by Dennis Cxrouch

In re Lizzo LLC (TTAB 2023)

In a new precedential opinion, the TTAB has sided with the musical artist Lizzo — agreeing to register her mark “100% THAT BITCH” for use on apparel.  The Trademark Examining Attorney had refused registration on “failure-to-function” — concluding that the phrase was a commonplace expression used to express a well-recognized sentiment.

The phrase comes from Lizzo’s 2017 song Truth Hurts (remade in 2019) that has become a viral sleeper hit.  The original line in the song is “I just took a DNA test, turns out I’m 100% that bitch.” But Lizzo herself did not create the phrase. Rather, Lizzo apparently saw a social media meme about being 100% that bitch and then added it to her song.  The examining attorney concluded that “evidence that consumers may associate the phrase with the famous singer/song because it was a lyric in the singer’s song does not entitle the applicant as a singer-songwriter to appropriate for itself exclusive use of the phrase.”

On appeal, the TTAB reversed the refusal.  Unlike patents and copyrights, trademark law is not designed to reward the creative endeavor of invention or authorship.  Rather, trademark is designed as a consume-protection and market-function tool and so focuses on consumer perception.  Here, the evidence suggests that the mark is being used in an ornamental fashion (rather than as simply words) and that ordinary consumers associate the mark with Lizzo.  Even though she didn’t create the words – she is the one who made them popular and transformed the “lesser known phrase to more memorable status.”  On those grounds, the TTAB concluded that the mark is registrable and thus reversed the denial.

A few years ago the mark would have also been rejected as scandalous, but that issue has been off the table since the Supreme Court’s FUCT decision.

Read the TTAB Decision here: Lizzo TTAB Decision

by Dennis Crouch

The Supreme Court will be handling some significant cases over the next few months that may have a major impact for folks working in IP & Tech fields. The following is brief list sorted by the date of oral arguments.

• Feb 21 – Gonzales v. Google (Does the safe harbor of CDA Section 230 shield Google from liability for encouraging users to view offending videos).
• Feb 22 – Twitter v. Taamneh (Can Twitter be held liable for providing a service that aids and abets terrorism, despite its substantial non-violative uses).
• March 21 – Abitron v. Hetronic (Extraterritorial application of US Trademark Law — damages from foreign sales).
• March 22 – Jack Daniels v. VIP (Commercial humor leading to fair use or no-infringement/dilution in the TM context)
• March 27 – Amgen v. Sanofi (Full Scope Enablement: How much description is enough to satisfy the enablement requirement).
• April 17 – Slack v. Pirani (For securities liability, what causal link is required between misleading statement and the purchase of shares).
• April 18 – Groff v. DeJoy (Should Title VII of the Civil Rights Act be given more teeth to protect religious liberty in the employment context).
• April 19 – Counterman v. Colorado (When does speech rise to a “true threat”, unprotected by the First Amendment.  Here, it was a series of unsolicited Facebook direct messages.  The question is whether his intent (mens rea) matters, or can he be convicted based only upon the reasonably perceived threat of the recipient.).
• April 24 – Dupree v. Younter (If SJ is denied on a question of law, must the party reassert the issue in JMOL in order to preserve the issue for appeal. Although not a patent case, this issue comes up all the time in patent litigation).
• April 25 – Yegiazaryan v. Smagin (When can an injury to a foreign plaintiff’s “intangible property” serve as the basis for a RICO claim).

by Dennis Crouch

The pending case of Jump Rope Systems v. Coulter Ventures is fascinating to me as someone who teaches both property and civil procedure. The basic questions: (1) As an inter partes review (IPR) proceeding draws to a close – toward cancellation – at what point are the claims no longer enforceable? (2) What is the effect of cancellation, in particular, is it like canceling a magazine subscription where the former subscriber isn’t off the hook for past-due bills; or, is it like an annulment – an Ab Initio Extinguishment?  The case also (3) raises a straight-up due process challenge to the IPR system.

A typical IPR where the petitioner prevails includes the following three-step sequence:

1. Unpatentable Decision: PTAB issues a final written decision concluding that the challenged claim has been proven unpatentable with a preponderance of the evidence.
2. Affirmed on Appeal: On appeal, the Federal Circuit affirms that judgment.
3. Certificate of Cancellation: Once the appeal is complete, the USPTO Director then issues a certificate canceling the claim. 35 U.S.C. 316.

The first question — if the patentee is involved in concurrent district court infringement litigation, at what step is the patent no longer enforceable?

