May 2020

Jury Verdicts and Forward-Looking Royalties

Patent

TCL Communication Technology Holdings Limited, et al., Petitioners v. Telefonaktiebolaget LM Ericsson, et al. (Supreme Court 2020)

Petition for writ of certiorari:

Technical standards created by standard-setting organizations—such as the 2G, 3G, and 4G wireless communication standards—are ubiquitous in the modern economy and enable the interoperability of products made by different manufacturers. To facilitate the implementation of standards and prevent abusive practices, most standard-setting organizations require [participating] companies that believe their patents are essential to practicing a standard to make binding commitments to license their patents on fair, reasonable, and nondiscriminatory (FRAND) terms. When the holder of a standard-essential patent [first makes a commitment, but later] refuses to honor that commitment, prospective licensees may seek a ruling that the FRAND commitment has been breached and an injunction ordering specific performance (i.e., forming a new license with FRAND terms and conditions).

In the decision on review, the Federal Circuit held that the patent owner accused of breaching its FRAND commitment had a Seventh Amendment right to have a jury set the royalty rate in the injunction requiring it to license its worldwide portfolio of patents on FRAND terms, simply because the injunction included a backward-looking royalty payment proposed by the patent owner as part of the consideration that the licensee was required to pay to receive specific performance.

The question presented is:

Whether a patent owner required to license its standard-essential patents on fair, reasonable, and nondiscriminatory terms has a Seventh Amendment right to a jury trial in a proceeding seeking the equitable relief of specific performance.

CAFC: Arthrex Inoculated IPRs that had not yet reached Final Written Decision

Patent

Caterpillar Paving Products Inc. v. Wirtgen America, Inc. (Fed. Cir. 2020)

In 2018, Wirtgen petitioned the USPTO Director to institute an inter partes review (IPR) against Caterpillar’s US9045871 (paving machine).  The PTO initiated the IPR, and eventually concluded that the challenged claims (as well as proposed substitute claims) were all unpatentable.

On appeal, Caterpillar asked the court to vacate and remand the decision for a new-hearing with a new-panel – citing Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019).  However, the court has refused:

Unlike in prior cases in which this court has recently vacated and remanded, Arthrex issued before the Board’s final written decision in this case.

The theory of Arthrex is that the court’s cancellation of PTAB judge job security instantly cured the Constitutional appointments problem (making them inferior officers rather than principal offiers).  Here, the Arthrex cure (Oct 2019) came just before the Caterpillar final judgment (Nov 2019). Caterpillar argued that it suffered under “a year’s worth of constitutional violations.” On appeal, however, the Federal Circuit ruled that the inoculation was complete against any IPR that had not yet reached final judgement.

Caterpillar, coupled with Cienna Corp., look to place a hard limit on the number of cases requiring new paneling following Arthrex.

Now Precedential: IPR Petitioner who Waived Arthrex issue cannot Raise it on Appeal after Losing the IPR

Now Precedential: IPR Petitioner who Waived Arthrex issue cannot Raise it on Appeal after Losing the IPR

Patent

Cienna Corp. v. Oyster Optics, LLC and Andrei Iancu (Fed. Cir. 2020)

In this case, the Federal Circuit held that an IPR petitioner did not have a right to raise the Arthrex appointments issue on appeal unless the issue was first raised before the PTAB. The court’s basic reasoning is actual and equitable waiver.

The problem with Ciena’s request is that, unlike the patent owner in Arthrex, Ciena requested that the Board adjudicate its petition. It, thus, affirmatively sought a ruling from the Board members, regardless of how they were appointed. Ciena was content to have the assigned Board judges adjudicate its invalidity challenges until the Board ruled against it. Under those circumstances, we find that Ciena has forfeited its Appointments Clause challenge. . . .

In this case, Ciena not only consented to adjudication by the Board, but it affirmatively sought to delay any consideration of its patent challenges by seeking a stay of the district court litigation initiated by Oyster. Any constitutional concern regarding the appointment of the Board judges in this case is negated by Ciena’s forfeiture.

This decision was originally released in January 2020 as a non-precedential opinion. However, on petition from the USPTO, the court has now re-designated the decision as precedential.

