents submitted by the inventor with the appeal, ‘there remain serious doubts with regard to the public availability of HES cell lines at the claimed priority date’. At the same time, however, the Board observed that all the cell lines mentioned by the appellant were initially derived from the inner cell mass of blastocyst stage human embryos, through methods that resulted in the destruction of the embryos. Thus, the panel focused on a more fundamental issue, which it described as follows:

[W]hether or not the accomplishment of the invention by relying on the use of an established HES cell line, thus without de novo production of HES cells by destroying a human embryo, would nevertheless be in conflict with the requirements of Article 53(a) EPC if said HES cell line has been originally produced by a method involving the destruction of an human embryo.

To find the answer to this question, the Board turned again to decision G 2/06. In that case, the appellant had argued that an interpretation of Rule 28(c) requiring consideration of all the steps preceding an invention would ‘go much too far’. The Enlarged Board of Appeal, however, had dismissed the argument as not relevant, without distinguishing between steps carried out by the inventor or by a third party, nor between steps directly or remotely related to the invention. The Board took the view that decision G 2/06 should be interpreted ‘as meaning that for the purpose of Rule 28(c) EPC, all steps preceding the claimed use of HES cells which are a necessary precondition for carrying out the claimed invention, have to be considered’.

Applying this perspective to the present case, the panel found that it had to take into account all the steps necessary to establish the commercially available HES cell lines described by the second embodiment, including the step resulting in the destruction of human embryos. Therefore, it concluded that the second embodiment of the patent application was excluded from patentability, even if the cell lines therein described were not created de novo, but at a point in time preceding their use for the claimed invention.

The final part of the decision examined the judgment of the Court of Justice in case C-34/10. The CJEU had clarified that ‘an invention must be regarded as unpatentable, even if the claims of the patent do not concern the use of human embryos, where the implementation of the invention requires the destruction of human embryos’. Further, the court had expressly acknowledged that ‘[t]he fact that destruction may occur at a stage long before the implementation of the invention, as in the case of the production of embryonic stem cells from a lineage of stem cells the mere reproduction of which implied the destruction of human embryos is, in that regard, irrelevant’. The Board thus concluded that its considerations fell in line with the principles enucleated by the Court of Justice.

The decision of the Board of Appeal is certainly not surprising, as it relies heavily on the reasoning of the Enlarged Board of Appeal in case G 2/06. Its rationale is clearly explained in the prior decision:

Article 53(a) EPC excludes inventions from patentability if their commercial exploitation is against ordre public or morality. Reference is made to points 25 to 27 where it has been explained why this Board considers the performing of this invention as commercial exploitation. In this context, it is important to point out that it is not the fact of the patenting itself that is considered to be against ordre public or morality, but it is the performing of the invention, which includes a step (the use involving its destruction of a human embryo) that has to be considered to contravene those concepts.

In this perspective, the decision of the Board merely highlights the necessity of evaluating, under Article 53(a) and Rule 28(c), all the steps that, while not being claimed in the patent application, still constitute a necessary precondition for the performing of the invention. In the context of HES cell related inventions, applicants thus face the challenge of (i) identifying a method of obtaining the cell lines used by the invention that does not involve the destruction of human embryos, and (ii) verifying whether the alternative method involves the destruction of human embryos at any stage preceding the isolation of the HES cell lines directly employed in the invention. 

When paper-only proceedings may not provide the swiftest solution

Monkey Tower Ltd v Ability International Ltd [2014] EWHC 18 (Pat), a 24 January decision of Henry Carr QC, sitting as a Deputy Judge of the Patents Court, England and Wales, came across this blogger's desk. It is unlikely to get on to BAILII, though it will be of interest to anyone who wants to save costs in Patent Office hearings by opting for submissions in writing only, but who may not be happy with one or more of the possible outcomes.

In Monkey Tower's application to revoke a UK patent held by Ability, the parties consented to a decision without an oral hearing. Before the Patents Office, the Hearing Officer held that some of the claims were anticipated by existing patents, but allowed Ability a further opportunity to propose amendments to the patent within six weeks of the date of his decision. Monkey Tower appealed on the ground that the hearing officer had erred, either in law or in principle, in letting Ability have a further opportunity to propose making amendments. Though Monkey Tower conceded that, under section 75 of the Patents Act 1977, the Comptroller of Patents did have a discretion, the company argued that the hearing officer did not exercise that discretion in accordance with fundamental principles of law, in particular the principle of procedural fairness.

