California Patent Attorney® Blog

Employee Claiming Employer Patent Theft Denied Relief In State Courts

November 14, 2011,

constitution-flag.jpgCalifornia - Suzanne Brown, employee for Tuscon, Arizona based Lisa Frank, Inc. is not entitled to relief for alleged patent theft by her former employer in state court, an Arizona appellate court held. Instead, she must pursue her claim in federal court which has exclusive jurisdiction over patents granted by the United States Patent and Trademark Office (USPTO).

Brown returned to work at Lisa Frank after a ten year absence in 2009. Once she began work, she notified the company that she had conceived of an idea for a child-safe oven. Working with other employees, Brown created a sketch of the oven and its details. The company submitted the sketches to its patent attorney who filed a patent and trademark application with the USPTO for the oven without notifying Brown. Brown was later terminated.

Brown originally brought the action in Arizona's Pima County Superior Court alleging several causes of action for breach of contract, unjust enrichment, and wrongful ownership and control of the invention. That original action, however, was dismissed upon motion by Lisa Frank for lack of subject matter jurisdiction. Brown then appealed the case to an Arizona appellate court which affirmed the lower court's dismissal of the case.

Under the Supremacy Clause found in the United States Constitution, federal law preempts state law when congress expressly provides for preemption, federal law leaves no room for state law, or where state law and federal law conflict. 28 U.S.C. § 1338 provides that "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents..." That jurisdiction is exclusive to the extent that it involves federally issued patents.

In this case, Brown argued that though federal law has preempted the patent system, inventors still maintain common law state rights over their inventions and that these rights are enforceable in state court. The appellate court disagreed, holding that Congress reserved the determination of inventorship to the USPTO and that such a determination is within the exclusive jurisdiction of the federal courts. As Brown's action depended on the resolution of a "substantial question of federal patent law," federal law preempted the state court's jurisdiction in this matter.

"Stent Wars" - Will the Federal Circuit Decision in Cordis Corp. v. Boston Scientific Corp. Finally End Fourteen Years of Patent Litigation?

October 1, 2011,

medical_instruments.jpgCalifornia - The Federal Circuit affirmed the Delaware district court's grant of judgment as a matter of law in favor of noninfringement and conclusion that the patents at issue were not unenforceable due to inequitable conduct.  In the court's opinion, the justices describe the case as, "but one installment - albeit, at nearly fourteen years, perhaps the longest - in an ongoing and epically expensive saga known as the 'Stent Wars.'"

On October 3, 1997, Cordis filed suit against multiple defendants for patent infringement of its heart stents for coronary artery disease.  The heart stents can be deployed by inflatable balloon to clogged arteries to expand and open up the artery.  When Cordis named Boston Scientific Corp. as one of the defendants, the company probably did not foresee itself engaging in over a decade of legal battle.

Particular to BSC's case, Cordis alleged that BSC's NIR stent infringed Patents 5,643,312 ('312 patent) and 5,879,370 ('370 patent).  Five years later in 2002, a jury found that BSC's NIR stent did not infringe the '312 patent, but did infringe the '370 patent.  Thereafter, the district court judge granted JMOL that the NIR stent did not infringe the '370 patent.  Additionally, the court held a bench trial on the issue of unenforceability due to inequitable conduct.  The court ultimately held that both patents were unenforceable because the patentees "purposefully neglected their responsibility of candor to the PTO by 'putting their heads in the sand'" with respect to known prior art references and for disclosing prior art references "in the midst of numerous other references and without identifying it as being of particular interest."

When the case reached the Federal Circuit on appeal in 2006, the Federal Circuit declined to address the issues of infringement, and remanded to the district court for further evidence regarding intent to deceive.  By 2010, the district court made additional findings and, surprisingly, reversed its earlier decision on inequitable conduct.  The court held that there was not clear and convincing evidence of deceptive intent and that each of the parties' arguments was equally persuasive.  Therefore, contrary to its earlier ruling, the court held that both patents were enforceable.

Renewing their initial appeals, the parties brought the suit to the Federal Circuit a second time.  This time, the Federal Circuit construed the claim construction given to the jury to determine whether the decision of noninfringement was proper.  Ultimately the Federal Circuit agreed that with the correct jury instruction construction, that the decision of noninfringement was proper because a reasonable jury would not be able to find infringement.  Additionally, the Federal Circuit affirmed the district court's decisions on no inequitable conduct.

