All posts by Jason Rantanen

About Jason Rantanen

Jason is a Law Professor at the University of Iowa College of Law.

Federal Circuit Dataset & Stats: January 2023 Update

By Jason Rantanen

It’s time for the January 2023 Federal Circuit statistics update! As I’ve done for the last few years, below I provide some statistics on what the Federal Circuit has been doing over the past year. These charts draw on the Federal Circuit Dataset Project, an open-access dataset that I maintain that contains information on all Federal Circuit decisions and docketed appeals.  While previous versions of the dataset have been limited to merits decisions, this year we began including non-merits terminations as well.  Currently, all non-merits terminations from 2022 are included in the dataset.  We’ll be working backwards to add terminations from earlier years.

One of my goals with this dataset is to make it publicly accessible so that anyone can use it in their own research. A complete copy of this year’s release is archived at https://dataverse.harvard.edu/dataverse/CAFC_Dataset_Project.  In addition, you can access the dataset through a user interface via https://empirical.law.uiowa.edu and generate your own subsets and graphs. A copy of the codebook is available at these locations as well. In addition, if you are a researcher who would like help using the dataset, please reach out to me – I’m happy to help out.

Onto the data!

Decision Numbers and Origins

Figure 1

Figure 1 shows the number of Federal Circuit opinions and Rule 36 summary affirmances by origin since 2010. These represent individual documents (i.e.: a single opinion or Rule 36) rather than docket numbers (which is how the Federal Circuit reports its metrics).

Once again, the highest number of merits decisions arose from the PTO. Overall, however, there was a substantial drop in the number of merits decisions: 532 in 2022, as compared with 643 in 2021.  Decisions from all origins actually dropped slightly, but the biggest drop was in the number of decisions arising from the PTO was the main reason: 147 in 2022 as compared with 216 in 2021. The direct cause of fewer decisions isn’t a mystery: as shown below, there was a big drop in appeals docketed at the Federal Circuit in 2021. Fewer appeals means fewer appellate decisions.

Opinions vs. Summary Affirmances

Figure 2

Figure 2 shows the number of opinions versus Rule 36 summary affirmances arising from the District Courts and PTO. In terms of absolute numbers, the court issued the fewest Rule 36 summary affirmances in appeals arising from these origins in several years.  In relative terms, 21% of the decisions arising from the district courts were disposed of through a summary affirmance while 42% of the Federal Circuit’s decisions arising from the PTO were summary affirmances.

What about the type of opinion that the court is issuing? For precedential opinions, Figure 3 shows that this is one area in which things are about the same as last year: the court issued slightly more precedential decisions arising from the district courts than in 2021 (52 vs. 47), and slightly fewer precedential decisions arising from the district courts (29 vs. 33). Rather, the drop in decisions arising from the PTO mostly manifested in terms of fewer nonprecedential opinions.

Figure 3

What about compared to the court’s overall decisions?  The number of precedential opinions issued by the court in 2022 was almost exactly the same as in 2021: 162 in 2022 as compared with 164 in 2021. But it is a drop from 2014-2020. (Note that this figure does not include Rule 36 summary affirmances).

Figure 4

General dispositions

Figure 5

In contrast with 2021, at which the Federal Circuit affirmed district court decisions relatively frequently (79%), in 2022 the court affirmed-in-full in appeals from the district courts just 57% of the time. Even including partial affirmances, the rate was lower than in recent years: it affirmed in full or part just 75% of the time. (The purple line indicates the average 68% affirmance rate over the 12-year time period). As a reminder, these graphs do not include petitions for writs of mandamus. In contrast, the court continued to affirm the PTO’s decisions at about the same rate as it has in recent years, affirming in full in 78% of its decisions.

Docketed Appeals

Figure 6 shows the number of docketed appeals by origin. These are are appeals filed at the Federal Circuit — the precursor to any decisions.  As Figure 6 shows, there was a substantial drop-off in appeals filed in 2021, followed by an increase in appeals filed in 2022, especially in appeals from the district courts (339 appeals filled in 2022 as compared with 286 appeals in 2021) and from the PTO (489 appeals filed in 2022 as compared with 402 appeals filed in 2021). Given what happened in appeals this year, I’d expect an increase in Federal Circuit decisions in 2023, recognizing that it takes about 13 months on average from filing to decision.

Figure 6

In addition to providing a picture of what’s being filed at the Federal Circuit, the docket dataset also allows us to match up the Federal Circuit decisions to other datasets of district court and PTO data, such as the USPTO Patent Litigation dataset and the Stanford NPE Litigation Dataset. If you’re interested in doing a deep dive into these areas, my research team and I used this data in a few papers this year:

Miscellaneous Dockets

One category of data that is not included in the above graphs is the data on petitions for writs of mandamus and petitions for permission to appeal. As in past years, nearly all of the miscellaneous matters consisted of Petitions for Writs of Mandamus, with a few Petitions for Permission to Appeal.  Figure 7 shows the numbers of dispositions of petitions for writs of mandamus over time.

Figure 7

In 2022, the court granted in whole or part 11 petitions for a writ of mandamus; fewer than 2021 (18), but at just as high a rate (42%). As in past years, the grants arise exclusively from petitions arising from the district courts.   Jonas Anderson, Paul Gugliuzza & I talk about this in more depth in Extraordinary Writ or Ordinary Remedy: Mandamus at the Federal Circuit, 100 Wash. U. L. Rev. 327 (2022)  

Additional terminations

Beginning in February 2022, the Federal Circuit began making all terminations of appeals available on its website. This is a terrific decision and is responsive to concerns about “missing” decisions that Merritt McAlister and I have each written about. That said, as I wrote about in my examination of the Federal Circuit’s decisions, the Federal Circuit has historically done a pretty good job most making merits decisions (i.e.: “Opinions” and “Rule 36” summary affirmances) available on its website, so many of these additional terminations consist of appeals that are dismissed pursuant to Federal Rule of Appellate Procedure 42(b). I supplemented what was on the court’s website with a collection of the additional January and February 2022 terminations from PACER, so all of the terminations for 2022 are in there.

Using data about these decisions, I was able to put together a graph showing how these appeals were disposed of. This graph differs a bit from the Federal Circuit’s own statistics because it’s by document rather than docket number, and (2) it is for the calendar year rather than the fiscal year. The purpose is to provide a sense of what happens to appeals other than those that result in merits decisions.

Figure 8

Close to 2/3rds of appeal terminations occurred in the context of an opinion (49%) or Rule 36 summary affirmance (14%). Most of the remainder were dismissals (32%). Of the dismissals, 63% were voluntary withdrawals (generally under to FRAP 42(b)). The remaining dismissals are for a variety of reasons, but typically due to a failure to prosecute the appeal, failure to appeal within the relevant time period, or lack of appellate subject matter jurisdiction.

To download the data for yourself, visit the dataverse or go to http://empirical.law.uiowa.edu. I’ve also saved a copy of my Excel workbook with the graphs on the Dataverse archive. It contains the specific parameters that I used to generate these graphs.

Guest Post by Prof. Hrdy & Dan Brean: The Patent Law Origins of Science Fiction

Guest post by Camilla A. Hrdy, Professor of Intellectual Property Law at University of Akron School of Law, and Daniel H. Brean, Senior In-House Intellectual Property Counsel, Respiratory Care, Philips.

Are inventions described in works of science fiction patentable? The answer is usually no, and for good reason. Some of the most beloved fixtures of the genre—time machines, faster-than-light space travel, teleportation, downloading memories, copying a consciousness, etcetera—are impossible or not yet possible when described by the author. This sort of science fiction is not patentable because it cannot logically be enabled or have credible utility when the patent is filed.

For similar reasons, science fiction is rarely cited as prior art against later patent filings. Science fiction can qualify as prior art under § 102(a) as a “printed publication” or as “otherwise available to the public.” It can be especially useful as “obviousness” prior art because, to quote the Federal Circuit, a “reference that does not provide an enabling disclosure for a particular claim limitation may nonetheless furnish the motivation to combine, and be combined with, another reference in which that limitation is enabled.” Raytheon Techs. Corp. v. General Electric Company, 993 F.3d 1374 (2021). However, science fiction is unlikely to be cited during examination.[1] Examiners lack the time and energy to search for on-point science fiction where there is so much more (and better catalogued) prior art among patents and scientific publications. Applicants, for their part, are not required to disclose prior art that is not material to patentability or that is cumulative of other prior art they’ve already provided. See https://www.uspto.gov/web/offices/pac/mpep/s2001.html.

It may surprise you, then, to learn that the genre of science fiction is deeply indebted to patent law and patent theory. In our new paper, The Patent Law Origins of Science Fiction, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4291271, we show that science fiction as a literary form was originally premised on the idea that works of science fiction are like patents. They disclose useful technical information that can give readers a “stimulus” to perfect the invention and figure out how to make it work.

The person responsible for this comparison was the so-called “father” of science fiction, Hugo Gernsback. He started the first exclusively-science fiction magazine, called Amazing Stories, in 1926. The Hugo awards, given to the best works of science fiction and fantasy writing, are named after him.

Gernsback was also an inventor and serious scientific thinker in his own right. He died with over thirty patents to his name. In the early 1900s, he started a radio and electronics equipment company in New York. To support his business, he initially published catalogs for mail-order electrical components, but the catalogs soon morphed into full-sized magazines with titles like “Modern Electrics, marketed to inventors and amateur “tinkerers.” Hugo Gernsback, The Perversity of Things, Grant Wythoff ed. (University of Minnesota Press 2016). His magazines were full of information about patents and advice on patenting—which Gernsback deemed an essential step in the commercial success of any new invention.

At first, Gernsback started publishing science fiction stories—which he then called “scientifiction”—to fill space in his electrical magazines. These stories were sometimes little more than a few paragraphs of exposition about some speculative new device that might be used in the future, plugged into a generic adventure plot. For example, one story featured a genius from the future using (what we now call) “radar” to track down a Martian who had kidnapped the protagonist’s love interest in a Space Flyer. Despite the fictional elements, science and scientific plausibility were still all-important. Gernsback was fond of saying the recipe for good scientifiction was 25% science and 75% literature.

Readers loved it, and Amazing Stories was born. Gernsback knew he was on to something, and he frequently published editorials expounding on the virtues of scientifiction. These editorials, along with his unpublished manuscripts, reveal Gernsback’s theory that a good science fiction story is like a patent, but a much more “palatable” read. Although he did not articulate it in precisely the same terms, Gernsback’s justification for scientifiction echoes the language of patent law’s disclosure theory. Scientifiction, he wrote, provides both knowledge and “stimulus.”[2] It inspires “seriously-minded” readers to learn about science and technology, and it supplies the “inventor or inventor-to-be who reads the story” with “an incentive” to “realiz[e] the author’s ambition” by perfecting the author’s science fictional inventions in the real world. Gernsback often drew the analogy to patents quite explicitly. The science fiction author, in his framework, was “an original inventor,” like the named inventor on a patent. The readers who got the author’s invention to work were like “manufacturers” who buy patents and commercialize the inventions therein “with but a few changes.” They were just there to profit from the author’s grand ambitions.

Over time, Gernsback developed a crazy idea. If science fiction authors are “inventors” who inspire others to reduce their inventions to practice, then shouldn’t science fiction authors be able to get patents for their prescient descriptions of future inventions? And shouldn’t science fiction serve as prior art against other peoples’ patents? In 1952, just after Congress had modernized the Patent Act, Gernsback made these ideas public. In a speech he gave to the World Science Fiction Convention in Chicago, he proposed that Congress should reform patent law (again) to give science fiction authors the ability to apply for “Provisional Patents.”

Gernsback’s Provisional Patents were not at all like today’s provisional patent applications. Compare 35 U.S.C. § 111. His Provisional Patents would have given science fiction authors thirty extra years in which to demonstrate their science fictional inventions worked. If they could do so, the Provisional Patent would be converted into a normal patent, presumably in force for the full patent term (which at that time meant 17 years). Otherwise, it would be abandoned. This proposal was not adopted and, we presume, was never seriously considered.

In the same speech, Gernsback also proposed that authors and publishers should start identifying works of science fiction that contained “new and feasible” inventions, so that they could send these selected works to the patent office. Gernsback’s hope was that the patent office would be deluged with science fiction and have no choice but to start reviewing and citing science fiction more often as prior art. This idea had more grounding in current law than Gernsback’s Provisional Patents, but it was not adopted either. Mechanisms for getting prior art to the patent office have certainly improved since Gernsback’s time. But we still don’t send the patent office curated collections of science fiction.

Gernsback’s ideas were iconoclastic, and his proposal to make Provisional Patents available for inventions that are not yet reduced to practice is deeply troubling from a policy perspective. Science fiction authors who make reasonably accurate predictions about future technological developments would gain the ability to sue the very people who figure out how to make those technologies. Imagine the effect on the computer industry if a science fiction author had been able to reserve the right to patent a supercomputer in the early 1920s, and then converted this into a full patent in the 1950s…

But taking Gernsback’s ideas seriously generates some surprising insights. Science fiction—of the type that Gernsback and “hard sf” writers like Jules Verne and Isaac Asimov wrote—has more in common with patents than it might seem. Publishing a work of science fiction confers no exclusive rights on the inventions it contains. But, like patents, works of science fiction are documents that disclose potentially useful information about science and technology. Like patents, science fiction stories can describe inventions that have not literally been reduced to practice; they can leave many details to skilled artisans to figure out. Both science fiction readers and patent examiners are also supposed to suspend disbelief, presuming the inventions described on the page are based on plausible scientific principles. See, e.g. In re Cortright, 165 F.3d 1353 (1999). If we think patents are an important part of the innovation ecosystem because they disseminate useful technological teachings and insights, then science fiction might be too.

