Elijah E. Cummings Lower Drug Costs Now Act

The House recently passed H.R. 3 – the Elijah E. Cummings Lower Drug Costs Now Act — and the Bill has been received by the Senate for consideration.

The basic proposal is to require the U.S. Gov’t to negotiate on Medicare drug prices for insulin and >25 of the top-125 drugs (by national spending). The negotiation includes a price cap:

The negotiated maximum price may not exceed (1) 120% of the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom; or (2) if such information is not available, 85% of the U.S. average manufacturer price.

If the manufacturer fails to comply then there will be civil/tax penalties. So, the word “negotiation” should be placed within quotation marks. The Congressional Budget Office predicts that price negotiation prevision would lower government spending by about $500 billion over the next decade.

This particular proposal spends most of the money – by adding dental, vision, and hearing to Medicare.

Current law includes a “noninterference” clause associated with Medicare Part D:

Noninterference.—In order to promote competition under this part and in carrying out this part, the Secretary—

(1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors; and

(2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.

42 U.S.C. 1395w-111(i).

Although not a “patent” bill, the proposal would significantly impact the market for patented drugs and biologics. What is unclear at this point is how research would shift. PhRMA estimates that the US Bio / Pharma industry spent about $100 billion on research in 2017.

This Bill is likely to be blocked by Republican leaders in the Senate, although many Republicans have offered some support for “interference” in principle.


A Novel and Useful System for Ruling Middle Earth…

Section 285 Fee Award: Whole Case Must be “Exceptional;” Exceptional Portion is Insufficient

by Dennis Crouch

Intellectual Ventures I LLC v. Trend Micro Inc. (Fed. Cir. 2019) [IVFeeAward]

IV sued Trend Micro back in 2010 for infringing its U.S. Patent Nos. 5,987,610, 6,073,142, 6,460,050, and 7,506,155.   After substantial back and forth, we eventually learned that the patents are invalid as directed toward abstract ideas. See Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307 (Fed. Cir. 2016).  On motion, the Judge Stark then awarded attorney fees to Trend Micro based upon the changed testimony of IV’s expert witness at trial in the parallel Symantec case.

Ruling from the bench, the … district court concluded that Intellectual Ventures’s conduct was exceptional “solely with respect to this collection of circumstances regarding [its expert’s] changed testimony.” Considering “whether the case overall is exceptional,” however, the district court expressly “f[ou]nd it was not.” The district court also concluded that “it would be wrong to say that [Intellectual Ventures’s] case was objectively unreasonable.”

Slip. Op.  The district court ruled that the case is not “exceptional” but went ahead and awarded attorney fees. The problem is that 35 U.S.C. § 285 expressly limits attorney fee awards to “exceptional cases.”

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

35 U.S.C. § 285.  On appeal, the Federal Circuit has vacated and remanded — holding that the district court erred in its analysis.  It is improper to find that the case is not exceptional and also award attorney fees under Section 285.

A portion but not the Whole: The district court did find that a discrete portion of IV’s litigation misconduct was improper and exceptional.  However, the district court ultimately concluded that discrete misconduct did not taint the case enough to render the whole “exceptional.”  On appeal, the Federal Circuit found that Section 285 attorney fees are only available when the case as a whole is exceptional.

Instead of determining whether the case was exceptional, it appears that the district court may have focused on whether one discrete portion of the case stood out…. This is not the appropriate analysis. Section 285 gives the district court discretion to depart from the American Rule and award attorney fees “in exceptional cases.” Accordingly, under the statute, the district court in this case should have determined whether the circumstances surrounding the expert’s changed opinion were such that, when considered as part of the totality of circumstances in the case, the case stands out as exceptional.

Slip Op.  A “district court has discretion, in an appropriate case, to find a case exceptional based on a single, isolated act.”  Such as finding must also consider the case as a whole and the totality of circumstances. Here, the district court did not make such a conclusion — and in fact concluded that the case was not exceptional.


Nexus: Product must be “Essentially the Claimed Invention”

by Dennis Crouch

Fox Factory, Inc. v. SRAM LLC (Fed. Cir. 2019)

This is an important case for anyone arguing secondary indicia — not a good case for patent holders. The court here again raised the “nexus” hurdle by holding that a presumption of nexus can only be achieved by proving that the product being sold by the patentee is “essentially the claimed invention.”  This is a situation where SRAM owned two patents in the same patent family — both of which covered aspects of its X-Sync bicycle chainring (gear).  Each patent included elements not claimed in the other — for the court that was enough evidence to disprove coexistence.


Guest post by Profs. Yu and Contreras: The Uncertain Criminal Status of PAE Litigation in China

Guest post by Professor Jorge L. Contreras and Associate Professor Yang Yu of Shanghai University of International Business and Economics.  Professor Yu has graciously provided translations of core parts of the court’s judgment and Prosecutor’s protest.

On September 30, 2019, the Shanghai Pudong New Area People’s Court (court of first instance) ruled that an individual, Mr. Li Xingwen, was guilty of criminal extortion for asserting patents against a number of Chinese companies shortly before their initial public offerings (IPOs). The case was widely reported in the international press (see here, here and here) before the official release of this first-instance judgment, and gave rise to concern about the risks of asserting patents in China. The full text of the Shanghai court’s decision was finally released on September 30, 2019 and reveals several interesting details about the case. In particular, Mr. Li’s conduct giving rise to the judgment of extortion involved the falsification and backdating of a license agreement with a related company in order to extract additional royalties from a company with which Li had already settled.  However, most of Mr. Li’s other patent assertions, notwithstanding their strategic filing prior to the defendants’ IPOs, were viewed as legitimate.  Then, on October 18, 2019, the Shanghai Pudong New Area People’s Procuratorate lodged a protest with the Shanghai No.1 Intermediate People’s Court, arguing that the judgment against Mr. Li was too lenient.  Below, we summarize the facts of the case and the findings of the court of first instance, then assess the implications of the People’s Prosecutor’s protest.

The Patent Assertions

According to one news report, Mr. Li was a prolific inventor and patent agent. Beginning as a university student, he reportedly applied for over 1,000 patents, more than 600 of which had issued at the time of the case. These patents covered a diverse range of products including “a folding bicycle, a flushing water tank, a self-filtering aquarium, [and] an insecticidal device” (IAM, Oct. 1, 2018).  In addition to these, Mr. Li filed numerous patents covering aspects of electrical equipment. Working with his brother, Li established several holding companies to which he transferred some of these patents.

Beginning in 2015, Li’s companies sued four Chinese electronics firms for patent infringement in the Beijing, Xiamen and Shanghai courts. In several cases, the litigation was brought as the defendant companies were in the process of registering their securities in IPOs on the Shanghai or Shenzhen stock exchanges.  In all cases, the alleged infringers settled the cases brought by Mr. Li’s companies, committing to pay him a total of RMB 2.163 million (RMB 1.163 million of which had been paid at the time of his prosecution).

Some cases involved the assertion of two Chinese patents claiming methods for data transmission and image acquisition against Zhang Yue Technology Inc., a manufacturer of e-book readers. A series of cases were brought from March 2017 to  July 2017 by Mr. Li’s company Shanghai Ke Dou Electronic Technology Co. Ltd. (Ke Dou) in the Beijing Intellectual Property Court and Shanghai Intellectual Property Court.  Zhang Yue settled with Ke Dou on 15 July 2017, agreeing to pay a total of RMB 800,000.

Then, at the end of 2017, Li’s holding company Ke Dou entered into an agreement with another Li company called Shanghai Bu Dao Industrial Co., Ltd. (Bu Dao).  Under this agreement, Ke Dou purported to grant Bu Dao an exclusive license to a data transmission patent (Patent No. ZL201010523269.X “Method and system for initiating data transmission between devices through image acquisition”). What’s more, the Ke Dou – Bu Dao agreement was back-dated so that it appeared to pre-date the license that Ke Dou granted to Zhang Yue.