Henry Carr QC dismissed the appeal. In his view,

* where the Patents Office had developed a procedural practice, the courts could still scrutinise it on appeal. The Office needed to ensure that its practice was procedurally fair and accorded with the overriding objective in rule 74 of the Patent Rules 2007, that of dealing with cases justly.

* it was no longer correct that, where there was any scope for a claim-validating amendment, the patentee should autotomatically be given the chance to amend after an interim decision had been handed down. In this respect there was no difference between revocation and infringement actions, and there should not be a more generous attitude to post-decision amendments in revocation actions.

* a patent was a right in rem and, unless revoked, deterred the public from working within its claims -- and revocation proceedings were normally commenced by parties who were concerned about being sued for infringement. This being so, the exercise of discretion under section 75(1) of the Act, post-hearing, had to take regard of all circumstances which were relevant to the question of procedural fairness to the parties.

* depending on the facts, those relevant circumstances were likely to include

(i) the resources already devoted by the parties to the proceedings;

(ii) the extent of any re-litigation as a result of the amendment;

(iii) the likelihood that a valid amendment could be proposed; and

(iv) whether there was evidence that prejudice would be caused to applicant for revocation by the delay that would be occasioned by a post-decision amendment application.

Thus, while an opportunity to amend after an interim decision would not be accorded to the patentee as a matter of course, it might well be fair to give such an opportunity in appropriate cases.

* on the facts, the Hearing Officer was right go give Ability the chance to seek amendments within six weeks of the date of the decision under appeal, for three reasons. First, the parties had consented to a decision without an oral hearing. That had saved time and costs, but had meant that the parties had been unable to explore their submissions with the tribunal and answer questions from the tribunal. Secondly, the decision under appeal had been reached on the basis of only short written submissions from the parties. Thirdly, the opportunity for re-litigation was limited and any further proceedings were likely to take the form of short written submissions.

France commits to UPC

From our friend Bertrand Sautier comes the information that, following Austria and Malta, France passed a law yesterday to approved the Unified Patent Court package which was signed on February 2013. Says Bertrand: "That is another step completed!"

The text of law can be found here

Keeping evidence secret post-trial: a common-sense ruling in Convatec case

Smith & Nephew plc v Convatec Technologies Inc; TJ Smith & Nephew Ltd and Smith & Nephew Medical Ltd (third parties) [2014] EWHC 146 (Pat) is the latest in a series of rulings in fairly acrimonious litigation that has occupied the courts of England and Wales for the past few years. Discussion of much of this earlier litigation can be found on the IPKat, here.

So what was the latest round of litigation all about? Smith & Nephew (S&N), in the course of earlier proceedings in which it sought a declaration of non-infringement in relation to Convatec's  patent, disclosed numerous documents that set out in full the details of its manufacturing processes. A confidentiality scheme existed between the parties to deal with this confidential disclosure and an interim order was made under the Civil Procedure Rules, CPR r.31.22(2).

Once the declaration proceedings were over, with Birss J ruling that Convatec's patent was valid and partially infringed, S&N sought a permanent r.31.22(2) order in relation to various documents which, it said, contained commercially sensitive information relating to its manufacturing processes and equipment, its dealings with regulatory authorities and/or its commercial strategy. According to a witness for S&N, those documents, taken together, painted a very detailed picture of the development of the company's product, providing a window into its internal workings and know-how which it had built up over years of experience in new product development.

Mr Justice Birss granted the order, but only in part.  In his view,

* the parties well understood that sitting in private should only occur when it is strictly necessary and should be kept to a minimum: "That is what happens in the Patents Court".

* It was first necessary to explore both the nature and details of S&N's secret processes, since justice could not be done without it. The Court of Appeal had already recognised in Lilly ICOS Ltd v Pfizer Ltd (No.2) [2002] EWCA Civ 2 that patent cases presented particular problems because parties might feel constrained to hold back from disclosing relevant or potentially relevant documents if they were afraid of the consequences of their information seeing the light of day.

* On the facts, a permanent order was appropriate in relation to the documents relating to S&N's manufacturing processes and equipment and its commercial strategy.  While some of those documents played a crucial role at trial, its outcome could still be understood without them.

* In contrast, apart from some regulatory documents which referred to S&N's manufacturing or development testing work or commercial strategy, no further permanent r.31.22(2) order would be made. While S&N had built up substantial experience and know-how in dealing with regulatory authorities, disclosure of those documents would not reveal that know-how or damage S&N at all. Accordingly, the only documents to be covered by the order were those that made reference to manufacturing or process information or commercial strategy.

Convatec did not object to the order sought by Smith & Nephew and did not attend for the majority of the discussion on this issue.

