I pulled up 10 recent federal complaints alleging trade secret misappropriations to get a sense of what filings look like today. All 10 involved allegations against former employees. Most focused on sales folks leaving and soliciting customers. A couple of cases involve employees forming allegiances with the competitor before leaving. One involves a competitor trying to hire-away employees. And, one includes a text full of explicit emoji. Overall, about 50 new Federal trade secret cases were filed in the past 30 days with about 600 over the past 12 months.
MGA Home Healthcare Colorado, LLC v. Thun, Docket No. 1:22-cv-02534 (D. Colo. Sep 28, 2022). According to the complaint: Former employee (Thun) was lead client manager but was terminated by MGA. Thun then joined a competitor Amazing Health Care and began soliciting clients. The employment agreement included a non-solicitation clause extending for 12-months following the end of employment.
Schnitzer Steel Industries, Inc. v. Dingman et al, Docket No. 1:22-cv-00361 (D.R.I. Oct 03, 2022). According to the complaint: Former employee (Dingman) had signed both a non-compete and non-disclosure agreement with scraper Schnitzer. Dingman was fired in June 2022 and then formed a competing company to purchase and recycle catalytic converters. He then started calling all of the same suppliers and has “successfully stolen business” from Schnitzer.
H.B. Fuller Company v. Strzegowski, Docket No. 0:22-cv-02389 (D. Minn. Sep 28, 2022). According to the complaint: Former employee (Strzegowiski) joined competitor and began soliciting former customers.
Cartiga, LLC v. Robles, Docket No. 9:22-cv-81612 (S.D. Fla. Oct 19, 2022). According to the complaint: Former employee (Robles) began soliciting former customers. Attachments to the complaint include a nice row of middle fingers in response to the cease and desist letter.
NEBCO, Inc. v. Butler, Docket No. 4:22-cv-03217 (D. Neb. Sep 29, 2022). According to the complaint: Employee (Butler) allegedly began doing a bit of self dealing with a competitor with plans to join that company.
MERIDIAN BANK v. SANDY SPRING BANK et al, Docket No. 2:22-cv-03951 (E.D. Pa. Oct 04, 2022). According to the complaint: Nine former employees were hired away by competing bank who had been given confidential information regarding salary, benefits, and customer lists.
TRANSACTLY, INC. v. MOVE-IN READY, LLC et al, Docket No. 1:22-cv-00987 (W.D. Tex. Sep 29, 2022). According to the complaint: Employees formed a competing company and sent confidential information to the new company before quitting.
BIGRENTZ, INC. v. KGM Enterprises, LLC, Docket No. 1:22-cv-00430 (D. Idaho Oct 13, 2022). According to the complaint: Former employee formed competing company and began recruiting more employees with knowledge of customers lists and have begun soliciting those customers.
Gartner, Inc. v. G2.com, Inc., Docket No. 3:22-cv-01291 (D. Conn. Oct 13, 2022). According to the complaint: Competitor is hiring former employees seeking to “steal” plaintiff’s market share. Sued both competitor and former employees.
BMO Harris Bank, N.A. v. Eimen et al, Docket No. 1:22-cv-05378 (N.D. Ill. Sep 30, 2022). According to the complaint: Former wealth management employees joined competitors and began soliciting former clients.
Molly Metz is a competitive jump-roper (5-time world champ) and also an inventor of an innovative jump rope handle that allows super speed jumping loved by both competitors and cross-fit freaks. U.S. Patent Nos. 7,789,809 and 8,136,208. There has been massive infringement since her patents issued 10-12 years ago. Financing an infringement lawsuit is a bit tricky, especially for a total-startup (micro entity) in a fairly small market. After failed licensing discussions, her company Jump Rope Systems eventually sued Coulter Ventures (owners of Rogue Fitness) in 2018 for patent infringement. Jump Rope Systems, LLC v. Coulter Ventures, LLC, 18-cv-731 (S.D. Ohio). Coulter turned around and petitioned for inter partes review (IPR). IPR2019-00586, IPR2019-00587. The PTAB granted the petitions and eventually concluded that the claims were obvious compared against the prior art. The PTAB decision here is fairly questionable as applying hindsight bias in justifying the combination of prior references. Still, the Federal Circuit affirmed without opinion.
The Federal Circuit precedent is clear that all enforcement litigation should end as soon as the PTAB finds a claim unpatentable in an IPR/PRG and the determination is affirmed on appeal. “That affirmance … has an immediate issue-preclusive effect on any pending or co-pending actions involving the patent.” XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018). As I write below, the Federal Circuit’s approach has some doctrinal holes. Still, it is precedent and the district court followed that precedent–dismissing the case and siding with the accused infringer. Jump Rope appealed, but made clear to the Federal Circuit that the purpose of its appeal was to change the law and moved for summary affirmance of the district court’s judgment.
The IPR Certificate eventually issued in August 2022 stating that the claims have been cancelled, but that time the district and appellate courts had already been treating them as cancelled for months.
Whether, as a matter of federal patent law, a determination of unpatentability by the Patent Trial and Appeal Board in an inter partes review proceeding, affirmed by the Federal Circuit, has a collateral estoppel effect on patent validity in a patent infringement lawsuit in federal district court.
Although the Second Restatement of Judgments is not “law” as such, the Supreme Court (and other courts) have repeatedly concluded that its statements do reflect the law. One theory for immediately applying the PTAB judgment is the doctrine of collateral estoppel (aka “issue preclusion”). In XY, the Federal Circuit particularly concluded that collateral estoppel applies to immediately bar a patent infringement lawsuit once the PTAB finds the claims unpatentable and that determination is affirmed on appeal. Judge Chen’s XY decision has numerous problems. The basic concern is that the opinion fails to consider standard limitations on the application of collateral estoppel, such as differing standards of review. One key example: the PTAB decided obviousness based upon the low standard of preponderance of the evidence; and the IPR Appeal was decided on an even lower substantial evidence standard. But, decisions on those low standards do not tell us whether the issue would be decided the same way under a higher standard of clear and convincing evidence. Standard issue preclusion rules prohibits this sort of application. See Grogan v. Garner, 498 U.S. 279 (1991). But, the Federal Circuit majority simply concluded that the patentee “had its day in court” and now is bound by the outcome. As I noted above, in my view the PTAB obviousness decision here is quite weak in the way that it combines disparate references and identifies the problem to be solved. I mention this because it seems like a case where the standard of review might make a difference.
To be clear, in my mind all of this might be a different situation once the USPTO issues its IPR certificate that actually cancels the claims. At that point, the patent has been cancelled, but the parties here appear to be fighting about the pre-cancellation interim period. One additional complication to this case is the reality that obviousness is a question of law, albeit one based upon substantial subsidiary facts. Legal decisions by the courts also become binding precedent (apart from their preclusive impact on the parties), but this area becomes complicated when the legal determinations are based upon unique underlying factual conclusions.
Rothy and Birdies compete in the shoe market. Rothy’s launched its knit loafers in 2017; Birdies launched its product in 2021 and Rothy’s sued for infringing three of its design patents. D885,016, D885,017, D909,718, and D870,425.
Birdies moved for summary judgment of both invalidity and non-infringement. For the invalidity defense it (partially) relied upon its prior calf-hair version of the shoe shown in the comparison chart above. The defendant made the classic defensive argument that the prior art is so similar to the accused product that either (1) the patent is invalid [if broadly interpreted] or (2) the patent is not infringed [if narrowly interpreted]. On summary judgment, Birdies argued:
Ultimately, by accusing the knitted Blackbird—a shoe with a silhouette that predates Rothy’s patents—of infringement, Rothy’s has created a catch-22 for itself. If the asserted patents are given Rothy’s broad construction (broad enough to cover the knitted Blackbird), then the patents are necessarily invalid: the original (non-knit) Blackbird predates the asserted patents, and using a knit material does not save the patents from invalidity, particularly given the myriad of other preexisting knit flats, as well as the absence of knit from at least a subset of the asserted patents. Alternatively, if the patents are given a narrower reading that allows for differences (other than the knit material) between the original Blackbird and the asserted patents, then the knitted Blackbird does not infringe.
