Baker Hostetler Patent Watch

Alerts / May 10, 2012

Inside this Edition of Baker Hostetler's Patent Watch:

If you have questions about the material presented in this Executive Alert, please contact Dr. Lawrence M. Sung (lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

Chicago Bd. Options Exch., Inc. v. Int’l Secs. Exch., LLC

“Where the specification makes clear that the invention does not include a particular feature, that feature is deemed to be outside the reach of the claims of the patent, even though the language of the claims, read without reference to the specification, might be considered broad enough to encompass the feature in question.”

On May 7, 2012, in Chicago Bd. Options Exch., Inc. v. Int’l Secs. Exch., LLC (Rader, Wallach, Fogel) affirmed-in-part, reversed-in-part, vacated-in-part and remanded the district court’s summary judgment that CBOE did not infringe U.S. Patent No. 6,618,707, which related to an automated exchange for the trading of options contracts that allocates trades among market professionals and that assures liquidity. The Federal Circuit stated:

Means-plus-function limitations are governed by 35 U.S.C. § 112, ¶ 6 . . . . As such, § 112, ¶ 6 “represents a quid pro quo by permitting inventors to use a generic means expression for a claim limitation provided that the specification indicates what structure(s) constitute(s) the means.” Construction of a means-plus-function limitation involves two steps. First, the court must identify the claimed function. Second, the court must identify the corresponding structure in the specification that performs the recited function. The parties’ dispute in this case concerns only the second step.

It is well-established that the “specification must be read as a whole to determine the structure capable of performing the claimed function.” A “structure disclosed in the specification is corresponding structure only if the specification or prosecution history clearly links or associates that structure to the function recited in the claim.” “The duty of a patentee to clearly link or associate structure with the claimed function is the quid pro quo for allowing the patentee to express the claim in terms of function under section 112, paragraph 6.” Thus, “[i]f an applicant fails to set forth an adequate disclosure, the applicant has in effect failed to particularly point out and distinctly claim the invention . . . .” Whether the specification “adequately sets forth structure corresponding to the claimed function necessitates consideration of that disclosure from the viewpoint of one skilled in the art.”

In this case, system memory is the disclosed structure clearly associated with “system memory means.” . . . CBOE contends that the bid matching process and the offer matching process “store” allocation parameters because they “apply” and “contain” allocation parameters. In effect, CBOE argues that “store,” “apply” and “contain” have similar meanings. We disagree. The term “store” or a derivation thereof is associated with “system memory” or “book memory” or a “memory” every time the term is used in the specification. Nowhere is “system memory” or “book memory” associated with “apply” or “contain.” Nothing in the Patent suggests that “storing” and “applying” are used interchangeably in reference to allocating parameters. Hence, CBOE’s contention that the bid matching process and the offer matching process “store” allocating parameters fails because the Patent does not ascribe the same meaning for “apply,” “contain” and “store.” The general presumption that different terms have different meanings remains. Accordingly, we construe the function of “system memory means” to be “storing parameters of the entity administering the invention for allocating trades between the incoming order or quotation and the previously received orders and quotations.” . . . We often assume different terms convey different meanings. The ’707 Patent does not teach otherwise in this instance. Accordingly, we construe “matching” as “identifying a counter-part order or quotation for an incoming order or quotation.” We hold that “matching” is a process that is distinct from “allocating.”

Although the district court did not err in holding that the ’707 Patent disavowed all floor-based exchange systems, it did err in determining that “automated exchange” describes a “method.” The district court construed “automated exchange” to mean “a method for executing trades of financial instruments that is fully computerized, such that it does not include matching or allocating through use of open outcry.” It also construed “exchange” as “a method for executing trades of financial instruments,” and construed “automated” to mean “fully computerized, such that its protocol does not include matching or allocating through use of open-outcry in order to execute trades.” The district court further explained that “a method that effects trades of financial instruments by automatically matching and allocating but also entails ‘oral communications between market professionals at a central location in open view of other market professionals’ is not fully computerized and therefore not ‘automated.’” This construction was based largely on the district court’s holding that the ’707 Patent disavowed traditional floor-based trading.

