Did you know that anyone who discovers a product which is falsely marked as being patented can sue on behalf of the government? Patents have a life span of 17 to 20 years and companies must pay maintenance fees every four years on their patents.  Once a patent expires they are required to remove the patent number(s) from the product.  Products marked with expired patent numbers or falsely labeled as “patent pending” are considered ‘false patent markings’. The seller of falsely marked articles can be fined up to $500 per unit.  In the event of a damages award, half of the reward goes to the government and the other half to the plaintiff.

Consider the case of Stauffer v. Brooks Brothers Inc. in which Brooks Brothers clothing store was sued by a “false marking troll” who in this case also happens to a patent attorney; Raymond Stauffer. While shopping at a Brooks Brothers store in New Jersey Mr. Stauffer discovered some bow ties on display that were labeled with expired patent numbers. These particular bow ties incorporated a technology called “Adjustolocs” developed and patented by the James Hugh Bow Company Inc back in the 30′s.  As part of the deal for including the adjuster locks technology Brooks Brothers was required to place the patent number directly on the bow ties.  At the time this was proper ‘patent marking’ however, when the patents expired in 1954 and 1955 Brooks Brothers did not remove the patent numbers from the bow ties and they continued to be sold with the marked patent numbers for at least 50 years after the patents had expired.

By marking the bow ties with the patent numbers Brooks Brothers put their clients and competitors on notice that the bowties were patented, when in fact they had expired.  Essentially this is an un-fair marketplace advantage and fraud on the public.  I imagine that if competitors had realized the technology was available, they would have created a similar ‘adjuster lock’ technology to compete with the Brooks Brothers bow tie.

This case was initially dismissed by the District Court saying they did not think that the plaintiff, Mr. Stauffer had standing to bring the lawsuit.  The case was then appealed to the federal appellate court which ruled that Mr. Stauffer was able to uphold his right to sue and could indeed  ”stand in the shoes” of the government and perform a ”citizen’s arrest” (apparently this was an unsettled question of law).  This ruling could pave the way for hundreds of similar suits against other false patent markings to move forward.

With regard to damages, my guess is that since the bow ties are not very expensive on a per unit basis in relation to the $500 per unit penalty the court will likely adjust the damages downwards on a per article basis.  Courts generally have the discretion to do this. But still the damages could be substantial. Imagine a $5.00 damage award for each of (I’m just guessing here) 1000 bow ties per year for 50 plus years. That’s at least a $250,000 award.

 To give you an idea, this covered game patents, computer programs, industrial patents, and a slew of other areas where a new process was discovered utilizing a pre-existing machine or article of manufacture.  For example, imagine for discussion purposes discovering that salt cured cancer.  What incentive would there be for you to invest the time and money to develop your product and bring it to market if you could not reasonably protect the new use of the pre-existing material? 

I know this is an absurd idea but it helps to bring the point home.  The lower federal circuit court had said that processes can only be patentable if they are tied to a machine or article of manufacture, or if they transform something into a different state or thing.  In other words, the focus was on “does the process transform data?”  This was a direct attack on software patents which operated on the Internet and which performed business operations or in other words business methods.

What was really at stake?  Imagine having invested heavily in developing an online business.  As part of this investment you wanted to mitigate your risk by obtaining a measure of exclusivity in exchange for disclosing the invention to the public.  Imagine over the past 10 to 15 years assuming that these patents that you obtained were valid and enforceable.  Then imagine a change in the patent law which said that arguably your invention should not have been patented in the first place. 

Also what about the small businesses, inventors, and developers who rely upon securing their intellectual property based on the established US property rights?  What incentive would there be to develop software which is inventive in some fashion, and then have another software developer deconstruct and reconstruct in a clean room approach a similar type of software process.  Copyright is a nonexclusive right.  This means that two authors can coexist independently of one another as long as they each independently developed their code.  Patent rights are exclusive.  This means that the first to invent, and the first patent is the first to benefit from the rights of making, using, selling, and importing into United States the invention.

