The trade-battles are heating up – with President Trump imposing tens of billions of dollars of new tariffs on Chinese imports and China responding in-kind to US good imported into China. Additional tariffs have been announced on a more global basis on goods worth hundreds-of-billions of dollars.
The operational process here is that the office of the United States Trade Representative (USTR)* has gone through a political and deliberative process of determining which imports to tie to a 25% tariff (import tax). The justification for the tariff is largely based upon Chinese non-tariff barriers to US goods. In particular, the USTR found in its “Section 301 report” that “the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation covered in the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce.” The chosen tariffs primarily focus on products related to China’s “Made in China 2025” initiative to move up the industrial food-chain in terms of high technology and pharmaceutical product manufacture. The allegations are that the initiative is being implemented by placing barriers to US imports and by using unlicensed US intellectual property rights.
In a new notice, the USTR has provided a particular pull-back process to allow US stakeholders to request particular products be excluded from the import tariff based upon “severe economic harm to a U.S. interest” that could result from the tariffs. [New Notice]. The requirements for the submission are fairly onerous for anyone who does not already have an intimate understanding of US Trade laws and practices. Thus, I expect that the primary filers will be industry-focused trade organizations. The notice also provides a limited opportunity to oppose any requested exclusions.
Notes:
In the US, disputes over tariffs are heard by the US Court of International Trade with appeals going to the Federal Circuit.
The Office of the US Trade Representative is an administrative agency headed by the USTR (Robert Lighthizer), a cabinet level political appointee.
by Dennis Crouch [Updated on July 12 to correct an error]
Apple and Google v. ContentGuard v. Iancu (Fed. Cir. 2018)
Apple and Google both challenged ContentGuard’s U.S. Patent 7,774,280 under the Covered Business Method Post Grant Review proceedings. The challenges raised eligibility, novelty, and obviousness challenges to several of the claims, but the Director (acting via the PTAB) only partially instituted: instituting only on novelty and obviousness, and only to three of the claims. In the end, the PTAB found those claims obvious, but also allowed the patentee to add Claim 37 as a substitute for Claim 1 and found the new claim valid (not proven invalid).
On appeal, the Federal Circuit ruled the entire event a nullity — finding that the PTAB used the wrong standard for determining whether the patent qualifies as a covered business method. See Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1323 (Fed. Cir. 2015) and Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1379 (Fed. Cir. 2016). A key case on point is also Secure Axcess, LLC v. PNC Bank National Ass’n, 848 F.3d 1370, 1381 (Fed. Cir. 2017). However, that case was vacated as moot by the Supreme Court in PNC Bank Nat. Ass’n v. Secure Axcess, LLC, 138 S. Ct. 1982 (2018).
The “Transitional Program for Covered Business Method Patents” is not codified within the United States Code (35 U.S.C. ___) because it is only a temporary program that sunsets in September 2020. Thus, the CBM program is generally cited as Section 18 of the Leahy-Smith America Invents Act.
Although the program allows for broad challenges of “covered business method” beyond the 102/103 published art restrictions of inter partes review, it also provides a particular narrow definition of what counts as a a covered business method patent:
[A] patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.
In Unwired Planet, the Federal Circuit held that the “financial product or service” cannot be merely “incidental to or “complementary to” a financial activity. Rather, the claims must have a “particular use” focused on financial activity.
Here, exemplary claim 1 is a method of “transferring rights” using “meta-rights”:
1. A computer-implemented method for transferring rights adapted to be associated with items from a rights supplier to a rights consumer, the method comprising:
obtaining a set of rights associated with an item, the set of rights including a meta-right specifying a right that can be created when the meta-right is exercised, wherein the meta-right
is provided in digital form and is enforceable by a repository;
determining, by a repository, whether the rights consumer is entitled to the right specified by the meta-right; and
exercising the meta-right to create the right specified by the meta-right if the rights consumer is entitled to the right specified by the meta-right, wherein the created right includes at least one state variable based on the set of rights and used for determining a state of the created right.
Google and Apple allegedly use this process to transfer access to third-party apps via their Play Stores.
In the appeal, the Federal Circuit explained that the system could be used in either financial services or non-financial services – and it “is not enough for the specification to describe how the invention could, in some instances, be used to facilitate financial transactions.”
CBM Decision Vacated: On remand, the PTAB will revisit the CBM question and will also need to follow the new rules against partial-grants.
= = = =
I’ll note here that the added claim 37 — that the PTAB found good-to-go adds a few limitations:
The “item” – the subject of the rights being transferred is an “item of content;”
The rights being transferred are “usage rights” or perhaps “another meta-right” (metameta); and
The “meta-right is not itself a usage right because exercising the meta-right
does not result in action to the content.”
It will be interesting to see whether the patentee goes about amending its claims through rexamination or reissue to add the new language.
