Quarterly Intellectual Property News Update 03/31/10 Steven J. Wietrzny
This update contains the following articles:
Patents pending for more than three years due to Patent Office delay may be entitled to an extension of their term.
A request with the Patent Office must be filed within 180 days of the patent's issue date. Patentees should particularly consider applying for an extension for patents that are still likely to be valuable at the end of their term.
On January 7, 2010, the Federal Circuit held in Wyeth v. Kappos that the United States Patent and Trademark Office had been miscalculating the patent term owed to patentees in certain situations. The patent term is the time period during which the patent is enforceable. The patent term begins when the patent is granted, and typically expires 20 years from the date the patent application was filed. To prevent a shortened patent term, federal law requires the patent term be extended to offset certain delays by the Patent Office during examination of a patent. The Patent Office is responsible for calculating this adjustment, which is known as a Patent Term Adjustment ("PTA").
In Wyeth, the Federal Circuit held that the Patent Office had misinterpreted federal law and was under-calculating the PTA in situations involving the overlap of two specific types of delays. To comply with the Wyeth decision, the Patent Office announced that it would accept requests to recalculate the PTA for patents that are within 180 days of issuance. It is currently unclear how the decision will affect patents with an under-calculated PTA that are outside this 180-day window.
The Guarantees Resulting in a PTA
While a patent term is measured from the filing date of an application, patent rights are not enforceable until the patent is issued. Therefore, delays in examination result in a loss of rights to patentees by shortening the enforceable period, or term, of a patent. In order to prevent excessive delays by the Patent Office from adversely affecting the patent term, Congress in 1999 provided applicants with three "guarantees." Any delay in examination by the Patent Office in violation of these guarantees will result in a day-for-day increase in the patent term. The first guarantee, "prompt patent and trademark office responses," sets deadlines for certain Patent Office actions. This guarantee is provided in 35 USC 154(b)(1)(A) and referred to as "A Type" delays. The second guarantee, "no more than 3-year application pendency," sets a deadline on overall examination time by the Patent Office of no more than 3 years. This guarantee is provided in 35 USC 154(b)(1)(B) and referred to as "B Type" delays. The third guarantee, "delays due to interferences, secrecy orders, and appeals," ensures that delays due to interferences, secrecy orders, and appeals do not detract from the patent term. This guarantee is provided in 35 USC 154(b)(1)(C) and referred to as "C Type" delays. Only A Type and B Type delays are relevant under Wyeth.
The Wyeth Decision
Between May 2000 (the effective date of the 1999 guarantees) and January 2010 (the date of the Wyeth decision), the Patent Office calculated the PTA for a patent by taking the greater of the A Type or B Type delays (greater of A or B).
In Wyeth, the Federal Circuit held that the Patent Office had misinterpreted the wording of the 1999 guarantees and had been under-calculating the PTA in certain situations. These situations occur when both an A and B Type delay exist and
do not fully overlap in time. The proper calculation of PTA, as presented by the Federal Circuit in Wyeth, is the sum of the A Type and B Type delays, subtracting any overlap (A+B-overlap). This calculation can result in a substantial increase in patent term over the Patent Office's pre-Wyeth calculation.
Patent Office Action
To comply with the Federal Circuit's decision in Wyeth, the Patent Office's software systems have been changed to properly calculate and display the PTA for patents that issue on or after March 2, 2010.
For patents that issued prior to March 2, 2010, the Patent Office has published an interim procedure and corresponding form for requesting a recalculation of the PTA. Because of a 180-day statute of limitations that applies to patent term adjustment requests, the Patent Office, however, will only accept requests for recalculation filed within 180 days of the patent's issue date.
Patents with an Issue Date outside the 180-Day Window
Although the interim procedure is limited to patents that issued within a 180-day window, the Patent Office has been miscalculating PTA values since May 2000, and the Wyeth decision theoretically affects every patent that issued since
May 2000. It is currently uncertain whether patents outside the 180-day window will be granted additional PTA. At least one suit, however, has been filed to date challenging the interim procedure's 180-day window.
A patentee or assignee who had a patent issue within the last six months, but before March 2, should immediately determine if the patent is eligible for additional term under Wyeth. If the patent is eligible, and is within 180 days of issue, a Request for Recalculation of Patent Term Adjustment should be immediately filed with the Patent Office.
A patentee or assignee who had a patent issue after May 2000, but where the patent is not within the 180-day statute of limitations, may wish to determine if the patent would have been eligible for additional term under the Wyeth calculation. If a patent would have been eligible, the patentee or assignee may choose to pursue a judicial remedy.
When is a Patent is Eligible for additional PTA?
