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USPTO Seeks Further Public Input on Patent Subject Matter Eligibility

Patent,

From the USPTO: The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) today announced that as part of its effort to solicit input from the public regarding the legal contours of patent subject matter eligibility, it will be holding two roundtables, one in November and one in December.

“In recent years, the jurisprudence on the very basic issue of what is patent eligible subject matter has been evolving requiring adjustments by innovators, businesses, lower courts and administrative agencies such as the USPTO,” said Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Michelle K. Lee. “Our goal is to minimize any uncertainty in the patent system by ensuring  we not only continue to apply the statute and case law in this area as faithfully as possible, but also understand the impact of the jurisprudence on innovation by assessing what, if any, changes might be helpful to further support innovation.”

In a notice published today in the Federal Register, the USPTO announced that it will begin a nationwide conversation on patent eligible subject matter through two roundtable discussions. The first roundtable will be held November 14, 2016, at the USPTO headquarters in Alexandria, Virginia. This roundtable will focus on the USPTO’s continuing efforts to seek input from across the country and across industries on how the USPTO can improve the agency’s subject matter eligibility guidance and training examples. To facilitate a broader legal discussion on the contours of patentable subject matter, the USPTO will host a second roundtable on December 5, 2016, at Stanford University in Stanford, California. Through the power of USPTO’s nationwide footprint, each of our regional offices will also participate in both roundtables, enabling individuals and industries from around the country to share their perspectives at a location closest to them, in addition to written submissions.

Together, these roundtables will help facilitate discussion on patent subject matter eligibility in view of several decisions in recent years by the courts. If you wish to attend or participate in a roundtable, please see the Federal Register notice to learn more. You may also visit the USPTO’s Events Page.

Stay current with the USPTO by subscribing to receive e-mail updates. Visit our Subscription Center at www.uspto.gov/subscribe.

Lee v. Tam: Supreme Court Takes on the Slants

Patent, , ,

by Dennis Crouch

In its decision in this trademark registration case, the Federal Circuit found the statutory prohibition against registering “disparaging marks” an unconstitutional governmental regulation of speech in violation of the First Amendment. (En banc decision).  I noted in my December 2015 post that “there would be a good chance for Supreme Court review of the case if the government presses its position.”

The Supreme Court has now granted the USPTO’s petition for writ of certiorari asking:

Whether the disparagement provision of the Lanham Act, 15 U.S.C. 1052(a), which provides that no trademark shall be refused registration on account of its nature unless, inter alia, it “[c]onsists of . . . matter which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute” is facially invalid under the Free Speech Clause of the First Amendment.

In the case, Simon Tam is seeking to register a mark on his band name “The Slants.” The USPTO refused after finding that the mark is disparaging toward individuals of Asian ancestry.

Tam’s responsive brief was unusual in that he agreed that Certiorari should be granted.  The brief also restated and expanded the question presented as follows:

1. Whether the disparagement clause bars the registration of respondent’s trademark.
2. Whether the disparagement clause is contrary to the First Amendment.
3. Whether the disparagement clause is unconstitutionally vague under the First and Fifth Amendments.

While the Federal Circuit majority opinion had agreed that the disparagement clause was contrary to the First Amendment, only a two-judge concurring opinion indicated that the clause is unconstitutionally vague.  Thus, the reframing of the question presented here appears an attempt to offer alternative reasons for affirmance.  The Supreme Court offered no indication as to which question is proper.

Congratulations to Ron Colemen for shepherding this case and Profs Volokh and Banner who apparently wrote the petition response.

En Banc Query: Must the PTO Allow Amendments in IPR Proceedings?

Patent,

AquaImageby Dennis Crouch

In its original Aqua Products decision, the Federal Circuit upheld the USPTO’s tight limits on amendment practice in IPR proceedings. Under the rules, a patentee has one opportunity to propose amendments or substitute claims. However, the proposal will only be granted if the patentee also demonstrates in the motion that the proposed amendments would make the claims patentable over the known prior art.

In a new order, the Federal Circuit has now granted the appellant’s en banc rehearing request – asking the parties to focus solely on the following questions regarding the burdens:

(a) When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?

(b) When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?

En Banc Order.  The court has invited views of amici curiae.  Those briefs will be due October 5, 2016 (unless supporting the PTO’s position and then you get an extra month).  Appellant’s brief will be filed by September 26, 2016. Oral argument are already scheduled for Friday, December 9, 2016 at 10:00 a.m.

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The underlying case involves Aqua Products’ self-propelled robotic pool cleaner that uses an internal pump both as a vacuum cleaner to power the propulsion system.   U.S. Patent No. 8,273,183.  Competitor Zodiac Pool Systems filed for IPR which the PTO instituted as to some of the challenged claims and ultimately issued a final decision that the claims were invalid as obvious over a combination of two prior-art references.

Motion to Amend: In a timely motion, Aqua moved to amend three of the claims to include the limitations found in the non-instituted claims. (In particular, the patentee asked to substitute claims 1, 8, and 20 with claims 22-24 respectively.  The PTAB agreed that these new claims satisfied the formal requirements of Section 316(d), but refused to enter the amendment – finding that the patentee’s motion had failed to show that the substitute claims were distinguishable over the prior art.

The parties (Aqua & Zodiac) settled the underlying infringement case in April 2015 and so Zodiac did not participate in the appeal. However, the USPTO intervened in the case to defend Aqua’s appeal of the PTAB invalidity holding.

The PTO’s position in the case remains defiant.  The Agency argues that its rules regarding amendments and its application of those rules are both reasonable and entitled to substantial deference.

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Documents:

 

 

 

 

 

The Limited Role of Common Sense in the Obviousness Analysis

Patent,

by Dennis Crouch

Decisions by the Patent Trial & Appeal Board are rarely overturned on appeal.  I expect that result is largely due to the fact that the Patent Office has staffed the Board with highly trained and skilled patent law experts.  The other important factor though, is the standard of review.  Factual findings made by the Board are reviewed for “substantial evidence” — meaning that the findings need not be “correct” but rather rather merely supported by “more than a mere scintilla of evidence.”  Thus, patentees are hard-pressed to get a reversal based upon erroneous factual conclusions.  (For a counter-example, see In re Warsaw Ortho (Fed. Cir. 2016).

In the new decision captioned Arendi S.A.R.L. v. Apple Inc., Appeal No. 15-2073 (Fed. Cir. 2016) [ArendiApple], the court has reversed the Board – finding an erroneous application of the law.  This approach to an appeal tends to work better – because issues of law decided by the PTAB are ordinarily reviewed de novo on appeal (except where the agency’s interpretation is given deference).

The holding:

Because the Board misapplied our law on the permissible use of common sense in an obviousness analysis, we reverse.

The software patent at issue involves a identifying a key in a document (such as a person’s name) and then searching a separate data-source for further information on that key. U.S. Patent No. 7,917,843 (claiming 1998 priority).

