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Archived updates for Friday, February 29, 2008

TGIF for the Spork

U.S. Patent No. D388,664 for "Spork"
Issued January 6, 1998 to
Hubert Gagnon and Aldo Bellatti
of Quebec, Canada

The word "spork" reportedly first-appeared in the 1909 supplement to the Century Dictionary, where it was described as a trade name and "a 'portmanteau-word' applied to a long, slender spoon having at the end of the bowl projections resembling the tines of a fork." U.S. Trademark Registration No. 0901492 (now expired) was later issued for "SPORK" in connection with a combination plastic spoon, fork, and knife by Van Brode Milling Company. Nonetheless, modern sporks should not be confused with knorks, splayds, spifes, pastry forks, grapefruit spoons, and/or runcible spoons. According to one expert on spork etiquette, a suitable alternative utensil must always be provided when soups or sauces are a dominant portion of the meal in question.

Thank Goodness It's Friday,

--Bill Heinze
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Archived updates for Thursday, February 28, 2008

Optimizing the Chances for a Successful Intervening Rights Defense

In "Intervening Rights and the Possibility for Last-Minute Heroics," Michael J. Sacksteder suggests the following activities for optimizing the chances for a successful intervening rights defense:
  • Track the progress of reexaminations involving patents already asserted (or likely to be asserted) to determine the impact of amendments to the original claims.
  • Consider the inventory of “specific things” in inventory at the time a reexamination certificate is likely to issue in order to maximize the benefit of a finding of absolute intervening rights.
  • Obtain and rely on an opinion of counsel based on prior art asserted in reexamination.
  • Scrupulously avoid willful infringement (and its indicia)
  • Consider and document the timing of preparations, contracts, etc., in order to coincide with reliance on opinion of counsel.
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ITC Stays Section 337 Investigation on Eve of Trial with Reexamination Rejections

On February 26, 2008, in "Certain of Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same," Inv. No. 337-TA-605 Administrative Law Judge Theodore R. Essex issued an Initial Determination "Order Granting Respondents' Motion for Stay Pending Reexamination." As noted by Judge Essex,

The Commission does not have a per se rule regarding whether to stay an investigation in light of an ongoing reexamination proceeding at the PTO. Rather, each case is decided on its own unique facts based on a careful balancing of the equities. Thus, under “appropriate circumstances,” an Administrative Law Judge may stay an investigation. See e.g., Certain Personal Computed Consumer Electronic Convergent Devices, Components Thereof, and Products Containing Same, 2006 ITC Lexis 52, Inv. No. 337-TA-558, Order No. 6 at 11-12 (February 7, 2006[; three-month stay where all claims were rejected in Initial Office Action issued in
reexamination before complaint was filed] )(Commission notice of decision not to
review an Initial Determination ordering a temporary stay (March 10, 2006))(“Personal Computers”). In determining whether a stay is appropriate, several factors are weighed, including: (1) the state of discovery and the hearing date; (2) whether a stay will simplify the issues and hearing of the case; (3) the undue prejudice or clear tactical disadvantage to any party; (4) the stage of the PTO proceedings; (5) the efficient use of Commission resources; and (6) the alternative remedies available in federal court.

. . . Contrary to Tessera’s argument, Microsphere Adhesives is distinguishable from the facts of this investigation. In Microsphere Adhesives, the motion to stay was based on a reexamination in which the reexamination had been ordered but no rejections stood outstanding. In the present investigation, the PTO has issued office actions in both the‘326 reexam and the ‘419 reexam rejecting all of the claims at issue in this investigation.

. . . Although discovery is closed and the hearing in this investigation was scheduled to begin on February 25, 2008, significant public and private resources may still be saved if respondents' motion for stay is granted. Specifically, the parties may be saved the time and expense of the hearing itself, the time and expense to file post-hearing briefs, the time and expense of filing any petitions for review, and ultimately the time and expense of taking an appeal of the Commission’s final determination to the Court of Appeals for the Federal Circuit. Additionally, the International Trade Commission and its staff may be saved the time required for the hearing and the time and energy required to process this matter to final decision. Accordingly, this factor
weights in favor of granting the motion to stay.

The fact that the Commission may rescind an order granting relief, does not guarantee that respondents will not be significantly harmed if the stay was denied. If indeed the stay was denied, the hearing was to go forward, and an initial determination was to issue finding respondents in violation of Section 337, the remedy of a limited exclusion order is most likely. That would, at a minimum, prevent respondents from importing the accused products into the United States.

. . . As previously noted, an Initial Office Action issued in the ‘326 patent on February 21, 2008, and an Action Closing Prosecution issued in the ‘419 patent on February 19, 2008.2 When a reexamination is pending concerning a patent which is in litigation, the PTO processes the reexamination with “special dispatch.” MPEP 2261. Thus, there is every reason to believe that the reexamination process will continue to proceed in a timely manner. Because the PTO proceeding is at an advanced stage, this factor weighs in favor of granting a stay.


The Initial Determination of the Administrative law Judge will become the determination of the Commission 30 days after its date of service unless the Commission orders review within those 30 days.

A "Beginner's Guide to Unfair Import Investigations" is available here. My June 2002 APLF Roundtable presentation on "Unfair Import Investigations at the U.S. International Trade Commission" is watchable at http://www.aplf.org/events/roundtables/2002-06-20.shtml. Official information on "Understanding Investigations of Intellectual Property Infringement and Other Unfair Practices in Import Trade" is available from the ITC at http://www.usitc.gov/us337.htm, including "Answers to Frequently Asked Questions" at ftp://ftp.usitc.gov/pub/reports/studies/PUB3516.PDF. "
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Archived updates for Wednesday, February 27, 2008

ECJ: "Parmesian" Infringes PDO for "Parmigiano Reggiano"

In Commission of the European Communities v Federal Republic of Germany (Case C-132/05 February 26, 2008), the European Court of Justice held that "Since the Federal Republic of Germany has therefore failed to show that the name ‘Parmesan’ has become generic, use of the word ‘Parmesan’ for cheese which does not comply with the specification for the Protected Designation of Origin ‘Parmigiano Reggiano’ must be regarded for the purposes of the present proceedings as infringing the protection provided for that PDO under Article 13(1)(b) of Regulation No 2081/92."

As noted by IP Kat Jeremy,

The European Court of Justice rejected the argument that a PDO enjoys protection only in the exact form in which it is registered. It accepted that PDOs could become generic, citing the examples of Camembert and Brie [says the IPKat, that's a big concession: under Article 13(3) of the Regulation, "Protected names may not become generic."], but concluded that Germany had not proved that Parmesan had itself become generic: unauthorised use of the term was thus an infringement. The court nonetheless dismissed the Commission's action.

The key bit of the decision is Article 10(4) of the Regulation. When it provides that,

‘[i]f a designated inspection authority and/or private body in a Member State establishes that an agricultural product or a foodstuff bearing a protected name of origin in that Member State does not meet the criteria
of the specification, they shall take the steps necessary to ensure that
this Regulation is complied with …’,
this indicates that the designated inspection authority and/or private body in a Member State is that of the Member State from which the PDO comes -- in this case Italy, where Parmesan comes from, or at least ought to come from -- and not Germany itself.
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Quote of the Week (and a $10 Million Sanction)

"The defendants prolonged the proceedings unnecessarily (thus unduly imposing upon the jury's time), they sought to mislead both the jury and the Court, and they flouted the governing claim construction as set forth by the Federal Circuit. Under these circumstances, the Court concludes that it is proper to impose a penalty of ten million dollars." -- Senior District Judge Edward Harrington in Depuy Spine, Inc. v. Medtronic, Civil Action No. 01-10165-EFH, District of Massachusetts, February 25, 2008 (with more background via Peter Zura's 271 Patent Blog)
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Chinese Patent Law Revisions Expected in 2008

