Are you infringing on other’s patent: direct infringement of a patent

For start up companies, one of the most common questions asked is: we are considering developing a product, are we infringing upon other’s IP?  To understand whether your planned product infringes upon other’s patents, the first step is always to do a patent search.  And the second step is to analyze where your planned product stands in regard to the direct infringement, induced infringement and contributory infringement. 

In my past posts, I discussed various ways of doing patent or literature search.  In this and next few posts, let’s look at various types of infringements.

Section 271 of the Patent Act, 35 USC 271, provides three provisions each addressing a type of infringement.  Subsection (a) governs direct infringement and provides:

“Except as other wise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringers the patent.” 

Under this form of liability, your mental stat is irrelevant.  Direct infringement is a strict-liability offense.  This means that regardless of your intention or lacking thereof to infringe upon a patent, as long as your product infringes upon a patented claim, you are an infringer. 

A direct infringement analysis starts with the determination whether a patented claim literally “reads on” your product (or process), or covers your product (or process) under the doctrine of equivalents.  The former is called literal infringement and the later is termed the infringement under the doctrine of equivalents.

The term “literal infringement” means that each and every element recited in a claim has identical correspondence in your product or process.  When there is no literal infringement, a claim could still be infringed under the doctrine of equivalents if some elements of your product (or process) perform substantially the same function and in substantially the same way to achieve substantially the same result as in the patented claim. 

Therefore, the steps in an infringement analysis are:

1. Construe the scope of the “literal” language of the claims.

2. Compare the claims, as construed, with your product (or process) to determine whether there is literal infringement.

3. If there is no literal infringement, construe the scope of the claims under the doctrine of equivalents. 

The most efficient way of perform above analysis is to prepare a claim chart.  In Column 1, list out all the elements in a patented claim.  In Column 2, list all the elements in your product (or process) and match each element up with the element in the Column 1.  If there are elements in your product (or process) that do not match up literally with the elements in the Column 1, place them temporarily in Column 3.  Then, look at the function and the end result of the elements in Colum 3 and ask yourself—whether a Column 3 element performs substantially the same function and in substantially the same way to achieve substantially the same result as an element in Column 1.  If yes, match them up.  After that, step back and look at your claim chart—if each element in Column 2 and Column 3 matches up perfectly with the elements in Column 1.  You might have a potential infringement issue in your hand.  If not, you are not off the hook yet; you should be looking at induced infringement and contributory infringement issues.

Thanks for reading.

Connie

cwan@patentonomy.com

Inter Partes Review (IPR) in a nutshell

Inter partes review (“IPR”) is one of the several tools established under the AIA for an issued patent to be challenged through an administrative process administered by USPTO.  The rationale for using an IPR process rather than a court proceeding is the perceived cost saving even though I personally do not think the process is as inexpensive as the proponents of the AIA have hoped.

Who can initiate an IPR on a patent?

Anyone (other than the patent owner) can initiate an IPR request to cancel one or more claims of an issued patent as unpatentable.  The ground for unpatentability must be the lack of novelty (under 35 U.S.C. § 102) or obviousness (under 35 U.S.C. §103).  The prior art cited for supporting an IPR request can only be patents or printed publications.  This means that you cannot challenge the patentability through an IPR process based on an on-sale bar. 

What kind of patent is subject to an IPR?

You can use IPR process to challenge the patentability of any patent.  For example, you could use the IPR process to challenge your competitor’s patent.  Also, if you are sued for infringement of a patent, you could initiate an IPR process trying to knock the patent out before litigating your case before a court. 

When can you request an IPR on a patent?

You can request an IPR of an issued patent after 9 months following issuance.  However, if the patent is under PGR process, you must wait until the termination of the PGR process before you can file your IPR request.  Also, if you are served with a compliant alleging infringement of the patent, you have one year to request an IPR on the patent.  After one year, you can no longer request an IPR on the patent.  This limitation does not apply to the situation that you are requested to join the litigation.

How do you start an IPR process?

To start an IPR process, you must file a petition under 35 U.S.C. § 311.  The petition must meet the following conditions for the USPTO to consider your IPR request.

First, you must pay a request fee of $9,000.00.  This amount will cover your request for the USPTO to review 20 claims.  If you want to challenge more claims (in excess of 20 claims), you need to pay $200 per additional claim. 

