All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law.

Summary Judgment, Eligibility, and Appeals

Patent

by Dennis Crouch

Ericsson Inc. v. TCL Communication Tech. (Fed. Cir. 2020)

The jury sided with Ericsson — holding that TCL willfully infringed the two asserted claims of Ericsson’s US7149510 and awarded $75 million in compensatory damages. Judge Payne then added an additional $25 million enhanced damages for the adjudged willfulness.

On appeal, a divided Federal Circuit has reversed judgment — holding that the asserted claims are actually invalid as a matter of law as being directed toward ineligible subject matter under Section 101.  Majority Opinion by Chief Judge Prost and joined by Judge Chen. Dissenting Opinion by Judge Newman.

The bulk of the case focuses on waiver of TCL’s right to appeal – with the majority finding no waiver.

During the litigation, TCL moved for summary judgment of ineligibility.  The district court denied that motion after finding that the patent was not directed toward an abstract idea. The case continued then continued to trial and judgment as noted above.

After being denied summary judgment, a moving party typically needs to take a couple of steps in order to preserve the argument for appeal.  Preservation is necessary because the summary judgment motion is seen as effectively moot once trial starts, and so the party needs to make a post-trial renewed motion for Judgment as a Matter of Law (JMOL) under Fed. R. Civ. Pro. R.50(b) (or similar post-trial motion) in order to preserve the issue for appeal.  And, under the rules, a R. 50(a) JMOL motion (made during trial) is a prerequisite to the post-trial R.50(b) renewed JMOL motion. An appeal can then follow if the judge denies the R.50(b) motion.  Here, TCL did not file a JMOL motion or any other post-trial motion on eligibility, but instead simply appealed the Summary Judgment denial — typically a non-starter on appeal.

The waiver rule is different when Summary Judgment is granted.  A grant of summary judgment finishes litigation on the issues decided, and those issues are fully preserved for appeal.

Coming back to this case: Many denials of summary judgment are based upon the existence disputed issues of material fact.  And, even when a defendant’s SJ motion is denied, the defendant may still win the issue at trial.  Here, however, when the district court denied the ineligibility SJ motion there was nothing left for the jury to decide.  Using that logic, the majority held that when the court denied TCL’s ineligibility SJ motion, it effectively effectively granted SJ of eligibility.  Critical to this determination is the appellate panel’s finding that “no party has raised a genuine fact issue that requires resolution.”  With no facts to decide, the question became a pure issue of law: either it is eligibile or it is ineligible. “As a result, the district court effectively entered judgment of eligibility to Ericsson.”  And, as I wrote above, a grant of summary judgment is appealable.

Writing in dissent, Judge Newman argues that the majority’s conclusion that pre-trial denial of SJ on eligibility is the same as a final decision going the other way “is not the general rule, and it is not the rule of the Fifth Circuit, whose procedural law controls this trial and appeal. . . . The majority announces new law and disrupts precedent.”

Judge Newman explained that TCL simply failed to pursue its Section 101 claim after Summary Judgment was denied.

TCL did not pursue any Section 101 aspect at the trial or in any post-trial proceeding. . . . TCL took no action to preserve the Section 101 issue, and Section 101 was not raised for decision and not mentioned in the district court’s final judgment.

There is no trial record and no evidence on the question of whether the claimed invention is an abstract idea and devoid of inventive content. The panel majority departs from the Federal Rules and from precedent.

Newman, J. in Dissent.

The majority also went on to say that its “authority is total” in deciding whether to hear an appeal because there is “no general rule.” “We have the discretion to hear issues that have been waived.”  (The first quote is not actually from the court but something I read in the news).  The court here oddly includes the following statements:

[T]here is “no general rule” for when we exercise our discretion to reach waived issues. . . . Our general rule against reaching waived issues is
based on sound policy. . . .

Majority opinion (concluding that if appeal was waived, the court would exercise its discretion to hear the appeal).

= = = =

On the merits of the invention, the majority and dissent also disagree. As you can read below, the claims are directed to a system for software-access-control and the majority found it directed to the “abstract idea of controlling access to, or limiting permission to, resources.”  The district court instead found that the claims were directed to an “improved technological solution to mobile phone security software.”

1. A system for controlling access to a platform, the system comprising:

a platform having a software services component and an interface component, the interface component having at least one interface for providing access to the software services component for enabling application domain software to be installed, loaded, and run in the platform;

an access controller for controlling access to the software services component by a requesting application domain software via the at least one interface, the access controller comprising:

an interception module for receiving a request from the requesting application domain software to access the software services component;

and a decision entity for determining if the request should be granted wherein the decision entity is a security access manager, the security access manager holding access and permission policies; and

wherein the requesting application domain software is granted access to the software services component via the at least one interface if the request is granted.

5. The system according to claim 1, wherein:

the security access manager has a record of requesting application domain software;

and the security access manager determines if the request should be granted based on an identification stored in the record.

 

Who Cares About Oral Arguments?

Patent

As the Federal Circuit temporarily moved to telephonic oral arguments, the court also began denying more oral argument requests after deciding that “oral argument [are] unnecessary.”  In denying oral arguments, the court has generally been citing Fed. R. App. P. 34(a)(2)(C) which allows an assigned appellate panel to decide that oral arguments are not needed based upon a determination that “(C) the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument.” The decision to deny a request for oral arguments must be unanimous.

The Federal Circuit recently completed its April sitting and I used the oral argument schedule to create the chart below.  The chart below shows the percentage of cases with oral arguments for each Judge. Chief Judge Prost heard the highest percentage of oral arguments while Judges Lourie and Hughes were on panels that cancelled all of their oral arguments. One interpretation is that Chief Judge Prost sees oral arguments as more important for her decisional process, while Judges Lourie and Hughes find less importance.  Although the number of cases was small (10 to 20 per judge), the dramatic shift in distribution is unlikely due to chance.

