Patently-O https://patentlyo.com America's leading patent law blog Tue, 17 Jul 2018 02:08:34 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.7 McDonnell Boehnen Hulbert & Berghoff LLP https://patentlyo.com/media/2014/01/mbhb-3b.gif https://www.mbhb.com/ 480 150 Intellectual Property Law Patently-O Bits and Bytes by Juvan Bonni https://patentlyo.com/patent/2018/07/patently-o-bits-and-bytes-by-juvan-bonni-3.html https://patentlyo.com/patent/2018/07/patently-o-bits-and-bytes-by-juvan-bonni-3.html#respond Tue, 17 Jul 2018 02:08:34 +0000 https://patentlyo.com/?p=23919 Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

  • Jan Wolfe: Federal Circuit will not Rehear Apple Challenge to Wireless Data Patent (Source: Reuters)
  • Kirtika Suneja: India Raises Trade Deficit Issue with China at WTO (Source: The Economic Times)
  • Anatol Antonovici: American Express Awarded Blockchain Patent for Payment System (Source: Cryptovest)
  • Jan Wolfe: U.S. Court Denies Jazz Pharma Bid to Revive Narcolepsy Drug Patents (Source: Reuters)
  • Jason Silverstein: Walmart Patents Audio Surveillance Technology to Record Customers and Employees (Source: CBS)
  • Kevin Parrish: Microsoft Patent Paves Way for a Touch- and Smudge-Free Tablet Future (Source: Digital Trends)

Commentary and Journal Articles:

  • Atty. Krista Cox: Would Kavanaugh Change The Outcome Of SCOTUS Intellectual Property Cases? (Source: Above the Law)
  • Dr. Zia Qureshi: Intellectual Property, not Intellectual Monopoly: Reforming the System (Source: The Daily Star)
  • Prof. Amy Adler: Why Art Does Not Need Copyright (Source: SSRN)
  • Jena McGregor: What Walmart’s Patent for Audio Surveillance Could Mean for its Workers (Source: The Seattle Times)

Upcoming Events:

  • Patent Olympiad

New Job Postings on Patently-O:

  • Bloomberg BNA
  • Dority & Manning

 

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Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

Upcoming Events:

New Job Postings on Patently-O:

 

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USPTO: Claim Construction in AIA Trials https://patentlyo.com/patent/2018/07/uspto-construction-trials.html https://patentlyo.com/patent/2018/07/uspto-construction-trials.html#comments Mon, 16 Jul 2018 16:45:18 +0000 https://patentlyo.com/?p=23913 Claim construction continues to hold focus as the centerpiece of contested patent cases — both in court and in administrative AIA trials (primarily, Inter Partes Review proceedings) before the Patent Trial and Appeal Board (PTAB).  One element of current practice is that the USPTO applies a different standard for construing claims than do courts or the USITC in infringement litigation. (Compare Broadest Reasonable Interpretation with Phillips / Ordinary Meaning standards).

One of PTO Director Iancu’s early initiatives has been to unify the standards.  That process began with a notice of proposed rulemaking with finalized rules coming later this fall.

The USPTO has posted comments submitted on the proposed change — with over 350 submissions.  Although the bulk of submissions favor the change, a substantial number also argue that the BRI standard is an important aspect of IPR effectiveness — with the beneficial result of lowering consumer costs and improving access to medicines. It will take some time to review these comments.

I was involved in two of the submissions:

  • Professors of Law: Supporting change as promoting uniformity and clarity. Although I provided some input on this document, the primary drafter was Prof.

Continue reading USPTO: Claim Construction in AIA Trials at Patently-O.

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Claim construction continues to hold focus as the centerpiece of contested patent cases — both in court and in administrative AIA trials (primarily, Inter Partes Review proceedings) before the Patent Trial and Appeal Board (PTAB).  One element of current practice is that the USPTO applies a different standard for construing claims than do courts or the USITC in infringement litigation. (Compare Broadest Reasonable Interpretation with Phillips / Ordinary Meaning standards).

One of PTO Director Iancu’s early initiatives has been to unify the standards.  That process began with a notice of proposed rulemaking with finalized rules coming later this fall.

The USPTO has posted comments submitted on the proposed change — with over 350 submissions.  Although the bulk of submissions favor the change, a substantial number also argue that the BRI standard is an important aspect of IPR effectiveness — with the beneficial result of lowering consumer costs and improving access to medicines. It will take some time to review these comments.

