IP Update, Vol. 10, No. 7, July 2007
July 2007
Patents / Obviousness - Diabetes Blockbuster Drug Survives Post-KSR Obviousness Challenge
Patents / Claim Construction - Broad Claim Scope Survives Despite Single Embodiment Disclosure
**WEB ONLY** Patents / Indefiniteness and Inequitable Conduct - “Near” Is Definite, “About” Is Not
Patents / Claim Construction - Federal Circuit Redefines Undisputed Plain Meaning of Claim Term
**WEB ONLY** Patents / Claim Construction - Agreed Upon Claim Construction Death Knell to Appellant
Trademarks / Oppositions - Use of Word “Chi” (Life Energy) Likely to Cause Confusion
Copyrights/ Infringement - Credit Card Processor Not Liable for Infringement
Patents / Attorney Discipline - Practitioner Tied to Invention Promoter Disciplined
Patents / Legislation - Senate Judiciary Committee Accepts Amendments to Patent Reform Legislation
Patents / Doctrine of Equivalents
Twenty-Year-Old Festo Case Propelled to Its “Foreseeable” Conclusion
By Paul Devinsky
In a case that has been twice to the U.S. Supreme Court and twice to the en banc Federal Circuit in its almost 20-year odyssey, a split panel of the U. S. Court of Appeals for the Federal Circuit has now held that since the accused structure was, in view of prior art provided to the U.S. Patent and Trademark Office (USPTO), foreseeable at the time the patent owner amended its claims, prosecution history estoppel applied and the accused structure was surrendered (as an equivalent) by amendment. Festo Corp. v. SMC Corp., Case No. 05-1492 (Fed. Cir., July 5, 2007) (Dyk, J.; Newman, J., dissenting).
Festo owns a patent directed to a magnetically coupled arrangement for a driven member and a driver member that claims a “small gap” magnetically coupled rodless cylinder. The piston/cylinder was a known (prior art) device for magnetically coupling a driving member to a driver member. The difference between the Festo invention and the prior art was that the gap between the piston and driven member was maintained as small as possible in order to maximize the strength of the magnetic coupling force.
During the initial prosecution, Festo submitted two prior art patents that disclosed a “large gap” rodless cylinder. One of these patents described a sleeve “made of non-magnetic material.”
Festo also amended the application by replacing the original independent claims with a new independent claim that recited “a cylindrical sleeve made of a magnetizable material.” The original claim did not refer to a “sleeve.” The amendments also replaced “sealing means” in the original claim with “first sealing rings located axially outside said guide rings.” The purposes of the amendments were not explained.
SMC’s accused device is also a magnetically coupled rodless cylinder containing a piston, cylinder and driven member. However, in the SMC device the sleeve on the driven member is made of a non-magnetizable material, aluminum alloy. In addition, while the SMC device contains two guide rings (one on each end of the driven member), it only uses one sealing ring. The parties agreed that the accused device does not literally infringe the patent because it does not satisfy either of these two claim limitations. At the district court, after hearing evidence on the “function/way/result” equivalents test, the jury found infringement.
After an initial panel decision affirming the judgment, (“Festo II”), the Supreme Court granted certiorari and remanded to the Federal Circuit for consideration of the prosecution history estoppel question in light of its recently issued Warner-Jenkinson decision (“Festo III”). The Federal Circuit (en banc) held that the amendments were presumed to be related to patentability and therefore created an absolute bar to application of the doctrine of equivalents. Festo VI (See IP Update, Vol. 3, No. 12.) Again the case went to the Supreme Court and again the Supreme Court vacated and remanded, holding that an amendment did not raise a complete bar to equivalents. Rather, there were three exceptions to the bar: where the equivalent was “unforeseeable at the time of the application,” where “the rationale underlying the amendment [bears] no more than a tangential relation to the equivalent in question,” or that “some other reason suggest[s] that the patentee could not reasonably be expected to have described the insubstantial substitute in question.” Festo VIII (See IP Update, Vol. 5, No. 5.)
In a second en banc decision, the Federal Circuit held that rebuttal of the presumption of surrender was a question of law to be tried by a court and not a jury (“Festo X”) (See IP Update, Vol. 6, No. 10 .) With respect to foreseeability, the Federal Circuit concluded that was “a legal question” but held that, because “[b]y its very nature objective unforeseeability depends on underlying factual issues.” The Federal Circuit thus remanded the case to the district court to determine whether an ordinarily skilled artisan would have thought an aluminum sleeve to be an unforeseeable equivalent of a magnetizable sleeve and whether a person of ordinary skill in the art would have considered the accused two-way sealing ring to be an unforeseeable equivalent of the recited pair of sealing rings.
On remand, Festo argued that neither an aluminum sleeve nor a single two-way sealing ring was foreseeable on the date of the amendment. Specifically Festo argued that while aluminum was a well-known option, its utility to provide magnetic field shielding was unknown. According to Festo, its use for that purpose was unforeseeable at the time of the amendment. Regarding the sealing rings, Festo argued that a person of ordinary skill in the art would not have foreseen the SMC structure as “a design option” because a skilled artisan would have though that removing a ring would allow impurities to enter the gap and result in deformation of the tube.
Notwithstanding, the district court found that Festo failed to rebut the presumption for either the magnetizable sleeve or the sealing rings. Festo appealed.
The Federal Circuit affirmed, holding that for purposes of a doctrine of equivalents analysis, foreseeability does not require the applicant to be “aware that a particular equivalent would satisfy the insubstantial differences test or the function/way/result test with respect to the claim as amended.” Rather, so long as the accused structure was a “foreseeable alternative,” prosecution history estoppel applies.
Citing Festo VIII, the Court explained that the Supreme Court “ties foreseeability to whether the applicant would have been expected to know of, and thus properly claim, the proposed equivalent at the time of the amendment.” Thus, the Federal Circuit reasoned that “an equivalent is foreseeable when the equivalent is known in the pertinent prior art at the time of amendment,” rejecting Festo’s argument that the equivalent must be foreseeable under the function/way/result test at the time of the amendment: “We disagree that the foreseeability test requires application of the function/way/result or insubstantial differences test. Rather, we find that an alternative is foreseeable if it is disclosed in the pertinent prior art in the field of the invention. In other words, an alternative is foreseeable if it is known in the field of the invention as reflected in the claim scope before amendment.”
