Federal Circuit Orders District Court to Stay Litigation to Await Conclusion of Later-Filed Post-Issuance Review (CBM) Proceeding

By Dennis Crouch

VirtualAgility Inc., v. Salesforce.com, Dell, Dr. Pepper, et al. (Fed. Cir. 2014)

The America-Invents-Act (AIA) created set of new and powerful administrative proceedings that allow third parties to challenge issued patents. These include post-grant review (PGR), covered business method review (CBM), and inter partes review (IPR). Congress maintained the less-powerful but still important third-party requested ex parte reexamination. In the coming months, the Federal Circuit will be challenged with reviewing various aspects of the new proceedings. Perhaps most importantly, the court will be challenged with determining how much deference and leeway to give the USPTO in developing its own procedures and interpretation of the law.

Apart from the agency deference issue, a second major issue whose steam continues to build involves the rising number of conflicts between federal courts and the patent office. Traditionally, post-issuance challenges have been handled by the courts, but the new procedures have shifted the balance of power. It turns out that most patents involved in post-issuance administrative challenges are also involved in parallel challenges in federal district court. These parallel proceedings will often have somewhat different results, and many remain confused over the potential result of such a conflict. In the extreme, the issue raises constitutional questions of separation of powers between the executive (the PTO) and the courts.

One solution to the conflict is to have the decision-makers take turns and apply principles of estoppel, preclusion, and comity to resolve the delayed process in a way that avoids conflict with the first-decided case. The PTO has generally refused to stay its proceedings and many district court judges have difficulty ordering stays – especially in cases such as this where the review request is filed several months after the infringement lawsuit. It is important to recognize that post-issuance review requests are limited by law to only challenge issues that can also be challenged in court. Thus, for a judge, the post-issuance review request serves as a transparent statement that the defendant does not trust the judge or jury to make the call.

The Timeline Here: In January 2013, VA sued the defendants in the Eastern District of Texas, alleging infringement of its U.S. Patent No. 8,095,413. Five months later (May 2013) one of the defendants (Salesforce.Com) filed a covered business method review (CBM) petition alleging that that the claim of the patent were all invalid under Sections 101, 102, and 103 of the Patent Act. In November 2013, the PTAB partially granted the CBM petition and ordered review of the claims under Sections 101 and 102 (but not 103) and setting a July 2014 PTAB trial date with a final decision expected by November 2014. At that point, the district court was made-aware of the PTAB’s late-start but rapid progress. However, the district court refused to stay the litigation pending outcome of the PTAB case and continued moving forward with claim construction hearing set for April 2014 and trial also set for November 2014.

One aspect of the new CBM process is that the statute allows for interlocutory appeal of a district court’s decision to grant or deny a stay of litigation pending CBM review. Thus, after the district court refused to grant the stay, Salesforce appealed. The Federal Circuit quickly granted a stay of the district court litigation pending appeal and has now ordered that the district court to stay its proceedings pending the CBM review. The majority decision here is written by Judge Moore and joined by Judge Chen. Judge Newman wrote in dissent arguing that the decision here removes the discretion given to district courts.

The statute provides four factors that a district court must consider when determining whether or not to grant a stay of a late-filed CBM review.

[T]he court shall decide whether to enter a stay based on—

(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;

(B) whether discovery is complete and whether a trial date has been set;

(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and

(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

AIA §18(b)(1). Regarding appeals, the statute indicates that the Federal Circuit’s “shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.” AIA §18(b)(2). Thus, Judge Newman’s call for deference is likely misplaced. For its part, the majority refused to determine whether any deference is required and instead held that reversal was warranted even under an abuse of discretion standard.

The result here provides a strong suggestion to district courts that they should stay litigation once the PTAB has indicated that it will review the identical claims being litigated in court.

175 thoughts on “Federal Circuit Orders District Court to Stay Litigation to Await Conclusion of Later-Filed Post-Issuance Review (CBM) Proceeding

  1. 8

    … coming soon from a PTAB near you:

    “Since your patent can be sold, that means your patent is a business method.”

    “Accordingly, we now hold that ALL patents are now subject to CBM reexams.”

    p.s. And please stop calling us patent death squads … even though we know we are.

    1. 8.1

      What’s really obnoxious, Steve, is that the PTAB has been able to assert statutory jurisdiction over cases where they arguably do not have jurisdiction, and the courts have studiously refused to review those decisions, thereby forcing patent owners to defend their patents in the patent office, at great expense, with no guarantee that they will ever be able to have judicial review of the unwarranted power grab by the patent office.

      What the courts seem to have overlooked is the abuse that these proceedings actually are. They increase costs to the patent owner who must now defend both in court and in the patent office. If the court cases are stayed pending, justice this denied the patent owner who effectively loses patent term. Moreover, if the patent is protecting a small company’s business in products and services it provides, it needs patent protection to stay in business. Stripping patent owners of the ability to proceed in court, as in this case, effectively undermines the value of a patent to a startup. This ultimately damages not only that business, but all startups. Venture capitalists will note that patents have become all but unenforceable until they had been independently reviewed by the patent office one more time, a process that can and will take years.

      1. 8.1.2

        Wow, Ned, you are starting to sound like someone who actually cares about the law. If we could only straighten you out regarding Benson, you would be one of the good guys.

        1. 8.1.2.1

          I’ve led Ned down a path of discussion many times – he quite refuses to take those last few steps towards a reasonable and logical conclusion.

          Just don’t see that changing any time soon.

      2. 8.1.3

        “What the courts seem to have overlooked is the abuse that these proceedings actually are. ”

        You know Ned, I tend to agree with you. But on the other hand we cannot forget the abuse that led to the implementation of these proceedings in the first place.

        1. 8.1.3.1

          6, the abuse of which you speak are due mainly to examinations that allowed obvious patents, or with broad functional claims (which can be the same thing), that arguably read on whole industries who “independently” invented (yeah sure). The big boys wanted a cheap way to challenge these patents without going to court.

          But now, they are used by the big boys as litigation tactics to increase burdens on small fry patent owners by adding another hostile forum designed to kill patents with their lower burden and BRI.

