September 2011

David Kappos’ View on Patent Reform

September 28, 2011, by Mandour & Associates, APC

San Diego – Last Friday, David Kappos, the Director of the USPTO, weighed in with his thoughts on the passage of patent reform with Lisa Murphy on Bloomberg TV’s “Fast Forward.”

<strong>America Invents Act’s Effect on Current Backlog at the USPTO</strong>

According to Mr. Kappos, the current backlog at the USPTO is, on average, 33 months. Kappos recognized that the backlog is a huge problem at the PTO and stated that his goal is to reduce the pendency period to 20 months with the passage of the AIA. He explained that “<em>The law does several really important things. One, it simplifies our patent system to enable us to examine patent applications more effectively, more efficiently and therefore more quickly. Second thing the law does is it gives us the ability at the USPTO, for the very first time, to set our own fees, to set them to reflect the costs of the services that we perform and over time therefore to collect enough money in fees so that we can hire the additional examiners we need in order to work our way quickly through that backlog</em>.”

Mr. Kappos also revealed that, since the passage of the AIA, the USPTO would like to bring in “around 1,500 examiners and possibly up to 2,000 new examiners in the next year.” This is a substantial addition of new examiners considering that the addition would be on a base of about 7,000 examiners. Additionally, with the new funds, the USPTO may be able to restart programs that were indefinitely halted earlier this year due to funding cuts. One such program was its plan to open a satellite office in Detroit and potentially more satellite offices, pending the success of the Detroit office.

<strong>America Invents Act’s Effect on Job Creation</strong>

Proponents of patent reform have said that the reform would create 200,000 new jobs. The interviewer was skeptical of this number and couldn’t quite see the connection between patent reform and 200,000 jobs. When asked about his view, Mr. Kappos suggested that the figure was on the low side.

Mr. Kappos stated “<em>Having a strong patent system is very highly related to job creation. I’ve talked to CEOs of small companies all the time who tell me that it’s when they get their patents that they are able to go out and get the financing they need, start up a factory or a manufacturing line, and hire the employees they need. And that story is repeated thousands and thousands of times across the American economy every year. And so if you add all the opportunities up that are locked in our backlog of still around 675,000 unexamined applications, there are undoubtedly many thousands of opportunities to create new companies. Each one of those companies spawning many jobs. So frankly, I think there are many more than 200,000 jobs locked up in this agency over time</em>.”

It is easy to be skeptical of the 200,000-job figure, but after listening to Mr. Kappos and seeing his confidence in the reform, perhaps he is right. At least we know that the PTO itself will try to contribute 1,500 – 2,000 jobs to that figure.

You can see the entire interview <a href=”http://www.bloomberg.com/video/76013282/”>here</a>.

Patent Exhaustion Not Applicable in Second-Generation Seed Case

September 28, 2011, by Mandour & Associates, APC

San Diego – In a controversial decision, the Federal Circuit recently upheld a District Court ruling in favor of Monsanto in the patent infringement case Monsanto Company v. Bowman. Monsanto brought an action for patent infringement against Indiana farmer Vernon Bowman after learning that he had purchased second generation soybean seeds of Monsanto’s “Roundup Ready” line from a grain elevator and replanted them.
Monsanto holds a patent for soybean seeds resistant to the herbicide Roundup, which Monsanto also manufactures. Once purchased from Monsanto, these seeds may be planted by farmers. However the second generation seeds produced by the initial crop may not be replanted. Instead, a new set of seeds must be purchased from patent holder Monsanto.

The user-agreement does state that farmers are able to sell the second generation seeds to grain elevators for use as commodity seeds, which are often used as animal feed. However, the user agreement is silent as to whether commodity seeds purchased from a third party could be replanted.

In this case, Bowman purchased a large number of commodity seeds and was able to identify and replant the Roundup Ready second generation seeds from the others. Upon discovering this, Monsanto pursued an action in the Southern District of Indiana against Bowman for patent infringement. Monsanto argued that by using the second generation seeds of their patented seed line, Bowman had infringed on their patent.
Bowman, on the other hand, argued that the patent had been exhausted. Patent exhaustion occurs when a patent holder sells or licenses the patented component which is then subsequently sold, without restriction, to others. Since Bowman purchased the seeds legally from another legal purchaser, he argued that Monsanto’s patent rights had been exhausted. Bowman argued that the unrestricted sale by the grain elevator to him exhausted Monsanto’s rights in the second generation seeds, leaving him free to plant them.

The court rejected this argument holding that the patent rights had not been exhausted. As a patent holder, Monsanto has the ability to prevent others from using, making, or selling its patented material. By planting the second generation seeds, Bowman was committing patent infringement by using the offspring of Monsanto’s patent in an unauthorized manner.

Critics of the decision noted that neither Monsanto nor Bowman created the second generation seeds directly. Rather, Monsanto sold first generation seeds that grew into plants, creating the second generation seeds. One such critic stated that, “Monsanto needs to sue its own plants for violating Monsanto’s patents, not the farmer.”

