In re Lantus Direct Purchaser Antitrust Litig., 18-2086, 2020 WL 728628 (1st Cir. Feb. 13, 2020)

This class-action antitrust decision from the 1st Circuit reversed a lower court dismissal — holding that consumers had alleged sufficient injury based upon Sanofi’s improper listing of patents in the FDA Orange Book (Approved Drug Products with Therapeutic Equivalence Evaluations).

The court explains:

The principal questions posed on this appeal are whether Sanofi improperly submitted a patent for listing in the Orange Book and, if so, whether Sanofi is potentially liable under the antitrust laws to drug purchasers who were allegedly harmed by the effective extension of Sanofi’s monopoly. We answer “yes” to both questions and vacate the dismissal of the plaintiffs’ complaint to the extent that the district court held otherwise.

The FDA statute calls for listing of patents “which claim[ ] the drug for which [an application is submitted] or which claim[ ] a method of using such drug.” 21 U.S.C. § 355(b)(1).

Here, the listed patent at issue is US Patent 8,556,864 which covers the drive mechanism for Sanofi’s SoloSTAR Insulin Pen.  The Orange Book listing is important because it can be used to trigger a 30-month stay of FDA approval of a competitor’s product. The drive mechanism is apparently part of the SoloSTAR pen thus it appears that a generic knock-off competitor would infringe the patent.  But, the appellate panel still held that it was improperly listed in the orange book since the patent does not claim the drug or a method of using the drug. The court writes:

[B]ecause the claims of the ‘864 patent do not mention the drug for which the sNDA was submitted, the patent does not “claim the drug,” and it was improper for Sanofi to have submitted it for listing in the Orange Book as a drug claiming either insulin glargine or the Lantus SoloSTAR. The regulations clearly require a patent not to be submitted if it does not claim the drug for which the application was filed: “For patents that claim a drug product, the applicant must submit information only on those patents that claim the drug product, as is defined in § 314.3, that is described in the pending or approved NDA.” 21 C.F.R. § 314.53(b)(1) (emphasis added).

On remand, the district court will take-up the case again and likely focus on whether the improper listing actually caused harm to consumers.

In a couple of 2019 decisions, the Federal Circuit appeared to expand-out the “merely tangential” exception to prosecution history estoppel. Those cases have now both been petitioned to the Supreme Court for review — with the two cases becoming three petitions:

• Hospira, Inc. v. Eli Lilly and Company, SCT Docket No. 19-1058. [Petition]

Whether a patentee may recapture subject matter via the doctrine of equivalents under the “tangential relation” exception by arguing that it surrendered more than it needed to during prosecution to avoid a prior art rejection, even if a claim could reasonably have been drafted that would literally have encompassed the alleged equivalent.

• Dr. Reddy’s Laboratories, Ltd., v. Eli Lilly and Company, SCT Docket No. 91-1061 [Petition]

[W]hether, under Festo’s “tangential” exception to prosecution history estoppel, patent owners may recapture subject matter they could have claimed in prosecution but did not, by arguing that they surrendered more than they needed to during prosecution to address a rejection by the Patent Office.

• CJ CheilJedang Corp. v. International Trade Commission, SCT Docket No. 19-1062. [Petition]

Whether, to avoid prosecution history estoppel under Festo, “the rationale underlying the amendment” must be the rationale the patentee provided to the public at the time of the amendment.

The doctrine of equivalents [DoE] is fairly complicated by itself because of the element-by-element function-way-result test and the limit on vitiation of claim elements.  DOE is further complicated by the prosecution history estoppel [PHE] that creates a presumption against equivalents associated with narrowing claim amendments made during prosecution for a “substantial reason related to patentability.”  In Festo, the Supreme Court explained that courts should presume estoppel based upon a narrowing amendment. However, the patentee may avoid the estoppel by providing evidence that the “rationale underlying the [narrowing] amendment … bear[s] no more than a tangential relation to the equivalent in
question.” Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 740 (2002) (TAN).  In prior posts, I called this expansion [DoE]; retraction [PHE]; re-expansion [TAN] process DoePHETAN.  The complication comes from the courts who – as I previously explained “wanted to empower patentees with the doctrine of equivalents but then became afraid that they had gone too far” and perhaps given too much power to a jury.

The petitions here are powerful and their parallelism may create interest from the court. Unfortunately, neither call for simplifying this process but rather ask for more detailing — What is the meaning of “tangential?”; At point must the “rationale” be declared?; What is the scope of “recapture” available for DoE?

= = = =

Recent DOE Decisions from the District Courts: Steyr Arms, Inc. v. SIG Sauer, Inc., 17-CV-483-JD, 2020 WL 905534, at *4 (D.N.H. Feb. 25, 2020) (court rejects DoE claim because the accused “pin” was not sufficiently structurally similar to the claimed “bridge”).

Speedfit LLC v. Chapco Inc., 215CV1323PKCRLM, 2020 WL 758824, at *2 (E.D.N.Y. Feb. 14, 2020) (patentee waived DoE claim after failing to include it in its pretrial infringement contentions).

KAIST IP US LLC v. Samsung Elecs. Co., Ltd., 2:16-CV-01314-JRG, 2020 WL 731360, at *7 (E.D. Tex. Feb. 13, 2020) (confirming jury verdict — finding that “the jury had substantial evidence from which to find infringement under the doctrine of equivalents.”).

Epistar Corp. v. Lowes Companies, Inc., LACV1703219JAKKSX, 2020 WL 771096, at *9 (C.D. Cal. Feb. 11, 2020) (unequivocal disclaimer during prosecution will bar DoE).

