by Dennis Crouch

The Biden Administration is seeking comment on its proposed framework for how how agencies should evaluate exercising “march-in rights” over federally funded inventions. For those familiar with march-in rights, this guidance has been a long time coming. While these powers have technically existed for years under the Bayh-Dole Act, the lack of clear procedures around their use has rendered them largely theoretical. This proposal could change that.

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Congratulations to Sharon Israel on her new leadership role at the USPTO.  I was happy to learn that Director Vidal has appointed Sharon Israel as its new Chief Policy Officer and Director for International Affairs. Ms. Israel has been a leader of the patent bar for many yeas and will bring tremendous expertise to this important role overseeing the USPTO’s policy and international programs.  For the past few years, she has been a partner at Shook Hardy focusing on patent litigation — primarily on the defense side. (more…)

Hsuanyeh Law Group v. Winston & Strawn, 23-cv-11193 (S.D.N.Y. 2024)

A recent copyright infringement lawsuit filed by small Boston intellectual property boutique Hsuanyeh Law Group PC (HLG) against international giant Winston & Strawn LLP focuses a dividing line that can highlight when copying the work of another firm is permissible.  I believe that Winston & Strawn will eventually prevail based upon a fair use defense, but it is still an embarrassing situation for the firm and attorneys involved.  I hope that they did not overbill the client.  The role of attribution is also receiving increasing focus as attorneys begin to rely more heavily on AI outputs for their legal documents.

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by Dennis Crouch

In PureCircle USA Inc. v. SweeGen, Inc., No. 22-1946 (Fed. Cir. Jan. 2, 2024) (non-precedential) [PureCircle Decision], the Federal Circuit affirmed a district court summary judgment siding against the patentee, PureCircle.  The court concluded that the stevia production method claims were all invalid, either for: (1) lack of written description for the genus claim or (2) lack of eligibility because the claims are directed to a natural phenomenon combined with an abstract idea.  Judge Dyk authored the opinion of the court that was joined by Judges Schall and Stark affirming the ruling of C.D.Cal Judge James Selna.

The written description portion of the opinion parallels the Supreme Court’s 2023 Amgen decision that focused on the sibling doctrine of enablement. Although non-precedential, the eligibility portion appears important because of the way it combines prohibited eligibility categories and rules that method claims requiring a particular purity level are themselves an abstract idea absent requirement of specific steps on how that purity level is achieved.

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by Dennis Crouch

The U.S. Court of Appeals for the Federal Circuit has begun 2024 [2023] with its first precedential patent decision in DexCom, Inc. v. Abbott Diabetes Care, Inc., 2023-1795 (Fed. Cir. January 3, 2024).  In an opinion by Judge Stoll, the court affirmed a district court decision denying DexCom’s motion for a preliminary injunction. The patentee had requested an order barring Abbott from pursuing its IPR challenges – based upon a forum selection clause that was part of a prior settlement between the parties. Judges Dyk and Hughes were also on the panel.

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by Dennis Crouch

The following is my patent law exam from this past semester. As in years past, the exam was worth less than half of the final grade because the students did other substantial work during the semester, including a major moot court competition.   Students were permitted access to their book/notes/internet, but were barred communications with another human during the exam.

This year’s exam is very loosely based upon an interesting patent that I found associated with the Tow Whee product created by Eric Landis.  See US11167164, US11731470, and US11724148.  But, the events described are entirely my creation.

= = =

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by Dennis Crouch

The US Patent and Trademark Office (USPTO) issued a total of 312,100 utility patents in the calendar year 2023. This marks the fourth consecutive year of decline in the number of issued patents. The 2022 figures show a 3% decrease from the previous year and a 12% decrease from the record-high numbers seen in 2019, as depicted in the chart below.  One of the biggest changes from 2022 to 2023 is that non-US patent applicants dropped from 51% of the total down to 48%. In fact, numbers from US-applicants increased over the past year.   There was a roughly parallel shift when looking at the % of patents naming a US inventor — up from 47% in 2022 to 50% in 2023.

It’s important to recognize that patent issuance in any given year is largely based on innovations and applications filed 2-5 years prior or more. For example, the 2023 decline reflects a drop in underlying patent filings, R&D, and new invention volume primarily from 2018 to 2020, with most applications pending examination for years before grant. Similarly, the 2022 and prior year patent volumes correlate most directly with late 2010s economic, policy and innovation landscapes. So this data is more of a backwards-looking snapshot. The drivers behind 2023’s applicant mix shift likely originated a few years back as well — established in the midst of the COVID pandemic. Though issuing patents now, the underlying applicant behaviors and investment decisions providing this US boost trace back to the 2020-2022 period or earlier based on typical application lag. Any analysis of the grant mix changes must recognize this context, and account for influencers at the time of filing rather than issuance to best understand the shift.

