Guest Post by Sapna Kumar. Prof. Kumar is an Associate Professor at the University of Houston Law Center, where she teaches patents and administrative law. Her most recent article, Regulating Digital Trade, discusses the ClearCorrect decision at length and is available on SSRN.
Some interesting developments have arisen this past week regarding ClearCorrect Operating, LLC v. USITC. In this case, the Federal Circuit will decide whether the ITC has jurisdiction over digital information (see Patently-O Archives for my previous post about this case).
The Suprema En Banc Opinion
The first development is the Federal Circuit’s en banc decision in Suprema v. USITC. Both parties in ClearCorrect will file supplemental briefs to discuss what impact Suprema has on their case.
Back in 2011, I argued in a law review article that the ITC should be entitled to Chevron deference when it determines whether an article infringes a valid and enforceable patent. Prior to Suprema, the Federal Circuit had never granted deference to the ITC for a patent-related decision outside of dicta. In Suprema, the Federal Circuit belatedly steps on the Chevron bandwagon, granting the ITC deference for its interpretation of “articles that infringe.”
Although the Suprema decision affirmed the ITC, it nevertheless supports a reversal in ClearCorrect. The Suprema majority treats the terms “articles” and “goods” as interchangeable throughout the opinion. Black’s Law Dictionary, both at the time the Tariff Act was passed and at present, shows that “goods” generally refers to tangible property.
The four-judge dissent in Suprema was even more explicit, maintaining that “articles” refers to physical objects. This is notable, given that dissenting judges Prost and O’Malley are both on the ClearCorrect panel. Nothing from the majority’s decision will prevent the ClearCorrect panel from holding that “articles” are limited to tangible property.
Another notable feature of the Suprema decision is how the court chose to apply the Chevron test. Chevron has two steps. First, the reviewing court asks whether Congress has directly spoken to the precise question at issue. If Congress hasn’t, the court moves to Step Two, where it asks whether the agency’s answer is based on a permissible interpretation of the statute.
In most circuits, Step Two is relatively toothless, with just about any answer being treated as reasonable. The only notable exception is in the D.C. Circuit, where Step Two is a searching standard that is analogous to hard-look review. In Suprema, the court adopted an approach that is close to the D.C. Circuit, conducting a detailed review of the statutory text, policy, and legislative history of § 337. If this robust Step Two is applied in ClearCorrect, the ITC’s decision will be struck down due to liberties that the agency takes with the legislative history.
ClearCorrect Oral Argument
Also this week, a three-judge panel (Prost, O’Malley, and Newman) heard oral arguments for ClearCorrect. The panel expressed concern about where to draw the line for electronic transmissions. The ITC’s attorney conceded that not all imports of information are under its jurisdiction, but was unable to tell the panel where the ITC believes the line should be drawn. The panel observed that the digital models in this case were not bought and sold in commerce, but were instead used to create molds that were then used to create plastic aligners.
Prost and O’Malley also scrutinized the ITC’s statutory interpretation. They noted that dictionary definitions from the 1920s seemed to support a much narrower interpretation than what the ITC was seeking.
My article Regulating Digital Trade was also discussed by the panel. Prost raised my argument that the Commission Opinion misquoted a key 1922 Senate Report. The Senate Report states:
The provision relating to unfair methods of competition in the importation of goods is broad enough to prevent every type and form of unfair practice.
The Commission Opinion quoted this language without the limiting phrase “in the importation of goods,” and failed to use an ellipses. Both Prost and O’Malley questioned whether the ITC’s position was still valid given the narrower language.
To date, the Supreme Court has never granted certiorari on a § 337 case. Given that the Federal Circuit is now grappling with important issues of jurisdiction, it may be time for the Supreme Court to get involved.
There was a case today, JVC v. Nero, link to cafc.uscourts.gov, that borders on the sublime if not ridiculous.
JVC sued Nero for infringing on pooled essential patents that it admitted Nero was licensed to.
One really has to wonder at the attorneys who filed the case. Sanctions would be in order here.
I thought the same thing when I read the case.
I think Ned has switched his tune….