ViiV Healthcare Co. v. Gilead Scis., Inc., CV 18-224-CFC, 2020 WL 567398, at *3 (D. Del. Feb. 5, 2020) (refusing to apply the disclosure-dedication rule)

In a recent post, I noted the “trap” for patent prosecutors who use the transitional phrase “consisting essentially of.” That phrase has been traditionally interpreted to indicate that an infringing apparatus (or method) would include all of those elements and may also include other elements that “do not materially affect the basic and novel properties of the invention.” The more popular and broader “comprising” transition captures as infringement an apparatus that practices all of the claim elements, regardless of what additional elements are also being practiced by the accused. The courts have also locked-down the meaning of the narrower “closed” transition “consisting of” to only find infringement when the accused apparatus practices the claim limitations and nothing more.

Following my alarmist post, Paul Morgan provided me with “calm down” commentary — writing that he “would suspect” the use of consisting essentially of “is quite small, essentially limited to some chemical composition claims.”

To follow-up with some data, I downloaded all of the utility patents issued so far in in 2020 and parsed through all of the claims.  Paul Morgan was correct — the beast is quite rare. Of the 50,000 utility patents issued thus-far in 2020, only 0.5% include the phrase within their claim sets. (Note – I searched for “consisting essentially of” or “consists essentially of”).   A prime example comes from U.S. Patent 10,525,007:

1. A preserved tea composition, consisting essentially of: green tea leaf; yerba mate leaf; peppermint leaf; honey powder; at least one of monk fruit and monk fruit extract; water; at least one of a Cannabis sativa extract and/or a Cannabis sativa extract having tetrahydrocannabinol and cannabidiol; and wherein the composition is free of nicotine, and wherein the composition is free of tobacco.

Note that some portion of the consisting essentially of limitations are not found in the transitional phrase following the claim introductions but rather in a transition leading to a sub-limitation or modified Markush group. An example of this structure is found in U.S. Patent 10,573,826.

1. An organic light emitting diode device comprising: a first light emitting layer consisting essentially of boron subphthalocyanine that emits substantially orange light; …

Comprising is obviously much more common — 98% of patents in my cohort include “comprising.” 12% of patents recite the phrase “consisting of” however, the vast majority of those are signaling a Markush group rather than an initial transition. (Note – again here, I looked for both the “ing” and “s” form of the terms). These results are shown in the chart below.

Close to 1% of claims do not use one of these three traditional transitions. Of those, it appears that the majority use some other word such as “having,” “containing,” or “including.” A small minority of patents are written without any transitional phrase at all. These typically jump from the introduction directly into wherein clauses. There are also a substantial number of chemical compound claims drafted in the following form: “A compound selected from the group consisting of: …”

by Dennis Crouch

HZNP Finance Limited v. Actavis Laboratories UT, Inc. (Fed. Cir. 2020) [En Banc Order][Original Panel Decision]

In an 8-4 Federal Circuit has denied HZNP’s petition for en banc rehearing over a vigorous dissent from Judge Lourie (joined by Judges Newman, O’Malley, and Stoll).

The focus of the petition is the “reasonable certainty” indefiniteness standard in relation to the un-expressed elements of an invention claimed using the transitional phrase “consisting essentially of.”  In its original October 2019 holding, the Federal Circuit explained that the “consisting essential of” transition indicates that the claim requires the listed elements and is also “open to unlisted ingredients that do not materially affect the basic and novel properties of the invention.”  In that framework, the “basic and novel properties of the invention” become a claim limitation that itself must be definite.

HZNP’s claim at issue here is directed to a pain-treatment ointment “consisting essentially of” 2% diclofenac sodium; 40% DMSO; etc. (Sold as PENNSAID).  The specification indicated that “better drying time” was one of the improvements provided by the invention.  The specification provided two methods of evaluating better drying time.  However, those methods were ruled inconsistent and without a standard for PHOSITA to evaluate drying time.  Since the novel feature was indefinite, the court found that the claim itself was indefinite.

This outcome is clearly problematic for current patent application drafting practice because only a minority of patent applications expressly identify and explain the novel features of the invention.  One reason why those are not explained apriori is that the inventor’s understanding of novelty shifts as the patent application moves through the patenting process (or even later during litigation) and more prior art is unearthed.  Although not entirely clear, it looks to me that the proposed method of claim interpretation uses a more subjective novelty — what did the patent applicant think was the novel feature.

In its en banc petition, HZNP asked the Federal Circuit to hold that the “basic and novel properties” were not claim elements and thus not subject to the “reasonable certainty” requirements of Nautilus and 112(b).  The patentee provided three separate arguments:

1. The plain language of 35 U.S.C. § 112, ¶ 2 restricts application of the definiteness standard to claim limitations;
2. The “basic and novel properties” of the invention are not claim limitations since an infringer need not practice those properties in order to infringe; and
3. Our tradition has never applied the definiteness standard to the “basic and novel properties” of an invention.

Judge Newman dissented in the original panel decision and joined Judge Lourie’s dissent from en banc rehearing.   The basic thrust of the dissents is as following:

Better drying time is not in the claim, and it is the claims that the statute requires be definite.

Dissent.  The dissent also notes that the patentee likely created the problems here by providing two methods of measuring — “one wonders whether, if this patent did not recite the methods by which better drying time was measured, any indefiniteness of the “consisting essentially of” language would have arisen at all.”

The question I would ask is whether we should require disclosure of the basic and novel properties of the invention as part of every patent specification — perhaps as part of the written description requirement.  The dissent appears to assume that these are a requirement of the utility doctrine — but notes that utility is such an easy test that it is not even challenged unless “not credible.”

