Hologic v. Minerva, 19-2054 (Fed. Cir. 2022) (en banc petition)
The Supreme Court’s 2021 decision retained assignor estoppel as a cognizable patent law doctrine that can bar a former patent owner from later challenging the patent’s validity. Although the doctrine was retained, the Court also concluded that the Federal Circuit had applied the doctrine “too expansively.” Like other estoppels, assignor estoppel is equitable in nature and so courts should consider any “unfairness in its assertion” and particularly only apply the doctrine when the assignor has made either “explicit nor implicit representations in conflict with an invalidity defense.” Minerva Surgical, Inc. v. Hologic, Inc., 210 L. Ed. 2d 689 (June 29, 2021).
The basic setup here is that back in the 1990s the inventor (Csaba Truckai) filed his patent application for an endometrial ablation tool that operates as a “moisture transport system.” The embodiments in the application all use a “moisture permeable” applicator head. The application also the disclosed prior art moisture impermeable approach, disparaged that approach that led to a “problem of steam and liquid buildup at the ablation site.” The patent document is clearly directed toward the permeable portion as a key aspect of the invention. But, one claim in the original application (Claim 31) was directed to other aspects of the invention and did not expressly require use of the permeable member. And, although Truckai argued that the specification’s description should limit the claim scope to inherently include the permeability clause, the Federal Circuit disagreed and instead concluded that “nothing in the intrinsic record supports limiting claim 31” to require a moisture permeable material. Truckai also prosecuted claim 31 for some time – overcome an anticipation rejection. Eventually though the claim was dropped by the patentee following a restriction requirement.
The Truckai application was filed in 1998 and that same year Truckai signed an assignment of rights to start-up company Novacept. Later Novacept was purchased for $300m by Hologic. In this process, Truckai filed another assignment in 2004 warranting it had “no present knowledge from which it could reasonably conclude” that the assigned IP rights were invalid or unenforceable.” By that time though, claim 31 had been withdrawn following a restriction requirement.
Now at his next startup (Minerva), Truckai conceived of another device. The new device relied upon a moisture impermeable head. Truckai apparently showed the device to Hologic as part of a potential sales agreement. Rather than buying, Hologic filed a continuation of that 1998 application with new scope expanded out to cover Truckai’s new impermeable membrane.
Once the patent issued, Hologic sued Minerva for patent infringement. Minerva argued that the new claims were invalid for lack of enablement and written description — that the expanded claim scope improperly covered moisture impermeable heads that were not disclosed in the original specification; Hologic argues that Minerva’s invalidity challenge is barred by assignor estoppel.
The Federal Circuit initially sided with the patentee, but that judgment was vacated by the Supreme Court. On remand, the Federal Circuit considered the case history and the Supreme Court guidance, and eventually maintained with its original conclusion barring the invalidity defenses under the doctrine of assignor estoppel. After construing that original Claim 31, the court concluded that it was broad enough to encompass both permeable and impermeable devices; and therefore that Truckai’s actions at least an implicit representation that he was transferring patent rights covering impermeable devices. Ergo, assignor estoppel prohibits him from now claiming that such expansive claims are invalid.
The new petition for rehearing argues that the Federal Circuit got this all-wrong by applying the principles of claim construction as it did.
The difference between a primary focus on the inventor/assignor’s representations (as the Supreme Court directed) and the mechanics of claim construction (as the Panel purported to apply) is more than semantic.
With claim construction, we know that the use of “comprising” creates an open-ended scope. Thus, the absence of the permeable clause in claim 31 allows or claim scope that includes impermeable heads. But, this quirk of claim construction is different from concluding that Truckai had made affirmative statements that his invention covers impermeable heads. The defendant argues, “silence is not a representation.” Of course, the Supreme Court made clear that the representations can be “implicit.”
In the lawsuit, Truckai wants to argue that the claims covering impermeable heads are invalid for failure of disclosure. Assignor estoppel will apply if Truckai made some representation that his assigned patent rights cover impermeable heads. In its petition, Truckai argues that the court should take special precaution in judging claims submitted in a patent application that never-issued. Because those original applied-for claims are “inchoate rights of indefinite scope,” the court should take extra measures to read meaning from the specification:
But if the task is to determine what the inventor represented in a never-issued claim, then the fact that the specification declares moisture trapped at the ablation site as the problem the invention solves represents that the device could not work if it included moisture impermeable material. An inventor did not represent that his invention is something his own description of the invention makes clear would not work.
The general rule for en banc petitions is that no response need be filed unless requested by the Court. However, I expect that such a request will be forthcoming on this interesting issue.
The level of estoppel was a sticking point a decade ago in the lead-up to the America Invents Act (AIA). Patentee’s were concerned with repeat harassment by accused infringers; Accused infringers were concerned that IPRs would be ineffective and that they would then lose their right to challenge the patent in court. We now know that IPRs are very effective, but sometimes patent challengers would still like a second bite. That is the situation in the pending petition for certiorari in Apple Inc. v. California Institute of Technology, 22-203 (U.S.). Apple lost its IPRs against CalTech and now wants to bring additional invalidity challenges in court that it could have raised in its IPR petitions.
In the 2011 AIA legislation, Congress created two forms of petitioner estoppel, each of which attach only if the IPR petition is granted and the PTAB reaches a Final Written Decision, and only with respect the claims actually adjudged in the IPR final written decision.
315(e)(1) Estoppel of Further Proceedings Before the USPTO: The petitioner [or privy/RPI] may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
315(e)(2) Estoppel of Invalidity Arguments in Court: The petitioner [or privy/RPI] may not assert either … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
35 U.S.C. 315(e). As you can see, both provisions create estoppel barring a petitioner from later raising “any ground that the petitioner raised or reasonably could have raised during that inter partes review.” The question in
Apple v. CalTech: CalTech sued Apple and Broadcom for infringing its patents covering wireless communication chip logic. Apple responded with several IPR petitions. The petitions were granted initiating the IPR, but the USPTO eventually sided with patentee in its final written description. Apple is thus prohibited from re-challenging the validity of the already challenged claims “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”
Back in district court, Apple attempted to raise additional invalidity challenges, but the district court barred those defenses. The district court concluded that Apple could reasonably could have included those as grounds in its IPR petition and thus barred under 315(e)(2). CalTech eventually won a $1 billion jury verdict. On appeal, the Federal Circuit vacated the verdict on other grounds, but affirmed on the issue of estoppel. The Federal Circuit particularly held that estoppel extends to “all grounds not stated in the petition but which reasonably could have been asserted against the claims included in the [IPR] petition.” California Inst. of Tech. v. Broadcom Ltd., 25 F.4th 976 (Fed. Cir. 2022), overruling Shaw Industries Group, Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016).
Apple’s new petition to the Supreme Court identifies what it sees as a fundamental flaw in the Federal Circuit’s textual analysis. The Federal Circuit concluded that Apple was estopped from later raising grounds that it reasonably could have raised in the inter partes review petition. But, the statute as written creates a slightly different test — asking what “reasonably could have raised during that inter partes review.” The following is Apple’s question presented to the Supreme Court:
Whether the Federal Circuit erroneously extended IPR estoppel under 35 U.S.C. § 315(e)(2) to all grounds that reasonably could have been raised in the petition filed before an inter partes review is instituted, even though the text of the statute applies estoppel only to grounds that “reasonably could have [been] raised during that inter partes review.”
Apple question presented.
The IPR process begins with an IPR petition. 35 U.S.C. § 311. The statute charges the USPTO Director the role of instituting the IPR, although that duty had been delegated tot he PTAB. 35 U.S.C. § 314. After institution, the PTAB conducts a trial and issues its final written description. Apple’s basic argument is that the statute’s use of “during” excludes potential actions that could have taken place prior to institution. To wit, Apple recognizes that it reasonably could have made additional arguments in its IPR filings, but those took place prior to the IPR; And, once the IPR petition is granted, the challenger no longer has any opportunity to raise any other grounds to challenge the patents. In this scenario, the statute is practically limited to cover only grounds actually raised. Apple explains:
When “an inter partes review of a claim in a patent … results in a final written decision,” a petitioner is estopped from asserting in district court litigation only “any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 35 U.S.C. § 315(e)(2) (emphasis added). By expanding statutory estoppel to cover any ground that could have been raised in a petition before an inter partes review even begins, the Federal Circuit effectively rewrote the statute. This Court’s review is urgently needed to restore Section 315(e) to its proper scope.
Apple’s petition relies heavily on the work of Cleveland-Marshall Prof. Christa Laser and her 2018 Florida Law Review article. Christa Laser, The Scope of IPR Estoppel: A Statutory, Historical, and Normative Analysis, 70 Fla. L. Rev. 1127 (2018). Laser suggested that the Supreme Court reinterpret the statute and “should hold that IPR estoppel applies narrowly only to grounds actually raised and instituted.” Id. Baltimore Prof. Greg Dolin penned a responsive article concluding that Laser’s approach is too narrow. Gregory Dolin, Estopping Patent Harassment: A Response to Christa J. Laser, 70 Fla. L. Rev. F. 136 (2019). From my view, Dolin and the Federal Circuit have the better view on this one over Apple and Laser. We’ll see this fall whether the Supreme Court agrees.
