End of the Road for Ethicon’s Anti-Delegation Argument?

by Dennis Crouch

In a 10-1 decision, the Federal Circuit has rejected Ethicon’s petition for en banc rehearing on the question of  whether the USPTO Director improperly delegated IPR institution decisionmaking. Ethicon will likely petition the Supreme Court for its views.  The case raises interesting, but ones that I expect will ultimately fail.  Chief Judge Prost likely held the decision release to await the Cuozzo affirmance that implicitly supports the court’s ruling here.

Inter Partes Reviews (IPRs) can be broken down into a two step process. At the institution stage, the Patent Office Director is tasked with determining whether to institute the proceeding. 35 U.S.C. § 314. Once instituted, the Patent Trial and Appeal Board (PTAB) holds trial and makes a final determination of merits. 35 U.S.C. § 316(c).  Despite the statutory separation, the Director has delegated the entire procedure to the PTAB – including the institution decision.  In its failed petition, Ethicon questioned this delegation – asking: “Does the Patent Act permit the [PTAB] to make inter partes review institution decisions?”

The decision in Cuozzo does not directly address the challenge issues here, but the court’s loose language does suggest that it would side with the Federal Circuit.  In particular, the court repeatedly refers to actions by the “Patent Office” regarding institution and other decision rather than using the statutory language “Director.”  Although not as consistent, the court also repeatedly refers to actions by the PTAB as by the “Patent Office.”  In his dissent, Judge Alito addresses the issue directly and without criticism, although failing to note that Director Lee is a woman:

The Director of the Patent Office has delegated his authority to institute inter partes review to the Patent Trial and Appeal Board (Board), which also conducts and decides the inter partes review. See 37 CFR §§42.4(a), 42.108 (2015); 35 U. S. C. §§316(c), 318(a). I therefore use the term “Patent Office” to refer to the Director, the Board, and the Patent Office generally, as the case may be.

Alito dissent at footnote 2.


Supreme Court Calls for Views of the Solicitor General

The no-change decision in Cuozzo was the biggest immediate patent law news from June 20, 2016.  However, two other actions by the court that day may end up having a greater long term impact.  Namely, that same day the court called for the views of the US Solicitor General (CVSG) in both Impression Products v. Lexmark and Sandoz v. Amgen.

Standing alone, a CVSG order significantly increases the odds that a particular case will be granted certiorari.  Those odds would then be significantly increased again if the SG supports certiorari. These cases are largely ancillary to patent prosecutors because they focus on how a patent is used.  Yet, their impact could shape the business model of patents licenses as property.

Federal Circuit Saves Patentees by ruling that “Before” includes “Just Afterwards”

by Dennis Crouch

Immersion Corp. v. HTC Corp. (Fed. Cir. 2016) [ImmersionHTC]

Sometimes one day makes a big difference – especially if you accidentally missed yesterday’s deadline (or if you misread the statute).

The case here is about the deadline for filing a continuation application under 35 U.S.C. § 120.  The general rule for filing a continuation application is that it must be filed while the parent application is “alive” – before the parent is either patented or abandoned.   The statutory language for this requirement statues that must be “filed before the patenting or abandonment of or termination of proceedings” of the parent application.” Id.  Since patents are thought to issue at 12:01 am on their appointed date of issue (and thus are enforceable any time that day), the statutory language seems to suggest that a proper continuation must have been filed on the prior-day in order to have been “filed before . . . ”.  The PTO has never gone-in for that interpretation and instead has long stated in its regulations that continuations may be properly filed on the issue date.

On appeal here the Federal Circuit contravenes that statutory language and sides with the PTO interpretation. In particular, the court holds that a continuation is properly filed on the date of issuance of the parent application. In reaching this decision, the court looked to the long history of allowing same-day-continuation filing and support from the PTO.

In short, the repeated, consistent pre-1952 and post-1952 judicial and agency interpretations, in this area of evident public reliance, provide a powerful reason to read section 120 to preserve, not upset, the established position. And the conclusion is reinforced by the fact that Congress has done nothing to disapprove of this clearly articulated position despite having amended section 120 several times since its first enactment in 1952

To bolster its decision supporting the PTO, the court interestingly indicates that the PTO’s interpretation of the deadline is “essentially procedural.” As a result, the PTO’s statutory interpretation should be given weight rather than considered de novo on appeal.

The decision by Judge Taranto and signed by Judges Prost and Linn.  Because of the clear pro-patentee outcome of this decision and textual strain, a well positioned petition for certiorari has some chance.

Supreme Court Affirms Cuozzo – Siding with Patent Office on BRI and No-Appeal

By Dennis Crouch

The Supreme Court has upheld the AIA provision barring challenges to the Patent Office’s decision to institute inter partes review. 35 U. S. C. §314(d).  In addition, Justice Breyer’s majority opinion approved of the Patent Office’s approach of applying the broadest reasonable construction (BRI) standard to interpret patent claims – finding it a “reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.”

The Court was unanimous as to the BRI standard however, Justices Alito and Sotomayor dissented from the no-appeal ruling – they would have interpreted the statute as limiting interlocutory appeals but still allowing review of the decision to institute within the context of an appellate review of the PTO’s final decision on the merits.

Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ____ (2016).

No Appeal: The court began with the express language of the statute which expressly states that the decision of “whether to institute an inter partes review . . . shall be final and non-appealable.”  The provision is plain on its face and indicates congressional purpose of delegating authority to the Patent Office.  The dissenting opinion offered by Justice Alito offered to limit the statute as preventing only interlocutory appeals, but the majority rejected that interpretation as lacking textual support and being ‘unnecessary’ since the APA “already limits review to final agency decisions.”[1]  The Supreme Court also analogyzed the PTO’s initiation decision to that of a grand jury – which is likewise unreviewable. “The grand jury gets to say— without any review, oversight, or second-guessing— whether probable cause exists to think that a person committed a crime” (quoting Kaley v. United States, 571 U. S. ___ (2014)).