Birdies Motion for SJ. The argument makes sense. But, the district court didn’t agree. For invalidity, the district court concluded that the prior art wasn’t quite good enough to find the design obvious. Then, for infringement, the court noted that Birdies’ reliance on its own same-shaped shoe for invalidity almost admits infringement. “Birdies even admits as much by arguing that the original Blackbird—made of calf hair—and the Rothy’s patented designs share a silhouette.” Rothy’s, Inc. v. Birdies, Inc., 21-2438 (N.D. Cal. 2022). In the end, the district court denied the defendant’s motion for summary judgment: “A jury could reasonably find that Birdies’ knitted Blackbird, depicted [above], infringes each of Rothy’s patents.” The case here offers another example of why Inter Partes Review (IPR) proceedings are a godsend for accused infringers. The separate tribunals allow for the patent challenger to tell two different stories without worrying about creating confusion.
The decision here was from May 2022. Since then, the parties settled the case with Birdies agreeing to stop making & selling the accused designs.
The pleadings include the fabulous set of drawings of historic men’s shoes and boots from John Peacock’s book titled Shoes: The Complete Sourcebook. I would buy (and wear) those 1880 English flowered loafers if I could find a reasonable pair.
The following is a guest post from Logan Moore. Logan is a 3L at the University of Missouri School of Law and a member of our Veterans Law Clinic. Under the leadership of Prof. Angela Drake, our clinic filed an amicus brief in this important new Federal Circuit case. — Dennis
by Logan Moore
I. Introduction
Veterans are typically entitled to benefits for service-connected disabilities. The Department of Veterans Affairs (VA) has adopted a rating schedule, divided into different diagnostic codes (DCs) for various symptoms or conditions, to evaluate how an injury impairs a veteran’s earning capacity.[1] The VA recently amended its diagnostic code for claims related to prosthetic knee replacements (DC 5055) to clarify that the criteria apply to “total [knee] replacements only.”[2] The amendment resolved ambiguity as to whether DC 5055 also covered partial knee replacements. For claims filed under DC 5055 on or after February 7, 2021, the new, seemingly unambiguous rating criteria will be applied. For pending claims filed before February 7, 2021, however, the old, ambiguous rating criteria will be applied if more favorable to the veteran.[3] Therefore, even though the VA formally amended its rating schedule almost two years ago, courts’ interpretation of the “old” DC 5055 still has a meaningful impact on thousands of pending claims filed before February 7, 2021.
The National Organization of Veterans’ Advocates (“NOVA”) petitioned the Federal Circuit to review VA’s interpretation of the prior DC 5055 language. Specifically, VA set out its own interpretation of the diagnostic code in 2015 – in the “Knee Replacement Guidance” – and again in 2016 – in the “Knee Replacement Manual Provision.” Thus, in National Organization of Veterans’ Advocates v. Secretary of Veterans Affairs (“NOVA 2022”),[4] the Federal Circuit faced several important questions about DC 5055, including (1) whether the Knee Replacement Guidance or the Knee Replacement Manual Provision constitutes the “final agency action” reviewable by the Federal Circuit; (2) whether DC 5055 was ambiguous at the time of VA’s guidance; (3) whether Auer agency deference applied to VA’s interpretation;[5] and (4) whether the Gardner pro-veterans canon required any doubts to be resolved in NOVA’s favor.[6]
NOVA 2022 provides some clarity on two principles that are often in conflict in veterans’ law cases—the general rule of deference to an agency’s interpretation and a pro-veteran canon to resolve all doubt in favor of the veteran. And its holding gives important insight on how adjudicators should analyze disability claims under DC 5055 for claims filed before February 7, 2021.
Ultimately, the NOVA 2022 majority held: (1) the Knee Replacement Guidance published in July 2015 was the “final agency action” subject to the court’s review; (2) at the time of this final agency action, DC 5055 was ambiguous as to whether it covered partial knee replacements; (3) the Knee Replacement Guidance was not entitled to Auer deference as it was inconsistent with a vast majority of prior Board decisions; and (4) the petitioner’s interpretation was entitled to the pro-veteran presumption because the language of DC 5055 did not unambiguously support the Secretary’s argument.
With this preview in mind, it is helpful to briefly discuss a prior Federal Circuit decision regarding VA’s “Knee Replacement Guidance”—Hudgens v. McDonald, 823 F.3d 630 (Fed. Cir. 2016).[7]
II. Hudgens v. McDonald
Michael Hudgens injured his knee while serving on active duty in the United States Army. In 2003, he had partial knee replacement surgery, and, in 2006, he sought benefits from the VA for his injury. When he was eventually given a 0% disability rating for right knee instability, he appealed to the Board of Veterans’ Appeals (“Board”). At the time of Mr. Hudgens’s claim and appeal, DC 5055 provided the following guidance for prosthetic replacement of the knee joint:
For 1 year following implantation of prosthesis ……………… 100 [% disability rating].
With chronic residuals consisting of severe painful motion or weakness in the affected extremity …………….. 60 [% disability rating].
With intermediate degrees of residual weakness, pain or limitation of motion rate by analogy to diagnostic codes 5256, 5261, or 5262.
Minimum rating …………….. 30 [% disability rating].
Both the Board and the United States Court of Appeals for Veterans Claims (“CAVC”) denied Mr. Hudgens’s claim on the grounds that DC 5055 applied only to total knee replacements. Mr. Hudgens ultimately appealed to the Federal Circuit.
Prior to the court’s consideration of Mr. Hudgens’s case, the majority of the Board’s decisions regarding DC 5055 found that the regulation did apply to partial knee replacements.[8] But in July 2015, just before final briefs were due to the Federal Circuit in Mr. Hudgens’s case, the VA published an informal rule (the “Knee Replacement Guidance”) to clarify that the language of DC 5055 “refers to replacement of the joint as a whole.”[9] Thus, the Hudgens court was tasked with addressing the confusion surrounding DC 5055’s coverage.
In Hudgens, the Federal Circuit ultimately held that (1) DC 5055 was ambiguous – it did not expressly state that it applied to only full knee replacements, and the majority of Board decisions regarding DC 5055 found that it actually covered partial replacements, (2) Auer deference did not require acceptance of the VA’s interpretation in the Knee Replacement Guidance – it is the Veterans Court’s “stated practice” to look to Board decisions for guidance and the Knee Replacement Guidance conflicted with numerous prior Board rulings,[10] and (3) the pro-veteran presumption applied. Therefore, the Federal Circuit ultimately held that DC 5055 covered partial knee replacements.
III. NOVA 2022
Fast-forward a little more than six years, and the National Organization of Veterans’ Advocates (“NOVA”) petitioned the Federal Circuit to review the VA’s updated interpretation of DCs 5055.[11]
III.A. VA’s Post-Hudgens Amendment to DC 5055
Six months after Hudgens, the VA directed regional office (“RO”) adjudicators “to not evaluate under DC 5055 any claims for partial knee replacements filed and decided on or after July 16, 2015” (Knee Replacement Manual Provision).[12] And in 2020, the VA amended DC 5055 following notice-and-comment to “clarify [its] intent to provide a minimum evaluation following only total joint replacement.”[13] The amended regulation provides, in relevant part:
Prosthetic replacement of knee joint: … Minimum evaluation, total replacement only ……………….. 30 [% disability rating].
In addition, a note was added to the rating schedule to emphasize that “prosthetic replacement” in DC 5055 “means a total replacement of the named joint.”[14]
III.B. Jurisdictional Question
The Federal Circuit first briefly resolved the jurisdictional question: which VA instruction – the Knee Replacement Guidance or the Knee Replacement Manual Provision – constituted the final agency action subject to the court’s review? The court acknowledged that “Manual [P]rovisions that merely republish prior agency interpretations or restate existing law are not reviewable” in the Federal Circuit. Because the Knee Replacement Guidance “predates the Knee Replacement Manual Provision, and the Manual provision makes no substantive change to the Guidance,” the NOVA 2022 court held that the July 2015 Knee Replacement Guidance was the reviewable agency action.
