Coming in 2017: Reforms to Copyright Law and the Copyright Office

First proposal:

  • While keeping the Copyright Office within the Legislative Branch, separate it from the Library of Congress.  I have previously suggested the more dramatic action of joining the Copyright Office with the Patent & Trademark Office to allow for better coordination of rights. 
  • Modernize copyright office technology. PLEASE DO THIS! 
  • [Copyright-Reform.pdf]

Mike Masnik (Techdirt) writes: Congress Proposes First Stages Of Copyright Reform, And It’s Not Good.


Lemley-Oliver-Richardson: Patent Purchases and Litigation Outcomes

The sales market for patent rights continues to vex analysts – especially in terms of valuation. In their Patently-O Patent Law Journal article, Professor Mark Lemley teams up with the Richardson Oliver Group to provide some amount of further guidance.  The article particularly considers how patent litigation outcomes vary according to the identity of the patentee (ownership) and the manner in which the patent was obtained (source).

We analyzed the data based on ownership and source to test our intuitions about how successfully purchased patents can be litigated. The results, especially, when analyzed based on the entity type produced both confirmatory and surprising results. For example, the intuition that companies generally do better with their own patents was confirmed. In contrast, surprisingly, inventor-started companies fared better with purchased patents. Purchasers can use the results of this analysis to inform future modeling and purchase decisions.

Mark A. Lemley, Erik Oliver, Kent Richardson, James Yoon, & Michael Costa, Patent Purchases and Litigation Outcomes, 2016 Patently-O Patent Law Journal 15.

Read the ArticleLemley.2016.PatentMarket

Prior Patently-O Patent L.J. Articles:

  • Bernard Chao and Amy Mapes, An Early Look at Mayo’s Impact on Personalized Medicine, 2016 Patently-O Patent Law Journal 10 (Chao.2016.PersonalizedMedicine)
  • James E. Daily, An Empirical Analysis of Some Proponents and Opponents of Patent Reform, 2016 Patently-O Patent Law Journal 1. (Daily.2016.Professors)
  • Tristan Gray–Le Coz and Charles Duan, Apply It to the USPTO: Review of the Implementation of Alice v. CLS Bank in Patent Examination, 2014 Patently-O Patent Law Journal 1. (GrayLeCozDuan)
  • Robert L. Stoll, Maintaining Post-Grant Review Estoppel in the America Invents Act: A Call for Legislative Restraint, 2012 Patently-O Patent Law Journal 1 (Stoll.2012.estoppel.pdf)
  • Paul Morgan, The Ambiguity in Section 102(a)(1) of the Leahy-Smith America Invents Act, 2011 Patently-O Patent Law Journal 29.  (Morgan.2011.AIAAmbiguities)
  • Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12 (sarnoff.2011.derivation.pdf)
  • Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent Patent Law Journal 6 (chao.sealedrecords.pdf)
  • Benjamin Levi and Rodney R. Sweetland, The Federal Trade Commission’s (FTC) Recommendations to the International Trade Commission (ITC):  Unsound, Unmeasured, and Unauthoritative, 2011 Patently-O Patent Law Journal 1 (levi.ftcunsound.pdf)
  • Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent Law Journal 111 (Collins.KingPharma.pdf)
  • Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent Law Journal 95 (matthews.falsemarking.pdf)
  • Kristen Osenga, The Patent Office’s Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89 (Osenga.pdf)
  • Peter S. Menell,  The International Trade Commission’s Section 337 Authority, 2010 Patently-O Patent L.J. 79
  • Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently‐O Patent L.J. 72
  • Kevin Collins, An Initial Comment on Ariad: Written Description and the Baseline of Patent Protection for After-Arising Technology, 2010 Patently-O Patent L.J. 24
  • Etan Chatlynne, Investigating Patent Law’s Presumption of Validity—An Empirical Analysis, 2010 Patently-O Patent L.J. 37
  • Michael Kasdan and Joseph Casino, Federal Courts Closely Scrutinizing and Slashing Patent Damage Awards, 2010 Patently-O Patent L.J. 24 (Kasdan.Casino.Damages)
  • Dennis Crouch, Broadening Federal Circuit Jurisprudence: Moving Beyond Federal Circuit Patent Cases, 2010 Patently-O Patent L.J. 19 (2010)
  • Edward Reines and Nathan Greenblatt, Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009, Part II, 2010 Patently‐O Patent L.J. 7  (2010) (Reines.2010)
  • Gregory P. Landis & Loria B. Yeadon, Selecting the Next Nominee for the Federal Circuit: Patently Obvious to Consider Diversity, 2010 Patently-O Patent L.J. 1 (2010) (Nominee Diversity)
  • Paul Cole, Patentability of Computer Software As Such, 2008 Patently-O Patent L.J. 1. (Cole.pdf)
  • John F. Duffy, The Death of Google’s Patents, 2008 Patently O-Pat. L.J. ___ (googlepatents101.pdf)
  • Mark R. Patterson, Reestablishing the Doctrine of Patent Exhaustion, 2007 Patently-O Patent L.J. 38
  • Arti K. Rai, The GSK Case: An Administrative Perspective, 2007 Patently-O Patent L.J. 36
  • Joshua D. Sarnoff, BIO v. DC and the New Need to Eliminate Federal Patent Law Preemption of State and Local Price and Product Regulation, 2007 Patently-O Patent L.J. 30 (Download Sarnoff.BIO.pdf)
  • John F. Duffy, Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21. (Duffy.BPAI.pdf)
  • Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1 (Casino-Seagate)

