December 2015

Inter Partes Reviews are Won/Lost on the First Filing

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In Redline Detection v. Star Envirotech,[1] the Federal Circuit has affirmed (1) the PTAB substantive determination that Star’s patent claims[2] are not invalid as obvious and (2) the PTAB procedural refusal to allow Redline to submit a post-institution expert declaration in its attempt to challenge the patent.[3]

On procedure, the Federal Circuit found that the Patent Office must be given deference in interpreting its own regulations regarding PTAB process and that the PTO’s rules make sense as they are designed to encourage submission of “all of the efidence that supports the ground of unpatentability” at the petition stage.  Here, although the PTAB rules do allow for submission of supplemental information – the PTAB was justified in denying the submission here since the petitioner gave no reason for the delayed submission other than cost-savings.

Although the PTAB rules (§ 42.123) suggest that supplemental filings may be made within one-month of a petition being granted – that simply might not work in many cases.  Thus, this case stands for the proposition that, even when timely filed within the one-month deadline, a motion to submit supplemental information must be justified beyond merely being “relevant.” More broadly, the result here repeats the conventional wisdom that inter partes reviews are generally won/lost on the first-punch.

Star’s patent relates generally to the abstract idea of generating leak-identifying smoke for use in volatile environments such as a vehicle brake-system.  On the merits, the PTAB found that the submitted prior art did not render the particularly challenged claims obvious.

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[1] Redline Detection, LLC v. Star Envirotech, Inc., App. No. 2015-1047 (Fed. Cir. 2015), appealed from the Patent Trial Appeal Board’s final decision in IPR2013-00106.

[2]  Claims 9 and 10 of U.S. Patent No. 6,526,808.

[3] See 37 C.F.R. § 42.123(a) (2012).

Federal Circuit: Testing Vehicle Operators for Impairment is an Unpatentable Abstract Idea

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Vehicle Intelligence v. Mercedes-Benz (Fed. Cir. 2015) (Non-precedential opinion)

Vehicle Intelligence and Safety LLC is the owner of United States Patent Number 7,394,392 vehicle safety improvements. In particular, the patent claims systems and methods for testing vehicle operators and then taking control of the vehicle if the operator is deemed impaired. Senior Judge Hart of the Northern District of Illinois ruled on the pleadings (12(c)) that the asserted claims were invalid as being drawn to patent-ineligible subject matter under Section 101 of the Patent Act. On appeal, the Federal Circuit here affirms – holding that “the disputed claims cover only abstract ideas coupled with routine data-gathering steps and conventional computer activity.” An early potential strike against the patent that the inventor, Kevin Roe, is also the patent attorney who prosecuted the case and the litigator who filed the appellate briefs.

Claim 16 reads as follows:

A system to screen an equipment operator, comprising:

a screening module to screen and selectively test an equipment operator when said screening indicates potential impairment of said equipment operator, wherein said screening module utilizes one or more expert system modules in screening said equipment operator; and

a control module to control operation of said equipment if said selective testing of said equipment operator indicates said impairment of said equipment operator, wherein said screening module includes one or more expert system modules that utilize at least a portion of one or more equipment modules selected from the group of equipment modules consisting of: an operations module, an audio module, a navigation module, an anti-theft module, and a climate control module.

In applying Alice Corp., Federal Circuit began with step one – is the claim drawn to ineligible subject matter? Answer: Yes. Here, the court found the claims directed toward “the abstract idea of testing operators of any kind of moving equipment for any kind of physical or mental impairment.”

Although the court did not explain particularly how the testing of operators for impairment fits within the definition of an abstract idea, the court made clear that one element of its decision was based upon the fact that the claims were broadly written and not limited to particular impairments, particular screening or testing methods, the method of programming the claimed “expert system,” or the “nature” of the control.

[C]ritically absent from the entire patent is how the existing vehicle equipment can be used to measure these characteristics; assuming these measurements can be made, how the decision module determines if an operator is impaired based on these measurements; assuming this determination can be made, how the decision module decides which control response to make; and assuming the control response decision can be made, how the “expert system” effectuates the chosen control response. At best, the ‘392 patent answers the question of how to provide faster, more accurate and reliable impairment testing by simply stating “use an expert system.” Thus, in the absence of any details about how the “expert system” works, the claims at issue are drawn to a patent ineligible abstract idea, satisfying Mayo/Alice step one.

An important take-away from this analysis is that the concept of an abstract-idea is closely tied-in with the novelty of the claims themselves – even at step-one of Alice. Thus, contrary to what many patent attorneys continue to believe, whether a concept is an “abstract idea” will depend upon the invention’s priority dates. However, on that same point, the Court rejected Vehicle Intelligence’s argument that its claim did not embody that broad concept of “testing-operators and taking control” since prior patents held by other companies already disclosed and claimed other methods of achieving those same results. The court rejected that notion since full-preemption is not a requirement of the Alice test.

Readers will also notice the linkage between the court’s analysis for eligibility and the doctrines of written description and indefiniteness. The suggestion in this case appears to be that the same claim could have been eligible if the patentee had provided (in the specification) a full explanation of how to implement its system.

On step two of Alice, the court found that “nothing” in the claims disclosed “any inventive concept sufficient to transform the abstract idea of testing operators of any kind of moving equipment for any kind of physical or mental impairment into a patent-eligible application of that idea.” On this point, the patentee argued that its claims were tied to particular device (one of “an operations module, an audio module, a navigation module, an anti-theft module, and a climate control module.”). However, the court found that the patent did not include enough of an explanation of “how the methods at issue can be embedded into these existing modules.”

The court also notes that being “tied to particular machines” is not “sufficient to confer eligibility.”

Although non-precedential, the case will certainly reverberate – especially the court’s refusal to limit the definition of ‘abstract idea’ and its continued acceptance of judgment-on-the-pleadings as the proper method for dismissing cases on Section 101.

Joe Herndon at Patent Docs has more.