III.C. Whether “Old” DC 5055 Covers Partial Knee Replacements After VA’s Knee Replacement Guidance
With the jurisdiction question answered, the court turned to address whether the VA’s interpretation of DC 5055 in its Knee Replacement Guidance was “arbitrary and capricious” or contrary to law.[15] The court noted that it must look to the text of DC 5055 “on the date the VA promulgated the Knee Replacement Guidance” because the court’s evaluation is whether the Guidance constitutes a valid interpretation of the code. The court followed Hudgens and concluded that the version of DC 5055 that existed when the VA promulgated the Knee Replacement Guidance is ambiguous.
Similar to Hudgens, the Federal Circuit then considered whether Auer deference or the Gardner pro-veteran presumption applied in this case. The court ultimately held that the prior conflicting Board decisions still precluded application of the Auer deference because “no relevant law or facts [had] changed since [its] decision in Hudgens.” Notably, since Hudgens, the Supreme Court reinforced the limits of the Auer doctrine. Specifically, in Kisor the Court provided that Auer deference is not appropriate where the agency interpretation “creates an unfair surprise” that upends reliance by regulated parties.[16]
According to the Federal Circuit, the Knee Replacement Guidance created unfair surprise because (1) Board decisions provide persuasive authority to the CAVC, (2) the vast majority of Board decisions prior to the Guidance applied DC 5055 to partial replacements, and thus (3) the prior Board interpretations may have “engender[ed] reliance interests that foreclose” Auer deference. Therefore, the NOVA 2022 court concluded that Hudgens still controlled its decision and the Knee Replacement Guidance did not qualify for deference.
Finally, under the pro-veteran canon of construction, the Federal Circuit determined that it must defer to NOVA’s interpretation of DC 5055. In Hudgens, the court held that “even if the government’s asserted interpretation of DC 5055 is plausible, it would be appropriate under the pro-veteran canon only if the regulatory language unambiguously supported the government’s interpretation.” And as the NOVA 2022 court explained, the text of DC 5055 at the time of the Knee Replacement Guidance was certainly ambiguous and thus any doubt should be resolved in favor of petitioners.
IV. Conclusion
There remain thousands of pending veteran disability benefit claims filed before the VA recently amended some of its rating criteria—including DC 5055. The Federal Circuit’s holding in NOVA 2022 provides important guidance to adjudicators charged with applying the old DC 5055 language to a veteran’s pre-2021 claim.
[3] Under the “pro-veteran canon,” ambiguous VA regulations are interpreted in a manor favorable to the veteran.
[4] Nat’l. Org. of Veterans’ Advocates, Inc. v. Secretary of Veterans Affairs, 48 F.4th 1307, 1310 (Fed. Cir. 2022).
[5] Under Auer v. Robbins, an agency’s interpretation of its own regulation is controlling unless the interpretation is “plainly erroneous or inconsistent with the regulation.” 519 U.S. 452, 461 (1997).
[6] Under Brown v. Gardner, “interpretive doubt is to be resolved in the veteran’s favor.” 513 U.S. 115, 118 (1994).
[7] Hudgens v. McDonald, 823 F.3d 630 (Fed. Cir. 2016).
[8] To this point, 11 out of 14 relevant Board decisions found that DC 5055 was applicable to both full and partial knee replacements. Id. at 637.
[9] Agency Interpretation of Prosthetic Replacement of a Joint, 80 Fed. Reg. 42042 (July 16, 2015).
[10] The Supreme Court has clarified that Auer deference is unwarranted where “the agency’s interpretation conflicts with a prior interpretation.” Christopher v. Smithkline Beecham Corp., 567 U.S. 142, 155 (2012).
[11] Nat’l. Org. of Veterans’ Advocates, Inc. v. Secretary of Veterans Affairs, 48 F.4th 1307, 1310 (Fed. Cir. 2022).
[15] Under the Administrative Procedure Act (“APA”), a court should “hold unlawful and set aside agency action” that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or is promulgated “without observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (D).
[16] Kisor v. Wilkie, 139 S. Ct. 2400, 2418 (2019).
One of my favorite of all global patent law events is the Patent Cup–a regatta that takes the battle of wits beyond the courtroom or patent offices. The idea was hatched in 1989 by two friends, German patent attorney Peter Franck and French patent attorney Frederic Benech. The idea was to have a sailing patent attorney or agent organize in his or her own country a friendly race among IP professionals to showcase local sailing venues that might otherwise not be discovered. While a friendly competition, the Patent Cup has included sailors with both world-champion and Olympic pedigrees. As with many other events, the pandemic delayed the event for a couple of years, but the 31st running of the Patent Cup was a great success a few weeks ago in my old town of Chicago. The 2022 Patent Cup was organized by my former boss Marcus Thymian.
The regatta took place on Lake Michigan in September 2022 benefitted from perfect weather (not always a sure thing in Chicago). Principal Race Officer (PRO) and Chicago patent litigator Leif Sigmond, Jr., was able to run 9 competitive races and a more casual distance race. A mixed team from Australia, New Zealand, and Brazil (captained by Australian patent attorney James Cherry) claimed first place and were awarded the Patent Cup trophy. Thymian’s US team was second, while a team of current and former EPO patent examiners was third.
The regatta was sponsored Thymian and Sigmond’s respective firms: GrowIP Law Group and BakerHostetler and included sailors from 9 different countries. The competitors raced on the Chicago Yacht Club’s fleet of “Tom 28” boats. Next year’s Patent Cup is scheduled to take place at a yet-to-be-determined European location. Congratulations to the winners!
The Federal Circuit’s recent decision in IBM v. Zillow Group, Inc., — F.4th — (Fed. Cir. Oct 17, 2022) is a companion case another recent opinion, Weisner v. Google, — F.4th — (Fed. Cir. Oct 13, 2022). The two eligibility appeals were decided a days apart by the same three-judge panel of Reyna, Hughes, and Stoll following oral arguments held minutes apart. Both district courts dismissed infringement lawsuits at the pleading stage and the “abstract idea” question was up on appeal.
The two appellate opinions are also parallel. In both cases Judge Hughes concluded that claims were ineligible as directed to abstract ideas. Likewise, in both cases Judge Stoll concluded that the patentees had alleged plausible and specific facts showing that the claims embodied inventive concepts. As such Judge Stoll concluded that dismissal on the pleadings–before weighing any evidence–was improper. But, the two cases have different outcomes because of the third panel member, Judge Reyna. In IBM, Judge Reyna joined Judge Hughes’ opinion siding with the defendant. In Weisner, Judge Reyna joined Judge Stoll’s opinion siding with the patentee.
To be clear all three judges agreed that most of the asserted claims were invalid. The disagreement is over a subset that, according to Judge Stoll at least, the patentees made plausible and specific allegations sufficient to overcome a motion to dismiss.
Federal litigation begins with a plaintiff filing a complaint. In patent litigation, this is typically the patentee suing a defendant for patent infringement. Under the rules, the complaint must include a “short and plain statement … showing” that the patentee is entitled to relief. FRCP R. 8. In Iqbal and Twombly, the Supreme Court reinterpreted this rule to require nonconclusory allegations of specific facts that make the cause-of-action plausible. If the complaint fails this standard, the defendant can seek what was traditionally known as a “demurrer” and is now called a “motion to dismiss for failure to state a claim upon which relief can be granted” under R. 12(b)(6) or “motion on the pleadings” under R. 12(c).
At the pleading stage, the court generally does not require the parties to provide admissible evidence to prove their factual contentions. But, one trick with patent eligibility is that eligibility is a question of law rather than a question of fact and the courts can require parties to prove-up questions of law very early-on in the lawsuit. This is especially true in the context of patent eligibility where, for the most part, the proof is intrinsic evidence such as the patent document itself and perhaps the prosecution history file. But, eligibility can at times also require consideration of extrinsic evidence, such as whether aspects of the claimed invention were, in-fact, already generic concepts to a person of skill in the art.
