by Dennis Crouch

On August 15, 2023, the Judicial Conference Advisory Committee on Civil Rules published proposed amendments to Rules 16 and 26 of the Federal Rules of Civil Procedure. One of the goals of these amendments is to encourage parties to address issues relating to claims of privilege and work product protection early in litigation. This could be particularly impactful for patent cases, which frequently involve extensive disputes over these very issues.  The proposal would also retitle Rule 16(b) to include both scheduling and case management (the current version just focuses on scheduling).

Rule 26(b)(5)(A) focuses on the the procedure for “claiming privilege” as an reason for refusing to comply with an otherwise valid discovery request or disclosure requirement.  A party generally has to:

(i) expressly make a claim of privilege; and

(ii) create a privilege log that describes the nature of the thing withheld.

The privilege log will be disclosed to the other side and it is something of an art to describe the items without putting the other side on the trail of the protected information. Note – I use privilege here as an overarching term. The rule applies to items/information protected by both privilege and work product rules.

The proposed amendment to Rule 26 requires parties to discuss and include in their discovery plan the method they will use to comply with Rule 26(b)(5)(A).  This will likely include some information about the contents of the privilege log; manner and timing of the exchange; etc.  Similarly, the change to Rule 16 make discussion of this plan an optional aspect of the Judge’s 16(b) scheduling order.

Patent cases often involve the assertion of attorney-client privilege and work product protection over large volumes of technical, financial, and legal documents. At times, litigation between competitors centers on highly confidential corporate information that parties often seek to protect as privileged.  Producing privilege logs describing all of these documents can be extremely burdensome and costly.  The amendment encourages parties to agree upfront on efficient ways to approach this task, such as through categorical designations or date ranges rather than document-by-document listings.

The proposed amendment to Rule 16 allows the court to include provisions about privilege issues in its scheduling and case management orders. With an early understanding of the volume and type of potentially privileged materials involved, the judge can build in procedures for timely resolution of any disputes. For example, the order could provide for rolling productions of privilege logs on a regular schedule.

Getting ahead of privilege disputes will be especially useful in patent cases, where objections often arise late in discovery — and key documents are often hidden behind that privilege wall. Last-minute disagreements can derail case schedules. An orderly process set forth in the case management order will allow privilege issues to be dealt with efficiently as they arise, without disrupting the rest of the litigation.  To be clear though, the new rule is quite incremental and is subject to substantial abuse by parties who seek to hide documents using weak privilege arguments.

While application will depend on the specifics of each case, these amendments represent a step in the right direction. Patent litigators should be prepared to have detailed discussions about privilege during the Rule 26(f) conference and seek early guidance from the court.

The Rule 16/26 proposals begin on page 120 of the following PDF document released by the Judicial Center: https://www.uscourts.gov/sites/default/files/2023_preliminary_draft_final_0.pdf.

by Dennis Crouch

One-E-Way, Inc. v. Apple Inc., 22-2020 (Fed. Cir. Aug. 14, 2023) (nonprecedential) (Opinion by Chief Judge Moore, joined by Judges Lourie and Stoll).

The district court sided with Apple on summary judgment, finding no infringement. On appeal, the Federal Circuit has affirmed, holding that Apple’s accused Bluetooth products do not infringe One-E-Way’s patents.  Although the parties had agreed to the construction of the “unique user code” term, they disagreed over the construction-of-the-construction.  On appeal, the court treated this meta-construction effectively as a form of claim construction — looking for the ordinary meaning rather than a contract-like interpretation that would have looked more toward discerning the intent of the parties.

One-E-Way sued Apple for infringing the claims of two patents related to a wireless digital audio system that allows private listening without interference. The system uses a transmitter connected to an audio source and a receiver connected to headphones. The transmitter contains a code generator that generates a “unique user code” associated with a specific user to allow pairing between the transmitter and receiver.

During the infringement litigation, the parties agreed to construe “unique user code” as a “fixed code (bit sequence) specifically associated with one user of a device(s).” Although Apple’s Bluetooth products do transmit a unique code to establish the connection, the code is not unique to the user, but rather it is unique to the Bluetooth device.  The district court agreed with Apple’s assessment and granted summary judgment of non-infringement.

On appeal, One-E-Way argued that the “unique user code” limitation is still met by Apple’s accused Bluetooth products. Specifically, One-E-Way contended that even though the Bluetooth address codes are associated with devices, the codes are still associated with individual users through operation of the device. In other words, One-E-Way argued that Bluetooth pairing to a particular device is equivalent to pairing with a specific user.  This argument makes the assumption that each device is limited to just “one user.” Although that assumption is not strictly true, I expect that it holds true in 99% of cases.  For a while, I shared Bluetooth headphones with one of my daughters–it did not work well at all.

The Federal Circuit rejected this argument, finding that it was inconsistent the claim construction which clearly states the code is associated with “one user.” rather than the device itself.  Even if the Bluetooth address code is associated with a user through use of the device, the code remains fundamentally associated with the device. The Federal Circuit found no evidence that the code itself becomes directly linked to the user, rather than the device, through pairing and use.

