by Dennis Crouch
This week, the Supreme Court granted certiorari in the administrative patent review case of Cuozzo v. Lee. Cuozzo raises the following two questions: (1) Whether the court of appeals erred in holding that, in inter partes review (IPR) proceedings, the Patent Trial and Appeal Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning; and (2) whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable. The petitioner (Cuozzo) now has forty-five days to file its opening merits brief with amici briefs due one week later.
The other major patent issue before the court this term involves the enhanced damages questions raised in the parallel cases of Halo and Stryker. Oral arguments are set for those cases for February 23, 2016. Although not a party, the Solicitor General has requested permission to participate in oral argument as amicus curiae and for divided argument filed. The US Government generally supported the petitioners’ position that the Federal Circuit has unduly limited the availability of enhanced damages for willful infringement and other egregious acts by an adjudged infringer.
This week, the Supreme Court also issued a GVR in Medtronic v. NuVasive – ordering the Federal Circuit to reconsider whether the mens rea evidence presented was sufficient to prove active inducement under Commil.
1. Petitions Granted:
- Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513 (enhanced damages) (linked to Stryker)
- Stryker Corporation, et al. v. Zimmer, Inc., No. 14-1520 (enhanced damages) (linked to Halo)
- Cuozzo Speed Technologies, LLC v. Michelle K. Lee, No. 15-446 (BRI construction in IPRs; institution decisions unreviewable)
2. Petitions Granted with immediate Vacatur and Remand (GVR)
- Medtronic Sofamor Danek USA, Inc., et al. v. NuVasive, Inc., No. 15-85 (Commil re-hash – mens rea requirement for inducement)
3. Petitions for Writ of Certiorari Pending:
- Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
- Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
- Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
- Post Grant Admin: Achates Reference Publishing, Inc. v. Apple, Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB)
- Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
- Claim Construction: Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
- Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
- Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial) (New Petition)
- Preclusion or Jurisdiction:
ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?) - Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
- Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
- Claim Construction: Media Rights Technologies, Inc. v. Capital One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
- Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
- Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
- Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
3. Petitions for Writ of Certiorari Denied:
- Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567
- Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
- OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
- Fivetech Technology Inc. v. Southco, Inc., No. 15-381
- Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
- Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
- Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
- Kenneth Butler, Sr. v. Balkamp Inc., et al., No. 15-273
- Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
- Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
- Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
- Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
- Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
- I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
- Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
- Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
- W.L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
- NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
- Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
- MobileMedia Ideas LLC v. Apple Inc., No. 15-206
- SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine)
- Rodney K. Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602
- Lakshmi Arunachalam v. JPMorgan Chase & Co., No. 15-691
4. Prior versions of this report:
MORTGAGE GRADER, INC., v. FIRST CHOICE LOAN SERVICES INC., NYLX, INC. (CAFC 2016)
Just from the title we can make a good guess about what the case is about: subject matter eligibility. This is a somewhat rare bird these days: the precedential 101 case affirming ineligibility (most affirmations come to us via non-precedential orders under Rule 36).
Also of interest: the case was written by Chief District Judge Stark of Delaware (O’Malley and Taranto joining).
Here’s the miserable, ridiculous claim:
<iA computer-implemented system for enabling borrowers to anonymously shop for loan packages offered by a plurality of lenders, the system comprising:
a database that stores loan package data specifying loan packages for home loans offered by the lenders, the loan package data specifying, for each of the loan packages, at least a loan type, an interest rate, and a required borrower credit grading; and
a computer system that provides:
a first interface that allows the lenders to securely upload at least some of the loan package data for their respective loan packages to the database over a computer network; and
a second interface that prompts a borrower to enter personal loan evaluation information, and invokes, on a computer, a borrower grading module which uses at least the entered personal loan evaluation information to calculate a credit grading for the borrower, said credit grading being distinct from a credit score of the borrower, and being based on underwriting criteria used by at least some of said lenders;
wherein the second interface provides functionality for the borrower to search the database to identify a set of loan packages for which the borrower qualifies based on the credit grading, and to compare the loan packages within the set, including loan type and interest rate, while remaining anonymous to each of the lenders and without having to post a request to any of the lenders, said second interface configured to display to the borrower an indication of a total cost of each loan package in the set, said total cost including costs of closing services not provided by corresponding lenders.
Got that? It’s a computer system with a database and two (wow!) interfaces. Try not to faint! This s00per awesome system “allows” you to shop for loan packages (super techno!) without revealing your identity (because nobody ever did anything anonymously before). Somehow the highly trained corp of Loan Package Engineers at the PTO let this one slip through.
The judge in the Central District of California where the case was filed wisely chucked the case on summary judgment.
