Michelle Lee resigned yesterday as the Director of the USPTO, effective immediately. Ms. Lee’s resignation follows months of uncertainty regarding USPTO leadership during which time high-tech giants and politicians alike expressed much support for Ms. Lee to remain as the Under Secretary of Commerce for Intellectual Property and USPTO Director under the Trump administration. Today, Secretary of Commerce Wilbur Ross named USPTO Associate Solicitor Joseph Matal as interim Director until Ms. Lee’s successor is named. Former Federal Circuit Chief Judge Randall Rader; Philip Johnson, a SVP for IP Policy & Strategy at Johnson & Johnson; and Michael McKeon, a partner at Fish & Richardson have all expressed recent interest in leading the USPTO and have been rumored to have interviewed with Secretary Ross to replace Ms. Lee.
There are several advantages to pursing protection for a key innovation in the form of a “family” of patents and pending patent applications. These include the possibility of obtaining protection in the form of claims covering different aspects of an invention, and different infringing actions (of a user, maker or seller of an invention) as those actions would be described from different perspectives (e.g., server-side, client-side, internally, externally, etc.).
It is important to note that some of those uses or perspectives may not be apparent when the application is filed, and may depend upon the business environment, business models being pursued, or technologies that are developed to solve problems that arise in the industry. Each of these aspects of a business may change over time in response to economic developments or efforts made by competitors.
A family of patents and applications may also provide the option of having a choice of which among multiple claim sets is asserted or licensed; this may (in some cases) enable the assertion of claims in some patents without putting claims in the un-asserted patents at immediate risk. A family of patents also increases the likelihood that a targeted party will have to expend resources to fight an assertion or an aggressive licensing effort.
In order to obtain the benefits of pursing protection for an invention in the form of a family of patents and applications, it is necessary that the initially filed description (termed “the specification”) and figures be sufficient to support the other perspectives, uses cases or implementations, and that they do so in a way that satisfies the enablement and written description requirements of the patent law. Enablement requires that the sum of the information disclosed in the description and figures contain enough information to “enable” one of ordinary skill in the art at the time the invention was made to implement the invention without encountering significant obstacles that would require further inventive efforts to overcome. In some sense, an enabling disclosure in the hands of one of ordinary skill is one sufficient to allow that person to produce the invention using standard engineering techniques and abilities. The “written description” requirement has been interpreted to mean that the sum of the description and the figures are sufficient to indicate that the inventor was in possession (i.e., they recognized the implementation approach and/or use case) of the form of the invention that is represented by the claims being asserted.
However, drafting a patent application in a way that can provide the proper support is a non-trivial exercise. One way to accomplish this goal is to follow a process that attempts to preserve the possibility that the application may be used to support claims directed to other likely use cases and implementation methods. This may be done (in part) by considering alternate industries in which the solution represented by the invention might have value and alternate ways in which a function or operation that is part of the invention could reasonably be implemented.
In some sense the task is to develop a specific tool that can be used to obtain leverage in order to assist in gaining or maintaining a competitive advantage. However, certain constraints apply: (1) the tool will not be available for at least 2 to 3 years, but it must be described in detail at present; (2) the possible situations in which the tool will be needed are only generally known at present, and the ways in which it is desired to use the tool may change between now and when the tool becomes available; and (3) the specific form of the tool that will be needed is only known in a general sense at this time (e.g., the tool may need to be capable of being implemented in one of several ways, all of which must be properly supported).
Given the practical considerations and constraints, how does one prepare a patent application in a way that ensures a greater likelihood that it contains adequate support when filed for claims that are intended to protect against uses that may not be known or fully understood until years later? One way is to craft patent applications that not only describe an invention and its use by the company itself, but also provide support for claims covering a generic implementation of the solution represented by the invention, where that solution may be relevant to multiple use cases, operating environments and industries. Using this approach, the patent application is not simply a description of a single product feature or process, but instead represents a description of a solution to a problem or class of problems, with the solution being expressed in varying levels of detail and in terms of being applicable to multiple operating environments.
An important part of the process is deciding how to characterize an innovation; in order to do this, it is helpful to consider a new product feature or service from a different perspective than it might typically be considered. Instead of viewing a feature or service as providing a new option for a user, it should be viewed as providing a solution to a specific technical and/or business problem. This is easier said than done, as it requires an engineer or patent attorney to figuratively “step back” and formulate a “generic description” of a higher-level problem that is being solved, rather than focus on the details of an implementation that produces the new feature or service.
Such a generic description will typically be based on a number of considerations, including (a) the context in which the feature or service is used (using general, non-limiting terms to describe the operating environment for the feature or service); and (b) what does the feature or service enable a user to do? Based on the answers to (a) and (b), it may be possible to formulate a statement that, at a high level, describes the technical or business problem for which the innovation provides a solution.
