All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law.

Eligibility and Physical Products

by Dennis Crouch

The six PTAB decisions reviewed below provide insight into the application of 35 USC 101 in cases involving more than just computer hardware and software. While the claims in each decision recite physical devices or molecules, the PTAB still found most to be ineligible as directed to an abstract idea and lacking an integrated inventive concept beyond well-understood, routine conventional activities. A core parallel across the decisions is the PTAB’s focus on whether the additional elements in the claims, including the physical components, integrate the judicial exception into a practical application or provide significantly more.

  • Ex parte Ezerzer: CKRD peptides that can modulate immune system activity for treating autoimmune diseases – fragment of naturally occurring protein.
  • Ex parte Magatti: Beverage preparation system (Nespresso) which monitors container consumption to enable convenient reordering.
  • Ex parte Demou: System for predicting occurrence of adverse cardiovascular or cerebrovascular health conditions, including use of sensors attached to an artificial pump in a human body.
  • Ex parte Mitchell: Automated beer brewing system that modifies beer recipes to adjust sensory characteristics based on user inputs.
  • Ex parte Facchinetti: Continuous glucose monitor and insulin pump system that detects failures in glucose monitoring or insulin treatment in real-time.
  • Ex parte Masherah: Claims a system for distributing physical trading cards by scanning them and offering electronic versions for purchase online.

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Ex parte Ezerzer, Appeal 2022-004253 (February 7, 2024) (Symthera Canada Ltd.)  Decision_2022004253_02-05-2024.

The claimed invention claims specific CKRD peptides that can modulate immune system activity for treating autoimmune diseases. Citing Myriad, the examiner rejected the claims under Section 101 after concluding that the claims covered a fragment of polypeptides that naturally occur within the human body.  On appeal, PTAB agreed that there is “no dispute that the peptides themselves are fragments of larger naturally occurring proteins.”  However, the panel found “market differences” between the claimed peptide and the naturally occurring form.   The patentee particularly provided evidence that its claimed sequence had a much higher ability to bind to inflammatory targets — suggesting an important practical and likely structural difference from the naturally occurring larger molecule. For example, it  is likely that this protein fragment folds in a different way than the larger molecule from which it is derived.

The PTAB also recognized that there is some likelihood that the claimed invention has shown-up in nature.  Relying on Myriad, the PTAB found that “the mere possibility that the peptides of claim 1 might have existed as a natural phenomenon is insufficient to establish that the composition is a product of nature and therefore a judicial exception” The Examiner had not shown that the specific peptides of SEQ ID NOs: 2 and 16 necessarily existed in nature.

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Ex parte Magatti, Appeal 2023-000550 (February 20, 2024) (Society des Produits Nestle) Decision_2023000550_02-15-2024.

The claimed invention in Ex parte Magatti relates to a beverage or foodstuff preparation system (including a Nespresso machine) which monitors container consumption to enable flexible and convenient reordering for the end user.  The system includes subsystems for preparing containers, controlling preparation, monitoring consumption, and networking with external devices.

Regarding the 101 rejection entered by the PTAB, the claimed system was determined to be directed to an abstract idea of “keeping an inventory record of food or beverage containers for use with food or beverage preparation equipment.” Limitations reciting tracking stock state information and comparing order identifiers were found to be mental processes of observation, evaluation, and judgment. For example, a coffee shop barista tracking coffee pod usage and purchase orders with pen and paper.

The additional elements like the beverage preparation machine, computer subsystem, and networking subsystem did not integrate the abstract idea into a practical application or provide “significantly more.” Instead, these elements merely used generic components such as a (“generic beverage or foodstuff preparation machine”) as tools to implement the inventory management abstract idea without shifting the invention’s true focus from managing inventory.

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Ex parte Demou, Appeal 2023-004366 (February 27, 2024) (HeartWare) Decision_2023004366_02-23-2024.

The claimed invention relates to a system for predicting an “occurrence of an adverse cardiovascular or cerebrovascular health condition.”  The claims particularly require an implantable pump having a variety of sensors attached to a rotor.  But, the novel features of the invention is the capability to process the sensor data using a particular algorithms to predict a likely future cardiac event.

In its decision, the PTAB affirmed the examiner’s eligibility rejection under 35 USC § 101 — finding that the claim was directed to an abstract idea of “mental processes” because many of the claimed steps could be performed in the human mind but for the recitation of a generic computing device. The PTAB relied on CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011) (holding the claims that could be “performed in the human mind . . . or by a human using a pen and paper” were directed to patent-ineligible mental processes).   Although the patentee’s actual process involves quite complex data manipulations, the claim itself was “broad enough to encompass straightforward situations that involve little more than mental observations, calculations, and comparisons of features from a plot.”

The PTAB further determined that the additional elements in the claims, including the implantable pump, sensors, communication circuitry, memory, input/output interface, and processor, did not integrate the judicial exception into a practical application. The additional elements were described generically in the specification to perform well-understood functions such as gathering, transmitting, and processing data — finding that “the Specification does not indicate in any manner that the recited ‘one or more sensors,’ first and second ‘communication circuitry,’ and ‘processor’ of claim 32 are anything other than generic, off-the-shelf components.”

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Ex parte Mitchell, Appeal 2023-003309 (P.T.A.B. Feb. 21, 2024) (PB Funding Group) Decision_2023003309_02-21-2024.

The invention here is an automated beer brewing system that modifies beer recipes to adjust sensory characteristics of beer based on user inputs. The claimed invention allows users to select a baseline beer recipe and adjust its characteristics, such as bitterness, flavor, and aroma, to suit their preferences. The system then modifies the recipe accordingly, using a performance model to predict the outcome of these adjustments.  The specification notes that beer making is an old practice, and the question here is whether the claimed invention constitutes an abstract idea rather than a patent eligible invention.

The PTAB affirmed the Examiner’s rejection of the claims — finding them directed to a mental process that could be performed by a human using pen and paper, involving thinking about and modifying a beer recipe. The Board found that the claims did not integrate the abstract idea into a practical application and did not add an inventive concept beyond the abstract idea itself. The use of a computer to automate this process was deemed insufficient to transform the claims into patent-eligible subject matter.  In particular, the claims did not recite new technology. The Board concluded that mere automation of manual processes using generic computers does not satisfy the requirements for patent eligibility. “Nothing in claim 1 provides an inventive concept as the creation of beer recipes and determination of characteristics from a recipe are well-understood, routine, and conventional in the beer making arts and are more than capable of being performed in the human mind.”

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Ex parte Facchinetti, Appeal 2023-001547 (Feb. 28. 2024) (Dexcom) Decision_2023001547_02-26-2024

DexCom is a leader in continuous glucose monitoring. The claimed invention here relates to a method a safety method – looking for real-time failures of monitoring or insulin treatment. Claim 1 is directed to a “device” that includes a continuous glucose monitoring system and an insulin infusion pump, but the key advance is in the data processing that creates individualized model based upon patent data using a discrete  reiterative filter to predict glucose levels with confidence intervals and then create an alert if the actual levels deviate.

Regarding the 35 USC § 101 rejection, the PTAB determined that claim 1 was directed to an abstract idea of “mathematical concepts and concepts that can be practically performed in the human mind or with the assistance of pen and paper (including an observation, evaluation, judgment, opinion).” The PTAB further determined that the additional elements in the claim, including the continuous glucose monitoring system, insulin infusion pump, alert device, and processor, did not integrate the judicial exception into a practical application. The additional elements were described in the specification as generic computer components being used in a conventional manner to manipulate data. The PTAB stated that “[m]erely adding generic data generating hardware and computer components, namely a generic processor, to perform an abstract idea does not integrate the abstract idea into a practical application.” Thus, the claims cannot be patented.

