IP Class Notes, Spring 1997

I N T E L L E C T U A L
P R O P E R T Y

S P R I N G 1 9 9 7
C L A S S N O T E S

PROFESSOR MARGARET JANE RADIN
STANFORD LAW SCHOOL

IP 97 - Class No. 1

1. Today will be intro. to IP -- should we call it intellectual property or intangible property?

(a) Historically there are problems with both these concepts

(i) property was thought of as physical objects [remember

how seisin had to attach to something?], so how can there be

property if there's nothing tangible for it to attach to?

(ii) property was thought of as "outside" the self, so how

can something "inside" the self, a mental production, become

property? How can there be property in ideas?

(b) Today we might no longer have conceptual difficulty with the notion of intangible property, but it still appears peculiar to think of mental productions as property. Are we to pay each other for every idea we exchange with each other? Is a meter metaphorically running somewhere in everyone's head? If not, what is the dividing line between mental productions that cannot be owned and those that can?

(i) This is the most urgent meta-question in the IP field:

what kinds of information productions are unowned/unownable

[in the public domain/in the commons] and what kinds of

information productions are owned/ownable?

- If no knowledge and information is in the public

domain for people to appropriate freely and use, then

no new knowledge can be produced (so we won't have any

thing for IP to attach to)

- But if all knowledge and information is in the

public domain for people to appropriate freely and use,

then we might have underproduction of new knowledge

(because arguably people won't produce it unless they

can reap the benefits)

(ii) Do you think there will be a bright line answer to where

the line is drawn between IP and the public domain?

(iii) This is the Big Question that recurs in all the fields that we study in this course

2. Text and materials:

(a) Casebook: Intellectual Property in the New Technological Age [Lemley, Menell, Merges] [Little Brown, in press]

- galley proofs are being made available shortly

- in the meantime use MS [copy center has]

(b) Statute book: Unfair Competition, Trademark, Copyright and Patent: Selected Statutes and International Agreements [Goldstein, Kitch, Perlman, eds. , Foundation Press][bookstore has]

(c) Probably a few handouts [later]

3. Syllabus: available next week [we will proceed through the first three chapters that you have]

Tomorrow: 2-1 through 2-36

4. Grade issues:

- Regular exam will be given [open book]

- No grades for class participation

5. Communications:

- my e-mail address

- class e-mail list: law324@lists.stanford.edu

To subscribe, send a message to majordomo@lists.stanford.edu

containing the line:

subscribe law324 username@leland.stanford.edu

6. What's in this course? This is a whirlwind survey course....

(a) We'll concentrate on domestic (U.S.) law, state and federal

- [In this field this curricular allocation makes less and

less sense. You are hereby urged to take International IP as

well.]

(b) Four basic components:

- trade secret [part of a number of protections based on state law (developing out of tort law) [ also includes unfair competition; right of publicity]

- trademark

- patent

- copyright

(c) These four fields are summarized in the chart on pp. 1-33 -1-35

[Very roughly, patent is the only one that covers [certain kinds of] ideas per se--copyright covers expressions of ideas; trade secret

covers [certain kinds of] secret ideas; and trademark covers [certain

kinds of] labeling of products]

(d) What newspaper stories have you seen recently about these issues?

- trade secret (General Motors v. Volkswagen)

- trade mark (Juice Club problem?)

- patent (E-Data)

- copyright (Scientology cases)(Walt Disney v. day care centers)

7. In this country, the "policy" arguments underlying IP are heavily economic. Economic analysis of a sort has always been the basis of this field. [Contrast with the situation re policy/theory of tangible P][Note: not true in Europe]

- Why might this be so?

- Possibly because the Constitutional grant of power to Congress to establish patent and copyright said the purpose is "to promote the Progress of Science and useful Arts" [Art I cl. 8 -- (1- 14)]

- And possibly because the conceptual problems with intangible property or property in mental products don't exist in the

economic theory [though it does have other problems, as we'll see]

8. So let's take a look at the economic story that gets applied to IP. [I'll return to noneconomic theories later in the course] First recall the characteristics of economic theory:

- maximizing

- collectivist

- consequentialist

- positivist

- empirical

9. Recall the standard economic story re P in land--it has two primary features:

(1) [Behavioral Premise: Necessity of Monetary Incentive] People will not invest resources to put land into productive use unless they have incentives to do so. The appropriate incentive is that returns on the productive use should be internalized to the one who made the investment;

(2) [Factual Premise: Scarcity/Depletability of Desired Resources] Everyone wants to grab scarce/depletable resources before others can grab them. This leads to TOC. To avoid TOC, the costs must be internalized to one owner [exclusion is necessary to husband scarce resources]

10. Can IP be understood with the same economic analysis used for tangible P? [No, because Premise #2 doesn't apply]

- If you rip off my crops I no longer have them and no longer can reap the benefit from them; but if you rip off my ideas I still have them and can use them

- notion of information as public goods

[1-16-17}

11.What is the effect of this difference on the economic analysis of IP?

(a) Must rely exclusively on the behavioral premise and creation of incentives

(b) In every case or class of cases the benefit of incentive-creation or reinforcement has to be weighed against the costs of monopolization

- I.e., once the P rights exist, in the case of real P they can still promote benefit because of the danger of TOC; but in the case of IP once the P rights exist it's all downhill (artificial restriction that causes costs and

doesn't avoid any)

- Result: IP is always trying to do a complex balance

(cost/benefit analysis) involving balancing the plus of information that will be created because of granting P versus the minus of information that will not be disseminated and used because of the restrictions caused by granting P

- Do you think there's an algorithm or a hard and fast

rule for this balance? [what kinds of issues will you expect

to find embedded in IP doctrines?]

(c) For example, describe the standard economic story re Copyrights: [too little will be published unless first publishers can have a monopoly to exclude subsequent publishers for X years]

- Is this true? [Depends on empirical factors? which

ones?]

- esp. these:

extent of excess of first copy cost over

subsequent copy cost;

extent of "lead time" to first

publisher;

what is X?;

extent of costs of implementing

a P system in this field

[Note Breyer's famous article, cited in n. 2 on 1-24]

(f)-Describe the standard economic story re Patents: [too few useful inventions will be created unless inventor can have a monopoly on use for X years]

- Is this true? [Depends on empirical factors? which ones?]

- What should we make of George Priest's comment (note

3 on 1-24)?

IP 97 Class No. 2

1. What is a trade secret? [information of monetary value to your business which actually is a secret]

- Examples: formula for Coke; Thoreau family pencils...

2. What policy argument(s) might support giving you legal remedies against use of your trade secret by your competitor? [How do doctrinal features fall out of these arguments?]

(a) Trade Secret Proposition 1: Too little information enabling

business to run more efficiently and produce valuable goods for society

will be produced if competitors can appropriate it after production and use it to compete against you [benefit internalization]

- legal doctrine paying attention to this

might require that the protected information actually

add value [how hard did you work to produce it? how

hard did you try to keep it secret?]

(b) Trade Secret Proposition 2: Too little social welfare results if business energies are wasted in costly efforts to steal other people's productions and costly efforts to protect against such thefts [undermining necessary cooperation/fostering arms race]

- legal doctrine paying attention to this might

hold liable those who acquire secrets by improper means [breach of fiduciary relationship; industrial espionage]

(c) Why do casebook authors refer to 2 theories of trade

secret protection?

- tort: wrongful act of defendant [prevent arms race]

- property: ownership right of plaintiff [achieve benefit

internalization]

- In economic theory, these two tend to coalesce. If you're tort-oriented, you might lay more stress on the nature of the wrongful act by defendant; if you're property- oriented, you might lay more stress on the contours of the ownership/ possessory right in plaintiff

3. Look at this the other way:

[Anti-Trade Secret Proposition 3]: It is not fair or efficient to let one business keep to itself the better or more cost-effective way of doing something

- Are there circumstances where this proposition is true? These circumstances will give rise to legal doctrines excluding them from trade secret protection [independent discovery, including

reverse engineering]

4. Can some things be covered both by trade secret and by patent? How would you choose one or the other? [come back to this question]

5. If an entrepreneur kept valuable information secret forever, no need would arise for a legal remedy.

(a) It might be very expensive to keep information absolutely secret forever. It can be argued that giving a legal remedy relieves entrepreneurs from part of the expenditures they would otherwise have to expend to keep information absolutely secret. [But if they don't spend enough then it won't be a secret and there won't be legal protection]

(b) In practice the secret won't be very useful if not disclosed to some people. But these people can become turncoats. This is how a lot of trade secret litigation arises. There are three basic scenarios:

(1) [Changing trading partners] Disclosure by seller to gain supply contract; later, buyer goes to competitor [or vice versa -- disclosure by buyer to get something supplied to specifications; later, supplier makes same thing for a competitor (as in Metallurgical case)]

- also joint venture partners

(2) [Changing employers] Disclosure by employer to employee; later, employee goes to competitor [as in GM vs. Volkswagen case]

(3) [Skulduggery] Industrial espionage

6. Now look at doctrinal formulation: What's a trade secret?

(a) Rest. Torts: any information "used in one's business" which gives its owner "an opportunity to obtain an advantage over competitors who do not know or use it," so long as the information is in fact a secret [sec. 757 comment b, quoted at beginning of ch. 2-A-2][quoted in Metallurgical v. Fourtek]

(b) Rest. 3d Unfair Comp. (Stat Supp (15))sec. 39: "any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others"

(c) Uniform Trade Secrets Act (Stat Supp (35) sec. 1(4): "information. . . that (i) derives independent economic value. . . from not being general known to, [and not being readily ascertainable by proper means by,] other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy" [also in ch. 2-A-2]

7. What are the elements of the c/a for misappropriation of trade secret? [Look at Uniform Act sec. 1(2), ch. 2-A-2 and Stat Supp (34-35)] According to UTSA, there are three basic elements:

(a) Information must eligible kind of information [and] be secret (enough) [not generally known]

(b) Wrongfully acquired by defendant

- breach of contract; breach of implied fiduciary duty; skulduggery

(c) Plaintiff took reasonable precautions to keep secret

[Query whether the third element is separate? Maybe first element will take care of it?]