Single Reference Plus Common Sense: In its obviousness decision, the Board identified a single prior art reference (Pandit) that teaches the recognition of text classes (such as phone numbers) and then providing additional suggestions based upon that recognition (such as dial, add to contacts, etc.).  However, Pandit did not expressly teach a search of the separate data-source.  In concluding that the invention was obvious, the Board found that it would have been “reasonable . . . common sense” that Pandit would search through the contact list for the phone number before actually adding a new contact number. The board wrote:

[I]t would have been obvious to the ordinary artisan to utilize a computerized search for duplicate telephone entries when entering a telephone number in an electronic address book database as taught by Pandit.

In making its determination, the Board held that common sense must be applied throughout the obviousness analysis, and not only when combining references that disclose all the required limitations.

On appeal, the Federal Circuit rejected the Board’s analysis – holding that Common Sense must be confined to its “proper place in the obviousness inquiry.” (I expect that this line from the opinion is one that will likely upset members of the Supreme Court because it is ridiculous.).

Caveats to Common Sense: In confining the use of common sense, the Federal Circuit identified three “caveats” to its use:

  1. “First, common sense is typically invoked to provide a known motivation to combine, not to supply a missing claim limitation.”
  2. Second, when common sense is used to supply a missing claim limitation, it should only apply where the missing limitations is “unusually simple and the technology particularly straightforward.”
  3. “Third . . . common sense . . . cannot be used as a wholesale substitute for reasoned analysis and evidentiary support, especially when dealing with a limitation missing from the prior art references specified.”

Although not listed specifically as a caveat, the court also discussed a fourth – that statements of common sense or general knowledge cannot overcome “important” claim limitations without supporting evidence.

Question of Substantial Evidence: Stepping back from these broad statements of law, the court partially reforms its opinion to the proper question –  “whether there was substantial evidence supporting the Board’s finding that common sense would lead one to search for the telephone number in Pandit.”  In the appeal, the Federal Circuit found that no evidence had been presented regarding the common sense conclusion but rather only attorney argument. “Specifically, Appellees have failed to show why it would be common sense for the ‘Add to address book’ function to operate by first ‘search[ing] for entries with the same telephone number.'”

To be clear – I am 100% on board here – that an obviousness finding must be supported by evidence.  Unfortunately, that is not what the Supreme Court appeared to rule in KSR v. Teleflex — where it suggested that “analysis” can do the trick.

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Arendi has infringement cases pending in Delaware against Blackberry, Motorola, Google, Apple, Sony, Nokia, HTC, Yahoo!, Samsung, and LG.  Arendi is a Luxembourg patent owner created by the ‘843’s Norwegian inventor Atle Hedløy.

Guest post: 2016 U.S. Patent Practitioner Trends Part 2 – Removal and Retirement of Patent Practitioners

Patent

By Zachary Kinnaird, Patent Attorney with International IP Law Group, PLLC

Based on my analysis of the USPTO roster data:

  • There were 44,295 registered patent practitioners in the U.S. as of April 2016.
  • After 20 years on the USPTO roster, at least 15%  of practitioners originally registered between 1988 and 1996 are no longer registered as of April 2016.
  • Going back from April 2016, every subsequent year before 1986 shows an additional 2% of patent practitioners are no longer registered.
  • The USPTO either skipped or removed a large number of registration numbers originally to be assigned in 1964, 1966, and 2001 for currently unclear reasons.

Retirement trends based on removals from the USPTO roster

The number of practitioners removed from the USPTO database reveals a practitioner percentage removal trend that can be seen as a retirement estimate for patent practitioners. This trend shows that the longer a practitioner has had a registration number, the more likely they are to have retired, or otherwise been removed, from the roster.

The chart below shows the percentage of patent practitioners who still remain registered on the USPTO roster as a function of each practitioner’s year of registration. The further to the right, the more recently the practitioner earned their registration number.

Graph 1

*Gaps years 1964, 1966 removed as likely outliers as discussed more below

** Value for 2001 shown in red as data for 2001 came from the USPTO Official Gazette rather than from a calculation from the USPTO database. Data for 2001 from USPTO database calculations was an outlier as discussed more below

From the graph above, there appears to be an initial sudden dip at 1996 that suggests that about 15% of practitioners leave the practice after 20 years of being registered agents and attorneys. These numbers stay fairly level for another 10 years on the roster, or back until 1986 before another large dip in the percentage of practitioners still registered. The trend after this first 30 years on the roster is a nearly linearly removal at a rate of approximately 2% a year. This retirement pattern continues until 55 years after initial registration, or 1960 in the above chart.

At the time this data was collected, there were 44,295 individuals in the USPTO database, however there are likely far fewer than this actively filing or prosecuting patents with the USPTO. The percentages of practitioners still on the roster are very likely to be higher than in actual practicing attorneys and agents. Remaining on the roster is relatively costless for a practitioner due to the lack of dues and continuation education requirements. It is likely that many practitioners have effectively retired without yet being removed from the roster. Accordingly, the percentages shown on the above graph are a ceiling of the actual figures of practitioners who are actually still practicing.

Tracking removal rates of registered attorneys from the USPTO roster

The above retirement graph was generated from percentages of practitioners removed from the USPTO database. Finding the percentage of those removed can be a challenge, however, as the USPTO only maintains the current state of the patent bar in its public database and does not publicly provide a list of all practitioners ever registered at the USPTO.

Instead, the Office of Enrollment and Discipline periodically conducts a mandatory survey of active registered practitioners pursuant to 37 C.F.R. § 11.11. This survey, in part, determines if the practitioner is still active and wants to remain on the USPTO roster. As noted above, there is essentially no cost to remain on the roster as there are currently no annual dues or continuing education requirements. However, if a practitioner is no longer practicing and either indicates the end of their practice in the survey or does not respond to the survey, the USPTO removes that practitioner from the roster.

The below graph is constructed with the knowledge that practitioners can be removed through this survey system and by assuming that the USPTO assigns numbers in a sequential order. This visualization shows the number of registration numbers removed each year compared to the number of registration numbers initially assigned in that given year. For instance, while the USPTO roster may include 1,210 practitioners who first gained registration numbers in 2015, the first registration number assigned in 2015 (i.e. 73,303) compared to the last registration number assigned in 2015 (i.e. 74,530) suggests that 1,227 registration numbers were actually assigned in 2015 and that some of these 2015 practitioners have already been removed from the database. Carrying out this calculation for each year going back to 1950 yields the graph below.

Graph 2

As noted above, there are unusual red spikes in 1964, 1966, and 2001. The red spikes corresponding to 1964 and 1966 are far out of place and I believe they are likely outliers. The red spike in 2001 IS an outlier. This can be said with confidence based on comparison to number of practitioners found in the USPTO Gazette for the year of 2001. Potential practitioners in the PTO Gazette are listed provisionally to allow time for the public to report any additional information about the practitioners before they formally receive a registration number. 1,853 potential practitioners were listed for 2001 in the USTPO Official Gazette compared to the calculated value difference of 2,697 between the first registration number assigned in 2001 and the last. The corrected graph below reflects the modified value for 2001 based on the Official Gazette listings. Unfortunately, the listing of potential practitioners in the online resources of the Official USPTO Gazette currently only goes back as far as 1995 and can’t be used to find values for 1964 and 1966.

