Category: Intellectual Property

U.S.-Centered Negotiations for Product Made and Sold Outside United States Do Not Constitute Sale or Offer for Sale in United States

Mcdermott Will Emery Law Firm

Halo Elecs., Inc. v. Pulse Elecs., Inc. and Pulse Elecs. Corp.

In a case exploring the limits of what constitutes a sale or offer for sale “within the United States” under 35 U.S.C. § 271(a), the U.S. Court of Appeals for the Federal Circuit found that sales were carried out outside of the United States and, even though they were partially negotiated in the United States, did not constitute an infringement of U.S. patent rights under § 271(a).  Halo Elecs., Inc. v. Pulse Elecs., Inc. and Pulse Elecs. Corp., Case Nos. 13-1472; -1656 (Fed. Cir., Oct. 22, 2014) (Lourie, J.) (O’Malley, J., and Hughes, J., concurring).

Halo accused Pulse of infringing its patents related to surface mount electronic packages containing transformers for mounting on a printed circuit board.  Pulse’s products were manufactured in Asia and the majority of its products were delivered to customers in Asia.  Pulse received the purchase orders for these products abroad.  However, Pulse engaged in pricing negotiations with its customers in the United States, and Pulse’s U.S.-based employees had to approve prices quoted by its agents when those prices fell beneath a threshold.  The district court granted Pulse summary judgment of non-infringement finding that its activities for these sales were insufficient to constitute a sale or offer for sale “within the United States.”  After a trial finding that the same products that did enter the United States infringed Halo’s patents, the district court found Pulse’s substantial invalidity defense negated the objective prong of willfulness under In re Seagate.  Halo appealed.

On appeal, the Federal Circuit panel affirmed that Pulse’s U.S.-based activities for its products manufactured and sold in Asia were not sales or offers for sale “within the United States.”  The Court noted that while a sale is not necessarily limited to the place of transfer of the tangible property, but may also be determined by the place where agreement to such a transfer takes place, extraterritorial applications of U.S. patent law were disfavored.  The Court found it was undisputed that the products at issue were manufactured, shipped and delivered abroad; that the purchase orders were received abroad; that the negotiations that occurred in the United States did not constitute a firm agreement to buy and sell; and that Pulse was paid abroad for its products.  Based on these facts, the Court found it need not reach Halo’s argument that the place of formation of a contract can be determinative of whether a sale has occurred “within the United States.”  The Court further explained that for an offer to sell to constitute infringement, the offer must be to sell a patented invention within the United States, and that Pulse’s actions therefore did not constitute an offer for sale cognizable under the Patent Act.  Finally, the panel affirmed the district court’s finding of no willfulness, agreeing that Pulse’s presentation of a substantial invalidity defense at trial negated the objective prong of the willfulness test.

Practice Note: In a concurrence, Judge O’Malley and Judge Hughes, while agreeing with the finding of no willfulness under current case law, urged the full court to reexamine its enhanced damages jurisprudence in light of the Supreme Court of the United States’ decisions in Highmark v. Allcare Health Management Sys., and Octane Fitness v. ICON Health & Fitness.  Specifically, the concurrence urged reconsideration of the two-part subjective/objective test required under Seagate; the requirement that willfulness be proven by clear and convincing evidence; whether de novo review is the appropriate standard on appeal; and whether willfulness must be decided by the court as a matter of law.

ARTICLE BY

Christopher L. May
OF
McDermott Will & Emery

Antares Pharma Bolsters the “Original Patent” Rule for Reissued Patents

Michael Best Logo

On November 17, the Federal Circuit decided Antares Pharma, Inc. v. medac Pharma Inc., holding reissued patent claims invalid for failing to comply with the “original patent” requirement of 35 U.S.C. § 251. The court’s decision casts a spotlight on the original patent rule and reinvigorates the little-used doctrine as an invalidity defense against reissued patent claims.

In Antares Pharma, the plaintiff alleged infringement of U.S. Patent RE44,846. Specifically, the plaintiff asserted four claims that had been added through reissue proceedings to broaden the original patent. The original claims were directed to various embodiments of a jet injection device, and the asserted reissue claims covered particular safety features for any injection device. The patentee sought a preliminary injunction, which the district court denied. The court found substantial questions of validity regarding whether the reissued claims impermissibly recaptured subject matter surrendered during prosecution to obtain the original claims.