Joe Hand Promotions, Inc. v. Alburl (N.D. Ala. Feb. 20, 2020) [JoeHand v Barraza]

This short copyright decision has some interesting holdings regarding copyright infringement and LLCs.

The basics are that Sidelines Pub & Grub exhibited a PPV fight (2017 Mayweather vs. McGregor) without paying the license fee to the US promoter Joe Hand.

One of the defendants is Angie Barraza. Barraza was minority owner in the business (10%); was a daytime manager of the bar; but apparently had no knowledge of the alleged unlawful activity.

Barraza claims that all of the unlawful activity alleged in the complaint fell under the purview of Scott Alburl [Barraza’s husband at the time] and was orchestrated and carried out by him without her knowledge or assent. Barraza also stated that, even if she had known about her former husband’s activities with regard to the Program, she would not have been able to stop him because, she says, Alburl was abusive and deceitful towards her in their marriage.

The problem is that the ex-husband is in default.  Prior to the infringement another co-owner “sold” his rights to the business back to Alburl for “the amount of $0.00.”  The bar was never profitable and is now closed.  So . . . Barraza is the only one with money to pay.

Liability for Owner: Assuming that Barraza’s allegations are true, the Court must determine whether, despite her alleged limited ownership and control of Sidelines33, LLC, she can still be held vicariously liable for the infringing conduct of Alburl and Sidelines33, LLC.

• The question: Is Barraza personally liable for the (willful) copyright infringement?
• Answer: Yes, she is vicariously liable — even for the willful infringement.

In its opinion, the court appeared to have no concern regarding the role of “limited liability” or limits on officer liability. The court explains:

All business owners share in both the gains and losses of their businesses. Had the business been profitable, Barraza would have been entitled to a share of those returns. However, she can not now disclaim her interest in the business to avoid its liabilities.

The court went-on to explain that Barraza’s “level of influence” over the company activities is immaterial and irrelevant “for the purpose of determining whether she is jointly liable for the business’s copyright infringement.”

= = =

The statutory damage regime offers an award of $750 – $30,000 for each copyrighted work infringed.  That award can be increased to $150,000 for willful infringement, and lowered to $200 for innocent infringement.

(c) Statutory Damages.–

(1) … the copyright owner may elect … an award of statutory damages … for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just.

(2) In a case where … the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where … such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200.

17 U.S.C. 504.

Joe Hand asked for $24,000 in statutory-damages — treble $8,000 standard license for this size of bar showing the fight.   Barraza asked that the court lower the damages to the $200 minimum for innocent infringement.

In its decision, the court found that willfulness damages would be appropriate even though Barraza may have acted be innocent herself.

The infringement at issue in this case was willful. . . .  Barraza appears to misunderstand the concept of vicarious joint and several liability. As noted above, the Plaintiff is not required to even prove that she had knowledge of or participated in the infringement. Rather, as an owner, the infringing actions of Sidelines are imputed to her.

Since the underlying infringement was willful — that willfulness can be imputed onto Barraza as the business owner. Accordingly, the amount of statutory damages is between $750 and $150,000.”

The statutory damages provision is written to suggest that the court (i.e., the judge) would set the amount of statutory damages “as the court considers just.”  However, the Supreme Court held in Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998) that statutory copyright damages serve as substitute for regular damages in a way that preserves the Constitutional right to a Jury Trial. “[I]f a party so demands, a jury must determine the actual amount of statutory damages under § 504(c) in order to preserve the substance of the common-law right of trial by jury.” Id. (internal citations omitted).

Bottom line here – the jury gets to pick a number between $750 and $150,000.

by Dennis Crouch

Ironworks Patents LLC v. Samsung Elecs. Co., 2020 U.S. App. LEXIS 5269 (Fed. Cir. Feb. 21, 2020) (nonprecedential)

After a narrowing claim construction, the patentee stipulated to a non-infringement and invalidity judgment. On appeal, the Federal Circuit has vacated and remanded — holding that the underlying claim construction was partially erroneous.

The two patents at issue – U.S. Patents 6,427,078 & 5,915,239 – originated with Nokia in the mid-1990’s and are directed to aspects of hand-held personal communication devices.

Role of the Numbers in Drawings: The ‘078 patent requires a “camera unit” that is part of the device.  In construing the claims, the district court interpreted “camera unit” as requiring “a camera,  optics, microprocessor and memory, battery, and interface to external systems” all situated as a component of a personal communication device.  Samsung’s cameras do not have their own battery or external interface.  On appeal, the Federal Circuit looked within the patent document to conclude that those elements should not be read into the claim.

The specification confirms that a “camera unit” is a camera, optics, and an image processing unit. The specification consistently refers to camera unit 14 which includes camera arrangement 14o (comprising camera 14a and optics 14b) and image processing unit 14c (which comprises microprocessor 23 and memory units 24).

Slip Op.  The primary difficulty with this construction comes from the most detailed figure relating to the camera — Figure 5 (below).  Figure 5 shows the camera and includes the battery and interface and the specification states that “the structure of both camera card 15 and camera unit 14 conforms to the block diagram shown in Fig. 5.”

On appeal, the Federal Circuit refused to limit “camera unit” to the design found in the figure. In particular, the Federal Circuit explained that the camera unit is consistently numbered in the fourteens (14, 14a, 14b, 14o, 14c).  The battery and interface have separate numbers — indicating that they are not actually part of the camera unit.

Figure 5 uses the same numbering convention as the rest of the specification, suggesting camera unit 14 is comprised of elements numbered as 14 (i.e., camera arrangement 14o, which comprises camera 14a and optics 14b, and image processing unit 14c). Other elements in Figure 5 are numbered differently, such as battery 21 and interface 22, suggesting they are not part of the camera unit 14.