Graph 3

The outlier variation in 2001 is likely due to a conscious choice by the USPTO to jump to a higher registration number for assignment rather than adhere to a generally sequential and quantum assignment of registration numbers. This is likely true for 1966 and 1964 as well. For example, at the end of 1966 the last registration number assigned was 23,099 which is followed by a jump to 24,002 on the very next day numbers were assigned. These gaps suggest that there may have been a USPTO policy at the time to skip blocks of numbers and perhaps start at the next round number in the sequence (e.g. 24,000 in 1967) at the start of a next year.

Data Retrieval Methodology

The USPTO provides both a database for practitioner information as well as a zip file of this data in spreadsheet form that is updated daily. However, the spreadsheet provided by the USPTO does not include the dates of registration as an attorney or agent. Accordingly, the process of retrieving the registration date information from the USPTO online database was automated with web macros to yield the data that is analyzed in this post. As many practitioners have been registered as both patent agents and as patent attorneys, only the date an individual first received a registration number was used for this analysis. For access to the data set being used, or if any errors are noticed, please feel free to reach out by email.

This article is a continuation and extension of my previous analysis on the USPTO database graphing the USPTO attorney and agent database as well as my update to that story as of April 30, 2016.

Editor’s note: Comment moderation policy is in effect.  Excessive or uncivil posts will be deleted without further notice. 

 

MCM v. HP Briefs

Patent,

by Dennis Crouch

Petition:

  • MCM-Petition-and-Appendix: (1) Whether inter partes review (IPR) violates Article III of the Constitution; and (2) whether IPR violates the Seventh Amendment to the Constitution.
  • Response Due June 30, 2016.

Amici in Support of Grant

  • MCM_INTERDIGITAL_TESSERA (“Characterizing something as a public right comes with certain consequences. By incorrectly holding that patents are public rights, the Federal Circuit’s decision has far-reaching and wholly implausible consequences that the Federal Circuit never grappled with and that have ‘nothing to do with the text or tradition of Article III.'”)
  • MCM_NYIPLA (“The public rights doctrine is a complex issue that requires this court’s resolution.”)
  • MCM_Mossoff (“[T]his Court has long recognized and secured the constitutional protection of patents as private property rights reaching back to the early American Republic.”) (Signed by Profs Mossoff (Scalia Law), Cahoy (Penn State), Claeys (Scalia Law), Dolin (Baltimore), Ely (Vandy), Epstein (NYU & Chicago), Harrington (Montreal), Holte (SIU), Hurwitz (Nebraska), Manta (Hofstra), O’Connor (UW), Osenga (Richmond), Schultz (SIU)).
  • MCM_UNM (“[T]he threat of IPR devalues university patents.”)
  • MCM_LAUDER (“Amici agree with Petitioner that the IPR procedure was beyond Congress’s power to impose, and its underpinning rationale—that patents are a matter of administrative largesse, rather than a constitutionally protected property right—is constitutionally infirm.”)
  • MCM_HoustonInvestors (“Congress has exceeded its authority to undermine patents to give “patent pirates” encouragement to infringe patents in the well supported historical expectation that the IPR is likely to invalidate the patents.”
  • MCM_SECURITYPEOPLE (“As noted in McCormick Harvesting Co. v. Aultman, 169 U.S. 606 (1898), once a patent is issued, it can only be cancelled or invalidated by an Article III court, not the executive branch. Similarly, as taught in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989), Congress cannot conjure away the Seventh Amendment fact-finding process employed in Article III courts by mandating that traditional legal claims be tried to an administrative tribunal.”)
  • MCM_IEEE-USA (“This bizarre state of affairs merits the close scrutiny of this Court. All issued U.S. patents deserve the same constitutional protections and legal standards in invalidation proceedings as those available in Article III courts.”) * UPDATE: The brief was filed by IEEE-USA (a division of IEEE).

Judge Hughes and the New § 101 Dichotomy

Patent,

By Jason Rantanen

Enfish v. Microsoft (Fed. Cir. 2016) Download Enfish
Moore, Taranto, Hughes (author)

In re TLI Communications Patent Litigation (Fed. Cir. 2016) Download TLI
Panel: Dyk, Schall, Hughes (author)

This month’s decision in Enfish was an overnight sensation—almost literally, as mere days later the PTO issued the new examiner guidance to implement the decision that Dennis wrote about last week.  That guidance emphasizes the Federal Circuit’s recognition of Mayo Step-1 as a meaningful inquiry and focuses on particular aspects of Enfish that relate to that inquiry: comparisons to prior abstract idea determinations; a caution against operating at too high a level of abstraction of the claims, and the rejection of the tissue-paper argument that use of a computer automatically dooms the claim (it doesn’t).

Although receiving only light treatment in the guidance, in my view the critical analytical move in Enfish is more than just the court’s recognition of Mayo Step 1 as meaningful—it is the analytical framework that the Federal Circuit constructs that ultimately determines the outcome.  At its heart, Enfish contains a seemingly simple categorization scheme, one that offers the promise of a quick and easy way out of the § 101 maelstrom.  Yet, looking deeper, my sense is that it would be a mistake to rely too heavily on the Enfish framework as a universal solution, even in the computer technology space.

On its own terms, the Enfish framework sets up a choice between “whether the focus of the claims is on the specific asserted improvement in computer capabilities…or, instead, on a process that qualifies as an “abstract idea” for which computers are invoked merely as a tool.”  Enfish Slip Op. at 11.  In other words, is the claimed invention something that makes a computer work better?  Or are computers merely being used to do another task?  If the former, the subject matter is patentable; if the latter, the claim must be subjected to Mayo Step-2.  This distinction sets up the ultimate conclusion in Enfish that the claims are not directed to an abstract idea and serves as the analytical difference between Enfish and In re TLI Patent Litigation, a subsequent opinion concluding that the challenged claims are not directed to patentable subject matter.

In Enfish, Judge Hughes introduced the “improvement in computer capabilities”/”invoked merely as a tool” dichotomy after rejecting the idea that “all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two.”  Id. In broad terms, the inquiry involves considering “whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea,” but the framework is made more concrete in the next sentence.  That sentence contains the language quoted above, a binary categorization whose importance grows as it is repeated throughout the remainder of the discussion of patentable subject matter:

  • “In this case [] the plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.”  Id. at 12.
  • “we find that the claims at issue in this appeal are not directed to an abstract idea within the meaning of Alice.  Rather, they are directed to a specific improvement to the way computers operate.”  Id.
  • “the claims here are directed to an improvement in the functioning of a computer.  In contrast, the claims at issue in Alice and Versata can readily be understood as imply adding conventional computer components to well-known business practices.”  Id. at 16.
  • “And unlike the claims here that are directed to a specific improvement to computer functionality, the patent ineligible claims at issue in other cases recited use of an abstract mathematical formula on any general purpose computer.”  Id. at 17.
  • “In other words, we are not faced with a situation where general-purpose computer components are added post-hoc to a fundamental economic practice or mathematical equation.  Rather, the claims are directed to a specific implementation of a solution to a problem in the software arts.  Id. at 18.

