A Myriad of Issues in Gene Patents

This June the Supreme Court issued it’s opinion in Myriad. In a Solomonish move, the Court split the baby of biotech. Here, all nine members of the Court chose to cleave at a point between isolated DNA being ineligible subject matter on the one hand, and complimentary DNA (cDNA) being eligible on the other.

Without belaboring the point too much, isolated DNA is just that: a portion of a DNA molecule isolated from its natural environment in a cell. Generally, this is a very specific portion of the genome encoding a particular gene or genes. DNA, however, includes long portions that don’t code for proteins. These segments may be removed to yield a modified DNA strand that only has the active, coding portions of molecule. This “refined” version is cDNA and exists nowhere in nature.

In effect, the Court put levels of human manipulation on a spectrum and drew a line, albeit a bit fuzzy, that separates patent eligible DNA based inventions from those that are not. According to the Court, isolating DNA is not enough of a transformation to be patentable, but removal of introns to yield cDNA is. The problem is that “isolated” DNA doesn’t exist in nature either. Further, the requirement of a specific utility for the DNA sequence claimed already limits the scope of inventions to those isolated sequences with a known usefulness.

An Alternative Approach

The line drawn between isolated DNA and cDNA is an arbitrary one that, while allowing more uses of the genes for basic research, arguably still protects the most valuable components of genetic tests. I believe Section 101 is a very broad declaration of patent eligibility and limiting it in an arbitrary way is not helpful. Stronger application of obviousness to prevent the patenting of known elements would improve things without creating an unpredictable regime with little basis in the statute.

Bowman v. Monsanto: Planting of Patented Seeds to Make a Second Generation of Seeds Infringes RoundUp Ready Patents

On Monday, the Supreme Court decided Bowman v. Monsanto and held that a farmer monsanto-logowho purchases patented seeds from a grain elevator and then plants those seeds and harvests the crop, infringes the patent. Previous cases had held farmers liable for holding over a portion of their crop for planting the next year, but those cases involved the violation of the license agreement the farmer must sign when purchasing the licensed seeds. In this case, the farmer purchased the seeds from a grain elevator with no contractual strings attached.

The result shouldn’t be a surprise, and some people even expected a unanimous opinion, which the Supreme Court issued. The issue in the case was “patent exhaustion” and it is the principle that once a patented article is the subject of an authorized sale, the owner of the article is free to use it as they see fit or resell it to another person. Patent exhaustion, however, doesn’t allow the purchaser to make copies of the patented article.

A patent doesn’t give the patent holder the right to do anything themselves (after all, there could be other patents that cover other aspects of the same product). What a patent does give is the right to exclude others from making, using, selling, offering for sale, or importing the patented article. This is much like the deed to real property that gives the owner the right to keep trespassers off, but doesn’t actually allow the owner to do any particular activity on the land (you have to look to zoning laws and permitting agencies for that).

Patent exhaustion applies to only some of that bundle of rights that the patent holder has, namely making, selling, and offering for sale the patented article that was previously bought. A person can’t make copies of the article they bought and claim that the copies don’t infringe because of patent exhaustion. In Monsanto, Bowman claimed that planting the soybeans was really just a normal use of them and their “self reproduction” was the natural result. The Court, however, saw this process of planting and harvesting as the natural way of “making” a second generation of seeds. The beans Bowman bought from the elevator could have been resold, used for animal or human food products, or even used as a feedstock for bio-fuel.

The question that then comes up is how does a farmer ever plant patented seeds without infringing the relevant patents? The answer is actually pretty simple and has been used by Monsanto and other seed companies for decades. When purchasing seeds (which of course comes with the right to resell or use them for feed) farmers must sign a license agreement granting them the right to “make” one descendent generation by planting. That descendent generation may then be sold or used but not planted.

This really is the same outcome that would be expected in other technology areas where a purchaser can freely use or resell the product, but not replicate it. The difference here is the self replicating nature of biological organisms.

Means Plus Function Claims – Literally Equivalent

Dennis Crouch at Patently-O posted an interesting article about the drop in the percentage of patent applications that have claims utilizing means plus function language. Means plus function claims are based on 35 U.S.C § 112(f) which states:

Element in Claim for a Combination.— An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

The data presented shows a drop from near 25% to roughly 7% of patent applications include a means plus function claim. This may not be surprising as these claims are viewed as somewhat arcane. However, there is good reason, in some cases, to include such claims.

misuseofliterallyIn a typical infringement analysis, the first determination is whether or not an accused device or process literally infringes a claim. If not, it is possible that the accused device or process could still infringe under the doctrine of equivalents. That doctrine states that an accused device, while not literally containing an element of the claim, may still infringe the claim if an aspect of it performs substantially the same function, in substantially the same way, to achieve substantially the same result.

