All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law.

Federal Circuit: System is Not a Method (and therefore patent must be delisted from Orange Book).

by Dennis Crouch

Jazz Pharms, Inc. v. Avadel CNS Pharms, LLC (Fed. Cir. 2023)

In the pharmaceutical industry, there is a lot of interplay between the patents and FDA regulation.  A party with an approved drug product will often list related patents in the Orange Book.  Jazz’s approved drug is sodium gamma-hydroxybutyrate (“GHB”).  GHB is an infamous date-rape drug and the FDA conditioned its approval on Jazz developing “Risk Evaluation and Mitigation Strategies” (REMS).  Jazz created a set of strategies, and also obtained a patent covering the strategy. US8731963.  The patent basically overs a computer system that keeps track of prescriptions and inventory using a “single-pharmacy system” as well as a focus on whether the drug was purchased by a cash-payer.  Jazz listed this REMS patent in the Orange Book as covering its drug product.   And, although the patents covering the drug use itself expired in 2022, the REMS patent is still in force.  But, the FDA is actually no longer requiring Jazz to use the system.

In my view, this is a pretty weak patent, and a court will probably eventually hold that it is ineligible.  But, the “beauty” of the orange book listing is that patent quality often does not really matter.   As the Federal Circuit explained Orange Book listing “arm[s] the patent owner with the ability to trigger a presumptive, thirty-month suspension of the FDA’s approval of a competitive product.”  In other words, if a competitor wants to enter the market, the mere existence of a listed Orange Book patent creates a 2.5 years delay in approval of their product.  The law also makes it an act of infringement for a third party to submit a NDA alleging that it is either not infringing or that the patent is invalid/unenforceable.

In this case, Avadel is wanting to market its own GHB drug and has its own proposed REMS using multiple pharmacies.  After Avadel filed its NDA, Jazz sued.  Avadel responded with a counterclaim seeking a court order to delist the patent.

Orange Book listing is proper when the patent either (1) covers the approved drug; or (2) covers an approved method of using the drug.  The Federal Circuit appeared ready to allow this type of REMS patent as an Orange Book Listing.  But, here is the rub for Jazz — its patent doesn’t claim a method, but rather claims a computer system.

Each of the ’963 patent’s three independent claims describes a ‘computer-implemented system’ that comprises ‘one or more computer memories’ and a ‘data processor.’ . . . That the claimed systems can be used in the course of treating patients suffering from narcolepsy does not alter the fact that these are system claims.

Slip Op.  Jazz  unsuccessfully argued that the FDA required submission of a “system,” and that should alter the method requirement.  In fact, the FDA does not directly review the submitted patents and has never definitively stated that REMS patents can be listed.

Thus, the Federal Circuit affirmed the lower court order to delist the patent.

= = =

My key struggle with this case is the background law that a “system” claim automatically covers both the system itself and using the system.   This stems from the definition of patent infringement that covers making, using, selling, etc. 35 USC 271(a).

Guest Post: Third-Party Litigation Funding: Disclosure to Courts, Congress, and the Executive

Guest post by Jonathan Stroud.  Stroud is General Counsel at Unified Patents – an organization often adverse to litigation-funded entities.[1] He is also an adjunct professor at American University Washington College of Law. 

Patent assertion finance today is a multibillion-dollar business.[2]  Virtually nonexistent in the patent space in the U.S. ten years ago—at least in part due to longstanding common law rules on champerty, maintenance,[3] and patent law’s relative high risk—today third-party litigation funding (TPLF)[4] undergirds about 30% of all patent litigation, by conservative estimates.[5] Insurance options are suddenly plentiful,[6] funders are expanding and multiplying,[7] and new deal commitments are on the rise.[8] This general trend is seen in the first chart below, adapted from a recent white paper by Korok Ray.[9]