Clearly, the patent claim is canceled at Step-3 and by that point cannot be enforced going forward. The Federal Circuit though has held that the claim is already unenforceable at Step-2 based upon the court’s questionable application of collateral estoppel.   I call it questionable because of the different standards  of proof applied in the PTAB vs the District Court.  The affirmed PTAB decision found the claim invalid with a preponderance of the evidence.  But, in district court litigation invalidation requires clear and convincing evidence, a substantially higher standard. And, a conclusion of invalidity under a lower standard does not conclusively tell us that the same claim would have been proven invalid under a higher standard.  Using a standard approach such as found in the Restatement (Second) of Judgments, collateral estoppel would not apply here because of the difference in standards.  Here, we tend to use an exacting standard for res judicata principles because of their due process implications — the result bars a party from making their argument in court.  The Federal Circuit’s fudging of the rule makes some practical sense – the statute appears to make the issuance of the cancellation certificate a ministerial process with its “Director shall” language.  And yet, fudging the rules in a way that undermines due process is troubling.  I’ll note here that courts appear to generally be waiting for the appeal decision before announcing preclusion, although it is unclear whether that approach is somehow required or simply prudential (since district courts generally see the Federal Circuit as unpredictable).  I’ll also note that I previously called out the Federal Circuit for improper expansion of preclusion law with regard to the Kessler Doctrine – they did not listen to me there either.

The second question at issue in Jump Rope Systems involves the impact of cancellation — what about infringement that occurred (and lawsuits pending) prior to the cancellation?

The reissue system is a somewhat-close relative to inter partes review and has the benefit of 150 years of case law, including numerous Supreme Court decisions.  With reissues, courts have clearly held that cancellation of claims during reissue render those claims entirely moot.  See, for instance, Moffitt v. Garr, 66 U.S. 273, 283 (1861) and Meyer v. Pritchard, 23 L. Ed. 961 (1877).  But, the reissue system has a significant difference — a reissue begins with a patentee surrendering its patent as required by statute. 35 U.S.C. 251.  It is that surrendering that makes the cancellation of claims in a reissue so dramatic.

With inter partes review, the patentee does not surrender the patent and so we have a potentially different situation.  Still, courts have regularly treated cancellation of claims as voiding the claims backward and forward through time.  But, it is not so clear that approach is correct and there are many situations where the courts have given “cancel” to only prospective effect.  In its briefing, Jump Rope cites a long string of cases in various areas of law as well as simple plain meaning of the word:

Plain English is in accord. “Canceling” a magazine subscription stops future deliveries, but past issues remain in hand.

Jump Rope Reply Brief. If Jump Rope wins on this, an IPR petition that cancels claims would only cut-off prospective damages and injunctive relief.  The patentee could still recover pre-cancellation damages so long as the defendant failed to prove the claims invalid in district court at the higher standard.

= = =

The briefing also includes an important due process challenge — arguing that the use of IPRs to prevent infringement lawsuits violate due process.  In Oil States, various the patentee raised various challenges to the system, but did not bring a due process challenge. Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365 (“We emphasize the narrowness of our holding. . . . Oil States [has not] raised a due process challenge.”).

Here, the patentee makes two arguments:

1. “First, front-line adjudicators are not sufficiently insulated from political forces. United States v. Arthrex, Inc., 141 S. Ct. 1970, 1993 (2021) (Gorsuch, J., concurring in part & dissenting in part) (‘The Court’s decision in Oil States allowing executive officials to assume an historic judicial function was always destined to invite familiar due process problems. . . . [P]owerful interests are capable of amassing armies of lobbyists and lawyers to influence (and even capture) politically accountable bureaucracies.’) (citations and internal quotation marks omitted).”
2. “Second, by not permitting traditional live cross-examination of witnesses
   (instead, relying on written depositions), IPR procedures violate due process in view of the importance of the property right at issue. See Goldberg v. Kelly, 397 U.S. 254, 269 (1970) (‘In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses.’)”

Great questions from petitioner.

Robert Greenspoon (Dunlap Bennett) is counsel for the patentee Jump Rope Systems. Louis DiSanto (Banner Witcoff) is representing the accused infringer Coulter Ventures.   Their offices are a few blocks apart in downtown Chicago.

By Jason Rantanen

It’s time for the January 2023 Federal Circuit statistics update! As I’ve done for the last few years, below I provide some statistics on what the Federal Circuit has been doing over the past year. These charts draw on the Federal Circuit Dataset Project, an open-access dataset that I maintain that contains information on all Federal Circuit decisions and docketed appeals.  While previous versions of the dataset have been limited to merits decisions, this year we began including non-merits terminations as well.  Currently, all non-merits terminations from 2022 are included in the dataset.  We’ll be working backwards to add terminations from earlier years.

One of my goals with this dataset is to make it publicly accessible so that anyone can use it in their own research. A complete copy of this year’s release is archived at https://dataverse.harvard.edu/dataverse/CAFC_Dataset_Project.  In addition, you can access the dataset through a user interface via https://empirical.law.uiowa.edu and generate your own subsets and graphs. A copy of the codebook is available at these locations as well. In addition, if you are a researcher who would like help using the dataset, please reach out to me – I’m happy to help out.

