More on post-eBay injunctions

by Dennis Crouch

Earlier this month I highlighted Professor Kesan’s reports on post-eBay injunction jurisprudence. Professor Chris Seaman (W&L) has posted a parallel (draft) report titled Permanent Injunctions in Patent Litigation After eBay: An Empirical Study. The paper provides an in depth analysis of the decisions – below I highlight three of the charts that help to tell the story. In general, Seaman’s results confirm what I see as conventional wisdom regarding the likelihood of obtaining injunctive relief.

The one perhaps-surprising element of Seaman’s report is that he found no correlation between any of the commonly intrinsic patent measures that have previously been correlated with patent value, such as the number of patent claims, higher citation to prior art, higher forward-looking citation counts, and a larger patent family.


 

Guest Post: Digital Information at the Border

Guest post by Sapna Kumar.  Prof. Kumar is an Associate Professor at the University of Houston Law Center, where she teaches patents and administrative law. She has written extensively about the ITC. Her most recent article, Regulating Digital Trade, discusses the ClearCorrect decision at length and is available here (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2586740).

Next week, the Federal Circuit will hear oral arguments for ClearCorrect Operating, LLC v. International Trade Commission. It will decide whether the International Trade Commission’s (ITC’s) jurisdiction extends to digital information. Much is at stake.

Background

The ITC has jurisdiction over infringing “articles” that are imported into the country, under § 337 of the Tariff Act. Patent holders use the ITC because it can grant exclusion orders that block infringing goods from entering the country and are enforced by Customs and Border Patrol at ports of entry. The ITC can also issue cease-and-desist orders.

As discussed in an earlier post, the technology at issue involves plastic dental aligners. Align Technology’s (Align’s) patents cover methods of making aligners by generating the digital data sets for the aligners and then using the data to make the aligners, generally through 3D printing. ClearCorrect found what it thought was a clever way to circumvent the patent: patients were seen in Houston (where digital scans were made of the patients’ teeth), but a Pakistani counterpart created digital models of the patients’ teeth and created digital treatment plans. These data sets were uploaded to a Houston server; ClearCorrect then used 3D printers in Houston to create physical models of the patient’s teeth, and used the models to create the aligners.

Align argues that the digital data sets are “articles,” and claims that §337 was triggered when the data was uploaded to the Houston server. In April 2014, a majority of the ITC Commissioners agreed, interpreting the term “articles” to include digital information. Although the majority conceded that the ITC doesn’t have the power to exclude digital information from the U.S., it did order ClearCorrect to cease and desist importing data sets. Commissioner Johanson vigorously dissented, maintaining that Congress failed to delegate power to the ITC to remedy the importation of digital information.

Problems and Pitfalls

On the surface, the ITC’s decision seems like the right one—ClearCorrect was clearly trying to circumvent Align’s patents. But this case raises difficult questions regarding the scope of the agency’s authority. The core of the ITC’s jurisdiction is in rem, meaning that its jurisdiction isn’t over people, but rather, the articles themselves. In rem jurisdiction has been found to exist over intangible property such as domain names. In several domain name cases, courts emphasized the fact that in rem jurisdiction was appropriate because the court could exercise exclusive control over the property at issue. But nobody can control digital information in the abstract, making in rem jurisdiction a poor fit.

Even if in rem jurisdiction exists, there is still a question of what the term “articles” means. Here, the ITC’s statutory analysis is weak. It ignores Congress’s use of restrictive terms such as “goods” in the Tariff Act’s legislative history. More importantly, the ITC fails to address how Congress could have intended the ITC to have power over intangible articles in 1930 when the ITC lacked cease-and-desist authority until 1974.

But it gets worse. The ITC claims that the Supreme Court’s decision in International News Service v. Associated Press is relevant because it involved newspaper articles that were transmitted by telegraph, disregarding the fact that the case involved a different statute and an entirely different type of article. It also attempts to interpret “articles” in light of the Driver’s Privacy Protection Act, which was passed more than 60 years after the original Tariff Act. Going forward, the Federal Circuit should consider providing guidance to the ITC on how to engage in proper statutory interpretation.