Armed with this exclusive license, Bu Dao sued Zhang Yue in the Beijing IP Court under the same patent. To exert even greater pressure, Bu Dao reported the lawsuit to the China Securities Regulatory Commission (CSRC), which had oversight over Zhang Yue’s pending IPO.  In an attempt to avoid interference with the IPO, Zhang Yue agreed to settle the lawsuit with Bu Dao for an additional RMB 800,000.

Arrest and Charges

After signing the second license agreement, Zhang Yue reported Mr. Li and his brother to the police (IAM, Jul. 23, 2018). The case was investigated by the securities crime unit of the Shanghai Public Securities Bureau.  Mr. Li and his brother were arrested in January 2018 and prosecutors charged them with extortion on August 24. As reported by IAM (Oct. 1, 2018) the Shanghai Public Security Bureau explained the charges as an effort to preserve order in China’s capital markets, and justified them on the basis that the purpose of Li’s litigation was not to protect his patented technology but simply to earn large sums of money. This behavior, one official noted, “is in line with the characteristics of extortion”.

The Court’s Decision

The Shanghai Pudong New Area People’s Court rendered its decision in Mr. Li’s case on September 30, 2019. It evaluated the conduct of Mr. Li and his brother with respect to four different defendants that had been sued for patent infringement, including Zhang Yue.  In three of the cases, Mr. Li’s lawsuits were timed to coincide with the defendant’s preparation for or execution of an IPO.  Unlike the Public Securities Bureau, however, the court did not consider this fact to be dispositive.  In order to prove the crime of extortion, the court explained that the accused must have illegally obtained payment by means of threats and intimidation.

The court then noted that the patents asserted by Mr. Li’s companies against the four defendants were either recognized as valid by the China National Intellectual Property Administration (CNIPA) or were, at worst, of uncertain validity. As a result, seeking and obtaining license fees for such patents was not illegal. It was not relevant that Mr. Li’s demands for royalties came at sensitive times when the defendant companies were preparing for stock listing or financing.  Moreover, the court did not find evidence that Mr. Li’s companies carried out “threats or blackmail” simply by demanding payment for its patents.  Rather, it was possible that the defendants decided to pay the requested amounts for legitimate business reasons.  Accordingly, extortion was not found in these instances.

However, with respect to the second demand made against Zhang Yue, Mr. Li and his brother colluded “in bad faith” to fabricate an exclusive license agreement between their companies Ke Dou and Bu Dao. Bu Dao then sought additional royalties from Zhang Yue after it had already paid Ke Dou for the same patent.  Moreover, when Mr. Li reported Zhang Yue’s infringement of the patents to the CSRC, he did so only to pressure Zhang Yue to pay Bu Dao for these patents.  This action constituted coercion, and Zhang Yue’s payment to Bu Dau was made out of fear of the effect that nonpayment might have on its pending stock offering.  As a result, the court found that the Lis’ behavior toward Zhang Yue constituted criminal extortion.

The convictions required the Lis to refund the payment improperly paid by Zhang Yue, as well as additional fines of RMB 50,000 and 20,000 for Mr. Li and his brother, respectively.  In addition, Mr. Li and his brother were sentenced to four years and six months, and two years, imprisonment, and the unspecified “tools” used to commit the extortion were confiscated.

The Prosecutor’s Challenge to the Judgment

On October 18, 2019, the Shanghai Pudong New Area People’s Procuratorate (the local prosecutorial authority) lodged a protest with the Shanghai No.1 Intermediate People’s Court, arguing that the judgments against Mr. Li and his brother were too lenient, in that no extortion judgment was imposed with respect to their patent demands against the companies other than Zhang Yue. In its protest, the Prosecutor has argued that having the right to bring a patent enforcement action under the civil patent law does not necessarily exonerate a patentee from a criminal judgment of extortion. That is, civil and criminal offenses must be judged independently, and in this case, whether or not the Li brothers had patents, their conduct amounted to extortion.  The Prosecutor also questions the legitimacy of Mr. Li’s  enforcement actions under the patent law, arguing that the patents were not clearly valid or enforceable, were based on minor modifications to prior art technology, and involved extremely low R&D costs – all of which make the basis for his patent claims dubious.  What’s more, the settlement payments made by the alleged infringers were not related to the number, content or value of the patents, but were instead paid unwillingly in order to avoid litigation that could scuttle their other financing and corporate transactions. The Prosecutor points to Mr. Li’s deliberate targeting of companies that were in the process of obtaining financing and failure to make substantial preparations for litigation as further evidence of his malicious intent.  For all of these reasons, the Prosecutor has petitioned the court to extent its extortion judgment to the Li brothers’ other patent assertions.


It not clear when the People’s Court will rule on the Prosecutor’s protest, or when (or whether) a written decision will be issued in response. However, the outcome of this protest could be important for all firms considering the initiation of patent infringement litigation in China. While one can assume that few legitimate patent holders will resort to the clearly deceptive tactics adopted by the Li brothers (e.g., creating backdated licensing agreements between related shell companies), the Prosecutor seeks to impose criminal penalties on behavior that is far more common in the business environment:  asserting patents without certainty regarding their validity, confronting an infringer prior to or in the midst of a financing transaction, or obtaining a settlement payment that is not directly related to the number or value of the asserted patents. In the U.S. and other Western countries, tactics like these have generally been accepted as permissible, so long as a patent has been validly issued by the relevant granting authority.  But if the Shanghai Pudong New Area People’s Procuratorate has its way, an entirely new level of intent-based scrutiny could be applied to patent litigation.

Principal Officers: Three En Banc Petitions in Arthrex v. Smith & Nephew

by Dennis Crouch

None of the parties were happy with the outcome in Arthrex v. Smith & Nephew (Fed. Cir. 2019) and all three have now petitioned for en banc review:

In its decision, the Federal Circuit held that the appointment process for PTAB judges (APJs) violates the Appointments Clause of Article II of the U.S. Constitution.  The court explained that these judges are principal officers under the constitution and thus, must be appointed by the President of the United States rather than merely the Head of Department.  However, the court issued a cy-près ruling in an attempt to limit the upset caused by its ruling. In particular, the court invalidated a portion of the statute that limited the PTO’s ability to remove APJs from the board. According to the court, that change was enough to reclassify the PTAB Judges as inferior officers that do not need presidential appointment.  Despite its proposed “cure”, the Federal Circuit held that – in this case – the PTAB decision must be vacated and reheard in front of a new panel of APJs. “We hold that a new panel of APJs must be designated to hear the inter partes review anew on remand.”

Why is no-one happy?:

  1. The Patentee would like the case wholly thrown out and argues that the CAFC’s savings-cut was both incorrect and insufficient to convert principal officers to inferior officers.
  2. Both the Patent Challenger and USPTO as intervenor want the original final written decision reinstated (cancelling the claims) and argue that the en banc court should find the APJs were already inferior officers.  They also argue that, if APJs are principal officers then the en banc court should reconsider the appropriate remedy for such an appointments clause violation.

More to come on this.

Self Anticipation Dooms Chamberlain Patent

The Chamberlain Group, Inc. v. One World Techs, DBA Techtronic Indus. (Fed. Cir. 2019)

This case involves the same parties as my recent post on disavowal. Dennis Crouch, Disavowal: Case Closed Once the Inventor Manifests That the Invention Includes a Particular Aspect, Patently-O (December 12, 2019). This particular dispute an inter partes review (IPR) challenge of Chamberlain’s U.S. Patent No. 7,196,611 (garage door opener learning mode).

