This is an unusual new lawsuit filed by Martin Hoyle against several former USPTO officials, including former USPTO Director Michell Lee; former PTAB Chief James D. Smith; and former vice-chief Jay Moore. The complaint argues that the defendants violated Hoyle’s Due Process rights in the way they handled his patents during their IPR proceedings. U.S. Patent No. 6,628,314 and U.S. Patent No. 6,771,290.
The complaint suggests that Lee was compromised as a former Google official and future Amazon official (the targets of his patent lawsuits) and that the PTAB judicial assignments were intentionally stacked with judges likely to rule that his patents were invalid. The result was that the PTAB judges “Medley, Pettigrew, and Deshpande … either conspired with, or were at the very least complicit, in the unconstitutional scheme to deprive Plaintiffs of their valuable property rights in these patents.”
The lawsuit is styled as a Bivins action, which allows a private damages action against federal officials for civil rights violations. Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971).
Basically, you become a visiting professor for two years — teaching one course per year, helping with the GW IP program and working on your scholarship. They are hoping to find a candidate to start Fall 2021. Contact: email@example.com.
I have not seen the salary. I expect that it is much less than a starting associate at an IP firm, but well above the median US household income. How golden are your handcuffs? (For those thinking of going into academia, I’ll note that my salary as a law professor is still below my starting salary at MBHB LLP 18 years ago.
Rain Computing has filed an interesting petition to the Supreme Court focusing on indefiniteness and means-plus-function claims. Rain Computing, Inc. v. Samsung Electronics America, Inc., No. 21-170 (Supreme Court 2021). Rain’s asserted claims require a “user identification module configured to control access of … software application packages.” The Federal Circuit interpreted “module” as a non-structural nonce word. As such, the court interpreted the module element a means-plus-function limitation under 35 U.S.C. § 112(f). The problem though was that the specification did not disclose any corresponding structure “clearly linked” with the claimed function. As such, the Federal Circuit found the claims invalid as indefinite.
The first question in the petition focuses on the courts trigger-happy approach to invalidating means claims and the interpretive difference between a claim limitation and the claim as a whole. Although courts often construe individual claim limitations, indefiniteness is generally determined by considering the claim as a whole in light of the specification and the prosecution history and asking whether the claim informs “with reasonable certainty those skilled in the art about the scope of the claim.” Nautilus. The idea here is that the Federal Circuit should have asked the broader question — would someone of skill in the art have reasonable certainty as to the claim scope? Instead, the court did a shortcut and effectively held that the element-by-element corresponding-structure is a requirement of patentability if means language is used. The petitions also notes the construction provision of 112(f) requiring that “such claim shall be construed to cover the corresponding structure …” On its face, the provision focuses on construction of the whole claim, not just the means-element.
The second question is directed toward the Federal Circuit’s conclusion that the specification disclosed only a ‘general purpose computer’ when the district court held otherwise. The petition suggests that change-of-course would require clear-and-convincing evidence before the claim can be invalidated. The underlying assumption of this argument is that some aspect of interpreting the specification is a question of fact (rather than a question of law).
Whether a patent claim may be invalidated for indefiniteness only if, under 35 U.S.C. § 112, para. 2 (now subsection 112(b)) as construed by Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 901 (2014), the whole claim, “read in light of the specification delineating the patent, and the prosecution history, fail[s] to inform, with reasonable certainty those skilled in the art about the scope of the claim” and 35 U.S.C. § 112(f) (previously 112 para. 6) affects only coverage of a combination claim of which an element is expressed as allowed by the subsection?
Whether the United States Court of Appeals for the Federal Circuit panel in this case erred by invalidating a patent as indefinite without mentioning 35 U.S.C. § 112, para. 2 (now subsection 112(b)) and applying the Nautilus test and by substituting, without clear and convincing evidence, its conclusion of a “general purpose computer” for the district court’s finding of no “general computer”?
I’ll note here that Rain Computing is represented by the Hsuanyeh Law Group, founded by Hsuanyeh Chang. Dr. Chang is also the listed inventor of the patent here and is CEO of the petitioner Rain Computing.
Piano Factory v. Schiedmayer Celesta GmbH (Fed. Cir. 2021)
The Schiedmayer family has been making and selling pianos since the 1700s, although the current version of the company makes only Celestas and Glockenspiels, not the 88 key Piano Forte that is popular in the US. The last Schiedmayer family pianos were apparently built and sold back in 1980. For a few years the Japanese company Kawai also sold some Schiedmayer branded pianos (apparently without license).
Piano Factory’s director noted around 2001 that nobody was making Schiedmayer brand pianos any longer and assumed the mark must have been abandoned. So, Piano Factory began branding labelling unbranded pianos with the Schiedmayer brand and selling them to the public. The following is Piano Factory’s explanation of its own operation:
When a SCHIEDMAYER branded piano was needed on the showroom floor, a quality piano from those in the warehouse, such as an unbranded piano manufactured by companies like American Sejung Corp, had a SCHIEDMAYER brand nameplate placed on it.
Piano Factory Brief.
More than a decade later, the Schiedmayer Celesta company petitioned to cancel the mark, and the TTAB complied, finding that Piano Factory’s use of the mark created a false association. The TTAB also rejecting Piano Factory’s a laches defense. This case is now on appeal.
