No Costs to Government when it Intervenes in IPR Proceedings

by Dennis Crouch

LG Electronics v. Iancu (Fed. Cir. 2018) [ORDER]

In a R.36 Affirmance, the Federal Circuit upheld the PTAB obviousness judgment. The USPTO promptly filed a request for a bill of costs for $387.60.  The Federal Circuit has now rejected that request since the PTO was an intervenor, not a party.

LG Electronics (LG) sued Advanced Micro Devices, Inc. (AMD) for infringement back in 2014 and AMD responded with the filing of this inter partes review (IPR) petition. U.S. Patent 7,664,971. The PTAB found all the challenged claims obvious and LGE appealed, but AMD did not defend the case on appeal since the parties settled the underlying infringement dispute.  At that point, the PTO “exercised its right to intervene” under 35 U.S.C. 143.

The Director shall have the right to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board in a derivation proceeding under section 135 or in an inter partes or post-grant review under chapter 31 or 32.

After affirming on the merits, the PTO asked for its costs Federal Circuit Rule 39.  Under the rule, costs just include copying, service of process, clerk fees, etc. — and here added up to $388.

The Federal Circuit rule states that “if a judgment is affirmed, costs are taxed against the appellant.” However, the rule includes a caveat when costs are “for or against” the US. In that case, costs are assessed “only if authorized by law.”  28 U.S.C. § 2412(a) allows for costs when the Government is a party to litigation.  Here, however, the Government was an intervenor.

This appeal was not brought by or against the United States. It was a dispute arising between two private parties, AMD and LG. The PTO was an intervenor, which, although having a right to intervene, see 35 U.S.C. § 143, had no obligation to intervene. No one asked it to intervene. It was in effect a volunteer. Section 2412(a) is therefore not applicable to this case.

The court found no other particular statute authorizing costs to the government — and thus the court “decline[d] to award costs in these circumstances.”

Interesting petition

Havilland v. FX Networks LLC, Supreme Ct. Docket No. 18-453

Olivia de Havilland is a 102-year-old, two-time Academy Award winning best actress, who played Melanie Hamilton in the movie classic, “Gone with the Wind.” Of particular relevance here, she is also a woman who lives her life devoted to high moral and ethical standards.

FX Networks, LLC and Pacific 2.1 Entertainment Group, Inc. appropriated the literal name and identity of Olivia de Havilland, without consent or compensation, to be the narrator of a mini-series, “Feud: Bette and Joan,” devoted to the theme of women actors catfighting, using vulgar language, and backstabbing one another. FX, claiming artistic license, admits that many of the statements and vulgar language attributed to de Havilland were fabricated and knowingly untrue.

The California Court of Appeal reversed the trial judge’s denial of a Motion to Strike, and dismissed Miss de Havilland’s claims, based on a First Amendment defense for docudramas.

The Question for the Court is: Are reckless or knowing false statements about a living public figure, published in docudrama format, entitled to absolute First Amendment protection from claims based on the victim’s statutory and common law causes of action for defamation and right of publicity, so as to justify dismissal at the pleading stage?

Infringing?: Offers (made in the US) to Sell (abroad)

by Dennis Crouch

Texas Advanced Optoelectronic Solutions, Inc., (TAOS) v. Renesas Electronics America, Inc., fka Intersil Corporation (Supreme Court 2018)

This case focuses on TAOS’ patented photodiode array ambient light sensor that is now widely used in smartphones to adjust display brightness.  U.S. Patent No. 6,596,981.  Following failed merger negotiations with TAOS, Intersil developed a competing product and Apple signed-on as a client. However, a jury found Intersil liable for patent infringement, trade secret misappropriation, breach of contract, and tortious interference with prospective business (finding that Intersil had improperly used confidential information from the merger talks).

A tough aspect of the patent case against Intersil itself is that 98.8% of its products are manufactured, packaged, and tested abroad — then delivered to customers abroad. U.S. patent law is territorial and almost none of the products were made, used, or sold “within the United States.” 35 U.S.C. 271(a).  In its new petition for writ of certiorari, TAOS argues that the infringer should still be liable becase it made “offers to sell” the invention within the US.

Here, the evidence shows that an offer was made in California by Intersil to sell the accused sensors to Apple at $.035 each.  Although the offer was made in California, delivery was set outside the U.S.  The delivery location is critical under the leading Federal Circuit decision in Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296 (Fed. Cir. 2010).  In Transocean, the court held that “offers to sell . . . within the United States” are limited to offers where – if accepted – the sale will occur in the United States.   Now TAOS raises the following question to the Supreme Court:

Whether an “offer[] to sell” occurs where the offer is actually made or where the offer contemplates that the proposed sale will take place.

[Petition].  Linguistically — the basic question is whether “within the United States” clause modifies “offers” or “sell” (or perhaps both). In the context of the statute’s list of bad actions it is pretty clear that the focal point is “offers.”

[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

35 U.S.C. 271(a). There is really no Congressional guidance on what was intended when the law was implemented as part of the Uruguay Round Agreements Act (1994).

In Transocean, the offer was made in Scandinavia to but for delivery in the US — the court held this as infringing because the sale was going to take place in the US. “In order for an offer to sell to constitute infringement, the offer must be to sell a patented invention within the United States. The focus should not be on the location of the offer, but rather the location of the future sale that would occur pursuant to the offer.”  Id. The Supreme Court called for views of the Solicitor General in that case, but the parties settled prior to resolution.   Now the court has another chance to consider the issues.

= = = =

The importance of this case is much greater following the Supreme Court’s recent decision in WesternGeco LLC v. ION Geophysical Corp.  In that case, the court indicated that foreign consequential damages are available to compensate for U.S. acts of infringement.   Here, that could mean that TAOS could collect damages for the foreign made products that stemmed from the US originated offer.

= = = =

One way to look at this case is through a simple two-by-two table of activities showing the location of the offer as well as the location of the proposed sale.  Everyone agrees that box-1 is infringing where both the offer and eventual sale are in the US; we all also agree that box-4 is not infringing where neither the offer nor the eventual sale are in the US.  The debate is then over boxes 2 and 3.  In Transocean, the Federal Circuit held that box-3 is also infringing — focusing on the location of the eventual sale.  Here, the patentee is arguing that the statute focuses on the location of the offer and thus that boxes 1 and 2 are the actionable situations.  I can also conceive of a court saying that of the four, only box 1 is infringing or alternatively that 1, 2, and 3 are all infringing..

