An Expert of Ordinary Skill

Patent,

by Dennis Crouch

Patent cases regularly involve expert testimony about the how a “person having ordinary skill in the art” (PHOSITA) might think.  PHOSITA is the objective ‘reasonable person’ that serves as a reference point for most patent doctrines.  Often, PHOSITA is particularly defined by some educational or experience level related to the particular area of technology.  The intuition here is that someone very little experience is likely to see an incremental invention as patentable; while someone with a very-high level of skill might see the same incremental advance as obvious. See
Innovention Toys, LLC v. MGA Entm’t, Inc., 637 F.3d 1314, 1323 (Fed. Cir. 2011) (“A less sophisticated level of skill generally favors a determination of nonobviousness . . . . while a higher level of skill favors the reverse.”).  Although this intuition generally makes sense, most agree that particulars are fairly irrelevant.

One difficulty with patents is that the inventions often bridge two or more major educational areas. A good example of this is Best Medical Int’l., Inc. v. Elekta Inc., — 4th — (Fed. Cir. Aug 26, 2022).  Best’s patents cover a method of optimizing a radiation beam for use in tumor targeting. US 7,015,490.  The invention requires understanding of how radiation treatment works and its impact on tumor growth. In addition, the invention requires a substantial amount of computer programming to implement the particular algorithms.

In the IPR, the patentee introduced testimony from Daniel Chase who has been designing and running radiation plans for decades.   One problem here, although Chase has been doing this work and has expertise in radiation therapy design and optimization, he is not a computer programmer.

The basic rule with experts testifying about PHOSITA appears to be that the experts need to personally be at or above PHOSITA level.

[W]here an issue calls for consideration of evidence from the perspective of one of ordinary skill in the art, it is contradictory to Rule 702 to allow a witness to testify on the issue who is not qualified as a technical expert in that art.

Sundance, Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356, 1363 (Fed. Cir. 2008)

In Best Medical, the PTAB qualified Chase as an expert as to portions of the invention, but then highly discounted his testimony regarding obviousness of the computer programming aspects of the invention. On appeal, the Federal Circuit gave deference to the Board’s factual conclusion that PHOSITA would have computer programming experience and affirmed that conclusion.

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Best Medical also includes a small but important mootness decision.  In the case, the patentee caught itself in the eye of the needle.  In particular, an issue became moot after the PTAB’s decision, but before it filed the notice of appeal.  On appeal here, the Federal Circuit found that the decision stands  cannot be appealed; and no Munsingwear vacatur.

We talked about the IPR above.  In addition, the petitioners had also challenged the same patent via ex parte reexamination.  In the reexam, Best Medical cancelled claim 1, but did so “without prejudice or disclaimer.” Claim 1 had also been challenged in the IPR and Best Medical asked the PTAB to also drop that claim — but the PTAB refused and instead issued its final written decision that Claim 1 was obvious.  Why?: The reexam was still pending and Best Medical had not filed a statutory disclaimer as to claim 1.  The Board explained that “Under SAS we still have to issue a ruling on that claim unless it’s actually disclaimed.”  On appeal, the Federal Circuit found no problem with the Board’s approach: “We cannot say that the Board erred in addressing claim 1’s patentability under these circumstances.”

Ok if the Board had power to hold claim 1 obvious, then the patentee should have a right to appeal that decision. Right?-Wrong.  The catch here is that the Reexam ended before the appeal here and Best Medical did not appeal claim 1. At that point, claim 1 was dead and gone and a moot point.

Why even appeal a claim that you cancelled? The patentee doesn’t want the claim back, but is concerned that the IPR decision regarding claim 1 could create some amount of res judicata that might later inhibit its ability to enforce similar claims.   An examiner in a separate case with a claim similar to claim 1 has apparently already stated that she is “essentially bound by the Board’s reasoning”   On appeal though the Federal Circuit found this reasoning insufficiently concrete to create standing.  In particular, the court apparently doubted the examiner’s reasoning.  “Indeed, we know of no cases that would apply collateral estoppel in these circumstances, nor has BMI cited any.”  The court also concluded that potential collateral consequences are generally insufficient on their own to confer standing to appeal.  Thus, the appeal on claim 1 is dismissed as moot.

To be clear, this still looks like a good outcome for the patentee because of the general approach to issue preclusion that “non-appealable issues and judgments are without preclusive effect.” SkyHawke Techs., LLC v. Deca Int’l Corp., 828 F.3d 1373 (Fed. Cir. 2016).

The Federal Circuit’s decision here is a bit squirrelly for those of you who know about the Munsingwear line of cases.  US v. Munsingwear, Inc.,  340 U.S. 36 (1950), involved charges of violating WWII era price regulations.  The district court had dismissed the case on the merits.  Meanwhile, while the case was on appeal, the President cancelled and annulled the regulation.  This seemingly made the appeal moot–except for the potential collateral consequences.  In its decision, the Supreme Court vacated the judgment below with instructions to dismiss the case.

That procedure clears the path for future relitigation of the issues between the parties and eliminates a judgment, review of which was prevented through happenstance. When that procedure is followed, the rights of all parties are preserved; none is prejudiced by a decision which in the statutory scheme was only preliminary.

Munsingwear.  In Best Medical, the Federal Circuit distinguished Munsingwear based upon timing of the appeal.  The apparent difference: In Munsingwear the case became moot after the notice of appeal had been filed.  In Best Medical the case became moot before the notice of appeal.

We also hold that Munsingwear vacatur is inapplicable here because this appeal did not become moot during the pendency of the appeal. Rather, the “mooting” event— claim 1 being finally canceled—occurred before BMI filed its notice of appeal.

Slip Op.  This final bit appears potentially wrong to me.  The Federal Circuit does not cite any prior cases holding that Munsingwear does not apply to cases that become moot during that short window between a lower court’s final judgment and the filing of a notice of appeal.  But, I have not seek a case on-point yet.

Moderna v. Pfizer

Patent

by Dennis Crouch

I just talked about the new Moderna v. Pfizer patent infringement lawsuit with my patent class.  I showed them Claim 1 of asserted US10898574. One student who has some biotech background offered the insight: “Wow, that claim is really broad … effectively covers the industry standard.”

Another student suggested that equitable estoppel may be an issue.  Back in 2020, Moderna indicated that it would not be asserting its patents during the midst of the COVID-19 pandemic.    In particular, Moderna made the following public statement: “while the pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic.”

Apparently for Moderna, the pandemic was over by March 8, 2022.  As such, Moderna is only seeking monetary damages “for Defendants’ infringement occurring on or after March 8, 2022.” The complaint also carves out “sales to the U.S. government that are subject to 28 U.S.C. § 1498 or to the 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment (AMC).”  US Gov’t sales would require a separate action under Section 1498 in the Court of Federal Claims.  Apparently a simultaneous lawsuit has been filed in Germany.

The complaint does not seek injunctive relief, so this is directly about the size of the damage award.  Although I have no direct knowledge of this, I suspect that there were some limited negotiations and the competing offers differed by more than an order of magnitude.

The technology here all centers genetically modified mRNA with code for a particular polypeptide of interest (e.g., the spike protein).  Claim 1, of the ‘574 patent, for instance claims a method to get the cell to start producing the protein by administering the mRNA.  Here, the claim calls for simultaneously introducing N1-Methylpseudouridine, which serves to suppress immune response and increase protein production.  Claim 2 of the same patent is directed to a pharmaceutical composition of “lipid nanoparticles” that encase the mRNA.

Patent litigator Bill Lee (Wilmer Hale) is representing Moderna. Pfizer has not yet filed an appearance.

 

Decisions by the Court as an Institution; or by the Judge as a Human?

Patent

by Dennis Crouch

In Novartis Pharm. Corp. v. Accord Healthcare, Inc., 38 F.4th 1013 (Fed. Cir. 2022), the Federal Circuit made a procedurally embarrassing rehearing decision.  In its original decision the appellate court sided with the patentee on validity–affirming that the claims satisfied the written description requirement. Novartis Pharm. Corp. v. Accord Healthcare, Inc., 21 F.4th 1362 (Fed. Cir. 2022).  That original opinion had been authored by Judge O’Malley with Chief Judge Moore in dissent.  When O’Malley retired, the court silently replaced O’Malley with Judge Hughes and issued a new opinion on rehearing flipping the outcome.  In the new decision, Judge Moore’s dissent became the majority (joined by Judge Hughes) with Judge Linn moving to the dissent.