I first note the appeal because oral arguments included a fabulous bit of singing — apparently a first for the Federal Circuit. Listen and watch in the video.
The case argues the Arthrex issue for the TTAB, although its unclear what remedy Piano Factory is now seeking. I believe there is a good chance that the court will issue a statement in this case that the PTO Dir. has power to review certain TTAB decisions.
The merits argument basically boils down to two arguments: First argument is premised on evidence that one or more third parties were using the Schiedmayer name without permission for a decade before Piano Factory started on, and then Piano Factory used the name for 15 more years. Does this create (a) laches; (b) an inference of abandonment; or (c) an inference that maybe Schiedmayer doesn’t have exclusive rights. Second argument is that Schiedmayer’s current business (celestas and glockenspiels) isn’t close enough to Piano Factory’s business (pianos) to create likely confusion.
In an important pharma decision, the Federal Circuit has doubled-down on its prior ruling that Teva’s sales of the drug carvedilol induced infringement of a GSK method-of-treatment patent, even though Teva’s product is approved and labeled only for non-infringing uses (as required by statute). In the new decision, however, the court makes clear that the inducement liability is due to Teva’s additional marketing activity that encouraged others to infringe.
The GSK Patent covers the use of carvedilol to “decrease a risk of mortality caused by congestive heart failure.” RE40,000 (original US Pat 5,760,069). The FDA approved Teva’s sales of the same drug, but only under a “skinny label” that carves-out the patented use. Teva only labeled its version for treatment of hypertension and left ventricular dysfunction following a heart attack (“post-MI LVD”). Despite the label differences, the drugs are otherwise therapeutic equivalents indicated by the FDA’s “AB rating.” Thus, many people (insurance companies, pharmacies, doctors, patients, etc) began using the cheaper generic for the patented purposes and Teva profited.
GSK sued for inducing infringement and the jury sided with GSK and awarded $200 million in damages. The district court rejected the jury verdict and instead found insufficient evidence to show causation — that insufficient evidence Teva’s actions caused the underlying infringement. Then on appeal the Federal Circuit flipped again and reinstated the jury verdict in its October 2020 decision.
The problem with the Oct 2020 decision is that it included an indication that a Generic could be held liable for inducement by simply selling a generic version of a drug and noting the therapeutic equivalence with the branded drug — without ever mentioning the patented use. The Federal Circuit has now released a new decision clarifying that such a straight use of the Skinny-Label could not justify inducement liability. In this case, however, the court found sufficient evidence that Teva went further — labelling its drug in a way that encouraged the patented use.
An important element of this decision: the FDA’s Skinny-Label Carveout approval process does not create a genuine safe-harbor for the generic launch.
The new opinion is listed as per curiam, signed by Chief Judge Moore and Judge Newman. Judge Prost wrote in dissent.
If a brand drug company (here, GSK) has a patent on one of a drug’s uses, it tells the FDA which use is patented. In fact, it tells the FDA exactly what language from its label is covered by its patents. The FDA will then permit a generic version of that drug to come to market if the manufacturer “carves out” such use from its drug label by omitting the language that the brand drug company identified. That’s what happened here. GSK’s sworn FDA filings identified just one use as patented. So Teva carved out that use and came to market with its “skinny” label. It played by the rules, exactly as Congress intended. It sold its generic for years without controversy.
= = = =
The opinion raises the doctrine of equitable estoppel. The argument is premised on the idea that GSK’s statements to the FDA led Teva to believe that its skinny-label would not induce infringement. Since Teva relied upon those statements to its detriment, GSK should now be estopped from suing Teva for inducement. This issue was not yet decided by the district court and so will be raised on remand.
= = = =
Note on the damages: $200 million was GSK’s lost profits; Teva only profited $13 million from the infringement because of its generic pricing.
= = = =
I expect that we’ll see a congressional fix following this decision.
Guest Post by Meshandren Naidoo and Dr. Christian E. Mammen
A world first – South Africa recently made headlines by granting a patent for ‘a food container based on fractal geometry’ to a non-human inventor, namely an artificial intelligence (AI) machine called DABUS.
Over the past three years, the AI algorithm DABUS (short for Device for the Autonomous Bootstrapping of Unified Sentience) and its team of supporting humans, including Dr. Stephen Thaler and Prof. Ryan Abbott, have made headlines around the world as they sought patent protection for a fractal-inspired beverage container (shown below) that they contend was invented by DABUS.
Notably, their application has been denied by the United States Patent and Trademark Office (USPTO), the United Kingdom Intellectual Property Office (UKIPO), and the European Patent Office (EPO). The grounds for rejection have included a mix of procedural formalities, formal legal requirements, and theoretical objections. The procedural formalities and formal legal requirements, which have been equally important to the theoretical questions in these decisions, are sometimes overlooked in the popular media. They include such issues as whether (and how) Dr. Thaler obtained authorization from DABUS to file the patent application, and whether the patent statutes include a requirement that inventors be human. Each of these three jurisdictions found sufficient reasons in these formalities to reject DABUS’ patent applications. In addition, the EPO focused on the broader question of legal personhood: namely, that a number of other rights and obligations are attendant upon being an inventor, and unlike humans, an AI lacks the legal personhood to discharge those obligations and exercise those rights. The UK courts reasoned similarly, noting that an AI lacks the capacity to hold property, and therefore could not have authorized Dr. Thaler to act on its behalf. The USPTO emphasized that under US law invention requires “conception” followed by reduction to practice, and reasoned that “conception” requires a theory of mind that is simply not established to be present in an AI.