In its petition for redesignation, the PTO explained that losing petitioners “continue to raise the same argument [on appeal]. A precedential opinion would reduce that motions practice and save the Court time.”  Examples of pending cases:

  • Moderna Therapeutics v. Protiva Biotherapeutics, Nos. 20-1184, -1186, ECF No. 37 (Fed. Cir. motion filed Mar. 6, 2020);
  • Valve Corporation v. Ironburg Inventions, Nos. 20-1315, -1379, ECF No. 24 (Fed. Cir. motion filed Feb. 28, 2020);
  • Valve Corporation v. Ironburg Inventions, No. 20-1316, ECF No. 22 (Fed. Cir. motion filed Feb. 22, 2020);
  • Palo Alto Networks, Inc. v. Finjan, Inc., No. 19-2151, ECF No. 56, at 4, 32, 49 (Fed. Cir. blue brief filed Nov. 27, 2019);
  • United Fire Protection Corp. v. Engineered Corrosion Solutions, No. 20-1272, ECF No. 16 (Fed. Cir. motion filed Jan. 9, 2020);
  • Comcast Cable Comm. v. Promptu Sys. Corp., No. 19-1947, -1948, ECF No. 26, at 66 (Fed. Cir. blue brief filed Nov. 15, 2019);
  • Comcast Cable Comm. v. Promptu Sys. Corp., No. 19-2287, -2288, ECF No. 18, at 66 (Fed. Cir. blue brief filed Nov. 15, 2019);
  • Baby Trend, Inc. v. Wonderland Nurserygoods, No. 19-2309, ECF No. 28, at 65-66 (Fed. Cir. corrected blue brief filed Feb. 24, 2020).

 

 

Q. Todd Dickinson Will be Missed

Patent

Q. Todd Dickinson passed away this week at age 67.  Todd has been a leader of the intellectual property community for many years and certainly had a major impact on my life and career.  Thank you Todd!

He was PTO director when I was a law student back in 2001.  At the time, Prof. Doug Lichtman and I were studying data on patenting and I remember being amazed at the rapid jump in the number of patents being issued per year.

The change reflected Dickinson’s approach to patent applicants — identifying inventors and patentees as the “clients” served by the PTO.  The change also reflected his leadership within the PTO that was apparent following the antagonism under Jim Rogan.  We met in person at the AIPLA midwinter institute in 2005 and enjoyed dozens of meetings, panels, discussions, phone calls and emails.  It was always more enjoyable when you were there!

Great tributes from Gene & Renee Quinn and Joff Wild.

Windy City IPR: Are Joinder Decisions Appealable after Thryv?

Patent

by Dennis Crouch

In Facebook, Inc. v. Windy City Innovations, LLC, 953 F.3d 1313 (Fed. Cir. 2020), the Federal Circuit held that the PTAB had improperly allowed Facebook to self-join to its own already-granted inter partes review (IPR) proceeding.  Prof. Vishnubhakat explained:

The panel held that § 315(c) does not authorize same-party joinder, i.e., does not allow a petitioner who has filed an inter partes review petition to join its own, earlier inter partes review petition. The panel also held that § 315(c) does not authorize issue joinder, i.e., does not allow joinder that would introduce new issues material to patentability, such as new patent claims or new grounds for cancellation.

Saurabh Vishnubhakat, Joinder and the One-Year Time Bar in Inter Partes Review, Patently-O (March 20, 2020).  Facebook had wanted to join its prior case, because its later-filed case would have otherwise been time-barred under § 315(b)(1-year post-service timeline does “not apply to a request for joinder”).

Facebook v. Windy City was decided one month before the Supreme Court issued its opinion in Thryv, Inc v. Click-To-Call Techs., LP, 18-916, 2020 WL 1906544 (U.S. Apr. 20, 2020).  In Thryv, the court held that the USPTO’s interpretation of the § 315(b) one-year time-bar was not reviewable on appeal based upon the “no appeal” provision of § 314(d).

(d) No Appeal.— The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

35 U.S.C. § 314(d). Thryv further found that the no-appeal provision bars a party from using its appeal from a final written decision to overturn an institution-stage decision.

[NOTE – in an upcoming IPO Webinar,
I’ll be addressing the overlay between
Thryv and Windy City on a panel along
with Greg Castanias (Jones Day) and
Scott McKeown (Ropes & Gray).]

