Patents

Patent Office Issues Guidelines for Products and Laws of Nature

The United States Patent Office (USPTO) has issued a new set of training materials to provide guidance to patent examiners on whether patent claims improperly encompass laws of nature, natural phenomena and principles, or products of nature.

The training materials are based on the US Supreme Court’s recent decisions in Molecular Pathology v. Myriad Genetics and Mayo Collaborative Services v. Prometheus Laboratories, Inc.

The new guidelines will have an impact on patent applications now pending.

According to the USPTO, the proper test for patentability is:

  • “whether a claim reflects a significant difference from what exists in nature” (patent eligible), or
  • “whether a claim is effectively drawn to something that is naturally occurring” (not patent eligible).

The PTO provided a flowchart to illustrate the analysis and included an example:

The Amazonian cherry tree is a naturally occurring tree that grows wild in the Amazon basin region of Brazil. The leaves of the Amazonian cherry tree contain a chemical that is useful in treating breast cancer. However, to be effective, a patient must eat 30 pounds of the leaves per day for at least four weeks. Many have tried and failed to isolate the cancer-fighting chemical from the leaves. Applicant has successfully purified the cancer-fighting chemical from the leaves and has named it amazonic acid. The purified amazonic acid is structurally identical to the amazonic acid in the leaves, but a patient only needs to eat one teaspoon of the purified acid to get the same effects as 30 pounds of the leaves…

In the USPTO’s view, a claim to the purified acid would not be patent-eligible because:

  • there is no structural difference between the acid in the leaves and the purified acid, and
  • the claim does not include features to show that the purified product is markedly different from the natural one.

Commentators have questioned why the USPTO is apparently seeking to make patent-ineligible purified or isolated natural products that have been considered patentable in the US for at least 100 years and are patentable in many other countries.

If you have questions about patentability, contact our office to arrange a free initial consultation with one of our patent attorneys.

At Sheldon Mak & Anderson, we recognize that innovation is your competitive edge – and it needs protection. Recognized as one of the country’s “Best Law Firms” by U.S. News and Best Lawyers, Sheldon Mak & Anderson was established in 1983 and is one of Pasadena’s oldest law firms. Our full-service IP firm provides local, regional, national, and international legal services in the following areas: patents, trademarks, copyrights, trade secrets, IP litigation, international patent and trademark prosecution, licensing, alternative dispute resolution, and green technology.

Contact our knowledgeable intellectual property attorneys today TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) or email us at tri@usip.com to find out how we can provide powerful protection for your unique ideas.

We have offices conveniently located in Pasadena (626-796-4000, 100 Corson Street Third Floor, Pasadena, CA 91103-3842);  Riverside (951-787-7770, 5885 Brockton Avenue, Riverside, CA 92506-1863); Upland (909-946-3939, 222 N. Mountain Avenue, Suite 210, Upland, CA 91786-5714); and Orange County (855-874-3327, 2102 Business Center Drive, Suite 130, Irvine, CA 92612-1001).

Disclaimer: We fully comply with all laws related to attorney marketing and this posting is considered an advertisement.

Photo Attribution: “A montage displaying the five major branches of natural science: Chemistry (represented by the center image of flasks containing chemicals), Astronomy (top left picture of stars), Earth Science (top right picture of erupting volcano), Physics (bottom right picture of spinning top), and Biology (bottom left picture of fish).” By Misc is licensed under CC BY 2.0.

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Federal Circuit Rejects $3.5 Million Patent Verdict against Safeway Subsidiary

The Federal Circuit Court of Appeals has rejected a $3.5 million patent infringement jury verdict against Blackhawk Network Inc., a subsidiary of Safeway Inc.

InComm, a prepaid product and transaction services company, sued Blackhawk in 2009, alleging that it had infringed two claims of InComm’s patent for a “System and Method for Authorizing Stored Value Card Transactions.”

Blackhawk, based in Pleasanton, California, operates gift card “malls” selling prepaid gift cards, debit cards, and telephone calling cards via grocery stores, “big box” stores, convenience stores, and other retailers and online outlets.

The damages were based on what the jury determined to be a “reasonable royalty” if Blackhawk had licensed use of the patent.