Finally, the Court noted that Festo’s proposed test focuses on the wrong claim: “The question is not whether after the narrowing amendment the alternative was a known equivalent, but rather whether it was a known equivalent before the narrowing amendment. The purpose of an amendment typically is to avoid the prior art. If at the time of the amendment, the equivalent was known in the pertinent prior art, the applicant should not be able to recapture it simply by establishing that a property of the equivalent—irrelevant to the broader claim before amendment—was relevant but unknown with respect to the objectives of the narrower amended claim. In other words, an equivalent that is foreseeable as an alternative to the broader claimed feature does not become unforeseeable simply because the claimed feature is narrowed.”
In dissent, Judge Newman argued that the majority “has confounded the issue” of equivalency “by creating a new an incorrect criterion for the measurement of ‘foreseeability,’ i.e., that an existing structure need not be recognized, or even recognizable, as an equivalent at the time of the patent application or amendment in order to be ‘foreseeable’ if it is later used as an equivalent.” In Judge Newman’s view, the Court’s new rule “further erodes the residue of the doctrine of equivalents.” According to Judge Newman, the majority holding is that “structures can be foreseeable as a matter of law, although the equivalency was unknown in fact.”
Judge Newman objected to the majority’s logic that SMC’s “aluminum alloy shield was retrospectively foreseeable at the time of the amendment because it later was used as an equivalent, although it was not known to be equivalent and would not have been deemed equivalent at the time of the amendment.” In a bon mot likely to be quoted in any further petition Festo might file, Judge Newman observed “hindsight is not foreseeability.”
Diabetes Blockbuster Drug Survives Post-KSR Obviousness Challenge
By Astrid R. Spain
Addressing the issue of obviousness of a chemical compound over a structurally similar prior art compound in a post-KSR world, the U.S. Court of Appeals for the Federal Circuit upheld a district court decision that the patented invention—the blockbuster diabetes drug ACTOS®—was unobvious. Takeda Chem. Indus. et al. v. Alphapharm et al., Case No. 06-1329 (Fed. Cir., June 28, 2007) (Lourie, J.).
Thiazolidinediones (TZDs) are a class of drugs that act as insulin sensitizers. The TZD compound pioglitazone is the active ingredient in Takeda’s ACTOS®, which is used to control blood sugar in patients who suffer from Type 2 diabetes. Takeda owns U.S. Patent No. 4,687,777 (the ’777 patent), entitled “Thiazolidinedione Derivatives, Useful As Antidiabetic Agents.” Claim 1 of the ’777 patent claims a genus of compounds, while claim 5 claims pharmaceutical compositions containing that genus of compounds. The critical portion of the claimed compound structure is a ring structure referred to as an ethyl-substituted pyridyl ring. The claimed formula covers four possible compounds with an ethyl substituent located at the four available positions on the pyridyl ring. The formula includes the 3-ethyl compound, 4-ethyl compound, 5-ethyl compound (pioglitazone) and 6-ethyl compound. Claim 2 of the ’777 patent covers the single compound pioglitazone.
Alphapharm, a generic drug manufacturer, filed an Abbreviated New Drug Application (ANDA) for a generic version of pioglitazone along with a Paragraph IV certification asserting that the ’777 patent is invalid as obvious under 35 U.S.C. § 103. In response, Takeda brought an infringement action against Alphapharm to market generic pioglitazone. Alphapharm advanced its invalidity argument, asserting that the claimed compounds would have been obvious at the time of the alleged invention. Alphapharm’s obviousness contention rested entirely on a prior art TZD compound that was referenced in Table 1 of the ’777 patent as compound b, a compound structurally similar to pioglitazone. After a bench trial, the district court concluded that Alphapharm failed to make a prima facie case that compound b rendered pioglitazone obvious.
On appeal, Alphapharm argued that the Supreme Court’s recent decision in KSR v. Teleflex, as well as the Federal Circuit’s recent decision in Pfizer v. Apotex, mandated reversal. Alphapharm contended that the district court had erred as a matter of law (relating to the obviousness of chemical compounds) in holding that the ethyl-substituted TZDs were non-obvious in light of the closest prior art compound, compound b. The Federal Circuit rejected this contention, noting that in chemical cases “normally a prima facie case of obviousness is based upon structural similarity, i.e., an established structural relationship between a prior art compound and the claimed compound,” but additionally requires “a showing that the prior art would have suggested making the specific molecular modifications necessary to achieve the claimed invention.” The Federal Circuit noted that its test for prima facie obviousness for chemical compounds is consistent with the legal principles enunciated in KSR.
The Court acknowledged that in situations involving a need to solve a problem that has a finite number of predictable solutions, a skilled person has good reason to pursue these known options. In such circumstances, the Court noted, the fact that a combination may be obvious to try can be sufficient to show it was obvious. The Court distinguished the present case, noting that rather than identify predictable solutions for diabetes treatment, the prior art disclosed a broad selection of compounds any one of which could have been selected as a lead compound for further investigation.
Pointing Out Nonexistence of Written Description Sufficient to Shift Burden to Applicant
By Kevin Roddy
Reversing a district court decision, the U.S. Court of Appeals for the Federal Circuit recently held that by complying with MPEP § 2163.04(I)(B), and thus with the Court’s decision in Alton, the U.S. Patent and Trademark Office (USPTO) met its burden to provide a prima facie case of a lack of written description, thus shifting the burden to the applicant. Hyatt v. Dudas, Case No. 06-1171 (Fed. Cir., June 28, 2007) (Michel, C. J.).
Hyatt filed numerous patent applications and continuation applications since the 1970s. Five of these cases were at issue, all continuation applications that could be traced back for decades that shared the same specification and that generally claimed devices comprising various combinations of electronic components. During prosecution, Hyatt withdrew all of the original claims and substituted over 1,100 new claims based on the same specification. The examiner initially rejected a number of these claims for failing to comply with the written description requirement.
The Court noted that a statement of a prima facie case of failure to comply with § 112 “need not be a full exposition on every conceivable deficiency of a claim.” Rather, its purpose is simply to provide “sufficient notice to the applicant to facilitate his effective submission of information.” The Court reasoned that the applicant is in the best position to provide information about the purported invention, and the USPTO’s authority to shift the burden to obtain this information is crucial to ensure that the patent office is not making patentability determinations on insufficient facts and information. The Court cautioned that “this is not to say that the [US]PTO can reject a complex claim with numerous limitations by summarily declaring that no written description exists.” However, the Court noted that, when no such written description can be found in the specification, the only thing the USPTO can reasonably be expected to do is to point out its nonexistence.
