Following are excerpts from a panel discussion entitled "IP
Protection for Modern Technology" which was part of the Federalist
Society's 1999 National Lawyers Convention. The convention took
place November 11-13, 1999, in Washington, D.C.
Chris Rogers (Vice Chairman, IP
Practice Group Federalist Society):
I'd like now to introduce our distinguished moderator, Judge Randall
Rader. President Ronald Reagan appointed him to the United States
Claims Court in 1988. President George Bush nominated Judge Rader
to the Court of Appeals for the Federal Circuit in 1990. Before
his appointment to the bench, Judge Rader served members of the
House of Representatives from '75 to '80, and was Counsel to the
Senate Judiciary Committee from '80 to `88.
JUDGE RANDALL R. RADER (Moderator):
It's a pleasure to be here with the Federalist Society today, and
to see the growing numbers who are interested in our intellectual
property area. I wanted to discuss, today, a rather interesting
legal topic, which is also of interest, I would think, to Federalists:
the prospects for multinational enforcement of intellectual property.
Let me precede this by discussing with you an event which just
happened this last week here in Washington. We had a conference
of international intellectual property judges. There were about
80 judges from around the world gathered here, and we discussed
topics such as the varied standards for patentability in our countries,
the ways of adjudicating. It led to some interesting thoughts about
the prospects of a worldwide enforceable intellectual property system,
and the merits that that might have in a marketplace which is already
Think with me for a minute on the progress we've seen in intellectual
property in the last few years: Treaties, of course, going back
as far as 1886 with the Paris Convention and the Patent Cooperation
Treaty, and then most recently, the Uruguay Round, which brought
us TRIPS, the protection for intellectual property within the GATT
These treaties have assisted inventors in acquiring worldwide patent
rights. And with, as we mentioned, the global market, we understand
that inventors are really driven to acquire these rights, and have
obtained parallel intellectual property rights around the world.
Otherwise they forfeit a great deal of the market potential of their
intellectual property. These conventions have only recently and
somewhat tentatively, however, discussed enforcement internationally.
Think of the problem of what we're talking about here. The problem
is rather easy to conceptualize. For example, say you've got a software
patent invention of tremendous value, and a large multinational
corporation like IBM or something of that nature is infringing your
patent nationwide, and in every other nation in which it operates.
What is your strategy for enforcing your important intellectual
property rights worldwide?
Of course, you can hire local attorneys in every country where
the infringement is taking place. You can translate all the documents
dealing with the infringement that's occurring in each separate
nation into that language of that country. You can transport your
expert witnesses to each separate country throughout the whole world.
You can ultimately bring a separate suit in each of those countries,
complete with multiple appeals. It's easy to comprehend that the
expense of enforcing your intellectual property rights is going
to, in many instances, outweigh any potential benefit. A more efficient
remedy, you might suggest, would be to allow a patent owner to bring
a suit in one forum, say, the United States, Japan, Germany, someplace
where you have confidence in their ability to comprehend the implications
of intellectual property, and ask that forum to apply the various
other national laws to bring the infringing conduct to some kind
Now, a recent case in the Court of Appeals for the Federal Circuit
illustrates some of the difficulties with that: in that case, a
United States company sued a Japanese multinational corporation
for infringement of U.S. process patents. The Japanese company defended,
saying that the U. S. district court lacked any jurisdiction or
authority to adjudicate a claim under Japanese law for infringement
that may have occurred in Japan. The Japanese company's position
was, you can go ahead and sue us for anything that happened on United
States soil over which United States courts have jurisdiction, but
don't try to ask a United States District Court to interpret Japanese
law and to determine whether or not there had been an infringement
in Japan. Well, the district court had to deal with the problem,
and the Federal Circuit had to deal with the problem on appeal.
There are two sources of authority under U.S. law whereby you might
acquire jurisdiction in the United States to adjudicate the infringement
that may have occurred in Japan. First, you could obtain original
jurisdiction if you could find that there was some kind of nonfederal
unfair competition claim. Well, you could say the Japanese patent
law violation is a nonfair, nonfederal claim. But is it an unfair
The Federal Circuit examined that and rather than, at length, discuss
the implications, I can bring you quickly to the conclusion. They
said, no, unfair competition deals with antitrust, state business
torts, false advertisement, and protects consumers. Patent law is
protecting inventors, therefore, patent law in Japan is not really
an unfair competition claim, and, therefore, there's no original
But the American company had a different theory as well. They said,
what about supplemental jurisdiction where you have nonfederal claims
attached to patent claims, United States patent claims, and you
could sue, under supplemental jurisdiction, if, recalling a little
bit of civil procedure for us all, if there's a common nucleus of
operative fact. Immediately, your mind begins to whirl. Is there
a common nucleus of operative fact? You have a Japanese patent,
you have an American patent, patents on the same thing. So, apparently,
you would have the beginnings of a common nucleus of operative fact,
but there are differences. Now, you could interpret the degree of
The Court identified slightly different infringing devices in Japan
and in the United States. They noted that most of the Japanese infringement
dealt with an apparatus; most of the United States infringement
dealt with processes related to that apparatus.
