All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law.

Introducing the Trade Secret Case Management Judicial Guide

Patent, , , ,

The following guest post comes from Berkeley Law Professor Peter S. Menell* who took on the pro bono task of assembling and managing a fabulous team of leading lawyers to create the Trade Secret Case Management Judicial Guide. The guide will quickly become leading the go-to source as Federal Judges manage their growing trade secrecy caseloads.  The following is an introduction and request for comments. – D.C. 

Guest post by Prof. Peter S. Menell*

As the knowledge economy expanded and concerns about trade secret misappropriation mounted in the digital age, federal policymakers undertook efforts to reinforce trade secret protection a decade ago.  These efforts came to fruition with passage of the Defend Trade Secrets Act of 2016 (DTSA).  This landmark legislation, modeled on the Uniform Trade Secrets Act, elevated and expanded trade secret law’s role in the federal intellectual property system.  DTSA fully opened the federal courts to trade secret litigation as well as added several new features, including an ex parte seizure remedy and whistleblower immunity.

DTSA added to the large and growing federal caseloads.  It also exposes more federal judges, relatively few of whom studied or litigated trade secret cases prior to their judicial appointments, to the distinctive challenges of trade secret litigation.

Origins and Design of the Trade Secret Case Management Judicial Guide

In 2019, as part of my work educating federal judges about intellectual property law and case management in conjunction with the Federal Judicial Center, I set out to assemble a team of leading practitioners, scholars, and judges experienced with trade secret litigation to develop a case management treatise to guide judges, litigators, in-house counsel, policymakers, scholars, and students in navigating this new and expanding terrain of federal intellectual property law.

David Almeling and Victoria Cundiff are two of the most experienced trade secret litigators in the nation. They have been instrumental in the Sedona Conference Working Group on Trade Secrets. Jim Pooley has long been the unofficial dean of the trade secret world—author of a leading trade secret treatise, experienced trade secret litigator and advisor, and former WIPO Deputy Director General. Peter Toren is an experienced criminal trade secret litigator who served for many years in the as a federal prosecutor with the Computer Crime and Intellectual Property Section of the Criminal Division of the United States Department of Justice where he served as Acting Deputy Chief. Professor Elizabeth Rowe litigated trade secrets cases before entering academia, where she has published numerous trade secret articles and co-authored the first trade secret law casebook.  Professor Rebecca Wexler is a rising star in scholarship at the intersection of data, technology, and secrecy in the criminal legal system, with a particular focus on evidence law, trade secret law, and data privacy.

I brought experience as a contributor to DTSA (my research and reform proposal was the basis for DTSA’s whistleblower immunity provision), lead author of a widely adopted intellectual property casebook, lead author of the Patent Case Management Judicial Guide (PCMJG), and organizer of over 60 IP education programs for federal judges since 1998.

Using the PCMJG as a template—with chapters organized in the stages of litigation and guided by an early case management checklist—we have worked through countless drafts over the past three years in developing the Trade Secret Case Management Judicial Guide. We have now completed the draft and received comments from a Judicial Advisory Board.  We have submitted the draft to the Federal Judicial Center for publication within its resource library for federal judges. We hope to complete that process this spring and welcome comments from practitioners and other members of the public in the interim. The public can access the guide at:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4360102

Distinctive Features of Trade Secret Litigation 

Trade secret litigation has both similarities with and significant differences from other types of civil and criminal litigation. It also parallels and differs from other types of intellectual property—patent, copyright, and trademark—litigation. Three such differences stand out: (1) the tensions surrounding protecting trade secrets over the course of litigation in public tribunals; (2) the high emotional level in many trade secret litigations; and (3) the potentially complex interplay between civil and criminal trade secret actions.

1. The Challenge of Identifying Trade Secret and Then Protecting Them throughout the Litigation

Perhaps the key difference relates to the subject matter: secrets. The secret nature of the information at issue poses significant challenges for case management because of public nature of federal litigation and freedom of expression. Patent cases also involve aspects of secrecy—such as unpublished patent applications that might bear on validity and business strategy related to damages—but trade secret litigation goes to the very heart of the cause of action: that the information that was allegedly misappropriated was not known or readily ascertainable.

Unlike a patent, which affords an exclusive right about the public, trade secrets are relative rights. While the trade secret owner will necessarily need to disclose the secret to some third parties, such as employees or commercial partners, to exploit it, once a trade secret is disclosed by the trade secret owner without restriction or is broadly revealed by third parties without authorization, it cannot be a secret. Those who learn of the secret through publicly accessible websites or publications are free to use that knowledge. The bell cannot be unrung. Moreover, those who independently develop information claimed by another as a trade secret are free to use and disclose it—so long as their development was in fact independent.

Trade secret disputes also present an early “identification” problem that differs from disputes arising over other forms of intellectual property. In patent, copyright, and trademark cases, the intangible resource has already been identified and registered with a regulatory body (or, in the case of unregistered trademarks, made public through use), and therefore can be publicly specified in the pleadings. The protected information claimed to be at issue in a trade secret case cannot be disclosed in public filings, however, without destroying the very subject matter of the plaintiff’s legal claim. Yet defendants need to know what the secrets are that they have allegedly misappropriated and the court needs to know what the case is all about to be able manage and decide it.

This produces three interrelated quandaries at the outset of trade secret case:

  • Do the pleadings adequately set forth a cause of action under the familiar Twombly and Iqbal standards?
  • When, how, with what level of specificity, and subject to what protective order provisions will the trade secret owner be required to reveal its trade secrets to the defendant?
  • What is the boundary between protectable trade secrets and general knowledge and skill?

The first of these questions requires the plaintiff to provide more than vague, conclusory statements that restate the elements of a trade secret to survive a motion to dismiss. The second quandary often requires the court to assist the parties in customizing the discovery process to ensure that the trade secrets stay protected during the course of litigation while facilitating the exchange of sensitive information, often to competing business enterprise defendants. This typically entails fashioning an appropriate protective order that takes into consideration the trustworthiness of the various players in the litigation drama: counsel, litigants, employees, experts, and possibly others. Plaintiffs will understandably be concerned that the very effort to enforce their trade secrets could result in the loss of what may be their most valuable business assets. At the same time, defendants will want to know what they are accused of misappropriating. And the public (including journalists) will be interested in what may be high profile disputes affecting important industries. Consequently, courts will often be called upon to tailor and enforce protective orders and oversee the trade secret identification process.

The third question is primarily a question on the ultimate merits, although it may inform management of the first two. Its resolution will require the court and the ultimate factfinder to delve into the thorny question of where general knowledge and skill end and protectable trade secrets begin. This assessment inevitably involves an appreciation of the technologies or information at issue, which may be beyond the general knowledge of the court. The court and factfinder may need the assistance of experts to sort out these issues to determine liability and frame out the contours of any ultimate relief.

Compounding these challenges, trade secret owners often seek immediate equitable relief to prevent the defendant and third parties from using or disclosing a trade secret before trial. Yet, for the reasons noted above, the contours of the alleged trade secrets and any improper encroachment upon them will often be difficult to assess with precision before there has been sufficient discovery to reveal what information is at risk and to fully test claims of misappropriation. And defendants will fear that early equitable relief on an incomplete record will interfere with their business operations.

Moreover, the secrecy imperative runs through the entire litigation process, not simply the pleading stage. The court must take care to ensure that hearings and filings with the court during the pretrial and trial stages do not disclose trade secrets to the general public. In enacting the EEA, of which the DTSA is now a part, Congress recognized that victims of trade secret thefts could face a dilemma between reporting the matter to law enforcement and concerns that the trade secret will be disclosed during discovery or during a criminal trial. To alleviate this concern, the Act authorizes the court “to enter such orders and take such other action as may be necessary and appropriate to preserve the confidentiality of trade secrets.” 18 U.S.C. § 1835(a). At the same time, the court must balance the public’s interest in knowing about civil and criminal proceedings against the trade secret owner’s right to limit access to the trade secrets themselves.

