PATENTS
$1.5 BILLION VERDICT AGAINST MICROSOFT SET ASIDE BY DISTRICT COURT
CRS Weighs In On Supreme Court Decision In KSR v. Teleflex
Symbol Must Be Placed Near Protected Item, Federal Circuit Panel Rules
Paparella & Associates moves office locations in Atlanta
USPTO Issues New Rules - Costlier Patents likely
PATENTS
$1.5 BILLION VERDICT AGAINST MICROSOFT SET ASIDE BY DISTRICT COURT
DATELINE: SAN DIEGO
A jury's damage award of $1.5 billion to Alcatel-Lucent in February for infringement by Microsoft Corp. of two Lucent patents cannot stand because the plaintiff conclusively proved infringement of only one of the patents at issue, U.S. Judge Rudi M. Brewster of the Southern District of California concluded yesterday (Lucent Technologies v. Gateway Inc. et al., 02CV2060-B consolidated with 03CV0699-B and 03CV1108-B, S.D. Calif.).
According to Judge Brewster, Microsoft is entitled to judgment as a matter of law (JMOL) that it did not infringe - directly or indirectly - U.S. Patent No. 5,341,457; furthermore, a retrial may be needed to determine ownership of Lucent's second asserted patent, RE 39,080.
Lucent filed 15 patent claims against personal computer makers Gateway and Dell in 2003; Microsoft intervened on the basis that the patents in question were closely tied to its Windows operating system, eventually counterclaiming for a declaration of noninfringement.
The '457 patent, titled "Perceptual Coding of Audio Signals," and the '080 patent relate to the conversion of audio into the digital MP3 file format. During trial, which began in January, Microsoft argued that it had licensed the relevant technology for $16 million from German corporation Fraunhofer, which is largely responsible for the file format. Thus, Microsoft asserted, it could not have infringed the patents in suit. In response, Alcatel-Lucent claimed that it owned patented technology unrelated to Microsoft's license. The plaintiff was formed after Alcatel and Lucent merged in 2006; AT&T's Bell Labs also was an innovator of MP3 technology and became part of Lucent in 1996.
Jurors rejected the software giant's assertions, finding that claims 1, 3 and 4 of the '080 patent were contributorily infringed domestically and abroad through the supply of components and that infringement also was induced by Windows Media Player versions 10 and 11 and by Windows Media Player with Cyberlink plug-in. Furthermore, claims 1, 5 and 10 of the '457 patent were infringed by Microsoft, the jury found. Jurors rejected Microsoft's assertions that the '080 patent was invalid as anticipated and/or obvious.
In granting Microsoft JMOL, Judge Brewster reversed his April post-trial ruling upholding the verdict, finding yesterday that with regard to the '080 patent, "the jury's verdict was against the clear weight of the evidence." Because the disputed claims were performed on or after April 1989 - under the agreement in place between AT&T and Fraunhofer - Fraunhofer is in fact co-owner of the '080 patent, and Microsoft's affirmative defense that the patent was lawfully licensed was erroneously discounted. The jury's finding that the HQ encoder of the Windows Media Player infringes the '457 patent is unsupported by the evidence, Judge Brewster held.
CRS Weighs In On Supreme Court Decision In KSR v. Teleflex
DATELINE: WASHINGTON, D.C.
The U.S. Supreme Court's recent opinion in KSR v. Teleflex "may generate litigation over the validity of some patents issued and upheld" under the Federal Circuit U.S. Court of Appeals' teaching-suggestion-motivation test for obviousness, with ramifications for suits between patent holders and alleged infringers and between patentees and their licensees, the Congressional Research Service said in a report May 31.
CRS, the research arm of the Library of Congress, said that although the high court in KSR International Co. v. Teleflex Inc. (550 U.S. ___ , No. 04-1350, April 30, 2007; See 5/7/07, Page 4) rejected the so-called TSM test as the sole test for obviousness, "the Court did not expressly invalidate it either."