Now, Novartis is seeking a rehearing — arguing (1) that the original decision was correct; and (2) that the judicial replacement to alter the outcome was improper.  I previously wrote about the petition by Novartis and the amicus briefs in support.  The defendant Accord has now filed its responsive brief in opposition.

The brief makes three arguments to explain why it was proper to appoint a new judge on panel rehearing in a way that flipped the outcome.

  1. First, the dissent (Judge Linn) “did not [publicly] raise any objection to the procedure employed.” Note here that Judge Linn has senior status and now generally an outsider to the courts internal procedure.
  2. Second, Courts largely have authority to make their own rules and procedures, but Congress has declared that an appellate judicial panel must be at least three judges.
  3. Third, the petition grossly overstated common practice when it argued that  the operating procedure of “virtually every circuit” would prohibit this outcome.

In my mind, none of these arguments are particularly compelling.  But, I expect that the court will choose to simply deny the rehearing without further comment.  If the court forces itself to make an express decision, it will only draw further criticism.

It is nice to think of the Federal Government in terms of its various institutions of government, such as the Federal Circuit Court of Appeals or the US Patent & Trademark Office.  That framework provides a sense of stability and coherence.  But, perhaps I should take this case as a reminder that the constitutional structure of our government is not based upon those institutions.  Rather, it centers on the individual humans charged with making the decisions.

Prior Writings on the case:

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Accord’s brief was filed by Paul Skiermont (SkiermontDerby) along with his team of Sarah Spires and Mieke Malmberg.  The Novartis brief was filed by Jane Love (Gibson Dunn). That brief was signed by a host of attorneys, including Robert Trenchard, Thomas Hungar, and Jacob Spencer (all at Gibson Dunn); Deanne Maynerd and Seth Lloyd (both from MoFo); and Willy Jay, David Zimmer, and Edwina Clarke (Goodwin Procter).

DoggyPhone v Furbo

Patent

by Dennis Crouch

Andrew Davis is an ophthalmologist in Bellevue.  In his spare time he invents canine communication devices and treat dispensers.  Figure 9 below comes from his US9723813 (2012 priority date).

You can buy something similar from Amazon – the Furbo dog camera.

DoggyPhone has sued Tomofun (maker of Furbo) for patent infringement. DoggyPhone LLC v. Tomofun, LLC., 19-cv-1901 (W.D. Wa. 2022).  Tomofun petitioned for inter partes review (IPR) on five separate grounds.  However, the PTAB denied institution, after finding that the asserted prior art failed to teach all of the claimed elements in the proper combination. (IPR2021-00260 DoggyPhone).  The district court had stayed litigation pending outcome of the IPR.  Now though the case is up and running again with jury trial set for January 2023.

The district court just issued claim construction, refusing to find any of the claim terms indefinite and giving all terms their ‘plain and ordinary meaning.’

= = = =

Asserted claim 7

7. A system for communicating with a pet, comprising:

a treat bin;

a food dispenser that dispenses treats from the treat bin;

an audio device;

a delivery module that: receives a treat delivery command; and in response to the received treat delivery command: dispenses via the food dispenser at least one treat from the treat bin; plays via audio device an audio signal that notifies the pet of availability of a treat; and receives input from the pet; and

a control that transmits to the delivery module a treat delivery command,

wherein the system: in response to a first communication command received from a user, transmits to the delivery module the treat delivery command; plays at least one of live audio or video received from the user of a remote client device; and transmits to the remote client device at least one of live audio or video of the pet, wherein the system begins transmission to the remote client device of at least one of the audio or video of the pet in response to input from the pet.

Order on “In re unsealing of court records” rescinded

Patent

By Jason Rantanen

Last week the Federal Circuit issued an order relating to the unsealing of materials filed in cases docketed ten or more years ago. Misc. Docket 22-160: Is your (old) appeal on this list?

Today the court issued a new order rescinding that order as “impracticable.”

Upon further consideration of the court’s August 17, 2022 Order, the court finds it impracticable at this time to continue to proceed with the proposed unsealing of previously-identified cases. Specifically, the court finds that there will be insufficient time and considerable, unanticipated administrative difficulty to both the court and to counsel in providing an opportunity for counsel and parties in the previously-identified cases to permit a physical review of the identified cases by the National Archives and Records Administration’s December 31, 2022 deadline for the court to complete the accessioning of its remaining pa-per case records.

Instead, the court will accession the cases to the National Archives and Records Administration for permanent retention under seal.  Read the new order here: https://cafc.uscourts.gov/wp-content/uploads/22-160.pdf (Archive copy: 22-160)

In re Killian: Spurious Eligibility Arguments

Patent,

by Dennis Crouch

In re Killian, — F.4th — (Fed. Cir. August 23, 2022)

This decision authored by Judge Chen and joined by Judges Taranto and Clevenger appears as something of a tour-de-force rejecting a large number of spurious eligibility arguments.  The court seemingly made the case precedential to help avoid seeing these same arguments arise again.

Jeffrey Killian filed his patent application back in 2014 seeking to patent his computerized algorithm for identifying “overlooked eligibility for social security disability insurance” and other adult-child benefits.  The basic approach is to get access to state records of individuals receiving treatment for developmental disabilities or mental illness from a state licensed facility. Those records are then compared against the Federal SSDI rolls.   Once an individual is identified, the claims then call for information a GUI to open for a caseworker who inputs various information such as SSN, birth information, family information in order to determine eligibility for benefits.   The examiner found the claims novel, non-obvious, and sufficiently definite.  But, still, the claims suffered from the fatal defect of being directed toward an abstract idea.  The PTAB affirmed the examiner rejection of all pending claims — concluding that the claims were directed to an “abstract mental process.”  Although the claim recited various technology, the Board concluded that those were ancillary under Alice Step 1 (“insignificant extra-solution activity”); and under Alice Step 2, those additions were insufficient to transform the unpatentable idea into a patent eligible invention.  On appeal, the Federal Circuit has affirmed.

Step 1.  At Step 1 of the eligibility exception analysis, the court asks whether the claims are “directed to” an unpatentable exception, such as an abstract idea.  In that process, the court endeavors to consider the claimed invention’s “character as a whole.”  Here, it found that the “thrust” of the claims is collection and examining of data.  Those are steps that humans do regularly in their own mind and, as such, the court found them an unpatentable abstract idea. The claims also recite various computer technology and use of input screens.  However, the court the extra activity insufficient under Alice: A claim does not pass muster at step two by “[s]tating an abstract idea while adding the words ‘apply it with a computer.'”  Slip Op. (quoting Alice).

Killian argued to the appellate panel that the eligibility standard applied by the USPTO was arbitrary and capricious–thus violating due process and APA requirements, inter alia.  The court disagreed and provided two responses.  (1) Appeal to Authority: The rules here come from the Supreme Court and therefore are not arbitrary & capricious; (2) Appeal to Reason: The Federal Circuit has provided sufficient guidance on how to apply the doctrine and how to figure out what counts as an abstract idea.

Although there is no single, inflexible rule for the abstract idea inquiry, our court has provided guidance as to what constitutes an abstract idea. We have explained that, first, “[t]he ‘abstract idea’ step of the inquiry calls upon us to look at the ‘focus of the claimed advance over the prior art’ to determine if the claim’s ‘character as a whole’ is directed to excluded subject matter.” Affinity Labs. Once we identify the “focus of the asserted claims,” we may consider whether the claims “fall into a familiar class of claims directed to’ a patent-ineligible concept.” Elec. Power Grp.

