Unfair Import Investigations Requested for Scanners, Organ Locators, and Flash Memories

On September 23, 2005, Symbol Technologies, Inc. filed a "Section 337" unfair import complaint at the U.S. International Trade Commission. The complaint requests that an unfair import investigation be instituted involving "Certain Laser Bar Code Scanners, Scan Engines, Components Thereof and Products Containing Same." The proposed respondents are Metro (Suzhou) Technologies Co., Ltd., China and Metrologic Instruments, Inc., Blackwood, New Jersey. The complaint has been designated as confidential and assigned Docket No. 337-2446 for indexing in the Commission's database.

On September 28, 2005, Varian Medical Systems, Inc. and SAS PRAXIM, Inc. filed a "Section 337" unfair import complaint at the U.S. International Trade Commission. The complaint requests that an unfair import investigation be instituted involving "Certain Devices for Determining Organ Positions and Certain Subassemblies Thereof." The proposed respondent
is Resonant Medical, Inc., Canada.The complaint has been designated as confidential and assigned Docket No. 337-2447 for indexing in the Commission's database.

On September 29, 2005, Toshiba Corporation filed a "Section 337" unfair import complaint at the U.S. International Trade Commission. The complaint requests that an unfair import investigation be instituted involving "Certain Flash Memory Devices and Components Thereof, and Products Containing Such Devices and Components." The proposed respondents are Hynix Semiconductor, Inc., Korea and Hynix Semiconductor America, Inc,. California. The complaint has been designated as confidential and assigned Docket No. 337-2448 for indexing in the Commission's database.

Such complaints typically include an allegation of intellectual property infringement and a request that the infringing godds be excluded from entry into the United States. The Commission now has 30-35 days from the filing date of the complaints in which to decide whether to institute the investigation. Upon institution, the proposed respondent will be served with the Complaint via postal mail and an Administrative Law Judge will schedule discovery, conduct a trial, and issue a written "Initial Determination," usually within about 10 months. Due to the expedited nature of these proceedings, and availability of general exclusion orders affecting non-parties, it is important to notify any potential importers of similar products as soon as possible.

Click here for more information on the importance of monitoring these ITC investigations, and click here for a free audio-visual Internet presentation on "Unfair Import Investigations at the U.S. International Trade Commission."

For the latest details on a particular Section 337 investigation, or to arrange a free, in-person presentation on these (and/or other) intellectual property topics, contact me, Bill Heinze (Bill.Heinze@tkhr.com), at Thomas, Kayden, Horstemeyer & Risley in Atlanta, Georgia.

TGIF for Renting your DVR on the Internet

The folks at http://www.rentmydvr.com/ want you to "Never miss your Favorite TV Show again!" According to their website:

Now you don't have to remember to program your DVR or VHS to record you
favorite TV show. With the Rent My DVR site you can simple hire someone that
will do the recording for you. Simply file a request on our site to have someone record for you and as soon as a new episode of your favorite show has been broadcasted, it is downloaded automatically to your computer and you can
watch it whenever you want. Record 5 TV shows for a Euro!

Make money by letting your DVR. If you would let your DVR to our users, please sign up for a recorders account.

Sign up today!

But, as pointed out by Joe Gratz on Corante's Copyfight Blog, "before submitting a recording request, the user must click a check-box next to the following statement:

"I assure [you] that I have an agreement with ABC that allows me to record this
show."

Ooooh, just wait until the folks at the American Brodcasting Company find out about this. . . .

Thank Goodness It's Friday,

--Bill Heinze

U.S. Losing Support on Opposition to WIPO Development Agenda

According to William New writing for "Intellectual Property Watch" on September 29, 2005, the United States appears to be isolated in its insistence that discussions on the development agenda be moved to the WIPO Permanent Committee on Cooperation for Development Related to Intellectual Property (PCIPD). Reporting from the World Intellectual Property Organisation General Assembly running through October 6, new also adds

Developing countries have resisted the PCIPD proposal out of concern that it would marginalise the development agenda, which they argue cuts across core areas at WIPO.

The United States argued in a floor statement Thursday that WIPO has not ignored development concerns and that intellectual property does not hinder development. The earlier Intersessional Intergovernmental Meeting (IIM) meetings have not provided a forum for an in-depth examination of all proposals, and that no consensus has emerged on any of the proposals put forward in the IIM, the U.S. delegate said.

The U.S. further said it supports a “frank exchange of views” and work to respond to developing country needs, but that the IIM process “was a compromise, time-limited, and reached the end of its mandate at the end of July 2005.” The time has come for a permanent forum to discuss the issues, and the PCIPD would be the best as it could be easily converted, it said.

“Despite our belief that WIPO is not, and should not become, a core development body, we do support WIPO improving its efforts, within its core competencies to bring the benefits of IP to all of its member states,” the U.S. delegate said, adding that this could be added to the PCIPD mandate.

Get more details on the WIPO Genral Assembly from EFF's Depp Links Blog.

Patent Reform Legislation Stymied by Damages Provision

According to Sarah Stirland writing for "Intellectual Property Watch" on September 29, 2005, the biggest remaining sticking point between the information technology industry and the biotechnology and pharmaceutical industries in the latest patent reform bill is its proposal to change the way courts award damages:

In testimony submitted to the House subcommittee, BSA’s Counsel Emery Simon
said that his group opposes the coalition’s proposal to change the legal language covering damages to cover “claimed inventions” rather than “inventive contributions.”

This change could allow patent holders to claim monetary damages based on the value of an entire new product, rather than the value of an inventor’s partial contribution to a product. But “we think the law is functioning well as it exists,” said Herb Wamsley, the Intellectual Property Owners Association’s executive director. “We have not seen any legal cases that demonstrate that the law doesn’t work. The proponents of ‘inventive contribution’ are trying to change the law in a way we don’t understand, but would appear to reduce the amount of patent damages and royalties than what we would have today,” he added.

While members of the House subcommittee earlier this month tried hard to bring industry representatives closer to consensus on the issue, it was clear that negotiations are going to be tough. BSA’s Simon warned legislators during his presentation to the subcommittee that “The support of our industry for this legislation should not be taken for granted.”

EC Launches Consultations for State Aid on Innovation

The European Commission is launching consultations on improvements to EU state aid rules with regard to projects encouraging innovation. “Even though effective competition is the best tool to strengthen innovation and competitiveness in Europe, state aid can also play a very useful supporting role, " said Competition Commissioner Neelie Kroes. "In this consultation document, the Commission sets out for the first time its concrete ideas on ways to support innovation via state aid. It is also the first concrete implementation of the refined economic approach outlined in the State Aid Action Plan.”

The suggested improvements include rules for aid that funds innovation, criteria to help public authorities to target aid more effectively, clarifying the rules to increase legal certainty and simplification of the regulatory framework. The proposals for innovation aid cover six broad areas: innovative start-ups; risk capital; the integration of innovation into existing rules on state aid for research and development (R&D); innovation intermediaries; training and mobility between university research personnel and SMEs; and poles of excellence for projects of common European interest

Click here for answers to frequently asked questions on state aid for innovation, and click here for more on the European Commission's state aid action plan.

ITCTLA Annual Meeting with Circuit Justice Randall Rader

Mark your calendar now to attend the Annual Meeting of the ITC Trial Lawyers Association on Tuesday, Nov. 8, 2005. The meeting will feature a panel of presentations, followed by the Keynote Address of the Hon. Randall R. Rader, Circuit Justice, Court of Appeals for the Federal Circuit.

Registration will begin at 1:00 pm EST, followed by panel presentations from 2:00 - 5:00 pm, in the Main Hearing Room of the ITC. The reception will begin at 5:30, followed by dinner and Judge Rader's Keynote Address.

The West Coast video conference session is planned for Palo Alto, will begin at 11:00 am PST, and will include a catered lunch.

Seating will be limited for the dinner program and West Coast video conference, so please keep an eye out for the registration forms and program details that will be forwarded by email in the near future.

Sams Presents TTAB Efficiency Initiative

John Welch writes in his TTABlog that U.S. Trademark Trial and Appeal Board Chief Administrative Judge J. David Sams presented the 2005 Midwest IP Institute with several initiatives that the TTAB is currently considering in an effort to make TTAB inter partes practice more efficient and effective:

• Mandatory initial disclosures
• Accelerated case resolution
• Mandatory telephone conference before filing an unconsented motion
• TTAB decisions and orders by e-mail rather than paper
• Service by e-mail
• Service of opposition on applicant
  

FTC Chairman Addresses Patentee "Hold-Up" of Standards-Setting Organizations

In a speech entitled "Recognizing The Procompetitive Potential Of Royalty Discussions In Standard Setting" (to Stanford University on September 23, 2005), U.S. Federal Trade Commission Chairman Deborah Platt Majoras provided her perspectives on standard setting and competition:

. . . While standard setting potentially provides tremendous benefits for consumers, it also potentially presents competitive issues that cannot be ignored. The most dangerous of these, of course, is the potential that a standard-setting effort will be used as a mechanism for competitors to fix prices, allocate markets, or boycott a competing firm or technology. Fortunately, we have not seen frequent instances of naked collusion in the standard-setting context. Still, SSOs should continue to take precautions to avoid facilitating collusion or other anticompetitive agreements.

What has become more common, though, is the potential for an intellectual property rights owner to "hold up" other members of a standard-setting organization after a standard has been set. If, at the start of the process, any one of a number of competing formats could win the standards battle, then no single format will command more than a competitive price. But standardization can change that dynamic. After the standard is chosen, industry participants likely will start designing, testing, and producing goods that conform to the standard – that is, after all, the whole idea of engaging in standard setting.

Early in the standardization process, industry members might easily be able to abandon one technology in favor of another. But once the level of resources committed to the standard rises and the costs of switching to a new technology
mount, industry members may find themselves locked into using the chosen
technology. In that case, competition for the standard ends (at least for a time, until, for example, the next generation of technology supplants it). In other words, before lock in – or "ex ante" – technologies compete to be the standard, and no patent-holder can demand more than a competitive royalty rate. After lock in – or "ex post" – the owner of the chosen technology may have the power to charge users supra-competitive royalty rates -- rates that may ultimately be passed on to consumers in the form of higher prices.

. . . [S]ome experienced members of SSOs and commentators have suggested that owners of patented technology should be permitted to state their intended royalty rates ex ante, that is, before the standard is set. Indeed, as some have suggested, if owners stated their royalty rates upfront, then price could become part of the competition among technologies for incorporation into the standard. Others have proposed that permitting SSO members to go further and engage in joint ex ante royalty discussions (perhaps even auctions) would also mitigate the hold-up problem.9 Such discussions would allow SSO members to collectively discuss – before lock in ("ex ante") – a royalty rate (or at least a maximum rate) for incorporated technology.

Both of these proposals, however, have raised concerns that agreed rates are exercises in collective price-fixing and therefore run afoul of the antitrust laws’ per se ban on price fixing. Consequently, some SSOs and their participants have hesitated to allow unilateral announcements of royalty rates by, let alone ex ante joint royalty discussions with, firms that own the technology being considered for incorporation into the standard, settling instead for rules that demand RAND terms for members.

While the antitrust concerns are understandable, they may have unduly prevented announcements of pricing intentions or royalty discussions that may, in fact, provide procompetitive benefits. First, a patent holder’s voluntary and unilateral disclosure of its maximum royalty rate, like most unilateral conduct, is highly unlikely to require antitrust scrutiny. Unilateral announcement of a price is, by definition, not a collective act subject to per se condemnation or even review under Section 1 of the Sherman Act, and it is hard to see how announcing one’s price before sale (without more) could amount to exclusionary conduct under Section 2.

Second, joint ex ante royalty discussions that are reasonably necessary to avoid hold up do not warrant per se condemnation. Rather, they merit the balancing undertaken in a rule of reason review. We would apply the rule of reason to joint ex ante royalty discussions because, quite simply, they can be a sensible way of preventing hold up, which can itself be anticompetitive. Put another way, transparency on price can increase competition among rival technologies striving for incorporation into the standard at issue. They may allow the "buyers" (the potential licensees in the standard-setting group) to get a competitive price from the "sellers" (the rival patentees vying to be incorporated into the standard that the group is adopting) before lock in ends the competition for the standard and potentially confers market power on the holder of the chosen technology. (Indeed, a few SSOs do this already: SSOs that require members to license incorporated technology to each other royalty-free have already, in effect, collectively negotiated a royalty arrangement.)

If joint ex ante royalty discussions succeed in staving off hold up, we can generally expect lower royalty rates to lead to lower marginal costs for the standardized product and lower consumer prices. By mitigating hold up, joint ex ante royalty discussions might also make possible the more timely and efficient development of standards. A reduction in ex ante uncertainty on royalty rates may "reduce the extent to which litigation is needed to resolve issues relating to patent and standards." Joint ex ante royalty discussions also could prevent delays in the implementation of the standard resulting from ex post litigation (or threats of it), which may involve "inefficient allocation of resources intended for innovation."

In a rule-of-reason analysis, of course, these possible procompetitive benefits are weighed against the risk of anticompetitive harms. In particular, some have raised concerns that the SSO members could use joint ex ante royalty discussions to force patent holders to offer royalty rates below the competitive level. The fear is that innovators may then reduce new investments in their research and development efforts.

While theoretically possible, this risk is unlikely to be a frequent practical concern. If the SSO members jointly lack buying power, they would not be able to impose a lower-thancompetitive rate. Further, SSO members may have incentives to temper their instinct to drive royalty rates too low. Manufacturing members of the SSO may recognize that patent holders (particularly non-manufacturing patent holders) who fear that the group will demand anticompetitively low royalty rates may choose not to join the SSO in the first place. If they do not join, then it will be harder for the
members to know about the patent holders’ potentially relevant intellectual
property before setting a standard – exposing the group to a greater risk of
demands for high royalty rates from a non-member in the end. Moreover, concerns
about collective buyer power may be minimal when the patent holders are
themselves manufacturers. Such patent holders may be willing to license their
technology for very little – perhaps even for free – in exchange for gaining the
first-mover advantage in manufacturing the standardized product.

It may also be appropriate to consider whether joint ex ante royalty discussions are reasonably necessary to mitigate hold up. In such an analysis, we likely would consider whether an uncoordinated series of bilateral negotiations between patentees and individual would-be licensees would be equally capable of mitigating hold up, or whether bilateral negotiations actually frustrate the necessary collective evaluation of which technology alternative is preferable, taking into consideration both the merits of the technologies and their prices.

Joint ex ante royalty discussions, of course, can offer an opportunity for SSO members to reach side price-fixing agreements that are per se illegal. If in conducting joint ex ante royalty discussions, manufacturing rivals cross over the line from discussing the price of technology they will "buy," if they choose a particular standard and start discussing – and fixing – the price of the products they sell, summary condemnation is almost certainly warranted. In fact, joint ex ante royalty discussions might make such collusion cheaper: the costs of gathering together and
deciding on a common plan could be spread over plans associated with both buying and selling.

Concerns about legitimate royalty discussions bleeding into such dangerous territory may dissuade some groups from conducting them in the first place. But those risks are not cause for declaring the entire enterprise per se illegal, especially since some standards developers may already have extensive experience managing this risk.

Of course, even absent antitrust concerns, SSO members may refrain from such discussions for business reasons alone. Some members of the standard-setting community apparently believe that joint ex ante royalty discussions are time-consuming, costly, and unproductive. Discussions may prove too complex, involving important non-price terms and heterogeneous royalty rates. Moreover, SSO members may feel that productive joint ex ante royalty discussions demand the skills of especially talented business people who understand the complicated legal, engineering, and business matters at issue.

Indeed, at the FTC/DOJ Hearings on Competition and Intellectual Property Law, one panelist testified that his large company simply does not have enough of such people to attend "the 300 different standards consortia or standards bodies" in which his company participates. Joint ex ante royalty discussions may prove costly in another way: some SSOs and their members want to concentrate on the difficult job of choosing the technically best standard, and deem cost considerations to be a distraction.

Thus, by pointing out the potential for joint ex ante royalty discussions to mitigate or eliminate the hold-up problem, I do not mean to suggest that such discussions in SSOs are required. I simply offer my view that conducting legitimate joint ex ante royalty discussions does not warrant per se condemnation.

Antitrust concerns should never be taken lightly; neither, however, should the benefits that the setting of standards can bring to consumers. Fortunately, our ntitrust laws and enforcement program are flexible enough to permit procompetitive standard-setting activity. I appreciate the opportunity to discuss these important issues with you today. Thank you.

Claim-Type Differentiation for Dummies

Contact me for a higher-resolution copy of this "poster presentation" to the 2005 Corporate Patent Seminar entitled "Structure, Function, and the Importance of Claim-Type Differentiation," or view a more-detailed presentation on this topic at http://www.aplf.org/events/roundtables/2003-11-20.shtml

A Postcard from the Solaia Patent Odyssey

Philip Brooks' "Patent Infringement Updates" points a September 26, 2005 article in the Star Tribune by Dee DePass describing the experience of nine companies that joined together to defend allegations of patent infringement from a reputed patent troll:

Initially, each of the nine companies hired an independent counsel, sought
software specialists and met with plant managers to verify that the patent in
question -- No. 5,038,318 -- was not employed in their automated manufacturing
processes. The patent, which Solaia purchased in 2001, was related to a
spreadsheet software device for communicating real-time data between automated
machines.

In June 2003, seven of the Minnesota manufacturers [filed a declaratory judgment action against] Solaia in U.S. District Court in Minnesota.

Solaia tried and failed to consolidate the Minnesota lawsuit into others being tried in Chicago. Solaia's law firm, Niro & Scavone, then took the unusual step of suing Fish & Richardson, accusing the law firm of soliciting manufacturers not to honor Solaia's patent. That case was dismissed this year. "I have never heard of any lawyer being sued because they were representing us. That was a new one," Ubel said. "Our group just had a good chuckle and we welcomed Fish & Richardson" to the regular meetings at the Minneapolis Club. By sticking together, the firms made a strategy of "divide and conquer" impossible, said Peyton of the National Association of Manufacturers.

"They want to say, 'Oh we are heroes because we banded together and took on
the evil giant.' That is nonsense," said Ray Niro, the Solaia attorney. "All they did was wait until there was a related decision down in Chicago that they perceived as being beneficial to them. And then Solaia agreed that they would defer based on that decision. Absolutely it was Solaia's decision. They didn't have to dismiss the case."

"It really blows my hot buttons to hear all this troll nonsense. Those who talk about trolls are know-nothings. They have no background dealing or enforcing patents," said Ray Niro, the Solaia attorney at Niro, Scovone, Haller & Niro who sent the letter to Valspar. He said his style of patent litigation helps cash-poor inventors protect their intellectual property, adding that big companies are not the only ones entitled to patent protection.

USPTO to Require Translation of Foreign-Language Provisional Applications

Effective November 25, 2005, the United States Patent and Trademark Office is amending the rules of practice (70 FR 56119) on September 26, 2005) to require that

1. a copy of the English translation of a foreign-language provisional application be filed in the provisional application if a nonprovisional application claims the benefit of the provisional application; and
2. a copy of documentary evidence supporting a claim of ownership must be recorded in the Office’s assignment records when an assignee takes action in a patent matter; and
3. separate copies of a document be submitted to the Office for recording in the Office’s assignment records, each accompanied by a cover sheet, if the document to be recorded includes an interest in, or a transaction involving, both patents and trademarks.

