The Federal Communications Commission recently issued three separate decisions considering 182 appeals from funding denial decisions made by the Universal Service Administrative Company ("USAC"). A common theme among the cases is the Commission’s refusal to adhere to form over substance where doing so would fail to promote the goals of the universal service program, i.e., ensuring access to discounted telecommunications and information services to schools and libraries. Following is a summary of these decisions.
Funding Denials for Failure to Timely Respond are Overturned
In the Alpaugh Unified School District decision, the Commission granted 78 appeals. USAC had denied or reduced funding on the grounds that the applicants failed to respond to its requests for information in a timely fashion.
Several different grounds of appeal had been asserted, including claims that the USAC information requests had not been received, that the requested information had been submitted to USAC, that a deferral had been requested or that a staffing problem prevented submission of the requested information. The Commission focused largely on the procedural nature of the failures as distinguished from "a failure to adhere to a core program requirement or a misuse of funds" and found good cause to grant the appeals, The Commission said "given that any violations that occurred were procedural, not substantive, we find that complete rejection of these applications is not warranted."
In addition to granting the appeals and remanding the applications to USAC for further action, the Commission directed USAC to develop outreach procedures designed to better inform applicants of the additional information that may be need and to provide applicants with a fifteen day period from the date of receipt within which to respond.
Technology Plan Waivers are Granted
In the Brownsville Independent School District decision, the Commission considered 32 appeals seeking review of USAC decisions to reduce or deny funding because the applicants' applications were not supported by approved technology plans. Under the rules, unless schools are seeking discounts on "basic local, cellular, PCS, and/or long distance telephone service and/or voicemail only," a request for discounts must be based on an approved technology plan developed prior to requesting bids on services and approved by a state agency or other specified entity.1 The Commission granted the appeals and waived, in part, its technology plan rules.
In some cases, the applicants had committed clerical or ministerial errors, e.g., providing the wrong technology plan documentation or missing deadlines for developing or obtaining approval. Based upon the procedural nature of these deficiencies, the Commission held that complete rejection of these applications was unwarranted.
In others, applicants had failed to submit technology plans based upon a misunderstanding of which telecommunications services are considered non-basic. In considering the appeals, the Commission noted that the principal purpose of the technology plan requirement is to guard against the waste of program funds. Here though, it found no evidence that the applicants – whose applications were by and large prepared by individuals whose primary role is unrelated to applying for universal service funds -- sought to defraud or abuse the E-rate program. The Commission granted these appeals finding that, based upon the circumstances, rigid compliance with its rules did not serve the public interest.
The Commission adopted additional directives here as well, applicable to all pending applications and appeals for Funding Year 2007. Where an applicant responds to a request to provide technology plan documentation and the requested documentation is deficient (e.g., is outdated or will expire before the end of the relevant funding year), USAC must: (1) inform the applicant promptly in writing of any and all deficiencies, along with a clear and specific explanation of how the applicant can remedy those deficiencies; and (2) permit the applicant to submit correct documentation, if any, within 15 calendar days from the date of receipt of notice.
Complete Rejection Unwarranted in Cases of Missed Deadlines for Evidencing a Signed Contract Where Legally Binding Commitments Were in Place
In a third decision, Adams County School District 14, the Commission granted relief to 72 Petitioners seeking a reversal of USAC funding denials. In 66 of the cases, the requests had been denied because the applicants did not have a legally binding agreement in place at the time of the FCC Form 471 submission. In the remaining 6 cases, the funding commitments had been reduced because the contract expired before the end of the funding year.
The appeals rested on one of three claims:
* conflicting local or state procurement requirements prevented compliance;
* employee error or misunderstanding of the rules; or
* technical compliance with the rules despite USAC’s decision to the contrary.
Where compliance was prevented due to a need to adhere to local or state procurement laws, because of a need to have service provider commitments approved by a governing board or where the service provider agreements were contingent upon obtaining USAC approval of funding, the Commission found that rigid adherence to the rule did not serve the public interest. It likewise found that denial of funding for ministerial mistakes, such as one applicant's mistaken notation on its FCC Form 471 that its contract ended nine months before the end of the funding year, thus securing funding for only three months instead of the 12 as intended, did not serve the public interest. More important than the missed deadline was the fact that the applicants had legally binding contracts in place during the relevant funding years and that all of the petitioners had some form of an agreement with their service providers before submitting their FCC Forms 471.