Explicit, Implicit Teaching
The KSR case centered on interpretation of Section 103(a) of the Patent Act, which provides one of the statutory bars for patentability of inventions: A patent claim will be considered invalid if "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
"The nonobviousness requirement is met if the subject matter claimed in a patent application is beyond the ordinary abilities of a person of ordinary skill in the art in the appropriate field," CRS said.
In cases where multiple prior art references are involved in the obviousness analysis, CRS said, the Federal Circuit had developed an approach in which an invention would be considered obvious only if there was an explicit or implicit teaching, suggestion or motivation that would lead a person of ordinary skill to combine references to produce an invention.
In the KSR case, KSR argued that Teleflex's patents relating to an adjustable pedal system for use with automobiles having electronic throttle-controlled engines were invalid as obvious, and the U.S. District Court for the Eastern District of Michigan agreed, granting summary judgment for KSR. However, the Federal Circuit vacated, finding that the District Court had improperly applied the TSM test by not adhering to it more strictly - in particular, that the District Court made no findings as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated that person to make the combination - and that district courts are required to make such findings.
Before the Supreme Court, the CRS report said, the central question was "whether the Federal Circuit had erred in crafting TSM as the sole test for obviousness under [103(a) of the Patent Act." The court in a decision written by Associate Justice Anthony M. Kennedy held that such an approach is contrary to Section 103 of the Patent Act and to Supreme Court precedents that call for an expansive and flexible inquiry, including Graham v. John Deere Co. of Kansas City (383 U.S. 1 [1966]).
Additional Guidance
CRS said the opinion "provided additional guidance for courts" to follow the principles in Graham and its progeny for determining the validity of a patent based on the combination of elements found in the prior art. The high court held that to determine whether there was an apparent reason to combine the known elements in the manner claimed by the patent at issue, courts should explicitly engage in an analysis that considers the interrelated teachings of multiple patents, the effects of demands known to the design community or present in the marketplace and the background knowledge possessed by a person having ordinary skill in the art, CRS said.
"The Federal Circuit's TSM test, and its mandatory application, is contrary to Graham and its progeny because it limits the obviousness analysis and is too formalistic, Justice Kennedy argued. In addition, he believed that the TSM test hindered the ability of courts and patent examiners to rely upon 'common sense,'" CRS said.
"However, Justice Kennedy allowed that TSM provides 'a helpful insight' - that a patent comprised of several elements is not obvious just because each of those elements was, independently, known in the prior art. This 'essence' of the TSM test is not necessarily inconsistent with the Graham analysis, and thus he predicted that the Federal Circuit has likely applied the TSM test on many occasions in ways that accord with the Graham principles. It is the Federal Circuit's rigid application of its TSM rule, however, that the Court deemed was problematic in this case," it said.
Uncertainty
In particular, CRS said, the court found that the Federal Circuit erred by holding that courts and patent examiners should look only to the problem the patentee was trying to solve, rather than other problems addressed by the patent's subject matter; by assuming that a person of ordinary skill trying to solve a particular problem will be led only to those elements of prior art designed to solve the same problem; by concluding that a patent claim cannot be proved obvious by showing that the combination of elements was obvious to try; and by adhering to rigid preventive rules that deny fact finders recourse to common sense.
"The KSR decision potentially may generate litigation over the validity of some patents issued and upheld under the Federal Circuit's TSM standard; the uncertainty over the enforceability of certain patents thus has ramifications for lawsuits between alleged patent infringers and patent holders, as well as between patentees and their licensees (for example, a patent licensee may want to challenge the validity of the patent to avoid paying royalties or even the imposition of an injunction).
"While the KSR Court rejected TSM as the sole test for obviousness, the Court did not expressly invalidate it either. Instead, the Supreme Court explained that courts and patent examiners, in evaluating a patent's claimed subject matter for obviousness under [103, must use common sense, ordinary skill, and ordinary creativity in applying the Graham factors and principles to the specific facts of the case," CRS said.