 

Interpreting Claims — Claiming Elements from the Background Art

DISCLOSURE: Back in 2013/14 I talked with the attorneys for Cave Consulting about serving as an expert witness for the underlying district court litigation. I ended up not doing any work related to the case. – DC

by Dennis Crouch

Cave Consulting Group, LLC, v. OptumInsight, Inc. (Supreme Court 2018) [20181102114930196_Cave Consulting v. Optuminsight Inc. Petition for Writ]

This pending case before the Supreme Court focuses on fundamental questions of how to interpret patent claim scope. 

Cave Consulting’s U.S. Patent No. 7,739,126 covers a method of determining physician efficiency that includes, inter alia, a step of calculating a “weighted statistic” associated with various “episodes of care.”  The broader claims are not expressly limited to the particular statistic used, while the dependent claims require alternatively require “indirect standardization” (Claim 25) or “indirect standardization” (Claim 26) of the weighting.  To be clear, the specification spends substantial time focusing on indirect standardization in detail, whereas direct standardization is a method known in the prior art.

In its case against Optum (a subsidiary of UnitedHealthcare and my insurance provider), the patentee argued that Optum used the direct-standardization weighting as claimed and a jury found agreed with a $12 million damages award.

On appeal the Federal Circuit shifted claim construction and reversed — holding that the independent claims implicitly excluded direct-standardization weighting. In its holding the court relied upon its precedent in Retractable Techs., Inc. v. Becton, Dickinson & Co., 653 F.3d 1296, 1305 (Fed. Cir. 2011) in stating that claims should be construed to “tether the claims to what the specifications indicate the inventor actually invented.”

Optum had argued disclaimer, but could not point toward any “clear and unmistakable” disavowal of scope or lexicographical redefinition of the terms. Rather, the court simply found that the best construction of the claimed “weighted statistic” excluded the traditional direct-standardization weighting.

Cave does not identify, nor do we find, any indication in the ’126 patent’s description that its invention employs direct standardization, and, other than the dependent claims, Cave’s support for including direct standardization comes exclusively from the description of the prior art methods in the background section.

Although there might ordinarily be a claim differentiation argument, the court found it weak here because the aforementioned dependent claims had been added during prosecution.

[I]n view of the specification’s consistently limiting description, we conclude that these interpretive canons, despite the later-added dependent claims, cannot overcome the claim scope that is unambiguously prescribed by the specification.

Now Cave Consulting has petitioned the U.S. Supreme Court to hear the case with the following question presented:

May a court construe a patent claim in a way that contradicts its plain and ordinary meaning by relying on statements in the specification that do not constitute lexicography or disavowal?

Cave Consulting sets up the case as a debate over whether claims control the scope of the rights:

  • When there is a conflict between clear and unambiguous claim language and statements in the specification, the claim language wins. White v. Dunbar, 119 U.S. 47, 52 (1886)(“The claim is a statutory requirement, prescribed for the very purpose of making the patentee define precisely what his invention is, and it is unjust to the public, as well as an evasion of the law, to construe it in a manner different from the plain import of its terms.”)
  • Howe Mach. Co. v. Nat’l Needle Co., 134 U.S. 388, 394 (1890) (“Doubtless a claim is to be construed in connection with the explanation contained in the specification . . . but, since the inventor must particularly specify and point out [what] he claims as his own invention or discovery, the specification and drawings are usually looked at only for the purpose of better understanding the meaning of the claim, and certainly not for the purpose of changing it, and making it different from what it is.”);
  • Cimiotti Unhairing Co. v. Am. Fur Ref. Co., 198 U.S. 399, 410 (1905) (“In making his claim the inventor is at liberty to choose his own form of expression, and while the courts may construe the same in view of the specifications and the state of the art, they may not add to or detract from the claim.”);
  • Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 510 (1917)(“It is to the claims of every patent, therefore, that we must turn when we are seeking to determine what the invention is . . . .”);
  • Smith v. Snow, 294 U.S. 1, 11 (1935) (“We may take it that, as the statute requires, the specifications just detailed show a way of using the inventor’s method, and that he conceived that particular way described was the best one. But he is not confined to that particular mode of use, since the claims of the patent, not its specifications, measure the invention.”);
  • Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 336 U.S. 271, 277 (1949) (refusing to narrow the unambiguous claim language based on the specification, noting that the Court has “frequently held that it is the claim which measures the grant to the patentee.”).

As you can see, this is an important area of jurisprudence that the Supreme Court has discussed on multiple occasions — increasing the odds of certiorari.

= = =

Richard Brophy and Marc Vander Tuig of Armstrong Teasdale filed the petition on behalf of Cave Consulting.

= = =

I’ll note here that it is cases like this that discourage patentees from including any background section at all.

= = =

 

Whitaker on Patent Marketing

by Dennis Crouch

Following up on the patent experience of US Attorney General Matthew Whitaker.  Although not a patent attorney, Whitaker has been a board member of the now defunct invention promotion scam World Patent Marketing.  In 2017, the Federal Trade Commission (FTC) filed suit against the company, won a preliminary injunction against its ongoing business, and then a consent decree for $27 million in judgments and injunction against ongoing business.  (Apparently at least $24 million is gone and not being repaid.)

Gene Quinn has written extensively about invention marketing scams discussed the preliminary injunction on his IPWatchdog site.  Quinn explains:

“The record supports a preliminary finding that Defendants devised a fraudulent scheme to use consumer funds to enrich themselves,” concluded United States District Judge Darrin P. Gayles. “Accordingly, the Court finds a preliminary injunction is necessary to maintain the status quo pending a trial on the merits.”

Perhaps most egregious, however, were the threats and intimidation World Patent Marketing directed toward complaining customers.