We have recognized that “[w]here the specification makes clear that the invention does not include a particular feature, that feature is deemed to be outside the reach of the claims of the patent, even though the language of the claims, read without reference to the specification, might be considered broad enough to encompass the feature in question.” Here, we agree with the district court and find that the ’707 Patent disavows traditional floor-based trading.

The Patent describes a system of trading options contracts in these floor-based environments as an “open-outcry” system because trading takes place through oral communications between market professionals at a central location in open view of other market professionals. The Patent characterizes the open-outcry system as “antiquated,” but it explains that because of efforts to preserve the traditional system, the transition to and use of computer-based technology on options exchanges has been slow. While floor-based exchanges employ some level of automation in the execution and allocation of orders, the specification recites that such exchanges have “inherent inadequacies” and “deficiencies [that] make it difficult to assess market depth and liquidity [which] ultimately impact the quality of the prices customers receive for their order.” The Patent further discloses that the disjointed nature of the various manual, and occasionally automated, systems used in floor-based exchanges cultivate these deficiencies, and again, make it difficult to assess the true market depth and liquidity ultimately impacting the quality of prices. The Patent suggests that the increasing volume of trades-in-options contracts, as well as the speed at which price information of underlying stocks is transmitted to consumers, have increased the demand for faster execution of trades. The Patent proposes an automated exchange for the express purpose of remedying these perceived deficiencies.

The ’707 Patent thus disavows the traditional open-outcry or floor-based trading systems. There is no other way to interpret the listing in the specification of the many reasons why manual and partially automated exchanges cannot sustain the growing demands of the market. Indeed, the specification goes well beyond expressing the patentee’s preference for a fully automated exchange over a manual or a partially automated one, and its repeated derogatory statements about the latter reasonably may be viewed as a disavowal of that subject matter from the scope of the Patent’s claims. . . . In this instance, proper claim construction may not vary from the Patent’s own description of “automated exchange” as being a system. Accordingly, while we affirm the district court’s determination that the “automated exchange” disavowed the open-outcry system, we cannot adopt the district court’s construction of “automated exchange” as a “method.” Instead, we construe “automated exchange” to mean “a system for executing trades of financial instruments that is fully computerized, such that it does not include matching or allocating through the use of open-outcry.”

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung (lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding Baker Hostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

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Otsuka Pharm. Co. v. Sandoz, Inc.

[W]hen analyzing obviousness-type double patenting in cases involving claimed chemical compounds, the issue is not whether a skilled artisan would have selected the earlier compound as a lead compound [because] the analysis must necessarily focus on the earlier claimed compound over which double patenting has been alleged, lead compound or not.

On May 7, 2012, in Otsuka Pharm. Co. v. Sandoz, Inc., the U.S. Court of Appeals for the Federal Circuit (Lourie,* Moore, Reyna) affirmed the district court judgment that U.S. Patent 5,006,528, which related to 7-{4-[4-(2,3-dichlorophenyl)-1-piperazinyl]-butoxy}-3,4-dihydrocarbostyril (aripiprazole) for the treatment of schizophrenia and bipolar disorder that Otsuka markets under the brand name Abilify®, was not invalid under 35 U.S.C. § 103 and under the doctrine of nonstatutory double patenting. The Federal Circuit stated:

In cases involving the patentability of a new chemical compound, prima facie obviousness under the third Graham factor generally turns on the structural similarities and differences between the claimed compound and the prior art compounds. The Defendants assert that the district court erred by employing a “lead compound” analysis as part of its determination under the third Graham factor. We reject that contention. New compounds may be created from theoretical considerations rather than from attempts to improve on prior art compounds. In this case, however, the parties’ arguments focus on selecting and modifying particular prior art compounds, designated as lead compounds. [W]hether a new chemical compound would have been prima facie obvious over particular prior art compounds ordinarily follows a two-part inquiry. First, the court determines whether a chemist of ordinary skill would have selected the asserted prior art compounds as lead compounds, or starting points, for further development efforts. A lead compound [is] “a compound in the prior art that would be most promising to modify in order to improve upon its . . . activity and obtain a compound with better activity.” As such, a lead compound is “a natural choice for further development efforts.” . . .

