Another week, another mandamus. This case is parallel to In re Samsung discussed earlier where Ikorongo divided its patent rights between Ikorongo-Texas (right to enforce in W.D.Tex.) and Ikorongo-Tech (right to enforce elsewhere in USA). In Samsung, the appellate court rejected this brazen attempt to manipulate venue. Here, the court found “no basis for a disposition different from the ones reached in Samsung” and ordered transfer to N.D.Cal.
President Biden is expected to sign an executive order today focusing on competition that includes 72 separate initiatives. The following are a few.
Non-Compete Agreements: About half of private-sector businesses require non-compete agreements. This stifle’s competitions and limits workplace mobility. The FTC is being asked to either ban or significantly limit non-compete agreements.
License Requirements: About 1/3 of jobs in the US require some sort of license from a state authority. These licenses limit mobility and lock folks out of certain jobs. The FTC is being asked to ban occupational licensing requirements that impede economic mobility.
Prescription Drugs: Drug prices are higher in the US than in any other country — even for the identical product. This is largely a construct of Federal Law. The FDA is directed to begin importing prescription drugs from Canada (in cooperation with states and tribes); The HHS is directed to support for generic and biosimilars and create a comprehensive plan (within 45 days) to combat high prescription drug prices and price gouging; FTC is asked to ban “pay for delay” agreements between patent owners and generic competitors.
Right to Repair: The FTC is encouraged to “limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs.” This is particularly focused on farmers, but will likely extend to other areas.
Hearing Aids: Sell these over the counter.
Hospitals: Complete implementation of hospital price transparency rules. Recognize that hospital mergers are usually not good for patients.
Obamacare: Do a post-Trump revamp of the National Health Insurance Marketplace to standardize plans and make it much easier for consumers to understand and comparison shop.
Internet: Restore net neutrality rules; limit early termination fees for home internet; require more transparency in pricing; limit private deals between ISPs and landlords that limit tenant access to competition and benefit the landlord.
Internet Mergers: Apply greater scrutiny of mergers, especially by dominant internet platforms.
Privacy: The FTC is encouraged to develop rules on surveillance and the accumulation of data by big-tech and to bar unfair competition in internet marketplace.
Passenger Train: Encourage the Surface Transportation Board to require railroad track owners to provide rights of way to passenger rail and to strengthen their obligations to treat other freight companies fairly.
More to come on this topic. Note, the statement does not mention patent rights or intellectual property, but several of the orders have IP implications.
At the behest of several leading Senators, the USPTO has begun a study on the “Current State of Patent Eligibility Jurisprudence.” To that end, the agency is seeking comments from the public that will be due by Early September. The agency would like input from various stakeholders, including inventors, owners, investors, licensees, users, and patent attorneys. The agency appears to be looking from key insight regarding the actual experience of parties involved — telling a story of the impact of patent eligibility doctrine.
Acting Director Hirshfeld has made clear in some settings his predilection for broad subject matter eligibility, and the wording of the questions suggest that the Agency is looking for reasons to decry the current state of narrowed eligibility.
The exact topic of comments are not limited, but the Agency has created a list of 13 questions that may guide input. I have paraphrased:
How does eligibility jurisprudence impact business in your tech area (be specific)?
What impacts have you experienced because based upon changes over the past decade? This includes patent prosecution, enforcement, R&D, employment, innovation, sales, competition, etc.
How is eligibility jurisprudence impacting the following: quantum computing; AI; precision medicine; diagnostic methods; pharmaceutical treatments; and other computer-related inventions?
How does US eligibility jurisprudence differ from your experience in other leading patent regimes?
Provide details on cases that were denied based upon eligibility in the US, but were allowed in other leading patent regimes.
Explain if US eligibility doctrine has shifted research/investment/jobs to other parts of the world.
Explain if US eligibility doctrine has shifted IP strategy toward trade secrecy.
Explain if US eligibility doctrine has shifted how you license or purchase patents.
Explain how US eligibility doctrine has shifted your litigation strategies.
What is the impact of US eligibility jurisprudence on the “global strength of US intellectual property.”
What is the impact of US eligibility jurisprudence on the US economy as a whole.
What is the impact of US eligibility jurisprudence on particular market areas?
How is the public impacted by the state of US eligibility jurisprudence?