Depends, anon, on whether Nero was licensed. I got the impression the first time I read the case that they were.
Yes Ned – that’s the part of you switching your tune.
Note that Malcolm has NOT followed that switch.
Note as well that no matter how “polite” you two are to each other, there will be NO resolution of this “point” – you will each take a turn atop a soap box, speak, and move on, never resolving the difference.
That’s not a dialogue – that is merely competing monologues.
Ned, Dennis, Robert Greenspoon, and folks
I am not sure if you saw this news last week.
“SEC Administrative Court Has A Constitutionality Problem”
link to law360.com
SEC “suffered what could become a fatal blow Wednesday when a New York federal judge called the controversial forum “likely unconstitutional.” ”
“most suits brought against the agency have alleged a host of larger problems, including constitutional violations, denial of due process and the bias of certain administrative law judges”
Ned and Robert,
=============
Have you guys looked at SEC case and similarities regarding APJ bias, due process and hiring practice of Ex Google Ms. Lee at USPTO for the Judges?
Would be interested in knowing your take on the SEC case and what you can learn from it.
They admitted a fraud action was a public right. Didn’t raise Article III. Didn’t cite Stern v Marshall. Showed no understanding of the issue.
I read the earlier case from Judge May. In that case the plaintiff admitted that the enforcement action involving securities fraud involved public rights even thought the action itself had an analogous action at common law.
In other words, they, the plaintiff, really did not get it. Here is the critical passage:
“The SEC does not dispute Plaintiff’s argument that an enforcement action
for civil penalties is “clearly analogous to the 18th-century action in debt,” Tull, 481 U.S. at 420, and this remedy is legal in nature. See Tull, 481 U.S. at 422 (“A civil penalty was a type of remedy at common law that could only be enforced in courts of law. Remedies intended to punish culpable individuals, as opposed to those intended simply to extract compensation or restore the status quo, were issued by courts of law, not courts of equity.”).
Rather, the SEC contends that “Plaintiff’s claim fails because it is firmly established that Congress ‘may assign th[e] adjudication’ of cases involving so called ‘public rights’ to ‘an administrative agency with which a jury trial would be incompatible[] without violating the Seventh Amendment[] . . . even if the Seventh Amendment would have required a jury where the adjudication of those rights is assigned instead to a federal court of law.’”
“Public rights” cases are those which “arise between the Government and
persons subject to its authority ‘in connection with the performance of the
constitutional functions of the executive or legislative departments.’” Atlas
Roofing, 430 U.S. at 457 (internal quotation omitted) (quoting Crowell v. Benson, 285 U.S. 22, 31 (1932)). Plaintiff does not dispute that this SEC enforcement action involves a public right. See Pl. Reply, Dkt. No. [13] at 19-20. Because the SEC is acting as a sovereign in the performance of its executive duties when it pursues an enforcement action, the Court also agrees that this is a public rights case.”
Egad, the nonsense put forward here all because the plaintiff agreed that the action was a public right. It is almost as if they never read Stern v. Marshall. Furthermore, then court did not follow Granfinanciera, even though she cited to it.
Why are plaintiff’s screwing this up? It is not that hard.
Crouch et al. are calling for SCOTUS intervention after virtually every CAFC opinion these days.
Very nice.
link to ipwatchdog.com
I hope it turns out not to be sanctionable. Or else he appeals.
6, the problem with IPRs is lack of standing. Is the PTAB really going to say that?
Anybody who does not have standing does not spend 100k on an IPR petition for the benefit of the public interest. I would be all for the PTAB banning every one of them, but on what grounds?
How is lack of standing an issue…?
Take this question – for arguments sake – that questioning validity has been established as “infecting the public” with enough concern so as to meet at least a pseudo-public rights view (recognizing your active case to the contrary).
Well I mean, that’s kind of a feature. Frankly I think the cumulative effect, over many years, should be to increase companies having more self-interest in actually getting a patent that is rock solid so that they don’t have to spend 100k-1mil to defend. Just be like a-f refs doesn’t say y.
And eventually the market should adjust to this sort of bringing a patent challenge. Though a successful IPR should drop the stock price. But then, that’s how it should have been in the first place eh?