IBM’s asserted US7187389 claims a method of displaying layered data on a map. The image just above comes from IBM’s expert showing how the invention allows for ordering of the various layers, and for rearranging the layers as well and using non-spatial visual clues such as opacity to help show the layering. On appeal, the judges all agreed that the claims are directed to the abstract idea of “organizing and displaying information.” Although the particular method claimed may be novel, the court’s Alice Step-1 analysis explains that the claims do not recite any “improvement in computer technology” and instead relies upon functional steps such as “selecting” information; “identifying” information; “matching” information; “re-matching” information; “displaying” information; “rearranging” information; etc.
Such functional claim language, without more, is insufficient for patentability under our law.
Slip Op. At Alice Step-2, the majority inquired as to any specific inventive concept beyond the abstract idea itself (and found none). Here, the court again focused on the functional limitations that it found to be insufficient: “simply not enough under step two.”
In partial dissent, Judge Stoll looked particularly to claims 9 and 13 that focused on rearrangement of the layers and particularly required “rearranging logic” and “re-matching logic.” Judge Stoll then read the IBM complaint which explained how the problem of rearrangement of an overly cluttered display is not a simple task — especially once you begin dealing with a large number of objects. Although expert testimony is not normally needed at the motion-to-dismiss stage, eligibility is different and district courts are regularly allowing expert declarations. In this case, IBM actually attached its expert declaration to the amended complaint itself in order to preempt the eligibility challenge. The expert testimony explained the difficulty of rearranging and re-matching data in a way that is comprehensible on a display. The layers coupled with dynamic re-layering as claimed help solve this problem, according to the expert.
In her decision, Judge Stoll read IBM’s specific allegations as supported by their expert declaration and found them to make a plausible claim of a technical improvement sufficient satisfy Alice Step 2. As such, Stoll would have reversed as to those claims, as she did in Weisner.
The second patent at issue is IBM’s US9158789 which claims a method of “coordinated geospatial” mapping. The basic idea is that a user draws a particular area on a map, and then is given filtered results specific to their particular selection. The figure above comes from IBM’s patent and shows how the user can draw a boundary (the triangle). The list is then populated with relevant results from inside the boundary. I used this with Zillow (the accused infringer) when looking for a house to buy in a specific area of Columbia Missouri. A screenshot of my neighborhood below (no houses for sale though).
Judge Hughes explains that the IBM claims are directed to the abstract idea of :
Responding to a user’s selection of a portion of a displayed map by simultaneously updating the map and a co-displayed list of items on the map.
Slip Op. In making this Step-1 determination, the appellate court significantly overlapped the Step-2 analysis–holding that the claims are “result-oriented” rather than directed to technical improvements. Once it dis reaching Step-2, the court found that the claims contained no inventive concept: The invention “was not directed to a computer-specific problem and merely used well-understood, routine, or conventional technology (a general-purpose computer) to more quickly solve the problem of layering and displaying visual data.” The court also read through the claim steps and found them to be functionally claimed–a loser under Step-1 and Step-2.
= = =
It is not clear why Judge Reyna sided with the patentee in Weisner but with the accused infringer in IBM. My best stab at distinguishing the two holdings is as follows. From these two cases, we might divide the claims into three categories:
Collecting and organizing data (these are the invalid claims in Weisner);
Collecting; organizing; and displaying data (these are the invalid claims in IBM); and
Collecting; organizing; and using data (these are the valid claims in Weisner).
Reading between Judge Reyna’s sub silento lines, methods of use that go beyond mere display represent the type of invention that is more likely to pass muster.
Comments should be submitted by Jan 17, 2023 via the eRulemaking Portal.
Earlier in 2022, the USPTO made some minor expansions to the criteria for registering as a patent attorney, but this new proposal offers the possibility of a broader inclusive market and a mechanism for the Office to regularly update eligibility criteria. It also asks whether there should be a separate bar for design patent practitioners. Things could get really interesting (in a good way) if folks trained in design (rather than engineering) start participating at the USPTO level.
On the PTAB side, the PTO is seeking comments about whether non-patent-attorneys should be permitted to represent clients in AIA proceedings. The USPTO also asks about potential development programs such as LEAP.
Nature Simulation Systems Inc. v. Autodesk, Inc. (Fed. Cir. 2022)
In its January 2022 decision, the Federal Circuit sided with the patentee in this indefiniteness decision. Nature Simulation Sys. Inc. v. Autodesk, Inc., 23 F.4th 1334 (Fed. Cir. 2022). Judge Newman wrote the majority opinion and gave deference to the USPTO examiner. During prosecution, the examiner had suggested a particular amendment that ended up being a bit confusing. Judge Newman concluded that some deference should be given to the examiner in this situation. Judge Dyk dissented and argued that indefiniteness should be decided as a question of law from an objective perspective–not whether the examiner gave the OK. Autodesk then petitioned for rehearing on the question of deference.
In response to the rehearing petition, the panel has issued a new decision continuing to uphold the patent validity, but deleting all reference to examiner deference.
= = =
The following was deleted from the opinion:
Actions by PTO examiners are entitled to appropriate deference as official agency actions, for the examiners are deemed to be experienced in the relevant technology as well as the statutory requirements for patentability:
We presume that an examiner would not introduce an indefinite term into a claim when he/she chooses to amend the claim for the very purpose of putting the application in a condition for allowance.
Tinnus Enters., LLC v. Telebrands Corp., 733 F. App’x 1011, 1020 (Fed. Cir. 2018). See also PowerOasis, Inc. v. TMobile USA, Inc., 522 F.3d 1299, 1304 (Fed. Cir. 2008) (stating that PTO examiners are “assumed to have some expertise in interpreting the references and to be familiar from their work with the level of skill in the art and whose duty it is to issue only valid patents.” (quoting Am. Hoist & Derrick Co. v. Sonra & Sons, Inc., 725 F.2d 1350, 1359 (Fed. Cir. 1984) (overruled on other grounds))).
= = =
I believe that Judge Newman is currently the longest serving federal appellate judge in regular service. She took her oath of office in February 1984 after being nominated by President Reagan and confirmed by the U.S. Senate on a voice vote. She is 95 years old.
I’m always excited to read a decision that splits hairs–finding some claims in a patent valid and others invalid. My hope is that the explanation will really get to the crux of the issues and help me to better understand how the law works. I’m often disappointed, but the Federal Circuit’s newest decision in Weisner v. Google LLC, — F.4th — (Fed. Cir. 2022) does offer some good clues. The basic outcome here: Weisner’s claims directed toward collecting information are abstract ideas; those directed toward using the information are patent eligible. This outcome is consistent with what we are seeing in biotech as well: diagnostics get a thumbs down; therapeutics get a thumbs up.
Weisner sued Google for patent infringement back in 2020, asserting infringement of a family of four patents. U.S. Patent Nos. 10,380,202, 10,642,910, 10,394,905 and 10,642,911. But, Google won the case fairly quickly on a R.12(b)(6) motion to dismiss with a holding from the district court that the asserted claims are ineligible under 35 U.S.C. § 101 (abstract ideas). On appeal, a divided Federal Circuit has reversed-in-part, holding that some of the claims are patent eligible because they implement “a specific solution to a problem rooted in computer technology.” Alice Step 2.
Judge Stoll wrote the majority opinion joined by Judge Reyna. Judge Hughes dissented, arguing that all the claims are invalid.
Weisner’s four patents are all part of the same family and all relate to ways of recording a person’s physical location history in ways that correspond to certain transactions. In the image (Fig.3 above), you can see the dude interacting with a Macy’s story device. Dude’s phone is configured to record the transaction along with the location history and push it to the cloud. Dude is doing something similar at Benson’s (Fig.4 below), but in that one he is entering the transaction details manually since Benson’s is a Brooklyn institution and isn’t high-tech like Macy’s.
