All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law.

NCAA v. Alston: Antitrust and Athlete Pay

Best sports of the season may actually be in the court — the Supreme Court.  The Supreme Court has agreed to hear the antitrust against the NCAA and AAC regarding payments to student athletes.

The basic issue here is that big-sport colleges and their associations (NCAA, SEC, ACC, etc.) generate tremendous revenue while at the same time use horizontal agreements to force their athletes to remain amateur.

Question presented:

By NCAA: Whether the Ninth Circuit erroneously held … that the National Collegiate Athletic Association eligibility rules regarding compensation of student-athletes violate federal antitrust law.

Restatement by Athletes: Whether restraints that competing NCAA member schools have agreed to impose in the name of “amateurism” should be exempt from challenge under the antitrust laws.

And, who owns the IP?

See National Collegiate Athletic Ass’n v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984)

Finjan’s Claims in IPR

Palo Alto Networks, Inc. v. Finjan, Inc. (Fed. Cir. 2020)

Note – I originally misread this decision as applying the Phillips standard for claim construction. On review, I realize that I misread the decision. The court explains:

For petitions for inter partes review filed on or after November 13, 2018, the Board applies the Phillips district court claim construction standard. 37 C.F.R. § 42.100(b) (2018); Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc); Immunex Corp. v. Sanofi-Aventis U.S. LLC, 977 F.3d 1212, 1216 & n.2 (Fed. Cir. 2020). For petitions for inter partes review filed before November 13, 2018, like Palo Alto’s, we apply the broadest reasonable interpretation claim construction standard.

So, my original opinion–that the change in claim construction made the difference–is obviously wrong.

= = = =

This appeal stems from an IPR proceedings filed by Palo Alto (PANW) against Finjan’s US. Patent No. 8,141,154.  Back in 2017, the Board originally sided with Finjan and confirmed patentability of the claims (not proven unpatentable). In a 2018 appeal, however, the Federal Circuit vacated that decision under SAS.  The IPR had only been partially-instituted and the Supreme Court in SAS held that partial-institution is improper.   On remand, the Board expanded its institution to all challenged claims and then again sided with the patentee — finding none of the challenged claims were proven unpatentable.  On appeal here, the Federal Circuit has affirmed. (more…)

Some pending en banc petitions before the Federal Circuit

In re Apple (level deference given on mandamus review of discretionary transfer decisions). [Uniloc Brief][Crouch’s prior post]

Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals, Inc. (Proper venue for ANDA filing — what counts as having “has committed acts of infringement”). [ValeantANDAVenue][Crouch’s prior post]

C R Bard Inc. v. AngioDynamics, Inc. (printed matter and eligibility). [BardPrintedMatter][Crouch’s prior post]

EcoServices, LLC v. Certified Aviation Services, LLC  (automation & eligibility) [EcoWashingMachine][CAFC Decision]

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (inducement and “skinny labels”) [GlaxoInducingSkinny][Crouch’s Prior Post]

 

 

Injury-in-Fact and Standing to Appeal from the AIA-Trial Decisions

New petition for writ of certiorari in an interesting Hatch-Waxman and the question of Article III standing in appeals of AIA-Trial Decisions.

Argentum Pharmaceuticals LLC v. Novartis Pharmaceuticals Corporation (Supreme Court 2020)

Introducing generic alternatives that compete with previously approved drugs requires market approval through the Food and Drug Administration (“FDA”). To do so, competitors submit an Abbreviated New Drug Application (“ANDA”) that relies on the safety and efficacy data of the previously approved brand name drug. When that previously approved drug is covered by a patent, however, the mere act of filing the required ANDA subjects the competitor to an immediate patent infringement suit by the brand name company. Such suits are common. By filing an infringement action, the brand name company obtains an automatic 30-month stay during which the FDA cannot approve the competitor’s ANDA.

The real and immediate risk of an infringement suit extends equally to all members of joint ventures that work towards FDA market approval. Petitioners formed a joint venture with a manufacturing partner to develop a generic alternative to Respondent’s brand name drug. Fearing an infringement suit, Petitioner challenged the validity of Respondent’s patent through an administrative proceeding created by Congress under the Leahy-Smith America Invents Act. Petitioner did not prevail on the challenge and appealed the adverse decision.

The questions presented are:

i. Did the Federal Circuit categorically and erroneously preclude redress for injured members of joint ventures in the pharmaceutical industry by only recognizing (1) the manufactuing partner in the joint venture, and (2) the partner applying for FDA marketing approval in the joint venture, as having demonstrable injury-in-fact for Article III standing?

ii. Did the Federal Circuit err by rejecting the Leahy-Smith American Invents Act’s statutory estoppel provisions as a basis to demonstrate injury-in-fact for Article III standing?

Petition.  The petition here was filed by Terry Stanek Rea, former PTO Deputy Director (and Acting Director).

Adaptive Streaming – Not Patent Eligible

by Dennis Crouch

Adaptive Streaming Inc. v. Netflix, Inc. (Fed. Cir. 2020)

In this non-precedential decision, the Federal Circuit has affirmed the lower court’s finding that Adaptive’s asserted claims are ineligible under Section 101. In 2019, Adaptive sued Netflix in C.D. Cal. for patent infringement.  Rather than filing its answer, Netflix immediately filed a motion to dismiss for failure to state a claim. Fed. R. Civ. Pro. 12(b)(6).  That motion was granted — case dismissed.

The patent claims a personal broadcasting system that transcribes an incoming video into a more usable format.  Us7047305 (1999 priority date).  I subscribed to Netflix back in 2001 — receiving rental DVDs in the mail each month.  Netflix has changed dramatically — and one bit of its process appears to be a user-based translation engine.

