Haptic Feedback Patents: Some Survive Eligibility Challenge by Fitbit

Immersion Corp. v. Fitbit (N.D.Cal. March 5, 2018)

On 12(b)(6) motion for dismiss, Judge Koh has thrown out some of Immersion’s asserted claims covering various haptic feedback approaches. However, some claims survived:

Invalid as Abstract Idea (claims from U.S. Patent No. 8,638,301):

 27. A system comprising

a processor configured to:

receive a first sensor signal from a first sensor, the first sensor configured to detect a movement of a first mobile device;

receive a second sensor signal from a second sensor, the second sensor configured to detect an interaction with the first mobile device;

receive a first data signal from a network interface, the network interface configured to receive signals transmitted by a second mobile device;

determine a change in a display signal based at least in part on the first data signal and the second sensor signal;

determine a haptic effect based at least in part on the first data signal; and

outputting [sic] the haptic effect.

28. The system of claim 27, wherein the first sensor and the second sensor are each configured to detect one or more of: contact, pressure, acceleration, inclination, inertia, or location.

29. The system of claim 27, wherein the second sensor comprises a touch-screen.

31. The system of claim 27, wherein the processor is further configured to transmit a second data signal to the network interface, and the network interface is further configured to transmit the second data signal to the second mobile device.

Not improperly claiming an abstract idea (Claims from U.S. Patent Nos. 8,059,105 and U.S. Patent No. 8,351,299 respectively): 

14. An apparatus comprising:

a sensor that senses motion of at least a portion of the apparatus and provides a sensor output based on the sensed motion;

a timer that provides a periodic timer output;
a vibrotactile device responsive to the timer that provides a corresponding periodic haptic output; and

a processing device that receives the sensor output and accumulates counts associated with the sensor output, the processing device providing an output to the vibrotactile device providing an output to the vibrotactile device once a threshold associated with the accumulated counts is reached.

19. A haptic feedback device, comprising:

one or more processors configured to receive an input signal and generate a force signal based on the input signal, wherein the input signal is associated with a user-independent event,
the user-independent event comprising one or more of a reminder event, an initiation of a task, a processing of the task, a conclusion of the task, a receipt of an email, or an event occurring in a game; and

one or more actuators configured to receive the force signal and impart a haptic effect based on the force signal.

= = = =

Read the Order: ImmersionDismissal

Prof Hrdy: When Inventions Kill Jobs

Camilla HrdyProf. Hrdy has an interesting new blog post to accompany her paper titled Technological Un/employment.  Her work focuses on the intersection between jobs and intellectual property – looking both historically and toward the future of automation. “[T]he impact of technology on employment has historically been “skill-biased”—demand for high skills workers rises; demand for low skill workers falls.”

Although I disagree with some aspects of Prof. Hrdy’s work. I absolutely agree that the Strong IP => More Jobs statements have been largely propaganda.  It may also be true that “inventions humans make today could end up meaning there are [very few] jobs left for their grandchildren.”  The difficulty for automation is that – even in a world of plenty – that hyper-accumulation results in scarcity for the populace.

Hrdy proposes regulation to help avoid these outcomes. Her approach is actually not unique. As she explains:

The basic idea is to deprive the innovator of the benefit of an exclusive right. Believe it or not, Queen Elizabeth thought this was a good idea. She denied William Lee a patent on his spinning loom, which reduced the amount of human labor needed to spin cloth, because she feared the implications for employment of her subjects. In Queen Elizabeth’s time, no patent meant no permission. Today, the effect would be less dire – no patent just means no exclusivity; it doesn’t mean no permission to practice at all. Still, if we accept the Incentive Effect, this would still dampen incentives to automate.

Hrdy’s proposal here is not based upon an idea that efficiency is bad, but rather that it has potentially harmful distributive effects.  My own take is that “jobs” in the form we see them today need not be a societal goal.  I do have to admit though that I watched the new Mr. Rogers documentary last night at the True/False film festival where he explained that love should not be treated as a scarce resource.


SCOTUS: Damages for Foreign Lost Profits Stemming from US Infringement

by Dennis Crouch

For the most part, U.S. patent law is territorial with U.S. patents only being infringed when the invention is practiced within U.S. borders.  The law does, however, include some fuzzy borders.  One exception is 35 U.S.C. § 271(f), which creates a cause of action for supplying “components” of a patented invention from the U.S.

In WesternGeco v. ION Geophysical, the question before the Supreme Court is the level of damages available for § 271(f) infringement:

Whether … lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases in which patent infringement is proven under 35 U.S.C. § 271(f).

As presented by WesternGeco, the question presented includes a false assumption –the “combinations” at issue here do not themselves violate any law. Rather, what we are talking about here are combinations that would be prohibited if made on US soil. In its brief, the U.S. Government offers a parallel statement of the question that avoids this problem:

Whether a patent owner that has proved a domestic act of patent infringement may recover lost profits that the patentee would have earned outside the United States if that domestic infringement had not occurred.

In the usual § 271(f) cases, courts are concerned with offending other nations regulating cross-border actions.  As such, the longstanding approach of comity has led to a strong presumption against extraterritorial application of US law.  Here, however, the competition between WesternGeco and the infringer ION Geophysical takes place on the high-seas outside of the coverage of patents. The patents at issue involve marine survey equipment using lateral steering equipment.  See U.S. Patent Nos. 6,691,038; 7,080,607; 7,162,967; and 7,293,520.  A jury awarded $100 million in lost profit damages, which the Federal Circuit decision would dramatically trim.

The Supreme Court has some history with § 271(f).  First, in the pre-271(f) decision of Deepsouth Packing Company v. Laitram Corporation, 406 U.S. 518 (1972), the Supreme Court held that shipping components of an invention from the US was not infringement within the US.  That spurred Congress to amend the statute to create Section 271(f), which includes two overlapping actions:

  • (f)(1) Supply Substantial Portion + Induce: suppl[y] in or from the United States all or a substantial portion of the components of a patented invention … as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.
  • (f)(2) Supply Special Components + Knowledge: suppl[y] in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention … knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.

In Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007), the Supreme Court held that “components” did not include electronic files shipped abroad. Then, in Life Techs. Corp. v. Promega Corp., 137 S. Ct. 734, 742 (2017), the court held that (f)(1)’s “substantial portion” requirement could not be satisfied by shipment of a single commodity component.

Damages for Patent Infringement: The damages statute for patent infringement is straightforward. A prevailing patentee is entitled to “damages adequate to compensate for the infringement” with a floor of reasonable royalty.

Rather than allowing for full consequential damages in this case, the Federal Circuit applied the general “presumption against extraterritoriality” to hold that Congress did not intend for the U.S. patentee to collect damages for actions that occurred abroad.  Thus, the patentee can collect a reasonable royalty for the export of components, but cannot claim its lost business due to ION’s use of those components outside of the US jurisdiction.  One way to frame this is that the decision finds the foreign actions to be intervening acts that cut-off the proximate cause analysis.

A few Predictions: WesternGeco has asked the Supreme Court to expand-out available damages, and I expect will win here — the Court will likely at least hold that the categorical preclusion goes too far.  Because Section 271(f) is rarely used, most patentees (and potential infringers) will be looking for what the decision says about patent damages in general.

Top Side Briefs have been filed in the case, led by WesternGeco’s merits brief but accompanied by amici, including a strong brief by the U.S. Government.  Briefs in opposition will be filed within the next few weeks.

Petitioner Brief: Paul Clement’s team at Kirkland & Ellis have presented a straightforward brief that challenges the Federal Circuit’s logic:

  1. The presumption against extraterritoriality should not apply here because the statutes are clear in terms of both infringement and damages.
  2. Even if the presumption applied, it should only apply at the infringement stage, not the damages stage.
  3. Concerns regarding overreach are properly limited by traditional proximate cause analysis.

A major difficulty with WesternGeco’s analysis stems from Microsoft (2007) where the court invoked extraterritoriality principle in narrowly interpreting the statute as well as the recent non-patent decision in RJR Nabisco, Inc. v. European Community, 136 S. Ct. 2090 (2016), holding that a RICO cause of action is not available to persons who suffer only foreign injuries.

U.S. Government Brief:  The US Solicitor’s brief strongly supports WesternGeco’s position – arguing that the Federal Circuit’s prohibition on lost-profits damages is “inconsistent with the text and purpose of Section 284.”  Rather, the Federal Circuit’s rule would “systematically undercompensate[] U.S. patent owners for infringement when the patent owner derives profits from cross-border commerce.”

The US Government Brief includes some linguistic tricks — arguing on the one hand that the statute only regulates U.S. conduct but at the same time that damages should flow based upon actions taken abroad.

Houston IPLA: With help from Prof. Sapna Kumar, the Houston brief disagrees with the DOJ on the foreign conduct – yes foreign conduct is being regulated.  However, the brief argues that such regulation is permissible and fits nicely with the two step test provided in 2016 RJR Nabisco decision.  Further reading, Sapna Kumar, Patent Damages Without Borders, 25 Tex. Intell. Prop. L. J. 73 (2017).

Power Integrations: Power Integrations, Inc., has a “profound interest” in the outcome of this case because it was also barred from pursuing damages in a parallel Federal Circuit decision. Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348, 1371-72 (Fed. Cir. 2013), cert. denied, 134 S. Ct. 900 (2014).  In its brief, the company provides its version of a tutorial on the doctrine of Superseding Causation – something needed based upon the Federal Circuits errors “fundamentally misconstruing the doctrine.”

NYIPLA Brief: The NY brief differs somewhat from Power Integrations – arguing that 2013 Federal Circuit decision did not offer a prohibition on foreign profits, but instead a limit on proximate cause — i.e., causal link must be proven between the infringing acts outlined above and any damage.

Professor Yelderman: Professor Yelderman’s brief walks through several traditional principles of law that should apply here, notably:

  • Rightful Position Principle: “The proposition that actual damages should return the plaintiff to the pecuniary position she would have been in but-for the wrong is unimpeachable—it is the founding principle of the compensatory damages remedy.” (Later Yelderman does write “To be sure, the principle that a plaintiff should be restored to her rightful position is not absolute.”)
  • Remedial Practice: “Longstanding remedial principles provide no basis for drawing a line at the water’s edge, requiring a factfinder to don blinders against the very real harms Smith may have suffered in foreign markets as the direct result of Jones’s tortious acts in the United States.”

IPLA Chicago: The Chicago Brief supports petitioners position – adding to the argument a statement that the refusal to permit liability will have a significant adverse impact on U.S. businesses.  I would have some debate over that analysis – a decision for the patentee here seems most likely to have the impact of further shifting component manufacture to foreign shores.

Finally, the Law Professor Brief: Professor Tim Holbrook led a law professor brief (joined by Jason Rantanen, et. al) arguing, inter alia, that the presumption against extraterritoriality should apply at multiple levels, including interpreting the damages statute and limiting the scope of proximate cause.  Timothy R. Holbrook, Boundaries, Extraterritoriality, and Patent Infringement Damages, 92 NOTRE DAME L. REV. 1745 (2017).

Helsinn v. Teva: On Sale Bar Post AIA

by Dennis Crouch

Helsinn Healthcare v. Teva Pharma (Supreme Court 2018) [Helsinn cert petition]

Helsinn has now filed its much anticipated petition for writ of certiorari focusing on the question of how exactly the 2011 AIA changed the “on sale bar.”

Question Presented:

Whether, under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.

The well drafted petition from Williams & Connolly top Supreme Court lawyer Kannon Shanmugam has a good shot of being granted — especially if supported by a strong amicus brief from the Federal Government.  The difficulty here is that the petition asks the Supreme Court to shed an approach it has developed over the past 200 years without (in my view) a clear statutory statement from Congress.

Prior to the AIA, the On Sale Bar prevented the patenting of inventions that had been on-sale more than one year before the application’s filing date. 35 U.S.C. 102(b).  Pre-AIA, on sale activities include non-enabling secret offers to sell the invention (so long as the invention was otherwise ready-for-patenting).  Because most companies outsource elements of product development and manufacture — the rule has created potential for trapping the unwary.