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TRADEMARKS
Symbol Must Be Placed Near Protected Item, Federal Circuit Panel Rules
DATELINE: WASHINGTON, D.C.
A registration symbol on a product must be located in such as way as to provide notice of the feature that is registered as a trademark, the Federal Circuit ruled Jan. 26 (Kransco Manufacturing Inc., et al. v. Hayes Specialties Corp., et al., Nos. 95-1236 and 95-1237, Fed. Cir.).
The court held in an unpublished opinion that a symbol that is only "somewhat near" that feature does not provide adequate notice of the registration.
The appeals court partially reversed a decision by the U.S. District Court for the Eastern District of Michigan, which had ruled in favor of Kransco Manufacturing Inc. in its suit against Hayes Specialties Corp. for alleged patent and trademark infringement of a small game footbag used for kicking, commonly known by its registered tradename, "Hacky Sack."
Kransco's registered mark covers the "sinuous seam" by which the two figure-eight shaped panels of the footbag are sewn together, forming a wavy line in the cover of the footbag. The patent specifies that the panels are drawn together by "securing means defining a continuous seam stitching" and that the bag is filled with polyethylene pellets.
The trial court found a likelihood of confusion between Hayes' competing footbag and Kransco's product, awarding Kransco nearly $69,000 in damages for infringement of its trademark, $100 as damages for infringement of its patent and more than $50,000 in attorneys' fees.
On appeal, Hayes contended that it did not have notice of the registration until it received a cease and desist letter from Kransco. The lower court had found that while the registration symbol on the Kransco footbags did a poor job of communicating the registration of the mark for the sinuous seam, the symbol was sufficiently "with the mark" within the meaning of the statute.
But the appeals court said the registration symbol on one of the outer panels of the bag which reads "Hacky Sack Official Footbag" was not adequate to provide the required notice.
"Although somewhat near the sinuous seam, the symbol is clearly identified with and at the end of the words Hacky Sack. There is nothing to identify the symbol ' ' with the sinuously stitched seams of the footbag," said the court in an opinion written by Chief Judge Glenn L. Archer Jr.
The court also noted that the packaging of the Kransco footbag contains a notice stating that Hacky Sack "is a brand name and registered trademark of Kransco." The notice does not indicate that the registration covers any other mark, the court said, and "is very suggestive that Hacky Sack is the only registered mark."
"We do not believe that any of the markings on Kransco's footbag and packaging supports the trial court's conclusion that the registration symbol provided notice of the mark for the sinuous seam. Accordingly, we conclude that Hayes did not have statutory notice," the court said.
The panel upheld the finding of patent infringement, rejecting Hayes' argument that prosecution history estoppel should prevent Kransco from claiming that the "polyethylene pellets" described in its patent cover a range of equivalents that include Hayes' plastic pellets. The judges said Hayes failed to show that the amendments it relied on were necessary to overcome the prior art or that Kransco surrendered a range of equivalents encompassing Hayes' pellets.
The court upheld the award of damages for patent infringement, which was set at a nominal amount because Kransco presented no evidence on the issue of damages, but vacated and remanded the award for trademark infringement, saying damages should be determined from the date of the cease and desist letter. The Federal Circuit also vacated the award of attorneys' fees in light of its finding on the trademark infringement issue and remanded the question to the lower court.
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FIRM NEWS
Paparella & Associates moves office locations in Atlanta
DATELINE: Atlanta, Georgia
The law firm has moved its office from its Alpharetta loation to the more convenient parimeter area.
The new offices will be located in the Lakeside Commons Complex, also known as the Porsche building, which is located directly across the street from the King and Queen (Concourse Corporate Center) building at the Georgia 400 - Interstate 285 central paimeter (Dunwoody) parimeter area.
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USPTO NEWS
USPTO Issues New Rules - Costlier Patents likely
DATELINE: Washington, D.C.
