Yabba Dabba Don’t — “Bedrock Principle” Prevents PTO from Recouping Attorneys Fees

In Peter v. Nantkwest, Inc., — US — (2019), the Supreme Court, citing the bedrock principle known as the “American Rule” that each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise, held that the PTO could not recoup its attorneys fees under §145 from an applicant who challenges a final rejection in district court.

The decision is a relief to all applicants, because it leaves a civil action as a viable remedy to an improper final rejection. But it still leaves applicants liable for the PTO’s “expenses of the proceedings,” win or lose. It is a little galling to have to pay the PTO’s “expenses” in unsuccessfully defending an improper rejection, but that is an issue to take up with Congress, not the courts.

Resort to the courts when one believes that the government has screwed up is an important remedy that keeps the system in balance. The Supreme Court’s decision maintains that balance, preserving the availability of court challenges of incorrect decisions by the examining corps. 

Marking Your Territory in Patent Claims

The use of trademarks in patent claims was previously discussed here. Trademarks continue to be used in patent claims, despite the potential for problems, not doubt because the trademark was seen as the best way to properly claim the invention. There is of course the concern that a trademark is indefinite, because the product can be changed at any time by the trademark owner. However changing meaning is a condition that can afflict any word in a claim, not just trademarks, granted changing meaning it is more likely with a trademark because it requires the action of a single person or entity, while changing the meaning of the work requires consensus.

Here are examples of trademarks recently used in patent claims:

AEROSIL– 10,154,954 (claim 2)

Android – 10,417,998 (claim 6), 10,417,008 (claim 6), 10,331,433 (claim 4).

ARSENSA – 10,154,954  (Claim 2)

Bluetooth – 10,420,011 (claim 9), 10,419,592 (claim 1), 10,365,866 (claim 10), 10,341,313 (claim 4), 10,321,516 (claim 6), 10,285,041 (claim 2), 10,027,169 (claim 7), 10,026,018 (claim 5), 9,998,996 (claim 7, 14), 9,955,515 (claim 8), 9,930,669 (claim 1), 9,912,794 (claim 1), 10,129,431 (claim 7, 16), 10,123,333 (claim 3, 14, 28), 10,019,852 (claims 2, 9,16), 9,980,059 (claims 1, 12, 23).

EPO-TEK – 10,330,233 (claim 17)

ETHERNET – 10,303,160 (claim 3,8)

Felica – 10,126,703 (claim 13)

Inconel – 10,392,728 (claim 10)

JAVA – 9,930,201 (claim 1)

JavaScript – 10,365,868 (claim 7)

Java Virtual Machine – 9,727,374 (claim 6)

Kahoot! 10,026,331 (claim 1)

KOVAR – 10,139,700 (claim 3)

Linux – 10,417,998 (claim 5), 10,417,008 (claim 5).

MIFARE – 10,126,703 (claim 13)

Monel – 10,392,728 (claim 10)

TRITON X – 10,254,276 (claim 5)

TWEEN – 10,254,276 (claim 5)

PARLEAM – 10,154,954 (claim 2)

QR Code – 10,223,625 (claim 5), 9,940,565 (claims 7, 10).

RLSA – 10,190,217 (claim 3), 10,017,853 (claim 7, 8)

SOFTISAN – 10,154,954 (claim 2)

VELCRO – 10,151,558  (claims 4, 7)

Vespel – 10,047,863 (claim 20)

VITRALI – 10,330,233 (claim 16)

Wi-Fi – 10,244,055 (claim 11), 10,044,903 (claims 6, 18), 10,129,431 (claims 6, 8, 17).

Wi-Fi Direct – 10,416,941 (claim 8), 10,342,071 (claim 12), 9,942,759 (claim 6).

Windows – 10,275,192 (claim 9).

ZIRCON – 10,240,814 (claims 1, 2, 9)

ZYLON – 10,201,999 (claim 8, 18)

Additional examples are relatively easy to find by search for the word trademark in the text of the claims, or searching for the R-in-the-circle symbol “.RTM.”

Although the meaning of a trademark can change over time, this is apparently understood by those of ordinary skill in the art, and rarely if ever is it necessary to specify that the meaning is determined “as of the filing date.”

Celebrating Labor Day in Patents

A number of patents mention Labor Day, most of these relate to calendars or calendar-based games.

