PTAB denied Cisco’s petitions to institute inter partes review (IPR) against two patents owned by Tel Aviv Univ. (Ramot). The statute is clear that the decision of whether to institute is not appealable, but Cisco filed for writ of mandamus with the Federal Circuit. Mandamus has now been denied. (more…)
By: Colleen V. Chien, Professor of Law; Nicholas Halkowski, first-year associate at Wilson Sonsini and 2020 JD grad; Maria He, Masters Graduate of the Masters in Business Analytics Program at Leavey Business School, and Rodney Swartz, PhD, patent agent, Intellectual Property Associate at SRI International, and third-year JD student; all at Santa Clara University and writing in their personal capacity. This post is the third in a series about insights developed based on data released by the USPTO.
Almost two years have passed since the USPTO issued its January 2019 Patent Eligibility Guidance (PEG). As the prospect of near-term Supreme Court or Congressional action on Section 101 remains murky, it is worth taking stock of patent prosecution and application trends following the PEG, and also, the Office’s accompanying Guidance on Section 112. In this post, we report on quarterly trends in office actions and filings before and after the PEG. We build on earlieranalyses reported in PatentlyO and the USPTO Office of Chief Economist’s own report from earlier this year, Adjusting to Alice, which found that the PEG was followed by decreases in both the likelihood of receiving a rejection and the uncertainty in patent examination.
It is thanks to the exciting continued releases of patent data from the Patent Office, collectively as part of the Open Data Portal (in beta), that we can follow these trends in an attempt to understand the impact of policy. We encourage the USPTO to continue providing data and improving its coverage and quality, providing the only source of data that the courts and policymakers can turn to on the prosecution impacts of their work, as well as research and patent data startups. As to the office action and appeals data, discontinuities and quality issues in currently available datasets presented challenges to our analysis, which we overcame by developing a number of computational approaches. The accompanying PatentlyO Bar Journal Article, Parsing the Impact of Alice and the PEG, (hereinafter referred to as “Article”), has the details and code we used, as well as a summary of the supporting analyses described below.
We find, following the PEG:
1. Decline in 101 Subject Matter Rejections and Stabilization of Appeals: The prevalence of 101 subject matter rejections declined by 37% after the PEG with absolute declines most dramatic among “software” applications as previously defined. (Fig. 1) Ex parte appeal decisions addressing 101 subject matter appeared to stem their rise. (Article 1A)
2. No Discernable Increase in 112 Rejections: The 112 Guidance issued by the Patent Office in January 2019 described the use of 112(a), (b), and (f) to address functional claims in computer-implemented inventions. Following the 112 Guidance, we did not discern an increase in the examiner’s application of 112 rejections, in general (Fig. 2) or at the subsection level, except in the case of 112(f) rejections as applied to “software” applications which have increased steadily since the USPTO’s February 2014 Executive Action on Claim Clarity and Federal Circuit’s June 2015 Williamson decision, both directed to functional claiming, from 2.7% in 1Q14 to 7.6% in 4Q19. (See Article 2A)
3. Leaving Small Entities Behind Through Forum Shopping?: Some applicants have responded to elevated 101 rejection rates by using analytic tools to draft their claims in order to “forum shop” out of Alice-impacted art units. Though the use of these tools is not observable, it is plausible that their cost puts them out of reach of small and micro entities, and might, as a result, lead to a greater concentration of discounted applications in these art units. However, when we looked at the data, we found that the share of applications by discounted entities over time had not increased but rather, has stayed relatively steady among applications filed from 2010 to 2018. (See Article Fig. 3)
4. No Noticeable Decline in “Medical Diagnostic” or “Software” Applications following Alice or Mayo: One limitation of focusing solely on rejection rates is that they do not capture applications “never filed” due to the changes in law or policy. To gauge whether or not there was an “Alice” or “Mayo” “effect” on the number of applications, we looked for declines, in absolute and relative terms, among medical diagnostic and software technology applications, as previously defined, but found no such declines. (See Article Fig.4) Although the PEG came out more than 18 months ago, we do not yet have a complete picture of application trends following the PEG, so cannot rule out that it was followed by increases in filings.
5. More Unique Words in Issued Patent Claims post Alice: Another limitation of focusing on examiner behavior is that it does not take into account changes in applicant behavior and the dynamic there between. With the help of Rocky Berndsen, Peter Glaser, and William Gvoth of Harrity and Harrity, we looked at the number of words included in patents filed after Alice. Applying a “differences in differences” approach, we found that the number of unique words in “software” patents relative to a baseline doubled from 10 additional to 20 additional words, consistent with the hypothesis that the Alice decision led to the addition of claim details. (See Article Fig. 5) As patents filed after the PEG are granted, it will be worth seeing whether or not outcomes along this metric have changed.
The data indicate that, following the PEG, the prevalence of 101 subject matter rejections, and likely frustration associated with same, declined. At the same time, we did not find that 112 rejections increased noticeably to take their place, or that caselaw or the PEG resulted in sustained diminished filings. While we are not able to report on the impact of the PEG on filings and application “quality” (words and details), due to time effects, fortunately, the USPTO’s data releases should seed continued study and analysis of the impact of it and future guidance and court decisions.
The authors represent that they are not being paid to take a position in this post nor do they have any conflicts of interest in the subject matter discussed in this post.
New Patently-O Law Journal Essay by Colleen V. Chien, Nicholas Halkowski, Maria He, and Rodney Swartz.
Almost two years have passed since the USPTO issued its January 2019 Patent Eligibility Guidance (PEG), itself a response to the Supreme Court’s Alice decision, and what many perceived as its destabilizing impact on the certainty of patent prosecutions. Leveraging new data releases, we report on trends in prosecution following the USPTO’s PEG and the Guidance on 112, finding 1) a decline in subject matter rejections and stabilization of subject matter appeals, 2) no discernable increase in 112 rejections, 3) no evidence that small entities were being left behind in Alice-impacted art units by forum shopping by large entities, 4) no noticeable decline in “medical diagnostic” or “software” applications following Alice or Mayo, and 5) more unique words in issued patent claims post Alice. The scripts and techniques we developed to navigate data discontinuities and a lack of labels and complete our analysis are included in this essay.
Paul M. Janicke, The Imminent Outpouring from the Eastern District of Texas, 2017 Patently-O Patent Law Journal 1 (2017) (Janicke.2017.Venue)
Mark A. Lemley, Erik Oliver, Kent Richardson, James Yoon, & Michael Costa, Patent Purchases and Litigation Outcomes, 2016 Patently-O Patent Law Journal 15 (Lemley.2016.PatentMarket)
Bernard Chao and Amy Mapes, An Early Look at Mayo’s Impact on Personalized Medicine, 2016 Patently-O Patent Law Journal 10 (Chao.2016.PersonalizedMedicine)
James E. Daily, An Empirical Analysis of Some Proponents and Opponents of Patent Reform, 2016 Patently-O Patent Law Journal 1. (Daily.2016.Professors)
Tristan Gray–Le Coz and Charles Duan, Apply It to the USPTO: Review of the Implementation of Alice v. CLS Bank in Patent Examination, 2014 Patently-O Patent Law Journal 1. (GrayLeCozDuan)
Robert L. Stoll, Maintaining Post-Grant Review Estoppel in the America Invents Act: A Call for Legislative Restraint, 2012 Patently-O Patent Law Journal 1 (Stoll.2012.estoppel.pdf)
Paul Morgan, The Ambiguity in Section 102(a)(1) of the Leahy-Smith America Invents Act, 2011 Patently-O Patent Law Journal 29. (Morgan.2011.AIAAmbiguities)
Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12 (sarnoff.2011.derivation.pdf)
Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent Patent Law Journal 6 (chao.sealedrecords.pdf)
Benjamin Levi and Rodney R. Sweetland, The Federal Trade Commission’s (FTC) Recommendations to the International Trade Commission (ITC): Unsound, Unmeasured, and Unauthoritative, 2011 Patently-O Patent Law Journal 1 (levi.ftcunsound.pdf)
Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent Law Journal 111 (Collins.KingPharma.pdf)
Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent Law Journal 95 (matthews.falsemarking.pdf)
Kristen Osenga, The Patent Office’s Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89 (Osenga.pdf)
Although USPTO Dir. Andrei Iancu is a political appointee nominated by President Trump, he has largely stuck to the tradition of avoiding partisan politics in his official role as Director. For instance, Dir. Iancu supported the re-appointment of Drew Hirshfeld as the Commissioner of Patents. Hirshfeld had been Dave Kappos’ Chief of Staff under President Obama.