          1. 8.1.3.1.1

            I don’t think it has really been absorbed yet just how much the post grant reviews have weakened a patent. Write that letter and your client may need another $500K to defend the patent in patent office.

            You have to tell the client that too. Are you sure you want to write a letter? Plus for small companies it can mean waiting a 1 1/2, which is a long, long time in Internet time.

            1. 8.1.3.1.1.1

              I will again emphasize that the anti-patent t3a baggers refuse to admit any weakening. Shows how mad the lot is.

              1. 8.1.3.1.1.1.1

                Well I for one will be happy to. I’m surprise if the rest wouldn’t. Although you may be right that the full impact has not been absorbed yet they’ll be coming around shortly.

              2. 8.1.3.1.1.1.2

                Night, I have been known to caution small business clients who finally get their patent not to go after any infringers whatsoever until the 9-month window for PGR elapses. I wouldn’t be surprised if that is not the general advice of any firm to their clients today.

                What PGRs have done is effectively remove 9 months of enforceability from a patent. That is all that was accomplished with that legislation.

                What in the world were they thinking? Be just like Europe? For what reason? What problem were they trying to solve?

                Ger many has a peculiar patent systems where patent validity cannot be challenged in court. This forces companies to file oppositions.

                We don’t have such a system, and there really is no need for oppositions unless one really is trying to become like Ger many and remove the whole issue of patent validity from the courts.

                But patent office litigation is a sport of kings. There is a real problem of disparity of resources. Forcing the small inventor or small business back into the patent office for years of litigation before his patent can be enforced has the effect of immunizing the big company from small-fry patents. It forces the small company to think once, twice or three times before they send a notice letter. What this does is give the big companies a license to every small company’s R&D, a license to steal with impunity.

                Think i4i v. Microsoft.

                It won’t be long before the lack of enforceability of patents by the small business will become well known. At that point, people will stop founding new businesses based on new ideas because they cannot protect them.

                Repeal of all these PGRs is not going to happen. That is why the constitutional challenge is so very, very important to the patent system.

              3. 8.1.3.1.1.1.3

                Night, I have been known to caution small business clients who finally get their patent not to go after any infringers whatsoever until the 9-month window for PGR elapses. I wouldn’t be surprised if that is not the gen eral advice of any firm to their clients today.

                What PGRs have done is effectively remove 9 months of enforceability from a patent. That is all that was accomplished with that legislation.

                What in the world were they thinking? Be just like Europe? For what reason? What problem were they trying to solve?

                Germany has a peculiar patent systems where patent validity cannot be challenged in court. This forces companies to file oppositions.

                We don’t have such a system, and there really is no need for oppositions unless one really is trying to become like Germany and remove the whole issue of patent validity from the courts.

                But patent office litigation is a sport of kings. There is a real problem of disparity of resources. Forcing the small inventor or small business back into the patent office for years of litigation before his patent can be enforced has the effect of immunizing the big company from small-fry patents. It forces the small company to think once, twice or three times before they send a notice letter. What this does is give the big companies a license to every small company’s R&D, a license to steal with impunity.

                Think i4i v. Microsoft.

                It won’t be long before the lack of enforceability of patents by the small business will become well known. At that point, people will stop founding new businesses based on new ideas because they cannot protect them.

                Repeal of all these PGRs is not going to happen. That is why the constitutional challenge is so very, very important to the patent system.

              4. 8.1.3.1.1.1.4

                What in the world were they thinking? Be just like Europe? For what reason?

                LOL

                getting warmer (hint big corp is usually synonymous with international corp)

              5. 8.1.3.1.1.1.5

                That is why the constitutional challenge is so very, very important to the patent system.

                Watch for the Chaebol effect with that torpedo below the waterline of the good ship AIA.

              6. 8.1.3.1.1.1.6

                Wow, Ned, you are sounding more and more like me every day. I agree that 9 months is another huge weakening effect.

                I also agree that we are going to reach a tipping point where a company like Google is just going to say no more patents and if you mess with us we are going to take your whole patent portfolio to the death squads. They will probably say something like we just put $10 billion into a fund for taking out anyone that tries to mess with us.

                (They will probably keep some patents themselves to sue other people that copy their information processing methods.)

                The tipping point is closer. Not quite there yet. Another round of patent destroying legislation and 6 might find himself out on the pavement.

              7. 8.1.3.1.1.1.7

                “Night, I have been known to caution small business clients who finally get their patent not to go after any infringers whatsoever until the 9-month window for PGR elapses. I wouldn’t be surprised if that is not the gen eral advice of any firm to their clients today.

                What PGRs have done is effectively remove 9 months of enforceability from a patent. That is all that was accomplished with that legislation.”

                A yummy yummy yummy target for laches. I hope you did this in an easily discovered email!

              8. 8.1.3.1.1.1.8

                “Not quite there yet. Another round of patent destroying legislation and 6 might find himself out on the pavement.”

                You might have a hard time beliebing this but people who actually work in the useful arts will carry on carrying on even without the info processing folks.

              9. 8.1.3.1.1.1.9

                6, you mean like actual work of replacing 10’s of millions of people with information processing machines?

              10. 8.1.3.1.1.1.10

                “replacing 10′s of millions of people with information processing machines?”

                Nah. That doesn’t sound statutory off the cuff.

          2. 8.1.3.1.2

            “6, the abuse of which you speak are due mainly to examinations that allowed obvious patents, ”

            Frankly I disagree about the obviousness thing. It’s an overblown concern imo. Sure they happen, but to lay a big ol share of the blame there is a mistake imo.

            “or with broad functional claims (which can be the same thing), that arguably read on whole industries who “independently” invented (yeah sure). ”

            In part, no doubt. That’s yet another of the abuses to stack on top of the pile. Regardless, patent attorneys don’t want to give up that little tool in their toolkit.

            They want to have their cake and eat it too. Thus the whole system must suffer collateral damage. Who’d a thunk? O wait, people like myself predicted exactly that not 5 years back. And the longer it goes on, the more and more collateral damage will be done.

            “But now, they are used by the big boys as litigation tactics to increase burdens on small fry patent owners by adding another hostile forum designed to kill patents with their lower burden and BRI.”

            What’s that you say? Political collateral damage happened? Hmmmm?