Instead of waiting till the end of the article to tell you what the court decided, I’ll tell you right now.  The court decided that process patents are too valuable to restrict to a single test.  They also held that abstract inventions that have no tie to patentable subject matter are un-patentable.  This was not a surprise.  It is actually a reaffirmation of what the Supreme Court has held for the past 200 years.  The Supreme Court said that the transformation test singled out by the Federal Circuit as the only test for determining if something is a patentable process is not the only test.  The court reminded everyone that “Section 100(b) says that “[t]he term ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.””  The court then went on to basically state that trying to tie and restrict a process or method to a machine or to transform an article to determine if the process is patentable would be a good test to use but it’s not the exclusive reason for determining if a process is patent eligible.

In doing so, the court did not close the door on business method patents and said that the existence of the “safe harbor provisions” of the 273 statute which protect pre-existing business users from being sued by a later individuals who obtain business method patents is basically proof that Congress intended for business methods (in my opinion at least the ones that run on the computer) to be patentable.

As I said earlier, there were no real surprises.  The patent at issue was denied because it was based on an “abstract idea”.  Things outside of the patentable realm include abstract ideas, laws of nature, and formulas.  Traditionally, method claims or process claims are only patentable when they are used in conjunction with a machine, an article of manufacture, manufacturing process, or in developing some kind of material or composition.  Usually a process claim includes a series of steps, where the steps operate on or manipulate the other patentable subject matter (the machine, the article, or the composition of matter like a chemical compound.)  The claim at issue in this case did not clearly point out (recite) the machine or article or composition of matter upon which it was operating.  Essentially it was just an abstract idea for hedging energy commodity risks.  If they had included something along the lines of a software process, or a process operating on a computer, then we likely would not be having this discussion today.

The court was obviously concerned about frivolous patenting.  They said there needed to be a limiting principle (developed under the Federal Circuit) to keep the patent office from being flooded with patent applications that  would put a chill on essentially true innovation.  The court indicated one direction may be fleshing out the “abstract idea” rejection area.  The court also discussed some of its past cases, including Diamond v. Diehr  where the court had held that the abstract idea, law of nature, or mathematical formula can’t be patented, but an “application of a law of nature or mathematical formulae to a known structure or process” could be patent eligible.  In other words, the court essentially reopened the door to business method patents which are unique and which can operate on a known type of computer.  This clearly does not mean that the business method would be patentable, only that it can be considered for patent protection.  The concept would have to also overcome the 102 bar for uniqueness or in other words the anticipation bar, as well as the 103 bar for obviousness (the true test of patentability.)

The Patent and Trademark Office Logo

The type of proceeding is called a “re-examination proceeding.”  A number of distinguished judges and attorneys believe that re-examination proceedings are sometimes the best way to “purify” a patent and determine how strong and valid may be the patent. 

They think this because a re-examination proceeding is an adversarial proceeding between a person who thinks the patent is bogus and the patent owner. 

Re-exams may take two forms, the “inter parte” re-examination proceeding where the two parties are arguing against one another with the examiner acting more as an intermediary, or an “ex parte” re-examination proceeding where the challenger files or opens the case, and the patent office takes does the rest of the work with the patent owner playing defense.

In fact essentially anyone at any time can open a re-examination of an existing patent (if of course there is a good enough reason to do so.)  The main purpose again is to have the patent re-evaluated  for validity because you may think the patent examiner did not do a good job, or you know of additional prior art information which bring up new issues of patentability.

Sometimes, the patent owner himself may wish to file a similar type of action called a “reissue” action.  He may want to do this because he may have either found new prior art references, or is trying to broaden out the claims for the patent. After two years from date of issuance this door is closed.

If you are the patent owner, how can you defend an attack if you are embroiled in a re examination?  One tactic that is to revise the claims to obtain more precise coverage over the invention and avoid the prior art reference (this has good and bad consequences which could be the topic of another article.)

the Old Patent Office

Revision of the claims can only occur during the Re-exam at the patent office.  Claims can’t be revised during a federal district court proceedings. 