That said, the USPTO is catching a bit of flack for what appears to be its first overtly pro-Trump tweet coming less than a week before the elections:
“Just a reminder, under President Trump’s leadership, the U.S. intellectual property ecosystem ranks #1 in the world, according to the 2020 International IP Index.” – Andrei Iancu, Director of the USPTO More: https://t.co/pgFkWVzM73
The IP Index noted here was released in February 2020 and did rank the US as #1. The Index also ranked the U.S. as #1 every year since it was first released in 2012. The ranking is released by the U.S. Chamber, a lobbying organization that supports U.S. business.
I personally don’t think that this is a big deal and only barely a violation of norms if at all. Trump has been president for four years, and his administration should get some credit for maintaining the #1 ranking.
I’ll also note that USPTO twitter account also promoted Obama as an innovation leader during his presidency.
For most of the history of the US patent system, the Commissioner of Patents was the head of the Patent Office and was seen as an Officer of the United States appointed by the President. The 1952 Patent Act was written as follows:
A Commissioner of Patents, one first assistant commissioner, two assistant commissioners, and nine examiners-in-chief, shall be appointed by the President, by and with the advice and consent of the Senate.
35 U.S.C. 3 (1952). In 1881 Congress created a national trademark law with registration via the Patent Office. This setup meant that the Commissioner of Patents was also in charge of trademarks. This also created the oddity that registered trademarks were marked with the patent office name.
In 1975, the job title was changed to “Commissioner of Patents and Trademarks” and the office name was changed to the “Patent and Trademark Office.” In 1999, Congress officially changed the office name to the “United States Patent and Trademark Office” and the position of “Director” (Deputy Undersecretary of Commerce) was created. At that time, the roles of Commissioner for Patents and Commissioner for Trademarks were pushed down as appointments by the Secretary of Commerce (with 5-year terms).
Question of the day: Assuming that Arthrex wins and PTAB judges must be appointed by the President, does this also mean that the Commissioner of Patents must be appointed by the President? Of note here, the Commissioner of Patents is also a member of the PTAB and comes with a 5-year term.* However, unlike regular PTAB Judges, the Commissioner can be removed from office by the Secretary of Commerce for “misconduct or non-satisfactory performance … without regard to the provisions of title 5.”
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* In what may be simply a longstanding error from the 1999 amendments, the Commissioner for Trademarks is also a member of the PTAB.
Cochlear Corp. v. Alfred E. Mann Foundation (Supreme Court 2020)
It is always tricky for a defendant to appeal solely on damages. Here, Mann filed this patent case back in 2007 and finally got to trial in 2014. The jury answered as follows:
The jury form on damages focused on notice-of-infringement; reasonable royalty rates; and also a grand total for damages — $131 million.
Following the verdict, the district court held a bench-trial on indefiniteness and found some of the claims indefinite. Since some of the infringed-claims were now invalid, the court awarded a new trial on damages issues. In addition, the court granted JMOL of no-willful-infringement. On appeal, the Federal Circuit reversed the willfulness judgment since Halo‘s more flexible test had replaced Seagate by that time. The new damages trial was also appealed, but the Federal Circuit refused to consider the issue since a new trial order is not a final judgment.
On remand, the district court reconsidered its new trial order — and instead reinstated the verdict. The court decided that the verdict questions structured to allow damages on “either” of the patents. Since claims in one of the patents were still valid and infringed, the court found the verdict sufficient. This was supported by the evidence since the damages expert had apparently treated the patents together as a group. The court also reinstated the jury’s willfulness decision and then doubled the verdict — up to $268 million. Now the money is getting serious.
Cochlear appealed again and the Federal Circuit affirmed and then denied rehearing. Now the case is pending before the Supreme Court on petition for writ of certiorari and with three very specific damages questions:
Whether the Federal Circuit has misapplied the “book of wisdom” set forth in Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. 689 (1933), by allowing a reasonable royalty for patent infringement under the Patent Act, 35 U.S.C. § 284, to be determined by evidence arising long after the hypothetical negotiation on which that royalty is based?
Whether Maryland v. Baldwin, 112 U.S. 490 (1884), forecloses an award of damages under a general damages verdict where some claims underlying that award are overturned after trial, and if so, whether a party may challenge such a result notwithstanding agreement to a general damages verdict?
Whether Garretson v. Clark, 111 U.S. 120 (1884), requires apportionment of patent damages to the inventive contribution of the claimed technology?
[Cochlear Petition]. A group of law professors have filed an amicus brief supporting certiorari of question 2: “to resolve the circuit split on how to treat general jury damages verdicts when the underlying verdict is overturned in part.” [Professor Petition].
The first question focuses on what information should be available during hindsight-focused hypothetical negotiation used to calculate damages. In Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. 689 (1933), the Supreme Court indicated that post-infringement evidence offers a “book of wisdom that courts may not neglect.” Still, the infringer argues that the book should not include evidence arising “long after the hypothetical negotiations” theoretically occurred.
The second question highlights the 1884 Supreme Court decision of Maryland v. Baldwin. Baldwin is an odd case to cite — it is an estates case involving inheritance and common-law marriage. But, the key of the case is its holding that a general verdict becomes faulty when one of several possible claims is found in error.
The third question asks about apportionment under Garretson v. Clark, 111 U.S. 120 (1884). In that case, the lower court found infringement, but awarded no damages. The Supreme Court affirmed with the following guidance:
The rule … is aptly stated by Mr. Justice BLATCHFORD in the court below: ‘The patentee,’ he says, ‘must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features, and such evidence must be reliable and tangible, and not conjectural or speculative; or he must show, by equally reliable and satisfactory evidence, that the profits and damages are to be calculated on the whole machine, for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature.’ Garretson v. Clark, 10 F. Cas. 40 (C.C.N.D.N.Y. 1878), aff’d, 111 U.S. 120 (1884).
The plaintiff complied with neither part of this rule. He produced no evidence to apportion the profits or damages between the improvement constituting the patented feature and the other features of the mop. His evidence went only to show the cost of the whole mop, and the price at which it was sold. And, of course, it could not be pretended that the entire value of the mop-head was attributable to the feature patented. So the whole case ended, the rule was not followed, and the decree is therefore affirmed.
Id. The Federal Circuit has recognized that apportionment is important, but is considered as part of the traditional reasonable royalty analysis.
2018 — Cameron sued Nitro in S.D. Tex (Houston) where both companies are located. That case is still pending.
2020 — Cameron separately sued Nitro in W.D. Tex (Waco). The new action accuses the same Nitro products but asserts different (albeit related) patents. The patents asserted include overlapping patent-families and inventorship. Cameron also separately sued “Butch’s Rathole & Anchor Service, Inc.” on the patents in W.D. Tex.
Nitro asked the W.D.Tex court (Judge Albright) to transfer its case to S.D.Tex, but Judge Albright refused.
The courts generally follow a first-to-file presumption for situations like this where there are two different cases filed in two different venues that involve the same parties and substantially overlapping issues. The presumption is that the cases should both be tried in the same venue, and that venue is the one where the first-case was filed. Wright & Miller explains:
Although the burden generally is on the moving party to establish that there should be a change of venue, when two courts have concurrent jurisdiction over a dispute involving the same parties and issues, as a general proposition, the forum in which the first-filed action is lodged has priority.
Fed. Prac. & Proc. § 3854 Standard in Considering Transfer—Interest of Justice. I should also note here that the Federal Circuit repeatedly refers to this as the “first-to-file rule” while I think it is more of a presumption. Their naming of this as a “rule” foreshadows their conclusion — that it must be followed.
Nitro’s motion to transfer was filed under 28 U.S.C. § 1404. That statute permits change of venue for convenience and in the interest of justice. Typically this type of transfer analysis considers a balance of public and private factors: interest of justice; judicial economy; court’s familiarity with the law; local interest in deciding the case; convenience of the parties and witnesses; plaintiff’s forum preference; etc.