Federal Circuit Call for Briefing: Following Thryv, the Federal Circuit has now called for additional briefing in Windy City — asking the parties (as well as the USPTO) to address “the effect, if any, of the Supreme Court’s decision in Thryv on our decision in this case.” (10 day June 10 deadline – extension granted).

In her letter to the court, Facebook’s attorney Heidi Keefe argues that “Thryv confirms that Section 314(d) bars review of the PTO’s Section 315(c) institution and joinder decisions.”

Windy City’s claim that joinder was improper amounts to an argument that the PTO “should have refused ‘to institute an inter partes review’” of Facebook’s follow-on petitions and Thryv makes clear that Section 314(d) precludes review of that claim.

ltr.Keefe.  I expect that Keefe is correct in her conclusions — that the joinder question here was effectively an institution question and thus barred from being appealed.  However, Thryv does not expressly decide the issue — giving the Federal Circuit some amount of textualist wiggle room.  The outcome in this case will likely let us know whether the Federal Circuit will give Thryv its full weight or instead attempt to cabin-in the decision.

If the PTAB Denies Institution Based on a Reference under Phillips, Does that Mean it was not Material Under BRI?

Ethics

By David Hricik

Mercer Law School

The decision in Jaguar Land Rover Ltd.v. Bentley Motors Ltd (E.D. Va. Apr. 30, 2020) (here) merely denied an amendment to add a counterclaim for inequitable conduct. There are a lot of those. But it is interesting because it brings into play the new approach PTAB uses of determining unpatentability with the Therasense approach to determining materiality based upon the broadest reasonable interpretation.

The accused infringer filed for institution of an IPR of the ‘828 Patent based upon what the parties called the Porsche 959 prior art. The accused infringer also defended the suit for infringement of the ‘828 patent by, among other things, asserting the Porsche 959 prior art anticipated.

While the IPR petition based upon the Porsche 959 art was pending before the PTAB, the accused infringer sought to amend its answer to allege a counterclaim based upon the failure to disclose the Porsche 959 art to the Office during prosecution, asserting inequitable conduct.

On February 20, 2020, the PTAB denied institution, but it did so based upon the November 2018 rule change to use Phillips interpretation for unpatentability.  ( here) So, we know that, at least based on the PTAB’s construction and the record made there, under Phillips the Porsche 959 art didn’t anticipate.

But, in denying the motion to amend the answer to add inequitable conduct, the trial court relied upon the PTAB decision to hold that it would be futile to permit the amendment. It reasoned that it was implausible that the Porsche 959 art could have been but-for material because of the PTAB’s decision.

But Therasense requires materiality be based upon the broadest reasonable interpretation standard, not Phillips. Thus, the PTAB decision doesn’t decide materiality: if anything, it decided there was no anticipation based on the PTAB’s claim construction under Philips.

Even weirder, the trial court held in denying amendment that it could still find invalidity based upon the Porsche 959 prior art. If anything, that would be precluded  by the PTAB’s decision (I’m not even sure that’s right, however). Finally, and I may be misremembering (I’m grading finals!), but I thought there was also Federal Circuit precedent finding materiality even on submitted art? (I know you can find invalidity that way.)

Supreme Court on Generic Functionality for Website Designs.

Patent

USPTO v. Booking.com B.V., Docket No. 19-46 (Supreme Court 2020)

Oral arguments are set in this trademark case for May 4, 2020 [Listen Live at 9:00 am EST].  Booking.com is seeking to register rights on their eponymous service BOOKING.COM. The basic question is whether the addition of “dot com” to a generic term can result in a protectable trademark.

The company’s actually uses the word “booking” in its typical generic form: “The World’s #1 Choice for Booking Accommodations.”  However, the company presented factual (survey) evidence that the addition of dot-com transforms the term in the eyes of consumers. Still, the PTO refused to register the trademark — holding that the “.com” addition is never enough.  The PTO’s approach here relates back to the 1888 decision in Goodyear Co. v. Goodyear Rubber Co., 128 U.S. 598 (1888).  At the time “Goodyear rubber” was seen as a generic term for a type of vulcanized rubber, and the Supreme Court held that adding the term “Company” would not change the matter — even if used for 20+ years with public understanding.