Now, the patent lawyers here are all thinking, and they're saying
to themselves, this isn't a big deal, because, give me any apparatus
and I can write a method claim describing that invention. And give
me any method that someone invents, and I can probably describe
an apparatus to do it. Why is the Court looking so carefully to
find a distinction between apparatus and process?
On the other hand, there are some differences in the law and how
each can be treated. So, already we have a little wedge in whether
or not there is a common nucleus of operative fact. There was a
slight difference in the devices that infringed in Japan, as opposed
to the United States different plugins, different power,
and other differences, perhaps, that could have been relevant.
The court ultimately decided that there was not a common nucleus
of operative fact and dismissed the case for lack of jurisdiction.
The United States court does not have jurisdiction to handle a Japanese
claim of infringement under Japanese law. In its opinion, underneath
the surface, it talks about comity and say, you know, it would be
wise for us to leave to Japanese courts the enforcement of Japanese
law. That's a wise sort of, federalist sort of policy, one might
say. Let the local decisionmakers handle the local decisions, the
Japanese, the Japanese decisions, et cetera.
The real unspoken obstacle here, which the Court, of course, doesn't
direct itself to, is clear: that is, can a United States jury impose
monopoly or exclusiveright processes on Japanese consumers? Could
a judge in the United States instruct his jury on Japanese law;
could the jury find infringement, and thereby grant intellectual
property rights in Japan that will cost the Japanese consumers some
additional price for that technology? And, of course, the Court
is sensitive to the potential backlash if we apply their law. They
might immediately pass indemnity laws to insulate a patent infringer
in their country. They might enact trade secret protection laws
to frustrate foreign judgments. Switzerland, for instance, has one
of these a law that prevents the export of any trade secret,
period, so you can't get discovery against a Swiss corporation to
find out if they're infringing. That's a little incentive for corporations
to set up Swiss affiliates to whom they transfer important trade
secrets and avoid the type of multinational enforcement we're talking
Fearing all that, the Court looks for and finds some absence of
common nucleus of operative fact. But, of course, the question remains,
what if you had a case "on all fours?" What if the Japanese
patent were, verbatim, the same the as the American patent? What
if the devices were identical in all relevant aspects? Would you
have a common nucleus of operative fact that would allow
and let's shift it around so we get the impact of this the
Japanese court to adjudicate infringement in the United States under
United States law? Would you be comfortable with that? Are the obstacles
too great? Well, there are several factors that suggest, no. TRIPS
has already begun to set up international enforcement standards.
Also, the market is driving the reduction of barriers to international
enforcement of intellectual property. The history of the Court of
Appeals for the Federal Circuit itself kind of illustrates the rewards
of a uniform enforcement standard.
Before the Court was created in 1982, each balkanized region of
the United States enforced different standards for patentability.
Of course, the uniform standards of the Federal Circuit have contributed
largely to the technological boom we've experienced. I think this
may urge us to consider the prospect of continuing TRIPS to a next
step, expanding the procedural guarantees of TRIPS into some substantive
areas. Maybe the United States will begin to abandon some of its
quirks in intellectual property law, and our patent law is the quirky
one in the world. The rest of the world has a more uniform way of
enforcing patents than we do.
As national tribunals begin applying each other's laws, maybe we
would find that there is a workable system for that. Of course,
the enforcement would still lie with the national court. Once a
judgment was entered against a United States company in a Japanese
court, the Japanese patent owner would come to the United States
to enforce that judgment. We might presume that a United States
court could use some form of Blonder Tongue, to use the old Supreme
Court case, which simply says that we will not retry the same issue
if it was fully and fairly adjudicated in another forum of competent
If we would ascertain that the Japanese court had adequate jurisdiction
to handle the matter, if the matter was fully and fairly adjudicated
in the Japanese court, then maybe the United States court would
give full faith and credit, to use a Constitutional term, to what
was done by the Japanese court. And, suddenly, the prospect of having
to travel to 80, 90, or 100 different forums in different countries
in different languages to enforce your international intellectual
property rights would begin to disappear.
TRIPS has begun the journey. I urge us to at least consider that
maybe TRIPS is just a rest stop on a longer road leading to a harmonious
international enforcement horizon.
With those thoughts, I leave you to contemplate whether I'm advocating
oneworld government or not. Thank you.
MR. CHARLES DADSWELL [Assistant
Chief Patent Counsel, Glaxo Wellcome]:
It's true that today intellectual property is thriving. If you
look at a lot of corporations, you'll see intellectual property
attorneys appointed as general counsel. They're reporting to boards,
they're sitting with CEOs and COOs, who are continually asking for
a complete and total intellectual property landscape of the products
they're selling. Most times you're seeing them ask for competitors'
intellectual property positions as well. This is surely going to
continue, particularly in the age that we're living in with technology
advances, where the Internet is thriving, where you see IPOs and
millionaires that are created from vaporware, and basically million
dollar losses to their bottom lines.