Onto the data!

Decision Numbers and Origins

Figure 1

Figure 1 shows the number of Federal Circuit opinions and Rule 36 summary affirmances by origin since 2010. These represent individual documents (i.e.: a single opinion or Rule 36) rather than docket numbers (which is how the Federal Circuit reports its metrics).

Once again, the highest number of merits decisions arose from the PTO. Overall, however, there was a substantial drop in the number of merits decisions: 532 in 2022, as compared with 643 in 2021.  Decisions from all origins actually dropped slightly, but the biggest drop was in the number of decisions arising from the PTO was the main reason: 147 in 2022 as compared with 216 in 2021. The direct cause of fewer decisions isn’t a mystery: as shown below, there was a big drop in appeals docketed at the Federal Circuit in 2021. Fewer appeals means fewer appellate decisions.

Opinions vs. Summary Affirmances

Figure 2

Figure 2 shows the number of opinions versus Rule 36 summary affirmances arising from the District Courts and PTO. In terms of absolute numbers, the court issued the fewest Rule 36 summary affirmances in appeals arising from these origins in several years.  In relative terms, 21% of the decisions arising from the district courts were disposed of through a summary affirmance while 42% of the Federal Circuit’s decisions arising from the PTO were summary affirmances.

What about the type of opinion that the court is issuing? For precedential opinions, Figure 3 shows that this is one area in which things are about the same as last year: the court issued slightly more precedential decisions arising from the district courts than in 2021 (52 vs. 47), and slightly fewer precedential decisions arising from the district courts (29 vs. 33). Rather, the drop in decisions arising from the PTO mostly manifested in terms of fewer nonprecedential opinions.

Figure 3

What about compared to the court’s overall decisions?  The number of precedential opinions issued by the court in 2022 was almost exactly the same as in 2021: 162 in 2022 as compared with 164 in 2021. But it is a drop from 2014-2020. (Note that this figure does not include Rule 36 summary affirmances).

Figure 4

General dispositions

Figure 5

In contrast with 2021, at which the Federal Circuit affirmed district court decisions relatively frequently (79%), in 2022 the court affirmed-in-full in appeals from the district courts just 57% of the time. Even including partial affirmances, the rate was lower than in recent years: it affirmed in full or part just 75% of the time. (The purple line indicates the average 68% affirmance rate over the 12-year time period). As a reminder, these graphs do not include petitions for writs of mandamus. In contrast, the court continued to affirm the PTO’s decisions at about the same rate as it has in recent years, affirming in full in 78% of its decisions.

Docketed Appeals

Figure 6 shows the number of docketed appeals by origin. These are are appeals filed at the Federal Circuit — the precursor to any decisions.  As Figure 6 shows, there was a substantial drop-off in appeals filed in 2021, followed by an increase in appeals filed in 2022, especially in appeals from the district courts (339 appeals filled in 2022 as compared with 286 appeals in 2021) and from the PTO (489 appeals filed in 2022 as compared with 402 appeals filed in 2021). Given what happened in appeals this year, I’d expect an increase in Federal Circuit decisions in 2023, recognizing that it takes about 13 months on average from filing to decision.

Figure 6

In addition to providing a picture of what’s being filed at the Federal Circuit, the docket dataset also allows us to match up the Federal Circuit decisions to other datasets of district court and PTO data, such as the USPTO Patent Litigation dataset and the Stanford NPE Litigation Dataset. If you’re interested in doing a deep dive into these areas, my research team and I used this data in a few papers this year:

• Jason Rantanen, Missing Decisions and the United States Court of Appeals for the Federal Circuit, 170 U. Pa L. Rev. Online (2022)
• Jason Rantanen, Charles Neff, Eweosa Owenaze & Allison Wiliamson, Who Appeals (and Wins) Patent Infringement Cases, 60 Houston L. Rev. 289 (2022) and
• Jason Rantanen, “Studying Patent Infringement Litigation,” Research Handbook on Empirical studies in Intellectual Property Law, Estelle Derclaye, ed. (Edward Elgar forthcoming) (preprint available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4194142).

Miscellaneous Dockets

One category of data that is not included in the above graphs is the data on petitions for writs of mandamus and petitions for permission to appeal. As in past years, nearly all of the miscellaneous matters consisted of Petitions for Writs of Mandamus, with a few Petitions for Permission to Appeal.  Figure 7 shows the numbers of dispositions of petitions for writs of mandamus over time.