As a former Federal Prosecutor, Whitaker’s place on the Board lent the company a high level of credibility. For lending his name, Whitaker was paid only about $600 per month.  At the time, Whitaker was also managing director of his own small Iowa law firm and penned at least one letter toward a complaining customer:

Whitaker was not prosecuted by the FTC and was not named in either the preliminary injunction or the consent decree.  Unlike other board members, Whitaker has not returned the cash he received in the scheme and has made no public statement regarding his role or the scam.  My hope is that the AG will have learned from this experience, however his ongoing silence on the issue is troubling.

USPTO News and Updates

  • We have a new USPTO deputy director LAURA PETER.  Ms. Peter has been a registered patent practitioner since 1989 — working primarily in house for the past two decades. Most recently she was Deputy General Counsel at A10 Networks. She was also GC at Immersion Corp — by that point the company was really just enforcing its patents on haptic feedback game controllers. (See recent case) In 2010 Peters was the republican candidate for the California State House of Representatives — she won the primary but lost to the Democratic incumbent in the general election.
  • Ms. Peter’s Reg. No. is 33,545.  The most recent PTO registration number belongs to Mr. Noble Woo with Reg. No. 77,596 (Registered 11/5/18). Congratulations Mr. Woo!
  • The Patent Public Advisory Committee (PPAC) will hold its next meeting on November 8 (AGENDA). You can either attend in person at the USPTO or watch via web stream.
  • The USPTO is continuing its excellent STEPP program for registered patent practitioners (STEPP = Stakeholder Training on Examination Practice and Procedure).  The next training is January 15-17 in Dallas. [More Info | Apply to Attend]
  • In January we’ll see a major shift on the House Judiciary Committee — this is important because patent legislation generally goes through that committee. Hank Johnson (D-Ga) is expected to take over as ranking member of the IP Subcommittee. Although Johnson does not have extensive IP experience, he is known as an effective legislator.  Bob Goodlatte (R-Va) and Darrell Issa (R-Ca) are retiring from the House.

Enforcing FRAND Commitments

FTC v. Qualcomm (N.D. Cal. 2018)

In an important decision, Judge Koh granted partial summary judgment for the Federal Trade Commission (FTC) that will require Qualcomm to license its Standard-EssentialPatents (SEPs) for 3G Mobile (and other) communication standards on fair, reasonable, and nondiscriminatory (FRAND) terms.  [FTC v Qualcomm]

Qualcomm agreed that it was subject to its prior FRAND commitment, but argued that it only applied to “complete devices like cellular handsets” and not to components like modem chips.  In other words, Qualcomm was happy to license to its chip customers, but not to its competitors. This decision follows other cases, including Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012) where the 9th Circuit held that “FRAND commitments include an obligation to license to all comers, including competing modem chip suppliers.”

The FTC sued Qualcomm alleging unfair competition under Section 5 of the FTCA — alleging that the failure to license represented anti-competitive behavior.

Although this particular issue is resolved, the case is moving forward on other antitrust allegations — including allegations that Qualcomm used its market dominance to negotiate higher royalties and terms, including exclusivity requirements, from handset makers.

Joke: What do you call a claim without a transition phrase?

by Dennis Crouch

Acceleration Bay, LLC v. Activision Blizzard Inc., Docket No. 17-2084 (Fed. Cir. 2018)

This consolidated appeal involves 12 different inter partes review proceedings collectively challenging three Acceleration Bay patents.[1] The patents at issue here are all related to methods of broadcasting information over a peer-to-peer network.  The basic approach here is to ensure that the network is sufficiently connected and then send data through each node to its neighbor participants.  I made the gif below that provides a simple example.

The PTAB split in its decision – finding many of the challenged claims obvious but some patentable.[2]  The decision involves a few patent attorney inside questions:

If a claim has no transition phrase, is it all body? Some of the challenged claims had no transition phrase such as “comprising” — Claim 1 of the ‘966 patent is on point:

1. A computer network for providing an information delivery service for a plurality of participants, each participant having connections to at least three neighbor participants, wherein an originating participant . . .

On appeal, the patentee argued that “information delivery services” should be seen as a limiting claim term — because it is part of the body of the claim — rather than a non-limiting portion of the preamble. Here, challenged term appears toward the start of the claim, but the patentee argues that the claim is all-body (and therefore is all limiting).  On appeal, the Federal Circuit sided with the PTAB that the term was part of the preamble and was non-limiting. The court writes “Acceleration’s poor claim drafting will not be an excuse for it to infuse confusion into its claim scope.”  Note here that the patents originally belonged to Boeing and were prosecuted by Perkins Coie.

Printed Publication: In its cross-appeal, Blizzard argued that a particular reference (“Lin”) should count as a prior art printed publication. The article in question is captioned:

Meng-Jang Lin, et al., Gossip versus Deterministic Flooding: Low Message Overhead and High Reliability for Broadcasting on Small Networks, Technical Report No. CS1999-0637 (Univ. of Cal. San Diego, 1999).

The unchallenged testimony was that the article by Lin was uploaded to the UCSD Computer Science and Engineering website (on a page of CSE technical reports).  The upload took place in 1999 before the critical date for the patents and the site was indexed and searchable – although the search function was limited. Still, the PTAB found that the document was not “published” — a conclusion affirmed on appeal. 

To qualify as a “publication” the document must either (1) be actually distributed to the public or (2) be publicly available. Because there was no evidence that the document actually reached members of the public, the focus was on the second prong, public availability.  The question here: “whether an interested skilled artisan, using reasonable diligence, would have found Lin on the CSE Technical Reports Library website.”  Although the site was indexed and searchable, the PTAB concluded that the search function was limited and that the evidence only “suggests that an artisan might have located Lin by skimming through potentially hundreds of titles in the same year, with most containing unrelated subject matter, or by viewing all titles in the database listed by author, when the authors were not particularly well known.”

Treating public accessibility as a factual determinatoin, the Federal Circuit affirmed — finding that “[s]ubstantial evidence supports the Board’s finding that there “is insufficient evidence of record to support a finding that a person of ordinary skill in the art in 1999 could have located Lin using the CSE Library website’s search function.”

= = = =

As noted above, a critical factor in the Federal Circuit’s analysis was the deference given to PTAB fact finding — holding that public accessibility is a question of fact.

