Tafas v. Dudas et al

Filing 253

Memorandum in Opposition re 125 MOTION for Summary Judgment Against Plaintiff Triantafyllos Tafas filed by Triantafyllos Tafas. (Attachments: # 1 Exhibit Ex 1# 2 Exhibit Ex 2# 3 Exhibit Ex 3# 4 Exhibit Ex 4# 5 Exhibit Ex 5# 6 Exhibit Ex 6# 7 Exhibit Ex 7# 8 Exhibit Ex 8# 9 Exhibit Ex 9# 10 Exhibit Ex 10# 11 Exhibit Ex 11# 12 Exhibit Ex 12# 13 Exhibit Ex 13# 14 Exhibit Ex 14# 15 Exhibit Ex 15# 16 Exhibit Ex 16# 17 Exhibit Ex 17# 18 Exhibit Ex 18)(Wilson, Joseph)

Tafas v. Dudas et al

Doc. 253 Att. 12

Case 1:07-cv-00846-JCC-TRJ

Document 253-13

Filed 01/22/2008

Page 1 of 30

EXHIBIT 12

Dockets.Justia.com

Case 1:07-cv-00846-JCC-TRJ

Document 253-13

Filed 01/22/2008

Page 2 of 30

Public Comment Regarding: Changes to Practice
Date: 6/29/2007 Signer Ron D. Katznelson Materials provided to OMB: Memo (1,058k) Presentation (217k) Patent Continuations (859k) Organization

http://www.whitehouse.gov/omb/oira/0651/comments/460.html

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Case 1:07-cv-00846-JCC-TRJ

Document 253-13

Filed 01/22/2008

Page 3 of 30

In the interest of brevity and to avoid repetition, the following are part of this exhibit and are incorporated herein by this reference including all respective attachments: 1. Appendix C to Exhibit 1 of the Brief of Amicus Curiae Dr. Ron D. Katznelson in support of plaintiffs, (Dkt. No. 231), as posted at OMB http://www.whitehouse.gov/omb/oira/0651/comments/460.pdf. 2. Exhibit 2 to this brief. [Ron D. Katznelson, Patent Continuations, Product Lifecycle Contraction and the Patent Scope Erosion ­ A New Insight Into Patenting Trends, Southern California Law Associations Intellectual Property Spring Seminar, Laguna Niguel, CA, (June 8-10, 2007), at OMB: http://www.whitehouse.gov/omb/oira/0651/comments/460-patent.pdf

New Insights and Characterization of Patenting Trends in the United States
By Ron D. Katznelson, Ph.D. Presented at the Southern California Law Associations Intellectual Property Spring Seminar, June 8­10, 2007, Laguna Niguel, CA

1
© Ron Katznelson

Content
Patent application filing rates
­ Continuations market trends and their essential role in securing US international IP competitiveness

Examination of related factual predicates that motivate patent reform Unintended(?) consequences of proposed patent reforms
­ First-to-file vs. First-to-invent
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© Ron Katznelson

Patent Application Components And Their Growth Trends

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© Ron Katznelson

Continuations Are Filed At Progressively Higher Rate For The Last 25 Years
Annual Trends in USPTO Utility Patent Applications
Applications 1,000,000

Doubling every 14 years ORIGINAL

100,000
Doubling every 6.5 years CONTINUATION

DIVISIONAL CIP

10,000

1,000 1980

1985

1990

1995 Fiscal Year

2000

2005

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© Ron Katznelson

Continuations Are Filed To Better Match Claims To New Products In The Market
# per year 1,000,000

Annual Trends in New Product Introductions

Trademark Applications

100,000

Patent Continuation Applications

10,000
Doubling every 6.5 years

New Product Announcements on PR NewsWire

1,000 1980

1985

1990

1995 Fiscal Year

2000

2005

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© Ron Katznelson

Historical Decline in Duration of Interval Prior to Competitive Entry for Innovations
100 80 60
Sources:
Consumer and Producers Goods: R. Agarwal & M. Gort, Journal Of Law & Economics 44(1), p. 161 (2001). Generic Pharmaceuticals: J.A. DiMasi & C. Paquette, Pharmacoeconomics, 22, Suppl. 2, pp. 1, (2004).