8. Consider Metallurgical Industries v. Fourtek (ch. 2-B-1) [included in book because judge tried to give definition of trade secret]:

(a) Facts: Metallurgical Industries was in the business of reclaiming tungsten carbide for re-use. In the 1970's it changed from the cold-stream process to the zinc recovery process (involving exposing the tungsten carbide to zinc in a furnace at high heat). Metallurgical ordered two zinc recovery furnaces from Therm-O-Vac, dealing with its representative, Bielefeldt.

Metallurgical Industries modified the furnaces to make them work better [inserted chill plates to create a temperature differential; replaced the one large crucible with several smaller ones; used unitary instead of segmented heating elements; installed a filter to keep zinc particles from clogging the vacuum pumps]. Therm-O-Vac went bankrupt and four of its employees, including Bielefeldt, founded Fourtek. In 1980 Fourtek built a zinc recovery furnace for Smith International which incorporated Metallurgical's improvements.

Metallurgical sued Smith International and Bielefeld and the other Fourtek principals.

(b) The trial court granted defendants' motions for directed verdicts. On what grounds?

- Metallurgical's information wasn't a trade secret, so

Bielefeldt and co. were free to use it. Why did district ct

think it wasn't a trade secret?

- zinc recovery process was well known

- information obtained by Bielefeldt was too general

- elements of the modifications were well known

- no protection for "negative know-how"

- not enough effort to keep secret (disclosure to

Consarc and La Floridienne) [Who were

they? --Consarc was a proposed supplier;

La Floridienne was a licensee]

(c) The appellate court reversed (i.e., issue of whether this was a trade secret should go to jury). Why did appellate ct think it could qualify as a trade secret?

- Adopts 1939 Rest. Torts definition

- Particular modifications unknown in the industry

- Enough efforts to keep secret; limited disclosure OK if furthering economic interests [what kind of evidence here?]

- Plaintiff shows that info. has value and that it

expended $ to develop it [what kind of evidence here?]

- Why should plaintiff have to show these two things?

[What is ct's rationale for these requirements?]

- ["It seems only fair that one should

be able to keep and enjoy the fruits of his

labor. . . ."]

(d) When this goes to the jury, how will it come out?

9. If Smith got info. from Bielefeldt but didn't know the info. came from Metallurgical or that Metallurgical was trying to keep it secret, what result? [see Uniform Act sec. (2)(ii)(b)(I) and (III)]

10. Question in Note 2: What if defendants had acquired information about metallurgical's process from Consarc or La Floridienne?

11. Problem 2-1: [B is not liable; once B has the info., can either of the others be liable?]

12. Suppose the info. on how to modify the furnaces was contained in a scientific publication, but Smith obtained it from Bielefeldt (who took it improperly from Metallurgical) rather than from the "proper" source -- is Smith liable?

- Rohm & Haas: Must information actually be "known" to

competitors to obviate existence of secret, or merely be

"readily ascertainable through proper means"?

- Uniform Trade Secrets Act says "readily ascertainable

by proper means" (Supp 35)

- But old Restatement rules said actually known [and

some states including California have adhered to the old

rules by deleting "readily ascertainable" in the Uniform

Act

- What's the difference between these two?

13. [So much for actual existence of secrecy][We'll do "improper means" later][Next, consider what counts as reasonable efforts to maintain secrecy -- Judge Posner in Rockwell Graphic Systems v. DEV (ch. 2-B-2)

(a) Facts: Rockwell manufactured printing presses. It outsourced production of spare parts for old presses. Engineering drawings for those parts were valuable (not easily reproduced by those who might need to repair press). Fleck and Peloso worked for Rockwell and had access to the drawings. They later went to work for DEV, a competitor (Fleck is the president). Peloso was fired from Rockwell after a security guard caught him removing drawings from Rockwell's plant. In discovery, 100 of the drawings turned up in DEV's possession, and DEV can't prove they obtained them properly.

Lower court ruled that Fleck and Peloso were off the hook (granted summary judgment for defendants) because these drawings weren't really trade secrets, because Rockwell hadn't made enough effort to keep them secret.

(b) What precautions did Rockwell take? What further precautions could they have taken?

(c) How does Judge Posner approach the Q of whether their precautions might be sufficient (i.e. can't be held insufficient as a matter of law)?

- precautions as evidence that defendant must have

obtained them improperly [focusing on wrongful act]

- precautions as evidence that plaintiff's secret has

high value [focusing on benefit internalization]

- would be windfall to plaintiff if "permitted

to recover damages merely because the defendant

took the secret from him rather than from the

public domain as it could have done with impunity"

[UTSA position and not Restatement position]

Question is whether the additional benefit in security would have exceed the cost of more security efforts [for jury]

"If trade secrets are protected only if their owners take extravagant, productivity-impairing measures to maintain their secrecy, the incentive to invest resources in discovering more efficient methods of production will be reduced, and with it the amount of invention."

IP 97 Class No. 3

1. Recall elements of cause of action for misappropriation of trade secret:

[Look at Uniform Act sec. 1(2), ch. 2-A-2 and Stat Supp (34-35)] According to UTSA, there are three basic elements:

(a) Information must eligible kind of information [and] be secret (enough) [not generally known]

- [not readily ascertainable by proper means]

(b) Wrongfully acquired by defendant

- breach of contract; breach of implied fiduciary duty; skulduggery

(c) Plaintiff took reasonable precautions to keep secret

2. Last class we talked about existence of (enough) secrecy. [We'll do "wrongfully acquired" later][Next, consider what counts as reasonable efforts to maintain secrecy -- Judge Posner in Rockwell Graphic Systems v. DEV (ch. 2-B-2)(47)

(b) What precautions did Rockwell take? What further precautions could they have taken?

(c) How does Judge Posner approach the Q of whether their precautions might be sufficient (i.e. can't be held insufficient as a matter of law)?

- precautions as evidence that defendant must have

obtained them improperly [focusing on wrongful act]

- precautions as evidence that plaintiff's secret has

high value [focusing on benefit internalization]

- would be windfall to plaintiff if "permitted

to recover damages merely because the defendant

took the secret from him rather than from the

public domain as it could have done with impunity"

[UTSA position and not Restatement position]

Question is whether the additional benefit in security would have exceed the cost of more security efforts [for jury]

[(d) How does Judge Posner approach the question of whether these drawings really have ceased to be a secret, even if the precautions were reasonable?]

3. Come back to "wrongfully acquired." This has two parts: (1) either breach of duty or (2) "improper" means [skulduggery]. Breach of duty in turn has two parts, either (a) breach of express contract or (b) breach of implied fiduciary duty.

Consider "improper" means: DuPont v. Christopher (63)

(a) What methods of industrial espionage have you heard about?

- bribe employees to give you documents, pictures, computer

data bases

-"bug" conference rooms

- listen in on cell phone conversations

- use listening equipment in parking lot

-"hack" into computers and download data

- intercept and copy e-mail

(b) What happened in DuPont?

Facts: DuPont had a secret process for producing methanol. A

new plant was under construction and roof wasn't on yet. X, an unknown person or corporation, hired the defendants in this case

to fly over and take photos.

Who should DuPont sue? X. But what if it can't find out

who X is?

In this suit DuPont sued the people who took the photos,

claiming wrongful appropriation of its trade secret (63).

During the litigation the aerial photographers wouldn't

answer Q's about who X was. DuPont moved to compel them

to answer.

Then what? [Do they have to answer? Depends upon whether DuPont states a valid claim against them.....

(c) Argue for defendant: DuPont has no valid claim against us, because...

- we didn't breach any confidential relationship

- we didn't do anything illegal

(d) Ct applies Texas law, which had adopted Rest. 757 (see 64)

- "improper means" is independent of the

requirement of "breach of confidence"

- cf. Unif. Act (2) (ii) (A)[Supp 34, (2)(ii)(A)]

(e) So what is improper means?

- independently illegal? [e.g., trespass?]

[see comment f, (65)][cf. Unif. Act 1(1)]

- immoral? (66)

- inefficient to protect against? (66)

(f) What if X didn't hire the Christophers but as independent entrepreneurs they took the photos and then shopped them around to DuPont's competitors? [Can competitor Y safely purchase the photos?]

- Is competitor Y acquiring by improper means?

- See Unif. Act 1(2)(i)

(g) What if competitor observes your product and deconstructs it, then builds a copy? [see note on reverse engineering (67n.2)][also locksmith case --Fanberg] [Why is reverse engineering exempt?]

[--Is what the Christophers did just a method of viewing

the competitors product?]

- Trying to view a "process," which is harder than

viewing a "product" [see note 2 (67)

[So how "devious" can you be, as long as you don't commit a tort such as trespass? (1) use information overheard in bar across

the street from the plant? (2) follow trucks leaving the plant to

see where they come from to learn what they're supplying? (3)

carefully read classified ads to see what employees are needed to

deduce what company is doing? (4) get investigative reporter to do

a story on it? (5) pretend you're an investigative reporter doing a

story?]

- Problem 2-6 (68): Suppose Christophers could have

"readily ascertained from a proper source"? [BTW, in this problem

does duPont have a c/a against the EPA for destroying its

trade secret?][see Monsanto (62)]

4. So much for skulduggery (Part I of "wrongfully acquired.") Now Part II: breach of duty/confidential relationship

(a) Duty of nondisclosure can be express (contractual). Get people to sign NDA's before they see any of your confidential drawings, documents, etc. (See, e.g., (101).)

(b) Under what circs will duty of nondisclosure be implied? Consider Smith v. Dravo (69)

- Facts: Mr. Smith invented shipping containers. Some aspects were patented and some were kept as trade secret. His business was just getting started when he unfortunately died. His estate wanted to sell the business to pay inheritance taxes.

- Defendant (operator of a barge line) negotiated with Cowan, the estate representative, about buying the business. Cowan sent detailed information; also, defendant's representatives traveled to Sturgeon Bay , Wisconsin, and viewed the plant.

- Negotiations broke down when defendant refused to accept any of plaintiff's offers. The day after the final negotiation, the defendant informed plaintiff's customer that it would supply shipping containers itself. It made them 4 inches narrower so they wouldn't interoperate with plaintiff's. It sold them to customers on lists disclosed by the plaintiff during the negotiations.