Here, Judge Albright walked through the traditional § 1404 factors and concluded that the interest-of-justice weighed in favor of keeping the lawsuit in Waco. In particular, Judge Albright found that his docket was much lighter and faster than those of the Houston judges, and that there were also other parallel cases in W.D. Tex. involving other defendants that could lead to inconsistent verdicts.
On mandamus, the Federal Circuit has given effect to the first-to-file rule — holding that the full Section 1404 analysis was improper.
[Judge Albright’s] determination rested on the legal proposition that the first-to-file rule is only applicable when the balance of factors favors the first-filed court.
That proposition is contrary to law.
Slip Op. (Internal citations eliminated).
To be clear, the court is not saying that the Section 1404 factors are irrelevant. Rather, as a matter of procedure, the first-to-file rule sticks absent “compelling circumstances” to justify an exception. Those compelling circumstances might come from a traditional Section 1404 factor.
The court justified this departure from the ordinary balancing because the second-filer “is insisting on having two substantially overlapping proceedings continue at the same time before two different courts.”
In its mandamus opinion, the court did not order transfer, but rather vacated the original judgment and demanded that on remand the district court consider whether its justification for keeping the case is “compelling.”
2011: Following claim construction, TecSec stipulated that use of Adobe’s product does not infringe the asserted patents.
2013: Claim construction is reversed on appeal, and the infringement case started-up again.
The question on appeal:
During the 2011-2013 timeline — is it legally possible for Adobe to induce infringement? In other words, could Adobe have the have the requisite intent necessary to induce infringement?
Yes, intent to cause infringement may still be provable based upon subjective-bad-faith, even if the behavior was “objectively reasonable.”
The court writes: “As a logical matter, a defendant may have the liability-supporting subjective state of mind even if a person could believe, with objective reasonableness (though wrongly), that the induced conduct was not infringing. To make the point in terms of this case, Adobe may have had the requisite knowledge of infringement if it believed (as we ultimately held in 2013) that the March 3, 2011 claim construction was incorrect, even if that construction was objectively reasonable.”
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This case has been ongoing since 2010. Back in 2011, the district court issued a narrowing claim-construction with the result of a stipulated dismissal of non-infringement. The Federal Circuit reversed that outcome in 2013 with a broader construction — setting up the eventual 2018 trial.
TecSec’s theory focused on both direct and induced infringement. Just before trial, the district court granted Adobe’s motion in limine to prevent TecSec from presenting any inducement evidence from between the 2011 claim construction and the 2013 reversal.
Defendant Adobe lacked the requisite intent to induce infringement or willfully infringe during the time period where the Court had reasonably, though erroneously, ruled in Adobe’s favor on infringement and TecSec had entered a stipulation of noninfringement.
InLimineOrder. The trial went on and TecSec was able to convince the jury on the direct infringement claim, but not on inducement. [Verdict.] The Jury also awarded $1.75 million in compensatory damages. At that point, however, the district court issued a JNOV order (renewed JMOL) that reduced the award down to ZERO DOLLARS — holding that the damages evidence was all tied to the inducement theory.
The record is … devoid of qualified testimony regarding appropriate damages for Adobe’s direct infringement … [T]he jury’s damages award of $1.75 million must be vacated in its entirety as inherently speculative and unsupported by the record.
On appeal, the Federal Circuit has reversed — holding that it was not proper to exclude the evidence of 2011-2013 inducement as noted above.
Although this looks like a win for the patentee, on remand I expect that the district court will open the door for a pretrial summary judgment motion regarding whether TecSec can prove subjective-intent to infringe.
The following letter to Congress appears to have substantial support from patent owners. The basics of the letter is to say that Dir. Iancu’s changes to the IPR process have been positive and should stick. Part of the issue here is that Dir. Iancu is a political appointee who is on his way out in 2021 if President Trump loses (and would likely leave in 2021 regardless).
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Dear Chairman Graham, Ranking Member Feinstein, Chairman Nadler, and Ranking Member Jordan:
The undersigned represent a diverse array of American innovators, ranging from universities and non-profit foundations, to individual inventors, to start-ups and small businesses, to manufacturing, technology, and life sciences companies. Together we represent thousands of organizations that employ millions of workers in the United States. We all believe that the future of the U.S. economy, including domestic job growth and our competitive advantage in the global economy, depends on a strong patent system that incentivizes innovators to invent and protects their inventions from unfair theft by others.
We write to express our support for the important improvements the U.S. Patent and Trademark Office (USPTO) has implemented over the past several years under the leadership of Director Andrei Iancu. In this short period, Director Iancu has clearly changed the dialogue surrounding patents, defined the patent system by the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to our economy and society as a whole. He continuously demonstrates commitment for restoring balance and confidence in the U.S. patent system.
Of particular importance, the USPTO has made several critical changes to the operations of the Patent Trial and Appeal Board (PTAB) that addressed some—but not all—of the unintended consequences of the America Invents Act (AIA), injecting more predictability, reliability, and consistency into the patent system. Patent owners must have confidence in the reliability of their patents so that they will invest the significant resources required to develop their ideas into new products and technologies.
Many of the recent changes the USPTO has implemented were intended to harmonize the standards used in PTAB trials with those used in patent infringement trials in federal district courts. Given that Congress intended PTAB trials to be a cost-effective alternative to district court litigation, and Director Iancu has the statutory authority, it made sense to ensure a consistent application of standards between proceedings in court and before the PTAB.
Perhaps the most important of these changes was adopting regulations to require PTAB to interpret issued patent claims according to their ordinary meaning as understood by a person of ordinary skill in the field covered by the patent. By adopting this so-called Phillips standard of claim construction used in federal court for use in PTAB proceedings, the USPTO provided much needed consistency in the interpretation of challenged patents. We also strongly support other recent changes, including updated briefing procedures, improved procedures for amending claims before PTAB, and appropriately assigning the burden of proof of invalidity on the patent challenger, all of which strengthen predictability of decisions by the USPTO and ensure that patent rights are more fairly issued and adjudicated.
We also understand from press reports that USPTO had been preparing to institute a proposed rulemaking concerning the factors PTAB panels can use to deny institution of a panel when there is parallel litigation in district court. While several large platform companies filed suit challenging the authority of the Director to exercise his discretion in this way, we think it clear that both the AIA itself and common sense support the authority of the USPTO director to set regulations for the exercise of discretionary authority to deny institution in these instances. We see basic unfairness to litigants who must otherwise litigate the same issues more than once, and little need to waste scarce government resources on duplicative actions proceeding in parallel before the PTAB and the district court. We strongly support a USPTO rulemaking to confirm this approach.
Recent letters to Congress opposing the USPTO rulemaking incorrectly suggest that it would upset congressional intent in passing the AIA by foreclosing an additional proceeding to challenge patents. Congress was clear that it intended inter partes review (IPR) to provide a cheaper and faster alternative – not an addition – to district court litigation. If a district court case is likely to conclude near the same time as an IPR proceeding concerning the same dispute, the IPR proceeding would not be a faster alternative, and instituting an IPR proceeding would only add to the cost of resolving the dispute, so it would also not be cheaper. Logically, then, when a dispute can be more efficiently resolved by a district court, or an ongoing litigation is likely to resolve the dispute in a reasonable period of time, the Director was given the discretion not to institute an IPR proceeding.
The IPR proceeding was structured to provide a quicker resolution and on a more limited set of issues than might be brought in litigation. As a result, parties in the proceeding were provided a more limited set of tools than available in District Court to allow the USPTO to meet this congressional mandate. Congress clearly put the Director in the position to determine, for the efficiency of justice, which forum could resolve the issues best, then went further by making that decision non-appealable – lest those appeals undercut the speed and low cost of the new proceeding. Suggesting otherwise is not consistent with the congressional record. Moreover, the recent Supreme Court decisions in Cuozzo v. Lee and Thryv v. Click-to-Call both affirm the Director’s broad discretion on instituting an IPR, a position at least one of the companies who signed the letters opposing the rulemaking supported in its own amicus brief to the Court.