The changes apply to any paper, application or reexamination proceeding filed in the Office on or after November 25, 2005. For applications claiming priority to a non-English provisional application, a translation of the provisional application and a statement that the translation was accurate required by 37 CFR 1.78(a)(5)(iv) will not be required to be filed in the provisional application, if the translation and statement were filed in the nonprovisional application before November 25, 2005.

Jury Testimony on Claim Construction Improper

In Cytologix Corp. v. Ventana Medical Systems, Inc. (Fed. Cir.; Sepetmebr 21, 2005), the court conclyuded that CytoLogix failed to present substantial evidence of infringement of claim 13 of the ’693 patent because it did not conduct a structural analysis of means-plus-function limitations in that claim:

The "temperature controller" limitation of claim 13 is a means-plus-function limitation as defined by 35 U.S.C. § 112, ¶ 6. Infringement of a means-plus-function limitation "requires that the relevant structure in the accused device . . . be identical or equivalent to the corresponding structure in the specification." Odetics, Inc. v. Storage Tech. Corp., 185 F.3d 1259, 1267 (Fed. Cir. 1999). To establish infringement under § 112, ¶ 6, it is insufficient for the patent holder to present testimony "based only on a functional, not a structural, analysis." Alpex Computer Corp. v. Nintendo Co., 102 F.3d 1214, 1222 (Fed. Cir. 1996). Here, CytoLogix failed to identify the structure in the specification that is the "temperature controller means" and compare it to the structure of the accused device. Accordingly, because CytoLogix failed to present substantial evidence of infringement of claim 13 of the ’693 patent, the jury verdict of infringement of claim 13 must be reversed.

Instead of offering such structural analysis, the parties agreed to have there experts testify before the jury on claim constrction:

We note that in this case the parties agreed, contrary to the district court’s wishes, not to have a Markman hearing, and that the claims were not construed until the close of evidence. This was not erroneous since we have held that the district court has considerable latitude in determining when to resolve issues of claim construction. See Jack Guttman, Inc. v. Kopykake Enters., Inc., 302 F.3d 1352, 1361 (Fed. Cir. 2002) ("District courts may engage in a rolling claim construction, in which the court revisits and alters its interpretation of the claim terms as its understanding of the technology evolves."). However, by agreement the parties also presented expert witnesses who testified before the jury regarding claim construction, and counsel argued conflicting claim constructions to the jury. This was improper, and the district court should have refused to allow such testimony despite the agreement of the parties.

The risk of confusing the jury is high when experts opine on claim construction before the jury even when, as here, the district court makes it clear to the jury that the district court’s claim constructions controlcase the parties agreed, contrary to the district court’s wishes, not to have a Markman hearing, and that the claims were not construed until the close of evidence.

Although in this case there is no ground for reversal since there was no objection to the expert testimony as to claim construction, it appears that the conflicting expert views as to claim construction created confusion and may have led to a verdict of infringement with respect to the asserted claims of the ’061 patent that was not supported by substantial evidence under the district court’s claim construction. We nonetheless conclude that the verdict should be sustained as to these claims because, although the district court’s claim construction was in error, the evidence requires a verdict of infringement under the correct claim construction [of the other claims].

Extraterritorial Trademark Infringement Considered by First Circuit

According to Lewis R. Clayton writing for the National Law Journal on September 26, 2005, the U.S. Circuit Court of Appeals for the First Circuit announced a new test last month for determining when federal trademark law will extend to extraterritorial conduct by foreign defendants. In McBee v. Delica Co. Ltd., 417 F.3d 107 (1st Cir. 2005):

McBee sued Delica in Japan, but, after several appeals, the Japanese courts
affirmed Delica's trademark. In 2002, McBee commenced an action in Maine federal
court under the Lanham Act seeking, among other things, damages based on the
Japanese sales of "Cecil McBee" products, and an injunction prohibiting Delica
from making its [Japanese-language] Web site available in the United States. The district court found jurisdiction was lacking. . . .

In affirming dismissal, the 1st Circuit rejected Vanity Fair's three-part
test, and instead reduced the analysis of jurisdiction over the extraterritorial
conduct of foreign nationals to a single factor: whether that conduct "has a
substantial effect on United States commerce." In applying its test to McBee's claims, the court considered two key extraterritorial activities: Delica's Japanese sales and the operation of Delica's Web site. Unfortunately for McBee, the court found that he had failed to show evidence of resale into the United States, or harm to his career or lost revenue, either in the United States or in Japan. . . .

The court ruled that, on its own, the visibility of the Web site within the United States does not constitute domestic conduct sufficient to ground subject-matter jurisdiction. . . . The court also emphasized that both the Web site and the Google results were written almost entirely in Japanese characters. This fact made the possibility of any real confusion in U.S. markets "very unlikely."

Goods Differences Prevent Infringement Preclusion before the TTAB

In Mayer/Berkshire Corp. v. Berkshire Fashions, Inc. (Fed. Cir.; September 22, 2005), the court concluded that the question of the likelihood of confusion before the trial (distict) court presented sufficiently different issues and transactional facts to bar the application of preclusion before the Trademark Trial and Appeal Board:

Caution is warranted in the application of preclusion by the PTO, for the
purposes of administrative trademark procedures include protecting both the
consuming public and the purveyors. Thus the party objecting to a registration
may raise grounds not only of commercial injury to itself, but of confusion or
deception or mistake to the consumer. The public policy underlying the
principles of preclusion, whereby potentially meritorious claims may be barred
from judicial scrutiny, has led courts to hold that the circumstances for
preclusion "must be certain to every intent." Russell v. Place, 94 U.S. (4 Otto)
606, 610 (1878). . . . The question of the likelihood of confusion presented sufficiently
different issues and transactional facts to bar the application of preclusion. The summary judgment of the Board is vacated, and the case is remanded for
further proceedings.

In this case, the issue litigated in the district court action was whether the marketing by Berkshire Fashions of specific products with either the BERKSHIRE mark or the Berkshire Fashions trade name was likely to cause confusion with Mayer/Berkshire's registered BERKSHIRE trademarks. In the opposition proceeding the question of likelihood of confusion required consideration not only of what the applicant has already marketed or has stated the intention to market, but of all the items for which registration is sought.

The parties disputed the extent to which Berkshire Fashions' application embraced a broader statement of goods than those before the district court. According to the Federal Circuit, "this aspect alone rendered summary judgment inapplicable, for the Board did not consider the separate goods in the Class 25 application, but stated that all "garments" were included in the district court judgment. Precedent and practice require a more detailed analysis."

The Embedded Patent Attorney

J. Matthew Buchanan at Promote the Progress is discussing the concept of the "EPA" Embedded Patent Attorney here, here, here, and here, including this excerpt:

Following this approach, the attorney does whatever it takes to learn about your
business . . . walking the floor, routinely meeting with employees, reading
everything he can about the business, its industry, and the competition. Over
time, the attorney develops a familiarity and, indeed expertise, in the field
that will return huge dividends. A well-educated (in your business, not a
reference to his/her pedigree) patent attorney can help the business person
steer the ship, so to speak. The patent system provides a wealth of information
about your industry, and a patent attorney that is integrated with your overall
business strategy can sort through the vast amount of information available to
provide meaningful insight on your strengths and weaknesses and to identify (and
seize!) opportunities.

"Of course, the ‘P’ from EPA could really be any specialty," writes Matthew, "I’m just partial to patent attorneys."

The GAO Reports on the USPTO

The U.S. Government Accountability Office ("GAO") has published "Testimony Before the Subcommittee on Courts, the Internet, and Intellectual Property, Committee on the Judiciary, House of Representatives" which summarizes the results of its Report GAO-05-1008T entitled "Improvements Needed to Better Manage Patent Office Automation and Address Workforce Challenges." Their conclusions include that the

• USPTO Continues to Pursue a Fully Automated Patent Process, but Has Not Effectively Managed its Strategy for Achieving This Capability.
• USPTO Lacks Essential Information Technology Investment Management Processes to Support Its Patent Automation.
• USPTO Has Taken Steps to Help Attract and Retain a Qualified Patent Examiner Workforce, but Long-Term Success Is Uncertain.
• USPTO Faces Long-Standing Human Capital Challenges that Could Undermine Its Recruiting and Retention Efforts.
• USPTO Has Made Greater Progress on Strategic Plan Initiatives that Enhance the Agency’s Capability Rather than Productivity and Agility

China Launches Patent Trade Website

According to Shanghai Daily on September 24, 2005, China's new patent trade Website at www.ip426.cn "gathers patent promotion and demand information in Jiangsu and Zhejiang provinces and Shanghai Municipality. If someone is interested, he or she can watch a short video through the video-on-demand system for introduction and talk with the patent-right owner for trade and cooperation."

Author Name Registrable for Series of Books

In In re First Draft, Inc., Serial No. 76420605 (TTAB September 20, 2005), the U.S. Trademark Trial and Appeal Board ruled that an author's name or pseudonym is registrable for a series of books under appropriate circumstance However, it agreed with the PTO that, based on the record evidence, FERN MICHAELS does not function as a trademark for Applicant's goods. "Had Applicant timely submitted certain proofs, the outcome might have been different," notes John Welch at the TTABlog in his insightful analysis of the decision.

Perpetual Movement at WIPO

Not to be confused with perpetual motion, "Creators in Perpetual Movement" highlights the evolution of the watch industry and "the ever-increasing importance of intellectual property to that sector." Sponsored by the World Intellectual Property Organization, the exhibition runs from September 24 to October 14, 2005, at the Crowne Plaza Hotel in Geneva. It is open to the public from 10:00 am to 6.00 pm, seven days a week.

Perhaps they will even have one of Cox's timepieces. Though not a perpetual motion machine per se, these clocks are powered by changes in atmospheric pressure via a mercury barometer so as to never need winding. The change of pressure in the Earth's atmosphere kept a mainspring coiled inside the barrel. The original Cox timepeice now resides in the Victoria and Albert Museum of Great Britain.

Click here for more on perpetual motion.

Current and Emerging Issues Relating to Patents

This WIPO website provides the following links to other sites, articles, and studies containing a variety of views and information on non-exhaustive list of current and emerging issues relating to patents. As the debate about patents develops, further topics may be added and others might be removed from the WIPO website:

• Access to Genetic Resources and Benefit Sharing
• Biotechnology
• Competition and Patents
• Economic Development and Patents
• Inventions Made/Used in Outer Space
• Licensing and Technology Transfer
• Nanotechnology
• Protection of Traditional Knowledge
• R&D, Innovation and Patents
• Software and Business Methods
• Standards and Patents

WIPO Index of Patent Systems

According to their website, the "WIPO Index of Patent Systems" is a tool for helping users of patent statistics understand the impact of differences between patent systems on the interpretation of patent statistics. The Index is based on the results of a survey sent by WIPO in March 2005 to all its Members States. The resulting country profiles reflect the status of the patent system in each country as of May 2005 and will be regularly updated as more information becomes available.

Package Licensing Not Per Se Patent Misuse

In U.S. Philips Corp. v. ITC (Fed. Cir.; September 21, 2005), the appellate court disagreed with the line of analysis employed by the International Trade Commission in concluding that Philips’s package licensing agreements were patent misuse per se, or under the rule of reason:

In light of the efficiencies of package patent licensing and the important differences between product-to-patent tying arrangements and arrangements involving group licensing of patents, we reject the Commission’s conclusion that Philips’s conduct shows a "lack of any redeeming virtue" and should be "conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958). We therefore hold that the analysis that led the Commission to apply the rule of per se illegality to Philips’s package licensing agreements was legally flawed.

* * *

Under the rule of reason, the finder of fact must determine if the practice at issue is "reasonably within the patent grant, i.e., that it relates to subject matter within the scope of the patent claims." If the practice does not "broaden the scope of the patent, either in terms of covered subject matter or temporally," then the patentee is not chargeable with patent misuse. More specifically, "the finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint’s history, nature and effect." Va. Panel, 133 F.3d at 869, quoting State Oil Co. v. Khan, 522 U.S. 3, 10 (1997); see also Monsanto Co., 363 F.3d at 1341.

The Commission’s rule of reason analysis is flawed for two reasons. Most importantly, its conclusion was largely predicated on the anticompetitive effect on competitors offering alternatives to the four so-called nonessential patents in the Philips patent packages. Yet, . . . the evidence did not show that including those patents in the patent packages had a negative effect on commercially available technology. The Commission assumed that there was a foreclosure of competition because compact disc manufacturers would be induced to accept licenses to the technology covered by the [non-essential] Farla and Iwasaki patents and therefore would be unwilling to consider alternatives. As noted, however, there was no evidence before the Commission that any manufacturer had actually refused to consider alternatives to the technology covered by those patents or for that matter that any commercially viable alternative actually existed.

In addition, as in its per se analysis, the Commission did not acknowledge the problems with licensing patents individually, such as the transaction costs associated with making individual patent-by-patent royalty determinations and monitoring possible infringement of patents that particular licensees chose not to license. The Commission also did not address the problem, noted above, that changes in the technology for manufacturing compact discs could render some patents that were indisputably essential at the time of licensing arguably nonessential at some later point in the life of the license. To hold that a licensing agreement that satisfied the rule of reason when executed became unreasonable at some later point because of technological development would introduce substantial uncertainty into the market and displace settled commercial arrangements in favor of uncertainty that could only be resolved through expensive litigation.

Finally, the Commission failed to consider the efficiencies that package licensing may produce because of the innovative character of the technology at hand. Given that the technology surrounding the Orange Book standard was still evolving, there were many uncertainties regarding what patents might be needed to produce the compact discs. As noted, package license agreements in which the royalty was based on the number of units produced, not the number of patents used to produce them, can resolve in advance all potential patent disputes between the licensor and the licensee, whereas licensing patent rights on a patent-by-patent basis can result in continuing disputes over whether the licensee’s technology infringes certain ancillary patents owned by the licensor that are not part of the group elected by the licensee.

We therefore conclude that the line of analysis that the Commission employed in reaching its conclusion that Philips’s package licensing agreements are more anticompetitive than procompetitive, and thus are unlawful under the rule of reason, was predicated on legal errors and on factual findings that were not supported by substantial evidence. For these reasons, we cannot uphold the Commission’s decision that Philips’s patents are unenforceable because of patent misuse under the rule of reason.

Because the Commission did not address all of the issues presented by the administrative law judge’s decision under both the per se and rule of reason analysis, further proceedings before the Commission may be necessary with respect to whether Philips’s patents are enforceable and, if so, whether Philips is entitled to any relief from the Commission. Accordingly, we reverse the Commission’s ruling on patent misuse for the reasons stated, and we remand this case to the Commission for further proceedings consistent with this opinion.

Assignor Estoppel Prevents Inventor Testimony on Invalidity

In Pandrol USA, LP, et al. v. Airboss Railway Products, Inc., et al. (Fed. Cir.; September 19, 2005) the lower court properly invoked the doctrine of assignor estoppel to excluded the inventor's tesimony on invalidity:

"Assignor estoppel is an equitable doctrine that prevents one who has assigned the rights to a patent (or patent application) from later contending that what was assigned is a nullity." Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988). Thus, an assignor and parties in privity with the assignor are estopped or barred from asserting invalidity defenses. Id. In this case, the district court invoked that doctrine to bar an assignor from testifying against the validity of its own patent.

Courts frequently mention four justifications for the doctrine of assignor estoppel: "(1) to prevent unfairness and injustice; (2) to prevent one [from] benefiting from his own wrong; (3) [to adopt the] analogy [of]. . . estoppel by deed in real estate; and
(4) [to adopt the] analogy to a landlord-tenant relationship." Id. (quoting Hal Cooper, Estoppel to Challenge Patent Validity: The Case of Private Good Faith vs. Public Policy, 18 Case W. Res. 1122, 1128 (1967)).

This case relies primarily on the "unfairness and injustice" justification. "[A]n assignor should not be permitted to sell something and later assert that what was sold is worthless, all to the detriment of the assignee." Diamond, 848 F.2d at 1224.
"The principle of fair dealing as between assignor and assignee of a patent whereby the assignor will not be allowed to say that what he has sold as a patent was not a patent has been part of the fabric of our law throughout the life of this nation." Id. (quoting Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249, 260 (Frankfurter, J., dissenting)). Thus, assignor estoppel prevents an assignor from asserting that its own patent, for which it may have received value upon assignment, is invalid and worthless. The district court properly excluded Mr. Young’s testimony on this basis.

The district court also correctly excluded Mr. Young’s testimony because Airboss did not produce his expert report before trial. Under Federal Rule of Civil Procedure (FRCP) 26(a)(2), testimony offered as expert opinion requires the offer of an expert report prior to trial. Mr. Young’s declaration contains expert opinion because he opines on claim construction and interpretation of the original application. Thus, without an expert report proffered for the record at any time, the district court correctly excluded this testimony on the basis of FRCP 26(a)(2).

Lack of Intrinsic Evidence Allows Reliance on Dictionary Definition

In Free Motion Fitness, Inc. v. Cybex International, Inc. (Fed. Cir.; September 19, 2005) the court held that where there was no intrinsic evidence to give the term a specialized meaning, the lower court properly looked to dictionaries for definitions of the word "adjacent" for assistance in determining the term’s meaning to one skilled in the art. The claim at issue involved an exercise apparatus [right], including a first extension arm having "a first end pivotally supported adjacent the resistance assembly at a first pivot point." According to the opinion,

"Our en banc decision in Phillips clarified the appropriate use of dictionaries in claim construction, rejecting the view that dictionary definitions govern unless contradicted by intrinsic evidence. Nonetheless Phillips confirms that courts may "‘rely on dictionary definitions when construing claim terms’" and that "[d]ictionaries . . . are often useful to assist in understanding the commonly understood meaning of words." The court must ensure that any reliance on dictionaries accords with the intrinsic evidence: the claims themselves, the specification, and the prosecution history. Under Phillips, the rule that "a court will give a claim term the full range of its ordinary meaning," Rexnord Corp. v. Laitram Corp., 274 F.3d 1336, 1342 (Fed. Cir. 2001), does not mean that the term will presumptively receive its broadest dictionary definition or the aggregate of multiple dictionary definitions. Rather, in those circumstances where reference to dictionaries is appropriate, the task is to scrutinize the intrinsic evidence in order to determine the most appropriate definition.

Webster’s Third New International Dictionary provides several different definitions of "adjacent," two of which are possibilities here. One definition is "not distant" and the other is "relatively near and having nothing of the same kind intervening."The specification thus suggests that "adjacent" simply means "not distant." We find nothing in the intrinsic record suggesting a concern with intervening pivot points or excluding an additional pivot point between the "first pivot point" and the resistance assembly, particularly given that a "pivot point" and a "resistance assembly" are not items of the "same kind". Renishaw PLC v. Marposs Societa’ Per Azioni, 158 F.3d 1243, 1250 (Fed. Cir. 1998) ("[W]here there are several common meanings for a claim term, the patent disclosure serves to point away from the improper meanings and toward the proper meaning."). The specification thus suggests that "adjacent" simply means "not distant." Indeed, Nautilus and Cybex appeared to agree before the district court that adjacent means "near." Under this definition the district court’s judgment of non-infringement is not supported because the pivot points of the accused devices are not distant from the resistance assembly.

