Sara Lee’s Patent for Coffee Pads Revoked by EPO

Senseo is a well known and hugely popular European coffee brewing system developed in 2001 by two Dutch companies, Philips and Douwe Egberts (subsidiary of Sara Lee). This co-branding project resulted in two main innovations, the coffee pads (or “pods”) and its unique design. The Senseo coffee machine combines a patented brewing system from Philips with quality coffee pads from DE. Sara Lee received an European patent for the pads: European patent nr EP o904 717 B1 which was granted in 2001 for a "assembly for use in a coffee machine for preparing coffee, container and pouch of said assembly".

The Senseo coffee machine automatically uses the correct amount of water and provides a solution to the so-called “bypass problem”. In order to maximize the flavor of the coffee bean, the machine ensures that all the water passes through the coffee pads quickly and evenly. Soon after its introduction, copycat pads reached the European markets. A slew of patent litigation followed. To no avail to Sara Lee, who brought the proceedings both in Netherlands and in Belgium.

The Integro case ended in 2003 with a defeat for Sara Lee, when the Dutch Supreme Court (“Hoge Raad”) held in a case between Sara Lee and Integro - a retail chain of supermarket stores- that Integro’s coffee pads did not infringe Sara Lee’s patent even though they were made and marketed to be used on Senseo coffee machines. In Belgium the results were not much better.

On August 30 a new – an final - blow was dealt to Sara Lee by the European Patent Office, deciding in opposition that Sara Lee’s coffee pad patent be revoked.

UK Patent Office Preliminary analysis of responses to consultation on inventive step

Further to our earlier blogger on the UK Patent Office public consultation on the inventive step requirement in UK patent law, the Office published its preliminary analysis of the responses received to this public consultation in early August.

Conclusions

At this stage, there is not really much to report. The review of inventive step was undertaken in response to international concern regarding patent quality worldwide but the preliminary analysis concludes that inventive step is generally handled appropriately at the UK Patent Office, "although there are some lessons to be learnt". However, the document makes it clear that the consultation forms only part of a wider internal review.

Preliminary results

In general, respondents were happy with the Patent Office's current practice. There were 26 responses to the consultation, 6 of them coming from representative bodies such as the AIPPI and CIPA.

• Complaints tended to be confined to specific scenarios, for example the 'obvious to try' formulation used recently by the UK courts when refusing some biotechnology patents caused concern to some respondents in that sector.
• The perceived difference in 'strictness' between the UK courts and UKPO was thought to be largely due to the more exhaustive prior art investigation that is done during post-grant patent litigation. Several responses stressed that the quality of search prior to grant is critical when assessing inventive step and the analysis suggests that this may be a focus for future work. (The analysis document notes that the concern that the UK courts were 'stricter' than the UKPO was mainly raised by respondents operating in the pharmaceutical sector.)
• The UKPO and the EPO were thought to be broadly equivalent in the 'level' of inventive step applied. The USA was felt by many to have a lower level and the Scandinavian countries were felt to be stricter.
• The analysis notes that a number of responses called for a harder inventive step hurdle and argued that innovation in the UK had been impeded by granted patent rights. However, the analysis also notes that most (but not all) of such responses were from respondents concerned about the patentability of software (which was not intended to be considered by this review in any case). This is a reminder that the anti software patent lobby remains strong and active. Its level of organisation on an EU-wide basis was seen during the fiasco last year over the failed draft directive for computer-related inventions. We came to hear word that there is concern that its lobbying of the Gowers Review may, potentially, have a disproportionate effect.

Peter Hill, Simmons & Simmons

Undesirable Software Patents and the US case KSR vs. Teleflex

The US Supreme Court will hear arguments later this fall in the KSR vs. Teleflex case (about § 103 of US Patent Law, the standard for "nonobviousness"). Certiorari was granted in June of this year. The potential exists to raise the bar to deny patenting inventions where there is no motivation in the prior art to combine individual known components. KSR has the potential to be the biggest patent case since at least the A&P case (A. & P. Tea CO. v. Supermarket Corp., 340 U.S. 147 (1950) from more than fifty years ago.

The debate will most likely mirror the one held in Europe last year as a result of the EU Commission's plan to introduce a harmonization directive on software patents. The discussion was soon centered around the idea that the threshold for granting patents should be heightened, so as to prevent the grant of "junk patents" (in Dutch a reference by the FFII was to "10 Ongewenste Patenten" ("10 undesirable patents").

