Most of the action in the House of Representatives begins in committees and subcommittees.  Over the past several terms, patent law legislation and USPTO oversight have primarily been handled by the Judiciary Committee, and particularly the Subcommittee on Courts, Intellectual Property, and the Internet, with the subcommittee chair often driving the discussion and proposals.

As Republicans take charge in the House, the new Speaker (along with the Judiciary Chair) will need to also name an IP Subcommittee chair.  There are two leading candidates:

• Rep. Darrell Issa, a Republican from San Diego, California; and
• Rep. Thomas Massie, a Republican from Northern Kentucky.

Both Issa and Massie are non-traditional judiciary committee members as neither are attorneys.  However, each has lots of experience in electronics and creating products, and with patents.  Issa asks great questions and is a powerful agency watchdog.  But, Massie is the one that truly believes in patents as an element of a strong libertarian property rights system.  In recent days, USInventor has been lobbying against Rep. Issa and has indicated to me that it would strongly support Rep. Massie.

I remember first hearing Rep. Issa’s voice on vehicle alarm systems back in the early 1990s saying: “protected by Viper, stand back.”  But, it is Massie’s patents that are particularly cool, most of which focus on haptic feedback mechanisms.

• https://patents.google.com/?inventor=Thomas+H+Massie

The following comes from my 2022 Civil Procedure I Exam. – Dennis

Introduction: Dryson makes a “hair wand” that styles as it dries.  The company also owns a design patent covering the product. In 2021, three different competitors started selling similar products. Dryson is considering suing them all together in a single lawsuit to be filed W.D. Tex. Federal Court. The action would allege both (1) Federal Patent Infringement; and (2) Unfair Competition (based upon Texas state law).  One note, Dryson’s attorneys believes that it has a good claim of Patent Infringement against all three parties, but the Unfair Competition claim would only be filed against two of the defendants.

1. Do the rules permit Dryson to file a single lawsuit that includes all these parties/claims? (Is Dryson required to bring them all together in one action?)

More facts for next question: Dryson filed the action as noted above. One of the defendants (Amaxon) sells the accused product, but does not actually manufacture the product.  Rather, Amaxon sells a product manufactured by Revloon. As part of their deal, Revloon agreed to indemnify Amaxon for any losses if the product turns out to be infringing on intellectual property owned by a third party.

2. The rules of Civil Procedure provide different ways that Revloon could become part of the lawsuit. Identify them and explain how it would work.

More facts for next couple of questions: When Amaxon first started selling the Revloon product, the company conducted a “freedom-to-operate” search.  To this end, Amaxon hired an attorney (Crunch) to opine on whether the knock-off version infringed anyone’s intellectual property rights. Crunch hired a technical expert to search through patent office records. The technical expert created a Technical Report showing several patents and trademarks that were implicated. Crunch then used that Technical Report to draft an Opinion Letter stating that: “Amaxon is infringing Dryson’s IP rights.” Despite the opinion letter, Amaxon decided that the profits were too lucrative and decided to keep selling the product. All of this occurred before Dyson sued or threatened to sue.

Later, during litigation, Dryson submitted a request to Amaxon seeking discovery of documents held by Amaxon that relate to Dryson’s intellectual property.  Amaxon identified  the Technical Report and Opinion Letter as responsive, and added them to its Privilege Log. But, Amaxon indicated that it would not disclose their contents to Dryson.  Dryson is interested in the documents because proof of willful infringement can lead to treble damages.

3. After attempting to negotiate to resolve the discovery dispute, Dryson filed a motion to compel – seeking an order requiring Amaxon to turn-over the two documents. How should the Judge rule?  

4. Assume that the court granted the motion to compel and ordered Amaxon to provide the requested documents. Can Amaxon appeal that order?

5. The case is headed to trial. What information would help you know whether the court will hold a bench trial or a jury trial (explain)?

More facts for next question: Dryson’s product has a problem.  It burns hair. Russell Brand is one of the people injured. Brand is a famous and wealthy comedian.  Although he is English, the incident happened on a trip to Missouri and so he filed suit in St. Louis Federal Court.  Rather than suing just for himself, Brand filed a class-action on behalf of all people whose hair had been burned within the State of Missouri (but excluding anyone whose skin was burned).  The case seeks both an injunction (stop selling harmful products) and monetary damages for hair loss.  Brand’s attorney is a leading class-action litigator and Brand has promised to pay all legal fees from his considerable wealth in pursuit of justice.

6. Should the court certify the class?

The US Patent and Trademark Office (USPTO) issued a total of 359,000 patents in 2022, including 323,000 utility patents. This marks the third consecutive year of decline in the number of issued patents. The 2022 figures show a 1% decrease from the previous year and a 9% decrease from the record-high numbers seen in 2019, as depicted in the chart below.

by Dennis Crouch

Patents filed before March 2013 are examined using the pre-AIA rules of patentability, including 35 U.S.C. 102(f):

A person shall be entitled to a patent unless — (f) he did not himself invent the subject matter sought to be patented.