The arguments in this case are somewhat meta. The parties are not arguing about claim construction per se, but rather construction of the construction.  In the appeal, the Federal Circuit considered the “plain and ordinary meaning of the agreed-upon construction” and concluded that it required required a more direct link to a user.   As it would with ordinary claim construction, the court looked to the specification for support.  In particular, the court noted that the patent specifications “distinguish between users and devices when describing the purpose of the invention” and recognized the problem of conflict that I had with sharing Bluetooth accessories. “The patents’ consistent reference to ‘user’ and ‘device’ as distinct entities and association of the unique user code with ‘user’ supports the district court’s conclusion that ‘one user of a device’ does not mean the device itself.” Slip Op.

Non-infringement affirmed.

= = =

The patents at issue are:

– U.S. Patent No. 10,129,627
– U.S. Patent No. 10,468,047

The ‘627 and ‘047 patents share the same specification. The court treated Claim 1 of the ‘627 patent as representative.

by Dennis Crouch

The Federal Circuit Special Committee has released a 100+ page report that recommends Judge Pauline Newman be suspended for her refusal to comply with the committee’s order that would permit an independent doctor conduct a mental or physical examination.   The proposed suspension for “one year or until she complies.”  This report will be delivered to the Judicial Council that will make its own decision.  I expect that the Judicial Council will agree with the sanction.

The committee consisting of Chief Judge Moore, former Chief Judge Prost, and Judge Taranto concluded that it had authority and a reasonable basis to order medical examinations and records from Judge Newman.  And, her refusal to cooperate constitutes misconduct with no good cause shown. Her arguments attempting to justify her refusal were each addressed and rejected by the committee.

Most pointedly, Judge Newman had provided her own medical report purporting to show her competence. The committee rejected that report as inadequate — giving it “no weight”:

• Source of Expert: The neurologist was chosen and engaged by Judge Newman herself, rather than being an independent expert selected by the Committee. This raised concerns about impartiality.
• Limited Scope: The report indicates only a limited examination was performed, not the comprehensive medical and mental health evaluations ordered by the Committee.
• No Opportunity to Question: The Committee and its experts had no ability to question the doctor, assess credibility, or probe his evaluation methods.
• Incomplete Conclusion: The report concludes there is no disability, but does not seem to thoroughly evaluate Judge Newman’s mental fitness to fulfill her judicial duties.
• Contrary Evidence: The report appears to ignore or downplay the contrary evidence of cognitive issues cited by the Committee.

In essence, the Committee found the report lacked credibility and thoroughness. Judge Newman had raised additional issues:

• Due Process and Recusal: Judge Newman argued the proceedings violate due process and required judicial recusal. The committee found they follow appropriate procedures and do not violate any of Judge Newman’s rights.
• Bias Arguments: Judge Newman alleged bias by the Judicial Council and Committee. The committee found no evidence of bias in the Council’s actions to suspend case assignments or the Committee’s prior orders.
• Staffing/Resources Arguments: Judge Newman claimed she was deprived of necessary staff and equipment. The committee found no merit to these arguments.
• Transfer Request Arguments: Judge Newman requested the matter be transferred to another circuit. The committee found no basis for such transfer.
• Cooperation Arguments: Judge Newman asserted she has cooperated and the orders were defective. The committee found she clearly refused to undergo medical exams and that the orders were proper.
• No Reasonable Basis Arguments: Judge Newman argued the committee lacked reasonable basis for orders. The committee pointed to staff concerns, case delays, and expert recommendation as providing reasonable basis.

July 31, 2023 Report and Recommendation

Newman’s separate lawsuit in D.C.Circuit seeking a declaratory judgment has not really moved.  The Special Committee indicated the view that their process was the proper venue rather than district court.

* The image above comes from the Montreal Cognitive Assessment (MOCA) that was given to Judge Newman by her neurologist. MOCA-Test-English. It was only partially completed because she had a broken wrist at the time and so was not able to trace the dots, draw the cube, or draw the clock.

by Dennis Crouch

Moderna filed a patent infringement lawsuit against Pfizer and BioNTech in August 2022, alleging that the defendants COVID-19 vaccine infringes three patents related to Moderna’s mRNA vaccine technology.  United States Patent Nos. 10,898,574, 10,702,600, and 10,933,127. The lawsuit centers around two key components of Moderna’s mRNA platform that it claims Pfizer copied – the use of modified nucleosides like 1-methylpseudouridine and the encoding of a full-length coronavirus spike protein. Moderna asserts that it pioneered these innovations years before the COVID-19 pandemic and patented them between 2011-2016. The complaint alleges Pfizer and BioNTech initially tested different vaccine designs but ultimately chose to copy Moderna’s approach, despite being aware of Moderna’s patents. In the lawsuit, Moderna is seeking monetary damages for patent infringement but not injunctive relief taht would remove the Pfizer vaccine from the market. Although Moderna pledged not to enforce its COVID-19 patents during the pandemic, it signaled in March 2022 that expected companies to respect its intellectual property rights going forward.