Figure 7

In 2022, the court granted in whole or part 11 petitions for a writ of mandamus; fewer than 2021 (18), but at just as high a rate (42%). As in past years, the grants arise exclusively from petitions arising from the district courts.   Jonas Anderson, Paul Gugliuzza & I talk about this in more depth in Extraordinary Writ or Ordinary Remedy: Mandamus at the Federal Circuit, 100 Wash. U. L. Rev. 327 (2022)  

Additional terminations

Beginning in February 2022, the Federal Circuit began making all terminations of appeals available on its website. This is a terrific decision and is responsive to concerns about “missing” decisions that Merritt McAlister and I have each written about. That said, as I wrote about in my examination of the Federal Circuit’s decisions, the Federal Circuit has historically done a pretty good job most making merits decisions (i.e.: “Opinions” and “Rule 36” summary affirmances) available on its website, so many of these additional terminations consist of appeals that are dismissed pursuant to Federal Rule of Appellate Procedure 42(b). I supplemented what was on the court’s website with a collection of the additional January and February 2022 terminations from PACER, so all of the terminations for 2022 are in there.

Using data about these decisions, I was able to put together a graph showing how these appeals were disposed of. This graph differs a bit from the Federal Circuit’s own statistics because it’s by document rather than docket number, and (2) it is for the calendar year rather than the fiscal year. The purpose is to provide a sense of what happens to appeals other than those that result in merits decisions.

Figure 8

Close to 2/3rds of appeal terminations occurred in the context of an opinion (49%) or Rule 36 summary affirmance (14%). Most of the remainder were dismissals (32%). Of the dismissals, 63% were voluntary withdrawals (generally under to FRAP 42(b)). The remaining dismissals are for a variety of reasons, but typically due to a failure to prosecute the appeal, failure to appeal within the relevant time period, or lack of appellate subject matter jurisdiction.

To download the data for yourself, visit the dataverse or go to http://empirical.law.uiowa.edu. I’ve also saved a copy of my Excel workbook with the graphs on the Dataverse archive. It contains the specific parameters that I used to generate these graphs.

The Chamberlain Group v. Overhead Door Corp., 21-CV-00084 (E.D. Tex. 2023)

Overhead door won a jury verdict in this case back in March 2022.  However, Judge Gilstrap ordered a partial new trial because Overhead Door had failed to disclose key features of its products until just before trial. New Jury, New Verdict.  Second time around, the new jury found the asserted claims valid and not infringed — setting the royalty at $43 million.

U.S. Patent No. 8,587,404.

4. A movable barrier system with a moving-barrier imminent motion notification, the system comprising:

a movable barrier operator connected to close a movable barrier;

the movable barrier operator configured to receive a transmitter identification code from a transmitter as part of a communication from the transmitter triggered in response to a first user input at the transmitter, the communication comprising a command to close configured to effect closing of the movable barrier, the movable barrier operator also configured to determine whether to close the movable barrier in combination with operating a moving-barrier imminent motion notification in response to receipt of the command to close the movable barrier based at least in part on the transmitter identification code;

the movable barrier operator configured to determine whether to close the movable barrier without operating the moving-barrier imminent motion notification based at least in part on the transmitter identification code.

It is hard for me to believe that the US Supreme Court is hearing the case of Jack Daniels vs Bad Spaniels. For those who don’t know, Jack Daniels is a form of Whiskey.  VIP Products makes and sells a squeaking dog toy known as “bad spaniels.” The setup here is a humorous parody, but JD is not laughing.

Jack Daniels sent a cease-and-desist letter to VIP who then filed a declaratory judgment action in Arizona. The district court sided with JD on both TM infringement and dilution and issued an injunction to stop ongoing sales and distribution.  (The excrementory references in Bad Spaniel also led to tarnishment conclusions).  On appeal though, the 9th Circuit identified the toy as an “expressive work” entitled to speech protections under the First Amendment of the US Constitution and ordered the lower court to apply an enhanced infringement analysis stemming from Rogers v. Grimaldi, 875 F.2d 994 (1989).  Under Rogers, the court needs to consider the expressive relevance of the accused work and whether it is “explicitly” misleading.  With regard to dilution, the appellate court found that the dog toy was not actually making commercial use of the JD mark.  Although the toy was being sold in commerce, the JD mimicry was for humourous speech purposes rather than simply commercial.

The Supreme Court granted certiorari and the briefing is ongoing.  Typically, the most important amicus brief in a private case is that filed by the U.S. Government.  Here, the USPTO and DOJ joined together to file a brief strongly supporting the mark holder — writing that the 9th Circuit decision “is egregiously wrong.” The Gov’t is particularly concerned that a funny joke will be an excuse to allow infringement.  Although humorous parody should be a factor in the likelihood-of-confusion analysis, the Gov’t argues that it should not be a determinative “get-out-of-the-Lanham-Act free card.”  On the dilution side, the Gov’t argues that Congress expressly set the rules, including a defense that the accused use is not being used as a mark.  The Gov’t argues here that the Ninth Circuit ignored that provision and instead created its own non-statutory rule regarding the commercial nature of the humor being used.