The Commission also granted requests for review where USAC had denied funding solely because the execution date of the contract did not accompany the signature lines of both the applicant and the service provider. It found that funding had been denied only because the effective date of the contract was separate from the signature lines but that the applicants were in compliance with the rules since they had signed and dated contracts in place before the submission of their FCC Forms 471.
As mentioned above, these decisions share in common an apparent policy decision to excuse good-faith lapses in strict compliance. Nevertheless, in each case the Commission emphasized the limited nature of its decision and that its actions do not eliminate or modify the rules at issue. Applicants are encouraged to be careful in their adherence to the Commission’s rules and policies so as to avoid delays in approval and/or denial of funding.
Note
1 Applicants whose technology plans have not been approved upon submission of the Form 470 must certify that they understand their technology plans must be approved prior to the commencement of service and must confirm, in Form 486, that their plan was approved prior to the receipt of services.
Please contact Mark Palchick (202/857-4411) or Howard Barr (202/857-4506) if you have any questions regarding this advisory.
http://www.wcsr.com/default.asp?id=114&objId=234
Monday, June 4, 2007
Supreme Court Issues Unanimous Decision Broadening the Obviousness Test for Determining Patent Invalidity
Suppreme Court Patent Decision: KSR Int'l Co. Vs. Teleflex Inc.
On April 30, 2007, the Supreme Court issued a unanimous decision in KSR Int’l Co. v. Teleflex Inc. that revised existing patent law on the issue of obviousness, making it easier for companies to challenge patents on the grounds that they cover products that are obvious combinations of existing technology. The Court decided that a patent claim reciting a combination of existing inventions and technologies for adjustable gas pedals was invalid for obviousness, reversing a decision by the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit’s decision was based on a test known as the "teaching, suggestion, or motivation" (TSM) test. Under the TSM test, when a patent is based on the combination of multiple prior art references, a patent challenger must establish some suggestion, teaching, or motivation that would have led a person of ordinary skill in the art to combine "prior art" (public domain) teachings in the manner claimed in the patent. The Supreme Court criticized the Federal Circuit’s application of the TSM test as too rigid and too narrow.
Key Conclusions of KSR
* A patent claim reciting a combination of elements that can each be found in the prior art will likely be obvious when that combination yields "predictable" results.
* Courts and patent examiners should not focus solely on the problem the patent holder was trying to solve when determining obviousness. Rather, any need or problem known in the field at the time of the invention and addressed in the patent can provide a reason for the combination, thereby leading to obviousness.
* A patent claim can be invalidated by a showing that the combination of elements was "obvious to try." According to the Court, the influence of design or market trends upon the development of a claimed invention may make it obvious.
* KSR significantly broadens the universe of information that a Court may consider in determining whether there exists a teaching, suggestion, or motivation to combine prior art references so as to render a patent claim obvious.
Consequences of KSR
* Vulnerability of Inventions Comprising Combinations of Old Elements- Previously, a patentee could take comfort in Federal Circuit law holding that combinations based on entirely new, partly new, or all old elements could be patentable and that an accused infringer's attempts to merely cite the existence in the prior art of each claim limitation, without more, were not helpful to the invalidity defense. Now, although merely citing the existence of each claim limitation in the prior art may still not be enough to render a claim obvious, it does bring the accused infringer one step closer to invalidating the claim. This broadened obviousness analysis will most highly impact inventions in the mechanical and electrical areas, where predictability of results is more common than with such fields as microbiology.
* Presumption of Validity Opened to Attack in Certain Cases - Under Federal Circuit precedent, the burden to overcome the presumption of validity with clear and convincing evidence is more easily carried when the patent challenger cites prior art that was not considered by the U.S.P.T.O. examiner during prosecution of the patent application. In KSR, a key prior art patent had not been considered during prosecution, and the Court remarked: "We...think it appropriate to note that the rationale underlying the presumption – that the PTO, in its expertise, has approved the claim – seems much diminished here." This statement may open the door to more direct attacks on the presumption of validity in future cases where the patent challenger relies on previously-uncited prior art.