The Memo below (in English, originally in Dutch) was a response to this list of 10 "undesirable patents" submitted to the Netherlands Ministery of Economic Affairs on the Computer Software Directive [1], which meanwhile failed to reach consensus and was therefore withdrawn.

MEMO

From: Severin de Wit
To: Economic Affairs Advisory Committee CII Directive
Date: April 13, 2005

We are of the opinion that it would benefit the substantive discussion on this difficult topic if we were to follow the suggestion by the Dutch Deputy Minister of Economic Affairs – made at the last plenary session of 23 November 2004 – to investigate whether there are European Patents that have been granted but that would (could) no longer be granted under the current wording of the proposed guideline. In this context it is useful to take the list of "undesirable patents" – which is now known within a wide circle – as the starting point here. Our comments on this list are therefore given below.

Introduction

A few remarks first of all:

1. The qualification "undesirable" appears to be too tendentious and raises the question as to from which perspective these patents would be "undesirable".

2. The comments below are not based on an extensive study of the grant history of the state of the art for the patents concerned. They do not constitute legal advice but are a well-founded first impression based on the patents themselves, know­ledge of the specialist fields and the wording of the claims.

3. In each case we comment on three aspects:

· what is the import of the patent,
· would the patent in our opinion still be granted under current European jurisprudence and the European Commission Directive (as now submitted to the European Parliament for second reading) and
· what would be the fate of the patent under the Directive as amended by the European Parliament.

1. EP 0 689 133 (granted 8/8/2001)
· The abstract presented for this patent appears to be too broad. In our opinion this patent relates only to the alternating display of different pieces of information within the same part of a complete screen. For example, the use of pop-up screens does not fall under this patent. It appears to be a basic patent for the use of tabs within part of a screen, so that it is easy to switch rapidly between different pieces of the information within a restricted part of the screen.
· It is not clear to us why this would be an "undesirable" patent (other than that it can be inconvenient for third parties who came up with this idea later). This patented technology is clearly technical and in our opinion would still be patentable under the current jurisprudence of the European Patent Office and the European Commission Directive.
· Since this idea relates to data processing, in our opinion it would not be patentable under the Directive as amended by the European Parliament.

2. EP 0 537 100 (granted 17/3/1999)
· Here again in our opinion the abstract is too broad. In our opinion opening a new screen containing, for example, a larger photograph if the user places a cursor on a small photograph and then, for example, double clicks, does not fall under this patent. The claim is somewhat more specific and the scope of protection is thus more limited. What is concerned is, for example, a blue block in a day within a display of a diary on a screen. The cursor can be placed on the blue block. By clicking (for example) more information about that day, in other words the meetings that have been arranged for that day and cannot all be displayed on the screen, is temporarily obtained. The complete screen of the diary does not disappear, so that it is not necessary to generate a complete screen. In our opinion it is also essential that the additional information shown disappears as soon as the cursor is moved away from, for example, the blue block. In the light of the formulation of the claim, the conventional expansion of specific information on the screen using a cursor does not fall under this because that was already known. The temporary nature appears to be essential.
· It is not clear to us why this would be an undesirable patent. This patented technology is handy and in our opinion would still be patentable under the current jurisprudence of the European Patent Office and the European Commission Directive because a man/machine interface is regarded as technical.
· In our opinion this idea would no longer be patentable under the Directive as amended by the European Parliament because this relates mainly to data processing.

3. EP 0 370 847 (granted 11/8/1993)
· We endorse the abstract in respect of the scope of the claim of this patent.
· In our opinion this is a classic case of a business method patent that currently would no longer be granted by the European Patent Office. The claim goes no further than specifying trade via, for example, the Internet and requires no technical adaptation of said Internet. In our opinion it would also no longer be possible to grant a patent under the European Commission Directive.
· This will also not be patentable under the Directive as amended by the European Parliament.

4. EP 0 715 740 (granted 4/7/2001)
· We endorse the abstract in respect of the scope of this patent. We should even like to describe this patent as "bizarre" because the claim states that when granting a loan account is taken of the "willingness" of the applicant to repay the loan. How does one measure such a psychological criterion?
· In our opinion this is a classic case of a business method patent that currently would no longer be granted by the European Patent Office. The claim goes no further than to specify the grant of a loan via, for example, the Internet and requires no technical modifications of that Internet. In our opinion a patent would also no longer be granted for this under the European Commission Directive.
· This will also not be patentable under the Directive as amended by the European Parliament.