In its response, Pfizer denied Moderna’s allegations of patent infringement and explained that it independently developed its COVID-19 vaccine without copying Moderna’s technology. Pfizer argues that Moderna’s patents are invalid because of the way they reach beyond Moderna’s actual contributions to mRNA technology and improperly claim fundamental discoveries made by other scientists.  In this vein, Pfizer raises several affirmative defenses, including invalidity and non-infringement of the asserted patents. Pfizer also asserts defenses based on implied license, waiver, and acquiescence stemming from Moderna’s public pledge not to enforce its COVID-19 patents during the pandemic.  As is usual, the answer also includes counterclaims that mimic the affirmative defenses — seeking declarations that the patent claims are invalid, not infringed, and unenforceable against Pfizer.  Here, these particular pleadings are rather limited and, for the most part, generally assert “35 U.S.C. 101, 102, 103, and/or 112.”

Docs:

• Moderna v Pfizer Complaint
• Moderna v Pfizer Answer
• Moderna v Pfizer DCT Claim Construction

The case is slowly moving forward in before Judge Richard Stearns with a trial rougly set for Fall 2024. Most recently, Judge Stearns issued a claim construction order following a Markman hearing.  As is common, the patentee did not ask for any construction, the defendants asked the court to define several terms.  Some of the proposals ask for broad definitions of certain terms (that would help Pfizer prove invalidity); while others sought narrow definitions of other terms (that would help Pfizer avoid infringement).  I tried to note the impact of the various constructions below. As you can see, each party won and lost arguments, but in the whole this looks like a good decision for Moderna.

• The court adopted a broad definition of “unmodified mRNA” suggested by Pfizer that includes a statement that “Unmodified may, but does not always, refer to the wild type or native form of a biomolecule.”  (This will help Pfizer prove invalidity)
• For the term “betacoronavirus,” the court rejected Pfizer’s argument that it is limited to betacoronaviruses in existence at the time of filing. The court found the intrinsic evidence indicates the term encompasses betacoronaviruses discovered after the filing date.  (This will help Moderna prove infringement)
• The court construed “S protein” as simply “spike protein, a structural protein forming a spike.” It declined to include functional limitations proposed by Pfizer.  (This will help Moderna prove infringement)
• The court construed “open reading frame” to apply to both DNA and mRNA. Pfizer had suggested limiting the term to just DNA contexts. (This helps Moderna prove infringement).
• The court construed the term “mRNA” to mean “messenger RNA, i.e., a ribonucleic acid (RNA) that encodes a polypeptide and can be translated to produce the encoded polypeptide.” This roughly aligns with Moderna’s proposed construction.   Pfizer had asked that for a definition that included mRNA as a “template for encoding” a polypeptide.  (It is not clear to me the impact of this ruling, however it likely favors Pfizer’s invalidity arguments focusing on whether certain prior art references sufficiently disclose mRNA).

For those of you new to claim construction, the district court is charged with defining terms used in the patent claims when they are a bit too unclear, or when the parties are disputing over their meaning.  The basic approach is that the court should provide the meaning that would a person of ordinary skill in the art would give to the terms at the time of the invention, and after reviewing the claims, the specification, and the prosecution history. See Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). Extrinsic evidence such as dictionary definitions and expert opinion can play a role, but is usually secondary to the intrinsic evidence.  This ruling on claim construction is really setting of the stage, with the real action coming soon via summary judgment motions and eventually the trial.

In my analysis above, I noted some inference about the impact of the various claim construction rulings. Please note that the parties have not yet briefed these issues and so we’ll see what happens.  There may be an immediate summary judgment motion, but I don’t see that as likely until the close of discovery.  It is important to remember that claim construction is not a final determination on infringement or invalidity, but  simply provides interpretations of disputed terms that will be used in those later determinations. In addition, parties often ask a court to reconsider its claim construction.

Although Pfizer obviously does not want to be liable for patent infringement here, Pfizer also holds and is seeking numerous patents on its own related technology.  I expect that Pfizer’s invalidity arguments will be targeted toward specific concerns with the Moderna patents rather than attempting to substantially expand the law.  We might see a different strategy if a non-profit or consumer-focused group had filed. We saw the latter in the Supreme Court’s 2013 Myriad decision.

= = =

Claim 1 of the ‘600 Patent is directed to the mRNA composition designed to encode a betacoronavirus spike protein or subunit, formulated in a lipid nanoparticle.

1. A composition comprising: a messenger ribonucleic acid (mRNA) comprising an open reading frame encoding a betacoronavirus (BetaCoV) S protein or S protein subunit formulated in a lipid nanoparticle.

Note that the court broadly defined betacoronavirus to include later-invented forms.  This leaves the claim open to enablement and written description challenges.

The ‘574 patent claims methods of using modified messenger RNA (mmRNA) with reduced immune activation properties compared to unmodified mRNA and also a slightly different composition claim. Unlike the ‘600 patent, these do not focus on the spike protein but are more generic versions of using the mRNA technology.