Continue reading ""Stent Wars" - Will the Federal Circuit Decision in Cordis Corp. v. Boston Scientific Corp. Finally End Fourteen Years of Patent Litigation?" »

Senate Approves Major Changes to Patent Reform Act

September 12, 2011,

flag.jpgCalifornia - After years of debates over patent reform, the U.S. Senate finally passed the America Invents Act Thursday, making major changes to America's patent laws. The 89-9 vote will be signed by President Obama just days after the United States Patent and Trademark Office (USPTO) issued its 8 millionth patent.

There are five key changes taking place in the new patent reform that will affect entrepreneurs, inventors, tech companies, and the USPTO. The five key pieces include:

First to File: The current patent system operates under the first to invent rule, which means that whoever can prove to a court of law that they invented something first can force another party into a legal battle over the patent. With the new first to file system under the America Invents Act, whoever files the patent first will get protection. Although much more clear-cut, some small businesses and entrepreneurs argue that it gives an advantage to large businesses that have the money to quickly file for patents.

Post-Grant Review: Currently, the USPTO has a procedure to re-examine patents after they have been issued, but it is very limited in its scope. Under the new process, inventors will have the ability to challenge a patent within nine months of its issuance by presenting the USPTO with evidence against the patent's validity. The upside is that this could potentially reduce some of the expensive patent litigation lawsuits, but opponents say that it is just another responsibility that will be placed on an already over-burdened Patent Office.

Fee collection Overhaul: Under the existing system, Congress establishes the fees that are collected by the Patent Office and also controls its budget. With the America Invents Act, the USPTO will be able to determine its own fees. Congress will continue to have budgetary power but the collected fees exceeding the budget will be placed into escrow and the USPTO can petition for their release. The reformed patent laws will stop Congress from siphoning money out of the USPTO budget, and allow the entity to keep all of the fees it collects.

Lack of Patent Lawsuit Reform: Although it was suggested and included in some earlier versions of the new patent bill, there is no new process in the America Invents act for determining damages in a patent infringement case. For the foreseeable future, juries may continue to award large sums of money for patent violations.

Software and Business Method Changes: There are a few minor provisions in the America Invents Act that clear up the debate over the propriety of software patents. One provision, for example, specifically excludes tax preparation software from a rule prohibiting the patenting of tax strategies, and another provision creates a way to defeat patents related to financial products, with the goal of eliminating a certain group of patents for check-imaging software.

Two New Patent Applications: Fingerprint-less Screens and Airbag-equipped Cell Phones

August 29, 2011,

touchscreen.jpgCalifornia - Patent application 20110195187 describes an invention entitled "Direct Liquid Vaporization for Oleophobic Coatings." While the title of the invention has little hope of becoming a household name, it's likely that Apple's new fingerprint-less screens will make their way into millions of households. According to Patently Apple, the application filed February of this year describes a method of applying an 'oleophobic' substance to the screen of any Apple iOS device during manufacturing. This process would create a fingerprint resistant coat on the screen of the device capable of repelling the oil and particles from our hands that create cosmetically unfavorable and visually obstructive smudges. The invention would certainly create a captivating marketing platform for Apple, but larger implications arise concerning how competitors will work around the patent to maintain the viability of their products within what some are calling a 'patent war.' Apple will have a have new weapon if they control the licensing of a process that renders fingerprints a thing of the past.

Patent application 20110194230 comes to us from the mind of Amazon CEO, Jeff Bezos, who has created a method of protecting cell phones from impact damage by equipping them with airbags. The application filed February of 2010, made public earlier this month, details a system in which the phone detects a sudden increase in acceleration when the phone is accidentally dropped by its user and deploys airbags to prevent a damaging impact with the ground. It's difficult not to snicker at the thought of airbag-deploying cell phone, but the application also suggests substituting the airbags with springs or gas propulsion, and if they are able to find an effective method, the precautionary equipment would prove to be valuable to many fumbling consumers who spend hundreds of dollars annually on replacement phones. However, the money saved will likely be applied to increased price of cell phones containing this preventative technology. It will be interesting to see whether airbags become the industry standard or simply a short-lived novelty item.

