February 2020

Competing Questions in Supreme Court Petitions

Patent

I enjoy reading competitive questions-presented in Supreme Court petitions.  Although I don’t have evidence to support this, my contention is that respondents have become much more aggressive at recharacterizing the questions from the way they were presented in the original petition.  As that aggression grows, so does the propensity of petitioners to write even more biased questions.

Briefing in Collabo Innovations, Inc. v. Sony Corp., Docket No. 19-601 (Supreme Court 2020), shows how the U.S. Solicitor’s office has gotten on-board the ‘game.’

Compare below:

Collabo Petition:

When U.S. Patent No. 5,952,714 issued in September 1999, the Patent Act provided only two avenues for challenging the validity of the patent’s claims: ex parte reexamination and district court litigation. Shortly thereafter, Congress added a third method, inter partes reexamination, but deliberately chose to exclude older patents from the new proceeding. More than 10 years later, Congress replaced inter partes reexamination with a fundamentally different proceeding, inter partes review, and made it apply retroactively to all prior patents.

 Responsive Brief from U.S. Gov’t

For almost four decades, the United States Patent and Trademark Office (USPTO) has “possessed the authority to reexamine – and perhaps cancel – a patent claim that it had previously allowed.” Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016). In the Leahy-Smith America Invents Act (AIA), Congress replaced one of the existing mechanisms for administrative reconsideration of issued patents with a new administrative reconsideration proceeding known as inter partes review. Congress further provided that inter partes review “shall apply to any patent issued before, on, or after th[e] effective date” of the AIA.
The questions presented are as follows:

1. Does the retroactive application of inter partes review to a patent that issued before the passage of the AIA, violate the Takings Clause of the Fifth Amendment?

2. Does the retroactive application of inter partes review to a patent that issued before the passage of the AIA, violate the Due Process Clause of the Fifth Amendment?

 The questions presented are as follows:

2. Whether the cancellation, following inter partes review, of petitioner’s pre-AIA patent violates the Just Compensation Clause.

1. Whether Congress’s decision to authorize the USPTO to conduct inter partes review of patents issued before the AIA’s effective date is irrational, and thus violates the Due Process Clause.

Notice the competing preambles that talk-past each other without addressing the same key points; The US Gov’t then reordered and rewrote the questions.  On the takings question — petitioner uses the trigger keyword “retroactive application” of IPR while the Gov’t refers to the more neutral “cancellation.”  Cancellation is an important term here because cancellation was already allowed pre-AIA under the reexamination statutes. On the due process question, the Gov’t flips the “rational basis” test to ask instead whether the AIA is “irrational.”  The Gov’t approach on this second question incorrectly suggests that Congressional irrationality is the test or perhaps the issue raised by the petition.  It turns out that neither are true because due process is also concerned with arbitrary government action (as indicated in Collabo’s briefing).

What is most interesting to me here is that these shifts and tilts of the question are all transparent to the Supreme Court justices and their law clerks. Still I expect that the alternate narratives trigger an emotional response; and those emotions are typically the root of decision making even for the highly rational.

 

Contact List Appeal Not Frivolous

Patent

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.

Infringe Ford’s Design Patents by Repairing your Car

Patent,

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.

Columbia v. Seirus: The Sky Is Not Falling

Patent

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:

Short 101 Decision

Patent

In re Noble Systems Corp. (Fed. Cir. 2020)

So far in 2020, the Federal Circuit has issued judgment on 30+ appeals from the USPTO.  The majority of these issued without opinion under the Federal Circuit’s “Rule 36” that allows for no-opinion judgments. In this case, the court changed tack and instead issued a two-sentence opinion. Although short, this is better than non opinion at all:

In this case, the Board affirmed the Examiner’s rejection of claims 1–7 and 9–21 of U.S. Patent Application No. 13/950,907. We affirm the Board on the ground that the claims are patent ineligible under 35 U.S.C. § 101.

