Overlapping Ranges in Claims and Prior Art Result in Invalidation of Patent on Transdermal Patch for Parkinson’s Disease

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By Chris Holman

UCB, Inc. v. Actavis Lab’ys UT, Inc., 2023 WL 2904757, — 4th —   (Fed. Cir. Apr. 12, 2023)

Rotigotine is a drug used to treat Parkinson’s disease. People with Parkinson’s disease experience significant gastrointestinal dysfunction, such as difficulty swallowing, which can frustrate the oral administration of drugs. However, the complications associated with oral treatment can be avoided by means of a transdermal patch that delivers the drug through the patient’s skin.  In order to cross the skin barrier, however, the drug must be in an “amorphous,” i.e., non-crystalline, form.  If the drug crystallizes in the patch, it will generally not be able to cross the skin barrier.

In 2007, UCB invented and marketed “original Neupro,” a transdermal patch for the treatment of Parkinson’s disease containing a dispersion of amorphous rotigotine and polyvinylpyrrolidone (PVP), with the PVP functioning as a stabilizer. Unfortunately, soon after original Neupro entered the market it was found that the rotigotine was crystallizing when stored at room temperature, rendering the drug ineffective.  This caused UCB to recall the product from the U.S. market in April 2008 (although it remained in limited use under a compassionate-use program). In Europe, regulators allowed original Neupro to stay on the market, under the condition that it would only be marketed under “cold-chain conditions,” i.e., it would be stored in a refrigerator.

The patent at issue in this case, U.S. Patent No. 10,130,589, is directed towards UCB’s solution to this problem, which was to essentially double the amount of PVP in the patch, from original Neupro’s weight ratio of rotigotine to PVP of 9:2 to the new, reformulated Neupro’s weight ratio of 9:4. In particular the ‘589 patent claims a method for stabilizing rotigotine by combining a non-crystalline form of rotigotine with PVP to form a solid dispersion, wherein the weight ratio of rotigotine to PVP is in a range from about 9:4 to 9:6. UCB re-entered the U. S. market with its reformulated Neupro in 2012.

In 2019, UCB sued Actavis for infringing the ‘589 patent in a Hatch-Waxman lawsuit.  The district court found the asserted claims to be invalid based on anticipation and obviousness, particularly in view of earlier-issued UCB patents, i.e., the “Muller patents,” which disclosed combinations of rotigotine and PVP present at a range of weight ratios from 9:1.5 to 9.5. Note that the Muller patents cover both original Neupro (9:2) and reformulated Neupro (9:4), while the ‘589 patent (claiming a range of 9:4 to 9:6) only covers reformulated Neupro. Significantly, UCB had successfully asserted a Muller patent in a previous ANDA suit that resulted in an injunction preventing approval of Actavis’s ANDA until the relevant Muller patent’s expiration in March 2021. The ‘589 patent would not have expired until December 2030, and thus could have delayed FDA approval of a generic version of Neupro by nine additional years.

On appeal, the Federal Circuit reversed the district court’s anticipation ruling, but affirmed on the basis of obviousness. The opinion, authored by Judge Stoll, begins by explaining that Federal Circuit precedent sets forth an established framework for analyzing whether a prior art reference anticipates a claimed range. If the prior art discloses a point within the claimed range, the prior art anticipates the claim. On the other hand, if the prior art discloses an overlapping range, the prior art anticipates the claimed range “only if it describes the claimed range with sufficient specificity such that a reasonable factfinder could conclude there is no reasonable difference in how the inventions operate over the ranges.”

In the case at hand, the prior art Muller patents disclose a range (9:1.5 to 9.5) that overlaps with the range claimed in the ‘589 patent (9:4 to 9:6). The Federal Circuit found that the district court had erred by failing to analyze this as an overlapping range case, but to instead treat this as a case in which the prior art discloses a point within the claimed range.  The Muller patents did not literally disclose any point within the range claimed in the ‘589 patent, but the district court had nonetheless concluded, based on expert testimony, that the range disclosed in the Muller patents would implicitly teach a person of skill “a few examples” of specific weight ratios, including 9:4 and 9:5 weight ratios of rotigotine to PVP. Nonetheless, the district court’s error with regard to its anticipation analysis was rendered moot when the Federal Circuit proceeded to affirm its obviousness finding.

Judge Stoll cited Federal Circuit precedent for the proposition that there is a presumption of obviousness when a claimed range overlaps with a range disclosed in the prior art. Although this presumption can be overcome if, e.g., the prior art teaches away from the claimed range, or the claimed range produces new and unexpected results, or other evidence demonstrates the nonobviousness of the claimed range, in this case the Federal Circuit agreed with the district court that UCB had failed to present evidence to rebut the presumption of obviousness.

For example, the district court had not erred in its decision to disregard the commercial success of reformulated Neupro, based on a lack of a nexus between the drug’s commercial success and the claimed invention. In particular, the Federal Circuit agreed that the existence of the Muller patents weakened UCB’s evidence of commercial success, because these patents operated as blocking patents, dissuading competitors from developing a rotigotine transdermal patch, at least until the Muller patents expired. While rejecting UCB’s suggestion that the court’s analysis had branded all co-owned patents as “blocking” patents, the court noted that in this case UCB had held exclusive worldwide rights to rotigotine for all therapeutic indications since 1998, and that until the Muller patents expired Actavis had been enjoined from marketing a generic version of reformulated Neupro.

Federal Circuit Confirms its Scrutiny of Judge Newman

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The recent controversy at the Court of Appeals for the Federal Circuit involving Chief Judge Kimberly Moore and Judge Pauline Newman has raised concerns and garnered attention. The Court has now confirmed the rumors about Judge Moore’s actions to remove Judge Newman from an active role on the bench. According to a statement of court and two published orders, it seems that Chief Judge Moore also has the support of her fellow judges in this matter.

The primary concern revolves around Judge Newman’s alleged failng to maintain a full workload due to health issues, taking an excessive amount of time to issue opinions, and showing signs of declining mental acuity. Despite these concerns, Judge Newman has refused to participate in the process or receive any documents related to it. Additionally, she has declined to submit to a medical examination or to take senior status or retire.  Her refusal to participate in the process serves as an additional cause in the complaint.

Judge Newman’s obstinance appears to be rooted in her belief that she is “the only person [on the Court] who care[s] about the patent system and innovation policy.”  Throughout her 39 years on the Court, Judge Newman has been a stalwart supporter of strong patent rights.

Judge Newman joined the court in 1984 and is now 95 years old. She has been the oldest member of the court since the death of Judge Giles Rich in 1999 at the age of 95.  Judges Dyk and Lourie are both in their 80s.  

The EU’s Response to National Judicial Determinations of FRAND Royalty Rates

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Guest Post by Professor Jorge L. Contreras

On March 28, 2023, Reuters reported that a proposed European Parliament and Council Regulation would empower the European Union Intellectual Property Office (EUIPO) to determine “fair, reasonable and non-discriminatory” (FRAND) royalty rates for European patents that are essential to industry standards (standards-essential patents or “SEPs”), and also to assess the essentiality of SEPs to the relevant standards.  In this post, I compare the leaked EU Proposal to last year’s Standards Essential Royalty Act (SERA) to which the EU Proposal bears a notable resemblance, with some important differences. Overall, I believe that the EU Proposal makes a positive contribution toward the efficient and fair resolution of FRAND disputes, though its most valuable role may be to nudge stakeholders toward the preferred solution of global rate-setting arbitration.