2. High Emotional Quotient

Complicating all of these issues is the fact that many trade secret cases are hotly contested battles that have the emotional intensity of child custody cases. Many trade secret cases pit a business enterprise against business partners, former employees, and contractors who have left the business to form or work for a competing enterprise. In some cases, the former associates are actual family members. But even if not related by blood or marriage, the ties between the plaintiffs and defendants can run deep. Co-founders of companies often have deep and continuing personal, financial, and social bonds. And the alleged misappropriation represents not just a competitive injury but a betrayal of sacred trust. The trade secrets are the product of countless hours devoted to a shared enterprise. They are the intellectual offspring of a joint relationship. The departure of a business associate or former employee can be like the dissolution of a marriage. And where the former colleague competes with the prior business, it can feel like an extreme form of disloyalty.

Trade secret protection can become intertwined with noncompetition agreements and other contractual restraints on the activities of former business associates and employees. The enforceability of such restraints on trade varies according to state law. Even where permitted, such restraints are typically required to be narrowly tailored to protect only legitimate interests, including trade secrets. Absent enforceable noncompetition agreements, employees are generally free to take their general knowledge and skill with them, even to competing enterprises. But therein lies one of the difficulties alluded to above: distinguishing protectable trade secrets from general knowledge and skill.

A second challenging tension may arise if an employee or contractor believes that an employer is engaged in unlawful activity. The employee might plan or be reporting sensitive information to the government as part of a False Claims Act case or other whistleblower action. In such cases, there is a risk that the plaintiff may use a trade secret claim to attempt to silence the whistleblower and gain backdoor discovery of what the government might be investigating. To guard against this overreach, the DTSA immunizes whistleblowers from liability under federal and state trade secret law for disclosure, in confidence, of trade secrets to government officials and attorneys solely for the purpose of reporting or investigating a suspected violation of law.

Another sensitive and difficult pattern relates to economic espionage cases in which the claim is made that an organization, potentially backed by a foreign government, has embarked upon a scheme, sometimes years in duration, to acquire trade secrets to assist development of a competing business or industry. These concerns can lead to both civil and criminal cases and have become more common and salient with growing concerns about international, sometimes state-backed espionage. These cases can be especially difficult to investigate and prosecute as a result of the discovery and jurisdiction impediments posed by international borders and the challenges posed by encrypted digital files. Some may pose concerns relating to sovereign immunity as well as diplomatic issues.

As a result of these patterns, judges in such cases may have to deal with especially high levels of distrust and willingness to escalate the litigation for business, personal, and criminal liability reasons.

3. The Interplay of Civil and Criminal Proceedings

Criminal trade secret investigations or suits are often known or anticipated to be underway during the pendency of a civil proceeding involving trade secrets. Both the government and the defendant in a civil case may have reasons for seeking a stay of the civil proceedings pending resolution of the criminal case. The government may seek a stay of the civil proceeding or of discovery in the civil proceeding to prevent interference with its investigation. The defendant may seek a stay to avoid having to invoke the Fifth Amendment during an active criminal investigation. On the other hand, the plaintiff in a civil case may want to pursue its claim expeditiously. Although most “garden variety” trade secret disputes do not include a criminal component, these are just some of the tensions that courts and litigants need to navigate when dealing with potentially parallel civil and criminal proceedings.

Using the Guide

Trade Secret Primer: Chapter 2 provides a comprehensive overview of trade secret law, tracing its legal sources, history, requirements, whistleblower immunity, defenses, and remedies. It then contrasts trade secrets with other forms of intellectual property, surveys common coincident claims and international aspects.

Early Case Management. Building upon Chapter 2’s survey of trade secret law, Chapter 3 frames the critically important early case management phase and sketches a flexible plan for the initial case management conference. Trade secret litigation typically unfolds quickly, often with the trade secret owner seeking preliminary equitable relief. The court must be ready to assist the parties in crafting a protective order, trade secret identification process, and a discovery plan. Chapter 3 offers a detailed checklist for guiding early case management and a suggested case management order that will anticipate common litigation challenges and facilitate the exchange of information, scheduling of trial stages, and promotion of efficient resolution of the case through litigation or settlement.

Trade Secret Identification. Chapter 4 guides the court through the nuanced process of identifying the trade secrets: the nature of the identification process (a procedural rule, not a merits determination), the timing of identification, the format for trade secret identification, the particularity of identification, access to the identification, and amending the identification. This issue is unique to trade secret law and thus this chapter focuses on a process that may be new to those adjudicating or litigating a trade secret case for the first time.

Preliminary Relief. Chapter 5 discusses the legal standards for evaluating requests for pre-trial equitable relief and expedited discovery in furtherance of such requests, provides examples of evidence that has been found to weigh in favor of or against pre-trial equitable relief, and offers guidance in framing orders granting equitable relief and in managing the entire process, including conducting post-hearing case management conferences following resolution of requests for preliminary equitable relief. It includes templates, tables illustrating relevant evidence, and illustrative orders.

Discovery. Chapter 6 presents the distinctive challenges of discovery in trade secret cases. It examines common discovery mechanisms, protective orders, dealing with the particular types of records often arise in trade secret cases (such as forensic images of devices, source code, employee records, and personal vs. work accounts and devices), management of disputes (including requests to seal documents), discovery from international sources, and common discovery motions. It also discusses the challenging question of how to balance the presumption of open access to the courts and court record with the need for owners of trade secrets to protect the secrets from public disclosure to avoid their destruction.

Summary Judgment. Chapter 7 addresses the summary judgment phase of trade secret litigation. Recognizing that many of the core issues in trade secret litigation are fact intensive, it addresses burdens of proof, the amenability of particular substantive issues to summary adjudication, expert declarations, and useful ways of managing and streamlining the summary judgment process and conducting summary judgment hearings.

Experts. Chapter 8 explores the role of experts in trade secret litigation. It first examines the principal areas in which experts are used and then discusses the court’s gatekeeper role in preventing unreliable expert testimony from being considered by the jury.

Pre-Trial Case Management and Trial. Chapter 9 assists courts in managing the lead up to trial, covering the pretrial conference. Chapter 10 then maps out the distinctive issues that frequently arise in trade secret cases, including late pretrial motions, jury pre-instruction, burdens of proof and persuasion, managing confidentiality in the courtroom, motions for judgment as a matter of law, jury instructions and verdict form, injunctions after trial, and exemplary damages and attorney’s fees.

Criminal Trade Secret Case Management. Chapter 11 presents the substantive law and case management issues associated with criminal trade secret prosecutions. It includes detailed discussion of the elements of proof, identifying the trade secrets, venue, defenses, confidentiality (including protective orders, trade secret owner participation, and cooperation between the government and the victim), extraterritorial application, whether to stay a parallel civil case, and sentencing/penalties.

Call for Comments

 Please send comments to me at pmenell@law.berkeley.edu.

* Koret Professor of Law; Director, Berkeley Center for Law & Technology; Faculty Director, Berkeley Judicial Institute; University of California at Berkeley School of Law.

Subreddit Drama

Patent, , , , , , , , ,

Reddit: Anyone can start a subreddit, and back in 2012 Jaime Rogozinski started r/WallStreetBets. Over the years, the site attracted millions of subscribers talking about aggressive trading strategies; providing middle-school humor; and pumping-up various stocks (e.g., GameStop).

In 2020, Reddit removed Rogozinski from his role controlling the subreddit as moderator, concluding that he was “attempting to monetize a community.” Rogozinski had published a book titled WallStreetBets and also filed trademark registration application for the mark WALLSTREETBETS, with him as the owner. Of course, lots of folks are monetizing their subreddits, but I have not heard of others registering a TM on the subreddit name.  Immediately after removing Rogozinski from control, Reddit filed competing registration applications for the same mark and continues to control the subreddit. Opposition proceedings are now pending before the TTAB.