            1. 8.1.3.1.2.1

              6, you might want to observe that some big companies bring IPRs against multiple patents of a patent owner. Now I have heard of negotiating tactics where the big company will say something like this to the small fry,

              “Grant us a license on X terms or else we will file IPRs against every patent in your portfolio.”

              Since there is no standing requirement, they can say this with impunity because they can bring IRPs against every patent.

              Also imagine a patent war conducted by two big companies. This is going to happen, trust me. Each company will PGR or IPR every or a large number of patents of the other.

              Such is not about good patents, but about abuse of process.

              You know why England adopted the English rule? The Barons of England used to engage in warfare between each other in court. Spurious disputes over land or anything were brought simply to harass and force settlements by the impecunious Baron to the deeper-pocketed Baron.

              In the United States, one cannot simply go to court. One has to have standing. But with PGRs and IPRs, standing is not required, and abuse can and will happen. I believe it is already happened because some big companies have already brought multiple IPRs against small companies. There is only one good reason for that.

              1. 8.1.3.1.2.1.2

                Scire facias.

                Abused by the wealthy in England – so much so that it was eventually repealed even there.

                We had the “writ” in effect with the first patent statutes that allowed anyone to bring suit to revoke a patent. (The concepts of standing had not yet developed in the early 1800’s.) ex parte Wood and Brudage held this action was in the nature of a writ scire facias at common law, and therefor had a 7th Amendment right to a jury trial on disputed facts as that right was accorded the patent owner in scire facias actions.

              2. 8.1.3.1.2.1.3

                “6, you might want to observe that some big companies bring IPRs against multiple patents of a patent owner. ”

                That’s exactly what I would do.

                “Grant us a license on X terms or else we will file IPRs against every patent in your portfolio.”

                That’s exactly what I would do. And it is what I have told others they can do vs a person patent threatening their business. And it’ll bring that license right on down right quick I imagine. Especially when those other patents are already licensed and making $$$.

                “Since there is no standing requirement, they can say this with impunity because they can bring IRPs against every patent.”

                Mhmmm.

                “Such is not about good patents, but about abuse of process.”

                I agree and it is delicious. All that just because you guys couldn’t be bothered to reign in 101 etc.

                Too flipping bad.

                “There is only one good reason for that.”

                Mhmmm.

              3. 8.1.3.1.2.1.4

                Oh and I should add Ned, a slightly more advanced version of that tactic that I thunk up. If I’ve already bothered to dredge up a few 102’s on some of their issued patents that are licensed I’ll also make the amount that I’m demanding to pay to license their patent negative (so that they’re paying me hush money) and I’ll demand that license forthwith.

        2. 8.1.3.2

          Fix abuse with counter-abuse. The monotonous government solution to all of life’s problems, eh, “brosefus”?

      3. 8.1.4

        “If the court cases are stayed pending, justice this denied the patent owner who effectively loses patent term. Moreover, if the patent is protecting a small company’s business in products and services it provides, it needs patent protection to stay in business. Stripping patent owners of the ability to proceed in court, as in this case, effectively undermines the value of a patent to a startup. This ultimately damages not only that business, but all startups. Venture capitalists will note that patents have become all but unenforceable until they had been independently reviewed by the patent office one more time, a process that can and will take years.”

        And all that happened simply because you guys couldn’t be bothered to reign in blatant skirting of 101 and patent trolling.

        I mean, I would be sad, but meh. You guys don’t want to address the actual problem. You want your cake and to eat it too.

        1. 8.1.4.2

          It’s like sitting down at a restaurant, looking over the menu and mentioning that you would like the steak if you can only pay for the salad – and the restaurant owner agrees, brings you the steak bu then gets upset when you only pay for the salad.

          6 – do your Fn job, stop whining about it and for the love of all that is holy, stop trying to blame others when you aren’t doing your job.

          1. 8.1.4.2.1

            “It’s like sitting down at a restaurant, looking over the menu and mentioning that you would like the steak if you can only pay for the salad – and the restaurant owner agrees, brings you the steak bu then gets upset when you only pay for the salad.”

            What is “like” that?

            “6 – do your Fn job, stop whining about it and for the love of all that is holy, stop trying to blame others when you aren’t doing your job.”

            Why you worried about me? In this thread we’re talking about congressional programs bro. Stay on target.

            1. 8.1.4.2.1.1

              The target was introduced by you at post 8.1.3, with your (wrong) accusation of “abuse.”

              I am very much on target, thank you.

              1. 8.1.4.2.1.1.1

                So then the abuse is what is like sitting down at a restaurant and doing all that stuff? And you’re worried about me because of the abuse even though I’m allegedly “wrong” about the abuse?

              2. 8.1.4.2.1.1.2

                You are just wrong about so many things 6.

                Here, you are wrong in QQing about others “abuse,” when the crux of the matter is that you just aren’t doing the Fn job. You’ve gone retrograde about 6 years and are trying the old ploy of blame the applicants.

              3. 8.1.4.2.1.1.3

                “Here, you are wrong in QQing about others “abuse,” when the crux of the matter is that you just aren’t doing the Fn job. ”

                Oh I see. The “crux” of some specific “matter” (as yet unspecified) is that I’m not doing my job. I take it then that all PGR’s IPRs etc are my fault. None of them have anything to do with congress’s subjective perceptions of trolls etc.

                Too funny anon. Too funny. Always good for a laugh.

                I still don’t see what “it” was that is supposedly like being at a restaurant though. I hope you’ll explain what “it” was so I can lol some more. You’re a regular comedian tonight.

                “You are just wrong about so many things 6.”

                Of course I am Mr. OCPD. Of course I am.

  2. 7

    I’ve misplaced my glossary for “technological.”

    Does anyone have a non-circular definition to post so that we can all get on the same page here?

    1. 7.1

      Technological: “Of, relating to, or using technology.”

      Taking us to (from Wikipedia):

      “Technology (from Greek τέχνη, techne, “art, skill, cunning of hand”; and -λογία, -logia[1]) is the making, modification, usage, and knowledge of tools, machines, techniques, crafts, systems, and methods of organization, in order to solve a problem, improve a pre-existing solution to a problem, achieve a goal, handle an applied input/output relation or perform a specific function.