The Leaked Draft

Even before the official release of the EU Proposal, a significant amount of material has become publicly available. A leaked text of the draft was posted on Kluwer Patent Blog, a summary and detailed synopsis has been posted on FOSS Patents, and a 248-page Impact Assessment by the European Commission (EC) has been widely circulated among stakeholders. As reported by Reuters, the draft EU Proposal was scheduled to be announced by EC Vice President Margrethe Vestager on April 26, but the leaked draft has already sparked significant commentary and debate (see summaries, with links, posted by Tom Cotter and Florian Mueller). Needless to say, a pre-release draft of proposed legislation does not carry the force of law, and as noted by Intellectual Asset Management and others, a lengthy legislative process lies ahead during which the EU Proposal could substantially change or be scuttled entirely. Nevertheless, it is worth discussing some of its potential impacts today.

The Problem: National Judicial Determination of Global FRAND Royalty Rates

The ambitious EU Proposal addresses numerous lingering issues that are inherent in the underspecified world of FRAND licensing, including whether or not patents declared as “essential” to particular industry standards are actually essential (Title V) (issue discussed here and here) and how FRAND licensing commitments can bind subsequent owners of essential patents (Art. 3) (issue discussed and here and here). On a positive note, the EU Proposal clarifies that “royalty-free licensing policies do not raise concerns” (recital 10) – a welcome acknowledgement in view of recent complaints about royalty-free SEP licensing requirements (see, e.g., here). These important issues, however, are beyond the scope of this post.

The biggest issue that the EU Proposal seeks to tackle is the recent tendency of courts in China and the UK (and potentially other countries) to establish FRAND rates for a SEP holder’s entire global portfolio (the Global Approach), rather than only for SEPs issued in that jurisdiction (the National Approach) (discussed in detail here and here). This phenomenon has led to jurisdictional disputes, escalating anti-suit (ASI) and anti-anti-suit injunctions (AASI) (discussed here, here and here), and an international “race to the bottom” as jurisdictions vie to become preferred destinations for resolving global FRAND disputes. As noted in the cited articles, European courts, following civil law principles, have generally been averse to anti-suit injunctions in global FRAND cases, resulting in royalties for European patents largely being established elsewhere. In addition, the European Union, along with the United States and others, is currently involved in a dispute at the World Trade Organization (WTO) over China’s ASI procedures in these cases (a detailed discussion of China’s ASI landscape can be found here).

Summary of the EU Proposal

Some of the key elements of the EU Proposal concerning FRAND rate determination are the following:

1 – Art. 21 would require SEP owners to register their European SEPs with a new “competence centre” (the “Centre”) established within the EUIPO; SEPs must be registered in order to be enforced in European courts (including the new Unified Patent Court (“UPC”));

2 – Arts. 17-18 would permit participants in standards-development organizations (SDOs) to collectively negotiate the aggregate (“top-down”) royalty burden for a particular standard, which would then be published by the Centre – an approach that would significantly improve the transparency and predictability of FRAND licensing negotiations (see here);

3 – Art. 36 would require SEP holders and implementers of FRAND-encumbered standards to request a FRAND rate determination by the Centre prior to initiating litigation over SEPs in a European court;

4 – Art. 40-41 establishes procedures for selecting the “conciliators” who would make the FRAND determination, including the proposal of five qualified candidates by the Centre, from which the parties would select two (though the means by which that selection would be made is not specified);

5 – Art. 60 provides that the determination of the conciliators will be confidential to the parties (a serious mistake, in my view, given the need for greater transparency in this area, as discussed here and here);

6 – Art. 58(4) provides that no European court or the UPC may rule on a case involving a European SEP unless it is notified of the resolution of this rate setting procedure.  While the Centre’s rate determination is not binding on a court, and there is no stated procedure for introducing the FRAND determination in a judicial proceeding, one would hope that the Centre’s determination will be used as evidence in most European judicial proceedings concerning the affected SEPs.

Comparison to the Proposed U.S. Standards Essential Royalty Act (SERA)

As noted in the introduction, concerns over foreign (particularly Chinese) ASIs and judicial determinations of global FRAND rates have also motivated federal legislators in the U.S. to propose a variety of measures designed to reduce the impact of these foreign proceedings on U.S. patents.  In 2022, two such bills were floated within the Senate Judiciary Committee: the Defending American Courts Act (DACA) (discussed here and here) and the Standard Essential Royalty Act (SERA) (discussed here and here). SERA would establish a U.S. judicial tribunal for the determination of FRAND rates applicable to U.S. FRAND-encumbered patents, notwithstanding the findings of any foreign court.  The recent EU Proposal shares some characteristics with SERA, but also has notable differences.  The Table below summarizes some of the areas of commonality and divergence between the U.S. and EU proposals.

Table 1

Comparison of Recent U.S. and EU FRAND Tribunal Proposals

Proposed U.S. Standard Essential Royalty Act (SERA) (June 2022) Proposed EU SEP Regulation (Mar. 2023)
Tribunal A new federal court EUIPO, an EU administrative agency
Authorization of collective negotiation of aggregate royalty burden No Yes
Binding effect Binding in U.S. Non-binding
Effect on foreign FRAND determinations Overrides foreign FRAND determinations for U.S. patents None
Confidentiality of decision No Yes
Creation of SEP registry No Yes
Essentiality testing Possibly, though not required Yes

 

Assessing the EU Proposal

The EU Proposal will likely improve some aspects of global FRAND litigation. For example, it could diminish the force of “global” FRAND rate determinations by non-EU courts in countries like China and the UK, create a more authoritative SEP database than that maintained by the notoriously hands-off SDOs, and eliminate some of the current concern over collective negotiation of aggregate royalty burdens for particular standards.

This being said, the EU Proposal also has a few significant drawbacks.  First, the EU Proposal creates a rate determination structure that is non-binding, thus opening the door to further debate and “new” evidence that could be introduced by parties seeking to convince European courts to deviate from Centre-determined rates. More importantly, the confidential nature of the Centre’s findings eliminates much of their potential systemic benefit, as other market participants will not be able to use the information developed by the Centre in their own FRAND negotiations, reinforcing the non-transparent system that exists today.  The U.S. SERA proposal overcomes both of these weaknesses by proposing a binding rate determination that will be open and transparent.

Another Step Along the Road to Non-governmental Global FRAND Rate-Setting?

Despite their advantages, both the U.S. and EU proposals suffer from a focus on individual party disputes rather than the overall royalty burden for a particular standard.  The most efficient, fair and transparent approach to global FRAND rate determinations is to involve all concerned parties (SEP holders and stakeholders) in a multilateral, multinational rate-setting procedure that addresses all SEPs covering a particular standard and then makes that determination publicly available, much like the copyright royalty rates determined by rate-setting boards in the U.S., UK and other countries (see proposal here).

While the international community has not yet embraced such a comprehensive, multilateral approach to FRAND royalties, an important first step in rationalizing the FRAND royalty system is eliminating the ability of individual jurisdictions (e.g., China/UK) pre-emptively to set global FRAND rates for patents outside of their jurisdictions (see here).  Processes such as those set forth in the U.S. SERA and the EU Proposal would significantly limit the bite of such unilateral global rate-setting efforts. As I have previously written, “country-by-country rate adjudication need not be the end game for global FRAND rate setting”.  If stakeholders find that legislatively mandated rate proceedings in individual countries are burdensome, they may be more amenable to a truly global, yet fair, solution to the FRAND royalty conundrum.

[Disclosures: The author declares no conflicts of interest regarding the subject of this article.]

Judge Newman

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Gene Quinn is reporting that Chief Judge Moore has moved forward with proceedings to remove Judge Newman from the bench — filing a complaint under the Judicial Conduct and Disability Act.  The stage of the action is not clear from Quinn’s reporting, but the usual process allows for any person to file a complaint that is then reviewed by the Chief Judge of the circuit.  If the Chief Judge sees merit in the complaint then she forms a special committee of judges to make a further determination.

