Is Termination a form of Institution (and thus Non-Appealable)

BioDelivery Sciences International, Inc. v. Aquestive Therapeutics, Inc., fka MonoSol RX, LLC, No. 19-1381 (Supreme Court 2020)

This case is procedural and it focuses – once again – on the unique two-step, two-decision-maker divide by Congress for inter partes review (IPR) proceeding.

  1. Step 1 – Institution: The USPTO Director decides whether to grant an IPR petition and “institute” proceedings.  This decision is “final and nonappealable.”
  2. Step 2 – Trial: Once the IPR is instituted, the PTAB takes-charge and moves the case to a final decision.

As the USPTO planned-out how to actually implement the proceedings, the Director at the time (Kappos) recognized that he didn’t want to personally decide all of the IPR decisions and also recognized that the USPTO petitions office was (is) not operating at peak efficiency (except for the automatically granted petitions). So, the the rules delegated the Director’s authority for instituting IPRs to the PTAB judges.  This effectively rewrote the proceedings as follows:

  1. Step 1: The USPTO Director PTAB decides whether to grant an IPR petition and “institute” proceedings.  This decision is “final and nonappealable.”
  2. Step 2: Once the IPR is instituted the PTAB then takes-charge and moves the case to a final decision.

Delegation of institution authority results in some amount of confusion about whether a given decision by the PTAB is associated with a non-appealable institutional decision or instead an appealable final judgment in the case.

BioDelivery began at the PTAB with three IPR petitions against Aquestive’s US8765167. This was pre-SAS, and the USPTO partially instituted the proceedings.  On appeal, the Federal Circuit vacated the final written decision on SAS grounds — holding that the USPTO cannot partially institute an IPR.  The partial-institution clearly falls on the side of step-1 nonappealable institution decision, but the Supreme Court created a limited exception in this situation.  See SAS Institute v. Iancu, 138 S. Ct. 1348 (2018) as limited by Thryv, Inc. v. Click-to-Call Techns., LP, 140 S. Ct. 1367 (2020).  You can read that original 2018 BioDelivery opinion here BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 898 F.3d 1205 (Fed. Cir. 2018).

In SAS, the Supreme Court held that at institution stage the Director must either (1) institute the proceeding as to all challenged claims or (2) deny the petition all together. Federal Circuit then extended SAS to also require that any final written decision address every ground for challenge (not just every claim). PGS Geophysical AS v. Iancu, 891 F.3d 1354 (Fed. Cir. 2018).

On remand, the PTAB decided it was faced with the question of whether to (1) proceed with a final decision on all grounds raised or (2) drop the whole case. It chose the latter–terminating all three IPR petitions.

The patent challenger then appealed again and the Federal Circuit had to figure out whether the termination of proceedings was more like an institution decision or a final written decision.  The court decided the former and held that the termination was final and nonappealable.  BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 935 F.3d 1362 (Fed. Cir. 2019) (opinion by Judge Reyna, dissent by Judge Newman); en banc petition denied at BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 946 F.3d 1382 (Fed. Cir. 2020) (dissent by Judge Newman).

Now comes the petition for writ of certiorari — arguing that “termination” should not be considered an institution decision. Questions presented:

1. Does the Judiciary have authority to review a Patent Office decision refusing to implement its mandate and this Court’s precedent?

2. May a petitioner appeal a decision terminating an instituted IPR, despite the decision being mislabeled as a nonappealable decision?

[BioDelivery Petition]

Although the situation is muddled by the PTAB/Director delegation, the basic question is whether ‘termination’ of an [improperly] instituted IPR is a furtherance of the institution process given to the discretion of the Director or is it instead a role given by statute directly to the PTAB.  The statute does discuss termination following settlement, but not in the particular context of this case.

The situation also reminds me of the recent essay by Brian Fry and Maybell Romero, The Right to Unmarry: A Proposal,  https://ssrn.com/abstract=3566944.

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I have included Fig. 1 from the challenged patent above. The claims are directed to an “oral film” that melts-in-your-mouth for drug delivery.  The film includes an “anti-tacking agent” such as vegetable oil or wax.

Our Summer Speaker Series: COVID-19 and Innovation Policy

By Jason Rantanen

The Iowa Innovation, Business & Law Center is hosting a summer speaker series featuring 30-minute talks by some of the leading legal scholars writing on innovation and COVID-19.  All talks will be via Zoom webinar on Thursdays at 3:30 ET/2:30 CT/ 1:30 MT/12:30 PT. (starting this Thursday).
Our speakers are:
The link for these talks is https://uiowa.zoom.us/j/98761682648
I hope you’ll mark your calendars and are able to join us!

 

Supreme Court End of Term 2020

The Surpeme Court seems to have ended its term for patent cases today – although the court has at least one more week of business before the summer break.

Petitions denied:

  • Collabo (retroactive IPR violates due process & takings); Celgene (same); Enzo (Same)
  • Hospira (limits on DOE); CJ CheilJedang (same)
  • Comcast (mootness of ITC decision for expired patent)

Federal Circuit decision Vacated & Remanded: 

  • Emerson Electric Co. (Thryv follow-on case)

Consideration of one fully briefed petition was postponed. Chrimar Systems. Chrimar has to do with the timing of judgment finality and issue preclusion. Particularly: How does claim cancellation via inter partes review impact prior court judgments upholding the the patent? (In this case, an appeal in the infringement litigation was still pending on other grounds).  A petition on related issues was recently filed in PhaZZer, and the court may be considering the issues together.