The Federal Circuit found that Hyatt was clearly notified of what the examiner felt was missing by the way of written description. For example, in rejecting one of the claims, the examiner was explicit in stating that, while each element may be individually mentioned in the specification, the deficiency was the lack of adequate description of the claimed combination. Thus, the burden of persuasion was shifted to Hyatt to cite where adequate written description was found, or make an amendment to address the deficiency. Because Hyatt failed to comply with the USPTO’s requirement at the appropriate time, the claims were properly rejected.
Broad Claim Scope Survives Despite Single Embodiment Disclosure
By Leonid G. Mikityanskiy
Holding that a patentee is entitled to claim scope covering an entire class of devices based on the patent disclosure describing one device of the class, the U.S. Court of Appeals for the Federal Circuit reversed the grant of summary judgment of non-infringement based on a district court’s narrow claim construction, but remanded for further consideration of claim enablement and validity. The Saunders Group, Inc. v. Comfortrac, Inc., Case No. 06-1576 (Fed. Cir., June 27, 2007) (Bryson, J.).
Plaintiff Saunders manufactures cervical traction devices and competes with defendants in the marketplace. Saunders owns a patent directed to a portable cervical traction device and alleged that the defendants were infringing it. The district court granted a summary judgment of non-infringement, construing the claims to be requiring inclusion of at least one pressure-activated seal. The district court arrived at this narrow construction because the patent specification disclosed a single embodiment using the seal and because all of the claims in the parent application explicitly recited this limitation. Saunders appealed.
The Federal Circuit reversed, holding that based on the intrinsic claim construction evidence (the claim language, the specification and the prosecution history) the district court’s construction was impermissibly narrow. With regard to the doctrine of claim differentiation, which gives rise to a presumption that a limitation added in a dependent claim is not present in the independent claim, the Court held that the district court’s inclusion of at least one pressure activated seal as a limitation in the independent claims of the patent was incorrect, because the limitation was omitted from some independent claims while included in other independent and dependent claims. Next, looking at the patent specification, the Court concluded that the specification did not indicate that a pressure-activated seal was the only way to practice the invention. Thus, the Court concluded the invention, as disclosed, was not limited to the single embodiment described.
Next the Court looked to the prosecution history and concluded that there was nothing in the prosecution history to require that the claim term “pneumatic cylinder” be limited to pressure-activated seals, nor was the ordinary meaning of the term so narrow. Furthermore, the Court noted that when the continuation application that matured into the patent was filed, the limitation direct to pressure activated seal was omitted from some of the new claims. The Court found this to be a strong indication that the claims lacking the limitation were not intended to be so limited. Finally, the Court noted that in a Petition to Make Special Saunders had identified the accused device as infringing even though it lacked a pressure-activated seal.
After construing the claims broadly, the Court noted that in the event the specification is found to be too narrow to support the broad claims validity may be an issue on remand. However the Court instructed that the possible invalidity should not be used by the district court to construe the claims narrowly.
Practice Note: This case is a reminder that when possible, prosecutors should include in their patent specifications sufficient disclosure to support multiple embodiments. Securing patent protection of a broad claim while disclosing only a single embodiment is typically an uphill battle especially where the involved field of technology is relatively new and unpredictable.
Omitting Description of “Well Known” Corresponding Structure Leads to Indefiniteness
Contact: Paul Devinsky
The U S. Court of Appeals for the Federal Circuit has now held a claim to be invalid as indefinite where the patent specification failed to disclose corresponding structure for a “means-plus-function” claim element, even though the patent specification disclosed that the stated function may be accomplished by “known … equipment.” Biomedino, LLC v. Waters Technologies Corp., Case No. 06-1350, (Fed. Cir., June 18, 2006) (Archer, Sr. J.).
Biomedino’s patent generally relates to methods and devices for determining the presence of psychoactive drugs in biologic samples, e.g., blood. The device claims at issue recited “valving” and “control means for automatically operating said valving.” The specification contained a figure having box labeled “Control,” and the written description taught that the regeneration process may be “controlled automatically by known different pressure, valving and control equipment.”
After finding that the term “control means” was a means-plus-function limitation subject to §112, ¶6, the district court held that the claims containing this limitation were indefinite because the specification did not recite corresponding structure. Biomedino appealed.
The Federal Circuit affirmed, agreeing with the district court that the claimed “control means” was a means-plus-function limitation. The Court then inquired as to whether “sufficient corresponding structure” is disclosed where the specification simply states that a claimed function can be performed by known methods or using known equipment and where the prior art of record and the testimony of experts suggest that known methods and equipment in fact exist.
In answering “no,” the Court noted that for claim limitations subject to § 112, ¶ 6, “[t]he inquiry is whether one of skill in the art would understand the specification itself to disclose a structure, not simply whether that person would be capable of implementing a structure.” As such, “a bare statement that known techniques or methods can be used does not disclose structure.”
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Patents / Indefiniteness and Inequitable Conduct
“Near” Is Definite, “About” Is Not
By Karen Stoffan
In a claim construction reversal, the U.S. Court of Appeals for the Federal Circuit dutifully performed a Phillips analysis, considering the intrinsic claim construction evidence. In doing so, the Court reversed the lower court’s determination that the term “near” was indefinite. William P. Young v. Lumenis, Inc., Case No. 06-1455 (Fed. Cir., June 27, 2007) (Lourie, J.).
Dr. Young invented a surgical method of declawing a cat using lasers (feline onychectomy). Lumenis is a manufacturer, seller and distributor of surgical laser instruments that were allegedly used to perform Young’s patented surgical procedure.
Young filed an infringement suit, and Lumenis countered with an inter partes reexamination. After the U.S. Patent and Trademark Office (USPTO) issued an office action rejecting the claims, the district court found the patent invalid and unenforceable.
In particular, the district court found the claim term “near” recited in the phrase “forming [an] incision in the epidermis near the edge of the ungual crest” to be indefinite. Although the district court roughly understood its meaning, it nevertheless found the term to be indefinite because it “fails to distinguish the invention over the prior art and does not permit one of ordinary skill to know what activity constitutes infringement.”
