By Dennis Crouch
US Water Services, Inc. v. ChemTreat (Fed. Cir. 2014)
The Federal Circuit has determined that it lacks subject-matter appellate jurisdiction over the patent infringement appeal and has thus transferred the case to its sister-court, the Court of Appeals for the Eighth Circuit.
The unusual outcome stems from the parties pleading posture that began pre-AIA. Under the law when the case was filed, the Federal Circuit has subject-matter appellate jurisdiction over cases that “arise under” federal patent law. Arising-under jurisdiction is a term of art that follows the “well-pled complaint rule” which requires the patent law question appear on the face of the plaintiff’s original 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).
Here, the original complaint was filed by USWS against ChemTreat for trade secret misappropriation under Minnesota law. In a counter claim, ChemTreat alleged invalidity and non-infringement of one of USWS’s issued patents. The parties then settled the trade secret claim and the district court subsequently granted ChemTreat’s motion for summary judgment of non-infringement. USWS now appeals that noninfringement determination. Since the patent issue was first raised in the responsive pleading (rather than in the complaint), the case cannot be said to arise under the federal patent laws. The result then is that the Federal Circuit has no subject matter appellate jurisdiction over the appeal.
As the patentee with a technical argument on appeal, the USWS was looking for Federal Circuit jurisdiction. It raised two arguments on the appeal (1) that it consented to the counterclaim filing; and (2) that the counterclaim joined additional parties (the patent owners since USWS was merely the exclusive licensee) and thus should be seen as the equivalent to a complaint under the well-pled-complaint rule. In its decision here, the Federal Circuit rejected both of those arguments, finding instead that the rule is hard and inflexible. See also Wawrzynski v. H.J. Heinz Co., 728 F.3d 1374 (Fed. Cir. 2013).
tl;dr: patent issue was first raised in a counterclaim so the case did not arise under the US patent laws.
If the same lawsuit had been more recently filed, it is possible but still unlikely that the Federal Circuit would have subject matter appellate jurisdiction based upon the AIA amendments made in 2011. In particular, the Federal Circuit jurisdiction now additionally extends to cases where the patent law issue is raised only in a “compulsory counterclaim.” Although not expressly decided it does not appear that the patent issue here should be seen as compulsory under the rules of civil procedure but instead merely supplemental. As such, even the broader appellate subject matter jurisdiction rules of the AIA would not permit the Federal Circuit to hear the case.
= = = = =
The decision here was based upon appellate subject matter jurisdiction and did not reach the merits of the underlying appeal. Those underlying merits focused on whether the district court held declaratory judgment jurisdiction since (according to USWS), USWS never threatened patent infringement and the challenged patent was so different from ChemTreat’s activities that it would be silly to fear such an action.
VIRTUALAGILITY INC. v. SALESFORCE.COM, INC
link to cafc.uscourts.gov
While litigation was pending against a defendant and that defendant’s customers, the defendant requested the PTO to institute a CBM. After the PTAB ordered trial on all claims, the defendant moved the district court to stay. A stay of a district court action favor of a CBM is authorized by statute, listing for factors. The District Court analyzed all four factors and found in favor of the patent owner and refuse entered a stay. The District Court reviewed the petition and the PTAB’s decision and was not convinced that the PTAB have would canceled all claims based on section 101 or based upon prior art. One of the reasons the district court denied a stay was that the CBM would not simplify the issues in that the defendant did not bring all the relevant prior art that was before the District Court to the attention of the patent office. Another of the reasons was that the defendants were direct competitors and the delay in the lawsuit would be prejudicial to the patent owner.
The defendant appealed and Federal Circuit reversed over another vigorous dissent by Judge Newman.
Essentially the Federal Circuit held that Congress did not intend district courts to review the PTAB’s institution decision as that would be a collateral attack on the PTAB. Once the PTAB institutes on all claims, that weighs heavily in favor of a stay.
Furthermore, the fact that some references were not presented to the PTO does not weigh gases stay because if the PTAB canceled all claims, that would resolve the issue even with respect to the withheld references.
The fact of competition weighed against stay, but was not decisive.
Judge Newman noted the Congressional record that Congress did not want the stays to be automatic, but that the decision of the panel would make the decision of stay almost automatic if all claims in suit were subject to the PTAB institution decision. She further noted that the fact that the patent owner was suing a direct competitor should have been given heavy weight.
Further she observed from the recent Hallmark case that decisions of the district court are entitled to respect. The majority did not decide the issue of the standard of review, however, saying that whatever the standard was, the outcome would be the same.