1. A method of producing a polypeptide of interest in a cell in a subject in need thereof, comprising administering to the subject a pharmaceutical composition comprising a modified messenger RNA (mmRNA) such that the mmRNA is introduced into the cell, wherein the mmRNA comprises a translatable region encoding the polypeptide of interest and comprises the modified nucleoside 1-methyl-pseudouridine, and wherein the pharmaceutical composition comprises an effective amount of the mmRNA providing for increased polypeptide production and substantially reduced innate immune response in the cell, as compared to a composition comprising a corresponding unmodified mRNA.

2. A pharmaceutical composition comprising: a plurality of lipid nanoparticles comprising a cationic lipid, a sterol, and a PEG-lipid,

wherein the lipid nanoparticles comprise an mRNA encoding a polypeptide, where in the mRNA comprises one or more uridines, one or more cytidines, one or more adenosines, and one or more guanosines and wherein substantially all uridines are modified uridines.

Finally, the ‘127 patent claims methods of administering a composition comprising mRNA encoding a betacoronavirus spike protein formulated in a lipid nanoparticle.  These claims specify percent ranges for ionizable cationic lipid, neutral lipid, cholesterol, and PEG-modified lipid components in the lipid nanoparticle.

1. A method comprising administering to a subject a messenger ribonucleic acid (mRNA) comprising an open reading frame encoding a betacoronavirus (BetaCoV) S protein or S protein subunit formulated in a lipid nanoparticle in an effective amount to induce in the subject an immune response to the BetaCoV S protein or S protein subunit, wherein the lipid nanoparticle comprises 20-60 mol % ionizable cationic lipid, 5-25 mol % neutral lipid, 25-55 mol % cholesterol, and 0.5-15 mol % PEG-modified lipid.

by Dennis Crouch

As I was reading the Federal Circuit’s nonprecedential decision in Realtime Data v. Array Networks, I noted the court’s repeated statements about how the broad functional claims lacked support in the specification.   Although I knew this was an eligibility case, the language made me think enablement and written description.  Then I reached Judge Newman’s dissenting opinion that begins:

This is properly an enablement case. . . . § 101 was never intended to bar categories of invention in this way. This judicial exception to eligibility is an unnecessary and confusing creation of the courts. This case is an example, for the enablement requirement of § 112 is better suited to determining validity of these claims than is the distortion of § 101. I respectfully dissent, and would remand for determination of validity under § 112.

Slip Op. (Judge Newman in Dissent).

The seven patents here all relate to methods of selectively compressing files to improve speed/storage capacity.  The basic idea behind the inventions is to quickly figure out whether it would be faster to compress & store a data block rather than simply store the uncompressed block.  This generally appears to be a technical question whose solution should be patentable, but the district court all the claims ineligible as directed to one or more abstract ideas.  For  instance US10019458 was deemed directed to the abstract idea of “compressing data using two distinct lossless compression algorithms such that the time to compress and store the first data block is less than the time to store the uncompressed data block.”  On appeal, the Federal Circuit affirmed, finding the claims directed to abstract ideas and lacking any eligible inventive concept under Alice Step 2.

The majority opinion included substantial animus to functional claim limitations:

• Ineligible if simply “claiming only a result.”
• Ineligible if merely “stating a functional result.”
• Ineligible if fail to “identify how the functional result is achieved by limiting the claim scope to structures specified at some level of concreteness.”

The policy debate over functional claiming is longstanding as was evident in the Supreme Court’s recent decision in Amgen v. Sanofi. This case continues that debate in the context of 101.

The majority opinion was written by Judge Reyna and joined by Judge Taranto.  The majority opinion does not reference enablement or Judge Newman’s dissent.

Newman’s dissent is only 3 pages and begins with the argument that the claims should be evaluated under 35 USC 112 for enablement, not 101 for eligibility.  Newman argues the enablement requirement of 112 already addresses overbroad functional claims by requiring the specification teach how to make and use the invention. Using 101 eligibility to target functional claims is therefore unnecessary.  Of course eligibility offers a short-cut for judges and accused infringers.

Judge Newman also makes the larger claim that section 101 was never intended to be a “limitation on patentable subject matter” but rather merely an introduction to the statute.  Expanding upon this, she criticized the judicial exceptions to 101 eligibility created by the courts as an “unnecessary and confusing creation” and identified the the current 101 law a “distortion” of the statute that creates “uncertainty” and “stifles innovation.”

by Dennis Crouch

The law of appellate jurisdiction routes almost every patent appeal to the Court of Appeals for the Federal Circuit.  This result is by design to ensure more national uniformity in application of the U.S. patent laws.  The court’s recent decision in Teradata Corp. v. SAP SE, 22-1286 (Fed. Cir. Aug. 1, 2023) provides an exception to the general rule.  In its decision, the Federal Circuit held it lacked jurisdiction over Teradata’s appeal because the patent infringement allegations only been raised in a permissive counterclaim.  Although the counterclaims might have been compulsory if compared against Teradata’s original complaint, during the litigation Teradata narrowed its claims in a way that caused separation from the counterclaims.