On remand, that narrowed definition of camera unit will raise the likelihood that Ironworks will win its infringement case.

Means Plus Function: Disputed claim construction in the ‘239 patent centered on two means plus function terms:

• means for interpreting the received voice commands
• means for storing the subidentifiers

Lack of Structure: The first – means for interpreting – led to an invalidity finding by the district court. Basically, the court found no corresponding structure in the specification.  On appeal, the Federal Circuit veered — finding structure:

The specification states that, “voice-control unit 2 comprises advantageously a voice-recognition means 3, a voice pattern memory 4, a controller unit 5, read-only memory 6, random access memory 7, speech synthesizer 8 and a interface 9.” It further discloses structure for the voice-control unit by describing the algorithm performed by the voice-control unit and its components.

Although these structural elements are disclosed at a fairly high level, the Federal Circuit found “sufficient structure.”

An important point here is that this particular step is only about interpreting the meaning of the claims — do we have enough information to be reasonably certain as to the claim scope? When the claims are construed broadly then there may be separate inquiries into whether the breadth implicates the enablement and written description doctrines.

subidentifiers: The second MPF term –  means for storing the subidentifiers – was sufficiently supported.  However, the district court limited the scope to the structure described in the specification — following the textual requirements of 112(f):

(f) Element in Claim for a Combination.— An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

In particular, the district court interpreted the claimed means-for-storing as requiring the particular storage algorithm described in the specification.  Samsung apparently does not use that same algorithm and so the patentee asked for a broader construction.  In this case, Ironworks argued that the means could have been fully supported without the disclosed algorithm and so should not be limited by the algorithm.  On appeal, the district court rejected that argument — holding that the claimed storing function “requires more than merely plugging in a general-purpose computer.” (quoting Ergo Licensing).

Because this subidentifier limitation was in all of the asserted claims in the ‘239 patent — the non-infringement finding will stick. On remand though, the patentee will further pursue its infringement claim under US6,427,078.

Toy’s picture-claim wins the day before the PTAB.

ChoiRock Contents Factory v. Aldric Saucier, Spin Master, Ltd. (Fed. Cir. 2020)

This case centers on Spin Master’s patented transformable toy. U.S. Patent 7,306,504. Korean toymaker ChoiRock petitioned for IPR, but the PTAB sided with the patentee — holding that the challenged claims had not been proven unpatentable.

On appeal, the Federal Circuit issued a split opinion on obviousness with Judges Bryson (Author) and Taranto in the majority affirming patentability and Judge Dyk dissenting (with regard to most of the claims).

Standing to Appeal: Before reacting the merits, the court first considered whether the patent petitioner had standing to appeal. ChoiRock challeged the patent in an IPR that reached final decision and thus has a statutory right to appeal under 35 U.S.C. 319.

A party dissatisfied with the final written decision of the PTAB under section 318(a) may appeal the decision pursuant to sections 141 through 144. Any party to the inter partes review shall have the right to be a party to the appeal.

In addition to the statutes, Federal Courts also have their own standing requirements based upon the limited jurisdiction offered by the case-and-controversy requirement found in Article III of the U.S. Constitution (as interpreted).  When a patent challenger appeals an adverse ruling from the PTAB it must establish that it sits in conflict with the patent holder regarding the patent in a way that is sufficiently concrete. In Spokeo, the Supreme Court offered a three part requirement of (1) injury in-fact; (2) the injury being fairly traceable to challenged conduct of the other-side; and (3) the injury being redressable by the court. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

IPR appeals offer an interesting setup because the parties have been vigorously fighting over patent validity at the PTAB and because the statute expressly purports to create a right-to-appeal.  Still, the Federal Circuit requires that the appellant show that the patentee has been wielding the patent in a way that causes injury to the challenger.

Here, Spin Master sent a letter to ChoiRock indicating that the company was infringing several of its patents, including the patent at issue here and, according to the court, ChoiRock “provided evidence establishing that it has concrete plans to begin selling that product line in the United States by early 2020.”  The Federal Circuit does not review this evidence of concrete plans. I pulled-up the briefing and found the unhelpful briefing regarding this evidence:

Obviousness:

The basic argument on obviousness is that the prior art teaches all of the elements.

On appeal, however, the Federal Circuit agreed with the PTAB that the prior art’s “display member” include a “plurality of revealers rotatably connected to [a] movable member[]”.  Rather, only the head was a rotatably connected revealer (one is not a plurality).  This is where Judge Dyk dissented — arguing that the arms and legs were also “revealers.”

by Dennis Crouch

Arctic Cat Inc. v. Bombardier Recreational Prods. Inc. (Fed. Cir. 2020)

This case involves the notice requirement for collecting back-damages in patent cases.  35 U.S.C. 287(a) creates a system for limiting back-damages in instances  where a patentee fails to mark its patented articles as patented.

In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

Id.  The marking requirement only applies to patentees practicing the invention via a “patented article.”  Non-practicing entities have nothing to mark, nor do patentees practicing their unmarkable patented process. In those situations, back damages are available — although still limited to six-years pre-complaint under 35 U.S.C. 286.

In this case, Arctic Cat had stopped manufacturing its patented thrust steering systems by the time the patent had issued — so no marking possible there.  However, Arctic Cat had licensed several of its patents to Honda, including the patents at issue here.  A couple of details regarding the license are important here: (1) The license was agreed-to prior to the issuance of the patents at issue and so did not expressly name them by patent number. However, the license expressly includes later-patents covering Thrust Steering. (2) The license expressly states that Honda has no marking requirements.