Whether a reference qualifies as a printed publication under § 102 is a legal conclusion based on underlying fact findings. Jazz Pharm., Inc. v. Amneal Pharm., LLC, 895 F.3d 1347, 1356 (Fed. Cir. 2018); accord Cooper Cameron Corp. v. Kvaerner Oilfield Prod., Inc., 291 F.3d 1317, 1321 (Fed. Cir. 2002). One such fact question is public accessibility, which we review for substantial evidence. Jazz Pharm., 895 F.3d at 1356.

In a prior post, I walked though a series of low quality citation strings on the question of whether public-accessibility is a question of fact (or instead a question of law).

Here, the court cites Jazz Pharma, and Jazz Pharma does include the holding that “[p]ublic accessibility is a question of fact.”  Jazz Pharma justifies this holding with a citation to In re NTP, Inc., 654 F.3d 1279 (Fed. Cir. 2011). NTP also includes the short statement that “publicly accessible is a question of fact,” again without any reasoning or explanation other than a citation back to In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004) along with the parenthetical (holding that whether a reference is publicly accessible is based on the “facts and circumstances surrounding the reference’s disclosure to members of the public”).  It turns out though that Klopfenstein did not actually make that holding. Once again, this citation string goes back to nowhere.

= = = =

[1] IPR2015-01951, IPR2015-01953, IPR2015-01964, IPR2015-01970, IPR2015-01972, IPR2015-01996, IPR2016-00933, IPR2016-00934, IPR2016-00935, IPR2016-00936, IPR2016-00963, IPR2016-00964.

[2] “Claims 1–9 of U.S. Patent No. 6,829,634, claims 1–11 and 16–19 of U.S. Patent No. 6,701,344, and claims 1–11 and 16–17 of U.S. Patent No. 6,714,966” were all found invalid. “Claims 10–18 of the ’634 patent, as well as substitute claims 19 of the ’966 patent, 21 of the ’344 patent, and 25 of the ’634 patent” were all found patentable.

 

 

US: Vote Today

Here in Missouri we have a Univ. of Missouri School of Law Graduate – Claire McCaskel – running against a former Univ. of Missouri School of Law Professor – Josh Hawley (whose spouse is a current Univ. of Missouri School of Law Professor).  Keeping it all close to home.

Failure to Disclose Prior License

by Dennis Crouch

Hollister Inc. v. Zassi Holdings, Inc., 2018 U.S. App. LEXIS 30085 (11th Circuit 2018) [Hollister Inc. v. Zassi Holdings_ Inc._ 2018 U.S. App][Hollister Inc. v. Zassi Holdings_ Inc._ 2016 U.S. Dist]

This case before the 11th Circuit involves a patent sale with a hidden prior license.  Hollister bought two pending patent applications from Zassi.  As part of the transaction, Zassi and its founder (Peter von Dyck) represented that the rights were “free and clear of any licenses.”

Later, when Hollister sued two competitors, Bard and ConvaTek, for infringement it learned that Zassi had already licensed the technology to ConvaTek.  Thus, while Bard paid $6 million for a license, the case against ConvaTek was dismissed.   Hollister Inc. v. ConvaTec Inc., 2011 U.S. Dist. LEXIS 66638 (N.D. Ill. June 21, 2011), aff’d without opinion, Hollister Inc. v. ConvaTec Inc., 470 F. App’x 904 (Fed. Cir. 2012).

Hollister then turned back to Zassi and von Dyck and sued for damages associated with the undisclosed license to ConvaTek.  The jury sided against Zassi and von Dyk for breach of warranty of title and fraud.  As a twist, however, the court awarded no damages.  Using a case-within-a-case analysis, the district court found that ConvaTek’s actions were infringing, but-for the prior license.  Hollister relied upon its license to Bard as a mechanism to calculate a reasonable royalty damage amount for ConvaTek as the “best, most comparable, most reliable evidence.”  However, the district rejected the argument — finding that the settlement with Bard had now foundational basis other than being the amount the parties agreed upon.  In other words, Hollister provided no objective economic approach showing the $6 million settlement was a reasonable royalty.

Hollister’s failure to explain how the parties calculated the lump-sum in the Bard agreement or to prove that the $6.65 million amount represented a reasonable royalty, upon which its damages theory in this case depends, is a failure of proof.

The district court similarly refused to give credence to the $5.9 million that ConvaTek paid to Zassi for the prior license.  The problem was that these settlements didn’t have an associated economic story. Without an objective economic story, the district court suggested it was left in the wind without any grounding for assigning a royalty amount.

Given no other tools to arrive at a reasonable royalty, the Court cannot invent one out of thin air, particularly given that the Federal Circuit requires sound economic proof of the nature of the market and likely outcomes in order to prevent the hypothetical from lapsing into pure speculation. (quoting Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302 (Fed. Cir. 2002)).

As a result of the lack of proof, the district court awarded ZERO dollars in damages.

On appeal, the Eleventh Circuit has reversed — finding the whole approach here suspect.  The problem is that the damages for fraud should be calculated as of the bargain back in 2006 — here though the district court looked at damages as of the 2010 lawsuit against ConvaTek.

This was error; it is too speculative to treat the amount that ConvaTec would have paid as a royalty for a license in 2010 as establishing the value of a license four years earlier. This is particularly true because in 2006 a license would have been less valuable due to the fact that no patent had yet been granted for the technology.

Then going on to the proof of damages, the appellate panel found that the evidence Hollister presented was enough to allow to recover at least “some damages in the hypothetical infringement action.”

Even when the patentee’s proof of damages is extremely weak, the proper course is for the court to award nominal damages, not zero damages. . . . Hollister introduced proof that the license ConvaTec negotiated in 2010 had value. . . . Even if Hollister’s proof of a reasonable royalty wasn’t very exact or there were ways that the proof could be challenged, it seems to us that Hollister was still entitled to something more than a royalty of zero.

On remand, the lower court will hold a new trial on damages — focusing on the question of what is the damages for the fraud associated with selling the applications without providing notice that the applications had already been licensed.

= = = =

You could conceive of a system where a prior patent license is not good against a subsequent good faith purchaser for value. In fact, the patent law provides a statute on point, but is limited to assignments:

An interest that constitutes an assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage.

