11 PATENT LAW Randy Canis CLASS 15 Case Law Update.

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PATENT LAW

Randy Canis

CLASS 15

Case Law Update

Intervening Rights

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Marine Polymer Technologies, Inc. v. Hemcon, Inc.

• Case History– D.C. – Hemcon infringed 6,864,285

patent– Panel – Reversed; Hemcon obtained

intervening rights– En banc – Affirmed the judgment of the

district court by an equally divided court.

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• Invention– discloses and claims preparations of

poly-β-1→4-N-acetylglucosamine (“p-GlcNAc”), a naturally occurring polysaccharide polymer produced by organisms such as arthropods, fungi, and microalgae

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• Independent Claim 6– A biocompatible poly-β-1→4-N-

acetylglucosamine comprising up to about 150,000 N-acetylglucosamine monosaccharides covalently attached in a β-1→4 conformation and having a molecular weight of up to about 30 million daltons in which at least one N-acetylglucosamine monosacharide has been deacetylated.

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• While litigation was ongoing before the District Court, HemCon filed a request for ex parte reexamination of the ’245 patent

• On March 29, 2011, the PTO issued the final reexamination certificate, which cancelled dependent claims 4, 5, 13, 14, 21, and 22 and confirmed the patentability of claims 1–3, 6–12, and 15–20 in accordance with the examiner’s decision.

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• Intervening Rights• HemCon

– argues that the asserted claims of the ’245 patent changed in scope during reexamination

– HemCon thereby acquired intervening rights in those claims,

– the district court’s finding of infringement should therefore be reversed.

• Marine Polymer – argues that intervening rights cannot apply with respect

to claims that have not been amended or newly introduced in the reexamination proceeding.

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• Doctrine of intervening rights

– first developed as courts recognized that permitting substantive changes to the scope of patent claims through post-issuance procedures left “the door . . . open for gross injustice” where a third party, having already begun to make, use, or sell a given article, finds its previously lawful activities rendered newly infringing under a modified patent. …

– In such situations, the defendant “acquired at least a right to continue to use the [articles] as if it held a license therefor under the reissued patent.”

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• Two types of intervening rights: – absolute intervening rights - intervening rights that

abrogate liability for infringing claims added to or modified from the original patent if the accused products were made or used before the reissue

– equitable intervening rights - intervening rights that apply as a matter of judicial discretion to mitigate liability for infringing such claims even as to products made or used after the reissue if the accused infringer made substantial preparations for the infringing activities prior to reissue

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• “Intervening rights do not accrue, however, where the accused product or activity infringes a claim that existed in the original patent and remains ‘without substantive change’ after reissue”

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• “[A]fter a patent emerges from reexamination, the statute makes available absolute and equitable intervening rights to the same extent provided in the reissue statute, but only with respect to ‘amended or new’ claims in the reexamined patent.”

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• “Section 307(b) governs intervening rights arising from ex parte reexamination and specifies that only ‘amended or new’ claims incorporated into a patent during reexamination ‘will have the same effect as that specified in section 252,’ i.e., will be susceptible to intervening rights.”

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• “But under § 307(b), the first question when assessing whether intervening rights arose from a reexamination is whether the asserted claim is ‘amended or new’; if the answer is no, that ends the inquiry. Only if the claim at issue is new or has been amended may the court proceed to the second step in the analysis and assess the substantive effect of any such change pursuant to § 252.”

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• “[T]he plain directive of the governing statute before us does not permit HemCon to invoke intervening rights against claims that the PTO confirmed on reexamination to be patentable as originally issued.”

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Patent Eligibility (Again!!!)

• “Abstract Ideas” exception

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CLS Bank International v. Alice Corporation Pty. Ltd.

• 2012 Fed. Cir. Panel Decision

• 101 Patent eligibility of a computer implemented invention

• Question – do claims fall within the “abstract ideas” exception to patent eligibility?

