By Dennis Crouch

I’m looking forward to a few of upcoming IP Law events.  Next week, I’ll be joining several hundred IP attorneys at the AIPLA annual meeting in Washington DC.  I am the final speaker of the event — you guessed it Professional Responsibility & Ethics.  The talk will take a comparative-law approach — looking at how duties and responsibilities shift according to the forum (litigation, prosecution, AIA Trials).  My ethics talk follows a year-in-review panel with four all-star speakers:

• Trademarks – Prof. Christine Haight Farley (American)
• Patents – Prof. Mark Lemley (Stanford)
• Trade Secrets – Prof. Elizabeth Rowe (Florida)
• Copyrights – Meaghan Kent (Venable)
• Ethics Prof. Dennis Crouch (Missouri)

Because I already follow patent issues so closely, I typically learn the most from non-patent panels.  I am particularly looking forward to hearing from Daniel Lee who is a deputy U.S. Trade Representative in charge of Innovation and Intellectual Property.

After that, I’ll be headed back to Chicago for the JMLS Annual IP Conference on Nov 2 where Judge Newman will give a keynote on how “The Future Is in Our Hands.”  Thanks to Prof. Daryl Lim for organizing this event.

Meanwhile, my co-blogger Prof. David Hricik (Patent Law Ethics) has several interesting upcoming events:

• October 19, 2018 – Hricik is speaking at the 33rd Annual Privacy & Technology Law Institute in Atlanta on “Legal Ethics in the Modern World”
• October 23, 2018 – Hricik is speaking at the 12th Annual Corporate IP Institute in Atlanta on “How Technology Creates Professionalism Issues”
• November 1, 2018 – Hricik is speaking at the 23rd Annual Advanced Patent Law Institute  in Austin on “Practicing IP Law Ethically in the Cloud”
• December 4, 2018 – Hricik is presenting a webinar for Stafford called “Conflicts in Patent Prosecution”

Jumping ahead to January — I’m headed to the final Colorado Bar Ass’n SkiCLE (it will likely continue in future years in some other form) January 2-6 2019 in Aspen/Snowmass.  Use code “FACULTYINSIDER” for $100 off.  See you on the slopes.

In Schirripa v. US, the Federal Circuit recently issued an interesting order:

Appellant Jeffrey Nathan Schirripa submitted to the court 18 copies of his confidential petition for panel rehearing and rehearing en banc. Upon examination, Appellant affixed to each petition what appear to be samples of cannabinoids, which may be controlled substances possessed or mailed in violation of federal law.

IT IS ORDERED THAT:

The Clerk of Court is directed to transmit these 18 documents to the U.S. Marshals Service for appropriate disposition or alternate action within the purview of the U.S. Department of Justice.

[SchirripaOrder] In the underlying case, Schirripa asked the Court of Federal Claims to enjoin the US Government from enforcing the Controlled Substances Act against his actions.  The court dismissed that case and the dismissal was affirmed on appeal.  Good luck Mr. Schirripa, and don’t tip the judges.

The cannabis attachment was apparently intended to create subject matter jurisdiction in the case.  I don’t fully understand the Schirripa’s flow chart, but it appears to be a boot-strap version a catch-22 for the court — the type of argument that you might figure out while high.

Read the en banc brief. [SchirripaEnBancBrief]

The following is a guest post from South African patent attorney Ralph van Niekerk of Von Seidels

Like all IP rights, patents are territorial and if you want to stop a competitor from practicing an invention in a particular country, you need to have a patent there.

Given the global world we live in, successful inventions tend to be adopted widely and used in many countries. This is a fortunate position for patent holders, who can often protect their competitive global position by filing patents in only a few key countries in which patent rights are respected and enforceable.  If a competitor is not able to practice the invention in those markets, the feasibility of doing so in the rest of the world is limited.

For many patent holders, protecting their inventions internationally does not extend much beyond the IP5: China, the United States, Japan, South Korea and Europe. The following graph of patent applications at the top ten offices shows that patent filings drop off very quickly outside of the IP5:

Source: World Intellectual Property Indicators 2017, published by the World Intellectual Property Organization (WIPO)

Given the picture above, is there much value in having patents in other countries in the world? In particular, is there any real value in having patents in Africa, and especially in some of the smaller African countries?