However, the doctrine of equivalents often is not even used because of prosecution history estoppel. This opposing doctrine means that when a claim is amended during prosecution, the patentee surrenders the claim scope, including equivalents, removed by the amendment. This means many claim elements will not be amenable to application of the doctrine of equivalents.

This result can conceivably be avoided in a claim that uses a means plus function limitation. Based on the statute above, the literal interpretation of a means plus function element includes equivalents. That means, regardless of the prosecution history, the patentee may be entitled to cover equivalents.

One strategy to exploit this includes reviewing the claims before submitting an amendment. Often, the elements being amended are at the core of the inventive concept. If you have multiple embodiments disclosed, it may make sense to add a new claim that replaces the narrowed elements with means plus function language so the patentee can still avail themself of the doctrine of equivalents for those elements.

I’d be surprised if only 7% of patent applications would benefit from such a strategy.

SCOTUS will Review Reverse Payment Cases

The Supreme Court has granted Certiorari in FTC v. Watson Pharmaceuticals. In this case, a brand name drug manufacturer paid a generic to stay out of the market in order to settle a patent infringement litigation. The question presented is:

Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).

There has been a lot of buzz over the last few months related to reverse payments used to settle patent litigation. I wrote about the Third Circuit case earlier this year and provide some more detailed background here. These settlements are peculiar to the generic/brand name drug arena and arise from the Hatch/Waxman act.

Until this summer, virtually every appeals court had held that such settlements did not violate anti-trust laws. The courts had tested such agreements with a “scope of the patent” test that looked to see if the agreement impermissibly extended the exclusionary effect of the patent beyond those to which the patent owner is entitled. Under this test, the settlement agreement will only be thrown out if the litigation was a sham, or the patentee obtained the patent by fraud. This is a very high standard to invalidate a settlement agreement and every major case I’ve seen upheld the reverse payments.

However, last summer, the Third Circuit came to a different conclusion. In In Re: K-Dur Antitrust Litigation, the court held that reverse payments are presumptively anti-competitive and the parties must show that either the payment was not for the purpose of delaying market entry by the generic manufacturer or that the agreement offers some pro-competitive benefit. This puts the burden on the drug manufactures and would likely result in more of these agreements being challenged and invalidated.

This decision by the Third Circuit produced the first circuit split on the issue. Oral arguments will likely be held this spring or summer.

SCOTUS Grants Cert in Myriad Gene Patenting Case

Last week, the Supreme Court granted a writ of certiorari in the Myriad case. I previously wrote about the status of this case and, to be honest, the case has gone back to the Supreme Court a bit faster than I had expected.

All we know is that four Justices voted to grant Certiorari, but there are some tea leaves that we can try to read. For example, the decision about which questions to grant Certiorari on is telling. Three questions had been posed to the Court:

  • Are human genes patentable?
  • Did the court of appeals err in upholding a method claim by Myriad that is irreconcilable with this Court’s ruling in Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)?
  • Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), that petitioners who have been indisputably deterred by Myriad’s “active enforcement” of its patent rights nonetheless lack standing to challenge those patents absent evidence that they have been personally and directly threatened with an infringement action?

Often, the Court rephrases the question when the writ is granted. However, question one was granted verbatim. The wording of the question may be troublesome for Myriad as the Court isn’t even asking if isolated and purified DNA is patentable, but only if human gene generally are.

Another interesting fact is that the Court did not grant cert on the second question. The Mayo decision had invalidated a DNA diagnostic test as not being statutory subject matter. However, in this case, the Federal Circuit has upheld Myriad’s own diagnostic claims, and now, the Supreme Court will leave that decision in place and not address it head on in the Myriad case. The Court could still invalidate the diagnostic claims with a broad holding related to question one, but I think that is unlikely.

This means the Court may be willing to let diagnostic tests to stand despite a potentially hostile position on patenting gene sequences and isolated genes. This would allow for exploitation of gene based diagnostics and other inventions, even if claims to the genes themselves are not patentable.