If you don't think that that is going to be the way that things
are going, let me share a couple of facts with you. I travel a fair
amount, and I actually picked these up out of the American Airlines
Book, so if anyone needs authorities for this, I can give you the
book, but I don't know if there are authorities in the back. I'm
just going to take it at face value.
Two of the facts that I thought were kind of astonishing ones:
number one, it's believed that 90 percent of all scientists who
have ever lived are alive today, and that as many scientific papers
have been published in the years since 1950 as were published in
all the time prior to 1950. The second one and this one even
took me aback a bit more based on the rate at which knowledge
is growing, it's speculated that by the time today's children reach
the age of 50, 97 percent of everything known in the world at that
time will have been learned since their birth. That's 97 percent,
and that's over the next 40 years. So it went on to say, and this
is the quote that actually got me thinking. Looking at these facts,
it was best said by Sparky Anderson, Manager of the Detroit Tigers:
"I've got my faults, but living in the past isn't one of them;
there's no future in it."
Okay, so what's my purpose for today? My purpose today is to try
to look to the future, to stimulate some thought, to provoke some
discussion, and look briefly at some of the issues that I see as
coming up in the forefront of intellectual property in the next
few years. From a patent perspective, I think the most interesting
challenge businesses are going to face is how they grapple with
the advent of the CAFC opinion of State Street Bank vs. Signature
Financial, 149 F.3d 1368 (Fed. Cir. 1998). That's the case that,
in fact, affirmed that methods of doing business fall within the
gambit of patentable subject matter.
So, if you look at businesses today and you follow that decision,
businesses are looking not only for ways to protect their own exclusive
markets, but also for a sword, a sword to use against other businesses
to keep them out of their market area. As those patents continue
to issue, as more business method patents come out, and as they're
litigated, we're going to see that those things are going to continue.
Some advocates even say that that decision from the CAFC is going
to actually slow the pace of economic growth. Thomas Weber, in Monday's
Wall Street Journal, in his column, eWorld stated, "The battle
is brewing over patents covering methods of doing business and threatens
to slam the brakes on the web's breakneck pace of innovation."
Whether that's going to happen or not, we're just going to see,
and I doubt very much if we're going to see the pace of innovation
stop, just because of those methods of doing business patents. Business
people are just too smart. They're going to license it and they're
going to find a way around this. Will it stop the pace of innovation?
I think not. Moving to an area still in the patent field, but in
an area a bit more mature than the software and the business method
patents, is the area of biotechnology. A fact that I saw the other
day shows that a lot of what's happening in biotechnology now is
not the type of patents that are issuing, but the sheer numbers
of patents that are actually being filed.
The Washington Post reported that Solara Genomics of Rockville,
Maryland, a firm just up the street, filed more than 6500 patent
applications for gene sequences in a single month. Now, if I were
in the business of biotechnology or competing with Solara, I would
have a patent attorney sitting in my office, explaining to me, exactly
what this meant to my business. That was 6500 patent applications
in a single month. I'd be wondering if I'm behind the 8ball if we
hadn't filed that many, whether it made economic sense to file that
many, and what was going to happen when those patents start issuing?
The problem for that patent attorney is that I don't think that
there is a good answer.
Moving into the area of trademarks and switching gears a little
bit, it seems that the Internet continues to dominate the headlines.
Just as we were making headway in the area of domain names, we've
got a couple other issues that are coming up.
The first issue that is coming up regarding the Internet is metatags.
Now, a metatag is simply a situation where a programmer can place
a word behind the text of a website in the code. When you go and
use a search engine, the search engine looks for not only the text
in that website, but also at these words behind the text, or these
When I was sitting going through this, the example that popped
in my head is, say you have an online business that sells camping
equipment. So, in your code, if you ask your programmer to embed
as a metatag behind the text, say, the word, Yosemite, a hundred
or a thousand times, so that when a person comes to your website
and they're looking at camping gear, they'll never see this, but
if you don't know about their website and you simply go to one of
the new search engines and say, okay, I need to know about Yosemite
So you type in Yosemite, and now the search engine goes and they
search that website. Now, they'll see the one for your camping equipment
with Yosemite a thousand times, and they'll bring that back as a
hit. So a person actually searching for places to go and exercise
to do hiking, will now have on their hit list, a camping equipment
manufacturer as well.
Now, that all sounds pretty innocent. It sounds like it's not a
problem. However, if you've got a competitor embedding your trademark
as a metatag in back of their website, it could be a problem. Dow
Jones reported that the Paine Weber Group had just sued Fantasy
Corporation in Manhattan for allegedly embedding the trademark,
Paine Weber, within the coding of the websites for adult entertainment.
So you can see where this is going. Now it doesn't sound so innocent,
The second issue, again in the trademark area, is something that
I was just alerted to about a week ago, and it's something called
"key word buys." It seems that some of the Internet websites
that have search engines are actually selling what's called a key
word buy to various different people.