Judging Ex Parte Cases

My research inquiry – Have you read any great writing on the difference between the process of judging a contested case vs an uncontested (or ex parte) case?  [email me:]

In the contested situation, a judge is free to be neutral and rely upon the each party to identify deficiencies in the opposing party’s arguments.  In the ex parte case, such as patent examination, there is no party voicing opposition.  The need for that voice is partially eliminated by the heightened duty of candor in these cases, but only partially.   How does the examiner fill the role of both judge and partial voice-of-opposition in this situation?

What it takes to Prove a Motivation to Combine

by Dennis Crouch

In re NuVasive (Fed. Cir. 2016)

In an important obviousness decision, the Federal Circuit has reversed the PTAB IPR decision – holding that the PTAB failed to sufficiently explain its ruling that a person having ordinary skill in the art (PHOSITA) would have been motivated to combine the prior art teachings to create the patented invention.  Although expressing its intent to follow KSR, the court here comes closer to trodding upon that (oft maligned) precedent.

The case involves an Inter Partes Review (IPR) challenge of NuVasive’s spinal fusion implant patent (U.S. Patent No. 8,361,156).  The claims require that the implants include, inter alia, radiopaque markers on the medial plane. The PTAB found the claims invalid as obvious based upon a collection of prior art references related to spinal fusion.

Doctrine of Obviousness: A claim is invalid if the differences between the prior art and the claim (considered “as a whole”) would have been obvious to PHOSITA considering the issue at the time the invention was made.  35 U.S.C. § 103.

Motivation to Combine: In many US obviousness cases, each of the claim limitations are found in some form within the body of prior art imputed to PHOSITA and the obviousness question becomes whether it would have been obvious to combine those references to form the claimed invention. In KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), the Supreme Court held that the motivation to combine references need not be found expressly in the prior art itself but may be explained by the fact finder using common sense.  Still, the KSR Court wrote that it “can be important to identify a reason that would have prompted [PHOSITA] to combine the elements in the way the claimed new invention does.”  Extending that decion, the Federal Circuit ruled that the PTAB must (1) “articulate a reason why a PHOSITA would combine the prior art references”; (2) have an adequate evidentiary basis for that finding; and (3) provide a “satisfactory explanation” for the motivation finding that includes an express and “rational” connection with the evidence presented.  See, In re Lee (conclusory statements are insufficient); Cutsforth v. MotivePower (must positively explain motivation – not just reject arguments against motivation); and Arendi v. Apple (PTAB “cannot rely solely on common knowledge or common sense to support its findings” of motivation).

Here, the basic question is whether it would have been obvious to combine prior art teaching the spinal fusion implant with references showing the use and importance of radiopaque markers in implants.  However, according to the appellate panel, “the PTAB failed to explain the reason why a PHOSITA would have been motivated to modify [the prior art], to place radiopaque markers ‘proximate to said medial plane'” as required by the challenged claims.

After discrediting the PTAB decision, the court also looked at the evidence presented by the challenger Medtronic.  Medtronic’s expert had explained that the motivation for adding the additional markers would be to provide surgens with “additional information” and that it would have been common sense to add the additional markers.

Medtronic’s arguments amount to nothing more than conclusory statements that a PHOSITA would have been motivated to combine the prior art references to obtain additional information.  According to the court, these “arguments amount to nothing more than conclusory statements” and thus should not be credited.  One key reference did explain that the medial markers were beneficial during the alignment process.  However, the Federal Circuit rejected that reference because it was published after the patent-in-question’s priority date and not cited in the prior art references.  Because they came after the priority date, the court found that the motivation “could not have been obtained . . . at the time of the invention.”

LifeTech v. Promega Oral Arguments: What is a ‘Substantial Portion’ of the Components

by Dennis Crouch

Life Technologies Corp. v. Promega Corp. (Supreme Court 2016) [LifeTechTranscript]

Today the Supreme Court heard oral arguments in LifeTech v. Promega. The case focuses on the statutory interpretation of 35 U.S.C. § 271(f)(1) (export of components of patented invention).  The ordinary rule of U.S. patent law is that patent rights are territorial – a U.S. patent covers only infringement within the US territorial lines.  As they say, if you want to sue someone for infringing acts in the UK, then get a UK patent (or perhaps soon an EPO patent).  Section 271(f) of the US patent act pushes a bit against the extra-territorial limitation by creating liability for unauthorized supply or export from the US of “all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the US in a manner that would infringe the patent if such combination occurred within the US.”

The case at hand involves a patented genetic test being performed in the UK. The accused infringer had exported from the US a commodity enzyme (Taq polymerase) necessary for the test.  LifeTech argues: “the only contact that any of this has with the United States is the fact that a single, commodity product is shipped to England as part of the process for the fabrication of these particular kits.”  As a point of fact, there was some debate at oral arguments about whether, at the time when infringement began, quality Taq was available from non-US sources.