How often science fiction influences innovation is an extremely interesting question. Ironically, the patent record itself is a great source of data with which to test Gernsback’s theories. In fact, one of Gernsback’s more questionable assumptions was that profit-hungry readers are “continuously” filing patents on inventions they learned about in science fiction. They remember the idea, “lard it with a few of [their] own, patent it and start a new billion dollar industry on it.” Regardless of whether that is true, if someone is inspired by science fiction to make an invention in the real world, then we should sometimes see evidence of this in the patent record.

Formal prior art citations to science fiction are rare for the reasons we said above. But we can find circumstantial evidence of science fiction’s influence by searching patents. For example, specifications sometimes reference science fiction in the body, even if they don’t formally cite to science fiction as prior art. Search the patent record for “Asimov, “Three Laws of Robotics,” or “Star Trek,” and you’ll see what we mean. We can also find more direct evidence of influence—situations where inventors expressly state that they got their inspiration from science fiction. For this, though, we usually have to look outside the patent record. Inventors’ autobiographies, interviews, speeches, and marketing efforts can reveal clues. For example, Neil Stephenson’s 1992 book Snow Crash features a virtual world called the Metaverse. Facebook and other tech companies are making their own virtual worlds and calling them by the same name. That, along with direct statements from employees that Stephenson is “our inspiration,” helps support that there was some degree of influence. Steven Levy, Neal Stephenson Named the Metaverse. Now, He’s Building It, Wired (Sept. 16, 2022).

This is surely sometimes independent invention, the result of multiple inventors responding to the same technological developments and contemporary trends. Mark A. Lemley, The Myth of the Sole Inventor, 110 Mich. L. Rev. 709 (2012). But sometimes it is not. Despite all the legal and practical barriers, science fiction appears in the patent record. It was important enough to play some small part in the journey that culminated in the invention. At the end of the day, there is only one explanation for this: Some inventors read science fiction, and some science fiction matters to those people. Its ideas inspire them in ways that traditional sources (including patents) do not. Gernsback put it best. Science fiction “fires the reader’s imagination more perhaps than anything else of which we know,” leaving readers “deeply thrilled[,]” as their “imagination is fired to the nth degree[.]” Few people would ever say that about reading patents.

Even if science fiction does not directly influence someone to make the precise inventions it discloses, it can impact peoples’ career choices, inspiring them to go into science or pursue a general line of inquiry. It can inspire them to go to space. Kristen Houser, Science fiction doesn’t predict the future. It inspires it, BigThink (Oct. 23, 2021). Arthur C. Clarke went so far as to say that “by writing about space flight we have brought its realization nearer by decades.” In Clarke’s view, science fiction both imparted useful technical information and acclimated readers to the possibility of space flight, priming them to support and accept the novel technology when it arrived.

Gernsback’s science fiction-as-patent theory also contains some wisdom for science fiction writers. A little more patent-style “enablement” in science fiction might do more for innovation than science fiction writers want to believe. There is nothing wrong with fantasy and so-called speculative fiction. It is often tremendously entertaining. But we call it science fiction (and thankfully not scientifiction) for a reason: it is based on kernels of real science. To quote Gernsback, what makes science fiction different from romance and adventure stories is that it is grounded in “scientific fact” and has the potential to be “prophetic.” It might one day come to pass. Science fiction authors who work to “enable” their stories, even just a bit, have a better chance to give a stimulus to readers to reduce their inventions to practice. There are many, many authors who already do this, and do so without compromising the quality of the narrative. They might literally affect the future in the way we imagine all inventors hope their patents will. See https://gamerant.com/best-hard-sci-fi-novels-newcomers/#the-three-body-problem-mdash-liu-cixin; https://upjourney.com/best-hard-science-fiction-novels.

For more about Gernsback’s ideas on patents and for more examples of science fiction’s impact on innovation, check out our paper here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4291271

[1] This is not to say it does not happen. In litigation, defendants have stronger incentives to find science fiction prior art and use it to build a case for invalidity. For example, in 2011, during the “smart phone wars,” Samsung argued Apple’s iPad design patent was anticipated by what appear to be “tablet” computers in scenes from Stanley Kubrick’s 1968 film 2001: A Space Odyssey. http://www.fosspatents.com/2011/08/samsung-cites-stanley-kubricks-2001.html

[2] These quotes come from Gernsback’s editorials in Amazing Stories. The full quotes and citations can be found in the paper. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4291271

 

Guest Post by Prof. Burstein: Design patents: Line drawing & Locarno

By Sarah Burstein, Professor of Law at Suffolk University Law School.

Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., 21-2299 (submitted but not decided) (oral argument recording available here)

The Federal Circuit heard oral arguments yesterday in the second round of Columbia v. Seirus. (Prior Patently-O coverage of this appeal is available here.) My 2015 article, The Patented Design, was mentioned several times during the argument.

In that article, I argued that a design patent’s scope should be limited to the design as applied to a specific type of product. In making that argument, I acknowledged that this approach could create some line-drawing problems, including the type that have arisen in Columbia v. Seirus. I suggested that, with respect to infringement:

[O]ne solution would be to put the burden of proof on the patent owner to show that the accused device should be considered the same type of product. Courts have been tasked with determining which products are and are not the same “type” of product in the trademark context; there is no obvious reason why they should not be able to do the same in the design patent context.

If, however, the line-drawing problem proves to be intractable, an alternative would be to determine product “types” according to the Locarno Agreement Establishing an International Classification for Industrial Designs. Specifically, “type of product” could be defined to map onto Locarno sub-classes. For example, Locarno Class 10 includes subclasses for “Clocks and Alarm Clocks,” “Watches and Wrist Watches,” and “Other Time-Measuring Instruments.” The Locarno classification system is not perfect for this use but it may provide a second-best solution if judicial common law development proves unworkable.

Sarah Burstein, The Patented Design, 83 Tenn. L. Rev. 161, 219–20 (2015) (footnotes omitted). So my argument was not that design patent scope (and in this case, the scope of comparison prior art) must be limited to the exact, specific type of article named expressly in the verbal portion of the design patent claim.

Instead, I argued that courts should look to whether the accused product (or reference) is the same general type of article.

I also suggested that the product type could be determined with reference to Locarno sub-classes. How might that work in practice?

Looking at the dispute in Columbia v. Seirus, the most relevant class would seem to be Class 5, “Textile piece goods, artificial and natural sheet material.” Here are the relevant class subheadings:

So which subclass(es) would apply here? This case is an example of how the “substantial latitude” that design patent applicants are given in describing the relevant article in their claim language, see MPEP § § 1503.01(I), might sometimes complicate later attempts at classification.

The asserted design patent, U.S. Patent No. D657,093, claims “the ornamental design of a heat reflective material.” The only Class 5 subclass heading that uses the word “material” is 05-06, “Artificial or Natural Sheet Material.” But the patented design seems to be directed more to something like the examples mentioned in subclass 05-05, “Textile Fabric.” (Indeed, if you look closer at the full Locarno Classification, subclass 05-05 specifically includes ID No. 100480, “Insulating fabrics.”)

So which bucket would the D’093 fit in best? Where classification is disputed, the burden of persuasion should be on whichever party wants to prove something is the same type of product.

For infringement, then, the patent owner should have to prove the accused product is the same type as what is claimed. For comparison prior art, the accused infringer should have to prove the reference is the proper type. (This is because the use of the prior art in evaluating infringement is a one-way ratchet; it can only be used to narrow the presumptive scope of a claim, not to enlarge it. See Sarah Burstein, Is Design Patent Examination Too Lax?, 33 Berkeley Tech. L.J. 607, 612 (2018).)

Evidence relevant to this inquiry could include information about any commercial embodiments, including information the patent owner has provided to regulators about their product or market. And if a patent owner has registered their design internationally, the design may already have a Locarno sub-class.

Who should decide? Judges would be well-suited to make these types of determinations. Indeed, these issues are likely to arise at the Markman stage or, as in Columbia v. Seirus, in motions in limine. This is not the kind of credibility or historical-facts determination that we normally leave to juries. Indeed, it’s difficult to imagine a way to effectively instruct juries on this issue without injecting undue confusion into the infringement analysis.

Guest Post by Prof. Contreras: How the ‘Patent Eligibility Restoration Act’ Would Harm American Businesses and Endanger Global Health by Reintroducing ‘Pathogen Patents’

Guest Post by Professor Jorge L. Contreras

The Patent Eligibility Restoration Act should be modified to prevent the reintroduction of patents on naturally-occurring genomic sequences that are isolated and purified in the lab, a change that will enable international pathogen research to continue while interfering little with private incentives to develop new biomedical technologies.

The Patent Eligibility Restoration Act of 2022 (PERA), introduced by Senator Thom Tillis (R-NC) in August 2022, is designed, among other things, to abrogate the Supreme Court’s patent eligibility decisions in Bilski, Mayo, Myriad and Alice. While Congressional action may be useful to clarify the confusing landscape of patent eligibility that has followed from these decisions, particularly in areas such as medical diagnostics, software and business methods, one piece of the eligibility puzzle that the Supreme Court got right, and which should not be changed, is Myriad’s holding that naturally occurring genomic sequences are ineligible for patent protection, even when “isolated and purified.”

In my book, The Genome Defense: Inside the Epic Legal Battle Over Who Owns Your DNA (New York: Algonquin, 2021), I discuss the Myriad case at length, focusing on its implications for human health and access to care.  Like many others, I am concerned that PERA would make newly identified human genetic variants with significant health implications (e.g., this and this) patentable again, potentially removing them from the broad competitive market and placing them in the hands of the first research team that chances to identify them (a task that is, today, largely serendipitous and requires little innovative skill). I have previously discussed these concerns here. In this post, however, I focus on a different and less-discussed issue: the risk that non-human pathogenic genomic sequences (i.e., from viruses and bacteria) will be patented by non-U.S. institutions and used to delay the development of lifesaving diagnostics, vaccines and therapeutics.

When Patents Held Up Pathogen Research

Prior to the Myriad decision, research groups around the world were able to obtain patents on newly identified pathogen genomic sequences, including those of the H5N1 influenza strain and the SARS and MERS coronaviruses. As I discuss in this new article, these patents led to disputes and delays in research on the diseases and effective countermeasures. After Myriad, however, research groups appear to have stopped seeking patents on new pathogenic agents, as shown by the global experience with the Ebola and Zika outbreaks, leading to greater global cooperation and rapid responses by public health agencies and private developers of diagnostics, vaccines and therapeutics.

SARS-CoV-2:  the Benefits of Patent-Free Pathogens

The genomic sequence of SARS-CoV-2 (the virus responsible for COVID-19) was first identified in early January 2020 by a team of researchers in China. On January 5, they uploaded the sequence to the publicly accessible GenBank database. Within days, diagnostic tests for the virus had been developed and a few months later, new vaccines against COVID-19 were being tested. As I have written previously, the unavailability of patents on genomic sequences, and the rapid uploading of the SARS-CoV-2 sequence to public databases, enabled researchers around the world to study the viral genome without fear of patent infringement and without the need to negotiate complex patent licensing agreements and pay royalties to the first researchers to determine its sequence. This open and unencumbered global research environment enabled scientists to identify and trace the spread of multiple pathogenic variants around the world, to understand the biological mechanisms of the virus, and to develop vaccines, diagnostics and therapeutics, all in record time.

PERA and U.S. Competitiveness

Senator Tillis, when introducing PERA, explained that a major goal of the bill is to enhance “the economic and global competitiveness of the United States”. He faults judicial decisions like that in Myriad for “undermining American innovation and allowing foreign adversaries like China to overtake us in key technology innovations.” Likewise, supporters of the draft legislation have enthusiastically proclaimed that it will “rev the US innovation engine once again”, warning that “[e]conomic growth, job creation, global competitiveness, public health and national security are all at risk until Congress repairs the law of patent eligibility that the Supreme Court has distorted.”

Yet, ironically, at least in the case of pathogenic sequences, PERA would work largely to benefit institutions in China and elsewhere, and could have adverse consequences for U.S. businesses and global public health.

Pathogens Usually Emerge, and are Sequenced, Outside the United States

Most serious pathogenic outbreaks result from the transmission of disease agents from animals to humans. These outbreaks originate in regions characterized by extensive animal husbandry, live animal markets, hunting or habitat loss. Within these parameters, the particular locale of a future outbreak is unpredictable. Recent infectious disease outbreaks have been traced, respectively, to China (SARS and H5N1), Saudi Arabia (MERS), Zaire and Congo (Ebola), Uganda and Brazil (Zika).

Likewise, once a pathogenic outbreak has entered human populations, the locations where its variants will emerge is also unpredictable. For example, the major variants of SARS-CoV-2  were first documented in China (original strain), the United Kingdom (alpha), South Africa (beta, omicron), Brazil (gamma), India (delta), Peru (lambda) and Botswana (omicron).

Today, genomic sequencing equipment is widely available at a modest cost. Researchers in 2021 estimated that the cost of sequencing a SARS-CoV-2 genome (only 1/100,000 the size of the human genome) is approximately $120, bringing it well within the reach of researchers in countries such as Gambia, which had, by mid-2021, sequenced more SARS-CoV-2 genomes than Germany.

It is also worth noting that countries, including the United States, that are parties to the World Trade Organization (WTO) Agreement on Trade Related Aspects of Intellectual Property (TRIPS) must give “national treatment” to applicants from all other member states. Thus, researchers from any TRIPS member country may apply for a U.S. patent and will be afforded the same rights as applicants from the United States. Indeed, for the past several years, most U.S. patents have been issued to non-U.S. applicants. In 2021, for example, of approximately 374,000 issued U.S. patents, nearly 200,000 (roughly 53%) were issued to foreign entities. This situation is not unique to the United States and is simply indicative of today’s global technology markets.