What happens here is that a key word buy allows a competitor to
buy advertising space on a search page, once you've gotten the search
back. So, say, for the pharmaceutical industry we have a product
called Flonase. Say, whenever the term, Flonase, is typed into a
search engine, a competitor of that product actually buys the advertising
space on the web hit list when it comes up? You search Flonase,
the first thing that comes up on a webpage is always the advertising.
They pay for the advertising and that's always going to come first.
So your competitor will come up with an active link.
So before the search for your website even comes up, that person,
you know, with the download speed today, might be bored, they might
click on your competitor and instantly go to their website. So there's
an issue there.
The last issue in the trademark area that I want to raise is the
issue of typos. And this goes back to the domain names. The question
here is, who's allowed to register the domain name for the most
frequently miskeyed spelling of your trademark?
Glaxo Wellcome is a perfect one for this. We spell our corporate
name, GLAXO, WELLCOME. But what happens when someone types in Welcome
with a single L? Who's allowed now to go ahead and further register
that trademark with the mistyped form?
Those are some of the issues that are coming up. So these are some
patent and trademark issues.
One last thing I'd like to do is just alert everyone that if you're
in the practice of intellectual property, one of the things that
you have to follow on a continuing basis is the legislation that's
going on in Washington. I just want to highlight quickly, three
bills that I think are coming up and that you'll see in Congress
over the next few months that are worth watching.
The first one is Senate Bill 1798, that's a patent reform bill
introduced by Senators Hatch and Leahy. This probably is one of
the most comprehensive redrafts of the patent bill that we've seen,
probably since the GATT provisions of some years ago. There are
some controversial issues. One of the biggest ones that I've seen
is the prior user rights provision there.
The second bill, again by Senator Leahy, is Senate Bill 1835. What
that essentially is, is that bill would restore to intellectual
property owners the right to sue states on intellectual property,
and is in response to the Supreme Court cases on the 11th Amendment,
state immunity, of College Savings Bank vs. Florida Prepaid PostSecondary
The last one that I want to highlight and I don't have a
number for this, and I apologize. It was introduced in the House
by Representative Brown from Ohio, and it hits home a little closer
to the business I'm in, and that's the Affordable Prescription Drug
Act. What this would do is force compulsory licensing for all lifesaving
prescription medicines prior to patent expiration. Now, I haven't
had a chance to take a close look at this bill as of yet, but just
from a cursory review, my question is, should this pass? I think
that it would actually be in violation of the TRIPS provisions of
MR. JOHN DOLL [Biotech Director,
One of the hottest topics for the past couple years has been percent
homology, similarity, and identity. And in the past two years, if
you've heard me speak, you'll notice that I've done a complete,
What we've done in the past is, we had a very wellthoughtout, very
logical, technical reason for making 112, Second Paragraph rejections
on claims that used this kind of claim language. A typical claim
that could be drawn, either to a DNA, a polynucleotide, or protein,
would read a polynucleotide having at least 90 percent homology
to a particular sequence or to a particular protein. And what we
were doing in the past was making it 112, Second Paragraph rejection,
saying that unless you told us what search algorithm you used to
establish the 90percent homology, similarity or identity, we would
say it was indefinite in the absence of the algorithm and the parameters
used to interpret that percent homology you got from that particular
Now, if you're a real scientist, you understand that there is a
difference in the art between the term, homology, similarity, and
identity. Unfortunately, over the years what has happened is that
the patents and the prior art have taken these terms and squashed
them together so they all mean the same thing, so I'm going to talk
about them as if they were the same thing. But after a couple of
years of listening to a lot of arguments and being beat up at a
lot of bar meetings, and actually even being beat up in bars over
this, we made the very reasoned, logical decision that the language,
at least 90 percent or at least 75 percent homologous is not indefinite,
per se. It's a very broad claim.
Even if there are 25 algorithms, and even if there's a myriad of
parameters in each one of those algorithms to define the percent
homology, it's not indefinite. We know exactly what you're claiming.
We have the ability, even though it's a large job, to search every
algorithm. It's a question of breadth or a question of how broad,
or of what kind of scope you're actually claiming. And in response
to that, what we're going to do is, we will be expanding our searches.
We'll take relaxed parameters.
If you do algorithms and you do percent similarity searching, you
know there are GATT penalties, there's rejoinder penalties, there's
mismatch penalties. But the question comes up again that it's not
indefinite. We know exactly what you're claiming. We know exactly
what breadth your claim has, and what the scope should be. If there
is a way to convince you that you may be overclaiming, it would
be through the application of art. We will do a search, we'll come
up with some prior art to convince you that maybe with a 102(b)
reference that it may be 75 or 50 percent homologous is not exactly
the scope you were looking for.
And a couple problems come up: The first is that we'll broaden
or relax our search parameters, and what we'll come up with is,
we'll come up with matches. What happens now is when we have a piece
of DNA that fits within your claimed disclosure of a certain percent
homology, but there's a totally different utility for that piece
Now, there's a question as to whether or not you've taught us how
to make and use that particular invention. So now we're talking
about a possible 112, First Paragraph problem that again could be
overcome very simply by narrowing your claim language to within
a certain percent homology that avoids the prior art. There are
a couple of other things that we should talk about. When we've dropped
the 112, Second Paragraph, we haven't stopped considering 101, whether
or not you have an actual utility for that invention. And there
still may be, as I said, 112, First Paragraph rejections.