If you remember, Cuozzo did not present a Constitutional challenge to the AIA regime and the majority opinion offered a glimmer of limitation in that regard. Notably, the Court suggested that challenges to the decision to institute might be appealable if based upon a Constitutional issue or some other issue outside “well beyond” the post issuance review proceeding statutory provisions.

We conclude that the first provision, though it may not bar consideration of a constitutional question, for example, does bar judicial review of the kind of mine-run claim at issue here, involving the Patent Office’s decision to institute inter partes review.

The opinion here includes a number of nuances that will be interesting to tease-out, but the bottom line is that IPR remains a powerful tool for challenging patents.

Claim Construction during Inter Partes Review: Regarding the Broadest-Reasonable-Interpretation being applied to patent claims, the court was unanimous in siding with the USPTO.  The court began by noting that Congress granted rulemaking authority to the USPTO to create regulations governing inter partes review and that this authority empowered the USPTO to enact rules both substantive and procedural that are reasonable in light of the statutory text.  Since the statute was “not unambiguous” as to the appropriate claim construction standard, and therefore that the USPTO must be given leeway in determining its administrative approach.

Cuozzo had argued that IPR proceedings were like trials in many ways and therefore the claim construction should be parallel to that of trial proceedings.  The Supreme Court rejected that analogy – finding that IPR proceedings serve a purpose much broader than merely “helping resolve concrete patent-related disputes among parties.”

[I]nter partes review helps protect the public’s “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806 (1945); see H. R. Rep., at 39–40 (Inter partes review is an “efficient system for challenging patents that should not have issued”).

In finding BRI reasonable, the court followed this public-interest pathway and found that BRI helps to provide stronger bounds on patent scope:

We conclude that the regulation represents a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office. For one thing, construing a patent claim according to its broadest reasonable construction helps to protect the public. A reasonable, yet unlawfully broad claim might discourage the use of the invention by a member of the public. Because an examiner’s (or reexaminer’s) use of the broadest reasonable construction standard increases the possibility that the examiner will find the claim too broad (and deny it), use of that standard encourages the applicant to draft narrowly. This helps ensure precision while avoiding overly broad claims, and thereby helps prevent a patent from tying up too much knowledge, while helping members of the public draw useful information from the disclosed invention and better understand the lawful limits of the claim. See §112(a); Nautilus, Inc. v. Biosig Instruments, Inc., 572 U. S. ___ (2014).


Most of the IPR-related petitions for writ of certiorari that are still pending are likely to fall-away at this point. However, the major caveats in the majority opinion (noted above) offer some light for both Cooper v. Lee and MCM v. HP since those petitions challeng the system on US Constitutional grounds.

USPTO Director Michelle Lee offered the following statement in reaction to the Cuozzo decision:

The USPTO appreciates the Supreme Court’s decision which will allow the Patent Trial and Appeal Board (PTAB) to maintain its vital mission of effectively and efficiently resolving patentability disputes while providing faster, less expensive alternatives to district court litigation.

Director Lee will likely step-down as the Obama Administration moves out.  A portion of her legacy will remain as the named respondent.

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[1] 5 U. S. C. §704


Almost Cut My Hair

by Dennis Crouch

Michael Kwun‘s new Greenbag article titled Alice Tells a Joke offers the following:

A patent lawyer walks into a barber shop. The barber takes a look at the lawyer for a bit, and then says, “Ok, that’ll be $20.” The lawyer responds, “But you didn’t cut my hair!” The barber replies, “That’s ‘insignificant post-solution activity.’”

Kwun’s short analysis considers In re Brown, No. 2015-1852 (Fed. Cir. Apr. 22, 2016) (nonprecedential opinion), where the Federal Circuit ruled that the claimed “method of cutting hair” lacks subject matter eligibility.

The rejected claim:

1. A method of cutting hair comprising;

a) defining a head shape as one of balanced, horizontal oblong or vertical oblong by determining the greater distance between a first distance between a fringe point and a low point of the head and a second distance between the low point of the head and the occipital bone;

b) designating the head into at least three partial zones;

c) identifying at least three hair patterns;

d) assigning at least one of said at least three hair patterns to each of the said partial zones to either build weight or remove weight in at least two of said partial zones; and

e) using scissors to cut hair according to said assigned hair pattern in each of the said partial zones.

My 2011 video is somewhat on point: HairCut

DTSA: Temporary Restraining Order for Former Employer

by Dennis Crouch

Henry Schein, Inc., v. Cook (N.D.Cal. 2016)

In one of the first written decisions based upon the Defend Trade Secrets Act (DTSA), Judge Tigar has granted Schein’s motion for a temporary restraining order (TRO) blocking former employee Jennifer Cook “from accessing, using, or sharing” allegedly stolen confidential data.  Cook was a sales representative for Schein’s dental-supplies business and left to join competitor Patterson Dental.  The TRO also prohibits Cook “from soliciting, contacting, or accepting business from any HSI customers assigned to her while she was employed by Plaintiff.”  In addition to the standard fiduciary duty employees owe to their employer, Cook had also signed a confidentiality and non-solicitation agreement.

Here – as with most trade secret cases – the basis for the case begins with a breach of contract. That breach is then used to establish misappropriation.  The trade secret claim gets the plaintiff to Federal Court and offers additional remedies not otherwise accessible.

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In California many non-solicitation agreements are deemed void based upon the state’s Business and Professions Code section 16600 which provides that “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

If it moves forward, this case will be an important test of whether the new federal law protecting trade secret rights preempts this state-law policy.*

Judge Tigar here failed to even consider this issue in his opinion — likely because, as is typical with TROs, the defendant was given no chance or opportunity to respond to the allegations.

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* In looking at the agreement, it recites that NY law will control its interpretation. [CookAgreement]

** Read the decision here: [ScheinTRO Decision]


Certificates of Correction

by Dennis Crouch

A substantial percentage of patents continue to pass through the post-issuance correction process that leads to a Certificate of Correction.


The chart above shows the number of certificates of correction issued by the USPTO each year with a forecast through the end of 2016.* After a patent issues, a patentee can petition for a correction of “clerical or typographical nature, or of minor character” or clear mistake by the USPTO. There is no fee if the error is a USPTO mistake and currently a $100 fee for correcting applicant-mistakes (no small/micro entity fee reduction).