35 U.S.C. § 102(f).  Under this old law, an accused infringer was able to assert a defense of invalidity if the issued patent fails to name the correct inventors.

In 2020 Plastipak sued its competitor Premium Waters for infringing a collection of twelve related patents covering the “neck finish” of a plastic bottle. The neck-portion is more costly and the inventions here generally allow for a reduced neck size while still including tamper-evident formations. Plastipak Packaging, Inc. v. Premium Waters, Inc. (W.D. Wis. Aug. 19, 2021) reversed on appeal in Plastipak Packaging, Inc. v. Premium Waters, Inc., — F.4th — (Fed. Cir. Dec. 19, 2022).

The patents list two inventors, Richard Darr and Edward Morgan.  But, on summary judgment the district court concluded they should have listed a third inventor, Alessandro Falzoni.  Usually it is no problem for a company to add additional inventors – even after the fact.  Here, though Falzoni was not a Platipak employee or subject to any agreement to assign rights, and so shared inventorship would mean shared ownership with an industry competitor.

What happened: Falzoni designed an improved neck while working for his Italian packaging company SACMI.  SACMI then proposed the design to various US parties, including Plastipak.  As part of that process, Falzoni emailed a 3D model of the design to Darr.  Darr responded with a finished drawing using the Falzoni model; and Falzoni found those drawings acceptable.  Darr asked for SACMI exclusive rights to the design, but, the parties could not agree on a deal. Eventually, Plastipak ended up filing for its own patent rights and manufacturing using alternate sources.

Taking all this in, the district court concluded that Falzoni had contributed significantly to the claimed invention and therefore should have been listed as an inventor. Since he was not listed, the claims were all invalid. Plastipak Packaging, Inc. v. Premium Waters, Inc. (W.D. Wis. Aug. 19, 2021).

The figure above compares the Falzoni design with that found in Plastipak invention (Fig 2).  The prior art being overcome is found in the middle (Fig 1).

In making its ruling, the district court focused on three primary factors: the “striking similarities” between Plastipak’s engineering drawings and the Falzoni design; the collaboration between Falzoni and Darr at arriving at the invention; and the  financial motivation to exclude Falzoni that made an “honest mistake” unlikely.

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On appeal, the Federal Circuit has vacated, holding that the case was not quite as open-and-shut as the district court claimed.  Although the evidence seems to suggest Falzoni is an inventor, the patentee has a right to a jury trial on this issue because there remain disputed issues of material fact.  In particular, the size of the neck appears to be the critical improvement here, but the patentee raised disputes about the size of Falzoni’s proposed neck.

Ultimately, we agree with Premium Waters that it presented sufficient evidence from which a reasonable factfinder may find clear and convincing evidence that Falzoni was a joint inventor of the X Dimension Patents. Such a finding could be grounded in Falzoni’s testimony, as corroborated by the 3D model and the testimony of another SACMI employee, as well as the arguably suspicious timeline, in which the collapse of Plastipak’s efforts to license SACMI’s ML27 design was quickly followed by Darr and Morgan filing their patent application. Such a finding could lead to the conclusion that the X Dimension Patents are invalid for failure to name Falzoni as an inventor. Crucially, however, nothing in the record requires a reasonable factfinder – particularly one who is resolving all fact disputes, and drawing all reasonable inferences, in Plastipak’s favor – to make these necessary findings. Accordingly, summary judgment of invalidity is not warranted.

Slip Op.

The court goes on to hold that “overwhelming evidence” of joint inventorship is not necessarily enough for summary judgment.  The question instead is whether a reasonable juror could find independent inventorship.  The appellate court also noted that the district court erred in failing to believe the Plastipak testimony.  While the appellate court appeared to agree that a Plastipak’s story of independent invention appeared concocted, the issue of credibility is for the jury to decide.

On remand, the case might still not get to a trial — the district court had not decided all of the summary judgment motions because it found this one dispositive.

Question for you: How do you think a court should handle a similar inventorship issue post-AIA?

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Christopher Dillon (Fish & Richardson) argued for the patentee Plastipak.  Jeffrey Costakos (Foley & Lardner) represented Premium Waters. Both lawyers led their respective trial and appellate teams.

by Dennis Crouch

“Smart wallets” are growing in popularity.  I have one branded FIDELO with a  carbon-fiber case that claims to block scammers trying to read the chip on my credit card.  I think of these generally as “smart wallets” but I learned today that the company Storus has a registered trademark for that term. What should I call them now?

Mosaic Brands, Inc. v. Ridge Wallet LLC, — F.4th — (Fed. Cir. 2022).

In 2020, Storus (AKA “Mosaic Brands”) sued Ridge Wallet for both patent infringement (US7334616) and product-design trade dress misappropriation.  Ridge counterclaimed with its own patent infringement contentions (US10791808, Fig 11 shown above).  The district court denied all the claims pre-trial.

• Summary Judgment: Mosaic ‘616 patent was not infringed based upon a somewhat narrow claim construction.
• Summary Judgment: Mosaic lacked product design trade dress rights.
• Summary Judgment: Ridge ‘808 patent was invalid as anticipated.

