Bose WAVE -- no evidence Bose intended to deceive the Trademark Office

Hexawave sought a federal registration for its trademark HEXAWAVE. Bose opposed that application, arguing a likelihood of confusion with Bose's prior registered trademarks, including WAVE. Hexawave then attempted to cancel Bose's registration, arguing that Bose committed fraud on the Patent and Trademark Office by claiming use on all goods listed in its registration, even though Bose had stopped manufacturing and selling certain of those goods.

Hexawave prevailed with the Trademark Trial and Appeal Board, which cancelled Bose's WAVE registration. Bose appealed to the Federal Circuit.

Evidence of "fraud"

Hexawave's evidence that Bose committed fraud was the combined Section 8 affidavit of continued use and Section 9 renewal application, filed in 2001, wherein Bose's general counsel stated that the WAVE mark was still in use on various goods, including audio tape recorders and players. As it turns out, Bose stopped manufacturing and selling audio tape recorders and players between 1996 and 1997 and Bose's general counsel knew this when he signed the declaration.

Fraud on the Trademark Office

“Fraud in procuring a trademark registration or renewal occurs when an applicant knowingly makes false, material representations of fact in connection with his application.” Torres v. Cantine Torresella S.r.l., 808 F.2d 46, 48 (Fed. Cir. 1986). A party seeking cancellation of a trademark registration for fraudulent procurement bears a heavy burden of proof. W.D. Byron & Sons, Inc. v. Stein Bros. Mfg. Co., 377 F.2d 1001, 1004 (CCPA 1967). Indeed, “the very nature of the charge of fraud requires that it be proven ‘to the hilt’ with clear and convincing evidence. There is no room for speculation, inference or surmise and, obviously, any doubt must be resolved against the charging party.” Smith Int’l, Inc. v. Olin Corp., 209 USPQ 1033, 1044 (T.T.A.B. 1981).

The Court went on to explain that the deception must be willful in order to be fraud, and that the deceiving party must intend to deceive the Patent and Trademark Office. Here, Bose's general counsel testified that because Bose continued to repair audio tape players and recorders, he believed Bose was still using the mark in commerce on those goods. As such, he had no intent to deceive the PTO. As stated by the Federal Circuit:

There is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive.

Decision reversed (with instructions for the Board to reinstate Bose's trademark with the registration updated to reflect that the WAVE mark is no longer used on audio tape recorders and players).

In re Bose, Case No. 2008-1448 (Fed. Cir. Aug. 31, 2009) (precedential)

Microsoft's appeal brief in Microsoft Word injunction matter

Dennis Crouch at Patently-O has acquired and posted Microsoft's 101-page opening appellate brief in i4i v. Microsoft. Microsoft's argument reads as a who's who in many of patent law's latest major decisions, including

• KSR v. Teleflex -- obviousness of inventions
• Cardiac Pacemakers v. St. Jude Med -- 35 U.S.C. § 271(f) does not apply to method claims (although Microsoft argues in terms of § 271(c))
• In re Seagate -- willful infringement
• eBay v. MercExchange -- injunctions in patent cases

As you will recall, a Texas judge entered an injunction preventing Microsoft from selling versions of Word which can handle custom XML, and ordering Microsoft to pay $290 million in damages. Read my earlier posts here, here, and here.

Microsoft expressed its clear discontent with the proceedings below:

In patent cases, even more than most, the trial judge’s role as a gatekeeper is crucial. As gatekeeper, the judge must define the metes and bounds of a patent through claim construction and then ensure that the evidence presented by the parties’ numerous experts is both reliable and rooted in the facts of the case at hand. And after the jury has rendered its verdict, it is the judge who, before allowing that verdict to become an enforceable judgment, must ensure that the verdict is adequately supported by the evidence and supportable under the law. This gatekeeping function is especially important in patent cases because of the delicate balance struck by patent law to achieve its objective of promoting, rather than stifling, innovation. That balance can be lost if the district court does not protect the process, and patent litigation then becomes a tax on innovation rather than its guardian.

This case stands as a stark example of what can happen in a patent case when a judge abdicates those gatekeeping functions.

* * *

By the time the plaintiffs presented their damages case, the district court had abandoned even the semblance of gatekeeping. ...

* * *

At this point, if the district court had been more faithful to its role as gatekeeper, it should have recognized a trial run amok and interceded to prevent a miscarriage of justice ...

In sum, justice was denied, and the Constitution violated:

This is not justice. If district courts are free to admit theories of infringement that nullify a patent’s claim terms, specification, prosecution history, and title; if they will allow an inventor to validate his patent by testifying without corroboration that he lied about the date of conception; if they will not intercede to preclude manifestly unreliable—indeed, concededly manipulated—surveys of infringing use, or Georgia-Pacific analyses based on “benchmarks” bearing no rational relationship to the accused product, then patent litigation will be reduced to a free-for-all, unbounded by the requirements of the substantive law or the rules of evidence or trial procedure. While that mode of dispute resolution might enrich some plaintiffs and their investors, it hardly can be said to “promote the Progress of Science and the useful Arts.” U.S. Const. art. I, § 8.

Microsoft then presents a 5-pronged attack on the proceedings below:

1. Improper claim construction read a key limitation -- the word "distinct" out of the claims
2. The claims are invalid
3. Insufficient evidence to support indirect infringement finding
4. The $200 million damage award is not "reasonable"
5. Awarding an injunction here is improper

HP and Dell Amicus Briefs

HP and Dell also weighed in. HP and Dell both argued that enjoining sales of Word would impose large hardships, as both of these companies distribute Word. Both companies explained their process for creating images, which are then copied onto new computes. For those computers that include enjoined copies of Word (presumably this number is large, but the amicus briefs are redacted to protect this confidential information), HP and Dell would need to create and test new images, which would cost time and money.

We'll see how i4i responds....

Combining drugs -- "epitome of obviousness?"

Ortho-McNeil sells the pain reliever Ultracet®, which is a combination of acetaminophen (Tylenol®) and tramadol (an analgesic). Ortho sued Teva Pharmaceuticals and Caraco Pharmaceutical Laboratories for infringing U.S. Reissued Patent 39,221, which claims combinations of acetaminophen and tramadol in certain ratios.

The defendants prevailed at the trial level by arguing that the patent was invalid for anticipation and obviousness. Basically, the prior art disclosed a pain reliever made up of acetaminophen, tramadol, and 2 other compounds at varying ratios. The trial court agreed that this rendered the patent obvious and anticipated, and granted summary judgment in favor of the defendants. Ortho appealed.

Obviousness of combining only acetaminophen and tramadol

The Federal Circuit stated the law on obviousness:

Obviousness is ultimately a determination of law, though it is based on questions of fact. [Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc. 424 F.3d 1293, 1302 (Fed. Cir. 2005] Anticipation is a question of fact. Id. Because issued patents enjoy a presumption of validity, obviousness and anticipation must be proven by clear and convincing evidence. Impax Labs., Inc. v. Aventis Pharma., Inc., 545 F.3d 1312, 1314 (Fed. Cir. 2008). When the patent examiner has considered the asserted prior art and basis for the validity challenge during prosecution, the burden of proving invalidity is especially heavy. Id.; Hewlett-Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1467 (Fed. Cir. 1990). ...