On appeal, the Federal Circuit declined to address the recapture issue. The court instead decided the case by invoking the original patent rule, an issue that had been argued but not resolved below.

Section 251, which governs reissue applications, states in pertinent part that where a patentee has by error claimed more or less that it had a right to claim in a patent, the Patent Office will “reissue the patent for the invention disclosed in the original patent.” The italicized provision had previously been applied in a manner analogous to the written description requirement to require that reissue claims found adequate support in the disclosure of the original patent. In Antares Pharma, however, the Federal Circuit turned to Supreme Court precedents dating back as far as 1854 to read a more stringent standard into the “original patent” provision of § 251. In particular, the court held that whether or not the written description requirement was satisfied, “the specification must clearly and unequivocally disclose the newly claimed invention as a separate invention.”

Applying that standard to the reissue claims on appeal, the court not only affirmed the denial of a preliminary injunction, but also held the asserted reissue claims invalid as a matter of law. The court concluded that the safety features claimed during reissue were never described separately from the jet injector or disclosed in the particular claimed combinations. Because the original specification lacked “express disclosure” of the exact embodiments recited in the reissue claims, those claims failed to satisfy the original patent requirement.

The Antares Pharma decision provides guidance to potential reissue applicants and offers a significant new weapon for parties accused of infringing a reissued patent. For patentees, the decision expands the risks associated with using a reissue application to seek supplemental or complementary patent protection—the reissue applicant not only risks intervening rights and undesirable modification or loss of previously issued claims, but now faces a heightened requirement, not applicable to continuing applications, for clear and unequivocal disclosure of the newly claimed subject matter as a separate invention. To the extent practical, new applications should clearly set forth each potential invention with detailed examples. For parties accused of infringement, the exacting Antares Pharma standard will provide an additional, robust basis for validity challenges against asserted reissue claims during litigation.

ARTICLE BY

Andrew T. Dufresne
Marshall J. Schmitt
OF
Michael Best & Friedrich LLP

Trademark Assignments: Keeping it Valid

Lewis Roca Rothgerber

After a trademark achieves federal registration, ownership of the mark may change hands for a variety of reasons. When a trademark owner transfers their ownership in a particular mark to someone else, it is called an assignment. Generally, for an assignment of a trademark to be valid, the assignment must also include the ‘goodwill’ associated with the mark (goodwill is an intangible asset that refers to the reputation and recognition of the mark among consumers). If the assignment of a trademark includes the mark’s goodwill and is otherwise legal, the assignee gains whatever rights the assignor had in the mark. Importantly, this includes the mark’s priority date, which has implications for protecting the mark from potential infringers going forward.

In contrast, if an assignment of a trademark is made without the mark’s accompanying goodwill, then it is considered an assignment “in gross” — and the assignment is invalid under U.S. law. Courts have analyzed whether an assignment was made in gross in a few different ways, but, as is the case with much of trademark law, protecting customers from deception and confusion is the primary motivation behind any analysis for determining the validity of an assignment.

One way courts determine if an assignment was made in gross is through the substantial similarity test. This test essentially examines whether the assignee is making a product or providing a service that is “substantially similar” to that of the assignor, such that consumers would not be deceived by the assignee’s use of the mark. This analysis includes an assessment of the quality and nature of the goods and services provided under the mark post-assignment.  Thus, even if an assignee is using the mark on the same type of goods, but the goods are of lower quality than the goods previously offered by the assignor under the mark, the assignment could be invalid. However, slight or inconsequential changes to goods and services after an assignment are not likely to invalidate the assignment, as such changes are to be expected and would not thwart consumer expectations.

Decisions on the question of substantial similarity are only marginally instructive, as the  test calls for a fact specific inquiry into what the consuming public has come to expect from the goods or services offered under a given mark. For example, courts have noted that despite similarities in services and goods, “even minor differences can be enough to threaten customer deception.”[1] Instances of products or services that were deemed not substantially similar (and thus resulted in invalid assignments) include: an assignee offering phosphate baking powder instead of alum baking powder;[2] an assignee using the mark on a pepper type beverage instead of a cola type beverage;[3] an assignee producing men’s boots as opposed to women’s boots;[4]an assignee using the mark on beer instead of whiskey;[5] and an assignee selling hi-fidelity consoles instead of audio reproduction equipment.[6]