Second, you must identify all real parties in interest.  You cannot be a front for someone else to challenge a patent.

Third, you must identify, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim.  The evidence may include copies of patents and printed publications that you rely upon in support of the your request.  If you rely on expert opinions, you need to provide affidavits or declarations of supporting evidence and opinions.

Fourth, to put the patent owner on notice that someone is challenging his patent, you must provide copies of the documents required under paragraphs (2), (3), and (4) of 35 U.S.C. § 312(a) to the patent owner or his representative.

Ok, I’ve filed an IPR request on my competitor’s patent.  Then what?

After you filed your IPR request with the USPTO, UPSTO will notify the patent owner that an IPR request has been filed challenging his patent.  The patent owner has the right to file a preliminary response within 3 months of the filing of your request.  In the response, the patent owner will explain to the USPTO why no IPR should be instituted by pointing to the failure of you meeting the above-mentioned requirements.  In this process, you as the IPR petitioner have the burden of proving a proposition of unpatentability by a preponderance of the evidence.

The USPTO will determine whether to institute an IPR within three months after: (1) receiving a preliminary response to the IRP petition; or (2) if no such preliminary response is filed, the last date on which such response may be filed. The standard that the USPTO uses to make the decision is the  “reasonable likelihood that the petitioner will prevail” with respect to at least one of the patent claims.  It is currently understood that the “reasonable likelihood” standard means satisfying a prima facie case of unpatentability.

The USPTO will notify the petitioner and patent owner, in writing, of the Office’s determination of whether to institute IPR, and will make the notice available to the public as soon as is practicable.  The notice will include the date on which the review will start.

If the USPTO grants your request, you will need to pay an additional $14,000 fee for the USPTO to institute the IPR.  This amount will cover 15 claims that will be reviewed by the USPTO.  If you’ve challenged more than 15 claims, you will need to pay $400 for each additional claim.

In addition, if an IPR is instituted, any civil suit filed later or on the same day will be automatically stayed (with some exceptions).

What’s happening during the IPR Proceeding?

During an IPR proceeding, the patent owner may file one motion to amend the patent by: (A) canceling any challenged patent claim; and/or (B) for each challenged claim, proposing a reasonable number of substitute claims.  Additional motions to amend may only be permitted upon the joint request of the IPR requester (the petitioner) and the patent owner to advance materially the settlement of a proceeding.  The patent owner is not allowed to enlarge the scope of the claims of the patent or introduce new matter.

No double dipping: stay and merger

If you file a civil action challenging the validity of any claim of the patent before you file the IPR request on the same patent, your IPR will not be instituted.  If you file the civil action after your IPR request or on the same date of your request, the civil action will be automatically stayed. 

Under this “no double dipping” rule, a counterclaim you filed challenging the validity of a claim of a patent in response to being sued does not constitute “a civil action challenging the validity of a claim of a patent.”

One more thing to keep in mind, during the pendency of an IPR, if another proceeding or matter involving the patent is before the USPTO, the Director has the right to determine the manner in which the IPR or other proceeding or matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter or proceeding.

No two bits on the apple: Estoppel

So you paid your fee and went through the IPR process.  Now, you received a final written decision from the USPTO Patent Trials and Appeals Board.  But you don’t like the decision.  Can you now go to a civil court (or other administrative places) and try again?  The answer is that depends. 

If you could have “raised or reasonably could have raised” a ground challenging the validity of a patent claim, you cannot use the same ground challenging such patent claim in a district court proceeding, an International Trade Commission (“ITC”) proceeding, or any other USPTO proceeding.  Basically, the decision from an IPR proceeding estops (precludes) your from trying again on the same ground that has already been considered during the IPR proceeding. 

Theoretically, you could try again on a different ground, right?  Well, “reasonably could have raised” covers a lot of grounds.  In practice, you might find it quite hard to get around.

Can I settle during the IPR process?

Before the USPTO has decided the merits of the proceeding, the IPR can be terminated upon the joint request of the petitioner and the patent owner.   If the IPR is terminated, no estoppel will attach—meaning if you settle with the patent owner before the USPTO makes the decision, you are free to challenge the same patent later in a civil court or any administrative proceedings. Any such agreement will be treated as business confidential information, will be kept separate from the file of the involved patents, and will be made available only to Federal Government agencies on written request, or to any person on a showing of good cause.

