All posts by Jason Rantanen

About Jason Rantanen

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

Guest Post by Ryan Abbott: Reflections on Recentive v. Fox: To Do or not To Do it with AI?

By Ryan Abbott. Professor Abbott, MD, JD, MTOM, PhD, is Professor of Law and Health Sciences at the University of Surrey School of Law, Adjunct Associate Professor of Medicine at the David Geffen School of Medicine at UCLA, partner at Brown, Neri, Smith & Khan, LLP, and a mediator and arbitrator with JAMS, Inc.

Recently, the Federal Circuit handed down its decision in Recentive v. Fox which the Court stated presented a question of first impression: “whether claims that do no more than apply existing methods of machine learning to a new data environment are patent eligible.” Recentive Analytics, Inc. v. Fox Corp., 134 F.4th 1205 (Fed. Cir. 2025). As the framing of the question suggests, the Court answered in the negative, confirming that patents that simply take an abstract idea and “do it with AI” are not statutory subject matter.

Since this decision, questions have come up about what this might mean for the patenting of inventions relating to artificial intelligence (AI) in the United States, and by extension, America’s leadership in AI development. Even before this case, the argument has been made that getting patents on AI innovations is difficult or impossible under the current law, and therefore patent eligibility reform is needed. These are important questions. As I have argued for years in my work on the Artificial Inventor Project, and as I testified on in Congress, AI technology is playing a rapidly growing role in the innovation process. We want to make sure the patent system is promoting the development and use of AI so that it can be used to generate socially valuable innovation (and that there are no legal concerns when that happens, including related to inventorship).

My view is that current patent eligibility law as it pertains to abstract ideas best supports the AI development and innovation that we need in the United States. The current approach permits the patenting of all aspects of AI technology – from the development and training of machine learning models to the applications of those models. Recentive gave us a glimpse into how patent eligibility law applies at one end of the AI patenting spectrum, and it reached the right conclusion.

Before delving into Recentive, it is helpful to understand the application of patent eligibility law in a traditional software patenting context. Eligibility analysis relies on the two-step Alice/Mayo test, which first determines whether claims are directed to judicial exceptions to eligible matter, namely abstract ideas, laws of nature, or natural phenomena. Alice Corporation v. CLS Bank International, 573 U.S. 208 (2014); Mayo Collab. Servs. v. Prometheus Lab’ys, Inc., 566 U.S. 66 (2012). If claims are directed to a judicial exception then to be patent eligible they must recite additional elements that amount to “significantly more” than the judicial exception. Mayo, 566 U.S. at 72-73. The Supreme Court has described the second part of the test as the search for an “inventive concept”. See MPEP § 2106. This is the Supreme Court’s way of ensuring that a true, technological invention lies at the heart of the patent and that it isn’t just an abstract idea dressed up to look like a real invention.

For more than a decade, the Alice/Mayo two-part test has been the exclusive test for software patent eligibility analysis. It balances patent incentives with the need to allow the public to utilize “the basic tools of scientific and technical work.” Alice Corp., 573 U.S. at 216. Patents on such tools could do more harm than good and “might tend to impede innovation more than it would tend to promote it.” Id. Claims are not ineligible simply because they involve judicial exceptions, the applications of such concepts remain protectable. Indeed, the Federal Circuit has subsequently clarified that claims directed to software and improvements in computer-related technologies are not inherently abstract. See, e.g., Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016); see also Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253, 1258 (Fed. Cir. 2017). Judicial exceptions have existed for more than 150 years, and a significant amount of case law has now applied Alice/Mayo in the context of software patents.

The Federal Circuit has tended to require patent applications to describe specific improvements over the prior art that improve a process, whether software- or hardware-based, rather than merely performing an existing process on a computer. This has allowed a wide range of computer-implemented claims to be found patent-eligible. See, e.g., McRO Inc. v. Bandai Namco Games America Inc., 837 F. 3d 1299 (Fed. Cir. 2016); Amdocs (Israel) Ltd. v. Openet Telecom Inc., 841 F. 3d 1288 (Fed. Cir. 2016); Ancora Technologies Inc. v. HTC America Inc., 908 F. 3d 1343 (Fed. Cir. 2018). This standard thus encourages research and development into improvements in computer processes, while preventing applicants from broadly tying up the use of computers to perform existing processes and relying on functional claiming (e.g., filtering content on a computer, unless an improvement over the prior art for filtering content; parsing, editing, sorting, and comparing data, absent a specific inventive method for carrying out these functions). See BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir. 2016); see Berkheimer v. HP Inc., 881 F.3d 1360, 1366 (Fed. Cir. 2018).

