Decoding Patent Ownership beginning with Core Principles

by Dennis Crouch

In a recent decision, the Federal Circuit vacated a district court’s grant of summary judgment that an inventor, Dr. Mark Core, had automatically assigned a patent associated with his PhD thesis to his then-employer and education funder TRW.  Core Optical Techs., LLC v. Nokia Corp., Nos. 23-1001 (Fed. Cir. May 21, 2024). The key issue was whether Dr. Core developed the patented invention “entirely on [his] own time” under his employment agreement. The majority opinion written by Judge Taranto and joined by Judge Dyk held the contract language was ambiguous on this point and remanded for further factual development to determine the parties’ intent.  Judge Mayer dissented.

Although not discussed in the court’s decision, the appellant brief includes a suggestion that the Federal Circuit should “narrow or overrule” the automatic assignment law seen in FilmTec Corp. v. Allied Signal, Inc., 939 F.2d 1568 (Fed. Cir. 1991), and its progeny (more…)

Federal Circuit Overrules Rosen-Durling Test for Design Patent Obviousness

by Dennis Crouch

In a highly anticipated en banc decision, the Federal Circuit has overruled the longstanding Rosen-Durling test for assessing obviousness of design patents. LKQ Corp. v. GM Global Tech. Operations LLC, No. 21-2348, slip op. at 15 (Fed. Cir. May 21, 2024) (en banc). The court held that the two-part test’s requirements that 1) the primary reference must be “basically the same” as the claimed design, and 2) any secondary references must be “so related” to the primary reference that features from one would suggest application to the other, “impose[] limitations absent from § 103’s broad and flexible standard” and are “inconsistent with Supreme Court precedent” of both KSR (2007) and Whitman Saddle (1893). Rejecting the argument that KSR did not implicate design patent obviousness, the court reasoned that 35 U.S.C. § 103 “applies to all types of patents” and the text does not “differentiate” between design and utility patents.  Therefore, the same obviousness principles should govern.  This decision will generally make design patents harder (more…)

Cellect or Reject? SCOTUS Asked to Consider Fate of ODP Doctrine

by Dennis Crouch

In its new petition for certiorari in Cellect LLC v. Vidal, No. __ (U.S. May 20, 2024), Cellect argues that the Federal Circuit erred in upholding the PTAB’s (PTAB) invalidation of Cellect’s four patents based on the judicially-created doctrine of obviousness-type double patenting (ODP). The key issue is whether ODP can cut short the patent term extension provided by the Patent Term Adjustment (PTA) statute, 35 U.S.C. § 154(b). Meanwhile, Dir. Vidal is looking to extend the power of ODP via rulemaking. This is an important case coming at an important time.  (more…)

Federal Circuit Limits Defendant Attorneys’ Fees Awards for IPR Expenses

by Dennis Crouch

The Federal Circuit’s recent decision in Dragon Intellectual Property LLC v. DISH Network L.L.C. affirms the district court’s grant of attorneys’ fees to the successful defendants, while denying recovery of fees incurred solely in the IPR proceedings and from plaintiff’s counsel.  The case offers important legal conclusions for attorney fees in cases that involve both district court and IPR litigation.

The district court found the case exceptional under § 285 due to the substantive weakness of Dragon’s infringement position, including clear prosecution history disclaimer precluding infringement by the accused products. A key issue on appeal was whether § 285 allows recovery of fees incurred in parallel IPR proceedings. The majority held that when a defendant voluntarily pursues an invalidity challenge through IPR, the fees incurred solely in the IPR are not recoverable. The court distinguished the facts from its prior decision in PPG Industries v. Celanese Polymer, where the defendant’s participation in reissue proceedings was not optional because the plaintiff had initiated them.

The majority also held that § 285 does not permit prevailing defendants to recover fees from plaintiff’s counsel. The statute’s silence on counsel’s liability, in contrast to other statutes and rules explicitly allowing recovery from attorneys, indicated that Congress did not intend § 285 to extend liability to counsel.