The last direct IP case for the court to decide this term is USPTO v. Booking.com. In that case, the USPTO wants to apply a bright-line-rule that adding “.com” to a generic word does not create a protect-able mark.  One reason I’m rooting for Booking.com is that they label me a Level 2 Genius! (Image below as proof).

 

Invention of a Slave and the Ongoing Movement For Equal Justice

by Dennis Crouch

The Black Lives Matter movement, ongoing protests, and statements of alliance have given me new hope that our society and its institutions are ready to take another step toward equal justice.

In 1857, the US Supreme Court decided Dred Scott v. Sandford, 60 U.S. (19 How.) 393 (1857) and affirmed what various state courts had previously decided — that under the law, free (non-enslaved) black and brown people were not United States Citizens.

[A]s long ago as 1822, the Court of Appeals of Kentucky decided that free negroes and mulattoes were not citizens within the meaning of the Constitution of the United States; and the correctness of this decision is recognized, and the same doctrine affirmed, in 1 Meigs’s Tenn. Reports, 331.

Dred Scott.  The following year, the US Patent Office with support of the US Attorney General took action to enforce the law in a memorandum entitled “Invention of a Slave.”  The memo begins with its clear statement: “A new and useful machine invented by a slave cannot be patented.” Under Dred Scott, a non-enslaved people of color also lacked the requisite citizenship.  Two recent articles walk through these events: Brian L. Frye, Invention of a Slave, 68 Syracuse L. Rev. 181, 194 (2018) (historical analysis); Kara W. Swanson, Race and Selective Legal Memory: Reflections on Invention of a Slave, 120 Columbia Law Review 1077 (2020) (reflection on historical and ongoing impact, inter alia).  The decision actually frustrated slave owners and during the civil war, the patent laws of the Confederate States did allow for patenting of inventions by enslaved peoples – although all ownership rights would flow to their owners.

In many ways, the courts fit its slavery cases within the doctrines of property law.  Enslaved people were identified as property.   A third new article in this vein is not intellectual property focused but walks through many ways that these old slavery cases remain good law today. Justin Simard, Citing Slavery, 72 Stan. L. Rev. 79 (2020).

Prof. Swanson reflected on her personal journey with Invention of a Slave — a journey that fits many of our own constructs:

As a former patent attorney turned legal scholar, I first encountered Invention of a Slave as an appropriately forgotten opinion. I saw no relevance to my former practice or to teaching patent law. I thought of it as a minor piece of patent lore, remaining firmly within my legal mindset of sorting precedents into “good” versus “bad” law. Nothing in my background as a white American, trained in science, law, and history in majority-white institutions, led me to see it differently.

Swanson.  Although not originally relevant to her, Swanson began to wonder why the the document remained relevant to the African American community. She explains – “Invention of a Slave might be unread by lawyers, but the African American community and its white allies were encouraged to take a look if they needed further proof to understand why so few African Americans had patented inventions before Reconstruction.”  Swanson.  Reconstruction era Constitutional Amendments and the Civil Rights Act of 1866 ended the the prohibition on patenting by brown and black Americans. Still, Professor Swanson’s essay walks through a small sample of ongoing roadblocks and hurdles for patentees, patent examiners, and lawyers.  Jim Crow of the patent system.

In my own state of Missouri, and at my home institution the University of Missouri School of Law, it took the US Supreme Court to order us to admit a qualified African American student, Lloyd Gaines. State of Missouri ex rel. Gaines v. Canada, 305 U.S. 337 (1938).  Even after that decision, the State determined that mixed race legal education would be so problematic that it opened a separate law school for non-white students. As for Lloyd Gaines, he disappeared in Chicago before starting law school. Here at the University of Missouri School of Law, we did not graduate an African American attorney until 1970.

Preclusion: Expanding Upon the Kessler Doctrine

by Dennis Crouch

In In re PersonalWeb Techs. LLC, 2019-1918, 2020 WL 3261168 (Fed. Cir. June 17, 2020), the court reinvigorates the Kessler Doctrine — holding preclusion is triggered even in cases voluntarily dismissed (with prejudice) by the patentee and is subsequently operable to block actions against subsequent allegations of infringement against the original defendant its customers. The doctrine is seen as a gap-filler for a situation not covered by either issue or claim preclusion.  Another similar gap-filler (is) was defense preclusion. However, the Supreme Court in Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc., 140 S. Ct. 1589 (2020) held that defense preclusion does not exist as a stand-alone doctrine going beyond the traditional notion of issue and claim preclusion. Although a substantially parallel situation, the court here does not cite or mention discuss Lucky Brand. [Update – PersonalWeb does cite Lucky Brand for the well known principle that “Claim preclusion bars both those claims that were brought as well as those that could have been brought in the earlier lawsuit.”]

]

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Res Judicata (claim & issue preclusion) always involves at least two actions.[1]  In the first action some judgment is reached.  Later, in the second action the court is asked to skip over and not re-litigate claims & issues that were already finalized in the first action.  In this context, claims are thought of as the broad causes of action; issues are typically narrower but may be any legal or factual determination by the court.