I was involved in two of the submissions:

  • Professors of Law: Supporting change as promoting uniformity and clarity. Although I provided some input on this document, the primary drafter was Prof. Vishnubhakat (Tex.A&M).
  • Prof. Crouch:  I also submitted my own memo highlighting the issue of estoppel and deference to claim construction by other tribunals.  The proposed rule do not address directly these issues, and I suggest that the USPTO should establish its rules and practices associated with PTAB Trial Proceeding claim construction in a way that best ensures that later tribunals will honor those constructions.

Other Law Prof Submissions:

  • Profs. Sarnoff and Ghosh: “We generally support the idea of a unitary post-grant interpretive standard in the PTO and the courts. However, we . . . encourage you to seek legislation to require the courts to adopt BRI for infringement litigation.” (Same from Prof. Dreyfuss).
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Jazz Pharms: Federal Register; Public Notice; and Printed Publications https://patentlyo.com/patent/2018/07/jazz-pharms-federal-register-public-notice-and-printed-publications.html https://patentlyo.com/patent/2018/07/jazz-pharms-federal-register-public-notice-and-printed-publications.html#comments Mon, 16 Jul 2018 14:45:06 +0000 https://patentlyo.com/?p=23907 Jazz Pharms., Inc. v. Amneal Pharms., Inc., — F.3d —, 2018 U.S. App. LEXIS 19268 (Fed. Cir. 2018)

The patented invention at issue in Jazz Pharms is not a drug or drug treatment, but rather to a “drug distribution system for tracking prescriptions” for drugs with a risk of abuse[1]  The PTAB found claims from all six patents to be invalid as obvious.

The core issue on appeal was whether a pre-filing disclosure by Jazz counted as a prior art “printed publication.”

Printed Publication: As the language suggests, a “printed publication” must be both “printed” and also a “publication.”  These requirements though have been broadly construed.  “Printed” publications go well beyond physical hard-copies to allow for various media – including video and online forms.  To be a “publication,” the reference needs to be made sufficiently available to the public – publication.  In the leading case of In re Hall,[2] the Federal Circuit explained that accessibility to the relevant public is key – we ask “whether interested members of the relevant public could obtain the information if they wanted to.”  Although the court has developed a number of guide posts, the question of sufficient availability is seen as a factual inquiry handled on a case-by-case basis.

Continue reading Jazz Pharms: Federal Register; Public Notice; and Printed Publications at Patently-O.

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Jazz Pharms., Inc. v. Amneal Pharms., Inc., — F.3d —, 2018 U.S. App. LEXIS 19268 (Fed. Cir. 2018)

The patented invention at issue in Jazz Pharms is not a drug or drug treatment, but rather to a “drug distribution system for tracking prescriptions” for drugs with a risk of abuse[1]  The PTAB found claims from all six patents to be invalid as obvious.

The core issue on appeal was whether a pre-filing disclosure by Jazz counted as a prior art “printed publication.”

Printed Publication: As the language suggests, a “printed publication” must be both “printed” and also a “publication.”  These requirements though have been broadly construed.  “Printed” publications go well beyond physical hard-copies to allow for various media – including video and online forms.  To be a “publication,” the reference needs to be made sufficiently available to the public – publication.  In the leading case of In re Hall,[2] the Federal Circuit explained that accessibility to the relevant public is key – we ask “whether interested members of the relevant public could obtain the information if they wanted to.”  Although the court has developed a number of guide posts, the question of sufficient availability is seen as a factual inquiry handled on a case-by-case basis.

The prior art here was developed as part of an FDA drug safety review for one of Jazz’s drug products that was known as a potential date-rape drug.  In May 2001, the FDA announced in the Federal Register an upcoming public meeting – noting that the focus of the meeting would be on risk management for the drug.  The notice included a hyperlink to the pin-cite that eventually included meeting information, including background material, minutes, transcripts, and slides.

With these facts, Jazz Pharms appears an easy case – the materials were freely available online and relevant members of the public were directed to the material via the official public source.

A few caveats here:

  • The materials were not proven to be searchable or indexed at the time. In response, the court explained that these are not required elements of publication if sufficiently disseminated via other mechanisms.
  • Jazz argued that folks of skill would not have seen the notice in the Federal Register and therefore not have been pointed to the underlying documents. In response, the Federal Circuit explained that a Federal Register notice might not always be sufficient to place the relevant public on notice of a publication, but that it was sufficient in this case since it was indexed and directed toward members of the public interested in systems to protect the public from potentially dangerous drugs.  The court also endorsed the PTAB’s “sensible observation that the purpose of the Federal Register is to provide notice of government action such as the advisory committee meeting here.”

Note here that with publication, the touch stone is “accessibility” rather than “actual access.”  The court has repeatedly explained that “[i]f accessibility is proved, there is no requirement to show that particular members of the public actually received the information.”  Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560 (Fed. Cir. 1988).

