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Archived updates for Monday, July 31, 2006

Florida Bar Approves IP Specialty Certification


According to Deborah C. España writing for Daily Business Review on July 26, 2006, The Florida Supreme Court recently approved amending Bar rules to add an intellectual property specialty. Applications for specialty certifications must be submitted to the Bar between July 1 and Aug. 31, and between Sept. 1 and Oct. 31. However, attorneys who seek certification in the two new areas won't be eligible to apply until the appointment of two new certification committees. "Attorneys may not be able to apply for certification in these two areas for the first time until the late fall and may not become certified until next spring," said Dawna Bicknell, head of legal specialization and education for the Florida Bar.

Board Certification for Lawyers: What Does It Mean in Florida?

Looking for information about a specific state? Go to Find a Certification Program.
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87 Million Yen Awarded to Japanese Employee-Inventor

According to the The Asahi Shimbun on July 27, 2006, Toshiba Corp will pay 87 million yen ($749,000) to former employee Fujio Masuoka who invented flash memory while working at the company. Masuoka had sought about 1.1 billion yen while Toshiba had offered about 6 million yen for the technology that reportedly led to 10 billion yen in royalties through 2002.

In 2005 Shuji Nakamura received 600 million yen from Nichia Corp. for his invention of the long-elusive blue light-emitting diode.

In 2004, Masayoshi Naruse received 150 million yen from Naruse for his development of a production method for the artificial sweetener "aspartame."

Read more on Japan's Article 35 of the Patent Law regarding employee-inventor compensation.
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UK Patent Renewal Distribution

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Archived updates for Friday, July 28, 2006

TGIF for Bar Exam Season

Wish someone you know Good Luck on the Bar Exam! with a personalized e-card from the Anonymous Lawyer:


And, if your future lawyer is still looking for that perfect practice, then tell them to post their credentials to the Anonymous Law Firm LLP where they can have it all, including a summer program, diversity and pro bono initiatives, and top compensation and benefits, not to mention the great associate lifestyle.

For more information, check out ALF's answers to frequently asked questions . . . or just buy the book.

Thank Goodness It's Friday (and the names have been changed to protect the innocent),

--Bill Heinze

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Archived updates for Thursday, July 27, 2006

Blatant Self-Promotion (and the Friendster Patent)

It's not every day that you get to see this name in the Wall Street Journal (on July 27, 2006, at page B1, above the fold, in bold-face font).
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USPTO Board Hearings to Be Open to the Public


Beginning August 1, 2006, patent hearings conducted by the U.S. Patent and Trademark Offices's Board of Patent Appeals and Interferences ("BPAI") and trademark hearings conducted by the Trademark Trial and Appeal Board ("TTAB") will be open to the public.

Docket schedules will be will be posted in advance on the USPTO Web sites at http://www.uspto.gov/web/offices/dcom/bpai/index.html and http://www.uspto.gov/web/offices/dcom/ttab/index.html. A limited number of spaces will be available to the public on a first-come, first-served basis. No advance requests for attendance by the public will be permitted.

Thirty minutes before the scheduled start of the hearing session, members of the public should arrive at the lobby level, Madison East Guard Desk and request a hearing badge for hearings in a specific hearing room, e.g., A, B, C, or D. Attendees will need to surrender a picture ID in exchange for a hearing badge. The Guard Desk will only issue a given number of hearing badges for each hearing room on a first come, first served basis. Fifteen minutes before the start of a hearing session a hearing usher will escort the public attendees with badges to the hearing rooms. Upon exiting the building, hearing badges are turned in at the Guard Desk in exchange for the attendee's picture ID.

Once granted entry to the hearing session, public attendees are required to stay for the entire hearing session even though there may be more than one proceeding scheduled during the hearing session.

For further information and procedures for admittance to board hearings, see: http://www.uspto.gov/web/patents/patog/week30/OG/TOC.htm#ref11.
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OHIM Publishes Draft Opposition and Examination Guidelines


The EU's Office for Harmonization of the Internal Market is revising its Examination and Opposition Guidelines in response to recent changes in the Community Trademark and designs CTM Regulation brought by Council Regulation (EC) N° 422/2004 and Commission Regulations (EC) N° 1041/2005 and N° 1042/2005 available at http://oami.europa.eu/en/mark/aspects/amendfees.htm.

Comments are welcome no later than 30 September 2006 and should be sent by e-mail to vincent.oreilly@oami.europa.eu. The process of formal adoption of revisions of the guidelines will be finalised in 2007. In the meantime amendments to practice that are reflected in the documents will be applied by examiners.

Changes have been made in a number of parts of the Draft Opposition Guidelines. The revised versions are contained in six separate documents below for ease of downloading:
The remaining sections of the Opposition Guidelines are not being changed.

The Draft Examination Guidelines are available at Examination24_7_2006.pdf
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IPO's Adler on Proactive Patent Lawyering

IPO President Marc Alder believes that we should all be "Searching Before Filing" and I tend to agree. According to Marc,

First, it is essential for assessing the patentability of an invention and
determining the exact scope of the expected claimed invention. . . . The second
self-interest reason for conducting a pre-filing patent search is to proactively
avoid infringement of others' patents. . . . It is smart to be
actively involved in analyzing your inventions.

In fact, I have been advocating such "Proactive Intellectual Property Lawyering" for quite some time.

For those of you that are concerned about the possibility of willful infringement liability in connection with anything that is located during a patent search, I would like to point out that I have never met a senior corporate leader that did not want to identify such problems early in the design/development process, when they are cheapest to rectify. Relying on the possibility of treble damages as a reason not identify your competitor's intellectual property rights always seemed to me like putting the cart before the horse. The total cost of intellectual property litigation often has very little to do with the size of any damages award. In fact, if your goal is to promote cost-effective measures to avoid all litigation, then maybe treble damages should be the penalty for NOT searching, or maybe it should be gotten rid of all together.

Sure, Adler is correct in noting that "It costs money to develop the capability and skill for inventors and patent owners to utilize sophisticated databases to conduct comprehensive pre-filing searches." However, one way to minimize those costs, and develop your organization's I/P culture, is with my "Free Intellectual Property Training Seminar" for new clients. Besides, if you like what you see the I/P Updates news service, your colleagues will love what I can show them in a half-day seminar.
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Archived updates for Wednesday, July 26, 2006

USPTO Presentations to the NAPP Annual Meeting

Thanks to Todd Rands for passing along presentations by USPTO Commissioner John Doll and others that were given at the National Association of Patent Practitioners 10th Anniversary Annual Meeting, July 15-18, 2006 in Alexandria, Virginia:
According to Todd,

They lay out the most recent version of PTO's proposed changes to continuation practice (soon to be announced), priority claims, numbers of claims, etc, along with other new proposals. I know the PTO is still officially "considering" the comments on the previously proposed rules. But with an announcement expected in Sept/Oct, it would seem that this July presentation is the likely route being followed (i.e., not just floating ideas at this point).

The proposal would limit applicants to 1 continuation filing as a matter of right, eliminate divisional applications unless necessitated by restriction, limit priority claims to only a single application, etc. The fact there is a petition process to allow some exceptions to these rules does not add much comfort.

European Patent Attorney Axel Horns adds, "Whilst some of the items are nothing else than a matter of course, others appear to have a taste of shifting problems from the Office to the applicants and their representatives. . . . The U.S. Patent Attorney finds himself in a very difficult situation with his client, the applicant, desiring to get as much patent protection as possible, on the one hand, and the OED threatening with severe disciplinary action, on the other hand."
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Inventor Rights in China

The July 26, 2006 issue of the "China Intellectual Property Law Newsletter" from Lehman, Lee, & Xu provides the following summary of China's requirements for reasonable compensation of inventors:
An employee who invents while in the employment of a company enjoys the following rights:
  • 'Award' after completion of the invention;
  • 'Reasonable remuneration' based on the 'exploitation and application' and
    'economic benefits';
  • Right to be named as inventor; and
  • First right of refusal for transfer of patent ownership, on equal terms
    offered to others.
Since there is very little Chinese guidance on these requirements, the authors suggest that international employers use principles similar to those they apply under Japan's corresponding Article 35 of the Patent Law.