Next, it is necessary to determine other possible use cases or situations in which the invention may be applicable and hence other entities for which such a patent would have value. In order to do this, it is helpful to consider other contexts in which the same or a similar problem arises (where this is based to some degree on the generic description of the invention developed previously). For example, if the problem being solved relates to how to optimally allocate bandwidth among multiple content delivery channels given a certain constraint, then it may be helpful to consider other industries in which a similar constraint arises or in which multiple streams of “product” are delivered via different delivery channels (where, for example, those “channels” may be communications channels, different networks or different physical delivery paths, and the “products” may be email messages, downloaded content or physical packages).
One of the keys to describing an innovation in a way that can support multiple use cases and implementations is a technique I refer to as “functional deconstruction.” This is an organized way to identify information needed to prepare an effective application and to structure that information into a description of the innovation that provides value to a company by creating a useful business asset.
Functional deconstruction is a form of system analysis, where instead of focusing on the details of a specific implementation of an invention, the operative elements or process steps are generalized and expressed as broader concepts. These broader concepts may be classes of elements or groups of processes that operate to perform a similar function (e.g., sorting, ordering, scaling, selecting, estimating, filtering, comparing, generating a type of output, etc.).
In order to practice this approach, the first step is to isolate each of the elements of a system or process that can be used to implement a generic example of the invention. In some ways, this step is similar to that of generating the “problem statement” referred to previously. The goal is to identify the primary functional elements or components of a generic implementation of the invention, and to do so using high-level and nonspecific language where feasible. For example, this might be accomplished by generating a high-level, functional block diagram of a system for implementing a generic example of the invention.
The result of this approach will be a set of elements, steps or functional components that are needed to implement a generic version of the invention. For example, there may be an element that permits a user to input data, an element that processes the input(s) to extract a specific characteristic, an element that compares that characteristic to determine a relationship between what the user entered and what the system has previously stored, and an element that transforms one form of input into a different one having a certain characteristic. It is important to make sure that the set of elements, steps or functional components includes those needed to perform what are believed to be the novel steps or functions of the innovative device, process or method.
After identifying the set of elements, steps or functional components, it is necessary to generate a list of the values or types that each element can take and still be capable of implementing the invention. This is a form of listing the “variations on the theme” for each element. The variations may be different devices that can be used, different data processing techniques (though all produce an equivalent output for purposes of the invention), different filters, different transforms, different ingredients (though all have a common characteristic), or different physical structures that can perform a function that is equivalent for purposes of the invention. Communications with the inventor may be needed at this point to isolate those “variations” that are practical in a business sense and/or technically feasible, or at least to remove those that are not. In addition to listing these variations, it may also be helpful to include several similar, but arguably different ways of describing each function or step of an innovative method, or each function or operation of the elements of a system or device (these might be termed “substantially functionally equivalent synonyms” for the purposes of implementing the invention).
Next, it is possible to generate various combinations of the possible values or types for each functional element and from those to construct a set of possible implementations of the invention. These possible implementations should be constrained in that only those combinations that are practical in both a business and technical sense should be part of the set.
Given the above information, a patent application can (in theory) properly support claims directed to one or more of the following:
(a) the embodiment of the invention implemented by the inventor (which is typically the product feature the inventor developed);
(b) possible uses of the invention to solve a similar problem that arises in different operating environments (and certain modifications to the implementation that are necessitated by the different environment); and
(c) multiple possible ways of implementing each of the primary functional steps or elements of the invention (which may be applicable to the original and/or to other environments).
In theory, the developed information enables the patent application to satisfy the written description and enablement requirements in so far as supporting a wide range of claims. This permits the introduction of claims that specifically address different operating environments and different implementations of the conceptual basis of the invention. As a result, the application can be “tuned” in response to recognizing a suitable strategic value proposition (such as a situation in which having leverage or a stake would be beneficial). Thus, by thinking in advance about how to describe and generalize an innovation and focusing on the underlying conceptual foundation for the invention, the value of a patent application directed to that innovation can be increased substantially. As a result, it can be used to generate one or more patents or applications that are part of a family and function as business assets.
 A family of patents and/or applications refers to two or more patents or pending applications that are related by virtue of having a common priority date and common source of the initial description of the invention (such as a provisional patent application that includes a sufficient amount of detail to provide an enabling disclosure). While similar in some ways (such as having basically the same description and figures), there are commonly differences between members of a family in that different patents or applications contain claims that focus on different elements, different potential infringers (e.g., end-users, service providers, makers or sellers), or different perspectives of how an invention may be practiced or used (e.g., from a server-side perspective, a client-side perspective or other perspective for a system of cooperating elements, etc.). Further, in some cases, a continuation-in-part (CIP) application may be filed that describes an invention having a priority date and basic description in common with other applications, but also adds additional information which is not entitled to the same priority date.
Note that although many of the process steps described herein are most applicable to software implemented inventions, they also are relevant to electronic and hardware structures used to implement inventive processes.
 The claims of a patent define the legally enforceable aspects of what a patent describes as an invention.