= = = =
At the petition stage, Google argued that the claims were directed to the abstract idea of “providing consumers with rights to an item, such as a movie or book.” The Director (via the PTAB panel) disagreed – although providing what appears to be extremely weak analysis:
Google’s arguments that the challenged claims … are directed to a patent-ineligible abstract idea are predicated on the notion that they recite a fundamental economic or longstanding commercial practice.
Contrary to Google’s arguments, the challenged claims are not directed merely to “providing consumers with rights to an item, such as a movie or book,” nor can the features recited in the challenged claims be stripped away so that these claims simply are directed to a traditional approach or method of licensing or sub-licensing content. Indeed, the challenged claims require much more.
For instance, independent claims 1 and 12 require obtaining “rights associated with an item”—namely, a digital work—wherein the set of rights includes a “meta-right” specifying a “right” that may be created. These claims further require providing the “meta-right in digital form” and indicate that the “meta-right” is enforceable by a “repository,” which, based on our claim construction above, constitutes “a trusted system” that enforces the “meta-rights” using very specific computer security and rights enforcement “integrities.” In addition, these claims further require “at least one state variable” used to determine the state of the “right” created by the “meta-right.”
Texas Advanced Optoelectronic v. Renesas Elecs. Am., 16-2121 (Fed. Cir. 2018)(Modified Panel Opinion Released July 9, 2018)
TAOS v. Renesas, focuses on the interplay between trade secret misappropriation (under Texas law), and patent law. TAOS patented an ambient light sensor using a photodiode array. See U.S. Patent No. 6,596,981. This type of sensor is widely used in smartphones to adjust the display brightness. Following failed merger negotiations, Intersil developed a competing product — which the district court found relied upon confidential information received during the negotiations. A jury found Intersil liable for patent infringement, trade secret misappropriation, breach of contract, and tortious interference with prospective business.
The damages verdict was as follows:
Patent Infringement: $74,000
Trade Secret Misappropriation – Disgorgment of D’s Profits: $48,000,000
The district court ruled that the Trade Secret award was duplicative of the Contract and Tortious Interference awards — and thus kept only the larger of those awards. All this was based upon the longstanding principle that “double recovery for the same injury is inappropriate.” Aero Prods. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1017 (Fed. Cir. 2006). Still, the state law trade secret damages were more than 500 times greater than the federal patent law damages.
Patent and Trade Secret?: One of the initial thought experiments for potential patentees is whether to (1) file for patent protection or instead (2) keep the invention as a trade secret. It turns out though that one of the jedi tricks of in-house counsel the art of layering rights rather than choosing rights. Counsel ask question: What must be disclosed in the patent application in order to obtain full rights?; What information may be kept secret without endangering the patent rights?; Can the product or process be divided into separate components so that some may be kept secret while others made public in patent documents? Is it possible to keep the patent documents secret for longer? Because early filing is so strongly encouraged in the patent system, it is regularly true that implementation details are developed after the filing date that are appropriately kept as trade secrets. Here, the alleged trade secretes included financial information on the costs as well as some technical information (the 1:1 interleaved array structure).
The combination is a trade secret: The asserted patent discloses, individually, a 1:1 array structure and also the interleaving of shielded and unshielded wells. However, the patent does not disclose the combination, of the array and interleaving wells (despite the fact that both disclosures are in the same patent application). It was proper here – according to the court – for the jury to find that the combination remained a trade secret. Here, it appears that the trade-secret combination need only survive a novelty test. See Sikes v. McGraw-Edison Co., 665 F.2d 731, 736 (5th Cir. 1982) (concluding that, under Texas law, a trade secret may be “the application of known techniques and the assembly of available components”; “a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which in unique combination, affords a competitive advantage and is a protectible secret”).
On appeal, the Federal Circuit affirmed that this technical information could be the enforceable trade secret. However, the court ruled that it was improper for TAOS to recover on both patent and trade secret claim
Here, Intersil’s use of TAOS’s photodiode array structure is the basis of Intersil’s liability for both trade secret misappropriation and patent infringement. . . . The patent award represents an impermissible double recovery [since] ‘all of the damages awarded to [plaintiff] flowed from the same operative facts: sales of the [same] infringing [products].’ (Quoting Aero Prods. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1017 (Fed. Cir. 2006)).
In Aero Prods., the Federal Circuit explained that “in determining whether there has been an impermissible double recovery of damages, the inquiry focuses on whether the damages issue arose from the same set of operative facts.”
Later-Acquired by Proper Means: An important question for damages: How long does the trade secret last. Here, in particular, prior to the real harm (Intersil’s contract with Apple), TAOS had already released its product and Intersil had reverse-engineered that product.
Timeline:
Summer 2003: TAOS ‘981 patent issues with 1:1 array and interleaving disclosed (but not the combination);
Summer 2004: Intersil received technical information from TAOS regarding 1:1 interleaving as part of merger negotiations;
August 2004: After ending negotiations, Intersil began developing its own 1:1 interleaved product;
January 2005: TAOS won contract from Apple to supply the sensors;
February 2005: TAOS releases its product that include the 1:1 interleaving;
January 2006: Intersil reverse-engineered TAOS product that included the 1:1 interleaving;
September 2006: Intersil won contract from Apple to supply the sensors;
November 2008: Lawsuit began.