I will return to this in a separate post, but the basic statutory question is whether the statutory revision eliminates secret or non-enabling sales (or some aspect thereof) from the scope of prior art.

Pre-AIA 102: A person shall be entitled to a patent unless … (b) the invention was … on sale in this country [before the critical date]

Post-AIA 102: A person shall be entitled to a patent unless . . . (1) the claimed invention was … on sale, or otherwise available to the public before the [critical date]

The statutory hook is the “otherwise available to the public” clause that the patentee here argues should be seen as also limiting the scope of the on sale bar to only include publicly available sales activity.  This statutory hook is coupled with supporting evidence from the AIA’s passage and about making prior art  is coupled with the USPTO’s interpretation of the statute in accord with Helsinn’s approach.

Cutting Down Prior Appropriation: How Paolo Bacigalupi’s The Water Knife Warns Us About Water Rights in the West

This is the second guest post coming from Michigan Law Professor Nicholson Price‘s seminar merging science fiction and legal analysis.  The author here – Kamie Cashette points her sights on the 2015 novel by American SciFi author Paolo Bacigalupi – The Water Knife. – DC

Guest Post by Kamie Cashette

Paolo Bacigalupi’s novel The Water Knife depicts the American Southwest in the not-so-distant future. Climate change has exacerbated an already scarce water supply, corporate interests have severely weakened the federal government, and states fight for water rights in ways that put Don Corleone to shame. State water agencies send employees to engage in guerrilla warfare-style tactics, like blowing up water-treatment plants and bombing dams, to make sure their territories come out on top. The places that do not manage to secure enough precious water rights, like Arizona, house masses of refugees desperate to escape to water-wealthy havens.

The world portrayed by The Water Knife strikes a particularly terrifying chord, mostly because of how plausible it seems. Bacigalupi makes painstaking efforts to incorporate modern day references into the book, from the third intake valve in Lake Mead that finished construction in 2015 to the image of a toothless Britney Spears. Moreover, the impending disappearance of the water supply in major cities like Cape Town, South Africa[1] further bridges the gap between the dystopian universe portrayed in the book and reality.


Bacigalupi’s world also seems to fit into a potentially realizable legal sphere. Today, Western states follow the prior appropriation doctrine to allocate water rights: someone who established a use of water decades or even a century ago has a higher priority over that usage than someone who begins tapping into that water today.[3] In other words, all junior water rights holders lose all of their water before the senior water rights holder has to give up a single drop. In a world of water scarcity, that makes senior water rights invaluable.

The Water Knife takes the legal framework of water rights in the West and realistically portrays the incentivized behavior in situations of extreme resource scarcity. The book centers around water rights “senior to God” that give Phoenix, Arizona some of the most senior rights on record. If Phoenix had knowledge of those rights, it would have legal claim to the water before any other state, giving it the ability to rise from its drought-induced ashes and to lay waste to its neighboring competitors. The lengths people are willing to go to in the book to get their hands on the water rights illustrates how a system of senior water rights in a situation of resource scarcity compels actors to fight each other tooth and nail instead of cooperating. As one of the characters remarks, a “[l]ot of people end up dead around these rights.”

Moreover, while the book’s portrayal of militant states and the practically non-existent role of the federal government seems outrageous, it may be within the realm of possibility. In The Water Knife, Congress passes a piece of legislation called the State Sovereignty Act, which allows states to stop U.S. citizens from other states from crossing into their borders. Freedom of movement between states has long been recognized as a fundamental constitutional right, and any suspension of that right is subject to strict scrutiny.[4] However, as the infamous decision of Korematsu v. United States[5] illustrates, rights subject to strict scrutiny have yielded to emergency and security concerns in the past. A drought so severe that it causes entire states to utterly collapse as Bacigalupi depicts could arguably fit that bill.

While the predicted Water Knife world is plausible, it is certainly not set in stone. State and local governments are trying to step in to mitigate the effects of climate change where the federal government has not. Among these efforts are lawsuits filed by cities across the country against oil companies for their contributions to global warming.[6] Additionally, on the national level, Professor Rhett Larson proposes shifting from an environmental policy paradigm hinging on climate change to one based on water security.[7] Larson also suggests using a regional approach to water security based around water basins instead of a state-by-state prior appropriations system. A book like The Water Knife that highlights the dangers of the Western water rights system and water insecurity in general makes an approach like the one advocated for by Larson more salient, and it sends a clear warning about what the future could hold. Whether the United States heeds that warning remains to be seen.

= = = = =


[1] James Longman, The Apocalyptic Atmosphere in Cape Town as Residents Struggle to Survive: Reporter’s Notebook, ABC News (Feb. 21, 2018, 1:06 PM), http://abcnews.go.com/International/reporters-notebook-apocalyptic-atmosphere-cape-town-residents-struggle/story?id=53217859.

[2] Jon Kerrin, Theewaterskloof Dam, South Africa, South African (2017), https://www.thesouthafrican.com/wp-content/uploads/2017/03/Jon-Kerrin-Theewaterskloof3.jpg.

[3] See, e.g., Prior Appropriation Law, Colo. Dep’t Nat. Resources, http://water.state.co.us/surfacewater/swrights/pages/priorapprop.aspx (last visited Feb. 23, 2018).

[4] See, e.g., United States v. Wheeler, 254 U.S. 281, 293 (1920); Saenz v. Roe, 526 U.S. 489, 500 (1999).

[5] 323 U.S. 214 (1944).

[6] See, e.g., David Zahniser, L.A. Lawmakers Look to Sue Big Oil Companies Over Climate Change—And the Costs that Stem from It, L.A. Times (Jan. 13, 2018, 5:00 AM), http://www.latimes.com/local/lanow/la-me-ln-climate-change-lawsuit-20180113-story.html.

[7] Rhett B. Larson, Water Security, 112 Nw. U. L. Rev. 139 (2017).

PTAB Reconstruing Claims: Estoppel?