The First Action: Back in 2011, PersonalWeb sued Amazon for patent infringement – alleging use of Amazon Web Services infringed several PersonalWeb patents.[2]  After an adverse claim construction ruling, PersonalWeb stipulated to a dismissal of its claims against Amazon with prejudice. In ordering dismissal, Judge Davis wrote: “Pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), all claims … are dismissed with prejudice. Defendants Amazon.com, Inc. and Amazon Web Services LLC retain the right to challenge validity, infringement, and/or enforceability of the patents-in-suit via defense or otherwise, in any future suit or proceeding.”  Since no particular issues were finally decided by the court, we can immediately conclude that the doctrine if issue preclusion won’t apply to this case.  However, a stipulated dismissal by the court still leads to claim preclusion.

We know right away that PersonalWeb is not going to be able to sue Amazon again alleging that the same acts accused in this first case constitute patent infringement. One trick of patent law though is that each unauthorized making or using of an invention constitutes a new act of patent infringement.  And, the Federal Circuit has generally limited the scope of claim preclusion to the particularly accused infringing acts. “We have held that claim preclusion does not bar a party from asserting infringement based on activity occurring after the judgment in the earlier suit.”[3]

The Second Action: Since Amazon won the first case, it continued to sell its Web Services.  No surprise.  But, these are new (alleged) acts of infringement even if not substantially different.  In 2018 PersonalWeb filed “dozens of new lawsuits” against a collection of Amazon’s customers. These cases were consolidated by the Judicial Panel on Multidistrict Litigation with pretrial proceedings before Judge Freeman (N.D. Cal.).  The district court partially dismissed the case – holding that PersonalWeb was precluded from suing Amazon’s customers for taking the same type of action accused in the original Amazon case (even the customer action was taken subsequent to the Amazon case).

The Kessler Doctrine: Claim preclusion does directly protect Amazon’s customers here because their accused infringement – even if functionally the same – was not within the scope of the first action. Still, the district court found preclusion under the Kessler Doctrine. See Kessler v. Eldred, 206 U.S. 285 (1907).  Kessler – as interpreted by the Federal Circuit – is a “gap filling” form of preclusion and allows “an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action where circumstances justify that result.” Brain Life, LLC v. Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014). Separately, the Federal Circuit has identified the doctrine as a “necessary supplement” to the traditional principles of res judicata.

[W]ithout it, a patent owner could sue a manufacturer for literal infringement and, if unsuccessful, file suit against the manufacturer’s customers under … any [patent] claim or theory not actually litigated against the manufacturer as long as it challenged only those acts of infringement that post-dated the judgment in the first action. That result would authorize the type of harassment the Supreme Court sought to prevent in Kessler when it recognized that follow-on suits against customers could destroy the manufacturer’s judgment right.[4]

Note here, that the “gap” would be filled by issue preclusion if the case had been pursued to a judgment of non-infringement.  Here, however, PersonalWeb dismissed its first action (with Amazon’s express consent) before the court could reach that judgment.

In addition to the temporal issue, Kessler also addressed the customer situation – finding them sufficiently in privity for the purposes of applying preclusion.

On appeal, PersonalWeb argued that the Kessler Doctrine should not be triggered by a voluntary dismissal. Essentially, PersonalWeb questioned whether the Kessler-type preclusion should be seen more akin to issue preclusion (express judgment of the issue required) or claim preclusion (triggered simply by a final judgment, including settlements). The Federal Circuit agreed with the lower court that a settlement is sufficient to create preclusion under Kessler and the Federal Circuit’s progeny. (Distinguishing license in Mentor Graphics).

The policy that drove the Supreme Court’s decision in Kessler would be ill-served by adopting the rule proposed by PersonalWeb. The Court in Kessler recognized that even if a manufacturer of goods were to prevail in a patent infringement suit, the manufacturer could be deprived of the benefits of its victory if the patentee were free to sue the manufacturer’s customers. The Court asked rhetorically whether, after Kessler had earned, “by virtue of the judgment, the right to sell his wares freely, without hindrance from Eldred [the patentee], must Kessler stand by and see that right violated … ?” Kessler. To allow follow-up suits by the patentee against Kessler’s customers, the Court explained, “will be practically to destroy Kessler’s judgment right.” Accordingly, the Court concluded that, setting aside “any rights which Kessler’s customers have or may have, it is Kessler’s right that those customers should, in respect of the articles before the court in the previous judgment, be let alone by Eldred, and it is Eldred’s duty to let them alone.” As the Court put the matter a few years after Kessler, a party that obtains a final adjudication in its favor obtains “the right to have that which it lawfully produces freely bought and sold without restraint or interference.” Rubber Tire Wheel Co. v. Goodyear Tire & Rubber Co., 232 U.S. 413 (1914)[5]

Although the Federal Circuit has spoken of Kessler in the form of preclusion, it has also provided the analogy of shop rights – a “limited trade right” that is attached to the product that “extends to protect any product as to which the manufacturer established a right not to be sued for infringement.”

In the end, the Federal Circuit provided an important caveat – parties are free and empowered to draft their settlement agreement in a way that overcomes the Kessler doctrine. [I]t can do so by framing the dismissal agreement to preserve any such rights that the defendant is willing to agree to. Settling parties will remain free to limit the preclusive effect of a dismissal; they simply have to fashion their agreement in a way that makes clear any limitations to which they wish to agree as to the downstream effect of the dismissal.”[6]

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[1] Res judicata is somewhat poorly defined. Sometimes it particularly refers to the doctrine of claim preclusion. At other times it refers more broadly to both claim and issue preclusion (and perhaps to other preclusion doctrines as well). The Supreme Court in Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc., 140 S. Ct. 1589, 1594 (2020) recently walked through this explanation.