Claim 39 at issue here requires a “broadcasting server” coupled to a “processor” with the capability of transcoding an incoming video signal from a first compression format into a second compression format “more suitable” for the client device — and available in multiple video stream outputs.  A dependent claim includes the functionality of changing the compression output “in response to a change in bandwidth conditions.”

Abstract Idea: The district court identified the abstract idea here as “collecting information and transcoding it into multiple formats.”

Directed To: With regard to what the claims are directed to, the court looked to the written description coupled with the claim language to deduce the “focus of the claimed advance of over the prior art.” (quoting Solutran (2019) and Affinity Labs 2016).  Here, the court concluded that the focus of the invention is format conversion of incoming video. “The focus is not any specific advance in coding or other techniques for implementing that idea; no such specific technique is required.”

Something more: The court offered a grade for the patent’s performance under Alice Step 2: “The claims also flunk the second step of the Alice inquiry.”  In particular, the court notes the presence of “generic” hardware carrying out its common function known in the art.  That much was admitted in the specification.

Patent Spec.  Regarding novelty + obviousness, the court here reiterated that satisfying those inquiries “does not imply eligibility under § 101, including under the second step of the Alice inquiry, because what may be novel and non-obvious may still be abstract.”

In its reply-brief, the patentee argued also that the commercial success of its invention should be used as evidence of patent eligibility.

[C]ommercial success and industry recognition serves as evidence that the technology underlying the asserted patent is far from well-understood, routine or conventional, and supports that the patent claims are directed to a technological solution to a technological problem.

[Adaptive_Streaming_Inc._v._Net_21]. The court did not consider that argument – considering it forfeited because not raised in the opening brief.

= = = = =

The patent here was originally owned by the dot com LUXXON, a company developing streaming services.  The patents were then assigned to an offshore holding company Hutchison Mediator (Bahamas) as part of an asset sale (part of CK Hutchison Holdings). Then WI-LAN took ownership and transferred rights to Adaptive Streaming, which appears to be a wholly owned subsidiary of WI-LAN (at least no other company owns >10%).

 

2020 Patent Exam – Are you Smarter than a 2L?

At the University of Missouri, my patent law class is practice based – with students drafting claims, rejecting claims, responding to office actions, and participating in a patent law moot court competition. The class is pretty much fully packed. Still, I also give them a short final exam to ensure sure that they have learned the basics.  This year’s exam is based upon an actual pending patent application for the Boss Hammer.  Note – I played with the actual facts and claims a bit to make it all more straightforward.

= = = =

Introduction: Daniel Raymond is the inventor of the “Boss Hammer” shown below. The hammer works as a conventional claw-hammer that might be used by a carpenter or house framer, but also has several secondary functions.  You can see the ruler being used in the drawings below.  The head of the hammer is slightly wider than the handle that allows it to rest atop a board (FIG 4A) and is arranged so that the handle extends out at a right-angle when the head is resting on the board. The head of the hammer is standard width (here 1-inch) so that it can form part of the measurement (FIG 4B).  The hammer also includes a set of angle marks calibrated with the claw end (FIG 5). This replaces a carpenter square so that you wouldn’t need to carry so many tools.

Raymond’s patent application claims a March 2019 effective filing date and includes the description and drawings above.  The application is currently pending before the USPTO with the following claims:

1. A hammer, comprising: a head; and a handle extending from said head;

wherein said head includes (a) a nail-striking section having a base surface and (b) a nail-pulling section having a pair of claws, each claw having an end;

wherein the claw ends share a common plane with the base surface of the nail-striking section; and wherein no other portions of the claws share a common plane with the base surface of the nail-striking section;

wherein at least a portion of said handle extends linearly and perpendicularly to said common plane for allowing a user to draw a straight line which is perpendicular to the common plane.

2. The hammer as set forth in claim 1 wherein said handle further includes angle indicia which indicates angles relative to said ends of said claws for allowing a user to draw a straight line which is non-perpendicular to the common plane.

[Note: I did not provide the students with this, but you can read Raymond’s published patent application here: Raymond Published App (Patent Center link). Likewise with the prior art: Warren Patent Prior Art].

Prior to filing the patent application, Raymond formed a new company (Boss Hammer Co.) and assigned his rights to the patent application to the new company.

One key prior art reference has been identified by the USPTO Examiner: U.S. Patent No. 7,621,503 (“Warren”).  That patent has now expired, but the Patent Examiner identified it as prior art because Warren’s patent application was filed in 2005 and the patent issued in 2009.

Raymond sees a few differences between his claims and Warren.  In particular: (1) in Warren, the entire base of the head is flat while Raymond’s head includes the curved claws; and (2) the angle-lines in Warren are relative to the nail-striking portion while Raymond proposes that these be drawn relative to the claw.  Raymond argues that these differences allow for a more agile hammer head.

= = = = =

Question 1. Is Raymond’s claim 2 directed toward eligible subject matter?

Question 2. Provide a concise argument why the USPTO should reject claim 1 as indefinite.

Question 3. Raymond is concerned that his pre-filing assignment of rights (discussed above) might block him from receiving a patent. In particular, the transfer document is labelled a “sale of patent rights” and recite $1 as consideration. Will the assignment of rights cause his company problems under Section 102?

Question 4. Should Warren bar Raymond from obtaining a patent?

Question 5. Higher-end hammer-heads are often made of titanium and it is well known in the industry how to form hammer-heads out of the metal. In his patent application, Raymond only disclosed Steel as a material for the hammer head. Raymond has suggested to his attorney that he would like to add a claim limitation directed to a titanium head. Raymond correctly notes that, after reading his application, someone skilled in the art would be able to make-and-use a titanium version of his invention. Can he amend the claims to add the titanium-head element? (Consider only written description and enablement requirements).