The suit related to eight lines of source code that were part of Blackhawk’s gift card activation platform. Blackhawk claims that the code was not actually used.

After the jury award in 2012, Blackhawk (which described itself as “not a technology company”) apologized to the jury and said that it would take steps to remove infringing source code from its platform.

Blackhawk also appealed the jury verdict.

The Federal Circuit ruled that the district court had misconstrued a claim in InComm’s patent that covered how InComm’s computer program determined whether a retailer’s point-of-sale device (e.g., a cash register) was authorized to make a gift card transaction.

According to the Federal Circuit’s opinion, InComm had conceded during the patent re-examination process that its claim required the use of point-of-sale device identifiers.

According to the Federal Circuit, there was no dispute that “Blackhawk’s accused product fails to use the terminal identifier when making such [an authorization] determination.”

If your company has been accused of patent infringement, or if you anticipate being involved in patent litigation, contact our office to arrange a free initial consultation with one of our patent lawyers.
At Sheldon Mak & Anderson, we recognize that innovation is your competitive edge – and it needs protection. Recognized as one of the country’s “Best Law Firms” by U.S. News and Best Lawyers, Sheldon Mak & Anderson was established in 1983 and is one of Pasadena’s oldest law firms. Our full-service IP firm provides local, regional, national, and international legal services in the following areas: patents, trademarks, copyrights, trade secrets, IP litigation, international patent and trademark prosecution, licensing, alternative dispute resolution, and green technology.

Contact our knowledgeable intellectual property attorneys today TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) or email us at tri@usip.com to find out how we can provide powerful protection for your unique ideas.

We have offices conveniently located in Pasadena (626-796-4000, 100 Corson Street Third Floor, Pasadena, CA 91103-3842);  Riverside (951-787-7770, 5885 Brockton Avenue, Riverside, CA 92506-1863); Upland (909-946-3939, 222 N. Mountain Avenue, Suite 210, Upland, CA 91786-5714); and Orange County (855-874-3327, 2102 Business Center Drive, Suite 130, Irvine, CA 92612-1001).

Disclaimer: We fully comply with all laws related to attorney marketing and this posting is considered an advertisement.

Photo Attribution: “Marina Safeway in Hamilton” by Caldorwards4

Supreme Court Rules Patent Holders Have Burden of Proof in Licensing Cases

The US Supreme Court has ruled that patent owners have the burden of proof when a patent licensee sues seeking a ruling that the patent is invalid and has not been infringed.

In the case of Medtronic Inc. v. Boston Scientific Corp. et al., Medtronic had licensed defibrillator patents from Boston Scientific Corp.  Boston Scientific had previously licensed the same patents from Mirowski Family Ventures LLC.

Medtronic sought a declaratory judgment that its new products were not covered by some of the Mirowski patents.  The terms of the license prohibited Mirowski from filing patent infringement counterclaims against Medtronic.

A lower court found that Mirowski had the burden of proving that Medtronic’s new products were covered by the Mirowski patents and also found that Mirowski had failed to meet that burden.

The Federal Circuit (which specializes in patent cases) vacated that ruling and held Medtronic had the burden of showing that it did not infringe.

The Supreme Court disagreed with the Federal Circuit, holding that the burden of proof of infringement still falls on the patent holder, even if the patent holder can’t bring an infringement claim against the licensee.

According to the opinion by Justice Stephen Breyer,

In our view, the burden of persuasion is with the patentee, just as it would be had the patentee brought an infringement suit. Simple legal logic, resting upon settled case law, strongly supports our conclusion.

Justice Breyer noted that, since patents can be complicated, the patent owner is in a better position than the alleged infringer to specify why and how a product infringes:

Until he does so, however, the alleged infringer may have to work in the dark, seeking, in his declaratory judgment complaint, to negate every conceivable infringement theory.

The case will now go back to the federal district court for further proceedings, including a determination on the infringement issue.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Supreme Court to Consider What Makes a Patent “Indefinite”

The US Supreme Court has agreed to hear a case involving the standards for determining whether a patent is invalid as indefinite.