Also, if IPR’s are getting so expensive then perhaps there should be limits placed on just how complex they’re allowed to get in the challenge.
6: perhaps there should be limits placed on just how complex they’re allowed to get in the challenge.
No doubt about that, particularly when the “technology” involved is devoid of unexpected results.
…or Flash of Genius…
Or serendipity or luck or anything that lacks, you know, intent and purpose…
😉
Strange that somehow an art thinks that unpredictable results means that it is harder. (And of course the nut jobs in the anti-patent movement have tried to use this.)
But, some thought and you realize that unpredictable results probably means that the art is easier. It means the art must rely on luck and experimentation whereas the predictable arts rely on creativity. None of these information processing systems existed 100 years ago. They have all come from the creative mind of inventors. There is no base to start. There is no way to perform rote experimentation. The systems have to be created in the mind of the inventor.
More strange mischaracterizations from the anti-patent crowd. Be interesting if the Lourie nut job had to actually address this issue in a debate forum. He regularly says, “you have done nothing but …..”, to information processing patents. Whereas, he lavishes great praise on those that discovered a molecule that happens to have beneficial properties to some use of man.
Your post, while no doubt well intentioned, uses too many buzz words that have been appropriated and (mis)-applied so extensively as to have lost their true meaning.
Difficulty – or lack thereof – is not dispositive. The “it’s predictable” mantra is a smokescreen at best. Therein the “logic” of the extreme predictability of making atoms (and then molecules) from electrons, protons and neutrons meets its “logical” conclusion that nothing is patent eligible.
The “thought” of relying on the creative mind of the inventor and the abstracting therein will be purposefully obfuscated as the invention itself – the “classic” purposeful obfuscation of software as the thought of software (and its weak cousin, the obfuscation of software and the execution of software).
Let’s not forget as well, that any molecule so discovered only has value in interacting with man by that molecule’s mere following of natural laws. You start giving so much power to the exceptions, there be nothing left but the exceptions.
And that is precisely why such POOR acrivining by the Court should be embraced fully and absolutely for what it says. It is only by recognizing such things as the gift of the “Gist/Abstract” sword – with no limits – swallow the rules that such re-writing of patent law can be ended.
Stomp. On. The. Gas. Pedal.
Yeah, but it is lack of standing that allows stock speculators to short a stock and then file an IPR.
It is the lack of standing that allows big companies to block small companies from getting any patents at all.
It is the lack of standing that allows big companies to threaten ruination on a small company or else as a tactic at the settlement conference.
This was why actions scire facias were barred in both England and in the US — abuse of the process by big companies mainly. This is an historical fact.
And yet Ned, can you really say that all of this was not the very purpose of the change in law by Congress in the AIA?
Again, and strictly for arguments sake given your active case (I won’t hold this as gospel from you), let’s say that patents are “infected” enough to have some “public rights” aspect inure. Is not then the Act of Congress that addresses this given aspect enough? After all, up to the AIA, the marking section of the statute provided for such “open” standing, did it not?
Oddly missing from that article is any discussion of the merits of the petitions that are being filed.
If Celgene’s patents are invalid then by all means get rid of them, the sooner or better.
That said, the truly unsavory behavior here is the short-selling of stock by this cre epazoid zillionaire. Get a life already. Oh wait: patent law’s favorite midget Erich Spangenberg is involved as an advisor. Now it all starts to make sense.
all means…
Sort of like the ends justify the means…?
On another thread, but just as apt here:
“render a patent all but worthless”
You use that phrase, but I do not think that you understand what that phrase means.
The ladders of abstraction and having a claim beyond an exacting (and thus easily worked around and thus “all but worthless”) claim is clearly something that you seem not to be able to grasp.
Maybe it’s that canard of yours wanting the optional claim format to be the ONLY “legal” claim format.
Maybe it’s that unwillingness to recognize Prof. Crouch’s own coined term of Vast Middle Ground.
Maybe it’s your ever short-scripted attempts to move goalposts from claims having parts and elements sounding in “mental steps” to wanting to discuss claims ENTIRELY in the mind.
