Patently-O https://patentlyo.com America's leading patent law blog Fri, 24 Mar 2017 22:51:06 +0000 en-US hourly 1 USPTO Working Group on Regulatory Reform https://patentlyo.com/patent/2017/03/working-regulatory-reform.html https://patentlyo.com/patent/2017/03/working-regulatory-reform.html#comments Fri, 24 Mar 2017 17:01:07 +0000 https://patentlyo.com/?p=16265 Under the direction of the White House, the USPTO has formed a “Working Group on Regulatory Reform.”  To implement the 2-for-1 regulatory agenda previously outlined on Patently-O. According to a release from Dir. Michelle Lee’s office:

USPTO’s Working Group on Regulatory Reform implements President Donald Trump’s January 30, 2017 Executive Order 13771(link is external), titled “Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs,” and his February 24, 2017 Executive Order 13777 (link is external), titled “Presidential Executive Order on Enforcing the Regulatory Reform Agenda.”

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Millions of Papers, Papers for Me https://patentlyo.com/patent/2017/03/millions-papers-for.html https://patentlyo.com/patent/2017/03/millions-papers-for.html#comments Thu, 23 Mar 2017 02:34:20 +0000 https://patentlyo.com/?p=16234 Stuck in the 19th Century, the Federal Circuit Rule 30(a) requires appellants to submit six paper copies of the appendix to the briefs. In a recent filing, pro se appellant Urvashi Bhagat asked the court to waive this requirement in favor of another form of out-dated technology known as “CDROM.”  Bhagat’s argument is that the 1,000+ pages of her appendix, would be cost prohibitive, unwieldy, and an unwarranted consumption of paper.   The copying and delivery cost here really is several thousand dollars — easily outweighing the $500 appeal filing fee.

In any event, the Federal Circuit has rejected the motion: “The motion is denied.  Six paper copies of the joint appendix will be due in accordance with Federal Circuit Rule 30(a)(5).” [CDROMBRIEF] [DenialCDROM]

Despite my suggestion that paper is archaic – I’ll readily admit that I also usually prefer a set of well-tabbed binders over a large PDF — except for keyword searching.  I also don’t have a CDROM device.  Perhaps my difficulty with electronic form is that I do not have the right software/tech on hand – suggestions?

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Lexmark Oral Arguments: A Boon to the Sticker Industry? https://patentlyo.com/patent/2017/03/lexmark-arguments-industry.html https://patentlyo.com/patent/2017/03/lexmark-arguments-industry.html#comments Wed, 22 Mar 2017 18:02:26 +0000 https://patentlyo.com/?p=16226 by Dennis Crouch

This is a follow-up on my earlier post on the oral arguments here:

The Cost of Getting the Law Right

On March 21, 2017, the Supreme Court heard oral arguments in the patent exhaustion case captioned Impression Prods., Inc. v. Lexmark Int’l., Inc., Docket No. 15-1189.  [Transcript: 15-1189_6468]  The two questions presented focus on downstream reuse/resale of a patented product and challenge the Federal Circuit’s rulings that: (1) a US patent is not exhausted when the patented product is sold subject to a no reuse/resale provision but instead can be asserted against downstream users/resellers who violate those original provisions; and (2) a US patent is presumptively not exhausted by an authorized and otherwise unreserved foreign sale of the patented product.  Petitioner Impression Prods., buys after-market ink cartridges, refills them and resells them and the patentee, Lexmark, is attempting to use patent rights to block that form of competition.

We can expect Justice Breyer to side with petitioners in this case:

JUSTICE BREYER: I think, that Lord Coke and his great principle of no alienation [restrictions] on chattels is being laughed at.

Truthfully, most of the oral arguments involve Justice Breyer explaining to other members of the court that Lexmark’s approach violate’s Lord Coke’s 300 year old maxims – “that’s been the kind of basic legal principle for an awfully long time.”  Lexmark’s primary answer: “the common law changed a lot after Lord Coke.”  In the two most recent IP Decisions by the Court – Star Athletica and SCA Hygiene – the majority ruled in favor of the IP rights-holder over Justice Breyer dissents in both cases.

Apart from Justice Breyer’s ‘heat’, the rest of the bench was clearly cold on this case – with few questions being asked of any of the parties.

 

In 2013, the Supreme Court decided the parallel copyright case of Kirtsaeng – siding with the accused infringers on the issue of international exhaustion.  A major difference though, is that exhaustion is codified by the copyright statute – but not in the Patent Act.

