Patent thickets in nanomedicine?

Of the comment below, recall CIRM has already found itself in a "patent thicket" created by WARF in the area of stem cells.

-->from SlashDot:

cheesedog writes "Over 5000 nanomedicine/nanotech patents have now been granted, and the patent land grab continues unabated. Dr. Raj Bawa says, "Patent thickets are considered to discourage and stifle innovation. Claims in such patent thickets have been characterized as often broad, overlapping and conflicting - a scenario ripe for massive patent litigation battles in the future." According to Bawa, nanomedicine start-ups may soon find themselves in patent disputes with large, established companies, as well as between themselves. In most of the patent battles the larger entity with the deeper pockets will rule the day even if the innovators are on the other side."

Bawa had previously written:

In December 2003, the US Congress passed the National Nanotechnology Initiative (NNI) of 2000 into law and recommended appropriating $3.7 billion for the next four years for the creation of the National Nanotechnology Coordination Office along with funding for various federal nanotechnology initiatives and programs. [IPBiz note: The overall Federal R&D proposed budget funding (FY2006) is cutting *real* Federal R&D spending for the first time in a decade; NNI was cut by 2.5% to $1.1B.]

The European Union has earmarked $1 billion from 2002 to 2006, while Japan has increased funding from $120 million in 1997 to nearly $750 million in 2002. Note that it is impossible to accurately determine the total funding in nanotechnology since these figures do not include private funding.

Some additional statistics from Nanotech Report 200322 are summarized below:
Public and private companies will spend close to $3 billion worldwide on nanotechnology R and D in 2003.

The US government has appropriated $2 billion for nanotechnology since 2000, putting it on track to be the largest US government funded science initiative since the Apollo Mission.

Presently, more than 700 companies are involved in nanotechnology.
40,000 US scientists are currently capable of working in nanotechnology.
In the past four years, more than 1,700 small tech jobs have been created from venture capital funding.

$900 million in venture capital funding has gone to nanotechnology startups since 1999, with $386 million invested in 2002.

Despite an overall decline in total venture capital from 2001 to 2002, venture investments in nanotechnology have increased (251% in electronics, 211% in industrial products and 313% in life sciences).

Critics question the wisdom of investing such large amounts for a technology that has generated few products, and charge that politicians have been cleverly sold unrealistic economic benefits of nanotechnology. In any case, we should not overestimate what can be achieved within the next five years nor underestimate what can be done by the year 2015. Time will tell if this technology will be a “disruptive technology” and revolutionize worldwide markets.

Hwang filed a PCT application on 3 Feb. 06, after the scandal had broken

Information from english.chosun.com suggests that Woo Suk Hwang filed a PCT application on February 3, 2006, which is AFTER his two papers in Science were retracted but before February 16, 2006, when the Schatten cip was published by the USPTO. SNU states that it is conforming to Woo Suk Hwang's request to leave the application unchanged [it's not totally clear if this applies to both PCT applications; the application filed in February 2006 (when everyone knew about the fraud) presumably should have been written to include only non-fraudulent work. The application of Dec. 30, 2004 might include some fraudulent work.]

from english.chosun.com:

Seoul National University said March 31, 2006 it accepted a request from Hwang Woo-suk to leave unchanged an application for a stem-cell technology patent from the disgraced cloning scientist. The university has the authority to manage the research findings of faculty, but any changes in content have to be made by the academics themselves.

The head of SNU's Industry Foundation, Chung Jin-ho, said it would have been within its rights to adjust the scope of the patent application since the fraudulent research papers were withdrawn. However, it decided to accept Hwang's request as the inventor to leave it as is.

The foundation applied for two patents on technical aspects of making stem cells under the international Patent Cooperation Treaty in December 2004 and February 2006, based on two fraudulent papers on the creation of stem cells from cloned embryos Hwang published in the U.S. journal Science. But patents can only be granted if application is made to member countries by June 30, 2006 [18 months from Dec. 30, 2004] for the first and August 3, 2007 [18 months from Feb. 3, 2006] for the second. "Hwang intends to reduce or change the scope of his patents if individual countries ask him to," Chung said. Hwang, who was sacked by SNU this month, applied for patents in 16 countries including the U.S.

The Industry Foundation chief said Hwang's one-time champion Prof. Gerald Schatten of Pittsburgh University included techniques developed by Hwang in his own patent applications, a move that came to light in February. [IPBiz: specifically, on February 16, 2006] SNU plans to ask the U.S. Patent and Trademark Office to add Hwang as a co-inventor on Schatten's application or exclude the techniques from it. [IPBiz: this request probably will not go far. Schatten cited Hwang's 2004 paper for the use of one element in a multi-element method claim.]

Forbes on low points for Apple Computer

Forbes discusses some high, and low, points for Apple.

In the negative:

Sometimes, Apple’s setbacks were plain bad luck, [IPBiz: ??, maybe there were tangible reasons for the failure] as in the case of the Newton--a handheld computer released a few years before the world was ready for it. When the public finally was ready to use personal digital assistants, the folks at Palm were the ones that benefited.

On occasion, Apple has limited its own success by setting up elitist or exclusive barriers to its products. It famously refused to license its Mac operating system until it was clear that it was getting clobbered by a combination of Microsoft and Intel. When Apple finally attempted to open up, the PC market yawned.

Named after Steve Jobs’ daughter, the Lisa computer was the company’s first product that combined a graphical user interface with a mouse. It was an innovative idea in 1983, but the $10,000 price tag and lumbering pace led to failure. Apple reportedly buried tons of unsold Lisa stock at a Utah landfill.

Would you call a 15.5-pound computer portable? Most consumers didn't either. The $6,500 machine the company introduced in 1989 found few takers. But Apple rethought the computer’s design, and by 1991 it came up with the PowerBook, which remains the standard in laptop design.

D Del finds Mattel/Fisher did not infringe LeapFrog patent

LeapFrog sued Mattel unit Fisher-Price in October 2003, alleging that its PowerTouch toy infringed claims of a patent related to LeapPad electronic books, but on March 30, 2006 U.S. District Judge Gregory M. Sleet of D. Delaware said Fisher-Price hadn't infringed.

LeapFrog had asserted that Fisher-Price's products were within the scope of patent claims embodied in LeapPad books that lets children press the letters of a word to hear how they sound. LeapFrog sought $58 million in damages. El Segundo, CA-based Mattel said that its PowerTouch books used different technology and that the LeapFrog patent was invalid.

RTT News reported: Commenting on the ruling, LeapFrog CEO Tom Kalinske, said, "Technology-based patent litigation is very complex and challenging. Nonetheless, we will continue to defend our intellectual property rights in the future."

A press release stated: "We are pleased that after a full hearing the Court found in our favor," said Neil Friedman, President of Mattel Brands. "As a company that invests significantly in the development of innovative products and intellectual property, we respect the intellectual property rights of others and conduct our business with the utmost integrity."

Reuters reported: Toy maker Mattel Inc. on March 31 said a federal court in Delaware ruled it did not infringe a patent held by LeapFrog Enterprises and that the claim in question was invalid.

David Mowery confused on Bayh-Dole?

Mowery: Bayh-Dole still serves as an adequate body of rules to govern who should reap the rewards of scientific innovation. "To begin tampering with this legislation on the question of stem cell research in order to set up what amounts to a separate set of laws for this new area of research will dramatically raise overhead costs and serve as a drag on innovation," he says. "The relatively small amount of money that will be returned to taxpayers will hardly make it worth it."

In the context of proposing rules to effect STATE funding of research, NO ONE is talking about tampering with the Bayh-Dole Act, which pertains to conditions for recipients of FEDERAL money to receive patent rights.

There are issues with the use of tax-exempt bonds issued by the STATE that have no counterpart in the FEDERAL financing scheme. Further, there are issues with patent infringement by STATE entities (Florida Prepaid Postsecondary) that have evolved since the Bayh-Dole Act. Further, the impact of 271(e)(1) on research related to FDA approvals, which law came AFTER Bayh-Dole, remains to be contemplated.

Issues facing states who wish to fund stem cell research go way beyond the Bayh-Dole Act. No one is talking about tampering with the Bayh-Dole Act, but states have to face the new issues.

MOREOVER, some people would NOT agree with Mowery's contention that Bayh-Dole is an adequate body of rules.

For example, one should read an IPBiz post on September 15 about a Fortune article on Bayh-Dole.

Further, Dianne Irving wrote in a rather dark vein:

But instead of fostering better industry, public health and job opportunities, the [Bayh-Dole] movement has imploded inward, leaving extensive economic and healthcare damage in its wake. It has turned universities into "companies" vying with industry and individual scientists for "intellectual property" rights and patents, resulting in contentious, lengthy and costly litigation, in turn resulting in the forced silencing of university scientists and inordinate pressures to falsify their data. In addition to taxpayers toting the bills for this, the expected boost in health care for the public has instead turned into drug company "busts", requiring the public to pay even more exorbitant prices for dangerous or useless "expedited" drugs and ever-higher health care costs.

In the threat by WARF against CIRM in advance of research in stem cells under Proposition 71, we see a taste of things to come in contentious, lengthy, and costly litigation in the arena of state-funded stem cell research.

As to Mowery's assertion-->

#1. It is incorrect in suggesting that states, in dealing with issues in state-funding of stem cell research, are "tampering" with Bayh-Dole legislation. Bayh-Dole has nothing to do with what they are doing.

#2. Whether or not Bayh-Dole is an adequate body of rules has been questioned.

#3. California taxpayers were told, on the ballot, about taxpayer revenue that would result from funding Proposition 71. Whether or not that the expectation of revenue was reasonable may be questioned; however, it is a "bait and switch" tactic to tell taxpayers, after the vote, that the representation was wrong and the "benefits" lie elsewhere.