In determining whether a chemist would have selected a prior art compound as a lead, the analysis is guided by evidence of the compound’s pertinent properties. Such properties may include positive attributes such as activity and potency; adverse effects such as toxicity, and other relevant characteristics in evidence. Absent a reason or motivation based on such prior art evidence, mere structural similarity between a prior art compound and the claimed compound does not inform the lead compound selection. Were it otherwise, the analysis would impermissibly rely upon ex-post reasoning.

The second inquiry in the analysis is whether the prior art would have supplied one of ordinary skill in the art with a reason or motivation to modify a lead compound to make the claimed compound with a reasonable expectation of success. In keeping with the flexible nature of the obviousness inquiry, the reason or motivation for modifying a lead compound may come from any number of sources and need not necessarily be explicit in the prior art. Again, pertinent properties guide the analysis, for “it is the possession of promising useful properties in a lead compound that motivates a chemist to make structurally similar compounds.” “[I]t is sufficient to show that the claimed and prior art compounds possess a ‘sufficiently close relationship . . . to create an expectation,’ in light of the totality of the prior art, that the new compound will have ‘similar properties’ to the old.”

In the present case, in assessing whether aripiprazole would have been prima facie obvious in view of the prior art compounds asserted by the Defendants, the district court summarized the applicable law as requiring inquiry into the hypothetical person of skill in the art’s identification of a lead compound, structural differences between the proposed lead compound and the claimed invention, motivation or teachings in the prior art to make the necessary changes to arrive at the claimed invention, and whether the person of skill in the art would have a reasonable expectation of success in making such structural changes.

We discern no error in the district court’s recitation of the applicable law. Moreover, the court did not require, as the Defendants allege, that only “the most obvious choice” could serve as the lead. Rather, the district court concluded that two compounds—clozapine and risperidone—would have been considered viable lead compounds. These were the only marketed antipsychotic compounds at the time the present inventors began their work. They were the natural and obvious lead compounds whose structures one would have considered to modify to obtain improved antipsychotic compounds. At the relevant time, there were no carbostyril compounds that were marketed as antipsychotics or were publicly known to have potent antipsychotic activity with minimal side effects. Carbostyrils were thus not plausible lead compounds, except in retrospect, and the district court did not clearly err in concluding that they were not. [T]he district court’s careful analysis exposed the Defendants’ obviousness case for what it was—a poster child for impermissible hindsight reasoning. Because we agree with the district court that the Defendants failed to prove that claim 12 of the ’528 patent would have been prima facie obvious over the asserted prior art compounds, we need not address the court’s findings regarding objective evidence of nonobviousness. . . .

We now turn to the Defendants’ contention that the district court erred by failing to hold the asserted claims of the ’528 patent invalid for nonstatutory obviousness-type double patenting in view of the unsubstituted butoxy compound of claim 13 of the ’416 patent. An inventor may obtain “a patent” for an invention pursuant to 35 U.S.C. § 101; the statute thus “permits only one patent to be obtained for a single invention.” The double patenting doctrine “precludes one person from obtaining more than one valid patent for either (a) the ‘same invention,’ or (b) an ‘obvious’ modification of the same invention.” Nonstatutory double patenting is a judicially created doctrine grounded in public policy that “prevent[s] the extension of the term of a patent, even where an express statutory basis for the rejection is missing, by prohibiting the issuance of the claims in a second patent not patentably distinct from the claims of the first patent.”

