by Dennis Crouch

In Oil States, the patentee lost its broad challenge to the AIA Post Issuance trial system. However the majority opinion penned by Justice Thomas hinted that other collateral attacks on the system could find more success.  Particularly, the court wrote that “our decision [finding that patents are public rights] should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.”

A Costly Screen: The takings clause is an interesting limit on government power. Rather than serving as an absolute limit, the clause creates a costly screen.  Although the government has power to take private property for public use, it is required to provide “just compensation” for every such taking.  “[N]or shall private property be taken for public use, without just compensation.” U.S. Const. 5th Amendment (1791).

If the government cancels my land ownership rights to instead create a public commons — the takings clause would require just compensation.  Imagine for a moment that the PTO’s cancellation of established patent rights is also categorized as a taking — the PTO would need to provide just compensation to the patentee.  The question now being raised in various cases — including the recent petition in Advanced Audio Devices, LLC v. HTC Corp.

One starting point: It is certainly a taking for the government to cancel patent rights in merely because it wants to use the invention or to give the public free access to the invention.  IPRs also involve cancelling patent rights.  However, in IPRs the patents are cancelled based upon a different justification — a non-patentability determination rather than merely a desire for unfettered public use of the invention.  The question though is whether this different justification will serve as a cognizable distinction.

The Advanced Audio petition adds the additional twist that its patents were filed pre-AIA.  Thus, the patentee asks the following question:

Whether inter partes review (“IPR”) of patents filed before enactment of the Leahy-Smith America Invents Act (“AIA”) violates the Takings Clause of the Fifth Amendment to the U.S. Constitution.

[Advanced Audio Devices SCOTUS Cert Petition (Final)].  Similar arguments are being raised in other cases, including the class action Christy v. USA.

Just Compensation for Cancelling My Patent

Upcoming PTO Events in at the HQ in Arlington:

1. August 2, 2018 (9 am to 3 pm ET): PPAC Meeting [Webcast]
2. August 14, 2018 (Noon to 1 pm ET): Patent Quality Chat: AIA Trial Statistics from PTAB and Using AIA Trials to Enhance Patent Examination
3. September 6, 2018 (9 am to 11 am ET): PPAC discussion of New FEES. 

USPTO is planning to exercise its fee setting authority to set or adjust patent fees. As part of the rulemaking proceeding for the issuance of regulations under Section 10, the USPTO will publish a proposed patent fee schedule and related supplementary information for public viewing no later than August 29, 2018.

• The next PPAC Meeting will be on August 2, 2018 starting at 9:00 a.m. I usually attend via webcast that works well. [Agenda and Links]
• Former Acting PTO Director Joseph Matal has moved into the role of Acting Solicitor of the agency as well as Acting Deputy General Counsel for Intellectual Property Law.  Congratulations Joe! Former Solicitor Nathan Kelley has left the office that he joined originally back in 1993 as an examiner.
• EPO is highlighting its new office in The Hague. The Video below is worth watching if only for the dramatic background music.

by Dennis Crouch

In its new en banc opinion, the Federal Circuit has confirmed that the Patent Act does not require patent applicants to pay the USPTO’s attorney fees in Section 145 actions.  The USPTO had requested $100,000+ to compensate for the time of its in-house attorneys.

NantKwest, Inc. v. Iancu, 16-1794, 2018 U.S. App. LEXIS 20932 (Fed. Cir. 2018) (en banc).

35 U.S.C. 145 provides an unsuccessful patent applicant with the option of either (a) appealing the PTAB decision to the Federal Circuit or (b) filing a “civil action” in district court.  One kicker though – the statute provides that “All the expenses of the proceedings shall be paid by the applicant.”

Back in 2010, the Federal Circuit ruled that the statute allows the USPTO to collect expenses “regardless of the outcome.” Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010) (en banc).

In NantKwest, the original panel split on the meaning of “all the expenses” — with the majority holding that “expenses” include USPTO attorney fees (including in-house salaried attorney fees)..  That panel decision has now been rejected in a 7-4 decision with Judge Stoll penning the majority decision. Chief Judge PROST wrote in dissent and was joined by Judges Dyk, Reyna, and Hughes.

The court’s reasoning here is that the “American rule” on fees (each party pays for its own attorney fees) is a strongly embedded and any statutory rejection of the rule must be “specific and explicit.” The “all the expenses” language here does not meet that requirement — especially since such an interpretation would render this the only federal statute requiring “a private litigant to pay the government’s attorneys’ fees without regard to the party’s success in the litigation.”

The bottom line here is that patent applicants who challenge a PTAB decision will still be forced to pay other expenses such as printing costs and expert fees — but will not be required to pay the PTO attorney fees as a matter of course.