A patent may be eligible for an adjustment under Wyeth, if the patent issued between May 2000 and March 2, 2010, and was subject to a B Type delay (i.e., must have been pending for more than three years). Even if these conditions are met, other factors may exclude a patent from the Wyeth decision, such as filing a Request for Continued Examination ("RCE") or applicant delay. Therefore, it is necessary to inspect the file history, including the overlap of the A and B Type delays, to determine if additional term is warranted.
If you have any further questions or would like us to assist you with either determining how your patents or portfolio are impacted by the Wyeth decision, or to inquire into potential actions for patents outside the Patent Office 180-day window set by the Patent Office, please contact Terri Flynn at (414) 277-5229 / [email protected] or your local Quarles & Brady attorney.
On December 28, 2009, the Federal Circuit held in Forest Group, Inc. v. Bon Tool Co. that the penalty for falsely marking an article as patented could be up to $500 per article. Prior to this decision, the penalty was typically $500 per decision
to falsely mark, regardless of the number of individual articles marked. Those who own patents should therefore make further efforts to ensure that products are not falsely marked not only because of the potential of more severe penalties, but also because the increased damages provide an incentive for third parties to bring false marking suits.
The False Marking Statute (35 USC § 292)
A false marking claim requires two elements. The first element is that an unpatented article be marked as patented. "Marked as patented" means not only labeling an article as "patented," "patent pending," or using similar language suggesting the article is protected by a patent, but also using such terms in advertising the article. The second element is an intent to deceive the public on the part of the individual responsible for marking the article.
Unlike most claims, which require the suing party to suffer some type of injury, the false marking statute is one of the few qui tam actions, which permit anyone to sue. The plaintiff in a successful false marking suit shares any amount recovered in penalties equally with the government.
Forest Group Decision
The false marking statute states that whoever violates the statue shall "be fined not more than $500 for every such offense." Prior to the Forest Group decision, courts did not consistently interpret the word "offense." Most courts interpreted it as a single marking decision. For example, the decision to falsely mark an entire production line of one million widgets as "patented" would result in a maximum penalty of $500. Other courts considered each day that a product was improperly marked a separate offense. For example, if the one million widgets in the previous example were marked over a period of 10 days, the maximum penalty would be $5000. In almost all cases, therefore, damages for false marking were very limited.
Under the Federal Circuit's interpretation of the statute in Forest Group, however, each falsely marked article constitutes
a separate offense. Additionally, while the decision did not change the activity that constitutes false marking, it did standardize the nature of the penalty to a severe $500 per article. The total penalty can quickly accumulate, especially for high volume articles. Keep in mind, however, that this is the maximum penalty a court can impose. Depending on the nature of the marked article, an individual court can set the penalty as high as $500 or as low as a fraction of a cent per article. In considering the per article penalty, a court may consider the cost of the article, the number produced, and the level of intent to deceive the public. In short, Forest Group made the penalty for false marking more severe by requiring the calculation on a per item basis. Yet, a court still has the ability to adjust the per article penalty to match the nature of the product marked and the level of intent to deceive the public.
Ramifications of the Forest Group Decision
The Forest Group decision exposes anyone improperly marking a product as patented to significant liability. All patent types fall under this decision: business method, design, process, device, and composition of matter. In addition, the fact that anyone is permitted to sue on a false marking claim combined with the increased monetary incentive resulting from the Forest Group decision, will almost certainly lead to an increase in the number of false markings suits as well as to greater scrutiny of marked articles and technologies.
There are two common scenarios where a false marking claim may arise. In the first, a marked article is not covered by the patent because the article is missing one or more claimed features. This was precisely the scenario in Forest Group. The articles in Forest Group were stilts used in construction. The stilts had all the features described in the patent with the exception of one, a "resilient lining."
In the second scenario, a marked article is not covered by the patent because the patent is unenforceable. The patent may have expired, been found invalid, or declared unenforceable. For a proper marking, the patent must be enforceable when the article is marked or sold. This scenario has been the subject of a rash of recent suits.
Therefore, it is important, especially when products are revised over time, to ensure that marked articles are indeed covered by the patent. It is likewise important to cease marking articles once the patent expires or is otherwise invalidated.
The Future of the False Marking Law
The Patent Reform Act (S. 515), currently making its way through Congress, includes changes that would partially counter the effect of the Forest Group decision. For example, the changes include removing the qui tam nature of the false marking claim. Instead of permitting anyone to sue, only those who "suffered a competitive injury" could sue and only for an amount "adequate to compensate for the injury." Additionally, the changes would be retroactive, applying to all pending suits. Overall, these changes would limit potential liability by restricting suits to only those who suffered a competitive injury. On the other hand, they would increase potential liability by allowing suits by multiple competitors for the same false marking action.