The combination of unpredictable sites of pathogenic emergence, inexpensive genome sequencing and national treatment under TRIPS suggests that if U.S. patents become available for pathogenic sequences, the parties most likely to obtain these patents will originate outside of the United States in countries that are likely sites of disease emergence. It is doubtful that allowing pathogen patenting would result in more patents being issued to U.S. applicants. Rather, U.S. and other companies that wished to develop diagnostics, vaccines and other technologies dependent on those sequences would either be excluded from the market or required to pay unpredictable prices for a license to operate under those patents.

Countries That Are Willing to Hold-Up Research

In recent years, certain foreign governments have shown themselves willing to hold-up international disease research and response efforts in order to gain concessions and advantages for themselves under the banner of “access and benefit sharing” (ABS). The most prominent example of this tactic occurred in 2006-07, when the government of Indonesia refused to share samples of the H5N1 influenza virus strain with the World Health Organization until it obtained commitments regarding access to any resulting biomedical products. Similar tactics were adopted by other countries during the MERS, Ebola and Zika outbreaks, as documented here.

If countries are willing to hold-up international research and disease response in order to secure ABS benefits for themselves, then they are also likely to use patents to extract further concessions from the international community. Demands for ABS concessions are not necessarily unjustified in view of past exploitation of local resources by foreign firms in developing countries. Yet even if justified, these barriers to the international response to emergent disease outbreaks can negatively impact global health. Reintroducing pathogen patenting will give countries where diseases emerge yet another tool to hold-up critical international research and development to the detriment of all.

Patents are not Necessary to Incentivize Pathogen Sequencing

One of the principal functions of the patent system is to provide financial incentives for innovators to develop new technologies. Yet, this rationale does not support the issuance of patents claiming pathogen sequences. The identification of new pathogens during emergent disease outbreaks is rarely undertaken by private industry. Rather, this function is usually carried out by public health agencies and academic laboratories, typically in the locale of the outbreak, and which are supported by public funds. Thus, unlike the development of vaccines and therapeutics, the financial incentives offered by patent exclusivity are not necessary to incentivize these early stage research efforts.

There Are Ample Patentable Innovations Relating to Disease Response and Containment Beyond Pathogen Sequences

It is also unnecessary to patent underlying pathogenic sequences in order to protect novel and innovative technologies such as diagnostics, vaccines and therapeutics. A 2012 WIPO study identified more than 50,000 patents and published patent applications across 57 countries that claimed the active ingredients of pneumonia, typhoid and influenza vaccines, most without claiming the underlying pathogen. Even more opportunities for innovation exist with respect to therapeutics, which can adopt a broad range of approaches to combating infection. For example, Regeneron filed more than 100 patent applications around the world on its Ebola drug Inmazeb, though the viral sequence was freely available on GenBank.

The broad availability of patents for innovation around pathogenic disease outbreaks is amply demonstrated by the COVID-19 pandemic. Despite the absence of patents claiming the SARS-CoV-2 sequence or its many variants, the research institutions and private firms that developed COVID-19 diagnostics and vaccines obtained numerous patents on the innovative aspects of their products. For example, one 2020 study found that, with respect to mRNA vaccine technology alone, 56 different entities ranging from large pharmaceutical companies to small and medium-sized entities held a total of 119 different patent families. Perhaps the most convincing evidence that sizeable numbers of patents have issued in this space is the expanding universe of patent litigation among mRNA vaccine manufacturers, now dubbed the “COVID-19 Patent Wars”. All of these examples demonstrate that COVID-19 technology innovations, vaccines in particular, have been amply protected without the need for patents on naturally occurring pathogenic sequences.

But is this Threat Real?

An argument that may be made against the need to limit further pathogen patents is that the ability of patent holders to enforce their patents, especially during global health crises, is limited by law.  For example, in the United States, a patent holder cannot obtain a permanent injunction preventing an infringer from practicing a patented invention unless it demonstrates that the public interest would not be disserved by the entry of the injunction.  Likewise, the International Trade Commission, when assessing the appropriateness of an exclusion order barring the importation of infringing goods into the United States, must take into account “the effect of such exclusion upon the public health and welfare.”  These limitations have greatly reduced (but not entirely eliminated) the number of injunctions and exclusion orders issued with respect to medical and health-related technologies.

These limitations suggest that, at least in the United States, the existence of patents claiming pathogenic sequences might not represent a significant threat to pathogen research or biomedical product development. However, the existence of patents on these basic research tools, no matter what the likelihood of eventual litigation outcomes, can chill research, impose delays and prompt the payment of unwarranted fees. Moreover, even meritless claims are costly to fend off in court and impose some level of risk on defendants, particularly in the U.S. where fee shifting is rare.  Thus, while various litigation doctrines may tend to lessen the threat of pathogen patents in the U.S., that threat is not eliminated entirely and may still represent a significant cost and deterrent to firms engaged in research and development of pathogen-based biomedical products.

Don’t Let PERA Potentially Hold Up Research Efforts

For the reasons outlined above, PERA should be modified to ensure that naturally occurring genomic sequences – even once isolated – remain ineligible subject matter for patent protection. Preventing the reintroduction of pathogen patents will enable international pathogen research to advance rapidly while interfering little with private incentives to develop innovative new biomedical technologies. In contrast, opening the door to pathogen patents arguably will provide opportunities for individual countries where outbreaks emerge to hold up international research efforts for their own benefit, causing delays and barriers to the development of lifesaving diagnostics, vaccines and drugs.

New PatentlyO L.J. Article: What Every Patent and Trademark lawyer Should Understand About the MPEP, TMEP, and Other Guidance

By Jason Rantanen

New Patently-O Law Journal article by  David Boundy, a partner at Potomac Law Group, PLLC. Mr. Boundy practices at the intersection of patent and administrative law, and consults with other firms on court and administrative agency proceedings, including PTAB trials and appeals. He may be reached at DBoundy@PotomacLaw.com.

What Every Patent and Trademark Lawyer Should Understand About the MPEP, TMEP, and Other Guidance: How to Use (and Defend Against) the MPEP to be a Better Advocate, by David Boundy – Boundy.2021.HowToUseGuidance.pdf

Every four years, the PTO issues new guidance documents.  Some of them are legal and either help applicants or give nonbinding advice.  Other guidance documents are beyond the PTO’s authority and create burdens that ought not be shifted onto the public.  Several recent notices from the Patent Office note that several batches are coming.

The administrative law lays out limits on the ways that federal agencies may use guidance documents vis-à-vis rights of the public.  Every patent practitioner should understand those limits—when does the MPEP state binding law, when is it mere aspiration for what an agency would like the law to be or would like you to do, when is it asymmetric (binding against the agency, but not against any member of the public), when is it an offer of a quid pro quo (the agency promises “if you do this, we’ll do that”), and when is it invalid and entirely unenforceable?  When has the PTO broken the law, and what rights does that give you?  Knowing the difference, and following the practical advice outlined below, can prevent you from unintentionally compromising your client’s rights.

Read: David Boundy, What Every Patent and Trademark Lawyer Should Understand About the MPEP, TMEP, and Other Guidance: How to Use (and Defend Against) the MPEP to be a Better Advocate, 2023 Patently-O Patent Law Journal 1 (2023) (Boundy.2021.HowToUseGuidance).

Prior Patently-O Patent L.J. Articles:

  • Colleen Chien, Janelle Barbier, and Obie Reynolds, The AIA at Ten – How Much Does the Pre-AIA Prior Art Regime Still Matter?, 2021 Patently-O Patent Law Journal 34. (Chien.2021.Pre-AIAPatents)
  • Nicholas Shine, Covid-19 Pandemic’s Impact on the U.S. Patent System Through November 2020, 2021 PatentlyO Law Journal 27 (2021) (Shine.2021.COVID-19Impact)
  • Thomas F. Cotter, Is Global FRAND Litigation Spinning Out of Control, 2021 PatentlyO Law Journal 1 (2021) (Cotter.2021.GlobalFRANDLitigation)
  • Colleen V. Chien, Nicholas Halkowski, Maria He, and Rodney Swartz, Parsing the Impact of Alice and the PEG, 2020 Patently-O Law Journal 20 (2020) (Chien.2020.ImpactOfAlice)
  • Paul R. Michel and John T. Battaglia, eBay, the Right to Exclude, and the Two Classes of Patent Owners, 2020 Patently-O Law Journal 11 (2020) (Michel.2020.RightToExclude)
  • Thomas F. Cotter, Two Errors in the Ninth Circuit’s Qualcomm Opinion, 2020 Patently-O Patent Law Journal 1 (2020). (Cotter.2020.TwoErrors.pdf)
  • Jasper L. Tran & J. Sean Benevento, Alice at Five, 2019 PatentlyO L.J. 25 (2019) (Tran.2019.AliceatFive.pdf)
  • Bernard Chao, Implementing Apportionment, 2019 PatentlyO L.J. 20 (Chao.2019.ImplementingApportionment)
  • Jeremy C. Doerre, Is There Any Need to Resort to a § 101 Exception for Prior Art Ideas?, 2019 PatentlyO L.J. 10. (2019.Doerre.AnyNeed)
  • Colleen V. Chien, Piloting Applicant-Initiated 101 Deferral Through A Randomized Controlled Trial, 2019 Patently-O Patent Law Journal 1. (2019.Chien.DeferringPSM)
  • David A. Boundy, Agency Bad Guidance Practices at the Patent and Trademark Office: a Billion Dollar Problem, 2018 Patently-O Patent Law Journal 20. (Boundy.2018.BadGuidance)
  • Colleen Chien and Jiun-Ying Wu, Decoding Patentable Subject Matter, 2018 PatentlyO Patent Law Journal 1.
  • Paul M. Janicke, Patent Venue: Half Christmas Pie, And Half Crow, 2017 Patently-O Patent Law Journal 13. (Janicke.2017.ChristmasPie.pdf)
  • Paul M. Janicke, The Imminent Outpouring from the Eastern District of Texas, 2017 Patently-O Patent Law Journal 1 (2017) (Janicke.2017.Venue)
  • Mark A. Lemley, Erik Oliver, Kent Richardson, James Yoon, & Michael Costa, Patent Purchases and Litigation Outcomes, 2016 Patently-O Patent Law Journal 15 (Lemley.2016.PatentMarket)
  • Bernard Chao and Amy Mapes, An Early Look at Mayo’s Impact on Personalized Medicine, 2016 Patently-O Patent Law Journal 10 (Chao.2016.PersonalizedMedicine)
  • James E. Daily, An Empirical Analysis of Some Proponents and Opponents of Patent Reform, 2016 Patently-O Patent Law Journal 1. (Daily.2016.Professors)
  • Tristan Gray–Le Coz and Charles Duan, Apply It to the USPTO: Review of the Implementation of Alice v. CLS Bank in Patent Examination, 2014 Patently-O Patent Law Journal 1. (GrayLeCozDuan)
  • Robert L. Stoll, Maintaining Post-Grant Review Estoppel in the America Invents Act: A Call for Legislative Restraint, 2012 Patently-O Patent Law Journal 1 (Stoll.2012.estoppel.pdf)
  • Paul Morgan, The Ambiguity in Section 102(a)(1) of the Leahy-Smith America Invents Act, 2011 Patently-O Patent Law Journal 29.  (Morgan.2011.AIAAmbiguities)
  • Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12 (sarnoff.2011.derivation.pdf)
  • Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent Patent Law Journal 6 (chao.sealedrecords.pdf)
  • Benjamin Levi and Rodney R. Sweetland, The Federal Trade Commission’s (FTC) Recommendations to the International Trade Commission (ITC):  Unsound, Unmeasured, and Unauthoritative, 2011 Patently-O Patent Law Journal 1 (levi.ftcunsound.pdf)
  • Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent Law Journal 111 (Collins.KingPharma.pdf)
  • Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent Law Journal 95 (matthews.falsemarking.pdf)
  • Kristen Osenga, The Patent Office’s Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89 (Osenga.pdf)
  • Peter S. Menell,  The International Trade Commission’s Section 337 Authority, 2010 Patently-O Patent L.J. 79
  • Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently‐O Patent L.J. 72
  • Kevin Collins, An Initial Comment on Ariad: Written Description and the Baseline of Patent Protection for After-Arising Technology, 2010 Patently-O Patent L.J. 24
  • Etan Chatlynne, Investigating Patent Law’s Presumption of Validity—An Empirical Analysis, 2010 Patently-O Patent L.J. 37
  • Michael Kasdan and Joseph Casino, Federal Courts Closely Scrutinizing and Slashing Patent Damage Awards, 2010 Patently-O Patent L.J. 24 (Kasdan.Casino.Damages)
  • Dennis Crouch, Broadening Federal Circuit Jurisprudence: Moving Beyond Federal Circuit Patent Cases, 2010 Patently-O Patent L.J. 19 (2010)
  • Edward Reines and Nathan Greenblatt, Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009, Part II, 2010 Patently‐O Patent L.J. 7  (2010) (Reines.2010)
  • Gregory P. Landis & Loria B. Yeadon, Selecting the Next Nominee for the Federal Circuit: Patently Obvious to Consider Diversity, 2010 Patently-O Patent L.J. 1 (2010) (Nominee Diversity)
  • Paul Cole, Patentability of Computer Software As Such, 2008 Patently-O Patent L.J. 1. (Cole.pdf)
  • John F. Duffy, The Death of Google’s Patents, 2008 Patently O-Pat. L.J. ___ (googlepatents101.pdf)
  • Mark R. Patterson, Reestablishing the Doctrine of Patent Exhaustion, 2007 Patently-O Patent L.J. 38
  • Arti K. Rai, The GSK Case: An Administrative Perspective, 2007 Patently-O Patent L.J. 36
  • Joshua D. Sarnoff, BIO v. DC and the New Need to Eliminate Federal Patent Law Preemption of State and Local Price and Product Regulation, 2007 Patently-O Patent L.J. 30 (Download Sarnoff.BIO.pdf)
  • John F. Duffy, Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21. (Duffy.BPAI.pdf)
  • Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1 (Casino-Seagate)

Rethinking enablement: Court grants cert in Amgen v. Sanofi

By Jason Rantanen

On Friday, the Supreme Court granted certiorari on two petitions raising intellectual property issues, including the closely-watched enablement Amgen v. Sanofi.  The other case is a Abitron Austria GmbH v. Hetronic International, a trademark dispute involving extraterritoriality issues.