Central to the Enfish framework is a recognition and definition of what is not patentable subject matter.  The opinion does not try to fight the idea that there is some subject matter that is not patentable.  Instead, it acknowledges that there are limits on patentable subject matter and works with those limits.  Judge Hughes considers the precedents in this area and identifies them as fundamentally involving the use of a computer as a general-purpose tool.  By defining what is not patentable subject matter in this way, Judge Hughes is freed to identify some “other” that is outside that impermissible category: developments that improve on the operation of the computer itself. Here, although the claimed invention could conceivably be articulated as an abstract idea, placing it within the framework leads to only one outcome: it is an improvement in computer capability, and thus patentable subject matter.

But viewing Enfish as the end-all of abstract ideas analysis, while appealing, would a mistake.  Judge Hughes’ next patentable subject matter opinion, issued just a few days latter, suggests that there is more to the analysis than just mechanically applying the Enfish framework.  At first, In re TLI Patent Litigation starts out with the Enfish framework: that “a relevant inquiry at step one is ‘to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.'” TLI Slip Op. at 8, quoting Enfish.  In Enfish, he observed,:

“We contrasted claims ‘directed to an improvement in the functioning of a computer’ with claims ‘simply adding conventional computer components to well-known business practices,’ or claims reciting ‘use of an abstract mathematical formula on any general purpose computer,” or “a purely conventional computer implementation of a mathematical formula,’ or ‘generalized steps to be performed on a computer using conventional computer activity.'”

Id., quoting Enfish. Unlike in Enfish, however, “the claims here are not directed to a specific improvement to computer functionality.  Rather, they are directed to the use of conventional or generic technology in a nascent but well-known environment, without any claim that the invention reflects an inventive solution to any problem presented by combining the two.”  Id. 

In re TLI raises two additional points to consider, however.  First, in addition to defining what is not patentable subject matter, Judge Hughes articulates some characteristics of subject matter that is patentable: “a solution to a ‘technological problem’ as was the case in Diamond v. Diehr” or an “attempt to solve a challenge particular to the Internet.”  Id. at 10.  Left unclear is the meaning of this discussion: does one only get to the solution to a technological problem inquiry if the claims are not directed to a specific improvement to computer functionality?  Or is the analysis more flexible than Enfish implies?

More significant are concerns about the bright-line nature of the Enfish approach.  While bright-line rules can be helpful, Bilski v. Kappos demonstrates the risk associated with their use in the patentable subject matter area.  Judge Hughes recognizes this concern in TLI, noting “the Supreme Court’s rejection of ‘categorical rules’ to decide subject matter eligibility.'”   Id.  The Federal Circuit will need to be careful to avoid becoming overly reliant on the Enfish framework, especially in areas where it does not fit well.  With the benefit of the last few years of experience, hopefully the Federal Circuit will be able to avoid this pitfall.  Even as this issue works its way out, however, I suspect to see the Enfish framework drawn upon heavily at the PTO and in district courts in the near future.

New Guidance to Examiners: Follow Enfish and TLI.

Patent,

by Dennis Crouch

The Enfish case is important in the way that it gives teeth to step-one of the Alice/Mayo test for subject matter eligibility.  Notably, the unanimous panel of Judges Moore, Taranto, and Hughes (author) held that neither the software-implemented data structure nor its method of creation were “directed to a patent-ineligible abstract idea” and thus did not pass Step-1 of Alice/Mayo.  Prior courts usage of the “gist” analysis for Step-1 left many of us with the feeling that almost all inventions could be boiled-down to an ineligible concept.  Enfish rejects that conclusion and instead held that that Step-1 is designed as a meaningful test.

With quick-response, the USPTO has issued a set of examiner guidance – asking examiners to immediately begin implementing the Federal Circuit’s re-interpretation of Alice/Mayo.  The guidance also highlights the contrasting May 17 decision in TLI. The challenged claims in TLI involved recording, administration and archiving of digital images, and the appellate panel (again with Hughes as author) held that the claims were directed to the abstract idea of classifying and storing digital images in an organized manner.

The guidance is copied in full below, but I thought I would begin with the conclusion:

In summary, when performing an analysis of whether a claim is directed to an abstract idea (Step 2A), examiners are to continue to determine if the claim recites (i.e., sets forth or describes) a concept that is similar to concepts previously found abstract by the courts. The fact that a claim is directed to an improvement in computer-related technology can demonstrate that the claim does not recite a concept similar to previously identified abstract ideas.

I would suggest that the PTO would have more accurately followed the Enfish guidance by affirmatively stating in its summary that an “improvement in computer-related technology” can include a software implementation as well as a new data structure.

In any event, these cases are tough ones for the Federal Circuit because they require line-drawing that is inherently policy based and that lack full guidance from the USPTO.  However, it appears that the court is endeavoring to accomplish its task of providing improved guidance to the USPTO while simultaneously fully following binding Supreme Court precedent.

The holding in Enfish also offers additional support to the PTO’s initially questionable call of suggesting that examiners limit their abstract idea constructs to only concepts “similar to concepts previously found abstract by the courts.”

The Guidance in full:

On May 12, 2016, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) in Enfish, LLC v. Microsoft Corp. held that the claimed database software designed as a “self-referential” table is patent eligible under 35 U.S.C. § 101 because it is not directed to an abstract idea. While the decision does not change the subject matter eligibility framework, it provides additional information and clarification on the inquiry for identifying abstract ideas (Step 2A of the subject matter eligibility examination guidelines).

In reaching its conclusion, the Federal Circuit highlighted several important points regarding the subject matter eligibility analysis, in particular regarding whether a claim is directed to an abstract idea (Step 2A). First, the court noted that when determining whether a claim is directed to an abstract idea, it is appropriate to compare the claim to claims already found to be directed to an abstract idea in a previous court decision. Second, the court emphasized that the “directed to” inquiry applies a filter to claims, when interpreted in view of the specification, based on whether their character as a whole is directed to a patent ineligible concept. Third, the Federal Circuit cautioned against describing a claim at a high level of abstraction untethered from the language of the claim when determining the focus of the claimed invention. Fourth, the court stated that an invention’s ability to run on a general purpose computer does not automatically doom the claim. The subject matter eligibility examination instructions, as set out in the 2014 Interim Eligibility Guidance, July 2015 Update, and May 4, 2016 memorandum to examiners, are consistent with these points.

The Federal Circuit in Enfish stated that certain claims directed to improvements in computerrelated technology, including claims directed to software, are not necessarily abstract (Step 2A). The court specifically noted that some improvements in computer-related technology, such as chip architecture or an LED display, when appropriately claimed, are undoubtedly not abstract. Explaining that software can make non-abstract improvements to computer technology just as hardware can, the court noted that claims directed to software, as opposed to hardware, also are not inherently abstract. Therefore, an examiner may determine that a claim directed to improvements in computer-related technology is not directed to an abstract idea under Step 2A of the subject matter eligibility examination guidelines (and is thus patent eligible), without the need to analyze the additional elements under Step 2B. In particular, a claim directed to an improvement to computer-related technology (e.g., computer functionality) is likely not similar to claims that have previously been identified as abstract by the courts.