5. EP 0 986 016 (granted 5/12/2001)
· We endorse the abstract of this patent.
· In our opinion this is a classic case of a business method patent that currently would no longer be granted by the European Patent Office. The claim goes no further than to specify trade via, for example, the Internet and requires no technical modifications of that Internet. In our opinion a patent would also no longer be granted for this under the European Commission Directive.
· This will also not be patentable under the Directive as amended by the European Parliament.

6. EP 0 628 919 (granted 19/1/2001)
· We endorse the abstract of this patent.
· In our opinion this is a classic case of a business method patent that currently would no longer be granted by the European Patent Office. The claim goes no further than to specify trade via, for example, the Internet and requires no technical modifications of that Internet. In our opinion a patent would also no longer be granted for this under the European Commission Directive.
· This will also not be patentable under the Directive as amended by the European Parliament.

7. EP 0 933 892 (granted 15/10/2003)
· We largely endorse the abstract of this patent although the claim is somewhat more specific. It relates to the transmission of centrally stored, compressed video/audio to end user equipment that stores the received video/audio locally. Decompression and playback then takes place locally to the end user as and when he or she desires. It is difficult to see why this is an "undesirable" patent. Remember that this patent was applied for in 1991 when companies were only just really adopting fax and the first stand-alone word processors.
· In our opinion this patent would still be patentable under the current jurisprudence of the European Patent Office and the European Commission Directive because this patent provides a technical solution for the efficient dissemination of centrally stored video/audio.
· In our opinion this patent would no longer be granted under the Directive as amended by the European Parliament because this patent relates to the processing and dissemination of data.

8. EP 0 633 694 (granted 13/1/1999)
· The abstract of this patent is technically incorrect. The claim has been read wrongly. The patent relates to the transmission of centrally stored video/audio to end user equipment. In this case a central buffer is used in which a film is temporarily stored. Multiple end users can log in to this using their equipment and play the portion of the film that has been stored in this central buffer. By using the central buffer all end users are able to forward and rewind within the portion of the film that is in the buffer. In our opinion the scope of this patent is fairly limited.
· In our opinion this patent would still be patentable under the current jurisprudence of the European Patent Office and the European Commission Directive because this patent provides a technical solution for the dissemination of centrally stored video/audio where the end user is still able to rewind and forward to some extent.
· In our opinion this concept would no longer be granted under the Directive as amended by the European Parliament because this patent relates to the processing and dissemination of data.

9. EP 0 807 891 (granted 17/5/2000)
· The claim in this patent appears to involve not much more than maintaining on a central server a shopping list indicating which goods have been selected by a purchaser on a website and sending this list back to the purchaser's web browser, the list being continually transmitted back and forth between the server and the user's web browser.
· In our opinion the patent lacks a clear technical invention. We are of the opinion that the claim granted here would probably not be granted under the current jurisprudence of the European Patent Office. It also appears to fall outside the scope of the European Commission Directive.
· The patent would certainly be outside the scope of the Directive as amended by the European Parliament because this patent relates to the processing and dissemination of data.

10. EP 0 927 945 (granted 23/4/2003)
· We subscribe to the abstract of Claim 1.
· In our opinion the patent lacks a clear technical invention. We are of the opinion that the claim granted here would probably not be granted under the current jurisprudence of the European Patent Office. It also appears to fall outside the scope of the European Commission Directive.
· The patent would certainly be outside the scope of the Directive as amended by the European Parliament.

Subsequent remarks

1. Thus we think that of the 10 patents cited the majority (6) would no longer be granted under the current jurisprudence of the European Patent Office and the European Commission Directive. (Some should probably also never have been granted under somewhat earlier jurisprudence. Grant of patents remains man's handiwork after all).

2. Many examples can be found of recent patent applications that are refused by the European Patent Office because according to the European Patent Office they do not relate (are said not to relate) to a technical invention:

· EP 332 770 [Pension Benefits System] which was rejected by the Board of Appeal of the European Patent Office because the Board was of the opinion that the claimed system related only to a pension system implemented on an existing processor;

· EP 828 223 [Hitachi], which was rejected by the Board of Appeal of the European Patent Office because the Board was of the opinion that the claimed system involved nothing more than a new way of auctioning via an existing communication system;

· EP 579 655 [Comvik], which related to a mobile telephone system where mobile phones have 1 SIM card but there are two accounts for this SIM card, for example one for private phone calls and one for business calls. According to the European Patent Office the problem that was solved here was solely of a financial and administrative nature;

· WO-A 02/07033 [Snijders, Fiszbajn], where the European Patent Office refused to carry out a literature search because according to the European Patent Office this application related solely to financial transactions via an existing processor;

· EP 1 429 269, EP 1 445 719, EP 1 469 403 [IP Strategy Incorporated] where the European Patent Office refuses to carry out a literature search because according to the European Patent Office these relate solely to financial transactions via an existing communication system;

· EP 1 293 922 [Berk], where the European Patent Office refuses to carry out a literature search because according to the European Patent Office this application relates solely to insurance transactions via an existing processor.