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Ex parte Masherah, Appeal 2022-004158 (P.T.A.B. March 4, 2024)  (The Upper Deck Company) Decision_2022004158_02-29-2024.

The claimed invention relates to an electronic distribution system for physical trading cards that can be scanned into electronic trading cards and placed on a website for purchase.  The claimed method involves first manufacturing “physical trading cards” and then “scanning” their images.  At that point then we have an online inventory system that then facilitates orders and shipping of the physical cards.

Regarding the 35 USC § 101 rejection, the PTAB determined that claim 22, which was representative of the claims on appeal, was directed to an abstract idea of “offering trading cards for purchase and sale” by reciting certain methods of organizing human activity in the form of commercial interactions.

Although the claims require printing/scanning/shipping steps, the specification specifically identified that the invention “generally relates to an electronic distribution system for physical trading cards that can be scanned into electronic trading cards and placed on a website for purchase.”  After finding the claims directed to an abstract idea, the PTAB the determined that the additional elements in the claim, including the recited scanner, website, and device, did not integrate the judicial exception into a practical application.

 

Four Funerals: Recent PTAB 101 Decisions

I wanted to consider some recent PTAB jurisprudence on patent eligibility under 35 U.S.C. § 101. The following post reviews four recent eligibility cases. In all four cases the PTAB found the claims lacked eligibility. Two of the cases affirmed examiner rejections while the other two added eligibility as a new grounds for rejection after finding that the examiner erred in their 102/103 rejections. All four cases here involve communications technology where the patent applicant was seeking to claim the functional operational steps without describing any new “technology.”  I have a second post coming with recent device 101 cases from the PTAB.

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Covenant to not sue “at any time” terminated with the license agreement

by Dennis Crouch

The recent Federal Circuit decision in AlexSam, Inc. v. MasterCard Intl. Inc. provides a lesson into the importance of carefully drafting—and understanding—the scope of licensing terms, especially covenants not to sue.  Of importance to this case is understanding both their scope and their duration.  The second half of the post delves into the jurisdictional hook that allowed the Federal Circuit to hear this case, even though it originated as a state law breach of contract claim, as well as analyzing whether MasterCard’s invalidity declaratory judgment counterclaim was truly compulsory, as required for Federal Circuit appellate jurisdiction.  The post also notes a curious empaneling of judges. 22-2046.OPINION.2-28-2024_2277625.

Background (more…)

Making a Proper Determination of Obviousness

by Dennis Crouch

Earlier this week, the USPTO published updated examination guidelines regarding obviousness determinations under 35 U.S.C. §103. While these new guidelines are not legally binding, they offer important insight into how the Office plans to apply an even more flexible approach to obviousness — something Director Vidal sees as mandated by the Supreme Court’s 2007 decision in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007). (2500 words).

Read the Guidance Here.

Overall the guidance here suggests that the office is looking to make non-obviousness a larger hurdle via increased flexibility.  Still, the guidelines spend some time on the requirements of a prima facie case; the necessity of both evidence and reasoning to support any obviousness rejection; and consideration of all evidence before the examiner.  Obviousness is already the most common rejection – with the vast majority of applications being initially rejected as obvious.  It will be interesting to see whether the rates go up even further following this new guidance. 

This post breaks down the guidelines and walks through some potential strategies for patent applicants. 

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Burden of Proof Buffers Patent Owner Misconduct in Patent Revival Case

by Dennis Crouch

A jury in Judge Albright’s W.D.Tex. court sided with Amazon – finding no infringement. On appeal, the Federal Circuit has affirmed — particularly affirming Judge Albright rejection of Freshub’s post-verdict motions. Freshub, Inc. v. Amazon.com, Inc., 22-1391 (Fed. Cir. Feb 26, 2024).  In a cross-appeal, Amazon argues that the district court should have found the patent unenforceable due to inequitable conduct. That appeal was also rejected. Freshub v Amazon.

No Reversible Error in Denying Inequitable Conduct

I want to use this blog post to focus on the finding of no inequitable conduct. (more…)

Pour Me Another: The Supreme Court Revisits the ‘Bad Wine’ of the Copyright Discovery Rule

by Dennis Crouch and Timothy Knight

On February 21, 2024, the Supreme Court heard oral arguments in the case of Warner Chappell Music v. Nealy, which deals with a circuit split over the availability of back-damages in copyright infringement cases. Specifically, the Court is examining whether copyright plaintiffs are barred from recovering damages for acts of infringement that occurred more than three years before filing suit, even if the claims are timely under the “discovery rule.” During the arguments, the parties and justices used metaphors of “bad wine vintages” in questioning the pedigree and value of the discovery rule and damages limitation put before them.  [Oral Argument Transcript]

The copyright law has a three year statute of limitations for filing suit that begins when the copyright “claim accrued.” Although “accrual” in copyright cases ordinarily occurs with infringement, the judge-made discovery rule allows copyright claims to accrue when the plaintiff discovers, or reasonably should have discovered, the infringement rather than when the infringing act occurred.  All circuit courts accept some form of the discovery rule, but they disagree over a second point — whether damages can reach back beyond the three-year statute of limitations period measured from the date of filing.  Although the statute does not make any distinction between a right to file an action and a right to back damages, the distinction stems from ambiguous dicta in the Court’s 2014 Petrella v. MGM decision. Although that case focused on laches, the court suggested general allowance for the discovery rule for copyright claims more than three years from filing, but also wrote that Section 507(b) permits “retrospective relief running only three years back from the date the complaint was filed.”  This statement led some courts (including the district court here) to conclude that a copyright holder can sue for wrongful actions that were more than three-years distant, but can only collect damages associated with infringing actions within the three year bubble.  In this case, the Eleventh Circuit sided with the plaintiff (reversing the district court) in holding that claims for back damages also follow the discovery rule — permitting potential distant claims. 

In the certiorari process, the music publishers asked two broader questions that seemed to potentially challenge the discovery rule itself, but the court granted a re-written narrower question that assumed the discovery rule is in place, but questioned whether it also allows damages beyond the three year mark. 

Kannon Shanmugam, representing the music publishers who lost before the Eleventh Circuit, began the argument with a statement that the case “presents a straightforward matter of statutory interpretation” under Section 507(b)’s three-year limitations period. He stated that “a plaintiff can obtain damages for acts of infringement only within three years of filing” and that Petrella supports this position. However, the Justices quickly noted that the question presented “assumes the existence of the discovery rule” and does not revisit whether one should exist at all. This prompted pushback from Shanmugam:

I don’t think that this Court when it rephrased the question presented was accepting any particular version of the discovery rule. . . At most, the rephrased question presented assumes the existence of some version of the discovery rule. It does not take sides on the scope of that rule.

The Justices remained skeptical, with Justice Sotomayor asking “isn’t it artificial for you to raise the most important part of your argument in a footnote” rather than directly asking the Court to revisit the discovery rule. She emphasized that Shanmugam was now trying to make arguments that went beyond the scope of the question presented. Justice Gorsuch echoed this, stating “we’re being asked to decide the scope of something that may or may not exist.”

Respondent’s counsel, Joe Earnhardt, also refused to defend the discovery rule’s validity. He argued the question that was granted certiorari “assumes that there is a discovery rule” and claimed all circuits agree one exists (but disagree as to its scope). Justice Gorsuch then wondered: “Why wouldn’t we just take up that question first” regarding the existence of any discovery rule? But Earnhardt maintained doing so was inappropriate since the issue “wasn’t raised below” and has no circuit split.

Overall, the Justices appear to not be willing to rule expressly on the discovery rule question – whether it exists, even while questioning how to decide a “scope” issue if the rule itself is uncertain. Justices floated the possibility of DIGing the case, meaning dismissing it as improvidently granted (DIG). That had also been suggested by respondent.  Justice Alito noted, it makes little sense to “talk about the second [question of scope] without resolving the first [its existence].” 