= = = =

[1] U.S. Patents 7,668,730, 7,765,106, 7,765,107, 7,895,059, 8,589,182, 8,457,988.

[2] In re Hall, 781 F.2d 897 (Fed. Cir. 1986).

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Practice before the PTAB: Recent Informative Decisions https://patentlyo.com/patent/2018/07/practice-informative-decisions.html https://patentlyo.com/patent/2018/07/practice-informative-decisions.html#comments Fri, 13 Jul 2018 13:31:09 +0000 https://patentlyo.com/?p=23900 The USPTO has recently designated five PTAB decisions as “informative.” (I have also included the recent Western Digital decision as well).

  • Ex parte Jung, 2016-008290 (Mar. 22, 2017) [construing “at least one of A and B” where A and B are categories]
  • Ex parte Ditzik, 2018-000087 (Mar. 2, 2018) [examiner properly applied issue preclusion in a reissue application to reject claim amendments that lacked written description] 
  • Colas Sols. Inc. v. Blacklidge Emulsions, Inc., Case IPR2018-00242, Paper 9 (Feb. 27, 2018) [petition cannot skirt Section 315 time-limits by requesting joinder with earlier-filed petitions]
  • Ariosa Diagnostics v. Isis Innovation Ltd., Case IPR2012-00022, Paper 55 (Aug. 7, 2013) [37 C.F.R. § 42.53(e) – foreign deposition guidelines]
  • Argentum Pharm. LLC v. Alcon Research, Ltd., Case IPR2017-01053, Paper 27 (Jan. 19, 2018) [must show concrete harm before submitted information will be sealed]
  • Western Digital Corp. v. SPEX Techs., Inc., Case IPR2018-00082, -00084, Paper 13 (Apr. 25, 2018) [Post-Aqua requirements for claim amendments during IPR]

 

Continue reading Practice before the PTAB: Recent Informative Decisions at Patently-O.

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The USPTO has recently designated five PTAB decisions as “informative.” (I have also included the recent Western Digital decision as well).

 

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Covered Business Methods: Apple v. ContentGuard https://patentlyo.com/patent/2018/07/covered-business-contentguard.html https://patentlyo.com/patent/2018/07/covered-business-contentguard.html#respond Thu, 12 Jul 2018 21:06:14 +0000 https://patentlyo.com/?p=23888 On July 11, I wrote about the recent Federal Circuit decision in Apple v. ContentGuard. My post erroneously stated that the court found that the patent does not qualify as a “covered business method” patent.  The court did not take that bold of a step of a reversal. Rather, the court vacated the PTAB’s finding that was based upon an improper legal standard and remanded for a reconsideration.

 On remand, the Board must determine whether the ’280 patent qualifies as a CBM patent in the first instance without relying on the “incidental to” or “complementary to” standard.

Thanks to Patently-O reader and USPTO Examiner Scott Anderson for pointing me to this missed detail. – DC

 

 

Continue reading Covered Business Methods: Apple v. ContentGuard at Patently-O.

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On July 11, I wrote about the recent Federal Circuit decision in Apple v. ContentGuard. My post erroneously stated that the court found that the patent does not qualify as a “covered business method” patent.  The court did not take that bold of a step of a reversal. Rather, the court vacated the PTAB’s finding that was based upon an improper legal standard and remanded for a reconsideration.

 On remand, the Board must determine whether the ’280 patent qualifies as a CBM patent in the first instance without relying on the “incidental to” or “complementary to” standard.

Thanks to Patently-O reader and USPTO Examiner Scott Anderson for pointing me to this missed detail. – DC

 

 

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Trade Battle Updates: Mechanisms to Avoid the Tariffs https://patentlyo.com/patent/2018/07/updates-mechanisms-tariffs.html https://patentlyo.com/patent/2018/07/updates-mechanisms-tariffs.html#respond Thu, 12 Jul 2018 16:46:14 +0000 https://patentlyo.com/?p=23887 Trade Battle Updates: Mechanisms to Avoid the Tariffs

by Dennis Crouch

The trade-battles are heating up – with President Trump imposing tens of billions of dollars of new tariffs on Chinese imports and China responding in-kind to US good imported into China. Additional tariffs have been announced on a more global basis on goods worth hundreds-of-billions of dollars.