Maybe it’s your canard of a pet theory which is nothing more than the b@nal cannot claim aggregations – which is ALREADY in the doctrine of Claim as a Whole – and applies fully as to ANY type of claim element, by that claim element sounding in “mental steps” or not.
Maybe it’s your inability to recognize what happened in the Act of 1952 and the reaction against the Court and the liberalization of functional language – both WITH the option of 112(f) AND outside of 112(f).
Of course, ALL of these points have been patiently put on the table for dialogue time and time again.
Maybe – just maybe – you want to gird up on your inte11ectual honesty, put aside your drive-by monologue short script and actually engage in a discussion of real law and real facts.
Naturally, I will not be holding my breath.
anon, start from the premise that one has a “legal” right to exclude that extends at its periphery only to what one discloses. (Written description, a statutory requirement.)
The Supreme Court invented the “equitable” doctrine of equivalents to extend protection to insubstantial substitutions.
But one cannot legally or equitably extend the protection of a patent to the principle such that it would cover something that was not the equivalent of what one discloses. The prohibition of claiming principles in the abstract was what Le Roy v. Tatham, Morse and Rubber-Tip Pencil were all about.
And yet, you contend, seriously, that patents are worthless unless one can claim abstractly — to claim results?
You really have to learn to accept what happened in 1952, Ned.
No, anon, it is you that has to get over your fixation with Rich.
Not Rich at all Ned – Congress.
You know, the actual branch with authority to write patent law per our constitution.
Tell me again what your attorney’s oath says…
that unwillingness to recognize Prof. Crouch’s own coined term of Vast Middle Ground.
Have you ordered your T-shirt yet?
I want a tee shirt, provided the words are printed across the chest and not across the stomach.
I’d send you a digital file of what to print, but that might violate some sort of anon TM on the phrase and I could end up before the ITC.
Now that is funny Slashdot Reader.
🙂
Hall of Fame nomination.
Another important distinction may be that the purported ITC control over electronic signal transmissions into the U.S. may well be perceived by other federal agencies as a turf threat to their own agencies jurisdictions over it [if they become aware of it]. That might also provide another argument that Congress never intended such jurisdiction for the ITC.
Paul, if the NSA cannot, consistent with the constitution, compile a database of phone calls, how can the government “control” electronic transmissions into the US?
You do realize Ned that the notion of content is very different with your “NSA” question, right?
No I do not, anon. Please explain.
What is the content at point here in the immediate context?
What would be the content at point in any discussion of NSA surveilllance?
What is the difference between the two?
Surely you can connect those dots.
If ye cannot look, how shall ye find?
Does not answer the questions put to you.
Ned, NSA has always had jurisdiction to monitor electronic communications from foreign countries.
Judge: NSA domestic phone data-mining unconstitutional
link to cnn.com
What part of “import” that distinguished from “domestic” are you struggling with, Ned?
I see, anon, we control imports at the source?
Not sure what you think that you mean by “at the source,” but be assured, it is legitimate at the border, eh?
Paul, those points were briefed and acknowledged by the panel.
They may be relevant to determining Congress’ intent with respect to the limits on ITC’s power but they aren’t relevant to the bigger issue here which is that the FCC also can not legally block information transmission on the sole basis that the transmitted information “can be used to infringe a US patent.”
The patent maximalists never fail to amaze. Over and over again they manage to convince themselves that some hot new technology is a “game changer” and, invariably, that perceived change mandates that patent rights be expanded and warped so they can get their grift on. The amazing part is that their motives are entirely transparent and yet they somehow think they can keep fooling everyone.
3-D printing represents an incremental increase in the ease of manufacturing certain articles. It’s a great technology and it should be widely employed. But running to the patent office with claims directed to “print this thing” or “use 3-D printed objects in this context” or (worst of all) “data file” is not “innovating.” It’s just patent trolling and patent abuse. Data that is useful for improving the speed and accuracy of manufacturing has always been around in one form or another. That data was never eligible for patenting. Putting that data into digital form or creating a “file” with it doesn’t change that fact and, unless a new wave of insanity washes over the US patent system, it never will.