The question before the Supreme Court is whether this single commodity component can satisfy the statutory test of “all or a substantial portion of the components” of the patented invention.

Issue: Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.

Because the Federal Circuit sided with the patentee (finding infringement) oral arguments began with petitioner (adjudged infringer) represented by Carter Phillips.  The Obama Administration (DOJ brief not signed by PTO) sided with the petitioner and was represented by Zachary Tripp; and Seth Waxman represented the patentee-resondent.

Although I see this is a statutory interpretation question Carter Phillips began the discussion with a statement that this is “largely an international trade case.”  The purpose of that focus is to remind the court of its prior international trade jurisprudence, including Microsoft v. AT&T, where it tends to interpret US law in order to limit extraterritorial application.

On the actual statutory interpretation, Justice Alito asked “Does ‘substantial portion’ mean a majority?”  Phillips replied: “I think it means substantially more than a majority. I would say that it has to be approximating or very close or tantamount to all. [In the case at hand] I would have thought at least four [of the five components] would have to be [exported]. But you know, in many instances, my guess is the right answer may well be five [out of five].”  The US Gov’t largely agreed with this – arguing that there should never be 271(f)(1) liability for exporting a single component but instead the export must reach “all or something tantamount to all of the components.”

Returning to the “substantial portion” language, Justice Kagan offered the following hypothetical:

JUSTICE KAGAN: If I said to you, Mr. Tripp, a substantial portion of my former clerks have gone into government work, how many would I mean?

MR. TRIPP: I think with any of these things, the interpretation of substantial depends entirely on its context and its purpose, and — and — and so this term is used in just, like, a countless array of ways in the law.

JUSTICE KAGAN: So you’re not pinning this on the — on the language here, the substantial portion means almost all?

MR. TRIPP: Well, no —

Essentially, the Goverment’s response here matches with LifeTech’s argument that “substantial portion” is rather ambiguous and so the court must supply a meaning while keeping in mind the principle against extra-territorial application.

Carter Phillips interpretation that a “substantial portion” means “approximately all” comes from the background behind the enactment of 271(f) — that is the overruling of Deepsouth where all the components were being exported but in an unassembled fashion.

JUSTICE KAGAN: Where — where do you get that from? What’s the principle there?

MR. PHILLIPS: Because all Congress wanted to do was to close a loophole [created by Deepsouth] where you’re essentially doing nothing but violating U.S. patent law and avoiding it by simply offloading it at the last second.

JUSTICE KAGAN: Well, how do we know that that’s all Congress wanted to do?

MR. PHILLIPS: [Changing the subject] the presumption against extraterritoriality would drive you in the opposite direction. Even if you could reasonably read the language either way.

MR. TRIPP: [answering the same question] So we’re trying to give a gloss on substantiality in light of the context and purpose of this statue as — as we understand all of 271(f) is designed to shore up the basic restrictioning and is actually making a patented invention in the United States and then shipping it abroad. Both of the provisions get at that. We think (f)(1) [should be limmited to] situations that resemble the Deepsouth paradigm.

Mr. Waxman rejected this analysis and instead argued that the statute “can be read in a commonsense way.” In addition, Mr. Waxman noted that 271(f)(2) itself overturns Deepsouth. 

LifeTech has also argued for a “quantitative” approach to finding “substantial portion” of the components — counting the number of components — rather than a qualitative approach. Pushing-back, Chief Justice Roberts noted “It seems to me that the significance of the component would be the most important consideration.”  Mr. Tripp responded that the “significance” question would be a “black hole that’s not going to get you anywhere.”  Of course, the Court has entered into this black hole on several occasions. Consider, for instance Quanta, where the court focused on the inventive or core aspects of the claims.

Regarding the quantitative approach, Mr. Waxman interjected here with a pharmaceutical example:

MR. WAXMAN: Let’s assume that you have a patented pharmaceutical, a tablet that, you know, remediates a disease. As is commonplace in these combinations, it has one active ingredient, and it has five inert ingredients that are as easy to pick up as you can imagine. The thing that is exported the factory overseas, which by the way is never liable under the statute because the statute only applies to conduct in the United States, they they’re happy to go down to their local warehouse and get the the five inert ingredients. But the molecule that does all the work, they import from the United States.

Under the approaches proposed by Lifetech and the US Gov’t, the exporter here would not be liable (perhaps rightly so).  One thing that Mr. Waxman failed to argue was an actual positive test for what counts as a “substantial portion.”  His approach instead would be to simply give the case to the jury to decide whether a substantial portion had been supplied or exported.  As a back-up, perhaps instruct the jury that “‘substantial’ means considerable in importance and/or amount.”

In Microsoft, the Supreme Court suggested that “components” for 271(f) purposes are the elements of a claimed invention.  Focusing on that point, Justice Sotomayor astutely asked “When a [patent] claim is [issued], how is the determination made of what the elements are? Do the elements’ determinations sort out the common from the uncommon in a patent claim?”  My answer here is that there is no specific definition by the patent office of what counts as an element or component and what is simply a limitation associated with a component. Responding, the US Gov’t simply said that “in most cases it actually won’t be that difficult.”  For the case-at-hand, the parties apparently agreed that the patent lists five components.