Judge Pauline Newman was appointed to the Federal Circuit by President Ronald Reagan in 1984 – 39 years ago. At the time, she was already 50+ years old with a successful career as a research scientist, patent attorney, and in-house counsel (chief of IP).  She is now 95 years old.   If I have done my counting correctly, Newman has authored over 2,800 majority opinions during her time on the bench; as well as 500 dissents.

Chief Judge Moore Said to Be Petitioning to Oust Judge Newman from Federal Circuit

 

Eligibility and the U.S. Solicitor General: Patenting the Scientific, Technological, and Industrial Arts

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by Dennis Crouch

A decade ago, the US Supreme Court issued a pair of decisions that upended substantial aspects of patent practice. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012); and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014).  These cases broadened scope of the “abstract idea” and “law of nature” exclusions in ways that largely overlap with other patent law doctrines, such as obviousness, indefiniteness, and even enablement.  But, unlike those doctrines, subject-matter eligibility jurisprudence is more of free-wheeling approach that typically does not require evidence.  In court, these cases are often decided at pleading-stage, before any evidence is introduced or considered.

Many thousands of patents have been denied or invalidated under the expanded doctrine.  Opponents of the change argue that it has created unpredictability, lack of respect for the law, and overreach that inhibits our culture of innovation historically fostered by the fuel of potential exclusive rights.

One difficulty with the law here is that it is entirely judge made.  The statute isclear that patents should be awarded to “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” so long as the other requirements of patentability are met.  35 U.S.C. 101.  The Supreme Court added its admittedly atextual gloss of excluding “laws of nature, natural phenomena, and abstract ideas.”  And, although those limits have been longstanding, the court expanded their scope and simplified the procedures for invalidating patents in Mayo and Alice. A substantial number of prior petitions have asked the Supreme Court to clarify and revise its stance on Section 101 eligibility, but the Supreme Court has repeatedly denied certiorari.  We may be moving to the next step with the two pending cases discussed below.

Most recently, the Solicitor General has provided its views in two pending cases and has recommended that the court grant certiorari and revise its eligibility doctrine. “These cases would be suitable vehicles for providing much-needed clarification in this area.”

In its briefing, the SG ties itself to the idea of “technological inventions”; arguing that “quintessentially technological inventions” should be patent eligible. SG Brief. A positive SG amicus brief usually indicates a high likelihood that the Supreme Court will hear the case. The two parallel pending cases are:

  • Interactive Wearables, LLC, v. Polar Electro Oy, 21-1281.  Interactive Wearables asserts two patents covering a wearable content player connected to a screen-based remote control that permits users to view information about the song being played from the remote. U.S. Patent Nos. 9,668,016 and 10,264,311.  The district court dismissed the case with prejudice on the pleadings for lack of eligibility. On appeal, the Federal Circuit affirmed without opinion.
  • Tropp v. Travel Sentry, Inc., 22-22.  Tropp’s asserted patents claim a method of improving airline luggage inspection by selling TSA-labelled locks having a master key held by TSA authorities.  If TSA needs to open the luggage for inspection, they use their key rather than cutting the lock. U.S. Patent Nos. 7,021,537 and 7,036,728. The district court found the claims ineligible on summary judgment.  On appeal, the Federal Circuit affirmed with a non-precedential per curiam opinion. Importantly, Tropp does not claim to have created any new technology here, but rather a new process.  Of course, Section 100 of the Patent Laws defines process to “include[] a new use of a known process, machine, manufacture, composition of matter, or material.”

In its brief filed jointly in both cases, the Solicitor General distinguishes between the inventions in Interactive and in Tropp; arguing that only the first represents a patent eligible invention because it is directed to the “scientific, technological, [or] industrial arts” rather than “non-technological methods of organizing human activity.”

Properly construed, [the abstract idea] exception helps cabin Section 101’s reach to patent law’s traditional bailiwick of the scientific, technological, and industrial arts. The category of patent-ineligible abstract ideas thus does not encompass quintessentially technological inventions, like the improved content player that the patentee claimed in Interactive. By contrast, as the court of appeals correctly recognized, Section 101 excludes non-technological methods of organizing human activity like the luggage-inspection method claimed in Tropp.

SG Brief.  In looking at the court decisions, the SG also argued that the lower courts had unduly considered other doctrines such as novelty, obviousness, and enablement and overlayed them into the obviousness analysis.

A court at step two therefore should ask whether a claimed invention sufficiently transforms an abstract idea into the kind of innovation eligible for patent protection. Rather than undertake that inquiry, however, the Interactive court placed undue emphasis on considerations of novelty, obviousness, and enablement. Although those considerations may sometimes overlap with the abstract-idea inquiry, they are the purview of different statutory provisions and perform different functions. See 35 U.S.C. 102, 103, 112. By contrast, the Tropp court correctly held that nothing in the claimed method transforms it into a technological invention.

Id. Although not clear, the Supreme Court may consider whether to grant or deny certiorari in these cases as early as its May 18, 2023 conference.  Meanwhile, a third eligibility case of Avery Dennison v. ADASA is also pending and could be taken-up on the same date.

It is of some importance here that the USPTO also signed the brief – indicating that it is on board with creating a technological invention dividing line.

Federal Circuit: Construing the Term “A” once Again

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by Dennis Crouch

In Salazar v. AT&T Mobility LLC, the Federal Circuit affirmed the district court’s judgment of noninfringement. Once again, the Federal Circuit was called upon to interpret the claim term “a,” this time to determine if Salazar’s claim requiring “a microprocessor” was limited to a single microprocessor. While “a ___” is usually interpreted to include “one or more ___,” the court upheld Judge Gilstrap’s narrower singular construction in this case, finding it limited by later references to “said microprocessor.”

Salazar’s US Patent No. 5,802,467 claims a communication system for interacting with multiple external devices. The system comprises “a microprocessor” that generates reprogrammable communication protocols, a memory device for efficient storage of command code sets retrieved by “said microprocessor,” a user interface for user selections and menu displays rendered by “said microprocessor,” and an infrared frequency transceiver coupled to “said microprocessor” enabling bidirectional communication with external devices.

AT&T systems may have the capability to achieve all these steps, but the defendant argued that each step utilized different processors or multiple processors. Thus, as the District Court explained, the dispute centered on “whether the claims require one microprocessor that is capable of performing the recited ‘generating,’ ‘creating,’ ‘retrieving,’ and ‘generating’ functions.” According to the district court construction, the patentee needed to identify a single processor that performed “all the functional (and relational) limitations recited for ‘said microprocessor.'” As a result, the court found no infringement. The Federal Circuit affirmed this decision on appeal.

While the indefinite article “a” is generally interpreted broadly as not limited to one item, this presumption can shift when necessitated by the patent documents. In this case, the patentee repeatedly used “said microprocessor” to refer back to the already claimed term in a way that “reinvokes [the] non-singular meaning” of the word “a.” Slip Op. (quoting Baldwin Graphic Sys., Inc. v. Siebert, Inc., 512 F.3d 1338 (Fed. Cir. 2008). According to the court, an alternative interpretation would ignore the meaning of “said.”

The key takeaway is that each time the claim uses “said microprocessor,” it refers back to the originally identified microprocessor. This interpretation prevented the argument that the claim covers the use of multiple microprocessors working together to achieve the described functionality.  Non-infringement affirmed.

= = = =

The jury sided with the patentee on anticipation. AT&T also appealed this issue. However, the Federal Circuit declined to hear the question, holding that AT&T failed to move for a Rule 50(a) JMOL before the case was submitted to the jury, thus waiving its right to appeal the sufficiency of the evidence on that issue.