Honda made & sold products under the license and did not mark the products with Arctic Cat’s patent numbers.  Although disputed, Honda arguably stopped making covered-products in 2013.  Arctic Cat then sued Bombardier in 2014.   The question then on appeal is how-far back can Arctic Cat collect damages:

1. Damages only go back to the date of the complaint filing since licensed products had been sold and not marked;
2. Damages go back to 2013 — when it was no longer possible to mark the products; or
3. Damages go back the full six years based upon a jury’s holding that the infringement was willful, which implies actual notice of the patent.

Holding: The answer by the court is #1 – Arctic Cat won’t get any pre-filing damages.

#2 (Damages after Cessation) is incorrect because “cessation of sales of unmarked products” alone does not excuse or cure “noncompliance with the notice requirement of § 287.” Rather, “to begin recovering damages after sales of unmarked products have begun, § 287 requires that a patentee either begin marking its products or provide actual notice to an alleged infringer; cessation of sales of unmarked products is not enough.”

#3 (Full Damages) is incorrect because the Federal Circuit has previously held that the back-damages “actual notice” requirement focuses on providing-of-notice.  What we look at is whether the patentee acted to provide notice — it is “irrelevant … whether the defendant knew of the patent or knew of his own infringement.” Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994) (citing Am. Med. Sys., Inc. v. Med. Engr. Corp., 6 F.3d 1523, 1537, N.18 (Fed. Cir. 1993) and quoting Devices for Medicine, Inc. v. Boehl, 822 F.2d 1062 (Fed.Cir.1987) (“Absent notice, [infringer’s] ‘knowledge of the patents’ is irrelevant.”).

Looking back to the statute — the key line calls for “proof that the infringer was notified of the infringement.”  287(a).  The court holds here that “notified of the infringement” requires an action by the patentee to provide actual notice. This outcome is similar to what is required by Fed. R. Civil Procedure R. 4(c) which places the burden on the plaintiff for providing notice of a new complaint being filed. A key difference though is that the rules of civil procedure actually spell out that “the plaintiff is responsible for having the summons and complaint served.” I’ll note here that the “filing” of a lawsuit triggers notice under 287 — service of the complaint and summons is seemingly not required. It is also different outcome than the notice requirement found in property recording statutes, including 35 U.S.C. 261 which asks whether a “subsequent purchaser” was “without notice.”

The language of Section 287 at issue here stems from the Patent Act of 1861. That statute indicated that – absent marking – “no damage shall be recovered by the plaintiff, except on proof that the defendant was duly notified of the infringement, and continued after such notice to make or vend the article patented.”  In an 1894 decision, the Supreme Court found that the “duly notified” statement requires an action by the patentee to provide notice.

The clear meaning of this section is that the patentee or his assignee, if he makes or sells the article patented, cannot recover damages against infringers of the patent, unless he has given notice of his right, either to the whole public, by marking his article ‘Patented,’ or to the particular defendants, by informing them of his patent, and of their infringement of it.

Dunlap v. Schofield, 152 U.S. 244, 247–48 (1894).  In Coupe v. Royer, 155 U.S. 565 (1895), the Supreme Court repeated that the required notice is “an affirmative fact, and is something to be done by him” i.e., done by the patentee.

In an interesting article, Michael McKeon argues that the Federal Circuit’s approach of requiring “an affirmative act” is actually based upon “a specific misquote of a critical word (act instead of fact).” Michael J. McKeon, The Patent Marking and Notice Statute: A Question of “Fact” or “Act”?, 9 Harv. J.L. & Tech. 429, 431 (1996). McKeon argues that Dunlap and Coupe were both about placing a burden of proof on the patentee — the patentee must affirmatively prove the fact that notice occurred — and that the Federal Circuit mistakenly read the cases as requiring an affirmative act of providing notice. McKeon cites to several pre-Federal Circuit cases that find actual notice is sufficient even without affirmative notice from the patentee. See, for instance, Warner v. Tennessee Products Corp., 57 F.2d 642 (6th Cir. 1932) (“Actual notice of the issue and contents of the patent, and of the claims that a practice infringes, is sufficient regardless of the source of such notice.”); Abington Textile Mach. Works v. Carding Specialists (Canada) Ltd., 249 F. Supp. 823, 849 (D.D.C 1965) (defendant’s actual/constructive notice was sufficient even though prior to formal notice from the patentee).

by Dennis Crouch

A newly canonical case in property law texts is Popov v. Hayashi, 2002 WL 31833731 (Cal. Super. Dec. 18, 2002).  The case involves a Barry Bonds record-setting home run baseball.  Alex Popov almost caught the ball, but as it entered his glove he was immediately engulfed by the crowd of fans who were deemed an “out of control mob, engaged in violent, illegal behavior.”  The ball came-out and Patrick Hayeshi (who was also knocked to the ground) picked up the ball and took possession. There was no credible evidence that Hayeshi took part in any of the violent or illegal behavior. Because of the oddity of fandom, the $6 ball was boosted to an expected value $1.5 million based upon its record-setting experience. (It was eventually sold at auction for ~$500k because of Bonds’ drop from fame).

Hayeshi had physical possession, but Popov wanted ownership and sued — pleading conversion, trespass to chattel, injunctive relief and constructive trust.

In its decision, the California judge partially ruled for Popov — holding that he had a “pre-possessory interest” in the baseball once it went in his glove, and that interest was unlawfully interrupted by the Crowd.

As a matter of fundamental fairness, Mr. Popov should have had the opportunity to try to complete his catch unimpeded by unlawful activity. To hold otherwise would be to allow the result in this case to be dictated by violence. That will not happen.