Help us Here in Missouri!

Patent

My son Charly’s upstart City Garden School is raising funds for scholarships, materials, and teacher education. The Waldorf educational goals focus on ‘whole child’ development and making intercultural links within polarized communities (something that we need here in Missouri) and community building.  The whole school, including two full-time teachers and rent, currently operates on under $70,000 per year!

Thank you for your help. The campaign runs through December 31. Simply visit http://comogives.com/product/city-garden-school/ to donate to a nourishing educational experience.  (The school is a registered not-for-profit and so should be tax-deductible).  — Dennis

Patentlyo Bits and Bytes by Anthony McCain

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Get a Job doing Patent Law

Commil v. Cisco: Despite Supreme Court Win, Patentee Still Loses

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Commil USA, LLC v. Cisco Systems, Inc., __ F.3d __ (Fed. Cir. 2015)

On remand from the Supreme Court, the Federal Circuit has again concluded that the jury’s infringement verdict was wrong – but this time altering the grounds for its decision. “We now conclude that substantial evidence does not support the jury’s finding that Cisco’s devices, when used, perform the ‘running‘ step of the asserted claims. The district court’s judgment is therefore reversed.”

In its 2015 decision in the case, the Supreme Court had rejected the prior Chief Judge Prost non-infringement opinion. Under the Supreme Court analysis, the good-faith (but wrongly held) belief that a patent is invalid does not excuse a defendant’s actions to actively induce another party to infringe the patent.

Rather than re-focusing on the legal intricacies of inducement, this time the appellate panel shifted focus to the defendant’s alternative argument — that there was no underlying infringement.  Here, the patent is directed to a wireless communication system with at least two Base Stations that run a “low level” protocol for each connection, but according to the appellate panel, the patentee failed to prove that Cisco (or its customers) used their base stations in that manner. Instead, Cisco’s testimony was that its Base Stations operate a single protocol instance that is used for all connections.

The most interesting element of this decision is that it could have been written back in 2014 when the panel wrote its original decision and the Federal Circuit could have avoided the questionable legal grounds that were later rejected.

 

University of Iowa Hiring an In-House IP Attorney

Patent

By Jason Rantanen

I’m excited to report that my academic institution, the University of Iowa, is hiring an in-house intellectual property attorney.  The University of Iowa is a major public research university that conducts, among many other activities, an extensive biomedical research program.  Situated at the heart of Iowa City, a beautiful midwestern college town, the university consists of 13 Colleges with over 32,000 students.  Among these is the University of Iowa College of Law, a top public law school founded in 1865.

The position is particularly exciting because we’ve designed it from the ground-up to support both the research and development mission of the university as well as the teaching mission of the College of Law.  The person hired for this role will primarily work with the University of Iowa Research Foundation (UIRF) in connection with the patenting process.  In addition, he or she will supervise law students working at the UIRF, support the innovative Iowa Medical Innovation Group course, and teach one advanced intellectual property course at the College of Law each year.  The summary from the job positing is below, and the posting itself is available at: https://jobs.uiowa.edu/pands/view/68075.

The University of Iowa (UI) seeks an In-House Intellectual Property Counsel (Patent Attorney) to support licensing activities and intellectual property management for technologies being commercialized by the University of Iowa Research Foundation (UIRF). This individual will advise on transactional issues including licensing, sponsored research and related agreements. The individual may draft and file some provisional patent applications. The Patent Attorney will coordinate with the UI’s Office of the General Counsel (OGC) on the UIRF’s role in any intellectual property litigation. In addition, this individual will support the Iowa College of Law by teaching and mentoring law students. In this role, this individual will teach one or more courses each year on an advanced intellectual property law topic such as intellectual property licensing, supervise law students working as externs in the UIRF, and support the College of Law component of the Iowa Medical Innovation Group (IMIG) course. This position will have solid-line reporting to the Executive Director of the UIRF, with dotted-line reporting to the UI Assistant Vice President for Economic Development.

The current advertisement runs until January 5, and if you’re interested in the position I would encourage you to apply by early January.  Inquiries about this position should not be sent to me.  They should be sent to the designated contact person on the job posting.

 

 

Merry Christmas from the USPTO (and from us at Patently-O)

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Most filings OK to delay to December 28.
The USPTO has issued the statement below:

A major power outage at USPTO headquarters occurred Wednesday, Dec. 22, resulting in damaged equipment that required the subsequent shutdown of many of our online and IT systems. This includes our filing, searching, and payment systems, as well as the systems our examiners across the country use. Additionally we are unable to receive faxed documents. We are working diligently to assess the operational impact on all our systems and to determine how soon they can be safely brought back into service in the coming days. We understand how critical these systems are for our customers, and our teams will continue to work around the clock to restore them as quickly as possible, though we are currently estimating that these systems will be impacted at least through the Christmas holiday on Friday, December 25.

In light of this emergency situation, the USPTO will consider each day from Tuesday, December 22, 2015, through Thursday, December 24, 2015, to be a “Federal holiday within the District of Columbia” in accordance with the description and regulations in the complete official notice in the text below.

You can monitor further status updates on the USPTO’s System Status page on our website (www.uspto.gov/blog/ebiz/), as well as on our Facebook (www.facebook.com/uspto.gov) and Twitter (www.twitter.com/uspto) accounts.

Thank you for your patience as we work to restore full service as soon as possible.

Since December 25 is already a federal holiday, the filing reprieve is actually pushed back to Monday, December 28.

Shukh Signals Petition for Certiorari in Futures-Assignment Case

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In a new filing, Alexander Shukh has asked the Federal Circuit to stay its mandate pending Mr. Shukh’s Petition for Writ of Certiorari. In his unsuccessful petition for en banc rehearing, Shukh asked the following question:

Whether, in a Section 256 Correction of Inventor action, does the common interest doctrine of attorney-client privilege entitle an inventor to access and use his own invention records and communications?