Nystrom Opinion Revised in View of Phillips

In Nystrom v. Trex Company, Inc., et al. (Fed. Cir. September 19, 2004), the court withdrew its previous opinion and granted a panel rehearing for the limited purpose of addressing the effects of Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). At the Georgia Bar Patent Rountable in Atlanta on September 22, 2005, Lawrence Nodine, of Needle & Rosenberg made the following summary comparisons between the original and revised opinions, with the quoted passages from the second opinion:

• Both start by looking at the words of the claim
• Before Phillips, go to the dictionary first; after Phillips the claims must be read in view of the specification:

"The person of ordinary skill in the art views the claim term in the light of the entire intrinsic record. Thus, the claims "must be read in view of the specification, of which they are a part." See id. Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc). "‘The construction that stays true to the claim language and most naturally aligns with the patent’s description of the invention will be, in the end, the correct construction.’" Phillips, 415 F.3d at 1316 (quoting Renishaw PLC v. Marposs Societa’ per Azioni, 158 F.3d 1243, 1250 (Fed. Cir. 1998)). In addition to
the written description, "the prosecution history can often inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it would otherwise be."

• Before Phillips, the dictionary must be disavowed; after Phillips dictionaries do not trump;

"In discerning the meaning of claim terms, resort to dictionaries and treatises also may be helpful. Id. at 1318. However, "undue reliance on extrinsic evidence poses the risk that it will be used to change the meaning of claims in derogation of the ‘indisputable public records consisting of the claims, the specification and the prosecution history,’ thereby undermining the public notice function of patents." Id. at 1319 (quoting Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1578 (Fed. Cir. 1995)). . . ."

However, as explained in Phillips, Nystrom is not entitled to a claim construction divorced from the context of the written description and prosecution history. The written description and prosecution history consistently use the term "board" to refer to wood decking materials cut from a log. Nystrom argues repeatedly that there is no disavowal of scope in the written description or prosecution history. Nystrom’s argument is misplaced. Phillips, 415 F.3d at 1321 ("The problem is that if the district court starts with the broad dictionary definition in every case and fails to fully appreciate how the specification implicitly limits that definition, the error will systematically cause the construction of the claim to be unduly expansive."). What Phillips now counsels is that in the absence of something in the written description and/or prosecution history to provide explicit or implicit notice to the public—i.e., those of ordinary skill in the art—that the inventor intended a disputed term to cover more than the ordinary and customary meaning revealed by the context of the intrinsic record, it is improper to read the term to encompass a broader definition simply because it may be found in a dictionary, treatise, or other extrinsic source. Id.; see also Snow v. Lake Shore & Mich. S. Ry. Co., 121 the appellants, that this language is to be taken as a mere recommendation by the the arrangement of the piston and piston-rod.").

• Claim differentiation is not controlling

"When different words or phrases are used in separate claims, a difference in meaning is presumed. Tandon Corp. v. United States Int’l Trade Comm’n, 831 F.2d
1017, 1023 (Fed. Cir. 1987). This principle of claim construction would suggest that the difference in the use of terms has significance and that "board" should not be limited to wood that is cut from a log. However, simply noting the difference in the use of claim language does not end the matter. Different terms or phrases in separate claims may be construed to cover the same subject matter
where the written description and prosecution history indicate that such a reading of the terms or phrases is proper. Id. at 1023-24 (affirming the International Trade Commission’s holding that "the inclusion of the term ‘non-gimballed’ in claim 5 did not require that claims 1 and 12 be read to encompass a gimballed first transducer")."

• Pre-Phillips decision requires that written description disclaim broad dictionary definition; after Phillips, the specification need not amount to a disavowal

An examination of the term "board" in the context of the written description and
prosecution history of the ’831 patent leads to the conclusion that the term "board" must be limited to wood cut from a log. The written description begins by noting that "[a] variety of specialized flooring materials have been developed for interior and exterior use." ’831 patent, col. 1, ll.13-14. The discussion then proceeds to the specific context of wood flooring materials for exterior use. In the context of the discussion of wood flooring materials for exterior use, the patent states, "In all conventional flooring materials known to applicant, the top and bottom horizontal surfaces of these flooring materials are flat and planar. As a result, water tends to stand on the surface of the decking material, causing it to deteriorate more quickly than it otherwise would." Id. at ll. 57-61. The discussion continues, "Further, the process used to cut such lumber from logs can produce inferior product on the outermost boards, often leading to scrap." Id. at ll. 65-67. The Background of
the Invention, thus, frames the invention in the context of wood decking
materials cut from logs, even though it acknowledges that other materials exist.

• After Phillips, panel is skeptical about arguments to avoid estoppel

"[W]hen arguing against an obviousness rejection, Nystrom stated, "YOSIDA [sic] is
clearly not concerned with materials made from wood, and especially an elongate
board for exterior use and having a convex top surface when installed that will
shed water and at the same time provide a surface that is suitable for
supporting furniture and comfortable to walk on." Id. at 4. Although Nystrom
argues that the latter statement was limited to explaining why Yoshida could not
be combined with the Zagelmeyer reference, which was directed to wood, we are
not convinced that the statement is so limited. "

• Before Phillips, panel reluctant to find "disavowal."

Nystrom explained in the same response that "the extent of curvature used by
ZAGELMEYER in his boards was such that a distinctly uneven surface resulted,
giving any surface constructed from them a corduroy-like texture which would
have been unsuitable for supporting furniture, and which would have produced a
distinct tactile sensation of roughness or uneven surface." Id. at 3. Thus, it is clear that when Nystrom was distinguishing Yoshida from an elongate board that is suitable for supporting furniture and comfortable to walk on, he was referring to the invention and not Zagelmeyer. We need not decide, however, whether this statement represents a clear disavowal of claim scope because the context reflects Nystrom’s consistent use of the term board to refer to wood decking materials cut from a log.

• After Phillips, panel gets to dictionaries last, and gives little weight compared to specification

"Nystrom explained in the same response that "the extent of curvature used by ZAGELMEYER in his boards was such that a distinctly uneven surface resulted, giving any surface constructed from them a corduroy-like texture which would have been unsuitable for supporting furniture, and which would have produced a distinct tactile sensation of roughness or uneven surface." Id. at 3. Thus, it is clear that when Nystrom was distinguishing Yoshida from an elongate board that is suitable for supporting furniture and comfortable to walk on, he was referring to the invention and not Zagelmeyer. We need not decide, however, whether this statement represents a clear disavowal of claim scope because the context reflects Nystrom’s consistent use of the term board to refer to wood decking materials cut from a log. "

• Phillips distinguished: Defendant in Phillips sought to narrow ordinary meaning; plaintif here trying to broaden with "obscure definitions":

In Phillips, we held that the term "baffle" did not require any specific angle—even in view of the written description’s limited disclosure of baffles oriented at right angles to the walls—because the ordinary meaning of the term "baffle," as reflected in a dictionary definition to which the parties stipulated and as supported by the overall context of the written description, was simply "objects that check, impede, or obstruct the flow of something." 415 F.3d at 1324. In this case, both parties acknowledge the ordinary meaning of "board" as "a piece of sawed lumber." Nystrom, however, seeks to broaden the term "board" to encompass relatively obscure definitions that are not supported by the written description or prosecution history. Broadening of the ordinary meaning of a term in the absence of support in the intrinsic record indicating that such a broad meaning was intended violates the principles articulated in Phillips. Therefore, we affirm the district court’s construction of the term "board."

For a copy of Mr. Nodine's side-by-side comparison of the two opinions, please feel free to contact me.

Non-Physical Differences Must Appear in Substantially All Gray Market Infringing Goods

In SKF USA, Inc. v. International Trade Commission, et al. (Fed Cir., September 14, 2005) the court held that physical material differences are not required to establish trademark infringement involving gray market goods.

"That is because trademarked goods originating from the trademark owner may have nonphysical characteristics associated with them, including services, such that
similar goods lacking those associated characteristics may be believed by
consumers to have originated from the trademark owner and, lacking such traits,
may mislead the consumer and damage the owner’s goodwill," wrote Judge
Lourie.

However, the court went on to affirm the Commission's determination on no trademark infringement because SKF USA did not establish a material difference between substantially all of its own products and the gray market imported goods based upon post-sale technical and engineering services.

. . . [W]e agree with the Commission that a plaintiff in a gray market trademark
infringement case must establish that all or substantially all of its sales are
accompanied by the asserted material difference in order to show that its goods
are materially different. If less than all or substantially all of a trademark
owner’s products possess the material difference, then the trademark owner has
placed into the stream of commerce a substantial quantity of goods that are or
may be the same or similar to those of the importer, and then there is no
material difference. Indeed, if it cannot be said that substantially all of a
trademark owner’s goods are accompanied by the asserted characteristic, then it
may properly be concluded that, in effect, there exists no material difference
between the trademark owner’s goods and the allegedly infringing goods. We have
reasoned before that "the consuming public, associating a trademark with goods
having certain characteristics, would be likely to be confused or deceived by
goods bearing the same mark but having materially different characteristics."
Gamut, 200 F.3d at 779. Conversely, then, a trademark owner’s argument that
consumers would be confused by gray goods lacking an asserted material
difference from the authorized goods is inconsistent with the owner’s own sale
of marked goods also lacking that material difference from its own authorized
goods. To permit recovery by a trademark owner when less than "substantially
all" of its goods bear the material difference from the gray goods thus would
allow the owner itself to contribute to the confusion by consumers that it
accuses gray market importers of creating. . . .

[Alhough] it was undisputed that 87.4% of SKF USA’s sales to authorized distributors were supported by the "full panoply" of post-sale technical and engineering services. . . ., [t]he Commission also found that "SKF USA’s bearings do not differ materially from respondents’ bearings" because "SKF USA has authorized the sale of SKF USA marked bearings by nonauthorized distributors, gray market distributors (including respondents), surplus distributors, and RBC/Tyson which we find are not predictably and consistently accompanied by post-sale technical and engineering services." Those are also findings of fact to which we defer.

USPTO Updates Centralized Delivery Exceptions

On September 19, 2005, the U.S. Patent and Trademark Office issued a pre-OG notice entitled "Updated Lists of Exceptions to the Centralized Delivery and Facsimile Transmission Policy for Patent Related Correspondence." This notice replaces all prior Office notices specifying a fax number or hand carry address for certain patent related correspondence.

The United States Patent and Trademark Office (Office) requires most patent related correspondence to be either

• faxed to the Central FAX number (571-273-8300),
• hand carried or delivered to the Customer Service Window (located at the Randolph Building, 401 Dulany Street, Alexandria, VA 22314),
• mailed to the mailing address set forth in 37 CFR 1.1 (e.g., P.O. Box 1450, Alexandria, VA 22313-1450), or
• transmitted to the Office using the Office’s Electronic Filing System.

Exceptions to this so-called "centralized delivery" policy generally involve situations where special handling of the patent related correspondence is available. All the current exceptions are listed in this notice which explains that five significant updates have occurred to the lists of exceptions since they were last published on July 12, 2005:

1. the Office of Public Records exceptions have been added.
2. the PCT Operations facsimile number for correspondence permitted to be filed by facsimile in international applications has changed to 571-273-3201.
3. the Office of Patent Publication facsimile has changed to 571-273-2885, the local area telephone number to check on receipt of payments transmitted by facsimile under that exception has also changed to 571-272-4200.
4. the Assignment Branch facsimile number has changed to 571-273-0140.
5. the Central Reexamination Unit (CRU) facsimile number has changed to 571-273-9900.

USPTO Outsources PCT Patent Searching

On September 21, 2005, the United States Patent and Trademark Office (USPTO) announced that it has awarded contracts to Landon IP, Inc., and IP Data Miner Inc., to participate in a Patent Cooperation Treaty (PCT) search pilot program. This pilot will determine whether searches by commercial entities can maintain the accuracy and quality standards for searches conducted by the USPTO during the patent examination process while remaining cost effective.

The USPTO is also exploring contracting out some of its PCT-related work, on a pilot basis, to other established government intellectual property offices that currently perform PCT-related searches/examinations. This pilot is expected to begin next month.

Information concerning the PCT search pilot contracting program is available at http://www.uspto.gov/web/offices/ac/comp/proc/pctsearch/pctsearchhom.html.

NAPP Georgia Meeting on the Politics of Patent Reform

The National Association of Patent Practitioners Georgia Regional Chapter will be hosting a meeting in Atlanta, GA. on September 27, 2005, 6:30-8:30 PM 999 Peachtree Street, Atlanta Georgia, 1st Floor conference room

A presentation will be given by Hayden Gregory, lobbyist for the ABA, on the Patent Reform Act of 2005.

For details and registration visit http://www.napp.org/events/ga_chap.asp.

EU-US Wine Agreement May Signal the Future of Geographic Indicators

On September 15, 2005, U.S. Trade Representative Rob Portman announced that the United States and the European Community reached agreement on wine-making practices and labeling of wine. Among other things, the agreement provides for the United States limiting use of certain “semi-generic” terms in the U.S. market; the EU allowing use of certain regulated terms on U.S. wine exported to the EU; and each recognizing certain names of origin in each other’s market.

According to the U.S. press release, "The Agreement does not address the use of 'geographical indications,' a form of intellectual property." However, BRIDGES Weekly Trade News Digest noted on September 21 that semi-generic terms have been at the core of the larger dispute over whether certain "names of origin" can be used for products not originating from the region in question:

The pact therefore sets a precedent for product-based GI recognition among the
WTO's two most powerful Members. This approach could spill over into their
negotiating positions in the WTO. There, it would run up against developing
countries,which have been pushing for a rule-based solution for recognising and
registering GIs under the TRIPS Agreement given their concern that a
product-based approach -- especially one limited to wine -- would not adequately
cover their own geographically-based food and handicraft products.

Since the EU and the US are among the world's biggest wine producers, theirdeal may motivate other producers such as Australia, Argentina, South Africaand Chile to seek similar protection for their wines in the WTO. In thismanner, a product-based list could emerge as the basis for WTO negotiations.This would require developing countries to develop product lists of theirown in order to benefit from GI protection.

The press release from the European Union noted that a second-phase of negotiations "will start ninety days after the date of entry into force of the agreement and will, among other things, include a dialogue on geographical indications (GIs), a dialogue on the matter of names of origin including the future of the semi-generic terms, a dialogue on the use of traditional expressions, low alcohol wines, certification, wine-making practices and the creation of a joint committee on wine issues."

California vintners applauded the bilateral deal for smoothing rough spots in the market for exports to Europe. European winemakers also toasted the new commitment to protection of their names. More on the agreement is available from the INTA here.

However, according to William New writing for Intellectual Property Watch on September 23, 2005, a September 16, 2005 meeting of the World Trade Organization committee responsible for intellectual property rights saw little progress on the issue of a creating a multilateral registration system for geographical indications of wines and spirits under Article 23.4 of TRIPS. Nonetheless, the meeting dis produce a new paper from the WTO secretariat comparing three proposals from Hong Kong (TN/IP/W/8), the European Union (TN/IP/W/11), and a joint proposal from Argentina, Australia, Canada, Chile, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Japan, Mexico, New Zealand, Taiwan and the United States (TN/IP/W/10). The main differences between these positions appeara to be whether GI registration should be mandatory. Europe would like to amend the TRIPS Agreement and make registration mandatory. The joint proposal would not amend TRIPS and would make registration voluntary by encouraging the use of a database of registered items. The Hong Kong proposal falls between, providing some protection for registered items across all members who choose to participate.

A separate effort is reportedly underway at the WTO to extend that GI protection to other products.

TGIF for Taking Your Legal Administrator to Lunch

Don't forget to (at least) take your Legal Administrator to lunch for Professional Legal Management Week, October 3-7, 2005.

According to the website, Professional Legal Management Week will be observed annually during the first full week in October and provides a forum for recognizing those in legal management for what they do and the role they play in the success of the organization, and in its service to its clients and those who work in the organization. The objectives of PLMW are:

• To provide awareness, understanding and education about the legal management profession, and
• To increase knowledge of the diverse roles within the profession.

Learn more about the sponsors of this week of recognition (or atonement, as the case may be).

Malta Patent Anomaly Driving Pharmaceutical Investment

According to Andrew Jack writing for the Financial Times on September 19 2005, although Malta has strong intellectual property protection laws, due to its small population of 400,000, few pharmaceutical companies ever bothered to incur the costs of obtaining Maltese patent protection. This patent anomaly has reportedly turned the tiny Mediterranean island into an unexpected investment location for the pharmaceutical industry:

The leading drugs companies have now begun registering their patents in Malta,
although they cannot do so retrospectively. There is also pressure to tighten the Bolar provision [EC Directive 2004/27/EC on pre-patent-expiry development activity] on across Europe. The even lower costs of the rising number of Indian generics companies are posing a fresh challenge. "We have a window of
opportunity for 15 years," says Joseph Tabona, chairman of Malta Enterprise, the local inward investment agency. "We view generics as a stepping stone
to other things such as 'health tourism' as we construct a new hospital."

USPTO Electrical Patent Examining Groups Seminar

Partnering in Patents XII
October 26, 2005
12:00 - 4:00 pm
USPTO Madison Auditorium
600 Dulaney St.
Alexandria, Virginia 22314
Cost: Free to attend, but $100 administrative fee for CLE credit.

One day prior to the AIPLA Annual Meeting, this seminar will feature an open dialogue between the USPTO Electrical Patent Examining Groups, the AIPLA Electronic and Computer Law Committee, and the Bar with opening remarks by Michael Dunnam of Woodcock Washburn.

Anton Fetting in the Office of Patent Legal Administration, and Lynne Browne Supervising Patent Examiner for Tech Center 2100 will discuss the Pre-Appeals Conference. James Dwyer, Director of Tech Center 2800 will then discuss the new Re-Exam Unit.

John Whealan, USPTO Solicitor, and Vincent Roccia and John McGlynn of Woodcock Washburn,
will discuss claim interpretation in view of Phillips v. AWH. Joseph Rolla, Deputy Commissioner of Patents, will also discuss Patent Reform.

Register here. There is no fee to attend.

Free Patent Damages Teleconference

Free Patent Damages Teleconference
Thursday, October 06, 2005
1:00 PM ET to 2:00 PM ET
Teleconference

Kathleen Kedrowski, of Kilpatrick Stockton LLP, and Shawn McGrath, of LECG, Inc. will address the following and related issues during the session:

• Patent infringement action statistics, including patent applications filed, patent infringement cases filed, trends in damages awards over time, top damages awards, types of damages awarded, and a comparison of damages awarded in bench trials vs. jury trials;
• Seminal cases that have shaped patent damages case law; and
• The effect of recent decisions in the Federal Circuit on patent damages case law.

More information and free registration are available here.