Conversely, case law has also shown that substantial similarity can be found even when products or services do differ in some aspects, if consumers aren’t likely to be confused. For example, the following product changes did not result in a finding of an invalid assignment: an assignee offering dry cleaning detergent made with a different formula;[7]an assignee using thinner cigarette paper;[8] and an assignee selling a different breed of baby chicks.[9]

Whether goods or services are substantially similar may seem like an easy test to apply, but, as case law demonstrates, this fact-intensive analysis can yield results that look strange in the abstract. Disputes involving the validity of a trademark assignment are decided on a case-by-case basis, using the specific facts at hand to determine if consumer expectations are being met under the new use. Thus, while trademarks acquired through assignment can have significant value (and grant the assignee important rights formerly held by the assignor), assignees should be wary of changes to goods or services under an acquired mark that could be seen as deceiving the public.

ARTICLE BY

Rachel A. Nicholas
OF
Lewis Roca Rothgerber LLP

[1] Clark & Freeman Corp. v. Heartland Co. Ltd., 811 F. Supp. 137 (S.D.N.Y. 1993).

[2] Independent Baking Powder Co. v. Boorman, 175 F. 448 (C.C.D.N.J.1910).

[3] Pepsico, Inc. v. Grapette Company, 416 F.2d 285 (8th Cir. 1969).

[4] Clark & Freeman Corp. v. Heartland Co. Ltd., 811 F. Supp. 137 (S.D.N.Y. 1993).

[5] Atlas Beverage Co. v. Minneapolis Brewing Co., 113 F.2d 672 (8 Cir. 1940).

[6] H. H. Scott, Inc. v. Annapolis Electroacoustic Corp., 195 F.Supp. 208 (D.Md.1961).

[7] Glamorene Products Corp. v. Procter & Gamble Co., 538 F.2d 894 (C.C.P.A. 1976).

[8] Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899 (1988).

[9] Hy-Cross Hatchery, Inc v. Osborne 303 F.2d 947, 950 (C.C.P.A. 1962)

Timeliness – The Devil Is in the Details (a.k.a. Rules)

Mcdermott Will Emery Law Firm

GEA Process Engineering, Inc. v. Steuben Foods, Inc.

In an order issued by the Patent Trial and Appeal Board (PTAB or Board), the Board expunged exhibits from the records of five related cases on the basis of timeliness. GEA Process Engineering, Inc. v. Steuben Foods, Inc., Case Nos. IPR2014-00041, IPR2014-00043, IPR2014-00051, IPR2014-00054, IPR2014-00055 (PTAB, Sept. 29, 2014) (Elluru, APJ).

In post-grant proceedings, it is important to note that there are two different deadlines for objecting to evidence.  Prior to institution, a patent owner is required to object to evidence submitted to the PTAB with the petition within 10 business days of institution of a trial. Once the trial has begun, i.e., after institution, a party seeking to object to the introduction of evidence or an exhibit must raise its objection within five business days of service of the evidence or exhibit. The objections should be served on the offering party and not filed with the PTAB.

In GEA Process Engineering v. Steuben Foods, following the institution of trial, the petitioner filed what it characterized as exhibits entitled “Petitioner’s Objections” to the patent owner’s evidence. However, the PTAB expunged the exhibits from the records of all five cases. As the Board explained, the applicable rule, 37 C.F.R. § 42.64(b)(1), requires that “[o]nce a trial has been instituted, any objection [to evidence] must be served within five business days of service of evidence to which the objection is directed.” As such, the petitioner’s filingits objections to the patent owner’s evidence, at the Board was improper—a potentially costly mistake.

ARTICLE BY

Ryan Edmond Vachon
OF
McDermott Will & Emery

.bit: Why Brands Need to Pay Attention [VIDEO]

Sterne Kessler Goldstein Fox

Monica Riva Talley, director at the intellectual property law firm Sterne, Kessler, Goldstein & Fox, P.L.L.C., discusses the unregulated domain .bit and why brands need to pay attention to this “Wild West of the Internet.” As Ms. Talley explains, ‘.bit’ is unlike any customary domain and presents several areas of concern for intellectual property owners including cybersquatting, the use of pirated content, and the absence of oversight or control by any regulatory entity.

© 2014 Sterne Kessler
ARTICLE BY

Monica Riva Talley
OF
Sterne, Kessler, Goldstein & Fox P.L.L.C.

