IP Update, Vol. 13, No. 1, January 2010

Beware § 292 Qui Tam Actions: "Marking Trolls"

USPTO Misinterpreted Patent Term Adjustment Statute

No Pre-Verdict JMOL Motions, No Review of Jury Damage Award

Factual Expert Declaration Is Vital to Avoid Summary Judgment

Plaintiff's Choice to File in a "Centralized Venue" Will Not Defeat a Motion to Transfer Venue if the Evidence Is Primarily in a Different Forum

Ordinary Observer Test—The Sole Test for Design Patent Invalidity

Contractual Agreement Trumps Statutory Scheme

Reissue Petition Denied for Merely Adding Dependent Claim

Federal Circuit Limits Recovery of Damages and Attorneys' Fees Awards

Federal Circuit Eliminates Presumption of Irreparable Harm in Non-Precedential Opinion

Judicial Precedent Trumps USPTO's Procedural Rules for Priority Interferences; Claim Terms Must Be Construed in Light of the Host Specification

Issues of Fact Render Summary Judgment of Obviousness and Infringement Improper

Bilski-Based Rejections of Computer-Implemented Claims Continue to Be Issued by Board of Appeals

Internet Specimens of Use Need Not Include Pictures of the Goods to Show Bona Fide Use in Commerce

It's the Quality, Not Quantity of the Contribution that Matters

Beware § 292 Qui Tam Actions: "Marking Trolls" By Brian Park

Vacating the district court's imposition of a single $500 penalty for to falsely marking a production run of stilts with a patent number, the U.S. Court of Appeals for the Federal Circuit found that the proper measure of damages for false marking is to impose a fine of up to $500 per falsely marked article. The Forest Group, Inc. v. Bon Tool Company, Case No. 09-1044 (Fed. Cir., Dec. 28, 2009) (Moore. J.).

The plaintiff, The Forest Group, is the owner of U.S. Pat. No. 5,645,515 (the '515 patent), claiming an improved spring-loaded parallelogram stilt for use in construction. The '515 patent required the stilts to possess a "resiliently lined yoke." The Forest Group manufactured its S2 stilt and marked the '515 patent number on each product. Bon Tool manufactured a stilt that was identical to Forest Group's S2 stilt. The Forest Group sued Bon Tool for infringement of the '515 patent.

In a separate action, Forest Group also sued Warner Manufacturing Company (Warner) for infringement of the '515 patent. The Warner court issued its claim construction, finding that the '515 patent required a "resiliently lined yoke." In the Warner case, the court granted summary judgment in favor of Warner, finding that the S2 stilts did not have a "resiliently lined yoke" and were therefore not covered by the '515 patent. Prior to that decision, The Forest Group was advised by its counsel to modify the S2 stilts so that they conformed to the '515 patent. Sometime after the November 2007 decision (by the Warner court) and after receiving contrary advice of counsel, The Forest Group manufactured another line of S2 stilts without "resiliently lined yoke[s]." It marked that line with the '515 patent number, as well.

After the district court in the Bon Tool case issued its claim construction, also finding that the '515 patent required a "resiliently lined yoke," it granted summary judgment that Bon Tool's stilts did not infringe on the '515 patent. Bon Tool then counterclaimed that The Forest Group falsely marked its S2 stilts with the '515 patent. The district court found that The Forest Group's actions met the two elements of false marking: the company falsely marked its S2 stilts with a patent number, and it did so with the intent to deceive the public. The district court found the requisite intent by noting that after the Warner court issued its claim construction, Forest Group knew its S2 stilts were not protected by the '515 patent, but chose to manufacture another line of S2 stilts bearing the '515 patent number.

After the district court ordered Forest Group to pay a single fine of $500 for the decision to falsely mark its S2 stilts with the '515 patent number, Bon Tool appealed, arguing that the district court erred in its interpretation of the false marking statute when it imposed a penalty based on the Forest Group's decision to mark the stilts as a group, rather than on a per article basis.

The Federal Circuit agreed and vacated the district court's judgment. The Federal Circuit held that the plain language of the false marking provision of 35 U.S.C. § 292 requires courts to impose a penalty for false marking on a per article basis. Consequently, the Court ruled that the proper measure of damages for false marking is a fine of up to $500 per falsely marked article. The Court went on to note that in cases involving "inexpensive mass produced articles," a court can, in exercise of its discretion, reduce the per article penalty to just a "fraction of a penny per article."