[2] U.S. Patent Nos. 5,978,791, 6,928,442, 7,802,310, 7,945,544, and 8,099,420.

[3] In re PersonalWeb Techs. LLC, 2019-1918, 2020 WL 3261168 (Fed. Cir. June 17, 2020)

[4] SpeedTrack, Inc. v. Office Depot, Inc., 791 F.3d 1317, 1328 (Fed. Cir. 2015).

[5] PersonalWeb.

[6] Id.

Claim Specificity Required for an Inventive Concept

Dropbox, Inc. v. Syncrhonoss Tecnologies, Inc. (Fed. Cir. 2020)

The appellate court here invalidates three Dropbox patents as ineligible (abstract ideas) and also confirms that the lawsuit was properly disposed on the pleadings. U.S. Patent Numbers 6,178,505, 6,058,399, and 7,567,541.

Looking at the ‘505 patent.  Claim 8 requires the following:

  • An “apparatus” for providing an information resource to a user.  The apparatus has the following element:
  • “an access checker” that (a) compares the “trust level” of the user identification mode, the network-path, and the encryption of the access request against (b) the sensitivity level of the resource being obtained.

The claims do not spell-out how this checking or comparison will take place, and the Federal Circuit notes that the specification also fails to delve into any “technological solution.” “Instead, the specification largely treats the ‘access filter’ as a black box.”  To be patent eligible:

The patent has to describe how to solve the problem in a manner that encompasses something more than the principle in the abstract. . . . And, that solution has to be evident from the claims.

Slip Op.

Specificity Required for an Inventive Concept: Regarding Alice Step 2, the patentee argued that its approach provided a more “economically secure way to transmit data.”  On appeal, the Federal Circuit found that advance – even if true – to be insufficient.  Rather, a claim includes an “inventive concept” at Step 2 when it “recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art.” Slip Op. (Quoting BASCOM).

On the Pleadings. In its (amended) complaint, Dropbox included five paragraphs alleging how the asserted patents provide an advancement over the prior art.  The problem, as noted in the prior paragraph, was that the allegations were not sufficiently specific.

The district court opined that some of these allegations found in the complaint should be disregarded as “attorney arguments . . . attempting to manufacture a factual question” insufficient to defeat a motion to dismiss. That holding is by the district court is questionable regarding complaints. On appeal, the Federal Circuit did not address the issue directly but instead held that the allegations were insufficient because the alleged innovative advance was not specifically tied to the claims themselves.

 

Who’s on First? Personal Jurisdiction and the First-to-File Rule

by Dennis Crouch

In re Seattle SpinCo, Inc. (Fed. Cir. 2020)

(a) Wapp Tech first sued UK software company Micro Focus plc (MF PLC) in E.D. Tex. for infringing several of its patent, including U.S. Patent No. 9,971,678 (system for testing app for mobile device). (b) MF PLC then had a two fold response.  First, through its US subsidiaries (MF LLC and SpinCo), the company filed a declaratory judgment (DJ) action in D.Del. Then, the MF PLC moved for dismissal in the Texas case for lack of personal jurisdiction — arguing that it lacked minimum contacts with Texas. The Texas court agreed with MF and granted the motion-to-dismiss.  However, the court permitted Wapp to amend its complaint to add the MF US subsidiaries (MF LLC and SpinCo).  Following that amendment, the Texas case continues, and the Delaware case is stayed pending outcome of the transfer arguments.  The Federal Circuit has now denied mandamus — thus it looks like the case will stay in E.D. Tex.

SpinCo then petitioned the Federal Circuit for mandamus, providing the following timeline chart:

Which Venue is the Right One: The petition for mandamus focuses on what it calls the “first-to-file rule” — arguing that a case should ordinarily remain in the court that first had proper jurisdiction over the case.  Although the Texas case was filed first, the Texas court didn’t have proper jurisdiction until 2019 – a year after the Delaware case was filed.  On appeal, the Federal Circuit found that the law was not so clear:

[Petitioner] cites no appellate court case that has held that first-filed status is determined by which court first secures personal jurisdiction over the parties.

Nor are we aware of any appellate case that has spoken of the first-filed rule in such terms.

Because there was no clear authority compelling action, the Federal Circuit denied mandamus.

Are We Talking in Circles: It is not surprising that there are not appellate decisions on this issue. A writ of mandamus is going to be required in order to get an appellate decision, and the court here holds that no mandamus will be granted without there first being an appellate decision.  This type of prudential venue question is not appealable after final judgment — Any harm caused by an error is already done and will be a moot point by the time final judgment is reached in the case.

 

When does a PTO Cancellation undermine a District Court Judgment of Infringement?

PhaZZer v. Taser (Supreme Court 2020)  [Petition for writ of certiorari]

PhaZZer defaulted in the litigation and the district court awarded $7.8 million to Taser. On appeal, the Federal Circuit quickly issued a R.36 no-opinion affirmance in 2019.  Then, in February 2020 the USPTO finally cancelled the claims of the asserted patent (via reexamination). US7234262.