Over the past few years, the Federal Circuit has issued a series of enablement decisions, including Amgen v. Sanofi, that rely on a lack of enablement to hold that functionally defined genus claims are invalid. (Dennis’s post on Amgen is here.This has been a topic to watch at the Federal Circuit, and two major law professor articles, one written by Mark Lemley and Jake Sherkow and the other co-authored by Dmitry Karshtedt, Sean Seymore, and Mark Lemley, have pointed out the problems with the Federal Circuit’s approach to genus claims, especially in the context of inventions such as antibodies. Karshtedt, Seymore and Lemley filed an amicus brief supporting en banc rehearing at the Federal Circuit (PatentlyO post here) as well as one supporting Amgen’s petition for certiorari.

The claim in Amgen illustrates this point. It claims the genus of antibodies that bind to a particular region on a specific protein. Here is a representative claim of Amgen’s Patent No. 8,829,165:

1. An isolated monoclonal antibody, wherein, when bound to PCSK9, the monoclonal antibody binds to at least one of the following residues: S153, I154, P155, R194, D238, A239, I369, S372, D374, C375, T377, C378, F379, V380, or S381 of SEQ ID NO:3, and wherein the monoclonal antibody blocks binding of PCSK9 to LDLR.

The problem is that there isn’t just one antibody that meets this requirement – rather, it encompasses potentially millions of currently unknown antibodies. The Federal Circuit held that the claims were far broader than the associated disclosure, requiring undue experimentation to identify undisclosed embodiments encompassed by the claims. Amgen petitioned the Supreme Court for review, extensively citing the Karshtedt/Seymore/Lemley article.  

On Friday, the Supreme Court granted certiorari on Question 2 of the Amgen petition, which focuses on the “full scope” and “undue experimentation” aspects of the of 112(a) jurisprudence. This was after the Solicitor General had recommended against certiorari.

Here’s the question that the Court granted cert on:

2. Whether enablement is governed by the statutory requirement that the specification teach those skilled in the art to “make and use” the claimed invention, 35 U.S.C. § 112, or whether it must instead enable those skilled in the art “to reach the full scope of claimed embodiments” without undue experimentation—i.e., to cumulatively identify and make all or nearly all embodiments of the invention without substantial “ ‘time and effort,’ ” Pet. App. 14a (emphasis added).

This will be the first time that the Supreme Court has addressed the enablement requirement in a very long time.  Those decisions used the pre-1952 version of the patent law statute, Rev. Stat. § 4888. Generally, however, it was very similar to the current 35 U.S.C. § 112(a). For example, as applied in Consol. Elec. Light Co. v. McKeesport Light Co., 159 U.S. 465 (1895) (a/k/a The Incandescent Lamp Case), it required:

“a written description of the device, and of the manner and process of making constructing, compounding, and using it in such full, clear, concise, and exact terms as to enable any person skilled in the art or science to which it appertains or with which it is most nearly connected to make, construct, compound, and use the same.”

To me, the issue of full scope enablement is one of the most challenging problems in patent law. Many patent law scholars have written about it, including myself, and I still haven’t seen a real solution. But I’m sure that much more will be said before and after the Court issues its decision.

Sadly, as I wrote about last week, Professor Karshedt passed away just a few days ago, and we’ll miss his insights on the case as it moves through the Supreme Court.

Here’s a link to the docket on ScotusBlog for those who would like to read more.

Guest Post – All Together Now: The Innovator Diversity Pilots Conference (November 18, 2022 at Santa Clara University and online)

By: Colleen V. Chien, Professor of Law, Santa Clara University School of Law and Margo A. Bagley, Asa Griggs Candler Professor of Law and Associate Dean for Research, Emory Law School and Hieken Visiting Professor in Patent Law, Harvard Law School (visiting Fall 2022) 

Link for more Information and to Register for the Conference

Growing the percentage of Americans of all backgrounds participating in the innovation system is not only the right thing to do, it is also critical to global economic competitiveness for the United States. But currently,  while women represent over 50% of the workforce and 27% of STEM workers, they comprise only 13% of inventors, according to the USPTO’s influential Progress and Potential report.  A growing number of stakeholders are actively experimenting with ways to narrow these and other innovator-inventor gaps* in participation and diversify the profession. We invite you to participate in our inaugural Innovator Diversity Pilots Conference, which will build on efforts like the USIPA Increasing Diversity in Innovation Pledge, signed by over 50 leading companies, USPTO Council for Inclusive Innovation (CI2), IPO Diversity in IP Toolkit, and Santa Clara Diversity in Innovation Best Practices Guide, to foster a community of practice, bolster the evidence base for what works, and inform policy and regulatory efforts to promote diversity and inclusion in innovation and invention.

Our focus on piloting – temporarily introducing new practices to learn from them – and rigorous research methods like field experiments to evaluate effectiveness underscores that the work of diversity and inclusion is hard and requires not only a focus on results, but also iteration, refinement, humility, and collaboration.

Featuring keynote remarks by USPTO Director Kathi Vidal and Professor John List (author of the Voltage Effect), the event is co-organized by the USPTO and co-sponsored by the law schools of Santa Clara University and Emory University, the Intellectual Property Owners Association, the US Intellectual Property Alliance, the National Academy of Inventors, the Institute for Progress, the Association for University Technology Managers, Meta, the Institute for IP and Social Justice, and Schwegman Lundberg & Woessner.

This year’s all-day event will take place on Friday November 18, 2022 in-person at Santa Clara University and on-line. Remote participation is free and the program will feature the following sessions:

  • The Why and How of Diversity Piloting – the case for diversity in innovation and rigorously piloting ways of advancing it, presented in part by leading economist and MacArthur Fellow Heidi Williams.
  • Getting People off the Bench – Learning from Doing – companies, researchers, and the USPTO will report on diversity nudges, affinity groups, and other practices for engaging and developing diverse talent.
  • Getting the Data and Tools Needed to Make Progress – how data and tools can be used, in privacy-respecting ways, to advance diversity in innovation and invention.
  • Innovator Diversity Policy Pilots – initiatives at the university, agency, state, and federal, levels to develop and use evidence to advance broad-based economic growth through greater participation and inclusion in innovation and inventing.

Fireside Chat with USPTO Director Kathi Vidal“USPTO Diversity Initiatives Changing the Innovation Ecosystem”

  • Let’s Pilot Together – conference participants will draw upon research, their experience, and the proceedings to “pitch” the USPTO and other sponsoring organizations with their ideas for piloting regarding, for example, attribution practices at the Office, mentorship, and adapting the diversity pledge to the academy.
  • Diversity in the Profession and Pipeline – discussion of existing and emerging initiatives and approaches like the Council for Inclusive Innovation (CI2), Patent Pipeline Program, LEAP, and the Mansfield Rule for supporting diversity in the legal profession and beyond.

Background resources and background materials are available here. We have designed the day to be informative, educational, and interactive. We hope you will join us, online or in-person.

*The Gender Innovator-Inventor Gap (source: Redefining Progress and the Case for Diversity in Innovation and Inventing

Link for more Information and to Register

Updated to reflect additional co-sponsors.

Dmitry Karshtedt

By Jason Rantanen

George Washington University Law School Professor Dmitry Karshtedt has passed. Dmitry was a remarkable scholar, wonderful colleague, and incredible friend. We often had different ways of thinking about patent law, and I always hoped that some day we might have time to write something together. Sadly will never happen. The world was more with Dmitry and less without him.

Professor Karshtedt received an A.B from Harvard and a PhD from UC Berkeley, both in chemistry. After a few years working as a chemist for a semiconductor startup, he went to law school, receiving his JD from Stanford Law School in 2011. He worked for a short time at Wilson Sonsini in Palo Alto before clerking for Judge Kimberly Moore on the Federal Circuit. He joined GW Law in 2015 after a fellowship at Stanford and received tenure in 2020.

Professor Karshtedt’s work was wide-ranging. He is named as an inventor on 13 patents, is the first-named author on five scientific publications, and spoke at dozens of conferences and presentations.  His legal scholarship was deep and contemplative, and includes two articles published in the Iowa Law Review. His most recent work with Mark Lemley and Sean Seymore, The Death of the Genus Claim, 35 Harv. J. L. & Tech., is cited extensively in petitions for certiorari before the Supreme Court.

But more importantly, Dmitry was a wonderful colleague who contributed to every conference and workshop he attended. If you emailed him anything, whether a short question or a draft paper, he would always reply with a thoughtful response, including in depth comments on your work–comments that always made it better. I and many others had many wonderful conversations with Dmitry both over email and in person. I cannot speak personally about his teaching, but if it was any reflection of his professional interactions it must also have been terrific.

I have so many memories of Professor Karshtedt, but for now will end with a link to a PatentlyO guest post that he wrote just last year, in which he reconceptualized the framework for how courts should think about nonobviousness – an approach that will continue to influence my own thinking and make me sad for else might have been.

Guest Post by Prof. Dmitry Karshtedt: Nonobviousness and Time

 

Guest post by Prof. Gugliuzza: Nonprecedential Precedent in Patent Venue Disputes

By Paul R. Gugliuzza, Professor of Law, Temple University Beasley School of Law

The Federal Circuit decides lots of mandamus petitions on transfer of venue under 28 U.S.C. § 1404(a). Most federal courts of appeals decide one or two per year, at most. The Federal Circuit, in 2021 alone, decided 30.

Yet the Federal Circuit rarely designates those decisions as precedent. Over 85% of the court’s venue mandamus decisions since 2008 have been nonprecedential. And, it’s worth noting, the Federal Circuit’s few precedential decisions are wildly unrepresentative: nearly 80% of them grant mandamus, even though, overall, petitioners succeed less than a third of the time.

In an order issued earlier this month, District Judge Alan Albright—who, despite recent changes in how cases are assigned to judges in his district, still has twice as many patent cases on his docket as any judge in the country—picked up this thread about the proliferation of nonprecedential Federal Circuit transfer decisions.

In Motion Offense v. Google, the patentee, who opposed transfer, argued that Judge Albright should follow Fifth Circuit case law on transfer of venue—and ignore the nonprecedential Federal Circuit decisions Google cited in its transfer motion. Judge Albright rejected the patentee’s argument, noting that he “cannot and does not overrule the reasoning of the Federal Circuit in a patent case.” (Motion Offense slip op. at 7.)

He continued: “Although the Federal Circuit issues unpublished, nonprecedential transfer opinions, the Federal Circuit frequently cites these opinions as though they precedentially interpret Fifth Circuit law.” (Id. (emphasis mine).)

Given how important transfer disputes are to patent litigation—and how often they occur—it’s worth asking whether Judge Albright is correct about how the Federal Circuit treats its nonprecedential transfer decisions.

Since 2008, the Federal Circuit has issued well over 100 nonprecedential transfer decisions, most of them coming out of two district courts in the Fifth Circuit: the Eastern and Western Districts of Texas. Those nonprecedential Federal Circuit decisions technically aren’t binding in future cases. Indeed, under the Federal Circuit’s unusual choice-of-law regime, the venue analysis is ostensibly governed by Fifth Circuit precedent, so even Federal Circuit decisions designated as precedential are binding only to the extent they’re interpreting Fifth Circuit law.

Yet the Federal Circuit does, in fact, often cite its own nonprecedential transfer decisions as if they were binding interpretations of Fifth Circuit law.

*          *          *

Drawing on a dataset that Jason Rantanen, Jonas Anderson, and I developed for a soon-to-be published article on the Federal Circuit’s mandamus practice, I looked at every Federal Circuit ruling on a mandamus petition challenging a decision by Judge Albright to deny transfer under § 1404(a)—38 rulings in total, all issued since June 2020. I then examined the citations in those rulings to prior Federal Circuit and Fifth Circuit decisions.

The bottom line: nearly a quarter of the citations were to nonprecedential Federal Circuit opinions.

Figure 1: Citations to Federal Circuit and Fifth Circuit Opinions in Federal Circuit Mandamus Decisions Reviewing § 1404(a) Transfer Denials by Judge Albright

This result holds across both (1) the precedential status of the citing decision and (2) whether the citing decision granted or denied mandamus. The only possible exception is Federal Circuit decisions denying mandamus, which tend to be quite short and light on citations as whole, including citations to nonprecedential Federal Circuit decisions.

Table 1: Citations in Federal Circuit Mandamus Decisions That Are Designated as Precedential (n=4)

Table 2: Citations in Federal Circuit Mandamus Decisions That Are Designated as Nonprecedential (n=34)

Table 3: Citations in Federal Circuit Decisions That Grant Mandamus (n=20)

Table 4: Citations in Federal Circuit Decisions That Deny Mandamus (n=18)

*          *          *

It’s not just the numbers but also the substance of the rulings that reflect the Federal Circuit’s heavy reliance on prior nonprecedential decisions.

For instance, in granting a mandamus petition filed by Apple, the Federal Circuit chided Judge Albright for “erroneously discount[ing]” the location of third-party witnesses in the transfer analysis. The Federal Circuit quoted from its prior nonprecedential opinion in In re HP for the proposition that “there [is] ‘no basis to discount’ third-party entities . . . ‘just because individual employees [i.e., witnesses] were not identified’” in the transfer motion. (Apple slip op. at 6.) The Federal Circuit’s opinion in Apple also relied on and quoted from two prior, nonprecedential decisions involving Google to reject Judge Albright’s treatment of the location of party witnesses in the transfer analysis. (Id. at 7, 10.)