The Federal Circuit also noted that the plain language of § 292(b) allowed for qui tam actions. In doing so the Court acknowledged that its decision could give rise to a new cottage industry: "marking trolls."

USPTO Misinterpreted Patent Term Adjustment Statute By Shilpa V. Patel, Ph.D.

The U.S. Court of Appeals for the Federal Circuit recently affirmed a district court decision finding that the U.S. Patent and Trademark Office (USPTO) has misinterpreted the statute 35 U.S.C. § 154(b), which provides for patent term adjustment (PTA) for certain USPTO delays. Wyeth and Elan Pharma International Limited v. David J. Kappos, Case No. 09-1120 (Fed. Cir. January 7, 2010) (Rader J.).

In 1999, 35 U.S.C. § 154(b) was amended to provide adjusted patent term for administrative delays caused by the USPTO. This decision addresses the interplay between two of the three patent term guarantee provisions, namely § 154(b)(1)(A) and § 154(b)(1)(B), also referred to as A and B delays, periods or guarantees, respectively.

The two provisions at issue provide a one-day extension of patent term for every day that issuance of a patent is delayed by a failure of the USPTO to comply with various enumerated statutory deadlines (A delay) and a one-day extension of patent term for every day greater than three years after the filing date that it takes a patent to issue (B delay). The statute further provides that to the extent that the A and B delays overlap, "the period of any adjustment shall not exceed the actual number of days the issuance of the patent was delayed."

The issue in this case stems from the USPTO's calculation of PTA for two U.S. patents co-owned by Wyeth and Elan Pharma. For each patent, the A and B periods overlap. In 2004, the USPTO had amended its interpretation of "overlap" as the period of time between the A and B periods arising and beginning during the pendency of the patent application. Thus, in its PTA calculations, the USPTO used the greater of the A or B period to calculate PTA and did not combine the periods. Wyeth and Elan Pharma sued the USPTO because they disputed the USPTO's calculations. According to Wyeth, the B period could not have started until three years after the application's filing date, such that the A and B periods could only overlap for any A period delay occurring three years after filing of the application.

By Wyeth's calculation, for each of its patents the amount of PTA was greater than the amount calculated by the USPTO. For each patent, the PTO calculated the PTA as the greater of the A or B period minus the days caused by applicant delay. Wyeth calculated the PTA to be the sum of the A and B delays and then subtracted the days of A delay after three years of pendency (i.e., in the B delay period) and the days caused by applicant delay. The Federal Circuit, affirming the district court ruling, agreed with Wyeth's calculations and stated that the statute "language is clear, unambiguous, and intolerant of the PTO's suggested interpretation" and "gives no deference to the greater-of-A-or-B rubric."

The USPTO announced that it will not seek further court review and it "is in the process of changing the manner [in which] it will calculate patent term adjustments."

Practice Note: Going forward, patentees should carefully review the USPTO's calculated PTA, including those for patents that issued recently and are still within the time period permitted by statute to request a recalculation, i.e., within 180 days after grant of the patent, 35 U.S.C. § 154(b)(4)(A), or within two months of issuance of the patent, 37 C.F.R. § 1.705. Furthermore, in allowed applications, patentees should consider requesting reconsideration of the USPTO's calculated PTA based on the Wyeth decision prior to paying the issue fee, 37 C.F.R. § 1.705(b).

No Pre-Verdict JMOL Motions, No Review of Jury Damage Award By Paul Devinsky and Jeremiah Armstrong

The U.S. Court of Appeals for the Federal Circuit upheld a permanent injunction and an award of $240 million in damages against Microsoft for patent infringement in connection with certain versions of MS Word software that offer XML editing functionality. The Federal Circuit held that by failing to file certain pre-verdict judgment as a matter of law motions, Microsoft waived two pivotal issues relating to the validity and damage for appeal. i4i Ltd. v. Microsoft Corp., Case No. 09-1504 (Fed. Cir., Dec. 22, 2009) (Prost, J.).

Validity Microsoft filed a pre-verdict judgment as a matter of law (JMOL) motion on invalidity but it only included arguments for anticipation based on the on-sale bar, not arguments regarding obviousness and other prior art references. In its decision, the Federal Circuit reminds us that "a party must file a pre-verdict motion on all theories, and with respect to all prior art references, that it wishes to challenge with a post-verdict JMOL." Because Microsoft waived its right to challenge the factual findings underlying the obviousness verdict, the appellate court presumed all the underlying factual disputes—none of which were explicitly enumerated in the jury verdict form—were resolved by the jury in i4i's favor and affirmed the district court's ruling on the validity...