That is in no small part due to it being the fastest-growing piece of the wider U.S. litigation finance boom of the past 20 years—as has been widely reported, private equity now undergirds huge swaths of U.S. bankruptcy, class action, trademark, securities, and tort litigation, to the tune of $50 to $100 billion in investments annually.[10]  According to one of the biggest litigation funders, publicly traded Burford Capital—recently featured on 60 Minutes[11]—there was a 237% increase in overall litigation funding in the US between 2012 and 2018, a trend that, by all accounts, continues unabated.[12]  Industry reports show new investments pouring fastest into patent infringement litigation; new deal commitments for TPLF saw an increase of 61%; and patent litigation accounted for 29% of all new commitments by TPLFs in 2021.[13]  Recent trends are shown in the chart below, adapted from a Westfleet Advisors report. [14]

In terms of how TPLF is structured, deals are variegated, complex private agreements.  But generally the funder will offer non-recourse funding (or funding that is “at risk”) upfront to cover expenses in exchange for being first in line to recoup all of that funding first (i.e., to be “paid back”) out of any recovery, and then to take some hefty percentage—often 60% or more of whatever is remaining, particularly in litigations deemed high-risk (like patent litigation), though there are no rules governing how much funders can ask for.  (It generally amounts to more than 50% of the total settlement recovery, acknowledging, at least by basic math, that they are the primary beneficiary of the litigation.). Sometimes all fees are paid upfront by the funder (Fortress is known for this); some pay some continuing level of a fee/contingency split with firms to split risk; some pay the original patentholder upfront, though others think that disincentivizes them from robust ongoing participation; others make all recovery, for all parties in a waterfall, contingent upon settlement.  Many start with and later add investors to ongoing funds and matters.  Nearly all require oversight and consultation at all key decision points.

Patent TPLF funds generally promise roughly 20% internal rates of return to funders (IRR) year-over-year, or about a 2x to 2.5x return on investment over generally four- or five-year investment cycles, suggesting, at least at the pitch level, that these investments are lucrative for the funders.[15]  The biggest (or at least most well-known) players—Magnetar Capital, Burford Capital, Fortress Investment Group, Omni Bridgeway, and Curiam Capital, to name just a few[16]—have funded patent cases for years, reporting in some cases that their existing funds were on pace to return 20% or more—less than some other investments tout, but still beating the market by a fair margin.[17]

At least, that’s as far as can be pieced together.  What we do know comes mostly from self-reporting, industry reports, and journalists.  That’s because current disclosure of litigation funding relies on a patchwork of state law, court rules, self-reporting, FOIA requests, leaks to journalists, and funding pitches.  It’s true today that no one in the government (Federal or state, judicial, legislative, or executive) knows who is funding which litigations, whether they are as profitable as they claim to be, if they are being properly taxed, or even how they are generally structured.  Disclosure is limited even for the two well-known, publicly traded litigation fund managers, Burford Capital and Omni Bridgeway; it is sparser still—and highly self-selective—for all the private funds involved.  According to a recent Government Accountability Office (GAO) report on litigation funding (written at Congress’ behest), “[e]xperts GAO spoke with identified gaps in the availability of market data on third-party litigation financing, such as funders’ rates of return and the total amount of funding provided,” and noted that no government body is aware of who is funding these cases, who is influencing or controlling them, or what promises they are making to investors.[18]  (It also notes litigation finance industry lobbying groups active today, and their membership.)

Disclosure remains sparse at least in part because the very wealthy private investors who fund litigation claims and then reap, they claim, windfall profits—some of them concededly foreign sovereign nation funds[19]—have fought hard to keep those agreements secret, even from judges asking for disclosure, much less from government officials, researchers, reporters, opposing parties, or the public.  As such, the Federal District Court of Delaware has recently found itself at the center of this high-stakes debate about transparency and the purpose of the courts.

In April of 2021, the District of Delaware’s Chief Judge, Colm Connolly, issued two standing orders requiring litigants to, inter alia, disclose third-party litigation funding.[20]  (The orders apply to all parties and litigation before his Court, not just parties to patent disputes, but do not extend, as yet, to the other sitting judges there.) The orders were neither ultra vires nor exceptional—The Federal Rules of Civil Procedure have been moving toward greater ownership transparency for years, the advisory committees have recommended that judges have the right to such disclosure and are considering further requirements,[21] and similar requirements in Federal District courts across the nation have been in place for years, in districts in, for example, California, Georgia, Iowa, Maryland, Michigan, Nevada, New Jersey, Ohio, and Texas (in the Western district).[22]  But that trend toward disclosure had thus far largely avoided being raised and enforced in the few Federal districts where patent litigation primarily resides (though the California and Texas districts have long had rules requiring disclosures—ones that are often ignored by LLC PAEs).


