William L. LaFuze
Section Chair, 2004–05

The pace of work on many projects underway in the Section of Intellectual Property Law continues to be brisk, with a full plate of work. Our Section leaders and committee members continue to amaze me with their dedication in devoting a substantial amount of quality time to Section matters. Thanks again to our many dedicated leaders who give so selflessly of their valuable time.
First of all, one of the most significant issues in patent reform has been the so-called “first-to-file” issue. While most patent systems of the world grant patents to the first inventor to file a patent application, the United States patent law provides that the first inventor is the only one entitled to a patent on an invention, even though the first inventor files later in time than another applicant, considering certain factors such as diligence in reducing the invention to practice. The Section of Intellectual Property Law has passed resolutions for the last decade or so directed to first-to-file issues. Because of some technical defects perceived by some, the Section’s official position on this issue has been a subject of some controversy for the last couple years. The Section voted overwhelmingly to support a change in the law to a first-inventor-to-file system at our 2004 Summer IPL Conference. That issue will go to the ABA House of Delegates in February for adoption by the ABA. Formal adoption of the first-inventor-to-file concept will make the ABA more aligned with the positions taken by other major bar and trade associations. Special thanks go to House of Delegates Representative Don Dunner, who has been dealing with others in the ABA on this issue.
On December 10, the President signed into law the Cooperative Research and Technology Enhancement (CREATE) Act. This new law now makes possible, under certain limited circumstances, the patenting of inventions resulting from joint research that may not have been patentable before passage of the act. In order to obtain the benefit of the new law, however, it is necessary to take appropriate steps during the prosecution of the patent application. The Section supported the position taken in the CREATE Act. Practitioners are well advised to review immediately pending applications to determine if action is needed by the applicant in order to take advantage of the benefits of the act.
Next, on December 10 the U.S. Supreme Court granted a petition for certiorari in the Grokster case. A couple months ago, I appointed a task force, headed by Donna Bergsgaard, to study the Grokster case and related Induce Act. New technology continues to pose new issues as to the extent of protection under our copyright law and enforcement alternatives, including vicarious liability when a party induces or encourages copyright infringement by another. As a sequel to the Napster litigation, the Grokster case considered the legality of file sharing and transfer of copyrighted works in light of technology, which moved would-be copyright infringers as found in Napster one step further from the clear reach of copyright protection. The Induce Act, which did not pass in this session of Congress, would afford copyright owners a broad form of enforcement power by imposing liability on those who create and commercialize new technologies used to manipulate and transfer copyrighted works. Consideration of the issues in the Grokster case and the Induce Act involves determining the proper balance as a matter of policy as to who should be liable for copyright infringement other than the direct infringer when infringement is induced or encouraged by others. There are different views as to whether a party should be liable when it puts out a product that is capable of both infringing and non-infringing use. The Section task force is busy attempting to see if a consensus can be reached on a position that can be urged in the Grokster case in the Supreme Court. An amicus brief in Grokster is due very soon, so the task force has only a short time to tackle this project.
Don Martens has been hard at work chairing both the FTC Task Force and the National Academy of Sciences Task Force. These two task forces are considering substantive proposed changes to our patent laws that could dramatically affect patent law and litigation.
One proposed change, that of post-grant oppositions, could materially change the patent litigation landscape. Depending on the details of the post-grant opposition process, this process has the potential for moving a vast amount of litigation handled in the district courts to the PTO to determine validity issues. The process in the PTO could offer substantial advantages to accused infringers. In the PTO, there is no presumption of validity favoring patentees, and no clear and convincing burden of proof to invalidate a patent facing infringers, as in district court litigation. Also, accused infringers would likely feel more comfortable avoiding juries in PTO proceedings that seem to give extra credence to patents in district court litigation. Finally, the process of going through a post-opposition proceeding is likely to be far less expensive than litigating validity issues in the district courts. But the devil is in the details with respect to just how such a post-grant opposition process would function – such as scope of discovery and other issues. Post-grant opposition is only one of many important potential changes facing users of the patent system. The two task forces are expected to complete their work and have a final report early this year. Thanks again, Don, for doing double duty on these two very important projects.
The Section leadership, including officers, Council, and committee chairs, will meet at a leadership conference in Miami on January 22-25. At this meeting, our leaders will share reports on their progress to date on various projects and discuss plans for the remainder of the ABA year. This meeting will be one of the highlights of the year for the Section leadership.
This continues to be an active and productive year for our Section. Many thanks again to our many dedicated servants of the profession and the Section.