The money quotes:
The series of steps covered by the asserted claims—borrower applies for a loan, a third party calculates the borrower’s credit grading, lenders provide loan pricing information to the third party based on the borrower’s credit grading, and only thereafter (at the election of the borrower) the borrower discloses its identity to a lender—could all be performed by humans without a computer. Cf. CyberSource Corp. v. Retail. …
(“[C]omputational methods which can be performed entirely in the human mind are the types of methods that embody the ‘basic tools of scientific and technological work’ that are free to all men and reserved exclusively to none.”) (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972)).
[MM note: Not only that, such methods are quintessential examples of abstract logic that have no place in the patent system.]
Because the claims are directed to an abstract idea,
the claims must include an “inventive concept” in order to
be patent-eligible. No such inventive concept is present
here….
“[A]fter Alice, there can remain no doubt:recitation of generic computer limitations does not make an otherwise ineligible claim patent-eligible. The bare fact that a computer exists in the physical rather than purely conceptual realm is beside the point.” DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1256 (Fed. Cir 2014)
Of course it’s beside the point.
There’s no way the Supreme Court will resurrect this pile of trash. But that fact hasn’t stopped a few other desperate patentees out there from asking.
I was happening to read the IP Professors amicus brief for Stryker. The reason why there were no cases of awarding enhanced damages for reasons other than willfulness was is because almost every patent case was brought in equity from 1819-1950, so sec 284 was never applied.
If you are around Professor Rantanen, I’d like to hear your counter.
J, Equity? Can you image proving infringement and the court denying an injunction because you haven’t proved damages?
Yes.
Actually, remedy is one area that Congress has shared its authority with the judicial branch.
Forgive me, I don’t understand your question. Patent owners elected for equitable remedies over legal remedies now specified in 284. Namely, those equitable remedies were injunctions and accounting. If you brought your suit at law, it was only because you were unable to bring a suit in equity, for example the patent was expired.
To take a shot at your question: you do not need to prove legal damages to be entitled to equity.
J, I agree. But that is not how the law has evolved since eBay.
Harm.
But what is Harm, but damages.
I should qualify that, J. Actual harm in terms of lost business, etc.
Legal damages are a form of remedying harm. Legal damages are not the only way to remedy harm. Further, proving damages is a separate question than proving harm. The harm is infringement in patent law. In contracts, the breach of the contract is the harm. In torts, the breach of a duty and causation are harms caused by the tortfeasor.
eBay preserved the substantive differences between law and equity. Just yesterday, SCOTUS ruled that ERISA plans can only collect in equity. ERISA plans are not entitled to legal damages whatsoever. In patent law, if you are granted a preliminary injunction, you have received equity despite not proving damages.
Going back to my point, from 1819 to 1870, patent owners had to elect to bring their suit in law or equity. Almost all sought equity because 1) injunctions, 2) legal damages were difficult to prove with specificity, and 3) the monetary awards in equity (accounting, which was disgorgement of profits) were much higher than in law (reasonable royalties, or all too often, nominal damages). Equity is often granted without proving damages, which is another reason why enhanced damages were never really considered except in rare circumstances.
J, I agree with you about eBay. But the Federal Circuit seems to now require that the patent owner prove some harm to his business in order to get an injunction, not just a violation of this exclusive right, or to suppress future infringement. This is the way they deny injunctions to NPEs.
I see what you are asking now. I would say, first, that the decision making of whether to grant equity resides mostly in the district court.
Equity is formulistic but that doesn’t mean bright line rules should be applied. If I had a NPE client looking for equity, I would go digging in equity treatises looking for support on why equity should be granted in his or her case. That goes straight to the heart of eBay: the historical practices of equity matter most of all.
Finally, the adequacy of legal damages is a factor in granting injunctions, but it is not the only one.
Where eBay misses**, J, is that “the heart” is to make the transgressed as whole as possible.
The “traditional” notion of injunction as some “most severe” form of remedy must not be so blindly applied when that form of remedy is simply the best measure of the right transgressed.
**or perhaps more correctly, where those wanting to use eBay to deny injunctive relief miss
anon, sometimes its in the public interest to enforce patent rights, and sometimes its not. I really don’t disagree with you that making the patent owner whole is an important consideration.
J,
Your “selectivity” is not grounded in law.
Note that I am not saying “don’t balance” here – what I am saying is that ANY balancing must set aside the “traditional” OH NOES view of injunctions exactly because when you are talking about a transgressed patent you are directly talking about the type of thing that injunction aligns best with as a remedy.
If you want to separate out preliminary injunctions – I am fine with that – the transgression at that point is merely alleged.