“did not intend district courts to review the PTAB’s institution decision”
Don’t have time to check this out, but this might impact the “takings” argument, based on the Executive branch (Article I court) taking one of the sticks in the bundle or property rights that we have discussed previously.
Note that in previous discussions, the separateness of this property right was distinguished from any later adjudication on the merits (of which may be challenged in an Article III proceeding).
This appears to create a violation of substantive due process.
I think you are actually on to something anon. The question I think comes down to whether patents rise to the level of other property rights in the Constitution. It is stated in a discretionary fashion and so the question is whether they can weaken the property to any form because the granting of the property is discretionary.
The power is stated in a discretionary fashion.
But like other such discretionary powers, once a system is in place, the property created is not discretionary.
The power to obtain is left in the hands of the applicant. When the applicant meets his part of the Quid Pro Quo, it is not discretionary on the part of the government to give the grant of patent.
When the Executive branch makes that grant of a patent, the full rights of the property inure.
The full rights are a bundle of sticks. One of those sticks is the presumption of validity.
That stick is being taken – not by an Article III court, but an Executive branch Article I court – and apparently, without any form of or ability to challenge.
This is a taking.
Of course, the remedy for this taking may – or may not – be nominal.
But a taking without remedy most definitely is unconstitutional.
I think that is basically right. But, I also think that it is ironic that the SCOTUS is so worried about adhering to their federal common law of 200 years ago while at the same time not paying attention to the question of what does “patent” mean in the Constitution. It says patent. So, shouldn’t the SCOTUS being going ape sh$t over these changes to the fundamental rights?
Night, any legal right is property. Marbury v. Madison.
anon, you already know that my view that taking validity from the courts is unconstitutional (Art. III, Jury Trial right). But consider this from the opinion:
“Indeed, a challenge to the PTAB’s “more likely than not” determination at this stage amounts to an improper collateral attack on the PTAB’s decision to institute CBM review, and allowing it would create serious practical problems. As a preliminary matter, Congress made postgrant
review more difficult to obtain than reexamination by raising the standard from “a substantial new question of patentability,” 35 U.S.C. § 303(a) (2012), to “more likely than not . . . unpatentable,” id. § 324(a). Congress clearly did not intend district courts to hold mini-trials reviewing the PTAB’s decision on the merits of the CBM review. To
do so would overwhelm and dramatically expand the nature of the stay determination. If the district court were required to “review” the merits of the PTAB’s decision to institute a CBM proceeding as part of its stay
determination, it would undermine the purpose of the stay. When the stay decision is then appealed to this court, we would be required to likewise review the PTAB’s decision to institute a CBM proceeding. This is clearly not how or when Congress intended review of the PTAB’s
CBM determinations to take place.”
Consider also, that institution decisions are by statute not appealable.
1) the “Congress didn’t want blah blah blah” is a bunch of hogwash made up of whole cloth
2) you did not address the fact (at all) that a property right was taken by the executive branch. This is a post-grant property right being taken without review by the Executive branch.
anon, the patent is not revoked, in whole or in part, until the PTAB issues its final decision canceling one or more claims.
As I have previously pointed out, the executive has no power to do that and the act is unconstitutional. Stern v. Marshall (and the cases it relies on).
I wonder if the patent owner here can raise the constitutional issue on remand in some form. They may not have preserved the issue properly because they should have raised it in opposition to the stay motion.
Regardless, the patent owner should give it the best they’ve got. They might want to refer to IPR 2013-00217, Patent Owners response.
Ned,
You are not paying attention. I distinguished the revocation of the patent itself with the taking of a different stick in the bundle of property rights.
Revocation (or not) of the patent itself is not at issue. The stick in the bundle is the presumption of validity. That stick is taken by the Executive branch at the point that the Article I judge decides to pull the granted patent back into review. That is the issue highlighted here with the Article III court saying that such a decision is not reviewable.
We have a taking – not of the entire bundle of sticks – but of one particular stick with no compensation, no review. That is the due process violation. Importantly, this taking by the executive branch, as being permitted by the judicial branch’s evaluation of the legislative branch’s intent – still fails the constitutional prohibition on taking. Here, it does not matter that all three branches are on the same page – a taking of a property right, without process of review or compensation has occurred. Once the grant occurs – that particular stick in the bundle of rights is real. And it does have value.
Hey, anon, check post 11, just below.
No one has a vested right in a rule of law.
Again, Ned, you are missing the point.
Nowhere do I identify what has been taken as a right of a legal action.
Nowhere.
I clearly identify the particular property right.
Why are you trying to obfuscate this?
I am not focusing on the loss of the review of the taking – I am focusing on the underlying taking itself.
