Not Awakening Slumbering Patents

by Steve Reiss (stevenreiss@scienbizippc.com)

From the Congressional Record:

I agree that the owner of a patent is as much entitled to his property in it as the owner of anything else, but he is entitled to no higher consideration than the owner of any other kind of property.

It is not the patentee who will suffer if this amendment shall pass, if anybody suffers. It is not the patentee who brings these suits; but it is usually a combination of agents and lawyers who find slumbering in your Patent Office some forgotten and worthless patent which, under the advantage given them by your present system, they can use as a means of robbing the people—it is they that bring the suit under some arrangements by which the profits are divided.

Now, sir, while I respect the genius and the talent of the inventor and will protect him as far as I can, I submit that it does not require any more talent or genius to buy or steal a patent than it does to buy or steal a horse, and therefore to the purchaser I would accord no more powers than I would to the man who owns any other kind of property by purchase. Possibly there may be some slight inconvenience growing out of this amendment to some of the patentees, but the inconveniences as I stated a moment ago do not weigh at all as against the great benefits that the people would receive by the protection which it would afford.

Senator William Windom (R-MN) speaking in favor of an amendment to the US patent laws, to add a new section to the Revised Statues (now United States Code), saying:

In any suit brought in any court now having jurisdiction in patent cases for an alleged infringement of any patented article, device, process, invention, or discovery, where it shall appear that the defendant purchased the same from the manufacturer thereof, or from a person or firm engaged in the open sale or practical application thereof, or that he manufactured or applied the same for and to his own use, and not for sale nor for making a product, for sale, if the plaintiff shall recover a judgment for merely nominal damages, the court shall adjudge that he pay all the costs of the suit; and if the plaintiff shall not recover the sum of $50 or over, the court shall adjudge him to pay his own costs, unless it shall also appear that the defendant, at the time of such purchase, manufacture, or practical application, had knowledge or actual notice of the existence of such patent, and that such purchase, manufacture, or practical application was an infringement of the rights of the plaintiff.

While complexly worded, Windom told the senate that under this new section:

The patentee has his remedy, if this amendment shall pass, against the maker and the vender of the patented articles, and he has also his remedy against the purchaser and user wherever that purchaser or user has notice that the patent has been infringed. It seems to me that this is a sufficient remedy.

 Congressional Record-Senate, January 20, 1879, p. 569-70.

Thus, to recover from a mere purchaser, actual notice that the purchased product was an infringement would be required.

The Nine Lives of the USPTO: Surviving Death Squads, Atomic Bombs, and Plagues!

by Steve Reiss (stevenreiss@scienbizippc.com)

With "death squads", "plagues", and "atomic bombs" facing it over the years, the US patent system seems to have nine lives.

          

Death Squads
In 2014, you could not read anything about US patent law without seeing something about the USPTO's Patent Trial and Appeal Board's reputation as a "death squad" for patents. “Death squad” was not the rhetoric of some corporate mouthpiece; so typical of the early-2000's when "patent troll" was shouted aloud as the bogeyman du jour. No, "death squad" was coined by Randall Rader, the former chief judge of the U.S. Court of Appeals for the Federal Circuit, which oversees all patent appeals in the U.S.  Ipwatchdog.com reported Rader’s complaints:

These bleak [PTAB patent invalidation] statistics have lead Federal Circuit Chief Judge Randall Rader, at the AIPLA annual meeting in October 2013, to call the PTAB “death squads killing property rights.”

Then, on March 21, 2014, at a conference hosted by the George Mason University School of Law, Chief Judge Rader doubled down on his prior statement, saying:

he was “troubled” by the many differences between proceedings at the PTAB and in the district courts, particularly pointing to the disparities in the treatment of the same evidence concerning the same claims. Rader mentioned that his recent comments about the Board being a “death squad” for patents in contested proceedings may be more accurate than some originally thought, considering the dismal track record for survivability of challenged claims in the first wave of final written decisions.

As of late 2017, you do not hear the term “patent death squad” as much as you used to, even with the PTAB’s still-dismal track record for survivability of challenged claims and apparent disdain of software/method claims.

Plagues
Well before the PTAB started its reign as a death squad, there was a different bogeyman facing the patent system.

There was the plague.