Is Google Buying Companies to Avoid Patent Litigation?

August 19, 2011,

cellphones.jpgCalifornia - Google's recent acquisition of Motorola Mobility for approximately $12.5 billion raised more than a few eyebrows. However, now that the dust from the deal has begun to settle, the reasoning behind the deal has become clear and an interesting trend has appeared.

To fully understand the deal, a little history is required. Google purchased a small company called Android Inc. in 2005, cumulating in the 2008 release of the Android Mobile Operating System. Android is beloved by users, and its market share quickly rose to rival that of Blackberry. More importantly, Android was a departure from other operating systems because it was open source, meaning Google actively encouraged individuals to experiment with the software code.

Then, in late 2010, Google released its first and only smartphone, the Nexus One. However, the Nexus One achieved only lackluster sales. After the news of Google's acquisition of Motorola Mobility broke, the hope of a widely successful combination of Motorola's hardware acumen and Google's open source spirit spread like wildfire.

Experts estimate that a smartphone can involve to up to 250,000 different patents. Due to the millions of dollars in sales that any given smartphone can accomplish, even one patent infringement lawsuit can become a huge obstacle. Therefore, companies have been spending millions (or billions in this case) to acquire entire companies in an effort to expand their own patent portfolios while at the same time avoiding litigation.

With Google's acquisition, which could become a game-changer in the smartphone industry, the value of tech companies is increasingly becoming a function of the number of patents that the company owns.

Microsoft to Pay $70 Million to Alcatel in Patent Judgement

August 1, 2011,

monitor.jpgCalifornia - A federal jury in San Diego ruled today that Microsoft must pay telecommunications infrastructure manufacturer Alcatel-Lucent, $70 million in damages in a judgement from a patent infringement claim from 2003.

The patent at issue was originally applied for by engineers at AT&T and provides a method of entering information into fields on a computer screen without the use of a keyboard. Initially, Alcatel-Lucent filed a claim against computer giants Gateway and Dell for their alleged infringement of the patent in 2002, with Microsoft intervening.

At an earlier trial involving the same parties, Microsoft was found guilty of infringing on the patent in its Outlook e-mail software, Windows Mobile, and with Microsoft Money. The original ruling would have cost Microsoft more than $500 million in damages, however it appealed the decision and the damages were lowered considerably.

In a statement from David Howard, Microsoft's corporate vice president and deputy general counsel of litigation, he said, "Today's verdict reflects a positive trend in the law of patent damages stemming from the Federal Circuit's earlier opinion in this and other cases. However, we continue to maintain that current law requires a genuine apportionment of damages when the infringement is directed to a small feature of a feature-rich product, and we are reviewing the verdict in that light and considering next steps."

This patent infringement case in particular is the most recent in a long history of litigation between the two companies. Microsoft was also the defendant in a patent infringement complaint filed with the U.S. International Trade Commission by Alcatel-Lucent over technology to identify and affiliate a user in a telephone network. The ITC ruled in favor of Alcatel-Lucent. Another patent case involving a communications protocol patent designed to allow a host computer to communicate with a "terminal device" resulted in a split ruling.

Lawyers for Alcatel-Lucent indicated that the company was "pleased" with today's ruling.

Patent Standard for Dropping the "Atomic Bomb" of Inequitable Conduct Raised

June 3, 2011,

cloud-bomb.jpgCalifornia - Reversing an earlier panel judgment, the Federal Circuit in Therasense, Inc. v. Becton, Dickinson and Company reviewed en banc the standards for inequitable conduct in patent infringement cases. A judge-made equitable defense that originated from the doctrine of unclean hands, proving inequitable conduct can completely bar the enforcement of a patent. To show inequitable conduct, an accused infringer needs to show that the patent applicant had "misrepresented or omitted material information with the specific intent to deceive the PTO."

The court sought to reduce inequitable conduct as a significant litigation strategy, as its use had led to undesirable consequences such as expanding discovery into corporate practices, discouraging settlement, and taking attention away from issues of patent validity and infringement, due to its focus on the moral character of the patentee. Describing inequitable conduct as "the atomic bomb of patent law," the court noted that where most defenses are claim specific, inequitable conduct is able to render entire patents unenforceable, with the potential to even endanger other patents in a patentee's portfolio. The en banc decision addressed both the "intent to deceive" and "materiality" elements of the defense.