Federal Circuit Narrows Scope for Copyrighting Software Function

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by Dennis Crouch

The copyright lawsuit between the data-software company SAS Institute and its scrappy copycat World Programming has been interesting to follow over the past several years, and the Federal Circuit has now issued a controversial opinion in the case.  SAS Inst. v. World Programming Ltd., — F.4th — (Fed. Cir. 2023).  The majority opinion authored by Judge Reyna and joined by Judge Wallach affirmed the lower court ruling that SAS failed to establish copyrightability of its claimed program elements.  Writing in dissent, Judge Newman argued that the majority’s rejection of copyrightability represents a “far-reaching change” not supported by either precedent or good policy.  I called this outcome controversial. The outcome would also be controversial had Judge Newman’s position prevailed.

The case is properly seen as an extension of the Supreme Court’s decision in Google
LLC v. Oracle America, Inc., 141 S. Ct. 1183 (2021).  In that case, the Court found that Google’s use of Java API naming conventions in its Android operating system was fair use under copyright law.  Because its fair use decision decided the case, the court did not rule separately on whether the API was even copyrightable in the first place.  In SAS v. WPL, the Federal Circuit squarely addressed the copyrightability question.

To be clear, computer software can still be copyrightable.  But, parties asserting protection will need to do a much better job of showing how their creative authorial input survives the “abstraction-filtration-comparison test,” which the Federal Circuit  applied in its decision.

Copyright law’s abstraction-filtration-comparison (AFC) test is used to determine whether a particular work is entitled to copyright protection. The AFC test involves breaking down a work into its constituent parts, abstracting the unprotectable elements, filtering out any remaining unoriginal or unprotectable elements, and then comparing the remaining protectable elements to the allegedly infringing work. The AFC test has been previously adopted by the Second, Fifth, and 10th Circuits.

Here, the court did not delve into the comparison step — and instead simply held that there was nothing left to infringe after abstraction & filtration.

The decision is also substantially procedural.  The district court held a copyrightability hearing and followed a burden shifting procedure created by the 11th Circuit in Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020).  In particular, the court first assumed that the work was copyrightable based upon the registration documents.  It then allowed the defense to present its filtration argument to show a lack of copyrightability.  If that evidence is sufficient (as it was here), the burden then shifts back to the copyright holder to rebut — and “to establish precisely which parts of its asserted work are, in fact, protectable.”   The difficulty for SAS is that it offered no rebuttal and instead “refused to engage in the filtration step and chose instead to simply argue that the SAS System was ‘creative.'” Slip Op. SAS presented an expert witness on copyrightability, but the district court found it extremely unreliable and thus excluded the testimony.  (The expert had not seen anything to filter out — even clearly unprotectable elements).

The majority walked through each of these issues and ultimately affirmed on all grounds.

= = = =

Some background: SAS makes data analysis software. A key feature of the SAS product is that folks can write programs using SAS syntax in order to get certain results. Thus there are a number of data jockeys who are experts in SAS code.  WPL is a UK based software company who obtained several copies of SAS statistical software and made their own clone version by rewriting the code and by relying upon an early version of SAS that is not protected by copyright.  The WPL version allows folks to use SAS language to get the same results — but at a much lower price.   When I sa “same results” — the clone pretty much identically copied output styles so that a chart made with WPL looks basically identical to a chart made in SAS using the same code.

SAS sued in E.D.Tex for copyright infringement.  Judge Gilstrap dismissed the copyright claims — holding that the software was unprotectable.  Copyright infringement appeals are ordinarily not heard by the Federal Circuit, but in a case of what appears to be appellate-forum shopping, SAS had also included patent infringement allegations that they eventually stopped pursuing.  Under the rules of procedure, if patent claims were raised in the case at some point, then the appeal heads to the Federal Circuit.

The copyright case is not about copying code.  It appears rather to be about copying the input syntax format used by individuals to input their programs and the output design styles for outputting data in some particular style. In the filtration analysis, WPL provided a host of evidence to show that these features should be “filtered out” of the SAS copyrights.

  • WPL established that an earlier version of the SAS System, “SAS 76,” was in the public domain.
  • WPL showed that many Input Formats and Output Designs in the current SAS System are identical or nearly identical to those in SAS 76 and should be filtered.
  • WPL demonstrated that the SAS Language should be filtered because it is open and free for public use.
  • WPL’s expert identified various allegedly copied materials that contained unprotectable elements such as open-source, factual, data, mathematical, statistical, process, system, method, and well-known and conventional display elements.

Bringing these together the Federal Circuit concluded that the defense had presented sufficient evidence to show uncopyrightability and that the district court was justified in requiring SAS to directly and particularly rebut the evidence rather than simply allowing a trial on the copyright as a whole.

The district court was correct to exercise its authority and require SAS to articulate a legally viable theory on which it expected to base its copyright infringement claims. Conversely, it would be improper for a district court to permit a matter to proceed to trial on the basis of vague and unidentified theories.

Slip Op.

Writing in dissent, Judge Newman argued that Fifth Circuit law protects this sort of computer software architecture even from non-literal copying.  The key citation is likely to a the Fifth Circuit’s 1994 Engineering Dynamics case:

Most courts confronted with the issue have determined that copyright protection extends not only to the literal elements of a program, i.e., its source code and object code, but also to its “nonliteral” elements, such as the program architecture, “structure, sequence and organization,” operational modules, and computer-user interface.

Eng’g Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335 (5th Cir. 1994).   Judge Newman noted that “computer programs” are expressly protected within the Copyright Act

Copyright protection subsists . . . in original works of authorship . . . including . . . (5) computer programs.

17 U.S.C. 102. As the Nimmer treatise explains, this 1980 amendment to the laws “dispels any lingering doubts as to the copyrightability of computer programs. It is
therefore now firmly established that computer programs qualify as work of authorship in the form of literary works, subject to full copyright protection.”
1 NIMMER ON COPYRIGHT § 2A.10(B) (2022 ed.).

Here, Judge Newman particularly noted that the collection of the various input functions and output designs is easily copyrightable. And, this is the same analysis done by the Federal Circuit in its original Oracle v. Google decision.

Judge Newman also concluded that the district court improperly shifted the burden of proof to the copyright holder.

= = = (more…)

What should the patent attorney do? 

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After coming up with a core idea for a new product, Inventor jumps on chatGPT and asks the AI to expand upon the product idea, including providing additional design elements based upon the inventor’s original description. ChatGPT comes through with flying colors and provides several detailed designs that inventor had not considered.  Inventor is diligent in their disclosure docs to include the chatGPT transcript.  Patent search reveals that Inventor’s original idea is not patentable by itself, but it is likely patentable when combined with the chatGPT input. The patent attorney sees value  in having claims directed solely to the features provided by chatGPT.

You are the patent attorney, what do you do in this situation?

eGrants and Quick Issuances

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by Dennis Crouch

Later this month the USPTO will transition to electronic patent grants or eGrants.  This primarily a cost-savings mechanism, although it saves some paper too.  Going forward, patentees will be able to obtain a paper ceremonial copy for a $25 fee.

This result does not have a direct major impact on patent practice, but as part of the change, the USPTO is issuing patents at a quicker pace following the issue fee.  That issue date is important because it is the final day for filing a follow-on application claiming priority.

Best Practices: With the compressed issuance timeline, a growing number of patent practitioners are moving to a standard practice of only filing the issue fee once a firm decision has been made as to whether to file a continuation.  And, if the decision is to file a continuation, delay the issue fee payment until the continuation is ready to go.