- Cowan didn't get defendant to sign any agreement promising not to disclose information before he disclosed everything to defendant.

(c) Ct holds for plaintiff--why? [(71) -- understood disclosure was for limited purpose; trust][cf. Rest. 3d Unfair Comp. sec. 41 (73)]

(d) Argue for defendants?

- Cowan didn't take reasonable precaution to protect this bec.

asking for NDA is cheap

- Defendant didn't appropriate trade secret because it

made changes in the product [see (74 n. 6)]

- No trade secret here in the first place? [see (72) notes 1-2]

5. Consider more generally methods of "proper" acquisition (that negate the 2d element of the c/a):

(a) Holder does something to lose the the secret: e.g., publication

- analogy in real P: abandonment; dedication to public

(b) Holder does nothing--competitor discovers it independently

- including "reverse engineering" (74)

- what is reverse engineering? [have you reverse

engineered anything?]

- no analogy in real P? [patents are more like real P in

that you own the idea no matter how someone else comes by it]

6. Consider Chicago Lock v. Fanberg (75):

(a) Facts: Chicago Lock Co. (plaintiff) made tubular locks which were especially secure because keys are difficult to reproduce. In order to get duplicates when they needed them, customers hired locksmiths to pick the lock, decipher the tumbler configuration and grind a duplicate tubular key. Locksmiths recorded the key code (i.e. the tumbler configuration) and the serial number of the lock when they had to do this, in case they were called upon to do it again. Victor Fanberg (defendant) collected this info. from the various locksmiths and made it into a manual which explained how to make duplicate keys for all the locks for which any locksmith had done this, provided the serial number was known. He sold the manual for $49.95, and had sold 350 of them by the time of trial. Chicago Lock Co. did not grant permission for these activities.

Trial ct held: The key codes constituted a trade secret, and Fanberg acquired them through improper means, therefore liable for misappropriation of Chicago Lock Co.'s trade secret

- What exactly did they do that was improper?

(b) 9th Circuit reverses:

- If Fanberg bought a bunch of locks himself, and

figured out the key codes and published them, this would not be

improper means. (77) [Explain?]

- But, did the individual locksmiths behave improperly

in transmitting the info. to Fanberg knowing he was going to collate it and publish it? [And did Fanberg behave improperly by collating and publishing?]

- Ct says (78) the locksmiths may have owed an implied duty to the customers not to disclose their key codes, but

they do not owe an implied duty to the lock company

- Therefore defendant Fanberg didn't improperly

procure any improper activities by the locksmiths

(c) 9th Circuit explains that reverse engineering is legal. If it weren't, trade secret would be more like patent monopoly. And that would be preempted by federal patent law (79)

- why is it thought to be a good idea to have trade

secret weaker than patent in this way?

7. Consider problem 2-9 (80):

(a) Is it legal to reverse engineer a product if the company doesn't know that's what you want it for and wouldn't have sold it to you if it knew? [once product is sold on the market, anyone can reverse engineer]

(b) Can company get around this by licensing rather than selling, and making licensing (contract) conditional on promise that buyer will not disclose info. and will not resell?

- cf. (80n.2): can trade secret owner get user to contract

not to reverse engineer?

(c) If info. is acquired "improperly" but then you add value for the public, does this excuse the tainted acquisition? [No; but why not?]

IP 97 Class No. 4

1. Reverse engineering [cont'd]

Chicago Lock v. Fanberg (75)[cont'd]:

Trial ct held: The key codes constituted a trade secret, and Fanberg acquired them through improper means, therefore liable for misappropriation of Chicago Lock Co.'s trade secret

- What exactly did they do that was improper?

(b) 9th Circuit reverses:

- If Fanberg bought a bunch of locks himself, and

figured out the key codes and published them, this would not be

improper means. (77) [Explain?]

- But, did the individual locksmiths behave improperly

in transmitting the info. to Fanberg knowing he was going to collate it and publish it? [And did Fanberg behave improperly by collating and publishing?]

- Ct says (78) the locksmiths may have owed an implied duty to the customers not to disclose their key codes, but

they do not owe an implied duty to the lock company

- Therefore defendant Fanberg didn't improperly

procure any improper activities by the locksmiths

(c) 9th Circuit explains that reverse engineering is legal. If it weren't, trade secret would be more like patent monopoly. And that would be preempted by federal patent law (79)

- why is it thought to be a good idea to have trade

secret weaker than patent in this way?

2. Consider problem 2-9 (80):

(b) Can company get around this by making buyer promise not to reverse engineer and disclose info. and not resell to someone who will?

- can't get promise not to resell (restraint on alienation)

- but, can you do it with licensing? [give buyer a license

to use your product with its info., rather than selling product,

and make license conditional on not reverse engineering it]

- cf. (80n.2): can trade secret owner get user to contract

not to reverse engineer? ["cts are split on this"]

(c) If info. is acquired "improperly" but then you add value for the public, does this excuse the tainted acquisition? [No; but why not?]

3. Go back to wrongful acquistion of trade secrets, breach of duty of confidentiality: the special case of departing employees (82)

- Will it count as improper acquisition of trade secrets Jones leaves company A and goes to work for company B, bring info. with him that was valuable to company A and now will be valuable for its competitor?

(a) Problem is this can range from taking 500 boxes of documents to memorizing something on purpose to simply knowing it as a by-product of one's work experience....

- we want to prevent employees from stealing documents

- we want to leave employees free to change jobs and

practice their skills; we want to leave employees free

to use the fruits of their learning and experience

- see, e.g., SI Handling (82) ["under Pennsylvania

law and employee's general knowledge, skill,

and experience are not trade secrets"]

- this countervailing concern affects remedies as

well as liability [we don't want to enjoin people from

working...]

(b) Consider Informix v. Oracle: Who will win? [What questions would you want to ask?]

(1) Did the 11 engineers sign an agreement with Informix? What did it say? [under contract to work for a period of time? under contract w/r to secret information? under contract w/r to not working for competitors?] ["confidentiality agreement"

(col. 3)]

- What does employment agreement usually look like?

- confidentiality

- invention assignment

- noncompetition

- See example (101-102) [come back to this: consider whether this is enforceable]

(2) What means did Oracle use to "lure away" the engineers?

(3) What information do the engineers have and how secret is

it? [extended parallel server; Universal Server][research firm says

Informix is 12-18 months ahead of the competition]

- Will Informix want to give this information to the

court?

(4) Could Informix argue that allowing the engineers to work for Oracle will inevitably disclose their trade secrets, causing breach of their confidentiality agreements, therefore this should trump the engineers' interest in working where they choose?

- in general, no law against competitor hiring away

employees (Diodes (85))

- But cf. PepsiCo v. Redmond (90) [upheld preliminary

injunction preventing Gatorade/Snapple from employing

former Pepsi manager][more often this argument is

rejected]

(5) What remedy will Informix ask for? [something designed

to prevent the employees from disclosing their trade secrets --

see col. 3]

3. Now consider covenants not to compete. [Rather than just making employees promise not to disclose trade secrets, you make them promise not to engage in any competing business]

(a) Problem is, are they enforceable? [If you work for Microsoft

once, can you be prevented from ever working for another software company anywhere in the world for the rest of your life?] [If permitted, these will be limited in time and geographical scope (if relevant}

(b) Consider CTI v. Software Artisans (86):

Facts: Hawkes signed agreement not to engage

in competing business for 12 months after he left

CTI. He and others left CTI and founded a new

competing company.

- This was upheld under traditional "reasonableness"

test (86-7)[general rule...]

- Cf. New York (88): unenforceable unless needed to

prevent disclosure of trade secrets

- Cf. California(88): unenforceable against employees

(but "reasonableness" test applies if ancillary to sale of

business)[So that's probably why Informix didn't make

their engineers sign them...]

4. Suppose employer did not make you sign either confidentiality or noncompetition agreement. In the absence of agreement, are you free to work for competitor B using information you picked upon the job at company A?

(a) What factors will be relevant to deciding this question?

- Is the information actually secret? [Does absence of K show

lack of precautions to keep secret?]

- Is there an implied duty to keep secret?

- [How much will you be prevented from practicing your profession or trade?]

(b) Consider Wexler v. Greenberg (93):

Greenberg was chief chemist for Buckingham Wax Co. His job was to reverse engineer competitors' products and to develop new formulas. Buckingham supplied products to Brite who marketed to users. Later Brite hired Greenberg and he developed facility to make the stuff themselves using formulas he developed when he worked for Buckingham.

Can Buckingham enjoin?

- [no trust or confidential relationship; merely

his routine duties]

What could Buckingham have done to make this come out

differently?

- [Make him sign NDA? covenant not to compete? make clear how much effort company put in...?][agreement stating

that everything he does becomes P of the company?]

5. What if Greenberg had signed employment contract in which he promised not to use in competitor's business anything he discovered while working at Buckingham? Consider covenants to assign inventions:

(a) [Can employer claim that it owns everything that was in your thoughts during the time you worked for it?]

- see (102) para 2 [note "trailer clause" (99)--enforceable

only if "reasonable"]

(b) [If not, can employer claim that it owns everything that you reduced to writing during the time you worked for it?]

- [If you invent something but don't write it down until the day after you quit, are you in the clear?]

(c) [Only during working hours? Only related to company business?]

- see Cal. Labor Code sec. 2870 (98) ["freedom to create statutes"]

6. Consider common law rules for patentable inventions (97):

- hired to invent: belongs to employer

- inventions in employers shop: shop rights

- independent invention: belongs to employee

7. Review contract on (101): Is it enforceable?

8. Contracts to license the use of trade secrets:

(a) Big problem: licensee needs to see secret in order to buy, but once it sees, why should it buy?

- at least, an argument to make enforcement of contractual NDA's very strict

(b) If you contract to license a trade secret needed to manufacture your product, and pay royalties, can you stop paying royalties once the info. is no longer secret?

(c) Consider Warner-Lambert (103)

- Facts: Warner-Lambert licensed the secret formula for Listerine 75 years ago. Judge interprets K as promising to pay royalties for as long as Warner-Lambert manufactured the product. In the meantime, the formula has become public knowledge. Warner-Lambert sues for declaratory judgment that it doesn't have to pay anymore.