This appeal is being closely watched. After the Sony Hack, a leaked memo emerged showing that the Motion Picture Association of America (MPAA) wants the ITC to order internet service providers to block customer access to websites with pirated content. To do this, the MPAA needs the ITC to have jurisdiction over infringing digital information. Given that there is no “digital border,” this also raises questions regarding when information has entered the country and links up to issues from Suprema, Inc. v. International Trade Commission regarding when § 337 is triggered.

Furthermore, this appeal will require the Federal Circuit to grapple with the issue of proper standard of review for ITC decisions. Because the ITC was interpreting the ambiguous term “articles” during formal adjudication, it is potentially eligible for strong deference under the Supreme Court’s Chevron U.S.A. v. Natural Resources Defense Council decision. Yet, the Federal Circuit has historically resisted applying Chevron deference to ITC patent decisions.

No matter how the Federal Circuit rules, its decision will not be the final word on digital trade regulation. One attempt has already been made to expand the ITC’s jurisdiction through legislation, and more attempts will likely follow.

Public Confidential Information: California Weighs In, Asks for Comments

By David Hricik

 

I’d normally only put this on the ethics page, but Dennis is on vacation and this issue pops up a lot in patent practice.

Suppose you get a call from a third party about a matter you’re handling for a client.  She tells you that she had written a blog post about a prior dispute she had had with your client, which your client had paid to settle.  Per your request, she emails you a link to the blog post.  You forward the link to a friend, saying nothing about it other than “this is interesting.”

Did you do anything wrong?

The information you forwarded was not privileged:  it came from a third party, so that doctrine doesn’t apply.  But, lawyers’ obligation of confidentiality extends far beyond privileged information, to protecting “confidential” information.  Whether information is “confidential” turns on applicable law, and in some states it includes even information that was publicly available when the lawyer was representing the client.  Generally, confidential information must be kept confidential if revealing it would be detrimental to the client, or former client, or the client had asked it not be revealed.

The California bar association has a proposed bar opinion that would make it clear that, while not privileged, even public information must be accorded protection as confidential information. The California bar has asked for comments, and you can do so here, and find the entire opinion.

Now think about patent practice.  You learn about a piece of prior art while representing Client A.  For whatever reason, it wasn’t pertinent to Client A’s application, so you didn’t disclose it.  Patent issues. Matter ends.

Now you’re representing Client B in prosecution. You remember that piece of prior art, and if you disclose it in Client B’s case, it is more likely that Client B will get a patent that, let’s say, will aid it compete with former Client A.  Can you?  Must you?

There are a lot of ways this issue comes up in patent practice, and some states like this proposed California opinion take a counterintuitive view of what is confidential.

Be careful out there and be sure to think about whether the USPTO rules, or your state rules, would control on that question.

Patents for Startups

Google’s cross-licensing program “LOT” continues to grow and apparently now includes more than 300,000 patent properties.

LOT Network operates as a poison pill for patent rights. In particular, members agree to license their entire portfolio of patents to all other members. However, the license only becomes effective if the patent is transferred to a non-LOT member, such as a patent assertion entity.

For many major operating companies, the most dangerous new patents will likely come from the start-up world and so Google (and others) have been considering how get start-ups to join the network. The company’s most recent proposal is its “Patent Starter Program” where Google will give away patent two families to start-up companies who agree to join the LOT Network. http://www.google.com/patents/licensing/.

It will be interesting to watch as this development moves forward.

Patentlyo Bits and Bytes by Anthony McCain

Get a Job doing Patent Law

Sensor Based Motion Tracking System Ineligible under Section 101

Thales Visionix v. USA and Elbit Systems (Ct. Fed. Clm. 2015).

Suing the government is always an interesting proposition because it is government-employed judges who decide whether or not the government is liable. In the U.S. claims of patent infringement against the Federal Government (or its contractors, typically) are brought in the Court of Federal Claims (CFC).

Here, Thales sued the Government and its contractor Elbit systems for infringing its U.S. Patent No. 6,474,159 used to track the relative motion between two moving objects. The allegation is that the invention is used in F-35 helmet-mounted displays – when the pilot turns his head, the relative tracking system shifts the display information.