One thing to recognize here is that the R.34 standard did not change because of COVID-19 and the National Emergency. What did change is the mechanism for oral arguments and potential emergency pressures on various judges. These issues might explain the differences in judicial rates more than whether a judge “cares about oral arguments.”

Moving forward we are going to see lots of results from the “natural experiment” created by the COVID-19 National Emergency and Global Pandemic. While the results may end up being interesting and teach us something, the nature of this experience probably includes too many confounding factors to provide real results.

Confusion from the Federal Circuit on Voluntary Dismissals and Attorney Fees

Patent

by Dennis Crouch

O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC (Fed. Cir. 2020)

Attorney Fees following Voluntary Dismissal: I recently posted a note on the Keith Manufacturing decision allowing for an attorney fee motion following a Fed. R. Civ. Pro. R. 41(a)(1)(A)(ii) stipulated dismissal with prejudice.  Mossberg involves attorney fees following a R. 41(a)(1)(A)(i) dismissal without prejudice.  The appellate court ultimately refused to award attorney fees against Mossberg because the dismissal was “without judicial imprimatur” and thus leaving no “prevailing party.”  As I note bellow, Keith and Mossberg are in some tension, even though both were penned by Judge Hughes and published less than 1-week apart.

FRCP Rule 41(a) covers voluntary dismissal of lawsuits:

(a)(1)(A) Voluntary Dismissal by the Plaintiff Without a Court Order:

… [T]he plaintiff may dismiss an action without a court order by filing:

(i) a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment; or

(ii) a stipulation of dismissal signed by all parties who have appeared.

(B) Effect. Unless the notice or stipulation states otherwise, the dismissal is without prejudice.

In Mossberg, the patentee sued Timney for infringement, but the district court almost immediately stayed the action awaiting the outcome of a series of USPTO reexaminations filed by Timney.  After 5+ years, Timney ultimately prevailed at the USPTO and the asserted claims were invalidated.  Back at the district court Mossberg voluntarily dismissed its lawsuit under R. 41(a)(1)(A)(i) without prejudice.   The district court then entered a docket order stating that the case was dismissed without prejudice.

Following dismissal, Timney asked for attorney fees — arguing that it won the lawsuit. Although the lawsuit was dismissed without prejudice, the collateral cancellation meant that Mossberg would not be able to sue again. Complete win for Timney.

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

35 U.S. Code § 285.  The district court refused to award attorney fees — holding that the dismissal without prejudice was “not a decision on the merits and thus cannot be a judicial declaration altering the legal relationship between the parties.” O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, No. 3:12-CV-00198, 2018 WL 4398249, at *6 (D. Conn. Sept. 14, 2018).

While the district court’s statement of the law is off a bit, the Federal Circuit affirmed the holding that attorney fees are not available for this type of voluntary dismissal.  In particular, the court decision does not need to be “on the merits,” but it must result in a “material alteration of the legal relationship of the parties” and “be marked by judicial imprimatur.” CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642, 1646 (2016).  CRST involved a Title VII action for employment discrimination.  That provision of the Civil Rights Act of 1964 includes a “prevailing” party provision for attorney fees that is similar to the Patent Act (“the court, in its discretion, may allow the prevailing party … a reasonable attorney’s fee.”).

Here, the Federal Circuit found no “judicial imprimatur” because the voluntary dismissal is “effective immediately upon plaintiff’s filing of the notice of dismissal.” Here, the district court did include a docket entry dismissing the case — but by that time the case had already been dismissed by the plaintiff.  “A properly filed Rule 41(a)(1)(A)(i) voluntary dismissal becomes effective immediately upon plaintiff’s filing of the notice of dismissal.” That make sense since the rule is titled voluntary dismissal “without a court order.”  Thus, the court explained that “[a]lthough the district court in this case entered a dismissal order after Timney filed its notice of voluntary dismissal, that dismissal order had no legal effect.”

= = = = =

Both Mossberg and Keith were penned by Judge Hughes.  Hughes is seemingly a good choice for these cases because of his decades of experience as a civil litigator at the Department of Justice.  But, the two cases are in tension.

In Mossberg, the court explains that there was not “judicial imprimatur” because the case was voluntarily dismissed by the parties under R.41(a)(1).  In distinguishing from prior cases where courts had dismissed cases on non-merits grounds, Judge Hughes writes “[i]n this case, there was no such final court decision [because a] properly filed Rule 41(a)(1)(A)(i) voluntary dismissal becomes effective immediately upon plaintiff’s filing of the notice of dismissal. . . . Because there is no final court decision here, Timney cannot be a prevailing party for purposes of attorney’s fees under § 285.”

Keith also involved a voluntary dismissal under R.41(a)(1) and did not require a court order. Judge Hughes explained this as part of his decision:

In April 2017, the parties filed a stipulation of dismissal with prejudice pursuant to Rule 41(a)(1)(A)(ii). Such a dismissal requires no court order.

In his decision in Keith, however, Judge Hughes held that the voluntary dismissal without a judicial statement counted as a judgment for attorney fees purposes under Fed. R. Civ. P. 54(d)(2)(A).

Judge Hughes should have included a statement in Mossberg distinguishing Keith. There are two basic ways to distinguish these: (1) Keith focused on the “judgment” language found in R. 54(d) while Mossberg focused on the “prevailing party” language of 285. That distinction is strictly true, but both judgment and prevailing party indicate a sense of judicial action and the court offers no reason why that element of the analysis should be different for the two different statutes. (2) A second way to distinguish the cases is that Keith was a dismissal with prejudice; while Mossberg was without prejudice.  The dismissal with prejudice is accompanied by substantial judicial action if the parties ever attempt to relitigate; while the dismissal without prejudice is seen as a full reset.

= = = = =

As you might guess from the parties, the case involves a trigger assembly for a firearm.