The Patent Fix: Wired’s Series on Reforming the Patent System

Wired has taken on the task of publishing opinion pieces from a variety of stakeholders in the patent system about how best to “fix” the patent system. I use the term “stakeholders” because that is what each of us is. We all are affected by the patent system, whether for good or bad. All these disparate views are valuable and show the range of opinions on the topic.

However, the case that is repeatedly made that the patent system is broken is predicated on the idea that patent litigation is running rampant and inhibiting innovation. In an earlier

piece, however, I pointed out that the number of patents issued has stayed flat relative to the size of the economy for the last half century. Also, patent litigation rates have been remarkably steady.

Competing views have been published from IBM and Google. While both have their points, the latter piece makes some poor editorial choices. For example, the image

chosen to go with the piece is figure 1, “From a patent for ‘Spam Score Propagation for

Not a patent

Web Spam Detection‘.” The only patent document I found that had that title is not an issued patent, but rather a published application that has not yet been examined by the USPTO. It’s hard to use it as an example of a poor quality patent, when it isn’t even a patent at all.

The piece also endorses the SHIELD Act which I think will have a greater deterrent effect on smaller entities who want to protect their intellectual property than it will on non-practicing entities (aka Trolls). (Here’s my earlier piece on the SHIELD Act).

There are some good thoughts presented on both sides, but the case to “fix” the patent system would be much stronger if its proponents would first show the system is actually broken.

Apple v. Samsung: Claim Construction at the Federal Circuit

Last month, the Court of Appeals for the Federal Circuit dealt a blow to Apple in its battle with Samsung. Procedurally, Judge Koh in the District Court for the Northern District of California had issued a preliminary injunction that blocked sales of Samsung’s Galaxy Nexus smartphone based on likely infringement of an Apple patent. Samsung was appealing that injunction.

U.S. Pat. No. 8,086,604, “Universal Interface for Retrieval of Information in a Computer System”

Preliminary injunctions are issued before the case is ultimately decided, and one requirement of a preliminary injunction is a finding that the patent owner has a likelihood to succeed on the merits of their suit. Part of the analysis required is a construction of the claims that are being asserted. In this case, Judge Koh read the claims in a way that would likely have lead to a finding of infringement by Samsung. The Federal Circuit, however, disagreed and held that a more restrictive claim construction was appropriate. With the narrower construction, Apple was not likely to win so the injunction was vacated.

This happened a month ago so I’m not trying to report a news story. Rather, I want to lay out the claim language at issue and help people understand how the process works. Personally, I agree with the Federal Circuit’s interpretation and I think the case is informative for attorneys who draft claims and clients who review them before filing. I’ve written before on the power of narrow claims, and this case emphasizes the problems associated with ambiguity in claim language.

The claim at issue was to searching on a device, such as a mobile device. The claim requires that the device comprise “a plurality of heuristic modules” that are used in searching. “Comprising” is an open ended transitional phrase in patent claims. That means that additional limitations and features may be present in an infringing device, but if that device includes all the limitations of the claim, it will still infringe.

The claim then goes on to say, “each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm.” Apple and Samsung had different ideas about what this language should mean. Apple argued that “each heuristic module” refers to the individual modules encompassed by the “plurality of heuristic modules” recited earlier in the claim while Samsung argued that “each heuristic module” refers to each module used by the device.

While that may sound like a small variation, it is the difference between infringing the Apple patent, or not. Under Samsung’s interpretation, each and every heuristic module used by the device must have its own predetermined algorithm that is different from all the others and each one must correspond to a different area of search. Samsung’s search used multiple heuristics, but some used an identical algorithm for different areas of search. Accordingly, the addition of those heuristics would avoid infringement despite the “comprising” transitional phrase used in the claim.

The Federal Circuit agreed with Samsung and went so far as to provide guidance to patent drafters on how to avoid such a construction. The Federal Circuit suggests that changing the language to “each of the plurality of heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm” would have avoided the problem for Apple. In conjunction with the “comprising” transitional phrase, this would have been interpreted as requiring a set of multiple heuristic modules, each of which corresponded to an area of search and each with a predetermined and different algorithm. The addition of heuristic modules that did not meet that requirement would not have mattered.

This whole issue sounds esoteric, but the language used by the Federal Circuit is how I draft claims and it’s because of the ambiguity that would otherwise exist. When you draft a claim, you must look at it from a variety of angles and decided if there are any reasonable interpretations that could be reached that would not be consistent with what the client wants to protect. I learned this practice drafting chemical cases where we wanted to keep a competitor from avoiding infringement by adding another compound to a formulation. It translates to other areas, even simple mechanical devices where I’ve used similar language.