Indeed, one of those Google opinions itself relied on the Federal Circuit’s prior nonprecedential decision in In re TracFone in granting transfer, writing that “[t]his case fits squarely within that line of precedent”—the “line of precedent” consisting of two cases: the Federal Circuit’s precedential opinion in another dispute involving Apple, In re Apple Inc., 979 F.3d 1332 (Fed. Cir. 2020), and the nonprecedential decision in TracFone. (Google slip op. at 10.)

Similarly, in granting mandamus in In re Juniper Networks—a precedential decision—the Federal Circuit cited its prior nonprecedential opinion in In re Hulu five times, concluding that “this case is a very close cousin of our recent decisions in Samsung [precedential] and Hulu [nonprecedential], and the disposition of this case is largely dictated by the disposition of those cases.” (Juniper slip op. at 14 (emphasis mine).)

Perhaps the most stunning treatment of nonprecedential mandamus decisions by the Federal Circuit is In re Pandora Media, which actually contains more citations to nonprecedential Federal Circuit rulings than to precedential Federal Circuit rulings. The Federal Circuit’s determination that Judge Albright erred by disregarding the subpoena power of the proposed transferee court was based entirely on three nonprecedential opinions: a 2014 case involving Apple, the Hulu case mentioned above, and a 2018 case involving HP. (Pandora slip op. at 6.)

The Federal Circuit in Pandora also leaned on the nonprecedential opinions in TracFone and Google (both discussed above) in criticizing how Judge Albright analyzed considerations about convenience for potential witnesses, noting that “we held in TracFone and Google that the litigation should be conducted where more witnesses could testify without leaving their homes or their regular places of business.” (Pandora slip op. at 12 (emphasis mine).)

*          *          *

It’s tempting to brush off the Federal Circuit’s use of nonprecedential decisions to justify its venue mandamus rulings. Venue mandamus is a niche issue, brought to prominence by a semi-specialized appellate court that is fighting a problem of court competition somewhat unique to patent litigation. And sometimes the Federal Circuit discusses nonprecedential decisions because it was the parties who cited them in the first place, creating a bit of a chicken-or-egg dynamic.

Yet the court’s own rules are clear about how it’s supposed to treat nonprecedential decisions. Federal Circuit Rule 32.1(d) states, in relevant part:

The court may refer to a nonprecedential or unpublished disposition in an opinion or order and may look to a nonprecedential or unpublished disposition for guidance or persuasive reasoning but will not give one of its own nonprecedential dispositions the effect of binding precedent.

This rule makes plain that nonprecedential venue mandamus rulings are not binding law. But the Federal Circuit arguably treated them as such in cases like Google, Pandora, and many others.

Viewed in that light, Judge Albright’s frustration is understandable: how can he make transfer decisions that are consistent with Federal Circuit law when it’s impossible to tell precisely what that law is?

*          *          *

We live in a time of declining public trust in government institutions and skepticism of the rule of law. Though transfer disputes in patent litigation might not capture the public’s attention like Supreme Court cases about guns, abortion, or voting rights, the Federal Circuit’s unprincipled use of nonprecedential opinions is precisely the sort of everyday lawlessness that, over the long term, can strain trust in the courts.

*          *          *

A few methodological notes and caveats:

  • In calculating the numbers reported above, I counted only citations within the analytical portion of the Federal Circuit’s ruling, and only in the portion of the court’s analysis addressing the § 1404(a) issue specifically.
  • I ignored citations in “citing” or “quoting” parentheticals.
  • I hand counted the citations, so it’s possible I missed or misclassified a small number of them. But the numbers are sufficiently large (545 relevant citations across 38 decisions) that a few errors, if they exist, wouldn’t affect the overall results much.
  • David Hricik wrote for this blog about how, in an earlier version of the Motion Offense order, Judge Albright claimed he’d have denied transfer under Fifth Circuit venue law but was compelled to grant transfer under Federal Circuit law. That claim remains in the amended order mentioned above, though Judge Albright altered the text slightly, writing: “The Court’s decision turns on whether it should apply traditional Fifth Circuit transfer law or apply the Federal Circuit’s interpretations of Fifth Circuit transfer law. This Court cannot ignore or overrule cases from the Federal Circuit. Only because of those Federal Circuit cases, this Court GRANTS Defendant’s Motion to Transfer.” (Motion Offense slip op. at 1. (first emphasis mine))

Order on “In re unsealing of court records” rescinded

By Jason Rantanen

Last week the Federal Circuit issued an order relating to the unsealing of materials filed in cases docketed ten or more years ago. Misc. Docket 22-160: Is your (old) appeal on this list?

Today the court issued a new order rescinding that order as “impracticable.”

Upon further consideration of the court’s August 17, 2022 Order, the court finds it impracticable at this time to continue to proceed with the proposed unsealing of previously-identified cases. Specifically, the court finds that there will be insufficient time and considerable, unanticipated administrative difficulty to both the court and to counsel in providing an opportunity for counsel and parties in the previously-identified cases to permit a physical review of the identified cases by the National Archives and Records Administration’s December 31, 2022 deadline for the court to complete the accessioning of its remaining pa-per case records.

Instead, the court will accession the cases to the National Archives and Records Administration for permanent retention under seal.  Read the new order here: https://cafc.uscourts.gov/wp-content/uploads/22-160.pdf (Archive copy: 22-160)

Misc. Docket 22-160: Is your (old) appeal on this list?

By Jason Rantanen

While this might not be the most newsworthy federal document archives story this week, it’s something that patent practitioners and others who practice before the Federal Circuit might want to take note of.  Today the Federal Circuit issued an order in Miscellaenous Docket 2022-160, “In re: Unsealing of Court Case Records.” The order reads:

The court is in the process of accessioning its remaining paper case records to the National Archives and Records Administration for permanent retention. These records predate the court’s transition to its electronic case management filing system in 2012 and once transferred to the National Archives will remain in only paper format and will not be made available online. Pursuant to Federal Circuit Rule 25.1(a)(1), “[a]fter five years following the end of all proceedings in this court, the court may direct the parties to show cause why confidential filings (except those protected by statute) should not be unsealed and made available to the public.” Through the review of these records, the court has identified several cases containing confidential filings that remain under seal more than five years following the end of all proceedings.

The order goes on to direct parties to the identified cases to this order to show cause within 60 days as to why confidential material in those cases should not be unsealed, along with instructions for what to do. The order is followed by 60 pages of case docket numbers and names. Almost all of them arise from the district courts, but there are a few from other origins. You can access it here: https://cafc.uscourts.gov/wp-content/uploads/22-160.pdf (archived version: 22-160).

For context, in 2012 the Federal Circuit switched from an older version of the court electronic records system to a newer version. As a result, appeals filed prior to the transition without subsequent case activity are only in the older system. (Appeals filed before the transition but with activity after the transition show up in both systems.) Many of the older materials are only available in paper form, and if you’ve ever tried to get them you know that it is very expensive and difficult.

I was curious about what portion of appeals this order applied to, so I plugged the docket numbers from the order into the Federal Circuit Dataset Project to get a sense of what portion of cases this applied to. (The list of docket numbers from the order is linked here: https://doi.org/10.7910/DVN/FRHXWT). In total, there are 1,151 appeal  numbers listed in the order (plus 3 duplicates). Of these, 1,122 matched an appeal docketed in 2000 or later that’s available in PACER; 16 don’t match a record that shows up in PACER (likely because the entire docket is confidential) and 13 involve appeals filed before 2000. The latest appeal was docketed in 2012, and most of the appeals listed were docketed between 2003 and 2010. Out of the 12,225 appeals docketed between 2000 and 2011, 977 show up on this list (about 8%).

However, most of the appeal dockets on the court’s list are appeals from the district courts, and those are only a portion of the court’s cases. Because these are records from the older generation of PACER, we don’t have as much information about them as for later appeals. (See this forthcoming article for details: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4162979.)  However, when I combined the list in the court’s order with our document dataset, which goes back to late 2004, and limited it to opinions and Rule 36 summary affirmances issued between 2005 and 2012, it turned out that about 25% of appeal dockets arising from the district courts that resulted in an opinion or Rule 36 in those years were listed on the court’s order (517/1,459), with about the same percentage for appeals arising from the ITC (79 out of 305). This isn’t exclusive; there are some numbers on the list that didn’t result in an opinion or order. But there’s a good chance that if you had an appeal in a patent infringement case that resulted in an opinion or Rule 36 affirmance between 2000 and 2011, it’s on the court’s list.

Bottom line: this is a lot of appeal dockets, both just in raw numbers and as a fraction of appeals in patent infringement cases and from the CIT.  The appeals were filed over a decade ago, and likely haven’t had any actions since 2012, but it may be worth a ctrl-F on the order to see whether your clients are impacted.

One thing that I do hope is that the court doesn’t de-accession the existing PACER docket search for pre-2012 cases. It provides only limited data and access to documents, but it’s the only publicly accessible directory or index for that information. As far as I know (and I’d love to be wrong!), there’s no existing paper analog.

Who appeals (and wins) patent cases?

By Jason Rantanen

There are lots of studies of Federal Circuit decisions, but very few involve the link between all cases filed at the district court cases and appeals. This prompted the question for me: who actually files appeals in patent infringement cases and how representative are they of the underlying civil actions filed in the courts? It turns out that the answer is “mostly patent asserters” and that they aren’t necessarily representative of case filings.

One of my research team’s ongoing projects is the Federal Circuit Dataset Project, which involves collecting all of the opinions & orders that the Federal Circuit makes available on its website, coding information about them, and then putting it all together into a publicly-accessible database that anyone can use to answer their own questions about the Federal Circuit.  There’s a user-friendly portal to the decisions dataset at empirical.law.uiowa.edu, and the full dataset is available at https://dataverse.harvard.edu/dataverse/CAFC_Dataset_Project.

This year, our major project involved linking up the CAFC dataset with datasets of patent infringement cases filed in the district courts. A draft of the first paper to spin out of this project is now up on SSRN at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4162979. (There is an option to download without logging in, but sometimes you have to hunt for it on the page.)  Thanks to the Houston Law Center’s Institute for Intellectual Property and Information Law for inviting me to present it at their national conference in June. Some takeaways:

  • For patent infringement cases filed between 2011 and 2016, about 6% have at least one appeal, although this rate has been declining from 7.8% of cases filed in 2011 to 4.4% of cases filed in 2016.
  • The average time from case filing to first appeal is 27 months, although there is substantial variation (SD of 18 months with rightward skew).
  • Appeals are overwhelmingly filed by patent asserters: 82% of first appeals in the set were filed by patent asserters compared to 18% by accused infringers.

For this particular project, we linked the Federal Circuit dataset to the Stanford NPE Litigation Database, which contains coding on patent asserter types. (Details about the Stanford dataset are available in Miller et al., Who’s Suing Us? Decoding Patent Plaintiffs since 2000 with the Stanford NPE Litigation Dataset, 21 Stan. Tech. L. Rev. 235 (2018)). Using this data, we found some differences between the frequencies of case filings and appeals.  Figure 2 from the paper shows the most frequent cases by Stanford litigation dataset category. Category 1 are companies that acquired patents but do not themselves make any products or provide any services.

Table of case filer frequency

Figure 2 from Who Appeals Patent Cases

Figure 2 shows that while companies that acquired patents (Stanford litigation dataset category 1) filed 37% of patent infringement actions from 2011-2016, only 25% of appeals from cases filed between 2011 and 2016 arose from those cases. On the other hand, while product companies accounted for only slightly more patent infringement lawsuits (just over 40%), appeals in cases filed by product companies constituted 54% of all appeals filed. In other words, cases brought by product companies are appealed at a higher rater than cases brought by companies that acquired patents. This is consistent with prior findings that cases brought by PAEs settle at a higher rate than cases brought by product companies. Not only that, but we also found a difference in who is bringing the appeal in these cases: in cases brought by a PAE, the patent asserter was the primary appellant about 90% of the time, whereas in cases brought by product companies the patent asserter was the primary appellant only about 70% of the time.

What about who wins these cases?  That’s a bit more complex, and depends on how you define “win.” We define a “win” as obtaining an affirmance if a party is the appellee and an affirmance-in-part, reversal or vacate if a party is the appellant.  Using this definition, we found that overall, patent asserters usually lose on appeal, with product companies being much more successful than PAEs. However, this is heavily affected by the fact that both patent asserters generally and PAEs specifically are in the shoes of the appellant most of the time, and more often than not, the Federal Circuit affirms the district court.

The paper itself goes into more detail, including information about affirmance rates by appellant type, other categories, and the kinds of forms that these decisions take.  You can read it here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4162979.

Disclosure: I am receiving an honorarium from the University of Houston Law Center Institute for Intellectual Property & Information Law upon publication of this paper in the Houston Law Review.

Guest Post by Prof. Contreras: Continental’s Antitrust Suit Against Avanci is Dismissed, but with Fewer Consequences for FRAND

Guest Post by Professor Jorge L. Contreras

On June 22, 2022, the Fifth Circuit reissued its opinion in Continental v. Avanci, replacing an earlier opinion that it issued on February 28.  While the reissued opinion continues to uphold the district court’s dismissal of the suit, it also eliminates the entirety of the Circuit’s earlier dicta concerning the nature of FRAND commitments and Article III standing, dicta that was heavily criticized by amici curiae.

Background

The standardization of wireless telecommunications protocols is largely conducted under the auspices of the European Telecommunications Standards Institute (ETSI) and organizational partners such as the US-based Telecommunications Industry Association (TIA) and Alliance for Telecommunications Industry Solutions (ATIS). Parties that participate in these standards development organizations (SDOs) generally agree to license patents that are essential to the implementation of those standards (standards-essential patents or SEPs) to manufacturers of standardized products on terms that are fair, reasonable and nondiscriminatory (FRAND).