Question 6. It is now 2022: Raymond obtained a patent covering claim 1 in 2021.  Later that year, IKEA began selling a similar hammer for its customers to use when assembling furniture.[1] The key difference between what Raymond sells and IKEA’s is that IKEA’s hammer-head is rubber-coated metal.  In addition, IKEA sells the hammer unassembled with instructions for assembly.  (It comes in two separate pieces –head and handle).  Will Raymond be able to show that IKEA infringes?

 

[1] IKEA sells its furniture unassembled, and it is a notoriously laborious process to assemble some items.

= = = = =

The hammer here looks pretty cool and would be a great holiday gift for your patent attorney friends. Wrap it in the drawings from the patent application.

Summary Judgment Satisfies Justice

by Dennis Crouch

Super-Sparkly Safety Stuff v. Skyline (Fed. Cir. 2020)

Apart from the Plaintiff’s fabulous name, this case involves the defendant’s catch-phrase “bling-it-on!”; photos of celebrity models; personal weapons (pepper spray); AND a design patent!

Both of these companies take the approach that a can of pepper-spray should be a fashion-accessory.  Skyline’s catch-phrase is “Bling it On!” while Super-Sparkly Safety Stuff doesn’t need more than its company name. The Patent at issue here is Super-Sparkly’s Design Patent No. D731,172 titled “rhinestone covered container for pepper spray canister.”  In the images below, you can compare the patented design (left) with Skyline’s accused product (right).  I have also included an image of a prior art rhinestone cover that was given-out at the Oscars a few years ago.

One thing to note here is that the patented design requires rhinestones on the bottom of the cannister.  Neither the accused product nor the prior art include those bottom-rhinestones.  Based upon that distinction, the district court awarded partial summary judgment of non-infringement. On appeal, the Federal Circuit has affirmed:

The district court did not err in concluding that that this difference precludes a finding of infringement under the ordinary observer test. . . .

The ’172 patent claims a very simple design, in which rhinestones are applied to two surfaces of a canister: the vertical cylinder and the bottom. Removing the rhinestones from one of these surfaces—the bottom—is a significant departure from the claimed design. The ’172 patent and the accused design are thus plainly dissimilar. . . . Even assuming that the two designs are not “plainly dissimilar,” a comparison with the prior art makes clear that the accused design does not infringe the ’172 patent. Although there do not appear to be “many examples of similar prior art designs,” the prior art “Pepperface” reference, dating from 2006, was widely marketed and endorsed by various celebrities. Its design has rhinestones around the majority of the canister, but not on the top (near the spray nozzle) or bottom of the cylinder. Per Egyptian Goddess, then, the Pepperface design highlights that the key difference between the ’172 patent and the accused design is that the bottom of the cylinder is decorated with rhinestones.

Summary Judgment of Non-Infringement Affirmed.

Civil Procedure moment: Here, the non-infringement was only partial summary judgment because other claims remained pending in the case–namely, Skyline filed unfair competition counterclaims. Under R. 54(b), partial summary judgment is not immediately appealable because it is not a “final judgment.”  However, the rule allows the district court to sever-off that portion of the case and enter final judgment “if the court expressly determines that there is no just reason to delay.”  This is effectively an alternate mechanism for certifying an interlocutory question for appeal.  The district court took those steps here, and the Federal Circuit agreed that “the case was properly certified” and so heard the appeal.

Before the district court, the plaintiff had asked the court to delay the summary judgment ruling and instead permit more discovery under R. 56(d).  The district court denied that request and the Federal Circuit found no abuse of discretion.  In particular, the appellate panel found that none of the additional discovery sought by the patentee “has any bearing on the ordinary observer test for design patent infringement.”

Who Says its Not Convenient? Mandamus on 1404(a) Convenience

by Dennis Crouch

In re Apple (Apple v. Uniloc), Misc. Docket No. 20-135 (Fed. Cir. 2020)

In November 2020, the Federal Circuit granted Apple’s mandamus petition and ordered the case of Uniloc v. Apple to be transferred from W.D.Tex. (Albright, J) to Apple’s other home-court of N.D. Cal.  In the Federal Circuit’s opinion, the district court had clearly abused its discretion in finding that N.D. Cal. was not clearly the more convenient forum.  Notice the double-use of the word clearly above — the district court will transfer only when the proposed forum is “clearly more convenient”; and mandamus will only be granted for “clear abuse of discretion.”

Uniloc has now petitioned the court for en banc rehearing–arguing that the appellate panel failed to provide the double-deference required for mandamus review of a discretionary transfer decisions. As Judge Moore wrote in her dissent, “There is no more deferential standard of review.

I remember talking with soon-to-be Chief Judge Rader back in 2009 about the court’s most important opinions of the term.  My view for top-on-the-list was In re TS Tech USA Corp., No. 09-M888 (Fed. Cir. Dec. 29, 2008).  That was the first case where the court granted mandamus on a denial of venue transfer under 28 U.S.C. § 1404(a). At that time, patent litigation was highly concentrated in the Eastern District of Texas, and the proper venue statute, 28 U.S.C. § 1400(b), had been fully nullified by the Federal Circuit.  E.D. Tex. remained a hot venue in patent cases following TS Tech, even as district court patent litigation declined based upon eligibility dismissals and the rise of administrative trials in the form of inter partes review (IPR). The real venue hammer came down with the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).  In that decision, the court reinvigorated the notion of “proper venue” under § 1400(b).  Now, patent cases can only be sued in districts within where the defendant is incorporated or where where the defendant has infringed the patent and keeps a regular-and-established-place-of-business.  By closing its Plano, TX Apple Store, Apple was able to avoid the E.D. Tex. because venue was no longer proper.