When to Audit Your I/P

Todd Mayover at the IP Counsel Blog writes that "In general, it is wise to conduct an IP audit at least once a year and sometimes more frequently depending on the size of the organization and the amount of intellectual property assets involved. Besides a regularly scheduled IP audit, there are significant events that may also trigger the need for an IP audit," including

• New Intellectual Property Management
• Transfer or Assignment of Interest in Intellectual Property
• Licensing Program
• Significant Change in Law, and
• Financial Transactions Involving Intellectual Property

Sept. 23 Webinar: Mediation and the Federal Circuit Practice

"Mediation and The Federal Circuit Practice"
Friday, September 23, 2005
12:15 to 1:25 p.m. Eastern
in Washington DC, and On-Line
Cost: $20

Panel members:

Alvin A. Schall, Federal Circuit Judge
Edward Hosken, Federal Circuit Mediation Officer-Designate
Martha Schneider, General Counsel U.S. Merit Systems Protection Board
Harrie Samaras, RatnerPrestia
Bob Niemic, Federal Judicial Center

Real Location:

The Federal Circuit Bar Association
Charitable and Educational Fund
Suite 900, 1620 I Street, NW
Washington, DC 20006(near Farragut West Metro)
Register here (and get a free box lunch)

Online Location:

To register for the Online Webcast, please visit Fedcirbar.webex.com where the registration password is 'fcba'

Get more information on upcoming patent Law conferences from Dennis Crouch's Patently-O Blog.

USPTO Names Advisory Committee Members

Three new members have been named to each of the Patent Public Advisory Committee (PPAC) and Trademark Public Advisory Committee (TPAC) to counsel USPTO Director Jon Dudas on the agency's operations, including its goals, performance, budget and user fees. The new members will serve three-year terms on the committees, which each have nine voting members.

The new PPAC members are:

Maximilian A. Grant, an associate in the litigation department of the Washington, D.C. office of Latham & Watkins. He is the local chair for the intellectual property and technology practice group. He joined Latham & Watkins in 2002 after serving as Deputy Assistant Secretary of Defense.

Gerald J. Mossinghoff, senior counsel to Oblon, Spivak, McClelland, Maier and Neustadt, an intellectual property law firm in Alexandria, Va. He is a former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks and former president of the Pharmaceutical Research and Manufacturers of America.

Lisa Norton, an attorney at DLA Piper, Rudnick, Gray, Cary US LLP. Prior to this position, she practiced in the Washington, D.C. office of King & Spalding. Her practice focuses on all aspects of patent law.

The new TPAC members are:

Ayala Deutsch, vice president and senior intellectual property counsel at NBA Properties, Inc., in New York. Her specialties include trademark law, copyright law and Internet law. Ms. Deutsch is a member of the board of directors of the International Trademark Association and co-chairs the New York State Bar Association Committee on Sports Law.

Van H. Leichliter, intellectual property leader and corporate counsel-trademarks at DuPont Corporate. He is a member of the government relations committee of the International Trademark Association.

Albert Tramposch, director of trademark registry services, Morgan, Lewis & Bockius in Washington, D.C. He has practiced exclusively in the area of intellectual property law for more than 19 years, and has worked in private practice in Alexandria, Va., Seattle, Wash., and Washington, D.C.

Judicial Conference Proposes End to Non-Precedential Opinions

The Judicial Conference has endorsed a new Rule 32.1 of the Federal Rules of Appellate Procedure that would permit the citation of judicial dispositions that have been designated "not for publication," "non-precedential," or the like. The proposed rule applies only to decisions issued on or after January 1, 2007 and must still be approved by the Supreme Court.

Section a) of the proposed rule states that "A court may not prohibit or restrict the citation of federal judicial opinions, orders, judgments. or other written dispositions that have been designated as "unpublished," "not for publication," "non-precedential," "not precedent," or the like." According to the 2005 Report of the Advisory Committee on Appellate Rules:

Rule 32.1 is extremely limited. It does not require any court to issue an unpublished opinion or forbid any court from doing so. It does not dictate the circumstances under which a court may choose to designate an opinion as "unpublished" or specify the procedure that a court must follow in making that determination. It says nothing about what effect a court must give to one of its unpublished opinions or to the unpublished opinions of another court. In particular, it takes no position on whether refusing to treat an unpublished opinion of a federal court as binding precedent is constitutional. Rule 32.1 addresses only the citation of federal judicial
dispositions that have been designated as "unpublished" or "non-precedential" - whether or not those dispositions have been published in some way or are precedential in some sense. . . .

[W]hether or not no-citation rules were ever justifiable as a policy matter, they are no longer justifiable today. To the contrary, they tend to undermine public confidence in the judicial system by leading some litigants - who have difficulty comprehending why they cannot tell a court that it has addressed the same issue in the past - to suspect that unpublished opinions are being used for improper purposes. They require attorneys to pick through the inconsistent formal no-citation rules and informal practices of the circuits in which they appear and risk being sanctioned or accused of unethical conduct if they make a mistake. And they forbid attorneys from bringing to the court's attention information that might help their client's cause.

Because no-citation rules harm the administration of justice, and because the justifications for those rules are unsupported or refuted by the available evidence, Rule 32.1 (a) abolishes those rules and requires courts to permit unpublished opinions to be cited.

Current practices regarding citation of unpublished opinions vary among the circuits, with some permitting citation, others disfavoring citation but permitting it in certain circumstances, and others prohibiting citation. According to Tony Mauro writing for the Legal Times on September 20, 2005, "The 2nd, 7th, 9th, and federal circuits ban citation of unpublished opinions outright, while six other circuits discourage it."

The Federal Circuit court of appeals opposed the change in a January 6, 2004 letter from Chief Judge Mayer:

. . . In the view of the judges of the Federal Circuit, the adoption of Rule 32.1, which will override our local rule, may adversely affect the administration of justice by skewing the allocation of judicial resources, delaying issuance of precedential opinions, increasing the issuance of judgments without an accompanying opinion, and harming litigants.

The proposed rule may skew the allocation of judicial resources. As the Committee is aware, the decision to designate certain opinions as nonprecedential stemmed from the ever-increasing appellate caseload of the last few decades and the impossibility of providing a precedential opinion in every case. The adoption of the practice allows the judges to concentrate their efforts on opinion writing in cases involving important and precedent-setting issues. Opinions issued as nonprecedential do not require the same amount of time or effort. The Advisory Committee opines that this allocation of judicial resources will not be affected by the proposed rule because a court, although barred from prohibiting the citation of nonprecedential dispositions, may nonetheless decide by local rule that it will not treat its nonprecedential opinions as binding precedent. We fear that this finely-drawn distinction will not forestall the need to allocate judicial resources differently. Judges will certainly feel compelled to devote more time and resources to nonprecedential opinions if counsel cite and rely on them.

Indeed, having a rule that allows a party to cite a nonprecedential opinion and a second rule that would mandate that a court ignore such citation does not seem workable. Further, if a circuit maintains a rule barring the court from treating a nonprecedential opinion as binding, there seems little point in allowing a litigant to cite such nonprecedential opinions.

It is also likely that the issuance of nonprecedential opinions in any number of routine cases will be delayed as judges devote more time to writing them. That, in turn, will either delay issuance of precedential opinions or result in less time being devoted to preparing them. On the other end of the spectrum, it is likely that there will be an increase in Federal Circuit Rule 36 judgments without opinion. In our view, both of these developments would be detrimental to the administration of justice.

Finally, although the proposed rule is intended to benefit litigants, the effect may be the opposite. First, many litigants may feel compelled to significantly expand the breadth and depth of their legal research because of the existence of the rule. However, this expanded time, effort, and cost will yield commensurately little in return. Nonprecedential opinions with abbreviated fact patterns and without new legal principles will in nearly all instances lend little clarity to the law. . . .

"So, citing an unpublished opinion is something like citing part of the law," writes J. Craig Williams at his May it Please the Court blog. "It just doesn't work."

The Politics of Patent Reform in the U.S.

In the third installment of his occasional series on patent politics, Declan McCullagh writes for CNet news.com on September 13, 2005 about the Patent Reform Act of 2005 which was introduced by Congressman Lamar Smith:

The legislation suddenly has become a flash point about everything that's right
with the U.S. patent system--and everything that's wrong with it. Technology
companies fighting expensive patent cases are hoping the bill will reduce
litigation, while open-source advocates say it will do nothing to hinder the
rising tide of software patents being issued. Many people feel that the measure
will make only modest improvements, if any, to the quality of patents being
awarded.

He also writes that Orin Hatch may be preparing to offer a competing bill in the Senate:

[Hatch] indicated that he might consider two other legislative options. The first one would be to permit third parties to submit "prior art," the legal term for evidence that an alleged invention was already public, after the patent application has been published but before it has been granted. A second option would be to repair the Patent and Trademark Office's existing re-examination process, which is virtually unused.

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WIPO Trademark Gazette Now On-Line

The World Intellectual Property Organization (WIPO) has begun publishing an on-line edition of the WIPO Gazette of International Marks, the official publication of the Madrid System for the International Registration of Trademarks. The on-line version of the Gazette is available on a weekly basis and is free-of-charge.

The WIPO Gazette of International Marks contains data on new international registrations, renewals, subsequent designations as well as other changes to and entries affecting international trademark registrations. The Gazette also contains information of general interest such as declarations and notifications made by contracting parties under the Agreement, the Protocol – the two treaties that govern the Madrid System – or the Common Regulations under these treaties regarding particular requirements, or the amounts of individual fees.

The international trademark system administered by WIPO allows a trademark owner the possibility of having a mark protected in up to 76 countries and the European Community (EC) by filing one application, in one language, with one set of fees, in one currency. Thereafter, the international registration can be maintained and renewed through a single procedure. An international registration under the Madrid System produces the same effects as an application for registration of the mark in each of the contracting parties designated by the applicant. If protection is not refused by the trademark office of a designated contracting party, then the status of the mark is the same as if it had been registered by that office.

The system is governed by two international treaties, namely the Madrid Agreement and the Madrid Protocol. The Madrid Protocol which became operational in 1996 introduced several features including the ability to submit applications in English and extend the period for notification of a refusal which made the system more flexible and attractive to a larger number of countries. Applicants may now submit applications in three working languages of the system, namely, English, French and Spanish.

The Madrid Express database includes all international registrations that are currently in force or have expired within the past six months. It is updated daily.

It also includes data relating to international applications and subsequent designations that have been received by the International Bureau but have not yet been recorded in the international register of marks. With regard to these, users are warned that the International Bureau has not yet made a decision on the international applications or subsequent designations concerned.
While every effort is made to ensure that this information accurately reflects the data recorded in the International Register, the only official publication remains the Gazette and the only official statements by the International Bureau regarding the contents of the International Register for a given international registration remain the certified extracts from the Register established on request by the International Bureau.

The subscription-only ROMARIN database contains a more-detailed history of the international marks.

USPTO Restarts Deadlines for Areas Affected by Hurricane Katrina

On September 15, 2005, the U.S. Patent and Trademark Office announced that it was restarting the time period of response to outstanding deadlines in applications having a corresponence address in certain postal areas of Alabama, Louisiana, or Mississippi affected by Hurricane Katrina.

For applications pending as of September 1, 2005, having a correspondence address in postal zip codes 36XXX, 39XXX, 700XX, 701XX, 702XX, 703XX, and 704XX, the Office is withdrawing any outstanding Office actions, notices of allowance, and other Office notices, and re-issuing those documents electronically via its image file wrapper (IFW) system. Applicants may view the included notice restarting the period for response in these applications via the private side of the USPTO's Patent Application Inspection Retrieval (PAIR) system. Applicants who do not currently have access to the private side of the USPTO's PAIR system will still be able to view the notice restarting the period for reply and the Office action, notice of allowance, or other Office notice in published applications via the public side of the USPTO's PAIR system.

Inquiries concerning this notice, or on how to obtain access to the private side of the USPTO PAIR system, may be directed to a legal advisor in the Office of Patent Legal Administration, at 877-PTO-NORL (877-786-6675) or 571-272-7704, or by e-mail at PatentPractice@,uspto.gov.

TGIF for Summertime Fun in Chicago

I'll be participating in the 42nd Annual Corporate Patent Seminar at the Four Points Sheraton in downtown Chicago on September 18-20.

Magnificent Mile, here I come! Watch for me near the water fountain in the lower left corner of this image (reload for the current view).

Thank Goodness It's Friday,

--Bill Heinze

Thoughts on the WTO Decision on Geographical Indications

According to Burkhart Goebel, writing for the INTA Bulletin on September 15, 2005, the core questions under the trademark claim in the recent World Trade Organization Panel decision on geographical indications (GIs) were 1) whether a prior trademark continued to enjoy protection if a confusingly similar GI was subsequently registered, and 2) whether the trademark would be enforceable against such later GI:

The language is somewhat convoluted, but the message is clear: A prior
trademark may block a later GI. Once this is accepted, as well as the principle
of territoriality, it may only be a small step to a multilateral system that
more closely reflects the Madrid system. Indeed, such a proposal was made by
INTA. It is a step that still has to be made and sometimes even seemingly small
steps can be difficult to make. However, the Panel has opened the door for such
a step to be possible.

Does that mean that we are only a small step away from a solution to the wider GI agenda? Certainly not. It only means that with the clarification of one key principle the debate can move on to discuss the true impact of, for instance, extension of Article 23 TRIPS protection on the availability of generic terms or trademarks. That debate, which is likely to be more technical in nature, is still ahead of us and necessary. It is an important achievement of the Panel decision that it paved the way for such a debate to become possible at all.

IPO Publishes Survey Results

According to the press release, 51.3 percent of respondents to an Intellectual Property Owners Association survey rated the quality of patents issued in the U.S. as less than satisfactory or poor (47.5 percent lessthan satisfactory and 3.8 percent poor). Those rating quality more thansatisfactory or outstanding were 8.8 percent of all respondents (8.8 percentmore than satisfactory and 0 percent outstanding). The portion saying it is satisfactory was 40.0 percent.

With regard to patent application pendancy, over two-thirds of respondents said they thought the patent process would get longer, not shorter, over the next three years. And nearly three-quarters said theywould be spending more, not less, on patent litigation over the coming years.

Additional survey results:

• Compared with quality 3 years ago, more companies thought quality is worse now than thought it is better (24.3 percent somewhat worse, 12.7 percent somewhat better and 53.3 percent the same).
• For the next three years, more companies thought quality will get worse than thought it will improve (28.7 percent get worse, 15.0 percent improve, and 51.2 percent stay the same).
• A majority said the patent filing and issuing process in the U.S. Patent and Trademark Office will get longer during the next three years (67.5 percent get longer, 16.3 percent get shorter, 13.8 percent stay the same).
• 73.8 percent of companies said their resources spent on patent litigation will increase over the next three years (73.8 percent will increase, 2.5 percent will decrease, 17.5 percent will stay the same and 6.3 percent don't know).

Douglas Sorocco (Bio, Email) at the PHOSITA Blog says that he's not sure about many of the surveys findings:

First, I'm not convinced of the measure of a high quality patent. There have
been numerous ways of measuring patent quality, including later citations and
success in court. However, I believe that a high quality patent is one that
never even needs to go to court. Sure, a patent that is well-written, clear and
thorough will stand the test of litigation. However, the best patents don't
require litigation to prove their value. In fact, the best patents would scare
off potential lawsuits. So, I disagree that quality patents are those that
succeed in court.

Second, I am not convinced that the deterioration in patent quality is due to fee diversion. While this does cause USPTO resources to be limited, I think the patent drafters need to assume some responsibility for the quality of the patents. Before I took the Patent Bar, I was convinced that upon issuance, a patent was nearly indestructible. However, I have since learned that issuance has little to do with anything other than the payment of an issue fee and maintenance fees. Litigation often proves to be the true test of patentability. Every good patent should be able to survive litigation (if it comes to that). The judge or jury is the true "Examiner" of the patent. The guy (or gal) working for the USPTO is just an expensive "trial run."

I think if every patent professional drafted patents with litigation in mind, the quality of patents would improve. This would result in reduced litigation. Even so, I admit that higher quality "trial runs" would also result in reduced litigation.

USPTO Revises CREATE Act Implementation Rules

Effective September 14, 2005, for any patent granted on or after December 10, 2004, the United States Patent and Trademark Office (Office) is revising the rules of practice in patent cases to implement the CREATE Act.
The changes in this final rule apply to

The Cooperative Research and Technology Enhancement Act of 2004 (CREATE Act) amends the patent laws to provide that subject matter developed by another person shall be treated as owned by the same person or subject to an obligation of assignment to the same person for purposes of determining obviousness if three conditions are met:

1. The claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made;
2. the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and
3. the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

The Office previously published an interim rule to revise the rules of practice in title 37 of the Code of Federal Regulations (CFR) to implement the CREATE Act. This final rule further revises the rules of practice in title 37, CFR, to implement the CREATE Act in light of comments that were received from the public.

Many of those comments requested clarification of § 1.109, including clarification of when double patenting under § 1.109(b) would apply. In response, Section 1.109 has been removed and this final rule includes guidelines concerning double patenting involving CREATE Act situations. For example, the guidelines clearly set forth that double patenting rejections based on applications or patents to parties of a joint research agreement will only be made after the CREATE Act exclusion has been invoked. In addition, the guidelines do not require that the invention of the disqualified patent be made as a result.

Several of those comments also questioned whether the Office has the authority to restrict licensing practice in the provisions of § 1.321(d) introduced in the interim rule. In addition, the comments expressed concern that the provisions of § 1.321(d) went beyond what is required by the CREATE Act and its legislative history.

In response to these comments, the USPTO has amended Section 1.321(d) to remove several requirements set forth in the interim rule. First, terminal disclaimers no longer are required to have any restriction on licensing to overcome an obvious double patenting rejection based on prior art of a party to a joint research agreement. Second, the requirement that the owner of the disqualified application or patent sign the terminal disclaimer is removed. Therefore, the removal of these requirements from the provisions of § 1.321(d) has simplified the process of filing the terminal disclaimer while still maintaining the goals of the CREATE Act and its legislative history.

The final rule eliminates the requirements under Section 1.71(g) that the application disclose (1) The date the joint research agreement was executed; and (2) a concise statement of the field of the claimed invention.

The final rule also discusses when an Action may be made final under these rules. If an amendment under § 1.71(g) is submitted in an application under final rejection to overcome a rejection under 35 U.S.C. 103(a) based upon a U.S. patent which qualifies as prior art only under 35 U.S.C. 102(e), the examiner may refuse to enter the amendment under § 1.71(g) if it is not accompanied by an appropriate terminal disclaimer (§ 1.321(d)). This is because such an amendment may necessitate the reopening of prosecution (e.g., for entry of a double patenting rejection).

If an amendment under § 1.71(g) is submitted to overcome a rejection under 35 U.S.C. 103(a) based upon a U.S. patent or U.S. patent application publication which qualifies as prior art only under 35 U.S.C. 102(e), and the examiner withdraws the rejection under 35 U.S.C. 103(a), the examiner may need to issue an Office action containing a new double patenting rejection based upon the disqualified patent or patent application publication. In these situations, such Office action can be made final, provided that the examiner introduces no other new ground of rejection that was not necessitated by either amendment or an information disclosure statement filed during the time period set forth in § 1.97(c) with the fee set forth in § 1.17(p). The Office action is properly made final because the new double patenting rejection was necessitated by amendment of the application by applicant.