Smith is a short opinion affirming the USPTO’s refusal to issue Jason Smith’s patent on eligibility grounds. The invention is a software method that allows customers to purchase assets from multiple vendors. The Board rejected the claims as directed to the abstract idea of “storage, organization, and display (e.g., retrieval) of data, which has consistently been held . . . to constitute an abstract idea.” The Appellate panel then found Smith’s arguments to the contrary unpersuasive. In his 2011 post-Bilski article, Prof Risch wrote some about the overlap between utility and eligiblity and suggested merger of the two doctrines. “The cleanest test would replace the current patentable-subject-matter test altogether with eligibility utility.” Michael Risch, A Surprisingly Useful Requirement, 19 Geo. Mason L. Rev. 57 (2011). The problem for Smith though is that the courts have not accepted Prof. Risch’s suggestions.
Perhaps the most interesting argument by Smith was his statement that “[t]he starting point for the Board’s analysis of should have been to determine whether the claims complied with the useful requirement.” The brief goes on to argue that: “If it is useful, it is by law patent eligible.” On appeal, the Federal Circuit noted first that Smith’s argument is “without citation” and then found that it is also without merit. In particular, the court concluded that utility and eligibility are separate and distinct doctrines: “utility is not the test for patent eligibility.” The Supreme Court alluded to this distinction in its Myriad Genetics decision. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591 (2013) (isolation of “important and useful gene [is] not an act of invention”). Further, utility is not a prong of the Alice/Mayo analysis.
Per Curiam Opinion by Judges Lourie, Dyk, and Hughes
James Mitchell (Mitchell IP) represented Mr. Smith; Sarah Craven (USPTO Associate Solicitor) was on the other side.
About 20 years ago I worked on a couple of Michael Borella patents. At the time, he was already a PhD computer scientist, inventor, and networking expert. Borella later became a lawyer and is now a leading partner at the firm.
In Haynes Holding Group LLC v. ESR Performance Corp. et al (C.D. Cal. 8:21-cv-02033 JVS (JDEx) (I can’t find a free version of the opinion), after the patentee sued, the defendant served a motion to dismiss for lack of personal jurisdiction. The defendant did not file an answer and then move to dismiss for lack of personal jurisdiction, leaving the patentee free to file a notice of voluntary dismissal, which it did, since the defendant had not answered.
The defendant then argued it was a prevailing party under Section 285 and entitled to fees. Judge Selna (correctly in my view) reasoned that because the dismissal by operation of the Federal Rules of Civil Procedure was without prejudice, and so the patentee could sue on the same claim, the defendant had not prevailed and denied the motion. In part, the court reasoned:
Cases across multiple districts align in holding that voluntarily dismissing a case without prejudice does not render the other party the “prevailing party,” whereas dismissing with prejudice or filing for the dismissal of previously-voluntarily-dismissed claims. See, e.g., Realtime Adaptive Streaming LLC v. Netflix, Inc., 2020 WL 7889048 at *4-5 (C.D. Cal. Nov. 23, 2020) (holding that filing for the dismissal of previously- voluntarily-dismissed claims constitutes an adjudication on the merits); Mixing & Mass Transfer Tech., LLC v. SPX Corp., 2020 WL 6484180 at *3 (D. Del., Nov. 4, 2020) (finding that neither a party’s voluntary dismissal or the court’s dismissal without prejudice would materially alter the legal relationship of the parties because “neither dismissal would prevent Plaintiff from reasserting those same claims against Defendants in another action”); Internet Media Interactive Corp. v. Shopify, Inc., 2020 WL 6196292 at *3 (D. Del. Oct. 22, 2020) (holding that plaintiff’s voluntary dismissal with prejudice rendered the defendant the prevailing party because “Defendant can no longer be subject to the particular claim of infringement asserted in Plaintiff’s Complaint”).
Of course, there are reasons (e.g., the cost of investigation) to not answer but only to move to dismiss, but taking that path and then moving for prevailing party status is not a viable option.
Inaction is generally defined as “the lack of action.” The two terms are antonyms. Still, courts regularly find that–at times–inaction constitutes action. Most of us learned in criminal law about crimes of omission where the actus reus is the “failure to perform a legal duty even when one has the capacity to do so.” The Federal Circuit performed this analysis in its recent decision in Gilbert Hyatt v. USPTO, 21-2324, — F.4th — (Fed. Cir. Sept 8, 2022).
Hyatt’s microprocessor patent applications have been pending since the 1990s and claim priority back much earlier filings. All this was prior to the 1995 implementation of the Uruguay Round Agreements Act that started measuring patent term from the filing date. Under the old rules that govern Hyatt’s applications, a patent is given force for 17 years following issuance. For the most part, these applications are also unpublished and the file histories are kept secret.
Hyatt’s appeal here relates to his pending U.S. Patent Application No. 08/435,938. Back in 2013 the application included about 200 pending claims. However, the USPTO forced Hyatt to select eight of those claims for examination as part of the PTO’s Hyatt-Management-Efforts. The examiner then rejected all eight of those claims. Hyatt then significantly amended the pending claims. According to the Federal Circuit, the amendments replaced all of the words of one of the claims except for the “A” starting the claim and the word “comprising.” The examiner then responded with a restriction requirement.
For most patent applicants, restriction requirements are just slightly annoying and add some cost to the clients. But, for the most part the restriction/divisional don’t substantially reduce the rights. And, in fact at times they can be beneficial because they avoid obviousness-type double patenting problems.
For Hyatt, the restriction requirement was very problematic. If he filed a divisional application to the remaining claims, he would lose his pre-GATT status. The result for the divisional application would be zero-days of patent term. Hyatt filed a civil action that the PTO’s restriction requirement violated the Administrative Procedure Act (APA). In particular, Hyatt pointed to 37 C.F.R. § 1.129 as prohibiting the restriction practice. The district court sided with the USPTO as has the Federal Circuit on appeal.
Section 129(b) generally prohibits the USPTO from issuing a restriction requirement in applications that has a priority claim from at least three years before the the June 1995 cut-off. Hyatt’s case meets that three year timeline. The provision also includes the following exception: A restriction requirement is allowed if: “(ii) The examiner has not made a requirement for restriction in the present or parent application prior to April 8, 1995, due to actions by the applicant.” The fight here is on the question of whether the PTO’s failure to issue a restriction requirement prior to April 1995 was “due to actions by the applicant.”
Due to Action by the Applicant: The USPTO’s explains that it didn’t issue a restriction requirement pre-1995 because, back then the application’s claims were all directed to the same invention. Hyatt’s amendments 20-years later necessitated the restriction. In this scenario, the USPTO explained that Hyatt’s pre-1995 action was that he “failed to disclose claims to a separate invention” pre-1995.
On appeal, the Federal Circuit agreed that Hyatt’s pre-1995 actions could be characterized as the action of “withholding” the future claims, and it is easy imagine the causation chain–the PTO’s failure to issue a restriction pre-1995 was due to Hyatt’s withholding of the future claims. Since around 2001, the MPEP explanation of how the rule works included an example that appears to exactly match Hyatt’s situation:
Examples of what constitute “actions by the applicant under 37 CFR 1.129(b) are: … (C) applicant disclosed a plurality of independent and distinct inventions in the present or parent application, but delayed presenting claims to more than one of the disclosed independent and distinct inventions in the present or parent application such that no restriction requirement could be made prior to April 8, 1995.
MPEP 803.03 (8th Ed, 2001). Here, Hyatt disclosed several different inventions “delayed presenting claims” until much later. The court notes, as it always does, that the MPEP does not carry force of law. Still, the manual does at least put everyone on notice.
The Federal Circuit’s recent decision in Arendi S.A.R.L. v. LG Electronics Inc., 21-1967, — F.4th — (Fed. Cir. Sept 7, 2022), upholds Judge Stark’s discovery penalty against the patentee Arendi with the result that the trial moves forward against only one product of the hundreds that were accused.
Arendi sued LG in 2012 for infringing its US7917843. As required by Delaware local rules, Arendi provided a set of infringement contentions to LG. The local rules require the patentee to first provide a list of accused products and patents alleged being infringed. Subsequently, the patentee must disclose a set of initial claim charts mapping showing how each accused product maps to each asserted claim.
In Delaware, these local rules are seen as discovery requirements that operate alongside other mandatory discovery found in FRCP 26. See D. Del. Default Standard for Discovery § 4. The local rule states that the required disclosures here are “initial” and that the parties “shall be permitted to supplement.”
In its disclosures, Arendi first provided a list of 200+ infringing products. But then when it came time to provide the claim charts, Arendi addressed only one product (the LG Rebel 4) and labelled it as “exemplary.” Later, Arendi and LG agreed on
eight representative products to stand-in for all accused products. The Rebel 4 was one of these eight. Despite the agreement on exemplary models, LG twice warned Arendi that it had not yet provided the claim charts as required by the local discovery rules. Arendi did not respond to those warnings.