As a South African patent attorney, I am frequently asked a version of this question by clients overseas. Since a patent is a right to exclude others from practicing the invention, I am quizzed as to what the patent litigation landscape is like in Africa and how easily a patent can be enforced against a competitor. Patent litigation in Africa is rare outside of South Africa, however, and objective measures of the strength of enforcement may not be available in many African countries.

But does the fact that a patent gives you the right to bring legal action against a competitor mean that the patent has no value to you unless you plan to enforce it? The answer is a resounding “no”. There are several good reasons to have a patent in African countries even if you never plan to enforce it there. I would go so far as to say that there are even good reasons to have a patent in a country in which enforcement options are limited to non-existent.

Royalty rates and exchange control

Many African countries have strict exchange control requirements that govern the flow of capital into and out of their economies. For a global company doing business in Africa, expatriating profits made from their African operations may not be a simple matter. Local officials may carefully scrutinise cross-border licence agreements and query the royalty rates charged.

Transfer pricing principles must be applied when supplies are made between related entities within a corporate group structure. In particular, when royalties are paid by a local subsidiary to a foreign parent company, the royalty charged must be aligned with what would be charged on an arms-length basis between unrelated parties.

A granted patent held by a parent company in a country of a local subsidiary can be powerful evidence that the technology being licensed is unique and justifies a higher royalty rate to be paid to the parent company. A local patent can be very useful in convincing exchange control authorities of this fact.

Tender processes

If the patented invention is one that will be used by government authorities, a local patent can help avoid what would otherwise be a competitive tender process.

I recently saw an example of this when the City of Cape Town asked my client for evidence that its water filtration system was patented. We provided details of the patent and the City issued my client with a letter confirming that they were the sole supplier of the system. The City did not go through the usual rigmarole of issuing a tender for competitive bids and this resulted in a valuable contract renewal for my client.

Local patents can therefore enable government contracts to be obtained more easily and on more favourable terms for products and services covered by the patent. To obtain single-supplier procurement and avoid an open tender, a patent may be very beneficial indeed.

Competition law liability (Antitrust)

While some countries in Africa may have weak enforcement of IP rights, the same is not true of their competition laws. African competition law regulators are effective in many countries and fines of up to 10% of a company’s turnover may be awarded. In South Africa, amendments to the Competition Act are in the pipeline that would see penalties increase to up to 25% of turnover for second offences.

A patent can justify commercial arrangements that would otherwise be anti-competitive. For example, tying arrangements are situations where a company agrees to supply a first product to another company, on condition that the other company also buy a second product from them. Such arrangements are usually seen as anti-competitive, but if both products are the subject of patent protection and are bundled as part of the same licence this will usually not be a problem. Similarly, boycotting a competitor by refusing to sell them a product may be anti-competitive unless the product is the subject of a local IP right in which case it is the supplier’s prerogative to whom to sell it. If a firm is dominant and has market power, charging an excessive price for a product or service or refusing to grant access to an “essential facility” may also be anti-competitive unless that product, service or facility is covered by an IP right.

South Africa’s Competition Act provides, in section 10(4), that, “A firm may apply to the Competition Commission to exempt from the application of this Chapter an agreement or practice, or category of agreements or practices, that relates to the exercise of intellectual property rights, including a right acquired or protected in terms of … the Patents Act”. An application for exemption under this provision is only available based on a local, South African patent. Similar considerations would apply in other African countries.

As a shield to potential competition law liability, patents in African countries can therefore be extremely valuable.