In my view this history is important.  The pre-TC Heartland nullification of the proper-venue statute (§ 1400(b)) was a but-for cause of the E.D. Tex. concentration “problem”; and the Federal Circuit used the convenient-venue statute (§ 1404(a)) to relieve that policy pressure.  Now that proper-venue has been revitalized, it is time for the court to also reconsider its approach to convenient-venue.

In this case, it is clear that W.D. Texas is a proper venue for Apple; It also seems like it is pretty darn convenient. Apple has 8,000+ employees in the district and maintains its second-largest headquarters outside of Cupertino. One of the accused products is made in the district. And, even if Apple needs to fly-in witnesses it will be OK because the company is in the process of building its own 192 room hotel in the district.

= = =

Extraordinary Writ?: I may do a separate essay that focuses more on the legal issues of the petition, but I thought I would leave-of with an interesting statistic from the petition:

Since 2008, [the Federal Circuit] has issued over seventy mandamus decisions; the Fifth Circuit by comparison has issued seven. And this Court grants the “exceptional remedy” of mandamus in approximately 1-out-of-3 petitions.

Petition at 2.

 

Locking in the Rules at the PTO

President Trump’s administrative agencies are working hard to lock-in policy changes before the major shift expected in January.  The Patent Office is no different. The changes here (except those implementing court precedent) are ones that the next administration could change, but the implementation Final Rules and Precedential Decision create administrative hurdles.

Final Rules on PTAB Practice: A new set of final rules has now been published and will become effective on January 8, 2021. [Rules].

  • Eliminating Presumption in Favor of Petitioner’s Evidence: During the institution stage, there is currently a presumption in favor of the petitioner involving testimonial evidence. 37 C.F.R. § 42.108(c) states that “a genuine issue of material fact created by such testimonial evidence will be viewed in the light most favorable to the petitioner solely for purposes of deciding whether to institute [a] review.’’  The change eliminates that presumption and going forward the Board will simply consider and weigh all presented evidence according to the institution standard.
  • Right to a sur-reply: this rule provides the patentee with the right to get-in the last word in the institution-stage briefing.  The new rules also allows the patent owner to respond to a decision to institute.  These changes have already been adopted by the Board, but are now codified within the Rules.
  • SAS: The new rules also implement the requirements of SAS barring partial institution (either all challenged claims are reviewed, or no claims are reviewed).

[Rule Change]

New Precedential Decisions: The PTAB (operating under the guidance of Dir. Iancu) has designated three recent institution related decisions as Precedential.  These decisions are important for locking-in the Board’s approach because the Federal Circuit no longer has authority (Thryv) to guide the scope and procedure of IPR institutions.

  • RPX Corp. v. Applications in Internet Time, LLC, IPR2015-01750, Paper 128 (Oct. 2, 2020) (precedential) (Finding that Salesforce is a real-party-in-interest of RPX, and thus that RPX is time-barred from petitioning for IPR).
  • SharkNinja Operating LLC v. iRobot Corp., IPR2020-00734, Paper 11 (Oct. 6, 2020) (precedential) (Board only needs to resolve real-party-in-interest disputes that would impact the time-bar).
  • Apple Inc. v. Uniloc 2017 LLC, IPR2020-00854, Paper 9 (Oct. 28, 2020) (precedential) (Denying institution/joinder of Apple’s copycat petition as a serial challenge; applying the General Plastics model.)

[PTO Description and Links to Cases].  It is easier for the next admin to make changes to these precedential decisions than it is to change rulemaking, but would at least be done in a public manner.

 

Patents and COVID-19 Vaccines

NYTimes has published a new opinion piece titled “Want Vaccines Fast? Suspend Intellectual Property Rights.”

A few years ago I wrote an essay entitled Nil: The Value of Patents in a Major Crisis Such as an Influenza Pandemic (2009).  My basic argument was that the timeline for patenting is quite different than the timeline for a pandemic.  Patents typically take years to obtain (especially on an international level) and pandemics typically have a shorter timeline.  By the time the patents issue, the crisis will likely be averted.  And, if the crisis is still ongoing governments will simply bend/break the patents if their owners refuse to comply.

My understanding is that – so far – none of the COVID-19 vaccines have been patented, but that process is certainly in the works.  The NYTimes article also implicitly recognizes that patents are not the key to COVID distribution, rather, the focus here is really to force the technology developers to also turn-over their undisclosed know-how and trade secrets. This is something obviously more invasive than refusing to enforce patent rights and would shift the balance of power out of the hands of the innovator companies.

Reviewing Summary Judgment for Abuse of Discretion?

GS Cleantech v. Adkins Energy LLC (Supreme Court 2020)

This pending petition for certiorari focuses on the civil procedure question: What is the standard for review of a partial summary judgment that is not reopened at trial?  Normally summary judgment is reviewed de novo on appeal, but this is a case where the Federal Circuit switched the standard.

The patentee here intentionally failed to disclose its its pre-filing sales-activity to the PTO during prosecution. Those prior sales barred patenting of a number of claims (on sale bar) and the remaining were found unenforceable (inequitable conduct).  That outcome was affirmed on appeal by the Federal Circuit and the court denied a petition for rehearing (without opinion).  Now comes the petition for writ of certiorari. Prof. Hricik and I have both written about the Federal Circuit decision:

Here is the relevant procedure at the district court:

  • Summary Judgment of Invalidity: A number of claims found invalid based upon the GS-Cleantech’s pre-filing commercial offer for sale (made after the invention was ready for patenting).
  • Bench Trial for Inequitable Conduct: The remaining claims were found unenforceable due to inequitable conduct at trial.  Inequitable conduct requires a showing of both intent-to-deceive and that the deception was material to patentability.  At trial, the district court relied upon its summary judgment determination as evidence of materiality.