They’re Alive: Federal Reserve Banks are “Persons” under the AIA

Patent

by Dennis Crouch

Over the past couple of decades, some banks have been making efforts to appear more personal & humane.  All that has come to fruition with the Federal Circuit’s decision in Bozeman Financial LLC v. Federal Reserve Bank of Atlanta, et al.  In its opinion the court explained that yes, the Federal Reserve is a person too — at least with regards to the right to file an inter partes review (IPR) or post grant review (PGR) petition.

The AIA permits “a person who is not the owner of a patent” to petition for IPR/PGR requesting cancellation of a patent. In 2019, the Supreme Court took-up a case where the US Postal Service (USPS) had filed for review of a patent owned by Return Mail, Inc.  Return Mail, Inc. v. U.S. Postal Serv., 139 S. Ct. 1853 (2018).  In its decision, the Supreme Court held that the USPS is not a person under the statute. The court stuck to its “longstanding interpretive presumption” that Congress’s use of the term “person” does not “include the sovereign.”

In the present case, the twelve Federal Reserve Banks jointly petitioned the USPTO to challenge Bozeman’s U.S. Patent Nos. 6,754,640 and 8,768,840. The PTAB complied and cancelled all of the claims — finding them ineligible under Section 101.

On appeal, the patentee asked that the entire case be thrown-out under Return Mail. However, the Federal Circuit refused — finding that the Federal Reserve Banks are sufficiently separate and distinct from the United States Gov’t.

The Federal Reserve Banks were established as chartered corporate instrumentalities of the United States under the Federal Reserve Act of 1913. Unlike the Postal Service, which was at issue in Return Mail, the Banks’s enabling statute does not establish them as part of an executive agency, but rather each bank is a “body corporate.”  Like any other private corporation, the Banks each have a board of directors to enact bylaws and to govern the business of banking. Moreover, the Banks may sue or be sued in “any court of law or equity.”  . . .

The Banks are not structured as government agencies. The Banks do not receive congressionally appropriated funds. 12 U.S.C. § 244. No Bank official is appointed by the President or any other Government official. 12 U.S.C. § 341. Moreover, the government exercises limited control over the operation of the Banks. Instead, the “direct supervision and control of each Bank is exercised by its board of directors.” 12 U.S.C. § 301. And the Banks cannot promulgate regulations with the force of law. Scott v. Fed. Reserve Bank, 406 F.3d 532, 535 (8th Cir. 2005). For these reasons, we conclude that the Banks are distinct from the government for purposes of the AIA. We recognize that there may be circumstances where the structure of the Banks does not render them distinct from the government for purposes of statutes other than the AIA. For purposes of the AIA, however, we conclude the Banks are “persons” capable of petitioning for post-issuance review under the AIA. The Board therefore had authority to decide the CBM petitions at issue here.

Note here that the court did not mention the Fed Reserve Board of Governors – whose members are appointed by the president – or the fact that the Board of Governors appoint a substantial portion of the directors of each bank.  The outcome here is also interesting to consider with respect to the corporate structure of various public universities around the country.

Moving on to the merits, of the eligibility decision, the Federal Circuit affirmed that the claims were directed to the abstract ideas of “collecting and analyzing information for financial transaction fraud or error detection” (‘840 patent).

(more…)

Guest Post: Out of the Blue: The Federal Circuit Devises a New Rule for Color Marks

Patent

Guest post by Christine Haight Farley (Professor, American University Washington College of Law and Faculty Director, Program on Information Justice and Intellectual Property).

The Court of Appeals for the Federal Circuit has held that color marks on product packaging can be inherently distinctive. On April 8, 2020, the court issued its opinion in In re: Forney Industries, Inc. It stated that “a distinct color-based product packaging mark can indicate the source of the goods to a consumer, and, therefore, can be inherently distinctive.”

Leaving aside the circularity of that statement—if it’s distinct it can be distinctive?—this holding lowers the bar for the acquisition of exclusive rights over colors. For the first time, color marks are instantly protectable (when used in commerce as a mark) and need not wait until they achieve secondary meaning, so long as they are used on packaging.

Because this ruling comes from the Federal Circuit it controls the how the Trademark Office deals with applications for color marks. Companies that want to acquire exclusive rights in colors now have a blueprint for how get a registration quickly: apply for a product packaging mark. So companies like Christian Louboutin should make those shoeboxes red!

The opinion was authored by Judge O’Malley joined by Dyk and Chen. The court reversed the TTAB, which had affirmed the trademark examining attorney’s refusal to register Forney’s mark.

In its use-based application (Serial No. 86269096), Forney identified its mark as a “color mark.” The mark, represented below, was applied for accessories and tools for welding and machining and described as follows: “[t]he mark consists of a solid black stripe at the top. Below the solid black stripe is the color yellow which fades into the color red. These colors are located on the packaging and or labels.”

Because Forney sought to register the mark without showing secondary meaning, the Examining Attorney refused registration on the principle register. Affirming, the TTAB, in a precedential opinion by Kuczma, held that “a color mark consisting of multiple colors applied to product packaging is not capable of being inherently distinctive.” It stated that Supreme Court precedent does not distinguish between color marks for products and color marks for product packaging; both require secondary meaning to be registrable.

Not a Gray Area

The Federal Circuit’s opinion reads like it thought it had carte blanche to write the rules in this area. It stated that “[t]he Supreme Court has [] provided several data points on inherent distinctiveness of trade dress.” (emphasis added) I’ve certainly never thought of the Supreme Court’s trilogy of cases on trade dress as data points; I always thought they were precedent. It later referred to these cases as “guideposts.”

Surprisingly, the Federal Circuit stated that “[a]lthough Qualitex implied that a showing of acquired distinctiveness may be required before a trade dress mark based on color alone can be protectable, it did not expressly so hold.” (emphasis added) This is just flatly wrong. The Qualitex Co. v. Jacobson Products Co. court did not “imply” the rule at all; it set it out in black and white:

over time, customers may come to treat a particular color on a product or its packaging … as signifying a brand. And, if so, that color would have come to identify and distinguish the goods–i.e. to “indicate” their “source”–much in the way that descriptive words on a product … can come to indicate a product’s origin.