Rather than an economic indicator, the grant numbers and details surrounding them are (I believe) more reflective of the operation of the USPTO and the faith innovative companies have in the patent system.

by Dennis Crouch

I’m excited to head out to Snowmass in early January for the IP-SKI conference! Although we have the Ozarks here in mid-Missouri, there is nothing like the Rocky Mountains.  This year I’ll also have the opportunity once again to connect with other intellectual property lawyers and talk shop while enjoying some long runs. (LINK)

In the meantime, I came across an interesting lawsuit that Aspen Skiing Company (ASC) recently filed against ski apparel company Perfect Moment. ASC owns and operates the four famous ski resorts that make up Aspen Snowmass – Snowmass along with Aspen Mountain, Aspen Highlands, and Buttermilk, with a history stretching back to 1947. According to the complaint, ASC is suing Perfect Moment for trademark infringement, false association, unfair competition, and other claims. [Aspen Complaint]

The basic scoop here is that Perfect Moment conducted photo shoots on ASC properties to promote its skiwear, intentionally trading on ASC’s fame and reputation. Back in March 2021, Perfect Moment posted social media photos showing influencers posing in Perfect Moment apparel, with recognizable buildings, ski lifts, and trails of the ASC resorts in the background. ASC asserts such posts falsely imply an endorsement or sponsorship relationship. After a cease & desist letter, Perfect Moment removed some but not all of the photos.  More recently, Perfect Moment began selling jackets and pants bearing an image of people relaxing in at the Aspen “beach club,” complete with the signature red-and-white striped tents and lounge chairs on the mountain. The complaint seeks injunctive relief, destruction of the allegedly infringing apparel, and disgorgement of Perfect Moment’s profits.

Truthfully, the case here is a bit shaky, but courts have been known to strongly protect trademark holder rights. I expect that PM will quickly cave to the legal pressure, although I would suggest first sending in the influencers to the Federal Courthouse for a quick shoot with their winter attorney apparel.

Ian Saffer and Kate Bohmann from Quarles & Brady filed the lawsuit on behalf of Aspen. It does not appear that PM has been served yet.

by Dennis Crouch

Thus far US copyright and patent tribunals have refused to award rights for AI generated works.  China has begun its move in the opposite direction with the recent decision granting rights to an artist who created an image using the popular generative AI system Stable Diffusion.  The case of Li v. Liu was decided by the recently Beijing Internet Court.  The court decides internet related cases using online tools. Although the court uses AI judges in some cases, this one was decided by humans.

[Read an English translation created by GWU Law Students Yuqian Wang and Jiaying Zhang supervised by Prof. Robert Brauneis: Li v Liu Beijing Internet Court 20231127 with English Translation. More AI related decisions are available at the GWU AI Litigation Database.]

The plaintiff, Li, used Stable Diffusion to generate a photorealistic image of an Asian woman. He shared the work on Xiaohongshu, a Chinese platform similar to Instagram. Later, the defendant Liu, a blogger, published the image in a blog post without Li’s permission, removing his username and platform watermark.

Li sued for copyright infringement. The Beijing Internet Court ultimately ruled in his favor, ordering Liu to apologize publicly, pay ¥500 ($72) in damages, and cover ¥50 ($7) in court fees.

Crucially, the court recognized Li as the legal rights-holder, having contributed the necessary “intellectual input” through choices of models, prompts, parameters, and final image selection. Judges emphasized that copyright law aims to encourage human creativity.

In this case, from the moment the Plaintiff conceived the disputed image to the moment the Plaintiff finally selected the disputed image, it can be seen that the Plaintiff has carried out a certain amount of intellectual input, such as designing the presentation of the character, selecting the prompts, arranging the order of the prompts, setting the relevant parameters, selecting which picture meets their expectations, and so on. . . . Currently, a new generation of generative AI technology is increasingly being used for creation. As long as AI-generated images reflect the original intellectual input of a person, they should be identified as a work and protected under copyright law.

This court ruling signals China’s interest in extending copyright law to better account for AI-generated content and also potentially places the country in the forefront of protecting AI creations.  Still, the Beijing Internet Court itself emphasized the approach of judging AI copyright issues based on the specific facts.