 Note that an entity may be a direct infringer of a claim in a first application and also be a direct or contributory infringer of a claim in another application, where both applications claim priority from the same original application. This is because the claims in different patent applications, even related ones, do not necessarily cover mutually exclusive inventions.
 35 U.S.C. §112(a) – The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.
 A more detailed description of the process discussed in this article may be found in my article entitled “A Key Obstacle to Implementing a Patent Strategy and One Way to Overcome It.”
In the interest of full disclosure, “yes,” this particular blog post is a marketing piece. But, it is also intended to be educational and inform prospective clients why it matters who they select to work with to identify innovations, draft patent applications and strategically manage their company’s patent portfolio. This brings up two related questions: why should it matter; and assuming it does matter, how do I identify the right person?
Why Does It Matter?
To answer the first question — a properly constructed patent portfolio is more than a collection of government-issued property rights. Because it is a set of property rights backed by the judicial power of the U.S. government, it is a business asset. A patent application (which is really a misnomer, as a patent application is closer to a 30-50 page report) uses text and images to describe a use of one or more technologies or structures in a specific way to solve a problem. Each report must be prepared and expressed in terms that satisfy very specific requirements, as expressed by law and court decisions. Further, the author of each report may choose to include or exclude certain language or concepts to accomplish their goal, where that goal is more than to obtain a patent; it is to obtain a patent with a certain set of enforceable definitions of the property right (termed “the claims”). This is why the contents of a patent application matters, and also why it is so important to select the “right” person to draft a patent application. This is particularly true if the application is directed to a complex technology and/or is expected to protect a fundamental aspect of the product, service or business model.
The patent application, if allowed, will be issued as a U.S. patent. This enables the owner (who is not necessarily the same as the inventors, if they have assigned their rights in the invention to another party) to use U.S. law and courts to prevent others from doing certain things. These include making, using, selling, offering to sell or importing the claimed invention. But an important (and often overlooked) aspect of owning a patent or patents is that an owner of a patent can obtain both tangible and intangible benefits without having to sue someone if they view a patent as a business asset that can be helpful in achieving certain business goals.
In one sense, a patent application is a tool to convert an idea into a business asset. Because this asset may have multiple uses or potential uses (some of which may not be fully understood when the application is filed), ideally the tool should be capable of being adapted so that it may be used in those multiple ways. These use cases may include:
- Reducing the likelihood of being sued by creating the threat of a counter-suit (where this may involve submitting a new set of claims in an application in an attempt to cover a competitor’s product or service);
- Increasing the likelihood of being able to offer something of value to a company that the owner wishes to engage with in a business relationship;
- Enabling the execution of a patent cross-license with another party, with an accompanying payment to (or lesser payment from) the patent owner;
- Protecting its own market or at least erecting a barrier to entry of a close competitor; or
- Increasing the likelihood of obtaining additional capital by serving as collateral for a loan, demonstrating inventiveness or providing an exit strategy for investors via licensing or sale.
A properly constructed patent portfolio is one that increases the chances of having leverage over (or providing something of value to) another party in a business relationship. Any situation in which a claim or claims arguably cover a product or service of another party, a product or service in that party’s product development pipeline, a product or service of a competitor of that party, or even a product or service of the competitor’s competitor may provide value to the patent owner. The variety of possible uses, along with the importance of (and requirements on) how concepts are described in a patent application is why it matters who a company selects to prepare its applications. This is because the language and concepts described in a patent application are much more than simply a translation of what an inventor said into “legalese;” companies that do not understand this difference have often been disappointed by the value of their patent portfolio.
How Do I Identify the Right Person?
Because of the complexities of preparing a patent application that can be used to support claims of varying scope and contexts, it is best to look for a patent attorney or patent agent who has indications of being able to handle the technologies and business models that are most relevant to a company. These indications typically include at least some (if not all) of the following:
- A technical degree (preferably an advanced degree or an undergraduate degree) and several years of experience as an engineer, researcher, scientist, etc. in the most relevant mathematical or scientific discipline (applied math, physics, electrical engineering, biology, chemistry, chemical engineering, biochemistry, software engineering, computer science, fluid mechanics, mechanical engineering, etc.);
- Experience in protecting innovations in the same general category as those expected to be developed by the company (this is a bit nebulous, but examples might include eCommerce platforms, SaaS, web or cloud-based services, authentication methods, virtual reality systems, artificial intelligence methods, machine learning, data mining, telecommunications, semiconductor processing, signal processing, etc.) — this enables the patent attorney or agent and the inventors to have a larger common knowledge base, and as a result, to be much more likely to communicate effectively when it comes to identifying and describing the protectable aspects of the product or service;
- At least five years’ experience, but preferably 10, in which the person has focused almost exclusively on patent prosecution and has also had significant experience with either patent licensing or patent litigation support;
- Experience as an in-house patent counsel as well as in a law firm; this enables the person to have a better understanding of the business issues that may be involved and to present issues in terms of business decisions (in some cases this may be gained from working in a law firm with someone who has served as an in-house counsel); and
- If in a law firm, experience serving as a virtual patent counsel for a company of the same relative size or stage of development as the company that wishes to hire them — this ensures that the patent attorney has had experience interacting with senior business, legal and technical executives (such as founders, CTO, GC, etc.) and understands their concerns regarding budget, market developments, investors, etc.