Critics of those decisions have emphasized the role of patenting as a part of national industrial policy, and in particular the role of patent grants in encouraging innovation. With increasingly capable AI algorithms, the argument provides, the ability to innovate is shifting from an exclusively human domain to one that includes the algorithms, and modern industrial policy needs to encourage and reward that shift.
These same factors appear to have come into play in the South African decision, though to a clearly different outcome.
The pitfalls of formal examination in South Africa
In July 2021, South Africa’s patent office, the Companies and Intellectual Property Commission (CIPC), granted the South African DABUS patent application, which was published in the South African Patent Journal. Unlike the USPTO, UKIPO and EPO, the CIPC does not conduct a more thorough interrogation of patent applications, known as substantive search and examination (SSE). Instead, all that is required in a formal examination (also known as a registration-based system) is for the application forms and fees to be in order with the specification documents attached. If these affairs are in order, the patent will summarily be granted by the CIPC. This, along with the lack of information provided by the CIPC post-grant has led to criticism directed towards its non-examining nature. This limited review for compliance with the procedural formalities appears to have reached a different outcome than the USPTO, UKIPO and EPO, finding that Dr. Thaler is empowered to apply on behalf of DABUS. No further information has thus far been given by the CIPC relating to the grant. It should be noted however that the ongoing patent reform in South Africa provides for training and infrastructure upgrades to accommodate a shift towards implementing SSE.
Does substantive South African patent law preclude AI inventorship?
The South African Patent Act 57 of 1978 (Patent Act) does not define an ‘inventor’ hence it is arguable that the Patent Act could, or should, be interpreted to include AI. However, the Patent Act presents some challenges in doing so such as, inter alia, the requirement for the provision of names and addresses of inventors—the EPO cited a similar requirement in denying DABUS’ application. If the reasoning of the USPTO is followed, a further challenge to the DABUS patent in South Africa would be the ‘first and true inventor test’. Like the ‘conception’ test in American patent law – the object of the test is to determine the identity of the ‘devisor’ of the invention. With that said, it is open for the South African legal system to determine if the test, which was originally crystallised in South African law in 1902 (with not much development taking place between then and now) is a bar to AI inventorship. Whilst case law which explains the test also refer to pronouns such as ‘he’ or ‘she’, South Africa could diverge from the USPTO and employ a more purposive approach to its interpretation (which is the Constitutionally recognised manner of interpretation) as opposed to a more textual one. This statutory interpretation method would include broader considerations in the process such as (1) advantages posed by AI inventorship; (2) policy directives; (3) the fact that AI inventorship was unlikely to have been considered during the period when the test was originally developed and; (4) the object of the test is to determine the identity of the deviser of the invention in the event of disputes and the like – not to preclude other non-human entities from innovating.
Was granting the patent a mistake?
At first glance, it may appear that the DABUS patent was erroneously granted by the CIPC. Although there has been a shift towards digitization, the CIPC has struggled extensively in the past with infrastructure and administrative issues. But it may be premature to conclude that the granting was erroneous. The post-apartheid government foresaw the challenges associated with the exclusion of a large portion of citizens from economic participation, and central to the solution was science, technology, and innovation. This culminated in the White Paper on Science and Technology in 1996. Soon after, came many other strategic policies aimed at placing South Africa and its citizens in a stronger position. In 2019, the Presidential Commission on the Fourth Industrial Revolution and an updated White Paper on Science and technology was published – both of which highlighted the need for a technology-orientated approach to solving socio-economic issues.
Unfortunately, innovation (noted in the 2019 White Paper on Science, Technology, and Innovation) as measured in products produced and patent output from South African applicants in the country and in other jurisdictions via the Patent Cooperation Treaty (PCT) has remained ‘relatively flat’. Adding to this was policymakers’ concerns of ‘the brain drain’ – the emigration of skilled persons in search of better opportunities and environments.
In April 2021, a call for public comments on the proposed National Data and Cloud Policy in terms of the Electronic Communications Act 36 of 2005 highlighted three main points: (1) the South African Government aims to create an AI institute to assist with reformation; (2) the intention of this is to encourage investment in, and exploration of, AI as a means to achieve sustainable development goals and economic growth; and (3) AI is viewed as a solution to some of the capacity issues facing South Africa.
Thus, as a matter of national industrial policy, it is entirely possible that the grant of DABUS’ patent is fully consistent with the emphases on broad access, digital innovation, and support of science and technology generally.
An opportunity for South Africa?
Given that South Africa is currently undergoing major patent reform, South Africa’s policymakers may find that it would be prudent to capitalise on any presented advantages. Support for, and recognition of, AI inventorship could make South Africa an attractive option for investment and innovation and may also cause these systems to be viewed as a sustainable form of innovation. The path forward for South Africa is uncertain, but there are opportunities in recognising AI as an inventor that could aid in achieving the national policy goals. In doing so, South Africa may champion the Fourth Industrial Revolution and signal leadership to other countries. Indeed, in just the few days since the South African DABUS patent was granted, the Australian Federal Court appears to have followed suit, overturning a rejection of DABUS’ application by that country’s patent office and finding that recognizing AI inventorship would be “consistent with promoting innovation.”