The Federal rules of appellate procedure do not require stay of mandate in the situation but permitted in cases where “the certiorari petition would present a substantial question and that there is good cause for a stay.” Here, I would expect that standard has been met. In particular, in the Stanford v. Roche case, the Supreme Court openly questioned the illogic of FilmTec. I have included an excerpt on-point from the Stanford oral arguments.

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JUSTICE GINSBURG: The whole thing that was wrong here is that Stanford, instead of drafting the agreement “I agree to assign,” should have said “I hereby assign” and then there would be no case. Is that — the Cetus agreement said “I hereby assign,” and the Federal Circuit said for that reason, even though it was second in time, it takes precedence. Stanford just said “I will assign.”

So if Stanford had instead used exactly the formula that Cetus used — “I agree to assign and hereby do assign” — would you have any case?

MR. FLEMING: …But Justice Ginsburg, your question is — is sound, which is that there is this distinction between an agreement to assign and a present assignment of future expected interests. That has been the law for decades. There are plenty of settled expectations based on that. That has not been challenged, not in the petition for certiorari, not in the opening brief of Stanford, and it only comes up in a footnote on the penultimate page of the reply brief. . . .

JUSTICE GINSBURG: We have a number of sample clauses in this record, and some say “I will assign.” Some say “I hereby do assign.” The notion that the — that answer, who is it who loses, should turn on whether one drafter says “I agree to assign” and the other says “I hereby assign” does seem very odd.

MR. FLEMING: That’s a distinction, Justice Ginsburg, that goes back to the Federal Circuit decision in Arachnid by Judge Giles Rich, who is a notable authority on the patent act. He relied on the Curtis treatise from 1873. But if that were an issue that the Court wished to reconsider, I think –

JUSTICE SCALIA: Is that patent law or is it regular contract law? Doesn’t it apply in other fields as well? I mean, I’m — I’m not aware that this is a peculiar doctrine applicable to patent law.

MR. FLEMING: No, not in particular. An agreement to assign is specifically that. It’s an agreement to do an assignment in the future.

JUSTICE SCALIA: To do it in the future. If somebody else gets an assignment before that agreement is — is executed, the assignment prevails.

JUSTICE GINSBURG: Then we’re talking about nonexistent property; property that may never, in fact, exist?

MR. FLEMING: That comes from the FilmTec decision, which relied on Justice Storey’s decision in Mitchell, and it’s used, again, by universities like Caltech and MIT that rely on the validity of a present assignment of future expected interest. I mean, I know that the issue of the interpretation of agreements to assign was addressed in the cert petition in ProStar v. IP Venture, which this Court denied cert on three terms ago. But if this Court were to wish to reconsider that doctrine, I would submit it can be done in an appropriate case where there is an amicus briefing on that issue. That’s not been considered here at all.

JUSTICE GINSBURG: So in the future, the universities would be protected against a third party simply by changing the form of contract with their employees to say “I hereby assign,” so we would have no continuing problem?

MR. FLEMING: I — they — they would be protected from this particular constellation of facts that came up in this case. There might be other problems –

JUSTICE BREYER: Yes, and then your clients would be out there arguing, oh, but you, see you can’t assign a future interests in the fruits from black acre; I mean, you can promise to do it, but black acre isn’t even around yet. And so when somebody ran in and got those fruits, well, then now we have a fight; and in law the second person wins, and in equity maybe the first person can get an injunction. I don’t know. But I guess people would raise that kind of argument, wouldn’t they?

MR. FLEMING: The point, Justice Breyer, is that all these questions are resolved in the exactly same way when we’re not talking about a federally funded invention.

Free Speech: Prohibition on Registering Disparaging Marks is Unconstitutional, Federal Circuit Rules

Patent

By Dennis Crouch

In re Tam (Federal Circuit 2015) (en banc)

Big trademark case from the Federal Circuit. Judge Kimberly Moore filed the majority opinion holding that the statutory prohibition against registration of “disparaging marks” is an unconstitutional governmental regulation of speech. This issue has been coming to a head for many years, and this decision will likely impact the parallel Washington Redskins dispute. There would be a good chance for Supreme Court review of the case if the government presses its position. However, it is not clear to me that the government will do so.

The majority writes:

The government cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks. It cannot refuse to register marks because it concludes that such marks will be disparaging to others. The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional. Because the government has offered no legitimate interests justifying § 2(a), we conclude that it would also be unconstitutional under the intermediate scrutiny traditionally applied to regulation of the commercial aspects of speech.

Nine members of the court signed the majority opinion filed by Judge Moore. In addition to signing the majority opinion Judge O’Malley filed a concurring opinion (joined by Judge Wallach). Judges Dyke, Lourie, and Reyna each field dissenting opinions.

Judge O’Malley’s concurrence argues that, in addition to serving as an unconstitutional speech limitation, section 2A is also “unconstitutionally vague, rendering it unconstitutional under the Fifth Amendment of the United States Constitution.”

Judge Dyk’s partial dissent argues that the statute itself is not “facially unconstitutional”, but has been applied in an unconstitutional manner in this particular case. Judge Dyk’s approach would leave intact the prohibition on registering marks that “disparage . . . or bring into contempt, or disrepute,” but would block the government from refusing registration based upon whether or not the government disagrees with a mark’s message.

Judge Lourie’s dissent first questions “why a statute that dates back nearly seventy years—one that has been continuously applied—is suddenly unconstitutional as violating the First Amendment. Is there no such thing as settled law, normally referred to as stare decisis?” On the merits, he argues that denial of a registration does not impact the freedom of speech. Rather, Mr. Tam can continue to use his “slants” mark even without registration. “The argument, therefore, that a trademark applicant’s right of free speech has been impaired by the failure of the USPTO to grant a federal registration is unconvincing.” Judge Lourie also questions whether a mark’s protection should count as even commercial speech.