Tax benefits

Some African countries offer tax benefits to encourage local research and development. For example, section 11D of South Africa’s Income Tax Act provides an incentive for conducting R&D in South Africa. The incentive is by way of enhanced tax deductibility of up to 150% for qualifying expenditure incurred in respect of R&D. South African patents may be used to bolster an application made under section 11D, as the definition for R&D includes:

systematic investigative or experimental activities of which the result is uncertain for purpose of discovering non-obvious scientific/technical knowledge, or creating an invention, a registerable design, a computer program (as defined in the relevant IP legislation) or knowledge essential to the use of such invention, design or computer program; or developing or significantly improving any qualifying invention, design, computer program or knowledge if such development or improvement relates to any new or improved function or improvement of performance, reliability or quality. [My emphasis]

So for any patents that relate to developments that occurred at least partially in South Africa, having registered IP rights like patents helps demonstrate that the R&D activities fell within this definition. It is expected that other African countries will also adopt similar progressive measures in future to stimulate local R&D.

Conclusion

A narrow view of patents sees their function as only their ability to exclude competitors, so as to enable the patent owner to either exclusively practice the invention or license it to others.

This article has explored four other good reasons for having patents that may be even more valuable to a patent owner than the right to exclude. None of these reasons involves the quality of the local courts or available enforcement mechanisms, and should be taken into account when deciding where patent protection may be valuable.

Recent Headlines in the IP World:

• Chaim Gartenberg: New Apple Patent Application Suggests iPhones Could Warn Against Spam Calls One Day (Source: The Verge)
• Helen Knight: Prior Art Archive Aims to Improve Patent Process (Source: MIT)
• Jan Wolfe: U.S. Appeals Court Upholds Ruling that Canceled Teva Copaxone Patents (Source: Reuters)
• Tom Blackwell: Canada, U.S. in NAFTA ‘Stalemate’ Over American Demands to Boost Protection for Brand-Name Drugs: Industry (Source: Financial Post)
• Fred Lambert: Tesla Patent Application Illustrates New Type of Cable Easier to  Manipulate by Robots in Move to Automate Production (Source: Electrek)

Source: WIPO

Commentary and Journal Articles:

• Stephen O’Neal: Why Mastercard’s Multi-Blockchain Might Be a New Step in the Patent Race (Source: Coin Telegraph)
• Stephen Key: How To Avoid Having A Worthless Patent (Source: Forbes)
• Prof. Timothy R. Holbrook: Extraterritoriality and Proximate Cause after WesternGeco (Source: SSRN)
• Erik Hovenkamp and Prof. Jorge Lemus: Proportional Restraints in Horizontal Patent Settlements (Source: SSRN)

New Job Postings on Patently-O:

• Steptoe–Life Sciences Patent Litigation Associate
• Steptoe–E.E./C.S. Patent Litigation Associate
• Viering, Jentschura & Partner
• Harrity & Harrity

by Dennis Crouch

The SUCCESS Act (HR 6758) has now passed through both the House and Senate and will very likely be signed into law by President Donald Trump within the next couple of weeks.

The key aspect of the bill is extension of USPTO fee setting authority that ended in September 2018 (7 years after AIA enactment).  Under the new law, USPTO will retain authority to set its own fee structure until September 2026 (15 years from AIA enactment).

Section 10(i)(2) of the Leahy-Smith America Invents Act (Public Law 112–29; 125 Stat. 319; 35 U.S.C. 41 note) is amended by striking “7-year” and inserting “15-year”.

Under the law, the USPTO Director has authority to “set or adjust by rule any fee established, authorized, or charged under [either the Patent Act or the Trade Mark Act] for any services performed by or materials furnished by the Office.”  The one caveat is that the fee structure must be designed “only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees) and trademarks (in the case of trademark fees), including administrative costs of the Office with respect to such patent or trademark fees (as the case may be).”

The “SUCCESS Act” portion of the legislation is an acronym for the “Study of Underrepresented Classes Chasing Engineering and Science Success Act of 2018” and begins with the following findings:

1. Patents and other forms of intellectual property are important engines of innovation, invention, and economic growth.
2. Many innovative small businesses, which create over 20 percent of the total number of new jobs created in the United States each year, depend on patent protections to commercialize new technologies.
3. Universities and their industry partners also rely on patent protections to transfer innovative new technologies from the laboratory or classroom to commercial use.
4. Recent studies have shown that there is a significant gap in the number of patents applied for and obtained by women and minorities.