We have provided still further guidance for those familiar classes of claims. For example, in the context of claims to results, we have explained that claims that “simply demand[] the production of a desired result . . . without any limitation on how to produce that result” are directed to an abstract idea. Interval Licensing. In the context of mental processes … we have explained that if a claim’s steps “can be performed in the human mind, or by a human using a pen and paper,” and the elements in the claim do not contain a sufficient inventive concept under Alice/Mayo step two, the claim is for a patent-ineligible abstract idea. Ericsson Inc. v. TCL Commc’n Tech. Holdings Ltd., 955 F.3d 1317, 1327 (Fed. Cir. 2020) And we have explained that “[i]nformation as such is an intangible”; accordingly, “gathering and analyzing information of a specified content, then displaying the results” without “any particular assertedly inventive technology for performing those functions” is an abstract idea. Elec. Power Grp. We have provided further guidance for “cases involving software innovations,” where the abstract idea “inquiry often turns on whether the claims focus 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.’ ” Finjan.

Our case law also provides guidance as to “inventive concept,” particularly in the context of claims for computer implementations of abstract ideas. We have explained that claims for methods that “improve[] an existing technological process” include an inventive concept at step two. BASCOM. And claims that “recite a specific, discrete implementation of the abstract idea” rather than “preempt[ing] all ways of” achieving an abstract idea using a computer may include an inventive concept. Id. But claims to “an abstract idea implemented on generic computer components, without providing a specific technical solution beyond simply using generic computer concepts in a conventional way” do not pass muster at step
two. Id. “Neither attempting to limit the use of [the idea] to a particular technological environment nor a wholly generic computer implementation is sufficient.” buySAFE.

Slip Op.

Kilian argued that prior eligibility precedent should not apply to him because he did not have the opportunity to litigate those cases.  On appeal the court rejected that attempt to undermine classic common law methodology.

Killian argued that the search for “inventive concept” at Alice Step 2 is improper because the Invention Requirement was eliminated by the 1952 Patent Act.  On appeal, the court noted first that the old “invention” requirement is different from the “inventive concept” element of Alice.  And, take it up with the Supreme Court.

Killian argued that the “mental steps” doctrine has no foundation.  On appeal, the court found that argument “plainly incorrect” based upon statements from the Supreme Court in Mayo (quoting Benson).

Killian argued that the PTO failed to provide any actual evidence that its computer usage was routine and conventional. On appeal, the Federal Circuit pointed to Killian’s patent application statement that the claimed method “may be performed by any suitable computer system.”  That said, the appellate court appears to have accepted the implicit judicial notice from the Board that “operations of storing, analyzing, receiving, and writing data are primitive computer operations found in any computer system.”  At this very basic level, these issues can really be seen as questions of law (and thus subject to precedential enforcement).  “As the Supreme Court has explained, generic computer functions, performed on, as the application itself admits, any generic computer, do not provide an inventive concept.”

If there had been a true question of fact in dispute, then prior precedent regarding similar inventions would not automatically establish those factual conclusions outside of the context of issue preclusion.  Here, the patentee’s “specification admits that the computer, which the Board correctly identified as the additional element of the claims, is well-understood, routine, and conventional, no further evidence is needed.”  Slip Op.

Rejection affirmed.

Question: Can you do anything to save Killian save his claims? [94488_14450042_03-29-2018_CLM]

= = =

Burman Mathis argued for Killian; Monica Lateef (USPTO Associate Solicitor) argued for the Agency.  Lateef is also a member of the Federal Circuit’s advisory council.

Join the AIPLA Law Journal Editorial Board

Patent,

The AIPLA Journal Quarterly has been publishing articles since its first 1972 issue.  That original issue included articles from Retired Supreme Court Justice Tom Clark as well as Sixth Circuit Chief Judge Harry Phillips and CCPA Judge Giles Rich.

  • Tom C. Clark, The Patent System Deserves Clean Hands, 1 AIPLA Q.J. 9 (1972) (arguing for doctrine of unenforceability for failure to disclose known prior art to the USPTO).
  • Harry Phillips, Burden of Proof in Patent Cases, 1 AIPLA Q.J. 17 (1972) (describing the lack of harmony among the various circuits).
  • Giles S. Rich, Laying the Ghost of the “Invention” Requirement, 1 AIPLA Q. J. 26 (1972) (walking through the history of drafting the 1952 Patent Act obviousness requirement).

I’m happy that the most recent issue – 50 years later – is an article that I co-authored on sovereign immunity and patent/copyright history.

Unlike most academic law journals, the AIPLA Q.J. articles are peer reviewed by an editorial board of intellectual property attorneys and professors. Two Editorial Board members review each manuscript, comment on the manuscript, edit the manuscript (if necessary), and indicate whether the manuscript should be selected for publication. The also journal has a staff of student members housed at GWU Law who have some say in the selection process and edit the articles.

The journal is seeking new members for its Editorial Board. You have to be an attorney and a member of the AIPLA.  3-year term begins in November.  Apply here by August 31, 2022.

 

Patent Law Canons and Canards: Bonito Boats

Patent, ,

by Dennis Crouch

For our patent law course today, the students read the Justice O’Connor unanimous opinion in  Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989).

Bonito Boats centers on a Florida statute prohibiting copying of unpatented boat hulls via direct molding.  The Florida courts had refused to enforce the law because it conflicted with Federal Patent Law.  And the Supreme Court affirmed — holding that the “carefully crafted bargain” embodied by the US patent system occupies the entire space and thus preempts any further state action offering patent-like rights.

From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy.

Id. The “balance” recognized by the Court is that some innovations are patentable, but only under the strict requirements found in sections 101-112 of the Patent Act. And, once a patent expires (or is refused or forfeited by public use), the balance allows “free access to copy whatever the federal patent and copyright laws leave in the public domain.” Compco Corp. v. Day–Brite Lighting, Inc., 376 U.S. 234 (1964).  In its analysis, the court had to contend with its prior statements permitting state regulation of trade secrets covering innovations that could have been patented.  See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).  The key difference is that the Boat Hull statute offered rights to inventions available to the public, while trade secret rights only apply information outside of public awareness. And, in addition the court noted that trade secrets protect a “most fundamental human right, that of privacy.” Id.  In other words, there is a substantial state interest in protecting trade secrets that fall outside of the realm of the patent balance.  Kewanee also made an assertion that trade secrets are so weak that they are unlikely to shift innovator activities.  That final assertion has become dubious in my mind as trade secrets have become more important within certain industries, alongside the expansion of patent eligibility exclusions.

One reason we read Bonito Boats early in the semester is because of the way that O’Connor walks through the various patentability doctrines, explaining how each serves an important role in the patent balance.

The novelty requirement [operates] to exclude from consideration for patent protection knowledge that is already available to the public. [The provisions] express a congressional determination that the creation of a monopoly in such information would not only serve no socially useful purpose, but would in fact injure the public by removing existing knowledge from public use.  . . .  As the holding of Pennock makes clear, the federal patent scheme creates a limited opportunity to obtain a property right in an idea. Once an inventor has decided to lift the veil of secrecy from his work, he must choose the protection of a federal patent or the dedication of his idea to the public at large. As Judge Learned Hand once put it: “[I]t is a condition upon the inventor’s right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy or legal monopoly.” Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2nd Cir. 1946).

In addition to the requirements of novelty and utility, the federal patent law has long required that an innovation not be anticipated by the prior art in the field. Even if a particular combination of elements is “novel” in the literal sense of the term, it will not qualify for federal patent protection if its contours are so traced by the existing technology in the field that the “improvement is the work of the skillful mechanic, not that of the inventor.” Hotchkiss v. Greenwood, 11 How. 248 (1851). In 1952, Congress codified this judicially developed requirement in 35 U.S.C. § 103, which refuses protection to new developments where “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person of ordinary skill in the art to which said subject matter pertains.” The nonobviousness requirement extends the field of unpatentable material beyond that which is known to the public under § 102, to include that which could readily be deduced from publicly available material by a person of ordinary skill in the pertinent field of endeavor. Taken together, the novelty and nonobviousness requirements express a congressional determination that the purposes behind the Patent Clause are best served by free competition and exploitation of either that which is already available to the public or that which may be readily discerned from publicly available material.

The applicant whose invention satisfies the requirements of novelty, nonobviousness, and utility, and who is willing to reveal to the public the substance of his discovery and “the best mode … of carrying out his invention,” 35 U.S.C. § 112, is granted “the right to exclude others from making, using, or selling the invention throughout the United States,” for a period of 17 years. 35 U.S.C. § 154. The federal patent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful, and nonobvious advances in technology and design in return for the exclusive right to practice the invention for a period of years.