Legislative Update

Hayden W. Gregory
Legislative Consultant

Congress Hikes PTO User Fees, Increases Funding for the Office

 

On December 8, President Bush signed into law H.R. 4818, the Consolidated Appropriations Act, 2005. This massive spending bill, which will fund most of the federal government for the next year, also contains substantial increases in user fees charged by the U.S. Patent and Trademark Office. The fee increases will apply immediately to fees paid on or after December 8.
On the funding side, the bill provides $1.54 billion for the U.S. Patent and Trademark Office for fiscal year 2005, which began October 1. This represents an increase of $322 million above funding for the current year. The PTO had sought these increases in fees and funding on the grounds that they are needed to improve quality, reduce pendency, and speed office automation.
The final bill enacts the fee increases averaging 15-20 percent that were contained in H.R. 1561, the House-passed fee bill, but provides that these fee changes will expire after two years. The bill does not contain anti-diversion language such as that contained in H.R. 1561. It does appropriate to the PTO all but $20 million of fee collections anticipated in FY 2005, including $219 million that is anticipated to be raised by the fee increases. The ABA and the Section had urged Congress not to enact the fee bill without also including a statutory end to diversion.

PTO Cleared to Begin Pilot Project on Outsourcing Patent Searches

 

H.R. 4818 also includes provisions from the House fee bill that would permit the PTO to contract with private firms to provide patent searches, but conditions full use of this authority on the successful completion of a pilot study. That limitation was not contained in S. 2809, the Senate appropriations bill, which would have allowed the PTO to outsource immediately and without limitation.

 

Ban on Patenting Human Organisms Renewed

 

The final PTO funding bill also includes a provision from the House bill that would bar patenting of human organisms. This restriction, originally enacted a year ago, was renewed for an additional year.

The CREATE Act Is Now Law

 

The closing days of the 108th Congress also saw the enactment of S. 2192, the Cooperative Research and Technology Enhancement (CREATE) Act. S. 2192, which is identical to a House-passed bill, H.R. 2391, modifies the prior art effect of disclosures made in the course of cooperative research agreements. These changes were seen as necessary in response to the Federal Circuit decision in OddzOn Products Inc. v. Just Toys Inc., which interpreted present law to exclude from obviousness prior art the results of collaborative work of employees of a single organization but not those of workers from different organizations collaborating under a joint R&D agreement.

Copyright Royalty Panels Restructured

 

On November 30, the President signed into law H.R. 1417, the Copyright Royalty and Distribution Reform Act of 2003. H.R. 1417, now Public Law 108-419, replaces ad hoc copyright arbitration royalty panels with three full-time copyright royalty judges, and makes other changes regarding copyright royalty distributions.

Dudas Appointment
Confirmed by Senate

 

On November 21, the Senate confirmed the appointment of Jon Dudas as Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office. Dudas was already serving in the post under a July 30, 2004, temporary appointment that did not require Senate confirmation and would have expired at the end of Congress’ 2005 session. He will now serve without time limitation, at the pleasure of the President.

WIPO Program
Slated for March

The World Intellectual Property Organization (WIPO) is offering a special half-day program on Mediation and Arbitration of Intellectual Property Disputes, to be held at the United Nations Headquarters in New York on March 30, 2005. Co-sponsored by the ABA Section of Intellectual Property Law, the program will feature keynote speaker Francis Gurry, Deputy Director General of WIPO and founder of the WIPO Arbitration and Mediation Center (http://arbiter.wipo.int/center/index.html). Prior to the program, a special tour of the UN Secretariat will be available to participants. Visit www.abanet.org/intelprop/2005wipo/home.html for details.

Committee News

Diversion of PTO Funds
(Special Committee 155)

 

Heath W. Hoglund and
Thomas E. Spath, Co-Chairs

Despite efforts by Section leadership and other national IP professional organizations, Congress recently passed legislation again increasing patent fees, without a specific restriction on future diversion of USPTO funds. Meanwhile, the United States Court of Federal Claims is proceeding with its review of Congress’ past practices of increasing, diverting and rescinding patent fees. In Figueroa v. United States, 68 U.S.P.Q.2d 1555, an inventor sued to challenge these practices alleging, among other claims, an illegal exaction. The defendant, the United States, moved to dismiss this claim on the grounds that Congress’ fee legislation is not subject to judicial review. The Court of Federal Claims, however, ruled that it would review these practices under the applicable constitutional standard set forth in the Patent and Copyright Clause to determine whether they “promote the progress of useful arts.” Art. I, § 8, cl. 8.
Pursuant to this decision, both plaintiff and defendant have recently filed motions for summary judgment. The plaintiff asserts, among other arguments, that these practices do not pass constitutional muster because they deprive the USPTO of needed resources. The plaintiff alleges that these practices have contributed to the growing backlogs in the USPTO and so delay the progress of useful arts.
The defendant advances, among other arguments, that prior to 1990, Congress subsidized the USPTO and that these prior subsidies are cumulatively greater than the diversions and rescissions of patent fees. The defendant also alleges that the Treasury, rather than the USPTO, pays the cost of providing certain post-retirement benefits to the USPTO’s former employees. 
Apparently not by coincidence, the President’s Budget for FY2005 proposes imposing the cost of these post-retirement benefits on the USPTO. Budget of the United States Government, Analytic Perspectives, Fiscal Year 2005, p 219.  The President’s FY2005 budget is available at www.whitehouse.gov/omb/budget/fy2005. The motions for summary judgment in Figueroa v. United States (as well as an amicusbrief) are available at www.hhoglund.com/fees.htm.