      It can also refer to the collection of such tools, including machinery, modifications, arrangements and procedures.

      The term can either be applied generally or to specific areas: examples include construction technology, medical technology, and information technology.

      1. 7.1.2

        cunning of hand sounds like those d@mm scriviners too….

        Of course, we can always attempt to throw in the scientific method to distinguish.

        Oh wait, Malcolm attempted that and FAILED, when I showed him that since Deming, et al, innovation in business methods utilize the scientific method.

        Drat.

    2. 7.2

      What a trivially elementary question you pose anon.

      “Technological”: not abstract.

  3. 6

    I could not find any mention of the jurisdictional issue in the District Court’s opinion. However I found this which I think is highly pertinent:

    “It is undisputed that VirtualAgility is and has been a small company with private investors and limited resources. Being left with no recourse against the infringing acts of much larger companies such as Defendants, even only for a year, may substantially injure VirtualAgility’s business such that it becomes “impossible to restore [its] exclusive position by an award of damages and a permanent injunction.”

    Considering the likelihood of appeals by a losing petitioner, the case could take 3 more years to resolve.

    When 1 year is enough to put a small company out of business, 3 is a death sentence.

    Add to that that the PTO does not even have jurisdiction as a CBM is clearly not involved here, the whole digression into the PTO is intended to delay, drive up PO costs, inflict financial hardship, intended to bankrupt, and is an abuse of the highest order.

    Can we utterly condemn the Federal Circuit here without seeming a tad bit harsh?

    1. 6.1

      “Capable of being used in a financial application applies to every spreadsheet, word processor, database, org chart program, inventory management program, or computer system. ”

      From down below.

      Yes Ned, that’s the beauty of it 🙂

    2. 6.2

      IMHO, IPRs and CBMs should not be available against any small company engaged in a business protected by the patent in suit.

      In the 1940s, congress considered oppositions, but shelved the idea as small entities (universities) could not afford them. They still cannot.

      Lawsuits are a difference animal altogether, as small companies can find law firms to take cases on contingency. But IPRs and CBMs probably have to be financed out of the patent owners pocket. Can they afford them?

      Doubtful.

      1. 6.2.1

        Engaged in a business protected by a patent? LOL.

        Way to give away the game Ned.

        This is just another poster child for hardcore patent reform. You know — the kind that “weakens patents ge nerally.”

        Get the s k u m out of the system.

            1. 6.2.1.1.1.1

              ?

              Who ever said that businesses are eligible subject matter?

              Now, if you want to talk about business methods, well Congress and 6 of the 9 Supreme Court Justices would like a little chat with you.

            2. 6.2.1.1.1.2

              “Who ever said that businesses are eligible subject matter?”

              Ned said that the small business was engaged in a business that was protected by a patent in suit. That is to say, Ned gave away the game that the small entity had patented its business since the business was what was being protected.

              1. 6.2.1.1.1.2.1

                Not the same at all 6. A business can very well be built around a patent. A patent can also very well cover a business method.

                A patent on a business though, that’s something different.

                Pay attention.

              2. 6.2.1.1.1.2.2

                “A patent on a business though, that’s something different.”

                We know. And that’s what MM called Ned out for referring to by “paying attention” re re.

              3. 6.2.1.1.1.2.4

                “6, good joke there. I see why you were on the floor laughing.”

                Thanks but it was all MM. It was a good one. I’m surprised you’re just now getting it though.

              4. 6.2.1.1.1.2.5

                And also Ned, beyond it being a joke, MM was also being for srs (in fact he might have been being solely srs though it read as a joke). If you’re effectively protecting the business (which we’ve all established is non-statutory subject matter) then a question arises whether or not the claim is valid under 101. You’re familiar with preemption by now. And if you’re preempting the whole business (which is ineligible) then that should prick an ear or two on a judicial panel.

    3. 6.4

      Reposted from another thread:

      MM (or ned etc) if you happen to read this do be a bro and remind me not to JADE with anon.

      Justifying, Arguing, Defending, and Explaining – you just can’t do that sht with an OCPDer, it just makes the whole situation worse.

      ___________

      Also, you guys might want to start considering whether or not anon’s little generalized “diddy’s” like saying someone is a hypocrite, is accusing others of that which they do (or bizarrely telling someone like me that I’m accusing other of stuff that “malcolm does” MD) is simply nothing more than an “emotional argument”. And, in such a case, you cannot respond logically since such responses are invalid from the get go to an emotional argument (not to mention that if you do you might start JADEing). Not only that, you might want to consider that whatever activity he is saying you did with it be being a hypocrite etc. really did happen, as in, factually, to anon. Since this appears to be the case you might want to consider responding in a fashion that assuages his emotions, if you absolutely must respond. Frankly with the OCPDer it doesn’t matter though usually because you’ve fallen short of his standards and he’ll be indignant for quite some time regardless.

    4. 6.5

      Reposted from another thread:

      MM (or ned etc) if you happen to read this do be a bro and remind me not to JADE with anon.

      Justifying, Arguing, Defending, and Explaining – you just can’t do that sht with an OCPDer, it just makes the whole situation worse.

      ___________

      Also, you guys might want to start considering whether or not anon’s little g e n eralized “diddy’s” like saying someone is a hypocrite, is accusing others of that which they do (or bizarrely telling someone like me that I’m accusing other of stuff that “malcolm does” MD) is simply nothing more than an “emotional argument”. And, in such a case, you cannot respond logically since such responses are invalid from the get go to an emotional argument (not to mention that if you do you might start JADEing). Not only that, you might want to consider that whatever activity he is saying you did with it be being a hypocrite etc. really did happen, as in, factually, to anon. Since this appears to be the case you might want to consider responding in a fashion that assuages his emotions, if you absolutely must respond. Frankly with the OCPDer it doesn’t matter though usually because you’ve fallen short of his standards and he’ll be indignant for quite some time regardless.

      1. 6.5.1

        the irony of you trying to apply “logic” when you run away from it every chance you get if you were to actually engage me with law and facts is delicious.

        yummy

      2. 6.5.2

        Justifying, Arguing, Defending, and Explaining – you just can’t do that sht

        You kind of assume that you have done any of that in the first place.