Liability for Recommendations

by Dennis Crouch

The US Supreme Court heard oral arguments today in the major internet-law case of Gonzalez v. Google, focusing on Section 230(c) of the Telecommunications Act of 1996.  That provision creates a wide safe harbor for internet service providers; shielding them from liability associated with publishing third-party content.  Section 230 fostered the dominant social media business model where almost all of the major internet media services rely primarily upon user-provided content.  Think YouTube, Instagram, Facebook, Twitter, TikTok, LinkedIn, etc.  Likewise, search engines like Google and Bing are essentially providing a concierge recommendation service for user-developed content and data.  The new AI models also work by using a large corpus of user-created data.  But, AI may be different since it is more  content-generative than most social-media.

The safe-harbor statute particularly states that the service provider will not be treated as the “publisher” of information content provided by someone else (“another information content provider.”)  47 U.S.C. 203(c).  At common law, a publisher could be held liable for publishing and distributing defamatory material, and the safe-harbor eliminates that potential liability.  Thus, if someone posts a defamatory YouTube video, YouTube (Google) won’t be held liable for publishing the video. (The person who posted the video could be held liable, if you can find him).

Liability for Recommending: In addition to publishing videos, all of the social media companies use somewhat sophisticated algorithms to recommend content to users. For YouTube, the basic idea is to keep users engaged for longer and thus increase advertising revenue.  The case before the Supreme Court asks whether the Section 230(c) safe harbor protects social media companies from liability when their recommendations cause harm.  If you have ever wasted an hour death-scrolling on TikTok, you can recognize that the the service provided was a steady stream of curated content designed to keep you watching. Each individual vid is something, but really you were latched-into the stream.  The question then is whether the safe-harbor statute excuses that entire interaction, or is it limited to each individual posting.

For me, in some ways it is akin to the Supreme Court’s struggle over 4th Amendment privacy interests related to cell-phone location information. While a single point of information might not be constitutionally protected; 127 days of information is an entirely different matter.  See Carpenter v. United States, 138 S.Ct. 2206 (2018).  Here, the safe harbor applies to a single video or posting by a user, but the sites compile and curate those into a steady stream that might also be seen as an entirely different matter.

Gonzalez’ child, Nohemi Gonzalez, was killed in the 2015 Paris terrorist attacks coordinated by ISIS.  In the lawsuit, Gonzales allege that YouTube is partially responsible because its algorithms provided tailor made recommendations of pro-ISIS videos to susceptible individuals who then participated in and supported the terrorist attacks that killed their child.  You may be thinking that Gonzales may have difficulty proving causation.  I think that is right, but the case was cut-short on Section 230 grounds before really reaching that issue.

The Ninth Circuit ruled in favor of Google, and the Supreme Court then agreed to hear the case on the following question:

Does section 230(c)(1) immunize interactive computer services when they make targeted recommendations of information provided by another information content provider, or only limit the liability of interactive computer services when they engage in traditional editorial functions (such as deciding whether to display or withdraw) with regard to such information?

80+ briefs were filed with the Supreme Court arguing various positions.  This is a very large number for a Supreme Court case.  Many of the briefs argue that shrinking the scope of Section 230 would radically diminish the pluralism and generativity that we see online.  I might be OK with that if it gets TikTok out of my house.

As noted above, the plaintiffs case seems to lack some causal links, and in my view there is a very good chance that the court will decide the case on that grounds (via the sister case involving Twitter).  Justice Alito’s early question for petitioner highlights the problem.

Justice Alito: I’m afraid I’m completely confused by whatever argument you’re making at the present time.