Book on Woo suk Hwang and the press

The book includes the tidbit: In his book, Lee also reports the behind-the-scenes story that the Ministry of Science and Technology of Korea refused to invite Pittsburgh University professor Gerald Schatten, Hwang's top partner, to the First Symposium on Stem Cell Research in Seoul in 2004.

He said the scientists reviewed Schatten's academic credentials and found him lacking. Schatten was finally invited through Hwang's political influence.

IPBiz note: Elsewhere, we had noted that Gerald Schatten is the top recipient of federal government funding on embryonic stem cells (yes, there is such a thing.) If (hypothetically) Schatten's credentials were lacking, who else in the US would have been qualified? Schatten's cip application, published on Feb. 16, also is of interest.

Nonfinal Office Action in re-exam of MercExchange '265 mailed on 24 March 06

A nonfinal Office Action in re-examination 90/006,956 was mailed on March 24, 2006, continuing the string of curious timing coincidences in this case between events in the re-exam and events in litigation. [Oral argument before the Supreme Court was on March 29, 2006]

Claims 1-29 of the '265 patent of MercExchange remain rejected.

Claims 26-29 are still rejected as obvious over Nahan ('111 patent).

The Office Action is 105 pages long, and the discussion of the commercial success of eBay towards the end makes for interesting reading.

There was some discussion of whether or not the '111 patent was considered during the initial prosecution. The USPTO says no. Of course, the interesting part of the re-exam is that the '111 was considered during the litigation.

LA Times on patent issues with Proposition 71 on stem cells

Lee Romney begins the article: When voters overwhelmingly approved California's novel $3-billion stem cell initiative, they counted on a promise spelled out on the ballot: The state would earn back as much as $1.1 billion in royalties from scientific discoveries.

But those hypothetical profits are now looking increasingly dubious.

Romney talks about the threats from WARF:

"Theoretically, could they [WARF] close down research activity in California? Yes," said Ed Penhoet, vice chairman of the institute's oversight committee.

A spokesman for the Wisconsin Alumni Research Foundation said talks with the institute are continuing. "We feel there should be a discussion about how the University of Wisconsin gets a benefit," Andrew Cohn said.

Of concerns of private industry:

Industry's key concerns, Genentech Executive Vice President Stephen Juelsgard told the committee, are that the state will dictate how much companies can charge for new treatments; maintain the right to patent technology, if companies fail to do so; and require companies to share developments they consider proprietary. Major companies "simply wouldn't engage," Juelsgard said. "It's not a risk worth taking."

Generally:

Californians "never intended a blank check for biotech," said John Simpson of the Foundation for Taxpayer and Consumer Rights. "The state should hold the patents."

State Sen. Deborah Ortiz (D-Sacramento), meanwhile, has introduced legislation that would send amendments to Proposition 71 to the ballot for a vote. Among them: a requirement that every grant or loan recipient share half [IPBiz: !!] of net licensing revenues with the state if the state shared the expense of developing or protecting the patent. The share would be 25% if the patent was developed without state help.

"We're putting money in. We should get more out," said Ortiz spokeswoman Hallye Jordan.

Very conveniently, bizzbangbuzz has a post on March 30 illustrating why venture capitalists will NOT be investing in embryonic stem cell work:

Rule No 4
Only products and services that can relieve a significant identified group of customer’s pains can generate revenue...

Rule No 5
Investors expect to exit with significant returns within six years...

Thus, the "private industry" folks have limited horizons to get money. Recall the ultimate fate of the "Dolly the Sheep" people AND patents.

Patent quality and the Data Quality Act

With all the discussion of patent quality attending NTP v. RIM and eBay v. MercExchange, I noticed that the March 17 issue of Science (311 Sicence 1536) had discussion of the federal "Data Quality Act." This law directs the Office of Management and Budget (OMB) to issue government-wide guidelines that “provide policy and procedural guidance to Federal agencies for ensuring and maximizing the quality, objectivity, utility, and integrity of information (including statistical information) disseminated by Federal agencies.” Of relevance to Eisenberg's proposal of peer review of patent applications, there's even a discussion of peer review.

Hmmm, the Data Quality Act might seem to encompass figures on patent grant rates released by the USPTO. Of course, the people most greatly in need of a quality upgrade (Jaffe and Lerner; Quillen and Webster on grant rates) are beyond the scope of the Act.

Journal publication, pubmedcentral and the ACS

In the year 2000, Peter Singer published an essay on the pubmedcentral proposal of the NIH.

Among other things, there was a line (about the then hypothetical future of 2002): In retrospect, readers realized that some of the old journals with the greatest cachet had never published a single qualitative article. Singer referred to a hypothetical article: "Medical publishing at the fin de siecle: suppression of innovation and the monopoly of knowledge."

Fast forward to the year 2006, and a letter by Ann Nalley, president of the American Chemical Society:

Dear ACS Colleague:

As a scientist and college professor, I’ve had a life-long passion for finding new and innovative ways of addressing life’s many challenges—especially when these innovations result in real positive societal benefits that improve our lives.

However, not all change is innovation. Change that is not well thought out, or for its own sake, can result in unintended consequences or irreparable harm. One area of change that I’m concerned with is the federal government’s rush to collect and make available articles derived from federally funded research—a process that has traditionally been the province of the private sector and scientific societies like the ACS.

As scientists, we rely on well-established and respected journals, like those of ACS and its sister societies, for the high-caliber peer review, editing, interpretation, and distribution of research that both validates and ensures optimal advancement of our discoveries. Without this refinement and conversion, the raw research results are much less useful in advancing new technologies and the changes they bring forth to our society.

In May 2005, the National Institutes of Health (NIH) instituted a voluntary policy requesting that NIH-funded researchers post their final, peer-reviewed articles accepted for publication in journals like those of ACS, on an NIH taxpayer-funded Web site— PubMed Central—within 12 months of publication. ACS worked diligently to help make this system work by fully supporting author participation and even offering to streamline the process by posting articles on behalf of authors.

But authors must opt in. At present, NIH is concerned that the low participation rate of researchers indicates its policy is failing—even though its policy has been operational for less than 10 months. Why such low participation rates by authors? One key problem seems to stem from lack of understanding of NIH’s new policy or perceived difficulties of posting. One way or another, scientists who write articles—and use them, too—don’t seem to think it’s worth it.

Which leads me to wonder: Is this change for its own sake? Does the new system really provide value that is presently unavailable under the current federal-private partnership? I am particularly concerned because now some people propose that NIH make the policy mandatory and require submission compliance just six months after publication. Even more troubling, the U.S. Congress is discussing legislation to require just such compliance by scientists—even if only partially funded by the federal government.

To be sure, taxpayers fund the conduct of federal research, but scientific societies like ACS and its sister societies add tremendous value to that research through critical peer review, technical editing, dissemination, and archiving— all of which require enormous investment. ACS has been a long-time partner in peer-reviewing and publishing federally funded research in our high-quality journals—among the most often quoted, cited, and cost-efficient in the scientific publishing world.

The value of scientific research—especially in chemistry—exists long after its publication and certainly well past 6 months. Moreover, it will be difficult to maintain a cost-efficient, high-caliber peer review and permanent archiving system if scientific societies have just six months to recoup costs before mandating free access. The prospect of “free” access to literature may seem good, but high quality literature at an affordable price is better.

The complexity of maintaining our system of literature dissemination is not always obvious. We all use the literature, and many of us publish in it. As scientists and citizens we should urge our legislators to make sure that there is an overarching benefit before potentially destabilizing today’s robust, quality system of literature dissemination.

At the very least, such a decision should be driven by hard, independently evaluated data. A credible agency like the Government Accountability Office should determine the long-term implications of these federal policies, before additional mandates. If we don’t, our government may inadvertently undermine the very system of innovation it aims to strengthen.

If you have thoughts on this emerging and important matter, please share them with me at president@acs.org.

**
In context, Nally is complaining about posting of scientists' final, peer-reviewed articles on an internet website (pubmedcentral) within 12 months AFTER publication in the journal.

I could not help thinking about Dan Hunter's article, Walled Gardens, 62 Wash & Lee L. Rev. 607, which complained about the requirement of some law reviews that articles which had been pre-published on an internet website to be removed from the website BEFORE publication in the journal.

The common theme is the perceived undesirability, by the journals, of information being made available on the internet. The noncommon theme is the timing. The SCIENCE journals have the expectation of presenting the information FIRST, and worry about the impact of later publication. The LAW journals do not care that the information has been presented somewhere else first, but don't want someone to access the information (presented elsewhere first) AFTER they decide to publish it LATER.

In the law area, the professors do get the opportunity to get feedback and make changes. This is akin to the practice in science of circulating a preprint (or for example with the ACS Petroleum Division, publishing a preprint). If this practice had been followed with Woo Suk Hwang, things would have evolved quite differently. Even the ACS has had some recently difficulty, with the Journal of the American Chemical Society retracting papers from a group at Columbia University (see for example 311 Science 1533 (17 March 06) on the retraction of certain papers by Bengu Sezen (and co-authors). Sezen is now a Ph.D. candidate at the University of Heidelberg.) One notes also some possible issue with work published in Science on bubble fusion. (see 311 Science 1532 (17 March 06)).

Legal Times on eBay oral arguments

The Legal Times discussion of the eBay oral argument began with a discussion of the lawyers:

Two veterans of the Supreme Court bar argued forcefully -- and inconclusively -- Wednesday in a high-stakes dispute over how easy it should be for a patent holder to win an injunction against an infringer.

From the tenor of the questioning in eBay v. MercExchange, justices seemed closely divided over the issue, alternately sympathetic toward Sidley Austin's Carter Phillips, arguing his 49th case at the Court, and then toward his adversary, WilmerHale's Seth Waxman, appearing before the high court for the 47th time.