JUSTICE KENNEDY: Why hasn’t this been codified? . . . Too buys or what?  . . .

Arguing for the petitioner, Andrew Pincus avoided the question and instead focused on the long history of precedent.

MR. PINCUS: I think the Court’s enunciation of the rule in the cases prior to 1952 was very clear and specific. There’s really no doubt that when Congress enacted the law in 1952, it did so with the knowledge that there was the principle that I’ve recited, and the Bowman recitation is consistent with many, many decisions of this Court dating back to the 1800s that say the same thing, that when there is an authorized sale, the patent rights are exhausted. The Court said in some cases, the — the article falls out of the patent laws and all that applies is State law.

And most importantly, the Court’s sole decision upholding these sort of restrictions, A.B. Dick was expressly overruled a few years later in the motion picture patents case. So we not only have the Court’s consistent enunciation of the doctrine, we have the fact that there was this deviation and then an immediate correction.

Answering this same codification question for the Government, Mr. Stewart pointed to an implicit exception in 35 U.S.C. 154(a)(1). That provision provides “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States.”

MR. STEWART: The Court’s historic cases in the domestic exhaustion field have located the exhaustion principle in the language of the predecessors of what is now 35 U.S.C. 154(a)(1). That is the provision of the Patent Act that says the patent owner has the right to exclude others from making, using, selling, offering for sale, or importing the patented invention. And in addressing predecessor versions of that language, this Court said those exclusive rights in essence don’t encompass the right to control resale or use of a lawfully sold article.

Finally, upon his turn to argue Mr. Trela suggested the statute goes further – it “provides that infringement occurs when someone makes, sells, uses, offers to sell, or imports into this country a patented article without authority from the patent owner.”

The Lexmark oral arguments actually began with a realization that a loss here for the patentee is not a total loss because an enforceable contract may remain.

MR. PINCUS: The contract law, with its limitations, would allow the enforcement those restrictions if they were a valid contract. This is all about whether the patent law remedies apply.

[later]  CHIEF JUSTICE ROBERTS: Why is normal contract law and normal State law inadequate, for your purposes?

MR. TRELA: If your only remedy is contract and you can’t enforce these limitations downstream . . . there’s going to be an arbitrage.

JUSTICE BREYER: Why can’t you enforce the contract downstream?

MR. TRELA: Well, because you — you don’t have privity, Justice Breyer.

JUSTICE BREYER: Then why don’t you require the person who sells it to just resell it with the requirement that they promise not to, you know, whatever it is? . . . one of the reasons that it’s hard to get away with that is the antitrust laws in the contract area. And another reason is because Lord Coke said 300 years ago, you know, you get into a lot of trouble when you start trying to restrict this buyer who’s got the widget and he would like to use it as he wishes. Now, that’s been the kind of basic legal principle for an awfully long time.

 

Justice Alito offered some perspective on the extraterritoriality aspects of the case – noting the preference of the court for interpreting US statutes to avoid extraterritorial application.

JUSTICE ALITO: And it’s somewhat surprising to me that none of the briefs in this case talk about our cases regarding extraterritoriality. In recent years, we have said that a statute does not apply outside the United States unless it says that it applies outside the United States. I don’t see why that shouldn’t be the same for a common-law rule like the rule here. And if what’s involved here is the application of U.S. patent law abroad, where is the clear statement that the exhaustion rule applies outside of the borders of the United States? I don’t see where that can be found.

MR. PINCUS: Your Honor, I don’t think this is a question of extraterritorial application anything — any more than the issue in Kirtsaeng was a question of extraterritorial application of the Copyright Act.

The question here is whether the patentee’s acts outside the United States have an impact on its ability to enforce its rights within the United States. No one is saying that the sales outside the United States are governed by the U.S. patent law, they’re obviously not, just as the sales outside the United States under the Copyright Act are not governed by the Copyright Act.

In thinking through the patent infringement claim, one question is that of notice.  What notice is required to limit resale/reuse? Is notice only required at the point of first-sale, or must notice also be provided to subsequent purchasers.

JUSTICE KENNEDY: Can they put a sticker on the products — “Do not sell”? This would be a great boom to the sticker business, right?

Hard for me to predict an outcome at this point, but get your stickers ready.