Inventions in most instances rely upon building blocks long since uncovered, and combine elements that are in some sense already known. KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 418-19 (2007). The combination of familiar elements according to known methods is likely to be obvious, however, when it does no more than yield predictable results. Id. at 1739. Each case must be decided in its particular context, including the characteristics of the science or technology, the nature of the choices available to one skilled in the art, the specificity of the prior art, and the predictability of results in the area of interest. Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1352 (Fed. Cir. 2008).

The Court then relied upon Ortho's expert testimony in deciding that there is a question of fact as to whether or not the claimed combination was obvious, and thus the Court vacated summary judgment on this issue and remanded.

Anticipation of the claimed ratio

The district court improperly resolved disputed questions of fact in reaching this conclusion. What a reference discloses is a question of fact. Para-Ordnance Mfg., Inc. v. SGS Imps. Int’l, Inc., 73 F.3d 1085, 1088 (Fed. Cir. 1995).

Thus, because the parties don't agree as to what the prior art discloses, a question of fact remains.

Obviousness of the claimed ratio

Here, the Federal Circuit was not convinced by Ortho's expert, and agreed with the trial court that no genuine issue of fact existed as to whether or not the claimed ratio was obvious. As such, claim 6 remains invalid for being obvious in light of the prior art.

The dissent -- Judge Mayer

Most interesting in this case (to me at least) is Judge Mayer's dissent. A sampling of his language conveys his opinion this matter:

The claimed invention does nothing more than combine two well-known pain relievers—acetaminophen and tramadol—in a single tablet. Since the prior art clearly and unequivocally taught that these two analgesics could be combined for effective pain relief, the claimed invention is the epitome of obviousness. I therefore respectfully dissent.

Ortho-McNeil Pharmaceutical, Inc. (“Ortho”) did not invent acetaminophen and it did not invent tramadol. ...

* * *

[A]s here, it was manifestly obvious to combine two well-known drugs -- which had previously been administered together -- in a single table...

* * *

Expert opinions must be given short shriftwhen they fly in the face of explicit disclosures in the prior art....

* * *

Simply put, there is nothing even arguably new about what Ortho claims to have invented. I would affirm.

(emphasis added, and citations omitted).

Ortho-McNeil Pharmaceutical, Inc. v. Teva Pharmaceuticals Industries, Inc., Case No. 2008-1549, -1550) (Fed. Cir. Aug. 26, 2009) (nonprecedential)

Who owns UNIX, Novell or SCO? That's up to the jury now...

In the 1960s, AT&T developed the UNIX operating system, which it sold to Novell for $300 million in 1993. Two years later, Novell decided to sell this business. Enter SCO Group. Novell and SCO struck a deal, the meaning and substance of which is at dispute.

SCO v. Linux

Fast forward 10 years. Linux is now gaining in popularity. SCO sues IBM, claiming it had incorporated its trade secrets into Linux. SCO demanded $5 billion in damages. Novell demanded SCO stop, which SCO refused. Novell then publicly announced that it, and not SCO, maintained ownership of the UNIX copyrights.

SCO v. Novell

SCO struck first and sued Novell for slander of title. Novell counterclaimed for slander of title, breach of contract, and unjust enrichment. Novell claims it continued to own the copyrights to UNIX, and licensed these rights to SCO. SCO's position is that it acquired the copyrights, leaving Novell a 95% interest in royalties as a "financing device."

That litigation proceeded to the summary judgment stage. On August 10, 2007, the District of Utah Court determined, in a 102-page order, that "Novell is the owner of the UNIX and UnixWare copyrights." SCO appealed.

Does Novell own UNIX as a matter of law?

The Court first addressed a contractual interpretation issue before getting to the question of whether SCO had been assigned the copyrights to UNIX, or if SCO merely was a licensee.

Copyright assignments must be in writing

Regarding transfers of ownership, the Copyright Act requires:

A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.

17 U.S.C. § 204(a). The Court explained:

Section 204 is intended “to protect copyright holders from persons mistakenly or fraudulently claiming oral licenses [or transfers].” Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27, 36 (2d Cir. 1982). As a result, Section 204 “enhances predictability and certainty of ownership—‘Congress’s paramount goal’ when it revised the [Copyright] Act in 1976.” Konigsberg Intern. Inc. v. Rice, 16 F.3d 355, 357 (9th Cir. 1994) (quoting Community for Creative Non-Violence v. Reid, 490 U.S. 730, 749 (1989)).

Novell argued that this obligation is akin to a statute of frauds, and that the writing must state with sufficient clarity the copyrights to be transferred. Because there was ambiguity in what the contracts between Novell and SCO said, the contracts themselves failed the writing requirement, and thus there was no valid copyright assignment. The Tenth Circuit was not convinced.

We think that Section 204’s writing requirement is best understood as a means of ensuring that parties intend to transfer copyrights themselves, as opposed to other categories of rights. See, e.g., Papa’s-June Music, Inc. v. McLean, 921 F. Supp. 1154, 1158–59 (S.D.N.Y. 1996) (although a writing need not explicitly mention “copyright” or “exclusive rights” to satisfy 204(a), the better practice is that it should). But when it is clear that the parties contemplated that copyrights transfer, we do not think that a linguistic ambiguity concerning which particular copyrights transferred creates an insuperable barrier invalidating the transaction.

The Court then decided that "[t]his case, involving a complicated, multi-million dollar business transaction involving ambiguous language about which the parties offer dramatically different explanations, is particularly ill-suited to summary judgment." After addressing a number of other contractual issues, the Court reversed (in-part) and remanded the matter back to the trial court.

Documents of interest:

• Trial court order granting summary judgment
• Description of SCO v. Linux lawsuits
• SCO is currently seeking Chapter 11 reorganization in bankruptcy
• Wiki page on SCO v. Novell
• The Court affirmed the award of $2.5 million in royalties owing from SCO to Novell

Affirmed-in-part, reversed-in-part.

SCO Group, Inc. v. Novell, Inc., Case No. 08-4217 (10th Cir. Aug. 24, 2009) (published)

Does the Patent Act contain separate requirements for enablement and written description? Fed. Cir. will decide en banc

ARIAD Pharmaceuticals prevailed at the trial level. Eli Lilly appealed. The Federal Circuit panel handling the appeal reversed, finding some claims of ARIAD's patent (U.S. Patent No. 6,410,516) invalid for lack of written description. Patently-O's writeup with more details is here.

ARIAD asked the Federal Circuit for an en banc rehearing. Yesterday, the Court granted that request, and will decide the following 2 questions:

Whether 35 U.S.C. § 112, paragraph 1, contains a written description requirement separate from an enablement requirement?

If a separate written description requirement is set forth in the statute, what is the scope and purpose of the requirement?

We'll see what happens.