Avanci is a collective licensing platform (similar to a patent pool) that was formed in 2016 to license wireless SEPs to manufacturers in vertical markets including the automotive industry. As of this writing, Avanci’s website indicates that it has licensed SEPs to 37 automotive brands including BMW, Volkswagen, Mercedes, Ford and GM, and that its licenses cover SEPs held by nearly fifty different firms including Nokia, Qualcomm, Ericsson and InterDigital.  Avanci’s licensing rate for automotive 4G SEPs is $15 per vehicle.  Though Avanci itself is not a member of the relevant SDOs, most of the SEP holders participating in Avanci are members, thereby requiring that Avanci abide by their FRAND licensing requirements.

The Litigation

Continental AG is a German supplier of automotive electrical and navigation systems to automotive manufacturers.  In 2019, Continental’s U.S. subsidiary filed suit against Avanci, Nokia, Sharp and several other SEP holders, alleging, among other things, that Avanci breached its FRAND commitment by refusing to offer Continental and other automotive component suppliers a license to SEPs covering the 2G, 3G and 4G standards.  Specifically, Continental alleged that because Avanci’s $15 per-vehicle licensing fee would be exorbitant (i.e., in excess of FRAND) if applied to the $75 telematics control unit (TCU) sold by Continental, Avanci refused to license SEPs to component suppliers like Continental, and instead offered licenses only to automobile manufacturers.  Then, because $15 is negligible in comparison to the overall cost of an automobile, automobile manufacturers would likely pay the charge, but later seek indemnification from Continental for those supra-FRAND costs.  Continental thus argued that it was damaged by Avanci’s refusal to license it directly at a FRAND rate.

Continental’s complaint alleged that this refusal constituted, among other things, a breach of the nondiscrimination element of the SEP holders’ FRAND obligations, a group boycott in violation of Section 1 of the Sherman Act, and an abuse of the standardization system constituting monopolization in violation of Section 2 of the Sherman Act.

Dismissal at the District Court (485 F. Supp. 3d 712 (N.D. Tex. 2020))

Chief Judge Lynn in the Northern District of Texas declined to exercise supplemental jurisdiction over Continental’s breach of contract and other state law claims and, given that the court lacked diversity jurisdiction over the parties, dismissed those claims for lack of subject matter jurisdiction (Continental subsequently filed an action in the District of Delaware making those claims).

Judge Lynn next granted the defendants’ motion to dismiss, finding that Continental lacked antitrust standing to bring suit.  First, she held that Continental did not adequately plead an antitrust injury, as it did not suffer direct harm from Avanci’s alleged failure to grant it a SEP license.  She points out that despite Avanci’s alleged refusal, Continental continued to sell TCUs to automotive customers, and any indemnification claims by those customers were speculative.  Moreover, she found that any antitrust violation arising from Avanci’s charging SEP licensing rates in excess of FRAND were felt by the automotive manufacturers and not by Continental.  Accordingly, Continental was a “remote or indirect” victim of the alleged conduct, and therefor lacking standing to bring suit.

The court went on to find that, even if Continental had standing, its Sherman Act claims would fail.  Under Section 1, the rule of reason analysis as applied to patent pools is generally satisfied when pool members are free to license the pooled patents individually, as is the case with Avanci.  Citing Bell Atlantic v. Twombly, 550 U.S. 544 (2007), the court noted that “[t]o the extent the Licensor Defendants refused to negotiate with Plaintiff or only agreed to do so at the same prices at which they license to the OEMs, this alleges at best parallel conduct and the possibility of concerted action, which are insufficient to state a claim of an unlawful agreement to restrain trade” (485 F. Supp. 3d at 732).

Under Section 2, the court observed that the additional monopoly power that a SEP holder obtains through the inclusion of its patented technology in a standard is “inevitable as a very frequent consequence of standard setting, and is necessary to achieve the benefits served by the standard, including procompetitive benefits” (citing Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 501 (1988)) (485 F. Supp. 3d at 733).  It further noted that “[a] lawful monopolist’s charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system” and that “[a] patent owner may use price discrimination to maximize the patent’s value without violating antitrust law.” (485 F. Supp. 3d at 734).  Expressly disagreeing with other cases holding that “deception of an [SDO] constitutes the type of anticompetitive conduct required to support a § 2 claim”, Judge Lynn found that “[e]ven if such deception had also excluded Defendants’ competitors from being included in the standard, such harms to competitors, rather than to the competitive process itself, are not anticompetitive.” (Id. at 735). Accordingly, she found no violation of Section 2.   Continental appealed.

Fifth Circuit – Withdrawn Decision (27 F.4th 326 (5th Cir. 2022))

On February 28, 2022, the Fifth Circuit, in a surprising turn of events, vacated the district court’s judgment and remanded with instructions to dismiss Continental’s claims for lack of Article III standing. This holding obviated the Circuit’s need to address the district court’s holdings regarding antitrust standing and the merits.

The Fifth Circuit’s decision to reject standing on Article III grounds – a theory that was neither briefed by the parties nor addressed by the district court – surprised many.  This move was still more surprising given that the Circuit based much of its reasoning on facts that were not in evidence and assumptions that were not supported by the record.

For example, the Circuit reasoned that Continental was not an intended third party beneficiary of the FRAND commitments made by Avanci’s members because Continental was not a member of the relevant SDOs.  This conclusion contradicts numerous other cases, including the Fifth Circuit’s own decision in HTC Corp. v. Telefonaktiebolaget LM Ericsson, 12 F.4th 476, 481 (5th Cir. 2021), in which it held that “[c]ompanies seeking to license under [FRAND] terms become third-party beneficiaries of the contract between the standard-essential patent holder and the standard setting organization” and “are thus enabled to enforce the terms of that contract.”

Likewise, the Circuit reasoned that a component manufacturer like Continental “does not need SEP licenses” from SEP holders because those SEP holders “license the [automobile manufacturers]” that purchase its components.  This conclusion overlooks the fact that even if a SEP holder grants licenses to automotive manufacturers, not all manufacturers are licensed at any given time. Moreover, except in the unusual case in which a component supplier makes components to order for an automobile manufacturer, the manufacturer’s license does not necessarily insulate the component supplier from claims of patent infringement.

Rehearing and Withdrawal of Fifth Circuit Decision

These and other issues in the Fifth Circuit’s opinion led Continental and various amici to petition the Fifth Circuit for rehearing en banc.

On June 13, 2022, the Fifth Circuit treated the pending petition for rehearing en banc as a petition for panel rehearing, granted that petition, and withdrew its February 28 opinion in its entirety.

On June 21, the Circuit issued an unpublished, nonprecedential per curiam opinion in which it “affirm[ed] the judgment of the district court that Continental failed to state claims under Sections 1 and 2 of the Sherman Act.”  Thus, the Circuit’s prior discussion of Article III standing, as well as its statements regarding the nature and beneficiaries of the FRAND commitment, are nullified.  In addition, by mentioning only the district court’s substantive Section 1 and 2 holdings, the Circuit does not uphold the district court’s ruling on antitrust standing.

Conclusions

Continental v. Avanci is not necessarily over.  Additional appeals of the Northern District of Texas decision are still available, and the Delaware contractual breach case continues.  Yet, the Fifth Circuit’s unusual withdrawal of its February 28 decision is a positive development in the evolving law concerning FRAND and SEP licensing.  First, it reinforces the widely held understanding that all implementers of standards are intended third party beneficiaries of FRAND licensing commitments made to SDOs (or at least declines to introduce dicta contrary to that understanding).  Second, it fails to support the notion that a SEP holder may avoid its obligation to license the suppliers of standardized components by licensing their end customers.  And most importantly, it declines to support the abstemious construction of antitrust standing adopted by the district court.  While there is clearly more to come in this and other disputes between component suppliers and SEP holders, the Fifth Circuit has avoided further muddying the waters in this already murky area.

[Note: the author led a group of thirteen law and economics scholars advised by Setty Chachkes PLLC in the filing of an amicus brief supporting en banc rehearing of this case.]

The Federal Circuit’s Precedent/Outcomes Mismatch

By Paul R. Gugliuzza, Temple University Beasley School of Law; Jonas Anderson, American University Washington College of Law; and Jason Rantanen, University of Iowa College of Law

Recently, we wrote about the small number of mandamus decisions on transfer of venue that the Federal Circuit has designated as precedential and about how those precedential decisions are unrepresentative of overall outcomes. Specifically, the Federal Circuit has labeled only 15% of its venue mandamus orders as precedential. And, though the Federal Circuit grants venue mandamus less than a third of the time, the court has granted nearly 80% of the petitions it has decided in precedential orders.

As a comparison, we wanted to share some data on precedential opinion rates in regular Federal Circuit appeals (as opposed to mandamus petitions). Our data make two things clear.

  • First, opinions in regular appeals are more than twice as likely to be precedential than orders on venue mandamus.
  •  Second, the outcomes reported in those precedential opinions—like precedential mandamus orders—are skewed toward cases in which the Federal Circuit disagrees with the decision below.

On the first point, here’s the breakdown of precedential opinions, nonprecedential opinions, and Rule 36 affirmances for all Federal Circuit appeals from 2008 through 2021.

Table 1: Federal Circuit Panel Appeal Rulings, 2008 through 2021

Table 2 below breaks the data down by tribunal of origin.

Table 2: Federal Circuit Panel Appeal Rulings By Tribunal of Origin, 2008 through 2021

These two tables make clear that, overall, 30% of Federal Circuit appeals are decided in a precedential opinion. In district court cases—the most relevant comparator for venue mandamus petitions—the figure is 42%.

Either way, the proportion of appeals resolved in precedential opinions is substantially higher than for venue mandamus petitions. Moreover, the Federal Circuit decides more than a quarter of appeals in no-opinion affirmances—a mechanism the court does not employ for mandamus petitions. If we excluded Rule 36 affirmances from our calculations, the differences between appeals and mandamus orders would be even greater.

On the second point about skewed outcomes: Like with mandamus petitions, the results in precedential opinions disproportionately disagree with the lower court or agency. Table 3 below reports the outcomes and modes of disposition of all Federal Circuit appeals (excluding a few hundred appeals that were dismissed or that had an unusual outcome—namely, something other than affirmed, reversed, vacated, etc.) from 2008 through 2021.

Table 3: Federal Circuit Panel Appeal Rulings, Excluding Dismissals and Other Outcomes, 2008 through 2021

As the bottom row of the table makes clear, overall, the Federal Circuit fully affirms in 78% of appeals. Yet, as the first row of data indicates, only 53% of precedential Federal Circuit opinions affirm the lower tribunal; 47% vacate or reverse, at least in part. By contrast, nonprecedential opinions (the second row of data on the table) fully affirm 81% of the time. And, as indicated toward the bottom of the table, nearly 30% of Federal Circuit appeals are decided in no-opinion Rule 36 affirmances, which, by definition, also fully affirm across the board.

In short, looking only at precedential opinions, one might think that, in any given appeal, there’s about a 50-50 chance the Federal Circuit will at least partly disagree with the tribunal below. But, in reality, fewer than a quarter of the Federal Circuit’s decisions disagree with the tribunal below in any respect.

The disparity between the outcomes reported in precedential opinions versus overall results is equally stark when the data is limited to the primary sources of Federal Circuit patent cases—appeals from the district courts, the PTO, and the ITC. From those three tribunals, combined, only 48% of precedential opinions fully affirm. But the overall fully-affirmed rate in appeals from those tribunals is 73%. The figures below illustrate those vast disparities.

Figure 1: Federal Circuit Precedential Rulings in DCT, PTO, and ITC Appeals, 2008 through 2021

Figure 2: Federal Circuit Nonprecedential Rulings in DCT, PTO, and ITC Appeals, 2008 through 2021

The skew of precedential opinions toward decisions that disagree with the lower tribunal provide a misleading sense of what Federal Circuit’s rulings look like day in and day out, just like the Federal Circuit’s precedential venue mandamus orders provide an inflated sense of the likelihood of mandamus being granted. These findings also raise interesting questions about what happens to patent doctrine when it is developed in cases that are not representative of overall outcomes.

The data used in this post comes from the Federal Circuit Dataset Project, available at https://doi.org/10.7910/DVN/UQ2SF7 or empirical.law.uiowa.edu.

 

Who Escapes Texas? And Where Do They Go? Mandamus Petitioners and Transferee Courts in Patent Venue Disputes

By Paul R. Gugliuzza, Temple University Beasley School of Law; Jonas Anderson, American University Washington College of Law; and Jason Rantanen, University of Iowa College of Law. This is the second in a new series on venue transfer requests and mandamus at the Federal Circuit.

Litigants shouldn’t get to choose the judge who decides their case. To us, that seems like an uncontroversial proposition. The ability to “judge shop” is the primary reason patentees once flocked to the Marshall Division of the Eastern District of Texas to file their infringement suits and are now flocking to the Waco Division of the Western District of Texas, where they’re guaranteed to have their case assigned to Judge Alan Albright. Judge shopping, we’ve argued elsewhere, raises concerns about court bias and capture and can make litigation unnecessarily costly and inefficient.

Numerous scholars, members of Congress, and even the Chief Justice have raised concerns about judge shopping, with a particular eye toward patent cases. Likewise, the Federal Circuit has indicated skepticism about the rapid accumulation of patent suits in Waco. In the past two years, the court has used the extraordinary writ of mandamus to order over twenty patent cases filed in Waco to be transferred elsewhere under 28 U.S.C. § 1404(a), which permits transfer “[f]or the convenience of parties and witnesses, in the interest of justice.” (Over the same time period, the Federal Circuit granted only two § 1404(a) mandamus petitions arising from any other court, both from the Eastern District of Texas.)