35 U.S.C. 261.  The USPTO will record license agreements. MPEP 301-302. But, there is no general negative consequence that flows from failure to record. (Certain gov’t licenses must be recorded).

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

The October Berkheimer Series

by Dennis Crouch

In Berkheimer, the Federal Circuit explained that underlying factual disputes might prevent a motion on the pleadings or summary judgment decision.  In this post, I looked at four recent district court cases that cite Berkheimer.

In iSentium, LLC v. Bloomberg Fin. L.P., 2018 WL 5447503 (S.D.N.Y. Oct. 29, 2018), the district court considered Berkheimer but primarily cited to its statement that “not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry.”  This was a case where additional facts were not necessary because the claim elements beyond the abstract idea were merely “a combination of elements is well understood, routine and conventional.”

In ECOSERVICES, LLC, Pl., v. CERTIFIED AVIATION SERVICES, LLC, 2018 WL 5629301 (C.D. Cal. Oct. 26, 2018) the district court had an interesting use of Berkheimer.  In the case, the defendant did not file for summary judgment on eligibility but instead waited until post trial to make its eligibility motion.  The district court found no waiver — noting particularly that post trial a good time because of the potential underlying facts that might be developed there. Citing Berkheimer.  In fact, in that case the defendant relied “on trial testimony and the jury’s verdict for part of its argument, [as such] it was reasonable to wait to resolve the § 101 issue until after trial.”

In CardioNet, LLC v. InfoBionic, Inc., 2018 WL 5017913 (D. Mass. Oct. 16, 2018), the court ruled on a 12(b)(6) motion to dismiss. As such, the court limited the potential factual-dispute-inquiry to the allegations made in the complaint.  However, the complaint did not include any particular “non-conclusory factual assertions” to create any dispute.  As such, the court ruled the patent ineligible as a matter of law.

Finally in KROY IP HOLDINGS, LLC, Pl., v. GROUPON, INC., 2018 WL 4905595 (D. Del. Oct. 9, 2018), the magistrate judge refused to recommend dismissal of the case on the pleadings — finding that “questions of fact remain as to whether the asserted claims of the ’660 patent were conventional at the time of the patent, and unresolved issues of claim construction could potentially bear on the analysis.”

Federal Circuit: Conference Distribution Still a Printed Publication even if No PHOSITA Attend

by Dennis Crouch

GoPro, Inc. v. Contour IP Holding LLC (Fed. Cir. 2018) [Original Opinion][Revised Opinion]

In its July 2018 decision, the Federal Circuit vacated a PTAB IPR final decision over a prior-art dispute — whether a GoPro catalog counts as prior art as a “printed publication” under 35 U.S.C. 35 U.S.C. § 102(b) (pre-AIA). Below I discuss the July Federal Circuit decision as well as the November 1 panel revision decision. 

In its IPR institution decision, the PTAB found that the patent challenger had made a threshold showing that the catalog was prior art as a printed publication. However, on final analysis, the PTAB found that its prior art status had not been proven.  The patent challenger GoPro appealed.

The Federal Circuit has broadly interpreted “printed publication” to include all sorts of documents — so long as they were either (1) distributed to relevant members of the public; or (2) accessible to the relevant public.

A reference will be considered publicly accessible if it was ‘disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence, can locate it.’ Blue Calypso quoting Kyocera Wireless.

Here, the catalog in question was taken to the Tucker Rocky dealer-only trade show in Fort Worth Texas in July 2009 (before the critical date).  Tucker Rocky is a wholesaler of “action sports vehicles like motorcycles, motorbikes, ATVs, snowmobiles, and watercraft.”  A GoPro employee testified that he took the catalog to the show where it was displayed and distributed to attendees. The employee also testified that the GoPro continued to make the catalog available to “actual and potential customers, dealers, and retailers through its website, direct mail, and other means of distribution.”  In its response, Contour provided evidence that the Tucker Rocky show was limited only to dealers — and not open to the public.  The PTAB found the GoPro employee’s testimony credible — but found it insufficient to prove public accessibility — since the show was not advertised or announced to the public.  According to the Board — the fact that dealers attended was insufficient because dealers do sales not camera engineering — i.e., dealers are not persons of skill in the art of camera making.  Thus, this dealer show is different from an academic meeting where the attendees are skilled in the art.

On appeal, the Federal Circuit disagreed with the PTAB’s conclusions — holding that the Board too narrowly “focused on only one of several factors that are relevant to determining public accessibility in the context of materials distributed at conferences or meetings. . . . [O]ur case law directs us to also consider the nature of the conference or meeting; whether there are restrictions on public disclosure of the information; expectations of confidentiality; and expectations of sharing the information.”

After reviewing the matter Federal Circuit rejected the PTAB analysis and found that the catalog’s use at the show counted as prior art.

Its original opinion focused more on factual matters — disputing some findings of the PTAB.  The new revised opinion focuses more on legal errors made by the PTAB — making this perhaps a more supportable opinion.

For a conference distribution, the key added line makes clear that the distribution can still count as a publication — even if not directly distributed to any person of skill in the art.

When direct availability to an ordinarily skilled artisan is no longer viewed as dispositive, the undisputed record evidence compels a conclusion that the GoPro Catalog is a printed publication as a matter of law.

It is this line that serves as the source of the essay title.  In the original opinion, the court quibbled with the notion that dealers were not PHOSITA.  The revised opinion substantially drops that argument and explains that the factor simply is not determinative.

I have black-lined the primary changes in the text based upon the rehearing decision:

Although the trade show was only open to dealers, there is no evidence or indication that any of the material disseminated or the products at the show excluded POV action cameras, or information related to such cameras.   Contrary to the Board’s conclusion, the attendees attracted to the show were likely more sophisticated and involved in the extreme action vehicle space than an average consumer. Thus, it is more likely than not that persons ordinarily skilled and interested in POV action cameras were in attendance or at least knew about the trade show and expected to find action sports cameras at the show. While the Board found that GoPro did not provide any evidence as to what products the companies at the trade show make, GoPro was not the only manufacturer of POV action cameras. The vendor list provided with Mr. Jones’s declaration listed a number of vendors who likely sell, produce and/or have a professional interest in digital video cameras. J.A. 4319, 4323–24.  This is especially true in light of the evidence that Tucker Rocky is a trade organization directed to action sports vehicles and accessories related thereto.  J.A. 4319.

The Board concluded that the GoPro Catalog was not a printed publication because the Tucker Rocky Dealer Show was not open to the general public and GoPro failed to provide evidence that someone ordinarily skilled in the art actually attended the dealer show.  But, the standard for public accessibility is one of “reasonable diligence,” Blue Calypso, 815 F.3d at 1348, to locate the information by “interested members of the relevant public.”  Constant, 848 F.2d at 1569 (emphasis added). A dealer show focused on extreme sports vehicles is an obvious forum for POV action sports cameras. And although the general public at large may not have been aware of the trade show, dealers of POV cameras would encompass the relevant audience such that a person ordinarily skilled and interested in POV action cameras, exercising reasonable diligence, should have been aware of the show. Mr. Jones testified that the dealer show was attended by actual and potential dealers, retailers, and customers of POV video cameras.  Additionally, the GoPro Catalog was disseminated with no restrictions and was intended to reach the general public.  Based upon Mr. Jones’s testimony, the evidence provided by GoPro regarding the Tucker Rocky Dealer Show, and the evidence of the Tucker Rocky Distributing website, we conclude that GoPro met its burden to show that its catalog is a printed publication under

Although the court did not well on this issue, the court noted that the patentee did not depose or cross examine the GoPro employee (Jones) who testified.  In hindsight, that may have been a strategic mistake.  Although Jones would have likely stuck to his testimony, a deposition would have likely been able to poke various holes into the account.

The revised opinion has a few other minor changes:

  • The Board based this decision on its finding conclusion that a certain GoPro catalog is not a prior art printed publication. We disagree. . . . In its final written decisions, the Board found concluded that the GoPro Catalog did not qualify as a prior art printed publication under 35 U.S.C. § 102(b).
  • The Board’s findings of fact, such as public accessibility, are reviewed for substantial evidence.

The change from “finding” to “conclusion” is not explained but these terms appear to be short-hand for “finding of fact” and “conclusion of law.” The Federal Circuit sees the question of whether a reference is a “printed publication” is a question of law — and so “conclusion of law” is the appropriate term.

= = = = =

Diversion into the wormhole of whether Public Accessibility a Question of Fact: I’m not confident in the court’s statement here that “public accessibility” is a question of fact.  In Klopfenstein, for instance, the court first noted that there were no factual disputes between the parties — but that the court still needed to determine whether the reference was publicly accessible. In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004).  Calling “public accessibility” a question of fact and “printed publication” a question of law is also problematic because the court has called the two classifications essentially overlapping — “Thus, throughout our case law, public accessibility has been the criterion by which a prior art reference will be judged for the purposes of § 102(b).” Klopfenstein.

In its 2018 Jazz Pharm. decision, the Federal Circuit stated that “Public accessibility is a question of fact that we review for substantial evidence.” Jazz Pharm., Inc. v. Amneal Pharm., LLC, 895 F.3d 1347, 1356 (Fed. Cir. 2018). The Jazz Pharm. court did not explain its reasoning for this statement but merely cited In re NTP, Inc., 654 F.3d 1279 (Fed. Cir. 2011).  The NTP case also provides a 1-liner that “Whether a reference is publicly accessible is a question of fact that we review for substantial evidence.”  NTP did not provide any reasoning for this statement but merely cited back to the aforementioned In re Klopfenstein, 380 F.3d 1345, 1350 (Fed.Cir.2004).  Klopfenstein decided the question of public accessibility (which was disputed by the parties) shortly after stating that “there are no factual disputes between the parties in this appeal.” This appears to be a situation where the roots were not properly dyed.

Going back to NTP, the court cited to a particular statement in Klopfenstein for its conclusion that public accessibility is a question of fact:

Whether a reference is publicly accessible is a question of fact that we review for substantial evidence. In re Klopfenstein, 380 F.3d 1345, 1350 (Fed.Cir.2004) (holding that whether a reference is publicly accessible is based on the “facts and circumstances surrounding the reference’s disclosure to members of the public”).

NTP.  Unfortunately, the NTP court badly mis-paraphrased Klopfenstein.  The more complete quote from Klopfenstein on this issue is as follows:

Where no facts are in dispute, the question of whether a reference represents a “printed publication” is a question of law. . . The determination of whether a reference is a “printed publication” under 35 U.S.C. § 102(b) involves a case-by-case inquiry into the facts and circumstances surrounding the reference’s disclosure to members of the public.

KlopfensteinNTP took this quote to mean that the issue of public accessibility is a question of fact. But, as you can see, the quote refers to the broader issue of whether a document is a “printed publication” and actually holds that it is a question of law.

In the 2012 Voter Verified decision, the Federal Circuit explained that “Public accessibility is a legal conclusion based on underlying factual determinations.” Voter Verified, Inc. v. Premier Election Sols., Inc., 698 F.3d 1374, 1380 (Fed. Cir. 2012).  For this principle, the Federal Circuit cited to Cooper Cameron Corp. v. Kvaerner Oilfield Prods., Inc., 291 F.3d 1317, 1321 (Fed.Cir.2002).  However, as far as I can tell, the Cooper Cameron decision says nothing of the kind (and the pin-cited portion of the case is not even related to the printed publication issue).

This whole series of failed citations makes the Federal Circuit look pretty bad.

Priority

The Supreme Court has requested briefing from the US Solicitor General in the pending case of Ariosa Diagnostics, Inc., v. Illumina, Inc., Sct. Docket No. 18-109. The case focuses on core aspects of patent law — what “counts” as prior art.  The petition focuses on the prior art date of unclaimed information found in a published patent application when that information was is also found in a provisional application relied upon as a priority document.

Question Presented: Do unclaimed disclosures in a published patent application and an earlier [unpublished] application it relies on for priority enter the public domain and thus become prior art as of the earlier application’s filing date, or, as the Federal Circuit held, does the prior art date of the disclosures depend on whether the published application also claims subject matter from the earlier application?

In Alexander Milburn Co. v. Davis-Bournonville Co., 270 U.S. 390 (1926), the U.S. Supreme Court provided a portion of the answer — holding that an unclaimed invention found in a later issued patent is “made public property” as of its filing date.  That statement though came as an interpretation of no-longer-active provision that the patentee must be “the original and first inventor.” Rev. Sts. § 4920.  In addition to interpreting a different statute, the court in Milburn also did not consider the priority question.

The relevant statute for this case is pre-AIA 102(e) — which also does not spell out what should happen in this situation — but nothing in the statute suggests to me that we should limit the prior art impact of priority filings to disclosures that are claimed in later patents or patent applications.  However, the Federal Circuit ruled in this case that that a published application can count as prior art as of its provisional filing date — but only as to features actually claimed in the application.  According to the court, features disclosed in the provisional but not claimed in the published application will only be prior art as of their date of public disclosure.

The opposition briefing makes a big deal of the fact that this case focuses on the outgoing pre-AIA statute.  However, I expect that the ruling that the court makes here will carry-over post-AIA. [More on this in an upcoming separate post]

Federal Circuit Backtracks (A bit) on Prior Art Status of Provisional Applications and Gives us a Disturbing Result

Ariosa Diagnostics v. Illumina: Prior Art Date of a Provisional Patent Application

 

Morris & Associates, Inc. v. John Bean Technologies Corp., 2018 WL 5078036 (U.S.) (on petition for writ of certiorari)

In Petrella v. Metro-Goldwyn-Meyer, Inc., 134 S.Ct. 1962 (2014), and SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S.Ct. 954 (2017), this Court held that laches is unavailable to bar actions for copyright and patent infringement brought within the respective statutes of limitation. In these cases, however, this Court noted that in contrast to laches, equitable estoppel remains a viable equitable remedy “long recognized as available in actions at law” against “unscrupulous patentees” where there is “misleading and consequent loss.”

For over a century, this Court and the Federal Circuit have held that a finding of equitable estoppel gives an accused infringer an implied license to a patented invention for the life of the patent, thereby constituting a waiver of the right to sue by the patentee. Yet for the first time, the Federal Circuit panel held that an implied license arising by equitable estoppel does not extend to the entire patented invention, but is instead restricted on a claim-by-claim basis to exclude claims added or substantially amended through ex parte reexamination, resulting in the implied license applying to select individual claims of a patent but not all.

The two questions presented are:

1. Whether the Federal Circuit erred and contradicted a century of this Court’s licensing precedent in holding that implied license rights to a patent arising in equity, particularly equitable estoppel, do not attach to the entire patented invention but instead attach only to a subset of the patent’s individual claims?

2. Whether the Federal Circuit erred and violated Morris’s due process rights by deciding an issue of first impression sua sponte not raised by the parties before the District Court or on appeal, which resulted in the court of appeals creating a new artificial categorical exception that restricts an accused infringer’s pre-established implied license rights arising in equity?

Conflating Design Patent & Trademark Infringement – Can you just not?

By Sarah Burstein, Professor of Law at the University of Oklahoma College of Law

Converse v. ITC and Sketchers, New Balance, et al. (Fed. Cir. 2018) [ConverseITC]

As Professor Crouch already pointed out, the majority here held that “[i]n the context of trade-dress infringement, . . . accused products that are not substantially similar cannot infringe.” In doing so, the majority cited a perfectly good and persuasive authority, Versa Prods. Co. v. Bifold Co. (Mfg.), 50 F.3d 189, 202 (3d Cir. 1995). The discussion could have just stopped there.

But no. The majority, in a decision written by Judge Dyk, went on to add this bit of dicta:

We have applied an analogous requirement in the design-patent context, where infringement cannot be found unless an ordinary observer would perceive that the “two designs are substantially the same.” Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 670 (Fed. Cir. 2008) (en banc) (quoting Gorham Co. v. White, 81 U.S. 511, 528 (1871)).

Hold up. “An analogous requirement?” I’m honestly not sure what the majority thinks is analogous here, other than the use of the words “substantially” and “similar” in these two areas of law (which are already rife with faux amis).

So, just for the record: The tests for design patent and trademark infringement are different.

A design patent is infringed when the defendant’s goods are too visually similar to the claimed design. (Yes, this is true even under Gorham v. White, as I explained at p. 177 here.) A trademark is infringed when consumers are likely to be confused as to the source, sponsorship, or origin of goods or services. Thus, factors like labeling, marketing, etc. are (at least in theory) relevant to the question of product-design trade dress infringement. But they’re not relevant to the question of design patent infringement.

It’s true, as the majority points out, that visual similarity is one element of the various likelihood-of-confusion tests. To the extent that these judges are suggesting that they’d like to import the (very high) degree of visual similarity required for a finding of design patent infringement into the trade dress infringement test, that would be a wise and welcome addition to the law. But I’m not sure that’s what they’re trying to say.

Reading the whole paragraph in context (as reproduced below with the citations omitted), it seems like they might be trying to import the anticipation-infringement symmetry rule from patent law into trade dress law. Here is the entire paragraph for context:

The likelihood-of-confusion analysis for determining infringement turns in part on the similarity of the accused products to the asserted mark. We described earlier that, in the invalidity determination, marks that are not substantially similar cannot be considered. In the context of trade-dress infringement, we also hold that accused products that are not substantially similar cannot infringe. We have applied an analogous requirement in the design-patent context, where infringement cannot be found unless an ordinary observer would perceive that the “two designs are substantially the same.”

I’m not aware offhand of any trademark cases that stand for the proposition that there must be symmetry of this type (though I haven’t researched this precise issue and would be happy to hear from anyone who has seen such cases). In any case, this seems like the type of situation where asymmetry would actually be a good rule. We might want product-design trade dress claimants to establish more visual distance from other users in the field than we would allow them to capture in any eventual trade-dress scope.

In the end, I’m not sure what the majority was trying to do here. But this decision could do without the design patent dicta. At best, it’s harmless surplusage. At worst, it unhelpfully conflates two dissimilar infringement standards and could cause unintended mischief in the future. So, Federal Circuit, when it comes to conflating design patent and trade dress infringement – can you just not?