The newsletter also discusses the March 1, 2006 requirements for trade exhibitions to set up Complaint Review Panels (CRP) on the floor of the show for resolving intellectual property infringement disputes. However, the punishments for infringing at a trade show are probably not sufficiently intimidating to have much effect:

if an exhibitor at the show is reported more than twice, the show sponsor
must deny that exhibitor from taking part in the next exhibition. However, the
law primarily refers to existing patent and copyright laws for punishments for
IPR infringement.

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Archived updates for Tuesday, July 25, 2006

Noninfringement Judgment Freed Exclusive Supplier


In Louisville Bedding Company v. Pillowtex Corporation No. 05-1595 (Fed. Cir., July 25, 2006), despite the fact that Pillowtex and Louisville concluded their litigation in 1998, Louisville filed a Rule 60(b)(6) motion in 2005 to reopen the case and have the district court partially vacate its judgment of noninfringement of U.S. Patent No. 5,249,322 for "Fitted mattress cover and method of making same," left. According to Louisville, when it agreed to settle its suit against Pillowtex, Pillowtex and Xymid had an exclusive supply agreement for the 4059 mattress pad skirt material and there were no indications at that time that Pillowtex would soon go out of business. Louisville thus assumed, when it agreed to have the district court enter a final judgment of noninfringement as to the 4059 mattress pad, that no other competitor would have access to Xymid’s 4059 mattress pad skirt material.

When Pillowtex went out of business in 2003, its exclusive supply agreement with Xymid was conveniently terminated, and Xymid began selling it’s 4059 mattress pad skirt material to competitors that were not licensed by Louisville. Louisville argued that only by partially vacating that judgment can it be freed from the collateral estoppel effect and effectively obtain license revenue from its competitors who sell products using the Xymid 4059 mattress pad skirt material.

The Federal Circuit concluded that the district court did not abuse its discretion in denying Louisville’s motion under Rule 60(b)(6). According to Circuit Judge Lourie,

Typically, a district court may grant relief under Rule 60(b)(6) only for "exceptional or extraordinary circumstances." Jalapeno Prop. Mgmt., LLC v. Dukas, 265 F.3d 506, 509 (6th Cir. 2001). Louisville has not made such a showing. Because businesses fail every day, the failure of Pillowtex in this case, even though it appeared to be highly commercially successful in 1998, is not an "exceptional or extraordinary circumstance." To say the least, Louisville took a calculated risk that did not turn out the way that it expected.

Nor can we say that the equities in this case particularly favor Louisville and its fateful business decision. In the Pillowtex case, Louisville was faced with a summary judgment of noninfringement and an unfavorable claim construction with respect to the ’322 patent. Its position looked bleak at that time. There was no certainty that Louisville could have had that result changed in the district court or on appeal if it did not enter into the settlement agreement. Thus, it was greatly to Louisville’s benefit to settle the case under the terms that it did.

Furthermore, we note that all of Louisville’s claims directed to Pillowtex’s accused mattress pads were dismissed pursuant to the settlement agreement except those relating to the 4059 mattress pad. Thus, Louisville salvaged significant benefit with respect to the 4059 mattress pad in reaching the settlement agreement. We therefore reject Louisville’s request to nullify what it concedes was a bargained-for provision in the settlement agreement. The fact that there has been no appearance by Pillowtex in this appeal further weakens Louisville’s argument to partially vacate the earlier judgment.

Moreover, although the district court did not issue an opinion articulating its basis for denying the motion, our review of the transcript of the hearing on the motion makes clear that the district court had a well-founded belief in the need for finality of the noninfringement judgment that it entered in 1998. As the Supreme Court has recognized, "[p]ublic policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties." W.L. Gore & Assocs., Inc. v. C.R. Bard, Inc., 977 F.2d 558, 561 (Fed. Cir. 1992) (citing Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 401 (1981) (quoting Baldwin v. Traveling Men’s Ass’n, 283 U.S. 522, 525 (1931))). This policy concern is even stronger when a case is ended by the deliberate choice of the parties. Id. (citing U.S. Steel Corp. v.
Fraternal Ass’n of Steel Haulers, 601 F.2d 1269, 1274 (3d Cir. 1979)).

The district court in the Pillowtex case articulated that same policy concern when
it made the following statement: "[W]hen a Court’s judgment is made as a result of a settlement . . . and it’s not appealed and it’s not reversed, and it’s been in the books for a number of years, there is a thought that the state of the law should not be subjected to such later strategic, market-driven economic requests. . . . The integrity issue was whether court judgments can be relied upon or whether they are subject to being . . . tweaked later by a party who has no opponent. Transcript of Record at 39-40, Louisville Bedding v. Pillowtex Corp., No. 3:94CV-722-S (W.D. Ky. Aug. 1, 2005). The court’s policy concern provides sufficient basis for us to affirm its denial of Louisville’s Rule 60(b)(6) motion.

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Guatemala Accedes to the PCT

Guatemala became the 133rd contracting state of the Patent Cooperation Treaty (PCT) when it deposited its instrument of accession at WIPO on July 14, 2006. The Treaty will enter into force for Guatemala on October 14, 2006.


According to the World Fact Book, Guatemala is the largest and most populous of the Central American countries with a GDP per capita roughly one-half that of Brazil, Argentina, and Chile. The agricultural sector accounts for about one-fourth of GDP, two-thirds of exports, and half of the labor force. Coffee, sugar, and bananas are the main products. The 1996 signing of peace accords, which ended 36 years of civil war, removed a major obstacle to foreign investment, but widespread political violence and corruption scandals continue to dampen investor confidence. The distribution of income remains highly unequal with perhaps 75% of the population below the poverty line. Other ongoing challenges include increasing government revenues, negotiating further assistance from international donors, upgrading both government and private financial operations, curtailing drug trafficking, and narrowing the trade deficit.
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74,000 .EU Domain Names Suspended


On July 24, 2006, EURid, the non profit organisation operating the Internet top level ".eu" domain, announced that it has suspended 74 000 .eu domain names and has sued 400 registrars for breach of contract. According to their press release, this move was prompted by abusive behavior from a syndicate of registrars who have systematically acquired domain names with the obvious intent of selling them. In the
domain name business this is called warehousing and is not permitted.

"Int his case we are convinced that the domain name holders of the 74 000 .eu names (Ovidio Ltd, Fausto Ltd and Gabino Ltd) are acting as a front for a number of registrars. The domain name holders and the registrars can be regarded as one and the same. Since registrars should only register domain names for existing customers and not 'warehouse' the names in order to resell them at a higher price, this is clearly in breach of the registrar contract," says Herman Sobrie, Legal Manager of EURid.

EURid says that it would like to make the names available for registration again once a court decision is rendedered.
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Archived updates for Monday, July 24, 2006

Pirate Treasure of the Week

"It's easy to make Chinese angry. And when we get angry we want revenge. If you file a complaint. I will never sell it to you!" -- Chinese Lawyer Hou Songlin reportedly said (through a translator) to Jocelyn Ford of American Public Media's "Marketplace" radio show when reminded that the Public Broadcasting Sytem has until August to challenge his Chinese trademark registration of PBS's pointy-nosed profile logo, left.