Knowles Electronics v. Cirrus Logic (Fed. Cir. 2018) [Knowles Case]

Construing Claims: In a 2011 decision, the Federal Circuit construed the claims of Knowles Electronics’ U.S. Patent No. 6,781,231, including the claim term “package” as used in the claimed microelectromechanical system to mean a “self-contained unit that has two levels of connection, to the device and to a circuit (or other system).” MEMS Tech. v. Int’l Trade Comm’n, 447 F. App’x 142 (Fed. Cir. 2011). When passing judgment on the same patent five years later, the PTAB offered a slightly different construction during an inter partes reexamination. In Judge Newman’s view, that difference allowed for the PTAB to find the claims anticipated while the 2011 Federal Circuit decision found the patents valid. She writes:

The difference between [the two] constructions may not appear to be large, but the PTAB’s construction sufficed to hold claims 1–4 invalid on the ground of anticipation whereas the Federal Circuit’s construction sustained validity on the ground of anticipation

The problem, for Judge Newman, is that a decision from the PTAB’s controlling court should control the actions of the PTAB and limit its power. For its part, the PTAB generally refuses to be bound by prior claim construction decisions by District Courts, but this is the first case where the PTAB has disregarded a prior interpretation by the Federal Circuit.

Although I began with Judge Newman’s opinion. Her opinion was in dissent, the Majority (Judges Wallach and Chen) avoided the question of whether the PTAB’s must follow Federal Circuit claim construction decisions. Rather, the majority held that the PTAB construction is in “accord with the definitions adopted in Mems Tech.” Based upon this claim construction, the majority agreed that the claims were anticipated by the proffered prior art.

Written Description: The patentee also added several claims during the reexamination. However, those were rejected for lack of written description. On appeal here, the Federal Circuit affirmed – holding that the newly added limitation that “solder pads are ‘configured to mechanically attach … the package to a surface of an external printed circuit board using a solder reflow process'” was not supported by the original specification. In particular, the specification did not identify the “solder reflow process” as the connection mechanism. Here, the PTAB held that such a process was not so well known in the art that the disclosure shows possession of that process. This factual conclusion by the PTAB was easy to defend on appeal since it need only be supported by substantial evidence. Judge Newman did not offer any dissenting opinion on this aspect of the judgment.

Electronic Medical Records: Not Eligible

Ex parte Naeymi-Rad (PTAB 2018)

Intelligent Medical Objects, Inc. (IMO) has an interesting business of capturing, standardizing, and simplifying medical documentation used in 3,500 hospitals and by 450,000 doctors.  This process is critical for both treatment and payment — all in an environment where mistakes can lead to death and bankruptcy.  In the U.S., companies have spent billions of dollars on designing electronic medical record systems — yet major problems remain.

IMO’s CEO Frank Naeymi-Rad along with 11 others are listed as inventors of the company’s pending Application No. 13/622,934 – recently rejected on eligibility grounds.  The claims are directed to a software system for “implementing a controlled vocabulary” within a longitudinal medical record.   The examiner finally rejected all 14 claims for on eligibility grounds (withdrawing the obviousness rejection) — concluding that the claims are directed to the abstract idea of “providing healthcare by generating and processing medical records.”

On appeal, the PTAB sided with the examiner – holding that – at a high level of abstraction, the claims “can be characterized as collecting, storing, and organizing … and transmitting information.”   Although the examiner acknowledges that the claims are novel and non-obvious, the PTAB still found no inventive concept.

Although the second step in the Mayo/Alice framework is termed as a search for an “inventive concept,” the analysis is not an evaluation of novelty or non-obviousness.

On this point, the PTAB quoted Diamond v. Diehr:

The ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the Section 101 categories of possibly patentable subject matter.

Rather than focusing on novelty as the “inventive concept” language suggests, the PTAB indicated its second step goal is a search for something “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself” quoting Alice/Mayo.  One approach that works for patentees is to show that their invention is an improvement of computer functionality.  Here, however, the PTAB ruled that the claims simply use computer technology — “generic components … employed in a conventional manner.”

IMO argued (through its attorney Richard Beem) that the addition of patient-by-patient controlled vocabulary was a key feature that allowed the longitudinal medical records possible because it allowed for relational storage — reducing memory and increasing speed.  I expect an appeal to the Federal Circuit on these (and other) points.

I list claim 1 below:

1. A method of implementing a controlled vocabulary in a longitudinal electronic medical record, comprising:

generating a first instance of a plurality of data objects during a first encounter, said plurality of data objects comprising data elements further comprising a first instance identifier and temporal identifiers;

linking a data object in said first instance to a summarization reference with a pointer, where the plurality of data objects and the summarization reference are related as part of a directed graph data structure;

creating an additional instance of a plurality of data objects during a later encounter, said additional instance of a plurality of data objects comprising data elements further comprising an additional instance identifier and temporal identifier;

providing continuity for said plurality of data objects of said first instance over time[, wherein said providing step comprises tracking a relationship between said data object of said first instance and a data object of said additional instance];

capturing said controlled vocabulary using a computer by forming a list of medical terms and list of associated descriptions;

creating a list of codes internal to said controlled vocabulary[, wherein said controlled vocabulary maps to at least one of a reference terminology or an administrative terminology];

storing said codes, said medical terms, and said descriptions using a computer in a format suitable for use in the longitudinal electronic medical record; and

tagging elements within a domain within the longitudinal medical record with said controlled vocabulary[.]

Disputed Claim Construction Should Not Ordinarily Be Decided on 12(b)(6) Motion

Nalco v. Chem-Mod (Fed. Cir. 2018)

The district court dismissed Nalco’s patent infringement complaint with prejudice on a R. 12(b)(6) motion for failure to state a claim upon which relief can be granted. On appeal, the Federal Circuit has reversed – finding that the patentee had properly stated a claim of direct infringement, infringement under the doctrine of equivalents, indirect infringement, and willful infringement.

Nalco’s asserted U.S. Patent No. 6,808,692 covers a method of removing most of the elemental mercury from the smoke emitted by a coal plant (before it is released into the atmosphere).  Although Nalco’s approach is no better than prior methods, it is cheaper and thus more likely to be adopted.  The claimed method requires injection of a halide precursor that is then converted to a halide (by the heat of the furnace) which then binds to mercury in a form that can be easily filtered from the flue gas.