After a brief partnership pursued under an NDA, SAP began offering a product similar to that of Teradata.  Teradata then sued for trade secret misappropriation and antitrust violations.  SAP responded with denials and also added patent infringement counterclaims.

Counterclaims: The Federal Rules of Civil Procedure permit a defendant to file counterclaims against the plaintiff. The rules divide the counterclaims roughly into two categories: compulsory and permissive.  Although no one actually forces defendant to any counterclaims, failure to assert the compulsory counterclaims is seen as a forfeiture of those claims.  Permissive counterclaims are not lost and instead can be raised in a separate, subsequent lawsuit (so long as a statute of limitations has not run, etc.). The rules spell out the following test for compulsory counterclaims:

(A) arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim; and (B) does not require adding another party over whom the court cannot acquire jurisdiction.

FRCP 13(a).   Compulsory Counterclaims are important for Federal Circuit jurisdiction because the court’s jurisdictional statute routes cases to the Federal Circuit if either (1) the plaintiff asserts a clam that arises under the US patent laws; or (2) a party asserts a compulsory counterclaim that arises under the US patent laws.  Note here the gap — The Federal Circuit does not get jurisdiction if only patent claim is filed as a permissive counterclaim (or a crossclaim or third-party claim).  A final quirk of the appellate jurisdiction is that the jurisdiction statute applies even if non-patent issues are the only ones being appealed.

In Teradata, the district court initially declined to sever SAP’s patent, finding they arose from the same transaction or occurrence as Teradata’s claims.  Eventually though the district court entered summary judgment on the antitrust and certain “technical” trade secret claims in SAP’s favor.  The court then entered partial final judgment under Rule 54(b) on those claims while staying remaining “business” trade secrets claim and the patent counterclaims.  R.54(b) partial final judgment is designed to sever aspects of the case and allow those to be immediately appealed.

Teradata appealed the antitrust and trade secret losses to the Federal Circuit. The court has rejected the appeal, holding that it lacks jurisdiction over Teradata’s appeal because SAP’s patent infringement counterclaims were not compulsory.  Rather, holding the appeal should be heard by the appropriate regional circuit court of appeals. For this case that is the 9th Circuit because the lower court is located in Northern California.

The Federal Circuit applies three tests in analyzing the same transaction test quoted above from R.13: (1) whether the legal and factual issues are largely the same; (2) whether substantially the same evidence supports or refutes the claims; and (3) whether there is a logical relationship between the claims.  In this analysis, the court looks to the complaints and counterclaims as filed. In addition, the Federal Circuit treats claims dismissed without prejudice as having never been filed.  Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178, 1189 (Fed. Cir. 2004)

In its initial complaint Teradata had asserted a wide range of trade secret claims that would arguably overlap with the asserted patents.  However, the company narrowed the scope of its claims via amended complaint and later stipulated dismissal without prejudice.  On appeal, the Federal Circuit concluded that those actions narrowed the operative claim to only what was finally asserted by Teradata.  In the case, this was particularly the “batched merge” functionality.  But, the patents asserted by SAP focus on a different technology and different products than batched merge.  This weighed heavily in the Federal Circuit’s analysis, distinguishing this case from prior compulsory counterclaim precedents.  The court noted that the legal and factual issues, as well as the evidence required, are not largely the same or substantially similar between Teradata’s narrowed trade secret claims and SAP’s patent counterclaims.  As a result, there is not a sufficient logical relationship between the narrowed trade secret claims and the patent counterclaims to make the latter compulsory.

= = =

At the district court, Teradata was seeking to have the patent claims severed for a separate trial and, at that time, SAP provided evidence it claimed “demonstrates the substantial overlap between Teradata’s alleged trade secrets and SAP’s asserted patents.”  This statement on the record apparently occurred after the narrowing of the trade secrets claims.  On appeal the sides were reversed.  In particular, SAP stepped back from the argument because it preferred to have the 9th Circuit decide the case rather than the Federal Circuit.  When questioned about its prior statements, SAP responded that estoppel cannot be used to shift a court’s jurisdictional requirements.

= = =

A strange aspect of the case has to do with the trade secret claims that were dropped during litigation.  There does not appear to be an express statement in the record that they were dropped “without prejudice.” And, even if they were dropped without prejudice, res judicata likely still applies to block those trade secrecy claims from being raised in a subsequent lawsuit.  Res judicata would apply because they are clearly part of the same transaction-or-occurrence of the other trade secrecy claims that were litigated.  During oral arguments, Judge Taranto asked an astute question of SAP’s lawyers seeking an admission that Teradata would have a right to relitigate those claims.  SAP’s lawyers refused to make that admission.  The opinion itself offers nothing here and appears to simply assume that the dismissals were without prejudice.

Not a perfect triangle: Even though the dropped trade secret claims likely relate to the same transaction or occurrence as the remaining “batched merge” trade secret claims; AND the dropped trade secret claims likely relate to the same transaction or occurrence as SAP’s patent counterclaims; It does NOT necessarily follow that the remaining “batched merge” trade secret claims arise from the same transaction or occurrence as the patent counterclaims. The relationship between the claims is not transitive – each comparison must be made directly based on the elements and facts required to prove each claim.