They Know It When They See It: Patentable Subject Matter After Alice

VedderPriceLogo

To those with even a casual interest in the preparation and prosecution of patents in the United States, the holding in the Supreme Court’s June 2014 decision in Alice Corp. v. CLS Bank International is well known: claims directed to intermediated settlement encompass an abstract idea, and generic recitation of a computer implementation in such claims fails to transform the abstract idea into patent-eligible subject matter. Predictably, numerous articles have since been published extolling the virtues (or lack thereof, as the case may be) of theAlice decision. While the patent eligibility debate is good and necessary, it leaves open the question of many would-be patentees: may I get a patent on my software-based innovation?

While the Court provided virtually no “bright line” rules in answer to this question, the decision nevertheless suggests various approaches that may be employed going forward to best ensure your patent application embraces patent-eligible subject matter.

Background

Alice Corporation obtained various patents directed to, as the Court put it, “a computerized scheme for mitigating ‘settlement risk’—i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation.” In a highly fractured opinion, the Court of Appeals for the Federal Circuit concluded that all of Alice’s claims were directed to patent-ineligible subject matter.

On further appeal, the Court cited its recent decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., in which the Court laid out its two-step process for separating patents directed to patent ineligible concepts from “those that claim patent-eligible applications of those concepts.” First, one must “determine whether the claims at issue are directed to . . . patent ineligible concepts.” If so, in the second step, one must then ask what else is in the claims that may be sufficient to “transform” the ineligible concept into a patent-eligible application thereof.

Unfortunately, the Court provides no guidance how one goes about determining whether claims are directed to ineligible concepts in the first step. In fact, the Court expressly takes a pass on the issue, stating that it “need not labor to delimit the precise contours” of what constitutes a patent-ineligible concept. Instead, the Court noted that it’s Bilski decision concerned claims directed to “hedging,” which “all members of the Court agreed” constituted an abstract idea. Without further reference to the actual language of the claims, the Court stated that Alice’s “claims . . . are drawn to the concept of intermediated settlement.” With this setup, the Court quickly concluded that “[l]ike the risk hedging in Bilski, the concept of intermediated settlement is a ‘fundamental economic practice long prevalent in our system of commerce.'”

Turning to the second step, the Court had little trouble in determining that various other recitations in the claim beyond the abstract idea failed to “do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” Looking at “the claim elements separately,” the Court stated that “each step does no more than require a generic computer to perform generic computer functions.” Further, considering the claimed computer elements “as an ordered combination” did not add anything “that is not already present when the steps are considered separately.”

Going Forward

So, you are now considering patent protection for your new, software-implemented invention, but the Court’s “guidance” in Alice has left you unsure whether it makes sense to proceed. Despite the outcome in Alice, patents based on software-implemented innovations have not been knocked out entirely, though they did take a pretty good punch to the gut. Going forward, would-be patentees must take greater care to ensure that they claim and present their inventions in a manner that minimizes the likelihood of being interpreted as an “abstract idea.” The following observations should help you avoid that pitfall.

1. Stay As Far Away From Bilski and Alice As You Can

As noted, the closest the Court came to providing concrete guidance for identifying patent-ineligible abstract ideas was to measure how close the underlying “inventive concept” of an invention comes to the abstract ideas found in Bilski and, in the future, Alice. That is, if the subject matter of your claims is reasonably analogous to the risk hedging claimed in Bilski or the intermediated settlement in Alice, it’s almost certainly going to be viewed as embracing an abstract idea. Instead, try to find a way to describe the subject matter of your invention as something other than a concept that is related to these concepts.

Even more so than before, for software-implemented ideas, application drafting will require a careful balancing of what you say in the specification and in the claims. That is, the difference between whatever abstract idea is arguably discussed in the specification versus the limitations in your claims (∆abst) should be as large as possible.

For example, assume an invention concerns a new technique for completing payments for goods and services via mobile, wireless devices, which method facilitates a more rapid exchange of certain types of data. Having a method claim that begins “A method for completing payments via mobile, wireless devices” strongly suggests that the “inventive concept” is directed to the mere idea of completing financial transactions, which starts to sound awfully similar to the intermediated settlement of Alice. Rather than focusing the claim on the novelty of the financial transaction itself, attempt to focus the claim on the effect the method has on the underlying mobile device, e.g., “A method for communicating transactional data by a mobile, wireless device.”