For additional information regarding the uses and ways of developing an effective patent portfolio, see the following publications:
- “A Key Obstacle to Implementing a Patent Strategy and One Way to Overcome It,” Lane Powell White Paper (December 23, 2013)
- “Patent Protection as Investment and Insurance,” Corporate Counsel magazine (May 6, 2013)
- “Protect Your Company — And Increase its Value With a Strategic Patent Portfolio,” Seattle Business magazine (October 2012)
Fitness device maker Jawbone was recently featured in a Re/code article announcing that the company had raised $165 million in new funding. The article mentioned another aspect of the Jawbone’s fundraising efforts; the company raised an additional $280 million using its patent portfolio as a significant part of the collateral in a previous arrangement with BlackRock Inc., the largest asset management company in the world.
The BlackRock deal is an example of viewing a patent portfolio as a business asset; BlackRock presumably felt that if Jawbone could not pay back the convertible note, then the patent portfolio might be the most valuable (and possibly only) asset available to enable them to recoup part or all of the loan amount. Regardless of how much value was given to the patent portfolio by BlackRock (because valuing a patent portfolio is a combination of using mathematical models and making certain estimates that are dependent upon how it might be used), the fact that BlackRock was willing to accept it as collateral demonstrates an important aspect of a properly developed patent portfolio.
A patent application represents a way of converting an innovation into a business asset. This asset has value to the business because it can be used in multiple ways to preserve or increase revenue, avoid or lessen risks, and generally provide a company with options it would not have in the absence of a properly constructed patent portfolio. A properly constructed patent portfolio is one that contains assets that have (or can be modified to have) multiple value propositions, some of which benefit the company and some of which may benefit other players in the market.
In some sense, patents enable the value associated with R&D investments to be realized in ways that are not limited to the sale of a product. This can provide an “exit strategy” in the event that the business is not successful, in which case some of the capital invested may be recouped via sale or licensing of the patents. And as demonstrated by Jawbone, capturing the value of innovations in this way can also assist in raising capital during operation of the business, in part because it suggests that new products and services are being developed and with that the possibility of increased market share and new sources of revenue.
The multiple value propositions and potential uses of a properly constructed patent portfolio should provide companies with an incentive to evaluate their products and technology in an effort to identify potential innovations. Business and transactional attorneys should also be aware of these value propositions and are encouraged to seek the advice of a suitable patent attorney (one with both the knowledge and skill set needed to understand the technology, and the ability to craft patent applications having strategic value) when dealing with current or prospective clients.
Lane Powell’s patent attorneys have prior experience as in-house patent counsel and in establishing effective patent programs for clients and are experienced in protecting a wide variety of technologies in multiple industries (including semiconductor manufacturing, flash memory design and operation, telecommunications, eCommerce, wireless data and mobile devices, signal processing, artificial intelligence network security, authentication methods, SaaS and cloud-computing). They have assisted companies ranging from startups to publicly-traded companies to identify innovations and develop effective strategies for protecting and leveraging those innovations. Please contact Alan Minsk or Kevin Jablonski for further information.
Computer software patents have been receiving significant upset overturn in validity since the well-known U.S. Supreme Court decision providing certain exceptions to patent eligible subject matter under 35 U.S.C. § 101, Alice Corp. v. CLS Bank International came out Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014). Since Alice, the Federal Circuit and other courts have been following the Alice decision and struck many presumably-valid U.S. patents as invalid without providing breakthroughs of how to overcome the 35 U.S.C. § 101 rejections to patent law practitioners.
On September 29, 2015, the Eastern District of Texas denied a summary judgment motion by Google Inc. and YouTube LLC to invalidate SimpleAir, Inc.’s two patents, Patent Nos. 8,572.279 and 8,601,154 by finding that the two patents are not directed toward an abstract idea (SimpleAir, Inc. v. Google Inc. et al.). The two patents cover systems and methods for transmitting data to remote computing devices through a “central broadcast server.” In this case, the District Court applied the two-prong Alice test including “ineligible concept” step and “inventive concept” step and found that the first “ineligible concept” test is satisfied. The Court stated that Google summarized the patents as “packaging and transmission information” and “do not explain how such a characterization, which ignores significant claim limitations, encompasses the invention claimed” by SimpleAir. Even though the Court did not disagree about the patents suggesting “implementation of the abstract idea of ‘packaging and transmitting information’” at some level, the Court’s role is not to “reach into a patent and extract an abstract idea,” rather to “examine” the patents and “determine whether they are directed to an abstract idea.” In this respect, the District Court has put forth a ruling that would appear to support the concept that transitory signals may, in fact, be patent eligible — an area long-held by Examiner to be off-limits.
