In re TracFone Wireless, Inc. (Fed. Cir. 2021)

In its second go-round in the case, the Federal Circuit has ordered District Court Judge Albright to grant TracFone’s motion to transfer its case to the S.D.Fla. on convenience grounds under 28 U.S.C. § 1404(a).  “We conclude that the district court clearly abused its discretion in denying transfer under § 1404(a).”  Generally, Section 1404(a) provides substantial discretion to the district court to determine whether or not to transfer a case to a different venue.  The statutory guidelines focus on “the convenience of parties and witnesses [and] the interest of justice”

In its opinion, the appellate panel walked through the parties/witnesses:

• Patentee Precis is a Delaware company with “no disclosed place of business.”
• The key inventor likely to testify (Karvenon) lives in Mankato.
• The attorney involved in patent prosecution likely to testify lives in Arizona.
• Defendant TracFone is also a Delaware company, its principal place of business is in Miami Florida. TracFone has identified for Florida-Based witnesses likely to testify.

Effectively, there is no reason for this case to be in Waco, Texas.  Still, the district court explained that the convenience here, in his discretion, did not rise to being “clearly more convenient” so as to demand transfer.   On appeal, the Federal Circuit disagreed — finding the district court’s conclusion “clearly flawed.”

The court did not reach the issue of improper venue that was also raised.

Read it here: TracFone Decision April 2021

TracFone: Mandamus All Over Again

Timing the Venue Inquiry in W.D. Texas

Egregious Delay and Blatant Disregard for Precedent

by Dennis Crouch

Amgen Inc. v. Sanofi-Aventis (Fed. Cir. 2021)

Patent claims typically cover an infinite number of potential infringing embodiments.  This seemingly renders true full-scope enablement an impossible task.  But the metaphysics are an illusion.  If we want valid patents, then there has to be some “good enough” threshold for enablement.

The focus in Amgen is a particularly tricky type of claim: genus claim with functional limitations.  Here, the claim is directed to an isolated monoclonal antibody defined by its ability to bind with the protein PCSK9 and consequently block PCSK9 from binding to LDL-C.

An isolated monoclonal antibody [that] binds to [one of the residues of PCSK9] and … blocks binding of PCSK9 to LDRL.

US8829165 (US8859741 is also at issue). In its decision, the Federal Circuit found the claims too broad in comparison to the disclosure.  “The functional limitations here are broad, the disclosed examples and guidance are narrow.”  Thus, although the jury found the claims enabled, the appellate majority affirmed the district court’s  post-verdict JMOL (notwithstanding the verdict).  This is a biopharma case, but the decision here can also be seen largely as an attack on functional claim limitations across the spectrum of patent technology fields.

Now, Amgen has filed a strong petition for en banc rehearing arguing that the majority has improperly created a new stiffer test for genus claims with functional limitations.

Question 1: Whether the panel’s new enablement test for genus claims with functional limitations, which has no basis in §112’s text, conflicts with Supreme Court decisions, including Minerals Separation, Ltd. v. Hyde, 242 U.S. 261 (1916); Wood v. Underhill, 46 U.S. (5 How.) 1 (1846); and Mowry v. Whitney, 81 U.S. (14 Wall.) 620 (1872), and decisions of this Court and its predecessor, including AK Steel Corp. v. Sollac & Ugine, 344 F.3d 1234 (Fed. Cir. 2003), and In re Angstadt, 537 F.2d 498
(C.C.P.A. 1976).

As mentioned above, the question of enablement was given to the jury.  Here, however, the Federal Circuit held that enablement is a question of law.  The distinction is likely dispositive in this type of close case where the jury sided with the patentee.  By treating enablement as a question of law, the Federal Circuit was able to review the issues de novo without impinging upon the reexamination clause of the 7th Amendment.  The second question challenges this approach:

Question 2: Whether enablement is a question of fact, as the Supreme Court has held, see Battin v. Taggert, 58 U.S. (17 How.) 74 (1854); Wood v. Underhill, 46 U.S. (5 How.) 1 (1846), or a question of law, as this Court holds, Op.6.

[Petition for Rehearing]

The brief cites and discusses a really well researched and written article by Professors Karshtedt, Lemley, and Seymore titled The Death of the Genus Claim (forthcoming 2021).  The article notes that today “it is no longer possible to have a valid genus claim. . . . [This] represents both bad law and bad policy.” Id.  In its decision, the majority seemed to largely agree, but declined to expressly foreclose the possibility of genus claims.

This is a very important case for pharma and biotech patenting, but will also likely have an impact on the doctrine of enablement generally — especially its relationship to functional claim limitations since those are found in most patents.  I expect a number of amicus briefs will be filed in the case over the next few weeks.