Although not expressly stated, by affirming on eligibility, the Federal Circuit did not affirm the PTAB’s parallel finding of obviousness based upon a single prior art reference. In this situation, the creation of an opinion actually creates a greater preclusive impact on the patent applicant than would have existed otherwise. R.36 judgments on the other hand are only seen as preclusive as to issues necessary for the final judgment.

= = = =

The claims at issue are software code that the PTAB found to be directed to “providing e-learning training content to an agent in a call center” which is nothing “other than an abstract idea of organizing human activity.”

18. A tangible computer-readable storage medium comprising instructions that when executed by a computer processor, cause the computer processor to:

receive input identifying an agent to receive a training course where the input comprises an agent identifier, a training course identifier of the training course;

generate training context data comprising a logical association of the agent identifier, the training course identifier;

determine whether the agent is to be provided the training course as fixed-time training or flex-time training, and

if the training course is to be provided as fixed-time training, then request a schedule module in a workforce management system (“WFM”) to schedule a start time for a training session for the agent,

wherein the WFM is configured to [1] generate a first beginning-of-training indicator to an e-learning module comprising the computer processor at the start time of the training session, and [2] generate a second beginning-of-training indicator to a call handling system,

wherein the call handling system ceases offering calls to the agent in response to receiving the second beginning-of-training indicator.

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes, Patent

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

What Counts as a New Argument in Reply

Patent

Apple Inc. v. Andrea Electronics (Fed. Cir. 2020)

After Andrea sued Apple for infringing its U.S. Patent 6,363,345 (noise cancelling audio signal processing), Apple responded with two inter partes review (IPR) petitions.  The PTO initiated both petitions and eventually cancelled all of the claims except 6-9.  Apple then appealed – asking that they all be invalidated.

The invention sets noise-thresholds for a set of frequency groups and subtracts-out amplitude beyond a calculated “future minimum value.”  Claim 6 does this on a periodic basis.

In the original IPR ‘626 petition, Apple argued obviousness of the claims based upon Hirsch over Martin.  In its responsive briefing during the IPR, Andrea argued that Martin does not disclose the “future minimum value” as claimed in claims 6-9.  Then in reply, Apple explained that obviousness becomes clear when seen over multiple periods (sub-windows).  However, the Board refused to consider Apple’s reply – finding that the multiple sub-window argument “raised a new theory of unpatentability for the first time in its reply brief.”

On appeal, the Federal Circuit reversed this holding — concluding instead that the reply brief did not offer a new argument:  “Its reply still asserted that claims 6–9 would have been obvious over Hirsch and Martin [and] relies on the same algorithm from the same prior art reference to support the same legal argument: that Martin
discloses the … “future minimum” limitations of the asserted claims.”  In its decision, the Federal Circuit distinguished prior cases where the reply brief cited to new evidence or new portions of already cited evidence.

  • Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1367 (Fed. Cir. 2015) — reply improperly referenced an embodiment of the prior art not discussed in the petition.
  • Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359 (Fed. Cir. 2016) — reply improperly cited new non-patent literature references.

The issue here is age-old. A good reply brief should do more than simply rehash the exact statements found in the original brief. At the same time, the reply should not be introducing new arguments that go beyond the original brief.  Consider the following interesting article: John F. Muller, The Law of Issues, 49 Wake Forest L. Rev. 1325 (2014)

On remand, the PTAB will now consider Apple’s reply brief and whether its argument is sufficient to render the claims obvious.

Your Patent License Likely Includes an Implied License to Other Patents

Patent

by Dennis Crouch

The decision in Cheetah Omni is an important reminder regarding implied licenses.  The holding solidifies the presumption that a license to a particular patent impliedly includes a license to all parents and continuations that “disclose the same inventions as the licensed patent.”  This extends the court’s prior decision in  General Protecht Group Inc. v. Leviton Manufacturing Co., 651 F.3d 1355 (Fed. Cir. 2011) and builds upon the parallel doctrine of legal estoppel discussed in AMP Inc. v. US, 389 F.2d 448 (Ct. Cl. 1968) and TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009).