Of course, this is one regional lower court decision and is not generally a policy statement of the PRC.  The judges here particularly noted that the level of creative expression requires a case-by-case analysis.  In an email, Berkeley IP scholar Yuan Hao (郝元) points out, there is still debate within China on this issue. A similar case decided by a court in Shenzhen came to the opposite conclusion, finding AI-generated output eligible for copyright protection as the “intellectual fruits” of the AI developer rather than the AI user. According to Hao, cases like Li v. Liu feature “experimentalist practice” with different local courts exploring the issue before final guidance from the Supreme People’s Court.  Hao also disputes depictions of the case as a political move to strategically assist China’s AI industry. While acknowledging that some “political” IP cases may occur, she has not seen evidence of that here.  In my view, the low-value of the case (less than $100) also serves as an indication that this was not intended as a landmark decision setting national policy, but rather resolving a minor copyright dispute between two individuals.

by Dennis Crouch

The patent battle between Masimo and Apple over pulse oximetry technology in the Apple Watch took a new turn on December 27th. Despite the recent import ban imposed by the U.S. International Trade Commission (ITC), Apple was granted a temporary stay by the U.S. Court of Appeals for the Federal Circuit. For now, this emergency ruling blocks the government from enforcing the exclusion order on certain Apple Watch models through at least mid-January. However, the legal fight is far from over. For Masimo, this short-term win for Apple weakens its bargaining position as the two companies continue their protracted patent dispute in courts and before regulatory agencies.

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by Dennis Crouch

In a non-precedential decision, the Federal Circuit has affirmed a set of PTAB decisions canceling the claims of four patents owned by Carucel Investments L.P. (“Carucel”) — finding them invalid as obvious under 35 U.S.C. § 103. See Carucel Invs. L.P. v. Vidal, Nos. 2021-1731 (Fed. Cir. Dec. 26, 2023). The affected Carucel patents include U.S. Patent Nos. 7,221,904; 7,848,701; 7,979,023; and 8,718,543, with priority back to a 1996 application filing. All four patents relate to mobile communication systems involving base stations that can be mounted on moving vehicles. Carucel v. Vidal Opinion.

The original focus of the invention involved a closed-loop rail system running alongside a highway and that carried mobile base stations moving in the direction of the flow of traffic. That focus of the invention was quickly scrapped – likely as impractical.  But, the disclosure was seen as sufficient to also cover movable base stations with no rail limitation — allowing mobile base stations that might be on the cars and other vehicles themselves.

Multiple petitioners, including Mercedes-Benz, Volkswagen, and Unified Patents filed petitions seeking inter partes review (“IPR”).  Relying on KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007), the Patent Trial and Appeal Board (“PTAB”) instituted review and ultimately issued final written decisions concluding that the petitioners had proven by a preponderance of evidence that all challenged claims were unpatentable as obvious.

On appeal, Carucel disputed the PTAB’s claim constructions, obviousness determinations, and post-institution procedures under the Administrative Procedure Act (“APA”).  The Federal Circuit rejected Carucel’s arguments on all fronts.

Claim Construction: During inter partes review proceedings, the patentee is typically seeking a narrow construction of various terms in order to distinguish itself from the prior art. This has to be a careful argument — if the patentee goes too narrow then the accused infringers can also escape liability.

Here, the patent specification suggests that the mobile base stations are connected directly via cellular-network.  However, the claims themselves only use the terms “mobile device” and “mobile unit.” The court explained that neither the claim language nor the specifications justified restricting the scope to only cellular networks or requiring the mobile devices to directly register or communicate with the network.  In its analysis the court concluded first that the words “mobile device” refers to the capability of movement of a physical object and does not suggest the narrow construction requested.

On the obviousness determination, the Federal Circuit made the factual determination that a person of ordinary skill in the art would have been motivated to combine the teachings of the prior art with a reasonable expectation of success.  That determination quickly led to the legal conclusion that the claims were obvious.  On appeal, the Federal Circuit gives deference to PTAB fact finding under the substantial evidence standard. And here, the court found more than iota to support the conclusions — especially after deferring to the PTAB’s credibility findings favoring petitioner’s expert testimony.  At oral arguments, Brian Bear (Spencer Fane) argued that the Board had simply adopted the opposing expert testimony ipse dixit without providing critical analysis and, in particularly without explaining how the prior art combination overcame the “massive barrier” of incorporating the TDMA systems in some references alongside the CDMA systems in other references.   As with the PTAB decision, the Federal circuit decision does not provide a direct response or analysis regarding the TDMA/CDMA incompatibility issue.