Revocation strawman: a new player in the patent litigation field

I have recently heard from Sharaz Gill, who was formerly head of patent litigation at HTC but has since gone on to found Skepsis Telecom. Explains Sharaz:

"We are basically a strawman patent revocation company specializing in UK and German revocation actions of (principally) telecoms patents. Skepsis isn’t an EPO opposition strawman, of which there are already several, but rather brings the revocation actions in the UK and German courts. As far as I am aware, this is unique in the telecoms patent litigation sector, although I gather that similar companies have been set up ad hoc in the pharma sector in the past. As a result, I thought that you and your readers might be interested in hearing about Skepsis.

I was motivated to set the company up by experiences at HTC. HTC was involved in the mobile phone wars from the outset and we successfully defended actions against IPCom, Apple and Nokia, to name but a few. Most of our disputes involved HTC being confronted with often large numbers of patents of dubious validity, which were nevertheless still dangerous because of the bifurcated litigation system in Germany. More recently, we also noticed an increase in the number of NPEs bringing infringement claims in Germany, which greatly increases the risk for handset manufacturers because Germany is the biggest European market for the majority of them. It isn’t yet clear what stance the UPC will take on NPEs and the high invalidity rates of hi-tech patents in Europe more generally, so there is clearly concern in the industry. Hopefully, Skepsis can help to tip the balance back in favour bona fide manufacturers.

Skepsis is now up and running and we are already advising clients on invalidity actions. Your readers should expect to see the first invalidity actions filed fairly soon".

This blogger is curious to see how this business model works and what its impact might be, both on patent litigation in Europe and in the negotiation of settlements. He also wonders whether reader have come across any equivalent companies in other commercial or industrial sectors.  If you have, please let us know.

India's IPAB highlights importance of due process when reviewing patent applications

A friend from Kerala, the state with the highest literacy rate and life expectancy in India, reported news of two recent orders issued by the Intellectual Property Appellate Board (IPAB), which set aside a couple of decisions of the Assistant Controller of Patents & Designs. Interestingly, the IPAB found that, in both cases, the Assistant Controller failed to provide the patent applicant with a fair review of its application, either issuing a cryptic, non-speaking, and vague response, or violating the 'Principle of Natural Justice'.

In the first decision (no. 8/2014), the IPAB reviewed the Assistant Controller's rejection of a patent application filed in 2006 by Schering Co. The application claimed the crystalline polymorph of a bisulfate salt of a thrombin receptor antagonist (Vorapaxar), used for the treatment of acute coronary syndrome chest pain caused by coronary artery disease (for more information, see this post at SpicyIP). The Assistant Controller rejected the application for lack of inventive step, under Section 2(1)(ja) of the Patents Act, adding that the applicant had failed to provide evidence of enhanced therapeutic efficacy, as required by Section 3(d) of the Patents Act (widely discussed after the Novartis judgment, and also commented on a previous PatLit post). Schering appealed the rejection, alleging that the Assistant Controller failed (i) to take into account the arguments raised by the applicant, and (ii) to state the reasons for the contested decision.

The IPAB observed that, under Section 15 of the Patents Act, 'the learned Controller ought not to have mechanically refused the application and on the other hand he could have exercised discretion to give opportunity to the applicant/appellant by making amendments in the application' (and later deciding whether to accept or reject the amended application). According to the board, the Assistant Controller issued a 'cryptic and non-speaking order', which failed to take into account all the arguments raised by the patent applicant. Similarly, when assessing the lack of inventive step, 'the Controller has given a very bald and vague reason without going into the details of the entire document'. Setting aside the contested decision, the IPAB remanded the matter to the Assistant Controller, bound to 'consider the matter afresh by affording sufficient reasonable opportunity to the applicant/appellant to substantiate their claims'.

In the second decision (no. 9/2014), the IPAB examined the Assistant Controller's rejection (see also here) of the application filed by Abraxis BioScience LLC in 2005 (no. 2899/DELNP/2005 - here), which claimed a pharmaceutical composition consisting of (i) a pharmaceutical agent (including, in particular, propofol, paclitaxel, or docetaxel), and (ii) a pharmaceutically acceptable carrier, comprising deferoxamine, to inhibit microbial growth, and a protein such as albumin, to reduce side effects. The applicant challenged the rejection, maintaining that the Assistant Controller unlawfully refused to provide Abraxis with an opportunity to be heard before taking a final decision, violating Section 14 of the Patents Act. Such violation, according to the applicant, determined a violation of the Principle of Natural Justice, as Abraxis was deprived of its right to immediately appeal a decision issued under Sections 14 and 15 of the Patents Act. A further argument concerned the conduct of the Assistant Controller in the pre-grant opposition proceeding initiated by a third party: the patent applicant submitted that the Assistant Controller unlawfully examined an additional ground of opposition ('insufficiency', under Section 25(1)(g) of the Patents Act) which had not been raised by any of the parties involved in the proceeding, thus committing a serious error of law.