On appeal, the Federal Circuit has sided with Ridge: Affirming that Mosaic has no case and vacating the anticipation summary judgment in Ridge’s favor.  On remand, the case should proceed to trial on the infringement counterclaims Ridge brought against Mosaic.

Is it Prior Art?: From a patent law standpoint, the most interesting part of the appellate decision focuses on anticipation and the basic patent-law game show question “Is it Prior Art?”

The purported prior art to the Ridge patent is a product manufactured and sold by Mosaic at a trade show.  The district court compared the asserted claims of Ridge’s US10791808 against the Smart Money Clip II (SMCII) and found each and every limitation embodied by the product. Mosaic presented testimony of its founder (Kaminski) that the SMCII product was on-sale more than 1-year before Ridge’s application filing date.  Mosaic also corroborated that testimony with invoices showing the SMCII was sold at a trade show in 2011.

On appeal, the Federal Circuit concluded that the evidence presented was sufficient for a jury to find anticipation.  But, the procedural problem here is that the district court superseded the jury and instead decided the case on summary judgment. In particular, the jury must decide whether the admittedly biased testimony is credible and whether the documents are authentic, taking into account the high standard of clear and convincing evidence.

While the District Court correctly concluded that the evidence was sufficient to satisfy the corroboration requirement, the District Court erred by proceeding to grant summary judgment of anticipation. Finding that Mosaic presented legally sufficient evidence to corroborate the inventor’s testimony does not necessarily mean that Mosaic’s evidence would also lead every reasonable factfinder – taking the evidence in the light most favorable to Ridge, as the non-moving party – to find by clear and convincing evidence that the SMCII does, in fact, predate the ’808 patent’s critical date. . . . Before the anticipation issue presented in this case can be resolved, a factfinder will have to evaluate the credibility and persuasiveness of the evidence of corroboration and make its own judgment as to whether Mosaic has proven, clearly and convincingly, that the SMCII is prior art to Ridge’s ’818 patent.

Slip Op.  To be clear, this opinion does not shut the door on anticipation summary judgment. But, for over 150 years the courts have hotly questioned and challenged  the credibility of self-serving prior art that first comes to light during the litigation.  The gold standard is always published documents (including patents and patent applications).

A patentee wanting to avoid summary judgment on witness credibility or document authenticity issues will need to provide some showing of a material dispute that creates reasonable doubt. But, because the patent challenger has such a strong burden of proof, the patentee’s showing does not require the presentation of contradictory evidence. Rather, it can be sufficient to simply present logical holes sufficient to create some reasonable doubt.

The District Court appears to have based its summary judgment decision, at least in part, on its belief that Ridge produced no affirmative evidence challenging Kaminski’s testimony. This was not consistent with our precedent, which holds that affirmative evidence is not always necessary in order to create a genuine dispute.

Slip Op.  Here, the patentee argued (1) the documents could have easily been backdated; (2) a lack of images of the SMCII from 2011; (3) a lack of any further documented sales; (4) a lack of meta-data associated with the provided documents showing their provenance; (5) Kaminski’s financial motive to misrepresent the information; and (6) the absence of any third-party corroborating evidence.  The patentee also presented some affirmative evidence — testimony that nobody had heard of Mosaic until 2019.  The appellate panel found these holes sufficient to create a dispute of material fact and thus avoid summary judgment:

Under these circumstances, Ridge is entitled to an opportunity to cross-examine Kaminski, in order to allow the factfinder to evaluate his credibility and the related issue of the authenticity of the corroborating documentary evidence. If the factfinder were to find that Kaminski is not credible, and that the documents on which Mosaic relies are not authentic, the record would then lack the requisite corroborating evidence and Mosaic would be unable to meet its clear and convincing burden.

Slip Op.  As an aside, I’ll note that that decision relates directly to the recent petition for writ of certiorari filed in Innovation Scis., LLC v. Amazon.com, Inc. (Supreme Court 2022)

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I won’t go into this here, but the Federal Circuit opinion includes a discussion of product design trade dress. The court affirmed that the trade dress rights are invalid because the product design is functional.

by Dennis Crouch

My personal name is fairly unique. But, there are several of us, including the most famous Dennis Crouch, the world’s most famous folk music double bassist. The photo below shows Dennis Crouch performing alongside Allison Kraus and Robert Plant. Sometimes folks get confused about who-is-who, but we quickly figure it out.  And, in our world of easy data-tracking, some folks prefer having common names to help avoid undue detection.  There is no central naming authority and so any attempt to ensure unique names would likely fail.

RFID chips are little electronic identification tags and, like names, RFID chips work best when given a unique serial number.  For commercial products, a common approach is to have a three-part ID number that identifies the brand, the class of goods, and the particular product.  The hardware does not have any anti-authoritarian bias, but it is still a tricky process to ensure uniqueness – especially in a distributed global system.

Adasa Inc. v. Avery Dennison Corp., — F.4th. — (Fed. Cir. 2022).