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Doll or Manikin

I love the elvish doll designed by Dr. Dudley Joy Morton uncovered by Prof. Burstein.  Morton was an orthopedic surgeon who was also an amateur “paleoanthropologist.”  He was apparently the first to suggest that Australopithecus was a hominid.  Morton published several books about feet, but only one related to gnomes & elves: The Grampas’ Toyshop (1922), a book of Christmas poetry. “After lights out on Christmas Eve, Grampa Stabler, an old elf, takes Ned and Sister to Toyland to meet Santa Claus and see the inner workings of his toy-making workshop.”

How Long May a Judge Delay in Explaining its Order?

by Dennis Crouch

In re Apple (Fed. Cir. 2020) [Apple Mandamus Petition]

On June 16, Apple petitioned the Federal Circuit for writ of mandamus on forum non-conveniens.  Uniloc has apparently sued Apple in 24 different lawsuits in E.D. Tex. and W.D. Tex. The vast majority of those cases have been transferred to N.D.Cal. (21 of them — transferred by Judges Gilstrap and Yeakel; 2 are stayed but likely to transfer or be dismissed later).  This lawsuit is the last active case.

The particular claims of this lawsuit were originally before Judge Yeakel (W.D.Austin), but Uniloc dismissed that case and refiled it before Judge Albright (W.D.Waco).  Judge Albright then refused to transfer the case.  Note here that Judge Albright is a former patent litigator and is apparently hoping to hear more patent cases, but Waco is not exactly a major industrial-innovation hub. (Aerial view of Waco shown below).

On June 17, the Federal Circuit acted immediately to call up on Uniloc to defend Judge Albright’s “order” (within the next seven days).

After briefing and conducting oral arguments on the transfer motion, Judge Albright immediately denied the motion at the conclusion of telephonic oral arguments on the issue.  At that point, the Court did not explain his reasoning, but indicated that a written order would be released soon.

From the transcript:

The Court would like to thank both sides for, really, one of the best arguments I’ve had in front of me. I’m blessed to have this job because the quality of the lawyers is so exceptional in every case I have. But I continue to find with patent cases, I guess, given the issues that are involved, the quality of lawyering just seems to get better and better as I go along.

The briefing was exceptional. The PowerPoints are very helpful. The Court is going to deny the motion to transfer, and we will get a written order out as soon as we can. The Markman is set for Friday afternoon at 1:30.

See Transcript of the Telephonic Motion Hearing Before the Honorable Alan D Albright, Dkt No. 61, May 12, 2020.

Apple Attempting to Shame the Court?: The oral order was May 12, so we are now about one month later later without an explanatory memorandum coming from the judge.  The mandamus here appears to be primarily an attempt to shame Judge Albright for his delay in providing an explanatory order during this time.  I wonder whether that complaint will fall on deaf ears before the Federal Circuit who regularly take six to nine months to write up their opinions.

Facilitating Innovation to Fight Coronavirus Act

S. 3630. I wonder what percentage of patentees would take this trade-off.  Patents covering COVID-19 related inventions rights don’t begin until the National Emergency officially ends; 10 years is then added to the patent term.

Patents impacted:

  • Eligible Patent – a patent issued for a new or existing pharmaceutical, medical device, or other process, machine, manufacture, or composition of matter, or any new and useful improvement thereof used or intended for use in the treatment of the Coronavirus Disease 2019 (COVID–19).

Impact:

  • The term of any eligible patent shall not begin until the date on which the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to that disease terminates.
  • The term of the patent shall extend for 10 years longer than it otherwise would under such title.

[More]

Assignor Estoppel

In Hologic, Inc. v. Minerva Surgical, Inc., 957 F.3d 1256 (Fed. Cir. 2020), the court upheld the doctrine of “assignor estoppel” but also found that it could be collaterally attacked via IPR since the PTO does not enforce the doctrine.  The panel – led by Judge Stoll — also called for reconsideration of the doctrine “as it applies both in district court and in the Patent Office.”

The patentee in this case want the the court to broadly hold that assignor estoppel cannot be circumvented via IPR proceeding; the defendants are asking that the court go the other way and narrow assignor estoppel associated with claims added or amended after the assignment.

Pending en banc questions from the patentee:

1. Whether an assignor can circumvent the doctrine of assignor estoppel by attacking the validity of a patent claim in the Patent Office?

2. Whether the America Invents Act prohibits the doctrine of assignor estoppel.

The accused infringer asks the following:

1. Whether assignor estoppel applies when the assignee broadened claims after assignment.

[Note – I amended these questions to make them more readable – DC].

A group of 26 law professors led by Prof. Mark Lemley (Stanford) filed a petition in support of the en banc rehearing — arguing that the Federal Circuit has unduly expanded the doctrine of assignor estoppel. [LemleyAmicus]

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What the court needs to do here is recognize that “assignor estoppel” is the same defense as the longstanding property law doctrine of “estoppel by deed.”  The two should be interpreted in parallel fashion.

Bostick v. Clayton County Georgia

It is a slow patent news day, but the Supreme Court offered a big employment discrimination decision in Bostick v. Clayton County Georgia (Supreme Court 2020).

The opinion joins together several cases challenging employment discrimination on the basis of gender identity (transgender) and also sexual orientation (homosexuality). Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of an “individual’s race, color, religion, sex, or national origin.”   Here, the Supreme Court holds that gender identity and sexual orientation both fall with the ambit of “sex” and thus are also protected against discrimination.