Nintendo and Others Sued for Patent Infringement

September 28, 2011, by Mandour & Associates, APC

San Diego – UltimatePointer LLC, a Texas-based technology company, has filed a patent infringement lawsuit against Nintendo over claims that Nintendo’s Wii remote directly conflicts with its own patent. UltimatePointer is also going after everyone else even remotely involved with the Wii, including Nintendo of Japan and Nintendo of America and various retailers involved in the making, using, importing, and/or selling the Wii systems, games, and related accessories.

UltimatePointer’s patent describes an “easily deployable interactive direct-pointing system and presentation control system and calibration method therefore.” The patent, which covers a product called the Upoint, was filed in May 2005, however it didn’t register until June 2010, four years after Nintendo launched its Wii console in North America.

The company is arguing that Nintendo Japan and Nintendo America have “directly infringed the patent with the unauthorized selling of its Wii remote hardware.” Large retailers such as Best Buy, GameStop, and Sears were also named in the lawsuit for participating in selling the infringing products, however online retail giant Amazon was not named as a defendant.

The complaint did not specify a monetary amount for damages that UltimatePointer is seeking, but instead is asking that Nintendo pay a “reasonable royalty” for the alleged infringement along with court costs and attorneys’ fees.

Interestingly, the Upoint is not currently available for sale. The UltimatePointer website claims that the products are under currently undergoing “a rigorous testing scheme” but the company is accepting obligation-free pre-orders

Perfect Snowman Patented

September 27, 2011, by Mandour & Associates, APC

San Diego – After a five year application process, Long Island resident Ignacio Marc Asperas finally received <a href=”http://www.google.com/patents/about?id=s3mZAAAAEBAJ&dq=Application+No.+US+11/342601″>U.S. Patent Number 8,011,991 B2</a>, entitled “Apparatus for facilitating the construction of a snow man/woman.” Mr. Asperas, who often had back trouble building large snowmen, created a method for constructing a large snowman that was relatively light and easy to complete. Granted just in time for the Christmas season, the patent contains 25 pages of instructions detailing the process for rolling snowballs, creating snow arms, and assembling the perfect snow man.

The process involves rubber or plastic spheres which, covered in snow, appear to be large “snow boulders.” The rubber or plastic spheres, known as “snow spheres,” as noted in the patent application, utilize static electricity to attract and hold snow to their exterior. This allows snowman builders to create a large and perfectly round snowball that is light enough to move or lift onto the snowman. Without the snow spheres, a snowman builder would be forced to roll snow into large, heavy, and difficult to move snow boulders or snow balls.

Describing the invention in the patent application, Mr. Asperas, stated, “I do not pretend that the ultimate snowman will be as revolutionary to the advancement of mankind (as the wheel and the toaster oven), but I do contend that as far as I know no one has ever conceived and reduced to practice such an apparatus.”

Perhaps in anticipation to his critics, Mr. Asperas stated in defense of his patent that, “We have created the internet. China is getting ready to send a person to the moon. And we invented silly putty, perhaps one of the all-time greatest inventions a big kid ever invented. Can’t somebody build a better snowman?”

San Diego Based Isis Pharmaceuticals Sues Santaris Pharma Over Patent Infringement

September 27, 2011, by Mandour & Associates, APC

San Diego – Isis Pharmaceuticals announced that it has filed a patent infringement lawsuit against Santaris Pharma A/S and Santaris Pharma A/S Corp. in the United States District Court for the Southern California District of California. In its complaint, Isis alleges that Santaris’ activities providing antisense drugs and antisense drug discovery services to several pharmaceutical companies violates Isis’ antisense biotech patents.

Isis Pharmaceuticals is currently the leader in antisense technology. Antisense drug therapy is a form of treatment for infections and genetic disorders and is currently being researched to treat a multitude of cancers, diabetes, Amyotrophic lateral sclerosis (ALS), asthma, inflammatory arthritis, and muscular dystrophy. Through its work with the antisense technology, Isis has built a large patent portfolio and is the owner or exclusive licensee of approximately 1,550 issued patents worldwide related to antisense drug therapies.

“Santaris Pharma does not believe the allegations in the complaint by Isis Pharmaceuticals have any merit,” stated Bolette Wildt, vice president and general counsel for the Danish company. He added, “Santaris is in the process of reviewing the allegations with its legal group.”

Isis is accusing Santaris of infringing on patents that cover the chemical modification of short genetic strands known as oligonucleotides, a drug technology that enhances the therapeutic properties of antisense drugs and the use of antisense compounds in drug discovery.

In a statement from B. Lynne Parshall, Isis’ chief operating officer and chief financial officer, she said, “A necessary component of our strategy is that we vigorously pursue infringement of our intellectual property.” Parshall went on to say that Santaris’ antisense activities aren’t protected by a special patent infringement exemption that was created to encourage and accelerate the development of genetic drug therapies.