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Short Circuit 1.19.2010 - Brief Comments on Opinions from the Federal Circuit
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02.09.2010
Wyeth and Elan Pharma International v. David J. Kappos, Slip op. 2009-1120 (Fed. Cir. January 7, 2010)
Patentee Tips for Dealing with Patent Term Adjustments
This opinion has been discussed in numerous blogs and its details are not treated here. Briefly, Wyeth and Elan ("Wyeth") had petitioned the PTO under 35 U.S.C. § 154 and 37 C.F.R. § 1.705 for patent term adjustment due to prosecution delays caused by the PTO. According to the PTO's interpretation of § 154, Wyeth was entitled to a patent term extension of 462 days. Under Wyeth's interpretation, it was entitled to an extension of 756 days. The PTO rejected Wyeth's petition and Wyeth appealed this decision to the U.S. District Court for the District of Columbia within 180 days of the grant of the patent, as provided by 35 U.S.C. § 154(b)(4). On summary judgment, the District Court found that Wyeth's interpretation of the statute was correct. The Justice Department appealed to the Federal Circuit, which upheld the District Court's ruling.
Based upon the Wyeth decision, many patentees will be entitled to a longer patent term adjustment than the PTO had been awarding prior to the decision. The PTO has announced that it will calculate patent term adjustments in conformity with Wyeth, pending a decision by the Solicitor General whether to appeal the decision. However, the PTO warned patentees to remember the 180 day limitation on appeals from denied petitions to modify PTO-determined patent term adjustment determinations.
This leaves many patentees with a dilemma as to how to proceed. In many instances, patentees petitioned the PTO to modify its patent term adjustment determination based on the District Court's summary judgment in Wyeth. In those instances, the PTO dismissed the petitions on grounds that the District Court's decision was not controlling authority and that the Federal Circuit had not yet decided the appeal. Due to the expense of filing a civil action in Federal District Court, many patentees did not file within 180 days prior to the Federal Circuit's decision. What remedies are available to patentees in this predicament? We think that a few alternative remedies may be worthy of consideration.
35 U.S.C. § 254 provides for a Certificate of Correction of PTO mistake. It provides that "Whenever a mistake in a patent, incurred through the fault of the Patent and Trademark Office, is clearly disclosed by the records of the Office, the Director may issue a certificate of correction stating the fact and nature of such mistake, under seal, without charge, to be recorded in the records of patents." It further provides that such patents, together with the certificate of correction shall have the same effect for causes of action arising thereafter as if the patent had been originally issued with the correction. This appears to be a reasonable and economical approach to the problem. The statute's use of the term "whenever" indicates that there is no time limitation to this approach. The records of the PTO disclose the necessary facts for correction of the patent term adjustment, namely the amount of delay incurred from the PTO (in conformity with Wyeth) and the amount of delay incurred from the applicant. Taking the PTO's earlier interpretation of § 154 as wrong ab initio, the calculation of the PTO mistake and required modification of the patent term adjustment appears to be straight forward. Since § 254 leaves this determination to the Director, the proper mechanism for this approach would be a Petition to the Director under 37 C.F.R. § 1.181(a)(2). Since this is the least expensive approach, many patentees may decide to try this first.
Should the Director decide that 35 U.S.C. § 254 cannot be used to correct the patent term adjustment, it may be possible to directly petition the Director for redress under 35 U.S.C. § 1.183 (Suspension of rules). This section provides that "In an extraordinary situation, when justice requires, any requirement of the regulations in this part which is not a requirement of the statutes may be suspended or waived by the Director." The "extraordinary situation, when justice requires" would be provided by the PTO's decision to ignore the District Court's summary judgment in Wyeth, coupled with the exorbitant cost faced by the patentee to bring a District Court action when it should not have been necessary to do so. The requirement of the regulations to be waived is the time limitation for a request of reconsideration of patent term adjustment, which is no later than the payment of the issue fee (37 C.F.R. § 1.705(b)) or within two months of the issue date (37 C.F.R. § 1.705(d); objection to the patent term adjustment shown on the published patent,which could not have been raised under subsection (b)). These specific deadlines are not required by the statute, which only requires that "the Director shall provide the applicant one opportunity to request reconsideration of any patent term adjustment determination made by the Director.", and does not specify a deadline for such an opportunity. It would be necessary to argue that the initial period for such a request was not an actual opportunity, since the PTO was simply dismissing all such petitions prior to the Federal Circuit's decision in Wyeth. In essence, this petition simply requests that the PTO reopen the matter for further consideration in view of the Federal Circuit's decision. This approach may also be useful for patentees who are still within the 180 day appeal deadline and see no reason why they should have to appeal in view of Wyeth.
These first two approaches could be utilized simultaneously. A third possible approach would be to file for Reissue of defective patents under 35 U.S.C. § 251. Filing for reissue may provide certain temporal advantages, but will involve some law of first impression. For example, the statute requires that the patent must be "wholly or partly inoperative or invalid". The shortage of the patent term adjustment would have to be asserted as making the patent "partially inoperative". Also, such defect must be "by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim." The defect in the specification would be the incorrect recitation of the patent term adjustment. Alternatively, the defect could be by reason of the patentee claiming less than he had a right to claim, in this case temporally, rather than by claim scope. Another question raised by this approach would be whether such a reissue would be a broadening reissue, requiring it to be filed within two years of the issue date of the patent. § 251 provides that "No reissued patent shall be granted enlarging the scope of the claims of the original patent unless applied for within two years from the grant of the patent." Subsequent case law has determined that any enlargement of the claims is a broadening reissue, even if the overall effect on the claim is to narrow it. Is the further extension of patent term "enlarging the scope of the claims"? Given judicial interpretations of § 251, it may be wise to assume that an enlargement of temporal scope would be regarded as a broadening reissue. Thus, this approach may be useful to an applicant who has missed the 180 day deadline for filing a District Court action, but is still within two years of the issue date.