The Federal Circuit divided the claims into two categories:
Claim Set A: Accumulating location histories for later use.
Claim Set B: Accumulating the location history and also using hose histories to improve search results (e.g., give different search results if someone has been to a Brooklyn Benson’s before).
In the appeal, the Federal Circuit agreed that all of the claims fail Alice step 1. In particular, the court found that they were all directed to the unpatentable idea of “collecting information on a user’s movements and location history and electronically recording that data.” Essentially, this is an electronic travel log that is effectively the same as what humans have been doing for all of history. As the district court wrote: “Humans have consistently kept records of a person’s location and travel in the form of travel logs, diaries, journals, and calendars, which compile information such as time and location.” Weisner v. Google LLC, 551 F. Supp. 3d 334 (S.D.N.Y. 2021). Weisner argued that the claims were limited to keeping travel history of members only — a feature that improves data integrity. On appeal though, the Federal Circuit rejected this claim as “attorney argument, unlinked to the complaint or the patent claims or specifications.” Even though eligibility is a question of law, it must still be based upon something more than simply attorney argument.
At step 2, the court also agreed that Claim Set A was not salvageable because the recited innovations are all merely generically claimed components.
But, Claim Set B is different. First, because Set B adds the search results uses, the Federal Circuit found it to be a “much closer question” as to whether they are directed to an abstract idea. In the end though the court concluded that the claims are directed to an abstract idea at Alice Step 1. I note here that the appellate court did not use any real analysis to decide this issue other than seemingly attorney judgely argument. Perhaps the court should have checked the prior portion of this very opinion where it discounted mere attorney argument on the same topic.
At Alice Step 2, the court concluded that the claims recite a specific implementation that – at least at this stage – should have survived a motion to dismiss because they “plausibly capture an inventive concept. Here, the court notes that the inventive concept comes from tying searches to a third party “reference individual” whose location history is similar to the party doing an internet search. “The system then prioritizes search results that the reference individual has visited.” In its decision, the Federal Circuit explained that this linkage is more than simply “improving web search using location history.” Rather, it is a specific implementation of that concept.
Judge Hughes wrote in dissent that the claimed search improvements are just like any old search with the addition of new searchable data — location history. The Stoll majority responds in a footnote that Judge Hughes opinion “misses the point” by discounting the importance of prioritizing travel histories in the search. As I mentioned in the intro, this outcome fits a standard approach that we are seeing in eligibility cases — it is much easier to protect methods of using information than it is to protect methods of collecting information. In the use-case, the information itself combined with some use will regularly be seen as an inventive concept. On the other hand, the courts have been less willing to say that collecting information is patent eligible.
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The patents here are co-owned by the inventors, Sholem Weisner and Schmuel Nemanov. Weisner wanted to sue Google, but Nemanov refused. Weisner went ahead and sued Google and also joined Namanov as an involuntary party under FRCP 19(a). See, AsymmetRx, Inv. v. Biocare Med., 582 F.3d 1314, 1322 (Fed. Cir. 2009)(“A patentee that does not voluntarily join an action prosecuted by its exclusive licensee can be joined as a defendant….”). The agreement between the two parties is a bit interesting. Weisner owns 78% of the rights, and the parties agreed that he would control exploitation of the patent “and will not be undercut by a minority owner.” WeisnerNemanovAgreement. The two battled these issues in a parallel lawsuit in NY State Court. WEISNER, SHOLEM vs. NEMANOV, SHMUEL, Docket No. 502269/2020 (N.Y. Sup Ct. Jan 29, 2020).
On Oct 14, the Supreme Court met in conference to discuss pending petitions, including two patent cases, both of which remain pending.
Relist on Written Description: The first is the big biotech full-scope written description case of Juno v. Kite. A jury awarded $1.2 billion in damages, but the Federal Circuit found the claims invalid. This is the third conference where the case was considered, and for a third time the court has decided to put-off its decision and instead relist the petition for a later conference. Although the Juno petition remains alive, its odds of being granted are going down (according to historic relisting numbers).
In Ariad, the Federal Circuit definitively held that Enablement and Written Description are two separate and distinct doctrines, but the Supreme Court has not since offered its remarks. Juno’s petition asks for the court to compare the statutory language of 112(a) against the Federal Circuit’s requirement of showing “possession [of] the full scope of the claimed invention” including all “known and unknown” variations of each component?
CVSG on Eligibility: In the patent eligibility case of Tropp v. Travel Sentry, the Supreme Court asked for the Solicitor General to provide the Government’s views on eligibility. Tropp’s petition asks “Whether the claims at issue in Tropp’s patents reciting physical rather than computer-processing steps are patent-eligible.” U.S. Patent Nos. 7,021,537 and 7,036,728. The SG has already been requested to file an eligibility brief in Interactive Wearables, LLC v. Polar Electro Oy. That petition asks identical questions to those proposed in American Axle as well as one focusing on the overlap between sections 112 and 101. “Is it proper to apply 35 U.S.C. § 112 considerations to determine whether a patent claims eligible subject matter under 35 U.S.C. § 101?” In its May 2022 filing, the Biden SG’s office supported granting certiorari in American Axle, arguing that Alice Corp. continued to create “uncertainty and confusion in the lower courts.” This was the same conclusion drawn by President Trump’s SG in Hikma v. Vanda.
1. A method of improving airline luggage inspection by a luggage screening entity, comprising:
making available to consumers a special lock having a combination lock portion and a master key lock portion, the master key lock portion for receiving a master key that can open the master key lock portion of this special lock, the special lock designed to be applied to an individual piece of airline luggage, the special lock also having an identification structure associated therewith that matches an identification structure previously provided to the luggage screening entity, which special lock the luggage screening entity has agreed to process in accordance with a special procedure,
marketing the special lock to the consumers in a manner that conveys to the consumers that the special lock will be subjected by the luggage screening entity to the special procedure,
the identification structure signaling to a luggage screener of the luggage screening entity who is screening luggage that the luggage screening entity has agreed to subject the special lock associated with the identification structure to the special procedure and that the luggage screening entity has a master key that opens the special lock, and
the luggage screening entity acting pursuant to a prior agreement to look for the identification structure while screening luggage and, upon finding said identification structure on an individual piece of luggage, to use the master key previously provided to the luggage screening entity to, if necessary, open the individual piece of luggage.
Christopher Rudy filed his fishing hook patent application back in 1988 with a file-wrapper-continuation in 1989. At the time he was already a patent attorney and so worked his own case. But, the USPTO offered some resistance. The BPAI/PTAB issued three different opinions on record, and the Federal Circuit also issued a 2020 decision holding that some of the claims were directed to the unpatentable abstract of “selecting a fishing hook based upon observed water conditions.” In re Rudy, 956 F.3d 1379 (Fed. Cir. 2020). Back on remand, Rudy cancelled the offending claims and finally received his U.S. Patent No. 11,406,092. As a pre-GATT patent, the term should last for 17-years from issuance. That makes a pretty good run going forward: the patent will issue 51 years after its original filing date. This is the first pre-GATT patent issued since 2020. Over the past five years, the Office has issued about 25 (none to Gil Hyatt). A number of these were held in abeyance due to DOD Secrecy Orders. As far as I know, the only one being litigated is 9,674,560 owned by Personalized Media Communications.
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Rudy’s basic discovery was that fishing-lure selection is not a one-size-fits-all situation. He particularly noted that factors such as water-clarity and light intensity at fishing depth will impact lure color selection. The patent includes a nice table:
The recently issued patent includes a number of apparatus and method claims. My favorite is No. 16, which claims a surefire method for catching a fish.