The Government’s basic argument here is that free speech concerns are properly incorporated into the infringement analysis and should not be given a separate overlay.  The result then is a holistic balancing of speech interests against the misleading nature of a product.  “The Ninth Circuit’s reasoning means that virtually any humorous pirating of a trademark will be “expressive” and thus qualify for heightened First Amendment protection, no matter how misleading.”

The briefing also highlights some concerning uses of marks to sell marijuana products, such as the Oreo knock-off below.  These don’t really seem humorous, but who am I to know?

Read the Gov’t Brief here.  One note, in the case, the appellate court did not expressly consider Bad Spaniels under a more traditional parody test.  The Gov’t suggested vacatur and remand to the 9th Circuit to reconsider on those grounds.

by Dennis Crouch

In 2022, the Federal Circuit held that an invention is only eligible for a US patent if a human conceived of the invention. Thus, no patents for invention wholly conceived by artificial intelligence.  Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022).  Thaler’s petition for writ of certiorari to the US Supreme Court would have been due last week, but Thaler was able to obtain an extension with the petition now being due March 19, 2023.  Thaler’s main attorney throughout this process has been Professor Ryan Abbott. The team recently added appellate attorney and Supreme Court expert Mark Davies to the team, and so it should be a great filing when it comes.  The motion for extension explains that the case presents a fundamental question of how the law of inventorship should apply “to new technological methods of invention.”

Specifically, this case arises from the Federal Circuit’s denial of a patent to an invention created by an artificial intelligence (AI) system, holding that an AI system is categorically unable to meet the definition of “inventor” under the Patent Act. The questions presented in Dr. Thaler’s petition will have a significant impact on Congress’s carefully balanced scheme for protecting the public interest in promoting innovation and ensuring the United States’ continued international leadership in the protection of intellectual property.

Extension Motion.  Part of the justification for delay is that Dr. Thaler and his attorneys have a parallel copyright case pending.  Thaler attempted to register a copyright for a computer-created work of art. But, the copyright office refused once Thaler expressly stated that there was no human author.  Thaler then sued in DC District Court.  Most recently, Thaler moved for summary judgment, presenting the following question for the district court to decide:

With the facts not in dispute, this case boils down to one novel legal question: Can someone register a copyright in a creative work made by an artificial intelligence? The plain language and purpose of the Copyright Act agree that such works should be copyrightable. In addition, standard property law principles of ownership, as well as the work-for-hire doctrine, apply to make Plaintiff Dr. Stephen Thaler the copyright’s owner.

THALER v. PERLMUTTER et al, Docket No. 1:22-cv-01564, Paper No. 16 (D.D.C. Jan 10, 2023).  The image, reproduced below from the complaint is known as “A Recent Entrance to Paradise.” (Registration Application #1-7100387071).

In another recent example, the Copyright Office has also canceled copyright registration for Zarya of the Dawn, apparently because of its AI-created status.

Guest Post by Jordan Duenckel.  Jordan is a second-year law student at the University of Missouri, head of our IP student association, and a registered patent agent. 

The Federal Circuit released its opinion in Personalized Media Communications, LLC, Vs. Apple Inc., Docket No. 2021-2275 on January 20, 2023, in a dispute involving an alleged pattern of inappropriate conduct during patent prosecution. In a split decision, the Federal Circuit ruled that the district court did not abuse its discretion in declaring a patent unenforceable based on prosecution laches.

Apple FairPlay uses digital rights management (DRM) to limit user access. Specifically, FairPlay encrypts data and uses “decryption keys” to control decryption. As an additional added layer of security, Apple further encrypted these decryption keys and this further encryption is the basis for the patent infringement suit brought by Personalized Media Communications, LLC (PMC) based on PMC’s U.S. Patent No. 8,191, (the “’091 patent”). The jury reached a unanimous verdict and awarded $308 million to PMC for infringement of claims 13-16. Despite the favorable verdict on infringement, the district court eventually sided with Apple by holding the ‘091 patent unenforceable based on the equitable affirmative defense of prosecution laches. Prosecution laches requires proving two elements:

1. The patentee’s delay in prosecution must be unreasonable and inexcusable under the totality of circumstances; and
2. The accused infringer must have suffered prejudice attributable to the delay.

Hyatt v. Hirshfeld, 998 F.3d 1347, 1359–62 (Fed. Cir. 2021).

PMC’s applications were pending for 16 years before the claims were presented for examination.  During that process, PMC filed several thousands of claims.  PMC’s application was one of the few pre-GATT applications still pending at the USPTO, having been filed on the June 7, 1995, deadline.  The legal result is that the patent term extends 17 years from its 2012 issuance date (34 years from the filing date). But, the district court concluded that equity could not maintain the result because PMCs delays were unreasonable and inexcusable.