3. This list can be infinitely expanded. There are thus apparently no grounds for major concern with regard to the consequences of the Directive as submitted by the European Commission for second reading.

4. It is striking that virtually all patents in the list of "undesirable patents" which in our opinion would no longer be granted under the current jurisprudence were granted in the period up to 2001. There is only 1 from the period thereafter (no. 10). This corresponds to the practical experience of patent attorneys that the European Patent Office has for the past few years become increasingly more stringent in maintaining its own rules and is granting hardly any more or no genuine business method patents. Remember that it takes some time before jurisprudence of the Board of Appeal of the EPO – for example in the Pension Benefits case – works its way through to the officials responsible for grant at the EPO. The Pension Benefits judgment[1] dates from September 2000 and it is therefore not surprising to see that the EPO has become much more critical since about the end of 2001 and is therefore rejecting much more, which is the reason why the list of "undesirable patents" contains mainly patents that were granted before 2001 (with the exception of two patents: no. 7 and no. 10).

5. We cannot see why the patents from the list of "undesirable patents" where we are of the opinion that they could still be granted under the current jurisprudence of the European Patent Office and under the European Commission Directive would have to be treated differently to, for example, a patent application for a plastic paperclip. We have appended an example of a European Patent (EP-B1 274 085) granted for such a paperclip. These patents have cost time, money, energy and inventive work on the part of scientists and technicians (specifically IT engineers), just as the plastic paperclip has cost time, money, energy and inventive work on the part of the inventor thereof.

6. If the Directive were to be amended in the manner as proposed by the European Parliament, not only the patents from the list of "undesirable patents" would be in the danger zone, but also many other patents from many SMEs but also from large innovative companies and institutions in the Netherlands. A number of examples of such patents from – largely small to medium-sized – Dutch companies and institutions which would be in the danger zone if a Directive according to what is proposed by the EP were to be adopted and the technology of which would then thus be able to be freely copied by anyone (as a result of which, in our opinion, protection of the knowledge-intensive industry in the Netherlands would be in great danger) are given below.

· EP 657 098, applicant NV Nederlandsche Apparatenfabriek NEDAP, subject: "Information system and method for automatically obtaining data about animals in dairy farming" [relates to the collection and processing of data in a dairy farm];

· EP 562 696, applicant Delft Geophysical BV, et al., subject: "A method of making a synthetic seismogram" [making seismograms based on simulations of earth layers];

· EP 1 367 779, applicant University of Twente, subject: "Robust congestion control mechanism for communication networks" [controlling congestion in a telecommunications network];

· WO 00/44937, applicant Keygene NV, subject: "Method and arrangement for determining one or more restriction enzymes for analysing a nucleic acid sequence" [analysis of DNA sequences];

· WO 2004/076977, applicant TomTom BV, subject: "Navigation device and method for exchanging data between resident applications" [navigation in cars, for example];

· EP 1 259 084, applicant Libertel Netwerk BV, subject: "Network system for connecting end-users and service providers" [relates to various layers in a network to enable end-users and service providers to be connected to one another];

· EP 377 480, applicant Teleatlas International BV, subject: "Procedure for setting up and keeping up-to-date data files for road traffic" [relates to keeping data files that are used for, for example, car navigation systems up to date];

· EP 1 429 512, applicant KPN, subject: "Telecommunication system and method for transmitting video data between Internet and a mobile terminal" [transmitting video data between Internet and mobile telephones];

· WO 03/091389, applicant TNO, subject: "Microbiological information system" [relates to the classification of microorganisms];

· EP 1 515 528, applicant TNO, subject: "Method and means for interconnecting users of a telephone network using speech recognition" [use of speech recognition for establishing connections in telecommunications networks];

· EP 1 196 252, applicant PTT Post Holdings BV, subject "Installation and method for updating an address database with recorded address records" [updating an address database on the basis of addresses read on items of post].