In its subsequent decision in Wal-Mart Stores, Inc. v. Samara Brothers, Inc., the Court reconfirmed its rule: “with respect to at least one category of mark— colors—we have held that no mark can ever be inherently distinctive.” It also stated: “In Qualitex, . . . [w]e held that a color could be protected as a trademark, but only upon a showing of secondary meaning.” Nope, no innuendo.

Coloring Outside the Lines

The Federal Circuit stated that “Forney’s multi-color product packaging mark is more akin to the mark at issue in Two Pesos than those at issue in Qualitex.” That’s an odd statement given that the mark at issue in Two Pesos, Inc. v. Taco Cabana, Inc. was a restaurant, while the mark at issue in Qualitex was, wait for it, … a color! But the point here was that the Federal Circuit was judging Forney’s mark as a product packaging mark, as in Two Pesos, and not a product design mark, as in Qualitex. And that was its error.

Yes, Qualitex involved a product design mark, but the rule it announced was about color marks, not product design marks. Again, it stated: “over time, customers may come to treat a particular color on a product or its packaging … as signifying a brand. And, if so, that color would have come to identify and distinguish the goods.” (emphasis added). In anticipating color on “packaging,” the court made clear the holding was about color, not product design.

Black Sheep

The Federal Circuit’s decision here creates a new rule for color marks in product packaging. Although it states that it is “not the only court to conclude that color marks on product packaging can be inherently distinctive,” even the case it cites doesn’t support its new rule. It cites a 10th Circuit decision (Forney Industries v. Daco of Missouri), but that court explicitly stated “we hold that the use of color in product packaging can be inherently distinctive … only if specific colors are used in combination with a well-defined shape, pattern, or other distinctive design.” (emphasis added). The Federal Circuit stated that the 10th Circuit was “considering a mark very similar to the one at issue here,” but that statement may have involved a bit of whitewashing because the 10th Circuit case involved the very same mark owner and the same mark! The only difference was that the mark was described with more definition in the 10th Circuit case, and the court still denied protection.

Red Flag

To the extent this decision is read to hold that color marks on product packaging can be inherently distinctive; it is at odds with both Qualitex and Wal-Mart. Does that make it ripe for reversal by the Supreme Court? While decisions by the Federal Circuit often make the Supreme Court see red, the Court only grants cert. in trademark cases once in a blue moon. The government, however, has a strong record of having its cert. petitions granted. Recall that most doubted cert. would be granted in Brunetti. Another question is whether the government will even petition for cert. or instead decide not to go chasing rainbows.

True Colors

Is there a narrower reading of this decision? Perhaps the holding is only that certain multi-color product packaging marks that are sufficiently definite can be inherently distinctive. As a policy matter, a single color product design mark is much more problematic for competition than a multi-color product packaging mark is.

Even were the holding so limited, it still begins to undermine the policy orientation of Wal-Mart. It’s hard not to understand Wal-Mart as a course correction. Two Pesos’s holding that trade dress can be inherently distinctive did not foresee any of the problems it created. Although Qualitex further extended trade dress to include color, it did claw back a requirement of secondary meaning. The Wal-Mart Court finally saw the policy mess created by Two Pesos. It meant to build on Qualitex’s limitation, not scale it back. Qualitex saved colors from being inherently distinctive, and Wal-Mart saved product design. The Federal Circuit’s decisions pushes in the opposite direction, by narrowing Qualitex’s carve-out.

Unfortunately, the Federal Circuit is not clear that that its new rule is limited to multi-color marks. It simply states: “we hold that color marks can be inherently distinctive when used on product packaging, depending upon the character of the color design;” and “a distinct color-based product packaging mark can indicate the source of the goods to a consumer, and, therefore, can be inherently distinctive.” Requiring a color mark to be “distinct” is not filling any gaps left open by Qualitex, which specifically sated that the green-gold color was distinct for dry cleaning press pads. If the court had in mind a particular kind of color mark, it missed a golden opportunity to say so.

The rationale for both Qualitex and Wal-Mart was that, unlike product packaging, neither color nor product design prompt consumers to “equate the feature with the source.” Is there reason to believe that either multiple colors function more like product packaging than a single color, or that color on a product conveys something different than color on a package? If so, what do we make of the fact that Forney has been using its multi-color mark on packaging for more almost 30 years and yet chose to litigate in two different courts of appeal rather than simply demonstrating its secondary meaning?

More opinions coming; and Patenting the Patenting Process

Patent

The Federal Circuit has an internal practice of only issuing R.36 affirmances-without-opinion in cases where the court holds oral arguments.  Most of the oral arguments have been cancelled for the court’s April sitting. The result then is that either (1) the court is going to write a lot more opinions or (2) the court will shift its practice to now start issuing no-opinion judgments even without oral arguments.

Todays short decision in In re Thomas (Fed. Cir. 2020) (per curiam) suggests to me that the court will be writing the opinions. Douglass Thomas is a patent attorney and his claimed invention is a “computer-implemented method for notifying users having patents of subsequent publications that reference the patents.”  The examiner rejected the claimed invention as ineligible and that decision was upheld by the PTAB (along with finding the claims anticipate/obvious).

The Federal Circuit has now affirmed the rejections — offering the following 1-paragraph analysis:

Applying the two-step framework set forth in Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014), the Board found that the claims are directed to the abstract idea of “alerting by notification message notice of a new publication indicated as relevant to the notifiee.” The Board also found that the claims do not contain an inventive concept beyond the abstract idea. We agree with the Board on both points. We therefore adopt the Board’s reasoning in its decision and its decision denying rehearing.

Slip Op.