= = =

Small Jazz Musician Foils Apple Music Trademark Registration

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by Dennis Crouch

Bertini v. Apple Inc., — F.4th — (Fed. Cir. 2023)

Apple Records was founded by The Beatles in 1968 and quickly became a success, producing many hit records in the late 1960s and early 1970s. Apple Computer Company was founded in the mid-1970s and almost immediately sued for trademark infringement by Apple Corps (the parent company of Apple Records).  The companies eventually settled the case with Apple Computer paying $80k and agreeing to stay out of the music business.  The companies clashed again in the 2000s as Apple Computer (now Apple Inc.) expanded into music via iTunes and other services.  The two eventually reached another settlement that transfers substantial rights over to Apple Inc. to use the mark in connection with its music-related products and services.

In 2015 Apple began using the mark APPLE MUSIC as its new music streaming service. It also filed to register a trademark on the mark.

Meanwhile, Charlie Bertini created his band AppleJazz Band back in 1984 to perform at the AppleJazz festival.  He also created the AppleJazz record label.  Bertini filed an opposition to Apple’s TM registration which the TTAB eventually dismissed.  On appeal here, however, the Federal Circuit has reversed — holding that Apple had not proven a sufficient right of priority.

Tacking: The basic issue in the case is whether Apple Inc. can claim priority use back to the founding of Apple Records in 1968 (or sometime before 1984). Of importance, the pre-84 use of Apple mark was solely for “gramophone records” and other record formats.  In its registration application, Apple is seeking to register APPLE MUSIC for “15 broad categories of services, from the production and distribution of sound recordings, to presenting live musical performances, to providing websites featuring entertainment and sports information.”  Slip Op.

On appeal, the Federal Circuit held that the tacking analysis must be pursued for each service listed its application.

The Board legally erred by permitting Apple to claim absolute priority for all of the services listed in its application based on a showing of priority for one service listed in the application. Tacking a mark for one good or service does not grant priority for every other good or service in the trademark application. A trademark owner must show tacking is available for each good or service for which it claims priority on that ground. . . . The trademark applicant cannot establish absolute priority for the full application simply by proving priority of use for a single service listed in the application.

Slip Op.  Here, Apple has not shown that taking is proper for live musical performances and therefore the application must be rejected.  On remand, Apple will likely be able to narrow its application to only services that are properly covered by its assignment from Apple Records.

In her analysis, Federal Circuit Chief Judge Moore repeatedly stated that tacking is an exception to the ordinary rule and should be narrowly construed.  American courts “uniformly apply the tacking doctrine narrowly.”  Although tacking allows for minor changes in services and in the mark itself, tacking requires “substantial identity.” “[G]oods or services must be substantially identical for tacking to apply.” Id.  In the context here, in order to have tacking for musical performances “Apple must therefore show live musical performances are substantially identical to gramophone records.” Although substantial identity is a question of fact, the Federal Circuit concluded that there was no need for the TTAB to determine this question — “no reasonable person could conclude … that gramophone records and live musical performances are substantially identical.”

Accordingly, Apple is not entitled to tack its use of APPLE MUSIC for live musical performances onto Apple Corps’ 1968 use of APPLE for gramophone records. Because Apple began using the mark APPLE MUSIC in 2015, Bertini has priority of use for APPLE JAZZ as to live musical performances. We therefore reverse the Board’s dismissal of Bertini’s opposition to Apple’s application to register APPLE MUSIC.

Id.

Note that Apple has substantially moved-on from this issue and redid its logo as shown below using a design-plus-word mark.

Skilled Searcher Test Allows Estoppel for Unknown References

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by Dennis Crouch

Ironburg Inventions Ltd. v. Valve Corp., — F.4th —, 21-2296 (Fed. Cir. Apr. 3, 2023)

The recent decision in Ironburg Inventions Ltd. v. Valve Corp. has significant implications for post-IPR estoppel under 35 U.S.C. § 315(e)(2). In this case, the Federal Circuit adopted a “skilled searcher” standard to determine whether grounds not raised in the original IPR “reasonably” could have been raised at the time. The court also addressed the burden of proof in estoppel cases, with the Federal Circuit holding that it lies with the party seeking the estoppel — a ruling that aligns with traditional practice and the best reading of the statute.  These standards and procedures are important because they provide clarity on the scope of estoppel and help stabilize the law, particularly given diverging district court rulings on these issues. One interesting aspect of Ironburg is the split 2-1 decision on indefiniteness, which I’ll address in a separate post.

Before delving into the case, it is also worth noting that the issue of estoppel and its nuances are currently pending before the U.S. Supreme Court in Apple v. CalTech. In Apple, the Federal Circuit broadly applied the estoppel doctrine, and the Supreme Court is now considering whether to grant certiorari.

Lack of Knowledge and a Skilled Searcher Test: After being sued for infringement, Valve challenged Ironburg’s game controller patent via inter partes review (IPR).  That administrative action ended with a final written decision favoring the patentee — i.e., Valve lost.  Back in district court, Valve attempted to challenge the validity again – this time based upon non-petitioned grounds that it gleaned from a competitor’s IPR petition against the same Ironburg patent. The district court barred Valve’s defenses as estopped under § 315(e)(2)  after concluding Valve “reasonably could have raised” those grounds in its original IPR. Valve argued that it had no knowledge of those references at the time of its IPR petition and therefore could not have included them as challenge grounds. However, both the district court and the Federal Circuit held that lack of knowledge is not a complete excuse.  Rather, in cases where the IPR challenger lacks knowledge of the prior art the appropriate test for estoppel is what “a skilled searcher conducting a diligent search reasonably could have been expected to discover.”

Burden Shifting: One question on appeal is which party has the burden of proving that the ground reasonably could have been raised in the IPR.  The district court (seemingly) placed the burden on the patent challenger to prove that it could not have reasonably raised the issue. In some ways, that burden makes sense because the IPR challenger is in the best position to understand and prove its level of knowledge  (or lack thereof) at the time.  On appeal, however, the Federal Circuit flipped that ruling — holding instead that the burden lies with the party seeking the estoppel to prove estoppel.  In my view, this result better aligns with both tradition and the reading of the statute.

Digging a bit into the weeds: the district court’s holding basically concludes that Valve reasonably should have been able to find the references since the other IPR challenger found them.  On appeal, the appellate court found some faulty logic — an inherent and unproven assumption made by the district court was that the other IPR challenger used only reasonable diligence to find the art. If, on the other hand, it took “extraordinary measures” to find the references and construct the challenge ground, then no estoppel should apply.

The patentee had won a $4 million judgment at the original trial, but on remand, the district court will need to reconsider its estoppel decision. If the result is no-estoppel, Valve will get a third chance at invalidating the patent. This case underscores the importance of conducting a diligent search to identify all potential grounds for invalidity and then putting the best grounds forward in the IPR petition.

The Brandeis Brief in Patent Cases

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by Dennis Crouch

Louis D. Brandeis was a famous lawyer long before becoming a Supreme Court Justice. In the 1908 case of Muller v. Oregon, Brandeis represented the State of Oregon defending the state’s rule restricting the number of hours that women could work in certain industries.  In defense of the law, Brandeis filed a brief that presented social science research and empirical evidence to support the argument that long working hours had negative effects on women’s health and family life.  That evidence helped sway the court and also spawned the “Brandeis brief” — an approach that continue to be a popular mechanism for attempting to influence the Supreme Court. Brandeis briefs typically include lots of facts and claims about how the world works and ask the court to use those facts in its interpretation of the law.  One key problem with this approach is that it does not follow the usual rules of evidence required for factual findings.  And, when the Supreme Court adopts the findings, then the facts suddenly become the law and binding precedent.  Thus, Muller v. Oregon, the Supreme Court precedentially concluded that it was uniquely risky for women to work long hours and that their natural caregiver role would be improperly disrupted.  Today, we might recognize that those conclusions included inherent cultural biases rather than stemming from the nature of women.