Reddit claims control and ownership because the subreddit is on its site and under its control; Rogozinsky argues that he did all the work building the brand for himself – not for Reddit. The issues in this case are interesting because they are similar to those being debated with regard to AI ownership and attribution. Here, the difference is that we have a corporate owner rather than an AI. And, although both the company and Rogozinsky had input in the creation — what really made this valuable is the input and connection to millions of users. Similarly, AI works well only if it has good input data — typically obtained by scooping up and examined up so many copyrighted works and user data.

In addition to the opposition proceedings, Rogozinski has now sued Reddit in Federal Court, asserting infringement of his unregistered WallStreetBets mark; infringement of his registered mark WSB; as well as violations of contract, rights of publicity, and duty of good faith and fair dealing. James R. Lawrence, III is representing the plaintiff.

Should be interesting.

Public use == “accessible to the public.”

Patent, , , ,

by Dennis Crouch

Bottom line in this new Minerva case — file your patent application before bringing a new product to a trade show. 

The Old Case: The battle between Hologic and Minerva went to the US Supreme Court in 2021; with the Court retained the doctrine of assignor-estoppel that bars a patent assignor from later challenging the patent’s validity or enforceability. Minerva Surgical, Inc. v. Hologic, Inc., 141 S. Ct. 2298 (2021). Although the doctrine remains, the Court narrowed its scope to only apply , but narrowed its scope to cover only situations where assurances (implied or express) made at assignment are later being undermined.  Thus, when claims are materially broadened post-assignment, the assignor should probably be permitted to challenge those claims.  As is true in many inter-corporate battles, the legal claims are being fought along different lines in various tribunals and cases.  This week, the Federal Circuit issued a new decision — this time involving upstart Minerva as the plaintiff suing Hologic for infringing its U.S. Patent No. 9,186,208.

Minerva’s ‘208 patent claims a device for endometrial ablation  and includes a 2011 priority filing date.  As you can see from the diagram above, the device includes both inner and outer frame elements, and the claims require that these “have substantially dissimilar material properties.”  This allows portions of the device to retain more flexibility (those coming in contact with the uterine lining) with other portions having more strength/durability.  Still, the whole head needs to be collapsible as well.

The application was filed in 2011, but back in 2009 Minerva had been doing testing on a prototype “Aurora device” that included inner/outer frames made of two different types of steel.  The devices were brought to a trade show (AAGL 2009) and Minerva gave a presentation on the device and distributed a brochure. It was also pitched to a potential acquirer.

In the appeal, Minerva provided three arguments as to why this activity was not an invalidating public use:

  1. Displaying the device at a trade show table does not count as a “use”
  2. Although the displayed device used two different types of steel, they were not different enough to satisfy the claim requirement of having “substantially dissimilar material properties.”
  3. The invention was not yet “ready for patenting” and therefore its public use was not disqualifying.

The Federal Circuit rejected each of these arguments in-turn.

Public Accessibility equals Public Use: Although the statutory language of “public use” suggests that the bar is triggered only if the invention is actually used.  The Federal Circuit explained here hat its interpretation is more expansive, and includes situations where the patentee made the invention “accessible to the public.” See, Delano Farms Co. v. California Table Grape Comm’n, 778 F.3d 1243 (Fed. Cir. 2015).  Here, the Aurora device was made available to attendees at a major trade show spanning several days.  Minerva brought 15 fully-functional devices and internally reported “lots of interest” and that the table was “busy.”

In Motionless Keyboard Co. v. Microsoft Corp., 486 F.3d 1376 (Fed. Cir. 2007), the Federal Circuit seemed to have ruled that public use requires use. Although publicly shown, the claimed keyboard was deemed not in public use since it was “visually displayed … without puting it into use [and] was never connected to be used in the normal course of business to enter data into a system.” Id.  Here in Minerva, Judge Reyna distinguished Motionless Keyboard, noting that Minerva’s disclosures were “well beyond” what was seen in that prior case.  The court focused on the sophistication level of the trade show attendees and their ability to closely scrutinize the device and see how it operated.

The inescapable conclusion … is that Minerva allowed knowledgeable individuals to scrutinize the invention enough to recognize and understand the SDMP technology Minerva later sought to patent.

Slip Op.  On appeal, Minerva argued that its prototype’s inner/outer frames did not have substantially different material properties.  On appeal, the federal Circuit also rejected that argument since Minerva materials from that time touted the benefits of the device’s SDMP.

Ready for Patenting: Public use only creates a bar to patenting if the invention was “ready for patenting.” Here, the court concluded that it was ready for patenting since (1) it had been reduced to practice; and (2) Minerva had sufficient documentation prepared describing the invention.

At the time, Minerva was still working to improve the technology and it had not yet been used to actually perform ablation on a living human.  On appeal, the Federal Circuit noted that no evidence (beyond common sense) indicates that the device’s only use is on live human tissue.  The court also noted that Minerva had conducted lab studies sufficient to move-on for clinical trials on humans.  Minerva’s final product used slightly different materials, but the court concluded that Aurora was still itself ready for patenting. “later refinements” and “fine tuning” go beyond reduction to practice and do not negate a public use.

Federal Circuit: Software Function Equals Structure

Patent, , , , ,

by Dennis Crouch

KEYnetik, Inc. v. Samsung Electronics Co. (Fed. Cir. 2023)

This short non-precedential opinion authored by Chief Judge Moore affirms a PTAB IPR obviousness finding.  The case has one key sentence:

Normally, once the function to be performed by software has been identified, writing code to achieve that function is within the skill of the art.

Slip Op.  This statement sits well with modernist design principles aptly stated by architect Louis Sullivan: “Form ever follows function.”

The patent challenger had provided expert testimony that software modifications needed to transform the prior art into the claimed invention would be “straightforward” and “simple.”  Those statements were not backed-up with specific analysis showing exactly how the modifications would be done.  However, the Federal Circuit concluded that these general conclusions combined with the implied judicial notice from above were sufficient to support the PTAB’s factual finding that PHOSITA would have “a reasonable expectation of success” in making the transformation.

Going back to the function-equals-structure statement from above: The court does not explain or particularly justify its factual conclusion other than to cite  its own 1997 decision of Fonar Corp. v. Gen. Elec. Co., 107 F.3d 1543, 1549 (Fed. Cir. 1997).  Fonar Corp. did not deal with obviousness, but instead was an appeal on the issue of best-mode disclosure under Section 112.   The patentee had provided functions of the software in its disclosure but had not provided the computer code itself.  On appeal, the Federal Circuit found that disclosure of the functionality was sufficient to satisfy best mode:

As a general rule, where software constitutes part of a best mode of carrying out an invention, description of such a best mode is satisfied by a disclosure of the functions of the software. This is because, normally, writing code for such software is within the skill of the art, not requiring undue experimentation, once its functions have been disclosed. It is well established that what is within the skill of the art need not be disclosed to satisfy the best mode requirement as long as that mode is described. Stating the functions of the best mode software satisfies that description test. We have so held previously and we so hold today.

Id.  The Federal Circuit did not endeavor to work through its Section 112(f) jurisprudence where it has repeatedly held that disclosure of function is insufficient to satisfy the ‘structure’ requirements of that provision.

Got Milk? Forget about Patent Eligibility

Patent, , , ,

Guest Post by Jordan Duenckel.  Jordan is a second-year law student at the University of Missouri, head of our IP student association, and a registered patent agent.  He has an extensive background in chemistry and food science.