Converse: Secondary Meaning and Infringement Redefined for Trade Dress

by Dennis Crouch

In its decision here, a divided Federal Circuit created a new test for secondary meaning, placed limits on trade dress infringement with an analogy to design patent law, and more . . .

Converse v. ITC and Sketchers, New Balance, et al. (Fed. Cir. 2018) [ConverseITC]

The ITC found that the mid-sole portion of these Converse All Star shoes was not a protected trademark — invalidating the Chuck Taylor trade dress registration (Reg. No. 4,398,753) and rejecting the existence of common-law rights.  Although it found no trademark rights — the ITC did explain that the accused shoes would be infringing if the mark was valid.  On appeal, the Federal Circuit has vacated and remanded.

Distinctiveness is a threshold requirement for trademark rights.  In Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205 (2000), the Supreme Court held that a product design (such as a shoe portion) is never inherently distinctive, but that distinctiveness may be acquired and proven with “a showing of secondary meaning” — i.e., that the relevant consumers associate the particular product features with a particular source of goods. Thus, a trade dress rights are established over time as consumers become more familiar with the product design.

In this case, the dates are important — because “the party asserting trade-dress protection must establish that its mark had acquired secondary meaning before the first infringing use” on an infringer-by-infringer basis.  In the opinion, the court modified this “first infringing use” language to set rough five-year cutoff — applying Section 2(f) of the Lanham act to the Courts.  Thus, five years of exclusive and continuous use will can create a presumption of secondary meaning. Thus, in evaluating the “length, degree, and exclusivity of use” by the mark holder, “the ITC should rely principally on uses within the last five years. . . . [U]ses older than five years should only be considered relevant if there is evidence that such uses were likely to have impacted consumers’ perceptions of the mark as of the relevant date”

In this case, the 2013 mark registration by Converse creates a presumption of secondary meaning — as of the registration date.

Converse argues that it is entitled to rely on the presumption of validity afforded to registered marks. We do not agree that this presumption applies to infringement that began before registration. . . . [U]nder the statute, the registration and its accompanying presumption of secondary meaning operate only prospectively from the date of registration. . . . This rule is a straightforward application of the Lanham Act, pursuant to which the PTO examines whether secondary meaning has been acquired at the time of registration. See 15 U.S.C. § 1052(f). The resulting registration confers a presumption of secondary meaning from that point in time, see id. §§ 1057(b), 1115(a), but at the time of registration the PTO is not asked to determine whether secondary meaning had been acquired at some previous date, and therefore registration cannot support a presumption for the period before registration. Indeed, on a record such as this, with a multiyear gap between infringement and registration, registration cannot even be probative of secondary meaning at the time of infringement.

Because the ITC did not establish when (if ever) the mark established secondary meaning pre-registration, on remand, Converse will be given a chance to prove that secondary meaning was established prior to “the first infringing use by each respondent.” The dissenting opinion in this case filed by Judge O’Malley would not have given Converse the opportunity to go back and provide this new evidence.

Test for Secondary Meaning: In addition to the presumption and timing issues, the Federal Circuit also found that the ITC erred in its analysis of secondary meaning — here the court laid out its particular test:

Today we clarify that the considerations to be assessed in determining whether a mark has acquired secondary meaning can be described by the following six factors: (1) association of the trade dress with a particular source by actual purchasers (typically measured by customer surveys); (2) length, degree, and exclusivity of use; (3) amount and manner of advertising; (4) amount of sales and number of customers; (5) intentional copying; and (6) unsolicited media coverage of the product embodying the mark. . . . All six factors are to be weighed together in determining the existence of secondary meaning.

This test is similar to that adopted by the various circuits, but include some quirks. (Prepare an additional post on this).

Regarding “exclusivity,” the Federal Circuit suggested that the ITC had relied upon shoes with designs “that were not substantially similar.”

The court explained that

Although we agree with the ITC that evidence of the use of similar but not identical trade dress may inform the secondary-meaning analysis, we think such uses must be substantially similar to the asserted mark. Here, the ITC made no determination as to which of the prior uses were substantially similar.

Establishing infringement: On the infringement side, the Federal Circuit also found errors in the ITC’s likelihood of confusion test.  Here, the court held that product design trade dress can only infringe if it is “substantially similar” to the protected trade dress — noting that “We have applied an analogous requirement in the design-patent context, where infringement cannot be found unless an ordinary observer would perceive that the ‘two designs are substantially the same.'” Quoting Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 670 (Fed. Cir. 2008) (en banc) (quoting Gorham Co. v. White, 81 U.S. 511, 528 (1871)).

Defaulting Parties: Finally, the ITC had refused to enter an exclusion order against defaulted respondents — based upon its finding that the trademark was invalid. In the appeal, the court here suggested that result should be changed.

= = = =

The majority opinion was written by Judge Dyk and joined by Judge Huges.  Judge O’Malley wrote in dissent. She explained:

I agree with the majority that the International Trade Commission (“ITC” or “Commission”) erred in its legal analysis in this matter and that its decision must be vacated. I also agree that a remand is appropriate. I even agree with many of the ways in which the majority finds that the ITC erred. I cannot join in the majority’s reasoning, however, because I believe that the majority overlooks important procedural facts and binding statutory authority to reach issues that are not properly before us. Thus, I do not agree with the majority’s decision to remand questions regarding the validity of the registered mark for further consideration or its decision to even address questions of infringement. And, I cannot accede to the majority’s failure to order the ITC to enter a remedy against the parties found in default in the proceedings below or to explain why public interest concerns would justify not doing so.

Specifically, I believe that the majority: (1) misperceives the scope of the ITC’s authority to invalidate duly issued intellectual property rights when it addresses the issue of the validity of a registered mark; (2) blurs the line between the concepts of priority of use under common law and the validity of a registered mark; (3) espouses advisory—and unnecessary—opinions on the weight to be given certain survey evidence and the question of infringement; and (4) ignores the ITC’s statutory obligation to enter remedies against defaulting parties. Thus, except where otherwise noted, I concur only in the conclusion that the ITC’s findings must be vacated, and the matter remanded to the ITC for further analysis. I dissent from the fact that the majority discusses matters not properly before us and from the nature of the remand the majority outlines.