More to come.

Functional Claim “Raises the Bar for Enablement”

by Dennis Crouch

Here is a rundown of what’s happening with US Supreme Court cases:

Decided: The court recently decided Google LLC v. Oracle America, Inc., holding that Google’s use of Oracle’s Java API was a fair use and therefore not copyright infringement.  The court made no determination as to whether the API was actually copyrightable in the first place. The case does not expressly decide any patent law issues, but does provide some guidance as to how courts should approach mixed questions of law and fact (such as claim construction) and the right to a jury trial. The jury trial issue was interesting.  Although a number of juries were given fair use questions pre-1791, the court held that our current version of fair use claims its ancestry from the equity rather than common law. Thus, no right to a jury trial on the question of fair use under the Seventh Amendment. “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.”

Argued: On March 1, 2021, the court heard oral arguments in US v. Arthrex regarding  it is proper for the Secretary of Commerce to appoint the PTAB judges as inferior officers of the United States. Or, instead, are they principal officers of the United States that must be appointed by the US President and confirmed by the Senate (as we do with Article III judges).  Nobody likes the Federal Circuit’s decision, and the question really is which way it should fall. (My guess is that these judges will be seen as inferior officers).  I expect that part of the majority decision (whichever way it goes) will involve interpreting the role and involvement of the PTO Director in PTAB decisions.  An inferior officer decision will interpret the statute as providing the PTO director with substantial authority; a principal officer decision will downplay the role of the PTO director.  Decision should be released by Mid-June 2021.

Argument Pending: One final case is set to be argued this term: Minerva Surgical, Inc. v. Hologic, Inc., focusing on the issue of assignor estoppel.  Can a prior owner of a patent right (such as an inventor) who transfers title to another (typically the employer) later assert in court that the patent is invalid?  In this case, the employee started his own competing company and was sued for patent infringement.  The lower court barred an invalidity defense. Now the question presented:

Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.

Oral arguments are set for April 21, 2021 with a decision by Mid-June 2021.

Other pending petitions:

Arthrex Issues: There are a large set of pending petitions awaiting the outcome of Arthrex. Some of these raise interesting additional issues, but most of them are pure follow-on cases : Iancu v. Luoma, et al., No. 20-74; Polaris Innovations Limited v. Kingston Technology Company, Inc., et al., No. 19-1459; Comcast Cable Communications, LLC v. Promptu Systems Corporation, et al., No. 20-92; Vilox Technologies, LLC v. Iancu, No. 20-271; Rovi Guides, Inc. v. Comcast Cable Communications, LLC, et al., No. 20-414; RPM International Inc., et al. v. Stuart, No. 20-314; Fredman Bros. Furniture Company, Inc. v. Bedgear, LLC, No. 20-408; Micron Technology, Inc. v. North Star Innovations, Inc., No. 20-679; Iancu v. Fall Line Patents, LLC, et al., No. 20-853; Immunex Corporation v. Sanofi-Aventis U.S. LLC, et al., No. 20-1285; Comcast Cable Communications, LLC v. Promptu Systems Corporation, No. 20-1220; Wi-LAN, Inc., et al. v. Hirshfeld, No. 20-1261

Patent Eligibility: Of the pending eligibility cases, I find American Axle and Ariosa the most interesting:  American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, et al., No. 20-891; NetSoc, LLC v. Match Group, LLC, et al., No. 20-1412; NetScout Systems, Inc. v. Packet Intelligence LLC, No. 20-1289; Ariosa Diagnostics, Inc., et al. v. Illumina, Inc., et al., No. 20-892.

Inventorship & Ownership: Ono Pharmaceutical Co., Ltd., et al. v. Dana-Farber Cancer Institute, Inc., No. 20-1258; In re Martillo, No. 20-1126 (suit to quiet title).

Obviousness: Amarin Pharma, Inc., et al. v. Hikma Pharmaceuticals USA Inc., et al., No. 20-1119 (secondary indicia); Sandoz Inc., et al. v. Immunex Corporation, et al., No. 20-1110 (obviousness type double patenting).

Willful Infringement: NetScout Systems, Inc. v. Packet Intelligence LLC, No. 20-1289 (this case also raises an eligibility question).

Procedure: Ericsson Inc., et al. v. TCL Communication Technology Holdings Limited, et al., No. 20-1130 (is pre-trial denial of summary judgment appealable absent post-trial JMOL); Warsaw Orthopedic, Inc., et al. v. Rick C. Sasso, No. 20-1284 (abstaining in favor of state court jurisdiction); PersonalWeb Technologies, LLC v. Patreon, Inc., et al., No. 20-1394 (preclusion under the Kessler doctrine); Tormasi v. Western Digital Corp., No. 20-1396 (does a convicted state inmate have standing to sue for patent infringement).