No Jury Trial for Declaratory Judgment Action on Patent Invalidity

In In re Technology Licensing Corporation (Fed. Cir., per curium, September 12, 2005) the court denied a petition for writ of mandamus to compel the district court to grant a jury trial request in a declaratory judgement action involving patent invalidity.

The court distinguished the facts of this case from Tegal Corp. v. Tokyo Electron America, Inc., 257 F.3d 1331 (Fed. Cir. 2001) by noting that the accused infringer had raised invalidity as a separate claim, rather than as an affirmative defense. The court went on to note that In re Lockwood, 50 F.3d 966 (Fed. Cir.) did not stand for the proposition that either party has a right to a jury trial in such a declaratory judgment action, regardless of whether damages are sought in a separate cause of action:

In sum, Lockwood does not stand for the proposition that a counterclaim for
invalidity always gives rise to a right to a jury trial (for either party) on
the ground that it is an inverted infringement action and that a patentee at
common law had the right to a jury by filing an infringement action and seeking
damages. Instead, the more accurate reading of Lockwood is that (1) it preserves
to the patentee the right to elect a jury by seeking damages in an infringement
action or counterclaim, and (2) the accused infringer or declaratory judgment
counterclaimant is entitled to a jury trial only if the infringement claim, as
asserted by the patentee, would give rise to a jury trial. Thus, if the patentee
seeks only equitable relief, the accused infringer has no right to a jury trial,
regardless of whether the accused infringer asserts invalidity as a defense (as
in the Tegal case) or as a separate claim (as in this case).

Applying the analysis of Lockwood and Tegal to the facts of this case leads to the conclusion that if TLC had filed a standard infringement action as plaintiff and had requested only an injunction, neither TLC nor Gennum would have been entitled to a jury trial, regardless of whether Gennum raised invalidity as a defense or in a counterclaim. By choosing the equity route for its infringement action, TLC would have ensured that neither claim would be triable to a jury. For that reason, the inverted lawsuit, with Gennum as plaintiff and TLC as defendant, seeking only equitable relief on its claim of infringement, confers no jury trial right on TLC.

Because a party such as TLC will ordinarily be able to dictate whether it will have a jury trial by choosing whether to limit itself to equitable relief, the problem faced by TLC is not likely to recur with frequency in conventional infringement actions. That may be the reason that there are relatively few precedents directly applicable here. Nonetheless, there is at least one prior appellate decision dealing with a similar fact setting, and in that case the appellate court reached the same conclusion that we reach here—that the patentee’s decision to seek only equitable relief resulted in the entire case, including the invalidity claims, being triable to the court, without a jury. See Shubin v. United States Dist. Court, 313 F.2d 250 (9th Cir. 1963).

Indeed, this court in Lockwood distinguished the Shubin case on the ground that there the patentee had limited its infringement counterclaim to a request for an injunction against future infringement, having stipulated to the absence of any claim for infringement damages. Lockwood stands for the proposition that if the patentee has abandoned any claim for damages, the related invalidity claims are triable to the bench, not to a jury. Several other district courts have reached the same conclusion as the court of appeals in Shubin and the court in this case, based on similar reasoning. See Kao Corp. v. Unilever United States, Inc., 2003 WL 1905635 (D. Del. 2003); Glaxo Group Ltd. v. Apotex, Inc., 2001 WL 1246628 (N.D. Ill. 2001); Pfizer Inc. v. Novopharm Ltd., 2001 WL 477163 (N.D. Ill. 2001).

Because we conclude that the magistrate judge correctly analyzed the pertinent opinions of the Supreme Court and this court on the scope of the jury trial in the procedural setting of this case, we deny the petition for a writ of mandamus.

PCT Newsletter Highlights for September 2005

The September 2005 issue of the PCT Newsletter is now available at http://www.wipo.int/edocs/pctndocs/en/2005/pct_news_2005_9.pdf. The highlights for this month include:

Signature Requirements for the Declaration of Inventorship

Starting October 1, 2005, the signature of the inventors will always have to appear on the declaration of inventorship under PCT Rule 4.17(iv), which may be filed during the international phase for the purposes of the designation of the United States of America.

Currently, if the inventor has signed the Request Form (PCT/RO/101) and the declaration of inventorship is filed together with the international application, then the signature of the inventor is not required on the declaration itself (see Section 214(a) of the Administrative Instructions under the PCT). However, starting October 1, 2005, the signature of the inventor in Box No. X of the request form (where the declaration is filed together with the international application) will no longer replace the signature on the declaration. Applicants are therefore advised to change their practice accordingly.

The Notes to Box No. VIII(iv) of the Request Form will be amended accordingly. In the meantime, the information concerning the possibility of not signing the declaration of inventorship itself (in the circumstances mentioned above), which was published in the practical advice in PCT Newsletter Nos. 10/2002 and 04/2005, is superseded.


Upcoming Session of the PCT Assembly

The thirty-fourth session of the Assembly of the PCT Union will be held in Geneva from 26 September to 5 October 2005, as part of the meetings of the Assemblies of the Member States of WIPO. In addition to discussions on PCT reform, and the presentation of status reports on quality management systems for PCT International Authorities and on PCT automation, two main sets of proposed amendments to the PCT Regulations will be submitted for adoption which would enter into force on 1 April 2006 and 1 April 2007, respectively.

The proposed amendments which would enter into force in 2006 relate to:

• exceptions to the all-inclusive designation system under certain conditions;
• the addition of Arabic as a publication language
• the move towards full and exclusive electronic publication of all international applications, and the publication of the PCT Gazette solely in electronic form; and
• the publication of declarations under PCT Rule 4.17 as part of the international application.

The proposed amendments which would enter into force in 2007 relate to:

• missing elements and parts of the international application;
• restoration of the right of priority;
• rectification of obvious mistakes; and
• PCT minimum documentation: the addition of patent documents from the Republic of Korea.

For further information on these proposals, and others, see documents PCT/A/34/2 and PCT/A/34/1.

United States of America Fax Number

The fax number of the United States Patent and Trademark Office for PCT applications, international and national phase has changed to (1-571) 273 32 01.

USPTO Waives Delayed Maintenance Fee Surcharges for Katrina Victims

On September 12, 2005, the USPTO announced that it will waive the surcharge in 37 CFR 1.20(i) for patentees who were unable to timely pay a patent maintenance fee due to the effects of Hurricane Katrina when they file the maintenance fee payment with a petition to accept a delayed maintenance fee under 37 CFR 1.378(c).

The USPTO advises patentees who need to file a petition to accept a delayed maintenance fee payment due to the effects of Hurricane Katrina to promptly file a petition under 37 CFR 1.378(c) (using USPTO form PTO/SB/66-- Petition to Accept Unintentionally Delayed Payment of Maintenance Fee in an Expired Patent (37 CFR 1.378(c)) accompanied by the applicable maintenance fee payment (but not the surcharge under 37 CFR 1.20(i)) and a copy of this notice. The inclusion of a copy of this notice will be treated as a representation that the delay in payment of the maintenance fee was due to the effects of Hurricane Katrina and as a request for sua sponte a waiver of the surcharge under 37 CFR 1.20(i).

Patentees are reminded that a petition to accept a delayed maintenance fee payment under 37 CFR 1.378(c) must be filed within twenty-four months from the expiration date of the patent. See 35 U.S.C. 41(c).

Inquiries concerning this notice may be directed to Eugenia Jones, Senior Legal Advisor in the Office of Patent Legal Administration, at 877-PTO-NORL (877-786-6675) or 571-272-7704, or by e-mail at PatentPractice@uspto.gov.

Comments on 2003 Cable Royalties Due October 13

The Copyright Royalty Board seeks comments on whether any controversy exists that would preclude the distribution of 50 percent of the 2003 cable royalty funds to the Phase I Parties. The Board also seeks comment on the existence and extent of any controversies to the 2003 cable royalty funds, either at Phase I or Phase II, with respectto the 50 percent of those funds that would remain if the partial distribution is granted.

Any party submitting comments on the existence of a Phase II controversy must identify the category or categories in which there is a dispute, and the extent of the controversy or controversies. The due date for comments is October 13, 2005. For further information, go to the Copyright Royalty Board website whih now offers online and printable forms for filing of claims to cable, satellite, and digital audio recording devices and media (DART) royalty fees. Click here for more information.

In other U.S. Copyright Office news, September 16, 2005 is the due date for reply comments on the rules for the delivery and format of records of use of sound recordings under sections 112 and 114.

Free Patent Lawsuit Notices

Those clever rascals at Rethink(ip) are at it again; this time offering free "RSS / E-mail Patent Lawsuit Filing Notices." Just enter your e-mail address here, or get the RSS feed here. Their plan to update the feed at least weekly -- an interval that we expect will deliver value in a timely manner.

Why is the existence of a lawsuit such a valuable piece of information? According to Stephen M. Nipper, you might not otherwise know you've been sued. The filing of a lawsuit can also be a valuable piece of competitive intelligence. Its already part of my "Proactive I/P Lawyering" program.

"Download Component" Narrowly Construed as Application

In Netwok Commerce, Inc., et al. v. Microsoft Corp. (Fed. Cir. September 8, 2005) the court considered the meaning of the term "download component" which has no commonly-understood meaning and was not used in the specification of United States Patent No. 6,073,124: (left).

The claim generally related to a method in a computer system for conducting electronic commerce, including requesting a first web server to order electronic data; receiving, in response to the request, a download component for coordinating the download of the electronic data; and under control of the download component, downloading from a second web server the electronic data.

Network Commerce admitted that the term "download component" appears nowhere in the specification, but argued that since the word component is used broadly in the specification to refer to all sorts of things, "download component" should be construed just as broadly. However, this argument was "unavailing" to the Federal Circuit . "The specification’s broad usage of one word from the claim term 'download component' does not suggest that the phrase 'download component' has the same meaning as that one word," noted the court:

Instead of a download component, the specification described a "download file." It appears from the function and description of the "download file" that this item corresponds most closely to the download component of the claims. The specification explains that the download file resides in the computer of an online merchant or is accessible to that computer. When the merchant receives an online request for electronic content, the online merchant "downloads and installs the download file" on the customer’s computer. This file when downloaded into the customer’s computer "extracts [from the download file] the executable boot program and component list."

The specification defines the capability of the boot program to include the ability
to read the component list to determine what [electronic content] . . . to download . . . from the appropriate contents supplier server,” and the ability to request the appropriate content from the supplier server. Thus, while the download file may contain different things, the specification indicates that it must contain at least the boot program.

The specification describes no programs mediating between the boot program and the operating system. Moreover, figure 8 identifies the boot program as a file called "SAFEboot.exe." An "exe file" is a file in "binary code" and "a Windows exe file (e.g., the Windows Media Player application) is an executable file because it is a sequence of bits arranged in such a way that it can be executed by . . . the computer’s operating system."

In summary, the specification makes clear that the download component must include a boot program, and that the boot program interacts directly with the operating system of the computer without the assistance of any other program. Accordingly, we construe "download component" to mean a file or program either sent to or received by a computer in response to a request for electronic data that 1) requests (or controls the download of) electronic data from a computer other than the computer from which the program was sent or received; 2) coordinates the download of electronic data; and 3) interacts directly with the operating system of the computer without another program mediating between it and the operating system.

This construction of the term "download component" is similar to the definition of "application" adopted in Eolas Technologies, Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005). There we approved the district court’s construction of "application" to mean "‘a computer program, that is not the operating system or a utility, that is designed to allow an end-user to perform some specific task.’" Id. at 1336. In addition, we see nothing in the prosecution history that remotely suggests that our interpretation of "download component" is incorrect.

Network Commerce relies on the declaration of its expert, Theodore Coombs, for the proposition that the "download component" need not contain the boot program. In his declaration, Coombs quotes various passages from the specification, and concludes: "I understand [these passages] to mean that there are possible embodiments of this invention that use a ‘download component’ that does not contain a boot program or executable code." Coombs’ declaration provides scant support for Network Commerce’s position. As we recently reaffirmed in Phillips, "conclusory, unsupported assertions by experts as to the definition of a claim term are not useful to a court." Phillips, 415 F.3d at 1318. Here Coombs does not support his conclusion with any references to industry publications or other independent sources. Moreover, expert testimony at odds with the intrinsic evidence must be disregarded. Id. ("[A] court should discount any expert testimony that is clearly at odds with the claim construction mandated by . . . the written record of the patent.") (internal quotations and citation omitted). That is the case here. . . .

Network Commerce argues on appeal that summary judgment of literal infringement was not appropriate because there are genuine issues of material fact. Specifically, it argues that metafiles are computer programs that carry out the claimed functions, relying on the declaration of its expert, Theodore Coombs. However, the download component must interact directly with the operating system of the computer without another program’s mediating between it and the operating system. Coombs stated in his declaration that metafiles perform the functions of the download component, but he did not state that they can perform those functions through direct interaction with the operating system. He conceded that metafiles are interpreted by Windows Media Player, which then sends instructions through the operating system to the microprocessor. Furthermore, Network Commerce concedes in its appeal brief that "metafiles are ‘powerful tools for controlling Windows Media Player.’" (Br. of Pls.-Appellants at 8 (quoting Microsoft documents with approval).) Thus, even according to Network Commerce, a metafile is not a download component as correctly construed. No genuine issues of material fact exist regarding metafiles. . . .

The expert declaration and other evidence relied on by Network Commerce supporting infringement by equivalents are generalized and do not provide particularized testimony and linking argument on a limitation-by-limitation basis. For this reason the evidence did not raise a genuine issue of material fact. Summary judgment of non-infringement under the doctrine of equivalents regarding metafiles was therefore proper.

More Patent Reform Legislative Hearings

On Thursday, September 15, 2005 at 10:00 AM in the Rayburn House Office Building, the House Subcommittee on Courts, the Internet, and Intellectual Property will conduct a Legislative Hearing on "The Amendment in the Nature of a Substitute to H.R. 2795, the 'Patent Act of 2005'" The witness list includes

• Emery Simon Counsel, The Small Business Software Alliance (BSA)
• Philip S. Johnson Chief Patent Counsel, Johnson & Johnson on behalf of the
  Pharmaceutical Research and Manufacturers of America (PhRMA)
• Robert B. Chess Chairman, Nektar Therapeutics on behalf of the Biotechnology Industry Organziation (BIO) and
• John R. Thomas Professor, Georgetown University Law Center

J. Matthew Buchanan at "Promote the Progress" writes

The draft amendment, which is a substitute bill, is clearly one supported by both PhRMA and BIO. It’s highly likely that BSA strongly opposes the draft amendment – it completely eliminates two of the provisions backed by the group (the injunctive relief provision and the “second window” for post-grant review proceedings in the Patent and Trademark Office).

The hearing should be quite interesting. If only you could be a fly on the wall. Oh, wait, you can — watch the webcast here.

And don't forget to also check out Buchanan's latest thoughts on "patent trolls":

Here’s the bottom line – the term is impossible to define without circumscribing
the property right provided by patents. Any attempt to do so creates a policy
nightmare. Continuing to do so stands to derail the real patent reform movement
that should be focused on patent quality.

If a patent is valid and enforceable, it should not matter who owns it. Period.

I think Dean Kamen stated it best after being introduced at the recent Conference on Patent Reform in DC, “Hello. I’m Dean Kamen. I’m a troll.”

"State Secrets" Privilege Narrowly Construed in Trade Secret Case

In Crater Corp. v. Lucent Technologies (Fed. Cir. September 7, 2005) the court agreed with the government’s assertion of the "state secrets privilege" in an intellectual property dispute but refused to allow the case to be dismissed for lack of discovery.

The arose when Lucent asked Crater to provide it with technical data, drawings, and other information relating to Crater's patented underwater connectors for fiber optics (right). Lucent expressly agreed not to reveal the information to third parties and not to produce the Crater coupler until a license agreement was finalized. When that agreement was breeched, Crater filed suit against Lucent alleging patent infringement and misappropriation of trade secrets and breach of contract.

However, ten months after the suit was filed, the federal government moved to intervene in order to assert the state secrets privilege. Specifically, the government sought to prohibit Crater "from conducting any discovery or serving any subpoena for information relating to the manufacture or use of [Crater’s] coupling device, or any coupling device, by or on behalf of the United States" because disclosure of such information would gravely damage national security.

Following a review of the classified discovery materials, the district court dismissed Crater’s complaint. The court reasoned that, although Crater would not have to prove the particular use of its trade secrets in order to prevail on its misappropriation of trade secrets claim, it would have to show that Lucent somehow incorporated its design information in a classified government device. The lower court also noted that, in light of the government’s proper invocation of the state secrets privilege, Lucent would not be able to adequately defend itself because it would not be able to disclose what it did or did not do for the government.

Hoever, the Federal Circuit court of appeals did not believe that these problems were sufficient to require dismissal of the complaint:

"Resolution of whether any of Crater’s claims can be adjudicated without privileged information turns on an analysis of the claims in light of the state secret that forms the basis for the government’s assertion of the privilege. We think that, at this juncture, however, there is a fundamental obstacle to conducting that analysis. The obstacle lies, we believe, in the fact that the record as it pertains to Crater’s state law claims is not adequately developed. . . .

In short, we think that deciding the impact of the government’s assertion of the state secrets privilege on Crater’s state law claims without first determining what trade secrets exist and whether a contract existed between Crater and Lucent is akin to putting the cart before the horse. If there are no alleged trade secrets and there was no contract, the issue of the state secrets privilege becomes moot. Alternatively, if there are trade secrets and/or there was a contract, an understanding of the precise nature of the trade secrets and the terms of the contract is essential to the analysis of whether Crater’s misappropriation of trade secrets and breach of contract claims may proceed in the face of the assertion of the privilege. In other words, in order to adjudicate this case, there must be a determination of (i) the precise trade secrets that exist in connection with the Crater coupler; (ii) which of those trade secrets Crater alleges were misappropriated; (iii) whether a contract existed between Crater and Lucent; (iv) if a contract did exist, its terms; (v) which of the contract’s terms Crater alleges were breached; and (vi) what constituted the alleged breach.

In sum, we conclude that the decision of the district court dismissing Crater’s complaint must be reversed and the case remanded to the court for further proceedings. Although we agree that there is a state secret here that must be protected, we conclude that further proceedings are required because we do not believe the record in the case—as it relates to Crater’s two state law claims—is sufficiently developed to enable a determination as to the effect of the government’s assertion of the privilege on those claims, in terms of Crater’s ability to assert the claims and Lucent’s ability to defend against them. If Crater establishes that it has one or more trade secrets in connection with the Crater coupler, the district court will know precisely what the secrets are. The government can then provide an affidavit or declaration—or otherwise address—how the precise questions involved, such as whether a particular trade secret was incorporated in a government device, would impermissibly implicate the state secrets privilege. Armed with that knowledge and with the knowledge of the state secret that must be protected, the court will be able to assess whether any misappropriation of trade secrets claim can go forward. As far as Crater’s breach of contract claim is concerned, if the district court determines that a contract did exist between Crater and Lucent and what the terms of that contract were, the district court, again armed with its knowledge of the state secret that must be protected, will be able to determine which, if any, of Crater’s breach of contract claims can proceed in the face of the government’s assertion of the state secrets privilege. In making that determination, the court may require the government to supply particularized affidavits or declarations in order to resolve the discovery issue.