Legal Times talked about Continental Paper: Under a 1908 precedent, Continental Paper Bag Co. v. Eastern Paper Bag Co., there is a legal presumption in favor of an injunction against the infringer although that's probably not why the Supreme Court asked for briefing on Continental Paper.

Legal Times concluded: One problem on the horizon for the case before the Court, noted several times by Roberts, is the fact that on review, the Patent and Trademark Office has invalidated all of MercExchange's patents involved in the case.

Waxman said that determination was not final and should not prevent the Court from ruling in the case.

An Office Action in re-examination rejecting claims does not "invalidate patents."

More importantly, from a substantive point of view, is that the Office Action rejecting claims was over the SAME prior art considered by the district court and by the CAFC, BOTH of which courts did NOT consider this art to invalidate the claims. See Intellectual Property Today, page 5, Feb. 2006. That might have been the stronger argument to make to the Supreme Court.

The Roberts comment has produced a a flurry of confusion.

**Along this line, tmcnet had a good discussion of the case, including this text about the re-examination.

Chief Justice John G. Roberts Jr. challenged Waxman, noting that since the lawsuit began, the Patent Office has rejected MercExchange's patent claims. Can the district court take that into account? Roberts asked.

Waxman said allowing parties to file for review after litigating cases in court would be an "open invitation" to manipulations of the patent process by infringers like eBay.

What is NOT mentioned here is
--> the re-exam began AFTER eBay lost at trial
--> the re-exam involved the SAME art over which eBay lost at trial
--> the CAFC affirmed the non-invalidating nature of the art BEFORE the USPTO mailed the Office Action. (refer to Intellectual Property Today, p. 5 (Feb. 2006)

Bayh-Dole: licensing return of $1 for every $60 spent?

From SF Business Journal, Stop meddling with stem cell institute:

That's not the only problem. The state's proposals appear to conflict with federal laws governing patent ownership by research institutions. [IPBiz: huh?] And commercializing CIRM's activities could also jeopardize the tax-free status of the bonds that will be used to create its source of funds. [IPBiz: using state money to allow specific private interests to collect patent royalties may be a problem, too.]

Given the inherently collaborative nature of scientific research, CIRM will need to use others' patents as well as develop its own. As we report on page 1, at least one major patentholder has put the institute on notice: If this is a commercial enterprise, we expect a cut. [IPBiz note: we've previously discussed the likely impact of Merck v. Integra in this area.]

Roger Noll, a noted Stanford economics professor, recently estimated that U.S. universities invest about $60 billion in research each year -- and net about $1 billion in licensing revenue. They've been at this for decades. Why would brand-new CIRM do much better? IPBiz note: The Bayh-Dole Act took effect in 1980. The universities don't "invest." They receive grants from the federal government. Further, the history of Bayh-Dole, which covers many technologies and the transition period from when there was almost no university patenting to much university patenting, is not a good predictor of what will happen in a particular technology area when the baseline is to obtain patents.

Economics professors have not, of late, offered wise counsel in the ip area. Apart from the voodoo math in the patent grant area by Jaffe and Lerner, some of "state grants on stem cells should be just like Bayh-Dole" papers bring up the "prize" incentive. As Bob Park recently wrote:

Rep. Bob Inglis (R-SC), Research Subcommittee Chair, announced that next week he will introduce legislation to create a major new incentive of perhaps $100 million to overcome scientific and technical barriers to a hydrogen economy. Like maybe the First Law of Thermodynamics? Inglis was inspired by the "success" of the Ansari X-Prize, which awarded $10 million for bringing a few minutes of space sickness into the lives of the rich and bored.

And, the hydrogen economy area has not yet been visited by a fraud on the scale of Woo Suk Hwang.

Scalia: "All he's asking for is `give me my property back.'"

In oral arguments for eBay v. MercExchange, AP quotes Justice Scalia: "We're talking about a property right here. All he's asking for is `give me my property back.'"

One observed in the briefs all the side-taking that previously was shown in lobbying for HR 2795. Against the injunction policy of the Federal Circuit are "high tech" companies such as Amazon.com [hmmm, remember the injunction Amazon got against Barnes & Noble?] and Yahoo! and for the current policy, among others, pharma. In the face of such division, don't look for a strong stepout from the Supreme Court.

Reuters covered the oral argument this way:

U.S. Supreme Court justices showed little inclination to scale back the rights of patent holders, sharply questioning arguments made by lawyers representing online auctioneer eBay.

"You're talking about a property right, and the property right is explicitly the right to exclude others," Justice Antonin Scalia told eBay's lawyer. "That's what a patent right is... give me my property back."

"I'm not sure you're going to get... the kind of wide-ranging allowance you seek," Scalia told the lawyer later.

BusinessWeek started with:

Patent trolls don't get much sympathy -- except maybe from the Supreme Court.

Some justices were skeptical of eBay's complaint that a lower court was too quick to block its use of the technology underlying the "Buy It Now" button. Justice Antonin Scalia pointed out the obvious: A person isn't allowed to take property away from someone who doesn't want to part with it -- even for a price.

BusinessWeek got into the patent quality issue, talking about a plague of bad patents:

An eBay win at the high court would curb the courts' ability to grant injunctions, thereby "lessening the hijacking effect" of patent trolls, says Emery Simon, counselor to the Business Software Alliance. The tech industry's complaint has its merits, but there's a big catch. The Federal Circuit and its injunctions aren't the problem. And curbing those injunctions would only mask the symptoms tormenting the patent system, without curing the disease: a plague of bad patents issued by an underfinanced and hidebound Patent and Trademark Office -- with the tech industry's help.

One infers that the plague talk is a legacy of the sloppy scholarship of Jaffe and Lerner.

More on the Crichton op-ed concerning Metabolite

The Reflector online of Mississippi State University has some discussion of Michael Crichton's op-ed in the New York Times on March 19, 2006.

Within the Reflector, Nathan Alday wrote:

As Crichton indicates, the patent system is fundamentally and frighteningly broken. The emphasis has moved from encouraging innovations-the stated purpose of patents in the U.S. Constitution-to encouraging greedy profiteers to extort both true innovators and others who could benefit from the technology. No process, observation or thought is safe from these so-called patent trolls.
(...)
Check out Crichton's article and see why the patent system is not just broken, but dangerously broken. As citizens and voters, we must make sure to take any steps we can-discuss the issue with each other, write our representatives and vote our minds-to ensure that patent law is reformed quickly and effectively.


I tried to post a commment on March 28, but nothing showed up. [UPDATE: it finally showed up.] It is somewhat interesting to note that Alday brought up free speech issues, but the refusal to post a comment on an internet board reminds one of some text in the Delaware case of Doe v. Cahill, 884 A2d 451.

Merely for history, here is the text of the comment, because you won't be reading it on the reflector:

Included herewith is a letter I sent to the New York Times about Crichton's article on March 19; the Times did not print it.

Michael Crichton's article ("This Essay Breaks the Law,"
March 19) conjures up frightening issues, which like
dinosaurs and trolls, may be presently more imaginary
than real. The patent at issue, US 4,940,658, derived
from university workers operating under a federal grant,
and thus comes to us through the Bayh-Dole Act. These
people are represented by a professor from the Stanford
Law School generally considered an advocate of patent
reform. In a different area, one recalls that the Eolas
patent, at issue in the Microsoft case, came from a
professor at UC/Berkeley and was ably defended in
re-examination by professors from Princeton and Michigan.
The claim at issue in the Metabolite case is
(schematically) a method of measuring a deficiency of X
in warm-blooded animals by assaying a body fluid for an
elevated level of Y and correlating an elevated level of
Y with a deficiency in X. X can be cobalmin or folate and
Y is homocysteine. This claim cannot be infringed merely
by thinking about the correlation or writing about the
correlation. In the current dispute, between two
companies, Metabolite and LabCorp, the argument by
defendant is that the correlating step is so vague that
the claim amounts to patent protection over a basic
scientific fact (the observed correlation) and thus is
invalid. People can disagree over the patentability of
methods employing correlations which were discovered as
the result of research, and the Supreme Court may shed
some light on this issue. What Crichton ignored is that
patents of this type, which are more of a tool to
accomplish an end than an end product, have been fostered
by the Bayh-Dole Act, and are the logical consequence of
basic researchers, such as government-supported
academics, entering the patent arena. The COX-2 patent of
the University of Rochester is an even more extreme
example of the phenomenon. Although there can be
legitimate concerns about what is being patented these
days, an inquiry into the source of the problem is also
helpful.

[sent by email March 19, 2006]

At the time I emailed the leter to the New York Times, I
had not learned about the March 14 meeting on stem cell
patent issues, reported by the California Stem Cell
Report , which included the text: And that means WARF
wants a payment from California.

I doubt that taxpayers of California thought they might
be paying state agencies of Wisconsin for patent rights.
I doubt that taxpayers of New Jersey understand that they
might be paying California or Wisconsin for the privilege
of having New Jersey scientists work in the stem cell
area.

Further, while I think the substance of the patent claim
in Metabolite (which came from Colorado University and
Columbia University) might be debated, one also recalls
that the Supreme Court already approved claiming a method
taking an advantage of knowledge from the Arrhenius
equation. In that case, the patent inventors were not
coextensive with the knowledge inventor (Arrhenius),
unlike the Metabolite case.

Crichton's op-ed did not come to grips with the
already-established baseline in patent law, placing it in
the category of a "Gambling in Casablanca?" remark.
Further, it did not come to grips with "who" is the
primary source of patents of this type, rendering
Crichton an unwitting Pogo.

Financial Times talks more about eBay v. MercExchange

The Financial Times reported the following on March 29:

Technology companies have supported eBay’s case before the Supreme Court arguing that patent cases are stifling innovation.

Pharmaceuticals companies have been arguing the opposite. In a brief to the court, they say limiting injunctions and weakening patent laws would drive up the cost of innovation.