Hay v African Gold Recovery Co 1902 TS 232 p 233.
University of Southampton’s Applications  RPC 567 (CA) paras 22–25.
Bertie Van Zyl (Pty) Ltd v Minister for Safety and Security 2010 (2) SA 181 (CC) para 21.
Mr Meshandren Naidoo is a Ph.D Fellow at the University of KwaZulu-Natal (South Africa) and member of the African Health and Research Flagship. His areas of interest are AI technology, intellectual property, business strategy, and bioethics. His Ph.D involves looking at the challenges posed by AI technology to South African patent law and what the potential solutions may be.
Dr. Christian E. Mammen is an IP litigation partner with Womble Bond Dickinson in Palo Alto, CA. He has practiced in San Francisco and Silicon Valley for over 20 years, and has held visiting faculty positions at a number of universities, including Oxford University, UC Berkeley Law School, and UC Hastings College of the Law. He has written and spoken extensively on AI and patent law, including “AI and IP: Are Creativity and Inventorship Inherently Human Activities,” 14 FIU L. Rev. 275 (2020).
The authors confirmed they did not receive compensation for this article and that they do not represent any clients that might be impacted by the article or the underlying decisions. The views expressed by them in this article are solely their own.
One of the topics to be discussed at tomorrow’s PPAC meeting is USPTO operations following the Supreme Court’s 2021 Arthrex decision. In Arthrex, the Supreme Court created an additional layer of review by the PTO Director in Inter Partes Review (IPR) proceedings following a PTAB final written decision. PTO Acting Director Drew Hirshfeld has considered the first two request for Director Review, and denied both requests. (IPR2020-00081 and IPR2020-00320). It appears that the Director personally considered both cases rather than delegating the decision back to the PTAB or another Official. Neither decision reach the merits but rather perfunctorily state:
It is ORDERED that the request for Director review is denied; and FURTHER ORDERED that the Patent Trial and Appeal Board’s Final Written Decision in this case is the final decision of the agency.
I expect that this approach will be the standard for almost all cases going forward.
Two mandamus cases regarding whether venue is proper in Judge Albright’s court in W.D. Texas.
Even though Apple has a $1 billion Austin Texas Campus and 8,000+ employees within the district, the company argued that litigating a patent case within the district would be truly inconvenient. In a prior decision, the Federal Circuit held that Apple’s extensive presence within the district should not be given much weight. In re Apple Inc., 979 F.3d 1332 (Fed. Cir. 2020). I would argue that decision was clearly wrong for convenient venue purposes. The real answer here is that the plaintiff (Koss Corp) shopped for Judge Albright and the defendant is shopping for a different Judge (any other judge). In a short opinion, the Federal Circuit has denied mandamus — finding that Apple did not show entitlement to the “extraordinary relief” of mandamus.
In Google, the court reiterated that “Google’s mere presence in the Western District of Texas insofar as it is not tethered to the events underlying the litigation is not entitled to weight in analyzing the local interest factor in this case.” However, again the appellate court concluded that Google did not show that N.D.Cal. was clearly more convenient.
This is an appellate procedure case focused on the timing of the notice of appeal. The statute creates a hard 30-day deadline for filing a Notice of Appeal (NOA). 28 U.S.C. § 2107(a). One difficulty though is that the statutory scheme muddies the water in terms of when to start counting. The courts have previously figured out how it works for ordinary appeals — you get 30-days from the final judgment. But, there is a special statute that allows interlocutory appeals in patent infringement lawsuits that creates a right to appeal in cases that are “final except for an accounting.” 28 U.S.C. § 1292(c). With that provision, it would seem that the notice of appeal should be filed within 30 days of the court action that triggers the final-except-for-an-accounting status. But, there is another level of complication that comes from the NOA tolling provision found in Fed. R. App. Proc. 4(a)(4). Rule 4(a)(4) focuses on post-verdict situation where a party files several motions for Judgment as a Matter of Law (JMOL) or New Trial. In that situation, the Rule states that “the time to file an appeal runs … from the entry of the order disposing of the last such remaining motion.” Rule 4(a) then goes on to particularly state that the notice of appeal is due 30 days after the last JMOL/NewTrial motion is decided.
The holding here: The court read an exception into Rule 4(a) — finding that it does not apply to § 1292(c) interlocutory appeals. As such, the appeal here was untimely and therefore dismissed for lack of jurisdiction.
Lets back up: At the trial court, a jury with the patentee and concluded that LG was willfully infringing the Mondis/Hitachi U.S. Patent No. 7,475,180. Post-verdict, the district court denied LG’s motions for JMOL on infringement and validity and then later granted a new trial on damages and willfulness.
Normally, a new trial delays appeal because the case is not yet final — and so no immediate appeal under the Final Judgment Rule. 28 U.S.C. § 1291. The statute also provides for interlocutory appeal in this particular situation — patent infringement lawsuits that are “final except for an accounting.” 28 U.S.C. § 1292(c). In Robert Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, (Fed. Cir. 2013), an en banc Federal Circuit held that “an ‘accounting’ in the context of § 1292(c)(2) includes the determination of damages.”