Following the close of fact discovery, Arendi provided an expert report that spelled out its infringement contentions for five additional representative models. At that point, LG moved to strike those portions of the expert report based upon Arendi’s failure to timely disclose its infringement contentions as required by the local rule. Judge Stark was in charge (during his tenure as a district court judge) and granted the motion — holding that Arendi had “failed to fulfil its discovery obligations” and thus had lost its right to provide such disclosures at that point. In particular, the district court also noted the prejudicial impact since: “LG understood Arendi was accusing only the Rebel 4.”
At that point, Arendi simply filed a new lawsuit, still in the District of Delaware specifically alleging infringement of the excluded products from the expert report. That new case was also routed to Judge Stark who dismissed it with prejudice under the duplicative-litigation doctrine. On appeal, the Federal Circuit has affirmed.
Improper duplicative litigation typically involves a plaintiff bringing two different lawsuits that align along four axes: (1) same claims (2) against the same defendant (2) in the same court (4) at the same time. Walton v. Eaton Corp., 563 F.2d 66 (3d Cir. 1977) (en banc). In that scenario, the district court is given discretion to dismiss one of the cases as part of its “general power to administer its docket.”
On appeal, Arendi argued that its two cases did not involve the same claims once the district court granted LG’s motion to strike. In general, a patentee’s infringement assertion against one product is a different claim than its assertion of the same patent against a different product. On appeal though the Federal Circuit found that Arendi had mischaractered the district court’s order.
The court did not grant LG’s motion to strike parts of Arendi’s infringement expert report because Arendi failed to sufficiently accuse the non-Rebel 4 products. The court granted the motion to strike because Arendi “failed to fulfill its discovery obligations” with respect to those products, so Arendi’s infringement allegations in its expert report were procedurally untimely.
Slip Op. The distinction here is technical, but that is civil procedure. In Arendi I, the district court did not did not dismiss Arendi’s claims against non-Rebel products. Rather, the court but rather excluded the evidence necessary for Arendi to actually win on those claims. The difference is important because it meant that the same claims were still pending in both cases at the same time. “Left with the simple and obvious fact that the non-Rebel 4 products accused in Arendi II are identical to products accused in Arendi I, we determine that the district court did not err in dismissing the Arendi II complaint as improperly duplicative.” Id.
The Arendi I court indicated that it will consider allowing the amendment depending upon the outcome of this appeal. Of course, by now Judge Stark has moved to the Federal Circuit and the case is currently not assigned to any judge.
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Opinion by Judge Prost
Judges: Prost, Chen, Stoll
Kemper Diehl represented the plaintiff on appeal along with his team from Susman Godfrey; Andrew Schwentker from Fish & Richardson argued for the defendant.
Apple Inc. v. Zipit Wireless, Inc., 30 F.4th 1368 (Fed. Cir. 2022).
This is a personal jurisdiction case. Apple filed a declaratory judgment action in N.D. Cal. against the patentee Zipit. The district court dismissed the case — finding that Zipit had insufficient contacts with the state of California. On appeal, however, the Federal Circuit reversed. The court instead concluded that Zipit had sufficient “minimum contacts” with the state and that the exercise of jurisdiction is not unreasonable. The crux of the decision is as follows:
[T]he district court read our precedent as applying a bright-line rule that patent infringement notice letters and related communications can never form the basis for personal jurisdiction. … [T]he district court erred in this regard.
Id. Personal jurisdiction doctrine has strong Federalism components. Even though patent cases are filed in Federal Court run by our National Government, those courts are limited in power by the particular State where they are located. For example, a Federal Court located in California only has power over parties with sufficient ‘minimum contacts’ with the state such that its exercise of jurisdiction would be reasonable and fair.
The Federal Circuit has repeatedly stated that exercise of personal jurisdiction over a patentee is improper when the company’s only related “contacts were for the purpose of warning against infringement or negotiating license agreements.” Breckenridge Pharm., Inc. v. Metabolite Laboratories, Inc., 444 F.3d 1356, 1364 (Fed. Cir. 2006); Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1353 (Fed. Cir. 2002); Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998) (three warning letters were insufficient). As the court explained in Red Wing, “[f]airness and reasonableness demand that a patentee be free to inform a party who happens to be located in a particular forum of suspected infringement without the risk of being subjected to a law suit in that forum.”
Zipit had been in repeated contact with Apple, but only in the context of informing Apple of its infringement and seeking to license the patent. The Zipit district court applied these cases to the facts at hand and concluded that, “all of Zipit’s contacts in California, including its in-person meetings, ‘were for the purpose of warning against infringement'” and Zipit had no binding contractual relationship in the form. “Accordingly, the Court lacks jurisdiction over Zipit.” Apple Inc. v. Zipit Wireless, Inc., 5:20-CV-04448-EJD (N.D. Cal. Feb. 12, 2021). The district court had particularly concluded that jurisdiction was reasonable under Burger King, but was barred by the Federal Circuit’s particular case law regarding warning letters and negotiations.
While Zipit was on appeal, the Federal Circuit decided Trimble Inc. v. PerDiemCo LLC, 997 F.3d 1147 (Fed. Cir. 2021). Trimble is important because of its approach of cabining-in the Red Wing Shoe line of cases. In truth, it effectively overruled Red Wing Shoe despite being decided by a three judge panel led by Judge Dyk. In particular, Trimble distinguished between the limited contacts in Red Wing Shoe that were simply “informing” as opposed to the more “extensive” contacts by the patentee in Trimble. Thus, under Trimble, the new rule of law is that “amplified” or “extensive” contacts with the forum can be sufficient, even if all the contacts are tied to informing a party of accused infringement and/or seeking a license.
In Zipit then, the appellate court followed Trimble‘s lead stating that “there is no general rule that demand letters can never create specific personal jurisdiction.” Zipit (quoting Trimble). The court further explains that the limitations in Red Wing Shoe should be seen as a factor in a court’s analysis of reasonableness under Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).
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Personal Jurisdiction as Not Patent Law Specific
The Federal Circuit has for many years applied its own law to personal jurisdiction questions even though the doctrine is procedural in nature. Unlike questions of inconvenient venue, the court has found that jurisdiction is “intimately involved with the substance of the patent laws.” On the other hand, for convenient venue questions the court applies the law of the regional circuit court of appeals.
In Trimble and now in Zipit, the court explains that since that time the Supreme Court has now made it clear that constitutional personal jurisdiction questions cannot be determined by appeal to “special patent policies.” In Particular, in its 2017 SCA Hygiene decision, the Supreme Court stated that “[p]atent law is governed by the same … procedural rules as other areas of civil litigation.”
In these pair of cases, the Federal Circuit has largely brought its doctrine back in line with that of other circuits with a holding that personal jurisdiction is not patent law specific. In Trimble though, the court continued to hoe the line that personal jurisdiction is a question of “Federal Circuit law” because the issue is “intimately involved with the substance of the patent laws.” Quoting Avocent (Fed. Cir. 2008). The Zipit court left that statement from its opinion.
Before getting into the decision, I’ll first post my DALL-E art entitled “corporate love triangle.”
The First Circuit appellate court described this case as a game of “musical chairs”. When the music stopped “one firm [was] left out in the cold.” I might think of it as a pair of ongoing secret love affairs that finally resulted in a jilted lover. Old models of a love triangle was really more of a “V” — a rivalry between two potential suitors. But, today’s pansexual environment allows for truer triangle relationships. In this case it is all a bit more mundane. The three players are Amyndas, Zealand, and Alexion–all pharameceutical research companies focusing on auto-immune inhibition.
Here, Amyndas (the one left out) had shared confidential information with both Zealand and Alexion (subject to contractual limitations). Later, those two companies formed an official partnership to develop a C3-binding protein (the same topic for which Amyndas had shared data). Zealand’s patent applications also published relating to the same topic. At that point, Amyndas sued–alleging breach of the Confidential Disclosure Agreements (CDAs); misappropriation of trade secrets; and conspiracy to use misappropriated information.
The district court cut much of the case short — dismissing the case against Zealand based upon a forum-selection-clause within their CDA. That agreement stated that “any dispute arising out of this Agreement shall be settled in the first instance by the venue of the defendant.” Here, Zealand Pharma is a Denmark company, and the district court determined that proper venue for the case is therefore in Denmark. On appeal, the plaintiff pointed-out that the Zealand has a presence in both Denmark and Massachusetts. This argument makes sense if you look at the federal law of venue which basically finds proper venue in any court with personal jurisdiction over the defendant. 28 U.S.C. 1391(b)-(d). You’ll note that Section 1391(b) states that proper venue is a location where the defendant “resides.” This seemingly narrow venue statement is blown-up by the definition in Section 1391(c)–a company “shall be deemed to reside … in any judicial district in which such defendant is subject to the court’s personal jurisdiction.” Id.
But, the appellate court considered the law as potentially instructive for construing the “venue of the defendant” as used in the contract. But, the court concluded that its interpretation should be narrower than Section 1391 since applying the venue law “would inevitably lead to the conclusion that Zealand Pharma potentially could be sued in virtually any jurisdiction” and thus render the venue clause of the contract “largely superfluous.” Amyndas Pharm. (1st Cir. Sept. 2, 2022). What the court did was stick with the notion that venue=residence, but then use a more natural definition of residence to be limited only to the corporate home (as is done now in personal jurisdiction contexts).