While courts in the past have often used a gross negligence standard to determine the intent element for inequitable conduct, the Federal Circuit raised the bar to a clear and convincing standard. The patentee needs to be shown to have known of a reference, known that the reference was material, and made a deliberate decision to withhold it from the PTO. Due to the difficulty of finding direct evidence of intent, the Court held that intent could be inferred from indirect and circumstantial evidence, but the clear and convincing standard meant that the specific intent to deceive be "the single most reasonable inference" that could be drawn from the evidence.

In addition to intent, the Court also raised the standard of materiality. To satisfy the materiality standard, the misrepresentation had to be the but-for cause for the patent claim's issuance. The Court held that the preponderance of evidence standard would apply and that claims would be given their broadest reasonable interpretation when determining whether the PTO would have allowed a claim had it been aware of the undisclosed material.

The Court also rejected the intent-materiality sliding scale that had been used in earlier cases. No longer can a weak showing of intent be allowed based on a strong showing of materiality; the two elements must be determined independently.

In making its ruling, the Court hoped to achieve better proportionality between the violation and the remedy. Because the doctrine of inequitable conduct could render an entire patent, potentially even an entire family of patents, unenforceable, the Court sought to restrict its use and ensure that it would only be applied in situations where a patentee through its misconduct has gained an "unfair benefit."

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.

Algae Biofuels: On the Road to Economic Viability or Just "On the Road"?

April 18, 2011,

algae-frog.jpgCalifornia - Annually, the San Diego Center for Algae Biotechnology (SD-CAB) holds a symposium featuring a distinguished panel of speakers from academia, government labs and private research centers as well as businesses and investors interested in using algae for commercial fuel production. This year's Algal Biofuels Symposium will be held Friday and Saturday, April 29-30th, in the Frederic de Hoffmann Auditorium of the Salk Institute for Biological Studies in San Diego, California and is entitled: "Algal Biofuels - Advancing to Economic Viability."

Day one of the symposium includes science speakers from the commercial side of algae biofuels research and development. Presentations on research from the newly established Consortium for Algal Biofuels Commercialization (CAB-Comm) will be held on the second day. The goal is to bring together academic and commercial sector scientists at the forefront of algal biofuels research to talk about the current state of algal molecular genetics, biochemistry, synthetic genomics and related technologies - all with an eye toward commercialization.

The mission of SD-CAB is to support the development of innovative, sustainable and commercially viable algae-based renewable energy sources, green chemical and biological products, water conservation and CO2 abatement in the San Diego area. Algae produce a variety of interesting molecules and fuel precursors, including triglycerides and fatty acids that can be converted to biodiesel, as well as isoprenoids and lipids that can be converted to traditional diesel fuel and gasoline. Algae can also be used to produce hydrogen or biomass, which can then be digested into natural gas.

The US consumes 140 billion gallons of liquid fuel every year. Algae are capable of producing 3,000 gallons of liquid fuel per acre per year. Algae grows well in seawater with minimal nutrient inputs and some strains can grow in desert ponds utilizing high-saline water from otherwise unusable aquifers. Competition between algae and traditional row-crop agriculture for arable land, fresh water and application of petroleum-based fertilizers could therefore be avoided. Many species of algae can even grow in wastewater from treatment plants, cleaning the water all the while.

Biofuel produced by algae approaches carbon neutrality. Since the photosynthetic organisms first remove the CO2 from the atmosphere, the overall carbon footprint is minimal. Algae production creates green-collar jobs, too. (See: http://www.cleantechsandiego.org./why-san-diego-leads/advanced-biofuels.html). The San Diego Association of Governments (SANDAG) 2010 report on the Economic Impact of Algal Biofuel Research estimates a current payroll of approximately $28.8 million, and rising, in the San Diego region alone. (See: http://algae.ucsd.edu/_files/EconomicImpactSummary2010.pdf).

The points made above provide intellectual property lawyers, venture capitalists, entrepreneurs and green collar workers alike with reason to hope for cleaner fuels produced more-sustainably sometime in the near future.