Finally, Judge Reyna argues in dissent that “the refusal to register disparaging marks under § 2(a) of the Lanham Act is an appropriate regulation that directly advances the government’s substantial interest in the orderly flow of commerce.” As such, he argues, regulation satisfies the intermediate standard of scrutiny should be applied in the commercial speech category.

Assigning Future Interests: Federal Circuit Denies Review of FilmTec

Patent

by Dennis Crouch

When I taught licensing, I turned to Ray Nimmer’s text.  Nimmer & Jeff Dodd are also authors of the treatise Modern Licensing Law. Although a number of patent transfer issues are straightforward, one that continues to lay confusion is the purported assignment of ownership of patent rights covering a yet-to-be-concieved invention.

In his case against Seagate, Alexander Shukh had asked the Federal Circuit to revisit the automatic-assignment rule of FilmTec.  However, that en banc request has now been denied.

Nimmer & Dodd had filed an amicus brief supporting Shukh’s now failed petition for en banc rehearing on this question of whether FilmTec remains good law and the extent that federal law (instead of state law) governs patent rights transfers. The Nimmer brief does not expressly argue for a particular answer, but does ask the courts to settle the matter.

[C]onfusion arises when dealing with agreements and assignments for inventions yet to be created. The precise issue is whether an “assignment” of future inventions, i.e., either an actual assignment or an agreement to assign, will create mere equitable property rights or will effect actual transfer of legal title, once the invention comes into existence.

Prior to FilmTec… the general rule was that, while “an agreement to assign in the future inventions not yet developed may vest the promisee with equitable rights in those inventions once made, such an agreement does not by itself vest legal title to patents on the inventions in the promisee.” Arachnid (Fed. Cir. 1991). This rule was of apparent long pedigree. . . .

In FilmTec, however, the Court held that, “[i]f an assignment of rights in an invention is made prior to the existence of the invention, this may be viewed as an assignment of an expectant interest,” and that “[o]nce the invention is made and an application for patent is filed, however, legal title to the rights accruing thereunder would be in the assignee.” Under this “automatic assignment” rule, equitable title to a future invention automatically ripens into legal ownership in an assignee, even though the “assignor” was no longer employed by the assignee when the patent application for the invention had been filed.

FilmTec has been widely criticized. In Stanford, Justice Breyer argued in dissent that the “Federal Circuit provided no explanation for what seems a significant change in the law” and that the FilmTec rule “undercuts the objectives of the Bayh-Dole Act.” Concurring with the majority, Justice Sotomayor nonetheless shared Justice Breyer’s concerns and noted that she understood “the majority opinion to permit consideration of these arguments in a future case.”

Read the brief: NimmerBrief; Shukh Petition; and Seagate Response.

Next Stop SCOTUS?: It is unclear whether Shukh will push this to the Supreme Court, but the Court has at least acknowledged that the issue exists and potentially problematic.  The problem with Shukh’s case is that we have not seen a clear explanation of the controvery – how a shift in the law gives Shukh the win.

 

 

Amicus Briefs on Enhanced Damages

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by Dennis Crouch

This term the Supreme Court is addressing one patent issue,[1] that of enhanced damages.[2] Two cases have been joined together for a single one hour hearing.  Merits briefing is ongoing. In an earlier post I briefly discussed the merits briefs that were filed in early December 2015. Now a set of friend-of-the-court briefs have also been filed either in support of the patentee-petitioners or in support of neither party. Respondent briefs as well as any briefs in support of respondent will be due in the upcoming weeks.

For the most part, the briefest stick to a model of focusing on a particular set of questions:

  • Is willfulness a prerequisite to enhanced damages under section 284?
  • Does the two-step test of Seagate create too high and too rigid of a standard?
  • Is subjective bad faith sufficient for enhanced damages award?
  • Should the District Court apply a totality of the circumstances test when determining enhanced damages?
  • What level of proof is required: preponderance of evidence or clear and convincing evidence?
  • When and enhanced damage award is appealed, what level of review should be applied?

The following is a short review of the amicus briefs that have been filed in the case.[3]

United States Government

When the United States government files and amicus brief, that brief is usually seen as the most important amicus brief in the case. Often, it is seen as the most important brief in the case – even more important than briefs filed by the parties themselves. The brief was filed in a joint effort by both the Department of Justice Solicitor’s office and the USPTO.

The government brief supports the petitioners’ position that the Federal Circuit test is too rule-based and too restrictive. “The Federal Circuit’s recent decisions, including its decisions in these cases, have imposed unwarranted restrictions on awards of enhanced damages.” In particular, the government argues that Seagate should be overruled. At the same time, the government takes pains to clarify that enhanced damages should only be awarded in cases of “unusually egregious acts of patent infringement.”  An interesting question not addressed by the brief is how “unusually egregious” corresponds to the “exceptional” requirement for attorney fees.

The government brief does particularly ask the court to limit enhanced damages only to cases involving willful infringement. In particular, the brief quotes affirmatively from Aro Mfg., that enhanced damages are available for “willful or bad-faith infringement.”[4]  Earlier courts, the brief notes, allow enhanced damages “for the infringer’s unlawful conduct was intentional, willful, flagrant, or undertaken in bad faith.”

Regarding the questions addressed above, the government brief argues that a preponderance of the evidence – the lower standard – is sufficient to prove enhanced damages and that District Court determinations regarding enhanced damages should be reviewed for abuse of discretion on appeal, not de novo.

Prof. Rantanen and Chris Seaman

Professors Rantanen and Seaman take a statutory and historical approach in their argument that willfulness is the appropriate standard for determining whether damages should be enhanced.  The historical case law they argue was bolstered by the AIA language which states that failure to obtain or introduce evidence of counsel “may not be used to prove that the accused infringer willfully infringed the patent”[5] It is clear from context that this new provision was intended to be a defense against enhanced damages under Section 284.

The professors argue that the determination of whether the infringement was willful should be accomplished through a totality of the circumstances test and reviewed on appeal for abuse of discretion as has been the law since 1836.