The claims of the patents at issue in this case describe the steps of configuring a computer memory in accordance with a self-referential table, in both method claims and system claims that invoke 35 U.S.C. § 112(t). The court asked whether the focus of the claims is on the specific asserted improvement in computer capabilities (i.e., the self-referential table for a computer database), or instead on a process that qualifies as an “abstract idea” for which computers are invoked merely as a tool. To make the determination of whether these claims are directed to an improvement in existing computer technology, the court looked to the teachings of the specification. Specifically, the court identified the specification’s teachings that the claimed invention achieves other benefits over conventional databases, such as increased flexibility, faster search times, and smaller memory requirements. It was noted that the improvement does not need to be defined by reference to “physical” components. Instead, the improvement here is defined by logical structures and processes, rather than particular physical features. The Federal Circuit stated that the Enfish claims were not ones in which general-purpose computer components are added after the fact to a fundamental economic practice or mathematical equation, but were directed to a specific implementation of a solution to a problem in the software arts, and concluded that the Enfish claims were thus not directed to an abstract idea (under Step 2A).

Closely following Enfish, the Federal Circuit decided TLI Communications LLC v. A. V. Automotive, LLC on May 17, 2016, which provides a contrast between non-abstract claims directed to an improvement to computer functionality and abstract claims that are directed, for example, to generalized steps to be performed on a computer using conventional computer activity. Specifically, the court stated that the TLI claims describe steps of recording, administration and archiving of digital images, and found them to be directed to the abstract idea of classifying and storing digital images in an organized manner (Step 2A). The court then found that the additional elements of performing these functions using a telephone unit and a server did not add significantly more to the abstract idea because they were well-understood, routine, conventional activities (Step 2B).

In summary, when performing an analysis of whether a claim is directed to an abstract idea (Step 2A), examiners are to continue to determine if the claim recites (i.e., sets forth or describes) a concept that is similar to concepts previously found abstract by the courts. The fact that a claim is directed to an improvement in computer-related technology can demonstrate that the claim does not recite a concept similar to previously identified abstract ideas.

We will continue to cover these issues in some depth over the next few weeks.

Book Review: Patents After the AIA

Patent

By Jason Rantanen

Alan J. Kasper, Brad D. Pedersen, Ann M. Mueting, Gregory D. Allen, & Brian R. Stanton, Patents After the AIA: Evolving Law and Practice (Bloomberg BNA 2016).

Last fall, I sat next to Greg Allen at the AIPLA annual conference dinner.  After we started talking about the lingering effects of pre-America Invents Act 102(g), he excitedly told me about a treatise he was working on that dealt with that and many other complexities created by the AIA.  He enthusiastically described the detail into which the book went, including the dozens of timelines dealing with different chronological issues facing patent prosecutors today and the lengthy chapter on transition issues, a chapter that turned out to be surprisingly complex.

A few weeks ago, I received a copy of the book for reviewing purposes. The short version is that Patents After the AIA is massive and detailed, and aimed largely at those who practice before the Patent Office.  The tome, bigger even than Harmon’s Patents and the Federal Circuit, is about three inches thick with over 1,900 tissue-paper thin pages.   Packed inside is more detail on the changes and challenges posed by the AIA than anyone might imagine from just reading the (relative short) 58-page AIA itself.  The dozens of timelines are there, along with chapters on legislative history, regulations, prior art and grace periods, international issues and harmonization, transition issues and much more.   Paired with the discussions of the law are “Practice Tips”: practical advice for prosecuting attorneys.  There is a wealth of detail about post-AIA patent practice contained in this book, and it could become the go-to treatise for patent attorneys.

That detail, though, imposes its own limitations.  In trying to simultaneously be a treatise on all of patent law and a useful resource for prosecutors, its usability suffers. The substantive portion of the treatise begins with a history of patent law–starting with the Book of Genesis.   The first chapter includes an abstract, conceptual overview of “The Innovation Process and Terminology Used in This Treatise,” complete with “instantiations of an invention.”[1]   Many topics are covered in multiple chapters, sometimes in a redundant way.  Discussions of post-AIA § 102(a), for example, are sprinkled throughout the book, with overlapping discussions in chapters 5 (Prior Art, Grace Periods, and Exceptions After the America Invents Act: Global Considerations), 6 (Prior Art, Grace Periods, and Exceptions After the America Invents Act: Practical Considerations), and 9 (America Invents Act Patentability Standards–Issues and Commentary).

The authors recognize this limitation: before even the table of contents, the reader comes to an eight-page section on “How to Use This Treatise,” begging the reader to “PLEASE…take a few minutes to read and study this introductory section of the treatise.”  In chapter 1, after summarizing the AIA, the authors include another orientation section: a description of the treatise’s organization and summaries of the chapters.   The authors also attempt to address the complexity of the subject matter by defining terms, with two separate lexicographies (a short one at the front and a long one at the end).  In some cases, this helps the reader: for example, differentiating between “Post-AIA” and “Pre-AIA” is critical.  But numerous terms that the audience for this book would likely be familiar with, such as “appeal brief,” “evidence,” “malpractice,” and even “human” (“a member of the Homo sapiens species”) are also defined.[2]  While definitions can be useful in establishing precision of meaning, they lose their effectiveness with both length of the text and number of defined terms–here, 164 pages of them.  The index suffers from the opposite problem: its 37 pages tend to be less detailed in key spots than desirable.  For instance, there is just one index column for “Prior art under the AIA” but two columns of index entries for “Prior user rights.”   Yet much of the book (and probably the practical concerns of attorneys) relate to the former rather than the latter.  Readers will probably find the table of contents to be more useful than the index.

Some of these issues may be due to the multi-author nature of the text, with too many cooks in the kitchen.  There’s unquestionably a lot to discuss here, but coupled with the amount of patent law covered there needs to be an emphasis on effectively communicating it.  For this treatise to become the go-to volume on patent law, the authors (or maybe just one person) need to focus on taking that next step.  Understandably, though, the authors were under significant time pressure in getting this project out the door, and they’re to be commended for what they accomplished.

Ultimately, Patents After the AIA is a useful treatise, with the potential to be more with some judicious editing.  Consolidating redundant sections, culling unnecessary text, simplifying (and consolidating!) the definitions, and refining the index would all help improve the accessibility and long-term usefulness of this book.  (Although if most readers are going to be using the online version of the text with its search-capability, improvements to the index are of lesser importance).   Little errors in execution need to be addressed as well.  Fortunately, just like with cooking, that’s an issue that can be remedied in subsequent versions.  Given the rapidity with which patent law continues to develop, and the certainty that there will be judicial interpretations of the open questions the authors identify, those versions are likely to be needed in the near future.

  1. The treatise defines “instantiation” as “[a] codification, manifestation, or representation of abstract subject matter or information as an actual, concrete, or real-world instance of that subject matter or information.”
  2. As is “and/or,” a term that should be excised from all writing, defined or not.

Disclosure: As I mentioned above, I received a (gratis) copy of this text so that I could write this review.  I also was a speaker at the AIPLA annual conference this past fall. 