Finally, the question of whether the state secrets privilege would be implicated by the production of particular documents is not ripe for resolution, and our discussion should not be read as resolving that question. We have not reviewed any of the documents which are sought in discovery and which the district court reviewed in camera. On remand, after the district court determines the precise nature of Crater’s state law claims, it will be for that court then to determine, in the first instance, which, if any, of the documents sought in discovery may be produced in the face of the government’s assertion of the state secrets privilege."

Corresponding "Means" Structure May Perform Additrional Function

In Engineered Products, Co. v. Donalson Co., Inc. (Fed. Cir., August 31, 2005, nonprecedential), the court agreed with Donaldson that the district court erred in its construction of a means-plus-function limitation by not identifying all of the structure necessary to perform the stated function in U.S. Patent No. 4,445,456, below.
In this case, the claims at issue contained the limitation "means for selectively disengaging the interengagable notches so as to permit the diaphragm to return to its infold position when the vacuum in the first chamber is relatively low." The court noted that specification of the patent states

When it is desired to reset the indicator after cleaning or replacement of the
air filter and after the member has been locked up, . . . the thumb of the
operator . . . is pressed against the button to move the member from its
off-center position to a vertical dotted line position by reason of the
cooperation between the flange and the bottom wall and the enlarged hole . . .
to release the notches and . . . permit [the] spring to return the indicating
assembly to its lower home position . . . .

****

If it is desired to permit the diaphragm to return to its infold position, . . . a person need only push the button . . . against the bias of [the] spring. This will cause the
locking member to pivot, about the flange, from its cocked, off-center position,
. . . to a vertical position where the notches can no longer engage the notches.

According to the Federal Circuit, this portion of the specification clearly links the button, flange, bottom wall, and enlarged opening to the function of disengaging the interengagable notches:

It is true that an individual initiates the process of disengaging the notches by pushing the button located at the bottom of the chamber. However, it is the
resulting action of the flange against the bottom wall that actually causes the
interengagable notches to disengage. See Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 296 F.3d 1106, 1119 (Fed. Cir. 2002) ("It remains true, of course, that corresponding structure need not include all things necessary to enable the claimed invention to work. It is equally true, however, that corresponding structure must include all structure that actually performs the recited function." (emphasis added)).

Our construction also does not read in a functional limitation of "pivoting." It is
true that the flange, as disclosed in the specification, pivots about the bottom wall to cause the locking member to disengage the interengagable notches. However, corresponding structure will almost always perform some additional function in the course of executing the claimed function. See, e.g., Kemco Sales, Inc. v. Control Papers Co., 208 F.3d 1352, 1359-63 (Fed. Cir. 2000) (holding that the corresponding structure was not just a "flat rectangle, but a plastic flap that folds over [an] envelope’s opening and is secured to the outside of one or both panels of the envelope" (emphasis added)). In this case, the pivoting of the flange on the bottom wall is simply how the flange operates to disengage the locking member from the notches.

Under our construction, we further conclude that a reasonable juror could not find that the NG Air Alert infringes claims 2 or 3 of the ’456 patent. See Genthe v. Lincoln, 383 F.3d 713, 716 (8th Cir. 2004) ("Judgment as a matter of law is appropriate where the evidence adduced at trial is entirely insufficient to support the verdict."). That is because, even assuming the NG Air Alert has structure that performs the function of "selectively disengaging interengagable notches," that structure is not the same or equivalent to the corresponding structure of claims 2 and 3—namely, the flange, bottom wall, and enlarged opening. See Frank’s Casing
Crew, 389 F.3d at 1378 ("Th[e] inquiry for equivalent structure under § 112, ¶ 6 examines whether ‘the assertedly equivalent structure performs the claimed function in substantially the same way to achieve substantially the same result as the corresponding structure described in the specification.’" (citation omitted)).

In particular, instead of a flange that works in conjunction with a bottom wall to cause the locking member to tilt back toward the vertical position and disengage the
interengagable notches, the accused structure consists of flared fingers that
are pushed inward when the operator of the NG Air Alert pushes a button.
Therefore, the flared fingers of the NG Air Alert perform the claimed function
in a substantially different way than the flange and bottom wall of claims 2 and
3. Accordingly, we reverse the district court’s decision denying Donaldson’s
motion for JMOL of non-infringement and remand with instructions to enter
judgment for Donaldson of non-infringement by the NG Air Alert.

Clamp Means Limited to Later-Developed Technology under DOE

In Bateman, et al. v. Por-Ta Target, Inc. (Fed. Cir. , September 1, 2005, nonprecedential) the court concluded that the district court correctly identified the structure corresponding to the "clamp means" limitation, and that summary judgment of non-infringement was proper on that basis.

The claims in this case generally related to an interconnect system for fabricating modular bullet deflecting devices, including

. . . clamp means releasably attached to the at least one facing strip for holding the
facing strip in secure engagement with the metallic plates adjacent the lateral
edges to apply a clamping force and thereby hold the metallic plates in rigid
connection with one another and forming a continuously bullet resistant joint. . . .

The court noted that specification and drawings of U.S. Patent No. 5,822,936 (above) disclosed structures that correspond to the claimed function of “holding the facing strip in secure engagement with the metallic plates adjacent the lateral edges to apply a clamping force and thereby hold the metallic plates in rigid connection with one another.” A nut 34 is attached to the plow bolt 22 and tightened until the backing washer 30 and the facing strip 14 are held firmly against the plates. When the nut 34 has been tightened sufficiently, the facing strip 14 and the backing washer 30 hold the plates 10 in rigid attachment.” The specification also states that the bolt extends through the channel between the plates.

[I]n accordance with § 112, paragraph 6, the “clamp means” limitation is
properly construed as covering these structures and their equivalents. See Micro
Chem., 194 F.3d at 1258 (“When multiple embodiments in the specification
correspond to the claimed function, proper application of § 112, ¶ 6 generally
reads the claimed element to embrace each of those embodiments.”).

"[A]n accused device literally infringes a claim element under § 112 ¶ 6 only
if it is insubstantially different from the corresponding structure in the
patent specification." Ishida Co. v. Taylor, 221 F.3d 1310, 1317 (Fed. Cir
2000). The "insubstantial difference" analysis "requires that a determination of
whether the way the accused structure performs the claimed function, and the
result of that performance, are substantially different from the way the claimed
function is performed by the corresponding structure … described in the
specification, or its result." Id. (internal quotations omitted).

The accused device utilizes "specially manufactured metal plates with holes
drilled or punched in them." Non-infringement Order at 10. In the accused device
the way the plates are held together is by passing "bolts [through] holes
drilled at the top, middle, and bottom of a facing strip, backing strip, and the
plate." Id. at 25. Further, as a result of this way of fastening the plates, the
district court found that "the plates can never fall away from one another because the bolts pass through the facing strip, backing strip, and metal plate, thereby providing a structural impediment to their separation." Id. at 25.

In contrast to the accused device, each of the embodiments disclosed in the ’936 patent requires a bolt passing through a gap between the metal plates and through a facing strip, backing washer, and a nut to clamp the plates together. As the district court correctly observed, "[i]f there was no channel, the washer, as backing means, would only butt up against one of the larger panels and therefore not exert the required clamping pressure on the two panels." Id. at 24. Furthermore, the district court found that, as a result, unlike the accused device, "[i]f one were to loosen the nuts of the ’936 patent device, the plates would fall apart." Id. at 25.

For the foregoing reasons, the accused device achieves the recited function of the "clamping means" in a substantially different manner than do the structures in the ’936 patent. Accordingly, the district court properly concluded that Porta does not
literally infringe the asserted claims of the ’936 patent.

Action also challenged the district court’s grant of summary judgment of non-infringement under the doctrine of equivalents.

For means-plus-function limitations, the doctrine of equivalents reduces to
whether or not there is an “insubstantial difference” between the limitation’s
corresponding structure and any after-invented technology found in the accused
device. Ishida, 221 F.3d at 1317. Where, as here, the equivalence issue does not
involve later-developed technologies, “a finding of non-equivalence …
preclude[s] a contrary finding under the doctrine of equivalents.” Chiuminatta, 145 F.3d at 1311. Thus, we affirm the district court’s grant of summary judgment of non-infringement under the doctrine of equivalents as a matter of law.

Teleseminar: How GM Manages its Domain Portfolio

Guest Speaker: Michael Cudworth Attorney, GM Legal Staff

September 14th at 8:30am PDT, 11:30am EDT, 4:30pm BST,





Find out how General Motors registers and tracks their domain portfolio and the strategies they employ for taking action against cybersquatters. Specifically, Michael A. Cudworth from General Motors will discuss how to:

• Develope Processes and Procedures for Managing Domains
• Consolidate their Domain Name Portfolio
• Take Action Against Known Cybersquatters

The seminar will be held September 14th at 8:30am PDT, 11:30am EDT, 4:30pm BST, and will last approximately one hour with a 15-minute Q&A session during which you can pose additional questions.

Register at http://www.markmonitor.com/seminars/091405.html. A reminder email will be sent the day of the seminar which also includes the access information. Should you have any questions or need assistance, feel free to contact us by phone at415-278-8488 or email
marketing@markmonitor.com

EST Claims Invalid for Lack of Specific Utility

In In re Fisher (Fed. Cir. September 7, 2005) the court found substantial evidence to support the Board’s findings that each of the five claimed express sequence tags, or "ESTs," in U.S. patent application Serial No. 09/619,643 lacks a specific and substantial utility and thus were not enabled. Professor Wegner calls the decision "a test case apparently designed by appellant Monsanto to create a tough utility standard for biotechnology fragments" that "is out of step with Europe and Japan and sets a model for developing countries seeking to emasculate patents for pharmaceuticals."

The claimed invention related to five purified nucleic acid sequences that encode proteins and protein fragments in maize plants. When a gene is expressed in a cell, the relevant double-stranded DNA sequence is transcribed into a single strand of messenger ribonucleic acid ("mRNA"). The messenger RNA contains three of the same bases as DNA (A, G, and C), but contains uracil ("U") instead of thymine. mRNA is released from the nucleus of a cell and used by ribosomes found in the cytoplasm to produce proteins. Complementary DNA ("cDNA") is produced synthetically by reverse transcribing mRNA. cDNA, like naturally occurring DNA, is composed of nucleotides containing the four nitrogenous bases, A, T, G, and C. Scientists routinely compile cDNA into libraries to study the kinds of genes expressed in a certain tissue at a particular point in time.

An EST is a short nucleotide sequence that represents a fragment of a cDNA clone. It is typically generated by isolating a cDNA clone and sequencing a small number of nucleotides located at the end of one of the two cDNA strands. When an EST is introduced into a sample containing a mixture of DNA, the EST may hybridize with a portion of DNA. Such binding shows that the gene corresponding to the EST was being expressed at the time of mRNA extraction.

The a'643 pplication generally disclosed that the five claimed ESTs may be used in a variety of ways, including:

1. serving as a molecular marker for mapping the entire maize genome, which consists of ten chromosomes that collectively encompass roughly 50,000 genes;
2. measuring the level of mRNA in a tissue sample via microarray technology to provide information about gene expression;
3. providing a source for primers for use in the polymerase chain reaction ("PCR") process to enable rapid and inexpensive duplication of specific genes;
4. identifying the presence or absence of a polymorphism;
5. isolating promoters via chromosome walking;
6. controlling protein expression; and
7. locating genetic molecules of other plants and organisms.

The court concluded that none of these asserted uses met the "specific" and "substantial" utility requirements of 35 U.S.C. §101:

"Following Brenner, our predecessor court, the Court of Customs and Patent Appeals, and this court have required a claimed invention to have a specific and substantial utility to satisfy § 101. See, e.g., Fujikawa v. Wattanasin, 93 F.3d 1559,
1563 (Fed. Cir. 1996) (“Consequently, it is well established that a patent may not be granted to an invention unless substantial or practical utility for the invention has been discovered and disclosed.”).The Supreme Court has not defined what the terms “specific” and “substantial” mean per se. Nevertheless, together with the Court of Customs and Patent Appeals, we have offered guidance as to the uses which would meet the utility standard of § 101. From this, we can discern the kind of disclosure an application must contain to establish a specific and substantial utility for the claimed invention.

. . . Simply put, to satisfy the "substantial" utility requirement, an asserted use must show that that claimed invention has a significant and presently available benefit to the public. . . . [I]n addition to providing a "substantial" utility, an asserted use must also show that that claimed invention can be used to provide a well-defined and particular benefit to the public. . . .

Regarding the seven uses asserted by Fisher, we observe that each claimed EST uniquely corresponds to the single gene from which it was transcribed ("underlying gene"). As of the filing date of the ’643 application, Fisher admits that the underlying genes have no known functions. Fisher, nevertheless, claims that this fact is irrelevant because the seven asserted uses are not related to the functions of the underlying genes. We are not convinced by this contention.

Essentially, the claimed ESTs act as no more than research intermediates that may help scientists to isolate the particular underlying protein-encoding genes and conduct further experimentation on those genes. The overall goal of such experimentation is presumably to understand the maize genome – the functions of the underlying genes, the identity of the encoded proteins, the role those proteins play during anthesis, whether polymorphisms exist, the identity of promoters that trigger protein expression, whether protein expression may be controlled, etc. Accordingly, the claimed ESTs are, in words of the Supreme Court, mere "object[s] of use-testing," to wit, objects upon which scientific research could be performed with no assurance that anything useful will be discovered in the end. Brenner, 383 U.S. at 535.

Fisher compares the claimed ESTs to certain other patentable research tools, such as a microscope. Although this comparison may, on first blush, be appealing in that both a microscope and one of the claimed ESTs can be used to generate scientific data about a sample having unknown properties, Fisher’s analogy is flawed. As the government points out, a microscope has the specific benefit of optically magnifying an object to immediately reveal its structure. One of the claimed ESTs, by contrast, can only be used to detect the presence of genetic material having the same structure as the EST itself. It is unable to provide any information about the overall structure let alone the function of the underlying gene. Accordingly, while a microscope can offer an immediate, real world benefit in a variety of applications, the same cannot be said for the claimed ESTs. Fisher’s proposed analogy is thus inapt. Hence, we conclude that Fisher’s asserted uses are insufficient to meet the standard for a "substantial" utility under § 101.

Moreover, all of Fisher’s asserted uses represent merely hypothetical possibilities, objectives which the claimed ESTs, or any EST for that matter, could possibly achieve, but none for which they have been used in the real world. Focusing on the two uses emphasized by Fisher at oral argument, Fisher maintains that the claimed ESTs could be used to identify polymorphisms or to isolate promoters. Nevertheless, in the face of a utility rejection, Fisher has not presented any evidence, as the Board well noted, showing that the claimed ESTs have been used in either way. That is, Fisher does not present either a single polymorphism or a single promoter, assuming at least one of each exists, actually identified by using the claimed ESTs. Further, Fisher has not shown that a polymorphism or promoter so identified would have a "specific and substantial" use. The Board, in fact, correctly recognized this very deficiency and cited it as one of the reasons for upholding the examiner’s final rejection.

With respect to the remaining asserted uses, there is no disclosure in the specification showing that any of the claimed ESTs were used as a molecular marker on a map of the maize genome. There also is no disclosure establishing that any of the claimed ESTs were used or, for that matter, could be used to control or provide information about gene expression. Significantly, despite the fact that maize leaves produce over two thousand different proteins during anthesis, Fisher failed to show that one of the claimed ESTs translates into a portion of one of those proteins. Fisher likewise did not provide any evidence showing that the claimed ESTs were used to locate genetic molecules in other plants and organisms. What is more, Fisher has not proffered any evidence showing that any such generic molecules would themselves have a specific and substantial utility. Consequently, because Fisher failed to prove that its claimed ESTs can be successfully used in the seven ways disclosed in the ’643 application, we have no choice but to conclude that the claimed ESTs do not have a "substantial" utility under § 101.

Furthermore, Fisher’s seven asserted uses are plainly not "specific." Any EST transcribed from any gene in the maize genome has the potential to perform any one of the alleged uses. That is, any EST transcribed from any gene in the maize genome may be a molecular marker or a source for primers. Likewise, any EST transcribed from any gene in the maize genome may be used to measure the level of mRNA in a
tissue sample, identify the presence or absence of a polymorphism, isolate promoters, control protein expression, or locate genetic molecules of other plants and organisms. Nothing about Fisher’s seven alleged uses set the five claimed ESTs apart from the more than 32,000 ESTs disclosed in the ’643 application or indeed from any EST derived from any organism. Accordingly, we conclude that Fisher has only disclosed general uses for its claimed ESTs, not specific ones that satisfy § 101.

Lemelson Meets His Waterloo

In Symbol Technologies, Inc., et al. v. Lemelson Medical, Education & Research Foundation, LP (Fed. Cir.; September 9, 2005) , the appellate court agreed with Symbol that the lower court did not abuse its discretion in holding that Lemelson’s patents are unenforceable under the doctrine of prosecution laches:

The [lower] court found that an 18- to 39-year time period had elapsed between the filing and issuance of the patents in suit. Symbol III, 301 F. Supp. 2d at 1355. That period of time is not what is contemplated by the patent statute when it provides for continuation and continuation-in-part applications. Patent applications should normally be permitted to issue when they have been allowed and the statutory requirements complied with. The court also found that Lemelson had engaged in “culpable neglect” during the prosecution of these applications and it recognized the adverse effect on businesses that were unable to determine what was patented from what was not patented. It noted that the Lemelson patents occupied the “top thirteen positions” for the longest prosecutions from 1914 to 2001 The court also cited the existence of “intervening private and public rights.” It concluded that “[i]f the defense of prosecution laches does not apply under the totality of circumstances here, the Court can envision very few circumstances under which it would.” Under those circumstances, we can hardly conclude that the court abused its discretion in holding the involved patents unenforceable on this ground. The court thoroughly examined the facts and the equities, and it exercised its discretion reasonably. We therefore affirm the district court’s holding of unenforceability.

The Federal Circuit also discussed Webster Electric Co. v. Splitdorf Electrical Co., 264 U.S. 463 (1924), where the Supreme Court applied the doctrine of prosecution laches to render patents unenforceable. Although those cases involved a nine-and-a-half-year delay and an eight-year delay, respectively, the Supreme Court later held that the presumptive two-year time limit referred to in Webster was dictum because it was not directly applicable to the issue of laches on which the case was decided. "Thus," the Federal Circuit concluded, "there are no strict time limitations for determining whether continued refiling of patent applications is a legitimate utilization of statutory provisions or an abuse of those provisions. The matter is to be decided as a matter of equity, subject to the discretion of a district court before which the issue is raised."

However, refiling an application solely containing previously-allowed claims for the business purpose of delaying their issuance can be considered an abuse of the patent system. See Bogese, 303 F.3d at 1368-69 (discussing Ex parte Hull, 191 USPQ 157 (Bd. Pat. App. & Interfs. 1975)). In particular, multiple examples of repetitive refilings that demonstrate a pattern of unjustifiably delayed prosecution may be held to constitute laches. Taken singly, the delay in the prosecution on any one particular
application will surely not appear to merit relief by the courts in equity. On the other hand, an examination of the totality of the circumstances, including the prosecution
history of all of a series of related patents and overall delay in issuing claims, may trigger laches.