The ‘159 patent is expressly directed to “cockpit helmet-tracking,” although it is not expressly limited to those applications. See Claim 1:

1. A system for tracking the motion of an object relative to a moving reference frame, comprising:

a first inertial sensor mounted on the tracked object;

a second inertial sensor mounted on the moving reference frame; and

an element adapted to receive signals from said first and second inertial sensors and configured to determine an orientation of the object relative to the moving reference frame based on the signals received from the first and second inertial sensors.

Reading claim 1, you’ll note the requirement of two sensors physically mounted upon two different objects as well as a signal receiver configured to receive data and compute the relative orientations. Further claims define the types of sensors as well as mechanisms for computation.

In the lawsuit, the United States Government raised the defense that the patent lacks subject matter eligibility – as impermissibly directed to an abstract idea. In its opinion, the CFC agrees;

Here, the Court … finds that TVI fails the first prong of the Alice analysis because the independent claims of the ‘159 Patent are directed to mathematical equations for determining the relative position of a moving object to a moving reference frame. Derived from Newtonian principles of motion and “borrowing the mathematics that an inertial navigation system uses to track an airplane relative to a rotating earth”, the navigation equation is undoubtedly a complex mathematical concept, and a solution to the problem of tracking two moving objects in relation to each other. However, the Court finds that this concept is a “building block of human ingenuity”, and the solution lies in the mathematical formulae, not the generic devices listed in the system claim. Accordingly, TVI’s claims fail the first prong of the Alice analysis because the claims are directed to the abstract idea of tracking two moving objects, and incorporate laws of nature governing motion, both of which are ineligible for patent protection.

[Regarding Alice Step 2] the system claim fails to transform the method claim into a patent-eligible invention. The plain language of Claim 1 describes generic, fungible inertial sensors that admittedly have already gained “widespread acceptance” in the field of motion tracking. Like the computer elements in Alice, these inertial trackers, when considered as an ordered combination in the claimed system, add nothing transformative to the patent. Although the concept of tracking the motion of a moving object relative to a moving reference frame may have been novel and nonobvious, the claimed system does nothing to ground this abstract idea in a specific way. The claims allow for the application of the navigation equation in almost endless environments, and are not limited to a fighter jet and a pilot’s helmet. . . .

Ultimately, the concern that drives the exclusionary exceptions for abstract ideas and laws of nature from § 101 eligibility “[i]s one of pre-emption.” Alice. The Court finds that the scope of the subject patent’s claims is insufficiently limited under the holdings of Mayo and Diehr, and if the patent were considered to protect eligible subject matter, it would pre-empt the use of the underlying abstract idea of relative motion tracking by others in the field. The patent’s ineligibility is confirmed by the machine-or-transformation test, under which the claims are not tied to any specific machine and do not transform the nature of the patent into something more than the abstract mathematics behind it. At its core, the patent is seeking protection for the mathematical formulae used in determining the relative orientation of two moving objects. The Court is unwilling to afford patent protection to Plaintiff’s claim on this building block of motion tracking technology.

101 – Read the Court Decision.

Using U.S. Discovery in Foreign Proceedings

In re POSCO (Fed. Cir. 2015)

On writ of mandamus, the Federal Circuit has vacated N.J. District Court Judge Chesler’s decision to allow confidential documents disclosed in the U.S. patent case to be used in the somewhat parallel actions in Japan and Korea.

The underlying infringement action here involves Nippon Steel suing the Korean company POSCO for infringing its patents covering a grain-oriented electrical steel strip having high magnetic flux density. (See., e.g., Patent No. 7,442,260).  Additionally, Nippon Steel sued POSCO in Japan for trade secret infringement and POSCO filed a declaratory judgment action in Korea asking for a no-infringement holding.