In U.S. Federal Court, a lawsuit begins with the filing of a complaint that must include sufficient allegations of fact that make the claim for relief plausible.  A complaint with factual deficiencies is can then be dismissed. Usually, a court will dismiss the case without prejudice (allowing it to be refiled with more complete factual assertions) or even informally suggest the plaintiff file an amended complaint.  Here, the Nalco has filed five different complaints (original plus four amended).  The first and third amended complaints were dismissed without prejudice.  Finally, at the fourth complaint the court dismissed with prejudice — leading to the appeal here.

In the complaints, Nalco explained in detail its theory of infringement. For its part, the district court appears to have conducted an informal claim construction that led to its ruling of no possible infringement.  The basic problem is that the patent suggests (but does not expressly claim) that a mixing of the halide precursor with other materials occurs within the flue, while the accused system pre-mixes prior to injection into the flue.

Thus, this is a case where direct infringement will likely be resolvable as a question of law following claim construction.  Here, however, the Federal Circuit rejected the lower court’s informal claim construction as premature at the pleading stage:

As Nalco explained, these disputes between the parties hinge on where “flue gas” may be located  within the power plant and what limitations are appropriate on where “injecting” may occur. It is not appropriate to resolve these disputes, or to determine whether the method claimed in the ’692 patent should be confined to the preferred embodiment, on a Rule 12(b)(6) motion, without the benefit of claim construction. The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits. (internal quotes removed)

What does this mean – although claim construction is an issue of law, the court here holds that claim construction is not the type of legal question that should normally be resolved on the pleadings without the due consideration given in the Markman process.


Walking through the complaint, the appellate panel also found improper dismissal of the patentee’s claims of infringement under the doctrine of equivalents, indirect infringement, and willful infringement.

US v. Microsoft: Searching a Server Abroad and Domestic Warrants

By Dennis Crouch

In United States v. Microsoft, the Supreme Court is asked to determine the scope of US extraterritorial police powers. Back in 2013, the Federal Government served a warrant on Microsoft seeking email records of one of its clients who was a suspected drug trafficker. Microsoft refused to comply because the emails were stored in Ireland. Although related to the Fourth Amendment, the question presented to the court centers on the scope of the Stored Communications Act – and whether warrants issued under 18 U.S.C. § 2703 can compel a US entity to retrieve and deliver materials stored abroad. Microsoft argues that the FBI should go through Irish protocol to get the information stored in Ireland. The case could have some obviously big impact on corporate disclosures abroad.

We might talk about liberty and freedom, but Microsoft’s position here is that a key way for US Citizens to maintain secrecy is to use foreign servers. Of course, few folks know the location of the clouds where their information is stored. Here, it was simply favorable tax law and a love for green that led to Microsoft’s Irish servers. A more apt question might be whether Microsoft must take action in Ireland or can the retrieval be entirely controlled from the US.

An opinion should be out by mid-June.

BETR: Innovation in Media and Entertainment Law

Mizzou’s Center for Intellectual Property and Entrepreneurship along with our Business, Entrepreneurship & Tax Law Review (BETR) is hosting its Spring Symposium this Thursday, March 1st from 9:30am until 2:00pm. Speakers include Professors Lyrissa Lidsky, Mary LaFrance, Jasmine Abdel-Khalik, Amy Sanders, Rachel Jones, and Brett Johnson. Newsy CEO Jim Spenser is the keynote. I’ll be moderating a panel on Entertainment Law. – Dennis


US v. Lundgren: When Recycling is a Crime

US v. Lundgren (11th Circuit 2018)

A pending case against recycler Eric Lundgren has now moved to the 11th Circuit Court of Appeals. Lundgren pled guilty to criminal copyright infringement and was sentenced to 15 months incarceration.  The basics are that he manufactured over 28,000 discs containing Dell/Microsoft Restore Discs and shipped them from China to the U.S.  Lundgren argued that the discs should be seen as publicly available since they don’t work without an access code and his actual plan involved using legitimate access codes that he had obtained from purchasers.  Microsoft apparently pushed the Miami FBI to pursue Lundgren for counterfeiting and last year he pled guilty to both Criminal Copyright Infringement and Conspiracy to Traffic in Counterfeit Goods.

  • 17 U.S.C. § 506(a)(1)(A) (“Any person who willfully infringes a copyright shall be punished … if the infringement was committed (A) for purposes of commercial advantage or private financial gain”).
  • 18 U.S.C. § 2320(a)(1) (“Whoever intentionally— (1) traffics in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services”).

The conspiracy to traffic in counterfeit goods is, I imagine, what really drove the charges — the problem with the discs was not only that they were Microsoft Restore discs, but that he had printed on them the Dell and Microsoft logos.  Of course, one trick with Conspiracy is that it is a future-crime – an agreement to commit a crime at some time in the future.

Because he pled guilty, Lundgren is not appealing his conviction, but rather is focusing on the 15-month prison sentence.  Basically, the sentence fits with the sentencing guidelines for the $700,000 in harm that the judge found ($25 per disc).  Lundgren argues on appeal that this calculation is incredibly off-the-mark since the discs were (at the time) given away for free by the companies.

Mark Rifkin and Randall Newman of Wolf Haldenstein (NY) are lead attorneys on the case.

PTAB: Tribal immunity does not apply to inter partes review proceedings.

Mylan and Teva v. St. Regis Mohawk Tribe (PTAB 2018)

In a long 42 page opinion, a PTAB panel has denied St. Regis Mohawk Tribe’s motion to dismiss the pending inter partes review (IPR) proceedings against its patents.  Here, the panel holds plainly that “Tribal immunity does not apply to inter partes review proceedings.”  Although the PTAB identified state sovereign immunity as a different question, the ruling here certainly suggests that

The case will be appealed to the Federal Circuit — I expect the court will be willing to hear a mandamus action, but we may have to wait until a final decision of validity — something that the equitable owner Allergan has been working hard to avoid.  The sovereign immunity question is the type of threshold question decided at the IPR petition stage.  Under the statute, PTO petition decisions are not subject to appeal. However, the issues here appear to fall squarely within the exceptions noted by the Supreme Court in Cuozzo.