Another interesting aspect of this decision is that the Court did find “a central broadcast server,” “a data channel,” and “transmitting information whether the user was online or not online to a data channel to an information source” are sufficient to show “significantly more than a patent on that abstract idea [of transitory signals]” to satisfy the Alice “inventive concept” step by heavily construing a “wherein-clause” in the claim language. Further, the Court did not buy an argument by Google that “data-transmission steps can be carried out using standard prior art protocols, carriers, and networks’ and claimed invention [was] ‘well-understood, routine, and purely conventional’” as the Court is asked to determine “whether the function performed by the computer at each step of the process is ‘[p]urely conventional.”
Those who practice patent law in the computer arts before the USPTO are well aware of dealing with 35 U.S.C. § 101 rejections of claims due to alleged lack of patentable subject matter when claiming so-called “abstract ideas.” Such recent rejections have been euphemistically referred to as “Alice” rejections due to the Supreme Court case Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014). As to what constitutes an actual abstract idea, one could go round and round about legal definitions. This very round and round is playing out at various levels in various federal courts of law.
In a new recent round, DataTern, Inc. v. MicroStrategy, Inc., is a patent infringement lawsuit on remand from the Federal Circuit, where the District Court has now denied a motion for summary judgment based upon the patent being asserted as directed to merely an abstract idea. Specifically, “[t]he Federal Circuit has described the [patent-in-suit] as . . . ‘directed to interfacing an object-oriented software application to access data stored in a relational database. . . creating ‘interface objects’ that act as intermediaries between the object oriented application and the relational database.’ . . . [W]hen read as a whole, the patent here does not recite a computer as a post-solution limitation or a specific application of a more generic abstract idea. Rather, the [patent] is directed at solving a problem that specifically arises in the realm of computing; indeed, object-oriented programs exist only in the realm of computers, and relational databases are utilized primarily, if not exclusively, on computers.”
A take-away here then is that patent claims directed to solving a specific problem are seen more and more as patent-eligible subject matter capable of escaping the gravity of the black hole known as Alice.
On Tuesday, August 25, the United States Patent and Trademark Office (USPTO) opened for public comment a proposed pilot program for inter-partes review proceedings (IPRs), one of the patent post-grant review proceedings made available under the Leahy-Smith America Invents Act. IPR proceedings have two phases: the institution phase and the trial phase. Currently, during the institution phase, a panel of three Administrative Patent Judges (APJs) reviews the IPR petition and decides whether some or all of the patent claims challenged in the petition should proceed to the trial phase. The trial phase is then conducted by the same three-APJ panel.
The USPTO’s proposed pilot program will change the composition of the institution and trial-phase panels. First, it will limit the institution phase to a single APJ. Then, after the institution decision has been made, the trial-phase panel will be comprised of the institution-phase APJ and two other APJs who were not involved in the institution decision. The USPTO cites increased efficiency as the main goal of the pilot program. But presumably the USPTO also hopes the new program will alleviate concerns about actual or perceived bias during the IPR process.
The USPTO will be soliciting public comments on the proposed pilot program through October 26.
Since the passing of the America Invents Act, a number of already issued patents have come under new scrutiny through various post-grant procedures. One of the more prominent post-grant procedures is the Inter Partes Review (IPR) available to any party wishing to challenge the validity of any issued patent after nine months beyond issuance. Another post-grant procedure is to challenge the issued patent’s validity as being directed to a Covered Business Method (CBM). Upon seeking an IPR or a CBM review, a panel of three judges from the Patent Trial and Appeal Board (PTAB) reviews the issued patent as if it were still pending given new evidence submitted by a petitioner for review. The petitioner and the patent owner are afforded opportunities to argue their respective positions and the PTAB may then find various claims as valid or invalid going forward.
However, once the PTAB issues a ruling, it has proven very difficult to overturn this ruling on appeal at the Court of Appeals for the Federal Circuit (CAFC). The CAFC has given great deference to the PTAB in determining validity or invalidity. Therefore, it has proven nearly impossible, so far, to win an appeal of a PTAB ruling. Two recent examples continue this trend.
In VERSATA DEVELOPMENT GROUP, INC. v. SAP AMERICA, INC., SAP AG, the CAFC affirmed that the PTAB correctly invalidated U.S. Patent No. 6,553,350 that was directed to a computer-based method for software customizing pricing based on factors such as the particular customer, product and size of the order. What was striking about the decision was that Versata had argued that the CBM review was only available to “banking” related patents. But the CAFC rejected this notion and affirmed invalidly on CBM grounds wherein CBM review may apply to any patent having anything related to money.
In the case of IN RE CUOZZO SPEED TECH, the CAFC reviewed the PTAB’s very first IPR decision. Here, the CAFC held that the CAFC lacks jurisdiction to review the PTAB’s decision to institute IPR; that the PTAB has statutory rulemaking authority in determining that patent claims subject to an IPR should be given their “broadest reasonable interpretation,” and that the PTAB properly denied Cuozzo’s motion to narrow its claims in order to avoid the prior art.