 

Patent and Trademark Affairs - Trademarks (Committee 203)

Brent E. Routman and
James L. Vana, Co-Chairs

The Patent and Trademark Office Affairs-Trademarks Committee is seeking your help. It has now been just over a year since the U.S. joined the Madrid Protocol. The committee is very interested to know what is working and what is not. For example, are your clients using the Protocol? If so, how often? What has been your experience using the new forms on the PTO website? 
If you are using the Madrid Protocol, please be kind enough to take five minutes to answer the following questions. Please e-mail your responses to Brent Routman, at broutman@merchant-gould.com. Thank you for your help.  

- How many Madrid applications have you filed?
- What issues have you encountered in connection with those applications?
- issues raised by USPTO
- issues raised by WIPO (IB)
- Have you gotten office actions on U.S. applications filed by foreign entities to extend protection?
- What issues have you seen with those applications?
- In general, have you (and your clients) found the Madrid Protocol to be useful?
- What other comments or observations do you have regarding the Madrid Protocol and its implementation?

International Trade Commission
(Committee 603)

 

Steven Gardner and
Jeannine Y. Sano, Co-Chairs

As part of its meeting on November 17, 2004, the International Trade Commission Committee had the benefit of having a guest speaker, Thomas Fusco, one of the Commission Staff Attorneys with the Office of Unfair Import Investigations (OUII), present his views regarding consent orders and settlement agreements in 337 investigations. The co-chairs thank Committee Member Tom Hahn, for arranging this opportunity to hear Mr. Fusco's perspective on this interesting and informative subject.
Since the last meeting, the committee has gotten a new member, Maureen Browne. The co-chairs hope that continued expansion of the committee will parallel the increased patent litigation activity before the ITC, which has record numbers of 337 investigations being filed each year. Another committee member, Jim Altman, will be leading a presentation on ITC 337 investigations versus rocket dockets and/or motions for preliminary injunction as means for fast patent infringement relief at the 20th Annual Intellectual Property Law Conference this spring.

 

Plants (Committee 1002)

Steve J. Callistein, Chair

Schmeiser v. Monsanto and Its Effects on Patent Prosecution

 

By Cynthia Tape, Melanie Rowand, and Sorel Bosan

Schmeiser v. Monsanto is the Supreme Court of Canada’s most recent decision involving higher life forms. In this case, Monsanto alleged that Schmeiser, a farmer, had infringed its patent rights by reproducing canola seeds and plants that contained genes and cells covered by Monsanto’s patent claims, and by selling the harvested canola seeds. The patent in question claimed genetically engineered genes, and cells containing those genes, that confer herbicide resistance on canola plants. The patent did not claim the canola plants or seeds themselves. Schmeiser countered that in light of the SCC’s reasoning in Harvard College v. Canada (Commissioner of Patents) (Harvard Mouse) the modified gene and cell claims of Monsanto’s patent were invalid. In Harvard Mouse, the SCC had ruled that higher life forms (including plants and animals) were unpatentable.
In a split decision, the majority held that the question whether patent protection for genes and cells extends to activities involving the whole plant is irrelevant to a validity analysis; it is relevant only to infringement. It follows that gene and cell claims can confer enforcement rights over whole plants despite the unpatentability of the plants themselves. A second key ruling concerned whether possession can amount to infringing use of an invention. The majority held that possession, at least in a commercial context, raises a rebuttable presumption of use. Schmeiser had failed to provide sufficient evidence to rebut the presumption in this case. However, the majority also held that Monsanto was entitled to nothing on its claim for an accounting of profits since there was no evidence that Schmeiser had earned any profit from Monsanto’s invention.
Subsequent to this case, the Patent Office changed its position on the patentability of claims directed to plant or animal cells. Previously, the Patent Office required claims to plant or animal cells to be restricted to isolated cells, cell lines or cells in culture. The Patent Office is now permitting claims to cells if the description does not define “cells” to include plants, animals or tissue. In another practice update, the Patent Office now takes the position that post-filing data (experimental data generated after the effective filing date) cannot be used to demonstrate the utility of an invention or the soundness of a prediction.

Mark Your Calendar—

Mediation and Arbitration of Intellectual Property Disputes
Co-sponsored with WIPO
March 30, 2005
United Nations Headquarters
New York, NY

Practical Tips on Intellectual Property Law
April 13, 2005
Crystal Gateway Marriot Hotel
Arlington, VA

20th Annual Intellectual Property Law Conference
April 14-16, 2005
Crystal Gateway Marriot Hotel
Arlington, VA

2005 Summer IPL Conference

June 22-26, 2005
Palace Hotel
San Francisco, CA