Bonito Boats. Of course one interesting bit of the story that the SUpreme Court admits is that Congress was not fully aware of what it was doing throughout all this careful crafting.

The Bonito Boats decision continues to have important influence on state activities. For instance, in its 2020 Jackson decision, the Second Circuit applied Bonito Boats in the copyright context to hold that copyright law impliedly preempted a particular right of publicity claim made by Curtis Jackson, aka “50 Cent.”  In re Jackson, 972 F.3d 25 (2d Cir. 2020).  Jackson had sold his copyrights to his record label, but was attempting to use rights of publicity to effectively control reproduction of his works.

En Banc on Indefiniteness

Patent

by Dennis Crouch

The indefiniteness-focused en banc petition in Nature Simulation Sys. Inc. v. Autodesk, Inc., 23 F.4th 1334 (Fed. Cir. 2022) has now been pending for six-months.  Most en banc petitions are denied rather quickly.  The extended delay here suggests to me that the court will still deny this petition, but the denial will be accompanied by explanatory opinions that further extend the doctrine.  Of course, there are several other potential outcomes.

The petition asks two question that I have reframed here:

  1. Examiner Deference: Should any deference be given to patent examiner actions  or statements when determining indefiniteness? (Here, the examiner proposed certain claim language in order to avoid an indefiniteness problem, and the majority gave weight to that conclusion).
  2. Doctrinal Overlap: Does the fact that the specification “describes and enables practice of the claimed method, including the best mode” have any relevance on whether the claim is definite? (Here, the majority opinion implicitly suggests a relationship).

Petition-20-2257.

Split infinitives: Federal Circuit divides on Indefiniteness

The NSS inventions relates to computer graphics rendering and claims a method of performing Boolean operations on facets of geometric objects.  NSS improved upon the known “Watson method” with what it called the “modified Watson method.”   During prosecution, the examiner rejected that claim terminology as indefinite and then proposed addition of a wherein clause that spelled out further details that point to particular steps taken in modified Watson:

wherein the modified Watson method includes removing duplicate intersection points, identifying positions of end intersection points, and splitting portion of each triangle including an upper portion, a lower portion, and a middle portion;

Exr. Amendment found in Notice of Allowance for Appl. No. 15/840,052. Later, NSS sued Autodesk for patent infringement. Nature Simulation Sys. Inc. v. Autodesk, Inc., Docket No. 3:19-cv-03192-SK (N.D. Cal.) and Autodesk argued that the claims were still indefinite.

Following a Markman hearing, Magistrate Judge Kim concluded that the claims were indefinite and dismissed the case. (Both parties had consented to have the case handled fully by the Magistrate Judge who is a former IP litigator).  In her opinion, Judge Kim spelled-out the dilemma as she saw it.

Thus, the question is thus: if the PTO issues a patent after amendment to clarify an indefinite term, but an expert later opines that a POSITA would not understand the term, how does the Court determine whether the term is indefinite? The only way to do so here is to look at each argument to see if Autodesk raises any unanswered questions. Here, Autodesk does.

Nat. Simulation Sys. Inc. v. Autodesk, Inc., 19-CV-03192-SK, 2020 WL 12933852, at *4 (N.D. Cal. July 31, 2020) (finding the “modified Watson method” indefinite).

On appeal, the Federal Circuit reversed, but in a split decision.  In particular, Judge Newman was joined by Judge Lourie in siding with the patentee while Judge Dyk wrote in dissent.  The majority opinion particularly critiques Judge Kim’s “unanswered questions” approach as not following the law:

When the meaning or scope of a patent claim is disputed by litigants, the judicial role is to construe the claim as a matter of law, on review of appropriate sources of relevant information. As summarized in Phillips v. AWH Corp., the court looks first to the intrinsic record of the patent document, including “the words of the claims themselves, the remainder of the specification, the prosecution history, and extrinsic evidence concerning relevant scientific principles, the meaning of technical terms, and the state of the art.” 415 F.3d 1303, 1314 (Fed. Cir. 2005) (en banc).

Here, however, the district court did not construe the claims, did not apply the protocols of intrinsic and extrinsic evidence, and did not resolve the meaning and scope of the challenged claims. The district court applied an incorrect standard of “unanswered questions” and a flawed analysis of validity.

Nature Simulation Sys. Inc. v. Autodesk, Inc., 23 F.4th 1334 (Fed. Cir. 2022) (majority).

The majority approach here aligns easily with pre-Nautilus indefiniteness holdings that claims are indefinite only if not able to be construed.  Pre-Nautilus, a proper approach to all claim construction was to first endeavor to construe the claims.  But the new “reasonably certain” standard does not necessarily require  the court to make any attempt to construe. Thus, while I agree that the district court’s “unanswered questions” rule departs from the law, Nautilus does not require a prior attempt-to-construe.  On the whole though, I have seen that a judge’s thought process  when attempting to construe challenged terms provides keen insight into the question of indefiniteness. And, it certainly remains true that unconstruable terms render the claims indefinite.  Thus, I would be in favor of an en banc Federal Circuit opinion suggesting that the indefiniteness process ordinarily include an attempt to construe.

The Newman majority also noted that the examiner should be given some amount of deference.  Here, the majority explained that “[a]ctions by PTO examiners are entitled to appropriate deference as official agency actions, for the examiners are deemed to be experienced in the relevant technology as well as the statutory requirements for patentability.”  Id.  The court also quoted its on-point albeit non-precedential statement in Tinnus Enters., LLC v. Telebrands Corp., 733 F. App’x 1011 (Fed. Cir. 2018) to the same effect: “We presume that an examiner would not introduce an indefinite term into a claim when he/she chooses to amend the claim for the very purpose of putting the application in a condition for allowance.”  The dissent

Judge Dyk explained in dissent that indefiniteness should be seen as an objective legal inquiry not burdened by a subject inquiry into the mind of the patent examiner.  The test is whether the PHOSITA can discern the patent claim scope with “reasonable certainty.” The inquiry does not ask “whether the claim language was added by a patent examiner or was not indefinite to the examiner.”  Judge Dyk in dissent.

= = =

Original Opinion Majority Written by Judge Newman and Joined by Judge Lourie; Dissent by Judge Dyk.

Autodesk is represented by Brian Matsui (Morrison Foerster) along with his team of Rudy Kim, Roman Swoopes, and Seth Lloyd.  NSS is represented on appeal by Matt Wawrzyn (WAWRZYN LLC).

= = =

The Federal Circuit has decided a number of indefiniteness cases in 2022. Niazi Licensing Corp. v. St. Jude Med. S.C., Inc., 30 F.4th 1339 (Fed. Cir. 2022) (reversing district court finding that claims to “resilient” and “pliable” catheters were indefinite); U. of Massachusetts v. L’Oreal S.A., 36 F.4th 1374 (Fed. Cir. 2022) (vacating district court finding that claims to adenosine skin compositions were indefinite); ImmunoGen, Inc. v. Hirshfeld, 2021-1939, 2022 WL 885774, at *2 (Fed. Cir. Mar. 25, 2022) (vacating district court holding that “AIBW” is indefinite); ClearOne, Inc. v. Shure Acq. Holdings, Inc., 35 F.4th 1345 (Fed. Cir. 2022) (affirming PTAB determination that newly added “self-similar” claim language was not indefinite); Dyfan, LLC v. Target Corp., 28 F.4th 1360, 1364 (Fed. Cir. 2022)(claimed “code” was not in MPF form and therefore not indefinite for lack of structural equivalents in the specification).

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes, Patent

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Brand-Generic Drugs: Infringement Judged by the ANDA Filing

Patent

by Dennis Crouch

Par Pharm., Inc. v. Eagle Pharm., Inc., No. 2021-2342, — F.4th — (Fed. Cir. Aug. 18, 2022)

In 2018, Eagle filed its Abbreviated New Drug Application (ANDA) with the FDA seeking to market a generic version of Par’s vasopressin injection product (Vasostrict) used for emergency blood pressure treatment.  Par had listed two patents in the Orange Book as covering its product and so, as required, Eagle’s ANDA included a Paragraph IV certification that the two patents were either (1) invalid or (2) would not be infringed.  35 U.S.C. § 355(j)(2)(A)(vii)(IV).