With the foundation of applying patent eligibility law to traditional software patents, we can more fully understand the Federal Circuit’s assessment of patent eligibility in an AI context in Recentive. This case concerned the eligibility of using machine learning, a subset of AI, to generate network maps and schedules for television broadcasts and live events. Recentive was appealing the district court’s ruling that its patents were directed to ineligible subject matter under 35 U.S.C. §101. The Federal Circuit affirmed the lower court on the basis that the patents lacked an inventive concept and were directed to the abstract idea of using a generic machine learning technique in a particular environment.

Preparing network maps is a long-standing practice, if a sophisticated and niche one that has traditionally been performed by human beings. Recentive characterized its patents as applying existing, generic AI approaches to this specific context. In other words, “do it with AI.”

This type of “do it with AI” claim is ineligible under the two-step Alice inquiry.  On the first step, the Court found that the claims were directed to the abstract idea of producing network maps and event schedules using known standard mathematical techniques. Recentive’s patent did not claim or describe how the machine learning technology resulted in a technological improvement. Instead, the patent was just about using AI to perform a task previously done by humans more quickly or efficiently without actually explaining how to accomplish that, which does not create eligibility. This is the same application of the Alice/Mayo test to traditional software patents.

On the second step, which looks at whether additional elements add an “inventive concept” that transforms an otherwise ineligible claim, the Court also found the patents failed. The patents only provided broad, functionally described common computing techniques and devices—again merely claiming an abstract idea.

While the Court framed Recentive as a question of first impression, the Federal Circuit has long held that software claims do not become eligible by limiting their application to a particular field or environment – eligibility does not result from taking an abstract idea and throwing in “do it on a computer” or “do it over the internet.” See, e.g., Intell. Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1366 (Fed. Cir. 2015). Similarly, that applying an existing technology to a new database does not create eligibility.  See, e.g., SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1168 (Fed. Cir. 2018). Like the software patent cases that came before it, Recentive just applied AI to an existing framework.

While simply describing an abstract idea and adding “do it with AI” is not patentable (nor should it be), patent protection is available for all aspects of AI innovation. Practitioners have outlined best practices for drafting these patent applications, emphasizing the importance of providing sufficient detail and explaining the technical advantage of the claimed solution. https://www.fr.com/insights/thought-leadership/articles/ai-patent-eligibility-observations-and-lessons-for-the-us-and-china/ (“The key for applicants is to clearly show that their claim improves a technological process rather than merely uses technology to perform an existing process.”) https://www.troutman.com/insights/locke-lord-quickstudy-patenting-ai-inventions.html. (“Draft a strong patent application… Focus on technical aspects and algorithms… Provide experimental evidence and results…”). Of course, applicants must also ensure what is being claimed is commensurate with what was actually invented and not improperly tying up the basic tools of further scientific development. The USPTO’s most recent guidance on patent subject matter eligibility in 2024 provided some examples as well.  See, e.g., https://www.uspto.gov/sites/default/files/documents/2024-AI-SMEUpdateExamples47-49.pdf.

Recent district court decisions applying Recentive have also upheld claim eligibility for AI-related claims. Aon Re, Inc. v. Zesty.AI, Inc., No. CV 25-201, 2025 WL 1938214 (D. Del. July 15, 2025) (“The claim thus implements machine-learning technology in a specific way to address a practical technical problem: how to accurately and quickly assess the physical characteristics and condition of a property from an aerial image using machine learning models.”); Nielsen Co. (US), LLC v. Hyphametrics, Inc., No. CV 23-136-GBW, 2025 WL 1672002 (D. Del. June 13, 2025) (Claimed method provides “an improvement to the technical field of image processing, and, in particular, to improving speed and reliability of detecting overlays in images, with reduced or eliminated human oversight… These claims contain structure because they, inter alia, recite the specific [neural] networks used to perform the detection”).