Retroactive Application of IPRs: Security People, Inc. v. Hirshfeld, No. 20-1380.

Is the addition of a network computer implemented social network, with a novel and unconventional rating system, to a method of organizing human activity per se unpatentable as directed to an abstract idea?

This is the question presented in NetSoc v. Match

— Dennis Crouch (@patentlyo) April 12, 2021

Read the Petition

In May 2020, the Supreme Court decided the trademark case of Lucky Brand  Dungarees, Inc. v. Marcel Fashions Grp., Inc., 140 S. Ct. 1589 (2020) and expressly refused to extend preclusion doctrines in the trademark realm beyond their traditional bounds set by the doctrines of issue and claim preclusion.

One month later, the Federal Circuit decided In re PersonalWeb Techs. LLC,  2020 WL 3261168 (Fed. Cir. June 17, 2020) and happily extended a quirky patent law preclusion doctrine beyond those traditional bounds.  See Kessler v. Eldred, 206 U.S. 285 (1907) (Kessler doctrine). In its decision, the Federal Circuit explained its expansion of Kessler “fills the gap left by claim and issue preclusion.” see Brain Life, LLC v. Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014).

Now, PersonalWeb has petitioned the Supreme Court for writ of ceritorari — pointing largely to Lucky Brands for its foundation. Questions Presented:

This Court has repeatedly held that, absent guidance from Congress, courts should not create special procedural rules for patent cases or devise novel preclusion doctrines that stray beyond the traditional bounds of claim and issue preclusion. Nonetheless, over the past seven years, the Federal Circuit has created and then repeatedly expanded a special, patent-specific preclusion doctrine that it attributes to this Court’s 114-year-old decision in Kessler v. Eldred, 206 U.S. 285 (1907)—a case this Court has not cited for almost 70 years. The Federal Circuit now routinely applies its so-called “Kessler doctrine” to reject suits like this one that would survive under ordinary preclusion principles.

The questions presented are:

1. Whether the Federal Circuit correctly interpreted Kessler to create a freestanding preclusion doctrine that may apply even when claim and issue preclusion do not.

2. Whether the Federal Circuit properly extended its Kessler doctrine to cases where the prior judgment was a voluntary dismissal.

The petition does two things here: (1) calls into question whether Kessler still applies and (2) even if Kessler itself is still good law, explains how the Federal Circuit has improperly extended the doctrine in cases such as PersonalWeb and Brain Life.

Read the petition: PersonalWeb petition

Read my prior post below:

Preclusion: Expanding Upon the Kessler Doctrine

by Dennis Crouch

The Federal Circuit’s new decision in Apple Inc. v. Qualcomm Inc. (Fed. Cir. 2021) offers an interesting standing puzzle.

After some heated litigation, Apple licensed 20,000+ Qualcomm patents as part of a six-year covenant-not-to-sue which resulted in the litigation being dismissed with prejudice.  Meanwhile, the parallel inter partes reexaminations (IPRs) moved forward with regard to two particular Qualcom patents within the package of 20,000+.

Although the PTAB granted Apple’s IPR petitions, the Board eventually sided with Qualcomm — holding that Apple had not proven that the claims were invalid.  Apple then appealed to the Federal Circuit.  The PTAB does not worry about Article III standing — because the PTAB is not an Article III court.  However, standing comes into play once the case moves from the administrative agency into the appellate court.

In MedImmune, Inc. v. Genentech, Inc., 529 U.S. 118 (2007), the Supreme Court  held that a patent licensee has standing to challenge a patent’s validity even without stopping the royalty payments.  Here, Apple argued that it likewise has standing. The problem, according to the court, is that cancelling of the two Qualcomm patents would not actually impact Apple’s obligations under the license.  This contrasts with MedImmune where an invalidity finding would dramatically impact the royalty owed.

In Apple’s view, a licensee’s obligations to pay royalties for a license to 100,000 patents would provide standing to challenge the validity of any single licensed patent, even if the validity of any one patent would not affect the licensee’s payment obligations. We do not read MedImmune so broadly.

Slip Op.  The basic outcome here is that a broad portfolio license does not, on its own, create MedImmune-style standing for the licensee to sue to challenge the patent rights.

The court also rejected Apple’s argument that it has an interest in invalidating the patents because it might be sued again once the patent expires.  On appeal, the Federal Circuit found that argument too speculative and unsupported by any evidence.