Mentor Graphics, Microsoft, and SAP

John Vandenberg of Klarquist Sparkman filed this brief arguing that trial courts should be given discretion to increase damages following a judgment of infringement.  Parties on this brief all have valuable patent portfolios. However, they are also subject to infringement allegations – typically from nonpracticing entities. In that framework is not surprising they argue that the behavior of the patent owner, not just the infringer, should be relevant to the willfulness inquiry. In particular the brief suggests that the court should consider whether the patentee “implemented a scientifically or commercially significant advance” and “diligently provided actual and clear notice.”  They also suggest that a patentee who, instead of suing the source of infringement, sues that infringers customers, should be less likely to receive enhanced damages.

Brief also asks the Supreme Court to make clear that enhanced damages are a question for the judge, not for a jury.

Nokia

John Haynes of Alston & Bird filed Nokia’s brief that argues for broader enhanced damages. Stating that “the Federal Circuit’s grafting of a willfulness requirement onto section 284 is contrary to the legislative history of the statute and ignores the compensatory aspect of enhanced damages.” A weakness of this argument from Nokia is that it fails to consider 19th-century Supreme Court cases on point such as Seymour v. McCormick (1854).

Prof. Mossoff

The purpose of Prof. Mossoff’s brief is to highlight his research that the current “crisis” in the patent system is nothing new rather.  Patent licensing entities have been around for more than 100 years and serve an “important role in the development of innovation”.

Licensing Executives Society

Daniel Stringfield from Steptoe and Johnson filed the LES brief is interesting because it is somewhat equivocal. The brief argues that the Seagate rule is beneficial because it appears to encourage predictable and consistent results at the same time, the brief recognizes that a more flexible approach may do a better job of deterring undesirable infringement and better protecting patented inventions.

Intellectual Property Owners Association

My former boss Paul Berghoff of MBHB filed the IPOs short brief. The brief supports Seagate and argues that enhanced damages should only be allowed based upon sufficient evidence that the infringement was subjectively willful and also objectively reckless. In general, a party that “mounted a good-faith defense against allegations of infringement” should not be punished with punitive damages even if defense was ultimately unsuccessful.

Public Knowledge, the Electronic Frontier Foundation, and Engine Advocacy

Charles Duan filed a brief for these three public interest groups acting together. In general these groups can be termed “anti-patent.”  The brief argues that the threat of enhanced damages are regularly used against small companies with “devastating results” such as practically requiring opinion letters for legitimate threat creating an incentive not to read patents. The brief also argues that lowering the bar would increase the likelihood of abusive patent demands.and C That petitioner’s policy concerns are detached from reality.

Ericsson

Mike McKool of McKool Smith filed Ericcson’s brief arguing that the Federal Circuit’s limits on enhanced damage awards are “practically insurmountable”, “too high”, and have “fostered patent holdout and diminished respect for intellectual property rights”.  Ericcson argues that the extensive body of precedent stretching back to the 1832 patent act provide sufficient standards and guidance for district courts considering enhanced damage awards.[6]  On particulars, the brief argues that there should be no objectively reckless requirement, no clear and convincing evidence requirement and no de novo review of District Court decisions regarding enhanced damages.

AIPLA

Peter Sullivan of Foley Hoag filed the AIPLA brief.  Brief argues that “willful infringement” should be read into the statute as a limit on when damages may be enhanced. For that point, the brief sites Seymour v. McCormick (1854) where the court wrote distinguished between, on the one hand, a “good faith” or ignorant infringer from a “wanton and malicious pirate.”

Of course, is not a clean dividing line between “good faith” acts and willfully bad acts. The brief does not delve into that potential middleground other than stating that proof of willful infringement should be a requirement.  However, the association does argue that the Seagate standard “goes too far, allowing blameworthy conduct to go unpunished.” The brief argues instead that proof of subjective bad faith should be sufficient.  The brief also cautions the Supreme Court to be wary of giving too much discretion to District Court judges. For instance, it argues that a totality of the circumstances test has the potential of leading to both unpredictability and imprecision in punitive damage awards.

Foreman, Morinville, and the “Small Inventors”

IP attorney Andy Baluch filed a brief on behalf of a group of self-identified “small inventors” including Lewis Foreman, Paul Morinville, and James Innes.  The brief lays out the argument that contemporary intellectual property licensing has been undermined by the rise of what is termed “efficient infringement.” In 1L contract law, budding attorneys learn of the economic concept of efficient breach that, in certain circumstances and jurisdictions, permits a contracting party to breach a contract when the harm (penalty) caused by the breach is less than the benefit associated with breach.  Manufacturers and the uses of technology are using the same concept now to continually infringe patent rights with the expectation that their benefit from infringing will be greater than any potential penalty they must pay. That balance has shifted in recent years as today the ordinary penalty is simply payment of a reasonable royalty since both injunctive relief and enhanced damages are so difficult to obtain. Brief argues that this “anti-patent climate is particularly harmful to America’s individual inventors and startups.”

Askeladden

Askeladden’s brief was filed by Kevin Colligan’s team at Goodwin Procter in New York.  Brief makes two primary conclusory arguments. First, despite the open language of section 284, enhanced damages should only be available for acts of willful infringement. That conclusion is supported by what Askeladden sees as “established” law in the patent field and “consistency” with the ordinary rules of punitive damages. Second, adjudged infringer’s should have an absolute defense to enhanced damages if the infringement occurred in good faith and based upon a reasonable belief that the patent was either invalid or not being infringed.

Innovention

James Otteson’s counsel of record for Innovention Toys. That company won an infringement action against MGA entertainment – makers of “Bratz.”  Although the district court awarded enhanced damages for willful infringement based upon strong evidence of copying, Federal Circuit reversed finding that MGA’s obviousness defense was not objectively reckless. The company has a petition for writ of certiorari pending.[7]  brief here stands with the petitioners, arguing that enhanced damages should not even require finding of willfulness but instead should be based upon the totality of the circumstances as determined by the District Court judge and only reviewed on appeal for substantial evidence/clear error.

