Archive for July, 2013

Another Neste Biodiesel Patent Suit is Stayed Pending Reexam

July 29th, 2013

 

Previous posts (e.g., here and here) have discussed Neste Oil’s patent infringement suits against competitor Dynamic Fuels involving biodiesel fuels and production processes.

Dynamic Fuels is a joint venture of Syntroleum and Tyson Foods that operates refineries capable of producing allegedly infringing synthetic renewable diesel fuels.

One of the suits has been stayed pending reexamination by the USPTO of Neste’s U.S. Patent No. 8,187,344 (’344 Patent), entitled “Fuel composition for a diesel engine” and directed to diesel fuels made from animal, plant, or fish fatty acids.

In a second lawsuit, the Delaware district court again granted the defendants’ motion to stay litigation pending reexam.  The patent-in-suit is U.S. Patent No. 8,212,094 (’094 Patent).

The ’094 Patent is entitled “Process for the manufacture of diesel range hydrocarbons.”  The patent relates to a process for the manufacture of diesel range hydrocarbons from a biological feedstock where the feed is hydrotreated and isomerized.

The court found that reexamination was likely to simplify the issues in the litigation and would advance judicial efficiency, particularly in this case where no scheduling conference or discovery has taken place.

The court spent some time analyzing whether granting the motion for a stay would prejudice Neste and answered that question in the negative.

One key issue was whether Neste and Dynamic Fuels are direct competitors, and if so, how large is the market in which they compete.  While Neste argued that they are the only two companies operating in the U.S. market for “paraffinic renewable diesel fuel,” the court disagreed and defined the market much more broadly:

Having considered the parties’ arguments on this point, the court believes that they are merely indirect competitors in the large, subsidy-driven market for biomass-based diesel.

The court also noted that Neste did not request a preliminary injunction in the case, which would have suggested that the parties do directly compete and a stay would cause Neste real prejudice.  Thus, the relationship of the parties weighed in favor of a stay:

Here, Neste has failed to seek a preliminary injunction against any of the defendants. In light of this failure and the above determination that the relevant market is actually quite broad, the court does not believe the parties are “direct competitors” such that this sub-factor should weigh against a stay.

Wind Turbine Case Not So Civil as Indictment Alleges Sinovel Conspiracy to Steal IP

July 25th, 2013

The AMSC- Sinovel copyright and trade secret dispute involving wind turbine control systems has been big news (see, e.g., previous posts here, here, here and here), but legally speaking, mostly civil. 

That changed recently when the U.S. Department of Justice filed an indictment in federal court in Wisconsin alleging that Sinovel, two of its employees, and a former AMSC employee conspired to commit trade secret theft and criminal copyright infringement.

The technology involved is AMSC’s source code, software, equipment designs and technical drawings that relate to regulating the flow of electricity from wind turbines to the electricity grid.  More particularly, the electrical control system includes the Power Module 3000 (PM3000) and the Programmable Logic Controller (PLC), both of which use AMSC’s proprietaryLow Voltage Ride Through (LVRT) sofware to keep wind turbines operational during temporary dips in electricity flow in the electric grid.

According to the indictment, AMSC took reasonable measures to maintain the confidentiality of its trade secrets and proprietary information such as restricting access to authorized personnel only, requiring a unique password to enter the computer system, and requiring employee certification of ethics and confidentiality rules.

The 11-page indictment states that the purpose of the alleged conspiracy was to:

obtain AMSC’s copyrighted information and trade secrets in order to produce LVRT compliant wind turbines, and to retrofit existing wind turbines with LVRT technology, without having to pay AMSC for previously-delievered AMSC software, products, and service or for AMSC’s trade secrets and intellectual property, thereby cheating AMSC out of more than $800,000,000 USD.

The remainder of the indictment lays out the details of the alleged conspiracy, which it says took place from about January 1, 2011 to about December 20, 2012.  The former AMSC employee allegedly copied or downloaded the PM3000 and PLC source code, adapted it for unlicensed use within Sinovel’s turbines, and emailed the modified software to one of the Sinovel employees.

In exchange, Sinovel allegedly offered the former AMSC employee an employment contract worth about double what he was being paid at AMSC, but the contract made it appear that he would be working for a different company – a Chinese wind turbine blade manufacturer – for a period of time.

The former AMSC employee allegedly traveled to China to work on adapting the proprietary and trade secret information for use in Sinovel wind turbines, and Sinovel allegedly conducted a successful “voltage sag” test using the updated LVRT technology.  One of the Sinovel employees allegedly wrote in a Skype chat with the former AMSC employee that the success was “all because of you.”

Sinovel also allegedly copied the AMSC PM3000 source code into some wind turbines commissioned in Massachusetts in 2011 and 2012.

There are so many things that could be said about this case, which began with several civil infringement and contract suits in China.  I will offer just a couple of observations. 

First, it seems an excellent case for the feds to pursue criminal charges because it represents the nexus of two of the Obama administration’s policy goals:  supporting the U.S. clean tech industry and dealing with IP theft in China.