As an initial matter, the parties disagree over the legal test for nonstatutory double patenting. Otsuka contends that there is no difference between obviousness under § 103 and obviousness-type double patenting. That is not entirely correct. We have noted that “a double patenting of the obviousness type rejection is analogous to [a failure to meet] the nonobviousness requirement of 35 U.S.C. § 103.” Important differences remain, however. The patent principally underlying the double patenting rejection need not be prior art. Moreover, when analyzing obviousness-type double patenting in cases involving claimed chemical compounds, the issue is not whether a skilled artisan would have selected the earlier compound as a lead compound. That is so because the analysis must necessarily focus on the earlier claimed compound over which double patenting has been alleged, lead compound or not.

The Defendants assert that, unlike an analysis under § 103, the test for obviousness-type double patenting never asks whether the prior art would have supplied a motivation to modify the earlier claimed compound. That is also incorrect. Unless the earlier claim anticipates the later claim under § 102, the question whether the two claimed compounds are “patentably distinct” implicates the question of obviousness under § 103, which in the chemical context requires identifying some reason that would have led a chemist to modify the earlier compound to make the later compound with a reasonable expectation of success. . . .

We agree with the district court that the asserted claims are not invalid for nonstatutory double patenting. [A]ripiprazole differs structurally from the unsubstituted butoxy of claim 13 of the ’416 patent. Aripiprazole has chlorine substituents at the 2 and 3 positions of its phenyl ring, whereas the unsubstituted butoxy has hydrogens at those positions—i.e., it is “unsubstituted.” In its double-patenting analysis, the court determined “that the prior art, including the Nakagawa Declaration, . . . did not teach the person of ordinary skill in the art to pursue a 2,3-dichloro substitution on the phenyl ring to achieve antipsychotic activity.” The evidence before the district court supports this finding. For example, the court credited evidence demonstrating the high degree of unpredictability in antipsychotic drug discovery as of the priority date. Experts testified that the discovery of new antipsychotic drugs in the 1980s was “very unpredictable,” and that antipsychotic research at that time was “notoriously unsuccessful.”

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung (lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding Baker Hostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

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In re Montgomery

[For purposes of anticipation under 35 U.S.C. § 102(b),] a result is only inherent if it inevitably flows from the prior art disclosure.

On May 8, 2012, in In re Montgomery, the U.S. Court of Appeals for the Federal Circuit (Lourie, Dyk,* Prost) affirmed the USPTO Board of Patent Appeals and Interferences decision upholding the patent examiner's rejection of U.S. patent application Serial No. 11/118,824, which related to renin-angiotensin system (RAS) inhibitors, as anticipated. The Federal Circuit stated:

"Determining whether claims are anticipated involves a two-step analysis. The first step involves construction of the claims of the patent at issue. Claim construction is a question of law reviewed de novo." "During examination, 'claims . . . are to be given their broadest reasonable interpretation consistent with the specification, and . . . claim language should be read in light of the specification as it would be interpreted by one of ordinary skill in the art.'" The broadest reasonable interpretation, like claim construction in the infringement context, is a question of law that we review de novo. "The second step [of an anticipation analysis] involves comparing the claims to the prior art. Anticipation is a question of fact reviewed for substantial evidence." A prior art reference anticipates a patent claim under 35 U.S.C. § 102(b) if it discloses every claim limitation. A reference may anticipate inherently if a claim limitation that is not expressly disclosed "is necessarily present, or inherent, in the single anticipating reference." The inherent result must inevitably result from the disclosed steps; "[i]nherency . . . may not be established by probabilities or possibilities."

The contested elements of claim 45 are the administration of ramipril (1) "to a patient diagnosed as in need of [stroke] treatment or prevention," (2) where such administration is "for the treatment or prevention of stroke or its recurrence." We thus determine de novo the broadest reasonable interpretation of each of these requirements. Because we conclude that HOPE [prior art reference] discloses both requirements, we need not address Montgomery's arguments concerning [the other prior art references,] AIRE, Frampton, and Gohlke.