Finally, the Federal circuit rejected Carucel’s argument that the PTAB’s denials of requests for Director Review violated the APA.  The denial orders themselves were unsigned, but still sufficiently identified the Commissioner Hirshfeld as the presiding officer.   In addition, the Director Review does not need to separately explain reasons for denial.  Although this is an agency action, the PTAB written decisions are “reviewable final decisions of the agency” despite intervening director denial.

Brian Bear of Spencer Fane argued the case for the patentee with Debra McComas of Haynes & Boone for appellees.  Michael Tyler from the PTO’s solicitor’s office also defended the opinions.  Judge Stark authored the unanimous opinion that was joined by Judges Dyk and Schall.

by Dennis Crouch

December 25th, marked the deadline for President Biden to reject the U.S. International Trade Commission’s (USITC) ruling banning imports of certain Apple Watch models. With no action from the White House, Apple now faces a federal government order to halt imports and sales of Apple Watch Series 9 and Ultra 2 devices because it incorporates light-based pulse oximetry technology covered by the claims of Masimo’s U.S. Patent Nos. 10,945,648 (claims 24 and 30) and 10,912,502 (claim 22).

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by Dennis Crouch

Thaler v. Comptroller-General of Patents, Designs and Trade Marks, [2023] UKSC 49. 

In a December 20, 2023 decision, the UK Supreme Court has agreed with American courts that an inventive machine is not deserving of patent rights.  The underlying case will be familiar to many with Dr. Stephen Thaler of St. Louis seeking to patent a thermal-mug designed by an artificial intelligence machine that he created.  Thaler has argued that the AI (called DABUS) conceived of the particular invention in question and also identified its practical utility.  The UK Supreme court based its holding upon the text of the UK Patents Act of 1977 as it reached the same ultimate conclusion as the Federal Circuit in Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022), cert. denied, 143 S. Ct. 1783 (2023).

These Thaler cases showcase that under the current patent law regime, autonomous AI systems cannot qualify as inventors entitled to patent rights, irrespective of their creativity. For AI-generated inventions to become patentable, intervention by policymakers to amend inventorship laws would likely be necessary. However, the arguably bigger questions of immediate importance surround collaborative human-AI inventions where both human and machine contribute in creation of a new invention. Thaler expressly disclaimed any human input into DABUS’s inventions, but going forward mixed human-AI inventor teams seem inevitable. Neither the UK Supreme Court’s decision nor the parallel US rulings provide direct guidance on the requisite threshold quality or quantity of human participation in such collaborative inventions to satisfy legal inventorship requirements. Thus, for instance, an open issue remains whether token perfunctory human approval of an AI-devised invention would suffice, or if substantive intellectual contribution is needed. And for primarily AI-driven inventions, are minor tweaks by a human collaborator enough? Or must the human contributor objectively supply the novel concept? (more…)

by Dennis Crouch

In a recent nonprecedential decision, the Federal Circuit dismissed Ontel’s appeal seeking to overturn the PTAB’s IPR decision upholding the patentability of Dafni’s hair straightening brush patents. Ontel Products Corp. v. Guy A. Shaked Invs. Ltd., No. 2022-1938 (Fed. Cir. Dec. 19, 2023). The court held that Ontel lacked standing to appeal because “the dispute between Ontel and Dafni over this patent is moot.” Under the mootness doctrine, “a case becomes moot ‘when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome.’” ABS Global, Inc. v. Cytonome/ST, LLC, 984 F.3d 1017, 1020 (Fed. Cir. 2021). At the same time, the panel refused to vacate the PTAB decision upholding the ‘562 patent claims, holding that the case “became moot through actions that are closer to joint settlement than to unilateral action” by Dafni.

In my earlier post, I noted my hope that the Federal Circuit would reach the substantive issues that focused on the role of secondary considerations in obviousness determinations and whether Dafni had established the required nexus between the evidence of industry praise and acceptance and the claimed invention. The mootness conclusion precludes that analysis.

Dafni had originally sued Ontel for infringing several different patents. Ontel successfully petitioned for Inter Partes Review (IPR) of one, US9877562, and the district court agreed to stay litigation pending outcome of the IPR.  Rather than waiting for that outcome, Dafni, with cooperation from Ontel, entered a stipulated dismiss of the ‘562 infringement allegations. The basic idea was that by removing that patent out of the queue, the case asserting US9578943 could move forward.  Dafni eventually won the IPR with a PTAB final written decision holding that the claims had not been proven invalid.  Ontel appealed, but the Federal Circuit has now dismissed the appeal as moot.