One wonders whether the Financial Times considers IBM and 3M to be technology companies. One infers not.

Newsone reported:

The [eBay] case is one of several high-profile disputes that are calling attention to the nation‘s patent laws, which some critics — including Amazon.com, Yahoo! and Xerox Corp. — say need updating to keep up with rapidly changing technology.

If judges are required to issue automatic permanent injunctions, eBay and the others said, patent-holding companies could use the threat of the court orders to coerce larger firms into settling lawsuits for huge sums of money.

"Under such circumstances, injunctions do not serve the goal of the patent system to promote innovation but turn that system on its head," lawyers for Time Warner Inc., Amazon.com, Xerox and others wrote in a friend-of-the-court filing.

"Bell Labs may seem like a national treasure, but I don't think the U.S. government would put it there"

The Star-Ledger on talks between Lucent and Alcatel about Bell Labs:

While its focus is inventing products for parent Lucent Technologies, Bell Labs' government ties are epitomized by President Jeong Kim, a former submariner who has advised the Central Intelligence Agency.

So it's hard to picture Bell Labs flying a French flag. Yet the labs--birthplace of the transistor, lasers and satellite communications--are one reason some analysts think Paris-based Alcatel is pursuing a merger with Murray Hill-based Lucent.

And many experts actually doubt that national security concerns would hinder a merger. At least, not on this side of the Atlantic. Alcatel's minority stake in the French defense contractor Thales -- and French labor unrest that would make merger layoffs extremely unpopular -- may prove to be thornier issues.

"Lucent doesn't do that much work with the government. Bell Labs may seem like a national treasure, but I don't think the U.S. government would put it there," said Steve Levy, a longtime telecom analyst.

Lucent and the larger Alcatel last week confirmed talks about a "merger of equals," reprising discussions that collapsed in 2001. Combined, they would be a $25 billion colossus, the world's biggest telecom-equipment maker. Alcatel's board of directors is scheduled to weigh the matter tomorrow.

A merger is likely to come before the Committee on Foreign Investment in the United States, which advises the President whether to block foreign investments deemed risky to national security, the economy or communications privacy. Of more than 1,570 foreign acquisitions scrutinized since 1988, only one company--a Chinese enterprise that pursued a U.S. aerospace parts maker in 1990--has been turned down.

Overseen by the Treasury Department and comprising 11 other agencies, the committee didn't oppose a Dubai company's bid -- recently withdrawn after a public furor -- to operate U.S. seaports.

On "Configuring N.J.'s future in stem-cell research"

There was one "letter to the editor" commenting on my February 23 Trenton Times op-ed on stem cell research.

Double dipping
Monday, March 06, 2006

Former Gov. Dick Codey and his cronies return once again to the public trough to fund embryo-destructive research ("Configuring N.J.'s future in stem-cell research," Feb. 23). They just won't quit.

Why should they? There are more than 500,000 frozen embryos warehoused in fertility clinics, many of which were paid for with mandated public insurance subsidies, such as were imposed by Codey and the New Jersey Legislature.

Spending more money to destroy the embryos is a soullessly efficient way to get bigger bucks than were already taken from the public to pay for embryo creation and to simultaneously reduce this embarrassing, growing glut of stockpiled humans.

MARK OSHINSKIE, J.D.

Highland Park

In the interest of full disclosure of the issues I raised in the op-ed of February 23, 2006, here is the piece:

Configuring N.J.'s future in stem-cell research
By LAWRENCE B. EBERT

Stem cells, undifferentiated cells that have the ability to turn into specific cell types, hold promise to beneficially affect health problems such as diabetes, Parkinson's and Alzheimer's diseases, stroke, heart attack and spinal cord injury. There are three sources of stem cells, of which one type, cells derived from early-stage human embryos, has caused controversy, because the creation of an embryonic stem-cell ``line'' requires the destruction of a human embryo. Because of this, President George W. Bush in 2001 stated his intention to "allow federal funds to be used for research on existing stem- cell lines, where the life-and-death decision has already been made," but no federal funds would be available for new stem-cell lines. The controversy remains, with recent discussion on CBS' ``60 Minutes'' (Feb. 12), featuring insights from Professor Robert George of Princeton University and Dr. Richard Scott of Morristown.

Because of the limitation on federal funding support for embryonic stem-cell work, various states have entered the arena of stem-cell support. On Nov. 2, 2004, California voters endorsed Proposition 71, a $3 billion initiative for stem-cell research. Within New Jersey, former Gov. Richard Codey advocated an approximately $350 million initiative for stem-cell research. The New Jersey proposal was supported by a Rutgers University study, which recommended that the state should get a one percent royalty on any medical treatments produced by researchers receiving state grants, generating an estimated $21 million. Assuming that new stem-cell therapies start in 10 years, insurers and individuals would save a combined $11.3 billion in health-care costs. Further, a March 2005 poll by the Civil Society Institute of Massachusetts showed that most New Jerseyans supported Codey's plan to finance stem-cell research.

Certain events have occurred since the time of the Rutgers report and Civil Society poll that should be considered by New Jerseyans in deciding the utility of a state-funded stem-cell initiative. Leaving aside the ethical issue associated with embryonic stem cells, one sees that there are other issues that might keep New Jersey taxpayers from getting a reasonable return on the stem- cell investment.

First, one may question whether any income from patent royalties will be received. In California, as in New Jersey, there were promises of a return to the taxpayer through patent royalties. Specifically, Proposition 71 supporters pointed to a Stanford University analysis projecting great patent royalty return. However, a later legal opinion prepared for California State Treasurer Phil Angelides noted that patents and royalties resulting from state grants might be construed as taxable assets, making them ineligible for financing by tax-exempt bonds. IRS rules largely forbid the states to use tax-exempt bonds to benefit specific private enterprises rather than serving a general public good _ and to share revenue from an enterprise to the extent that the state becomes like a business partner. This complication should be evaluated by New Jersey voters who might otherwise expect that tax-free bonds can be used to finance joint ventures wherein the private entity holds the patent right.

Second, one may question whether state funding will produce any FDA-approved stem-cell therapy in 10 years. Patents issued in the next few years may be "too soon" in time, because commercialization of embryonic stem-cell work is a long way off. Further, with the Supreme Court decision in Merck v. Integra, other researchers, including commercial entities, are free to use patents, without payment of royalties, for the purposes of complying with any FDA requirements. New Jersey taxpayers may pave the way for later innovators without seeing return on their investment.
The concern about timeliness has been heightened by the recent discovery of fraud in papers published in Science in 2004 and 2005 by the Korean researcher Woo Suk Hwang. Although the New Jersey studies were completed against a baseline that it was possible to harvest human stem cells from blastocysts generated through somatic cell nuclear transfer (SCNT) (2004 paper) and to generate patient-specific embryonic stem cells (2005 paper), it is now apparent that no one has harvested human SCNT-derived embryonic stem cells or generated patient-specific stem cells. Sadly, the best and brightest minds in the stem- cell field couldn't catch Hwang's fraud and overstated research, which was revealed by anonymous Internet postings by co-workers. Further, readers of the Hwang papers were not apprised of the separate patent positions staked out by co-authors Hwang and Schatten, which suggest that conflicts of interest may permeate the scientific literature of the area.

NOTE: Lawrence B. Ebert is a registered patent attorney admitted in New Jersey and New York. He is the author of ``Lessons to be Learned from the Hwang Matter: Analyzing Innovation the Right Way,'' to be published in the Journal of the Patent and Trademark Office Society in March 2006.

[the bolding has been added]

AFTER the "letter to the editor" and the op-ed, the New Jersey legislature took some votes. The issues contemplated by the legislature were not the ethics issues, the patent issues, or the enablement issues. From the Newark Star-Ledger on March 14, 2006 (bolding added by IPBiz):

Yesterday [March 13, 2006], an Assembly Committee and the full Senate both voted to add a stem cell research facility at the New Jersey Institute of Technology in Newark to the plan.

The Senate version adds $50 million for NJIT to the $200 million already in the bill for a Stem Cell Institute in New Brunswick and a research facility in Camden. But the Assembly version carves out $50 million for the Newark project while keeping the total cost at $200 million. Either way the facilities would be built with money borrowed against future cigarette tax revenues.

Under the Senate bill, sponsored by Senate President Richard Codey, the institute would include:

# The $50 million lab in Newark, where the focus would be on commercial applications and clinical trials of adult stem cells.

# A $150 million facility at Rutgers University in New Brunswick, to be run jointly by the University of Medicine and Dentistry of New Jersey and the Robert Wood Johnson Medical School. It would focus on cutting-edge research on stem cells, including embryonic stem cells.

# A $50 million facility at Rutgers-Camden in collaboration with the Coriell Institute for Medical Research and the Cancer Institute of New Jersey, focused on stem cells from cord blood, placentas and other human tissue.

The Ledger included the text: "This is an exciting time for the scientific, research and academic communities to be joining together," Sen. Wayne Bryant (D-Camden) said. "Very good things will happen by attracting the greatest research minds in the nation."

The Ledger article also stated:

Assemblyman Neil Cohen (D-Union) said that Assembly version might require scaling back the facility in New Brunswick, where plans are already finalized and construction could begin as early as this summer.

However, he argued that it was "extras," not the basic facility, that would be lost. "That place can be built for $100 million," Cohen said.

Sponsors in both chambers expect to work out differences in the two bills before the Senate vote next week.

Assembly Speaker Joe Roberts has no objection to creating three facilities but has concerns about the total amount of money allocated, according to Assembly Democratic spokesman Joseph Donnelly.

Still to come is money for actual research at the new facilities.

Codey has also introduced a bill that seeks voter approval, possibly as soon as the November election, to borrow $230 million more to award grants to researchers at the new facilities.