In Superior Fireplace, the court held that a certificate of correction that broadens the claim is only permissible when it is clear from the specification and prosecution history how to correct the error. Similarly, in Central Admixture Pharmacy the CAFC found that the correction from osmolarity to osmolality was void because the error “was not clearly evident to one of skill in the art and the result was to broaden the claims.” The relief for an improper certificate of correction is simply to cancel the certificate.  In Cubist Pharma v. Hospira (Fed. Cir. 2015), however, the court held that a structural diagram could be re-drawn in its sterioisomer form to correct a misunderstanding of the chemistry at the time of filing. I wrote on Patently-O that this decision highlights “that the ‘error’ being corrected need not be simply a typo.”

The number of corrections has remained relatively steady over the past 15 years. Since the number of issued patents issued has risen so dramatically during that time, this steady-state of correction filings means that the average number of corrections per recently issued patent has continued dropped steadily for the past decade with the odd exception of patents issued in 2009.   About 14% of patents issued 1990 to 2005 went through the correction process. That percentage is now down under 10%.

Timing: Based upon a small sample (750 corrected patents issued 2010-2014).  The median correction time is 49 days (from the PTO receipt of the request for correction until issuance of the certificate).  90% were complete within 6-months. 95% within 1-year.

* The chart includes utility patents as well as reissue, design, and plant patents.


Supreme Court Clarifies Copyright Attorney Fees: Reasonable Defense Not a Presumptive Excuse

by Dennis Crouch

In Kirtsaeng v. John Wiley & Sons (2016), the Supreme Court has vacated the Second Circuit’s ruling denying attorney-fee awards in the copyright case – but offered a balanced opinion that places a number of limits on when fees may be awarded.

The opinion holds the reasonableness of the losing party’s position should be a substantial factor.  I.e., the more reasonable that position, the less likely that fees should be awarded.  However, objective reasonableness is not the ‘controlling factor.’

That means in any given case a court may award fees even though the losing party offered reasonable arguments (or, conversely, deny fees even though the losing party made unreasonable ones). For example, a court may order fee-shifting because of a party’s litigation misconduct, whatever the reasonableness of his claims or defenses. Or a court may do so to deter repeated instances of copyright infringement or overaggressive assertions of copyright claims, again even if the losing position was reasonable in a particular case. Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals.

[internal citations omitted].

The problem with the Second Circuit decision was that it appeared to allow reasonableness to be a presumptive controlling factor. “[T]hat goes too far in cabining how a district court must structure its analysis and what it may conclude from its review of relevant factors.”

The decision does not cite either of the Supreme Court’s attorney fee cases from 2014. (Octane Fitness and Highmark).  However, the principles at issue here are likely to carry-over directly to patent cases – namely that although the reasonableness of a losing-party’s argument is an important factor in attorney fee awards, it should not prescriptively control the outcome.  That said, the copyright statutory language for attorney fees is quite different from that of the patent statute. The major difference is that the copyright statute indicates discretionary authority for district courts in their fee awards while the patent statute limits fee awards to “exceptional cases.”  That difference suggests to me that fee awards (according to the statute) should be more difficult to obtain in patent cases than in copyright cases.   In both patents and copyrights, the Supreme Court has now called for a flexible analysis and has also particularly indicated that the broader purposes of the respective intellectual property laws should be considered when determining whether to award fees.


Will the Walls Come Tumbling Down: Jericho v. Axiomatics at the Supreme Court

In a new petition for writ of certiorari, Jericho Systems has asked the Supreme Court to review its abstract idea test:

Whether, under this Court’s precedent in Alice Corp. Party Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), a patent may be invalidated as an “abstract idea” under 35 U.S.C. § 101 when it claims a specific implementation and does not preempt other uses of the abstract idea.

Jericho Systems Corp v. Axiomatics – Petition for Certiorari.

The district court ended the case with a judgment on the pleadings – finding that the asserted claims of Jericho’s Patent No. 8,560,836 lacked eligibility under Alice and Mayo (focusing on claim 1 as axiomatic).

Using the ‘gist analysis’, the district court found that:

[T]he gist of the claim involves a user entering a request for access, looking up the rule for access, determining what information is needed to apply the rule, obtaining that information, and then applying the information to the rule to make a decision.

This is an abstract idea. The abstract idea being that people who meet certain requirements are allowed to do certain things. This is like Axiomatic’s example of making a determination if somebody is old enough to buy an R rated movie ticket.

Thus, finding that the claim encompasses an abstract idea, the district court moved to Step 2 of the Alice/Mayo analysis – and again sided with the defendant:

As al ready stated, [the claimed invention simply] uses standard computing processes to implement an idea unrelated to computer technology. It does not change [sic] way a computer functions or the way that the internet operates.

On appeal, the Federal Circuit affirmed in a R.36 judgment without opinion.  On this point, the petition cites Jason Rantanen’s recent post indicating that around 50% of Federal Circuit decisions are being resolved without opinion. Jason Rantanen, Data on Federal Circuit Appeals and Decisions, PATENTLY-O (June 2, 2016).

A grant of certiorari in this case would serve as a salutary reminder to the Federal Circuit about the appropriate use of one-word affirmances—which currently resolve over 50 percent of that court’s cases. Rantanen, supra (showing that the percentage of Rule 36 opinions in appeals from district courts has increased from 21 percent to 43 percent in less than a decade). If the Federal Circuit is content to allow district court opinions to effectively substitute for its own opinions at such a high rate, that practice should not be permitted to “cert proof ” issues that are otherwise cleanly presented and worthy of this Court’s review. Cf. Philip P. Mann, When the going gets tough . . . Rule 36!, IP Litigation Blog (Jan. 14, 2016) (arguing that the Federal Circuit relies on summary affirmance under Rule 36 to “sidestep difficult issues on appeal and simply affirm”).

