by Dennis Crouch

In a recent decision, the Federal Circuit addressed several key issues in intellectual property litigation, including the scope of "absolute litigation privilege" under Illinois law, trade dress functionality, and the consequences of discovery sanctions. Toyo Tire Corp. v. Atturo Tire Corporation, No. 2022-1817, 2022-1892 (Fed. Cir. Oct. 4, 2024).

The decision here is non-precedential, likely because it does not include any patent-law issues and thus is entirely based upon regional circuit law (here, the Seventh Circuit). Still, the case includes a number of interesting and important holdings.  In this post, I focus on two particular issues: (1) the scope of privilege against being sued for defamation or other similar torts based upon statements made in a court proceeding; (2) the strong functionality doctrine that limits protection of trade dress on three-dimensional product design.

by Dennis Crouch

The Federal Circuit is set to decide an important issue regarding the scope of prior art that can be considered during inter partes review (IPR) proceedings in the pending appeal of Lynk Labs, Inc. v. Samsung Electronics Co., Ltd.  At issue is whether section 102(a)(2) prior art qualifies for use in an IPR proceeding because those applications were not yet publicly accessible until after the priority date of the challenged patent.  This case has very significant implications because 102(a)(2) prior art is extensively used - especially in crowded and rapidly moving areas of technology.  The question, is whether this type of 102(a)(2) prior art qualifies as a "patent or printed-publication" under the IPR limits of section 311(b).   Note that the same issue is raised in  another pending CAFC case VLSI Tech. LLC v. Patent Quality Assurance LLC, No. 23-2298 (Fed. Cir.).

The dispute stems from an IPR petition filed by Samsung challenging claims of Lynk Labs' U.S. Patent No. 10,687,400 ("the '400 patent") related to LED lighting systems. Samsung's petition relied upon a prior-filed patent application ("Martin") as a key prior art reference. (Application No. 10/417,735 subsequently published as U.S. Patent App. Pub. No. 2004/0206970).  This prior application is not prior art under 102(a)(1) - because it was not patented or published until after Lynk's effective filing date. However, the prior application is prior art under the "secret springing prior art" provision of 102(a)(2), since it was on file prior to Lynk and then subsequently published.  I refer to this as "secret springing prior art" because Martin was only secretly on file at the time Lynk filed its application - later, once Martin published it suddenly became prior art --back dated to the application filing date.

The PTAB instituted review and ultimately found the challenged claims unpatentable based in part on the Martin reference.

The Federal Circuit recently issued a decision in Provisur Technologies, Inc. v. Weber, Inc., No. 23-1438 (Fed. Cir. Oct. 2, 2024), partially reversing a $10.5 million jury verdict in a patent infringement case involving food processing machinery. This decision marks the latest chapter in an ongoing legal battle between the two food processing equipment manufacturers. The case has a complex procedural history, including parallel inter partes review (IPR) that is now on petition to the U.S. Supreme Court.

This October decision covers some of the ground that the court may address in the upcoming en banc rehearing of EcoFactor v. Google, offering some foreshadowing of likely outcomes. Here, the court strongly sided with the accused infringer in requiring particularized apportionment related evidence before allowing a patentee to use the entire market value of a product as the royalty base.  In EcoFactor, the court will similarly focus on the evidentiary standard required of expert testimony on damages apportionment. Provisur was authored by Chief Judge Moore, one of the most 'pro patentee' judges -- signaling that patent owners are unlikely to smile when they read the EcoFactor decision.

by Dennis Crouch

On September 30, 2024, the Supreme Court held its long conference, and considered whether to grant certiorari in a number of pending patent cases, including the eligibility-focused petition in Eolas v. Amazon. As we await the outcome of that conference, I wanted to highlight another new elitibility petition. This one in Plotagraph v. Lightricks.

Plotagraph, Inc. along with inventors Troy Plota and Sascha Connelly petitioned the court - seeking review of a non-precedential Federal Circuit decision that invalidated five of their patents related to digital animation technology.  U.S. Patent Nos. 10,346,017, 10,558,342, 10,621,469, 11,182,641, and 11,301,119.  The patented invention allows users to animate portions of digital still photos or video frames by selecting and shifting sets of pixels to simulate motion. For example, the technology could be used to make a waterfall in a still photo appear to be flowing. The Federal Circuit affirmed a district court decision that found these patents ineligible under § 101, concluding that they were directed to the abstract idea of digital animation and lacked an inventive concept.

by Dennis Crouch

The U.S. Court of Appeals for the Federal Circuit has granted Google's en banc rehearing in EcoFactor, Inc. v. Google LLC, No. 2023-1101 (Fed. Cir. Sept. 25, 2024), focusing on the admissibility of expert testimony regarding patent damages. This will be the first en banc utility patent case since 2018.

The order vacates the panel's previous decision that had sided with the patentee and calls for new briefing on: whether the district court properly applied Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), in allowing testimony from EcoFactor's damages expert. The court has set a tight briefing schedule, with Google's opening brief due in 45 days, EcoFactor's response due 45 days later, and Google's reply due 30 days after that. Notably, the court is also welcoming amicus briefs without requiring consent or leave.  This is an important case to the patent community.  Under eBay and its progeny, equitable remedies are already tightly limited, and this case is looking to similarly tie-down damages theories to prevent large damage awards and provide further mechanisms to allow a judge to decide the outcome rather than a jury.

