by Dennis Crouch

Simio, LLC v. FlexSim Software (Fed. Cir. 2020) (opinion by Chief Judge Prost and joined by Judges Clevenger and Stoll).

In this case, the Federal Circuit has affirmed the lower court’s summary dismissal of Simio’s infringement lawsuit on eligibility grounds.  The appellate panel also upheld the lower court’s refusal to permit the patentee to amend its complaint — seeing the proposed amendment as “futile.”

Dennis Pegden has received many awards for his work developing software (and programming languages) for simulating real-life processes in order to optimize decisionmaking; perform risk analysis, etc.  He was a professor who then developed his own company that was bought-out by Rockwell. Later, he formed the new company Simio, that owns the patent at issue here: U.S. Patent No. 8,156,468.  The ‘468 patent is effectively an object-oriented simulation programming tool that allows users to develop simulation models of process flows using a graphical framework.

In December 2018, Simio sued its competitor FlexSim for infringement of the ‘468 patent; FlexSim responded with its successful motion-to-dismiss on eligibility grounds.  The district court found the claims directed to the unpatentable abstract idea of the “decades old computer programming practice of substituting text-based coding with graphical processing.”

On appeal, the Federal Circuit affirmed — finding that the claims were indeed directed to transitioning from text-based coding to icon-based.  In making its “directed to” conclusion, the court repeatedly quoted the specification’s explanations that

[A]n object in the present invention is simple and completely graphical. There is no need to write programming code to create new objects. . . . Simio™ objects can be created with simple graphical process flows that require no programming. . . . [T]his invention can bring an improved object-oriented modeling approach to a much broader cross-section of users. . . . [etc.]

Quoting the patent specification.  And, the court agreed that “Simply applying the already-widespread practice of using graphics instead of programming to the environment of object-oriented simulations is no more than an abstract idea.”

Prior decisions have found innovations that improve computer functionality to be non-abstract (and thus patent eligible). Here, the court admitted that the claimed innovation may well improve the ability of many individuals to create simulations, but found that such a usability improvement does not count as an improvement to the computer’s functionality.

[Simio’s] argument does not explain how the computer’s functionality is improved beyond the inherent improvement of the experience of a user who cannot (or maybe, would rather not) use programming.

Slip Op. Quoting Customedia, the court explained its position that “user experience” is not “computer functionality.”

Simio pointed to particular improvements of user behavior offered by its invention such as faster simulation model development (a major selling point of the products in this area). Again, the court found that an abstract idea is still abstract, even if done quickly.

In Alice Step 2, the court admitted that the claim may include novel features, but those novel features are the abstract idea.

And that’s really what we have: a claim directed to the idea of using graphics instead of programming to create object oriented simulations—maybe a new idea, but still an abstract one—and lacking any inventive concept, any meaningful application of this idea, sufficient to save the claim’s eligibility.

Slip Op.

The rules of civil procedure allow for flexible pleading. Rule 8 simply requires “a short and plain statement of the claim.”  And, defects in a complaint are regularly fixed via amendment.  The rules of Civil Procedure require courts to “freely give leave” to amend pleadings “when justice so requires.”

Here, the district court refused to allow the patentee to amend its pleadings with specific allegations regarding the uniqueness of various claim elements.  On appeal, the Federal Circuit affirmed — finding that the proposed amendment were “conclusory statements” to be disregarding when ruling on a Rule 12(b)(6) motion.

Simio had delayed in its request to amend until after the deadline set by the district court in the R. 16(b) scheduling order.  On appeal, the Federal Circuit found that the district court was within its rights to deny amendments after that deadline absent presentation of good cause. Here, the court’s granting of the motion-to-dismiss didn’t count as good cause.

by Dennis Crouch

The Boeing Company v. Air Force (Fed. Cir. 2020)

This is a government contract case involving rights to technical data provided to the government from a contractor.  Boeing is working on a multi-billion-dollar F-15 Eagle Passive/Active Warning Survivability System (EPAWSS) project subject to a DoD contract.  Under the contract, Boeing “retains ownership” of the technical data it generates and delivers.  However, the U.S. Gov’t receives also “unlimited rights” to the data, including the right to “use, modify, reproduce, perform, display, release, or disclose [the] technical data in whole or in part, in any manner, and for any purpose whatsoever, and to have or authorize others to do so.”

When Boeing began providing data, it included first notice below.  The U.S. Gov’t. objected to that language and Boeing offered the second alternative. Still though the U.S. Gov’t. objected as out of compliance with the DoD regulations. (DFARS 252.227-7013(f)).  This objection apparently came as something of a surprise — Boeing says that it has been marking its technical data with propriety legends since 2002.

Boeing wanted to retain its limitations on use and further disclosure by “Non-U.S. Government recipients” and so petitioned to the Armed Services Board of Contract Appeals (ASBCA).  After losing, Boeing brought its appeal to the Federal Circuit.  On appeal here, though the Federal Circuit has reversed.

This is a contract dispute that focuses on the DoD regulations because they were incorporated into the contract.  The regulations strictly limit they ways that a Contractor can “assert restrictions on the [US] Government’s right[s].”  Here, the Federal Circuit drew a fine-point — finding that Boeing’s restrictions are expressly designed to restrict only non-US-Governmental parties. Although the regulations state that “All other markings are nonconforming markings,” the court held that that statement as only applying to markings that restrict US governmental rights.

