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PATENT NEWS
Matthew D. Marquardt, Editor
Articles:
Patent Reform Fate Remains Uncertain
Software Patent Volume Continues to Rise
Reduction to Practice Not Required for Application of On-Sale Bar
Boy Scouts Consider Adding Merit Badge for Invention
Appeals Court Overrules Finding of Misuse
Court Stresses Distinctions in Claim Interpretation Between PTO & Courts
Patent Owner Allowed to Enforce License Despite Invalidity Ruling
Refusal to Sell or License, Counterclaiming are not Misuse
Patent Reform Fate Remains Uncertain
The fate of patent reform in Congress remains uncertain as HR 400, which was passed
by the House last April, continues to await passage of and reconciliation with its Senate
counterpart, S507. S507 has been amended to bear a substantial resemblance to HR 400 but
continues to await floor debate itself. Meanwhile a new proposal, S1226 was introduced to the
Senate late in September. The new bill bears at least a superficial resemblance to the original
two, but does not so far appear to have serious support. Nor is it clear what the purpose of the
new bill is.
Sources: Patent News Service, 10/5/97; AIPLA Website; US GPO Website
Software Patent Volume Continues to Rise
More than 5,000 U.S. software patents are reported to have issued during the six month
period from February to July 1997, up from an estimated 9,000 such patents issued during all of
1996 and approximately 6,100 during 1995. At least one Massachusetts patent searcher,
however, has voiced the opinion that non-patent prior art continues to be a problem -- going so
far as to assert that upwards of 80 percent of all software patents now being issued are susceptible
to successful challenge on novelty grounds alone. Such critics rarely acknowledge, however, the
inevitable improvement in the strength of such patents as their own numbers grow: of necessity,
the proportion of relevant prior art already issued as patents is on the increase. Many observers
feel that software creators can no longer afford to ignore patent protection -- or patent
infringement issues.
Source: Patent News Service, 10/7/97
Reduction to Practice Not Required for Application of On-Sale Bar
The Court of Appeals for the Federal Circuit, which enjoys jurisdiction over appeals of
most patent cases, ruled September 8 that an invention need not actually be reduced to practice
or exist in physical form in order to be considered to have been placed "on sale" within the
meaning of the patent act and therefore barred from patentability The appeals court overturned
a district court finding that because the semi-conductor chip sockets at issue in the case had not
been built or tested, the invention had not been reduced to practice and therefore could not be
barred from patenting. Thirteen months prior to the filing of a patent application, an oral order
for more than 30,000 of the sockets had been placed.
The appropriate question, according to the appeals court, is not whether a prototype had
been created but whether the invention was substantially complete at the time of sale, so that
there was reason to expect that it would work for its intended purpose when finished. The court
found that completion of detailed engineering designs for the sockets was sufficient, especially
where no substantial questions related to the complexity of the design existed. The court also
found, in line with prior holdings, that the on-sale bar applies to variations of sold inventions
which would be obvious to those of ordinary skill in the art.
Source: BNA's Patent, Trademark & Copyright Journal, 9/18/97
Boy Scouts Consider Adding Merit Badge for Invention
In response to a proposal from a former Eagle Scout and member of the Philadelphia
Intellectual Property Lawyers Association, and endorsed by the Presidents of General Electric,
Du Pont, and Honeywell, among others, the Advancement Committee of the Boy Scouts of
America is considering the addition of an Invention category to their merit badge system. The
proposal was submitted in June, initially declined, and resurrected with prominent support.
Interested persons are encouraged to contact the Boy Scouts directly at their web site,
www.bsa.scouting.org. No word was available on a deadline for input or on proposed
requirements for receipt of the badge.
Source: Patent News Service, 9/26/97
Appeals Court Overrules Finding of Misuse
The Court of Appeals for the Federal Circuit ruled September 8 that B. Braun Medical
Inc. did not misuse its patent on its SafSite intravenous valve by contractually prohibiting a
licensee from using the SafSite valves on the licensee's own I-V extension sets. In so doing, the
court overturned a jury decision that Braun had misused the patent. The ruling was founded
on a finding that the jury verdict was based upon an erroneous instruction from the trial judge.