The Federal Circuit weighed in on the amorphous topic of subject matter eligibility in the recent opinion ChromaDex, Inc., V. Elysium Health, Inc., — F.4th —, Docket No. 2022-1116. Writing for a unanimous panel, Judge Prost affirmed a grant of summary judgment that U.S. Patent No. 8,197,807 (“the ’807 patent”) was directed to unpatentable subject matter and therefore ineligible based on 35 U.S.C. § 101.

ChromaDex’s ‘807 patent concerns nicotinamide riboside (“NR”), a form of vitamin B3 found naturally in cow’s milk. When ingested, a human body converts NR into the coenzyme nicotinamide adenine dinucleotide, or NAD+. Claim one of ‘807 states:

1. A composition comprising isolated nicotinamide riboside in combination with one or more of tryptophan, nicotinic acid, or nicotinamide,

wherein said combination is in admixture with a carrier comprising a sugar, starch, cellulose, … or polyanhydride,

wherein said composition is formulated for oral administration and increased NAD+ biosynthesis upon oral administration.

ChromaDex isolates and concentrates naturally occurring NR — selling dietary supplements that contain elevated levels of NR. The levels found in these supplements is significantly above natural levels present in milk or any other food.  Although the claims require isolated NR, they do not require a specific high-concentration, only enough to “increase[] NAD+ biosynthesis upon oral administration.” In its decision, the Federal Circuit focuses on the breadth of the claim and its ability to include natural milk (a product of nature) as the key ingredient providing the NR.

The Supreme Court has two key product of nature cases from the past 45 years: Diamond v. Chakrabarty, 447 U.S. 303 (1980) and Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013).

Under these cases, a determination that milk is within the scope of the claims is not, by itself fatal to eligibility.  Chakrabarty requires that to be patentable the claimed composition must “ha[ve] markedly different characteristics [from the natural phenomenon] and have the potential for significant utility.” 447 U.S. at 310. The chemical composition of isolated NR is not structurally or functionally different from NR found in milk. ChromaDex’s argument at the district court that the characteristics of isolated NR are purportedly different from naturally occurring NR— stability, bioavailability, sufficient purity, and therapeutic efficacy was rejected because these improvements were not required by the claim language. On appeal, ChromaDex insists in their brief that the claims have “markedly different characteristics” that render them patent eligible, specifically that (1) NR is found in milk in only trace amounts, i.e., one part per million, and (2) what little NR is found in milk is not bioavailable because it is bound to the lactalbumin whey protein. Again though, ChromaDex’s argument is thwarted by the overly broad claim language. The claims do not require either a minimum level of NR or even that the isolated NR is more bioavailable by separation from the lactalbumin.

The corollary to Chakrabarty is Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013) and is more similar to the subject matter of ChromaDex. In Myriad, the isolation of specific DNA fragments was found to be patent ineligible. ChromaDex faces the same problem. The act of isolating the NR compared to how NR naturally exists in milk is not sufficient, on its own, to confer patent eligibility.

Federal Circuit held that this Chakrabarty analysis was dispositive on the question of § 101 eligibility and affirmed the grant of summary judgment. One open question is whether the same two-step analysis of Alice/Mayo applies in the product-of-nature eligibility arena.  Without fully deciding that question, the Federal Circuit conducted a subsequent analysis under the Alice/Mayo two-step test and reached the same conclusion — that the claims are ineligible. As noted by this court, the Alice/Mayo test is functionally the same as the Chakrabarty analysis, especially when a composition of matter is at issue.

It appears to me that the primary issue is a patent drafting problem. The ‘807 patent was filed on April 20th, 2006, long before the clarifying guidance from Myriad (2013), Alice (2014), and Mayo (2012). At the time of filing, the isolation and reformulation was not subject to the explicit subject matter restriction in Myriad. However, the patent drafter should have been aware of Chakrabarty (1980). Claim one was written so broadly that potential embodiments include far more than dietary supplement pills.

The Federal Circuit distinguished the current case from Nat. Alts. Int’l, Inc. v. Creative Compounds, LLC, 918 F.3d 1338 (Fed. Cir. 2019). In Natural Alternatives, “natural products ha[d] been isolated and then incorporated into a dosage form”—“between about 0.4 grams to 16 grams”—“with particular characteristics to effectively increase athletic performance.” Id. at 1348–49.  The patentee may have also avoided an eligibility problem by providing evidence in the specification that the NR concentration in milk was insufficient to increase NAD+ biosynthesis as claimed, but that higher levels of concentration did provide that benefit.  To be most clear, the claims could have also added a limitation that the NR is provided in an “effective amount” to achieve the claimed NAD+ synthesis.

Standing to Challenge Inventorship

Patent, , , ,

by Dennis Crouch

Krzysztof Sywula’s story has some thematic elements of the Netflix Glass Onion show.  As he tells it, Sywula was at the Santorini Island Grill with Alexis DaCosta &  Vincent Coletti talking about creating an improved app for ride sharing.  During one of the meetings, Sywula apparently sketched-out a diagram on a napkin that he gave to DaCosta and that eventually served as a basis for the patent filings in this case.  The parties continued to work together for several more years with Sywula eventually becoming the CTO.  Then came the patenting.  Sywula was excluded from being listed as an inventor on the patents, including US11087250 and US11087252; and that was upsetting.

Sywula sued for correction of invention, and the District Court initially dismissed the case on standing, but – after an amended complaint – has now agreed that Sywula has met the requirements to survive a pleading-stage demurrer.

Standing to Sue: Federal Courts can only hear “actual cases or controversies.” U.S. Const., Art. III.  The Supreme Court has massaged those words in to a three part standing requirement of (1) injury in fact that is actual, concrete and particularized; (2) a causal link between the challenged actions and the stated injury; and (3) identification of a likely mechanism for redressing the injury that is within the court’s power.   These are often broken down to (1) injury-in-fact; (2) causation; and (3) redressability.

The First Problem — Assignment of Rights: Sywula signed a Consulting Agreement and an Invention Agreement, both of which promise to assign rights to DaCosta and Coletti or their newly formed company Teleport, including any inventions, trade secrets, discoveries, designs, software, etc., arising from his work on the endeavor.   In patent law, inventorship is tied directly to ownership. An inventor is a presumptive owner of any resulting patent rights.  However, those inchoate rights are assignable in a way that decouples inventorship and ownership.  There result here is that Sywula is not suffering an ownership injury (or any other payment injury flowing from his failure to be named as an inventor). Sywula v. DaCosta, 21-CV-01450, 2022 WL 2959577 (S.D. Cal. July 26, 2022).

The Second Problem — Concrete Reputational Injury: After receiving this first rejection from the district court, Sywula reformed his complaint to claim a reputational injury due to his failure to be listed as an inventor.   Here, courts have been somewhat clear that reputational-interest theory cannot be simply tied to a nebulous cloud.  The District Court quotes my 2021 article explaining that courts refuse to find Article III standing based simply upon loss of “the dignity of and accompanying self-satisfaction of official inventorship recognition.” Dennis Crouch, Reattribution, The Poison Pill & Inventorship, 5 BUS. ENTREPRENEURSHIP & TAX L. REV. 138 (Fall 2021).

But, the district court concluded that Sywula had done enough to move from nebulous to concrete.  In particular, Swyula’s pleading provide a sufficient showing that his career as a software engineer would have been boosted based if he had been properly listed as an inventor.  This economic/pecuniary tie-in is what the Federal Circuit looked for in its key decision of Shukh v. Seagate Technology LLC, 803 F.3d 659 (Fed. Cir. 2015).  The district court explains:

Sywula adequately pleads he sought employment in the field of his claimed invention. That is, Sywula, a software developer who purportedly architected, developed, and wrote the software for Teleport’s ride-sharing application, alleges he aspired to climb the hierarchical ladder for software developers and obtain a Principal Engineer role. Sywula also adequately pleads Teleport’s omission “affect[ed] his employment” by severely diminishing, if not foreclosing entirely, his opportunity for a promotion to Principal Engineer at Intel. Importantly, he alleges the prospects of his promotion from Software Engineer to Principal Engineer at Intel were not merely illusory or wishful thinking. He claims to have met nearly all of Intel’s experience-and skills-based criteria to be eligible for a promotion. However, he is missing one purportedly crucial qualification: he cannot claim to be an inventor of any patented technology. According to Sywula, “[p]ublished patents are usually required for software engineers to attain higher-ranked roles.” And Intel [his current employer], in particular, considers published patents as relevant to at least three qualities and skills it looks for in prospective Principal Engineers.