Here, the Intersil contract was not inked until after Intersil had reverse-engineered the TAOS product. Under Texas trade secrecy law, information is no longer a protectable trade secret once accessible by “proper means.” The court explained:
Such accessibility existed no later than January 2006, when Intersil successfully reverse-engineered the TSL2560, and perhaps as early as February 2005, when TAOS “released” the TSL2560.
Under the law then, “secrecy protection terminated at the end of the period of time it would have taken Intersil, after Intersil’s permissible discovery of the photodiode structure, to recreate that structure in its own products.”
Financial Information: In addition to limiting the damages for the technical-information misappropriation, the court ruled that the financial information was not protectable:
Cost information: Not protectable because Intersil already had its own cost information by the time of the alleged misappropriation.
Build-vs-Buy Analysis: Not protectable because the confidentiality agreement between the parties allowed for its use.
One additional problem with the trade secret damage award: Disgorgement: The jury had awarded damages in the form of disgorging profits of the defendant. On appeal, the Federal Circuit ruled that disgorgment is not available for trade secret misappropriation (without proving that disgorgment was the proper form of compensatory damages). The result here offers an interesting historical analysis of trade secret damages.
The Federal Circuit originally issued the decision in May 2017, the court has now denied a petition for rehearing en banc, but has rewritten a portion of the opinion relating to the patent damages — TAOS had asked for worldwide damages, but those continue to be denied.
Intersil submitted evidence that, except for 1.2% of the accused units, all of its accused products were manufactured, packaged, and tested abroad, and those units were shipped to manufacturers and distributors abroad. . . . But even the additional evidence . . . of domestic negotiations and Intersil’s testing of some of Intersil’s products—does not demonstrate “substantial activities regarding sales” sufficient to raise a material dispute of fact as to sales or offers to sell in the United States. . . . Intersil presented evidence of extraterritorial manufacturing, packaging, and shipping, and TAOS failed to present any evidence establishing the required domestic activity. On this record, TAOS has not produced evidence sufficient to raise a material dispute of fact as to the 98.8% of units that were the subject of the district court’s grant of summary judgment.
International damages for patent infringement denied.
In a non-precedential decision, the Federal Circuit has rejected George Wang’s pro se appeal — affirming the PTAB judgment that Wang’s claimed phonetic symbol system lacks eligibility under Section 101.
The baseline here is that the written english language is only quasi-phonetic. Every rule of spelling or pronunciation has layers of exceptions. Linguists have developed a phonetic pronunciation guides, but those use quirky non-english letters. Wang’s invention here offers a one-to-one system tying each vowel and consonant sound to a single phonetic symbol, and uses only English letters for the phonetic symbols. Table 1 below comes from Wang’s patent application and offers an example embodiment of his system:
The claim (slightly edited for clarity):
A phonetic symbol system comprising:
a plurality of phonetic symbols,
wherein each of said phonetic symbols is defined by one (or more than one) letter of English alphabet, the case or the style of said letter does not affect the sounds of said phonetic symbols,
each vowel [sound] is distinctively represented by one of said vowel phonetic symbols, and each consonant [sound] is distinctively represented by one of said consonant phonetic symbols.
Rather than reaching the more controversial aspects of eligibility, the court here first focused on the statutory requirement that a patent must be directed to a “process, machine, manufacture, or composition of matter.” 35 U.S.C. 101. Since the claim is not directed to any concrete physical form, it cannot be a machine, manufacture, or composition of matter. Further, because the claim does not actually require performance of any steps, then it cannot be defined as a process.
Without analysis, the court also agreed with the PTO that “defining phonetic symbols in language, using strings of English letters, is an unpatentable abstract idea” and that the claims offer nothing beyond the abstract idea:
[W]here, as here, claims of a patent application recite an abstract idea, the question becomes whether they contain “additional features” that embody an “inventive concept,” so as to nevertheless make them patenteligible. Alice Corp. Pty. Ltd v. CLS Bank Int’l, 134 S. Ct.
2347 (2014). The application claims on appeal, however, contain no “additional features” of any kind embodying an inventive concept. The claims merely encompass strings of English letters representing sounds. In short, there is no inventive concept that rescues them from patent ineligibility.
Rejection affirmed.
As the old saying goes, part of Mr. Wang’s problem is that he “has a fool for a client.” Patent law and procedure is at such a high level of complexity that it very rarely makes sense for an inventor to represent himself — especially at the appellate level.
My question for the patent attorneys and agents here: Is there a way for Wang to turn this case around by amending the claims so that they recite a particular method. [Read the application here: https://patents.google.com/patent/US20130054227] Is this the type of idea that patent law should cover? Consider U.S. Patent No. 7,004,758.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.