So, LG had a right to appeal once the renewed JMOL motions on liability were denied. But, LG did not appeal until months later, after the new trial on damages was ordered. As mentioned above, FRAP 4 typically tolls appeals until all post-verdict motions are decided. Here, the court held that the rule does not fully apply in the 1292(c) interlocutory appeal situation — but rather only tolls the timing of the interlocutory appeal until all liability-related motions are decided.
When only motions unrelated to the judgment being appealed remain, the judgment is final except for an accounting and the time to file an interlocutory appeal begins.
Because FRAP 4(a)(4) does not toll the interlocutory appeal period for outstanding motions unrelated to the interlocutory judgment, the damages motions that remained outstanding after the September Order did not toll the time frame for LG to file its notice of appeal on the liability portion of this case. . . . Because LG did not file its notice of appeal within thirty days of the issuance of the September Order, its notice of interlocutory appeal was untimely.
Slip Op. The court notes that this interlocutory appeal process is optional. LG will still be able to appeal all of the issues once the damages/willfulness trial is completed.
A new president makes a lot of appointments. Although the Patent Office Director is an important position, it is still a fair way down the list in terms of urgency. One reason–that most PTO management decisions are not highly political (especially in the R vs D sense). Unlike for some agencies, President Biden has not vowed to reverse course on any particular USPTO policy. We also have a long tradition of career PTO employees stepping-up and capably leading the agency as Drew Hirshfeld is doing now. But, it is time for a nomination, and I expect that we’ll see one within the next month or so.
Looking back, President Trump nominated Andrei Iancu toward the end of August; President Obama nominated his first Director David Kappos in June; and President Bush nominated his first Director James Rogan in September.
Andra sued Victoria’s Secret for infringing its US Pat. 8,078,498 covering a lingerie virtual showroom. Actually, Andra sued L Brands Inc (LBI), the parent company, as well as Victoria Secret Stores LLC (Stores) which operates the physical retail stores; Victoria’s Secret Direct Brand Management, LLC (Direct), which manages the internet activities (including in-store direct online and returns from the stores); and Victoria’s Secret Stores Brand Management, Inc. (Brand) which creates the apparel products. At the time of the lawsuit*, these companies were all directly linked together in a tight corporate subsidiary structure under LBI. Still, each defendant gets to raise the defense of improper venue.
Under the statute for patent litigation venue, venue is proper in a judicial district if either (1) the defendant is incorporated in the district or (2) the defendant infringes within the district and also has a “regular and established places of business” in the district. 28 U.S.C. 1400(b). Here, none of the defendants are incorporated in E.D. Texas and only the VS Stores has a regular-and-established-place-of-business in the district. As such, the district court dismissed the case against all of the non-stores defendants and, at that point, Andra also voluntarily dismissed its case against VS Stores.
On appeal, the Federal Circuit affirmed — particularly holding that the VS Stores do not serve as places of business for the non-store defendants. The court concluded that Andra had not proven that LBI sufficiently controls VS Stores despite public filings by LBI that dictate various “store operations, hiring, and conduct” and that the stores are acknowledged representatives of Brand and Direct (returns go the roughte website …). The court found that LBI’s public filings were statements about the various brands, but did not necessarily convey control over its wholly owned subsidiaries. The decision goes on, but basically serves as a total apologist for
* On August 3, 2021, LBI spun-off all of the Victoria Secret companies into a separate company VS&Co (VSCO) and LBI has changed its name to Bath & Body Works Inc. (BBWI). Its totally unclear how this change would impact the lawsuit. Also, this is confusing because of VSCO.
Dr. Islam is a professor at Michigan (UM). Back in 2012 though he took an unpaid leave-of-absence to start a LASER company. During that time he filed a number of patent applications that came from his time on-leave and that he assigned to Omni. However, UM argued that it owned the patents based upon his employment agreement; that it had expended some ongoing funds; and that Islam had bounced ideas off of some of the faculty members. This argument between Islam and UM was internal. UM did not file any paperwork with the PTO attempting to claim ownership and UM is not a party to the present litigation.
Omni later sued Apple for infringement, but the iPhone giant argued that Omni lacked standing since UM was the real patent owner. The district court sided with Omni — finding that Omni had received rights from the inventor, and that Islam had not assigned his rights to UM. On appeal, the Federal Circuit has affirmed.
The basic question is whether the Islam’s employment agreement with UM caused his inventorship rights to be automatically transferred in this situation.
Lets look at the contract. Here are the relevant clauses:
1) Patents … acquired as a result of or in connection with administration, research, or other educational activities conducted by members of the University staff and supported directly or indirectly (e.g., through the use of University resources or facilities) by funds administered by the University regardless of the source of such funds, and all royalties or other revenues derived therefrom shall be the property of the University.
* * *
4) Patents, copyrights, and property rights in computer software resulting from activities which have received no support, direct or indirect, from the University shall be the property of the inventor, author, or creator thereof, free of any limitation which might otherwise arise by virtue of University
5) In cases which involve both University-supported activity and independent activity by a University staff member, patents, copyrights, or other property right in resulting work products shall be owned as agreed upon in writing and in advance of an exploitation thereof by the affected staff member and the Vice-Provost for Research in consultation with the Committee on Patents and Copyrights and with the approval of the University’s Office of the General Counsel. It is understood that such agreements shall continue to recognize the traditional faculty and staff prerogatives and property rights concerning intellectual work products.
Both the district court and appellate court agreed that the agreement was not a present assignment of future inventions. “It does not purport to effectuate the present transfer of a present or future right.” Rather, at most, the language “reflects a future agreement to assign.”