Although Popov had some interest in the ball, Hayeshi was the one who took actual possession (gaining complete control of the ball and stopping momentum), and did so using within the bounds of both law and baseball custom.

In the end, the judge was unable to figure out which of the two should win:

Neither can present a superior argument as against the other.

Mr. Hayashi’s claim is compromised by Mr. Popov’s pre-possessory interest. Mr. Popov cannot demonstrate full control. … Their legal claims are of equal quality and they are equally entitled to the ball.

The court therefore declares that both plaintiff and defendant have an equal and undivided interest in the ball.

Id. In the end, the two co-owners sold the ball. The case would have come out differently if Hayashi was seen as a wrongdoer (Popov would get full ownership) or if Popov had dropped the ball without being wrongfully jostled (Hayashi would get full ownership).  The halfsies outcome is somewhat unusual in property law but was made easier because both parties announced they wanted to sell the ball — it was much easier to split the money rather than share possession of the ball itself.

In patent law, conception used-to establish a pre-possessory interest in the future patent.  Conception created an inchoate (incomplete) right that could be secured by diligently reducing the invention to practice (either actually or constructively by filing the patent application).  This approach has changed substantially post-AIA where the focus is on completing the invention process by filing for patent rights with severe limitations on any pre-filing rights or interests.  Prof Oliar and Stern explained;

The first-to-invent rule was abandoned following enactment of the Leahy-Smith America Invents Act (“AIA”) in 2011, the most comprehensive overhaul of U.S. patent law in at least half a century. Its most prominent change was to replace the first-to-invent rule with a first-to-file system, or more precisely, a system that awards patents to the first person to disclose their invention to the public, whether by filing a patent application or through other public acts. The AIA thus pushes back the temporal lynchpin from the beginning of the inventive process to its end.

Dotan Oliar, James Y. Stern, Right on Time: First Possession in Property and Intellectual Property, 99 B.U. L. Rev. 395, 422 (2019) (DDC: Note that the FTF change hasn’t been the most prominent change as suggested by the authors).

Patent law presents an element beyond the Oliar article and the Popov v. Hayashi decision. The patent system is not not generally focused on a winner-take-all approach. We’re not talking about the single Barry Bonds ball (or even a half-dozen). Rather, there are hundreds of thousands of potential valuable inventions awaiting discovery.  The plethora of potential inventions naturally offers the partial reward granted in Popov v. Hayashi.  No single person or entity will be able to claim all (or even a substantial percentage) of the inventions.  But, to claim any rights, the inventor must actually capture the “wily quadruped” despite knowledge of other hunters.  Pierson v. Post, 3 Cai. 175, 175 (N.Y. Sup. Ct. 1805) (“Pierson, well knowing the fox was so hunted and pursued, did, in the sight of Post, to prevent his catching the same, kill and carry it off.”).

In thinking through Popov v. Hayashi, I would pause to distinguish between the Popov’s pre-possessory interest in the ball and the pre-filing inchoate rights of an inventor.  While the second has been long considered a property right — the former is more like a personal interest that should not be wrongfully injured.  The closest actions would be unfair competition or wrongful interference with contractual relationships. Those actions are powerful, but are generally seen as outside of the property law context and instead in the midst of torts. The Supreme Court, on the other hand, has explained the power of an inchoate right to a patent:

The discoverer of a new and useful improvement is vested by law with an inchoate right to its exclusive use, which he may perfect and make absolute by proceeding in the manner which the law requires.

Gayler v. Wilder, 51 U.S. 477, 493 (1850).

In re Google (Fed. Cir. 2020)

In a mandamus order, the Federal Circuit has ruled that Google cannot be sued in E.D. Texas for patent infringement — holding that the district is an improper venue under TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017).

For most Federal Causes of action, venue is deemed proper if the court hearing the case has personal jurisdiction over the defendants. However, patent infringement cases are different.  Patent cases fall under a more specific venue statute that limits actions to districts where either (a) the defendant ‘resides’ (i.e., is incorporated) or (b) the defendant has a regular and established place of business and has committed acts of infringement. 28 U.S.C. 1400(b).

In Super Interconnect Techs. LLC v. Google LLC, No. 2:18-CV-00463-JRG, 2019 U.S. Dist. LEXIS 132005 (E.D. Tex. Aug. 7, 2019), Super Interconnect sued Google for infringing, but Google responded a motion for dismissal for improper venue.

Google is not a Texas company and so does not reside in E.D. Texas. Google is accused of infringing in TX, but Google argues that the company does not have a “regular and established place of business” in the district.

• Yes, Google does have many millions of customers and dollars in revenues from the district.
• Yes, Google does market its goods and services directly to consumers in the district.
• Yes, Google has AI services that provide immediate access to information and activities to millions within the district.
• Yes, Google ha[d] very large servers located within the district particularly designed to serve customers within the district. (Note (1) these servers were operated by local ISPs rather than Google itself; and (2) after the filing of this lawsuit, Google removed its servers from the District in order to avoid being sued in E.D. Tex.).

But:

• No, Google does not have a regular and established place of business in the district.

In its decision, the Federal Circuit repeated its prior holding in Cray that a regular-and-established-place-of-business must be a physical place located within the district.  While the servers qualify for the physicality requirement, they are not a “place of business.” According to the court, a “place of business” must have an “employee or agent” conducting business in the location — Google’s AI is not sufficient.

We conclude that a “regular and established place of business” requires the regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged “place of business.”