Timberland has been selling its iconic boots back in 1973 – almost 50 years ago. Actually, at the time the company name was Abington Shoes, but quickly changed its name to Timberland Boot because of the popularity. Timberland did not patent or register a copyright the design, and the market it rife with copycat boots.
Over the past several years, Timberland has been attempting to register the shape of the boots as protectable trade dress. However, the USPTO’s Trademark Trial & Appeal Board (TTAB) rejected the application, finding that the the company had failed to demonstrate that the boot shape had acquired secondary meaning in the eyes of consumers. The examiner had also rejected the trade dress registration as improperly functional, but the TTAB did not reach that issue.
In a new lawsuit, Timberland has asked a district court judge to overturn these rulings and find that the trade dress is distinctive and registrable.
Eligibility and indefiniteness are both judged primarily as questions of law, although both can occasionally depend upon some underlying factual finding. And, even when questions of fact are at issue, it is a judge (rather than a jury) that hears the evidence and determines the facts.
In recent years, eligibility determinations have moved forward in the litigation context and become a true “threshold test.” See Bilski v. Kappos, 561 U.S. 593 (2010). Often, eligibility is the first substantive determination in patent litigation and it is typically decided either on a motion to dismiss (12(b)(6)) or motion on the pleadings (12(c)).
With all the parallels, it is not surprising that some litigants are also suggesting that indefiniteness be decided at the pleadings stage.
The recent motion for dismissal by SquareSpace is on point — arguing that DataCloud’s patent claims indefinite functional limitations parallel to those rejected by the Supreme Court in O’Reilly v. Morse. [Brief in Support of Motion to Dismiss].
The brief walks through Supreme Court history in indefiniteness associated with functional claim limitations.
O’Reilly v. Morse, 56 U.S. (15 How.) 62 (1854)
Corning v. Burden, 56 U.S. (15 How.) 252 (1854)
Burr v. Duryee, 68 U.S. (1 Wall.) 531 (1864)
Fuller v. Yentzer, 94 U.S. 288 (1877)
Risdon Iron & Locomotive Works v. Medart, 158 U.S. 68 (1895)
Westinghouse v. Boyden Power Brake Co., 170 U.S. 537 (1898)
Busch v. Jones, 184 U.S. 598 (1902)
Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245 (1928)
General Electric Co. v. Wabash Appliance Corp., 304 U.S. 364 (1938)
United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942)
Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946)
Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 336 U.S. 271 (1949) (“Graver I”)
SquareSpace filed its motion to dismiss in May and DataCloud has recently filed an amended complaint and has argued that the amended complaint renders the motion “a nullity.” The new complaint adds three additional patents and also includes an allegation that attempts to skirt the indefiniteness question:
A person skilled in the art … would understand that each of the limitations and/or steps in the claims … are defined by what they do (not what they are). Even if any limitation and/or step of the claims is “functional”— and none are—the teachings of the … Patent provides to any skilled artisan sufficient structure, material, or acts necessary to perform the recited function or provides information sufficiently identifying a finite group of structures, materials, or acts necessary to perform the recited function that were well known to skilled artisans at the priority date.
Amended Complaint.
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Lawyers on the brief include James Dabney and Sue Robinson (as well as others).
I have been following the patent ownership lawsuit of Bio-Rad Laboratories, Inc. v. International Trade Commission and 10X Genomics. The case is now pending on a petition for en banc rehearing before the Federal Circuit.
Several former Bio-Rad employees left to form 10X Genomics. While at Bio-Rad, the individuals began development of a number of ideas but did not complete conception or reduction-to-practice. Some months later, after leaving and forming 10X, they completed the inventions and filed patent applications. Bio-Rad now argues that it has partial ownership rights to the inventions based upon the inventor’s contributions while employees.
In the appeal, the Federal Circuit sided with 10X, holding that the terms of the employment agreement were limited to Intellectual Property, and pre-conception ideas were not enough.
Now, Bio-Rad has petitioned for en banc rehearing arguing that the decision is contrary to a host of Federal Circuit decisions:
First, the panel’s decision conflicts with this Court’s precedent that employment contracts such as Bio-Rad’s are to be given their full import and not limited to a final conceived patentable invention. See, e.g., AT&T v. Integrated Network Corp., 972 F.2d 1321 (Fed. Cir. 1992).