- Argue for Warner-Lambert: Successors of the

inventor no longer have any P rights. My competitors

don't have to pay, so they can produce more cheaply

against me.

- Argue for Lawrence successors: Freedom of K;

K doesn't depend on how long my P rights last [if we

meant that, we could have said so]

- Result: Contract wins

- See notes 2 and 3 (107) [This rule is "controversial" -- and it

raises the larger question to what extent actors can contract out of P

rules]

NEXT WEEK: 108-168[trade secret remedies (108) [Litton; Lamb-Weston]; Intro. to patents (121); patentable subject matter (136) Diamond v. Chakrabarty (136); Funk Bros. (144); Parke-Davis (147); utility, Brenner, to 168]]

IP 97 Class No. 5

1. Contracts to license the use of trade secrets: [This is an ordinary contract, with a couple of wrinkles]

(a) Big problem: licensee needs to see secret in order to buy, but once it sees, why should it buy?

- not a problem with Listerine [you can see product w/o seeing secret] but what about database [e.g., all cooks who have experience w/ curlicue fries]

- at least, an argument to make enforcement of contractual NDA's very strict

(b) If you contract to license a trade secret needed to manufacture your product, and pay royalties, can you stop paying royalties once the info. is no longer secret?

- of course, your contract can provide for this. But what

if it doesn't?

(c) Consider Warner-Lambert (103)

- Argue for Warner-Lambert: Successors of the

inventor no longer have any P rights. My competitors

don't have to pay, so they can produce more cheaply

against me.

- Argue for Lawrence successors: Freedom of K;

K doesn't depend on how long my P rights last [if we

meant that, we could have said so]

- Result: Contract wins

- See notes 2 and 3 (107) [This rule is "controversial" -- and it

raises the larger question to what extent actors can contract out of P

rules][Recall previous discussion of employment contracts promising not to use any information even if it's no longer a trade secret]

2. Remedy for misappropriation of Trade Secret: What are the possibilities?

(a) Plaintiff has traditional P-rule entitlement [damages for past use, plus permanent injunction against future use]

(b) Plaintiff has a permanent liability-rule entitlement [damages for past use plus compulsory license payments for future use]

(c) Plaintiff has P rights (either P-rule or L-rule) only until the info. actually ceases to be secret

(1)-- until plaintiff ceases to keep it secret?

-- until someone else discovers/reverse engineers?

(2)-- defendant can apply to dissolve the injunction?

-- write injunction for only as long as ct thinks it would

reasonably take for others to discover the info.?

(d) What about kicker for extra deterrence? [don't change P rules into L rules at will] --e.g., treble or punitive damages?

3. How will we measure damages for past use?

(a) disgorge defendant's excess profit [unjust enrichment]

(b) pay for plaintiff's lost profit? [compensatory]

(c) amount equal to a reasonable royalty?

- how will ct figure this out? (110)

4. What remedy options are chosen by the UTSA? (108-9); (Supp 35); What remedy options are chosen by the Rest.3d of Unfair Competition? (Supp 16-17)

5. Consider Litton systems (110):

(a) Litton engineer testified that as a result of defendant's theft of its trade secrets, it had lost various contracts and the value of its San Carlos operation had declined significantly.

(b) Law and economics scholar no. 1 (Rosenfield), for the plaintiff Litton, stressed deterrence: damages should exceed the greater of the victim's loss or the thief's expected gain, multiplied by a factor which reflects the probability of detection.

[On this theory, what would be wrong with limiting damages to the victim's actual loss?]

[On this theory, what would be wrong with limiting damages

to the defendant's actual unjust enrichment (gain due to theft)?]

(c) Law and economics scholar no. 2 (Teece), for the defendant Ssangyong, stressed administrability: damages should be equal to disgorging defendant's actual gain from the trade secret theft.

[On this theory, what would be wrong with assessing punitive

damages to achieve extra deterrence?]

[On this theory, what would be wrong with assessing damages on the basis of defendant's expected gain at the time of the theft?]

(d) What did the judge decide? (see 113, last paragraph)

(e) Question 3 (114): Does the UTSA permit Judge Walker to do this?

6. Injunctions (see Lamb-Weston (114):

(a) Will injunctions be appropriate in departed employee cases?

- Depends. See, e.g., Baxter int'l v. Morris (118); recall

Pepsico v. Redmond (90-93) [unusual case]; what relief will

be appropriate (if any) in Informix v. Oracle?

(b) How will length of injunction be determined? [one common method is "head start" theory: enjoin defendant from using the stolen info. until such time as defendant could have discovered it by proper means][Head Ski case (116)]

(c) Facts of Lamb-Weston:

Plaintiff Lamb-Weston invented a process and equipment for producing curlicue fries. It started working on the process in 1986 and was issued 2 patents on May 22, 1990 [at which point the process and equipment ceased to be secret]. Before that, in January 1990, Lamb-Weston employees allegedly gave copies of the patent application to defendant McCain, which allegedly built a prototype before the patents issued in May.

The court imposed an 8-month injunction against McCain to make up for its improper head start. The injunction took effect March 27, 1991. McCain on appeal says ct abused its discretion because (1) didn't make findings about how long it would have taken McCain to develop helical blade independently, (2) injunction should have ended on April 19, 1991 (rather than on [November 27, 1991]).

Held: Length of injunction was not abuse of discretion, because:

- Plaintiff says head start was 18 months, not 12, so if theft took

place in April 1990, injunction should end October 1991

- "Although the shape of the blade and the slicing process was public

on May 22, the specifications, materials and manufacturing process

for making the blade were still trade secrets because they were not

included in the patent applications." (116)

- see note 2 (117)

7. Intro. to patent.

(a) Read (121-128) as background; (I'm trying to get biotech appendix promised in (121 n. 1).

Start with overview of patent laws on (128); look at Patent Act (281)

- Sec. 101 -- Whoever invents or discovers...

- Sec. 271 -- Whoever without authority makes, uses, offers to sell, or sells...

- Sec. 154(2)--Such grant shall be for a term [20 years from

date filed]

(b) As casebook says (129), there are five basic requirements for patentability:

1. patentable subject matter [what things can and cannot be

propertized?]

2. novelty [not anticipated]

3. utility [has to work]

4. non-obviousness [has to be a leap forward]

5. enablement [sufficient disclosure]

(c) The central part of a patent is what exactly you stake out P rights in (see p. 130): (because they're staked out in words instead of metes and bounds, there's an inherent vagueness)

- make claim as broad as possible? [a nonhuman mammal, rather than a mouse][means for support, rather than legs]

- but what if some previous patent covers some other

nonhuman mammal?

- i.e., the trick is to make as broad as possible and still be

novel enough

(d) patent litigation has 2 parts

- my device doesn't infringe

[claims (as interpreted) don't "read on" the "accused device"]

- even if it does, your patent is invalid

[your patent doesn't meet all five requirements as above]

(e) cts hold patents invalid in a nontrivial number of cases (though see (128), CAFC is upholding them more than disparate cts did previously); moreover, cts are not always in sync with the PTO

- policy differences

- PTO examiner my not have expertise or the benefit of high-

priced lawyers and experts

- patents only get litigated when they turn out to be

valuable

8. Consider first element of patentability [subject matter]; Diamond v. Chakrabarty (136)

IP 97 Class No. 6

1. As casebook says (129), there are five basic requirements for patentability:

1. patentable subject matter [what things can and cannot be

propertized?]["statutory subject matter"]

2. novelty [not anticipated][not in prior art]

3. utility [has to work]

4. non-obviousness [has to be a leap forward][not obvious to

one skilled in prior art]

5. enablement [sufficient disclosure][to one skilled in prior art]

2. Claims: The central part of a patent is what exactly you stake out P rights in (see p. 130): (because they're staked out in words instead of metes and bounds, there's an inherent vagueness)

(a) make claim as broad as possible? [see, e.g., "Transgenic nonhuman mammals" (150) rather than a mouse][means for support, rather than legs]

- but what if some previous patent had covered some other nonhuman mammal?

(b) i.e., the trick is to make as broad as possible and still be

novel enough

3. patent litigation has 2 parts

(a) my device doesn't infringe

[claims (as interpreted) don't "read on" the "accused device"]

(b) even if it does, your patent is invalid

[your patent doesn't meet all five requirements as above]

4. cts hold patents invalid in a nontrivial number of cases (though see (128), CAFC is upholding them more than disparate cts did previously); moreover, cts are not always in sync with the PTO

- policy differences

- PTO examiner may not have expertise or the benefit of high-

priced lawyers and experts

- patents only get litigated when they turn out to be

valuable

5. Consider first element of patentability [subject matter];

What types of things are patentable under the statute? Does the constitution limit what Congress can make patentable? [application to living things? computer programs?]

(a) What does the Patent Act tell us about what is properly the subect of patent? [Read sec. 101 again together with sec. 100]

process [means process, art or method; includes a new

use of a known process, machine, manufacture,

composition of matter, or material][or improvements

on an existing process]

machine [or improvements on an existing machine]

manufacture [or improvements on an existing manufacture]

composition of matter [or improvements on an existing

composition of matter]

Example of a new use of a known process? new

use of a known machine? new use of a known

manufacture? new use of a known composition of

matter? new use of a known material?

Example of improvements on a process? machine?

manufacture? composition of matter?

Note: if you get a patent on improvements,

if the underlying process is patented, you still can't use it without paying for it

(b) Does the Constitution limit what Congress can make patentable? ["to promote the progress of . . . useful arts"]

- 1952 Committee reports said "anything under the sun

that is made by man" (138)

(c) Traditional exclusion for natural principles (laws of nature) (138): why? [discovery of one can certainly promote the progress of useful arts in many cases]

-"manifestations of nature, free to all men and reserved exclusively to none"

- does this deter investment in basic research?