= = =

The underlying appeal is interesting and relates to per se antitrust violations and market analysis.

by Dennis Crouch

TBL Licensing v. Vidal (4th Cir. 2023)

The Timberland Boot trade dress case is pending before the Fourth Circuit, raising some interesting questions about the role of product trade dress vs design patents vs copyright vs utility patents.

Timberland boots were first sold in the 1970s with a unique design that quickly resonated with consumers. The company has now sold more than $1.3 billion of the boots in the US, with more than $100 million in sales most years.  The boot design is well recognized as an icon.  The image above is not an actual boot sold by the company, but one created by an AI with the prompt “timberland boot.”

In 2015 Timberland began the process of registering the boot design as a trademark.  The proposed registration filings focused on iconic elements of the boot, including the silhouette features shown above. But, the USPTO refused to register the mark.  The examiner found that the design lacks secondary meaning and is also too functional.  The TTAB affirmed, but only focused on the lack of secondary meaning. At that point Timberland filed a civil action under 15 U.S.C. § 1071(b) seeking a court order to register the design mark.  The district court sided with the USPTO, holding that Timberland had failed to prove (1) that the design was nonfunctional; and (2) that consumers recognize the design as a unique source identifier.  The case is now pending appeal before the Fourth Circuit.

One of the USPTO’s key arguments in the case focuses on timing.  Timberland boots have been on the market for 50 years, and according to the record the company has “never has demanded that competitors cease and desist from
selling look-alike boots.”  And, although lots of folks recognize the look of Timberland boots, it turns out that the marketplace is flooded with look-alike alternatives.

INTA has filed an amicus brief in support of Timberland arguing that the district court erred in its functionality analysis. Rather than analyzing whether the boot design “as a whole” is functional, the District Court incorrectly disectected the overall appearance of the Icon Boot design into constituent elements, without addressing whether the combination of elements (even if individually functional) formed a whole that was more than just the sum of its parts.

Read the briefs here:

• TBL v. Vidal – Opening Brief on Appeal
• TBL v. Vidal – USPTO Responsive Brief 
• TBL v. Vidal – Reply Brief
• TBL v. Vidal – INTA Amicus

by Dennis Crouch

Intellectual property rights in the U.S. have long been a mix of state common law rights and federal statutory rights.  Patents and copyrights were established in the Constitution and enacted by the First Congress in 1790.  Those rights were fairly quickly established as exclusively federal, meaning that there is effectively no patents or copyrights offered by individual states.  Trademarks and trade secrets followed a different path – developing under state common law before later later gaining federal protections; with trade secrets moving federal most recently via the Defend Trade Secrets Act (DTSA) of 2016.  Unlike patent and copyright, trademarks and trade secrets continue to be concurrent and overlapping, meaning that state rights continue to exist and be enforceable alongside the federal right.  It is common for litigation to assert both.  With trademark law, the federal right has been around since 1870 and today occupies most of the space.  Because the federal trade secrecy right is so new (and no registration is available), it is still unclear whether we’ll see the same result.

The straggler here is the right of publicity, often termed Name Image & Likeness or NIL rights.  Although publicity rights initially emerged as a privacy interest, I find that students are quick to see its kinship to trademark law and unfair competition.  While typical privacy rights focus on personal interests and one’s peace of mind, the right of publicity is more economic and commercial in nature.  The basic idea here is that a person’s reputation is an asset — commercial goodwill.  And, that person’s brand is their name, image, and likeness.

The growth of the internet and influencer culture has raised the awareness and importance of publicity rights as the a key transferable with endorsement deals and celebrity advertising.  In the background, we also have the emergence of deep fake AI tools that allow digital impersonation of celebrities at a level never experienced (as exemplified by my AI created version of Swift above).

In a recent hearing on AI IP issues before the US Senate IP subcommittee, Adobe proposed creating a new federal right of publicity called the Federal Anti-Impersonation Right (FAIR). This would establish a minimum level of protection against the unauthorized commercial use of a person’s name, image, likeness, or other identifying aspects of their persona. Adobe argued this is needed to protect artists and creators from having their style or likeness copied by AI tools and used by others for commercial gain.  A national right of publicity could provide more consistent protections similar to those created for trademarks and trade secrets. It could also facilitate enforcement across state lines and could eventually serve as the basis for international treaties in this increasingly global space where persona rights are often exploited online and across multiple platforms.

Adobe’s proposal is largely in theory, and the terms have not yet been drawn-up. Obviously, key policy questions remain:

• Should protections apply only to famous personalities or to anyone whose NIL is used for commercial gain?
• How should we balance free speech, parody, and fair use concerns?
• To what extent should online platforms be shielded from liability?
• Should rights vest only for commercial exploitation or is there a privacy interest to protect?