Though all aspects of AI can be patented under Alice – and our patent eligibility law aims to ensure that AI patents do not over-claim in a way that would harm further AI innovation and usage – AI has nonetheless become yet another argument in support of patent eligibility reform. Various changes have been proposed over the past decade to expand the scope of section 101. Most recently, Senator Thom Tillis re-introduced the Patent Eligibility Restoration Act (PERA) in the Senate. https://www.congress.gov/bill/119th-congress/senate-bill/1546/text. This Act would eliminate all judicial exceptions to patent eligibility, replacing them with explicit and narrow statutory exclusions: 1) a mathematical formula not integrated into a claimed invention; 2) a mental process performed solely in the human mind; 3) an unmodified human gene as it exists in the human body; 4) an unmodified natural material as it exists in nature; and 5) a process that is primarily economic, financial, business, social, cultural, or artistic in nature. Most relevant to the issue of AI patenting, and what would be patent-eligible if PERA were to become law, the bill includes an eligibility escape hatch. It states that “the claimed invention shall not be excluded from eligibility for a patent if the invention cannot practically be performed without the use of a machine or manufacture.” This would mean that any abstract ideas could be patented if implemented on a computer leveraging computational capabilities. Effectively all AI inventions “cannot practically be performed without the use of a [computer].” This means that under PERA, “do it with AI” patents like the one found to be ineligible in Recentive would be eligible.

As a result, PERA would be a significant shift for patent eligibility of computer-related patents, and one that would harm rather than help the development and use of AI. Problematically, by untethering patent eligibility for abstract ideas from the requirement that patents be about technological improvements, PERA would allow patents that harm the development and widespread usage of actual technology. This in turn is likely to result in more patent thickets which will make AI development increasingly difficult and expensive, it will give incumbents more leverage over startups, and it risks holdups from foreign adversaries abusing the patent system. This is precisely the type of approach that allowed a flood of “do it on a computer” and “do it on the internet” patents to harm software development and usage for years. It is not a standard that is likely to help the United States remain the world’s leader in AI development.      Nor is it a standard that will support innovators using AI as part of their development process.

And that is where our focus should lie: making sure our patent system is helping to incentivize AI technology development and usage in order to move the field forward. Patent eligibility has a pivotal gatekeeping role in the system, as the Federal Circuit correctly showed in Recentive. The line that has been drawn and applied in a software context for years is also the right one for AI.

The author represents that he is not being paid to take a position in this post. In addition to being an academic, the author is a practicing attorney and represents clients with interests on both sides of the post’s subject matter.

Federal Circuit Decisions – 2024 Stats and Datapack

By Jason Rantanen

It’s time for the annual Federal Circuit statistics update! As I’ve done for the past 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 containing information on all Federal Circuit decisions and docketed appeals. The court’s decisions are collected automatically from its RSS feed, and my research team uses a combination of Python-based algorithmic processing and manual review to code information about each document.

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, and the codebook is also available there. If you’re a researcher interested in using the dataset, feel free to reach out—I’m happy to help you work with the data or answer questions about it.

On to the data!

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 own metrics). Overall, about 20% of the Federal Circuit’s merits terminations were issued as Rule 36 summary affirmances.

Opinions vs. Summary Affirmances

For 2024, the overall number of merits decisions increased by about 70 compared to 2023. As in recent years, the highest number of merits decisions arose from the PTO. However, decisions arising from the district courts increased by about 20% in 2024. The court issued 115 merits decisions from the district courts in 2024, up from 95 in 2023 and close to 117 in 2022. In contrast, there was a decline in decisions arising from the PTO—from 190 in 2023 to 165 in 2024.

Figure 2a

Figure 2b

Figures 2a and 2b show the number of opinions versus Rule 36 summary affirmances arising from the district courts and PTO. In 2024, the Federal Circuit continued to issue Rule 36 affirmances fairly often in appeals from the PTO but only rarely in appeals from the district courts. Figure 3 displays the overall frequency of Rule 36 affirmances relative to opinions across all origins.

Figure 3

What about the opinions the court is issuing? As shown in Figures 4a and 4b, the court continues to issue nonprecedential opinions regularly in appeals from the district courts, and somewhat less frequently in appeals from the PTO. In other words, the court typically issues an opinion (rather than a Rule 36) in appeals from the district courts, but when it does, it’s just as likely to be nonprecedential as precedential. Conversely, while opinions in PTO appeals are less common, they are more likely to be precedential.