I also appreciated Justice Sotomayor’s humility on behalf of the court.

Justice Sotomayor: We’re a court. We really don’t know about these things. These are not the nine greatest experts on the internet.

Congress passed a separate safe-harbor in the copyright context as part of the DMCA.  A key difference there was that copyright holders were able to lobby for more limits on the safe harbor. For instance, a social media company needs to take down infringing content once it is on notice. DCMA notice-and-takedown-provision.  Section 230 does not include any takedown requirements. Thus, even after YouTube is notified of defamatory or otherwise harmful content, it can keep the content up without risk of liability until specifically ordered to take it down by a court.  Oral arguments had some discussion about whether the algorithms were “neutral,” but the plaintiff’s counsel provided a compelling closing statement: “You can’t call it neutral once the defendant knows its algorithm is doing it.”

[Note – I apologize, I started writing this and accidentally hit publish too early.  A garbled post was up for about an hour while I was getting my haircut and eating breakfast.]

A Typical Eligibility Case in 2023

by Dennis Crouch

The U.S. Constitution authorizes Congress to legislatively create a patent system. And, Congress has so since the beginning, with George Washington signing the the First Patent Act into law in 1790.  As Congress continued to legislatively develop the statute, courts also added common law nuance, including the law of patent eligibility.  In Bilski, the Supreme Court recognized that the traditional exclusions of “abstract ideas” and “laws of nature” were not textually derived, but were of such antiquity that their precedent could be maintained and justified. Bilski v. Kappos, 561 U.S. 593 (2010). Later, in Mayo and Alice, the Supreme Court fleshed-out its two step test for determining eligibility for these categorical exclusions.

  1. Ask whether the claimed invention is directed toward a categorical exclusion.
  2. If yes, ask whether the claimed invention includes something more, such as an inventive concept that transforms the abstract idea into a patent eligible invention.

Mayo v. Prometheus, 566 U.S. 66 (2012); Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014).  Since 2012, almost 2,000 court decisions have referenced these cases along with 8,000+ PTAB decisions.  These were clearly watershed cases that dramatically changed the landscape of patent law and patent litigation.

Prior to Alice/Mayo, most courts focusing on eligibility  issues contended with major policy goals associated with preemption of ideas and fundamental principles.  That analysis reeks of policymaking and helps explain why courts shied away.  The Alice/Mayo revolution systemized eligibility doctrine into a framework more familiar to judges. Although the purpose is still to avoid improper preemption of fundamental ideas, courts no longer have to grapple with the question of preemption, but rather only the jurisprudential proxies created by the Court.

The recent decision in Hawk Tech Sys. v. Castle Retail, — F.4th — (Fed. Cir. 2023), highlights the current state of the law.  Hawk’s patent relates to video surveillance systems, and claims a method of receiving and/or converting stored video images and then displaying them simultaneously on a remote viewing device.  The district court quickly dismissed the case under R.12(b)(6), finding the claim ineligible on its face.  On appeal  the Federal Circuit affirmed.

At some level, all inventions rely upon abstract ideas and laws of nature for their operation.  At Step 1, Alice asks a more pointed question — is the claim “directed to” one of those excluded forms.  The primary focus then is on what the patent itself “asserts to be the focus of the claimed advance,” looking to both the claim language and the associated specification. Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161 (Fed. Cir. 2019).   Hawk’s claims are directed to a method of viewing images, and includes a series of steps: “receiving, displaying, converting, storing, and transmitting digital video” that are all claimed “using results-based functional language.”  This combination of a data-manipulation process claimed at a high level of abstraction has been regularly tagged as being directed to an abstract idea.  In other cases, details in the specification showing a technological solution has saved claims at step 1.  Here, however, the court concluded that the abstract idea analysis focuses on the claim language itself.  Here, the court (in my view) mis-cited ChargePoint, Inc. v. SemaConnect, Inc., 920 F.3d 759 (Fed. Cir. 2019).  In that case, the court noted that technical details in the specification shouldn’t be imported into the claims for Alice step-on analysis.  Hawk’s argument was somewhat different — it suggested that the specification provided an explanation as to how the claimed approach solved a particular problem.  Even still, the patentee’s arguments are likely lacking because of the dearth of details in both the claims and the specification.  The court concluded that the claims simply “fail to recite a specific solution to make the alleged improvement … and at most recite abstract data manipulation.”