Perhaps channeling the Samsung v. Apple decision also released on December 6, 2016, Justice Breyer challenged the US Gov’t approach as too complex:

JUSTICE BREYER: But why do we have to go into the details here? I mean, it did strike me as an instance where maybe the less said by us the better. I mean, would you be happy if we say ‘it means what it says?’

‘All or substantially all’ means a whole lot. Or what you said, tantamount to all.

Of course, as is his wont, Justice Breyer here confused the language. The statute does not require “all or substantially all” but instead “all or a substantial portion.”   Mr. Tripp did not correct Justice Breyer on this even though he had full opportunity.  Mr. Waxman did offer the correction “And, Justice Breyer, I do want to correct one thing. You — you inadvertently kept saying this is all or substantially all. It’s not ‘all or substantially all’ – It’s ‘all or a substantial portion.'”  As a point of interpretation, Mr. Waxman indicated that many statutes do use the term “substantially all” and that should be seen as more rigorous of a standard than “a substantial portion.”

As with all Federal Circuit patent cases before the Supreme Court, reversal is likely.  However, I expect the reversal to be primarily a rejection of a hard-line interpretation of the Federal Circuit opinion.  I do not expect the Supreme Court to impose a quantitative limit on “substantial” but instead leave that question as one that must be proven to a jury as an element of infringement under Section 271(f).


Samsung v. Apple: Design Patent Damages May be Limited to Components

by Dennis Crouch

Samsung v. Apple (Supreme Court 2016)

In a unanimous opinion authored by Justice Sotomayor, the Supreme Court has reversed the Federal Circuit in this important design patent damages case.  Although the case offers hope for Samsung and others adjudged of infringing design patents, it offers no clarity as to the rule of law.

The decision centers on the special statutory provision for damage awards in design patents – 35 U.S.C. § 289.  Section 289 provides for the significant remedy of profit disgorgement based upon a defendant’s use of the patented “article of manufacture.” The infringer “shall be liable to the owner to the extent of his total profit.”

The challenge in Samsung v. Apple is whether to calculate the award based upon Samsung’s profits for its smartphone devices as a whole or instead whether profits could be narrowed to profits associated with individual components (such as the screen or phone body shape) even though those components are not sold directly to the consumers.

Siding with the infringer Samsung, the court held that the statute allows for damages to be applied at the component level since components are also “articles of manufacture.” The court also indicated that the product as a whole is also an article of manufacture.

[T]he term “article of manufacture” is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not. Thus, reading “article of manufacture” in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.

Thus, it will be up to courts to figure out which to level applies in particular cases.

No Test: Here, the court refused to offer any opinion as as to (1) how a judge or jury might go about deciding whether the profits apply to the product as a whole or instead to an individual component or (2) whether – in this case – the profits should be applied to the entire Samsung Galaxy smartphones or only to the individual components.  The problem, according to the Court, was inadequate briefing. “We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties.”  On remand, the Federal Circuit may grapple with these issues — what is the best test?

Defining Article of Manufacture:  In the decision, the court offered what it termed a “broad” meaning of “article of manufacture” as “a thing made by hand or machine.”  Although broad, the definition appears to exclude digital and virtual designs.   I query here whether Apple’s patented “graphical user interface for a display screen” at issue in this case fits this definition. USD0604305Sale of an Article of Manufacture: One problem with the decision is how it intermingles Section 171 with Section 289.  Section 171 can be thought of as the 101-of-design-patents and allows for the patenting of “any new, original and ornamental design for an article of manufacture.” Once issued, the design patent may be asserted either under the general patent statutes Section 271/284 (infringement/damages) or else under the alternative design patent alternative codified in Section 289.  The statute expressly allows for either option, but forbids double-collection of damages.  The distinction: Although Section 171 may well allow for patenting of a component or portion of a device (see below), it does not necessarily follow that an infringement action would lie in Section 289 for such a component – since that section requires a sale of the patented article of manufacture.   Perhaps all of this will be baked into the Federal Circuit test.

Component-Based Design Patents: Of some interest, the Court accepts as a given that design patents may properly cover a component of a multi-component invention. In the process, it affirmatively cites Judge Rich’s 1980 Zahn decision that allows for design patents covering partial components even when non-discrete or incomplete. Application of Zahn, 617 F. 2d 261 (CCPA 1980) (“Section 171 authorizes patents on ornamental designs for articles of manufacture. While the design must be embodied in some articles, the statute is not limited to designs for complete articles, or ‘discrete’ articles, and certainly not to articles separately sold . . . ”).  This goes beyond the also-cited old case of Ex parte Adams, 84 Off. Gaz. Pat. Office 311 (1898) (design patents allowed on movable/separable components).

Read the short decision: SamsungAppleDecision.

Top Patent Law Stories of 2016

If you miss my patent law year-in-review talk in Snowmass on January 6, do not worry – Patent Docs authors Donald Zuhn, Kevin Noonan, and Michael Borella will be offering their 10th annual live webinar on the “Top Patent Law Stories of 2016.” January 18, 2017 from 10:00 am to 11:15 am (CT).  Free, but pre-registration required (here).  CLE credit is pending for the states of California, Illinois, New Jersey, New York, North Carolina, and Virginia.

Guest Post: Can an Inventorship Be Challenged in a PGR Proceeding?

