by Dennis Crouch

The USPTO has released additional information regarding its current operations and the ongoing Federal Government funding crisis.  Bottom line is that the PTO expects to continue its patent operations “until at least the second week in February.”  Things on DC appear to be thawing enough to provide hope that an appropriations bill will see some light before then.

Although the USPTO is user-fee funded, it may only spend money that has been appropriated by Congress.  This limit comes directly from the US Constitution, which says “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Article I, Section 9.

The most recent USPTO appropriations authorization ended on December 22, 2018 — seemingly cutting of the agency’s ability to spend money.  However, the USPTO has been setting aside previously appropriated money in an “operating reserve” fund for a rainy-day (or rainy month+).  It is this operating reserve that is now being spent and set to run-out in a couple of weeks.

Many federal agencies receive budget authority for a single fiscal year, and any money appropriated but not spent by year-end will lapse and no longer be available.  Thus, for instance, 31 U.S. Code § 1301 provides that an annual appropriation  “may be construed to be … available continuously only if the appropriation … (2) expressly provides that it is available after the fiscal year covered by the law in which it appears.”  USPTO appropriations ordinarily include the this type of additional express caveat that appropriated funds are “to remain available until expended.”  That provision allows the USPTO to set-aside its rainy-day fund from prior appropriations.

The aforementioned reserve fund is part of the USPTO’s strategic plan. And the plan particularly involves setting user fees at a high enough level to grow that fund to withstand even fairly unreasonable funding lapses.  One concern though is whether the USPTO fee setting authority covers such overage.  In particular, the USPTO is authorized to set fees “only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees).” Adding a strategic operating-reserve-fund in case of a shutdown does not appear to fit within this list of cost bases.

by Dennis Crouch

Supernus is an important case that may substantially extend the patent term adjustment (PTA) for your client.  You’ll need to review the case files of recently issued cases to determine whether PTA was reduced by some supplemental filing (such as a late IDS). You may get the time back with a showing that the delay was reasonable. Deadlines in this area are tight. – DC

Supernus Pharmaceuticals, Inc. v. Iancu (Fed. Cir. 2019)

This case involves calculation of patent term adjustment (PTA) that extends the 20-year patent term due any delays in obtaining the patent.  The statute attributes most delays to the USPTO (extending PTA), but some are attributed to the patent applicant (reducing PTA). With regard to PTA reduction, the statute particularly calls-out late office action responses as “failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application.”  35 U.S.C. 154(b)(2)(C). In addition, the statute particularly gives the PTO Director authority to “prescribe regulations” that spell-out the times where PTA should be reduced due to an applicant’s failure to engage in such reasonable efforts.

This case involves supplemental filings by a patent applicant that potentially delay prosecution.  The dates here are important:

• February 2011, Supernus (the patentee here) filed a request for continued examination (RCE) in the case;
• August 2012, Sandoz filed an opposition in the the parallel European case that cited 10 new documents.
• September 2012, Supernus received notice of the opposition from its European counsel.
• November 2012, Supernus filed an information disclosure statement providing the cited documents.

When the patent issued, the USPTO caculated the patent-term-adjustment as 1,260 days.  Although that adds years to the patent term, the patentee wanted more. In particular, the PTO had reduced the term by 646-days — the entire time from the filing of the RCE until the filing of the IDS.  The PTO stood-by its calculation and cited its regulation that PTA is reduced by any “submission” by the applicant “after a reply has been filed” by the applicant.   37 C.F.R. 1.704(c)(8).   Under the regulation, the PTA reduction is calculated as the number of days between the original “reply” filing (here, the RCE) and the later “submission” (here, the IDS).

Supernus has a legitimate complaint. The statute says that PTA should be reduced when the applicant has failed to engage in reasonable efforts.  Here, Supernus apparently had no knowledge of the new documents for at least 18-months (Feb 2011 – Aug 2012). In fact, one of the documents (the opposition itself) had not even been created yet.  The point here is that even a highly reasonable actor could not have submitted the documents during that 18-month period.