Express Sequence Tags (EST's) are always a very hot topic when
I talk, and we really haven't changed on this, but we have taken
into account, the Eli Lilly decision. I wanted to identify to you
and define how we're looking at the EST applications. We have the
first generation applications which show a bare DNA sequence. It's
usually a partial sequence. It really is just an EST.
The utilities that were set forth for these compounds are usually
a shotgun type of utilities where it says that this particular piece
of DNA is useful as a probe, it's useful for chromosome marking,
it's useful for forensics. But the applications generally didn't
go any further to tell you what you're probing for, what chromosome
you were trying to mark, or exactly what disease state or what cell
line you were looking to identify.
What's happened is that we've seen a growth in the second generation
of EST applications. In these applications, we call them EST's because
it's a method of determining the particular sequences. You start
with an EST, shotgun type, disclosure and sequencing method, but
you piece together a full length open reading frame. So what people
are claiming now are full length open reading frames that were determined
from an EST.
Now, to do this, they've determined what protein would be associated.
Anybody can take a piece of DNA and tell exactly what protein would
be expressed from that particular piece of DNA. You'll do a computer
database search to see what that protein looks like. You'll determine
that it's a kinase or another functional protein, and you'll come
in and claim that as the use of the expressed protein.
We have a large number, probably 7,000 applications, of what we
call third generation cases. The third generation cases are all
disclosing open reading frames. Each one of the open reading frames
is a fulllength gene. It's been pieced together, usually through
pieces of EST's, or it's been pieced together through classical
determinations in biotech.
What we have now in the third generation cases is a complete functional
analysis of the DNA, of the protein that's expressed. I don't think
there is anybody that has a hard time with this particular type
of application. It's a full disclosure of how to make, how to use,
and the scientists are not even concerned about this type of research.
There was a large outcry about the first generation EST applications.
The restrictions and I'll run through this fairly quickly
in the first generation cases, as you know, covered 10 to
hundreds of thousands of EST's claimed in each particular application.
In the second and third generation cases, what we're seeing is that
people are coming down to a very small number of specific pieces
of DNA, specific genes. They know what the function of the gene
is, they know what's expressed. They know what the function of that
Commissioner Lehman was very friendly and very biotech friendly
when he made the decision that we could examine 10 ESTs in one particular
application. The problem in the group, though (any of you ex-patent
examiners will know) is that it's becoming more and more difficult
to examine 10 ESTs. We're spending a great amount of time to do
this. When it comes to an open reading frame, a fulllength gene,
or a gene that expresses a known protein, we're restricting you
to one piece of DNA or we're restricting you to the protein that's
If you're a corporate counsel, this is very important. We took
a road trip a couple of weeks ago, up to Solara. One of the questions
we wanted an answer to was this: It's very easy for me, to go to
the Board and say I know exactly how many genes I'm going to file
on next year or how many fragments I'm going to file on, so I know
exactly how much it's going to cost me to file those applications.
But you need to tell me how much it's going to cost to prosecute
them. How are you going to restrict me?
And so we go back to the office and I come up with a typical gene
application, and there are 13 different ways that I could restrict
the application. If it's a bioinformatics application, you can restrict
the database, the method, the use of the computers to run the algorithms.
You can restrict it to each one of the particular genes or to the
protein, and that makes a big difference if you're a corporate patent
counsel when you're trying to make a determination to convince the
Board how much money to give you to file these cases in the future.
The best advice that I can give you is that the answer is probably
going to be one. What happened in the past, though, is that I think
most of you are familiar with the Incyte patent where we examined
43 fragments and one open reading frame. Incyte said that was the
first EST patent to ever issue, but it really wasn't the first EST
patent to issue; we issued one in 1996 to a place in Boston called
In that particular case, however, it was the examiner's choice.
The examiner decided that each one of the fragments was so similar
that the examiner could search all 43 fragments along with the one
open reading frame. That was a decision that the examiner can make.
The examiner always has that option to examine more if the examiner
thinks he can do it within the time he has allotted to examine that
particular application. And, again, the waiver of the Rule 121 was
to allow us to examine 10 particular EST's in an application.
And the last bullet is the one where you always have the option
of talking to the examiner, asking the examiner if the examiner
could examine more if there is a common motif and if there's a particular
nucleotide range where you're novelty lies. It may be very easy
for the examiner to do more than one EST. Talk to the examiner,
talk to the examiner's SPE, and try to work out and see exactly
what you can get examined in that one particular application.
To talk about utility now, utility was something that we had wrapped
into the original guidelines. When we did the original written description
guidelines in response to the Eli Lilly decision, they were published
almost a year ago. We had public hearings. We took your comments
into account, and there were some very good comments that were submitted.
So, what we've done is we've rewritten the written description guidelines,
and we're putting out the second final interim written description
They have been signed by Commissioner Todd Dickinson. They've been
sent down to the Department of Commerce for final Agency approval.