        As is more often than not, well, that is not the case. Rather, it is that you fail to be able to engage in such manners that sets you abuzz in your pathet1c attempts to spin fantasies of grand illusions that you hide in.

        1. 6.5.2.1

          “You kind of assume that you have done any of that in the first place.”

          I didn’t assume anything re re. I simply observed what I had done in the past. And I will simply keep an eye out for it in the future.

          ^note no jadeing.

            1. 6.5.2.1.1.1

              Oh noes the OCPDer thinks I’m confusin myself and living in denial! O noes! He bids that I “wake up” lol!

    5. 6.6

      Wow, Ned, we agree on this one. The AIA has so weakened patents. And, the anti-patent movement even denies the weakening.

      1. 6.6.1

        How can you dare say weakening, given President Obama’s ringing endorsement of “We should be making it easier to turn new ideas into new jobs and into new businesses” when he spoke so glowingly about the AIA.

        Wait, if the AIA is all about turning all new ideas into new businesses, then all patents are related to new businesses and no patents should issue…

        😉

        As to the AIA itself, let’s look at same basic indices of quality:
        cost: higher with AIA, check
        timing: slower with AIA, check
        certainty: much more uncertain with AIA, check

        What’s not to love about the AIA?

        Oh wait, you mean you wanted to actually make patents stronger and more important…?

        Never mind (said in the best Emily Litella tones)

  4. 5

    Whether the claims were a covered CBM was raised and decided. Here from the institution decision at 10-15. Salesforce.com v. Virtualagility, CBM2013-00024 Institution Decision, Paper 16, PTAB Nov. 19,2013.

    link to ptabtrials.uspto.gov

    A “covered business method patent” is a patent that “claims a method or corresponding apparatus for performing data processing or other
    operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions”

    “Although claim 8 does not expressly refer to financial activity, such as those described in the Specification, the claimed method has particular application involving financial activities. The Specification discloses that the method can be used to evaluate: (i) budgeting issues, (ii) the cost of or investment in each particular goal or initiative, (iii) the economic return anticipated for achievement of the particular goal or initiative, (iv) the ratio of return on investment, or (v) the potential profit or loss of a scalable process. Ex. 1001, col. 5, ll. 5-8; col. 14, ll. 21-29. When applied to the activities listed above, and based on the legislative history that a covered business method patent is to cover activities that are financial in nature, the method of claim 8 represents a financial product or service used by an organization, which allegedly improves the financial health of the organization.”

    According to Petitioner, the ’413 patent is a covered business method patent, because it claims methods and apparatus used in the practice, administration, or management of a financial product or service, including activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.

    “Although the claims of the ’413 patent do not recite elements directly related only to a financial services business, the Specification describes application of the claimed method to activities that are financial in nature. … A specification that describes no financial product or service application is different from a specification that does describe such an application. Here, as discussed above, the Specification describes applying the invention as a financial product or service for use by an organization to improve the financial health of the organization.”

    1. 5.1

      So I invent a computer tool, like a database, that “can” be used for financial planning. Such is now a CBM, which requires the tool to be “part of” a financial product or service?

      A major league stretch.

      1. 5.1.1

        describes application of the claimed method to activities that are financial in nature

        Like the Commerce Clause, what item of general utility is NOT related somehow to something financial in nature?

        1. 5.1.2.2

          Yup. Courts inherently are political and thus outcome-driven regardless of nice theories to the contrary, but it seems that contemporary courts, not just the CAFC, are particularly so in comparison with their more honorable antecedents.

          Rot starts from the head. SCOTUS has a Chief Justice who aims for “consensus”, a political, not judicial, ambition, and a neurotic sorority whose recent hysterical dissents read more like agitprop than judicial opinions.

            1. 5.1.2.2.1.1

              ^^ your anti-patent t ea ba ggers, folks. They just can’t help themselves.

              😉

            2. 5.1.2.2.1.2

              The usual worthless nastiness from Miserable M0r 0n that the proprietor allows his blog to permeate in. You really are a piece of work, M0 r0n. You are perhaps more full of hatred than anyone I’ve seen post anywhere. You must be an immensely miserable wretch.

      2. 5.1.3

        describes application of the claimed method to activities that are financial in nature

        Like the Commerce Clause, what item of [TYPICAL] utility is NOT related somehow to something financial in nature?

        (this ge + ne filter issue blows)

  5. 4

    This frequently repeated allegation that “These parallel proceedings will often have somewhat different results” is simply not valid for AIA post-grant proceedings. Because they are run by Board APJs [not examining corps examiners as in reexaminations] under statutory deadlines that are well before normal patent litigation trials, much less final judicial decisions. In this case for example, not only was there was no “result” in this prospectively massively costly litigation against 12 defendants, this litigation had barely started! The E.D. TX judge’s “determination” that there was no balance in favor of a stay for an already instituted and vastly cheaper and faster CBM here could not possibly be rationally sustained. It was contrary to whole Congressional intent for these AIA post-grant proceedings.
    The wistful thinking by some that Congress does not have the Constitutional authority to [repeatedly] set up in rem administrative proceedings for re-examinations of erroneously issued patent claims to avoid very costly litigation thereon has been judicially rejected even by the Fed. Cir. for years in sustaining belated post-trial claim-cancelling decisions in reexaminations and interferences. Furthermore, the patent litigation views of the Sup. Ct. in recent years should speak for themselves to anyone unrealistically expecting their overruling of Congress on this subject. Over 1000 IPR’s and CBMs per year are already being filed and that plus several recent Sup. Ct. decisions requires a realistic acceptance of the (intended) effect on patent litigation on defective patents.
    The good news for patent owners is that FINALLY the PTO has done something effective to fix its long-standing disgraceful delays of patent owner REISSUE applications so that patent claims can be fixed ex parte before assertion or litigation. There is also the AIA “supplemental examination” system, which could be used more – it is NOT just for IC whitewashing as many folks erroneously think.

    1. 4.1

      has been judicially rejected even by the Fed. Cir. for years in sustaining belated post-trial claim-cancelling decisions in reexaminations and interferences.

