Design Patent Practice UPDATE – Use Caution in Con’s

In prosecuting design patent applications, it is common practice to use dashed lines to depict a feature of the design that is illustrated for context or environment, but is not considered to be part of the claimed design.  In continuation practice, it has also been common practice to broaden the originally claimed design by amending the drawings to change solid lines in the original design – which show what is claimed – to dashed lines depicting unclaimed boundary lines.  This later practice was recently considered, and significantly limited, by the Federal Circuit in In re Owens, 2012-1261, Fed. Cir., March 26, 2013 (“Owens”).  In Owens, the Federal Circuit affirmed the PTO’s rejection of Owens’ claimed design since the parent was deemed to lack adequate written description for the continuation (so he could not claim the benefit of the earlier filing date) and Owen had sold product more than one year prior to the filing date of the continuation.  As it turns out, the problem Owens had was not with what he took out of the original claimed design, but what he put in—a single dashed line intended to indicate that Owens was claiming part, but not all, of a surface from the original design.

Owens’ original application claimed the design of a mouthwash bottle design, as shown below.  This application issued as D531,515.  In an effort to get broader protection, Owens filed a continuation application in which he dashed out all lines except those defining four triangular shoulder portions and two small crescent portions bounded by the shoulder portions.  Owens also wanted to claim a portion or the surface bounded by the triangular shoulders and the crescent portion.  To depict where the portion of the surface that was being claimed ended, Owens added a dashed line on the upper portion of the surface and removed the shading lines below the dashed line.  Significantly, there was no existing contour line where this new dashed line was being added.  It is this new dashed line, that all parties agree defines an unclaimed boundary, that is the center of the controversy in this case.

 

The patent examiner concluded that the newly added dashed line defined a “new” trapezoidal surface that was not previously claimed and this newly claimed feature meant that Owens could not claim the benefit of the original application’s filing date.  It was the examiner’s view that Owens was not in possession of the claimed subject matter that only included a portion of the disclosed surface, at the time of the original filing.  (In other words, there was insufficient written description under 35 U.S.C. 112 para. 1 in the original application for the new claim.)  Since Owens had sold bottles (of the original design) more than 1 year prior to the filing date of the continuation application, the examiner rejected the application under 35 U.S. C.  103 as being obvious over Owens’ own prior art sales.  The PTO board of appeals affirmed.

In affirming the PTO’s rejection, the Federal Circuit noted that the written description requirement for design and utility patents is the same.  The court further noted that “when the issue of priority arises under 120 in the context of design patents prosecution, one looks to the drawings of the earlier application for disclosure of the subject matter claimed in the later application.” [Opinion at 7, citations omitted]    To distinguish over In re Daniels, 144 F. 3d 1455 (Fed. Cir. 1998) the court arrived at the somewhat strange result that removing an element in its entirety (as was the case in Daniels) is permissible whereas removing only a portion of the element (as Owens attempted to do) runs afoul of the written description requirement.  Although the question was not before the court, it seems that had Owens simply dashed out the original contour lines and not added the dashed line dividing the original surface (which would have made the claim even broader), the panel, following In re Daniels, would have been inclined to accept that as a proper amendment resulting in a claim that was supported by the original application. 

Owens will likely be significant in shaping future design patent litigation and prosecution.  A substantial number of design patents have issued from continuation applications in which the applicant broadened the original claim by adding dashed lines to define part of a previously claimed feature.  Under Owens, the priority date of these patents, and the underlying validity of the patent claim, will be open to new challenges.  During prosecution, care must be taken when preparing continuation applications.  Going forward, a prudent course may be to file the original design application with figures depicting a number of embodiments of varying scope ranging from the complete design to individual features that may be novel, non-obvious and commercially important.  This strategy will invite a restriction requirement from the PTO and divisional practice, but it will be far easier to demonstrate that the original application fully supports the later filed cases and avoid a later problem with written description.

More on the SHIELD ACT

In my post last week, I provided some of my views on the recently proposed SHIELD Act.

For some additional and differing thoughts on this topic, here is a recent article written by one of my partners, Ken Levitt, also discussing (and generally supporting) this proposed legislation.

The SHIELD Act - Is creating “second class citizenship” for certain patent owners the answer to the “troll problem”?

Rep. Peter DeFazio recently introduced a bill to the House, H.R. 845, cited at the “Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013,” or by its cooler, short-hand name, the SHIELD Act.  The SHIELD Act has a noble purpose.  After all, who can argue with the proposition that innovators deserve saving from egregious legal disputes?  Despite the noble purpose, however, it is reasonable to question whether the method being employed by this bill – singling out a class of patent owners for disparate treatment by the courts – is the right way to solve the “problem.”  Let’s explore.