16. A method to catch fish, comprising steps of
(1) observing clarity of water to be fished to determine whether the water is clear, stained or muddy,
(2) measuring light transmittance at a depth in the water where a fishing hook is to be placed, and then
(3) selecting a color of the fishing hook to be used by matching the observed water conditions ((1) and (2)) with a color [from the table above]
then attaching the selected hook to a fishing line,
then placing the attached, selected hook in the depth in the water where fishing is to take place,
and then catching the fish with the attached, selected hook,
wherein the fishing hook used is disintegrated from but is otherwise connectable to a fishing lure or other tackle and has a shaft portion, a bend portion connected to the shaft portion, and a barb or point at the terminus of the bend, and wherein the fishing hook used is made of a suitable material, which permits transmittance of light therethrough and is colored.
US-11406092-B1. The nice thing about Rudy’s claim here is that you only owe a royalty if you actually catch a fish.
Lavvan, Inc. v. Amyris, Inc., 21-1819, 2022 WL 4241192 (2d Cir. Sept. 15, 2022) (21-1819_so)
Lavvan sued Amyris for patent infringement. The parties had signed a prior contract with an arbitration agreement and Amyris unsuccessfully sought an arbitration order. The district court order denying arbitration is immediately appealable under 9 U.S.C. 16. Amyris appealed, but also lost on appeal. Open and shut.
Now the strange part. Amyris appealed to the Second Circuit who decided the case without questioning its own jurisdiction over a patent case despite stating in the opening paragraph that the complaint alleged patent infringement. In its opening brief, Amyris likewise stated that
The district court had jurisdiction over this case under 28 U.S.C. §§ 1331 and 1338 because Lavvan asserts what are, at least in name, federal claims of patent infringement and trade secret misappropriation. This Court has jurisdiction over this appeal from the order denying Amyris’s motion to compel arbitration under 9 U.S.C. § 16(a)(1)(B).
Amyris appellate brief at 5. Lavvan’s stated that it “concurs with Amyris’s statement … that this Court has jurisdiction under 9 U.S.C. § 16(a)(1)(B).” Neither party referenced the Federal Circuit’s usual role in hearing appeals in patent cases. Likewise, the Second Circuit failed to reference the Federal Circuit’s usual role.
Part of the problem here is that the Federal Circuit’s jurisdictional statute is quite specific. In patent cases before district courts, the Federal Circuit has jurisdiction over (1) final decisions, 28 U.S.C. 1295; (2) interlocutory injunction orders, 28 U.S.C. 1292(a)/(c); (3) interlocutory orders that follow the strict requirements of 28 U.S.C. 1292(b)/(c); and (4) decisions final except for accounting 28 U.S.C. 1292(c).
The SDNY’s refusal to compel arbitration is separately appealable under 9 U.S.C. § 16(a)(1)(B), and that provision does not provide any map to Federal Circuit jurisdiction. So, maybe the Second Circuit’s approach is correct. For its part, the Federal Circuit has repeatedly claimed jurisdiction over these appeals by categorizing arbitration orders as “in effect a mandatory injunction.” Microchip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350, 1354 (Fed. Cir. 2004). As in injunction order, the Federal Circuit has appellate jurisdiction under 28 U.S.C. 1292(a)/(c).
The Federal Circuit’s approach in Microchip Tech was rejected by the 8th and 3rd Circuits. Industrial Wire Products, Inc. v. Costco Wholesale Corp., 576 F.3d 516 (8th Cir. 2009) (interlocutory appeal denying motion to compel arbitration properly belongs in the regional circuit court of appeals); Medtronic AVE, Inc. v. Advanced Cardiovascular Sys., Inc., 247 F.3d 44 (3d Cir. 2001). Although non-precedential, the 2nd Circuit appears to have silently agreed with its sister regional circuits.
Having lost its appeal, Amyris might consider a motion for rehearing seeking vacatur for lack of appellate jurisdiction and a transfer to the Federal Circuit.
US Inventor along with several patent holders sued the USPTO back in 2021 seeking an injunction against the USPTO Director mandating that she engage and notice-and-comment rulemaking to issue standards for when IPR/PGR discretionary denials are appropriate. In addition, the case asks that the USPTO’s Standard Operating Procedure relating to discretionary denials be set aside as unlawful. Judge Gilstrap dismissed the case for lack of standing. US Inventor Inc. v. Hirshfeld, 549 F. Supp. 3d 549 (E.D. Tex. 2021). On appeal, the Fifth Circuit affirmed — finding that the parties here could not show the type of concrete and particularized injury necessary to serve as the foundation for a “case” or “controversy” under Article III of the U.S. Constitution. US Inventor Inc. v. Vidal, — F.4th —, 2022 WL 4595001 (5th Cir. Sept. 30, 2022).
US Inventor and its co-plaintiffs alleged a future harm of potential IPR proceedings that might have been discretionarily denied. But the court here found that future projection a “speculative chain of possibilities” insufficient for standing. Quoting Clapper v. Amnesty Int’l USA, 568 U.S. 398 (2013).
[Plaintiffs] contend their injury is like those in Sierra Club v. Marsh; TransUnion; Massachusetts v. EPA; and City of Dania Beach v. FAA. But in all those cases, and unlike that of Plaintiff-Appellants’, the injuries were actual and imminent; they did not require speculation. Given the specific, uncertain series of events required under Plaintiff-Appellants’ theory of harm, we find their injury more closely analogous to the impermissibly speculative theory of injury rejected in Clapper.
US Inventor (internal citations omitted). US Inventor also sought a ruling that it held “organizational standing” based upon the lobbying organization’s ongoing efforts to counteract the government’s allegedly unlawful actions. But, the court rejected that theory as insufficient: “redirection of resources toward litigation and legal counseling are insufficient.”
US Inventor and the other appellants were represented by Robert Greenspoon; DOJ attorney Weili Shaw argued for the Patent Office.
USPTO Director Kathi Vidal is beginning to move forward with various initiatives that I’ll discuss in upcoming posts. Most recently though, the Office issued a Request for Comments seeking public input on mechanisms for “bolstering the robustness and reliability of patents.” Comments due January 3, 2023 via Federal eRulemaking Portal at regulations.gov (docket: PTO-P-2022-0025). The document includes a commitment from the USPTO to increase patent examiner time, training and resources.
One question asked in the RFC is whether the USPTO should require patent applicants to link claim limitations to particular disclosures in the originally filed specification. That linkage would facilitate examiner understanding of the invention as well as considerations such as enablement and written description. In some cases cases, the office could automatically demand more detailed analysis — such as for genus; markush; or functional claim limitations.
On October 12, 2022, the Supreme Court will hear oral arguments in the fair use copyright case of Andy Warhol Foundation, Inc. v. Goldsmith, Docket No. 21-869 (2022). Roman Martinez (Latham Watkins) is set to argue for Warhol and Lisa Blatt (Williams Connolly) for Goldsmith. The Court is also giving 15 minutes to Yaria Dubin (USDOJ) who also filed a brief supporting Goldsmith.
Andy Warhol admittedly used Lynn Goldmith’s copyrighted photographs of Prince as the basis for his set of sixteen silkscreens. Warhol’s Estate argues that the artworks represent a commentary on the dehumanizing nature of celebrity whereas the Goldsmith photos merely reflect Prince in his unique human form.
The Supreme Court has taken-up the case to consider the extent that the doctrine of transformative fair use should value “differences in meaning or message,” especially in cases where the works share core artistic elements and have the same purpose.
Question presented: Whether a work of art is “transformative” when it conveys a different meaning or message from its source material (as the Supreme Court, U.S. Court of Appeals for the 9th Circuit, and other courts of appeals have held), or whether a court is forbidden from considering the meaning of the accused work where it “recognizably deriv[es] from” its source material (as the U.S. Court of Appeals for the 2nd Circuit has held).
Although Andy Warhol is dead, his art, legacy, copyrights, and potential copy-wrongs live on. In the 1980s, Warhol created a set of silkscreens of the musician Prince. Prince did not personally model for Warhol. Rather, Warhol worked from a set of studio photographs by famed celebrity photographer Lynn Goldsmith. Vanity Fair had commissioned Warhol to make an illustration for its 1984 article on Prince. As part of that process, the magazine obtained a license from Goldsmith, but only for the limited use as an “artists reference” for an image to be published in Vanity Fair magazine. The published article acknowledges Goldsmith. One reason why the magazine knew to reach-out to Goldsmith was that her photos had also previously been used as magazine cover-art. Warhol took some liberties that went beyond the original license and created a set of sixteen Prince silkscreens. Those originals have been sold and reproduced in various forms and in ways that go well beyond the original license obtained by Vanity Fair. (Warhol was never personally a party to the license).