7. We would therefore also be of the opinion that SMEs ought to be specifically in favor of the adoption of a (good, read:) latest Commission text for the Directive. The best illustration of this stance is the abovementioned company TomTom BV (with registered offices in Amsterdam). Founded in the early 90s as a small (!) software company, TomTom conquered the GPS market after it developed software with which it became possible to use GPS software in handheld PDAs. This solution became enormously popular because of its user friendliness and its competitive price (far less expensive than the GPS that is supplied as standard in cars). The company has grown enormously and is now an active patent applicant, simply because otherwise any large – American or Japanese – company can copy and market this product without the burden of high development costs and R&D. If no protection were to be available in Europe, companies such as TomTom BV – without doubt an exceptionally good example of successful Dutch entrepreneurship – would think twice before starting or maintaining their innovative company in Europe.

[1] Case T0931/95

Assignment of IP Rights, Room for Uniformity

During the upcoming AIPPI Congress 2006 in Gothenburg one of the more interesting subjects to be discussed is the question related to assignments of IP rights (Dutch Group).

IP rights are frequently used as security to enable financing of business ventures. However how does this work out for th different countries? What are the effects on third parties like banks and financial institutions? One of the essential characteristics of IP rights - and economically important - is their ability to be used commercially by assignment or licensing.

32 National groups, mostly consisting of IP practitioners and scholars, have prepared their national reports, answering several questions on how assignments in their respective countries work. For the results go to www.aippi.org, follow "Questions and Committees", then under "The scientific work of AIPPI, click "working committees", and look for Q190 ("Contracts regarding Intellectual Property Rights (assignments and licenses) and third parties"), click "Q190, then follow "Group Reports".

For a recent decision in The Netherlands on this subject (District Court Utrecht, 30 November 2005, IER 2006, 24 with a Note of Severin de Wit (full text in Dutch can be found at www.kluwer.nl (subscription required):

[quote]
Noot

Rechters zijn niet altijd gecharmeerd van 'proefprocedures' waarbij eiser en gedaagde een gekunsteld 'conflict' voorleggen om zo aan een in de praktijk bestaande - of, zoals de rechtbank in deze zaak aangeeft, vermeende - onduidelijkheid een einde te maken. Partijen in deze zaak maken het echter minder bont dan destijds partijen die de rechter in een civiele zaak een conflict voorlegde over de koop van een aantal juridische boeken onder de ontbindende voorwaarde dat de koop zou zijn ontbonden "als op 1 februari 1985 vaststaat dat de regering tot plaatsing van kruisraketten besloten heeft (…)" (Rb. Arnhem 24 oktober 1985, NJ 1986, 31 (m.nt. WLH)).

In de huidige zaak spande eiser, naar thans algemeen bekend zal zijn, Dick van Engelen, advocaat te Utrecht, deze proefprocedure aan om een, naar zijn oordeel in de praktijk voorkomende, onzekerheid via de rechter opgehelderd te krijgen. De vragen die aan de orde gesteld worden zijn (1) of de rechten op de VENTOUX-merken al dan niet registergoederen in de zin van art. 3:10 Burgerlijk Wetboek zijn, en (2) of de rechten op het Gemeenschapsmerk (c.q. -aanvrage) overdraagbaar zijn naar Nederlands recht, aangezien daarvoor ingevolge art. 3:83 lid 3 BW een 'wet' vereist is, die 'bepaalt' dat die rechten overdraagbaar zijn.Beantwoording van genoemde vragen zou raad bieden als men in de praktijk voor de vraag staat of voor het vestigen van een zekerheidsrecht op (b.v) een merkrecht met het maken van een pandakte kan worden volstaan of dat daar - in licht van de door Van Engelen aangezwengelde discussie - een akte van hypotheek aan te pas moet komen en, als dat laatste het geval is, hoe dan te handelen met de voorgeschreven inschrijving in het register? Volgens De Boer ( IER 2003, p. 141) stuit men in de praktijk op problemen om een notariële akte ter zake van IE-rechten, die mogelijk registergoederen zijn, te (doen) passeren omdat het notariaat in voorkomend geval daaraan geen medewerking verleent, simpelweg omdat de mogelijkheid tot inschrijving van die akte in een door de wet daartoe aangewezen openbaar register ontbreekt. Van Engelen is van mening dat IE-rechten geen registergoederen zijn en dat een Gemeenschapsverordening kwalificeert als 'wet' in de zin van art. 3:83 lid 3 BW. Probleem is echter dat, zegt Van Engelen, andere interpretaties van het wettelijk systeem niet bij voorbaat kunnen worden uitgesloten, wat tot problemen leidt bij transacties - zoals overnames, financieringen en beursgangen - waar de vraag opdoemt of de IE-rechten wel rechtsgeldig zijn overgedragen. Ook in geval daarover een opinion moet worden afgeven kan dit, nog steeds Van Engelen, leiden tot het moeten opnemen van allerlei mitsen en maren. Vandaar dat Ventoux - het advocatenkantoor van Van Engelen - stelde er (ook) belang bij te hebben dat (tevens) wordt uitgemaakt dat - indien de merkrechten op VENTOUX (wel) registergoederen zijn - die rechtsgeldig kunnen worden overgedragen bij wege van notariële akte en inschrijving van die akte in de desbetreffende registers voor Benelux- en Gemeenschapsmerken.