We first examine the requirement that the administration be "to a patient diagnosed as in need of [stroke] treatment or prevention." Montgomery does not contest that the patients in HOPE satisfy this claim requirement. HOPE explicitly disclosed the administration of ramipril to patients "at high risk for cardiovascular events such as myocardial infarction and stroke," and the eligibility criteria included patients with previous stroke. We see no error in the Board's uncontested conclusion that HOPE discloses the administration of ramipril to patients diagnosed as in need of stroke treatment or prevention.

We next turn to the preamble requirement that the method be "for the treatment or prevention of stroke or its recurrence." The Board did not rule directly on whether the broadest reasonable interpretation of the claims required that the treatment or prevention be effective or whether it was sufficient that the administration be designed to treat or prevent stroke. But in resting the decision on inherency, the Board appeared to assume that the patent included an efficacy requirement. We are skeptical that a proper interpretation of the claims would include an efficacy requirement. . . . We need not resolve this question, however, for we agree with the Board that even if the claim includes an efficacy requirement, efficacy is inherent in carrying out the claim steps. We agree with the dissent that a result is only inherent if it inevitably flows from the prior art disclosure, but there is no question here that treating stroke-prone patients with ramipril does in fact inevitably treat or prevent stroke. And Montgomery does not dispute that ramipril is in fact effective at preventing or treating stroke, which is the entire premise of his patent. We have repeatedly held that "[n]ewly discovered results of known processes directed to the same purpose are not patentable because such results are inherent . . ." HOPE discloses a protocol for the administration of ramipril to stroke-prone patients, and administering ramipril to stroke-prone patients inevitably treats or prevents stroke. Thus, HOPE inherently anticipates the claims at issue.

However, Montgomery urges that inherent anticipation requires that the claimed method have been actually performed, and that HOPE does not disclose actual performance of the method. This is not correct; HOPE reveals the actual administration of ramipril for treatment or prevention of stroke. In any event, even if HOPE merely proposed the administration of ramipril for treatment or prevention of stroke (without actually doing so), it would still anticipate.

To be sure, as the dissent points out, "[a]n invitation to investigate is not an inherent disclosure." But HOPE's protocol for the administration of ramipril is far from an abstract theory -- it is an advanced stage of testing designed to secure regulatory approval. HOPE was designed to obtain data for submission to regulatory agencies on the effect of ramipril on cardiovascular diseases including stroke based on substantial evidence that ramipril improved cardiovascular health, including by treating stroke risk factors such as hypertension. It is well established that a patent may be secured, and typically is secured, before the conclusion of clinical trials. In all relevant respects, HOPE is identical to the patent itself, which does not disclose actual results from the administration of ramipril for these purposes. Montgomery conceded at oral argument that HOPE's authors could have obtained the patent claims at issue based on the HOPE reference so it cannot be that this reference fails to anticipate. We thus affirm the rejection of claims 42, 43 and 45 of the '824 application as anticipated by HOPE. Because we affirm the Board's decision on this ground, we need not reach the issue of whether the claims are anticipated by the other prior art considered by the Board.

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung (lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding Baker Hostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

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Leader Techs., Inc. v. Facebook, Inc.

Whether a patent is invalid for a public use or sale [depends upon] "whether the subject of the barring activity met each of the limitations of the claim, and thus was an embodiment of the claimed invention."

On May 8, 2012, in Leader Techs., Inc. v. Facebook, Inc., the U.S. Court of Appeals for the Federal Circuit (Lourie,* Moore, Wallach) affirmed the district court's judgment entering the jury verdict that U.S. Patent 7,139,761, which related to software that allows users on a network to communicate and collaborate on a large scale, was invalid under 35 U.S.C. § 102(b). The Federal Circuit stated:

Under 35 U.S.C. § 102(b), a patent is invalid if "the invention was . . . in public use or on sale in this country" more than one year prior to the date the patent application is filed. "Whether a patent is invalid for a public use or sale is a question of law, reviewed de novo, based on underlying facts, reviewed for substantial evidence following a jury verdict." One of those underlying facts is "whether the subject of the barring activity met each of the limitations of the claim, and thus was an embodiment of the claimed invention." Because we presume that an issued patent is valid, 35 U.S.C. § 282, the party challenging the validity of a patent must prove by clear and convincing evidence that the product used or on sale prior to the critical date was embodied by the claimed invention.