A difficulty for Supernus is that the Federal Circuit previously upheld this particular regulation ( 37 C.F.R. 1.704(c)(8)) — finding it “reasonable.” Gilead Scis., Inc. v. Lee, 778 F.3d 1341 (Fed. Cir. 2015).

On appeal here, the Federal Circuit has distinguished Gilead and sided with the patentee.  In Gilead, the information found in a late-filed IDS was already known to the patentee — thus it was proper to attribute the entire delay to the applicant. The basic holding in Gilead was that the PTO does not have to prove that applicant delay actually caused a delay in issuance.

Here, the court focused on whether the PTA reduction can exceed “time during which the applicant failed to engage in reasonable efforts to conclude prosecution.”  After considering the language of the statute, the court concluded that the USPTO is only permitted to reduce PTA for periods where the applicant acted in an unreasonable manner.  This conclusion follows easily from the statute:

The period of adjustment of the term of a patent under paragraph (1) shall be reduced by a period equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.

35 U.S.C. § 154(b)(2)(C)(i) (emphasis added by the court).

Although the PTO has authority to regulate this area, it does not have authority to contravene the statute — as such the office acted inappropriately here. “We find the USPTO’s PTA reduction to be inconsistent with the PTA statute and, as a result, we accord no deference to the USPTO’s application of the regulations at issue in these circumstances.”

The PTO will now need to think-up some new regulations.  Two potential solutions.

=  = = = =

The patent at issue – U.S. Patent No. 8,747,897 – is somewhat interesting in the way that it claims the use of polyvinyl pyrrolidone (PVP) as a “complexing agent” in its pills.

by Dennis Crouch

Helsinn Healthcare v. Teva Pharma USA (Supreme Court 2019)

The Supreme Court has affirmed the Federal Circuit’s interpretation of the “on sale bar” — holding that “Congress did not alter the meaning of ‘on sale’ when it enacted the AIA.” The particular focus here was whether “secret” sales continue to qualify as prior art under the revised Section 102.  Here, the court says yes — “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a).”

In light of this settled pre-AIA precedent on the meaning of “on sale,” we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase. . . . Given that the phrase “on sale” had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase [otherwise available to the public] to upset that body of precedent.

After deciding that the AIA did not change the law, the Supreme Court also took some time to address the question of what is the law.  An interesting aspect of the decision here is that the Supreme Court has never expressly addressed the question of whether or the extent that an offer or sale must be public. However, the court noted its prior implicit precedent that secret sales count as prior art:

Although this Court has never addressed the precise question presented in this case, our precedents suggest that a sale or offer of sale need not make an invention available to the public. . . . The Federal Circuit … has made explicit what was implicit in our precedents. It has long held that “secret sales” can invalidate a patent. E.g., Special Devices, Inc. v. OEA, Inc., 270 F. 3d 1353 (2001) (invalidating patent claims based on “sales for the purpose of the commercial stockpiling of an invention” that “took place in secret”); Woodland Trust v. Flowertree Nursery, Inc., 148 F. 3d 1368 (1998) (“Thus an inventor’s own prior commercial use, albeit kept secret, may constitute a public use or sale under §102(b), barring him from obtaining a patent”). . . .

Given that the phrase “on sale” had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase to upset that body of precedent.

The Supreme Court decision is short – nine pages of text – and unanimous – authored by Justice Thomas.

Guest post by Howard Skaist, founder of Berkeley Law & Technology Group, LLC.

