When Co-Inventors Fail to Cooperate – Nobody Gets a Patent

by Dennis Crouch

In re VerHoef (Fed. Cir. 2018) is a sad tale of a failed partnership that doomed the patent rights.  The tale may be useful for anyone representing co-inventors involved in a start-up.  At a minimum, a corporate entity should have been created at the get-go to hold the patent rights and mitigate later breakdowns in the partnership. Notice the drawing below – even the dog looks sad.

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For patent applications filed prior to the America Invents Act implementation, the Patent Act included an express requirement that the patent applicant be the inventor.

A person shall be entitled to a patent unless - (f) he did not himself invent the subject matter sought to be patented.  35 U.S.C. 102(f) (pre-AIA)

The named in inventor in this case – Jeff VerHoef – received some help from a veterinarian Dr. Lamb. In particular, VerHoef first designed and built his prototype harness designed to provide ‘knuckling’ therapy for his dog.  Later, during a therapy session with Dr. Lamb, she suggested he consider a “figure 8” strap around the dog’s toes.  VorHoef implemented the idea then filed for patent protection — naming both himself and Dr. Lamb as co-inventors. 

Several months later, relations between VerHoef and Lamb broke-down; their original application was abandoned; and each filed their own separate patent applications. Both applications were filed on December 16, 2011 and are identical except for the names of the listed inventors.

Compare Pub. No. 20130152873 (VerHoef - at issue here) with Pub No. 20130152870 (Lamb - now abandoned).

VerHoef’s examiner examiner uncovered the parallel Lamb Application and subsequently rejected the claims under Section 102(f) — alleging that Lamb’s application provides evidence that “applicant did not invent the claimed subject matter.”  The PTAB affirmed that ruling and on appeal here the Federal Circuit has also affirmed.

For joint-inventorship, the baseline principles revolve around “conception.” Individuals who conceive of features that lead to the whole invention are generally thought of as proper joint-inventors.  However, the exact penumbra of what counts as sufficient contribution is at times difficult to exactly discern. Some cases suggest “every feature” while others require “significant contribution” as compared with the invention as a whole.  Here the court did not need to parse-out the exact limits. Rather, VerHoef admitted that the figure-eight design (1) was contributed by Lamb and (2) is an “essential feature” of the invention.

VerHoef argued that he is the sole-inventor since he “maintained intellectual domination and control over the work” at all times and since Lamb “freely volunteered” the idea of the figure eight loop during a therapy session. (“Lamb’s “naked idea was emancipated when she freely gave it to VerHoef.”)

The domination legal theory here from an  old patent board decision, Morse v. Porter, 155 U.S.P.Q. 280 (B.P.A.I. 1965).  In Porter, the Board wrote that if an inventor “maintains intellectual domination of the work of making the invention . . . he does not lose his quality as inventor by reason of having received a suggestion or material from another even if such suggestion proves to be the key that unlocks his problem.”  Porter is cited by the Patent Office MPEP inventorship section as the basis for the following heading:


Quarantining Bayh-Dole

by Dennis Crouch

National Institute of Standards and Technology (NIST) (a branch of the Department of Commerce) has announced a new initiative to “improve federal technology transfer” along with a Request for Information (RFI) published in the Federal Register.  The government is looking to “gather information about the current state of Federal technology transfer and the public’s ability to engage with Federal laboratories and access federally funded R&D through collaborations, licensing, and other mechanisms.”

The agency is broadly seeking for comments on topics including:

  1. Best practices in federal technology transfer (what are we doing right . . . and wrong);
  2. Improving efficiency and reducing regulatory burdens in order to attract private sector investment in later-stage R&D, commercialization, and advanced manufacturing;
  3. Ideas for new partnership models with the private sector, academia, other Federal agencies.
  4. Metrics and methods for evaluating the ROI outcomes and impacts arising from Federal R&D investment; and
  5. Mechanisms for significantly increasing technology transfer outcomes from the Federal sector, universities, and research organizations.

Looming large in the background of current Federal Policy is the the Bayh-Dole Act that allows universities and companies to privately patent the results of federally funded research.  In two-years, Bayh-Dole will have its 40th Anniversary — thus the “quarantine” title.



Detail Necessary for a Lawsuit: “Your Products Infringe My Patent”

by Dennis Crouch

Disc Disease Solutions v. VGH Solutions (Fed. Cir. 2018) [17-1483.Opinion.4-27-2018]

Disc Disease’s asserted patents relate to an inflatable air-brace for spinal support. U.S. Patent Nos. 8,012,113 and 7,618,509. The accused infringer sells three different inflatable spinal braces.  However, after considering the complaint filed by Disc Disease, the district court dismissed the case with prejudice for failure to state a claim upon which relief can be granted (R.12(b)(6)).  In the process, the district court rejected Disc Disease’s request to file a first amended complaint.

The timing of the complaint filing is somewhat important. It was filed on November 30, 2015 — the day before the rules of Civil Procedure were officially amended to eliminate the short-form patent complaint (Form 18).   Prior to that change, “Form 18 in the Appendix of Forms provided a form adequate to plead a direct infringement patent claim. See In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed. Cir. 2012).” Although the rules of Civil Procedure liberally allow plaintiffs to file a first-amended-complaint, the court here held that Disc Disease’s request to amend was not filed in a timely fashion and thus was appropriately rejected.

Under Iqbal and Twombly, a complaint must include allegations of fact sufficient to allow a “reasonable inference that the  defendant is liable for the alleged misconduct.”

Here, the complaint identified each of the alleged infringing products and then broadly alleged that the products meet “each and every element of at least one claim” of each asserted patent.  The claims did not include a claim chart, reference to any specific claim, or any specific element-by-element analysis.  Noting those failures, the district court ruled that the complaint lacked plausibility because it failed to “explain” the alleged infringement.

On appeal, the Federal Circuit has reversed — holding that the broad infringement allegation is sufficient under Iqbal/Twombly — at least for this relatively simple case. The court writes:

Disc Disease’s allegations are sufficient under the plausibility standard of Iqbal/Twombly. This case involves a simple technology.
The asserted patents, which were attached to the complaint, consist of only four independent claims. The complaint specifically identified the three accused products—by name and by attaching photos of the product packaging as exhibits—and alleged that the accused products meet “each and every element of at least one claim of the ’113 [or ’509] Patent, either literally or equivalently.” These disclosures and allegations are enough to provide VGH Solutions fair notice of infringement of the asserted patents. The district court, therefore, erred in dismissing Disc Disease’s complaint for failure to state a claim.

Judge Reyna’s decision here decides the case at hand, but does not provide substantial guide-posts beyond the general rule – Provide Fair Notice.  What we do know is that in a simple case it will be sufficient to simply identify (1) the patents being asserted and (2) the products being accused.