Edit: Based on a reader’s comment, here’s a direct link to the Bloomberg/BNA page for the book: http://www.bna.com/patents-aia-evolving-p57982059262/

Design Patent Claim Construction: More from the Federal Circuit

Patent,

Guest post by Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law.

Sport Dimension, Inc. v. Coleman Co., Inc. (Fed. Cir. April 19, 2016) Download Opinion

Panel: Moore, Hughes, Stoll (author)

Coleman accused Sport Dimension of infringing U.S. Patent No. D623,714 (the “D’714 patent”), which claims the following design for a “Personal Flotation Device”:

Coleman1

The district court construed the claim as: “The ornamental design for a personal flotation device, as shown and described in Figures 1–8, except the left and right armband, and the side torso tapering, which are functional and not ornamental.” The court, like many other courts and a number of commentators, interpreted the Federal Circuit’s 2010 decision in Richardson v. Stanley Works as requiring courts to “factor out” functional parts of claimed designs. Coleman moved for entry of judgment of noninfringement and appealed the claim construction (along with another issue not relevant to this discussion).

After Coleman’s appeal was docketed, the Federal Circuit disavowed the “factoring out” rule that many had read in Richardson. As discussed previously on this blog, in Apple v. Samsung and again in Ethicon v. Covidien, the court insisted that Richardson did not, in fact, require the elimination of functional elements from design patent claims.

Following this new interpretation of Richardson, the Federal Circuit reversed the district court’s construction of Coleman’s claim. The court stated, for the third time in a year, that district courts should not eliminate portions of claimed designs during claim construction. So it seems that the Federal Circuit’s retreat from Richardson is complete—if that weren’t clear already.

And, for the first time I’m aware of, the court actually explained how it determined whether something is “functional” for the purposes of claim construction. It’s been clear for a while that the court was using a more expansive concept of “functionality” in the context of claim construction than it was using for validity. (For more on this issue, see this recent LANDSLIDE article by Chris Carani.) However, the court hasn’t seemed to acknowledge that disconnect or explain how courts should analyze functionality in the claim construction context. In this case, the court did both. The Federal Circuit stated that the Berry Sterling factors, although “introduced…to assist courts in determining whether a claimed design was dictated by function and thus invalid, may serve as a useful guide for claim construction functionality as well.” (Those factors, discussed here, are very similar to the factors used by courts to determine whether a design is invalid as functional in the trademark context. For more on the trademark test and how it differs from the current design patent test for validity, see here.) Applying the Berry Sterling factors to the facts of this case, the court affirmed the district court’s conclusion that the armbands and tapering were functional.

So in Sport Dimension, it is clear that the Federal Circuit thinks it is important to determine whether an “element” or “aspect” (the court uses those words as synonyms) of a design is functional. And it is very clear that courts are not supposed to completely remove functional “elements” or “aspects” from design patent claims as a part of claim construction. But what are courts supposed to do? Here is what the court said:

We thus look to the overall design of Coleman’s personal flotation device disclosed in the D’714 patent to determine the proper claim construction. The design includes the appearance of three interconnected rectangles, as seen in Figure 2. It is minimalist, with little ornamentation. And the design includes the shape of the armbands and side torso tapering, to the extent that they contribute to the overall ornamentation of the design. As we discussed above, however, the armbands and side torso tapering serve a functional purpose, so the fact finder should not focus on the particular designs of these elements when determining infringement, but rather focus on what these elements contribute to the design’s overall ornamentation.

It’s not at all clear what the court is trying to say here, especially in the highlighted portion (emphasis mine). It seems that perhaps the court is trying to say that, in analyzing infringement, the factfinder should focus on the overall appearance of the claimed design. But if that is what the court meant, then this “claim construction” frolic adds nothing—the infringement test already requires the factfinder to look at the actual claimed design, as opposed to the general design concept.

This portion of the decision also seems to be in some conflict with the court’s decision in Ethicon. In Ethicon, as here, the district court eliminated all the functional portions of the claimed design. Unlike this case, the district court in Ethicon said that all the elements were functional and, thus, the claim had no scope. The Federal Circuit reversed, stating:

[A]lthough the Design Patents do not protect the general design concept of an open trigger, torque knob, and activation button in a particular configuration, they nevertheless have some scope—the particular ornamental designs of those underlying elements.

So Ethicon says that factfinders must look at the “particular ornamental designs” of functional elements. Sport Dimension says they “should not focus on the particular designs of [functional] elements.” These statements could potentially be reconciled by drawing a distinction between the “particular design” of an element/feature and the “particular ornamental design.” But it’s not at all clear what that distinction might be—or whether it makes sense to draw such a distinction at all.

More importantly, it’s not clear what, exactly, the Federal Circuit hopes to gain by making district courts go through this rigmarole. In this case, the accused product looks nothing like the claimed design, as can be seen from these representative images:

Claimed Design

Claimed Design

Accused Product

Accused Product

Yes, they both have armbands with somewhat similar shapes and some tapering at the torso. But the overall composition of design elements is strikingly different. You don’t need to “factor out” anything or “narrow” the claim to reach the conclusion that these designs are plainly dissimilar. (The same was true, by the way, of the facts in Richardson.) Even for designs that are not plainly dissimilar, the Egyptian Goddess test for infringement should serve to narrow claims appropriately where elements are truly functional because one would expect those elements to appear in the prior art. So once again, one is forced to ask what the Federal Circuit is trying to accomplish with these “claim construction functionality” rules—and whether the game is worth the candle.

Adding Fuel to the Bonfire of Patents

Patent,

Genetic Tech. v. Merial (Fed. Cir. 2016)

Lincoln famously explained the role of the patent system of adding “the fuel of interest to the fire of genius.”  In GTG, the court simplified the phrase by finding that genetic testing patents only value may be literally as fuel.

The decision by Judge Dyk and joined by Chief Judge Prost and Judge Taranto affirms a lower court’s dismissal on-the-pleadings of GTG’s patent infringement claim.[1]  The holding is that the claimed method for analyzing DNA for linkage disequilibrium is ineligible for as effectively claiming a law of nature.  The basic idea stems from the inventors discovery that coding regions (exons) typically correlate with “linked” certain non-coding regions (introns).

The parties agreed that claim 1 of the GTG ‘179 patent was representative for purposes of the eligibility issues. The claim encompasses methods of detecting a particularly genetic allele using the two step process of (1) amplifying and then (2) analyzing the linked intron region.

In analyzing the claims here, the court highlighted the similarity of the claims here to those in both Mayo v. Prometheus[2] and Ariosa v. Sequenom.[3]

The similarity of claim 1 to the claims evaluated in Mayo and Ariosa requires the conclusion that claim 1 is directed to a law of nature. . . .  The claim is directed to a natural law—the principle that certain non-coding and coding sequences are in linkage disequilibrium with one another. We hold that claim 1 is directed to unpatentable subject matter at the first step of the Mayo/Alice test. . . .

Claims directed to laws of nature are ineligible for patent protection when, “(apart from the natural laws themselves) [they] involve well-understood, routine, conventional activity previously engaged in by researchers in the field.” Mayo.