Mysterious to even many patent practitioners, plant patent issues create their own peculiar body of controlling case law. A recent Federal Circuit decision, Delano Farms v. The California Table Grape Commission, illustrates this point well.
The Delano Farms case explores what factually does not count as invalidating “public use” of two patented table grape varieties, the Scarlet Royal and the Autumn King. The case facts are a sociological study of how grape growers sometimes covertly operate in America’s cornucopia, the Central Valley of California. In down-to-earth terms, the case reveals how fresh produce growers and their marketers tend to look out after their own—even when it means lying under oath in order to protect each other.
What Are Plant Patents Anyway?
Plant patents came into legal being relatively late in our nation’s history. The Plant Patent Act of 1930 is really a posthumous tribute to the legacy of Luther Burbank (1849 – 1926), the legendary “Wizard of Horticulture.” Burbank’s cross-breeding work led to such famous varieties as the Russet Burbank potato (used in McDonald’s french fries), the plumcot, rainbow chard and the Shasta daisy. In testimony supporting passage of the Plant Patent Act, his good friend Thomas Edison opined that this bill “will, I feel sure, give us many Burbanks.”
Plant patents differ from regular utility patents, which generally cover “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof,” per 35 U.S.C. § 101. In contrast, a plant patent is available for those who invent or discover and then asexually reproduce a distinct and new variety of a plant, other than a tuber propagated plant or a plant found in an uncultivated state. The plant patent is supposed to describe the subject plant and identify its new and distinct features. 35 U.S.C. §§ 161, 162.
Many casually, but incorrectly assume that genetically modified seed patents (such as those issued to Monsanto) must be within the realm of plant patent law. As the foregoing definition demonstrates, the Plant Patent Act specifically requires asexual, not seed-based reproduction of a plant. Asexual propagation methods include cuttings, layering, budding and grafting. “Cuttings involve rooting a severed piece of the parent plant; layering involves rooting a part of the parent and then severing it; and budding and grafting is joining two plant parts from different varieties.”
Plant patents—unlike utility patents—can only include one invention claim. The single claim covers the plant material itself. For example, the plant patent claim for the Scarlet Royal grape is for a “new and distinct variety of grapevine denominated ‘Scarlet Royal,’ substantially as illustrated and described, characterized by its attractive dark red fruit color, oval fruit shape, and firm flesh texture with a neutral sweet flavor.” US PP16,229. The single claim for the Autumn King plant patent is for a “new and distinct variety of grapevine plant, ‘Autumn King,’ substantially as illustrated and described, characterized by its attractive pale green fruit color, cylindrical to ovoid fruit shape, and firm flesh texture with a neutral sweet flavor.” US PP16,284.
Setting the Table of Case Facts
The Delano Farms case involves a patent validity battle between major table grape growers and the owner and exclusive licensor of the Scarlet Royal and Autumn King table grape varieties. The U.S. Department of Agriculture (USDA) developed these two varieties and exclusively licensed them to the California Table Grape Commission. More detailed case facts are set forth in the Findings of Fact and Conclusions of Law entered by the federal trial court located in the Eastern District of California.
The Delano Farm plaintiffs (also including Four Star Fruit and Gerawan Farming) sought to invalidate these two grapevine plant patents based on the “public use” bar of 35 U.S.C. § 102(b). That former patentability bar states that a person will be entitled to a patent unless the invention was in public use in the United States more than one year before the date of the patent application filing. With the passage of the Leahy-Smith America Invents Act in 2011 and its first-to-file patent regime, public use before a patent application filing date is now grounds for patent invalidation.
The USDA applied for plant patent protection for both varieties on September 28, 2004. That means that “public use” of the two grapevines before September 28, 2003, potentially would invalidate the grapevine patents. That date becomes the “critical bar date” for analytical purposes.
In August 2001, the USDA held an “Experimental Variety Open House.” Attendees could view and taste the mature fruit from these two table grape varieties. The plant vines and cuttings themselves were not on display at the open house. Two orchard owner brothers, Jim and Jack Ludy, attended the open house and asked whether growers would be permitted to view the experimental varieties in the field. Because of the USDA patenting program, they were told “no.”
The trial focused on the covert activities of the Ludy brothers; their cousin, Larry Ludy; a USDA employee, Rodney Klassen; and a table grape marketer, Richard Sandrini. Their interactions represent a classic example of the idiom, “you scratch my back and I’ll scratch yours.”
At plant breeding sites, Klassen performed various duties as a USDA employee, including operating a trailer, spraying grape plots for disease and weed control, and pruning. Klassen thus had access to the two grapevines displayed at the open house. When asked by Jim Ludy whether he could obtain the unreleased varieties for him, Klassen replied that he would “take care” of him.
When Klassen delivered the Autumn King and Scarlet Royal cuttings to Jim Ludy in an unmarked paper bag, he told Ludy to not let the plant materials “get away from him” and not to put any of the grapes “in a box,” i.e., not to sell them commercially.