Finally, there is the option of filing a District Court action. Since the Federal Circuit's Wyeth decision the cost of this may have dropped substantially. There would be no need for discovery and the decision should be able to be made on the pleadings. This option is available to patentees who are within the 180 day appeal period. It may also be available to those outside the 180 day appeal period who plead equitable tolling of that period based on the PTO's decision to ignore the District Court's summary judgment in Wyeth. This approach is being taken in The General Hospital Corporation v. Dudas, filed January 16, 2009 in the District Court for the District of Columbia.
i4i Limited Partnership and Infrastructures for Information Inc. v. Microsoft Corporation, Slip op. (Fed. Cir. December 22, 2009)
Avoiding Pitfalls on Patent Infringement Appeals
In this appeal, the Federal Circuit upheld the jury verdict and judgment of the District Court for the Eastern District of Texas that Microsoft infringed i4i's U.S. Patent No. 5,787,449 which claims an improved method for editing documents containing metacodes. The jury awarded i4i $200 million in patent infringement damages. The District Court awarded an additional $40 million in damages for willful infringement and imposed an injunction against Microsoft. While generally a garden variety patent infringement case, the Federal Circuit's opinion did raise some points of interest.
At trial, Microsoft alleged that i4i's patent was anticipated by two references that had not been before the PTO during prosecution. Microsoft argued that the burden of proof for invalidating a patent based on prior art references that had not been before the PTO should be lower than for prior art reviewed by the PTO. The Federal Circuit rejected this argument, reaffirming that a challenger must prove invalidity by clear and convincing evidence. It also stated that the Supreme Court's decision in KSR International Co. v. Teleflex Inc., 550 U.S. 398, 426 (2007) did not change this burden of proof.
This decision also emphasized the importance of a litigant preserving rights by filing motion for a pre-verdict judgment as a matter of law (JMOL). The court stated that "Although Microsoft now objects to the size of the damages award, we cannot reach that question because Microsoft did not file a pre-verdict JMOL on damages." The court went on to say "Had Microsoft filed a pre-verdict JMOL, it is true that the outcome might have been different. Given the opportunity to review the sufficiency of the evidence, we could have considered whether the $200 million damages award was "grossly excessive or monstrous" in light of Word's retail price and the licensing fees Microsoft paid for other patents." …. "However, we cannot. Instead of the more searching review permitted under Rule 50(b), we are constrained to review the verdict under the much narrower standard applied to denials of new trial motions. … We must affirm unless the appellant clearly shows there was no evidence to support the jury's verdict." (emphasis in original).
The court took this same approach to Microsoft's appeal on obviousness, stating "Microsoft has waived its right to challenge the factual findings underlying the jury's implicit obviousness verdict because it did not file a pre-verdict JMOL on obviousness for [three prior art references]. … a party must file a pre-verdict JMOL motion on all theories, and with respect to all prior art references, that it wishes to challenge with a post-verdict JMOL."
In re Michael Sones, Slip op. 2009-1140 (Fed. Cir. December 23, 2009)
Changes in Sufficient Specimen in View of the Electronic Economy
The Federal Circuit's decision in this matter helps clarify the requirements of a sufficient specimen, for the growing number of trademark applicants submitting website and Internet images as specimens. Here, appellant was appealing a decision from the Trademark Trial and Appeal Board ("Board") involving the requirements of an Internet specimen of use, in relation to an intent to use application, in relation to the sale of a charity bracelet. An image of a website was submitted, which listed the product "ONE NATION UNDER GOD™ CHARITY BRACELET >> for $2.00," and showed a square graphic next to it, stating that a photo was unavailable. The PTO's rejection was based on the specimen's lack of "a picture of the goods in close proximity to the mark." When appellant failed to submit a picture of the goods, or additional textual descriptions in response to the PTO's office action, the PTO issued a final action, and the TTAB affirmed the decision to reject registration, because the website did not contain a picture of the goods.
The PTO, the Board, and now the Federal Circuit, interpreted a three-part test set forth in Lands' End, Inc. v. Manbeck, 797 F. Supp. 511 (E.D. Va. 1992) which set forth specific requirements for catalog or similar specimens (inclusion of a picture of the relevant goods, the mark displayed sufficiently near the picture of the goods, and information necessary to order the goods). Although the PTO and Board have since applied this three part test to electronic specimens of use, the Federal Circuit held that the Lands' End test for catalog specimens, especially the rigid requirement of a picture, has been improperly applied to website specimens.
As e-commerce becomes a more prevalent and common manner of selling and purchasing goods, the requirements of specimens for brick-and-mortar retailers have been less relevant. However, the Federal Circuit appropriately relies on analogies to appropriate specimens for the sale of goods in physical stores to broaden the requirements imposed on specimens of e-commerce. Just as a label, container, or display of goods, with or without a picture of the associate goods, can be a sufficient specimen for a physical retailer's application, so can a website image. A website is really an electronic display of goods, and as long as the evidence considered as a whole shows that the image identifies and distinguishes the goods, the bright-line requirement of a picture is not proper.
Circuit Judge Newman dissented from the decision, arguing that Sones had rendered the issue moot by filing a second, use-based application with a specimen including a picture for the same mark, for the same goods, and in the same class. However, this decision does provide helpful guidance to applicants who may wish to rely on website images and print-outs as specimens of use. If a website displays the mark, a description of the goods, and a point of sale opportunity, it can be more confidently submitted as a sufficient specimen, despite absence of a picture of the goods.