The origins of publicity rights stem from privacy protections rather than commerce. This conceptual difference from trademark law is important, and I would suggest that any federal right should consider personal dignity and reputational interests, not just economic harms from impersonation.

What do you think? Are you ready for a national right of publicity?

by Dennis Crouch

In re Float’N’Grill LLC, 2022-1438 (Fed. Cir. 2023)

Just in time for my early August floating trip down in the Ozarks, the Federal Circuit has affirmed the USPTO’s rejections of Float’N’Grill’s proposed reissue claims.  The problem: the reissue claims omit an “essential element” of the original invention in violation of 35 U.S.C. 251. The case here is quite similar to the maligned essential elements test of Gentry Gallery, but relies upon the reissue statute rather than the written description requirement of Section 112(a).

Float’N’Grill’s US 9,771,132 covers a floating grill. In patent lingo, we call this a “floating apparatus with grill supports” to allow grilling while floating in water. The disclosed embodiment uses magnets to removably secure the grill to the grill supports, and the original claims required a plurality of magnets.  After the patent issued, the patentee recognized that the magnet limitation was unduly narrow.  The broadening reissue was filed within the two-year 112(d) deadline and replaced the magnet limitation with one requiring the portions to be “removably securable.”

This is a Shark Tank innovation that got investment (video below). Before getting an investor, these guys filed a low quality initial patent application that had unduly narrow claims that were exploited by knock-off versions and really just disclosed a single embodiment.  They got a notice of allowance within a year and paid the issue fee without a continuation.   In its decision, the Federal Circuit rejected their reissue patent claims on what is clearly a technicality and one that is extremely biased toward those who spend more on patent prosecution.  Patent holders with more money would drafted a more “lawyerly” initial patent application that included wiggle room boilerplate statements and additional prophetic embodiments; and would have kept a continuation application alive.  Either of those strategies would have saved the broader claims.

The Original Patent Requirement: Section 251 requires that the reissue claims be directed to “the invention disclosed in the original patent.”  And here, the problem, according to the PTO and Federal Circuit, is that the magnets was essential to the invention as originally disclosed.

The key precedent on point is U.S. Industrial Chemicals, Inc. v. Carbide & Carbon Chemicals, Corp., 315 U.S. 668 (1942). In that case, the Supreme Court rejected a  set of reissue claims on similar grounds.  The original specification highlighted the inclusion of water to improve the efficiency of a reaction. Later, in the reissue, the patentee removed the water requirement.  In its analysis, the Supreme Court concluded that water was “a necessary step” in the invented process “essential in the original patent.”  As such, the claim omitting water was improperly added in the reissue.

In US Industrial Chemicals, the court also remarked that the original patent requirement goes beyond the ordinary limits of Section 112.  The test is not passed simply by showing that the proposed invention “might have been claimed in the original patent because it was suggested or indicated in the specification.”

The Federal Circuit reaffirmed these principles in Forum US, Inc. v. Flow Valve, LLC, 926 F.3d 1346 (Fed. Cir. 2019).  In that case, the original patent document disclosed several different machining implements, each having multiple arbors. The patent  also described advantages of the multiple-arbor arrangement.  In the reissue though the patentee attempted to remove the multiple-arbor requirement in favor of a  more generic support. In its opinion, the Federal Circuit concluded the proposed claims were invalid for failure to satisfy the original patent requirement.  The court noted that the patent document failed to suggest anywhere “that arbors are an optional feature of the invention.”  See also Antares Pharma, Inc. v. Medac Pharma Inc., 771 F.3d 1354, 1358 (Fed. Cir. 2014).

by Dennis Crouch

Trinity Info Media, LLC v. Covalent, Inc., No. 2022-1308, — F.4th — (Fed. Cir. July 14, 2023).

Trinity Info Media sued Covalent for infringing two patents covering a process of connecting users based on polling question answers – US Patent Nos. 9,087,321 and 10,936,685. The patents describe a system where users answer polling questions and the system uses those answers to find a “likelihood of match” between users. Connections are suggested for high-likelihood matches. The system uses conventional computer components like processors, memory, servers, etc. The ‘685 patent adds limitations about performing operations on a handheld device, displaying results via swiping, and using a mobile app.

The district court granted Covalent’s motion to dismiss, finding the asserted claims ineligible under 35 U.S.C. 101. The Federal Circuit affirmed after analyzing the claims under the two-step Alice/Mayo framework:

Step 1 – Determine if the claims are directed to a patent ineligible concept like an abstract idea.

• The court found the claims are directed to the abstract idea of “matching based on questioning”, which involves collecting user information, analyzing it, and displaying results.
• This is a mental process that could be performed by humans without a computer. Using generic technical components does not change the character of the claims.

Step 2 – Determine if the claims recite an inventive concept, i.e. something significantly more than the abstract idea.

• The court found the claims do not contain an inventive concept. The additional elements like processors, servers, mobile devices, etc. are generic and conventional.
• They are used in a conventional way to apply the abstract idea, which is insufficient to qualify as significantly more.
• The alleged advance of real-time matching based on polling does not make the claims patent eligible. That merely reflects use of generic computers to speed up the process.