In its final written decision, the PTAB sided with the patent challenger — finding all challenged claims (18-25) anticipated by a prior Chamberlain patent, U.S. Patent No. 4,638,433 (Schindler).  On appeal, the Federal Circuit has affirmed — finding that substantial evidence supported the Board’s factual conclusion of Anticipation.

Although not express in the claims, the specification focuses the invention on setting a “max run timer” —  “the amount of time for the door to move between its open and closed limits, plus five to ten seconds.” In its decision, the Federal Circuit described the process as follows:

First, the user presses a button on the controller to enter learn mode. Next, the controller identifies the proper beginning status for the door and the steps the user must complete to set the timer. Finally, the controller guides the user through the identified steps by flashing the appropriate indicator LED for each step. For example, if the step requires the user to open the door, the controller will flash the open limit LED. Once the user completes all the steps, the controller counts the time for the door to travel from its closed limit to its open limit, adds five to ten seconds, and records that value as the max run timer.

Claim 18 – at issue here – is not expressly limited to the “max run timer” setup, but does follow the aforementioned process with its four-step method for “assisting in the installation and maintenance” of a garage door opener (“barrier movement operator”).

  • turning-on “learn mode”;
  • identifying by the controller the present “state” of the opener;
  • identifying by the controller activities to be completed by a user; and
  • responsively transmitting guidance signals to an “annunciating unit” to provide guidance to the user.

The prior art patent (Schindler) focuses on a different learning mode – programming the upper and lower limits for the garage door movements.  Schindler uses the same “annunciating unit” (i.e., flashing lights) to communicate which limits are being programmed.

The appeal here focused on whether Schindler disclosed activities (plural) to be completed by the user or only one activity (singular).  The Federal Circuit confirmed that the Board had it right — Schindler discloses having the user both set an “up limit” and a “down limit.”  One issue here is that Schindler first identifies one of the activities and then later identifies the second activity.  On appeal, the Federal Circuit held that the claims do not have any timing requirement:

We agree with the Board that nothing in claim 18 “requires the activities to be identified together or at the same time.” . . . Given the absence of any timing limitation, the Board reasonably found that “Schindler’s disclosure of transmitting the signals in sequence, one after the other in response to the previously-completed steps of identifying the garage door operator’s present status and activities to be completed” teaches the “responsive to” step.

Slip Op.

What’s going on here? Knowing Chamberlain’s history of pushing the limits of its IP protections, it looks to me like the company was using this new patent to extend of its old Schindler patent that was approaching expiration. Although Chamberlain may have something patentable here, that needed to be reflected in the claims.

Attorney Fees Designed to Deter Future Wasteful Litigation

Blackbird Tech LLC v. Health In Motion LLC (Fed. Cir. 2019)

This case involves U.S. Patent No. 6,705,976 (“the ’976 patent”) owned by Blackbird.  The patent claims an exercise equipment with a bow-shaped contour with cable-exit ports. And HIM’s M1-Multi-Gym was accused of infringement (Compare patent image with product below).

After of 1.5 years of litigation Blackbird voluntarily dismissed its complaint with prejudice and executed a covenant not to sue the accused infringers.  However, rather than simply dismissing the case, the district court also paused to award attorney fees ($300k) to the defendants.  On appeal, the Federal Circuit has affirmed the fee award.

35 U.S.C. 285 provides discretionary authority for a district court to award attorney fees to the prevailing party, although only in “exceptional cases.”

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

Id. In Octane Fitness, the Supreme Court interpreted an “exceptional case” as one that “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).  Applying that standard, the district court noted that Blackbird’s litigation position was substantively weak; that the case was litigated in an unreasonable manner; and that fees were warranted “to deter future abusive litigation.”

Weak Case: Although the accused device includes the bowed shape, it has several differences from the claims and the Federal Circuit found that “the exercise of even a modicum of due diligence by Blackbird, as part of a pre-suit investigation, would have revealed the weaknesses in its litigation position.”  Although no motion for sanctions was filed, Blackbird was aware from early-on (the original answer) that HIM was planning to seek attorney fees and thus had sufficient “notice” to ensure its affairs were in order and correct defects in the case.

Nuisance Offers: During the litigation, Blackbird made several offers to settle at what the Federal Circuit called “nuisance value settlement offers” ranging from $80k to $15k. Each of these were “significantly less than the cost of litigation.”  On appeal, the Federal Circuit affirmed that low settlement offers may be considered when determining bad faith and exceptional cases.  Citing Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011) (patentee had “acted in bad faith by exploiting the high cost to defend complex litigation to extract a nuisance value settlement”).

Future Abusive Litigation: According to the Federal Circuit, Blackbird is an entity owned and controlled entirely by attorneys.  The firm makes its money by purchasing patents and then litigating them. Notably, the company has filed over 100 infringement lawsuits since 2014, none of which have reached a full, final decision on the merits.  The district court partially justified its fee award here on the idea that it would help deter Blackbird from bringing similarly weak positions in the future.  On appeal, the Federal Circuit affirmed — finding that reasoning proper to the exceptional case finding. “The District Court therefore did not abuse its discretion by considering the need to deter future abusive litigation.” This holding falls in-line with the court’s previous statement in Inventor Holdings:

We conclude that the district court acted within the scope of its discretion in finding this case to be exceptional based on the weakness of IH’s § 101 arguments and the need to deter similarly weak arguments in the future.

Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372 (Fed. Cir. 2017).

Fee award affirmed.

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Patent Books:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Validity Goulash: Functional Claim Language, Patent Eligibility, and Pick-up Truck Drive Shafts

by Dennis Crouch

In American Axle, the Federal Circuit found the patented method of manufacturing drifeshafts to be patent ineligible.  U.S. Patent No. 7,774,911. The claims “tuned” the shafts in order to reduce multiple forms of vibrational resonance, and the court held that the claims were improperly directed to “Hooke’s law, and possibly other natural laws.” The majority opinion was written by Judge Dyk and joined by Judge Taranto; while Judge Moore wrote a vigorous dissent identifying the majority opinion as “validity goulash” (and not the good tasting kind).

The majority worries about result-oriented claiming; I am worried about result-oriented judicial action.

Judge Moore writing in Dissent.

Hey Mechanical Engineers: Your Patents are Also Ineligible

American Axle has now petitioned for en banc review and has the support of six amici briefs.  Judge Moore largely wrote the brief here via her dissenting opinion, but the patentee does a good job of explaining (1) the “realness” of its invention and (2) how the accused infringer copied their approach.

  • AAM Rehearing Petition.
  • Amicus brief of 12 law professors. (The court’s opinion here does not fit with either Morse (1853) or the Bell patent case (1888).)
  • BIO amicus brief. (“Nothing in the claims or specification of the ‘911 patent recites or implies that an application of Hooke’s law to a liner is necessary or sufficient to tune the liner in accordance with the claim.”)
  • IPO amicus brief. (“The decision may open the floodgates to section 101 challenges to mechanical inventions, which have not been the subject of recent eligibility decisions of this Court or the Supreme Court.”)
  • U.S. Startups & Inventors for Jobs. (“From the standpoint of many entrepreneurs, inventors and investors that comprise the Invention Community, the U.S. Patent System appears to be on life support.”)
  • Michel amicus brief. (Former Chief Judge Michel argues that the decision here ignores core rules of summary judgment – disputed issues of material fact.)
  • Doerre amicus brief. (Patent attorney Jeremy C. Doerre argues (inter alia) that the law-of-nature exception does not present a fruitful approach to eliminating broadly drafted claims — the better approaches rely upon written description.)

The petition itself raises three questions:

  1. Must the court identify the “precise ineligible concept the claims are allegedly directed to.”
  2. Must the court consider disputed facts regarding the invention when determining whether the claims are directed toward an inventive concept?
  3. Should the court interpret Section 101 narrowly in order to avoid “swallow the enablement [and written description] requirements of Section 112?”