Pay attention man.
anon, one does no have a property right in a statute, a rule of law, a lawsuit or such.
One has a property right in the patent.
Ned,
Obtuse. Is it deliberate? (said in the best Andy Dufresne tones)
The stick in the bundle of patent property rights is the presumption of validity.
STAUFFER v. BROOKS 2 BROTHERS GROUP, INC
link to cafc.uscourts.gov
The AIA retroactively removed qui tam jurisdiction wrt false marking, and false making liability for marking with expired patents. A party to a pending lawsuit was then nonsuited, but argued the AIA was unconstitutional.
The Federal Circuit held that the nonsuited party had standing to raise the constitutionality issues.
Held that the Supreme Court decided the issue over a hundred years ago in the case of United States v. Connor, 138 U.S. 61 (1891), when it held that Congress could constitutionally amend laws in a way that nullified a pending suit of a qui tam claimant.
Held, the party had no vested right either in a rule of law or in a lawsuit.
The AIA is not unconstitutional on these grounds.
TROY v. SAMSON MANUFACTURING CORP
link to cafc.uscourts.gov
The Federal Circuit reversed a District Court holding that a losing party (Troy) to an interference could not introduce evidence regarding a July 2004 reduction the practice that it had not raised during interference. The PTO and the winning party to interference (Samson) had relied upon an earlier Federal Circuit case that a trial de novo cannot raise new issues.
The Federal Circuit reversal was based upon the Supreme Court case of Kappos v. Hyatt, that had ruled that in such a trial de novo that a party could introduce any evidence without restriction. Such a broad statement was inconsistent with limiting the scope of a de novo review to new evidence with respect to previously litigated issues. Thus even though the previous Federal Circuit case relied upon by the PTO had not been overturned directly by the Supreme Court Hyatt, the Federal Circuit said it was implicitly overruled.
One of the new issues that the losing party interference had raised was inequitable conduct by the Samson who had submitted a drawing made by Troy as its own invention. The losing party had proven in a trade secret action in a Massachusetts court that the Samson had derived the asserted invention at least in part from the losing party, Troy. The remand ordered the trial of this issue.
In our discussions Ned of pirates and good titles, what does this case remind you of?
Well, under the current law, anon, 102(f) exists and the patent is invalid if the invention was derived, even in part, from another.
Search as I may, I see absolutely ZERO mention of 102(f) in the entire decision.
anon, one assumes that a patent is invalid if the inventorship is incorrect, especially if it is been pirated. That was certainly the holding of OddzOn Products, Inc. v. Just Toys, Inc., 122 F.3d 1396 (Fed. Cir. 1997), a decision based upon §102(f). The repeal of §102(f) was intended to overrule this decision.
You stretch too far with a view simply not supported with the immediate case.
Validity has nothing to do with the issue at hand.
In Stanford v Roche, the issue was not validity – it was standing.
Standing Ned – a ground of legal challenge not contained in section 285, that nonetheless is always available to prevent the pirates from enjoying their ill-gotten booty.
Separately, as to overruling the decision as you now claim, do you have any backing of this in the Congressional record?
Anon, check this:
link to aiarulemaking.com
Refers to Dennis’ article on 102(f) and on Kappos’ lameass response that 101 fills the gap.
Ned – get out of the weeds.
Your link is nothing but fluff Ned.
One still has to submit an oath, right? Lying on that oath is still a fraud on the office right? one who lies, who attempts to pirate off the work of another cannot enforce and profit, can he Ned?
Focus, Ned – you need to focus.
And let me again stress the point at which you jump headlong into the weeds:
Validity has nothing to do with the issue at hand.
DIGITECH IMAGE TECHNOLOGIES v. ELECTRONICS FOR IMAGING, INC
link to cafc.uscourts.gov
The Federal Circuit affirmed a holding of the Central District Court for the District of California that claims drawn to a device profile (useful in digital imaging processing) and a method for deriving a device profile are invalid under §101 for two different reasons. First, the device profile is nothing more than information and information is neither a machine, manufacture or composition of matter. Second the method for deriving the device profile specifies nothing more than calculation because the claim did not require input from the physical device. Therefore the claim was invalid under the Supreme Court decision in Alice v. CLS Bank.
1. A device profile for describing properties of a device in a digital image reproduction system to capture, transform or render an image, said device profile comprising:
first data for describing a device de-pendent transformation of color infor-mation content of the image to a device independent color space; and
second data for describing a device de-pendent transformation of spatial in-formation content of the image in said device independent color space.