In order to facilitate resolution of brand-generic patent conflict, the Patent Laws include a form of paper infringement–a legal fiction that simply filing an ANDA and Paragraph IV certification counts as a form of patent infringement.  This gives the branded drug maker (here PAR) the ability to immediately sue to keep the generic off the market (if the patent turns out to be enforceable).  But, these Hatch-Waxman lawsuits are considered a form of declaratory relief and no actual damages are available.  This setup also means that these cases are not “Suits at common law” and so the Seventh Amendment right to a jury trial does not apply.  Thus, ANDA patent lawsuits are ordinarily decided by bench trial–and typically by one of the Delaware district court judges.  In patent law, injunctive relief has been difficult to obtain, but under the Hatch-Waxman law, the FDA will automatically delay any market approval by 30 months if the brand-patentee sued.

Vasopressin is a naturally occurring mammalian hormone and been generally known for decades.  As its name suggests the chemical has always been known since its naming for its ability to constrict blood vessels — the same use that Par’s patents claim.  Par’s two patents here cover a particular vasopressin composition (9,750,785) and a method of treatment using the composition (9,744,209).

Both Par patents include a pH requirement: “wherein the unit dosage form has a pH of 3.7-3.9.” In its ANDA, Eagle was careful to specify that its product would have a slightly different pH range: 3.4–3.6.  Eagle then argued that this difference was enough to avoid infringement.

Despite its nominal specifications, Par presented evidence that (it claims) Eagle’s product pH would “drift up” while sitting on the shelf.  It coupled that evidence with the very slight difference between Eagle’s product and Par’s patent to make the argument that Eagle’s product “would inevitably drift into Par’s claimed range.” Slip Op.   The district court (Judge Connolly) held a three-day bench trial and ultimately issued a judgment of noninfringement.  In particular, Judge Connolly concluded that the evidence failed to prove any upward drift of pH, but rather simply “minor fluctuations” without “any discernable trend.” Id. On appeal, the Federal Circuit has affirmed–seeing no “clear error” in the district court’s factual findings.

I mentioned above that this form of ANDA-filing infringement is a legal fiction created by Congress to facilitate a more competitive marketplace.   One problem then is that there is no actual product to inspect.  We have the ANDA filing, but there  are always substantial design choices before final release.   The prophetic inquiry thus looks to what is the “probable ANDA product” and asks whether that probable product would be infringing if actually made.

Still, the primary guide is the ANDA documents as the source of infringement in this highly regulated area. At times, a court can look to other relevant evidence, but only when the ANDA filing fails to “speak clearly and directly to the question of infringement.”  Rather, the court assumes that the ANDA filer will “act in full compliance with its representations to the FDA.”  In re Brimonidine Patent Litig., 643 F.3d 1366, 1378 (Fed. Cir. 2011).

Here, the ANDA documents are clear that the product does not infringe. The pH range in Eagle’s ANDA document is different than that claimed by Par.  And, the ANDA filings also indicate that the pH range will remain stable throughout the shelf life of the product.  Thus, the ANDA documents indicate no drift into Par’s protected space.

No Declaratory Judgment of Infringement. (Neither court decision discusses the doctrine of equivalents.)

I have not thought through all the claim preclusion issues. But, once the product is released Par may be precluded from suing again based upon res judicata and the Kessler Doctrine.

= = =

Judges: Moore, Prost, Hughes
Opinion by: Moore
Attorneys: Martin Black (Dechert) for the patentee Par along with Sharon Gagliardi, Brian Goldberg, Luke Reilly, Robert Rhoad, Daniel Roberts, and Jonathan Loeb. John O’Quinn (Kirkland) for Eagle along with Bill Burgess, Bryan Hales, Benjamin Lasky, and Jenna Wacker.

Disqualification due to Foreseeable Conflict Leads to $32m Malpractice Judgment

Ethics, Patent

By David Hricik, Mercer Law School

Ordinarily, a conflict of interest leads to disqualification, but they can lead to fee disgorgement (an attorney is supposed to be loyal, and like any other agent, is not entitled to keep a fee earned while being disloyal) and, on occasion, damages.  In a case affirmed by the Ohio Court of Appeals, those damages were $32 million.

In RevoLaze LLC v. Dentons US LLP, 2022-Ohio-1392 (Ohio App. Apr. 28, 2022), requires understanding what a “verein” is. It is a legal entity recognized under Swiss law somewhat similar to an association. A few law firms are organized this way, including Dentons.

In RevoLaze, Dentons US (part of a verein of many Dentons “entities”) had represented a patentee, RevoLaze, in an ITC proceeding and 17 related infringement suits. At the start of the matter, Revolaze received funding from a litigation funding group, and Dentons US agreed to reduce and cap its fees but had the right to a percentage of any recovery. Dentons had indicated to the litigation funding group that the recovery indicated potential damages of around a billion dollars, and so it vetted the patents and the case and after that agreed to fund the proceeding and related litigation, in phases, for up to $8 million.

But, Dentons US knew the ITC proceeding would be adverse to The Gap, and that Dentons Canada represented The Gap. Thus, if Dentons US was part of the same firm as Dentons Canada, then Dentons US’ representation of the patentee in the ITC proceeding was adverse to one of Dentons US’s clients, and it would be subject to disqualification.  There was no evidence that Dentons had advised RevoLaze of the risk of disqualification or of steps to reduce the impact if it happened.

Of course, The Gap moved to disqualify, and the ITC granted that motion. By that time, Dentons US had billed a significant amount, RevoLaze was struggling, and disqualification caused it to pay an additional $1 million to get replacement counsel up to speed.  The litigation funding group agreed to move up some funding to help, but RevoLaze settled the infringement cases and eventually dismissed the ITC proceeding while appeal of the disqualification order was pending there.

RevoLaze then sued Dentons, arguing the conflict had been foreseeable and that it had been damaged by, among other things, failing to obtain an ITC exclusion order and lost licensing revenue, with the total damages between $23 and $39 million.

To support breach — that disqualification had been foreseeable and so a reasonable lawyer would have either obtained informed consent or not taken the case — RevoLaze’s lawyers showed that Dentons US had been concerned about a conflict caused by the ITC proceeding with a client of a different “part” of Dentons (and so had not named that client in the ITC proceeding), it had a single conflicts database, Dentons’ own expert had written an article discussing the risk that a court would consider different “parts” of a verein to be one big law firm, and other facts

To support causation and proximate cause, RevoLaze had experts opine that but-for disqualification, the litigation funding costs would have been lower, RevoLaze would have obtained an exclusion order, and it would have obtained better settlements (i.e., better licensing and so had incurred lose profits).

The jury awarded $32 million. Then, the appellate court held the evidence was sufficient to support the verdict and the amount of damages.

This case, of course, is odd in that breach turned on whether Dentons was “one law firm” or separate firms, not on whether there was a conflict with a client. But the same logic would apply where a law firm undertakes a representation where it is foreseeable that it would be deemed to be adverse to a client, and so subject it to disqualification.

It appears from this June 2022 filing Dentons is seeking review by the Ohio Supreme Court, and it looks like on the issue of causation, so stay tuned.

Update:  A reader sent a link to an interesting student-authored article on the ITC decision that explains the verein (which auto-corrects to “vermin”) structure.

