Issue Preclusion for Patent Applicants

by Dennis Crouch

Blaise Mouttet is seeking a patent on his “Crossbar Arithmetic and Summation Processor.”  The invention is interesting because it is actually processor design. [17-2077.Opinion.12-6-2017]

Back in 2012, the Federal Circuit affirmed the PTO obviousness rejection of his pending claims in a parent application.  Following that negative outcome, Mouttet amended the pending CIP application to include the identical rejected claim.  The examiner and PTAB rejected that claim – finding that it “need not readdress the patentability of claim 25” since the identical claim had already been conclusively found obvious based upon the same references.  Mouttet then appealed to the Federal Circuit, and the court has affirmed – holding that Mouttet is not entitled to a reevaluation based upon his “new arguments” with respect to the prior art teaching.

Notably, the court includes important caveats — Mouttet could potentially get the claim reevaluated he had shown how the claim scope was different or if new secondary indicia of patentability were shown.

We have before us no new claim construction, or argument for a new claim construction, that would change the substance of the claimed invention at issue. Mr. Mouttet points to nothing in the specification of the [present] application that differs from the specification of the [adjudged parent] application and is material to the obviousness question. He has not presented any new evidence, whether concerning unexpected results, objective indicia, or anything else.

Here, the Federal Circuit applied issue preclusion:

  • Here, Mouttet is arguing about the combinability of Falk, Das, and Terpin. Those were “essential elements of the earlier determination of obviousness by the Board and this court.”
  • Mr. Mouttet had a “a full and fair opportunity to make his current contentions about obviousness when contesting obviousness of the identical claim in the earlier case.”
  • In these circumstances, it is proper to give the earlier determination of obviousness of claim 1 of the ’232 application preclusive effect to require rejection of claim 25 of the ’174 application.

The court here does not decide whether preclusion would also apply if the original obviousness rejection was based upon a PTAB decision that had not been appealed to the Federal Circuit.

Although losing on Claim 25, the Mouttet’s appeal was important because it forced the USPTO to drop its PTAB indefiniteness holding. The PTAB held that his claims 35-40 were indefinite because they merged statutory classes. On appeal, though, the solicitor conceded that the PTAB judgment was incorrect. The court agreed. The formerly problematic claim is written as a “35. A method of … using the processor of claim 1 … [to perform a series of steps].”

Note here that the PTAB had also substantially sided with Mouttet – reversing all of the examiner’s obviousness rejections.

= = = = =

Allowed Claim 1:

A processor comprising:

a crossbar array including row wires and column wires wherein bit patterns representative of numerical values are stored in a plurality of columns of the crossbar array and wherein the bit patterns store data in the form of high or low resistance states; and 

an output unit electrically connected to the rows of the crossbar array configured to sum the numerical values stored in the columns of the crossbar array. 

I´ll note that I am fairly confident that this allowed claim 1 is actually broader than claim 25 discussed above.  Wouldn’t issue preclusion also bar Mouttet’s case here (even if Mouttet is correct that both should be allowed)?

Purpose of Claim Construction: Construing Ordinary Terms

by Dennis Crouch

The Federal Circuit has denied the NobelBiz petition for en banc rehearing on questions of patent claim construction. Namely, the focus here is whether a district court is required to issue a claim construction beyond “plain and ordinary meaning” any time a litigant asserts a “dispute.”  The majority approach means that in most cases the usual jury-question of infringement is now being fully resolved at the claim construction stage.

Jury Instructions vs. Summary Judgment Tool: I see the dispute between the judges here as going to the fundamental purpose of claim construction.   Is claim construction essentially a form of jury instructions – designed to help the jury understand and follow the law of the case.  Or, instead, is claim construction designed as a mechanism for early case resolution — and for avoiding the cost and expense of holding a jury trial.  In this case, the term being disputed is “replacement telephone number,” and I cannot see how a further explanation of that term would do anything but create points of confusion in the jury room.  On the other hand,

En Banc: Construing Claims

Judge O’Malley penned a short dissent to the en banc denial – joined by Judges Newman and Reyna. Judge Newman had previously dissented from the original panel decision.

O’Malley writes:

[T]he majority erred by turning what is fundamentally a factual question for the jury regarding whether the accused systems and features infringe the patent claims into a legal one for the court—and ultimately this court—to resolve. And, by relying on O2 Micro International Ltd. v. Beyond Innovation Technology Co., 521 F.3d 1351 (Fed. Cir. 2008), to support its holding, the majority has added to the growing confusion regarding the scope of that decision. In the nearly ten years since O2 Micro issued, this court has stretched its holding well beyond the factual circumstances at issue there. In so doing, we have caused unnecessary difficulties for district courts, which must manage these already difficult-enough cases, and have intruded on the jury’s factfinding role. It is time we provide much-needed guidance en banc about O2 Micro’s reach. I dissent from the court’s order declining the opportunity to do so in this case.

En Banc Denial: NobelBizEnBanc.

Please Define What you Mean by Ordinary Meaning

= = = = =

One problem with the  NobelBiz case is that the patent does seem fairly silly and also fraudulent.  U.S. Pat. No. 8,135,122.  The claims propose a system to trick folks into believing that they are receiving a local call when it is actually coming from a remote call center. The core of the claims are as follows:

access the database and select a replacement telephone number [that uses an] area code of the telephone number of the call target; and

modify caller identification data of the call originator to the selected replacement telephone number [so that] the selected replacement telephone number [has an] area code the same as an area code of the telephone number of the call target;

= = = = =

Off Topic: Although I don’t believe that it was their attempt, a group of law professors have provided a set of guidance for upper-income lawyers to structure their businesses in order to take full advantage of the Trump Tax Reforms. The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation.