In the U.S. lawsuit, the district court entered a discovery protective order that disclosed confidential materials ‘be used by the receiving Party solely for purposes of the prosecution or defense of this action.’  U.S. discovery rules require much more extensive disclosures than do those in Korea or Japan. Thus, when POSCO disclosed “several million pages of documents containing confidential information” in the U.S. lawsuit, Nippon Steel looked to use some of those documents in the foreign courts.  In particular, Nippon Steel asked for, and the district court granted, a modification of the protective order that would allow it to use about 200 pages of documents relating to POSCO’s manufacturing process in the foreign court actions.  POSCO then petitioned for a writ of mandamus to stop the disclosure.

Here, the district court relied upon the Third Circuit precedent of Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994), which holds that a “party seeking to modify the order of confidentiality must come forward with a reason to modify the order. Once that is done, the court should then balance the interests, including the reliance by the original parties to the order, to determine whether good cause still exists for the order.”  Based upon that holding, the district court determined that the foreign court proceeding was sufficient justification for the modification.

In its mandamus decision, the Federal Circuit found that Pansy should not be controlling but that the court should also consider 28 U.S.C. § 1782 and Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) when determining whether to allow disclosure of confidential protected information to a foreign court.

Section 1782 provides that a U.S. district court “may order” disclosures for use in a foreign tribunal.  In Intel, the Supreme Court recognized that a district court should consider “comity and parity concerns” when deciding whether to grant disclosure. In particular, there is a recognized concern that parties will “abuse” the U.S. discovery process and “attempt to circumvent foreign proof-gathering restrictions.”

On remand, the district court will “conduct the proper assessment giving due consideration to the Intel factors.”

Maintenance Fees 2015

By Dennis Crouch

A substantial percentage of the USPTO budget arrives in the form of maintenance fee payments. This is “easy money” for the USPTO because the Office has already done the work of examination. A patent’s term runs 20-years from the effective filing date, not counting provisional or foreign national priority filing and with the addition of any patent term adjustment. They typical result is a term of 17 years post-issuance, give or take. During that time, a patent applicant must continue to pay maintenance fees at regular intervals: due 3 ½, 7 ½, and 11 ½ years from issuance (with an additional six-month grace-period added on).

The chart below shows the percentage of patents whose maintenance fees have been paid at each of the three stages. You’ll see that the vast majority of applicants pay the first maintenance fee (currently set at $1,600 for large entities); More patents drop out as the second maintenance fee is due ($3,600), and fewer than half of the cases see the third maintenance fee paid ($7,400). I expect that a number of factors drive the apparent trends in maintenance fee payments, including the ever-rising cost, the perceived value of future patent right, patent term remaining, general economic outlook, and current access to funds, for example.

The current fees were put into place in March 2013. It is not surprising that the increased price resulted in the diminished number demanded as shown in the chart. Importantly, however, the drop in maintenance fee payments was slight in comparison to the size of fee increase (3rd Fee increased by 50%).

In addition to the revenue generated, a number of folks (often non-patent-holders) see maintenance fees as a costly-screen configured to weed-out relatively worthless patents so as to ease any freedom-to-operate search.

Biologics Price Competition and Innovation Act: Refusal to Dance

By Dennis Crouch

The 2009 Biologics Price Competition and Innovation Act (BPCIA) was created as the Hatch-Waxman Act for Biologics – a mechanism for both protecting innovator investment and for encouraging third-party follow-ons albeit through “biosimilars” rather than “generics.” While parallel in theory to Hatch-Waxman, BPCIA includes many complicating twists that on the already complex innovator-generic dance. In recent oral arguments, Judge Lourie stated that Congress might be awarded “the Pulitzer Prize for complexity or uncertainty” based upon its drafting of the BPCIA.

Amgen v. Sandoz (Fed. Cir. 2015) offers the Federal Circuit a case of first-impression regarding an important element of the BPCIA – what happens when the biosimilar applicant refuses to play?

Under the BPCIA, the ‘patent-dance’ is kicked-off by the filing of a biosimilar application. Under, the statute, that applications “shall” include a set of disclosures. 42 U.S.C. § 262(l)(2). In a three-way split decision, the Federal Circuit holds that an applicant is not actually required to make the disclosure (i.e., not a “must” requirement) but instead that failure to make the disclosure merely results in the penalty defined by statute – permitting the “reference product sponsor” but not the biosimilar applicant to bring an action of declaratory judgment for infringement based merely upon the filing of the application.