Cheetah Omni LLC v. AT&T Services, Inc. & Ciena Corp. (Fed. Cir. 2020), began when Cheetah sued AT&T for infringing its U.S. Patent 7,522,836 (optical communication networks).

In a prior lawsuit, Cheetah had asserted the ‘714 patent against Ciena and Fujitsu (See family tree above). That lawsuit settled with a license agreement and covenant not to sue — relevant here because Ciena and Fujitsu supply AT&T with the accused infringing devices.  The question on appeal: whether the license agreement includes an implied license to the ‘836 patent.

The Ciena/Fujitsu lawsuit centered on the ‘714 patent. The resulting license agreement was directed toward the patent-in suit and also expressly called out certain family patents that were also included in the license:

all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, divisionals, foreign counterparts, reissues, oppositions, continued examinations, reexaminations, and extensions of the Patents-in-Suit … whether filed before, on or after the [License] Effective Date.”

Ciena License Agreement (emphasis added).  Although the list of family-members is extensive, it does not include continuations-of-parents or the specific relationship here: a continuation of a continuation of a parent-in-part (or nephew).

The Federal Circuit asks the question as follows:

In personal terms, because the uncle and grandparent of the ’836 patent, are licensed, is the ’836 patent also licensed?

I’ll pause here to note how the Federal Circuit’s question shifts the focus from the way I presented the case above.  Although the license agreement discusses everything in relation to the patent-in-suit (the uncle ‘714 patent), the Federal Circuit concludes that an important relationship is the “grandparent” relationship between the ‘836 patent and the ”925 patent, neither of which were the patent in-suit.  That shift to the ‘925 patent is important for two reasons (1) we have prior precedent implying a license to grandchildren patents but not to ‘uncles.’ General Protecht; and (2) the linkage between the ‘836 and the uncle ‘714 patent is tenuous because of the continuation-in-part status, whereas the grandchild lineage is straight continuation all the way down. The conclusion here is easy once the focus shifts to the grandparent-grandchild setup.

In General Protecht, the Federal Circuit found that a license to particular patent impliedly licensed the grandchild as well (continuation-of-a-continuation) – “because those continuations disclose the same inventions as the licensed patent.” On appeal, the Federal Circuit ruled that the General Protecht reasoning worked here as well:

Applying the presumption established in General Protecht provides a simple and clear resolution in this case. Because the ’925 patent is an expressly licensed patent in the licenses, the licenses also include an implied license to a continuation of its continuation, the ’836 patent. . . . If Cheetah did not intend its license “to extend to claims presented in continuation patents, it had an obligation to make that clear.” General Protecht.

Slip Op. License agreements are contracts typically interpreted under state-law (or foreign law). This particular style implied license appears to fall under federal law in finding that a patentee is legally estopped from claiming no-implied-license. “Legal estoppel prevents licensors from derogating or detracting from definable license rights granted to licensees for valuable consideration.”

Cheetah makes a couple of extra arguments here.

  • The ‘836 patent covers a different/narrower invention — Doesn’t matter since “the same inventive subject matter was disclosed in the expressly licensed patents.”
  • The parties all knew about the ‘836 patent but didn’t include it — Doesn’t matter because presumption goes against patentee. Further the license included a list of excluded patents and the ‘836 was not on the list.

I’ll note the 2018 decision in Cascades AV LLC v. Evertz Microsystems Ltd., 335 F. Supp. 3d 1088, 1097 (N.D. Ill. 2018) where the district court refused to find an implied license for a divisional.  The court noted differences in the claims — however the Federal Circuit here holds (again) that the focus should be on the disclosure.  That case was settled though so we don’t know how the Federal Circuit would react.

Commissioner for Trademarks: David Gooder

Patent

WASHINGTON – The United States Patent and Trademark Office (USPTO) announced today that U.S. Secretary of Commerce Wilbur Ross has appointed David Gooder to be the new Commissioner for Trademarks. As Commissioner, Gooder will be responsible for oversight of all aspects of the USPTO’s Trademarks organization.