Justice Gorsuch wrote the 6-3 majority opinion in textualist form:

Today, we must decide whether an employer can fire someone simply for being homosexual or transgender. The answer is clear. An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.

Those who adopted the Civil Rights Act might not have anticipated their work would lead to this particular result. Likely, they weren’t thinking about many of the Act’s consequences that have become apparent over the years, including its prohibition against discrimination on the basis of motherhood or its ban on the sexual harassment of male employees. But the limits of the drafters’ imagination supply no reason to ignore the law’s demands. When the express terms of a statute give us one answer and extratextual considerations suggest another, it’s no contest. Only the written word is the law, and all persons are entitled to its benefit.

Slip Op. Beyond the importance of the holding, the Gorsuch opinion has a few lines that will be quoted and used in future cases:

Sometimes small gestures can have unexpected consequences. Major initiatives practically guarantee them.

Likely, [the legislators] weren’t thinking about many of the Act’s consequences that have become apparent over the years . . . But the limits of the drafters’ imagination supply no reason to ignore the law’s demands.

In dissent, Justices Alito & Kavanaugh each argued that the Gorsuch opinion represented “legislation.” None of the decisions included any substantive discussion of the importance of either (1) the right of potential employees to not be discriminated against on the basis of gender identity and sexuality or (2) the right of employers to discriminate on those bases.   The majority does indicate that it is not a problem to fire an employee for “supporting the wrong sports team” (or it is at least not a violation of Title VII). 

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Change in the Law not Enough for R.60(b) Relief from Judgment

Medinol Ltd. v. Cordis Corp. (Fed. Cir. 2020) (nonprecedential)

Fed. R. Civ. Pro. 60 is entitled “Relief from a Judgment or Order” and allows a party to request that a district court reconsider a prior order. R. 60(b) provides a list of specific reasons for granting relief but concludes with a catch-all “any other reason that justifies relief.” R. 60(b)(6).  At times, 60(b)(6) motions can be quite powerful — especially because the rule does not set a firm deadline other than recognizing that the request “must be made within a reasonable time.” That said, courts only allow relief in “extraordinary circumstances.”

Back in 2014, the district court dismissed Medinol’s patent infringement claims as bared by laches.  Three years later, the U.S. Supreme Court held in SCA Hygiene that laches is not a proper defense in this situation. SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S. Ct. 954 (2017).

Case History: Medinol actually filed its R. 60(b)(6) motion in 2014. A few months after its case had been dismissed, the Supreme Court decided Petrella, a copyright case also holding laches was not a proper defense. Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014).  The district court & Federal Circuit refused to grant relief at that time — distinguishing copyright from patent law.  Subsequently the Supreme Court decided SCA Hygeine and ordered the Federal Circuit to reconsider Medinol’s case in light of the new law.  Medinol Ltd. v. Cordis Corp., 137 S.Ct. 1372 (2017).   On remand, the Federal Circuit then sent the case back to the district court to consider any extraordinary circumstances.  The district court again denied the motion for relief — holding that Medinol should have appealed the issue rather than asking for relief of judgment.  Further, although equitable defense (laches) is not effective, its underlying holding–that Medinol unreasonably delayed in bringing the lawsuit–suggests that the court should not bend-over-backwards to provide relief.  R. 60(b) relief expresses a “grand reservoir of equitable power to do justice,” but that power must be limited to only extraordinary cases.

On appeal again, the Federal Circuit has — holding that a change in the law is not sufficient alone to trigger R.60(b) relief and that relief cannot serve as a substitute for failure-to-appeal.

Of course, we do not expect parties to foresee the future when deciding whether to appeal an adverse judgment. We simply conclude that there were enough reasons supporting an appeal in this case for the district court to properly hold Medinol’s failure to appeal against it in the Rule 60(b)(6) analysis.

Slip op.

Gentlemen. It has been a privilege playing with you tonight.

by Dennis Crouch

Ubisoft v. Yousician (Fed. Cir. 2020) (nonprecedential)

Ubisoft (Rocksmith) and Yousician are competitors in the music-lesson software market.  Truthfully, I really enjoy using these tools — their main problem is the added screen time.

In 2018, Ubisoft sued Yousician for infringing its U.S. Patent 9,839,852 covering an “Interactive Guitar Game.”  Before the opening act even started, the district court dismissed the case on failure-to-state-a-claim. Fed. R. Civ. Pro. 12(b)(6).  In particular, the court found the claimed invention to be improperly directed to an abstract idea. On appeal, the Federal Circuit has now affirmed.

The claims at issue are directed to functional software stored on a computer drive — “a non-transitory computer readable storage medium with a computer program stored thereon.”  The claimed software is designed “present an interactive game for playing a song on a guitar” by causing the computer processor to take the following steps:

show finger notations on a display device (corresponding to the song to be played by a user);

receive audio input from the guitar that corresponds to the song played by the user;

assess the performance and determining a portion of the performance that should be improved;

change the difficulty level of the fingering notations (based upon the assessment); and

generate a “mini-game” targeted to improving the user’s skills associated with problematic portion.