PMC raised a number of justifications on appeal, perhaps most interesting is that PMC’s prosecution strategy was in line with the “Consolidation Agreement” it made with the PTO. The agreement was part of the USPTO’s efforts to move out these old cases.  According to the procedure, where PMC was to designate “A” applications and “B” applications, with the PTO prioritizing “A” applications. Rejected claims would transfer to the corresponding “B” application and prosecution of “B” applications was stayed until the corresponding “A” application issued. This A to B process, in effect, allows PMC to delay the examination of applications and allows two chances for examination without paying a continuing examination fee.

On appeal, the majority, written by Judge Reyna and signed by Judge Chen, did not see this scheme as an excuse, but rather as further evidence of PMC’s inexcusable behavior in the prosecution process. In dissent, Judge Stark suggested that Apple had failed to show prejudice attributable to PMC’s delay.

Typically, an accused infringer can show prejudice based upon investment or use of “the claimed technology during the period of delay.” The majority concluded that Apple necessarily invested in FairPlay during the delay since it launched the product in 2003. The dissent focuses on the timeframe of the PMC’s conduct, finding that it was PMC’s pre-2000 conduct that was unreasonable while the post-2000 conduct involved more routine aspects of patent prosecution’s back-and-forth nature.   But, Apple did not prove that it was prejudiced by the pre-2000 conduct.

My thoughts: Prosecution laches is a remedy meant to address abuse of the patent system and necessarily must be flexible to meet ever-changing strategic conduct. PMC employed a business strategy deliberately aimed at creating a labyrinth of patent protection extending beyond the statutory twenty years, directly stating that the goal was patent coverage extending 30 to 50 years.  Further, PMC was unable to provide a legitimate purpose for the delays that aligns with the general goals of patent protection.

To me, the prejudice suffered by Apple is clear. At the time that Apple was developing FairPlay, they were unable to know the full scope of PMC’s patent protection. The chronological line drawing that the dissent favors ignores the practical effects of PMC’s ongoing deliberate business strategy.  Although the unreasonable acts may have taken place prior to 2000, the impact of those actions continued well beyond. The attempt to distinguish post-2000 activities as prejudicial or not in isolation avoids the totality of the circumstances that equitable remedies like prosecution laches are meant to address.

by Dennis Crouch

Apple Inc. v. Zipit Wireless, Inc., 2022 WL 18108215 (PTO Dir., Dec. 21, 2022)

Back in December, Director Vidal issued an important director review decision holding an IPR challenger must prove that the challenged claims are invalid, even if the patentee raises no defense.  The PTAB appears to have incorrectly treated the situation as more of a default judgment even though the patentee had not expressly abandoned.

Apple filed three IPR petitions against each of two Zipit patents.  The PTAB instituted IPR proceedings in all six.  At that point, Zipit filed patent owner responses in two of the cases, but not in the other four cases.  In its final written decision, the PTAB did not consider the merits of the case, but simply concluded that the patent owner had “abandoned the contest” and treated their lack of opposition as a “request for adverse judgment under 37 C.F.R. § 42.73(b).”

In a sua sponte review of the record, Dir. Vidal noted that Counsel had not expressly abandoned the case, and during the hearing stated that judgment for Apple is appropriate “if the Board determines that they have met their burden of proof with respect to those claims.”  Vidal concluded that “Patent Owner’s non-opposition was contingent on the Board determining that Petitioner met its burden of proving by a preponderance of the evidence that the challenged claims are unpatentable.” As such, the Board must consider the evidence presented by Apple and determine whether it meets the statutory burden of providing “unpatentability by a preponderance of the evidence.” 35 U.S.C. 316(e).

Read it here: https://www.uspto.gov/sites/default/files/documents/IPR2021-01124_20221221_p14_20230104_.pdf

by Dennis Crouch

Novartis Pharms v. HEC Pharm (Supreme Court 2023)

Some drug treatments perform better if the patient starts with a loading dosage before shifting to the regular daily amount. But, loading dosages can be risky because of the high dosage and because of the greater likelihood of mistakes.  Novartis was able to configure a multiple sclerosis treatment plan without the loading dosage.  Its claims require the administration of fingolimod “at a daily dosage of 0.5 mg, absent an immediately preceding loading dose regimen.” US Patent No. 9,187,405. The problem for Novartis is that its original priority application filings did not say anything positive or negative about a loading dosage, and the court eventually rejected the priority claims and thus invalidated the patent claims.

Novartis almost walked away a winner.  In the ANDA litigation, Judge Jordan (D.Del.) found the claims valid and infringed by HEC. On appeal Federal Circuit Judge O’Malley penned the majority opinion affirming the Novartis win. Judge Linn sided with O’Malley, with Chief Judge Moore in dissent.