* Potential for Greater Use of Summary Judgment to Declare Invalidity- Reiterating that obviousness is ultimately a legal question for a district court judge to decide, the Supreme Court found that the case was ripe for resolution of obviousness on summary judgment because there was no genuine dispute of material fact as to the level of skill in the art, the content of the prior art, and the scope of the patent claim. While this treatment does not represent a change in the law, the Supreme Court’s approval of summary judgment in KSR may encourage district courts to more seriously consider disposing of patent cases before trial based upon obviousness defenses.
* Reaction by USPTO – On May 3, 2007, the Deputy Commissioner of Patents issued an internal Memorandum to examining group directors, indicating that the PTO would issue guidelines to its patent examiners on how to apply KSR to patent applications, but that in the meantime, the directors should note that the Supreme Court did not reject the TSM test and required explicit reasons for combining the teachings of prior art patents to render a claim obvious. The Memorandum concluded that it "remains necessary" to identify the reason supporting a proposed combination of prior art references.
Adapting to Change in Law Wrought by KSR
* Patent Applicants facing an obviousness rejection should ensure that the examiner followed the PTO's guidelines regarding KSR. Rejections not following the guidelines are subject to being withdrawn or overruled on appeal.
* Current patent litigants should reevaluate the likelihood of success of any obviousness defense asserted in the litigation, in light of KSR. If the claimed invention is in the mechanical or electrical area, then the litigants should explore whether any viable basis exists for classifying the results of the invention as "unpredictable." The likelihood of summary judgment resolution should also be considered. In this manner, patentees can reassess the invalidity risks of continuing with the litigation, and accused infringers can reassess how likely they are to end the litigation favorably, and at the very least, whether they have acquired any leverage with which to force a settlement of the case.
* Potential patent litigants - Patentees considering a lawsuit, as well as potential infringers facing a threat of litigation against them, should perform the same KSR analysis described above. The results of that analysis may impact the decision on whether the patentee should initiate litigation in the first place. If the patentee has threatened legal action, or even just offered a license, then the accused infringer may have grounds to initiate a declaratory judgment action against the patentee, and the KSR analysis can determine whether the infringer stands a substantial chance of prevailing in that action on obviousness invalidity grounds.
Ms. Sperry is an Associate, and Mr. Cicero is a Member, at Womble Carlyle Sandridge & Rice, PLLC ("Womble Carlyle"), where they both concentrate their practices on intellectual property litigation. The views herein expressed are solely those of the authors and are not necessarily the views of Womble Carlyle or its clients, are set forth only for purposes of discussion of the state of the law as of the date of this article, and should not be construed as legal advice. Any questions concerning the application of legal principles to particular facts should be presented in confidence to appropriate legal counsel.
http://www.wcsr.com/default.asp?id=114&objId=238
On April 30, 2007, the Supreme Court issued a unanimous decision in KSR Int’l Co. v. Teleflex Inc. that revised existing patent law on the issue of obviousness, making it easier for companies to challenge patents on the grounds that they cover products that are obvious combinations of existing technology. The Court decided that a patent claim reciting a combination of existing inventions and technologies for adjustable gas pedals was invalid for obviousness, reversing a decision by the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit’s decision was based on a test known as the "teaching, suggestion, or motivation" (TSM) test. Under the TSM test, when a patent is based on the combination of multiple prior art references, a patent challenger must establish some suggestion, teaching, or motivation that would have led a person of ordinary skill in the art to combine "prior art" (public domain) teachings in the manner claimed in the patent. The Supreme Court criticized the Federal Circuit’s application of the TSM test as too rigid and too narrow.
Key Conclusions of KSR
* A patent claim reciting a combination of elements that can each be found in the prior art will likely be obvious when that combination yields "predictable" results.
* Courts and patent examiners should not focus solely on the problem the patent holder was trying to solve when determining obviousness. Rather, any need or problem known in the field at the time of the invention and addressed in the patent can provide a reason for the combination, thereby leading to obviousness.
* A patent claim can be invalidated by a showing that the combination of elements was "obvious to try." According to the Court, the influence of design or market trends upon the development of a claimed invention may make it obvious.