"It turned out he had no idea who the pointy-nosed logo belongs to, or what PBS is. So he didn't know how much his catch was worth" from the non-profit organization, Ms. Ford concluded from her interview in Beijing.
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Excerpts from the Senate Report on USPTO Appropriations for 2007

Here are a few excerpts from the July 13, 2006 Senate Report (S. Rpt. 109-280, Text, PDF) on the DEPARTMENTS OF COMMERCE AND JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS ("Funding") BILL for 2007:
The Committee agrees to provide the Director the flexibility to reduce
patent filing fees in 2007 for documents filed electronically in accordance with
Federal regulation. Having granted this flexibility, the Committee directs USPTO
to provide a report to the Senate Committee on Appropriations detailing the cost
savings associated with this reduction in patent filing fees.

Hiring, Retention, and Human Resource Practices -- An innovation friendly
Government depends on an efficient patent system. Since fiscal year 2004, the
Committee has provided a 45 percent increase in funding for PTO, including
funding to hire thousands of new patent examiners. Yet during the same time
period, the backlog of pending patent applications has grown to over 500,000,
and it still takes an average of over 2.5 years to process a patent application.
Meanwhile, the Inspector General has received repeated complaints that PTO has
allowed or encouraged unfair personnel practices. The IG has identified these
problems as one of the top 10 management challenges of the Department of
Commerce. Even with increased funding, the problems at PTO are getting worse,
evidence that what is needed is better management. The Committee notes that in
June 2005, the Government Accountability Office [GAO] recommended several steps PTO should take to improve retention of patent examiners. The Committee directs PTO to provide a report to the Senate Committee on Appropriations, by March 2, 2007, on the status of implementation of GAO's recommendations, as well as, additional steps PTO will take to improve hiring, retention, and human resource
practices.

The Committee is concerned by the lack of information provided on the
progress of the National Intellectual Property Law Enforcement Coordination
Council [NIPLECC]. Funding was provided for NIPLECC in the amount of $2,000,000 under a separate heading in fiscal year 2005 and $500,000 under this heading in fiscal year 2006. The budget request proposes $990,000 for NIPLECC under the Department of Commerce's Departmental Management account in fiscal year 2007. The Committee questions the ability of any program to be successful without continuity within the Department and further questions the need to continue funding a program that neither the Department of Commerce nor the Department of Justice, the Co-Chairs of NIPLECC, are able to adequately justify or that has proven to be of any success. The Committee notes with disdain that the report required by the fiscal year 2006 conference report was never received and directs USPTO and DOJ to submit a report on the progress of NIPLECC no more than 30 days after the enactment of this act.
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USPTO-TEAS Now Accepts PDF Files for Some Documents

On July 22, 2006, the U.S. Patent and Trademark Office announced that, except for mark image files (which the USPTO will continue to accept only in a JPG format), it has now enhanced the Response to Office Action (ROA) form for its Trademark Electronic Application System ("TEAS") so as to accept PDF files, specifically for the following types of documents:

  • evidence
  • specimens
  • foreign registration certificates
  • consents
  • miscellaneous statements
  • signed declarations

The USPTO will NOT permit submission of an overall response as a PDF file; i.e., the evidence section cannot be used to attach a multi-page document consisting of arguments, evidence, revised identifications of goods/services, additional statements, etc. Any portion of the form that exists for a specific purpose must be used for that purpose, rather than trying to shoehorn a complete Response within the PDF file.

Also, information that is only accessible through a link, but not part of the submission itself, will NOT be considered to be made of record. The examining attorney will NOT independently access any URL as part of the examination process, and any materials presented only "by reference" will not constitute part of the actual file. Other PDF filing requirements are listed here.

In other TEAS news, the USPTO has corrected problems with Renewals for old registrations beginning with "00", and with Allegation of Use forms where there was a prior abandonment. A new checkbox has also been added to the Response form beneath the Supplemental Register option in order to prevent a blocking error when an applicant attempts to convert an application to seek registration on the Supplemental Register.

In response to a Suspension letter or a Suspension Inquiry letter, applicants can now file a TEAS ROA in order to submit a jpg image file of the foreign registration certificate, or to notify the examining attorney that the foreign registration certificate has not yet issued and that the examining attorney should, once again, suspend the application. Special procedures are also now available for electronically filing sound marks and specimens via TEAS.

The USPTO expects to move from "78" to "77" series codes around August 2006. Extensions of protection into the United States will continue to use the "79" series code.

The USPTO also wants to remind TEAS users that they should open only one form at a time and close the browser after completing the form. This will ensure a "unique" server session for each TEAS form to be processed. If you already have a TEAS form open on your desktop, never open another form via your browser's "File New Window" option.

Do not open a new form through a link or bookmark while you have another form open. Failure to do so may result in improper data displaying within the form. Also, the TEAS forms work best when they are accessed directly via a web browser. Do not attempt to access the forms via a browser embedded in another program. For instance, do not attempt to access the forms from within your Outlook or Lotus Notes web browser feature. Accessing the forms in this manner may disable some of the forms' features. You should always open your browser (Internet Explorer, Netscape, Firefox, Safari, etc.) directly and then use the TEAS forms.

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Archived updates for Friday, July 21, 2006

TGIF for the Original Patent Troll

In "Meet the Original Patent Troll," Lisa Lerer writes for IP Law & Business on July 20, 2006 that Ray Niro (ryhmes with Cairo) keeps in his office a statue of a troll lying on its back rolling with laughter. He's also got "a Falcon 10 jet, six Ferraris, acres of land in Chicago, Boca Raton and Aspen, and a $250,000 gift to DePaul University endowing the Raymond P. Niro professorship in intellectual property law," writes Lerer. But,

On average, it costs Niro $1 million to put on a case. He doesn't pay expenses, leaving inventors to find other sources, like patent-holding companies or private equity shops to front those costs -- usually about $2.5 million -- in exchange for a cut of the profits. He makes the money either as a straight 30-40 percent of damages, licensing fees and royalties, or a graduated arrangement, where as the firm progresses through the litigation, it gets a bigger cut. For example, for pretrial settlement Niro gets 20 percent; for a verdict at trial, 30 percent; for an appeal, 40 percent. Niro also does contingency work for a few corporations, which pay an up-front fee and a small percentage of the postsettlement riches. Contingency cases produce about 95 percent of the firm's roughly $100 million annual revenue. Niro charges his small number of hourly clients, including Alcatel, AccuMed Inc., Illinois Tool Works Inc. and Black & Decker, an hourly rate of $840. . . .

"We've lost some cases that we've really wanted to take because of the willingness of other people to pay all the expenses," says Niro. And that kind of stuff, he says, is really shady business.

Thank Goodness It's Friday (and Go Trolls!),

--Bill Heinze
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FTC Commissioner Testifies on Harm Caused By Generic Drug Exclusion Agreements

Testifying before the U.S. Senate’s Special Committee on Aging on July 10, 2006, U.S. Federal Trade Commissioner Jon Leibowitz explained that
The issue of [generic drug] exclusion payments has been the subject of
significant debate, but the Commission’s position is clear. Where a patent
holder makes a payment to a challenger to induce it to agree to a later entry
than it would otherwise agree to, consumers are harmed either because a
settlement with an earlier entry date might have been reached, or because
continuation of the litigation without settlement would yield a greater prospect
of competition.

