USPTO to Publish Final Rules for Next Phase of AIA Implementation

Tomorrow, the USPTO will conclude publication of all final rules and practice guides implementing the provisions of the Leahy-Smith America Invents Act which become effective on September 16, 2012.  The final  rule package (which also includes Final Rules published on August 6, 2012 and July 31, 20102) consist of:

In addition, the USPTO will also publish tomorrow its Office Patent Trial Practice Guide covering new procedures for inter partes review, post grant review and business method patent review proceedings commencing after September 12, 2102 as well as derivation proceedings commencing after March 16, 2013.

In re Bose: Federal Circuit Overturns Medinol Trademark Fraud Doctrine

In a widely anticipated appeal, In re Bose Corp., No. 2008-1448, slip op. (Fed Cir. Aug 31, 2009), the Court of Appeals for the Federal Circuit overturned the Trademark Trial and Appeal Board’s holding in Medinol Ltd v. NeuroVasx Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003) regarding fraudulent procurement of Federal trademark registrations.

Under Medinol and its progeny, a trademark registration or renewal could be canceled as fraudulent by the TTAB if it contained a material representation that the applicant knew, or should have known, was false at the time it was made.  However, as the Federal Circuit points out in its 12-page opinion strongly disapproving of the Medinol doctrine:

By equating “should have known” of the falsity with a subjective intent, the Board erroneously lowered the fraud standard to a simple negligence standard.

We have previously stated that “[m]ere negligence is not sufficient to infer fraud or dishonesty.”  We even held that “a finding that particular conduct amounts to ‘gross negligence’ does not of itself justify an inference of intent to deceive.”  The principle that the standard for finding intent to deceive is stricter than the standard for negligence or gross negligence, even though announced in patent inequitable conduct cases, applies with equal force to trademark fraud cases. After all, an allegation of fraud in a trademark case, as in any other case, should not be taken lightly. Thus, we hold that a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO.

Bose, slip o. at 6-7 (internal citations omitted, emphasis added)

The Court went on to further hold that the standard of proof required to demonstrate fraud is “clear and convincing evidence.”  The Court also held that where a misrepresentation is made in connection with an allegation of use in a trademark application or registration, where the misrepresentation is proven without a showing of fraud, the proper remedy is not to cancel the entire registration but rather to restrict it to those goods and services where use in commerce can be actually demonstrated.

The Court did not indicate whether in cases where fraud is demonstrated, cancellation of the entire registration is proper even where the material misrepresentation concerned only some goods or services.  The Court also left open the door for an exception to its holding in the event that “reckless disregard for the truth”, instead of scienter, is proven against the applicant.  Bose, slip op. at 9, fn. 2.

Roblor v. GPS Inds., et al. – Internet Personal Jurisdiction in Florida

Magistrate Torres recently issued a Report and Recommendation in a Southern District patent case dealing with personal jurisdiction exclusively premised on the Defendant’s website.  The Magistrate utilized, with reservations, the widely adopted Zippo Mfg. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa. 1997) “sliding scale” test to determine that the defendant’s website was “interactive” where it merely provided links to resellers and distributors of accused products but allowed users to create an account to download software for use with the accused products.

The Court acknowledged that the Federal Circuit has not yet addressed the Zippo rationale but that several other circuits (3rd, 4th, 5th , 6th, 8th ,and 9th ) had adopted it to some extent.  The Court also acknowledged that the 11th Circuit was split on the adoption of Zippo and joined in the criticism of Zippo, cautioning against over-reliance on the level of website interactivity in deciding jurisdictional question.  Ultimately, the Magistrate refused to hold the outcome of the Zippo analysis dispositive, but found through a more traditional analysis that there were insufficient contacts between the Defendant and Florida and recommended granting the motion to dismiss.

Interestingly, the court referenced a click-wrap agreement that contained exclusive venue/jurisdiction provisions in its reasoning.  The Court held that although the agreement could not bind the Plaintiff, it “nevertheless shows Intelligolf’s intention not to avail itself of a jurisdiction based on the use of the accounts other than in the state of California.”

In sum, this Report and Recommendation presents an excellent exposition of the status of Zippo and generally of website jurisdiction in Florida Federal courts.

By the way, congratulations to Jeffrey Kamenetsky who represents the prevailing Defendant.

In re Bilski strikes!

In re Bilski has claimed its first victim (to my knowledge) in district court.  In Cybersource Corporation v. Retail Decisions, Inc. No. C 04-03268 MHP (N.D. Cal. March 26, 2009), Plaintiff’s patent was declared invalid as not drawn to patent-eligible subject matter under 35 U.S.C. §101.  The patent-in-suit was for a “method and system for detecting fraud in a credit card transaction between a consumer and a merchant over the internet.”

Using the rationale of the In re Bilski decision (545 F.3d 943 (Fed. Cir. Oct. 30, 2008)(en banc)) the court found, among other things, that:

  • The “manipulation” of a credit card number (or other type of account number) does not meet the “transformation” requirement re-asserted in Bilski.
  • An IP address is not a “visual depiction” of a computer in the sense required by Bilski and thus its “manipulation” also does not meet the “transformation” requirement.
  • The recitation of “over the Internet” and “one or more processors” in a claim does not amount to limiting a claim to a “specific machine” as required by Bilski

Perhaps of most interest to patent litigators, the Court also held that “[T]here is at present no legal doctrine creating a special ‘Beauregard claim’ that would exempt [claims] from the analysis of Bilski.”  A “Beauregard claim” is a claim drawn to “computer readable media” containing software, rather than the method steps implemented by the software itself.  There has been much discussion as to whether a Beauregard claim, which would be considered an article of manufacture rather than a pure method claim, falls outside of the purview of Bilski.  That question, it appears, has been answered with a resounding “no”, at least in the Northern District of California.

The opinion in this case comes from judge Marilyn H. Patel who is no lightweight (you may remember her as the judge in the RIAA v. Napster case) so this opinion will likely be persuasive outside of the 9th Circuit.  Judge Patel expressed what many of us have wondered about the future of business method patents in the following quote:

In analyzing Bilski, one is led to ponder whether the end has arrived for business method patents, whose numbers swelled following the decision in State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998). Without expressly overruling State Street, the Bilski majority struck down its underpinnings. This caused one dissenter, Judge Newman, to write that State Street “is left hanging,” while another dissenter, Judge Meyer, registered “an emphatic ‘yes’” to rejecting State Street, and a third, Judge Rader, queried whether the court was willing to decide that the entire field of business patents is “undeserving of incentives for invention.” 545 F.3d at 995, 998, 1014. Although the majority declined say so explicitly, Bilski’s holding suggests a perilous future for most business method patents.