Back in 2016, Adidas petitioned the USPTO Director to institute inter partes review (IPR) proceedings against two of Nike’s patents. U.S. Patent Nos. 7,814,598 and 8,266,749. Acting on behalf of the Director, the PTAB instituted review of all challenged claims. The caveat – Although Adidas had raised two different grounds for challenging the claims, the USPTO instituted only on ground 1.
Here, the invention basically has three steps: (1) knitting fabric in a cylindrical form and then (2) cutting out a shoe-upper pattern from the fabric; and (3) incorporating the cut-out into a shoe. Grounds 1 and 2 were obviousness challenges with overlapping prior art citations: Ground 1 (Reed and Nishida) and Ground 2 (Castello, Fujiwara, and Nishida). In its final determination – focused just on Ground 1 – the PTAB sided with the patentee Nike and held that Adidas had not met its burden of proving obviousness.
On appeal, Adidas argued that the case should be remanded under SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). Although SAS focused on institution of all challenged claims – Adidas argues here that the case stands for the proposition that an IPR petition may only be granted/denied as a whole – if is granted, it must be granted as a whole, including all grounds for challenging all claims. Further, Adidas argues for remand because the PTAB has changed its own rules and now institutes review on all challenges raised in a petition. See Guidance on the Impact of SAS on AIA Trial Proceedings (Apr. 26, 2018).
The Federal Circuit has now sided with Adidas – ordering remand to consider all grounds raised by the petition as required by SAS. [Read the Decision: AdidasNike]
The appellate court writes:
The [Supreme] Court explained in SAS that in establishing inter partes review, Congress set forth “a process in which it’s the petitioner, not the Director, who gets to define the contours of the proceeding.” The Court held that if the Director institutes review proceedings, the review must proceed “in accordance with or in conformance to the petition,” a “petition describing ‘each claim challenged’ and ‘the grounds on which the challenge to each claim is based,'” (quoting 35 U.S.C. § 312(a)(3)). “Nothing suggests the Director enjoys a license to depart from the petition and institute a different inter partes review of his own design.” The [Supreme] Court found that “the petitioner’s petition, not the Director’s discretion, is supposed to guide the life of the litigation,” and “that the petitioner’s contentions, not the Director’s discretion, define the scope of the litigation all the way from institution through to conclusion.”
Nike argued that Adidas had also waived its right to present the alternative grounds by failing to raise the issue before the Board. On appeal, the Federal Circuit found “waiver inapplicable” in this case because the request on appeal was filed as “a prompt remand request due to the significant change in the law.”
= = = =
Looking back at the institution decision and reasons for denial on Ground 2, the PTAB explained that the petition “fail[ed] to identify ‘with particularity’ the grounds and evidence that form the underlying basis for Petitioner’s patentability challenge. For instance, with respect to claim 1, the claim chart offered to point out where the features of the claim are present in the prior art spans four pages and constitutes bulk citation to portions of Castello, Fujiwara, and Nishida. See Pet. 34–37. Such an approach does not provide meaningful “particularity” sufficient for the panel to ascertain where, specifically, Petitioner identifies the limitations of the claim in the prior art.”
A new legislative proposal (H.R. 6264) from Rep. Thomas Massie (R-Ky) is designed to largely roll-back the America Invents Act. [FinalPatentBill][SectionBySection]. Massie is an MIT Engineer, Inventor, and largely Libertarian in his approach to legislation.
Although libertarians are somewhat divided on the role of intellectual property rights, Massie is firmly in the camp of treating them as strong property rights. Thus, the proposal begins with several findings of Congress:
The [AIA] and several decisions of the Supreme Court have harmed the progress of Science and the useful Arts by eroding the strength and value of the patent system.
The United States Government exists to protect life, liberty, and property, which includes intellectual property.
A United States patent secures a private property right to an inventor.
This Act restores the patent system as envisioned by the Constitution of the United States.
Title: Restoring America’s Leadership in Innovation Act of 2018
The basic provisions here are as follows (although this is only a high-level review):
Section 3: Repeal the first-to-file system and replace it with the old first-to-file system, the one-year grace period and a statement that “a person shall be entitled to a patent where the inventor is first to conceive of the invention and diligently reduces the invention to practice.”
Section 4 and 5: Abolish the AIA Trials and revert the PTAB to the BPAI — noting that AIA Trials have “harmed the progress” by “invalidat[ing] patents and an unreasonably high rate.” Note, that the provision would not re-start Inter Partes Reexaminations.
Section 6: Allow PTO to keep and use all of its fees collected even if not spent that fiscal year.
Section 8: Limit certain prior art if derived from the applicant.
Section 9: Add the following statement: “A patent right is a private property right secured to an inventor upon issuance of the patent that shall only be revoked by a court ruling in a judicial proceeding, unless the patent owner consents to an administrative or other procedure. . . . patents shall be recognized as private property rights.” The provision is also designed to allow for full freedom-of-contract, including licensing without exhaustion.