Jim Ludy then gave “a few buds” of the USDA’s proprietary plant materials to his cousin Larry and told him that they should “keep it to ourselves.” Cousin Larry did not follow that advice. Richard Sandrini grafted over 19 acres of grapevines with the Autumn King plant cuttings that Larry gave him .
The unreleased varieties growing on Larry Ludy’s orchard properties were all located on an outside row on his farm. Those rows were visible from a nearby dirt road. No fences surrounded the grapevines and the road was publicly accessible. A separate parcel also included the novel grapevines. It too was not fenced and was publicly accessible by dirt roads. None of the plantings appear to have been marked with signs or labeled in any way.
When his Autumn King grapes were harvested (after the critical bar date), Sandrini intentionally mislabeled them as “Thompson Seedless” grapes in order to avoid unwanted attention from the USDA. Nevertheless, he received a premium price for them—significantly more than would have been typical for genuine Thompson Seedless grapes.
During a pretrial deposition in 2006, Jim Ludy testified falsely under oath in order to protect Rodney Klassen’s identity as his source of his USDA plant cuttings. When shown Klassen’s photograph, Ludy lied. He said he didn’t recognize him nor remember the name of the person who had given him the proprietary grapevines. After Klassen’s death, Ludy admitted in a 2012 deposition that his prior deposition testimony was false.
Plant Anonymity in California’s Vast Central Valley
To determine whether the use of the patented grapevines one year before their patent application date constitutes “public use,” a court must determine whether the purported use was (1) accessible to the public; or (2) was commercially exploited. The evidence necessary to invalidate a patent on public use grounds must be “clear and convincing.”
No trial evidence showed that the purloined grapevine cuttings or grapes had been sold to the public before the critical bar date. Therefore, that patent invalidation argument was not available to the plaintiffs. Rather, public accessibility became a focal point of trial testimony.
As anyone can attest who has driven through California’s Central Valley, you will cruise by seemingly endless arrays of cultivated fields and orchards. Its sheer expanse can be overwhelming and mind-numbing. That atmospheric fact worked in the USDA’s favor. Without close, expert scrutiny, the unreleased grapevines were not publicly identifiable even if they could be seen and examined by the public.
A key paragraph of the trial court’s conclusion of law highlights this basic point:
Although the Ludy’s took no affirmative steps to keep secret their vines of the unreleased varieties by signing a confidentiality agreement, by erecting a fence, or otherwise, the anonymity of the unreleased varieties was assured because not even the inventor of the varieties, Dr. Ramming, could identify a variety solely by looking at the vines, buds or cuttings. Essentially, the vines were hiding in plain sight.
Despite speculation as to what members of the public might have seen in the publicly accessible orchards, no trial witness testified to having seen or recognized the grapevines or mature fruit from these varieties prior to the critical bar date. As the trial court found, it “is impossible to reproduce a grapevine without possessing plant material for the vine. Merely seeing the vine or possessing the fruit is not sufficient to allow reproduction.” Findings of Fact and Conclusions of Law, ¶ 43.
The Ludy’s, moreover, had an economic incentive to keep their unauthorized possession of the unreleased grapevines a closely guarded secret. They were losing money on existing grape varieties and “needed to graft over their existing vines to a more profitable variety to avoid going out of business.” Id. ¶ 47. “Obtaining the Scarlet Royal and Autumn King plant material prior to its release provided [them] with a ‘big advantage’ over other growers.” Id.
These agricultural facts demonstrated that there was no legally cognizable “public use” of the two patented grapevines before the critical bar date.
The Delano Farms case affirms the validity of the Scarlet Royal and Autumn King plant patents on very fact-specific grounds. The individuals who spirited away the USDA’s patented grapevines kept their propagation a secret in order to enrich themselves and to gain a head start on other table grape growers. Their covert use cannot be deemed to be “public” use. As for the public at large, they really had no clue as to what they may have seen or had access to along the dirt roads that crisscross California’s Central Valley. Within its vast geographic range, patentable plants can and do hide in plain sight.
 The Delano Farms case applied the § 102(b) “public use” bar as it existed before the enactment of the America Invents Act (AIA) in 2011. With the “first to file” replacing the “first to invent” patent system, the AIA no longer includes a one year “public use” grace period.
 See Defendants’ Proposed Findings of Fact and Conclusions of Law Preceding Trial, ¶ 26(g) and (h), Dkt. No. 233, Delano Farms, et al. v. The California Table Grape Commission, et al., Case No. 1:07-cv-01610-SEH-JLT (E.D. Cal.).
As the summer winds down, vacations recede in the rear-view mirrors, and the “school” year begins, two recent cases offer a refresher course in the dire consequences awaiting inventors who misrepresent prior art during patent examination proceedings, and for patent litigators who misreport the nature of potential witness testimony in federal district court trials. The facts and outcomes of these two cases are extreme, but noteworthy as cautionary tales.