Zealand Pharma A/S is the Denmark company, its corporate family member and co-defendant “Zealand US” is a US company with a HQ in Boston, and so the lawsuit was clearly in its venue. But, Zealand US had not itself signed the CDA and so the court refused to give any weight to its corporate affiliate’s location. “The forum-selection clause points unerringly to Zealand Pharma, not to Zealand US.”
In focusing on Denmark, the court repeats that “At the time the CDAs were signed, Zealand Pharma’s residence could only have been Denmark” and consequently limited the forum selection clause venue to Denmark as well. One problem with the court’s statements here is the implicit suggestion that venue is frozen in stone at the moment of contracting. Some contracts do take that approach, but typically by expressly naming a particular venue (such as “New York”). On the other hand, my reading of this contract would imply that the “venue of the defendant” is determined at the point when a lawsuit is filed. At the time of contracting, Zealand Pharma had not yet been restructured to also form Zealand US. In my mind, that corporate transformation could be seen as expanding the venue if the new US version was a carve-out or split that took on some of the rights and obligations of the old company. In any event, the appellate court affirmed the lower court’s finding that the contract required the lawsuit to be filed in Denmark and so dismissal of the Massachusetts claims were proper. The appellate panel also pulled out its thesaurus to conclude that Amyndas arguments were “struthious” and that any further consideration would be “supererogatory.”
Trade Secrecy Claim Abroad: Still continuing the argument, Amyndas argued that the Defend Trade Secrets Act (DTSA) created a public policy that “guarantees a federal forum for trade secret theft claims.” Prior to the DTSA, ordinary trade secret claims were based only on state law and only in Federal Court on diversity or pendant jurisdiction. But, the DTSA gave Federal District Court original jurisdiction over trade secret actions. On appeal, the 1st Circuit found no evidence “that the DTSA was meant to supersede the forum-selection decisions of sophisticated parties.” Id. The court concluded by noting the “sockdolager” is the absence of any public policy reason why Amyndas should be able to litigate its case in the US. The court recognized that its decision “Gives Zealand Pharma home-court advantage and a more favorable choice of law for the trade secret dispute that has arisen.” Notably, Denmark does not allow the extent of discovery permitted by the US Federal Courts. But, that is the way contract law goes: “Those regrets may coalesce into a bitter lesson about looking at a nascent partnership through rose-colored glasses.”
Following the district court opinion, Amyndas decided to move forward on a second front and sued Zealand Pharma in Denmark in January 2022. In addition, it has obtained a stay of the contested patents from the European Patent Office.
On remand in the US litigation, the case is still pending against Zealand US and Alexion. But, the key allegations were against Zealand Pharama, and so the case may well fizzle out.
I’ll note – normally an appeal is only allowed once a case is finally concluded. Here, however, the district court was careful to issue a partial final judgment under R. 54(b) that dismissed Zealand Pharma and indicated that portion of the case was ripe for appeal.
U.S. ex rel Silbersher v. Allergan, Inc., 21-15420, — F.4th — (9th Cir. Aug. 25, 2022) [21-15420]
Zachary Silbersher is a NY Patent Attorney. In 2018, Silbersher filed a qui tam action against Allergan under the False Claims Act (FCA). The allegation was that Allergan fraudulently obtained patents covering Alzheimer’s drug treatments with the result of inflated Medicare drug prices. The district court denied a motion to dismiss but certified the issue for interlocutory appeal. Silbersher v. Allergan Inc., 506 F. Supp. 3d 772, 809 (N.D. Cal. 2020). The Ninth Circuit has now decided the case in Allergan’s favor–holding that the action fails under the FCA’s “public disclosure bar.”
The FCA has been a part of U.S. government since 1863 (the “Lincoln Law”) and is designed as a mechanism for catching (and thus deterring) fraud against the Federal Government. The law incentivizes whistleblowing — non-governmental folks (known as “qui tam relators”) can file the action on behalf of the U.S. government and will then receive a portion of any recovered damages (15-30% depending upon whether the Gov’t steps in to do the litigating).
In its current embodiment, the FCA contains a “public disclosure bar” that prohibits qui tam actions when the allegations are ‘based upon’ information that had already been publicly disclosed. The statute particularly defines public disclosure as being publicly disclosed in at least one of three ways:
(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or
(iii) from the news media,
31 U.S.C. § 3730(e)(4)(A) (2010). Here, the basis of Silbersher claim stem from the prosecution history files of the Allergan patent applications. On appeal, the Federal Circuit concluded that the patent prosecution files stemmed from an administrative hearing and thus qualifies as an “other Federal … hearing.” Part ii above is a bit quirky as written, but the Ninth Circuit concluded that the best interpretation is that four type-ii disclosures are: “report, hearing, audit, or investigation.” Further, those disclosures qualify under ii if they are “congressional, Government Accountability Office, or other Federal.” Id.
An ex parte patent prosecution is clearly “Federal”: the PTO is an agency of the U.S. Department of Commerce. To determine the meaning of “other,” we look to look to dictionaries. . . . “Other” means distinct from that just mentioned, different, or additional. “[O]ther Federal” here clearly means Federal reports, hearings, audits, or investigations not from Congress or the Government Accountability Office, a definition that of course includes ex parte administrative hearings before the PTO. Congress, then, intended for “other” to be a broader category that includes additional, information-obtaining methods distinct from those already mentioned.
U.S. v. Allergan, Inc. The result of this interpretation is that “other Federal” is controlling and the provision could have simply been written as “in a Federal report, hearing, audit, or investigation.” The appellate panel justifies its broad interpretation by the Supreme Court’s 2011 pronouncement that the public disclosure bar has a “generally broad scope.” Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401 (2011) (interpreting a prior version of the Act).
The result then is that Silbersher’s qui tam case is likely blocked. The law does have a separate provision though would allow the case to move forward if he is an “original source” of the information in his complaint rather than simply finding it within the patent prosecution record. On remand, the district court will need to determine that origin question.
Allergan is looking to win on a ‘technicality,’ but to be clear, the company also argues that it did not make any false claims and so would also ultimately win on the merits.
The Reverse Doctrine of Equivalents can shrink the scope of a patent to exclude acts literally covered by the claims. The Supreme Court in Graver Tank explained that the doctrine comes up to prevent abuse of the patent system:
[W]here a device is so far changed in principle from a patented article that it performs the same or a similar function in a substantially different way, but nevertheless falls within the literal words of the claim, the doctrine of equivalents may be used to restrict the claim and defeat the patentee’s action for infringement.
Graver Tank & Mfg. Co., Inc. v. Linde Air Prods. Co., Inc., 339 U.S. 605 (1950). The Graver Tank decision traced its provenance back to Westinghouse v. Boyden Power Brake Co., 170 U.S. 537 (1898) (“correspond[ence] with the letter of the [claim] does not settle conclusively the question of infringement.”). Both Westinghouse and Graver Tank describe this scope-shrinking as an aspect of the doctrine of equivalents that can either increase or decrease literal scope. The term “reverse doctrine of equivalents” was seemingly first used by Judge Markey in a 1977 decision rejecting application of any reverse doctrine of equivalents in the validity context. Ex parte Hogan, 559 F.2d 595, 607 (Cust. & Pat. App. 1977). Hogan places the term within quotation marks–“reverse doctrine of equivalents”–but did not indicate whether those quotes were for emphasis or citing some prior usage. The usage was later solidified by the Federal Circuit in SRI International v. Matsushita Electrical Corp. of America, 775 F.2d 1107 (Fed. Cir. 1985). In Roche Palo Alto LLC v. Apotex, Inc., 531 F.3d 1372 (Fed. Cir. 2008), the court endeavored to cabin-in the doctrine’s use by explaining that (1) “The reverse doctrine of equivalents is rarely applied”; and (2) the Federal Circuit “has never affirmed a finding of non-infringement under the reverse doctrine of equivalents.” Id.
The Reverse DOE has not seen much action of late. In Steuben Foods, Inc. v. Shibuya Hoppmann Corp., CV 19-2181-CFC-CJB, 2021 WL 4775996, at *1 (D. Del. Oct. 13, 2021), the court denied summary judgment. The defendant apparently admitted that its product was covered by the literal scope of the patent, but argued no infringement based upon the reverse doctrine of equivalents. In particular, the defense argued that its sterile region was substantially different than that disclosed by the invention. The jury was asked whether the accused machine “is no more than insubstantially different from the second sterile region of the invention.” The jury marked the box labelled YES-INFRINGED.
Unlikely that the defendant will choose this issue to appeal given the history of the Federal Circuit and reverse DOE, but we’ll see. In another recent Delaware decision, the court noted that Teva had initially raised the reverse doctrine of equivalents, but later dropped that defense. Vifor Fresenius Med. Care Renal Pharma Ltd. v. Teva Pharm. USA, Inc., CV 18-390 (MN), 2022 WL 3562555, at *6 (D. Del. Aug. 18, 2022). In, Kewazinga Corp. v. Microsoft Corp., 558 F. Supp. 3d 90, 112 (S.D.N.Y. 2021), the patentee sought summary judgment rejection of Microsoft’s reverse DOE defense. The district court refused, holding that any decision regarding reverse DOE must follow a finding regarding literal infringement. Id.