“so they can get their grift on”
What an arse.
Children, stop running through that field of rye.
If the process of
(1) identifying an existing technology that has no purpose except to print 3-D objects and then
(2) filing patents on “use existing technology to print object X”
isn’t “grifting”, then I don’t know what is.
What’s remarkable, “anon”, is that you are so incredibly quick to label everyone who disagrees with you about patent maximalization as an “arse” (or worse) while the most obvious “arses” out there in the patent assertion and acquisition world always get a free pass from you. Go figure.
Can you defend the type of claim I just described? You seem to believe such claims have merit. Let’s hear your argument, “anon.” And please try your best not to move the goalpost.
The invitation to play in the fields of rye in Malcolm’s delusions is politely declined.
Let’s return to this reality and this law.
this reality and this law.
Have you seen the junk claims underlying this kerfuffle?
The grifting I’m talking about is “this reality” and if these claims weren’t exactly the kind of junk that I’m talking about, we wouldn’t be debating whether the ITC has jurisdiction over patent ineligible data transmissions.
But you knew that already. Thanks for proving your cowardice and your inability to defend your own assertions once again, you miserable hypocrite.
Says the guy who refuses to discuss actual law and actual facts, but wants to invite others into the quagmire of his odd fantasies…
No thanks.
MM, can the FCC, or any agency, block any transmission based on its content?
1. How would they do this without monitoring communications?
2. Even if they legally could monitor communications, just how would they do it?
This is not China.
Ned, with all due respect, I’ve no idea why the ease of “enforceability” is relevant to the issue here. Let’s say, just for argument’s sake, that it’s “difficult” for the FCC (or the ITC, for that matter) to prevent the transmission of data over electronic signals (phone lines, cellular, Internet, whatever). Why should that matter?
To answer your question, I assume that “blocking” transmission would first require identification of an “infringing” transmission. That identification would (or could) be made by the patentee and brought to the commission’s attention, just as it was in this instance. It’s no different than any patentee identifying an alleged infringer and filing a complaint. “Blocking” would be achieved by punishment of the transmitter, using whatever tools are available. That’s the bottom line for the patentee after all: at a minimum, bring some or the threat of pain into the alleged infringer’s life so the alleged infringer stops performing the offending act.
Again: this is beside the point here. The point here is misuse of the patent system.
The point may be that if something is impossible, would it be rational to assume Congress meant it, given its impossibility and nothing even noting/addressing that impossibility?
Jane: The point may be that if something is impossible, would it be rational to assume that Congress meant it, given its impossibility and nothing even noting/addressing that impossibility?
Right. But clearly it is possible for the content of electronic transmissions to be identified by aggrieved citizens and brought to the attention of the agency (that’s what happened here, after all, and with respect to the FCC it’s what happens most of the time, I think). If the agency has the power and it fnds the actions punishable, the agency will then use whatever legal means exist to enforce its will.
But that assumes the premise: that the agency has that power. Given what that would mean remedies-wise, there are serious doubts about that.
For example, how would the ITC block over-the-air transmissions from broadcasters in Canada/Mexico? Assume the signals carry copyrighted works unlicensed by the US rightsholder — can the ITC order them blocked at the border? How would customs do that? And wouldn’t that interfere with trade relations/FCC jurisdiction?
Assuming the ITC ruled the radio engaged in unfair practices by importing music, does the consumer in Seattle, Washington potentially violate an ITC exclusion order by listening to a Canadian radio station that doesn’t pay royalties for playing the music? Do we really think this is what Congress intended?
that assumes the premise: that the agency has that power. Given what that would mean remedies-wise
It seems to me that you’re assuming the premise. 😉
I thought I was pretty clear on my views: neither the ITC nor the FCC can legally stop information transmission (using pre-existing technology) on the basis that the information can be used to infringe a patent.
Assume the signals carry copyrighted works unlicensed by the US rightsholder — can the ITC order them blocked at the border? How would customs do that? And wouldn’t that interfere with trade relations/FCC jurisdiction?