2. Get “Technical”

Perhaps more importantly, even if you can strongly contrast your claims to the underlying abstract idea, you may still be on shaky grounds if your application doesn’t somehow discuss how it leads to a technological improvement. In Alice, when rejecting the sufficiency of a generic computer implementation to rescue claims otherwise directed to an abstract idea, the Court specifically noted that the claim did not “purport to improve the functioning of the computer itself . . . [or] effect an improvement in any other technology or technical field.” Stated another way, rather than directing your specification and claims as teaching improvements to a traditionally human-implemented field of endeavor (e.g., hedging risk, mediating settlement risk), they should clearly establish how the innovation improves the operation of a machine (i.e., the computer implementing the software-driven method) or an overarching “technology or technical field” in which the computer-implemented method is employed.

The graph below illustrates the apparent “sliding scale” nature of the abstract idea and technology aspects of the Alice decision. As shown, the connection of the claimed subject matter to improvement to a particular technology is shown along one axis, and the distinction of the claims over an encompassed abstract idea (∆abst) is shown along the other. For claimed subject matter that demonstrates little distinction from the alleged abstract idea and that demonstrates a weak connection to a technological improvement, there is little likelihood (“No Chance”) of demonstrating subject-matter eligibility. Oppositely, for claimed subject matter that is strongly distinguished from the alleged abstract idea and that clearly concerns a technological improvement, there is a much greater likelihood (“No Problem”) of demonstrating subject-matter eligibility. It is to be expected, however, that the relative areas of the illustrated outcomes will be different according to the particular realm of abstract ideas at hand, i.e., the “No Chance” area is likely to be much larger when dealing with finance-related inventions versus inventions concerning, say, telecommunications.

 

For example, assume an invention concerns a new process applicable to trading platforms for various financial instruments, e.g., stocks, commodities, etc. Where possible, one should not stress how the claimed process makes trading markets more efficient or enables different types of financial instruments to be traded. Instead, it may be better to acknowledge in the specification that electronic trading is well-known and that the invention leads to better operation of the underlying machines (e.g., where the claimed process enables the machine to complete more trades per unit of time, complete the trades more accurately, in a manner less consuming of resources, etc.) or broadens the capabilities of such machines (e.g., where the process provides a function that was previously unavailable). In drafting the specification, carefully ascribe certain steps to humans versus machines where possible and then make sure the claims don’t include any of the human-performed steps.

3. Get to Know a European Patent Attorney

It has been observed by many commentators that the Alice decision is yet another nudge of U.S. practice in the direction of European practice, i.e., focused on a “technical problem” for which your invention must provide a “technical solution.” European patent attorneys have been dealing with such issues for many years and may be able to offer valuable insights how to best position your invention in an application.

4. Be Prepared to Make Decision Makers Prove “Abstractness”

A concern with the Court’s lack of guidance when assessing whether a claim embraces excluded subject matter is that, not unlike those seeking to obtain patents, the examiners at the U.S. Patent & Trademark Office (USPTO) and federal district court judges will be equally in the dark. Unfettered from concrete guidance, it may be anticipated that examiners and judges will be more apt to make unsubstantiated assertions that claims encompass abstract ideas. Having drafted your claims and specification as noted above, i.e., emphasizing less how the invention helps achieve a business goal or perform human tasks better and instead illustrating how it improves/extends operation of an underlying machine or overarching technology, you will at least have a stronger foundation for arguing against the alleged abstract idea.

ARTICLE BY

Christopher P. Moreno
OF
Vedder Price

ICANN’s gTLD Program – A Look Back and Forward

Sterne Kessler Goldstein Fox

ICANN’s new Generic Top-Level Domain (gTLD) program has been in full swing for over a year now, so it seems an apt time to examine some statistics as to how brands are engaging with new gTLDs, utilizing the Trademark Clearinghouse (TMCH), and which new gTLDs may give .com a run for its money.

gTLD Registration

While ICANN is expecting more than 1,300 gTLDs to go live in the following years, for the moment only slightly more than 400 are available. Despite the relatively slow roll-out of new top level domains (the characters following the ‘.’ in a domain name), the total number of registrations within these new domains has exceed the one million mark.