Nautilus Inc. v. Biosig Instruments Inc. involves U.S. Patent No. 5,337,753 for a heart-rate monitor.

The ‘753 patent covers a monitor mounted on exercise equipment (such as an exercise bicycle, treadmill, or elliptical trainer).  The user’s hands each contact a live electrode and a common electrode on the handles.  The patent doesn’t specify the distance between the electrodes, merely requiring that they be in a “spaced relationship.”

Biosig originally sued Nautilus in 2004, claiming that Nautilus’s exercise equipment included the device covered by the ‘753 patent.  Nautilus responded with a motion for summary judgment seeking a ruling that the patent was invalid on the grounds that the “spaced relationship” claim was indefinite.

A federal district court agreed and granted Nautilus’s motion.

However, the Federal Circuit (which specializes in patent cases) held that the “spaced relationship” claim was sufficiently definite, even though there was no specification of how wide the spacing should be.

The Federal Circuit held that the term “spaced relationship” was not indefinite because people with normal skills and knowledge in the technical field, reading the patent and looking at its drawings, would understand what the term meant.

For example, since claim 1 of the patent required the electrodes to detect signals at two points on the user’s hand, the distance between the electrodes could not be greater than the width of a typical user’s hand.

The Federal Circuit noted that even though a person “skilled in the art” might have to experiment to determine the scope of the claim, that didn’t make the claim indefinite, as long as the amount of experimentation required was not “undue.”

Nautilus challenged the Federal Circuit’s standard as “overly permissive” and appealed to the Supreme Court, saying that the decision would encourage inventors to make their claims unclear, thereby requiring federal judges to waste time making sense of such claims.

The Electronic Frontier Foundation has filed a brief in support of Nautilus, saying “a more sensible rule would help reduce abusive [patent] litigation.”

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Supreme Court to Rule on “Divided” Patent Infringement

The US Supreme Court has agreed resolve a dispute between Limelight Networks Inc. and Akamai Technologies over a patent for delivering Internet content.

Akamai holds a patent for a method to redirect Internet content when demand is high.  The company claims that defendant Limelight performs all but one step described in the patent and then induces its customers to perform the last step.

The US Court of Appeals for the Federal Circuit, which focuses on patent cases, ruled in 2012 that Limelight could be sued for inducing patent infringement.  The court overruled earlier decisions that induced infringement required a showing that a single entity performed all the steps constituting infringement of a method claim – the so-called “single entity rule.”

The court said that the “bizarre result” of the single entity rule was that a party inducing infringement could avoid liability by performing some of the claimed method steps itself.  The court found that it was sufficient if the inducer caused, urged, encouraged, or aided the infringing conduct of others.

Under 35 U.S.C. § 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”

The court held that Limelight could be liable for inducing patent infringement if the patent holder could show that:

Limelight knew of Akamai’s patent, (2) it performed all but one of the steps of the method claimed in the patent, (3) it induced the content providers to perform the final step of the claimed method, and (4) the content providers in fact performed that final step.

Google, Cisco, Oracle, and others are supporting Limelight, saying that products like smartphones “can be used in an almost infinite combination of ways by other companies and consumers.”

The US Solicitor General urged the Supreme Court to take the case, “to avert a significant expansion of the scope of inducement liability (and a corresponding increase in burdensome litigation).”

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

US Supreme Court to Rule on Attorneys’ Fees in Patent Cases

In the case of Highmark Inc. v. Allcare Health Management Sys., the US Supreme Court is scheduled to rule on whether a district court’s finding that patent infringement litigation was objectively baseless, and thus supported an award of attorneys’ fees to the defendant, is best decided by a trial court judge.

Allcare is the owner of US Patent No. 5,301,105, which is directed to “managed health care systems” used by organizations such as insurance companies to interact with health care providers.

In 2001, Allcare hired a market research firm to interview managed care companies such as Highmark.  Highmark’s answers suggested to Allcare that it might be infringing the ‘105 patent.  Allcare contacted Highmark and encouraged it to consider taking a license to the patent.

Highmark argued that it did not infringe the patent because, in Highmark’s view, the patent’s claims did not cover Highmark’s system.  Highmark also argued that the patent was unenforceable due to Allcare’s inequitable conduct.