[T]he name of “Goodyear Rubber Company” is not one capable of exclusive appropriation. “Goodyear Rubber” are terms descriptive of well-known classes of goods produced by the process known as Goodyear’s invention. Names which are thus descriptive of a class of goods cannot be exclusively appropriated by any one. The addition of the word “Company” only indicates that parties have formed an association or partnership to deal in such goods, either to produce or to sell them. Thus parties united to produce or sell wine, or to raise cotton or grain, might style themselves Wine Company, Cotton Company, or Grain Company; but by such description they would in no respect impair the equal right of others engaged in similar business to use similar designations, for the obvious reason that all persons have a right to deal in such articles, and to publish the fact to the world. Names of such articles cannot be adopted as trade-marks, and be thereby appropriated to the exclusive right of any one; nor will the incorporation of a company in the name of an article of commerce, without other specification, create any exclusive right to the use of the name.

Id.   Goodyear Co. was later followed by dot.com cases.  See, In re Oppedahl & Larson LLP, 373 F.3d 1171 (Fed. Cir. 2004) (patents.com not registrable). However, in Oppedahl, the Federal Circuit noted that there is no “rule that always disregards the use of ‘.com’.” Id. This sets up the question as presented by the U.S. Gov’t seeking to bar registration of the mark:

Whether, when the Lanham Act states generic terms may not be registered as trademarks, the addition by an online business of a generic top-level domain (“.com”) to an otherwise generic term can create a protectable trademark?

My question in the case is whether the operation of the internet has changed so substantially in the past 20 years so as to require a rethinking.  These days, almost no one types “.com” into their browser window but instead that portion is filled-in automatically.  Likewise, many people (like myself) primarily use Booking.Com via an app rather than a web browser (image below).  In the App setup, “.com” is merely a moniker and offers no direct functionality.

I had expected TLD’s to have lost all of their functionality by now — being eclipsed by other technology. They have continued to hold on, but I still expect that their supremacy (if it still exists) will only be for another decade or less.  Hopefully, the Supreme Court will recognize that its decision here need not assume that our current approach is locked-in-stone.

Can you Select England as the Forum for US Patent Litigation?

Patent,

In re Fortinet (Fed. Cir. 2020)

British Telecom (BT) and Fortinet have a written agreement associated with their global commercial relationship that establishes the courts of England as the “exclusive jurisdiction” for resolving both “contractual and/or non-contractual obligations” between the parties.  Despite that agreement, BT sued Fortinet in U.S. Federal Court (D.Del.) alleging infringement of its U.S. patent.

The district court refused to dismiss the case on forum-non-conveniens — holding that it was not clear that BT would have an alternative forum.  In particular, it is not clear that an English court would entertain allegations of infringement of a U.S. patent that occurred U.S. soil.

I need not resolve whether Plaintiffs’ claims are covered by the Frame Agreement because Fortinet has failed to demonstrate that an English court would have jurisdiction over Plaintiffs’ patent claims.

British Telecomm. PLC v. Fortinet Inc., 424 F. Supp. 3d 362, 369 (D. Del. 2019) (District Court Decision).

Denial of a motion-to-dismiss is interlocutory and thus not immediately appealable as a right. Still, Fortinet petitioner for writ of mandamus from the Federal Circuit.  However, that court has now denied the petition.  The court’s basic conclusion is that Fortinet has not the high standard required for mandamus: “it simply is not indisputably clear that Fortinet has established a right to dismissal under the doctrine of forum-non-conveniens.”

The leading precedent in Fortinet’s favor is Atlantic Marine Construction Co. v. United States District Court for Western District of Texas, 571 U.S. 49 (2013). In Atlantic Marine, the Supreme Court explained that “a valid forum-selection clause should be given controlling weight in all but the most exceptional cases.”  A major difference here is that this involves a request to move litigation to a foreign venue while Atlantic Marine involved transfer between U.S. districts courts that both had proper subject matter jurisdiction.  As such, the Supreme Court in Atlantic Marine did not consider “whether courts are precluded from considering the availability of
the alternative forum in the course of conducting its forum non conveniens doctrine analysis.”