A major problem with this sort of evidentiary submission directly to the Supreme Court is that it is unchecked and admittedly biased — these are sent to the court in briefs advocating a particular point of view and without the ordinary judicial evidentiary process.  But, proponents of Brandeis briefs argue that the rules don’t apply to these “legislative facts” because the evidence is being used to interpret the law rather than make case-specific factual conclusions.  This is much the same approach as the Court uses to determine historical facts for originalist decisions.  But, many historians would agree that history as defined in Supreme Court cases appears to be cherry-picked in order to achieve a particular results.

In patent cases, we often have Brandeis briefs on the policy impact of certain choices.  In addition, we also regularly see attempts to explain the science to the justices in ways that help lead them to a particular conclusion.  In Amgen, for instance, Nobel Prize winner Gregory Winter submitted a brief explaining that antibody design is extremely unpredictable and, because of that, broad functional claims should not be allowed.   Amgen contended that some of the evidence Winter relied upon had been excluded by the trial court, and thus should not be reintroduced to the Court. But, the practice is likely to persist.

Bye Bye Functional Claims

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by Dennis Crouch

Oral arguments from Amgen v. Sanofi suggest the potential of a blockbuster Supreme Court decision further derogating functional claim limitations (all of which are also genus claims).  A key question is whether the court will include limiting language that that directs impact primarily upon the “unpredictable arts.”

At oral arguments, the Supreme Court was quite hostile to the patentee counsel Jeffrey Lamken and his attempt to defend Amgen’s functionally claimed genus of antibodies.  I believe that Lamken took the wrong turn by first repeatedly telling the court that the claim covered only about 400 antibodies, before eventually admitting that a scope covering millions of yet unidentified antibodies.  I could taste the bitterness in the further questions.  Several members of the court struggled with the expressly functional claim limitation that permitted Amgen to claim all antibodies that achieve its stated results.  Lamken suggested that the “PTO regularly issues patents which have that sort of functional piece.”  Of course, the PTO also regularly issues invalid and overbroad patents.  In questioning, the court clearly thought we had a potential eligibility problem because of the functional limit. In his response Paul Clement picked-up on that issue and explained that the functional genus claim is “a work-around of Myriad. Because basically they’re pointing to something that exists in nature [the PCSK9 pathway] and they’re saying, we claim everything that works to bind there en bloc.”

In Amgen v. Sanofi, the Supreme Court  agreed to reevaluate the doctrine of enablement as applied by the Federal Circuit.  Although juries twice sided with the patentee, the district court and the court of appeals both rejected the jury verdict and concluded that lacked an enabling disclosure as a matter of law.  The Federal Circuit particularly noted (1) that functional limitations are much more difficult to enable than are structural limitations and (2) that each embodiment covered by a genus claim must be enabled.  Here, the court noted that Amgen had failed to enable the “far corners of the claimed landscape.”

Amgen has requested the court to incorporate a meaningful limitation into the enablement test.  In that framework, a patent challenger would need to show both (1) that some embodiments requires undue experimentation in order to recreate and (2) that those failures would be meaningful to skilled artisans.  And, Amgen suggests that functional genus should not face heightened scrutiny.  Lastly, Amgen suggested that the Wands Factors should be given less weight – that today they are being used as the test, rather than for functional support.  The particular Wands problem for the patentee here is the notion that antibodies are “unpredictable” and therefore require more disclosure.

The case is a very big deal, and not just for antibodies.  Every claim covers myriad undisclosed embodiments; Everyone is using lots of functional limitations; and Every patent suffers from unenabled far corners.

The claim here:

1. An isolated monoclonal antibody, wherein, when bound to PCSK9, the monoclonal antibody binds to at least one of the following residues: S153 … or S381 of SEQ ID NO:3, and wherein the monoclonal antibody blocks binding of PCSK9 to LDLR.

The Amgen invention centers around a pathway that others discovered regarding LDL, AKA “bad cholesterol,” the liver’s role in destroying bad cholesterol, and a new protein PCSK9.  The liver has LDL receptors (LDLRs) that bind and break-down LDL.  But, the body also makes a protein known as PCSK9 that competitively binds to those receptors and blocks the liver LDL-breakdown action.  In creating its invention, Amgen set out to find monoclonal antibodies that bind to PCSK9 and block its operation — and thus allow the liver to do its LDL-breakdown work.  The process for doing this was somewhat straightforward. They first injected a humanized-mouse with PCSK9 in order to cause an immune reaction to attack the foreign body.  The mouse created a bunch of antibodies (about 3,000) that bind to PCSK9.  These were then all tested (using standard rapid testing tools) to determine which ones bind the “sweet spot” of PCSK9 — and thus would have the impact of “block[ing] binding of PCSK9 to LDLR.”  This process brought it down to about 400 antibodies.  However, Amgen did not actually take the time to figure out the amino-acid sequence for of each of these. Rather, it did so for 16 of them and called it good.  Sanofi’s product is – most likely – one of the 400 discovered by Amgen, but was not literally described in the Amgen patent. Rather, Amgen described the process, and also described the use of a codon-replacement process to check similar antibodies (that is where the millions come-into play).

A key quote from Clement was be the following: “I think functional genus
claims are terrible.”  The essence of his argument is that they have the potential of giving the patentee a broad scope covering numerous radically different solutions.  The result though is that nobody has incentives to look for the others because of the covering patent.  “They retard the science.”  In his view, a more limited monopoly is much better — “We’re better off with two competing independently developed therapies.”

Colleen Sinzdak argued on behalf of the US Gov’t as amicus and in support of Sanofi.  Sinzdak was in complete agreement with Clement, arguing that broad genus claims are “a danger to innovation and especially in the medical field.”

The Government argued that a genus claim is only proper if each and every embodiment within the genus has been enabled. “It really is that simple. … you really do need to enable each of the different embodiments that you’re claiming.”  Sinzdak argued that in an unpredictable, fast-moving field, the law should be more stringent in order to allow an early patent to unduly grab land and shut-down further research.   Sinzdak suggested that the court force narrow claims and then let folks rely upon the doctrine of equivalents if necessary.

Lamkin’s important rebuttal point: Although Amgen did not literally disclose every embodiment, and some covered embodiments are quite structurally different from those disclosed, “the key fact in this case is that Sanofi has not identified one antibody that would require undue experimentation to make.”

Venue Transfer and Witness Credibility

Patent,

In re: Roku, Inc. (Fed. Cir. 2023)

IOEngine sued Roku for patent infringement back in 2021. As is common with large corporate defendants sued in Waco, Roku asked Judge Albright to transfer the case to N.D. California on convenience grounds under 28 U.S.C. 1404.  Judge Albright refused — noting that Roku’s corporate witness lacked credibility and his testimony was “either misleading or based on an inadequate investigation of the facts.”  In particular, the record showed several Roku employees with “particularly relevant knowledge” of the case located in the W.D. Tex. (Austin), but that Roku had indicated all potential employee witnesses were located in Northern California.

Still, Roku petitioned for mandamus with some confidence, having seen the Federal Circuit previously repeatedly nitpick the work of Judge Albright on transfer motions.  Although Roku did not expressly claim that Judge Albright was biased, it did argue a failure of “objective assessment” (essentially the equivalent).