Turning to the core question regarding retrospective damages, Shanmugam argued the time-bar stems directly from the statute of limitations provision that a claim must be brought within three years of accrual. “Our submission is simple. As this Court has said, the standard rule is that ‘accrues’ means at the point when you have a complete and present cause of action.” Plaintiff’s attorney Earnhardt contested this reading. He claimed other parts of the Copyright Act authorize full recovery of damages without any “lookback” restriction, such that imposing one would contradict Congress’s intent. It appears that nothing in the Copyright statute provides any hook for separately treating the damages timing from the general accrual limitation.  Justice Sotomayor explained her perspective that “The damages section speaks about damages. The statute of limitations speaks about a time period to file a complaint. You’re automatically tying the two. Tell me how you’re doing it.” Shanmugam argued both that the text demands a three year rule and that the particular damages limitation is derived from the Court’s own prior statements in Petrella.  On the other side Earnhardt agreed with the Justices that there is no such connection between the two statutes.  This core issue may also help explain the court’s difficulty in sifting through whether they must first answer a question about the discovery rule before analyzing how it applies to damages. Under Shanmugam’s theory, the two are inextricably linked, whereas for Earnheart the statute of limitations is entirely separate and distinct from the copyright damages statute. 

Earnhardt insisted Petrella was distinguishable dicta because the plaintiff there “only brought claims for the three-year period” preceding her lawsuit, whereas broader relief would be appropriate if earlier acts were successfully tied to timely claims under the discovery rule. However, Justice Gorsuch noted that Petrella’s language about damages going back “only three years” was seemingly not so limited. Shanmugam argued this was a necessary implication of the prior laches decision — the crux of the decision that laches does not apply to back-damages was the existence of a statute that cuts-off back damages at the three year mark.  Shanmugam cautioned that failing limit damages could entrench an overbroad discovery rule that lets plaintiffs reach back indefinitely. During oral arguments, the Court gave little indication of how it might interpret Petrella‘s meaning or perhaps walk-back its language, although Justice Gorsuch sees the case as clearly stating that “you look back three years and no more.” 

In the end, the Justices asked few questions about the government’s position that Petrella should not bar damages for timely claims and that the Second Circuit “erred” in Sohm v. Scholastic by holding otherwise based on the Petrella dicta. How the Court maneuvers around Petrella to answer the question remains to be seen when a decision is issued.

The key recurring metaphor during oral arguments was that of “bad wine” in reference to the discovery rule for copyright claims. Justice Gorsuch stated, “we also have a lot of cases in this Court casting doubt on the existence of a discovery rule. We’ve called it wine from a bad vintage or something like that.” See, for example, TRW Inc. v. Andrews, 534 U.S. 19, 37 (2001) (Scalia, J. in dissent writing “The injury-discovery rule applied by the Court of Appeals is bad wine of recent vintage.”); and Rotkiske v. Klemm, 140 S. Ct. 355, 360 (2019) (an “expansive approach to the discovery rule is a bad wine of recent vintage”).  Later, Respondent’s counsel argued that the copyright discovery rule is not “bad vintage” because it is inherent to the “accrual” language of the Copyright Act.  Of course, the discovery rule is not explicit in the language of the Act, and Gorsuch responded that it “may or may not” be there “some people say that the wine is there.” Sticking to the metaphor, Gorsuch later seemingly referenced the Petrella precedent and subsequent appellate decisions as “not even the old bad wine. It’s something else. It’s a new bad wine.”  The “bad wine” metaphor has generally captured skepticism amongst the Justices about a broad discovery rule. After all this back and forth over the vintage, both sides likely needed a smooth evening recovery Merlot.  We expect the nine sommeliers to release their opinion by the middle of June 2024. 

The Sky’s the Limit: How Chestek Frees the USPTO

by Dennis Crouch

Earlier this month, the Federal Circuit issued a decision in the case of In re Chestek that, on its face, simply upheld the USPTO’s requirement that trademark applicants provide their domicile address. But contained within the court’s ruling is language that could have some major implications — essentially giving the USPTO carte blanche ability to sidestep administrative rulemaking procedures for any new requirements it imposes, as long as they are deemed “procedural” in nature.  And on this point the Federal Circuit appears to establish a wide permissive definition that the rulemaking is procedural so long as does not affect the substantive patent or trademark standards.  Of course, the USPTO generally does not have substantive rulemaking authority regarding the patent standards, and so everything is procedure.

Chestek centered around amendments made to trademark regulations in 2019 requiring that applicants provide their domicile address, defined as their permanent legal residence or principal place of business — mailing address is insufficient. The USPTO argued that this new address requirement was needed to help enforce its parallel new rule mandating that foreign applicants retain U.S. licensed counsel. Chestek PLLC, a law firm run by Pamela Chestek and specializing in trademark law, challenged the domicile address rule itself, saying its imposition failed to comply with the notice and comment requirements of the Administrative Procedure Act (APA).

In what appears to be largely a test case, Chestek applied to register the mark CHESTEK LEGAL, but refused to include her personal home address.  She argued that for privacy reasons her personal home address is not generally known and that its submission risks major breaches in privacy. But, the USPTO refused to register her mark based upon her failure to comply with the domicile rule. After losing at the USPTO, Chestek appealed to the Federal Circuit.

On the core issue, the Federal Circuit sided resoundingly with the USPTO. The court held that the domicile address rule was clearly procedural in nature rather than substantive, and thus was exempted from APA notice and comment strictures. The key passage from the court reads:

[T]he new rule requires additional information about applicants, i.e., their domicile address. Requiring different or additional information from applicants regarding their addresses merely ‘alter[s] the manner in which the [applicants] present themselves…to the agency.’ It does not alter the substantive standards by which the USPTO evaluates trademark applications.

Chestek at 8 (Quoting JEM Broadcasting Co. v. F.C.C., 22 F.3d 320 (D.C. Cir. 1994).   In other words, because the domicile address rule does not itself change the substantive legal criteria for granting or denying trademarks, the court sees it as merely a procedural step in the application process. And crucially, procedural rules are exempt from notice and comment requirements under APA section 553(b)(A).

Under the statute, an agency must publish notice of proposed rules prior to them becoming law. BUT the requirement does not apply “(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) [when] impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. § 553(b).  I.e., the notice-and-comment requirements don’t apply to changes of agency procedure or practice.  Although the rule was deemed procedural, it still has substantial impact — i.e., Chestek loses her rights.  Of course any lawyer will agree failing to follow procedures can result in major consequences.

In finding the address rule procedural, the court asked the simple question: Does the rule “affect the substantive trademark standards by which the Office examines a party’s application.”  Here, the answer is clearly “no” and therefore, according to the Federal Circuit, the rule is procedural and thus exempt from notice-and-comment rulemaking.

Having found the challenged rules within the procedural exception to notice-and-comment rulemaking, we need not address Chestek’s argument that the proposed rule failed to provide sufficient notice of the domicile address requirement.

I am not worried about trademark applicants providing a residential address (although Chestek’s privacy argument seems to have some merit).  But, the Federal Circuit’s decision here appears quite sweeping and may provide the USPTO with enough authority avoid almost any future notice-and-comment in its rulemaking.

The notice and comment requirements serve a vital purpose, even when an agency does not incorporate public feedback into the final rule. The process provides transparency by allowing the public to understand what changes an agency is considering and why. It also fosters deliberation – the agency must provide a reasoned explanation if it rejects commenters’ concerns and proceeds to adopt the rule as originally proposed. Additionally, notice and comment creates a record for judicial review. If a party challenges the rule, the court can examine whether the agency fully considered and responded to material critiques raised during the process. An agency does not have free rein just because it technically “considered” comments before rejecting them. The record must substantiate that it took serious public input under advisement and had adequate grounds for sticking with the original course. Simply going through the motions of notice and comment without meaningfully wrestling with opposing views raised by stakeholders risks reversal upon legal challenge – and is bad policy for a nation that sees itself as promoting popular sovereignty. Even if not determinative, airing criticism, gathering diverse perspectives, and requiring a reasoned response uphold good governance norms and the model of administrative law. Allowing agencies to bypass this process denies public participation that bolsters legitimacy.