Warhol claimed copyright over his artistic creations and his Estate continues to receive royalty revenue long after his death in 1987. Goldsmith argues that her copyrighted photographs serve as the underlying basis for Warhol’s art and that she is owed additional royalties. After unsuccessful negotiations, Warhol’s Estate sued for a declaratory judgment and initially won. In particular, the SDNY District Court granted summary judgment of no-infringement based upon the doctrine of transformative fair use. The district court particularly compared the works “side-by-side” and concluded that Warhol’s creation had a “different character, a new expression, and employs new aesthetics with [distinct] creative and communicative results.” This test quoted comes from another famous a photo-transformation case, Patrick Cariou v. Richard Prince, 714 F. 3d 694 (2d Cir. 2013).
Richard Prince had modified Cariou’s photographs of a Jamaican Rastafarian community and exhibited his work as “appropriation art.” The copier eventually won, with an appellate holding that the majority of Richard Prince’s works were clearly transformative in their newly presented “aesthetic.” In that case, the 2nd Circuit also held that the new work can still be a transformative fair use even if not a “satire or parody” of the original work, or even be commenting on the original work in any way. That said, uses of someone’s copyright work for a the purpose of parody, news reporting, comment, or criticism make it much more likely that the use will be deemed a fair use.
After losing at the district court, Goldsmith appealed to the Second Circuit who reversed and instead concluded that Warhol’s art was “substantially similar to the Goldsmith Photograph as a matter of law” and “all four [fair use] factors favor Goldsmith.” The appellate court warned against too broadly reading its prior Cariou decision.
Warhol’s key legal precedent on point is Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994). Campbell involved 2 Live Crew’s parody of the famous Roy Orbison song “Oh, Pretty Woman.” The unanimous decision by Justice Kennedy delves into the first statutory fair use factor (“purpose and character of the use”) and distinguishes between (a) uses that simply replace or supersedes the original work and (b) those that are transformative of the original work. The more transformative a work, the more likely that it will be deemed a fair use and thus not infringing. Campbell goes further and explains that transformativeness is not solely about new expression—it is also focused on whether the new work has “a further purpose or different character, altering the first with new expression, meaning, or message.”
Goldsmith argues that transformative meaning is only one element of a wide-ranging fair use analysis appropriately conducted by the Second Circuit. As the Supreme Court recently explained in Google v. Oracle decision, the process is a “a holistic, context-sensitive inquiry” operating without any “bright line rules.”
The Copyright Act promises the original creator some amount of control over similar and follow-on works. In fact, the copyright owner is given exclusive rights to control preparation of any “derivative works based upon the copyrighted work.” For Warhol to rely entirely upon transformativness for his fair-use defense, the use must be so transformative as to leap beyond these derivative use rights. Still, Warhol argues that the Second Circuit erred by refusing to give weight to the transformed “meaning or message” even if underlying elements of his artwork were similar to elements of the original photographs. As the Court wrote in Campbell, transformative uses “lie at the heart of the fair use doctrine’s guarantee of breathing space within the confines of copyright.” Warhol’s particular complaint with the Second Circuit is its apparent ruling that “a new work that indisputably conveys a distinct meaning or message” will still not be deemed transformative if its expression unduly retains “the essential elements of its source material.” Warhol argues that legal conclusion was recently rejected by the Supreme Court in Google. Goldsmith responds that Warhol is misreading the Second Circuit’s decision – making a caricature of its holding. Rather, Goldsmith argues, the Second Circuit properly weighed all the fair use factors. Further, although “message and meaning” is an aspect of fair use, it not found in the statutory nor intended by its creator (Judge Leval) to fully explain fair use.
Goldsmith also cites a list of historic cases where “conveying new meanings or messages did not save infringers.” One famous case is the Supreme Court’s 1884 decision in Burrow-Giles Lithographic Co. v. Sarony involving a photograph and lithograph copy of the famous playwright Oscar Wilde. Sarony was the first Supreme Court case confirming copyright protection in photographs. Goldsmith notes that the lithographer made a number of stylistic changes to Wilde’s appearance—shifting Wilde’s gaze from a “thousand-yard stare [of a] calculated ennui” to a “soulful gaze and brooding eyebrows [of a] dashing poet.” Despite these shifts, everyone seemed to agree that infringement was clear: “the lithograph was so obviously nontransformative the lithographer did not even try to raise fair use.” Goldsmith’s description of the images of Wilde has the reverb of a pedantic academic art critic—and one may suspect that tone was strategic in order to demonstrate the potentially ridiculous nature of the inquiry into the “message and meaning” of artistic works.
A large number of amicus briefs were filed in the case. The most important of these is likely the brief of the Solicitor General filed on behalf of the U.S. Government (Biden Administration). The government brief focuses on transformative-use and notes that the Goldsmith and Warhol works have been used for the same purpose (republication in magazine articles about Prince) and do not involve a parody. In this same-use scenario, fair use is much less likely because the new work can be seen as little more than a replacement of the original. Regarding the meaning or message intended by Warhol, the government argues that Warhol failed to explain why he needed to reproduce Goldsmith’s work in order for that expression to take place. Thus, the government is attempting to cabin-in the transformative meaning doctrines to areas where the copying is further justified by reasoning or evidence.
The case’s impact on appropriation art and documentary filmmaking is easy to see, but there are other areas that may also see some big shifts depending upon the Supreme Court’s outcome. Although Warhol used pre-computer technology for his screen printing, the case has important implications for online copyright protections in a world of digital cut-and-paste and fingertip access to AI tools to transform digital works. You may have even seen apps that automatically transform photos into a Warhol-style work. A simple and broad holding from the Supreme Court supporting fair use would give substantial space allow these creative activities (and app development) to expand. But, that would be to the detriment of original creators seeking to protect their copyrights. A win for Goldsmith may require a re-tooling of these apps in order to fit within the stricter fair use requirements.
In his amicus brief, Berkeley Professor Peter Menell argues for Goldsmith, writing that “the Prince series consists of unauthorized derivative works prepared for a commercial purpose and without substantial transformative qualities.” Although Warhol’s work has become iconic within our culture, classifying the work as a “derivative work” creates the quirky conundrum that Warhol’s estate holds no copyright at all. This ruling then might extend to other areas—such as museum exhibits (since Goldsmith would then own the right to public display). I will note that Warhol already paid licensing fees to the owner of the underlying work in a number of situations, including for his use of Henri Dauman’s photo of Jacqueline Kennedy that had appeared in LIFE magazine.
This is not exactly a free speech case, but “meaning and message” certainly seem like forms of protected speech. In earlier cases, the Supreme Court ruled that fair use is a stand-in for First Amendment protections in the copyright world. We have seen copyright used in ways akin to SLAPP actions as well as by artists who do not want their work used to support unworthy causes (such as by politicians they oppose). The outcome here will shift those activities, either in favor of control by the original copyright holder, or more liberty to the potential (unwanted) user.
The case involves Anthony Novak who created a parody Facebook page to mock his the local police department in Parma, Ohio. The posts were clearly parody after perhaps a bit of initial confusion. Once Novak heard that the police were upset, he took down the posts (after 12 hours online). Still, Novak was eventually arrested, jailed, and prosecuted for disrupting police functions. His home was searched, and all of his electronic equipment was seized. A jury eventually acquitted Novak. He then turned around and sued for violation of his constitutionally protected civil rights. But, the courts found the arresting officers entitled to qualified immunity. Novak v. City of Parma, Ohio, 33 F.4th 296 (6th Cir. 2022).