However, Judge Bencivengo, sitting by designation at the Federal Circuit, dissented in part, arguing that in exceptional cases based on the complaint being objectively baseless from the start, district courts should have discretion to award defendants all reasonable fees, including those incurred in an IPR that resolved invalidity defenses asserted in response to the baseless complaint. The dissent viewed the IPR as a substitute for the stayed district court litigation on invalidity, rather than a truly parallel proceeding.

While 35 U.S.C. § 285 does not permit holding plaintiff’s counsel jointly and severally liable for attorneys’ fees, other statutes and rules may allow for the recovery of fees from attorneys in certain circumstances.  In this case the court specifically points to two examples:

  1. 28 U.S.C. § 1927, which states that “[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
  2. Federal Rule of Civil Procedure 11, which “expressly allows the court to impose monetary sanctions on attorneys and law firms, which can include ‘all of the reasonable attorney’s fees and other expenses’ incurred as a result of sanctionable conduct.”

The court notes that these statutes and rules “explicitly allow parties to recover costs and fees from counsel” and are “more appropriate vehicles to recover fees from counsel” compared to § 285, which is silent on the issue of counsel’s liability for fee awards.

Discussing Stern’s “Myth of Nonrivalry” for Patent Law

By Dennis Crouch

Two people cannot wear the same sock (at least at the same time) but they can think the same thought, sing the same song, or undergo the same medical procedure. As Thomas Jefferson famously put it, part of the ‘peculiar character’ of an idea is that ‘no one possesses the less, because every other possesses the whole of it.’

This quote from Professor James Stern’s new article introduces the conventional view that ideas and information are nonrivalrous, in contrast to the rivalrous nature  of tangible goods.  As an idea based creation, intellectual property’s nonrivalrous nature has always placed it on airy ground as a statutory creation rather than a natural law.  The rivalrous nature of real and personal property has justified property regimes, but for IP we have always needed additional justification and additional limits because propertization creates artificial scarcity.  But Stern’s new article bucks the conventional wisdom and instead argues that the nonrivalry of IP is a myth. James Y. Stern, Intellectual Property and the Myth of Nonrivalry, 99 Notre Dame L. Rev. 1163 (2024).  Although many economists assume that more information is better, Stern makes clear that is not always true. He writes “it seems a safe bet that there are substantial numbers of people who would prefer the human race had never come up with such novelties as land mines, cigarettes, cargo shorts, Jet Skis, genetically modified foods, anabolic steroids, robocallers, date-rape drugs, subwoofers, Ponzi schemes, and crystal meth, to name just a few.”

Stern’s article challenges the widely held belief that information goods are inherently nonrivalrous, and that this characteristic distinguishes them from tangible property. He argues that the concept of rivalry, properly understood, encompasses not just conflicts between two active uses of a resource, but also conflicts where one person wants to use a resource and another simply wants that person to refrain from doing so. This broader conception of rivalry in terms of wants and desires, Stern contends, is relevant to many situations involving intellectual property.  One Stern’s key insights is that preferences to control and restrict access to ideas and information are ubiquitous, extending well beyond the domain of intellectual property law. He points to examples such as privacy laws, testimonial privileges, classified information and state secrets laws, and the Federal Witness Protection Program as evidence that conflicts over controlling access to information are common and demonstrate the potential for rivalrousness when it comes to ideas and information.  This insight serves to challenge the notion that the nonrivalrous nature of information goods necessarily means that granting exclusive rights over them is unjustified or socially harmful.

The article also examines how the characterization of intellectual property rights as “monopolies” has shaped legal doctrine, such as the Supreme Court’s reliance on the “public rights doctrine” to uphold adjudication of patent validity in administrative proceedings. Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365 (2018). Stern suggests that this rhetoric traces partly to the view that information goods differ fundamentally from physical property due to their supposed nonrivalry.