Cert Denied in Oil States Follow-On Cases

Until today, a host of patent cases have been pending before the Supreme Court — hanging onto the coattails of Oil States. Following full affirmance of the IPR regime, the Supreme Court has now denied certiorari in those cases.  The one additional case that was ripe-for-certiorari in the most recent Conference is PNC Bank National Association  v. Secure Axcess, LLC, No. 17-350.  The court issued no order in that case — suggesting that it may be up for further consideration.  In PNC, the substantive question is “whether . . . CBM review requires that the claims of the patent expressly include a ‘financial activity element?'”

CBM Review Keeps its Narrow Scope: Narrowly Surviving En Banc Challenge

As far as I know, all of the Oil States follow-on cases denied today involved a patent whose claims had been cancelled by the PTAB.  In those cases, all appeals have now seemingly been exhausted.

Cases where Certiorari was Denied:   (more…)

Twisting the Nose of Wax

by Dennis Crouch

01 Communique Lab. v. Citrix Systems (Fed. Cir. 2018)

01Com’s U.S. Patent No. 6,928,479 is directed toward a software implemented private communication portal.  The patentee sued Citrix for infringement back in 2006.  Consider that — the lawsuit was filed before eBay limited injunctive relief, before KSR made it easier to invalidate a patent as obvious, before Nautilus raised the standard for indefiniteness, before Alice and Mayo opened the door to eligibility invalidation, and before Congress created the regime of AIA trials.  The long delay in this case should also be a thing-of-the-past.  Here, the district court stayed proceedings for seven years awaiting the outcome of an inter partes reexamination.  The reexam was finally concluded in 2014 with a judgment confirming patentability of the challenged claims.  Although unsuccessful before the PTAB, a 2016 jury sided with Citrix finding on infringement — finding none.  (Note here that Citrix also unsuccessfully argued invalidity to the court and the jury).

On appeal, the Federal Circuit has affirmed — holding that a new trial is not warranted.

01Com’s basic argument on appeal was that Citrix attorneys used their weak invalidity argument to sway the jury on non-infringement — basically by arguing that what Citrix is doing now in its GoToMyPC product is a close continuation to its prior-art BuddyHelp product.

Practicing the Prior Art: The Federal Circuit has repeatedly ruled that there is no “practicing the prior art” defense to literal infringement. Although that argument makes logical sense, the court has ruled that it improperly conflates invalidity and infringement in a way that may allow defendants to skirt the requirements of either doctrine.

In Tate . . . [w]e explained that “literal infringement is determined by construing the claims and comparing them to the accused device, not by comparing the accused device to the prior art.” We noted, moreover, that while the issue of whether asserted claims read on the prior art is relevant to the question of invalidity, “accused infringers are not free to flout the requirement of proving invalidity by clear and convincing evidence by asserting a ‘practicing [the] prior art’ defense to literal infringement under the less stringent preponderance of
the evidence standard.”

Here, unlike in Tate, the Federal Circuit ruled that the defendant had actually presented evidence of non-infringement (comparing the accused device with the patent claims) as well as invalidity (comparing the prior art with the patent claims).

Causing Prejudice or Improper Bias

The patentee here also argued that it was improper for a defendant to present testimony comparing the Citrix’s prior art version with its now-accused version because that evidence would cause undue prejudice in the eyes of the jury without actually helping prove any point of law or relevant fact.

On appeal, though, the Federal Circuit sided with the accused infringer by first holding that the full-triangle comparison may be useful to ensure that claim terms are treated in the same way across all aspects of the litigation.  For this point, the court cited to its Amazon.com restatement of Justice Bradley’s 1886 “nose of wax” quote:

“A patent may not, like a nose of wax, be twisted one way to avoid anticipation and another to find infringement.”

Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001) (citations and internal quotation marks omitted).  My interpretation of this is that the jury is better off hearing the case as a whole even if it must answer distinct questions of invalidity and infringement.   Here, in particular, the district court specifically advised the jury as to the law – noting that “[t]he determination of literal infringement depends on the presence of the claim elements in the accused product, not on similarities between the accused product and the prior art.”  On appeal, the Federal Circuit found these instructions easily enough to overcome any argument for a new trial.

The patentee also complained that the district court prohibited it from telling the jury that Citrix (the defendant here) had been the one who had requested the reexamination.  On appeal, the Federal Circuit sided with the trial court – finding no error and that the court’s judgment here likely aided in avoiding undue prejudice against the defendant.

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I’ll note here as an aside that the nose of wax quote is apt once again in the context of inter partes review proceedings where the challenger asks for the broadest reasonable interpretation of claims during the IPR but then can substantially narrow its approach when back in-court discussing infringement.

Intellectual Franchise Rights

by Dennis Crouch

Josh Malone, inventor of Bunch-O-Balloons, has provided a new patent-grant graphic below.  Malone’s most recent case is before the Federal Circuit after the PTAB issued a final written decision rejecting the claims.  Interesting changes though – Just before the Federal Circuit oral arguments in this case, the PTO Solicitor withdrew its support from the PTAB’s original decision and provided notice that the PTO is actively reconsidering its approach to claim construction and indefiniteness.

[B]ecause the PTAB’s approach to claim construction and indefiniteness during post-issuance proceedings under the America Invents Act is something the agency is actively considering, the Director has decided not to advocate for a particular approach in this appeal.

[RequestToWithdraw] The question here is whether the term “substantially filled” is indefinite.  The case has interesting features in that (1) the Federal Circuit has previously approved of this claim language (but not on BRI); and (2) there is an ongoing dispute as to the application of Packard and Nautilus in AIA Trials.

Taking Steps to Strengthen our Patent System

by Dennis Crouch

In a joint statement, Secretary of Commerce Wilbur Ross and Andrei Iancu, Undersecretary of Commerce and USPTO Director, have released a joint statement following upon President Trump’s statements yesterday that the Administration is “tak[ing] steps to strengthen our patent system.”  In particular, President Trump focused on increasing “reliability and enforceability of patents.”   Following today, Iancu and Ross have announced that “The Department of Commerce and the United States Patent and Trademark Office will be taking steps to further strengthen our patent system” and that our intellectual property rights must be “strong, reliable and predictable.” They write:

Born of our Constitution and steeped in our history, our patent system is the crown jewel that provides both the incentives and the protections necessary to power innovation and growth.

This particular announcement does delve further into specifics.  However, it is clear that Iancu will be pushing for patentee-favoring modifications in AIA trial procedure as well as eligibility jurisprudence.  The tie-in with the Commerce Secretary and President suggest that Iancu will have the political backing to implement changes within the USPTO, although legislative changes are still an uphill battle.