When appealed, inequitable conduct determinations are generally reviewed for abuse of discretion — providing substantial deference to the district court determination.  The patentee argued that things should be different on the issue of materiality – particularly on the issue of whether the undisclosed prior sales rendered the claims invalid.  The difference here, is that issue was decided on summary judgment, and summary judgment is generally reviewed de novo on appeal.

The Federal Circuit gave full deference — noting that the district court “held an eight-day bench trial in which materiality was squarely before it.”  Further, the district court did not simply apply its prior summary judgment determination but rather it incorporated the summary judgment evidence and admitted additional relevant evidence, including previously unheard testimony relating to materiality and ultimately “confirmed” its summary judgment determination in finding materiality.  On appeal, the Federal Circuit found this sufficient to move the on-sale determination fully under the abuse-of-discretion shelter of the inequitable conduct trial and identified the patentees arguments as lacking nuance. (“This argument is jejune.”).

The patentee also directly appealed the summary judgment of invalidity, but the appellate panel did not hear that issue (which it would have given de novo review). Rather, the appellate panel found the issue moot based upon the unenforceability holding.

All that sets up the current petition for writ of certiorari:

Until the Federal Circuit’s decision in this patent case, every Circuit had held that an issue resolved on partial summary judgment, and not reopened at trial, must be reviewed de novo. Here, the district court resolved the issue of patent invalidity on partial summary judgment, and did not reopen it at trial. Yet, the Federal Circuit expressly refused to review the issue de novo, and instead reviewed it under the “abuse of discretion” standard governing review of the decision at trial.

The question presented is: Whether the Federal Circuit, in cases arising under the Patent Act, may depart from the uniform rule of the other Circuit Courts that an issue resolved on partial summary judgment, and not reopened at trial, must be reviewed de novo on appeal.

[Petition]

Standing Naked before the TTAB

Australian Therapeutic Supplies Pty. v. Naked TM (Fed. Cir. 2020) (en banc)

NAKED TM holds the registration for the mark NAKED that it uses to sell its luxury condoms.  However, by the time NAKED TM started its business, Australian Therapy was already selling its NAKED condoms to US customers over the internet.  In the early 2000s, the companies reached some form of a tacit agreement — although without an express contract.  Since 2003, Australian has continued to sell NAKED condoms in the US, but the TTAB found that it was never more than 48 consumers per year.

The appeal here stems from Australian Therapy’s cancellation proceeding that ended when the TTAB found the petitioner lacked standing under 15 U.S.C. § 1064 (petition to cancel may be filed by “any person who believes that he is or will be damaged … by the registration of a mark …”).  The TTAB particularly found a binding contract between the parties where Australian Therapy gave-up its rights to use the mark in the US: 

The evidence shows that the parties reached an agreement. The mutuality of intent to contract is satisfied because the parties recognized their trademark issue and they communicated and exchanged offers to resolve it. The consideration for the contract is Petitioner’s agreement not to use or register the NAKED trademark for condoms in the United States and Respondent’s agreement not to use or register the NUDE trademark for condoms.

The Board explained also that Australian must show a “proprietary rights in its unregistered mark” in order to have standing under the statute.

On appeal, the Federal Circuit reversed — holding a cancellation petition may be filed by any party who demonstrates “a real interest in the cancellation proceeding and a reasonable belief of damage regardless.” It does not require evidence of a “proprietary interest in an asserted unregistered mark.”  Here, the court found a real-interest based on the fact that Australian had filed to register its marks, and had demonstrated a belief of damage because the USPTO refused registration of both the ’237 and ’589 applications based on a likelihood of confusion with Naked’s registered mark, U.S. Registration No. 3,325,577.”

At that point, NAKED TM petitioned for en banc rehearing on two questions:

I. Whether a petitioner who has forfeited its rights in a mark pursuant to a valid settlement agreement has a real interest in the proceedings and a reasonable belief of harm for the registration of said mark so as to support a finding of statutory standing under 15 U.S.C. § 1064 to challenge the registration of the mark; and

II. Whether a petitioner in the TTAB is required to establish the pleaded basis for its standing at the commencement of an action, or whether this Court may rely on an argument that has been waived by a party in finding a basis for standing in the TTAB.

The Federal Circuit has now denied the rehearing, although the case includes an interesting dissent from Judge Wallach. Wallach argues that the decision in Australian Therapy:

  1. Conflicts with our case law requiring a “legitimate commercial interest” to have a valid cause of action under 15 U.S.C. § 1064, see Empresa Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270, 1274 (Fed. Cir. 2014) (following Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014)., noting that a petitioner must have a “legitimate commercial interest sufficient to confer standing”);
  2. Undermines our case law favoring the enforcement of settlement agreements, see Wells Cargo, Inc. v. Wells Cargo, Inc., 606 F.2d 961, 965 (C.C.P.A. 1979) (“If there [is] a policy favoring challenges to trademark validity, it too has been viewed as outweighed by the policy favoring settlements.”); and
  3. Raises questions as to the impact of Supreme Court precedent on our statutory standing jurisprudence, see Lexmark, 572 U.S. at 128 n.4 (noting that statutory standing does not implicate Article III subject matter jurisdiction), 134 (providing “a direct application of the zone-of-interests test and the proximate-cause requirement [to] suppl[y] the relevant limits on who may sue”).

AusTherapy v. Naked.

USPTO Patent Center (Beta)

The USPTO has made its new Patent Center available to all users — although still in beta form.

The Patent Center is designed as a more streamlined tool electronic filing of patent applications that combines EFS-Web and PAIR. For now, the PTO is planning to keep those avenues available until the Patent Center achieves full functionality and stability.