Iancu Nomination Hearing

  1. American Patent Law is Exceptional.
  2. System should be Reliable, Predictable and High Quality.
  3. PTO should be a “culture of excellence”
  4. Priorities:
    • Bring stability and reliability to patent system.
    • Evangelize the IP System and the excitement and benefits of invention; confidence in the IP system is necessary for investment in innovation.
    • IPR System: The system needs to be balanced and returned to a higher level of predictability; one mechanism is to have the Director involved in decisions by the Board.
    • Eligibility: Supreme Court jurisprudence is the “current law of the land” but has produced a level of uncertainty.
    • Trade: Insist that trading partners have high level of IP rights and enforcement mechanisms.

Lost Profits for Infringement Abroad

In WesternGeco v. ION Geophysical, the Supreme Court is being asked to decide

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

The case is at the petitions stage, and we have been awaiting the views of the US Government (via the Solicitor General).  The SJ has now weighed-in arguing that:

In the view of the United States, the petition for a writ of certiorari should be granted.

The lawsuit is related to WesternGeco’s patents on marine seismic surveys.  Adjudged infringer ION manufactures components of the system in the US, for assembly and use “on the high seas.”  A jury found liability under 271(f) – exporting components of a patented invention for assembly abroad.  The jury also awarded the patentee $12.5 million in reasonable royalties in addition to $93.4 million in lost profits based upon specific competitive contracts lost.  On appeal though, the Federal Circuit ruled that lost profits were inappropriate here because they were based upon the assembly-abroad and activities outside of the U.S. jurisdiction.   That Federal Circuit decision is the basis for WesternGeco’s petition for writ of certiorari here.

Looking at the SG’s brief – the basic argument is that a patentee has a right to collect full consequential damages adequate to compensate for the infringement.

The court of appeals erred by precluding recovery of lost-profits damages necessary to provide full compensation solely because those profits would have been earned on contracts to perform services outside of the territorial jurisdiction of United States. The presumption against extraterritoriality does not bar courts from taking notice of foreign evidence or events in fashioning appropriate relief for a domestic act of patent infringement.

Historically, the SG’s advice (grant/deny) has been given substantial weight by the court — making a grant of the writ much more likely in this case.

When Natural Laws are Wrong

by Dennis Crouch

René Descartes may have been the first expressly identify the physical operation of our universe as “laws of nature” (although published in French) – spelling out specifically his three immutable laws of nature (later serving as Newton’s foundation):

  1. Each thing, as far as is in its power, always remains in the same state; and that consequently, when it is once moved, it always continues to move” (Pr II 37);
  2. All movement is, of itself, along straight lines (Pr II 39); and
  3. A body, upon coming in contact with a stronger one, loses none of its motion; but that, upon coming in contact with a weaker one, it loses as much as it transfers to that weaker body” (Pr II 40).

As the study of these natural laws developed, so did the recognition that they are not immutable laws, but rather fail to actually describe the working of our universe.  The third law was the first to fail as the “laws” of conservation of energy and momentum were further developed.  The other two laws dropped away with the theory of relativity and quantum mechanics.  Although still used today, we recognize that they are only a rough approximation.

In Mayo, the Supreme Court held the following to be a “law of nature”: If the blood-level of 6-TG exceeds exceed about 400 pmol per 8×10red blood cells, then the administration of the standard dose of thiopurine is likely to produce toxic side effects, whereas a blood level of about 230 pmol per 8×108 red blood cells indicates that the standard dose should be increased.  I am betting that this supposed “law” turns out to be incorrect as well.

The question I’m pondering over the next couple of weeks is how the law of patents should treat these incorrect or unproven laws of nature.

Amicus Briefing for PTAB Decision on Tribal Immunity in IPR Proceedings

Arguing Against Immunity

Arguing for Immunity



Reviewing Partial-Institution Decisions

CRFD Research v. Matal (Fed. Cir. 2017) (Iron Dome)
CRFD Research v. DISH Network (Fed. Cir. 2017)
Hulu, Netflix, and Spotify v. CRFD Research (Fed. Cir. 2017)

CRFD’s U.S. Patent  No. 7,191,233 has been challenged in four separate Inter Partes Review petitions – three of which were granted and reached final decision. Interestingly, the three decisions are somewhat different from one-another.

  • Iron Dome – invalid: Claim 1 anticipated; Claims 4-6 and 8-11 obvious.
  • DISH – invalid: Claims 1, 4, 23, and 25 anticipated; Claims claims 4 and 25 obvious.
  • Hulu – valid: Claims 1–3, 23, and 24 not anticipated; Claims 1–6, 8–11, 13–15, 17–20, 23–25, 29–31, 34–36, and 38–41 not obvious.

The PTAB decisions here may seem inconsistent, but the differences can be explained by the fact that each IPR focused on different prior art references (or combinations thereof).  Note here that the patentee loses (claims are cancelled) if a claim is found invalid in any one of multiple IPR proceedings.  On appeal, the Federal Circuit consolidated the cases and has ruled against the patentee — affirming the Iron Dome and Dish cancellations, but reversing the Board’s nonobviousness decision from Hulu.

The patented invention here is designed to allow someone to start a “session” on a first device but then transferring the session to a second device (along with a session history) so that the user does not need to fully re-initiating the session.”

Claim 1. A method for redirecting an on-going, software based session comprising:

conducting a session with a first device;

specifying a second device;

discontinuing said session on said first device;

transmitting a session history of said first device from said first device to a session transfer module after said session is discontinued on said first device; and

resuming said session on said second device with said session history.