First Steps After SAS Institute

Guest post by Saurabh Vishnubhakat, Associate Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering.  Although Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, his arguments here should not be imputed to the USPTO or to any other organization.

The Supreme Court’s decision in SAS Institute v. Iancu is likely to prove more immediately impactful to the status quo than the accompanying decision in Oil States Energy Services v. Greene’s Energy Group. The power of partial institution had been an integral part of the Patent Trial and Appeal Board’s decision-making from the start, and the all-or-nothing choice that the PTAB must now make raises four interrelated questions. One is how the agency will proceed in future cases. Another, and more pressing, is how the agency will deal with the crop of currently pending cases that were instituted as to some, but not all, patent claims in the original petition. Still another is how the litigants themselves, particularly would-be petitioners, will frame their challenges going forward. Finally, there is the question of what steps the Patent Office might take given its own altered incentives.

NB: The SAS Institute decision was the subject of a robust discussion at the April 26 Stanford IP Law and the Biosciences Conference panel on “Developments at the PTAB and the Federal Circuit.” I am indebted to my co-panelists Mark Lemley, David O’Brien, and Stefani Shanberg and to our moderator Lisa Larrimore Ouellette for sharpening my thinking on this developing issue.

Parsing the PTAB Guidance—Future Petitions

A helpful place to begin is the PTAB’s prompt and thoughtful Guidance on the Impact of SAS on AIA Trial Proceedings, issued just two days after the SAS Institute decision. As this blog pointed out in its recap of the Guidance, future petitions will be instituted as to all claims or as to none, as SAS Institute directly requires.

The Guidance goes further, however, to indicate that “if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.” This is notable because a “challenge” may be as broad as to refer to the statutory basis asserted for the invalidity of a claim, or to the prior art cited in support, or to both. For example, even if an inter partes review petition sought to invalidate just one patent claim, asserting both statutory grounds (§ 102 and § 103) and citing only two prior art references could conceivably constitute five separate “challenges” for purposes of an institution decision:

  • anticipation in light of Reference A;
  • anticipation in light of Reference B;
  • obviousness in light of Reference A;
  • obviousness in light of Reference B; and
  • obviousness in light of the combination of References A and B.

It is not self-evident that this additional step is required by the opinion in SAS Institute, which focuses on patent claims—claims that the petitioner challenged in its petition and claims as to which 35 U.S.C. § 318(a) requires a final written decision. Nevertheless, it was the same regulation, 37 C.F.R. § 42.108(a), that articulated the authority to proceed both “on all or some of the challenged claims and on all or some or the grounds of unpatentability asserted for each claim.” It is appropriately cautious, then, for the agency to step back from both together. Moreover, the Federal Circuit’s recent string of cases remanding decisions back to the PTAB for further explanation under the Chenery doctrine also makes it sensible for the agency to err on the side of inclusion when it comes to fully exploring the potential grounds for its eventual decision. More on that in a bit.

Parsing the PTAB Guidance—Currently Pending Cases

As for what to do with still-pending cases in which the PTAB has already made partial institutions, the Guidance states a policy that may seem surprising on first impression. In such cases, “the panel may issue an order supplementing the institution decision to institute on all challenges raised in the petition” (emphasis added). In other words, now that the Court has made institution an all-or-nothing proposition, the PTAB may go back and retroactively grant institution as to the rest of the petition.

What makes this policy puzzling is its apparent discretion. After SAS Institute, is the PTAB not required to issue such an order instituting the additional challenged claims?

Not necessarily. For one thing, institution is not even the only retroactive thing that the PTAB can do in this situation. Though the Guidance does not mention it, the PTAB could instead retroactively deny the entire petition (including what had previously been instituted). The reason why both of these approaches are viable is the structure of the institution standard in § 314(a): the Director, it says, may not institute unless there is a reasonable likelihood that at least 1 of the claims challenged in the petition will be canceled. This “may not . . . unless” framing means that a reasonable likelihood of success is a necessary condition, but it may or may not be a sufficient condition. Once the standard is met, whether or not to institute is discretionary. This much even the Court’s opinion accepted:

The text says only that the Director can decide “whether” to institute the requested review—not “whether and to what extent” review should proceed.

Slip op. at 8 (emphasis in original). Along similar lines, the Court also pointed out that “the language anticipates a regime where a reasonable prospect of success on a single claim justifies review of all”—justifies, not compels.

For another thing, the parties themselves may render such a supplemental order unnecessary. A joint request to terminate the case, particularly where the PTAB has yet to decide the merits, has potential benefits. Under § 317(a), the settling petitioner in such a case would escape without estoppel attaching. The patent owner, meanwhile, would likely receive a termination of the IPR altogether. It is true that § 317(a) gives the agency the power to proceed to a final written decision even after all petitioners have exited the case. However, in this of all situations, it would be a poor solution indeed for the PTAB to force itself into a final written decision on claims that it previously denied under the expectation that it would not have to issue final written decisions as to them. The mid-stream disruption that SAS Institute creates for existing cases may make settlement and jointly requested termination attractive not only to the parties but also to the PTAB.

For these reasons, a supplemental order granting institution as to all additional claims in the original petition—while permissible and perhaps even desirable—is not necessary for the PTAB to issue.

Litigant Incentives

While these pending cases are straightened out, of course, new would-be petitioners continually face a choice about whether and how to frame their petitions. For them, the stakes are now undoubtedly higher. Apart from cost constraints (including the PTAB’s recent fee increase before the SAS Institute decision was handed down) and page limits on petitions (which are difficult to circumvent only as a matter of additional cost), petitioners faced little disincentive against being overinclusive in their challenges. The possibility of partial institution meant that, so long as some arguments made it through, the remainder were not necessarily any great loss.

But now, a full denial of institution is a real possibility even for petitions that may contain some meritorious arguments, for the PTAB faces the responsibility of writing a final written decision as to every claim. That responsibility, moreover, requires increasingly through explanations under Chenery. The possibility of full denial is even more stark given that the Guidance promises that, if the PTAB institutes at all, it will institute not only as to all claims but also as to all challenges raised in the petition.

Thus, petitioners have an incentive to focus their petitions even further—when choosing claims to challenge, grounds to assert, and prior art to cite—in order to ensure that the likelihood of full institution is greater than the likelihood of full denial.

Patent Office Incentives

The incentive of the Patent Office, meanwhile, is likely to deny institution relatively more often in the wake of SAS Institute, at least initially. One reason is that the Court’s opinion has no effect on the PTAB’s ability to grant full institutions. Panels could already do so and still can. What panels now confront is the prospect of fully instituting even where some arguments in the petition may lack merit. Rather than dispense with these potentially unavailing arguments at the institution phase, where estoppel would at least arguably not attach, the only alternative left is to try all of these arguments fully, with all the Chenery obligations that such a choice entails, and the specter of estoppel looming larger than before for the petitioner. This represents a potentially significant increase in the PTAB’s workload and is not something that the Patent Office is likely to undertake lightly.