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[1] Certiorari has been granted on only one patent issue thus far. A number of petitions remain pending.

[2] Halo Electronics, Inc. v. Pulse Electronics, Inc., et al., Supreme Court Docket No. 14-1513 (2015) and Stryker Corporation, et al. v. Zimmer, Inc., et al., Supreme Court Docket No. 14-1520 (2015).  See, Dennis Crouch, Expanding the Framework for Enhanced Patent Damages, Patently-O (December 13, 2015).

[3] Opening  briefs by the petitioners are available on Patently-O at: https://patentlyo.com/patent/2015/12/expanding-framework-enhanced.html.

[4] Aro Mfg. Co. v. Convertible Top Replacement Co., 377 US. 476, 508 (1964).

[5] 35 U.S.C. § 298.

[6] See, for example Bott and Read.

[7] Innovention Toys, LLC v. MGA Entertainment , et al. , No. 15-635 (U.S. Nov. 10, 2015).

Two-Step Printed Matter Doctrine: (1) Is it Printed Matter?; (2) Do we give it patentable weight?

Patent, , ,

By Dennis Crouch

The printed matter doctrine probably arises less than it should as its contours are likely integral to an understanding of the patentability of software related inventions.  Like the abstract idea test the doctrine barring the patentability of certain “printed matter” is nonstatutory and judicially created.

In the recent DeStefano case, the Federal Circuit vacated a PTAB anticipation decision that was based upon the printed matter doctrine — holding that the Board erred in its understanding of the test.

Distefano claims a user-directed method of designing an electronic document.[1] The PTAB found that all of the elements of the claim were anticipated by a prior art reference except for the claimed requirement of “selecting a first element from a database including web assets authored by third party authors and web assets provided to the user interface from outside the user interface by the user.”  Rather than finding that element in the prior art, the Board ruled that it should be given no patentable weight under the printed matter doctrine.

The printed matter doctrine has a long history and generally stands for the principle that no patentable weight should be given to the content of information recorded in a substrate.[2]  leading case in the area continues to be 1931 Russell decision.[3] In Russell, the CCPA ruled that a “mere arrangement of printed matter on a sheet or sheets of paper, in book form or otherwise, does not constitute any new and useful art.”

The Federal Circuit has ruled on several printed matter cases — holding that the content labels providing dosage instructions, instructions for performing tests, and numbers printed on a wristband were all printed matter.[4] on the other side, the Federal Circuit ruled in Lowry that data structures themselves should not be considered printed matter if they include “information regarding physical interrelationships within a memory.”[5]

To be clear, the question of whether or not a claim element is printed matter represents just the first step in the process. Once an element is determined to be printed matter the court must take the next step of determining whether or not it should be given patentable weight.  Regarding the second step, the court writes here that the “common thread amongst all of these cases is that printed matter must be matter claimed for what it communicates.”  Thus, information content can be given patentable weight if it “has a functional or structural relation to the substrate.”

Coming back to DiStefano’s case, the appellate panel here ruled that the claimed “selecting a first element” step failed the threshold question and was not itself a claim directed toward printed matter. The court writes:

Although the selected web assets can and likely do communicate some information, the content of the information is not claimed. And where the information came from, its “origin,” is not part of the informational content at all. Nothing in the claim calls for origin identification to be inserted into the content of the web asset.

Thus the case was vacated and remanded back to the patent office for another go-round.  I’ll note here that this is the second time the Federal Circuit has reached a decision in this case. In its 2014 unpublished decision the Federal Circuit also rejected the board’s attempt at an anticipation rejection-that time finding that the rejection was an “new ground of rejection” that required a remand.[6]

The claim itself appears fairly simple and straightforward, and one that is, in my guesstimate, likely directed to an idea already known.[7] Of course, so far the patent office has been unable to find the right references and unfortunately had to really stretch the law in this one.

On remand, it will be interesting to see whether the patent office follows its usual procedure of allowing a case after a successful appeal by the applicant, or will a new search and new rejection be submitted?

My understanding is that Mr. DiStefano continues to own the patent via his Patent Trust LLC.  Patents in his portfolio include US Patent Numbers 6,331,400, 6,771,291, 7,353,199, 7,996,259, 8,335,713, 8,412,570, 8,417,567, 8,423,399, 8,442,860, 8,589,222, 8,650,076, 8,768,760, 8,781,890 and 8,996,398.[8]

= = = = =

[1] US patent Application No. 10/868,312, claim number 24.

[2] See 1 Chisum on Patents section 1.02.

[3] In re Russell, 48 F.2d 668, 669 (CCPA 1931)(indexing the names in directories and dictionaries).

[4] AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1048 (Fed. Cir. 2010); King Pharm., Inc. v. Eon Labs, Inc., 616 F.3d 1267, 1279 (Fed. Cir. 2010); In re Ngai, 367 F.3d 1336, 1337–38 (Fed. Cir. 2004); and In re Gulack, 703 F.2d 1381, 1385 (Fed. Cir. 1983).

[5] In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994).

[6] In re DiStefano, 562 F. App’x 984, 984 (Fed. Cir. 2014).

[7] The text of the claim is as follows:

A method of designing, by a user in a user interface having first and second display regions each capable of displaying a plurality of element, an electronic document, comprising:

selecting a first element from a database including web assets authored by third party authors and web assets provided to the user interface or outside the user interface by the user;

displaying the first element in the second display region;

interactively displaying the electronic document in the first display region;

modifying the first element displayed in the second display region upon receiving a first command to modify the first element in the second display region; and

displaying the modified first element in the first display region, wherein the modified first element forms at least part of the electronic document.

[8] Thomas L DeStefano III, LinkedIn biography available at https://www.linkedin.com/in/thomas-l-distefano-iii-a538811.

