Bloomfield Hills Michigan., — August 10, 2010 Rader, Fishman & Grauer PLLC, a leading national intellectual property law firm, is pleased to announce that R. Terrance Rader of Troy and Michael B. Stewart of Birmingham were once again recognized by Best Lawyers and included in the 2011 Best Lawyers in America list. Best Lawyers, is the oldest and most respected peer-review publication in the legal profession.

The Rader, Fishman & Grauer attorneys chosen as 2011 Best Lawyers In America are highly experienced intellectual property lawyers whose practices focus on patent, trademark, copyright and trade secret strategies, litigation and licensing.

R. Terrance Rader (Troy), a founding member, is considered one of the top intellectual property
litigators in America. Rader has more than three decades of experience in patent, trademark and trade secret litigation appearing before U.S. District Courts across the United States and the Court of Appeals for the Federal Circuit. Rader is a former primary examiner for the U.S. Patent & Trademark Office. In addition to being listed in Best Lawyers, Rader is also listed among Who’s Who in America, Who’s Who in American Law, Michigan Super Lawyers and the Lexis Nexis Martindale Hubbell Bar Register of Preeminent Lawyers.

Michael B. Stewart (Birmingham), a founding and managing member, has worked in a wide range of technical areas in domestic and foreign intellectual property matters, including merger and acquisitions, prosecution and litigation. Stewart’s breadth of experience has enabled him to apply a comprehensive, cross-disciplinary approach to maximize the scope of intellectual property protection and beneficial usage for his clients. In addition to being listed in Best Lawyers, Stewart has been recognized by Crain’s Detroit Business as a “40 Under 40” business leader to watch. He is also listed in Who’s Who in the World and Who’s Who in American Law, Michigan Super Lawyers and the Lexis Nexis Martindale Hubbell Bar Register of Preeminent Lawyers.

First published in 1983, Best Lawyers is based on an exhaustive annual peer-review survey. For the new U.S. edition, more than 50% of the lawyers listed in Best Lawyers cast more than 3.1 million votes on the legal abilities of other lawyers in the same and related specialties. Because of the rigorous and transparent methodology used by Best Lawyers, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor.

Rader, Fishman & Grauer is a national intellectual property law firm in the United States, ranking annually in the top 10 percent in the number of new patents and trademarks obtained nationwide (IP Today). The firm is a leader in intellectual property litigation and operates its own state-of-the-art, high-tech courtroom. Its practice is focused exclusively on patents, trademarks, copyrights, trade secrets and associated litigation, licensing, freedom-to-use opinions and due diligence investigations. Rader, Fishman & Grauer provides intellectual property legal counsel and services all over the world from offices in Bloomfield Hills, Michigan; Washington, D.C.; Orange County, California and Tokyo. As a firm, Rader, Fishman & Grauer PLLC has received numerous accolades and awards from the legal profession.

by: Charlie Bieneman 

What is patentable and what is not patentable? Today, the United States Supreme Court offered a frustratingly vague answer to this question in its long-awaited decision in Bilski v. Kappos (No. 08-964.) Many of you have probably already been bombarded with reports and commentary concerning today’s decision. We would like to offer you some thoughts on its practical effects.  In particular, how are you affected if you own patents or patent applications that claim business methods? How does Bilski affect software claims? And how should Bilski affect your plans to file patent applications in the future?

Bilski concerned a patent application for a method of hedging risk. The Court held that Bilski’s method is not patentable subject matter, a result in which all justices agreed. However, a majority of the Court stated that it is possible for a business method to be patentable. The majority held that Bilski’s method was unpatentable because it was directed toward an “abstract idea.” Unfortunately, the Court did not clearly draw the line between ideas that are abstract and ideas that are not abstract. The Court’s decision in Bilski is therefore pretty limited to the facts of the case.

Thus, our general reaction to Bilski is that the answer to questions about how the decision affects existing portfolios and plans is “not much.” That is, we believe that Bilski is going to turn out to be fairly limited to its facts, and that the decision is unlikely to have a broad impact on existing or planned patent portfolios. Bilski’s claims truly were abstract, in the sense that they could have been carried out solely in the human mind, without affecting or transforming any physical matter, and without the aid of any computer or other machine. Claims that either do not have any physical element at all, or that are not carried out on a machine such as a computer, though not unheard of, are relatively rare.

In particular, Bilski does not appear to pose much threat to claims directed toward computer software. The Court actually rejected a rigid test adopted by a lower court in part because the Court felt that the rigid test would improperly create uncertainty as to whether certain software claims were patentable.