Another reason why the agency’s incentives now point more, if not entirely, toward denial is the workaround proposed in Justice Ginsburg’s dissent. Only a paragraph in length, it expressly contemplates precisely this sort of full denial of a petition, except that the PTAB in its decision to deny institution would also identify which claims were worthy of review and which claims were not. Petitioners could then refile in light of this guidance. Justice Ginsburg described this exercise as the PTAB spending its time “uselessly”—in contrast simply to allowing partial institutions and reaching the same point without the added step of refiling.

But this is actually a reasonable idea. Just as petitioners themselves now have greater incentive than before to focus their challenges in order to make full institution more tenable than full denial, the PTAB can also play a useful complementary role by explaining in its denials of institution just what it finds worthy or unworthy of review, and why. By channeling petitioners to “file new or amended petitions shorn of challenges the Board finds unworthy,” the PTAB may create additional work in the short run. Over time, however, its guidance would conserve the agency’s adjudicatory resources by discouraging the overinclusive petitioning that partial institution fostered because the PTAB had a way to manage its workload without having to discipline extravagant petitioners.

This is no longer the case, and the PTAB’s own workload is now more closely tied to the burdens that it allows petitioners to visit upon patent owners. The opinion of the Court purported not to take a stance on policy arguments about efficiency, directing such arguments to Congress. Nevertheless, the decision in SAS Institute may produce efficiency gains after all.

USPTO Guidance for Dealing with SAS Decision

by Dennis Crouch

The US Supreme Court recently decided SAS Institute Inc. v. Iancu (U.S. Apr. 24, 2018), holding that USPTO has been improperly issuing “partial-institution” and holding AIA trials on only a subset of challenged claims. The USPTO has now issued a one-page introductory guidance memorandum for procedure moving forward.  According to the Memo:

  1. The PTAB will institute as to all claims or none. Thus going forward, “if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.”
  2. For pending trials associated with a partial-institution decision, “the panel may issue an order supplementing the institution decision to institute on all challenges raised in the petition. . . . [and] may take further action to manage the trial proceeding” to take into account the shift. “For example, if the panel has instituted a trial and the case is near the end of the time allotted for filing the Patent Owner Response, the panel may extend the due date for the Patent Owner Response to enable the Patent Owner to address any additional challenges added to the proceeding.”
  3. “It is expected that the parties will work cooperatively … to resolve disputes and propose reasonable modifications to the schedule.”
  4. Questions: Trials@uspto.gov or “Chat with the Chief” webinar on Monday, April 30, 2018, from noon to 1 pm ET to discuss the SAS decision.

The guidance here makes sense except to the extent that the guidance does not appear to require ongoing panels to add the additional challenged claims.  The memo states that “the panel may issue [such] an order,” it should instead require each panel to issue such an order.

Second issue. Although I expect it was a collaborative effort with PTO management, the guidance here comes from the PTAB.  That answer matters because the Patent Act particularly divides duties between the Director (institution decisions) and the PTAB (AIA Trials). Although the Director has delegated his institution decision role to the PTAB, I don’t know that the Director has delegated authority to later expand the institution decision.

[Read the Guidance][Link to the upcoming Chat with the Chief]


President Donald J. Trump Proclaims April 26, 2018, as World Intellectual Property Day

Statement by Donald J. Trump, April 26, 2018:

On World Intellectual Property Day, we not only celebrate invention and innovation, but also we recognize how integral intellectual property rights are to our Nation’s economic competitiveness. Intellectual property rights support the arts, sciences, and technology. They also create the framework for a competitive market that leads to higher wages and more jobs for everyone. The United States is committed to protecting the intellectual property rights of our companies and ensuring a level playing field in the world economy for our Nation’s creators, inventors, and entrepreneurs.

Our country will no longer turn a blind eye to the theft of American jobs, wealth, and intellectual property through the unfair and unscrupulous economic practices of some foreign actors. These practices are harmful not only to our Nation’s businesses and workers but to our national security as well. Intellectual property theft is estimated to cost our economy as much as $600 billion a year. To protect our economic and national security, I have directed Federal agencies to aggressively respond to the theft of American intellectual property. In combatting this intellectual property theft, and in enforcing fair and reciprocal trade policy, we will protect American jobs and promote global innovation. (more…)

The Supreme Court and IPRs – a Mixed and Messy Bag of Results

The following guest post is written by Brad D. Pedersen, Patent Practice Chair at Patterson Thuente.  It originally ran in the PT newsletter.

In Oil States, Justice Thomas authored the 7-2 majority decision affirming the constitutionality of IPR proceedings over challenges based on Article III separation of powers and the 7th Amendment Right to Trial by Jury.  Depending upon which camp you are in, this will be seen as either generally favorable (petitioners) or generally unfavorable (patent owners).

In the parallel SAS Institute decision, Justice Gorsuch authored the 5-4 majority decision strictly construing what the Patent Trial and Appeal Board must rule upon in a Final Written Decision at the end of an IPR trial. In overturning USPTO rulemaking, Justice Gorsuch held that the Board is not authorized to render so-called “partial institution” decisions. Instead, the statute is clear that the Board must address all of the claims that are being challenged by a petition in a Final Written Decision at the end of an IPR trial. Regardless of which camp you are in, this decision is a mixed and messy bag of results.

The SAS Institute decision creates immediate chaos and uncertainty for the hundreds, if not thousands, of IPR proceedings for which an IPR trial has been instituted but all appeals are not yet finalized. Will IPR cases already on appeal be remanded, en mass, by the Federal Circuit back to the Board to effectively rework each Final Written Decision?  Will parties be allowed to introduce evidence and/or arguments in pending IPR trials relative to claims for which an IPR trial was not instituted, and would this apply if pending appeals are remanded? If non-instituted claims must now be addressed in each Final Written Decision, does that effectively end the partial approach to patentee estoppels set forth in the Federal Circuit’s Shaw Industries decision (817 F.3d 1293)?

On the brighter side. the mixed and messy SAS Institute decision may be the push Congress needs to revisit the America Invents Act and address the many issues relating to fairness, procedures, claim construction, claim amendments, and burdens of proof that commentators have raised regarding IPR proceedings.

In the interim, it is likely that the USPTO will be forced to provide some type of stop-gap measure in response to the SAS Institute decision. The Office will need to promulgate rules as quickly as they can on how to deal with claims challenged in a petition that were not part of the claims for which an IPR trial was instituted. One approach to such a stop-gap solution would be to promulgate rules that no new evidence or arguments can be introduced by the parties during an IPR trial for any claims which did not meet the threshold test for institution, and that the Board will repeat the same analysis set forth in the Decision to Institute relative to such non-instituted claims as part of any Final Written Decision.  USPTO rule promulgation, however, is never a quick and clean process, so it may be at least several months before even stop-gap measures will be in place.