U.S. Patent No. D34888 on a Design for Medal
celebrates the laborer
U.S. Patent No. 2,284,256 covers on a Card Game features a Labor Day Card
U.S. Patent No. 3,565,437 on a Discount Store Board Game Apparatus, features a Labor Day sale card (68).

Trick Question: How Many Utility Patents has the USPTO issued?

The as of last Tuesday, August 20, 2019, the USPTO issued U.S. Patent 10,390,470. That would seem to be the answer. A patent nerd would remember, however, that before patents were numbered about 9,957 patents — called the X patents — issued. A serious patent nerd would further know that as of August 20, 2019, for one reason or another, more than 48721 numbers did not correspond to issued patents. An uber patent nerd would know about factional patents, patents with fractional numbers issued between patents with whole numbers. There are at least four fractional patents in the era when patents were numbered.

So as of August 20, and until the next batch on August 27, the number may be 10,351,710.

Detailed Explanation and Corroboration Made “Sham Affidavit” Doctrine Inapplicable

In Quest Integrity USA, LLC v. Cokebusters USA Inc., [2017-2423] (May 21, 2019), the Federal Circuit affirmed the judgment of invalidity as to claims 12, 24, and 33, of U.S. Patent No. 7,542,874 under the on sale bar of 102(b), reverse the judgment of invalidity as to claims 30 and 40, and remanded for further proceedings.

Cokebusters defended on the ground that the claims were invalid under 35 U.S.C. § 102(b) because there was a commercial sale of services that used the claimed methods, computer-readable media, and system more than one year before June 1, 2004, the date the application that led to the ’874 patent was filed in the United States. The basis for the on-sale bar defense was an offer by Quest itself to provide furnace tube inspection services to a client in the petrochemical industry. The district court agreed, and granted summary judgment of invalidity of claims 12, 24, and 33, and after discounting affidavits by Quest as “sham affidavits” also granted summary judgment as to claims 30 and 40.

The Federal Circuit noted that the parties agreed that the Norco Sale was “a commercial offer for sale” under § 102(b), and said that the fact that Quest did not sell its hardware or software (i.e., its method, computer-readable medium, or system) does not take Quest’s commercial activities outside the on-sale bar rule. Rather, Quest used its method, computer-readable medium, and system commercially to perform furnace inspection services and produce the Norco Reports for its customer. Sale of a product produced by performing a claimed process implicates the on sale bar. The same approach necessarily applies where a service is performed for compensation using a claimed computer-readable medium or system that generates a “product.” After concluding that all of the limitations in the claims were in fact met by the pre-critical date commercial activity, the Federal Circuit affirmed summary judgment with respect to claims
12, 24, and 33.

However as to claims 30 and 40, there was an additional limitation that the district court relied upon the testimony of a co-inventor to find was also present in the pre-critical date commercial activities. However Quest argued that there was a genuine issue of material fact that precluded summary judgment because there was also contrary evidence in the form of declarations by the same inventor, and a co-inventor contradicting the earlier deposition testimony, and explaining why the inventor Lorenzo had made an error. The district court rejected Quest’s arguments, concluding that the declarations were “sham affidavits” because they contradicted the earlier deposition testimony.

The Federal Circuit concluded that the declarations of cannot be dismissed as sham affidavits. First, the second co-inventor’s declaration did not contradict any earlier testimony that he gave. The general rule is that the sham affidavit doctrine allows a court to disregard an offsetting affidavit that is submitted in opposition to a motion for summary judgment when the affidavit contradicts the affiant’s prior deposition testimony, not another witness’s prior deposition testimony. The Federal Circuit also determined that it was error to disregard the first co-inventor’s declaration because it offered a detailed declaration in which he provided a “plausible explanation” why his deposition testimony was incorrect. (The co-inventor was shown only a portion of the source code that did not contain dated comments from after the critical date, indicating that the version he testified about was not in use prior to the critical date, and further the displays were inconsistent with the use of the code he was shown.).

The Federal Circuit said that the detailed explanation in the declaration and corroborating evidence took the declaration out of the sham affidavit doctrine. The Federal Circuit reversed summary judgment as to claims 30 and 40, and remanded.

Prior User Defense Protects Trade Secret Owners Whose Secret is Patented by Another.

