California Patent Attorney® Blog

May 2011 Archives

Issue of Joint Patent Infringement Creates Divided Ruling

May 13, 2011,

courthouse.jpgCalifornia - In April, the Federal Circuit decided the case of McKesson Technologies Inc. v. Epic Systems Corp., ruling that to show infringement of a patented method, the performance of all the steps of the method must be attributable to a single party. The decision, which included a majority opinion, a concurrence, and a dissent, illustrates the division in the court in dealing with interactive method patents and new technologies.

McKesson's patent described a method involving personalized web pages in order to facilitate the communication between doctor and patient. Epic Systems manufactures a software product called MyChart, which it licensed to software providers and allows medical providers to associate a patient's medical records with a personalized web page. None of the providers require the patient to use the MyChart software; the patient must initiate the communication. "Initiating a communication" is an essential step in McKesson's patented method, and it is around this step where most of the argument lies.

Writing the majority opinion, Judge Linn based his holding on three previous cases: BMC Resources v. Paymentech LP, Muniauction v. Thomson, and Akamai Technologies v. Limelight Networks Inc. In order for McKesson to successfully allege induced infringement, there must first be direct infringement, which for a method patent, according to BMC, requires the performance of each step in the method by a single party. When multiple parties come together to perform the steps of the method, it is only directly infringed if one party exercises "control and direction" over the entire process. Muniauction held that the "control and direction" element would be satisfied when the accused direct infringer could be found to be vicariously liable for the acts committed by the other parties. Akamai stated that for the actions of one party to be attributable to another, there must be an agency relationship or contractual obligation between the parties.

Finding no such relationship between the medical providers and the patients, as the patients were neither agents of the providers nor contractually obligated to use MyChart, Judge Linn found that no direct infringement had occurred as the performance of the method could not be attributed to a single entity under the "control and direction" test.

Judge Newman's dissent asserted that creating an absolute "single-entity rule" was an unacceptable enlargement of the holding in BMC, and that none of the cases the majority cited "turned on whether different entities independently or interactively perform different steps of the method claim." Instead, the existence of joint liability needed to turn on "participation, collaboration, or other relevant facts." Newman wrote that the majority holding, by limiting infringement for interactive method patents, "eliminates the patent incentive" for such methods, by making them "open for infringement without redress."

Judge Bryson's short concurrence opinion stated that decision was correct in light of BMC, Muniauction, and Akamai, but questioned whether the three cases were themselves correct, and expressed the opinion that an en banc review might be needed to resolve the issue.

If you have a patent infringement matter, we are patent litigation attorneys so please feel free to contact us.

America (Possibly) Reinvents Ex Parte and Inter Partes Reexamination

May 4, 2011,

flag.jpgCalifornia - The "America Invents Act" (the "Act") (S. 23 & H.R. 1249), formerly known as the Patent Reform Act of 2011, are two similar bills currently making their way through the Houses of Congress. This is the fourth consecutive session in which Congress has attempted to alter the U.S. patent system, and proposed changes include switching patent priority from "first to invent" to "first to file". The U.S. system has not undergone a serious change since the enactment of the American Inventors Protection Act in 1999.

The Act would provide a transition period of several years during which inter partes reexamination could still be requested but does not propose to alter ex parte reexamination. Therefore, according to the USPTO's announcement appearing in the Federal Register on April 25, 2011, it must "continue its efforts to improve the existing reexamination system." (http://www.gpo.gov/fdsys/pkg/FR-2011-04-25/html/2011-9805.htm).

In any event, David Kappos, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, reaffirmed the importance of reexamination recently in a press release: "We recognize that [it] is one of the most important functions of the USPTO, because these patents often have significant commercial value and are usually involved in concurrent litigation. [And] [b]y resolving these disputes more quickly, we can make patent reexamination a better mechanism for reviewing patent validity." (http://www.uspto.gov/news/pr/2011/11-28.jsp).

A public meeting will be held on June 1st at the USPTO in order to solicit public opinions on several changes under consideration concerning the streamlining of the procedures governing ex parte and inter partes reexamination proceedings. These changes have ostensibly been designed to achieve faster and more efficient resolution of the substantial new question of patentability (SNQ) for which reexamination has been ordered. The proposed changes fall into three categories: 1) changes which affect both ex parte and inter partes reexaminations, 2) changes which only affect ex parte reexamination and 3) changes affecting only inter partes reexamination.

In outline form, they are (see the relevant CFR for more detail at http://www.gpo.gov/fdsys/pkg/FR-2011-04-25/html/2011-9805.htm):

1) Proposed Changes to Both Ex Parte and Inter Partes Reexaminations:
A. Requester Must Separately Explain How Each SNQ Presented in the Request Is ``New'' Relative to Other Examinations of the Patent Claims.
B. Requester Must Explain How the References Apply to Every Limitation of Every Claim for Which Reexamination Is Requested.
C. Requester Must Explain How Multiple SNQs Raised in the Same Request Are Non-Cumulative of Each Other; Cumulative SNQs Will Be Deemed to Constitute a Single SNQ.
D. The Examiner May Select One or More Representative Rejections From Among a Group of Adopted Rejections.
E. Requester's Declaration and Other Evidence Will Be Mainly Limited to the Request.
F. Patent Owner's Amendments and Evidence Will Be Mainly Limited to the First Action Response.
G. Claim Amendments Will Not Be Entered Unless Accompanied by a Statement Explaining How the Proposed New Claim Language Renders the Claims Patentable in Light of an SNQ.
H. Petitions Practice Will Be Clearly Defined.

2) Proposed Changes Specific to Ex Parte Reexamination:
A. Make Permanent the Pilot That Allows the Patent Owner to Optionally Waive the Patent Owner's Statement.
B. Where the Patent Owner Does Not Waive the Statement, the Order Granting Reexamination Will Include a Provisional FAOM, Which May Be Made Final in the Next Action.

3) Proposed Changes Specific to Inter Partes Reexamination:
A. Third Party Requester May Dispute the Examiner's Designation That a Rejection is "Representative" of Other Rejections in the Group.
B. Final Office Action Closes Prosecution and Triggers Appeal Rights.
C. Third Party Requester's Appellant Brief is Limited To Appealing An Examiner's Decision That a Claim is Patentable; Additional Bases To Cancel A Rejected Claim Can Only Be Argued in a Respondent Brief Following Patent Owner's Appellant Brief.

The USPTO invites comments on the proposed changes as well as thirteen other specific questions posed at the end of the notice in the April 25th CFR. If you are interested, now is the time to weigh-in on the possible reinvention of the U.S. ex parte and inter partes reexamination process.