To date, the top five strings sitting atop the gTLD registrations list are: .xyz, .club, .guru, .berlin, and .photography. The most popular new string .xyz, which is marketing itself as an alternative to the crowded .com registry, has amassed nearly 525,000 registrations alone.

Interest and Adoption by Top Brands

World Trademark Review (WTR) recently explored the .xyz domain registration of the 50 most valuable brands and found that 80% had either registered or blocked their brand in this space. WTR’s review also found evidence of prevalent cybersquatting; for example, a single individual currently owns the domains names “americanexpress,” “honda,” and “homedepot” in the .xyz space.

In general, the levels of brand adoption and interaction with the gTLD program overall remains inconsistent, with some brands significantly more pro-active than others in their fields. Even when it comes to the Trademark Clearinghouse (TMCH), companies traditionally known for brand protection, including RedBull, Nintendo, and Blackberry, have evidently decided not to register their marks with this rights protection database

Trademark Clearinghouse

The TMCH is ICANN’s centralized database of registered trademarks related to the new gTLD program. According to the most recent figures released by the TMCH, nearly 33,000 marks from 103 countries and covering 119 jurisdictions have been submitted. These marks represent protection for over 11,000 brands and businesses worldwide. Of the marks submitted, 87% have been registered by a trademark agent, approximately 50% for multiple years, and nearly 98% have been verified. The TMCH will still be accepting mark submissions and renewals indefinitely, and approximately 7,000 marks have been submitted since the beginning of the year. On November 5 of this year, the first group of TMCH registrations will be up for renewal.

The TMCH is also tasked with delivering Claims Notices to those attempting to register a domain name matching a trademarked term. In March the Clearinghouse revealed that in excess of 500,000 Claims Notices had been issued, and 95% of the infringing domain registrations were no longer being pursued. The TMCH hailed the number of delivered Claims Notices as an indication of a “high level of interest in trademarked terms from third parties,” and proof that “protection mechanisms are working.”

But, while these findings appear to suggest the success of defensive mechanisms, there are at least two alternative interpretations of the data that likely influence these numbers. First, many of the infringing domain registrations were likely the product of data-mining and unlikely to have been pursued regardless. The second is that the sheer number of Claims Notices being issued may be keeping individuals with valid applications on the sidelines. Regardless of the reasoning behind the Claims Notices, they are at least evidence of the popularity and interest surrounding the new gTLD program.

gTLD Round Two?

As the first expanded gTLD round rollout progresses towards conclusion, ICANN has begun planning the second round. The organization has stated publically that the next round is expected in 2016 at the earliest,” but experts believe 2017 is a more realistic time frame.

In preparation for the second round of gTLDs ICANN has published a Draft Work Plan. The 27 page document details several sets of reviews and activities scheduled to guide consideration for the second round of applications. The plan addressed program implementation reviews, root stability, rights protection, the GNSO, and competition, consumer trust, and choice reviews.

As the gTLD space continues to expand indefinitely, brands will have to continue to monitor and reassess how to navigate this dynamic landscape.

ARTICLE BY

Monica Riva Talley
OF
Sterne, Kessler, Goldstein & Fox P.L.L.C.

Renewal Deadline – 1 Year Trademark Clearinghouse Registrations

Sterne Kessler Goldstein Fox

If your company was an early registrant in the Trademark Clearinghouse, it is likely your registrations had an effective date of November 5, 2014, the date the Clearinghouse went “live.” If so, the deadline to renew one-year registrations is November 5, 2014.

© 2014 Sterne Kessler
ARTICLE BY

Monica Riva Talley
Tracy-Gene G. Durkin
Ivy Clarice Estoesta
Julie D. Shirk
OF
Sterne, Kessler, Goldstein & Fox P.L.L.C.

“The Good Wife” Defends Genetically Modified Organisms (GMOs)

Schwegman Lundberg Woessner

Last Sunday’s episode of “The Good Wife” featured a Christian mediation between a farmer (Robert Joy) sued by a Pioneer-like company, represented by the actor Richard Thomas, for saving GMO corn seed for replanting. The facts were a mash-up of J.E.M. Ag Supply v. Pioneer Hi-Bred., 534 U.S. 124 (2001), and Monsanto Canada v. Schmeiser, 1 S.C.R. 902 (2004). In the former case, JEM was selling Pioneer’s hybrid seed that had been “saved” by farmers from a previous crop of the seed, in violation of the shrink wrap-type license on the original Pioneer seed they had purchased at JEM. In Monsanto-Canada, a farmer saved and replanted glyphosate-resistant canola seed from a field he claimed was contaminated by “GMO” pollen from neighboring fields.