One issue that the district court (and obviously the Federal Circuit) failed to address was that of preemption – what is the relevance of the fact that substantial, practical, an and non-infringing applications of the given abstract idea are available and not covered by the patent.  Petitioner argues that issue is critical to the analysis.  “[T]he lower courts regularly decline any discussion of preemption in favor of rote analysis of patent language at so high a level of generality that the claim language is rendered all but meaningless. This leads to the untenable result that patents—such as the one here—that do not preempt other uses of the alleged “abstract idea” at issue are nevertheless held to violate Alice.”



Supreme Court Sides with Patentees–Providing Flexibility for Proving Enhanced Damages

by Dennis Crouch

The Supreme Court today issued an important unanimous decision in Halo v. Pulse – vacating the Federal Circuit’s rigid limits to enhanced damages in patent cases.  The decision rejects the dual objective/subjective test of Seagate as “inconsistent” with the statutory language of 35 U.S.C. §284.  Rather, the court indicated that district courts have discretion to award enhanced damages where appropriate “as a sanction for egregious infringement behavior” and that those awards will be reviewed with deference on appeal.  Although the district courts are given discretion, the opinion here makes clear that enhanced damages should not be awarded in “garden-variety cases.”

Section 284 gives district courts the discretion to award enhanced damages against those guilty of patent infringement. In applying this discretion, district courts are “to be guided by [the] sound legal principles” developed over nearly two centuries of application and interpretation of the Patent Act.[1] Those principles channel the exercise of discretion, limiting the award of enhanced damages to egregious cases of misconduct beyond typical infringement.

The Roberts opinion linked this case to that of Octane Fitness in which the court had earlier rejected a rigid Federal Circuit test for attorney-fee awards in favor of  flexible discretion at the district court level.[2]  In its decision, the Supreme Court also repeatedly cited its 19th century decisions as guidance.[3] However, rather than wholehearted acceptance of those old cases, the nuanced opinion walks through their reasoning and explains which continue to hold force today.

In thinking about enhanced damages, I find it useful to keep in mind that this issue only arises after a patent has been found enforceable and the accused found liable for infringement.  Thus, any ‘excuse’ offered for the infringement at that point is insufficient to avoid liability but may still be sufficient to avoid an enhanced damage award.  An important element of the decision is that of timing for the excuse.  The opinion notes that an ex post defense generated for litigation is does not remove culpability.  Rather, culpability will be measured according to the infringer’s knowledge at the time of the accused unlawful conduct.

Although the burden for proving egregious infringement behavior rests entirely upon the patentee, the court here held that clear-and-convincing evidence is not required to support an enhanced damages award.  Rather, a preponderance of the evidence (more likely than not) is sufficient to support that award.

Missing from the opinion is an express holding as to whether willful infringement is a prerequisite to an enhanced damages award.  The statute, of course, is silent on this point – indicating only that “the court may increase the damages up to three times the amount found or assessed.”  Going forward, it may make sense to refer to the topic as ‘egregious’ infringement rather than ‘willful’ infringement.

The opinion vacates the decisions in both Halo and Stryker. Read the Decision: HaloPulseStrykerZimmerDecision

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Although the court’s opinion was unanimous, Justice Breyer also provided a concurring opinion joined by Justices Alito and Kennedy.  The concurrence suggests a more limited discretion for the district court – namely: (1) that mere knowledge of the patent is insufficient to prove willfulness; (2) failure to obtain advice of counsel cannot be used to prove recklessness (see Section 298); and (3) enhanced damages are not to be used to compensate the patentee for either the infringement or the hassle/cost of litigation.

Regarding the standard for review, Justice Breyer also offers an interesting statement supporting the Federal Circuit’s role as an ‘expert court’:

[I]n applying that standard [of deference], the Federal Circuit may take advantage of its own experience and expertise in patent law. Whether, for example, an infringer truly had ‘no doubts about [the] validity’ of a patent may require an assessment of the reasonableness of a defense that may be apparent from the face of that patent.  And any error on such a question would be an abuse of discretion.

Despite this ‘experience and expertise’, I won’t look for the Supreme Court to begin giving deference to the Federal Circuit anytime soon.

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[1] Martin v. Franklin Capital Corp., 546 U. S. 132, 136 (2005) (quoting Fogerty v. Fantasy, Inc., 510 U. S. 517, 533 (1994)).

[2] Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U. S. ___ (2014).

[3] See, for example, Seymour v. McCormick, 16 How. 480, 488 (1854); Dean v. Mason, 20 How. 198, 203 (1858); Hogg v. Emerson, 11 How. 587, 607 (1850); Livingston v. Woodworth, 15 How. 546, 560 (1854); Tilghman v. Proctor, 125 U. S. 136, 143–144 (1888); Topliff v. Topliff, 145 U. S. 156, 174 (1892); Cincinnati SiemensLungren Gas Illuminating Co. v. Western SiemensLungren Co., 152 U. S. 200, 204 (1894); Clark v. Wooster, 119 U. S. 322, 326 (1886); Day v. Woodworth, 13 How. 363, 372 (1852); and Teese v. Huntingdon, 23 How. 2, 8–9 (1860).

USPTO’s Six New Patent Quality Studies

1) Evaluation of the deviation of 35 U.S.C. §101 rejections from official guidance, correctness of rejections and completeness of the analysis. This study will evaluate whether examiners are properly making subject matter eligibility rejections under 35 U.S.C. §101 and clearly communicating their reasoning.

2) Review of consistency of the application of 35 U.S.C. §101 across art units/technology centers. This study will take a look at applications with related technologies located in different art units or technology centers and determine whether similar claims are being treated dissimilarly under 35 U.S.C. §101.

3) The practice of compact prosecution when 35 U.S.C. §101 rejections are made.  This study will determine whether all appropriate rejections are being made in a first Office action when a subject matter eligibility issue is also identified.

4) Correctness and clarity of motivation statements in 35 U.S.C. §103 rejections. This study will evaluate whether reasons for combining references set forth in rejections under 35 U.S.C. §103 are being set forth clearly and with correct motivation to combine statements.