The operational process here is that the office of the United States Trade Representative (USTR)* has gone through a political and deliberative process of determining which imports to tie to a 25% tariff (import tax).  The justification for the tariff is largely based upon Chinese non-tariff barriers to US goods. In particular, the USTR found in its “Section 301 report” that “the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation covered in the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce.”  The chosen tariffs primarily focus on products related to China’s “Made in China 2025” initiative to move up the industrial food-chain in terms of high technology and pharmaceutical product manufacture.  The allegations are that the initiative is being implemented by placing barriers to US imports and by using unlicensed US intellectual property rights.

Continue reading Trade Battle Updates: Mechanisms to Avoid the Tariffs at Patently-O.

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Trade Battle Updates: Mechanisms to Avoid the Tariffs

by Dennis Crouch

The trade-battles are heating up – with President Trump imposing tens of billions of dollars of new tariffs on Chinese imports and China responding in-kind to US good imported into China. Additional tariffs have been announced on a more global basis on goods worth hundreds-of-billions of dollars.

The operational process here is that the office of the United States Trade Representative (USTR)* has gone through a political and deliberative process of determining which imports to tie to a 25% tariff (import tax).  The justification for the tariff is largely based upon Chinese non-tariff barriers to US goods. In particular, the USTR found in its “Section 301 report” that “the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation covered in the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce.”  The chosen tariffs primarily focus on products related to China’s “Made in China 2025” initiative to move up the industrial food-chain in terms of high technology and pharmaceutical product manufacture.  The allegations are that the initiative is being implemented by placing barriers to US imports and by using unlicensed US intellectual property rights.

In a new notice, the USTR has provided a particular pull-back process to allow US stakeholders to request particular products be excluded from the import tariff based upon “severe economic harm to a U.S. interest” that could result from the tariffs. [New Notice].  The requirements for the submission are fairly onerous for anyone who does not already have an intimate understanding of US Trade laws and practices.  Thus, I expect that the primary filers will be industry-focused trade organizations.  The notice also provides a limited opportunity to oppose any requested exclusions.

Notes:

  • In the US, disputes over tariffs are heard by the US Court of International Trade with appeals going to the Federal Circuit.
  • The Office of the US Trade Representative is an administrative agency headed by the USTR (Robert Lighthizer), a cabinet level political appointee.
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Covered Business Method: Licensing of Content is not (necessarily) a Financial Service https://patentlyo.com/patent/2018/07/licensing-necessarily-financial.html https://patentlyo.com/patent/2018/07/licensing-necessarily-financial.html#comments Wed, 11 Jul 2018 17:14:02 +0000 https://patentlyo.com/?p=23874 by Dennis Crouch [Updated on July 12 to correct an error]

Apple and Google v. ContentGuard v. Iancu (Fed. Cir. 2018)

Apple and Google both challenged ContentGuard’s U.S. Patent 7,774,280 under the Covered Business Method Post Grant Review proceedings.  The challenges raised eligibility, novelty, and obviousness challenges to several of the claims, but the Director (acting via the PTAB) only partially instituted: instituting only on novelty and obviousness, and only to three of the claims.  In the end, the PTAB found those claims obvious, but also allowed the patentee to add Claim 37 as a substitute for Claim 1 and found the new claim valid (not proven invalid).

On appeal, the Federal Circuit ruled the entire event a nullity — finding that the PTAB used the wrong standard for determining whether the patent qualifies as a covered business method. See Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1323 (Fed. Cir. 2015) and Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1379 (Fed. Cir. 2016).  A key case on point is also Secure Axcess, LLC v.

Continue reading Covered Business Method: Licensing of Content is not (necessarily) a Financial Service at Patently-O.

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by Dennis Crouch [Updated on July 12 to correct an error]

Apple and Google v. ContentGuard v. Iancu (Fed. Cir. 2018)

Apple and Google both challenged ContentGuard’s U.S. Patent 7,774,280 under the Covered Business Method Post Grant Review proceedings.  The challenges raised eligibility, novelty, and obviousness challenges to several of the claims, but the Director (acting via the PTAB) only partially instituted: instituting only on novelty and obviousness, and only to three of the claims.  In the end, the PTAB found those claims obvious, but also allowed the patentee to add Claim 37 as a substitute for Claim 1 and found the new claim valid (not proven invalid).

On appeal, the Federal Circuit ruled the entire event a nullity — finding that the PTAB used the wrong standard for determining whether the patent qualifies as a covered business method. See Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1323 (Fed. Cir. 2015) and Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1379 (Fed. Cir. 2016).  A key case on point is also Secure Axcess, LLC v. PNC Bank National Ass’n, 848 F.3d 1370, 1381 (Fed. Cir. 2017). However, that case was vacated as moot by the Supreme Court in PNC Bank Nat. Ass’n v. Secure Axcess, LLC, 138 S. Ct. 1982 (2018).