In J.E.M. Ag Supply, the only defense mounted by J.E.M. was that utility patents should not be issued on plants and, fortunately, the Supreme Court disagreed, in a decision that includes both plants made by conventional breeding techniques and transgenic modifications. In Monsanto Canada, the farmer was found to have infringed Pioneer’s patents.

In the “Good Wife” episode, the farmer was accused of saving seed in violation of the agribusiness’ patents. He argued that his field had been contaminated by “seed” blown from neighboring GMO fields, but Florick Agos presented an expert witness who “testified” that such blow-over would only “contaminate” about 6% of a non-GMO crop per year. The farmer and the agribusinessman were friends and after the farmer admitted he had replanted the transgenic canola, they settled the dispute with the farmer agreeing to pay some small amount of damages, as I recall.

The major issue for patent attorneys working in the ag biotech area (and for agribusiness itself) is the public perception –despite decisions upholding the patentability of plants in the U.S. or of the transgene or the transformed plant cell in Canada—that it is wrong to patent living organisms. At the end of the “Good Wife” mediation scene, one of the parties – the preacher? – exclaims that he is shocked that plants can be patented. J.E.M. was one of the last Supreme Court decisions that expanded the scope of patent rights. The Canadian Supreme Court was divided in ruling for Monsanto. As succinctly summarized by the majority:

“Inventions in the field of agriculture may give rise to concerns not raised in other fields—moral concerns about whether it is right to manipulate genes in order to obtain better weed control or higher yields. It is open to Parliament to consider these concerns and amend the Patent Action should it find them persuasive.”

© 2014 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.
ARTICLE BY

Warren Woessner
OF
Schwegman, Lundberg & Woessner, P.A.

U.S. Bancorp CBM Results in Cancellation of Retirement Capital Access Management Co.’s Patent Claims

Schwegman Lundberg Woessner

In 2011, U.S. Patent 6,625,582, entitled Method And System For Converting A Designated Portion of Future Social Security And Other Retirement Payments To Current Benefits, was assigned to Retirement Capital Access Management Company LLC.  Benefit Funding Systems LLC asserted the ’582 patent against U.S. Bancorp in June of 2012.  Benefit Funding Systems LLC v. U.S. Bancorp, Case No. 1:12-cv-803-LPS (D. Del. filed June 22, 2012).  In response, U.S. Bancorp filed a CBM petition requesting review of claims 1, 13, 14, 18, 30, and 31 of the ’582 patent on March 29, 2013.  U.S. Bancorp asserted that the ’582 patent qualified for CBM review under 35 U.S.C. § 324 and Sec. 18(a) of the Leahy-Smith America Invents Act, Pub. L. 112-29, 125 Stat. 284, 329 (2011), and that these claims were invalid under 35 U.S.C. § 101.

U.S. Bancorp’s CBM Petition states:

The specification states that “[t]he present invention relates generally to a system and method which provides a mechanism for a [beneficiary] of Social Security payments, or of other retirement payments, to access present value of a designated portion of its future retirement payments . . . . [W]ithout encumbering the beneficiary’s rights to its future retirement benefits.” See U.S. Bancorp Ex.1003 (‘582 patent), Col. 1:10-22.

The ‘582 patent explains that “retirement age individuals” are finding retirement benefits or the anticipated timing of those benefits “to be somewhat inadequate to meet their present and future financial needs, expectations, and objectives.” See U.S. Bancorp Ex.1003, Col. 1: 23-29. The ‘582 patent further states that such retirement benefits “have not generally been seen as an adequate source of current capital, particularly to support financing based upon future receipts” due to “the current legislated proscriptions . . . against assigning or otherwise alienating future retirement benefits.” U.S. Bancorp Ex.1003, Col. 1:35- 43. Therefore, the ‘582 patent purports to provide a financial program that allows a beneficiary to access the present value of future retirement payments while complying with U.S. laws restricting alienation of future retirement benefits. U.S. Bancorp Ex.1003, Col. 1:43-49. Curiously though, the ‘582 specification does not explain – and claims do not recite any limitations regarding – how the patented financial scheme complies with U.S. laws. Instead, each independent claim merely includes the limitation that monetary benefits are provided “without violating legislated proscriptions in the United States against alienation of future retirement funds.” See, e.g., U.S. Bancorp Ex.1003, Col. 9:8-9 (claim 1).