5) Enforcement of 35 U.S.C. §112(a) written description in continuing applications. This study will evaluate claims in continuing applications to determine if they contain subject matter unsupported by an original parent application and whether examiners are appropriately enforcing the requirements of 35 U.S.C. §112(a) written description.

6) Consistent treatment of claims after the May 2014 35 U.S.C. §112(f) training. This study will determine whether claims invoking 35 U.S.C. §112(f) are being properly interpreted and treated.



Claim Limits and Differences

Indacon v. Facebook, App. No. 15-1129 (Fed. Cir. 2016)

Indacon’s U.S. Patent No. 6,834,276 covers an improved database system that adds “custom links” so that instances of a “link term” would point to a particular file in the database. Thus, applying this in LinkedIn, you might find that references to “Dennis Crouch” point to my LinkedIn profile.  Of course, the way that Facebook & LinkedIn operate does not create the pointer-link for all occurrences of the term.

During claim construction, the district court determined that the asserted claims required that all instances of a specified link term be identified and linked.  Although not expressly claimed, the district court found that the all-instances requirement should be found in the definition of “link term” and “custom link.” On appeal, the Federal Circuit has affirmed.

As the first step in the de novo claim construction analysis, the appellate panel determined that the claimed “link term” and “custom link” had no defined meaning in the art – a factor making the specification and prosecution history even more important in the analysis.  As the next step, the court looked to the specification that called for automated tagging a link term “when [it] is encountered in a file or document.”   and for “association of any selected link term with any of the plurality of files in the selectable database.”  In my mind, these are ambiguous at best in terms of requiring all instances be identified. The clincher, however, was buried in the prosecution history where the patentee explained that the operation works by linking “every instance of a specified word . . . [and again] associate all instances of a specified word with a specific file.”

The statements from the prosecution history were sufficient for the court to affirm that the “every instance” should be imported into the claim term construction.

“[T]he interested public has the right to rely on the inventor’s statements made during prosecution, without attempting to decipher whether the examiner relied on them, or how much weight they were given.” Fenner Invs., Ltd. v. Cellco P’ship, 778 F.3d 1320 (Fed. Cir. 2015). Here, the patentees repeatedly described their invention both in the specification and the prosecution history as allowing “every instance” or “all instances” of a defined term to be identified and displayed as a link. Under these circumstances, the district court did not err in limiting the link claim terms as such.

Strict Limits on Claim Differentiation: Indacom’s best argument stemmed from the language of non-asserted claims. In particular, some of the claims required linking of “instances” of a term while other claims required linking “all instances.” The implication here is that the “instances” does not require “all instances.”

On appeal, Judge Stoll indicated that the claim differentiation argument only applies in a narrow range of cases — where claims are otherwise identical in scope.  “[W]e have declined to apply the doctrine of claim differentiation where, as here, the claims are not otherwise identical in scope.” Citing World Class Tech. v. Ormco, 769 F.3d 1120 (Fed. Cir. 2014) and Andersen v. Fiber Composites, 474 F.3d 1361 (Fed. Cir. 2007).

Although it is still probably not enough to win the case (and thus a harmless error for this case), Judge Stoll’s statement of the doctrine is unduly limiting and will likely be harmful in future cases.  This is, however, the approach suggested by Professor Lemley in his 2008 article: “First, courts should not use the doctrine unless the claims in question are in an independent-dependent relationship.” Mark A. Lemley, The Limits of Claim Differentiation, 22 BERKELEY TECH. L.J. 1389 (2007).

Rather than relying upon claim differentiation – the better approach may be to expressly differentiate the claims to indicate the difference. Thus, rather than just “instances” the claims could have said “at least some instances.”




Digital Trademark and Design Patent Infringement

Guest post by Lucas S. Osborn, Associate Professor of Law at Campbell University School of Law. He will be visiting at Denver University School of Law for 2016-17.

Digital technology continues its collision with intellectual property law, this time in BMW’s lawsuit against the online virtual modeling company TurboSquid. TurboSquid sells digital 3D models of various items for use by game developers, architects, visual effects studios, etc.

This case is paradigmatic of a project Mark McKenna and I are working on, which analyzes trademarks in the context of digital goods. BMW complains that TurboSquid’s “marketing of 3-D virtual models” of BMW vehicles infringes BMW’s trademarks, trade dress, and design patents. Specifically, it complains that TurboSquid “markets and tags BMW-trademarked 3-D virtual models of BMW vehicles as suitable for games.”

Interestingly, although some of BMW’s registrations cover “miniature toy vehicles,” “interactive game programs,” and “scale model vehicles,” none of the registrations covers virtual models of vehicles. BMW also alleges that it “licenses its trademarks and patented designs for use in 3-D virtual models for computer games.”

BMW’s claims of infringement raise conceptual difficulties. Does selling a virtual object directly infringe a trademark or design patent that contemplates, or is in fact limited to, a physical good?

In thinking about trademark infringement, the core analysis focuses on whether the digital file is a good about which there is confusion as to source, sponsorship, or the like.  Confusion might arise from at least three mechanisms. First, TurboSquid might create a website environment that looks as if it is a BMW-sanctioned website, such as by using a domain name like BMW.net or by designing the webpage to suggest that it is affiliated with BMW. The TurboSquid website does not do this.

Second, TurboSquid might cause confusion through the external labels attached to each file. If the file name/description read, “BMW authorized model of BMW X3,”  TurboSquid would falsely suggest an affiliation or source. But its external file labels read simply, “BMW X3” and the like. BMW will doubtless argue that this external file labeling provides an indication of source or affiliation, but is this so? Arguably the external description is nominative or descriptive because it merely describes what the file is, i.e., a model of a BMW car. Of course, TurboSquid could change all the external file descriptions to eliminate the potential confusion (i.e., “unauthorized model of BMW X3”), but courts should balance the burden on TurboSquid and the effects on user search costs against any evidence of the extent of actual or potential confusion.