At step 2 the appellate panel agreed with the district court that the claims failed to show any technological improvement sufficient to be considered an inventive concept.  Here, the court concluded that achieving a novel technological benefit was insufficient because the claims were written in “generical functional language” relying upon “conventional computer and network components operating according to their ordinary function.”

One quirk of the district court decision was that it held a hearing and considered some evidence prior to deciding the R.12(b)(6) motion.  But, those motions are designed to be based simply on the pleadings. The rules further provide that, if a court considers matters outside the pleadings then “the motion must be treated as one for summary judgment.”  FRCP 12(d).  And, once it becomes summary judgment, then the court needs to allow more time for the parties to develop the factual evidence.   On appeal, the Federal Circuit agreed that the district court erred, but concluded that the error was harmless since the district court’s decision did not hinge on any of the additional material presented.


Note: The patent here claims a 2002 priority date, but the particular application was filed in 2017 and issued in 2019.  I.e., the case was considered and passed muster under the USPTO’s eligibility examination guidelines.

Justin Hasford of Finnegan handled the the case below and the appeal for the defendant, Castle Retail.  Chris Austin of Weide & Miller represented the patentee .

A Free Speech Right to Accuse Others of Patent Infringement

by Dennis Crouch

Rule 1 of the Federal Rules of Civil Procedure sets out a bold goal for civil litigation: “the just, speedy, and inexpensive determination of every action.”  Patent litigation is rarely speedy; quite expensive; and, many would argue, often unjust.  In the case below, one party attempted some quick relief via preliminary injunction, but the Federal Circuit has vacated on free-speech grounds.

Light-Netics owns U.S. Patent Nos. 7,549,779 and 8,128,264 that cover easy-to-hang Christmas lights. These lights include a magnetic backing that can attach easily to metal surfaces (such as a metal roof).  Light-Netics sued after discovering competing products on sale from Holiday Bright Lights (HBL).  And, in addition, Light-Netics sent a notice to various light stores warning them that HBL lights were infringing. Lite-Netics LLC v. Nu Tsai Capital LLC (DBA Holiday Bright Lights), — F.4th — (Fed. Cir. 2023). 

Light-Netics sued for infringement, HBL responded with unfair competition counterclaims. The district court quickly issued a TRO followed-up with a preliminary injunction against the patentee.  Judge Buescher (D.Neb.) ordered the patentee to (1) stop publicly stating that HBL copied the invention and (2) stop telling HBL customers that they could also be liable for infringement.   Part of the district court’s justification here was a preliminary consideration of the merits of the lawsuit: narrowed claim construction eliminated literal infringement; and a finding that the patentee was estopped from asserting DOE.   At base, the issue has to do with the meaning of the article “a”: can “a” be plural? Here, the claim requires a light socked with “a neodymium magnet [having] a pull strength of at least five pounds” while the accused device uses several magnets.

On appeal, the Federal Circuit has vacated and remanded — holding that the district court went too far in restricting the patentee’s protected speech.

Objectively Baseless: The Federal Circuit has given patentees a fairly-wide berth with regard to public accusations of infringement and customer cease-and-desist letters. In particular, the court has held that state court tort claims associated with out-of-court patent enforcement activities are preempted by federal law unless the patent holder “acted in bad faith.” Breaking this down, the court requires that the infringement allegation be “objectively baseless” and that the patentee conducted its affairs with subjective bad faith. Although the court does not conduct a full First-Amendment analysis, the high burden is justified by our individual liberty interest (that includes corporate commercial speech).

In its decision, the Federal Circuit concluded that it is not-unreasonable for a patentee to assert that a claimed “magnet” could be infringed by two or more magnets.