ARIAD Pharmaceuticals, Inc. v. Eli Lilly And Co., Case No. 2008-1248 (Fed. Cir. Aug. 21, 2009) (en banc)

Another quick update on Microsoft Word order in Texas -- Parties agree Microsoft doesn't have to post a bond

Just another quick follow up on the judgment entered against Microsoft in Texas in i4i v. Microsoft. Read my earlier posts here, and here.

Yesterday, the Court entered a stipulated order, allowing Microsoft to avoid posting a bond or other security pending its appeal (including any appeals to the Supreme Court). Microsoft included a verification that it has the present ability to pay (approximately $290,000,000) and it will provide plaintiff with updated verifications quarterly indicating that Microsoft still has the ability to pay. If there comes a point in time that Microsoft doesn't have the ability to pay, it will notify i4i, the plaintiff, within 7 days. Finally, Microsoft agreed that, should any payments be due on the judgment after the appeal finishes, Microsoft will pay within 15 days. Additionally, the parties left open the option to come back to the Court and ask for a modification of the order.

You can read the order here.

A "classifier" is a particular machine, and thus patent eligible

George Forman (no, not that George Foreman) invented a method for selecting a predetermined number of features for a set of binary partitions over a set of categories given a dataset of feature vectors associated with the categories. Read the application here. Claim 1 and 4:

1. A computer-implemented feature selection method for selecting a predetermined number of features for a set of binary partitions over a set of categories given a dataset of feature vectors associated with the categories, the method comprising:

for each binary partition under consideration, ranking features using two-category feature ranking; and

while the predetermined number of features has not yet been selected:

picking a binary partition p;

selecting a feature based on the ranking for binary partition p; and

adding the selected feature to an output list if not already present in the output list and removing the selected feature from further consideration for the binary partition p.

4. A method in accordance with claim 1 and further comprising using the selected features in training a classifier for classifying data into categories.

The Examiner rejected claims 1-35 as nonstatutory subject under 35 U.S.C. § 101. (There were also obviousness rejections, which are not discussed in this posting). The Board of Patent Appeals and Interferences explained the law:

As the U.S. Supreme Court has noted, “‘[a]n idea of itself is not patentable[]’….‘A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.’” [Diamond v. Diehr, 450 U.S. 175, 185 (1981)] (citations omitted).

In determining whether a claim as a whole is directed to an abstract idea, a key distinction has been drawn between (1) claims that seek to wholly pre-empt the use of a fundamental principle, and (2) claims that are merely limited to foreclosing others from using a particular application of that fundamental principle. See In re Bilski, 545 F.3d 943, 957 (Fed. Cir. 2008) (en banc), cert. granted, 77 U.S.L.W. 3442, 3653, 3656 (U.S. June 1, 2009) (No. 08-964).

Based on U.S. Supreme Court precedents, Bilski restated the U.S. Supreme Court’s “definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself.” Bilski, 545 F.3d at 954. This restatement, embodied as the “machine-or-transformation test,” requires that a claimed process either (1) be tied to a particular machine or apparatus, or (2) transform a particular article into a different state or thing. Id. This test ensures that the claimed process does not pre-empt uses of the principle that do not use the specified machine or apparatus. The test further precludes a claimed process from pre-empting “the use of the principle to transform any other article, to transform the same article but in a manner not covered by the claim, or to do anything other than transform the specified article.” Id.

Claim 1 -- not patent eligible

Addressing claim 1, the Board found the recited steps were not tied to a particular machine or apparatus, nor did they transform a particular article into a different state or thing. As such, the claim failed Bilski, as was not patent eligible. The Board found the preamble's requirement that the method be "computer-implemented" was merely "a nominal structural recitation [which] would be a tantamount to a general purpose computer and would therefore not tie the process to a particular machine or apparatus." (citing Gottschalk v. Benson, 409 U.S. 63 (1972)). The Board also found no transformation in claim 1, and upheld the finding of rejection under § 101.

Claim 4 -- The Classifier is a particular machine & thus patent eligible

Turning to claim 4, the Board found that the "classifier" is a particular machine because of the following definition from the specification:

A classifier is typically constructed using an inducer. An inducer is an algorithm that builds the classifier using a training set comprising records with labels. After the classifier is built, it can be used to classify unlabeled records.” Spec. ¶ 0005.

Per the Board:

A “classifier” is therefore a particular machine in that it performs a particular data classification function that is beyond mere general purpose computing. Since the claim recites using the selected features in training this classifier, the claim is therefore tied to a particular machine, namely the classifier. Claim 4 also transforms a particular article into a different state or thing, namely by transforming an untrained classifier into a trained classifier.

Claim 15 -- A machine or article of manufacture, but still not patent eligible

First, the law:

If a claimed machine (or article of manufacture) involves a mathematical algorithm, then we must determine whether the scope of the claimed invention encompasses one of the judicially-created exceptions. This determination of claim scope requires that we make two inquiries:

(1) Is the claim limited to a tangible practical application, in which the mathematical algorithm is applied, that results in a real-world use (e.g., “not a mere field-of-use label having no significance”)?

(2) Is the claim limited so as to not encompass substantially all practical applications of the mathematical algorithm either “in all fields” of use of the algorithm or even in “only one field?”

If the machine (or article of manufacture) claim involves a mathematical algorithm and fails either prong of this two-part inquiry, then the claim is not directed to patent-eligible subject matter under § 101.

Claim 15 begins "A memory embodying computer program code for feature selection..." A memory is a machine or an article of manufacture, so it satisfies at least one category of § 101. But where the claimed machine involves a mathematical algorithm, the patent-eligibility analysis must go further. The Board's analysis:

Here, claim 15 is not limited to a tangible practical application in which the algorithm is applied that results in a real-world use. Although the preamble recites that the program code is “for feature selection for a plurality of categories,” this nominal intended use recitation falls well short of reciting a tangible practical application that results in a real-world use. Moreover, the remainder of the claim merely recites data manipulation steps that are performed by the processor upon execution of the program code. These limitations, likewise, fail to recite a tangible practical application that results in a real-world use. Furthermore, the sheer breadth of claim 15 encompasses substantially all practical applications of the algorithm. In essence, claim 15 merely recites a general purpose computing device intended to facilitate the future execution of the recited data manipulation functions—manipulations similar to those in claim 1 that we found to be unpatentable under § 101.

Reversed in part, affirmed in part.

Ex parte Forman, Appeal 2008-005348 (BPAI Aug. 17, 2009)

Game - Set - Match; Federal Circuit affirms dismissal of suit about dual surface tennis courts

May 2, 2007. Mallorca, Spain. On this side, the world's number 1 male tennis player -- Roger Federer -- who also happens to be considered the best grass court tennis player. On the other side, the world's number 2 male tennis player -- Rafael Nadal -- who happens to be considered the best clay court tennis player. ESPN covered the story here.

Renata Marcinkowska was awarded U.S. Patent No. 6,814,669 titled "Dual Surface for Sport Event or Game." The day before the match, Marcinkowska (herself a former professional tennis player) commenced an action against an advertising company in Spain and a sports marketing and management company in Ohio. Problem is, she filed suit in South Carolina, and neither defendant was subject to personal jurisdiction there. The defendants moved to dismiss on that basis, and also argued that Marcinkowska's complaint failed to state a claim upon which relief can be granted. The court granted the motion on both counts, and dismissed with prejudice.