We conclude that the additional elements of claim 1 are insufficient to provide the inventive concept necessary to render the claim patent-eligible.

GTG is an Australian company that had previously sued a few dozen companies for infringing the ‘179 patent. The claims have been reexamined (at Merial’s request) and patentability confirmed.

= = = = =

[1] The courts found that claims 1-25 and 33-36 of U.S. Patent No. 5,612,179 are ineligible under Section 101.

[2] Mayo Collaborative Serv. v. Prometheus Lab., Inc., 132 S.Ct. 1289 (2012)

[3] Ariosa Diagnostics, Inc. v. Sequenom, Inc., 726 F.3d 1296 (Fed. Cir. 2013); rehearing en banc denied by Ariosa Diagnostics, Inc. v. Sequenom, Inc., 809 F.3d 1282 (Fed. Cir., Dec. 02, 2015); on petition for writ of certiorari (No. 15-1182, filed March 21, 2016).

Sequenom: A great discovery should be worth something!

Patent

Sequenom v. Ariosa (on petition for writ of certiorari 2016)

Sequenom’s petition for writ of certiorari argues that the Federal Circuit and the lower courts have “dangerously overextended Mayo” and its bar to patent eligibility and that clarification is needed from the U.S. Supreme Court.   The science at issue is fascinating and stems from the problem of running dangerous fetal DNA tests.  The discovery here was that fetal DNA can be found floating around the blood of the pregnant mother and that the fetal DNA can be selectively amplified by focusing on the paternally inherited portion of its DNA (rather than the maternally inherited).  Sequenom’s patent claims two simple steps: (1) amplifying paternally inherited DNA from a plasma sample taken from a pregnant female and then (2) detecting the presence of the DNA.  Of course, the technology for these two steps was already known in the art at the time of the invention, and these two steps were (and are) the fundamental steps generally used to detect particular DNA molecules.  The Federal Circuit found these claims unpatentable under Mayo v. Prometheus because they effectively claim the unpatentable natural phenomenon: the existence of paternally-inherited cell-free fetal DNA (cffDNA) in the maternal bloodstream.

The petition for writ of certiorari asks the patent eligibility, but does so in a way that attempts to also lead the court to the answer:

Whether a novel method is patent-eligible where: (1) a researcher is the first to discover a natural phenomenon; (2) that unique knowledge motivates him to apply a new combination of known techniques to that discovery; and (3) he thereby achieves a previously impossible result without preempting other uses of the discovery?

The brief here does a good job of attempting to set-up some dividing lines for the Court – if it wishes to draw them.  The petition will have strong support from industry as well as many in academia.  However, it is unclear whether a ‘win’ here for the patentee would translate to support those seeking to patent software inventions.

[SequenomCertPetition]

Battle over Secret Sales and Secret Commercialization under the AIA

Patent, , , , ,

by Dennis Crouch

Helsinn v. Dr. Reddy’s and Teva (D.N.J. 2016)

The America Invents Act of 2011 (AIA) amended the definitions of prior art under 35 U.S.C. § 102 – up for grabs in this case is whether the changes included a narrowing of the ‘on-sale bar.’  Prior to the AIA, the ‘on sale’ bar blocked patenting of inventions that had been “on sale in this country.”  Although not specific in the statute, courts interpreted the on-sale bar to include secret sales or offers-to-sell.  These typically include closed-door business-to-business and custom sales rather than retail sales.[1]  The AIA amended the statute in a number of ways – most pertinent here is addition of the ‘otherwise available to the public’ clause to Section 102(a)(1).[2]  The provision now reads:

Novelty; Prior Art.—A person shall be entitled to a patent unless—(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

The question in this case is how to interpret the statutory phrase “on sale, or otherwise available to the public.”  The otherwise available to the public language suggests that the ‘on sale’ activity is also available to the public.  That reading, however, conflicts with the history of the on sale bar.  Which construction is correct?

The district court in Helsinn sided with the USPTO’s interpretation of the statute – that the AIA modified the definition of on-sale so that it now only includes publicly available sales activity.  This allowed the patentee in the case to avoid an invalidity finding based upon its own prior sales of the patented drug. On appeal, Teva offers its set of arguments to retain the old-meaning:

  1. In ordinary usage, an item is “on sale” whether sold privately or publicly.
  2. Courts have treated “on sale” as a term of art for almost two centuries for sound policy reasons grounded in the Constitution.
  3. Congress did not change the settled meaning of “on sale” by adding the phrase “otherwise available to the public.”
  4. The district court’s reading of “on sale” would render meaningless the crucial word “public” in [102(b)(1)(B)].
  5. A Committee Report and floor statements of two senators cannot accomplish what they failed to accomplish in the statute itself.
  6. The PTO’s interpretation is not entitled to deference.

[TevaSecretSaleBrief]

Professors Mark Lemley (Stanford) and Robert Merges (Berkeley) along with 39 other law professors have filed a brief in support of Teva’s arguments here – arguing that the new interpretation “would radically rewrite the law of prior art.”

The key legal question in the case is simple: did Congress mean to sweep away scores of established cases under the 1952 Act even though it reenacted language unchanged since 1870, merely because it added the phrase “or otherwise available to the public” to the list of prior art categories in the new AIA section 102? We think not. We have three primary reasons. First, the district court’s reading is inconsistent with the language and structure of the AIA. Second, it is inconsistent with Congressional intent in readopting the “on sale” and “public use” language in section 102. Finally, it would sweep away scores of cases decided over two centuries and radically rewrite a host of patent doctrines.

[TevaProfAmicusBrief] Moving forward, Helsinn’s responsive brief will be due April 21.

Of course, the issues here have been substantially debated already with commentators coming out on both sides of the debate:

= = = = =

AIA expanded the scope of prior art in a number of ways. This is one area, however, where it potentially shrunk the body of potential prior art.  Innovative entities with a robust business involving private-transactions and those who rely upon third-party manufacturers are the most likely to benefit by a changed-law.

An important policy question (that could also influence is the construction) is whether eliminating secret sales as prior art would actually allow an innovator secretly commercialize its patent for years and then subsequently obtaining patent rights.

= = = = = =

 

[1] The Federal Circuit has also include a manufacture-supply agreement. (E.g., a supplier seeking for to manufacture and supply your custom inventory).  This issue is currently being reconsidered by the Federal Circuit in the en banc case of Medicines Co. v. Hospira.

[2] The statute also eliminating the ‘in this country’ limitation for on-sale prior art and limited the one-year grace period associated with the on sale bar.

Federal Circuit Recognizes Patent Agent Privilege

Patent

by Dennis Crouch

In re Queens University (Fed. Cir. 2016)

In an interesting and important mandamus ruling, the Federal Circuit has ordered the district court to withdraw its order compelling discovery of communications with non-attorney patent agents.  The decision here recognizes “patent agent privilege”

[W]e find that the unique roles of patent agents, the congressional recognition of their authority to act, the Supreme Court’s characterization of their activities as the practice of law, and the current realities of patent litigation counsel in favor of recognizing an independent patent-agent privilege.