Thomas D. Kohler and Kevin C. McGrath*

The enactment of the AIA brought several changes to processes for correcting and challenging inventorship.  Perhaps most notable were the elimination of 35 U.S.C. § 102(f) and the replacement of interference proceedings with derivation proceedings.  These changes have raised several questions on the implications of improper inventorship in a post-AIA patent.  See, e.g., Crouch, With 102(f) Eliminated, Is Inventorship Now Codified in 35 U.S.C. 101?, Patently-O (October 4, 2012).  Of the many questions yet to be addressed, one is whether an allegation of improper inventorship can be raised in a Post Grant Review (PGR) proceeding.

The PTAB recently had a chance to address that question when it ruled on the first ever PGR petition filed against a design patent.  Galaxia Electronics Co. v. Revolution Display, LLC,  PGR2016-00021, paper 11 (PTAB  November 2, 2016).   In deciding not to institute trial, the PTAB also made the first ever decision on an alleged inventorship error in a PGR proceeding.  However, the PTAB chose to not address the fundamental question of whether an alleged error in inventorship is a statutorily proper ground for institution of a PGR and instead denied institution by deciding the Petitioner failed to present adequate evidence to support its allegation.  While this may have been the judicially expedient way to resolve this specific petition, sooner or later the PTAB is going to have to deal with the question of whether inventorship challenges should be grounds for PGR.  When it does get to that question, the PTAB should decide there is no place in a PGR proceeding for inventorship challenges.

A PGR trial cannot be instituted unless the information in a petition demonstrates that it is more likely than not that at least one challenged claim is unpatentableSee 35 U.S.C. § 324; see also 37 C.F.R. § 42.208.  Even before the AIA, however, an allegation of improper inventorship typically did not result in invalidation.  See Viskase Corp. v. American National Can Co., 261 F.3d 1316, 1329 (Fed. Cir. 2001) (“Absent fraud or deceptive intent, the correction of inventorship does not affect the validity or enforceability of the patent for the period before the correction.”); see also 1-2 Donald S. Chisum, Chisum on Patents § 2.03 [4][a] (Matthew Bender) (“Misjoinder and nonjoinder [of inventors] have long been viewed as ‘technical’ defects, not to be favored as objections or defenses to patent rights.”).  The reason being that, despite 35 U.S.C. § 102(f) (pre-AIA), inventorship could be corrected in most instances under either §§ 251 (“Reissue Of Defective Patents”) or 256 (“Correction Of Named Inventor”).

A limited pre-AIA exception where inventorship could not be corrected was if a movant could not demonstrate the error arose without deceptive intent.  See, e.g., Pannu v. Iolab Corp., 155 F.3d 1344, 1350 n.4 (Fed. Cir. 1998) (noting the requirement of showing the error occurred without deceptive intent, but also that “good faith [was] presumed in the absence of a persuasive showing of deceptive intent”). The AIA removed that limited exception, thereby eliminating any possibility of invalidating a patent based on improper inventorship, assuming at least one of the owners is willing to make corrections deemed necessary.  Specifically, besides eliminating § 102(f), the AIA also amended sections 251 and 256 by removing the “without any deceptive intention” requirement from those two sections.  While commentators have questioned whether that pre-AIA requirement had any practical effect, see Chisum § 2.04[4][d], the amendments to sections 251 and 256 make it clear that any demonstrated inventorship error can be corrected; either by a certificate of correction, a reissue application, or by a suit under § 256 in Federal court.  See, e.g., Vapor Point, LLC v. Alford, 832 F.3d 1343, 1348 (Fed. Cir. 2016) (ruling on an action to correct inventorship brought under § 256).

Admittedly, in situations where a party has raised an inventorship issue in a PGR, it is unlikely that all alleged inventors would be willing to cooperate with the patent owner.  But this still is not a stumbling block to correction of inventorship because cooperation of all inventors is not necessarily required. As noted in MPEP § 1481.02(I), in the event an inventor is unavailable or uncooperative, a patent owner can still obtain correction via reissue.  See 37 C.F.R. §§ 1.175, 1.64; see also MPEP § 1412.04(II) (“Reissue As A Vehicle For Correcting Inventorship”).  Further, the patent owner may establish the right to take action pursuant to procedures described in MPEP § 325.  To the extent there was a legitimate dispute as to ownership affecting entitlement toact, that dispute is separate from inventorship and a matter governed under state law—a matter that simply cannot be resolved by the PTAB or anyone at the USPTO. See, e.g., Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1471 (Fed. Cir. 1998).

There is a further, practical problem to permitting inventorship challenges in a PGR.  If the PTAB were to institute trial on that ground (alone or among others), nothing would appear to prevent the patent owner from admitting the error and filing a reissue application or § 256 court action to correct it. It would then seem that fundamental due process considerations should allow the patent owner to correct a correctable error.  But the PTAB may not be able to wait to see if inventorship is corrected before ruling in the PGR because it is statutorily obligated to reach a final determination within 12-18 months of instituting trial.  35 U.S.C. § 326 (a)(11).  Based on the current backlog of reissue applications and other matters before the Central Reexamination Unit (CRU), it is unlikely that a reissue application could reach final disposition within the 12-18 month time period.   The USPTO would thus seem to be stepping into a quagmire if it does not eliminate inventorship error as a ground for PGR—a patent owner has a right to pursue correction of inventorship, yet the PTAB is obligated to reach a final decision before that correction can be effected.   On the other hand, if inventorship challenges before the PTAB are limited to Derivation proceedings, which are not statutorily mandated to be completed within a specific time frame and also contemplate correction of inventorship as a possible outcome (35 U.S.C. § 135(b)), that potential quagmire is avoided.