Human tutors have worked in the music lesson world for a long time. Some folks are self-taught, but it is a pretty big deal to have responsive computer software that actually works for helping learn guitar.  Within the claim, you can see hints of major developments of (1) accurately assessing performance and then (2) motivating learning through gamification.  The problem with the claims is that they are written in broad functional form without actually claiming how the results are accomplished.  In particular, the claims could be transformed by expressing the algorithms for assessing performance; changing difficulty level; or generating the mini game.  Taking all this a step further, the court looked to the specification and found only a description of “these steps in functional terms and not by what process or machinery is required to achieve those functions.”

Without those specifics, the court held that this is just taking a human tutor’s method and saying “do it on a computer.”

[The steps here are] thus no different from the ordinary mental processes of a guitar instructor teaching a student how to play the guitar.

Slip Op.

[Post title comes from Titanic (1997)]

Internet Law at the Supreme Court

Although I love teaching patent law, my favorite class to teach is often Internet Law. This next year I’ll be teaching it both to law students and as a sophomore-level undergraduate class. One thing that is great about the class is that all of the students already have a set of preconceived notions about how internet society should work, but without much information about the legal background.

Here are three cases Supreme Court petitions that I’ve been following that are closely related to civil internet law issues:

= = = = =

LinkedIn Corporation v. hiQ Labs, Inc., No. 19-1116. (Cert Pending)

In the case, LinkedIn told hiQ to stop scraping data from its public website and also created a technical barrier to block the bulk scraping (while keeping the LinkedIn user information on the public-facing website).  In response, hiQ deployed a set of bots to circumvent the barriers and harvest the data. The 9th circuit sided with hiQ – finding no violation of the Computer Fraud and Abuse Act (CFAA).  The petition asks:

Whether a company that deploys anonymous computer “bots” to circumvent technical barriers and harvest millions of individuals’ personal data from computer servers that host public-facing websites—even after the computer servers’ owner has expressly denied permission to access the data—“intentionally accesses a computer without authorization” in violation of the Computer Fraud and Abuse Act.

[LinkedIn Petition].

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Malwarebytes, Inc. v. Enigma Software Group USA, LLC, No. 19-1284 (Cert. Pending)

Malwarebytes is another case out of the 9th Circuit and focuses the filtering-immunity provision of the Communications Decency Act (CDA). 47 U.S.C. § 230(c)(2).  The CDA has been receiving substantial airtime recently with President Trump & Senator Hawley’s push to limit the ability of online service providers like Twitter, Google, and Facebook from politically motivated filtering. The relevant text of the statute is follows:

(2) Civil liability: No provider or user of an interactive computer service shall be held liable on account of—

(A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected, or

(B) any action taken to enable or make available to information content providers or others the technical means to restrict access to material described in paragraph (1).

The case involves the defendant Malwarebytes whose anti-malware software identified the plaintiff Enigma’s software as “potentially unwanted.”  Enigma sued –alleging that Malwarebytes improperly “configured its software to block users from accessing Enigma’s software in order to divert Enigma’s customers.”  The district court found immunity, but the 9th Circuit reversed — holding that “anticompetitive animus” bypassed the 230(c)(2) defense, leading to the question presented to the Supreme Court:

Whether federal courts can derive an implied exception to Section 230(c)(2)(B) immunity for blocking or filtering decisions when they are alleged to be “driven by anticompetitive animus.”

[Malwarebytes Petition]. In my view, the 9th Circuit decision and briefing thus far misses the mark by failing to analyze the “good faith” requirement in the analysis.

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Hunt v. Board of Regents of the University of New Mexico, No. 19-1225.

Paul Hunt, was a UNM medical school student back in 2012 and posted the following anti-abortion tirade on Facebook soon after Obama’s election:

The Republican Party sucks. But guess what. Your party and your candidates parade their depraved belief in legal child murder around with pride.

Disgusting, immoral, and horrific. Don’t celebrate Obama’s victory tonight, you sick, disgusting people. You’re abhorrent.

Shame on you for supporting the genocide against the unborn. If you think gay marriage or the economy or taxes or whatever else is more important than this, you’re fucking ridiculous.

You’re WORSE than the Germans during WW2. Many of them acted from honest patriotism. Many of them turned a blind eye to the genocide against the Jews. But you’re celebrating it. Supporting it. Proudly proclaiming it. You are a disgrace to the name of human.

So, sincerely, f[***] you, Moloch worshiping
a[**]holes.

[Stars added for your sensibilities.]

The University found the post “unprofessional.” Hunt offered to remove the expletives, but the university found that insufficient. Hunt then sued on first amendment grounds.  The district court and 10th Circuit both rejected Hunt’s case on qualified immunity, with the appellate panel finding no precedent barring “reasonable medical school administrators [from] sanctioning a student’s off-campus, online speech for the purpose of instilling professional norms.”

The question presented:

Whether Respondents violated Mr. Hunt’s clearly established rights as a private citizen under the First Amendment by punishing him for his off-campus, political speech.

[Hunt Petition]

 

Backdating at the Board: Provisionals & Prior Art

by Dennis Crouch

Merck Sharp & Dohme Corp. v. Microspherix LLC (Fed. Cir. 2020)

The Federal Circuit here affirms the PTAB IPR final determination that Merck failed to prove the Microspherix claims invalid. US9636401; US9636402; US8821835. Microspherix sued Merck — accusing Merck’s implantable contraceptive of infringing. Merck responded with the three IPR petitions.