- [includes abstract ideas, mathematical formulas: causes problems for what to do about computer programs...][later]

(d) Bioengineering: should living things be patentable? [as found in nature? as made by man?] Consider Diamond v. Chakrabarty (136)

6. Diamond v. Chakrabarty (136):

(a) Chakrabarty (a microbiologist for G.E.) applied for patents relating to his development of a genetically engineered bacterium which could help clean up oil spills. His claims were of 3 types (137):

for the method of producing the bacteria [process claim]

for combining the bacteria with a carrier material to float

on the water

for the bacteria themselves [product claim]

Are any of these problematic? [only the bacteria themselves.... explain][Consider carefully note 5 on p. 150][product claim; process claim; product-by-process claim]

(b) How does Burger go about exploring the issue?

his discovery is not nature's handiwork but his

own; accordingly it is patentable (139)

(c) Diamond is the Patent Examiner, not some would-be

infringer. What arguments does the government put forward, and how does Burger answer them?

genetic engineering was unforeseen when Congress

enacted sec. 101; including it should be left to

Congress (141)

[Patent Act is supposed to cover the

unanticipated]

[What is the relevance of Parker v. Flook -- cited

on p. 141?]

genetic engineering is dangerous

if so, Congress should amend the

Act; once we look at the plain meaning, our

job is done (142)

Congress didn't intend the Act to cover living

things [otherwise it wouldn't have had to enact

specific statutes to cover plants developed by

humans] (139-40)

- [Did too?]

(d) Decision was 5-4: Consider dissent (Brennan, Marshall, White, Powell)(142):

Burger can't explain away that Congress thought

specific legislation was needed to get new plants

covered; moreover, bacteria were specifically

excluded from that legislation

this extends the patent system (bec. Congress has

previously legislated in the belief that living organisms

aren't covered); shouldn't do this, esp. where "uniquely

implicates matters of public concern" (144)

(e) What exactly are the matters of public concern?

- life is gift of God, not an article of manufacture

-note plant patents can monopolize food products

- impact on the farm animal gene pool

- cruelty to animals

7. Funk Bros. Seed Co. (144): Was earlier ct less willing to underwrite broad scope of patent?

(a) Plants fix nitrogen from the air using bacteria of the genus Rhizobium which infect the roots of the plant. Different plants use different bacteria. Previously, people had manufactured and sold bacteria cultured in the laboratory that were specific to particular plants (145). Mixed cultures had proved unsatisfactory because the different bacteria species were mutually inhibitory. [Why were people trying to produce a mixed culture?] Then Bond discovered that certain strains of the different species of bacteria would not be mutually inhibitory but could co-exist. "Thus he provided a mixed culture of Rhizobia capable of inoculating the seeds of plants belonging to several cross-inoculation groups." [See one of the claims in note 1, p. 144]

District ct held the product claims invalid for want of invention and dismissed the complaint. Ct of appeals held the product claims were valid and infringed.

Supreme Court says:

These qualities are the work of nature... (145)

[Explain Frankfurter concurrence (146): Apparently Bond's claims were so broad as to cover anyone who combined any mutually compatible strains. Frankfurter thought that reached too far (would cover the idea of alloying metals, for example, and not just particular alloys); instead, he thought that particular strains should be identified and that a new and useful property result from their combination.]

8. Also consider Parke-Davis (147): Was L. Hand concerned more with practical commercial viability than with distinction between nature and man's handiwork?

(a) Takamine patented a pure extract from suprarenal glands of animals, which Parke-Davis (assignee of the patents), called adrenalin. [See the claim in footnote on p. 148.] A competing company marketed a competing product. L. Hand holds the patent on the product valid.

- It's not a claim for a substance that has merely been

extracted but otherwise unchanged, bec.

- it doesn't have a salt

- the claim is broader, covering any product with these

characteristics, however it's arrived at [reconsider note 5

on 150: should this claim be allowed?]

- [or limit this type of patent to a

"product-by-process" claim?]

- "But, even if it were merely an extracted product without

change, there is no rule that such products are not patentable" (148)

- "it became for every practical purpose a new thing

commercially and therapeutically" (148)

- what do you think of the tree bark hypo (149 n. 1)?

(b) See note 6 (151): A new amendment bans patents on medical and surgical procedures. Why? [Is this different from Parke-Davis patenting adrenalin?]

8. "Abstract Ideas" (151): [not the idea itself, but a device to make an idea practically useful]

(a) O'Reilly v. Morse (151): Morse wasn't allowed to patent electro-magnetism; but he was allowed to patent the process of using it to telegraph

(b) The Telephone Cases (152): Alexander Graham Bell was allowed to patent the telephone -- but not all telephonic uses of electricity

(c) The E-data patent?

(d) Mathematical formulas? [e=mc²]

(e) Computer programs?

9. "Business Methods" (153-4)

(a) Note Judge Newman (154n.1)

(b) [Computer software will change this rule?]

10. Take a look at problem 3-3 (156).

NEXT WEEK: utility 157-168; novelty and statutory bars 168-193; nonobviousness 193-206...

IP 97 Class No. 7

1. Patent life forms (Diamond v. Chakrabarty) [cont'd]

(a) Decision was 5-4: Consider dissent (Brennan, Marshall, White, Powell)(142):

Burger can't explain away that Congress thought

specific legislation was needed to get new plants

covered; moreover, bacteria were specifically

excluded from that legislation

this extends the patent system (bec. Congress has

previously legislated in the belief that living organisms

aren't covered); shouldn't do this, esp. where "uniquely

implicates matters of public concern" (144)

(b) What exactly are the matters of public concern?

- life is gift of God, not an article of manufacture

-note plant patents can monopolize food products

- impact on the farm animal gene pool

- cruelty to animals

2. "Abstract Ideas" (151): [not the idea itself, but a device to make an idea practically useful]

(a) O'Reilly v. Morse (151): Morse wasn't allowed to patent electro-magnetism; but he was allowed to patent the process of using it to telegraph

(b) The Telephone Cases (152): Alexander Graham Bell was allowed to patent the telephone -- but not all telephonic uses of electricity

(c) The Online Resources patent?

(d) Mathematical formulas? [e=mc²]

(e) Computer programs?

3. "Business Methods" (153-4)

(a) Note Judge Newman (154n.1)

(b) [Computer software will change this rule?]

4. Utility ["new and useful" (sec. 101)]

(a) Note on different types of utility (163)

general (163)

specific (164)

moral (164-5)(gambling; spotted tobacco case; drugs and medical devices; radar detector (Whistler Corp. 165)

(b) problem of when pharmaceuticals are useful (162 n. 4)

(c) problem of when chemical process patents are useful--consider Brenner v. Manson (157)

Facts: Manson applied for a patent on a process that produced a prticular chemical compound. The patent office denied the patent and the patent office Board of Appels agreed. The court reversed, however, because it believed that it was enough for the process to actually produce the product it was claimed to produce, so long as the product was not deterimental (158).

That is not the test of utility, says Fortas. What possibilities are there?

- process is useful if it really does produce the product

it is supposed to, even if we don't have any use for the product

right now [as ct below thought]

- process if useful if it really does produce the product,

and also the product is currently useful for research

- i.e., scientific laboratories will buy it?

- process is useful if it really does produce the product,

and also the product is currently useful in aspects of

ordinary life other than research

What does the S.Ct. hold? (159-160)

Rationale? ["A patent is not a hunting license.."]

(d) Is Brenner ct wrong to hold that utility for further research should not count as utility? [consider problem 3-5 (167)

5 Novelty ["new and useful" (sec. 101)]; [implementation in sec. 102]

6. Overview of sec. 102 (168):

(a) The patent "bargain" is that in return for a monopoly [on breathrough inventions that wouldn't have been produced otherwise] the inventor must give it to the public domain (the store of knowledge), (1) by disclosing it in the patent, so others can use if they pay, and others can build on it, and (2) can use it for free at the end of the term.

(b) The "bargain" gives rise to several separate issues:

(1)--Does the relevant public already know the exact process,

etc., at the time the claimed "invention" is made? [This is called

" anticipation"]

- Which parts of the statute are directed at this?

- 102(a): prior to date of invention, it was (i) "known or used by others in this country; or (ii) described in a "printed publication" in any country; or (iii) "patented" in any country

- 102(e): prior to date of invention, it was

(iv) described in a pending application, which

was later granted

(2)--Does the relevant public already have enough information

so that the claimed invention is obvious at the time it is made?

- Which parts of the statute are directed at this?

- 103 [to be considered later]

(3)--Who is the relevant public? [to be considered later]

(b) In addition, our system gives patents to the first to invent, rather than the first to patent (disclose). [sec. 102(g)] This system is risky for the public domain, because it encourages people to keep their inventions secret as long as possible.

(1)--Explain: Inventor A invents something important but keeps it secret. When competitor B later invents the same thing, A can contest the patent, and A would win, because first to invent. [Might be economically rational to let someone

else see whether it's commercially viable and then come out

of the woodwork and claim the patent!]

(2)--Which parts of the statute are directed at this problem?

- 102(b): you can't get a patent if your application is

dated more than one year after (i) patented in any country;

(ii) described in a printed publication in any country;

(iii) in public use in this country; (iv) on sale in this country;

- 102(d): can't get a patent in U.S. if your application

is dated more than one year after your application in a

foreign country

- 102(g): can't get a patent if you suppress or conceal

your invention

7. Now focus on sec. 102(a) [before the applicant's date of "invention," the device was known or used in this country, or patented or described in a printed publication anywhere]

(a) Consider Rosaire (169): What counts as being known?

- Facts: Rosaire and Horvitz got two patents on method of prospecting for oil (Horvitz interest assigned to Rosaire). The method involved analyzing gases for emanations from nearby hydrocarbon deposits. They claimed they invented this process in 1936. But, "appellee contends that Teplitz and his coworkers [who worked for Gulf, not appellee] knew and extensively used in the field the same alleged inventions before any date asserted by Rosaire"(170)

- What issues? (1) What was the date of activities of

Teplitz and coworkers? (2) Does what Teplitz and coworkers

did amount to being"known" for purposes of sec. 102(a)?