      Not true, paul. At least to the extent of different contexts, and if true to the context that I have pointed out, past transgressions do not excuse a violation of the law.

      As Prof. Hricik has pointed out – even upwards of 50 years of getting the law wrong will not change the fact that a court can recognize that the law has been applied incorrectly and apply the law correctly (that is, differently) from a point moving forward.

      Let me remind all of Judge Markey’s words:

      ““[o]ur concern here is with plain, simple disregard of the statute—
      evidenced in the promulgation of some words and phrases that muddy
      the decisional waters and other words and phrases that render the law
      as written by congress a nullity
      . In sum, when it comes to patent cases,
      the statute is the law—and court opinions containing language and
      concepts contrary to the statute are unlawful.

      Howard T. Markey, Why Not the Statute?, 65 J. PAT. OFF. SOC’Y 331, 331 (1983).
      (italic emphasis in original, bold emphasis added)

      1. 4.1.2

        “In sum, when it comes to patent cases, the statute is the law—and court opinions containing language and concepts contrary to the statute are unlawful.”

        Indeed, and patent claim eliminations by Interferences, Reexaminations, IPRs and CBMs and PGR’s are all statutory.

        1. 4.1.2.1

          (sorry paul, you fell into the trap – as even statutory law that flows from the sole source of authority granted under the constitutional may not violate other portions of the constitution – here, due process)

    2. 4.2

      Paul, “The wistful thinking by some that Congress does not have the Constitutional authority to [repeatedly] set up in rem administrative proceedings for re-examinations of erroneously issued patent claims to avoid very costly litigation thereon has been judicially rejected even by the Fed. Cir. for years in sustaining belated post-trial claim-cancelling decisions in reexaminations and interferences.”

      Not really. Just once, in Patlex, followed without any analysis by Joy Technology.

      Newman in Patlex held patent validity to be a public right because patents could only be created by statute. Her ruling is flatly inconsistent with many Supreme Court cases to the contrary, and including many of recent vintage. See, e.g., Stern v. Marshall. Whether a right is created by statute or not is irrelevant to the public rights analysis.

      The District Court in Patlex upheld the constitutionality of reexaminations because the statutes then provided for a trial de novo. That right of a trial de novo was removed by the AIA.

      The Supreme Court jurisprudence is clear: the validity of legal rights must be adjudicated in Court, and if such rights were tried in the courts of England prior to 1792 to a jury, there is a right to a jury trial.

      The question of whether patent validity enjoys a 7th Amendment right to a trial by jury was decided early in our Republic. It does. Ex Parte Wood & Brundage.

      So, while there are a host of Supreme Court cases that hold that the patent office cannot administratively revoke an issued patent, there stands just one that says it can, a poorly reasoned opinion of the Federal Circuit.

      1. 4.2.2

        Ned, I won’t go into all the legal holes in that argument, but surely you are aware that even a patent suit not seeking any damages, that is, only for an injunction or a declaration of invalidity, does not require a jury trial, not even to mention all the other administrative trials in our overall legal system.

        1. 4.2.2.2

          Paul, are you “aware” that patent owner can waive his or her constitutional rights?

          Granfinanciera HELD that congress MAY NOT constitutionally take a legal right that must be tried to a jury and confine its adjudication EITHER to a court of equity or to an administrative tribunal.

          It is the involuntary nature of the action that is at issue.

          In McCormick Harvesting, the Supreme Court acknowledged the validity of reexaminations requested by the patent owner. But, the Supreme Court HELD that as a constitutional matter the executive had no power to do so without the consent of the patent owner – citing cases that go directly back to Marbury v. Madison.

          ITC — the patent owner requests and administrative remedy. Moreover, an invalidity holding does not revoke the patent.

          Federal Court of Claims – action against the sovereign for which there is sovereign immunity. There is no right to sue the sovereign in the first place.

          Regarding a declaration of invalidity — In re Lockwood held that there is a 7th Amendment right to a trial by jury.

          ex parte Wood and Brundage – HELD in actions to revoke a patent there was a 7th Amendment right to a jury trial for disputed facts.

          Your turn. Cite authority if you can. Any authority.

          1. 4.2.2.2.2

            The authority is the enacted statutes which overrules any ancient case law decisions from way back when the PTO did not then have such statutory authority.

            I will await with baited breath [pun intended] the results of your and anon’s constitutional challenges to the three reexamination statutes and all of the AIA post-grant system statutes. Better yet, post a copy of letters in which you actually advise a real client that these statutes are all unconstitutional.

            1. 4.2.2.2.2.1

              Paul, nice admission that you have no authority.

              The fact that the Federal Circuit will do the will of the patent office and patent bar and invent some off-the-wall, whole cloth, legal analysis such as occurred in Patlex assuredly gives you comfort.

              The problem is getting the issue to the Supreme Court – having a party on the other side who will not pull the plug as did the patent owner in Lockwood.

              “Ancient.” My God. Stern v. Marshall was 2011!

              Moreover, Newman in Patlex proved she didn’t know what she was talking about. The public rights idea she came up with is so alien to the Supreme Court case law as to be laughable.

              Moreover, people who repeat her nonsense like a mantra also prove that they do not know what they are talking about.

              Public rights has to do with sovereign immunity — government acting in its sovereign capacity. Start with Murray’s Lessee and see just what the doctrine is really about.

              1. 4.2.2.2.2.2.1

                Well anon, this whole sequence only goes to show that folks like Paul do not really know what they are talking about.

                Look how this began… with “The wistful thinking by some that Congress does not have the Constitutional authority to [repeatedly] set up in rem administrative proceedings for re-examinations of erroneously issued patent claims to avoid very costly litigation thereon has been judicially rejected even by the Fed. Cir. for years …”

            2. 4.2.2.2.2.3

              Better yet, post a copy of letters in which you actually advise a real client that these statutes are all unconstitutional.

              You know that you have reached the bottom of the barrel when your argument is one that is equivalently “out yourself.”

              1. 4.2.2.2.2.3.1

                Ned / anon – are you aware of the lawsuit filed by eCharge against the USPTO making these exact arguments (pub rights / stern / art III sep of powers, etc.)?