[IPBiz note: The amount of money involved is $480 million ($250 million for the facilities and $230 million for money to do research in the facilities). The March 14 article was written by DEBORAH HOWLETT, available at dhowlett@starledger.com.]

"Your eyes probably glaze over at 'intellectual property,' but it's time to wake up and pay attention"

That was one line from John M. Simpson's op-ed in the San Francisco Chronicle on California's Proposition 71. Some other interesting text was:

The biotech industry is lining up to take Prop. 71 money and wants as few strings as possible attached. Speaking to biotech executives at a conference his firm organized in San Francisco, Steve Burrill, chairman of the venture capital and merchant banking firm Burrill & Co., described the capital funding being provided by taxpayers in California and a few other states as "almost like free money" compared to commercial venture capital. That phrase is a tipoff to the lack of any sense of obligation. Clearly defined IP rules, governing such things as price and accessibility by underserved populations, will ensure that businesses meet fair obligations to the public when they take the public's "free money."

The meeting in question is the Burrill meeting of March 14, 2006, the same meeting at which WARF was making its patent royalty demands against CIRM.

Simpson also wrote:

Most of the media fuss surrounding stem-cell research has been over political and social issues surrounding the use of fertilized human eggs. But it's the boring, really technical IP regulations that could mean whether or not you will get treatment someday.

In New Jersey, for example, the state senate votes have revolved around the ethics issues of the use of embryonic stem cells. In this partisan vote, the Republicans lost. In New Jersey, to a greater extent than in California, there has not been significant discussion of the patent issues. Californians are more aware of the tax-exempt bond/patent royalty issue than are New Jerseyans. Beyond intellectual property, there is another issue. These treatments will require FDA approval. There is not yet an approved IND for an embryonic stem cell treatment of humans. "Whether or not a human will get treatment someday" (like within the next ten years) requires attention to IP details, a realistic post-Hwang assessment of the state of the embryonic stem cell art, and a sober analysis of how long working through the FDA is going to take.

More on WARF demand to CIRM for patent royalties in stem cell area

Daniel S. Levine discussed the WARF demand on CIRM:

Elizabeth Donley of WARF recently told stem cell institute [CIRM] Chairman Robert Klein that WARF expects a piece of the action.

"We feel we should get a share of that," said Donley. "We haven't talked about the specifics of how that will work, but we have an open dialog. I think they are willing to discuss with us the idea of taking a license, and we're certainly willing to give them one."

The California Institute for Regenerative Medicine said it is assessing the WARF licensing issue and formulating a response.

The economic benefits of California's stem cell investment will likely be indirect -- the attraction of scientific talent, the creation of new jobs and companies, reduced cost of drug development and the possibility of cutting the long-term health care costs of people suffering from chronic conditions. But voter expectations of near-term financial benefits and political pressures to capture returns to offset the cost to taxpayers helped shape the institute's intellectual property policy.

(...)
[There was discussion from a report for the California state legislature]

We believe that a state IP policy that seeks to benefit the state by revenue sharing would not be appropriate and could well have the unintended consequence of decreasing, rather than increasing, the long-term economic benefits to the state," the report said.

The report [for California Council on Science and Technology, Jan. 2006] noted that a study of University of California inventions from 1975 to 1995 found that only 1 in 400 could be expected to generate more than $1 million in licensing revenue over its entire life. With state research funding in a typical year at $300 million, the report said that would be expected to produce 120 inventions. [IPBiz: huh?] That means that one invention every three years could be expected to generate more than $1 million over its life. [IPBiz: in 3 years, there are 360 inventions, which is less than 400. MORE IMPORTANTLY, the previous study concerned inventions over a wide range of technological areas, in different stages of development. The present funding is in ONE technology area, with ONE stage of development. The comparison is spurious. FURTHER, there are FDA approval issues for this technology area.]

"There was considerable political pressure, and it became clear there was a significant expectation on the part of the public and some political officials of a substantial revenue stream in the short term," said Danny DeCillis, research associate with the California Council on Science and Technology. "They were not happy with the message that this was not realistic." [IPBiz: the expectations came from promises made during the campaign for Proposition 71. The expectations were not realistic, but neither is the analysis about the expectations.]

It is unclear how an agreement between WARF and the California institute will be structured. Though WARF charges researchers a fee of just $500, its commercial licenses typically include an upfront fee, an annual maintenance fee and royalties. The size of the fees and royalties vary depending on the size of the licensee and the application of the technology.

[IPBiz note: as discussed before, contemplate Merck v. Integra (research exemption for work leading to FDA approval) and Florida Prepaid Postsecondary (about suing states or state entities for patent infringement).]

Where's the discussion of fee diversion?

With talk about H.R. 2795 renewed, where is the discussion of fee diversion in patent reform? From JPTOS in 2001:

The United States Patent and Trademark Office (PTO) has been fully
funded by user fees for over ten years. Actually, it has been more than fully
funded, as more than a half billion dollars in user fees have been diverted for
other purposes. n2 In recent years the diversion represents approximately
ten percent of all the user fees paid to the PTO. While this problem has been
widely reported, n3 its solution continues to evade the reach of those it
hurts most, intellectual property owners.

Heath W. Hoglund, 83 J. Pat. & Trademark Off. Soc'y 725 (Oct. 2001)

Remarkable feat?

from careerbuilder: (This is a Philadelphia Law Firm but some of the work will take place in Central Jersey) Must be adaptable and quick on your feat.

More on offshoring of patent applications

Although the big market in offshoring may be in doing homework assignments for US students, there's still talk about offshoring of patent applications.

from a board:

*Has anyone actually used a service that outsourced overseas for drafting a utility app? Can you give me an idea of how much it would cost (not including filing fee)? Like how much would a firm like Schwegmann charge for a run of the mill application that it routes through its India folks? Not asking for any confidential info, but I just want to know how much it would cost my company.

*I haven't used Shwegman, but I do know that EvalueServe charges roughly $5000 per application. Not much of a cost savings over a U.S. filing all things considered, and everyone I've known who has used them has been dissatified with the quality (we've taken over several applications they drafted and I can attest to that).

*The oversea work costs about $2500 per application, but quality is poor. It takes about 10-15 additional hours of work to put the application in condition for filing.

*My firm does patent work for a Fortune 100 company (lets call it "ACME Corp.") that as outsources some utility patent applications to India -- mostly electrical subject matter. ACME in-house counsel tells me that their total cost per application (including prep & drawings) is about $2500 (!)

ACME in-house counsel who suggested and supervises the India outsourcing program says that quality is "good enough" to continue the program. Off the record, ACME in-house counsel who have to review and revise the applications say that the applications are total crap.

*The worker-bee in-house attorneys at ACME have said that the quality is worse than an entry-level patent associate and requires a substantial time investment in-house to get each application into shape for filing.

ACME still saves prep. $$$ tho -- on the backs of their in-house attorneys, who currently get no more productivity points for revising and filing of an application from India than one prepared by a US patent attorney. Sucks to be them.

-->The Wall Street Journal has an article on offshoring of legal work on September 28, 2005, and mentioned that DuPont was utilizing offshored services in the patent application area.

On the debate about patent quality

IPBiz post 1400, on the subject of patent quality.

Of the comment below, I will state categorically that the assertion that the USPTO grants patents on 97% of applications, or alternatively on 50% of applications, has nothing to do with the "quality" of work at the USPTO. The issue of quality pertains to whether or not the USPTO grants patents according to the requirements imposed by statute, including novelty, nonobviousness, enablement, and written description. Depending upon "what's in" the applications, the grant rate could be anything, but the grant rate would not indicate how closely the USPTO was following the law.

Of the issue of "which" grant rate is accurate, I had noted a preference for that of Clarke over that of Quillen/Webster. This is what I wrote in JIP-1:

The patent grant rate studies of Quillen and Webster are flawed and the published grant rate numbers should not be relied upon in making arguments about patent reform. The models of Quillen and Webster erroneously assume that all continuing applications are repeated attempts to patent the invention of the parent application. The methodology of Quillen and Webster, even as modified in 2002, involves double counting of patents and artificially inflates the patent grant rate. The approximations of Clarke are more reliable than those of Quillen and Webster.

I used the nomenclature of Clarke about double-counting. The more direct statement of the problem, which I mentioned in JIP-2, is simply that Quillen and Webster subtract continuing applications from abandonments when there is no evidence that there is an antecedent abandonment for a given subtracted continuing application.

If Clarke's paper had not already been published, I might have approached the problem in a way different than Clarke, but I would have reached the conclusion that the Quillen/Webster approach, and numbers, were not accurate, just as Clarke did.

In view of eBay's use, in a Supreme Court brief in 2006, of the numbers of the first Quillen and Webster paper, it is apparent that legal writers feel free to use whatever they can find in the legal literature, even when it is wrong. On the present facts, even Quillen and Webster had dropped the 97% number four years BEFORE eBay used it in the Supreme Court brief. Those who criticize the work of others (such as the work of the USPTO in patent quality) should not come into court with "unclean hands," citing to work known to be wrong to justify a position.

As one other observation, the name of the PTO director is Jon (not John) Dudas, who is a graduate of the University of Chicago Law School, class of 1993.

Comment on an IPBiz post from March 12, 2006:

John Dudas says there is no patent quality issue? Wow. Talk about institutionalization.

Of course there is a patent quality issue. Of course there are tons of bad (obvious, non-useful, covering prior art) patents granted each week.

What else does the fact that around 75% of applications result in an eventual patent indicate, other than that the USPTO is much too eager to grant patents, regardless of quality.

John Dudas doesn't want you to look at the man behind the curtains. He doesn't want you to believe that the system is broken. He wants you to trust that the USPTO is doing a grand job.

It is not. The system is broken. Patent quality is in the toilet. That's a tough pill to swallow if you are a holder of a bad patent, if you are a patent lawyer, or if you work at the USPTO. But that's the truth.