So even if, despite the elimination of § 102(f), inventorship can still be challenged under 35 U.S.C. §§ 101 or 171, such a challenge is not a statutorily proper ground for institution of a PGR because such a petition cannot demonstrate that it is more likely than not that at least one challenged claim is unpatentable.  And such a ruling would comport with the statutory-framework of the AIA—Congress created Derivation proceedings, the replacement for Interference proceedings (35 U.S.C. § 135 (pre-AIA)), as the sole proceeding before the Board for inventorship challenges to post-AIA patents.  See 35 U.S.C. § 135; see also 37 C.F.R. § 42.401 et seq.  Thus, inventorship challenges can still be brought before the PTAB, it is simply a matter of choosing the correct vehicle through which to do so.  While the PTAB chose not to address this issue this time, when next raised, it should decide the Derivation proceeding is the sole process to bring such a claim before the Board.

But until the PTAB rules definitively that inventorship error is not a ground on which PGR may be based, it is our view that failure to raise that ground in a petition will most likely lead to an estoppel on the issue.  See 35 U.S.C. § 325 (e).  Thus, for now, any PGR petitioner that thinks it might have a possible basis for challenging inventorship better raise that ground in its PGR petition or risk being estopped from later challenging the patent on that basis.

Tom Kohler and Kevin McGrath are director and associate, respectively, at Downs Rachlin Martin, PLLC which represented the Patent Owner in Galaxia Electronics Co. v. Revolution Display, LLC, PGR2016-00021 (PTAB May 18, 2016); the first PGR petition directed to a design patent.

The Federal Circuit and Appeals from the Patent Office

By Jason Rantanen

As expected, for the fiscal year ending on October 31, 2016, the Federal Circuit docketed more appeals arising from the U.S. Patent and Trademark Office than from the district courts.  This result will almost certainly hold true for the calendar year as well: from January through October of this year, the Federal Circuit received 471 appeals arising from the district courts and 560 appeals arising from the PTO.

The below chart is an updated version of a chart I’ve posted before.  It shows the annual number of appeals docketed at the Federal Circuit per fiscal year (which runs from the beginning of October to the end of September.

Appeals filed at CAFC (Fiscal Year)

Changes over smaller periods of time:  To get a sense of whether appeals from the PTO are continuing to rise, I created a chart of the number of appeals arising from the PTO on a monthly basis.  Although there’s substantial  month-to-month variation, the overall trend for the last year does not suggest to me that the appeals from this source are continuing to increase.  However they remain at a much higher level as compared with the period before 2014.

Appeals filed at CAFC (monthly)

Makeup of appeals arising from the PTO: Using data from the USPTO’s annual Performance and Accountability Report, I constructed the below pie charts to illustrate how the composition of appeals from the PTO has changed over the last several years.  These graphs provide a vivid image of how dramatically that composition has changed in a short period of time.

2012 appeals from PTO2014 appeals from PTO2016 appeals from PTO

Note that this data is not an exact reflection of the appeals that reach the Federal Circuit due to a few limitations in the underlying reported data.  In particular, there are a handful of appeals (my understanding is <10) that might be counted in multiple years due to the way the data is reported for 2016.  In addition, the data is reported for all appeals to federal appellate courts, not just appeals to the Federal Circuit.  Due to variations in appeal pathway, a handful will end up in the regional circuits (especially trademark cases for which review is sought in the district court.  Pro-Football v. Blackhorse is an example).

What will the future bring? Going forward, I’d expect the number of appeals arising from the PTO to decline to some—but not a great—extent.   Data from the USPTO’s annual Performance and Accountability Report indicates that the number of newly filed inter partes review proceedings has remained roughly constant over since 2014, with 1310 cases filed in FY 2014, 1737 cases filed in FY 2015, and 1565 cases filed during FY 2016.   (Source: USPTO Performance and Accountability Reports, Table 15).  Since most of the appeals are from inter partes review proceedings (as there are relatively few of the other types of inter partes proceedings), a modest decline in the broader pool will likely result in a modest decline in the subset.  In addition, as attorneys obtain greater information about the probability of outcomes at the Federal Circuit, it is likely that appeals will fall as parties choose not to incur the expense of an appeal, at least in cases at the extreme.

Patent Law vs Property Law in Impression Prods. v. Lexmark Int’l.

by Dennis Crouch

I finally predicted something! The Supreme Court has now granted writ of certiorari in the pending patent exhaustion case of Impression Products, Inc. v. Lexmark International, Inc., SCT Docket No. 15-1189.  The two questions presented involve domestic and international exhaustion respectively.