The “Transitional Program for Covered Business Method Patents” is not codified within the United States Code (35 U.S.C. ___) because it is only a temporary program that sunsets in September 2020.  Thus, the CBM program is generally cited as Section 18 of the Leahy-Smith America Invents Act.

Although the program allows for broad challenges of “covered business method” beyond the 102/103 published art restrictions of inter partes review, it also provides a particular narrow definition of what counts as a a covered business method patent:

[A] patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

In Unwired Planet, the Federal Circuit held that the “financial product or service” cannot be merely “incidental to or “complementary to” a financial activity. Rather, the claims must have a “particular use” focused on financial activity.

Here, exemplary claim 1 is a method of “transferring rights” using “meta-rights”:

1. A computer-implemented method for transferring rights adapted to be associated with items from a rights supplier to a rights consumer, the method comprising:

obtaining a set of rights associated with an item, the set of rights including a meta-right specifying a right that can be created when the meta-right is exercised, wherein the meta-right
is provided in digital form and is enforceable by a repository;

determining, by a repository, whether the rights consumer is entitled to the right specified by the meta-right; and

exercising the meta-right to create the right specified by the meta-right if the rights consumer is entitled to the right specified by the meta-right, wherein the created right includes at least one state variable based on the set of rights and used for determining a state of the created right.

Google and Apple allegedly use this process to transfer access to third-party apps via their Play Stores.

In the appeal, the Federal Circuit explained that the system could be used in either financial services or non-financial services – and it “is not enough for the specification to describe how the invention could, in some instances, be used to facilitate financial transactions.”

CBM Decision Vacated: On remand, the PTAB will revisit the CBM question and will also need to follow the new rules against partial-grants.

= = = =

I’ll note here that the added claim 37 — that the PTAB found good-to-go adds a few limitations:

  1. The “item” – the subject of the rights being transferred is an “item of content;”
  2. The rights being transferred are “usage rights” or perhaps “another meta-right” (metameta); and
  3. The “meta-right is not itself a usage right because exercising the meta-right
    does not result in action to the content.”

It will be interesting to see whether the patentee goes about amending its claims through rexamination or reissue to add the new language.

= = = =

At the petition stage, Google argued that the claims were directed to the abstract idea of “providing consumers with rights to an item, such as a movie or book.” The Director (via the PTAB panel) disagreed – although providing what appears to be extremely weak analysis:

Google’s arguments that the challenged claims … are directed to a patent-ineligible abstract idea are predicated on the notion that they recite a fundamental economic or longstanding commercial practice.

Contrary to Google’s arguments, the challenged claims are not directed merely to “providing consumers with rights to an item, such as a movie or book,” nor can the features recited in the challenged claims be stripped away so that these claims simply are directed to a traditional approach or method of licensing or sub-licensing content. Indeed, the challenged claims require much more.

For instance, independent claims 1 and 12 require obtaining “rights associated with an item”—namely, a digital work—wherein the set of rights includes a “meta-right” specifying a “right” that may be created.  These claims further require providing the “meta-right in digital form” and indicate that the “meta-right” is enforceable by a “repository,” which, based on our claim construction above, constitutes “a trusted system” that enforces the “meta-rights” using very specific computer security and rights enforcement “integrities.”  In addition, these claims further require “at least one state variable” used to determine the state of the “right” created by the “meta-right.”

 

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Patently-O Bits and Bytes by Juvan Bonni https://patentlyo.com/patent/2018/07/patently-o-bits-and-bytes-by-juvan-bonni-2.html https://patentlyo.com/patent/2018/07/patently-o-bits-and-bytes-by-juvan-bonni-2.html#comments Mon, 09 Jul 2018 20:20:23 +0000 https://patentlyo.com/?p=23851 Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

  • Atty. Douglas Clark: NSBA Supports Patent System Reform Measure (Source: Financial Regulation News)
  • Sam Sherratt: UC Berkeley to Gain Two US CRISPR Patents (Source: Bio News)
  • Dugie Standeford: European Parliament Rejects Starting Negotiations On Copyright Reform Proposal (Source: Intellectual Property Watch)
  • Chris Tsui: Cadillac Design Patent Reveals Possible CT5 Coupe (Source: The Drive)

Source: USPTO

  • Aloysius Low: Future Samsung phone might get face-scanning camera, like iPhone X (Source: CNET)

Commentary and Journal Articles:

  • Prof. Shobita P:arthasarathy: U.S. Patent System Out of Step with Today’s Citizens (Source: Finance and Commerce)
  • Atty. AnthonyDe Fazekas and Atty. Maya Medeiros: Why Collaborative AI can Become a Legal Minefield (Source: The Globe and Mail)
  • David Olive: Trump’s Tariffs are a Clear, Present Danger to Canada (Source: The Star)
  • Prof. Wissam Aoun: The Fourth Industrial Revolution and the Democratization of Patent Agency (Source: SSRN)
  • Prof. Lauren Cohen, Prof. Umit G. Gurun, and Prof. Scott Duke Kominers: Patent Trolls: Evidence from Targeted Firms (Source: SSRN)

New Job Postings on Patently-O:

  • Sealed Air
  • Michael Best & Friedrich LLP

 

Continue reading Patently-O Bits and Bytes by Juvan Bonni at Patently-O.

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Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Source: USPTO

Commentary and Journal Articles:

New Job Postings on Patently-O:

 

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Subsequent Public Availability of Misappropriated Information Cuts-Off Trade Secret Damages https://patentlyo.com/patent/2018/07/availability-misappropriated-information.html https://patentlyo.com/patent/2018/07/availability-misappropriated-information.html#comments Mon, 09 Jul 2018 18:58:35 +0000 https://patentlyo.com/?p=23864 Subsequent Public Availability of Misappropriated Information Cuts-Off Trade Secret Damages

by Dennis Crouch

Texas Advanced Optoelectronic v. Renesas Elecs. Am., 16-2121 (Fed. Cir. 2018)(Modified Panel Opinion Released July 9, 2018)

TAOS v. Renesas, focuses on the interplay between trade secret misappropriation (under Texas law), and patent law.  TAOS patented an ambient light sensor using a photodiode array.  See U.S. Patent No. 6,596,981. This type of sensor is widely used in smartphones to adjust the display brightness.  Following failed merger negotiations, Intersil developed a competing product — which the district court found relied upon confidential information received during the negotiations.  A jury found Intersil liable for patent infringement, trade secret misappropriation, breach of contract, and tortious interference with prospective business.

The damages verdict was as follows:

  • Patent Infringement: $74,000
  • Trade Secret Misappropriation – Disgorgment of D’s Profits: $48,000,000
  • Trade Secret Misappropriation – Punitive Damages: $10,000,000
  • Reasonable Royalty for Breach of Contract: $12,000,000
  • Retention of Documents Breach of Contract: $1
  • Tortious Interference – Lost Profits: $8,000,000
  • Tortious Interference – Punitive Damages: $10,000,000

The district court ruled that the Trade Secret award was duplicative of the Contract and Tortious Interference awards — and thus kept only the larger of those awards.

Continue reading Subsequent Public Availability of Misappropriated Information Cuts-Off Trade Secret Damages at Patently-O.

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Subsequent Public Availability of Misappropriated Information Cuts-Off Trade Secret Damages

by Dennis Crouch

Texas Advanced Optoelectronic v. Renesas Elecs. Am., 16-2121 (Fed. Cir. 2018)(Modified Panel Opinion Released July 9, 2018)

TAOS v. Renesas, focuses on the interplay between trade secret misappropriation (under Texas law), and patent law.  TAOS patented an ambient light sensor using a photodiode array.  See U.S. Patent No. 6,596,981. This type of sensor is widely used in smartphones to adjust the display brightness.  Following failed merger negotiations, Intersil developed a competing product — which the district court found relied upon confidential information received during the negotiations.  A jury found Intersil liable for patent infringement, trade secret misappropriation, breach of contract, and tortious interference with prospective business.

The damages verdict was as follows:

  • Patent Infringement: $74,000
  • Trade Secret Misappropriation – Disgorgment of D’s Profits: $48,000,000
  • Trade Secret Misappropriation – Punitive Damages: $10,000,000
  • Reasonable Royalty for Breach of Contract: $12,000,000
  • Retention of Documents Breach of Contract: $1
  • Tortious Interference – Lost Profits: $8,000,000
  • Tortious Interference – Punitive Damages: $10,000,000

The district court ruled that the Trade Secret award was duplicative of the Contract and Tortious Interference awards — and thus kept only the larger of those awards. All this was based upon the longstanding principle that “double recovery for the same injury is inappropriate.”  Aero Prods. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1017 (Fed. Cir. 2006).  Still, the state law trade secret damages were more than 500 times greater than the federal patent law damages.