In addition, the legislation includes the following “sense of Congress”:

It is the sense of Congress that the United States has the responsibility to work with the private sector to close the gap in the number of patents applied for and obtained by women and minorities to harness the maximum innovative potential and continue to promote United States leadership in the global economy.

The legislation does not actually do anything but does require the PTO Director along with the SBA Administrator to conduct a study that:

1. Identifies publicly available data on the number of patents annually applied for and obtained by, and the benefits of increasing the number of patents applied for and obtained by women, minorities, and veterans and small businesses owned by women, minorities, and veterans; and
2. provides legislative recommendations for how to— (A) promote the participation of women, minorities, and veterans in entrepreneurship activities; and (B) increase the number of women, minorities, and veterans who apply for and obtain patents.

Within 1 year, the PTO Director will provide a report to Congress on the results.

In its pending Application No. 12/814,020, eBay is attempting to patent a list of listings ranked by “dwell time” — the “elapsed amount of time one or more users view a page describing the listing.”

The examiner originally rejected the claims as improperly directed toward an abstract idea.  On appeal, however, the PTAB has reversed finding that “dwell time” is a uniquely “internet-centric challenge” and the claimed solution is  “is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” quoting DDR Holdings.  The PTAB particularly noted that “dwell time” is not merely “some business practice known from the pre-Internet world” that was claimed by simply saying “perform it on the Internet.”

[DwellTimePTABDecision]

Claim 18 below is representative.

18. A method comprising:

identifying a plurality of listings stored in a … database as search results;

determining, using a processor, a respective dwell time associated with each [listing], the dwell time based on an elapsed amount of time one or more users view a page describing the listing, and the dwell time associated with a likelihood of a transaction occurring with respect to the listing; and

ranking the listings … based at least in part on the respective dwell time ….

PROBLEM — Although there is probably a way to salvage this invention on eligibility grounds, the PTAB is clearly wrong that “DWELL TIME” is an internet specific phenom.  Apparently, none of these PTAB judges have worked in retail sales.

= = = =

I’ll note here that the chart above is described as follows: “FIG. 1 is a graph of a likelihood of a transaction occurring based on dwell time at a ‘view item’ page.”  This chart appears fairly problematic in this case if – as I suspect – the chart is actually a prophetic example – even though not identified as such.  Not a huge deal – except that the entire patent turns on the function of “dwell time.”  If I were prosecuting this patent, I would make sure the PTO is made aware of the source of data (or absence thereof) for forming this figure).

by Dennis Crouch

Data Engine Techs. LLC v. Google LLC (Fed. Cir. 2018)

D.Delaware Judge Stark dismissed DET’s case on the pleadings — holding that the Borland/DET spreadsheet-tab patent claims were directed to abstract ideas.  On appeal, the Federal Circuit has partially reversed — finding that some of the claims are directed toward “specific improved method for navigating through complex three-dimensional electronic spreadsheets” and thus are patent eligible. The decision here is authored by Judge STOLL and joined by Judges REYNA and BRYSON.

The patents at issue here basically cover the use of tabs in a spreadsheet document. You might be thinking – “WHAT I’VE BEEN USING TABS FOR 25 YEARS” — at least that is what I was thinking.  The thing is that DET’s patents were invented by folks at Borland Software — baker of Quattro Pro — and claim priority back to 1992. BOOM! Microsoft came out with its tabbed version of Excel in 1993 following Borland’s release. Back then I used Quattro Pro – and tabs were awesome.  The case here is against Google for its tabbed sheets.

As you’ll see below, the claims include a “notebook tab” — and that feature seems to be the key for patent eligibility.  This aspect of the decision makes it fairly questionable.

I’ll note that this case may well fit into the IP case-books as a companion to the 1996 Supreme Court case on spreadsheet menu copyright. Lotus Dev. Corp. v. Borland Int’l, Inc., 516 U.S. 233 (1996).

One framework for looking at this decision is by comparing Claims 1 and 3 of DET’s U.S. Patent No. 6,282,551.  According to the Federal Circuit, Independent Claim 1 is unpatentable, while dependent Claim 3 is good to go.