 Gooder has worked for more than 25 years on intellectual property (IP) and brand protection challenges facing iconic global brands. Gooder will begin his new role on March 2, 2020. (more…)

IP in State of the Union Address:

Patent

Trump:

I also promised our citizens that I would impose tariffs to confront China’s massive theft of American jobs. Our strategy worked. Days ago, we signed the groundbreaking new agreement with China that will defend our workers, protect our intellectual property, bring billions of dollars into our treasury, and open vast new markets for products made and grown right here in the United States of America. For decades, China has taken advantage of the United States, now we have changed that but, at the same time, we have perhaps the best relationship we have ever had with China, including with President Xi. They respect what we have done because, quite frankly, they could never believe what they were able to get away with year after year, decade after decade, without someone in our country stepping up and saying: Enough. Now, we want to rebuild our country, and that is what we are doing.

Read the US China Agreement (Phase 1) here: Economic_And_Trade_Agreement_Between_The_United_States_And_China.

With regard to the New NAFTA, IPO has suggested that it does not live-up to the hype with regard to pharmaceutical patent enforcement.  From IPO:

President TRUMP signed the U.S.-Mexico-Canada Agreement (USMCA), the North America trade pact that will replace NAFTA. The White House states that the USMCA “contains new protections for American intellectual property, ensuring strong, effective protection for American innovators and creators.” IPO has expressed disappointment with the agreement and said that “[i]n the future, IPO hopes to work with the Administration and Congress to create a fair and level playing field with our trading partners and establish appropriate safeguards for American innovators.”

IPO’s basic problem with new NAFTA is its lack of provisions focusing on protections for data submitted to regulatory authorities (especially for biologics).

 

Constitutionality of Administrative Patent Judges

Patent

The Federal Circuit has issued two recent Arthrex-related orders of note.

In Arthrex, the Federal Circuit held that the appointment process for PTAB judges (Administrative Patent Judges) violates the Appointments Clause of Article II of the U.S. Constitution.  According to the court, these Judges are “principal officers” and thus must be appointed by the President of the United States (rather than merely the head of the Commerce Dep’t).  I explained in a prior post that the court also “issued a cy-près ruling in an attempt to limit the upset” caused by invalidating the appointments of all these judges.  “In particular, the court invalidated a portion of the statute that limited the PTO’s ability to remove APJs from the board. According to the court, that change was enough to reclassify the PTAB Judges as inferior officers that do not need presidential appointment.”  That decision is now up for en banc rehearing — with three separate petitions filed.

Principal Officers: Three En Banc Petitions in Arthrex v. Smith & Nephew

Impact on Ex Parte Examination: In the pending case of In re: Boloro Global Limited, Appeal No. 19-2349 (Fed. Cir. 2020), the Federal Circuit has ordered the USPTO to explain the impact of Arthrex on ex parte patent examination cases:

Within 14 days from the date of filing of this order, the Director [of the USPTO] is directed to submit a supplemental response, not to exceed 20 pages, addressing whether Arthrex should be extended to ex parte examination cases. Boloro’s reply to that supplemental response, which is not to exceed 10 pages, is due within seven days thereafter.

Order of February 5, 2020.

= = = = =

Polaris Innovations Ltd. v. Kingston Tech. Co., Inc., 2018-1831, 2020 WL 504974 (Fed. Cir. Jan. 31, 2020) is parallel to Arthrex and the Federal Circuit vacated the PTAB IPR decision and “remanded to the Board for proceedings consistent with this court’s decision in Arthrex.”  The interesting aspect of the decision the concurring opinion by Judge Hughes and joined by Judge Wallach.  The pair concluded that they were bound by the prior panel decision in Arthrex, but “disagree with the merits” of the holding.  The opinion explains (1) PTAB judges should be seen as inferior officers and (2) if principal officers, the Arthrex panel’s solution is highly questionable.