Truthfully, these questions are rather weak because they they have all been addressed by most members of the court in some form. The strongest aspects of AAM’s arguments are the facts of the case.

With the ’911 patent, AAM invented novel and unconventional methods of manufacturing improved driveshafts that include “liners”—low cost, hollow tubes made of a fibrous material (such as cardboard).

Before the ’911 patent, it had only been well understood to use liners in driveshafts to attenuate a single type of vibration called “shell mode” vibration. Neapco admitted that prior art liners had only attenuated shell mode vibration, and “presented no argument or evidence to contradict that” fact on appeal. As explained in the ’911 patent, prior art liners were not suitable (let alone well understood) to attenuate another type of vibration called “bending mode” vibration. And liners certainly were not well understood to attenuate both bending and shell mode vibration.

AAM solved these problems. It was the first to discover that liners could be “tuned” to attenuate bending mode vibration, or the combination of both bending and shell mode vibration. The claims of the ’911 patent recite these solutions.

Petition for rehearing.

The difficulty for AAM is that the point-of-novelty for the method claims is specified as a result rather than as a process:

tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member; and positioning the at least one liner within the shaft member such that the at least one liner is configured to damp shell mode vibrations in the shaft member by an amount that is greater than or equal to about 2%, and the at least one liner is also configured to damp bending mode vibrations in the shaft member,

‘911 patent Claim 1. The real question here is whether these functional claim limitations should be seen as too abstract.  Or, instead, are they effective at providing a clear and limited scope once coupled with the specification disclosure and the knowledge of a skilled artisan?


Trumped-up Trademarks – or – How are you today?: I’m Peachy

by Dennis Crouch

As Congress moves forward impeaching President Donald Trump, business-minded Americans are also looking for ways to monetize the process.  The following are a few recent trademark applications.  Some are still pending while others have been abandoned after receiving rejections from trademark examiners at the US Patent & Trademark Office.

IMPEACH 45. President Trump is the 45th President and so the meaning of this proposed mark (IMPEACH 45) is clear. The USPTO examiner caught the implication and rejected the application “because the applied-for mark consists of or includes something identifying a particular living individual whose written consent to register the mark is not of record.”  The applicant then abandoned the registration application. A slightly more cryptic mark made it through the registration process.  The image to the right shows the general prohibition sign  (“no-sign”) covering the number 45 that is now a registered mark owned by Kamyar Shadan of Tiburon, CA.

Back in August 2016, it looked like Hillary Clinton would be No. 45.  Thus when Mark Allan filed for IMPEACH THAT BITCH, the TM examiner similarly found that the proposed mark improperly “identifies Hillary Clinton, a living individual.”  That registration application has also been abandoned. Other anti-Hillary registration applications include ANYBODY BUT CLINTON, WOMEN AGAINST CLINTON, and the catchy HILLARY.CON. These registration applications have all been abandoned.

Future Impeachments: One way to potentially overcome the prohibition on registering a mark identifying another person (without their permission) is to register the mark of a future identifier.  Thus, a Florida Attorney (Mitch Soligan) has already filed for rights on IMPEACH 46. Folks better start paying attention to who is running for VP.

MAGA: President Trump’s arguably misdescriptive slogan “Make America Great Again” is a registered mark owned by DONALD J. TRUMP FOR PRESIDENT, Inc. Ellen Lust filed her competing application with a catchy addition – “Make America Great Again Impeach Trump.”  The Senior markholder (trump-for-president) filed a pre-registration letter of protest and examiner refused to register the mark.

Although American, Lust is a professor of political science at the University of Gothenburg in Sweden. I reached out to Prof. Lust for more information, but she has not responded.

Impeach the President – This abandoned application was filed in 2018 for a board game. Unfortunately, I believe we are still waiting to see the actual game.  Although there is a logo (below) and a website: impeachthepresidentthegame.com.


Impeach the Cheat is a pending TM application filed November 2019 that includes an interesting graphic. “The mark has a meaning of justice being served to an individual for wrong-doing in public office.”  This one is graphically interesting with its allusion to Nixon.

Finally, my favorite is the IMPEACHMINTS – Peach Flavored Mints – that quaintly stretch back to GWB. Hopefully there is no bitter aftertaste.



Disavowal: Case Closed Once the Inventor Manifests That the Invention Includes a Particular Aspect

by Dennis Crouch

Techtronic Indus. v. International Trade Commission and The Chamberlain Group (Fed. Cir. 2019) (TechtronicvITC)

Chamberlain’s patent at issue here claims a garage door opener motor drive unit with two microcontrollers — one of which is sited in a “wall console” and the other presumably in the head unit, although this second portion is unclaimed. U.S. patent No. 7,161,319.

1. An improved garage door opener comprising a motor drive unit for opening and closing a garage door,

said motor drive unit having a microcontroller and a wall console,

said wall console having a microcontroller,

said microcontroller of said motor drive unit being connected to the microcontroller of the wall console by means of a digital data bus.

The accused infringer is Hong-Kong based TTI. TTI owns Ryobi, and Ryobi makes the accused garage door opening system.  hamberlain filed its case in the USITC which issued exclusion orders against the appellants.  On appeal, the Federal Circuit has reversed and vacated on claim construction.

Infrared Detector: It is clear from the patent document that the inventor’s saw the main point of their invention as a passive infrared detector housed in a wall console.

SUMMARY OF THE INVENTION: A passive infrared detector for a garage door operator … contained in a wall control unit.

‘319 patent, invention summary. This focus on the passive infrared detector is found throughout the patent document.  Consider the inventor’s statement of the problem to be solved by the invention:

What is needed then is a passive infrared detector for controlling illumination from a garage door operator which could be quickly and easily retrofitted to existing garage door operators with a minimum of trouble and without voiding the warranty.

‘319 patent, background.  The easy retrofit solution was to create a wall-unit with an infrared detector. Further, the only described embodiment places the passive infrared detector in the wall console.

Now, look back up at claim 1 and notice that a passive infrared detector is not expressly claimed. That limitation was spelled out in claims of the parent patent, but Chamberlain’s patent attorney at Fitch Even removed it from this continuation patent.

USITC decisions are made by the six commissioners (currently only five), but the Commission tasks an Administrative Law Judge (ALJ) to conduct the trial.  Here, the ALJ narrowly construed the “wall console” term — holding that “Chamberlain
… disavowed wall consoles lacking a passive infrared detector.”  This construction is important because Ryobi’s wall console does not have a passive infrared detector — thus, the narrow construction meant no infringement.

The Commissioners then took-up the ALJ’s decision and disagreed — ultimately giving “wall console” its ordinary broad meaning that resulted in an easy infringement finding (and resulting exclusion order preventing importation of Ryobi products).

On appeal, the Federal Circuit reviewed the claim construction de novo and found that the ALJ’s original decision was correct. “Chamberlain disavowed coverage of wall consoles without a passive infrared detector.”

[W]here the inventor … has manifested that the invention does or does not include a particular aspect, that intention is regarded as dispositive.

Here, such statements regarding the invention fall into the disavowal category – and must be “clear” although not necessarily “explicit.”

We conclude that the ’319 patent disavows coverage of wall consoles lacking a passive infrared detector because the specification, in each of its sections, discloses as the invention a garage door opener improved by moving the passive infrared detector from the head unit to the wall console. It is axiomatic that, where the specification “describes ‘the present invention’ as having [a] feature,” that representation may disavow contrary embodiments. See Poly-America (“[A]n inventor may disavow claims lacking a particular feature when the specification describes ‘the present invention’ as having that feature.” The ’319 patent, by consistently representing the invention as the placement of the detector in the wall console, has thus effected a disavowal of alternative locations.