Federal Circuit Requires High Particularity Standard for False Marking Claims

April 11, 2011,

bottles.jpgCalifornia - In In re BP Lubricants USA Inc., the Federal Circuit Court of Appeals held that a false marking claim must satisfy the particularity standard of Fed.R.Civ.P. 9(b), which requires that complaints alleging fraud or mistake "state with particularity the circumstances constituting fraud or mistake." A complaint containing only "conclusory allegations that a defendant is a 'sophisticated company' and 'knew or should have known' that the patent expired" was ruled to be insufficient to meet that standard. Granting in part Petitioner BP Lubricants USA, Inc.'s request for mandamus, the Court ordered the district court to dismiss relator's complaint with leave to amend.
Petitioner BP distributed products using a bottle design for which they had received a design patent. BP was alleged to have continued to mark its bottles with the patent numbers, even after its expiration in 2005, despite being a "sophisticated company" that had "experience applying for, obtaining, and litigating patents," for the purpose of deceiving the public.

The purpose of the Rule 9(b) standard is to weed out frivolous claims. To survive dismissal, a plaintiff must show "some objective indication to reasonably infer that the defendant was aware that the patent expired." If this awareness is established, the combination of actual misrepresentation and awareness of the falsity of the representation would be enough to infer the required "intent to deceive" element of the crime.

The Court found that relator's argument that BP was a "sophisticated company" that "should have known" of the patent's expiration was not enough to reasonably infer that BP had actual awareness. In addition, the mere fact that the mark on the bottles was false and misrepresentative was insufficient to show the Petitioner's possessed intent to deceive, the relationship between factual falsity and state of mind not being strong enough.

Addressing the relator's concerns that the anonymous nature of false marking meant that specific individuals could not always be named to show deceptive intent, the Court stated that there were other types of evidence from which deceptive intent can be reasonable inferred. For example, evidence that Petitioner had sued third parties for infringement after the expiration of the patent or had revised its markings after patent expiration would in the Court's eyes be sufficient.

Lastly, the Court addressed its earlier ruling in Pequignot v. Solo Cup, 608 F.3d 1356, which held that "the combination of a false statement and knowledge that the statement was false creates a rebuttable presumption of intent to deceive the public." While the Pequignot presumption can be an important factor in meeting the Rule 9(b) pleading standard, the Court ruled that by itself it is not enough.

This case marks the first time the Federal Circuit has ruled conclusively on whether false marking is subject to the pleading standards of Rule 9(b). In determining that the heightened standard of Rule 9(b) is necessary, courts will now have an easier time dismissing false marking cases deemed to be frivolous.

Clean Tech IP is Here to Stay...and Grow

April 10, 2011,

wind-turbine.jpgCalifornia - What is the tie that binds the following eleven threads? 1) Energy generation (wind, hydro, solar, geothermal, biofuels), 2) energy storage (batteries, fuel cells), 3) energy infrastructure, 4) energy efficiency, 5) transportation, 6) water & wastewater (conservation, treatment), 7) air & environment (clean-up, monitoring, offsets and trading), 8) materials (chemical, bio, nano), 9) manufacturing/industrial (smart production), 10) agriculture (natural pesticides, land management, aquaculture) and 11) recycling & waste management.

The answer is that substantial portions of each fall under the "clean tech" umbrella. Clean tech, then, spans many diverse industry segments. However, this diversity is unified by a clear set of overarching goals: 1) provide superior performance at lower costs, while 2) greatly reducing or eliminating negative ecological impact, at the same time as 3) improving the productive and responsible use of natural resources. (See http://cleantech.com/about/cleantechdefinition.cfm).

Fortunately Eric L. Lane, a patent attorney in San Diego, has done an excellent job of synthesizing the legal implications of this growing area of IP and presenting it to us in the form of a highly literate and pleasantly readable book. The book is entitled "Clean Tech Intellectual Property: Eco-marks, Green Patents, and Green Innovation" and is published by the Oxford University Press (2011). (http://www.amazon.com/Clean-Tech-Intellectual-Property-Innovation/dp/product-description/0199737096).

Mr. Lane's book presents clean tech IP as an important area of law and policy seeking to foster innovation in order to improve the environment and curb global warming. In it, he treats green intellectual property as a discrete field set apart from the general realm of intellectual property law, and offers 260 pages of arguments and evidence beckoning us to join him in his belief that it is worthy of study, practice and expertise in its own right.