* KSR significantly broadens the universe of information that a Court may consider in determining whether there exists a teaching, suggestion, or motivation to combine prior art references so as to render a patent claim obvious.
Consequences of KSR
* Vulnerability of Inventions Comprising Combinations of Old Elements- Previously, a patentee could take comfort in Federal Circuit law holding that combinations based on entirely new, partly new, or all old elements could be patentable and that an accused infringer's attempts to merely cite the existence in the prior art of each claim limitation, without more, were not helpful to the invalidity defense. Now, although merely citing the existence of each claim limitation in the prior art may still not be enough to render a claim obvious, it does bring the accused infringer one step closer to invalidating the claim. This broadened obviousness analysis will most highly impact inventions in the mechanical and electrical areas, where predictability of results is more common than with such fields as microbiology.
* Presumption of Validity Opened to Attack in Certain Cases - Under Federal Circuit precedent, the burden to overcome the presumption of validity with clear and convincing evidence is more easily carried when the patent challenger cites prior art that was not considered by the U.S.P.T.O. examiner during prosecution of the patent application. In KSR, a key prior art patent had not been considered during prosecution, and the Court remarked: "We...think it appropriate to note that the rationale underlying the presumption – that the PTO, in its expertise, has approved the claim – seems much diminished here." This statement may open the door to more direct attacks on the presumption of validity in future cases where the patent challenger relies on previously-uncited prior art.
* Potential for Greater Use of Summary Judgment to Declare Invalidity- Reiterating that obviousness is ultimately a legal question for a district court judge to decide, the Supreme Court found that the case was ripe for resolution of obviousness on summary judgment because there was no genuine dispute of material fact as to the level of skill in the art, the content of the prior art, and the scope of the patent claim. While this treatment does not represent a change in the law, the Supreme Court’s approval of summary judgment in KSR may encourage district courts to more seriously consider disposing of patent cases before trial based upon obviousness defenses.
* Reaction by USPTO – On May 3, 2007, the Deputy Commissioner of Patents issued an internal Memorandum to examining group directors, indicating that the PTO would issue guidelines to its patent examiners on how to apply KSR to patent applications, but that in the meantime, the directors should note that the Supreme Court did not reject the TSM test and required explicit reasons for combining the teachings of prior art patents to render a claim obvious. The Memorandum concluded that it "remains necessary" to identify the reason supporting a proposed combination of prior art references.
Adapting to Change in Law Wrought by KSR
* Patent Applicants facing an obviousness rejection should ensure that the examiner followed the PTO's guidelines regarding KSR. Rejections not following the guidelines are subject to being withdrawn or overruled on appeal.
* Current patent litigants should reevaluate the likelihood of success of any obviousness defense asserted in the litigation, in light of KSR. If the claimed invention is in the mechanical or electrical area, then the litigants should explore whether any viable basis exists for classifying the results of the invention as "unpredictable." The likelihood of summary judgment resolution should also be considered. In this manner, patentees can reassess the invalidity risks of continuing with the litigation, and accused infringers can reassess how likely they are to end the litigation favorably, and at the very least, whether they have acquired any leverage with which to force a settlement of the case.
* Potential patent litigants - Patentees considering a lawsuit, as well as potential infringers facing a threat of litigation against them, should perform the same KSR analysis described above. The results of that analysis may impact the decision on whether the patentee should initiate litigation in the first place. If the patentee has threatened legal action, or even just offered a license, then the accused infringer may have grounds to initiate a declaratory judgment action against the patentee, and the KSR analysis can determine whether the infringer stands a substantial chance of prevailing in that action on obviousness invalidity grounds.
Ms. Sperry is an Associate, and Mr. Cicero is a Member, at Womble Carlyle Sandridge & Rice, PLLC ("Womble Carlyle"), where they both concentrate their practices on intellectual property litigation. The views herein expressed are solely those of the authors and are not necessarily the views of Womble Carlyle or its clients, are set forth only for purposes of discussion of the state of the law as of the date of this article, and should not be construed as legal advice. Any questions concerning the application of legal principles to particular facts should be presented in confidence to appropriate legal counsel.
http://www.wcsr.com/default.asp?id=114&objId=238
How lawyers charge fees
You can't make a decision about whether or not to hire a lawyer without knowing something about how a lawyer charges fees. Without doubt, lawyers are expensive. Although fee rates may vary from one part of the country to another, fees charged by lawyers in Louisiana are probably typical and close to the national average. Like any professional or businessman, a lawyer must be compensated for years of training and experience as well as expenses and office overhead. The typical lawyer may pay 50% or more of each fee for overhead and there must be enough left over to provide a reasonable income.