According to the background section, the prior art taught the use of passive infrared detectors in the head unit of the garage door opener to control the garage’s lighting, but that locating the detector in the head unit was expensive, complicated, and unreliable. The ’319 patent therefore sets out to solve the need for “a passive infrared detector for controlling illumination from a garage door operator which could be quickly and easily retrofitted to existing garage door operators with a minimum of trouble and without voiding the warranty.”

The remaining sections of the patent—even the abstract—disclose a straightforward solution: moving the detector to the wall console.

Chamberlain argued that the patent recites a separate relating to programming of the microcontrollers. However, the Court rejected that argument:

The suggestion that the patent recites another invention—related to programming the microcontroller—in no way undermines the conclusion that the infrared detector must be on the wall unit. . . . But the entire purpose of [the microcontroller programming] part of the description is to enable placement of the detector in the wall console, and it never discusses programming the microcontroller or applying digital signaling techniques for any purpose other than transmitting lighting commands from the wall console.

The court appears to note that one problem with this additional invention is that the specification was not very specific.  The claimed “digital data bus”, for instance, is not expressly discussed in the specification other than an oblique reference to “lines carrying the normal wall control switch signals.”

Chamberlain also argues that disavowal is not clear because nothing in the specification suggests that it would be impossible or infeasible to put a passive infrared detector elsewhere.  On appeal, the Federal Circuit found some merit to that argument, but concluded that the specification here “plainly represents the scope of the invention to the exclusion of some embodiments.”

Here, the entire specification focuses on enabling placement of the passive infrared detector in the wall console, which is both responsive to the prior art deficiency the ’319 patent identifies and repeatedly set forth as the objective of the invention. Thus, the ’319 patent disavows locating the detector elsewhere, even without an express concession to that effect.

Slip Op.  Although not cited here, this case reminds me substantially of Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998) and its maligned “omitted elements” test.


Supreme Court: PTO Cannot Recoup its Attorney Fees in Defending §145 Civil Actions

by Dennis Crouch

Peters v. NantKwest, 589 U. S. ____ (Supreme Court 2019)

In a short, unanimous decision, the Supreme Court has upheld the “American Rule” of fee shifting — holding that the “all expenses of the proceedings” provision of § 145 does not authorize reimbursement of PTO attorney/paralegal costs associated with working on the case.

The question presented in this case is whether such “expenses” include the salaries of attorney and paralegal employees of the United States Patent and Trademark Office (PTO). We hold that they do not.

Slip. Op.

I have sympathy for the PTO in this case. It is expensive for the agency to defend itself in district court litigation and those costs must be recouped somehow.  If the PTO spends $300,000 on defending a § 145 trial, that money will likely be taken-away from examination and lead to increased fees for next year.  From the PTO’s perspective, almost every substantial request from the patent applicant comes with an associated fee that is related to the cost of providing the service and why should this be different? The answer, of course, is that a trial in Federal Court is a far cry from agency action and is particularly designed to cut-off and avoid agency overreach. The Supreme Court correctly decided the case today based upon the tradition and long history of the “American rule” that is also supported by are culture of providing access to the courts.

= = =

Background: When the PTO refuses to issue a patent, most applicants just turn their tail and go home.  Others are stubborn and take the matter to court.  The Patent Code provides two alternative approaches: (1) appeal immediately to the Federal Circuit; or (2) file a civil action under § 145 — demanding a federal trial on whether the PTO must issue the patent.  Law students write appellate briefs in their 1L advocacy class — writing a pretty good appellate brief is relatively easy and also relatively cheap.  One problem with appealing directly is that the Federal Circuit gives substantial deference to any factual findings by the PTO — As such, it is usually only fruitful to appeal on questions of law or where the factual error is exceedingly clear.  Section 145 civil actions, however, allow the patent applicant to present new evidence, including oral expert testimony, that is considered afresh by the district court without deference to prior PTO factual findings.  The primary downside, of course, is the expense of expert witnesses, depositions, and the trial.

The last line of § 145 states: “All the expenses of the proceedings shall be paid by the applicant.”  The Lanham Act has a parallel provision for times with the PTO refuses to register a mark: “Unless the court finds the expenses to be unreasonable, all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.” 15 U.S.C. § 1071.

Do “all the expenses” include PTO attorney fees: The Sotomayor opinion begins with the long-held tradition that “[e]ach litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” The court explained that the tradition applies generally in civil cases. “This Court has never suggested that any statute is exempt from the presumption against fee shifting.”  Likewise, § 145 is not except.

The rule of no-fee-shifting is a presumption grounded in the common law — one that Congress can flip.  However, because the rule is so fundamental to American legal practice, the courts have required a “specific and explicit” statement of Congressional intent.  Here, the word “all the expenses” do not meet that threshold level of clarity.

The court’s interpretation of “all the expenses of the proceedings” is as follows:

The complete phrase “expenses of the proceeding” is similar to the Latin expensæ litis, or “expenses of the litigation.” This term has
long referred to a class of expenses commonly recovered in litigation to which attorney’s fees did not traditionally belong. See Black’s Law Dictionary 461 (1891) (defining “expensæ litis” to mean “generally allowed” costs) … These
definitions suggest that the use of “expenses” in §145 would not have been commonly understood to include attorney’s fees at its enactment. …

[T]he modifier “all” does not expand §145’s reach to include attorney’s fees. Although the word conveys breadth, it cannot transform “expenses” to reach an outlay it would not otherwise include. Cf. Rimini Street, Inc. v.
Oracle USA, Inc., 586 U. S. ___, ___–___ (2019) (slip op., at 6–7) (“The adjective ‘full’ in §505 therefore does not alter the meaning of the word ‘costs.’ Rather, ‘full costs’ are all the ‘costs’ otherwise available under law”).

The final section of the opinion delves briefly into PTO history and probably should have been left out because it appears to me to add more confusion than clarity. The court writes that:

There is no evidence that the (19th century) Patent Office, the PTO’s predecessor, originally paid its personnel from sums collected from adverse parties in litigation, or that the Office initially even employed attorneys.

This statement does not appear relevant –  a more relevant question would be whether the PTO collected attorney fees in those early cases.

In the end, the Supreme Court found that all signs pointed to a conclusion that the cost-shifting provision does not include attorney fees.


A Rose by Any Other Name – or – It’s not Wrong it’s just Different

by Dennis Crouch

The bench was an active inquisitor in the Thryv v. Click-to-Call oral arguments held Dec. 9, 2020 before the U.S. Supreme Court.  This is the third post-AIA Supreme Court case focusing on the no-appeal provision of 35 U.8.C. § 314(d) (“determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable”).   [TRANSCRIPT]

Oral arguments focused on two major issues: (1) the extent that SAS limited Cuozzo; and (2) the importance of the time-bar since there are alternative fora for judging patentability and the patent is invalid anyway.

The first point — SAS limiting Cuozzo: In SAS (2018), Justice Gorsuch explained the holding in Cuozzo (2018) as follows:

Cuozzo concluded that § 314(d) precludes judicial review only of the Director’s “initial determination” under § 314(a) that “there is a ‘reasonable likelihood’ that the claims are unpatentable on the grounds asserted.

SAS. To be clear, if the no-appeal statute’s sole function is to block appeal of the reasonable-likelihood decision, then the decision is foreclosed in favor of the patentee (allowing appeal of the time-bar question).  However, as I suggested in a prior essay, I believe that Justice Gorsuch SAS opinion overstated Cuozzo’s holding. I suspect this was an intentional shading of Cuozzo made possible because of 5-4 split.  A smaller majority allows for a more extreme opinion.

This issue was ripe for discussion in the oral arguments with Thryv’s counsel Adam Charnes attempting to explain that Gorsuch’s SAS statement isn’t “wrong” per se, it just isn’t complete.  Charnes would obviously rather not require overturning of the Supreme Court’s most recent case on the subject in order to win.