The logic of this case sweeps broadly and sets up the USPTO to potentially make more “procedural changes” without meaningful external input or following the traditional notice-and-comment approach.

Carl Oppedahl has been writing about the impact of the new .DOCX standard associated with a $400 fee for non-compliance as a typical procedural rule with substantive impact created without notice-and-comment because it merely involves procedural aspects of the patent application process — despite the large penalty for noncompliance. Other potential examples:

  • Requiring that every application include a signed statement from the inventor explaining their contribution in detail, or face immediate abandonment.
  • Mandating that the background section of specifications provide explicit citations to the closest statement of the problem as found in the prior art
  • Imposing a $1000 processing fee for any application that the USPTO deems improperly formatted

None of these hypothetical new rules have any direct bearing on the substantive bases on which the USPTO evaluates patentability. But forcing applicants to jump through more procedural hoops and face steeper penalties would clearly make pursuing and maintaining protection more onerous. Without formal notice and comment, however, aggrieved parties would have little recourse to contest such impositions or to help guide the potential policy decisions.

One potential catch, alluded to in passing in Chestek, is the stipulation that procedural rules cannot “affect individual rights and obligations.” And indeed, one could argue that layered procedural requirements that make the patenting process drastically more expensive or convoluted would impinge on inventors’ substantive rights. Moving forward we will have to see which of these threads of thought the court and the PTO will follow.

To be clear, I believe the Federal Circuit followed administrative law precedent here, and I raise the issue just to recognize the power of the USPTO.  We can also recognize that, for the most part, USPTO leadership is generally open to hearing direct feedback and suggestions from constituents.  The notice-and-comment approach is not so necessary because the Patent Bar remains much like a small town. where many of us know each other at a personal level.  In Chestek, for instance, the USPTO has heard the privacy complaints regarding requiring home address, but ultimately weighed that against the ongoing problems facing the agency from faulty foreign applications.  That is effectively the same approach as notice-and-comment. The key difference though, is that USPTO official availability is a choice that might not be made by every administration, whereas notice-and-comment are required by law.

Beyond the Limit: The Battle Over Copyright Back-Damages in Warner Chappell Music v. Nealy

By Dennis Crouch and Timothy Knight*

The Supreme Court is set to hear oral arguments on February 21 in an important copyright case – Warner Chappell Music v. Nealy. The central issue is whether copyright plaintiffs can recover damages for infringing acts that occurred more than three years before filing suit, under the “discovery accrual rule.” 

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Obviousness: Is a Reasonable Expectation of Success Sufficient

by Dennis Crouch

In Vanda v. Teva, the Federal Circuit confirmed the obviousness of Vanda’s claims covering use of tasimelteon (Hetlioz) to treat circadian rhythm disorders (Non-24-Hour Sleep-Wake Disorder).  Teva and Apotex, filed Abbreviated New Drug Applications (ANDAs) with the FDA seeking to market generic versions of the $100m+ drug.  Vanda sued, but lost on obviousness grounds — with the court holding that the claimed combination was obvious because it was directed to a set of known elements and a person of ordinary skill would have a “reasonable expectation of success” in reaching the resulting invention.  The rulings here included a conclusion that – even if the particular limitations were not obvious, it would have been obvious for a skilled artisan to try them out.

Vanda argues that the law of obviousness requires more than simply a reasonable expectation of success. Rather, in their petition to the Supreme Court, the patentee argues that the resulting invention must have been “predictable” or an “plainly indicated by the prior art.”

The question presented is: Whether obviousness requires a showing of “predictable” results, as this Court held in KSR, or a mere “reasonable expectation of success,” as the Federal Circuit has held both before and after KSR?

VandaCertPetition.

A new amicus brief strongly supports the petition with an interesting historical review of obviousness doctrine from the past 150 years.  The brief, filed by The National Association of Patent Practitioners and Professor Christopher Turoski (current NAPP president) brief argues that the Federal Circuit’s “reasonable expectation of success” standard for assessing obviousness departs from longstanding Supreme Court precedent on obviousness that was subsequently codified in 35 U.S.C. § 103.  NAPP Amicus Brief.

Under Pre-1952 “Invention” Standard

The brief traces the obviousness requirement back to Hotchkiss v. Greenwood, 52 U.S. (11 How.) 248 (1850), where the Court held that simply substituting one known material for another in an otherwise unchanged device was obvious and lacked “that degree of skill and ingenuity which constitute essential elements of every invention.” In the 100 years of “invention” cases following Hotchkiss, the Court consistently held that an invention “must be the result of invention, and not the mere exercise of the skill of the calling or an advance plainly indicated by the prior art.” Altoona Publix Theatres, Inc. v. Am. Tri-Ergon Corp., 294 U.S. 477 (1935). The key question was whether the advance would “occur to any mechanic skilled in the art” or was “plainly foreshadowed by the prior art.” Loom Co. v. Higgins, 105 U.S. 580, 591 (1881); Textile Machine Works v. Louis Hirsch Textile Machines, Inc., 302 U.S. 490, 498 (1938).  None of the Supreme Court cases, either pre- or post-1952, rely upon reasonable expectation of success as a determinative factor in assessing the obviousness of an invention.

In Altoona Publix Theatres, the patentee sought to enforce its patent covering covering the use of a flywheel to sound recording and reproduction equipment in order to make the film movement more uniform. The Supreme Court held the patent claims invalid for lack of invention. The Court explained that a flywheel was a very old and common mechanism for improving uniformity of motion in machinery. Its addition here merely involved “the skill of the calling” rather than the inventive faculty, as the flywheel’s use was plainly indicated by prior art showing flywheels applied in other sound recording devices. The Court relied on longstanding precedent that an improvement is not patentable unless it required invention, not just ordinary skill, and was not “plainly indicated” in the prior art.

An improvement to an apparatus or method, to be patentable, must be the result of invention, and not the mere exercise of the skill of the calling or an advance plainly indicated by the prior art. . . . The inclusion of a flywheel in any form of mechanism to secure uniformity of its motion has so long been standard procedure in the field of mechanics and machine design that the use of it in the manner claimed by the present patent involved no more than the skill of the calling. . . . [The prior art] plainly  foreshadowed the use made of the flywheel in the present patent, if they did not anticipate it. The patentees brought together old elements, in a mechanism involving no new principle, to produce an old result, greater uniformity of motion. However skilfully this was done, and even though there was produced a machine of greater precision and a higher degree of motion-constancy, and hence one more useful in the art, it was still the product of skill, not of invention.

Altoona Publix Theatres, Inc. v. Am. Tri-Ergon Corp., 294 U.S. 477 (1935).  In Altoona, the court thus concluded that the added flywheel failed this “invention” test, so the patent claims were held invalid.  The standard in Altoona of “plainly indicated” in the prior art is foreshadowed in the Supreme Court’s prior cases such as Slawson v. Grand Street, P.P. & F.R. Co., 107 U.S. 649 (1883) (cannot patent “an idea which would naturally and spontaneously occur to any skilled mechanic or operator in the ordinary progress of manufactures”); see also Altantio Works v. Brady, 107 U.S. 192 (1883).

Similar “plainly indicated” language comes from the Supreme Court’s decision in Textile Machine Works v. Louis Hirsch Textile Machines, Inc., 302 U.S. 490 (1938). The invention at issue in the case was an attachment for flat knitting machines to allow reinforcing and split-seam designs to be added to the knitted fabric. The Court held the patent claims invalid as obvious and embodying no more than “the skill of the calling.”