Objectively assessing the facts shows that the [Roku] employees in WDTX identified by IOENGINE do not possess relevant material information. And, even if they do, their knowledge is, at best, cumulative to the knowledge of Roku employees in NDCA.

Roku Petition.  Of course, the second sentence suggests the problem with Roku’s argument.

In the end here, the appellate panel did not move forward — holding that denial of transfer was not a “clear abuse of discretion” since the district court considered the relevant factors in its conclusion that Roku failed to show that the Northern District of California was clearly more convenient.

$469 Million: There and Gone

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ClearPlay v. Dish Network (D.Utah 2023)

Earlier in March 2023, a Utah jury sided with the patentee ClearPlay – find that Dish Network infringed two “clean movie” patents used to to skip the naughty bits of a video program. US7577970 (Claims 28 and 33); and US6898799 (Claim 12).  The jury went on to award a “reasonable royalty” of $469 million.

Hold that pause button.  This week, Judge Nutter rejected the jury verdict and instead granted the defendant’s motion for Judgment as a Matter of Law.  Nutter concluded that the patentee had not shown either literal infringement or infringement by equivalents.  The court ordered DISH to prepare a draft order for his signature that adopts the rational from its briefing.

The draft order will contain support, citations, and consistent rationale from its briefing; transcript references from DISHs appendix (which should be used extensively in the draft order); and references to contrary positions taken by ClearPlay to illustrate the conflicts that this ruling resolves.

Minute Entry of March 21.   The case has been pending since 2014.

Abitron v. Hetronic: Extraterritorial Application of U.S. Trademark Law

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by Dennis Crouch

The Supreme Court held oral arguments on March 21, 2023 in the international trademark case of Abitron Austria GmbH v. Hetronic International, Inc. and will be holding arguments on March 22, 2023 in the whisky dog toy trademark case of Jack  Daniel’s Property v. VIP Products.

Abitron was formerly the international distributor for Hetronic radio-remote-control products used largely for heavy machinery.  Hetronic products have a distinctive yellow-black coloring pattern.  At some point, Abitron began selling a competing product using the same pattern and same product names.  (Image above).  Hetronic sued and won a $90 million judgment based upon willful  trademark infringement and goodwill injury.  Hetronic also won on a contract claim, but contract law would not support this disgorgement remedy.

The $90 million award reflected the entire gross revenue of Abitron’s knockoff sales, 97% of those sales were outside of the USA.  As Abitron wrote in it its brief: these “were sales in foreign countries, by foreign sellers, to foreign customers, for use in foreign countries, that never reached the United States or confused U.S. consumers.”  Of course, this foreign anaphora omits a key domestic conclusion: the harm was directed to the USA and felt in the USA by the TM owner.  Of course, the leading justifications for TM law are tied to customer harm, and we only assign rights to the business unit because it quickly solves a collective action problem.  In that framework, any harm caused by Abitron is also felt abroad — with confusion of its non-us customers.

On appeal, the 10th Circuit sided with Hetronic and confirmed the award.  The U.S. Supreme Court then granted certiorari on the following question:

Whether the court of appeals erred in applying the Lanham Act extraterritorially to petitioners’ foreign sales, including purely foreign sales that never reached the United States or confused U.S. consumers.

Petition.  At oral arguments, Lucas Walker (MoloLamken and former Gorsuch clerk) argued on behalf of the adjudged infringer; Matthew Hellman (Jenner & Block and former Souter clerk) argued on the other side; and Masha Hansford (SG’s office) largely sided with petitioner.

Although U.S. law is generally thought to not apply extraterritorially, trademark law has had a somewhat different path triggered by the Court’s decision in Steele v. Bulova Watch Co., 344 U.S. 280 (1952), which allowed for collection of damages for foreign infringement.  Petitioners here both distinguish Steele and suggest that it could be overruled.

In my view, this level of extraterritorial application creates a sovereignty conflict, with the USA extending its reach unduly into the realm covered by trademark and competition laws of other nations.  Sovereignty principles recognize the independence of each nation and are built upon principles of non-interference — that nations should not interfere with the internal affairs of other nations.  This is a situation that calls for the court to exercise comity and abstain from extending its reach absent a clear statement and authorization from Congress. Rather, if a trademark holder wants to sue for confusing sales made in Europe, Europe is the location where the parties should deal with the issue.

All Inventors are Human; All Humans are Inventors

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by Dennis Crouch

Petitioners in Thaler v. Vidal ask the Supreme Court one simple question:

Does the Patent Act categorically restrict the statutory term ‘inventor’ to human beings alone?

Thaler Petition for Writ of Certiorari.  Only a court with substantial hubris would be willing to take-on this case, but I’m confident that the Supreme Court is up for the task.

The power of AI tools has become viscerally apparent over the past few months and hopefully members of the court have been shown chatGPT or some other generative AI tools that are now widely available (if still quite flawed).  We are are now at a point where it is easy to see an AI tool creating inventive output. And, even if recognition of the invention is fundamental to the inventing process, the AI tools certainly provide sufficient contribution to be considered for joint inventorship.

In general, we take an objective approach to patentability focusing on whether the result is a substantial step beyond what was known before and looking for objective evidence within the patent document of sufficient disclosure.  Some early 20th century courts had alluded to a potential subjective test, but Congress rejected that in the 1952 Patent Act, writing that “Patentability shall not be negatived by the manner in which the invention was made.”  35 U.S.C. 103.  The basic idea here is that we have a public policy goal of encouraging innovation and invention, “promot[ing] the Progress of Science and useful Arts.”  And Congress concluded that a key way to get results is to reward results.

In Thaler’s case, the PTO and courts short-circuited the patentability analysis because the purported inventor is a machine, and machines simply are not permitted to be inventors.

The pending case involves a human named Thaler (Dr. Stephen Thaler) who created an “imagination engine” named DABUS.  According to thus-far undisputed allegations, DABUS created two inventions and also recognized their utility without any specific guidance from a human.  In Thaler’s view, DABUS was the inventor since it was the “individual . . . who invented or discovered the subject matter of the invention.” 35 USC 100(f).   But, the USPTO refused to award a patent because the listed inventor was inhuman.

On appeal, the Federal Circuit affirmed — holding that the word “individual” found in 100(f) was properly interpreted as applying only to humans.  One oddity of this conclusion is that definition was added in 2011 as part of the America Invents Act, and without any suggestion on record that the amendment was intended to exclude robots or non-humans.

Thaler’s new petition asks the U.S. Supreme Court to take up the case and so some simple statutory interpretation of the word “individual” in context of Section 100(f) and (g).  According to Thaler, the statute is designed to focus attention on the entity that actually does the inventing and does not limit its scope to “humans” or “natural persons,” the common mechanisms used by Congress.

Professor Ryan Abbot has been Counsel of Record for Thaler throughout the case.  Thaler added Mark Davies and his Orrick team for this petition.  Earlier in March, the UK Supreme Court heard oral arguments regarding the UK version of the patent, asking whether “section 13(2)(a) of the Patents Act 1977 (the “1977 Act”) require a person to be named as the inventor in all cases, including where the applicant believes the invention was created by an AI machine in the absence of a traditional human inventor?”  The UKIPO Comptroller-General refused the application and that decision was affirmed on appeal. [2021] EWCA Civ 1374.

= = =

Assuming Thaler loses here, the unsatisfying solution appears to be that the owner or user of the AI will simply be claiming rights as the constructive inventor.  Thaler has a pending application in the EPO suggesting himself as the inventor as owner of DABUS. This approach substantially stretches the law of inventorship.  In the U.S., limitations on challenging inventors mean that many inventive entities can de facto stretch the notion of inventorship without getting caught.

= = =

If you are interested in supporting Thaler’s position, brief in support will be in about 30-days. (Depending upon the docket date, that has not been released yet).

