Correcting Patents During an IPR

by Dennis Crouch

Fitbit, Inc. v. Valencell, Inc. (Fed. Cir. 2020)

In this decision, the Federal Circuit makes two important statements going forward relating to inter partes review proceedings:

  • A joined party has full rights to appeal a PTAB final decision – even as to claims or grounds not raised by the joined party.
  • During an IPR, the PTAB must correct errors in a patent when a certificate of correction would be appropriate and when requested by the parties.  (When you read the case, you’ll note that the court doesn’t quite say this, but almost.)

Valencell’s US8923941 covers methods of generating data relating to blood oxygen level, heart rate, and other physical activity.  The claimed method includes two primary steps: (1) sensing; and (2) processing.  The sensing step requires a single device “attached” to a user that includes a motin sensor (accelerometer) and a pulse-oximeter (photoplethysmography – PPG).  The processing step creates a signal that includes heart rate, respiration rate, and a plurality of physical activity parameters.

This setup is now common with many millions of such devices being sold across the country.  According to its court filings, Valencell repeatedly approached various major players–including Fitbit and Apple–looking for partnership & licensing opportunities. The companies refused and Valencell eventually filed a set of infringement lawsuits back in 2016.  Apple & Fitbit then petitioned for inter partes review.

This case is partically an IPR procedure case and so the following timeline is somewhat important:

  • Apple filed its IPR petition on claims 1-13. The Board partially granted the petition in part — only as to claims 1, 2, and 6-13.
  • Fitbit then filed its IPR petition on claims 1, 2, and 6-13 and moved for joinder with Apple’s case. The Board granted that motion.
  • The Supreme Court then issued SAS — barring the practice of partial institution.  As such, the Board issued a new institution decision adding all of the challenged claims (3-5).
  • The Board then found the originally granted claims to be unpatentable, but found no problem with claims 3-5 (“not unpatentable.”)

Apple did not appeal, but Fitbit has appealed — arguing that claims 3-5 are also invalid.

Joinder and Right of Appeal: The first question in the case is whether Fitbit has a right to appeal regarding claims that it did not challenge in the first place.  Here, the Federal Circuit says yes they do get to appeal — holding that a joined party’s rights apply “to the entirety of the proceedings and includes the right of appeal.” The court here was primarily guided by the right-of-appeal statute that states plainly “Any party to the inter partes review shall have the right to be a party to the appeal.” 35 U.S.C. § 319.  And, the joinder provision indicates that the new entity is “join[ed] as a party.” 35 U.S.C. § 315(c).

On the merits of obviousness: I discussed the general scope of claim 1 above.  Claims 3-5 are all dependent and add a few additional limitations:

  • Claim 3 – the processed data is usable with an application specific interface (abbreviated API)
  • Claim 4 – the “the application” generates statistical relationships between the various parameters. [Note – there is no antecedent basis for “the application”]
  • Claim 5 – adds further definition to the stats developed, including “Bland-Altman plots.”

Do the Analysis: As to claim 3, the parties had offered competing constructions of the term application-specific-interface.  The Board chose the patentee’s narrower construction and ruled the claim not-proven-unpatentable. On appeal, the Federal Circuit ruled that the Board should have completed its analysis and walked through whether the claim was obvious under the narrow construction.

Lack of Antecedent Basis: The limitations of claims 4 & 5 lack antecedent basis. In particular, the claims appear to add limitations to “the application” but that portion of the invention is not previously claimed.   The Board didn’t get into its obviousness analysis because of this technical issue with the claims:

Although we agree that the recitation of the term “the application” in claim 4 lacks antecedent basis in claim 1, we declined to speculate as to the intended meaning of the term.   Although Petitioner and Patent Owner now seem to agree on the nature of the error in claims 4 and 5 [citing briefs], we find that the nature of the error in claims 4 and 5 is subject to reasonable debate in view of the language of claims 1 and 3–5 and/or that the prosecution history does not demonstrate a single interpretation of the claims.

Board Op.

It turns out that during prosecution, the patent applicant cancelled a dependent claim discussed the Application, and the stray reference was not caught by either the attorney nor the examiner.

On appeal, the Federal Circuit holds that the Board should have fixed the error here.

The preferable agency action is to seek to serve the agency’s assignment under the America Invents Act, and to resolve the merits of patentability. Although the Board does not discuss its authority to correct errors, there is foundation for such authority in the America Invents Act, which assured that the Board has authority to amend claims of issued patents. See 35 U.S.C. § 316(d). . . . The concept of error correction is not new to the Agency, which is authorized to issue Certificates of Correction.

In particular, all the parties agreed that the error was inadvertent and could be corrected by the Board.

Although the Board states that the intended meaning of the claims is “subject to reasonable debate,” we perceive no debate. Rather, the parties to this proceeding agree as to the error and its correction. The Board erred in declining to accept the parties’ uniform position and correct the error that claim 4 depend from claim 3. With this correction, the rejection of claims 4 and 5 for absence of antecedent basis for “the application” disappears.

Slip Op. On remand, the Board will correct the error and actually judge the obviousness of these three remaining claims.

Sufficiency of a Range: UK Supreme Court

by Dennis Crouch

Regeneron Pharmaceuticals Inc. v Kymab Ltd., [2020] UKSC 27.

This important patent decision comes from the UK Supreme with a holding that Regeneron’s patents are invalid for insufficiency of the disclosure.  The insufficiency doctrine in the UK is parallel to US enablement law.

In the U.S., the courts have limited the enablement doctrine – especially considering McRO, Inc. v. Bandai Namco Games Am. Inc., 959 F.3d 1091 (Fed. Cir. 2020) (claims are valid absent identification of “concrete” and “particular” embodiment covered by the claim but not enabled).  Of course, the US now has a powerful eligibility doctrine that overlaps as well.

The Regeneron patents cover transgenic mice that produce human immunoglobulin used to create drugs.

1. A transgenic mouse that produces hybrid antibodies containing human variable regions and mouse constant regions, wherein said mouse comprises

an in situ replacement of mouse VDJ regions with human VDJ regions at a murine chromosomal immunoglobulin heavy chain locus and

an in situ replacement of mouse VJ regions with human VJ regions at a murine chromosomal immunoglobulin light chain locus.

EP2264163 (EP1360287 also asserted).  If I understand this correctly, mice were first generically modified to contain DNA sequences for creating the human antibody.  However, those mice died easily and so the researchers added back some amount of murine (mice) DNA.  With just the right mix, the mice lived well and also produced antibodies that could be given to humans without triggering a human anti-mouse antibody response (HUMA).

UK statutory law requires:

The specification of an application shall disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art.

14(3) of the UK Patents Act 1977 (Replicating the EPC Article 83). In the UK and Europe, courts have also used the undue-experimentation test and have also considered whether a skilled person would need create a follow-on invention in order to practice the invention.

Typically a claimed “range” in patent law is thought of as a numerical spread with the claim covering all potential embodiments in-between.  The full-scope of a claimed range must be enabled, and this is a common attack-point for defendants.  Here, the claims do not specify such a range, but the defendant was able to characterize the claimed replacement regions as constituting a wide swath of potential transgenic mice — thus a range (“range of products”).  The Supreme Court agreed here that it is the full scope of claimed “range of products” that must be enabled.

In the case, the trial court sided with the defendants — holding that “the teaching in the patent did not enable any type of mouse within the range to be made, let alone mice across the whole of the relevant range.” (quoting here from the Supreme Court opinion).  The appellate court disagreed — finding that the claim did enable something within the claimed scope — and that the disclosure was sufficient because the invention was inventive and groundbreaking.

Finally, at the Supreme Court, the Lord Justices followed a third path – that ultimately resulted in the claims being invalid. Like the appellate court, the Supreme Court agreed that some embodiments covered by the claim were enabled.  However, the court ruled that “some embodiments ” was not enough.

Patentees are free to choose how widely to frame the range of products for which they claim protection. But they need to ensure that they make no broader claim than is enabled by their disclosure.

A claim which seeks to protect products which cannot be made by the skilled person using the disclosure in the patent will, subject to de minimis or wholly irrelevant exceptions [such as the length of a mouse’s tail], be bound to exceed the contribution to the art made by the patent, measured as it must be at the priority date.

Enablement across the scope of a product claim is not established merely by showing that all products within the relevant range will, if and when they can be made, deliver the same general benefit intended to be generated by the invention, regardless how valuable and ground-breaking that invention may prove to be.

Id. In applying these principles to the Regeneron patents, the court found that the wide-range of potential products claimed were not sufficiently disclosed. In particular, the claimed range of products included transgenic mice with long segments of the human variable region gene locus.  But, the specification only taught how to do this with short-segments.  Invalid.

Biosimilars and Temporary Restraining Orders

by Dennis Crouch

Genentech and City of Hope v. Immunex and Amgen (Fed. Cir. 2020)

Genentech’s bevacizumab (Avastin) is a large-molecule biologic cancer chemotherapy.  The FDA approved (licensed) Amgen’s biosimilar (aka generic) version – that is sold as Mvasi.  As a biosimilar, the approval process was quicker and cheaper for Amgen because the FDA relied upon some of the data originally provided by Genentech.

Under the Biologics Price Competition and Innovation Act (BPCIA), the biosimilar producer must provide the innovator company with notice at least 180-days before marketing the product:

The [biosimilar] applicant shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).

42 U.S.C. § 262(l)(8)(A).  Here, Amgen provided notice, but then supplemented its FDA application to add an additional manufacturing facility and to make a change to its drug label.

Genentech thought that the 180 day notice should be reset based upon the supplemented application. However, Judge Connolly (D.Del.) denied Genetech’s motion for a temporary restraining order.  The Federal Circuit allowed immediate appeal — implicitly finding that the denial of a TRO was an order to refuse an injunction that is immediately appealable under 28 U.S.C. § 1292(a)(1). [See Below for my criticism of this.]

On appeal, the Federal Circuit has affirmed based upon its statutory interpretation of Section 262(l)(8)(A) (quoted above).  In particular, the court looked at the statutory notice requirement — requiring notice of “commercial marketing of the biologic product.”  Here, the “biologic product” – as also defined in the statute – is separate and distinct from its manufacturing facility or its product label.  When Amgen changed those details it did not alter the biologic product. Thus, the original notice was sufficient.

 Genentech’s interpretation, which would impose several timing requirements where each supplement necessarily triggers another notice requirement, is inconsistent with the statute and with Sandoz II. [Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664 (2017).]  A biosimilar applicant that has already provided Section 262(l)(8)(A) notice regarding its biological product need not provide another notice for each supplemental application concerning the same biological product.

Slip Op.

= = = =

In my brief search on Westlaw, I could not find any other case where the Federal Circuit heard an interlocutory appeal of a denial of a temporary restraining order.  In a 1999 decision, the Federal Circuit refused to hear such an interlocutory appeal on a TRO denial. Nikken USA, Inc. v. Robinson-May, Inc., 217 F.3d 857 (Fed. Cir. 1999) (nonprecedential).  In Nikken, the patentee had requested both a temporary restraining order and a preliminary injunction.  The district court quickly denied the TRO (finding validity + infringement issues) but did not immediately rule on the preliminary injunction.  When the patentee appealed the TRO denial, the Federal Circuit acted sua sponte to deny appellate jurisdiction. Id., See Office of Personnel Management v. American Fed’n of Gov’t Employees, AFL-CIO, 473 U.S. 1301 (1985) (“the established rule is that denials of temporary restraining orders are ordinarily not appealable”).

Thus, the rule is that denial of a TRO motion is not immediately appealable while denial of a preliminary injunction motion is immediately appealable. You could imagine situations where at TRO motion is effectively a PI and thus may be immediately appealed. Here, however, Federal Circuit did not consider the TRO/PI divide but rather simply stated: “We have jurisdiction under 28 U.S.C. § 1292(a)(1).”

Here, because the appellee won on appeal there won’t be any party challenging appellate jurisdiction and so the situation for this case is moot, but does create a precedential foothold for appeals of temporary restraining orders.

= = = =

In looking at the briefing at the district court level, the patentee asked for a TRO and also requested a “statutory prohibition” which it vehemently denied was a request for a preliminary injunction.  The defendants characterized the plaintiffs’ motion as one for preliminary injunction. The different classification approaches stem from the hard-to-meet test for preliminary injunctive relief — the preliminary-injunction four-factor test is even harder than the test for a permanent injunction because it additionally requires a showing of a likelihood of success on the merits.  The district court did not decide this particular dispute because it held that the movant (Genentech) would lose the motion regardless.

Based upon all of this, there is a good argument that appellate jurisdiction exists under 28 U.S.C. § 1292(a)(1), but that argument was never actually made. And, the Federal Circuit failed its duty to consider its own jurisdiction over the appeal.

Confronting Your Accuser via ZOOM

by Dennis Crouch

Federal Courts have been delaying trials since March 2020. There have been a handful here and there – but not jury trials.

One patent case preparing for a jury trial before Judge Leonard Stark (D.Del) is Sunoco Partners Marketing & Terminals L.P. v. Powder Springs Logistics, LLC, 2020 WL 3605623 (D. Del. July 2, 2020).  The lawsuit was filed back in 2017 alleging infringement of Sunoco’s patents for cutting its gasoline with cheaper butane. US9494948 and US9606548 (“continuous in-line blending of butane and petroleum”).

In a recent order, Judge Stark announced that he is moving forward with an in-person jury trial, albeit with a few exceptions.

[Read the Order: RemoteJuryTrialOrder

No face-to-face witness testimony. The key aspect of the order is that the trial will move forward without witnesses being in the court room.  Rather, testimony will be remote.  Although the defendants argued that they could not “receive a fair trial if all the witness examinations must be handled remotely,” Judge Stark concluded that “skilled trial counsel” will make it work.  “I expect that the jury will be given what it needs to make necessary factual findings, including credibility assessments.” Id.  Although not directly in the order, the witness testimony will presumably be via video.

Part of why the court did this was to avoid the politics of face coverings.

By excluding all witnesses from testifying in court, the Court will not confront the issue of whether to permit or require witnesses to testify with face coverings (or alternatively to prohibit witnesses from doing so).

In my opinion, avoiding the politics-of-masks is a horrible reason for the judge to make the call for remote testimony.  On the other hand, the court also gave a very sensible back-up reason:

Not having witnesses in the courtroom will also make it much easier to maintain social distancing in the courtroom and protect the health of those in the courtroom.

Id. In addition to no witness testimony, the court will also be closed except for 4-reps for the plaintiff and 3-reps for each defendant (including local counsel).  These are the total numbers for the whole trial (no swapping). The trial will be simulcast to video.  However, the court is only going to simulcast it to another courtroom and observers can attend there. Hopefully the video will be recorded.

Note on my title: The 6th Amendment of the U.S. Constitution includes a defendant’s right to “be confronted with the witnesses against him.” However, the provision is limited to “criminal prosecutions” not civil actions such as patent cases.

Thanks to Robert A. Matthews ( for directing me to the decision. 

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

One more on Aunt Jemima

by Dennis Crouch

I’m sure that there will be a few references to the Aunt Jemima trademarks in upcoming law review articles. Let me direct you to a handful of court decisions regarding the mark. The cases offer an important look at how judges saw race & commerce in the mid-20th century.

The courts here effectively concluded that only one company could sell flour (or syrup) branded with the caricature of a black-skinned person.


In this Case, Persuasive Authority Must be Considered

by Dennis Crouch

In law school, we talk about decisions that are binding as precedent and others that are not binding but that may be considered as persuasive authority.  There is very little precedent on when persuasive authority must be considered, and usually we say something flippant about ignoring the other decisions.  The case below is one that comes out the other way — the court abused its discretion by failing to consider persuasive authority. 

Electronic Communication Techs., LLC v. ShoppersChoice.Com, LLC (Fed. Cir. 2020)

ECT sued ShoppersChoice on its US9373261, but the district court (S.D.Fla.) dismissed the case on the pleadings–holding that the claims were ineligible under 35 U.S.C. § 101.  That decision was affirmed by the Federal Circuit in May 2020. See Elec. Commc’n Techs., LLC v., LLC, 958 F.3d 1178 (Fed. Cir. 2020).

Because of the oddities of the final-judgment rule, the patentee was able to appeal the eligibility question before the district court reached the issue of attorney fees under 35 U.S.C. § 285.  The district court did eventually deny the attorney fee award as described by the Federal Circuit here:

[T]he District Court denied ShoppersChoice’s motion for the award of attorney fees. In
doing so, the District Court explained that “[u]nder the Lanham Act, ‘[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.’”  . . .

ShoppersChoice contends that the District Court abused its discretion in weighing relevant factors, and by applying the incorrect attorney fee statute. We agree with ShoppersChoice.

Slip Op. (denial of attorney fees vacated and remanded).

Obviously it was a mistake to cite the Lanham Act provision instead of the Patent Act, but it is not a big deal because the statutes have identical provisions:

  • Patent Act: The court in exceptional cases may award reasonable attorney fees to the prevailing party.
  • Lanham Act: The court in exceptional cases may award reasonable attorney fees to the prevailing party.

I don’t think that the Federal Circuit would have vacated simply because of the erroneous citation — especially because interpretation of the two provisions have been harmonized by the Supreme Court in recent years. Rather, the main focus of the was the court’s failure to consider two important points.

  1. ECT’s manner of litigation; and
  2. The objective weakness of the asserted patent claim

Manner of Litigation: ECT’s case against ShoppersChoice was one of a larger number of infringement lawsuits filed by ECT.  Those lawsuits apparently included the type of behavior now associated with classing-patent-trolling: standardized demand letters; low-value settlement offers; failure to proceed in cases. And, ECT had already been sanction by a different court for this type of conduct.  The district court did not consider these issues in its opinions other than a conclusory statement that ECT had not “exhibited the kind of unreasonable behavior that would make
this case stand apart from others.”

On appeal, the Federal Circuit held that the court must go back and “actually assess the totality of the circumstances.” (quoting AdjustaCam).

Objective Weakness: By the time the district court ruled on its attorney fee determination, there were two additional relevant cases out of California federal court.

  • McKinley (C.D.Cal. 2014): finding other claims of the patent invalid under 101.
  • True Grit (C.D. Cal. 2019): holding that  “no reasonable patent litigant would have believed” that claim 11 was “viable” after the McKinley decision.

Although these two district court were not binding on the Florida court, the appellate panel concluded that the district court should have expressly wrestled with their holdings before reaching an alternative outcome.

[T]he absence in the Attorney Fee Order of any reference to either relevant case, or any allusion to their opposing conclusions, is problematic.

Slip Op.

So, on remand the district court will again consider whether the prevailing defendant – ShoppersChoice.Com gets its attorney fees.

Patent Law and Booking.Com: as a whole or by parts

time to register your

United States Patent & Trademark Office (USPTO) v. Booking.Com B.V. (Supreme Court 2020) [Full Decision PDF]

In this trademark case, the USPTO asked the court to implement its “nearly per se” rule that a generic term remains generic even if coupled with a generic top level domain (such as “.com”).  The 4th Circuit sided with BOOKING.COM and the Supreme Court has now affirmed: “[W]e discern no support for the PTO’s current view in trademark law or policy.” Id.

According to the majority, the question is not whether some portion of BOOKING.COM is generic but rather whether the term “taken as a whole” is generic.  Then the court queries — what type of generic thing is a “”

That should resolve this case: Because “” is not a generic name to consumers, it is not generic.

In its opinion, the court notes the PTO inconsistency (ART.COM and DATING.COM are both registered).

The following quote from the case is probably the most controversial:

[I]f “” were generic, we might expect consumers to understand Travelocity—another such service—to be a “” We might similarly expect that a consumer, searching for a trusted source of online hotel-reservation services, could ask a frequent traveler to name her favorite “” provider. Consumers do not in fact perceive the term “” that way, the courts below determined.

The majority opinion was written by Justice Ginsburg and joined by six other justices, including all five conservatives. Justice Sotomayor concurred in a very short opinion; and Justice Breyer wrote in dissent and would have applied Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., 128 U. S. 598, 602 (1888). Justice Breyer writes:

Goodyear recognized that designations such as “Company,” “Corp.,” and “Inc.” merely indicate corporate form and therefore do nothing to distinguish one firm’s goods or services from all others’. . .  .[W]here a compound term consists simply of a generic term plus a corporate designation, the whole is necessarily no greater than the sum of its parts. . . .

Breyer in dissent.

Breyer spends some time focusing on the problems associated with survey evidence.  I suspect that aspect of his dissent will have some impact on how courts conduct trademark cases in the future.


Vestigial Use

by Shubha Ghosh, Crandall Melvin Professor of Law and Director, Syracuse Intellectual Property Law Institute

As companies voluntarily retire their offensive trademarks, two questions tug at whatever passes for a conscience nowadays.  First, can these undesirable marks come back, revived by whomever sees a market niche for these symbols? This may seem like a ridiculous possibility, but on June 21, 2020, an Intent to Use Application was filed  on the word mark “Aunt Jemima” by Retrobrands, a Florida LLC, whose mission “is to revive ‘abandoned’ consumer iconic brands and to bring them back to the marketplace.” The second question is, do these intellectual property mea culpas do any good in the face of companies like Retrobrands and the entrenched nostalgia it represents?  After all, gallons of maple syrup were transformed into Benjamins, even more Tubmans, over the years. Should not there be some disgorgement in the form of reparations?

The proposed doctrine of vestigial use under federal trademark law can address both questions. As described below, vestigial use can prevent trademark abandonment, which would potentially allow some enterprising cultural chauvinist from appropriating the mark. Vestigial use, as applied, can also provide a new revenue source that can finance the necessary reparations.

A vestigial use is the use of a mark to maintain the memory of a brand. Instead of offensive symbols littering the shelves of your local grocery store, they can be relegated to a museum. The idea would be similar to that of Budapest’s Memento Park, where the brutalist statues  from the Soviet era have a fitting resting place, about a forty minute bus ride from the Budapest bus terminal in a rural outskirt more habitable than Siberia but just as overlooked. Memento Park is a reminder of ideas gone woefully wrong.

Vestigial use would allow a trademark owner to continue using a mark without completely abandoning it. A trademark owner can claim continued use of the mark as a curator with the once fully commercialized mark relegated to a virtual museum. Retired offensive marks would be hidden away, but still can serve as a reminder of what was once bought and sold freely in the United States.  History is neither erased nor glorified. Instead, these marks become objects of study, specimens of bigotry past and continuing. These vestigial marks would have a place on a pedestal much like Uncle Tom’s Cabin, Huckleberry Finn. The Yellow Wallpaper, Native Son, and To Kill a Mockingbird have a protected place in public libraries. Like these books, vestigial marks benefit the public through their presence, serving as the occasional fodder for those who like to ban cultural relics and as a constant memento of a persistent ugliness.

I envision vestigial use as a judge-made doctrine, although with some imagination an appropriate statute could be drafted. It would allow trademark owners to defeat a claim of abandonment by someone who seeks to take up the mark. Under section 1127 of the Lanham Act, abandonment occurs when a mark’s “use has been discontinued with intent not to resume such use.”  The provision defines use as “the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark.” If vestigial use were adopted, a trademark owner’s showcasing the history of the mark would count as bona fide use. For offensive marks, owners like Quaker Oats, or its licensees, could create the equivalent of a Memento Park while blocking others from adopting the mark for full profit-making branding.

Vestigial use is necessary because failure to commercialize the mark may constitute abandonment under current doctrine. If Quaker Oats used the Aunt Jemima mark solely as a museum relic, that would most likely constitute a discontinuation of the mark “with an intent not to resume such use.”  Under the Lanham Act, use requires the goods labelled with the mark “are sold or transported in commerce.” Vestigial use of the mark would not require sales or transportation in commerce in the traditional sense. In fact, vestigial use presumes the mark is removed from the national mass market associated with the establishment of trademark rights. However, an archival use entails interested viewers going towards the trademarked product much like visitors to a museum. Instead of many products transported to purchasers, vestigial use entails many purchasers travelling to view the archived mark. The mapping is not from many marked goods to many purchasers but from many viewers to the one marked product.

As far as analogies go, this is admittedly a stretch. But if trademark law is about creating and protecting associations, it is not completely clear why the law’s protection should be limited to the many products going out to many buyers. First, there is nothing sacred about many to many; trademark law protects marks on niche products, even in markets with a few consumers. It is also not clear why the transportation has to be from product to buyers. Trademark law protects marks on websites which are unique objects which attract buyers.  The transportation requirement under the statute encapsulates the many consumers going to a single branded product. Vestigial use is a possible interpretation of the statute.

But possible does not mean highly probable. Courts may be hesitant in reinterpreting the use requirement to make it ostensibly easier to obtain rights. My proposal, however, is limited to applying vestigial use as a limitation on abandonment as opposed to lowering the use requirement for registration or demonstrating ownership. Potential evisceration of the public domain may also be the concern. Vestigial use sounds like warehousing of marks. But the proposal requires some affirmative act of the mark holder, namely a memorial or curated use. Furthermore, the public domain is a strange status under trademark law. An abandoned mark is not really in the public domain. As Professor Gerhardt argues in her blogpost, Quaker Oats would have rights under 1125(a) against companies like Retrobrands. Vestigial use is designed to prevent new users from fully recapturing supposedly abandoned marks.

Picking up on the public domain point, some policy makers may turn to genericide as the appropriate doctrine to put these offensive marks to rest. Arguably the racial stereotypes underlying “Aunt Jemima” or “Eskimo” are generic signifiers for outdated and commonly understood denigrating tropes. However, genericide means that the mark refers to the genus to which a product belongs, not about the signification of marks. Consequently, genericide is not practically suited to put to rest generically offensive marks.

Even if the proposed doctrine of vestigial use is unconvincing, analyzing it reveals the underlying problem. One reason for posts like this is that the Supreme Court’s decision in Tam rules out the possibility of denying registration or other trademark protections to offensive marks. According to the Court’s logic, “Aunt Jemima” is just another viewpoint under the First Amendment, and viewpoints do not ever really disappear. Their persistence is evinced by companies like Retrobrands and the recurring terms of the current public discourse. Vestigial use acknowledges the persistence of offensive discourse, despite all good intentions. Appropriating this persistence through trademark protection for memorial uses is a reminder of the terms of the cultural and political debate, Memory may at some date lead to the substantive economic and political reforms needed to combat inequality and bigotry.  Marks are never dead, and the past is never past, even if undistinguished.

Abandoning Disparaging Marks

As TM owners willingly give up their racially disparaging and gender stereotyping marks, are there ways to ensure that the marks are not reoccupied by others wanting to free ride on their fame and infamy?

Guest Post by Deborah R. Gerhardt, Reef C. Ivey II Excellence Fund Term Professor of Law at UNC School of Law

Quaker Oats says it plans to phase out its “Aunt Jemima” brand. The character has long been criticized as a stereotypical representation of black women as inferior servants. In recognition of the problem, the Company had been gradually revising the brand’s image and considering when might be the appropriate time to phase it out altogether. Of course, if taking a bold stand against racism had been their true intent, they would have taken much more decisive action to drop the brand long ago.

As Trevor Noah observed on the Daily Show’s June 17, 2020 episode,

It’s also amazing that the brand knew that Aunt Jemima was racist and then instead of just changing it, they chose to instead slowly phase out the racism over time. That is so ridiculous. Can you imagine you caught your partner cheating and instead of stopping, they said, Yeah, yeah. You’re right baby. This is so wrong. I think I’m going to slowly start phasing out all of my affairs. From now on no sex, just hand stuff.

Amidst protests following the wake of George Floyd’s untimely death, Quaker Oats proclaims it truly does plan to take action to recreate the brand, although you would not know that from looking at its website one week after the announcement. As the screenshot below illustrates, no indication of abandonment appears on their pancake mix or syrup web pages.

The current plan is hardly inspiring. It appears to be: “Let’s keep the admittedly racist mark in place until a suitably less racist substitute has been crafted.”

One of the potential ways to challenge a third-party registration of a racist brand was eliminated in 2017. For years Section 2(d) of the Lanham Act blocked registrations that disparaged a group of people. But despite this bar, the “Aunt Jemima” mark (and so many other disparaging marks) registered anyway.  Some however, were blocked or cancelled (including the Washington Redskins mark) on that basis before the Supreme Court held the bar unconstitutional in Matal v. Tam 137 S. Ct. 1744 (2017). Since that decision, the First Amendment right to free expression permits citizens to seek registration of racially offensive trademarks.

After Tam, the Quaker Oats plan to abandon the Aunt Jemima mark raises an interesting question: what if a third party were to seize the opportunity to pick up the well-known mark and double down on the racist stereotype? Are there strategies that Quaker Oats can use to minimize any consequential harm? For a fun take on what such a highjacking looks like, go here to see what happens when the Southpark kids adopt “the Washington Redskins” for their start-up after the registration was cancelled. Contrary to the suggestion in that episode, there at least a couple of strategies that may work.

The Southpark spoof appears to be coming true with recent application to register marks on AUNT JEMINA and ESKIMO PIE by notorious “trademark entrepreneur” Leo Stoller. Consider Also Mark Cohen’s discussion of Colgate Palmolive’s Darlie (“Black man toothpaste.”) trademark in China.

The easiest option is to lean on the USPTO’s examiner corps. Even if the company ceases using the mark, the company’s portfolio of registrations will remain on the Principal Register until, one by one, they expire. If a new entrant to the syrup and pancake mix market applies to register “Aunt Jemima,” the Examiner would look at the Principal Register and see if any confusingly similar marks are still live. I predict that as long as Aunt Jemima lives on the Principle register, the marks will block others from registering confusing similar brands. We will not have to wait long to see if my prediction is right because on June 18, 2020, an individual in California applied to register “Aunt Jemima” for “Pancake mixes; Maple syrup; Pre-mixed pancake batter; Table syrup.” Something at the USPTO would have to go terribly against the norm for this application to succeed. Quaker Oats owns five registrations (and one pending application) for the brand, and some will not be up for renewal until 2025. Even if Quaker Oats took no action against the current applicant, the mark’s continued presence in the USPTO’s TESS data will give trademark examiners a clear and easy way to deny registration of the mark to anyone else until the last Quaker Oats “Aunt Jemima” mark expires.

This practice reveals that some trademark owners can succeed in blocking new entrants years after use has stopped. Although the Lanham Act ties trademark rights to use, for the sake of efficiency, USPTO trademark examiners treat third party federal registration as an irrefutable heuristic for use in office actions. When an Examiner blocks an application because the proposed mark is confusingly similar to one already registered, the USPTO treats the facts in the registration as true. Because Quaker Oats would not be a party to the applicant’s registration proceeding, USPTO examiners will not look into allegations of abandonment without Quaker Oats present to defend its brand. The company’s current “Aunt Jemima” registrations will be more than sufficient to deny the new entrant registration. However, if Quaker Oats opposed the registration, the new entrant could raise the defense of abandonment. Therefore, Quaker Oats would be smart to stay quiet and let the USPTO take care of the matter. If the new entrant had the chutzpah to seek cancellation of the Quaker Oats federal registrations, they would have to respond to the applicant’s claim that “Aunt Jemima” was available because Quaker Oats abandoned use of the mark and expressed a clear intent not to resume its use.

Beyond the arena of registration, there are alternatives for Quaker Oats to explore if someone were to actually start using the “Aunt Jemima” mark in commerce, whether or not the new entrant sought registration. The Lanham Act is broad enough to assert a claim against a new adopter even if the original trademark owner abandoned the mark as a matter of law as long as consumers still draw a connection between the “Aunt Jemima” mark and Quaker Oats. The language of 15 USC 1125(a) may support a cause of action for false sponsorship, false affiliation or false designation of origin or state unfair competition if a new entrant used the mark in commercial advertising in a way that causes Quaker Oats harm.  Contrary to what the Redskins (the football team not the start-up) owner claimed in the South Park skit, there actually is something a trademark owner can do, and much that the USPTO will do for a trademark owner both before and after the mark has been abandoned.

“The technology involved in this appeal is simple” and Allows Common Sense to Substitute for Elements Not in the Prior Art

by Dennis Crouch

B/E Aerospace v C&D Zodiac (Fed. Cir. 2020)

Commercial aircraft lavatories are always oddly shaped in order provide some amount of functionality while minimizing space usage. B/E’s patent here covers the shape of the bathroom that includes the carve-out for a seat just forward — notice the “s” shape of the wall in the image below.  On appeal here the Federal Circuit has affirmed the PTAB obviousness decision.  This outcome was easy to guess once I read the court’s opening discussion line: “The technology involved in this appeal is simple.”  U.S. Patent Nos. 9,073,641 and 9,440,742.

The claims includes two “recesses” in the wall — you can see these in Figure 2 above.

  • an upper recess to receive the inclined seat-back; and
  • a lower recess for the back legs (“seat support”)

PTAB found the claimed invention obvious based upon the two prior art references shown below (and note the lower bottom recess):

Neither of the prior art references include the lower recess to support the back legs. However, the PTAB concluded that a skilled artisan would have found it obvious to modify these to include the claimed second recess. The Board concluded that this modification is was a “predictable” modification for solving a known problem — especially when “coupled with common sense.”

The Board was helped-along with its prior art analysis looking at several other contemporary references showing a lower recess.  I’ll note here that these contemporary references were not used as “prior art” but rather as information of the level of skill in the art.

On appeal, the Federal Circuit has affirmed finding the second recess “nothing more than the predictable application of known technology . . . because a person of
skill in the art would have applied a variation of the first recess and would have seen the benefit of doing so.”  In addition, the court found that it would have been “common sense” to modify the prior art in order to try to save further space.

Here, the Board’s invocation of common sense was properly accompanied by reasoned analysis and evidentiary support. The Board dedicated more than eight pages of analysis to the “second recess” limitation and relied on
Mr. Anderson’s detailed expert testimony. The Board noted Mr. Anderson’s opinion that a “person of ordinary skill in the art would recognize that as a seat is moved further aft the seat support necessarily is also moved further aft.”

Slip Op. The court particularly noted that the simplicity of the technology aided in the conclusion of obviousness.

Here, just like in Perfect Web, the evidence shows that the technology of the claimed invention is simple. The patents relate to contoured walls that “reduce or eliminate the gaps and volumes of space required between lavatory enclosures and adjacent structures.” The missing claim limitation (the “second recess”) involves repetition of an existing element (the “first recess”) until success is achieved.


With regard to the design drawings submitted to identify the level of skill in the art.  The Federal Circuit determined that it need not reach the issue of whether they were improperly handled or prohibited by 35 U.S.C. 311(b).  Rather, the court held that the PTAB’s obviousness conclusion stands on its own – based upon the two prior art references coupled with the expert testimony.

Further, and happily, participation in the U.S. patent system, as patentees and as licensees, is available to citizens and non-citizens alike. Carl Schenck, A.G. v. Nortron Corp., 713 F.2d 782, 784 (Fed. Cir. 1983)

Will this Limit on Patent Term Extension Drive a Rewriting of Hatch-Waxman?

The court today denied two en banc petitions:

Biogen International GmbH v. Banner Life Sciences LLC, 20-1373 (Fed. Cir. 2020)

The law allows for a limited extension of patent term based upon regulatory delays – such as FDA delay in approving a drug for sale.  The statute is unfortunately complex and poorly written. 35 U.S.C. 156.

In this case, Biogen received a patent term extension for its Patent US7619001 associated with using the drug Tecfidera (MS treatment). By the time of the litigation, the patent would have expired, but for the term extension.

Banner’s proposed version of the drug is a bit different than Biogen’s Tecfidera — although apparently bioequivalent. The court included the following diagram showing the differences with the Biogen’s version is DMF and Banner’s is MMF (both versions were covered by the asserted claim):

In the case, the Federal Circuit held that the term extension did not apply in this situation.  The court limited limiting PTE to only situations where the same drug (active ingredient) is being accused of infringement, even if the alternative is covered by the patent claims and includes the same active portion.  The court wrote:

Because the scope of a patent term extension under 35 U.S.C. § 156 only includes the active ingredient of an approved product, or an ester or salt of that active ingredient, and the product at issue does not fall within one of those categories, we affirm the judgment of the district court.

In its petition for rehearing, Biogen asked two questions:

  1. Whether the panel’s decision allows an infringer to avoid an innovator’s patent term extension by using the claimed and bioequivalent active moiety of the compound in the patentee’s approved drug product.
  2. Whether patent term extension under 35 U.S.C. § 156(b)(2) for method claims is limited to the “approved product” only, where the only limit that Congress imposed on patent term extension for method claims is “any use claimed by the patent and approved for the product,” and Congress further provided that “[a]s used in this subsection, the term ‘product’ includes an approved product” (i.e., is not “limited” to an approved product). 35 U.S.C. § 156(b) (emphases added).

PhRMA also filed an en banc petition in support. The PhRMA brief argues that this decision will allow generic companies skirt the Hatch-Waxman generic-innovator compromise. In particular, generic companies will be able to rely upon innovator data to gain market entry since the active portion of the drug product is the same, while not being subject to the term extension.

The Federal Circuit has denied the en banc petition without further opinion.

[BiogenCAFCDecision] [Discussion by Kevin Noonan]
[Biogen en banc petition] [Biogen PhRMA Amicus]

= = = = =

Dragon Intellectual Property v. DISH Network LLC, 19-1283 (Fed. Cir. 2020).

This is a common setup: Patentee sues for infringement; Defendant collaterally attacks patent via IPR and claims are cancelled; District court then dismisses case as moot – void ab initio. The petition questions whether the defendant can be considered a “prevailing party” for attorney fees in such a situation. “When, if ever, can a litigant be deemed the ‘prevailing party’ in a case terminated as a result of mootness?”

In the case, the district court found no prevailing party in this situation. On appeal, the Federal Circuit rejected that approach – holding that the defendant could be considered a prevailing party because it rebuffed the claims.  The Federal Circuit has now denied the en banc petition — meaning that its rule sticks.

DragonIP en banc petition



Is Termination a form of Institution (and thus Non-Appealable)

BioDelivery Sciences International, Inc. v. Aquestive Therapeutics, Inc., fka MonoSol RX, LLC, No. 19-1381 (Supreme Court 2020)

This case is procedural and it focuses – once again – on the unique two-step, two-decision-maker divide by Congress for inter partes review (IPR) proceeding.

  1. Step 1 – Institution: The USPTO Director decides whether to grant an IPR petition and “institute” proceedings.  This decision is “final and nonappealable.”
  2. Step 2 – Trial: Once the IPR is instituted, the PTAB takes-charge and moves the case to a final decision.

As the USPTO planned-out how to actually implement the proceedings, the Director at the time (Kappos) recognized that he didn’t want to personally decide all of the IPR decisions and also recognized that the USPTO petitions office was (is) not operating at peak efficiency (except for the automatically granted petitions). So, the the rules delegated the Director’s authority for instituting IPRs to the PTAB judges.  This effectively rewrote the proceedings as follows:

  1. Step 1: The USPTO Director PTAB decides whether to grant an IPR petition and “institute” proceedings.  This decision is “final and nonappealable.”
  2. Step 2: Once the IPR is instituted the PTAB then takes-charge and moves the case to a final decision.

Delegation of institution authority results in some amount of confusion about whether a given decision by the PTAB is associated with a non-appealable institutional decision or instead an appealable final judgment in the case.

BioDelivery began at the PTAB with three IPR petitions against Aquestive’s US8765167. This was pre-SAS, and the USPTO partially instituted the proceedings.  On appeal, the Federal Circuit vacated the final written decision on SAS grounds — holding that the USPTO cannot partially institute an IPR.  The partial-institution clearly falls on the side of step-1 nonappealable institution decision, but the Supreme Court created a limited exception in this situation.  See SAS Institute v. Iancu, 138 S. Ct. 1348 (2018) as limited by Thryv, Inc. v. Click-to-Call Techns., LP, 140 S. Ct. 1367 (2020).  You can read that original 2018 BioDelivery opinion here BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 898 F.3d 1205 (Fed. Cir. 2018).

In SAS, the Supreme Court held that at institution stage the Director must either (1) institute the proceeding as to all challenged claims or (2) deny the petition all together. Federal Circuit then extended SAS to also require that any final written decision address every ground for challenge (not just every claim). PGS Geophysical AS v. Iancu, 891 F.3d 1354 (Fed. Cir. 2018).

On remand, the PTAB decided it was faced with the question of whether to (1) proceed with a final decision on all grounds raised or (2) drop the whole case. It chose the latter–terminating all three IPR petitions.

The patent challenger then appealed again and the Federal Circuit had to figure out whether the termination of proceedings was more like an institution decision or a final written decision.  The court decided the former and held that the termination was final and nonappealable.  BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 935 F.3d 1362 (Fed. Cir. 2019) (opinion by Judge Reyna, dissent by Judge Newman); en banc petition denied at BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 946 F.3d 1382 (Fed. Cir. 2020) (dissent by Judge Newman).

Now comes the petition for writ of certiorari — arguing that “termination” should not be considered an institution decision. Questions presented:

1. Does the Judiciary have authority to review a Patent Office decision refusing to implement its mandate and this Court’s precedent?

2. May a petitioner appeal a decision terminating an instituted IPR, despite the decision being mislabeled as a nonappealable decision?

[BioDelivery Petition]

Although the situation is muddled by the PTAB/Director delegation, the basic question is whether ‘termination’ of an [improperly] instituted IPR is a furtherance of the institution process given to the discretion of the Director or is it instead a role given by statute directly to the PTAB.  The statute does discuss termination following settlement, but not in the particular context of this case.

The situation also reminds me of the recent essay by Brian Fry and Maybell Romero, The Right to Unmarry: A Proposal,

= = = =

I have included Fig. 1 from the challenged patent above. The claims are directed to an “oral film” that melts-in-your-mouth for drug delivery.  The film includes an “anti-tacking agent” such as vegetable oil or wax.

Our Summer Speaker Series: COVID-19 and Innovation Policy

By Jason Rantanen

The Iowa Innovation, Business & Law Center is hosting a summer speaker series featuring 30-minute talks by some of the leading legal scholars writing on innovation and COVID-19.  All talks will be via Zoom webinar on Thursdays at 3:30 ET/2:30 CT/ 1:30 MT/12:30 PT. (starting this Thursday).
Our speakers are:
The link for these talks is
I hope you’ll mark your calendars and are able to join us!


Supreme Court End of Term 2020

The Surpeme Court seems to have ended its term for patent cases today – although the court has at least one more week of business before the summer break.

Petitions denied:

  • Collabo (retroactive IPR violates due process & takings); Celgene (same); Enzo (Same)
  • Hospira (limits on DOE); CJ CheilJedang (same)
  • Comcast (mootness of ITC decision for expired patent)

Federal Circuit decision Vacated & Remanded: 

  • Emerson Electric Co. (Thryv follow-on case)

Consideration of one fully briefed petition was postponed. Chrimar Systems. Chrimar has to do with the timing of judgment finality and issue preclusion. Particularly: How does claim cancellation via inter partes review impact prior court judgments upholding the the patent? (In this case, an appeal in the infringement litigation was still pending on other grounds).  A petition on related issues was recently filed in PhaZZer, and the court may be considering the issues together.

The last direct IP case for the court to decide this term is USPTO v. In that case, the USPTO wants to apply a bright-line-rule that adding “.com” to a generic word does not create a protect-able mark.  One reason I’m rooting for is that they label me a Level 2 Genius! (Image below as proof).


Invention of a Slave and the Ongoing Movement For Equal Justice

by Dennis Crouch

The Black Lives Matter movement, ongoing protests, and statements of alliance have given me new hope that our society and its institutions are ready to take another step toward equal justice.

In 1857, the US Supreme Court decided Dred Scott v. Sandford, 60 U.S. (19 How.) 393 (1857) and affirmed what various state courts had previously decided — that under the law, free (non-enslaved) black and brown people were not United States Citizens.

[A]s long ago as 1822, the Court of Appeals of Kentucky decided that free negroes and mulattoes were not citizens within the meaning of the Constitution of the United States; and the correctness of this decision is recognized, and the same doctrine affirmed, in 1 Meigs’s Tenn. Reports, 331.

Dred Scott.  The following year, the US Patent Office with support of the US Attorney General took action to enforce the law in a memorandum entitled “Invention of a Slave.”  The memo begins with its clear statement: “A new and useful machine invented by a slave cannot be patented.” Under Dred Scott, a non-enslaved people of color also lacked the requisite citizenship.  Two recent articles walk through these events: Brian L. Frye, Invention of a Slave, 68 Syracuse L. Rev. 181, 194 (2018) (historical analysis); Kara W. Swanson, Race and Selective Legal Memory: Reflections on Invention of a Slave, 120 Columbia Law Review 1077 (2020) (reflection on historical and ongoing impact, inter alia).  The decision actually frustrated slave owners and during the civil war, the patent laws of the Confederate States did allow for patenting of inventions by enslaved peoples – although all ownership rights would flow to their owners.

In many ways, the courts fit its slavery cases within the doctrines of property law.  Enslaved people were identified as property.   A third new article in this vein is not intellectual property focused but walks through many ways that these old slavery cases remain good law today. Justin Simard, Citing Slavery, 72 Stan. L. Rev. 79 (2020).

Prof. Swanson reflected on her personal journey with Invention of a Slave — a journey that fits many of our own constructs:

As a former patent attorney turned legal scholar, I first encountered Invention of a Slave as an appropriately forgotten opinion. I saw no relevance to my former practice or to teaching patent law. I thought of it as a minor piece of patent lore, remaining firmly within my legal mindset of sorting precedents into “good” versus “bad” law. Nothing in my background as a white American, trained in science, law, and history in majority-white institutions, led me to see it differently.

Swanson.  Although not originally relevant to her, Swanson began to wonder why the the document remained relevant to the African American community. She explains – “Invention of a Slave might be unread by lawyers, but the African American community and its white allies were encouraged to take a look if they needed further proof to understand why so few African Americans had patented inventions before Reconstruction.”  Swanson.  Reconstruction era Constitutional Amendments and the Civil Rights Act of 1866 ended the the prohibition on patenting by brown and black Americans. Still, Professor Swanson’s essay walks through a small sample of ongoing roadblocks and hurdles for patentees, patent examiners, and lawyers.  Jim Crow of the patent system.

In my own state of Missouri, and at my home institution the University of Missouri School of Law, it took the US Supreme Court to order us to admit a qualified African American student, Lloyd Gaines. State of Missouri ex rel. Gaines v. Canada, 305 U.S. 337 (1938).  Even after that decision, the State determined that mixed race legal education would be so problematic that it opened a separate law school for non-white students. As for Lloyd Gaines, he disappeared in Chicago before starting law school. Here at the University of Missouri School of Law, we did not graduate an African American attorney until 1970.

Preclusion: Expanding Upon the Kessler Doctrine

by Dennis Crouch

In In re PersonalWeb Techs. LLC, 2019-1918, 2020 WL 3261168 (Fed. Cir. June 17, 2020), the court reinvigorates the Kessler Doctrine — holding preclusion is triggered even in cases voluntarily dismissed (with prejudice) by the patentee and is subsequently operable to block actions against subsequent allegations of infringement against the original defendant its customers. The doctrine is seen as a gap-filler for a situation not covered by either issue or claim preclusion.  Another similar gap-filler (is) was defense preclusion. However, the Supreme Court in Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc., 140 S. Ct. 1589 (2020) held that defense preclusion does not exist as a stand-alone doctrine going beyond the traditional notion of issue and claim preclusion. Although a substantially parallel situation, the court here does not cite or mention discuss Lucky Brand. [Update – PersonalWeb does cite Lucky Brand for the well known principle that “Claim preclusion bars both those claims that were brought as well as those that could have been brought in the earlier lawsuit.”]


= = =

Res Judicata (claim & issue preclusion) always involves at least two actions.[1]  In the first action some judgment is reached.  Later, in the second action the court is asked to skip over and not re-litigate claims & issues that were already finalized in the first action.  In this context, claims are thought of as the broad causes of action; issues are typically narrower but may be any legal or factual determination by the court.

The First Action: Back in 2011, PersonalWeb sued Amazon for patent infringement – alleging use of Amazon Web Services infringed several PersonalWeb patents.[2]  After an adverse claim construction ruling, PersonalWeb stipulated to a dismissal of its claims against Amazon with prejudice. In ordering dismissal, Judge Davis wrote: “Pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), all claims … are dismissed with prejudice. Defendants, Inc. and Amazon Web Services LLC retain the right to challenge validity, infringement, and/or enforceability of the patents-in-suit via defense or otherwise, in any future suit or proceeding.”  Since no particular issues were finally decided by the court, we can immediately conclude that the doctrine if issue preclusion won’t apply to this case.  However, a stipulated dismissal by the court still leads to claim preclusion.

We know right away that PersonalWeb is not going to be able to sue Amazon again alleging that the same acts accused in this first case constitute patent infringement. One trick of patent law though is that each unauthorized making or using of an invention constitutes a new act of patent infringement.  And, the Federal Circuit has generally limited the scope of claim preclusion to the particularly accused infringing acts. “We have held that claim preclusion does not bar a party from asserting infringement based on activity occurring after the judgment in the earlier suit.”[3]

The Second Action: Since Amazon won the first case, it continued to sell its Web Services.  No surprise.  But, these are new (alleged) acts of infringement even if not substantially different.  In 2018 PersonalWeb filed “dozens of new lawsuits” against a collection of Amazon’s customers. These cases were consolidated by the Judicial Panel on Multidistrict Litigation with pretrial proceedings before Judge Freeman (N.D. Cal.).  The district court partially dismissed the case – holding that PersonalWeb was precluded from suing Amazon’s customers for taking the same type of action accused in the original Amazon case (even the customer action was taken subsequent to the Amazon case).

The Kessler Doctrine: Claim preclusion does directly protect Amazon’s customers here because their accused infringement – even if functionally the same – was not within the scope of the first action. Still, the district court found preclusion under the Kessler Doctrine. See Kessler v. Eldred, 206 U.S. 285 (1907).  Kessler – as interpreted by the Federal Circuit – is a “gap filling” form of preclusion and allows “an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action where circumstances justify that result.” Brain Life, LLC v. Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014). Separately, the Federal Circuit has identified the doctrine as a “necessary supplement” to the traditional principles of res judicata.

[W]ithout it, a patent owner could sue a manufacturer for literal infringement and, if unsuccessful, file suit against the manufacturer’s customers under … any [patent] claim or theory not actually litigated against the manufacturer as long as it challenged only those acts of infringement that post-dated the judgment in the first action. That result would authorize the type of harassment the Supreme Court sought to prevent in Kessler when it recognized that follow-on suits against customers could destroy the manufacturer’s judgment right.[4]

Note here, that the “gap” would be filled by issue preclusion if the case had been pursued to a judgment of non-infringement.  Here, however, PersonalWeb dismissed its first action (with Amazon’s express consent) before the court could reach that judgment.

In addition to the temporal issue, Kessler also addressed the customer situation – finding them sufficiently in privity for the purposes of applying preclusion.

On appeal, PersonalWeb argued that the Kessler Doctrine should not be triggered by a voluntary dismissal. Essentially, PersonalWeb questioned whether the Kessler-type preclusion should be seen more akin to issue preclusion (express judgment of the issue required) or claim preclusion (triggered simply by a final judgment, including settlements). The Federal Circuit agreed with the lower court that a settlement is sufficient to create preclusion under Kessler and the Federal Circuit’s progeny. (Distinguishing license in Mentor Graphics).

The policy that drove the Supreme Court’s decision in Kessler would be ill-served by adopting the rule proposed by PersonalWeb. The Court in Kessler recognized that even if a manufacturer of goods were to prevail in a patent infringement suit, the manufacturer could be deprived of the benefits of its victory if the patentee were free to sue the manufacturer’s customers. The Court asked rhetorically whether, after Kessler had earned, “by virtue of the judgment, the right to sell his wares freely, without hindrance from Eldred [the patentee], must Kessler stand by and see that right violated … ?” Kessler. To allow follow-up suits by the patentee against Kessler’s customers, the Court explained, “will be practically to destroy Kessler’s judgment right.” Accordingly, the Court concluded that, setting aside “any rights which Kessler’s customers have or may have, it is Kessler’s right that those customers should, in respect of the articles before the court in the previous judgment, be let alone by Eldred, and it is Eldred’s duty to let them alone.” As the Court put the matter a few years after Kessler, a party that obtains a final adjudication in its favor obtains “the right to have that which it lawfully produces freely bought and sold without restraint or interference.” Rubber Tire Wheel Co. v. Goodyear Tire & Rubber Co., 232 U.S. 413 (1914)[5]

Although the Federal Circuit has spoken of Kessler in the form of preclusion, it has also provided the analogy of shop rights – a “limited trade right” that is attached to the product that “extends to protect any product as to which the manufacturer established a right not to be sued for infringement.”

In the end, the Federal Circuit provided an important caveat – parties are free and empowered to draft their settlement agreement in a way that overcomes the Kessler doctrine. [I]t can do so by framing the dismissal agreement to preserve any such rights that the defendant is willing to agree to. Settling parties will remain free to limit the preclusive effect of a dismissal; they simply have to fashion their agreement in a way that makes clear any limitations to which they wish to agree as to the downstream effect of the dismissal.”[6]

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[1] Res judicata is somewhat poorly defined. Sometimes it particularly refers to the doctrine of claim preclusion. At other times it refers more broadly to both claim and issue preclusion (and perhaps to other preclusion doctrines as well). The Supreme Court in Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc., 140 S. Ct. 1589, 1594 (2020) recently walked through this explanation.

[2] U.S. Patent Nos. 5,978,791, 6,928,442, 7,802,310, 7,945,544, and 8,099,420.

[3] In re PersonalWeb Techs. LLC, 2019-1918, 2020 WL 3261168 (Fed. Cir. June 17, 2020)

[4] SpeedTrack, Inc. v. Office Depot, Inc., 791 F.3d 1317, 1328 (Fed. Cir. 2015).

[5] PersonalWeb.

[6] Id.