Federal Circuit Vacates $300 Million Jury Verdict on Multiple Grounds

In a significant decision with implications for patent litigation practice, the Federal Circuit has vacated both infringement and damages judgments totaling $300 million in Optis Cellular Technology v. Apple Inc., finding multiple errors by the Eastern District of Texas that undermined the validity of the jury's verdict. Judge Prost's opinion identified four distinct areas of reversible error:

  1. Improper verdict form construction that violated Apple's Seventh Amendment right to jury unanimity,
  2. Incorrect patent eligibility analysis under 35 U.S.C. § 101,
  3. Erroneous means-plus-function determination under 35 U.S.C. § 112 ¶ 6, and
  4. Abuse of discretion in admitting prejudicial settlement evidence under Federal Rule of Evidence 403.

Optis asserted several standard-essential patents (SEPs) covering Long-Term Evolution (LTE; aka 4G) technology against various Apple devices including iPhones, iPads, and Watches. After an initial jury verdict awarding $506.2 million, the district court granted a new trial on damages only, finding that the jury had not heard evidence regarding Optis's FRAND (fair, reasonable, and non-discriminatory) licensing obligations. The second jury awarded $300 million as a lump sum for past and future sales.

Competing jury form proposals
(patentee in green; accused in blue): 

Single Broad Verdict Form from Judge Gilstrap

How Much is Hidden in the Jury Black Box: Patent cases are extremely complicated. And, this one involved five separate patents, including allegations of both literal and DOE infringement, willful infringement, and invalidity. In situations like this, district court judges look for ways to simplify the jury decision making. Judges often have legitimate concern that lay jurors will be overwhelmed by highly technical claim constructions and complex infringement theories across multiple patents, potentially leading to decisions based on confusion rather than careful consideration of the evidence. And, judges worry that overly detailed verdict forms increase the risk of logically inconsistent findings, which can complicate post-trial proceedings and create appellate complications.


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“Do it on AI” claims are Abstract Ideas

by Dennis Crouch

The Federal Circuit's AI-patent decision this week affirmed a district court's dismissal of the claims as ineligible, holding that "generic" machine learning technology is itself an abstract idea. Recentive Analytics, Inc. v. Fox Corp., No. 2023-2437 (Fed. Cir. Apr. 18, 2025).

In its decision, the court acknowledged the growing importance of machine learning, and exerted some care in limiting its holding:

Machine learning is a burgeoning and increasingly important field and may lead to patent-eligible improvements in technology. Today, we hold only that patents that do no more than claim the application of generic machine learning to new data environments, without disclosing improvements to the machine learning models to be applied, are patent ineligible under § 101.

At oral arguments, the patenee's attorney Robert Fredrickson (Goodwin) explained that one reason his client did not claim a new algorithm is that it would have raised 101 issues:

This wasn't an invention of a new machine learning technique, because that would fall into another one of this court's section 101 traps, is if the claim is improving the mathematical algorithm or making machine learning better, then we're claiming the natural law, the mathematical algorithm itself.

That question --  scope of protection for new machine learning algorithms -- will be left for another day.


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New USPTO Leadership on the Horizon: Lutnick Confirmed as Commerce Secretary, Squires Expected as Director

by Dennis Crouch

Yesterday, the Senate voted to confirm Howard Lutnick as Secretary of Commerce. Lutnick, has been CEO of Cantor Fitzgerald and a prolific inventor named on over 400 U.S. patents. Commerce has a wide coverage, including housing the USPTO.

Meanwhile, Dani Kass at Law360 is reporting that John A. Squires, currently a partner at Dilworth Paxson and former chief IP counsel at Goldman Sachs, is expected to be nominated as the next USPTO Director.  Like Lutnick, Squires has extensive fintech experience.

The Director position requires presidential nomination and Senate confirmation under 35 U.S.C. § 3(a)(1). The statute specifically requires that the Director be a U.S. citizen with a professional background and proven ability in patent or trademark law.  I expect that Sec. Lutnick will play a key role in advancing Squires’ potential nomination through the process.