Only Some of the Claims are Invalid

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by Dennis Crouch

Hantz Software v. Sage Intacct (Fed. Cir. 2023) (non-precedential) 

The district court sided with the defendant Sage, dismissing the complaint for lack of eligibility.  In a short opinion, the Federal Circuit has largely affirmed, but made an important caveat — that the district court held only that claims 1 and 31-33 are invalid.

[W]e agree that the operative complaint asserted infringement of only claims 1 and 31–33 of each asserted patent, and because Sage did not file any counterclaim of its own (instead, it simply moved to dismiss Hantz’s complaint), we conclude that the ineligibility judgment should apply to only claims 1 and 31–33 of the asserted patents. We therefore vacate the district court’s judgment insofar as it held any claim other than claims 1 and 31–33 of each asserted patent ineligible and affirm in all other respects.

Slip Op.  Despite the limit here, claim preclusion will prevent Hantz from reasserting any of the remaining claims against Sage. Non-mutual collateral estoppel should also apply here to to prevent Hantz from asserting any of the claims against a third party — unless the claims are meaningfully distinct on eligibility grounds from those already adjudged to be invalid.  Normally, collateral estoppel only applies to issues actually litigated, but in the patent context, the Federal Circuit has ruled that it may also apply to non-litigated claims when the differences do not “materially alter the question of invalidity.” Ohio Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333, 1342 (Fed. Cir. 2013); MaxLinear, Inc. v. CF CRESPE LLC, 880 F.3d 1373, 1377-78 (Fed. Cir. 2018) (Asking “whether the remaining claims present materially different issues that alter the question of patentability”).

 

(more…)

Preparing for Automated Examination

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Associates around the country today are drafting motions, patent applications, and other documents using some version of ChatGPT.   Of course, If I were a judge or examiner, I might also be interested in using AI to help facilitate my decision-making.  ChatGPT is good for that as well and can provide a reasoned structure, including identifying of prior art and obviousness standards.

If you recall your last writing course, the professor repeatedly focused attention on the audience. “Who is the audience you are looking to persuade?”  Moving forward, it appears that we really do have a new audience for our writing — AI advisors.  This calls to mind the great tape recorder scene from Real Genius (1985). Members of the class began just leaving tape-recorders to record the  boring lecture; eventually, the professor also just brought in his own taped lecture to speak to the machines.

Automated Examination: On the patent prosecution side, we may shortly be in a situation where AI systems will be able to conduct patent examination at the same level of quality as a typical human examiner.  It seems obvious that we should rely upon the AI to at least facilitate examination.  The bigger question is whether to eliminate the first-level human bureaucracy all together and move to an automated examination system.  The benefit of that process is that it could be done very rapidly (immediate allowance / rejection) and potentially at a much lower cost.  Certainly, PCT systems could move toward substantially lowering costs with initial search reports and examination being done automatically.

What do you think? 

IPRs and the APA: Review of Director’s Discretion to Initiate IPRs

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By Jordan Duenckel.  Jordan is a second-year law student at the University of Missouri School of Law and a registered patent agent. 

Apple brought an action against the USPTO Director Vidal in district court under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701– 706, challenging the Director’s instructions to the Board regarding exercise of discretion in IPR institution decisions. In Apple v. Vidal, 2022-1249, — F.4th — (Fed. Cir. Mar. 13, 2023), Judge Taranto (joined by Judges Lourie and Stoll) largely affirmed the district court’s dismissal, confirming that the Director’s instructions are unreviewable.  The court did separately reverse a tertiary challenge to allow Apple to proceed on a claim related to the note-and-comments procedure of the APA. 

Apple and other repeat players in patent infringement litigation often use the inter partes review process under 35 U.S.C. §§ 311–319 to challenge the validity of asserted patents. The statute provides a two-step IPR process: Step 1 is the institution decision by the Director under § 314(b); Step 2 is the trial and final written decision by the PTAB.   

At least two prerequisites assist the Director in deciding to grant review: [1] a reasonable likelihood that the petitioner would prevail in 35 U.S.C. § 314(a) and [2] a petition must be filed within one year after service of the infringement complaint. § 315(b). Even if these conditions are met, the Director has unreviewable discretion over whether to initiate an IPR. The statutory text is seemingly as clear as a statute can be: “The determination by the Director whether to institute an inter partes review under [§ 314] shall be final and non-appealable.” 35 U.S.C. § 314(d); see also United States v. Arthrex, Inc., 141 S. Ct. 1970, 1977 (2021).   

From the outset of the IPR program, the Director delegated institution authority to the Board. 37 C.F.R. § 42.4(a). Practically, without this delegation, Director Vidal would spend a disproportional amount of time reviewing IPR petitions at the expense of other duties of the office, although she could have delegated responsibility to other agency departments such as the petitions division.  The right of delegation of the institution is settled law. See Ethicon Endo-Surgery, Inc. v. Covidien LP, 812 F.3d 1023, 1031–32 (Fed. Cir. 2016).  

At issue in Apple v. Vidal are the so-called Fintiv instructions issued by the Director based on Apple Inc. v. Fintiv, Inc., IPR2020-00019, 2020 WL 2126495 (P.T.A.B. Mar. 20, 2020) which provides six factors for analysis of whether to institute an IPR parallel to pending litigation.   

Proposing an analysis under the arbitrary and capricious standard, Apple and the other petitioners are directly focused now not on the denial of a specific petition for IPR review but as a general challenge to the Director’s instructions to the PTAB about how to exercise the delegated discretion.   

Slip Op. The district court ruled that 35 U.S.C. § 314(d) “precludes judicial review” of the challenged agency actions, bringing the case within the APA exclusion stated in 5 U.S.C. § 701(a)(1). According to this court, the IPR statute’s preclusion was settled by the Supreme Court in Arthrex and encompasses review of content-focused challenges to the Fintiv instructions. § 314(d) provides the clearest congressional delegation of nonreviewable discretion possible and the panel rightfully relied on plain-meaning and clear Supreme Court precedent.    

While affirming the dismissal of the content-based claims, the court separates the procedural requirements set forth in the APA. Reversing the district court in part, Judge Taranto’s panel opinion reopened Apple’s claim that the Director was required, by 35 U.S.C. § 116 together with 5 U.S.C. § 553, to promulgate institution instructions through notice-and-comment rulemaking procedures.  Slicing the procedure from the underlying substance of the rule, Taranto relies on Lincoln v. Vigil, 508 U.S. 182, 195 (1993) to clarify that the 5 U.S.C. § 553 provides the basis for rulemaking through the notice-and-comment procedure for the Director’s instructions and is a separate analysis of reviewability from the substance of the instructions. 

Standing was also preemptively addressed for the remand proceedings. Lujan provides the three-step test: injury-in-fact, causation, and redressability. In search of a particularized, concrete injury, the court takes notice that Apple is a repeat player with a history of IPR claims being denied. This past injury was used to show the eminency of future injury resulting from the denial of the benefits of IPRs linked to the concrete interest possessed by an infringement defendant. Redressability and causation were met because there is a genuine possibility that the instructions would be changed in a way favorable to Apple in notice-and-comment rulemaking.  

The Federal Circuit may have reached a bit to find standing in an effort to effectively resolve concerns about a heavily used procedure: the IPR process. On remand, the district court might rightly decide that a traditional notice-comment rulemaking procedure is required to redress harms or prophylactically provide clarifications for the patent system that can accomplish the goals of using agency resources effectively. Allowing the frequent fliers of the IPR system to at least have an appearance of input in the procedure would create a process with more certainty and produce more long-term economic efficiency.