Director Iancu has also brought a renewed commitment to much-needed administrative regularity at the USPTO and a real and commendable focus on ways to expand American innovation by tapping into the strength of our nation’s diversity and increasing the opportunities for all Americans to participate in innovation. He has also introduced innovative measures to help patent stakeholders during the COVID-19 crisis, including deferred fee payments for small and micro entities and extensions of time for certain statutory deadlines.
Under Director Iancu’s leadership, the USPTO has taken great strides toward restoring a predictable, reliable, and consistent patent system that protects inventors and promotes U.S. leadership in global innovation. We urge you to support these reforms, and look forward to working with you and your colleagues on the Judiciary Committees to further strengthen our patent system.
As one of us has recently observed (here and here), courts in the U.S. and UK adjudicating cases involving standards-essential patents and FRAND licensing commitments have increasingly issued injunctions preventing one party from pursuing parallel litigation in another jurisdiction (anti-suit injunctions or ASIs). In response, courts in other countries – namely Germany and France – have begun to issue anti-anti-suit injunctions (AASIs) to prevent parties from seeking ASIs that would hinder their own proceedings. And even anti-anti-anti suit injunctions (AAASIs) have emerged as more than theoretical possibilities. Amidst this international jockeying for jurisdiction, commentators have wondered where it will end, and whether every country involved in complex, multi-jurisdictional disputes will get into the ASI game. In two recent cases, China has now stepped forward as another major jurisdiction in which ASIs are available to litigants.
The first case involves Chinese smartphone manufacturer Huawei and Texas-based patent assertion entity Conversant Wireless Licensing (formerly Core Wireless). Conversant holds a globe-spanning portfolio of patents that it acquired from Nokia and which it claims are essential to the 2G, 3G and 4G wireless telecommunications standards developed under the auspices of the European Telecommunications Standards Institute (ETSI). Conversant sought to license these patents to Huawei, but negotiations broke down and in 2017 and 2018 Conversant asserted the patents against Huawei in multiple jurisdictions. The UK suit was recently decided by the UK Supreme Court,  UKSC 37, which held that a UK court has the authority to set a global FRAND royalty rate between the parties, notwithstanding its lack of jurisdiction over patents outside the UK (see discussion here). (This case also involved an unsuccessful 2018 bid by Conversant to obtain an ASI from the UK Court of Chancery,  EWHC (Ch) 2549, against the prosecution of a related suit by ZTE, Huawei’s co-defendant, in the Shenzhen Intermediate People’s Court in China – discussed here).
In response to Conversant’s initial patent assertions, in January 2018 Huawei sought declarations from the Nanjing Intermediate People’s Court of Jiangsu Province, China, that it did not infringe three of Conversant’s Chinese patents and, if it did, that it was entitled to a license on FRAND terms. On September 16, 2019, the Nanjing court declined to issue a declaration regarding infringement, but established a “top down” FRAND royalty for the three Conversant patents (discussed at length in IAM, 23 Sept. 2019 and IAM, 5 Aug. 2020). The decision is currently on appeal at the Supreme People’s Court (SPC) of China.
Meanwhile, in April 2018, Conversant sued Huawei in the District Court in Düsseldorf, Germany, alleging infringement of several European patents. On August 27, 2020, the Düsseldorf court granted Conversant an injunction against Huawei’s sale, use or importation in Germany of devices infringing patent EP1797659 (the German Patent).
On the same day, Huawei applied to the SPC seeking an “act preservation” ruling (a judicial action roughly equivalent to an ASI) to prevent Conversant from enforcing the Düsseldorf injunction until the conclusion of the Chinese proceedings. The SPC granted the ASI after an ex parte hearing in which Conversant did not participate. In its decision, the SPC cited a number of factors weighing in favor of granting the ASI, many of which resemble the factors considered by U.S. courts when considering ASIs (see Contreras, The New Extraterritoriality, pp. 265-67):
the parties to the Chinese and German actions are the same;
there is partial overlap between the subject matter of the cases;
Conversant’s enforcement of the German injunction would interfere with the Chinese action;
in order to avoid the effects of the German injunction, Huawei must either withdraw from the German market or accept the license offered by Conversant in Germany, which sets a global FRAND royalty rate that is 18.3 times higher than the rate set by the Nanjing court;
imposition of the ASI will not materially prejudice Conversant’s rights in Germany with respect to the merits decisions (as opposed to the injunction decisions) of the German courts;
imposition of the ASI will not harm the public interest;
imposition of the ASI will not affect international comity, as the Chinese actions were brought before the German action and the ASI will not affect the subsequent trial in the German case or detract from the legal validity of the German judgment.
Also relevant to the SPC’s decision, though not specifically included in its consideration of the ASI, was the fact that in August, 2018, the Chinese State Intellectual Property Office (SIPO) ruled that the Chinese counterpart to the German Patent was invalid. Conversant brought an administrative lawsuit challenging that ruling in the Beijing Intellectual Property Court. That matter is still pending.
Upon entry of the ASI, the SPC established a penalty of RMB 1 million per day (approximately US$150,000) if Conversant violates the ASI. Because the ASI was issued ex parte, Conversant was entitled to apply for reconsideration within five days. It did so, and its request was denied on September 11, leaving the ASI in force.
The dispute between InterDigital, a U.S.-based patent assertion entity, and Xiaomi, a Beijing-based electronics firm, relates to five InterDigital patents covering the 3G and 4G standards. When negotiations for a license failed, on June 9, 2020 Xiaomi sought a declaration by the Wuhan Intermediate People’s Court of the appropriate FRAND royalty rate for the patents. On July 29, InterDigital sued Xiaomi for infringement in the Delhi High Court in India, seeking monetary damages and an injunction. In response, on August 4, Xiaomi asked the Wuhan court for an “act preservation” ruling (ASI) preventing InterDigital from enforcing the injunction while the Wuhan proceeding was in progress.
The Wuhan court granted Xiaomi’s request, reasoning that:
InterDigital’s filing of parallel litigation in India during the pendency of the Wuhan case showed a lack of respect for the Wuhan court and the case before it;
The Indian action was intended to interfere with and obstruct the Wuhan case;
The Indian action is likely to lead to a ruling in conflict with that of the Wuhan court;
The entry of an injunction in India will likely cause significant harm to Xiaomi;
Because InterDigital is a non-practicing entity that does not make products, but relies solely on licensing income, it would not be harmed substantially by the inability to seek an injunction against Xiaomi
Accordingly, on September 23, the Wuhan court (a) ordered InterDigital to withdraw its requests for injunctive relief in India, (b) prohibited InterDigital from seeking injunctive relief in China or any other country with respect to the 3G/4G patents currently at issue in the Wuhan case, and (c) prohibited InterDigital from asking another court in China or any other country to determine a FRAND royalty rate or resolve a FRAND dispute relating to the 3G/4G patents at issue.
As in Conversant v. Huawei, the Wuhan court established a penalty of RMB 1 million per day (approximately US$150,000) if InterDigital violates the ASI. Because the ASI was issued ex parte, InterDigital was entitled to apply for reconsideration within five days. It did so, and its request appears to have been denied, leaving the ASI in force.
The ASIs issued by Chinese courts in Conversant v. Huawei and InterDigital v. Xiaomi signal a new willingness of Chinese courts to vie for jurisdictional authority in global battles over standard-essential patents. To some degree, this development was entirely predictable. Courts in the U.S. and UK have, for several years, sought to resolve global FRAND disputes being litigated on the international stage. But there is no reason that U.S. and UK courts should be the exclusive venues for such proceedings. The courts of every country in which the parties have sufficient assets to care about adverse rulings can exert similar authority. As one of us has previously observed, this inter-jurisdictional competition is rapidly leading to a “race to the bottom” and a “race to the courthouse” in international FRAND disputes.