Patent and Trade Secret?:  One of the initial thought experiments for potential patentees is whether to (1) file for patent protection or instead (2) keep the invention as a trade secret.  It turns out though that one of the jedi tricks of in-house counsel the art of layering rights rather than choosing rights.   Counsel ask question: What must be disclosed in the patent application in order to obtain full rights?; What information may be kept secret without endangering the patent rights?; Can the product or process be divided into separate components so that some may be kept secret while others made public in patent documents? Is it possible to keep the patent documents secret for longer? Because early filing is so strongly encouraged in the patent system, it is regularly true that implementation details are developed after the filing date that are appropriately kept as trade secrets. Here, the alleged trade secretes included financial information on the costs as well as some technical information (the 1:1 interleaved array structure).

The combination is a trade secret: The asserted patent discloses, individually, a 1:1 array structure and also the interleaving of shielded and unshielded wells. However, the patent does not disclose the combination, of the array and interleaving wells (despite the fact that both disclosures are in the same patent application).  It was proper here – according to the court – for the jury to find that the combination remained a trade secret. Here, it appears that the trade-secret combination need only survive a novelty test. See Sikes v. McGraw-Edison Co., 665 F.2d 731, 736 (5th Cir. 1982) (concluding that, under Texas law, a trade secret may be “the application of known techniques and the assembly of available components”; “a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which in unique combination, affords a competitive advantage and is a protectible secret”).

On appeal, the Federal Circuit affirmed that this technical information could be the enforceable trade secret.  However, the court ruled that it was improper for TAOS to recover on both patent and trade secret claim

Here, Intersil’s use of TAOS’s photodiode array structure is the basis of Intersil’s liability for both trade secret misappropriation and patent infringement. . . . The patent award represents an impermissible double recovery [since] ‘all of the damages awarded to [plaintiff] flowed from the same operative facts: sales of the [same] infringing [products].’ (Quoting Aero Prods. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1017 (Fed. Cir. 2006)).

In Aero Prods., the Federal Circuit explained that “in determining whether there has been an impermissible double recovery of damages, the inquiry focuses on whether the damages issue arose from the same set of operative facts.”

Later-Acquired by Proper Means: An important question for damages: How long does the trade secret last.  Here, in particular, prior to the real harm (Intersil’s contract with Apple), TAOS had already released its product and Intersil had reverse-engineered that product.

Timeline:

  • Summer 2003: TAOS ‘981 patent issues with 1:1 array and interleaving disclosed (but not the combination);
  • Summer 2004: Intersil received technical information from TAOS regarding 1:1 interleaving as part of merger negotiations;
  • August 2004: After ending negotiations, Intersil began developing its own 1:1 interleaved product;
  • January 2005: TAOS won contract from Apple to supply the sensors;
  • February 2005: TAOS releases its product that include the 1:1 interleaving;
  • January 2006: Intersil reverse-engineered TAOS product that included the 1:1 interleaving;
  • September 2006: Intersil won contract from Apple to supply the sensors;
  • November 2008: Lawsuit began.

Here, the Intersil contract was not inked until after Intersil had reverse-engineered the TAOS product.  Under Texas trade secrecy law, information is no longer a protectable trade secret once accessible by “proper means.” The court explained:

Such accessibility existed no later than January 2006, when Intersil successfully reverse-engineered the TSL2560, and perhaps as early as February 2005, when TAOS “released” the TSL2560.

Under the law then, “secrecy protection terminated at the end of the period of time it would have taken Intersil, after Intersil’s permissible discovery of the photodiode structure, to recreate that structure in its own products.”

Financial Information: In addition to limiting the damages for the technical-information misappropriation, the court ruled that the financial information was not protectable:

  • Cost information: Not protectable because Intersil already had its own cost information by the time of the alleged misappropriation.
  • Build-vs-Buy Analysis: Not protectable because the confidentiality agreement between the parties allowed for its use.

One additional problem with the trade secret damage award: Disgorgement: The jury had awarded damages in the form of disgorging profits of the defendant.  On appeal, the Federal Circuit ruled that disgorgment is not available for trade secret misappropriation (without proving that disgorgment was the proper form of compensatory damages).  The result here offers an interesting historical analysis of trade secret damages.

The Federal Circuit originally issued the decision in May 2017, the court has now denied a petition for rehearing en banc, but has rewritten a portion of the opinion relating to the patent damages — TAOS had asked for worldwide damages, but those continue to be denied.

Intersil submitted evidence that, except for 1.2% of the accused units, all of its accused products were manufactured, packaged, and tested abroad, and those units were shipped to manufacturers and distributors abroad. . . .  But even the additional evidence . . . of domestic negotiations and Intersil’s testing of some of Intersil’s products—does not demonstrate “substantial activities regarding sales” sufficient to raise a material dispute of fact as to sales or offers to sell in the United States. . . . Intersil presented evidence of extraterritorial manufacturing, packaging, and shipping, and TAOS failed to present any evidence establishing the required domestic activity.  On this record, TAOS has not produced evidence sufficient to raise a material dispute of fact as to the 98.8% of units that were the subject of the district court’s grant of summary judgment.