Squires brings significant private sector IP experience to the potential role. At Goldman Sachs, he founded and led the investment bank’s intellectual property practice from 2000 to 2009. This was at the same time that Lutnick at CantorFitz was deeply involved on the technical side.  Squires’ practice at Dilworth Paxson has continued to focus on emerging technologies including AI, blockchain, and fintech.  He also previously helped to create the Fortress’ IP Investment group’s $4 billion.

Although Squires has not published his list, I expect that the following will be some of his focal points as he jumps into the fray:

  1. Ensuring the patent system is both accessible and valuable to small startups.
  2. Expanding patent eligibility through legislation, especially for Software/Fintech.
  3. Expanding the use of AI tools in the examination process to create a more efficient and predictable process.
  4. Reducing the backlog and patenting delays.
  5. Considering ways to link the patent system with national security.

The USPTO had expanded a number of DEIA related initiatives under Directors Iancu and Vidal. Those have been eliminated already and so are unlikely to be a focus of Squires’ tenure.

Trading Technologies Files Supreme Court Petition on Patent Eligibility, Rule 60(b)(3), and Federal Circuit Procedural Issues

by Dennis Crouch

Trading Technologies (TT) has petitioned the Supreme Court to review a Federal Circuit decision raising three significant questions about patent law and civil procedure. The case stems from TT's patent infringement suit against IBG LLC and Interactive Brokers LLC over patents related to electronic trading user interfaces.  U.S. Patent Nos. 6,766,304, 6,772,132, 7,676,411, and 7,813,996.  (I have mentioned this previously, but TT is a former client and I was involved with enforcing the '304 and '132 patents in the past).

The case caption now lists Harris Brumfield as trustee following TT's 2021 sale, though the litigation began and was primarily conducted by Trading Technologies. 20250103171844464_2025-01-02 No 24- Petition.


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Recent Patent Cases at the Supreme Court

by Dennis Crouch

The Supreme Court has not granted certiorari in any patent cases this term. But the 2024 docket includes a number of important petitions -- some focusing on procedural issues and others on fundamental patent law questions. Here is a quick review of those currently pending before the high court:


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The Abstract Divide: BBiTV Likely to Seek Supreme Court Review of Software Patent Eligibility

by Dennis Crouch

BBiTV has signaled its intent to seek Supreme Court review of the Federal Circuit's rejection of its electronic program guide patents, teeing up important questions about patent eligibility for software innovations. The case highlights persistent tensions in how courts evaluate patent eligibility for screen-based user interfaces under 35 U.S.C. § 101.  Broadband iTV, Inc. v. Amazon.com, Inc.


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When (and Where) Does Amazon’s APEX Create Personal Jurisdiction

By Dennis Crouch

The Supreme Court will soon consider whether to review what I see as an important Federal Circuit decision finding personal jurisdiction based solely on a patentee's use of Amazon's private patent enforcement system. In Lighting Def. Grp. LLC v. SnapRays LLC, No. 24-524 (petition filed Nov. 5, 2024), Arizona-based LDG submitted a patent infringement complaint against Utah-based SnapPower through Amazon's Washington-based Patent Evaluation Express (APEX) program.  To be clear: this is a private arbitration system that relates to selling on Amazon - it is not a federal court case.  Under APEX, Amazon notifies accused sellers who have three weeks to either participate in Amazon's evaluation process, settle with the patent owner, or file a declaratory judgment action - otherwise their listings are removed.

SnapPower sued in Utah federal court seeking a declaratory judgment of non-infringement and invalidity. However, the district court dismissed for lack of personal jurisdiction since LDG (an AZ company) had no contacts with Utah. On appeal, the Federal Circuit reversed, holding that LDG's use of the APEX system knowing it would affect SnapPower's Utah operations was sufficient to create jurisdiction there. The cert petition argues this conflicts with Supreme Court precedent requiring contacts with "the forum State itself, not the defendant's contacts with persons who reside there." Walden v. Fiore, 571 U.S. 277 (2014).