Together, the two decisions on IPRs handed down by the Supreme Court today forecast an active and uncertain summer in the world of IPRs.

Unclean Hands Applied to Cancel Legal Damages Award

by Dennis Crouch

This is an important decision here – applying the equitable defense of unclean hands in a unique way to overturn a $200 million jury verdict.  Although the opinion rests on shaky ground (my view), it is now the law of the land. 

Gilead Sciences v. Merck (Fed. Cir. 2018)

The district court rejected a $200 million jury verdict against Gilead’s infringing Hep-C sofosbufir drugs.  Rather than enforcing the jury verdict, the district court held instead that the patents are unenforceable due to Merck’s “unclean hands” involving both business and litigation misconduct. The district court explained:

The record … reflects a pervasive pattern of misconduct by Merck and its agents constituting unclean hands, which renders Merck’s ‘499 and ‘712 Patents unenforceable against Gilead. . . .

Candor and honesty define the contours of the legal system. When a company allows and supports its own attorney to violate these principles, it shares the consequences of those actions. Here, Merck’s patent attorney, responsible for prosecuting the patents-in-suit, was dishonest and duplicitous in his actions with Pharmasset, with Gilead and with this Court, thus crossing the line to egregious misconduct. Merck is guilty of unclear hands and forfeits its right to prosecute this action against Gilead.

On appeal, the Federal Circuit has affirmed – seemingly rendering the two asserted U.S. Patent Nos. 7,105,499 and 8,481,712 effectively moot.

As I discuss below, the decision has a few substantial problems — most notably is the fact that the unclean-hands traditionally only applies to block a party from seeking equitable relief (as opposed to legal relief).  In the end, it appears that Merck was only seeking compensatory money damages — something purely legal.  I know that Merck originally requested declaratory judgment of infringement (prior to Giliad’s market release), but the actual claim before the jury was for infringement and compensatory damages.  Further, declaratory judgment is now seen as a statutory right rather than an equitable doctrine.  We should draw here a strong parallel with SCA Hygiene Prods. V. First Quality Baby Prods. (Supreme Court. 2017) (Equitable defense of laches cannot bar legal damages in patent cases).  Further, it appears to me that Merck did not request injunctive relief in this case (based upon my reading of their counterclaim).

The facts as decided found by the district court:

  • 2001: Merck filed patent applications that eventually led to the patents-in-suit here. Merck Chemist/Patent-Attorney Phillipe Durette helped with the prosecution.
  • 2002: Jeremy Clark working for a predecessor to Gilead (Pharmasset) was begin reviewing Merck’s early published patent applications “looking for loopholes.”  Clark hit upon a proposed compound that led to sofosbuvir – the active drug at issue in this case.
  • 2003, Pharmasset (Clark) filed a patent application the sofosbuvir creation.
  • 2004 Merck and Pharmasset began to collaborate on development, but setup (1) a non-disclosure agreement and (2) a FIREWALL blocking Merck patent prosecutors from seeing details of Pharmasset.  However, in a PHONE CALL, Patent Attorney Durette was told about the secret Clark patent application.  After the phone call, Durette stopped his participation in the collaboration, but continued to prosecute the Merck patents.
  • 2005 the Pharmasset (Clark) patent application became public, and Durette then amended the claims in the Merck applications to specifically target on the same compound.
  • Durette worked the first application until it issued in 2006.
  • A separate attorney (Jeffrey Bergman) took over prosecution for Merck in 2010 and narrowed so that the claims targeted metabolites of the same sofosbuvir compound.
  • Later at trial, Durette served as the corporate (R. 30(b)(6)) witness for Merck and the district court found that he gave false testimony in his deposition — denying that he had been part of the PHONE CALL.

Here, the real problem for Merck is that its agent Durette (1) joined the call against the FIREWALL; then (2) continued to prosecute the applications after improperly learning of the information; and (3) lied about it at trial.  Collectively, those were enough for an unclean hands finding.  Note here that unclean hands sits in the background of several legal defenses: (a) the defendant alleged failure of written description, but the jury found that the amended claims were fully supported by the original specification; (b) the defendant alleged an implied license; but the court found otherwise; (c) there might have been a violation of the non-disclosure agreement, but that defense did not apply since Merck’s application was filed after the Pharmasset (Clark) application became public; (d) the defendant could have sued for breach of contract or unfair competition, but it did not.

The doctrine of unclean hands has long been part of the U.S. law operating under the maxim: “those seeking equity must do equity.” In other words, a party asking for equitable relief must come with clean hands.   In the 1933 case of Keystone Driller Co. v. General Excavator Co., the Supreme Court Court spelled out how the doctrine operates in patent cases. The court began with the traditional maxim that a “[c]omplainant, to be entitled to equitable relief, must not only show that he has good cause of action, but that he comes into court with clean hands.”

He must be frank and fair with the court, nothing about the case under consideration should be guarded, but everything that tends to a full and fair determination of the matters in controversy should be placed before the court.’ Story’s Equity Jurisprudence (14th Ed.) s 98. . . . This court has declared: ‘It is a principle in chancery, that he who asks relief must have acted in good faith. The equitable powers of this court can never be exerted in behalf of one who has acted fraudulently, or who by deceit or any unfair means has gained an advantage. To aid a party in such a case would make this court the abetter of iniquity.’ Bein v. Heath, 6 How. 228, 247, 12 L.Ed. 416.

Of course, the “clean hands” must be tied to the matter in litigation — courts look to see whether the bad-acts are connected to the cause of action at issue.  In Therasense, the Federal Circuit reviewed Keystone:

Keystone involved the manufacture and suppression of evidence. The patentee knew of “a possible prior use” by a third party prior to filing a patent application but did not inform the PTO. After the issuance of the patent, the patentee paid the prior user to sign a false affidavit stating that his use was an abandoned experiment and bought his agreement to keep secret the details of the prior use and to suppress evidence. With these preparations in place, the patentee then asserted this patent, along with two other patents, against Byers Machine Co. (“Byers”).  Unaware of the prior use and of the cover-up, the court held the patents valid and infringed and granted an injunction. The patentee then asserted the same patents against General Excavator Co. and sought a temporary injunction based on the decree in the previous Byers case. The district court denied the injunctions but made the defendants post bonds. The defendants discovered and introduced evidence of the corrupt transaction between the patentee and the prior user. The district court declined to dismiss these cases for unclean hands. On appeal, the Sixth Circuit reversed and remanded with instructions to dismiss the complaints. The Supreme Court affirmed.
The Supreme Court explained that if the corrupt transaction between the patentee and the prior user had been discovered in the previous Byers case, “the court undoubtedly would have been warranted in holding it sufficient to require dismissal of the cause of action.” Id. at 246, 54 S.Ct. 146. Because the patentee used the Byers decree to seek an injunction in the cases against General Excavator Co. and Osgood Co., it did not come to the court with clean hands, and dismissal of these cases was appropriate.