Decisions of this court lend strong support to the proposition that, “in patent parlance,” at least in an open-ended “comprising” claim, use of “a” or “an” before a noun naming an object is understood to mean to “one or more” unless the context sufficiently indicates otherwise. . . .

The patent uses “the” or “said” when referring back to an antecedent “a” phrase, but that usage does not itself suffice to demand the singular meaning because if the “a” phrase means “one or more,” so would the subsequent reference-back phrases.

Slip Op.  The court notes that the patentee’s embodiments all just show a single magnet, but the court found nothing in the specification that limits the claim to that embodiment.

There is no “present invention” or other specification language that restricts the invention to a single (or single-piece) magnet, and there are no structural limitations in the claims that implicitly demand such a configuration. Importantly, and more generally, nothing in the ’779 patent indicates that the evident purpose of the magnet on the socket base (to attach the light string to a metal surface) can be achieved only, or with specified effectiveness, through a single (or single-piece) magnet, rather than a plurality of magnets collectively having the specified pull force.

Id.  Likewise, the Federal Circuit also concluded that the doctrine of equivalents could be pursued. The patentee had argued that “two semicircular magnets in the Magnetic Cord light-fixture bases are equivalent to the one [claimed] magnet.”  The Federal Circuit found “nothing unreasonable” about that allegation.  Further, Lite-Netics did not make any amendments or statements during prosecution concerning the number of magnets in a way that would create estoppel.

On remand, the patentee may seek a narrower preliminary injunction — focusing on the patent not discussed by the Federal Circuit.  Still, the Federal Circuit’s discussion gives a big boost to the patentee’s case.

Once Upon a Time: The Patent

I’m finally getting to Pascal Attali’s wonderful 2022 book titled Once Upon a Time: The Patent. The book’s 300 pages is divided into 50+ short chapters written as vignettes on the global patent system.  Every vignette typically begins with a fictionalized historical narrative and then a more detailed explanation of the historical context and its importance.  Attali is a European patent attorney and so the focus is more European and global stories.  That has been wonderful for me since I already know lots of U.S. stories. I’m only half way through the book, but my favorite so far is reading about the abolition and later reinstitution of Dutch patent law 1869-1912.  Big thumbs up. Don’t take my word for it, read the review from Anastasiia Kyrylenko.  IPKat found it to be the BEST PATENT BOOK OF 2022.


UPC: First step – Opting-Out

The launch of the Unified Patent Court (UPC) has been waiting on Germany to formally ratify the UPC agreement.  That has now happened.

The court is set to begin operation on June 1, 2023.  Folks with European Patents will want to consider whether to file opt-outs for your patents (beginning March 1, 2023).  Some patentees with highly valuable patents will likely opt-out because the UPC rules allows competitors to challenge and invalidate the patents.  Unlike in the US IPR system, EPO opposition does not appear to create any estoppel against later UPC challenges.

Introducing the Trade Secret Case Management Judicial Guide

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

Guest post by Prof. Peter S. Menell*

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

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

Origins and Design of the Trade Secret Case Management Judicial Guide

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

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

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

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

Distinctive Features of Trade Secret Litigation 

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

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

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

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

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

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

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

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

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

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

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

2. High Emotional Quotient

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

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

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

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

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

3. The Interplay of Civil and Criminal Proceedings

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

Using the Guide

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

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

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

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

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

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

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

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

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

Call for Comments

 Please send comments to me at

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

Subreddit Drama

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

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

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

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

Should be interesting.

Public use == “accessible to the public.”

by Dennis Crouch

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

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

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

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

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

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

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

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

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

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

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

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

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

Federal Circuit: Software Function Equals Structure

by Dennis Crouch

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

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

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

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

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

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

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

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

Got Milk? Forget about Patent Eligibility

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

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

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

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

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

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

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

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

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

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

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

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

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

Standing to Challenge Inventorship

by Dennis Crouch

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

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

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

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

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

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

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

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

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

Read the Decision:

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

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

Models v. Strip Clubs and the Lanham Act

by Dennis Crouch

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

by Dennis Crouch

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

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

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

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

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

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

Roundup Ready 2 Patent Litigation

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

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

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

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

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

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