The Federal Circuit reversed—noting again that claims are indefinite only when they are “not amenable to construction or are insolubly ambiguous.” An indefiniteness ruling necessarily requires claim construction and examination of any intrinsic evidence. Here, the Court found that the intrinsic evidence (a drawing and reference in the specification to cat-sized measurements) resolves the meaning of the term. Noting that the potential error range of “about” was quite wide, the court distinguished the present case from Amgen (a case in which the Court found the term “about” to be indefinite); in that case the term had been added to the claims post-filing. Here, the Court explained the term “near” describes a location on an animal, as opposed to a precise numerical measurement, and that in this case it was appropriate because the size of the appendage and the amount of skin required to be incised will vary from animal to animal based on the animal’s size.
The Court also disagreed with the lower court’s finding of inequitable conduct—finding that Young’s late submission of deposition statements cured any potential problem: “The essence of the duty of disclosure is to get relevant information before an examiner in time for him to act on it, and that did occur here.” Allegedly misleading statements made in response to an office action were viewed by the Court as attorney argument in an effort to distinguish the claims from the prior art; not gross mischaracterizations or unreasonable interpretations of the prior art reference.
Practice Note: An alleged omission can be cured with a timely submission, i.e., one where the examiner has time to act on it.
Federal Circuit Redefines Undisputed Plain Meaning of Claim Term
By Evan A. Parke
Addressing the common claim construction issue of whether a claim term should construed consistent with its plain meaning or limited to a disclosed embodiment, the U.S. Court of Appeals for the Federal Circuit redefined a claim term having an undisputed plain meaning and limited it to the disclosed embodiment. Honeywell Int'l, Inc. v. Universal Avionics Systems Corp., Case Nos. 06-1406, -1435 (Fed. Cir., July 3, 2007) (Bryson, J.; Plager, J., dissenting).
The patent-in-suit pertained to aircraft navigational systems for warning airplane pilots of potentially hazardous flight conditions. At issue was the construction of the claim term “heading of the aircraft,” specifically the definition of the word “heading.” It was undisputed that the word “heading” carried a distinct meaning in the art of navigation; i.e., the direction in which an aircraft is pointed. While Figure 5, which was described in specification as an “important feature” of the invention, disclosed a “bearing”-related computation, with “bearing” having its own, distinct meaning in the art (the direction from a fixed observer to the aircraft) the specification lacked any embodiment showing how the “heading” of the aircraft could be computed. Thus, the district court construed the term “heading” to mean “bearing.”
The Federal Circuit affirmed. In redefining “heading” to mean “bearing,” the Federal Circuit relied upon the bearing-related computations set forth in Figure 5 and the emphasis in the specification that this was an “important feature” of the present invention. The Court found this to be “clear” evidence of what was intended by the term “heading,” noting that, under Federal Circuit law, a term may be redefined in a particular manner for the purposes of a patent without an explicit statement of redefinition. The Court further noted that, had “heading” not been redefined as “bearing,” the disclosed embodiment would not have related to any limitation of the claimed invention.
Practice Tip: Honeywell drives home the importance of the specification in a post-Phillips world. It also shows that, where a single embodiment is disclosed in the specification, the claims may be so limited, regardless of whether the claim language at issue has an undisputed plain meaning alternative to, and not reading upon, the disclosed embodiment. Sometimes this will work to the patentee’s advantage, sometimes not. However, in general, it is advisable to avoid drafting applications in which a single embodiment is disclosed and unclaimed features of that embodiment are described as being an important feature of the present invention. Under Honeywell, the claims may nevertheless be “redefined” and limited to the disclosed embodiment.
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Patents / Claim Construction
Agreed Upon Claim Construction Death Knell to Appellant
By André De La Cruz
The U.S. Court of Appeals for the Federal Circuit, affirming a district court’s grant of summary judgment of patent non-infringement, held that the parties’ previously stipulated claim term definitions prevented the patentee from subsequently attempting to broaden the terms. Hutchins v. Zoll Medical Corp., Case No. 06-1539 (Fed. Cir., July 3, 2007) (Newman, J.).
Hutchins, appearing pro se, asserted his “CPR Computer Aiding” patent against Zoll Medical. The patent was directed to “an interactive computer-directed system” used to guide emergency service personnel in the proper administration of CPR and was claimed as a “general purpose computer” (GPC) having an “interactive display input.” The system prompts emergency personnel to enter the victim’s age and state of consciousness, and, in response, “provides detailed step-by-step procedures” to administer cardiopulmonary resuscitation (CPR). The Zoll device, on the other hand, used a RISC (reduced instruction set computer) processor having limited functionality that would not qualify as a GPC. It “requires no input from the rescuer” and merely monitors the victim’s heart in order to determine whether CPR or defibrillation was necessary. Based on the agreed definitions of a “general purpose computer” (a computer capable of running multiple unrelated programs and having a GPC architecture) and “interactive display unit,” the district court ruled that neither term could be found by a reasonable jury to be present in the Zoll device and granted summary judgment of non-infringement. Hutchins appealed.
The Federal Circuit affirmed, preventing Hutchins from broadening the agreed-to construction of the term “general purpose computer” to encompass a RISC-based system since the phrase was added during prosecution in response to a U.S. Patent and Trademark Office (USPTO) rejection. The Federal Circuit noted that every claim of the patent required a “general purpose computer system,” and found it “implausible” for a RISC to be regarded as a “general purpose computer.”
Equally, the Federal Circuit affirmed the lower court’s summary judgment determination on the term “interactive display input.” As described in the patent, emergency service personnel must manually input characteristics of the victim prior to receiving corresponding instructions. The Zoll device, however, does not require emergency personnel to enter any such information. Rather, the accused device was a passive device that provided information to personnel based on information it passively acquired.
Patents / Appellate Jurisdiction
Appellate Jurisdiction Lacking in Appeal of Preliminary Injunction Contempt Order
By Eric Hinkes
Addressing the issue of whether a district court erred in finding an appellant in contempt for violating an injunction that prohibited infringement of the plaintiff’s patent and in the same order dissolved the injunction based on newly raised claims of the patent’s invalidity, the U.S. Court of Appeals for the Federal Circuit dismissed the appeal of the contempt ruling for lack of jurisdiction and held that the district court properly dissolved the injunction. Entegris, Inc. v. Pall Corp., Case No. 06-1374 (Fed. Cir., June 13, 2007)(Moore, J.).