Not-Yet Filed Invention Rights

The Patent Act indicates that patents should be treated as if “personal property” and that both patents and patent applications are “assignable in law by an instrument in writing.” 35 U.S.C. 261.  Section 102 also suggests that the claimed invention may already be “owned” prior to filing. 35 U.S.C. 102(b)(1)(C).

A disclosure [in a prior-filed patent application] shall not be prior art to a claimed invention under subsection (a)(2) if … [T]he subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

Id. The reference to ownership of pre-filing inventions suggests a property right, but does not expressly define that right.  In its 2011 decision, the Supreme Court offered the clue “that inventors have the right to patent their inventions.” Bd. of Trustees of Leland Stanford Junior U. v. Roche Molecular Sys., Inc., 563 U.S. 776 (2011).  In Stanford v. Roche, the court also offered some cases for discussion:

  • Gayler v. Wilder, 51 U.S.(10 How. 477), 493 (1851) (“the discoverer of a new and useful improvement is vested by law with an inchoate right to its exclusive use, which he may perfect and make absolute by proceeding in the manner which the law requires”);
  • Solomons v. United States, 137 U.S. 342 (1890) (“whatever invention [an inventor] may thus conceive and perfect is his individual property”);
  • United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933) (an inventor owns “the product of [his] original thought”).

Despite these old cases, it is remains unclear to me what does it mean to “own” a “claimed invention” before the patent application is on file.  What law applies?

Briefing begins in US v. Arthrex

US vs. Arthrex, 19-1434 (Supreme Court 2020).

Earlier this year the Supreme Court granted writ of certiorari on the PTAB appointments clause issues stemming from the Federal Circuit’s determination that (1) PTAB judges were Officers of the United States who should have been appointed by the President (rather than by the Secretary of Commerce), but (2) the appointments problem was curable by eliminating any statutory job security held by the judges (this reduced them to “inferior officers” who are properly appointed by a head of department, such as the Secretary of Commerce).  The court agreed to hear the first two questions, but not the third (regarding waiver/forfeiture).

  1. Whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office are principal officers who must be appointed by the President with the Senate’s advice and consent, or “inferior Officers” whose appointment Congress has permissibly vested in a department head.
  2. Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges.
  3. Whether the court of appeals in Arthrex erred by adjudicating an Appointments Clause challenge that had not been presented to the agency.

July 22, 2020 Memorandum for the United States.

The case involves three parties.

  • Arthrex, whose patent is being challenged in inter partes review. Arthrex brought the appointments clause challenge, but strongly disagrees with the severing “cure.”
  • Smith & Nephew, the IPR petitioner. Smith & Nephew fundamentally argues that the the PTAB judges are at most inferior officers and thus were properly appointed.
  • US Gov’t intervened in the lawsuit to defend the PTAB decision, and also argues that PTAB judges are inferior officers.

The first round of merits briefing has been filed by the US and Smith&Nephew.  As discussed below, neither party addressed the second question — they will have an opportunity to do so after Arthrex files its opening brief later this month. Additional amicus briefs are expected this week.

US Gov’t Brief:  In its brief, the US argues strongly that PTAB administrative patent judges “are inferior officers whose appointment Congress permissibly vested in the Secretary of Commerce.”  US Government did not address the second question of curing the Appointments problem.

For its analysis, the US attempted to align its argument with the Supreme Court’s approach in Edmond v. United States, 520 U.S. 651 (1997) (Inferior officers must be “directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate.”).

The Gov’t brief walks through the ways that the Secretary of Commerce and USPTO Director (both presidential appointees) possess authority to direct and supervise PTAB judges:

  • The Secretary (in consultation with the PTO director) appoints the judges.
  • The Secretary can remove the judges for “efficiency” purposes and that includes “failing to follow their supervisors’ instructions.”
  • The PTO Director has “unfettered power to decide which adjudicators will sit on any Board panel.”
  • The PTO Director has power to “promulgate regulations governing Board proceedings; issue binding policy directives, including instructions regarding how the patent laws and USPTO policies apply to particular fact patterns; and determine which Board decisions are precedential and therefore binding on future panels.”
  • “The Director has additional prerogatives regarding the conduct of individual proceedings. He may decide unilaterally whether a particular inter partes or post-grant review will proceed at all, and he possesses substantial authority over any rehearings that the Board may grant.”

Role of Rulemaking: Note here that that one important question arises regarding the extent that the Director has “given-up” authority by rulemaking and by tradition.  Under the promulgated regulations as currently in operation, the PTO Director has delegated substantial authority to the PTAB and to the Chief Judge.  An important example of this is that the PTAB determines institution decisions. A question for the Court will be the extent that those prior rulemakings should be considered when analyzing the officer-status of PTAB judges.

Mechanical Turks: In its opinions, the Federal Circuit also analyzed the situation using Edmond. In its brief, the US asserts that the court’s approach is “deeply flawed.”  Most importantly, the US argues that Edmond should be seen as providing for a flexible and open ended analysis of the level of supervision and control; whereas the Federal Circuit followed a more “mechanistic” of distilling Edmond into three discrete criteria and then focusing solely on those.

Burdensome: An additional important criteria here has to do with the burdensome nature of having the President Nominate and the Senate Confirm a large number of administrative officials. From 1836-1975, the patent judges (then called examiners-in-chief) were appointed by the President.  However, the expansion of the patent system (and administrative state in general) began to identify those appointments as an unneeded burden on the President and thus shifted their appointment to the Secretary of Commerce.  I expect that some members of the court – such as Justice Gorsuch – will see this justification as carrying little weight.

Still no Trillion Dollar Judgment

Parker v. Apple (Fed. Cir. 2020) (non-precedential order)

The Federal Circuit has dismissed Parker’s pro se appeal as frivolous.  Parker described the facts of the case as follows:

On October 29, 2018 Raevon Parkerwent to the Apple Store in the Saint Louis Galleria for a malfunction of his cellular device. The attendant in the Apple Store fixed the device but kept it by deceiving the Plaintiff knowing that it was the first phone to have new features [created by Parker himself].