The Court explained that “[t]he addition of a new and useful element to an old combination may be patentable; but the addition must be the result of invention rather than the mere exercise of the skill of the calling, and not one plainly indicated by the prior art.” Id.

One confusing element of this history is that the Supreme Court also began to talk of invention in terms of the “flash of creative genius” or other similar language. See Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84 (1941). According to Cuno Engineering, to be patentable, a device “must reveal the flash of creative genius, not merely the skill of the calling.” Id.

Section 103 Codifies Prior Precedent

Prior to 1952, the patent act did not include a statutory obviousness standard. Rather, both the statute and the US constitution simply required an “invention.”

Congress created Section 103 obviousness standard in the 1952 Patent Act that we all rely upon today.  But, in its key and still leading analysis of the statute, the Supreme Court explained that the new law was “intended merely as a codification of judicial precedents embracing the Hotchkiss condition.” Graham v. John Deere Co., 383 U.S. 1, 17 (1966). Assessing obviousness under § 103 thus follows the Hotchkiss line of cases by determining whether the advance was “plainly evident from the prior art” such that one skilled in the art “would immediately see” that it was obvious based on the existing disclosures.

Of course, one change with the addition of Section 103 is the final sentence of the provision stating that the “manner in which the invention was made” will not negate patentability. The legislative history and Graham are both clear that this provision was intended “to abolish the test [Congress] believed [the Supreme Court] announced in the controversial phrase ‘flash of creative genius,’ used in Cuno.”  What is left then is a focus on whether the invention would be within the mere skill of the calling and plainly evident from the prior art. In its most recent analysis of KSR, the court did not use the plainly evident standard, but rather focused on situations where the elements of an invention were all known and the combination was nothing more than “predictable use of prior art elements.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007). Throughout this time the Supreme Court has never used a “reasonable expectation of success” test.

Departure from Binding Precedent

According to the petition and the amicus brief, the Federal Circuit’s “reasonable expectation of success” test sets a lower bar, finding obviousness wherever a skilled artisan might reasonably expect to achieve the result, even if it was not plainly foreshadowed in the prior art.  This includes situations where it might be obvious to pursue a research question — but where the answer to the question is unknown or unpredictable.

The first court reference that I have found for “reasonable expectation of success” standard appears to have originated in the case of Cmmw. Engr. Co. of Ohio v. Watson, 293 F.2d 157 (D.C. Cir. 1961).The Patent Office Board had originally stated that “Appellant has merely applied an old process to another analogous material with at least reasonable expectation of success. It is well settled that this does not constitute invention.”  The District Judge affirmed this holding in a Section 145 action, as did the D.C. Circuit Court on appeal. Cmmw. Engr. Co. of Ohio v. Watson, 188 F. Supp. 544 (D.D.C 1960), aff’d, 293 F.2d 157 (D.C. Cir. 1961).

I did also find a 1925 decision by the Commissioner of Patents office affirming a rejection. Ex parte McElroy, 337 Off. Gaz. Pat. Office 475 (1925).  In the case, the patent applicant argued that the cited reference was not sufficient to render the invention unpatentable — arguing “a reference must do more than suggest a possibility, that it must also postulate a reasonable expectation of success.”  The Assistant Commissioner rejected this argument, stating that Richter “carefully sets out the process of the present application and indicates its success.” The decision appears to agree with the  reasonable expectation of success standard, but concluded that the reference provided at least that level of teaching. But, it is not clear to me when this standard became sufficiently “settled” as recited in the 1960-61 Commonwealth Engineering decisions.  It was not until 1995 that reasonable-expectation-of-success was added to the MPEP, but by that time there had already been a number of Federal Circuit decisions on point.

In any event, I hope the Supreme Court will take up this case and push it forward — hopefully further developing obviousness doctrine.  Respondents in the case Teva and Apotex had waived their right to respond, but the Supreme Court expressed some interest in the case by requesting a response in a February 15 order (due March 18, 2024).

Parties:

  • Vanda Pharmaceuticals Inc., Petitioner, represented by Paul Hughes (McDermott Will & Emery)
  • Apotex Inc. and Apotex Corp., Respondent, represented by Aaron Lukas (Cozen O’Connor)
  • Teva Pharmaceuticals USA, Inc., Respondent,  represented by J.C. Rozendaal (Sterne Kessler)

Amici Curiae

  • American Council of the Blind, Blinded Veterans Association, and PRISMS, Amicus Curiae, represented by Mark Davies (Orrick)
  • Professor Christopher M. Turoski and The National Association of Patent Practitioners, Amicus Curiae, represented by Ryan Morris (Workman Nydegger)
  • Salix Pharmaceuticals, Inc. and Ocular Therapeutix, Inc., Amicus Curiae, represented by Justin Hasford (Finnegan)

 

Incorporation by Reference Rules at the Federal Circuit

by Dennis Crouch

Promptu Systems v. Comcast (Fed. Cir. 2024)

The Federal Circuit released two opinions today involving these two parties.  The first sides with Promptu on claim construction – remanding the case back to the Pennsylvania district court for further development.  The second concludes that reprimands Comcast’s attorney for trying to sneak-in extra words into its appellate brief.  This post will focus on the second case.

Mark Perry is a leading appellate expert from Weil, Gotshal & Manges LLP representing Comcast in the litigation and various IPRs between the parties.  There are four related IPRs on appeal, and in its briefing petitioner used somewhat different arguments in its briefs and then stated that it was “incorporation by reference” arguments made in other briefs.  The problem here is that appellate judges see the briefing word limit as a feature of the appellate system — forcing parties to limit their briefs to their best arguments rather than allowing scattershot appeals.  Perry noted that his incorporation by reference was targeted to only about 2000 words from one brief that he hoped would aid in court efficiency.  At oral arguments, the Federal Circuit ordered counsel to show cause why he should not be sanctioned for violating its prohibition on using incorporation by reference “to exceed word count.” The court explained this is “fundamentally unfair” and forces the opposing party to respond to arguments beyond the permitted length.  This is not the court’s first time addressing this issue — it did so previously in with the same result. Microsoft Corp. v. DataTern, Inc., 755 F.3d 899 (Fed. Cir. 2014).

In response to a show-cause order, counsel argued he was simply trying to “enhance efficiency,” “streamline the briefing,” and “save the time and resources of the Court.”  In a brief filed and signed only by Perry, he stated that “Comcast and its counsel were unaware of this Court’s decision in Microsoft, until Promptu’s reply brief was filed.”  It is not clear what is limited to “counsel,” but the crazy aspect of this case is that the same firm – Weil Gotshal – was chastised in that case for similar actions. The brief here was joined by attorneys at Farella Braun & Martel LLP.

Counsel argued that he and Appellee were unaware of our decision in Microsoft until Appellant’s Reply Brief was filed, Show Cause Br. at 3, and had they been aware, they would not have included the incorporation by reference, id. at 4. Microsoft is not only a precedential decision of this Court, but a precedential decision of this Court that admonished the exact same law firm before us now for the exact same behavior. We accept as true Counsel’s claim that he was not aware of the Microsoft decision until the Reply Brief referenced it. When it becomes apparent that a lawyer has violated a court rule, as an officer of the court, it would be best for that lawyer to bring it to the court’s attention and withdraw the improper argument. Here, Appellee was made aware of our case law, but chose to do
nothing.

The court’s statement here is important – the rule for attorneys is that they have an affirmative duty to correct misstatements to the court.

Perry argued that the Federal Circuit had not previously ruled on incorporating arguments between companion appeals — the Microsoft case was about incorporating from other-party briefs. But, the court quickly rejected this weak distinction.