Also, there is a potential downside for the attacker / upside for the patent owner. If the patent survives a re-exam, the patent claims will be “stronger” and more enforceable than prior to the re-examination.  If this happens, the potential defendant who had filed for the re-exam may have a harder time proving non-infringement of the patent during a Federal Court patent infringement suit.

It’s also important to realize that the adversary to the patent may not be able to challenge the patent in federal district court if the patent has been determined to be valid during the re-examination proceeding.

Re-examinations can be helpful during a patent infringement suit in federal district court.  This is because the court can stop the proceedings until the outcome of the re-examination has been completed.  Again, the issue is that the patent may come out stronger than it originally was and be even more enforceable.

In the initial stages of the re-examination the adversary to the patent must identify and argue how the prior art makes the patent invalid.

A thorough review of the patent history  or “the file wrapper” may be helpful in developing an attack on the patent.  It may be that portions of the pre-existing prior art were not closely looked at during the initial examination of the patent and therefore a “substantial new question of patentability” could be raised just on the existing prior art itself.

By showing a detailed claim chart between the challenged patent claim elements and the elements in the prior art reference, the challenger could allege that the prior art anticipated or made obvious the claims. Also, more detailed obviousness arguments could be made.

It takes the patent office at least three months after receiving a request for re-examination along with the about $9,000 fee for inter-partes and $2500 fee for ex-parte reexamination to consider the request and determine if it can go forward (this does not include attorneys fees which can start to mount quickly.)  If the patent office decides that the arguments are not strong enough, the re-exam will be rejected and it cannot be appealed, but the decision can be petitioned to the patent commissioner.

If the case can move forward, then the patent owner has two months to respond, including any proposed amendments to the attackers complaint.

After the patent owner responds to the challenger, the challenger has two months to respond to the patent owner’s arguments.

After that the process is somewhat like a regular office action at the patent office, except a lot faster, similar to a court case.

You have probably learned more than you wanted to but now you know about the Patent litigation’s Step Brother, the Re-exam.

SRAM Patent

SRAM Corp v. AD-II Engineering, Inc. 2010 WL 743885 (C.A. Fed. (Ill.))
This is a case about index shifters for bikes. If there is anyone over the age of say 30, you may remember a time when bicycles had manual shifting mechanisms and it was always somewhat tricky to get the chain onto the right gear sprocket.

SRAM, a bike component company invented a bicycle derailleur and gear shifting system which made it much easier to downshift the gears. Current shifting designs use this “indexing” type system which enables you to click once and the gears will change.

Apparently, SRAM obtained a patent which included method and apparatus claims for the gear system. AD-II Engineering developed a competing system which SRAM thought infringed their patent. The last in a long litigation trail was just finished up.

Surprisingly, this is a somewhat old patent having been granted in 1990. Prior to 1995, all patents had a life of 17 years from the date of issuance for utility patents, and 14 years from date of issuance for design patents. Utility patents applied for after 1995 have a life of 20 years from date of filing, design patents are still 14 years from date of issuance.

The litigation likely started prior to the expiration of the patent. Otherwise, the patent claims would have been expired and unenforceable. In other words, anyone could practice the invention disclosed in the expired patent.

SRAM Shifter

It’s not surprising to see litigation occurring after the expiration of the patent. This occurs mainly because the products become more valuable as they are on the market for longer periods of time, and positions become more entrenched. Accordingly, the risks and rewards are greater.

In the earlier litigation case, the district court itself found that the company ADII was making and selling gear shifters which essentially performed the same functions and were infringing the SRAM patent.

Fortunately for ADII, their patent team was able to find a prior published Japanese patent application which clearly described all of the elements in the method and apparatus claims of the SRAM patent.

The appeals court, decided that the SRAM patent was anticipated and found the patent claims invalid. The case was dismissed.

Anticipation is patent language for saying that all of the elements present in the claim, were already present and invented as shown in a prior art reference such as a publication, a product, or some other publicly available material.