The court, however, includes the important limitation that the privilege only extends to the extent that communications fall within the patent agent’s scope-of practice as “authorized by Congress.”  On this point, the appellate panel quotes 37 C.F.R. § 11.5(b)(1):

Practice before the Office in patent matters includes, but is not limited to, preparing and prosecuting any patent application, consulting with or giving advice to a client in contemplation of filing a patent application or other document with the Office, drafting the specification or claims of a patent application; drafting an amendment or reply to a communication from the Office that may require written argument to establish the patentability of a claimed invention; drafting a reply to a communication from the Office regarding a patent application; and drafting a communication for a public use, interference, reexamination proceeding, petition, appeal to or any other proceeding before the Patent Trial and Appeal Board, or other proceeding.

On remand, the parties in the dispute will likely now fight over whether the agent-in-question’s activities fell within these limits on practice.

Going forward, this case also offers an important next step in the continued rise of stature of patent agents both within law firms and corporate structures.

This is an important case and I’m betting that David Hricik will write further on the topic. 

US Patent Applicants Heading to the EPO

Patent

By Dennis Crouch

At the recent Mizzou-USPTO symposium there was some discussion about whether the European Patent Office (EPO) has positioned itself as a more favorable patent venue than the US.  Most practitioners will agree that the US is now more restrictive in terms of subject matter eligibility and the new pan-European patent enforcement court makes those patents obtained in Europe more all the more valuable.  Today, the EPO released a set of data that makes these prognostications appear to ring true.

The first chart below shows that the number of EPO patent applications coming from the US grew substantially over the past year (up 16.4%).  Top US-based EPO filers include United Technologies (UTX), Qualcomm, GE, Intel, Microsoft, J&J, and Honeywell – with these top seven collectively representing about 20% of the US-based EPO applications filed in 2015.  Some major U.S. filers (such as AT&T and GM) did not make the list.  UTX was not patent powerhouse in recent decades, but has ramped-up filings over the past few years. The growth in applications from the US almost accounts for the entire increase in filings over 2014.

EPOUSGrants

Although these are year-to-year changes, it is important to consider that the impacts will linger in the system for the next 20 years.

Patentlyo Bits and Bytes by Anthony McCain

Patent,

Get a Job doing Patent Law                  

Strategic Decision Making in Dual PTAB and District Court Proceedings

Patent, , , ,

By Jason Rantanen

Saurabh Vishnubhakat (Texas A&M), Arti Rai (Duke) and Jay Kesan (Illinois) recently released a draft of their empirical study of Patent Trial and Appeal Board proceedings, Strategic Decision Making in Dual PTAB and District Court Proceedings.  Their study takes a close look at the relationship between IPR and CBM proceedings and district court proceedings to assess the “substitution hypothesis”: the claim that post-grant review is “an efficient, accessible and accurate substitute for Article III litigation over patent validity.”

In addition to an array of descriptive statistics on post-grant proceedings at the PTO, the authors find that:

  • “Although IPR petitions may challenge patent claims as to either novelty or nonobviousness, nonobviousness challenges predominate across all major technology areas.” (p. 18)
  • During the period studied (September 16, 2011 to June 30, 2015), “a total of 14,218 patents were either challenged in an IPR or CBM petition, asserted in litigation, or both. A subset of 11,787 patents were involved in litigation alone; 324 patents were involved in a USPTO proceeding alone; and 2,107 patents were involved in both. Accordingly, about 15.2% of litigated patents are also being challenged in the PTAB, and about 86.7% of IPR- or CBM-challenged patents are also being litigated in the federal courts.” (p. 20) [edited on Feb. 12, 2016]
  • Overall, most CBM and IPR petitions are filed by those with a direct self-interest flowing from infringement litigation.  78% of CBM petitioners, and 70% of IPR petitioners, “have previously been defendants in district court litigations involving the patents they later challenge in CBM [or IPR] review.” (p. 23)  By this the authors simply mean that the petitioners showed up as defendants in an infringement proceeding on a given patent before filing for IPR or CBM review on that patent.  They likely continued to be infringement defendants during the pendency of the IPR or CBM (the authors did not track that).

Vishnubhakat et. al’s third finding has two implications.  First, a substantial number of CBM and IPR petitions are filed by parties who are not concurrently defendants in litigation involving those patents.  The existence of this group merits further study. The authors suggest a range of motivations driving these petitions.

Second, notwithstanding that group, the vast majority of CBM and IPR petitions are filed by parties that are in all likelihood simultaneously litigating the patents in district court.  Given the substantial amount of overlap, and the potential for strategic behavior by accused infringers, the authors suggest that the same claim construction standard should be applied by both forums–a point with implications for Cuozzo Speed Technologies v. Lee.

Read the article here: http://ssrn.com/abstract=2731002

 

Federal Circuit: The IPR System is Constitutional

Patent, , , ,

by Dennis Crouch

In a precedential opinion, the Federal Circuit has rejected MCM’s foundational challenges against the Inter Partes Review (IPR) system implemented as a result of the America Invents Act of 2011 (AIA).

MCM Portfolio v. HP (Fed. Cir. 2015) (MCM.decision)

In particular, the court held that the IPR system does not violate Article III of the U.S. Constitution nor does it violate the Seventh Amendment of the U.S. Constitution.  On the merits, the court then affirmed the PTAB’s decision cancelling MCM’s challenged claims as obvious.  The court writes:

The teachings of the Supreme Court in Thomas, Schor, and Stern compel the conclusion that assigning review of patent validity to the PTO is consistent with Article III. . . . . [Furthermore we] are bound by prior Federal Circuit precedent. . . . We see no basis to distinguish the reexamination proceeding in Patlex from inter partes review. . . .

Because patent rights are public rights, and their validity susceptible to review by an administrative agency, the Seventh Amendment poses no barrier to agency adjudication without a jury.

The decision here also essentially forecloses Carl Cooper’s parallel proceedings. However, both parties are likely to request rehearing en banc followed by petitions for writ of certiorari.

Ignoring Patent Demand Letters

Patent

by Dennis Crouch

Professor Colleen Chien has published an unfortunate new Wall Street Journal essay titled “The Best Way to Fight a Patent Demand May Be to Do Nothing.”  Chien’s factual bases appears spot-on: a large and increasing percentage of companies are refusing to even respond to patentee correspondence. The unfortunate aspect of the Chien’s essay is her suggestion that this really may be “the best way to deal with a patent demand.”

To be clear, Chien notes that a company will likely need to respond to letters by a “larger competitor,” a “patent bully,” or a well funded patent troll.  Those entities are apparently serious and are ready and willing to use the court system to achieve their goals. What is left-over are patentees who lack the fortitude or desire to pursue a long court battle — especially where the potential damage award is less than six-figures.  Those patentees are safe to ignore.

An unfortunate aspect of Chien’s suggested triage system is that it does not focus on merits – is the patent actually being infringed; is the patent valid?  Rather, the focus is simply whether the patentee has the wherewithal and propensity to sue and whether the triaging-company can slide under the radar.  Professor Chien’s suggested best practice approach moves us further away from any respect for patent rights and toward a more extreme system of litigation enforcement.