I believe that viewed in light of the Director’s significant control over the activities of the [PTAB] and Administrative Patent Judges, APJs are inferior officers already properly appointed by the Secretary of Commerce. But if APJs are properly considered principal officers, I have grave doubts about the remedy Arthrex applied to fix their unconstitutional appointment. In the face of an unconstitutional statute, our role is to determine whether severance of the unconstitutional portion would be consistent with Congress’s intent. Given the federal employment protections APJs and their predecessors have enjoyed for more than three decades, I find no legislative intent to divest APJs of their Title 5 removal protections to cure any alleged constitutional defect. … But, given the high standard for finding non-severability, I cannot say that the Arthrex panel’s remedy was improper.

Id.

Guest Post by Prof. Holbrook: Whose Law Controls On Sale Prior Art in Foreign Countries?

Patent

Guest post by Timothy R. Holbrook, Vice Provost for Faculty Affairs and Asa Griggs Candler Professor of Law, Emory University.

The America Invents Act (AIA) effected a sea change in U.S. patent law.  One of the most significant changes was to shift the U.S. from a “first to invent” to a “first inventor to file” system for allocating priority.  This move is reflected in the restructuring of 35 U.S.C. § 102, the provision that defines prior art for assessing whether an invention is novel and non-obvious.

Aside from the shift in assessing priority, some contended that, by amending § 102, Congress had rejected long-standing Supreme Court precedent that allowed secret uses and sales of the invention to trigger the statutory bars under the 1952 Patent Act.  In Helsinn Health Care S.A. v. Teva Pharmaceuticals USA, Inc., the Supreme Court, in its first case addressing the AIA’s § 102, rejected this argument.

The AIA did more than shift the United States to a first-inventor-to-file system, however.  The AIA also eliminated geographic limits on prior art.  Under the 1952 Patent Act, activities triggering the public use and on-sale bars under then-35 U.S.C. § 102(b) had to take place “in this country.” The elimination the geographic limit greatly expands what qualifies as prior art under the AIA.  Moreover, the Supreme Court’s interpretation of the AIA in Helsinn makes that even more sweeping as secret sales activity that may not be accessible to the broader public can now qualify as prior art.

The removal of the territorial limits, however, also presents a different question: whose law will govern whether an invention is deemed “on sale”?  Under the 1952 Patent Act, to be on sale, an invention (1) had to be the subject of a formal commercial offer for sale and (2) had to be ready for patenting.  Whether the invention is subject to a formal commercial offer is assessed from basic contract principles.

In the foreign context, however, what constitutes a formal commercial offer may vary from U.S. law. Because these proposed or completed sales transactions could take place outside of the United States, the law of another country generally would govern any potential or actual agreements.

The elimination of the geographic limits to on-sale activity now presents a choice of law problem.  On one hand, one could argue that the law of the relevant country should control: the parties in the transaction have that law in mind and not necessarily U.S. patent law.  On the other, if the courts were to rely on foreign law to assess whether the invention is “on sale” under § 102(a) of the AIA, then what qualifies as on-sale prior art would vary widely, depending on the law of the country in which the commercial activity took place.  The same activity might qualify as prior art in one context and not in another.  Courts, therefore, would be better of creating U.S. law defining triggers on-sale prior art regardless of where the activity occurred.

So what route will the courts take?  I suspect it will be the latter, using Federal Circuit law to define the contours of on-sale prior art even when the activity arises overseas.

The Federal Circuit addressed an analogous situation in interpreting the statutory bars under § 102(b) of the 1952 Patent Act.  After the Supreme Court reworked the on-sale bar test in Pfaff v. Wells Electronics, Inc., the Federal Circuit in Group One, Ltd. v. Hallmark Cards, Inc., clarified step one of the two-part test by requiring a formal commercial offer for sale.  In so doing, the court confronted a similar choice of law issue: should the law of the state governing the transaction dictate whether the invention was on sale, or should Federal Circuit law?