My University of Missouri Law School colleague Erika Lietzen was deeply involved in the legislative negotiations and believes that the decision here is “inconsistent with the intent at the time.”

 

Judges Lourie, Newman, and Chen all filed separate opinions. Undoubtedly, the case will receive a petition for en banc rehearing as well as a petition for writ of certiorari.

Read the Decision: http://patentlyo.com/media/2015/07/AmgenSandoz.pdf

Patentlyo Bits and Bytes by Anthony McCain

Get a Job doing Patent Law

Upcoming:

Eligibility Discussion: Christal Sheppard will be visiting the University of Missouri System on  Thursday, July 23 at the University of Missouri Kansas City (UMKC) Law School Campus.  Sheppard is Director of the Detroit Patent Office.  Sheppard along with Prof Chris Holman, Michael Cygan from the PTO’s OPLA, Crissa Cook (Hovey Williams), and Jason Mudd (Erise IP) will be discussing the PTO’s new approach to subject matter eligibility and may delve into the expected new examiner guidance. Pre-register here.

 

Fighting for Peace and Love

Juice Generation v. GS Enterprises (Fed. Cir. 2015)

PLJJuice Generation has been seeking a registration on its mark “Peace Love and Juice” for its juice bar business but has been challenged by GSE who holds a family of marks with the phrase “Peace & Love” used in the restaurant business. The question for registration is whether the Juice Bar mark creates a likelihood of confusion with the GSE marks.  The Trademark Trial & Appeal Board (TTAB) found that the marks were too similar and thus could not both be registered. On appeal, however, the Federal Circuit has vacated that decision based upon its opinion that the TTAB should more thoroughly reevaluate the strength/weakness of GSE’s marks.  In particular, the court found that the TTAB should more fully consider the extent of third-party use of the Peace & Love phrase.

The fact that a considerable number of third parties use similar marks was shown in uncontradicted testimony. In addition, “[a] real evidentiary value of third party registrations per se is to show the sense in which . . . a mark is used in ordinary parlance.” 2 McCarthy on Trademarks and Unfair Competition § 11:90 (4th ed. 2015) (emphasis added). “Third party registrations are relevant to prove that some segment of the composite marks which both contesting parties use has a normally understood and well recognized descriptive or suggestive meaning, leading to the conclusion that that segment is relatively weak.” Id.

In its decision, the Federal Circuit repeatedly emphasized that the strength or weakness of a mark is not a binary question, but rather one that fits on a spectrum of possibilities.  Although a weaker mark can be registered and protected, its penumbra of power will be much narrower than would a stronger mark. “The Board here did not conduct an analysis of all evidence relevant to where on that spectrum GS’s marks fall and the resulting effect on the overall likelihood-of-confusion determination.”

 

Judge Stoll

On July 17, 2015, Kara Farnandez Stoll took the oath of office as Circuit Judge of the United States Court of Appeals for the Federal Circuit with a lifetime appointment from the President of the United States.

The court has now returned to its full panel of twelve regular status judges along with six senior-status judges. Of the twelve, seven are Obama appointees.

 

Ex Parte Reexam Filings

By Jason Rantanen

In my Patent Law Year in Review talk this morning at the Wisconsin Bar Association’s Tenth Annual Door County Intellectual Property Law Academy, I touched briefly on ex parte reexamination filings.  With the heavy interest in inter partes reviews, ex parte reexam filings probably haven’t been on most people’s radar.  And until recently, data from the past year wasn’t available on the PTO’s website.   Recently, though, the PTO updated the data on ex parte reexamination filings (available here: http://www.uspto.gov/learning-and-resources/statistics/reexamination-information).  As the below figure shows, although there was a drop-off following the steep increase in the fee for filing ex parte reexamination and launch of inter partes review proceedings, parties are still filing about 50-100 requests for ex parte reexamination per quarter.  (For comparison, there are about 400-450 requests for inter partes review filed per quarter).

Ex Parte Reexam FIlings

I’d also like to give a shoutout for the assistance I received from calling the PTO’s ex parte reexamination hotline (571-272-7703).  It’s always great when a helpful voice is on the other end of the line.