The “patent exhaustion doctrine”—also known as the “first sale doctrine”—holds that “the initial authorized sale of a patented item terminates all patent rights to that item.” Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 625 (2008). This case presents two questions of great practical significance regarding the scope of this doctrine on which the en banc Federal Circuit divided below:

1. Whether a “conditional sale” that transfers title to the patented item while specifying post-sale restrictions on the article’s use or resale avoids application of the patent exhaustion doctrine and therefore permits the enforcement of such post-sale restrictions through the patent law’s infringement remedy.

2. Whether, in light of this Court’s holding in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1363 (2013), that the common law doctrine barring restraints on alienation that is the basis of exhaustion doctrine “makes no geographical distinctions,” a sale of a patented article—authorized by the U.S. patentee—that takes place outside of the United States exhausts the U.S. patent rights in that article.

Lexmark offered its rewriting of the questions as follows:

Section 271(a) of the Patent Act provides that “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.” 35 U.S.C. § 271(a) (emphasis added). The petition asks this Court to review two questions related to this provision:

1. This Court and the court of appeals have held that the sale of a patented article does not automatically confer unlimited “authority” for others to make, sell, or use that article where the patent rights actually conveyed are more limited in scope. E.g., Gen. Talking Pictures Corp. v. W. Elec. Co., 304 U.S. 175 (1938); Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992). Did the court of appeals correctly reaffirm its precedent in holding that Lexmark’s sale of a patented toner cartridge, subject to a lawful and express limitation, did not automatically convey unlimited authority that had been clearly denied?

2. This Court and the court of appeals also have held, in light of Congress’s decision to geographically limit the scope of patent rights and infringement liability to the United States, that a lawful sale abroad does not automatically confer unlimited “authority” to sell or import a patented article in the United States. E.g., Boesch v. Graff, 133 U.S. 697 (1890); Jazz Photo Corp. v. ITC, 264 F.3d 1094 (Fed. Cir. 2001). Did the court of appeals correctly reaffirm its precedent in holding that Lexmark’s sale of a patented toner cartridge in a foreign country, pursuant to the laws of that country, did not automatically convey “authority” to sell and import that product in the United States?

Looking forward to: 

Microsoft v. Enfish: Turns Out the Claims Are Obvious

This is a discussion of the new Federal Circuit Decision Microsoft v. Enfish appealing a PTAB final decision.

In the prior parallel decision – Enfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016), the Federal Circuit reversed a district court ruling that Enfish’s asserted software claims were ineligible under § 101 and also vacated the lower court’s holding that some of the claims were invalid as anticipated. U.S. Patent Nos. 6,151,604 and 6,163,775 (inventions relating to a “self-referential” database).

Enfish sued Microsoft for infringement in 2012. In addition to its litigation defenses, Microsoft marshaled a collateral attack on the patents with five petitions with the US Patent Office for inter partes review of the ’604 and ’775 patents.

After instituting review, the Patent Trial and Appeal Board found some of the patent claims invalid as anticipated/obvious.  On appeal, PTAB factual findings are generally given deference but legal conclusions are reviewed without deference.  After reviewing the claim construction and rejections, the Federal Circuit affirmed in a non-precedential decision.

Collateral Attacks: These collateral attacks work well to cancel patent claims with obviousness arguments that would have been unlikely to be accepted by a trial court or jury.  This is a pointed example here since the previously rejected district court’s judgment was based upon a more simplistic Section 101 analysis that is easier for the Federal Circuit to overturn.

Not Amenable to Construction:  The most interesting aspect of the decision is hidden in a single sentence statement:  “As to claims 1–26 and 30 of both patents—which are not at issue before us—the Board terminated proceedings after concluding that those claims were not amenable to construction.”

In its final judgment, the Board explained that those claims include a means-plus-function element (“means for configuring said memory according to a logical table“) but that no embodiments of the element were provided in the specification.  And, although a person of skill in the art may know how to construct the element, our 112(f) jurisprudence requires embodiments in the specification and does not allow a patentee to “rely on the knowledge of one skilled in the art to address the deficiencies” See Function Media, LLC v. Google Inc., 708 F.3d 1310 (Fed. Cir. 2013).  The statute states permits means-plus-function claims but also provides a guide for narrowly construing those claims.

35 U.S.C. 112(f) ELEMENT IN CLAIM FOR A COMBINATION.—An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

In both patent prosecution and district court litigation, failure to properly disclose structural embodiments for a means-plus-function limitation results in the claim being held invalid as indefinite since the limitation’s scope cannot be properly construed.  In the inter partes review situation, however, the Board’s power is limited to cancelling patents on novelty or obviousness grounds.  As such, the Board simply terminated the IPR trial with respect to these non-construable claims. The Board writes:

In the circumstance when the specification of the challenged patent lacks sufficient disclosure of structure under 35 U.S.C. § 112, sixth paragraph, the scope of the claims cannot be determined without speculation and, consequently, the differences between the claimed invention and the prior art cannot be ascertained. For the reasons given, we determine that independent claims 1, 11, and 15 are not amenable to construction and, thus, we terminate this proceeding with respect to claims 1, 11, and 15 under 37 C.F.R. § 42.72.

[PTAB Final Decision].

No Appeal of Termination: Neither party appealed the termination, although the Federal Circuit previously held that its appellate jurisdiction over these cases is limited to appeals of “final written decision[s] with respect to the patentability of any patent claim challenged by the petitioner …”  A termination decision was seen as essentially an extension of the institution decision that is not itself appealable.