In making this “employee or agent” requirement, the court looked to the patent-law service-of-process statute 28 U.S.C. 1694 that indicates service may be made upon a defendants “agent or agents conducting such business” at the regular and establish place of business. The court explains:

The service statute plainly assumes that the defendant will have a “regular and established place of business” within the meaning of the venue statute only if the defendant also has an “agent . . . engaged in conducting such business.” Likewise, the provision that “service . . . may be made by service upon the agent” and the “regular and established” character of the business assumes the regular, physical presence of an agent at the place of business. In the absence of a contrary indication, these assumptions must govern the venue statute as well. . . .

Slip Op.

Judge Wallach joined the opinion, but also penned a concurrence questioning Google’s business model (hmm, seems that the company is doing pretty well for itself…). Judge Wallach explains:

I join with the majority’s order, but I write separately to raise questions about Google’s business model. During oral argument, Google did not answer, when asked, the question of what its main source of business is in the Eastern District of Texas. Google simply explained that it does not “actively do[] anything. In other words, there’s no evidence of any employee or agent . . . being present in the district.” Oral Arg. at 51:55–52:15.

When asked again, “what do you do in the Eastern District?,” Google responded  what “what Google does in the District will depend on what the subject of that verb is,” and “when you look at the service statute the subject of that verb has to be ‘employees’ or ‘agents’ in the District.” Id. at 52:30–52:53. Finally, Google was asked “when you gather information, from customers, which is part of your business, you agree. How does that get passed back to Google? It goes through the server?” Id. at 58:59–59:10.
Google’s counsel responded stating: “I am not aware.

There’s nothing in the record that I’m aware of on that point, your Honor.” Id. at 59:11–59:14. Given the absence from the record of information sufficient to understand Google’s business model, the question remains for the District Courts to determine whether Google’s end users become agents of Google in furtherance of its business by virtue of voluntarily or involuntarily sharing information generated on Google’s servers. If, for example, by entering searches and selecting results a Google consumer is continuously providing data which Google monetizes as the core aspect of its business model, it may be that under the analysis in which I today join, Google is indeed doing business at the computer of each of its users/customers. Because this is a question I believe should be entertained by District Courts, I concur.

Mira Advanced Tech v. Microsoft (Fed. Cir. 2020)

The PTAB sided with Microsoft — finding the challenged claims of Mira’s two challenged patents obvious. U.S. Patents 8,848,892 & 9,531,657.  On appeal, Mira hired new counsel and argued for an alternative claim construction of the term “contact list.”  Figure 1 in the claims is described in the patent as “the database structure of contact list of present invention.”  The idea here is to have a “memo” interface tightly incorporated into a contact list.

Microsoft’s attorney Chris Carroway responded to the appeal with a motion for sanctions:

An appeal is not a mulligan. While a party is certainly free to retain new counsel to pursue an appeal, that new counsel is not free to raise new arguments that could have been made, but were not made, on behalf of the client before the first tribunal. An appeal premised on such new arguments—arguments waived because they were not presented to the first tribunal—is futile and, therefore, frivolous.

MicrosoftMotionForSanctions.  Mira then responded with a discussion of de novo claim construction — arguing that the main question on appeal is the correctness of the Board’s construction — which was vigorously argued before the Board.

In the appellate court, sanctions for frivolous appeals are handled under Federal Rule of Appellate Procedure R. 38:

If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee.

FRAP 38.  In its judgment, the Federal Circuit did not delve into the merits of either claim construction or the sanctions. Rather, the court (1) issued a R.36 affirmance of the Board’s decision in Microsoft’s favor and (2) denied the sanctions without explanation.  The oral arguments included some limited discussion of whether sanctions can apply to a appeal that is weak on the merits — or must there be additional misconduct or failed lawyering.

Underlying the IPR is a pending lawsuit in West Virginia involving the patents at issue. That case has been stayed since 2017 – pending resolution of the IPR proceedings. The court now won’t have to decide Microsoft’s pending motion to dismiss on 101 and for improper venue.

Automotive Body Parts Ass’n v. Ford Global Techs, LLC (Supreme Court 2020) [19-__PetitionForAWritOfCertiorari]

Ford has implemented an aggressive strategy of patenting the various parts of its new vehicles.  Many of these new patents are design patents: Wheels; fenders; airbag compartments; grilles; bumpers; tail lights; headlights; console; hood; mirror; etc.

After an accident, a vehicle owner typically wants to repair the vehicle.  While repair of the vehicle may seem permissible under an exhaustion doctrine, the difficulty comes in when looking at individual parts. Repair of the vehicle might require replacement/reconstruction of a patent part (such as the side-mirror pictured above).  The repair industry (and insurance companies) would like to use less-expensive repair parts — one way is to buy off-brand parts — especially for lower-tech items such as a fender or headlight cover.  But, the design patents are preventing that from happening.

In its new petition for writ of certiorari, Automotive Body Parts Ass’n asks the Supreme Court should provide a broader view for the exhaustion doctrine:

Under the patent exhaustion doctrine, a patentee’s decision to sell a product exhausts all of its patent rights in that item. The unrestricted sale creates an implied license to use, which includes the right to repair. Analysis of whether a right to repair exists requires identification of the correct article of manufacture.

The Federal Circuit held that repair rights and identification of the article of manufacture should be determined solely by what is claimed in the patent. This holding allows a patentee to greatly diminish or eliminate the right to repair and allows improper broadening of design patent protection over unclaimed portions of a design. The question presented is:

How should the article of manufacture be determined when applying the patent exhaustion and repair doctrines in design patent cases?

These issues have already been discussed in some ways by the Supreme Court in Aro Mfg. Co., Inc. v. Convertible Top Co., 365 U.S. 336 (1961) and Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964).  However, the petitioner largely sets these cases aside — arguing that design patents are particularly problematic — and that the Supreme Court can fashion a design-patent-specific remedy.