International damages for patent infringement denied.

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Phonetic Symbol System Not Patent Eligible https://patentlyo.com/patent/2018/07/phonetic-symbol-eligible.html https://patentlyo.com/patent/2018/07/phonetic-symbol-eligible.html#comments Thu, 05 Jul 2018 13:14:26 +0000 https://patentlyo.com/?p=23726 Phonetic Symbol System Not Patent Eligible

In re Wang (Fed. Cir. 2018) (nonprecedential)

In a non-precedential decision, the Federal Circuit has rejected George Wang’s pro se appeal — affirming the PTAB judgment that Wang’s claimed phonetic symbol system lacks eligibility under Section 101.

The baseline here is that the written english language is only quasi-phonetic.  Every rule of spelling or pronunciation has layers of exceptions.  Linguists have developed a phonetic pronunciation guides, but those use quirky non-english letters.  Wang’s invention here offers a one-to-one system tying each vowel and consonant sound to a single phonetic symbol, and uses only English letters for the phonetic symbols. Table 1 below comes from Wang’s patent application and offers an example embodiment of his system:

The claim (slightly edited for clarity):

A phonetic symbol system comprising:

a plurality of phonetic symbols,

wherein each of said phonetic symbols is defined by one (or more than one) letter of English alphabet, the case or the style of said letter does not affect the sounds of said phonetic symbols,

[said phonetic symbols include] vowel phonetic symbols and consonant phonetic symbols . . . ,

each vowel [sound] is distinctively represented by one of said vowel phonetic symbols, and each consonant [sound] is distinctively represented by one of said consonant phonetic symbols.

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Phonetic Symbol System Not Patent Eligible

In re Wang (Fed. Cir. 2018) (nonprecedential)

In a non-precedential decision, the Federal Circuit has rejected George Wang’s pro se appeal — affirming the PTAB judgment that Wang’s claimed phonetic symbol system lacks eligibility under Section 101.

The baseline here is that the written english language is only quasi-phonetic.  Every rule of spelling or pronunciation has layers of exceptions.  Linguists have developed a phonetic pronunciation guides, but those use quirky non-english letters.  Wang’s invention here offers a one-to-one system tying each vowel and consonant sound to a single phonetic symbol, and uses only English letters for the phonetic symbols. Table 1 below comes from Wang’s patent application and offers an example embodiment of his system:

The claim (slightly edited for clarity):

A phonetic symbol system comprising:

a plurality of phonetic symbols,

wherein each of said phonetic symbols is defined by one (or more than one) letter of English alphabet, the case or the style of said letter does not affect the sounds of said phonetic symbols,

[said phonetic symbols include] vowel phonetic symbols and consonant phonetic symbols . . . ,

each vowel [sound] is distinctively represented by one of said vowel phonetic symbols, and each consonant [sound] is distinctively represented by one of said consonant phonetic symbols.

Rather than reaching the more controversial aspects of eligibility, the court here first focused on the statutory requirement that a patent must be directed to a “process, machine, manufacture, or composition of matter.” 35 U.S.C. 101.  Since the claim is not directed to any concrete physical form, it cannot be a machine, manufacture, or composition of matter.  Further, because the claim does not actually require performance of any steps, then it cannot be defined as a process.

Without analysis, the court also agreed with the PTO that “defining phonetic symbols in language, using strings of English letters, is an unpatentable abstract idea” and  that the claims offer nothing beyond the abstract idea:

[W]here, as here, claims of a patent application recite an abstract idea, the question becomes whether they contain “additional features” that embody an “inventive concept,” so as to nevertheless make them patenteligible. Alice Corp. Pty. Ltd v. CLS Bank Int’l, 134 S. Ct.
2347 (2014). The application claims on appeal, however, contain no “additional features” of any kind embodying an inventive concept. The claims merely encompass strings of English letters representing sounds. In short, there is no inventive concept that rescues them from patent ineligibility.

Rejection affirmed.

As the old saying goes, part of Mr. Wang’s problem is that he “has a fool for a client.”  Patent law and procedure is at such a high level of complexity that it very rarely makes sense for an inventor to represent himself — especially at the appellate level.

My question for the patent attorneys and agents here: Is there a way for Wang to turn this case around by amending the claims so that they recite a particular method.  [Read the application here: https://patents.google.com/patent/US20130054227]  Is this the type of idea that patent law should cover?  Consider U.S. Patent No. 7,004,758.

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