Marcinkowska appealed. After walking through analysis for personal jurisdiction the Court affirmed. There was no allegation that an intentional tort (i.e. patent infringement) took place in South Carolina. So the Federal Circuit affirmed.

Regarding the 12(b)(6) motion to dismiss for failure to state a claim, the Federal Circuit noted that IMG did not make, use, sell, or offer for sale the subject matter of the '669 patent in the U.S. Marcinkowska argued that IMG promoted the match on its website, and let people in the U.S. download photos from the event. She also argued that IMG promoted its own services by broadcasting depictions of the dual surface tennis court in the U.S. The trial court found this too thin to be "use," and the appellate court agreed:

As a practical matter, the exhibition promoted on the internet and televised throughout the world was held on a tennis court built and housed in the Kingdom of Spain, and it was this Spanish tennis court that provided the playing surface for the “Battle of the Surfaces” exhibition over which IMG and other entities obtained trademarks, advertised, and licensed broadcast rights throughout the world. In this case, the hybrid tennis court was not “used” in the United States - it was “used” in Spain and that use was broadcast in the United States.

You can watch some of the match here:

Decision affirmed

Marcinkowska v. IMG Worldwide, Inc., Case No. 2009-1213 (Fed. Cir. Aug. 20, 2009)(nonprecedential)

Assignments aren't the only way to transfer ownership of patents -- operation of law also works

The owner of U.S. Patent Nos. 6,141,653; 6,336,105; 6,338,050; 7,162,458; and 7,149,724 granted a security interest in the patents to Silicon Valley Bank and to Cross Atlantic Capital Partners. Silicon Valley Bank assigned its interest to Cross Atlantic. Once the owner defaulted on its loan obligation, Cross Atlantic foreclosed and auctioned the patents off. Cross Atlantic -- the only bidder at the auction -- bought the rights, and then assigned them to Sky Technologies.

Sky then sued SAP for patent infringement. SAP challenged whether Sky had standing to sue, since there was no written assignment document assigning the rights from the owner to Cross Atlantic (and thus the chain of title was "broken"). The trial court found that the foreclosure transferred the rights to Cross Atlantic by operation of law, and thus denied SAP's motion to dismiss. SAP asked for an interlocutory appeal, which the trial court allowed.

35 U.S.C. § 261 provides, in part:

Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.

The Federal Circuit explained the law:

In order to seek damages for infringement of a patent, a party must have standing at the inception of the lawsuit. Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1579 (Fed. Cir. 1991). A party that has been granted all substantial rights under the patent, “regardless of how the parties characterize the transaction that conveyed those rights,” is considered to have legal title, and therefore standing. Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1249–50 (Fed. Cir. 2000). Thus, it is the “substance of what was granted” that determines the rights in the patent, not the form. Id. at 1250; Vaupel Textilmaschinen KG v. Meccanica Europa Italia S.P.A., 944 F.2d 870, 873–76 (Fed. Cir. 1991). ...

* * *

We have previously held that patent ownership is determined by state, not federal law. Akazawa [v. Link New Technology International, Inc., 520 F.3d 1354, 1357 (Fed. Cir. 2008)] (citing Jim Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567, 1572 (Fed. Cir. 1997) (“[T]he question of who owns the patent rights and on what terms typically is a question exclusively for state courts.”)). ...

* * *

Even though a transfer of patent ownership, if through an assignment, must be in writing, this court has held, “[T]here is nothing that limits assignment as the only means for transferring patent ownership. . . . [O]wnership of a patent may be changed by operation of law.” Akazawa, 520 F.3d at 1356.

Finally, the Court held:

We find that Akazawa controls in the instant case, and that the district court’s reliance on its reasoning was appropriate because transfer of patent ownership by operation of law is permissible without a writing.

Decision affirmed.

Sky Technologies, LLC v. SAP AG, Case No. 2008-1606 (Fed. Cir. Aug. 20, 2009) (precedential)

Saying an "interrogator/reader" does "no transmission," means an "interrogator/reader" does not include a transmitter

RFID Tracker sued a number of retailers (Wal-Mart, Gillette, and Target) for alleging infringing U.S. Patent No. 6,967,563, a patent disclosing an inventory control system which includes radio frequency identification ("RFID") tags attached to the inventory to be managed. Claim 1 includes the following limitation:

an interrogator/reader in communication with the computer and including:

a field generator...; and

a receiver,

The parties disagreed as to the meaning of "interrogator/reader." RFID argued this term required no construction, while Wal-Mart, Gillette & Target construed the term to "a field generator and a receiver, but not a transmitter." The Court adopted Defendant's construction. RFID stipulated to non-infringement, and appealed the construction up to the Federal Circuit.

The Court explained prosecution disclaimer:

The prosecution history must be reviewed when interpreting a claim to “exclude any interpretation” that was “disclaimed or disavowed during prosecution.” Computer Docking Station Corp. v. Dell, Inc., 519 F.3d 1366, 1374-75 (Fed. Cir. 2008); ZMI Corp. v. Cardiac Resuscitator Corp., 844 F.2d 1576, 1580 (Fed. Cir. 1988). “A patentee may limit the meaning of a claim term by making a clear and unmistakable disavowal of scope during prosecution.” Computer Docking, 519 F.3d at 1374.

If the applicant unequivocally disavows claim scope, the doctrine of prosecution disclaimer applies even if the disclaimer results in a negative claim limitation. See N. Am. Container, Inc. v. Plastipak Packaging, Inc., 415 F.3d 1335 (Fed. Cir. 2005) (affirming district court’s construction of claim term “generally convex” to require “a majority of convex points along the inner wall and no concave points,” as the applicant’s statements in the prosecution history disclaimed coverage of an inner wall with any concavity). Prosecution disclaimer may also arise from an applicant’s statements in a parent patent application if the parent application relates to the same subject matter as the claim language at issue. Ormco Corp. v. Align Tech., Inc., 498 F.3d 1307, 1314 (Fed. Cir. 2007).

In response to an obviousness rejection under 35 U.S.C. § 103(a), the applicant had argued that the present invention is "simply a receiver and a field generator in its simplest form," and that the claimed method "requires no polling and no transmission from the interrogator/reader." As such, "RFID cannot now contend that the claimed interrogator/reader is anything more..."

Decision affirmed.

Relevant documents:

• Claim construction order.

RFID Tracker, Ltd. v. Wal-Mart Stores, Inc., Case No. 2008-1412 (Fed. Cir. Aug. 18, 2009) (nonprecedential)

Microsoft files emergency motion to stay execution of judgment in Texas

Just a brief follow up to last Thursday's post discussing the injunction entered in Texas precluding Microsoft from selling Word with custom XML. As expected, Microsoft has moved for a stay to delay enforcement of the injunction and wave its obligation to post a bond pending appeal. That motion has been filed under seal, so its contents are not yet available. Slashdot has a brief story here, and PC Mag has a story here. Stay tuned...