A linkage between PTO continuation reform and time/application?

An issue that is not getting much attention is the impact of the proposed PTO change on continuing applications ON time spent per application.

POPA states: limiting second and subsequent continuation applications which examiners usually process more quickly would INCREASE the number of tough cases per docket and decrease examiners' action counts, automatically making it harder for them to meet production goals.

POPA raises the issue that the impact of limiting second and subsequent applications would not fall uniformly on the examination corps, but would fall disproportionately on the senior and primary examiners, who handle most of the continuation work. POPA says this would mean these examiners would have to do more than four new cases a year, and, in effect, lower the time spent per application.

[As a small caveat, while many people discuss this in terms of "continuation" applications, the proposal would effect continuing applications (including cips and RCEs, but excluding divs). There are currently more RCEs filed than traditional continuations.]

Apart from the POPA issue about the possible decrease in "time spent per application," there is the separate issue that any gains from limiting second and subsequent applications would not solve the problem of the mounting backlog anyway. There are too few second and subsequent applications to matter.

Combine the two issues, and one wonders if limitations on second and subsequent continuing applications is more smoke and mirrors than substance?

[IPBiz post 1399]

Stock market follows district court claim constructions

Kimberly Moore wrote In an empirical study of all claim construction decisions appealed to the Federal Circuit from 1996 through 2003, I found that district court claim constructions were reversed 35% of the time but the stock market still goes for the quick hit.

from the Houston Chronicle:

Shares of Tessera Technologies, which have traded between $24.70 and $45.98 over the last year, closed up $2.64, or 8.8 percent on March 24, 2006, at $32.74 on the Nasdaq.

The stock jump followed an optimistic note from Cowen analyst Raj Seth, who speculated the likelihood of Tessera winning its case against Micron and Infineon is strengthened based on recent claims construction in the U.S. District Court for the Eastern District of Texas.

"No doubt claims construction is a critical step in a patent case because it defines the scope/boundaries of a patent . . . That the Texas court chose to stick largely with previous definitions would indicate to us that Tessera's patent claims are solid," Seth wrote in a note.

In March 2005, Tessera filed a patent infringement suit against Infineon and Micron, and amended its suit in April to include antitrust claims.

-->
Bringing this back to eBay v. MercExchange, Tessera co-authored an amicus brief in the case which argued that eBay’s brief wrongly characterizes the patent marketplace. eBay and its supporters contentions of a “broken patent system” is not supported by the evidence.

Not surprisingly, Micron co-authored a brief supporting eBay.

Thus, the briefs become merely another forum for arguing positions in separate, ongoing litigations. They are not so much a broad view on law or policy as they are self-interested positions in particular litigations.

Abraham Lincoln on newspaper commendation

With the expected flurry of newspaper coverage on eBay v. MercExchange, one recalls some words of Abraham Lincoln: Commendation in newspapers and by distinguished individuals is all that a vain man could wish.

A different definition of patent troll

If you're like Forgent, you are a patent troll, according to a recent article. The text is Forgent and other companies with similar strategies -- often called "patent trolls" by critics -- amass intellectual property portfolios and file suits against other businesses, accusing them of infringement.

The article continues:

Forgent's biggest earner -- generating $US108.4 million in settlements and licence fees in the past three years -- has been US Patent 4,698,672, issued in 1987 and obtained in an acquisition. At the heart of the so-called 672 patent is something ubiquitous in the technology world: the JPEG format for digital pictures.

Although JPEG is used in countless electronic gadgets and software programs since the 1980s, it wasn't until two years ago that Forgent sued 44 companies, including some of the hi-tech sector's largest players.

Fogent said they were using the patented compression technique covered in the 672 without paying a licencing fee.

Thirteen companies have settled, including Yahoo. More than 50 others not involved in Forgent's lawsuit have agreed to pay unspecified royalties for using the patent, including RIM, and Forgent has notified more than 1000 other companies they may owe royalties.

RIM won't disclose the price, but spokesman Mark Guibert says negotiations with Forgent resulted in a "reasonable agreement".

The trial for the remaining defendants -- among them Apple, Dell, Hewlett-Packard, IBM and Microsoft -- is pending in the US District Court in San Francisco. Dan Venglarik, an intellectual property attorney with Davis Munck Butrus in Dallas, who is not involved in the case, says Forgent's tactics have far-reaching impact. Many smaller companies especially will be likely to settle rather than dispute Forgent's claim because of the high costs of litigation, which could easily top $US3 million.

"If the numbers make sense, companies are going to be inclined to settle to avoid the risk," Butrus says.

Small inventor story from Akron pertinent to eBay v. MercExchange

The Akron Beacon-Journal has an interesting story of a patent by a high school teacher, which story illustrates an aspect of the issue in eBay v. MercExchange.

As an electronics teacher at Copley High School in 1976, Howard Hale used a relevant hands-on example to motivate students in his class: a simple series of circuits connected to an auto ignition that would prevent the vehicle from being started without the completion of a few maneuvers, done in sequence.

It intrigued a number of people, but efforts to commercialize it didn't progress. Then Hale's niece, Elaine Futrell, got involved in 2004. "I kept thinking, `If we took his theory and applied today's technology to it, we could keep people who were impaired from being able to start their car,' " said Futrell, who now is CEO of Gauntlet Technology Systems, a company built around Hale's invention. The company is in the small Portage Lakes ranch house that once belonged to Futrell's grandparents.

Beyond the "tricky sequence" approach of 1976, the 2004 approach incorporates biometrics. His product uses fingerprint identification and specialized software customized to recognize each driver and lock one out of a vehicle if he or she does not complete the sequence of maneuvers in the preset amount of time. Thus, the 2004 embodiment is both a theft deterrent AND a drunk driver deterrent.

A patent lawyer stated: "When you disclose an idea without a patent or a patent pending, you're headed toward litigation. A company can always say, `You don't have a patent, and we don't think it's patentable,' and then they can take it and run with it. You can either sue them or let it go."

The lesson is, if you think you have a good idea, apply for the patent before you seek partners to help you bring the product to market.

Apropos of eBay v. MercExchange, one asks how far Mr. Hale might get if he didn't have the threat of a permanent injunction to back him up?

The patent in question is US 6,920,389, issued July 19, 2005. The nonprovisional application was filed August 19, 2004.

The first claim is

A system for use with vehicle having a vehicle ignition circuit and a plurality of vehicle function devices comprising:

a sequencing mechanism operable to receive logic inputs from each of a plurality of vehicle function devices when the vehicle function device is energized, the sequencing mechanism being operable to generate a plurality of function outputs, each of the function outputs being in a predetermined "go" logic condition only if each of the plurality of vehicle function devices are energized according to a predetermined sequence;

a timing mechanism operable to selectively provide a timing output in a predetermined "go" logic condition for a predetermined time period; and,

a gate mechanism operable to generate an ignition output responsive to each of the generated function outputs and the timing output, wherein the ignition output is in a predetermined logic "go" condition only if each of the plurality of function outputs and the timing output are in the predetermined logic "go" condition, wherein the ignition output is operable to selectively complete the vehicle ignition circuit when the ignition output is in the logic "go" condition.

No mention of biometrics in this claim, and one wonders if there is a 102(b) public use issue as to the acts in 1976 (and later)?? Time will tell.

New York Times on eBay case on March 27

The New York Times (Katie Hafner) mentioned that the eBay case has attracted attention because of "the growing issue of how large technology companies deal with the constant threat of patent challenges." Well, sort of. The eBay case concerns the standards for issuing an injunction AFTER patent validity and infringement have been established by a court. This is, of course, a more narrow issue than the "constant threat of patent challenges," and pertains ONLY to the case where the patent "challenge" proved to be a valid assertion of infringement. Not exactly a troll issue. Of course if the "troll," a priori, knows he has no "guaranteed" right to an injunction, that might change the troll's bargaining strategy, but the "troll" separately knows the troll has to win the infringement case BEFORE the injunction weapon can be used. This case may be a bit over-hyped by the media.

To put this in the "troll" box, eBay did bring up the fact that one of the patents of MercExchange (the one on which the permanent injunction would be based) had claims which were rejected in a re-examination. However, that assertion is a little tricky. From page 5 of the February 2006 issue of Intellectual Property Today (available LEXIS):

In the review of MercExchange v. eBay, 401 F.3d 1323, 74 USPQ2d 1225
(CAFC 2005), the US Supreme Court is tackling the question whether the CAFC
erred in setting forth a general rule that a district court, absent exceptional
circumstances, issue a permanent injunction after a finding of
infringement. Although the CAFC used the words "exceptional circumstances" in the
eBay case, previous CAFC language had included "sound reason," "sufficient
reason", and "special reason." In arguing for the standard inquiries to determine
the propriety of an injunction, the eBay brief asserted that the district
court properly found that the public interest did not support granting an
injunction.

One reason furnished was the uncertain status of the validity of
business method patents. In support, the eBay brief noted, that subsequent to the
district court decision, the PTO had found claims of US 5,845,265 invalid [In
re-exam 90/006,956, filed by eBay under 37 CFR 1.510 on March 5, 2004, after
the district court decision of August 6, 2003 in 275 F.Supp.2d 695, the PTO
issued a non-final Office Action (signed on Feb. 11, 2005 but mailed March 24,
2005) rejecting claims 26-29 under 102(e) and claims 1-25 under 103 over US
5,664,111, the same art found not invalidating in the CAFC decision of March 16,
2005 (401 F.3d 1323).]

To suggest that this was a more pervasive problem, the eBay brief stated that 74% of the time the PTO finds "the patent invalid" or restricts claims. The eBay brief did not mention that re-examinations occur for only a fraction of a percent of issued patents.