Yet even more seems to be at play in these two cases than China’s adoption of jurisdictional measures already deployed in the U.S. and UK. The ruling of the Wuhan court is far broader than the Supreme People’s Court’s ruling in Conversant v. Huawei in two major respects that are worth considering. First, its geographic scope is not limited to the country in which InterDigital sought injunctive relief (India), but extends to all jurisdictions in the world. As an anti-suit measure, this is more sweeping than any ASI issued in U.S. or other courts in FRAND cases. Under U.S. and UK law, a court considering a request for an ASI must compare the action in the domestic court with the parallel action in the foreign court and determine whether they address the same matter and whether the resolution of the domestic action would dispose of the foreign action. This type of analysis is not possible with an ASI that is not directed to a particular foreign action, but prospectively prohibits any attempt to seek an injunction anywhere in the world.
The second major addition by the Wuhan court is the prohibition on InterDigital’s ability to ask any other court in the world to determine a global FRAND rate for its 3G/4G patents. As such, China has clearly joined the international race to be the jurisdiction of choice for determining FRAND royalty rates in global disputes involving standard-essential patents.
 A FRAND commitment is an obligation undertaken by a participant in a standards development organization (SDO) to grant licenses of its patents that are essential to implementation of one of the SDO’s standards on terms that are fair, reasonable and nondiscriminatory. For a primer on standards development and FRAND commitments, see this chapter.
The following is simply the text of the Supreme Court’s 1895 decision:
Consol. Electric Light Co v. McKeesport Light Co, 159 U.S. 465 (1895) [16_S.Ct._75]
Consol. Electric Light Co v. McKeesport Light Co, 159 U.S. 465 (1895)
This was a bill in equity, filed by the Consolidated Electric Light Company against the McKeesport Light Company, to recover damages for the infringement of letters patent No. 317,76, issued May 12, 1885, to the Electro-Dynamic Light Company, assignee of Sawyer and Man, for an electric light. The defendants justified under certain patents to Thomas A. Edison, particularly No. 223,898, issued January 27, 1880; denied the novelty and utility of the complainant’s patent; and averred that the same had been fraudulently and illegally procured. The real defendant was the Edison Electric Light Company, and the case involved a contest between what are known as the Sawyer and Man and the Edison systems of electric lighting.
In their application, Sawyer and Man stated that their invention related to ‘that class of electric lamps employing an incandescent conductor [e]nclosed in a transparent, hermetically sealed vessel or chamber, from which oxygen is excluded, and … more especially to the incandescing conductor, its substance, its form, and its combination with the other elements composing the lamp. Its object is to secure a cheap and effective apparatus; and our improvement consists, first, of the combination, in a lamp chamber, composed wholly of glass, as described in patent No. 205,144,’ upon which this patent was declared to be an improvement, ‘of an incandescing conductor of carbon made from a vegetable fibrous material, in contradistinction to a similar conductor made from mineral or gas carbon, and also in the form of such conductor so made from such vegetable carbon, and combined in the lighting circuit with the exhausted chamber of the lamp.’
The following drawings exhibit the substance of the invention:
The specification further stated that:
‘In the practice of our invention, we have made use of carbonized paper, and also wood carbon. We have also used such conductors or burners of various shapes, such as pieces with their lower ends secured to their respective supports, and having their upper ends united so as to form an inverted V-shaped burner. We have also used conductors of varying contours,—that is, with rectangular bends instead of curvilinear ones; but we prefer the arch shape.’
‘No especial description of making the illuminating carbon conductors, described in this specification, and making the subject-matter of this improvement, is thought necessary, as any of the ordinary methods of forming the material to be carbonized to the desired shape and size, and carbonizing it while confined in retorts in powdered carbon, substantially according to the methods in practice before the date of this improvement, may be adopted in the practice thereof by any one skilled in the arts appertaining to the making of carbons for electric lighting or for other use in the arts.’
‘An important practical advantage which is secured by the arch form of incandescing carbon is that it permits the carbon to expand and contract under the varying temperatures to which it is subjected when the electric current is turned on or off without altering the position of its fixed terminals. Thus, the necessity for a special mechanical device to compensate for the expansion and contraction which has heretofore been necessary is entirely dispensed with, and thus the lamp is materially simplified in its construction. Another advantage of the arch form is that the shadow cast by such burners is less than that produced by other forms of burners when fitted with the necessary devices to support them.’
‘Another important advantage resulting from our construction of the lamp results from the fact that the wall forming the chamber of the lamp through which the electrodes pass to the interior of the lamp is made wholly of glass, by which all danger of oxidation, leakage, or short-circuiting is avoided.’
‘The advantages resulting from the manufacture of the carbon from vegetable fibrous or textile material instead of mineral or gas carbon are many. Among them may be mentioned the convenience afforded for cutting and making the conductor in the desired form and size, the purity and equality of the carbon obtained, its susceptibility to tempering, both as to hardness and resistance, and its toughness and durability. We have used such burners in closed or hermetically sealed transparent chambers, in a vacuum, in nitrogen gas, and in hydrogen gas; but we have obtained the best results in a vacuum, or an attenuated atmosphere of nitrogen gas, the great desideratum being to exclude oxygen or other gases capable of combining with carbon at high temperatures from the incandescing chamber, as is well understood.’
The claims were as follows:
‘(1) An incandescing conductor for an electric lamp, of carbonized fibrous or textile material, and of an arch or horseshoe shape, substantially as hereinbefore set forth.’
‘(2) The combination, substantially as hereinbefore set forth, of an electric circuit and an incandescing conductor of carbonized fibrous material, included in and forming part of said circuit, and a transparent, hermetically sealed chamber, in which the conductor is inclosed.’
‘(3) The incandescing conductor for an electric lamp, formed of carbonized paper, substantially as described.’
‘(4) An incandescing electric lamp consists of the following elements in combination: First, an illuminating chamber made wholly of glass hermetically sealed, and out of which all carbon-consuming gas has been exhausted or driven; second, an electric-circuit conductor passing through the glass wall of said chamber, and hermetically sealed therein, as described; third, an illuminating conductor in said circuit, and forming part thereof within said chamber, consisting of carbon made from a fibrous or textile material, having the form of an arch or loop, substantially as described, for the purpose specified.’
The commercial Edison lamp used by the appellee, and which is illustrated below, is composed of a burner, A, made of carbonized bamboo of a peculiar quality, discovered by Mr. Edison to be highly useful for the purpose, and having a length of about 6 inches, a diameter of about 5/1000 of an inch, and an electrical resistance of upward of 100 ohms. This filament of carbon is bent into the form of a loop, and its ends are secured by good electrical and mechanical connections to two fine platinum wires, B, B. These wires pass through a glass stem, C, the glass being melted and fused upon the platinum wires. A glass globe, D, is fused to the glass stem, C. This glass globe has originally attached to it, at the point d, a glass tube, by means of which a connection is made with highly organized and refined exhausting apparatus, which produces in the globe a high vacuum, whereupon the glass tube is melted off by a flame, and the globe is closed by the fusion of the glass at the point d.
Upon a hearing in the circuit court before Mr. Justice Bradley, upon pleadings and proofs, the court held the patent to be invalid, and dismissed the bill. 40 Fed. 21. Thereupon complainant appealed to this court.
Attorneys: Leonard E. Curtis and Edmund Wetmore, for appellant; F. P. Fish, for appellee.
Opinion: Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.
In order to obtain a complete understanding of the scope of the Sawyer and Man patent, it is desirable to consider briefly the state of the art at the time the application was originally made, which was in January, 1880.
Two general forms of electric illumination had for many years been the subject of experiments more or less successful, one of which was known as the ‘arc light,’ produced by the passage of a current of electricity between the points of two carbon pencils placed end to end, and slightly separated from each other. In its passage from one point to the other through the air, the electric current took the form of an arc, and gave the name to the light. This form of light had been produced by Sir Humphry Davy as early as 1810, and, by successive improvements in the carbon pencils and in their relative adjustment to each other, had come into general use as a means of lighting streets, halls, and other large spaces; but by reason of its intensity, the uncertain and flickering character of the light, and the rapid consumption of the carbon pencils, it was wholly unfitted for domestic use. The second form of illumination is what is known as the ‘incandescent system,’ and consists generally in the passage of a current of electricity through a continuous strip or piece of refractory material, which is a conductor of electricity, but a poor conductor; in other words, a conductor offering a considerable resistance to the flow of the current through it. It was discovered early in this century that various substances might be heated to a white heat by passing a sufficiently strong current of electricity through them. The production of a light in this way does not in any manner depend upon the consumption or wearing away of the conductor, as it does in the arc light. The third system was a combination of the two others, but it never seems to have come into general use, and is unimportant in giving a history of the art.