My Comments on the Proposed Examination Guidelines Post-AIA: Why I Think the PTO is Wrong in its Interpretation of the New Section 102

As you may know, there are some significant changes being made to U.S. patent law. As part of those changes, the Patent and Trademark Office must provide guidance to the examiners on how to apply the new law. One change is in the grace period for third party disclosures made between the filing date of an application and an inventor’s disclosure made up to one year earlier.

I read the guidelines and disagree with the Office’s position. Thankfully, under the Administrative Procedure Act, there is a comment period during which members of the public can submit their views. While several people have submitted comments critical of the guidelines, mine are focused on issues of statutory construction and I also provide an alternative interpretation.

You can review previously submitted comments at the USPTO website. I also have a PDF version of these comments available for download.

The following are my comments on the Examination Guidelines for Implementing the First Inventor to File Provisions of the Leahy-Smith America Invents Act that are being submitted the the USPTO today, October 26, 2012:

Dear Sir:

I am a registered Patent Attorney (Reg. No. 56,668) and have been practicing exclusively in intellectual property for the past eight years. My practice is almost exclusive to patents, including prosecution, counseling, due diligence, and licensing. I am, however, writing only as an interested member of the public and not as an employee of my law firm. The views expressed in these comments are my own views that I hold at this time and should not be attributed to any client or other practitioner in my firm.

I am grateful to the Office for extending the time to present comments on these Examination Guidelines and am pleased to have the opportunity to have these comments considered. Having reviewed many of the already submitted and well reasoned comments, I shall limit mine to the provision where I do not feel my views have been adequately expressed by others. In particular, these comments are directed towards the portion of the Examination Guidelines related to the Office’s interpretation of the “grace period” established in 35 U.S.C. 102 as amended by the AIA.

It is my view that, at least in part, the Examination Guidelines are based on a faulty interpretation of the statutory text, and that a proper interpretation of the statute would yield a very  different application of the “Grace Period.”

I.  The Office’s Interpretation of the “Grace Period” Established by 35 U.S.C. 102 as amended by the AIA and Expressed int the Examination Guidlines

The portion of the Examination Guidelines describing the Office’s interpretation reads as follows:

The exception in 35 U.S.C. 102(b)(1)(B) applies if the ‘‘‘subject matter’ disclosed [in the prior art disclosure] had, before such [prior art] disclosure, been publicly disclosed by the inventor or a joint inventor * * *.’’ 41 Thus, the exception in 35 U.S.C. 102(b)(1)(B) requires that the subject matter in the prior disclosure being relied upon under 35 U.S.C. 102(a) be the same ‘‘subject matter’’ as the subject matter publicly disclosed by the inventor before such prior art disclosure for the exception in 35 U.S.C. 102(b)(1)(B) to apply. Even if the only differences between the subject matter in the prior art disclosure that is relied upon under 35 U.S.C. 102(a) and the subject matter publicly disclosed by the inventor before such prior art disclosure are mere insubstantial changes, or only trivial or obvious variations, the exception under 35 U.S.C. 102(b)(1)(B) does not apply.1

The relevant portion of 35 U.S.C. 102 as amended by the AIA reads:

(b)    Exceptions-
1.    DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION- A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—
A.    the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
B.    the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.2

The interpretation advanced by the Office in these Guidelines would result in the anticipation of a claimed invention by a disclosure made by a third party, subsequent to a disclosure by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor, so long as the intervening disclosure includes de minimis departures from the inventor’s disclosure.3 Additionally, because minor variations between the prior disclosure by an inventor and a later third party disclosure would render the Grace Period exception inapplicable, it is difficult to foresee a situation where an obviousness rejection of claims could be traversed by application of the exception provided in the statute.

To reach this interpretation, the statutory term “subject matter disclosed [by another]”4 used in 102(b)(1)(B) must be taken to mean that this third party disclosure is, for all intents and purposes, identical to that “disclosed by the inventor….”

II.  An Alternative Interpretation

An alternative interpretation to that advanced in the Examination Guidelines would be one in which the statutory term “subject matter disclosed” is provided a meaning that is different from one that requires identity with the inventor’s prior disclosure. Such a statutory interpretation could, for example, be that the “subject matter disclosed” means “the nature or gist of the disclosure.”5 Such an interpretation takes a broader view of the statutory term “subject matter disclosed,” and is more consistent with the AIA than the interpretation expressed by the Examination Guidelines.