'Monopoly' Duration (Years)

40 20
Consumer and Producer Goods
2.9% reduction per year

Generic Pharmaceuticals
HatchWaxman Act

10 8 6 4 2
Horizontal bar span indicates averaging period over which duration estimates were obtained 3.8% reduction per year

10.4% reduction per year

1 1880
© Ron Katznelson

1900

1920

1940

1960

1980

2000

Innovation Introduction Year

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Continuations Filing Growth Rate Exceeds That Of Original Applications Because:
Historical product life cycle reduction and the exponential growth in new product introductions necessitate new or amended patent claims in progressively growing fraction of inventions. Product lifecycle reduction over time is accompanied with the grant of patents with progressively diminishing claim scope. Patent continuations are essential for applicants who seek to appropriate equivalent returns from their inventions. However, as a steady 60% of Continuations, RCEs have not been the reason per se for increased growth rate.
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© Ron Katznelson

Continuations' Important Role During The Pendency Of A Prior Application
Claiming one's invention need not end at the original filing date Facilitates presentation of claims based on new market, new development and prior art information Enables improved matching of claims' scope and content to actual products in the market place "Breaths new life" in protecting inventions embedded in products under ever-increasing obsolescence rate Continuations are unique to the US patent system
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© Ron Katznelson

US Patents Issued From Continuations, CIPs and Divisions Have Longer Lifetimes

Source: K.A. Moore, Worthless Patents, Berkeley Technology Law Journal. 20(4), p.1521, (Fall 2005) (Table 6).

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© Ron Katznelson

US Patents Issued From Continuations, CIPs and Divisions Have Longer Near Term Lifetimes
4th year patent survival rate by priority chain length
95 Percent Maintained (%) 90 85 80 75 0 83.1 87.8 89.3 90.1 90.2 92.4

Number of related applications

1

2

3

4

5+

Source: J.A. Barney, AIPLA Quarterly Journal, 30(3), pp. 317-352 (September 2002). . Data for patents granted in 1996.
© Ron Katznelson

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Continuations Help Reduce US Patents' Lifetime Erosion Compared to That of Other Nations
Survival Rate

Percent of patents surviving after renewal payments at the JPO by grant era. Source: Tokyo Institute of
Intellectual Property (2006).

Before 1970

1980's 1970's

Half-Life

Half Life 15 (Years) 14 13 12 11 10 9 8 1996
U S P TO (From grant date)

Patent Life From Filing Date (Years)

EPO (From application date)

Patent lifetime at the USPTO, EPO and JPO. Half-Life is the patent age at which 50% of the patents are not renewed by their owners.
Source: Trilateral Patent Offices (2006).
2002 2004 2006 Renew al Year

JPO (From grant date)

1998

2000

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© Ron Katznelson

Separation of The Two Patent Pillars
Time spans and relevance

The Patent Bargain Disclosure

20th Century
Specification

21st Century
Specification

Right To Exclude

Claims Claims

Bifurcating events of disclosure and events of obtaining claims becomes necessary due to shortening product lifecycles and accelerated claim obsolescence.
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© Ron Katznelson

Limiting Continuations at the USPTO Will Harm US Competitiveness in World Markets
In the unavoidable product lifetime reduction market environment, patent claim obsolescence is an increasing problem Foreign patents' lifetime erosion has been a contributor to their inability to sustain full incentives and protection to their owners. US continuations provides US patentees unique means for mitigating patent obsolescence The US is moving towards greater reliance on innovation and IP while loosing more of its industrial base. Any patent reform that reduces our patent system to an eroding patent system as used by our trading partners, will only weaken the US.
© Ron Katznelson

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Myth: Overbroad Patents Are Issued

"The Subcommittee may ... examine the extent to which current patent law permits and contributes to the issuance of overbroad patents, as well as other patent law problems". -- House Judiciary Committee Oversight Plan
110th Congress, (February 7, 2007)

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© Ron Katznelson

Patents Are Issued With Gradually Diminishing Scope
Patent Decision Trends in Federal District Courts
1
PV
P

1975

Infringement Probability (PI)

0.75

1985

19 90

Adjudicated claims were of gradually diminishing scope relative to alleged infringing activities and the accumulating prior art record. Notwithstanding litigation selection effects, the adjudicated claims narrowing trend is reflective generally of the patent base as a whole.
1

PV
P

I

=

½

0.5

Pr o

-P at en t

I

=

¼
PV
P

er ow rr ms Na lai C

I

=
1 /8

1995

2000

0.25 0.25

200 5

0.5 0.75 Validity Probability (PV)

Data source: Henry & Turner (2006), note 147 for 1975-2000 and Patstats for 2001-2005. © Ron Katznelson

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Myth: The Patent Litigation "Explosion"
"... burgeoning patent litigation is increasingly making lawyers the key players in competitive struggles rather than entrepreneurs and researchers." (emphasis supplied) -- Jaffe & Lerner, Innovation and its discontents (2004),
section "The Patent Litigation Explosion", at 13.