I begin this post with pessimism about the fundamental inquiry into patent damages.  In most cases, I see patent damages as inherently speculative. The law's hypothetical negotiation to reach a reasonable royalty is a counter-factual endeavor set so far apart from reality that its results have little real meaning.  In typical infringement cases,  there is no overlap between amounts acceptable to either party.  The baseline for a hypothetical royalty is typically determined by what the court would likely award in damages. However, this creates a circular problem, as the court's award is itself based on the hypothetical royalty. This circularity makes it challenging to establish a truly objective starting point for damage calculations.  Even when we have evidence of prior licenses -- those tend to be in wholly different scenarios where the patents have not yet been adjudged enforceable and infringed.   This distinction is important because every case I have encountered at the licensing stage includes credible arguments from the potential licensee that the patent is either not-enforceable or not-infringed.  Thus, although I see the hypothetical negotiation as a useful tool, our attempts to tightly align the historical fiction with the actual practice of patent licensing simply does not provide a real answer as to the results of such a hypothetical negotiation.

The inherent speculativeness of the hypothetical negotiation relates directly the Daubert standard and Rule 702.  In particular, the law requires that expert testimony on damages be based upon "reliable principles and methods."  And, I would reject any approach that, because of the difficulty in providing this evidence, would place a heightened burden on patentees to show they are deserving of a damage award associated with adjudged infringement.  At the same time, we have to recognize that damages experts are paid large rates because they are compelling witnesses - and there are many examples of experts using their persuasive skills to convincingly present dubious methodologies or unsupported conclusions as scientific fact. The limits imposed by Rule 702 serve a crucial purpose in this context. The gatekeeping function of the court under Daubert is particularly important in patent cases, where the technical complexity of the subject matter and the large sums at stake can make jurors especially susceptible to well-presented but potentially flawed expert opinions.  This is not an emperor's new clothes situation where a child can easily see the nakedness. The intricate patterns of economic theories, market analyses, and technical valuations woven by damages experts can be so sophisticated that even experienced judges and attorneys may find it challenging to identify flaws or inconsistencies.

by Dennis Crouch

In a nonprecedential opinion, the Federal Circuit affirmed the PTAB decision finding all claims of Novartis's U.S. Patent No. 9,220,631 unpatentably obvious. Novartis Pharma AG v. Regeneron Pharmaceuticals, Inc., No. 2023-1334 (Fed. Cir. Sept. 23, 2024). The court rejected a teaching-away argument even though the prior art had described a key component as "markedly inferior."

by Dennis Crouch

The Federal Circuit's recent decision in Astellas v. Sandoz emphasized the importance of the "party presentation principle" -- that, for the most part, courts should rely upon the parties to frame the issues that need a ruling.  Visiting Delaware, Nebraska District Court Judge Bataillon had issued a sua sponte ruling that certain pharmaceutical patent claims were invalid under 35 U.S.C. § 101 -- even though the defendant had not moved for such a ruling.  On appeal, the Federal Circuit has vacated and remanded -- "trusting" that on remand Judge Bataillon "will take an objective, measured, and thorough look into the legal issues and evidence of record to resolve only those disputes that exist between the parties."

Judge Bataillon's colorful opinion language asserted that the branded and generic pharma companies have colluded to pervert the intent of Hatch-Waxman.  On remand, it may be substantially drier.

by Dennis Crouch

The Supreme Court's landmark decision in eBay v. MercExchange dramatically changed the patent landscape by eliminating the potential of injunctive relief for many patent holders, even in the face of ongoing infringement. The Patent Act indicates that injunctions may be awarded "in accordance with the principles of equity," 35 U.S.C. 283, and in eBay, the Court found this required usage of a "four-factor test historically employed by courts of equity."  The central factor in the test for permanent relief is whether the infringement constitutes irreparable harm against the patent holder.  Prior to eBay, courts had seen infringement as indicative of irreparable harm, but altered their approach after eBay so that today a judgment of infringement comes with no presumption or indication that those tortious acts constitute irreparable harm.

A recently filed appeal before the Federal Circuit seeks to alter this new status quo -- particularly by providing an extensive historical analysis of how traditional courts of equity analyzed irreparable harm in the context of injunctive relief.  The new case is at the preliminary injunction stage, but the preliminary injunction test includes the same irreparable harm clause.

by Dennis Crouch

The Federal Circuit is set to hear oral arguments in November 2024 in Teva v. Amneal, No. 24-1936, a case that could significantly impact Orange Book patent listing (and delisting) practices under the Hatch-Waxman Act (formally known as the Drug Price Competition and Patent Term Restoration Act of 1984).  Hatch-Waxman established a framework for generic drug approvals in the United States. It aims to balance incentives for pharmaceutical innovation with mechanisms to facilitate faster generic drug entry, including provisions for challenging patents listed in the FDA's Orange Book and offering a 180-day exclusivity incentive for first generic entrants.  The Orange Book listing also comes with a powerful 30-month stay -- pausing generic entry - if the patentee sues a generic seeking FDA approval.

At issue are five patents related to Teva's ProAir HFA (albuterol sulfate) Inhalation Aerosol, a metered dose inhaler (MDI) product. The patents claim various aspects of the inhaler device and dose counter, but do not expressly recite the active ingredient albuterol sulfate. Teva listed these patents in the FDA's Orange Book for ProAir HFA.  The big-money question in the case is whether these device patents are properly listed -- recognizing that the Orange Book is particularly for patents that claim either the drug or a method of using the drug.

by Dennis Crouch

The Supreme Court's October 2024 term begins a day early this year. On September 30, the Court will meet for what has become known as the "long conference" -- passing judgment on dozens of petitions that have been briefed over the summer break.  The long conference is primarily a time to deny a large swath of petitions with very few certiorari grants.  Petitioners are usually simply hoping for a relist -- holding over their case for some future conference and a more complete consideration.

A number of patent cases will be reviewed that day.  The following are patent cases scheduled for the Long Conference, listed roughly in the decreasing order of likelihood of being granted certiorari (in my estimation):