In many ways, the Reverse Doctrine of Equivalents has the potential of doing some of the same work as our doctrines of full-scope enablement & written description. A key difference though is that the outcome is a narrowed patent claim rather than an invalid patent claim.
The pending appeal in Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., 2021-2299 (Fed. Cir. 2022) raises a number of important design patent law questions, including an issue of first-impression of the scope of “comparison prior art” available for the ordinary observer infringement analysis under Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (en banc) and its key predecessor Smith v. Whitman Saddle Co, 148 U.S. 674 (1893). Since Egyptian Goddess, the Federal Circuit has placed renewed importance on the claimed “article of manufacture,” but not in the comparison portion of infringement analysis.
In 2021, the Federal Circuit issued the important, albeit short-winded, design patent decision In re SurgiSil, L.L.P., 14 F.4th 1380 (Fed. Cir. 2021). In SurgiSil, the court held that the particular article-of-manufacture recited by the claims should not be ignored, even for anticipation purposes. SurgiSil’s cosmetic lip implant has a remarkably similar shape to lots of other two-pointed cylinders. As an example, the image above shows the SurgiSil lip implant (bottom) compared against a prior art blending stump (top) sold by Blick.
The PTAB found SurgiSil’s claim anticipated, but the Federal Circuit reversed–holding that a blending stump does not anticipate a lip implant.
Utility patent attorneys are familiar with the Schreiber decision that allows for non-analogous art to be used for anticipation rejections. In re Schreiber, 128 F.3d 1473 (Fed. Cir. 1997)(“whether a reference is analogous art is irrelevant to whether that reference anticipates”). In some ways, Schreiber could be seen as intension with SurgiSil. In reality though the two decisions fit well together and SurgiSil did not make a special design patent rule or reject Schreiber. Rather, Surgisil simply interpreted the claim at issue as requiring a lip implant and then found that a non-lip-implant didn’t satisfy that claim limitation. I will note that SurgiSil was a patent applicant’s appeal from the USPTO. The case was remanded back to the USPTO 10 months ago, and not patent has issued yet. I expect that the examiner has now rejected the claim on obviousness grounds.
SurgiSil, coupled with the court’s prior decision in Curver Luxembourg, SARL v. Home Expressions Inc., 938 F.3d 1334 (Fed. Cir. 2019), place new weight on the claimed ‘article of manufacture.’ On open question is how this focus should play out in the infringement analysis under Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (en banc).
A design patent’s scope is typically determined by its recited article of manufacture and single embodiment shown in the drawings. An accused design does not have to exactly match the drawings. Rather, what we do is ask whether an “ordinary observer” would be deceived that the accused design is the patented design. Egyptian Goddess. Before making the comparison, the ordinary observer is supposed to become familiar with the prior art (if the issue is raised). The prior art is used to help measure the scope of the claims. If there is no prior art remotely similar, then the patented design is going to be given a broader scope by the ordinary observer; on the other hand, when the prior art is quite similar to the patented design the patent scope will be narrow. Of note, comparison prior art is only used at the accused infringer’s behest, and so the issue will strategically arise only when the defendant has evidence of very similar prior art.
The open question: What prior art should we look to when making a comparison? That question is before the court in Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., 2021-2299 (Fed. Cir. 2022) (pending before the Federal Circuit). In the case, the accused infringer (Seirus) had some spot-on comparison prior art, the only problem is that the references were sourced from disparate articles of manufacture far afield from Columbia’s claimed “heat reflective material.” The case is potentially big because of the profit disgorgement remedy available in design patent cases. 35 U.S.C. 289 (“[the infringer] shall be liable to the [patent] owner to the extent of [the infringer’s] total profit”). And, we might expect a strong potential that a decision here on the infringement side will reflect-back to also apply in any obviousness analysis.
I have written before about the Columbia v. Seirus lawsuit that involves the reflective (but water permeable) inner layer that both use to line their cold weather gear. Columbia’s Design Patent No. D657,093 claims the “ornamental design of a heat reflective material” as shown the drawings. As you can see from Figures 1 and 2 below, the design shows a wave-like design, which the inventor (Zach Snyder) says was inspired from his time living in Arizona and seeing heat ripple mirages rising from the ground.
The Seirus product is similar and uses a wave/ripple design. Early Seirus products lacked branding, but Seirus later added its brand name to the designs in order to promote its brand and avoid confusion. If you have seen these designs on apparel liners, it is coming from Seirus brand. Although Columbia has the patent, the company initially launched its product using a pixilated design (covered by a separate design patent) and later decided to not adopt the wave in order to avoid confusion with Seirus.
At trial, the jury was shown images of the patent as well as the accused product in order for it to conduct the ordinary observer test. The Egyptian Goddess infringement analysis also requires consideration of the prior art. Seirus presented some visually close references, including a 1913 utility patent covering the inner tire liner. (Fig 5 below from US1,515,792). The court limited the scope of comparison prior art to only fabrics for the Egyptian Goddess comparison. That tire patent was allowed because the inner layer was in a fabric form.
At trial, the jury sided with the defendant Seirus and found the patent not infringed.
Now on appeal, the patentee argues that infringement analysis prior art (“comparison prior art”) should be limited by the patent’s stated article of manufacture. If the Columbia court had limited comparison prior art to only those showing “heat reflective material,” it would have all been excluded. But, the district court allowed-in the prior art from unrelated arts, and then went further by precluding Columbia from asking the jury to reject the unrelated comparison prior art. The basic idea for limiting comparison prior art stems from the same notions expressed by the Federal Circuit in SurgiSil and Curver Luxembourg: design patents do not cover bare designs but rather designs “for an article of manufacture.” 35 U.S.C. 171. And, that “article of manufacture” portion of the law should remain at the forefront of all design patent doctrines. In Egyptian Goddess, the patent covered the “ornamental design for a nail buffer” and all the comparison prior art references were also nail buffers. 543 F.3d 665 (Fed. Cir. 2008). Likewise, in Whitman Saddle, the design patent at issue was directed to a “design for a riding saddle,” and the prior art used in comparison was also a riding saddle. 148 U.S. 674 (1893). But, the district court in Columbia refused to limit comparison prior art to only the same article of manufacture. The district court concluded that such a ruling would improperly import too much functional into the design patent right — design patents cover form, not functionality.
In my view, Columbia’s proposal of a strict article-of-manufacture limitation is too limiting because it does not reflect the perspective of either a designer or an ordinary observer and because it offers the potential opportunity for undue gamesmanship in the writing of the claims. As an alternative rule of law, the patentee suggests that the scope of comparison prior art be limited to articles that are either the same article of manufacture or “articles sufficiently similar that a person of ordinary skill would look to such articles for their designs” This test comes from Hupp v. Siroflex of Am., Inc., 122 F.3d 1456 (Fed. Cir. 1997) and was used to define the scope of prior art for an obviousness test rather than comparison prior art for the infringement analysis. But, it seems to roughly make sense that the same scope of prior art should be considered both for obviousness and for infringement analysis — although obviousness is from the perspective of a skilled designer and infringement is looks to the ordinary observer (i.e., consumer).
I would argue that even Columbia’s broader alternative approach is too narrow. In Columbia’s asserted patent, the images (below) show the use of the material as an inner liner for various articles of clothing as well as an outer liner for a sleeping bag. It would make sense to me that an ordinary observer might be deceived by other apparel liners using the same wave, even if not “heat reflective;” and thus that a jury should be permitted to consider those products as comparison prior art in the Egyptian Goddess infringement analysis. Unfortunately for Columbia, my broader notion of comparison prior art makes their case difficult since at least one of the comparison references shown to the jury was the wave pattern used as the outer liner of a rain jacket, US5626949, and all of the references are some form of fabric. Further, in some ways Columbia opened the door to a very broad scope of comparison prior art by including Figure 1 (shown above) claiming the material as a pattern apart from any particular application (such as those shown in other figures).
There are two primary procedural mechanisms to limit the scope of comparison prior art. (1) exclude prior art from consideration as irrelevant; (2) allow the jury to consider the evidence, but allow the parties to also introduce evidence regarding the extent that the prior art might influence the ordinary observer or skilled artisan. These are all issues that folks have repeatedly worked through (and continue to argue about) with regard to validity and obviousness in utility patents, but they remain undecided in the design patent infringement context post Egyptian Goddess. The appellate brief asks three particular questions on point:
What is the relevant scope of “comparison prior art” that is to be considered in a design patent infringement analysis?
Is it error to instruct the jury that all prior patents are comparison prior art to a design patent, and to fail to instruct the jury to limit the scope of comparison prior art to those related to the claimed article of manufacture?
Was it an error to prohibit Columbia from distinguishing comparison prior art on grounds that it failed to disclose a the claimed article of manufacture?
Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc. (Fed. Cir. 2022) (Appellant’s opening brief).