In Burlington Industries, Inc. v. Dayco Corp (Fed. Cir. 1988), Senior Judge Nichols, writing for the court, added a final paragraph to the opinion, saying (emphasis added):

We add one final word: the habit of charging inequitable conduct in almost every major patent case has become an absolute plague. Reputable lawyers seem to feel compelled to make the charge against other reputable lawyers on the slenderest grounds, to represent their client's interests adequately, perhaps. They get anywhere with the accusation in but a small percentage of the cases, but such charges are not inconsequential on that account. They destroy the respect for one another's integrity, for being fellow members of an honorable profession, that used to make the bar a valuable help to the courts in making a sound disposition of their cases, and to sustain the good name of the bar itself. A patent litigant should be made to feel, therefore, that an unsupported charge of "inequitable conduct in the Patent Office" is a negative contribution to the rightful administration of justice. The charge was formerly known as "fraud on the Patent Office," a more pejorative term, but the change of name does not make the thing itself smell any sweeter. Even after complete testimony the court should find inequitable conduct only if shown by clear and convincing evidence. A summary judgment that a reputable attorney has been guilty of inequitable conduct, over his denials, ought to be, and can properly be, rare indeed.

This plague may have been prevented had earlier warnings been heeded. 
 
For example, well-respected Chief Judge Markey of the Federal Circuit, in FMC Corp. v. Manitowoc Co., Inc. (Fed. Cir. 1987), said: 

"Inequitable conduct" is not, or should not be, a magic incantation to be asserted against every patentee. Nor is that allegation established upon a mere showing that art or information having some degree of materiality was not disclosed. To be guilty of inequitable conduct, one must have intended to act inequitably. Thus, one who alleges a "failure to disclose" form of inequitable conduct must offer clear and convincing proof of: (1) prior art or information that is material; (2) knowledge chargeable to applicant of that prior art or information and of its materiality; and (3) failure of the applicant to disclose the art or information resulting from an intent to mislead the PTO.

But, the warnings of the late 80's went unheeded and in the next decade another Federal Circuit judge felt obligated to warn about the plague facing the patent system.

This time, it was Judge Lourie, writing in Molins Plc v. Textron Inc (Fed. Cir. 1995), and looking back at past cases, said:

[U]njustified accusations of inequitable conduct are offensive and unprofessional. They have been called a "plague" on the patent system. ... Unjustified accusations may deprive patentees of their earned property rights and impugn fellow professionals. They should be condemned.

Despite Federal Circuit judge comments condemning the overuse of the inequitable conduct charge, later on, a commentator would blame the Federal Circuit, itself, by easing the requirements for proving Inequitable Conduct, for creating the very plague they denounce. See Scott D. Anderson, Inequitable Conduct: Persistent Problems And Recommended Resolutions, 82 Marquette LR 845 (1999).


Atomic Bombs
Despite identifying the plague on the patent system in the form of inequitable conduct in the late 1980's, the plague doctors of the Federal Circuit were slow to find the cure; taking close to 30 years to find it.

In 2011, the Federal Circuit addressed the plague in an en banc decision. In Therasense, Inc. v. Becton, Dickinson (Fed. Cir. 2011) (en banc), the court fell on its sword:

This court embraced these reduced standards for intent and materiality to foster full disclosure to the PTO...This new focus on encouraging disclosure has had numerous unforeseen and unintended consequences.

 The court admitted the severity of the problem:

The remedy for inequitable conduct is the “atomic bomb” of patent law. Unlike validity defenses, which are claim specific, inequitable conduct regarding any single claim renders the entire patent unenforceable. Unlike other deficiencies, inequitable conduct cannot be cured by reissue, or reexamination. Moreover, the taint of a finding of inequitable conduct can spread from a single patent to render unenforceable other related patents and applications in the same technology family. Thus, a finding of inequitable conduct may endanger a substantial portion of a company’s patent portfolio.

 One study estimated that eighty percent of patent infringement cases included allegations of inequitable conduct.

In Therasense, the court, realizing Judge Nichols was right back in 1988, reaffirmed his concern that:

Left unfettered, the inequitable conduct doctrine has plagued not only the courts but also the entire patent system. 

In Therasense, The Federal Circuit decided the problems resulted from two issues: intent and materiality.

First, concerning intent, the Court reaffirmed an earlier decision holding the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the PTO.

Second, concerning materiality, the Court then adopted a new materiality standard. Materiality now requires "but-for materiality." Under this standard, when an applicant fails to disclose prior art to the PTO, that prior art is but-for material only if the PTO would not have allowed a claim of the patent had it been aware of the undisclosed prior art.