Adasa’s U.S. Pat. No. 9,798,967 facilitates unique RFID serial numbers, allowing them to be created on-demand and without additional authorizations or queries to some central authority. The basic solution here: some RFID authority allocates a block of serial numbers to the RFID creator who then gives each RFID being created a unique serial number taken from the block.

In 2017, Adasa sued Avery Dennison for patent infringement. At the close of discovery, both sides made several summary judgment arguments:

• Avery Dennison moved for summary judgment of non-infringement — DENIED.
• Avery Dennison moved for summary judgment of ineligibility — DENIED.
• Adasa moved for summary judgment that its claims were not-invalid as anticipated/obvious (vis-a-vis prior art suggested by AD). — GRANTED.
• Asada moved for summary judgment that its claims were infringed — GRANTED IN PART (District court held claim 1 was infringed).

Thus, at the summary judgment (pre-trial), the district court completely sided with the patentee as to claim 1, finding it infringed and not invalid.  All that was left for claim 1 was a trial on damages.  At that point, other claims were still pending, but the patentee successfully requested that those claims be dismissed without prejudice so that the case could efficiently move forward.  At trial, the jury returned a verdict of 0.45 cents per chip — which added up to $35 million.   The district court also added a $20 million sanction against the defendant for discovery abuse. (AD had failed to disclose more than two-billion RFID chips it had sold until a post-trial audit revealed their existence).

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As I was reading this case, I was sure that the Federal Circuit was going to flip the whole table based upon eligibility.  But no, the Federal Circuit affirmed the district court’s conclusion that the claims are directed to a “hardware-based RFID serial number data structure designed to enable technological improvements to the commissioning process.”  It certainly helped the patentee here that Chief Judge Moore was on the panel, but Judge Hughes and Stark also signed-on to the opinion.

= = =

Patentee did not fare as well on anticipation/obviousness. Defendant had relied upon “RFID for DUMMIES” as the key prior art.  That reference included a description of how ID allocation worked when the central server was unavailable. And, the court concluded that a reasonable juror “could find RFID for Dummies discloses each element of claim 1.”

RFID for Dummies describes a methodology for ensuring the assignment of unique serial numbers to RFID tags when a central numbering authority is inaccessible or impractical, for example, when a company utilizes multiple manufacturing lines to produce the same product. To decentralize and make feasible the allocation of unique serial numbers across all manufacturing lines, RFID for Dummies discloses an “intelligent hierarchy” in which “a range of serial numbers for each product is allocated to each manufacturing facility.” “Within a facility, a range of numbers from those allocated to the facility is allocated to each line” thereby effectively subdividing the serial number “into a facility number, line number, and subserial number in which the allocation hierarchy is maintained between facility number and line number.”

According to the court, this description could be read to be the same thing that is claimed. In other words, this is an issue for the jury.  Although the focus was on anticipation, the Federal Circuit here also vacated the single reference summary judgment of non-obviousness.  (The court also concluded that a second reference also could reasonably be seen as anticipatory and that summary judgment had been inappropriate).

= = =

On remand, the court will likely hold a new trial on anticipation/obviousness. If the claims are still valid then the damages verdict should stand.

The defendant on appeal argued that the judge should have asked the jury for a lump-sum payment rather than only a per-piece royalty amount.  But, during trial the defendant never advanced a lump-sum damages theory.

It may be that in some circumstances licenses, standing alone without supporting lay or expert testimony, can support a lump-sum instruction. This is not such a case. Here, Avery Dennison clearly and repeatedly argued against the relevancy of the [lump sum] licenses upon which it now relies. Its damages expert opined at least two of the three licenses were not helpful to understanding the value of a hypothetical negotiation. . . . Avery Dennison instead focused its damages theory at trial on design-around costs, which it presented to the jury as a starting-point in a hypothetical negotiation for a running royalty, not a lump-sum payment.

Where Avery Dennison failed to present a lump-sum damages theory to the jury and, moreover, actively undermined the very evidentiary basis it now contends required a lump-sum instruction, the district court did not err in declining to include such an instruction. Further, because there was insufficient evidence to warrant a lump-sum instruction, the district court appropriately declined to include a lump sum option on the verdict form.

Slip oP.

= = = =

Sanctions: After trial had completed, Avery Dennison disclosed that it had sold more than 2-billion additional RFID tags.  The district court at that point sanctioned the company an additional .2 cents per infringing tag. The district court additionally noted Avery Dennison’s bad behavior throughout the litigation process: “patent and continuous disregard for the seriousness of this litigation and its expected obligations.” On appeal, the Federal Circuit found no general problem with awarding sanctions or the process involved.

However, the Federal Circuit did find fault with the district court’s sanction calculation. In particular, the district court sanctioned the defendant 0.2 cents for every infringing tag. It should have imposed the penalty only on the 2 billion that were disclosed late in the process. That would have totaled out to ~ $5 million  sanction instead of ~ $20 million.

On remand, the district court can re-institute the sanctions.  The appellate panel recognized that a new validity trial will be ongoing, but noted that the sanctions award can persist even if the defendant ultimately wins the new trial.