In explaining why Ontel lacked a concrete stake in the appeal, the court emphasized that “Dafni’s prior ’562 patent-infringement claim against Ontel is no longer pending” and that Dafni’s “disclaimer of any right to challenge the district court’s order dismissing the claim of infringing that patent (including by seeking to reinstate the ’562 patent-infringement claim), precludes any new assertion of that patent against Ontel.” Further, Ontel provided no “evidence of planned or likely future conduct that could risk potential-infringement liability” and identified no “relevant contractual rights” affected by the PTAB decision.

The court rejected Ontel’s assertion that it had an interest in preventing Dafni from relying on the PTAB decision regarding the ’562 patent in separate litigation involving Dafni’s ’943 patent. As the court explained, issue preclusion does not apply to unappealable PTAB decisions, and “the potential for collateral consequences” of the PTAB’s conclusions is insufficient to supply standing. Quoting Best Medical International, Inc. v. Elekta Inc., 46 F.4th 1346, 1353 (Fed. Cir. 2022)

Having found the dispute over the ’562 patent moot, the court next considered the proper disposition—whether to simply dismiss the appeal or also vacate the PTAB decision under United States v. Munsingwear, Inc., 340 U.S. 36 (1950). As the Supreme Court has made clear, “[v]acatur is in order when mootness occurs through happenstance—circumstances [either] not attributable to the parties [or attributable to] the ‘unilateral action of the party who prevailed in the lower court.” Arizonans for Official English v. Arizona, 520 U.S. 43 (1997). However, “mootness by reason of settlement does not justify vacatur.” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18 (1994).

Here, the court found Dafni did not unilaterally cause mootness but rather the case “became moot through actions that are closer to joint settlement than to unilateral action.”  The court highlighted a joint stipulation dismissing the ’562 patent claims, Ontel’s opposition to reinstating those claims, and Dafni’s ultimate disclaimer of any right to challenge that dismissal order. Exercising its “equitable discretion,” the Federal Circuit declined to also vacate the PTAB decision upholding the ’562 patent claims.

by Dennis Crouch

An increasing number of foreign defendants are being sued for IP infringement in US courts.  These cases raise important procedural questions of district court personal jurisdiction over the foreign defendants. One ongoing debate involves proper service of process for foreign defendants under the Hague Service Convention.

Freedom Patents LLC v. TCL Electronics provides some interesting nuance.  The case was filed in E.D.Tex before Judge Mazzant with Freedom Patents suing TCL companies located in the China, Hong Kong, and Vietnam for infringing its antennae patents, including US8284686.

Several defendants challenged the propriety of service of process, and moved to dismiss under Federal Rule of Civil Procedure R. 12(b)(5) (“insufficient service of process”).  Judge Mazzant initially delayed any ruling on the motion, but after the TCL companies petitioned for mandamus, he eventually issued his split decision in the case — ultimately finding that the HK and Vietnamese defendants had been properly served, and providing a simple mechanism for serving the PRC China-based defendants (delivering the summons to their US attorneys). [Mazzat Order on Service of Foreign Defendants].

Texas law provides a mechanism for service of process of non-Texas-residents who engage in business in Texas, but without a regular place of business or a designated agent.  This substitute service process is that the Texas Secretary of State legally serves as the designated agent for foreign defendants conducting business within the state who have not already established a registered agent. Here, the plaintiff alleged that each of the defendants were conducting business in the state of Texas without any designated agent. This allowed the plaintiff to serve the Texas Secretary, he then forwarded a copy of the summons to each defendant.

Although all of the defendants received actual notice, they still complain that they were not formally served and therefore are not subject to the Court’s jurisdiction. TCL Vietnam argued that it does not engage in business in Texas, and therefore the Texas approach is improper. The Hong Kong and PRC defendants argued that the approach did not comport with the Hague Convention.

TCL Vietnam: Texas law defines ‘doing business’ within the state to include committing a tort in the state.  Here, the sale of infringing product in the state is patent infringement — a tort. Although TCL Vietnam is not necessarily the importer or seller within the US, prior Texas cases have have held that a foreign manufacturer  is doing business in the US by producing products with plans for them to be sold in the US, and then putting them into the stream of commerce in a way that sends them to the US.  Based upon this line of reasoning along with the patentees factual allegations, Judge Mazzant found that the patentee had shown enough to conclude TCL Vietnam was doing business in the US. And, therefore, that the service was proper.

The PRC and Hong Kong defendants raised a second issue — that the transmission of documents from the Texas Secretary of State to their offices in PRC and Hong Kong implicates the Hague Convention.