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Supreme Court Cheers on Copyright Separability https://patentlyo.com/patent/2017/03/supreme-copyright-separability.html https://patentlyo.com/patent/2017/03/supreme-copyright-separability.html#comments Wed, 22 Mar 2017 14:34:41 +0000 https://patentlyo.com/?p=16235 Screen-Shot-2016-05-02-at-2.27.31-PM1[1]by Dennis Crouch

Star Athletica v. Varsity Brands (Supreme Court 2017)

In a new Copyright decision, the Supreme Court has modified the doctrine of separability that allows for copyright of works of authorship associated with useful articles.

Under the statute:

The design of a useful article … shall be considered a [copyrightable] pictorial, graphic, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.

17 USC 101.  Interpreting that statute, the Court here holds that the statute requires that an ‘artisitc feature’ of a useful article may be copyrighted:

if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work either on its own or in some other medium if imagined separately from the useful article.

In walking through this, the court held that two-dimensional surface decorations will not always be separable, but the ‘artwork’ applied to the cheerleader uniforms at issue here did pass the test.

The Star Athletica decision will further blur the line between the intellectual property spheres and savvy IP strategists will continue to layer overlapping IP rights.  A challenging aspect of the decision will be the “work of art” requirement.

Read the Decision: 15-866_0971

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The Cost of Getting the Law Right https://patentlyo.com/patent/2017/03/cost-getting-right.html https://patentlyo.com/patent/2017/03/cost-getting-right.html#comments Tue, 21 Mar 2017 18:34:17 +0000 https://patentlyo.com/?p=16227 Andrew Pincus (arguing today in Lexmark):

If you look at the Alice case, for example, that obviously had tremendous implications for both the patentees and for people who had entered into license agreements and were paying money for patents that turned out to be invalid. But that was just a consequence of this Court getting the law right.

https://www.supremecourt.gov/oral_arguments/argument_transcripts/2016/15-1189_6468.pdf

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Doctrine of Laches Cannot Bar Legal Damages Claims in Patent Cases https://patentlyo.com/patent/2017/03/doctrine-laches-mostly.html https://patentlyo.com/patent/2017/03/doctrine-laches-mostly.html#comments Tue, 21 Mar 2017 14:40:19 +0000 https://patentlyo.com/?p=16217 SCA Hygiene Prods. V. First Quality Baby Prods. (Supreme Court. 2017)

In a 7-1 decision delivered by Justice Alito, the Supreme Court has expanded its recent copyright decision in Petrella to now hold that laches cannot be invoked as a defense in patent cases to prevent legal damages within the statutory 6-year limitations period of 35 U.S.C. § 286.

The basic idea is that Laches is a judge-made remedy created by the court of equity in the absence of any statute of limitations.  However, when Congress acts to create a statute of limitations – as it did with §286 – the judge-made law no longer has a role to play.

Again playing on a decade-long-theme of no-patent-exceptionalism, the court wrote:

Indeed, it would be exceedingly unusual, if not unprecedented, if Congress chose to include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim. Neither the Federal Circuit, nor First Quality, nor any of First Quality’s amici has identified a single federal statute that provides such dual protection against untimely claims.

https://www.supremecourt.gov/opinions/16pdf/15-927_6j37.pdf

Justice Breyer dissented – arguing that “for more than a century courts with virtual unanimity have applied laches in patent damages cases” in order to fill an important gap in the statutory regime.

 

 

= = = = =

Supreme Court to Review (and likely Reject) Laches as a Defense in Patent Infringement Cases

SCA Hygiene Laches Oral Arguments: How Do we Interpret Congressional Silence?

Court Maintains Laches Defense for Back Damages in Patent Cases

 

 

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Federal Circuit Affirms Potentially Inconsistent Verdict https://patentlyo.com/patent/2017/03/federal-potentially-inconsistent.html https://patentlyo.com/patent/2017/03/federal-potentially-inconsistent.html#comments Tue, 21 Mar 2017 14:36:43 +0000 https://patentlyo.com/?p=16214 TVIIM v. McAfee (Fed. Cir. 2017) [tviim]

A N.D. California jury held that TVIIM’s U.S. Patent No. 6,889,168 was both invalid as anticipated and not infringed.  On appeal, the Federal Circuit affirmed.

Here, the patentee argued that the jury’s verdict applied an inconsistent claim construction since, if the claims were broad enough to be anticipated then they would have also been infringed.  Likewise, IVIIM argues that if the claims were so narrow as to not be infringed, then they also would not have been anticipated by the prior art.  On appeal, however, the Federal Circuit rejected that approach for several reasons – most notably, that any error was harmless since “On appeal, TVIIM concedes that substantial evidence supports the jury’s finding for either non-infringement or invalidity but argues it does not support both.”