Entegris, now d.b.a. Mykrolis, initially brought suit against Pall alleging infringement of two patents related to liquid filters used in the semiconductor industry. The district court granted Mykrolis’ motion for a preliminary injunction, but Pall then commenced selling a modified version of the filter. After subsequent motions by the parties, the district court held Pall in contempt for violating the junction but, in the same order, dissolved the injunction based, in part on a newly raised invalidity challenge to the asserted patents.
On appeal, Pall argued that the district court’s finding of contempt was improper and that the Federal Circuit had jurisdiction over its appeal of the contempt order as an interlocutory appeal under §1292(a). The Federal Circuit, citing Supreme Court precedent, narrowly construed §1292(a), stating that the contempt order Pall appealed did not grant, continue, modify, refuse or deny an injunction, nor did it refuse to dissolve or modify an injunction. To the contrary, the Federal Circuit noted that the district court expressly indicated that it was not modifying the original injunction when it found that Pall’s sales were a violation. Because the contempt order was only an interpretation of the preliminary injunction and not a “modification” of the injunction within the meaning of §1292(a), the Court concluded that it lacked appellate jurisdiction. Furthermore, the Court explained that the contempt order cannot be characterized as “continuing” the preliminary injunction within the meaning of §1292, because it did not prolong, extend, or in any other way impact its duration. As the contempt order did not fall into any of the enumerated categories of appealable interlocutory orders under §1292(a), and because Pall did not sufficiently allege that it would face “irreparable consequence” if it was unable to appeal the contempt order at this time, the Federal Circuit held that it did not have jurisdiction over Pall’s appeal.
The Federal Circuit also held that it did not have jurisdiction over Pall’s appeal under the final judgment statute, §1295(a). Under §1295(a), parties may only appeal final decisions of a district court, defined by the Supreme Court as a decision that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. Although Pall argued that the contempt order was final within the meaning of §1295(a), because a fine had been assessed against it that must be paid immediately, the Federal Circuit rejected the notion that a civil contempt order is final. Rather, the Court reasoned that the district court order holding Pall in contempt for violating the preliminary injunction did not end the litigation on the merits as it remained pending. Thus, the Federal Circuit held that it did not have jurisdiction over Pall’s appeal pursuant to 28 U.S.C. §1295(a).
Lastly, the Court addressed Pall’s argument that it may properly exercise pendent or ancillary jurisdiction over its appeal of the contempt order because it has jurisdiction over Mykrolis’ cross-appeal of the dissolution of the preliminary injunction. However, the Court stated that exercising pendent jurisdiction is not appropriate because the contempt order was not “inextricably intertwined” with the remaining appealed issues.
Use of Word “Chi” (Life Energy) Likely to Cause Confusion
By Han (Jason) Yu
Addressing whether confusion is likely between two stylized marks containing the word “chi” (which means vital energy and vital force in Chinese thought and medicine), the U.S. Court of Appeals for the Federal Circuit reversed the decision of the Trademark Trial and Appeal Board (the Board) and found that confusion is indeed likely. China Healthways Institute, Inc. (d.b.a. Chi Institute) v. Xiaoming Wang, Case No. 06-1464 (Fed. Cir., June 22, 2007) (Newman, J.).
China Healthways makes and sells electric therapeutic massagers under the mark CHI and owns a federal trademark registration for the same. Xiaoming Wang applied to register the mark CHI PLUS for “electric massage apparatus” and the application was opposed by China Healthways. It is undisputed that China Healthways has priority and that the parties’ goods are virtually identical. Relying on the known meaning of the word “chi,” the Board concluded that “CHI” is at least highly suggestive, if not merely descriptive, when used on electric massagers and, therefore, a weak component of the marks. The Board went on to deny China Healthways’ opposition distinguishing the marks based on their other components—specifically, the stylized letter “I” in China Healthways’ mark, and the additional word “PLUS” in Wang’s mark. China Healthways appealed.
The Federal Circuit reversed the Board, concluding that “CHI” is a significant component of the marks when viewed in their entirety and must be given appropriate weight. While accepting its meaning in Chinese traditional medicine, the Court observed, the word “chi” does not mean an electric therapeutic massager. The Court also declined to view the differences between the marks as sufficient to avoid confusion and was critical of the fact that the Board dissected the marks by eliminating portions thereof and then simply compared the residue. The Court questioned such methodology, particularly in light of the identity of the goods, the identity of the intended consumers and the identity of the channels of trade. In addition, citing the DuPont factors, the Court found that the Board should have considered the evidence of actual confusion presented by China Healthways, as well as the fact that China Healthways has sold tens of thousands of electric massagers with the CHI mark, whereas Wang had only recently entered the market. Evidence of large sales volume, the Court noted, is relevant because one of the DuPont factors is the fame of the prior mark, as measured by volume of sales, advertising and length of use.
Practice Note: When goods in question are identical, a lesser degree of similarity between marks is required for finding likelihood of confusion. Also, marks should be compared in their entirety; dissecting marks is generally not the correct method.
Credit Card Processor Not Liable for Infringement
By Paul Devinsky
In a split decision, a panel of the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s holding that companies that process credit card payments, even for internet pirates, are not liable for contributory copyright infringement or for inducement. Perfect 10, Inc. v. Visa International Service Association, Case No. 05-15170 (9th Cir., July 3, 2007) (D. Smith Jr., J.; Kozinski, J., dissenting).
Perfect 10, publisher of “adult” material including photographs of “natural” models, sent defendants notices specifically identifying websites selling pirated photographs and informed defendants that their cards were used to purchase infringing images. The defendants took no action in response to the notices. Perfect 10 filed suit alleging contributory and vicarious copyright infringement, as well as inducement. The defendants moved to dismiss under FRCP 12(b)(6). The district court granted the motion. Perfect 10 appealed.
Citing to its own decision in Perfect 10 v. Amazon.com (IP Update, Vol. 10, No. 6), the Ninth Circuit noted that a defendant is a contributory infringer if it has knowledge of a third party’s infringing activity and “induces, causes, or materially contributes to the infringing conduct.” In an internet context, the Ninth Circuit—citing to Grokster (2005), (IP Update Vol. 8, No. 6)—noted that a defendant who “engages in personal conduct that encourages or assists the infringement” may be liable for contributory infringement. Analogizing to the patent law concept of “inducement,” the Court (citing to its Amazon.com decision), noted that “[o]ne infringes contributorily by intentionally inducing or encouraging direct infringement.” It continued by stating that “an actor may be contributorily liable [under Grokster] for intentionally encouraging direct infringement if the actor knowingly takes steps that are substantially certain to result in such direct infringement.”
The panel noted “to find that Defendants’ activities fall within the scope of the test for contributory infringement would require a radical and inappropriate expansion of exiting principles of secondary liability and would violate the public policy of the United States.” The Court dismissed Perfect 10’s argument that by continuing to process credit card payments to the infringing websites despite having knowledge of ongoing infringement, the defendants induce, enable and contribute to the infringing activity in the same way the defendants did in Napster and Grokster. The Ninth Circuit reasoned that the credit card companies cannot be said to materially contribute to the infringement because “they have no direct connection to that infringement,” i.e., to the reproduction, alteration, display and distribution of Perfect 10’s images over the internet. The panel further noted that unlike the Amazon.com and Grokster cases, none of the defendants’ systems were used to locate or obtain the infringing images. (Responding to Judge Kozinski’s dissent, the majority noted that search engines such as Google and payment systems such as Visa are not equivalents for purposes of preventing further infringement upon notice, since in the former case, it is the search engine itself that assists in the distribution of infringing content.
In Grokster, the Supreme Court applied the patent law concept of "inducement” to a claim of contributory infringement against a file-sharing program. The court found that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”
The Court noted that the Supreme Court in Grokster announced that the standard for inducement liability is providing a service “with the object of promoting its use to infringe copying,” but that “[m]ere knowledge of infringing potential or actual infringing uses would not be enough … to subject [a defendant] to liability.” Rather, the Court opined that inducement “premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.” Moreover, to establish inducement liability, it is crucial to establish that the distributors “communicated an inducing message to their … users,” the classic example of which is an “advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations.” Absent factual allegations to support such elements, the Ninth Circuit found dismissal of the inducement claim to be proper.
Vicarious Liability
“Vicarious” infringement is a concept related to contributory infringement, but based on the agency principles of respondeat superior. To state a claim for vicarious copyright infringement, a plaintiff must allege that the defendant has the right and ability to supervise the infringing conduct, as well as a direct financial interest in the infringing activity. The Court, analogizing the conduct here to that of Google in the Amazon.com case, concluded that Perfect 10 failed to state a claim for vicarious copyright infringement.
In Amazon.com, the Ninth Circuit found that Google had the ability to control its own index, search results and web pages, but not the right to control the infringing acts of third parties. Moreover (noted the majority), “the Amazon.com court rejected a vicarious liability claim based on Google’s policies with sponsored advertisers, which state that it reserves the right to monitor and terminate partnerships with entities that violate others’ copyright[s].”
Here, the majority found that even though the defendants “could likely take certain steps that may have the indirect effect of reducing infringing activity,” the defendants could not control that activity, and the “mere ability to withdraw a financial ‘carrot’ does not create the ‘stick’ of right and ability to control that vicarious infringement requires.”
Dissent
In dissent, Judge Kozinski disagreed with the majority on the issue of contributory infringement, concluding the Amazon.com decision requires such a finding for Perfect 10 since the defendants transaction processing “is not just an economic incentive an essential step in the infringement process.” The dissent also takes issue with a majority’s justification that “infringement could continue on a large scale [without the aid of the defendant] because other viable … mechanisms are available,” noting that the same justification, if applied in Amazon.com should have absolved Google of liability because of the obvious availability of alternatives.” (In the Amazon.com case, that issue was remanded to the district court.)
Rather, in the view of the dissent, the “material assistance” issue (for contributory infringement) turns on whether the activity in question “substantially assists” infringement.
The dissent also takes on the majority on the issue of vicarious liability, noting that the defendants “have a right to stop or limit the infringing activity, a right they have refused to exercise.”
Tasini Retroactively Nips Greenberg v. National Geographic Copyright Claim
By Natalie A. Ward
More than six years after its initial decision in this case, the U.S. Court of Appeals for the Eleventh Circuit overruled a remand judgment in favor of a copyright infringement claimant whose print photos were reproduced in an electronic format in a National Geographic anthology. Greenberg v. Nat’l Geographic Society, Case No. 05-16964 (11th Cir., June 13, 2007) (Trager, D.J.).
Plaintiff Greenberg’s freelance photos were published in four issues of the magazine National Geographic. Following initial publication, Greenberg regained copyright ownership. National Geographic regularly reproduced its issues in bound volumes, microfiche and microfilms. In 1997, it released CNG, a CD-ROM set containing a page-by-page electronic version of each of the approximately 1,200 issues published from 1888 through 1996. CNG included and introductory sequence comprised of a Kodak advertisement, a moving display of the National Geographic logo and a short slide-show of 10 selected issue covers, including a cover photo taken by the plaintiff.
After National Geographic secured a copyright registration for the collective work in 1998, Greenberg filed a suit claiming that CNG infringed his copyrights in his individual photos. On summary judgment, the district court dismissed Greenberg’s claim, finding that, since § 201 of the Copyright Act grants the copyright in a collective work to its publisher, the defendants enjoyed the right to publish a revision of the originally-licensed work regardless of Greenberg’s copyright in his individual contributions. In early 2001, the Eleventh Circuit reversed, holding that the CNG compilation constituted “a new product ‘in a new medium, for a new market,’” and directed the district court to enter judgment for Greenberg. A jury awarded Greenberg a willful infringement verdict of $400,000 ($100,000 per work). The National Geographic Society (NGS) appealed
Later in 2001, the Supreme Court issued its decision in Tasini v. New York Times, (IP Update, Vol. 4, No. 7), a case involving copyright claims by freelance authors whose works were reproduced in electronic databases that allowed users to retrieve isolated articles, separate and apart from the original or revised periodical context. In Tasini, the Supreme Court, invoking the concept of “media neutrality,” held that a “transfer of work between media does not alter the character of that work for copyright purposes.” The Supreme Court implied that microfiche and microfilm reproductions, which presented the works in context, were privileged under §201, but refused to attach the privilege to the electronic databases, which could not be considered mere reproductions or revisions of the collective work. The Greenberg case subsequently lay quiet for several years until a separate group of freelance photographers sued NGS. In that case (Faulkner v. National Geographic), the district court found that the Eleventh Circuit decision in Greenberg had been effectively overruled by the Supreme Court in Tasini. The district court perceived the Tasini decision to be intervening case law negating the Eleventh Circuit Greenberg decision.
The decision in the Faulkner case forced the Eleventh Circuit to reconsider its decision in the Greenberg case. On review, the Eleventh Circuit proceeded, under the framework of Tasini (which focused on user perception of the works and whether “the original context of the collective work ha[d] been preserved in the revision” or media transfer) and found that the § 201 privilege attached to the database, which preserved the original context of the magazines. The Court found that the amendment of a 25-second introductory sequence to the voluminous database material did not “so alter the collective work so as to destroy its original context.”
The Court vacated the jury’s willful infringement verdict and remanded the case to the district court for retrial.
**WEB ONLY**
Copyrights / Originality and Infringement of Compilations
Yacht Compilation Displayed Enough Creative Spark to Warrant More Protection
By Sudip Kundu
Affirming a district court’s denial of defendants’ motion for judgment as a matter of law and jury instruction on copyright infringement, the United States District Court for the Eleventh Circuit further articulated the originality requirement and standard for infringement of copyrights with respect to compilations. BUC Int’l Corp., v. Int’l Yacht Council Limited, Case No. 04-13653 (11th Cir., June 21, 2007) (Tjoflat, J).
The work at issue was the “Standard Listing Form and Format” (the Format) used in connection with a multiple listing service (MLS) of recreational boats and yachts called BUCNET. This service included a computer network and software that allowed brokers to share, compare, search and track the status of vessel listings stored in plaintiff’s database. The Format was created to facilitate the presentation of information on BUCNET, and the plaintiff obtained a copyright in the “compilation, selection and organization of [the BUCNET] database.” The plaintiff later sued for copyright infringement upon learning that over 4,400 listings on defendants’ MLS replicated BUCNET listings. The case was tried to a jury, which found for the plaintiff.
On appeal, the defendants argued that BUCNET’s compilation of vessel listings lacked originality because, inter alia, the Format did not survive application of the merger doctrine, which holds that, when there are so few ways of expressing an idea, not even the expression of the idea is protected by copyright. The Court explained that the merger doctrine therefore operates as an exception to the normal idea-expression dichotomy, i.e., “copyright normally protects the expression of ideas, but not the ideas themselves”.
The defendants argued that the vessel listings lacked originality because there were so few ways of effectively describing the “idea of dividing vessel listings by rooms, functional and aesthetic features of the vessel.” The Court rejected this argument, stating that the defendants’ definition of the “idea” followed the contours of the chosen expression (i.e., the plaintiff’s vessel listings). According to the Court, defining expressions in this manner was an attempt to “cast the idea and the expression as one.” Doing so, however, would “swallow up the idea-expression dichotomy, and the merger doctrine would become the rule instead of the exception.” Instead, the Court stated that the “idea” was to “present yacht brokers with information about boats,” and the evidence at trial demonstrated that plaintiff’s way of expressing this idea was one of many different ways. Accordingly, the merger doctrine did not apply to plaintiff’s listings.
Next, the defendants argued that the district court erred when it instructed the jury that it could find copyright infringement if there were “substantial similarities” between the original elements of the plaintiff’s compilation and the corresponding elements of the defendants’ compilation. Rather, the jury should have been instructed that to find copyright infringement, it had to find that the allegedly infringing elements were “virtually identical” to plaintiff’s original elements. The Court acknowledged that the “substantial similarity” standard imparted a narrow construction in the case of compilations. The Court, however, noted that the “virtual identicality” standard, which “called for a greater degree of similarity between the copyrighted work and the allegedly infringing work” than the “substantial similarity” standard, did not apply to compilations. Instead, the “virtual identicality” standard applied to “claims of copyright infringement of nonliteral elements of a computer program. Here, the plaintiff was not claiming infringement in the selection or arrangement embodied in a screen display or some other nonliteral element of its computer program and the district court did not err in instructing the jury on the “substantial similarity” standard.
Practitioner Tied to Invention Promoter Disciplined
By Cameron K. Weiffenbach
The U.S. Court of Appeals for the Federal Circuit upheld disciplinary action by the U. S. Patent and Trademark Office (USPTO), excluding from practice a practitioner who acted in concert with an invention promoter so that the invention promoter would not have to honor a money-back guarantee to inventors. Bender v. Dudas, Case No. 06-1243 (Fed. Cir., June 21, 2007) (Linn, J.).
The licensed practitioner, Mr. Bender, prosecuted patent applications on behalf of customers of American Inventors Corporation (AIC), an invention promoter. Through advertising, individual inventors would contact AIC and provide invention disclosures. For a fee, AIC would do a patent search. The search results were invariably positive and the inventors were told by AIC’s sales personnel that their idea should be patented. The inventor was then enticed by AIC sales personnel to sign a contract with AIC and pay a flat fee in exchange for AIC’s promise to promote the invention to manufacturers and to pay legal fees associated with prosecuting a patent application.
Most of the inventors using AIC’s services were unfamiliar with the basics of patent law and the patent system. The contract included a guarantee to refund 100 percent of the fee paid by the inventor if a patent was not procured. The contract did not specify the type of patent that would be obtained, i.e., utility or design. According to past employees of AIC, it was AIC’s general policy and practice was to conceal the differences between these types of patents, mainly because if the invention disclosure did not merit a utility patent application, a design patent application would be filed on the device or article.
After a contract was signed, the inventor’s disclosure was sent to a patent attorney, Mr. Gilden. To ensure ornamentation, it was Gilden’s practice to have his draftsman add decorative ornamentation or surface indicia to the drawings. Almost all inventors signed the applications with the added embellishment. AIC personnel would file the design patent applications using Gilden’s registration number. In 1993, the USPTO brought a disciplinary action against Gilden because he failed to explain to inventors the difference between design and utility patents and because he failed to add his draftsman as a co-inventor in those applications with added embellishments. After the USPTO initiated the disciplinary action, AIC contacted another attorney, Bender, to take over prosecution of Gilden’s applications already on file.