The damages that the plaintiff is seeking is a trillion dollars.

Parker first sued in Missouri state court asking for $2 trillion and $900 USD as well as return of his priceless phone.  The Missouri court dismissed on the pleadings for failure to state a claim. Later, Parker refiled in Federal Court and that case was also dismissed.

You may have heard of district court’s certifying questions for appeal under 28 U.S.C. 1292(b).  In this case, the district court issued a reverse-certification — certifying that any appeal by Mr. Parker should not be taken in good faith.  Still, Parker appealed.

On appeal to the Federal Circuit, Parker made a takings claim — arguing that his 5th Amendment rights were violated by Apple — “his property was taken for public use and he had not been compensated.”  Despite widespread concern over Apple’s monopolistic practices, Apple is not the government and is not bound by the 5th Amendment takings clause or is incorporation under the 14th Amendment.  Thus, the Federal Circuit dismissed the case and denied Parker’s fee waiver petition (Proceedings in forma pauperis).  The Federal statute guiding the court’s approach to in forma pauperis proceedings indicates that the court should dismiss any case where “the action or appeal is frivolous.”  28 U.S.C. § 1915(e)(2)(B).  Following that guidance the the court has dismissed Parker’s appeal.

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I will note that the current value of Apple’s publicly traded shares is $2 billion trillion.

Computer Fraud and Abuse Act: Van Buren v. US

by Dennis Crouch

A lot has changed since President Reagan signed the Computer Fraud and Abuse Act of 1984 (CFAA) and amended it in 1986.  Still, the CFAA remains Federal Law’s primary anti-hacking statute and provides for both civil and criminal penalties.  The most-oft used provision reads as follows:

(a)Whoever … (2) intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains … (C) information from any protected computer … shall be punished.

18 U.S.C. 1030(a). The broad and potentially uncertain scope of “exceeds authorization” is the Focus of the Supreme Court’s November 30, 2020 oral arguments in Van Buren v. United States.

As a police officer, Mr. Van Buren was authorized to search the Georgia Crime Information Center database, but only for police business. As part of a broader FBI sting, Van Buren agreed to and did-actually search the database at the request of private citizen (Albo).  In particular, Albo paid Van Buren $6,000 to search the license-plate records of a prostitute that Albo was considering hiring.

A jury convicted Van Buren for both wire-fraud and computer-fraud.  On appeal, the 11th Circuit overturned the wire-fraud verdict on faulty jury instructions (ordering a new trial); but affirmed the computer fraud conviction despite the “vague language of the CFAA.”  U.S. v. Van Buren, 940 F.3d 1192 (11th Cir. 2019), cert. granted, 140 S. Ct. 2667 (2020).   The Supreme Court granted certiorari on the following question:

Whether a person who is authorized to access information on a computer for certain purposes violates Section 1030(a)(2) of the Computer Fraud and Abuse Act if he accesses the same information for an improper purpose.

[Petition].  The statute does provide a definition:

(6) the term “exceeds authorized access” means to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter;

18 U.S.C.A. § 1030(e)(6). Martin’s simple statutory argument: As a police officer, he was authorized to access and obtain the license-plate information, even if he did so here for an inappropriate reason.  The 11th Circuit disagreed and followed its prior precedent in U.S. v. Rodriguez (11th Cir. 2010). Rodriguez is a closely parallel case of an SSA employee who conducted personal searches on the SSA databases. In that case, the 11th Circuit affirmed the CFAA conviction.

One underlying issue here is that the 11th Circuit’s approach seemingly makes it a federal crime for an individual to obtain information after violation of a terms-of-use.  The government argues that prosecutorial discretion is sufficient to avoid these concerns and that the statute should be “specifically and  authorized” individuals, not the general public.

So.  The government argues that its statutory interpretation turns on the word “so” as used in the statute.  I’m still struggling with how that argument works.

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Read the Transcript and Listen to the Audio.  The outcome here is a bit unclear to me, but I expect the Supreme Court to at least offer a set of limiting principles for the statute — if not going as far as suggested by Van Buren.  That said, I would not be surprised with a 7-2 Sotomayor decision favoring Van Buren. That outcome would then serve as notice to Congress to update the 35-year-old law.

The government repeatedly worked to draw an analogy between the information at issue here and property rights.  The case may turn on the extent that the Supreme Court finds that analogy appropriate.  In particular, the government will likely win if we think of exceeding access as a form of “stealing information” as parallel to that of a brick-and-mortar store employee taking money from the till.  The employee has access to the money, but exceeds access by taking it out.

Obviousness: Claim Construction (Q.of.Law) vs. Interpretation of the Prior Art (Q.of.Fact)

by Dennis Crouch

In re Aspen Aerogels, Inc. (Fed. Cir. 2020) (non-precedential)

The basic question in this ex parte appeal is whether the asserted references teach the layering of aerogels as required by the insulation materials claim pending before the USPTO.  The pending APN 14/446,663 was filed in 2014, but claims a chain of priority stretching back to a 2005 provisional patent application. The basic idea here is that aerogel is a great insulator, but is fragile, so the claim requires fiber-reinforcement.  The claim particularly requires two plys of fiber-reinforced aerogel — and that the fibers in the plys are interlaced with one-another.

Claim 1: A composite comprising

[a] at least one first ply of fiber-reinforced aerogel material adjacent to [b] at least one second ply of fiber-containing material,

wherein fibers from the at least one first ply of fiber-reinforced aerogel material are interlaced with fibers from the at least one second ply of fiber-containing material.