Section 10: abolishes publication of patents except upon request by the patent applicant with the explanation that “automatic publication of patent applications . . . has harmed the progress of science and the useful arts by creating ‘‘prior art’’ by operation of law that prevents a patent owner from applying for a patent on the same invention if a patent does not issue.”
Section 11: Establish strong presumption of validity to be applied whenever a patent is challenged (including administrative proceedings); Toll the patent term during any patent challenge.
Section 12: Overrules eBay v. MercExchange by creating a presumption that any infringement creates irreparable harm.
Section 13: Allowing best mode failure as a defense once again.
Note here that this proposal has a 0% likelihood of passing this Congress, but it has been introduced and offers an interesting discussion point.
The light bulb represents the patent system in many ways – both for the invention itself and for the symbolic spark of creativity and determined perseverance that it represents. Thus, it may be appropriate that a new Supreme Court petition stems from a light-bulb case (white LEDs). Nichia Corporation v. Everlight Electronics Co., Ltd., Supreme Court Docket No. 17-1707 (2018).
Professor Mark Lemley (acting in his role as an advocate) has filed a new petition for writ of certiorari focused on the question of obviousness — asking why the Federal Circuit is effectively treating obviousness as a question of fact:
1. This Court has repeatedly held that whether a patent is invalid as obvious is a question of law, though it may depend on subsidiary factual findings. . . . Should an appellate court review the ultimate legal question of obviousness de novo, as the Seventh and Ninth Circuits have held and as the Federal Circuit held before 2012, or must the appellate court defer to a jury’s conclusion even on the ultimate legal question, as the Federal Circuit has repeatedly held in patent cases since 2012?
2. Alternatively, if this Court were to conclude that obviousness presents a “mixed” question of law and fact, as the Federal Circuit now treats it, should this Court grant certiorari, vacate, and remand this case to determine whether appellate review of that “mixed” question should be de novo or deferential in light of U.S. Bank National Association ex rel. CWCapital Asset Management LLC v. Village at Lakeridge, LLC, 138 S. Ct. 960, 967 (2018), a case decided after the Federal Circuit decision here?
The brief explains that in 2012, the Federal Circuit abandoned its historic treatment of obviousness as a question of law (and de novo review) and began instead “deferring to jury verdicts even on ultimate questions of law.”
Although this particular case is focused at the appellate level, a statement from the Supreme Court could also shift how district courts decide — particularly requiring that district court judges rule on the ultimate question of obviousness (doing so would require a reasoned opinion as well). The brief explains that this designation as a question of law is not a mere happenstance in this situation – but rather:
[R]eflects the long-standing recognition that patents are public rights and that the public has an interest in the proper determination of their validity. . . Judges, not juries, are expected to set the proper balance between the interests of patentees and the public, and to do so on the record.
In this case, Prof. Lemley is representing the patentee Nichia who’s asserted claims were found invalid by a jury. The patent, U.S. Patent No. 5,998,925, covers an improved white-light LED.
With reference to my earlier post on international patent rights as a chip in international trade negotiations, consider recent discussion of Trump stepping back from the World Trade Organization (WTO) – the administrator of TRIPS and GATT.
Patent owners and innovators continue to push for statutory reform of the doctrine of subject matter eligibility — with the primary goal of repudiating recent Supreme Court precedent of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012) and Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).
Several bar associations and groups presented their proposed revisions. That approach, however, was something of a stumbling block for the initiatives. Although there was generalized unity, there has not been unity on the specifics. That is slowly changing with AIPLA, IPO, and NYIPLA all on-board with roughly the same proposal:
35 U.S.C. § 101—Inventions Patentable
(a) Eligible Subject Matter.—Whoever invents or discovers any useful process, machine, manufacture, composition of matter, or any useful improvement thereof, shall be entitled to a patent therefor, subject only to the conditions and requirements set forth in this title.
(b) Sole Exceptions to Subject Matter Eligibility.—A claimed invention is ineligible under subsection (a) only if the claimed invention as a whole exists in nature independent of and prior to any human activity, or can be performed solely in the human mind.
(c) Sole Eligibility Standard.—The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard to the requirements or conditions of sections 102, 103, and 112 of this title, the manner in which the claimed invention was made or discovered, or whether the claimed invention includes an inventive concept.
Here, the term “claimed invention” does not mean what might suggest — an invention that has been claimed in a patent or patent application. Rather, the term “claimed invention” is narrowly defined as “the subject matter defined by a claim in a patent or an application for a patent.” 35 U.S.C. 100(j). In other words, the “claimed invention” is what is claimed to be the invention.
Of course, the next step will be much more difficult for proponents of the legislation – getting Congress to act.