On this point, the patentee disagreed and argued that it served the defendants’ legally designated agent in the State of Texas, a domestic service. And therefore, that the Hague Convention has no applicability since it only addresses foreign service.

FRCP 4(h) governs service of process for corporations, including foreign corporations.  A foreign defendant being served within the US may be served by “following state law for serving a summons” as it would be done in state court in that district. See 4(h)(1)(A) referring to 4(e)(1).  The patentee argues that this is what is happening — that the foreign defendants are constructively in the state of Texas via their legally designated agent and therefore can be served in the manner permitted by Texas law.   On the other hand, a foreign defendant being served outside of the US can be served “by any internationally agreed means … reasonably calculated to give notice, such as those authorized by the Hague Convention.” R.4(f)(1). The rule for international service also gives district courts latitude in determining the means of service so long as “not prohibited by international agreement” so long as reasonably calculated to notify the defendants. R.4(f)(3).  The defendants point here though is that service of foreign defendants outside of the US requires consideration of international agreements, namely Hague.

After reviewing these issues, the district court sided with the defendants, concluding that “when a signatory to the Hague Convention is served through the Texas Secretary of State, the Hague Convention is implicated.”  Primarily here, the court concluded that due process considerations should be incorporated into the rule — and so it makes sense to ensure that the notice is reasonably calculated to reach the defendants.  Normally, a party is deemed served if their designated agent is properly served. Here, however, because we have involuntary agent created by law, due process requires an additional step – that the agent then forward the materials to the defendant in a way calculated to achieve notice.  Because this international forwarding is part of the service process, the rules of international service (i.e., Hague) are implicated.

At the next inquiry, the court looked to see whether the actions — mailing from the  Texas Secretary comport with Hague.  Now the actual Hague process is fairly slow and cumbersome. The plaintiffs instead successfully argued that the service should be deemed to pass muster so long as it is reasonably calculated to put the defendant on notice and is not contrary to any international agreement such as Hague.

• With regard to Hong Kong, the court concluded (contrary to defendants arguments) that Hong Kong continues to permit service by mail. “In their Motion, Defendants stated ‘service of process by mail is not allowed in . . . the Hong Kong SAR.’ This is false.”
• With regard to PRC, the court found that China has expressly objects to service by mail.

When incorporated into the Hague analysis, these contrary results allowed the court to find that service by mail from the secretary of State was proper in Hong Kong as well as Vietnam. On the other hand, the service by mail to PRC defendants was improper.

In the case, Plaintiffs requested alternative relief — allowing service of process through an alternative means.  Namely, the court noted that the PRC defendants had hired US counsel and that it would be proper to serve those defendants via their US attorneys. Although Hague does not proved for service to US Counsel, it also does not prohibit that approach that the court found would be reasonably calculated to provide notice.

The defendants have moved for reconsideration — arguing the order contains clear errors of law creating “manifest injustice”if allowed to stand.

First, the defendants contend that even if Hong Kong generally permits mail service, substituted service on the Hong Kong defendants through the Texas Secretary of State was improper because they do not engage in business in Texas as required by Texas law.  (Judge Mazzant seems to have skipped that initial issue for PRC/Hong Kong defendants).

Second, the defendants argue that alternative service on the China-based defendants through their U.S. counsel would violate principles of international comity.  The key Federal Circuit case on point is the non-precedential In re Oneplus Tech. Co., No. 2021-165, 2021 U.S. App. LEXIS 27282, at *9-10 (Fed. Cir. Sep. 10, 2021).  In Oneplus, the court explained that “even when other methods of obtaining service of process are technically allowed, principles of comity encourage the court to insist, as a matter of discretion, that a plaintiff attempt to follow foreign law in its efforts to secure service of process upon defendant.”  Id. The delay caused by proper Hague service is not sufficient justification.

by Dennis Crouch

In the pending appeal of In re Chestek, PLLC, No. 22-1843, a trademark applicant is opposing the USPTO requirement that all applicants must disclose their domicile address. This requirement, referred to as the “domicile address rule,” has been controversial since the USPTO adopted it in a 2019 rulemaking. For individuals, this rule requires an actual residential address.  See Requirement of U.S. Licensed Attorney for Foreign Trademark Applicants and Registrants, Final Rule, 84 Fed. Reg. 31498 (July 2, 2019).  The outcome could have significant implications for privacy and transparency in the trademark registration system.  For a variety of reasons, many people do not publicly disclose their place of residence. In the US, the most common reasons stem from domestic violence and stalking. Although the USPTO is attempting to offer a mechanism to protect domestic residence from public view, it also recently had a major data loss of that information — and effectively all domestic residence information is available in various sources online.  A decision favoring the petitioner would also be seen as bolstering the Administrative Procedure Act’s notice and comment requirements.