The court opted for the latter, rejecting the district court’s use of Missouri law to determine whether the invention was on sale.  The court reasoned that reliance on state law would create variability in interpreting a federal statute and emphasized “the importance of having a uniform national rule.” As the court stated:

To hold otherwise would potentially mean that a patent could be invalid in one state, when the patentee’s actions amounted to an offer under the laws of that state, and valid in a second state, when the same actions did not amount to an offer under the laws of that second state. Such a result is clearly incompatible with a uniform national patent system.

If past is prologue, one could easily see the court reaching the same conclusion with respect to the use of foreign law to interpret § 102(a) of the AIA.  Applying the law of various countries where commercial activities arise could lead to widely varying standards for on-sale prior art.  Indeed, the situation would be fare more complex than applying state law not only because of differing legal standards but also differing legal systems.  It is a more complicated analysis for U.S courts to discern foreign law than to discern the law of a given state.  It seems highly likely, therefore, that the Federal Circuit choose to apply its own law, using basic contract principles, in interpreting § 102(a) on-sale prior art that arises in foreign countries.

The situation at the international level, however, is far more complex than refusing to apply state law.  Activities in a foreign country would be assessed, and indirectly regulated, through the application of a U.S. legal standard, implicating concerns of the extraterritorial application of U.S. law.  Unlike the state law situation – where state law is subordinate to federal law – the Federal Circuit will be applying the law of the United States to acts in a co-equal sovereign. Actors in the relevant country may be unaware that their commercial behavior is violating U.S. patent law if there are significant substantive differences. That said, I would be surprised if courts consider this activity to trigger the presumption against extraterritoriality, in the same way they failed to truly account for the presumption in the patent exhaustion context.

The removal of geographic limits on public uses and on-sale prior art is a rather sweeping change.  As yet, the importance of the removal of these territorial limits has not been explored by the courts.  Particularly as it relates to on-sale prior art, courts likely will be applying U.S. law to activities arising in foreign countries in the interest in having a uniform standard.

Tim Holbrook is Vice Provost for Faculty Affairs and Asa Griggs Candler Professor of Law at Emory University.  This essay is drawn from part of his article, What Counts As Extraterritorial in Patent Law?, 25 B.U. J. SCI. & TECH. L. 291 (2019).

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Unenforceability, Preclusion, and Interlocutory Appeals

Patent

by Dennis Crouch

I wrote an essay last month discussing the rarity of certified questions on appeal under 28 U.S.C. § 1292(b). See, Dennis Crouch, Certified Questions on Appeal under § 1292(b), Patently-O (January 31, 2020).

In Feit Electric Co. v. CFL Tech. (Fed. Cir. February 3, 2020)[20-110 CAFC denial], the Federal Circuit has denied Feit’s petition for discretionary review of a certified question.

The case involves CFL Tech’s U.S. Patent No. 6,172,464 that was previously held unenforceable (back when owned by Ole Nilssen).  However, the unenforceability decision came before the law of unenforceability changed in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc).  Therasense made it harder to find patent unenforceable.  Thus, if re-judged under the revised law, the ‘464 patent might actually be enforceable.

Change of Law: Unenforceability of the patent has been fully litigated and decided and issue preclusion would normally apply.  The certified question on appeal is whether the change-of-law exception to issue preclusion applies in this case – citing primarily Dow Chemical Co. v. Nova Chemicals Corp., 803 F.3d 620 (Fed. Cir. 2015) (finding that the Supreme Court’s decision in Nautilus was an “intervening change in law”).

The CFL Tech district court applied the change-of-law doctrine under Dow and thus found no issue preclusion. However, the district court also noted the case of Morgan v. Dep’t of Energy, 424 F.3d 1271 (Fed. Cir. 2005). In Morgan, the Federal Circuit limited the change-of-law doctrine in cases involving “clarifying” interpretations. Uncertain in its opinion, the district court then certified the question for discretionary interlocutory appeal.