In 2014, two months after Alice was decided by the Supreme Court, a post that I wrote appeared on Patently-O proposing an approach to claim drafting in light of the Alice decision using a “thought experiment” as an illustration.  A hypothetical in that post suggested trying to claim the original computer spreadsheet VisiCalc before the Alice decision and then after the Alice decision.  The conclusion of the post as to Section 101 was summarized at the time, as follows:

“…from a formal perspective, it is necessary that innovative aspects of the invention, as implemented or intended to be implemented, be on the face of the claim …” (emphasis supplied)

One problem, however, as illustrated starkly by the hypothetical is that claims drafted in light of the Alice decision are generally narrower than they would have been otherwise. Today, perhaps, one could write better (e.g., broader) claims to pass muster under the Mayo–Alice Framework than the example claims provided in that 2014 post.  However, the point of this post is not to attempt to do that, but rather to consider the pre-Alice claim provided as an illustration and ask the following two questions.

First, how would the pre-Alice claim from that original post fare under the subject matter eligibility guidance recently published in January 2019? Second, how might that claim (or claims) be re-drafted to hopefully significantly improve the chances that the claim (or claims) will pass muster under that same new guidance?

To refresh, the ‘before’ claim of the post was:

1. A method comprising:  implementing a spreadsheet on a computer.

The primary change under the new subject matter guidance is to so-called step 2A (using the terminology of the US Patent Office) — whether the claim is directed toward a judicial exception such as an abstract idea.  The new subject matter guidance adds a first prong and a second prong to Step 2A.  Following the first prong, an examiner is to determine whether the claim recites a judicial exception, in this case an abstract idea, by referring to subject matter groupings. The subject matter groupings are specified as: mathematical concepts, certain methods of organizing human behavior, and mental processes.

I note that the guidance is quite specific in saying that the claim must “recite” matter that falls within the enumerated groupings.  Thus, here, I would say it does not.   Nonetheless, I have to question if an examiner would take that view.  While the claim clearly does not recite a mathematical concept, I could imagine an examiner asserting that the claim recites a mental process.  While I would not agree with this latter conclusion, I could imagine that an examiner might say, for example, that a spreadsheet can be a mental process and that the language “implementing … on a computer” is nothing more than clever patent drafting.

How, then, might the claim be re-drafted to overcome such a rejection, but still retain some measure of breadth?  To challenge ourselves, and perhaps, recite slightly more than necessary, how about this claim?

1. A method comprising:  implementing a spreadsheet via a computer, including determining contents of one or more cells thereof, based at least in part on one or more user-specified operations to be applied to signals and/or states to be provided as operands for the one or more user-specified operations.

This re-drafted claim at least arguably does not recite a mental process.  Rather, the claim language is pretty specific to make it clear that physical processes are taking place.  Thus, at least two out of three groupings have been drafted around.

Still, an examiner might say that a spreadsheet is a long-standing, fundamental economic practice or one that is a method of organizing human activities, demonstrating one danger with this particular grouping. It is, by its very nature, a bit vague.  Without making any admissions, thus, it would not be not entirely unreasonable for an examiner to suggest that a spreadsheet might fall into this grouping.

Fortunately, all is not lost.  Even if one fails to pass muster under the first prong, an opportunity to satisfy section 101 under the second prong remains.  Here, the new guidance says that if the recited exception is integrated into a practical application, then the claim is still patent-eligible.

Specifically, the guidance says that to meet the second prong the claim is to integrate the judicial exception into a practical application that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort to monopolize the judicial exception.  Being an advocate, my position would be that we have met this already with the claim above.

However, again, to be especially hard on ourselves, perhaps we need to make it clear that some sort of result is generated, so that, as a whole, the claim comprises an improvement over a spreadsheet generated by hand, perhaps, as follows:

1. A method comprising:  implementing a spreadsheet via a computer, including: determining contents of one or more cells thereof, based at least in part on one or more user-specified operations to be applied to signals and/or states to be provided as operands for the one or more user-specified operations; and generating output signals and/or states based at least in part on the determining, wherein the generating includes generating a report that comprises at least a table portion or a sub-portion of the spreadsheet.