Despite being short and lacking depth of analysis. The decision is helpful in a number of ways — most importantly has to do with the potential alternate reasons for affirmance. If the case had been simply affirmed without opinion then we would not know if the court affirmed eligibility or instead on obviousness/anticipation. That would allow Thomas to avoid issue preclusion and potentially raise the same arguments again in this or a different case.  The court’s 1-paragraph will foreclose that avenue.

Attorney Fees Following Settlement

Patent

Keith Manufacturing Co. v. Larry D. Butterfield (Fed. Cir. 2020)

This is another prevailing-party case following a settlement. 

Butterfield is a former employee of Keith Mfg.  After leaving the company, Butterfield filed a patent application that eventually resulted in US9126520. The patent covers a mechanism for unloading trailers — which also happens to be the focus of Keith’s business.  The lawsuit alleges various causes of actions, including trade secret misappropriation, breach of contract, invalidity, inventorship correction, etct.

Butterfield issued a covenant-not-to-sue Keith on the patent; and the parties then settled the case. The lawsuit officially ended with the filing a stipulation of dismissal with prejudice pursuant to Rule 41(a)(1)(A)(ii) (voluntary dismissal without court order based upon agreement of the parties).

The stipulated dismissal did not mention costs or attorney fees, and Butterfield subsequently moved for attorney fees under the Patent Laws (section 285) as well as FRCP 54(d) and Oregon state statute.

The district court rejected the request for fees — holding that a stipulation-of-dismissal without a court order does not count as a “judgment” and that R.54(d) implicitly requires a “judgment” as a prerequisite to awarding fees. No judgment; no attorney fees. In particular, the rule states that the motion for attorney fees must be filed within “14 days after the entry of judgment” and must also “specify the judgment.”

On appeal, the Federal Circuit has reversed — explaining that the use of “judgment” in R.54(d) has the “prudential purpose” of avoiding R.54(d) requests of attorney fees all throughout the litigation and the subsequent piecemeal appellate litigation.  Rather, in this case, “judgment” in the provision should be seen as including “dismissal.” Thus, on remand the district court may now consider the attorney fee motion.

Note – the Federal Circuit outcome here is the same as that reached by the 10th Circuit in Xlear, Inc. v. Focus Nutrition, LLC, 893 F.3d 1227 (10th Cir. 2018) (Lanham Act case).

A method of removing “the plank in your own eye”

Patent

In his Sermon on the Mount, Jesus reportedly provided a set of anti-hypocrite statements all centered around cleaning-out human eyeballs:

 3 “Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye? 4 How can you say to your brother, ‘Let me take the speck out of your eye,’ when all the time there is a plank in your own eye? 5 You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.

Matthew 7:3-5 (NIV).  The Federal Circuit’s new decision in Myco Industries v. BlephEx, LLC (Fed. Cir. 2020), offers a modern and less-metaphorical treatment of the same issues.

BlephEx has a patent on a particular method using a swab to remove debris from a human eye. U.S. Patent No. 9,039,718 (treatment method for blepharitis).  Myco is an unwelcome newer competitor with its AB (anterior blepharitis) MAX product.  However, rather than suing for infringement, BlephEx apparently started threatening lawsuits against both Myco and also Myco’s customers (typically opthalmic/optometric medical professionals).

Myco filed suit – asking for a declaratory judgment of no infringement and also invalidity as well as seeking unfair-competition damages for bad-faith patent infringement statements by BlephEx.   In the lawsuit, Myco also asked for and was a preliminary injunction against BlephEx’s ongoing speech. In particular, the district court enjoined BlephEx or its people

from making allegations of patent infringement and from threatening litigation against [Myco’s] potential customers.

Grant or denial of a preliminary injunction is immediately appealable and BlephEx appealed.  The Federal Circuit has now reversed the lower court decision — holding that the injunction was an improper limit on speech.

The Federal Circuit has previously held that preliminary injunctions preventing a company from “communicating its patent rights” requires a showing of “bad faith” supported by “a finding that the claims asserted were objectively baseless.” “An asserted claim is objectively baseless if no reasonable litigant could realistically expect success on the merits.”  The basic idea here is that someone with a patent has a legal right to communicate with infringers and others to tell them “stop and/or get a license.”  Note here that the “bad faith” requirement goes well beyond the usual “likelihood of success on the merits” prong for preliminary relief.

Here, the reversal was easy because the district court did not consider whether the BlephEx’s statements were baseless and in bad faith. “This alone warrants reversal.”

Speech is not to be enjoined lightly. Here, there is not even a finding, let alone a finding supported by evidence and a correct view of the law, that the speech restrained was either false or misleading. The district court abused its discretion when it granted a preliminary injunction enjoining BlephEx from making allegations of patent infringement without a finding of bad faith and with no adequate basis to conclude that allegations of patent infringement would be false or misleading. It also abused its discretion in enjoining BlephEx from threatening Myco’s potential customers with litigation where there was not only no finding of bad faith but no evidence in the record that any such threats had even been made. We therefore reverse and vacate the district court’s preliminary injunction, and remand.

Allegations against the doctors: 35 USC 287(c) immunizes “a medical practitioner’s performance of a medical activity” from being charged with infringement under 35 U.S.C. 271(a) or (b).  Under the statute, the patentee will not have a case against the medical practitioner or against a related health care entity.  Judge O’Malley – who authored the opinion here – would likely quibble with my aforementioned statements.  In the opinion she writes that “[t]he plain text of the statute does not state that a medical practitioner is ‘immune from infringement,’ . . . [Rather, t]he act provides immunity to certain infringers, but it does not render them non-infringers.” The Judge’s point here is really that there might be some other third parties who are liable for indirect infringement based upon the medical practitioner’s underlying infringement.

In any event, the court’s ruling here is that it is OK to tell Doctors that they are infringing and that you may “take action” to stop the infringement. Even though you can’t sue the doctor, you might sue the supplier for contributory infringement.