Discretion: Here, the appellate court used its discretion to not hear the appeal, but then went ahead to decide that the district court got it right — no preclusion.

Feit and the amici read too much into Morgan. All that Morgan rejected was a version of the change-in-law exception “so broad” that it would deny preclusion based on judicial decisions that merely “clarify earlier interpretations of a statute.” It did not reject the higher standard for a result-altering intervening change in law required by Dow Chemical, which was applied in this case based on the significant change of law made by this court in Therasense.

Thus, although the Federal Circuit refused to hear the appeal, it went ahead and decided the issue.

Advisory Dicta: I would call the appellate decision advisory dicta — and thus would not become “law of the case” since the court did not actually hear the appeal.  However, from a practical standpoint the district court will (and should) follow the guidance laid down here.  The Federal Circuit took the same approach in Heat Techs., Inc. v. Papierfabrik August Koehler Se, 2019 WL 3430477 (Fed. Cir. July 18, 2019) (denying petition for interlocutory appeal, but explaining its interpretation of the law in the denial order).

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Cost of Accessing PACER

Patent

National Veterans Legal Services Program (NVLSP) v. US (Fed. Cir. 2020)

Today, the Federal Circuit heard oral argument in this case involving the $0.10 per page fee for downloading documents from PACER. The basic argument here is that “PACER fees must be limited to PACER costs.”

This case challenges the legality of user fees charged by the federal judiciary for access to records via its Public Access to Court Electronic Records system, or PACER. It is undisputed that these fees far exceed the costs of providing such records—costs that have decreased exponentially even as fees have risen. The district court held that PACER fees have been unlawfully set above the amount authorized by Congress and found the government liable for the excess. This appeal concerns whether the unlawful excess identified by the district court was too little (the plaintiffs’ view), too much (the government’s view), or just right.

Opening brief. [PACER Case Opening Brief]. In 2002, modified the law with regard to the cost of providing electronic docketing information by indicating that the Judicial Conference my “prescribe reasonable fees” to access information, but may do so “only to the extent necessary.”

The appeal here is interlocutory based upon the certified question of whether the statute authorizes the US Courts “to charge more in PACER fees than is necessary to recoup the total marginal cost of providing access to records through PACER?”  In its briefing, the U.S. Government also argues that the case as a whole lacks jurisdiction under the Little Tucker Act.  A large number of amicus briefs were also filed supporting the petition and arguing that this is a very important issue involving transparency and access to the court system.

  • Retired Judges (including Judge Posner): Fees reduce judicial transparency and legitimaxy
  • ACLU: Access protected by 1st Amendment
  • Casetext, etc.: Fees curtail legal research
  • Sen. Lieberman: (Sponsor of 2002 law discussed above) Fees may not be above costs of providing access.

 

Access to Prior Art Initiative of the USPTO to Ease Importation of Prior Art References from Parent Cases

Ethics

By David Hricik, Mercer Law School

The USPTO is a couple of years into its Access to Prior Art Initiative, which in its first phase was designed to create for the examining corps a single list of references combining those cited in an application (by applicant and examiner) and references from the immediate U.S. parent applications (cited by applicant and examiner, but not third parties).  In the first phase, if an application met criteria for inclusion (among other things, only certain Art Units were included), the Office would notify the practitioner that the prior art was automatically imported, reducing the burden o cite that art.  The project was intended to then expand to include foreign counterpart and PCT applications.

In looking for exactly how broadly this has been implemented, I was unable to find much information after January 2019.  As Carl Oppedahl recently pointed out, it’s a great idea and means to avoid unnecessary work and issues about disclosure.  If you’ve had any involvement and can share, that’d be great.  I’m curious, for example, if the process is working: for example, is the importation complete and accurate?   I’ll also reach out to the Office and see if I can learn anything and will amend this post if so.

While I can understand why the list might not automatically include third party submissions, the omission does create a potential “trap” where a practitioner in the child fails to cite third-party art from the parent which was material to the parent, or is (or becomes) material to the child.