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

Despite the protestations of Columbia and its amici in support of the petition for rehearing, the Federal Circuit’s decision in Columbia v. Seirus is not the end of design patent law as we know it. (For prior Patently-O coverage, of this case and the pending petition, see here and here.)

It would be better for everyone if the court had been clearer on one key point but—even if that part is not corrected—the sky still will not fall.

The paragraph that has spurred these declarations of designpocalypse reads as follows:

The district court relied on one precedent from this court—L.A. Gear—for the proposition that logos should be wholly disregarded in the design-infringement analysis. In that case, the parties did not dispute that the patented and accused designs were substantially similar. L.A. Gear, 988 F.2d at 1125. In fact, “copying [was] admitted.” Id. In evaluating infringement there, we explained that design infringement is not avoided “by labelling.” Id. at 1126. A would-be infringer should not escape liability for design patent infringement if a design is copied but labeled with its name. But L.A. Gear does not prohibit the fact finder from considering an ornamental logo, its placement, and its appearance as one among other potential differences between a patented design and an accused one. Indeed, the fact finder is tasked with determining whether an ordinary observer would find the “effect of the whole design substantially the same.” Gorham, 81 U.S. at 530. It would be inconsistent with this mandate to ignore elements of the accused design entirely, simply because those elements included the name of the defendant.

Columbia v. Seirus, 942 F.3d 1119 at 1131. Columbia and its amici argue that the court’s decision in Columbia is inconsistent with a “holding” in L.A. Gear and will wreak destruction and devastation on design patent law. Columbia and its amici are wrong on both counts.

First, the statement in L.A. Gear that pertained to “labelling” was not a holding. As the Columbia panel noted, the issue of whether the designs were sufficiently similar was not before the court in L.A. Gear. In the briefs, none of the parties involved in L.A. Gear argued that “labelling” was relevant to design patent infringement. Nothing in the decision in L.A. Gear suggests that the issue came up in oral argument. The issue of whether “labelling” was relevant to the issue of design patent infringement was simply not before the Federal Circuit in L.A. Gear. Thus, nothing the Federal Circuit said about “labelling” vis-à-vis design patents constituted a decision of any kind—let alone a holding.

It’s not clear why the L.A. Gear panel chose to include that bit of “labelling” dicta. But it is dicta.

And even if it weren’t, not all uses of logos, brand names, etc. constitute “labelling.” As the panel appreciated, these visual elements can be used decoratively. (For many good examples, consider Louis Vuitton’s textile designs.) If we were to have a rule against “labelling,” some thoughtful development and line-drawing may be required.

Second, Columbia argues (and some of its amici echo) that the decision in Columbia v. Seirus will require courts to issue judgments of noninfringement whenever a defendant “simply emblazon[s] [its] brand name or logo on another’s design.” The panel decision says no such thing. It merely says that courts don’t have to ignore any and all uses of logos.

The three traditional types of protectable designs are: (1) configuration (a/k/a shape), separate and apart from any surface ornamentation; (2) surface ornamentation, separate and apart from the underlying configuration; and (3) a combination of both. The USPTO currently interprets the second category broadly, including any and all “surface treatment.”

In Columbia v. Seirus, the claimed design was for surface ornamentation only. Despite the broad language used by the panel, the panel had no occasion to—and could issue no holding as to—all possible types of designs. This decision simply does not apply to designs that claim configuration only. If patent owners wish to avoid having brand names, logos, etc. considered as part of the infringement analysis, they are free to keep claiming configuration-only designs (such as those shown in Bison’s amicus brief). Read properly, the panel’s decision in Columbia v. Seirus, merely says that, when surface ornamentation is claimed as part of the design, a court should consider the entire surface design—even if the surface design includes logos or brand names.

That ruling is consistent, by the way, with the USPTO’s current treatment of logos, brand names, etc. in the prosecution context. Logos, brand names, etc. can—and are—claimed as (or as part of) “surface treatments.” Here are just a few examples:

It would be odd to say that these kinds of elements count as “designs” (or parts thereof) for the purposes of patentability but must be ignored entirely when it comes to infringement. Such a rule would not only be odd, it would also significantly undermine the notice function of design patents.

Of course, we could have a system where we said that logos, brand names, etc. aren’t protectable as “designs” and should be irrelevant to both patentability and scope. But that’s not the system we have today. Perhaps it’s a conversation we should have.

The panel’s decision in Columbia v. Seirus could put some pressure on patentees to be clearer about whether they’re claiming a configuration-only or combination design. After all, the latter involves surface designs while the former does not. But that wouldn’t be a bad thing. Greater clarity in this area would promote competition and greater public notice and could be achieved with minimal cost or complication for design patent applicants.

One final note: It’s not clear why the panel in Columbia v. Seirus put such emphasis on “copying.” Copying is neither necessary nor sufficient to support a finding of design patent infringement. (For more on the contemporary test for design patent infringement, see this short piece.) The references to copying are unhelpful at best; pernicious dicta at worst.

To summarize, if the panel in Columbia v. Seirus wanted to issue a revised decision that made it clear that they’re talking about surface designs—not configuration-only designs—that would probably be helpful. And the part about “copying” could go. But the sky is not falling.

= = = = =

The following briefs have been filed in the pending en banc petition for the case:

• 5 – Columbia Petition for Panel Rehearing
• 6 – IDSA motion and amicus brief
• 6 – Practitioners motion and amicus brief
• 6 – Bison motion and amicus brief
• 7 – Seirus Response