By Jason Rantanen

Trustees of Boston University v. Everlight Electronics Co., Ltd. (Fed. Cir. 2018) Download Opinion
Panel: Prost (author), Moore, Reyna

This opinion provides an example of how Section 112 can function as a commensurability requirement.  The court’s final lines say as much:

“Having obtained a claim construction that included a purely amorphous
layer within the scope of the claim, BU then needed to successfully defend against an enablement challenge as to the claim’s full scope…Put differently, if BU wanted to exclude others from what it regarded as its invention, its patent needed to teach the public how to make and use that invention. That is ‘part of the quid pro quo of the patent bargain.'”

Slip Op. at 14 (citations omitted).

I like the opinion because the court’s analysis fits neatly with my conceptual explanation of how enablement analyses are actually performed: it’s a two-step process, with the first step being the articulation of the relevant target and the second asking whether the patentee managed to hit that target.  Here, the court defined the target as consisting of one of six possible permutations under the claim construction the patent owner had sought.  Unfortunately, the evidence did not support the conclusion that a person having ordinary skill in the art could make that permutation without undue experimentation.

In the Federal Circuit’s words, Patent No. 5,686,738 “relates to the preparation of monocrystalline GaN films via molecular beam epitaxy.”  Slip Op. at 4. These films are used in creating blue light LEDs.  The plaintiff, Trustees of Boston University (BU), sued defendants for infringing the ‘738 patent.  Following a jury trial, BU obtained a verdict of infringement and no invalidity.  The district judge subsequently denied defendants’ renewed motion for judgment as a matter of law, in which defendants had argued that the asserted claim was not enabled.  Defendants appealed.

Only claim 19 of the ‘738 patent was at issue.  That claim states:

A semiconductor device comprising:

Two constructions were key here.  The court construed “grown on” to mean “formed indirectly or directly above” and “a non-single crystalline buffer layer” to mean “a layer of material that is not monocrystalline, namely, [1] polycrystalline, [2] amorphous or [3] a mixture of polycrystalline and amorphous, located between the first substrate and the first growth layer.”  (emphasis added).  It also understood “growth layer” as including within its scope a monocrystalline growth layer.  BU did not challenge any of these constructions on appeal.

In the Federal Circuit’s view, collectively these constructions raised six possible permutations for the relationship between growth layer and buffer layer:

• (1) monocrystalline growth layer formed indirectly on a polycrystalline buffer layer;
• (2) monocrystalline growth layer formed indirectly on a buffer layer that is a mixture of polycrystalline and amorphous;
• (3) monocrystalline growth layer formed indirectly on an amorphous buffer
  layer;
• (4) monocrystalline growth layer formed directly on a polycrystalline buffer layer; (5) monocrystalline growth layer formed directly on a buffer layer that is a mixture of polycrystalline and amorphous; and
• (6) monocrystalline growth layer formed directly on an amorphous buffer layer.

Slip Op. at 6. Of these six permutations, defendants focused their enablement argument on #6: whether a person of ordinary skill in the art could practice the invention with a monocrystalline growth layer formed directly on an amorphous buffer layer.

With the court’s attention focused on permutation #6, the enablement analysis was relatively straightforward.  The evidence supporting enablement of #6 was weak: the only technique described in the patent, epitaxy, doesn’t work to grow a growth layer directly on an amorphous structure.  BU tried to argue that the patent didn’t actually teach epitaxy, but the court was unpersuaded: “The ’738 patent’s specification is concise—just over four columns of text—and focuses on epitaxy. Indeed, it is saturated with the word ‘epitaxy’ or variants thereof.”  Id. at 9.  BU also argued that what the patent taught could not be epitaxy “because epitaxy invovles a crystalline layer on top of another crystalline layer,” and an amorphous layer is not “crystalline.”  Id. at 10.  But regardless of whether one called it epitaxy or not, the problem was that  BU couldn’t identify anywhere in the specification that taught how to grow a monocrystalline layer directly on an amorphous layer.  Nor was the expert testimony sufficient as it consisted of conclusory statements.  Testimony that other people had successfully grown a monocrystalline layer on top of an amorphous buffer layer didn’t help either, as “[s]imply observing that it could be done–years after the patent’s effective filing date–bears little on the enablement inquiry.”  Id. at 12.

In light of how the court understood the focus of the enablement issue, BU’s final argument–that the specification enabled 5 out of the 6 permutations and that was enough–didn’t work.  The court cited the “full scope” language from precedent here, and the “gap-filling” approach didn’t work here since that concept “is merely supplemental; it cannot substitute for a basic enabling disclosure.”   Ultimately, the court concluded that the patent needed to enable all six permutations–a result consistent, the court noted, with the claim constructions that BU itself had sought.  In the end, the court saw this as being in the vein of Liebel-Flarsheim: if you get the claim scope you ask for through construction, you’re also going to need to show enablement of that scope.