When we get them back, signed, we will publish them in the Federal
Register. Unfortunately, it will take a couple weeks, and we haven't
gotten them back yet so it will be two or three weeks until we can
In the meantime, one of the biggest things that we did is that
we separated the utility guidelines from the written description
guidelines. Today what we have is, we have a twopronged analysis
to make a determination as to whether or not we have utility, whether
the 101 statute has been satisfied.
What we're going to is a threepronged analysis. And today what
we do is, we look for a specific utility, whether or not that utility
is defined for a particular purpose, and whether or not the utility
is credible would one of ordinary skill in the art look at
the disclosed utility and know that it would be useful for that
particular disclosed invention?
Of course, you always have the option where there is such a wellestablished
utility, the examiner opens a case, takes a look at the claim and
says, I know exactly what the utility for this particular invention
would be. That's always acceptable, and it will be in the future
Now, what we're going to do tomorrow, the threeprong test is going
to be, use a specific utility, but the utility has got to be specific
for the claimed invention. Again, it's going to have to be a credible
utility. Would one of ordinary skill in the art expect this utility
to work for this particular claimed invention?
Substantial utility: This is the new prong that we've added. It
has to be a utility that is a real world utility. Again, tomorrow,
a wellestablished utility will always be acceptable if the invention
that you're claiming is so well known to have a particular utility
that there's no need to even disclose it.
You've heard me say in the past that I would allow a claim drawn
to a DNAcomprising, SEQ. ID. where the utility was set forth as
nothing more than a probe or a chromosome marker or for forensics.
We've rethought that. I was beat up quite a bit, so we went back
and we read. We read Renner v. Manson again, we read a couple of
other court decisions, and decided that we could actually change
this - that the utility has to be specific, it has to be specific
for your claimed invention.
For example: What is your piece of DNA probing for? Are you probing
for a particular gene? Are you probing for a particular disease
state? What cell line are you probing for? If it's a diagnostic,
tell us what disease state you're looking for specific to your claimed
invention. Another example would be a protein. You'll come in with
a protein, and people say it's useful as an antigen. Well, of course,
any antigen will raise an antibody. Exactly what is your antibody
When I talk about a substantial utility, it has to be a realworld
value, and not just basic research on the material itself to determine.
And one of the things that we've come up with as an example to show
that a piece of DNA that expresses a protein where the use of the
protein is not known, is not a realworld utility. That's where you're
looking to do basic research to determine what protein is exactly
expressed, and what that protein does in that particular system.
And throwaway utilities: This is where it actually gets a little
funny, but they will never be considered substantial, even though
I have had some arguments to the contrary. A throwaway utility would
be a transgenic animal used as snake food.
That one might work, though. If you had a real muscular, if you
had an Arnold Schwartzenegger mouse that was big and beefy so that
you didn't have to raise so many mice to feed your snake, that one
would work, but you must come in and tell us specifically what your
One we see a lot is a protein as a nutritional supplement. You'll
see an application come in where the applicant really doesn't know
what the protein is useful for. So they'll go through pages and
pages of preferred utilities and then at the end they'll say, oh,
by the way, it is useful as an animal feed supplement. Any protein
would be useful as an animal feed supplement, any protein is useful
as a source of amino acids. We're not going to consider that a substantial,
realworld utility or using them as landfill. The one in the middle
is a one that we see a lot. We haven't seen many Harvard mice being
used as snake food, even though I'm sure it would work for that.
The guidelines will very clearly say that throwaway, insubstantial,
nonspecific utilities do not meet the requirements of 35 USC §
101, even if they're asserted in the specification, because we said
that in our guidelines. When we issued the guidelines that last
time, we made the statement very clear. It's on page 49, and it
says very simply, you tell us you want to use it as snake food,
we will believe you. We've rethought that after being beat up quite
The good news is that the new utility guidelines will really only
affect first generation EST cases where you have a bare piece of
DNA and you have a shotgun disclosure as to what the utility would
be useful for, and a very limited number of second generation ESTs
where they've pieced together an open reading frame and the utility
was set forth as to be a nutritional supplement.
Thus, in the vast majority of cases that we see, utility is not
a question. And in the utility guidelines, and in the written description
on enablement there is really going to be no substantial change
as to how we see 112, First Paragraph, enablement. What we have
is that this enablement rejection will continue to form the basis
of those rejections where you do not have a utility. It's hard to
teach one of ordinary skill in the art how to use an invention when
you haven't really disclosed the credible, substantial, realworld
Written description: I can do this really quickly because on reconsideration,
we've looked at written description. We've made quite a few written
description rejections in the group. In the antisense area, if you
prosecute in that area, you've seen quite a few rejections.
You have heard me talk about subgenuses where you have a particular
claim, and that claim is a functional limitation. I have made the
statement that if you're probing for something and you're generating
a lot of antisense compounds that form a genus, you must tell us
what part of that genus forms the subgenus that works as an antisense
Now what we're doing is looking with respect to see if you've taught
us how to make that determination. It doesn't take one of great
skill to go into the lab and to run a functional assay or to run
a functional analysis to make a determination whether or not this
particular piece of DNA is functional for that particular utility.