Deciding whether the external file description creates confusion or instead is nominative bleeds into the third potential argument for confusion, which is that the content of the digital file itself causes the confusion. That is, BMW will argue that since the content of the digital file displays a BMW logo on the car, the purchaser will be confused as to source or sponsorship. The Supreme Court, however, seemingly foreclosed this argument in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). Dastar directs that a court should not use the content of the digital file to inform the confusion analysis.

Dastar copied footage from Fox’s Crusade in Europe television series and reused portions of that footage in its own videos without attribution to Fox. Id. at 26-27. Fox alleged Dastar committed reverse passing off in violation of § 43(a) of the Lanham Act by representing Fox’s content as its own. Id. at 27. The Supreme Court rejected Dastar’s claim, holding that “origin of goods” refers only to the “producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. Id. at 37.

The Court was concerned that allowing claims for reverse passing off in the context of copyrightable works “would create a species of mutant copyright law” that would conflict with the Federal copyright regime. Id. at 34. Dastar’s concern about conflicts between copyright and trademark law channels courts away from finding confusion based on the content of expressive works. See generally Mark P. McKenna, Dastar’s Next Stand, 19 J. Intell. Prop. L. 357 (2012). Thus, the content of TurboSquid’s files cannot form the basis of the confusion. The content of the files is protected, if at all, by some other form of intellectual property law, such as copyright.

Even assuming there is no point-of-sale confusion with the purchase of the digital file, TurboSquid cannot drive away freely just yet; it must contend with post-sale confusion. Post-sale confusion protects trademark owners when there is no point-of-sale confusion because the purchaser of the good knows it is fake. Courts have found that confusion can arise after a sale when the individual wears the infringing good in public, causing observers to see the branded item and become confused about whether it is genuine or not.

TurboSquid’s purchasers obviously will not wear the digital files in public. Nevertheless, they will use the files in downstream productions such as video games, and thus BMW also alleged there will be post-sale confusion. However, use of the models in expressive works like games and other video productions will not likely lead to an actionable trademark claim because the First Amendment protections provided to expressive works would likely trump any trademark claim.  See, e.g., Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989); E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir. 2008). Moreover, once again Dastar suggests that any potential confusion generated from the content of the video game or other expressive work is irrelevant under the Lanham Act.

Trademark law arose in a world of physical goods to protect manufacturers and prevent consumer confusion as to who manufactured the goods. In a digital world, manufacturing will increasingly be done, if at all, by individuals with 3D printers. Other digital models, such as TurboSquid’s BMW models, will never exist as physical objects.  Where consumers care about the quality of a digital file, trademark law can protect consumers from being deceived by indicia external to the file. But if purchasers are not confused about the source of the digital file based on external indicia, courts should channel any other potential claims (if any) to other areas of intellectual property law.

Patentlyo Bits and Bytes by Anthony McCain

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Inducing Infringement: Procedural Limits on the Reasonable Non-Infringement Belief

by Dennis Crouch

On remand from the Supreme Court vacatur, the Federal Circuit has reaffirmed its prior NuVasive decision and – in the process limited the reach of the Supreme Court’s 2015 decision of Commil USA, LLC v. Cisco Systems, Inc., 135 S. Ct. 1920 (2015).

Opinion: Warsaw Orthopedic, Inc. v. NuVasive, Inc. (Fed. Cir. 2016)

The primary holding of Commil is that belief-of-patent-invalidity is not a defense to allegations of inducing infringement.  In Commil, the Supreme Court also indicated that inducement requires proof that the accused inducer knew or was willfully blind to the fact that the actions being induced would constitute patent infringement. (clarifying a potential ambiguity of Global Tech).

Here, the adjudged infringers gave instructions to doctors on how to use its surgical tools in a way infringed NuVasive’s patent.  However, the companies argue that the evidence presented to the jury was insufficient to find that they “it knew (or was willfully blind to the fact) that it was instructing doctors to infringe” the asserted patent (even after being sued for infringement).

Medtronic’s explanation of its ‘belief‘ was that it had constructed a reasonable claim construction argument under which its activities would not infringe.  To resolve this, the Federal Circuit delved deep into the claim construction argument and found “no support in the language of claim 1 of the ’236 patent or its prosecution history to support MSD’s [claim construction] position.”

An oddity of the decision is that the Court suggests (but seemingly does not hold) that Medtronic waived its claim construction argument by failing to seek a revised claim construction.

In any event, MSD’s effort at this late stage amounts to a request for a revised claim construction that it never sought. That is improper, as we previously ruled in our earlier opinion. Warsaw, 778 F.3d at 1373 (citing Hewlett-Packard Co. v. Mustek Sys., Inc., 340 F.3d 1314, 1321 (Fed. Cir. 2003)). Moreover, claim construction is, of course, ultimately a question of law that must be left to the court, not the jury. Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 837 (2015). We have previously held that it is improper for juries to hear conflicting expert testimony on the correctness of a claim construction, given the risk of confusion. CytoLogix Corp. v. Ventana Med. Sys., Inc., 424 F.3d 1168, 1172 (Fed. Cir. 2005).

Thus, it is unclear hear what the outcome would be if Medtronic had presented a reasonable non-infringement argument based upon an alternative claim construction.

The opinion of the court was filed by Judge Dyk.  Judge Reyna also filed a concurring opinion. One aspect of Judge Reyna’s concern is that the lower courts will latch upon the “no support” language of the majority opinion as the test for whether an alternative claim construction is reasonable. Rather, Judge Reyna would propose procedural limits:

While the Supreme Court in Commil stated that a defendant lacks the intent for induced infringement where his reading of the claims is both different from the plaintiff’s and reasonable, I do not believe Commil opens the door for this court to assess the reasonableness of a defendant’s non-infringement position that is based on a claim construction that a defendant failed to raise, or that was not before the jury. In this case, MSD proposed no construction for the “stopping” limitation, arguing that the limitation has a plain meaning to one of ordinary skill in the art. I would resolve this case on this basis. Where a defendant proposes no construction of a claim term, this court is speculating to determine what the defendant’s reading of the claims is. We should not be in the business of creating claim constructions for defendants in induced infringement actions so that we may then assess whether the claim constructions are reasonable.