The Federal Rules of Appellate Procedure allow parties to incorporate by reference certain materials rather than reproducing them. Fed. R. App. P. 28(a)(viii). But the Federal Circuit has repeatedly held Rule 28 does not permit incorporating substantive legal arguments between briefs. See also Medtronic, Inc. v. Teleflex Life Scis. Ltd., 86 F.4th 902 (Fed. Cir. 2023). Parties cannot use incorporation to end-run word limits or avoid repeating arguments responding to the unique issues in each appeal.

In the end, the court decided not to sanction Perry, Comcast, or the Weil firm.  I’m sure Mr. Perry’s longstanding and excellent reputation helped him avoid direct penalty.  If I were the court, I would have put more pressure on the firms itself to ensure excellence.

On the merits, Perry’s approach won, with the Federal Circuit affirming the PTAB judgment cancelling claims in a R.36 judgment.

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Redefining Patent Continuation Strategy: Sonos v. Google Appeal

by Dennis Crouch

One of the more shocking patent decisions of 2023 was Judge Alsup’s holding in Sonos, Inc. v. Google LLC, No. C 20-06754 WHA, 2023 WL 6542320 (N.D. Cal. Oct. 6, 2023).  The scathing opinion left two Sonos multi-zone smart-speaker patents unenforceable due to prosecution laches and a rejection of the $32 million jury verdict.  Sonos had amended its claims after after learning of Google’s particular product, and Judge Alsup found that approach inequitable, concluding that the patentee was “wringing fresh claims to read on a competitor’s products from an ancient application.”  But, Sonos’ prosecution approach in the case is a widespread practice in the field and so the case raises significant questions about both patent enforcement strategies and equitable loss of rights based upon “late claiming” where claims are amended in response to market conditions.

The Appeal Brief: A Closer Look

Sonos has now filed an appeal brief that challenges Judge Alsup’s decision on several grounds, emphasizing the fairness of their patent prosecution process and arguing against the application of prosecution laches. The brief details the timeline of Sonos’s patent filings, innovations, and claim amendments, arguing these were done in good faith and within the bounds of patent law norms.  I’ll reprint the introduction here:

The district court has strong views about “the way the patent system should work.” But those views conflict with the Patent Act, the Federal Rules of Civil Procedure, and this Court’s precedent. Undeterred, the district court rewrote patent law and reconstituted the judicial role to erase a $32.5 million jury verdict and throw out other patent claims that should have been tried.

To override the jury verdict, the district court recast the doctrine of prosecution laches in an unprecedented way to declare two of Sonos’s patents unenforceable. The court recognized that Sonos prosecuted the patent family diligently through several continuation applications off a 2006 provisional application. The court also acknowledged that Sonos did nothing that extended its patents’ terms. Yet the court held that Sonos took too long to prosecute the specific claims it asserted against Google here. The court was most troubled that Sonos added the asserted claims in a continuation application after Google brought its infringing products to market. But Sonos disclosed the invention years before Google even began investing in those products, and informed Google about that patent family. In fact, Sonos had already secured patents in the same family with broader claims covering Google’s products. At any rate, “amend[ing] [to] insert claims intended to cover a competitor’s product” is not “in any manner improper”—and, in fact, is entirely compatible with Congress’s design. Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 874 (Fed. Cir. 1988). If this Court condones this novel application of prosecution laches, it will endanger many thousands of patents secured through standard continuation practice and discourage the early and complete disclosure of new innovations.

The district court also found the asserted claims invalid on the ground that Sonos did not supply adequate written description as of the claimed priority date. The court had previously rejected Google’s summary judgment motion on written description, and Google did not try that defense or a priority-date challenge to the jury. Yet the court took the reins of Google’s defense and crafted a narrative of Sonos’s subterfuge to justify its invalidity ruling. The court hinted at this story for the first time in the middle of trial, but waited until after trial to recount it fully, depriving Sonos of any opportunity to present testimony refuting it. The court found that written description for the asserted claims depended on a single sentence that Sonos added to the specification by amendment in 2019. It ignored that the specification contained additional support for the claims and the sentence in question had been incorporated by reference into every earlier application in the priority chain. Nevertheless, the court concluded that Sonos had tricked the Patent Office into allowing the amendment. That finding was inconsistent with the record evidence and depended on multiple disputed facts that would have been for jurors to decide—if anyone had ever presented the issues to them.

These intrusions into the jury’s domain were not isolated to the two patents that went to trial. On two other patents, the district court granted Google summary judgment of invalidity. But it did so only by resolving factual disputes about the prior art. This is not how Congress said the patent system should work, nor how the Federal Rules say the judicial system should work. This Court should reverse the post-trial laches and invalidity rulings on the ’885 and ’966 patents. And it should vacate the summary judgment rulings on the ’615 and ’033 patents to allow Sonos to try its case to a jury.

SonosBrief.

The outcome of the appeal could have significant implications for how patents are prosecuted and enforced. A reversal of Judge Alsup’s ruling might affirm the validity of strategic claim amendments, provided they are done within the legal boundaries.  Conversely, upholding the decision could set a precedent that restricts how patent holders can amend claims in response to emerging technologies and competitors.

Sonos lead appellate counsel is Joshua Rosenkranz (Orrick), and the team includes George Lee (Lee Sullivan).  Dan Bagatell (Perkins Coie) is lead appellate counsel for Google.  Google has 40 days to file its responsive brief.

Joint Inventorship: AI-Human Style

by Dennis Crouch

The U.S. Patent and Trademark Office (USPTO) recently published examination guidance and a request for comments on the treatment of inventorship for inventions created with the assistance of artificial intelligence (AI) systems.  Inventorship Guidance for AI-Assisted Inventions.

The key takeaway here is that the USPTO believes that an AI-developed invention is patentable so long as a human satisfies the joint-inventorship standard of “significantly contributing to the invention.” A human who provides a significant contribution may be the sole inventor and original owner, even in situations where the AI provided the greater contribution.

The PTO’s approach here is fairly broad and will likely serve current AI use cases in most situations because most AI invention models of today are tightly controlled and managed by humans rather than simply arising from AI autogeneration or broad prompting. Thus, from a practical effect, there will likely be at least one natural person who satisfies the joint inventorship standard in the vast majority of cases. (Recognizing here that mere control of an AI is insufficient. Rather, the human must provide significant inventive contribution).

Although I am very sympathetic to recognizing human contributions, I also want a patent system that broadly encourages innovation without either prescribing or proscribing particular approaches. The flexibility of this guidance allows room for both human and machine intelligence to intersect in the creative process. But, we should continue monitoring the effects the policy to ensure it does not unduly constrain AI’s eventual capacity to autonomously formulate inventive concepts. But for now, the USPTO’s basic framework reasonably balances competing interests.

But, the USPTO’s approach is not fully grounded in the law because it allows for patenting of an invention in a situation where no human or combination of humans fully conceived of and originated the invention. Rather, we are simply looking for at least one human who provided a significant contribution. The guidance does not particularly address this issue and, by declining to specifically justify the legal grounds why human “significant contributions” suffice even without complete conception, the USPTO leaves the door open to contrary arguments. Opponents could contend that full conception remains legally required for inventorship and that this expansion of the inventorship doctrine exceeds the statutory language.  It is not clear who will have standing to make this particular argument.