In this case, Leader does not contest that a Leader2Leader® product was offered for sale and publicly used prior to December 10, 2002, the critical date. Nor, for the purposes of the on-sale bar, does Leader contest that the invention was "ready for patenting" prior to the critical date. Instead, Leader argues that Facebook failed to offer clear and convincing evidence that the version of Leader2Leader® offered for sale or used prior to December 10, 2002 fell within the scope of the asserted claims. Specifically, Leader argues that Facebook failed to offer any evidence, such as expert testimony, source code, or schematics, to prove when Leader incorporated the patented technology into the Leader2Leader product. Indeed, Leader argues that the only evidence at trial was testimony that showed that Leader did not use or offer for sale the invention until after the critical date. Leader asserts that even if the jury found that testimony incredible, incredible testimony is not affirmative evidence of its opposite, viz., that the invention was on sale or used prior to the critical date. Thus, argues Leader, Facebook failed as a matter of law to prove invalidity by clear and convincing evidence. In the alternative, Leader argues that the district court abused its discretion in denying its request for a new trial because the verdict of invalidity was against the great weight of the evidence. . . .

We agree with Facebook that legally sufficient evidence supported the jury's verdict that the version of Leader2Leader® demonstrated and offered for sale prior to the critical date was an embodiment of the asserted claims. Contrary to Leader's arguments, the record is not devoid of the minimum quantity of evidence to support the jury's verdict. First, Leader admitted in its interrogatory responses that Leader2Leader® powered by the Digital Leaderboard® engine "embodies" the asserted claims of the '761 patent. Leader argues that, by employing the present tense, its admissions were limited to only the instance of the Leader2Leader® powered by the Digital Leaderboard® engine that existed at the time Leader served its responses on Facebook. But Leader did not qualify its interrogatory responses in that manner. The responses did not specify any date ranges nor did they identify versions or builds of the software -- information that Leader appears to have tracked. Coupled with Leader's admission, the record contains legally sufficient evidence linking the pre-critical date software to the software that Leader admitted fell within the scope of the asserted claims. In its offer to Wright Patterson in January 2002, Leader offered for sale the exact software product that Leader admitted fell within the scope of the asserted claims -- the Digital Leaderboard® engine supplied under the Leader2Leader brand -- and described that software as "fully developed" and "operational." Like Leader's admissions, Leader did not identify a specific build or version of the software in the offer for sale. Moreover, in the offer, Leader depicted the fully developed system as powering a browser-accessible "Big Board" that allows analysts and agencies to collaborate and share information, a disclosure that matches the embodiments of the '761 patent in material respects. This description is consistent with Leader's other pre-critical date documents, which describe the software as facilitating the same type of user interaction described in the '761 patent's embodiments, such as document management, collaborative meetings and file sharing. Those documents also state that, by December 3, 2002, Leader had "flawless[ly]" demonstrated the software, which contained the company's "full suite of technology services," and had been "built."

In upholding the verdict, we recognize that as a general matter a computer scientist can easily modify and change software code and that two versions of the same software product may function differently. But, in this case, Leader fails to point to any contemporaneous evidence in the record that indicates that the Leader2Leader® powered by the Digital Leaderboard® engine that existed prior to the critical date was substantively different from the post-critical date software; indeed, the evidence points in the opposite direction. As for [the] testimony that Leader was constantly revising the software and just completed the final version right after the pre-critical date demonstrations and offers for sale, the jury was entitled to disbelieve such a transparently convenient assertion in light of all of the evidence before them. On appeal, we cannot reweigh the evidence or supplant the record. We are bound by the record developed below, viewed in the light most favorable to Facebook, and can only reverse the verdict if the record is critically deficient of the minimum quantity of evidence from which the jury might have reasonably rendered a verdict against Leader. Even if we may have reached a different verdict had we sat on the jury, it is not our role as an appellate court to overturn the jury's verdict when it was supported by substantial evidence.