The inventor of new technology has two choices for protection: patents or trade secrets.  They are generally mutually exclusive, because the disclosure requirements to obtain a valid patent, or inconsistent with the secrecy needed to have a protectable trade secret.  For most inventions, the choice is easy.  Because trade secrets only last while the invention is secret, they are not good protection for inventions that are revealed to the public when the invention is commercialized.  However, for inventions that are not disclosed by commercialization — typically inventions related to the manufacture of the product like recipes, manufacturing processes, and manufacturing equipment – trade secret protection may be a reasonable choice.  It is hard to detect infringement of a patent these types of patents inventions, so keeping the inventions out of the hands of competitors by keeping them secret may offer the best protection.

However, trade secrets have a critical weakness – the loss of secrecy destroys them.  Thus while trade secrets have a potentially infinite life, their life can also be disappointingly brief if the secrecy is lost  or if the it is independently developed.  But independent creation has another possible consequence – the second inventor might decide to patent the invention, and enforce it against the first inventor who decided to keep it a trade secret.

The first inventor could be vulnerable, as its activities may not constitute “prior art” that can be used to challenge the second inventor’s patent.  However the AIA created a prior user defense in 35 USC 273, which was tailor-made for this circumstance.  The defense applies to a patent on a process, or a machine, manufacture, or composition of matter used in manufacturing or other commercial process.  The defense requires that the prior user, (1) acting in good faith, (2) commercially used in the invention, (3) in the United States, (4) either in connection with an internal commercial use or a sale or transfer, (5) at least one year before the earlier of the patent filing date or first public disclosure.

The first inventor has the burden of proof, and thus should keep records sufficient to be able to established the defense.  The defense is also personal, and can only be asserted by the person who performed or directed the performance of the commercial use, or by an entity that controls, is controlled by, or is under common control with such person.  The defense can be transferred, but only ancillary and subordinate part of a good-faith assignment or transfer for other reasons of the entire enterprise or line of business to which the defense relates.  Moreover, when transferred, the defense is limited to the uses at sides where the invention was used before the later of the effective filing date of the claimed invention or the date of the assignment or transfer of such enterprise or line of business.

Of course asserting the prior user defense takes fortitude, be it is basically conceding infringement, and depending on the circumstances, willful infringement if the defense does not succeed.  Further, there are a number of limitations that make the prior use defense unreliable:

  • It only applies to  patents issued on applications filed after September 16, 2011, and does not apply to patents on inventions made, owned or subject to an obligation of assignment to either an institution of higher education or a technology transfer organization (35 USC 273(e)(5)). It must be proven by clear and convincing evidence. 35 USC 273(b).
  • The prior use must be continuous.  35 USC 273(e)(4).
  • The case will be deemed exception for purposes of an award of attorneys’ fees if the defense is asserted without a reasonable basis. 35 USC 273(f).
  • The defense is not a general license, but is limited to the prior commercial use, and improvements not covered by the claims. 35 USC 273(e)(3). The defense does not invalidate the patent.  35 USC 273(g).
  • The defense does not invalidate the patent.  35 USC 273(g).

For these reasons, a prior inventor who decides to rely on trade secret protection for an invention may wish to set up a invalidity defense should a second inventor come along and get a patent.  The first inventor might do so by making a public disclosure of just enough information to make the invention unpatentable without revealing the trade secret itself.  This disclosure might prevent a third party patent from issuing, or if it did issue, could be used to invalidate it. Such a strategy is fraught with uncertainty in striking the balance of invalidating subsequent patents while not disclosing enough to destroy the trade secret.

Another strategy might be to leverage the Supreme Court decision in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc., and arrange for a non-disclosing sale of the invention.  Since it should not make a difference who is the buyer and who is the seller, the first inventor could contract to buy the invention from a vendor bound by a confidentiality agreement.  Should a patent issue to a third party, this non-disclosing sale would be prior art as long as it occurred before the third party filed its patent application.  (Note that none of the exceptions in 102(b) appear to apply to a non-disclosing sale.).