JUSTICE GINSBURG: What do you do with the sentence in this Court’s SAS decision that says 314(d) precludes judicial review only of the Board’s initial determination under 314(a) that there is a reasonable likelihood that the claims are unpatentable?

MR. CHARNES: We think that that’s not a complete description of Cuozzo . . . .

JUSTICE GINSBURG: So you think that that was just a wrong sentence?

MR. CHARNES: I wouldn’t say it was wrong. . . . What I’d say is that the Court had no need to describe Cuozzo more broadly … because that was not the factual circumstance of SAS. …

JUSTICE KAVANAUGH: I think you are saying “it’s wrong,” to pick up on Justice Ginsburg’s question, at least the use of the word “only.”

MR. CHARNES: I think it’s not a complete description. I think that’s not the only basis that this Court explained in Cuozzo. I think that’s — that’s a fair point.

Justice Kavanaugh is the only new member of the court since SAS and his vote is likely critical to the outcome in this case. However, the most likely swing vote is Chief Justice Roberts.

The Gov’t attorney, supporting Thryv in its no-appeal argument and agreed that the SAS statement is wrong.

MR. ELLIS: (Representing the U.S. Gov’t and supporting the no-appeal argument)I do think that sentence is wrong, and I think it’s incomplete. . . . Cuozzo concluded more than that. And I think, if you look at the decision, you’ll see that.

The wrongness of Justice Gorsuch’s statement is potentially twofold: (1) it is clearly an unduly narrow statement of the holding in Cuozzo; and (2) it might also be an incorrect interpretation of the statute.  For me, this raises the interesting esoteric question about precedent and primary sources.  What is the precedential and stare decisis role of the Supreme Court’s (mis)description of its prior precedent.  Is the (mis)description now the leading precedent, or is it merely a secondary source helpful in interpreting the original decision.

Mr. Geyser has the easier case on these points — arguing that the patentee clearly wins under SAS, and should also win under Cuozzo.

MR. GEYSER: (Arguing for the patentee) We’re simply reading 314(d) to say exactly what this Court in SAS said it meant, which is it is limited to only the initial patentability threshold in 314(a).

My friend from the government now concedes that they think that [SAS] was wrong. I don’t believe they’ve asked this Court to overturn SAS. We don’t think that the Court was wrong.

JUSTICE KAGAN: Well, it’s not a question of overturning. It’s just — I think what they were saying is that SAS dealt with one issue in which it was unnecessary to recite Cuozzo’s full test, but Cuozzo has a broader test than SAS quoted.

MR. GEYSER: Well, to be very clear, I think that we win under Cuozzo as well, but I don’t think that the reasoning in that statement, which is a very plain statement in SAS, can be limited in that way.

[The “only” language in SAS] is an absolute part of the core holding of the case in rejecting what the government eventually framed as their primary submission in SAS.

The substantive issue on appeal in Thryv was the PTO’s interpretation of the time bar in § 315(b).  Although a lawsuit had been filed and served, the PTAB found that the time-bar was not triggered because that lawsuit had been dismissed without prejudice.  On appeal, the Federal Circuit found that the PTAB had misinterpreted the statute — holding that dismissal does not annul the time-bar.

The Patent Challenger and Government both argue that the a time-bar decision by the PTAB is not appealable. Justice Gorsuch pushed that question in an extreme example, and Charnes held his ground on no appeal:

JUSTICE GORSUCH: Let’s just hypothesize that someone has tried to undo this patent four times or maybe even more in a court of law, failed for various reasons every single time, and then comes to the director of patents, who has a political mission, perhaps, to kill patents, let’s just say. And it is clearly time-barred under the statute. Let’s just hypothesize that. And yet, the director goes ahead and does it anyway. Under your submission to the Court, I believe you’re saying that is a shenanigan this Court cannot review.

MR. CHARNES: It is correct that our submission is that’s not reviewable. The time bar is not reviewable.

JUSTICE GORSUCH: All right. The hypothesis, there’s no good faith, okay? The director of patent has a political desire for whatever reason to destroy this patent and many others. . . . In your circumstance, you’re telling the Court there’s no review of that decision, I believe, or maybe it’s not a shenanigan even in your — your view perhaps.

MR. CHARNES: Well, I think there is
— there is no review under — under 314(d). It may be that it’s an appropriate case for mandamus relief if the circumstances are as egregious as you suggest in your hypothetical. . . .

JUSTICE GORSUCH: So we’re going to just channel all these cases to mandamus? Is that — is that the upshot of your position?

MR. CHARNES: No, because mandamus is a rare relief. I mean, it would only be reserved for really egregious circumstances like your hypothetical.

JUSTICE GORSUCH: If the institution decision is not reviewable at all, how would it be mandamus-able? . . .

Mr. Ellis from the SG’s office added his two-cents with an argument along the lines of “you shouldn’t care about privacy if you have nothing to hide.”  In this case, his argument was that we shouldn’t worry since “you’re going to get review, judicial review of the patentability” question.

MR. ELLIS: What was open for review was that patentability analysis. Now Respondent opted not to challenge that patentability analysis. But, if it had merit, that would be judicially reviewable and then the patent wouldn’t be canceled.

This discussion takes us to the second general topic for discussion — is the time-bar a big deal.  In Cuozzo and in oral arguments here, the justices appeared reluctant to bar appeals of important issues such as due process violations and statutes of limitations.

CHIEF JUSTICE ROBERTS: Well, but, I mean, I don’t think it’s what we were fighting over at Yorktown. I mean, it’s just a question of whether — (Laughter.)

CHIEF JUSTICE ROBERTS: — as you said, the ultimate question, the ultimate issue that affects the property rights in a patent, it’s going to be reached. It’s just a question of whether you use one procedure or another. . . .

CHIEF JUSTICE ROBERTS: As I understand [Mr. Charnes] answer, at least part of it is more or less that this is small potatoes. It’s just about timing for — for the institution of the matter and that the basic issue of the patent validity is something you’re going to get to. You have a number of avenues to get to it.

The basic idea here is that even if the petition is time-barred, patentability could be raised in an ex parte reexamination or in a district court declaratory judgment challenge, or by a separate petitioner who was not time-barred:

CHIEF JUSTICE ROBERTS: [speaking about ex parte reexam] Well, it’s different, I’ll give you that, but, I mean, it’s focused on the same ultimate question. . . .

JUSTICE KAGAN: But if it’s not with
this Petitioner, it can be another Petitioner. . . And, indeed, even when a petitioner drops out under this statute, the Board can keep the proceeding going without the petitioner. So the fact that it is this Petitioner seems utterly unimportant under this statute.

Justice Ginsburg appeared to recognize that the time-bar is important:

JUSTICE GINSBURG: In Cuozzo, it was a particularity requirement, and that was described as a minor statutory technicality. But, here, we’re not dealing with a minor statutory technicality; we’re dealing with a time bar.

Justice Gorsuch provided a softball for the patentee’s counsel to answer:

JUSTICE GORSUCH: Well, I guess the question, though, that we’re struggling with is so what’s the big deal? If you’re stuck going to ex parte review anyway, why should we care? What’s your answer to that?

MR. GEYSER: … because inter partes review is a very different process than ex parte reexamination.

JUSTICE GORSUCH: Spell that out. Spell that out. Why?

MR. GEYSER: It’s because instead of having an opportunity for a single response, truncated discovery, you’re in an adversarial proceeding. You’re before a panel of three PTAB judges who might give you an hour oral hearing.

You get a long, iterative process with a talented patent examiner who can say this is what I think is wrong, and then you have lots of opportunities to show them exactly why
that concern is unfounded.

And, again, the PTAB is reversed a fourth of the time. It’s not like this process … is perfect or without error. . . .