But I reject your “modification” because all your modification does is attempt to change the nature of the right transgressed into some type of “business tort” efficient breach item. It should NEVER be viewed that some transgressions are “worth less” than other transgressions at the core legal principle of what the right is that has been transgressed. Patent law is simply not written (by Congress) to “play favorites” like that. There simply are not different shades of what a patent right means.
Keep in mind, anon, that my construction of the law allows for enhanced damages for compensatory purposes as a substitute for injunctive relief. So please don’t accuse me of reducing patent law to a business tort-effective breach subject. As I said, sometimes it is in the public’s best interest to grant an injunction.
Equity is up to the district court judge. It is proper for a judge to consider all relevant factors, including the social harm of granting injunctions.
You are missing the heart of remedy J, and as such, you are indeed plying the effective breach mantra.
Maybe you are not aware of what the effective breach mantra means. That mantra too is concerned with “public interest.”
I don’t think that you are realizing that you are placing the public’s interest ahead of the transgressed party being made whole. You are forgetting the heart while seemingly playing “the heart(strings)” of some “greater good” commons.
The greater good though is met by having a strong patent system – including guarding against the very type of efficient breach that you are indeed espousing.
There is no “social harm” in restoring the legitimate rights of the transgressed.
There may be personal inconveniences – but those are not social harms.
Really, no social harm? Basic supply and demand dictate that there must be social harm. The whole patent system is based on the bargain for short-term social harm (a deficiency of supply in an invention) in exchange for long-term success (more and better inventions).
Lets take a medical device invention. Competitor makes an infringing substitute from the OME. Court is asked to give an injunction, but handing down an injunction means that it denies supply to this limited invention. People might need, in fact might die without it. Explain to me how that is not social harm.
You also are failing a basic understanding of where equity is based. The source of that power is the tradition of the court.* It is not derived from the patent statute, therefore this power is not controlled by the patent statute.
*I understand that the power of the Federal Courts to grant equity is from Congress. But if not for that act, equity would reside in state courts. I am speaking of the judiciary generally, not just the federal judiciary.
“Basic supply and demand dictate that there must be social harm”
Wrong.
Supply and demand do not make all property into the commons type concern that you want to make it out to be.
Once again – we are talking about transgressions of a valid patent right. Your view here necessarily means that ANY patent worth anything must be open to the commons or there is some of your social harm.
That is NOT – and cannot be – correct.
“ failing a basic understanding of where equity is based”
Not true at all.
We are still talking about the heart of making the transgressed whole, right?
You are the one that seems off kilter here.
“this power is not controlled by the patent statute.”
Never said that it was – and my position has no need to make it so. At the same time that there is NO need to have equity “controlled” by the patent statute, the heart of equity remains the same. Likewise, what a patent IS – the negative right of exclusivity – remains what needs to be restored as much as possible – per the NON-patent controlled view of what equity is at its heart.
Your strawman is a F A I L.
anon, its frustrating when you just reply to the conclusion and not the reasoning. You avoided my hypothetical.
You also skipped over the distinction of equity coming from the patent statute and equity derived from the power of the courts. Let me try again. The power of equity comes from the power of the courts, independent of any one right articulated by statute or common law. Thus, making a party whole–whether we are talking about torts, contracts, patents–it is only one consideration from which that power is to be used. If you are injured in a car accident and are awarded damages by a jury, you cannot use equity years later to have the damage award increased just because the jury underestimated the damages. It would make you more whole if the court did use equity, but there are other policy considerations weighing against the use of equity in that situation.
What I’m saying, and eBay backs me up, is that you can’t take away the seriousness of injunctions because traditionally it is always a consideration. Application of equity in patent law must be treated the same as every other area of law.
And you’ll have to explain to me why it cannot be the case that valuable patents cause social harm.
I’m not straw manning you. Your argument is what Judge Rader wrote a few times, “the fourth factor (public interest) always is in favor of enforcing patent rights.” And that is wrong. In some, maybe most, circumstances it will favor. In some, particularly in my hypothetical, it might not favor enforcing patent rights.
The tradition of equity weighs the competing interests of the public, it is not automatically viewed in favor or against the winning party’s rights.
You are strawmanning and my argument is my own.
Radar may have a similar argument, but my argument here stands on its own (and still, you need to come to terms with it – you have still omitted the heart of equity in your haste to include the commons).
“But what is Harm, but damages.”
Are you including harm to the patent system itself when the “exclusive right” is denigrated and made into nothing more than some flimsy business “convenient” efficient breach item instead of having the remedy that most aligns with the nature of the right itself?
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