Thus, we agree with Boeing that Subsection 7013(f) … is silent on any legends that a contractor may mark on its data when it seeks to restrict only the rights of non-government third parties.

Slip Op.

Anyone savvy will note that if the US government has “unlimited rights,” then those rights would include the full right to release, disclose, our otherwise authorize a third-party to use the data. Boeing’s modified proposal takes this into account — stating that third-parties use must be authorized either by Boeing or the U.S. Gov’t.  However, the Gov’t still argues that its rights are being restricted because it requires the Government to be the “authorizer” — something potentially quite burdensome and “inconsistent with its unlimited rights.”  On remand, the Board may consider this issue.

In its decision, the Federal Circuit walks through a set of light policy arguments as well:

Boeing asserts that the Board’s interpretation of Subsection 7013(f) will have far-reaching consequences that will impair contractors’ abilities to protect their rights in their technical data and threaten the willingness of technology innovators to do business with the government. The government responds that allowing contractors unbridled freedom to mark technical data with self-created legends of their choosing is inconsistent with the DFARS and would encumber unrestricted information with unclear markings that make it difficult for the government to exercise its license rights.

To be clear, neither party presents any policy arguments that would be sufficient to overcome the plain language of Subsection 7013(f), as explained above. In any event, we decide this case on the regulation, not policy. … But our interpretation of the plain language of Subsection 7013(f) has the added benefit of alleviating some of Boeing’s policy concerns.

Id.

Technical Data Rights: The underlying question, of course, is what rights are we talking about? The US does not have a category of property rights known as “technical data rights.”  The best data protection may be trade-secret rights, but that does not seem to work here because we’re talking about data that has been turned over to another party without any restriction.  Boeing’s copyright notice is probably the best-clue.  However, copyright protection in a document is a far-cry being the “owner” of the technical data as the court discussed.

Eli Lilly and Co v. Apotex, Inc. (Fed. Cir. 2020)

You don’t see this often — the district court held on summary judgment that Apotex infringes under the doctrine of equivalents.  On appeal, the Federal Circuit has affirmed – finding no error. (Nonprecedential opinion)

Lilly’s US7772209 claims a particular treatment scheme for pemetrexed disodium that includes a pre-treatment with folic-acid to avoid the harsh side-effects.  See, Crouch, Eligibility Cannot be Raised in IPR Appeal (2019).  Apotex’s product uses a slightly different salt – pemetrexed dipotassium.  Apotex needs its version to be the equivalent in order to receive drug approval, but it would prefer to still avoid infringement under the Doctrine of Equivalents.

Although Apotex (implicitly) admits that its version is an equivalent, the company argues that Lilly should be estopped from pursuing DoE infringement here because of Prosecution History Estoppel (PHE).  In particular, Lilly made a narrowing amendment to the claim term in question during patent prosecution to avoid the prior art and now seeks to reclaim that ground via equivalents.

My simplistic drawing above does the trick.  Lilly’s original patent filing did not expressly claim the use of “pemetrexed disodium,” but rather used the broader term “an antifolate.”  During prosecution, Lilly narrowed its claims to avoid some prior art — deleting the broader “antifolate” limitation and replacing it with the narrower “pemetrexed disodium.”

None of the dependent claims expressly recited Pemetrexed Disodium.  However, one original claim had limited the antifolate to “ALIMTA,” which is Lilly’s brand of Pemetrexed Disodium.  In addition, the specification noted that the “most preferred” antifolate for the practicing the invention is “Pemetrexed Disodium (ALIMTA), as manufactured by Eli Lilly & Co.”  The claim to ALIMTA was also deleted during prosecution based upon an indefiniteness rejection. MPEP 2173.05(u).

PHE: We know that a narrowing amendment made during prosecution creates a presumption of Prosecution History Estoppel that would bar the patentee from asserting infringement-by-equivalents over the surrendered subject-matter.

The district court found no surrender, and the Federal Circuit affirmed.  The first bit here is easy claim construction — the original (dependent) claim recited “ALIMTA” and now the claim recites “pemetrexed disodium.”  The district court found these to be synonymous, and the federal circuit agreed.  Apotex had argued that ALIMTA should have been seen as encompassing all forms of pemetrexed, and thus its deletion would serve as an additional narrowing amendment. The courts, however, rejected that argument based upon in intrinsic evidence within the patent documents.  This was the sole argument raised on appeal by Apotex and thus lost the case.

The court does not address PHE stemming from the bigger amendment (antifolate => pemetrexed disodium).  There was a continuation application in-between, but you “can’t use continuations to avoid fact of narrowing amendment.” Robert A. Matthews, 2 Annotated Patent Digest § 14:82.

by Dennis Crouch

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

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

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

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

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

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

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

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

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

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

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

= = = = =

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

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

= = = =

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

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

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

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

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

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

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

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

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

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

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

= = = = =

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

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

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

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

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

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

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

= = = = =

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

by Dennis Crouch

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

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

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

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

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

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

Summary Judgment of Non-Infringement Affirmed.

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

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

by Dennis Crouch

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

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

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

• Read the petition [2020.12.09 Dkt 0059 Uniloc Petition for Rehearing En Banc]
• Any Amicus in Support Due Within 14-days. Fed. Cir. Rule 35(b).
• I criticized the Federal Circuit’s original opinion in my essay: Dennis Crouch, Federal Circuit Usurps Judge Albright’s Judicial Power, Patently-O (November 10, 2020).

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

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

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

= = =

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

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

Petition at 2.

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

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

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