In short, Bilski does not, as some had predicted, turn the world upside down. Most claims that were patentable yesterday will still be patentable tomorrow. Unfortunately, however, the Bilski Court did not articulate a test for patentability that can be used to predict whether claims other than Bilski’s are patentable. As Justice Stevens put it in his opinion concurring in the Court’s result:

The Court . . . never provides a satisfying account of what constitutes an unpatentable abstract idea. . . . The Court essentially asserts its conclusion that [Bilski's] application claims an abstract idea. This mode of analysis (or lack thereof) may have led to the correct outcome in this case, but it also means that the Court’s musings on this issue stand for very little.

Harsh words, perhaps, but probably correct. Thus, the Patent Office is going to be scrambling in the days to come to articulate a standard for patentability that examiners can apply, and that applicants can understand. Expect, therefore, that for some time to come we will be living with a certain degree of unpredictability and uncertainty when dealing with both the Patent Office and courts on the issue of patentable subject matter.

In sum, as a practical matter, Bilski appears to be somewhat of an anticlimax. The law in this area will doubtless continue to develop and evolve. For now, at least, the business of obtaining patents directed to various processes, including software processes, seems likely to continue much as it has been.

If you have any questions concerning the Bilski decision, software and business method patents, or patentable subject matter in general, please contact Charles Bieneman (cab@raderfishman.com ; 249-594-0648) or any attorney at Rader Fishman & Grauer PLLC.

In October, Michigan hosts the World Stem Cell Summit. Billed as the flagship event of the global stem cell and regenerative medicine community, it will draw 1,200-plus participants from around the world and showcase the substantial life science resources Michigan has available to develop and support businesses that diversify its economy.

Making these businesses successful involves leveraging their intellectual capital. Patenting is one technique for doing so.

The U.S. Patent Act, 35 U.S.C. §1 et seq., implements Congress’ constitutional power to “promote the Progress of Science and useful Arts.” An issued patent allows the patent holder to exclude others from making, using, offering for sale, selling, or importing the patented invention for about 20 years from filing the related application with the U.S. Patent and Trademark Office (USPTO).

The requirements for obtaining a patent include, among others: An invention that is patentable subject matter; an invention that is useful, novel, and non-obvious; and a patent application that shows that the inventor is in possession of the claimed invention and enables one to practice the invention without undue experimentation, so-called “written description” requirements.

Although these criteria are readily stated, obtaining a patent remains challenging, even for seemingly novel, promising discoveries.

Recent decisions illustrate some of these challenges. Since the U.S. Supreme Court’s decision in Diamond v. Chakrabarty (1980), many patents have issued for cell lines, gene sequences, and the like which have been developed, purified, or isolated from a natural state. Yet, patenting life forms and derivative materials remains controversial; while the USPTO currently allows patenting of certain stem cells, some other countries do not.

Public debate continues over where the line for patentable subject matter should be drawn. In Association for Molecular Pathology v. USPTO (S.D.N.Y. 2010), nonprofit plaintiffs represented by the ACLU challenged several patents related to the human BRCA1/2 genes used to evaluate breast cancer susceptibility.

In March 2010, the federal district court granted summary judgment in the plaintiffs’ favor and against patent holders Myriad Genetics and the University of Utah Research Foundation, finding that the isolated genes and related methods were not patentable subject matter.

Some suggest that if the decision is upheld, it could affect years of gene patenting previously allowed under existing USPTO guidelines.

Assertions of public interest also underlie a recent challenge to stem cell patents on obviousness” grounds. In KSR v. Teleflex (2007), the U.S. Supreme Court held that the determination of “obviousness” involves: Whether the prior art teaches a finite number of identifiable, predictable solutions to the problem addressed; Whether there would have been a reasonable expectation of success; and Whether a skilled artisan would have been motivated by design pressures and market needs such that it would have been “obvious to try” to develop the claimed invention.

The KSR factors were at issue in a “consumer watchdog” challenge to three stem cell patents held by the Wisconsin Alumni Research Foundation (WARF). Claiming that the patents were “impeding scientific progress and driving vital stem cell research overseas,” the Public Patent Foundation and the Foundation for Taxpayer and Consumer Rights sought re-examination of the WARF patents in 2006.

In 2007, the patent examiner rejected the patents, but in 2008, the rejections were reversed. Due to procedural rules, the groups could appeal with respect to only one patent.

In April 2010, the USPTO Board of Patent Appeals and Interferences reinstated the rejection of the WARF patent claims before it, finding in relevant part that claims at issue were “obvious” under KSR because “the path to deriving human [embryonic stem] cells had a definite starting point with explicit landmarks along the way”; it was “obvious to try” to derive the stem cells; and a skilled artisan would have had “significant guideposts” to follow in doing so. The examination and the controversy continue.

Finally, Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co. illustrates not only the application of “written description” requirements, but also public policy underlying the patent system.

The Ariad inventors had discovered a transcription factor, NF-kB, which could protect cells from harmful extra cellular influences.