Bilski v. Kappos, 561 U.S. 593 (2010) (machine-or-transformation test is not the sole test for determining patent eligibility)
KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398 (2007) (common sense allows PHOSITA to combine references in considering an invention’s obviousness)
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722 (2002) (narrowing amendment presumptively creates prosecution history estoppel)
Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920 (2015) (an infringer’s belief that a patent is invalid is not a defense to a claim of induced infringement)
TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001) (utility patent creates strong inference of a design’s functionality)
Vanda Pharms. Inc. v. West-Ward Pharms. Int’l Ltd., 887 F.3d 1117 (Fed. Cir. 2018) offers an example of a claim on the cusp of eligibility. In a 2-1 decision, Vanda’s schizophrenia treatment claim was found eligible with Judge Lourie penning the majority and Chief Judge Prost in dissent. Judge Hughes was the swing vote here.
I have several thoughts on the patents at issue here, but they boil down to the following (1) Vanda’s claims should be patent eligible; (2) but the claims are not patent eligible under Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012) and Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).
Now, West-Ward has filed its petition for rehearing en banc on the following question*:
1. Whether adjusting a dose of an old drug based on a patient’s genetic risk of poorly metabolizing it is eligible for patenting under 35 U.S.C. § 101.
A brief in support has been filed by Inventia and Mylan.
I previously wrote that “the majority’s approach appears to latch onto simple patent drafting tricks as the basis for distinguishing Mayo — an approach directly rejected by the Supreme Court in Mayo.”
The claim in Vanda is directed toward a method of treating a patient suffering from schizophrenia with the drug iloperidone. The drug was already known as a schizophrenia treatment prior to the invention here, but some individuals did not tolerate the drug well (risk of “QTc prolongation”). The major discovery of the inventors here was that a genetic difference (the “CYP2D6 genotype”) led to those folks likely being poor metabolizers of iloperiodon. The patent then has two basic steps:
Determining whether the patient is genetically a poor metabolizer of the drug (i.e., has the CYP2D6 genotype)
Administering iloperidone to the patient (<12 mg per day if express CYP2D6 genotype; otherwise 12-24 mg per day) in order to reduce the risk of “QTc prolongation” for poor metabolizers.
The basics here is that the inventors discovered the relationship between the genetic expression, a potential risk, and a safe drug level. That discovery itself is clearly not patentable and so the patentee added
The Supreme Court’s Mayo decision also involved a personalized treatment approach (this time for IBD) based upon metabolization rate with the following two steps:
Administering the drug (6-thioguanine) to treat the GI disorder; and
Measure (“determine”) the level of the drug (6-thioguanine) in the blood — with low levels (<230 pmol per 8×108 red blood cells) indicating a need to increase the next drug dosage and high levels (>400 pmol per 8×108 red blood cells) indicating a need to decrease the next drug dosage.
In distinguishing these claims the majority explained that
Mayo was a diagnostic method while Vanda is a treatment method. The reality is though that both are diagnostic and treatment oriented. What the majority suggests, but does not say, is that Mayo’s claims would be patent eligible if they added one more step of injecting the new dosage. To me added injection sounds like the type of non-inventive post-solution activity that cannot transform an ineligible law of nature into a patent eligible invention.
Stepping back a little bit — One way to think about this case is as the flip side of Sequenom. In that case, the Federal Circuit followed Mayo, but expressly called for the Supreme Court to revisit its eligibility doctrine. In his en banc denial concurring opinion, Judge Lourie wrote: “I find no principled basis to distinguish this case from Mayo, by which we are bound.” However, the Supreme Court did not grant certiorari in Sequenom. Rather than following that same approach — asking for help from the Supreme Court — The court in Vanda decided to make it happen themselves. In my view, an en banc denial here will be a high flaunting of Supreme Court precedent — the question then will be what – if anything – will the Supreme Court do about it?
The Supreme Court has granted Helsinn’s petition for writ of certiori in the first case focusing on the 2011 rewriting of the prior art and novelty statute 35 U.S.C. 102.
Issue: Whether, under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.
Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc., Docket No. 17-1229. Expect a hearing this fall and a decision early 2019.
A major focus of discussions surrounding the AIA first-to-file provisions was to limit prior art to objective and publicly available references. However, Congress did not expressly alter the “on sale” bar language that has been used as a source for the rule that an inventor’s pre-filing secret sales activities (or other commercializing uses) will bar later patenting.
My initial expectation is that the Federal Circuit decision will be affirmed — with a holding that Congress did not intend to overrule 190 year old Supreme Court precedent. But, the conventional wisdom in patent cases is that the Supreme Court does not ordinarily grant certiorari in order to affirm the Federal Circuit.
A key underlying aspect of the focus here is that differential treatment of secret commercialization between the inventor and some random third party has never been express within the statute. The Court need not wait for a new congressional statement to revisit that non-statutory approach.
In my mind, the biggest question in this area is how sales, offers, or other commercialization should be treated in an obviousness analysis.
The specification of U.S. Patent No. 10,000,000 is short – only about three pages long. However, the patentee made room for the following boilerplate:
Although specific advantages have been enumerated above, various embodiments may include some, none, or all of the enumerated advantages.