Now lets talk about the Logo. The figure above might be the key exhibit of the whole case. The figure shows the Seirus design with an overlay from Figure 2 of the Columbia patent. As you can see, the waves fit up almost perfectly (after a bit of resizing). A detailed analysis can find other differences in the waves, but the key visual difference is the repeated Seirus logo.
The importance of those logos was a key element of the prior appeal in the case. Columbia Sportswear N.A., Inc. v. Seirus Innovative Accessories, Inc., 942 F.3d 1119 (Fed. Cir. 2019) (Columbia I) The leading precedent of L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1124 (Fed. Cir. 1993) indicates a copycat cannot escape design patent infringement by labelling products with a different trade name. (Images of the L.A. Gear patent and Accused infringer below). In Columbia I, the Federal Circuit distinguished L.A. Gear by explaining that the precedent “does not prohibit the fact finder from considering an ornamental logo, its placement, and its appearance as one among other potential differences between a patented design and an accused one.” Id. Rather the logo should be considered for its “effect of the whole design.” Id. (Quoting Gorham).
In the second trial, Seirus spent some time focusing on the logos as important design elements and that may well have made the difference for the jury. In particular Seirus provided evidence that the logos were arranged and designed in a decorative way to be both ornamental and to catch attention. In addition, the logos are used to break-up the wave so that folks don’t get hypnotized. In other words, the logos were more than mere labeling. Still, on appeal Columbia has asked the appellate court to address these issues once again in the form of objections to the jury instructions:
Did the court err by failing to instruct the jury – that in this case – confusion (or lack of confusion) as to the source of goods “is irrelevant to determining whether a patent is infringed?” Columbia suggests that the problem comes about with the infringement instructions that focus on “deceiving” consumers. Columbia also implies that in some cases customer confusion as to source could be relevant evidence — such as in cases where the patentee also manufactures a product covered by the patent. Here, however, Columbia does not practice the patented invention.
Did the court err by failing to instruct the jury that “Labelling a product with source identification or branding does not avoid infringement?” (Quoting L.A. Gear). This final question appears to be rehashing the issue decided in Columbia I and so has presumably become unappealable law of the case. For its part, Columbia argues that “[t]o the extent Columbia I is in conflict with Unette, Braun, or L.A. Gear, the prior cases control.” On this point, it appears that Columbia may be preserving the issue for en banc or Supreme Court review.
This ongoing dispute between the two athletic apparel companies has been ongoing since Adidas filed its IPR petition back in in 2012. IPR2013-00067. The decade is explainable procedurally–this is the third appeal in the case. The appeals have all centered on Nike’s proposed substitute claims. Initially, the Board refused to allow Nike to enter a substitute claim. That decision was partially vacated on appeal by Nike, Inc. v. Adidas AG, 812 F.3d 1326 (Fed. Cir. 2016) (Nike I) and then the doctrine of allowing substitute claims was substantially shifted by the court’s en banc decision in Aqua Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017). The Board then issued a second written decision concluding that the substitute claims were obvious. On appeal, the Federal Circuit again vacated based upon the PTAB’s failure to provide notice that it would rely upon a particular prior art reference (Spencer). Nike, Inc. v. Adidas AG, 955 F.3d 45 (Fed. Cir. 2020) (Nike II). Back on remand, the Board opened the case to additional briefing on obviousness and then concluded again that the new claims were obvious. The PTAB again relied upon Spencer to teach a particular stitch configuration for flat lace holes.
Ordinary IPR proceedings place the burden of proof on the petitioner who challenged the patents. 35 U.S.C. 316(e) (“petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.”). Things get a little bit tricky with amended and substitute claims. Originally (pre-Aqua), the Board had held that the patentee had the burden of showing the patentability of any new claims. However, in Aqua, the en banc Federal Circuit held that 316(e) applies also to amended claims. Aqua (the AIA “places the burden of persuasion with respect to the patentability of amended claims on the petitioner.”).
Who Has the Burden – Petitioner, Patentee, or the Board?: In adversarial proceedings, we typically argue about which party has the burden of proving some factual contention. At times, however, the burden is placed upon the judicial tribunal instead. In my civil procedure class yesterday we covered Rule 11 sanctions and discussed how the rules empower the judge to act sua sponte, but must issue a written order that “describe the sanctioned conduct and explain the basis for the sanction.” FRCP R. 11.
In this case, it was the Board that raised the use of Spencer to teach the lace-hole in the substitute claim. And, despite the seeming direct statement from Aqua that the petitioner bears the burden, the Board concluded that in that situation the Board could take-on the burden of persuasion itself. The Board noted the unusual circumstances of substitute claims that raise new issues not expected by the petition and that – at times petitioners “fail to raise certain evidence of unpatentability that is readily identifiable and persuasive.” In order to protect the integrity of the system, it is the Board’s responsibility to step-up and provide the evidence. The Board read Aqua as prohibiting any shifting of the burden onto the patentee, but failing to provide any guidance in the situation of patentability questions raised by the Board.
On appeal here, the Court refused to particularly answer this question. Rather, the court noted that the petitioner (Adidas) met the burden of proof in its briefing on remand. Thus, even if the Board’s statement regarding its burden is in error, that error is harmless.
The Board and Adidas’s arguments mirror each other, and therefore, the outcome below would have been the same regardless of whether the burden fell to Adidas or the Board. We thus find it unnecessary to determine here whether, in an inter partes review, the petitioner or Board bears the burden of persuasion for an unpatentability ground raised sua sponte by the Board against proposed substitute claims.
Slip Op. Obviousness affirmed.
= = = =
One reason why it is totally fine for the court to duck the question of burden allocation is that the Patent Office has adopted a revised rule that expressly allocates the burdens of persuasion. The rule codified at 37 C.F.R. § 42.121(d). Under the new rules a petitioner always has the burden: “A petitioner bears the burden of persuasion to show, by a preponderance of the evidence, that any proposed substitute claims are unpatentable.”
The pending Supreme Court petition in ML Genius v. Google focuses on an important issue of copyright preemption.
The basic setup: Genius.com has lots of song lyrics, most of which were posted by fans (i.e., “crowdsourced”). LyricFind scraped the data and then sold it to Google. With the data in hand, Google now displays the lyrics in the search results rather than directing traffic to Genius. Genius sued.
Contract not Copyright: Genius does not hold the copyright to the lyrics and so has no copyright infringement claim. But, Genius does require its users to agree to an extensive contractual agreement that includes a promise that the user will not commercially reproduce, copy, or distribute any portion of the Genius service. At some point, Genius began to suspect that Google was using the lyrics from its service and set-up some test cases that proved their suspicion.
After some back-and-forth, Genius eventually sued Google in New York state court, alleging that
Google LLC and LyricFind have been caught red-handed misappropriating content from Genius’s website, which they have exploited–and continue to exploit–for their own financial benefit and to Genius’s financial detriment.
Original NY Complaint. The complaint asserts breach of contract based upon violation of its terms of service; unfair competition (based upon state law); and unjust enrichment. Google removed the case to Federal Court and then sought dismissal of the case–arguing that all claims asserted in the case are preempted by Section 301(a) of the Copyright Act.
(a) … all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 … are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.
17 U.S.C. § 301(a). The district court found the claims preempted. Genius Media Group Inc. v. Google LLC, 19-CV-7279 (E.D.N.Y. Aug. 10, 2020). On appeal, Genius focused only on the contract claim, but the Second Circuit still affirmed–holding that the copyright act preempts state law contract claims. ML Genius Holdings LLC v. Google LLC, 20-3113, — F.4th — (2d Cir. Mar. 10, 2022). Now Genius has brought its case to the US Supreme Court with the following question:
Does the Copyright Act’s preemption clause allow a business to invoke traditional state-law contract remedies to enforce a promise not to copy and use its content?
The case ties in directly to lots of academic work on the topic. Judge Easterbrook’s 1996 decision in ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) was a flashpoint with its holding that contractual restrictions on the use of information was not so preempted. The ProCD approach has been adopted by a number of circuits, but not the Second Circuit. Prior to its decision in this case, the Second Circuit appears to have not stated any clear precedent on the topic:
Considering the prominence of the S.D.N.Y. and how often and yet inconsistently it has ruled on the issue, it is truly remarkable that the Second Circuit has not yet delivered a binding precedent on this issue.
Guy A. Rub, Copyright Survives: Rethinking the Copyright-Contract Conflict, 103 Va. L. Rev. 1141, 1181 (2017).
The Genius brief was filed by Joshua Rosenkranz (Orrick) along with Christopher Cariello, Jennifer Keighley, Lauren Weber, and Emily Villano. Briefs from Google and LyricFind are due September 8, 2022.
Some commercial and recreational fishermen place artificial reefs in the Gulf of Mexico to attract fish and increase their chances of a successful catch. StrikeLines is a small Pensacola, Florida business that collects and sells the coordinates of those artificial fishing reefs. The folks who place the reefs want them to be kept secret, but StrikeLines indicates that it discovers the reefs properly through analysis of various sonar datasets. Of some importance for this case, although Pensicola is in the Northern District of Florida, StrikeLines keeps its data on servers located in Orlando. Orlando is in the Middle District of Florida.