The patents here cover implantable therapeutic/diagnostic devices that also have a radiopaque marker that helps find the device after insertion.  As originally filed, the claims were directed to “brachytherapy” — slow release of radioactive agents to treat cancer.  However, the claims were expanded in various continuation applications to broadly claim any “therapeutic, prophylactic, and/or diagnostic agent”

The interesting legal question on appeal has to do with the timing of the asserted prior art reference Zamora. The chart below shows the patent filings in question, and each party argued that the opposing non-provisional applications could not properly claim priority to their respective provisional applications.

Question 1: Does 102(e) (pre-AIA) apply in inter partes review?: 35 U.S.C. 311 limits IPR validity challenges “the basis of prior art consisting of patents or printed publications.”  Under 102(e), Zamora’s 2001 non-provisional application became prior art once the resulting patent issued. However, as of its 2001 filing date, the application was neither a “patent or printed publication.”  In its decision here, the court simply assumed that 102(e) prior art counts under the IPR statute (as it has done in prior cases as well) See In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1281 (Fed. Cir. 2015), aff’d sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016).  Post-AIA 102(a)(2) does not have the same problem because the statute makes clear that it is the patent / published application that is the prior art.

Question 2: Does Zamora’s provisional date allow for further back-dating of the 102(e) date?: Here, the court explains that Zamora would get the 2000 prior art date of its provisional “if it was entitled to the date of the Zamora provisional.” The court quoted Drinkware, LLC v. Nat’l Graphics, Inc., 800 F.3d 1375, 1381 (Fed. Cir. 2015) in explaining that the “‘reference patent is only entitled to claim the benefit of the filing date of its provisional application if the disclosure of the provisional
application provides support for the claims in the reference patent in compliance with’ the written description requirement.”  Here, the court noted that 2001 Zamora claimed three options for placement of a radiopaque medium, but one of those was not present in the provisional application.  That failure of written decription meant that Zamora’s prior art date was 2001, not Jan. 2000.

Question 3: Does Microspherix’s provisional date work as a priority date?: In considering priority claims, the courts generally operate on a claim-by-claim basis.  Thus, in a complex patent family, a single patent may include claims with a variety of priority dates. One problem with our current system is that a patent only tells us the earliest claimed priorty date — not the actual priority date.  The actual date is only realized and determined through ex post litigation.  Here, Merck argued that some of the claims went beyond the provisional disclosure. On appeal, the Federal Circuit disagreed — explaining that the the written description requirement requires the disclosure to “reasonably convey” possession of the invention.

Here, the particular written description argument focused on the length of the claimed strands that were inserted into a body.  The original provisional disclosed a variety of strand lengths, but none of them were longer than 1 cm (10 mm).  Some of the patent claims claim strands without any length limitation, and Merck argued that Microspherix was not in possession of such a broad range of strand lengths. On appeal, the Federal Circuit agreed with the PTAB that the description found int he provisional “adequately supports the claimed strand recited in Microspherix’s patent
claims.”

Federal Circuit Backtracks (A bit) on Prior Art Status of Provisional Applications and Gives us a Disturbing Result

Case must be “Exceptional” for Attorney fees in Patent or TM case

Munchkin, Inc. v. Luv N’ Care, Ltd. (Fed. Cir. 2020)

This lawsuit centers on Munchkin’s U.S. Patent 8,739,993 covers a “spillproof drinking container” as well as associated trademark and unfair competition claims.  Munchkin sued and LNC responded with an inter partes review petition. The PTAB cancelled the claims; the Federal Circuited affirmed without opinion (R.36); and Munchkin then dismissed its patent claims in the district court.  By that point, Munchkin had also dropped all of its non-patent claims (dismissed with prejudice).

After Munchkin’s voluntary dismissal, the defendant then asked for attorney fees under 35 U.S.C. § 285 (Patent Act) and 15 U.S.C. § 1117(a) (Lanham Act).  Both provisions indicate that attorney fees can be awarded to the prevailing party in “exceptional cases.”  Although a district court is given discretion in determining whether a case is “exceptional,” a threshold still exists.

The judge sided with LNC — finding all of the claims “substantively weak” and noting that Munchkin should have known of the weakness. The court then awarded $1.1 million in attorney fees.

On appeal, the Federal Circuit has reversed — holding that the moving party (LNC) had failed to meet its burden of presentation since it “presented nothing to justify” an exceptional case finding.

Here, the trademark and unfair competition claims were voluntarily dismissed by the plaintiff without any substantial analysis of the issues by the court.  That situation can still lend itself to a fee award. However, the Federal Circuit here ruled that those underlying issues of merit or misbehavior must be “meaningfully considered by the district court.”

LNC failed to make the detailed, fact-based analysis of Munchkin’s litigating positions to establish they were wholly lacking in merit. The district court’s opinion granting a fee award likewise lacked adequate support.

Slip Op.

The appellate panel showed its approach with the patent claim.  Although the patent was found invalid, for exceptional case analysis we begin with an assumption that the patentee had a reasonable basis for believing its patent was valid.  The prevailing party has the burden of then showing that the position was unreasonable.

The relevant question for purposes of assessing the strength of Munchkin’s validity position is not whether its proposed construction is correct; rather the relevant question is whether it is reasonable.

In other words, a prevailing defendant does not receive attorney fees simply for winning the case or by proving the patent invalid.  Fee awards require a second step of proving the patentee’s case was also unreasonable. “That Munchkin’s patent was ultimately held unpatentable does not alone translate to finding its defense of the patent unreasonable.”

No fees.