JUSTICE KAGAN: It just doesn’t seem as though this petitioner makes all that much difference.

MR. GEYSER: Well, Congress felt otherwise in this heavily negotiated process that produced 315(b) as a fundamental safeguard for patents.

JUSTICE GORSUCH:  Why does it matter whether it’s one petitioner or another petitioner?

MR. GEYSER: To make sure that you don’t have someone gaming the system . . .

MR. GEYSER: And [Congress] understood that this [time-bar] is a significant protection for patent owners. And it’s a significant way to divide the authority between the courts on the one hand and the agency on the other.

There is a more detailed statutory interpretation question here — The no-appeal provision is directed to institution determinations “under this section” — i.e., Section 314, and the time-bar is found under Section 315 of the Code.  Under this “chapter”

JUSTICE KAVANAUGH: But “under this chapter” is used in the same provision [314(b)]. If we had “under this chapter” here [in 314(d)], that would solve your problem.

The petitioners here do a nice job of overcoming that argument and so I don’t see it as the basis for the decision, although the court may throw it in as an ancillary matter.

In the end, the case comes down to a strong presumption that agency decisions are subject to appeal in Federal Court. And, the question is whether congress did enough in the statute to overcome that presumption in this case.  Patentee’s counsel (who is aware of many cases) ended his arguments with an appeal to precedent and history:

MR. GEYSER:I would submit that I’m not aware of any case that this Court has ever decided that would find Article III review cut off entirely based on language as indirect as this.

We can look for a decision in this case in the Spring of 2020.  I am expecting a split opinion with the majority affirming — holding that the no-appeal provision has no force in this particular case.

Tax Investment Scheme Not Patent Eligible

In re Greenstein (Fed. Cir. 2019) (nonprecedential)

An obvious “problem” with tax-deferral schemes (such as a retirement plan) is that Government officials would like to spend the money already.  Mark Greenstein has the solution – monetizing the taxes-owed.  Essentially the government could sell the right to collect the future taxes just like you might sell-off accounts receivables or unpaid invoices.  Because the state has powerful collection mechanisms, the particular approach here is that the Gov’t still collects the taxes and then forwards the money to the investors.

Greenstein’s pending patent application claims this approach.  Although the claims are a bit unclear, it looks like he intends to roll-up the future taxes into a couple of different funds with “which provide rates of return based on factors which are different from each other.”

Claims were rejected on eligibility – abstract idea. The PTAB explained:

Exchanging consideration for a right to receive future payments, as well as managing the amounts of those future payments, is a fundamental business practice, long prevalent in our system of commerce.

On appeal, the Federal Circuit has affirmed –agreeing that the claims use of technology is too abstract — simply using “generic computer elements to perform generic computer functions.”  Greenstein argued that his methodology new, complex, and specific.  However, the PTAB and Federal Circuit agreed that neither the novelty nor complexity solve “the problem of abstractness. . . . [T]he complexity of this known method does not impart patentability to computer-implementation of the method.”

Rejection affirmed.

= = = =

1. A [computerized] method … to manage the sale of taxes received by reason of removal of amounts from tax-deferred vehicles, the method including a specification of the measure of the taxes which are sold;

using one or more computers to track amounts contributed to and withdrawn from such tax-deferred vehicles;

specifying adjustments to the measure of amounts owed to purchasers of taxes sold and owed to purchasers of taxes sold based on removal of amounts from tax-deferred vehicles;

adjusting the amount owed to purchasers of taxes received by reason of removal from tax-deferred vehicles to take account of subsequent withdrawals and contributions to the tax deferred vehicles;

adjusting the amount payable of taxes which are sold to take account of subsequent withdrawals
from and contributions to the tax-deferred vehicles;

specifying an adjustment to take account of a change in tax rates;

adjusting the amount owed to purchasers of such taxes to take account of any specified adjustment in tax rates;

using one or more computers to divide the rights to receive the adjusted amount payable of such taxes sold into qualitatively different interests which provide rates of return based on factors which are different from each other;

tracking the ownership of such different interests;

receiving amounts payable of such taxes which amounts are adjusted to take account of withdrawals from and contributions to the tax deferred vehicles;

transferring the amounts due to the owners of the qualitatively different interests which provide rates of return based on factors which are different from each other.

Copyright, Trademark, and Artificial Intelligence

Back in August 2019, the USPTO published a notice requesting public input on the interplay between patent law and artificial intelligence (AI). In October, the USPTO expanded its notice to extend the inquiry to include copyright, trademark, and other IP rights.  The PTO has now extended that deadline for comments until January 10, 2020. 84 FR 66176.

Questions for the public: 

1. Should a work produced by an AI algorithm or process, without the involvement of a natural person contributing expression to the resulting work, qualify as a work of authorship protectable under U.S. copyright law? Why or why not?

2. Assuming involvement by a natural person is or should be required, what kind of involvement would or should be sufficient so that the work qualifies for copyright protection? For example, should it be sufficient if a person (i) designed the AI algorithm or process that created the work; (ii) contributed to the design of the algorithm or process; (iii) chose data used by the algorithm for training or otherwise; (iv) caused the AI algorithm or process to be used to yield the work; or (v) engaged in some specific combination of the foregoing Start Printed Page 58142activities? Are there other contributions a person could make in a potentially copyrightable AI-generated work in order to be considered an “author”?

3. To the extent an AI algorithm or process learns its function(s) by ingesting large volumes of copyrighted material, does the existing statutory language (e.g., the fair use doctrine) and related case law adequately address the legality of making such use? Should authors be recognized for this type of use of their works? If so, how?

4. Are current laws for assigning liability for copyright infringement adequate to address a situation in which an AI process creates a work that infringes a copyrighted work?

5. Should an entity or entities other than a natural person, or company to which a natural person assigns a copyrighted work, be able to own the copyright on the AI work? For example: Should a company who trains the artificial intelligence process that creates the work be able to be an owner?

6. Are there other copyright issues that need to be addressed to promote the goals of copyright law in connection with the use of AI?

7. Would the use of AI in trademark searching impact the registrablity of trademarks? If so, how?

8. How, if at all, does AI impact trademark law? Is the existing statutory language in the Lanham Act adequate to address the use of AI in the marketplace?

9. How, if at all, does AI impact the need to protect databases and data sets? Are existing laws adequate to protect such data?

10. How, if at all, does AI impact trade secret law? Is the Defend Trade Secrets Act (DTSA), 18 U.S.C. 1836 et seq., adequate to address the use of AI in the marketplace?

11. Do any laws, policies, or practices need to change in order to ensure an appropriate balance between maintaining trade secrets on the one hand and obtaining patents, copyrights, or other forms of intellectual property protection related to AI on the other?

12. Are there any other AI-related issues pertinent to intellectual property rights (other than those related to patent rights) that the USPTO should examine?

13. Are there any relevant policies or practices from intellectual property agencies or legal systems in other countries that may help inform USPTO’s policies and practices regarding intellectual property rights (other than those related to patent rights)?

Artificial Intelligence (AI) Patents


Goats Remain on the Roof

by Dennis Crouch

Todd C. Bank v. Al Johnson’s Swedish Restaurant (Fed. Cir. 2019)

Al Johnson’s registered trade dress “consists of goats on a roof of grass.”

In the case, Mr. Bank petitioned to cancel the mark registration.  Bank is not a competitor or customer. Rather, Mr. Bank is offended by the way that the mark demeans goats — denigrating the value that he (and society) places on the “dignity and worth of animals.”  On the merits, Bank argued that the mark is functional and also disparaging to animal lovers. This second theory is no longer viable (if it ever were) under Matal v. Tam.