But then an odd sequence of events occurred: (1) in February 2022, HEC filed a petition for panel rehearing; (2) but before the panel could rule on the motion, Judge O’Malley retired.  (3) At that point, Judge Hughes was added to the panel; and (4) Judge Hughes sided with Chief Judge Moore’s position.  The modified panel then issued a new opinion with Judge Moore’s prior dissent effectively becoming the majority, and Judge Linn now writing in dissent.  What made this more surprising was that the Federal Circuit had not provided any indication of Judge Hughes’ substitution.

Novartis petition for certiorari addresses both the procedural judicial shell game and the substantive written description question. Questions presented:

1. Whether 28 U.S.C. § 46 and principles of sound judicial administration preclude a court of appeals from adding a new judge to form a new panel and redecide a case after an original three-judge panel has already decided the case and entered its judgment.

2. Whether 35 U.S.C. § 112 should be interpreted consistent with its plain text as requiring that a patent specification contain a “written description of the invention” in a form that need only be understandable to “any person skilled in the art,” or whether the court of appeals properly read in a heightened requirement that allows it to deem the specification inadequate on de novo review and displaces the perspective of a person skilled in the art.

Novartis Petition for Cert 2023.   The Supreme Court will decide the Amgen enablement case later this term, but recently denied certiorari in the written description case of Juno v. Kite.

My thoughts: I think that Chief Judge Moore probably has the best argument on the merits of the written description question.  If you are going to claim some particular element of the invention (and use it to overcome the prior art), that element should be introduced at some level in the original specification.  But, written description is a question-of-fact, what that means is that the appellate court cannot simply substitute its decision in place of that of the district court. Rather, the district court’s finding of facts should be affirmed barring some clear error or abuse of discretion. The case is close enough here that I would not find a clear error by the district court judge.  The panel switch also smells very bad to me.

Pundits will tell you that the use  of top Supreme Court counsel helps get the court’s attention. That bonus is probably mostly because of their skill at framing the case, but their reputation within the Court probably also plays a role.  In this case though Novartis appears to go overboard and included a host of top Supreme Court counsel, including Deanne Maynard (MoFo), Willy Jay (Goodwin Procter), and Thomas Hungar (Gibsun Dunn), all of whom have successfully argued numerous cases before the Court.

by Dennis Crouch

The Supreme Court has added a fourth case to its list of potentials for 2023: Apple Inc., v. California Institute of Technology, Docket No. 22-203.  The case is extremely important for our patent system because it could define key aspects of the interplay between inter partes review (IPR) proceedings and parallel district court litigation.

IPR Estoppel Provision: In traditional patent infringement litigation, accused infringers almost always raise invalidity defenses — arguing that the patent fails to satisfy the conditions of patentability set forth in the Patent Act.  For the past decade, IPRs have offered an additional powerful tool to challenge validity.  As the IPR system was being developed, patent holders were concerned about repeat harassment and argued that patent challengers should be required to choose their battleground: either the PTAB or Court, not both.   Aspects of the eventual compromise are codified in the estoppel provision of 35 U.S.C. 315(e)(2).  The statute becomes effective once an IPR reaches a final written decision as to some claim in the challenged patent. At that point, the IPR petitioner is prohibited from asserting in court that any challenged claim is “invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”  Id.  The question in the case is statutory interpretation – what did Congress mean by “could have raised during that inter partes review”?

Apple lost its IPR against CalTech’s patent and subsequently attempted to maintain further obviousness arguments in the parallel infringement litigation. The district and appellate courts applied 315(e)(2) estoppel to prohibit those additional obviousness arguments — concluding that Apple reasonably could have raised them in its initial IPR petition.  Apple’s appeal to the Supreme Court argues that the Federal Circuit misconstrued the statute. Apple’s argument hinges on three key points:

1. The statutory estoppel applies only to grounds that could have been raised “during” the IPR;
2. The IPR begins only at the point where the PTAB grants the petition to institute an IPR; and
3. Once the IPR is instituted, the petitioner is barred from raising new grounds (except for rebuttal-type issues).

The Federal Circuit’s error (according to Apple) is that the court found that estoppel applies to any ground that could have been raised in the petition. But, the petition is pre-IPR and thus not “during” the IPR as the statute requires.  The petition for writ of certiorari asks the following question:

Whether the Federal Circuit erroneously extended IPR estoppel under 35 U.S.C. § 315(e)(2) to all grounds that reasonably could have been raised in the petition filed before an inter partes review is instituted, even though the text of the statute applies estoppel only to grounds that “reasonably could have [been] raised during that inter partes review.”

Petition.