Apple offers the sparsest of declarations in  support of standing, which are devoid of any of the specificity necessary to establish an injury in fact. Without more, we are left to speculate about what activity Apple may engage in after the expiration of the license agreement that would give rise to a potential suit from Qualcomm. This is insufficient to show injury in fact. . . . What products and product features Apple may be selling at the expiration of the license agreement years from now are not the kind of undisputed facts we may take judicial notice of because they may be reasonably questioned. . . . We are not fortune-tellers. Accordingly, we must decline Apple’s invitation to take judicial notice.

Slip Op.

In the end, I expect that Apple could have established standing, but chose instead to withhold details from the license and it upcoming product line that could have changed the outcome.

by Dennis Crouch

In Google LLC v. Oracle Am., Inc., 593 U. S. ____  (2021), the Supreme Court spends a few pages walking through procedural aspects of the fair use defense.

Like many patent law doctrines, fair use is a mixed question of law and fact. The defendant’s use of the asserted copyrighted work and its impact on the plaintiff are typically factual issues that must be proven by evidence as weighed by the factfinder (often a jury). These are questions such as “how much of the copyrighted work was copied” and “whether there was harm to the actual or potential markets for the copyrighted work.” Google at 19.  However, the questions of law emerge when we are categorizing the importance of the factual findings as well as asking the ultimate question of whether the use was a fair use.

The fact-law divide comes up in various ways: Is there a Constitutional right to a jury trial on the issue; lacking that may a jury still decide the issue; does proof require evidence (as defined by the Federal Rules of Evidence) proven to a particular standard; or instead do we simply look for the ‘right’ answer; on appeal, what is the standard of review — deference or not?  Fact/Law also comes up in patent prosecution, but examiners are not charged with making the distinction and the rules of evidence don’t apply.

At the trial court this leads to the very practical question of how easily a judge can dispose of the issue pre-trial.  Questions of law are often easy to determine pre-trial; some mixed questions are also relatively easy to determine pre-trial if there is no right to a jury determination; mixed questions involving substantial factual disputes and a right to a jury trial are hard.  In patent cases, courts are regularly making pre-trial determinations on claim construction and eligibility, both of which are ultimately questions of law but that can involve underlying factual determinations.  Obviousness is another mixed question.  Although  the ultimate determination of obviousness is a question of law, it is treated differently from claim construction and eligibility.  Rather than being decided by a judge, obviousness is typically decided by a jury as fact-finder.  The difference is that obviousness typically requires detailed factual determinations that are hard to separate from the ultimate conclusion of obviousness and that are subject to a Constitutional right to a jury trial.

In deciding an issue, a district court will typically separate its analysis between findings-of-fact and conclusions-of-law. This separation is expressly required in FRCP 52(a)(1) when a judge determines the facts without a jury.  District courts also decide other substantive questions pre- and post-trial.  However, those determinations are typically purely questions-of-law.  (Failure to state a claim; Summary Judgment; Judgment as a Matter of Law).

Back to Google: Oracle sued Google for copyright infringement, and Google raised a defense of Fair Use.  The district court gave the question of fair use to the jury who sided with Google.  On appeal, though the Federal Circuit reversed and found no fair use.  Although the jury had decided the issue, the Federal Circuit gave no deference to the jury’s legal conclusions.  In its subsequent analysis, the Supreme Court agreed with the Federal Circuit’s  procedural approach of de novo review of the legal conclusions but ultimately disagreed on the substance. Rather, the Supreme Court concluded that Google’s use was a fair use as a matter of law.

One typical difficulty in the law-fact divide is that the questions are often not easily separable. In Markman, the Supreme Court called claim construction a “mongrel practice” because it is a mixed question that is hard to separate-out.  Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).   In Google, the court determined that the big questions of fair use should be treated as questions-of-law because they “primarily involves legal work.”

The Google court went on to cite Markman in concluding that there is no 7th Amendment Right to a Jury Trial on the doctrine of fair use. “As far as contemporary fair use is concerned, we have described the doctrine as an ‘equitable,’ not a ‘legal,’ doctrine.” Google at 20.  See U.S. Const. 7th Amd. (“In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.”).

The Court’s general approach to mixed questions of law is explained in some detail within its 2018 bankruptcy decision of U. S. Bank N. A. v. Village at Lakeridge, LLC, 583 U. S. ___, 138 S. Ct. 960 (2018). In that case, the mixed-question was whether a creditor qualified as a “non-statutory insider.”  In U.S. Bank, the court explained that “mixed questions are not all alike.”  Some mixed questions are more like questions of law requiring an “amplifying or elaborating on a broad legal standard.”  Those should be treated as questions of law.  Other mixed questions require analysis of narrow facts “that utterly resist generalization.”  Those should be treated as questions of fact.  “In short, the standard of review for a mixed question all depends—on whether answering it entails primarily legal or factual work.”