The result here is that a potentially inconsistent verdict is not improper so long as any possible resolution of the inconsistency reaches the same outcome (here, that the patentee loses).  In this case, any proposed construction of the claim terms resulted in either the patent being invalid or being not infringed.

= = = =

Claim 1 of the asserted patent is listed below:

1. A security system for a computer apparatus, wherein said computer apparatus includes a processor and system memory, said security system comprising:

at least one security module which under direction from the processor accesses and analyzes selected portions of the computer apparatus to identify vulnerabilities;

at least one utility module which under the direction from the processor, performs various utility functions with regards to the computer apparatus in response to the identified vulnerabilities; and

a security system memory which contains security information for performing the analysis of the computer apparatus.

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Patentlyo Bits and Bytes by Anthony McCain https://patentlyo.com/patent/2017/03/patentlyo-bits-and-bytes-by-anthony-mccain-31.html https://patentlyo.com/patent/2017/03/patentlyo-bits-and-bytes-by-anthony-mccain-31.html#comments Mon, 20 Mar 2017 18:39:18 +0000 https://patentlyo.com/?p=16209
  • Nancy Urizar: Supreme Court Of The United States To Hear Oral Arguments In Patent Exhaustion Case
  • Andy Lucas & Robyn Chatwood: Intellectual Property Rights In A Virtual World
  • Deanna Okun: US Must Bolster Fight With China Over Intellectual Property Rights
  • Matthew Humphries: Sony Patent Wants Every Gadget To Double As A Wireless Charger
  • Evan Engstrom: In Apple v. Samsung, SCOTUS Sided With Reason Over Rounded Corners
  • Michael Fleming, Glenn Vanzura, & William Briggs: Patent Owners Face Increased Fraud Liability Risk
  • Get a Job doing Patent Law                  

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    An Economic Argument Against Mandatory Patent Exhaustion https://patentlyo.com/patent/2017/03/economic-mandatory-exhaustion.html https://patentlyo.com/patent/2017/03/economic-mandatory-exhaustion.html#comments Mon, 20 Mar 2017 00:26:27 +0000 https://patentlyo.com/?p=16199 Guest Post By Prof. Jonathan Barnett, University of Southern California School of Law & Prof. Ted Sichelman, University of San Diego School of Law

    As Patently-O has described in several posts (here, here, here), the Supreme Court is poised to decide the fate of the patent exhaustion doctrine in Impression Products v. Lexmark International. Specifically, the Court is likely to answer two important sets of questions: (1) To what extent does exhaustion limit the enforcement of contractual sale and use restrictions on downstream purchasers?; and (2) Does exhaustion apply to foreign sales? If so, how?

    Oddly, although exhaustion has major ramifications for IP markets, there have been almost no formal models of the doctrine’s economic effects in the domestic context, and few models in the international context. A recent paper by one of us (Sichelman), together with two economists, Edwin Lai and Olena Ivus, provides a rigorous economic model to determine the effects of (1) a mandatory exhaustion regime, in which the patent owner essentially can never enforce downstream limitations, and (2) a presumptive exhaustion regime, in which the patent owner and a licensee/purchaser can opt out of exhaustion via contract.

    Drawing from this paper and other economically oriented analysis, we recently co-authored an amicus brief in Impression Products, which argues in favor of a presumptive understanding of the exhaustion doctrine.  (Interestingly, although academics are usually pegged as strongly in favor of mandatory exhaustion, our brief garnered 44 signatures—significantly more than the brief filed by professors arguing in favor of mandatory exhaustion.)

    The major points of the brief and paper are straightforward.