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung (lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding Baker Hostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

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In re Youman

If the narrowing [of claim scope] is unrelated to the surrendered subject matter, it is irrelevant for the purposes of the [35 U.S.C. § 251] analysis even if it renders the reissue claim as a whole intermediate in scope relative to the patented and original claims.

On May 8, 2012, in In re Youman, the U.S. Court of Appeals for the Federal Circuit (Lourie, Schall, Prost*) vacated and remanded the USPTO Board of Patent Appeals and Interferences decision upholding the patent examiner's rejection of U.S. patent application Serial No. 09/313,532 (seeking reissue of U.S. Patent No. 5,629,733), which related to an electronic program schedule system for a television that allows the user to access and navigate television program information efficiently, under 35 U.S.C. § 251. The Federal Circuit stated:

[The reissue statute, 35 U.S.C. § 251,] allows a patentee to broaden claims in its original patent if the patentee can show "error without any deceptive intention." [T]he reissue statute requires a patentee to file for a broadening reissue patent within two years of the issuance of the patent. As a result, the public is on notice for two years following the issuance of a patent that the patent can be broadened to recapture matter "dedicated to the public" through error; after the two year period, the public can definitively rely on the scope of the patent claims. Additionally, 35 U.S.C. § 252 ensures that if the patentee succeeds in obtaining a broader reissue patent, the public interest is protected through intervening rights.

Congress limited reissue to instances where the patentee could demonstrate an "error without any deceptive intention." Because the reissue statute is "based on fundamental principles of equity and fairness," the "error" requirement is liberally construed. The most commonly asserted correctable error is the failure of the patentee's attorney to appreciate the full scope of the invention during prosecution of the original patent application. Yet, "not every event or circumstance that might be labeled 'error' is correctable by reissue." Against the remedial backdrop of the reissue statute, one such circumstance that does not satisfy the "error" requirement is embodied by the recapture rule. The recapture rule bars a patentee from recapturing subject matter, through reissue, that the patentee intentionally surrendered during the original prosecution in order to overcome prior art and obtain a valid patent. The rationale underlying the rule is that the cancellation or amendment of the original claim in order to overcome prior art is a deliberate action that necessarily excludes the inadvertence or mistake contemplated by the statute's error requirement.
To determine whether the applicants' reissue claims violate the recapture rule, we apply a three-step recapture rule analysis. Under the first step, we "determine whether and in what 'aspect' the reissue claims are broader than the patent claims." The parties do not contest that with regards to the selecting means, the Board correctly determined that the "changing" limitation in claim 24 ("the reissue claim") is broader than the "cycling" limitation of patented claim 1 of the '766 patent ("the patented claim"). This conclusion is confirmed by dependent reissue claim 25, which limits reissue claim 24 by calling for "changing from a first to second character comprising cycling through displayed alphanumeric characters."

Having agreed with the parties that the reissue claim is broader than the patented claim, step two requires us to "determine whether the broader aspects of the reissue claims relate to surrendered subject matter." Both parties answer this inquiry in the affirmative. Yet, they dispute what constitutes surrendered subject matter within the context of the recapture rule. . . . We agree with the Board that through their argument and amendment, the applicants' surrendered subject matter was any selecting means that was broader than the cycling limitation of the patented claim. If the reissue claims are broader relative to the patented claims in a manner related to the surrendered subject matter, we must "determine whether the surrendered subject matter has crept into the reissue claim." Unless the claims are materially narrowed in a way that avoids substantial or whole recapture of the surrendered subject matter, the surrendered subject matter has crept into the reissue claims and they are barred under the recapture rule. The Board failed in several respects to apply this third step of the recapture rule; thus, we must vacate and remand.