Go fish! It's not an exceptional case just because you won

Wedgetail sued Huddleston Deluxe for infringing its fishing lure patent. See U.S. Patent No. 6,857,220. Huddleston argued that it did not infringe, and that the patent is invalid. After the court entered its claim construction order, Wedgetail moved to dismiss its infringement claims with prejudice, as it decided "that it may be difficult to establish infringement under certain of the Court's constructions." Wedgetail also covenanted not to sue Huddleston for infringing the '220 Patent, and argued that, per Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1056 (Fed. Cir. 1995), the Court was divested of subject matter jurisdiction and could no longer hear Huddleston's counterclaims.

In response, Huddleston requested permission from the Court to brief its entitlement to and amount of attorney's fees. The next day, the Court entered its order, dismissing with prejudice Wedgetail's patent infringement claims as well as Huddleston's counterclaims. The Court further ordered that each party was to bear its own costs and attorney's fees.

Huddleston appealed, and argued to the Federal Circuit that it was entitled to fees, or at the very least, Huddleston should have been given an opportunity to present its motion for fees. The Federal Circuit explained the law:

35 U.S.C. § 285 provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” This provision is an exception to the so-called “American Rule”:

Under the American Rule each party bears its own attorney fees and expenses. As an exception to that rule, courts have exercised their inherent equitable power to make whole a party injured by an egregious abuse of the judicial process. . . . Congress enacted Section 285 to codify in patent cases the “bad faith” equitable exception to the American Rule. . . . Recognizing the good faith/bad faith distinction, Congress expressly limited such awards to “exceptional cases.”

Sun-Tek Indus., Inc. v. Kennedy Sky Lites, Inc., 929 F.2d 676, 678 (Fed. Cir. 1991) (internal quotation marks and citations omitted). “The determination of whether a case is exceptional and, thus, eligible for an award of attorney fees under § 285 is a two-step process. First, the district court must determine whether a case is exceptional, a factual determination reviewed for clear error. After determining that a case is exceptional, the district court must determine whether attorney fees are appropriate, a determination that we review for an abuse of discretion. A district court abuses its discretion when its decision is based on clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary or fanciful.” Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en banc) (citations omitted).

“[T]he exceptional nature of the case must be established by clear and convincing evidence.” Cambridge Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048, 1050 (Fed. Cir. 1992). As this court has consistently found, however, only a limited universe of circumstances warrant a finding of exceptionality in a patent case: “inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.” Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed. Cir. 2002); see also, e.g., Brasseler, U.S.A. I, L.P., v. Stryker Sales Corp., 267 F.3d 1370, 1380 (Fed. Cir. 2001) (same); id. (“Exceptional cases are normally those involving bad faith litigation or those involving inequitable conduct by the patentee in procuring the patent.”); Hoffman-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000) (“Among the types of conduct which can form a basis for finding a case exceptional are willful infringement, inequitable conduct before the P.T.O., misconduct during litigation, vexatious or unjustified litigation, and frivolous suit. Such conduct must be supported by clear and convincing evidence.” (quoting Beckman Instruments, Inc., v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989))); Multiform Desiccants, Inc. v. Medzam, Ltd., 133 F.3d 1473, 1481–82 (Fed. Cir. 1998) (“Findings of exceptional case have been based on a variety of factors; for example, willful or intentional infringement, inequitable conduct before the Patent and Trademark Office, vexatious or unjustified litigation, or other misfeasant behavior.”); Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1579 (Fed. Cir. 1996) (“Bad faith litigation, willful infringement, or inequitable conduct are among the circumstances which may make a case exceptional.”); Cambridge Prods., 962 F.2d at 1050–51 (“In the case of awards to prevailing accused infringers . . . ‘exceptional cases’ are normally those of bad faith litigation or those involving fraud or inequitable conduct by the patentee in procuring the patent.”); Bayer Aktiengesellschaft v. Duphar Int’l Research B.V., 738 F.2d 1237, 1242 (Fed. Cir. 1984) (“In awarding attorney fees to a prevailing accused infringer, such exceptional circumstances include, inter alia, inequitable conduct during prosecution of a patent, misconduct during litigation, vexatious or unjustified litigation, or a frivolous suit.”).

After briefly addressing Huddleston's failure to actually file a motion for attorney's fees within 14 days of entry of judgment, the Court determined that the record supported the trial court's decision to refuse fees; "because the district court's decision, although lacking explanation, is supported by the record, '[n]o useful purpose would be served by a remand to enable the district court to tell us in express terms what we already know from the record."

Affirmed.

Relevant documents

• Court's claim construction order
• Wedgetail's motion to dismiss with prejudice
• Huddleston's opposition to the motion to dismiss
• Court's order dismissing claims with prejudice

Wedgetail, Ltd v. Huddleston Deluxe, Inc., Case No. 2009-1045 (Fed. Cir. Aug. 12, 2009)

Fore! Genuine issue of fact concerning anticipation of golf ball patent

The Federal Circuit has just remanded the long-running patent infringement dispute between Callaway and Acushnet concerning certain Callaway golf ball patents. The patents at issue are:

• 6,210,293: "Multi-layer golf ball"
• 6,503,156: "Golf ball having multi-layer cover with unique outer cover characteristics"
• 6,506,130: "Multi layer golf ball"
• 6,595,873: "Multi-layer golf ball"

At the trial level, Acushnet stipulated that it infringed, but argued the patents were invalid for being anticipated and obvious over the prior art. The trial court disagreed on anticipation, but held a trial on obviousness, where the jury determined that all but one of the asserted claims was valid.

Acushnet argued that U.S. Patent 4,431,193 to Nesbitt anticipated each of the claimed limitations, even though it did not expressly disclose two limitations (namely the use of polyurethane in the outer cover and the use of a blend of ionomer resins in the inner cover). Acushnet explained that these two additional limitations were disclosed in Nesbitt because it incorporated by reference U.S. Patent 4,274,637 to Moliter:

Reference is made to the application Ser. No. 155,658, of Robert P. Molitor issued into U.S. Pat. No. 4,274,637 which describes a number of foamable compositions of a character which may be employed for one or both layers 14 and 16 for the golf ball of this invention.

The district court did not agree, because Nesbitt did not specifically incorporate polyurethane and ionomer-resin blends. The Federal Circuit explained the law as follows:

To incorporate matter by reference, a host document must contain language “clearly identifying the subject matter which is incorporated and where it is to be found”; a “mere reference to another application, or patent, or publication is not an incorporation of anything therein . . . .” In re de Seversky, 474 F.2d 671, 674 (CCPA 1973). Put differently, “the host document must identify with detailed particularity what specific material it incorporates and clearly indicate where that material is found in the various documents.” Adv. Display Sys., 212 F.3d at 1282. Nesbitt identifies with specificity both what material is being incorporated by reference (foamable polymeric compositions suitable for golf ball cover layers) and where it may be found (the Molitor patent). Nesbitt col.3 ll.51–61. We have previously held that language nearly identical to that used in Nesbitt (“[r]eference is made to”) can be sufficient to indicate to one of skill in the art that the referenced material is fully incorporated in the host document. See In re Voss, 557 F.2d 812, 815–16 (CCPA 1977); In re Hughes, 550 F.2d 1273, 1275–76 (CCPA 1977). Here, however, the district court held that Nesbitt satisfies the requirements for incorporation only with regard to the ionomer resins disclosed in Molitor, stating that “Molitor ’673 is mentioned in Nesbitt to identify examples of suitable resins, preferably ionomer resins, and not to specifically incorporate polyurethane.” Summary Judgment Order, 523 F. Supp. 2d at 396.