Proposed Changes to Federal Circuit Rules

Patent

By Jason Rantanen

Earlier this month, the Federal Circuit released a set of proposed amendments to the Federal Circuit Rules of Practice and Procedure that completely overhaul the existing rules.   These changes are extensive, with the summary alone filling six pages.  The bulk of the proposed amendments focus on the shift from paper to electronic filing, with changes in both terminology and procedure.   Other notes:

  • The proposed rules revise the court’s approach to material deemed confidential.  Parties will be able to designate up to 15 words in a brief “confidential” without needing to file a motion.  More lengthy redactions require a motion “establishing that the additional confidentiality markings are appropriate and necessary pursuant to a statute, administrative regulation, or court rule.”   (Rules 11(c), 17(e), 27(m), 28(d) and 30(h)).
  • Several of the proposed amendments add language relating to the Certificate of Interest, emphasizing the requirement that a Certificate of Interest be included when filing all motions, including motions for a stay or injunction pending appeal (Proposed Rules 8(a)(4) and 26.1).  In addition, the proposed amendments add more language requiring that Certificates be amended promptly when information changes.  (Rule 26.1 and 47.4(b)). As someone pointed out, though, the Federal Circuit Rules already require a Certificate of Interest to be filed with each motion, petition, or response.  See Fed. Cir. R. 47.4.  Rule 47.4(c) also requires that if any of the information changes, the party must file an amended certificate within 7 days of the change.  Does anyone know why all the redundant language is being added in Rules 8(a)(4), 26.1 and 47?

The court’s own summary of the proposed changes is available here: summary_of_proposed_rule_changes_dec_2015, with a redlined version of the actual edits available here: federal_circuit_rules_public_notice_dec_2015.  Given their scale, it’s difficult to get a sense of the changes from the summary alone.  I encourage folks who regularly practice before the court to read through the changes carefully, both for substance and areas of potential unintended error.  If there are any areas of potential ambiguity or overcomplexity, now is the time to point them out.  Comments on any of the proposed changes are due to the court by January 4.

In addition, the court’s website notes that “Reviewers may wish to note that the recent amendments to Rule 28(a)(12) and 28(f), and Rule 30(b)(4)(E), relating to the pagination and marking of appendices and supplemental appendices are final with an effective date of January 4, 2016.”  These rules apply to all appeals docketed on or after Monday, January 4, 2016.

Federal Circuit denies en banc request

Patent

by Dennis Crouch

In yet another set of Apple v. Samsung decisions, the Federal Circuit has denied en banc rehearing on the permanent injunction decision with the minor tweaks of the original decision shown in the markup below:

Apple did not establish that these features were the exclusive or significant driver of customer demand, which certainly would have weighed more heavily in its favor. Apple did, however, show that “a patented feature is one of several features that cause consumers to make their purchasing decisions.” Apple III, 735 F.3d at 1364. We conclude that this factor weighs in favor of granting Apple’s injunction.[1]

The amendment of the original amendment was agreed to by the original majority panel (Judges Moore and Reyna).[2]  Chief Judge Prost also substantially amended Part-B of her dissent.

In the panel opinion (whose holding still stands), the Federal Circuit rejected Judge Koh’s opinion that Apple had not shown irreparable harm absent injunctive relief.  In particular, the appellate panel deemed that Judge Koh’s nexus standard was too high.  The court wrote:

Thus, in a case involving phones with hundreds of thousands of available features, it was legal error for the district court to effectively require Apple to prove that the infringement was the sole cause of the lost downstream sales. The district court should have determined whether the record established that a smartphone feature impacts customers’ purchasing decisions. Though the fact that the infringing features are not the only cause of the lost sales may well lessen the weight of any alleged irreparable harm, it does not eliminate it entirely.

Panel opinion.

On remand, Judge Koh will now re-determine whether injunctive relief is proper.

We are all a bit confused about all of the Apple v. Samsung decisions flying around.  This particular opinion stems from N.D. California Docket No 12-cv-0630-LHK and involves a judgment of infringement of U.S. Patent Nos. 5,946,647; 8,046,721; and 8,074,172.  The design patent case petitioned to the Supreme Court is different and stems from N.D. California Docket No 11-cv- 01846 –LHK[3]

= = = =

[1] Apple Inc. v. Samsung Electronics Co., App. No. 14-1802 (Fed. Cir. December 16 2015) (order on petition for rehearing en banc); original decision here; see also Crouch, Federal Circuit Pushes Court to Stop Samsung’s Infringing Sales, Patently-O (September 17, 2015).

[2] Apple Inc. v. Samsung Electronics Co., App. No. 14-1802 (Fed. Cir. December 16 2015) (new panel opinion).

[3] Samsung Electronics Co. v. Apple Inc., No 15-___ (on petition for writ of certiorari).

 

35 U.S.C. 289

Patent

35 U.S.C. 289

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.

 

Samsung Electronics Co. v. Apple Inc., No 15-___ (design patent scope and damages calculation)(New Petition)

Patent

by Dennis Crouch

Samsung Electronics Co. v. Apple Inc., No 15-___ (on petition for writ of certiorari) (Samsung Petition)

Samsung has now filed its petition for writ of certiorari challenging the $400 million that it has paid for infringing Apple’s design patents that cover the iconic curved corner iPhone and its basic display screen.[1]  Samsung writes, “[The Supreme Court] has not reviewed a design-patent case in more than 120 years.”[2] Here, Samsung raises two questions that go to the core of the power of design patent rights. In its petition, Samsung frames the issues as follows.

Design patents are limited to “any new, original and ornamental design for an article of manufacture.” 35 U.S.C. 171. A design-patent holder may elect infringer’s profits as a remedy under 35 U.S.C. 289, which provides that one who “applies the patented design … to any article of manufacture … shall be liable to the owner to the extent of his total profit, … but [the owner] shall not twice recover the profit made from the infringement.”