Some who disagree with the Commission’s position argue that we must presume
the validity of the patent, and even infringement, and its exclusionary power
for the full term unless patent litigation proves otherwise. They also argue
that we must permit parties to settle patent litigation, which they may choose
to do regardless of their positions on the merits, according to their own risk
calculus at the time. These arguments, however, ignore both the law and the
facts. There is no question that the result of patent litigation, and therefore
the timing of generic entry, is uncertain. But the antitrust laws prohibit the
paying of a potential competitor, as well as an existing competitor, to stay out
of the market, even if the entry is uncertain. We disagree with the argument
that generic entry before the end of a patent term is too uncertain or unlikely
to be of competitive concern, because Congress spoke on the issue and we know
that would-be generic entrants have enjoyed a nearly 75 percent success rate in
patent litigation initiated under Hatch-Waxman. As for the argument that
challenging such payoffs will deter settlements, which generally are favored,
legitimate patent settlements – using means other than exclusion payments –
continued to occur without hindrance from the Commission decision.
According to the Commission, experience has borne out the efficacy of the Hatch-Waxman Act process and the correctness of its premises – i.e., that many patents will not stand in the way of generic entry if challenged, and that successful challenges can yield enormous benefits to consumers:

By increasing the likelihood of generic entry, however, the statute also increases the incentive for brand and generic manufacturers to conspire to share, rather than compete for, the expected profits generated by sales of both brand and generic drugs. According to the Commissioner's testimony

In nearly any case in which generic entry is contemplated, the profit that
the generic anticipates will be much less than the profit the brand-drug company
makes from the same sales. Consequently, it typically will be more profitable
for both parties if the brand-name manufacturer pays the generic manufacturer to
settle the patent dispute and agree to defer entry. Although both the brand-name
company and the generic company are better off with the settlement, consumers
lose the possibility of an earlier generic entry, either because the generic
company would have prevailed in the lawsuit or the parties would have negotiated
a settlement with an earlier entry date but no payment. Instead, consumers are
left with the guarantee of delayed generic entry and paying higher prices.

The Commission has challenged patent settlements when it believes that brand-name and generic companies have eliminated the potential competition between them and shared the resulting profits. . . . Initially, the Commission’s enforcement efforts in this area appeared significantly to deter anticompetitive behavior. . . . Recent court decisions, however, have taken a lenient view of exclusion payment settlements, essentially holding that such settlements are legal unless the patent was obtained by fraud or that the infringement suit itself was a sham.

In the U.S., a brand-name drug manufacturer seeking to market a new drug product must first obtain FDA approval by filing a New Drug Application ("NDA") that, among other things, demonstrates the drug product’s safety and efficacy. At the time the NDA is filed, the NDA filer also must provide the FDA with certain categories of information regarding patents that cover the drug that is the subject of its NDA. Upon receipt of the patent information, the FDA is required to list it in an agency publication entitled "Approved Drug Products with Therapeutic Equivalence," commonly known as the "Orange Book.

Rather than requiring a generic manufacturer to repeat the costly and time-consuming NDA process, the Hatch-Waxman Act Amendments permit the company to file an Abbreviated New Drug Application ("ANDA"), which incorporates data that the "pioneer" manufacturer has already submitted to the FDA regarding the branded drug’s safety and efficacy. The ANDA filer must demonstrate that the generic drug is "bioequivalent" to the relevant branded product. The ANDA must also contain, among other things, a certification regarding each patent listed in the Orange Book in conjunction with the relevant NDA. One way to satisfy this requirement is to provide a "Paragraph IV" certification, asserting that the patent in question is invalid or not infringed.

An ANDA filer that makes a Paragraph IV certification must provide notice, including a detailed statement of the factual and legal bases for the ANDA filer’s assertion that the patent is invalid or not infringed, to both the patent holder and the NDA filer. Once the ANDA filer has provided such notice, a patent holder wishing to take advantage of the statutory stay provision must bring an infringement suit within 45 days. If the patent holder does not bring suit within 45 days, the FDA may approve the ANDA immediately.

Filing a Paragraph IV certification is a prerequisite to operation of the two most competitively sensitive provisions of the statute 1) the automatic 30-month stay of approval of the ANDA when a patent holder brings an infringement suit, and 2) the 180 day marketing exclusivity for the first filer of an ANDA.

If the patent holder does bring suit with 45 days after the filing of an ANDA, the filing of that suit triggers an automatic 30-month stay of FDA approval of the ANDA. And, without FDA approval, a generic manufacturer cannot bring its product to market. The imposition of a stay can, consequently, forestall generic competition for a substantial period of time.

The second competitively sensitive consequence is the 180-day period of marketing exclusivity. To encourage generic drug manufacturers to challenge questionable patents by filing Paragraph IV certifications – a move that can potentially subject the company to costly and burdensome patent infringement litigation – the Hatch-Waxman Amendments provide that the first generic manufacturer (first-filer) to file an ANDA containing a Paragraph IV certification is awarded 180 days of marketing exclusivity, during which the FDA may not approve a potential competitor’s ANDA. The 180-day period is calculated from the date of the first commercial marketing of the generic drug product. The potential impact of the 180-day exclusivity period is further magnified by the fact that, under the prevailing interpretation of the Hatch-Waxman Amendments, a second ANDA filer may not enter the market until the first filer’s 180-day period of marketing exclusivity has expired, even if the first filer substantially delays commencement of the exclusivity period.

"Congress should clarify that dismissal of an action brought by a generic applicant seeking a declaratory judgment constitutes a forfeiture event for the 180-day exclusivity period," testified Commissioner Leibowitz.
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Archived updates for Thursday, July 20, 2006

Measuring the Role of Patents at Your Firm

Thanks to Rees Morrison at "Law Department Management" for reminding us about Michael Kaminski's Spring 2005 paper on "Measuring the Patenting Success of Companies: Metrics and Measurement for Patent Departments" where he "describes 27 possible metrics and measurements that a company can choose from to describe its patent activities:"
  • Number of Patents Issued
  • Number of Patent Applications Filed
  • Number of Invention Disclosures Received
  • Comparing the Number of Patents Obtained to the Number of Patents Issued to Your Competitors
  • Illustrating How the Patents or Applications Cover Products or Technology
  • Protection of Market Exclusivity
  • Patent Use Indicators
  • Ratio of Sales to Patents
  • Market Impact of Patented Innovations
  • Added Product Value From a Patented Feature
  • Volume of Sales That Is Patent Protected
  • Effects of Expiring Patents on Company Performance
  • Money Saved by Abandoning Patent Protection for Products Removed from a Product Line or No Longer Being Developed for Introduction
  • Money Savings From Abandoning Low-Quality Patents
  • Amount of Revenue Generated Through Licensing
  • Non-Monetary Value From Licenses
  • "Technology Cycle Time" of Cited Patents
  • "Technology Strength" Measurement
  • Calculating Value Using Patent Citations
  • Value of a Patent or Groups of Patents Calculated Through a Discounted Cash Flow Analysis
  • Value of Intangible Assets
  • Rate of Return on Intangible Assets
"It is useful to remember the five fundamental roles of patents in facilitating business success," writes Mr. Kaminski. "Such roles should be reflected in whatever metrics and measurements are used," including
  • Patents Protect Core Technologies From Competitor
  • Patents Attract Investment
  • Patents Prevent Competitors From Inventing Around Critical Inventions
  • Patents Can Create a Tool to Improve the Firm's Negotiating Strategy
  • Patents Can Be Used as Offensive Weapons in Market Competition
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Archived updates for Wednesday, July 19, 2006

Leo Stoller Sanctioned by US-TTAB

Thanks to John Welch at the TTABlog for letting us know that the U.S. Trademark Trial and Appeal Board has sanctioned Leo Stoller for "filing of an extraordinary number of requests for extension of time to oppose." The sanctions include
  • vacating the approval of each of his (more than 1800) requests for extension of time to oppose filed since November 2005
  • prohibiting him from the filing of any further request for extension of time to oppose for two years, and
  • permanently prohibiting him from appearing before the USPTO on your own behalf or as an officer, director, or partner of any entity for the purpose of filing any request to extend time to file a notice of opposition, or any paper associated therewith.

According to the July 14, 2006 letter from Chief Administrative Trademark Judge J. David Sams,

At your website, you offer to "RENT-A-FAMOUS slogan" and offer "Famous
Trademarks for Rent On-Line." Your website states that you "control over 10,000
famous trademarks…." Nonetheless, the exhibits from your website do not
demonstrate your offering for sale any goods or services, other than the
"rental" of the marks themselves, nor do the website exhibits demonstrate the
use of any of the asserted terms as trademarks. These excerpts from your
website, rather than evidencing support of any purported claim for damage,
reinforce the conclusion that you are holding up thousands of applications in an
attempt to coerce applicants to license, i.e., "rent," trademarks to which you
have not demonstrated any proprietary right. Cf. Central Mfg. Co. v. Brett, 78
USPQ2d 1662, 1675 (N.D. Ill. 2005) ("Leo Stoller and his companies present
paradigmatic examples of litigants in the business of bringing oppressive
litigation designed to extract settlement.")