Under this interpretation, any intervening reference that anticipates or renders obvious a claimed invention would not qualify as prior art, even if the disclosure cited includes obvious variations of the claimed invention.

III.  Reasons for Adopting a Broader View of the Term “Subject Matter Disclosed”

There are several reasons why a broader view of the term “subject matter disclosed” is appropriate, many of which have been addressed adequately by other commentors. In addition to those, there are two that I wish to address in these comments. First, the principals of statutory construction suggest that the statute is more amenable to a broader view than the interpretation expressed in the Examination Guidelines. Secondly, there are several situations in which the interpretation expressed in the Examination Guidelines would result in perverse results.6

    A. Statutory Construction of Section 102

        1.  Plain Meaning

The interpretation expressed in the Examination Guidelines is one that would have “subject matter disclosed” mean that the third party disclosure is identical to that “disclosed by the inventor….” However, such a meaning could have been made very clear by use of other language and is inconsistent with the plain and common meaning of “subject matter.”

I note that other commentors have taken an opposing view. For example, one commentor has said in supporting the Office’s position:

In 102(b)(1)(A) the statute says that “the subject matter disclosed” by the inventor cannot be used against the inventor. In 102(b)(1)(A) the statute says that “the subject matter disclosed” by the inventor cannot be used against the inventor if disclosed by a third party who obtained “the subject matter disclosed” from the inventor, either directly or indirectly. Therefore, it is eminently reasonable for the USPTO to say that for subsequent disclosures after a disclosure of the inventor to be excluded as prior art they must be the same as the disclosure of the inventor with even trivial differences enough to prevent application of the exclusion.7

This argument, however, is circular. In essence, the argument is that “subject matter disclosed” means “subject matter disclosed” and since the drafter of the legislation used the same words they must mean the same thing. However, these instances of “subject matter” relate to different disclosures: namely the initial inventor’s disclosure and the intervening third party disclosure. This argument also fails to address the underlying question: what does “subject matter disclosed” mean. I will concede that once properly interpreted, the interpretation should be consistent throughout the statute. However, the crux is whether “subject matter disclosed” is properly interpreted to mean an identity between disclosures, or if a boarder view is appropriate.

“Subject matter” is not used to describe the exact expression of a concept or idea. Rather, the “subject matter” of a disclosure is the idea or concepts described. An analogy to another area of intellectual property law is the idea/expression dichotomy of copyright. In that context, the subject matter of a work would be the non-copyrightable idea, not the expression thereof. Similarly, the subject matter of a disclosure would be the ideas, concepts, limitations, and elements described by the disclosure, and not the language in which the author of the disclosure chose to express them. Another area where the term “subject matter” is used consistently with my proposed broader view is in current 35 U.S.C. 103(c) where the term is clearly used with a meaning broader than that adopted by the Office in the Examination Guidelines.8

Accordingly, the plain meaning of “subject matter disclosed” is more amenable to a broad view than to the view expressed in the Examination Guidelines.

        2.  Each Statutory Provision Should be Interpreted to Have Effect

Application of the interpretation expressed in the Examination Guidelines would render the Grace Period created by section 102(b)(1)(B) without any practical effect. If the only third party disclosures that can be obviated by showing prior publication by the inventor are those in which there are not even mere insubstantial changes, or only trivial or obvious variations between the cited art and the prior disclosure, 102(b)(1)(B) has no purpose or effect.

The odds that an independently developed, third party disclosure would not include, at the very least, “insubstantial changes” are infinitesimal. Any such disclosure would almost certainly have been made by one “who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor” and thus be eliminated as prior art under section 102(b)(1)(A). Accordingly no third party disclosures would be excluded as prior art by section 102(b)(1)(B), and the interpretation expressed in the Examination Guidelines would effectively read this subsection out of the statute.

    B.  The Interpretation of “Subject Matter Disclosed” Expressed in the Examination Guidelines Would Lead to Perverse Results

Apart from the already discussed result that section 102(b)(1)(B) would be read out of the statute, there are other peculiar results from application of the interpretation expressed in the Examination Guidelines.