When the parties we unable to negotiate an agreement, Highmark sued Allcare for patent infringement.

A special master found that there was no infringement as a matter of law and recommended that summary judgment of non-infringement be granted.  The district court then dismissed the case.  Allcare appealed, and the Federal Circuit affirmed the summary judgment.

While the appeal on the merits was pending, Highmark moved for an “exceptional-case” finding and Rule 11 sanctions against Allcare.  Highmark called Allcare a “troll” who “sells no products” and “offers no services” but tries to make money by licensing its patent or threatening litigation.

In 2010, the district court awarded Highmark $4,694,740 in attorneys’ fees and $209,626 in costs based on a finding that the dispute was an “exceptional case.”

Allcare appealed, and the Federal Circuit reviewed the district court’s grounds for its exceptional-case determination de novo.  The circuit court deferred to the district court, finding that it “did not clearly err in concluding that Allcare’s…allegations were brought in subjective bad faith.”

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Supreme Court Hears Arguments on Attorney’s Fees in Patent Cases

The Justices of the US Supreme Court challenged both sides during arguments about attorney’s fees in patent cases.

As we previously reported, the Supreme Court is hearing two cases this session that relate to attorney’s fees in patent cases:  Highmark Inc. v. Allcare Health Management Systems Inc. and Octane Fitness LLC v. Icon Health & Fitness Inc.

One case deals with the legal standards trial courts should apply in awarding attorney’s fees in patent cases, and the other case deals with whether a trial court’s award of fees should be entitled to deference on appeal.

Under existing law, attorney’s fees are normally paid by the party that incurred them.  One party can only be ordered to pay the other’s attorney’s fees in “exceptional” patent cases.

An “exceptional” case is defined as one that is objectively baseless and was brought in subjective bad faith.

During oral argument in the Octane case, Justice Stephen Breyer said that the existing standard might be too difficult to meet.  Justice Elena Kagen agreed.

Justice Breyer suggested that although the US Patent Office had issued many bad patents, the presumed validity of a patent made it hard to show that an infringement case was objectively baseless.

Although he did not use the term “patent troll,” Breyer described a scenario in which a patent owner asserted a patent with “very abstract language” against many defendants, hoping to encourage settlements and avoid the costs of litigation.

He said it was not clear that the plaintiff’s case in such a situation would be objectively baseless.

Octane’s attorney suggested that instead of applying the “objectively baseless” standard courts should shift fees if a case is “unreasonably weak.”

Justice Antonin Scalia took issue with that proposed standard, saying “You’ve got to give me something tighter than that.”

During oral argument on the Highmark case, Justice Samuel Alito said that many federal judges may not have the expertise to determine whether fees should be awarded in an “exceptional” patent case.

“Exceptional compared to what?” he said.

Justice Ruth Bader Ginsburg said that deferring to district courts could result in an inconsistent application of the law, with a “risk of large disparities from district judge to district judge.”

An attorney for Allcare argued that the Federal Circuit (which was created to hear patent cases) was best suited to review fee awards.

However, Chief Justice John Roberts challenged that assumption, saying, “The Federal Circuit was established to bring about uniformity in patent law, but they seem to have a great deal of disagreement among themselves.”

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US Supreme Court to Determine Whether Federal Circuit’s “Exceptional” Test is Improper in Patent Cases

In the case of Octane Fitness, LLC v. Icon Health and Fitness, Inc., the US Supreme Court is scheduled to determine whether the Federal Circuit’s two-part standard for finding an “exceptional case” for awarding attorneys’ fees improperly appropriates a district court’s discretion.

The case involves Icon, a manufacturer and seller of exercise equipment which owns US Patent No. 6,019,710 for an “Exercise Device with Elliptical Movement.”

Icon sued Octane, a start-up exercise equipment company that made elliptical exercise equipment.  Octane claimed that its machines were based on licensed patents that pre-dated the ‘710 patent and that its linkage system was nothing like the one described in the ‘710 patent.

In its petition for certiorari to the Supreme Court, Octane claimed that Icon “recognized Octane’s success and hatched a plan to extort royalties out of Octane with a weak patent case,” using an “old patent…that was sitting on the shelf.”