= = =

Derek Shaffer (Quinn Emanuel) handled the appeal for Avery Dennison with Robert Greenspoon (Dunlap Bennett) for Adasa.

by Dennis Crouch

For most of US history, the Commissioner of Patents was appointed by the President and led the USPTO.  Things shifted in the 1990s with the creation of Director and Deputy-Director positions at the top.  But, the Commissioner remains vitally important and manages a workforce and throughput that is larger than ever.   Earlier in 2022, Commissioner Drew Hirshfeld stepped down after a long USPTO career (joining the Schwegman law firm). His immediate replacement, Andrew Faile, has been acting Commissioner, but Andy is also retiring after a really successful USPTO career.  Now, Dir. Kathi Vidal has announced their replacement — Vaishali Udupa. Ms. Udupa has been working in patents since she graduated from American Univ Law in 2000: First at Pennie & Edmonds before its breakup; then at Jones Day for a decade as a patent litigator; and finally at Hewlett Packard for the past decade as Associate General Counsel for litigation.  Like Dirs. Vidal and Lee, Udupa is a longtime member of ChIPs. Throughout her career, Udupa has stayed primarily in the Washington DC area.

The law calls for the Secretary of Commerce to appoint a Commissioner who is (1) a “United States [citizen] with demonstrated management ability and professional background and experience in patent law.”   Although politics are involved in the appointment of a Commissioner, this is a real job of day-to-day management of an intellectual production line involving 10,000+ patents employees.  It is a 5-year appointment.

According to the USPTO, Ms. Udupa will join the USPTO on January 17, 2023. Congratulations Vaishali Udupa on the new position and to Andrew Faile on a really impactful career.

The appointment of a USPTO outsider to the Commissioner position is quite unusual, and I expect that the move represents a major commitment to change at the USPTO with an ongoing focus on diversity and inclusion within our intellectual property system.  The move comes with some risks as Udupa confronts her management team who are likely to respond with “that is how things have always been done.”

by Dennis Crouch

Waco Texas has been a hot spot for patent infringement litigation over the past several years.  We all love “Fixer Upper”  and Baylor.  But, the Waco difference for patent cases is Judge Alan Albright. Judge Albright is a former patent litigator appointed to the bench by President Trump in 2018.  Everyone loves having a patent-knowledgeable judge and there are no  clear statistics suggesting that Albright unduly favors patentees.  However, Judge Albright is now predictable in his approach and has a “get-the-case-to-trial” focus that plaintiffs love.  Defendants often prefer to spend more time on dispositive motions — hoping to throw-the-case-out before trial.  In addition Defendants often prefer to stay litigation pending patent office IPR review.

Judge Albright is the only Federal judge in Waco, and that has made a big difference.  And, Under traditional WDTex rules an action filed in Waco will be heard by Judge Albright.  This is quite different from other courts that have multiple judges with random assignment of new cases.

Garcia Order I: Back in July 2022, Western District of Texas Chief Judge Orlando Garcia issued a major order shaking up the rules of judicial assignment.  In particular, the order states that new patent cases filed in Waco will be randomly distributed among 12 different WDTex judges.  This change somwhat slowed down new-case filing in Waco.  Cases have been distributed among the judges, although Judge Albright continues to receive about half of the new cases.  Most of the rest have been assigned to Judges Judge Pittman, Garcia, Yeakel, and Rodriguez.

Garcia Order II: In November 2022, Judge Garcia took Senior Status and stepped down from his role as Chief Judge. A few days before stepping down, Garcia issued a new order that does not expressly mention patent cases, but does indicate that Judge Albright will be assigned “[a]ll cases and proceedings in the Waco Division.”  On its face, the new order seems to overrule Order I, but that remains unclear.  The New Chief Judge Alia Moses will need to clarify.  I will note that some of the cases assigned to Chief Judge Moses under the Garcia I order have already been transferred back to Judge Albright.

The Garcia II order took effect on December 1, 2022.  Since then, 18 new patent infringement lawsuits have been filed in  W.D.Tex. (Waco) (according to PACER) with the following assignments:

• 13 are assigned to Judge Albright
• 2 are assigned to Judge Yeakel (these are related, both filed by Vilox).
• 3 are not yet assigned to any judge.

These results suggest Garcia II has changed the game and that Judge Albright will be receiving the bulk of the patent docket going forward.  We’ll be looking for a more positive statement from the court, but those tend to be rare. 

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Seriously, I don’t have HGTV at my house, but whenever we travel, my wife and I often just lay in the big hotel bed and watch Fixer Upper.

by Dennis Crouch

This updated chart groups patent applications by filing date and then divides each group into three categories: Patented, Abandoned, and Pending.  Some insights from the data:

• The grant rate rose substantially from 2011 to 2018. This may be due to the movement among patent attorneys to draft more technical and detailed patent applications. I have not yet attempted to measure whether the increase marks a new level of patent application complexity. (Remember, I’m comparing applications filed in 2011 to those filed in 2018).
• Abandonments typically occur after multiple rounds of prosecution. Thus, there are only a few abandonments in applications pending less than three years.  (Look at the applications filed in early 2021).
• Less than 10% of cases are still pending after 4-years of prosecution, with most issuances happening within 30-months of filing.