Even so, Mr. Stoller has yet to give up th fight. He notes in his Rentamark Blog posting for July 19, 2006,

There is no Board rule that limits the amount of extensions a party not violate
an file. The Board did and cannot point to any Rule that Stoller
violated. Stoller is absolutely confident of receiving a fully and fair hearing
before the Federal Circuit and that after such hearing Stoller will be
vindicated, because Stoller did not violate any Board Rule.

For more information , check out the TTABlog's Leo Stoller Collection.

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Corporate Intellectual Property Intern and Scholarship Program

The Intellectual Property Owners Association's Education Foundation has announced the Donald W. Banner Corporate Intellectual Property Intern Scholarship program that will
  1. publish information about internships for law students in corporate IP departments, and
  2. award $10,000 scholarships annually to two outstanding law students who have completed corporate IP internships.

Students will apply directly to companies for internships and directly to the Foundation for scholarships. If your company, IPO member or non-member, plans to have an IP internship program for law students in 2007, please return this form or other materials that describe the program BY JULY 31 to jessica@ipo.org or Fax: 202/466-2893.

You incur no obligation by listing your internship program.

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Archived updates for Tuesday, July 18, 2006

USPTO Expects Continuation and Claim Number Limitations by January 2007

According to Hal Wegner, Deputy Commissioner for Patent Examination Policy Jay P. Lucas announced in his luncheon speech at the George Mason University Law School on July 18, 2006 that the final rules package on continuation and clain number limitations would be published at some point between Thanksgiving and Christmas this year. This would make the rules effective one month later, in January 2007. "Commissioner Lucas acknowledged that the PTO is still studying the 575 public comments – some thirty, forty or fifty pages – but nevertheless expressed the view that the final rules package would be implemented," writes the Good Professor.
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A Short History of Moral Rights

In "Moral Rights" from PLI’s Treatise "All About Rights for Visual Artists," Ralph E. Lerner and and Judith Bresler discuss the

  • Right of Disclosure (Droit de Divulgation)
  • Right to Withdraw from Publication or to Make Modifications (Droit de Retrait ou de Repentir)
  • Right of Authorship (Droit à la Paternité) and
  • Right of Integrity (Droit au Respect de l’Oeuvre)

The authors trace the beginnings of these "Droit Moral" to the philosophy of individualism that accompanied the French Revolution:

However, the central debate over the nature of artists’ rights occurred in
Germany near the close of the nineteenth century: an intellectual work had
either a dualist Doppelrecht—that is, an incorporeal property giving rise to
personal rights of either a patrimonial or a moral nature—or a monist nature,
whereby both the personal and the patrimonial rights were inseparable parts of a
single Persönlichkeitsrecht. The debate over those two views was resolved in the
first half of the twentieth century. The dualist view prevailed in France while the monist view predominated in Germany.

Moral Rights were included in included in Article 6bis of the Berne Convention for the Protection of Literary and Artistic Works in 1928 which states:

Independently of the author's economic rights, and even after the transfer of
the said rights, the author shall have the right to claim authorship of the work
and to object to any distortion, mutilation or other modification of, or other
derogatory action in relation to, the said work, which would be prejudicial to
his honor or reputation.

While the United States became a signatory to that convention in 1988, it still does not completely recognize moral rights as part of copyright law.
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Patent Licensing is Commercial Activity Exception to Foreign Sovereign Immunities Act

In Intel v. Commonwealth Scientific and Industrial Research Organisation and Microsoft v. Commonwealth Scientific and Industrial Research Organisation, Slip. Op. 06-1032 and -1040(July 14, 2006), the Federal Circuit held that the Australian national space agency was not entitled to claim immunity under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602-1611, because the "commercial activity" exception applied to its patent licensing activities in the U.S.

CSIRO is the assignee of United States Patent No. 5,487,069 for "Wireless LAN," below right. CSIRO asserts that the patent covers the Institute of Electrical and Electronics Engineers ("IEEE") standards 802.11a and 802.11g, i.e., the preferred specifications for high speed data transfer. Following CSIRO's attempts to license the '069 patent to various American companies, declaratory-judgment actions were filed by Intel Corp. ("Intel"), Dell Inc. ("Dell"), Microsoft Corp. ("Microsoft"), Hewlett-Packard Co. ("HP") and Netgear, Inc. ("Netgear"). In CISRO's motion to dismiss, the district court considered whether CSIRO was immune from suit under the FSIA or whether the commercial activity exception set forth in 28 U.S.C. § 1605(a)(2) applied.

Under the FSIA, "a foreign state is presumptively immune from the jurisdiction of United States courts; unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state." In partiocular, 28 U.S.C. § 1605(a)(2) which provides:
[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the
foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.
According to the opinion by Chief Judge Michel,

"Commercial activity" is statutorily defined to mean "either a regular course of commercial conduct or a particular commercial transaction or act." 28 U.S.C. § 1603(d). The FSIA further indicates that "[t]he commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose."

. . . [T]he Supreme Court has held that the exception to immunity set forth in §
1605(a)(2) applies where foreign state "'do[es] not exercise powers peculiar to
sovereigns;' rather, it 'exercise[s] only those powers that can also be exercised
by private citizens.'" Weltover, 504 at 614 (internal citation omitted). CSIRO's
acts of (1) obtaining a United States patent and then (2) enforcing its patent
so it could reap the profits thereof—whether threatening litigation or by
proffering licenses to putative infringers—certainly fall within the latter
category. Indeed, we have expressly recognized, in another context, that
patentee's attempt to conduct license negotiations is a commercial activity."
Phillips Plastics Corp. v. Hatsujou Kabushiki Kaisha, 57 F.3d 1051, 1054 (Fed
Cir. 1995). Nor are we persuaded that a contract must be fully consummated in order to qualify as commercial activity. Section 1603(d) refers to "a particular commercial transaction or act," which suggests that this definition necessarily includes more than just completed transactions. While CSIRO argues that the legislative history sets the lower boundary of the spectrum at a single contract, we interpret that sentence as merely providing one example of "a particular commercial transaction or act."

Nor are we persuaded that a contract must be fully consummated in order to qualify as commercial activity. . . .

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Archived updates for Monday, July 17, 2006

Late Interference Claim Requires Support from Pre-Critical Date Claims

In The Regents of the University of California v. University of Iowa Research Foundation, (Fed. Cir.; July 16, 2006) California had attempted to provoke an interference by filing claim 205 more than one year after the ’646 patent issued. However, under 35 USC Section 135(b)(1),

A claim which is the same as, or for the same or substantially the same subject
matter as, a claim of an issued patent may not be made in any application unless
such a claim is made prior to one year from the date on which the patent was
granted.

California argued that when it filed claims 202-204 (with an interferenece request) within a year of the issuance of the ’646 patent, it "discharged" its duty under section 135(b)(1). However, in response to California’s amendment, the PTO rejected claims 202-204. More than one year after the ’646 patent had issued, California added another method claim, claim 205, to the ’191 application. After more prosecution, and another examiner interview, California canceled claims 202-204 and the PTO then declared an interference between claim 205 of California’s ’191 application and Iowa’s ’646 patent.

According to Circuit Judge Rader, California was required to show support between late-filed claim 205 and claims 202-204 which were filed before the crtical date. Requiring the Board to confine its analysis to only pre-critical date claims 202-204 contravenes precedent, the plain meaning of the statute, and the policy underlying that section, this court rejects those contentions:

[O]pinions like Berger, Corbett, and others, see, e.g., Cryns v. Musher, 161 F.2d 217 (CCPA 1947), permit a party confronted with a section 135(b)(1) bar to show that claims filed after the critical date find support in claims filed before the critical date. If a party can show such support, section 135(b)(1) will not act as a bar. Berger, 279 F.3d at 981-82. Thus, California’s position that the relationship between the post- and pre-critical date claims is not relevant to section 135(b)(1) contravenes the weight of precedent. This court has already explained that such a relationship is not only relevant, but dispositive of the section 135(b)(1) question.

California points out that when it filed claims 202-204 within a year of the ’646 issuance it also requested an interference. In Berger and Corbett, the record showed no such interference request before the critical date in the applications at issue. That factual distinction has no legal significance. Section 135(b)(1) does not include any language suggesting that a pre-critical date request for an interference makes any difference. Section 135(b)(1) bars any claim having a degree of identity with a claim in an issued patent unless such a claim is filed before the critical date. Thus, title 35 in this section does not demand notice of an impending interference, but instead prohibits unsupported, post-critical date identity.

California cannot satisfy section 135(b)(1) by supplying notice of an interference. Instead, as this court’s precedent explains, California must demonstrate that claims in the ’191 application provide pre-critical date support for the post-critical date identity between claim 205 and the ’646 patent. That demonstration necessarily
entails a comparison between pre- and post-critical date claims.

Finally, contrary to California’s arguments, no language in Berger or Corbett suggests that the reason the court compared the pre- and post-critical date claims in
those cases was merely because the record showed no request for interference
within the critical time period. In short, the existence of a request for interference is not relevant to a proper section 135(b)(1) analysis.

Like this court’s precedent, the language of section 135(b)(1) does not support California’s proposed construction. California’s construction would convert section 135(b)(1) into a statute of limitations that could be tolled by a single pre-critical date claim. In essence, California contends that the phrase “such a claim” in section 135(b)(1) means any earlier claim that might have given notice of an interference had the PTO declared such an interference. To the contrary, the statutory term “such a claim” refers to the claim that the potentially interfering party seeks to add, which is directed to the same or substantially the same subject matter as that claimed in a patent, regardless of whether that party earlier filed a different claim having the required identity with a patented claim. The statute requires “such a claim” to come before the critical date. Thus, section 135(b)(1) does not refer to some unrelated claim made earlier in prosecution even if accompanied by a request for interference.

The policy underlying section 135(b)(1) also supports the Board’s construction of that section. This court and its predecessors have described section 135(b)(1) as a statute of repose, placing a time limit on a patentee’s exposure to an interference proceeding. See, e.g., Corbett, 568 F.2d at 765 (explaining that Congressional intent behind the predecessor to section 135(b)(1), i.e., R.S. 4903, “was clearly to enact a statute of repose . . . so that the patentee might be more secure in his property right”); Berman v. Housey, 291 F.3d 1345, 1351 (Fed. Cir. 2002) (quoting Corbett). This general explanation, however, does not mean that a patent applicant can “discharge” its obligation under section 135(b)(1) for all future claims by filing any claim that once complies with that section. Contrary to California’s arguments, section 135(b)(1) is not a simple "notice statute" informing patentees about potential interference proceedings.

In fact, no notice at all is provided to the patentee by operation of section 135(b)(1) itself. Rather, in order to serve as a statute of repose, section 135(b)(1) operates in conjunction with the PTO’s duty to declare interferences. The filing of an interfering claim and the subsequent declaration of an interference have a cause-and-effect relationship. By limiting the time period for filing a potentially interfering claim, section 135(b)(1) limits the patentee’s vulnerability to a declaration of an interference only because it limits the window of time in which the cause of the interference can occur. The PTO should declare a valid interference upon receipt of a claim that satisfies section 135(b)(1), and which is otherwise patentable.

Despite the expected cause-and-effect relationship between the filing of an interfering claim and the declaration of an interference, this court’s predecessor observed that the PTO sometimes fails to declare an interference where one exists. As Corbett explains, "[the PTO] should declare an interference whenever copending applications claim substantially the same invention, and, if it fails to do so, the public interest is better served by a belated interference than by the issuance of a second patent." 568 F.2d at 765. In other words, while an interference based on a post-critical date claim is not desirable, where such an interference is merely belated, meaning the same interference should have been earlier declared by the PTO, the interference should not be barred by operation of section 135(b)(1). Thus, the limited exception to the one year bar, provided by the "such a claim" language in section 135(b)(1), allows for belated interferences. Beyond such belated interferences, California’s construction of section 135(b)(1) would permit different interferences because that construction removes from section 135(b)(1) any requirement for a nexus between the pre- and post-critical date claims.

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EPO President Predicts London Protocol Ratification

According to Huw Jones writing for Reuters on July 13, 2006, European Patent Office President Alain Pompidou expects ratification of the London Protocol Agreement before the May 2007 elections in France. So far, the Protocol has been ratified by 10 countries, including Britain and Germany, but France's endorsement is also needed.

As explained by Axel H Horns in his "IP Jur" blog:
If ratified, the Parties to the Agreement waive, entirely or largely, the requirement for translations of European patents to be filed in their national language. In practice this would cause that European patent proprietors will no
longer have to file a translation of the specification for patents granted for an EPC Contracting State Party to the London Agreement and having one of the three EPO languages as an official language. Where this is not the case, they
will be required to submit a full translation of the specification in the
national language only if the patent is not available in the EPO language
designated by the country concerned.
Under the current scheme, once a European patent is granted or more precisely within three months (or six months for Ireland) from the date of grant, the patent must be translated in an official language of each country in which the patentee wants patent protection. If the translation of the European is not provided to the national patent office within the prescribed time limit, the patent "shall be deemed to be void ab initio in that State" (Article 65 EPC). This current situation leads to high translation costs for patent holders, reduces the incentives to apply for a European patent and, many argues, the situation is a burden on the competitiveness of the European economy.

More on the London "Agreement dated 17 October 2000 on the application of Article 65 of the Convention on the Grant of European Patents" is available here.
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Archived updates for Friday, July 14, 2006

TGIF for the End of World Cup Soccer


U.S. Patent No. 6,974,390
"Golf Practice System"
Yoshihiko Shioda of Charlotte, North Carolina (USA)

According to the Abstract, "The practice ball is any generally spherical shape made of a flexible material and having an internal pressure of approximately atmospheric, for example an uninflated soccer ball. The practice golf club has a substantially oversized club head with a peripheral rim defining a large opening through the club head."

Thank Goodness It's Friday (and time to hit the links)

--Bill Heinze

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Archived updates for Thursday, July 13, 2006

ECJ Limits Cross-Border Patent Jurisdiction

According to Marta Pertegás & Charles Gielen in "Cross-border patent enforcement : back to square one?," circulated by Professor Hal Wegner on July13, 2006, the European Court of Justice (ECJ) officially condemned pan-European cross-border jurisdiction practice in two patent rulings released that same day. "The long awaited judgments in GAT v. Lamellen and Roche v. Primus," write the authors, "substantially limit the possibility for centralising infringement claims on foreign patents before a single national court."

The Oberlandesgericht (Higher Regional Court) Düsseldorf had stayed GAT's appeal and referred the following question to the Court of Justice for a preliminary ruling on the effect of the Brussels Convention:
"Should Article 16(4) of the Convention . . . be interpreted as meaning that the
exclusive jurisdiction conferred by that provision on the courts of the Contracting State in which the deposit or registration of a patent has been applied for. . . only applies if proceedings . . . are brought to declare the patent invalid or are proceedings concerned with the validity of patents . . . where the defendant in a patent infringement action or the claimant in a declaratory action . . . pleads that the patent is invalid or void and that there is also no patent infringement for that reason. . . .?

The ECJ ruled as follows:
"Article 16(4) ... is to be interpreted as meaning that the rule of exclusive jurisdiction laid down therein concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection."

According to Jeremy Phillips of the Queen Mary Intellectual Property Research Institute, University of London,
This ruling . . . means that only a French court tribunal can rule on the
validity of a French patent. The ruling does not mention jurisdiction in respect
of infringement, however, since Article 16(4) is not applicable to them. It also
confirms that the exclusivity of jurisdiction is the same, whether the party
challenging the validity brings proceedings to invalidate the patent or merely
raises the patent's invalidity as a defence to an infringement action.
However, Pertegas and Gielen see broader implications for these decisions:
The judicial reluctance of the European Court of Justice severely curtails the trend toward the centralization of patent infringement litigation in European jurisdictions. The ECJ has perhaps evidenced that cross-border enforcement of patent rights is hard to rime with the current jurisdictional framework. Cross-border litigation in patent disputes may be 'dead' under the 'Brussels' regime, yet today's judgments will hopefully accelerate the negotiation process towards a feasible alternative, either a Community patent or a European Patent Litigation Agreement (EPLA) .
In fact, during a July 12, 2006 public hearing in Brussels on the future patent policy in Europe, European Commissioner for Internal Market and Services Charlie McCreevy reportedly told the audience “I will go for one big last push for the Community patent.” Morover Intellectual Property Watch rep[orted on July 13 that


McCreevy is also ready to move forward now with the proposed European Patent
Litigation Agreement (EPLA), which also was on the agenda at the hearing. This
could mean the setting up a European patent court with jurisdiction to deal with
infringement and revocation actions concerning European patents, according to
the European Patent Organisation Working Party on Litigation which adopted
a declaration on the issue in 2003.
But, for now, Professor Wegner may be correct in surmising that, until a decision by the Federal Circuit in Voda v. Cordis Corp., Fed. Cir. App. No. 05-1238 (Newman, Gajarsa, Prost, JJ.), "the Japanese judiciary stands alone as the most progressive of the trilateral regions" in terms of transborder patent enforcement. "Radical changes in procedures within Japan make the Tokyo District Court the best (or worst) option in certain situations," he explains in his October 2005 paper on "Global Forum Shopping in the Wake of Voda v. Cordis and Trans-Border Patent Enforcement."
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The PCT World



The countries shown in blue are PCT Contracting States as of July 1, 2006.
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A Primer on the Law of Invention Supression

In Flex-Rest, LLC v. Steelcase, Inc. (Fed. Cir.; July 13, 2006), Steelcase stipulated that its "KBS" keyboard support device infringed. In turn, Flex-Rest stipulated that Steelcase’s device was conceived and reduced to practice before Flex-Rest’s invention (right) was conceived in November 1990. Flexrest also stipulated that the KBS device taught each limitation of the asserted claims. Consequently, the Steelcase device was completely invalidating prior art under 35 U.S.C. § 102(g) unless Flex-Rest could establish "a sufficient evidentiary basis for a reasonable jury to find . . . that there was suppression or abandonment by Steelcase in connection with the KBS [device]."

Under 35 U.S.C. § 102(g)(2), "[a] person shall be entitled to a patent unless—. . . before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it." The Federal Circuit explained that there are actually two types of suppression or concealment under this section of the statute:
  1. cases in which the inventor intentionally suppresses or conceals his invention, and
  2. cases in which a legal inference of suppression or concealment can be drawn based on an unreasonable delay in making the invention publicly known.

According to Circuit Judge Linn,

Intentional suppression occurs when an inventor "designedly, and with the view of applying it indefinitely and exclusively for his own profit, withholds his invention from the public." Paulik v. Rizkalla, 760 F.2d 1270, 1273 (Fed. Cir. 1985) (en banc). The only evidence Flex-Rest offers for this argument is the time taken to file the patent application for the KBS device and the fact that the device was kept secret during that time. "Intentional suppression, however, requires more than the passage of time. It requires evidence that the inventor intentionally delayed filing in order to prolong the period during which the invention is maintained in secret." Fujikawa, 93 F.3d at 1567 (emphasis added).

The record demonstrates that after reduction to practice, Steelcase moved almost immediately towards both filing a patent application and commercially disclosing the KBS device at a trade show, actions which indicate an intent to make a public disclosure. Both the patent application and commercialization efforts came to fruition about six and one-half months later. That the device was kept secret during this time is not, by itself, indicative of intentional suppression or concealment. See E.I. Du Pont de Nemours & Co. v. Phillips Petroleum Co., 849 F.2d 1430, 1436 n.5 (Fed. Cir. 1988) ("Because work is ‘secret’ does not necessarily mean that it has been ‘abandoned, suppressed or concealed.’"). Because Flex-Rest did not offer any evidence indicating a designed intent to withhold the KBS device from the public, we conclude that there is not sufficient evidence to support a jury instruction regarding intentional suppression or concealment.

Flex-Rest next argues that the delay in filing a patent application for the KBS device supports an inference of suppression or concealment. "The failure to file a patent application, to describe the invention in a published document, or to use the invention publicly, within a reasonable time after first making the invention may constitute abandonment, suppression, or concealment." Dow Chemical, 267 F.3d at 1342 (citations omitted). Our case law provides guidance on what constitutes a reasonable delay when an invention is disclosed to the public by commercializing the invention.

In Dow Chemical, we held that a delay of two and one-half years between reduction to practice and the commercialization of an invention did not constitute a prima facie case of suppression or concealment where the first inventor made "reasonable efforts to bring the invention to market." 267 F.3d at 1343 (quoting Checkpoint, 54 F.3d at 762). In that case, the first inventor "actively and continuously took steps towards [] commercialization . . . including the procurement of financing to build a new production plant and [] attention to safety considerations." Id. We noted that the fastest route to commercialization was not required, only reasonable efforts. Id. Similarly, in Checkpoint, we agreed with an administrative law judge’s determination that a delay of four years between reduction to practice and commercialization was reasonable when the first inventor took steps to bring the invention to market such as disclosing it to his employer, conducting further tests, purchasing supplies from vendors, and helping develop a system for mass production. 54 F.3d at 762.

In this case, Flex-Rest offered no evidence to indicate that Steelcase’s delay of six and one-half months between reduction to practice and commercialization of the KBS device was not the result of reasonable steps to bring the invention to market. After reduction to practice, Steelcase resolved design issues and spent $775,000 on tooling for the parts to the KBS device. The lead times for creating the tooling varied from four weeks to approximately six months. Therefore, it does not appear that Steelcase could have brought the KBS device to market much sooner than the trade show unveiling in June 1991.

At the same time, Steelcase’s patent counsel began drafting a patent application for the KBS device, submitting a first draft to Steelcase in March 1991. The draft was reviewed by the four named inventors and filed in May 1991. No evidence indicated that this amount of time was unreasonably long.

We disagree with Flex-Rest’s contention that Lutzker and Young command a different result. First, both Lutzker and Young address disclosing a prior invention only by filing a patent application; they do not address—as is the case here—disclosure through commercialization. In an interference context, we have held that delayed filing due to commercialization efforts or improvements not reflected in the patent application are inexcusable. Lutzker, 843 F.3d at 1367; Young, 489 F.2d at 1281-82. However, we have expressly distinguished Lutzker and Young from situations in which public disclosure occurred by bringing the invention to market. See Dow Chemical, 267 F.3d at 1343 (distinguishing Lutzker and Young from cases in which an invention is disclosed to the public by commercialization); Checkpoint, 54 F.3d at 762 (distinguishing Lutzker because "[h]ere, . . . Kaltner’s invention was brought to the public by marketing"). are applicable here. Therefore, the "reasonable steps to market" identified in Dow Chemical and Checkpoint are applicable here.

Flex-Rest had the burden to produce sufficient evidence to create a genuine issue of material fact as to whether the KBS device was suppressed or concealed. We conclude that no evidence of record supports such an instruction. We also conclude that the district court fairly stated the legal principles in answering the jury’s questions on "public" and "prior art" and did not commit prejudicial error.

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EFS Web Survey and Training

As part of its ongoing outreach program, the United States Patent and Trademark Office would like to invite you to give feedback on your experience with its "EFS-Web" electronic patent application filing system at

http://websurveyor.net/l.dll/JGsD9C6A5E8A5ldZD9U407019J.htm

Also, if you or anyone in your organization is interested in receiving EFS-Web training, then feel free to click on the link below to enroll in one of the upcoming online training activities:

http://www.uspto.gov/ebc/portal/efs/tutorials_trainingschedule.htm
If you have any other questions about EFS-Web, PAIR, PKI or any other component of our e-commerce initiative, please contact the EBC Customer Service Center at 866 217-9197 (toll-free) or 571-272-4100 or send e-mail to ebc@uspto.gov.

Links to more EFS-Web resources are available here.
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Internet Advertising Did Not Prevent U.S. Concurrent Use Registration

Thanks to John Welch at "The TTABlog" for pointing to a rare, citable ruling on concurrent use proceedings from the U.S. Trademark Trial and Appeal Board in CDS, Inc. v. I.C.E.D. Management, Inc., Concurrent Use No. 94001250 (TTAB, July 6, 2006), where the Board held that CDS was entitled to a concurrent use registration for the state of Kansas and a portion of the state of Missouri located within 50 miles of Lenexa, Kansas; and that ICED’s registration was limited to exclude those areas.

As a general rule in the U.S., a prior user of a mark is entitled to a registration covering the entire United States. However, the prior user's rights are limited to the extent that the subsequent user can establish that
  1. no likelihood of confusion exists, and
  2. it has concurrent rights in its actual area of use, plus its area of natural expansion.

Priority is therefore not normally an issue in concurrent use proceedings. Rather, the question is whether the concurrent use applicant has met the jurisdictional requirement of establishing use in commerce prior to the defendant’s application filing date.

In this case, CDS began using its mark for its services in the Kansas City area in 1993, which is before the July 18, 1994 filing date of ICED’s application. Although there was some evidence that CDS and ICED did, at one time, operate in overlapping territory, CDS withdrew from the overlapping territory so that its previous use in the territory did not preclude a determination that there is no likelihood of confusion. According to the Board
[W]hile we look to the filing date of ICED’s application to determine whether
there is jurisdiction for a concurrent use proceeding, we are not locked into
that date for making our determinations on the appropriate territory for the
parties and the likelihood of confusion question. . . . Therefore, CDS’s retreat
from the overlapping territory prior to the close of the testimony period is
effective in eliminating an area of potential likelihood of confusion.
Once the Board determined that CDS had met the jurisdictional requirements for commencing a concurrent use proceeding, it went on to determine what territory was appropriate for the parties.

ICED as the registrant and [presumptively] prior user “is entitled to a registration covering the entire United States, including areas of its use and nonuse, subject only to the exception of geographic areas where the junior user can prove prior use. The junior user is, in effect, frozen in its area of prior use. However, the area of “prior use” includes more than areas of actual use. The CCPA has held that actual use in a territory was not necessary to establish rights in that territory, and that the inquiry should focus on the party's (1) previous business activity; (2) previous expansion or lack thereof; (3) dominance of contiguous areas; (4) presently-planned expansion; and, where applicable (5) possible market penetration by means of products brought in from other areas. Weiner King, Inc. v. The Weiner King Corp., 615 F.2d 512, 204 USPQ 820, 830 (CCPA 1980).

After the board limited CDS' rights to the area near Lenexa, Kansas, it went on to consider whether these and other geographic restrictions would still foreclose a likelihood of confusion. In this regard, the Board was not persuaded by ICED argument that there would still be confusion inasmuch as both parties advertise on the Internet.

As we mentioned previously, CDS has a disclaimer on its website that specifies that it does business under the mark THE COPY CLUB in only seven identified states. The Sixth Circuit has “found the existence of a disclaimer very informative, and [it] held that there was no likelihood of confusion, partly on that basis.” Taubman Co. v. Webfeats, 319 F.3d 770, 65 USPQ2d 1834, 1839 (6th Cir. 2003), citing, In Holiday Inns, Inc. v. 800 Reservation, Inc., 86 F.3d 619, 39 USPQ2d 1181 (6th Cir. 1996). Here, too, in the context of a concurrent use proceeding, and because of our view that advertising on the Internet does not automatically preclude concurrent use registration, we find that the presence of a disclaimer on CDS's website is likewise helpful in avoiding confusion in this case.

Therefore, we conclude that the specific evidence of the parties’ simultaneous use on the Internet in this case does not require us to find that there is a likelihood of confusion.

As to the effect of the Internet on concurrent use proceedings, John writes that "the Board answered the question raised last year in the HUBCAP HEAVEN case [not citable as precedent], TTABlogged here."

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An Overview of Patent Cost Management

"In "Managing Patent Costs: An Overview," the World Intellectual Property Organization's Guriqbal Singh Jaiya and Christopher M. Kalanje discuss the different types of patent costs and how to manage them, including:
The authors conclude that managing acquisition and maintenance costs of patents "has to be done without unduly increasing risks or lowering the quality of patent grants or monitoring the granted patents to manage costs during the life of a patent. . . . Patents assets are just one part of an overall IP management process aimed at leveraging and profiting from IP assets."

They also provide numerous links to other materials on these topics, including
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Archived updates for Wednesday, July 12, 2006

No Exhaustion of Patent Rights for Conditional License or Method Claims


In LG Electronics, Inc. v. Bizcom Electronics, Inc., et al. (No. 05-1251, July 7, 2006), the Federal Circuit reiterated that the "first sale" exhaustion doctrine does not apply to a conditional license or a patentee's rights in its method claims. According to Circuiyt Judge Mayer,
The LGE-Intel license expressly disclaims granting a license allowing computer system manufacturers to combine Intel’s licensed parts with other non-Intel components. Moreover, this conditional agreement required Intel to notify its customers of the limited scope of the license, which it did. Although
Intel was free to sell its microprocessors and chipsets, those sales were
conditional, and Intel’s customers were expressly prohibited from infringing
LGE’s combination patents. Cf. N.Y. U.C.C. Law § 2-202 (allowing contracts to be
supplemented by consistent additional terms unless the writing is intended to be
complete and exclusive). The "exhaustion doctrine . . . does not apply to an
expressly conditional sale or license," B. Braun Med. Inc., 124 F.3d at 1426, so
LGE’s rights in asserting infringement of its system claims were not exhausted.

Conversely, the trial court declined to find LGE’s asserted method claims
exhausted. Several defendants contest this ruling on cross-appeal, and we reject
their challenge. Based on the above reasoning, even if the exhaustion doctrine
were applicable to method claims, it would not apply here because there was no
unconditional sale. However, the sale of a device does not exhaust a patentee’s
rights in its method claims. Glass Equip. Dev., Inc. v. Besten, Inc., 174 F.3d
1337, 1341 n.1 (Fed. Cir. 1999) (citing Bandag, Inc., 750 F.2d 903, 924 (Fed.
Cir. 1984)). The [lower] court was correct.
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Archived updates for Tuesday, July 11, 2006

Protecting Your IPR in China

"Protecting Your Intellectual Property Rights (IPR) in China A Practical Guide for U.S. Companies" has been prepared by the U.S. Department of Commerce as an introduction to China’s IPR environment. It describes methods for safeguarding and protecting IPR, outlines possible enforcement actions available in China’s IPR enforcement regime, and explains the limited role of the United States Government in IPR infringement cases, including

For more on China, check out the "IP Dragon ?????" and the DOC's more-comprehensive China Business Guides.

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