Section one of the book presents strategies for drafting and prosecuting clean tech patent applications, building green patent portfolios and clean tech transfer and licensing. Section two covers clean tech and the courts. Topics include "Green Patent Litigation Past, Present, and Future" as well as non-practicing patentees (NPP's) in the clean tech world. Green branding, greenwashing and eco-mark enforcement are covered in section three. Section four, the final section, is devoted to green patent policies and initiatives and concludes with the debate over IP rights in low-income developing countries. All sections include analyses of relevant cases and lessons learned.

In the end, "Clean Tech Intellectual Property: Eco-marks, Green Patents, and Green Innovation" is the first comprehensive review of intellectual property and clean technology. It relies upon industry trends, legal developments and case studies to analyze the dynamic interplay between clean technologies and intellectual property regimes: 1) how IP law affects clean tech growth and 2) how green business models shape IP practice. If Mr. Lane is correct, as we and the fellowship of kindred minds suspect he is, then this first book will not be the last. Clean tech really is here to stay...and grow.

Google's Search Goes Visual...And Social

March 21, 2011,

face.jpgCalifornia - Google's empire, built on advertising revenue tied to keyword searching, has recently taken a turn toward image-driven search capability with the addition of two patents.

The first, "User Interface for Presenting Search Results for Multiple Regions of a Visual Query," describes how an overall visual query, such as a photograph, screen shot, or video frame is first submitted to a computing system, which then breaks it up into discrete pieces, possibly according to type. Each piece is then sent to a specific search system implementing a distinct visual query search process. A plurality of results is generated and an interactive results document is created and sent back. This document has one or more visual identifier for each piece of the overall picture with a selectable link to a particular result for that piece. The visual identifier may be a box or a translucent label which could be color-coded by type.

Even more provocative, though, is the second patent, "Facial Recognition With Social Network Aiding," which describes a computer-implemented method of processing facial image queries using social media data pertaining to the requester in order to obtain results. This is accomplished by identifying one or more individuals associated with potential image matches and measuring social connectivity between that image and the requester. These social metrics may be obtained from communication applications, social networking applications, calendar applications and other collaborative applications. Next, an ordered list of persons is generated by ranking the visual similarity between the queried image and potential image matches. Finally, results from the list are sent to the requester.

Google has a couple of ideas for protecting the privacy of Facebook users and the like. First, Google contemplates allowing facial recognition capabilities only to the person positively identified in a picture. A second possibility is based upon obtaining permission. Once a person has been positively identified, a request might be sent to that person asking to allow their image to be returned in future searches conducted by people within their social network.

The ideal of mining social network data to improve facial recognition has been explored by others, too, including researchers at Harvard, who published a paper on the topic in 2008 concluding the technology had promise. (Autotagging Facebook: Social Network Context Improves Photo Annotation).

Critics point to darker possibilities, though. Dictators and governments are already identifying people based upon photos posted in social media connected to their real names. After the Iranian protests were over in 2009, the government is known to have gone through Flickr, collected photos of protesters then published them on government websites.

Nonetheless, Google continues to develop such technology amid its broader overall effort to add visual and social networking capabilities to its search technology.

Apple's New Patent - The iGlove?

March 15, 2011,

gloves.jpgCalifornia - Capacitive touch-screens, such as those found on the Apple iPod, as well as many tablet PCs and smartphones, detect inputs through distortions in the screen's electrostatic field. These distortions can be caused by the touch of a finger, thanks to the human body's conductive properties. On the other hand, nonconductive materials such as fabric are unable to interact with the screen.

Since actions such as cleaning the screen with a cloth or keeping the device in a pocket will not activate the screen, this also means that a user will not be able to use their iPod or smartphone touchscreen while wearing gloves, a dilemma in times of cold weather. In its new patent for a "High Tactility Glove System," Apple seeks to solve this problem by creating a system where a user can operate the touchscreen while keeping their gloves on and hands warm.

The patented glove consists of two layers, a thin inner liner and a thicker outer shell. The inner liner is made of an electrically conductive material, simulating the electrical properties of human skin. The thicker and more insulated outer shell contains apertures at the fingertips. Normally, these are kept closed, which can be done with an elastic ring surrounding the aperture or by having the aperture covered by a removable cap. However, when a user wearing the gloves wishes to use an electronic device, they can peel back the outer shell so that the inner liner protrudes through, where it is able to contact and interface with the device. After performing the desired operations, the liner is then withdrawn back into the shell.