Thanks to the IP Dragon on February 22, 2008 for pointing to Charles and Jeanne Liu's four part, English-language series on the third revision of the Chinese Patent Law (“Patent Law (Draft Revision 2006)”) that is expected to be finalized in 2008 after the current 2000 version has been effective for eight years. Among the changes that they note
  • OBVIOUSNESS STANDARD -- The inventiveness of an invention is defined as being an invention having significant substantive characteristics to “a person of ordinary skill in the art” and constituting a substantial technological advance in the field. Design Patents shall be substantially distinguishable from any prior design or a combination of the features of a prior design.
  • PATENT/UTILITY MODEL CROSSOVER --If applications for an invention patent and for a utility model patent based on the same invention were filed on the same day by the same applicant, the applicant may take advantage of the crossover of the invention and utility model applications. An applicant might take advantage of the crossover of the applications for an invention patent and utility model patent when filing the applications in China through the Paris Convention, but that at the national entry into China for a PCT application, the applicant has to select either invention or utility model, but not both.
  • SUB-DIVISIONAL TIMING -- A sub-divisional application may still be filed based on a divisional application, however, the time limit to file such sub-divisional application will now be governed by the status of the initial application rather than that of the parent patent application. The type of the application, either for an invention patent or for a utility model patent, must be the same as that of the initial application.
  • FIRST FILING FOR INVENTIONS MADE IN CHINA -- The current patent law requires Chinese individuals and entities to first file applications in China for inventions made in China. The Patent Law (Draft Revision 2006) extends this requirement to both Chinese and foreigners such that a foreign filing license from the state patent administration is required for “any individual or organization” to file a patent application in a foreign country if the application is based on “an invention made in China.” if a person filed a patent application in a foreign country based on an invention made in China without permission from the Chinese patent administration, the person’s patent application filed later in China based the same subject matter will be denied approval in China.
  • GREY-MARKET AND BOLAR EXEMPTIONS -- Under a new first-sale provision parallel or grey-market imports are permissible. Second, the draft revision newly introduced the “Bolar” exemption that the manufacture, use, or importation of patented pharmaceuticals or patented medical devices solely for obtaining and providing data required for regulatory approval of a drug or medical device is permissible.
  • UNFAITHFUL PROSECUTION -- Where a patent owner knew that his patented art belongs to a prior art, but nevertheless unfaithfully brought an action against another party in an administrative or judicial proceeding for patent infringement, the patent owner will be held liable to the alleged infringer for damages caused by the unfaithful accusation.
  • COMPULSORY LICENSING -- he patent administration may grant a compulsory license, upon request, for the use of a patented invention or utility model if the patent owner, without any legitimate reason, has not practiced or adequately practiced the patented invention for three years after issuance of the patent, or if the patent owner’s practice of the patented invention is deemed by the authority as unfairly excluding or restraining competition.
  • GENETIC RESOURCE IDENTIFICATION -- the source of a genetic resource should be disclosed in the specification of a patent application if the accomplishment of the invention relies on the acquisition and use of the genetic r
  • LAW FIRM DEIGNATIONS BY THE SIPO -- foreign applicants may entrust any legally formed patent agency in China to represent their patent applications in China, and on the other hand, domestic Chinese applicants may entrust any legally formed patent agency in China which ultimately works together with a foreign law firm, or even directly entrust a foreign patent firm to file their patent applications in a foreign country.
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.ASIA Landrush Ends March 12, 2008

Foley & Lardner LLP warns that the Landrush period for .ASIA will end on March 12, 2008 (Hong Kong time). Following the Landrush period, .ASIA domain names will go live on March 26, 2008 and domain name registrations will continue on a first-come, first-served basis.

According to Foley,

[R]egistering the .ASIA domains now that are most important to your business will help deter registration of such domain names by cybersquatters who may register and use such domain names in a bad faith attempt to trade upon the goodwill associated with your brands. Although .ASIA domains are governed by ICANN, and thus subject to the Uniform Domain Name Dispute Resolution Policy, it is more cost-effective to register these domains now rather than attempting to recover them from third parties later.

The only requirement to be eligible to register a .ASIA domain name is that at least one of the domain contacts associated with the domain must be an existing and current legal entity in the DotAsia community, which includes more than 70 countries (specified by ICANN). Because this requirement can be satisfied using an ICANN-accredited registrar located in one of those countries (which Foley routinely uses on behalf of its clients), you do not need to have a physical company address in the defined DotAsia community to acquire a .ASIA domain name.

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Chinese Chief Justice Encourages Market Rates for IP Damages

According to China Daily on February 22, 2008, the Supreme People's Court (SPC) has ordered courts at all levels to adhere to a "full-compensation" principle when dealing with intellectual property rights (IPR) cases.
Jiang Zhipei, chief justice of the SPC IPR Tribunal, told China Daily: "If [Yamaha Motor Co v. Zhejiang Huatian] were handled simply according to legal compensation regulations, because of being unable to reach a clear compensation amount, the figure would have been about 500,000 yuan” [rather than the record damages of 8.3 million yuan ($1.16 million) for a trademark infringement involving a foreign investor.] "But the fact was the plaintiff did lose millions according to the evidence," he said.

"Courts should consider fully the actual transaction circumstances, including online business behavior, and properly present full market values," Cao said. He encouraged courts to introduce specialists such as auditors and accountants to assist in calculating infringement compensation, especially in cases of copyright royalties, losses and illegal gains.
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Archived updates for Tuesday, February 26, 2008

No Relief from Judgment for Post-Judgment Reexamination Statements

In Amado v. Microsoft Corp. (February 26, 2008), Microsoft had filed a petition for reexamination of the ’615 patent following the district court’s entry of judgment. Microsoft then moved for relief from judgment pursuant to Rule 60(b)(6), arguing that Amado surrendered claim scope during the reexamination in order to secure issuance of the claims.
The district court denied the motion, noting that although Microsoft was aware of the prior art upon which its reexamination petition was based well before trial, it failed to file the reexamination petition until after the unfavorable judgment was entered. The trial court determined that the newly-discovered evidence Microsoft sought to use to set aside the judgment—namely, Amado’s statements to the PTO—was a result of Microsoft’s lack of diligence in filing the petition.

According to the opinion by Circuit Judge Linn,

The district court thus concluded that the circumstances surrounding Microsoft’s
motion did not warrant relief from judgment: "Given that Microsoft waited until
after the judgment in this case to file its Petition for Reexamination, while simultaneously failing to appeal the jury’s finding of validity, Microsoft was not faultless in the delay and justice does not require overturning a jury verdict at this late stage based on statements made to the PTO." Escrow/Injunction Order at 14.

Because extraordinary circumstances have not been shown, we conclude that the district court did not abuse its discretion when it denied Microsoft’s motion for relief from judgment under Rule 60(b)(6).

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Escrowed Damages During Appeal May be Greater than Jury Award

In Amado v. Microsoft Corp. (February 26, 2008), a jury had awarded Amado damages for infringing sales equivalent to a $0.04 reasonably royalty. The district court also granted Amado’s request for a permanent injunction, but then stayed the injunction until seven days after the resolution or abandonment of any appeal. As a condition of the stay, the district court required that Microsoft make escrow deposits of $2.00 per copy of the infringing software sold during the stay.

Both parties contended that the district court erred in assessing a $0.12 royalty for the infringing units sold during the stay. Amado contended the proper award is $2.00 per unit, the amount escrowed, while Microsoft contends the proper amount is $0.04, the amount found by the jury to be a reasonable royalty.

According to the opinion by Circuit Judge Linn

When a district court concludes that an injunction is warranted, but is persuaded to stay the injunction pending an appeal, the assessment of damages for infringements taking place after the injunction should take into account the change in the parties’ bargaining positions, and the resulting change in economic circumstances, resulting from the determination of liability—for example, the infringer’s likelihood of success on appeal, the infringer’s ability to immediately comply with the injunction, the parties’ reasonable expectations if the stay was entered by consent or stipulation, etc.—as well as the evidence and arguments found material to the granting of the injunction and the stay.

Because we are unable to determine whether the district court’s award of $0.12 was a reasonable exercise of its discretion, id. ("It is important for the district court to provide a concise but clear explanation of its reasons for the fee award." (internal punctuation modified) (citing Hensley v. Eckerhart, 461 U.S. 424, 437 (1983))), we vacate the district court’s escrow award and remand the matter to the district court for reconsideration. [FOOTNOTE 2: We take no position on the proper amount of the eventual award. That, of course, is a matter committed to the sound discretion of the district court. We observe only that, logically, the eventual award should fall somewhere between the $0.04 amount the jury found to be an appropriate pre-verdict reasonably royalty and the $2.00 amount Amado was willing to accept in exchange for a license.]
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Archived updates for Monday, February 25, 2008

65% of Registered Community Designs Invalidated

According to James Nurton writing for Managing Intellectual Property, a report published by MARQUES (for members only) has found that Registered Community Designs were invalidated in 65% of the first 300 decisions published by OHIM.
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How Judges, Bureaucrats and Lawyers Put Innovators at Risk

In "Patent Failure; How Judges, Bureaucrats, and Lawyers Put Innovators at Risk," (Princeton University Press, March 2008), James Bessen and Michael J. Meurer consider many reforms, most of which have also been advanced by other people. Of course, the devil is in the details. The authors readily admit that "In presenting this list of policy ideas, we admit that we really do not know what it will take to substantially improve patent notice. These policy reforms move us in the direction of an effective patent system, but we do not know whether they are sufficient to get us there:"
  • Make patent claims transparent. We recommend changes in the way patent claims are defined, published, recorded in the application process, and used for subsequent determinations so that innovators have clear, accessible, and predictable information on patent boundaries. This includes strong limits on patent “continuations,” a procedure used to keep patent claims hidden from the public for extended periods. We also consider a new role for the Patent Office where, for a fee, innovators can obtain opinion letters on whether their technology infringes a patent.
  • Make claims clear and unambiguous by enforcing strong limits against vague or overly abstract claims. This includes a robust “indefiniteness” standard that invalidates patent claims that can be plausibly interpreted in multiple, fundamentally different ways. Also,
    we recommend reforms to limit overly abstract patents in software and other
    technologies. At the very least, patent law should prevent software patents from claiming technologies far beyond what was actually disclosed as the invention. If this proves inadequate, then we suggest subject matter tests to limit the range of software inventions that can be patented, tests similar to those used during the 1970s and 1980s.
  • Make patent search feasible by reducing the flood of patents. This includes a strong requirement that patents should not be granted on obvious inventions, coupled with substantially higher renewal fees. Ideally, patent renewal fees should be set by a quasiindependent agency and should be based on empirical economic research. These reforms will help stem the patent flood by screening-out unwarranted patents and discouraging renewal of low value patents. Reducing the number of such patents should help notice by reducing the cost of clearance search.
  • Besides improving notice, we also favor reforms to mitigate the harm caused by poor notice. These include an exemption from penalties when the infringing technology was independently invented and changes in patent remedies that might discourage opportunistic lawsuits.
Meet the authors at a symposium on their work at the University of Georgia School of Law, Dean Rusk Hall, Saturday, March 29, 2008, 8:00 am – 5:30 pm, $50 per person.
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A Guide to the EPC 2000

"A Guide to the EPC 2000," by Nicholas Fox of patent attorneys Beresford & Co and published by the Chartered Institute of Patent Attorneys, aims to help practitioners find their way around the new law. It contains an extensively annotated and cross-referenced copy of the revised Convention and Implementing Regulations, as well as the Rules Relating to Fees. Articles and their most relevant rules are printed together to enable them to be read in context. Practical commentaries highlight the major changes and rule re-numberings, illustrating how the articles and rules interact in practice.