Simply put, the Second Amended Complaint contains enough factual material for this Court to infer Defendants’ withholding of inventorship credit in the Teleport patents plausibly diminished or even foreclosed his prospects of career-advancement at Intel and, more generally, in whatever software-developer position he holds or will hold. Hence, Defendants’ omission plausibly strips Sywula of the pecuniary benefits attendant to promotion. Accordingly, Sywula has adequately alleged an economic component to one of his reputational injuries.

Sywula v. Teleport Mobility, Inc., 21-CV-1450, 2023 WL 362504, at *16 (S.D. Cal. Jan. 23, 2023).  In its analysis here, the court went somewhat light on the causation element — noting that it is enough that the reputational injury influenced his career trajectory without being the sole cause.  The court also accepted a second justification for jurisdiction — Sywula’s failure to obtain a job as a software engineer at Apple could be partially attributed to the fact that he was not listed as an inventor.

Read the Decision: https://patentlyo.com/media/2023/02/Sywula-v.-DaCosta-et-al-Docket-No.-3_21-cv-01450-S.D.-Cal.-Aug-15-2021-Court-Docket.pdf

Note: I don’t think that the napkin is of record yet in the litigation.

Question: Is an inventorship dispute something material to patentability such that should be disclosed to the USPTO under 37 C.F.R. 1.56?

Models v. Strip Clubs and the Lanham Act

Patent, , , , , , , , , ,

by Dennis Crouch

Rights to use a person’s Name-Image-and-Likeness or NIL generally fall within two categories of intellectual property: rights of publicity and rights of privacy.

  • Rights of publicity protect commercial value that a person has developed in becoming a celebrity.  Rights of publicity can also protect against resulting false impressions created by a seeming endorsement.
  • Rights of privacy can also protect against misappropriation of NIL — typically under the guise of an invasion-of-privacy claim.

The pending case of Gibson v. RPS Holdings LLC, 5:21-cv-00416 (E.D.N.C. 2023) involves a set of thirteen different professional models whose images were allegedly used without their permission to advertise for the Capital Cabaret, a strip club halfway between Raleigh & Durham, North Carolina.  None of the models have any history with the club.  Apparently, the club obtained photos of the models; and then edited them into advertisements for pubilcation on Facebook, Instagram and other online media.

One difficulty for professional models such as the plaintiffs here is that copyright the photographic images is typically held by the photographers, not the models.  But, modeling agreements also regularly include limited licenses regarding how (and for how long) the images will be used.

In Gibson, the plaintiffs have sued under both the Lanham Act and N.C. state law:

  • Section 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1) for misrepresentation of sponsorship (False Advertising + False Association).
  • N.C. common law right of privacy – misappropriation.
  • N.C. Unfair & Deceptive Trade Practices.
  • N.C. Defamation.
  • Etc.

The case is moving forward and is at the close of discovery (March 31, 2023) with summary judgment motions due at the end of April.

Most recently, plaintiffs filed a motion to quash a subpoena seeking information on exactly how the attorneys “discovered, came across, learned of, and/or otherwise became aware of” the advertisements.  The motion argues that this information is protected by attorney client privilege as well as work product.  The defense argues that this information is important for its laches defenses.

I mentioned the copyright difficulty above. A second difficulty for the models in this case is that most rights-of-rights of publicity doctrines require focus on celebrity; and ask whether that person’s NIL is identifiable to the consuming public.  I have to admit that I don’t really know anything about the modeling industry, but I don’t believe think that these models are household celebrities. The ads from the strip club were not intended to indicate that these particular models support the club; rather, the intent was to provide a provocative image.

Of course the misappropriation of a completely anonymous face could not form the basis for a false endorsement claim, because consumers would not infer that an unknown model was ‘endorsing’ a product as opposed to lending her image to a company for a fee.

Bondar v. LASplash Cosmetics, No. 12-cv-1417, 2012 WL 6150859, at *7 (S.D.N.Y. Dec. 11, 2012) quoted in Electra v. 59 Murray Enterprises, Inc., 987 F.3d 233, 258 (2d Cir. 2021), cert. denied, 211 L. Ed. 2d 352 (Nov. 22, 2021).   The Carmen Electra case was also a suit by models against strip clubs with the models represented by the same law firm. (The Casas Law Firm).  In their denied petition for certiorari, the plaintiffs asked:

Must an individual prove they have a commercial interest in their identity, or must a person prove they are recognizable, publicly prominent, or a celebrity, to bring and sustain a claim under 15 U.S.C. § 1125(a)?

Petition.   The Electra case was decided by the 2nd Circuit.  However, other circuits have rejected the celebrity requirement as improperly grafted-onto the statute.

Is the Federal Circuit facing a Chronic Problem of Inequitable Conduct?

Patent, , , ,

Note from Crouch: I included “chronic” in the title of this post as a reference to an antiquated reference to marijuana, and did not intend to claim that this issue is one that the court is repeatedly facing. 

United Cannabis Corporation v. Pure Hemp Collective Inc., Docket No. 22-01363 (Fed. Cir. 2023)

This case is still pending before the Federal Circuit, but I found it interesting enough for a preview.

United Cannabis holds a broad marijuana patent – US9730911 – with claims directed to a liquid cannabinoid having 95% of either THC or CBD.

5. A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is tetrahydrocannabinol (THC).

10. A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is cannabidiol (CBD).

In 2018, United Cannabis sued Pure Hemp for patent infringement and Pure Hemp responded with a Walker-Process antitrust counterclaim for asserting a patent known to be invalid.  The defendant also argued the patent should be held unenforceable due to inequitable conduct during prosecution.

The inequitable conduct claim was based upon a failure to provide material references to the USPTO as required under 37 CFR 1.56.  In particular, the Cooley LLP prosecuting attorney admitted to copying material from prior art into both the Abstract and the Detailed Description of the patent specification; but did not cite the reference within the patent document or disclose that reference to the USPTO for consideration.  Although not identical, the reference (Whittle – U.S. Pat. Pub. No. 2004/0033280) apparently disclosed a liquid with 88.9% CBD or 95% CBD+THC. So, quite close to what was claimed.  In deposition, the prosecuting attorney apparently explained that the copying was done to speed the process and save time – and is a recommended common practice.  It also turns out that the same law firm –  Cooley – represents GW-Pharma (the owner of the Whittle prior art) in patent prosecution.  And, Cooley attorneys had argued to the USPTO that GW Pharma invented a liquid formulation with 95% purity CBD.

The litigation ground to a halt in the midst of discovery when United Cannabis filed for bankruptcy.  But, the bankruptcy case was eventually dismissed based upon the illegal nature of the business venture (illegal at the Federal level).  At that point United Cannabis decided to drop its infringement case.  The parties jointly agreed that the patentee would dismiss its claims with prejudice, while the defendant dismissed its counterclaims without prejudice.

Although the merits had been resolved, the accused infringer was a bit upset for having to litigate the pointless lawsuit, and consequently filed a motion seeking attorney fees under 35 U.S.C. 285.  Section 285 allows the district court discretion to award reasonable attorney fees to the prevailing party in “exceptional cases.” In a terse opinion, the district court denied the fees motion: finding (1) the defendant was not the prevailing party because of the jointly-agreed dismissal and (2) the facts of the case were not shown to be “exceptional” since the dismissal occurred before the facts had been determined.