Lawyer fees, negotiating
Talk to your lawyer about fees. This is the best way to avoid misunderstandings.
Lawyers normally charge fees in one of three ways:
* at an hourly rate
* by a flat rate
* on a contingency
An hourly rate is usually preferred by business clients because they may have several cases that the lawyer is working on at one time. The lawyer itemizes the time spent on each case and presents a bill, usually on a monthly basis.
Lawyers will frequently charge a flat rate when the approximate amount of work involved is known in advance or when the client needs to know exactly how much the fees will total. Flat fees are often payable in advance or in installments.
Contingency fees are based on a percentage of an award or settlement that the lawyer recovers. If the lawyer does not win the case or obtain a settlement, the client generally does not owe any fees. Contingency fees are usually one-fourth to one-third of the amount recovered. In many cases, the percentage is increased if the case goes to trial or if it is appealed.
Contingency fees have come under attack lately on the theory that they encourage lawyers to file lawsuits that may not have any merit. In actual fact, a competent lawyer is not about to take a case on a contingent basis unless it does have merit. This is because the lawyer ends up spending his time and paying for expenses to prepare a case without any guarantee that he will be paid. If he is successful, he may be well paid for his efforts. If he is not successful, he will have lost a considerable amount of time that could have been used on behalf of a client who is paying by the hour.
The contingency fee is also the only way many potential clients have of hiring a lawyer. If all fees were charged on a flat rate or by the hour, the man who is injured in an accident and loses his job would have no means to obtain the services of a lawyer. Most contingency fee contracts result from personal injury cases. This is because the lawyer can usually expect more of a recovery if he is successful and because the client is usually not in a position to pay any other type of fee. Lawyers will sometimes take other types of cases on a contingency basis, but there usually must be the potential for a large award. As a general rule, the harder the type of case is to win, the more potential there must be for a large recovery.
http://www.la-legal.com/modules/article/view.article.php?c10/42/p0
Lawyer fees, negotiating
Talk to your lawyer about fees. This is the best way to avoid misunderstandings.
Lawyers normally charge fees in one of three ways:
* at an hourly rate
* by a flat rate
* on a contingency
An hourly rate is usually preferred by business clients because they may have several cases that the lawyer is working on at one time. The lawyer itemizes the time spent on each case and presents a bill, usually on a monthly basis.
Lawyers will frequently charge a flat rate when the approximate amount of work involved is known in advance or when the client needs to know exactly how much the fees will total. Flat fees are often payable in advance or in installments.
Contingency fees are based on a percentage of an award or settlement that the lawyer recovers. If the lawyer does not win the case or obtain a settlement, the client generally does not owe any fees. Contingency fees are usually one-fourth to one-third of the amount recovered. In many cases, the percentage is increased if the case goes to trial or if it is appealed.
Contingency fees have come under attack lately on the theory that they encourage lawyers to file lawsuits that may not have any merit. In actual fact, a competent lawyer is not about to take a case on a contingent basis unless it does have merit. This is because the lawyer ends up spending his time and paying for expenses to prepare a case without any guarantee that he will be paid. If he is successful, he may be well paid for his efforts. If he is not successful, he will have lost a considerable amount of time that could have been used on behalf of a client who is paying by the hour.
The contingency fee is also the only way many potential clients have of hiring a lawyer. If all fees were charged on a flat rate or by the hour, the man who is injured in an accident and loses his job would have no means to obtain the services of a lawyer. Most contingency fee contracts result from personal injury cases. This is because the lawyer can usually expect more of a recovery if he is successful and because the client is usually not in a position to pay any other type of fee. Lawyers will sometimes take other types of cases on a contingency basis, but there usually must be the potential for a large award. As a general rule, the harder the type of case is to win, the more potential there must be for a large recovery.
http://www.la-legal.com/modules/article/view.article.php?c10/42/p0
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