Figure 4a

Figure 4b

Dispositions

Figure 5 shows the general disposition of Federal Circuit appeals – in other words, whether the panel affirmed, affirmed-in-part, reversed-in-full, etc. Overall, affirmances in appeals from the district courts were a little less frequent last year (65% affirmance in full; 76% affirmance in full or part), while affirmances in appeals from the USPTO continued to be common (84% affirmance in full; 92% affirmance in full or part).

Figure 5a

Figure 5b

Figure 6 shows the distribution of terminating documents of any type for 2024 regular appeals. About 57% of terminating documents were Opinions or Rule 36 summary affirmances (i.e., merits decisions). Most of the remainder were dismissals (including voluntary dismissals), with a small number of transfers and remands (typically issued through orders). Note that these terminations are counted per document, and appeals dismissed for procedural reasons (such as failure to prosecute) are sometimes later reinstated—so the percentage of appeals ultimately terminated via dismissal is somewhat lower than shown in this figure.

As with the previous figures, the unit of record for Figure 6 is a document—i.e., an opinion or order. A single document, such as an opinion, may decide multiple appeals.

Miscellaneous Dockets

What about petitions for writs of mandamus? These, along with petitions for permission to appeal, are shown below. Figure 7 indicates a slight decrease in the number of decisions on petitions last year. Nearly all (42) of the 2024 decisions on miscellaneous docket matters involved petitions for writs of mandamus.

Figure 7

What were the outcomes of these petitions? Of the 20 decisions on writs of mandamus arising from the district courts in 2024, just one was granted—a substantial shift from recent years.

If you’d like to explore the data yourself, it’s archived on the Harvard Dataverse. I’ve also updated the docket dataset to include appeals filed in 2024. A printout of the Jupyter Notebook used to generate this report is available there, along with an Excel file containing the underlying data tables. If you use the datasets, please cite them as follows:

  • Replication materials for blog post:
    Rantanen, Jason, 2023, “Replication Data for ‘Federal Circuit Decisions Stats and Datapack'”, https://doi.org/10.7910/DVN/HPARYR, Harvard Dataverse, V6

  • Document dataset:
    Rantanen, Jason, 2021, “Federal Circuit Document Dataset”, https://doi.org/10.7910/DVN/UQ2SF7, Harvard Dataverse, V7, UNF:6:cbz6tO1MyVSewzIAncqf2A==

  • Docket dataset:
    Rantanen, Jason, 2021, “Federal Circuit Docket Dataset”, https://doi.org/10.7910/DVN/EKSYHL, Harvard Dataverse, V6, UNF:6:io8bOGQ323wHBLZMlUsm+w==

 

PatCon 13, April 10-12

PatCon 13 at University of San Diego, April 10-12

The Patent Conference (“PatCon”) is the largest annual conference for patent scholars globally. PatCon 13 will be a three-day event held from Thursday, April 10, to Saturday, April 12, at the University of San Diego School of Law, in conjunction with its annual conference. PatCon will feature over 40 prominent law professors, economists, and attorneys. Qualcomm’s General Counsel, Ann Chaplin, will deliver the keynote on Thursday, and Professor Bronwyn Hall, UC Berkeley, will receive the Extraordinary Achievement Award, plus present a plenary lecture, on Friday. The event is free to all academics, students, government attorneys, and in-house counsel. More information can be found here

Guest Post by Profs. Masur & Ouellette: Patent Disclosure and After-Arising Technologies

Guest post by Professors Jonathan S. Masur (Chicago Law) and Lisa Larrimore Ouellette (Stanford Law).

This blog recently covered the Federal Circuit’s important decision in In re Entresto (Novartis Pharmaceuticals v. Torrent Pharma), 125 F.4th 1090 (Fed. Cir. 2025), which upheld patent claims even though they covered after-arising technology that was not described or enabled in the specification. As Dennis noted, the Federal Circuit appeared to depart from well-established prior law on the subject. But as we explain in our forthcoming article, Disclosure Puzzles in Patent Law, we believe the court should move the law further still from where it stands—and it should correct some of its reasoning along the way.

To review, In re Entresto involved a patent that claimed a pharmaceutical composition of two hypertension drugs, valsartan and sacubitril, “in combination.” When the patent was filed, the only known method of combining these chemicals was in a physical mixture. That is the only combination method disclosed in the specification. In the intervening years, however, scientists have discovered a means of combining the two chemicals in a “complex,” an arrangement in which they are connected by weak chemical bonds. This is the method used to make the accused infringing drug. The patent owner argued successfully that the claim language (“in combination”) was broad enough to cover this mode of combination. But the fact that the use of a complex was after-arising technology—and thus the specification said nothing about it—raised written description and enablement issues.