Extracts and further details, here. Click here to order.
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Federal Circuit Judicial Conference May 15, 2008

DATE: Thursday, May 15, 2008
TIME: 8:30 a.m. to 4:30 p.m.
PLACE: Grand Hyatt Washington (Located at Metro Center Metro Station)
PROGRAM INFORATION: http://www.cafc.uscourts.gov/conf/program.html
Online Registration (Mail Registration Form)
General Registration $275
Current Government Employee $225
Late Registration (after May 2, 2008) $295
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Archived updates for Sunday, February 24, 2008

A Few Points on the German Inventor Remuneration Process

According to WIPO's English-language translation of the German "Law on Employee Inventions:"

2.– Inventions within the meaning of this Law are only those which may be the
subject of a patent or of protection as a utility model. Inventions within the meaning of this Law are only those which may be the subject of a patent or of protection as a utility model.

4.– (1) Employee inventions within the meaning of this Law may be either tied or
free.
(2) Tied inventions (service inventions) are those made during the term of employment which:
(i) either resulted from the employee’s tasks in the private enterprise or in the public authority,
(ii) or are essentially based upon the experience or activities of the enterprise or public authority.

6.– (1) An employer may claim a service invention by means of an unlimited or a limited claim.
(2) Such claim shall be made in a written statement, addressed to the employee. It shall be made as soon as possible, and no later than four months from the receipt of a proper report (Section 5(2) and (3)).

7.– (1) On the receipt of a written declaration of an unlimited claim, all rights in the service invention shall pass to the employer.
(2) On the receipt of a written declaration of a limited claim, a non–exclusive right to use the service invention shall pass to the employer. Should an employer’s right of use unreasonably impede an employee’s further exploitation of his invention, the employee may request that, within a period of two months, his employer either
make an unlimited claim to the service invention or release it to the employee.
(3) Dispositions of a service invention made by an employee before his employer has declared a claim, shall have no effect on his employer, insofar as the employer’s rights are concerned.

8.– (1) A service invention shall become free:
(i) where the employer releases it by a written statement;
(ii) where the employer makes a limited claim to it, subject to the employer’s right to use the invention in accordance with Section 7(2);
(iii) where the employer has not made a claim to it within four months upon receiving a proper invention report (Section 5(2) and (3)) or, for cases falling under Section 7(2), within two months of the request filed by his employee.
(2) The employee may dispose of a service invention that has become free and the restrictions in Sections 18 and 19 shall not apply.

9.– (1) The employee shall have a right to reasonable compensation as against his employer, as soon as the employer has made an unlimited claim to a service
invention.
(2) In assessing compensation, due consideration shall in particular be given to the commercial applicability of the service invention, the duties and position of the employee in the enterprise, and the enterprise’s contribution to the invention.

10.– (1) The employee shall have a right to reasonable compensation as against his
employer, as soon as the employer has made a limited claim to a service invention and has used it. Section 9(2) shall apply mutatis mutandis.
(2) After having stated a claim to a service invention, an employer may not, in dealing with his employee, contest the invention’s eligibility, at the time of the claim, for industrial property protection unless a decision to this effect has been rendered by the Patent Office or a court of law. The employee’s right to such compensation as becomes payable before the decision has force of law shall not be affected thereby.

18.– (1) An employee who has made a free invention during the term of an employment contract shall notify his employer in writing thereof without delay. He shall give the employer all the details–concerning the invention and, if necessary, concerning its realization–which the employer may need in order to judge whether it is in fact a free invention.
(2) Where the employer does not contest that the invention notified to him is a free invention, by written declaration to the employee within three months of the notification, he may no longer claim the invention as a service invention.
(3) There shall be no obligation to notify the employer of a free invention if the invention is obviously not capable of being used in the employer’s enterprise.

19.– (1) Before exploiting a free invention further during the term of his employment contract, an employee must offer his employer at least a non–exclusive right to use the invention on reasonable terms, if the invention falls within the range of the actual or planned activities of the employer’s enterprise at the time the offer is made. Such offer may be submitted together with the notification required by Section 18.
(2) Where the employer does not accept the offer within three months, his prerogative shall lapse.
(3) Where the employer states within the time provided by subsection (2) that he intends to acquire the rights offered to him, but claims that the terms offered to him are not reasonable, the court shall determine the terms upon a declamatory action by the employer or employee.
(4) The employer or the employee may request a new determination of the terms, if the circumstances essential to the terms agreed or fixed have changed substantially.

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Archived updates for Friday, February 22, 2008

No Experimental Use Exception After Commercial Offer for Sale

In Atlanta Attachment Co. v. Leggett and Platt Inc. (February 21, 2008) the Federal Circuit held that Atlanta Attachment's sales to Sealy were not experimental merely because they were prototypes submitted to determine if the invention fit Sealy’s requirements.

According to the opinion for the court filed by Circuit Judge Mayer:

Our patent laws deny a patent to an inventor who applies for a patent more than one year after making an attempt to profit from his invention by putting it on sale. 35 U.S.C. § 102(b); see also Elizabeth v. Am. Nicholson Pavement Co., 97 U.S. 126, 137 (1877). An invention is so barred when it was both the subject of a commercial offer for sale before the critical date and ready for patenting at the time of the offer. Pfaff v. Wells Elecs, Inc., 525 U.S. 55, 67, 199 S.Ct. 304, 311-12 (1998).

To meet the first, commercial offer, prong, the offer must be sufficiently definite that another party could make a binding contract by simple acceptance, assuming consideration. Netscape, 295 F.3d at 1323. In determining such definiteness, we review the language of the proposal in accordance with the principles of general contract law. Id. The law has long recognized a distinction between experimental usage and commercial exploitation of an invention. While "[a]ny attempt to use [an invention] for profit . . . would deprive the inventor of his right to a patent," an inventor’s use "by way of experiment" does not bar patentability. Elizabeth, 97 U.S. at 137 (1877). Therefore, we must consider whether the suspect activities were experiments as opposed to an attempt to profit from the invention, that is, whether the primary purpose of the offers and sales was to conduct experimentation. Allen Eng’g Corp. v. Bartell Indus., 299 F.3d 1336, 1354 (Fed. Cir. 2002). Neither profit, revenue, nor even an actual sale is required for the use to be a commercial offer under section 102(b) – an attempt to sell is sufficient if it rises to an offer upon which a contract can be made merely by accepting it. Although the third prototype was never actually delivered to Sealy, it was indeed sold to Sealy because Atlanta Attachment sent Sealy an invoice for the machine (an offer), and Sealy paid for the machine (an acceptance).

Atlanta Attachment responds that its sales to Sealy were experimental, because they were prototypes submitted to determine if the invention fit Sealy’s requirements. However, experimentation conducted to determine whether the invention would suit a particular customer's purposes does not fall within the experimental use exception. Allen Eng’g, 299 F.3d at 1355 (citing In re Theis, 610 F.2d 786, 792 (CCPA 1979)). Therefore, we are interested only in the actions of Atlanta Attachment (and not Sealy’s experiments) in determining whether the machine was suitable to the purpose of the invention.

Additionally, Leggett & Platt is correct to emphasize that Atlanta Attachment did not retain control over the prototypes when they were in Sealy’s possession. While we have held that control may not be the lodestar test in all cases, we have also said that it is important, and sometimes dispositive. Electromotive Div. of Gen. Motors Corp. v. Transp. Sys., 417 F.3d 1203, 1213 (Fed. Cir. 2005) (citing In re Hamilton, 882 F.2d 1576 (Fed. Cir. 1989)). In Allen Engineering, we simply catalogued a set of factors that previous cases had found instructive, and in some cases dispositive, for determining commercial offers versus experimental uses. 299 F.3d at 1353. The issue of control is dispositive here, therefore we need not review each factor set out there.

Atlanta Attachment was not experimenting within the contemplation of the experimental use doctrine when it sold its invention to Sealy because Sealy
performed the testing and because Atlanta Attachment did not have control over
the alleged testing to establish experimentation. See Electromotive Div., 417
F.3d at 1213. The fact that Sealy experimented with the prototypes is immaterial
because the experimental use exception only concerns the actions of the inventors and their agents, and Sealy was not under the inventors’ control.