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Judge Newman’s D.C. Lawsuit Against Fellow Judges Largely Dismissed on Jurisdictional Grounds

by Dennis Crouch

Federal Circuit Judge Pauline Newman has been fighting for her right to judge after charges implicating her fitness for office.  Earlier this month, a committee of federal judges upheld Newman’s one-year suspension from new case assignments for refusing to cooperate with a misconduct investigation.  Newman had separately sued her colleagues in DC District Court, but Judge Cooper has now dismissed most of that lawsuit on jurisdictional grounds. While a few counts remain, the court’s ruling deals a serious blow to Judge Newman’s attempt to challenge the judiciary’s self-policing procedures.  Newman v. Moore, 23-cv-01334 (D.D.C., February 12, 2024). Newman v. Moore Decision. (more…)

Don’t Judge a Range by its Cover: Federal Circuit Sides with Patentee on Written Description Support

by Dennis Crouch

In a recent decision, the Federal Circuit held that a claimed range reciting narrower values than those described in the patent specification can still satisfy the written description requirement under 35 U.S.C. § 112(a). RAI Strategic Holdings, Inc. v. Philip Morris Prods. S.A., No. 22-1862 (Fed. Cir. Feb 9, 2024). Reversing a PTAB post-grant review decision, the court ruled that claims reciting a heating element with having a length of 75-85% of the disposable aerosol-forming substance had adequate written description support even though the specification only described broader ranges, such as “about 75% to about 125%.” Id.

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Broad Bayh-Dole March-In Licensing Rights Affirmed in Alzheimer’s Mouse Patent Dispute

by Dennis Crouch

The Federal Circuit recently upheld the US government’s royalty-free license rights over an Alzheimer’s disease research patent under the Bayh-Dole Act. University of South Florida Board of Trustees v. United States, 22-2248 (Fed. Cir. February 9, 2024). The decision confirms the broad scope of the government’s licensing rights under the Act — namely that it can include work that predates the funding agreement. It also comes at a salient time, as the Biden Administration weighs the idea of more aggressively exercising “march-in rights” under the Act to promote affordability of taxpayer-funded inventions. Read the Decision.

The dispute centered on U.S. Patent No. 5,898,094, which covers transgenic mice expressing mutated genes linked to Alzheimer’s. Scientists at the University of South Florida (USF) and Mayo Clinic developed the mice with partial funding from a National Institutes of Health grant. USF sued the government for infringement after a government contractor used the patented mice without authorization.

In its defense, the government argued the work that led to reducing the patented invention to practice occurred “under” its grant funding agreement with Mayo Clinic. The Bayh-Dole Act gives federal funding agencies certain rights over federally-sponsored inventions, including “a nonexclusive, nontransferrable, irrevocable, paid-up license” under 35 USC §202(c)(4).

With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world [with some further caveats].

35 USC §202(c)(4). The Court of Federal Claims agreed with the government’s interpretation and entered judgment of noninfringement.

On appeal, USF argued the statute requires the funding agreement predate the inventive work. It claimed the subcontract between Mayo and USF was not executed until months after the critical experiments. However, the Federal Circuit affirmed based on the breadth of the statutory language. It held that a subsequent agreement  can cover prior work, if payment for the prior work is within the grant’s scope. Since USF eventually accepted grant funds for the experiments under its subcontract with Mayo, §202(c)(4) applied.

[A necessary premise of USF’s argument] is that any “funding agreement” adequate to trigger § 202(c)(4) must be in place at the time of the relevant work (here, a first actual reduction to practice in April 1997), so that the November 1997 subcontract (whose execution and effective date were later than April 1997) does not suffice to trigger § 202(c)(4).

The court rejects this premise, finding the statutory language does not impose strict timing requirements for funding agreements to establish government license rights:

The Act says that “funding agreement” includes “any . . . subcontract of any type” for the performance of work under a funding agreement. § 201(b). That breadth-indicating language supports inclusion within the provision of a subcontract that provides for, among other things, payment for work already performed before the subcontract is executed or its “effective date.

The court later reaffirms this conclusion. “We reject this suggested temporal limitation on the scope of the relevant Bayh-Dole Act language.”

This conclusion is strongly bolstered by the record in this case, which suggests that what occurred here is not an uncommon fact pattern in government funding of research conducted in part by non-grantee members of a consortium called for in a government grant. Specifically, the record makes clear that subcontracts are commonly not executed until sometime after the grant is awarded, yet the grant-covered work proceeds without waiting for the inking of a subcontract.

Id. This decision endorses broad government rights under Bayh-Dole when research funding and contracting arrangements evolve over long timelines. The court refused to impose strict timing requirements not evident from the statutory text. As government witnesses observed, delays in memorializing inter-institutional agreements are commonplace in collaborative grant projects.

The ruling also comes amidst attention on the proper scope of Bayh-Dole march-in rights. USF’s lawsuit invoked the related §1498, where the government assumes liability for third-party patent infringement. Exercising march-in rights under §203 lets the government grant licenses to third parties for health or safety needs, yet this authority has almost never been affirmatively used. The Biden Administration recently sought public input on utilizing march-in rights to promote affordable access to publicly-funded inventions. Among other limitations, commenters noted march-in rights likely do not authorize the government to set product prices.

The case here highlights that the Government has broad power in situations where parties have accepted federal funding. It does not, however, answer when exertion of that power is sound policy.

= = =

I received several emails and comments about this post unfairly treating Section 202 and 203 rights as the same thing.  I agree that I was cavalier in my post by not distinguishing the two. Although both involve actions that the Federal Government can take with regard to federally-funded inventions, Section 202 licenses are regularly relied upon, while Section 203 march-in rights are almost never relied upon (but the Biden admin would like to expand their use.)

Section 202 provides the Federal Government with a nonexclusive, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.  Section 203 allows the U.S. government to go further an grant a narrow “reasonable” license to a “responsible applicant” if the patent resulted from federally funded research and certain conditions are met.  The government can only exercise Section 203 march-in rights if it determines that action is necessary because the patent owner has not achieved “practical application” of the invention or because public health/safety needs are not being reasonably satisfied. So there must be a specific triggering condition.  Those limits are not in place for Section 202 license rights.

 

Federal Circuit Reverses PTAB on Printed Publication Status of Operating Manuals

by Dennis Crouch

It is interesting that we continue to have cases fighting over what counts as a “printed publication” under 35 U.S.C. § 102.

In Weber, Inc. v. Provisur Technologies, Inc., Nos. 2022-1751, 2022-1813 (Fed. Cir. Feb. 8, 2024), the PTAB sided with the patentee, but on appeal the Federal Circuit reversed — finding that Weber’s food slicer operating manuals was a printed publication.  The case shows that documents with quite limited distribution, such as operating manuals sent to ~10 customers, may still meet the public accessibility standard for prior art depending on the circumstances of disclosure and expectations around further dissemination.

Although this case involves pre-AIA 35 U.S.C. § 102(b), the same “printed publication” language is found in post-AIA 35 U.S.C. § 102(a).

The case involved a dispute between competitor food slicer manufacturers Weber and Provisur. Provisur sued Weber for infringing two of its patents relating to high-speed mechanical slicers used to slice and package meats and cheeses. U.S. Patent Nos. 10,639,812 and 10,625,436. Weber filed two inter partes review petitions asserting that the patents were invalid as obvious based on Weber’s own operating manuals for its commercial slicers, in combination with other prior art references. IPR2020-01556, IPR2020-01557.

The Board initially found in its institution decisions that Weber provided enough evidence to support the public availability of the manuals as printed publications. But in its final written decisions, the Board changed course and found that the manuals were not sufficiently publicly accessible due to limited dissemination and confidentiality restrictions.

On appeal, the Federal Circuit against the patentee. Writing for the panel, Judge Reyna explained that “[t]he touchstone of whether a reference constitutes a printed publication is public accessibility” and that “[t]he standard for public accessibility is whether interested members of the relevant public could locate the reference by reasonable diligence.”

The scope and content of the prior art is a question of fact. Thus, the Federal Circuit gave deference to the PTAB’s determination of inadequate public accessibility, but ultimately concluded that the Board’s decision was not supported by substantial evidence:

The record evidence shows that Weber’s operating manuals were accessible to interested members of the relevant public by reasonable diligence. For instance, Weber employees testified that the operating manuals could be obtained either upon purchase of the Weber food slicer or upon request directed to a Weber employee.