First, the Board considered any broadening of the patented claim via a modified limitation, regardless of how minimal, sufficient to invoke the recapture rule's bar. Specifically, the Board determined that the broadening from cycling to changing "essentially broadens patented claim 1 to an intermediate scope (i.e., narrower than original patent claim 1 before amendment, but broader than issued claim 1)." The Board then held that "[t]his broadening therefore constitutes an impermissible recapture of surrendered subject matter." In erring, the Board failed to distinguish between instances where an added limitation has been modified versus instances where an added limitation is eliminated in its entirety. [S]uch a distinction is critical to applying correctly step three of the recapture rule. [In this case,] the Board has already determined that the added limitation -- cycling -- has not been eliminated; rather, it has been broadened to changing. Such modification does not instantly implicate the recapture rule bar, as the Board held; rather, such a broadening modification must be evaluated to determine if it materially narrows relative to the original claim such that surrendered subject matter is not entirely or substantially recaptured.

The appellee argues that material narrowing should be determined relative to the patented claim, rather than the original claim. We disagree. Using the original claim as a frame of reference for determining whether the reissue claim materially narrows is consistent both with case law and the purposes underlying the reissue statute. By measuring material narrowing relative to the original claim, which was deliberately surrendered during the original prosecution, we are ensuring that the patentee is unable to recapture what it surrendered deliberately, but allowing room for error, as required by the reissue statute. [E]ven when narrowing a claim to overcome prior art, "[c]ertainly one might err without deceptive intention in adding a particular limitation where a less specific limitation regarding the same feature, . . . would have been sufficient to render the claims patentable over prior art." By contrast, if we use the patented claims, as the appellee urges, as a frame of reference and prevent any broadening relative to the patented claims, we would bar patentees from doing what they otherwise would be entitled to under the reissue statute -- broadening their claims within two years when such claims were overly narrowed during prosecution as a result of attorney error. This would frustrate the remedial nature of the reissue statute and contradict case law.

[A ceiling] for determining whether a modified limitation material narrows [is] any recapture of surrendered subject matter that was in the prior art of the original prosecution. The logic of such a ceiling flows from the concept of "error" under the reissue statute. When a patentee is narrowing its claim limitations due to prior art that would otherwise render the claims unpatentable, the patentee can only be doing so deliberately, without any possibility of error. Thus, if the patentee modifies the added limitation such that it is broader than the patented claim yet still materially narrows relative to the original claim, the recapture rule does not bar reissue. The Board's failure to distinguish this case from instances where the added limitation is deleted in its entirety and to conduct the proper analysis for a modified limitation is reason enough to vacate and remand.

If the modified limitation does not materially narrow (or, in other cases, the limitation is eliminated), the Board must still determine whether the reissued claims were materially narrowed in other respects so that the claims have not been enlarged, and hence avoid the recapture rule. While the Board attempted to conduct this analysis, it incorrectly evaluated whether other limitations added during reissue materially narrow based on whether those added limitations were directed to an "overlooked aspect" of the invention. Whereas the recapture rule applies when surrendered subject matter is being reclaimed, overlooked aspects by definition were never claimed and thus never surrendered. "[O]verlooked aspects" is a separate inquiry under reissue that is independent of whether or not the recapture rule applies. Without conducting any analysis beyond determining that the limitations the applicants identified as materially narrowing were not overlooked aspects, the Board did not correctly apply step three.

Properly applied, the material narrowing must relate to the surrendered subject matter to prevent the recapture rule from applying. If the narrowing is unrelated to the surrendered subject matter, it is irrelevant for the purposes of the analysis even if it renders the reissue claim as a whole intermediate in scope relative to the patented and original claims. If the narrowing is related to the surrendered subject matter, it must render the reissue claim narrower than it is broader in a manner pertinent to the subject matter surrendered during prosecution in order to avoid the recapture rule.

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung (lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding Baker Hostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

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