Zie over deze discussie in IER: Van Engelen, "Intellectuele eigendomsrechten registergoederen?", IER 2002, p. 275-281. Een reactie van De Boer, "Naschrift bij de recentelijk verschenen artikelen omtrent zekerheidstelling op IE-rechten - hoe verdere hoofdbrekens te voorkomen?", IER 2003, p. 141. Domingus, "Inschrijving van IE-rechten en rechtshandelingen betreffende IE-rechten: het blijft een lastig vraagstuk", IER 2003, p. 142-145 en een nawoord van Van Engelen, "Nawoord bij reacties Domingus & De Boer", IER 2003, p. 145-146.

De omstandigheid dat in de literatuur onzekerheid bestaat vormt naar het oordeel van de rechtbank een onvoldoende belang. De rechters leiden uit de door (eiser) overgelegde stukken af dat de door partijen bedoelde onzekerheid in de literatuur ' overigens aangezwengeld door (eiser) zelf' - zoals de rechtbank eraan toevoegt - niet zozeer bestaat ten aanzien van de wijze van overdracht, maar ten aanzien van de vraag of het recht een registergoed is in de zin van art. 3:10 BW en of de verordening een wet is in de zin van art. 3:83 lid 3 BW. De rechtbank geeft hierop geen antwoord omdat hij van mening is dat partijen onvoldoende belang bij hun vorderingen hebben. Partijen zijn in hoger beroep, dus we wachten af.

SdW
[unquote]

FTC: Rambus patent standard setting contravenes US antitrust laws

On August 2, 2006 The Federal Trade Commission unanimously decided that computer technology developer Rambus, Inc. engaged in a course of deceptive conduct that distorted a critical standard-setting process, resulting in an unlawful monopoly in the markets for four computer memory technologies relating to dynamic random access memory, or DRAM. DRAMs are memory devices that store and process information and are found in personal computers, servers, handheld devices, printers, and digital cameras throughout the world.

In an opinion by Commissioner Pamela Jones Harbour, the Commission found that Rambus’s conduct constituted deception in violation of Section 5 of the FTC Act and that this deception contributed significantly to Rambus’s acquisition of monopoly power in the four relevant markets in violation of Section 2 of the Sherman Act.

BACKGROUND
In June 2002, Commission staff filed a complaint against Rambus alleging that Rambus manipulated and deceived an industry-wide standard-setting organization, the Joint Electron Device Engineering Council (“JEDEC”) with the intent to obtain market power. According to the staff’s complaint, Rambus participated in JEDEC’s DRAM standard-setting activities for several years without disclosing to JEDEC or its members that it was actively working to develop, and possessed, a patent and several pending patent applications that involved specific technologies ultimately adopted in the standards. The complaint also alleged that Rambus waited until the industry had begun manufacturing DRAMs that complied with JEDEC standards to enforce its patents, resulting in Rambus’s acquisition of durable market power in violation of the antitrust laws.

The complaint was litigated in an administrative trial before Chief Administrative Law Judge (“ALJ”) Stephen J. McGuire. In February 2004, Judge McGuire dismissed the charges against Rambus, finding that Complaint Counsel had failed to establish that Rambus had any obligation to disclose its patents to JEDEC during JEDEC’s standardization of DRAM. see Full Docket at FTC website).