Id. The Board had relied heavily on the Federal Circuit’s decision in Cordis Corp. v. Boston Scientific Corp., 561 F.3d 1319 (Fed. Cir. 2009).  In Cordis, the court faced the question of whether two two academic monographs describing an inventor’s work
distributed to several university and hospital colleagues as well as two companies interested in commercializing the technology.  Although there was no express confidentiality agreement, the court found that “academic norms” included an expectation that the disclosures would remain confidential. With regard to the distribution to commercial entities, the court found found that the inventor had requested and expected confidentiality. The court noted the lack of evidence showing these types of entities typically made such documents publicly available or that they had incentives to do so. Dr. Palmaz also testified that confidentiality was requested and honored in practice.  The written agreement with one of the companies expressly disclaimed any confidentiality obligations, but the court still found that the document was kept within the company and that the expectation of confidentiality was reasonable.

On appeal, the Federal Circuit distinguished Cordis from the situation in Weber:

Weber’s operating manuals were created for dissemination to the interested public to provide instructions about how to assemble, use, clean, and maintain Weber’s slicer, as well as guidance for addressing malfunctions that users might encounter.

Id.  Somewhere between 10 and 40 entities received the manuals. But, the Federal Circuit concluded that “No minimum number of occasions of access is dispositive of the public accessibility inquiry in all cases.”  Accessibility does not actually require that it was accessed.

The commercial slicers were quite costly and so the manual was only distributed to this small number of companies. The manual also included a copyright notice that the Board found prevented substantial distribution.  On appeal, the Federal Circuit found these limits inadequate.  The purchasers were the interested public that obviously could “afford the high-cost slicers.” And, “Weber expressly instructed customers who were re-selling their slicers to transfer their operating manuals to purchasing third parties.”

I wonder how the court would have ruled if the manuals distributed to customers included a stronger confidentiality expectation.

Panel: Judges Reyna, Hughes, Stark. Opinion by Judge Reyna.
Arguing counsel: Richard Crudo (Sterne Kessler) for Weber, Inc. and Michael Babbitt (Willkie Farr) for Provisur Technologies, Inc.

AI and Patent Attorney Misconduct

Yesterday in my patent prosecution course, students turned to AI tools to help them draft patent claims.  None of the AI-proposed claims were ready for prime-time, but they served as a useful starting point as the students organized their thoughts.  More and more attorneys are turning to these same AI tools to help them be more productive and efficient while delivering a higher quality work product.  It is tough, for instance, to read all the prior art. AI tools can help mine the references for potential obviousness problems — and provide a pin cite to the key language in the art.

USPTO Director Vidal recently released a new memorandum concerning the use of artificial intelligence (AI) in patent office proceedings.  directorguidance-aiuse-legalproceedings. The memo recognizes that AI tools can be powerful both for applicants and for USPTO examiners.  But, AI tools cannot be used to avoid ethical duties.  The memo thus provides firm guidance that existing ethics rules on candor and misconduct apply even when AI tools are used to generate legal filings and evidence. This comes on the heels of several high-profile cases of “AI hallucination” outside of the PTO context, where language models like ChatGPT produced false information that lawyers presented as fact or law.

For example, submissions to the USPTO generally require a signature, and by affixing a signature, the signatory-who has to be a person-certifies, among other things, that “All statements made therein of the party’s own knowledge are true,” that “all statements made therein on information and belief are believed to be true,” that “after an inquiry reasonable under the circumstances” any “legal contentions are warranted by existing law” or “by a nonfrivolous argument for the extension … or reversal of existing law,” and that “factual contentions have evidentiary support” or likely will have evidentiary support after a reasonable opportunity for discovery.

Quoting from USPTO Rule 11.18.  This rule is based directly on the Federal Rule of Civil Procedure , Rule 11 that has been applied in the AI context.  Dir. Vidal goes on to highlight a few particular circumstances:

  • Simply assuming the accuracy of an AI tool is not a reasonable inquiry.  
  • A submission (including an AI-generated or Al-assisted submission) that misstates facts or law could also be construed as a paper presented for an improper purpose because it could “cause unnecessary delay or needless increase in the cost of any proceeding before the Office.”
  • Etc.

Be careful out there everyone!

 

Judicial Misconduct Sanction Against Judge Newman Affirmed

by Dennis Crouch

The Judicial Conduct and Disability Committee has denied Federal Circuit Judge Pauline Newman’s petition challenging the Federal Circuit Judicial Council’s misconduct finding against her. The Committee includes seven Federal Judges from around the country, chaired by Fourth Circuit Judge Traxler. The particular finding here is an affirming the Federal Circuit’s determination that Judge Newman committed serious misconduct by refusing to undergo a requested medical examination to assess whether she has a disability rendering her unable to discharge her judicial duties. In re Newman.

The complaint originated in March 2023 when the Federal Circuit Chief Judge Moore identified concerns about Judge Newman’s fitness for office based on incidents suggesting significant cognitive impairment. A Special Committee of Federal Circuit judges was appointed to investigate whether Judge Newman has a disability. The Committee ordered Judge Newman to undergo neurological and neuropsychological testing to make this determination. Judge Newman refused, arguing the special Committee lacked reasonable basis for the testing and her due process rights were violated.

The Special Committee and Judicial Council (consisting of all Federal Circuit judges except for Judge Newman) found Judge Newman’s refusal to comply constituted serious misconduct under the Rules for Judicial-Conduct and Judicial-Disability Proceedings. Her failure to cooperate meant that her “fitness” could not be determined.  As sanction, Judge Newman was barred from hearing cases for one year, subject to renewal if she continues refusing to comply.

In her petition to the Broader Committee, Judge Newman argued the Council abused discretion by not transferring her case to another circuit and that alleged due process violations established good cause for her noncompliance. She also challenged the sanction as exceeding the Council’s authority.

The Committee upheld the misconduct finding and sanction.  It found the Chief Judge and Judicial Council properly exercised discretion not to request a transfer per the Rules’ exceptional circumstances standard. Judge Newman’s due process arguments also failed since she received required procedures and access to evidence. The one-year case suspension comported with the Council’s responsibility to ensure effective court administration under the circumstances and was “not grossly in excess of other suspensions imposed under the Act.”

By unanimously affirming the finding against Judge Newman, the Committee reinforced judicial councils’ broad authority to investigate disability complaints and impose sanctions for noncompliance. However, its opinion indicates that a transfer may be warranted if, for instance, Judge Newman calls Judicial Council members as witnesses regarding her fitness in future Judicial Council proceedings.

Judge Newman’s lawsuit in the D.C. Circuit is ongoing, with the district court considering the motion to dismiss filed by her co-judges.  Newman v. Moore, et al., Docket No. 1:23-cv-01334 (D.D.C. Filed May 10, 2023).

 

Livestream of LKQ v. GM

The Federal Circuit is hearing oral arguments today in the design patent case of  LKQ Corporation v. GM Global Technology Operations LLC 21-2348.  Judge Stoll’s opinion in the case sides with the patentee GM on the issue of obviousness — affirming a PTAB decision in favor of the patentee.  LKQ’s appellate team led by Prof. Mark Lemley argues that Federal Circuit’s obviousness standard (known here as the Rosen-Durling test) makes it too difficult to actual reject or cancel design patent claims.  Lemley argues for a much more flexible and common sense approach as required by KSR.  The USPTO’s amicus agrees Federal Circuit law should be expanded, but not as far as suggested by LKQ.  GM argues for the status quo.

According to the listing, the en banc panel today consist of Chief Judge Moore,  and Circuit Court Judges Lourie, Dyk, Prost, Reyna, Taranto, Chen, Hughes, Stoll, and Stark.  Not listed is Judges Cunningham and Newman.  

Livestream below: (more…)