Though we think the harms caused by a party being able to choose its own judge are clear and indisputable, there is a counternarrative. It goes something like this: the Federal Circuit is polluted with “anti-patent sentiment.” It is captured by the big tech companies that are the most frequent targets of infringement suits—Apple, Google, and the like. And the Federal Circuit is thwarting patentees (and innovation) by sending infringement cases away from patentees’ chosen courts in Texas to places that are friendlier to defendants, such as the Northern District of California.

Fortunately, data we have collected as part of our comprehensive empirical study of mandamus practice at the Federal Circuit can help us assess whether, when it comes to questions about patent venue, the Federal Circuit is really in the pocket of big tech.

First off, it is true that mandamus petitions seeking transfer from Texas to the Northern District of California are more likely to be granted than petitions seeking transfer to other districts. As the table below shows, from 2008 through 2021, the Federal Circuit granted 32.0% of mandamus petitions seeking to overturn a district court decision denying transfer from the Eastern District of Texas to the Northern District of California as compared to 25.6% of petitions seeking transfer from the Eastern District of Texas to any district besides the Northern District of California. Likewise, the Federal Circuit granted 63.2% of mandamus petitions seeking to overturn a district court decision denying transfer from the Western District of Texas to the Northern District of California as compared to 46.2% of petitions seeking transfer from the Western District of Texas to any district besides the Northern District of California.Overall, mandamus petitions seeking to overturn a district court decision denying transfer from either Texas district to the Northern District of California were granted 45.5% of the time, while petitions seeking transfer from either Texas district to any district besides the Northern District of California were granted only 30.8% of the time.

To be clear, this disparity in grant rates among transferee courts doesn’t establish that the Federal Circuit unduly favors Silicon Valley-based tech companies. Rather, it may be that cases filed against those companies in Texas present particularly strong cases for transfer given that the defendants’ offices, employees, documents, and R&D facilities tend to be located in California. Regardless, the data does make clear that a mandamus petition seeking transfer from Texas to the Northern District of California is nearly 40% more likely to be granted than a petition seeking transfer from Texas to any other district.

To better gauge big tech’s success at the Federal Circuit, we can also look at the grant rates for individual mandamus petitioners. We found these results, frankly, a little surprising. First of all, there are not as many repeat petitioners as one might think. In total, from 2008 through 2021, roughly 185 individual parties joined one or more petitions for a writ of mandamus seeking to overturn a decision by the Eastern or Western District of Texas denying transfer under § 1404(a). (For the purpose of this analysis, we combined obviously related corporate entities, such as Samsung Electronics and Samsung Electronics America. Also, because many petitions are joined by multiple parties, the total number of petitioners is much larger than the number of Federal Circuit decisions.)

The most frequent petitioner in our dataset is Apple, which filed 16 petitions over the 14 years covered by our study. The Federal Circuit granted 4 of those petitions. The most successful petitioner of note is Google, which prevailed on 4 of its 6 petitions. But those numbers are small, making it hard to draw definitive conclusions.

The table below shows the results of Federal Circuit mandamus decisions in which the Eastern or Western District of Texas denied transfer under § 1404(a), limited to petitioners who appeared in three or more decisions from 2008 through 2021.As indicated on the first table above, the overall grant rate for Federal Circuit mandamus petitions challenging denials of § 1404(a) transfer motions by the Eastern or Western District of Texas is 37.5%, so these frequent petitioners do about average. (Though of course the mandamus grant rates in cases out of the Eastern and Western Districts of Texas are much higher than in cases filed elsewhere.)

If we added the Federal Circuit’s mandamus decisions from 2022 (after we closed the dataset for our study at the end of 2021), the numbers would change somewhat. Apple is 2-0 this year, which ups its grant rate to 33.3%. Google also won its only petition in 2022, bumping its grant rate up even higher, to 71.4%. Samsung likewise is 1-0 this year, so its rate is now 50%. Still, we would hesitate to say that any of this establishes that the Federal Circuit is biased against patentees and in thrall to big tech.

To be sure, the world’s richest corporations, like Apple and Google, enjoy massive advantages any time they litigate; the notion that we have an impartial court system indifferent to litigants’ economic power is fanciful. But it’s also specious to claim that the Federal Circuit’s mandamus practice indicates court capture by big tech. More likely, the Federal Circuit is using the imperfect tools at its disposal to fix a real problem: the questionable incentives for both judges and litigants in a system where the party filing a case gets to choose its judge.

U Mass v L’Oréal: Avoiding indefiniteness through claim construction

By Jason Rantanen

University of Massachusetts, Carmel Laboratories, LLC v. L’Oréal, S.A., L’Oréal USA, Inc. (Fed. Cir. 2022) – opinion

Panel: Prost, Mayer, Taranto (author)

This opinion nominally addressing indefiniteness illustrates the power of de novo claim construction review at the Federal Circuit. UMass’s claimed invention is a topical skin care product containing adenosine that is applied to the skin. The district court concluded that the claim was indefinite, but on appeal the Federal Circuit negated the indefiniteness determination by adopting the claim construction proposed by L’Oréal – a victory for sorts of UMass but, based on the briefs, not the outcome it was looking for.

The difficulty in this case arose from the combination of the structure of the skin and the wording that UMass used to claim the invention. Starting with the skin structure, the relevant parts basically look like this:

Figure 1: “Artist”‘s representation of skin layers

Representative claim 1 of patent number 6,645,513 reads:

A method for enhancing the condition of unbroken skin of a mammal by reducing one or more of wrinkling, roughness, dryness, or laxity of the skin, without increasing dermal cell proliferation, the method comprising [1] topically applying to the skin a composition comprising a concentration of adenosine in [2] an amount effective to enhance the condition of the skin without increasing dermal cell proliferation, [3] wherein the adenosine concentration applied to the dermal cells is 10-3 M to 10-7 M.

(bracketed numbers and emphasis added).

Apparently seeking to avoid a noninfringement outcome, UMass argued that the “wherein” clause [3] referred to the concentration of adenosine that seeped into the dermis rather than the concentration of the product applied to the skin. But since  clause [1] and [3] thus referred to different concentrations, the result was an ambiguity in the meaning of composition clause [1] and “effective” clause [2]: what is a “concentration of adenosine in an amount effective to enhance the condition of the skin”?  Relying on the subjective determination precedent, the district court concluded that this phrase was indefinite: “Indeed, the determination of whether a person’s skin is enhanced provides a paradigmatic example of indefiniteness. Beauty, after all, is “in the eyes of the beholder.”” University of Massachusetts v. L’Oréal USA, Inc., 534 F. Supp. 3d 349 (D. Del. 2021). UMass appealed the indefiniteness determination, trying to thread the needle between a limiting claim construction and an indefiniteness outcome. L’Oréal both responded on the indefiniteness point and advanced its own claim construction argument.

The Federal Circuit could plausibly have affirmed on indefiniteness in my non-judicial opinion. However, instead the Federal Circuit focused on claim construction, walking through its standard claim construction analysis and concluding that clause [3] actually referred to the concentration of adenosine in the product applied to the skin, not the resultant concentration in the dermis. Because this removed a necessary predicate of the district court’s indefiniteness determination, the consequence was a remand to the district court for further proceedings.

The Federal Circuit first concluded that the claim itself was ambiguous about what clause [3] referred to: “We first conclude that the relevant claim language, es-pecially when viewed in the context of the whole claim, is not plain on its face, much less plain in supporting UMass’s interpretation of it.” Slip Op. at 8. The opinion spends several pages discussing this; worthwhile reading if you are making a text-based argument, but too much depth to go into in a blog post.

The next step in claim construction is to look at the specification. This didn’t provide much support for UMass’s claim construction position, however: “UMass has not shown that, even in this context, the specification makes clear that the inventors contemplated measuring the adenosine concentration after exposure to the cells, rather than in a solution before application to the cells.” Id. at 12.

The last step of the intrinsic evidence analysis, however, did produce a clear outcome to the court.  “Even more strongly than the specification, the prosecution histories of the patents in question resolve the ambiguity surrounding the meaning of “the adenosine concentration applied to the dermal cells” in the wherein clause.Id.  The Federal Circuit concluded:

The amendments and comments clearly convey that UMass was continuing the pre-amendment reliance on the concentration in the composition before application to the skin, rather than introducing a materially different, unexplained notion of concentration, no longer assessed before contact with the object of application. UMass’s proposed construction now cannot fairly be squared with the understanding that both it and the examiner expressed during prosecution, and on which skilled artisans are entitled to rely.

Id. at 14. Because the use of the prosecution history was to resolve a lingering ambiguity in the claim language, this was not a case where the “clear and unmistakable disclaimer” standard applied for overcoming an otherwise plain meaning of the claim.

Opinions Without Law: Federal Circuit Mandamus Decisions on Transfer of Venue

Guest post by Paul R. Gugliuzza, Temple University Beasley School of Law; Jonas Anderson, American University Washington College of Law; and Jason Rantanen, University of Iowa College of Law.

We’ve written here a few times about how the parties seeking Federal Circuit review use the writ of mandamus to get around the usual rule that only final, case-ending judgments can be appealed. The primary conclusion of our research (which will appear in the Washington University Law Review later this year) is that, though the Federal Circuit grants mandamus far more frequently than any other federal court of appeals, the Federal Circuit’s high grant rate is driven almost entirely by mandamus petitions in patent infringement cases out of the Eastern and Western Districts of Texas that raise questions about transfer of venue for convenience reasons under 28 U.S.C. § 1404(a).

For example, from late 2020 through the end of 2021, the Federal Circuit decided 34 mandamus petitions challenging § 1404(a) transfer decisions by Judge Alan Albright of the Western District of Texas, who now hears more patent cases than any other judge in the country. The Federal Circuit granted twenty of those petitions, or 58.9%. Overall, from 2008 through 2021, the Federal Circuit granted 37.3% of mandamus petitions out of the Eastern and Western Districts of Texas on § 1404(a) issues (38 of 102). Outside of § 1404(a) petitions from those two district courts, however, the Federal Circuit’s mandamus grant rate (on all issues, from all lower tribunals) was only 9.9% (30 of 304).

With the Federal Circuit issuing so many mandamus decisions on transfer of venue, one might presume that the law governing the standard for obtaining mandamus relief, as well as for evaluating transfer motions under § 1404(a), is robust and well-developed.

But that is far from true.

As an empirical matter, the Federal Circuit designated only 4 of the 34 recent mandamus decisions reviewing Judge Albright as precedential. And all 4 were grants. So not only is the quantity of precedential case law small, it’s not representative of overall results.

In fact, from 2008 through 2021, the Federal Circuit issued only 19 precedential decisions on § 1404(a) transfer out of 128 total decisions. And the precedential decisions disproportionately granted mandamus: 15 grants, only 4 denials. By comparison, in nonprecedential mandamus decisions, the grant rate was substantially lower: 26 grants, 83 denials. The figure below puts the unrepresentative nature of the Federal Circuit’s precedential § 1404(a) mandamus orders in stark relief.

Figure 1: Decision form for petitions for writs of mandamus at the Federal Circuit, 2008-2021This data raises the question: Does the lack of precedent and the skewed nature of the outcomes in it matter? Even if every Federal Circuit § 1404(a) mandamus decision were treated as binding precedent, the fact-intensive and case-specific nature of the § 1404(a) inquiry arguably permits a judge (whether a district judge or a Federal Circuit judge deciding a mandamus petition) to justify almost any outcome in a given case. Moreover, as a matter of Federal Circuit choice-of-law doctrine, transfer of venue issues that arise in patent cases, as well as the standard for obtaining the extraordinary writ of mandamus, aren’t even governed by Federal Circuit precedent—they’re governed by the precedent of the regional circuit from which the case arises.

Nevertheless, we think there are at least three reasons to be concerned about the current state of appellate precedent on mandamus and convenience transfer in patent cases.

First, it is strange that there is so little binding law on such important issues. In the regional circuits, mandamus decisions on transfer of venue are almost nonexistent. (From 2019 through 2021, there was only one, total.) And the same goes for mandamus more generally: as we report in more detail in our article, over the past three years, the Federal Circuit has granted roughly the same number of mandamus petitions (24) as every other federal court of appeals combined. Yet none of this Federal Circuit case law is “law” in the way lawyers usually think about appellate decisions that are labeled as “precedential.”

Second, the lack of binding precedent on venue-related mandamus illustrates the problematic nature of the Federal Circuit’s choice-of-law rules more generally, under which some legal issues that frequently arise in patent cases are not governed by the (often ample) Federal Circuit precedent on the issue. Other notable issues, in addition to venue and mandamus, that are not actually governed by Federal Circuit decisional law include: the standard for pleading a claim of patent infringement, the criteria for granting injunctive relief for patent infringement, and the substantive standards governing claims in other areas of federal IP law, such as copyright and trade secrets. (For a thoughtful critique of the entire concept of “circuit law,” see Tommy Bennett’s forthcoming article, There Is No Such Thing As Circuit Law.)

Finally, the Federal Circuit’s venue-related mandamus precedent (or, the lack thereof) provides another example of how the Federal Circuit’s decisions about whether to designate a ruling as precedential or nonprecedential can distort perceptions about what the court is really doing. For instance, as one of us showed in a prior study with Mark Lemley, the Federal Circuit upholds the validity of a patent over a challenge on patentable subject matter grounds about 20% of the time when it decides the case in a precedential opinion. In nonprecedential opinions and summary affirmances under Federal Circuit Rule 36, however, the court upholds the validity of a patent challenged as lacking patentable subject matter less than 2% of the time. Similarly, on § 1404(a) mandamus petitions, a review of precedential decisions makes it look like over three-quarters of them are granted. But, in reality, the grant rate is less than one-third.