Although the article is not patent focused, Stern’s arguments have significant implications for patent law by undermining a key justification for limiting the scope and strength of patent protection. If rivalrousness is possible for patented inventions, then the case for treating patents as a form of property is stronger.  An example application here could be eBay and the role of damages and injunctions in patent cases.  Similarly, with respect to patent term, Stern’s article raises questions about the appropriate duration of patent rights. If the justification for time-limited patent rights rests partly on the assumption that inventions are nonrivalrous and therefore do not require permanent exclusivity, then recognizing the potential for rivalrousness in the use of inventions may suggest a need to reconsider the optimal term length. At the same time, concerns about dynamic efficiency and the importance of promoting follow-on innovation may still counsel in favor of limiting the duration of patent rights, even if some degree of rivalrousness is present.  Consider also double patenting, that is designed to ensure that the public should have access to the invention upon expiration of the patent. See In re Longi, 759 F.2d 887 (Fed. Cir. 1985).

Although I have not fully bought into his ideas, professor Stern has done a great job challenging us to rethink core aspects of intellectual property law.  Many courts, especially members of the Supreme Court, have long seen intellectual property as inherently suspect without any inherent value other than the incentive to innovate.  Stern’s article grapples with this argument that and highlights the need for a more nuanced understanding of the interests at stake.

USPTO ARP Panel Restores MPF Sanity, but Still Rejects Xencor’s Claims

by Dennis Crouch

In a new Appeals Review Panel (ARP), the USPTO has clarified the Office’s position on means plus function claims — explaining that the specification need not describe statutory equivalents to satisfy the written description requirement.  The outcome here shows value for the intentional use of means-plus-function limitations as a mechanism for expanding patent scope when genus claims are otherwise unavailable.

Still the court maintained the written description rejection on other grounds — finding that the broad preamble “method of treating a patient” to be limiting and not adequately supported by the specification.  Perhaps on remand the patentee will amend the preamble to instead claim a “means of treating a patient.”  (more…)

Navigating the USPTO’s Regulatory Wave: Key Comment Deadlines for Summer 2024

by Dennis Crouch

Over the past two months, the USPTO has issued an unusually large number of public comment requests related to various proposed rules and procedure changes. This wave of RFCs includes significant proposals aimed at adjusting patent fees for fiscal year 2025, refining terminal disclaimer practices, and addressing the impact of artificial intelligence on prior art and patentability. The agency is also seeking feedback on formalizing the Director Review process following Arthrex and various changes to IPR proceedings, including discretionary review. And there’s more… (more…)

The Legacy of A.B. Dick and Motion Picture Patents: How these 100+ Year Old Ruling Reshaped Patent Law

by Dennis Crouch

I see the US Supreme Court’s 1912 decision in Henry v. A.B. Dick Co. as a major turning point in American patent and antitrust law. 224 U.S. 1 (1912).  The Court’s 4-3 decision favored the patentee and allowed the patent owner to place restrictions on the use of its patented product even after sale. But, that decision sparked a major reform effort.  Just a few years later, the Supreme Court reversed course in Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917), effectively overruling A.B. Dick and signaling a new largely anti-patent-monopoly era.

In A.B. Dick, (more…)

How Chestek Impacts USPTO’s Rulemaking Authority and the Push to Restore

by Dennis Crouch

The Federal Circuit’s recent decision in Chestek v. Vidal opened the door to extensive USPTO rulemaking that entirely avoids the notice and comment process required by the Administrative Procedure Act (APA). In re Chestek PLLC, 92 F.4th 1105 (Fed. Cir. 2024).  Chestek has now filed her petition for writ of certiorari to the U.S. Supreme Court asking: Whether the PTO is exempt from notice-and-comment requirements when exercising its rulemaking power under 35 U.S.C. § 2(b)(2).

(more…)

Major Proposed Changes to Terminal Disclaimer Practice (and You are Not Going to Like it)

by Dennis Crouch

The USPTO recently issued a notice of proposed rulemaking that could significantly impact patent practice, particularly in the realm of terminal disclaimers filed to overcome non-statutory double patenting rejections.  Under the proposed rule, a terminal disclaimer must include an agreement that the patent will be unenforceable if it is tied directly or indirectly to another patent that has any claim invalidated or canceled based on prior art (anticipation or obviousness under 35 U.S.C. 102 or 103). The new enforceability requirement would be in addition to the existing provisions that require a terminal disclaimer to match the expiration date of the disclaimed patent to the referenced patent and promise enforcement only during common ownership.