The Intellectual Property Appellate Board held that '[t]he reading of the [...] provision [of Section 14] makes it crystal clear that the above said provision contemplates of an opportunity of hearing and as such the said provision is mandatory but unfortunately in the instant case such a mandatory requirement of affording opportunity to be heard was denied to the appellant'. According to a previous judgment of the High Court of Delhi, which the board considered to be 'squarely applicable to the facts of the instant case', the provision at issue 'casts a duty on the controller to give a hearing to an applicant, before exercising any discretionary power, which was likely to affect an applicant for a patent adversely'. The IPAB added that, as an order under Sections 14 and 15 is indeed appealable (while a decision rendered in a pre-grant opposition proceeding, under Section 25, may not be equally appealable, or may force the applicant to defer its appeal), Abraxis was deprived of its right to appeal the adverse order. For these reasons, the board concluded that the Assistant Controller passed the contested decision 'in flagrant violation of the Principle of Natural Justice'.

The second argument raised by Abraxis was also upheld. Reciting previous case law, the IPAB noted that '[w]hen the facts necessary to make out a particular claim, or to seek a particular relief, are not found in the plaint, the Court cannot focus the attention of the parties, or its own attention on that claim or relief, by framing an appropriate issue'. Thus, the Assistant Controller erred in extending the perimeter of its review to an argument which had not been raised by any of the parties.

International Patent Forum 2014: what's in it for patent litigators?

This year's International Patent Forum 2014, masterminded by Managing Intellectual Property magazine, takes place in the congenial yet businesslike surroundings of London's Waldorf Hilton Hotel -- which is not so very far from the courts that decide so many important patent-related disputes at trial and appeal levels.  The Forum is to be held on 18 and 19 March, which is not so very far away.  PatLit is delighted to say that readers of this weblog are entitled to a £300 discount on their registration fee if they register via this link.  In-house counsel have an even better deal: they will be admitted free of all registration charges.

So what's in the programme for patent litigators? On Day One the afternoon programme looks like this, in relevant part:

Enforcement practice in China
• Trends in China’s increasing enforcement practice
• How protected is your IP in China?
• Best practices for patent-monetisation in China 

Litigation planning and forum shopping in Europe
• Implications of the Spanish legal challenge outcome
• Game over? Litigation planning and strategy under the new UPC
• Risks and opportunities of forum shopping in Europe 

Antitrust and IP litigation
• Why antitrust laws threaten your IP pool
• A guide to future trends in antitrust legislation, and to how this will impact on your IP portfolio

Day Two offers the following topics too:

NPEs and patent trolls roundtable: A global comparison
• Will there be a global rise of patent trolls?
• Measures to counter trolls without compromising on the strengths of patents in general
• Whose problem is it? New legislation versus sector self-defence

Russia focus

• Patent protection and enforcement in Russia
• Challenges in protecting your intangible assets in Russia
• How new legislation is about to further strengthen IP protection

There's a strong cast of speakers and commentators, so the event won't be short of instructive content, tempered by well-informed and experienced contributions from people in the "been there, done that" category.

Slightly frustratingly, this blogger will be out of the country on 18/19 March, so will be hearing about the proceedings only at second hand.  If any readers of this blog are planning on attending and would like to write up any of their thoughts and comments for publication on this weblog, can they please get in touch by emailing jjip@btinternet.com.

Homemade solutions against patent trolls - part 2: New York Advocate General reaches settlement with MPHJ

In July 2013, the Nebraska Attorney General chose a peculiar solution to prevent the spread of 'patent trolling' phenomena. Rather than directly targeting the patent holder, the AG filed a cease and desist order against the Farney Daniels law firm, which had sent demand letters on behalf of MPHJ, one of the companies most commonly associated with the allegedly deceptive behaviors which prompted the US House of Representatives to pass the Innovation Act in early December. The order issued by the Nebraska AG enjoined the law firm from initiating new patent infringement enforcement efforts within Nebraska, pending an investigation on the alleged violation of the Nebraska Consumer Protection Act, § 59-1601 seq., and the Uniform Deceptive Trade Practices Act, § 87-301 seq.