Broad Claims = Invalid: In reviewing the rejections, the Federal Circuit first noted that the key prior art (Phan) taught a somewhat different approach to transferring sessions than the patent at issue. However, anticipation does not involve a disclosure-to-disclosure comparison, but rather asks whether the prior art discloses the invention as claimed.

A patent is invalid for anticipation under 35 U.S.C. § 102 if a single prior art reference discloses all limitations of the claimed invention.

Here, the Board found several of the actual claims of the ‘233 patent were broad enough to encompass Phan’s disclosure – and thus were anticipated.  (Affirming Iron Dome).  Because anticipation is a question of fact, the PTAB’s determinations regarding this issue are reviewed with deference — PTAB findings will be affirmed if supported by more than an iota of evidence, as was done here. On the other hand, obviousness has been deemed “a question of law based upon subsidiary findings of fact.”  As such, the ultimate question of obviousness is reviewed de novo on appeal.


= = = =

The Hulu portion of the case is really about IPR procedure.  Hulu had raised several grounds for challenging the patent in its IPR petition, but the PTO selected only a few of the grounds for trial — finding the others redundant. One of the denied grounds argued obviousness, based on Bates alone, while a granted grounds involved a combination of Bates and Chan.  Both of these grounds agreed that Bates alone did not teach the timing of the “transmit session” limitation. Rather the arguments were respectively that (1) the limitation was obvious based upon Bates alone; and (2) the limitation was taught by Chan and the combination was obvious.  IPR was not instituted on the first ground, only the second. At trial, the PTAB found (1) Chan did not actually teach the limitation; and (2) that Hulu was barred from presented the obvious-based-upon-Bates argument since it was denied institution.

On appeal the Federal Circuit has rejected the PTAB’s approach holding that:

The Board, in its discretion, elected to not institute review on Bates alone for redundancy reasons, but instituted review on obviousness grounds that include the only reference—Bates—cited in that ground. To bar Hulu from pressing an argument it raised in a ground the Board found “redundant” and that it expressly incorporated into other proposed grounds of unpatentability on which the Board instituted would not only unfairly prejudice Hulu, but would also raise questions about the propriety of the Board’s redundancy decision.

The Federal Circuit then went on to consider this (and a few other) issues – eventually concluding that the claims were obvious and thus reversing the PTAB decision.

I’ll note here that two major failings of this portion of the Federal Circuit’s decision are (1) that the court offered no standard for its review of the PTAB’s refusal to allow certain arguments; and (2) the court appears to basically be reviewing the partial institution decision — but those are not reviewable under Cuozzo.


from IPO:

Tune in to the IP Chat Channel™ tomorrow, 6 December at 2:00p.m. ET, to earn CLE and hear a sophisticated discussion of Functional Claiming After Mastermine v. Microsoft, a recent Federal Circuit decision that reversed a lower court’s finding of indefiniteness after finding the claims were not improperly simultaneously directed to both an apparatus and a method of using the apparatus. This decision could provide helpful guidance to patent prosecutors, but the situation is tangled because some experts worry that the Federal Circuit is disregarding the Supreme Court’s finding in Nautilus (2014) that a patent is indefinite if it doesn’t describe the invention with “reasonable certainty.”

Panelists CHARLES BIENEMAN (Bejin Bieneman), PROF. DENNIS CROUCH (University of Missouri Law), and SCOTT MCKEOWN (Ropes & Gray) will also discuss this month’s decision BASF v. Johnson Matthey, involving catalytic converter technology, where the Federal Circuit reversed an indefiniteness finding. Our panel will discuss this tangled knot, and in untangling it, give their best advice for how patent prosecutors should proceed.

Hosted and produced by journalist Pamela Sherrid

LINK to Register


Secured by Inventors

Ron Katznelson’s new paper is available online, titled Private Patent Rights, the Patent Bargain and the Fiction of Administrative ‘Error Correction’ in Inter Partes Reviews.  Ron argues:

The exclusive patent right is not a creature of Congress. That right originates with, and is created by, the inventor. It is only secured by statute subject to the Constitution, as part of the patent bargain in exchange for the inventor’s public disclosure of the invention and of the manner and process of making and using it.
No PTO “error correction” in an issued patent is possible because the public disclosure (that might have been otherwise kept as a common-law trade secret) cannot be returned – the exchange of rights upon patent issuance is irreversible and uncorrectable. Extinguishing the inventor’s private patent right must therefore be the exclusive province of Article III courts.

Where is that Anticipation Rejection? Isn’t it Obvious!

by Dennis Crouch

The USPTO released a new data set of office action rejections, including an action-by-action breakdown of the basis for each rejection and the prior art relied upon. The first chart below shows the frequency that obviousness and anticipation rejections are found in office actions.  The shift since 2009 is quite interesting — obviousness rejections are up significantly following KSR while anticipation rejections are way down.

NoveltyRejections79% of what: Note here that the data set only includes office actions that contain at least one rejection.  Thus, for 2017 we could say that, 79% of actions with a rejection include an obviousness rejection.  A second big caveat is that the data set only includes applications that have been laid-open; and they had OCR scanning or other data problems with about 10% of the rejections and those have been excluded from the data set.

[Dataset][USPTO Whitepaper]

Alice and TRIPS Compliance

I asked Prof. Daniel H. Brean for this guest post that stems from his new paper on international patent law issues titled Business Methods, Technology, and Discrimination.  Brean is an assistant professor at Akron School of Law and Of Counsel at The Webb Law Firm. – DC

by Daniel H. Brean

The United States is obligated under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) treaty to make patent rights available and enjoyable without discrimination as to the “field of technology” of the invention.[i]  No specific areas of technology may be singled out for unjustified special treatment.

In a new paper (Business Methods, Technology, and Discrimination, 2018 Mich. St. L. Rev. __ (forthcoming), available at, I argue that the United States is doing just that with respect to computer-implemented business methods.  Doctrinally, such methods are subject to an especially high bar for patent eligibility.  Statutorily, patents on such methods may be challenged in invalidity proceedings that are exclusively available for so-called “covered business method patents.”  The law seems to reflect a skepticism that computer-implemented business methods should be broadly eligible for patenting, as well as a distaste for the aggressive enforcement of many such patents by patent assertion entities.  While these may be real problems and serious policy challenges, discrimination by technological field is not a TRIPS-compliant solution.

Discrimination can be de jure—where the law facially discriminates—or de facto.   De facto discrimination can be shown by evidence of the discriminatory effects of the law, as well as by showing that a discriminatory purpose can be inferred from the objective characteristics of the law.

From a doctrinal standpoint, Alice v. CLS Bank[ii] appears to have caused at least de facto discrimination against what the Court considered “mere” computerization of business methods. Though rooted in Mayo v. Prometheus’s[iii] field-neutral analysis, Alice fashioned a new rule against “generic computer implementation” of business practices.  The result is that the vast majority of challenged patents in the computer-implemented business method space have been rendered ineligible in district courts, in the Federal Circuit, and in the PTAB.  For applications still in prosecution, Alice rejections are disproportionately affecting the technology center that includes business method art units, with most rejections being applied in the e-commerce art units.

The upshot of the post-Alice landscape seems to be that improving computer technology per se is patent eligible, as is using computers to solve industrial or computer-centric problems, but using computer technology to facilitate a business process is not. When Alice purports to exclude generic computerization from patenting, it essentially draws a line between using technology and creating technology.  Alice calls the former non-technology when what it really means is non-inventive, which is beside the point. Many have criticized Alice for how the framework’s “search for an inventive concept” improperly blurs the line between § 101 and §§ 102-103, flying in the face of Diamond v. Diehr’s proclamation that the novelty of the components used or steps performed in a method should have “no relevance” to a § 101 determination.[iv]  TRIPS art. 27.1 itself expressly distinguishes the idea of being within a “field of technology” from the notion that patentable inventions must also be “new” and “involve an inventive step.” For Alice to exclude almost all computerized business methods from the patent system for these reasons, but on § 101 grounds, lacks coherence and appears at least de facto discriminatory.

By contrast, the Covered Business Method Review (“CBM”) program presents a fairly clear case of de jure discrimination. Alongside the creation of two other technology-neutral proceedings (inter partes review and post-grant reveiew), Congress created the CBM program, limited it to “covered business method patents,” and allowed for challenges on § 101 grounds to be made.[v]  Although Congress purported to exclude “technological inventions” from the program, the Federal Circuit and the USPTO have closely tied the reach of the CBM program to Alice, such that CBM patents are now largely coextensive with the computerized business methods that the courts, following Alice, deem ineligible.[vi]  As expected, patent claims that reach a final judgment in the CBM program are being invalidated at very high rates, especially on § 101 grounds. On top of that, the CBM program even includes two provisions that uniquely disadvantage the owners of CBM patents: (1) a narrow estoppel provision that gives petitioners broader abilities to challenge CBM patents in both the PTAB and district court;[vii] and (2) a rare right for interlocutory appeal of any decision denying a motion to stay parallel litigation—with even rarer de novo appellate review.[viii]

To be clear, not all differential treatment rises to the level of TRIPS-violating discrimination.  In the pharmaceutical context, for example, the inventions are subject to regulations and market restrictions that can justify some special accommodations.  A member country’s patent laws may properly extend the term of a drug patent to offset a lengthy regulatory review period, or may properly allow generic drug makers to begin seeking their own regulatory approval during the patent term.[ix]  But the United States’ handling of computer-implemented business methods seems to go beyond the kind of justifiable differential treatment that TRIPS tolerates. For computer-implemented business methods, the legal differences in treatment discussed above correspond to nothing unique about the subject matter, but arguably reflect broader problems in the United States patent system concerning patent examination quality and litigation abuse.

None of this discrimination is in violation of the treaty, of course, unless computer-implemented business methods are a “field of technology” under art. 27.1.  Congress and the USPTO have ostensibly assumed not, but there are several good reasons to interpret TRIPS as deeming such methods technological.  First, most definitions of “technology” encompass not only creation but also use of technological tools—a view that is consistent with Diehr’s proscription against novelty forming a part of the § 101 analysis.  Second, although business methods per se were not clearly patent eligible in the U.S. until 1998[x] (three years after TRIPS went into effect), many computerized processes had long been eligible for U.S. patent protection when TRIPS was negotiated.  Third, the U.S. has on ten separate occasions questioned, for TRIPS compliance purposes, whether the laws of other countries provided adequate protection for software and business methods.[xi]  Fourth, though the U.S. has been an outlier among TRIPS members in patenting non-computerized business methods, it is not alone.[xii]  Fifth, patenting computer-implemented business methods not only accords with the broad “useful arts” scope of patent systems historically,[xiii] but also reflects modern trends applying more scientific and technological rigor to business and financial practices.[xiv]

The fact that at least some computer-implemented business methods are patent eligible in the U.S. itself suggests that the field is technological, even if many methods in the field ultimately fall short on inventive merit.  Eligibility at the threshold is a long way from patentability, and what Alice would view as mere computerization of a well-known business process will rarely be inventive enough to be patented as a novel, nonobvious process.  But arranging and employing computers and software for practical business purposes is nonetheless a technological endeavor that brings such methods under TRIPS’ protections.

As the United States considers more changes to the availability and enjoyment of patent rights, it should end this discrimination in favor of technology-neutral practices or reforms.[xv] Otherwise, it sets a precedent of singling out disfavored technologies for disadvantageous treatment on a country-by-country basis, which could undermine the international patent law harmony that TRIPS is intended to facilitate.

= = = = =

[i] TRIPS art. 27.1 (“[P]atents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. … [P]atents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”).

[ii] Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).

[iii] Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012).

[iv] Diamond v. Diehr, 450 U.S. 175, 187-88 (1981) (“The ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the § 101 categories of possibly patentable subject matter. … It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. This is particularly true in a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made.”); cf. KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 418-19 (2007) (“[I]nventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known.”).

[v] AIA § 18(d)(1) (defining CBM patent generally as “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service”).

[vi] See Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1327 (Fed. Cir. 2015) (“[E]ven if the invention required the use of a computer, the claim did not constitute a technological invention. As we are now instructed, the presence of a general purpose computer to facilitate operations through uninventive steps does not change the fundamental character of an invention.”) (citing Alice); Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48763-64 (Aug. 14, 2012) (explaining that inventions are not shown to be “technological” by: (1) the “recitation of known technologies”; (2) “reciting the use of known prior art technology”; or (3) “combining prior art structures to achieve the normal, expected, or predictable result of that combination.”).

[vii] Compare AIA § 18(a)(1)(D) (applying estoppel only to arguments actually “raised” by the petitioner) with 35 U.S.C. §§ 315(e)(2), 325(e)(2) (applying estoppel to all arguments that the petitioner “raised or reasonably could have raised”).

[viii] AIA § 18(b)(2).

[ix] See Report of WTO Dispute Settlement Panel, Canada-Patent Protection of Pharmaceutical Products, WT/DS114/R (March 17, 2000), at 170-71 (“Article 27 does not prohibit bona fide exceptions to deal with problems that may exist only in certain product areas. … [Rather, Article 27 is concerned with] the unjustified imposition of differentially disadvantageous treatment.”); see also 35 U.S.C. § 156(c) (extending patent term to offset regulatory review); 35 U.S.C. § 271(e) (immunizing certain regulatory-approval activities from infringement liability).

[x] State Street Bank and Trust Company v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998) (holding patent eligible a business process involving share price calculations because it “produces a useful, concrete and tangible result”).

[xi] Stefania Fusco, TRIPS Non-Discrimination Principle: Are Alice and Bilski Really the End of NPEs?, 24 Tex. Intell. Prop. L.J. 131, 147, 150 (2016) (concluding that “the U.S. has consistently interpreted of Article 27(1) TRIPS as requiring WTO countries to provide protection to both software and business methods”).

[xii] See John R. Allison & Emerson H. Tiller, The Business Method Patent Myth, 18 Berkeley Tech. L.J. 987, 1022 (2003) (“[M]ost other countries do not recognize patents on business methods.”); Rajnish Kumar Rai & Srinath Jagannathan, Do Business Method Patents Encourage Innovation?, 2012 B.C. Intell. Prop. & Tech. F. 1, 5-6 (2012) (“Japan, Australia, Singapore and possibly Korea generally appear to follow the U.S., whereas the European Union (‘EU’), the United Kingdom (‘UK’), Canada and India are more conservative on the issue and do not favor BMPs.”).

[xiii] See generally Sean M. O’Connor, Finding the Lost “Art” of the Patent System, 2015 U. Ill. L. Rev. 1397, 1476 (2015) (explaining that “useful arts,” in its proper historical context, would include “any and all arts that involve the use of natural materials or forces for practical ends” that can be objectively measured, as opposed to measured only by taste or sentiment).

[xiv] John F. Duffy, Why Business Method Patents?, 63 Stan. L. Rev. 1247, 1263 (2011) (explaining that “[a]s early as the mid-twentieth century, engineers and physical scientists were already migrating into the academic realms of business, economics, and management”).

[xv] For example, avoiding the § 101 question and resolving such issues on other patentability grounds. See Dennis Crouch & Robert Merges, Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making, 25 Berk. Tech. L. J. 1673, 1686-87 (2010) (describing studies showing that 84-94% of claims rejected on Section 101 grounds in the USPTO are also rejected on other grounds, which “show[s] an exceptionally high rate of doctrinal overlap and lends credence to the idea that, by initially avoiding subject-matter-eligibility questions, many of those potential issues will be avoided”).

PPAC Annual Report

PPACReport2017The Patent Public Advisory Committee (PPAC) has released its 2017 annual report with a set of important recommendations for the Director:

  1. USPTO should remain independent of Department of Commerce, including control of HR and IT;
  2. USPTO should be given further fee-setting authority beyond the AIA’s 2018 sunset date;
  3. USPTO should continue to modernize its legacy IT systems
  4. Congressional legislation should support the Telework and Hoteling program at the PTO;
  5. PTAB should “remain vigilant in ensuring fair and transparent processes and proceedings in order to render wellgrounded decisions;”
  6. Current mid-level rank of USPTO IP Attachés should be increased by one level, which would give USPTO IP Attachés greater access to senior host government officials and Ambassadors.
  7. Regarding Section 101: the USPTO should (a) continue to update the stakeholder community and examiner corps on recent jurisprudence and where appropriate, continue to issue memoranda that describes the relevant court decision; (b) finalize the MPEP updates in Section 2106 directed to “Patent Eligible Subject Matter,” so the stakeholder community has one central repository on the USPTO’s website to receive the latest updates; and (c) should continue stakeholder outreach programs and workshops on Section 101 developments due to the critical nature of this area.

In addition to these recommendations, the PPAC also offered several Kudos to the PTO for:

  1. Reducing first-action pendency average from 28 months (2011) to 16 months (2017);
  2. Reducing overall total application pendency average from 34 months (2011) to 24 months (2017);
  3. Improvement in its quality initiatives, including the Quality Metrics Program, Clarity and Correctness Data Capture Program and the Clarity of the Record Pilot as well as in its on-going efforts to enhance patent quality.


Federal Circuit: Unquantified Infringement == No Infringement

Life Techs. Corp. v. Promega Corp. (Fed. Cir. 2017)

Normally, patent infringement liability stems from an infringer using all-elements of a claimed invention.  However, a quirky provision found in 35 U.S.C. 271(f)(1) creates liability for exporting some components of a patented invention.  Particularly, the statute requires export/supply of “a substantial portion of the components.”  In its 2017 Life Tech decision, the Supreme Court interpreted this provision — holding that: export of a single component of a multicomponent invention could not meet the “substantial portion” threshold requirement. Namely, one component cannot be a “substantial portion of the components.”

On remand, the Federal Circuit has issued a new opinion in the case — this time affirming the district court judgment that patentee (Promega) failed to prove infringement under 271(f)(1) as required by the Supreme Court decision.

One problem with this analysis though – according to Promega is that – for some of the infringing kits, “it was undisputed at trial that LifeTech supplied more than one component. . . Taq polymerase and primer pairs.”   In a footnote the Federal Circuit dismissed this argument – finding that Promega had not proven particular damages regarding these 2-component exports and thus had no right to collect any damages for the infringement.

US Sales: The decision similarly affirmed of the district court’s JNOV that “that Promega failed to prove its infringement case under 35 U.S.C. § 271(a).”  A major problem with this conclusion is – as the court explains: “that the record contains evidence of admitted infringement by Life under § 271(a).” In its original decision in the case, the Federal Circuit wrote explained:

At trial, LifeTech admitted that some of the sales of its accused genetic testing kits in the United States were “technically an infringement” of Promega’s patents.LifeTech also admitted that Promega was “entitled to be compensated for [LifeTech’s] infringement.” Promega presented evidence to the jury showing sales of LifeTech’s accused kits in the United States. Based on LifeTech’s own admissions, which are supported by evidence in the record, we conclude that LifeTech’s kits made, used, or sold in the United States infringe the Tautz patent under 35 U.S.C. § 271(a).

On remand here, the Federal Circuit has taken a different position — by noting that the exact quantity of US infringement is unknown: “some unquantified number of Life’s kits infringed under § 271(a).”

At trial, Promega had presented world-wide sales numbers – that included both infringing USA kits and the UK kits (component-export elements) in a way that both the district court and now the appellate panel argue waived its right to obtain particularized damages under 271(a) – and as such “any reinstatement of our prior decision on § 271(a) infringement would be moot.”

= = = = =



Oil States: Engaging with History, Private Property, and the Privy Council

I invited Prof. Dmitry Karshtedt to provide this discussion of today’s oral arguments in Oil States. Note, Prof. Karshtedt  filed an amicus brief in the case supporting the petitioner.  Read the transcript here. – DC

By Prof. Dmitry Karshtedt

This morning’s argument in Oil States v. Greene’s Energy saw a highly engaged bench. The wide-ranging argument covered everything from the expected topics of the public-private right divide and the significance of the Privy Council’s adjudications of patent rights to perhaps more surprising angles involving government takings and even disputes between travelers and airlines over lost bags.

Some of the main themes of the argument:

  • Does the PTAB in the IPR exercise judicial power at all?
  • How, if at all, are IPRs are different from reexams?
  • What about the patentees’ settled expectations? Do they justify some form of heightened judicial review before an issued patent in existence for some time can be taken away?
  • Are Due Process issues fundamentally tied to the Article III question raised in this case, or should “power” and “process” be distinguished?
  • Can the PTAB adjudicate infringement?
  • Do Federal Circuit appeals represent constitutionally adequate Article III supervision of the PTAB?

Allyson Ho, Oil States’ counsel, lead with the argument that Inter Partes Reviews (IPRs) embody an unconstitutional transfer of judicial power to decide claims of private right between private parties without party consent or adequate Article III supervision. Justice Ginsburg asked almost immediately whether IPRs merely allow for correction of the PTO’s own errors. Ms. Ho then made an important strategic decision in conceding that, while ex parte and inter partes reexams (though a closer case) present permissible, examination-like error-correcting proceedings, IPRs differ from those earlier mechanisms because they more closely resemble an adjudication of a private-party dispute in which the PTO acts as an arbiter. Justice Kagan and Chief Justice Roberts questioned whether there is really a salient difference between IPRs and reexaminations, as the latter too allow for a process by which a third party informs the PTO that particular prior art may render an issued patent unpatentable after all. Ms. Ho, in response, stressed the high degree of third party involvement and the trial-like nature of the proceedings. In addition, she argued that in case of settlement, the PTAB generally does not complete the IPR.

The argument then moved toward the role of Congress in creating the patent right. Surely, suggested Justice Kennedy, Congress can validly limit the patent term and perhaps even shorten the patent term after issuance, so why not IPR? The response appeared to be that a grant of a patent cannot be conditioned on giving up structural rights, harkening to the discussion of the unconstitutional conditions doctrine in the petitioner’s reply brief. Even though Congress can create rights, there is a constitutional limits on how those rights can be restricted. The Chief Justice then mentioned the law of takings, suggesting that the government can take actions that devalue the right, with the Fifth Amendment sometimes entitling the aggrieved rights-holder to compensation.

The discussion then moved on to topics that have been particularly well-aired in party and amicus briefs. First, Justice Ginsburg continued to press the error correction point, pointing out that IPRs are relatively narrow in scope in that only issues of novelty and non-obviousness with specific types of prior art can be resolved in those proceedings. Ms. Ho responded that, be that as it may, 80% of IPRs also involve concurrent district court litigation, with infringement actions getting dismissed when PTAB invalidates the patent at issue. Second, Justice Gorsuch brought up the McCormick Harvesting case and its possible constitutional basis, a point which Ms. Ho embraced, but Justice Kagan then suggested that McCormick, rather, was resolved on statutory grounds. There was no further discussion of McCormick.

Ms. Ho then returned to the line between IPRs and reexams, and the earlier point that the former are really about deciding a cause between parties in a trial-like proceeding. Justice Breyer, at this point, suggested that, even if this were so, non-Article III tribunals do this all the time anyhow, as when resolving disputes between travelers and airlines over lost luggage. In addition, Justice Breyer suggested, doesn’t the Patent Act’s phrase “subject to the provisions of this title” puts patentees on notice that post-issuance non-Article III patentability determinations are possible? A point was repeated that IPRs are about an agency figuring out whether it made a mistake, with third party-input, as frequently happens in many administrative proceeding.  Moreover, Ms. Ho was questioned as to how much third-party participation is needed to make a process unconstitutional. She returned to the idea of significant third party-control.

Justice Gorsuch then brought up the point that, if patents are private rights, no non-Article III adjudication of any sort is permissible. A question then arose whether analysis would change if the IPRs existed since 1790, the year that the first Patent Act was passed, and the discussion then moved to the Privy Council. Justice Kagan observed that the role of the Privy Council in adjudging patentability over time waned but was not eliminated. Before reserving time for rebuttal, Ms. Ho made the point that the patent laws were closely intertwined with the common law from the time of the Statute of Monopolies.

Mr. Christopher Kise, arguing for Greene’s Energy, argued that IPRs simply reexamine the propriety of the original patent grant, which is not a judicial function. The action is not to extinguish the patent but simply to decide that it should not issue. In addition, argued Mr. Kise, even if the Court had to get to the public-private right distinction, it should readily conclude that patents are public rights that can be adjudicated outside Article III tribunals. At this point, an interesting question came from Justice Breyer – what about settled expectations of the patentee after some time from issuance goes by? What about investments and reliance interests? The implication seemed to be that, while of course patents can always be invalidated by courts, perhaps heightened judicial review is needed to take patents away after some time in their existence.

The Chief Justice then raised the point of Due Process and PTAB panel-stacking, and whether Congress’ power to take away patents can allow patent validity to become a pure policy tool of the executive branch. Mr. Kise contended that Due Process problems, if any, should be considered on a case-by-case basis. Justice Sotomayor brought up the point of judicial review of PTAB determinations at the Federal Circuit, to which Justice Gorsuch responded that the PTAB is not an adjunct of the district courts and can issue self-executing judgments. He also brought up the issue of vested rights in land grands. To that, Mr. Kise responded that land is core property interest in the way that patents are not, because the latter depend on the federal statute and exist for an instrumental purpose of promoting the progress of useful arts. He also contended that process issues should be separated from power issues.

As Malcolm Stewart began arguing for the government, the Chief Justice framed the point of “bitter versus the sweet” – whether the government can condition the grant of a patent on anything it likes, including stacking of the deck in PTAB proceedings. Mr. Stewart responded that, even if there were a Due Process problem, Due Process does not require Article III, as public employee tenure protection cases show. He also mentioned that expanded panels are not unlike en banc panels in the federal circuit courts, and exist principally to correct panels that diverged from precedents. Justice Breyer then brought up the issue that the IPR statute is applied retroactively to the patent at issue in this case. Mr. Stewart’s response was that patents could be reexamined since 1980 and could be invalidated in certain proceedings before then, and they could always be invalidated by courts.

Returning to the public-private rights debate, Chief Justice Roberts discussed the Schor test and whether the multi-factor analysis of Schor is conducive to investment backed-expectations. Mr. Stewart contended that, whatever the test, PTAB adjudicates private rights because liability for past money damages are not involved. The question then came up whether the PTAB can adjudicate infringement, to which Mr. Stewart responded that probably not because money damages are involved. Justice Gorsuch then asked whether the PTAB can perhaps declare non-infringement, to which Mr. Stewart responded that there is no tradition of the PTO’s making that determination. Justice Gorsuch asked about the PTO’s tradition of cancelling patents, and Mr. Stewart’s response was that the issue is really about deciding patentability, which the PTO has been doing since 1836.

In rebuttal, Ms. Ho reiterated her point that Congress cannot condition a grant of a patent on taking away litigants’ structural rights and reinforced the point that appeals are not a sufficient form of Article III supervision. She ended with the point that, again, IPRs resolve disputes between two private parties.

Oil States Transcript

Oil States Transcript.  Commentary to follow.

Interesting quotes:

Justice Sotomayor: If I own something, which is what your basic position, I understand, is, that this is a personal right, how can a government agency take that right away without due process of law at all? Isn’t that the whole idea of Article III, that only a court can adjudicate that issue?

JUSTICE GORSUCH: [W]e have a number of cases that have arguably addressed this issue already, like McCormick, for example, in which this Court said the only authority competent to set a patent aside or to annul it or to correct it for any reason whatever is vested in the courts of the United States.

Cert Denied in Amdocs

The Supreme Court has denied Openet’s petition for writ of certiorari in Openet v. Amdocs.  The petition asked “whether the Federal Circuit erred by looking beyond the claims to the patent specification to assess patent eligibility?”  The court also denied certiorari in the pro se case of Poniatowski v. Matal.

Three Supreme Court Petitions: Teaching Away, Eligibility, Affirmed Without Opinion

Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co., Ltd., Supreme Court Docket No. No. 17-751.

  1. Whether the Federal Circuit has erred in holding that, for the purposes of an obviousness determination under 35 U.S.C. § 103(a), a reference “teaches away” from a proposed combination only if it expressly “criticize[s], discredit [s], or otherwise discourage[s]” the proposed combination.
  2. Whether inter partes review …  violates the Constitution by extinguishing private party rights through a non-Article III forum without a jury. (Copy of Oil States Question)

Nidec Petition.


CyberMonday: Patent Law at the Supreme Court

The Supreme Court will hear oral arguments on Cyber-Monday 11/27 in two important patent cases:

  • Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712. Asking whether inter partes review (IPR) operates unconstitutionally “by extinguishing private property rights through a non-Article III forum without a jury.”
  • SAS Institute Inc. v. Matal, No. 16-969. Asking whether, in an IPR, the PTAB must issue a “final written decision as to every claim challenged by the petitioner, or whether it allows that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner.” See 35 U.S.C. § 318(a).

Since Justice Scalia will not be there, I’ll include a punch-line quote that comes from Oil State’s Reply Brief:

But it is odd to argue that the agency makes so many mistakes in issuing patents that its special expertise is needed to resolve disputes over those errors.

My expectation is that the AIA and PTO’s approach will be upheld in both cases.  At oral arguments look for any signals that conservatives will break away from Justice Thomas notion that patent rights are not “core private property” but instead are properly considered lesser franchise rights.  In addition, look for consideration of whether the justices are thinking outside-of-patent-law at a bigger picture review of public rights doctrine.


For last minute reading, consider the Oil States Reply Brief [OilStatesReply].  The following is an important portion:

This Court has recognized only narrow exceptions to the rule that Congress may not authorize non-Article III tribunals to exercise the Judicial power by adjudicating disputes between individuals. One of those narrow exceptions involves disputes over public rights. But “ ‘even with respect to matters that arguably fall within the scope of the “public rights” doctrine, the presumption is in favor of Art. III courts.’ ” Stern. Respondents cannot overcome the presumption in favor of Article III, and their attempts to wedge IPR into the narrow public-rights exception only confirms that it does not fit.

a. Claims By Or Against The Government. Respondents liberally cite these paradigmatic public rights cases, e.g., Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 274-75 (1855), but in every case – like most modern-day agency enforcement adjudications – the government was a party. IPR adjudicates disputes between private parties and does not at all implicate the government’s sovereign immunity – the origin of the exception. Id. at 274-75. Indeed, the AIA does not authorize the PTO to bring an IPR. 35 U.S.C. § 311(a).

b. Claims Historically Resolved Exclusively By Another Branch. The government concedes, as it must, that “challenges to the validity of issued patents were often brought injudicial forums.” Gov’t Br. 46; see also 3 William Blackstone, Commentaries 260-61; Br. of Legal Historians 5-37; Addendum 23-31. That concession is fatal because the exception applies only to claims “historically *** determined exclusively by” another branch. Stern, 564 U.S. at 485 (emphasis added).

The government nonetheless argues (at 46) that the “authority of the Crown and Privy Council to cancel patents” renders them public rights. Not so. First, this Court has repudiated that theory’s most significant implication, instead holding that an Executive patent revocation “would be in fact an invasion of the judicial branch of the government by the executive.” McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606, 612 (1898). Second, the Privy Council ceased revoking invention patents in ordinary cases – such as those involving a patent’s novelty – in 1746. . . .

c. Claims Whose Adjudication Is Essential To An Expert Agency’s Resolution Of A Limited Regulatory Objective, Tied To A “Particular Government Action.”… [R]espondents misapprehend this narrow exception at each step. … [A]dministering the patent laws is not [a limited regulatory objective]…. IPR is not “essential” to that objective…

It will be interesting.

In SAS, the court’s response may depend upon how far the Justices have gone down the road of releasing judicial intuition in favor of a strict-grammar approach to statutory interpretation. The statutory question at issue is found within 35 U.S.C. 318, which focuses on the “decision of the board” in cases where the director has already instituted the IPR:

If an inter partes review is instituted … [the PTAB] shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner ….

The suggestion by petitioners is that the “any patent claim challenged” requires a written decision even as to claims that were challenged in the petition but not instituted for PTAB review.  Here, though I see a credible grammar argument that the claims challenged claims referred to in Section 318(a) are limited only to those instituted.

The SAS challenge can also be seen as pushing against the Director’s authority under Section 314 to partially-institute an IPR (institute as to only some of the challenged claims or for only some of the reasons challenged).  Of course, that issue is not appealable directly (institution decision is not ordinarily appealable) although the implementing rules could be challenged.  And, SAS did not push this button.