Claim 1 is directed to a method of organizing a “three-dimensional spreadsheet” (i.e., multi-tabbed).  However, claim 1 does not particularly claim the notebook tabs — that limitation is added to claim 3.

1. In an electronic spreadsheet … a method for organizing [a] three-dimensional spreadsheet comprising:

[Partition into tabs:] partitioning [a] plurality of cells into a plurality of two-dimensional cell matrices so that each of the … cell matrices can be presented to a user as a spreadsheet page;

[Name each tab:] associating each of the cell matrices with a user-settable page identifier …;

[Cells referencing other tabs:] creating in a first cell of a first page at least one formula referencing a second cell of a second page said formula including the user-settable page identifier for the second page; and

[Saving the tabs in files:] storing said first and second pages of the plurality of cell matrices such that they appear to the user as being stored within a single file.

3. The method of claim 1, further comprising:

associating the plurality of cell matrices  with a notebook identifier, whereby information stored in a first plurality of cell matrices may be referenced from a second plurality of cell matrices.

The court explained the problem with Claim 1 as follows:

We conclude that under Alice step one, [claim 1] is directed to the abstract idea of identifying and storing electronic spreadsheet pages. . . . [The claim] generically recites “associating each of the cell matrices with a user-settable page identifier” and does not recite the specific implementation of a notebook tab interface. Claim 1 of the ’551 patent is therefore not limited to [a] specific technical solution and improvement in electronic spreadsheet functionality . . . Instead, claim 1 of the ’551 patent covers any means for identifying electronic spreadsheet pages.

By implication, Claim 3 is patent eligible because it includes the limitation that the cell matrices (pages) are associated with notebook identifier (a tab).   I personally don’t see how claim 3 adds “something more” in a specific enough manner to transform the claim 1 into a patent eligible invention.

In its eligibility determination, the court spends most of its time focused on claim 12 of U.S. Patent No. 5,590,259.  Claim 12 is a different story than claims 1 and 3 above and does appear to cross a threshold from generically claiming aspects of an invention to very specifically zeroing in on how the user interface operates at a detailed functional level:

12. [A] computer-implemented method of representing a three-dimensional spreadsheet on a screen display, the method comprising:

displaying … a first spreadsheet page from a plurality of spreadsheet pages, …;

while displaying said first spreadsheet page, displaying a row of [user-settable] spreadsheet page identifiers along one side … each … being displayed as an image of a notebook tab … and indicating a single respective spreadsheet page…;

receiving user input … in response to selection with an input device of a spreadsheet page identifier for said second spreadsheet page;

[responsively] displaying said second spreadsheet page … in a manner so as to obscure said first spreadsheet page from display while continuing to display at least a portion of said row of spreadsheet page identifiers; and

receiving user input for entering a formula in a cell on said second spreadsheet page, said formula including a cell reference to a particular cell on another of said spreadsheet pages having a particular spreadsheet page identifier comprising at least one user-supplied identifying character, said cell reference comprising said at least one user-supplied identifying character for said particular spreadsheet page identifier together with said column identifier and said row identifier for said particular cell.

In reviewing this claim, the court explains:

When considered as a whole, and in light of the specification, representative claim 12 of the ’259 patent is not directed to an abstract idea. Rather, the claim is directed to a specific method for navigating through three-dimensional electronic spreadsheets. The method provides a specific solution to then-existing technological problems in computers and prior art electronic spreadsheets. The specification teaches that prior art computer spreadsheets were not user friendly. . . .

The Tab Patents solved this known technological problem in computers in a particular way—by providing a highly intuitive, user-friendly interface with familiar notebook tabs for navigating the three-dimensional worksheet environment…. The invention was applauded by the industry for improving computers’ functionality as a tool able to instantly access all parts of complex three-dimensional electronic spreadsheets. Numerous contemporaneous articles attributed the improved three-dimensional spreadsheets’ success to its notebook tab feature.

Representative claim 12 recites precisely this technical solution and improvement in computer spreadsheet functionality. The claim recites specific steps detailing the method of navigating through spreadsheet pages within a three-dimensional spreadsheet environment using notebook tabs. . . . The claimed method does not recite the idea of navigating through spreadsheet pages using buttons or a generic method of labeling and organizing spreadsheets. Rather, the claims require a specific interface and implementation for navigating complex three-dimensional spreadsheets using techniques unique to computers.