Judge Newman wrote in dissent and argued that “these patents are the property of the University.”
Although both the majority and dissent conclude that the issue is a matter of contract law, neither cite to the governing law of contracts for this case–the law of Michigan.
Sito Mobile (SITO) sued Hulu in the Western District of Texas (Waco), alleging infringement of seven of its patents. U.S. Patent Nos. 8,825,887; 9,026,673; 9,135,635; 9,135,636; 9,591,360; 10,009,637; and 10,171,846. Both SITO and Hulu are Delaware companies with Hulu headquartered Santa Monica and SITO in New Jersey (although SITO is currently going through Chapter 11 reorganization bankruptcy).
Although venue was “proper,” Hulu argued that the case should be transferred to the Central District of California for convenience. 28 U.S.C. § 1404(a). Judge Albright refused, but the Federal Circuit has now granted Hulu’s petition for mandamus and ordered the case transferred.
(a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.
Section 1404(a) seems straight forward as providing a district court discretionary authority to transfer a case. Still, the court must transfer the case once a party “clearly demonstrates” that transfer meets the statutory standard of being “for the convenience of parties and witnesses and in the interest of justice.” The courts have developed substantial gloss on the statute, with a set of four public interest factors and four private interest factors used to answer the convenience question:
Private 1: Ease of access to sources of proof;
Private 2: Availability of compulsory process;
Private 3: Cost of attendance for willing witnesses;
Private 4: Any other practical issues “that make trial of a case easy, expeditious and inexpensive.”
Public 1: Administrative difficulties from court congestion;
Public 2: Local interest in having test decided at home;
Public 3: Familiarity of the forum with the law of the case;
Public 4: Avoidance of unnecessary conflicts of laws.
The district court found three factors weighed against transfer. (1) compulsory process for witnesses; (2) cost for willing witnesses; and (3) administrative difficulties from court congestion. On Mandamus, the Federal Circuit held that each of these factors actually weigh in favor of transfer.
Availability of compulsory process — 100 miles and state lines: Most witnesses in patent infringement trials are either under the control of the parties or are willing witnesses. However, the rules also allow for compulsory process to force third party witnesses to testify even if unwilling. The catch, “a subpoena may command a person to attend a trial . . . (A) within 100 miles of where the person resides, is employed, or regularly transacts business in person; or (B) within the state where the person resides, is employed, or regularly transacts business in person, if the person … (ii) is commanded to attend a trial and would not incur substantial expense.” FRCP 45.
The 100 mile and state line rules mean that Judge Albright could not compel a non-party witness to fly from Southern California to Texas in order to testify in court. In this case, Hulu identified several content delivery networks (CDNs) as well as prior art witnesses all located in California that it would potentially call at trial. The district court disregarded these witnesses as either (1) not likely to be called or (2) likely willing to attend. On mandamus, the Federal Circuit found that Judge Albright’s statement that “prior art witnesses are generally unlikely to testify at trial” was “untethered to the facts of this case and therefore was an abuse of discretion.” The appellate panel writes:
Hulu’s proposed prior art witnesses directly related to prior art that was specifically mentioned in the asserted patents themselves, heightening their potential relevance. The district court provided no analysis whatsoever to cast doubt that these particular prior art witnesses would play a role in an upcoming trial other than speculation that they would be “unlikely to testify at trial” because generally prior art witnesses do not do so. Such a bare and generalized analysis cannot be said to be providing “individualized, case-by-case consideration” of the relevant factors, as is required for the analysis of a § 1404(a) motion. Van Dusen v. Barrack, 376 U.S. 612 (1964). Furthermore, we have cautioned that “[r]equiring a defendant to show that the potential witness has more than relevant and material information at this point in the litigation or risk facing denial of transfer on that basis is unnecessary.” In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009). The district court abused its discretion in zeroing out the weight of these witnesses without any case-specific analysis.
Slip Op. Regarding their willingness to testify. Here, the appellate panel found it sufficient that there were multiple third-party witnesses none of which had been shown to be willing to travel to Texas.
Willing Witnesses: Even though only one of the willing witnesses reside in W.D. Tex., the district court still found that W.D. Tex. was more convenient. The appellate court disagreed here. “[G]iven the overwhelming number of potential witnesses from Hulu in or near California compared to the two from SITO in Texas, we determine that this factor favors transfer.”
Court Congestion: Although W.D.Tex and C.D.Cal have about the same level of court congestion, Judge Albright weighed this favor strongly in favor of keeping the case in his courtroom. The difference is that Judge Albright in particularly aggressively pushes patent cases to trial. On mandamus, the appellate panel held that it should not look at the particulars for this factor. After “disregarding the particular district court’s ability to push an aggressive trial date, this factor is neutral.”
Mandamus granted, and the district court is ordered to transfer the case to C.D.Cal.
Utility Doctrine does not get much use in patent prosecution. Still, examiners do reject claims on utility grounds. The following are three recent PTAB decisions that all reverse examiner utility rejections. In Horne, focus is whether a partially-built tool has any utility; In Zauderer, the question is whether a theoretical rocket ship design has any credible utility; and in Grajcar the question focuses on whether data was provided to support a sex-selection method.