Before finishing, the court also took the district court to task for faulty claim construction — offering the kind “reminder” that “limitations from different dependent claims should not be interpreted as if they were general statements of disavowal from the written description.”

= = = =

As with many Judge O’Malley decisions, this one has several other important learning points.  One of note is that BlephEx apparently did not suggest to the lower court that Bad Faith was needed for a preliminary speech injunction. On appeal, Myco argued waiver.  The Federal Circuit disagree — holding that “there can be no waiver here of the Judge’s duty to apply the correct legal standard.”

New Job Postings on Patently-O

Patent

We’re in a strange job market in the USA.  While many areas have virtually stopped working, other areas are busier than every. Certainly, inventors have not stopped inventing.  The COVID-19 global pandemic has shocked us all into new ways of thinking and offered glimpses into new problems to be solved.  Here are some new job listings on Patently-O Jobs:

Submit your own job posting here: JOBS SUBMISSION.

En Banc Denial.

Patent

As courts continue to streamline their operations, the Federal Circuit has denied three petitions for en banc rehearing:

  • 19-1177 Koninklijke Philips N.V. v. Google LLC (obviousness: propriety of using a prior art reference to show ‘general knowledge’ and thus avoid the the need to consider limitations on combining prior art.)
  • 18-1768 Polaris Innovations Limited v. Kingston Technology Co. Inc. (Arthrex redux)
  • 19-2026 Mirror Imaging, LLC v. Fidelity Information Services (Arthrex redux)

The question I’m posing in civil procedure: What are other ways that we can streamline our legal process to still provide equal protection and substantial justice while avoiding the current difficulties created by COVID-19? Can we use this as an inflection point to build a better system?

Comcast v. ITC and Rovi: Supreme Court petition.

Patent

The USITC sided with Rovi against Comcast and barred importation of the set top boxes that Comcast uses for its X1 cable service.  Comcast has now petitioned its case to the U.S. Supreme Court with three questions:

  1. Should the case be vacated as moot since the patents are now expired?United States v. Munsingwear, Inc., 340 U.S. 36 (1950).
  2. The statute focuses on “articles that  . . . infringe.” Here, the accused set-top boxes themselves don’t infringe and are not infringing when imported.  The infringement only occurs when used by customers.   What gives?
  3. The ITC found that Comcast did not actually import the set top boxes, but should still be liable for “importation” of the boxes.  What gives?

[Petition]  The petition explains that the ITC’s approach here has shifted over the past few years:

The Commission has increasingly asserted authority over purely domestic patent infringement that is the province of Article III courts and juries. Here, the Commission issued an order banning importation of set-top boxes that are integral to Comcast’s X1 cable service, even though those boxes are staple articles of commerce that infringe no patents; the purported inducement and infringing uses occurred domestically after importation; and Comcast did not itself import the boxes.

Id. The petition repeatedly notes that ITC actions allow patentees “to evade limitations on injunctive relief in litigation” setup by the Supreme Court in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

CARES Act – Patent Deadline Extensions for COVID-19 Related Delays

Patent

The CARES Act (March 27, 2020) provides the USPTO Director with authority to extend deadlines to account for our current national emergency regarding the COVID-19.  Dir. Iancu today announced a set of extensions noting that “we are working to provide as much relief as possible to our stakeholders, consistent with our ability to maintain the USPTO’s fee-funded operations. We are especially mindful of the outsized impact on small businesses and independent inventors, and have provided additional relief for these groups. Ultimately, our goal is to ensure not only that inventors and entrepreneurs can weather the storm, but that they can hit the ground running once it passes.”

The basic rule is that most PTO prosecution deadlines March 27 to April 30 are eligible for a 30-day extension if filed with a statement that the delay “is due to the COVID-19 outbreak” and some party involved with the prosecution “was personally affected.”  Here, the personal impact can apply to applicants, patent owners, 3rd party requesters, inventors, practitioners, etc. This list presumably includes non-human corporate owners. The “personally affected” clause is quite broad and includes office closures, cash flow interruptions, inaccessibility of files, travel delays, family illnesses, or other non listed reasons.

Read the rules: NOTICE of waiver of patent-related timing deadlines.

Note, the extension does not cover original filing deadlines; PCT or national stage filing deadlines; Deadlines for filing a non-provisional application following a provisional; or deadline for filing an inter partes review petition.

Finally, the notice says “Yes” — “The USPTO is open for the filing of patent documents and fees.”

Particular questions: Covid19PatentsRelief@uspto.gov or OPLA (571) 272-7704.

Teaching Online, Copyright, and Queen Anne’s Revenge

Patent

Guest post by Kevin L. Smith, Dean of Libraries at the University of Kansas

On March 23, 2020, the Supreme Court announced a decision in one of the three copyright cases before it this term, Allen v. Cooper, a case that involves alleged copyright infringement by the state of North Carolina for using some video shot by a private videographer of the salvage operation for Blackbeard’s notorious pirate ship, the Queen Anne’s Revenge. Predictably, the Justices cannot resist word play about piracy and copyright infringement. The truth is that the case is really about sovereign immunity, so the jokes might have more appropriately focused on Queen Anne. The question presented in the case was whether a state can be sued in federal court for copyright infringement, and, specifically, was the effort to allow such lawsuits through the Copyright Remedies Clarification Act a valid exercise of Congressional authority.

Both these questions received a resounding “no” in the unanimous opinion. The Court found that Congressed did not have authority, either under its Article 1 power to grant patents and copyrights or under section 5 of the 14th Amendment, to abrogate sovereign immunity to create state liability for copyright infringement. Patent practitioners will not be surprised that much of the discussion focused on the Court’s 1999 precedent in Florida Prepaid. Indeed, most of the debate in the case, which feature a majority opinion and two different concurrences, focused on the amount of deference due to established precedent, and it seems pretty clear that much of the background in this discussion are positions being established regarding Roe v. Wade.