First, let’s consider what I perceive to be the real problem.  There has been a growing trend over the last decade for third parties to acquire patent rights as an investment vehicle and assert those rights to obtain a return on their investment.  Unfortunately, in many cases, the assertion is utterly baseless, yet respectable companies with a need to make reasonable business decisions are compelled to pay to settle these cases because it is far less expensive to pay than it is to fight and win.  This is certainly a problem:  bad actors bringing frivolous patent suits against good companies with the goal of extracting a settlement from those good companies based on the rational business judgment that it is far less expensive to settle the frivolous suit rather than pay much larger legal fees to prove non-infringement and invalidity.  No one can reasonably defend this type of abusive conduct and any legislation that could effectively eradicate this bad behavior, without prejudicing patent owners that did not engage in such egregious conduct, would be a tremendous benefit.  The question is, does the SHIELD Act acomplish this difficult goal?

The SHIELD Act has at its core a loser-pays provision that will require some patent owners (hint – NPE’s) to “post a bond in an amount determined by the court to cover the recovery of full costs [which include “reasonable attorney’s fees”].  If the patent owner does not prevail, on both infringement and validity,  “the Court shall award the recovery of full costs to any prevailing party asserting invalidity or noninfringement…upon the entry of a final judgment if the court determines that the adverse party did not meet at least one of the conditions described in subsection (d),” which defines the special class of patent owners subject to this Act.

Looking at subsection (d), the act applies to all patent owners, except those that fit into an enumerated exception.  These exceptions serve define who is a “good” patent owner who is outside the scope of the act.  The exceptions in subsection (d) include (1) the “original inventor” or “original assignee” at the time of patent issuance, (2) a party that can demonstrate “substantial investment…in the exploitation of the patent through production or sale of an item covered by the patent,” or (3) “University or Technology Transfer Organization[s]."  When you take out these exceptions, the SHIELD Act applies to entities that acquire the patent from the original owner and do not currently practice the invention.  This second-class of patent owners would be required to post a bond to cover the defendant’s litigation costs – typically in the 1-3 Million dollar range for a “simple” patent case with less than $25 Million in dispute – and risk forfeiting this amount if they don’t win at trial.  It is important to note, that the fees are not paid as a result of baseless litigation or misconduct.  It is simply because the patent owner does not prevail.

Even though I often represent corporate defendants accused of patent infringement by non-practicing patent owners, I am hesitant to define the “ NPE problem” more broadly to include all patent owners who don’t practice the patented invention but who have a reasonable and good faith basis to assert infringement. It is certainly a strategic concern for defendants that patent litigation against a non-practicing entity is the worst form of “assymetric warfare” with no upside for the defendant and little downside for the patent owner. It is also a practical business concern that once a defendant is named in a patent suit it is already a “loser” in that it must divert resources to address the suit, regardless of the merits. But, these concerns are not unique to patent litigation.   A patent is simply a bundle of rights, and those rights shouldn’t depend on the nature of the patent owner.   After all, even a landowner that is a complete jerk still has the right to enforce his no tresspassing signs and keep people off of his property.

The exceptions in the Act are intended to isolate “patent trolls” but will not be so limited.  For example, what happens if GOOD COMPANY assigns its patents to its own patent holding entity for tax or management purposes, e.g., GOOD COMPANY HOLDING LLC, (which is not uncommon), and it does not make a product within the scope of one of its patents but its competitor does with a directly competing product.   If GOOD COMPANY wants to bring suit to stop the infringement or secure a royalty from COMPETITOR, it would be subject to the SHIELD Act.  Lets go one step further and assume that COMPETITOR brought the first action and GOOD COMPANY asserted that same patent as a defensive counter-claim.  Same result, GOOD COMPANY is subject to the Act and may need to post a substantial bond in order to maintain its counterclaims.  What about an “original inventor” that wants to take advantage of the benefits of incorporation and assigns her rights to her company?  That small company formed by the “original inventor” is now subject to the SHIELD Act and must find a way to post a bond for several million dollars before bringing suit, regardless of how meritorious (or not) the suit may be.  It is not too difficult to think of more examples of how this Act may have unintended, or at least undesirable, consequences for many patent owners that are not "bad actors."

The SHIELD Act has a noble purpose in reducing the number of baseless patent infringement suits, but it seems to be punishing the wrong behavior.  The “problem,” as identified by the name of the Act, is “Egregious Legal Disputes.”  This is the conduct that patent reform needs to address rather than discriminating against a class of patent ownership that cannot be properly tailored to truly solve the “problem” without significantly impairing the value of all patents.  The bench, the bar and Congress each have a responsibility to keep looking at ways to curb litigation abuse and reduce litigation costs.  I applaud Congressman DeFazio’s efforts to curb litigation abuse, but the SHIELD Act, as it currently stands, does not seem to be the answer to the “problem.”

The opinions expressed above are ONLY mine and should not be attributed to Dorsey & Whitney, its clients, or anyone else. (This is always the case, but worth mentioning again in connection with this posting since reasonable minds can certainly differ on this topic.)