The U.S. Patent and Trademark Office (USPTO) continues to propose new initiatives to make its operations more efficient, to ensure that the patent application process promotes innovation, and to improve the quality of issued patents. These pages have been developed to provide full transparency to the public about these ongoing efforts.
On July 10, 2006, the USPTO proposed new rule changes related to Information Disclosure Statements. Applicants list information for the examiner to consider in a communication called an Information Disclosure Statement (IDS). These proposed IDS rule changes are designed to encourage patent applicants to provide the USPTO the most relevant information related to their inventions in the early stages of the review process.
On June 26, 2006, the USPTO published new procedures for accelerated examination and made these procedures effective on August 25, 2006. These accelerated examination procedures offer filers a final decision by the examiner within 12 months on whether their application for a patent will be granted or denied, and are designed to give applicants quality patents in less time.
The USPTO inaugurated these pages with information about rule changes proposed on January 3, 2006 related to claims practice and continuation practice. These proposed rule changes will make the patent examination process more effective and efficient by reducing the amount of rework by the USPTO and reducing the time it takes for the patent review process.
The information below includes an explanation of the challenges the USPTO faces, the reasons why proposed rule changes are necessary, the proposed rule changes, and supporting material. Additionally, the information below includes a schedule of dates and places where USPTO representatives have made presentations concerning the proposed rule changes, and scheduling information for new presentations. These pages will be updated as new information or proposals are unveiled.
No rule change will be effective before October 1, 2006, and at least 30 days advance notice of the changes shall be given.
USPTO Requesting More Timely and Useful Information Disclosure Statements (IDSs)
As part of its ongoing efforts to promote investment in innovation and spur economic growth, the USPTO announced on July 10, 2006, new proposed IDS rule changes that would encourage patent applicants to provide the USPTO the most relevant information related to their inventions in the early stages of the review process. As a result, patent applications could be processed in a more streamlined and effective manner.
The USPTO has observed that applicants sometimes provide information in a way that hinders rather than helps timely, accurate examination. For example, some applicants send a very large number of documents to the examiner, without identifying why they have been submitted, thus tending to obscure the most relevant information. Additionally, some applicants send very long documents without pointing out what part of the document makes it relevant to the claimed invention. Sometimes applicants delay sending key information to the examiner. These practices make it extremely difficult for the patent examiner to find and properly consider the most relevant information in the limited time available for examination of an application.
The proposed IDS rule changes are designed to address the above-mentioned issues by encouraging early submission of relevant information, and discouraging submission of information that is unimportant or does not add something new for the examiner to consider. With the proposed IDS rule changes, patent examiners would not have to review documents that do not directly relate to the claimed invention, or that duplicate other information already submitted.
USPTO to Give Patent Filers Accelerated Review Option
The USPTO published procedures on June 26, 2006, setting forth requirements for patent applicants who want, within 12 months, a final decision by the examiner on whether their application for a patent will be granted or denied. To be eligible for “accelerated examination,” applicants who file under this procedure will be required to provide specific information so that review of the application can be completed rapidly and accurately.
Applicants have a duty to disclose to the USPTO material prior art of which they are aware, but are not required to search for prior art. Under the USPTO's accelerated examination procedure, applicants will be required to conduct a search of the prior art, to submit all prior art that is closest to their invention, and explain what the prior art teaches and how their invention is different.
In addition to providing and explaining any prior art references, applicants must explicitly state how their invention is useful and must show how the written description supports the claimed invention. The proposal also limits the number of claims allowed in each application and shortens the time periods for responding to most USPTO communications.
The accelerated examination procedure is designed to give applicants quality patents in less time. In exchange for quick examination, patent examiners will receive more focused and detailed information about the invention and the closest prior art from the applicants. This increased disclosure upfront by applicants will help examiners more quickly make the correct decision about whether a claimed invention deserves a patent.
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