The examiner rejected the claim as obvious and that was affirmed by the PTAB. The Federal Circuit has now affirmed.

  • U.S. Patent App. No. 2002/0094426 (Stepanian) taught having the two layers of fiver-reinforced aerogel, but did not teach the interlacing of fibers.
  • Japanese Patent No. 2000-080549 (Sano) teaches interlacing of fibers of layers using needle-felting.

Aspen’s argument on appeal is that Stepanian does not actually teach plys as claimed but rather two masses of undifferentiated aerogel.  On appeal here, Aerogel presented this as a question of law involving the definition of the term claim term “ply.”  The Federal Circuit here rejected that approach — holding instead that the real question is whether the prior art discloses the plys.  The difference between these two approaches is very important on appeal: Claim construction is reviewed de novo on appeal without deference to the PTO determination; Content of the prior art is reviewed for substantial evidence with major deference going to the PTO.

[W]e determine the issue to be a factual question of whether the prior art teaches an undifferentiated mass of aerogel or teaches layers of fiber-reinforced aerogel as the Board determined. We review this issue for substantial evidence.

Slip Op.  Stepanian (which I have previously discussed in PatentlyO) clearly shows layers, and particularly defines Fig 3 (below) as disclosing “a 3-layer laminate.”  But, the issue is that Stepanian stacks the fibers and then pours in the areogel over the layers of fibers.  The PTAB made the factual conclusion that Stepanian disclosed “plys” of fiber-aerogel, even with the pour-over approach, and the appellate panel found substantial evidence for that conclusion.

Whether layers of fibrous material are filled with aerogel and then stacked or stacked and then filled with aerogel makes no difference if the result is the same as the claimed composite here.

Slip Op.

Note here, that Aerogel is also the owner of the Stepanian patent application (and issued patent). The problem though is that the Stepanian application was published back in 2002, more than 1-year before the priority date of the application at issue here.

Rejection affirmed.

If there really is a claim-construction issue here, on remand the patentee may want to amend its claims to make the proper construction exceedingly clear and then rejoin the rodeo.

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If we go back to the heart of this matter: Aergoel appealed on claim construction, the Federal Circuit says “the real issue is not claim construction but rather the content of the prior art” (paraphrase).  The court then goes on to refuse to decide the claim construction issue and instead decide the case on the alternative grounds.

Truthfully, this seems wrong. The appellate court should have decided the issue raised by the appellant (claim construction) and ended the case there.  I read appellant’s brief who particularly stated that no factual question is being appealed: “There is no dispute here about any relevant fact.”

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Poongs Muthukumaran, chief counsel for Aspen argued for his employer; Kakoli Caprihan argued for the PTO.

For Better or Worse: A time for Family

As we reflect on family, consider the following cases:

Inspiration for Inventing on Thanksgiving Day: 

Shafer claims that he invented the subject matter of his patent and reduced it to practice November 24, 1921 (Thanksgiving Day). . . . [This was] the first time that his brother, who was a mechanic, and he, had the day off together, they devoted that morning to reducing to practice his discovery.

Brown Instrument Co v. Gen. Electric Co, 35 F. Supp. 29, 30 (E.D.N.Y. 1940), rev’d sub nom. Gen. Elec Co v. Minneapolis-Honeywell Regulator Co, 118 F.2d 278 (2d Cir. 1941) (thermostat patent).

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Protecting Children from Forced Adoption: 

He was a research man prepared to devote his life to discoveries of value to industry. Under [his employment] contract he was, however, if he worked in another laboratory or for another manufacturer, required to assign his discoveries to appellee. This would effectively close the doors of employment to him. Until the end of the [contract term of three years] he was compelled either to work for appellee or turn over the children of his inventive genius to it. Such a contract conflicts with the public policy of the land, which is one that encourages inventions and discourages the exclusion of an employee from engaging in the gainful occupation for which he is particularly fitted for all time, anywhere in the United States.

Guth v. Minnesota Min. & Mfg. Co., 72 F.2d 385, 388–89 (7th Cir. 1934).

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It just sounds bad to terminally disclaim a child: 

Although a terminal disclaimer does not conclusively show that a child patent involves the same cause of action as its parent, the terminal disclaimer is still very relevant to that inquiry.

SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1168 (Fed. Cir. 2018).

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As a Family, we are In it Together: 

[T]he FRAND commitment applies to all members of that patent family, unless a specific exclusion has been made.

TCL Commun. Tech. Holdings, Ltd. v. Telefonaktiebolaget LM Ericsson, CV 15-2370 JVS(DFMX), 2017 WL 6611635, at *15 (C.D. Cal. Dec. 21, 2017).

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I’ll buy some consonance for $250:

[T]he sibling patent did not maintain consonance [under Section 121], and therefore the safe harbor provision cannot apply, we hold [the claims] invalid.

St. Jude Med., Inc. v. Access Closure, Inc., 729 F.3d 1369, 1380 (Fed. Cir. 2013).

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Sleeping in your Corset?: 

They were presented to her for use. He imposed no obligation of secrecy, nor any condition or restriction whatever. . . . The donee of the steels used them for years for the purpose and in the manner designed by the inventor. . . . According to the testimony of the complainant, the invention was completed and put into use in 1855. The inventor slept on his rights for eleven years.

Egbert v. Lippmann, 104 U.S. 333, 337 (1881).

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Patents & Divorce: 

In a dissolution action, patents are subject to equitable distribution.

Teller v. Teller, 53 P.3d 240, 249 (Haw. 2002).

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L·U·B·R·I·C·I·O·U·S

[T]he patent fails to teach how the invention actually achieves lubriciousness.

Ritchie v. Phallix, Inc., 8:06-CV-2128-T-26TGW, 2007 WL 9723903, at *2 (M.D. Fla. Oct. 26, 2007).