The appeals court found, in line with its earlier reasoning in Mallinckrodt Inc. V. Medipart Inc.,
that conditions on the use of licensed patents are generally valid -- although, like any other
contract provisions, they are subject to limitations of law, including in particular antitrust and
patent law. Likewise, violations of valid conditions are subject to remedy as patent infringement
or breach of contract.
Source: BNA's Patent, Trademark & Copyright Journal, 9/18/97
Court Stresses Distinctions in Claim Interpretation Between PTO & Courts
With the issuance of a revised opinion on September 10 in the In re Morris case, the Court
of Appeals for the Federal Circuit strengthened its earlier finding that the rules of interpretation
employed by the Patent and Trademark Office in examining claims and those used by courts in
interpreting them are not identical. A patent applicant, seeking to overturn a Patent Office
finding that his noise-reduction system for computer disc drives was unpatentable, asked the
court to restrict the scope of the interpretations placed on its claim language by an examiner
during the examination. The court, however, explained in its original opinion that the PTO
must give claim terms the broadest possible meaning consistent with their ordinary usage among
those skilled in the relevant art, which the court viewed as more restrictive than the standard
to be applied against issued patents by the courts and laid down in the Markman v. Westview
Instruments case -- the reasoning being supported, in part, by the statutory presumption attached
to issued patents that the patents are valid. In issuing its revised opinion, the court struck
several sentences of its original language, with the goal of clarifying its intent to make the
distinction.
Source: BNA's Patent, Trademark & Copyright Journal, 9/18/97
Patent Owner Allowed to Enforce License Despite Invalidity Ruling
The United States Court of Appeals for the Federal Circuit, which reviews all patent appeals,
held May 5 that a patent licensee could be required to make royalty payments for the use of a patented
process even if the process patent was later found to be invalid. The Shell Oil Company stopped
royalty payments to the licensing branch of the Max Planck Institute after Shell switched to a new
process for producing propylene, and when the Institute sued for infringement and back royalties Shell
counterclaimed for invalidity. The Appeals court found that even though the patent was invalid, the
Institute was entitled to recover damages in breach of contract for royalties from the date of the alleged
breach until the date the validity of the claims was first challenged. In doing so, the Appeals court
skirted a contrary result given by the US Supreme Court in Lear v. Adkins, explaining in doing so that
under Lear a licensee cannot escape royalty payments until it both actually stops payment of royalites
and informs the patent onwer that the reason for stopping is a belief in the invalidity of the patent.
Source: BNA's Patent, Trademark & Copyright Journal, 5/15/97; Studiengesellschaft Kohle m.b.H. v. Shell Oil Co., CAFC No. 96-1079.
Refusal to Sell or License, Counterclaiming are not Misuse
The Federal District Court for Central Kansas ruled April 8 that a coalition of computer and
printer service providers who conceded infringement of several of Xerox patents and copyrights were
not entitled to claim misuse by Xerox of those patents and copyrights as a defense. The coalition sued
Xerox for violation of the antitrust laws, claiming that Xerox's refusal to sell or license its technology,
and the allegely excessive prices Xerox charged for patented parts and copyrighted software it produced,
constituted misuse of its patents and its copyrights. When Xerox counterclaimed for infringement, the
coalition added its counterclaims to the misuse charges. The court entered judgment for Xeorx,
explaining that a unilateral refusal to sell or license patents, or the charging of "unreasonable" prices
for patented and copyrighted products, cannot amount to an antitrust violation, and that the entry of
counterclaims for infringement could only constitute misuse if the claims were objectively meritless were
brought solely in order to interfere with a competitor's business.
Source: BNA's Patent, Trademark & Copyright Journal, 5/22/97; ISO Antitrust Organizations Antitrust Litigation, DC Kan.
The Editor
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