For data consistency, I used only published applications as I generally cannot see abandoned/pending data for unpublished applications.  In addition, some of the issued patents have already expired after failing to pay the maintenance fees. Those expired patents were categorized in this chart as patented.

by Dennis Crouch

The America Invents Act became law in September 2011, but the first-to-invent provisions only took effect for patent applications filed after March 16, 2013.  Most US utility applications claim back to an earlier application filing: either prior utility patent application, provisional patent application, PCT application, or foreign patent application.  We apply pre-AIA status so long as every claim within the chain-of-priority has an effective filing date prior to the March 2013 date. AIA § 3(n). Otherwise, post-AIA law applies.  Id.

For the chart below, I pulled up records from US patent application publications from the past 10 years and looked at whether the applicant claimed pre-AIA or post-AIA status.

I have marked three portions of the chart with letters A, B, and C.

• A – The first set of published applications claiming post-AIA status started being released about 6-months after the March 2013 date.  Although applications are generally published 18-months after the filing date, the PTO calculates this from the earliest US/PCT date being claimed. For the most part, these are applications that claim priority back to a provisional application filing, but likely involved new-matter being added to the utility application and rewriting of the claims. Because of the new-matter, the applicant was unable to claim that every claim had  a pre-AIA effective filing date.
• B – Once we hit the 18-month mark applications started publishing regularly.  This block is a bit of a mess, but what we have here, for the most part are applications relying upon a PCT filing, and that 30-month deadline.
• C – Throughout both B and C, we also have applications publishing that claimed priority back to pre-AIA utility applications.   Once the noise of the PCT filings ended, we start to see something of a steady decay as fewer applications are filed claiming priority so-far-back.  As of November 2022, about 3.5% of the new publications claimed pre-AIA status. These are applications typically filed earlier in 2022 that claim priority back to an original filing from 9+ years go.

Side note – The chart above is based upon applicant-reported data that the PTO has largely accepted.  Some percentage of these Pre/Post AIA claims likely wrong — and could even become wrong ex post based upon interpretive changes in the law of enablement and written description.  As far as I recall, the Federal Circuit has not yet had the opportunity to interpret the priority provision found in AIA § 3(n).

by Dennis Crouch

I like to think of collateral estoppel alongside binding precedent.  Both involve a set of (at least) two separate cases, and the question is always whether some conclusion drawn in the earlier action forecloses relitigation of same (or similar) issue in the latter action. Precedent is broader because it applies across-the-board regardless of the parties involved.  Collateral estoppel (also known as issue preclusion) is narrower because it only applies when the party being estopped in the latter action was also a party in the earlier action. But, when that same-party requirement is met, collateral estoppel can be much more powerful.

Most importantly, collateral estoppel has the magical quality of binding both horizontally and upwardly. This means that issues decided at the district or administrative court level can be binding on all other courts: district courts, administrative courts, appellate courts, and even the Supreme Court.  On the other hand, precedent feels the gravitational pull and flows downhill.  District court decisions are not binding precedent because they are at the bottom.  The Supreme Court precedent flows down to bind appellate courts whose precedent binds their assigned district courts. Although both the Supreme and Appellate Courts respect their own prior precedent, it is not binding in the same sense as those courts are also self-empowered to modify their own precedent. Another important feature of collateral estoppel is that it applies to both issues of fact and law.  Although some courts have disagreed on this point, precedent is only binding for questions of law.

The Federal Circuit’s recent Uniloc preclusion decision is a tough one and exemplifies an important feature of collateral estoppel power: it is most strident when the original court decision is wrongly decided, but still binds later courts (including later appellate courts). Uniloc USA, Inc. v. Motorola Mobility LLC, 52 F.4th 1340 (Fed. Cir. 2022).  Even though the original lower court decision violated precedent, it still binds the parties.

Some background and how this Played out for Uniloc: HP sold several patents to Uniloc back in 2017 who then sued Apple, Motorola, and Blackboard for patent infringement. Uniloc has a litigation financing relationship with Fortress with the patents serving as collateral for the deal.  The terms of the Fortress financing became important for the subsequent litigation. Basically, if Uniloc failed to meet certain revenue goals, Fortress would be given a license to the patents (including a right to sublicense).  Uniloc then failed to meet the goal, and, by the terms of the deal, those license rights arguably automatically passed to Fortress.

After some venue-action, Uniloc v. Apple ended up before Judge Alsup in the Northern District of California. Apple’s attorneys were able to convince the judge that the license to Fortress meant that Uniloc no longer held full rights to the patent and thus lacked standing to sue.  In my view, Judge Alsup’s conclusion is wrong on the merits.  A patentee who has non-exclusively licensed its patents still has standing to sue.  Judge Lourie detailed the law on this in his “additional views” while the lead opinion simply stated that “there is considerable force to Uniloc’s argument” on the merits. Uniloc v. Motorola, 52 F.4th at 1350 (Fed. Cir. 2022).  Uniloc appealed the Apple decision and (again, in my view) would have likely won on appeal. . . BUT, the parties reached a settlement in the midst of appellate briefing and asked the appellate court to dismiss the appeal. Uniloc did not seek vacatur of the lower court decision as part of the settlement.  So, at the end of the day, Uniloc v. Apple ended with a district court judgment remaining in force, including the decision that the Fortress license left Uniloc without standing.