Thanks for reading.

Connie

cwan@patentonomy.com

So you own the patent, but can you sue to enforce?

The usual rule in a patent infringement/enforcement case is that all owners of the patent being asserted must join in the lawsuit.   However, it is well established by the case law that, if a plaintiff as an exclusive licensee holds all substantial rights in a patent, the title-owner of the patent need not be joined.  See, for example, Morrow v. Microsoft, 499 F.3d 1332 (Fed. Cir. 2007).  In those cases, the exclusive licensee essentially is the de facto owner of the patent and the owner of the patent is holding an empty title with only economic interest (i.e. rights to receive royalty).  Because there is a unity of patent rights, the patent title owner needs not be joined.  But, if he chooses to, the patent title owner can join the suit, until now.

In a recent case, Azure Networks and Tri-County Excelsior v. CSR, et. al (Fed. Cir. 2014), the Federal Circuit holds that the legal owner of the patent has no standing to be a co-plaintiff with the exclusive licensee.  Azure Networks is the exclusive licensee of U.S. Patent No. 7,756,129 and Tri-County Excelsior is the legal title holder of the patent.  The ownership of the patent was transferred by Azure Networks as a gift to Tri-County Excelsior Foundation, a non-profit organization.  Then, Tri-county Excelsior Foundation granted an exclusive license of “all substantial rights” to Azure Networks.  The “all substantial rights” include “the exclusive, worldwide, transferable right to bring enforcement actions, unfettered control over litigation, and exclusive authority to reach settlements and grant sub-licenses.”   Under the licensing agreement, Tri-County “may participate in litigation only at Azure’s sole discretion.” In return for granting the license, Tri-County receives 1/3 of proceeds on the patent. 

Azure Network and Tri-County jointly sued CSR for infringing the patent in the Eastern District of Texas.  The District Court noted that nothing about Azure Network and Tri-County relationship structure indicates that Tri-County has control over any aspect of litigation involving the ’129 patent; rather, it is clear that Azure is holding all the strings.  The District Court concluded that factors such as Azure’s exclusive right to sue, exclusive license, and freedom to sublicense strongly suggest that the license agreement constitutes an effective assignment and therefore Tri-county has no standing in the lawsuit.

Azure and Tri-County appealed.  The question on appeal is whether Tri-County, as the patent owner, has standing as a co-plaintiff.  The Federal Circuit ruled no.  The court agreed with the District Court that, when all substantial rights in the patent are transferred to an exclusive licensee, that entity becomes the effective owner and the license is an effective assignment.  Because Tri-County had transferred substantially all rights to the exclusive licensee Azure, the owner has no standing to join the lawsuit.  The court suggested that the motivation for transferring the patent title and then receiving a license back was largely to ensure that the case venue would remain in the Eastern District of Texas.

So the implication from this case is that, if you would like the title holder of a patent to have standing to join an enforcement suit, a slice of substantive rights other than economic interest should be left to the owner.

Thanks for reading.

Connie

cwan@patentonomy.com

Composition and device inventions are “strict liability” for “public use” bar and infringement

Recently, I had a businessperson telling me that her competitor has a patent on a composition for treating an inflammatory condition.  The claim of the composition is recited as:

“A composition for treating an inflammatory condition X, wherein the composition comprises A, B and C.”

The businessperson’s conclusion is that she can sell the composition as long as she does not tell people to use it for treating the inflammatory condition.  She is wrong.

In a typical composition claim as recited above, the stated “purpose” does not really matter.  The claimed invention is the composition including A, B and C.  Therefore, the above claim basically exclude others from making, using, selling and offering to sell “a composition including A, B and C” regardless of the purpose.  In another word and borrowing a term from the tort law, this is a “strict liability” claim.

The encounter made me think—what about “a public use” of the above composition for treating a different condition? Would such public use trigger the “public use” bar under 35 U.S.C. § 102(b) (2006) (pre-America Invents Act) (current version at 35 U.S.C. § 102(a)(1)(2012))? 