For the fair use analysis in Google, the court followed the U.S. Bank standard and determined that the fair use questions at issue in the case were primarily legal and thus should be reviewed de novo on appeal.

Bringing all this back to patent law, I don’t see anything in this analysis to disturb our current approaches to obviousness, claim construction and eligibility.  But, both Google and U.S. Bank are clear that they are focusing on the particular issues in the case at hand.  It may well be that the mixed question analysis will come out differently on a different set of facts.

Chief Judge Prost took over as Chief at the end of May 2014 just after Judge Rader stepped-down from the position.  The position lasts for seven years and that date is approaching in May 2021. In addition, the statute prohibits a judge from being Chief Judge once they turn 70 years old.  Judge Prost is also turning 70 toward the end of May 2021.  28 U.S.C. 45. Thus, we’ll have a new Chief Judge within the next 7 weeks or so.

The next chief is defined by statute:

(1) The chief judge of the circuit shall be the circuit judge in regular active service who is senior in commission of those judges who—

(A) are sixty-four years of age or under;

(B) have served for one year or more as a circuit judge; and

(C) have not served previously as chief judge.

Judge Moore is the most senior active judge that satisfies the three statutory requirements and thus is the chief-apparent.  Judges Newman, Lourie, and Dyk are the three most-senior active judges.  However, they are all over the age of 64 and thus do not qualify to become the next Chief Judge.  Judge O’Malley is next in line following Judge Moore, but turns 65 in November 2021. Assuming that Judge Moore takes to the role and remains Chief Judge for her full 7 year term, the next Judge on deck will be Judge Chen in 2028. Since all of the current Judges are >50 years old, none would be eligible for the subsequent go-round in 14 years.

* I also apologize for openly discussing ages of these humans in such an uncouth way, but it is required by the statute.

By Jason Rantanen

There are lots of quantitative studies of patent litigation appellate court decisions, going all the way back to P.J. Federico’s 1956 article Adjudicated Patents in the Journal of the Patent and Trademark Office Society.  One of the big limitations of these studies, though, is that there hasn’t really been any work done to examine how replicable their observations are – even for variables as seemingly simple as whether the court affirmed or reversed on a particular issue, or reached a particular outcome, such as whether a patent’s claims was obvious.  New studies compare their aggregate results to previous studies, but not the actual data themselves–even when studying the same set of cases.

In an article forthcoming in the Hastings Law Journal, Abigail Matthews, Lindsay Kriz and I set out to do exactly that: to examine the amount of agreement between two studies on nonobviousness around the time of KSR v. Teleflex, one that I did that was published in 2013 and one that was recently published by Judge Ryan Holte and Prof. Ted Sichelman.

Our reliability assessment reveals a complex picture.  Somewhat reassuringly, the results from the two studies are largely consistent for decisions from the same time period.  Surprisingly, however, fewer than 2/3rds of the decisions analyzed in both studies were the same—even when limited to the identical time period and using the same criteria.  Within that set of cases, however, the core data coding was largely identical, with a few notable exceptions.  Specifically, we find differences in the coding for procedural postures and in some coding related to judicial reasoning.

In addition, since the period covered by those two studies ended several years ago, we also updated the dataset through the end of 2019.  Here are some highlights from our findings:

• The number of Federal Circuit decisions in appeals arising from the district courts that involved a § 103 issue peaked between 2010 and 2015, and in recent years has declined to half of that peak.
• The percentage of Federal Circuit decisions with an outcome of “obvious” in appeals arising from the district courts remained high between 2006 and 2014, but since 2015 the number of “obvious” outcomes has fallen dramatically.
• The Federal Circuit continues to affirm district courts on the issue of obviousness at a high rate (around 80% of the time since 2013), and—in contrast with the immediate post-KSR period studied Holte & Sichelman (2019) and Rantanen (2013)—since 2013, affirmances have been equally high for district court outcomes of “nonobvious.”
• The number of grants of summary judgment involving § 103 that were reviewed by the Federal Circuit in its decisions has fallen substantially in recent years. Nearly all § 103 decisions arising from the district court that were reviewed by the Federal Circuit between 2016 and 2019 involved a bench or jury trial.

In the paper we talk about some possible explanations for this decline, including two obvious causes: the rise of inter partes review and patent eligible subject matter issues.  You can read the full preprint on SSRN here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3818466.  I’m hoping to have the data posted within the next few weeks.