The Federal Circuit went on to identify several "legitimate grounds for refiling a patent application which should not normally be grounds for a holding of laches:"

• Filing a divisional application in response to a requirement for restriction, even when one defers the filing of a divisional application until just before the issuance of the parent application.
• Refiling an application containing rejected claims in order to present evidence of unexpected advantages of an invention when that evidence may not have existed at the time of an original rejection.
• Refiling an application to add subject matter in order to attempt to support broader claims as the development of an invention progresses.
• Refiling an application in the absence of any of these reasons, provided that such refiling is not unduly successive or repetitive.

With 562 U.S. patents to his credit, Jerome Lemelson was the most prolific inventor since Thomas Edison (1093 patents). Using royalties from his creative legacy, his family's Lemelson Medical, Education & Research Foundation Partnership has provided millions of dollars for programs such as the annual US $500 000 Lemelson-MIT Award, touted as the world's largest single prize for invention and innovation. However, his detractors attributed much of his success to the use of Byzantine tactics for exploiting loopholes in the patent system. Learn more about the Lemelson controversy here.

"Until Lemelson, there has rarely – if ever – been a case brought to the Federal Circuit where a primary goal was to set the stage for a Supreme Court appeal," writes Professor Hal Wegner. "Here, appellate counsel was specifically chosen from amongst Supreme Court appellate specialists. " Lemelson now represents an eighth case to be added to his "Seven IP Cases on the Radar Screen for the October 2005 Term of the Court." Get a transcript of the appellate court hearing from thePatently-O Blog.

UKPO Seeks Comments on Classification and PCT Re-Publication

The U.K. Patent Office is looking for feedback about whether and how you make use of its Patent Classification Key (the UKC Key). They are also interested in the public's views on the practice of re-publishing PCT (original language English) cases when they enter the National Phase in the U. K.

The UK Patent Office has its own Patent Classification Key (the UKC key). All published UK patents are classified using the UKC key. The documents classified using the UKC key now represent only a small proportion of the total number of patents published globally. All published UK patent specifications are also classified using the International Patent Classification (IPC) system and, some time following publication, the European Patent Office's own classification system ECLA. Consequently, the value and future of the UKC key has been brought into question.

PCT applications entering the national phase are re-published with GB publication numbers. This is generally the only value-add that we make to these cases prior to re-publication. The future of the UKC key therefore has a consequential impact on the value of re-publication of such cases and it is therefore considered appropriate to consult on both issues together.

The re-publication is limited to the front page only for applications filed in English through the PCT and entering the national phase on the expiry of the prescribed period. Where the application is not filed in English, the republished document also includes an English translation of the entire specification. In 2002, 1604 cases entered the national phase, of which 170 (i.e. about 10%) were filed in a language other than English. For PCT applications that have already been published by WIPO, re-publication is an entirely administrative act and accords no legal rights.

USPTO Museum Reopens with "The Invention Machine"

Since the beginning of time, people have been developing better ways to do things, and for over 200 years the American patent and trademark systems have been there to protect and encourage innovation. That's the story being told in the opening exhibit of the newly-remodeled USPTO Museum in Alexandria Virginia -- "The Invention Machine: A Day in My Life."

“The United States Patent and Trademark Office Museum showcases the innovation and creativity of Americans. We hope it will inspire a new generation of Americans to explore, create, and contribute to the prosperity of this great nation,” says USPTO Commissioner Jon Dudas. Visitors will see how intellectual property is found in the routines they follow at the beginning of the day, in methods they use for travel, in medical innovations they rely upon for good health, and in the different ways they relax and play.

The museum and gift shop are located in the atrium of the Madison Building, 600 Dulany Street, Alexandria, VA, and easily accessible from the King Street and Eisenhower Avenue Metro stations. The hours are 9:00 a.m. to 5:00 p.m., Monday through Friday and noon to 5:00 p.m. Saturday; closed on Sundays and federal holidays. School groups are most welcome and encouraged to schedule a tour.

The United States Patent and Trademark Office Museum and Store were developed and are maintained by the National Inventors Hall of Fame Foundation.

EU to Extend Pediatric Drug Patent Term in Exchange for Testing

On September 7, 2005, The European Parliament approved amendments to a proposed regulation to enhance the development of pediatric medicines. Article 36 of the "proposal for a regulation of the European Parliament and of the Council on medicinal products for paediatric use and amending Regulation (EEC) No 1768/92, Directive 2001/83/EC, and Regulation (EC) No 726/2004" offers drug makers an additional six months' patent protection on a given medicine, if they agreed to test its effects on children.

According to News.Telegraph, "that would extend patents for children's drugs to 15½ years, which could make companies an extra six £6 million, to offset the £2.7 million usually spent on clinical trials." French conservative deputy Francoise Grossetete, who guided the proposal through parliament, reportedly told Reuters that drug firms had wanted a 12-month patent extension. Although some EU member states, including Hungary and Poland, had argued for a shorter extension in order to support their generic drug manufacturers, parliamentary sources reportedly told the BBC that it was unlikely they would be able to organise a blocking minority, and that the regulation would probably have a smooth passage into law. Grossetete said she hopes the new rules will be in place by 2006.

Patent extension incentives for drug deveolpement are not a new idea. According to Dee Ann Divis writing for United Press International on September 1, 2005, the U.S. Congress will also be asked this fall to consider offering a "wild card patent extension" for a biodefense drug and vaccine manufacturers for a patent of their choice. Similar wild card extensions have also been proposed to spur development of new antibiotics in the U.S. and U.K.

China I/P Symposium

The Association of Patent Law Firms and DePaul University College of Law Center for Intellectual Property Law & Information Technology (CIPLIT), invite you to join them at a symposium on emerging Intellectual Property issues faced by corporations doing business with and in China

Date: October 20, 2005
Time: 8.30 am to 4.30 pm
Place: DePaul University College of Law, Room 8005, 1 East Jackson Blvd., Chicago.
Registration: http://media.aplf.org/conferences/chinasymposium.php.
Cost: Free to APLF members/$200 to in-house counsel

Click here for the agenda.

The Politics of Piracy in China

While some may see Chinese President Hu Jintao's upcoming visit to the U.S. as an opportunity to push Chinese authorities to crack down on rampant violations of international copyright, trademark and patent protections, a new book suggests that such external pressure will have little or no impact on the crux of the problem: the central government's inability to enforce intellectual property norms across the vast reaches of China's 31 provinces.

"Recent rhetoric of those who champion direct confrontation of China over intellectual property protection reflects an astonishing degree of ignorance about the bureaucratic nature of the Chinese legal, economic and political systems," says Dr. Andrew C. Mertha, author of The Politics of Piracy: Intellectual Property in Contemporary China (September 2005, Cornell University Press). "Increases in U.S. pressure will only result in Beijing digging in its heels and being far less receptive to U.S. concerns."


Mertha, an assistant professor of political science and international studies in Arts & Sciences at Washington University in St. Louis, has researched Chinese intellectual property issues since he moved to that country in 1998. His latest conclusions are drawn from personal interviews with hundreds of people, including local government officials and businesspeople throughout China, national political leaders, scholars, lawyers, trade representatives and veterans of private investigative agencies specializing in Chinese business disputes, as well as some of the pirates themselves.

Mertha suggests that the success of our efforts to deal with street-level piracy ultimately hinges on an intimate understanding of power politics in China's local bureaucracies and government-business relations. Leaders of local government bureaucracies are often intimately involved with companies that profit from pirated goods, so that when a community depends heavily on piracy for jobs and income, local powerbrokers have little incentive to crack down on violators. Local governments and agencies have limited resources and seldom make anti-piracy efforts a real priority. Violators also have developed increasingly sophisticated methods to manufacture and sell pirated and counterfeited goods, in some cases even copying the factories that produce them.

Mertha's book traces the history, cultural context and ongoing economic implications of intellectual property in China, and offers the following summaries of three areas that he considers to be the most important and least understood.

First, many people argue that China should utilize its IPR provisions within the revised criminal law to go after the pirates and counterfeiters. However, China's legal infrastructure does not have the capacity, nor the authority, to effectively handle the sheer volume of potential IPR violations. The courts are under the jurisdiction of local governments, which sometimes have a direct interest in looking the other way when it comes to IPR violations. In fact, the violating factories might even be owned by the local governments in question. More often, however, local governments simply want to ensure social stability and this means employing as many people as possible, even if it means employing them in IPR-violating enterprises.

Second, China's extensive administrative enforcement bureaucracies can offer only limited help for aggreived intellectual property owners. In order to use these institutions effectively, it is necessary to find creative ways to compensate their shortcomings. For example, many Chinese copyright holders have recognized that the copyright enforcement apparatus is extremely weak in terms of its personnel, operating budget, and bureaucratic reach. Consequently, they usually choose to take shift their claims to the more-powerful anti-counterfeiting bureaucracies by invoking laws on trademark, anti-unfair competition, and product quality.

Third, we need to recognize that intellectual property violations are based, first and foremost, on economic, not legal or "cultural," calculations. Most Chinese (and expatriates in China) buy pirated software, motion pictures, and music CDs because they are cheaper by several orders of magnitude than their legitimate counterparts. Microsoft Office costs more in China than it does in the United States, about the monthly income of most middle-class Chinese. It is no wonder, therefore, that the Chinese prefer to buy it for a dollar. By bringing the price closer to the black market price, at least temporarily, US companies can use their comparative advantage of virus-free software, product upgrades, and support services. This may mean losing money in the short run, but in the long run these losses pale in comparison to the continuation of the status quo.

"Intellectual property in China is a highly sensitive and often misunderstood policy issue," Mertha concludes. "It is embedded in a complicated institutional context, one in which change is often swift and dramatic — and uneven — and its future trajectory remains largely uncertain. If we want to curtail piracy and counterfeiting in China, we must learn the lessons of past engagement with China over the issue, as well as take into account some of the basic factors of IPR violations in China that never seem to make it onto the public discourse over the issue. Ultimately, to be effective, we must find some way to work with national-level Chinese authorities, to help them implement laws already on the books and enforce them at the local level."

Telephone-Number-Squatting?

According to Kevin Poulsen writing for Wired.com on September 07, 2005, the U.S. Federal Communications Commission unceremoniously transferred control of the toll-free number "1-800-RED-CROSS" to the nonprofit group on Friday.

It's former owner, Steve Parker, Chairman of 800-Ideas.com, says that he had acquired the phone number after founding a company called "Red Arms," which, by pure coincidence happens to share the same alphanumeric phone-pad translation as 8-0-0-R-E-D-C-R-O-S. Parker had begun charging local Red Cross chapters a per-minute fee to get calls originating from nearby calling areas. He claims to have had about half a dozen of the more than 1,000 local Red Cross chapters signed up for the service before losing the number.

"We make our living off of phone numbers that spell words," said Parker. "We've created companies like 1-800-FLY-CHEAP. We actually pioneered shared usage" of these toll-free numbers.

"They were talking about the kinds of money that changed hands for 1-800-FLOWERS, which is ridiculous," said Chuck Connor, senior vice president of communication and marketing for the American Red Cross. "We're not going to be paying seven figure sums to some West Coast boiler-room operation for a number we should have had in the first place."

Usufruct you, Mr. Parker!

TGIF for Commemorating Your Relationship with I/P

"Is there anything more romantic than commemorating your relationship in a piece of intellectual property?," asks The Patently Silly Blog. Not if you're Jewel and Frank Periandri of Hinckley, Ohio, co-inventors of U.S. Patent No. D491982 for this greeting card:

The same sentiments could even be offered to a few of the ex-subscribers to the I/P Updates news service at www.ip-updates.com. But to the other 7,020 of you that are still here, all I can say is thanks, and

Thank Goodness It's Friday,

--Bill Heinze

Makoto Nakajima New Commissioner of the Japanese Patent Office

Although a formal press release has not yet been issued, it appears that Makoto Nakajima has been named Commissioner of the Japan Patent Office. The 53 year-old Mr. Nakajima graduated from the University of Tokyo with a degree in Law and joined the Ministry of International Trade and Industry in April 1974. Since June 2004 he has served as Director-General of MITI's Trade and Economic Cooperation Bureau.

Litigation No Substitute for Protecting I/P in China

According to Meagan C. Dietz, Sarena Shao-Tin Lin, and Lei Yang writing in the latest issue of McKinsey Quarterly, many multinational companies in China are losing the battle to protect their intellectual property, largely because they rely too heavily on legal tactics and fail to factor IP properly into their strategic and operational decisions.

The best companies reduce the chance that competitors will steal their IP,
by carefully selecting which products and technologies to sell and manufacture
in China. . . . The law alone isn't enough to protect intellectual assets. A company should assign explicit responsibility for its IP to senior managers who are familiar with all aspects of the business and able to focus their energies on those elements of IP protection it can control. Achieving the right mix of legal, operational, and strategic considerations is difficult, and companies certainly can't protect all of their IP all of the time. Yet those that get it right are more likely to build successful businesses in China.

The author's "Pyramid of IP Protection" graphic illustrates that an "intellectual property awareness culture" is an important operational consideration for those doing business in China. You can get your operation some free I/P awareness here.

60% Reversal Rate for USPTO Ex Parte Appeals

According to Professor Hal Wegner, "Statistics taken from the Official Gazette (on line) that were provided by Sean Passino show that nearly sixty (60) percent of ex parte patent appeals that reach a decision involve a reversal of at least one ground."

The following overall statistics are taken from the Official Gazette," writes the Good Professor, "except that the various types of remands and dismissals are lumped into one category, and the percentages for actual decisions are calculated by deduction of the remands and dismissals:"

Disposition, % of Dispositions*, [% decided cases]

AFFIRMED, 36. 6%, [40 % decided]

AFFIRMED-IN-PART, 12.6 %, [14 % decided]

REVERSED, 40.9 %, [45 % decided]

REVERSALS, 53.5 %, [59 % decided]
(INC. PARTIAL)

REMANDS; DISMISSALS, 9.9 %

TOTAL, 100.0%

* Decisions to date of reporting for fiscal year 2005

Assitance to IP Firms Affected by Hurricane Katrina

The American Intellectual Property Law Association (AIPLA) has created a wesite devoted to offers of assistance to IP firms affected by Hurricane Katrina here. AIPLA members who can give help or support can send detailed information describing the support being offered directly to the AIPLA at aipla@aipla.org.

I/P in October 2005 term of the U.S. Supreme Court

Professor Wegner has released yet another paper discussing seven cases before the Court during its next term, along with their status and implications:

A. Oral Argument in November 2005
(1) Unitherm v. Swift Eckrich – argument November 2, 2005
(2) Illinois Tool v. Independent Ink – argument November 29, 2005

B. Certiorari Petitions
(3) Schering-Plough – cert. petition briefing stage
(4) KSR v. Teleflex – awaiting vote on certiorari
(5) Lab. Corp. v. Metabolite – awaiting vote on certiorari
(6) eBay v. MercExchange – cert. petition briefing stage

C. Case Awaiting En Banc Circuit Decision
(7) The BlackBerry case – awaiting denial of en banc at the circuit

The Patently-O Blog has summarized the cases here and kindly posted a copy of the Good Professor's thoughts here.

WIPO Sees Silver Lining in Harmonization Failure

Failure to agree on a proposal to harmonise national patent laws by World Intellectual Property Organisation members “is not necessarily the end of the world for WIPO,” Francis Gurry, WIPO deputy director general, reportedly said in a press briefing at WIPO headquarters on September 7, 2005. Although the trilateral countries contribute significantly to WIPO’s funding, a lack of harmonisation would not have much impact on the organisation’s revenues, Gurry said.

According to William new writing in the September 7, 2005 issue of "I/P Watch," WIPO has been under pressure to promote a “trilateral” harmonization proposal by the European Union, Japan, and the United States, as the United States and Japan have signalled a willingness to take the harmonization effort outside WIPO. Still, differences persist between the three I/P power centers. For instance, on prior art, the United States does not recognise prior oral disclosures, while the European Patent Convention does, plus the two sides have different approaches to the treatment of applications that were previously filed but have not been published, according to an official. On the grace period, the United States offers 12 months while the European Patent Convention does not the same kind of grace period.

Gurry surmised that the real problem may be “legislation fatigue” after a decade that has seen “an orgy of policy issues” related to intellectual property rights in different international bodies, such as WIPO and the World Trade Organization, and at the regional and national levels. This is “not necessarily a bad thing,” Gurry said, because it could shift the policy focus to a concrete debate about rights. “I would say it’s stress caused by success, not stress caused by failure,” he said.

The increased attention to intellectual property issues has led to a two-sided polict debate: rightsholders targeting piracy and technology, and consumers seeking greater flexibility from strict measures. But those perspectives may converge once the “clouds of ideology” are cleared away, Gurry argued, as those who do not want encroachment on the public domain may recognise that accomplishing this begins with a better system for intellectual property protection.

JPO Consolidated Examination Requests Due September 30

Since 2000, the Japanese Patent Office has offered applicants expedited, consolidated examination of applications with overlapping technical relevance. Applicants who wish to have related inventions examined together under the consolidated examination program in the 2006 fiscal year must apply to the Examination Policy Planning Section by

1. Submitting a Request for consolidated examination by e-mail before September 30th, 2005; and
2. Sending a list of relevant applications to the applicant from the JPO before December 22nd, 2005.

More information about the consolidated examination process at the JPO is available at http://www.jpo.go.jp/torikumi_e/t_torikumi_e/renkeisinsa_h18e.htm where it states that "Any person residing abroad is required to carry out examination procedures with the JPO through a patent administrator."

Checking for Plagiarism One Sentence at a Time

LexisNexis has teamed-up with iParadigms to offer "LexisNexis CopyGuard" pattern-matching technology for identifying suspected plagiarism. The service assigns each document a "similarity index" indicating the total percentage of the document containing text originating elsewhere in the Lexis database. It also provides and "Originality Report" that underlines and color codes questionable sentences, with links to the original sources.

But should we be looking for plagiarism sentence by sentence simply because we can?

Musicians know that all great composers steal; documentarian's lament over dissappearing history; and artists are plagued by intellectual property issues. Even technological breakthroughs can be viewed as more of a societal building process than the singular obsessions of lonely geniuses.

According to Stuart P. Green, a professor of law at Louisiana State University in Baton Rouge, copyright law "protects a primarily economic interest that a copyright holder has in her work ... whereas the rule against plagiarism protects a personal, or moral, interest." But just how far should we go to protect these non-economic interests? When Malcolm Gladwell described the plagiarism of his own work in a November 15 article for The New Yorker, he concluded that "In the worlds of academia and publishing, plagiarism has gone from being bad literary manners to something much closer to a crime. We have somehow decided that copying is never acceptable and the ethics of plagiarism have turned into the narcissism of small differences: because journalism cannot own up to its heavily derivative nature, it must enforce originality on the level of the sentence." Others have even gone so far as to suggest that if the phrase, "To promote the progress," in the U.S. Constitution means prioritizing people's access to writings and discoveries, then the rise of open source production and dissemination of content may now be demonstrating that the incentive justification for intellectual property just isn't true when the means of production and distribution are in the hands of individuals, without the need for significant capital contributions.