The Apotex v. UCB Federal Circuit Case
On August 14, 2014, the Federal Circuit issued a precedential decision in a long running case regarding Apotex’s U.S. Patent No. 6,767,556. It is entitled “Pharmaceutical Compositions Comprising Moexipril Magnesium” and was invented by Apotex’s founder, Dr. Bernard Sherman. Apotex is the largest producer of generic pharmaceutical products in Canada.
The Federal Circuit affirmed the district court’s ruling that the ’556 patent is unenforceable due to the inequitable conduct of its inventor.
The case facts are egregious. The ’556 patent is generally directed to a process for manufacturing moexipril tablets used to treat hypertension. Apotex sued rival drug manufacturers contending that their moexipril tablets (Univasc and Uniretic)—available in the 1990s—were manufactured through the process covered by Apotex’s ’556 patent that issued in 2004. To obtain this patent right to sue competitors, Dr. Sherman misrepresented prior art in a USPTO patent examination proceeding and proved to be a non-credible, dissembling witness when called to the stand in federal court.
The Federal Circuit’s decision does not mince words: “the district observed that Dr. Sherman abused the patent system by targeting a competitor’s existing and widely available product and seeking to obtain a patent on it through lies and deception for the purpose of suing that competitor.”
The Apotex case displays the type of inventor misconduct most calculated to raise the ire of district court and appellate judges. Although Therasense, Inc. v. Becton, Dickinson and Co., 946 F.3d 1276 (Fed. Cir. 2011) raised the evidentiary bar for inequitable conduct findings and conclusions, recent Federal Court jurisprudence also emphasizes that appellate court judges will not disturb witness credibility findings that support inequitable conduct rulings. In the Apotex decision, the Federal Circuit recites the principle that this court “may not reassess, and indeed is incapable of reassessing, witness credibility and motive issues on review.” The center of gravity of inequitable conduct findings and conclusions now resides in federal district courts—and not in a formerly more interventionist Federal Circuit upon appeal.
Because the ’556 patent inventor’s prior art misrepresentations reached the level of “but-for” materiality, the Federal Circuit did not have to reach the issue of whether Dr. Sherman’s conduct rose to the “level of egregious conduct such that materiality could have been presumed” under Therasense. Deceptive intent was also found and upheld on appeal. Among other things, Sherman had “directed his counsel to bolster [his] misrepresentations by procuring and submitting the declaration of an expert who was deliberately shielded from the truth.” Sherman also had to admit that he never performed the experiments described in the ’556 patent, and yet the specification examples are all written in the past tense. “We agree with the district court that deceptive intent is the single most reasonable inference that can be drawn from the evidence.”
The Tesco v. Weatherford District Court Decision
Tesco v Weatherford is a recent federal district court decision that focuses on the misrepresentations and misconduct of trial counsel in a patent infringement lawsuit. The case involves two patents that describe a tool used on a drilling rig. The patents concern a case drilling system with a link tilt.
Four days into trial, the co-inventor of the patent surprised everyone in the courtroom when he testified that a marketing brochure prepared by plaintiff Tesco displayed his invention. Its August 2002 preparation date placed it well before a November 2002 on-sale bar critical date. Over a weekend trial recess, Tesco’s counsel scrambled to repair this gaping hole in his client’s patent infringement claim. The following Monday, counsel informed the court that they had gotten to the bottom of the brochure’s preparation by interviewing the person who did the renderings in the brochure. Counsel represented to the court that the witness had stated that the rendering is not the invention, that “in fact, there is no doubt it’s not [the] invention.”
Trial counsel would come to rue those unequivocal representations. When the alleged author of the renderings testified at his post-trial deposition, he stated he had no involvement with the brochure. The court decision set forth the deposition testimony verbatim at some length. Tesco’s counsel argued that his deposition could be construed as supporting his courtroom statements, but the court rejected the technical distinctions proffered as unpersuasive. Counsel’s misrepresentations occurred at a “critical inflection point” at the trial. Had the court known the truth, it may well have entered a judgment for the defendants forthwith. The court determined that a sanction of attorneys’ fees alone would not suffice. “Just as with witnesses testifying truthfully under oath, the proper of administration of justice depends upon counsel being completely forthright with the Court.”
As a result of this litigation misconduct, the court dismissed Tesco’s patent claims with prejudice, and signaled that it would entertain a motion for attorneys’ fees based on the ruling. Since the ruling has only recently been issued, it may well be the subject of an appeal.
These two cases should give every patent practitioners pause for reflection. We all want to secure the best possible results for clients. When prosecuting a patent application, or battling over patent rights at trial, it can be easier than we think for zealous advocates to slip into the lyrical adage of Paul Simon’s song The Boxer, “still, a man hears what he wants to hear and disregards the rest.” That natural human tendency to concentrate on what supports a claim as opposed to what detracts from it–unless checked–can have profoundly deleterious impacts down the line when a full evidentiary record is evaluated.