Octane spent $1.3 million defending itself against Icon’s patent infringement lawsuit and prevailed at summary judgment.  However, the district court did not award Octane attorneys’ fees, finding that under the Federal Circuit’s two-part test the case was not “objectively baseless” or brought in “subjective bad faith.”

Although in US courts the parties generally bear their own legal fees, the Patent Act provides for the award of attorneys’ fees to the prevailing party in “exceptional cases.”  This provision is intended as a deterrent to “improper bringing of clearly unwarranted suits” for patent infringement.

The Federal Circuit affirmed the summary judgment for Octane and also affirmed the district court’s decision on fees.

Octane argued in its petition that the “exceptional-case” standard applied by the Federal Circuit was “inexplicably and unfairly” high and almost impossible for a defendant in a patent infringement case to meet.

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Jury Finds that Google’s Patent License Protects Its Customers

A federal jury in Texas has found that Google’s license with a patent owner prohibits that patent owner from suing Google’s customers for infringement of the licensed patents.

Beneficial Innovations Inc., a Las Vegas-based non-practicing entity (NPE), had sued Google and other defendants in 2007 and 2009 alleging infringement of Beneficial’s patents for online advertising.

One of the patents, filed in 2000 and issued in 2009, is for

A networked system … for presenting advertising during on-line interactions between a user and a service of a network (e.g., the Internet…). Advertisements (ads) are presented to a networked user unrequestedly during user interactions with the service. The user can activate the ads (via hyperlinks) for receiving additional advertising. …

In 2010, Google and Beneficial entered into a license for the two patents at issue.  Google and its YouTube subsidiary were then dismissed from the patent infringement case.

The license agreement covered Google’s customers, but “only to the extent” that the customers’ activities would constitute direct or indirect infringement by Google but for the license.

However, less than a year after the settlement Beneficial sued a number of companies, including five Google customers, for infringement of the same patents.

The Google-Beneficial patent license had left open the issue of whether Google’s customers’ specific activities were covered by the license.

Google intervened in the suit against its customers, claiming that it violated the licensing agreement.  However, the Google-Beneficial patent license was unclear on whether it covered the specific activities challenged by Beneficial in the latest suit.  This was the question the jury decided in Google’s favor.

Google sought only nominal damages in the amount of one dollar, as it was primarily interested in relieving its customers of the burden of the lawsuit.

Although the case had a positive outcome for Google, it is possible that it could have been avoided with a more carefully drafted license agreement that spelled out the full range of potential uses by Google customers.

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Federal Circuit Upholds Invalidity of Patent in Case against Warner and CBS

The Federal Circuit Court of Appeals has upheld a trial court’s ruling that invalidated a patent owned by CyberFone Systems LLC on the basis that it covered an abstract concept rather than a patentable invention.

CyberFone owned US Patent No. 8,019, 060, issued in 2011, for a “Telephone/transaction entry device and system for entering transaction data into databases.”  According to the patent abstract,

Transaction data is entered by the user in response to prompts in a template. The template and entered data are accumulated into data transactions which are exploded and sent to an external database servers [sic] for processing and storage. Each database server may explode the data transaction to produce ancillary records which are then stored, and/or forwards the data transaction or some or all of the ancillary records to other database servers for updating other databases associated with those database servers. The database server(s) may also return data streams for use in completing the fields in the data transaction.

Soon after the patent was issued, CyberFone sued 81 defendants for infringement.  The defendants included news and media companies such as Warner Bros., CBS, Yahoo, Twitter, and LinkedIn.

The defendants moved for summary judgment on the grounds that the patent’s claims described only an abstract idea.

The district court judge agreed, saying:

The patent, broken down into its component parts, recites steps by which data is obtained, sorted and stored.  These steps represent nothing more than a disembodied concept of data sorting and storage.

The Circuit Court found that the patent unfairly purported to give CyberFone ownership of a basic idea:

Here, the well-known concept of categorical data storage, i.e., the idea of collecting information in classified form, then separating and transmitting that information according to its classification, is an abstract idea that is not patent-eligible.

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