Smith is a software engineer from Mobile, Alabama. In 2019, he was convicted by a N.D. Florida jury for criminal theft of trade secrets and extortion (found not guilty for violation of the CFAA). Smith had discovered a vulnerability in the StrikeLines website and obtained many of the coordinates using a debugger known as “fiddler”. Smith messaged his friends and shared coordinates with friends. These facts constituted the basis for the trade secret theft charges. Meanwhile, Smith got in contact with folks at StrikeLines telling them about the breach and that he had the data. After some back-and forth (via phone messaging), Smith indicated that he would accessing the data and sharing it if they would give him the coordinates of a great spot for deep grouper fishing. This ‘ask’ served as the basis for the extortion charge. And, in the end, Smith was sentenced with 18 months followed by one-year of supervised release.
Throughout this entire time, Smith was in Alabama, not Florida. In his pending petition before the U.S. Supreme Court, Smith argues that venue was improper in Florida. The basis for his argument stems from the U.S. Constitution, which declares “The Trial of all Crimes . . . shall be held in the State where the said Crimes shall have been committed.” U.S. Const. art. III, § 2, cl. 3. The Sixth Amendment narrows this down further to the particular judicial district–requiring “an impartial jury of the State and district wherein the crime shall have been committed.” This same rule is found within Rule 18 of the Federal Rules of Criminal Procedure: “the government must prosecute an offense in a district where the offense was committed.”
Smith appealed his conviction and the 11th Circuit partially sided with the defendant–holding that venue was improper on the trade secrecy claim, but was proper for the extortion charge.
In analyzing proper venue in Federal criminal cases the courts have a two-step approach: (1) identify the essential conduct elements of the crime; and (2) determine where those conduct elements were committed. Criminal trade secret theft has five elements:
D intended to convert proprietary information for the economic benefit of someone other than the owner;
The proprietary information is a trade secret;
D Knowingly stole the trade secret or took it without authorization or by fraud or deception.
D intended or at least knew that the offense would injure the owner of the trade secret; and
The trade secret is related to interstate or foreign commerce.
Of these, elements 1 and 4 are mens rea elements rather than conduct elements and so the 11th Circuit found them irrelevant to the venue question. Elements 2 and 5 are qualities of the information, not conduct elements. Thus, the only conduct element is 3: “stole the trade secret or took it without authorization.” Under the U.S. Constitution, that the criminal trial must take place wherever that conduct occurred.
In its decision, the 11th Circuit recognized that venue is certainly proper in Alabama (where Smith was located) and probably proper in Middle-District of Florida since that is where the data was located when it was “stolen.” However, none of the essential conduct for trade secret theft occurred in Pensicola. Thus, “venue was not proper in the Northern District of Florida because Smith never committed any essential conduct in that location.” U.S. v. Smith, 22 F.4th 1236, 1238 (11th Cir. 2022). In the case, the Gov’t asked for an effects test — arguing that the company StrikeLines felt the effect of the theft in Pensicola. The court noted that some doctrines do apply an effect test for venue, but only in situations where the conduct elements of a criminal offense are defined in terms of their effects. Here, for instance, trade secret theft did not require harm to the TS owner as an element of the crime.
The extortion case was different since Smith had been directly communicating with folks via telephone in N.D. Florida. In that scenario, it is clear that the crime can be charged in either Smith’s location or N.D. Fla. The 11th Circuit also affirmed Smith’s jail term enhancement for obstruction of justice. Smith had testified that his exchanges were a “negotiation” and not extortion, and the district court found that to be false testimony.
Smith’s new petition for writ of certiorari does not directly challenge any of the 11th Circuit findings. Rather, Smith is concerned about what is next. In particular, the Government believes that a case thrown out for lack of venue can be retried in the proper venue. Smith argues here that venue was presented to the jury and that that the Gov’t should be barred from trying him again in Alabama. Thus, the question presented:
The Constitution requires that the government prove venue. When the government fails to meet this constitutional requirement, should the proper remedy be (1) acquittal barring re-prosecution of the offense, as the Fifth and Eighth Circuits have held, or (2) giving the government another bite at the apple by retrying the defendant for the same offense in a different venue, as the Sixth, Ninth, Tenth, and Eleventh Circuits have held?
Smith Petition. (Note the question above is the version used by the Amicus and is slightly more pointed). Another way to ask this question: What remedy is available for the Government’s violation of the constitutionally protected venue right? As prosecution for cyber-crimes continues to rise, the questions here continue to increase in importance.
The Conservative Rutherford Institute and Libertarian Cato Institute joined with the National Association of Public Defenders in an amicus brief. The brief argues that venue in criminal cases has been fundamental to criminal procedures for centuries dating back to the Magna Carta and that the 11th Circuit allowance for retrial undermines that right.
The Solicitor General’s brief in the case was due earlier this month, but the Court granted an extension until September 21.
In Patent Law class today, we started the chapter on “disclosure” that focuses on doctrines of enablement, written description, and best mode as codified in 35 U.S.C. 112(a).
(a) In General.— The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.
Id. Our casebook begins with enablement, which asks whether the disclosure is sufficient to enable a skilled artisan to make and use the invention to its full scope without undue experimentation. The first case for discussion was a Judge Rader opinion reversing a district court’s summary judgment dismissal. CFMT, Inc. v. YieldUp Int’l Corp., 349 F.3d 1339 (Fed. Cir. 2003). CFMT’s two asserted patents claimed improved apparatus/method for cleaning semiconductor wafers using a specific closed-environment setup. After filing for patent protection, the inventors were hired by Texas Instruments (TI) to implement a version of the system. Their first try removed visible dirt and grease, but failed to meet TI’s commercial standards. In particular, laser scan revealed lots of contaminants Id. (“filthy”). The inventors then took six months of repeated experiments to eventually create a version that worked up to TI’s standard. The district court ruled that amount of intense experimentation was too much and constituted undue experimentation. Further, by the time the inventors figured out how to make the system work, they had done enough work for an additional patent application. I.e., making the system work required additional inventing.
On appeal, the Federal Circuit tacitly agreed that the inventors did a lot of experimentation, but concluded that the district court erred in its focus. In particular, Judge Rader found that the “invention” to be enabled is limited to the “invention as claimed.” The claims did not require a commercially ready system or a system that removes all contaminants to a TI’s electron microscope requirements. Rather, the claims require a method for “cleaning semiconductor wafers” (i.e., “removal of contaminants”) without stating any specific standards. From that perspective, the claimed invention was clearly enabled because it did do some amount of cleaning/removal. The court concluded: “In sum, any meaningful ‘cleaning’ would satisfy the claimed goal of ‘cleaning of semiconductor wafers.'” Id.
The Federal Circuit sees enablement as ultimately a question of law; albeit based upon underlying factual determinations. Here, the lower court applied the wrong standard for enablement and thus prompted de novo review on appeal.
One aspect CFMT is the link between utility and enablement. In particular, the enablement requirement also requires that specification enable use of the invention. If the specification only leads to inoperable machines, then the it has failed the enablement requirement. However, the inoperability standard is quite law and “applies primarily to claims with impossible limitations.” Id. Here, the invention actually worked — just not at the level desired by TI.
Patent cases regularly involve expert testimony about the how a “person having ordinary skill in the art” (PHOSITA) might think. PHOSITA is the objective ‘reasonable person’ that serves as a reference point for most patent doctrines. Often, PHOSITA is particularly defined by some educational or experience level related to the particular area of technology. The intuition here is that someone very little experience is likely to see an incremental invention as patentable; while someone with a very-high level of skill might see the same incremental advance as obvious. See Innovention Toys, LLC v. MGA Entm’t, Inc., 637 F.3d 1314, 1323 (Fed. Cir. 2011) (“A less sophisticated level of skill generally favors a determination of nonobviousness . . . . while a higher level of skill favors the reverse.”). Although this intuition generally makes sense, most agree that particulars are fairly irrelevant.
One difficulty with patents is that the inventions often bridge two or more major educational areas. A good example of this is Best Medical Int’l., Inc. v. Elekta Inc., — 4th — (Fed. Cir. Aug 26, 2022). Best’s patents cover a method of optimizing a radiation beam for use in tumor targeting. US 7,015,490. The invention requires understanding of how radiation treatment works and its impact on tumor growth. In addition, the invention requires a substantial amount of computer programming to implement the particular algorithms.
In the IPR, the patentee introduced testimony from Daniel Chase who has been designing and running radiation plans for decades. One problem here, although Chase has been doing this work and has expertise in radiation therapy design and optimization, he is not a computer programmer.
The basic rule with experts testifying about PHOSITA appears to be that the experts need to personally be at or above PHOSITA level.
[W]here an issue calls for consideration of evidence from the perspective of one of ordinary skill in the art, it is contradictory to Rule 702 to allow a witness to testify on the issue who is not qualified as a technical expert in that art.
Sundance, Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356, 1363 (Fed. Cir. 2008)
In Best Medical, the PTAB qualified Chase as an expert as to portions of the invention, but then highly discounted his testimony regarding obviousness of the computer programming aspects of the invention. On appeal, the Federal Circuit gave deference to the Board’s factual conclusion that PHOSITA would have computer programming experience and affirmed that conclusion.