To me the big question coming out of this case is how much it changes the landscape for teachers working in public schools or universities. Can we all breathe a sigh of relief and no longer worry about copyright infringement? I want to suggest that this decision doesn’t really change much, and that educators employed by states should pretty much continue to do what they are doing, relying on fair use but not throwing all caution to the wind. Two important points occur to me.

  1. There is still injunctive relief available against a state entity for continuous violations of federal law, under the Ex Parte Young doctrine. The long running lawsuit by three academic publishers against Georgia State University is premised on this doctrine, and, even though the publishers seem to have largely lost on fair use grounds, this case that is now as old as some fine Scotch is still costing GSU time and money. So simply relying on a “go ahead, try to sue me” attitude still seems unwise.
  2. Employees of non-profit educational institutions also have another protection from liability, in section 504(c)2 of the U.S. copyright law. This statutory defense remits all statutory damages – the biggest bite available to most copyright plaintiffs – for such employees who have a good faith belief that their actions were fair use. If this provision is to mean anything, it must mean that the revision applies even (indeed, only) when that belief was mistaken, so that a court has gotten to the issue of damages. In effect, this provision has already widened the scope for fair use decisions made by the very teachers and faculty who might think they could benefit from the ruling in Allen v. Cooper.

So maybe it is only the folks who represent state institutions who need to pay much attention to this case. It is an arrow in their quiver of defenses to raise if they get sued. But teachers and faculty at those institutions should go on as before, making smart fair use decisions, even as they recognize that both Congress and the Court have given them some extra breathing room.

Fair use is crafted for the benefit of educators and researcher. The examples of the kinds of activities that might be fair use makes this clear, since five of the six examples are education related: criticism, comment, teaching, scholarship, and research. These examples are not per se fair use; the factor analysis still must be applied. But they do indicate that Congress intended to give educators a great deal of latitude in making fair use decisions, as well as a reduced risk, based on the 504(c)2 provision discussed above.

As most educational institutions move to online teaching during this period of efforts to contain the outbreak of COVID-19, teachers and faculty should keep this latitude in mind. Our first priority should be providing the best education to students in the online environment, and doing it as expeditiously and efficiently as possible. Many publishers of academic materials are moving to make the resources they publish widely available. In my own copyright law class, I use an open casebook, but also asked my students to obtain and read a monograph from MIT Press, and at our request, the Press gave each student a link to download a no-cost copy of the book, in case they did not have the purchased copy with them when they were told to stay at home. I mention this to illustrate that publisher are thinking about these issues with us, and have tried to be helpful. It is also the case, however, that sometimes we will have to rely on fair use, and that is OK. With or without the Supreme Court’s ruling in Allen v. Cooper, fair use was made for us, and it was made flexible precisely so that we could respond to changing circumstances.

Recently, a group of copyright specialists in academic libraries, many, but not all of whom are lawyers, drafted a statement about fair use in a time of emergency, which can be found online with a list of signers and those who have endorsed it (full disclosure: I am one of the signers). This statement recognizes a long-acknowledged fact about fair use — it is extremely driven by circumstances – and makes an effort to assess how the extraordinary circumstances under which teachers and academics are now trying to deliver their courses might impact a fair use analysis. It really simply serves to remind us that fair use is flexible, adaptable, and designed to support teaching and research. Whether or not our state institutions can be liable for copyright infringement damages (and the Court has now told us that they cannot be), fair use remains our most useful and productive legal tool in this enterprise.

Claiming Super-Augmenting a Persona to Manifest a Pan-Environment Super-Cyborg

Patent

Motupalli v. Iancu (Supreme Court 2020)

This pro se petition to the Supreme Court has a number of major problems, but does ask one interesting question:

Whether 35 U.S.C. §112 [the enablement doctrine] is satisfied when the specification of a patent application is enabling to an interdisciplinary team of two or three persons, working in cooperation?

[petition].  The statute is written as directed toward a single person: “enable any person skilled in the art to which it pertains.” But, a project of this size is unlikely to be understandable by any single human (See below).

The case itself is a nonstarter if only based upon the title of the invention at issue:

Necktie-imitating Persona Extender / Environment-Integrator and Method for Super-Augmenting a Persona to Manifest a Pan-Environment Super-Cyborg or Wedded Avatar of Christ with eThrone for Global Governance

See US Pub No. 20120253517.

 

Motupalli’s full biography can be found on Amazon.com:

Oral Arguments at the Federal Circuit (via Telephone)

Patent

The Federal Circuit is set to start holding oral arguments again for the week of April 6, 2020. The arguments not be in-person but rather conducted via telephone (audio only).  The currently conceived setup won’t allow non-parties to listen-in on the conversation but the court is recording oral arguments and has indicated that it “will continue to release same-day audio for all arguments.” Additionally, a substantial number of scheduled arguments have been cancelled with a notice that:

The panel of judges that will decide this appeal has determined that oral argument is unnecessary. See Fed. R. App. P. 34(a)(2)(C).

The cited rule of appellate procedure indicates that a party’s request for oral arguments may be denied based upon unanimous agreement from the assigned panel of three judges agree that “oral argument is unnecessary” because:

(A) the appeal is frivolous;

(B) the dispositive issue or issues have been authoritatively decided; or

(C) the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument.

Fed. R. App. Proc. R. 34(a)(2).

The rules of appellate procedure allow for use of “physical exhibits other than documents” during oral arguments. R. 34(g). That’s probably not happening either.