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© Ron Katznelson

Compared To What?
Trademark Lawsuits Copyright Lawsuits

Patent Lawsuits Issued Patents (right hand axis)

Filed Year
Source: Somaya (2004), note 200, Courtesy of Elsevier Ltd.
© Ron Katznelson

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Number of Patents

Number of Suits

Trend Analysis Is Meaningless Without A Comparison Scale
The growth in the number of patent lawsuit filings was substantially lower than that of trademark lawsuit filings. As an indicator of commercial activity, the relative number of patent lawsuits has not changed much. Patent lawsuits in 2005 were 1% of all Federal civil lawsuits - the same percentage as that recorded in 1975.
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© Ron Katznelson

Myth: Patent Infringement Damage Awards "Have Grown Out Of Control"
The patent critics argue that the trends for damage awards represent a growing unjustified "tax" on innovation. "..evidence is mounting that judicial determinations of damages for patent infringement have begun to exceed market rates." (emphasis supplied)
- House hearing testimony of Professor John R. Thomas, March 29, 2007. 19
© Ron Katznelson

Damages - No Evidence That Use of Georgia-Pacific Factors Have "Begun to Exceed Market Rate"
US Corporate Profits Before Taxes ($Billion) Infringement Award ($Million)

10,000

Total patent infringement judgment awards

3.4% per year growth

$1,000

1,000

$100

US corporate profits before taxes
100

7% per year growth

$10

Average patent infringement judgment award
10 1956 1961 19 6 6 1 971 1 976 1 981 19 8 6 19 9 1 1 996 2 001 $1 20 0 6

YEAR Sources: US Census Bureau, The 2007 Statistical Abstract, Table 770. Corporate Profits, Taxes, and Dividends: 1929 to 2005; PricewaterhouseCoopers, 2007 Patent and Trademark Damages Study.
© Ron Katznelson

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Unintended Consequences Of "First To File" Patent Reforms

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© Ron Katznelson

Patentees in `First-to-file' Countries Lag Behind in Patent Disclosure Breadth Compared to US Patentees
Average number of 45 pages per application

8

28 Average number of claims per application

Based on nationality of patent applicants at the EPO in 2002 Source: E. Archontopoulos et al, When small is beautiful: Measuring the evolution and consequences of the voluminosity of patent applications at the EPO, Information Economics And Policy, 19(2), pp. 103-132, (June 2007).

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© Ron Katznelson

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Longer Disclosures Confers More Valuable Patent Rights
95 Percent Maintained (%) 90 85 80 75 70 65 60 <1k 1 -2 k 2 -3 k 3 -4 k 4 -5 k 5 -6 k 6 -7 k > 7k
65.9 75.2 84.3 80.7

4th year patent survival rate by specification length
86.5 88 89

91

Number of words in the specification

Source: J.A. Barney, AIPLA Quarterly Journal, 30(3), pp. 317-352 (September 2002). . Data for patents granted in 1996.
© Ron Katznelson

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Unintended consequences of "Harmonizing" down
Although other factors contribute to US' longer disclosures than that of other countries, not having to "race-to-the-patent-office" is a significant contributor. In nations that use the First-to-File system, applicants are wrongly balancing disclosure and enablement detail with a race to be the first to file. (see prior slide). Should it be adopted, the resultant decline in disclosure breadth in a US First-to-File system would not only deny the public from receiving the full benefits of the patent bargain, but will also produce a progressively poorer prior art record, resulting in overbroad or low quality patents subsequently being issued.
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© Ron Katznelson

Unintended consequences of "Harmonizing" down (Contd.)
In this regard, "Harmonization" is another word for tipping the trade scale in favor of our trading partners. Today, US patentees file more extensive and detailed applications in part because they are not under the `First-to-File' gun. They later file the same applications in foreign countries. In both venues, US applicants are able to submit more claims that have broader support in the disclosure. ­ Better patents. Foreign inventors must make due with less specification support and are therefore generally disadvantaged compared to US applicants when the scope and number of claims are considered. This US advantage should not be taken away. A US originated patent right is more valuable to its owners because it is more effective in excluding foreign originated products even in foreign markets. Changing the current law for the sake of removing uncertainty in only a few hundred interference cases will likely have far reaching unintended consequences to the US economy. 25
© Ron Katznelson

Conclusions
The US patent system is the best in the world. Continuations must be permitted to be the wave of the future, or else, US patent rights will erode due to accelerated claim obsolescence. There is no factual support to allegations of overbroad patents, patent litigation "explosion" or of excessive patent damage awards. Do not fix that which is not broken in the US patent system.
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© Ron Katznelson

Thank You

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© Ron Katznelson