This case is now on appeal before the Federal Circuit. The patentee has admitted that the district court erred in its prevailing party analysis, but argued that the district court was correct to find that the case was not exceptional.  The appellant argues instead that the copying into the critical portions of the application: detailed description of the invention and abstract create an inference of both materiality and intent sufficient for an exceptional case finding.  For its part, the district court only provided a cursory analysis of these issues without delving into any of the evidence presented.  The briefing also argues that “Cooley attorneys also have a policy of withholding references until after the first office action, in direct contravention of patent office guidance.”  Still, in this case, the references were never submitted prior to issuance.  The brief goes-on to remark that “in academic circles, it is referred to as plagiarism.”  And, even without rising to the Therasense level of inequitable conduct, should be seen as creating an exceptional case.

James Gourley from Carstens & Cahoon argued on behalf of the defendant-appellant. (Brief).  Cooley’s Orion Armon argued on behalf of the Plaintiff-Appellee. (Brief).

What do you think: Do the facts as stated here create an exceptional case for the accused infringer?

Dir. Vidal on Privity and Real-Party-in-Interest in IPRs

Patent, , , ,

by Dennis Crouch

Samsung v. NetList, IPR2022-00615 (Dir. Rev. 2023)

USPTO Director Vidal has ordered the PTAB to expand its approach to the privity and real-party-in-interest (RPI) analysis at the start of inter partes review (IPR) proceedings.  The question in the Samsung case is whether Google should be considered an RPI or privy in a way that would bar Samsung’s IPR petition.

Back in October 2022, Samsung filed an IPR petition against Neglist’s US7619912; and the PTAB granted institution.  The patent covers a memory module, and Netlist previously sued Google for infringement back in 2009. That case is amazingly still pending in C.D.Cal.  The accused modules were supplied by Samsung, and Google at one point demanded indemnification from Samsung. Netlist agreed to stay the Google case in while awaiting the outcome of a parallel Samsung lawsuit that was filed more recently.

After the PTAB granted the IPR, Director Vidal quickly issued a sua sponte director review order and also ordered the PTAB to allow additional discovery into Google’s role.  Repeating precedent and rules already in place, Dir. Vidal has now ordered the PTAB to particularly consider the “extent to which Google has an interest in and will benefit from Samsung’s actions, and inquire whether Samsung can be said to be representing that interest after examining its relationship with Google.” Quoting with modification, Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336 (Fed. Cir. 2018).  Further, the PTAB must also recognize that the notion of “privity” is a separate and distinct inquiry from that of RPI.  At times, a party may be in privity with the petitioner even if not a real-party-in-interest.

Statute of Limitations – One year Time Bar: An IPR petition has a clear deadline.  No IPR can be instituted if “the petitioner, real party in interest, or privy of the petitioner” had been sued for infringing the patent more than 1-year beforehand. 35 U.S.C. 315(b).   Based upon this statute, if Google is an RPI/Privy, then the IPR is time barred.

In this type of indemnification situation, it is easy for me to see the RPI/privity connection. But, the PTAB, at least originally, refused to see a connection.  Its basic idea is that Samsung’s indemnity agreement relieves Google of all liability — and therefore (despite being an accused infringer), Google has no interest in the outcome of the IPR.  It is really hard for me to wrap my head around this argument.  If I were being sued by a third party, I would be glad to have an indemnification agreement, but would be much more satisfied if the case were entirely dismissed.  A potential contract right is generally much less valuable than a final decision absolving liability.

Roundup Ready 2 Patent Litigation

Patent, , , , , , ,

Bayer CropScience v. Pierce, et al. (E.D. Mo 2023)

Bayer and its subsidiary Monsanto have filed a new set of patent infringement lawsuits against farmers who saved seeds and replanted them in violation of Monsanto Roundup Ready patents and license agreements.  Monsanto’s original patents on genetically modified plants have all expired. But, the company now primarily sells Roundup Ready 2 – Xtend seeds for soybeans and cotton. And those new lines are covered by new patents. Here, the company has asserted United States Patent Nos 9,944,945  and 7,838,729.

  • The ‘729 patent has a 2007 priority date and claims plants genetically modified with a particular DNA sequence to express dicamba monooxygenase. This allows the plant to quickly catalyze and degrade the herbicide dicamba; thus allowing use of dicamba herbicide as an addition/alternative to glyphosate in the common situation involving herbicide resistant weeds.
  • The ‘945 patent has a 2005 priority date and claims a transgenic soybean plant modified with a gene that confers increased glyphosate tolerance so that more glyphosate can be used without harming the soybean.

Each of the six new infringement lawsuits infringe both patent infringement as well as breach of contract for saving and planting seed down in the Missouri Bootheel.

  • Bayer CropScience LP v. Robert O. Pierce, Docket No. 4:23-cv-00088 (E.D. Mo. Jan 25, 2023)
  • Bayer CropScience LP v. Danny Glass, Docket No. 4:23-cv-00087 (E.D. Mo. Jan 25, 2023)
  • Bayer CropScience LP v. Greg Duffy, Docket No. 4:23-cv-00086 (E.D. Mo. Jan 25, 2023)
  • Bayer CropScience LP v. Caleb Duffy, Docket No. 4:23-cv-00085 (E.D. Mo. Jan 25, 2023)
  • Bayer CropScience LP v. Michael Hodel, Docket No. 4:23-cv-00084 (E.D. Mo. Jan 25, 2023)
  • Bayer CropScience LP v. Brian G. Irions, Docket No. 4:23-cv-00083 (E.D. Mo. Jan 25, 2023)

I expect that Bayer will easily win these cases, but we’ll see. So far, none of the farmers have lodged an appearance in court.

How Does One “Use” Flowers?

Patent, , , , ,

by Dennis Crouch

We all love flowers, but what is their real purpose, their “use.”  That was a key question the court faced when deciding In re WinGen LLC (Fed. Cir. 2023).

The utility patent at issue covers a petunia plant.  Here, the Federal Circuit has affirmed that the claims are invalid based upon a pre-filing trade-show display of the ornamental plant — holding that the display counted as a “public use.”  “The displaying of ‘Cherry Star’ … was … undoubtedly a use for its intended purpose: ornament.”

The inventors here used conventional plant breeding to create a new form of petunia (Calibrachoa).  WinGen first obtained a plant patent (PP23,232); followed by a utility patent that was filed as a continuation-in-part (US9313959). The claims require two components (1) a particular petal phenotype and (2) a particular genotype:

Petal Phenotype: at least one inflorescence with a radially symmetric pattern along the center of the fused petal margins, wherein said pattern extends from the center of the inflorescence and does not fade during the life of the inflorescence, and

Genetic Feature: a single half-dominant gene, as found in Calibrachoa variety ‘Cherry Star,’ representative seed having been deposited under ATCC Accession No. PTA-13363.

During the reissue, the patentee disclosed the potential invalidating prior use; admitting that the claimed variety was displayed at a private Home Depot event where wholesale growers displayed their wares.  Nothing was for sale at the event, no orders were placed, and attendees were not permitted to take samples or cuttings.  However, there was also no express or implied obligation of confidentiality binding individuals who attended.

The patentee argued that the display should not be considered a public use — it was only displayed — and not used.  One case on point is Motionless Keyboard Co. v. Microsoft Corp., 486 F.3d 1376 (Fed. Cir. 2007).  In that Motionless Keyboard, the alleged prior use involved displaying the invention (a keyboard).  But there, the court found no public use because the keyboard was not hooked-up to a computer. Id.  The patentee also distinguished the old canard of Egbert v. Lippmann, 104 U.S. 333 (1881).  In Egbert, the Supreme Court premised its public use finding on the notion the inventor failed to maintain control over his invention — allowing someone to wear the corset around in public repeatedly over an extended time without any restrictions. See, Dey, L.P. v. Sunovion Pharms., Inc., 715 F.3d 1351 (Fed. Cir. 2013).  Here, however, the flower was kept in the control of the patentee despite being displayed.