The Federal Circuit upheld the patent against both challenges for basically the same reason: that the specification demonstrated that the patentee possessed and enabled the full scope of the claims at the time the patent application was filed. In other words, the patent claimed the two chemicals “in combination,” and the specification had indeed described and enabled the two chemicals “in combination.” But the court’s reasoning was peculiar. The court asserted that the after-arising technology—the combination of the two chemicals into a complex—“is not what is claimed.” To argue otherwise, the Federal Circuit declared, would be to “erroneously conflate[] the distinct issues of patentability and infringement.” (more…)

Announcing FRAND: German Case Law and Global Perspectives

Guest Post by Thomas F. Cotter, Taft, Stettinius & Hollister Professor of Law, University of Minnesota Law School

Cover of FRAND

As readers of this blog are aware, organizations such as the European Telecommunications Standards Institute (ETSI), IEEE, and others promulgate standards that enable products such as smartphones and other complex technological devices to interoperate.  These standard-setting organizations (SSOs) encourage their members to commit to licensing patents that may be essential to the practice of the relevant standards on fair, reasonable, and nondiscriminatory (FRAND) terms.  Because SSOs do not define the meaning of FRAND, however, when the owners of these standard-essential patents (SEPs) and the companies that implement them fail to reach terms, litigation is often the result.  And because patents are territorial rights, FRAND litigation often spans the globe—though because of its importance to the European market, Germany has been home to many of the most important FRAND cases over the past decade.  The German FRAND case law, in turn, is based in part on the German courts’ interpretation of European Union competition (antitrust) law, and differs in important respects from the approaches taken in FRAND cases in other leading jurisdictions, including the United Kingdom, the United States, and China. (more…)

Guest Post by Profs. Lemley & Ouellette: Fixing Double Patenting

Guest post by Professors Mark A. Lemley and Lisa Larrimore Ouellette of Stanford Law School.

Two of the most controversial patent law changes of the past year have involved obviousness-type double patenting, which allows applicants to patent obvious variants of their earlier patents by disclaiming the extra term of the later-expiring patent. First, the Federal Circuit held in In re Cellect that patents tied by double patenting must expire on the same day even if one of the patents has received a patent term adjustment (PTA) giving it a more-than-twenty-year term. The en banc denial and pending cert petition in Cellect have attracted substantial interest from amici and commenters. Second, the USPTO proposed that terminal disclaimers include a commitment to not enforce the patent if any claims in the patent to which it is tied are found to be obvious or not novel. Early commentary on the proposal was “overwhelmingly negative.”

In our new draft article, Fixing Double Patenting, we argue that this outcry is unwarranted.


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Guest post by Prof. Holbrook: Extraterritoriality and Patent Damages Under § 271(a)

Guest post by Tim Holbrook. Robert B. Yegge Endowed Distinguished Professor of Law and Provost's Professor, University of Denver Sturm College of Law.

United States patents are generally territorial.  Their exclusive rights only operate within the United States and its territories.  Or so one may think reading the Patent Act.  Moreover, in a global marketplace, the territorial nature of intellectual property rights can create challenges. It would be simpler for a patent holder to just use the U.S. patent to cover foreign activity. This is especially true if a domestic act of infringement has spillover effects into other countries.

So, when – if ever – can a patent owner receive damages for foreign activity that may flow from acts of domestic infringement?

The Supreme Court answered that question  


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Guest Post: Where Are the Patent Judge Shoppers Going?

By Paul R. Gugliuzza and J. Jonas Anderson

In the past few weeks, more and more people outside of patent law have learned about ‘judge shopping’—quirks in procedural rules that allow plaintiffs to pick not just a court but the individual judge who will hear their case.

Republican state attorneys general and conservative activists have been exploiting those rules to challenge federal government policies on abortion, immigration, gun control, transgender rights, and more in front of sympathetic, Republican-appointed judges, primarily in Amarillo and Wichita Falls, Texas.

Last month, the Judicial Conference of the United States (a group of judges who oversee the operation of the federal courts) issued a new policy urging courts to adopt case assignment procedures that prevent judge shopping, especially in cases challenging federal law.