Of course, the original Federal Enfish decision mentioned above also addressed this indefiniteness issue and held that the claims were not indefinite because sufficient structure was disclosed — holding that the scant description was adequate because “the sufficiency of the structure is viewed through the lens of a person of skill in the art and without need to ‘disclose structures well known in the art.’  I guess that this means that those claims are OK.

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European Unitary Patent Court One Step Closer with UK Signaling Assent

by Dennis Crouch

One of my students recently led a class discussion on the future European Unitary Patent and Unitary Patent Court.  The idea is to have a pan-European patent enforcement zone for patents issued by the European Patent Office (EPO).  This differs from the current state-of-affairs that requires patentees to go through national validation their EPO patent grant in each enforcement country and then bring individual enforcement actions in each European country.

The UK’s pending/potential exit from the EU created some question of whether the UPC Agreement (UPCA) would be ratified since the UK is a necessary party to the agreement (along with Germany and France).   Germany has also not ratified, but is expect to do so shortly.

In an announcement earlier this week, however, the UK announced that it will ratify the agreement — making the new court an almost-done-deal.  In the announcement, the UK Government noted that “The UPC itself is not an EU institution, it is an international patent court. The judiciary appointed include UK judges.”  However, Joff Wild notes that “the Court of Justice of the European Union will be the final court of appeal in the system under certain circumstances.”

We can expect that the UPC will quickly become a major patent enforcement institution – and Europe may overtake the US as patent-litigation-central.



Is it Obvious to Combine Five References?

by Dennis Crouch

On his (great) blog, Bill Vobach considers whether it is time to revisit In re Gorman, 933 F.2d 982 (Fed. Cir. 1991).   Gorman involved an obviousness rejection based upon a combination of thirteen references. The Federal Circuit rejected Gorman’s argument that the combination of a large number of references to support a rejection for obviousness “of itself weighs against a holding of obviousness.” See also, In re Troiel, 274 F.2d 94 (CCPA 1960) (rejecting appellant’s argument that combining a large number of references to show obviousness was “farfetched and illogical”).  The USPTO has regularized this holding within its Manual of Patent Examination Practice (MPEP) Section 707.07(f) (“reliance on a large number of references in a rejection does not, without more, weigh against the obviousness of the claimed invention”).  Of course, when Gorman was decided, the court also required some express motivation in order to combine references — that requirement was eliminated ten years ago by the Supreme Court in KSR v. Teleflex (2007).

I cannot recall any obviousness decision coming out of a district court that combines four or more references.  Neither Judges nor Juries will stand for that level of complexity.  The PTAB judges are so well trained in the complexity of technology and patent law that they are open to these poly-reference arguments in the AIA trial context.

Vobach, who reviews almost all of the Federal Circuit oral argument audio clips, reports that various judges have commented recently on the large number of references being relied upon in obviousness rejections.  Judge Moore most pointedly noting that “four or greater . . . that’s a lot of references!”

Two approaches for moving forward on the issue: (1) preserve the appeal and request en banc hearing; (2) argue that Gorman was reset by KSR.  An unlikely third approach might push Congress to move toward an European approach that begins the analysis with the closest single prior art reference and builds from there.


Exhaustion and Conditional Sales

The Supreme Court has again relisted Impression Products petition for writ of certiorari – further raising the prospect that the exhaustion case will be heard.  Ticking almost all of the boxes, Impression has top Supreme Court counsel (Andy Pinkus); Support from the SG; Prior Supreme Court cases in tension with the Federal Circuit’s holdings; and Plenty of Amicus Support.  The court will again consider the petition at its December 2 conference.

The following two questions are presented:

  1. Whether a “conditional sale” that transfers title to the patented item while specifying post-sale restrictions on the article’s use or resale avoids application of the patent exhaustion doctrine and therefore permits the enforcement of such post-sale restrictions through the patent law’s infringement remedy; and
  2. Whether, in light of this Court’s holding in Kirtsaeng v. John Wiley & Sons, Inc. that the common law doctrine barring restraints on alienation that is the basis of exhaustion doctrine “makes no geographical distinctions,” a sale of a patented article – authorized by the U.S. patentee – that takes place outside of the United States exhausts the U.S. patent rights in that article.

My hope is that the court will use this as an opportunity to clarify the unduly confusing Quanta decision.

Other Supreme Court News: Cert denied in DBN and DataTreasury. December 6 oral arguments in LifeTech.

Filing Patent Lawsuits

According to estimates from LexMachina, the number of U.S. Patent Lawsuits filed in 2016 is set to be significantly lower than any year since enactment of the AIA Non-Joinder Rules.*  While infringement actions are down, the number of patents-in-force is at an all-time high.  PatentLawsuitsPerYear

Prior to the America Invents Act of 2011, the courts allowed plaintiffs to join multiple parties as defendants in a single lawsuit – even when the only relationship between the parties was that they all were alleged to infringe the asserted patent.  The AIA blocked those multi-party actions in its non-joinder provision.  The result was that the number of lawsuits filed per year rose post-AIA even though the number of accused infringers actually dropped. This also means that anyone looking at trends in infringement actions needs to carefully analyze the data if their time span extends across the AIA enactment date.