In distinguishing these cases, the Federal Circuit looked to the purpose of the invention.  The oddity of this utility patent is that it claims an ornamental plant.  Although the claims were not challenged on Section 101 utility grounds, the Federal Circuit still considered the plant’s utility as it fed into the “public use” bar of Section 102.  And without fanfare, the court concluded that its purpose was ornamentation; that a display of the plant counts as ornamentation; and therefore the plant was in public use.

Although the court indicates that this situation (ornamental use of a utility patent) is a unique question of first impression, the court inexplicitly issued its decision as non-precedential. Perhaps the court simply did not want to make law based upon a logical paradox. Further, the Federal Circuit’s justification was not found in the USPTO brief in the case. Rather, the USPTO asked for a simple rule that a public use follows from display of the complete invention in a commercial setting and without any secrecy limitations.  But public display is not enough for a finding of traditional public use.

The patentee had also argued that its continued control over the plant meant that nobody at the Home Depot event could have learned of the genetic feature claim limitation.  On appeal, the Federal Circuit did not consider that argument – finding that the argument had been forfeited because it was not meaningfully presented to the lower tribunal.

The patentee told the court in briefing and at oral arguments that the claims cover an ornamental plant.  Those admissions allowed the court to rely upon that conclusion in its decision.  Here, the real utility might be found in the specification (and deposit) that provide guidance on how to grow the plant.

Note that this was a pre-AIA case.  The AIA now includes an additional catch-all “otherwise available to the public” that presumably makes it easier to show that certain public showings ‘count’ as prior art.

Trademark Registration: 100% THAT BITCH

Patent, , , ,

by Dennis Cxrouch

In re Lizzo LLC (TTAB 2023)

In a new precedential opinion, the TTAB has sided with the musical artist Lizzo — agreeing to register her mark “100% THAT BITCH” for use on apparel.  The Trademark Examining Attorney had refused registration on “failure-to-function” — concluding that the phrase was a commonplace expression used to express a well-recognized sentiment.

The phrase comes from Lizzo’s 2017 song Truth Hurts (remade in 2019) that has become a viral sleeper hit.  The original line in the song is “I just took a DNA test, turns out I’m 100% that bitch.” But Lizzo herself did not create the phrase. Rather, Lizzo apparently saw a social media meme about being 100% that bitch and then added it to her song.  The examining attorney concluded that “evidence that consumers may associate the phrase with the famous singer/song because it was a lyric in the singer’s song does not entitle the applicant as a singer-songwriter to appropriate for itself exclusive use of the phrase.”

On appeal, the TTAB reversed the refusal.  Unlike patents and copyrights, trademark law is not designed to reward the creative endeavor of invention or authorship.  Rather, trademark is designed as a consume-protection and market-function tool and so focuses on consumer perception.  Here, the evidence suggests that the mark is being used in an ornamental fashion (rather than as simply words) and that ordinary consumers associate the mark with Lizzo.  Even though she didn’t create the words – she is the one who made them popular and transformed the “lesser known phrase to more memorable status.”  On those grounds, the TTAB concluded that the mark is registrable and thus reversed the denial.

A few years ago the mark would have also been rejected as scandalous, but that issue has been off the table since the Supreme Court’s FUCT decision.

Read the TTAB Decision here: Lizzo TTAB Decision

 

 

Upcoming Supreme Court Oral Arguments in IP & Tech Cases

Patent, , , , , , , ,

by Dennis Crouch

The Supreme Court will be handling some significant cases over the next few months that may have a major impact for folks working in IP & Tech fields. The following is brief list sorted by the date of oral arguments.

  • Feb 21 – Gonzales v. Google (Does the safe harbor of CDA Section 230 shield Google from liability for encouraging users to view offending videos).
  • Feb 22 – Twitter v. Taamneh (Can Twitter be held liable for providing a service that aids and abets terrorism, despite its substantial non-violative uses).
  • March 21 – Abitron v. Hetronic (Extraterritorial application of US Trademark Law — damages from foreign sales).
  • March 22 – Jack Daniels v. VIP (Commercial humor leading to fair use or no-infringement/dilution in the TM context)
  • March 27 – Amgen v. Sanofi (Full Scope Enablement: How much description is enough to satisfy the enablement requirement).
  • April 17 – Slack v. Pirani (For securities liability, what causal link is required between misleading statement and the purchase of shares).
  • April 18 – Groff v. DeJoy (Should Title VII of the Civil Rights Act be given more teeth to protect religious liberty in the employment context).
  • April 19 – Counterman v. Colorado (When does speech rise to a “true threat”, unprotected by the First Amendment.  Here, it was a series of unsolicited Facebook direct messages.  The question is whether his intent (mens rea) matters, or can he be convicted based only upon the reasonably perceived threat of the recipient.).
  • April 24 – Dupree v. Younter (If SJ is denied on a question of law, must the party reassert the issue in JMOL in order to preserve the issue for appeal. Although not a patent case, this issue comes up all the time in patent litigation).
  • April 25 – Yegiazaryan v. Smagin (When can an injury to a foreign plaintiff’s “intangible property” serve as the basis for a RICO claim).

Transfer Venue: Texas Corp Status Given No Weight

Patent, , , ,

In re Google LLC (Fed. Cir. 2023)

This is another mandamus action win by Google on convenience grounds. The Federal Circuit has ordered the case moved out of the Western District of Texas (Waco) to the Northern District of California.

Jawbone Innovations, LLC sued Google for patent infringement back in 2021 in W.D.Tex. (Waco).  Jawbone is a Texas company and has a physical base in Waco. But, as the court noted, the company was formed only a few months before the lawsuit was filed.  Some of you may own Jawbone headphone/speaker products.  The operating company closed in 2017, and Jawbone Innovations is a resulting patent-holding company.

As usual, Google moved to transfer its case out of the W.D. Tex.  Judge Albright reviewed and rejected the transfer motion and Google immediately petitioned for mandamus.  The Federal Circuit has now granted mandamus and ordered the case transferred.

Although the appellate court stated that it provided deference to Judge Albright’s decision, it ultimately rejected his analysis.  I note a couple of the issues below:

  1. Time to Trial: The appellate panel indicated that the likelihood of a speedy resolution in one jurisdiction versus another should not be given any regard in the convenience analysis unless the parties particularly justify why a speedy trial is important. Here, the court held that Jawbone clearly has no urgency to resolve the case since it is a non-practicing entity.  As such, the fact that W.D.Tex. may resolve the case faster than N.D.Cal. should be given no consideration.  This result appears problematic to me in general.  Although there is no Constitutional right to a speedy trial in patent cases,
  2. P is a (new) Texas Corp: The district court gave substantial weight to the fact that Jawbone is a Texas company and has an office in Waco near the Courthouse.  The Federal Circuit rejected that analysis — finding instead that Jawbone has no meaningful presence in the district.  Further, the claimed presence appears a transparent effort to manufacture facts favorable for this sort of venue challenge.

In addition to Google’s accused infringing design work being done in N.D.Cal., an important factor in this case is that the underlying Jawbone inventions were also created in N.D.Cal.; and that is the location of the former Jawbone decision-makers and prosecuting attorneys.

As I’ve written before, I expect Google’s true reason for asking for transfer is not primarily based upon any of the convenience factors. Rather Google is concerned that it is more likely to receive a harsh outcome in Texas from Judge Albright than it would before one of the N.D. Cal. Judges in Silicon Valley.