So what we're going to say is that I think written description requirements
or rejections are going to be rare in the future. From the applications
that we have seen filed over the last year and a half, it's a rare
occasion where applicant has not given us an adequate written description
to show the examiner that applicant is in possession. And that's
how we've interpreted written description; applicant must be in
possession of the invention.
Written description is going to be viewed as to what was the level
of skill in the art at the time you filed the invention. The examiner
will review the specification to make a determination as to what
was fully disclosed. The only question the examiner has to answer
is, was applicant in possession of the invention at the time he
filed the application? We'll do a complete search to see what the
prior art teaches about that particular invention.
If you've actually reduced the invention to practice, there should
be no question about written description. If you have a complete
structure or a complete process, there should be no question about
written description. If there is substantial variations in the art
which are turned up by the prior art, you may have a problem with
your claim, and we may be able to work out functional language at
that point in time to help you.
The next thing and I'm really not going to talk about it
at all, because I want to hear what Michael has to say is
that bioinformatics is a topic, it's an emerging technology, and
what's happening is that there is a large number of applications
being filed. And you have no idea where to examine them. Do they
go to the computerrelated arts? Technology Center 2700? Or do they
come to Technology Center 1600 where we do the biotechnology arts?
We've made a determination that we're going to take all the bioinformaticstype
applications, move them into Technology Center 1600, and we're now
looking to hire examiners that have electrical backgrounds and biotech
backgrounds, and we're going to do crosstraining between our 102
guidelines and the 101 guidelines that are somewhat different for
the Technology Center 2700 examiners.
The copyrights in films, music, and photographs have some very
important digital representation issues. People are starting to
create derivative works of photographs and music, and you need to
be thinking about whether or not you have sufficiently protected
those copyrightable works.
Be careful of late-developed technologies. There is a case down
at the bottom, Batiste vs. Island Records, 179 F.3d 217 (5th Cir.
1999). One of the artists gave away all his rights to a particular
set of songs, and the record company had the wherewithal to say
"and any future technologicallybased versions of the same thing."
The artist was apparently devastated to find out that somebody
took his ballad and stuck it into a rap song and just mixed it up,
and, sure enough, his ballad was a ballad no more. So, it turns
out that he had given away those rights, so please be sure to think
about the laterdeveloped technology issues.
The digital copies are becoming pervasive in this area of technology.
People are making digital copies of photos. People are starting
to find ways to, and even patent ways of marking their photographs
so that you can find out if somebody has made a derivative work
of it. If you're into that area, please think about investigating
that type of technology.
Myself, I'm a music fanatic, and the MP3 music standard has come
out, and it's really turned the recording industry on its ear. I
was able to get one of the new MP3 players with two hours of music,
and it's amazing. You're going to have people moving music between
people, so if you're in the music area, please think about how you
might protect yourself in the MP3 arena.
We heard briefly about trademarks and domain names. I think that
there are a lot of people wondering how they can protect GlaxoWelcome
with one L. It's just like there are people wondering how McDonalds
was silly enough not to have protected its trademark initially in
the McDonalds.com case where somebody else essentially registered
the name. So if your company has not registered its domain name,
please think about doing so. It will probably cost you dearly if
you need to buy it back from somebody else.
Congress at the moment is trying to deal with the people they're
calling cybersquatters. It's amazing that Congress actually chose
to deal with Congressional people and Senators and political candidates
first, but that's apparently who they are worried about at the moment
for domain name problems.
There are some new registration organizations that are coming out,
and there are certainly some multinational registration issues that
I can talk to you about. There are people in Trinidad and Tobago
that are out selling McDonalds to for Tobago, so just know that
just because you protect it in the United States, doesn't mean you've
protected it all over.
I think everybody is familiar with the right to exclude others
from making, using, and selling patents. In this modern day trend,
one of the interesting things that is coming out is people are trying
to set up license agreements where they say I'll license your technology,
I'll give you a twopercent royalty. What do you do when there are
a hundred patents like that? You're paying 200 percent royalty,
and that's pretty tough to do.
So people have come up with the concept of royalty stacking, where
if you need to use somebody else's technology, you get to reduce
Company A's royalty because you have to pay a royalty to Company
B. For people who haven't talked about that, that's an interesting
What goods are you going to cover? The changes in technology have
enabled people to say, well, wait a minute, yes, I know my license
is for printers, but really, a fax machine is like a printer, because
it prints things out, and do I owe you a royalty on that as well?
There is also a recent case on something a little different, which
is reasonable royalty, and the big question becomes, if you're negotiating
for a patent license and you don't get it, can that be used against
you when you actually are found to infringe?
But now I'd like to move to the more widely known issue of electronic
What is electronic commerce? I think everybody has seen it. The
Internet has kind of made it pervasive. It's product information;
it's being able to buy and sell goods. Since we're running a little
bit behind, those companies, Amazon.com, Digital River, those are
some of the companies that are really out there at the forefront
selling goods over the Internet. You might want to think about visiting
their sites if you want to know what kind of goods people are selling
on the Internet.