This is a major proposal that fundamentally alters the effect of terminal disclaimers.  (more…)

Supreme Court Affirms Availability of Back-Damages Under Copyright Discovery Rule

By Dennis Crouch and Timothy Knight

On May 9, 2024, the Supreme Court issued its opinion in Warner Chappell Music v. Nealy, No. 22-1078, 601 U.S. ___ (2024), resolving a circuit split over the availability of back-damages in copyright infringement cases. In a 6-3 decision authored by Justice Kagan, the Court affirmed the Eleventh Circuit’s ruling, permitting recovery of damages for acts that occurred more than three years before the filing of the lawsuit under the “discovery accrual rule.”

For those of you who have not been following the case, the Plaintiff Sherman Nealy, a music producer, helped create musical works in the 1980s with his collaborator, Tony Butler.  Nealy was incarcerated from 1989 to 2008 and again from 2012 to 2015 (more…)

Patenting Informational Innovations: IOEngine Narrows the Printed Matter Doctrine

by Dennis Crouch

This may be a useful case for patent prosecutors to cite to the USPTO because it creates a strong dividing line for the printed matter doctrine — applying the doctrine only to cases where the claims recite the communicative content of information. 

IOEngine, LLC v. Ingenico Inc., 2021-1227 (Fed. Cir. 2024).

In this decision, the Federal Circuit partially reversed a PTAB invalidity finding against several IOEngine patent claims. The most interesting portion of the opinion focuses on the printed matter doctrine.   Under the doctrine, certain “printed matter” is given no patentable weight because it is deemed to fall outside the scope of patentable subject matter. C R Bard Inc. v. AngioDynamics, Inc., 979 F.3d 1372 (Fed. Cir. 2020).  In this case though the Federal Circuit concluded that the Board erred in giving no weight to IOEngine’s claim limitations requiring “encrypted communications” and “program code.”

The printed matter doctrine a unique and somewhat amorphous concept in patent law that straddles the line between patent eligibility under 35 U.S.C. § 101 and the novelty and non-obviousness requirements of §§ 102 and 103. (more…)

Cycling Towards Confusion: Is there room for iFIT Fitness Services and iFIT Safety Glasses?

by Dennis Crouch

In its initial decision, the TTAB dismissed iFIT’s opposition to ERB’s I-FIT FLEX registration — finding no likelihood of confusion because the goods were in separate markets.  iFIT is a major manufacturer of exercise equipment like treadmills and stationary bikes and holds several trademark registrations for IFIT marks covering fitness machines, online fitness training services and content, software, and some ancillary products like apparel.  ERB Industries applied to register I-FIT FLEX for protective and safety eyewear sold at hardware stores such as Home Depot.  Although the two brands are at-times sold in the same online store (Amazon.com and Walmart.com) this type of overlap was not sufficient for the TTAB. In its decision, the TTAB rejected iFIT’s relatedness argument using an analogy to racecar drivers and chemists. The TTAB reasoned that while some racecar drivers and chemists may use safety glasses, that doesn’t mean safety glasses are related to racecars or to chemicals like ammonia.

iFIT appealed the Federal Circuit, and most recently Federal Circuit granted (more…)

Amazon Patent Enforcement Process Can Create Personal Jurisdiction

by Dennis Crouch

In a significant decision on personal jurisdiction in patent cases, the Federal Circuit held that using Amazon’s patent enforcement process (APEX) to target an alleged infringer’s listings can subject the patent owner to specific personal jurisdiction in the alleged infringer’s home state. SnapRays, LLC v. Lighting Def. Grp. LLC, No. 2023-1184 (Fed. Cir. May 2, 2024).

Plaintiff SnapRays (d/b/a SnapPower) is a Utah company that designs and sells electrical outlet covers with USB ports and night lights. Defendant Lighting Defense Group (LDG), a Delaware company based in Arizona, owns a patent on outlet cover technology. In 2022, LDG initiated an action against SnapPower through Amazon’s Patent Evaluation Express (APEX) program (more…)