I intentionally avoided diving into the ITC versus FCC issue because neither agency can legally do what the ITC is trying to do here.
The answer to your question, generally, is that if there is an act that the agency is legally empowered to squelch then the agency can do whatever it is empowered to do in order to dissuade the signal transmitter from transmitting the signal or dissuade recipients from translating/converting the signal. We have treaties and stuff with other countries, for instance, that might be brought to bear on the situation. Another question, of course, is whether the agency should bother in every instance of violation, regardless of the impact of that violation, and I think the answer to that question is easy and already well-known.
Jane: Assuming the ITC ruled the radio engaged in unfair practices by importing music, does the consumer in Seattle, Washington potentially violate an ITC exclusion order by listening to a Canadian radio station that doesn’t pay royalties for playing the music? Do we really think this is what Congress intended?
I certainly don’t believe that’s what Congress intended and I’m pretty sure you don’t either. But I learned many years ago never to underestimate the ability of the IP maximalist to reach for and grab whatever legal tool is available, no matter how ridiculous the argument no matter what price the rest of society will pay. The major and foremost consideration is immediate financial gain with the secondary consideration being how much more money and power can be quickly grabbed before the inevitable, necessary reform shuts them down. Once you appreciate this, all of the absurd “arguments” the maximalists make are very easy to understand (and predict).
As has been noted previously, Jane, In re Nuitjen is controlling law as pertains to electromagnetic waves.
The same cannot be said of digital transmissions of electrons.
If one wants to actually THINK about this, the logical conclusion is that Nuitjen is an affront to anyone with even a basic understanding of physics.
Try not to pretend otherwise just to reach some desired “philosophical” ground.
That only insults you and that ground you want to reach.
“is an affront to anyone with even a basic understanding of physics.”
Said the person with no basic understanding of physics.
a basic understanding of physics
Is that the same “physics” that equates an imaginary “box of protons” with an objectively defined chemical structure? If so, you’re probably the only one smart enough to understand it. Congratulations …?
Anon,
“… In re Nuitjen is controlling law as pertains to electromagnetic waves.
The same cannot be said of digital transmissions of electrons.”
Did I miss something over-riding the 2007 decision?
uspto.gov
Here’s a helpful quote:
Oops . . . forget the “helpful quote”. Cut-&-paste error. Mea culpa.
I am more than sure that you don’t understand this terrain Dobu.
Please don’t embarrass yourself.
As for 6 (the guy with electrons falling out of wires), that advice is just too late.
Well, then, O Great and Wise Anon, renown legal authority and “physicist” (O.o) , please distinguish Nuijten’s “electrical signals” and “signal’s physical carrier” from your “digital transmissions of electrons“, if you would be so kind as to demonstrate your remarkable erudition for this humble seeker of knowledge.
dobu don’t even bother bro, anon clearly doesn’t know his ar se from his elbow, or a signal, in this area. Nobody need pay him any mind.
anon, in your view, can congress install monitoring cameras everywhere so that it can determine whether individuals are violating any law, or even thinking about violating any law?
This is where your advocacy leads one – to 1984, a police state to end all police states.
Nothing of the sort, Ned – see the comments above.
MM, the ITC can issue an exclusion order. It is customs that enforces. Their writ extends to goods imported and exported.
Punishing people for violating an exclusion order? Half the people you talk about are not in the US. The other half have not been found to infringe anything by a court of law. What remedy are you proposing? Seizing goods not found to infringe? Really?
There are good reasons why patents cannot protect signals based on signal content.
Ned: There are good reasons why patents cannot protect signals based on signal content.
No doubt. The difficulty in enforcing such patents — and I’m not denying that there are difficulties — is just one of those reasons and it’s not the most important one.
Let’s say that twenty five years from now technology is developed that allows the determination, with reasonable accuracy and specificity, the information content of a living person’s brain. Let’s also say that there are methods for facilitating targeted memory loss. Should we then reconsider the patenting of abstractions because we can detect and enforce infringement? OF COURSE NOT.
I should add, lest we forget, that there are folks out there reading this blog who are happy to turn people who think new thoughts about certain kinds of data into infringers *now*.