    • The “Paid Twice” Argument is Meritless: Proponents of mandatory exhaustion sometimes argue that it is improper for a patent owner to be “paid twice”—for instance, once upon the initial sale of a patented good and another time upon resale. Although this may sound plausible intuitively, it does not hold up to economic analysis. A patent owner wants to maximize profits, not prices. Multiplying royalties through a chain of purchasers will tend to increase price and therefore depress consumer demand. Thus, there are strong market constraints that restrict the royalty amount a patent owner can charge. There is no sound economic reason why in every case a patent owner should not be able to break up the profit-maximizing aggregate royalty into multiple components payable at different points on the supply chain. Indeed, economic modeling shows that these “double” payments, implemented through use-specific downstream limitations, may sometimes be essential to optimizing incentives to invent and commercialize new technologies.
    • The “Restraints on Alienation” Concern is Ambiguous: The view that is generally espoused is that restraints on personal property are generally not enforced. However, much doubt has been cast on this view. Moreover, in the real property context, reasonable restraints on sale and use have been enforced for hundreds of years. This makes economic sense, especially in the patent context, because a rigorous economic treatment shows that the “restraint on alienation” concern boils down to transaction costs, including negotiation and information costs in downstream licenses and sales. The paper’s model shows that when transaction costs are high relative to the value of the underlying good—think medical device patent owner negotiating with a patient prior to a surgery—then mandatory exhaustion may yield net static benefits by eliminating the possibility of these transaction costs. However, when transaction costs are low—think a patent owner negotiating with a large computer manufacturer—then mandatory exhaustion may prevent customized deals that are economically efficient. Given the extent to which information technology and other industries rely on complex supply chains involving market participants with different needs, mandatory exhaustion may impose significant costs not justified by the benefits.
    • Exhaustion’s Effect on Consumers is Ambiguous: Many proponents of mandatory exhaustion argue that it benefits consumers. However, mandatory exhaustion tends to preclude what economists term “price discrimination”—namely, the ability to charge different prices (and associated terms of use) that reflect consumers’ different product valuations and budget constraints. By forcing patent owners to recoup all their profits from the first purchaser, the patent owner will tend to raise the initial price for the product. This increase, in turn, forecloses consumers who cannot afford the higher price. So while mandatory exhaustion does leave more money in the pockets of the consumers who can afford the product, it often forecloses another class of consumers entirely from buying the product. While some might argue that mandatory exhaustion allows for arbitrage resulting in broader access, any such gains are likely to be short-lived since the patent owner will typically respond by adopting a uniform pricing scheme, often resulting in less access for lower-valuation and lower-income consumers plus weaker incentives for the patent owner to invent and commercialize in the future. In general, the net access and incentive effects of these various factors will differ in any particular market. However, the short story is that there is no sound basis for the popular view that mandatory exhaustion necessarily promotes the interests of consumers—in many cases, just the opposite will be true.

    The brief and paper also consider other important aspects of the exhaustion doctrine, such as multi-component products, information asymmetries, switching costs, design-arounds, and the like. Even taking all of these wrinkles into account, the upshot is similar to that above—whether exhaustion is beneficial depends on the particular circumstances at-issue. The same arguments hold in the context of foreign sales.

    Based on these considerations, the amicus brief argues that presumptive exhaustion is the best approach for balancing the benefits and costs of downstream limitations in technology markets.  This approach allows a patent owner to opt out of a default exhaustion rule so long as clear notice is provided and the restrictions are otherwise legal (e.g., do not violate the antitrust laws or other public policy concerns). A mandatory, “per se” rule on the other hand assumes all downstream limitations are pernicious, when the economics show otherwise. In this regard, courts are in a suitable position to sort out reasonable from unreasonable downstream limitations, something that courts have done in the past when applying the exhaustion doctrine and, in the related antitrust law of vertical restraints, have done for 40 years since the Supreme Court’s landmark Sylvania decision.

    We also argue that it is essential to allow downstream limitations to be enforced via a patent infringement suit rather than a state contract claim—otherwise, it would be too costly to bind remote downstream purchasers, injunctive relief would generally not be available, and a uniform body of federal law would not develop.

    In sum, when the economics of exhaustion is carefully considered, the most sensible rule that emerges is a presumptive one that allows for reasonable limitations when clear notice is provided to downstream purchasers.

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    Mentor Graphics v. Synopsys: Covering All the Bases https://patentlyo.com/patent/2017/03/graphics-synopsys-covering.html https://patentlyo.com/patent/2017/03/graphics-synopsys-covering.html#comments Thu, 16 Mar 2017 16:06:39 +0000 https://patentlyo.com/?p=16189 Mentor Graphics v. Eve-USA (Synopsys) (Fed. Cir. 2017) [synopsysmentor]

    The appeal here is somewhat complicated – as reflected by the Federal Circuit’s 42-page opinion.  The complications begin with the founding of EVE, and emulation software company founded by folks who invented emulation software at Mentor. Synopsys then acquired EVE.   EVE had previously licensed some of Mentor’s patents, but Mentor claims the license was terminated by the Synopsys acquisition.