The best place to begin any analysis is probably with the statute. The key trademark statute followed by the USPTO is the 1946 Lanham Act.  Although the Act has been amended numerous times, since its original passage it has expressly required applicants to provide their domicile when applying for a federal trademark registration.  “The application shall include specification of the applicant’s domicile.” 15 U.S.C. § 1051(a)(2).  From the statutory standpoint, this is seemingly open and shut. But, for undisclosed reasons, the USPTO never enforced this statutory requirement by requiring the actual permanent place of residence rather than simply a mailing address.

USPTO apparently saw no need for rigorous enforcement until fraudulent foreign applications surged, raising concerns over phony addresses and shell entities.  As the agency was battling fraudulent trademark application filings, it concluded that the domicile disclosure could serve as an important tool — especially with regard to the “U.S. Counsel Rule” that requires foreign trademark applicants to designate a U.S.-licensed attorney as their representative. According to the agency, over 18,000 fraudulent trademark applications have been terminated and over 3,000 registrations sanctioned since 2019 for violations of the U.S. Counsel Rule. The USPTO maintains that scammers often provide fake U.S. mailing addresses, so verifying an applicant’s domicile is crucial to combat this fraud.

While the Lanham Act does not define “domicile,” the USPTO’s 2019 rulemaking defined it as the “permanent legal place of residence of a natural person or the principal place of business of a juristic entity.” 37 C.F.R. § 2.2(o).  Unlike traditional mailing addresses, these domicile addresses cannot be post office boxes. The USPTO states that because trademark counsel may change over a registration’s lifetime, having an applicant’s domicile helps confirm whether foreign applicants still must have U.S.-licensed representation.

The appellant in the case, Chestek PLLC, declined to provide its domicile address to the USPTO. Instead, Chestek provided a P.O. box mailing address in its trademark application. Citing privacy concerns, Chestek argued that the domicile address requirement was imposed improperly through the 2019 rulemaking.  I’ll note here that Chestek PLLC is the law firm owned by trademark attorney Pam Chestek.

Although the USPTO may have the statutory authority to demand domicile disclosure, Chestek argues that the agency must still work through the proper APA procedures before requiring the disclosure. And if followed correctly, the notice-and-comment process would have allowed likely led to critical public statements explaining why the disclosure rule is bad policy as well as suggestions for addressing the foreign-filing problems while mitigating the privacy issues.

In the briefing, Chestek noted that the original notice of proposed rulemaking did not say anything about domicile disclosure requirement or any notice that the proposed rule might require the disclosure.  This, according to Chestek, violated the Administrative Procedure Act’s (“APA”) notice-and-comment requirements. Chestek argues that the proposed rule disclaimed any new reporting requirements or any impact on domestic applicants. Chestek also argues that the final rule requiring domicile addresses is arbitrary and capricious because the USPTO provided no substantive explanation for the change between the proposed and final rules.

David Boundy filed an amicus brief arguing that the domicile address rule violates multiple federal laws governing agency rulemaking, not just the APA’s notice and comment requirements raised by Chestek. In his brief, Boundy explains that the Paperwork Reduction Act requires robust cost-benefit analysis before agencies can collect new information — an analysis skipped by the USPTO.  Boundy also alleges the USPTO evaded the Regulatory Flexibility Act’s mandate to analyze impacts of rules on small businesses. He notes most small trademark firms would be affected by the domicile requirement, yet the USPTO never considered resulting costs. Boundy ultimately contends such omissions reflect a consistent pattern of administrative law violations in recent PTO rulemakings.

In multiple recent rulemakings, the PTO has silently skipped steps, claimed exemptions from these laws for reasons that are transparently false, or claimed to be exempt for reasons having no basis in the written law. . . . [T]he domicile address rule is part of a pattern. The pattern includes errors of omission, errors of objectively false statements, and one rule where the PTO was blocked from going forward by regulation—so the PTO flew the same rule under the regulatory review radar as subregulatory “guidelines.” These statements are made to ex parte tribunals, and each has the effect of evading analysis and work that Congress required agencies to do in order to assure that the agency’s rules are in the public interest. Because the PTO’s actions in this case are part of a consistent overall pattern, the Court may fairly infer that the PTO intended to evade the law in this case.

Boundy Brief.