At the same time, Judge Reyna also faulted the majority for failing to actually consider whether evidence of knowledge was presented.

In Global-Tech, the evidence demonstrated the defendant’s willful blindness. The opinion here cites no similar evidence. The opinion’s analysis suggests that any time a defendant’s products are found to directly infringe, the plaintiff has sufficiently established the defendant’s intent to induce infringement. This proposition conflicts with Global-Tech, Commil, and our caselaw.

Comment: The procedural approach here seems interesting and useful. The suggestion is a rule that an inducement defendant who is arguing that it had a reasonable non-infringement belief must actually present that argument to prove no underlying direct-infringement.  That approach require the judge/jury to first determine the merits of the argument before then determining whether it was at least reasonable.



Supreme Court Patent Update: 271(e) Safe Harbor

by Dennis Crouch

Look for opinions in Halo/Stryker and Cuozzo by the end June 2016.

Post Grant Admin: While we await Cuozzo, a set of follow-on cases continue to pile-up.  My speculation is that the Supreme Court will delay any decision in those cases until it finalizes the outcome of Cuozzo. With a host of new friend-of-the-court briefs and interesting constitutional questions, MCM v. HP is perhaps best positioned for certiorari.  Additional pending cases include Versata v. SAP (scope of CBM review); Cooper v. Lee (whether IPRs violate Separation of Powers); Click-to-Call Tech, LP v. Oracle Corp., (Same questions as Cuozzo and now-dismissed Achates v. Apple); GEA Process Engineering, Inc. v. Steuben Foods, Inc. (Flip-side of Cuozzo: Appeal when PTAB exceeds its authority by terminating an instituted IPR proceeding?); Interval Licensing LLC v. Lee (Same as Cuozzo); and Stephenson v. Game Show Network, LLC (Same as Cuozzo)

Design Patent Damages: Samsung has filed its opening merits briefs in the design patent damages case against Apple.  Design patent infringement leads to profit disgorgment, but the question is what profits? [More from Patently-O].

Versus Cisco: There are a couple of newly filed petitions. Interestingly, both filed by Michael Heim’s firm with Miranda Jones on both briefs representing plaintiff-petitioners.  In both cases Cisco is respondent.

  • CSIRO v. CISCO (fact-law divide in proving infringement damages under 35 U.S.C. § 284).
  • COMMIL v. CISCO (appellate disregard of factual evidence).

Of course, Commil was the subject to a 2015 Supreme Court decision that rejected the Federal Circuit’s original opinion favoring Cisco.  On remand, the Federal Circuit completely changed its decision but again sided with Cisco and rejected the jury verdict — holding “that substantial evidence does not support the jury’s finding that Cisco’s devices, when used, perform the “running” step of the asserted claims.”

Safe Harbor for Federal Submissions: In the newly filed Amphastar Pharma case, the Supreme Court has already requested a response from Momenta. The question presented focuses on the safe-harbor provision of 35 U.S.C. § 271(e)(1) and asks: Whether the safe harbor protects a generic drug manufacturer’s bioequivalence testing that is performed only as a condition of maintaining FDA approval and is documented in records that must be submitted to the FDA upon request.  The federal circuit held that Amphastar’s activity in this case was not protected by the safe harbor because it involved information “routinely reported” to the FDA post-approval. [Amphastar Petition]

The big list:


Data on Federal Circuit Appeals and Decisions

By Jason Rantanen

A few months ago, I wrote that the Federal Circuit is now receiving more appeals arising from the Patent and Trademark Office than the District Courts.  As of the end of May, that trend is still holding strong.

CAFC Appeal Rates

This influx of appeals raises the question of how the Federal Circuit will manage its expanded docket.  One possibility is that the court will make greater use of Rule 36 summary affirmances in appeals where the panel votes to affirm.

To assess whether this is already happening, my research assistants collected and coded information about all decisions in appeals arising from the PTO and district courts that were posted to the Federal Circuit’s “opinions and orders” page since 2008.  (To my knowledge, this represents the full set of opinions and Rule 36 summary affirmances, but if anyone has contrary information I’d be very interested in hearing it.)  Orders (not all of which are posted to the website) are not included in the below graphs.

The first graph distinguishes between Federal Circuit opinions, both precedential and nonprecedential, and Rule 36 summary affirmances.  The orange bars represent numbers of opinions each year and the blue bars represent numbers of Rule 36 summary affirmances.  The percentages reflect the percentage of Rule 36 summary affirmances.

PTO Opinions v R 36

I see two takeaways from this graph. One is that the use of Rule 36 summary affirmances is indeed rising, both in absolute numbers and as a percentage of dispositions.  During 2015 and so far in 2016, the Federal Circuit has resolved more appeals arising from the PTO through Rule 36 summary affirmances than with an opinion.

But the court can hardly be accused of slacking: at the same time that Rule 36 summary affirmances are going up, the court is also issuing more opinions in appeals arising from the PTO than ever before. Last year, the court issued almost 60 opinions in appeals arising from the PTO and this year it is poised to exceed that by a substantial margin.

A similar trend appears from looking at precedential and nonprecedential opinions separately.  The following figure depicts numbers of precedential opinions (yellow), nonprecedential opinions (red), and Rule 36 affirmances (blue).  The rate at which the court is issuing both precedential and nonprecedential opinions is climbing, with the court issuing only a few less precedential opinions in the first five-and-a-half months of 2016 than all of last year.  The percentages here reflect the percentage of all dispositions that took the form of a precedential opinion.

PTO Nonprec prec Rule 36

I also looked at appeals arising from the district courts and include those graphs as below.  Here, too, the percentage of appeals disposed of through a Rule 36 summary affirmance has risen since 2008, as has the absolute number of Rule 36 summary affirmances.  However, given the slight dip in appeals arising from the district courts, I expect to see a lower number of both appeals and summary affirmances this year.

DCt Opinions v R 36

For the sake of completeness, here’s the figure for precedential and non-precedential opinions broken out separately.