The reverse is also true. There's Ebay, where people are now being
able to sell their goods to other people in electronic auctions.
There are a couple of other systems that are coming online for saying
how they would like to be able to auction off goods or to limit
the price that they're willing to pay for goods.
So, electronic commerce is the new area, and so what does it bring?
Well, of course, we're all interested in the fact that it brings
The one that started it for me was the Interactive Gift Express
vs. CompuServe case. Interactive Gift went out and sued about seven
or eight different defendants, CompuServe being probably the most
notable, and said that their claim covered everything that was downloading
goods over the Internet. The court didn't agree. The briefs are
in for that case, but I don't think Federal Circuit has had the
oral arguments yet.
I think everybody here probably has heard about the PriceLine.com
vs. Microsoft case. Microsoft is in the news for a lot of things,
and they keep getting beaten up, but if you've got a company that
big, it's going to continue to happen. Really it's an auctioning
method dealing with being able to set your price for a particular
service that you want to buy, whether it be hotel rooms or airline
The big companies, the big Internet companies that are out there,
they've been able to make a market name for themselves, but it's
really only with patents that you will be able to secure a medium
or longterm position for some of these markets.
Amazon.com was essentially a nobody, and when a big boy like Barnes
and Noble came after them in their arena, the only thing that really
protected them was the fact that they had a patent issue, I think,
about three weeks ago. And within 48 hours, Amazon.com had, in fact,
sued Barnes and Noble. So it is an effective weapon.
This last one is a pretty unknown case at the moment. I think it's
going to get some more press. It's a company called TechSearch that
sued several people in Chicago, and it essentially has to do with
websites that accept queries and sends results. If you can have
a website that doesn't do that, I'd be surprised. We have to wait
and see whether or not the prior art is out there to knock it out.
But why the sudden interest in ecommerce? Well, I think it's the
low cost and I think it's the media and investor awareness of ecommerce,
mostly so people can make more fun of Microsoft.
But I think this second slide is really probably much more the
reason why people are thinking about electronic commerce. There
is a broader range of statutory subject matter now. The State Street
Bank case opened the door to allowing people to patent methods of
doing business. There's another case, AT&T vs. Excel Communications,
172 F.3d 1352 (Fed. Cir. 1999), which people said goes even beyond
the original State Street Bank case.
So as we look to the modern age, you're going to be able to protect
your business methods more and more, but please think about doing
We talked a lot about gene sequences today. One of the interesting
issues in modern technology, at least for me, being a computer person,
is information access. People get access to market data, people
get access to gene sequences, and to just any kind of database information.
And people are protecting not only the methods of generating gene
expressions, but also they're getting license fees for when you
use their gene expressions.
So it's an interesting problem for people who need to license this
technology. What are you going to do about royalty structure? Are
you going to charge per access, per time, for the field of use?
It's an open question at the moment.
Antitrust, as I said at the beginning, is really something that
people have heard a lot about in the news recently. The question
is whether or not people are abusing their monopoly power.
The FTC investigated Intel, which I think is probably a less known
case. Intel was accused of not giving away its confidential information
to its competitors or to potential licensees. Apparently when you
are a big player, you may have to do that.
The FTC has a pretty good precedent now. There was no actual court
decision. They came to an agreement, but it certainly is going to
make life much tougher for big companies in the future.
The big thing to know is that Intel agreed to give a compulsory
license to people. The only thing that is the escape clause for
Intel is if somebody has threatened them with an injunction, versus
just money damages, then they can say, okay, now I get to withhold
the information from you. But the long and the short of it is, if
it's just money, Intel has got plenty of that, so don't worry.
So, in brief, one of the things I want to remind people is that
the emerging technology is causing a great set of problems, but
also a great set of opportunities for companies. People are continuing
to find new uses of old works, both from the copyright standpoint,
and also in the methods of doing business area. So, take advantage
of the trends in the electronic commerce patents.
One of the things we heard Judge Rader say is that the rest of
the world is trying to figure out whether or not they want to be
harmonized with the U.S., or whether or not the U.S. is finally
going to have to bend to the system of everyone else. As far as
electronic commerce patents go, it's actually the other way around.
The rest of the world is bending to the United States' lead, and
it's funny because many people said that all these other countries
were never going to come around to the U.S. way; they were going
to say that software was just this mathematical set of algorithms,
and really it was like the law of nature, and there was no way that
the other countries were going to agree to the U.S. format.
It's happened. Europe is trying to grapple with the issue. Europe
had three or four cases that came down that broadened their protection
to essentially what is available in the United States. Japan looks
like it's going to do the same. I was just down lecturing in Singapore,
and the Singaporian Government is trying to decide if they're going
to break from the UK model and move more towards the U.S. model
If you're thinking about an electronic commerce patent, file in
the U.S., maintain your ability to file in other countries, and
hope that the law catches up to you so that you can enforce your
patent, as Judge Rader said, in the near future. Thank you.