It’s amusing to contemplate even more devious ways to hide prior art in plain sight, maintaining relative confidentiality while setting up a prior art road block to third party patents. Although such gamesmanship may not guarantee the desired result.  For example, in In re Wyer, 655 F.2d 221 (C.C.P.A. 1981), a patent application was filed with the Australian Patent Office, resulting in the publication of a printed abstract of the application, and microfilm copies being retained by the Australian Patent Office, available for the public to view and copy.  As a result, the application was found to be a prior art printed publication by the Federal Circuit’s predecessor, the CCPA.

In In re Hall, 781 F.2d 897 (Fed. Cir. 1986), a dissertation was submitted to the Department of Chemistry and Pharmacy at Freiburg University in Germany, indexed in a special dissertations catalog which was part of the general users’ catalog, and stored in the stacks in a special dissertation section.  As a result, the dissertation was found to be a prior art printed publication by the Federal Circuit.

In Mazzari v. Rogan, 323 F.3d 1000 (Fed. Cir. 2003) , a report was indexed, cataloged, and available to the public at the Ontario Power Generation Resource Center.  Another report was written in German, but also available at a library.  The court simply held, with respect to the German reference, that a publication printed in a foreign country can act as a statutory bar.  As a result, the report was found to be a prior art printed publication by the Federal Circuit.

In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004), a fourteen-slide presentation was printed and pasted onto poster boards and displayed continuously for two and a half days at an American Association of Cereal Chemists meeting, and then put on display for less than a day at an Agriculture Experiment Station at Kansas State University. As a result, the presentation was found to be a prior art printed publication by the Federal Circuit.

Finally, in Bruckelmyer v. Ground Heaters, Inc., 445 F.3d 1374 (Fed. Cir. 2006), a Canadian patent application included two figures that were cancelled during prosecution and not included in the patent that issued from the application.  The application, including the two cancelled drawings, was found to be a prior art printed publication by the Federal Circuit.

Conclusion

Deciding to treat an invention, particularly one relating to the manufacture of a product, as a trade secret, rather than patenting it, is often a good decision.  This is particularly true, if infringements would be hard to detect. However, the inventor should consider the ability to keep the invention secret, and the likelihood that a third party might subsequently make the same invention.  The inventor should also consider the likelihood that the third party might obtain a patent, and if the prior user defense should fail, what the inventor can do to be prepared to invalidate that patent.

District Court Read Mandate Too Broadly and Improperly Limited Validity Challenge

In Tek Global, S.R.L. v. Sealant Systems International, Inc., [2017-2507](March 29, 2019), the Federal Circuit vacated the district court’s final judgment as to validity and reversed the denial of a partial new trial on validity, finding that the district court improperly restricted SSI’s efforts to present the jury with relevant evidence of invalidity.

SSI argued that had the district court allowed it to present to the jury its obviousness theory based on Eriksen in view of Bridgestone, the jury would have found the asserted claims invalid. But the district court instructed the jury that it was not permitted to conclude that Bridgestone or Eriksen, alone or in combination with one another, discloses all the requirements of the claim at issue.

The Federal Circuit found that the district erred in interpreting its prior mandate to foreclose all obviousness theories based on Eriksen in view of Bridgestone. It was the only obviousness theory at issue in the prior appeal that was foreclosed, and the district court should not have barred SSI from presenting to the jury other preserved obviousness theories based on the combination of Eriksen and Bridgestone that were not before this court in the prior appeal.

Brrr!

With temperatures in parts of the U.S. lower than we have seen in decades, it seems appropriate to recognize the inventors whose work help us brave this weather weather.

First and foremost is Chester Greenwood, inventor of ear muffs, whose U.S. Patent No. 188,292, issued March 13, 1877:

Chester Greenwood’s patent in ear muffs.

Our thanks should also go to Joel Craddick, whose U.S. Patent No. 1,394,810, issued October 1921, on an “Electrothermal Garment” — among the earliest electrically heated clothing.

Joel Craddick’s patent on an electrothermal garment.

However, inventors’ work on protecting us from the cold continues to this day, and John Elson, Kerrie Gath, Clay Maranville, and Victoria Schein, were issued U.S. Patent No. 10,143,043 on a “Heated Seat Belt.” While when I am backing out of my driveway at 1° F I will be wearing a jacket so thick that I won’t be able to tell whether or not the seat belt is warm, I can still appreciate their thinking of us.


John Elson, Kerrie Gath, Clay Maranville, and
Victoria Schein’s U.S. Patent on a Heated Seat Belt.