Scope of IPR Estoppel: Reasonable Procedural Steps

Patent

By Dennis Crouch

Almost all patent law professionals will agree that an accused infringer with good prior art generally has a much better chance of getting the claims cancelled via IPR rather than asking a jury to decide.  Accused infringers also prefer IPRs because they effectively bifurcate the trial between validity and infringement, with the IPR validity questions being decided first while infringement litigation is stayed.  The result is that the IPRs are also a low risk option for accused infringers since no liability attaches from that decision.  If they lose the IPR, accused infringers still have another shot of escaping liability in the actual infringement trial.  At trial, the accused infringer can still raise invalidity defenses.  However, the estoppel provisions of 35 U.S.C. § 315(e) bar relitigation of “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”

The Federal Circuit recently gave some further interpretation to the scope estoppel in Click-to-Call, LP v. Ingenio, Inc., 22-1016, — F.4th — (Fed. Cir. August 17, 2022).  Ingenio filed its IPR petition back in 2013.  At the time, the PTAB was still doing “partial institutions” pre SAS. And, in this case the Board instituted the IPR on three grounds and denied to institute on three grounds.  The Board eventually sided with the petitioner in its final written decision and cancelled the challenged claims.  There are two additional important procedural elements of the IPR: (1) The petitioner had challenged claim 27, but the Board denied to institute that particular ground.  Thus, claim 27 survived the IPR.  (2) While the IPR was on appeal to the Federal, SAS was decided banning partial institution. SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).  In a strategic decision Ingenio did not seek remand for full institution to try to also catch the one remaining claim 27.

On remand, the district court judge (Yeakel, W.D.Tex.) allowed Ingenio to challenge claim 27 on the same grounds raised at IPR and ultimately issued a summary judgment of invalidity.  The district court clearly erred in its decision by analyzing the argument as only raising issue preclusion.  In general, issue preclusion is much narrower because it applies only to arguments actually litigated and decided whereas IPR estoppel applies more broadly to cover grounds that “reasonably could have [been] raised.”

But Ingenio argues that the error was harmless.  In particular, if you look at the estoppel statute, it appears to apply only to claims that were part of the inter partes review.  Although claim 27 had been challenged in the petition, it never became part of the inter partes review itself and was not subject to a final written decision.   On appeal though the Federal Circuit concluded that claim 27 was only missing from the IPR because of a deliberate choice by Ingenio in failing to seek remaind post-SAS.

The fact that the Board, due to a legal error corrected by SAS, failed to include claim 27 in its final written decision does not absolve Ingenio of the estoppel triggered by its choice to challenge claim 27 at the Board. . . . [Under SAS], the scope of the IPR as defined in the petition included claim 27. . . . Ingenio’s choice to leave unremedied the Board’s mistake does not shield it from estoppel as to a claim it included in its IPR petition.

Slip Op.  I mentioned that Ingenio made a strategic decision to not request remand following SAS to remedy the partial institution.  In its brief, Ingenio explains that it was concerned that the PTAB would have denied the entire petition–thus undermining all the work that it had completed in the process. “It is equally likely the
PTAB would have rejected the entire petition instead of instituting the entire petition in the post-SAS world.” Ingenio Brief.  The Federal Circuit’s response–tough cookies.  You make your choices and get the results.

The court identifies this case as a unique situation resulting from an intervening Supreme Court decision.  But I would also recognize it as a broader statement from the court on the scope of estoppel and what a petitioner “reasonably” can do.  Summary judgment of invalidity reversed.  Here in particular, the scope now includes legal or procedural steps that could have been made.

= = = = =

Changing focus post-IPR: The infringement litigation was filed back in 2012 and later that year Ingenio submitted its infringement contentions listing the particular claims being asserted.  Ingenio subsequently filed its IPR petition in 2013 challenging all of the asserted claims.  At that point, the district court stayed litigation until the IPR concluded in 2020.  In the first joint-status report the parties made a joint statement that the patentee “intends to proceed with litigation of the asserted claims not affected by the Inter Partes Review proceedings: specifically, claims 24, 27, and 28.”  In its statement to the court, the defendant indicated its intent to challenge the validity of those claims, but did not object to the fact that claims 24 and 28 had not been one of the claims originally asserted in the infringement contentions.

The Magistrate Judge Hightower refused to permit the patentee to change its infringement contentions despite the changes that took place during the proceeding seven years where the case had been stayed.  Without analysis, the court simply wrote that “Click-to-Call has not provided good cause for leave to amend nearly eight years after its original selection of claims for trial.”  Judge Yeakel then adopted the Magistrate Judge’s recommendations.   On appeal, the Federal Circuit affirmed — finding no abuse of discretion.  On this point, the district court had noted that it issued a stay because the IPR would likely simply the case for trial since “all but one of the claims to be asserted at trial” were being reviewed in the IPR.   On appeal, the court concluded that the district court’s approach from the beginning to narrow issues for trial and “did not envision adding other claims to the case following the IPR.” The appellate court also suggested that at some point during the six-year delay Click to Call should have indicated its plans to amend.  Of course, during that time of the case being stayed, the district court was not permitting or considering any procedural motions of this type. The court also noted the magistrate judge’s terse analysis, but found it appropriate given that Click-to-Call had only put “minimal effort” into making the argument in the first place.

Refusal to permit amendments to the infringement contentions affirmed on appeal.

= =

Panel: Stoll, Schall, and Cunningham
Decision by: Stoll
Attorneys: Dan Shih (Susman Godfrey) for plaintiff-appellant (along with Brian Melton & Max Tribble); Amanda Brouillette (Kilpatrick) for defendant-appellee (along with Clay Holloway and Mitch Stockwell).

Misc. Docket 22-160: Is your (old) appeal on this list?

Patent

By Jason Rantanen

While this might not be the most newsworthy federal document archives story this week, it’s something that patent practitioners and others who practice before the Federal Circuit might want to take note of.  Today the Federal Circuit issued an order in Miscellaenous Docket 2022-160, “In re: Unsealing of Court Case Records.” The order reads:

The court is in the process of accessioning its remaining paper case records to the National Archives and Records Administration for permanent retention. These records predate the court’s transition to its electronic case management filing system in 2012 and once transferred to the National Archives will remain in only paper format and will not be made available online. Pursuant to Federal Circuit Rule 25.1(a)(1), “[a]fter five years following the end of all proceedings in this court, the court may direct the parties to show cause why confidential filings (except those protected by statute) should not be unsealed and made available to the public.” Through the review of these records, the court has identified several cases containing confidential filings that remain under seal more than five years following the end of all proceedings.

The order goes on to direct parties to the identified cases to this order to show cause within 60 days as to why confidential material in those cases should not be unsealed, along with instructions for what to do. The order is followed by 60 pages of case docket numbers and names. Almost all of them arise from the district courts, but there are a few from other origins. You can access it here: https://cafc.uscourts.gov/wp-content/uploads/22-160.pdf (archived version: 22-160).

For context, in 2012 the Federal Circuit switched from an older version of the court electronic records system to a newer version. As a result, appeals filed prior to the transition without subsequent case activity are only in the older system. (Appeals filed before the transition but with activity after the transition show up in both systems.) Many of the older materials are only available in paper form, and if you’ve ever tried to get them you know that it is very expensive and difficult.

I was curious about what portion of appeals this order applied to, so I plugged the docket numbers from the order into the Federal Circuit Dataset Project to get a sense of what portion of cases this applied to. (The list of docket numbers from the order is linked here: https://doi.org/10.7910/DVN/FRHXWT). In total, there are 1,151 appeal  numbers listed in the order (plus 3 duplicates). Of these, 1,122 matched an appeal docketed in 2000 or later that’s available in PACER; 16 don’t match a record that shows up in PACER (likely because the entire docket is confidential) and 13 involve appeals filed before 2000. The latest appeal was docketed in 2012, and most of the appeals listed were docketed between 2003 and 2010. Out of the 12,225 appeals docketed between 2000 and 2011, 977 show up on this list (about 8%).

However, most of the appeal dockets on the court’s list are appeals from the district courts, and those are only a portion of the court’s cases. Because these are records from the older generation of PACER, we don’t have as much information about them as for later appeals. (See this forthcoming article for details: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4162979.)  However, when I combined the list in the court’s order with our document dataset, which goes back to late 2004, and limited it to opinions and Rule 36 summary affirmances issued between 2005 and 2012, it turned out that about 25% of appeal dockets arising from the district courts that resulted in an opinion or Rule 36 in those years were listed on the court’s order (517/1,459), with about the same percentage for appeals arising from the ITC (79 out of 305). This isn’t exclusive; there are some numbers on the list that didn’t result in an opinion or order. But there’s a good chance that if you had an appeal in a patent infringement case that resulted in an opinion or Rule 36 affirmance between 2000 and 2011, it’s on the court’s list.