For many years prior to 1880, experiments had been made by a large number of persons, in various countries, with a view to the production of an incandescent light which could be made available for domestic purposes, and could compete with gas in the matter of expense. Owing party to a failure to find a proper material, which should burn but not consume, partly to the difficulty of obtaining a perfect vacuum in the globe in which the light was suspended, and partly to a misapprehension of the true principle of incandescent lighting, these experiments had not been attended with success; although it had been demonstrated as early as 1845 that, whatever material was used, the conductor must be inclosed in an art-tight bulb, to prevent it from being consumed by the oxygen in the atmosphere. The chief difficulty was that the carbon burners were subject to a rapid disintegration or evaporation, which electricians assumed was due to the disrupting action of the electric current, and hence the conclusion was reached that carbon contained in itself the elements of its own destruction, and was not a suitable material for the burner of an incandescent lamp.
It is admitted that the lamp described in the Sawyer and Man patent is no longer in use, and was never a commercial success; that it does not embody the principle of high resistance with a small illuminating surface; that it does not have the filament burner of the modern incandescent lamp; that the lamp chamber is defective; and that the lamp manufactured by the complainant, and put upon the market, is substantially the Edison lamp; but it is said that, in the conductor used by Edison (a particular part of the stem of the bamboo, lying directly beneaty the siliceous cuticle, the peculiar fitness for which purpose was undoubtedly discovered by him), he made use of a fibrous or textile material covered by the patent to Sawyer and Man, and is therefore an infringer. It was admitted, however, that the third claim—for a conductor of carbonized paper—was not infringed.
The two main defenses to this patent are (1) that it is defective upon its face, in attempting to monopolize the use of all fibrous and textile materials for the purpose of electric illuminations; and (2) that Sawyer and Man were not in fact the first to discover that these were better adapted than mineral carbons to such purposes.
Is the complainant entitled to a monopoly of all fibrous and textile materials for incandescent conductors? If the patentees had discovered in fibrous and textile substances a quality common to them all, or to them generally, as distinguishing them from other materials, such as minerals, etc., and such quality or characteristic adapted them peculiarly to incandescent conductors, such claim might not be too broad. If, for instance, minerals or porcelains had always been used for a particular purpose, and a person should take out a patent for a similar article of wood, and woods generally were adapted to that purpose, the claim might not be too broad, though defendant used wood of a different kind from that of the patentee. But if woods generally were not adapted to the purpose, and yet the patentee had discovered a wood possessing certain qualities, which gave it a peculiar fitness for such purpose, it would not constitute an infringement for another to discover and use a different kind of wood, which was found to contain similar or superior qualities. The present case is an apt illustration of this principle. Sawyer and Man supposed they had discovered in carbonized paper the best material for an incandescent conductor. Instead of confining themselves to carbonized paper, as they might properly have done, and in fact did in their third claim, they made a broad claim for every fibrous or textile material, when in fact an examination of over 6,000 vegetable growths showed that none of them possessed the peculiar qualities that fitted them for that purpose. Was everybody, then, precluded by this broad claim from making further investigation? We think not.
The injustice of so holding is manifest in view of the experiments made, and continued for several months, by Mr. Edison and his assistants, among the different species of vegetable growth, for the purpose of ascertaining the one best adapted to an incandescent conductor. Of these he found suitable for his purpose only about three species of bamboo, one species of cane from the valley of the Amazon (impossible to be procured in quantities on account of the climate), and one or two species of fibers from the agave family. Of the special bamboo, the walls of which have a thickness of about 3/8 of an inch, he used only about 20/1000 of an inch in thickness. In this portion of the bamboo the fibers are more nearly parallel, the cell walls are apparently smallest, and the pithy matter between the fibers is at its minimum. It seems that carbon filaments cannot be made of wood,—that is, exogenous vegetable growth,—because the fibers are not parallel, and the longitudinal fibers are intercepted by radial fibers. The cells composing the fibers are all so large that the resulting carbon is very porous and friable. Lamps made of this material proved of no commercial value. After trying as many as 30 or 40 different woods of exogenous growth, he gave them up as hopeless. But finally, while experimenting with a bamboo strip which formed the edge of a palm-leaf fan, cut into filaments, he obtained surprising results. After microscopic examination of the material, he dispatched a man to Japan to make arrangements for securing the bamboo in quantities. It seems that the characteristic of the bamboo which makes it particularly suitable is that the fibers run more nearly parallel than in other species of wood. Owing to this, it can be cut up into filaments having parallel fibers, running throughout their length, and producing a homogeneous carbon. There is no generic quality, however, in vegetable fibers, because they are fibrous, which adapts them to the purpose. Indeed, the fibers are rather a disadvantage. If the bamboo grew solid, without fibers, but had its peculiar cellular formation, it would be a perfect material, and incandescent lamps would last at least six times as long as at present. All vegetable fibrous growths do not have a suitable cellular structure. In some the cells are so large that they are valueless for that purpose. No exogenous, and very few endogenous, growths are suitable. The messenger whom he dispatched to different parts of Japan and China sent him about 40 different kinds of bamboo, in such quantities as to enable him to make a number of lamps, and from a test of these different species he ascertained which was best for the purpose. From this it appears very clearly that there is no such quality common to fibrous and textile substances generally as makes them suitable for an incandescent conductor, and that the bamboo which was finally pitched upon, and is now generally used, was not selected because it was of vegetable growth, but because it contained certain peculiarities in its fibrous structure which distinguished it from every other fibrous substance. The question really is whether the imperfectly successful experiments of Sawyer and Man, with carbonized paper and wood carbon, conceding all that is claimed for them, authorize them to put under tribute the results of the brilliant discoveries made by others.
It is required by Rev. St. § 4888, that the application shall contain ‘a written description of the device, and of the manner and process of making constructing, compounding, and using it in such full, clear, concise, and exact terms as to enable any person, skilled in the art or science to which it appertains or with which it is most nearly connected, to make, construct, compound, and use the same.’ The object of this is to apprise the public of what the patentee claims as his own, the courts of what they are called upon to construe, and competing manufacturers and dealers of exactly what they are bound to avoid. Grant v. Raymond, 6 Pet. 218, 247. If the description be so vague and uncertain that no one can tell, except by independent experiments, how to construct the patented device, the patent is void.
It was said by Mr. Chief Justice Taney in Wood v. Underhill, 5 How. 1, 5, with respect to a patented compound for the purpose of making brick or tile, which did not give the relative proportions of the different ingredients: ‘But when the specification of a new composition of matter gives only the names of the substances which are to be mixed together, without stating any relative proportion, undoubtedly it would be the duty of the court to declare the patent void. And the same rule would prevail where it was apparent that the proportions were stated ambiguously and vaguely; for in such cases it would be evident, on the face of the specification, that no one could use the invention without first ascertaining, by experiment, the exact proportion of the different ingredients required to produce the result intended to be obtained. . . . And if, from the nature and character of the ingredients to be used, they are not susceptible of such exact description, the inventor is not entitled to a patent.’
So in Tyler v. Boston, 7 Wall. 327, wherein the plaintiff professed to have discovered a combination of fusel oil with the mineral and earthy oils, constituting a burning fluid, the patentee stated that the exact quantity of fusel oil which is necessary to produce the most desirable compound must be determined by experiment. And the court observed: ‘Where a patent is claimed for such a discovery, it should state the component parts of the new manufacture claimed with clearness and precision, and not leave a person attempting to use the discovery to find it out ‘by experiment.” See, also, Béné v. Jeantet, 129 U. S. 683, 9 Sup. Ct. 428; Howard v. Stove Works, 150 U. S. 164, 167, 14 Sup. Ct. 68; Schneider v. Lovell, 10 Fed. 666; Welling v. Crane, 14 Fed. 571.