One thing that the Therasense court missed here in its discussion of Keystone is that the equitable defense was applied to the equitable remedies sought by the patentee. It was not a direct defense to the associated legal remedies.

In this case Merck ultimately asked the court for a purely legal remedy (compensatory damages) for Gilead’s admitted infringement — I am hard-pressed to understand how unclean hands now fits into the picture as a defense.

= = = = =

I’ll note here that the thrust of Merck’s argument is that the bad-acts were not material since Merck did not take any advantage of the knowledge until after the Gilead patent published.  And, at that point, it was standard patent practice to amend claims to parallel a competitor’s patent application.  Thus, the bad acts (at least pre-litigation) might not be considered the but-for cause (materiality standard for inequitable conduct).  Here, however, the court refused to extend the strict Therasense materiality standard to the unclean hands doctrine.

SAS Institute v. Iancu: Shifting IPR and Litigation Strategies

by Dennis Crouch

In SAS Institute, Inc. v. Iancu (2018) [16-969_f2qg], the Supreme Court issued a split 5-4 decision holding that:

When the Patent Office institutes an inter partes review, it must decide the patentability of all of the claims the petitioner has challenged.

Although quite narrow, the decision reversed the PTO’s prior interpretation of the IPR statutes and will likely impact IPR strategies both for petitioners and patentees.

Any Patent Claim Challenged: Private parties may challenge an issued patent by filing an inter partes review (IPR) petition.  The petition must specify which claims are being challenged, and explain why the challenge is likely to succeed.  Under the statutory provisions, the USPTO Director must then decide whether or not to grant the petition and institute a trial before the Patent Trial and Appeal Board (PTAB or Board).  At the conclusion of the trial, the Section 318(a) of the Patent Act indicates that the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added [during the IPR].”  35 U.S.C. §318(a). The Supreme Court decision here is tightly focused on statutory interpretation — holding that the statute requires that the PTO decide the patentability of all challenged claims (that are not dismissed).  The PTO had interpreted the statute to allow for partial-institution-decisions.

In the case before the court, SAS had challenged all 16 claims of the ComplementSoft U.S. Patent No. 7,110,936.  However, rather than instituting on all claims, the PTO only instituted review of 9 claims.  Writing for the majority, Justice Gorsuch explained:

The Director (in truth the Board acting on the Director’s behalf) . . . instituted review on only some (claims 1 and 3–10) and denied review on the rest.

Once a final judgment was issued by the PTAB (finding eight of the nine unpatentable), SAS appealed — arguing that the statute required decisions on the remaining five claims.

Now, SAS will get its opportunity. For SAS, the potential to challenge these additional claims may help the company avoid having to fight those claims in court.  In addition, the all-challenged-claims rule may also serve as a bargaining chip for the patent challenger in any settlement hearings.

Although the patent-challenger may benefit in this particular case, I expect that the overall benefit from the decision will help patentees. In particular, most non-instituted claims are ones that would likely have been confirmed as patentable.  That decision from the PTAB will lend strength to patentee claims in court and also raise estoppel problems down the road for patent challengers.

Simplifying petitions decisions: The decision here should simplify the petition institution decisions.  Following SAS, the question should simply be whether there is at least 1 challenged claim where the petitioner has presented a “reasonable likelihood” of prevailing on the merits.  35 U.S.C. 314(a).

The majority did not spend time on policy determinations — instead simply stating that the PTO should take its case to Congress.

The Director’s policy argument—that partial institution is efficient because it permits the Board to focus on the most promising challenges and avoid spending time and resources on others—is properly addressed to Congress, not this Court.

It will be interesting to see whether new PTO Director Iancu will go to congress on this point – I expect not, unless there are clear efficiency concerns. At this point, the Office only provided the following statement:

The USPTO is carefully considering the Supreme Court’s decisions and determining their impact on various proceedings at the PTAB.

Deference: An important element of the decision for administrative law folks is the majority statements regarding Chevron deference:

[W]hether Chevron should remain is a question we may leave for another day. Even under Chevron, we owe an agency’s interpretation of the law no deference unless, after “employing traditional tools of statutory construction,” we find ourselves unable to discern Congress’s meaning.

Here, the majority found no ambiguity — and thus gave no deference to the PTO.  I expect that the 5-4 split between the justices in this case largely comes down this particular question — when should courts give deference to legal interpretations made by expert administrative agencies?  Supreme Court precedent on the issue continues to be messy, although there remains some thought that Congress will solve the problem by actually spelling out whether deference applies when it writes its statutes.

On a final issue, the PTO argued that the question before the court was effectively a challenge to the PTO petition decision — something made expressly unappealable by the Patent Act §314(d).  “Even if the statute forbids his partial institution practice, the Director suggests we lack the power to say so.”  However, the majority disagreed with the PTO Director — holding that the case here involves “exactly the sort” of “shenanigans” that serve as exceptions to the Cuozzo rule.

Writing in dissent, Justice Ginsberg, joined by the other three most liberal justices, calls Gorsuch’s reading “wooden” and lacking of any true understanding or indication of congressional intent: “Court’s opinion offers no persuasive answer to that question, and no cause to believe Congress wanted the Board to spend its time so uselessly.”

Coming back to Deference: A more thorough dissent by Justice Breyer explains his position that the statute offers enough of a gap in certainty to allow the PTO to fill-in its interpretation and be given deference for that gap-filling.

Because I believe there is such a gap and because the Patent Office’s interpretation of the ambiguous phrase is reasonable, I would conclude that the Patent Office’s interpretation is lawful.

(Breyer in dissent.) Overall, this is a set of nicely written decisions that serve as an example in the patent law field of the broader and ongoing administrative law debate over the role of administrative agencies in interpreting their governing statutes.