Second, the panel’s decision also conflicts with precedent regarding joint inventorship that can occur serially over time and that contribution of a single idea to a final invention can qualify as joint inventorship, which is a protectable right subject to contract. See, e.g,. Vanderbilt Univ. v. ICOS Corp., 601 F.3d 1297 (Fed. Cir. 2010). Precedent does not impose a temporal restriction on when a person can become a co-inventor. The analysis requires comparing the significance of the work alleged to be an inventive contribution to the claims as a whole. Fina Oil & Chem Co. v. Ewen, 123 F.3d 1446 (Fed. Cir. 1997).
Bio-Rad is correct that the Federal Circuit appears to have been too tight in its statements of the law, but it may well be that the contributions made while employees at Bio-Rad were still insufficient.
VoIP-Pal.com, Inc. v. Apple, Inc., No. 20-1809 (Supreme Court 2021)
VoIP-Pal sued Apple for infringing its U.S. Patent Nos. 9,537,762; 9,813,330; 9,826,002; and 9,948,549. Apple filed four petitions for for inter partes review, but all four were denied by the PTAB. Judge Koh then dismissed the infringement case in Apple’s favor–finding that all asserted claims were directed to ineligible subject matter. On appeal, the Federal Circuit affirmed without opinion (R.36). Now, VoIP-Pal has petitioned for writ of certiorari. The case is now part of a trio of eligibility cases pending before the Court. See American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, No. 20-891; iLife Technologies, Inc. v. Nintendo of America, Inc., No. 20-1760.
The patents here are all directed routing calls using Voice Over Internet Protocol (VoIP) communications. The basic idea is to rout calls based upon a user identification, rather than using key parts of a telephone number (such as country codes; area codes; and other signals). Once the recipient ID is entered, the system would look-up their location and route the communications accordingly. Judge Koh found the claims were directed to the abstract idea of “Routing a communication based on characteristics of the participants.” Judge Koh did not attempt to define “abstract idea,” but noted some hallmarks found in VoIP’s claims:
Claim 1 is directed to an abstract idea: (a) the claimed method discloses only generalized steps drafted in purely functional terms; (b) it is analogous to well-known, longstanding practices; and (c) it does not recite an improvement in computer functionality.
In its petition for writ of certiorari, VoIP-Pal asks three questions:
1. What is the appropriate standard for determining whether a patent claim is “directed to” a patent-ineligible concept under step one of the Court’s two-step framework for determining whether an invention is eligible for patenting under 35 U.S.C. §101?
2. Is patent eligibility (at each step of the Court’s two-step framework) a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of art at the time of the patent?
3. Is it improper to apply 35 U.S.C. § 112 considerations to determine whether a patent claims eligible subject matter under 35 U.S.C. § 101?
[Petition] The 112 discussion is basically an argument that any problems with functional claim limitations should be dealt with under §112 rather than §101.
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The chart above shows the number of U.S. patents issued each year that include the phrase “VoIP” somewhere in the document. Folks were already doing some packet-switched voice communications before the 2000’s, but typically used a different name.
Ex parte Callewaert, APPEAL 2019-005598 (Patent Tr. & App. Bd. Feb. 25, 2021).
Following an obviousness rejection, applicant relied upon an example in the specification to help prove an unexpected result (that the living cell would create certain “unnatural glycan structures”). The PTAB rejected the argument — finding that the example was written in the present tense and therefore assumed to be prophetic and therefore “does not provide the factual evidence needed to support unexpected results.” (emphasis in original). It appears in this case, the PTAB treated the prophetic example as merely an argument.
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Ex Parte Cigan, APPEAL 2020-001230 (Patent Tr. & App. Bd. Sept. 14, 2020)
Cigan provides a minor counterpoint to Callewaert. The patent applicant argued that the prior art examples should be disregarded as merely a prophetic example. The PTAB rejected the call and instead presumed that the prior art teachings were enabling. See In re Antor Media Corp., 689 F.3d 1282 (Fed. Cir. 2012) (holding that prophetic examples in the prior art are still presumed to be enabling).
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Ex Parte Harriman, APPEAL 2020-004459 (Patent Tr. & App. Bd. Feb. 10, 2021)
In Harriman, the PTAB reversed an examiner’s enablement and written description rejections, holding that the prophetic examples of an immunoglobulin light chain were sufficient. The claims are directed to a genetically modified (transgenic) chicken grows human immunoglobulin. (owned by Ligand)
The Federal Circuit has again granted mandamus and ordered Judge Albright to transfer two cases case out of his W.D.Tex. court to a more convenient forum (N.D.Cal.).