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The Next USPTO Director: Duffy’s Four Factor Test

by Dennis Crouch

In a prior post, I focused on President Elect Trump's nomination of Howard Lutnick as Commerce Secretary, but the most direct impact for the patent system will be the upcoming nomination of the next USPTO Director. Dennis Crouch, Howard Lutnick and the Patent System, Patently-O (November 25, 2024).  Like the Secretary of Commerce, the Director (who is also Undersecretary of Commerce) must also be nominated by the President and confirmed by the Senate under 35 U.S.C. § 3.

Professor John Duffy (UVa) recently outlined four essential qualities for the next USPTO Director. [Part 1][Part 2].  Duffy was my law professor at UChicago back in 2002, and I have deeply respected his work since then - both as a scholar and teacher.  Back then we were at the apex of broad patent eligibility doctrine.  The landscape has shifted dramatically then, with decisions like Alice and Mayo fundamentally reshaping what inventions qualify for patent protection. Duffy and I align in thinking that eligibility scope has been unduly narrowed.  We also align on another axis - that the obviousness should be robustly examined at the USPTO as the central patentability doctrine. Recall here that Duffy was one of the key forces behind KSR v. Teleflex that eliminated the Federal Circuit's more rigid "TSM" test.  As I get into this post, I also want to recognize the background that - despite these major changes to the patent system seemingly making it more difficult to obtain patent protection - the allowance rate is higher than anytime in the past 15 years. Dennis Crouch, USPTO Patent Grant Rate and Growing Backlog, Patently-O (Nov. 29, 2024).

Duffy's Four Part Framework for USPTO Leadership: First, Duffy argues that the new Director "should be open to a more reasonable, expansive, and text-based approach to patentable subject matter." As he notes, this is particularly important given the rapid advancement of information-based technologies in the 21st century. He rightly recognizes that the patent system must adapt to embrace new technological fields while maintaining its fundamental principles.

Second, the Director must possess familiarity with emerging technologies, particularly in areas like cryptocurrencies and artificial intelligence. As Duffy explains, the Director's role as Under Secretary of Commerce for Intellectual Property demands leadership across all IP fields—a scope that continues to expand with technological advancement.

Third, and perhaps most pragmatically, Duffy emphasizes the need for bureaucratic reform. Managing over 10,000 patent examiners requires not just administrative skill but also the vision to "rethink the PTO from the ground up." This is particularly relevant given the agency's evolution into what Duffy describes as a "complex Rube Goldberg machine" of initial examinations and administrative reviews.

Fourth, Duffy insists on rigorous enforcement of the nonobviousness requirement, calling it "central to the proper functioning of the patent system." This point deserves particular emphasis and expansion.


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Two Decades and Counting: The Never-Ending Section 101 Battle Over Financial Analytics

Application No. 10/028,284, filed in December 2001, provides a fascinating window into the evolution of patent eligibility jurisprudence. This application – assigned to GE Financial and prosecuted by folks at Hunton and Williams – is still pending 23 years after its original filing date. Filed pre-Bilski and still pending post-Alice, the application claims a “waterfall tool” that analyzes financial product pricing by tracking how actual revenue “cascades down” from list price through various deductions (like underwriting errors, discounts, commissions, and bonuses) to arrive at the final “pocket price.”

The system integrates data from multiple sources, including actuarial, commission, and bonus systems, to identify and manage “revenue leaks” in financial products like insurance policies. The tool specifically measures metrics like underwriting error rates and premium leakages (caused by risk reclassification), and implements automated control plans when metrics hit predetermined trigger levels. I expect that in the decades since it was filed, these methods have become widely used in the industry.

Why is the application still pending?: This is one of the rare cases that folks complaining about the patent system can point to regarding zombie patent applications. The examiner has issued dozens of rejections, including 15 final rejections.  The applicant took the case to the PTAB – and lost – and has kept the application pending by filing RCE-after-RCE.  The most recent Request for Continued Examination (number 14) was filed in June 2024 after yet another final rejection on eligibility grounds. I should note here that I did not randomly identify this application bout identified it as one of the oldest applications still pending at the USPTO. (more…)