Oil States and SAS are out

By Jason Rantanen

Oil States Energy Services v. Greene’s Energy Group: Inter partes review does not violate Article III or the 7th Amendment.  Patents are public rights for purposes of this question.  This holding is a self-proclaimed narrow one that “should not be misconstrued as suggesting that patents are not property for the purposes of the Due Process Clause or Takings Clause.” Thomas for the majority; Breyer with a concurring opinion (joined by Ginsburg and Sotomayor), Gorsuch dissenting (joined by Roberts).  Opinion here: Oil States v. Greene’s Energy

SAS Institute v. Iancu: When the USPTO institutes an inter partes review, it must decide the patentability of all of the claims the petitioner challenged, based on the plain text of § 318(a).  Gorsuch for the majority; Ginsburg dissenting (joined by Bryer, Sotomayor, and Kagan); Breyer dissenting (joined by Ginsburg and Sotomayor, and Kagan in part).  Opinion here: SAS v. Iancu

Off to teach Administrative Law, so more to come later.

Update: Prof. Tom Cotter has a longer summary on his Comparative Patent Remedies blog: http://comparativepatentremedies.blogspot.com/2018/04/us-supreme-court-upholds-inter-partes.html



Ned Heller – 1947-2018

I learned today that Ned Heller has died.

Edward Peter (‘Ned’) Heller III, 70, of Aptos, California, died Tuesday, April 10, 2018, at University of California-San Francisco Medical Center in San Francisco, California.

Edward was a patent attorney and chief patent counsel for Alliacense Limited LLC, and previously was chief IP counsel for Seagate Technology and Control Data. He served on numerous advisory boards, including the Board of Directors of Intellectual Property Owners Association, for which he was chair of its Patent Law Committee; and was a longtime member of the Board of the Inventors Hall of Fame. Edward loved history and politics and spoke about them frequently. He could speak for hours on such topics, especially the Roman Empire.

It was Ned who initially researched and briefed the constitutional questions at issue in Oil States. Heller represented MCM v. HP in a parallel bid for consideration of the Article III issues.  He loved to debate the role of scire facias within the 18th and 19th Century Chancery court of England.

Over the years, Ned posted hundreds of comments on Patently-O, his final comment in March of this year was typical. He wrote:

Government is necessary to protect rights; but once we have government, those in power can use that power to feather their own nests by favoring the interests of the few, and the powerful, over the interests of the public.

Our founding fathers understood this well and tried to disperse power, and to balance it.

Which is why Oil States is so necessary to patent law. Removing the courts from patent validity concentrates too much power in the PTO. Even if that institution were not corrupt at the beginning, having so much power inevitably will lead to corruption.

Thank you Ned! I will be looking for you on your next go-round.

Assignor-Estoppel and Damage Apportionment

by Dennis Crouch

In EVE-USA v. Mentor Graphics, petitioner raises two important questions of patent law involving assignor-estoppel and damage apportionment respectively.  Here, EVE-USA was founded by former Mentor employee-inventors.  Initially Mentor licensed-back their patents, but terminated that license when Synopsys acquired EVE.  The resulting lawsuit ended with a $36 million jury verdict for infringement of U.S. Patent No. 6,240,376. Note here, Mentor owns the ‘376 patent, but the two listed inventors – Luc Burgun and Alain Raynaud – are the co-founders EVE.

In January, I suggested that the case has a good shot of being heard by the Supreme Court. Today, the Supreme Court requested the Solicitor General file views of the U.S. Government on the issue — tilting the odds significantly further toward grant.

Supreme Court on Damage Apportionment and Assignor Estoppel

Assignor Estoppel: Although the patent act expressly indicates that invalidity is a defense to patent infringement, courts applied “assignor estoppel” to prevent EVE-USA (through its parent company Synopsys) from challenging the patent validity.  Here, the court effectively pierced the corporate veil to extend the traditional inventor limits to their corporate entities as well.  The question presented by the adjudged infringer:

1. [W]hether, and under what circumstances, assignors and their privies are free to contest a patent’s validity.

Apportionment of Damages in Lost Profits Cases: The second issue involves damages apportionment in cases where the patent covers a feature or portion of a whole product and where the patentee claims lost-profits derived from sales of the product itself.  The infringer here argues that the Federal Circuit improperly “permits patentees to recover lost profits damages for an entire multi-component product, without apportioning the value between patented and unpatented features, simply by showing that the patentee would have made the sale ‘but for’ the infringement.”  Thus, the question presented is:

2. Did the Federal Circuit err in holding that proof of but-for causation, without more, satisfies the requirement that damages be apportioned between patented and unpatented features?

When I wrote in January, Mentor had not filed its brief in opposition.  Now, the party briefs are in.  US Government tends to be fairly slow in submitting its views in the CVSG situation — thus, I would not expect a brief before Autumn.

Documents in the Case:

  • Federal Circuit Decision
  • Federal Circuit En Banc Denial
  • Petition for Writ of Certiorari (EVE-USA)
  • Opposition Brief  (Mentor)
  • Reply Brief (EVE-USA)
  • Law Professor Brief (Bernard Chao): “An unbroken line of Supreme Court precedent holds that apportionment analysis is required in all damages calculations.”
  • Eric Bensen Brief: “The patentee has the burden of identifying the portion of its lost profit that would have been attributable to the value of its patented invention as opposed to the value of the article’s unpatented components. It is only that portion that a patentee seeking a lost profits award may recover as damages under the Patent Act. Were it otherwise, a patentee could use a patent on a small feature to restrict the sale of goods that would otherwise trade freely in the marketplace.”
  • Law Professor Brief (Stanford Clinic): Assignor estoppel should be limited to cases such as bad faith negotiations and only rarely applied to those in privy with the assignor.  This brief substantially follows Mark Lemley’s article on the topic.
  • HP, EBay, Oracle, et. al: The Federal Circuit’s “all or nothing” approach in the lost profit scenario “creates the risk of large damages awards far out of proportion to the value created by the patented features. This risk,
    in turn, gives undue leverage to patentees and imposes potentially prohibitive costs on doing business—even in products and services that largely reflect the accused infringer’s own innovation.”

In its opposition brief, Mentor argues that petitioner waived any argument relating to assignor estoppel “except that the doctrine should be abolished entirely;”

New Patently-O Email Service

I’m happy to announce that we’re moving our Patently-O Daily Review Email to a new provider – MailChimp.  We have been using Google’s FEEDBURNER, but that service has continued to degrade over time.  The new version should be easier to read on all devices.

About 25,000 folks are signed-up to receive the daily email. If you have not already signed up, you can add your name here: [https://patentlyo.com/subscribe-patently-crouch].  Big thank you to Patently-O’s lead sponsor MBHB LLP for helping with this transition.

– Dennis Crouch

Proving the Factual Underpinnings of Eligibility

by Dennis Crouch

Director Iancu has made clear that the current state of patent eligibility jurisprudence is untenable.  Examiners need clear guidance — something he and I both see as lacking in the Supreme Court jurisprudence.  In addition to being ambiguous, we also share the perspective that the Alice/Mayo test unduly restricts the scope of eligible subject matter.  The PTO’s action here involves several fronts: (1) issuing guidance that is as-clear-as-possible for examiners and applicants; (2) working with Congress to legislatively broaden eligibility scope; (3) using the PTO’s to push public sentiment toward supporting strong and broad patent rights (when an underlying invention truly exists).