For enablement-timing gurus, there’s some interesting language in the section about the post-application successes to ponder.

In addition to the one patent case (Helsinn), the Supreme Court also has one Copyright case lined-up for its October 2018 term:

Fourth Estate Public Benefit Corp. v. Wall-Street.com, No. 17-571

Section 411(a) of the Copyright Act provides that “no civil action for infringement of the copyright in any United States work shall be instituted until” either (1) “registration of the copyright claim has been made in accordance with this title,” or (2) “the deposit, application, and fee required for registration have been delivered
to the Copyright Office in proper form and registration has been refused.” 17 U.S.C. 411(a).

The question presented is as follows: Whether a copyright owner may commence an infringement suit after delivering the proper deposit, application, and fee to the Copyright Office, but before the Register of Copyrights has acted on the application for registration.

ScotusBlog has the Briefs

By Jason Rantanen

Saint Regis Mohawk Tribe, Allergan, Inc. v. Mylan Pharmaceuticals Inc., Teva Pharmaceuticals USA, Inc., AKORN, Inc. (Fed. Cir. 2018) Download Opinion

Panel: Dyk (concurring), Moore (author), Reyna

Last fall, Allergan transferred a set of patents relating to its Restasis product (the “Restasis Patents”) to the Saint Regis Mohawk Tribe (“the Tribe”). The Tribe promptly asserted tribal sovereign immunity in the pending inter partes review proceedings involving the Restasis patents.  In February, the PTAB denied the Tribe’s motion to terminate the IPRs, a decision the Tribe appealed.  Following an expedited briefing schedule, the Federal Circuit has now affirmed the PTAB’s denial of sovereign immunity.

The panel opinion, joined by all three judges, addressed only one of the arguments against sovereign immunity: that under the Supreme Court’s analysis in Fed. Maritime Comm’n v. S.C. State Ports Auth., 535 U.S. 743 (2002), tribal sovereign immunity does not apply.  It’s important to note at the outset that “Generally, immunity does not apply where the federal government acting through an agency engages in an investigative action or pursues an adjudicatory agency action.”   Slip Op. at 5.

The Court in FMC looked to whether the adjudications at issue were “the type of proceedings from which the Framers would have thought the States possessed immunity when they agreed to enter the Union.”  Id. at 5-6. In particular, the Federal Circuit observed that “[i]n doing so, the Court recognized a distinction between adjudicative proceedings brought against a state by a private party and agency-initiated enforcement proceedings.”  Id. at 6.

This question is similar to that of whether an administrative agency can hear a dispute at all, and unsurprisingly the court looked to the Supreme Court’s recent decisions for guidance.  “IPR is neither clearly a judicial proceeding instituted
by a private party nor clearly an enforcement action brought by the federal government,” the court observed, before comparing the views offered by the Court in Oil States v. Greene’s Energy and SAS v. Iancu.  Ultimately, the court concluded, “IPR is more like an agency enforcement action than a civil suit brought by a private party….”  Thus, “we conclude that tribal immunity is not implicated.”  Id. at 8.

How is IPR more like an agency enforcement action?  For one thing, the Director chooses whether to institute an IPR.  And while that discretion is limited to an all-or-none decision under SAS, “if the Director decides not to institute, for whatever reason, there is no review.”  Id. at 8.  In addition, “the Board may choose to continue review even if the petitioner chooses not to participate,” reinforcing “the view that IPR is an act by the agency in reconsidering its own grant of a public franchise.”   Id. at 9.  There are also differences between the IPR rules of procedure and the Federal Rules of Civil Procedure; because of these distinctions “the agency procedures in FM much more closely approximated a civil litigation than those in IPR.”  Id. at 10.  Nor does the existence of more “inquisitorial” proceedings in which sovereign immunity would not apply, such as ex parte and inter parte reexamination, mean that sovereign immunity must apply to IPRs.

Judge Dyk joined the panel opinion in full, but wrote separately to describe the history of inter partes review and why those reviews are not adjudications between private parties.  His opinion is a great reference if one wants a thorough description of the history of the proceeding, complete with numerous source citations.

This dispute is clearly not at an end, and I suspect that the Tribe and Allergan will seek en banc review, if not head straight for a cert petition.  Given the expedited briefing schedule, I expect this issue to continue to move quickly.  At the same time, however, keep in mind that in the parallel infringement proceeding in the Eastern District of Texas,  Judge Bryson (sitting by designation) found the Restasis Patents obvious following a bench trial.  Allergan (now joined by the Tribe) appealed that determination.  Oral argument is currently scheduled for September.

by Dennis Crouch

Each summer, the Supreme Court takes a recess and patent cases begin to pile-up in the high-court’s docket. Only a handful of intellectual property petitions are granted certiorari each year, but almost all of the petitions raise interesting and important issues of law and policy.