Cancelling a Patent Claim

Patent, , , ,

by Dennis Crouch

The pending case of Jump Rope Systems v. Coulter Ventures is fascinating to me as someone who teaches both property and civil procedure. The basic questions: (1) As an inter partes review (IPR) proceeding draws to a close – toward cancellation – at what point are the claims no longer enforceable? (2) What is the effect of cancellation, in particular, is it like canceling a magazine subscription where the former subscriber isn’t off the hook for past-due bills; or, is it like an annulment – an Ab Initio Extinguishment?  The case also (3) raises a straight-up due process challenge to the IPR system.

A typical IPR where the petitioner prevails includes the following three-step sequence:

  1. Unpatentable Decision: PTAB issues a final written decision concluding that the challenged claim has been proven unpatentable with a preponderance of the evidence.
  2. Affirmed on Appeal: On appeal, the Federal Circuit affirms that judgment.
  3. Certificate of Cancellation: Once the appeal is complete, the USPTO Director then issues a certificate canceling the claim. 35 U.S.C. 316.

The first question — if the patentee is involved in concurrent district court infringement litigation, at what step is the patent no longer enforceable?

Clearly, the patent claim is canceled at Step-3 and by that point cannot be enforced going forward. The Federal Circuit though has held that the claim is already unenforceable at Step-2 based upon the court’s questionable application of collateral estoppel.   I call it questionable because of the different standards  of proof applied in the PTAB vs the District Court.  The affirmed PTAB decision found the claim invalid with a preponderance of the evidence.  But, in district court litigation invalidation requires clear and convincing evidence, a substantially higher standard. And, a conclusion of invalidity under a lower standard does not conclusively tell us that the same claim would have been proven invalid under a higher standard.  Using a standard approach such as found in the Restatement (Second) of Judgments, collateral estoppel would not apply here because of the difference in standards.  Here, we tend to use an exacting standard for res judicata principles because of their due process implications — the result bars a party from making their argument in court.  The Federal Circuit’s fudging of the rule makes some practical sense – the statute appears to make the issuance of the cancellation certificate a ministerial process with its “Director shall” language.  And yet, fudging the rules in a way that undermines due process is troubling.  I’ll note here that courts appear to generally be waiting for the appeal decision before announcing preclusion, although it is unclear whether that approach is somehow required or simply prudential (since district courts generally see the Federal Circuit as unpredictable).  I’ll also note that I previously called out the Federal Circuit for improper expansion of preclusion law with regard to the Kessler Doctrine – they did not listen to me there either.

The second question at issue in Jump Rope Systems involves the impact of cancellation — what about infringement that occurred (and lawsuits pending) prior to the cancellation?

The reissue system is a somewhat-close relative to inter partes review and has the benefit of 150 years of case law, including numerous Supreme Court decisions.  With reissues, courts have clearly held that cancellation of claims during reissue render those claims entirely moot.  See, for instance, Moffitt v. Garr, 66 U.S. 273, 283 (1861) and Meyer v. Pritchard, 23 L. Ed. 961 (1877).  But, the reissue system has a significant difference — a reissue begins with a patentee surrendering its patent as required by statute. 35 U.S.C. 251.  It is that surrendering that makes the cancellation of claims in a reissue so dramatic.

With inter partes review, the patentee does not surrender the patent and so we have a potentially different situation.  Still, courts have regularly treated cancellation of claims as voiding the claims backward and forward through time.  But, it is not so clear that approach is correct and there are many situations where the courts have given “cancel” to only prospective effect.  In its briefing, Jump Rope cites a long string of cases in various areas of law as well as simple plain meaning of the word:

Plain English is in accord. “Canceling” a magazine subscription stops future deliveries, but past issues remain in hand.

Jump Rope Reply Brief. If Jump Rope wins on this, an IPR petition that cancels claims would only cut-off prospective damages and injunctive relief.  The patentee could still recover pre-cancellation damages so long as the defendant failed to prove the claims invalid in district court at the higher standard.

= = =

The briefing also includes an important due process challenge — arguing that the use of IPRs to prevent infringement lawsuits violate due process.  In Oil States, various the patentee raised various challenges to the system, but did not bring a due process challenge. Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365 (“We emphasize the narrowness of our holding. . . . Oil States [has not] raised a due process challenge.”).

Here, the patentee makes two arguments:

  1. “First, front-line adjudicators are not sufficiently insulated from political forces. United States v. Arthrex, Inc., 141 S. Ct. 1970, 1993 (2021) (Gorsuch, J., concurring in part & dissenting in part) (‘The Court’s decision in Oil States allowing executive officials to assume an historic judicial function was always destined to invite familiar due process problems. . . . [P]owerful interests are capable of amassing armies of lobbyists and lawyers to influence (and even capture) politically accountable bureaucracies.’) (citations and internal quotation marks omitted).”
  2. “Second, by not permitting traditional live cross-examination of witnesses
    (instead, relying on written depositions), IPR procedures violate due process in view of the importance of the property right at issue. See Goldberg v. Kelly, 397 U.S. 254, 269 (1970) (‘In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses.’)”

Great questions from petitioner.

Robert Greenspoon (Dunlap Bennett) is counsel for the patentee Jump Rope Systems. Louis DiSanto (Banner Witcoff) is representing the accused infringer Coulter Ventures.   Their offices are a few blocks apart in downtown Chicago.

Three New Supreme Court Cases:

Patent

by Dennis Crouch

  1. Vidal v. Elster.  Elster is seeking to register the mark TRUMP TOO SMALL, but was initially rebuffed because the law prohibits registration of a mark consisting of the name of a particular individual. 15 U.S.C. 1052(c).  On appeal though, the Federal Circuit found such a restriction unconstitutional — especially in this situation where the mark forms a criticism.  The court’s decision follows the logic of two recent Supreme Court cases on point: Tam (the SLANTS – disparaging marks) and Brunetti (FUCT – scandalous marks).  In its petition, however, the US Gov’t tries to distinguish those viewpoint cases from this one that arguably does not involve viewpoint discrimination. Question presented: “Whether the refusal to register a mark under Section 1052(c) violates the Free Speech Clause of the First Amendment when the mark contains criticism of a government official or public figure.”
  2. Nike v. Adidas: This one is not yet a petition, but in an extension request, Nike indicated its plans to petition this case.  The basic issue is whether the IPR statute permits the Board to raise patentability issues sua sponte with regard to substitute claims.  See 35 USC 316(e) (“the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence”).
  3. Thryv v. Click-to-Call: This is the sister case of the IPR previously before the Supreme Court. The IPR only canceled some of Click-to-Call’s claims. The district court then invalidated the remaining claim in suit.  However, on appeal, the Federal Circuit ruled that the invalidity challenge was estopped under Section 315(e).  Thus, the petition in this case is likely to raise the same question raised by Apple in the CalTech case. For now though, the petitioner is simply asking for a 30-day extension of its due date.

Chamberlain Closes on Overhead Door

Patent

The Chamberlain Group v. Overhead Door Corp., 21-CV-00084 (E.D. Tex. 2023)

Overhead door won a jury verdict in this case back in March 2022.  However, Judge Gilstrap ordered a partial new trial because Overhead Door had failed to disclose key features of its products until just before trial. New Jury, New Verdict.  Second time around, the new jury found the asserted claims valid and not infringed — setting the royalty at $43 million.

U.S. Patent No. 8,587,404.

4. A movable barrier system with a moving-barrier imminent motion notification, the system comprising:

a movable barrier operator connected to close a movable barrier;

the movable barrier operator configured to receive a transmitter identification code from a transmitter as part of a communication from the transmitter triggered in response to a first user input at the transmitter, the communication comprising a command to close configured to effect closing of the movable barrier, the movable barrier operator also configured to determine whether to close the movable barrier in combination with operating a moving-barrier imminent motion notification in response to receipt of the command to close the movable barrier based at least in part on the transmitter identification code;

the movable barrier operator configured to determine whether to close the movable barrier without operating the moving-barrier imminent motion notification based at least in part on the transmitter identification code.