  6. 3

    Why didn’t the Court simply deny the stay on the basis that the claims were not a CBM? I see nothing in the claim MM posted that indicates that the claim relates to a “financial” product or service.

    Was this issue even raised before the PTAB?

    1. 3.1

      Ned, the Fed. Cir. specifically held that a D.C. judge has no business doing second-guessing of the Board APJ’s decision to institute a CBM as a basis for forcing all the defendants to continue into a full blown patent trial. [The patent owner has the opportunity to challenge and appeal the CBM jurisdiction in that proceeding itself. ]

      1. 3.1.1

        You too miss the point paul of a separate stick in the bundle of property rights being taken.

        1. 3.1.1.1

          Boo hoo hoo hoo!!!!

          Everyone’s rights were chucked in the trash when this ga rb age claim was granted.

      2. 3.1.2

        Paul, yeah, right.

        Perhaps the patent owner should have move to enjoin the PTO for exceeding its jurisdiction.

          1. 3.1.2.1.1

            Anon, the PTO’s jurisdiction depends on the statute. The statute requires the claims to be directed to a “financial” product or service.

            If the claims are not directed to a financial product or service, the PTO does not have even statutory subject matter jurisdiction.

              1. 3.1.2.1.1.1.1

                Anon, frankly, I don’t understand your question. The PTO has no general authority to revoke patents. The CBM statute requires a CBM as a jurisdictional prerequisite.

                I am not sure at all that congress can deny the courts the right to even look at the jurisdiction of PTO to revoke a patent.

                That would be constitutional violation all by itself.

              2. 3.1.2.1.1.1.2

                Anon, frankly, I don’t understand your question. The PTO has no gen eral authority to revoke patents. The CBM statute requires a CBM as a jurisdictional prerequisite.

                I am not sure at all that congress can deny the courts the right to even look at the jurisdiction of PTO to revoke a patent.

                That would be constitutional violation all by itself.

      3. 3.1.3

        Paul, according to the Fed. Cir. opinion, the district court apparently was not even asked to look at the question of “financial” product or service. The denial of the stay was based on the courts view about the prior art and 101 vs. that of the PTAB.

        There is nary a word in the claim relating to price, dollar amounts, financial risk or the like.

        One its face it does not appear that the PTAB has jurisdiction.

        1. 3.1.3.2

          You seek to hand wave away the critical difference by noting “oh, it’s only a software patent,” as if to say that for patents of this kind, no legal reasoning is required.

          The fact remains however, that this is a separate legal point that you and he disagree upon, and wouldn’t it be nice to have Malcolm explain why he disagrees with your view? In some cognizant manner using actual legal reasoning (and not some obscene hand waving).

            1. 3.1.3.2.3.2

              “What “legal reasoning” led to the grant of this patent?”

              Pretty sure the “legal reasoning” is that patents are an entitlement program.

    2. 3.2

      Ned,

      Perhaps this time you will take up the point of you engaging Malcolm in a pleasant conversation and seek from him his rationale for posting as he does. Here too is a situation where your view and his are strictly incompatible. As he refuses to establish his reasoning based in either law or fact with those who have been adversarial with him, perhaps you will have better luck teasing from him some basis grounded in reason for his proclivities.

      1. 3.2.1

        anon, MM doesn’t like computer implemented inventions of any type.

        Once you see such in a claim, it is a red flag that something is terribly wrong.

          1. 3.2.1.1.1

            The last thing Billy wants to do is talk about this patent claim, unless its to fel late it simply for being issued.

            1. 3.2.1.1.1.1

              The last thingnecessary is to talk about this explicit claim.

              It is much more fruitful to understand the legal reasoning to be applied to any claim.

  7. 2

    Claim 1:

    1. A system for supporting management of a collaborative activity by persons involved therein, the persons not being specialists in information technology, the system being implemented using a processor and a storage device accessible to the processor, and the system comprising:

    a representation of a model of the collaborative activity in the storage device, the model of the collaborative activity including model entities, the model entities providing access to information concerning the collaborative activity, being organized into a plurality of hierarchies having a plurality of types, and a given model entity being capable of simultaneously belonging to a hierarchy having one of the types and a hierarchy having another of the types; and

    said processor being configured to provide a graphical user interface to a person of the persons for providing outputs to the person and responding to inputs from the person by performing operations on a model entity as limited by a type of access which the person has to the model entity, the operations including controlling access to the model entity, creating, modifying, and/or deleting the model entity, assigning the model entity to a location in a hierarchy, accessing and/or modifying the information concerning the collaborative activity via the model entity, viewing model entities as ordered by a hierarchy to which the entities belong, and viewing model entities as ordered by a value in the information concerning the collaborative activity to which the entities give access.

    That’s one incredible piece of j nk right there, viewed from many different angles. Lots of words, though!

    1. 2.2

      And you know it is j nk how? We know that you are completely ignorant of information processing and have a world view dating to about the year 1200.

      (Plus you have the intellectual capacity of a g3ne challenged chimp.)

        1. 2.2.1.1

          “ge” plus “ne” = moderation filter tripped.

          Not sure why the filter is set so sensitively nor if moderations of the moderation filter are possible, but some changes (including the ability to edit for a short time) would be welcome additions to the comment capabilities.

            1. 2.2.1.1.1.1

              LOL – or perhaps the filter was set up so, since a certain individual seems to have a fetish for the Big G…. (and perhaps, just perhaps, Prof. Crouch received a letter from the Big G, advising him of the reckless nature of this person with the fetish).

              I don’t know – but such seems as plausible as anything else I’ve seen.

              1. 2.2.1.1.1.1.1

                Oh I don’t doubt that someone like Big G has sent some letters. That’s what certain folks live and breathe to do. That’s why they are getting slapped in the face by congress and the Supreme Court.

                Thanks for playing, Billy.

              2. 2.2.1.1.1.1.3

                has sent some letters. That’s what certain folks live and breathe to do.

                LOL – your not kidding – not limited to blogs in this country either.

                As for getting slapped in the face, meh, not really related given that there is no actual harm in sending letters, is there?

              3. 2.2.1.1.1.1.4

                “As for getting slapped in the face, meh, not really related given that there is no actual harm in sending letters, is there?”