Of course, most of us would like to see our work get at least hyperlink, if not outright attribution. In the Talmud, notes Professor Green, "a person who reports something in the name of the one who said it brings redemption into the world." Rabbi, Joseph Telushkin explains the reasoning behind that text this way. "If a person presents as her own an intelligent observation that she learned from another, then it would seem that she did so only to impress everyone with how 'bright' she is. But if she cites the source from whom she learned this information, then it would seem that her motive was to deepen everyone's understanding. And a world in which people share information and insights to advance understanding, and not just to advance themselves, is one well on its way to redemption."

While the I/P Updates news service may not show you a path to salvation, we do try to advance your understanding of news and information affecting intellectual property practitioners. And we make no bones about trying to impress you with what we know, regardless of its source. So remember, it you like this news service, you'll love the way that we practice law.

Subscribe here, and send your work here.

Free Office Space for I/P Practitioners Displaced by Hurricane Katrina

According to the IP Law Bulletin on September 7, 2005, Birch, Stewart, Kolasch and Birch, will make a private suite of offices for use, free of charge, to any intellectual property law firm or similar organization that has been displaced by the disastrous conditions in Louisiana and other parts of the Gulf Region. Interested organizations should call Charles Gorenstein, Partner, or John Sadowski, Executive Director, at (703) 205-8000.

Free Teleconference: Trans-Border Patent Infringement Under U.S. Law

Date: September 13, 2005
Time: 1:00 - 2:00 pm (ET)
10:00 - 11:00 am (PT)
Register here by September 12, 2005

While globalization may be eroding the significance of national borders from a business perspective, their significance from the perspective of U.S. patent law remains considerable. Several recent decisions, such as the Federal Circuit's rulings in NTP, Inc. v. Research in Motion, Ltd.; AT&T Corp. v. Microsoft Corporation; and Eolas Technologies, Inc. v. Microsoft Corporation, highlight important issues for patent owners and their competitors - ranging from whether one infringes a method claim if it is practiced across borders, to what triggers 35 U.S.C. § 271(f) liability in the software context for "supply[ing]" from the U.S. to others abroad a "component" of a patented invention. In this teleconference, the speakers will discuss developments in this evolving body of U.S. law, and their potential significance for global businesses.

English Translations of I/P Laws in Various Countries

As part its activities to assist developing countries primarily in Asia and the Pacific Rim improve their industrial property systems, the Japanes Patent Office has site provide the texts (both in English and Japanese) of the industrial property laws and regulations in effect in various industrialized and developing countries. According to the JPO website:

We hope that the governments of developing countries use this site to refer to the legal systems of other countries in order to establish, revise, or contribute to their own industrial property laws. At the same time, we hope that those who apply for the acquisition of industrial property rights in other countries profit from the information contained in this site. Please note that the translations of the texts and of the other information contained in this site are not official, and examining the original texts of the laws of the countries concerned is advised.

Subscribe to I/P Updates!

Free, daily and weekly subscriptions to the I/P Updates news service are available via e-mail and RSS here, in the right column.

Contact Information for USPTO Customers Affected by Hurricane Katrina

Patents

USPTO customers in the areas affected by Hurricane Katrina who have questions or problems regarding patent applications or other patent proceedings should contact Eugenia Jones at 571-272-7727 or eugenia.jones@uspto.gov.

For questions or problems regarding Board of Patent Appeals and Interferences (BPAI) matters, please contact Craig Feinberg at 571-272-9797 or craig.feinberg@uspto.gov.

Trademarks

USPTO customers in the areas affected by Hurricane Katrina who have questions or problems regarding trademark applications or registrations should contact Janis Long at 571-272-9573 or janis.long@uspto.gov.

For questions or problems regarding Trademark Trial and Appeal Board (TTAB) matters, please contact David Mermelstein at 571-272-4292 or david.mermelstein@uspto.gov.

The contents of USPTO files for trademark applications, many registrations, and international applications filed under the Madrid Protocol, are available on the USPTO website at http://portal.uspto.gov/external/portal/tow. If a party needs a file that is not available on the USPTO web site, the party may e-mail a request to add the contents of that file to the USPTO database to TM_Scanning@uspto.gov.

TRAFFIC LAW CENTER Registrable for Legal Services

According to John Welch at the TTABlog, the U.S. Trademark Trial and Appeal Board gave Applicant Robin Sullivan the green light to register the mark TRAFFIC LAW CENTER for "legal services." It reversed the PTO's Section 2(e)(1) mere descriptiveness refusal, finding that the mark has acquired secondary meaning, but also required disclaimer of the generic term "traffic law." In re Sullivan, Serial No. 76202254 (August 18, 2005) [not citable].

Welch writes that the Applicant proved use of the mark since 1989, providing services to more than 110,400 clients and garnering revenues of more than $20 million in the 1990-2002 period. He also spent more than $3 million in advertising during roughly the same period and prominently displays the designation TRAFFIC LAW CENTER at his various locations:

The Board rejected the PTO's poSition that the mark is "highly descriptive" and therefore must meet a heightened 2(f) standard of proof. The Board also found that each of the "several other lawyers or law firms around the country" use TRAFFIC LAW CENTER in rendering their services in "a proprietary manner, i.e., as a trade name or service mark, not use in a descriptive manner." Still, the Applicant's own usage of "traffic law" in his appeal briefs and his license agreement led to this portion of the mark requiring a disclaimer.

Click here for "KEEPING TABS ON THE TTAB" and keeping tabs on John Welch.

TGIF for the Heroes of Engineering

The heroes of engineering are featured in "The 20th Century through the Comics," published by the American Society of Mechanical Engineers in honor of their 125th anniversary. This month's comic features Allen K. Breed, inventor of the automotive air bag inflator disclosed in U.S. Patent No. 4,711,466:

His apparatus included a sensor 50 mounted on a toroidal-shaped pressure vessel 30. The sensor contains firing pins 53 that are aligned to detonate stab primers 54 and activate percussion primers 55. When the vehicle decelerates, the sensor initiates gas generation in the vessel which is isolated from the sensor. This configuration allows the sensitive pyrotechnics in the sensor to be kept separate from the gas generator until they are installed in the automobile. It therefore simplifies the manufacturing, handling, and shipping of the gas generator and greatly increases the safety of the system before it is installed in the vehicle.

Click here for more on air bag safety from the U.S. National Highway Transportation Safety Administration.

Thank Goodness It's Friday,

--Bill Heinze

A Checklist for .EU Domain Name Registration

by Richard Schreier at Pool.com

In the coming months, the European Registry for Internet Domains ("EURid") will be making the .eu internet Top Level Domain (TLD) available for registration to all entities or persons meeting the .eu’s European presence requirements.

Registration of .eu domain names will occur in two steps: (1) a phased four-month "sunrise period" (beginning in the fourth quarter of 2005) open only to certain prior rights holders (of particular interest to readers of these updates) and (2) the landrush period, in which anyone meeting the .eu presence requirements may apply to register a .eu domain. Although applicants could wait until the landrush period to register a .eu domain, it is possible that the domains they want will not be available. How then should a trademark professional proceed to successfully acquire domains on behalf of their clients with prior rights during the sunrise period? Consider the following checklist.

1. Ensure a prior right may be proven.

Article 10 of Commission Regulation (EC) No. 874/2004 (April 28, 2004) (the "Regulation") defines "prior rights" as

"inter alia, registered national and community trademarks, geographical
indications or designations of origin, and, in so far as they are protected
under national law in the Member-State, where they are held: unregistered marks,
trade names, business identifiers, company names, family names, and distinctive
titles or protected literary and artistic works."

You need to ensure that the prior right for your domain request can meet the burden of proof required by the legislation. It is not sufficient, for example, that your organization owns the equivalent ".com" domain. You will also need to submit documentation meeting EURid’s requirements. If you fail to do so, you will lose your opportunity to register the name, leaving the person next in line with the chance to prove their position when yours is rejected.

2. Decide in which Sunrise period you should participate.

During the first phase of the sunrise period, only domain names that correspond with public bodies or to a registered national or Community Trade-mark (CTM) may be registered. Phase two will apply to all other prior rights. It is still unclear what evidentiary material will be needed to justify a prior right but these will be published prior to the launch of the sunrise period.

3. Choose a domain acquisition partner, carefully!

Accredited registrars are the only organizations who can submit domain requests on behalf of customers to EURid. However, they are obligated to submit domain names on a first come, first served basis. Therefore, your request's position in the their queue could have a significant impact on your ability to successfully acquire your domain.

EURid also allows accredited registrars to collaborate with intermediaries or agents who do not fall under the same restrictions as registrars. A variety of service providers around the world, such as Pool.com Inc. (http://www.pool.com/), leverage their network of accredited .eu registrars to provide trademark holders with the best chance of acquiring the .eu domain that reflects their prior rights. Their advanced algorithms maximize the possibility that a trade-mark holder’s domain application will be the first in the race to secure the domain.

4. Be prepared to prove your claim.

If your request is processed by EURid first (yes, in addition to being at the top of the registrar’s list you need to ensure your application is also the first one received by EURid) then you will need to prepare the "acceptable proof" that supports your claim to a prior right within 40 days of your request being considered. PriceWaterhouseCoopers has been selected by EURid to evaluate the claims to prior rights. Once they approve your application, the domain name will be registered to you the applicant, but will only become usable after a forty day appeal period.

5. Consider collaborating with a "sunrise" professional.

There are a number of individuals in the marketplace who routinely assist organizations with securing domain names during a sunrise period. They offer consulting-for-a-fee services that leverage their experience and knowledge gained from previous sunrise applications. And, in particular, they are well versed in the nitty-gritty details that could result in an application being rejected. For example, an application may be rejected simply because the documents are stapled together (PWC suggests the time required to "unstaple" documents that need to be rerouted to multiple professionals for review is significant when considering the volume of applications that will need to be reviewed).

6. A few other considerations.

First, the unique first come first served rule combined with the obligation for registrars to submit requests in the order in which they are received, makes it particularly challenging to secure the domains you want. It will be difficult to identify registrars who do not already have an inventory of domain requests which would prevent your request from being given top priority.

Second, with 25 countries in the EU, most of which have independent trade-mark registration databases, the likelihood that more than one organization will seek to register a specific domain name is very high. Competition WILL be fierce so organizations need to be well armed if they want to be successful.

The following link -- http://www.eurid.eu/en/euDomainNames/sunrisePeriod.html -- will direct you to the EURid website section that specifically deals with the sunrise period. Most of the popular questions are listed and answered there but ultimately, securing the domain name of choice in the .eu TLD will be a challenge for most organizations. The process itself is relatively simple but the first-come-first-served rules combined with fierce competition will make successful domain name acquisition elusive. Organizations would be well served to have a well defined plan of alternatives that optimize the probability to acquiring the domains they deserve.

Patent Portfolio Management Basics

"It does not make sense to invest thousands of dollars per year in patents, simply because any one of your patents could be worth millions," writes Dave Fisch, TAEUS Engineering Programs Director, in the Augsut 2005 issue of Taues Times. "If you owned real estate worth several hundred million dollars that cost you $5 million yearly taxes, you would actively manage the property to maximize your return and minimize your expenses. The same motivation needs to be applied to your patent assets, whether you own ten or ten thousand patents."

He suggests conducting periodic human checks of each patent versus the potential market for the patented technology. "It is critical that the information and opportunities you identify get captured in a way that allows you to easily retrieve this information," says Fisch. And I agree. With the right tools, processes, and leadership in place, a business can eaily identify those patents that can bring in licensing revenue and/or protect your business operation. It can also identify patents that should be sold or otherwise disposed of.

Where to start, you ask? First, develop a "Proactive I/P Culture" with seminars and watch services for your engineers and marketers. If your current counsel can't, or won't, provide these services (at no charge), then maybe you need new counsel. Second, sit down with the individuals who are most knowledgable about a particular market segment and review the claims in your corresponding patents and goods identifications in your corresponding trademarks. If your current counsel can't work with non-legal personnel to identify the point of novelty in each of the independent claims in an average of two minutes or less per patent, then maybe that counsel shouldn't be drafting the claims in your new applications. Third, when it comes to infringement, demand that your attorney explain the legal risks and expected costs to non-legal managers in a memo that is less than two pages long and/or a presentation that lasts less than fifteen minutes.
Impossible, you say? Then invite me to your facility for a free demonstration.

USPTO Seeks Comments on Trilateral Document Sharing

The United States Patent and Trademark Office (USPTO) is currently considering whether and to what extent documents contained in the files of published foreign patent applications may be entered by Examiners into the official record in U.S. patent application files. Comments regarding this matter may be directed to Mark Powell, Technology Center director, at Mark.Powell@uspto.gov or Jay Lucas, Sr. Legal Advisor-Automation, at Jay.Lucas@uspto.gov.

For a number of years, the USPTO, European Patent Office and Japan Patent Office (Trilateral Offices) have been considering ways to maximize the mutal exploitation of search results. Together, the Trilateral Offices represent nearly 90% of all patent applications filed in the world, illustrating the dramatic potential for workload reduction in the USPTO through effective work sharing.

As part of this ongoing cooperation, the Trilateral offices have established a trilateral document access (TDA) standard by which any one office may access electronic files of published applications in the other two offices. One of the main benefits of TDA over currently available published application sources (e.g. public PAIR) is a common interface standard, by which examiners in each office can view the file contents of a published application in one of the other two offices in the examiner's own native viewing format, increasing efficiency and effectiveness.

Examiner usage of TDA is limited to viewing and printing application documents from the published files of the other Trilateral Offices. The proposal would expand TDA usage to permit examiners to import certain published documents from the files of a "donor" office into the application file of the "recipient" office, becoming part of that file. Likewise, examiners from the other Trilateral Offices similarly will be able to import documents from the USPTO file of published applications.

It is proposed that TDA importation be limited to the following documents:

• Application As Filed (Request, Claims, Description, Drawings, etc)
• List of cited references
• available reference copies in the file
• Search report (without examiner comments or arguments), and
• Appropriate translations, when available.

Password Circumvention for Repair Did Not Lead to Copyright Infringement

In Storage Technology Corp. v. Custom Hardware Engineering & Consulting, Inc., et al. (Fed. Cir. August 24, 2005) the court identified repair conduct invloving password circumvention conduct that appears to fall within the safe harbor of 17 U.S.C. § 117(c) and is therefore outside the scope of the Digital Millenium Copyright Act. The court also recognized that a license agreement with customers allowed the customers’ agent to copy software into RAM during the activation of the customers’ licensed product.

Section 117(c) of the copyright Act is entitled "Limitations on exclusive rights: Computer programs" and provides that

it is not an infringement for the owner or lessee of a machine to make or authorize the making of a copy of a computer program if such copy is made solely by virtue of activation of a machine that lawfully contains an authorized copy of the computer program, for purpose only of maintenance or repair of that machine, if --
(1) such new copy is used in no other manner and is destroyed immediately after the maintenance or repair is completed; and
(2) with respect to any computer program or part thereof that is not necessary for the machine to be activated, such program or part thereof is not accessed or used other than to make such new copy by virtue of the activation of the machine.

In this case, StorageTek sold its tape libraries to customers, but merely licensed the software that ran the library systems. The licensed software specifically excluded the maintenance code which was stored in RAM and protected by a password provided only to authorized service providers. As an unauthorized service provider, CHE had to had to override the "GetKey" password protection scheme in order to read the system fault codes

StorageTek alleged that CHE committed copyright infringement when it rebooted and reconfigured its customers’ units in order to obtain the fault codes. CHE did not deny that the copyrighted maintenance code is copied into RAM when the company reboots its customers’ systems. Instead, CHE’s position was that its actions are protected by section 117(c) because the owners of the tape libraries authorized CHE to turn on the Control Units and Management Units in order to maintain and repair the tape libraries, and the duplication of the software into RAM is necessary for the machine to function. CHE also argued that its activities fall directly within Congress’s purpose in enacting section 117(c), which was to "ensure that independent service organizations do not inadvertently become liable for copyright infringement merely because they have turned on a machine in order to service its hardware components."

According to Cory Hojka at the Patently-O Blog,

In a case of first impression, the Federal Circuit addressed the extent of
this protection offered by 17 U.S.C. § 117(c). The Court of Appeals, relying on
definitions in 17 U.S.C. § 117(d), held that § 117(c) protects maintenance and
repair as two different activities. “Repair,” according to the Federal Circuit,
is restoring a broken machine to its original specifications. “Maintenance,” on
the other hand, has “a much broader temporal connotation” that “encompass[es]
monitoring systems for problems [and] not simply fixing a single, isolated
malfunction.” Thus, the Federal Circuit found erroneous the district court’s
conclusion that only repair activities are protected under Sec. 117(c).

Cathy Kirkman at the Silicon Valley Media Law Blog also offered this analysis with regard to the scope of the software licenses:

StorageTek argued that its license did not extend rights to third parties,
because it stated that the licensee may not "permit another person to use" the
code. However the Court looked to other clauses of the agreement to
conclude:

"The clear implication of those sections is that the license is
tied to the piece of equipment on which the software resides. Thus, the
authorized use is tied to a particular machine, rather than a particular
person."

The clauses in question stated that the software may be transferred
only with the equipment, and the license is solely for use in enabling the
equipment on which the code was provided.

The court also went on to conclude that, to the extent that CHE’s activities do not constitute copyright infringement or facilitate copyright infringement, StorageTek is foreclosed from maintaining an action under the Digital Millenium Copyright Act:

The problem in this case is that the copying of the software into RAM when the
Control or Management Units are rebooted takes place regardless of whether the
LEM or ELEM is used. Hence, there is no nexus between any possible infringement
and the use of the circumvention devices. Rather, CHE’s circumvention of GetKey
only allows CHE to use portions of the copyrighted software that StorageTek
wishes to restrict technologically. The activation of the maintenance code may
violate StorageTek’s contractual rights vis-à-vis its customers, but those
rights are not the rights protected by copyright law. There is simply not a
sufficient nexus between the rights protected by copyright law and the
circumvention of the GetKey system. . . . In this case, the threat from CHE’s circumvention of GetKey is distinct from the dangers that StorageTek’s copyright protects against.

In his disenting opinion, Judge Rader noted that, while he agreed that "maintenance" includes checking the proper functioning of components, he did not agree that CHE’s use of Storage Tek’s maintenance code falls within the protection of § 117(c):

Section 117(c)(1) specifies that any copy of the maintenance software must
be destroyed "after the maintenance or repair is completed." CHE, however, does
not meet this condition. CHE runs the maintenance software continually to
monitor operation. Only when a problem arises during monitoring, does CHE
actually work on the silo. Thus, CHE uses the copy of the maintenance code in
RAM beyond actual servicing or repairing. This continual use falls outside the
scope of § 117(c). . . .

CHE [also] does not boot the machine in order to service or repair it;
it boots to manipulate the maintenance level of the maintenance code so that it
may read fault codes. As noted above, this is not "maintenance" or "repair"
under § 117(c). CHE also does not "immediately destroy" the copy when the
service or repair is completed. CHE uses the maintenance code even while the
machine is functioning properly and is in full use by the client. How can CHE’s
continual use of Storage Tek’s software during a three-year (or more) contract
not be "using the material for a prohibited purpose"? Again, the "immediately
destroy" requirement of § 117(c) protects use only during the limited time the
repairman is actually working on the computer.