Predictably, the beneficiaries of judge shopping—namely, Republicans—decried the new policy as politically motivated and urged district courts to ignore it. Democrats, for their part,


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Guest Post by Prof Burstein: Sanctions & Schedule A

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

Jiangsu Huari Webbing Leather Co., Ltd. v. Joes Identified in Schedule A, No. 1:23-cv-02605 (SDNY Jan. 2, 2024), ECF 76.

The Schedule A litigation phenomenon continues apace in the Northern District of Illinois, a court that has become, in the words of Judge Seeger, “an assembly line for TROs.” But Schedule A litigation is not confined to Chicago. It has spread, perhaps most notably to the Southern District of Florida and the Southern District of New York.

One recent decision out of New York merits closer attention. In this case, as in most Schedule A cases, the plaintiff was able to obtain an ex parte TRO that included an order instructing Amazon to freeze the defendants’ seller accounts. The order also required the plaintiff to post a bond of $20,000 “for the payment of any damages any person may be entitled to recover as a result of an improper or wrongful restraint ordered.”

The plaintiff sued 163 defendants, alleging that each was liable for infringing a utility patent directed towards “a rectangular-shaped buckle-and-belt mechanism” for “an outdoor exercise product.”

At the TRO stage, the plaintiff’s “infringement evidence chart” consisted of a series of screenshots (many of them low-resolution screenshots) of the accused products. Here’s an example of all of the evidence submitted in that chart with respect to one of the defendants:

As per usual in a Schedule A case, the defendants did not find out about the case until after their accounts were frozen. When the plaintiff moved to extend the TRO, multiple defendants appeared to object. Judge Rochon refused to extend the TRO and the plaintiff voluntarily dismissed the case.

Two of the defendants, Hyponix and NinjaSafe, moved for bond damages, sanctions, and fees. They argued that the plaintiff had filed to conduct a sufficient pre-suit investigation and had committed various acts of litigation misconduct. They further argued that they each suffered damages from being wrongfully enjoined.

Judge Rochon granted the defendants’ motions for bond damages but denied their motions for sanctions and fees. She agreed that the moving defendants had been wrongfully enjoined because “Hyponix has pointed to at least four elements of claim 1 of the ’673 patent that are not present in its product” and “Ninja Safe has also shown that its products may not infringe claim 1 and has raised questions of invalidity.” Accordingly, Judge Rochon granted each moving defendant bond damages, though less than they asked for: $3,682.28 for Hyponix and $14,641.51 for NinjaSafe.

But she refused to grant sanctions or fees, despite being “troubled by Plaintiff’s conduct in this case.” In particular, Judge Rochon noted the “‘clear discrepancies’ between the protected elements of the ’673 Patent and the products of many of the parties against which Plaintiff secured a TRO.” She also noted other instances of “possible misconduct,” including:

  • “Plaintiff represented that most of the 163 parties were difficult to find and contact. In practice, however, contact information for many of the parties was readily available. . . . Plaintiff does not indicate that it tried with any diligence to locate these parties before seeking a TRO.”
  • “The pace and prevalence of Plaintiff’s dismissals suggest to the Court that Plaintiff used Rule 41 as part of a broader strategy to freeze the accounts of its competitors, then withdraw its claim against any party that happened to object.”
  • “Plaintiff failed to provide Hyponix with documents necessary for its defense. . . . . Plaintiff claims, falsely, that Hyponix did not request these documents.”

(Emphasis added.) Despite all of this, Judge Rochon refused to sanction the plaintiff:

Despite these concerns, the Court does not lightly award sanctions and will not do so in this case. Plaintiff holds a valid patent for its Hanging Exercise Product, its claim was colorable against at least some of the parties, and it dismissed its lawsuit voluntarily at a very early stage in the litigation (presumably in light of the issues raised by the Court at the order to show cause hearing), before any of the defendants responded to the Amended Complaint. Defendants here were made whole for their losses under the bond. Although a close question, the Court exercises its discretion to deny Defendants’ request for sanctions under its inherent powers and 28 U.S.C. § 1927. . . . To the extent that Plaintiff and its counsel engage in similar misconduct in the future, however, the Court will not hesitate to impose sanctions.

As Professor Eric Goldman noted in this blog post, “it would not be lightly awarding sanction when a plaintiff has committed so many violations.” Two additional points stand out as well.