The first Pfaff prong is also met, and experimental use negated, because Atlanta Attachment had presented a commercial offer for sale of the invention en masse. Atlanta Attachment gave a quotation to Sealy dated September 27, 2000, for 50 production units, with "anticipate[d] installation of Production units to begin no later than March 2001." This offer occurred before the critical date of March 5, 2001. Furthermore, as Atlanta Attachment confirmed, the quotation became a contract with the signature of a purchasing entity. Therefore, this quotation constitutes an offer for sale that cannot avoid the on-sale bar via the experimental use exception. An offer to mass produce production models does not square with experimentation under any standard; it is commercial exploitation.

We now turn to the second Pfaff prong, ready for patenting. Contrary to Atlanta Attachment’s argument, once there has been a commercial offer, there can be no experimental use exception. We also conclude that the third prototype was a reduction of claim 32 to practice, and therefore the invention was ready for patenting.

. . . Atlanta Attachment received comments from Sealy about the third prototype, and in response improvements to the prototype were included in a fourth prototype. The amount Sealy had paid for the third prototype was refunded upon delivery of the fourth prototype. The district court erred in concluding that these facts showed the third prototype was not suitable for its intended purpose.

. . . Consistent with the rule that later refinements do not preclude reduction to practice, it is improper to conclude that an invention is not reduced to practice merely because further testing is being conducted. Moreover, because vibration-free operation was not a claimed feature, it would only be relevant if the vibration actually prevented workability or utility of the invention.

Because the third prototype was on sale, we agree with Leggett & Platt that it was material to the examination. See Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1318 (Fed. Cir. 2006) (noting that a reasonable examiner would have
2007-1188 considered the true nature of the invention’s reduction to practice to be important in deciding to allow the claim). However, materiality does not presume intent. Manville Sales Corp. v. Paramount Sys. Inc., 917 F.3d 544, 552 (Fed. Cir. 1990). The district court did not consider intent after deciding the third prototype was an experimental use, leaving this issue of fact unresolved. We therefore must remand the case for the district court to reconsider the allegation of inequitable conduct.

Added in the cocurring opinion of Circuit Judges Prost and Dyk,

I agree with the majority opinion and fully join it. I write separately, however, to point out the confusion in our caselaw regarding the applicability of the experimental use doctrine to the two prong test for the on-sale bar. . . .

When the inventor conducts a commercial transaction in order to facilitate development, but the development activity meets the requirements of the experimental use doctrine, the inventor avoids the on-sale bar. This exception
to the on-sale bar does not evaporate upon reduction to practice. In essence,
just as inventors could develop any aspect of the invention privately, they may
employ the concepts of agency and confidentiality to also accomplish the same
result.

In the present case, as the majority opinion demonstrates, Atlanta Attachment cannot use the experimental use doctrine to avoid the first prong of the on-sale bar because it did not demonstrate experimental, rather than simply commercial, purposes for the sale. Similarly, the quote for fifty "production unit" machines separately demonstrates an offer to sell with simply commercial intent. Both the sale and offer to sell conclusively demonstrate satisfaction of the first Pfaff prong. The experimental use doctrine is inapplicable.

While the experimental use doctrine, as such, is not pertinent to the second Pfaff prong, an inventor’s experimentation may have relevance to that prong. As to the second prong, a patentee may still avoid the on-sale or public use bars by proving that the "invention" required additional experimentation, and was not in fact complete. Such a showing parallels the pre-Pfaff experimental use doctrine, but instead of involving an exception to the on-sale or public use bars, takes effect as merely avoiding the ready for patenting prong in the first place. Experimentation of this type must concern claimed aspects of the invention, because those aspects control whether the invention is ready for patenting or not.

In the present case, Atlanta Attachment’s argument that the third prototype did not work for its intended purpose attempts to avoid the second Pfaff prong. As the majority opinion demonstrates, however, because all of Atlanta Attachment’s arguments concern unclaimed features, they cannot avoid the conclusion that the third prototype was a reduction to practice and therefore met the second Pfaff prong.

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Archived updates for Thursday, February 21, 2008

Copyright Registrar Requires Seperate License Determination under Sections 112 and 114

The Register of Copyrights has concluded that in setting rates for the section 112 and 114 statutory licenses, the Copryight Royalty Judges must establish separate values for each of the two licenses and that rates for the section 112 license shall include a minimum fee.


The Copyright Royalty Judges are required by 17 U.S.C. 803(b) and 37 CFR 351 to issue determinations of rates and terms for royalty payments due for the public performance of sound recordings in certain digital transmissions by licensees in accordance with the provisions of 17 U.S.C. 114, and the making of certain ephemeral recordings by licensees in accordance with the provisions of 17 U.S.C. 112(e).


According to the Registrar,
The requirement in section 112(e)(4) to determine rates is logical in that the two licenses involve different rights. The section 112 statutory license applies to reproductions, while the section 114 statutory license applies to public performances. Moreover, the beneficiaries of the section 114 license are not identical to the beneficiaries of the section 112 license. Royalties collected under section 114 are paid to the performers and the copyright owners of the sound recordings, i.e., usually the record companies; whereas, the royalties collected pursuant to the section 112 license are not paid to performers. Without separate rates for both the section 114 and 112 licenses, SoundExchange is unable to allocate properly the funds it collects as the
Designated Agent and fulfill both its responsibility to distribute receipts to stakeholders of the public performance right under section 114(g) as well as its
responsibility to distribute receipts to separate stakeholders of the reproduction right under section 112.

Consequently, the Register finds that the Copyright Royalty Judges’ resolution to include rates for the section 112 license within rates and terms for the section 114, without specifying what percentage, if any, is attributable to the section 112 license, does not fulfill the Copyright Royalty Judges’ responsibility to determine the value of the section 112 license for ephemeral copies. Both the text and the legislative history of section 112 indicate Congress’ view that the rate setting body must determine the value of the section 112 license. See 17 U.S.C. 112(e)(3) (requiring reasonable rates and terms of royalty payments for the activities specified by paragraph (1) which
shall include a minimum fee for each type of service offered by transmitting
organizations); DMCA Conf. Rpt., 105–796, at 89–91; DMCA Section-by-Section
Analysis at 52–53, 61–62.
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USPTO Proposes Biological Material Deposits Be Made Available Before Patent Application Publication

Thanks to Christopher P. Singer at Patent Docs for describing the Federal Register notice on February 20, 2008 where the U.S. Patent and Trademark Office announced proposed changes to the rules regarding submission of biological deposits pertaning to patent applications:

In particular, the revised rules would require that any deposit of biological material be made before the application publishes, and that all restrictions on access to the deposited material imposed by the depositor be removed upon publication.

. . . For purposes of enablement, the Federal Circuit has held that even "the availability of a sample to the public after the patent has issued will meet the enablement requirement." In re Lundak, 773 F.2d 1216, 1223 (Fed. Cir. 1985). Since the American Inventors Protection Act went into effect, certain commentators have argued that because the publication of a U.S. application can create provisional rights for the applicant, the published application must be in compliance with the enablement and written description requirements of § 112. This means that, if needed for § 112 purposes, a deposit of biological material would need to be made prior to publication (i.e., that the AIPA supersedes the rule stated in Lundak).

To be ensured of consideration, comments must be received by the USPTO on or before April 21, 2008.
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Chinese Patent Trials to Allow Foreign Experts as Reference, Not Evidence

According to Xie Chuanjiao writing for China Daily on February 20, 2008, foreign experts will be allowed to take part in Chinese patent rights trials involving foreign parties. Supreme People's Court vice-president Cao Jianming reportedly also told a national conference in Jinan, Shandong province that
  • Courts should use more people with specialist technical backgrounds to serve on people's juries in IPR trials, and even invite renowned experts to serve as full jury members
  • Concerned parties will be encouraged to bring people with technical experts into court to speak on issues relating to the case
  • "To improve the accuracy of deciding technical facts in such cases, local courts can also set up an expert consultation system," the Cao said."However, the consultants' opinions must be used only as reference for judges and not be presented as evidence."
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Archived updates for Wednesday, February 20, 2008

Ordinary American Purchasers Include Those Knowledgeable in English and Foreign Language

In In re Spirits International N.V., Serial No. 74382759 (February 11, 2008) the U.S. Trademark Trial and Appeal Board clarified that "in determining whether a mark in a
foreign language is deceptive as to geographic origin, the question is whether an appreciable number of consumers for the goods or services at issue will be deceived. At least one
significant group of 'ordinary American purchasers' is the purchaser who is knowledgeable in English as well as the pertinent foreign language."

With the above principles in mind, we presume that a word in one of the common, modern languages of the world will be spoken or understood by an appreciable number of U.S. consumers for the product or service at issue. . . .

As for the present case, there is no question that Russian is a common, modern language. . . .

The term MOSKOVSKAYA and its translation, "of or from Moscow," are essentially equivalent in meaning. . . .

There is nothing in the record to indicate the mark would not be translated because of marketplace circumstances or the commercial setting in which the mark is used. . . .

There is also no question that the translated meaning of MOSKOVSKAYA is not obscure. . . .


Thus, applying the doctrine of foreign equivalents in this case, we find that the primary meaning of MOSKOVSKAYA, meaning "of or from Moscow," is geographic. The common, adjectival form of the term does not detract from the geographic meaning of the mark as a whole. See In re Joint-Stock Co. "Baik," supra (BAIKALSKAYA, meaning "from Baikal" in English, is primarilygeographically descriptive of vodka from that area); and In re Jacks Hi-Grade Foods, Inc., 226 USPQ 1028 (TTAB 1985) (NEAPOLITAN held primarily geographically deceptively misdescriptive as applied to sausage emanating from the United States). Indeed,
the adjectival meaning, "from Moscow" actually emphasizes the geographical significance.

. . . Applicant argues that the Board's decision in Thomas is inconsistent with the holding in Palm Bay "to the extent that the Board interpreted the Court's reference to the 'ordinary American purchaser' to mean 'the ordinary American purchaser who is knowledgeable in the foreign language,'" and that the Thomas case along with the authorities cited for this proposition "are no longer good law." (Brief, p. 23, n. 12.) Applicant contends that the Board's interpretation in Thomas "simply can not be
squared" with the holding in Palm Bay which, according to applicant, found that "it was 'error' for the Board to have based its decision on the fact that 'an appreciable number of purchasers in the U. S. speak and/or understand French. . . '"

We disagree with applicant's interpretation of the Palm Bay case. Applicant has improperly taken the Court's references to the "ordinary American purchaser" out of context and has missed the import of the decision. . . .

Contrary to applicant's contention, the Court did not hold that it was "error" for the Board to have based its decision on the fact that "an appreciable number of purchasers in the U.S. speak and/or understand French," or that the Board erred in defining this "appreciable number of purchasers" as the relevant group for analysis under the doctrine of foreign equivalents. Rather, the Board's error was in finding that such purchasers "will translate" applicant's VEUVE ROYALE mark into English.8 In view of the Board's own finding, on the one hand, that purchasers would be "unlikely to translate" applicant's VEUVE ROYALE mark and two of opposer's three marks, and its contradictory finding, when comparing applicant's mark with opposer's third mark (THE WIDOW), that purchasers would translate applicant's mark, the Court merely decided which of the contradictory findings was correct and which was in error. Thus, when the Court agreed with the Board that the average American purchaser was unlikely to translate the VEUVE ROYALE mark and disagreed with the Board's contradictory finding, it did not address the definition of the "ordinary American purchaser."

FOOTNOTE 8 This view of Palm Bay is supported by Sutter Home Winery, Inc. v.
Madrona Vineyards, L.P., 2005 WL 701599 (N.D. Cal. 2005) (unpublished). The Court observed that reliance on the doctrine of foreign equivalents "is merely an application of the general rule that two marks are confusingly similar only when their use 'would cause confusion of any appreciable number of ordinary prudent purchasers as to source of the goods' [citation omitted]." Continuing, the Court noted, citing Palm Bay ("396 F.3d at 1377"), that this inquiry "in turn depends on whether
an 'appreciable number of purchasers in the United States,' who courts presume to speak English as well as the pertinent foreign language, will understand the meaning of the foreign word mark at issue and translate that mark into its English equivalent."

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Archived updates for Tuesday, February 19, 2008

Obviousness Challenge Avoids Preliminary Injunction

In Erico International Corp. v. Vutec Corp. (February 19, 2008), the Federal Circuit vacated the grant of a preliminary injunction where an obviousness challenge cast enough doubt on the validity of Claim 17 of US5740994 to negate likelihood of success on the merits as to infringement of a valid patent:



According to the opinion by Circuit Judge Rader:

"Validity challenges during preliminary injunction proceedings can be successful, that is, they may raise substantial questions of invalidity, on evidence that would not suffice to support a judgment of invalidity at trial." Amazon.com, Inc., 239 F.3d at 1358. In other words, a defendant need not prove actual invalidity. On the contrary, a defendant must put forth a substantial question of invalidity to show that the claims at issue are vulnerable. Thus, a showing of a substantial question of invalidity requires less proof than the clear and convincing standard to show actual invalidity. Id.

This court concludes that the OBO Betterman reference coupled with the EIA standards and Mr. Laughlin's testimony mount a serious challenge to the validity of Claim 17 of the '994 patent. First, the OBO Betterman reference shows a hook fastener with downwardly flared flanges nearly identical to the Erico J-Hook. The downwardly flared flanges implicitly point to the reasonableness of sag in cables installed by using OBO Betterman fasteners. Second, the EIA standard states the appropriate spacing used between open-top cable supports. The OBO Betterman fasteners and the J-Hooks are similar to open-top cable supports in that cables are suspended between supporting members (i.e., J-Hooks, rungs of an open-top cable ladder). The applicable section of the EIA standard reads:


4.6.5 Cable Support
Where zone conduit or cable tray is not available in a suspended ceiling space and where telecommunications cables are allowed to be placed loosely in the ceiling, adequate open-top cable supports, located on 1222-1525-mm (48-60-in) centers, shall be provided.
It is reasonable to see that downwardly flared flanges coupled with the EIA spacing requirements could implicitly motivate a person of ordinary skill to use J-Hooks with the EIA spacing to achieve cable sag of no more than about 30 centimeters. See KSR Int’l Co., 127 S.Ct. at 1743; Dystar Textilfarben GmbH v. C.H. Patrick Co., 464 F.3d 1356, 1368 (Fed. Cir. 2006) ("[T]here exist[s] an implicit, indeed common-sensical, motivation to combine the two references."). To further show common cable installation practices prior to the filing of the '994 patent application, Mr. Laughlin's testimony shows an implicit motivation to combine the prior art. In part, Mr. Laughlin testified:

Q. I'm going to get to that in just a moment, okay. More than a year prior to the filing date of your patent, was it a common practice for installers of communication cables to pull the cable taut once they installed the cable between the supports if done in a workmanlike fashion?

A. Yes, if done in aworkmanlike fashion.

Q. Were communication cables installed more than a year prior to your patent filing date in a workmanlike fashion?

A. There certainly were people installing them in a workmanlike fashion, and there were many people that were not.

Q. But there were at least some people that were installing them in a workmanlike fashion?

A. Yes, some.

Q. More than a year before your filing date?

A. Yes.

Q. And you knew that when you filed your patent application?

A. Yes.

Q. When those installers who did install in a workmanlike fashion more than a year prior to your filing date in open top cable supports and pulled taut, the sag would be less than 30 centimeters, correct?

A. Yes, if they were pulled taut.

Transcript of Proceedings at 92-93, Erico Int'l Corp. v. Doc's Mktg. Corp., 1:05-cv-2924 (N.D. Ohio Mar. 9, 2006). Mr. Laughlin's testimony shows the reasonableness of installing cables using open-top cable supports with EIA spacing standards resulting in less than 30 centimeters of sag. As such, the OBO Betterman reference coupled with the EIA standards and Mr. Laughlin's testimony raise a substantial question of invalidity of Claim 17.

Even assuming the accuracy of the District Court's secondary consideration analysis, it is reasonable to infer that one of ordinary skill would have considered the OBO Betterman hook coupled with the EIA standards and common knowledge within the art as shown by Mr. Laughlin's testimony to explain that Claim 17 is vulnerable based on invalidity. See KSR Int'l Co., 127 S.Ct. at 1742; Amazon.com, Inc., 239 F.3d at 1358. Thus, Doc's invalidity challenge based on obviousness cast enough doubt on the validity of Claim 17 to negate likelihood of success on the merits as to infringement of a valid patent. At this point, of course, Doc's has only cast doubt on the validity of the '994 patent. The District Court will have the opportunity to reach a final validity determination at trial.

Accordingly, this court vacates the district court’s grant of a preliminary injunction.
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Settlement Agreement Clause Not to Challenge Patent Validity May be Void in Europe

Thanks to the IPKat for pointing out Knorr-Bremse Systems for Commercial Vehicles Ltd v Haldex Brake Products GmbH [2008] EWHC 156 (Pat), a ruling of England and Wales Patents Court where judge Mr Justice Lewison stated that "There is at the least a good arguable case that, even if KBS UK are bound by the non-challenge [to patent validity] clause (which in my judgment they are not) that clause is void because it contravenes article 81 EC:"

. . . 48. Mr Vanhegan submitted that in any event the non-challenge clause is void as being a contravention of article 81 EC. In Windsurfing International Inc v European Commission [1988] F.S.R. 139 the ECJ considered the effect of a non-challenge clause in a patent licensing agreement. It said:

"[89] The seventh of the clauses which the Commission regards as incompatible with Article 85(1) relates to the obligation on the licensees not to challenge the validity of the licensed patents.

[90] On that point, Windsurfing International argues that the interest of the public in an essentially free system of competition, an interest which in any event was protected by the thorough and extensive patent application procedure provided for by the German legislation, was better served by a no-challenge clause making it easier to be granted a licence by the patentee.

[91] The Commission, however, takes the view that even where a licensee is only able to challenge a patent because of the information which has become available to him as a result of his privileged relationship with the licensor, the public interest in ensuring an essentially free system of competition and therefore in the removal of a monopoly perhaps wrongly granted to the licensor must prevail over any other consideration.

[92] It must be stated that such a clause clearly does not fall within the specific subject-matter of the patent, which cannot be interpreted as also affording protection against actions brought in order to challenge the patent's validity, in view of the fact that it is in the public interest to eliminate any obstacle to economic activity which may arise where a patent was granted in error.

[93] It must therefore be held that the obligation referred to in paragraph (3) of Article 1 of the decision constitutes an unlawful restriction on competition between manufacturers."

49. In Bayer AG and Maschinenfabrik Hennecke GmbH v. Süllhöfer [1990] F.S.R. 300 the ECJ held that it made no difference that the non-challenge clause was contained in an agreement settling litigation. The court said:

"[14] In the Commission's view, an undertaking not to challenge an industrial property right included in a licensing agreement should, in principle, be considered to be a restriction of competition. Such a clause is, however, compatible with Article 85(1) of the EEC Treaty when it is included in an agreement whose purpose is to put an end to proceedings pending before a court, provided that the existence of the industrial property right which is the subject-matter of the dispute is genuinely in doubt, that the agreement includes no other clauses restricting competition, and that the no-challenge clause relates to the right in issue.

[15] The point of view put forward by the Commission cannot be accepted. In its prohibition of certain agreements between undertakings, Article 85(1) makes no distinction between agreements whose purpose is to put an end to litigation and those concluded with other aims in mind. It should also be noted that this assessment of such a settlement is without prejudice to the question whether, and to what extent, a judicial settlement reached before a national court which constitutes a judicial act may be invalid for breach of Community competition rules.

[16] A no-challenge clause included in a patent licensing agreement may, in the light of the legal and economic context, restrict competition within the meaning of Article 85(1) of the EEC Treaty.

[17] In regard to that context, it should be pointed out that there is no restriction on competition when the licence granted is a free licence in as much as, in those circumstances, the licensee does not suffer from the competitive disadvantage involved in the payment of royalties.

[18] Nor does a no-challenge clause contained in a licence granted subject to payment of royalties restrict competition when the licence relates to a technically outdated process which the licensee undertaking did not use."

50. In the present case it is common ground that both KBS and Haldex are part of an oligopoly in the field of braking systems for commercial vehicles and that their trade is conducted throughout the EU. On the face of it, therefore, a non-challenge clause is likely to distort competition and affect trade between member states. There is no uestion in the present case of a free licence. Nor is it possible to say that the technology in question is outdated, since Haldex relies on the two patents as preventing the commercialisation of the SV3801 valve. . . .

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Archived updates for Saturday, February 16, 2008

USPTO Modifies Declaration to Permit Access to Application by Foreign Patent Offices

According to a notice from the USPTO published on February 13, 2008 (via Patent Docs),
the USPTO has modified its Declaration form (PTO/SB/01) to include a checkbox which provides the applicant with the option to preauthorize the EPO and JPO to access its US application(s) [in order to obtain priority dcouments]. Essentially, this updated Declaration form bypasses the need to file a separate form PTO/SB/39, "Authorization to Permit Access to Application by Participating Offices."

The requirement for a seprate paper has also been formally waived. However a new PTO/SB/39 (more information here) has also been provided for applicants that prefer to continue filing a separate paper. The new PTO/SB/39 form has also been modified in several othr respects, including a specific statement that "access be provided to information concerning the date of filing the Authorization to Permit Access to Application by Participating Offices" which is sometimes of critical significance to the JPO.

Other modifications to the USPTO Forms in February 2008 include:

PTO/SB/21 Transmittal Form
PTO/SB/22 Petition for Extension of Time under 37 CFR 1.136(a)
PTO/SB/23 Petition for Extension of Time under 37 CFR 1.136(b)
PTO/SB/24 Express Abandonment Under 37 CFR 1.138
PTO/SB/24a Petition for Express Abandonment to Avoid Publication under 37 CFR 1.138(c)
PTO/SB/24b Petition for Express Abandonment to Obtain a Refund
PTO/SB25 Terminal Disclaimer to Obviate a Provisional Double Patenting Rejection over a Pending Second Application
PTO/SB26 Terminal Disclaimer to Obviate a Double Patenting Rejection over a Prior Patent
PTO/SB/27 Request for Expedited Examination of a Design Application (37 CFR 1.155)
PTO/SB/30 Request for Continued Examination (RCE) Transmittal
PTO/SB/31 Notice of Appeal from the Examiner to the Board of Patent Appeals and Interferences
PTO/SB32 Request for Oral Hearing before the Board of Patent Appeals and Interferences
PTO/SB/36 Rescission of Previous Nonpublication Request (35 U.S.C. 122(b)(2)(B)(ii)) and, if applicable, Notice of Foreign Filing (35 U.S.C. 122(b)(2)(B)(iii))
PTO/SB/37 Request for Deferral of Examination 37 CFR 1.103(d)
PTO/SB/38 Request to Retrieve Electronic Priority Application(s)
PTO/SB/39 Authorization to Permit Access to Application by Participating Offices
PTO/SB/42 37 CFR 1.501 Information Disclosure Citation in a Patent
PTO/SB/43 Disclaimer in Patent under 37 CFR 1.321(a)
PTO/SB/61 Petition for Revival of an Application for Patent Abandoned Unavoidably under 37 CFR 1.137(a)
PTO/SB63 Terminal Disclaimer to Accompany Petition
PTO/SB64 Petition for Revival of an Application for Patent Abandoned Unintentionally Under 37 CFR 1.137(b) [2 pages]
PTO/SB64a Petition for Revival of an Application for Patent Abandoned for Failure to Notify the Office of a Foreign or International Filing (37 CFR 1.137(f))
PTO/SB/67 Power to Inspect/Copy
PTO/SB/68 Request for Access to an Abandoned Application under 37 CFR 1.14
PTO/SB/91 Deposit Account Order Form
PTO/SB/92 Certification of Mailing under 37 CFR 1.8
PTO/SB96 Statement Under 37 CFR 3.73(b)
PTO/SB/97 Certificate of Transmission under 37 CFR 1.8
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Archived updates for Friday, February 15, 2008

En Banc Federal Circuit to Reconsider Patentable Subject Matter of Business Methods

Taking sua sponte action, the Federal Circuit has ordered an en banc rehearing of the In re Biliski case with regard to the following five questions concerning claim 1 of U.S. patent Application No. 08/833,892:

1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

The parties are requested to file supplemental briefs that should address the following questions:
  1. Whether claim 1 of the 08/833,892 patent application claims patent-eligible
    subject matter under 35 U.S.C. § 101?
  2. What standard should govern in determining whether a process is patent-eligible subject matter under section 101?
  3. Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?
  4. Whether a method or process must result in a physical transformation of an
    article or be tied to a machine to be patent-eligible subject matter under section 101?
  5. Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

According to Professor Crouch,

In its opposition brief, the PTO argues that there are several Section 101 reasons to eliminate the Bilski application. First, according to the PTO, the claimed method does not qualify as a statutory “process.” Rather, statutory processes have always been associated with physical transformation or machine implementation — details missing from Bilski’s claims. In addition, the PTO argues that Bilski’s claim is an abstract idea because it is merely a “disembodied concept” that would preempt an entire field of commodities trading. Regarding State Street, the PTO would limit the the requirement of a “useful, concrete, and tangible result” to computer implemented inventions that employ a mathematical algorithm.

(Thanks to Chad Wieland for passing along a copy of the Order.)
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TTAB Personal Subpeona Power Extends to Foreign Trademark Applicant Corporations

In Rosenruist-Gestao E Servicos LDA v. Virgin Enterprises Limited (December 27, 2007), the U.S. Court of Appeals for the Fourth Circuit ruled that service of a subpoena ad testificandum on the domestic representative of the foreign trademark applicant in a U.S. opposition proceeding was sufficient to require the foreign applicant to appear and testify in the district where the domestic representative was located. If the foreign applicant fails to name a domestic representative in its trademark application, the Director of Patents and Trademarks in Alexandria, Virginia (the Eastern District of Virginia), is deemed to be the foreign domestic representative of the applicant.

According to the opinion by Circuit Judge Traxler,
[W]e agree with VEL that the term "witness," as used in the statute, is not limited to natural persons and allows the court to reach corporations and other juristic persons. Because the unappealed order of March 2, 2006, established for purposes of this case that the subpoena was valid and that Rosenruist, as the subject of the subpoena, was required to obey it, it follows that the district court should have granted VEL’s motion to compel.
As noted by dissenting Circuit Judge Wilkinson,

In a first for any federal court, my colleagues hold that a foreign company that has no United States employees, locations, or business activities must produce a designee to testify at a deposition in the Eastern District of Virginia so long as it has applied for trademark registration with a government office located there. 35 U.S.C. § 24
(2000). As a result, foreign witnesses can be compelled to travel to the United States and give in-person deposition testimony at the behest of any litigant in a trademark dispute, "for use in any contested case in the Patent and Trademark Office" ("PTO") — though the PTO’s own procedures call for obtaining testimony from foreign
companies through other means.

. . . [This decision] is bound to embroil foreign trademark applicants in lengthy, procedurally complex proceedings. It inverts longstanding canons of construction that seek to protect against international discord, and it disregards the views of the PTO whose proceedings 35 U.S.C. § 24 is designed to aid. . . . No matter how one cuts
the cookie, the bottom line is that the majority enforces the subpoena. In so doing, the majority creates a standard that is in fact a national one: the PTO is located in the Eastern District of Virginia; applications for trademark registration are filed there; and subpoena enforcement will frequently be sought in that district. Indeed, for any foreign corporation without a pre-existing United States presence, the majority’s decision will be controlling. For this reason, among others, I think this decision is unfortunate. The decision to extend the subpoena power under 35 U.S.C. § 24 to foreign companies situated similarly to Rosenruist is one that is plainly before this court, and its importance warrants full discussion.

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Knowledge Leak Prevention Through Aggressive Patent Enforcement Strategy

In "Reputations for Toughness in Patent Enforcement: Implications for Knowledge Spillovers via Inventor Mobility" Professors Agarwal, Ganco, and Ziedonis "find that a firm's litigiousness significantly curtails the dissemination of knowledge anticipated from employee departures, particularly to firms that are relatively disadvantaged to fund or withstand a legal dispute (i.e., that are small, young, or private). The overall effects are similar in magnitude for California-based firms relative to firms headquartered in other states. The study sheds new light on the strategic levers firms use to capture value from investments in human capital and R&D."
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Archived updates for Thursday, February 14, 2008

TGIF for "Inventive Step Support" Humor

from the Wall Street Journal at http://s.wsj.net/public/resources/images/ED-AH061_811sep_20080206165725.gif

Thank Goodness It's Friday,

-- Bill Heinze
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Congratulation New USPTO-PAC Members

U.S. Commerce Secretary Carlos M. Gutierrez recently named three new members to the Patent Public Advisory Committee (PPAC) and three to the Trademark Public Advisory Committee (TPAC).

The new PPAC members are:

Louis J. Foreman is founder and chief executive of Enventys, an integrated product design and engineering firm with offices in Charlotte, N.C., and Taiwan. A prolific inventor himself, he frequently lectures on the topics of small business creation and product development as well as intellectual property. Mr. Foreman is the publisher of Inventors Digest, a 20-year-old publication devoted to the topic of American innovation. He was the founding member of the Inventors Network of the Carolinas. He is the executive producer and judge for a new inventor’s TV show called Everyday Edisons, which airs nationally on PBS stations.

F. Scott Kieff is a law professor at Washington University in St. Louis and a research fellow at Stanford’s Hoover Institution where he runs the Hoover Project on Commercializing Innovation. He serves as a faculty member of the Munich Intellectual Property Law Center in Germany and previously has been a visiting professor in the law schools at Northwestern, Chicago, and Stanford, as well as a faculty fellow in the Olin Program on Law and Economics at Harvard. Having practiced law for over six years as a trial lawyer and patent lawyer for Pennie & Edmonds in New York and Jenner & Block in Chicago, and as law clerk to U.S. Circuit Judge Giles S. Rich, he regularly serves as a testifying and consulting expert, mediator, and arbitrator to law firms, businesses, government agencies and courts.

Damon C. Matteo is vice president and chief intellectual property officer of the Palo Alto Research Center (PARC). His two-decade career in intellectual capital management (ICM) includes extensive experience in the creation, strategic management, venture/funding and commercialization of the full spectrum of corporate intellectual property assets through such vehicles as direct-to-product use, licensing, assertion, start-ups and M&A in North America, Asia & Europe. Among Mr. Matteo’s numerous professional awards, he bas been named one of the "Fifty Most Influential People in Intellectual Property" by Managing Intellectual Property magazine; and has received the National Technology Transfer Excellence Award given by the U.S. Federal Government. Mr. Matteo also serves on the Board of Directors for the European Center for Intellectual Property Studies, and was selected principal industry expert in intellectual capital management for both the U.S. Security & Exchange Commission (SEC) and the United Nations. Mr. Matteo frequently lectures on ICM at universities and professional organizations throughout the world.

The new TPAC members are:

James H. Johnson, Jr., is a practicing attorney in Atlanta at Sutherland Asbill & Brennan LLP. With a practice focused on trademarks and service marks, Mr. Johnson has expertise in unfair competition and domain name disputes, and has been involved in domestic and international trademark matters for Fortune 500® companies. Prior to joining the firm, Mr. Johnson gained trademark experience with The Coca-Cola Company, the Kellogg Company, and at the USPTO as an examining attorney. Mr. Johnson also lectures regularly on trademark and general intellectual property law principles. He is a member of INTA, where he served on the Board of Directors from 1990 to 1993 and from 1995 to 1997, and currently serves as Chairman of the Trademark Committee for the Georgia Bar. Mr. Johnson received his undergraduate degree from Princeton University and his J.D. from the University of Virginia School of Law.

Elizabeth R. Pearce is Director of the Intellectual Property Group at American International Group, Inc., managing the AIG trademark, patent and copyright portfolios, and an executive member of AIG's IP Task Force. She has worked in the IP field for 16 years, seven of those years at AIG, and serves on the Internet Committee and the Internet Whois Subcommittee of the International Trademark Association. In her prior career, Ms. Pearce was a magazine and book editor, notably with Gourmet, Cuisinart, and Time, Inc. She has a B.A. in American Studies from Queens University of Charlotte in North Carolina and a professional certificate in IP law from NYU.

Jeffrey W. Storie is a shareholder in the Fort Worth, Texas law firm of Decker Jones McMackin McClane Hall & Bates, P.C., where he leads the firm's intellectual property practice group. His practice focuses on trademark prosecution, entertainment and intellectual property law transactions and brand protection. Mr. Storie is a member of the International Trademark Association, the American Intellectual Property Law Association, the Brand Protection Council of the American Apparel and Footwear Association and the International Anti-Counterfeiting Coalition (IACC). Mr. Storie has been active in the development of the Texas music community, having served as vice president of the Texas Music Association and an associate editor of the Entertainment and Sports Law Journal of the State Bar of Texas. He is a member of the Intellectual Property Law Section of the State Bar of Texas. Mr. Storie holds a B.A. from Miami University (Ohio) and received his J.D. from the Cumberland School of Law of Samford University.

The new members will serve three-year terms on the committees, which were created by the 1999 American Inventors Protection Act to advise the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO) on the management of patent and trademark operations, respectively, including goals, performance, budget and user fees. The committees have nine voting members who are appointed by and serve at the pleasure of the Secretary of Commerce.

Patent Public Advisory Committee Meeting Dates for 2008:

February 8, 2008
May 9, 2008
August 8, 2008
November 7, 2008

Trademark Public Advisory Committee Meeting Dates for 2008:

February 5, 2008
June 10, 2008
October 21, 2008
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Senate Patent Reform Bill Delayed Until April

According to Keith Perine in the February 13, 2008 issue of Congressional Quarterly (via Hall Wegner):
The Senate is not expected to take up a measure to overhaul patent laws until April at the earliest, as agreement on the complex legislation remains elusive. Senate Judiciary Chairman Patrick J. Leahy, a Vermont Democrat who sponsored the legislation (S 1145), acknowledged Wednesday that it likely won’t be on the floor until after a two-week March recess.

"So far …. there have not been substantive negotiations over complex provisions — particularly a section dealing with damages awards in patent infringement lawsuits — since the Judiciary panel approved the bill last July.

"'I think the people who want this bill have to weigh in very heavily,” said Orrin G. Hatch, R-Utah. …. Lobbyists have predicted that the committee-approved bill does not have a filibuster-proof majority of 60 votes."

IPO Daily News adds:
The March congressional recess runs through March 28. Numerous groups are
lobbying the Senate for changes in the legislation. Senator Leahy is planning to redraft certain sections. IPO still expects an effort to pass S. 1145 in coming weeks, and IPO members should continue to be active in legislative discussions.
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Automatic Employee Patent Assigment Rights Obtained to Challenge Jurisdiction

In DDB Technologies v. MLB Advanced Media (February 13, 2008) the ultimate question became whether the patent interest of inventor Dr. David Barstow ("Barstow") were previously assigned to his former employer, Schlumberger Technology Corporation ("Schlumberger") so that those rights could now be used by MLBAM to avoid jurisdiction. The Federal Circuit held that the question of whether a patent assignment creates an automatic assignment or merely an obligation to assign is governed by federal law, and that further jurisdictional discovery was warranted on whether Barstow's work was sufficiently related to his employment in order to fall within the terms of the assignment as construed under Texas law.

Inventor Barstow, a computer scientist, worked for Schlumberger from 1980 until 1994. At the start of his employment, Barstow entered into an employment agreement that included the following relevant provisions:

3. Employee shall promptly furnish to Company a complete record of any and
all technological ideas, inventions and improvements, whether patentable or not,
which he, solely or jointly, may conceive, make or first disclose during the
period of his employment with [Schlumberger].

