Patents

Expect a "Perilous Future for Most Business Method Patents," Saith Judge Marylin Patel

April 6, 2009

Judge Marylin Hall Patel, a federal district judge in the North District of California (San Francisco/Silicon Valley) since 1980 and Chief Judge in the District from 1997 – 2004, is a well known federal judge when it comes to intellectual property matters. For example, Judge Patel decided the Grokster case at the district court level, which eventually was affirmed by the Supreme Court, and she has decided many patent cases.  When she speaks on IP matters, one would do well to listen Therefore, her March 26, 2009 decision in Cybersource v. Retail Decisions is of no small significance. In this case Judge Patel applied In re Bilski to invalidate two business method patent claims in U.S. Patent No. 6,029,154, titled “Method and system for detecting fraud in a credit card transaction over the Internet.” The CAFC’s decision in Bilski requires that a process either be tied to a machine or apparatus or involve a transformation, and Judge Patel held that the ’154 patent failed this “machine-or-transformation” test. Judge Patel held that a credit card number is not a physical object, thereby failing the “transformation” test, and she rejected the argument that because the claims were tied to the Internet they satisfied the “machine” test, since “one cannot touch the Internet.” At the conclusion of her opinion she stated: In analyzing Bilski, one is led to ponder whether the end has…

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American Lawyer: The USSC Has the CAFC Trembling in its Robes

March 17, 2009

“Justice belongs to those who claim it, but let the claimant beware lest he create new injustice by his claim and thus set the bloody pendulum of revenge into its inexorable motion” Frank Herbert ———————— For those who have access to the American Lawyer (and I realize that at $430/year that’s a tiny percentage of lawyers, and almost no non-lawyers), there’s a interesting article in the March 2009 issue on the impact the Roberts Court’s patent rulings in appeals from the CAFC (six cases, six reversals) has had on the CAFC. The article, titled “The Error of Their Ways,” shows the extent to which the USSC is pushing the CAFC in the direction of a more moderate (less permissive) application of patent law. According to this article, the Supreme Court has the CAFC questioning everything they have ever known about patent law. If this article is to be believed, the Supreme Court has effected a major retrenchment in U.S. patent law. Oh well. Who said that the law was immune from creative destruction? You may be able to find the American Lawyer in a library, but I doubt that many libraries would pay that subscription ….

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CAFC to Patent Applicant: "Read Our Lips – We Really Don't Like Business Method Patents"

March 14, 2009

In In re Lewis Ferguson, a March 6, 2009 decision from the Court of Appeals for the Federal Circuit, the applicant sought to patent “a marketing paradigm for bringing products to market.” After the application was denied by the various levels of the Patent Office bureaucracy for lack of patentable subject matter, the applicant appealed. The CAFC court quoted this claim from the application as an example: A paradigm for marketing software, comprising: a marketing company that markets software from a plurality of different independent and autonomous software companies, and carries out and pays for operations associated with marketing of software for all of said different independent and autonomous software companies, in return for a contingent share of a total income stream from marketing of the software from all of said software companies, while allowing all of said software companies to retain their autonomy. Novel and nonobvious? It may just be me, but if this isn’t a distribution system that’s been implemented a million times, I’ll be damned. The CAFC didn’t like it either, but they didn’t even get that far. Relying on In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), the Court observed: Applicants’ method claims are not tied to any particular machine or apparatus. Although Applicants argue that the method claims are tied to the use of a shared marketing force, a marketing force is…

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What? Marshall, Texas?

March 5, 2009

It would be nice if lawyers didn’t have to call their clients and tell them that their company had been sued for patent infringement in the Eastern District of Texas (EdTX). “Where? Where’s that?” “What, you’ve never heard of Marshall, Texas?” you reply. “Never been to Tyler, Beaumont or Lufkin? Kind of quiet evenings after the sidewalks are rolled up, but your choice of BBQ rib joints is almost endless, and traffic isn’t a problem.” As I’ve written before EdTX has evolved into a hotbed of patent litigation, although it has cooled a bit as of late. When you’re talking to a lawyer in Boston and you learn that he or she is heading to Texas, it’s a good bet that the destination is somewhere in the Eastern District. The EdTX has assembled some frightening statistics regarding number of patent cases (large) and the success rate of plaintiffs (high). The lawyers in that part of the country joke that they used to do PI law (personal injury), and now they do IP law (intellectual property). But, everyone has known for a while that this couldn’t last forever, and that EdTX might lose its hold on patent litigation once W left office. Indeed, the patent reform litigation just filed in the House and Senate has the EdTX in its crosshairs. The Senate bill states (excerpted): A party shall not manufacture venue by…

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Zealous Advocacy, or Abuse of Advocacy?

October 11, 2008

In the Medtronic v. BrainLab patent litigation in U.S. District Court in Colorado, Senior U.S. District Judge Richard P. Matsch has sanctioned Medtronic Navigation, Inc. and its lawyers $4.3 million, an amount which represents part of the attorney’s fees and costs incurred by BrainLab in defending this case. This order is a follow-up to his decision last February ordering that Medtronic be sanctioned, but not deciding (at that time) the precise amount of the sanction. Unusual circumstances led to this disaster for Medtronic and its counsel. As many readers of this blog know, the judge, not the jury, determines the scope of the patent claims in patent litigation. This is done by the judge before trial, in what is often referred to as a “Markman hearing.” The name of the hearing is based on the 1996 U.S. Supreme Court decision in Markman v. Westview, which held that patent “claim interpretation” is the province of the judge, not the jury. After the judge determines the scope of the patent and the meaning of the claims, he or she instructs the jury accordingly, and the lawyers are expected to honor the judge’s rulings and tailor their case to the judge’s pre-trial claim interpretation. So, what went wrong in the Medtronics case? Apparently, during the jury trial on infringement the lawyers for Medtronic (the plaintiff), argued outside of the scope of claim interpretation…

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EdTX Judge Says: Litigate Future Royalties as Part of Trial

September 4, 2008

We’ve been following the lower courts’ interpretation and application of eBay v. MercExchange since the case was decided by the Supreme Court in May 2006. In eBay the Court held that post-judgment injunctions were not “automatic” for successful patent plaintiffs, but rather that the trial court had to apply the traditional equitable test to determine whether an injunction or ongoing royalties were the appropriate remedy. In June I gave a presentation at Massachusetts Continuing Legal Education on developments in this area in the two years since the decision. (Warning – the Powerpoint won’t make a lot of sense without the voice-over, but it gives some idea of the landscape). As I discussed then, a constellation of issues was forming around the question of how to assess future royalties if it is determined that this was the appropriate remedy after final judgment. By then, of course, the jury has gone home. Was it up to the judge to determine the royalty? Would there be a new trial (jury or otherwise) on this issue alone? Would the pre-judgment royalty be used for future royalties (as some courts have done)? Not surprisingly, a U.S. District Judge in the Eastern District of Texas has taken the first real “shot” at this issue. In early August Federal District Court Judge Clark issued an order in several cases, advising the parties that he expected the issue…

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