[See finding of fact (170)]

- What about the fact that Teplitz invented this first and later applied for a patent in 1939 (170)? Should Teplitz get the patent instead of Rosaire? [see below; Griffith]

- What about appellant's claim that Teplitz's activities

were merely an experiment?[see Picard (172-3 n. 4)

also

- What about the fact that appellee (National Lead Co.) gets to infringe someone's patent and then defend by claiming that actually someone else had it before the patentee?

- What about the fact that Rosaire and Horvitz couldn't have known what Gulf employees were doing?

(b) Summary: What counts as being known?

public (not secret)

any commercial use

not an abandoned experiment

intentionally produced (not accidental) (note 173-4)

published [What counts as printed publication? See

In re Hall]

7. Statutory bars [didn't file soon enough (time clock); or, someone else invented first even if you filed first (priority)]

(a) Read sec. 102(b)

(b) What counts as printed publication?

Consider Hall (175)

Facts: Hall wanted to patent a chemical compound. [What is a reissue application? see sec. 251]. Hall's effective filing date is February 27, 1979. It turns out that a German doctoral dissertation anticipated this product; the degree was awarded on November 2, 1977. Therefore, if the German dissertation counts as a printed publication, Hall's application is too late under 102(b).

Two issues:

(1) Can a dissertation in German count as a printed publication to bar a U.S. patent?

- Yes, if made available to the public

(2) Then, what date was this dissertation made

available to the public?

- Date it was put into the main library of the

University

- See Affidavit of Dr. Will (175-6)

What date would Hall have had to have his application filed by?

- Note 3 (177): publication = available to at least one member

of the general public; with journals this means receipt by at least

one subscriber (thus, if you submit a manuscript by mistke you can

get it back before it's published)

See also, DuPont v. Cetus (grant proposal not a publication)

(c) Consider Problem 3-7 (177)

IP 97 Class No. 8

1 Now focus on sec. 102(a) [before the applicant's date of "invention," the device was known or used in this country, or patented or described in a printed publication anywhere]

(a) Consider Rosaire (169): What counts as being known?

- What issues? (1) What was the date of activities of

Teplitz and coworkers? (2) Does what Teplitz and coworkers

did amount to being"known" for purposes of sec. 102(a)?

[See finding of fact (170)]

- What about the fact that Teplitz invented this first and later applied for a patent in 1939 (170)? Should Teplitz get the patent instead of Rosaire? [see below; Griffith]

- What about appellant's claim that Teplitz's activities

were merely an experiment?[see Picard (172-3 n. 4)

also

- What about the fact that appellee (National Lead Co.) gets to infringe someone's patent and then defend by claiming that actually someone else had it before the patentee?

- Compare with real property ejectment suits;

trespasser doesn't get to set up invalidity of possessor's

title -- why the difference?

- no disorderly scrambles?

- public domain?

- What about the fact that Rosaire and Horvitz couldn't have known what Gulf employees were doing?

(b) Summary: What counts as being known?

public (not secret)

any commercial use

not an abandoned experiment

intentionally produced (not accidental) (note 173-4)

published [What counts as printed publication? See

In re Hall]

2. Statutory bars [didn't file soon enough (time clock); or, someone else invented first even if you filed first (priority)]

(a) Read sec. 102(b)

(b) What counts as printed publication? [similar to sec. 102(a)]

Consider Hall (175)

Two issues:

(1) Can a dissertation in German count as a printed publication to bar a U.S. patent?

- Yes, if made available to the public

(2) Then, what date was this dissertation made

available to the public?

- Date it was put into the main library of the

University

- See Affidavit of Dr. Will (175-6)

What date would Hall have had to have his application filed by? [November (?) 1978]

(c) Note 3 (177): publication = available to at least one member

of the general public; with journals this means receipt by at least

one subscriber (thus, if you submit a manuscript by mistke you can

get it back before it's published)

See also, DuPont v. Cetus (grant proposal not a publication)

(d) Consider Problem 3-7 (177)

3. What counts as known or used (under sec. 102(b)? [similar to sec. 102(a)]

(a) Egbert v. Lippmann (178)

Note that the predecessor to 102(b) said "in public use for more than 2 years with the consent and allowance of the inventor" (179)

Facts: Barnes invented a better corset spring and his girl friend

(later his wife) used it, along with a friend of hers, starting in 1855; he didn't apply for a patent until 1866. "In the meantime the invention had found its way into general, almost universal, use."

Ct says this is "public" and a bar: why?

[giving to someone else with no restrictions (180-81),

even if only to one person]

(b) NB note 3 (182) Egbert not read broadly; but even a single sale will be a bar ["on sale"]

Does this also apply to an offer to sell? [Yes]

(c) experimental use exception (see City of Elizabeth (183)

Invented of more durable wooden pavement had it laid on

public street, where people and horses walked on it for 6 years. Is this public use?

- No, because experimental use doesn't count [and how

about the length of time? suitable for the experiment -- see

(185)]

(d) Answer questions 1 and 2 on p. 187

4. Priority (187) (sec. 102(g))

(a) Under what circumstances can someone who files an application first still not get the patent? [Generally, first to invent wins]

- How does this work? [after someone files an application,

or after the patent is issued, someone claiming to be first to

invent files an application, and the PTO declares an

interference][see sec. 135]

(b) When has someone invented? [reduction to practice]

- What is reduction to practice? [making a workable prototype]

(c ) So, is it possible for A to conceive first, B to conceive second,

but B reduces to practice first and counts as first to invent, B gets the patent? [even if A is first to file?]

- Yes. But only if A isn't diligent enough between

conception and reduction to practice [second sentence of

sec. 102(g)]

(d)What about bad incentive to keep invention secret until somebody else tries to exploit?

- second inventor can win if 1st kept invention

secret [1st sentence of sec. 102(g)]

- second inventor can also win if 1st "abandoned"

(e) Consider Griffith v. Kanamaru (188)

- Griffith (for Cornell U.) and Kanamaru (for a Japanese chemical firm) both invented an aminocarnitine compound useful in the treatment of diabetes. Kanamaru got the patent and Griffith's later application for the same thing caused an interference.

- Who was first to reduce to practice?

- Griffith = January 11, 1984

- Kanamaru = [November 17, 1982 - he has

to go by filing date; read note 2 on p. 191]

[not true anymore; see note on GATT/TRIPS

(192-3)

- So, Griffith in order to win would have to come

within the exception in 102(b)? [1st to conceive AND diligent

in reduction to practice]

Was Griffith the first to conceive?

When did he conceive? [June 30, 1981] When did Kanamaru conceive? [again, has to go by filing date: November 17, 1982]

Was Griffith diligent enough under 102(g)?

- following Univ. policy of waiting for

outside funding

- waiting for a graduate student

(e) Answer question 1 on p. 191

- Griffith would win if he had reduced to practice on

11/16/82 [even though Kanamaru filed first]

- Does the diligence of the first to reduce to practice

matter? [well, if he's *really* not diligent, perhaps could

claim he "abandoned"]

(f) Read Note 3: Who would have won under first to file rule?

(g) Read Note 4: What happens to Griffith after Kanamaru wins?

5. Nonobviousness [how does it differ from novelty?]

(a) Read sec. 103(a)

[Note 103(b) is a 1996 amendment giving special solicitude to biotech processes--see (206n.3)]

(b) The S. Ct. explained and interpreted the nonobviousness requirement in Graham v. John Deere Co. (193 )

- Facts: Graham (a plow manufacturer) holds a patent on a spring clamp which permits plow shanks to be pushed upward when they hit obstructions in the soil. He patented one version in 1950 (the `811 patent) and then another version in 1953 (the `798 patent). The later one changes the position of the shank and the hinge plate so that the shank can flex more and this makes the plow work better. The PTO first rejected this as not being distinguished from his earlier patent (204), but then allowed it after he substituted 2 new claims.

Graham sues competitors (John Deere et al.) for using the device covered by the `798 patent. They respond that the patent is invalid; specifically that "the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art" under sec. 103. S.Ct. gets the case because two circuits reached different decisions on same patent (194).

(c) Why do patents have to meet a non-obviousness test? Is this test constitutionally required? [Yes]

- (194): innovation; advancement; and things which add

to the sum of useful knowledge

- (196): not creator's natural right, but benefit to society;

high standard for patentability

(d) Previous to the 1952 Act the courts used "invention"

rather than non-obviousnessness

- Hotchkiss (197-8) [inventor vs. skilful mechanic]

- Cuno (199) [flash of creative genius][see last sentence of 103]

(d) Did codification as non-obviousness lower the threshold of patentability; or was it just an attempt to use less misleading words to accomplish the "same" thing? (194, 200)

(e) How will court go about determining nonobviousness?

(199) scope and content of the prior art; differences between

the prior art and the claims at issue; level of ordinary skill in the pertinent art

(199): secondary considerations: commercial success; failure

of others; satisfaction of long-felt demand

- NB (214) [later]

[(f) Question of law or question of fact? (199)]

(g) How applied to this case?

- what was scope and content of the prior art? (204)

- what were the differences between the prior art and the

claims at issue? (204)

- what was the level of ordinary skill in the pertinent art?

(205)

(h) What is the role of prosecution history ("file wrapper") in this case?

NEXT: nonobviousness [cont'd]-to 216; enablement - to 228; infringement-literal - to 241; doctrine of equivalents, etc. - to 264

IP 97 Class No. 9

1. Nonobviousness [how does it differ from novelty?]

(a) Read sec. 103(a)

(b) The S. Ct. explained and interpreted the nonobviousness requirement in Graham v. John Deere Co. (193 )

(c) Why do patents have to meet a non-obviousness test? Is this test constitutionally required? [Yes]

- (194): innovation; advancement; and things which add

to the sum of useful knowledge

- (196): not creator's natural right, but benefit to society;

high standard for patentability

(d) Previous to the 1952 Act the courts used "invention"

rather than non-obviousnessness

- Hotchkiss (197-8) [inventor vs. skilful mechanic]

- Cuno (199) [flash of creative genius][see last sentence of 103]

(d) Did codification as non-obviousness lower the threshold of patentability; or was it just an attempt to use less misleading words to accomplish the "same" thing? (194, 200)

(e) How will court go about determining nonobviousness?