COMMISSION DECISION
The opinion of August 2, 2006 overturns Judge McGuire’s decision. Using the framework articulated by the D.C. Circuit Court of Appeals in U.S. v. Microsoft, 253 F. 3d 34 (D.C. Cir. 2001), the Commission found that “Rambus withheld information that would have been highly material to the standard-setting process within JEDEC,” and this course of conduct constituted deception under Section 5 of the FTC Act: Rambus’s conduct was calculated to mislead JEDEC members by fostering the belief that Rambus neither had, nor was seeking, relevant patents that would be enforced against JEDEC-compliant products. Rambus’s silence, in the face of members’ expectations of disclosure, created a misimpression that Rambus would not obtain and/or enforce such patents. When suspicions arose, Rambus allayed them with the reminder that it had made a prior disclosure. The message that Rambus reasonably conveyed was that Rambus would have disclosed anything if it had had anything relevant to reveal.

Overturning Judge McGuire’s findings, the Commission found that Rambus did have an obligation to disclose the existence of its patents to JEDEC. While the Commission acknowledged that the rules of JEDEC and its parent, the EIA, “are not a model of clarity,” the rules imposed a duty of good faith that suggested that disclosure of relevant patents was expected. This interpretation of the rules was reinforced by testimony of other JEDEC members that indicated that members understood that the disclosure of patents and patent applications was expected and examples of members actual disclosing patents and patent applications relating to developing standards.

The Commission found that Rambus failed to inform JEDEC that the patents covered the proposed DRAM standards and that Rambus intended to enforce these patents. Consequently, the Commission determined that “we find nothing in the record to suggest that, in the cooperative environment prevailing at JEDEC, the incidents to which the ALJ and Rambus have pointed were sufficient to put JEDEC members on notice that Rambus would pursue a deceptive course of conduct to obtain patents covering JEDEC’s standard, then engage in patent hold-up to extract royalties on terms of Rambus’s choosing.”

The Commission determined that this deceptive conduct contributed significantly to Rambus’s acquisition of monopoly power in violation of Section 2 of the Sherman Act. By hiding the potential that Rambus would be able to impose royalty obligations of its own choosing, and by silently using JEDEC to assemble a patent portfolio to cover the SDRAM and DDR SDRAM standards, Rambus’s conduct significantly contributed to JEDEC’s choice of Rambus’s technologies for incorporation in the JEDEC DRAM standards and to JEDEC’s failure to secure assurances regarding future royalty rates – which, in turn, significantly contributed to Rambus’s acquisition of monopoly power.” Moreover, the Commission found that alternative technologies existed that JEDEC could have standardized, but that Rambus’s deceptive skewed JEDEC’s ability to objectively determine the appropriate standard.

There was evidence that Rambus engaged in the destruction of documents, an issue that Rambus is currently litigating before other federal courts. However, the Commission refused to impose any sanctions for Rambus’s spoliation of documents in light of its finding that Rambus violated the antitrust laws.

The Commission ordered additional briefings to determine the appropriate remedy forRambus’s violations. In its complaint, FTC staff had sought a royalty-free license for Rambus’s patents for SDRAM and DDR SDRAM, while Rambus had sought licensing on reasonable and non-discriminatory (“RAND”) terms. It is likely that the Commission may not issue a decision regarding remedy until early 2007.

In addition to ordering Rambus to provide either a royalty-free or RAND license to SDRAM and DDR SDRAM, the Commission may also order Rambus to disgorge any profits obtained from its unlawful conduct. Moreover, although the Commission found that the industry was not locked in to subsequent generations of SDRAM that are currently in the market, i.e., DDR2 SDRAM, DDR3 SDRAM, and DDR4 SDRAM, the Commission may apply its remedy to these evolutionary technologies as a “fencing-in” provision. Such provisions have been used in technology markets where the technology in dispute becomes obsolete during the litigation and the Commission determines that the remedy must be applied to future generations of the technology in order to effectively remedy harm to consumers.

(source: (c) April J. Tabor, McDermott, Will & Emery)

Patent Trolls: one more time

On Friday December 8, 2006 a conference will be held in London (Crowne Plaza Hotel), organised by IBC UK Conferences, Informa UK Ltd.

"Patent trolls: a pejorative or deserved epithet? Examining the phenomenon from both sides".