The petition for certiorari asks two questions:
Whether an officer is entitled to qualified immunity for arresting an individual based solely on speech parodying the government, so long as no case has previously held the particular speech is protected.
Whether the Court should reconsider the doctrine of qualified immunity.
One problem with Novak’s posts is that over the past few years it has become more and more difficult to tell the difference between satire and reality. The Sixth Circuit suggested a preemptive “THIS IS PARODY” warning, but that doesn’t seem quite right. For parody to really work, there needs to be some initial source confusion — the parody has to be initially plausible to get full comedic effect.
Over at The Onion, journalists are sad-proud about the fact that they regularly forecast future events with their “reporting.” They give the example of their 2017 post on nuclear codes sitting around at Mar-A-Lago. Those folks are obviously concerned that their work may also be held
The Onion files this brief to protect its continued ability to create fiction that may ultimately merge into reality. As the globe’s premier parodists, The Onion’s writers also have a self-serving interest in preventing political authorities from imprisoning humorists. This brief is submitted in the interest of at least mitigating their future punishment.
Onion Brief. According to the Supreme Court docket, the court has twice rejected the Onion Brief, but I’m confident that the court went ahead and read the thing.
Let me know what you think.
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I feel compelled to mention that I spent a summer living in Parma Ohio (in one of the houses below). I was 19 and just had a 10-speed bicycle that I rode to work each day. As far as I recall, there was nothing good in that town; and it was worse for someone without a car. I also spent an afternoon in Parma Italy. This was after a month tooling around northern Italy, and we were craving something American. So, we stopped at the Parma Ikea and had Swedish Meatballs.
Today in Patent Law Class, we covered the Supreme Court’s important decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) focusing on the question of whether the patentee has a 7th Amendment right to have a jury decide “genuine factual disputes about the meaning of a patent?” The Supreme Court’s answer: No, although claim construction might involve underlying factual determinations, the doctrine is ultimately a question of law best decided by a judge. Id. Twenty years later, the Supreme Court reiterated these same principle in Teva Pharm. USA, Inc. v. Sandoz, Inc., 574 U.S. 318 (2015) (holding that, underlying factual findings should be given deference on appeal).
The underlying patent (RE33,054) was directed to an inventory control system for a drycleaner. A jury sided with the patentee and found infringement, but the district court rejected the verdict. Rather, the district court awarded Judgment as a Matter of Law to the defendant on grounds of non-infringement. The district court particularly considered the claim term “inventory” and construed that term to be tied to individual articles of clothing–as would be necessary to satisfy the claimed inventive result to “detect and localize spurious additions to inventory.” Under that construction, the defendant could not infringe because its system tracked transactions rather than articles of clothing, and each transaction might include multiple articles. On appeal, the Federal Circuit issued an in banc affirmance. Then on certiorari, the Supreme Court also affirmed. This double affirmance means that the Federal Circuit’s decision also continues to have precedential merit. Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995), aff’d, 517 U.S. 370 (1996).
The law-fact divide is an important feature of complex civil litigation procedure — especially patent law. The importance arises in several different contexts. In Markman, the question was “who decides” judge or jury; In Teva, the question was appellate deference to district court fact finding; In Microsoft Corp. v. I4I, Justice Breyer explained that the law-fact divide is important for burdens of proof since burdens such as clear-and-convincing-evidence only apply to factual findings and no such burden is associated with issues of law. Microsoft Corp. v. I4I Ltd. Partn., 564 U.S. 91, 114 (2011) (Breyer, J, concurring). In addition, the evidentiary standards tied to the Federal Rules of Evidence applies to issues of fact, and does not (necessarily) bind the inquiry into questions of law. Thus, in deciding a question of law, a court may consider information that might not be available to a jury when deciding a question of fact.
The Markman hearing quickly became a popular process for district courts to receive argument and evidence before construing the claims (often resulting in summary judgment). Because of their popularity, Markman is – by far – the most cited Supreme Court patent case of the 1990s. Markman hearings show how timing is also important for the law-fact divide. Claim construction is decided before trial; leaving juries regularly being seen as irrelevant to questions of infringement and anticipation. This is especially true when parties craft their proposed claim construction to hone-in on the ultimate questions of infringement or validity.
To support its conclusion that the 7th Amendment does not require a jury trial to decide factual disputes about the meaning of a patent, the Supreme Court first looked to history. The court suggested that historical preservation analysis is the best approach since the 7th Amendment requires that “trial by jury shall be preserved.” This amendment was part of the Bill of Rights ratified in 1791 and so the court generally looks back to that time for its historic preservation analysis. The problem though is that 1791 (and prior) patents did not include claims, and so there was no relevant historic answer as to who decides claim scope. The court then looked to precedent–citing a number of 19th century cases and treatises reflecting that claim construction was a judicial function. And, the court also concluded that giving the authority to judges would get better results, since judges are better at construing legal documents than juries, and also lead to more uniformity of law.
In Markman, we learned that it is the judge’s role to construe the claims, but courts continued to argue for the next decade+ about claim construction methodology and procedure. The proposed uniformity was lacking. In my view, the uniformity has now largely been realized, at least within the court system, once Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc) was decided and the dust settled.
Zahner’s Design Pat. D746,078 covers the ornamental design of a shower curtain as shown in the figures above. Zahner sued Katri Sales for infringement, and the defendant turned-around and filed a request for ex parte reexamination. The examiner found some great prior art from 2013, which predates this particular design application filing date. But, the design patent also claimed priority to Zahner’s prior utility patent application (Serial No. 09/617,402) that predates the reference. The utility application includes a number of drawings that are similar-to, but not exactly the same as those in the Design Patent. (Images below).
The basic question in the case then was whether the priority drawings provide sufficient written description support for the eventual design as claimed.
09/617,402 (Priority filing)
The PTAB found the design claim was not sufficiently supported by the priority disclosure and so the priority claim was invalid. And, without the priority claim, the invention had become obvious by the time of the later actual filing date. The basic problem, can be seen in the design patent’s perspective view shown below. The perspective shows that the inner surface of the aperture is flat and with right-angled edges. According to the PTAB, those features are new to the design patent and not disclosed by Figure 21 of the priority filing. On appeal, the Federal Circuit affirmed without opinion.
Close-up of the Design Patent drawing
Zahner disagrees with the merits of the decision here, but has also suggested that it will raise procedural challenges in an upcoming petition for writ of certiorari. In particular, Zahner intents to raise the same question that Arthrex will likely raise, although this time in the reexamination context:
Question: Does the Reexamination Statute permit a challenge to priority claims?
Zahner has also argued that its situation is particularly egregious because the priority question was particularly addressed by the examiner during the original prosecution. That is important because reexaminations are limited to “new” questions of patentability.
After receiving the R.36 no-opinion affirmance, Zahner filed a petition for panel rehearing that included the following line: “A written opinion on this issue is respectfully requested.” The Federal Circuit though denied the petition without opinion. This situation thus raises the issue I addressed in my 2017 paper titled Wrongly Affirmed without Opinion. In that paper, I argue that these no-opinion judgments are contrary to the statutory requirement of Section 144 requiring the court to issue an opinion in appeals from the PTO. Although this argument has been raised in dozens of cases, the court has not yet responded to the argument, and the peculiar procedural setup allows this status quo. In a recent request for extension of time, Zahner indicated to the Supreme Court that it also plans to raise the no-opinion question.
I mentioned Arthrex above, its petition to the Supreme Court will be due in November 2022. In its failed petition for rehearing on the IPR-priority issue, Arthrex asked the following question:
Whether 35 U.S.C. § 311(b)’s restriction “only on a ground that could be raised under section 102 or 103” permits IPR challenges that depend solely on compliance with the written description requirement of section 112.
by Dennis Crouch
USPTO Director Kathi Vidal is beginning to move forward with various initiatives that I’ll discuss in upcoming posts. Most recently though, the Office issued a Request for Comments seeking public input on mechanisms for “bolstering the robustness and reliability of patents.” Comments due January 3, 2023 via Federal eRulemaking Portal at 