                Tell that to the congressional committee currently mulling over whether or not to turn state AG’s loose on letter writers sending demands.

              4. 2.2.1.1.1.1.6

                “Is that the same AG that got his law rejected….?”

                I don’t know what “law” you think was “rejected” since the “bill” is currently pending in congress. At least it was last I heard which was not long ago. If you have an update plz to be posting.

              5. 2.2.1.1.1.1.8

                “The AG’s bill is pending in Congress…?”

                I don’t know if it is “the ag’s bill” but yes, there is a bill to allow AGs to go after letter writers etc. (ha te to say I told u so that the posse the AG got together was coming after the letter writers). And they were also talking about increasing the reqs for pleadings. It was either on patent docs or on that latest bits and bytes or whatever iirc. Look around, if you can’t find it I’ll try to find it.

    2. 2.3

      The claims here seem invalid per Alice, everything in the claim that relates to technology being old.

      1. 2.3.1

        Let’s hope that is far from the test, but it is always great to have you give the misinformation a try over and over again.

      2. 2.3.3

        Upon this logic, anything built or configured from those ancient things called electrons, protons and neutrons are “invalid per Alice

        (I see that the obfuscation of patent eligible and patentable is being maintained)

      3. 2.3.4

        At this point moving forward with claim 1 at least seems sanctionable. Anyone who’d license this j unk is a total I d iot.

        1. 2.3.4.1

          *Anyone who’d license this j unk is a total I d iot.*

          Or maybe, since 90% of operating multi-employee businesses in this country infringe the claim as written, they just don’t have the $2MM+ it takes to go to court.

    3. 2.4

      Now that I look at that claim, I find it hard to reconcile the statute with it. Why in the fricken world is this a CBM?

      “DEFINITION.—
      (1)
      IN GEN ERAL.—For purposes of this section, the term ‘‘covered business method patent’’ means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”

      1. 2.4.1

        The ambiguous scope of jurisdiction of a CBM has yet to be decided by any Fed. Cir. appeal. But note that having a claim “for performing data processing or other operations used in the practice, administration, or management of a financial product or service” is not the same as a claim TO a financial product or service. Also what about claims “for performing data processing or other operations” written so broadly or generic that they can be asserted against someone practicing, administering, or managing a financial product or service?
        Also remember that this whole CBM system is temporary and ends less than 7 years from now.

          1. 2.4.2.1.1

            An Article I (executive branch) court commits a taking of a stick within the bundle of property rights with the grant – and that grant itself (and the taking that the grant represents) lacks any due process protection of the property right of a duly granted patent.

            Ned, I am puzzled as to how you are not seeing the scire farcies [sp?] parallel.

            1. 2.4.2.1.1.1

              anon, oh, but I do. The CBM statute is unconstitutional as it seeks to revoke a patent without the owner’s consent in an Art. I tribunal.

              Plainly unconstitutional under any number of cases including Marbury v. Madison, ex parte Wood and Brundage, McCormick Harvesting, Granfinanciera and Stern v. Marshall.

              1. 2.4.2.1.1.1.1

                Even a hole such as this – below the water line of the good ship USS AIA will sink a ship that laughed off the well-known interior bulwark design of sections surviving flooding with the (rejected) severability clause.

                (the Chaebol defense strategy at work)

      2. 2.4.3

        Right you are Ned — it’s clearly not a CBM. Not even close.

        It’s got nothing to do with a financial product or service; and is certainly a technological invention.

        An IPR was the legally proper challenge here.

        Salesforce no doubt filed the CBM in order to argue 101.

        1. 2.4.3.1

          Steve, check post 5, a quote from the Institution decision.

          The reasoning of the PTAB is that a computer tool that can be used for financial purposes (disclosed application among many), is a computer tool OF a financial product or service.

          I think this is placing the cart before the horse, or better, lifting one by his own bootstraps.

          Now I wonder whether the District Court addressed this issue. If they did, one can see a pattern here where the Federal Circuit will not tolerate a collateral attack on IPR decision not on the merits (within its jurisdiction) and a determination of basic jurisdictional facts.

        2. 2.4.3.2

          “It’s got nothing to do with a financial product or service; and is certainly a technological invention.”

          Idk steve, it appears to pertain to “personnel management” software. As ned likes to say, these “processors to x” are just method claims in disguise. So yeah, maybe business method after all.

          1. 2.4.3.2.1

            6, it must be a financial product or service.

            A general tool for organizing data is not a financial product or service.

            The claim may be invalid under 101, but CBMs are statutorily limited to financial products or services. Capable of being used in a financial application applies to every spreadsheet, word processor, database, org chart program, inventory management program, or computer system. Capability might be one factor, but whether the claim covers a financial product or service is quite another.

          2. 2.4.3.2.2

            6, it must be a financial product or service.

            A gen eral tool for organizing data is not a financial product or service.

            The claim may be invalid under 101, but CBMs are statutorily limited to financial products or services. Capable of being used in a financial application applies to every spreadsheet, word processor, database, org chart program, inventory management program, or computer system. Capability might be one factor, but whether the claim covers a financial product or service is quite another.

              1. 2.4.3.2.2.1.1

                6, I’m not tracking you. Capable of use in a financial application does not make the claimed subject matter a financial product.

              2. 2.4.3.2.2.1.2

                I thought you just answered yourself up above in your up above post.

                You laid out the criteria.

                In this case the patentee “claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions”. Surely this apparatus is used in the administration or management of a financial service.

                And hey, if they disagree, they can always whine to the federal circuit! Or wait, oh … no, they can’t.

              3. 2.4.3.2.2.1.3

                I’ve misplaced my glossary for “technological.”

                Does anyone have a non-circular definition to post so that we can all get on the same page here?

      1. 2.5.2

        Funny, you want me to defend this particular claim – when I have not – and then turn around and accuse me of defending this claim and any claim.

        Do you realize your hypocrisy?

  8. 1

    In the extreme, the issue raises constitutional questions of separation of powers between the executive (the PTO) and the courts.

    LOL. Malcolm, tell us all about it.

    1. 1.1

      Malcolm’s silence on this very first point of the day (after whining about the very thing yesterday) screams volumes.

Comments are closed.