Now, it seems that it would be challenging to assert that a practical application with meaningful limits has not been claimed.  Furthermore, if needed, more dependent claims could be used to flush out more application specific features.  Thus, it would seem, we have successfully written or could successfully write a claim that is patent-eligible under the new guidance.

Given the length limitations of a post such as this, it is important that I now quickly move to the point of my prior musings.  So, I have three general observations to make in light of my “thought experiment” above.

First, that my re-drafted claim would pass the Mayo–Alice Framework under the close scrutiny of a court at best is unclear.  Thus, as one conclusion, even if you are able to draft a claim to pass the new subject matter guidance, it seems prudent to include, as dependent claims, features that you believe more clearly pass the patent eligibility test being applied by courts. 

As a second conclusion, in an attempt to provide greater certainty, it appears that the new guidance permits one to present broader patent-eligible claims to the US Patent Office than previously.  To rephrase this latter point, the Patent Office has provided guidance intended to ferret out the more egregious cases of patent-ineligibility, thereby leaving it to courts to sort out closer question situations, as this example might illustrate.

As a third conclusion, with respect to the new guidance, the “money,” so to speak, resides in meeting the second prong. More specifically, while a patent drafter should certainly attempt to draft claims to comply with the first prong and the second prong; still, given the vagueness at the edges of the first prong groupings, efforts by a patent claim drafter to comply with the second prong appear to me to be more likely to succeed.

Tabbed Spreadsheet — Patent Eligible

Patenting a Spreadsheet

Alice Corp. and Patent Claiming: A Simple Example

We are only 21 days into 2019, but trajectories in patent infringement lawsuits appear to be following the same patterns as 2018 — with the top-four venues staying in the same almost identical rank-order:

1. D.Del
2. E.D.Tex.
3. C.D.Cal.
4. N.D.Cal.

For 2018, N.D. Cal. slightly outranked C.D.Cal.  That result is flipped thus far in 2019.  For 2018 and 2019, these five venues represented 55% and 57% of total case filings respectively. (Data compiled from LexMachina Dockets)

The New Judge in town is Alan Albright. Albright was a long-time patent litigator and is now the lone federal judge in the Waco division of the W.D. Texas.  If you file your patent case in Waco, it will be heard by an experienced patent litigator. Congratulations Judge Albright.

The America Invents Act requires the USPTO Director to consider reducing Patent Office fees each fiscal year.  In particular, the Act requires that the Director:

(1) shall consult with the Patent Public Advisory Committee and the Trademark Public Advisory Committee on the advisability of reducing any fees [subject to USPTO Fee Setting Authority] and (2) after the consultation required under paragraph (1), may reduce such fees.

This requirement is not codified in the U.S. Code because it is part of the temporary fee-setting-authority granted by the AIA for 7-years and then extended this year by the USPTO FEES Act for an additional 8-years (ending in October 2016).

by Dennis Crouch

AC Techs v. Amazon.com, Inc. (Fed. Cir. 2019)

This case focuses on AIA-Trial Procedure following SAS Institute, Inc. v. Iancu, 138 S.Ct. 1348 (2018).   In SAS, the Supreme Court held that the USPTO’s institution decision is binary — “either institute review or don’t.”  If the USPTO institutes an IPR then the PTAB must issue a final written decision regarding each claim challenged in the petition.  Prior to SAS, the USPTO commonly issued partial-institution orders — instituting the IPR on only a subset of challenged claims.

Here, Amazon’s petition was granted as to Grounds 1 and 2, but not Ground 3.  At institution stage, the Board found Ground 3 redundant — in part because the claims challenged by Ground 3 were already challenged by Ground 1.  Thus, we don’t have the same situation as SAS, but it is somewhat similar.  An important bit of information for the case is that Ground 3 did not present new prior art, but only an argument based upon an alternative claim construction.

In its final written decision, the Board invalidated a number of claims, but sided with the patentee for claims 2, 4, and 6 — the same claims challenged by not-instituted Ground 3.  On motion, the Board then issued a revised opinion considering Ground 3 and rejecting the remaining claims on that ground.