The Federal Circuit held that a district court need not exclude unprotected conceptual or functional features from a design patent’s protected ornamental scope. The court also held that a design-patent holder is entitled to an infringer’s entire profits from sales of any product found to contain a patented design, without any regard to the design’s contribution to that product’s value or sales. The combined effect of these two holdings is to reward design patents far beyond the value of any inventive contribution. The questions presented are:

1. Where a design patent includes unprotected non-ornamental features, should a district court be required to limit that patent to its protected ornamental scope?

2. Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?

Of course, Questions 1 and 2 are likely to impact utility patent rights as well.

The brief cites to Patently-O essays by Gary Griswold and Jason Rantanen (predicting an “explosion of design patent assertions and lawsuits”).

= = = = =

[1] U.S. Design Patent Nos. D618,677; D593,087; and D604,305.
dPat2Dpat1dPat3

[2] See Gorham Co. v. White, 81 U.S. 511 (1871);  Dobson v. Dornan, 118 U.S. 10 (1886); Smith v. Whitman Saddle Co., 148 U.S. 674 (1893); and Dunlap v. Schofield, 152 U.S. 244 (1894).

 

Patentlyo Bits and Bytes by Anthony McCain

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Get a Job doing Patent Law

Pending Supreme Court Patent Cases (Update)

Patent, , , , , , ,

by Dennis Crouch

As of December 14, two petitions for certiorari have been granted — both covering the same topic of enhanced damages, a.k.a. willfulness. Another 17 petitions remain pending, a few of which have potential.

  1. Petition Granted:
  1. Petition for Writ of Certiorari Pending:
  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-___ (design patent scope and damages calculation)(New Petition)
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG)
  • Inducement: Medtronic Sofamor Danek USA, Inc., et al. v. NuVasive, Inc., No. 15-85 (Commilre-hash – mens rea requirement for inducement)
  • Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commilre-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Post Grant Admin: Cuozzo Speed Technologies, LLC v. Michelle K. Lee, No. 15-446 (BRI construction in IPRs; institution decisions unreviewable)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial) (New Petition)
  • Preclusion or Jurisdiction: SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kesslerdoctrine – enhanced preclusion)
  • Preclusion or Jurisdiction: ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Preclusion or Jurisdiction: Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567 (If patent ownership is fixed after the filing of a complaint, can jurisdiction be cured by a supplemental complaint)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Claim Construction: Media Rights Technologies, Inc. v. Capitol One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on)
  • Soon to be Denied: Arunachalam v. JPMorgan Chase & Co., No. 15-691 (unclear)
  • Soon to be Denied: Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602 (unclear)

Expanding the Framework for Enhanced Patent Damages

Patent

So far this term, the Supreme Court has agreed to hear only one patent issue – enhanced damages, a.k.a. willfulness.  Two separate lawsuits have been joined together for the Supreme Court hearing: Halo[1] and Stryker[2].  An expanded one-hour has been allotted for the yet-to-be-scheduled oral arguments.

Petitioners have now filed their merit briefs.

In all likelihood, the Supreme Court will continue its decade-long path of rejecting the Federal Circuit’s penchant for patent-centric bright-line tests and instead require that the Federal Circuit simply follow the statute and general law associated with enhanced and punitive damages.  See., e.g., Octane Fitness (2014)[3], MedImmune (2007)[4], and eBay (2006).[5] In particular, the statute’s only statement on enhanced damages gives deference to the district court to act within the treble-damages limit, indicating that “the court may increase the damages up to three times the amount found or assessed.”  The most parallel case-on-point is Octane Fitness where the 2014 Supreme Court eliminated the Federal Circuit’s rigid test for attorney fee shifting under Section 285.

The question of enhanced damages is only relevant once the asserted patent is adjudged enforceable and infringed and damages awarded for the infringement.  Then, under Federal Circuit rule, enhanced damages can only be awarded upon clear-and-convincing evidence that (1) the infringer acted despite an objectively high likelihood that its conduct was infringing, and (2) the infringer knew or should have known of the risk.

Question presented in Halo:

Whether the Federal Circuit erred by applying a rigid, two-part test for enhancing patent infringement damages under 35 U.S.C. § 284, that is the same as the rigid, two-part test this Court rejected last term in Octane Fitness . . .  for imposing attorney fees under the similarly-worded 35 U.S.C. § 285.

Questions presented in Stryker:

  1. Whether the Federal Circuit has erred in imposing a rigid, two-part threshold test on the flexible text of Section 284.

  2. Whether a district court has the discretion under Section 284 to award enhanced damages for the deliberate copying of a patented invention.

Both briefs highlight the Supreme Court’s pre-1952 statements that the power to enhance damages is within the district court’s discretion.[6]  Of course, the statute at that point was perhaps more explicit that enhanced damages were “in the power of the court.”  But, the current statute is almost on point – “the court may increase the damages.”  And, in the 1983 General Motors case, the Supreme Court wrote that the 1952 Patent Act’s implementation of Section 284 was simply a codification of existing law.[7]

Briefing will continue into January with oral arguments to come after that.

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[1] Halo Electronics, Inc. v. Pulse Electronics, Inc., et al., Supreme Court Docket No. 14-1513 (2015).

[2] Stryker Corporation, et al. v. Zimmer, Inc., et al., Supreme Court Docket No. 14-1520 (2015).

[3] Octane Fitness v. Icon Health & Fitness (2014) (fee-shifting under § 285 sits within the discretion of the district courts based upon a totality of the circumstances rather than a rigid framework involving both subjectively and objectively bad behavior.)

[4] MedImmune v. Genentech (2007) (test for declaratory judgment is more flexible than what had been allowed by the Federal Circuit).

[5] eBay v. MercExchange (2006) (traditional equitable test for a permanent injunction applies in patent cases).

[6] See Birdsall v. Coolidge, 93 U.S. 64 (1876) and Topliff v. Topliff, 145 U.S. 156 (1892).

[7] Gen. Motors v. Devex (1983) (case focused on prejudgment interest).