(CBM Petition at pp. 4-5.)

Claim 1, which is representative of the subject matter, recites:

1.  A computerized method for creating a source of funds based on present value of future retirement payments, comprising the steps of:

a. designating an account in a depository for a beneficiary to receive future retirement payments payable to said beneficiary from a source of said retirement payments for a preselected period of time;

b. designating a benefit provider for providing a monetary benefit to said beneficiary;

c. authorizing said depository to periodically disburse a predetermined portion of said retirement payments deposited in said account to said benefit provider during said preselected period of time;

d. providing said monetary benefit to said beneficiary from said benefit provider based at least in part on present value of a designated portion of said future retirement payments without encumbering said beneficiary’s right to said future retirement payments and without violating legislated proscriptions in the United States against alienation of future retirement benefits;

e. causing said future retirement payments to be deposited into said account throughout said preselected period of time;

f. causing said depository to transfer a portion of said retirement payments deposited into said account to said benefit provider during said preselected period of time; and

g. reimbursing said benefit provider from resources other than said future retirement payments if said transfer of a portion of said retirement payments from said depository to said benefit provider are curtailed prior to said end of said preselected period of time, and making said retirement payments available for the exclusive use of said beneficiary.

The CBM Petition concluded:

Importantly, none of the claim steps is limited to performance on, or by, any specific device or computer. Indeed, no device or computer is needed at all, as all of the steps can be performed by a human.

(CBM Petition at p. 9.)

The Patent Owner (Retirement Capital Access Management Co. LLC) filed a Preliminary Response on July 2, 2013, arguing that the Petitioner failed to carry its burden of showing that it is more likely than not that at least one of the challenged claims of the ’582 patent is unpatentable under § 101, at least in part because:

 

  • the Petitioner cannot show “that, in practice, the claims cover the abstract concept itself”; and

  • the use of a computer as part of the specialized electronic funds transfer is not merely convenient, or done for the purpose of expediting calculations.

 

Despite these arguments, the Board granted institution of CBM review on September 20, 2013.  (CBM2013-00014, Paper 12, Sep. 20, 2013.)  A Patent Owner Response dated November 20, 2013 was filed that set forth the arguments from the Preliminary Response and provided an argument that § 101 is not a proper ground upon which a covered business method review may be maintained.  (Patent Owner Retirement Capital Access Management Company LLC’s Response, Paper 19, p. 37, Nov. 20, 2013.)  A Reply was filed by the Petitioner and an Oral Hearing was held on April 1, 2014.  No depositions were taken, based on the record in PRPS.

The Board issued a final written decision, dated Aug. 22, 2014, canceling each of the challenged claims under 35 U.S.C. § 101.  The Board dismissed Patent Owner’s assertion that CBM review cannot be premised on § 101, stating that the AIA allows for CBM reviews to include certain grounds of invalidity based on conditions for patentability, including § 101:

As recognized by the Supreme Court, § 101 is a condition for patentability. In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 12 (1966), the Supreme Court stated that the 1952 Patent Act “sets out the conditions of patentability in three sections,” citing 35 U.S.C. §§ 101, 102, and 103. The Supreme Court has also addressed invalidity under § 101 when it was raised as a defense to an infringement claim under § 282. See Mayo Collaboration Servs. v. Prometheus Labs, Inc., 132 S.Ct. 1289, 1293 (2012).

(Decision at p. 9.)

What is also notable about this proceeding is that the CBM review didn’t include:

 

  • anticipation or obviousness grounds (and the necessary submissions of prior art),

  • an assertion of indefiniteness,

  • an expert declaration to support the CBM Petition, and

  • depositions of experts by either side.

 

Indeed, at 36 pages in length, the CBM Petition is roughly half the length allotted by the Board’s rules.  Thus, a relatively short record was produced in this CBM.  However, as covered in a previous post, this is not the only Petitioner to take advantage of this approach (See a similar approach in LinkedIn Corporation v. AvMarkets, Inc., CBM2013-00025.)

ARTICLE BY
Timothy Bianchi

OF
Schwegman, Lundberg & Woessner, P.A.