4. Employee agrees to and does hereby grant and assign to Company or
its nominee his entire right, title and interest in and to ideas, inventions and
improvements coming within the scope of Paragraph 3:

a) which relate in any way to the business or activities of [Schlumberger], or

b) which are suggested by or result from any task or work of Employee for [Schlumberger], or

c) which relate in any way to the business or activities of Affiliates of [Schlumberger], together with any and all domestic and foreign patent rights in such ideas, inventions and improvements. Employee agrees to execute specific assignments and do anything else properly requested by [Schlumberger], at any time during or after employment with [Schlumberger], to secure such rights

It was unclear whether Barstows activities may have releated to his work at Schlumberger. During his employment with Schlumberger, Barstow worked on several projects related to the development of computer software used to control and record data measured by physical sensors used in logging oil wells, and on other software development projects. Barstow also worked on several personal projects during that time period, including collaborating with his brother Daniel on a method for broadcasting data about a live event, such as a baseball game, and producing a simulation of that event to be viewed on a computer. This project eventually led to the applications for the four patents in suit.

While employed at Schlumberger, Barstow discussed this project with Charles Huston, Schlumberger’s general counsel for software matters, and Dr. Reid Smith, the director of the lab in which Barstow worked. Both Huston and Smith testified that they knew Barstow was working on a "baseball simulator" project, J.A. at 153, that they had discussed the project with Barstow and also between themselves, and that they did not believe at the time that the project belonged to Schlumberger. Huston stated, "Dave came to Re[i]d and myself and said this is what I’m doing. If there is any problem with this let me know and Re[i]d and I discussed it and we don’t see how it applies to Schlumberger’s business." J.A. at 154. Smith testified that Barstow’s project was "general knowledge" at Schlumberger, that he had never "suggest[ed] to Dr. Barstow that the personal work he was doing belonged to Schlumberger," and that he was not "aware of anyone at Schlumberger ever stating a belief that Dr. Barstow’s personal work belonged to Schlumberger." J.A. at 165-66. However, the extent of Huston and Smith’s knowledge of the project is unclear from the record.

In 2004, DDB filed this patent infringement action against MLBAM, alleging that MLBAM provides several Internet services related to baseball that infringe the Computer Simulation Patents and the Pattern-Matching Patent. More than a year later, immediately before the close of discovery, MLBAM entered into negotiations with Schlumberger to acquire any interest that Schlumberger had in the patents in suit. Several months later, on April 7, 2006, Schlumberger and MLBAM entered into an agreement that assigned to MLBAM all of Schlumberger’s rights and interest in the patents in suit and granted MLBAM a retroactive license to practice under those patents.

On May 1, 2006, MLBAM moved the district court to dismiss the action for lack of subject matter jurisdiction, based on DDB’s failure to join all owners of the patents in suit (including MLBAM) and on DDB’s inability to pursue an infringement claim against MLBAM by virtue of its newly acquired ownership interest in those patents.

On September 26, 2006, the district court granted MLBAM’s motion to dismiss. The court found that the patents in suit fell within the scope of Barstow’s employment agreement because they were both "suggested by" and "related to" his work for Schlumberger. In determining that the patents in suit were "suggested by" Barstow’s work, the district court relied particularly on their relation to two prior patents issued to Schlumberger that named Barstow as the inventor.

Having concluded that Schlumberger, and thereafter MLBAM, was a co-owner of the patents, the court determined that it lacked subject matter jurisdiction because DDB had not joined Schlumberger and could not join MLBAM.



According to the majority opinion by Circuit Judge Dyk,

We must first determine whether the question of automatic assignment is
governed by federal or state law. Although state law governs the interpretation
of contracts generally, see Thatcher v. Kohl’s Department Stores, Inc., 397 F.3d
1370, 1373 (Fed. Cir. 2005), the question of whether a patent assignment clause
creates an automatic assignment or merely an obligation to assign is intimately
bound up with the question of standing in patent cases. We have accordingly
treated it as a matter of federal law. See Speedplay, Inc. v. Bebop, Inc., 211
F.3d 1245, 1253 (Fed. Cir. 2000); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d
1574, 1580-81 (Fed. Cir. 1991); cf. Rhone-Poulenc Agro, S.A. v. DeKalb Genetics
Corp., 284 F.3d 1323, 1328 (Fed. Cir. 2002) (holding that bona fide purchaser
defense is governed by federal law). Applying federal law, we have held that
whether an assignment of patent rights in an agreement such as the one in this
case is automatic, requiring no further act on the part of the assignee, or
merely a promise to assign depends on the contractual language. If the contract
expressly grants rights in future inventions, "no further act [is] required once
an invention [comes] into being," and "the transfer of title [occurs] by
operation of law." FilmTec, 939 F.2d at 1573 (contract provided that inventor
"agrees to grant and does hereby grant" all rights in future inventions); see
also Speedplay, 211 F.3d at 1253 (contract provided that employee’s inventions
within the scope of the agreement "shall belong exclusively to [employer] and
[employee] hereby conveys, transfers, and assigns to [employer] . . . all right,
title and interest in and to Inventions"). Contracts that merely obligate the
inventor to grant rights in the future, by contrast, "may vest the promisee with
equitable rights in those inventions once made," but do not by themselves "vest
legal title to patents on the inventions in the promisee." Arachnid, 939 F.2d at
1581 (contract provided that, for inventions within the scope of the agreement,
"all rights . . . will be assigned by [inventor] to CLIENT").

Paragraph 4 of Barstow’s employment agreement with Schlumberger stated
that Barstow "agrees to and does hereby grant and assign" all rights in future
inventions falling within the scope of the agreement to Schlumberger. J.A. at
471 (emphasis added). This contractual language was not merely an agreement to
assign, but an express assignment of rights in future inventions.3 The district
court therefore determined that, if the patents in suit were within the scope of
the employment agreement, they would have been automatically assigned to
Schlumberger by operation of law with no further act required on the part of the
company. Accordingly, DDB’s statute of limitations, waiver, and estoppel
defenses have no merit.

We turn then to the question whether the employment agreement covered the patents in suit because they "relate in any way to the business or activities" of Schlumberger, or "are suggested by or result from" Barstow’s work for Schlumberger. Those issues, of course, are governed by Texas law.

. . . Because we hold that further jurisdictional discovery was warranted, we do not reach the issue of whether the district court correctly held on the previous record that the patents in suit fell within the scope of Barstow’s employment agreement with Schlumberger.

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Exposure/Defense Cost Ratio Relatively High for Patent Litigation

Patent lawsuits have much more at stake in terms of liability exposure relative to the outside-counsel costs of defense than any other kind of lawsuit," writes Rees Morrison at Law Department Management. According to research by eLawForum,
“In employment and asbestos litigation, the ratio is approximately one-to-one,” which means that for every dollar the defendant corporation pays in settlement [liability costs] it pays one dollar to a law firm representing it [defense costs]. Met. Corp. Counsel, Vol. 16, Feb. 2008 at 28, continues. “In commercial and environmental litigation, the ratio is three-to-one. In personal injury and product liability, four-to-one, and in medical malpractice as much as eight-to-one. For intellectual property, the ratio can be ten-to-one or more.”
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OHIM Geographical Indications Database

According to the Intellectual Property Research Institute of Australia "International Developments in IP Bulletin" for February 2008, the EU's Office for Harmonization of the Internal Market has created
a database containing geographical indications of wines, spirits, agricultural productsand foodstuffs protected under Community Regulations and Bilateral Treatiesbetween the European Commission and third countries. The publicly accessible database, in Excel format, is to be used by examiners when examining Community Trade Mark applications. To access the database, click on http://oami.europa.eu/en/mark/marque/pdf/Geographical_Indications.xls

OHIM has also released a new brochure on national laws relating to the Community Trade
Mark and the Community Design at http://oami.europa.eu/en/office/diff/pdf/National_law.pdf
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Archived updates for Wednesday, February 13, 2008

Reasonable Royalty for Saving Infringing Seed Exceeds Established Technology Fee

In Monsanto v. David (February 5, 2008), the Federal Circuit rejected an argument that the $7.75 "technology fee" (for each sack of genetically-altered soybeans purchased) was an established reasonable royalty for the infringing act of saving seed:
At trial, Monsanto’s expert testified that after applying the multi-factor Georgia Pacific test he calculated a reasonable royalty for David’s infringement at $66 per bag. The district court, however, relying on this court’s decision in Ralph, awarded a $55.04 royalty instead. David, 448 F. Supp. 2d at 1093; see Ralph 382 F.3d at 1383. David’s argument that the court should have adopted the technology fee paid on each purchase of Roundup Ready® soybean has come before this court previously in both Ralph and McFarling III. As in those cases, we reject the argument here. Ralph held that the Technology Fee is "not an established royalty for planting . . . saved seed." Ralph, 382 F.3d at 1384. David argues that his case is distinguishable from Ralph due to the fact that there is no evidence that David, unlike Ralph, transferred seed to others. Regardless of any perceived difference in the relative levels of culpability between David and Ralph, our decision in Ralph stands for the fact that the technology Fee is not an established royalty for the infringing act of saving seed. As for the specifics of this case, the district court was within its discretion to rely on the only reasonable testimony presented to it, that of Monsanto’s expert. Furthermore, we do not see how the court’s reduction of the royalty from $66.00 to $55.04 implicates the doctrine of collateral estoppel. We therefore uphold the district court’s finding of a royalty of $55.04 per unit.
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