At oral arguments, the patentee’s attorney (Gregory Hillyer) argued that a better framing of the invention was the requiring of a “unique identifier to the answer so that that answer can find its place in a new and novel array of match servers, rather than a single match server that would have to later be searched.”  Unfortunately for the patentee these features were not actually required by the claims. Judge Cunningham pressed the patentee to identify specific non-conclusory allegations in the complaint about inventiveness. The patentee had difficulty citing anything substantial.

The patentee (Trinity) provided a number of arguments, but the court rejected each one in turn:

• Trinity argued the claims recite specific improvements to computer capabilities, like using “multiple match servers” and a “match aggregator.” However, the court found these were simply generic computer components used in a conventional way to implement the abstract idea.
• Trinity argued the claims recite a technical solution to a problem, like allowing “rapid real-time matching.” But the court found this merely uses computers to make the process faster, which is not enough for patent eligibility.
• Trinity argued humans cannot perform mental matching as fast as the claimed system. However, the court noted the claims do not require the alleged improvements in speed or capability. Rather, the focus of the claims themselves was on the abstract idea.
• Trinity argued the claims recite unconventional features like using a handheld device and swiping to review matches. However, the court found these limitations just apply the abstract idea using generic technology, and are not an inventive concept.  These were generic components by the time of the invention.
• Trinity relied on allegations that some limitations were not in the prior art. However, the court discounted these conclusory statements, noting that an abstract idea remains abstract even if some computer limitations are novel.

In the end, the appellate panel affirmed the lower court’s obviousness finding.

= = =

Patent eligibility can sometimes involve underlying factual questions, but that this was not one of those cases. The quoted Berkheimer to explain that ‘not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry.’  Here, the court also concluded that claim construction and discovery were not necessary precursors for the 101 analysis since the patentee failed to identify any proposed claim constructions or specific facts that would affect the 101 analysis.

by Dennis Crouch

The key benefit of the first-to-file patent regime, introduced by the Leahy-Smith America Invents Act (AIA), is the clarity that it provides. The filing date is an understandable, immutable, and reasonable priority claim marker. This is in contrast to the invention “date”, which requires evidence of the inventor’s mental state as shown by corroboratory evidence; spread across time from conception to invention completion accomplished at reduction to practice. Pre-AIA invention priority contests were decided through a process known as Interference Proceedings—mini trials before the Board (then known as the Board of Patent Appeals and Interferences or BPAI).

The transition from first-to-invent to first-to-file has involved a number of quirks, the latest is found in SNIPR Technologies Ltd. v. Rockefeller University, — F.4th — (Fed. Cir. July 14, 2023). The case focuses on situations where one party has a Pre-AIA filing date and the other was Post-AIA.

Both parties claim patent rights to certain methods of using CRISPR tools to edit bacterial genes for the purpose of creating antibiotic resistance. The idea then is that those “good” bacteria will not be impacted by the use of antibiotics to kill “bad” bacteria growing in the same pot.

After SNIPR’s patents issued, Rockefeller amended its pending claims to match those of the SNIPR patents for the purpose of prompting an interference.  The PTO took the bait, declared an interference, and invalidated the SNIPR patents.  On appeal though, the Federal Circuit has reversed — holding that the SNIPR patents are post-AIA patens and therefore should not have been subjected to an interference proceeding.

Rockefeller’s application claims priority to a provisional application filed on February 7, 2013 (before the March 2013 AIA date). The SNIPR patents claim priority back to a May 2016 filing. In interference lingo, Rockefeller is the “senior party” because of its earlier filing date and SNIPR was unable to provide an earlier date of conception.

On appeal, the Federal Circuit concluded this whole process was wrong and no longer permitted. In particular, the PTAB erred in subjecting SNIPR’s AIA patents to an interference proceeding. Only pre-AIA patents, not pure post-AIA patents like SNIPR’s, can be subjected to such a proceeding. The court reached this conclusion based upon its analysis of the text, purpose, and history of the AIA, concluding that first-to-file patents are exclusively governed by the new priority provisions found in the AIA and therefore cannot be subject to an interference. Under the AIA, we no longer question which party is the first inventor, but rather only ask if there is some prior art that renders the claimed invention obvious or anticipated.

The result then is that SNIPR’s patents have not been cancelled, and the PTO will also need to issue the Rockefeller patent. Some folks see this as a major metaphysical risk—that the existence of two patents covering the same invention could lead to the singularity. While having double patents is probably not the best outcome, industry will work through this possibility of blocking rights as it has many times in the past. The Federal Circuit considered this issue and noted that the Rockefeller filings could be raised in a variety of other ways—such as an AIA-trial proceeding, a process to challenge the validity of a patent—to challenge the SNIPR patents. Although there is a theoretical scenario where a pre-AIA application would not qualify as post-AIA prior art, that scenario is highly unlikely and remote. While a remote risk exists, the Court ultimately found it did not justify overriding Congress’ intent in the AIA statute to rid the system of interference proceedings and focus on filing date.