What’s the news: The Supreme Court has issued a CVSG – Call for the Views of the Solicitor General – in the case.  What this means is that at least four justices think that case has potential but that they would like to hear the Biden Administration’s views on whether this is an appropriate vehicle. The SG’s office is already working on three other briefs. Two focus on eligibility (Interactive Wearables & Tropp), and the other addresses the PTO-FDA interaction involving skinny-label infringement (Teva v. GSK).

My view on the estoppel issue:

1. Point for CalTech: The Federal Circuit’s solution here is the better policy.  Parties should not be given repeated affirmative opportunities to attempt invalidation of the same patent claims. Rather, the process should follow the general use-it-or-lose-it rule of litigation that forces parties to bring their best arguments to the table and see if they are good enough.  Here, Apple made a strategic decision to bring certain arguments to the PTAB — most likely because they were the best arguments.  It doesn’t help anyone to now let them bring on the third-string as a measure of patent invalidity.
2. Point for Apple: A pure textual reading of the statute favors Apple. If the IPR does not start until initiated, “during” the IPR would not include any petition-stage actions.
3. Match for CalTech: Apple’s reading removes essentially all meaning from the “reasonably could have raised” provision since petitioners basically cannot add any new grounds once the petition is granted. The statute’s purpose though was to prevent abusive and serial patent challenges.

I always hope that the Supreme Court takes patent cases because of both the drama and potential for meaningful and positive reform.  Likewise, I hope that the court takes this case, but then affirms.

by Dennis Crouch

Over the past several months, the USPTO and FDA have been collaborating with the purpose of promoting competition and lower drug prices in the US.   This week (Jan 19), the USPTO is holding a 7-hour joint listening session hosted by USPTO Director Kathy Vidal and FDA Commissioner Robert Califf.  [Register and see the Agenda here]

The session has three key substantive areas:

1. The extent and impact of pharmaceutical and biotech companies acting in a two-faced manner: Arguing to the USPTO that their treatments represent major changes from what was previously done (and thus patentable); while simultaneously arguing to the FDA that then later arguing that these same treatments are quite similar to what is already on the market (and thus safe for use).
2. The extent that pharmaceutical and biotech companies are improperly gaming the patent system and then using those games to justify strong protections under Hatch-Waxman and the BPCIA.
3. How can the Orange Book process be improved to protect innovation while simultaneously improving competition?  Prof. Jay Thomas’s remarks here are on point: “Despite their [extraordinary] impact, Orange Book patent listings receive no FDA oversight.”  PTO-P-2022-0037-0010.

The thrust of this entire gambit from the administration level is to reduce drug prices.  But, once we drop down to the PTO/FDA level, the close industry relationship suggests to me that agency officials will be keenly aware of the potential negative impacts of any action on pharma innovation.

The key leadoff speaker is Hastings Law Professor Robin Feldman whose work argues that the system is broken in myriad ways.  George Mason Prof. Adam Mossoff will provide a high-level counterargument, and several others will talk through complications. In particular, I always learn a lot hearing from Corey Salsberg (Novartis), Sean Tu (WVU), and Jay Thomas (G-Town)

While this is a joint event, both agencies (along with several other federal agencies) are also operating unilaterally to address the high cost of healthcare in America.  In particular, the FTC/DOJ are using antitrust tools to push against monopoly-level pricing even for drug products whose use is protected by patents.

Although no direct action items are expected to come out of this event,  I see all of this as quite a big deal as the various players work to establish their narrative.

by Dennis Crouch

A continuing trend in American law is the rise of Trade Secrecy as a powerful form of intellectual property.

The FTC and Biden Administration have called for eliminating employee non-compete agreements, which will strengthen the hard push for trade secrecy.  Most trade secret claims involve former employees moving to competitors.  If contracts limiting those transitions are unenforceable, more weight will almost certainly fall on trade secrecy rights.

Recently, President Biden also signed into law the Protecting American Intellectual Property Act of 2022.  Despite its broad name, the new law focuses entirely on international trade secrecy issues.  In particular, the law authorizes the US President to place sanctions on foreign entities that engage or benefit from “significant theft of trade secrets of United States persons.”   The law has a two-step approach: (1) the President must provide Congress with a report of violators; and (2) the President must then put sanctions on the violators (with the exception that sanctions can be waived if in the national interest).  Potential sanctions include blocking and prohibiting “all transactions in all property and interests in property of the entity.”

The new law is set to Sunset in 7 years and so will not be codified within the United States Code (USC).  However, the law does rely upon the DTSA definition of trade secret found in 18 U.S.C. 1839:

[T]he term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if— (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.

Under Federal Law, the theft of trade secrets held by US persons for the purpose of taking information out of the US is also a felony. See, Economic Espionage Act.

But, for the most part the practice of trade secrecy law is radically different than that of patent law.  I’m wondering the extent that patent attorneys are engaging in the transition.