Ex parte Horne, APPEAL 2020-004000, 2021 WL 2788193 (2021)
Applicant claimed a saw blade blank without cutting teeth and the examiner rejected the claims as lacking utility since it was just a work-in-process. On appeal, the PTAB reversed — finding that creation of the blank is a useful step in the blade manufacture process. “Contrary to the Examiner’s suggestion, the utility requirement of § 101 does not require an invention to be a ‘final product’ made to sell to end users.”
Ex parte Zauderer, APPEAL 2020-003919, 2021 WL 2495190 (2021)
Zauderer’s application claims a method rocket launching using a linear Faraday magnetohydrodynamic (MHD) generator attached to an MHD linear accelerator. The examiner rejected the claim as lacking credible and specific utility. In particular, the examiner concluded that the claims were directed toward an “inherently unbelievable undertaking [based upon] implausible scientific principles.” On appeal, the PTAB reversed — finding that the invention sufficiently useful. In particular, the examiner had failed to particularly address the credibility of the scientific principles relied upon in the application. Although the invention has not been reduced to practice (and thus was purely theoretical), the PTAB found “no prohibition against claiming an invention based upon a scientific theory, as long as the invention is useful to the public as disclosed.” The application has now been allowed and should issue shortly (assuming Zauderer pays the fee). [25570_13584574_07-23-2021_NOA]
Ex Parte Grajcar, APPEAL 2020-005035, 2021 WL 1499408 (2021)
Grajcar’s application claims a method of sex-selection of tilapia using 440-460 nm wavelength light (this is blue/violet). The examiner rejected the inventio as lacking utility since the patentee provided no experimental data proving that it actually works. On appeal, the PTAB reversed — finding that the specification did include a sample of 12 larvae treated with 450 nm light and resulted in 9 males, 1 intersex, and 2 female. The particular claim is directed to “selecting sex”, which is seemingly more general than selecting males in particular. In the appeal the PTAB interpreted the claim as selecting males, thus resolving the dispute.
A potentially important product design trademark case is pending before the U.S. Supreme Court involving those chocolate covered bready-sticks. Ezaki Glico Kabushiki Kaisha v. Lotte International America Corp., Docket No. 20-1817 (Supreme Court 2021).
Glico’s Pocky product has been sold since 1966 and are apparently popular. Lotte’s Pepero’s are a knock-off version. Glico sued for trademark infringement, asserting Glico’s trademark rights in the product design of chocolate-covered elongated rod biscuits. Glico registered this particular mark back in 1989. Reg. No. 1,527,208.
The lawsuit ended fairly quickly. The district court found that the design is functional and therefore not protectable by trademark. On appeal, the 3rd Circuit affirmed.
If you have eaten one of these, then you know a bit about the shape functionality:
Biscuit end can be handled without getting chocolate on your hands;
Rod design allows for close-packing in a compact box suitable for sharing;
Rod design allows for eating “one bite at a time … without opening your mouth
According to the third circuit, these aspects were utilitarian and therefore functional as a matter of law.
In its petition, Glico presents the following questions:
The Lanham Act protects trade dress from unlawful copying. Trade dress includes a product’s design, such as the red wax seal on a bottle of Maker’s Mark, the shape of the Chanel No. 5 perfume bottle, and the configuration of the Pepperidge Farm Milano cookie. To qualify for trade dress protection, a product’s design cannot be “functional,” among other requirements. At issue in this case is the test for “functionality” in trade dress law and the role of alternative product designs in creating a dispute of fact that prevents summary judgment. This petition presents two questions:
1. Whether trade dress is “functional” if it is “essential to the use or purpose of the article” or “affects the cost or quality of the article,” as this Court and nine circuit courts have held, or if it is merely “useful” and “nothing more,” as the Third Circuit held below.
2. Whether the presence of alternative designs serving the same use or purpose creates a question of fact with respect to functionality, where the product’s design does not affect cost or quality and is not claimed in a utility patent.
[Petition]. AIPLA, IPO, and INTA have all filed briefs supporting certiorari. Their argument is that the Third Circuit used an unduly expansive definition of “functional” that is contrary to the precedent of the Supreme Court and every other circuit court of appeals.
The briefs include lots of pictures of chocolate covered cookies (biscuits).
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Glico also holds a patent titled “Stick-shaped snack and method for producing the same.” U.S. Patent No. 8,778,428. The US patent claims a particular method of making these tasty snacks as well as “A stick-shaped snack made by the [claimed] method.” (product-by-process claim) The district court found the patent relevant to showing functionality. On appeal though, the Third Circuit disagreed since the patent focused on a particular method of manufacture rather than novel features of the product itself. There is also a Japanese Utility Model patent but did not feature in the litigation.
Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA Inc., Docket No. 21-02024 (Fed. Cir. 2021) is up on appeal again. The district court found Amarin’s asserted patent claims obvious and the Federal Circuit affirmed that holding in a R.36 affirmance without opinion.
Following the Federal Circuit’s decision, an ad-hoc group of doctors, patients, and Amarin stock holders (collectively known as EPA Drug Initiative II) moved to intervene in the lawsuit and asked the court to vacate its judgment based upon “multiple fatal statistical errors in analyzing and interpreting the prior art.” The group argues that
The invalidation of Amarin’s patents could potentially cost hundreds of thousands of American lives, as Amarin has been deprived of the incentive to promote Vascepa in the U.S., and Defendants can neither sell generic Vascepa to a large segment of the patient population, nor promote generic Vascepa, as those activities would violate Amarin’s other patents.