[O]ther technical advantages may become readily apparent to one of ordinary skill in the art after review of the following figures and description.
It should be understood at the outset that, although exemplary embodiments are illustrated in the figures and described below, the principles of the present disclosure may be implemented using any number of techniques, whether currently known or not. The present disclosure should in no way be limited to the exemplary implementations and techniques illustrated in the drawings and described below.
Unless otherwise specifically noted, articles depicted in the drawings are not necessarily drawn to scale.
Modifications, additions, or omissions may be made to the systems, apparatuses, and methods described herein without departing from the scope of the disclosure. For example, the components of the systems and apparatuses may be integrated or separated. Moreover, the operations of the systems and apparatuses disclosed herein may be performed by more, fewer, or other components and the methods described may include more, fewer, or other steps. Additionally, steps may be performed in any suitable order. As used in this document, “each” refers to each member of a set or each member of a subset of a set.
To aid the Patent Office and any readers of any patent issued on this application in interpreting the claims appended hereto, applicants wish to note that they do not intend any of the appended claims or claim elements to invoke 35 U.S.C. 112(f) unless the words “means for” or “step for” are explicitly used in the particular claim.
In recent remarks at the 10M patent ceremony, Rep. D. Issa discussed a White House trade meeting focusing on problems caused by weak enforcement of patents in Canada. For Issa, this is emblematic of a global problem with the U.S. patent system.
Just today we had a number of people at the White House [discussing trade disputes] . . . They went over in detail what the courts, for example, for years in Canada did to us. They decided that if you didn’t tell people how important your patent was, with specificity, they would just invalidate your patent. [FB Live Link]
The statement is interesting on many levels — including the ongoing role of intellectual property as an aspect of any trade dispute. In the same way that countries can raise tariffs on foreign goods, they can also shift the treatment of foreign patent applicants by raising costs or by setting quotas. While the US has long been a champion of lowering international barriers to patenting, it has also long been a champion of free trade. For a trade battle, these tools are likely all on the table and so we may see rocky times ahead for the international patent system.
Important non-patent Supreme Court case for businesses operating online:
South Dakota v. Wayfair, Inc (Supreme Court June 21, 2018)
Holding: The “physical presence” rule of Quill Corp. v. North Dakota, 504 U. S. 298 is overruled. While states may not impose undue burdens on interstate commerce, the constitution does not prohibit taxation of activities having “substantial nexus with the taxing State” that are non-discriminatory, fairly apportioned, and related to services provided by the state.
Sirona Dental Systems GMBH v. Institut Strauman AG (Fed. Cir. 2018)
In its Final Written Decision, the PTAB partially invalidated Sirona Dental Systems U.S. Patent No. 6,319,006 (claims 1-8 obvious over two prior art references; claims 9-10 patentable). Following cross-appeals, the Federal Circuit the Federal Circuit found no error in these ultimate conclusions, but did vacate the decision based upon the Board’s refusal to allow the patentee to amend its claims.
The ‘006 patent covers the use of x-rays and optical scans of teeth to determine an “optimal bore hole” location for a tooth implant.
Rather than simply requesting an amendment to the claims, Sirona filed a “contingent motion to amend” — essentially asking for two-simultaneous-trips through the whirly ball known as inter partes review. The basic request: If the original claims are found invalid, please amend them to this narrower form. The PTAB does allow these contingent motions, but did not allow it this particular PRE-Aqua decision. In Aqua, the Federal Circuit held that the PTAB had been improperly requiring patentees to prove the patentability of their proposed claim amendments before allowing them to be amended. Rather, under Aqua, it is the petitioner who “bears the burden of proving that proposed amended claims are unpatentable.”
Here, the court writes:
The final written decision, which issued prior to our en banc decision in Aqua Products, improperly placed the burden on Sirona to demonstrate that the proposed substitute claims were patentable. Thus, we must vacate the Board’s denial of Sirona’s contingent motion to amend and remand for the Board to reconsider in light of Aqua Products.
On remand, the PTAB will reconsider whether to allow the amendment and, if so, whether the amendment is sufficient to overcome the prior art.
New Grounds: The Federal Circuit also suggested that the Board consider “in light of recent precedent including SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), whether it may consider combinations of references not argued by the petitioner in opposing the motion to amend claims, and, if so, what procedures consistent with the
APA are required to do so.”
Side note: The PTAB decision here is the one IPRO where then PTO Director Michelle K. Lee took-up her statutory role as a PTAB Judge.
Royal Crown Dr. Pepper, and Seven Up v. Coca Cola (Fed. Cir. 2018)
This case stems from Royal Crown’s opposition of Coca-Cola’s attempt to register various trademarks with the term ZERO. These include, among others, SPRITE ZERO, FANTA ZERO, COKE ZERO, PIBB ZERO, and my favorite COKE ZERO ENERGY.