For example, the Office’s interpretation produces the odd result that a reference that is less like the inventor’s prior disclosure has a greater preclusive effect on patentability than a reference that is identical to (even if developed independently from) the disclosure of the inventor. This is because an identical disclosure that would otherwise anticipate a claimed invention would not qualify as prior art, while a variated disclosure that renders the claimed invention obvious would be prior art. In effect, there would be no Grace Period except in regards to intervening publications that are verbatim reproductions of the inventor’s disclosure.

IV. Conclusion

The Examination Guidelines rely on a faulty interpretation of the term “subject matter disclosed.” A proper interpretation of the statute leads to a broader view of “subject matter” and is consistent with the rest of the statute. This broader view also avoids peculiar results that are contrary to what would be expected such as the effective elimination of section 102(b)(1)(B) from the statute. Such results are contrary to the structure and language of the statute and should be avoided by adopting an interpretation that is in harmony with the plain meaning of the statute and does not deprive section 102(b)(1)(B) of meaning.

With this broader (and more appropriate) view of “subject matter disclosed” in mind, the Examination Guidelines should be revised. In particular, I believe the statute compels the result that intervening references that would otherwise anticipate or, by themselves or in combination with others, render a claimed invention obvious are not prior art under 35 U.S.C. 102 as amended by the AIA.

Again, I wish to thank the Office for the opportunity to provide these comments. I also want commend the Office on the preparation and publication of several comprehensive rule packets for implementation of the AIA in a relatively short period of time.


Sean P. Connolly



1 Request for Comments, 77 Fed. Reg. at 43767, col. 2.

2 35 U.S.C. 102, as amended by the America Invents Act, Public Law 112-29 sec. 3.

3 For purposes of brevity, I will refer to initial disclosures by an inventor, joint inventor, or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor, as an “inventor’s disclosure.”

4 The restriction “by another” is inferred from Section 102 because disclosures by an inventor or derived from the inventive entity are not prior art under section 102(b)(1)(A).

5 This is not to say that disclosing “nature or gist” of an invention would be sufficient to antedate a reference. It may well be necessary to show satisfaction of the enablement and other requirements within the prior disclosure by the inventor in order to obviate an intervening reference, but that is not a question that need to be addressed here. Rather, any interpretation of “subject matter of the disclosure” that allows for reasonable variation from the intervening disclosure could be suitable for purposes of these comments.

6 While I often take a dim view of the effectiveness of using legislative history to interpret a statute, such arguments have been reasonably made by other commentors and I shall refrain from making such arguments here.

7 Comments of Eugene R. Quinn, Jr., Submitted October 3, 2012, at 4. Available at http://www.uspto.gov/patents/law/comments/e-quinn_20121003.pdf

8 “Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.” 35 U.S.C. 103(c)(1). An interpretation of “subject matter” that means identity between disclosures would be nonsensical in the context of section 103 which deals with obviousness.

Patent Litigation Rates: What They Tell Us and What They Don’t

Over the course of the last week, I’ve come across two blog posts, via my twitter feed, that show opposite views on patent litigation. The first takes the position that patent troll litigation is rampant and stifling innovation, especially for startups. The title, “Numbers Don’t Lie: Patent Trolls are a Plague” sums up the author’s position nicely. However, the piece doesn’t paint a very comprehensive picture.

The numbers referred to are those based on a survey by Colleen Chien of Santa Clara University – School of Law. Prof. Chien notes that 40% of respondents stated that troll activities had had a significant impact on the startup’s operations. However, the fact that patents are asserted against emerging businesses more often than others shouldn’t come as a surprise. After all, if a company is arguably infringing a patent as part of its core business, it would be expected that the issue would come up earlier in the company life cycle. These numbers could be skewed relative to the economy as a whole.

The second article takes another tack as you can see from the equally suggestive title, “The ‘Patent Litigation Explosion’ Canard.” As you can guess, the author, Prof. Adam Mossoff, disagrees with the idea that there is a “Patent Litigation Explosion” going on. This piece discusses patent litigation rates (measured as a percentage of issued patents litigated). From 1790 to 1860 the rate averages 1.65%. From 2000-2009, it was 1.5%.

I’m inclined to think the litigation rates over time to be a better indicator of the growth of patent litigation than a survey of startups. To be honest, I was skeptical of the litigation rates, not that they are inaccurate, but they may not be very meaningful if the number of patents issued relative to GDP has gone up. My assumption was that the number of patents issued per billion dollars of GDP would have grown and that the a constant litigation rate would actually mean an overall increase in patent litigation relative to GDP. That assumption was wrong.