[EPADI Motino to Intervene] [EPADI Motino to Vacate]. The district court denied the motions and those issues are now on appeal before the PTAB. I expect EPADI to lose its appeal, but it raises an ongoing interesting question about the role of patents in the availability and pricing of drugs and biologics. The intervenors are calling for patent rights in order to better ensure that the drug is available.
One reason that I expect EPADI to lose is that it had requested permission to file an amicus brief in the original appeal as had the Biotechnology Innovation Organization (BIO). The Federal Circuit denied EPADI’s request but permitted BIO’s.
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One idea here goes back to the deals of Edmund Kitch with his prospect theory of patenting as a special form of the tragedy-of-the-commons. Edmund Kitch, “The Nature and Function of the Patent System,” Journal of Law and Economics, 1977, 20, pp. 265.
The NHK-Fintiv Rule provides the PTAB with authority to deny institution of IPR proceedings when the challenged patent is already subject to pending parallel district court litigation. The rule stems from two PTAB decisions that were later designated as precedential.
NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., IPR2018-00752, 2018 WL 4373643 (Patent Tr. & App. Bd. Sept. 12, 2018), designated precedential on May 7, 2019.
Apple Inc. v. Fintiv, Inc., IPR2020-00019, 2020 WL 2126495 (Patent Tr. & App. Bd. Mar. 20, 2020), designated precedential on May 5, 2020.
IPR proceedings have two major decision points. Institution: After IPR petition is filed, the PTO Director determines whether or not to institute the IPR. The statute provides the director with discretionary authority on whether or not to institute the IPR, but does create a threshold — requiring that the petition show at least “a reasonable likelihood that the petitioner would prevail.” 35 U.S.C. 314. Also, the PTO Director has delegated their institution authority to the PTAB, and so a PTAB panel actually makes the decision. Final Decision: If the IPR is instituted then the PTAB is charged with holding a trial and reaching a final decision “with respect to the patentability of any patent claim challenged.” On the other hand, if institution is denied, the case is over and no appeal is permitted. “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. 314(d). Note here that “nonappealable” has been generally interpreted as ordinarily not appealable. See Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) and Thryv, Inc. v. Click-To-Call Technologies, LP, 140 S. Ct. 1367 (2020).
With NHK-Fintiv, PTAB panels are able to use their discretionary authority to deny institution in situations involving parallel litigation guided by a six-factor test that generally dance around the overarching question of whether “instituting a trial would be an inefficient use of Board resources.”
Whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
Proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;
Investment in the parallel proceeding by the court and the parties;
Overlap between issues raised in the petition and in the parallel proceeding;
Whether the petitioner and the defendant in the parallel proceeding are the same party; and
Other circumstances that impact the Board’s exercise of discretion, including the merits.
Apple v. Fintiv. The test has been used dozens of cases to deny institution, and litigants and district court judges have figured out strategic techniques to push these factors in their favored direction.
In a new petition to the U.S. Supreme Court, Apple has asked asked for relief, arguing that NHK-Fintiv “undermines access to IPR, contrary to Congress’s express design.” Apple v. Optis Cellular (Supreme Court 2021) (petition for writ of certiorari). Apple argues that the rule permitting denial “exceeds the PTO’s authority … is arbitrary or capricious, or was adopted without required notice-and-comment rulemaking.” Id.
After its IPR petition against an Optis Cellular patent was denied, Apple sought relief from the Federal Circuit who refused — holding that it had no power to hear the case either on appeal or via mandamus. Apple Inc. v. Optis Cellular Tech., LLC, 2021-1043, 2020 WL 7753630, at *1 (Fed. Cir. Dec. 21, 2020) (non-precedential order). The court more generally offered its reasoning in Cisco Systems Inc. v. Ramot at Tel Aviv University Ltd., 834 F. App’x 571 (Fed. Cir. 2020).
Meanwhile, the district court case against Apple proceeded in E.D. Tex. The jury found the Optis patent claims willfully infringed and not proven invalid and awarded $506 million in damages. Judge Gilstrap entered judgment for the damage award, but did not enhance the damages — finding in his view that the case lacked egregiousness. I believe that the case is awaiting judgment on Apple’s outstanding motions for new trial and JMOL.
The Petition for Certiorari: The petition is interesting primarily from an appellate and administrative procedure front. Here, the agency used a particular mechanism of rulemaking that appears to be done without notice + comment and that is not appealable. From that perspective it seems problematic.
In my mind, Judge O’Malley is still a newcomer to the Court of Appeals for the Federal Circuit, but the official records show that she joined back in 2010 as President Obama’s first nominee. Prior to joining the Federal Circuit, Judge O’Malley had already been a Federal Judge (N.D. Ohio) for 16 years. Her experience as a trial court judge has added significant depth and nuance to the appellate court over the past decade and in here 200+ opinions and orders. Above all, she is respected across the bar as a tough but impartial jurist.
I’m writing about Judge O’Malley because she has announced her plans to retire on March 11, 2022. These future-retirement announcements are designed to provide President Biden time to name a successor. Barring other changes, this will be Biden’s second nominee following Judge Cunningham’s recent Senate confirmation.
Congratulations to Judge O’Malley on an amazing career!