(199) scope and content of the prior art; differences between

the prior art and the claims at issue; level of ordinary skill in the pertinent art

(199): secondary considerations: commercial success; failure

of others; satisfaction of long-felt demand

- NB (214) [later]

[(f) Question of law or question of fact? (199)]

(g) How applied to this case?

- what was scope and content of the prior art? (204)

- what were the differences between the prior art and the

claims at issue? (204)

- what was the level of ordinary skill in the pertinent art?

(205)

(h) What is the role of prosecution history ("file wrapper") in this case? {(205-6)]

2. One way nonobvious differs from novelty is that to "anticipate," "a single prior art reference must disclose every element of what the patenteee claims as his invention," (207), whereas something can be obvious even if you would have to look at different references to figure it out (if it would be obvious to look in these different places and put the ideas together.

Consider In re Vaeck (207):

(a) Patent examiner rejected the patent, and the PTO's appeals board affirmed the rejected; but ct here reverses the rejection. [I.e., PTO says the claimed invention would have been obvious and ct says no it wouldn't.]

(b) What was the claimed invention?

[a hybrid gene that allowed manufacture of protein that killed insects expressed in a cyanobacterium (blue-green algae) that floated on top of water so insects would eat it][see bottom of (208)]

(c) Why did PTO think it would have been obvious to anyone skilled in the art? [What are "references"?]

Dzelzkalns discloses a chimeric gene capable of being highly expressed in a cyanobacterium [but not with the insecticidal protein]

Sekar I, Sekar II, and Ganescan teach genes encoding the insecticidal protein and the advantages of expressing such genes in hosts from another species [but not the cyanobacterium]

(d) Why did the judge think it wasn't obvious?

obviousness is a legal question; standard of review is

clearly erroneous (209)

2 factors to consider:

whether the prior art would suggest that the procedure/

device be tried

whether the prior art would also have revealed . ..

a reasonable expectation of success. [Why this factor??]

(e) What else would the PTO have needed to win on obviousness?

i. [one of the references should hint at what can be done; e.g., in O'Farrell, a prior reference mentioned preliminary evidence that its method could do what the later applicant claimed (211); so, in the case at bar, one of the references should have suggested that cyanobacteria would be attractive hosts for expressing unrelated foreign genes, but, instead, the relevant prior art only indicated that cyanobacteria are attractice hosts for foriegn genes involved in photosynthesis (210)]

- Will it work if the suggestion is only implicit? (211 n. 1)

ii. [What about the reasonable expectation of success factor?]

- See (212 n. 2; In re Bell) ["undue experimentation" implies nonobviousness]

3. Consider problem 3-9 (213)

4. "Objective evidence"/ "Secondary considerations" (214)

(a) Secondary considerations such as commercial success, long-felt need, failure of others, copying, and unexpected results may tip the scale in favor of patentability (conclusion of nonobviousness).

- How does the reasoning go? [If there was so much demand

for this, others would definitely have made it if they could; commercial success shows the level of demand]

(b) But this reasoning is thought to be problematic. Why?

- Commercial success need not be due to the innovation

(215)

- Merges says failure of others is less problematic for

nonobviousness (216); explain...

- What about long-felt need but no evidence

that others tried and failed?

5. Enablement [Adequate Description/Disclosure][5th element of patentability]

(a) Read sec. 112

- 3 requirements (223 n. 1): written description; clear claim;

enablement

(b) The purpose is two-fold(217):

- prove to the world that the applicant was in fact in possession of the invention at the time of the application [otherwise someone else might be the first inventor] [Fiers v. Revel (217)]

- enable those skilled in the relevant art to make and use the invention

(c) The invention must be described well enough that one of ordinary skill in the art can make and use the invention

- if one skilled in the art has to use "undue experimentation,"

then it is not properly disclosed [see (227 n. 3)]

- this means applicant won't get the patent

- recall that if prior art references would require "undue

experimentation" to discover the applicant's device/process,

then the applicant will get the patent

- can these conflict? [yes, if applicant needs to argue in patent

no. 1 that prior art would require undue experimentation

to one skilled in the art, then, in patent no. 2, disclosing

in same way as prior art did wouldn't be good enough

to get the patent .... see (226 n. 1)

- who is the one who must be enabled? [see (228 n. 5)]

(d) The "best mode" of carrying out the invention must be disclosed (228 n. 6) [What is the rationale for this requirement?]

6. Broad claims often run into enablement difficulties. [I.e., you may claim transgenic nonhuman mammal, but your specification only tells how to make a mouse]

(a) How will this come up? [you sue someone who has made a cat

and he responds that your specifications don't enable the cat so your patent is invalid]

(b) E.g., consider the incandescent lamp case (217):

- Facts: The Sawyer and Man patent claimed "incandescing conductor for an electric lamp, of carbonized fibrous or textile material." (see claims (218). They had actually used carbonized paper. Thomas Edison found that carbonized bamboo of a particular species worked better. Is Edison infringing the Sawyer and Man patent?

- Does the Edison lamp literally infringe claim 1? [yes, carbonized bamboo is carbonized fibrous material]

- What defenses does Edison have?

- [novelty, utility, fraud (217)]

- enablement: the description of the device in the patent

application doesn't enable one, without undue experimentation,

to arrive at the particular species of bamboo that works best

[read (220, 221)]

- Edison wins because claims 1 and 2 are invalid. What about claim 3? (218)

7. Consider Problem 3-10 (209)

NEXT: infringement-literal - to 241; doctrine of equivalents, etc. - to 264

IP 97 Class No. 10

1. Enablement/disclosure [cont'd]: consider problem 3-10 (209)

2. Now we've surveyed all 5 elements of patent validity. We're ready to move on to infringement. Recall litigation pattern:

(1) We didn't infringe

(2) Even if we did infringe, your patent is invalid

Look at sec. 271: what is infringement?

3. The main thing you do in adjudicating infringement is see if the claims of the patent "read on" the accused device. [Literal infringement] [What is non-literal infringement? see below ("doctrine of equivalents")]

(a) An obvious case of literal infringement is if I just take your device and copy it exactly.

(b) Can there be literal infringement even if the accused device is not an exact copy?

- Yes, because the legally operative scope of the property

right is not the patented device itself but the words of the claim (as

applied to the accused device)

- E.g., if your claim says "transgenic nonhuman mammal"

w/ X biological property, and your device is a mouse, a transgenic rabbit with X biological property can infringe

[Infringer might still win by claiming patent was

invalid for lack of enablement]

- Another example: Sawyer and Man patent claim 1 said

carbonized fibrous material. Edison's use of carbonized bamboo

would infringe, even though he didn't copy their use of

carbonized paper.

(c) Although the accused device needn't be an exact copy of the

patentee's device, in order for it to be literally infringing it does need

to incorporate every element of the patentee's claim (see (240 n. 1)).

- What elements are there in claim to "transgenic nonhuman mammal" w/ X biological property? [(1) transgenic (2) nonhuman (3) mammal (4) X biological property]

--So, in other words, a "transgenic nonhuman

mammal" without X property wouldn't infringe, etc.

(d) What if infringer just changes a really trivial element?

- Suppose the claim for a complicated apparatus included a

glass cylinder and the accused device was exactly the

same except the cylinder was plastic

- It's still not literal infringement (240 n. 1); but it might be infringement by doctrine of equivalents (difference is

so trivial that it's unfair to let infringer get away with

it)

- [Of course, patentees will try not to write claims

this way. What's a better way to draft it? [use more general

terms for the appropriate properties of the material]]

4. Consider Larami v. Amron (229):

(a) Facts: One Esposito patented a toy water gun, which squirted water under pressure created by a hand pump, and also made noise and light. He assigned the patent to Amron and TTMP. Larami made a toy water gun ("Super Soaker") that squirted out water under pressure created by a hand pump, but didn't make noise and light. Larami brought action for declaratory judgment that Super Soaker didn't infringe TTMP (Totally Rad Soaker) [action also was for damages for tortious interference with contractual relations, etc., because TTMP was advertising that Larami was infringing]

(b) In order to decide case, what must judge do? (1) interpret the claims; (2) see if, as interpreted, they cover the accused product.

- Note: Markman (253)

(c) Here, claims for the light and noise capabilities were not in issue. What about the water-squirting capabilities? Read the claim (232)

- After the judge examined the SuperSoaker, what

did he decide? [no chamber therein, because tank was

on the outside] [this is an interpretation of "therein" and a

determination that it is an element of the claim]

(d) But, isn't the pressure-pump the main invention and the placement of the tank trivial?

- Still, because the claim said "therein," it isn't

literal infringement

- Might try to argue by equivalents [but ct here

thought the placement of the tank outside the gun was

such a dramatic improvement that it couldn't be

held to be equivalent (233)]

(e) Could Esposito have drafted the patent in such a way that it would be literally infringed even by guns whose tank wasn't inside the body of the toy? ["an elongated housing and a chamber for a liquid connected to said housing in such a way as to permit water to flow from the chamber through the housing ..." ?? see also (234 n. 1)]

5. Consider Genentech v. Welcome (234)

(a) Facts: Genentech had three patents relating to a protein called t-PA (tissue plasminogen activator) which is important in dissolving blood clots and stopping heart attacks (235). The '603 patent relates to purifying human t-PA found in melanoma; the '075 patent relates to producing t-PA through genetic engineering (236).

The claim of the '603 patent (236) claimed "human plasminogen activator...having a specific activity of about 500,000 IU/mg..."

The claim of the '075 patent (237) claimed "a DNA sequence encoding human tissue plasminogen activator"

Defendants produced products called met-t-PA and FE1X using biochemical methods to alter naturally occurring t-PA (238-239). FE1X has a much longer half-life in the body making dosage easier. Do they infringe?

(b) How will ct approach the issue? First, interpret the claims. What are their essential elements and how broad are they? [To look at it the other way, what are their limitations?]

- What are the elements of the '603 claim? What are its

limitations? [see elements (236); cts interpretation (238)]

(c) Result? [(239)]

- Why didn't defendants' products at least infringe the '075

patent which related to a genetically engineered product and not

to the purified human product?