Allergan owned several patents that it granted to the Mohawk Tribe back in 2017.  Although the patents are quite valuable, Allergan actually paid the Mohawk Tribe to take the patents.  The scheme allowed Allergan to still exclusively control use of the underlying inventions and potentially benefit from the Sovereign Immunity given to Indian Nations within the United States.

In reviewing whether sovereign immunity applies here, the PTAB held the following:

  • There is no statutory basis for the application of Tribal Immunity in IPR proceedings.
  • There is no controlling precedent requiring the application of Tribal Immunity in IPR proceedings. (Decisions by other Federal Agencies is not controlling precedent.)
  • Granting of sovereign immunity to the States in the IPR context does not require granting of sovereign immunity to the Indian Nations.
  • Congress granted the PTO with broad IPR authority over “any patent.”
  • In IPR actions, the jurisdiction is in rem – over the patent – rather than in personam – over the patent owner.  This means that IPRs are less offensive of any immunities.
  • IPR actions are not the “type of suit” to which tribal immunity applies at common law since petitioners are not seeking anything from the tribe (only cancellation of its valuable property rights).

The collection of these legal determinations served as the PTAB’s foundation for its final decision of no immunity.

The PTAB then went on to look at the particular situation in this case – where the Mohawk Tribe is the assignee, but Allergan holds all effective rights.  After reviewing the details of the transfer, the PTAB ruled in the end that it could treat Allergan as the “patent owner.” See Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1250 (Fed. Cir. 2000) (a “party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights.”).

I would see this case as quite different if the Mohawk Tribe had actually bought the patents or obtained them through some positive-value venture.  Here, the approach is blatant rent seeking and I am glad that the PTAB was able to work its way through.

PatCon 8 Conference in San Diego Next Week

By Jason Rantanen

Next week is PatCon, the largest annual gathering of patent law, economics, and business professors. This year’s conference takes place at University of San Diego on Friday & Saturday, March 2-3, and features Joe Matal, Carter Phillips, Patent Pilot Program judges, PTO economists, prominent local attorneys, and over 50 academics (providing up to 12.5 hours of CLE credit). I’ll be there, talking about the Compendium of Federal Circuit Decisions, one of my ongoing works in progress. More information on PatCon can be found here.

Patent Agent Privilege in Texas

In an important new decision, the Texas Supreme Court has recognized “patent-agent privilege” as a form of attorney-client privilege.  The court writes:

[B]ecause patent agents are authorized to practice law before the USPTO, they fall within [Texas Rules of Evidence] Rule 503’s definition of “lawyer,” and, as such, their clients may invoke the lawyer-client privilege to protect communications that fall within the privilege’s scope.

In re Silver (Texas 2018) [160682]


In the case, the trial court had concluded that a party’s communications with a patent agent were only privileged to the extent that the patent agent was acting under an attorney’s direction.  The court here reverses that judgment — no supervision is necessary.   The court does offer a major caveat — that communications outside of the patent agent’s authorized practice area might not be protected:

The client’s communications with a registered patent agent regarding matters outside the agent’s authorized practice area might not be protected because these communications are not necessarily made to facilitate the rendition of professional legal services.

In announcing a potential line, the court did not actually draw the line as to when a communication strays too far.Image result for texas memes

Ulbricht v. U.S.: Privacy Interest in your Home Router Traffic

by Dennis Crouch

Important petition for writ of certiorari outside of patent law, but still well within the technology law sphere: Ulbricht v. U.S., Supreme Court Docket No. 17-950, questions presented:

  1. Whether the warrantless seizure of an individual’s Internet traffic information without probable cause violates the Fourth Amendment.
  2. Whether the Sixth Amendment permits judges to find the facts necessary to support an otherwise unreasonable sentence.

Ulbricht is known as the Dread Pirate Roberts, Frosty, Altoid, and creator of the Silk Road dark web marketplace.  Here, Ulbricht challenges his conviction and sentencing for drug trafficking, money laundering, and hacking — arguing that the evidence used to convict was illegally obtained in violation of his constitutional rights.

Without warrant, the government tracked Ulbricht’s communications to a particular IP address and then began skimming data from all communications passing through his home wireless router (located in his living room).  This allowed the government to identify the source and destination of all messages, including all of Ulbricht’s devices that he used for communications (including his laptop whose seizure became the sting target). Under the Electronic Communications Privacy Act (ECPA), the government needs a court order, but does not need to show probably cause as required by the Fourth Amendment.  The government did obtain such an order prior to beginning its router-skimming operation.  The petition here argues however that the US Constitution requires more.

In its decision, the Second Circuit relied upon the analogy to old-school-telephones and held that the collected internet traffic was “akin to data captured by traditional telephonic pen registers and trap and trace devices.” As such, no warrant was needed.

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Two important telecom cases are pending before the court this term –

  • Carpenter v. United States (Whether the warrantless seizure and search of historical cellphone records revealing the location and movements of a cellphone user over the course of 127 days is permitted by the Fourth Amendment).
  • United States v. Microsoft (Whether a US provider of email services must comply with a probable-cause-based warrant by making disclosure of electronic communications within that provider’s control, but that are stored abroad in a foreign country) (Argument set for Feb 27).

Patent Eligibility: Handling Disputed Issues of Material Fact

Following the Federal Circuit’s decisions in Berkheimer, AATRIX, and ATS, the role of evidence and factual conclusions in the eligibility analysis is in a somewhat confused state. That setup makes Cleveland Clinic’s recent petition for writ of certiorari quite timely.