Second, as eloquently explained by wind patent and technology expert Philip Totaro in this prior post, the case points up the critical importance of LVRT technology for the stability of wind energy in China and the economic viability of Chinese wind turbine manufacturers.

Trigonometry Plus Non-Conventional Steps Equals Eligible Subject Matter in Blade Assembly Patent

July 22nd, 2013

 

Henryk Oleksy is the owner of U.S. Patent No. 6,449,529, entitled “Process for contour machining of metal blocks” and directed to methods of determining machining instructions for a milling machine to cut a concave hook in the root section of a turbine blade (‘529 Patent).

In most turbines, projections called hooks located on the interior surfaces of the root sections of turbine blades hold the blades to the rotary wheel of the turbine.  To prevent the blades from wobbling, the curvature of the hook in the root section must be machined to specific dimensions.

In 2006 Oleksy sued GE for infringement of the ‘529 patent, and both parties moved for summary judgment as to the validity of the patent.  The issue was whether the claims of the ‘529 Patent constitute patentable subject matter under Section 101 of the patent law.

Last month Judge Virginia Kendall of the U.S. District Court for the Northern District of Illinois granted Oleksy’s motion and denied GE’s, holding the ‘529 patent valid under Section 101 (Oleksy Opinion).

Claim 1 of the ‘529 Patent includes a recitation that the instructions for a computer numerical control milling machine are “obtained by trigonometric analysis” of the required curvatures of the spinning form cutter and rotary table of the machine.  Standing alone, trigonometric analysis is an unpatentable mathematical formula.

Therefore, the question was whether the claim includes an additional element or elements that constitute an “inventive step.”  The court found that claim 1 of the ‘529 Patent does contain such additional elements including a step of moving the spinning form cutter “in a convex path” while the rotary table rotates “simultaneously from a plus rotation angle to a minus rotation angle and, alternatively, from a minus rotation angle to a plus rotation angle.”

According to the court this step is unconventional and was not used before Oleksy’s invention.  Therefore, the patented process is more than a mere mathematical formula:

As a result, Oleksy did not patent a mathematical formula, he patented a unique process of milling a root section of a turbine blade that happened to include the use of a mathematical formula as part of the process . . . Oleksy’s patent does not pre-empt the use of his trigonometric analysis, he simply forecloses it[s] use with respect to causing a spinning form cutter to move in a convex path to machine the root section of a turbine blade.

The court found an inventive step and also, significantly, noted that the claimed invention is limited to this particular application.  Accordingly, the claimed invention is patent eligible subject matter under Section 101:

Oleksy’s patent contains specifically defined, non-conventional steps.  Moreover, the patent is limited to the particular application of milling the curvature of a hook . . . Oleksy’s process is patent eligible under Section 101.

The court’s decision also addressed claim construction issues and the parties’ motions to dismiss and strike certain claims and defenses.

Green Patent PR (Continued)

July 18th, 2013

Picking up where we left off, I now have a preliminary draft of the Patent PR study (available here) and a better sense of how the subject matter of clean tech press releases fits into the full universe of patent PR.

The relative proportion of subject matter categories for the full data set, i.e., for press releases generated by patentees across all industries, is shown in Chart 1.

Chart 1:  Patent PR Subject Matter, All Industries

The largest subject matter category is Prosecution, with 215, or nearly half, of patent-focused press releases relating to the patent application process from filing to grant.  106 releases, or just under a quarter of patent PR, involve litigation, the second place category. 

Transactional matters comprise 14.9 percent of patent press releases, and Post-Grant Procedures represent 5.5 percent of the data set.  The smallest subject matter categories are Honors/Accolades (2.2 percent), Patented or Patent-Pending Product (1.1 percent), and ANDA Patent Challenge (0.9 percent).  Miscellaneous subjects comprise just under two percent of the data set. 

Subject matter coding for Clean Technology firms is shown in Chart 2.

Chart 2:  Patent PR Subject Matter, Clean Technology

The Clean Technology industry has the largest spread between the Prosecution and Litigation categories (57.9 percent) and the smallest proportion of Litigation press releases of the industries analyzed.  More than two thirds of Clean Technology firms’ releases (68.4 percent; 26 releases) relate to prosecution as compared to about half for firms generally, while the percentage of press releases relating to litigation (10.5 percent; 4 releases) is well below that of the general firm population (24.3 percent). 

This may reflect the fact that the Clean Technology industry is relatively young compared to the other industries analyzed.  In addition, the Clean Technology industry very rarely reports on patent transactions (2.6 percent; 1 release) compared to 14.9 percent in the full data set.  Post-Grant Procedures, however, are reported at a higher rate by Clean Technology firms (7.9 percent; 3 releases) than the general firm population (5.5 percent).

Finally, press releases generated by Clean Technology firms fall into the Miscellaneous category at a much higher rate (7.9 percent; 3 releases) than those of firms generally, which may mean that the relatively young industry is experimenting or still gaining its footing with patent PR.  In addition, the variety of subject matter may reflect the fact that Clean Technology is an umbrella term for a diverse array of subsectors such as, inter alia, wind, solar, biofuels, energy storage, and energy efficiency technologies.