Bottom line: this is a lot of appeal dockets, both just in raw numbers and as a fraction of appeals in patent infringement cases and from the CIT.  The appeals were filed over a decade ago, and likely haven’t had any actions since 2012, but it may be worth a ctrl-F on the order to see whether your clients are impacted.

One thing that I do hope is that the court doesn’t de-accession the existing PACER docket search for pre-2012 cases. It provides only limited data and access to documents, but it’s the only publicly accessible directory or index for that information. As far as I know (and I’d love to be wrong!), there’s no existing paper analog.

Welcome Derrick Brent – USPTO Deputy Director

Patent

by Dennis Crouch

The Secretary of Commerce recently appointed Derrick Brent as Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office.  As here, the Deputy Director, Brent will serve as the principal advisor to Dir. Vidal.  His key role will likely be in helping Dir. Vidal navigate the political side of the office as well as substantial outreach.

Deputy Dir. Brent is a mechanical engineer (OSU) and lawyer (Northwestern) and also a musician.  After law school, Brent worked both for Vorys Sater and then the USDOJ before being recruited as Senior Counsel by Sen Boxer where he spent lots of time on the America Invents Act.  Since 2012, Brent has been working as in-house counsel or doing similar consulting work.

His diverse professional experience has included Senior Counsel for U.S. Senator Barbara Boxer, Senior Trial Attorney in the Department of Justice, and Associate at Vorys, Sater, Seymour and Pease LLP. His work has principally focused in litigation and policy related to intellectual property, civil rights, employment and commercial law.

Welcome!

The statute:

Deputy under secretary and deputy director.— The Secretary of Commerce, upon nomination by the Director, shall appoint a Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office who shall be vested with the authority to act in the capacity of the Director in the event of the absence or incapacity of the Director. The Deputy Director shall be a citizen of the United States who has a professional background and experience in patent or trademark law.

35 U.S.C. 3. Additional Leadership Changes:

  1. Longtime USPTO leader Drew Hirshfeld left the agency this summer and has now joined the Schwegman firm.
  2. Andrew Faile is Deputy Commissioner for Patents and has stepped-up to serve as Acting Commissioner until the Secretary of Commerce appoints a new Commissioner.  The statute provides a 5-year term for the Commissioner once appointed.  Although the position requires a political appointment, it is most-often an internal hire because the Commissioner really needs to understand Office complexities.
  3. Shirin Bidel-Niyat is Dir. Vidal’s chief of staff. Bidel-Niyat is a relative newcomer to the office — having joined in 2021 as a Senior Advisor.  Her role will likely involve substantial internal political strategy and White House interfacing.
  4. Longtime PTO employee Dede Zecher had been acting chief of staff and is now Chief Advisor to the Director.   Zecher is a former patent examiner, SPE, and advisor to the Deputy Commissioner.
  5. The PTO also has a new Chief Communications Officer (CCO), Russell Lopez. Lopez has spent his career as doing communications for various California gov’t authorities.
  6. David Berdan has moved back to his role as USPTO General Counsel.  The GC’s office has three Deputy GCs: (1) Will Covey who is also Director of OED; (2) David Shewchuk who runs the “office of general law” — handling non-IP issues; and (3) Thomas Krause who is the USPTO Solicitor.

 

 

 

Director Review of Institution Decisions Moving Forward

Patent

by Dennis Crouch

In re Palo Alto Networks, Inc., 22-145, — F.4th — (Fed. Cir 2022)

In Arthrex, the Supreme Court found the Congressionally created IPR scheme unconstitutional because it gave too much authority to PTAB judges.  United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021).  In a hope for some political accountability, the Constitution requires Officers of the Government to be appointed by the US President.  U.S. Constitution, Art. II, § 2, cl. 2. The problem–PTAB judges have authority to cancel substantial property rights but are not appointed by the President. Rather than rendering the AIA dead on arrival, the Supreme Court decided to cure the defect by taking some authority from the PTAB judges and handing it to the USPTO Director, who was properly nominated by the President and confirmed by the Senate.  Under the Arthrex model, any PTAB final written decision (in the AIA-trial context) can then be reviewed by the USPTO Director.

But, what about IPR institution decisions.  If you recall, inter partes review proceedings begin with an IPR Petition and an institution decision.  If the IPR is instituted then the case moves to trial and a final written decision by the PTAB.  If the IPR is not instituted, the case is closed with no right for appeal.  One quirk of all this involves the division of labor.  As mentioned above, the statute calls for the PTAB to decide the final written decision, but then in Arthrex the Supreme Court added the additional Director Review.  At the institution stage, the statute follows a different scheme calls for the USPTO Director to decide whether or not to institute. 35 USC 314.  Despite the statute, the USPTO Director has never personally signed an institution decision but rather issued regulations giving institution authority to the PTAB. The regulations do not allow for any subsequent director review. 37 C.F.R. § 42.71.  If the institution petition is granted, the Arthrex approach suggests eventual director review following a final written description. The USPTO has stated in its interim guidance documents that the USPTO “does not accept requests for Director review of decisions on institution.”

Although none of the issued rules or guidance suggests that the Director retains any authority, when Dir. Vidal took office, she issued a set of interim guidance documents stating that she has authority to review institution decisions.  Further, the new interim guidance documents state that the “Director has always retained and continues to retain the authority to review such decisions sua sponte after issuance (at the Director’s discretion).”  And, in recent months the Director has issued sua sponte review of two IPR institution decisions.

In 2021, Centripetal Networks sued Palo Alto Networks (PAN) for patent infringement.  PAN responded with two AIA trial petitions; IPR2021-01151 for U.S. Patent No. 10,659,572 and PGR2021-00108 for U.S. Patent No. 10,931,797.  The PTAB Denied institution. PAN attempted to seek director review, but was told that the USPTO dies not accept requests for Director Review of institution decisions and that “there will be no further review of the Board’s decision by the Office.”

By statute, institution decisions are not appealable, but can be reviewed on extraordinary writ — writ of mandamus.  PAN petitioned, but the Federal Circuit has now denied the petition.  On mandamus, the Federal Circuit concluded that “there is no structural impediment to the Director’s authority to review institution decisions either by statute or by regulation.”  Although the Director has delegated substantial decisionmaking authority, the court found that the Director is still the “politically accountable executive.”  Further, it apparently is of no concern that the system provides no formal mechanism for petitioning the Director for intervention.  The decision here suggests that in reality the Director has authority to intervene in any pending case before USPTO.

The majority decision was written by Judge Dyk and joined by Judge Chen. Judge Reyna wrote in concurrence and that “a categorical denial by the Director to accept any requests for review raises potential constitutional concerns.”  However, Judge Reyna suggested that the new director’s approach of sua sponte review might be enough.

When PAN’s briefing began, the USPTO’s position appeared clear cut of no director review of institution decisions, and their case was undermined by the interim actions by Dir. Vidal who decided to begin reviewing those as well. In his concurring decision, Judge Reyna writes: “We should not compel an agency to take specific action that the agency demonstrates it has already taken.”

Note: The two cases with pending director review of institution decisions are:

  • OpenSky Indus., LLC v. VLSI Tech. LLC, IPR2021-01064, Paper No. 41 (P.T.A.B. June 7, 2022);
  • Pat. Quality Assurance, LLC v. VLSI Tech. LLC, IPR2021-01229, Paper
    No. 31 (P.T.A.B. June 7, 2022).

In both of these cases, the PTAB granted institution.  Initial briefs in these director reviews are due on August 18, 2022.

LSI v. UMN: Binary Conversion, Eligibility, and “By Another”

Patent,

by Dennis Crouch

UMN’s U.S. Patent No. 5,859,601 is super interesting because it is so similar to the patent rejected by the Supreme Court in Gottschalk v. Benson, 409 U.S. 63 (1972). Benson’s claims were directed toward a method of converting binary-coded decimal numbers into pure binary numbers.  Similarly UMN’s claims are directed also to a method for converting binary numbers–this time from “m-bit binary datawords into n-bit binary codewords” by applying “maximum transition run (MTR) codes.”  UMN’s basic idea is that researchers were finding long binaries with lots of transitions were more likely to lead to read-errors.  Example, 010101010101 has lots of transitions while 111111000000 has only one transition.  If the algorithm finds a long sequence of consecutive transitions then it does something (like adding a pause or transition code) to reduce the probability of error detection. The algorithm also adds an additional transition code at a regular interval.