Anticipation is also codified for patentability standards in the patent statute under 35 USC section 102 (b). This statute basically says that if the invention was published prior to the invention as defined in the claim, or if it was published one year or more prior to the filing date of the patent application, then the claim is invalid and/or “anticipated”. In other words one can’t obtain a patent on something that has already been invented.

AD-II Shifters

Anticipation is the corollary to literal infringement. In this particular case we see both literal infringement and anticipation applied. The District Court found that there was literal infringement of SRAMs patent. The local court believed that each and every element of SRAM patent was present in the allegedly infringing device that being the ADII gear shifting system.

On Appeal, ADII was able to turn the tables on SRAM by finding the older published Japanese patent which had each and every element of the SRAM claims, clearly described in the Japanese patent application making the SRAM patent invalid.  A shifty case indeed.

What is the moral of the story? In drafting claims, make sure that the claims clearly can read on potential infringing devices by providing as few elements in the claims as possible, but also make sure that the patent search is broad enough to give a good idea of the prior art landscape so as to avoid any invalidation of the patent claims through anticipation.

 This is a case about a how to save money and maintain your trademark instead of having to revive it and fend off an action in Federal District Court!

 As you may or may not know, you can easily abandon a trademark if there is no commercial use of the trademark three years.  If the federal registration goes abandoned for failure to pay its “statement of use fees” then the trademark can be acquired by a third party after the three years if the original trademark owner had not continued to use it in commerce, or “intended” to use it in commerce.

 Tyco, produced a line of toys under the “Incredible Crash Dummies” and the “Crash Dummies” trademarks.  See pic.  You may remember seeing these toys in stores or on commercials in the early and mid 90’s.  Tyco was bought out by Mattel in 1997.

 Trademark assets that are purchased during a merger or acquisition sometimes need to be transferred from one party over to the other through what’s called an “assignment”.  These assignments should include the goodwill associated with the mark and need to be recorded at the US Patent and Trademark Office.  Mattel performed all of these functions.

 It appears that Mattel likely either did not have a good docketing system, or did not have the time to spend on maintaining the trademarks in use, but whatever the case Mattel failed to pay the section 8 declaration of use. This declaration must be paid at the 5 yr, 10 yr, and successive 10 year terms. Because Mattel did not maintain their registration, the trademark went abandoned and after approximately 3 years was picked up by Crash Dummies the Movie LLC.

 Crash Dummies, The Movie, LLC applied for trademark.  As a back story, it appears that’s the movie people tried to license Crash Dummies from Tyco but because Tyco was having financial difficulty, they were not able to close the deal, so to speak.  So the movie deal had been on hold until the trademark could be licensed or acquired.

 As an aside, titles themselves cannot be trademarked.  For example the first Star Wars movie was not able to be trademarked until it became a series.  Only after the title represented more than one publication in a series could it actually represents a plurality of goods.  The same goes for books.

 Mattel realized its mistake, and fortunately they had been developing a new version of The Crash Dummies toy before and during the abandonment phase.  Therefore, they were able to prove that they “intended” to continue using the mark, and they were able to prove this objectively through their activities. 

 If their activities had showed that they had not done anything with regard to developing the toy line for the three-year period then this would have been an objective indication of their intent not to continue to use the trademark.  In such a case, the Crash Dummy movie company would have been able to keep trademarks that they tried to “hijack” from Mattel.

Mattel could have saved likely tens of thousands of dollars in legal fees if they had just paid the statement of use fee (thats of course assuming that they could allege the sales of the toys..!)

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 The patent owners obtained the patent for a “floor finishing material” to be used on athletic courts, bowling lanes, and other floor surfaces made of wood, linoleum, terrazzo   or concrete.  See the pic.     

 The invention is essentially a thin plastic sheet placed over a floor surface connected by an adhesive layer. In re Suitco Surface, Inc. 2010 WL 1462294, 1 (C.A.Fed.) (C.A.Fed.,2010); patent number 4,944,514.       