First I looked to the USPTO data regarding patents issued. Here is a chart for patents issued each year from 1963 to 2011.

The “ups” and “downs” unsurprisingly correlate to the general state of the economy as fewer patents issue during and after economic downturns. However, I was interested in the number of patents issued per billion dollars in GDP. I used real GDP data (GDP adjusted for inflation) and the number of utility patents issued for each year from 1963 to 2011. So, I simply divided the number of patents issued in a given year by the inflation adjusted GDP that year. The following chart shows what I found:

While there is a lot of variation, the overall trend appears relatively flat. The average number of patents issued per billion dollars of GDP from 1963 to 2011 was 13.00, and a significant portion of the last decade was below that. Accordingly, the litigation rates referenced by Prof. Mossoff are informative and it appears that there has not been a significant increase in patent litigation, relative to GDP.

Of course, this is only part of the story. Calculating litigation rates as a function of the number of patents issued in a particular year doesn’t necessarily correlate to the number of patents in force (i.e. issued and with all relevant maintenance fees paid that have not yet expired) for that year, but it is, perhaps, a leading indicator of the number of patents that will be in-force in years to come. Such a calculation, however, is easier to make and is likely a reasonable starting point.

Another issue is that these numbers doesn’t tell us the economic impact of patent litigation. While the number of cases relative to GDP is steady, the average price tag (damages, attorney’s fees, etc) associated with a patent litigation may have grown relative to GDP, or there may have been a significant increase in licenses entered before a complaint is filed. However, I haven’t seen any data to show that either of those things has happened.

Apple Scores a Big Jury Verdict Against Samsung, But What About an Injunction?

There are some very good summaries of the Jury verdict, and there is also a lot of speculation about what happens now that the jury found various Samsung patents infringe Apples patents and trade dress. The jury’s verdict form shows how they answered the various IP claims. In summary, all of Apple’s and Samsung’s patents (utility and design) were found valid. However, none of Samsung’s patents were infringed and the vast majority of Apples were. However, the jury form also gives a some indications of what may happen next in this case.

While a lot will be written in the next week on pending appeals and cross appeals, motions for judgement notwithstanding the verdict (JNOV), and other post trial maneuvers, Judge Koh will also have to decide if she will award an injunction preventing future sales and imports of the infringing products. Injunctions are imposed as an equitable remedy by the judge, not the jury. In deciding whether or not to grant an injunction in patent cases, federal judges must apply the eBay factors, named for the 2006 eBay v. MercExchange case in which the Supreme Court clarified the factors that must be weighed. Those factors that a plaintiff must demonstrate include:

(1) that it has suffered an irreparable injury;

(2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury;

(3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and

(4) that the public interest would not be disserved by a permanent injunction.

Since that case, courts have been more reluctant to grant permanent injunctions at the end of a patent trial. One reason cited for the decline in injunctions is that the presumption of irreparable harm is dead. This case is a bit different though.

In addition to the patents infringed, Samsung was found to both infringe and dilute Apples iPhone trade dress (both registered and unregistered). The strength of Apple’s trade dress is in its distinctiveness and Apple’s continued use of it. Trade dress protection is only available so long as the trade dress serves as a source identifier for the product. If another manufacturer can sell goods that infringe or dilute Apple’s trade dress going forward, that would likely do irreparable harm to Apples trade dress rights against other parties.

In this case, there is significant overlap between the design patents and Apple’s trade dress. There is even an arguable overlap between the utility patents and trade dress as the rebounding scroll lists covered by some of the utility patents are part of the look and fee of the various iOS devices. In this unique case, Apple is in a position to argue that failing to provide a permanent injunction would pose an irreparable harm to Apples other intellectual property, namely it’s trade dress.

My personal feeling is that Apple has a better than average chance of obtaining a permanent injunction. Whether the rationale behind it will be based solely on the patents, trade dress, or a combination where the various forms of intellectual property reinforce a showing of irreparable harm will be interesting to see. Keep in mind, that while it isn’t a slam dunk, Judge Koh did show a willingness to impose a preliminary injunction early in the case.

As it stands now, Apple will file its motion and brief on August 29, Samsung will reply on or before September 12 (the rumored launch date of the iPhone 5), and a hearing before Judge Koh will be held on September 20.

UPDATED: Judge Koh, has scheduled the hearing for Decmeber 6.