Prosecution Pendency Thoughts

The first chart below shows one view of how patent prosecution pendency is generally improving.  In particular, the chart shows the percentage of patents that took more than three years from filing to issuance.  As is apparent, that percentage has plummeted in President Obama’s patent office (Kappos-Rea-Lee).  Unlike a few years ago, most US patents now issue within three years of filing (not counting priority claims).

The second chart tells a different story by looking at the oldest prosecution files and seeing that those have grown substantially over this same time period.  In particular, the second chart shows the percentage of patents that took more than seven years to issue (filing date to issue date).  For the most part, these long-pendency prosecutions involved PTAB appeals.

PendencyThreeYearsPendencySevenYears

The Impact of eBay on Injunctive Relief in Patent Cases.

PatentlyO299

The chart above comes from the interesting new article from Kirti Gupta and Jay P. Kesan of Qualcomm and Univ of Illinois respectively titled Studying the Impact of eBay on Injunctive Relief in Patent Cases.   You’ll note little measurable difference in the rate at which either permanent or preliminary injunctions are granted pre or post eBay.

The pair explain the result as one of self-selection — i.e., folks with little chance of success post-eBay didn’t even seek injunctive relief.  Supporting that contention, the article reports a significant drop post-eBay in the percentage of cases where injunctive relief was sought.

CPC and Google Search

For the past 15 years, the US patent classification system has fallen on hard times as more searchers move toward non-structured “Google style” searching.  Now, however, a global cooperative led by the EPO and USPTO are moving forward with a  the Cooperative Patent Classification (CPC) that offers some promise both for better classification and for more cross-border standardization.

In turn, Google has released a new version of its patent search capabilities — by indexing both its patent documents and its non-patent “Google Scholar” documents according to CPC standards.

For Google, this is not just about their core business of improving search. Indeed, Google is a major player in the U.S. patent system, both as a patent owner and as a defendant in patent infringement lawsuits.  In a blog post, Google’s Allen Lo (Deputy GC for patents) and Ian Wetherbee (Google Patents developer) rightly argue that better search leads to better patents.  It will be interesting to see whether the improved Google Search makes an impact.

Links:

 

Appellate Jurisdiction: Its No Longer a Patent Case (and thus no Fed. Cir. Jurisdiction) when the Patent Claim is Voluntarily Dismissed

by Dennis Crouch

Predator Int’l v. Gamo Outdoor (10th Cir. 2015)

In this decision, the Court of Appeals for the Tenth Circuit (10th Cir.) has held that it has jurisdiction over an appeal of a would-be patent case because the complaint was amended prior to final judgment to drop the patent claim.

Federal Circuit jurisdiction over patent appeals is an exception to the usual rule that district court decisions are appealed to the respective regional circuit court of appeal. Under pre-AIA statute, the Federal Circuit takes jurisdiction over appeals of final decisions in “any civil action arising under any Act of Congress relating to patents.” 28 U.S.C. 1338; 28 U.S.C. 1295.  So called “arising-under” jurisdiction is a term of art in civil procedure and follows the “well-pled complaint rule” by requiring the patent law question appear on the face of the plaintiff’s complaint as outlined in the Supreme Court’s 2002 decision on point. Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 534 U.S. 826 (2002).

The question here though was – what happens when the patent claim appears in original complaint but not the amended complaint.  The 10th Circuit panel decided that the amendment robbed the Federal Circuit of Jurisdiction:

Section 1295(a)(1) might seem to deprive this court of jurisdiction because a claim for patent infringement was included in Predator’s original complaint. . . . But at the time of Cogswell’s notice of appeal, the most recent complaint was Predator’s fourth amended complaint, . . . which did not contain a patent-infringement claim. And it is that complaint which governs our jurisdiction.

In a parallel situation, the Federal Circuit also held that it lacked lacked jurisdiction over an appeal where the patent claim had been voluntarily dismissed without prejudice prior to final judgment. Gronholz v. Sears, Roebuck & Co., 836 F.2d 515 (Fed. Cir. 1987). In Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826 (2002), Justice Stevens wrote a concurring opinion also arguing for the same result – that “if the only patent count in a multicount complaint was voluntarily dismissed in advance of trial, it would seem . . . clear that the appeal should be taken to the appropriate regional court of appeals rather than to the Federal Circuit.”