Here is the text of the 35 U.S.C. § 102(a)(1)(2012):

“A person shall be entitled to a patent unless...the claimed invention was … in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention…”

The Federal Circuit’s answer to the above question is yes.  Here is the case on point: Pronova BioPharma Norge AS v. Teva Pharmaceuticals USA, Inc., which is a pending petition before the Supreme Court.  This issue being petitioned is: whether the statutory bar for “public use” of an invention under 35 U.S.C. § 102(b) (2006) (pre-America Invents Act) (current version at 35 U.S.C. § 102(a)(1)(2012)) broadly bars a patent when an innovator company allows any public access to its invention even if the invention is not actually used in public for its intended purpose.

Pronova v. Teva (Fed. Cir. Sept. 12, 2013) is a non-precedential case by the Federal Circuit.  In this non-precedential opinion, the CAFC invalidated claims to Orange Book-listed patents on omega-three fatty acid formulations because Pronova's predecessor in interest had permitted unrestricted use of formulations falling with the scope of the claims.  In this decision, the CAFC confirmed that a public use requires the disclosure of all aspects of the claimed invention in public and without limitations regarding secrecy or use.  The CAFC ruled that the Pronova's predecessor’s submission of samples of the claimed formulation to a research scientist without restriction, along with a disclosure of the compound’s formulation and the scientist’s subsequent confirmatory analytical testing constituted an invalidating public use.  The CAFC rejected Pronova’s argument that the samples had to actually be used for their intended purpose in order to constitute an invalidating public use.  Specifically, the CAFC stated that "[a]n invalidating public use need not be the intended use of the invention disclosed or claimed in the patent as long as the invention is fully disclosed without restriction." 

In another word, for triggering public use bar to patentability, how the claimed invention is used does not matter.  What matters is that the public has the unrestricted access to the claimed invention—it’s a strict liability.

Thanks for reading.

Connie

connie@patentonomy.com

What is a “public use” bar to patentability?

 “Public use” and “on sale” are often the first bars applied to the patentability of a claimed invention.  According to the America Invents Act (AIA) 35 U.S.C. § 102(a)(1),“A person shall be entitled to a patent unless...the claimed invention was … in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention…”  Therefore, if you sell in public or allow the public access to your invention before you filing for the patent protection, the invention is no longer patentable.

The standard for “public use” is well established by the case law.  The "seminal case" regarding “public use” is Egbert v. Lippmann, 104 U.S. 333, 336 (1881) (the corset case, which has been studied by every patent law student), where the Court posed the essential question:  "[w]as the invention's use public in the sense that it was made available to others with no limitation or restriction?"  In Dey, L.P. v. Sunovion Pharm., Inc., 715 F.3d 1351, 1355 (Fed. Cir. 2013), the CAFC reiterated that the standard for public use is where "a completed invention is used in public, without restriction." 

Public use can be negated where there exists disclosure under a confidentiality agreement or "similar expectations of secrecy," Invitrogen Corp. v. Biocrest Mfg., L.P., 424 F.3d 1374, 1379 (Fed. Cir. 2005).  One measure of the extent to which the disclosure is confidential (as opposed to "public") is "the amount of control which the discloser retains over the invention during the uses in question." See, Lough v. Brunswick Corp., 86 F.3d 1113, 1121 (Fed. Cir. 1996) (insufficient control); Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005) (unrestricted disclosure to employees); Beachcombers, International, Inc. v. Wildewood Creative Products, Inc., 31 F.3d 1154 (Fed. Cir. 1994) (unrestricted disclosure to party-goers); and Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1265–67 (Fed. Cir. 1986) (inventor retained control of puzzle and information).   The "sophistication of those to whom disclosure was made" is also a factor in the extent to which a use is a public use.

Public use can also be negated where some but not all aspects of an invention are disclosed. See, W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1549 (Fed. Cir. 1983) and Janssen Pharmaceutica, N.V. v. Eon Labs Mfg., Inc., 134 F. App'x 425, 431 (Fed. Cir. 2005) (all aspects of the invention must be disclosed). 

Therefore, to protect your invention against “public use” and “on sale” bar, you should only disclose your complete invention to a third party under a confidentiality agreement and don’t start selling or offering to sell or license your invention before filing for the patent protection.

Thanks for reading.

Connie

connie@patentonomy.com