* * *

Nesbitt incorporates the entire list of foamable compounds (“a number of foamable compositions”) disclosed by Molitor ’637 as appropriate materials for use in golf ball cover layers, including polyurethane and mixtures of ionomer resins. We perceive no basis to differentiate between incorporation of the ionomeric resins disclosed by Molitor ’637 and the other compositions in the list, including polyurethane. Accordingly, we hold that Nesbitt incorporates by reference the potential cover layer materials described in Molitor ’637, including polyurethane and ionomer resin blends.

As such, the Federal Circuit remanded the case to the trial court for further proceedings on the anticipation issue.

Callaway Golf Co. v. Acushnet Co., Case No. 09-1076 (Fed. Cir. Aug. 14, 2009)

Microsoft Word + custom XML = no more?

Tuesday, Judge Davis of the Eastern District of Texas entered a permanent injunction against Microsoft, enjoining the company from:

1. selling, offering to sell, and/or importing in or into the United States any Infringing and Future Word Products that have the capability of opening a .XML, .DOCX, or .DOCM file (“an XML file”) containing custom XML;

2. using any Infringing and Future Word Products to open an XML file containing custom XML;

3. instructing or encouraging anyone to use any Infringing and Future Word Products to open an XML file containing custom XML;

4. providing support or assistance to anyone that describes how to use any infringing and Future Word Products to open an XML file containing custom XML; and

5. testing, demonstrating, or marketing the ability of the Infringing and Future Word Products to open an XML file containing custom XML.

The Court also entered final judgment, with damages:

• $200 million for infringement
• $40 million for willful infringement
• ~$11.8 million for post-verdict damages
• ~$38 million in pre-judgment interest
• (for a total of ~$290 million)

i4i sued Microsoft for infringing U.S. Patent No. 5,787,449 directed to separately manipulating the architecture and content of a document. The '449 invention relied upon a "metacode map," which allowed a reliable method of manipulating the structure of a document without reference to its content. Claims 1-13 were found to be invalid for being indefinite under 35 U.S.C. § 112 ¶ 2.

Claim 14 provides:

14. A method for producing a first map of metacodes and their addresses of use in association with mapped content and stored in distinct map storage means, the method comprising:

providing the mapped content to mapped content storage means;

providing a menu of metacodes; and

compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes; and

providing the document as the content of the document and the metacode map of the document.

Direct Infringement

Microsoft's offered 3 arguments that there was no direct infringement: (1) no evidence that Word created a "data structure," as required by the Court's construction of the term "metacode map;" (2) insufficient evidence that Word contained "metacodes;" and (3) improper construction of the terms "distinct map storage means," "mapped content storage means," and "mapped content storage." The Court was not persuaded by any of these arguments.

Indirect Infringement

Microsoft next argued that contributory and inducement infringement was also improper. The Court explained:

A cause of action for contributory infringement flows from 35 U.S.C. § 271(c). That section provides:

Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.

35 U.S.C. § 271(c).

Induced infringement is a separate cause of action from contributory infringement. “In order to prevail on an inducement claim, the patentee must establish first that there has been direct infringement, and second that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement.” ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1312 (Fed. Cir. 2007) (internal quotation marks omitted). “[I]nducement requires evidence of culpable conduct, directed to encouraging another's infringement, not merely that the

inducer had knowledge of the direct infringer's activities.” Id. at 1306. Furthermore, “[t]he plaintiff has the burden of showing that the alleged infringer's actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.” DSU Med. Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) (quoting Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990)).

Both forms of indirect infringement require the plaintiff to prove corresponding acts of direct infringement. See DSU Med. Corp., 471 F.3d at 1303. Importantly however, a patentee may prove both indirect infringement and the corresponding direct infringement by circumstantial evidence. See Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1219 (Fed. Cir. 2006). “There is no requirement that direct evidence be introduced, nor is a jury's preference for circumstantial evidence over direct evidence unreasonable per se.” Id. Moreover, “[t]he drawing of inferences, particularly in respect of an intent-implicating question . . . is peculiarly within the province of the fact finder that observed the witnesses.” Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1110 (Fed. Cir. 1986); see also Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1378 (Fed. Cir. 2005) (declining to disturb jury's verdict because intent to induce infringement “is a factual determination particularly within the province of the trier of fact”).

Microsoft offered 3 arguments concerning contributory infringement: (1) insufficient evidence that Microsoft knew Word was "patented and infringing;" (2) insufficient evidence that Word did not have a substantial non-infringing use; and (3) the software couldn't form the basis of a contributory infringement claim because the only claims asserted were process claims. The Court was not persuaded by any of these arguments.

Willfulness

To prevail on a charge of willful infringement, the patentee must show the accused infringer acted with objective recklessness. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). First, the patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions infringed a valid patent. Id. The accused infringer's state of mind is irrelevant to this objective inquiry. Id. If the patentee meets this threshold objective standard, the patentee must further demonstrate that the accused infringer knew or should have

known of this objectively high risk. Id. Whether infringement is willful is a question of fact and reviewed for substantial evidence. Metabolite Labs., Inc. v. Labs. Corp. of Am. Holdings, 370 F.3d 1354, 1359 (Fed. Cir. 2004).

Microsoft offered a number of arguments, none of which were convincing to the Court, including: (1) because the Court invalidated some claims of the '449 patent, Microsoft asserted defenses to the remaining claims, and i4i involuntarily dismissed some accused products, there was no willfulness; and (2) insufficient evidence of whether Microsoft knew of the likelihood of infringement.

The Court then addressed obviousness and anticipation, as well damages.

The Court's claim construction order (also granting partial summary judgment of invalidity) can be found here. Supplemental claim construction here.

The Court's 65-page memorandum and order can be found here. The permanent injunction can be found here. And the final judgment can be found here.

i4i Ltd. v. Microsoft Corp., Case No. 6:07-CV-00113-LED (E.D. Tex. Aug. 11, 2009).

Computer programs are functional, and are patent eligible when recorded on computer-readable medium.

William Bodin and Derral Thorson invented a virtual camera and method for editing and browsing images for virtual cameras. Claims 17-24 were rejected under 35 U.S.C. § 101 as being directed to non-statutory subject matter. For example, claim 17 claimed:

A computer program product for digital imaging, the computer program product comprising: a recording medium; means, recorded on the recording medium, for creating, in the virtual camera, an unedited image request for an unedited digital image; ...