6. Consider the doctrine of equivalents. [Graver Tank v. Linde Mfg. (242):

(a) Facts: Linde owned a patent covering an electric welding process and "fluxes" to be used with it. Their flux was a compound called Unionmelt. The district court held four flux claims to be valid and infringed by Lincolnmelt, defendants' competitive product; rest of claims invalid. The district court's findings on validity (vel non) were upheld after going all the way to the S.Ct. Now the S.Ct. has the case again for rehearing, limited to the question of whether the 4 valid flux claims have been infringed.

The patent owned by Linde claimed a welding compound "containing a major proportion of alkaline earth metal silicate." Linde's product, Unionmelt, contained silicates of calcium and magnesium (both alkaline earth metal silicates). The competitive product, Lincolnmelt, consisted of 88.49% manganese silicate (not an alkaline earth metal silicate) and calcium silicate. In welding it worked the same as Unionmelt.

(b) Argument that Lincolnmelt does not infringe: Read the literal wording of the claim -- it says "major proportion of alkaline earth metal silicate" and the accused compound instead has a major proportion of something which is not an alkaline earth metal silicate [Trial court said patent wasn't "literally" infringed.]

(c) Argument that Lincolnmelt infringes anyway: Permitting infringers to avoid patents by changing minor details would deny inventors the benefit of patents and would mess up incentive structure. (243) If the thing is essentially the same it doesn't have to be literally the same in every detail.. [sameness & difference]

- if it performs substantially the same function in substantially the same way to obain the same result, it's the same [even if different in name, form, or shape (243)

- equivalence can involve mechanical components or

chemical ingredients

(d) Court says (243) that the doctrine operates not only in favor of the patentee of a pioneer or primary invention, but also for the patentee of a secondary invention consisting of a combination of old ingredients which produce new and useful results, although the area of equivalence may vary under the circumstances. What does this mean?

- cites Westinghouse (discussed on (259-60)

- "reverse" doctrine of equivalents [if what you did is

enough of a breakthrough, even literal infringement can

be excused]

(e) Whether or not to find infringement by applying doctrine of equivalents is question of fact for trial court. In this case the issue is whether trial court erred in finding Lincolnmelt was equivalent to Unionmelt (and thus infringing).

- What kinds of factors led the trial court to make this decision? [(244-5)]

- identical in operation and produce the same

kind and quality of weld

- no evidence that Lincolnweld was developed by

independent R & D [court can infer that accused compound

is copied]

- prior art: Miller and Armor involved use of

manganese silicate in weldling fluxes [expired patents]

- persons reasonably skilled in the art

would have known manganese and magnesium

were interchangeable [use of prior art in

favor of doctrine of equivalence]

- Expert witnesses

- Texts on inorganic chemistry

- Visits to laboratories and observations of welding

demonstrations

(f) Dissent: Patentee should be held to literal claim, because:

(1) shouldn't be allowed to let things mentioned in

specifications broaden the claim; what is not literally

claimed is dedicated to the public (246)

- inventor experimented with other ingredients

including manganese and chose the ones claimed

- might have thought couldn't get a

patent if claimed manganese, since

it was known in prior (expired) patents [use of

prior art against doctrine of equivalents]

- see n. 1 (246-7): hypothetical claim procedure in

golf ball case

(2) differences are more than de minimis (247 n. 2)

(g) CAFC dramatically reinterpreted doctrine of equivalents in Hilton-Davis (1995)--adds copying vs. independent design; and objective evidence (like known interchangeability in the prior art): question is whether differences are "insubstantial" or "substantial" [note: cert. granted, decision not yet issued]

- note this is a jury issue (255-6)

- raises possibility that judge in Markman hearing will interpret claim narrowly so that literal infringement can't be

found, but then jury can give patentee victory anyway by

finding equivalence

(h) Doctrine of equivalents is accordion-like: cts give the patent broader scope if they think it is a pioneer patent (see 250-251)

- Does this mean your pioneer patent could prevail

against an improvement doing exactly the same thing but

with a stronger material that hadn't been discovered yet

when your patent issued? (251; explain)

- Hughes aircraft (yes); Laser Alignment (yes);

Texas Instruments (no)

(i) Problem of mean-plus-function claims (261-2)

- Read last paragraph of sec. 112 [allows means-plus-function

claim for an element of a combination]

- Nevertheless, this only covers structure disclosed

in the specification and equivalents thereof (262)

- See note 3 (263): this has caused considerable

confusion... problem is, it seems to limit the doctrine

of equivalents (264)

- Example: What would happen if your means for performing

a calculation in your process was an adding machine, and

the accused infringer's process used a computer?

- Might be like Hughes Aircraft or Laser Alignment [but

not if doctrine of equivalents in your case is limited to the

meaning of equivalents in last para. of sec. 112]

[Add: Problem 3-11]

NEXT: infringement [cont'd] and remedies - to 308. Omit sec. G (design and plant patents); move on to software patents -intro (830-850 [read on own]; 963-990

IP 97 Class No. 11

1. Infringement [cont'd][sec. 271(Supp 333)]: inducment and contributory infringement

(a) Consider sec. 271(b) [active inducement]

- see note on inducement (267)

- in Water Technologies, a consultant supplied plans for

an infringing device [he didn't make, sell, himself, but he induced

his client to do so]

- importance of intent [statute doesn't say so?]

- see also notice requirement for direct

infringement (sec. 287)

- what do you need to know to count as intent?

- that there is a patent that covers this

- that your activities will lead to infringement

- role of patent attorney's opinion letter re the above

(b) Consider sec. 271 (c) [contributory infringement]

(1) Why should there be infringement liability for firm

that makes component of an infringing device? [Why should manufacturing an unpatented product automatically make you an infringer w/r to some other patented product?]

- Why the exemption for staple article or

commodity of commerce...? [see (283 n. 43)]

- Why the exemption for firm that doesn't know of

its product's adaption for infringement? [intent]

- [is this necessary if the article has no

commercial noninfringing uses?]

(2) Consider Bard v. ACS (264)

- Facts: ACS was supplier of a catheter for use in angioplasty. The method of angioplasty it was used in was patented by Bard. Bard sues ACS for contributory infringement.

- In order to figure out whether there is contributory infringment, first court has to figure out whether there is any direct

infringement that defendant can contribute to

- How does ct do this? [remember procedure: first

interpret claims, then see if they read on the accused

process] (265)

- Why is summary judgment reversed?

- Can catheter manufacturer be contributorily liable even if

doctor who uses infringing device is immunized? (266 n. 1)

2. Defenses [other than patent invalidity]

(a) experimental use (269)

- note problem of gearing up to produce patented product before end of term

- this defense is very narrow, except for pharmaceuticals

(271 n. 3)

(b) inequitable conduct [before the PTO]: Kingsdown (217)

(1) what counts as inequitable conduct? failure to disclose

material information, or submission of false material information,

with intent to deceive

- e.g., not mentioning an important reference in

prior art (276 n. 2)

- would it be bad enough if you were

merely negligent w/r to prior art, or would

have to omit it purposely or knowingly?

(2) would it be inequitable conduct to draft claims that cover

the product of a competitor that is already on the market?

(3) would it be inequitable conduct to delay your prosecution to make your patent issue as late as possible? [note, no longer a problem]

- why would you do this? (276 n. 3)

- what are the ways you can delay an application?

[note sec. 133 - 6 months to respond to any PTO action]

- explain division; parent (sec. 121)

(4) note sec. 253 (disclaimer): would it be inequitable conduct

to fail to disclaim a claim that you came to think was invalid?

- see sec. 288: must disclaim invalid claim to recover

costs against infringer of valid portion of patent; also may have to disclaim to avoid inference of deceptive intention

- see also sec. 251 (reissue)

(5) Go back to facts of Kingsdown: what happened?

- Facts: Kingsdown sued Hollister for infringement of

'363 patent (on a 2-piece ostomy appliance). The claims

had been revised a lot during 6-year prosecution. During this

period Kingsdown got a new attorney who saw Hollister's

competing product and filed a continuation application (apparently covering the competing product).

- [What is a continuation application? new

application changing only the claims]

In the process of drafting the continuation application, the

attorney copied over all the claims that the examiner had

previously allowed. He made a mistake, however, w/r to

claim 43 --he thought it was identical to allowed claim

50 in the original (parent) application, but instead it was

identical to a claim that the examiner had disallowed for

indefiniteness under sec. 112 [not "particular" and "distinct"

enough]. Claim 43 made it into the final patent as claim 9.

Defendant claims that had claim 9 been written as the

narrower, allowable original claim 50 rather than the

rejected original claim 50, defendant would possibly

have been able to defend against infringement.

Defendant therefore says Kinsdown's attorney, after

seeing defendant's device, must have deliberately carried

forward the wrong version of the claim because he saw

that it would provide a stronger case for his client.

Trial ct finds intent to deceive; what result? Patent is

unenforceable. However, appellate court reverses--

explain (see 274).

why did court think this didn't amount to inequitable conduct? [finding of intent was clearly erroneous; gross negligent wouldn't be enough culpability]

(c) patent misuse

- issue of trying to "extend" monopoly to non-patented items

- facts of Motion Picture Patents (278)

- make licensees of patented machine use only the

film utilizing patentee's other patents; make licensees comply with other later-imposed directives of patentee

- ct thought this was outside scope of patent

grant (see 281)

Over the years this doctrine has been narrowed: what does it now look like?

- sec. 271(c) : patentee can't sue for infringement if competitor

sells "staple" product for use with patented product [i.e. can't tie to

staple product [don't need antitrust or patent misuse for this]

- sec. 271(d): (1) patentee can himself sell a nonstaple product necessary for the patent and it won't be patent misuse; moreover, (5) unless patentee has market power in the relevant market for the patented (tying) product, it won't be patent misuse to refuse to sell the patented product unless buyer also purchases another product

- see Dawson Chemical (284)

- what is left for patent misuse?

- royalty not measured by use? [Hazeltine (285)]

- grantback clauses (286)

- patent suppression? [not anymore; see sec. 271(d) (4)]

3. International patent law (290) [read on own mostly]

- first-to-file system

- absolute priority [no one-year grace period]

- Paris Convention [12 months to file after 1st filing somewhere]

- PCT [gives more time up to 30 months]

- GATT/TRIPS

- what did we make others