    Ending Assignor Estoppel: The jury found that Synopsys infringed Mentor’s U.S. Patent No. 6,240,376 and awarded $36 million in lost profits damages.  The district court had refused to allow Synopsys to challenge the patent’s validity based upon the doctrine of assignor estoppel.  The judge-made doctrine prohibits a patent’s seller/assignor (such as an inventor who assigned rights to his employer) from later challenging the validity of a patent in patent infringement litigation.   Here, Synopsys agreed that the doctrine applied since the inventors of the ‘376 patent had founded and continued to operate EVE that was the source of the infringement.   However, the adjudged infringer boldly asked the Federal Circuit to eliminate the doctrine (as the PTAB has done) since Supreme Court “demolished the doctrinal underpinnings of assignor estoppel in the decision that abolished the comparable licensee estoppel in Lear, Inc. v. Adkins, 395 U.S. 653 (1969).” On appeal, the Federal Circuit panel disagreed – as it must – following its own precedent such as Diamond Sci. Co. v. Ambico, Inc., 848 F.2d 1220, 1222–26 (Fed. Cir. 1988) and MAG Aerospace Indus., Inc. v. B/E Aerospace, Inc., 816 F.3d 1374, 1380–81 (Fed. Cir. 2016).  The setup here is proper for en banc or Supreme Court petition.  On Point is Mark A. Lemley, Rethinking Assignor Estoppel, 54 Hous. L. Rev. 513 (2016) (arguing that the doctrine “interferes with both the invalidation of bad patents and the goal of employee mobility”).

    Indefinite: The district court held on summary judgment that Synopsis’ cross-asserted U.S. Patent No. 6,132,109 is indefinite. On appeal, the Federal Circuit reversed.  The asserted claims require a “circuit analysis visually near the
    HDL source specification that generated the circuit.”  And, the district court found that the undefined term-of-degree “near” rendered the claim indefinite.

    Patent law requires that the claims “inform, with reasonable certainty, those
    skilled in the art about the scope of the invention.” Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014).  Terms of degree are certainly permissible, but the patent document must include “some standard” used to measure the term of degree.

    Here, the court walked through terms of degree that have been accepted post Nautilus: “spaced relationship”,  “visually negligible”, and “look and feel” based upon the intrinsic evidence or established meaning in the art.

    Here, the specification indicates that the nearness of the circuit analysis display is to allow “a designer to make more effective use of logic synthesis and reduce the complexity of the circuit debugging process.”  In addition, the specification provides several diagrams showing the analysis next to the appropriate line of code (below). These descriptions provided enough of a standard for the court to find a reasonable certainty as to the scope of the term and the claim as a whole. “[W]e hold a skilled artisan would understand “near” requires the HDL code and its corresponding circuit analysis to be displayed in a manner that physically associates the two.”  On remand, Synopsys will get a shot at proving infringement of this patent.

    synopsyschart

    Eligibility: A separate Synopsys patent was found ineligible. U.S. Patent No. 7,069,526 (asserted claims 19, 24, 28, 30, and 33). The claims are directed to “A machine-readable medium containing instructions …”  The problem is that the patent expressly defines “machine-readable medium” to include “carrier waves” and therefore is invalid under In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007).  In Nuijten, the court held that transitory signals are not eligible for patenting because they do not fit any of the statutory classes of “process, machine, manufacture, or composition of matter.” The here court writes: “Because the challenged ’526 claims are expressly defined by the specification to cover carrier waves, they are similar to the ineligible Nuijten claims.”

    Claim Preclusion: Finally, the Mentor has successfully appealed the district court claim preclusion holding as to Mentor’s U.S. Patent Nos. 6,009,531 and 5,649,176.  Back in 2006, Mentor had sued EVE for infringing the patents.  That litigation settled with Eve’s license and a dismissal with prejudice.

    Here, the Federal Circuit held that claim preclusion cannot apply because the current litigation is based upon acts that occurred subsequent to the prior settlement.

    Mentor’s infringement allegations are based on alleged acts of infringement that occurred after the Mentor/EVE license terminated and were not part of the previous lawsuit. Claim preclusion does not bar these allegations because Mentor could not have previously brought them.

    What is a bit unclear here is how the license plays in.  The court noted that the current infringement claims are “based on post-license [termination] conduct, so the alleged infringement did not exist during the previous action.”  It is unclear how the court would deal with pre-termination conduct.

    Note: The case also includes an important holdings on lost profits damages, willfulness, and written description that we’ll save for a later post.

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