The Examiner found these claims non-statutory because the claims were directed to the computer program product itself, which is not embodied on a computer readable medium. The Board of Patent Appeals and Interferences disagreed. First, the law:

Under § 101, there are four categories of subject matter that are eligible for patent protection: (1) processes; (2) machines; (3) manufactures; and (4) compositions of matter. 35 U.S.C. § 101. But even if a claim fits within one or more of the statutory categories, it may not be patent eligible. In re Ferguson, 558 F.3d 1359, 1363 (Fed. Cir. 2009).

“[A]n applicant may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article” into a different state or thing. In re Bilski, 545 F.3d 943, 961 (Fed. Cir. 2008) (en banc), cert. granted, 77 U.S.L.W. 3442, 3653, 3656 (U.S. June 1, 2009) (No. 08-964); see also Gottschalk v. Benson, 409 U.S. 63, 70 (1972).

“[A] machine is a concrete thing, consisting of parts, or of certain devices and combination of devices. This includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.” Ferguson, 558 F.3d at 1364 (quoting In re Nuijten, 500 F.3d 1346, 1355 (Fed. Cir. 2007), reh’g denied en banc, 515 F.3d 1361 (Fed. Cir. 2008), and cert. denied, 129 S. Ct. 70 (2008)).

IBM, who owns the patent application, argued that the claims expressly include "a recording medium" and the means-plus-function clauses "record on the recording medium for digital imaging." The Board then explained:

Computer programs and data structures are deemed “functional descriptive material,” which impart functionality when employed as a computer component. When functional descriptive material is recorded on some computer-readable medium, it becomes structurally and functionally interrelated to the medium and will be statutory in most cases since use of technology permits the function of the descriptive material to be realized. Compare In re Lowry, 32 F.3d 1579, 1583-84 (Fed. Cir. 1994) (claim to data structure stored on a computer readable medium that increases computer efficiency held statutory) with In re Warmerdam, 33 F.3d 1354, 1361-62 (Fed. Cir. 1994) (claim to computer having a specific data structure stored in memory held statutory product-by-process claim but claim to a data structure that referred to ideas reflected in nonstatutory process rather than referring to a physical arrangement of the contents of a memory held nonstatutory).

Finally, the Board found that the "recording medium" disclosed in the Specification was equivalent to a computer-readable medium, and thus the Examiner's rejection was reversed.

Ex parte Bodin, 2009-002,913 (BPAI Aug. 5, 2009)

University of South Florida's amicus brief in Bilski

USF has filed an amicus brief in Bilski (which you can find on patently-o here).

USF argues that Bilski's impact on medical innovations is particularly troublesome. USF starts its discussion with the Constitution, and argues that medicine had been known for thousands of years as one of the "useful Arts." From Hippocrates (whose oath refers to medicine as "the art") to the first edition of the Encyclopædia Britannica (which defined medicine as "The art of preserving health...") to Thomas Jefferson (whose letters showed that he considered medicine one of the "useful Arts"), medicine was and is a "useful art." When Article I, Section 8 of the Constitution was drafted, the framers intended to include medicine as one of the "useful arts" to be protected.

USF next moves to Congress, and argues that when it enacted the first Patent Act, and ever since, it has consistently intended to include protecting medical innovations with patents. USF concludes:

The Federal Circuit’s “machine-or-transformation” test as set forth in In re Bilski is more restrictive than required by this Court’s precedent and finds no support in any legislation. In practice, it has already been applied to strike down patents directed to methods of immunizing patients with improved efficacy and safety thereby casting a cloud on the validity of a great many process patents in the medical and biotechnological fields.

The “machine-or-transformation” test is a useful starting point for analysis of patent eligibility of process claims. However, if a process claim is not tied to a particular machine or does not recite transformation of an article into a different state or thing, the inquiry should not stop there, as the process may still be patent eligible as long as it does not attempt to claim “laws of nature, natural phenomena, [or] abstract ideas.” Diamond v. Diehr, 450 U.S. 175, 185 (1981).

Naked Cowboy dismisses lawsuit against Clear Channel

The Naked Cowboy had sued Clear Channel to protect his trademark. Bloomberg covered it here. Tampa blogs covered it here. (And completely unrelated to this post, but he's also running for mayor of New York.)

His complaint (filed May 28, 2009) was that a Tampa radio station, 93.3 FLZ, infringed his rights when it aired an "imposter" Naked Cowboy. He also alleged that 51 videos of the imposter were put on youtube, which the station then linked to on its website. He alleged that one of the station's employees appeared in the Naked Cowboy's signature attire: a white cowboy hat, white cowboy boots, white underpants, and an acoustic guitar.

Very exciting. Yesterday, he dismissed his lawsuit against Clear Channel.

Robert Burck d/b/a The Naked Cowboy v. Clear Channel Communications, Inc., Case No. 2:09-CV-02560-SDW-MCA (D.N.J.)

Hotels + .com is still generic

Hotels.com sought to register its service mark HOTELS.COM for the services of "providing information for others about temporary lodging; travel agency services, namely, making reservations and bookings for temporary lodging for others by means of a telephone and the global computer network." The Trademark Trial and Appeal Board upheld the Examiner's reject and found it to be generic for those services.

Hotels.com argued on appeal that HOTELS.COM is not generic because the website does not provide lodging, and thus is not synonymous with the word "hotel" and because Hotels.com offered survey evidence showing its mark was widely associated with applicant, and not viewed as a generic term.

The Federal Circuit explained the law:

Whether a particular term is generic, and therefore cannot be a trademark or service mark, is a question of fact. In re Reed Elsevier Props., Inc., 482 F.3d 1376, 1378 (Fed. Cir. 2007). The Patent and Trademark Office (PTO) bears the burden of establishing that a proposed mark is generic, In re Merrill Lynch, Pierce, Fenner, & Smith, Inc., 828 F.2d 1567, 1571 (Fed. Cir. 1987), and must demonstrate generic status by clear evidence. See Trademark Manual of Examining Procedure 1209.01(c) (i) (4th ed. 2005) (“The examining attorney has the burden of proving that a term is generic by clear evidence.”); 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition §12:12 (4th ed. 2008) (“As Judge Posner remarked [in Ty Inc. v. Softbelly’s Inc., 353 F.3d 528, 531 (7th Cir. 2003)]: ‘To determine that a trademark is generic and thus pitch it into the public domain is a fateful step.’”).

* * *

A generic term cannot be registered as a trademark, for generic terms by definition are incapable of indicating source. Merrill Lynch, 828 F.2d at 1569; see H. Marvin Ginn Corp. v. Int’l Ass’n of Fire Chiefs, Inc., 782 F.2d 987, 989-90 (Fed. Cir. 1986) (a generic term is the common name for the genus of goods or services being sold). However, a term that is descriptive, but not generic, may acquire distinctiveness and serve as a trademark. “Whether a term is entitled to trademark status turns on how the mark is understood by the purchasing public.” In re Montrachet S.A., 878 F.2d 375, 376 (Fed. Cir. 1989). In the generic-descriptive-suggestive-arbitrary-fanciful continuum of words and their usage as marks of trade, there is no fixed boundary separating the categories; each word must be considered according to its circumstances. See In re K-T Zoe Furniture, Inc., 16 F.3d 390, 393 (Fed. Cir. 1994) (“[D]escriptive terms describe a thing, while generic terms name the thing. . . . there is only a fine line between describing and naming.” (quoting 1 McCarthy, §12.05[1] (3d ed. 1992))).