Cleveland Clinic Foundation v. True Health Diagnostics LLC, Supreme Court Docket No. 17-997 (2018) questions presented:

In this case, the patents were fully examined by the PTO and found to be novel and not obvious, including for one of the patents, confirmation after two ex parte reexaminations. The PTO further found that the prior art taught away from the claimed inventions. Notwithstanding …, the district court declared [the patents] invalid at the pleading stage. It gave the patents a cursory review, and refused to construe any claim terms. It took 55 separate claims – each claiming a distinct invention with many different limitations – and analyzed them as if all of the claimed inventions were a single method with two simplistic steps. The court did not permit evidentiary submissions or development of the record, and while the district court purported to take judicial notice of the prosecution history, it ignored the PTO record in its analysis. The Federal Circuit affirmed the lower court, invalidating valuable patent rights in a new and nonobvious diagnostic method using known techniques to detect an element in blood, but where the inventors had discovered that adapting known techniques for an entirely new purpose yielded medically-relevant data not known in the prior art and, in fact, taught away from by the prior art.

The questions presented are:

1. Whether the court below erred in holding, contrary to Mayo, that a method involving natural phenomena is ineligible for patent protection if it claims known techniques that have been adapted for a new use and purpose not previously known in the art.

2. Whether Mayo authorizes a district court to invalidate valuable patent rights on the pleadings when there are disputed questions of fact, a disputed question of claim construction or scope, and/or an undeveloped evidentiary record, notwithstanding the presumption of patent validity and settled procedural and Seventh Amendment safeguards that ordinarily prevent the resolution of such disputed questions on the pleadings.

The petition was filed in January and was supported by an Amicus brief filed by Raymond Mercado.  In the wake of Berkheimer and AATRIX the petitioner then filed a supplemental brief setting up the conflict between Judges Moore and Stoll on the one hand and Judge Reyna on the other (Judge Reyna was also author of the Cleveland Clinic decision).

The defendant in this case, True Health Diagnostics, has waived its right to respond to the petition. If the Supreme Court has any interest in the case, the most likely next step would be to ask True Health for responsive briefing — likely followed by a request for the views of the Solicitor General.

Eligibility: A Factual Dispute Requires Alleged Facts

The recent non-precedential opinion of Automated Tracking Solutions v. Coca Cola provides something of a backstop to AATRIX and Berkheimer.   The ATS panel includes Judges Moore and Stoll – the two leading judges pushing for more formality in considering factual conclusions underlying an eligibility decision.  In ATS, however, the panel affirmed a district court judgment on the pleadings that the asserted patent lacks eligibility.  The panel restated its prior conclusions that “patent eligibility under § 101 is a question of law that may contain underlying issues of fact.” However, in this case the court found no material facts in dispute.

The four asserted ATS patents are all directed to “inventory control” processes using RFID technology. U.S. Patent Nos. 7,551,089; 7,834,766; 8,842,013; and 8,896,449.  RFID chips include a transponder that is then identified by a reader that receives a signal via an antenna.  

Claim 1 of the ‘766 patent is listed below:

1. A system for locating, identifying and/or tracking of an object, the system comprising:

a first transponder associated with the object;

a reader that is configured to receive first transponder data via a radio frequency (RF) signal from the first transponder;

an antenna in communication with the reader and having a first coverage area;

a processor coupled to the reader, wherein the processor is configured to receive the first transponder data from the reader and to generate detection information based on the received first transponder data, the detection information comprising first sighting and last sighting of the first transponder in the first coverage area; and

a storage device that is configured to store the detection information.

In reviewing this claim, the District Court followed the Alice/Mayo two step framework asking first, whether the claim is directed toward an ineligible abstract idea and if so, whether the claim also includes an inventive step that goes beyond the ineligible aspects to transform the whole into an eligible invention. On appeal here, the Federal Circuit has affirmed. The results:

Step 1: The claim is directed to the process of collecting data, analyzing the data, and determining results based upon the analysis.  As stated, that process is an abstract idea.

Step 2: Recognizing that RFID technology was known at the time, the claim adds no inventive step beyond the abstract idea.

The patentee attempted to establish a disputed factual question – whether the RFID technology as used in the claims was “routine and conventional” at the time.  In Berkheimer, the Federal Circuit determined that issue to be a question of fact.  Here, however, the patentee had failed to make plausible factual allegations in its complaint sufficient to create a dispute here.  “The complaint alleges nothing to support ATS’s contention that RFID was a developing technology Nor does the complaint allege that any o the hardware components in the representative claims–either alone or in combination as a system–are anything but well understood, routine, and conventional.”  Rather, the specification of the patent states that RFID systems are known and can be quite simple. 

Dismissal affirmed.  

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As an aside, I’ll ask why this case was released as non-precedential while the two parallel 101 cases mentioned above were deemed precedential. Professors Lemley and Gugliuzza (BU) have accused the court (members of the court) of attempting to shift the rule by hiding precedent. Can a Court Change the Law by Saying Nothing?

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And, you have to love the drawings in the patents. You’ll notice the typical corporate shelf in figure 4 above that includes typical documents and files along with weapons, money, and narcotics.

Science Fiction Law — Still Reeling: Minority Report, Sixteen Years Later

Michigan Law Professor Nicholson Price is teaching an interesting seminar this semester merging science fiction and legal analysis.  We agreed that his students should write blog posts and that I would publish the most worthy on Patently-O.  The first post comes from Lauren Kimmel and is focused on stopping future crimes. – DC

Guest Post by Lauren Kimmel

Steven Spielberg’s Minority Report (starring Tom Cruise) was released over a decade and a half ago; and yet, in many ways, the film has withstood the test of that time. The film takes place in Washington, D.C., in the year 2054—nearly a hundred years after American writer Philip K. Dick published his original short story with the same name and general storyline. In the film, the District’s Precrime Division use futuristic and fatalistic visions of three “precogs” to detect and apprehend would-be, “heat-of-passion” murderers before they are able to carry out their respective homicides.

Sixteen years later, Minority Report offers some interesting insight about where we are in the narrative of our own law and society. For example, the science fiction of the film bears remarkable, if not alarming, similarity to the technology behind predictive policing, a term used to encompass a range of real-world precrime detection systems currently in use around the country and even across the globe. The National Institute of Justice defines predictive policing as “taking data from disparate sources, analyzing them and then using the results to anticipate, prevent and respond more effectively to future crime.” We do not know exactly what predictive policing looks like from the inside out—but these precrime detection systems likely combine crime-mapping software, statistical data, police reports, and complex algorithms to help police better anticipate the next steps of would-be criminals.