10.A method of gen erating a device profile that describes properties of a device in a digital im-age reproduction system for capturing, trans-forming or rendering an image, said method comprising:
gen erating first data for describing a device dependent transformation of col-or information content of the image to a device independent color space through use of measured chromatic stimuli and device response characteristic functions;
gen erating second data for describing a device dependent transformation of spatial information content of the image in said device independent color space
through use of spatial stimuli and de-vice response characteristic functions; and
combining said first and second data in-to the device profile.
Information is non statutory? Who’d have thunk it?
Manipulation of information without more is not a statutory process (abstract exception)? Who’d have thunk it.
What have Malcolm and I have been saying here for quite some time.
PTO, back to the drawing boards. Find any case authored by Rich and put an asterisk next to it.
If only they had used the term “device profile data structure” instead they’d be totally golden.
Just kidding, folks.
You really can’t get around this basic, fundamental fact: information is ineligible subject matter. Therefore, you can’t use patents to protect information. Therefore, if your patent protects information — regardless of how limited the field is in which that information is protected — your patent is an ineligible p. o. s.
See how that works? It’s really, really easy to follow the logic …. unless you believe that the much-beloved 1952 patent act was intentionally written with giant gaping loopholes designed to allow people to protect information with patents. Does anyone believe that? As far as I know, nobody believes that.
“If only they had used the term “device profile data structure” instead they’d be totally golden.”
Lulz.
The case here is NOT what Malcolm has been preaching.
Please pay heed to my comments on the other thread (the one that introduced this case).
Please pay heed to my comments
ROTFLMAO
Get a life.
Get a legal argument.
Um, you do know what one of those is, right?
(hint: it involves law, and likely fact – and typically not dependent on table pounding, so you will have to change your ways)
Malcolm at least is trying to help everyone’s health here: link to theweek.com
Here’s something that Ned and Malcolm need to, um, integrate:
anthropomorphication.
Folks, we are very, very close to a full restoration of Hotel Security and its progeny overruled by Rich in State Street Bank. The gravamen of Hotel Security: combine the non statutory with the statutory and there must be invention in the statutory.
Imagine had the claimant simply added that the profile was recorded on a CRM? Then the court would had to apply Prometheus/Alice. That would have said the addition of a known media would not be “enough.” There has to be invention in the eligible.
This goes to show that the Stevens dissent in Bilksi is slowly being adopted as well, as that dissent would have restored Hotel Security in a direct overrule of State Street Bank.
Imagine had the claimant simply added that the profile was recorded on a CRM?
Or a piece of paper.
Then the court would had to apply Prometheus/Alice. That would have said the addition of a known media would not be “enough.” There has to be invention in the eligible.
Yup.
“Or a piece of paper.”
Would have been even better!
“Imagine had the claimant simply added that the profile was recorded on a CRM? Then the court would had to apply Prometheus/Alice. That would have said the addition of a known media would not be “enough.” There has to be invention in the eligible.”
Indeed. Would have made it more interesting.
LOL – the return of the “Britney Spears CD is the same as the Microsoft operating disc” depth of legal analysis.
You might have a point, Billy, if the “innovation” here was described with half as much detail as exists in one measure of a typical Britney Spears song.
Ned,
You are clearly not reading what the judges here wrote.
Read the case again my friend – this case does NOT support your agenda.
“This goes to show that the Stevens dissent in Bilksi is slowly being adopted as well”
Yes, Ned, going from four votes to three votes is indeed “slow adoption.”
H-W TECHNOLOGY, L. C. v. OVERSTOCK.COM, INC
link to cafc.uscourts.gov
This case involves two issues: first, whether a claim that he issued without an element that was present at the notice of allowance, could be enforced. The Federal Circuit affirmed the district court holding that such claim cannot be asserted.
Federal Circuit further affirmed the district court holding that a certificate of correction that issued after the case had been filed did not apply by statute because the statute states that a certificate of correction only applies to subsequent cause of action.
However the Federal Circuit reversed the district court holding that the claim was invalid, because a claim as corrected has not yet been subject to litigation.
Regarding the second issue, there was a CRM claim that called for a computer program comprising a number of method steps in the claim as set forth below. The Federal Circuit affirmed a ruling that the claim was indefinite because one cannot mix “apparatus” and method steps in a single claim.
17. A tangible computer readable medium encoded
with computer program for performing contextual
searches on an Internet Phone (IP) phone
comprising the steps of:
receiving a command to perform a contextual
search;
receiving search criteria from a user of said IP
phone;
submitting said search criteria to a server
coupled to said IP phone; and
receiving from said server a list of merchants
matching said search criteria and information
regarding each of said merchants
in said list;
wherein said user completes a transaction with
at least one of said merchants listed without
the need to gen erate a voice call;
wherein said information received by said user
comprises a variety of offers, wherein
said user selects one of said variety of offers
associated with said one of said merchants
listed, wherein said selected offer is
transmitted to said one of said merchants
listed electronically; and
wherein said user’s contact and payment information
is not transmitted to said one of
said merchants listed, wherein said user’s
contact and payment information is available
to said one of said merchants listed.