The Federal Circuit heard oral argument in the case in early December 2023, with Chestek’s attorney, Andrew Grossman, arguing that the domicile address requirement disproportionately affects victims of domestic violence and other at-risk individuals. He stated that the USPTO failed to consider alternatives like exempting applicants who already designated U.S. counsel.

The USPTO’s representative, Mary Beth Walker, countered that the final rule logically flowed from the proposed rule’s focus on using domicile to determine if foreign applicants had engaged U.S. counsel. “[I]t was obvious from the NPRM that to administer the requirement for foreign-domiciled filers to be represented by U.S. counsel, the USPTO would need and could require all filers to provide their domicile address. The changes to the final rule text merely clarified that fact.” Associate Solicitor Walker also contended that any applicant wanting to raise privacy concerns could have commented during the rulemaking process.

Federal judges generally take domicile privacy quite seriously because of the repeated historic threats.  In oral arguments the judges acknowledged the privacy risks.  In addition, the judges repeatedly questioned USPTO counsel about the lack of explicit justification for the requirement within the rulemaking and questioned the ‘logical outgrowth’ argument.  That said, the judges also seemed open to the PTO arguments that the domicile requirement was a simple procedural change necessary to implement the US Counsel Rule and that the requirement was “reasonably discernable” from the original notice.   So, bottom line is that it is difficult to predict the outcome of this particular case.

by Dennis Crouch

The Federal Circuit has granted a large number of mandamus petitions in order to move cases out of Judge Alan Albright’s W.D.Tex. courtroom based upon the inconvenience felt by large multinational defendants.  On December 14, 2023, the appellate court once again took the extraordinary step, this time on behalf of Samsung, of granting a petition for a writ of mandamus, ordering the infringement lawsuit to be transferred to the Northern District of California.  In re Samsung Elecs. Co., Ltd., No. 2023-146 (Fed. Cir. Dec. 14, 2023).

For convenience transfer motions under 28 U.S.C. 1404(a), the Federal Circuit follows the law of the particular regional circuit court of appeals. Because most of these cases stem from Texas, this means the Fifth Circuit who recently established further precedent the copyright case In re TikTok, Inc., 85 F.4th 352 (5th Cir. 2023).

The Fifth Circuit in In re TikTok granted TikTok’s petition for a writ of mandamus, directing the Western District of Texas to transfer a copyright infringement case brought against TikTok by a Chinese company to the Northern District of California. The court applied the test for mandamus review of improper venue decisions established in In Re Volkswagen, requiring the movant to show the transferee venue is “clearly more convenient.” After analyzing each of the eight court created private and public interest factors that govern transfer, the Fifth Circuit concluded that the district court’s denial of transfer amounted to a clear abuse of discretion leading to a patently erroneous result.

Specifically, in TikTok, the Fifth Circuit found the district court erred in weighing the witness convenience and ease of access to proof factors against transfer, since the key evidence and witnesses were predominately located in China and California. It also critiqued the district court’s reliance on post-motion case progress to deny transfer as an abuse of discretion, where the court itself was responsible for delay in deciding the transfer motion. Since multiple factors favored transfer and none favored the plaintiff’s chosen venue, the Fifth Circuit granted mandamus directing the Western District of Texas to transfer the case.

In Samsung, the Federal Circuit followed-in-suit and ordered Samsung’s case to be transferred.  One key factor in the case has to do with travel time from potential Korean witnesses, and the Federal Circuit concluded that the NDCA was much more convenient as a travel destination from Korea:

The Fifth Circuit recently rejected similar reasoning in In re TikTok . . . . Because most of the potential witnesses here are in Korea and NDCA, transfer would greatly reduce the time and inconvenience of travel. As in TikTok, the presence of some [party] employees in Eastern Texas . . . ‘cannot overcome the immense inconvenience that the majority of relevant witnesses would face if this case were to be tried in’ WDTX.

Samsung at 4.  The court here does not provide its factual basis for explaining why traveling from Korea to NDCal is immensely more inconvenient than Korea to Texas, and has previously rejected the use of travel distance as a key factor — especially in situations like patent cases that will typically involve an extended trial.

Judge Albright had also noted that party witnesses were willing to travel to Texas — even if located in Korea or California.  On Mandamus, the Federal Circuit that “[t]he Fifth Circuit recently rejected similar reasoning” in TikTok.

This decision continues a trend of the Federal Circuit relying on mandamus to repeatedly overturn Judge Albright’s refusal to transfer cases out of his WDTX courtroom. Both the outcome and the tone of In re Samsung signals that the Federal Circuit remains skeptical of plaintiff-preferred venues that lack meaningful connections to patent disputes.