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Best Medical also includes a small but important mootness decision. In the case, the patentee caught itself in the eye of the needle. In particular, an issue became moot after the PTAB’s decision, but before it filed the notice of appeal. On appeal here, the Federal Circuit found that the decision stands cannot be appealed; and no Munsingwear vacatur.
We talked about the IPR above. In addition, the petitioners had also challenged the same patent via ex parte reexamination. In the reexam, Best Medical cancelled claim 1, but did so “without prejudice or disclaimer.” Claim 1 had also been challenged in the IPR and Best Medical asked the PTAB to also drop that claim — but the PTAB refused and instead issued its final written decision that Claim 1 was obvious. Why?: The reexam was still pending and Best Medical had not filed a statutory disclaimer as to claim 1. The Board explained that “Under SAS we still have to issue a ruling on that claim unless it’s actually disclaimed.” On appeal, the Federal Circuit found no problem with the Board’s approach: “We cannot say that the Board erred in addressing claim 1’s patentability under these circumstances.”
Ok if the Board had power to hold claim 1 obvious, then the patentee should have a right to appeal that decision. Right?-Wrong. The catch here is that the Reexam ended before the appeal here and Best Medical did not appeal claim 1. At that point, claim 1 was dead and gone and a moot point.
Why even appeal a claim that you cancelled? The patentee doesn’t want the claim back, but is concerned that the IPR decision regarding claim 1 could create some amount of res judicata that might later inhibit its ability to enforce similar claims. An examiner in a separate case with a claim similar to claim 1 has apparently already stated that she is “essentially bound by the Board’s reasoning” On appeal though the Federal Circuit found this reasoning insufficiently concrete to create standing. In particular, the court apparently doubted the examiner’s reasoning. “Indeed, we know of no cases that would apply collateral estoppel in these circumstances, nor has BMI cited any.” The court also concluded that potential collateral consequences are generally insufficient on their own to confer standing to appeal. Thus, the appeal on claim 1 is dismissed as moot.
To be clear, this still looks like a good outcome for the patentee because of the general approach to issue preclusion that “non-appealable issues and judgments are without preclusive effect.” SkyHawke Techs., LLC v. Deca Int’l Corp., 828 F.3d 1373 (Fed. Cir. 2016).
The Federal Circuit’s decision here is a bit squirrelly for those of you who know about the Munsingwear line of cases. US v. Munsingwear, Inc., 340 U.S. 36 (1950), involved charges of violating WWII era price regulations. The district court had dismissed the case on the merits. Meanwhile, while the case was on appeal, the President cancelled and annulled the regulation. This seemingly made the appeal moot–except for the potential collateral consequences. In its decision, the Supreme Court vacated the judgment below with instructions to dismiss the case.
That procedure clears the path for future relitigation of the issues between the parties and eliminates a judgment, review of which was prevented through happenstance. When that procedure is followed, the rights of all parties are preserved; none is prejudiced by a decision which in the statutory scheme was only preliminary.
Munsingwear. In Best Medical, the Federal Circuit distinguished Munsingwear based upon timing of the appeal. The apparent difference: In Munsingwear the case became moot after the notice of appeal had been filed. In Best Medical the case became moot before the notice of appeal.
We also hold that Munsingwear vacatur is inapplicable here because this appeal did not become moot during the pendency of the appeal. Rather, the “mooting” event— claim 1 being finally canceled—occurred before BMI filed its notice of appeal.
Slip Op. This final bit appears potentially wrong to me. The Federal Circuit does not cite any prior cases holding that Munsingwear does not apply to cases that become moot during that short window between a lower court’s final judgment and the filing of a notice of appeal. But, I have not seek a case on-point yet.
I just talked about the new Moderna v. Pfizer patent infringement lawsuit with my patent class. I showed them Claim 1 of asserted US10898574. One student who has some biotech background offered the insight: “Wow, that claim is really broad … effectively covers the industry standard.”
Another student suggested that equitable estoppel may be an issue. Back in 2020, Moderna indicated that it would not be asserting its patents during the midst of the COVID-19 pandemic. In particular, Moderna made the following public statement: “while the pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic.”
Apparently for Moderna, the pandemic was over by March 8, 2022. As such, Moderna is only seeking monetary damages “for Defendants’ infringement occurring on or after March 8, 2022.” The complaint also carves out “sales to the U.S. government that are subject to 28 U.S.C. § 1498 or to the 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment (AMC).” US Gov’t sales would require a separate action under Section 1498 in the Court of Federal Claims. Apparently a simultaneous lawsuit has been filed in Germany.
The complaint does not seek injunctive relief, so this is directly about the size of the damage award. Although I have no direct knowledge of this, I suspect that there were some limited negotiations and the competing offers differed by more than an order of magnitude.
The technology here all centers genetically modified mRNA with code for a particular polypeptide of interest (e.g., the spike protein). Claim 1, of the ‘574 patent, for instance claims a method to get the cell to start producing the protein by administering the mRNA. Here, the claim calls for simultaneously introducing N1-Methylpseudouridine, which serves to suppress immune response and increase protein production. Claim 2 of the same patent is directed to a pharmaceutical composition of “lipid nanoparticles” that encase the mRNA.
Patent litigator Bill Lee (Wilmer Hale) is representing Moderna. Pfizer has not yet filed an appearance.
In Novartis Pharm. Corp. v. Accord Healthcare, Inc., 38 F.4th 1013 (Fed. Cir. 2022), the Federal Circuit made a procedurally embarrassing rehearing decision. In its original decision the appellate court sided with the patentee on validity–affirming that the claims satisfied the written description requirement. Novartis Pharm. Corp. v. Accord Healthcare, Inc., 21 F.4th 1362 (Fed. Cir. 2022). That original opinion had been authored by Judge O’Malley with Chief Judge Moore in dissent. When O’Malley retired, the court silently replaced O’Malley with Judge Hughes and issued a new opinion on rehearing flipping the outcome. In the new decision, Judge Moore’s dissent became the majority (joined by Judge Hughes) with Judge Linn moving to the dissent.
Now, Novartis is seeking a rehearing — arguing (1) that the original decision was correct; and (2) that the judicial replacement to alter the outcome was improper. I previously wrote about the petition by Novartis and the amicus briefs in support. The defendant Accord has now filed its responsive brief in opposition.
The brief makes three arguments to explain why it was proper to appoint a new judge on panel rehearing in a way that flipped the outcome.
First, the dissent (Judge Linn) “did not [publicly] raise any objection to the procedure employed.” Note here that Judge Linn has senior status and now generally an outsider to the courts internal procedure.
Second, Courts largely have authority to make their own rules and procedures, but Congress has declared that an appellate judicial panel must be at least three judges.
Third, the petition grossly overstated common practice when it argued that the operating procedure of “virtually every circuit” would prohibit this outcome.
In my mind, none of these arguments are particularly compelling. But, I expect that the court will choose to simply deny the rehearing without further comment. If the court forces itself to make an express decision, it will only draw further criticism.
It is nice to think of the Federal Government in terms of its various institutions of government, such as the Federal Circuit Court of Appeals or the US Patent & Trademark Office. That framework provides a sense of stability and coherence. But, perhaps I should take this case as a reminder that the constitutional structure of our government is not based upon those institutions. Rather, it centers on the individual humans charged with making the decisions.
Accord’s brief was filed by Paul Skiermont (SkiermontDerby) along with his team of Sarah Spires and Mieke Malmberg. The Novartis brief was filed by Jane Love (Gibson Dunn). That brief was signed by a host of attorneys, including Robert Trenchard, Thomas Hungar, and Jacob Spencer (all at Gibson Dunn); Deanne Maynerd and Seth Lloyd (both from MoFo); and Willy Jay, David Zimmer, and Edwina Clarke (Goodwin Procter).
DoggyPhone has sued Tomofun (maker of Furbo) for patent infringement. DoggyPhone LLC v. Tomofun, LLC., 19-cv-1901 (W.D. Wa. 2022). Tomofun petitioned for inter partes review (IPR) on five separate grounds. However, the PTAB denied institution, after finding that the asserted prior art failed to teach all of the claimed elements in the proper combination. (IPR2021-00260 DoggyPhone). The district court had stayed litigation pending outcome of the IPR. Now though the case is up and running again with jury trial set for January 2023.
The district court just issued claim construction, refusing to find any of the claim terms indefinite and giving all terms their ‘plain and ordinary meaning.’
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Asserted claim 7
7. A system for communicating with a pet, comprising:
a treat bin;
a food dispenser that dispenses treats from the treat bin;
an audio device;
a delivery module that: receives a treat delivery command; and in response to the received treat delivery command: dispenses via the food dispenser at least one treat from the treat bin; plays via audio device an audio signal that notifies the pet of availability of a treat; and receives input from the pet; and
a control that transmits to the delivery module a treat delivery command,
wherein the system: in response to a first communication command received from a user, transmits to the delivery module the treat delivery command; plays at least one of live audio or video received from the user of a remote client device; and transmits to the remote client device at least one of live audio or video of the pet, wherein the system begins transmission to the remote client device of at least one of the audio or video of the pet in response to input from the pet.