Applying this principle to the patent under consideration, how would it be possible for a person to know what fibrous or textile material was adapted to the purpose of an incandescent conductor, except by the most careful and painstaking experimentation? If, as before observed, there were some general quality, running through the whole fibrous and textile kingdom, which distinguished it from every other, and gave it a peculiar fitness for the particular purpose, the man who discovered such quality might justly be entitled to a patent; but that is not the case here. An examination of materials of this class carried on for months revealed nothing that seemed to be adapted to the purpose; and even the carbonized paper and wood carbons specified in the patent, experiments with which first suggested their incorporation therein, were found to be so inferior to the bamboo, afterwards discovered by Edison, that the complainant was forced to abandon its patent in that particular, and take up with the material discovered by its rival. Under these circumstances, to hold that one who had discovered that a certain fibrous or textile material answered the required purpose should obtain the right to exclude everybody from the whole domain of fibrous and textile materials, and thereby shut out any further efforts to discover a better specimen of that class than the patentee had employed, would be an unwarranted extension of his monopoly, and operate rather to discourage than to promote invention. If Sawyer and Man had discovered that a certain carbonized paper would answer the purpose, their claim to all carbonized paper would, perhaps, not be extravagant; but the fact that paper happens to belong to the fibrous kingdom did not invest them with sovereignty over this entire kingdom, and thereby practically limit other experimenters to the domain of minerals.
In fact, such a construction of this patent as would exclude competitors from making use of any fibrous or textile material would probably defeat itself, since, if the patent were infringed by the use of any such material, it would be anticipated by proof of the prior use of any such material. In this connection it would appear, not only that wood charcoal had been constantly used since the days of Sir Humphry Davy for arc lighting, but that in the English patent to Greener and Staite, of 1846, for an incandescent light, ‘charcoal, reduced to a state of powder,’ was one of the materials employed. So also, in the English patent of 1841 to De Moleyns, ‘a finely pulverized boxwood charcoal or plumbago’ was used for an incandescent electric lamp. Indeed, in the experiments of Sir Humphry Davy, early in the century, pieces of well-burned charcoal were heated to a vivid whiteness by the electric current, and other experiments were made which evidently contemplated the use of charcoal heated to the point of incandescence. Mr. Broadnax, the attorney who prepared the application, it seems, was also of opinion that a broad claim for vegetable carbons could not be sustained, because charcoal had been used before in incandescent lighting. There is undoubtedly a good deal of testimony tending to show that, for the past 50 or 60 years, the word ‘charcoal’ has been used in the art, not only to designate carbonized wood, but mineral or hard carbons, such as were commonly employed for the carbon pencils of arc lamps. But we think it quite evident that, in the patents and experiments above referred to, it was used in its ordinary sense of charcoal obtained from wood. The very fact of the use of such word to designate mineral carbons indicates that such carbons were believed to possess peculiar properties required for illumination, that before that had been supposed to belong to wood charcoal.
We have not found it necessary in this connection to consider the amendments that were made to the original specification, upon which so much stress was laid in the opinion of the court below, since we are all agreed that the claims of this patent, with the exception of the third, are too indefinite to be the subject of a valid monopoly.
As these suggestions are of themselves sufficient to dispose of the case adversely to the complainant, a consideration of the question of priority of invention, or rather of the extent and results of the Sawyer and Man experiments, which was so fully argued upon both sides, and passed upon by the court below, becomes unnecessary.
For the reasons above stated, the decree of the circuit court is affirmed.
Gensetix v. Univ. Texas v. Baylor College of Med. (Fed. Cir. 2020)
Here is the three-party setup in this case involving the patentee, licensee, and accused infringers:
Invent & Patent: Dr. Decker, a UTexas researcher invented a method for generating anti-tumor immune response and UTexas obtained the patents (US8728806; US9333248);
License: UTexas provided an exclusive license to Mr. Mirrow who later transferred the license to Gensetix;
Infringe: Dr. Decker later moved his lab to BCM and continued research without license;
Sue: Gensetix sued BCM & Decker for infringement, but the patent owner UTexas refused to participate in the case.
The usual rule is that a patent infringement lawsuit cannot proceed unless the patentee — i.e., the patent owner — is a plaintiff. And, in a normal lawsuit being a plaintiff is voluntary business. However, our rules of civil procedure do also call for “involuntary plaintiffs.”
(2) Joinder by Court Order. [A required party] who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plaintiff.
Fed. R. Civ. Pro. R. 19(a)(2). This happens occasionally in patent cases such as this where the patentee has promised to enforce the patent, but then later refuses. In that situation, the licensee files the lawsuit as plaintiff and joins the patent owner as an involuntary plaintiff. The problem here — UTexas is part of the State of Texas and claims sovereign immunity in this case.
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State.
U.S. Const., Amendment XI (1795). Although the 11th Amendment offers only a limited amount of State Sovereign immunity, the Supreme Court has repeatedly written that the structure and nature of Federal system includes additional State immunities.
In its appellate decision in the case, the Federal Circuit answered two questions (1) Does sovereign immunity protect TX from being joined as an involuntary plaintiff; (2) If TX cannot be joined as a party, may the case proceed without the patentee? The court then issued three separate opinions with Judge O’Malley’s approach garnering a majority on each issue:
Thus, in the end, the court found that TX is immune from being joined, but that the case should proceed with the licensee suing BCM for infringement.
BCM subsequently petitioned for en banc review on the following question:
Can a party who is not a patentee “have remedy by civil action for infringement”?
BCM En Banc Petition. That petition has now been denied — setting up potential Supreme Court review.
The basic framing of the appeal is that there is some tension between the language of R.19 and the Supreme Court decision in Republic of Philippines v. Pimentel, 553 U.S. 851 (2008).
First, R. 19: The text of the rule expressly allows a court to continue with a lawsuit even though a “required party” cannot be joined. The basic approach is that the court must apply “equity and good conscious” to determine whether to dismiss the case or to proceed.
19(b) When Joinder Is Not Feasible. If a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.
Id. (listing factors to consider).
On the other hand, in Pimentel, the court appeared to endorse a stark limit on continuing suits such as this where the sovereign is absent but will be potentially injured by an adverse decision:
A case may not proceed when a required entity sovereign is not amenable to suit. [Our prior] cases instruct us that where sovereign immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be ordered where there is a potential for injury to the interests of the absent sovereign.
Republic of Philippines v. Pimentel, 553 U.S. 851 (2008).
The patent act creates a cause-of-action for patent infringement, and the en banc question presented quotes from from the statute:
A patentee shall have remedy by civil action for infringement of his patent.
35 U.S.C. 281. The petition mentions that on remand it will be able to raise this issue and dismiss the case since Gensetix is not a “patentee.” The FedCir has held that exclusive assignees can be considered a patentee if they have “all substantial rights” to the patent. In this case, Gensetix originally argued that it had all substantial rights, but now admits that it does not. Thus on remand this may become a standing issue.
In a terse opinion, Judge Hughes has affirmed the demurrer (12(b)(6) decision by Judge Sweeney (S.D. Ind) holding Tenstreet’s U.S. Patent No. 8,145,575 invalid as directed toward an abstract idea.
The holding: even if the invention provides “advantages over the previous method,” it is not patent eligible without a “technological improvement beyond the use of a generic computer.” In essence, “do it on a computer” is not enough for patent eligibility. Judge Hughes writes:
[The patent claims arguably] provide three advantages over conventional processes for employment verification: (1) a single channel for routing transmissions; (2) the ability for job applicants to monitor the verification process; and (3) database storage of employment history.
The test for patent-eligible subject matter is not
whether the claims are advantageous over the previous method. Even if the ’575 patent provides advantages over manual collection of data, the patent claims no technological improvement beyond the use of a generic computer network. Accordingly, the district court correctly determined that the ’575 patent claims are directed to the abstract idea of collecting, organizing, and storing data on a conventional computer network, and that the ’575 patent claims recite no elements that transform them to patent-eligible applications.