On appeal, the Federal Circuit confirmed that the Board had followed proper procedure — noting that “if the Board institutes an IPR, it must similarly address all grounds of unpatentability raised by the petitioner.” See BioDelivery Scis. Int’l, Inc. v. Aquestive Therapeutics, Inc., 898 F.3d 1205 (Fed. Cir. 2018) (“Post-SAS cases have held that it is appropriate to remand to the PTAB to consider non-instituted claims as well as non-instituted grounds.”).

The Federal Circuit also found no due process violation in the rehearing since the USPTO provided notice and allowed additional discovery and argument prior to considering Ground 3.

by Dennis Crouch

The USPTO has released pair of examiner guidance documents for (1) examination of patent eligibility and (2) examination for definiteness of functional claim limitations (with a focus on software patents).

• 2019 Eligibility Guidance focusing Primarily but Not Exclusively on Abstract Idea analysis
• 2019 Definiteness Guidance for Functional Limitations in Software Patents

Although these guides do not have the force of law, they are quite important because they direct the bureaucratic process — telling examiners how to examine patent applications for these issues. Examiner performance will be adjudged based upon their ability to comply with the guidance.  In general, I would expect that examiners will be more quickly swayed by citations to the guidelines rather than to citations to particular court decisions.  Examiners will be trained in the upcoming weeks and training materials will be available at the PTO website.

Here, I will focus on the eligibility guidelines and leave definiteness for a separate post.

Prior iterations of eligibility guidelines focused on a listing of post-Alice cases as examples for examiners to follow.  Examiners are typically not attorneys and are not expected to read cases — that makes this case-focused approach problematic in the long-term.  In the new 2019 iteration, the PTO has attempted to synthesize case law in a way that is practical for examiners.  The PTO is also suggesting that this approach will be more reliable and more predictable.  The USPTO does not have the power to shift the legal definition of eligibility.  However, the Agency is given discretionary authority to design a practical administrative mechanism for implementing the law as given.  That is how I see the PTO’s approach here. Now lets look at two of the important changes from prior guidance documents: .

Categories of Abstract Ideas: The inquiry of Alice/Mayo Step 1 is whether the patent claim is “directed to” an “abstract idea” or other excluded area.  The first important guidance change here is to create three of categories or “groupings” of abstract ideas:

• Mathematical Concepts
• Methods of Organizing Human Activity
• Mental Processes

Under the guidance, claims that do not recite matter within one of these three groups “should not [ordinarily] be treated as reciting abstract ideas.”  The guidance does note a “rare circumstance” where an abstract idea might fall outside these categories.  While this approach does not settle the ongoing question of what counts as abstract, it does go a long way toward helping examiners decide when to reject claims.

“Directed To” an Ineligible Concept: The PTO guidance has also focused-in on the Supreme Court’s “directed to” requirement that finds claims problematic only if “directed to” the ineligible concept.  For that element, the PTO asks examiners to consider whether the ineligible concept is “integrated into a practical application.”

A claim is not “directed to” a judicial exception, and thus is patent eligible, if the claim as a whole integrates the recited judicial exception into a practical application of that exception.

The guidance for analyzing this issue focuses on whether keywords of whether the claim uses the ineligible subject matter in a way “that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception.”

Although the document is written primarily as examiner guidance, it is also being applied to PTAB judges and is being seen as a statement of PTO policy.

Although the PTO is permitted to spend its already collected fees.  It isn’t actually able to spend fees collected since the shutdown.  My understanding is that the Office is in cost-cutting mode based upon President Trump’s statement that the shutdown could last for “weeks or even years.”

Once funds run out, the PTO is looking for ways to keep the doors open enough to continue to accept new application filings — while shutting down examination and PTAB activities.  It is likely that a special PTO funding bill would receive bipartisan support — keeping the patent office rolling while other government services are shut-down.