The two other cases, Uniloc v. Motorola and Uniloc v. Broadcom, were still pending in D.Del on December 4, 2020 when Judge Alsup issued his dismissal order of the Apple case. Two days later, on December 6, Motorola moved to dismiss on the same ground of lack of standing due to the license. Oddly, in its briefing, Motorola indicated that Apple decision was “not binding” but instead only provided persuasive authority. I expect that Motorola’s “not binding” remark was an indication of its precedential value rather than its preclusive impact.  Judge Connolly dismissed the Motorola case, on standing grounds (and without referring to collateral estoppel).  Acting sua sponte, Judge Connolly then dismissed the Broadcom action in a short opinion that might have been based upon issue preclusion (from the prior Motorola decision), but without actually stating as such and without Broadcom making that claim.  One bottom line here, although the parties and the court were all aware of the prior Apple decision, nobody suggested at the district court level that it had issue preclusive effect.

Uniloc appealed the dismissals — arguing that the two decisions wrongly  interpreted the Constitutional requirements of standing with regard to patent infringement actions.  At that point, the two defendants for the first time raised the prospect that Apple had preclusive effect.

Forfeiture/Waiver: From the setup, you should be thinking forfeiture or Waiver. Ordinarily a new defense cannot be raised for the first time on appeal. Rather, a party planning to appeal some issue should first timely raise the issue to the district court. This rule of appellate procedure applies to the res judicata doctrines of issue and claim precl.  Arizona v. California, 530 U.S. 392 (2000) (“res judicata [is] an affirmative defense ordinarily lost if not timely raised”).  Here though, we also have the express statement from Motorola that the Apple case is “not binding.” That appears to create waiver.

On appeal, the Federal Circuit excused the delay by Motorola and Broadcom and found no forfeiture or waiver.  In particular, the court noted that, although the Apple decision was final, it wasn’t final-final.  For issue preclusion to attach, the original action must be “final,” which generally means that the district court reached final judgment on all issues in the case.  But, the Federal Circuit here held that there is no forfeiture unless the first case is what I call final-final–not only reached final judgment, but also exhausted all direct appeals.  That extra step is important for this case because the Apple appeal was still pending as Motorola/Broadcom district court was deciding those cases.  The Federal Circuit noted “strong policy reasons supporting a finding of no forfeiture of collateral estoppel when the argument was first raised after the appeal process of the preclusive case was concluded, and we conclude that forfeiture is not appropriate here.”

As to waiver based upon the “not binding” statement from Motorola, the Federal Circuit concluded that the intent of that statement was with reference to stare decisis  and binding precedent rather than binding as a matter of preclusion.

Finally, the court also issued a catch-all statement that–even if there was an unexcused delay, the court has discretion to excuse the forfeiture. “[W]e have discretion to excuse any forfeiture.”  Id. That claim by the court seems to be an overstatement since an appellate court excusing forfeiture or waiver should consider the equities of the situation before moving forward.

Merits of Issue Preclusion: On the merits, it seems to be a fairly open-and-shut case of issue preclusion:

1. Same Issue: The issue of the license and the resulting no-standing decision was litigated decided in the first case (Apple); and that same issue is now at issue in the second case (Motorola).
2. Actually Litigated: The issue was actually litigated in Apple.
3. Subject to a Valid and Final Judgment: The Apple district court properly entered final judgment (and it was not reversed on appeal).
4. Essential: The license/standing issue was essential to the Apple judgment.

Traditional collateral estoppel had a same-parties rule, parties in first case be the same as those in the second case. In its 1979 Parklane Hosiery decision, the Supreme Court opened the door to “nonmutual issue preclusion” that allows non-parties to assert collateral estoppel. The new rule is a same-party rule and is singular rather than plural; result being that issue preclusion can apply so long as the party against whom nonmutual issue preclusion is being invoked was a party to the previous proceeding that already decided the same issue.  Here, Uniloc was a party to the first case, and the estoppel is being applied against Uniloc in the second case–so this fits the same-party rule.  Courts distinguish between nonmutual defensive and nonmutual offensive issue preclusion; being more resistant to applying issue preclusion in the offensive scenario.  Here, the preclusion is defensive in nature–Motorola is using the doctrine to as a defense against Uniloc’s infringement claim.  With all this together, the appellate court easily concluded preclusion applied and thus that the defendants should automatically win on the issue of standing.

