March 2019

Presumption of Nexus or “Presumptions All the Way Down”

Patent,

by Dennis Crouch

Xactware Solutions, Inc. v. Eagle View Techs., Inc. (Fed. Cir. 2019)

Both of these companies use drones to measure houses — their reports are then used for roofing, solar, and insurance estimates. In 2015, Eagle View sued Xactware for patent infringement — that case is ongoing.  Meanwhile, Xactware filed a series of inter partes review petitions – the subject of the appeal here.

For its part, the PTAB agreed to hear the IPRs — finding initially that the petitions had merit.  Ultimately, however, the PTAB sided with the patentee and found in its final decision that the challenged claims were not proven invalid. On appeal, the Federal Circuit has also affirmed.

Nexus between Secondary Indicia and the Claimed Invention:  The briefing focused on Eagle View’s secondary indicia of non-obviousness.  The service is clearly commercially successful and has been lauded with industry praise for solving solving a long-recognized problem.  Xactware argued, however, that these secondary indicia did not have a close enough nexus with the particular inventions claimed in the patents.  Without discussion, the Federal Circuit concluded that the Board’s finding of nexus was supported by substantial evidence.

Presumption of Nexus. The court did not touch the trickier question of presumption-of-nexus.

Patent claims are presumed patentable and non-obvious.  Thus, any obviousness challenge must present evidence sufficient to overcome that presumption.  Secondary indicia of nonobviousness are akin to rebuttal evidence — only needed if the challenger meets that initial prima facie burden.

Secondary indicia of non-obvousness involve two important elements (1) the indicia itself (such as commercial success or industry praise of a product); and (2) a nexus between the indicia and the claimed invention at issue.  This second element – nexus – is generally more difficult to actually prove.  However, the Federal Circuit has created a presumption-of-nexus doctrine.  We assume a nexus if the patentee shows that the successful/praised product (1) “embodies the claimed features” and (2) is “coextensive with the claimed features.” Brown & Williamson Tobacco Corp. v. Philip Morris Inc., 229 F.3d 1120, 1130 (Fed. Cir. 2000).  Here, the “coextensive” requirement prevents presumption-of-nexus when the claimed invention is just a small component of a multi-component product. However, we have an ongoing debate on how to know when a product has too-many non-claimed-features to still be coextensive with the claims.

Although the parties asked for further guidance on this issue, the Federal Circuit ruled that no determination on presumption-of-nexus was necessary because the patentee had provided actual proof of nexus — that the claimed features were the cause of the success/praise/etc.

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Of note, the first result of my Google search for “xactware” is an advertisement for EagleView. I am amused but not confused. See Eric Goldman, Another Court Says Competitive Keyword Advertising Doesn’t Cause Confusion, Technology & Marketing Law Blog (2018).

Sleepy decision by the PTAB

Patent

In Ex parte Alder (Appeal No. 2017-4809) (PTAB 2019), the PTAB recently found the claimed “snoring detection device” ineligble as directed to the abstract idea of “detecting snoring.”

1. A snoring detection device comprising:

a sensor configured to detect sounds during a breathing cycle; and

a processor configured to: [1] detect a noise level during an inspiration phase of the breathing cycle with said sensor; [2] detect a noise level during an expiration phase of the breathing cycle with said sensor; [3] determine an occurrence of a snore based on a difference in the noise levels detected during inspiration and expiration, the difference comprising a subtraction of the noise level during expiration from the noise level during inspiration.

Alder.  This case followed the other recent PTAB decisions regarding the 2019 Eligibility Guidelines.  In particular, the decision recites elements of the guidelines but then makes no real effort to actually apply the guidelines to the case-at-hand. Rather, the decision follows the usual approach of drawing analogy to the various appellate and Supreme Court cases to find the closest thread.

[Updated to correct typo in name – Alder not Adler]

Supreme Court will hear Section 145 Attorney Fees Case

Patent

by Dennis Crouch

The Supreme Court has granted writ of certiori in Iancu v. NantKwest Inc. on the question:

Whether the phrase “[a]ll the expenses of the proceedings” in 35 U.S.C. § 145 encompasses the personnel expenses the United States Patent and Trademark Office incurs when its employees, including attorneys, defend the agency in Section 145 litigation.

When an examiner refuses to allow an applied-for patent, the applicant can appeal to the USPTO’s internal administrative board (PTAB). If still unsuccessful, the applicant then has a choice of either (1) filing a civil action in federal court or (2) appealing directly to the Court of Appeals for the Federal Circuit. 35 U.S.C. § 145.

The provision authorizing the civil action ends with the statement:

All the expenses of the proceedings shall be paid by the applicant.

In prior cases, the Federal Circuit has held that “all the expenses” means that applicant must pay the expenses win-or-lose, including the USPTO’s taxable costs.  Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010) (en banc). In NantKwest, the USPTO asked also for its attorney fees as part of “all the expenses.” (Note, the USPTO doesn’t hire outside attorneys to handle these, but it calculated its in-house attorney time and requested $100,000+).

The original NantKwest panel sided with the USPTO — holding that  “expenses” include USPTO attorney fees.  However, a 7-4 split of the en banc court changed direction and held that “expenses” does not include attorney fees.  In its decision, the Federal Circuit focused on the traditional presumptive “American rule” on attorney fees (each party pays for its own attorney fees) and found that the “all the expenses” language was not sufficiently “specific and explicit” to overcome the presumptive rule.

Petition Stage Briefing:

In a separate fees case, the Court today issued an opinion in Rimini Street Inc. v. Oracle USA Inc., holding that that the copyright act’s allowance of “full costs” only extends to traditional “taxable costs” and does not include, for instance, expert witness, e-discovery, or jury consultant fees.

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