However, too much NF-kB activity could harm the cell. The inventors surmised that artificially interfering with NF-kB activity could reduce harmful effects. The resulting patent had broad claims reciting the step of “reducing NF-kB activity,” but it did not identify specific compounds to produce this result.

In March 2010, an en banc Federal Circuit upheld an earlier reversal of a multimillion dollar infringement verdict in Ariad’s favor, finding that the patent at issue was invalid.

Defendant Eli Lilly had contended that the patent language was little more than a research plan. The Court essentially agreed, affirming that the “written description” requirement of 35 U.S.C. §112, Para. 1, has two facets and finding the patent invalid for lack of written description.

Responding to criticism that a finding of invalidity would impair incentives to do basic research, the Court emphasized public policy underlying patents: “… Patents are not awarded for academic theories, no matter how groundbreaking or necessary to the later patentable inventions of others. ‘[A] patent is not a hunting license. It is not a reward for the search, but compensation for its successful conclusion.’ …

Requiring a written description of the invention limits patent protection to those who actually perform the difficult work of ‘invention’ — that is, conceive of the complete and final invention with all its claimed limitations …”

To patent in the life sciences, one must have an informed, cogent strategy to convince the USPTO, the courts, and the public that one’s claimed invention is patentable subject matter, meets novelty requirements, and teaches how to practice an invention that the inventor possesses.

In addition, translating promising academic work into inventions that are patentable as “useful Arts” will, in many cases, require entrepreneurial collaboration between public and private entities.

Those who pursue a patent strategy with these factors in mind increase their chances of success in capitalizing on Michigan’s substantial human and intellectual resources in the life sciences and in diversifying its economy.

James F. Kamp is a partner at Rader, Fishman & Grauer PLLC, where he practices patent litigation and patent prosecution in the biotech/life sciences and other areas. Contact him at (248) 594-0656 or jfk@raderfishman.com.

Congress is considering creating a new exemption for infringement of U.S. design patents.
Specifically, H.R. 3059 proposes amending the Patent Act to specify that “it shall not be an act of infringement of any design patent to make, use, offer to sell or sell…any article … that itself constitutes a component part of another article of manufacture, if the sole purpose of the component part is for the repair of the [other] article … so as to restore its original appearance.”

Under the proposed revision, an original equipment manufacturer (OEM) could still, for example, obtain a design patent for a uniquely styled bumper of an automobile. However, a third party could make and sell the identical bumper without concern of infringing that patent if the sole purpose of that bumper was to repair the automobile to its original appearance.

Design patents v. utility patents

To analyze the implications of H.R. 3059 for the auto industry, it is useful to understand where design patents fit in the overall scheme of intellectual property protection.

When most business executives discuss patents, they typically discuss utility patents, which are the most common form of patent protection. Utility patents provide a monopoly to an inventor for methods, machines, compositions of matter, and articles of manufacture if they are new, not obvious, and meet the other statutory criteria for patentability.

Put simply, utility patents protect functional and structural inventions without regard to their aesthetic appearance.

Design patents are different.

Design patents are not concerned with functionality. Rather, they provide a monopoly to an inventor for “ornamental designs.”

To be patentable, the ornamental designs must also be new, not obvious, and must meet other statutory criteria.

Under the current patent laws, both utility and design patents can be (and are) granted for component parts as well as overall assemblies that include multiple components. (For examples of component-type design patents, see U.S. D615,007 assigned to Nissan for a radiator grill, and U.S. D617,479 assigned to Toyota for a front combination lamp.)

Unpatented component parts of a patented combination may be subject to the “Repair Doctrine” and the related “Implied License” concept in patent law.

Assume in the above bumper scenario that the bumper was not patented because it, by itself, did not represent a sufficient leap over prior art bumpers for either design patent protection or utility patent protection.

Assume the automobile was protected by a utility patent claiming an automobile comprising the combination of an automotive frame, a bumper connected to the frame, and a gizmo A connected to the frame.

Generally, in such a situation, a purchaser of the patented automobile (assuming the purchase was unrestricted in relevant aspects) receives an implied license to use and repair the automobile. This license includes the right to purchase the unpatented bumper.

The auto purchaser would not be directly infringing any patent rights by installing the unpatented bumper into the patented automobile because of the implied license.

In the absence of direct infringement, there can be no indirect infringement through contributory infringement or inducement of infringement.

That result opens up an aftermarket for the unpatented bumpers. Domestic and foreign third-party manufacturers can then make, import and sell the unpatented bumpers to the licensed auto purchasers.

Thus, H.R. 3059 does not necessarily affect the rights aftermarket manufacturers and importers with respect to all components — just those that the U.S. Patent and Trademark Office determined were patentable after examination.