The patent also claims an embodiment of the invention where the outer shell also contains a conductive portion electrically coupled to the inner liner, allowing the surface of the outer shell to interact with a touchscreen. However, the apertures still exist in this embodiment should the user wish to perform actions requiring more precision than would be practical with the bulkier outer shell.

25% Rule for Patent Damages Rejected; $19 Billion Cat back in bag

March 3, 2011,

cat in bag.jpgCalifornia - 35 U.S.C. § 284 provides that upon finding infringement of a valid patent, damages shall not be "less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court." Often, during litigation, the "reasonable royalty" rate is arrived at through imagining a hypothetical negotiation has taken place between the parties at the time infringement began. (Wang Labs. Inc. v. Toshiba Corp., 993 F.2d 858, 869-70 (Fed.Cir.1993)).

The 25% rule is a tool that has been used to approximate the reasonable royalty rate that the manufacturer of a patented product would presumably be willing to offer to pay to the patentee during a hypothetical negotiation. The Court of Appeals for the Federal Circuit has tolerated its use where its acceptability has not been disputed. Lower courts have invariably admitted evidence based on the 25% rule, due either to its widespread acceptance or because its admissibility was not contested.

Critics of the rule point out three main flaws. First, the relationship between the patent and the accused product is ignored. Consequently, the particular importance of the patent to the profits of the product, the availability of close alternatives, and other potentially important factors likely to be taken into account in real negotiations are not. Second, the relationship between the parties is ignored. For example, degree of risk cannot be explicitly apportioned between the licensor and licensee of a particular technology. Third, the rule is arbitrary and does not relate necessarily to the results of a negotiation hypothesized to have taken place before the infringement. Recently, Uniloc USA, Inc. v. Microsoft Corp., ___ F.3d ___ (2011 WL 9738) gave the Federal Circuit a chance to revisit damages.

Uniloc alleged that Microsoft's "Product Activation" authentication feature found in Word XP, Word 2003, and Windows XP programs infringed its '216 patent covering an anti-pirating software registration and licensing system utilizing a particular algorithm and the jury agreed. They awarded Uniloc $388 million in damages for patent infringement, relying upon Uniloc's expert, Dr. Gemini, who testified that damages should be $564,946,803 based upon a hypothetical negotiation between the parties (and the Georgia-Pacific factors).

Dr. Gemini applied the 25 percent "rule of thumb" to the $10 estimated value of each infringing Product Activation key on Microsoft licensed software, yielding a value of $2.50 per key. He then multiplied this number by the number of new Office and Windows product licenses (225,978,721) sold, which resulted in the $565 million value. He then "checked" his valuation by calculating that against the $19 billion total market value of Microsoft product sales, his $565 million represented only a 2.9% royalty rate. He even presented a pie chart to the jury displaying information to this effect, noting that 2.9% was reasonable.

On appeal, the Federal Circuit, faced for the first time with a chance to rule squarely on the rule, seized the opportunity:

"This court now holds as a matter of Federal Circuit law that the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation. Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue."

Id. at 19. Thus, under the Daubert standard for expert testimony and FRE 702, general theories are permissible only if the expert sufficiently ties the theory to the specific facts of the case at hand.

The court went on to review numerous cases, from Kumho Tire and Joiner to ResQNet and Wordtech and held that their meaning was clear: "[T]here must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25% rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement."

At trial, Microsoft argued that Uniloc's use of the entire market value rule was not proper since the Product Activation key did not create the basis for customer demand or substantially create the value of the component parts, and Dr. Gemini's testimony tainted the jury's damages deliberations. The district court agreed and granted a new trial on damages. The "$19 billion cat was never put back into the bag" and the jury may have "used the $19 billion figure to 'check' its significant award of $388,000,000." Uniloc II, 640 F.Supp.2d at 185. The Federal Circuit affirmed, holding that the district court did not abuse its discretion in granting a conditional new trial on damages for Uniloc's violation of the entire market value rule.

The Federal Circuit did not propose improved methods of calculating damages but seems intent on continuing to modify awards.