First, the fact that some of the infringement claims might be colorable does not change the fact that the plaintiff brought numerous claims that were not—including the claims brought against the moving defendants. If the plaintiff had sued Hyponix and NinjaSafe separately, would that have changed the court’s analysis? If so, why should the fact of mass joinder insulate the plaintiff from sanctions? Especially in light of the fact that it’s far from clear that any—let alone all—of the defendants were properly joined, as they sell different products and do not seem to be actually connected in any way. See 35 U.S.C. § 299. In any case, the fact remains that this plaintiff brought many claims that were not colorable and used the machinery of the federal judiciary to wrongfully enjoin competitors. That is what should matter in the sanctions calculus, not the fact that some of the other claims (against apparently unrelated defendants) might have potentially had merit.

Second, it is true that the plaintiff dismissed the case at what would be, in a regular case, “a very early stage in the litigation.” But in a Schedule A case, the TRO seems to be the whole game. The plaintiff gets a TRO with an asset freeze, then starts making settlement demands. At that point, the defendants generally either settle or default. It appears that these cases aren’t meant to proceed any further. And as the defendants’ submissions show, significant damage can be done in these cases, even in a short period of time. (One also wonders how much money the plaintiff may have been able to extract in settlements before dismissing the case.)

In the end, the decision to sanction and to award fees is left to the discretion of the judge. And while it is encouraging to see Judge Rochon recognize the damage caused by acts that have become common in Schedule A cases (e.g., using FRCP 41 to dismiss defendants who fight back), it is discouraging to see a result that will only serve to further disincentivize Schedule A defendants from fighting back.

Once a judge grants a TRO with an asset freeze, the deck is heavily stacked against the Schedule A defendants. Defendants have strong incentives to settle, even when the cases against them lack merit. In many cases, it’s just too expensive to fight back, especially when your assets have been frozen.

If judges were willing to sanction plaintiffs—or at least shift fees—when Schedule A defendants were wrongfully restrained, that would do a lot to help level the playing field and incentivize the plaintiffs to bring better claims.

Without fee shifting or sanctions, the cost of bringing a nonmeritorious claim in a Schedule A case is virtually zero, while the harms to defendants who are wrongfully restrained—even for a short time—can be devastating. As Judge Hunt has noted, “the extraordinary remedy of freezing all [the defendants’] assets without notice” can “potentially ruin[] a legitimate business.”

Plus, as Casey Hewitt noted on Mastodon, Schedule A “defendants have no choice but to litigate, have no option to meet and confer and avoid a lawsuit . . . They did not ignore demand letters or refuse to negotiate or discuss alleged infringement.” But once they find out that their assets have been frozen, they have to “hire expensive IP litigators or they will lose their businesses.” In these circumstances, it seems like fee shifting for wrongfully enjoined Schedule A defendants should be the norm, not the exception.

Yes, it’s true that a presumption in favor of fee shifting would be a departure from normal federal court practice. But courts routinely use their discretion to grant procedural departures to Schedule A plaintiffs—e.g., email service, ex parte asset freezes, mass joinder upon conclusory (and in many cases, dubious) allegations. Perhaps it is time for judges to start using their discretion to make routine departures for Schedule A defendants, too.

Additional observations:

  1. This case is a good example of why patent litigation is a poor fit for the Schedule A litigation model. I’ve written here before about how design patent infringement is ill-suited to ex parte adjudication; so too is utility patent adjudication. If judges are going to keep allowing the Schedule A model in patent cases (and they don’t have to do so, in these cases or in any others), they should consider making it a regular practice to special masters to help analyze the infringement evidence at the TRO stage. And they should, at a minimum, require an individualized claim chart for each and every defendant.
  2. It is far from clear that Judge Rochon actually had the power to freeze these defendants’ assets in the first place. As Judge Kendall noted in a recent order, 35 U.S.C. § 284 “does not provide for the equitable relief of accounting and profits,” which is seems to be the standard basis for asset freezes in other types of IP cases. Furthermore, as Judge Seeger has noted, “Schedule A plaintiffs typically don’t request and receive equitable monetary relief” at the end of their cases, even when equitable relief is available. Other judges might be well-advised to start questioning whether they should use their discretion to keep granting these types of asset freezes, even in cases where a remedy of equitable disgorgement is actually available.

For more on the Schedule A phenomenon, see: