Obviousness Law: A Reasonable Expectation of Success

In re Stepan Co. (Fed. Cir. 2017)

In a split decision, the Federal Circuit has vacated the PTAB ruling that Stepan’s claims are not patentable.  The claims here are directed to the use of ultra-high concentrate glyphosate and a particular surfactant to ensure “better adherence to leaves, thereby enhancing penetration.”  Although the PTAB (Board) found motivation to combine elements of the prior art to form the claimed system, the Board did not fully support that PHOSITA would have a ‘reasonable expectation’ that the combination would be a success.

Success

The decision here thus goes to the core of obviousness law:

The majority: An obviousness determination requires finding both “that a skilled artisan would have been motivated to combine the teachings of the prior art . . . and that the skilled artisan would have had a reasonable expectation of success in doing so.” quoting Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359 (Fed. Cir. 2016). . . . Absent some additional reasoning, the Board’s finding that a skilled artisan would have arrived at the claimed invention through routine optimization is insufficient to support a conclusion of obviousness. (Majority opinion by Judge Moore and joined by Judge O’Malley).

The Dissent (Judge Lourie): Where, as here, there is a single prior art reference, there does not need to be a finding of reasonable expectation of success for those skilled in a particular art to make conventional modifications to the prior art and look for improvements in some parameter. See In re Ethicon, Inc., 844 F.3d 1344, 1351 (Fed. Cir. 2017).

Majority’s Response in FN.1: The dissent suggests the PTO need not establish a reasonable expectation of success where there is a single prior art reference. We do not agree. Whether a rejection is based on combining disclosures from multiple references, combining multiple embodiments from a single reference, or selecting from large lists of elements in a single reference, there must be a motivation to make the combination and a reasonable expectation that such a combination would be successful, otherwise a skilled artisan would not arrive at the claimed combination.

To be clear here, the PTAB did appear to find a reasonable expectation of success. [PTAB Decision] The holding here though is that such a broad conclusory finding must also be supported by specific factual findings targeted to the patent at hand.  An important element of this decision is that the majority particularly held that the lack of factual findings supporting the PTO’s conclusion meant that the agency had not even established a prima facie case of obviousness.

Image result for stepan company

Dismantling Inter Partes Review

by Dennis Crouch

The America Invents Act of 2011 brought about sweeping changes to the US Patent System — most dramatic of these was the creation of the administrative trials: especially Inter Parties Review (IPR) and Covered Business Method Review (CBM).

But if initiation of the AIA Trial system has been dramatic, the potential outcome of Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC (Supreme Court 2017) is even more so.  Oil States is asking the Supreme Court to find the IPR system unconstitutional and thus order the system dismantled.

Earlier in 2017, the Supreme Court agreed to hear the Oil States case on the following question:

Whether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

Oil States has now filed its very well written opening merits brief.  Briefing will continue over the next few months, and I expect substantial amicus filing on both sides of the case, as well as input from President Trump’s Department of Justice.

The patent at issue in the case is U.S. Patent No. 6,179,053 that covers a lockdown mechanism for well tools. After being sued for infringement, Green filed the IPR petition with the USPTO and the agency eventually found the challenged claims unpatentable on a broad claim construction (after first rejecting the district court’s claim construction).   The Federal Circuit then affirmed the case without opinion (R.36).  The implication here: Oil States believes its patent is valid when properly construed.

The argument in this case begins with a focuses on history — for centuries, patent infringement and validity disputes have been decided in courts. “Article III promises a court to these litigants, and the Seventh Amendment promises a jury.”  The America Invents Act (AIA) shifts the approach – to having an administrative agency handle the “trial proceedings.”

With this background, Oil States argument is straightforward:

As this Court has long held, “Congress may not ‘withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.’ ” Stern v. Marshall, 564 U.S. 462 (2011) (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272 (1855)). That is just what Congress has done with inter partes review, which wrests patent-validity cases from federal courts and entrusts them to administrative-agency employees, who decide questions of law that Article III reserves to judges and questions of fact that the Seventh Amendment reserves to juries. Neither Article III nor the Seventh Amendment tolerates this circumvention. . . . “When a suit is made of ‘the stuff of the traditional actions at common law tried by the courts at Westminster in 1789,’ * * * the responsibility for deciding that suit rests with Article III judges in Article III courts.”  Stern (quoting N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 90 (1982)).

The brief does an excellent job of demarcating a justiciable line for the Court.  According to the briefs, the problem with IPR isn’t really that the PTO is invalidating patents, but instead that the IPR regime is set-up as a full-on adversarial judicial proceeding to invalidate patents that is designed to promote a different outcome and without the Article III protections of district courts.  That wholesale replacement of the Article III court and Jury rights is simply not allowed.

One way that the court could rule against Oil States is by ruling that the IPR cancellation process involves “public rights” rather than private property rights.  To do so, however, would come in fairly directly conflict with the court’s recent statements in Stern.

More to come on this interseting ! Top-side amici briefs are due in 7-days.

Read the BriefOil States Energy Services 082417 AS FILED

The Federal Circuit rejected many of these arguments in MCM. Read the court’s decision here.

 

 

Correction: Bracha was Exactly Correct about the Privy Council Exception

by Dennis Crouch

In an earlier post, I commented on what I suggested was an error by Professor Oren Bracha in his SJD Thesis Owning Ideas: A History of Anglo-American Intellectual Property.  On further reflection – Bracha was not wrong, but exactly correct. 

Bracha’s work cited a 1904 treatise on English Patent Law as stating that “revocation clauses authorizing the Privy Council to revoke patents were continued to be inserted in the patent grants up to 1902.”  Although the 1904 treatise itself is somewhat cryptic, the 1852 patent law sets out a “statutory form” for a patent right that includes the caveat for the privy counsel (or the queen herself) to void the patent if it turns out it was improperly issued or becomes “prejudicial or inconvenient.”  The form indicates the following statement should be included with each patent grant:

Provided always, and these Our Letters Patent are and shall be upon this Condition, that if at any Time during the said Term hereby granted it shall be made appear to Us, Our Heirs or Successors, or any Six or more of Our or their Privy Council, that this Our Grant is contrary to Law, or prejudicial or inconvenient to Our subjects in general, or that the said Invention is not a new Invention as to the public Use and Exercise thereof, or that the said is not the true and first Inventor thereof within this Realm as aforesaid, these Our Letters Patent shall forthwith cease, determine, and be utterly void to all Intents and Purposes, anything herein before contained to the contrary thereof in anywise notwithstanding.

Patent Law Amendment Act of 1852 [PL Amendment Act (1852)].

The historic point here – although the it did not actually revoke any patents after 1779 — the privy council seemingly held that power up until at least 1902.

I only had a chance to look through one English patent issued during this time period – the 1896 Marconi patent. The patent does include the caveat that permits the Privy Council to void the patent – following the form language almost identically.

marconicaveatt

Thank you to Professors John Golden and Oren Bracha for providing copies of these historic references and pointing out my error. 

= = =

 

Applying it to Oil States: When the US was formed, we rejected the notion of royalty and the surrounding apparatus (including a privy council).  So, in my view, there is not a direct line of reasoning that somehow transfers the privy council power to the PTO or even to Congress to distribute as it wishes.  Rather, the way that I think about the privy council issue in relation to Oil States is to focus on the question of whether administrative revocation somehow offends our American court structure and its place within the federal government.  I can imagine the Supreme Court writing something along the lines of: “Even in England, at the heyday of common law courts, patents could be administratively cancelled upon private petition.”  Under this interpretation privy council supports the PTO’s power to revoke.

There is a flip-side argument here that might support Oil State’s position.  The argument involves the manner in which the Privy Council (and Queen’s) power to cancel was created for each patent by expressly including the power as an express caveat to each patent grant.  In the US, these sorts of caveats were never included within the patent grant (as far as I’m aware), and certainly were not included within pre-AIA patents being cancelled via Inter Partes Review.

= = =

One further note for those delving into history:  I mentioned Bracha’s Thesis work Owning Ideas: A History of Anglo-American Intellectual Property.   Bracha has a much more recent book: Owning Ideas: The Intellectual Origins of American Intellectual Property, 1790–1909 (Cambridge Press 2016) that focuses on development of American law.

PTAB: Serial Filing Past the Deadline and Adding Judges to Achieve a Result

by Dennis Crouch

Nidec Motor v. Zhongshan Broad Ocean Motor (Fed. Cir. 2017)

Serial Filings: Important statement here from the Court against allowing a PTAB IPR patent challenger to continue to file additional IPR petitions after the 1-year deadline of 315(b) via the joinder process of 315(c); and also against stacking of PTAB Board to achieve particular results on rehearing.  The court’s statement though is entirely dicta – it actually affirmed the PTAB decision here where these actions occurred. 

On appeal in this case is the PTAB’s cancellation of the claims of Nidec’s Patent No. 7,626,349.  The patent covers an HVAC with an improved motor controller that uses sinus-wave powering (rather than square-waves) for reduced noise.

SineWave

In September 2013, Nidec sued Broad Ocean for infringement and Broad Ocean followed with an IPR petition in July 2014 (within the one-year deadline).  The Board (acting on behalf of the PTO Director) partially instituted the IPR – but denied on the grounds relating to a Japanese Publication since Broad Ocean had attested to the translation accuracy.  In February 2015 (a month after the original petition decision), Broad Ocean filed a second petition – this one including the required affidavit.

The PTAB originally denied the new petition – holding that it was filed after the 1-year statutory deadline following the lawsuit initiation. 35 U.S.C. § 315(b).  That original panel decision was split, with Judges Wood and Boucher in the majority, and Tartal in dissent.  Tartal argued that the late-filing should be allowed to be joined (under § 315(c)) to the original IPR proceeding in a way that avoided the 1-year filing deadline.    Statutes at issue:

315 (b)Patent Owner’s Action.— An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner … is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).

315 (c) Joinder.— If the Director institutes an [IPR], the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director … determines warrants the institution of an inter partes review under section 314.

On the rehearing, the PTAB Chief (acting on behalf of the PTO Director) shuffled the Board seemingly to change the result – adding two additional judges – Medley and Arbes – with the result that the dissenting opinion became the majority who offered an interesting explanation of the statute.  Section 315(c) textually appears to focus on joinder of additional people.  However, the text actually allows for “joinder of any person” – and according to the majority that should be interpreted to allow the “same person” to join himself to his prior filing (and in the process bring-along additional claims).

§ 315(c) permits the joinder of any person who properly files a petition under § 311, including a petitioner who is already a party to the earlier instituted [IPR]. We also conclude that § 315(c) encompasses both party joinder and issue joinder, and, as such, permits joinder of issues, including new grounds of unpatentability, presented in the petition that accompanies the request for joinder.

After joinder, the Board went on to find the challenged claims obvious (based upon challenges instituted in the original petition) and anticipated (based upon challenges in the second petition)

Unfortunately for the appeal, the Federal Circuit determined that it “need not resolve” the joinder issue because the obviousness finding were proper and were based upon the original petition.

Because there is no dispute that Broad Ocean timely filed the First Petition (containing the obviousness ground), the issues on appeal relating only to the Board’s joinder determination as to anticipation ultimately do not affect the outcome of this case

ExpandedPanelThe court opinion affirming obviousness was written per curiam. An important concurring opinion was filed by Judge Dyk and joined by Judge Wallach suggesting that the PTAB’s joinder decision is wrong and that stacking of panels is problematic.  The opinion’s designation as concurring appears to be an implicit recognition that the additional opinion is dicta.

They write:

[W]e write separately to express our concerns as to the [PTO] position on joinder and expanded panels since those issues are likely to recur. Although we do not decide the issues here, we have serious questions as to the Board’s (and the Director’s) interpretation of the relevant statutes and current practices. . . .

The issue in this case is whether the time bar provision allows a time-barred petitioner to add new issues, rather than simply belatedly joining a proceeding as a new party, to an otherwise timely proceeding. Section 315(c) does not explicitly allow this practice. We think it unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding, whether the petitioner seeking to add new issues is the same party that brought the timely proceeding, as in this case, or the petitioner is a new party. . . .

Second, we are also concerned about the PTO’s practice of expanding administrative panels to decide requests for rehearing in order to “secure and maintain uniformity of the Board’s decisions.” . . .

[Although t]he Director represents that the PTO “is not directing individual judges to decide cases in a certain way”[,] we question whether the practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.

Part of the reason why this is all dicta is that the PTO Director’s decision whether or not to initiate proceedings is – by statute – not appealable.

 

Privy Council’s Role in Cancelling Patents Around 1791

WiggedJudgeby Dennis Crouch

In my view, a potential critical historical question in Oil States is whether the English Privy Council was empowered to revoke patents back in 1791.

For many years leading up to its last cancellation action in 1779, the Privy Council operated as a kind of administrative body empowered to revoke or void issued patent rights on signature of a sufficient number of Privy Council members.   If the Privy Council was empowered in the 1790s to cancel issued patents without judge or jury, that suggests that – in today’s world of expanded administrative power – Congress can also empower a the PTO to cancel issued patents.  Some folks may reflect that – although Old English Law matters for the Seventh Amendment jury trial issue, it is much less critical for the administrative law question.  Others will also argue that the Privy Council approach was entirely rejected by Americans when we rejected the notion of American Royalty.  I’ll slide by these points for this point and instead look at uncovering some Privy Council history.

If we begin with recognizing that the Statute of Monopolies indicated that patents should be tried by the courts, one explanatory theory for the Privy Council’s power is that English patent rights always included a caveat that permitted patents to be cancelled by the Council as an alternative avenue.   Certainly, the Privy Council was active in these proceedings prior to 1779.

EnglishPatentSystemA 1904 treatise titled The English Patent System (by William Martin) states that, although Privy Council had not taken any recent actions, the Patents Law Amendments Acts of 1852 and 1902 each include a proviso allowing granted patents to be revoked by the Privy Council:

Although the Statute of Monopolies declared that patent grants should be tried in the courts of common law “and not at the Council Table,” this power continued to be inserted in patents. Even at the present day the statutory form of the patent, as also that enacted for the first time in 1852, contains a similar proviso against prejudice and inconvenience “to our subjects in general.” This proviso after having lain dormant for centuries has received statutory recognition in the Patents Act of 1902.  By this Act the Privy Council is empowered to revoke a patent in the event of an existing industry or the establishment of a new industry being unfairly prejudiced.

I have not yet personally reviewed these acts to know whether Martin’s statement is correct. (Anyone?).  Minor note here that I believe Oren Bracha in his book Owning Ideas: A History of Anglo-American Intellectual Property (n.35) mistakenly interprets this passage to say that “revocation clauses authorizing the Privy Council to revoke patents were continued to be inserted in the patent grants up to 1902.”  However, I also have not reviewed pre-1902 English patent grants for these revocation clauses (Anyone?).  [See THIS POST for an update and correction]

An additional historical point comes from a sources citing one a final, albeit unsuccessful, “petition to the Council to vacate a patent in 1794.”  D. Seaborne Davies, Early History of the Patent Specification, 50 L.Q.R. 88-109 (1934) (citing Privy Council Registers, Vol. 141, p.88); E. Wyndham Hulme, Privy Council Law and Practice of Letters Patent for Invention from the Restoration to 1794, 33 L.Q.R 63, 181 (1917).  Hulme explains:

The historical record is thus starting to suggest that, although the Privy Council took no action to cancel patents after 1779, it may have been empowered to do so throughout the 18th and 19th Centuries.  At this point, I don’t have any further take-away conclusions and would be receptive to comments and guidance.

Right to a Jury Trial in Patent Validity / Revocation

by Dennis Crouch

Oil States Energy Services, LLC, v. Greene’s Energy Group, LLC., now pending before the Supreme Court raises one important question:

Issue: Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

In June 2017, the Supreme Court granted certiorari and briefing is expected to continue through November 2017.

One amicus group did not wait till their filing deadline but instead has preemptively filed a brief “in support of neither party” even before any of the party briefs have been filed. Professor Tomás Gómez-Arostegui has focused on IP legal history for the past decade joined with British legal history scholar Sean Bottomley to establish several basic historical points:

Records from the 18th century are unequivocal and demonstrate that juries decided validity questions (including novelty) at several stages of the life of a patent. Juries were tasked with determining validity during infringement litigation, whether initiated at law or in equity; during court proceedings for revoking patents; and sometimes during patent prosecution. For a time, the Privy Council could also revoke patents, but it last did so in 1779. . . .

[READ THE BRIEF: 16-0712 ac H Tomas Gomez-Arostegui]

A primary thrust of the brief is to challenge the conclusions made by Mark Lemley in his article, Why Do Juries Decide if Patents are Valid?, 99 Virginia L. Rev. 1673 (2013).  The brief “corrects recent misconceptions on the subject, including those
appearing in [the Lemley] article relied upon by the parties.”

Fairly silly way to conduct business, but the constitutional permissiblity of the AIA Trial regime will depend upon whether revocation of patent rights were handled by jury trials in England around the time the Bill of Rights was adopted.  As the Supreme Court has repeatedly affirmed, “The right of trial by jury thus preserved is the right which existed under the English common law when the Amendment was adopted.” Balt. & Carolina Line, Inc. v. Redman, 295 U.S. 654 (1935).  Although its fairly complex, the basic questions are (1) is revocation a common-law question (as opposed to one of equity) and if so (2) was it handled by a jury?   This is where Prof. Gómez-Arostegui steps in, writing:

  • In infringement actions: “the validity of a patent (if contested) was always decided at law, regardless of where the plaintiff initially filed. Moreover, the law courts would always try the case before a jury unless the parties had [otherwise] stipulated.”
  • In injunction actions filed in the Court of Chancery, the court would generally force the parties to file a separate common law action in order to permit the jury to resolve validity.
  • “[J]uries regularly decided the following issues related to validity: (1) whether the invention was new; (2) whether the patentee was the actual inventor of the purported invention; (3) whether the invention was useful; (4) whether the specification accurately described the claimed invention; and (5) whether the specification enabled a person working in the relevant art to construct the item described in it.”
  • “In a recent article, Professor Lemley argues that an ultimate or overarching issue of validity existed in the late 18th century that was ‘not itself a question
    of fact,’ but was instead a question of law. . . . Given the significance of this assertion, and the fact the Respondent has already relied upon it, it requires close inspection. In short, Lemley is incorrect and he cites no authorities that support the proposition.”
  • Patent revocation via writ of scire facias did operate via the Court of Chancery.  However, according to the brief here, “The Court of Chancery always sat as a law court in these instances and always sent issues of fact related to validity to the King’s Bench for a jury trial.” “Notably, scire facias did not require fraud or inequitable conduct, as the Federal Circuit claims [in Lockwood].”

One big gap for Gómez-Arostegui is with regard to the Privy Counsel who “could also revoke patents” including when “not new.”  The last revocation in this manner was 1779 on an issue of national security.  There are, however, no records of any petitions filed after 1780 and contemporary writing suggest that the revocation process moved entirely to scire facias.   The brief suggests that, if it were available, parties would have continued to push through the Privy Counsel because scire facias was so expensive and complicated.

= = = =

Now, lets say that the Supreme Court buys the notion that patent validity was a question of law requiring a jury trial, there is still another line of important Supreme Court precedent saying that “the Seventh Amendment is generally inapplicable in administrative proceedings, where jury trials would be incompatible with the whole concept of administrative adjudication and would substantially interfere with the . . . . [agency’s] role in the statutory scheme.” Curtis v. Loether, 415 U.S. 189, 194-95 (1974), quoted in Greg Reilly, The Constitutionality of Administrative Patent Cancellation (2017).

Short Non-Precedential Opinions?

by Dennis Crouch

Many of us have been criticizing the Federal Circuit new proclivity to issue no-opinion judgment – particularly in patent cases stemming from the Patent Trial and Appeal Board. The Court appears to be experimenting with a new method – short non-precedential decisions.  I highlight two decisions released on August 17:

 

In Gold Standard, the PTAB had found all claims of the challenged patent obvious. IPR2015-00632, U.S. Patent No. 8,727,773. That decision is now affirmed on appeal. In the four-page appellate decision identifies the evidence sufficient to support the Board’s factual conclusions (substantial evidence standard) and thus affirms.

Similarly, in Cronos Tech., the district court had granted summary judgment of non-infringement of U.S. Patent No. 5,664,110. On appeal, the Federal Circuit affirmed in a three-page opinion that essentially adopts the district court reasoning with some explanation.

Both appeals identify exactly why the patentee lost and why the lower judicial opinion was correct and should serve as models of future panels concerned with no-opinon judgments.

 

Although released on the same day, the two opinions are written by two completely different judicial panels – a hopeful indication that the court is considering this approach as a replacement to its R.36 approach that is now receiving so much criticism.

Breathing Preambles and Patent Ambiguity

Georgetown Rail v. Holland (Fed. Cir. 2017)

In a prior post, I noted that the Federal Circuit initially released this appellate decision under seal but requested that the parties show cause as to why it should remain under seal.  After receiving no objection from the parties, the court has now unsealed the decision.

The case centers on Georgetown’s U.S. Patent No. 7,616,329 which covers a method for inspection of railroad tie-plates and particularly includes automating the examination of misaligned tie plates. 

In 2012 Union Pacific set up a head-to-head challenge between Georgetown and Holland.  Holland got the business then Georgetown sued Holland for patent infringement.  A jury awarded $1.5 million in lost profit damages, and the judge then enhanced the damages by an additional $1 million and awarded a permanent injunction against infringing the patent.

The most important part of the decision is likely the claim construction – particularly the court’s interpretation of the preamble as not limiting.

In relevant parts, Claim 1 of the patent calls for:

1. A system for inspecting a railroad track bed, including the railroad track, to be mounted on a vehicle for movement along the railroad track, the system comprising:

at least one light generator positioned adjacent the railroad track …;

at least one optical receiver positioned adjacent the railroad track …; and

at least one processor for analyzing the plurality of images wherein [the processor uses a particular algorithm]

A lay reading of the claim appears that we have a a three part system ((1) a light; (2) a sensor; and (3) a processor), and the system is “mounted on a vehicle.”

The infringement problem here is that the defendant just the sensing in the field, but then takes the file back to the home office for processing.  Thus, only part of the system is mounted to a vehicle. On appeal here, the Federal Circuit sided with the patentee with a broad clam construction – holding that the claim does not require mounting of the processor.

A patent claim is usually divisible into three distinct portions, the preamble; the transition phrase, and the body.

ClaimElements

The preamble is ordinarily seen as an introductory phrase to set the stage, but not actually spelling out or defining any of the actual elements of the invention.  The transition phrase – most commonly “comprising” — signals that the body is coming next.  Finally, the body itself is the heart of a patent claim because it spells out the scope of the invention – its metes and bounds.

Claim preambles though are an oddity of claim construction.  They ordinarily do  not limit claim scope, but sometimes do.  If the preamble merely recites a purpose or intended use, then it is not limiting.

However, a preamble may be limiting if: “it recites essential structure or steps”; claims “depend[] on a particular disputed preamble phrase for antecedent basis”; the preamble “is essential to understand limitations or terms in the claim body”; the preamble “recit[es] additional structure or steps underscored as important by the specification”; or there was “clear reliance on the preamble during prosecution to distinguish the claimed invention from the prior art.”

Slip opinion, quoting Catalina Mktg. Int’l, Inc. v. Coolsavings.com, Inc., 289 F.3d 801 (Fed. Cir. 2002).  The court also likes to talk about how the preamble is limiting when it “breathes life and meaning into the claim.” See In re Wertheim, 541 F.2d 257 (CCPA 1976).

BreathingLifeOf course, it is a fairly difficult proposition to know when a preamble providing the breath of life – perhaps akin to knowing when a claim is improperly abstract.  The court has generally accepted that the test is not straightforward. It requires review of the “entire patent” as well as the prosecution history to understand what was “actually invented and intended to encompass by the claim.”  Slip op. See also Applied Materials, Inc. v. Advanced Semiconductor Materials Am., Inc., 98 F.3d 1563, 1572−73 (Fed. Cir. 1996) (whether the preamble constitutes a limitation “is determined on the facts of each case in light of the overall form of the claim, and the invention as described in the specification and illuminated in the prosecution history”); Am. Med. Sys., Inc. v. Biolitec, Inc., 618 F.3d 1354, 1358 (Fed. Cir. 2010) (“there is no simple test” for understanding the import of the preamble, but “we have set forth some general principles to guide th[e] inquiry”).

Here, the court looked to the “context of the entire patent” to reach the conclusion that the “mounted on a vehicle” statement does not provide any structural limitation to the claim scope but instead “is meant to describe the principle intended use of the invention.”  However, the specification notes that the processing “can be performed by another computer system” other than one located on the inspection vehicle.  According to the court, this is a suggestion that the location of the processor is not essential to the invention itself.

During prosecution, the patentee also told the examiner that the analyzing and determining steps occur “along the railroad track bed.”  However, the court found those non-limiting because the purpose of the statement was not to overcome prior art involving a distributed processing approach.  “Ambiguous statements made during prosecution, especially those that do not directly distinguish the element claimed as essential for purposes of finding a limitation in the preamble, ‘cannot fairly limit the characteristics of the claim term.’ Grober v. Mako Prods., Inc., 686 F.3d 1335 (Fed. Cir. 2012).

The problem with this entire approach.  Patentees who want clear-cut claim scope use short nonce preambles so that there is never any question about what is or is not limiting.  In my experience, lengthy preambles are instead used strategically to provide ambiguity into the claim scope to make it easier to later argue alternatively for broader or narrower claim scope depending upon situation during litigation.

During prosecution, the examiner should expressly state that “the examiner considers the preamble non-limiting” except in the few cases where preamble is seen as limiting.  However, even this express approach will leave ambiguity as to whether a court will see the preamble as limiting because of the difference between Broadest-Reasonable-Interpretation (BRI) used by the courts and Actual Claim Construction (ACC) used by the courts.

Reviewing Factual Findings that Support a Legal Conclusion (of Eligibility)

FoundationThe Federal Circuit has denied Prism Tech‘s petition for en banc rehearing on the question of deference to district court factual-findings that underlay a decision on patent eligibility.  Prism had raised the following question:

This case warrants en banc review because it involves the precedent-setting question of whether this Court should apply a clear error standard of review to a district court’s underlying factual findings regarding patent eligibility under 35 U.S.C. § 101.

In this case, the District Court found the Asserted Claims patent eligible under § 101 and made several factual findings in support thereof. On appeal, the Panel characterized patent eligibility under § 101 purely as an issue of law and applied a de novo standard of review to both the legal issue of patent eligibility and the District Court’s underlying factual determinations. The Panel should have granted deference to the District Court’s factual findings. Failing to do so was inconsistent with precedent of the Supreme Court and this Court that grants deference to subsidiary factual determinations made by district courts in deciding similar questions of law—namely, Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015) (Federal Circuit must review for clear error district court’s subsidiary factual findings regarding claim construction); Mintz v. Dietz & Watson, Inc., 679 F.3d 1372 (Fed. Cir. 2012) (Federal Circuit must review for clear error district court determinations on factual inquiries underlying the obviousness analysis); Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 841 F.3d 1334, 1341 (Fed. Cir. 2016) (Federal Circuit must review for clear error district court’s subsidiary factual findings regarding indefiniteness).

PrismBrief.    This issue will continue to percolate.

The court also recently denied a somewhat similar petition in GoDaddy.com v. RPost Communications.  That losing patentee’s petition asked whether eligibility a proper invalidity defense even though it is not codified as a defense in 35 U.S.C. §282(b) and whether, at the summary judgment stage, must the district court weigh evidence underlying the eligibility question in the non-movant’s favor?

Finally, the court has also denied the petition in RecogniCorp v. Nintendo Co.  That petition focused on the eligibility of patents relating to the encoding and decoding of data.

Data on Federal Circuit Decisions – updated

By Jason Rantanen

One of my current projects is to create a transparent and user-friendly database of information about Federal Circuit decisions–particularly, its patent law decisions–with a structure that’s useful for empirical researchers and other people who write about the court. If folks are going to throw around numbers about the court, my hope is that they have some grounding in a relatively clear and consistent methodology.

My goal in creating this database is to focus on information that’s of interest to researchers and commentators rather than to create another database for online legal research.  While Westlaw, Lexis, and the various free alternatives are great tools for finding key cases, there are lots of problems with using them for empirical research, not the least of which is the periodically changing nature of their interfaces–changes that make replication of older studies difficult. Also, since their focus is on helping practitioners do legal research, commercial databases tend not to collect and record data in a way that’s useful for empirical work.

I’ve used components of the dataset before, including in PatentlyO posts and an article on dissents at the Federal Circuit, and others have used it in their own projects (Crouch; Gugliuzza & Lemley).  Currently, coded data includes basic information about each decision arising from the district courts and PTO back to 2007, with written opinions going back to 2004.   Fields include information such as document type, precedential status (and Rule 36’s!), panel members, dissents and concurrences, and opinion authors.  I’m interested in crowdsourcing additional fields to code once I’ve published the dataset. Everything’s being done in-house at Iowa–even the R Shiny app that powers the user interface was coded as a project for a graduate statistics consulting class under the instruction of Rhonda DeCook, and my research assistant Louis Constantinou has been a huge help in getting this project finally done.

I’ll be rolling out the web-based portal in the near future, but in the meantime I’ve had requests for some of the data–particularly an update on the court’s use of Rule 36 summary affirmances.   Those charts are below.  The basic methodology employed in creating these charts is described in my earlier post on Federal Circuit appeals and decisions.

Finally, since the purpose in creating this database is to share it, students or other researchers who are interested in drawing from it for their own work are welcome to email me before it goes public.  Basically, it’s a starting point that’s flexible enough to allow future researchers to do their own coding without having to redo basic information about each decision.

Decisions by Tribunal of Origin

Given the increase in appeals from the PTO over the past few years, this graph is not all that surprising–but it’s still quite dramatic.  As of mid-2017, the number of decisions in appeals arising from the PTO has exceeded the number of decisions from the district courts for the first time in the history of the Federal Circuit to my knowledge.

The following two charts are updated versions of figures from my post from last summer on types of Federal Circuit decisions.

Types of Decisions - DCt

Types of Decisions - PTO

BPCIA: Patent Dance Steps Becoming a Bit Clearer

PatentDanceAmgen v. Hospira (Fed. Cir. 2017)

The dispute here falls under the Biologics Price Competition and Innovation Act of 2009 (BPCIA), which can be loosely described the Hatch-Waxman equivalent for large-molecule biologics.

Particularly, BPCIA creates an abbreviated approval pathway for products that are “biosimilar” to an already FDA-approved biological drug product.  Unfortunately, the actual statute is a complete mess – being both unduly complex and unduly vague.  That said, the Supreme Court used nice words in its recent decision: “The BPCIA sets forth a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of infringement.” Sandoz, Inc. v. Amgen, Inc., 137 S. Ct. 1664 (2017).

The setup in this particular mandamus action is that the patentee Amgen was seeking discovery on exactly how Hospira’s biosimilar was going to be produced – information included within its aBLA applicant to the FDA.  However, the district court refused discovery since the requested information was “irrelevant to the asserted patents” in the case.  Amgen argued that the discovery was necessary to see if they might need to assert further patents.

Ordinarily there is no direct appeal of discovery orders since they are mere interlocutory orders rather than final judgments. Here, Amgen petitioned for a writ of mandamus. However the Federal Circuit has rejected that petition – finding that it lacked jurisdiction in the case.  The court went on to note that the BPCIA permits Amgen to disclose any patent it believes “could be reasonable asserted” and thus perhaps should have included a longer list, which then would have opened discovery further.

In PatentDocs, Andrew Williams explains the potential impact here:

More importantly . . . the Court suggested that if a patent was not included in its paragraph (l)(3)(A) list, even if there was no reason to suspect that it might be relevant to the present case, the BLA holder could be precluded under 35 U.S.C. § 271(e)(6)(C) from ever asserting that patent (depending on what “under this section” turns out to mean).  Of course, this could lead to the unintended (or maybe intended) consequence of overly long patent lists containing every conceivable patent that could be related to the manufacture of biologics in situations when inadequate information has been provided.

[LINK]

 

 

Cache Data Types: Patent Eligibility

cacheAbstractVisual Memory v. NVIDIA (Fed. Cir. 2017)

In a split opinion, the Federal Circuit has sided with the patentee and reversed a the district court judgment that Visual Memory’s patent claims improperly encompass an abstract idea.  The opinion filed by Judge Stoll was joined by Judge O’Malley.  Judge Hughes wrote in dissent.

Claim 1 of asserted U.S. Patent No. 5,953,740 is directed to a “computer memory system” that includes a “main memory” and also a “cache” both connected to a bus that can then be connected to a processor.  The inventive element, is that the cache’s operation is programmable – allowing it to work efficiently with different processors.  The claim particularly requires “a programmable operational characteristic of said system determines a type of data stored by said cache.”  In the words of the court, “the memory system is configured by a computer to store a type of data in the cache memory based on the type of processor connected to the memory system.”

Claim 1. A computer memory system connectable to a processor and having one or more programmable operational characteristics, said characteristics being defined through configuration by said computer based on the type of said processor, wherein said system is connectable to said processor by a bus, said system comprising:

a main memory connected to said bus; and

a cache connected to said bus;

wherein a programmable operational characteristic of said system determines a type of data stored by said cache.

After Visual Memory sued NVIDIA, the defendant filed a R.12(b)(6) motion to dismiss for failure to state a claim. In granting that motion, the district court ruled that the patent was directed to the “abstract idea of categorical data storage” – something humans have been doing for many years.  In Alice Step 2, the court found that the cache, bus, and processor were all conventional and the claimed “programmable operational characteristics” were merely vaguely described “generic computer elements. Quoting Intellectual Ventures v. Capital One, 792 F.3d 1363, 1367 (Fed. Cir. 2015).

On appeal, the court began with a strawman conclusion that “none of the claims recite all types and all forms of categorical data storage.”  Of course, none of the Supreme Court abstract idea cases involve claims that entirely covered the scope of the stated abstract idea.

The meat of the court’s argument is also its conclusion:

As with Enfish’s self-referential table and the motion tracking system in Thales, the claims here are directed to a technological improvement: an enhanced computer memory system.

As in those cases, the court here looked to the specification to find particular technological improvements that underlay the invention.  Here, for instance “[t]he specification explains that multiple benefits flow from the ’740 patent’s improved memory system.”

Judge Hughes dissent agrees that the key inventive element is that the claims require the potential for a change in the type of data stored in cache depending upon the processor connected.  However, Judge Hughes points out that the claims do not spell out details of that process but rather “the patent lacks details about how” this so-called inventive element is actually achieved.

I disagree, therefore, with the majority that combining the black box of a “programmable operational characteristic” with conventional computer equipment constitutes a specific improvement in computer memory systems. Because the ’740 patent does not describe how to implement the “programmable operational characteristic” and requires someone else to supply the innovative programming effort, it is not properly described as directed to an improvement in computer systems.

Hughes in Dissent. The majority responds to Judge Hughes by arguing (1) the patent application includes an appendix of 200+ pages of computer code for actually implementing the process; and (2) the fact that the patent might not enable the invention is not a 101 issue – it is an enablement issue. [I leave off the third argument that was weaker.]

The decision here is obviously panel dependent, meaning that the area remains in flux and disruption.

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200 pages of code: Neither party appeared to have any real problem with fact that the decision was on the pleadings prior to any discovery or weighing of facts at issue in the case.  However, the majority highlight the 200+ pages of computer code submitted with the application with a suggestion that those pages might include further descriptive information.  That possibility then, according to the court, should preclude a judgement on the pleadings since “all factual inferences must be drawn in favor of the non-moving party.  I think the court is onto something here, although any serious consideration of this approach must also include the higher “plausibility” requirement when making those inferences.

 

 

Patentlyo Bits and Bytes by Anthony McCain

Get a Job doing Patent Law                  

Court Jumps in to Claim Construction and Anticipation Analysis

US07581688-20090901-D00000Homeland Housewares v. Whirlpool Corp. (Fed. Cir. 2017)

In a split opinion, the Federal Circuit  rejected the PTAB’s IPR validity judgment favoring the patentee Whirlpool — holding instead that the challenged claims are invalid as anticipated. Patent No. 7,581,688; IPR No. IPR2014-00877.  Judge Dyk penned the opinion joined by Chief Judge Prost. Judge Newman wrote in dissent.

The underlying claimed invention is an automatically pulsed blender cycle.  The basic idea is to occasionally go through a “deceleration phase” that slows the cutter blade down to a reduced “predetermined settling speed” before accelerating the blade back to the normal operating speed.  The claims require that the settling speed be “indicative of the items in the container having settled around the cutter assembly.”

The basic issue on appeal is whether the prior art (U.S. Patent No. 6,609,821 to Wulf) anticipates Whirlpool’s patent:

The Board determined that Wulf did not anticipate the ’688 patent because its disclosures did not meet the “settling speed” limitation. However, the Board did “not adopt any explicit construction of the term for [its] Final Written Decision,”

On appeal, the Federal Circuit first found that the PTAB should have construed the disputed language:

Just as district courts must, “[w]hen the parties raise an actual dispute regarding the proper scope of . . . claims, . . . resolve that dispute,” O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 521 F.3d 1351, 1360 (Fed. Cir. 2008), the Board also must resolve such disputes in the context of IPRs.

 

In the appeal, the appellate panel then decided to take-on the claim construction and anticipation analysis on its own. The court writes:

Given that the Board did not rely on extrinsic evidence here as to claim construction, we can determine the correct construction of “settling speed” and then determine whether the Board correctly held that Wulf does not meet the limitations of claim 1.

In my view, the court’s statement reprinted above is wrong in so many ways.  Of course the the Board did not “rely on extrinsic evidence” in claim construction — since the board “declined to provide a construction.”  Further, even when the claim construction considered is a question of law and reviewed de novo, the appellate court is still a reviewing court – not a court of first instance. Here, the court reviews substantial intrinsic evidence in making its claim construction determination, and it is merely a legal fiction that the resulting conclusions are not ‘factual interpretations’ that should be based upon more than a review of the appellate docket submissions. . . .

The actual claim construction issue here is somewhat odd – the claim language states that “the speed of the cutter assembly is reduced from the operating speed to a predetermined settling speed . . .  indicative of the items in the container having settled around the cutter assembly.”  The construction offered by the federal circuit here is that the settling speed is “slower than the operating speed and permits settling of the blender contents.”  WOW – good thing that the court provided a construction here since that wasn’t apparent from the claims.

 

FY2017: PTO On Course for Record Number of Issued Patents

by Dennis Crouch

The chart below shows the number of utility patents issued each fiscal year going back to 1980.  FY2017 has 7-weeks remaining. If issuances remain steady, then we’ll see a substantial increase in the number of patents issued over FY2016.  Importantly, the increase is not due to increased new application filing but instead reflects the PTO continuing to work through its backlog of pending cases.

PatentsPerYear

Right to Jury Trial: Not for Attorney Fees

JuryOfPearsAIA America v. Avid Radiopharma (Fed. Cir. 2017)

In a short opinion, the Federal Circuit has ruled that the factual basis an attorney fee award need not be decided by a jury — affirming a $4 million fee award that followed a jury trial on the sole issue of whether the plaintiff (AIA) owned the asserted patents. U.S. Patent Nos. 5,455,169 and 7,538,258.

The U.S. Constitution provides

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

The right to a jury of peers in civil cases is one of those fundamental principles designed to uphold the rights of property and contract but keep them in balance with community principles and values.  The limitation of the amendment is that it only applies to “Suits at common law.” The “common law” limitation implicitly refers to the distinction between “legal” and “equitable” suits that do not require a jury trial.  Further, the Constitution indicates that the right to jury trial shall be “preserved.”  This suggests that issues which were decided by judges (rather than juries) at common law are not transformed into jury questions by the Constitution. Rather, the provision appears designed to maintain the status quo requirements

The Constitution reference to “Suits” makes historic sense when suits were either filed before a common law court or a court of equity.  At the Federal level, those courts are merged and so we now look to particular issues within each lawsuit to determine whether those issues need be determined by a jury.  Thus, for instance, a case involving a patentee’s request for reasonable royalty damages and injunctive relief, the damages would require a jury (if requested) as an issue traditionally decided by common law courts while injunctive relief is an equitable question that does not require a jury.

Here, the question before the courts was whether an attorney fee award under Section 215 requires a jury. For its analysis, the court first looked historically and determined that common law judges (rather than juries) decided the fee award issue.  The Federal Circuit’s conclusion is that this “implies that attorney’s fees generally do not involve legal rights.”  I would draw a similar but slightly distinct conclusion – that there was no right to a jury to be “preserved” regarding the issue of attorney fees. Further, the appellate panel went on to look at the remedy – and found it is properly classified as equitable because it raises “issues collateral to and separate from the decision on the merits.” (quoting Budinich v. Becton Dickinson & Co., 486 U.S. 196(1988)).

With its conclusion that attorney fees under 35 U.S.C. § 285 are “properly characterized as an equitable remedy,” there is no need for a jury determination.

= = = =

A few notes here – Yes, you heard that right, a $4 million fee award for a 12-witness jury trial.  Avid had requested about $7 million. Yes, discovery and lawyering is expensive, but the discovery in the case was “targeted” toward only the ownership issue (that did admittedly involve allegation of conspiracy).

The trial issue: whether the plaintiff, the assignee of the patents in suit, has standing to prosecute this patent infringement action. Unless the plaintiff owns the patents, it has no standing. The defendants contend that the assignor of the patents was not the sole inventor of the invention; and, even if he was, ownership of the invention vested in his university-employer by operation of Florida law. If the defendants are correct, the plaintiff lacks standing.

This appears to be a super fascinating issue that would extend our knowledge of the ownership process when inventors assign their future invention rights.  Unfortunately, the Jury Verdict is SEALED, and the Federal Circuit’s decision on the merits of the case was issued as a R.36 Affirmance without Opinion.

An important element of the original district court decision here (that was affirmed without opinion) points out a Florida State Regulation that “An invention which is made in the field or discipline in which the employee is employed by the University or by using University support is the property of the University…” R. 6C4–10.012(3)(c) (emphasis added).  To be clear, this regulation is not a “contract” with the future inventor but instead a regulation in the Florida code that identifies ownership of the patent right — seemingly in conflict with the statement in Stanford v. Roche that “Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor.”

Linking Patent and Trademark Attorney Fees

[UPDATE – Fixed an error – I had previously suggested that the mark at issue was a product design mark, it is not]

Romag Fasteners v. Fossil is a rare infringement case that involves allegations of both patent and trademark infringement.  The important aspect of the Federal Circuit’s decision here harmonizes the attorney fee requirements for trademark and patent cases.

A jury sided with Romag – finding that Fossil’s magnetic snaps infringed both the asserted patent and trademark (product design). (U.S. Patent No. 5,722,126 and U.S. Trademark Reg. No. 2,095,367).

The jury returned a verdict for Romag, finding that Fossil had engaged in patent and trademark infringement. The district court granted fees related to the patent portion of the case but denied fees on the trademark side.  On appeal, the Federal Circuit has vacated that judgment.

Lanham Act and Patent Act provide identical language for awardinging reasonable attorney fees to the prevailing party in exceptional cases: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”  35 U.S.C. 285; 15 U.S.C. 1117(a).  Based upon the identical language of the statutes, the appellate court here ruled that the Supreme Court’s Octane Fitness approach to fees in patent cases also applies in Trademark cases.  The Second Circuit had previously (pre-Octane Fitness) required “evidence of fraud or bad faith.” Under Octane Fitness, that requirement is unduly strict and improper.  All of the other Circuit courts who have considered the issue agree with the Federal Circuit that Octane Fitness applies to TM cases under Section 1117(a). Because the court applied the incorrect standard, this TM portion of the case was remanded to determine whether fees are appropriate.

On the patent side, the appellate panel also found “several errors” by the district court – and thus vacated that grant of fees.  These errors include (1) a misstatement as to the timing of the defendant’s withdrawal of its defenses and that those defenses were pursued  in order to “prolong litigation;” (2) no conclusion as to the actual merit of the withdrawn defenses; (3) misstatements regarding prior court ruling on the inadequacy of the rejected indefiniteness defense as “woefully inadequate; and (4) failure to consider the totality of the circumstances, including the plaintiff’s bad-faith of waiting until just before Black Friday to file its case and request a TRO.  Coming together, these issues require vacatur of the fee award on the patent side.

On remand, the district court will be asked to again reconsider an award of fees to the successful plaintiff Romag.

The Majority opinion was penned by Judge Dyk and joined by Judge Hughes.  Judge Newman dissented-in-part. “I do not discern where, or how, the district court abused its discretion, for the district court reasonably observed that this case ‘stood out from the others,’ in the words of Octane Fitness, concluding that Fossil ‘aggressively pursue[d] invalidity counterclaims in an attempt to prolong litigation and exponentially increase the cost and risk of pursuing a lawsuit.'” Newman in dissent.

= = = = =

For me, an interesting aspect of the case here involves the correct level of granularity for the “prevailing party” finding.  The court here divides of the portions of lawsuit between the various doctrines — patent; trademark; CT state unfair competition; etc.  For each, the court determined the ‘prevailing party’ and apportioned fees accordingly – even though the losing party had won on some smaller issues.  At this point, I do not believe that the Federal Circuit has strictly adopted this approach – rightly so because there is almost always overlap.  Here, for instance, the TM discovery was almost certainly overlapping with the patent discovery.

= = = = =

I have not examined the full history here, but the Trademark appears to cover the product design, which is also to the subject of the patent.  TrafFix? The mark covers ROMAG.

Federal Circuit Fails its Civil Procedure Test on Standing

Personal Audio v. Electronic Frontier Foundation (EFF) (Fed. Cir. 2017)

On appeal, the Federal Circuit has sided with the USPTO — affirming the IPR final judgment of unpatentability of Personal Audio’s US Patent No. 8,112,504.  The patent claims a system for “disseminating media … episodes in a serialized sequence.”

The most interesting question addressed by the court is whether the original Inter Partes Review (IPR) Requester – EFF – has standing to to participate as a party.  The problem for standing is that EFF is a public-interest organization that promotes online civil liberties.  EFF was not threatened by the ‘504 patent, but instead filed the IPR petition as part of its general public interest campaign against “stupid patents.”  EFF thus doesn’t appear to meet the “case or controversy” standard required by Article III of the U.S. Constitution.

The Federal Circuit decided a somewhat similar standing question in Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014).  Consumer Watchdog also involved a public-interest organization challenging a patent via AIA-Trial. Standing wasn’t a problem for the trial itself since the PTAB is not an Article III court – and so the constitutional requirement didn’t apply.  However, the Federal Circuit dismissed Consumer Watchdog’s appeal (it lost the case at the PTAB) on standing grounds.

EFF case has a slightly different posture since it won at the PTAB – with the patent being held invalid.  The appellant Personal Audio clearly has standing since its patent has been judged unpatentable, and the question is whether EFF has standing to participate as an appellee despite its lack of a direct interest in the outcome.  For the Federal Circuit, that posture makes the difference:

Here, the party invoking judicial review is Personal Audio; it is apparent that Personal Audio, on cancellation of its patent claims by the PTAB, has experienced an alteration of “tangible legal rights . . . that is sufficiently ‘distinct and palpable’ to confer standing under Article III.” Virginia v. Hicks, 539 U.S. 113, 121 (2003) (internal citations omitted). With Article III satisfied as to the appellant, EFF is not constitutionally excluded from appearing in court to defend the PTAB decision in its favor.

The court then went on to side with EFF and PTAB on the merits – confirming the claims as unpatentable.

I would suggest that the Federal Circuit’s decision on the standing issue here does not fully explore the somewhat complex precedent on the standing issue.  In particular, the court wrongly focuses its standing decision on the position of the appellant.  The Supreme Court has explained several times that all parties must have an ongoing case-or-controversy:

[T]he opposing party also must have an ongoing interest in the dispute, so that the case features “that concrete adverseness which sharpens the presentation of issues.”

Camreta v. Greene, 131 S. Ct. 2020, 2028 (2011) (quoting Los Angeles v. Lyons, 461 U.S. 95, 101 (1983)).  I’ll note here that my reading of Camreta and Lyons is that both are addressing the Constitutional requirement – thus the AIA statutory statement allowing parties to appeal is inapplicable.

The Federal Circuit relied upon another line of Supreme Court cases – notably ASARCO Inc. v. Kadish (1989).  In that case we similar situation where the petitioner was clearly harmed by a lower state-court decision but the respondent probably did not itself have sufficient case-or-controversy standing.  In its decision on the case, the Supreme Court began with a recitation of standing – noting that the petitioner’s harm was sufficient: “We determine that petitioners have standing to invoke the authority of a federal court and that this dispute now presents a justiciable case or controversy for resolution here.”  ASARCO.  The problem with this holding is that it speaks  only to the case as a whole rather than standing of the particular party.