The following is a comprehensive list of Patent cases pending before the Supreme Court.  I have excluded a small handful that have (in my estimation) no shot at certiorari and also fail to raise interesting patent law issues.

Petitions Granted:

1. Prior Art – On Sale Bar: Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., et al., No. 17-1229. This case questions whether 102(a) prior art under the AIA is limited to publicly available prior art. Particularly, does a pre-filing sale of the invention count as “on sale” prior art where the sale was a private sale that did not publicly disclose the invention? Merits briefing should be complete in October with oral arguments likely held in November 2018.

Petitions for Writ of Certiorari Pending:

1. Inequitable Conduct: Regeneron Pharmaceuticals, Inc. v. Merus N.V., No. 17-1616. The question presented is “Whether a patent right can be fully extinguished based on misconduct committed by the patentee’s counsel during federal district court litigation to enforce the patent right.”
2. Validity – Indefiniteness: American Technical Ceramics Corp. v. Presidio Components, Inc., No. 17-1497 (Can a patent’s definiteness be proven based wholly upon post-filing evidence?)
3. Damages – Enhanced Damages: Bombardier Recreational Products Inc., et al. v. Arctic Cat Inc., No. 17-1645 (Can treble damages for “willful infringement” be based upon a “should have known” standard?)
4. Validity – Obviousness: Nichia Corporation, et al. v. Everlight Electronics Co., Ltd., et al., No. 17-1707 (Treating obviousness as a question of fact vs law).
5. Validity – Obviousness: B/E Aerospace, Inc. v. C&D Zodiac, Inc., No. 17-1252 (Process of obviousness analysis — is there first a prima facie obviousness analysis followed by consideration of objective indicia of non-obviousness?)
6. Procedure – Standing for AIA Trials: Return Mail, Inc. v. United States Postal Service, No. 17-1594 (Whether the government is a “person” who can petition to institute a CBM;  Does a 1498(a) action count as an infringement action?)
7. Procedure – Standing of AIA Trials: RPX Corporation v. ChanBond LLC, No. 17-1686 (What is required for a petitioner to have standing to appeal an AIA Trial final decision?)
8. Procedure – Impact of Factual Stipulation: Allergan Sales, LLC v. Sandoz, Inc., et al., No. 18-21 (may the court “ignore a factual stipulation”).
9. Procedure – Federal Court Patent Jurisdiction: Alexsam, Inc. v. Wildcard Systems, Inc., et al., No. 17-1483 (Does a breach-of-patent-license lawsuit arise under the Federal Patent laws?)
10. Procedure – Joinder of Co-Owner: Advanced Video Technologies LLC v. HTC Corporation, et al., No. 18-77 (When we have co-owners of a patent, can one co-owner use Fed. R. Civ. Pro. R. 19 to force joinder of the other co-owner in an infringement lawsuit?)
11. Procedure – Timing of New Trial Motion: Promega Corporation v. Life Technologies Corporation, et al., No. 17-1669.
12. Inventor Rights: Leitner-Wise v. LWRC International, LLC, et al., No. 18-52.  Leitner-Wise (the inventor) assigned his patent rights as part of a royalty agreement that have not been by the subsequent assignee.  May he now sue the assignee for infringement?
13. Patent Eligibility: Integrated Technological Systems, Inc. v. First Internet Bank of Indiana, No. 17-1590 (“Does 35 U.S.C. § 282 allow for challenges to a patent’s validity based on patent eligibility under 35 U.S.C. § 101?”)
14. AIA Trials and Appeals: Stambler v. Mastercard International Inc., No. 17-1140 (Can Congress revoke a patent owner’s right to have the validity of his patent determined by a jury trial before an Article III forum after his patent issues; and (2) whether Federal Circuit Rule 36 contravenes 35 U.S.C. § 144.).
15. Infringement — Ensnarement as a Defense: Jang v. Boston Scientific Corporation, et al., No. 17-1332 (“Whether the Federal Circuit’s “ensnarement” defense to infringement [under the doctrine of equivalents] violates patent holders’ Seventh Amendment jury-trial rights.”)
16. Prior Art – Effective Date of Prior Art: Ariosa Diagnostics Inc. v. Illumina Inc, No. 18-****.  (“If a patent discloses but does not claim an invention, does that disclosure qualify as prior art as of the date of the application in which it was first made, such that no one else may patent the same invention based on a later-filed application?”)