Infringement of design patents

Like all patents, design patents do not give an inventor the right to use the invention. Instead, the nature of the rights that patents grant is negative. Design patent grants the right to exclude others from making, using or selling the patented design in the U.S. Basically, the right of a patent holder is to gain relief for infringement.

OEMs and suppliers can seek recourse for infringement of design patents by importers in the International Trade Commission (ITC). Under the current law, in the stylized bumper scenario described above, the OEM could seek injunctive relief preventing importation of an infringing bumper from, for example, China.

The OEM could also, of course, seek injunctive relief and/or damages in U.S. federal courts for infringement of a design patent directed to the bumper.

If enacted, H.R. 3059 would eliminate such recourse in the ITC and federal courts.
H.R. 3059 is sponsored by Zoe Lofgren, D-Calif., along with eight co-cosponsors, none from Michigan. The bill was referred to the House Judiciary Committee, and a hearing took place on March 22, 2010.

There are arguments for and against H.R. 3059 that are pertinent to the auto industry: Pro: Primary supporters of the bill include the Consumer Federation of America (CFA) and the Property Casualty Insurers Association of America (PCI).

These supporters argue that, inter alia, permitting OEMs and suppliers to obtain design patents on component parts diminishes competition and consumer choice by eliminating the aftermarket for cosmetic repair parts.

They argue such patents unduly increase the cost of minor auto repairs, thereby increasing insurance premiums.

This increase may lead to (1) more damaged automobiles being “totaled” rather than repaired, thereby damaging the environment, and (2) consumers foregoing expensive repairs, thereby resulting increasing safety risks.

Con: Ford Motor Co. submitted testimony against the bill, arguing that it always has been cheaper to steal something rather than to pay for it.

Ford estimates the cost of copycat parts to Ford, its suppliers and dealers is $400 million annually. Ford also argues that the bill merely eliminates otherwise protectable intellectual property rights in component parts, reducing a 14-year monopoly to zero.

Ford contrasts this reduction with the recent extension of U.S. copyright monopolies to 120 years.

Ford addresses the insurance issues by noting that Ford provides insurance companies with its replacement part pricing that those companies use to set their rates. Then, some insurance companies refuse to pay for genuine parts and refer repair shops to copycat suppliers. Such referrals may be without disclosure to the consumer unless required by law.

Linda D. Kennedy is a partner at Rader, Fishman & Grauer PLLC. She practices patent law before the U.S. Patent and Trademark Office and in U.S. district courts and the U.S. Court of Appeals for the Federal Circuit. Contact her at (248) 594-0619 or ldk@raderfishman.com

If you are unable to attend the live PLI program in New York the program is available via webcast.

Prior to immigrating to the United States, Alex obtained a Jurist Degree from the BIP Institute of Law in Minsk, Belarus. While attending law school in Belarus, Alex participated in a Moot Court/Trial Practice program taught by American law professor Sam Oakland, a Scholar of the Fulbright Program. Alex also holds a Master of Law (LLM) degree in Corporate and Finance from Wayne State University Law School. His interest in Intellectual Property law was portrayed in an LLM Essay paper entitled “Gray market in the Context of U.S. Patent and other fields of Intellectual Property Law.”

Alex was born in Vitebsk, Belarus and now resides in Michigan with his family. He is fluent in English, Russian and Belarusian. In his spare time Alex enjoys spending time with his family, skiing, hiking, rock climbing, and photography. Alex is a member of the State Bar of New York.

Lane has over 40 years of law experience in private and corporate practice in the intellectual property field, including litigation, prosecution and transactional matters. His practice includes domestic and foreign patent prosecution, freedom to use opinions, patentability opinions, trademark registration opinions, domestic and foreign patent and trademark prosecution, copyrights, trade secrets, rights of publicity, intellectual property evaluations/due diligence, drafting and negotiating technology and intellectual property agreements, and counseling management on intellectual property matters. Prior to his private practice, he was the Assistant Patent Counsel to Occidental Petroleum Corporation and managed the day-by-day operations of the patent department.

Rader, Fishman & Grauer PLLC is a national intellectual property law firm in the United States ranking annually in the top 10 percent in the number of new patents and trademarks obtained nationwide (IP Today). The firm is a leader in intellectual property litigation and operates its own state-of-the-art, high-tech courtroom. Its practice is focused exclusively on patents, trademarks, copyrights, trade secrets and associated litigation, licensing, freedom-to-use opinions and due diligence investigations. Rader, Fishman & Grauer PLLC recently opened an office at 16485 Laguna Canyon Road, Irvine, Calif. 92618. For more information, contact: info@raderfishman.com or 949-585-0348.

Rader, Fishman & Grauer PLLC provides cost-effective intellectual property legal counsel and services all over the world from offices in Bloomfield Hills, Michigan; Washington, D.C.; Orange County, California and Tokyo. Visit www.raderfishman.com.

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