Speakers are:

• Ken Adamo, partner, Jones Day, US
• Robert S. Bramson, Bramson & Pressman , US
• Dr. George M. Calhoun, Executive-in-Residence, Wesley J. Howe School of Technology Management
• Peter Detkin, Cofounder and Managing Director, Intellectual Ventures (formerly Patent Counsel, Intel), US
• Dr. Elliot Fishman, Industry Associate Professor, Wesley J. Howe School of Technology Management
• Charles P. Gilliam, former General Counsel, Content Guard, UK
• Rt. Hon. Lord Justice Jacob, Court of Appeal, UK
• Toshimoto Mitomo, Vice President, Intellectual Property Department, Sony Corporation of America, US
• Louis Lupin, General Counsel, Qualcomm, US
• Prof. Dr. Christian Osterrieth, partner, Reimann Osterrieth Köhler Haft, Germany
• David Perkins, partner, Milbank, Tweed, Hadley & McCloy LLP, UK
• Jan Willems, Enlarged Board of Appeal, EPO, Germany
• Severin de Wit, partner, Simmons & Simmons, Netherlands

(see blog posts on Sisvel and Sandisk about IFA seizures)
“Aside from the mythology involved, one way to look at the troll situation is that you have 'bad patent trolls,' on the one hand, and 'bad patent thieves,' on the other.” (source: ThinkExist.com)

ECJ brings end to Cross Border Practise in Netherlands and Germany

On 13 July 2006, the long awaited decisions of the European Court of Justice (ECJ) were given in the cases of GAT v LuK and Roche v Primus. To the disappointment of some, the ECJ appears to have prohibited cross-border relief, bringing the Dutch and the German patents courts (which were willing to grant such relief in certain circumstances) in line with the English patents court (which has always refused to grant such relief). However, the decisions are such that both the Dutch and German patents courts may continue to grant cross-border relief in certain circumstances. Whether they do so or not, will have to be seen. However, the decisions will undoubtedly provide further impetus for many in industry to call for a centralised European Patents Court to be established as soon as possible, enabling parties to litigate European patents on a Europe-wide basis. see for full analysis: Simmons & Simmons

Not everyone is convinced GAT v. LUK and Roche v. Primus made an end to possibilities for cross border relief in Netherlands, as Prof. Willem Hoyng writes in his comment on both cases (in Dutch), see: www.boek9.nl

Ariad v Lilly, a "a drug pathway" patent dispute

In May 2006, a jury in the U.S. District Court of Massachusetts in Boston issued an initial decision in the case of Ariad Pharmaceuticals et al v. Eli Lilly and Company. The federal jury's verdict is that U.S. Patent No. 6,410,516, owned by Harvard, the Massachusetts Institute of Technology, and the Whitehead Institute and licensed to Ariad Pharmaceuticals, is valid and infringed by Lilly's sale of Evista(R) and Xigris(R). Ariad, based near Boston, sued Indianapolis-based Lilly, accusing the larger company's drugs Evista and Xigris of infringing the patent on its experimental drug pathway, NFkB. The patent covers a method of treating disease by regulating a certain type of cell activity. The patent is on a an experimental drug, AP23573, covering a method of treating soft-tissue and bone cancers. Critics question the validity of the drug’s patent because it attempts to protect the process in which the drug works, not the drug’s chemical composition.

However, jurors in U.S. District Court in Boston agreed with Ariad, slapping Lilly with $65 million in damages in May.

"In my more than thirty years of experience in patent law, which includes involvement in dozens of patent lawsuits, I've never seen a jury verdict with which I so strongly disagree; the finding of infringement stands at odds with the most basic premise of the patent system. If practicing technology that's already known, and therefore is old, infringes a patent, the inventor hasn't properly limited the patent to technology that is new," said Robert A. Armitage, senior vice president and general counsel for Lilly.

This decision appears to go against long-standing patent practice in that one cannot get a patent that would remove known materials from the public. In addition, it has always been the case that one may patent a drug without knowing how it works. If this decision were allowed to stand, many drugs could eventually be found to infringe patents that were issued long after the
drugs themselves were discovered. This also begs the question of if a researcher discovers a drug without ever knowing the drug acts on a patented pathway or before the pathway is
understood, does that constitute infringement? If the drug was acting on the pathway before the pathway was discovered, does the existence of the drug invalidate the patent on the pathway by rendering it not "new"? This could also give rise to an ever-increasing number of conflicting patents. Because NF-kB can activate so many genes, more than 150, it is implicated in many diseases. A separate bench trial with the U.S. District Court of Massachusetts has been held last week (August 7) on Lilly's contention that the patent is unenforceable and will also consider the patent's improper coverage of natural processes. In June 2005, the U.S. Patent and Trademark Office commenced a reexamination of the patent (Reexam. C.N. 90/007,828). The reexamination is currently in progress.

From: Patent Baristas (blog by Stephen, May 4, 2006), CNN Money, August 4, 2006,