Bender wrote letters to each of Gilden’s applicants that included a brief discussion of the differences between a design and utility patent. As for those applications with the added embellishments, Bender filed amendments to remove the added indicia.
Eventually the USPTO successfully brought a disciplinary action against Bender, based on the design patent application switch. On appeal the Court agreed there was substantial evidence that Bender neglected a legal matter by continuing to prosecute design applications knowing that the inventor wanted a utility patent application instead. The Court further found Bender’s discussion of the difference between design and utility patents in his letter to Gilden’s applicants to be “an entirely hollow and formalistic gesture” because it did not advise the inventor of the type of patent best suited to protect the inventor’s invention and that Bender’s motive for not advising the inventor was, according to the Court, “driven in large measure if not entirely by AIC’s money-back guarantee.”
Moreover, the USPTO found that Bender improperly failed to advise inventors of final rejections until after the three-month shortened statutory period had expired. Bender admitted the delay, but argued that he was awaiting a decision in a test case to determine if deletion of ornamentation from a file patent drawing constituted new matter. According to the Court, "[w]hile such an explanation might justify advising the client to seek an extension of time … or a stay of proceedings pending resolution of the test case, it does not justify an absolute failure to notify the client at all that a final rejection had issued, let alone the response needed.”
Further, the USPTO found that Bender did not get the consent of his client after “full disclosure,” including the extent of his relationship with AIC, and also failed to explain the money-back guarantee and disclose the amount he was being paid by AIC. The Court agreed with the USPTO that Bender’s financial relationship with AIC created a conflict of interest. Bender was compensated by AIC, a fact that the USPTO found affected his professional judgment on behalf of the client. While the Court noted that the term “full disclosure” was undefined, it deferred to the USPTO interpretation of the term.
Finally, the USPTO found that Bender engaged in conduct prejudicial to the administration of justice. This is a catch-all ground for disciplinary actions. In Bender’s case, the Court agreed with the USPTO that he was evasive in his answers to the USPTO’s requests for information with respect to his financial relationship with AIC.
Bender also challenged the authority of the USPTO to discipline him, arguing that it exceeded its authority under the patent statutes and that the USPTO’s request for information lacked procedural safeguards. The Count easily dismissed this argument, noting that the disciplinary rules were well within the scope of §§ 2(b)(2)(D), 32 patent statutes and that the request for information “not only assists the agency in gathering facts, it also protects practitioners by providing them with an opportunity to explain any questionable conduct and present reason why disciplinary proceedings are not warranted.”
Senate Judiciary Committee Accepts Amendments to Patent Reform Legislation
By Rita Weeks and Paul Devinsky
During late June and early July 2007, it was two steps forward one step back insofar as the Senate Judiciary Committee’s consideration of patent reform is concerned. The committee did adopt two major amendments to the Patent Reform Act of 2007 (S. 1145) and reported out the bill. The House Judiciary Committee has also reported out as version of “substitute” text bill (H.R. 1908) having several substantive changes compared to the original house bill.
During its markup on June 21, 2007, the Senate Judiciary Committee unanimously adopted Senator Patrick Leahy’s Manager’s (D-Vt.) Amendment. Among other things, the Manager’s Amendment effectively requires a petitioner seeking post-grant review to demonstrate economic harm, e.g., that the claim in issue is not only invalid but also harms the opposer. This should operate to curb resort to the post-grant review process and should be viewed as a pro-patentee amendment. The amended bill also provides that foreign defendants may be sued only where their principal subsidiaries are located (much to the chagrin of some IP “rocket dockets” such as the Eastern District of Texas) and it designates the United States Patent and Trademark Office’s jurisdiction as the Eastern District of Virginia, rather than its current designation of the District of Columbia. Despite the Committee’s unanimous approval of the Manager’s Amendment, the Committee was unable, either at the June 21 markup or at a follow up meeting on June 28, to assemble a quorum to vote on whether to forward the amended bill to the full Senate.
The Senate Committee also adopted a second Manager’s Amendment during a markup session on July 12, 2007. Among the revisions, the Committee adopted language imposing additional limitations on forum selection; most notably, applying the venue restrictions not only to infringement clams but to declaratory judgment (DJ) actions as well (much to the relief of patent owners, especially in view of the expansion of DJ jurisdiction following the Supreme Court MedImmune decision and Federal Circuit ScanDisk decision). Additionally, the second Manager’s Amendment includes language that would prohibit patent holders from “manufacturing venue” by assignment or incorporation to establish venue for a specific district. Additionally, the second Manager’s Amendment eliminated the provision of the original bill that would have given the USPTO substantive rule making authority. This provision had been the source of considerable controversy. The Committee considered an amendment that would give federal appeals courts greater discretion in considering challenges to interlocutory rulings by trial judges while a trial is ongoing, but that amendment (which was the subject of opposition voiced by Judge Michel, Chief Judge of the Federal Circuit in a letter to the committee) was defeated. Finally, the committee adopted an amendment to end USPTO fee diversion.
A substitute text House bill (H.R. 1908) was favorably reported out of the House Judiciary committee on July 18, 2007. The substitute text House bill eliminates the so-called “second-window” of time for challenging a patent (post grant review more than one year post issuance); but will retain inter partes reexamination for that purpose. A controversial aspect of the substitute text is the limitation placed on inequitable conduct as a basis for an unenforceability defense. Also (bowing somewhat to Judge Michel’s opposition to the damages apportionment provision in the original bill), the House committee has revised that provision to provide district court’s discretion in applying an appointment analysis. Finally the substitute text contains a new section that would mandate that applicants for patents provide a search report and “analysis relevant to patentability.” The House committee has now moved the bill to the House for a vote.
Both the Senate and the House bills retain the basic first-inventor-to-file system and provide for filing by assignee (in lieu of inventor(s)). Both bills also heighten the standards for establishing willful infringement. The issues where reconciliation between the Senate and House bills will likely be required include post-grant opposition proceedings, USPTO rulemaking authority, best mode requirement (whether to keep it), and a new limitation on past damages for method claims (the House bill provides 2 years prior to actual notice.) It is expected that there will be heavy lobbying over the remaining summer period before Congress reconvenes in September.