Coke uses the ZERO mark on zero calorie products — presumably to indicate the same. Other companies, including Royal Crown have used the mark for the same purposes (See DIET RITE PURE ZERO). Royal Crown argued that Coca-Cola should be required to disclaim the term ZERO since it a generic term is simply descriptive of the a feature of the goods. The Federal Circuit has approved of the disclaimer process in the past: “Disclaiming unregistrable components prevents the applicant from asserting exclusive rights in the disclaimed unregistrable terms.” In re La. Fish Fry Prods., Ltd., 797 F.3d 1332, 1335 (Fed. Cir. 2015).
Coca-Cola argued that no disclaimer was necessary since its use of the ZERO mark was not generic and has acquired distinctiveness under Section 2(f) of the Lanham Act. The TTAB agreed with Coca-Cola and approved the marks for publication without any disclaimer.
On appeal, the Federal Circuit has VACATED and REMANDED — holding that the TTAB applied the wrong standard in determining whether the the marks are generic and did not fully consider the evidence presented. The court also held that the TTAB had failed to sufficiently explain how the evidence presented meets the “precise burden” of acquired distinctiveness.
The word ZERO has lots of potential meanings that can vary by context. In trademark law, we look particularly a mark’s use in the particular marketplace at issue (“genus of goods”) and consider how the the relevant public would understand the term with reference to that genus. If the term is understood “to refer to a key aspect of that genus” then it is generic. In re Cordua Rests., Inc., 823 F.3d 594, 603 (Fed. Cir. 2016). It was in the “key aspect” or sub-genus focus that the TTAB failed in its analysis:
The Board here failed to consider whether the relevant consuming public would consider the term ZERO to be generic for a subcategory of the claimed genus of beverages—i.e., the subcategory of the claimed beverages encompassing the specialty beverage categories of drinks with few or no calories or few or no carbohydrates.
On remand, the TTAB will reconsider the issue with a focus on whether ZERO is generic for zero-calorie drinks.
Again, the focus of Trademark Law is the perception of relevant consumers. A word or phrase that is seemingly descriptive of a product can still serve as a protectable mark if those consumers distinctively associate the mark with particular products or services (rather than the genus as a whole). In cases where a mark is “highly descriptive” then “evidence of acquired distinctiveness must be exacting.”
Here, however, the TTAB “did not make any finding as to the degree of descriptiveness conveyed by the term ZERO” nor did it asses the evidence “through an exacting lens.”
What is really going on in the case: Coke could register these marks if it disclaimed protection to ZERO alone. However, it appears that Coke is looking to use these marks as a stepping-stone for prohibiting any other ZERO soft drinks.
The United States government is not directly liable for patent infringement under the Patent Act. However, 28 U.S.C. 1498(a) represents a partial waiver of sovereign immunity — allowing patent owners to sue the US Government for its unlicensed use of a U.S. patent.
149a(a) Whenever an invention described in and covered by a [US] patent . . . is used or manufactured by or for the United States without license . . . or lawful right . . . , the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.
In FastShip, LLC v. U.S., the question before the Federal Circuit was whether the infringing Littoral Combat Ships (“LCS”) were “manufactured” by the Government before the patent expiration dates. In particular, the accused LCS-3 ship model was still under construction when the asserted patents expired, but the patentee argued that it should be considered manufactured since it was substantially complete, including the key aspects of the claims at issue that had no non-infringing uses.
Rejecting the patentee’s argument, the court made the seemingly straightforward determination that a product is not “manufactured” until it is made suitable for use. According to the court, the term should be seen as synonymous with the word “make[]” as found in the ordinary infringement provision of the Patent Act.
[W]e interpret “manufactured” in § 1498 in accordance with its plain meaning, such that a product is “manufactured” when it is made to include each limitation of the thing invented and is therefore suitable for use.
The interpretation here does not fill all potential gaps, but serves its purpose in this case. The claims were interpreted to require a hull — and no hull had been yet built by the patent expiration.
Today the USPTO issued U.S. Patent No. 10,000,000 covering a new form of LADAR invented by Joseph Marron and assigned to Raytheon. [patent10million].
The patent is the 10 millionth issued since the current numbering system was established in 1836. Although the count has been going for 182 years, one-half of the patents have been issued over the past 30 years. The chart below shows the number of U.S. utility patents issued per year over the past four decades with an expected-value for 2018.
LADAR (Laser detection and ranging) is similar to RADAR, but uses a light emitting LASER instead of radio waves. These are well known systems, the improvement appears to be that the system can receive multiple inputs within a single clock cycle.
Patent No. 10 Million is atypical in several ways:
The ‘000 patent lists a single inventor. Most new patents list multiple inventors.
The ‘000 patent does not claim priority to or benefit from any prior US or Foreign application. Most new patents include at least one priority claim.
The ‘000 patent lists a U.S. corporate patent owner. Most new corporate-owned patents are owned by foreign companies.
Compare, for example Patent No. 10,000,001 — an injection molding invention with multiple inventors, claiming priority back to an original Korean patent application and owned by a Korean company.