DCt Nonprec prec Rule 36

Data collection notes: For purposes of this analysis, each document was treated as an individual disposition.  Approximately 10% of the data was coded by independently by two coders.  Comparison of the coding results indicated near-perfect agreement.

Thanks to my research assistants Peter Kline and Andrew Stanley for their work in coding these decisions.

Design Patent Damages at the Supreme Court

by Dennis Crouch

Samsung has filed its opening merits briefs in its design patent damages appeal Samsung v. Apple.  The central issue in the case is the proper statutory interpretation of the design patent damages statute 35 U.S.C. 289 that offers an alternative calculation for damages:

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.

The question for the court is “total profit” from what? Is it the sale of the article-of-manufacture (here, the Galaxy phones) or merely the particular component.  For this case, the particular components would be the front face of the phone and the icon-grid displayed on a user interface screen.  Samsung asks: 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? [Samsung Opening Brief – US Supreme Court]

In a statement to Patently-O, Samsung argued that “If the current ruling is left to stand, it would value a single design patent over the hundreds of thousands of groundbreaking technology patents, leading to vastly overvalued design patents.”  The itself brief cites Professor Rantanen’s 2015 essay for the proposition that the high damage is likely result in an “explosion of design patent assertions and lawsuits.”

The design-patent-damages statute was originally enacted in 1887 as a reaction to the last Supreme Court design patent damages cases that limited lost profit awards. Dobson v. Hartford Carpet Co., 114 U.S. 439 (1885); and Dobson v. Dornan, 118 U.S. 10 (1886).  However, Samsung argues that the 1952 amendments are important here.

Reasonable Royalty for Industry Standard Patents

by Dennis Crouch

The Australian governmental research agency CSIRO has been the plaintiff in a number of E.D. Texas patent cases over the past decade — repeatedly enforcing its wireless local-area-network (LAN) U.S. Patent No. 5,487,069 that has been held to cover WiFi (802.11a and 802.11g).

After a long battle, CISCO stipulated to liability and validity of the patent.  In a bench trial, the court found that a reasonable royalty was about $.83 per WiFi product sold by Cisco.  On appeal, however, the Federal Circuit vacated that Judgment – holding that the royalty rate was likely too high because it internalized the lock-in value of the standardized technology.  There are many ways to create a wireless local network and there really is not any indication that the ‘069 patent offers the best way (even among other available alternatives).  Instead, what makes the ‘069 patent so valuable is that it was chosen as the standard.

The underlying question now on petition for certiorari to the Supreme Court is whether and the extent that CSIRO’s royalty rate should be discounted because the invention was chosen as the standard.  However, CSIRO’s petition focuses on the standard of appellate review:

The Patent Act provides that a “[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement ….” 35 U.S.C. § 284. In contravention of this broad language, the Federal Circuit has erected a rigid set of legal rules to control the determination of damages by triers of fact. As a result, the Federal Circuit now exercises de novo review over inherently factual questions, resulting in routine reversals.
This Court has held with regard to another patent remedies provision that it is improper for the Federal Circuit to “superimposed an inflexible framework onto statutory text that is inherently flexible.” Octane Fitness. And this Court is considering related questions in relation to another portion of section 284 in Stryker Corp. and Halo Electronics.

The question presented is:

Is the Federal Circuit’s promulgation of rigid legal rules to control the weight to be given by the trier of fact to evidence of patent infringement damages proper under 35 U.S.C. § 284?


Because damages are now the fundamental remedy for patentees, this case will be an important one to follow.

[Read the Petition: CSIRO v. Cisco Petition for Certiorari]

Guest Post by Prof. Contreras – CSIRO v. Cisco: The Convergence of RAND and non-RAND Royalties for Standards-Essential Patents

MCM v. HP Briefs

by Dennis Crouch


  • MCM-Petition-and-Appendix: (1) Whether inter partes review (IPR) violates Article III of the Constitution; and (2) whether IPR violates the Seventh Amendment to the Constitution.
  • Response Due June 30, 2016.

Amici in Support of Grant

  • MCM_INTERDIGITAL_TESSERA (“Characterizing something as a public right comes with certain consequences. By incorrectly holding that patents are public rights, the Federal Circuit’s decision has far-reaching and wholly implausible consequences that the Federal Circuit never grappled with and that have ‘nothing to do with the text or tradition of Article III.'”)
  • MCM_NYIPLA (“The public rights doctrine is a complex issue that requires this court’s resolution.”)
  • MCM_Mossoff (“[T]his Court has long recognized and secured the constitutional protection of patents as private property rights reaching back to the early American Republic.”) (Signed by Profs Mossoff (Scalia Law), Cahoy (Penn State), Claeys (Scalia Law), Dolin (Baltimore), Ely (Vandy), Epstein (NYU & Chicago), Harrington (Montreal), Holte (SIU), Hurwitz (Nebraska), Manta (Hofstra), O’Connor (UW), Osenga (Richmond), Schultz (SIU)).
  • MCM_UNM (“[T]he threat of IPR devalues university patents.”)
  • MCM_LAUDER (“Amici agree with Petitioner that the IPR procedure was beyond Congress’s power to impose, and its underpinning rationale—that patents are a matter of administrative largesse, rather than a constitutionally protected property right—is constitutionally infirm.”)
  • MCM_HoustonInvestors (“Congress has exceeded its authority to undermine patents to give “patent pirates” encouragement to infringe patents in the well supported historical expectation that the IPR is likely to invalidate the patents.”
  • MCM_SECURITYPEOPLE (“As noted in McCormick Harvesting Co. v. Aultman, 169 U.S. 606 (1898), once a patent is issued, it can only be cancelled or invalidated by an Article III court, not the executive branch. Similarly, as taught in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989), Congress cannot conjure away the Seventh Amendment fact-finding process employed in Article III courts by mandating that traditional legal claims be tried to an administrative tribunal.”)
  • MCM_IEEE-USA (“This bizarre state of affairs merits the close scrutiny of this Court. All issued U.S. patents deserve the same constitutional protections and legal standards in invalidation proceedings as those available in Article III courts.”) * UPDATE: The brief was filed by IEEE-USA (a division of IEEE).