The eBay brief also cited Cecil Quillen, 11 Fed. Cir. B. J. 1, 3 for "estimating rate of patent approvals by the PTO to be 97%." Sadly, Quillen and his co-author Ogden Webster never estimated the patent approval rate to be 97%. Rather, they placed the Grant Rate in the range 80% to 97%, with the 97% upper bound rendered invalid by their recognition in Footnote 17 that a patent can issue both from a continuing
application and the corresponding parent application. Although not mentioned in the
eBay brief, Quillen and Webster corrected their view of estimates of the Grant Rate
number the following year (12 Fed. Cir. B. J. 35 (2002), discussed in 86 JPTOS
568 (2004)). In the eBay brief, the 97% number is neither a faithful
representation of what Quillen and Webster said nor an accurate statement of the
patent grant rate at the PTO. As a general observation about citing law reviews,
one notes that it is not a defense to liability to assert the accurate reporting
of (false) information obtained from another source. Lawrence v. Bauer
Pub. & Print. Ltd., 89 N.J. 451, 461, 446 A.2d 469 (NJ 1982). It is no more
reasonable to cite a law review for the proposition that Gary Boone invented the
integrated circuit (see Mark A. Lemley, Patenting Nanotechnology, 58 Stan. L. Rev.
601, 612 (2005)), than it is to cite Woo Suk Hwang for the existence of patient
specific embryonic stem cell lines (see Lawrence B. Ebert, Lessons to be Learned
from the Hwang Matter: Analyzing Innovation the Right Way, accepted JPTOS,
2006). [end IPT material]

The New York Times brought up the various parties presenting "friend of the court" briefs:

Supporting briefs from third parties, including some unlikely ones, have piled up for each side. A pharmaceutical industry trade group filed a brief in support of MercExchange, as did General Electric, Proctor & Gamble, the University of California, a group of venture capitalists and the United States government. All argued in favor of injunctions against those who infringe patents.

A brief filed jointly by Oracle, Microsoft and Intel in support of eBay argued that the injunction rule "has transformed patents into a powerful tool for litigation abuse" and "stifles innovation." EBay has also hired Juleanna Glover Weiss of the Ashcroft Group, a lobbying firm in Washington founded by John Ashcroft, the former United States attorney general, to help with communications efforts related to the case and patent issues in general.

One sees that there is NOT a consensus within business on the legal issues within eBay v. MercExchange. The Wall Street Journal had made a similar point last week.

The Times characterized the issue in this way:

The appeals court said that injunctions were the "general rule" in patent infringement cases, and should be withheld only in such "rare instances" as "the need to use an invention to protect public health."

At issue before the Supreme Court on Wednesday is whether the federal circuit court's ruling correctly interpreted federal patent law, which authorizes judges to grant injunctions but does not require them to do so.

The case has attracted an unusual amount of public attention in part because of recent attempts by large corporations to change patent law to lessen the threat posed by so-called nonpracticing patent holders.

The Supreme Court had requested review of the 1908 Supreme Court case, Continental Paper. This pertained to the question of whether an injunction was appropriate when the patentee did NOT practice the invention. The Times wrote:

In his decision to withhold the injunction, the district court judge noted that MercExchange "exists solely to license its patents or sue to enforce its patents, and not to develop or commercialize them."

IPBiz posted pertinent text from the district court and CAFC opinions.

Yet in a telephone interview, Mr. Woolston said that MercExchange had indeed put its patents to commercial use. "Come to MercExchange.com and buy a plasma TV," said Mr. Woolston. "We are practicing our inventions."


The Times article suggested that, even if a permanent injunction issued, it would not have an impact on eBay:

Yet, if an injunction is ordered in the eBay case, the day-to-day workings of eBay are not likely to be affected, said Hani Durzy, a spokesman for eBay. Mr. Durzy added that immediately after the verdict in 2003, the company made changes to the Buy It Now feature.

The idea that businessmen should work out these matters, rather than placing them in the hands of courts ill-equipped to deal with business issues, didn't occur to the Times.


[IPBiz post 1394]

With oral argument on March 29, eBay/MercExchange case in the newspapers

With oral argument scheduled for March 29, various newspapers are starting to talk about eBay v. MercExchange, on the use of injunctions after patent infringement is established.

From the San Jose Mercury News: "This isn't just this niche area of the law and a problem in that niche area. It's a problem for the U.S economy and the U.S. worker,'' said Noreen Crall, vice president and chief patent counsel at Sun Microsystems. ``It's having a chilling effect on innovation."

Those nasty-grams [letters by patentees to possible infringers] help illustrate the problem. Each forces tech executives to make some unpleasant choices.

Tech companies can assign lawyers and engineers to research the claim, which is a pricey proposition. A legal opinion can cost between $50,000 and $200,000. Cisco, for example, is paying an outside firm ``hundreds of thousands of dollars a year'' just to respond to the letters, Chandler said.

Another option is for firms to buy off the patent holder by agreeing to a monetary settlement or licensing agreement. Or they can ignore the letter, which often comes from a so-called ``patent troll'' -- a company that owns a minor or questionable patent and whose sole business is to try to wring money from companies that may infringe on the patent.

But here's the real nasty part for Silicon Valley companies: If the patent holder takes them to court and wins, a judge almost certainly will issue an injunction, forcing the entire product off the market. It almost happened with the BlackBerry earlier this year until the device's maker, Research in Motion, agreed to a $612.5 million settlement with NTP, a small, intellectual property firm, to end a patent dispute.

Newsweek: Student cheating is reaching new levels

Newsweek International reports: In a huge study of 50,000 college and 18,000 high-school students in the United States by Duke University's Center for Academic Integrity, more than 70 percent admitted to having cheated.

Interestingly, the concept of outsourcing/offshoring appears in the cheating of the 21st century: From purchasing "original" essays from Web sites like Gradesaver.com to "outsourcing" computer-programming homework to experts in India via sites like Rentacoder.com, students can now buy A's for the price of a school lunch. (..) SparkMobile, a new service from SparkNotes (Barnes & Noble's take on Cliffs Notes), will text students themes to use for surprise in-class essays or beam them iPod-friendly audio summaries of classic novels.

Unlike the Chicago Tribune discussing the politics of stem cells, Newsweek does bring up Woo Suk Hwang: Scientists like South Korea's once revered stem-cell research pioneer, Hwang Woo Suk, fake lab results. In a recent poll of 25,000 high-schoolers by the California-based Josephson Institute of Ethics, nearly half agreed with the statement "A person has to lie or cheat sometimes in order to succeed."

Newsweek noted: Many [universities] are even beginning to throw them [standardized exams] out altogether in favor of interviews and recommendations, markers of aptitude that can't be faked.

Sorry, but I don't believe that. Interviews and recommendations are a different proxy for ability, which could involve a different manner of misrepresentation. Just because someone says you are good does not mean you are good. In the realm of patent law, the debate about patent approval rates illustrates part of this issue. Quillen and Webster wrote about a range of 80% to 97%, which the Harvard Law Review (among others) elevated to 97%. The National Academy of Sciences initially bought into the story. Just because people endorse an idea, by citing it, does not make it true.

Stem cell politics obscuring real issues with embryonic stem cells

Stem cell politics in New Jersey, by way of the Chicago Tribune:

As state Rep. Linda Stender tries to oust Republican Rep. Michael Ferguson from his congressional seat representing north-central New Jersey, she hopes the promise of embryonic stem cell research, and Ferguson's opposition to it, gives her a distinct advantage. [IPBiz note: there are issues in embryonic stem cell research other than the moral one. In a world of limited funding, is embryonic stem cell therapy the best bet on the time scale of ten years? What is the true state-of-the art of embryonic stem cell work in the post-Hwang world? How will patents play out in blocking access to certain methods?]

"If you know anybody who suffers from diabetes or Alzheimer's or has had a spinal cord injury, I think that you want to see a cure," Stender, a self-described "progressive," said in an interview. "There are people in my family that have been affected by terrible diseases. And I choose to put my faith in science to find a cure, and the promise of a cure appears to be in stem cell research." [IPBiz note: ask Woo Suk Hwang]

Ferguson, a strong opponent of abortion, is clear in his opposition to stem cell research for moral reasons. But he insists he always has been a champion of medical and biotechnology research --issues important to the sizeable health care industry in his district -- during his five years on Capitol Hill.

"I just think efforts to politicize this issue are misguided and will ultimately be unsuccessful, and that's because of my very strong record in field of health care," Ferguson said. He said his mother survived bone marrow cancer for six years thanks to scientific advances.

Democrats around the country are counting on the stem cell issue to give them a boost in November's congressional elections. On Monday, Rep. Rahm Emanuel, D-Ill., who heads the Democratic effort to retake the House, will visit New Jersey to join Stender in unveiling Internet ads targeting Ferguson and six other Republican candidates, including Illinois state Sen. Peter Roskam and Rick O'Donnell in Colorado, who oppose stem cell research.

"This is just another example where the president and people in Congress could care less for everyday folks out there," said Ed Perlmutter. Perlmutter, who has a daughter with epilepsy, is in a Democratic primary race in a district outside Denver and hopes to challenge O'Donnell in the fall.

The Democrats plan to push the issue especially hard in districts that are home to large medical or biotechnology industries [pork-barrel politics], as well as politically moderate areas where a Republican officeholder has played a large role in opposing stem cell research.

Emanuel said the issue allows Democrats to appeal to women and to talk about their bigger message - that Republicans represent the status quo and are beholden to special interests, especially the religious right, while Democrats represent change and progress.