On the first front, the USPTO has: (1) issued a new “Berkheimer memorandum” focusing on the Federal Circuit’s holding in Berkheimer that”[w]hether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination;” and (2) issued a Request for Public Comment on USPTO “subject matter eligibility guidance, and particularly … guidance in the Berkheimer memorandum to the Patent Examining Corps.”

The USPTO follows a multi-step process in determining patent eligibility.  First, the office considers whether the invention meets the express statutory requirements under Section 101 (“process, machine, manufacture, or composition of matter, or . . . improvement thereof”).  This first step is at times called either Step 0 or Step 1 of the eligibility analysis.  After satisfying the statute, the PTO must then consider whether the atextual limitations apply (abstract idea, law of nature, natural phenomenon).  In Alice/Mayo, the Supreme Court explained that this later inquiry involves two sub-steps identified as either (a) Alice/Mayo Step 1 and 2 or (b) Step 2A and 2B of the USPTO Eligibility Guidance.   In the two sub-steps, the Agency must first determine whether the claim is directed toward one of the eligibility exceptions. Then, if so directed, determine whether the claim includes “significantly more” than the ineligible concept — such as an “inventive concept.”

Although eligibility is considered a question of law, an open issue is the extent that  underlying elements are questions of fact.  In Berkheimer, the Federal Circuit started to answer this question — by holding that “whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact.”

Running with that holding the Berkheimer memo requires examiners base any conclusion of well-understoodness upon evidence. Running in the background here is a reminder that patent examination begins with an assumption of patent eligibility unless the examiner shows otherwise.   In the memo, the PTO identifies four ways to prove that an element is well-understood in the art:

  1. An express admission by the applicant;
  2. A citation to a PTO-approved court decision holding that a the particular element at issue is well-understood in the art;
  3. “A citation to a publication that demonstrates the well-understood, routine, conventional nature of the additional element.” Here, the focus is not simply whether the element was known in the prior art, but whether it was “widely prevalent or in common use in the relevant field.” Here, the USPTO draws in written-description doctrine – noting that this is “comparable to the types of activity or elements that are so well-known that they do not need to be described in detail in a patent application to satisfy 35 U.S.C. 112(a); or
  4. Taking “official notice” of the well-understoodness of the element.  The memorandum cautions that “[t]his option should be used only when the examiner is certain, based upon his or her personal knowledge, that the additional element represents well-understood, routine, conventional activity engaged in by those in the relevant art, in that the additional elements are widely prevalent or in common use in the relevant field, comparable to the types of activity or elements that are so well-known that they do not need to be described in detail in a patent application to satisfy 35 U.S.C. 112(a).”  Further, if an applicant challenges the “official notice” then the examiner must provide direct evidence to satisfy the element.

The PTO is looking for commentary by August 20, 2018 to Eligibility2018@uspto.gov.

Requirement to Issue Opinions

by Dennis Crouch

New petition for writ of certiorari to the U.S. Supreme Court in Security People, Inc. v. Ojmar US LLC (17-1443).

Question by the patentee Security People presented:

Whether the Federal Circuit’s issuance of Rule 36 judgments without opinions for the disposition of appeals from the Patent and Trademark Office violates 35 U.S.C. § 144’s requirement that the Federal Circuit “shall issue” its “mandate and opinion” for such appeals.

[Read the Complaint]. The question here stems from my 2017 article arguing that R.36 judgments are improper when issued in appeals from PTO decisions.  The question is also the same as that asked in a number of still pending petitions for writ of certiorari:

  • Celgard, LLC v. Lancu (No. 16-1526)
  • C-Cation Tech., LLC v. Arris Group, Inc., et al. (No. 17-617)
  • Integrated Claims Sys., LLC v. Travelers Lloyds of Texas Ins. Co., et al. (No. 17-330)
  • Stambler v. Mastercard International Inc. (No. 17-1140) (question #2).

In Security People, the underlying Inter Partes Review involves a challenge to Claim 4 of Petitioner’s U.S. Patent No. 6,655,180 covering a “locker lock with adjustable bolt.”  The Board found the claim invalid as obvious based upon the combination of two prior art references. 

DNC v. Russia: Hacking, Copyright Infringement, and Trade Secret Misappropriations

I teach internet law, and focus substantial time on computer privacy and cyber security law.  The core anti-hacking statute is the Computer Fraud and Abuse Act (18 U.S.C. 1030(a)). Although I’m somewhat surprised by the new DNC v. Russia lawsuit, it is not surprising that the CFAA serves as a primary basis for the lawsuit.

[Read the Complaint]

In addition to Russia, the Democratic National Committee (DNC) also joined Donald Trump Jr., Paul Manafort, Wikileaks Wikipedia, Julian Assange, Jared Kushner, Guccifer 2.0, and others as defendants alleging violations of a wide array of federal laws, including the CFAA, RICO the Wiretap Act, the Stored Communications Act, the DMCA, and the Defend Trade Secrets Act, as well as common law trespass and trespass to chattels.

The complaint begins:

In the run-up to the 2016 election, Russia mounted a brazen attack on American Democracy. The opening salvo was a cyberattack on the DNC, carried out on American soil.  In 2015 and 2016, Russian intelligence services hacked into the DNC’s computers, penetrated its phone systems, and exfiltrated tens of thousands of documents and emails. Russia then used this stolen information . . . supporting the campaign of Donald J. Trump (“Trump”), whose policies would benefit the Kremlin.

In the Trump campaign, Russia found a willing and active partner in this effort . . . Through multiple meetings, emails, and other communications, these Russian agents made clear that their government supported Trump and was prepared to use stolen emails and other information to damage his opponent and the Democratic party.

The intellectual property claims here are two-fold:

  1. Violation of the anti-circumvention provisions of the DMCA; and
  2. Trade secret misappropriation.

The DMCA’s anti-circumvention provisions provide a cause of action against someone who circumvents a “technological measure” used to control access to a copyrighted work:

No person shall circumvent a technological measure that effectively controls access to a work protected under this title.

17 U.S.C. 1201. Here, the argument is that the firewalls and passwords protecting the DNC computers were the “technological measures” used to protect the files, documents, and emails — all of which are copyrighted.

Similarly, the DNC argues that those files also contain trade secret material.  Here, the DNC argues that – although a non-profit – the DNC is in business.  “Specifically, the DNC is in the business of supporting Democratic political campaigns.” The stolen documents included important strategic information whose value required secrecy.

Although clearly politically motivated, it will be interesting to follow the development of the lawsuit.