The underlying actions were filed by a patent holding company known as Ikorongo Texas LLC against Samsung and LG Electronics. As explained below, the owners of Ikorongo Texas formed the company as an attempt to solidify venue in W.D.Texas and avoid the case being transferred for inconvenient forum.
Ikorongo Texas is owned by five-individuals led by patent agents Hugh Svendsen & Sarah Svendsen. The five also own a separate company known as Ikorongo Technology LLC. The asserted patents were previously fully owned by Ikorongo Tech. However, before suing, Ikorongo Tech geographically divided the patent rights. In particular, the company assigned all rights in the patents relating to the WDTX back to the five-individuals. At that point, the five individuals owned all rights to sue and collect damages associated with infringement occurring in the “specific counties” covered by WDTX. The five individuals then created the new company Ikorongo Texas and assigned their WDTX rights to the company. Ikorongo Texas then sued Samsung and LGE. The following day, Ikorongo Texas amended its complaint to also add Ikorongo Tech as a co-plaintiff so that collectively they could seek damages for the full USA. Ikorongo Texas is a Texas LLC (corporate registration in Texas), but its owners and managers all reside in North Carolina.
The defendants in the lawsuit admitted that venue was proper in WDTX, even under the high bar for proper venue created by 28 U.S.C. § 1400(b). But, the defendants argued that N.D.Cal. is a better, more convenient venue, and requested transfer. Even if venue is proper, a defendant may still complain that that the forum is inconvenient and request a change of venue. The statute:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.
28 U.S.C. § 1404(a). A court has discretion as to whether to transfer a case, but should look to the convenience of the parties, convenience of the witness, and also the interest of justice. In addition, the court may only transfer a case to a district where venue and personal jurisdiction are proper (“where it might have been brought”).
Judge Albright refused to transfer the case to California — holding that Ikorongo Texas would not have had proper venue to sue in the state. In patent cases venue is only proper against a US corporate defendant if either (1) the defendant is incorporated within the state or (2) the infringement occurred within the district and the defendant has a regular place of business in the district. The defendants here are incorporated in NY & Delaware, and the infringement alleged by Ikorongo Texas was only in WDTX. Thus, no proper venue.
On mandamus, the Federal Circuit has rejected that analysis — rejecting this “collusive” attempt to avoid the transfer on convenience grounds.
Ikorongo Texas is plainly recent, ephemeral, and artificial—just the sort of maneuver in anticipation of litigation that has been routinely rejected. . . . [T]he district court disregarded the pre-litigation acts by Ikorongo Tech and Ikorongo Texas aimed at manipulating venue.
Slip Op. The court then disregarded the creation geographic division and ordered transfer (after also finding that the convenience factors clearly weigh in favor of transfer and refusing to transfer would be an abuse of discretion).
The decision here has a limiting feature–that Ikorongo Texas was formed for the sole purpose of manipulating venue. I wonder what the courts would say about Apple closing its store in E.D.Tex.
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I’ll note also that the case might have turned out differently if Ikorongo Tech had not been added to the case.
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The decision does not rely in direct on-point precedent, but instead relies heavily upon precedent in in the context of subject matter diversity jurisdiction. Miller & Lux, Inc. v. E. Side Canal & Irrigation Co., 211 U.S. 293, 305–06 (1908). In that case, a California corporation had formed a separate Nevada corporation and transferred property rights to the Nevada Corp in order to create diversity jurisdiction. The Supreme Court said No. One problem with this analogy is that there is a particular statute barring collusive incorporation in order to create diversity jurisdiction:
A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.
28 U.S.C. § 1359. Although also statutory, diversity jurisdiction has an express constitutional basis whereas convenient-forum is entirely statutory. That distinction has historically offered courts to – at times – distinguish between the two in their analysis and interpretation. The opinion does not delve into why the linkage is appropriate here.
Over the past several years, Timberland has been attempting to register the shape of the boots as protectable trade dress. However, the USPTO’s Trademark Trial & Appeal Board (TTAB) rejected the application, finding that the the company had failed to demonstrate that the boot shape had acquired secondary meaning in the eyes of consumers. The examiner had also rejected the trade dress registration as improperly functional, but the TTAB did not reach that issue.