 The patent owners wanted to broaden out the scope of the patent.  In order to do this, the patent owners had to file what is termed a “re-examination” of the patent.  This can be done only within the first two years after obtaining a patent.      

first prior art patent

 Re-exams come up when a patent owner realizes that a competitor has designed around his claims. So the patent owner reopens the examination of the patent application to make sure that the claims cover the entire scope of the invention and hopefully obtain some broader coverage that includes the competition.     

 During this case the patent office rejected the re-examined patent application because they found some new “prior art” patents that arguably invalidated the patent through anticipation.      

  The closest prior art was a floor covering pad which had a number of plastic sheets connected together by a number of adhesive layers. (see pic)  The pad was designed to be used right before entry into a clean room or a hospital bay to remove dirt from the shoes or wheels of incoming traffic.  This was patent number 3,785,102. 

  But this particular sheet was designed for temporarily protecting a floor during construction.  The sheet was designed to be removed after the building construction was finished.     

  It seems a little bit hard to believe that 3M could patent a thin dual layer of adhesive and plastic coating which can go on to a clay-court surface.  This just goes to show that even the smallest improvement may have significant value because of the underlying technology, or because of the solved problem which had not previously been noticed. (or they had really convincing patent attorneys.)     

A Prior Art reference

  The patent office probably agreed with the perceived absurdity of the patent.  They said that when interpreting the term “finishing surface” it should be interpreted broadly to include a finishing surface “structurally suitable for placement on the top surface of the floor.”  In other words, several layers could be placed on top of the finishing layer itself.      

 The patent office took this tact so that they could make the invention invalid based on the multiple layered floor covering prior art reference above (remember the multiple plastic layers with multiple adhesives between them.)      

  This is where the appeals court said that the patent office had gone too far.  The appeals court basically said that the claims cannot be interpreted in a re-examination proceeding much further beyond the “specification” and that the “claim language should be read in light of the specification as it would be interpreted by one of ordinary skill in the art.”     

  In other words, by placing a good written description of the claim elements into the technical specification of the patent application, a patent owner can clearly define some of the reasonable limits of the claimed terminology in his claims.     

  This means that providing multiple embodiments and descriptions of alternative ways of doing something in the patent application will help to broaden out the scope of each particular term in the patent application while also preserving the intended limits of the claims so that they may not be construed overly broad by the patent office during a re-exam proceeding, but also be construed reasonably broad in light of the patent law for infringement purposes.

 In the Richardson v. Stanley Works, Inc.  case there were two competing tool manufacturers who both created multifunction carpentry tools. The tools combine conventional hammers with stud climbing tools and crowbars.  The question was whether or not the design patent owned by Richardson for the “step claw” design was infringed by Stanley’s “fubar” design. 

 (As an aside, if I had to vote based on just the trademark creativity, I’d go with Stanley’s “fubar” design. I guess one could say that Richardson’s case was Fubar’ed. You will likely get the meaning if you ever saw Clint Eastwood star in Heartbreak Ridge. Great movie.)

 In other words,  how was the court to construe the claim for infringement.  The court relied upon its decision in the “Egyptian Goddess” case where they held the test for infringement is “the ordinary observer test [which] should be the sole test for determining whether a design patent has been infringed.”  543 F.3d 665 (Fed Cir. 2008). 

 The Court went on to say that the design patent owner must establish that an ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design. 

 The Court also said that “in evaluating infringement, we determine whether the “deception that arises is a result of the similarities in the overall design, not of similarities in ornamental features in isolation.” 

 In other words one must not consider the functionality similarities but look at the ornamental design elements as a whole to conclude either that the claimed design and accused designs contain or don’t contain those overall ornamental effects. If they do then there is likely infringement. Such infringement may result in consumer confusion between the two designs.

 To make this analysis simple, the court separated out the functional elements from the nonfunctional designs.  When comparing the two ornamental design elements against one another the functional elements cannot be considered. 

 In other words the functional portion of the hammer head by itself cannot be considered during the comparison, if there is an ornamental feature to the hammer head which is the same of similar to the patented design, then there likely is infringement of that particular design element. Of course all the design elements in the patented design must be present in the allegedly infringing article and they must be overall substantially similar for there to likely be infringement of the design patent claim.