Two aspects of this case make me uncomfortable.  The first part is an underlying feature of issue preclusion — that sometimes the first court reaches the wrong answer, and issue preclusion can still apply.  Here, the wrong-answer is amped-up because it is a Constitutional decision stripping the plaintiff of standing.  Second, and perhaps more importantly is that the appellate court skips over a core rule that prohibits the application of collateral estoppel to work an injustice. In its opinion, the Federal Circuit repeatedly cited Wright & Miller, but skipped that entire section of the treatise.  Here, the seeming error by Uniloc was settling the Apple appeal. Of course, that was a global dispute involving lots of other patents. But, by the time of the Apple settlement, the Delaware court had already issued its decisions in the two later cases and, despite a full opportunity, nothing in any of those cases suggested that the Apple district court decision would have a collateral estoppel impact.  It is not clear to me that these considerations are enough to flip the outcome, but it seems that the court should have at least considered the issues.

This Week, the Senate confirmed John Murphy to become a Federal District Court Judge in the Eastern District of Pennsylvania. Murphy holds a PhD Chemical Engineering from CalTech in addition to his Harvard Law degree.  He he clerked for Judge Kimberly Moore and has been litigating patents at Baker Hostetler (Philly) since 2007. (He was  originally with Woodcock Washburn and that firmed merged with Baker in 2014). Throughout this time he as also been teaching patent litigation at Rutgers and joined Judge Moore as a co-author to her casebook on Patent Litigation (along with Tim Holbrook).  Congratulations Judge Murphy!

Murphy and I share one-degree of lawyerly separation. We were both co-counsel with Leif Sigmund representing Trading Technology in patent litigation (two separate cases).   Most recently, the pair won a jury verdict for TT of infringement and validity following a four-week trial.

by Dennis Crouch

Google v. Hammond Development, — F.4th — (Fed. Cir. 2022)

We have an important IPR collateral estoppel decision from the Federal Circuit. The basic outcome here is that issues litigated and decided in one IPR will be seen as fixed and finally decided as between the parties in future IPRs.  For family member patents, the courts will ask if the first case answered the same patentability questions at issue as the second case.  Preclusion decisions should not be taken lightly because they bar a party the opportunity to defend its rights in court.

Hammond sued Google for infringing a family of three patents and that case is still pending in Waco.  Google responded with three IPR petitions. For two of the patents, the PTAB sided entirely with Google and found the claims obvious.  Hammond did not appeal those findings.  In the third patent–the one at issue here on appeal–the PTAB issued a split decision with six of the thirty claims surviving, including claim 18 in US10270816.

Google’s argument on appeal: Google argues that the issues of patentability with regard to claim 18 of the ‘816 are identical to those already decided by the PTAB in its prior decision invalidating a parallel claim in a family-member patent.   Since the issue was already litigated and decided in the first case, Hammond is estopped from relitigating that same issue.

The two patent claims are not identical, but are quite close.  Here, the Federal Circuit found that to be good enough based upon prior precedent that issue preclusion can still apply despite language differences in the claims. The question is whether the differences “materially alter the question of invalidity. Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333 (Fed. Cir. 2013).

Here, the appellate court identified the differences in the claims and found them insignificant.  That conclusion appears shaky somewhat shaky. My reading of the claims is that the previously invalidated claim required certain activities on “one or more application servers.”  On the other hand, the claim at issue now expressly divides the activities between a “first application server” and a “second application server.”  Thus, for these elements, the already invalidated claim is broader and, in my view, shouldn’t preclude the patentee from arguing those differences.   In its analysis, the appellate panel satisfied itself by pointing to a conclusion in the first case that “distributing software applications across multiple servers was well known to the artisan.”  But, that conclusion does not appear to directly implicate the specific first and second server configuration as claimed.  But, the Federal Circuit is the one that decides, not Crouch.

Collateral estoppel questions always involve at least two cases, and the question is whether some decision in the first case precludes relitigation of an issue in the second case.  Federal Circuit doctrine bars the party from re-litigating an issue of fact or law if the following four elements are met:

1. The issue in the second case is identical to one decided in the first action;
2. The issue was actually litigated in the first action;
3. Resolution of the issue was essential to a final judgment
   in the first action; and
4. The party being estopped had a full and fair opportunity to litigate the issue in the first action.

In re Freeman, 30 F.3d 1459 (Fed. Cir. 1994) (in the context of litigation).  In this case, the patentee admitted element 2-4, and only challenged the first prong.  As noted above, the appellate panel disagreed and found the first prong met.

Timing is a big issue in these cases.  The general rule is that issue preclusion attaches as soon as the first case is made final.  At times, that “made final” element can be a bit confusing–does it apply at the point of the final written decision by the PTAB, once the Director denies review, or only once all appeals are exhausted?  Here, the Federal Circuit did not address that issue since the appeals in the first case had already been exhausted (Hammond did not appeal).  Once the first case is final, collateral estoppel will immediately apply and preclude arguments even in parallel ongoing litigation.

The collateral estoppel decision eliminates two more of Hammond’s claims, but the patentee still has four claims that have survived.  Hammond may still see this as a partial win. When it comes to patent litigation, the patentee needs just one claim able to run the gauntlet of validity, enforceability, and infringement.  We’ll see how that works once the case moves forward before Judge Albright.