Dennis Crouch and Hal Wegner have done some excellent work on tracking the status of the USPTO proposed rules, including the proposed rule that would place an arbitrary limit on the ability to file continuation applications. Since their initial publication, the rules have been the subject of a great deal of debate which, thanks to the Office’s secretive handling of the rules following the notice and comment process, has been reduced to rumor and gossip of late.

Now, Dennis and Hal have tracked the rules to the Office of Management and Budget. Following standard procedure, the Office has submitted the rules package to OMB for regulatory review before publication of the final rules.

Here’s the real gold star – Dennis even uncovered the details on the process for submitting comments to on the rules to the OMB, which apparently has a policy “to meet with any party interested in discussing issues, whether they are from State or local governments, small business or other business or industry interests, or from the environmental, health or safety communities.”

Yep..it’s not too late to voice your concerns over the proposed rules. Unfortunately, we have no clue as to the content of the rules package as submitted to OMB thanks, again, to the Office’s behavior (one report had a PTO official characterizing them as ‘privileged’). In this light, it seems appropriate to assume that the rules haven’t changed and that comments to the OMB should focus on the proposed version and the Office’s secretive practices following their publication.

So we’ve officially got a patent reform bill in the 110th Congress (both Crouch and Zura have excellent summaries). Hearings are even underway. So now we’ve all got to watch Congress like a pot of water on the stove, right?

I say no. Right now, Congress is last in line in the patent reform debate, in my eyes.

Why’s that, you ask? It’s simple, really. The question we wanted to have answered by the first reform bill in the 110th Congress is this: How much progress has been made to overcome the giant chasm that separates the stakeholders?

The Patent Reform Act of 2007 certainly fulfilled its purpose. It certainly provided the answer to that burning question – a resounding ‘zero’. Yesterday’s hearing showed us that the 110th, is, necessarily, starting at the beginning….again. We haven’t moved a bit.

Does that mean reform is a dead issue right now? Again, I say no. It’s ironic, really. As legislative reform spins its wheels in Congress, both the courts and the Patent and Trademark Office are working to ensure that significant reform is made.

And they’re doing it now.

Want examples? Try these on for size. Think about KSR (I know you were already). Think about the Federal Circuit’s continued ‘reminders’ [example 1][example 2][example 3] of the flexibility of the TSM test as we wait for KSR. Think about the Amgen denial and the potential Supreme Court review of the Cybor de novo standard for claim construction review. Think about the rules package that is apparently making its way down the pike. Think about MedImmune and its progeny (there’s your reform right there). Think about the continued development of injunctive relief law in light of eBay (settlement tables continue to wobble as we speak). And, as my sleeper pick, think about Eon-Net and its potential effect on egregious troll-like litigation ’strategies’.

Don’t get me wrong…Congress clearly still wants in on the reform business. It’s just going to be a little late to the party.

In the fall of 2005, Brazil successfully used the TRIPs compulsory licensing provisions as a sword to negotiate lower prices on patent-protected drugs from big pharma. Abbott flinched when faced with this novel approach, and agreed to drastic discounts to avoid an ‘official’ compulsory license.

Back then, I viewed the agressive actions of the Brazilian government as “a beginning” of a new trend:

“Is this really an end to the drama, though? I don’t think so. I think it more resembles a beginning.

This issue will grow in importance for the medical-related industries considering the language of the TRIPs agreement and the WTO Doha Declaration in particular. Brazil and other countries are likely to be emboldened by the Abbott deal. When will Brazil or another country raise the TRIPs medical-emergency sword again? Hard to predict, of course, but considering the success Brazil had in the Abbott deal, one thing is certain- it will happen.“

Well, it didn’t take long. Brazil is raising the compulsory license sword again, now threatening to break Merck’s patent on Efavirenz, an AIDS antiviral drug that the Brazilian government believes is a “public interest medicine.”

This move by the Brazilian government is not particularly surprising. It worked before, why not try again?

But, the bigger trend now appears to be developing. Thailand recently adopted the strategy. Abbott again found itself as the target (and the de facto poster boy of the entire industry), and again flinched. The company recently cut the price of its AIDS drugs by more than half in an effort to avoid an ‘official’ compulsory license.

Chances are, we’ll see developing nations deploy the Brazilian strategy over and over again as the successes continue to pile up. Big pharma no doubt has a tough decision to make – when and how to mount a counter attack.

Who said domestic patent reform was the biggest patent issue on big pharma’s mind?

The guys at 37 Signals (purveyors of elegantly simple, web-based software that I use every day) are looking to buy a projector and recently asked for “recommendations based on personal experience” to help them in making the purchase. Their high-profile blog will likely attract lots of valuable comments on the subject….if you or your firm are contemplating a projector purchase, you’ll no doubt find lots of useful information over there.

For those convinced that the so-called patent-trolls are here to stay and that an Act of Congress is required to make them go away, I encourage you to take a “hmmmm…that’s interesting” look at Eon-Net v. Flagstar Bancorp.

In that case, the Federal Circuit recently refused to stay a sanctions judgment entered against a patentee and its counsel for various “troll-like” practices that occurred during the underlying patent litigation (which resulted in summary judgment of noninfringement). The district court entered a sanctions judgment against the attorney and his firm in the amount of $141,984.70 for failure to conduct an adequate prefiling investigation and for filing a baseless claim (F.R.C.P. 11).

While the Federal Circuit was only considering the stay and not the merits of the sanctions judgment (that will come later), the motions panel cleverly detailed various findings made by the district court regarding the troll-like practices of the patentee while it omitted any significant discussion of the movant’s arguments in favor of the stay. The non-precedential order reads like an instruction booklet for patent troll litigation strategies:

“Eon-Net’s complaint was virtually identical to numerous other complaints filed against parties with greatly disparate business operations;”

“Eon-Net followed service of the complaint with a cheap offer of settlement;”

“After Flagstar showed Eon-Net that its software was from a licensee to Eon-Net’s patent, and after Flagstar moved for summary judgment of noninfringement, Eon-Net identified other allegedly infringing software that was not identified in its complaint;”

“Eon-Net based its infringement allegation on an investigation of Flagstar’s website but that counsel did not obtain copies of the allegedly infringing software, was unable to determine how the web page worked, and did not evaluate the code;”

“Eon-Net presented no evidence or argument to support its [new infringement] position;”

“not only did Eon-Net fail to obtain or inspect copies of the software, it failed to even identify the software;”

“Eon-Net did not explain how it concluded that the ‘697 Patent could be construed to cover web-based forms;”

“indicia of extortion are present in this case;”

“Eon-Net offers a nuisance settlement at the outset to avoid a hard look at the merits of its infringement claims.”

(internal quotations omitted)

Why is this non-precedential opinion so significant? Simple….it will likely have significant impact on the willingness of law firms to engage in these common ‘troll-like litigation practices’. The true trolls, if there are such beasts, might just find themselves without representation.

It’s also important to note that the Court seemed to assign little, if any, weight to counsel’s argument that “his relatively small law firm will endure significant financial hardships if the imposition of monetary sanctions is not stayed pending appeal.” Why is this important? Anecdotally, most infringement suits that follow the ’strategies’ employed in this case are brought by smaller law firms that, presumably, don’t have deep pockets.

Stay tuned…the Court’s consideration of the merits of the sanctions judgment might be even more interesting.

For a detailed review, read the FedCirc.us analysis of the Eon-Net v. Flagstar Bancorp opinion.