 In the end, because the two designs were overall not substantially the same, there was no infringement.

 A common question that we sometimes receive is whether or not the registration of a copyright will act as a statutory bar to publication of the invention.  In other words, if you first register a copyright on the invention, then a year or more later file for patent protection, will the  copyright registration specimen be considered a prior art publication and prevent the inventor from obtaining a patent on the invention as described in the copyrighted subject matter.

 The short answer is that yes it would.  That’s because the specimen is available for inspection at the copyright office.  This follows with the standard definition of a publication.  The publication must be “accessible by the public” and kept in a manner which allows the work to be found with reasonably diligent searching. 

 Graduate thesis papers are a good example of this.  The thesis is indexed and catalogued in the university’s library and is publicly available generally speaking, for viewing and review just by going to the library looking under the card catalog or searching on the site.  But in the copyright office situation, the specimen or manuscript may not be indexed to be easily discovered by the public, in other words the level of access may not be public enough. 

 In addition, there may be no evidentiary proof of the date of the indexing of the work at the copyright office.  In other words, if an inventor registered the description of the invention at the copyright office, there may be a good chance that the date of indexing of the copyright was not readily recorded or available to the public.  This was the situation for the In re Lister case where the inventor (a Doctor) registered his copyright, and more than one year later filed for a patent on his invention.  Normally the publicly accessible work would act as a statutory bar to his receiving a patent.  Fortunately for the good Doctor, he was able to convince the court that the document was not properly indexed and the date of indexing was not accessible (in other words the copyright office date that the document was available to the public was not readily available,) in other words he got off on a technicality and was able to keep his patent because the copyright office did not properly index the date of publicly accessible work.

A very conservative rule of thumb, patent first…register copyright second.

 This has an effect of weakening the enforcement of software patent claims outside of the United States.  This obviously can have an effect on methods which are hosted on a server outside of the US and where the method of the claim is practiced on that server in what may be considered a cloud environment. 

 Infringement under section 271 (f) essentially is created when the components of a patented invention are supplied from the United States to an outside location where the component is then assembled to form all or a substantial portion of the patented invention. 

 The Cardiac Pacemakers Inc. v. St. Jude Medical Inc. Federal Circuit decision (576 F.3d 1348 (Fed Cir. 2009) overruled the Union Carbide Chemicals plastic technology case and held that the method of heart stimulation was not infringed even when there was a shipment of a device to an overseas location which was capable of performing the patented method. 

 Federal Circuit basically stated that the 271 (f) section does not forbid supplying products that result in the patented method.  What the statute does forbid is supplying the components themselves for a patented article.

 In summary, products can now be assembled in the United States and then shipped overseas to perform the patented method.  In other words, software may be compiled onto a computer, the computer may then be shipped to an overseas location, and the method may be practiced in that overseas location without infringing the patent owner’s method claims.  This makes a strong argument for obtaining both apparatus or system claims, as well as method claims, and means plus function claims.

 How can this come up?  Generally, if a client thinks that the patent application has been filed and it has not, or the patent has expired and residual products have been made or still exist on the marketplace.  In such case, the patent statute provides for a monetary penalty for “intentionally and falsely” marking patent numbers on unpatented items. 

 Any person, may sue and receive at least half of the penalty for false marking.  The penalty, or in other words statutory fine for false marking is not more than $500 for every offense. 

 It turns out that an offense is on a “per article” basis.  This is according to the December 2009 Forest Group Inc. v. Bonne Tool Company, 590 F.3d 1295 (Fed Cir. 2009.)  It should be noted though that the “not more language” in the statute enables the District Courts to strike a balance between encouraging the enforcement of an important public policy such as falsely marking an item as patented, and imposing the disproportionately large penalty for small and inexpensive items which may be produced in large quantities. 

 As a summary, there are a few patent attorneys who themselves have taken on filing “Qui Tam” actions which they hope to receive settlement payments on behalf of the public for their efforts.