What should be done to alleviate these concerns? For starters, the Federal Circuit should reconsider its needlessly complex, unpredictable—and arguably meaningless—choice of law regime. (We tend to think that most lawyers and judges treat the Federal Circuit’s § 1404(a) mandamus decisions as binding, even if they are not as a matter of formal doctrine.) Instead, the Federal Circuit should simply apply its own precedent to all federal issues that arise in patent cases. In addition, the Federal Circuit could be more conscientious when deciding whether to designate mandamus decisions as precedential, making sure that its precedential rulings are more representative of the population of mandamus decisions as a whole. More fundamentally, we might question whether the precedential/nonprecedential distinction continues to make sense in an age where the internet makes it easy to access the vast majority of federal appellate decisions (though certainly not all of them).

Thaler v Vidal: Oral Arguments on Monday

By Jason Rantanen

On Monday, June 6, the Federal Circuit will hear oral arguments in Thaler v. Vidal,  covered on PatentlyO here.  Dr. Thaler  claims that his AI system, DABUS, has invented a new technology and should be named as its inventor on the patent. Although access to the Federal Courts Building remains restricted, you can listen to the arguments live at https://cafc.uscourts.gov/home/oral-argument/listen-to-oral-arguments/. The court’s long had a practice posting recordings of oral arguments, but it’s great that they’re also making the audio available in real time.

If you’re interested in more context, students in Professor Colleen Chien’s, AI and the Law class wrote a series of blog posts covering the issue, including a post on Dr. Thaler’s legal arguments, a post on the DABUS technology, patents and patent applications, and the results of a small survey of patent prosecutors on AI in their fields.

Read more at Santa Clara’s AI and the Law for Social Impact and Equity blog!

A patent small claims court – what do you think?

By Jason Rantanen

The Administrative Conference of the United States (ACUS) is an independent federal agency that’s charged with recommending improvements to administrative process and procedure.  The position of Chairman is currently vacant, so the Vice-Chairman, Matthew Lee Wiener, is serving as Acting Chair. A key aspect of ACUS is soliciting  input from the public.

ACUS is conducting a study on behalf of the USPTO to examine “issues associated with and options for designing a small claims patent court.”  It recently published a request for public comments on the idea of a small claims patent court.  From the notice in the Federal Register:

Since at least the late 1980s, concerns have been raised that the high cost of
patent litigation deters small- and medium-sized enterprises, including
those owned by traditionally underrepresented groups, from seeking
to enforce their patents. Policymakers, scholars, and organizations have studied
whether a small-claims procedure is needed for resolving patent disputes.

They have reached different conclusions and proposed different actions.
The Department of Commerce has also considered the possibility of a
small claims patent court. Most recently, in December 2012, the USPTO
issued a Federal Register notice requesting public comment on ‘‘whether
the United States should develop a small claims proceeding for patent
enforcement’’ (77 FR 74830 (Dec. 18, 2012)).

Given ongoing interest in the topic, USPTO has engaged ACUS to conduct
an independent survey and analysis of issues associated with and options to
consider in designing a small claims patent court. A report resulting from the
study will ultimately be submitted to Congress and will address, among other
topics, whether there is a need for a small claims patent court, the feasibility
and potential structure of such a court, and the relevant legal, policy, and
practical considerations in establishing a small claims patent court.

Although ACUS is seeking all comments on the topic, they’ve specifically pointed out these areas of interest:

1. Whether there is need for a small claims patent court;

2. The policy and practical considerations in establishing a small
claims patent court;

3. The institutional placement, structure, and internal organization of a
potential small claims patent court, including whether it should be
established within the Article III federal courts, as or within an Article I court,
or as an administrative tribunal;

4. The selection, appointment, management, and oversight of officials who preside over proceedings in a potential small claims patent court;

5. The subject-matter jurisdiction of a potential small claims patent court,
whether participation in such proceedings would be mandatory or
voluntary, and whether parties can remove cases to another administrative
tribunal or federal court;

6. The procedures and rules of practice for a potential small claims
patent court, including, as relevant, pleadings, discovery, and alternative
dispute resolution;

7. The remedies that a potential small claims patent court would be able to
provide;

8. The legal effect of decisions of a potential small claims patent court; and

9. Opportunities for administrative and/or judicial review of small claims
patent court decisions.

While I forsee lots of issues associated with a small claims patent court, I would imagine that the issue preclusion issues arising from an invalidity determination would be need especially carefully thought out, as well as whether patent owners could use this mechanism to bring large quantities of suits against consumers/end users who lack the resources to adequately defend themselves against a patent infringement claim.

Comments are due by July 5, 2022, and can be submitted at “info@acus.gov,” with “Small Claims Patent Court Comments” in the subject line of the message.  Remember that submitted comments may be made publicly available.

Credit to Jeremy Graboyes for bringing this to my attention.

Guest Post by Prof. Contreras: A Statutory Anti-Anti-Suit Injunction for U.S. Patent Cases?

Guest Post by Professor Jorge L. Contreras

On March 8, 2022, five U.S. senators[1] introduced the “Defending American Courts Act” (DACA) in the Senate Judiciary Committee.  If enacted, DACA would penalize parties that assert foreign anti-suit injunctions (ASIs) in U.S. patent infringement proceedings, effectively creating a statutory “anti-anti-suit injunction” (AASI) applicable in all courts across the U.S.  In this post, I briefly consider the reasons behind the DACA and its potential impact.

The Controversy over ASIs in FRAND Cases

The controversy over ASIs has been brewing for several years.  As I have discussed at length elsewhere, ASIs are in personam procedural remedies that have existed under the common law for centuries. Essentially, an ASI is issued by a first court to prevent a party from pursuing litigation in a second court when it would interfere with the proceedings in the first court. ASIs have been issued routinely by courts in the U.S. and UK, for example, to prevent a party from pursuing litigation over a matter that is subject to an arbitration agreement.

Beginning in 2012, however, ASIs emerged as litigation tools in suits involving the licensing of standards-essential patents (SEPs).  Under the rules of several major standards-development organizations (SDOs), SDO participants that hold patents that are essential to products implementing the SDO’s standards must license those patents to product manufacturers (implementers) on terms that are “fair, reasonable and nondiscriminatory” (FRAND).  Because SDOs, as a rule, do not specify the level of FRAND royalties, SEP holders and implementers sometimes disagree over the amounts that should be paid. Litigation ensues, both as to the SEP holder’s compliance with its FRAND commitment, and the implementer’s infringement of the SEPs (given that it does not yet have a license).  And because many of the markets for standardized products (e.g., smartphones, laptops and gaming devices) are international, litigation is often prosecuted in several countries simultaneously.

In 2012, Microsoft and Motorola were engaged in such a dispute.  Microsoft sued Motorola for violation of its FRAND commitments to two SDOs in a U.S. district court.  Motorola brought an infringement action against Microsoft in Germany.  The German court, finding infringement, issued an injunction against Microsoft’s infringing activity in Germany.  Microsoft then sought an ASI from the U.S. to prevent Motorola from enforcing the German injunction.  The district court granted the ASI on the basis that the parties were the same, the resolution of the U.S. matter would dispose of the German matter, and the continuation of the foreign litigation would frustrate U.S. policies against avoiding inconsistent judgments, forum shopping and engaging in duplicative and vexatious litigation (871 F. Supp. 2d 1089, 1098-100 (W.D. Wash. 2012), aff’d 696 F.3d 872 (9th Cir.)).

ASIs and FRAND Litigation in China

In 2017, the UK High Court (Patents) established a global FRAND royalty rate in Unwired Planet v. Huawei, a case involving the infringement of a handful of UK SEPs.  Courts in China soon followed suit, assessing FRAND rates applicable around the world (Peter Yu, Yu Yang and I discuss this trend here). In response, parties litigating FRAND cases in the U.S. sought ASIs to enjoin their counterparties from pursuing those actions in China, at least until U.S. courts could make their own FRAND determinations.  In at least two of these cases, U.S. courts issued ASIs prohibiting actions in China (TCL v. Ericsson, 2015 U.S. Dist. LEXIS 191512 (C.D. Cal.), and Huawei v. Samsung, No 3:16-cv-02787-WHO (N.D. Cal., Apr. 13, 2018) – both cases are discussed here).

Then, beginning in 2020, Chinese courts began to issue ASIs of their own, this time prohibiting competing actions in the U.S., Europe, India and elsewhere.  During the course of 2020, Chinese courts, including the Supreme People’s Court, issued an unprecedented five ASIs to prevent parties from pursuing foreign actions that could interfere with their own proceedings (these ASIs are discussed here).

In response to this move, courts in the U.S., Germany, France and India began to issue anti-anti-suit injunctions (AASIs), prohibiting the parties before them from seeking ASIs (discussed here and here and here).  Not surprisingly, some courts, including those in China, then issued anti-anti-anti-suit injunctions (AAASIs) to prevent parties from seeking AASIs – a procedural spiral that I have referred to as “anti-suit injunctions all the way down”.

Political Responses to Chinese ASIs

The increasing use of ASIs by Chinese courts has led to political responses in the U.S. and Europe.  In February, the European Union filed a complaint in the World Trade Organization over China’s lack of transparency in issuing ASIs against European parties. And in April 2021, the U.S. Trade Representative described China’s increasing use of ASIs as “worrying” in her Special 301 Report.

The DACA also seeks to address this situation.  Senator Thom Tillis, in introducing the bill, stated “The Chinese Communist Party’s attempt to make Chinese courts the world arbiter of intellectual property must be stopped.” The bill’s sponsors explain that its purpose is “to prevent China from stealing intellectual property from American companies through their corrupt court system.”  Thus, while the text of DACA speaks to all “foreign” ASIs, the bill seems targeted directly at Chinese proceedings.

The Defending American Courts Act

If enacted, DACA would impose two types of penalty on a party that seeks to restrict an action for patent infringement before a U.S. court or the International Trade Commission (ITC) through the assertion of a foreign anti-suit injunction.  First, the party is prohibited from challenging the asserted patent at the Patent Trial and Appeals Board (PTAB) (Sec. 2(c)).  Second, if the party is found to infringe the patent, the infringement will be presumed to be “willful” for purposes of enhancing damages under Section 284 of the Patent Act, and the action will be deemed “exceptional” when determining whether to award attorney fees under Section 285 (Sec. 2(b)).

The text of DACA is not particularly detailed, leaving open many questions regarding the proceedings, both foreign and U.S., that would be affected (e.g., Does DACA affect PTAB actions initiated prior to the assertion of a foreign ASI? If so, is there any effect on preclusion of district court invalidity challenges under the recent CalTech v. Broadcom case? Is an action still deemed “exceptional” for awards of attorneys’ fees even if the asserted patents are eventually invalidated?)  Hopefully some of these gaps will be filled as and if the bill moves through committee.  To this end, DACA also calls for the USPTO to conduct a study of “the harms resulting from anti-suit injunctions” (Sec. 3(a)(2)) within one year of the enactment of the Act.  Perhaps it would make sense for this study to be conducted before legislation like DACA is adopted, to determine what harm, if any, should be addressed, and what the most appropriate response might be.

DACA as a Legislative AASI?

Despite the rhetoric accompanying its introduction, the measures that would be imposed by DACA are relatively modest. While one could conceptualize DACA as a legislative version of the AASI, it does not actually prohibit parties from seeking or asserting foreign anti-suit injunctions in U.S. tribunals, nor would it direct U.S. courts to issue AASIs or take other actions in response to the assertion of foreign ASIs.

In fact, the AASIs already issued by courts in the U.S., Europe and India in response to Chinese ASIs are generally more punitive than the contingent measures that would be imposed under DACA.  For example, in Ericsson v. Samsung, No. 2:20-CV-00380-JRG (E.D. Tex. Jan. 11, 2021), a U.S. district court responded to an ASI issued to Samsung by a court in China by prohibiting Samsung from enforcing the ASI against Ericsson (under penalty of contempt) and ordering Samsung to indemnify Ericsson against any monetary penalties imposed by the Chinese court.

Thus, while the penalties imposed by DACA are meaningful and may, indeed, dissuade some litigants in U.S. matters from seeking foreign ASIs, it is not clear that they offer greater deterrents than the AASIs that U.S. courts are already empowered to issue.

DACA, of course, offers an ex ante deterrent, imposing a penalty before a foreign ASI is sought or asserted in the U.S.  However, courts in Germany have recently begun to issue preemptive AASIs ordering parties who have not yet initiated any actions in China not to do so, given the “prevalent trend of Chinese companies filing ASIs” (discussed here and here), and a Dutch court has also indicated that it might consider doing so.

What Goes Around Comes Around

A final thought: despite the explicit anti-China tenor of the comments accompanying DACA’s introduction, we should remember that ASIs are not Chinese inventions.  They are products of the common law and were first used in FRAND cases by U.S. courts against actions in China.  As my co-authors and I argue here, the Chinese courts effectively “transplanted” ASIs to China from the U.S. and UK.

Like ASIs themselves, it is not unlikely that the enactment of DACA in the U.S. will trigger foreign responses in kind.  What would happen if China, Germany and other countries adopted legislation similar to DACA, preventing U.S. companies in foreign courts from enforcing ASIs issued by U.S. courts? As a procedural mechanism in U.S. and foreign proceedings, the ASI has many legitimate uses.  Yet legislative deterrents imposed by other countries could limit the use of ASIs by U.S. parties when appropriate.  One risk of unilateral measures such as DACA is that they could trigger reciprocal actions by other countries that could cause more harm than good to U.S. companies and markets.  It is thus important that policy makers consider fully both the potential benefits of DACA, as well as its potential costs.  As noted above, the study called for under Section 3(a)(2) of DACA might be useful to conclude prior to the enactment of legislation of this nature.

[1] Thom Tillis (R-NC), Chris Coons (D-DE), Tom Cotton (R-AR), Mazie Hirono (D-HI), and Rick Scott (R-FL)