The Court agreed with the lower tribunals and found that the word "hotels" did not lose its genericness simply by being combined with ".com"

Rejection affirmed.

In re Hotels.com, L.P., Case No. 2008-1429 (Fed. Cir. July 23, 2009)

USPTO was arbitrary and capricious over $10

The PTO granted Jorge Taylor U.S. Patent No. 5,178,701 relating a chemical sealant device for fixing flat tires. Mr. Taylor's 7 1/2 year maintenance fee was due between January 12, 2000 and January 12, 2001. If he paid between January 12, 2000 and July 12, 2000, the fee was $975. If he paid between July 13, 2000 and January 13, 2001, the fee was $975 plus a $65 surcharge, for a total of $1,040.

Mr. Taylor claims the PTO told him by telephone that the fee to pay was $1,030. So that's what he paid on January 13, 2001. The PTO kept the cash.

In 2004, Mr. Taylor called the PTO in advance of paying the 11 1/2 year maintenance fee (perhaps to find out how much?). The PTO then informed him that his patent was expired because he hadn't paid the 7 1/2 year maintenance fee.

Mr. Taylor then sent a number of letters asking for resinstatement (the PTO treated these each as petitions, but denied them without reviewing the merits as Mr. Taylor did not submit the $200 petition fee). Mr. Taylor explained that he could not afford the $200 petition fee, but that he "would not wave [sic] my money nor my patent without a fight." He explained:

1) You never billed me, but told me over the phone that my fee was $1030.00. I paid you that much.

2) You cashed my check, pocketed my $1030.00 and expired my patent for lack of payment. You then never informed me otherwise. I also have proof that I paid this amount of $1030.00. You kept me in the dark over a $10.00 discrepancy for over 3 years so that you could keep the $1030.00 and expire my patent, without my knowledge, for lack of payment. If I did not pay the fee why would you cash my check? How convenient, like a thieve [sic] in the night, never informed me of your malfeasant [sic]. If there were any discrepancies as to the fee owed and the fee paid, you should have made me aware so that the transaction could have been corrected.

2 year laters, Mr. Taylor sued the PTO for misappropriation of his $1,030, and sought damages of $1 billion (his estimated value of his patent). The district court dismissed under Fed. R. Civ. P. 12(b)(6). Mr. Taylor appealed to the Federal Circuit in forma pauperis.

Keeping Mr. Taylor's money while expiring his patent was not cool:

This court finds that the Office’s course of action in accepting Mr. Taylor’s deficient payment on the one hand, while on the other hand expiring his patent without notifying him under MPEP § 2531 that his payment was inadequate, was arbitrary and capricious.

The Court then remanded the case to the district court with instructions to exercise its equitable powers and reinstate Mr. Taylor's patent upon receipt of payment of all outstanding maintenance fees.

Taylor v. U.S. Patent and Trademark Office, Case No. 2009-1133 (Fed. Cir. Aug. 4, 2009)

It's no Goud (sorry -- weak pun)

Goud and Zimmer invented a system abstraction layer for a basic input/output system (BIOS) program which enables selection from among at least 2 different processor abstraction layer (PAL) components.

Claims 1 is illustrative:

1. A method comprising:

providing at least two selectable processor abstraction layer B components within one basic input/output system program

The Examiner rejected this claim as being directed to non-statutory subject matter. The Board explained the basics:

Under § 101, there are four categories of subject matter that are eligible for patent protection: (1) processes; (2) machines; (3) manufactures; and (4) compositions of matter. 35 U.S.C. § 101. While the scope of patentable subject matter encompassed by § 101 is “extremely broad” and intended to “‘include anything under the sun that is made by man,’” it is by no means unlimited. In re Comiskey, 554 F.3d 967, 977 (Fed. Cir. 2009) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980)). For example, laws of nature, abstract ideas, and natural phenomena are excluded from

patent protection. Diamond v. Diehr, 450 U.S. 175, 185 (1981).

It is the second exclusion noted above—abstract ideas—that is relevant to the appeal before us. Thus, even if the claimed invention nominally recites subject matter that falls within the enumerated categories under § 101, the claimed invention would still not recite patentable subject matter if the claim as a whole is nonetheless directed to an abstract idea. As the U.S. Supreme Court has noted, “‘[a]n idea of itself is not patentable[]’….‘A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.’” Id. at 185 (citations omitted).

In determining whether a claim as a whole is directed to an abstract idea, the Court has drawn a key distinction between (1) claims that seek to wholly pre-empt the use of a fundamental principle, and (2) claims that are merely limited to foreclosing others from using a particular application of that fundamental principle. See In re Bilski, 545 F.3d 943, 957 (Fed. Cir. 2008) (en banc), cert. granted, 77 U.S.L.W. 3442, 3653, 3656 (U.S. June 1, 2009) (No. 08-964).

Machine or Transformation? -- It's "rife with physical materials"

Applicants argued that claim 1 is "rife with physical materials" because it calls for processor abstraction layer B components and a BIOS program. Thus, according to Applicants, "the claim is statutory because it recites at (1) program, and (2) a concrete and tangible result, namely a BIOS program 'with certain characteristics never before seen in the prior art.'" The Board did not agree.

Claim 1 is not tied to a particular machine

[E]ven assuming, without deciding, that a machine were required to implement the recited method, such a machine would not be a particular machine as Bilski requires. See Bilski, 545 F.3d at 961-62. At best, such a nominal structural recitation would be a tantamount to a general purpose computer and would not tie the process to a particular machine or apparatus.⁵ Indeed, such a nominal recitation of physical structure tantamount to a general purpose computer is analogous to the recitation of storing binary coded decimal signals in a shift register that the U.S. Supreme Court found to be unpatentable in Benson. See Benson, 409 U.S. at 73 (listing claim 8 which calls for, in pertinent part, “storing the binary coded decimal signals in a reentrant shift register”) (emphasis added). In any event, “[n]ominal recitations of structure in an otherwise ineligible method fail to make the method a statutory process.” Ex parte Langemyr, App. No. 2008-1495, slip op., at 20 (BPAI May 28, 2008) (Informative) (citing Benson, 409 U.S. at 71-72), available at http://www.uspto.gov/web/offices/dcom/bpai/informative_opinions.html (last visited Mar. 15, 2009).

Claim 1 also does not transform a particular article into a different state or thing

We also find that claim 1 does not transform a particular article into a different state or thing. Merely providing selectable components within a program, in effect, provides a particular program with those components. Merely providing a program with particular components, however, falls well short of transforming a particular article into a different state or thing as Bilski requires.

^5. In Gottschalk v. Benson, 409 U.S. 63 (1972), the Court held that claims directed to a method for converting binary-coded-decimal (BCD) numerals into pure binary numerals for use with a general-purpose digital computer were nonstatutory under § 101.

Rejections affirmed.

Ex parte Goud, No. 2008-003121 (July 20, 2009)