On the one hand, predictive policing presents clear benefits to the communities who make use of it; it may be helpful, for example, in halting everything from drug deals to domestic terrorist activity to mass shootings, to violent or gang-related crimes. But predictive policing also raises serious questions about our own “progress” toward a science-based society. Is science-based progress always a good thing? And, even if it is not, is this our path, for better or worse?

Predictive policing helps us write a story about when and where crime will happen, as well as who will commit it. But in the context of our imperfect society, we must ask, Is this story the right one? Importantly, the “black box” of predictive policing technology obscures from public scrutiny its process for arriving at certain crime predictions, sparking key constitutional and public policy concerns. Where does the data come from? What factors are entered into the algorithms? Are certain factors weighted more than others? Does the technology behind predictive policing change over time to incorporate new patterns and findings—and if so, how? Does it learn (a la artificial intelligence technology), or does human instruction (and, along with it, human error) play a role? Do those developers return to the black box of algorithms to clarify when a crime “occurred” but no one was ever charged (i.e., arrests vs. convictions)?

And most importantly, what is the purpose that we, as a society, want predictive policing to serve—and does the technology ultimately serve this purpose? What’s more, even though computers are not biased, the statistics feeding it might be; moreover, predictive policing is only as good as the officers and analyzers who handle the data. Even if human error, at least in the sense of data input, is not a primary concern, context may be just as important as the data itself. A lack of understanding of the context could (and likely does) exacerbate existing racial and socioeconomic tensions. For example, if police are already patrolling a poorer, primarily black neighborhood and, as a natural result, detecting more crime there than the more affluent and perhaps primarily white neighborhoods they are not monitoring (but where crime may nevertheless be occurring), the crime maps compiled using these statistics may be skewed to reflect a measured bias against the former group. Or, if poorer communities are more likely to see theft—because many individuals lack and cannot afford basic necessities—the data may similarly imply that these communities are simply more “crime-prone” than others—when there is really more to the discussion.

One last consideration and concern is the fact that these predictive policing technologies are developed and carried out by private companies, such as PredPol, HunchLab, and Upturn. We should be asking whether it is a good or bad idea to privatize these services, and trust them with developing and interpreting predictive policing technology. Consider the following quote from Rashad Robinson, Executive Director of Color of Change: “Sending corporate power and corporate interest into the criminal justice system will end in bad results. It will end in profits over people and profits over safety and justice and none of us can afford that.”  Especially when we consider what this process has done to our prison systems, it may be worth thinking twice about privatizing other aspects of the criminal justice system.

More on Prosecution Disclaimer

By Dennis Crouch

Arendi v. Google (Fed. Cir. 2018)

In its petition for inter partes review (IPR), Google argued the obviousness of all 79 claims of Arendi’s of U.S. Patent No. 6,323,853. The PTAB granted the petition (acting on behalf of the PTO Director) and issued a final decision cancelling the claims. In its decision, the PTAB followed a common district court practice of issuing alternative reasons for its judgment – holding that (1) its preferred broad claim construction rendered the claims invalid; but (2) the claims would still be invalid under a more narrow construction. On appeal, the Federal Circuit disagreed with the broad construction, but agreed with the alternative reasoning – thus affirming the obviousness holding.

One Click Substitutes: Arendi’s patent claims a process for substituting information (such as a name or address) in a document based upon a single user command. Basically, following user activation, the program will look for a first bit of information within the document – such as a name in a <NAME> field. A database is then used to lookup related information to fill other fields in the document, such as an <ADDRESS> field. The program might also update the original <NAME> field fit the formal version found in the db.

Prosecution Disclaimer: During prosecution, the claims were particularly amended to require operation “upon a single entry of the execute command by means of the input device.” In order to over come prior art, the patentee distinguished the TSO prior art reference based upon the fact that TSO required a user to select a text string while Arendi’s amended claims did “not require the user to select a text string [but] functions automatically upon a single click.” The examiner included that distinguishing point in the reasons for allowance.

During the IPR, however, the PTAB found that (1) the claims to not expressly exclude typing-in a text string; and (2) the statements by the patentee during prosecution were not sufficient to rise to a prosecution disclaimer that would narrow the claim scope; and (3) the examiner’s reasons for allowance are essentially immaterial because prosecution disclaimer is based upon applicant statements, not examiner statements.

On appeal, the Federal Circuit found “clear and unmistakable” surrender of subject matter – the requirement for prosecution disclaimer under cases such as Middleton, Inc. v. 3M, 311 F.3d 1384 (Fed. Cir. 2002); Omega Eng’g, Inc. v. Raytek Corp., 334 F.3d 1314 (Fed. Cir. 2003), Innova/Pure Water, Inc. v. Safari Water Filtration System, Inc., 381 F.3d 1111 (Fed. Cir. 2004); and Sorensen v. Int’l Trade Comm’n, 427 F.3d 1375, 1379 (Fed. Cir. 2005).

Not so easy in My View: I do not see this case as quite so easy as the Federal Circuit made-out. In particular, the patent applicant never stated or argued (on record) that its invention excluded the manual selection of text, but rather stated that “the present invention does not require the user to select a text.”  Ordinarily, an argument that a claim does not “require” a particular action is seen as a far-cry and treated quite differently from a statement that a claim “does not cover” or “disclaims coverage over” that action.  The “comprising” transition language used by the claim further builds upon this argument that no disclaimer took place.

In any event, the holding is that the scope was disclaimed and thus the first portion of the PTAB decision was rejected.

As mentioned above, the PTAB offered its decision in the alternative – and the Federal Circuit agreed with the second reason.  The claims are obvious under the second analysis since a prior art reference (Goodhand) performs “essentially the same textual analysis” and does not require the user text selection.

In sum, the PTAB found that Goodhand shows all of claim 1’s limitations, when giving effect to the prosecution disclaimer and limiting the scope of the “single entry” command. This finding is supported by substantial evidence. On the PTAB’s findings, the alternative conclusion of unpatentability on the ground of obviousness in view of Goodhand is sustained.

Claim Cancellation Affirmed