Claim 1. A method for peer-to-peer sharing of job applicant verification data over a network, the network comprising; a computerized exchange being in communication with one or more requesters, providers, and job applicants; the exchange managing one or more interactions of each requester, provider, and job applicant with the exchange; each requester being an entity seeking verification data about one or more job applicants, each provider being an entity in possession of the verification data of one or more job applicants and providing the verification data in response to a request for the verification data, the verification data disclosing a status of the job applicant during a period of time; said method comprising the steps of:
allowing one or more communication channels to interface with the exchange;
assigning an attribute to each requester, provider, and job applicant, the attribute defining the communication channel accessible to each requester, provider, and job applicant in transmitting data to the exchange and receiving data from the exchange;
receiving a verification request from a requester through the communication channel of the requester;
comparing, by the computerized exchange, the verification request with requirements;
routing the verification request to a provider through the communication channel of the provider;
receiving verification data provided by the provider in response to the verification request through the communication channel of the provider; and
routing the received verification data through the communication channel of the requester;
wherein at least one requester is also a provider for a second requester and at least one provider is also a requester for a second provider, the at least one requester providing verification data to the exchange for a period of time in which a respective job applicant was employed by the at least one requester and the second provider providing verification data to the exchange for a period a time in which the same or a different respective job applicant was employed by the second provider.
The following comes from the Amy Coney Barrett Senate Confirmation Hearing Day 3 Transcript
Senator Tillis: (54:08)
I was talking with Senator Coons, who is the ranking member on a committee that I chair, a sub-committee here on intellectual property. We’ve done a lot of work and we’re working on a bipartisan bicameral basis. And I have to thank Senator Blumenthal for probably being one of the more active members in this committee. I think it’s an area where we really are working on a bipartisan basis.
Moving to [an] area that’s been addressed on the committee on intellectual property and patent law eligibility. As chairman of the subcommittee, I’m really interested in protecting the intellectual property of the American innovation economy. There’s no question that we’re the leader in the world. But in recent years we’ve seen a lot of Supreme Court cases that have waded into patent eligibility, producing a series of opinions that have really muddled the waters. And in some cases, I agree with the decision but I worry about the methodology that they used to get there. So, I’m curious about your thoughts. In my committee, we’ve talked about specific cases that we could potentially abrogate if we could get bipartisan support and we’re in those discussions. But what are your thoughts on the Supreme Court’s rulings on patent eligibility? And do you think that the court should go back and clarify at least the method that they use to reach their opinion?
Amy Coney Barrett: (57:01)
So, without commenting on any particular cases, which actually I have to be completely honest and confess to, I can’t think of what particular cases you might be thinking of in the patent eligibility. But without commenting on those cases in any event, I think I would say that clarity in decision-making is always something that courts should strive for. And I know on the seventh circuit, we try and I’m trying to be attuned to in writing opinions, whether it gives good guidance to lower courts and then to also those who are trying to order their conduct in compliance with the law. So, I think clarity is certainly a virtue in this context.
Senator Tillis: (57:38)
And I think that we’re working, like I said, on a bipartisan bicameral basis to help or do it on our part. Copyright law and technology is other area that we’ve focused quite a bit on. I think I had one witness say that our current laws are MySpace laws in a TikTok world. There’s a lot of changes that have occurred. And we feel like there’s a need for us to maybe move forward with some clarity and some protections. The Supreme Court has spent more than a century answering questions about whether copyright law covers new technologies like cameras, player pianos, moving pictures, the list goes on, several internet enabled technologies. Do you think that the Supreme Court is the best institution to answer these questions or is that a role Congress should play?
Amy Coney Barrett: (58:29)
Most of the things you’re identifying sound to me like matters of policy. And so, those seem like matters that are best addressed by the legislature, a democratically elected body, not policy made by courts.
Although this case comes from an inter partes review, it is one that could be used by patent prosecutors when discussing claim meaning with examiners. The basic principle here is that the “broadest reasonable interpretation” of a claim must be considered “in light of the specification.” Here, the claims did not spell-out a sizing limitation for an artificial heart valve, but the size was apparent from the specification.
I feel really bad about this, but whenever I see a Snyders lawsuit, I cant stop thinking back to the late 1990’s when I used to eat Snyder’s mustard flavored pretzels.
This case is not about pretzels, but rather focuses on Snyders artificial heart valve patent US6540782. Eat your heart out?
Snyders sued St. Jude for infringement in D.Minn and St. Jude responded with a pair of inter partes review (IPR) petitions. The PTAB initiated the IPRs and eventually ruled that some of the claims were anticipated by a prior patent.
IPR2018-00105: PTAB sided fully with the patentee on obviousness and anticipation challenges based upon Leonhardt
IPR2018-00106: PTAB sided partially with the challenger — finding claims 1, 2, 6, and 8 anticipated by the Bessler patent, but finding the remaining claims patentable.
Both parties appealed, and the Federal Circuit has fully sided with the patentee Snyders.
The focus of the appeal was on construction of the following claim term
… a flexibly resilient frame sized and shaped for insertion in a position between the upstream region and the downstream region…
Basically, the artificial valve includes a bendable frame that will fit in the natural valve position. It also includes attachment hooks to hold it in place.
An important aspect of Snyders valve is that it can be inserted into place without removing the native damaged valve. The key prior art (Bessler) also disclosed a valve insert, but it was sized to fit the valve location after removal of the damaged valve. The problem for Snyders is that the claim language does not make this distinction explicit. Rather, the claim only requires that the frame fit in the position between the upstream and downstream regions (i.e., the original valve location). Thus, the PTAB broadly interpreted the claim language to also cover a frame “sized and shaped” to fit in the location after removal of damaged heart material.
On appeal, the Federal Circuit reversed the claim construction — holding that sized to the native-valve-space should be read into the claim, even when applying the broadest reasonable interpretation:
The claim’s reference to “repairing a damaged heart valve,” without any reference to removal, suggests that the native valve remains. So too does the claim’s reference to the damaged heart valve “having a plurality of cusps,” which appears superfluous if claim 1 is interpreted to include embodiments where the damaged valve and its cusps are removed. . . .
The specification states that “the frame is sized and shaped for insertion between the plurality of cusps C of the damaged heart valve in a position between an upstream region and a downstream region.” . . . Moreover, the specification stresses that the artificial heart valve it discloses can be inserted without removing the native valve and that this is an improvement on the prior art.
Slip Op. The specification actually particularly references Bessler as problematic prior art that requires “removal of the native valve, cardiopulmonary bypass and
backflushing of the coronary arterial tree.” Snyders explains that its approach avoids those major procedures.
Finding of anticipation reversed. Now the case will go back to Minnesota to consider infringement and perhaps other invalidity arguments.
The Supreme Court has granted Certiorari in Arthrex on the questions of whether Administrative Patent Judges (APJs) were properly appointed under the U.S. Constitution and, if not, what is the proper remedy.
None of the appellants were satisfied with the Federal Circuit’s decision in the case and each petitioned for Supreme Court review. Subsequently, the U.S. Gov’t filed a memorandum walking through what it saw as the three unifying questions presented in the case. The court has granted hearing on only the first two questions.
1. Whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office are principal officers who must be appointed by the President with the Senate’s advice and consent, or “inferior Officers” whose appointment Congress has permissibly vested in a department head.
2. Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges.
3. Whether the court of appeals in Arthrex erred by adjudicating an Appointments Clause challenge that had not been presented to the agency.
The case stems from an inter partes review (IPR) conducted by Administrative Patent Judges (APJs) at the Patent Trial & Appeal Board (PTAB). Arthrex is the owner of U.S. Patent No. 9,179,907 — a patent claiming an assembly for securing soft tissue (such as a tendon) to a bone without requiring the surgeon to tie any knots. Smith & Nephew successfully challenged the patent via IPR, with the PTAB APJs concluding that the challenged claims were unpatentable as anticipated. On appeal, Arthrex challenged the decision on constitutional (appointments clause) grounds; Smith & Nephew defended the decision, and the USPTO (U.S. Gov’t) also intervened to support the decision of its PTAB judges.
At the Federal Circuit, the original decision was authored by Judge Moore and joined by Judge Reyna and Chen. The court subsequently denied en banc rehearing. The denial include five separate opinions, including an additional opinion by Judge Moore defending her original opinion and a concurring opinion by Judge O’Malley. Judge Dyk wrote in dissent as did Judge Hughes and Judge Wallach. Four of the Judges did not indicate their vote (Chief Judge Prost and Judges Lourie, Taranto, and Stoll). Based upon the result (en banc denial), at least two of them voted to deny rehearing.