However, the majority opinion in Holmes Group leaves the question open — expressly indicating that “this case does not call upon us to decide whether the Federal Circuit’s jurisdiction is fixed with reference to the complaint as initially filed or whether an actual or constructive amendment to the complaint raising a patent-law claim can provide the foundation for the Federal Circuit’s jurisdiction.” (note 1).

An odd element of this result is that the appellate jurisdiction of a multi-claim case will be malleable up until final judgment.

= = = = =

AIA Changes to Jurisdiction: The AIA amended the jurisdiction statutes to (1) ensure district court’s have jurisdiction over all cases involving “any claim for relief” arising under the US patent laws; and (2) provide the appellate court with jurisdiction when cases either “arise under” the patent law  or where a party “has asserted a compulsory counterclaim arising under” the patent law.  These changes were seen as overruling the prior rule from Holmes Group that the existence of a patent law counterclaim in the answer-pleading (rather than claim in the complaint).

These changes don’t appear to directly impact the outcome except that the language “has asserted” could suggest that jurisdiction is created if the patent counterclaim is ever asserted (even if later dropped).   And, that difference in language seems to me to suggest that Congress was thinking about the scope of the original complaint defining appellate jurisdiction – though quite implicitly.

In any event, the policy goal behind all of this is to maintain a single appellate court for deciding patent issues, and the outcome decided by the 10th Circuit here very much continues that goal.

= = = = =

 

Predator v. Gamo began when Predator filed its patent infringement lawsuit against Gamo, asserting infringement of U.S. Patent No. 6,526,893 (covering a lead air-rifle pellet with polymeric tip) along allegations of trade dress and copyright infringement.  Fairly soon thereafter, a glaring problem emerged with the patent claim.  One of the listed co-inventors (Lee Phillips) came forward claiming that he retained partial ownership of the patent rights.  At that point, the patentee voluntarily dismissed the patent claim in order to to fight a state-court battle over patent ownership, which then became more complicated when Gamo purchased Phillips purported interest and intervened in the state court action.

With the state-court case going south (including a failed motion to recuse that judge), the patentee returned to Federal Court with a motion to supplement and amend its complaint — by both reviving its original infringement complaint and adding a challenge to Gamo’s claimed ownership rights.  However, the district court refused to permit the changes and also awarded $10,000 in sanctions against Predator’s attorney John Cogswell for improperly gaming the system, the district court awarded $10,000 in sanctions.  Cogswell then appealed that ruling to the 10th Circuit Court of Appeals.

After determining that it had jurisdiction (as discussed above), the court then reversed the lower court’s sanctions order — finding that Predator had properly justified its delay in seeking to add the claims and thus were not sanctionable.

Ironically, if, on remand the district court reconsiders and allows the complaint to be amended again to add the patent claim then suddenly apparent appellate jurisdiction would shift again to the Federal Circuit.

 

 

Patent Reform Slows Down in Congress

by Dennis Crouch

Acting in bi-partisan fashion, leadership in the House of Representatives has reportedly removed Rep. Goodlatte’s Innovation Act (H.R. 9) from House Floor consideration for this summer – indicating that the bill is not yet ready for a consensus vote.  (Summer session typically runs through the end of July with a break for the month of August).

Some amount of opposition had been building within Congress, including a joint press conference yesterday that included U.S. Representatives John Conyers (D-Mich.), Thomas Massie (R-Ky.), Bill Foster (D-Ill.), and Scott Peters (D-Calif.) as well as Senators Chris Coons (D-Del.) and David Vitter. In their press release, the group wrote that “H.R. 9 is strongly opposed by inventors, small businesses, venture capitalists, startup communities, and manufacturing, technology, and life sciences companies.”

A compromise bill has some chance this fall and we can expect more aggressive PR campaigns showing the woes of patent trolls as well as the benefits of patent-driven innovation.