There is lots more to think about with this case, but this is enough for one post.

The following is a guest post by Lauren Vincent who is currently a 3L at the University of Missouri School of Law.  Vincent is the Editor-in-Chief of the Missouri Law Review. – DC

ZUP, LLC v. Nash Mfg., Inc., 896 F.3d 1365 (Fed. Cir. 2018)

Facts and Holding

ZUP, LLC v. Nash Manufacturing, Inc. involves two competitor businesses in the water recreational device industry. ZUP, LLC (“ZUP”) brought its wakeboarding invention, the “ZUP Board,” to market in 2012. ZUP’s U.S. Patent No. 8,292,681 covers the board itself and a method of riding the board in which a rider simultaneously uses side-by-side handles and side-by-side foot bindings to help maneuver between various riding positions. This transition is shown in the figures below.

In 2014, Nash Manufacturing, Inc. (“Nash”) brought its wakeboarding invention, the “Versa Board,” to market. The Versa Board had several holes on the top surface of the board that allowed users to attach handles or foot bindings in various configurations, but Nash warned its users against having the handles attached to the board while standing. If a user theoretically ignored Nash’s warnings, the user could attach the handles and foot bindings in a configuration that paralleled the method of riding that ZUP described in the ZUP Board patent.

ZUP filed an infringement claim against Nash. Nash counterclaimed, seeking a declaration of non-infringement and invalidity on obviousness grounds. ZUP presented evidence of secondary considerations to the district court. However the district court found the claims obvious in light of a combination of six prior patents involving water recreational boards. Images of some of the prior art patents are shown below.

The Majority

In a split decision, the Federal Circuit affirmed the district court’s holding that the ZUP Board patent claims were invalid as obvious under § 103(a) because a person of ordinary skill in the art would have had a motivation to combine the prior art references in the method it claimed and further held that the district court properly evaluated ZUP’s evidence of secondary considerations. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007) and Graham v. John Deere Co., 383 U.S. 1 (1966).

The Federal Circuit agreed with the district court’s conclusion that the ZUP Board patent merely identified known elements from prior patents (food bindings, handles etc.) and combined them. Further, the Federal Circuit agreed with the district court that ZUP’s purpose in so combining (helping riders maneuver between positions by focusing on rider stability) had been a longstanding goal of the prior patents – a goal predictably shared by many inventors in the industry. The Federal Circuit further concluded that because ZUP presented only minimal evidence of secondary considerations, ZUP did not “overcome” the strong showing of obviousness established by application of the other three Graham factors to the facts of the case. Chief Judge Prost authored the majority opinion that was joined by Judge Lourie.

The Dissent

Writing in dissent, Judge Newman argued that the obviousness determination was improper because the prior patents never suggested the specific wakeboard modifications claimed by ZUP. Judge Newman further maintained that the majority effectively treated the fourth Graham factor – secondary considerations — as one that should only be considered in rebuttal. By requiring that the fourth factor “overcome” the others, Judge Newman contended that the majority engaged in improper judicial hindsight.

by Dennis Crouch

Michael Meade is a fascinating story teller and mythologist as well as author of the 2016 book The Genius Myth.  In the book, Meade recognizes that there is no single heroic act or idea that is going to save humanity or even set us on the ‘right’ trajectory.  Rather, Meade sees genius as a potential aspect of every person — and that distributed innovation and creation is going to be necessary for any true improvements in our global existence.  He writes:

The question becomes not whether or not you are a genius, but in what way does genius appear in you and how might it contribute to your well-being and at the same time benefit the world around you.

The US patent system fits this approach in some ways — one reason why we have 10,000,000+ patents is that the standard for patentability is low enough so that many many individuals experience sufficient genius.  The problem though is that the hoops, tricks, and costs leave the patent system as an insider game not accessible to the vast majority are locked-out.

The question in my mind is how our system for promoting innovation can help to encourage a broader awakening of genius?