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• “[T]his court concludes that the system, method, and media claims at issue are not drawn to mere ‘abstract ideas’ but rather are directed to practical applications of invention falling within the categories of patent eligible subject matter defined by 35 U.S.C. § 101”

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• Invention– 3 patents– “a computerized trading platform for

exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate ‘settlement risk.’”

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Claim 33 of the ‘479 patent

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these [sic] transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and

(d) at the end-of-day, the supervisory institution instructing one of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

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Claim 1 of the ’720 patent

A data processing system to enable the exchange of an obligation between parties, the system comprising:

a data storage unit having stored therein information about a shadow credit record and shadow debit record for a party, independent from a credit record and debit record maintained by an exchange institution; and

a computer, coupled to said data storage unit, that is configured to (a) receive a transaction; (b) electronically adjust said shadow credit record and/or said shadow debit record in order to effect an exchange obligation arising from said transaction, allowing only those transactions that do not result in a value of said shadow debit record being less than a value of said shadow credit record; and (c) generate an instruction to said exchange institution at the end of a period of time to adjust said credit record and/or said debit record in accordance with the adjustment of said shadow credit record and/or said shadow debit record, wherein said instruction being an irrevocable, time invariant obligation placed on said exchange institution.

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• D.C. – post Bilski found that Alice’s 4 patents

were invalid due to 101 patent ineligibility

– first analyzed the method claims under the machine-or-transformation test

– also analyzed the method claims under the abstract idea exception.

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• “[T]he district court found the methods to be invalid under § 101 as directed to the ‘fundamental idea of employing a neutral intermediary to ensure that parties to an exchange can honor a proposed transaction, to consummate the exchange simultaneously to minimize the risk that one party does not gain the fruits of the exchange, and then irrevocably to direct the parties, or their value holders, to adjust their accounts or records to reflect the concluded transaction.’”

• Found system and machine readable claims directed to the same abstract concept

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• “Section 101 is a general statement of the type of subject matter that is eligible for patent protection ‘subject to the conditions and requirements of this title.’ Specific conditions for patentability follow . . . . The question therefore of whether an invention is novel ‘is wholly apart from whether the invention falls into a category of statutory subject matter.’”

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• D.C. has discretion in what order to take up the issues of 101, 102, 103, and 112

• “[T]he dividing line between inventions that are directed to patent ineligible abstract ideas and those that are not remains elusive.”

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• “While every inventor is granted the right to exclude, or ‘pre-empt,’ others from practicing his or her claimed invention, no one is entitled to claim an exclusive right to a fundamental truth or disembodied concept that would foreclose every future innovation in that art.”

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• “The mere implementation on a computer of an otherwise ineligible abstract idea will not render the asserted ‘invention’ patent eligible.”

• “On the other hand, where the ‘addition of a machine impose[s] a meaningful limit on the scope of a claim,’ and ‘play[s] a significant part in permitting the claimed method to be performed, rather than function[ing] solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations,’ that machine limitation renders the method patent eligible.”

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• “It can, thus, be appreciated that a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not.”

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• “[T]his court holds that when—after taking all of the claim recitations into consideration—it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101.”

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• “[T]he form of the claim in this case does not change the patent eligibility analysis under § 101.”

• Regardless of what statutory category claim’s language is crafted to literally invoke, we look to the underlying invention for patent eligibility purposes.

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• “Because mere computer implementation cannot render an otherwise abstract idea patent eligible, … the analysis here must consider whether the asserted claims (method, system, and media) are substantively directed to nothing more than a fundamental truth or disembodied concept without any limitation in the claims tying that idea to a specific application”

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• “[I]t is difficult to conclude that the computer limitations here do not play a significant part in the performance of the invention or that the claims are not limited to a very specific application of the concept of using an intermediary to help consummate exchanges between parties.”

• “The asserted claims appear to cover the practical application of a business concept in a specific way, which requires computer implemented steps…”

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Questions on the Final Exam?

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THANKS FOR A GREAT YEAR!!!

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Program

Completed

All course materials - Copyright 2002-11 Randy L. Canis, Esq.

11 PATENT LAW Randy Canis CLASS 15 Case Law Update.

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