"The notion that you would stop us from finding that cure is fundamental to whether you will offer new priorities or the old priorities that got us here," Emanuel said.
But Republican strategists insist that such a specific issue will not decide any race. Rather, they say, the outcome will rest on larger concerns about Iraq and the economy. Carl Forti, spokesman for the National Republican Congressional Committee, which seeks to win House seats for Republicans, dismissed the stem cell issue as the Democrats' latest obsession, one of a long series of hoped-for magic bullets.
"House races tend to be much more about pocketbook issues," Forti said. "I can guarantee you that there will not be a competitive House race in the country where stem cells are discussed in the paid media," meaning campaign advertisements

(...)
Opinion polls suggest that voters support such research by a 2-to-1 ratio. Independent voters with the power to decide elections increasingly favor it as well, according to Andrew Kohut, president of the Pew Research Center.
(...)

The Chicago Tribune article never mentioned Woo Suk Hwang or the uncertainty in "where" embryonic stem cell research was in 2006. It would be helpful if the voters got some insight on realistic expectations for the work in the next 10 or so years. Voters might also be interested in issues with patents in the area, as in the demands made by WARF upon CIRM.


Separately, in New Jersey, from the Asbury Park Press on March 21, 2006:

The plan calls for the creation of a stem-cell research institute in New Brunswick and funding for biomedical and stem-cell related facilities in Camden and at the New Jersey Institute of Technology in Newark.

But the $50 million question of just how much money will be borrowed against future cigarette taxes remains. The Senate bill calls for $250 million, while the Assembly bill calls for $200 million.

"A bill will be voted on by the Assembly," said sponsor Assemblyman Neil Cohen, D-Union. "There are still further discussions to have with the Senate president and with the Governor's Office."

Senate Minority Leader Leonard Lance, R-Hunterdon, said the Senate shouldn't approve the plan without the approval of taxpayers. "I'm not discussing the merits of embryonic versus adult stem cells. I want the people to vote on this borrowing," Lance said.

**One notes that in New Jersey, the debate in stem cell research is "where" to spend the money, and "how much" each facility will get. No one is discussing issues with tax-exempt bonds and patent thickets. One thinks back to the bond issue in the late 1980's which passed, with much of the money wasted on getting Chinese post docs. Separately, recall the San Filippo case at Rutgers University.


[IPBiz post 1391]

Philly Inquirer on Da Vinci mess: "Copying one author is plagiarism. Copying many is research."

Rogak on Dan Brown: The untold secret in the U.K. breach of copyright suit against Da Vinci Code author Dan Brown is that this isn't the first time he's borrowed someone else's ideas for his own work. He's done it his entire life.
He got the idea for his first novel, Digital Fortress, when teaching English at Phillips Exeter Academy in New Hampshire. One day, the Secret Service showed up on campus hours after a student sent an e-mail threatening President Clinton's life. Brown built an entire book around it. The kid could rightly sue. After all, Brown eventually made a pile of money from it.

She concludes:
Nor did Baigent and Leigh pluck the premise for Holy Blood, Holy Grail out of thin air - it's been bandied about for centuries. No one - artist or not - lives in a vacuum. We learn from and are inspired by the ideas of others, which we then absorb and convert into our own. Then someday, someone else will, we hope, likewise be inspired by our ideas.
Perhaps Chilean novelist Isabel Allende said it best in her book Aphrodite: A Memoir of the Senses: "Copying one author is plagiarism. Copying many is research."

Stem cells for baldness

Ken Washenik, MD, PhD New York University Medical Center, has implemented the idea to harvest healthy follicle stem cells and to multiply them in vitro. New follicle stem cells are grown in laboratory cultures. Then they are attached to tiny skin-cell scaffolds and implanted into bald areas of the scalp.

"The idea is to take these cells from the bulb of the hair, grow them in culture, and come back with an increased number of hair seeds you could inject into the scalp," Washenik says. "You start with a small number of hairs and come back with a larger number of hair seeds, and inject them into one area, and just create brand-new hair follicles."

Moreover, researchers have discovered that some follicle cells do more than regenerate. They give off chemical signals. Nearby follicle cells -- which have shrunk during the aging process -- respond to these signals by regenerating and once again making healthy hair. It works in lab mice. And, Washenik says, it works in human skin cultures, too.

"So this three-to-four-years-away number is not fantasy," Washenik says. "It is biotechnology research, and nature can always step in the way and slow things down. But the concept of tissue-engineered hair growth to create a new hair organ looks very real."

Post-Gazette on Gerald Schatten; scientific ethics

The following report discusses Pittsburgh's Gerald Schatten and some past issues in his career.

In November, University of Pittsburgh reproductive biologist Gerald P. Schatten found himself entangled in an investigation of scientific misconduct along with a stem-cell research collaborator in South Korea.

Renowned Korean researcher Hwang Woo-suk admitted manipulating laboratory samples to create fake DNA results for a paper -- co-authored by Dr. Schatten -- that claimed to have succeeded in embryonic stem-cell cloning.

The fraud staggered the worldwide scientific community because it occurred in the high-profile discipline of stem-cell research and involved Hwang, who carried the title of Supreme Scientist in Korea and was head of the world's leading stem cell research center.

But while the breadth of that case was unusual, the occurrence of scientific research misconduct is not.

A recent survey by HealthPartners Research Foundation in Minneapolis, Minn., of more than 3,400 early- and mid-level U.S. scientists funded by the National Institutes of Health showed that more than one-third of them admitted research wrongdoings between 2002 and 2005.

Only 1.5 percent of them admitted to the most serious misconduct of falsification or plagiarism.

And last year, the federal Office of Research Integrity in the Department of Health and Human Services received about 300 allegations of research misconduct last year, double the number from 2003.

Cheating, of course, occurs in all fields. But scientists and researchers?

"The temptations are huge," said Paul D. Tate, senior scholar in residence at the Council of Graduate Schools and director of its Responsible Conduct of Research initiative.

At a research lab where no one is looking over shoulders, a scientist who ignores anomalous results can produce career-boosting work.

"At the cutting edge of science," Tate said, "the rewards are huge and the temptation is greater."

Such was the case with Hwang. As first recipient of the title Supreme Scientist, he received $15 million from his government. That was in addition to about $27 million in international funding support he secured in 2005. His online fan club had 15,000 members.

Ethicists point to various reasons for cheating in the scientific community, among them mental illness, the unfamiliarity of foreign nationals with American research ethics, pressure to publish and the lackluster teaching of ethics in graduate schools.

Sometimes, researchers can be swept up in the misconduct of others or simply make missteps.

Schatten's case shows that the pressure to move forward on high-profile projects, combined with the difficulty of keeping track of research involving multiple teams in disparate locations, can make it difficult to steer clear of ethical lapses.

Schatten, who is director of the Pittsburgh Development Center and Magee-Womens Research Institute, was involved in laboratory-related misconduct investigations at both his previous university jobs prior to arriving at Pitt in mid-2001.

The first involved misappropriated eggs at the University of Wisconsin-Madison during 1993-94. Schatten, then a professor of zoology, molecular biology, and obstetrics and gynecology, used eggs for research that later were discovered to have been obtained illegally by a University of California-Irvine fertility clinic, from women without their consent.

In that case, two University of California-Irvine physicians were charged by the federal government with mail fraud and conspiracy to defraud patients of their genetic material. Both fled the United States. A third UC-Irvine physician was convicted in 1998 of fraudulently billing insurance companies; he was fined $64,000 and sentenced to three years probation.

Additionally, more than 100 couples were paid nearly $20 million to settle their cases.

As far as Schatten's involvement, a University of Wisconsin investigation determined that he "unintentionally" received the misappropriated eggs.

"Jerry was very thoroughly investigated," said Alta Charo, a professor of law and medical ethics at Wisconsin and a member of the university team that investigated Schatten at the time.

"He did receive written documents that purported to be consent forms ... and relied upon those and had provided those to the appropriate oversight bodies."

Schatten left Wisconsin in 1998 for the Oregon National Primate Research Center, where he was research director of the Center for Women's Health, and a professor of obstetrics and gynecology, and cell and developmental biology.

There, he directed the researchers who in early 2001 produced the world's first genetically modified nonhuman primate, a transgenic monkey.

Later that year, the center's Institutional Biosafety Committee investigated Schatten for three "miscommunications" that included a misstatement to the committee about his research work. All three issues were remedied "in a relatively short period of time," a research center spokesman said.

"They were fairly minor issues," said the spokesman, Jim Newman. "However, if they were not addressed so quickly, they would have been more serious issues."

Schatten has refused public comment since it was first reported in November that Hwang had fabricated data on the cloning of patient-specific stem cells. A Pitt inquiry last month concluded Schatten did not intentionally falsify stem-cell research information described in a paper that appeared last year in the journal Science. The article has since been retracted.

The committee did chide Schatten for his lack of judgment in allowing his listing as senior author of the discredited paper and recommended the university "implement whatever corrective or disciplinary actions are commensurate with (Schatten's) research misbehavior."

Such actions would be at the discretion of Arthur Levine, senior vice chancellor of health sciences, and would be kept confidential.

Ethicists disagree about the best way to prevent scientific cheating. Robert P. George, the McCormick Professor of Jurisprudence and director of the James Madison Program in American Ideals and Institutions at Princeton University, believes it's a character issue.

"You won't prevent this kind of thing by simply making people more knowledgeable about the rules," he said. by STEVE LEVIN, Pittsburgh Post-Gazette

IPBiz note: Having served on the Ethics Task Force of the American Chemical Society, I can say that "education" was the main thrust of the Society's efforts. Unlike the APS, the ACS took no steps on co-author responsibility. Furthermore, the ACS took no steps on enhancing editor responsibility or facilitating the publishing of corrections/commmentary.

Under the current system of review, the federal grant recipient (e.g., university) conducts a review of any challenged conduct. The ORI reviews the review by the grant recipient. In the end, the funding agency may impose sanctions (e.g., no grants for x years).

It is true that the 2005 paper in Science, of which Schatten was co-author, was retracted. It is also true that te 2004 paper in Science, favorably cited in the April 2005 symposium on stem cell policy at Princeton, was retracted.