UMN sued LSI for patent infringement in 2016 in the N.D. Cal.; LSI responded with its petition for inter partes review.  The IPR proceedings were initially delayed by UMN’s claim of sovereign immunity. In 2019, the Federal Circuit held that “state sovereign immunity does not apply to [IPR] proceedings.” Regents of the Univ. of Minnesota v. LSI Corp., 926 F.3d 1327 (Fed. Cir. June 14, 2019), cert. denied, 140 S. Ct. 908, 205 L. Ed. 2d 458 (2020).  Back on remand, the PTAB issued a split decision–finding independent claim 13 unpatentable but concluding that LSI failed to show that claims 14 and 17 were obvious.  These claims add the allegedly unique limitation that the maximum transition run size is somewhere between 1 and 10.

LSI appealed its loss on the dependent claims and the Federal Circuit has now affirmed.  LSI Corp. v. Regents of U. of Minnesota, 2021-2057, — F.4th — (Fed. Cir. Aug. 11, 2022).  The original 2019 decision was authored by Judge Dyk and joined by Judges Hughes and Wallach.  The Federal Circuit has an Internal Operating Procedure involving appeals following remand to attempt to reconstitute the same panel or one with at least two of the same judges.  Judge Wallach took senior status in 2021 and so Judge Reyna was added to the new 2022 panel. Judge Dyk again wrote the opinion.

Prior Art By Another: Seagate was a collaborator with the UMN inventors (Moon and Brickner). And, back in September 1995, the inventors submitted a report to Seagate about their work.  They filed their patent application April 1996–well within the 1-year statutory grace period.  But, in January 1996 Seagate filed a patent application (Tsang) that does not list the UMN inventors.  Tsang describes MTR coding in its background section and references the Seagate Report.  Tsang also provided further improvements on the MTR methodology.

Once Tsang published/issued, it became prior art as of its filing date. Pre-AIA Section 102(e).   Section 102(e) refers to “an application for patent . . . by another.”  Here, Tsang is clearly another, but the particular portion of Tsang referenced was clearly derived from the UMN inventors Seagate Report.  Under longstanding precedent, Section 102(e) has been interpreted exclude material derived from the inventors. In re Costello, 717 F.2d 1346 (Fed. Cir. 1983). In other words, regardless of the listed inventors on a purported prior art reference, we look to the actual underlying disclosure and ask whether that information was “by another.”  Still LSI argued that Tsang was a proper 102(e) reference

Tsang’s summary of, and reliance on, the earlier work of Dr. Moon and Dr. Brickner does not make Tsang an inventor of the earlier work.

Slip Op.  Thus, that portion of Tsang was properly excluded from prior art consideration.  The court’s interpretation of Section 102(e) stretches our statutory interpretation limits since 102(e)’s prior art test is at the application level, and the court here drills down to specific disclosures and portions of the application.  The AIA remedied this statutory stretching by creating the exception of 102(b)(2) that focuses on the disclosure level.

Shifting Arguments: LSI had Separately relied upon two tables found in a prior patent Okada.   The problem — although the petition relied upon Okada, petitioner’s reliance on the particular tables didn’t happen until the IPR Hearing.  In its decision the  board found that the new theory was both untimely and unpersuasive.  On appeal, did not address the untimely conclusion — only the persuasiveness.  The Federal Circuit did not like that approach and concluded that untimeliness was a separate and independent ground that LSI forfeited “by failing to challenge it in its opening brief on appeal.”

The case should now head back to the Northern District of California where UMN is asserting both surviving claims.  The lawsuit has been stayed for the past four years awaiting resolution to the IPR. Meanwhile, LSI’s motion for judgment on the pleadings that the asserted claims are patent-ineligible has remained undecided throughout that time.  LSI 101 Motion.

Patrick McElhinny (K&L Gates) argued the IPR appeal for UMN and Kristopher Reed (Kilpatrick) argued for LSI.   The same teams are also handling the underlying litigation.

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Narrowed Assignor Estoppel Still Bars Minerva Surgical from Challenging Validity

Patent

by Dennis Crouch

The defense of assignor estoppel has been in flux. The Federal Circuit had previously broadly applied the non-statutory doctrine to prevent a prior owner of patent rights (the “assignor”) from later challenging the validity of those rights. The basic idea was that the assignment of rights includes an implicit warranty.  In a 2021 decision, the Supreme Court shrunk the doctrine by creating important caveats. Minerva Surgical, Inc. v. Hologic, Inc., 141 S. Ct. 2298 (2021).  Although the Court retained the doctrine generally, it concluded that assignor estoppel is limited to situations where “the assignor’s claim of invalidity contradicts explicit or implicit representations made in assigning the patent.” Id.  The court noted potential situations of no-estoppel: (1) assignment made prior to the inventor even seeing the patent document; (2) a change in the law that renders the patent invalid; and (3) after the assignment, the new owner changes the scope of the patent claims that goes “beyond what the assignor intended to claim as patentable.” A key example of this would be claim changes that result in scope that is “materially broader” than those originally assigned.

On remand, the Federal Circuit concluded that estoppel still applies despite the Supreme Court’s added limitations. Hologic, Inc. v. Minerva Surgical, Inc., 19-2054, — F.4th — (Fed. Cir. 2022). In particular, the appellate court found that the claims at issue in the  litigation are not materially broader than what the assignor intended to claim at the time of the assignment.

The invention here relates to “an endometrial ablation device used to treat abnormal uterine bleeding (menorrhagia) by destroying targeted cells in the lining of the uterus.” Slip Op.  The invention generally proposed use of a “fluid permeable elastic member” for moisture removal; except that one claim in the application did not require the use of the permeable member.  (Claim 31).

Prior to the assignment at issue, the examiner had a restriction requirement and the patentee cancelled Claim 31 so that all of the remaining claims required the permeable member.  The patent application was in this state — with only permeable member claims — when the assignment at issue took place. Later, the patentee obtained a patent covering the invention without the permeable member and then sued the assignor who had formed a competing company.  In the litigaiton, the defendant challenged the broader claims as lacking written description, but the district court barred those challenges.

On appeal, the Federal Circuit found that in this context, the cancelled claim should still be considered part of the invention that the assignor expected to be patented.

[T]his 2002 cancelation in response to the Examiner’s restriction requirement says nothing, implicitly or explicitly, about the patentability of claim 31. Put another way, Mr. Truckai canceled claim 31 for reasons other than patentability. Indeed, an assignee would have understood that the restriction requirement and subsequent cancelation in response to the restriction requirement meant that the patent applicant could later prosecute claim 31’s subject matter. . . . Although claim 31 was canceled for purposes of further prosecution of the ’072 application, cancelation did not nullify the claim, as it remained viable for further prosecution in a divisional application filed by whomsoever owned the ’072 application. . . . The 2004 assignment assigned not just the rights to the ’072 application, but also the rights to any continuation, continuation-in-part, or divisional patent applications not yet filed. For certain, canceled claim 31 traveled with the ’072 application and its assignment to Hologic.

Slip Op.  Thus, to understand changes in the patent claims, the court will delve into the prosecution history to uncover the reasons for any changes to claim scope and then make some conclusions about whether those reasons fit within the assignor’s implicit intent-to-claim.  In a footnote, the opinion reserves the particulars for another day:

Our holding in this regard is limited to the facts of this case. We do not address whether a claim canceled for  reasons other than to comply with a restriction requirement would be part of the 2004 assignment.

Slip Op., Note 4.

I’ll note that the facts of Hologic do not reflect an ordinary patent case.  The assignment at issue was part of a $300 million company sale and thus was highly lawyered.  The assignment particularly included an express warranty that the IP rights being assigned were both valid and enforceable.  In the ordinary case, the inventor will be assigning rights to their employer pre-filing without the particular warranty or level of knowledge.