In response to the surge of false marking suits following the Forest Group decision, a House bill (H.R. 4954) was introduced on March 25 containing the same changes to the false marking statute as contained in the Patent Reform Act. Introduction of this bill is presumably to speed passage of these changes by isolating them from the much boarder Patent Reform Act. As it stands, the fate of both the Patent Reform Act and House bill H.R. 4954 is unclear.
False marking suits and corresponding penalties are both likely to increase in light of the Forest Group decision. Even if the proposed changes to the false marking statute are enacted by Congress, a significant incentive to pursue false marking suits will remain. It is therefore recommended that marked products be periodically evaluated to ensure they are covered by the cited patents and that the patents are valid. It is also recommended that a verification step be added to the business process for product updates and revisions to ensure that any new products are still covered by the cited patents. Similarly, products or materials bearing "patent pending" should be checked as needed to insure that a patent application still covers the invention and is still pending (or, if a patent has issued, the marking should be updated with a patent number).
If you have any further questions or would like us to assist you in verifying that your products are properly marked, evaluating your competitor's marked products or developing business guidelines to ensure that products are properly marked, please contact Terri Flynn at (414) 277-5229 / [email protected] or your local Quarles & Brady attorney.
The Federal Circuit recently held that comments made by a patent applicant in a counterpart foreign patent application can be material to the patentability of claims in a pending U.S. patent application, and that failure to formally disclose such comments to the U.S. Patent Office can render the U.S. patent unenforceable under the doctrine of inequitable conduct.
On January 25, 2010, the Court of Appeals for the Federal Circuit held in Therasense, Inc. v. Becton, Dickinson and Co. that the subject patent was unenforceable because the applicant failed to comply with its duty of candor to the U.S. Patent Office. In Therasense, Abbott Diabetes Care, Inc. (a subsidiary of Abbott Laboratories and the successor to Therasense) owned a series of patents relating to technology for disposable blood glucose test strips, which it accused Becton, Dickinson and Co. of infringing. As part of its defense, Becton claimed that one of the patents at issue, the '551 patent, was unenforceable because Abbott failed to comply with its duty of candor.
During the prosecution of the '551 patent, Abbott failed to disclose a response to a European Office Action for a European Patent that was prior art to the '551 patent and contained similar claims to the '551 patent. In the response to the European Patent Office, Abbott made an argument in support of patentability that contradicted an argument Abbott later made during the prosecution of the '551 patent. The Federal Circuit held that the contradictory statement was material to the patentability of the '551 patent, and that Abbott had committed inequitable conduct by failing to submit the response during prosecution of the '551 patent. Accordingly, the Federal Circuit held that Abbott's '551 patent was unenforceable.
Duty of Candor
Under the duty of candor, inventors, prosecuting attorneys or agents, and any person substantively involved in the application process have a duty to disclose all the information that is material to patentability of the invention that they are aware of to the U.S. Patent Office during the prosecution of a patent application. The U.S. Patent Office defines information to be material to patentability if the information is not cumulative to information already on the record for the application and either (a) establishes a prima facie case of unpatentability of a claim in the application; or (b) refutes, or is inconsistent with, a position the applicant takes with regard to the patentability of one or more claims before the U.S. Patent Office.
This duty to the U.S. Patent Office exists until the application becomes abandoned or a patent is granted on the application. Importantly, if a party fails to submit material information, the later granted patent may be held unenforceable under the doctrine of inequitable conduct if the patent is later challenged - as was the case in Therasense. Thus, all parties with a duty of candor must understand what types of information are material to patentability as well as which sources may contain the material information.
Traditionally, inventors and their legal representatives complied with the duty of candor by submitting documents such as domestic and foreign patent publications, technical journal articles, and product brochures. However, a recent line of opinions by the Court of Appeals for the Federal Circuit has provided further instruction on which types of documents may be material to patentability, and which should be disclosed to avoid a charge of inequitable conduct. These cases have held that U.S. Office actions, responses to U.S. Office actions, and Notices of Allowance for cases related to the application being prosecuted or for cases that have substantially similar claims to the application being prosecuted may also be considered material to patentability. Therasense extends this line of cases to the foreign spectrum by holding that material information may also be contained in responses to foreign Office actions for such cases.
Therefore, to avoid inequitable conduct and unenforceability of a patent, those having a duty to candor to the U.S. Patent Office need not only evaluate prosecution documents (Office actions, responses, allowance notices, etc.) of related U.S. patent cases for statements that are material to patentability, but must now similarly evaluate foreign counter applications for material information, at least insofar as it is contained in applicant's responsive documents.
If you have any further questions, please contact Steven Wietrzny at [email protected] / (414) 277-5415 or your Quarles & Brady attorney.