Doesn’t this case invalidate all CRM claims not using MPF?
Ned,
You have done it again (oops – in the best Britney Spears tones).
You have misrepresented what exactly was being “mixed” – and this item is not representative of CRM claims.
To wit, the portion of the claim at issue:
“wherein said user completes a transaction with
at least one of said merchants listed without
the need to g3n3rate a voice call;”
’955 patent col. 28 l. 61–col. 29 l. 15 ([here, bold] added).
The district court held that the italicized limitations
were method limitations and that apparatus claim 17
thus combines two statutory classes of invention. The
rationale behind invalidating such a claim as indefinite is
that it is unclear when infringement occurs.”
Please take note (before you go on a carpet bombing rampage).
I owe you a Coke.
for completeness, a part of the next claim element was also italicized:
“…wherein said user selects one of said variety of offers associated with said one of said merchants listed,…“
Good point, anon. It was the human action that was the key.
this item is not representative of CRM claims
Seems pretty “representative” of a lot of j nk that’s floating out there.
Kiss yet another class of s 0ftie w 0ftie patents buh-bye.
LOL – Another Malcolm self-FAIL.
Pumpkin, try actually reading the case and what has been posted.
No, it doesn’t, Ned. It invalidates all CRM claims that are as poorly written as this one. The court had no problem with the receiving, receiving, submitting, and receiving steps – in context, these are not steps that define a claimed method but instead define the program that resides on the CRM. On the other hand, some of the “wherein” clauses recite steps in the form of method steps, not in the form of steps that are carried out by the computer program. For instance, the limitation “wherein said user selects one of said variety of offers” is not a step carried out by the program.
The drafter here got lazy when converting the method to Beauregard form. It perhaps wouldn’t have been a critical error if the method claim wasn’t unenforceable for other reasons.
no prob
DanH, agreed.
“in context, these are not steps that define a claimed method but instead define the program that resides on the CRM.”
So much hilarity in that statement! “these blatant method steps merely describe a program therefore they all coo!”
“For instance, the limitation “wherein said user selects one of said variety of offers” is not a step carried out by the program.”
As long as the step is carried out by a compooter instead of a person yous all good to go!
LOL – pay attention 6. That step specifically was not one “carried out by a compooter instead of a person,” hence, NOT good to go.
/face palm
I’m pretty sure 6 was responding to DanH’s proposed “solution” to fixing the claim and not addressing the claim as written.
Try to focus, Billy. Focus on your losses. They’re mounting.
“I’m pretty sure 6 was responding to DanH’s proposed “solution” to fixing the claim and not addressing the claim as written.”
Did both at the same time actually in this case! The intention here was two birds, one stone!
You are “pretty wrong” again – 6 quoted the claim.
“You are “pretty wrong” again – 6 quoted the claim.”
He was part right and part wrong anon. So were you. Just let the right/wronging go brosef.
LOL – trying to control again, eh 6?
“pay attention 6. That step specifically was not one “carried out by a compooter instead of a person,” hence, NOT good to go.”
Yes, I know that re re. That’s why I made a sarcastic comment re our existing paradigm! I was poking fun at our existing “paradigm”, where so long as you stick the method step in the “program” you’re golden, but if it isn’t on/in the “program” you’re not. Through the existing paradigm (where the 112 justification comes from “we don’t know when infringement happens”) we’ve effectively carved out an exception for compooter methods attached to machines, but all other methods attached to machines are anathema.
Have either of you bothered to read the case yet?
Yes I have read the case.
Does not show.
“Does not show.”
Yeah well your being an ar se shows, as always.
LOL – yet another control attempt through ad hominem…
“The Federal Circuit affirmed a ruling that the claim was indefinite because one cannot mix “apparatus” and method steps in a single claim.”
Meh, they hold only that because of the “wherein”s in the claim that it was indefinite. Of course they simply set to the side all the other 10 method steps that are blatantly set forth, supposing them to have been magically transformed via a draftsman into magical “functions” that are totally not method steps.
So ta rded. It’ll take a case involving the actual method steps (as opposed to the mere wherein’s requiring someone to take action tacked onto the bottom) being contested all the way to the supremes to get people away from worshiping the draftsmanship.
“ get people away from worshiping the draftsmanship.”
LOL – 6, do you have an option to use something other than claims?