The patent statute allows for any person to raise an inter partes review (IPR) challenge of an issued patent.  Trademark cancellation petitions are more limited — requiring the petitioner to “believe[] that he is or will be damaged” by the mark.  Although the “belief” requirement appears quite broad and subjective, the court has created objective standards of reasonableness — requiring (1) a “real,” “legitimate,” and “personal” interest in the proceedings and (2) a “reasonable basis” for the belief of damage.

Here, the TTAB and CAFC agreed that Mr. Bank lacks standing. The court held that Mr. Bank provided neither a real interest nor a reasonable basis for his belief of damage.

Mr. Bank failed to plead a real interest in the cancellation proceedings. To make such a pleading, an “opposer must have a direct and personal stake in the outcome of the opposition.” . . . Mr. Bank failed to provide any reason other than to allege that the Goats on the Roof Registration is “demeaning to goats” and that the “respect, dignity, and worth of animals” were affected by that alleged demeaning. . . . Mr. Bank provided no other basis to suggest he maintained a direct and personal stake in the outcome and so we conclude that Mr. Bank failed to plead to a real interest.

Regarding reasonable basis, the court noted that being offended by a mark is unlikely to count as a recognized damage under Tam.

While Mr. Bank asserted that the trade dress “is offensive to numerous persons,” including himself, because it was demeaning to goats, he failed to articulate how this reason survives Tam.


AJ Johnson also asked for its cost and attorney fees for defending the appeal.  In response to that request, Bank also requested that AJ Johnson be required to pay his costs.  On appeal, the court sided with the mark holder — finding the appeal (and Bank’s request for fees) to be frivolous and awarded fees under Fed. R. App. P. 38 (“If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee.”).

Swedish Restaurant explains that because Mr. Bank petitioned the TTAB three times on this matter, all of which were dismissed for lack of standing, and appealed the final decision to this court, where the case was “frivolous as filed and frivolous as argued[,]” damages are warranted. . . . We conclude that this appeal and Mr. Bank’s motion for sanctions are frivolous. Mr. Bank filed multiple petitions with the TTAB regarding the Goats on the Roof Registration, all of which were dismissed for, inter alia, standing. Mr. Bank was afforded the opportunity to revise his petition and remedy the standing defect, which he did not do. Despite the fact that Mr. Bank was informed by the TTAB that his disparagement claim was based on an unconstitutional and stricken section of the Lanham Act, he raises it again before this court. Based on these facts and our analysis, Mr. Bank’s appeal is frivolous. . . . Even though Mr. Bank appears pro se before us, he is an attorney and bears the commensurate obligations. Id. at 1583 (concluding that, even when an attorney appears pro se, he or she is “chargeable with knowledge of . . . our rules”).

Accordingly, we grant Swedish Restaurant’s motion for costs and attorney fees, including the costs and fees incurred in relation to the parties’ sanctions motions, and deny Mr. Bank’s motion for sanctions.


Back in 2009, the Swedish Restaurant sued Georgia based Goats on the Roof.  The case settled, and according to a WSJ article, the Georgia facility agreed to pay a licensing fee. The article goes on to say:

Al Johnson’s is on constant lookout for other cloven-hooved intellectual-property violations.

Lars Johnson Has Goats on His Roof and a Stable of Lawyers to Prove It. Apparently Goats on the Roof of the Smokies also has a licensing agreement.

The concept of having live goats on a roof dates back 40 years to the legendary Al Johnson’s Swedish Restaurant in Door County, Wisconsin. The Johnson family began letting goats graze on the sodded roof of their Sister Bay, WI eatery to attract crowds, and boy has it worked well for them. Four decades later, the restaurant is still going strong, and the goats (and the Swedish pancakes) are as popular as ever.

Now, thanks to a licensing agreement with the restaurant, our Pigeon Forge attraction is able to share the same fun and unique feature with visitors to the Great Smoky Mountains.

Todd Bank is interesting. He self identifies as “the annoyance lawyer.” If Bank wants to try for Round 4, he should probably find folks who have received the cease-and-desist letter and represent them.


Gov’t Suggests that neither Berkheimer nor Hikma are ready for Supreme Court

by Dennis Crouch

HP Inc., fka Hewlett-Packard Company v. Steven E. Berkheimer (Supreme Court 2019)

The Supreme Court has previously identified patent eligibility as a question of law.  However, in Berkheimer, the Federal Circuit recognized that the ultimate legal conclusion may be based upon factual conclusions.  For example, the level of skill in the art (or state-of-the-art) is a classic factual question that may be relevant to the question of inventive contribution (Alice step 2).

The fact-law divide is important for a number of issues. For example:

  • Motion to dismiss or Summary Judgment: at the pretrial stage, it is appropriate for the court to determine questions of law but not to resolve disputed issues of material fact.
  • Evidentiary standards: factual conclusions generally demand a higher standard of evidence and particular burden of proof.
  • Who decides: factual determinations are often given to a jury to decide rather than a judge and “no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.” 7th Amendment.
  • Statement of Facts: If the judge is deciding questions of fact and law, the judge must “find the facts specially and state its conclusions of law separately.” FRCP 52(a).
  • Appellate burden: Factual conclusions are generally given deference on appeal while questions of law are reviewed de novo.

Following the Berkheimer decision, HP petitioned the Supreme Court for certiorari on the following question:

Whether patent eligibility is a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of the art at the time of the patent.

Following briefing, including 7 briefs amici, the Supreme Court then requested that the Solicitor General provide the views of the U.S. Gov’t on the question.  That CVSG brief has now been filed.

SG Brief Berkheimer

The SG also filed a parallel brief in Hikma on the question of “Whether methods of using drugs to treat medical conditions are patent-eligible processes under Section 101.”

SG Brief Hikma

Both briefs open with the following line: “In the view of the United States, the petition for a writ of certiorari should be denied.” Both briefs go on to explain the high level of uncertainty in the law of eligibility:

[A]lthough the Court has construed Section 101 and its precursors for well over a century, its recent decisions have introduced substantial uncertainty regarding the proper Section 101 inquiry.

[The] new framework has generated substantial uncertainty in the lower courts concerning the scope of the exceptions and the proper methodology for determining whether a particular patent implicates them. In Hikma, for example, the majority and dissenting opinions in the Federal Circuit each pointed to different aspects of the language and logic of this Court’s decision in Mayo in reaching diametrically opposite conclusions regarding the patenteligibility of a concrete method of medical treatment.

SG Brief Berkheimer.  According to the Government, the Berkheimer case puts the cart before the horse. Berkheimer focuses in on procedural questions when the substance of the law remains uncertain. Instead of taking this case, the SG suggests first granting review on a case to clarify substantive standards.

The question presented in HP’s petition focuses on whether the Section 101 patent-eligibility inquiry calls for a legal determination by courts, a factual determination by juries, or both. That question would be difficult to answer in any cogent manner while uncertainty about the substance of the Section 101 inquiry persists. At a minimum, the answer to the question HP’s petition poses may be significantly affected by additional guidance this Court provides about the proper analysis for ascertaining whether Section 101 encompasses a particular patent claim. Granting review in this case to address that procedural question would therefore be premature. The Court instead should grant review in an appropriate case to clarify those substantive standards, and it should defer resolution of ancillary issues such as the judge-jury question raised in HP’s petition.



Examining Ranges Workshop

I have been impressed with the USPTO’s training programs, although I have not yet attended one of their Virtual Instructor Led Training (vILT) courses that essentially repeat the training delivered to patent examiners.  I am signed up for the next event — Examination of Ranges — that will be held Feb 11, 12, or 13, 2020 (2-hour free event).

Sign up here.

The USPTO also does a good job of posting many of its Examiner Guidance and Training Materials that are available here.  Two of the most useful are (1) the claim interpretation material from May 2019 [claim_interpretation_2019] and (2) the 102/103 workshop material from 2018 [102103_workshop_slides].

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