As I reported in mid December, Nebraska's homemade solution did not withstand the scrutiny of courts. The District Court for the District of Nebraska ruled that the cease and desist order, issued before the conclusion (and review) of a formal investigation into the conducts of MPHJ and Farney Daniels, was akin to a forbidden prior restraint of speech and association. Thus, the District Court granted a preliminary injunction which prevented the Nebraska Attorney General from enforcing the cease and desist order against the law firm. In a decision of 14 January, the same judge reiterated this conclusion, granting a motion for preliminary relief filed by MPHJ itself, allowing Farney Daniels to keep representing the patent assertion entity in Nebraska.

AG Eric T. Schneiderman

Possibly inspired by the failure of Nebraska's solution, the Attorney General of the State of New York took a different path. On 14 January, the AG announced that he was able to reach a 'groundbreaking settlement' with MPHJ. The agreement essentially requires the patent assertion entity (i) to make a serious effort to determine the validity of its allegations of infringement, before making an accusation, either directly or through an attorney, (ii) to provide the alleged infringer with detailed information on the patents at issue, as well as on the basis on which the infringement allegation is made, (iii) to disclose information about the patents' likely invalidity, or to refrain from trying to collect revenues if the patents have been held invalid, (iv) to state the factual basis for a proposed licensing fee, and (v) to disclose its true identity. The Attorney General, Eric T. Schneiderman, noted that the agreement is meant to serve as a blueprint for other AGs dealing with patent trolling phenomena:

So-called ‘patent trolls’ exploit loopholes in the patent system and have become a scourge on the business community [.] They drain critical resources from small and medium-sized businesses that would otherwise be available for reinvestment and job creation, which are sorely needed across New York. State law enforcement can’t cure all the ills of the federal patent system, but the guidelines established in today’s settlement will put an end to some of the most abusive tactics by placing the industry on notice that these deceptive practices will not be tolerated in New York.

The following is a summary of the main obligations imposed to MPHJ under the settlement agreement, properly known as 'Assurance of Discontinuance'. The patent assertion entity, in relation to infringement allegations concerning New York individuals or companies, agreed:

• to provide a written notice to any company which has already concluded a licensing agreement with MPHJ, informing the licensee that it has the right to void the license agreement, in return for a full refund;
• to refrain from asserting its patents against any individual or small business (with fewer than 50 employees) which previously received a demand letter from MPHJ or its attorneys;
• if making allegations of infringement, to make reasonable efforts to evaluate (i) the scope of the asserted patents, (ii) the specific product used or sold by the targeted company, which allegedly infringes the asserted patents, according to MPHJ's good faith assessment;
• if merely intending to inquire as to whether a company infringes one of its patents, to make reasonable efforts to identify reasonably available facts about the targeted business, the allegedly infringing products, and the likelihood of infringement;
• to describe with reasonable specificity the basis for the infringement allegation;
• to provide information on the existence of (i) relevant pending or completed litigation in which a court found the asserted patents to be invalid or non-infringed, or (ii) relevant findings by the USPTO which raise issues of invalidity, or (iii) a terminal disclaimer which terminates before the end of the proposed license term;
• on request, to provide a claim chart or equivalent document that explains the basis of MPHJ's good faith infringement allegations;
• when proposing a licensing fee, to provide factual support for any reason or justification adduced for the proposed fee;
• when asserting a patent through a licensing agent, to disclose MPHJ's relationship with the agent;
• when asserting a patent in which another person has a financial interest (5% or more), to disclose the identity of such person;
• to refrain from providing misleading information on license agreements reached with third parties;
• to refrain from requiring the alleged infringer to enter into a non-disclosure agreement which would restrict communications between the targeted company and other companies against whom MPHJ is asserting the same patents (unless the non-disclosure merely protects MPHJ's proprietary business information, trade secrets, or attorney work product);
• to refrain from making fraudulent statements, or from referring to previous communications, unless it includes copies of such communications or has documentation verifying that MPHJ actually sent them;
• to refrain from asserting its patents through a legal counsel, unless the above mentioned requirements are also met by the counsel (good faith basis, reasonable efforts to identify the scope of the patents, as well as the allegedly infringing products);
• to refrain from asserting any patents which has been held invalid in a final judicial decision.

The settlement also contains provisions which require MPHJ to disclose the partial or comprehensive nature of the proposed agreement, and the existence of a licensing agreement or covenant not to sue with the originator or manufacturer of the allegedly infringing products. Further, the agreement establishes fines for any violation of its provisions. The solution endorsed by the New York Advocate General positively addresses most of the issues raised by vague demand letters. It may not be a miraculous cure for the underlying issues that feed patent trolling, but, at least in the State of New York, it could restore fair play rules.