“A single inartful statement in the prosecution history”

Patent

Genentech v. Iancu (Fed. Cir. 2020)

Hospira, Samsung Bioepis, Celltrion, and Pfizer each filed one or more inter partes review (IPR) petitions challenging Genentech breast-cancer slow-down patents: US7846441 and US7892549.  The patents recognize that some breast cancer patients make too much ErbB2 protein.  The offered solution is administration of an antiErbB2 antibody and “a taxoid, in the absence of an anthracycline derivative.”  The claims do not require a specific dosing except that it be adequate to do the job without causing major problems:

… in an amount effective to extend the time to disease progression in said human patient, without increase in overall severe adverse events.

‘441 patent, claim 1 (elsewhere claimed “effective amount”). The Board found a number of the claims invalid and Genentech appealed.  None of the petitioners participated in the appeal to defend the Board’s decision as part of a settlement with Genentech, but the USPTO intervened.

The question on appeal is the meaning of the claimed “amount effective to extend the time to disease progression.”  The problem for the patentee is that the specifications do not define the required comparisons. During prosecution the examiner originally rejected “extend the time to disease progression” as indefinite after explaining that the specification “never set[s] forth what the extension of time to disease progress is relative to.”

After receiving the indefiniteness rejection during prosecution, the patent applicant did not amend the claims but rather explained that “clearly” the effectiveness of the claimed combination should be compared with the baseline “relative to an untreated patient.”  Later, during the IPR, the Board used the statement to construe the claim term as stated and find the claim invalid as obvious.

Genentech argues that its claims should not be limited “Based on a single inartful statement in the prosecution history.” In particular, Genentech argues that the claimed improvement in disease progression should be compared to treatment with paclitaxel (the taxoid alone) – not with an untreated patient.  And, that in that framework the improvement in outcomes would have been nonobvious.

On appeal, the Federal Circuit has affirmed the PTAB claim construction and the obviousness determination.  The appellate panel noted that Genentech might have an argument except for the fact that “[t]he specification does not … expressly define the disputed terms.” In its indefininteness rejection, the examiner asked particularly — is the time “relative to untreated patients? Pateients who received antibody or taxoid alone? …”  The patentee then responded “untreated patients” and is now arguing that the correct answer should have been “taxoid alone.”

Genentech expressly rejected this comparator during prosecution and instead clearly stated that it was effectiveness relative to an untreated patient. Genentech provided an unequivocal, direct response to the examiner’s inquiry—that the term “extend the time to disease progression” was compared to an untreated patient.

Slip Op.  The response discussed above was provided in the ‘441 patent prosecution history.  In the appeal, the Federal Circuit also agreed that the same construction should apply in the ‘549 patent “which shares a specification and is in the same patent family.” “We see no error in the Board’s constructions.”

 

Patent Abandonment

Patent

The US is reporting more new jobless claims last week than for the entire prior year — ending a 10-year streak of month-by-month “job growth” that began shortly after Pres. Obama took office and has continued for the past three years under Pres. Trump.

In addition to cutting employees, businesses are likely to cut patents. Russ Krajec offers some preliminary numbers on abandonment of rejected claims — finding that the number for the first half of March 2020 show an abandonment rate of double normal.

Effects of COVID-19 on Patents – Twice The Number of Abandonments

 

CARES Act Text – PTO Related Deadlines

Patent

The following is the text of the CARES Act as it relates to the USPTO deadlines. [Full Text of the Bill].

SEC. 12004. 

(a) IN GENERAL.—During the emergency period described in subsection (e), the Director may toll, waive, adjust, or modify, any timing deadline established by title 35, United States Code, the Trademark Act, 19 section 18 of the Leahy-Smith America Invents Act (35 U.S.C. 321 note), or regulations promulgated thereunder, in effect during such period, if the Director determines that the emergency related to such period—

(1) materially affects the functioning of the Patent and Trademark Office;
(2) prejudices the rights of applicants, registrants, patent owners, or others appearing before the Office; or
(3) prevents applicants, registrants, patent owners, or others appearing before the Office from filing a document or fee with the Office.

(b) PUBLIC NOTICE.—If the Director determines that tolling, waiving, adjusting, or modifying a timing deadline under subsection (a) is appropriate, the Director shall publish publicly a notice to such effect.

(c) STATEMENT REQUIRED.—Not later than 20 days after the Director tolls, waives, adjusts, or modifies a tim13 ing deadline under subsection (a) and such toll, waiver, adjustment, or modification is in effect for a consecutive or cumulative period exceeding 120 days, the Director shall submit to Congress a statement describing the action taken, relevant background, and rationale for the period of tolling, waiver, adjustment, or modification.

(d) OTHER LAWS.—Notwithstanding section 301 of the National Emergencies Act (50 U.S.C. 1631), the au21 thority of the Director under subsection (a) is not contin22 gent on a specification made by the President under such section or any other requirement under that Act (other than the emergency declaration under section 201(a) of such Act (50 U.S.C. 1621(a))). The authority described in this section supersedes the authority of title II of the National Emergencies Act (50 U.S.C. 1621 et seq.).

(e) EMERGENCY PERIOD.—The emergency period described in this subsection includes the duration of the por5 tion of the emergency declared by the President pursuant to the National Emergencies Act on March 13, 2020, as
7 a result of the COVID–19 outbreak (and any renewal thereof) beginning on or after the date of the enactment of this section and the 60 day period following such duration.
(f) RULE OF CONSTRUCTION.—Nothing in this section may be construed as limiting other statutory authorities the Director may have to grant relief regarding filings or deadlines.

(g) SUNSET.—Notwithstanding subsection (a), the authorities provided under this section shall expire upon the expiration of the 2-year period after the date of the enactment of this section.

(h) DEFINITIONS.—In this section:

(1) DIRECTOR.—The term ‘‘Director’’ means the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

(2) TRADEMARK ACT.—The term ‘‘Trademark Act’’ means the Act entitled ‘‘An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes’’, approved July 5, 1946 (15 U.S.C. 1051 et seq.).

(i) EMERGENCY REQUIREMENT.—The amount provided by this section is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.

Coronavirus Aid, Relief, and Economic Security (CARES) Act and the USPTO